TIDMSAC

RNS Number : 7208T

SacOil Holdings Limited

22 November 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")

Reviewed interim results

for the six months ended 31 August 2013

SacOil Holdings Limited is pleased to announce its results for the six months ended 31 August 2013

OVERVIEW

SacOil is an independent African oil and gas company, dual-listed on the JSE and AIM, and has business operations that are focused across the African continent. Currently, the Group operates in the following jurisdictions: the Democratic Republic of Congo ("DRC"); the Republic of Malawi; the Republic of Botswana; and the Federal Republic of Nigeria. Further, the Company continues to evaluate opportunities to secure high-impact acreage in other established and prolific hydrocarbon basins in Africa.

OPERATIONS

Shareholders are referred to the announcement issued on SENS and RNS on 8 November 2013, in which the Company communicated a detailed update on its asset-level operations. The operational highlights for the period under review include:

- DRC, Block III: 2D seismic data acquisition currently being planned and expected to commence within the next dry season in Q1 2014;

- Nigeria, OPL 233: Execution of 2013 work programme and 3D seismic data acquisition currently underway;

- Nigeria, OPL 281: Re-interpretation of seismic and well data;

- Malawi, Block 1: Planning of environmental and social impact assessment; and

- Botswana: Granting of licences 123, 124 and 125.

FINANCIAL REVIEW

For the six months ended 31 August 2013, the Group reported a profit of R27,0 million (2012: loss of R11,8 million) primarily arising from an increase in investment income earned and decreases in finance and operating costs, relative to the corresponding prior period.

Other income for the period under review comprised foreign exchange gains amounting to R43,7 million (2012: R38,9 million) arising on the remeasurement of the following US Dollar denominated balances:

- the loans receivable from Energy Equity Resources (Norway) Limited ("EERNL");

- the Block III contingent consideration; and

- the cash collateral deposited with Ecobank.

The 21% overall decrease in other income is primarily attributable to the once-off profit on disposal of the 6,67% interest in Block III and the once-off break fee received from a third party in the corresponding prior period.

Other operating costs decreased by 50% to R11,5 million (2012: R23,2 million) during the period under review. The reduction is primarily attributable to decreases in corporate, remuneration, consulting, legal and travel and accommodation costs.

Investment income for the period under review comprised:

- interest income from loans of R34,2 million (2012: R18,9 million);

- interest earned on cash and cash equivalents of R0,2 million (2012: R0,4 million); and

- imputed interest income of R12,5 million (2012: R7,9 million) arising from the unwinding of the time value discount applied to the contingent consideration for Block III.

Investment income increased by R19,7 million relative to the corresponding prior period, reflective of an increase in the amounts advanced to EERNL, the compounding effect of the interest accruals and the impact of the weak Rand.

The Group's finance costs of R10,5 million (2012: R21,5 million) relate to interest on the two US$1 million loans acquired from Gairloch Limited ("Gairloch") during September 2012 and October 2012, to fund working capital requirements of the Group and work programme commitments for OPL 233. During the period under review the Group incurred further interest charges amounting to R32,6 million on the Gairloch novated loan. This interest has been capitalised to the OPL 233 exploration and evaluation asset, as it relates to a qualifying asset.

Taxation decreased by 13% to R41,7 million (2012: R48,1 million). Taxation was comparatively higher in the corresponding prior period as a result of the once-off capital gains tax incurred on the disposal of the 6,67% interest in Block III.

Exploration and evaluation assets increased by R43,8 million to R206,7 million (28 February 2013: R162,9 million) during the period under review as a result of the Group capitalising exploration expenditures amounting to R11,2 million and borrowing costs totalling R32,6 million in relation to OPL 233.

Other financial assets, under non-current assets, comprise:

- the US Dollar denominated contingent consideration for Block III of R221,9 million (28 February 2013: R181,5 million);

- the US Dollar denominated long-term loan due from EERNL of R123,5 million (28 February 2013: R93,5 million);

- the proceeds receivable on the sale of the Greenhills plant of R4,9 million (28 February 2013: R4,7 million);

- the advance payment against future services of R59,5 million (28 February 2013: R56,7 million); and

- the loan due from DIG Oil (Proprietary) Limited.

The overall increase of 20% in other financial assets, under non-current assets, is primarily a result of foreign exchange gains and interest amounting to R70,4 million on the contingent consideration and on the loan due from EERNL.

Other financial assets, under current assets, comprise:

- the US Dollar denominated short-term loan due from EERNL of R150,7 million (28 February 2013: R83,9 million); and

- the proceeds receivable on the sale of the Greenhills plant of R1,0 million (28 February 2013: R0,9 million).

The R66,9 million overall increase in other financial assets, under current assets, is primarily the result of foreign exchange gains and interest on the short-term loan due from EERNL.

Cash and cash equivalents comprise the revalued US$10 million cash collateral held as security for the performance bond on OPL 233 of R103,2 million (28 February 2013: R89,1 million) and cash deposits amounting to R0,3 million (28 February 2013: R4,9 million). The 10% increase in cash and cash equivalents is primarily attributable to foreign exchange gains resulting from the weaker Rand.

Other financial liabilities comprise the three loans owed to Gairloch totalling R235,1 million (28 February 2013: R129,0 million), operating costs owed to Nidgel United Oil Company amounting to R9,8 million (28 February 2013: R2,4 million), EERNL's 50% share of the cash collateral of R51,5 million (28 February 2013: R44,2 million) and makewhole costs owed to Yorkville under the Standby Equity Distribution Agreement totalling R0,4 million (28 February 2013: nil). The 69% increase in other financial liabilities is primarily attributable to foreign exchange losses and interest on the Gairloch loans amounting to R106,1 million, foreign exchange losses amounting to R7,3 million on EERNL's share of the cash collateral, and foreign exchange losses and additional costs relating to the amounts owed to Nigdel totaling R7,4 million.

GOING CONCERN

The Board is satisfied that the planned recapitalisation of the Company, as referred to in the General Meeting Circular to SacOil shareholders dated 7 November 2013, will ensure that the Group has adequate resources to continue operating for the next 12 months. The Group interim financial statements presented have been prepared on a going concern basis.

 
 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 
 for the six months ended 31 August 2013 
                                                           -------  -------------  --------------- 
                                                                                         Restated* 
                                                           -------  -------------  --------------- 
                                                                         Reviewed         Reviewed 
                                                           -------  -------------  --------------- 
                                                                       Six months       Six months 
                                                           -------  -------------  --------------- 
                                                                     to 31 August     to 31 August 
                                                           -------  -------------  --------------- 
                                                                             2013             2012 
                                                           -------  -------------  --------------- 
                                                             Notes              R                R 
                                                           -------  -------------  --------------- 
 
 Other income                                                          43 737 699       55 213 642 
                                                           -------  -------------  --------------- 
 Other operating costs                                               (11 501 668)     (23 198 827) 
                                                           -------  -------------  --------------- 
 Operating profit                                                4     32 236 031       32 014 815 
                                                           -------  -------------  --------------- 
 Investment income                                               5     46 927 405       27 203 337 
                                                           -------  -------------  --------------- 
 Finance costs                                                       (10 474 963)     (21 517 167) 
                                                           -------  -------------  --------------- 
 Profit before taxation                                                68 688 473       37 700 985 
                                                           -------  -------------  --------------- 
 Taxation                                                            (41 712 659)     (48 072 518) 
                                                           -------  -------------  --------------- 
 Profit/(loss) for the period from continuing operations               26 975 814     (10 371 533) 
                                                           -------  -------------  --------------- 
 Discontinued operation 
                                                           -------  -------------  --------------- 
 Loss for the period from discontinued operation                 7              -      (1 414 628) 
                                                           -------  -------------  --------------- 
 Profit/(loss) for the period                                          26 975 814     (11 786 161) 
                                                           -------  -------------  --------------- 
 Total comprehensive profit/(loss) for the period                      26 975 814     (11 786 161) 
                                                           -------  -------------  --------------- 
 Profit/(loss) attributable to: 
                                                           -------  -------------  --------------- 
 Equity holders of the parent                                          26 284 839     (12 472 750) 
                                                           -------  -------------  --------------- 
 Non-controlling interest                                                 690 975          686 589 
                                                           -------  -------------  --------------- 
                                                                       26 975 814     (11 786 161) 
                                                           -------  -------------  --------------- 
 Total comprehensive profit/(loss) attributable to: 
                                                           -------  -------------  --------------- 
 Equity holders of the parent                                          26 284 839     (12 472 750) 
                                                           -------  -------------  --------------- 
 Non-controlling interest                                                 690 975          686 589 
                                                           -------  -------------  --------------- 
                                                                       26 975 814     (11 786 161) 
                                                           -------  -------------  --------------- 
 Earnings/(loss) per share from continuing operations 
                                                           -------  -------------  --------------- 
 Basic (cents)                                                   8           2,76           (1,43) 
                                                           -------  -------------  --------------- 
 Diluted (cents)                                                 8           2,76           (1,43) 
                                                           -------  -------------  --------------- 
 Earnings/(loss) per share from continuing and 
                                                           -------  -------------  --------------- 
 discontinued operations 
                                                           -------  -------------  --------------- 
 Basic (cents)                                                   8           2,76           (1,62) 
                                                           -------  -------------  --------------- 
 Diluted (cents)                                                 8           2,76           (1,61) 
                                                           -------  -------------  --------------- 
 

* Due to a change in accounting policy, certain amounts shown here do not correspond to the 2012 interim results and reflect adjustments made as detailed in note 3.

 
 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 
 At 31 August 2013 
                                                   -------  ------------------  ---------------- 
                                                                      Reviewed           Audited 
                                                   -------  ------------------  ---------------- 
                                                                     31 August       28 February 
                                                   -------  ------------------  ---------------- 
                                                                          2013              2013 
                                                   -------  ------------------  ---------------- 
                                                     Notes                   R                 R 
                                                   -------  ------------------  ---------------- 
 ASSETS 
                                                   -------  ------------------  ---------------- 
 Non-current assets 
                                                   -------  ------------------  ---------------- 
 Property, plant and equipment                                         253 773           317 008 
                                                   -------  ------------------  ---------------- 
 Exploration and evaluation assets                       9         206 659 432       162 859 167 
                                                   -------  ------------------  ---------------- 
 Other intangible assets                                               130 949           161 760 
                                                   -------  ------------------  ---------------- 
 Other financial assets                                 10         445 099 456       371 719 195 
                                                   -------  ------------------  ---------------- 
 Total non-current assets                                          652 143 610       535 057 130 
                                                   -------  ------------------  ---------------- 
 Current assets 
                                                   -------  ------------------  ---------------- 
 Other financial assets                                 10         151 707 934        84 803 036 
                                                   -------  ------------------  ---------------- 
 Trade and other receivables                                         3 672 368         3 665 149 
                                                   -------  ------------------  ---------------- 
 Cash and cash equivalents                              11         103 580 730        94 032 416 
                                                   -------  ------------------  ---------------- 
 Total current assets                                              258 961 032       182 500 601 
                                                   -------  ------------------  ---------------- 
 Total assets                                                      911 104 642       717 557 731 
                                                   -------  ------------------  ---------------- 
 EQUITY AND LIABILITIES 
                                                   -------  ------------------  ---------------- 
 Shareholders' equity 
                                                   -------  ------------------  ---------------- 
 Stated capital                                                    534 172 123       534 172 123 
                                                   -------  ------------------  ---------------- 
 Reserves                                                            6 001 847        26 681 469 
                                                   -------  ------------------  ---------------- 
 Accumulated loss                                                (172 735 613)     (219 700 074) 
                                                   -------  ------------------  ---------------- 
 Equity attributable to equity holders of parent                   367 438 357       341 153 518 
                                                   -------  ------------------  ---------------- 
 Non-controlling interest                                           22 989 130        22 298 155 
                                                   -------  ------------------  ---------------- 
 Total shareholders' equity                                        390 427 487       363 451 673 
                                                   -------  ------------------  ---------------- 
 Liabilities 
                                                   -------  ------------------  ---------------- 
 Non-current liabilities 
                                                   -------  ------------------  ---------------- 
 Deferred tax liability                                             88 755 267        72 588 101 
                                                   -------  ------------------  ---------------- 
 Total non-current liabilities                                      88 755 267        72 588 101 
                                                   -------  ------------------  ---------------- 
 Current liabilities 
                                                   -------  ------------------  ---------------- 
 Other financial liabilities                            12         296 808 352       175 574 827 
                                                   -------  ------------------  ---------------- 
 Current tax payable                                               119 540 560        93 962 655 
                                                   -------  ------------------  ---------------- 
 Trade and other payables                                           15 572 976        11 980 475 
                                                   -------  ------------------  ---------------- 
 Total current liabilities                                         431 921 888       281 517 957 
                                                   -------  ------------------  ---------------- 
 Total liabilities                                                 520 677 155       354 106 058 
                                                   -------  ------------------  ---------------- 
 Total equity and liabilities                                      911 104 642       717 557 731 
                                                   -------  ------------------  ---------------- 
 Number of shares in issue                                         953 340 791       953 340 791 
                                                   -------  ------------------  ---------------- 
 Net asset value per share (cents)                                       40,95             38,12 
                                                   -------  ------------------  ---------------- 
 Net tangible asset value per share (cents)                              19,26             21,02 
                                                   -------  ------------------  ---------------- 
 
 
 CONSOLIDATED STATEMENT OF CASH FLOWS 
 for the six months ended 31 August 2013                                Reviewed          Reviewed 
                                                              ------------------  ---------------- 
                                                                      Six months        Six months 
                                                              ------------------  ---------------- 
                                                                    to 31 August      to 31 August 
                                                              ------------------  ---------------- 
                                                                            2013              2012 
                                                              ------------------  ---------------- 
                                                                               R                 R 
                                                              ------------------  ---------------- 
 Cash flows from operating activities 
                                                              ------------------  ---------------- 
 Cash used in operations                                             (8 739 666)     (122 076 336) 
                                                              ------------------  ---------------- 
 Interest income                                                         217 185           354 795 
                                                              ------------------  ---------------- 
 Tax paid                                                                 32 412                 - 
                                                              ------------------  ---------------- 
 Net cash used in operating activities                               (8 490 069)     (121 721 541) 
                                                              ------------------  ---------------- 
 Cash flows from investing activities 
                                                              ------------------  ---------------- 
 Purchase of exploration and evaluation assets                       (4 210 593)                 - 
                                                              ------------------  ---------------- 
 Sale of exploration and evaluation assets                                     -        75 997 000 
                                                              ------------------  ---------------- 
 Receipts from loans and receivables                                   4 303 501                 - 
                                                              ------------------  ---------------- 
 Net cash from investing activities                                       92 908        75 997 000 
                                                              ------------------  ---------------- 
 Cash flows from financing activities 
                                                              ------------------  ---------------- 
 Proceeds from other financial liabilities                             3 288 700       148 382 917 
                                                              ------------------  ---------------- 
 Dividends paid to non-controlling interest                                    -      (24 573 794) 
                                                              ------------------  ---------------- 
 Net cash from financing activities                                    3 288 700       123 809 123 
                                                              ------------------  ---------------- 
 Total movement in cash and cash equivalents for the period          (5 108 461)        78 084 582 
                                                              ------------------  ---------------- 
 Foreign exchange gains on cash and cash equivalents                  14 656 775         6 259 400 
                                                              ------------------  ---------------- 
 Cash and cash equivalents at the beginning of the period             94 032 416        10 774 298 
                                                              ------------------  ---------------- 
 Cash and cash equivalents at the end of the period                  103 580 730        95 118 280 
                                                              ------------------  ---------------- 
 
 
 CONSOLIDATED 
 STATEMENT OF 
 CHANGES 
 IN EQUITY 
                                                                                                       Total 
                                                                                                      equity 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
                                                     Share-based                    Restated*   attributable          Non- 
                                                                                                          to 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
                          Stated     Revaluation         payment         Total    Accumulated         equity   controlling      Total 
                                                                                                     holders 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
                         capital         reserve         reserve      reserves           loss         of the      interest     equity 
                                                                                                      parent         (NCI) 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
 For the six                   R               R               R             R              R              R             R          R 
 months ended 31 
 August 
 2013 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
 
 Balance at 28           534 172                          26 681        26 681       (219 700        341 153        22 298    363 451 
  February 2013              123               -             469           469           074)            518           155        673 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
 Changes in 
 equity: 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
 Profit for the                                                                                       26 284                   26 975 
  period                       -               -               -             -     26 284 839            839       690 975        814 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
 Total 
  comprehensive 
  profit for                                                                                          26 284                   26 975 
  the period                   -               -               -             -     26 284 839            839       690 975        814 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
 Share options                                           (20 679       (20 679 
  lapsed                       -               -            622)          622)     20 679 622              -                        - 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
                                                         (20 679       (20 679                        26 284                   26 975 
 Total changes                 -               -            622)          622)     46 964 461            839       690 975        814 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
 Balance at 31           534 172                                         6 001       (172 735        367 438        22 989    390 427 
  August 2013                123               -       6 001 847           847           613)            357           130        487 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
 For the six 
 months ended 31 
 August 
 2012 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
 Balance at 29           486 184           1 810          27 932        29 743       (188 602        327 325       109 943    437 269 
  February 2012              423             947             584           531           491)            463           833        296 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
 Changes in 
 equity: 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
 (Loss)/profit                                                                                       (12 472                  (11 786 
  for the period               -               -               -             -   (12 472 750)           750)       686 589       161) 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
 Total 
 comprehensive 
 profit/(loss) 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
                                                                                                     (12 472                  (11 786 
 for the period                -               -               -             -   (12 472 750)           750)       686 589       161) 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
                                                                                                      36 771                   36 771 
 Issue of shares      36 771 700               -               -             -              -            700             -        700 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
 Acquisition of 
  non-controlling                                                                                     24 693       (49 267    (24 573 
  interest                     -               -               -             -     24 693 273            273          068)       795) 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
                                                                                                                   (24 573    (24 573 
 Dividends                     -               -               -             -              -              -          794)       794) 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
                                                                                                      48 992       (73 154    (24 162 
 Total changes        36 771 700               -               -             -     12 220 523            223          273)       050) 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
 Balance at 31           522 956           1 810          27 932        29 743       (176 381        376 317        36 789    413 107 
  August 2012                123             947             584           531           968)            686           560        246 
                   -------------  --------------  --------------  ------------  -------------  -------------  ------------  --------- 
 

* Due to a change in accounting policy, certain amounts shown here do not correspond to the 2012 interim results and reflect adjustments made as detailed in note 3.

1. Basis of preparation

The consolidated condensed interim financial statements of the Group, comprised SacOil Holdings Limited and its subsidiaries (together "the Group"), for the six months ended 31 August 2013, have been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), the preparation and disclosure requirements of IAS 34: Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the Financial Pronouncements as issued by the Financial Reporting Standards Council, the Listings Requirements of the JSE Limited and in the manner required by the South African Companies Act, No. 71, 2008. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with IFRS, as issued by the IASB, have been omitted or condensed as is normal practice.

Principal accounting policies

The same accounting policies, presentation and methods of computation have been followed in these consolidated condensed interim financial statements of the Group as those applied in the preparation of the Group's annual financial statements for the year ended 28 February 2013, except for the change in accounting policy detailed in note 3. The adoption of the following standards, which became effective during the period under review, had no material impact on the results, except for the disclosures required by these standards:

- IFRS 10: Consolidated Financial Statements;

- IFRS 11: Joint Arrangements;

- IFRS 12: Disclosure if Interests in Other Entities; and

- IFRS 13: Fair Value Measurement.

All of the Group's financial instruments are held at amortised cost. The fair values thereof would be influenced by numerous factors the most significant of which include credit risk, other forms of non-performance risk (for financial liabilities), and interest rate risk. Management is of the opinion that, taking into account the value of collateral, as well as payment options, the fair value of the financial instruments is expected to approximate the carrying value thereof.

The consolidated condensed interim financial statements of the Group should be read in conjunction with the Group's consolidated annual financial statements for the year ended 28 February 2013.

Notes to oil and gas disclosure

In accordance with AIM Guidelines, Bradley Cerff is the qualified person that has reviewed the technical information contained in this news release. Bradley has over 16 years' experience in the oil and gas industry with a Masters Degree in Science and Business Administration focused on Foreign Direct Investment in the African oil and gas industry. He is also a member of the Society of Petroleum Engineers.

2. Auditors' review report

The consolidated condensed interim financial statements of the Group for the six months ended 31 August 2013 have been reviewed by Ernst & Young Inc. A copy of the auditors' unqualified review opinion, which includes an emphasis of matter paragraph for the going concern matters noted in note 16, is available for inspection at the registered office of the Company.

These consolidated condensed interim financial statements have been prepared under the supervision of the interim Finance Director, Tariro Mudzimuirema (Chartered Accountant).

3. Change in accounting policy

During the period ended 31 August 2012, the Group capitalised costs paid by Total on behalf of Semliki Energy SPRL, 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 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 to note 13). As a result of the change in accounting policy, the following adjustments were made to the Group consolidated condensed interim financial statements:

 
                                                                 Adjustments 
 As of and for the period ended 31 August 2012                             R 
                                                 --------------------------- 
 
 Decrease in exploration and evaluation assets                  (20 638 362) 
                                                 --------------------------- 
 Decrease in long-term borrowings                               (20 638 362) 
                                                 --------------------------- 
 Decrease in deferred tax liability                              (3 320 451) 
                                                 --------------------------- 
 Increase in non-controlling interest                              3 146 188 
                                                 --------------------------- 
 Decrease in taxation                                            (3 320 451) 
                                                 --------------------------- 
 Decrease in loss for the period                                 (3 320 451) 
                                                 --------------------------- 
 Decrease in loss per share (cents)                                   (0,02) 
                                                 --------------------------- 
 Decrease in diluted loss per share (cents)                           (0,02) 
                                                 --------------------------- 
 
 
                                                             31 August           31 August 
                                                                  2013                2012 
                                                       ---------------  ------------------ 
 4. Operating profit                                                 R                   R 
                                                       ---------------  ------------------ 
 
 Profit on sale of exploration and evaluation assets                 -          40 926 877 
                                                       ---------------  ------------------ 
 Loss on re-measurement of financial assets                          -        (31 621 739) 
                                                       ---------------  ------------------ 
 Foreign exchange gains                                     43 737 699          38 945 883 
                                                       ---------------  ------------------ 
 Break fee received                                                  -           6 962 621 
                                                       ---------------  ------------------ 
 Impairment of property, plant and equipment                         -         (1 456 572) 
                                                       ---------------  ------------------ 
 Corporate costs                                           (1 496 983)         (3 012 342) 
                                                       ---------------  ------------------ 
 Auditors' remuneration                                      (140 926)         (2 315 189) 
                                                       ---------------  ------------------ 
 Employee benefit expense                                  (5 171 965)         (6 251 827) 
                                                       ---------------  ------------------ 
 Accounting fees                                              (20 000)           (388 375) 
                                                       ---------------  ------------------ 
 Consulting fees                                             (759 620)         (2 109 224) 
                                                       ---------------  ------------------ 
 Legal fees                                                  (947 065)         (2 373 166) 
                                                       ---------------  ------------------ 
 Travel and accommodation                                    (691 390)         (1 793 602) 
                                                       ---------------  ------------------ 
 Depreciation                                                 (94 046)           (373 271) 
                                                       ---------------  ------------------ 
  Property, plant and equipment                               (63 235)           (373 271) 
                                                       ---------------  ------------------ 
  Other intangible assets                                     (30 811)                   - 
                                                       ---------------  ------------------ 
 Rentals - premises                                          (561 303)           (492 313) 
                                                       ---------------  ------------------ 
 Brokers' fees                                               (744 998)           (838 488) 
                                                       ---------------  ------------------ 
 
 
                                                    31 August              31 August 
                                                         2013                   2012 
                                                 ------------  --------------------- 
 5. Investment income 
                                                 ------------  --------------------- 
 Interest receivable - loans                       34 225 495             18 904 637 
                                                 ------------  --------------------- 
 Interest received - cash and cash equivalents        217 185                354 795 
                                                 ------------  --------------------- 
 Imputed interest on financial assets              12 484 725              7 943 905 
                                                 ------------  --------------------- 
                                                   46 927 405             27 203 337 
                                                 ------------  --------------------- 
 

6. Segmental reporting

The Group operates in five 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, Botswana and Malawi. Operations in South Africa relate to the general management, financing and administration of the Group.

 
 For the six 
 months ended 
 31 August 2013 
                                                                                              South 
                 ---------------  -----------------  -----------  -------------  ------------------  ----------------- 
                         Nigeria                DRC       Malawi       Botswana              Africa       Consolidated 
                 ---------------  -----------------  -----------  -------------  ------------------  ----------------- 
                               R                  R            R              R                   R                  R 
                 ---------------  -----------------  -----------  -------------  ------------------  ----------------- 
 
 Other income                  -         27 078 912            -              -          16 658 787         43 737 699 
                 ---------------  -----------------  -----------  -------------  ------------------  ----------------- 
 Investment 
  income                 211 077          9 693 141            -              -          37 023 187         46 927 405 
                 ---------------  -----------------  -----------  -------------  ------------------  ----------------- 
                                                                                            (10 474 
 Finance costs                 -                  -            -              -                963)       (10 474 963) 
                 ---------------  -----------------  -----------  -------------  ------------------  ----------------- 
 Other 
  operating                                                                                 (11 475 
  expenses              (17 793)                  -            -        (8 241)                634)       (11 501 668) 
                 ---------------  -----------------  -----------  -------------  ------------------  ----------------- 
                                            (34 612 
 Taxation                 32 413               756)            -              -         (7 132 316)       (41 712 659) 
                 ---------------  -----------------  -----------  -------------  ------------------  ----------------- 
 Profit/(loss) 
  for the 
  period                 225 697          2 159 297            -        (8 241)          24 599 061         26 975 814 
                 ---------------  -----------------  -----------  -------------  ------------------  ----------------- 
 Segment assets                             324 724                                         195 125 
  - non-current      131 009 869                643      896 740        386 548                 810        652 143 610 
                 ---------------  -----------------  -----------  -------------  ------------------  ----------------- 
 Segment assets                                                                             155 657 
  - current          103 235 757             67 931            -              -                 344        258 961 032 
                 ---------------  -----------------  -----------  -------------  ------------------  ----------------- 
 Segment 
  liabilities -                             (88 755 
  non-current                  -               267)            -              -                   -       (88 755 267) 
                 ---------------  -----------------  -----------  -------------  ------------------  ----------------- 
 Segment 
  liabilities -                             (94 037                                        (286 376 
  current           (51 508 000)               825)            -              -                063)      (431 921 888) 
                 ---------------  -----------------  -----------  -------------  ------------------  ----------------- 
 
 
 
 For the six months 
 ended 31 August 
 2012 
                                                Restated*                                      South 
                     -----------------  -----------------  ----------  ----------  -----------------  ---------------- 
                               Nigeria                DRC      Malawi    Botswana             Africa      Consolidated 
                     -----------------  -----------------  ----------  ----------  -----------------  ---------------- 
                                     R                  R           R           R                  R                 R 
                     -----------------  -----------------  ----------  ----------  -----------------  ---------------- 
 
 Other income                        -         33 615 107           -           -         21 598 535        55 213 642 
                     -----------------  -----------------  ----------  ----------  -----------------  ---------------- 
 Investment income             294 337          7 943 905           -           -         18 965 095        27 203 337 
                     -----------------  -----------------  ----------  ----------  -----------------  ---------------- 
 Finance costs            (21 194 404)                  -           -           -          (322 763)      (21 517 167) 
                     -----------------  -----------------  ----------  ----------  -----------------  ---------------- 
 Other operating                                                                             (21 830 
  expenses                 (1 368 139)                  -           -           -               688)      (23 198 827) 
                     -----------------  -----------------  ----------  ----------  -----------------  ---------------- 
                                                  (43 157 
 Taxation                            -               759)           -           -        (4 914 759)      (48 072 518) 
                     -----------------  -----------------  ----------  ----------  -----------------  ---------------- 
 (Loss)/profit for 
 the period from 
                     -----------------  -----------------  ----------  ----------  -----------------  ---------------- 
 continuing 
  operations              (22 268 206)        (1 598 747)           -           -         13 495 420      (10 371 533) 
                     -----------------  -----------------  ----------  ----------  -----------------  ---------------- 
 Loss from 
 discontinued 
 operation 
                     -----------------  -----------------  ----------  ----------  -----------------  ---------------- 
 (note 7)                            -                  -           -           -        (1 414 628)       (1 414 628) 
                     -----------------  -----------------  ----------  ----------  -----------------  ---------------- 
 (Loss)/profit for 
  the period              (22 268 206)        (1 598 747)           -           -         12 080 792      (11 786 161) 
                     -----------------  -----------------  ----------  ----------  -----------------  ---------------- 
 Segment assets -                                 348 420 
  non-current               44 953 555                250           -           -         81 384 007       474 757 812 
                     -----------------  -----------------  ----------  ----------  -----------------  ---------------- 
 Segment assets -                                                                            175 104 
  current                   84 638 853          8 699 856           -           -                978       268 443 687 
                     -----------------  -----------------  ----------  ----------  -----------------  ---------------- 
 Segment 
  liabilities -                                  (103 166 
  non-current                        -               818)           -           -                  -     (103 166 818) 
                     -----------------  -----------------  ----------  ----------  -----------------  ---------------- 
 Segment 
  liabilities -                                   (55 542                                   (134 214 
  current                 (42 166 500)               551)           -           -               940)     (231 923 991) 
                     -----------------  -----------------  ----------  ----------  -----------------  ---------------- 
 

* Due to a change in accounting policy, certain amounts shown here do not correspond to the 2012 interim results and reflect adjustments made as detailed in note 3.

7. Discontinued operation

The Board committed to a plan to sell the Greenhills manganese processing plant ("the Plant") early in 2012 following a strategic decision to focus the Group's efforts and resources on the core oil and gas business. The Plant was therefore classified as held for sale at 31 August 2012. The Plant was subsequently sold on 1 October 2012 and met the criteria of a discontinued operation in terms of IFRS 5.32 at 28 February 2013.

 
                                                              31 August 2012 
 Results of discontinued operation                                         R 
                                                         ------------------- 
 
 Revenue                                                           9 113 711 
                                                         ------------------- 
 Cost of sales                                                   (7 328 296) 
                                                         ------------------- 
 Gross profit                                                      1 785 415 
                                                         ------------------- 
 Operating expenses                                              (3 200 043) 
                                                         ------------------- 
 Loss for the period                                             (1 414 628) 
                                                         ------------------- 
 Basic loss per share (cents)                                         (0,18) 
                                                         ------------------- 
 Diluted loss per share (cents)                                       (0,18) 
                                                         ------------------- 
 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 
                                                         ------------------- 
 

At 31 August 2013 the present value of these future cash receipts is R5 925 154 (28 February 2013: R5 647 200) and is included under other financial assets.

 
 8. Earnings/(loss) per share                                                    31 August 2013       31 August 2012 
 From continuing and discontinued operations 
                                                                              -----------------  ------------------- 
 Basic (cents)                                                                             2,76               (1,62) 
                                                                              -----------------  ------------------- 
 Diluted (cents)                                                                           2,76               (1,61) 
                                                                              -----------------  ------------------- 
 From discontinued operation 
                                                                              -----------------  ------------------- 
 Basic (cents)                                                                                -               (0,18) 
                                                                              -----------------  ------------------- 
 Diluted (cents)                                                                              -               (0,18) 
                                                                              -----------------  ------------------- 
 From continuing operations 
                                                                              -----------------  ------------------- 
 Basic (cents)                                                                             2,76               (1,43) 
                                                                              -----------------  ------------------- 
 Diluted (cents)                                                                           2,76               (1,43) 
                                                                              -----------------  ------------------- 
 Profit/(loss) for the period used in the calculation of the basic and                        R                    R 
  diluted 
                                                                              -----------------  ------------------- 
 earnings/(loss) per share from continuing and discontinued operations               26 284 839         (12 472 750) 
                                                                              -----------------  ------------------- 
 Loss for the period from discontinued operations                                             -            1 414 628 
                                                                              -----------------  ------------------- 
 Profit/(loss) used in the calculation of basic and diluted earnings/(loss) 
  per share 
                                                                              -----------------  ------------------- 
 from continuing operations                                                          26 284 839         (11 058 122) 
                                                                              -----------------  ------------------- 
 Weighted average number of ordinary shares used in the calculation of 
  basic 
                                                                              -----------------  ------------------- 
 earnings/(loss) per share                                                          953 340 791          771 061 757 
                                                                              -----------------  ------------------- 
 Add: Dilutive share options                                                                  -            1 350 251 
                                                                              -----------------  ------------------- 
 Weighted average number of ordinary shares used in the calculation of 
                                                                              -----------------  ------------------- 
 diluted earnings/(loss) per share                                                  953 340 791          772 412 008 
                                                                              -----------------  ------------------- 
 Headline earnings/(loss) per share 
                                                                              -----------------  ------------------- 
 Basic (cents)                                                                             2,76               (2,60) 
                                                                              -----------------  ------------------- 
 Diluted (cents)                                                                           2,76               (2,60) 
                                                                              -----------------  ------------------- 
 Reconciliation of headline earnings/(loss)                                                   R                    R 
                                                                              -----------------  ------------------- 
 Profit/(loss) for the period from continuing and discontinued operations            26 284 839         (12 472 750) 
                                                                              -----------------  ------------------- 
 Adjust for: 
                                                                              -----------------  ------------------- 
 Impairment of property, plant and equipment                                                  -            1 456 572 
                                                                              -----------------  ------------------- 
 Profit on sale of exploration and evaluation assets attributable to 
                                                                              -----------------  ------------------- 
 equity holders of the parent                                                                 -          (9 060 997) 
                                                                              -----------------  ------------------- 
 Headline earnings/(loss) for the period                                             26 284 839         (20 077 175) 
                                                                              -----------------  ------------------- 
 

9. Exploration and evaluation assets

For the six months ended 31 August 2013

 
                                                                    Restated* 
                        At                                                 At                              At                            At 
            --------------  --------------  ---------------  ----------------  --------------  --------------  ------------  -------------- 
                  February         Adjust-                          31 August                        February                        August 
            --------------  --------------  ---------------  ----------------  --------------  --------------  ------------  -------------- 
                      2012           ments        Disposals              2012       Additions            2013     Additions            2013 
            --------------  --------------  ---------------  ----------------  --------------  --------------  ------------  -------------- 
                         R               R                R                 R               R               R             R               R 
            --------------  --------------  ---------------  ----------------  --------------  --------------  ------------  -------------- 
 
 Block III 
  DRC          101 381 633               -     (27 015 358)        74 366 275               -      74 366 275             -      74 366 275 
            --------------  --------------  ---------------  ----------------  --------------  --------------  ------------  -------------- 
 OPL 281                            (3 639 
  Nigeria       47 712 172            250)                -        44 072 922               -      44 072 922             -      44 072 922 
            --------------  --------------  ---------------  ----------------  --------------  --------------  ------------  -------------- 
 OPL 233                            (3 081                                             42 642                        43 413 
  Nigeria        3 962 528            896)                -           880 632             598      43 523 230           717      86 936 947 
            --------------  --------------  ---------------  ----------------  --------------  --------------  ------------  -------------- 
 Botswana                -               -                -                 -               -               -       386 548         386 548 
            --------------  --------------  ---------------  ----------------  --------------  --------------  ------------  -------------- 
 Malawi                  -               -                -                 -         896 740         896 740             -         896 740 
            --------------  --------------  ---------------  ----------------  --------------  --------------  ------------  -------------- 
                                    (6 721                                             43 539                        43 800         206 659 
               153 056 333            146)     (27 015 358)       119 319 829             338     162 859 167           265             432 
            --------------  --------------  ---------------  ----------------  --------------  --------------  ------------  -------------- 
 

* Due to a change in accounting policy, certain amounts shown here do not correspond to the 2012 interim results and reflect adjustments made as detailed in note 3.

OPL 233

During the period under review the Group capitalised borrowing costs totalling R32,6 million (2012: nil) and incurred further exploration expenditures totalling R10,8 million (2012: nil).

Botswana

During the period under review the Group acquired three exploration licences in Botswana for R0,4 million.

Block III

During the corresponding prior period, Semliki SPRL, a subsidiary of SacOil, sold to Total RDC a 6,67% interest in Block III resulting in the derecognition of R27,0 million of exploration and evaluation assets.

Adjustments

Adjustments to the OPL 281 and OPL 233 assets in the corresponding prior period relate to promoter fees. These fees will now be recovered from EERNL and are included in amounts due from EERNL under current other financial assets (note 10).

 
                                                                         31 August          28 February 
                                                                              2013                 2013 
                                                          ------------------------  ------------------- 
 10. Other financial assets                                                      R                    R 
                                                          ------------------------  ------------------- 
 Non-current: 
                                                          ------------------------  ------------------- 
 Contingent consideration                                              221 888 167          181 470 254 
                                                          ------------------------  ------------------- 
 Deferred consideration on disposal of Greenhills Plant                  4 933 216            4 701 795 
                                                          ------------------------  ------------------- 
 Loan due from DIG                                                      35 314 943           35 315 725 
                                                          ------------------------  ------------------- 
 Advance payment against future services                                59 508 337           56 716 754 
                                                          ------------------------  ------------------- 
 Loan due from EER                                                     123 454 793           93 514 667 
                                                          ------------------------  ------------------- 
                                                                       445 099 456          371 719 195 
                                                          ------------------------  ------------------- 
 Current: 
                                                          ------------------------  ------------------- 
 Loan due from EER                                                     150 715 996           83 857 631 
                                                          ------------------------  ------------------- 
 Deferred consideration on disposal of Greenhills Plant                    991 938              945 405 
                                                          ------------------------  ------------------- 
                                                                       151 707 934           84 803 036 
                                                          ------------------------  ------------------- 
 Total                                                                 596 807 390          456 522 231 
                                                          ------------------------  ------------------- 
 
 11. Cash and cash equivalents 
                                                          ------------------------  ------------------- 
 Cash and cash equivalents comprise: 
                                                          ------------------------  ------------------- 
 Bank balances                                                             344 973            4 677 192 
                                                          ------------------------  ------------------- 
 Short-term deposits                                                             -              215 368 
                                                          ------------------------  ------------------- 
                                                                           344 973            4 892 560 
                                                          ------------------------  ------------------- 
 Restricted cash                                                       103 235 757           89 139 856 
                                                          ------------------------  ------------------- 
                                                                       103 580 730           94 032 416 
                                                          ------------------------  ------------------- 
 

Restricted cash comprises the cash collateral of US$10 million (28 February 2013: US$10 million) paid to Ecobank to secure the performance bond on OPL 233. The cash is held in the bank account of SacOil's wholly owned subsidiary, SacOil 233 Nigeria Limited. The remainder of the performance bond is secured by a first ranking legal charge over SacOil's investment in SacOil 233 Nigeria Limited.

 
 12. Other financial liabilities 
 Gairloch Limited                                                                  235 084 090          128 978 015 
                                                                         ---------------------  ------------------- 
 Energy Equity Resources (Norway) Limited                                           51 508 000           44 199 000 
                                                                         ---------------------  ------------------- 
 Yorkville Advisors LLP                                                                429 742                    - 
                                                                         ---------------------  ------------------- 
 Nigdel United Oil Company Limited                                                   9 786 520            2 397 812 
                                                                         ---------------------  ------------------- 
                                                                                   296 808 352          175 574 827 
                                                                         ---------------------  ------------------- 
 
                                                                                     31 August            31 August 
                                                                         ---------------------  ------------------- 
 13. Contingent assets and liabilities                                                    2013                 2012 
                                                                         ---------------------  ------------------- 
 Commitments                                                                                 R                    R 
                                                                         ---------------------  ------------------- 
 
 Exploration and evaluation assets - work programme commitments                    413 938 891                    - 
                                                                         ---------------------  ------------------- 
 Work programme commitments will be funded from the proceeds 
                                                                         ---------------------  ------------------- 
 of the rights offer. Details of the rights offer are provided in note 
  15. 
                                                                         ---------------------  ------------------- 
                                                                                     31 August          28 February 
                                                                         ---------------------  ------------------- 
                                                                                          2013                 2013 
                                                                         ---------------------  ------------------- 
 Contingent liabilities                                                                      R                    R 
                                                                         ---------------------  ------------------- 
 Performance bond on OPL 233 issued by Ecobank in respect of 
                                                                         ---------------------  ------------------- 
 OPL 233 exploration activities                                                    154 524 000          132 597 000 
                                                                         ---------------------  ------------------- 
 Cost carry arrangement with Total                                                  32 861 257           20 411 689 
                                                                         ---------------------  ------------------- 
 Farm-in and transaction fees on receipt of title to OPL 233                       134 950 960          115 801 380 
                                                                         ---------------------  ------------------- 
 Farm-in and transaction fees on receipt of title to OPL 281                       149 373 200          128 177 100 
                                                                         ---------------------  ------------------- 
                                                                                   471 709 417          396 987 169 
                                                                         ---------------------  ------------------- 
 

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 R103,2 million ($10 million) (28 February 2013: R89,1 million (US$10 million)) cash collateral as disclosed in note 11. 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. At 31 August 2013, Total had incurred R32,9 million (28 February 2013: R20,4 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 (refer to note 3).

Farm-in and transaction fees

OPL 233

A farm-in fee of R109,2 million (28 February 2013: R93,7 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 R25,8 million (28 February 2013: R22,1 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 R123,6 million (28 February 2013: R106,1 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 R25,8 million (28 February 2013: R22,1 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.

14. Dividends

The Board has resolved not to declare any dividends to shareholders for the period under review.

15. Subsequent events

Equity settlement of the Gairloch Loans

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 the terms of this agreement debt totalling circa 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. For details relating to the equity settlement of the Gairloch Loans, shareholders are referred to the circular distributed to shareholders dated 7 November 2013. This circular is also available on the SacOil website:

www.sacoilholdings.com.

Rights Offer

As previously announced on 12 September 2013, 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 ("Right Offer 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 Government Employees Pension Fund ("GEPF"), managed by the Public Investment Corporation (SOC) Limited ("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. For details relating to Rights Offer, shareholders are referred to the circular distributed to shareholders dated 7 November 2013. This circular is also available on the SacOil website:

www.sacoilholdings.com.

Bridge Loan Facility

On 27 September 2013, SacOil obtained a temporary overdraft facility of R15 million from Nedbank subject to the fulfilment of certain conditions precedent, some of which have already been met. The outstanding conditions precedent will be fulfilled on 6 December 2013, subject to SacOil shareholders approving the resolutions to give effect to the Whitewash Resolution, the Specific Issue and Rights Offer, as defined in the circular posted to shareholders on 7 November 2013.

Loan advanced to EERNL

The short-term loan due from EERNL, as disclosed in note 10, became due and payable on 31 May 2013. As at the date of the release of the interim 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 provided exceeds the carrying value of the loan. The loan is secured by EERNL's shares in its subsidiary EER233 Nigeria which holds a 20% interest in OPL 233, subject to government approval.

16. Going concern

As indicated in the General Meeting Circular to SacOil shareholders dated 7 November 2013 ("Circular"), the Board plans to recapitalise the Company by way of a renounceable rights offer of 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 30 November 2014 include the following assumptions some of which are subject to material uncertainties as discussed in further detail below:

- Cash inflow from the loan receivable from EERNL of R161,2 million (US$16,1 million);

- Cash inflow arising from rights issue proceeds amounting to R570,0 million;

- Cash outflows from farm-in fees payable to Nigdel and Transcorp totalling R226,0 million (US$22,6 million) the timing of which is uncertain; and

- Settlement of the full debt payable to Gairloch 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

The resolutions required to give effect to the Rights Offer and Specific Issue are detailed in the Circular in the Notice of General Meeting. It is imperative that SacOil obtains shareholder approval for both the Rights Offer and Specific Issue. SacOil has prepared its working capital forecast on the basis that the Specific Issue and Rights Offer are approved by shareholders, and that the Rights Offer is fully subscribed for.

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 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. As detailed in the Circular in Annexure 6, the Company has received irrevocable undertakings in favour of the resolutions required to give effect to the Rights Offer and Specific Issue, from shareholders with a 23,9% total equity interest in SacOil. Subsequent to the issue of the Circular, SacOil received a further irrevocable undertaking from the PIC, representing the GEPF a 16,6% shareholder in SacOil, to vote in favour of the resolutions detailed in the Circular, excluding the Whitewash Resolution, as referred to therein. The less certain element to this is the extent to which shareholders will follow their rights giving rise to the raising of the full R570 million 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.

Loan receivable from EERNL

EERNL has not met its repayment obligations on the short-term loan repayment, which became due and payable on 31 May 2013. To date, EERNL has paid US$1 million of the US$12,5 million owed to SacOil at 31 May 2013 (31 August 2013: US$14,6 million). 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 OPL 233 and OPL 281. These fees are payable within 30 days of the receipt of title. As at the date of the release of the interim results, the Company has been unable to determine the likely timing of the receipt of title to both OPL 233 and OPL 281 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.

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 Board is however confident that the Specific Issue and the Rights Offer 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 has decided to prepare the financial statements on a going concern basis. In the interim SacOil has secured an interim funding facility, as detailed under note 15, which will enable it

to pay for its daily operational costs and work programme commitments on OPL 233.

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

22 November 2013

CORPORATE INFORMATION

Registered office and physical address:

2nd Floor, The Gabba, Dimension Data Campus, 57 Sloane Street, 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**

Mzuvukile Maqetuka**, Stephanus Muller**, Vusi Pikoli**, Ignatius Sehoole*, Gontse Moseneke*

(*) Non-executive Director; (**) Independent Non-executive Directors

 
 Advisers: 
 Company Secretary                              Fusion Corporate Secretarial Services (Proprietary) Limited 
                                      --------------------------------------------------------------------- 
 Transfer Secretaries South Africa              Link Market Services South Africa (Proprietary) Limited 
                                      --------------------------------------------------------------------- 
 Transfer Secretaries United Kingdom            Computershare Investor Services (Jersey) Limited 
                                      --------------------------------------------------------------------- 
 Corporate Legal Advisers                       Norton Rose Fullbright South Africa 
                                      --------------------------------------------------------------------- 
 Auditors                                       Ernst & Young Inc. 
                                      --------------------------------------------------------------------- 
 JSE Sponsor                                    Nedbank Capital 
                                      --------------------------------------------------------------------- 
 AIM Nominated Adviser                          finnCap Limited 
                                      --------------------------------------------------------------------- 
 

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR LIFLALTLFFIV

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