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
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Transfer Secretaries South Africa Link Market Services South Africa (Proprietary) Limited
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Transfer Secretaries United Kingdom Computershare Investor Services (Jersey) Limited
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Corporate Legal Advisers Norton Rose Fullbright South Africa
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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
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