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SCL - SacOil - Reviewed Provisional Results and Further Cautionary Announcement

Release Date: 21/05/2010 15:40:08      Code(s): SCL
SCL - SacOil - Reviewed Provisional Results and Further Cautionary Announcement 
for the year ended 28 February 2010                                             
SacOil Holdings Limited                                                         
(Formerly SA Mineral Resources Corporation Limited)                             
(Incorporated in the Republic of South Africa)                                  
(Registration number 1993/000460/06)                                            
JSE code: SCL                                                                   
ISIN: ZAE000127460                                                              
("SacOil" or "the company" or "the group")                                      
Reviewed Provisional Results and Further Cautionary Announcement for the year   
ended 28 February 2010                                                          
Consolidated Statement of Comprehensive Income                                  
                                               Reviewed            Audited      
                                                  Group              Group      
                                          Twelve months       Eight months      
to 28 February     to 28 February      
                                                   2010               2009      
                                                  R`000              R`000      
Revenue                                           31 724             20 802     
Cost of sales                                   (20 210)           (16 395)     
Gross profit                                      11 514              4 407     
Operating costs                                 (10 144)            (7 850)     
Profit/(loss) from operations                      1 370            (3 443)     
Share-based payment expense                            -           (23 753)     
Fair value gain on revaluation of property,                                     
plant and equipment                                3 195                  -     
Impairment loss                                  (3 016)              (383)     
Investment income                                    731                557     
Interest paid                                       (13)               (93)     
Profit/(loss) before tax                           2 267           (27 115)     
Taxation                                               -                  -     
Profit/(loss) for the year                         2 267           (27 115)     
Weighted average number of shares (`000)         313 292            313 292     
Earnings/(loss) per share (cents)                   0.72             (8.65)     
Diluted earnings/(loss) per share (cents)           0.72             (8.64)     
Headline earnings/(loss) per share (cents)          0.95             (8.65)     
Diluted headline earnings/(loss) per share (cents)  0.95             (8.64)     
Reconciliation of headline                                                      
Profit/(loss) attributable to shareholders         2 267           (27 115)     
Impairment loss on revaluation of                                               
financial assets held for sale                     3 016                  -     
Fair value gain on revaluation of                                               
property, plant and equipment - net of tax       (2 301)                  -     
Headline earnings/(loss)                           2 982           (27 115)     
Headline earnings/(loss) per share (cents)          0.95             (8.65)     
Diluted headline earnings/(loss) per                                            
share (cents)                                       0.95             (8.64)     
Consolidated Statement of Financial Position                                    
                                               28 February     28 February      
                                                      2010            2009      
R`000           R`000      
Non-current assets                                    8 535           7 709     
Property, plant and equipment                         7 640           4 838     
Deferred tax asset                                      895               -     
Loans receivable                                          -           2 871     
Current assets                                       40 942          40 369     
Loans receivable                                     27 867          27 867     
Inventory                                             2 305           2 048     
Trade accounts receivable                             3 558           2 628     
Sundry accounts receivable                              214             970     
Cash and cash equivalents                             6 998           6 856     
Total assets                                         49 477          48 078     
EQUITY AND LIABILITIES                                                          
Equity attributable to equity holders                 43332          41 065     
Stated capital                                        83726          83 726     
Share-based payment reserve                           23754          23 754     
Revaluation reserves                                   2301               -     
Accumulated loss                                   (66 449)        (66 415)     
Non-current liabilities                                 934             706     
Liability under instalment sale agreement               108               -     
Provision for environmental rehabilitation              826             706     
Current liabilities                                   5 211           6 308     
Trade accounts payable                                1 330           3 537     
Liability under instalment sale agreement               138                     
Deferred tax liability                                  895               -     
Loans payable                                         2 503           2 503     
Sundry accounts payable                                 345             268     
Total equity and liabilities                         49 477          48 078     
Number of shares in issue (`000)                    313 292         313 292     
Net asset value per share (cents)                     13.83           13.11     
Consolidated Statement of Cash Flows                                            
Twelve months       Eight months      
                                         to 28 February     to 28 February      
                                                   2010               2009      
                                                  R`000              R`000      
Cash generated from/(utilised in) operations       2 146            (2 950)     
Cash (utilised in)/generated from                                               
movements in working capital                     (2 421)                796     
Increase in inventories                            (257)              (594)     
(Increase)/decrease in accounts receivable         (172)              2 053     
Decrease in accounts payable                     (1 992)              (663)     
Cash utilised in operating activities              (275)            (2 154)     
Investment income                                    731                493     
Interest paid                                       (13)               (93)     
Net cash flows from operating activities             443            (1 754)     
Net cash flows from investing activities           (263)               (19)     
Net cash flows from financing activities            (38)            (3 190)     
Net (increase)/decrease in cash                                                 
and cash equivalents                                 142            (4 963)     
Cash and cash equivalents                                                       
at the beginning of the period                     6 856             11 819     
Cash and cash equivalents                                                       
at the end of the period                           6 998              6 856     
Consolidated Statement of Changes in Equity                                     
                                          Twelve months       Eight months      
to 28 February     to 28 February      
                                                   2010               2009      
                                                  R`000              R`000      
Stated capital                                                                  
Opening balance                                   83 726             83 726     
Closing balance                                   83 726             83 726     
Accumulated loss                                                                
Opening balance                                 (66 415)           (39 300)     
Total comprehensive profit/(loss) for the                                       
year                                               2 267           (27 115)     
Transfer to revaluation reserves - net of                                       
tax                                              (2 301)                  -     
Closing balance                                 (66 449)           (66 415)     
Revaluation reserves                                                            
Opening balance                                        -                  -     
Revaluation reserves - net of deferred tax         2 301                  -     
Closing balance                                    2 301                  -     
Share-based payment reserve                                                     
Opening balance                                   23 754                  -     
Share-based payment expense                            -             23 754     
Closing balance                                   23 754             23 754     
1. Basis of preparation                                                         
The annual financial statements of the group for the year ended 28 February     
2010 have been prepared in accordance with the group`s accounting policies,     
which comply with International Financial Reporting Standards, IAS 34, as well  
as the AC 500 standards as issued by the Accounting Practices Board or its      
successor, the Listings Requirements of the JSE Limited and the Companies Act   
of South Africa and are consistent with those of the previous period, except    
for a change in the subsequent measurement model of property, plant and         
equipment from a cost model to a revaluation model. These financial statements  
have been prepared on a going concern basis.                                    
All monetary information and figures presented in these financial statements    
are stated in thousands of Rand (R`000), unless otherwise indicated.            
2. Auditors` report                                                             
The provisional financial statements have been reviewed by the company`s        
auditors, Moore Stephens MWM. Their unmodified review opinion is available for  
inspection at the company`s registered office.                                  
3. Change of year-end                                                           
Further to a change in the company`s year-end for the 2009 financial year,      
readers are made aware that the comparative financial information in these      
financial statements represents an eight-month period to 28 February 2009,      
hence affecting the year-on-year comparability of the financial information.    
4. Comments on the results                                                      
Earnings of 0.72 (2009: loss of 8.65) cents, diluted earnings of 0.72 (2009:    
loss of 8.64) cents, headline earnings of 0.95 (2009: loss of 8.65) cents,      
diluted headline earnings of 0.95 (2009: loss of 8.64) cents and a net asset    
value of 13.83 (2009: 13.11) cents per share were reported. Included in         
earnings are an impairment of R3.0 million of the seed funding granted to       
Pioneer Coal Limited ("Pioneer Coal") and a revaluation surplus on the          
revaluation of property, plant and equipment in an amount of R3.2 million.      
A deferred tax liability was recognised on the revaluation surplus in an amount 
of R0.9 million.                                                                
The Greenhills plant increased gross profit by 161%. This is mainly             
attributable to the company`s initiative to improve the overall management of   
the plant. Tighter financial controls, accurate stock recording and stock       
movement control, an improved ordering system and regular reviews of the cost   
of raw materials are all contributing factors to the improved results.          
The company was able to minimise the lag effect of cost increases to customers  
through regular reviews of selling prices thus ensuring that gross margins are  
increased. As a result of improving margins, the Greenhills plant is now        
trading profitably as is the company after the deduction of head office and     
corporate expenses.                                                             
Pioneer Coal Limited, a newly formed company, issued 313 291 612 ordinary       
shares to SacOil at a price of R0.001 per share during December 2008. During    
the period under review and in compliance with the revised IFRS 3,              
pre-acquisition and start-up costs in an amount of R3.0 million, which had been 
capitalised previously, have now been impaired through the statement of         
comprehensive income for Pioneer Coal.                                          
Shareholders are also advised that the agreements by Pioneer Coal to acquire    
all the shares and loan accounts in Mudengu Resources Holdings (Proprietary)    
Limited, Bono Lithihi Investments Group (Proprietary) Limited and Solar         
Spectrum Trading 365 (Proprietary) Limited have lapsed and are of no further    
interest to Pioneer Coal.                                                       
The directors of Pioneer Coal continue to evaluate numerous value-adding coal   
acquisitions that will enhance shareholder value for SacOil shareholders and    
will inform the shareholders in due course of any new transactions. Once        
Pioneer Coal makes a suitable acquisition, such shares will be distributed to   
SacOil`s shareholders by way of an unbundling. It remains the intention of the  
SacOil board of directors to separate its coal assets from its oil and gas      
assets. This will enable SacOil shareholders to attribute separate values to    
their respective interests.                                                     
5. Dividend                                                                     
The board has resolved not to declare any dividend to shareholders for the      
period under review.                                                            
6. Investment in South Africa Congo Oil Company (Proprietary) Limited           
Further to previous announcements, the last of which was published on 11 March  
2010, regarding the company`s investment in South Africa Congo Oil Company      
(Pty) Limited ("the Transaction"), the date for fulfilment of the conditions    
precedent to the agreements referred to therein has been extended to 31 May     
2010. The last condition outstanding is the receipt of a Presidential Decree    
from the President of the Democratic Republic of the Congo. The directors       
continue to pursue the Decree and follow up on a regular basis with the         
Presidential Office. The directors are currently considering a potential        
restructure of the Transaction and shareholders will be advised of the same in  
the near future.                                                                
7. Post-balance sheet events                                                    
Investment in the exploration permit Gas potential Chaal Permit Area, Tunisia:  
As announced on 11 May 2010, a farm-out agreement was reached on 10 May 2010    
("the Agreement") in terms of which SacOil will, subject to specified           
conditions precedent set out in the Agreement, acquire a 55% participating      
interest in the Chaal Permit Area ("the Acquisition").                          
The Chaal Permit Area is potentially one of Tunisia`s most significant future   
gas resources.                                                                  
Chaal is a potential world-class gas condensate discovery located onshore       
central Tunisia some 25 kms to the west of Tunisia`s second largest city, Sfax. 
Candax Energy Inc. ("Candax"), together with its partners and the Tunisian      
Government, are actively pursuing the deep gas resources at Chaal and in the    
Triassic reservoirs lying beneath the producing fields in the south of the      
The Chaal field covers approximately 1 200 square kilometres. Gas condensate    
was discovered there in the early 1960s. In 2006 a further well was drilled     
(the Chaal 1 Well) and encountered significant gas shows. The Chaal permit is   
within close proximity of established excess capacity gas pipeline              
infrastructure and gas markets (both local and international) where excess      
demand exists.                                                                  
Prior to the implementation of the transactions contemplated in the Agreement,  
the participants in the Chaal Permit Area ("the Participants") and their        
respective interests ("Participating Interests") are:                           
Falcan Chaal Petroleum Limited ("Falcan"), a company registered in Barbados     
and wholly owned by Candax, a company listed on the Toronto Stock Exchange      
Societe de Maintenance d`Installations Petrolieres ("SMIP"), a Tunisian         
company (20%); and                                                              
MCX North Africa Co., Limited ("Mitsubishi"), a company wholly owned by         
Mitsubishi Corporation, a public company registered in Japan (20%).             
Following the implementation of the transactions contemplated in the Agreement  
(with Falcan and SMIP having assigned part of their respective interests to     
SacOil), the Participants and their Participating Interests would be:           
SacOil                                                             55.00%       
Falcan                                                             18.75%       
SMIP                                                                6.25%       
Mitsubishi                                                         20.00%       
Shareholders are referred to an announcement published on 11 May 2010 for full  
details of the Acquisition.                                                     
8. Greenhills plant                                                             
SacOil has positioned itself to grow the manganese business at its Manganese    
plant near Graskop, Mpumalanga better known as the Greenhills plant, and        
continues to actively seek new markets for its products, being that of          
manufacturing manganese sulphate powder, manganese sulphate solution and        
manganese oxide. The directors believe that the plant will be in a position to  
maintain local and international sales volumes. A weaker Rand will facilitate   
increased exports. The directors are also in the process of evaluating the      
current condition of the property, plant and equipment. Following the           
implementation of a modest rehabilitation and expansion plan, the plant will be 
able to achieve increased production capacity. Having improved the performance  
of the plant the directors are also seeking value-adding and complementary      
acquisition opportunities for the Greenhills plant.                             
9. Future direction                                                             
The company`s main focus is Oil and Gas. The investment in the exploration      
permit Gas potential Chaal Permit Area, Tunisia, will enable the company to add 
to its current financial and technical resources. The directors are also in the 
process of evaluating other value-adding acquisitions which will enhance        
shareholder value.                                                              
10. Further cautionary announcement                                             
Further to a cautionary announcement made on 11 May 2010, SacOil shareholders   
are advised to continue to exercise caution when dealing in their SacOil        
securities until a further announcement is made with regards to the investment  
in the exploration permit Gas potential Chaal Permit Area, Tunisia.             
By order of the board                                                           
Melinda van den Berg                                                            
Fusion Corporate Secretarial Services (Proprietary) Limited                     
Company secretary                                                               
21 May 2010                                                                     
Directors:                   R J Linnell (Chairman), C Bird*,                   
                            G S Moseneke, R T Vela*, (*British)                 
Registered office:           119 Rosen Office Park, 37 Invicta Road,            
                            Midrand, 1685                                       
Registered postal address:   PO Box 8439, Halfway House, 1685                   
Transfer secretaries:        Link Market Services South Africa (Proprietary)    
Corporate finance advisers:  Lonsa Corporate Finance (Proprietary) Limited      
Corporate legal advisers:    Deneys Reitz Inc.                                  
Sponsor:                     Sasfin Capital (A division of Sasfin Bank Limited) 
Company secretary:           Melinda van den Berg - Fusion Corporate            
                            Secretarial Services (Proprietary) Limited          
Date: 21/05/2010 15:40:08 Supplied by www.sharenet.co.za                     
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