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SCL - SacOil Holdings Limited - Unaudited Interim Results for the six months

Release Date: 29/10/2010 07:05:07      Code(s): SCL
SCL - SacOil Holdings Limited - Unaudited Interim Results for the six months    
ended 31 August 2010                                                            
SacOil Holdings Limited                                                         
(Formerly SA Mineral Resources Corporation Limited)                             
(Incorporated in the Republic of South Africa)                                  
(Registration number 1993/000460/06)                                            
Share Code: SCL          ISIN: ZAE000127460                                     
("SacOil" or "the Company" or "the Group")                                      
Unaudited Interim Results for the six months ended 31 August 2010               
Consolidated Statements of Comprehensive Income                                 
                                  Unaudited       Unaudited           Audited   
Six months      Six months         12 months   
                                August 2010     August 2009     February 2010   
                                      R`000           R`000             R`000   
Revenue                               16 474          16 106            31 724  
Cost of sales                       (11 456)        (10 051)          (20 210)  
Gross profit                           5 018           6 055            11 514  
Operating costs                      (7 958)         (4 914)          (10 144)  
Results from operating activities    (2 940)           1 141             1 370  
Finance income                           179             327               731  
Finance costs                           (10)             (1)              (13)  
Net finance income                       169             326               718  
Impairment losses                          -               -           (3 017)  
Share-based payment expense          (4 179)               -                 -  
                                    (4 179)               -           (3 017)   
(Loss)/profit for the period                                                    
before tax                           (6 950)           1 467             (929)  
Income tax                                 -               -               895  
(Loss)/profit for the period         (6 950)           1 467              (34)  
Other comprehensive income                                                      
Fair value gain on revaluation                                                  
of property, plant and equipment           -               -             3 196  
Income tax on other                                                             
comprehensive income                       -               -             (895)  
Other comprehensive income for                                                  
the period net of income tax               -               -             2 301  
Total comprehensive                                                             
(loss)/income for the period         (6 950)           1 467             2 267  
Reconciliation of headline                                                      
(Loss)/profit for the period         (6 950)           1 467              (34)  
Adjustments for headline                                                        
- Impairment of loans receivable           -               -             3 016  
                                    (6 950)           1 467             2 982   
Weighted average number of                                                      
shares (`000)                        314 800         313 292           313 292  
Basic (loss)/earnings per share                                                 
(cents)                               (2.21)            0.47              0.72  
Diluted (loss)/earnings per                                                     
share (cents)                         (2.20)            0.47              0.72  
Headline (loss)/earnings per                                                    
share (cents)                         (2.21)            0.47              0.95  
Diluted headline (loss)/earnings                                                
per share (cents)                     (2.20)            0.47              0.95  
Consolidated Statements of                                                      
Financial Position                                                              
                                  Unaudited       Unaudited           Audited   
                                 Six months      Six months         12 months   
August 2010     August 2009     February 2010   
                                      R`000           R`000             R`000   
Non-current assets                     8 030           7 784             8 535  
Property, plant and equipment          7 135           4 785             7 640  
Deferred tax asset                       895               -               895  
Loans receivable                           -           2 999                 -  
Current assets                        40 636          41 210            40 942  
Loans receivable                      27 867          27 867            27 867  
Inventories                            2 578           2 199             2 305  
Trade accounts receivable              5 012           5 399             3 558  
Sundry accounts receivable               564             368               214  
Cash and cash equivalents              4 616           5 377             6 998  
Total assets                          48 667          48 994            49 477  
EQUITY AND LIABILITIES                                                          
Equity attributable to equity holders 43 064          42 532            43 332  
Stated capital                        86 229          83 726            83 726  
Share-based payment reserve           27 933          23 754            23 754  
Revaluation reserves                   2 301               -             2 301  
Accumulated loss                    (73 399)        (64 948)          (66 449)  
Non-current liabilities                  886           1 075               934  
Instalment sale obligations                -             310               108  
Provision for environmental                                                     
rehabilitation                           886             765               826  
Current liabilities                    4 717           5 387             5 211  
Trade accounts payable                 2 638           2 643             1 330  
Instalment sale obligations              166               -               138  
Deferred tax liability                   895               -               895  
Loans payable                              -           2 503             2 503  
Sundry accounts payable                1 018             241               345  
Total equity and liabilities          48 667          48 994            49 477  
Number of shares in issue (`000)     321 635         313 292           313 292  
Net asset value per share (cents)      13.39           13.58             13.83  
Statements of Changes in Equity                                                 
                                                  Share-based     Revaluation   
R`000                       Stated capital     payment reserve         reserve  
Balance at 28 February 2010         83 726              23 754           2 301  
Share issue                          2 503                   -               -  
Loss for the period                      -                   -               -  
Share-based payment expense              -               4 179               -  
Revaluation reserve on                                                          
revaluation of property,                                                        
plant and equipment                      -                   -               -  
Deferred tax liability                   -                   -               -  
Balance at 31 August 2010           86 229              27 933           2 301  
                                                      Accumulated       Total   
R`000                                                         loss      equity  
Balance at 28 February 2010                               (66 449)      43 332  
Share issue                                                      -       2 503  
Loss for the period                                        (6 950)     (6 950)  
Share-based payment expense                                      -       4 179  
Revaluation reserve on revaluation of property,                                 
plant and equipment                                              -           -  
Deferred tax liability                                           -           -  
Balance at 31 August 2010                                 (73 399)      43 064  
Cash Flow Statements                                                            
Unaudited       Unaudited           Audited   
                                 Six months      Six months         12 months   
                                August 2010     August 2009     February 2010   
                                      R`000           R`000             R`000   
Cash utilised in                                                                
operating activities                 (2 472)         (1 723)             (277)  
Finance costs                           (10)             (1)              (13)  
Investment income                        179             198               731  
Net cash flows from                                                             
operating activities                 (2 303)         (1 526)               441  
Cash flows from investing activities                                            
Increase in loans receivable               -             310             (144)  
Additions to property, plant                                                    
and equipment                              -           (263)             (263)  
Net cash flows from investing activities   -              47             (407)  
(Decrease)/increase in loans payable    (79)               -               108  
Net cash flows from                                                             
financing activities                    (79)               -               108  
Net movement in cash and                                                        
cash equivalents                     (2 382)         (1 479)               142  
Cash and cash equivalents at the                                                
beginning of the year                (6 998)           6 856             6 856  
Cash and cash equivalents at the                                                
end of the year                        4 616           5 377             6 998  
Notes to the Interim Financial Statements for the six months ended 31 August    
1. Basis of preparation                                                         
The interim financial statements of the Group for the six months ended 31 August
2010 have been prepared in accordance with the Group`s accounting policies,     
which comply with International Financial Reporting Standards as well as the AC 
500 standards as issued by the Accounting Practices Board or its successor and  
are consistent with those of the previous year. This interim report has been    
prepared in accordance with and containing the information required by          
International Accounting Standard 34 - Interim Financial Reporting. The interim 
report has been prepared on a going concern basis.                              
The interim report has not been audited or reviewed by the Company`s auditors.  
All monetary information and figures presented in these interim financial       
statements are stated in thousands of Rand (R`000), unless otherwise indicated. 
2. Commentary on the results                                                    
Sales volumes at the Greenhills plant were less than expected due to good       
rainfall in the summer rainfall areas causing a decline in the demand for animal
feeds. Orders from the Company`s anchor client continued at expected levels.    
Despite a marginal decrease in sales volumes, the plant managed to achieve 0.84 
cents per share in earnings net of 0.36 cents per share (R1.1 million) in       
relation to maintaining and upgrading the plant.                                
The Company is currently reviewing the condition of the plant and has engaged a 
consultant to evaluate the plant and report back to the board of directors      
("Board"). Pursuant to this evaluation, the Board will consider its options in  
relation to this non-core asset.                                                
The Group`s results reported a loss of 2.21 (2009: earnings of 0.47) cents per  
share, a headline loss of 2.21 (2009: earnings of 0.47) cents per share and a   
net asset value of 13.39 (2009: 13.58) cents per share.                         
Of the loss of 2.21 cents per share, 1.33 cents per share relates to a share-   
based payment expense recognised in profit and loss, in an amount of R4.2       
million, in relation to 10 464 446 share options that were granted to directors 
on 8 July 2010. The total expense was recognised during the period under review 
in compliance with IFRS 2 - Share-Based Payments.                               
Corporate head office costs in an amount of R4.3 million are included in        
operating costs for the period under review, accounting for 1.36 cents per share
of the loss reported for the period. These costs include expenses amounting to  
R2.0 million incurred in relation to the circular posted to shareholders on 4   
September 2010 to consider and approve, inter alia, the restructuring of the    
Company`s proposed investment in the oil concession rights pertaining to Block 3
("Block 3 Rights"), Albertine Graben in the Democratic Republic of the Congo    
("Block 3"), the acquisition of 50% of the entire issued share capital of, and  
all claims of the South African Congo Oil Company (Proprietary) Limited ("SacOil
(Proprietary) Limited") vendors against, SacOil (Proprietary) Limited, the      
proposed acquisition by SacOil of a 55% participating interest in the Chaal Gas 
Exploration Permit Area in Tunisia and proposed specific issues of SacOil shares
("Shares") for cash (collectively, "the Transactions"). It furthermore includes 
ongoing costs amounting to R1.1 million in relation to the Transactions.        
3. Results of general meeting and general issues of Shares for cash             
As announced on 20 September 2010, a general meeting was held on Monday, 20     
September 2010 to consider the ordinary resolutions relating to the Transactions
as detailed in the circular posted to SacOil shareholders ("Shareholders") on   
Saturday, 4 September 2010.                                                     
All the ordinary resolutions tabled at the general meeting were approved by the 
requisite majority of votes required from Shareholders. A listing of the 255 456
000 new Shares in respect of the Transactions was granted by the JSE Limited    
("JSE") on Wednesday, 22 September 2010.                                        
In accordance with its general authority, 1 700 000 new Shares were issued by   
the Board to Abdur Rahman Moosa and listed on the JSE on Monday, 13 September   
2010 ("Issue to Moosa"). The 1 700 000 new Shares were issued at 60 cents per   
Share, being a 3% premium to the 30-day volume weighted average price ("VWAP")  
of the Shares on the JSE on Monday, 23 August 2010, being the date that the     
price of the Issue to Moosa was agreed by the Board.                            
On Friday, 17 September 2010, STANLIB Asset Management Limited ("STANLIB")      
signed an irrevocable undertaking to subscribe for 40 000 000 new Shares for a  
cash amount of R25 000 000 ("Issue to STANLIB"). The Shares were issued at 62.5 
cents per Share, being a 4% premium to the 30-day VWAP of the Shares on the JSE 
on Thursday, 16 September 2010, being the date that the price of the Issue to   
STANLIB was agreed by the Board. The Shares were listed on Tuesday, 28 September
2010. Following the listing and the issue of the new Shares in respect of the   
Transactions, the Issue to Moosa and the Issue to STANLIB, the Company will have
618 790 828 Shares in issue and the Issue to STANLIB will equate to 6.46% of the
issued share capital of the Company.                                            
The 41 700 000 new Shares will rank pari passu with the existing Shares.        
The proceeds from the issues for cash detailed above will be used by the Company
to fund working capital.                                                        
4. Investment in SacOil (Proprietary) Limited                                   
As announced on 25 June 2010, SacOil (Proprietary) Limited was granted the Block
3 Rights after the President and the Prime Minister of the Democratic Republic  
of the Congo ("DRC") signed Presidential Ordinances in respect of Block 3 in    
June 2010. SacOil has appointed Mr Glen Penfield as its senior exploration      
advisor in respect of Block 3. Glen has more than 30 years of professional      
experience in hydrocarbon and mineral exploration, geophysical contracting,     
project management and business development in more than 35 countries but       
primarily in Africa and specifically within the DRC. Glen is both a geologist   
and geophysicist. He is a noted mentor of scientific talent, having supervised  
or trained a number of now prominent geoscientists, many during his eight year  
tenure as Manager of Integrated Interpretation Services at the Western Atlas    
International group of companies.                                               
Shareholders are referred to an announcement made on 30 September 2010 for      
details of its work programme on Block 3.                                       
5. Entry into unincorporated joint venture ("JV") agreement with Energy Equity  
Resources ("EER")                                                               
SacOil has embarked on its strategy of seeking to acquire production and near   
production oil and gas fields on the African continent ("Production Assets").   
SacOil`s focus, in this regard, will be to target such Production Assets in     
established oil and gas production basins in Africa. Nigeria is the natural     
first stop given the long-standing relations between Nigeria and South Africa.  
More specifically, Nigeria has many discovered but undeveloped oil and gas      
fields and there is active divestment of certain Production Assets by           
international oil companies ("IOCs") because of, inter alia, Nigeria`s          
Indigenisation Laws.                                                            
To acquire Production Assets, SacOil needed a local Nigerian partner and on 5   
October 2010 announced its entry into an unincorporated JV agreement with EER.  
The arrangement with EER fits neatly with SacOil`s objective of working with    
credible local partners in the jurisdictions the Company looks to enter. EER    
maintains strong relationships with the Nigerian authorities, host communities  
and IOCs operating in Nigeria. The JV`s envisaged initial transaction (in       
onshore Niger Delta) has a recoverable contingent resource (P50) (as verified by
an independent competent person) of 100 million barrels of oil equivalent (mboe)
and a potential to produce up to 30 000 barrels of oil per day.                 
6. Legal action against SacOil                                                  
Shareholders are advised that the Company has been cited as defendent in two    
actions instituted by one Joseph Gadifele Modibane ("the Plaintiff") in the     
North Gauteng High Court. In his first action the Plaintiff alleges that he was 
entitled to receive 105 000 000 Shares in the ordinary share capital of SacOil  
at an issue price of 30 cents per Share. The Plaintiff further alleges that he  
is entitled to claim damages from SacOil in the amount of R67 200 000.          
In a second action the Plaintiff alleges that the content of the announcement   
made on 15 September 2010, was defamatory to the Plaintiff and claims payment   
from the Company of damages in the amount of R80 000 000.                       
Having regard to the information in its possession the Board is of the view that
the claims are without factual foundation and have no substance. The Company has
therefore instructed its legal representatives, Deneys Reitz, to vigorously     
defend the actions and seek punitive costs.                                     
7. Dividend                                                                     
The Board has resolved not to declare any dividend to Shareholders for the      
period under review.                                                            
8. Changes to the Board                                                         
On 10 August 2010, Mrs Carina de Beer was appointed Finance Director of SacOil. 
On 15 October 2010 Mr Colin Bird`s designation changed from that of Non-        
executive Director to Executive Director.                                       
9. Listing on the London Alternative Investment Market ("AIM") and future       
As announced on 12 October 2010, SacOil is pursuing a secondary listing on AIM  
by the end of Q1 2011. Although SacOil has successfully raised capital by way of
issues of shares for cash, the Company`s intention is to attract new            
institutional investors to ensure that SacOil is sufficiently capitalised to    
further develop current exploration projects and execute near production and    
producing asset oil and gas transactions it has in the pipeline.                
SacOil has progressed on its stated strategic focus of targeting the acquisition
of discovered but undeveloped or indeed prior producing but now shut in near    
term producing and production assets on the African continent. In the important 
Nigerian oil and gas market, the JV with EER gives SacOil an opportunity to     
pursue an initial transaction in the onshore swamp area of the Niger Delta of   
discovered but undeveloped oil assets. The JV partnership further benefits      
SacOil in that it can now acquire oil and gas assets disposed of by             
International oil companies as a result of Nigeria`s indigenisation legislation.
An introduction to AIM will provide the Company with a further platform to raise
its public profile and afford United Kingdom ("UK") investors the opportunity to
participate in the future growth of the business. It is understood that the AIM 
market has a bigger appetite for upstream oil and gas assets.                   
The Company`s vision is to successfully build SacOil into a Pan African         
independent upstream oil and gas company. It has an ambitious and aggressive    
acquisition led growth strategy and it is well positioned to harness its foot   
hold into Africa. Its JV with EER is a case in point.                           
SacOil has appointed FINNCAP Limited as its NOMAD and joint broker while        
Renaissance Capital Limited will act as lead broker. Fasken Martineau LLP has   
been appointed as UK legal adviser to SacOil.                                   
By order of the Board                                                           
Melinda Gous                                                                    
Fusion Corporate Secretarial Services (Proprietary) Limited                     
Company secretary                                                               
29 October 2010                                                                 
Directors: RJ Linnell (Chairman), RT Vela (Chief Executive Officer),            
C de Beer (Finance Director),C Bird (Executive), G Moseneke                     
Registered address: 119 Rosen Office Park, 37 Invicta Road, Midrand, 1685       
Postal address: PO Box 8439, Halfway House, 1685                                
Website: www.sacoilholdings.com                                                 
Transfer secretary: Link Market Services SA (Proprietary) Limited               
Company secretary: Melinda Gous                                                 
Legal advisors: Deneys Reitz Inc.                                               
Sponsor: BDO South Africa Advisory Services (Pty) Limited                       
Date: 29/10/2010 07:05:07 Supplied by www.sharenet.co.za                     
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