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Sacoil Holdings Limited - Audited Results For The Year Ended 28 February 2013

Release Date: 17/09/2013 07:05:00      Code(s): SCL     
SACOIL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1993/000460/06)
JSE share code: SCL
AIM share code: SAC
ISIN: ZAE000127460
("SacOil" or "the Company" or "the Group")
AUDITED RESULTS
for the year ended 28 February 2013

SacOil Holdings Limited is pleased to announce its results 
for the year ended 28 February 2013.
KEY HIGHLIGHTS
For the year under review
- Another geography and asset is added in Malawi
- Posting of performance bond on OPL 233 in Nigeria
- Extension of OPL 233 exploration phase by the
  Nigerian National Petroleum Corporation
- Approval of OPL 233 extension work programme
  and budget
- Renegotiation of farm-in and joint operating terms
  for OPL 233
- Total acquires a further 6.67% interest in Block III
  from SacOil's partner in Semliki
- Airborne gravity and magnetic survey acquired
  for Block III

Subsequent to the year under review
- Appointment of Tito Mboweni to the SacOil Board
  as the independent non-executive Chairman
- Appointments of Vusumzi Pikoli,
  Mzuvukile Maqetuka and Stephanus Muller to the
  SacOil Board as independent non-executive directors
- Appointment of Ignatius Sehoole as non-executive director
- Appointments of Roger Rees as Chief Executive
  Officer and Tariro Mudzimuirema as Finance Director
- Constitution of various Board committees
- Planned recapitalisation of the Company through a
  renounceable Rights Offer
- Planned equity settlement of Gairloch loans
- Request for tender for OPL 233 seismic survey

Commenting, Roger Rees, Chief Executive of SacOil said: "With the successful recapitalisation of the Company, it will be debt-free
and in a significantly stronger position to be able to move its existing asset portfolio forward and as such create value for shareholders.
The Company has a management team with a strong track record of developing resource assets and the portfolio itself holds significant
potential. It is a strong balance of high-impact exploration licences, along with lower risk appraisal and near-term production prospects,
all of which are in highly prospective areas, such as the DRC Lake Albert Area, part of the proven East African Rift System, and the
Niger Delta, in Nigeria."

OVERVIEW
For the year ended 28 February 2013 the Group reported a reduction in the loss from continuing operations to R70,1 million
(2012: R104,1 million). Contributing towards this positive trend were the disposal of the loss-making Greenhills Manganese plant, the
farm-out profit on the Block III exploration and evaluation asset, an increase in investment income by 59%, a 76% reduction in taxation
and a 46% reduction in finance costs.

Although the Group's audit report contains an emphasis of matter paragraph about the Group's ability to continue as a going concern,
the directors are confident that, upon completion of the proposed recapitalisation of the Company by way of the planned Rights Offer
and the equity settlement of the Gairloch loans, the Group will be able to continue its operations for the foreseeable future, that is
for a period of at least 12 months.

FINANCIAL PERFORMANCE

Other income
During the period under review the Group generated other income of R123,2 million (2012: R248,6 million) comprising:
-    A profit of R71,1 million (2012: loss of R83,4 million included under "other operating costs") realised by Semliki Energy SPRL
     ("Semliki") on disposal of a 6.67% (2012: 60%) interest in Block III to Total RDC ("Total") in March 2012 (2012: March 2011) for a
     cash consideration of R76,0 million (US$10 million) (2012: R143,5 million (US$15 million)) and a future contingent consideration of
     R26,8 million (2012: R219,1 million). The transaction was initiated by and benefited SacOil's partner in Semliki. SacOil's effective
     interest in Block III has remained unchanged at 12.5%;
-    Foreign exchange gains totalling R32,1 million (2012: R6,2 million). The Group's foreign exchange gains arise on translation of
     US dollar denominated loans receivable from Energy Equity Resources (Norway) Limited ("EERNL"), as well as on the cash that is
     collateralised as security on the performance bond for OPL 233; and
-    A transaction break fee of R7,9 million (2012: nil) received from a third party and various other income items totalling R12,1 million (2012: nil).

The decrease in other income primarily reflects a decrease in the Group's farm-out activity offset by increases in foreign exchange gains.

Other operating costs

Other operating costs totalled R175,6 million (2012: R162,0 million) for the year under review. These costs primarily include:
-    The write-down of R129,9 million (2012: nil) of future expected cash flows from the contingent consideration for the Block III farm-outs
     in March 2011 and March 2012. The write-down was necessitated by the change in timelines impacting the receipt of the contingent
     consideration and is reflective of the time value of money;
-    Remuneration costs of R15,9 million (2012: R13,4 million);
-    Audit fees of R4 million (2012: R0,3 million);
-    Consulting fees totalling R3,7 million (2012: R11 million);
-    Legal fees of R4,1 million (2012: R9,3 million); and
-    Corporate costs totalling R4,6 million (2012: R8,6 million).

Included in the 2012 other operating costs were the loss of R83,4 million on the farm-out of Block III in March 2011 and the one-off AIM
listing costs of R21,9 million.

Investment income
During the reporting period the Group generated investment income of R46,9 million (2012: R29,5 million) primarily comprising:
-    Interest income of R37,6 million (2012: R15,6 million) earned on the loans receivable from EERNL. These loans increased to
     R177,4 million (2012: R66,2 million) in the current year due to EERNL's share of the performance bond cash collateral and related
     costs, interest and foreign exchange gains;
-    Interest income of R8,5 million (2012: R13,4 million) accruing to the Group as a result of the unwinding of the time value discount
     applied to the contingent consideration for Block III pursuant to the farm-outs in March 2011 and March 2012.

Finance costs
In order to fund the cash collateral of R79,4 million (US$10 million) required to post the performance bond on OPL 233, the
Group secured borrowings from Renaissance BJM Securities (Proprietary) Limited ("Rencap") and Yorkville Advisors LLP ("Yorkville").
This additional funding requirement increased finance costs to R58,9 million (2012: R44,4 million). Of these costs, finance costs
amounting to R35,1 million (2012: nil) have been capitalised to the OPL 233 asset, under exploration and evaluation assets, as they are
directly attributable to the acquisition of a qualifying asset (2012: nil).

Taxation
The Group achieved a 76% reduction in taxation. Taxation was significantly higher in 2012 as a result of deferred tax of R105,3 million
on the initial recognition of the contingent consideration and capital gains tax of R41,0 million, on the farm-out of Block III in March 2011.
The farm-out in the current year resulted in capital gains tax of R28,5 million (2012: R41,0 million). The current year net deferred tax
credit was R32,7 million (2012: charge of R105,3 million) which comprised the following:
-    Recognition of a deferred tax charge of R10,7 million (2012: R105,3 million) associated with the current contingent consideration;
-    Recognition of a deferred tax credit of R67,3 million corresponding to the write-down of the prior contingent consideration; and
-    Recognition of a deferred tax charge of R23,9 million associated with the unwinding of the discount and foreign exchange gains
     on the contingent consideration.

Other tax charges included withholding tax on foreign dividends of R8,1 million (2012: R10,2 million) and foreign taxes amounting
to R36,9 million (2012: R10,2 million).

FINANCIAL POSITION
Non-current assets
Non-current assets increased by 9% as a result of increases in other financial assets and exploration and evaluation assets, offset by
a decrease in property, plant and equipment. The US dollar-based long-term loan due from EER, included in other financial assets,
increased to R93,5 million (2012: R66,2 million) in the current year due to the weakening of the Rand and accumulated interest. The
Group also re-classified as long term, under other financial assets, a receivable of R56,7 million, following the re-negotiation of the terms
of settlement of this financial asset during February 2013. This receivable, which is due for settlement by February 2016, has been
discounted to reflect the present value of the future receivable of R75,5 million. Other loans due from operating partners also increased
to R35,3 million (2012: R1,9 million) due to increases in activity in our operations.

The contingent consideration, under other financial assets, decreased to R181,5 million (2012: R263,3 million) as a result of the write-down
outlined above offset by the contingent consideration from the farm-out of Block III in March 2012 of R26,8 million (2012: R219,1 million)
and interest income and foreign exchange gains amounting to R21,3 million.

The farm-out of Block III in March 2012 resulted in the derecognition of a portion of exploration and evaluation assets amounting
to R27,0 million (2012: R242,1 million). This decrease was offset by the capitalisation of borrowing costs amounting to R35,1 million to
exploration and evaluation assets, in respect of the OPL 233 asset.

The disposal of the Greenhills plant resulted in the recognition of an impairment loss of R1,0 million (2012: nil) on the remeasurement
of property, plant and equipment to fair value less costs to sell, and the derecognition of R4,3 million of buildings, plant and equipment.

Current assets
Current assets increased by 85% as a result of increases in other financial assets and cash and cash equivalents, offset by decreases
in inventory and trade and other receivables. Cash and cash equivalents as at 28 February 2013 included the revalued cash collateral
of R89,1 million (US$10 million) (2012: nil) held as security for the performance bond on OPL 233. Other financial assets included the
short-term loan due from EERNL of R83,8 million (2012: nil) which relates to EERNL's 50% share of costs relating to the cash collateral.
The reclassification of a receivable of R75,5 million follows the re-negotiation of the settlement of this financial asset as outlined above.
The disposal of the Greenhills Manganese plant in September 2012 eliminated inventories (2012: R2,5 million) and trade receivables
(2012: R3,6 million).

Non-current liabilities
Non-current liabilities decreased by 32% reflective of the decrease in deferred tax on the contingent consideration which decreased
to R181,5 million (2012: R263,3 million).

Current liabilities
In order to fund the cash collateral of R79,4 million (US$10 million) required to post the performance bond on OPL 233, the Group
secured borrowings from Rencap and Yorkville during April 2012. The Yorkville loan was settled in November 2012 through the issue
of equity in SacOil Holdings Limited and a cash payment of US$1,0 million.

As announced on 31 December 2012, the Rencap loan was novated to Gairloch in December 2012. The loans due to Gairloch at
28 February 2013 were R129,0 million (2012: nil). On 12 September 2013, the Company concluded an agreement with Gairloch for
the settlement of the loan through an issue of equity in SacOil, subject to shareholders approval. The loans continue to incur interest at
8% and 10% per month, respectively, until 30 September 2013, being the calculation date agreed with Gairloch under the Subscription
and Settlement Agreement. A circular providing details of the loan conversion incorporating a Notice of General Meeting, will be issued as
soon as practicable.

The Group is also indebted to Nigdel for operating costs of R2,4 million on OPL 233 (2012: nil).

Taxes payable increased to R94,0 million (2012: R20,5 million) as a result of the capital gains tax on the 6.67% farm-out of Block III of
R28,5 million, withholding tax on foreign dividends of R8,1 million and foreign taxes amounting to R36,9 million (2012: R20,5 million).

FINANCING OF THE GROUP'S ACTIVITIES
Total cash generated during the year was R83,3 million (2012: utilisation of R7,1 million) resulting in a year-end balance of R94,0 million
(2012: R10,8 million). This cash is currently held as collateral for the performance bond on OPL 233 and will be utilised to fund future
exploration activities of the Group.

Net cash from financing activities of R101,5 million (2012: R51,7 million) is reflective of the loans acquired by the Group to fund the
R79,4 million (US$10 million) cash collateral required to post the performance bond on OPL 233. Further loans were also acquired to
fund the working capital requirements of the Group. These loans were acquired as follows:
-    R63,5 million (US$8 million) was acquired from Renaissance BJM Securities (Proprietary) Limited ("Rencap") in April 2012 to part
     fund the cash collateral.
-    The Rencap loan was novated to Gairloch Limited ("Gairloch") on 28 December 2012. The novated loan was R96 million (US$11,25 million).
-    R30 million (US$3,4 million) was acquired from Yorkville Advisors LLP in April 2012 to part fund the cash collateral. This loan was
     repaid in November 2012.
-    R8,2 million (US$1 million) was acquired from Gairloch in September 2012 to fund working capital requirements.
-    R8,8 million (US$1 million) was acquired from Gairloch in October 2012 to part fund work programme commitments and working
     capital requirements.

RECAPITALISATION OF THE COMPANY AND EQUITY SETTLEMENT OF GAIRLOCH LOANS
SacOil concluded an agreement dated 12 September 2013 with Gairloch for the conversion of R238,5 million (US$24,1 million) of debt
and accrued interest provided by Gairloch to equity in SacOil by no later than 31 January 2014 ("the Specific Issue"), thereby leaving
SacOil debt free, reducing finance costs and significantly improving its balance sheet position.

Furthermore, the Company intends to raise additional capital of R570 million by way of a renounceable rights offer of 2 111 111 111 SacOil
shares ("Right Offer Shares") at an issue price of R0,27 per share ("the Rights Offer"), which will be supported by one of the Company's
largest shareholders, the Public Investment Corporation (SOC) Limited ("the PIC"), to the extent of circa R329 million. The ratio of rights
offered for existing SacOil shares will be in proportion to each shareholder's respective shareholding in the Company.
The Specific Issue and the Rights Offer ("the Transactions") are interconditional and will result in a recapitalisation of the Company enabling
it to actively pursue and develop its oil and gas prospects. It is expected that the Transactions will be concluded by 31 January 2014.

OUTLOOK
The successful completion of the Transactions will see the Company recapitalised and able to fund its existing assets to June 2015.
The Group's underlying assets remain attractive. The proceeds of the Rights Offer will be applied to moving these assets up the value
curve. Our stronger balance sheet will further allow us to pursue value enhancing opportunities on the African continent.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                                                                                        Restated*
                                                                                        2013                2012
                                                                    Notes                  R                   R
Other income                                                                     123 222 360         248 612 642
Other operating costs                                                           (175 626 093)       (161 990 719)
(Loss)/profit from operations                                                    (52 403 733)         86 621 923
Share-based payment expense                                                                -          (8 891 216)
Operating (loss)/profit                                                          (52 403 733)         77 730 707
Investment income                                                                 46 940 839          29 455 933
Finance costs                                                                    (23 837 213)        (44 402 672)
(Loss)/profit before taxation                                                    (29 300 107)         62 783 968
Taxation                                                                         (40 785 309)       (166 884 559)
Loss for the year from continuing operations                                     (70 085 416)       (104 100 591)
Discontinued operation
(Loss)/profit for the year from discontinued operation                   5        (1 526 959)          2 791 163
Loss for the year                                                                (71 612 375)       (101 309 428)
Other comprehensive loss:
Release of revaluation reserve on impairment/depreciation 
 of property, plant and equipment                                                 (1 045 359)           (340 000)
Taxation related to components of other comprehensive income                               -              95 200
Other comprehensive loss for the year net of taxation                             (1 045 359)           (244 800)
Total comprehensive loss for the year                                            (72 657 734)       (101 554 228)
Loss attributable to:
Equity holders of the parent                                                     (55 627 404)       (101 294 322)
Non-controlling interest                                                         (15 984 971)            (15 106)
                                                                                 (71 612 375)       (101 309 428)
Total comprehensive loss attributable to:
Equity holders of the parent                                                     (56 672 763)       (101 539 122)
Non-controlling interest                                                         (15 984 971)            (15 106)
                                                                                 (72 657 734)       (101 554 228)
Loss per share from continuing operations
Basic (cents)                                                            6             (5,93)             (14,51)
Diluted (cents)                                                          6             (5,93)             (14,43)
Loss per share from continuing and discontinued
operations
Basic (cents)                                                            6             (6,10)             (14,12)
Diluted (cents)                                                          6             (6,09)             (14,04)

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                                                                                                        Restated*
                                                                                        2013                2012
                                                                      Note                 R                   R
ASSETS
Non-current assets
Property, plant and equipment                                                        317 008           6 148 362
Exploration and evaluation assets                                                162 859 167         153 056 333
Other intangible assets                                                              161 760                   -
Other financial assets                                                           371 719 195         331 430 863
Total non-current assets                                                         535 057 130         490 635 558
Current assets
Inventories                                                                                -           2 540 131
Other financial assets                                                            84 803 036                   -
Trade and other receivables                                                        3 665 149          85 219 043
Cash and cash equivalents                                                         94 032 416          10 774 298
Total current assets                                                             182 500 601          98 533 472
Total assets                                                                     717 557 731         589 169 030
EQUITY AND LIABILITIES
Shareholders' equity
Stated capital                                                           7       534 172 123         486 184 423
Reserves                                                                          26 681 469          29 743 531
Accumulated loss                                                                (219 700 074)       (188 602 491)
Equity attributable to equity holders of parent                                  341 153 518         327 325 463
Non-controlling interest                                                          22 298 155         109 943 833
Total shareholders' equity                                                       363 451 673         437 269 296
Liabilities
Non-current liabilities
Deferred tax liability                                                            72 588 101         105 304 059
Provisions                                                                                 -           1 065 972
Total non-current liabilities                                                     72 588 101         106 370 031
Current liabilities
Other financial liabilities                                                      175 574 827          12 496 195
Current tax payable                                                               93 962 655          20 495 100
Trade and other payables                                                          11 980 475          12 538 408
Total current liabilities                                                        281 517 957          45 529 703
Total liabilities                                                                354 106 058         151 899 734
Total equity and liabilities                                                     717 557 731         589 169 030
Number of shares in issue                                                        953 340 791         832 225 699
Net asset value per share (cents)                                                      38,12               52,54
Net tangible asset value per share (cents)                                             21,04               34,15

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

CONSOLIDATED STATEMENT OF CASH FLOWS
                                                                                        2013                 2012
                                                                                           R                    R
Cash flows from operating activities
Cash used in operations                                                          (18 156 924)        (133 918 365)
Interest income                                                                      843 988           (1 447 623)
Finance costs                                                                              -          (44 402 672)
Tax paid                                                                             (33 714)         (40 990 200)
Net cash used in operating activities                                            (17 346 650)        (220 758 860)
Cash flows from investing activities
Purchase of property, plant and equipment                                             (8 200)            (504 209)
Purchase of exploration and evaluation assets                                     (8 478 078)            (508 907)
Purchase of other intangible assets                                                 (184 869)                   -
Sale of exploration and evaluation assets                                         75 997 000          143 465 700
(Increase)/decrease in loans and receivables                                     (68 190 699)          19 493 215
Net cash (used in)/from investing activities                                        (864 846)         161 945 799
Cash flows from financing activities
Proceeds on share issue                                                                    -           80 000 000
Proceeds from other financial liabilities                                        150 617 203           23 580 182
Acquisition of non-controlling interest                                          (24 573 795)                   -
Finance lease payments                                                                     -              (90 508)
Dividends paid to NCI                                                            (24 573 794)         (51 801 149)
Net cash from financing activities                                               101 469 614           51 688 525
Total movement in cash and cash equivalents for the year                          83 258 118           (7 124 536)
Cash and cash equivalents at the beginning of the year                            10 774 298           17 898 834
Cash and cash equivalents at the end of the year                                  94 032 416           10 774 298
  
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY                                                                                                                
                                                                                                                       Total equity                                    
                                                                        Share-based                     Restated*   attributable to             Non-                   
                                                 Stated   Revaluation       payment         Total     Accumulated    equity holders      controlling           Total   
                                                capital       reserve       reserve      reserves            loss     of the parent   interest (NCI)          equity   
                                                      R             R             R             R               R                 R                R               R   
Balance at 1 March 2011                     374 029 488     2 055 747    27 932 584    29 988 331    (96 199 385)       307 818 434      161 760 088     469 578 522   
Changes in equity:                                                                                                                                                     
Loss for the year                                     -             -             -             -   (101 294 322)     (101 294 322)         (15 106)   (101 309 428)   
Other comprehensive loss for the year                 -     (244 800)             -     (244 800)               -         (244 800)                -       (244 800)   
Total comprehensive loss for the year                 -     (244 800)             -     (244 800)   (101 294 322)     (101 539 122)         (15 106)   (101 554 228)   
Issue of shares                             112 154 935             -             -             -               -       112 154 935                -     112 154 935   
Share options issued                                  -             -     8 891 216     8 891 216               -         8 891 216                -       8 891 216   
Share options lapsed                                  -             -   (8 891 216)   (8 891 216)       8 891 216                 -                -               -   
Dividends                                             -             -             -             -               -                 -     (51 801 149)    (51 801 149)   
Total changes                               112 154 935     (244 800)             -     (244 800)    (92 403 106)        19 507 029     (51 816 255)    (32 309 226)   
Balance at 29 February 2012                 486 184 423     1 810 947    27 932 584    29 743 531   (188 602 491)       327 325 463      109 943 833     437 269 296   
Changes in equity:                                                                                                                                                     
Loss for the year                                     -             -             -             -    (55 627 404)      (55 627 404)     (15 984 971)    (71 612 375)   
Other comprehensive loss for the year                 -   (1 045 359)             -   (1 045 359)               -       (1 045 359)                -     (1 045 359)   
Total comprehensive loss for the year                 -   (1 045 359)             -   (1 045 359)    (55 627 404)      (56 672 763)     (15 984 971)    (72 657 734)   
Issue of shares                              47 987 700             -             -             -               -        47 987 700                -      47 987 700   
Share options lapsed                                  -             -   (1 251 115)   (1 251 115)       1 251 115                 -                -               -   
Acquisition of non-controlling interest               -             -             -             -      22 513 118        22 513 118     (47 086 913)    (24 573 795)   
Discontinued operation                                -     (765 588)             -     (765 588)         765 588                 -                -               -   
Dividends                                             -             -             -             -               -                 -     (24 573 794)    (24 573 794)   
Total changes                                47 987 700   (1 810 947)   (1 251 115)   (3 062 062)    (31 097 583)        13 828 055     (87 645 678)    (73 817 623)   
Balance at 28 February 2013                 534 172 123             -    26 681 469    26 681 469   (219 700 074)       341 153 518       22 298 155     363 451 673   

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

1. Basis of preparation
The consolidated annual financial statements of the Group for the year ended 28 February 2013 have been
prepared in accordance with the Group's accounting policies, which comply with International Financial Reporting
Standards, IAS 34: Interim Financial Reporting, as well as the Financial Reporting Guides as issued by SAICA, the
Listings Requirements of the JSE Limited and the Companies Act of South Africa, and are consistent with those
of the previous period, except for the change in accounting policy as detailed in note 3.
These consolidated annual financial statements have been prepared on a going concern basis.
All monetary information is presented in the functional currency of the Group, being South African Rand.

2. Auditor's audit report
The Group annual financial statements are the responsibility of the directors of the Company. They have
been prepared under the supervision of Roger Rees CA (SA). These financial statements have been audited by
Ernst & Young Inc., the Group's auditors. The unqualified audit report includes an emphasis of matter paragraph
which refers to the directors' disclosure in note 12 which indicates conditions which give rise to a material
uncertainty which may cast significant doubt on the Company's ability to continue as a going concern. The audit
report is available for inspection at the Company's registered office and is available in the integrated annual report,
the availability of which is detailed in note 10.

3. Change in accounting policy
In the prior financial period the Group capitalised costs paid by Total RDC ("Total") on behalf of Semliki Energy SPRL
("Semliki"), a subsidiary within the Group, in terms of a cost carry arrangement under the farm-in agreement for
Block III. These costs increased the Block III exploration and evaluation asset resulting in a corresponding increase
in liabilities representing the amounts owed to Total. To align its accounting practices with comparable companies
in the industry, the Group has decided not to capitalise these costs but rather to use the requirements of IAS 37,
Provisions, Contingent Liabilities and Contingent Assets, and only recognise the liability and corresponding asset
on the occurrence of the contingent event (Refer note 8). Comparative figures have been restated to reflect the
change in accounting policy. As a result of the change in accounting policy, the following adjustments were made
to the Group financial statements:

                                                 Adjustments   
As of and for the year ended 29 February 2012              R   
Decrease in exploration and evaluation assets   (28 939 490)   
Decrease in long-term borrowings                (28 939 490)   
Increase in deferred tax liability                11 575 796   
Decrease in non-controlling interest             (5 787 898)   
Increase in taxation                              11 575 796   
Increase in loss for the year                     11 575 796   
Increase in loss per share (cents)                      0,81   
Increase in diluted loss per share (cents)              0,80   

There were no adjustments required for the 2011 financial year-end as the cost carry arrangement only
commenced during the 2012 financial year. The reversal of the cost carry in the 2012 financial year results in the
elimination of all costs capitalised by the Group in terms of the old accounting policy. No adjustments are therefore
necessary in the current financial year.



4.  Segmental reporting                                                                                                                      
The Group operates in four geographical locations which form the basis of the information evaluated by the Group's   
chief decision-maker. For management purposes the Group is organised and analysed by these locations. These   
locations are: South Africa, Nigeria, DRC and Malawi. Operations in South Africa relate to the general management,   
financing and administration of the Group.     
                                                                              
                                                   Nigeria                    DRC            Malawi        South Africa       Consolidated   
2013                                                     R                      R                 R                   R                  R   
Other income                                             -             87 537 316                 -          35 685 044        123 222 360   
Investment income                                  742 237              8 510 118                 -          37 688 484         46 940 839   
Finance costs                                            -                      -                 -        (23 837 213)       (23 837 213)   
Other operating expenses                       (1 577 049)          (130 320 152)                 -        (43 728 892)      (175 626 093)   
Taxation                                          (33 714)           (32 628 727)                 -         (8 122 868)       (40 785 309)   
Loss for the year from                                                                                                                       
continuing operations                            (868 526)           (66 901 445)                 -         (2 315 446)       (70 085 416)   
Loss from discontinued operation                                                                                                             
(note 5)                                                                                                                       (1 526 959)   
Loss for the year                                                                                                             (71 612 375)   
Segment assets - non-current                    87 596 152            255 836 529           896 740         190 727 709        535 057 130   
Segment assets - current                        89 139 856                 58 510                 -          93 302 235        182 500 601   
Segment liabilities - non-current                        -           (72 588 101)                 -                   -       (72 588 101)   
Segment liabilities - current                 (44 199 000)           (75 592 235)                 -       (161 726 722)      (281 517 957)   

Business segments
The operations of the Group comprise one class of business, being oil and gas exploration and development.

5. Discontinued operation
The Greenhills manganese processing plant ("the Plant") was sold on 1 October 2012 and met the criteria for a
discontinued operation in terms of IFRS 5.32. The Plant was not a discontinued operation or classified as held for
sale at 29 February 2012 as management had not committed to a plan to dispose of the Plant. The comparative
statements of comprehensive income have been re-presented to show the discontinued operation separately
from continuing operations. The Board committed to a plan to sell the Plant early in 2012 following a strategic
decision to focus the Group's efforts and resources on the core oil and gas business.



                                                                                       2013               2012
Results of discontinued operation                                                         R                  R
Revenue                                                                           9 882 587         37 172 586
Cost of sales                                                                    (7 261 686)       (26 569 161)
Gross profit                                                                      2 620 901         10 603 425
Operating expenses                                                               (4 147 860)        (7 812 262)
(Loss)/profit for the year                                                       (1 526 959)         2 791 163
Basic (loss)/earnings per share (cents)                                               (0,17)              0,39
Diluted (loss)/earnings per share (cents)                                             (0,17)              0,39
Cash flows used in discontinued operations
Net cash used in operating activities                                              (322 989)        (1 015 228)
The Plant was sold for R7 million payable as follows:                                                        R
1 October 2013                                                                                       1 000 000
1 October 2014                                                                                       2 000 000
1 October 2015                                                                                       2 000 000
1 October 2016                                                                                       2 000 000
Total consideration                                                                                  7 000 000
The present value of these future cash receipts is R5 647 200 and is included under other financial assets.

6. (Loss)/earnings per share                                                            2013              2012
                                                                                           R                 R
From continuing and discontinued operations
Basic (cents)                                                                          (6,10)           (14,12)
Diluted (cents)                                                                        (6,09)           (14,04)
From discontinued operation
Basic (cents)                                                                          (0,17)             0,39
Diluted (cents)                                                                        (0,17)             0,39
From continuing operation
Basic (cents)                                                                          (5,93)           (14,51)
Diluted (cents)                                                                        (5,93)           (14,43)
Loss for the year used in the calculation of the basic and diluted loss
per share from continuing and discontinued operations                            (55 627 404)     (101 294 322)
Loss/(profit) for the year from discontinued operation                             1 526 959        (2 791 163)
Loss used in the calculation of basic and diluted loss per share
from continuing operations                                                       (54 100 445)     (104 085 485)
Weighted average number of ordinary shares used in the calculation
of basic loss per share                                                          912 157 573       717 411 053
Add: Dilutive share options                                                          540 006         4 142 477
Weighted average number of ordinary shares used in the calculation 
of diluted loss per share                                                        912 697 579       721 553 530
Headline loss per share
Basic (cents)                                                                          (8,10)            (5,02)
Diluted (cents)                                                                        (8,10)            (4,99)
Reconciliation of headline loss
Loss for the year from continuing and discontinued operations                    (55 627 404)     (101 294 322)
Adjust for:
(Profit)/loss on sale of exploration and evaluation assets attributable
to equity holders of the parent                                                  (18 290 947)       65 254 812
                                                                                 (73 918 351)      (36 039 510)

7. Stated capital
                                                                      Nature       Number of            Stated
Date                                           Issued to             of issue         shares           capital
Opening balance                                                                  832 225 699       486 184 423
23 March 2012                           Yorkville Advisors     Specific issue     29 328 257        12 628 000
4 May 2012                              Yorkville Advisors     Specific issue     32 135 560        15 815 400
9 July 2012                             Yorkville Advisors     Specific issue     24 578 863         8 328 300
13 November 2012                        Yorkville Advisors     Specific issue     35 072 412        11 216 000
Closing balance                                                                  953 340 791       534 172 123

8. Commitments and contingent liabilities
                                                                                          R                  R
Commitments - Group                                                                    2013               2012
Exploration and evaluation assets - work programme commitments -
due within 12 months                                                            221 242 262                  -
Exploration and evaluation assets - work programme commitments -
due within 13 - 28 months                                                       243 379 394                  -
Total                                                                           464 621 656                  -
Contingent liabilities - Group
Performance bond on OPL 233 issued by Ecobank in respect
of OPL 233 exploration activities                                               132 597 000                  -
Cost carry arrangement with Total                                                20 411 689         28 939 490
Farm-in and transaction fees on receipt of title to OPL 233                     115 801 380         98 695 400
Farm-in and transaction fees on receipt of title to OPL 281                     128 177 100        109 243 000
Total                                                                           396 987 169        236 877 890

Performance bond
In April 2012, the Group posted a $25 million performance bond to support the work programme on OPL 233.
This performance bond is secured by a R89,1 million ($10 million) cash collateral, revalued at year-end. The cash
is held in the bank account of SacOil's wholly-owned subsidiary, SacOil 233 Nigeria Limited. The remainder of
the performance bond, disclosed as a contingent liability, is secured by a first ranking legal charge over SacOil's
investment in SacOil 233 Nigeria Limited.

Cost carry arrangement
The farm-in agreement between Semliki and Total provides for a carry of costs by Total on behalf of Semliki.
Total will be entitled to recover these costs, being Semliki's share of the costs on Block III, plus interest, from future
oil revenues. The contingency becomes probable when production of oil commences and will be raised in full at
that point. Only at 28 February 2013 Total has incurred R20,4 million (2012: R28,9 million) of costs on behalf of
Semliki. Should this liability be recognised, a corresponding increase in assets will be recognised, which, together
with existing exploration and evaluation assets, will be recognised as development infrastructure assets.

Farm-in and transaction fees
OPL 233
A farm-in fee of R93,7 million (2012: R79,9 million) (US$10,6 million) is due to Nigdel United Oil Company Limited
upon the formal approval by the Nigerian government of the assignment of title to SacOil 233 Nigeria Limited in
relation to OPL 233. A transaction fee of R22,1 million (2012: R18,8 million) (US$2,5 million) is due to Energy
Equity Resources (Norway) Limited upon the receipt of title to OPL 233, pursuant to the provisions of the Master
Joint Venture Agreement.

OPL 281
A farm-in fee of R106,1 million (2012: R90,4 million) (US$12 million) is due to Transnational Corporation of Nigeria
Limited upon the formal approval by the Nigerian government of the assignment of title to SacOil 281 Nigeria
Limited in relation to OPL 281. A transaction fee of R22,1 million (2012: R18,8 million) (US$2,5 million) is due to
Energy Equity Resources (Norway) Limited upon the receipt of title to OPL 281, pursuant to the provisions of the
Master Joint Venture Agreement.

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

10. Posting of integrated annual report and details of annual general meeting
Shareholders are advised that the integrated annual report is available on the Company's website
(www.sacoilholdings.com) and will be posted to shareholders on 23 September 2013. The annual general meeting
of SacOil will be held on Friday, 29 November 2013 at 10:00 at 2nd Floor, The Gabba, Dimension Data Campus,
57 Sloane Street, Bryanston.

The record date on which members must be recorded as such in the register maintained by the transfer secretaries
of the Company for the purpose of being entitled to attend and vote at the annual general meeting is Friday,
22 November 2013.

11. Events after the reporting period
The following event took place from the period 1 March 2013 to the date of this report:
Equity settlement of Gairloch loans
Subsequent to the year-end, Gairloch Limited ("Gairloch") exercised its rights under the three loans agreements,
to require SacOil to equity settle loans owed to Gairloch. On 12 September 2013 SacOil concluded an agreement
with Gairloch for the conversion of debt to equity in SacOil. Under terms of this agreement debt totalling
R238,5 million (US$24,1 million) will be converted into 883 449 144 new SacOil ordinary shares at R0,27
(US$0,0272876) per share. The share issue price represents a 4,6% discount to the volume weighted average
traded price of the SacOil shares on the JSE over the 30 business days prior to the date of the suspension.

Shareholders are referred to the announcement dated 12 September 2013 issued on SENS and RNS for further
details on the loan conversion.

Rights Offer
Shareholders are advised that the Company intends to raise additional capital of up to R570 million by
way of a renounceable rights offer of 2 111 111 111 SacOil shares at an issue price of R0,27 per share
(the "Rights Offer"). The Rights Offer will be supported by one of the Company's largest shareholders, the Public
Investment Corporation (SOC) Limited, to the extent of circa R329 million. The ratio of rights offered for existing
SacOil shares will be in proportion to each shareholder's respective shareholding in the Company. Shareholders
are referred to the announcement dated 12 September 2013 issued on SENS and RNS for further details on the
Rights Offer.

Loan advanced to EERNL
The short-term loan due from EERNL became due and payable on 31 May 2013. As at the date of the release of
the results EERNL has not fulfilled its repayment obligations in respect of this loan. Discussions are in progress
to agree a repayment schedule for this overdue amount. The Company is also considering its position in respect
of the default provisions of the loan agreement underlying this receivable. The loan has not been impaired as the
value of the security exceeds the carrying value of the loan.

Acquisition of exploration licences
The Company announced on 9 May 2013 that its Botswana subsidiary, Transfer Holdings (Proprietary) Limited,
had been advised by the Botswana Department of Mines that these exploration licences were duly approved
and ready for collection. The petroleum exploration licences numbers 123/2013, 124/2013 and 125/2013 were
awarded to Transfer Holdings (Proprietary) Limited on 29 April 2013. A further announcement in relaton to these
licences will be released in due course.

Suspension of trade in the Company's shares on the JSE and AIM
An application was made to the JSE and AIM for the trading of the Company's shares to be suspended on
both exchanges following the resignations from the Board of two non-executive directors and the Chief
Executive Officer as announced on SENS and RNS on 31 May 2013, at which point the Company did not have
a fully constituted Board. Shareholders are further referred to the announcement issued on SENS and RNS on
12 September 2013, regarding the progress made in obtaining a lifting of the suspension on both the JSE and AIM.

12. Going concern
SacOil incurred a total comprehensive loss for the year ended 28 February 2013 of R72,7 million (2012: R101,6 million). 
The Group continues to incur losses. The Company and Group are currently experiencing liquidity challenges.

The Board plans to recapitalise the Company by way of a renounceable rights offer for R570 million to be completed by 
31 January 2014 (the Rights Offer). The Board also plans to equity settle the Gairloch Loans by 31 January 2014 under 
the terms of the Subscription and Settlement Agreement concluded with Gairloch on 12 September 2013 (the Specific Issue). 
The completion of both transactions is dependent upon future material uncertain events which are discussed below. Furthermore, 
the Companys projected cash flows to 31 August 2014 include the following assumptions, some of which are subject to material 
uncertainties as discussed in further detail below:
 A cash inflow from the loan receivable from Energy Equity Resources (Norway) Limited (EERNL) of $22,5 million;
 Cash inflow arising from rights issue proceeds amounting to R570 million;
 Cash outflows from farm-in fees payable to Nigdel and Transcorp totalling $22,6 million, the timing of which is uncertain;
 Cash outflows from seismic and operating costs for OPL 233 amounting to $9,6 million; and
 Settlement of the full debt payable to Gairloch Limited by means of a conversion to capital rather than a settlement in cash.

The features of these cash flows are further described below:
Rights offer and equity settlement of Gairloch Loans
It is imperative that SacOil obtains shareholder approval for both the Rights Offer and Gairloch debt conversion to equity. 
In terms of section 41(3) of the Companies Act, as SacOil will be issuing shares with voting power exceeding 30% of the voting
power of all the Companys shares immediately prior to both the Specific Issue and the Rights Offer, approval by way of a special
resolution is also required from SacOil shareholders (the Companies Act Resolution). Both these transactions require at least a 
75% vote in favour of the transactions.

Management has engaged with some of the Companys shareholders to determine the levels of support and appetite for the Rights Offer. 
To date, the Company has obtained support for 58% of the Rights Offer value, representing an irrevocable undertaking by the Public Investment
Corporation (PIC) to support the Rights Offer to the extent of circa R329 million. Although the outcome of the shareholders approval
and the extent of the subscription to the Rights Offer cannot be determined with certainty at this stage, the Board is reasonably 
confident that the approval of the Rights Offer will be successful. The less certain element to this is the extent to which shareholders 
will follow their rights giving rise to the raising of the full R570 million worth of capital. Furthermore, ongoing communications with 
various shareholders have demonstrated a general understanding of the immediate need to convert the Gairloch Loans which continue to accrue 
onerous finance charges. Again, the Board is reasonably confident that shareholders approval for the equity settlement of the Gairloch Loans 
will be obtained because the Board believes that the key factors that have previously caused shareholders to vote against conversion have been addressed.

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. 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 EERNLs 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 this annual report, 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 Boards 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 managements intention to renegotiate the timing of settlement 
of the fees should title be received before funds are available.

OPL 233 work programme costs
The Company needs to fund $9,6 million of seismic and operating costs up to 31 January 2014. The current arrangement is that EERNL will fund these
costs on behalf of SacOil, as a repayment mechanism for the amounts owed to SacOil. It is uncertain whether EERNL will honour these payment obligations 
given that EERNL did not meet its repayment obligations at 31 May 2013. Should EERNL continue to default, SacOil will consider enforcing the security 
provided by EERNL as noted above. SacOil would nevertheless in the interim be responsible to fund these costs in the event EERNL does not honour their 
commitment. SacOil currently does not have the funds available to make these payments.

The Board is, however, confident that the proposed conversion of the Gairloch debt to equity and the Rights issue will be approved by the shareholders, 
and that through this action SacOil will have appropriately addressed the material uncertainties with respect to going concern. It is on this basis that
management had decided to prepare the financial statements on a going concern basis. In the interim SacOil needs to secure access to interim funding 
facilities to be able to pay for its daily operational costs. Management have sought to secure an interim overdraft facility with one of its Financiers.

A facility of R6 million has been approved subject to the following suspensive conditions:
1) The conclusion of the Gairloch Subscription and Settlement Agreement confirming the conversion of the Gairloch debt to equity;
2) The PIC providing an irrevocable undertaking to support R329 million of the rights offer (A condition which has been met); and
3) The Company obtaining irrevocable undertakings from the requisite number of shareholders to vote in favour of the resolutions to give effect to the 
   full Gairloch loan conversion and rights offer, including the whitewash resolution in relation to the PICs holding 

These conditions give rise to material uncertainties which may cast significant doubt about the companys ability to continue as a going concern and, 
therefore that it may be unable to realise its assets and discharge its liabilities in the normal course of business. 

The financial statements are prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available
to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the 
ordinary course of business.

By order of the Board
Roger Rees
Chief Executive

Johannesburg
16 September 2013

CORPORATE INFORMATION

Registered office and physical address:
2nd Floor, The Gabba, Dimension Data Campus
57 Sloane Street, Bryanston, 2021

Postal address:
PostNet Suite 211, Private Bag X75, Bryanston, 2021

Contact details:
Tel: +27 (0) 11 575 7232
Fax: +27 (0) 11 576 2258
Email: info@sacoilholdings.com
Website: www.sacoilholdings.com

Directors:
Roger Rees (Chief Executive Officer), Tariro Mudzimuirema (Finance Director)
Tito Mboweni (Chairman)*, Mzuvukile Maqetuka*, Gontse Moseneke**, Stephanus Muller*, Vusi Pikoli*, Ignatius Sehoole*
* Independent non-executive directors ** Non-executive Director

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



Date: 17/09/2013 07:05:00 Supplied by www.sharenet.co.za                     
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