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Sacoil Holdings Limited - Reviewed Interim Results For The Six Months Ended 31 August 2013

Release Date: 22/11/2013 12:00:00      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")



Reviewed interim results

for the six months ended 31 August 2013



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



OVERVIEW

SacOil is an independent African oil and gas company, dual-listed on the JSE and AIM, and has business

operations that are focused across the African continent. Currently, the Group operates in the following

jurisdictions: the Democratic Republic of Congo ("DRC"); the Republic of Malawi; the Republic of

Botswana; and the Federal Republic of Nigeria. Further, the Company continues to evaluate opportunities

to secure high-impact acreage in other established and prolific hydrocarbon basins in Africa.



OPERATIONS

Shareholders are referred to the announcement issued on SENS and RNS on 8 November 2013, in which

the Company communicated a detailed update on its asset-level operations. The operational highlights

for the period under review include:



- DRC, Block III: 2D seismic data acquisition currently being planned and expected to commence within

  the next dry season in Q1 2014;

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

  underway;

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

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

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



FINANCIAL REVIEW

For the six months ended 31 August 2013, the Group reported a profit of R27,0 million (2012: loss of

R11,8 million) primarily arising from an increase in investment income earned and decreases in finance and

operating costs, relative to the corresponding prior period.



Other income for the period under review comprised foreign exchange gains amounting to R43,7 million

(2012: R38,9 million) arising on the remeasurement of the following US Dollar denominated balances:

   

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

? the Block III contingent consideration; and

? the cash collateral deposited with Ecobank.



The 21% overall decrease in other income is primarily attributable to the once-off profit on disposal of

the 6,67% interest in Block III and the once-off break fee received from a third party in the corresponding

prior period.



Other operating costs decreased by 50% to R11,5 million (2012: R23,2 million) during the period under

review. The reduction is primarily attributable to decreases in corporate, remuneration, consulting, legal

and travel and accommodation costs.



Investment income for the period under review comprised:



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

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

- imputed interest income of R12,5 million (2012: R7,9 million) arising from the unwinding of the time

  value discount applied to the contingent consideration for Block III.



Investment income increased by R19,7 million relative to the corresponding prior period, reflective of an

increase in the amounts advanced to EERNL, the compounding effect of the interest accruals and the

impact of the weak Rand.  



The Group's finance costs of R10,5 million (2012: R21,5 million) relate to interest on the two US$1 million

loans acquired from Gairloch Limited ("Gairloch") during September 2012 and October 2012, to fund

working capital requirements of the Group and work programme commitments for OPL 233. During the

period under review the Group incurred further interest charges amounting to R32,6 million on the Gairloch

novated loan. This interest has been capitalised to the OPL 233 exploration and evaluation asset, as it

relates to a qualifying asset.



Taxation decreased by 13% to R41,7 million (2012: R48,1 million). Taxation was comparatively higher in

the corresponding prior period as a result of the once-off capital gains tax incurred on the disposal of the

6,67% interest in Block III.



Exploration and evaluation assets increased by R43,8 million to R206,7 million (28 February 2013:

R162,9 million) during the period under review as a result of the Group capitalising exploration expenditures

amounting to R11,2 million and borrowing costs totalling R32,6 million in relation to OPL 233.



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

   

? the US Dollar denominated contingent consideration for Block III of R221,9 million (28 February 2013:

  R181,5 million);  

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

  R93,5 million);    

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

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

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



The overall increase of 20% in other financial assets, under non-current assets, is primarily a result of

foreign exchange gains and interest amounting to R70,4 million on the contingent consideration and on

the loan due from EERNL.



Other financial assets, under current assets, comprise:



? the US Dollar denominated short-term loan due from EERNL of R150,7 million (28 February 2013:

  R83,9 million); and

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



The R66,9 million overall increase in other financial assets, under current assets, is primarily the result of

foreign exchange gains and interest on the short-term loan due from EERNL.



Cash and cash equivalents comprise the revalued US$10 million cash collateral held as security for the

performance bond on OPL 233 of R103,2 million (28 February 2013: R89,1 million) and cash deposits

amounting to R0,3 million (28 February 2013: R4,9 million). The 10% increase in cash and cash equivalents

is primarily attributable to foreign exchange gains resulting from the weaker Rand.



Other financial liabilities comprise the three loans owed to Gairloch totalling R235,1 million (28 February

2013: R129,0 million), operating costs owed to Nidgel United Oil Company amounting to R9,8 million

(28 February 2013: R2,4 million), EERNL's 50% share of the cash collateral of R51,5 million (28 February

2013: R44,2 million) and makewhole costs owed to Yorkville under the Standby Equity Distribution

Agreement totalling R0,4 million (28 February 2013: nil). The 69% increase in other financial liabilities

is primarily attributable to foreign exchange losses and interest on the Gairloch loans amounting to

R106,1 million, foreign exchange losses amounting to R7,3 million on EERNL's share of the cash collateral,

and foreign exchange losses and additional costs relating to the amounts owed to Nigdel totalling

R7,4 million.



GOING CONCERN

The Board is satisfied that the planned recapitalisation of the Company, as referred to in the General

Meeting Circular to SacOil shareholders dated 7 November 2013, will ensure that the Group has adequate

resources to continue operating for the next 12 months. The Group interim financial statements presented

have been prepared on a going concern basis.



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 31 August 2013

                                                                                     Restated*

                                                                      Reviewed        Reviewed

                                                                    Six months      Six months

                                                                  to 31 August    to 31 August

                                                                          2013            2012

                                                         Notes               R               R



Other income                                                        43 737 699      55 213 642

Other operating costs                                             (11 501 668)    (23 198 827)

Operating profit                                             4      32 236 031      32 014 815

Investment income                                            5      46 927 405      27 203 337

Finance costs                                                     (10 474 963)    (21 517 167)

Profit before taxation                                              68 688 473      37 700 985

Taxation                                                          (41 712 659)    (48 072 518)

Profit/(loss) for the period from continuing operations             26 975 814    (10 371 533)

Discontinued operation

Loss for the period from discontinued operation              7               ?     (1 414 628)

Profit/(loss) for the period                                        26 975 814    (11 786 161)

Total comprehensive profit/(loss) for the period                    26 975 814    (11 786 161)

Profit/(loss) attributable to:

Equity holders of the parent                                        26 284 839    (12 472 750)

Non-controlling interest                                               690 975         686 589

                                                                    26 975 814    (11 786 161)

Total comprehensive profit/(loss) attributable to:

Equity holders of the parent                                        26 284 839    (12 472 750)

Non-controlling interest                                               690 975         686 589

                                                                    26 975 814    (11 786 161)

Earnings/(loss) per share from continuing operations

Basic (cents)                                                8            2,76          (1,43)

Diluted (cents)                                              8            2,76          (1,43)

Earnings/(loss) per share from continuing and

discontinued operations

Basic (cents)                                                8            2,76          (1,62)

Diluted (cents)                                              8            2,76          (1,61)



* Due to a change in accounting policy, certain amounts shown here do not correspond to the 2012 interim results

  and reflect adjustments made as detailed in note 3.



CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 August 2013

                                                                        Reviewed         Audited

                                                                       31 August     28 February

                                                                            2013            2013

                                                            Notes              R               R

ASSETS

Non-current assets

Property, plant and equipment                                            253 773         317 008

Exploration and evaluation assets                               9    206 659 432     162 859 167

Other intangible assets                                                  130 949         161 760

Other financial assets                                         10    445 099 456     371 719 195

Total non-current assets                                             652 143 610     535 057 130

Current assets

Other financial assets                                         10    151 707 934      84 803 036

Trade and other receivables                                            3 672 368       3 665 149

Cash and cash equivalents                                      11    103 580 730      94 032 416

Total current assets                                                 258 961 032     182 500 601

Total assets                                                         911 104 642     717 557 731

EQUITY AND LIABILITIES

Shareholders' equity

Stated capital                                                       534 172 123     534 172 123

Reserves                                                               6 001 847      26 681 469

Accumulated loss                                                   (172 735 613)   (219 700 074)

Equity attributable to equity holders of parent                      367 438 357     341 153 518

Non-controlling interest                                              22 989 130      22 298 155

Total shareholders' equity                                           390 427 487     363 451 673

Liabilities

Non-current liabilities

Deferred tax liability                                                88 755 267      72 588 101

Total non-current liabilities                                         88 755 267      72 588 101

Current liabilities

Other financial liabilities                                    12    296 808 352     175 574 827

Current tax payable                                                  119 540 560      93 962 655

Trade and other payables                                              15 572 976      11 980 475

Total current liabilities                                            431 921 888     281 517 957

Total liabilities                                                    520 677 155     354 106 058

Total equity and liabilities                                         911 104 642     717 557 731

Number of shares in issue                                            953 340 791     953 340 791

Net asset value per share (cents)                                          40,95           38,12

Net tangible asset value per share (cents)                                 19,26           21,02

CONSOLIDATED STATEMENT OF CASH FLOWS

for the six months ended 31 August 2013                                 Reviewed        Reviewed

                                                                      Six months      Six months

                                                                    to 31 August    to 31 August

                                                                            2013            2012

                                                                               R               R

Cash flows from operating activities

Cash used in operations                                              (8 739 666)   (122 076 336)

Interest income                                                          217 185         354 795

Tax paid                                                                  32 412               ?

Net cash used in operating activities                                (8 490 069)   (121 721 541)

Cash flows from investing activities

Purchase of exploration and evaluation assets                        (4 210 593)               ?

Sale of exploration and evaluation assets                                      ?      75 997 000

Receipts from loans and receivables                                    4 303 501               ?

Net cash from investing activities                                        92 908      75 997 000

Cash flows from financing activities

Proceeds from other financial liabilities                              3 288 700     148 382 917

Dividends paid to non-controlling interest                                     ?    (24 573 794)

Net cash from financing activities                                     3 288 700     123 809 123

Total movement in cash and cash equivalents for the period           (5 108 461)      78 084 582

Foreign exchange gains on cash and cash equivalents                   14 656 775       6 259 400

Cash and cash equivalents at the beginning of the period              94 032 416      10 774 298

Cash and cash equivalents at the end of the period                   103 580 730      95 118 280



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                                                                                                                                                       Total equity

                                                                                                    Share-based                                 Restated*           attributable to             Non-

                                                            Stated            Revaluation               payment                 Total         Accumulated            equity holders      controlling           Total

                                                           capital                reserve               reserve              reserves                loss             of the parent   interest (NCI)          equity

For the six months ended 31 August 2013                          R                      R                     R                     R                   R                         R                R               R



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

Changes in equity:

Profit for the period                                            ?                      ?                     ?                     ?           26 284 839               26 284 839          690 975      26 975 814

Total comprehensive profit for the period                        ?                      ?                     ?                     ?           26 284 839               26 284 839          690 975      26 975 814

Share options lapsed                                             ?                      ?          (20 679 622)          (20 679 622)           20 679 622                        ?                                ?

Total changes                                                    ?                      ?          (20 679 622)          (20 679 622)           46 964 461               26 284 839          690 975      26 975 814

Balance at 31 August 2013                              534 172 123                      ?             6 001 847             6 001 847        (172 735 613)              367 438 357       22 989 130     390 427 487

For the six months ended 31 August 2012

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)/profit for the period                                     ?                      ?                     ?                     ?         (12 472 750)             (12 472 750)          686 589    (11 786 161)

Total comprehensive profit/(loss)

for the period                                                   ?                      ?                     ?                     ?         (12 472 750)             (12 472 750)          686 589    (11 786 161)

Issue of shares                                         36 771 700                      ?                     ?                     ?                    ?               36 771 700                ?      36 771 700

Acquisition of non-controlling interest                          ?                      ?                     ?                     ?           24 693 273               24 693 273     (49 267 068)    (24 573 795)

Dividends                                                        ?                      ?                     ?                     ?                    ?                        ?     (24 573 794)    (24 573 794)

Total changes                                           36 771 700                      ?                     ?                     ?           12 220 523               48 992 223     (73 154 273)    (24 162 050)

Balance at 31 August 2012                              522 956 123              1 810 947            27 932 584            29 743 531        (176 381 968)              376 317 686       36 789 560     413 107 246



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



1. Basis of preparation

The consolidated condensed interim financial statements of the Group, comprised SacOil Holdings Limited and its subsidiaries

(together "the Group"), for the six months ended 31 August 2013, have been prepared in accordance with the recognition and

measurement criteria of International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards

Board ("IASB"), the preparation and disclosure requirements of IAS 34: Interim Financial Reporting, the SAICA Financial Reporting

Guides as issued by the Accounting Practices Committee, the Financial Pronouncements as issued by the Financial Reporting

Standards Council, the Listings Requirements of the JSE Limited and in the manner required by the South African Companies Act,

No. 71, 2008. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in

accordance with IFRS, as issued by the IASB, have been omitted or condensed as is normal practice.



Principal accounting policies

The same accounting policies, presentation and methods of computation have been followed in these consolidated condensed

interim financial statements of the Group as those applied in the preparation of the Group's annual financial statements for the year

ended 28 February 2013, except for the change in accounting policy detailed in note 3. The adoption of the following standards,

which became effective during the period under review, had no material impact on the results, except for the disclosures required

by these standards:



? IFRS 10: Consolidated Financial Statements;

? IFRS 11: Joint Arrangements;

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

? IFRS 13: Fair Value Measurement.



All of the Group's financial instruments are held at amortised cost. The fair values thereof would be influenced by numerous factors

the most significant of which include credit risk, other forms of non-performance risk (for financial liabilities), and interest rate risk.

Management is of the opinion that, taking into account the value of collateral, as well as payment options, the fair value of the financial

instruments is expected to approximate the carrying value thereof.



The consolidated condensed interim financial statements of the Group should be read in conjunction with the Group's consolidated

annual financial statements for the year ended 28 February 2013.



Notes to oil and gas disclosure

In accordance with AIM Guidelines, Bradley Cerff is the qualified person that has reviewed the technical information contained in

this news release. Bradley has over 16 years' experience in the oil and gas industry with a Masters Degree in Science and Business

Administration focused on Foreign Direct Investment in the African oil and gas industry. He is also a member of the Society of

Petroleum Engineers.



2. Auditors' review report

The consolidated condensed interim financial statements of the Group for the six months ended 31 August 2013 have been reviewed

by Ernst & Young Inc. A copy of the auditors' unqualified review opinion, which includes an emphasis of matter paragraph for the

going concern matters noted in note 16, is available for inspection at the registered office of the Company.



These consolidated condensed interim financial statements have been prepared under the supervision of the interim Finance

Director, Tariro Mudzimuirema (Chartered Accountant).



3. Change in accounting policy

During the period ended 31 August 2012, the Group capitalised costs paid by Total on behalf of Semliki Energy SPRL, a subsidiary

within the Group, in terms of a cost carry arrangement under the farm-in agreement for Block III. These costs increased the Block III

exploration and evaluation asset resulting in a corresponding increase in liabilities representing the amounts owed to Total. To align

its accounting practices with comparable companies in the industry, the Group decided not to capitalise these costs but rather

to use the requirements of IAS 37: Provisions, Contingent Liabilities and Contingent Assets, and only recognise the liability and

corresponding asset on the occurrence of the contingent event (refer to note 13). As a result of the change in accounting policy, the

following adjustments were made to the Group consolidated condensed interim financial statements:



                                                                       Adjustments

As of and for the period ended 31 August 2012                                    R



Decrease in exploration and evaluation assets                         (20 638 362)

Decrease in long-term borrowings                                      (20 638 362)

Decrease in deferred tax liability                                     (3 320 451)

Increase in non-controlling interest                                     3 146 188

Decrease in taxation                                                   (3 320 451)

Decrease in loss for the period                                        (3 320 451)

Decrease in loss per share (cents)                                          (0,02)

Decrease in diluted loss per share (cents)                                  (0,02)



                                                        31 August        31 August

                                                             2013             2012

4. Operating profit                                             R                R



Profit on sale of exploration and evaluation assets             ?       40 926 877

Loss on re-measurement of financial assets                      ?     (31 621 739)

Foreign exchange gains                                 43 737 699       38 945 883

Break fee received                                              ?        6 962 621

Impairment of property, plant and equipment                     ?      (1 456 572)

Corporate costs                                       (1 496 983)      (3 012 342)

Auditors' remuneration                                  (140 926)      (2 315 189)

Employee benefit expense                              (5 171 965)      (6 251 827)

Accounting fees                                          (20 000)        (388 375)

Consulting fees                                         (759 620)      (2 109 224)

Legal fees                                              (947 065)      (2 373 166)

Travel and accommodation                                (691 390)      (1 793 602)

Depreciation                                             (94 046)        (373 271)

 Property, plant and equipment                           (63 235)        (373 271)

 Other intangible assets                                 (30 811)                ?

Rentals ? premises                                      (561 303)        (492 313)

Brokers' fees                                           (744 998)        (838 488)



                                                 31 August    31 August

                                                      2013         2012

5. Investment income

Interest receivable ? loans                     34 225 495   18 904 637

Interest received ? cash and cash equivalents      217 185      354 795

Imputed interest on financial assets            12 484 725    7 943 905

                                                46 927 405   27 203 337



6. Segmental reporting

The Group operates in five geographical locations which form the basis of the information evaluated by the Group's chief

decision-maker. For management purposes the Group is organised and analysed by these locations. These locations are:

South Africa, Nigeria, DRC, Botswana and Malawi. Operations in South Africa relate to the general management, financing

and administration of the Group.



For the six months ended 31 August 2013

                                                                                                    South

                                         Nigeria             DRC      Malawi    Botswana           Africa    Consolidated

                                               R               R           R           R                R               R



Other income                                   ?      27 078 912           ?           ?       16 658 787      43 737 699

Investment income                        211 077       9 693 141           ?           ?       37 023 187      46 927 405

Finance costs                                  ?               ?           ?           ?     (10 474 963)    (10 474 963)

Other operating expenses                (17 793)               ?           ?     (8 241)     (11 475 634)    (11 501 668)

Taxation                                  32 413    (34 612 756)           ?           ?      (7 132 316)    (41 712 659)

Profit/(loss) for the period             225 697       2 159 297           ?     (8 241)       24 599 061      26 975 814

Segment assets ? non-current         131 009 869     324 724 643     896 740     386 548      195 125 810     652 143 610

Segment assets ? current             103 235 757          67 931           ?           ?      155 657 344     258 961 032

Segment liabilities ? non-current              ?    (88 755 267)           ?           ?                ?    (88 755 267)

Segment liabilities ? current       (51 508 000)    (94 037 825)           ?           ?    (286 376 063)   (431 921 888)

For the six months ended 31 August 2012

                                                       Restated*                                    South

                                         Nigeria             DRC      Malawi    Botswana           Africa   Consolidated

                                               R               R           R           R                R              R



Other income                                   ?      33 615 107           ?           ?       21 598 535     55 213 642

Investment income                        294 337       7 943 905           ?           ?       18 965 095     27 203 337

Finance costs                       (21 194 404)               ?           ?           ?        (322 763)   (21 517 167)

Other operating expenses             (1 368 139)               ?           ?           ?     (21 830 688)   (23 198 827)

Taxation                                       ?    (43 157 759)           ?           ?      (4 914 759)   (48 072 518)

(Loss)/profit for the period from

continuing operations               (22 268 206)     (1 598 747)           ?           ?       13 495 420   (10 371 533)

Loss from discontinued operation

(note 7)                                       ?               ?           ?           ?      (1 414 628)    (1 414 628)

(Loss)/profit for the period        (22 268 206)     (1 598 747)           ?           ?       12 080 792   (11 786 161)

Segment assets ? non-current          44 953 555     348 420 250           ?           ?       81 384 007    474 757 812

Segment assets ? current              84 638 853       8 699 856           ?           ?      175 104 978    268 443 687

Segment liabilities ? non-current              ?   (103 166 818)           ?           ?                ?  (103 166 818)

Segment liabilities ? current       (42 166 500)    (55 542 551)           ?           ?    (134 214 940)  (231 923 991)





* Due to a change in accounting policy, certain amounts shown here do not correspond to the 2012 interim results and

  reflect adjustments made as detailed in note 3.



7. Discontinued operation

The Board committed to a plan to sell the Greenhills manganese processing plant ("the Plant") early in 2012 following a

strategic decision to focus the Group's efforts and resources on the core oil and gas business. The Plant was therefore

classified as held for sale at 31 August 2012. The Plant was subsequently sold on 1 October 2012 and met the criteria of

a discontinued operation in terms of IFRS 5.32 at 28 February 2013.



                                                        31 August 2012

Results of discontinued operation                                    R



Revenue                                                      9 113 711

Cost of sales                                              (7 328 296)

Gross profit                                                 1 785 415

Operating expenses                                         (3 200 043)

Loss for the period                                        (1 414 628)

Basic loss per share (cents)                                    (0,18)

Diluted loss per share (cents)                                  (0,18)

The Plant was sold for R7 million payable as follows:                R

1 October 2013                                               1 000 000

1 October 2014                                               2 000 000

1 October 2015                                               2 000 000

1 October 2016                                               2 000 000

Total consideration                                          7 000 000



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

included under other financial assets.



8. Earnings/(loss) per share                                                           31 August 2013    31 August 2012

From continuing and discontinued operations

Basic (cents)                                                                                    2,76            (1,62)

Diluted (cents)                                                                                  2,76            (1,61)

From discontinued operation

Basic (cents)                                                                                       ?            (0,18)

Diluted (cents)                                                                                     ?            (0,18)

From continuing operations

Basic (cents)                                                                                    2,76            (1,43)

Diluted (cents)                                                                                  2,76            (1,43)

Profit/(loss) for the period used in the calculation of the basic and diluted                       R                 R

earnings/(loss) per share from continuing and discontinued operations                      26 284 839      (12 472 750)

Loss for the period from discontinued operations                                                    ?         1 414 628

Profit/(loss) used in the calculation of basic and diluted earnings/(loss) per share

from continuing operations                                                                 26 284 839      (11 058 122)

Weighted average number of ordinary shares used in the calculation of basic

earnings/(loss) per share                                                                 953 340 791       771 061 757

Add: Dilutive share options                                                                         ?         1 350 251

Weighted average number of ordinary shares used in the calculation of

diluted earnings/(loss) per share                                                         953 340 791       772 412 008

Headline earnings/(loss) per share

Basic (cents)                                                                                    2,76            (2,60)

Diluted (cents)                                                                                  2,76            (2,60)

Reconciliation of headline earnings/(loss)                                                          R                 R

Profit/(loss) for the period from continuing and discontinued operations                   26 284 839      (12 472 750)

Adjust for:

Impairment of property, plant and equipment                                                         ?         1 456 572

Profit on sale of exploration and evaluation assets attributable to

equity holders of the parent                                                                        ?       (9 060 997)

Headline earnings/(loss) for the period                                                    26 284 839      (20 077 175)



9. Exploration and evaluation assets

For the six months ended 31 August 2013

                                                             Restated*

                          At                                        At                          At                         At

                    February       Adjust-                   31 August                    February                     August

                        2012         ments     Disposals          2012      Additions         2013    Additions          2013

                           R             R             R             R              R            R            R             R



Block III DRC    101 381 633             ?  (27 015 358)    74 366 275              ?   74 366 275            ?    74 366 275

OPL 281 Nigeria   47 712 172   (3 639 250)             ?    44 072 922              ?   44 072 922            ?    44 072 922

OPL 233 Nigeria    3 962 528   (3 081 896)             ?       880 632     42 642 598   43 523 230   43 413 717    86 936 947

Botswana                   ?             ?             ?             ?              ?            ?      386 548       386 548

Malawi                     ?             ?             ?             ?        896 740      896 740            ?       896 740

                 153 056 333   (6 721 146)  (27 015 358)   119 319 829     43 539 338  162 859 167    43 800 265  206 659 432





* Due to a change in accounting policy, certain amounts shown here do not correspond to the 2012 interim results and

  reflect adjustments made as detailed in note 3.



OPL 233

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

expenditures totalling R10,8 million (2012: nil).



Botswana

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



Block III

During the corresponding prior period, Semliki SPRL, a subsidiary of SacOil, sold to Total RDC a 6,67% interest in Block III resulting

in the derecognition of R27,0 million of exploration and evaluation assets.



Adjustments

Adjustments to the OPL 281 and OPL 233 assets in the corresponding prior period relate to promoter fees. These fees will now be

recovered from EERNL and are included in amounts due from EERNL under current other financial assets (note 10).



                                                                                        31 August         28 February

                                                                                             2013                2013

10. Other financial assets                                                                      R                   R

Non-current:

Contingent consideration                                                              221 888 167         181 470 254

Deferred consideration on disposal of Greenhills Plant                                  4 933 216           4 701 795

Loan due from DIG                                                                      35 314 943          35 315 725

Advance payment against future services                                                59 508 337          56 716 754

Loan due from EER                                                                     123 454 793          93 514 667

                                                                                      445 099 456         371 719 195

Current:

Loan due from EER                                                                     150 715 996          83 857 631

Deferred consideration on disposal of Greenhills Plant                                    991 938             945 405

                                                                                      151 707 934          84 803 036

Total                                                                                 596 807 390         456 522 231



11. Cash and cash equivalents

Cash and cash equivalents comprise:

Bank balances                                                                             344 973           4 677 192

Short-term deposits                                                                             ?             215 368

                                                                                          344 973           4 892 560

Restricted cash                                                                       103 235 757          89 139 856

                                                                                      103 580 730          94 032 416



Restricted cash comprises the cash collateral of US$10 million (28 February 2013: US$10 million) paid to Ecobank to

secure the performance bond on OPL 233. The cash is held in the bank account of SacOil's wholly owned subsidiary,

SacOil 233 Nigeria Limited. The remainder of the performance bond is secured by a first ranking legal charge over SacOil's

investment in SacOil 233 Nigeria Limited.



12. Other financial liabilities

Gairloch Limited                                                                      235 084 090         128 978 015

Energy Equity Resources (Norway) Limited                                               51 508 000          44 199 000

Yorkville Advisors LLP                                                                    429 742                   ?

Nigdel United Oil Company Limited                                                       9 786 520           2 397 812

                                                                                      296 808 352         175 574 827



                                                                                        31 August           31 August

13. Contingent assets and liabilities                                                        2013                2012

Commitments                                                                                     R                   R



Exploration and evaluation assets ? work programme commitments                        413 938 891                   ?

Work programme commitments will be funded from the proceeds

of the rights offer. Details of the rights offer are provided in note 15.

                                                                                        31 August         28 February

                                                                                             2013                2013

Contingent liabilities                                                                          R                   R

Performance bond on OPL 233 issued by Ecobank in respect of

OPL 233 exploration activities                                                        154 524 000         132 597 000

Cost carry arrangement with Total                                                      32 861 257          20 411 689

Farm-in and transaction fees on receipt of title to OPL 233                           134 950 960         115 801 380

Farm-in and transaction fees on receipt of title to OPL 281                           149 373 200         128 177 100

                                                                                      471 709 417         396 987 169



Performance bond

In April 2012, the Group posted a $25 million performance bond to support the work programme on OPL 233. This

performance bond is secured by a R103,2 million ($10 million) (28 February 2013: R89,1 million (US$10 million)) cash

collateral as disclosed in note 11. The remainder of the performance bond, disclosed as a contingent liability, is secured by

a first ranking legal charge over SacOil's investment in SacOil 233 Nigeria Limited.



Cost carry arrangement

The farm-in agreement between Semliki and Total provides for a carry of costs by Total on behalf of Semliki. Total will

be entitled to recover these costs, being Semliki's share of the costs on Block III, plus interest, from future oil revenues.

The contingency becomes probable when production of oil commences and will be raised in full at that point. At

31 August 2013, Total had incurred R32,9 million (28 February 2013: R20,4 million) of costs on behalf of Semliki. Should

this liability be recognised, a corresponding increase in assets will be recognised, which, together with existing exploration

and evaluation assets, will be recognised as development infrastructure assets (refer to note 3).



Farm-in and transaction fees

OPL 233

A farm-in fee of R109,2 million (28 February 2013: R93,7 million) (US$10,6 million) is due to Nigdel United Oil Company

Limited upon the formal approval by the Nigerian government of the assignment of title to SacOil 233 Nigeria Limited in

relation to OPL 233. A transaction fee of R25,8 million (28 February 2013: R22,1 million) (US$2,5 million) is due to Energy

Equity Resources (Norway) Limited upon the receipt of title to OPL 233, pursuant to the provisions of the Master Joint

Venture Agreement.



OPL 281

A farm-in fee of R123,6 million (28 February 2013: R106,1 million) (US$12 million) is due to Transnational Corporation

of Nigeria Limited upon the formal approval by the Nigerian government of the assignment of title to SacOil 281 Nigeria

Limited in relation to OPL 281. A transaction fee of R25,8 million (28 February 2013: R22,1 million) (US$2,5 million) is due

to Energy Equity Resources (Norway) Limited upon the receipt of title to OPL 281, pursuant to the provisions of the Master

Joint Venture Agreement.



14. Dividends

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



15. Subsequent events

Equity settlement of the Gairloch Loans

Gairloch Limited ("Gairloch") exercised its rights under the three loans agreements, to require SacOil to equity settle loans

owed to Gairloch. On 12 September 2013 SacOil concluded an agreement with Gairloch for the conversion of debt to

equity in SacOil. Under the terms of this agreement debt totalling circa R238,5 million (US$24,1 million) will be converted

into 883 449 144 new SacOil ordinary shares at R0,27 (US$0,0272876) per share. The share issue price represents a 4,6%

discount to the volume weighted average traded price of the SacOil shares on the JSE over the 30 business days prior to

the date of the suspension. For details relating to the equity settlement of the Gairloch Loans, shareholders are referred

to the circular distributed to shareholders dated 7 November 2013. This circular is also available on the SacOil website:

www.sacoilholdings.com.



Rights Offer

As previously announced on 12 September 2013, the Company intends to raise additional capital of up to R570 million

by way of a renounceable rights offer of 2 111 111 111 SacOil shares ("Right Offer Shares") at an issue price of R0,27

per share (the "Rights Offer"). The Rights Offer will be supported by one of the Company's largest shareholders, the

Government Employees Pension Fund ("GEPF"), managed by the Public Investment Corporation (SOC) Limited ("PIC"),

to the extent of circa R329 million. The ratio of rights offered for existing SacOil shares will be in proportion to each

shareholder's respective shareholding in the Company. For details relating to Rights Offer, shareholders are referred to

the circular distributed to shareholders dated 7 November 2013. This circular is also available on the SacOil website:

www.sacoilholdings.com.



Bridge Loan Facility

On 27 September 2013, SacOil obtained a temporary overdraft facility of R15 million from Nedbank subject to the fulfilment

of certain conditions precedent, some of which have already been met. The outstanding conditions precedent will be

fulfilled on 6 December 2013, subject to SacOil shareholders approving the resolutions to give effect to the Whitewash

Resolution, the Specific Issue and Rights Offer, as defined in the circular posted to shareholders on 7 November 2013.



Loan advanced to EERNL

The short-term loan due from EERNL, as disclosed in note 10, became due and payable on 31 May 2013. As at the date of

the release of the interim results EERNL has not fulfilled its repayment obligations in respect of this loan. Discussions are in

progress to agree a repayment schedule for this overdue amount. The Company is also considering its position in respect

of the default provisions of the loan agreement underlying this receivable. The loan has not been impaired as the value

of the security provided exceeds the carrying value of the loan. The loan is secured by EERNL's shares in its subsidiary

EER233 Nigeria which holds a 20% interest in OPL 233, subject to government approval.



16. Going concern

As indicated in the General Meeting Circular to SacOil shareholders dated 7 November 2013 ("Circular"), the Board plans

to recapitalise the Company by way of a renounceable rights offer of R570 million, to be completed by 31 January 2014

("the Rights Offer"). The Board also plans to equity settle the Gairloch Loans by 31 January 2014 under the terms of

the Subscription and Settlement Agreement concluded with Gairloch on 12 September 2013 ("the Specific Issue").

The completion of both transactions is dependent upon future material uncertain events which are discussed below.

Furthermore, the Company's projected cash flows to 30 November 2014 include the following assumptions some of which

are subject to material uncertainties as discussed in further detail below:



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

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

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

  which is uncertain; and    

- Settlement of the full debt payable to Gairloch by means of a conversion to capital rather than a settlement in cash.



The features of these cash flows are further described below:



Rights Offer and equity settlement of Gairloch Loans

The resolutions required to give effect to the Rights Offer and Specific Issue are detailed in the Circular in the Notice of

General Meeting. It is imperative that SacOil obtains shareholder approval for both the Rights Offer and Specific Issue.

SacOil has prepared its working capital forecast on the basis that the Specific Issue and Rights Offer are approved by

shareholders, and that the Rights Offer is fully subscribed for.



Management has engaged with some of the Company's shareholders to determine the levels of support and appetite for

the Rights Offer. To date, the Company has obtained support for 58% of the Rights Offer value, representing an irrevocable

undertaking by the PIC to support the Rights Offer to the extent of circa R329 million. Although the outcome of the

shareholders' approval and the extent of the subscription to the Rights Offer cannot be determined with certainty at this

stage, the Board is reasonably confident that the approval of the Rights Offer will be successful. As detailed in the Circular

in Annexure 6, the Company has received irrevocable undertakings in favour of the resolutions required to give effect to the

Rights Offer and Specific Issue, from shareholders with a 23,9% total equity interest in SacOil. Subsequent to the issue of

the Circular, SacOil received a further irrevocable undertaking from the PIC, representing the GEPF a 16,6% shareholder

in SacOil, to vote in favour of the resolutions detailed in the Circular, excluding the Whitewash Resolution, as referred to

therein. The less certain element to this is the extent to which shareholders will follow their rights giving rise to the raising

of the full R570 million of capital. Furthermore, ongoing communications with various shareholders have demonstrated a

general understanding of the immediate need to convert the Gairloch Loans which continue to accrue onerous finance

charges. Again, the Board is reasonably confident that shareholders' approval for the equity settlement of the Gairloch

Loans will be obtained.



Loan receivable from EERNL

EERNL has not met its repayment obligations on the short-term loan repayment, which became due and payable on

31 May 2013. To date, EERNL has paid US$1 million of the US$12,5 million owed to SacOil at 31 May 2013

(31 August 2013: US$14,6 million). The Company is in discussions with EERNL to renegotiate payment terms and is also

considering its rights in terms of the default provisions underlying the loan agreement. It is uncertain at this stage whether

EERNL will meet its repayment obligations on or before the proposed repayment date. Should non-payment of the short-

term loan continue, SacOil will consider enforcing the security provided by EERNL, being EERNL's shares in its subsidiary

EER 233 Nigeria Limited which owns a 20% interest in OPL 233, through the disposal of this interest, to recover amounts

owed.



Farm-in and transaction fees

The payment of farm-in and transaction fees is dependent upon the receipt of title to OPL 233 and OPL 281. These fees

are payable within 30 days of the receipt of title. As at the date of the release of the interim results, the Company has been

unable to determine the likely timing of the receipt of title to both OPL 233 and OPL 281 as these are subject to regulatory

approvals not within the control of the Company. The Board's current plan is to fund these fees from the proceeds of the

Rights Offer. Should title be received prior to the completion of the Rights Offer, the Company would be unable to fund

these fees in the ordinary course of business. It is management's intention to renegotiate the timing of settlement of the

fees should title be received before funds are available.



These conditions give rise to material uncertainties which may cast significant doubt about the Company's ability to

continue as a going concern, and therefore that it may be unable to realise its assets and discharge its liabilities in the

normal course of business. The Board is however confident that the Specific Issue and the Rights Offer will be approved

by the shareholders, and that through this action SacOil will have appropriately addressed the material uncertainties with

respect to going concern. It is on this basis that management has decided to prepare the financial statements on a going

concern basis. In the interim SacOil has secured an interim funding facility, as detailed under note 15, which will enable it

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



The financial statements are prepared on the basis of accounting policies applicable to a going concern. This basis

presumes that funds will be available to finance future operations and that the realisation of assets and settlement of

liabilities, contingent obligations and commitments will occur in the ordinary course of business.



By order of the Board



Roger Rees

Chief Executive



Johannesburg

22 November 2013



CORPORATE INFORMATION



Registered office and physical address:

2nd Floor, The Gabba, Dimension Data Campus, 57 Sloane Street, 2021



Postal address:

PostNet Suite 211, Private Bag X75, Bryanston, 2021



Contact details:

Tel: +27 (0) 11 575 7232

Fax: +27 (0) 11 576 2258

Email: info@sacoilholdings.com

Website: www.sacoilholdings.com



Directors:

Roger Rees (Chief Executive Officer), Tariro Mudzimuirema (Finance Director), Tito Mboweni**

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

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



Advisers:

Company Secretary                           Fusion Corporate Secretarial Services (Proprietary) Limited

Transfer Secretaries South Africa           Link Market Services South Africa (Proprietary) Limited

Transfer Secretaries United Kingdom         Computershare Investor Services (Jersey) Limited

Corporate Legal Advisers                    Norton Rose Fullbright South Africa

Auditors                                    Ernst & Young Inc.

JSE Sponsor                                 Nedbank Capital

AIM Nominated Adviser                       finnCap Limited
Date: 22/11/2013 12:00:00 Supplied by www.sharenet.co.za                     
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