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