Wrap Text
Summarised audited results for the year ended 28 February 2014
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 together with its subsidiaries "the Group")
SUMMARISED AUDITED RESULTS
for the year ended 28 February 2014
Highlights:
- Board and subcommittees reconstituted
- Lifting of JSE and AIM suspension
- R336.6 million raised through Rights Issue
- R238.5 million Gairloch loans converted to equity
- Company is debt free
- New shareholder structure
- Acquisition of three exploration licences in Botswana
- Commencement of OPL 233 3D seismic survey
- Signing of OPL 281 Production-sharing Contract
- Signing of a Memorandum of Understanding to pursue gas opportunities in Mozambique
- Appointment of new Chief Executive Officer
OVERVIEW
The Group's income and financial assets are predominantly denominated in US Dollars.
The weakening of the Rand, and the resulting increase in foreign exchange gains and
foreign income receivable, significantly underpinned the financial results of the Group.
In addition to the increase in income, the Group's operating costs decreased by 43%
primarily due to a reduction in the impairment of the Group's financial assets.
Consequently, for the year ended 28 February 2014, the Group reported a profit before
taxation of R64.7 million (2013: loss of 29.3 million).
FINANCIAL PERFORMANCE
Other income
Other income comprises foreign exchange gains totalling R47.4 million
(2013: R32.1 million) which arose on translation of the US Dollar denominated cash
collateral, the contingent consideration receivable and loans advanced to Energy
Equity Resources (Norway) Limited ("EERNL") and DIG Oil (Proprietary) Limited ("DIG").
In the prior financial year other income included profit of R71.7 million on disposal
of exploration and evaluation assets, foreign exchange gains totalling R32.1 million,
the break fee received from a third party of R7.9 million and various other income
items totalling R11.5 million.
Other operating costs
The decrease in other operating costs is a combination of improved cost management
given the liquidity challenges faced by the Group during the 2014 financial year and
the reduction in the impairment of the Group's financial assets.
Investment income
Interest receivable from EERNL contributed R103.0 million (2013: R37.6 million)
towards investment income. The Group's cash and cash equivalents generated interest
income totalling R0.9 million (2013: R0.8 million). Interest accruing to the Group
as a result of the unwinding of the time value discount applied to the Group's
financial assets contributed a further R26.7 million (2013: R8.5 million). The Group's
financial assets in this regard are the contingent consideration receivable, the advance
payment against future services and the deferred consideration on disposal of the
Greenhills Plant.
The increase in investment income is primarily attributable to the weakening of the
Rand and default interest on the loan to EERNL at 2% per annum (compounded) from
1 June 2013, over and above the contractual interest rate of 30% per annum on loans
advanced to EERNL. No additional loans were advanced to EERNL during the financial
year under review.
Finance costs
The Group's finance costs for the year under review total R91.9 million
(2013: R64.0 million). Finance costs totalling R40.9 million (2013: R35.1 million)
incurred on specific borrowings from Gairloch Limited ("Gairloch") and the Public
Investment Corporation (SOC) Limited ("PIC") have been capitalised to the OPL 233
exploration and evaluation ("E&E") asset, which is a qualifying asset in terms of IFRS.
A further R38.1 million (2013: R5.1 million) is recoverable from EERNL under the terms
of the loan agreement with EERNL and has been capitalised to the EERNL loan receivable.
The remaining finance costs of R12.9 million (2013: R23.8 million) in the statement of
comprehensive income include interest totalling R11.6 million (2013: R5.1 million) on
Gairloch loans utilised for the Group's working capital requirements, and debt-raising
fees and interest paid on the loan from the PIC totalling R0.8 million (2013: RNil).
These loans were equity and cash settled in January 2014. Finance costs in the prior
year also included R18.7 million relating to the discounting of financial assets.
The increase in finance costs is primarily attributable to the Gairloch loan which
attracted interest for a period of seven months in the current year, relative to
one month in the prior financial year. This loan was equity-settled in January 2014.
FINANCIAL POSITION
Exploration and evaluation assets
The Group invested R62.6 million (2013: R7.5 million) in OPL 233 for the seismic
acquisition phase of the work programme. Furthermore, the Group capitalised
R40.9 million (2013: R35.1 million) of borrowing costs attributable to specific
Gairloch borrowings. The Group also acquired exploration licences in Botswana for
R0.4 million (2013: R0.9 million acquisition of Malawi licence).
Other financial assets
The Group's other financial assets include the contingent consideration receivable
from Total E&P RDC ("Total") pursuant to the farm-out of Block III, loans advanced to
EERNL and DIG, the advance payment against future services and the deferred
consideration on disposal of the Greenhills Plant.
Interest receivable for the year from EERNL increased other financial assets by
R103.0 million (2013: R37.6 million). Interest on specific Gairloch borrowings also
increased other financial assets by R38.1 million (2013: R5.1 million). This interest
is recoverable from EERNL under the terms of the loan agreement. During the financial
year under review, EERNL paid R13.8 million (2013: R25.8 million) towards the
settlement of the loan outstanding. An impairment provision of R37.9 million (2013: RNil)
relating to part of the short-term interest receivables off-sets these increases.
Foreign exchange gains contributed R105.4 million (2013: R25.1 million) to the increase
in other financial assets. These gains arose on the translation of the US Dollar
denominated contingent consideration receivable and the loans advanced to EERNL and DIG.
Interest arising from the unwinding of the time value discount applied to financial
assets contributed R26.7 million (2013: R8.5 million) to the increase in other
financial assets.
An impairment loss of R22.1 million (2013: R129.9 million) arising from the write-down
of future expected cash flows from the contingent consideration receivable also off-set
the increases noted above. The write-down was necessitated by a change in timelines
affecting the receipt of the contingent consideration and is reflective of the time
value of money.
Cash and cash equivalents
A Rights Offer that was undertaken to recapitalise the Company closed at the end of
January 2014. Total cash of R336.6 million was raised representing 59% subscription to
the Rights Offer. At 28 February 2014 cash and cash equivalents include R273.3 million
of these funds after the settlement of the PIC loan (R47.9 million) and the Group's
accumulated short-term liabilities (R15.4 million).
Cash and cash equivalents also include the historical OPL 233 performance bond cash
collateral of R108.1 million (2013: R89.1 million) (US$10 million) which has been
revalued by R19.0 million (2013: R6.5 million), net of interest income.
Total shareholders' equity
The Rights Offer proceeds noted above contributed R336.6 million towards the increase
in equity. The equity settlement of the Gairloch loans contributed a further
R238.5 million. SacOil also raised R0.7 million by way of a general issue for cash
during the financial year under review.
The Group's profit for the year increased shareholders' equity by a further R9.5 million.
Deferred tax liability
Deferred tax arises from the estimated future contingent consideration receivable and
various temporary differences on transactions of the Group. The increase in the
contingent consideration by R40 million (2013: decrease of R81.8 million) resulted in
a deferred tax change of R16 million (2013: credit of R32.7 million). A further charge
of R3.9 million (2013: RNil) arose from the Group's transactions with connected parties
and impairment provisions.
Other financial liabilities
The decrease in other financial liabilities reflects the equity settlement of the
Gairloch loans totalling R238.5 million (2013: R129.0 million), off-set by increases
in the amounts due to EERNL for its equivalent share of the cash collateral and
Nigdel United Oil Company Limited ("Nigdel") for OPL 233 work programme costs. The
amounts due to EERNL increased by foreign exchange losses totalling R9.7 million
(2013: R3.3 million), reflective of the weakening of the Rand against the US Dollar.
The amounts due to Nigdel increased by R17.9 million (2013: R2.4 million) representing
SacOil's share of OPL 233 seismic costs at the reporting date.
Current tax payable
The Group experienced significant liquidity challenges during the 2014 financial year
and was unable to settle foreign taxes payable. As a result taxes attributable to
disposals by the Group of exploration and evaluation assets and the declaration of
dividends in prior financial years remained outstanding and continued to accrue
interest during the 2014 financial year. Interest on taxes outstanding amounts to
R21.4 million (2013: R36.9 million). Foreign exchange losses total R47.5 million
(2013: RNil). The foreign taxes are denominated in US Dollars.
The Group's current tax charge for the year is R14.0 million (2013: RNil). The Group's
profit for the year was primarily driven by foreign exchange gains on transactions
with non-connected parties and interest receivable from EERNL.
CASH FLOWS
Cash totalling R39.1 million (2013: R24.7 million) was used to fund the Group's
working capital requirements, including but not limited to remuneration (R13.5 million),
consulting fees (R2.1 million), legal fees (R1.9 million), corporate costs
(R7.4 million), audit fees (R2.0 million), rentals (R1.1 million), travel and
accommodation (R1.4 million), and broker fees (R0.9 million).
The Group's investment of R63.2 million in the Botswana licences, OPL 233 seismic costs,
property, plant and equipment and intangible assets, off-set by the cash inflows from the
Group's loans and receivables of R14.8 million (primarily the part payment of
R13.8 million of the EERNL loan), resulted in net cash used in investing activities of
R48.4 million (2013: R0.9 million).
The Rights Offer proceeds of R336.6 million, together with the increase in the amounts
owed to Nigdel and EERNL, resulted in net cash from financial activities of
R355.9 million (2013: R101.5 million).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2014 2013
Note R R
Other income 47 350 527 123 222 360
Other operating costs (100 247 072) (175 626 093)
Loss from operations (52 896 545) (52 403 733)
Investment income 130 555 693 46 940 839
Finance costs (12 931 875) (23 837 213)
Profit/(loss) before taxation 64 727 273 (29 300 107)
Taxation (55 212 656) (40 785 309)
Profit/(loss) for the year 9 514 617 (70 085 416)
Discontinued operation
Loss from discontinued operation - (1 526 959)
Profit/(loss) for the year 9 514 617 (71 612 375)
Other comprehensive loss:
Items that will not be reclassified to profit or loss
in subsequent periods:
Release of revaluation reserve on impairment of
property, plant and equipment - (1 045 359)
Items that may be reclassified to profit or loss
in subsequent periods: - -
Other comprehensive loss for the year, net of taxation - (1 045 359)
Total comprehensive income/(loss) for the year 9 514 617 (72 657 734)
Profit/(loss) attributable to:
Equity holders of the parent 19 594 296 (55 627 404)
Non-controlling interest (10 079 679) (15 984 971)
Profit/(loss) for the year 9 514 617 (71 612 375)
Total comprehensive income/(loss) attributable to:
Equity holders of the parent 19 594 296 (56 672 763)
Non-controlling interest (10 079 679) (15 984 971)
Total comprehensive income/(loss) for the year 9 514 617 (72 657 734)
Earnings/(loss) per share
Basic (cents) 4 1.37 (6.10)
Diluted (cents) 4 1.36 (6.09)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2014 2013
Note R R
ASSETS
Non-current assets
Property, plant and equipment 247 207 317 008
Exploration and evaluation assets 266 809 536 162 859 167
Other intangible assets 175 476 161 760
Other financial assets 433 344 048 371 719 195
Total non-current assets 700 576 267 535 057 130
Current assets
Other financial assets 222 542 359 84 803 036
Trade and other receivables 649 764 3 665 149
Cash and cash equivalents 381 579 766 94 032 416
Total current assets 604 771 889 182 500 601
Total assets 1 305 348 156 717 557 731
EQUITY AND LIABILITIES
Shareholders' equity
Stated capital 6 1 109 977 054 534 172 123
Reserves 6 001 847 26 681 469
Accumulated loss (179 426 156) (219 700 074)
Equity attributable to equity holders of parent 936 552 745 341 153 518
Non-controlling interest 12 218 476 22 298 155
Total shareholders' equity 948 771 221 363 451 673
Liabilities
Non-current liabilities
Deferred tax liability 92 498 394 72 588 101
Total non-current liabilities 92 498 394 72 588 101
Current liabilities
Other financial liabilities 74 167 311 175 574 827
Current tax payable 176 856 253 93 962 655
Trade and other payables 13 054 977 11 980 475
Total current liabilities 264 078 541 281 517 957
Total liabilities 356 576 935 354 106 058
Total equity and liabilities 1 305 348 156 717 557 731
Number of shares in issue 3 086 169 261 953 340 791
Net asset value per share (cents) 30.74 38.12
Net tangible asset value per share (cents) 22.10 21.04
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Total equity
attributable Non-
Stated Share-based to equity controlling
capital Revaluation payment Total Accumulated holders of interest Total
(Note 6) reserve reserve reserves loss the parent ("NCI") equity
R R R R R R R R
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)
Transfer on disposal of assets - (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
Changes in equity:
Profit/(loss) for the year - - - - 19 594 296 19 594 296 (10 079 679) 9 514 617
Total comprehensive income/
(loss) for the year - - - - 19 594 296 19 594 296 (10 079 679) 9 514 617
Issue of shares 575 804 931 - - - - 575 804 931 - 575 804 931
Share options lapsed - - (20 679 622) (20 679 622) 20 679 622 - - -
Total changes 575 804 931 - (20 679 622) (20 679 622) 40 273 918 595 399 227 (10 079 679) 585 319 548
Balance at
28 February 2014 1 109 977 054 - 6 001 847 6 001 847 (179 426 156) 936 552 745 12 218 476 948 771 221
CONSOLIDATED STATEMENT OF CASH FLOWS
2014 2013
R R
Cash flows from operating activities
Cash used in operations (39 133 285) (24 692 023)
Interest income 889 724 843 988
Finance costs (1 324 143) -
Tax received/(paid) 32 404 (33 714)
Net cash used in operating activities (39 535 300) (23 881 749)
Cash flows from investing activities
Purchase of property, plant and equipment (71 426) (8 200)
Purchase of exploration and evaluation assets (63 026 602) (8 478 078)
Purchase of other intangible assets (86 956) (184 869)
Sale of exploration and evaluation assets - 75 997 000
Decrease/(increase) in loans and receivables 14 793 124 (68 190 699)
Net cash used in investing activities (48 391 860) (864 846)
Cash flows from financing activities
Proceeds on share issue 337 273 662 -
Proceeds from other financial liabilities 18 670 494 150 617 203
Acquisition of non-controlling interest - (24 573 795)
Dividends paid to NCI - (24 573 794)
Net cash from financing activities 355 944 156 101 469 614
Total movement in cash and cash equivalents for the year 268 016 996 76 723 019
Foreign exchange gains on cash and cash equivalents 19 530 354 6 535 099
Cash and cash equivalents at the beginning of the year 94 032 416 10 774 298
Cash and cash equivalents at the end of the year 381 579 766 94 032 416
1 Basis of preparation
The consolidated annual financial statements of the Group for the year ended
28 February 2014 have been prepared in accordance with the Group's accounting
policies, which comply with the recognition and measurement criteria of
International Financial Reporting Standards, and the presentation and disclosure
requirements of IAS 34 - Interim Financial Reporting, the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee, the Financial Reporting
Pronouncements as issued by Financial Reporting Standards Council, the Listings
Requirements of the JSE Limited and the Companies Act of South Africa (No. 71 of
2008, as amended). The accounting policies applied in the preparation of the
results for the year ended 28 February 2014 are consistent with those adopted in
the financial statements for the year ended 28 February 2013, except as noted below.
The Group has adopted the following new standards and amendments to standards,
including any consequential amendments to other standards: IFRS 10 - Consolidated
Financial Statements, IFRS 11 - Joint Arrangements, IFRS - 12 Disclosure of Interests
in Other Entities, IFRS 13 - Fair Value Measurement, and Presentation of other
comprehensive income (Amendments to IAS 1). Application of these standards has not
had a material impact on the measurement of assets and liabilities of the Group,
but has resulted in additional disclosures.
These consolidated annual financial statements have been prepared on a going
concern basis.
All monetary information is presented in the functional currency of the Company,
being South African Rand.
2 Auditor's review report
The Group annual financial statements are the responsibility of the directors of
the Company. They have been prepared under the supervision of Tariro Mudzimuirema
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 9 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, which is available on the Company's website.
3 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.
Nigeria DRC Malawi Botswana South Africa Consolidated
2014 R R R R R R
Other income 9 722 354 12 441 074 - - 25 187 099 47 350 527
Investment income 872 310 20 499 497 - - 109 183 886 130 555 693
Finance costs - - - - (12 931 875) (12 931 875)
Other operating expenses (199 450) (22 149 316) - (10 381) (77 887 925) (100 247 072)
Taxation 32 404 (37 378 904) - - (17 866 156) (55 212 656)
Profit/(loss) for the year 10 427 618 (26 587 649) - (10 381) 25 685 029 9 514 617
Segment assets
- non-current 191 159 973 295 859 426 896 740 386 548 212 273 580 700 576 267
- current 108 144 436 38 929 675 - - 457 697 778 604 771 889
Segment liabilities
- non-current - (88 597 261) - - (3 901 133) (92 498 394)
- current (53 973 973) (136 593 804) - - (73 510 764) (264 078 541)
Nigeria DRC Malawi Botswana South Africa Consolidated
2013 R 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 (33 713) (32 628 727) - - (8 122 869) (40 785 309)
Loss for the year (868 525) (66 901 445) - - (2 315 446) (70 085 416)
Loss from discontinued operation (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
- current 89 139 856 58 510 - - 93 302 235 182 500 601
Segment liabilities
- non-current - (72 588 101) - - - (72 588 101)
- 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.
2014 2013
4 Earnings/(loss) per share R R
From continuing and discontinued operations
Basic (cents) 1.37 (6.10)
Diluted (cents) 1.36 (6.09)
From discontinued operation
Basic (cents) - (0.17)
Diluted (cents) - (0.17)
From continuing operations
Basic (cents) 1.37 (5.93)
Diluted (cents) 1.36 (5.93)
Profit/(loss) for the year used in the calculation
of the basic and diluted earnings/(loss) per share
from continuing and discontinued operations 19 594 296 (55 627 404)
Loss from discontinued operation - 1 526 959
Profit/(loss) used in the calculation of basic
and diluted earnings/(loss) per share from
continuing operations 19 594 296 (54 100 445)
Weighted average number of ordinary shares used in
the calculation of basic earnings/(loss) per share 1 435 074 830 912 157 573
Issued shares at the beginning of the reporting
period 953 340 791 832 225 699
Effect of shares issued during the reporting period
(weighted) 481 734 039 79 931 874
Add: Dilutive share options 1 618 673 540 006
Weighted average number of ordinary shares used in
the calculation of diluted earnings/(loss)
per share 1 436 693 503 912 697 579
Headline earnings/(loss) per share
Basic (cents) 1.37 (8.10)
Diluted (cents) 1.36 (8.10)
Reconciliation of headline loss
Profit/(loss) for the year from continuing and
discontinued operations 19 594 296 (55 627 404)
Adjust for:
Profit on sale of exploration and evaluation assets
attributable to equity holders of the parent - (18 290 947)
Headline earnings/(loss) 19 594 296 (73 918 351)
5 Financial instruments by category
Carrying Carrying Fair Fair
value value value value
2014 2013 2014 2013
Group R R R R
Loans and receivables
Other financial assets 655 886 407 456 522 231 589 512 367 456 522 231
6 Stated capital
Nature of Number of Stated
Date Issued to issue shares capital
Balance at
1 March 2013 953 340 791 534 172 123
3 October 2013 N Gutta General issue 2 777 777 691 244
29 January 2014 Various* Specific issue 1 246 601 549 336 582 418
30 January 2014 Westglamry Limited Specific issue 641 840 797 173 297 015
30 January 2014 Newdel Holdings
Limited Specific issue 241 608 347 65 234 254
Balance at
28 February 2014 3 086 169 261 1 109 977 054
* Shares issued to various shareholders under the terms of the Rights Offer that
closed on 27 January 2014. 1 219 302 642 (98%) of these shares were issued to
the Government Employees Pension Fund.
7 Commitments and contingent liabilities
R R
Commitments 2014 2013
Exploration and evaluation assets - work programme
commitments - due within 12 months 130 425 256 221 242 262
Exploration and evaluation assets - work programme
commitments - due within 13 to 48 months 642 206 667 243 379 394
772 631 923 464 621 656
Exploration and evaluation commitments will be funded
through a combination of debt and equity funding.
Contingent liabilities
Performance bond on OPL 233 issued by Ecobank
in respect of OPL 233 exploration activities 161 841 000 132 597 000
Cost carry arrangement with Total 36 508 805 20 411 689
Farm-in and transaction fees on receipt of
title to OPL 233 141 341 140 115 801 380
Farm-in and transaction fees on receipt of
title to OPL 281 156 446 300 128 177 100
Total 496 137 245 396 987 169
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 cash collateral of
R108.1 million (2013: R89.1 million) ($10 million). 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 production 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 28 February 2014 Total has incurred
R36.5 million (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.
Farm-in and transaction fees
OPL 233
A farm-in fee of R114.3 million (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 OPL 233 to SacOil 233 Nigeria Limited. A transaction
fee of R27.0 million (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 R129.4 million (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 OPL 281 to SacOil 281 Nigeria Limited. A
transaction fee of R27.0 million (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.
8 Dividends
The Board has resolved not to declare any dividends to shareholders for the period
under review.
9 Going concern
The planned recapitalisation of the Company, as previously announced to shareholders,
was completed in January 2014. The Company converted all the Gairloch loans into
equity and is now debt free. Furthermore, the Company raised R336.6 million from
the R570 million Rights Offer, which will enable the Group to fund its operations
for the foreseeable future. Although the above transactions were a success a deficit
of R90 million remains in the Group's projected cash flows to June 2015, which is
indicative of part of the shortfall from the Rights Offer. To manage the Group's
non-performance risk in funding its assets and commitments, management is in early-
stage discussions with financial institutions regarding the raising of equity and debt
funding to eliminate or manage the deficit. The likelihood of success of this
initiative remains uncertain at this stage.
The cash flow projections to June 2015 also include cash inflows from EERNL totalling
R189.8 million (US$17.9 million). The loan owed to SacOil remains overdue since
31 May 2013. EERNL has requested a further extension of the loan to July 2014
whilst it undergoes its own recapitalisation, which will enable it to settle in
full the amounts owed to SacOil. It is difficult to determine with certainty the
outcome of the planned recapitalisation and, consequently, the settlement of the
loan owed to SacOil. The Board continues to assess the benefit of 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.
The above 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 remains reasonably confident that it will
manage the material uncertainties that exist, as such the financial statements
have been 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.
10 Events after the reporting period
The following event took place from the period 1 March 2014 to the date of this
report:
On 31 March 2014, the Company, the Public Investment Corporation (SOC) Limited
("PIC") and the Instituto De Gestao Das Participacoes Do Estado ("IGEPE") entered
into a Memorandum of Understanding ("MoU") intended to regulate the relationship
between the parties with regard to:
- assuring the supply of natural gas and energy security, and opening up and growing
the industrial and domestic consumer market for natural gas across Mozambique;
- establishing joint venture companies to, inter alia, build an onshore natural gas
central processing facility, a pipeline to link the gas fields in Mozambique with
potential customers in southern Africa (referred to as the "African Renaissance
Project" or "ARP") and to develop and grow the natural gas consumer market in
South Africa and other Southern African Development Community member states for
the supply and distribution of natural gas along the pipeline in Mozambique
(referred to as "Gas for the People Project" or "GPP"); and
- establishing ancillary projects such as, but not limited to, a gas-to-liquid
plant and a combined cycle gas power plant.
Importantly, both the ARP and GPP are long-term projects, and are subject to,
amongst other matters, feasibility studies, front-end engineering design, detail
engineering, market analysis, social impact studies, the conclusion of joint
venture agreements by 30 July 2014 or such later date as agreed to in writing by
the parties, and the raising of the funding required for the projects. The
feasibility studies are subject to the approval of the Boards of directors of each
of the PIC and SacOil and satisfaction of any other applicable approval processes
of these parties.
On 10 March 2014, Transfer Holdings (Proprietary) Limited became a wholly-owned
subsidiary of SacOil following the acquisition of a further thirty per cent (30%)
interest.
On 2 May 2014 Transnational Corporation of Nigeria PLC ("Transcorp") and the
Nigerian National Petroleum Corporation signed the Production-sharing Contract for
OPL 281. Transcorp, as operator of OPL 281, will now proceed to prepare and lodge
an application to seek the approval of the Nigerian Government for Transcorp to
assign a 20% participating interest to SacOil's wholly-owned subsidiary,
SacOil 281 Nigeria Limited.
By order of the Board
Roger Rees
Acting Chief Executive Officer
Johannesburg
28 May 2014
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
E-mail: info@sacoilholdings.com
Website: www.sacoilholdings.com
Directors:
Roger Rees (Acting Chief Executive Officer), Tariro Mudzimuirema (Interim Finance
Director), Tito Mboweni (Chairman)*, Mzuvukile Maqetuka*, Gontse Moseneke**,
Stephanus Muller*, Vusumzi Pikoli*, Ignatius Sehoole**, Danladi Verheijen**,
Titilola Akinleye**
* Independent Non-executive directors ** 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, a division of Nedbank Limited
AIM Nominated Adviser
finnCap Limited
Date: 28/05/2014 03:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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