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Updated Trading Statement for the Six Month Period Ended 31 August 2016
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”)
UPDATED TRADING STATEMENT FOR THE SIX MONTH PERIOD ENDED 31 AUGUST
2016
Shareholders are referred to the announcement released on the
Johannesburg Stock Exchange News Service (“SENS”) and the Regulatory
News Service of the London Stock Exchange (“RNS”) on 18 November 2016
in which the Company advised that earnings per share and headline
earnings per share for the six months ended 31 August 2016 are expected
to be at least 20% lower relative to the prior comparative period
(“the Announcement”). The Announcement indicated that the Company
would provide a more detailed trading statement which would highlight
reasons for this deviation as set out below.
Foreign exchange losses
A significant component of the Group’s asset base is denominated in
United States Dollars (“US$”). The recovery of the Rand against the
US$ during the period resulted in foreign exchange losses of R62
million which eroded this asset base. Future developments within the
currency markets will continue to impact the Group’s assets. In
comparison, the results of the Group for the six months ended 31
August 2015 included foreign exchange gains totalling R57.5 million
arising from the weakening of the Rand against the US$ during the
period. These gains which arose from the revaluation of the US$ asset
base contributed to the overall profit recorded by the Group for the
period ended 31 August 2015.
Provision for impairment of financial assets
The SacOil Board of directors continues to pursue the recovery of
US$19.1 million (R277.4 million as at 31 August 2016) owed to the
Group by Transcorp pursuant to the termination of the Group’s
participation in OPL281. Inherently litigation is a protracted
process which often leads to delays in the resolution of outstanding
matters. Our legal counsel has estimated that the matter will likely
be resolved during the first half of 2018. This delay has affected
the valuation of the receivable and a provision for impairment of
R48.1 million has been recognised to take into account the impact of
the time value of money.
For the duration of the Encha Acknowledgement of Debt Agreement (“the
Agreement”), as provided for therein, the Company received
certificates from Encha's auditors which confirmed at each reporting
date that the net asset value of the Encha Group exceeded R100 million
as a basis to support the recoverability of the amount owed. Since
the expiry of the Agreement and the subsequent default by Encha on
its obligations, this information has not been made available to the
Company to enable a complete assessment of the financial position of
the Encha Group. Information available to enable an assessment of
the recoverability of the R115.8 million owed to the Company as at 31
August 2016 was therefore limited to information available in the
public domain on Encha's asset base. This information however does
not provide visibility of Encha's liabilities to enable a complete
assessment of the net asset position as at 31 August 2016. A provision
for impairment of R115.8 million has therefore been raised.
The results of the Group as at 31 August 2015 included an impairment
provision of R26 million with respect to the Block III contingent
consideration receivable relative to the Encha and Transcorp
impairment provision of R164 million as highlighted above.
Lagia
In an effort to optimise the production profile of the Lagia Oil Field
in Egypt, we conducted thermal stimulation on existing wells on the
field. Despite these operations, the field’s technical performance
remains below expectations. Financial performance of the asset was
also negatively affected by the developments in the global markets
with respect to oil prices and exchange rates which resulted in Lagia
contributing lower than expected revenue of R3.2 million despite an
increase of R2.7 million in operating costs associated with steaming
operations.
As a result of the above, shareholders are advised that the basic loss
per share is expected to be between 6.76 cents and 6.79 cents,
representing a decrease of between 2192% and 2202% from the basic
earnings per share of 0.32 cents recorded for the six months ended 31
August 2015.
The basic headline loss per share, which excludes the impact of any
re-measurements of assets or liabilities, is also expected to be
between 6.76 cents and 6.79 cents, representing a decrease of between
2781% and 2794% from the basic headline earnings per share of 0.25
cents recorded for the six months ended 31 August 2015.
The net asset value per share as at 31 August 2016 is expected to be
between 19.58 cents and 22.39 cents, a decrease of between 20% and
30% when compared to the net asset value per share of 28.11 cents at
29 February 2016.
The results for the six months ended 31 August 2016 will be released
on SENS and RNS on Wednesday, 30 November 2016.
The financial information on which this trading statement is based
has not been reviewed, audited or reported on by the Company's external
auditors. This statement is issued in compliance with paragraph 3.4(b)
of the Listings Requirements of the JSE Limited.
This announcement contains inside information for the purposes of
Article 7 of EU Regulation 596/2014.
JSE Sponsor
PSG Capital Proprietary Limited
30 November 2016
For further information please contact:
SacOil Holdings Limited
Damain Matroos
+27 (0)10 591 2260
finnCap Limited (Nominated Adviser and broker)
Christopher Raggett and James Thompson
+44 (0) 20 7220 0500
FirstEnergy Capital (Joint broker)
Hugh Sanderson / David van Erp
+44 (0) 20 7448 0200
Buchanan (Financial PR adviser) - UK
Ben Romney / Chris Judd / Madeleine Seacombe
+44 (0)20 7466 5000
ABOUT SACOIL
SacOil is a South African based independent African oil and gas
company, dual-listed on the JSE and AIM. The Company has a diverse
portfolio of assets spanning production in Egypt; exploration and
appraisal in the Democratic Republic of Congo, Malawi and Botswana;
and midstream projects including crude trading in Nigeria and a
terminal project in Equatorial Guinea. Our focus as a Group is on
delivering energy for the African continent by using Africa’s own
resources to meet the significant growth in demand expected over the
next decade. The Company continues to evaluate industry opportunities
throughout Africa as it seeks to establish itself as a leading, full-
cycle pan-African oil and gas company.
Date: 30/11/2016 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
