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Preliminary Audited Results For The Year Ended 28 February 2015

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21 May 2015

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”) 

Preliminary Audited Results For The Year Ended 28 February 2015

Highlights

  • Implementation of revised business strategy
    • Acquisition of an oil-producing asset in Egypt
    • Portfolio rationalisation – exit from OPL 281 and OPL 233 in Nigeria
  • Settlement agreement related to EERNL loans
  • Strong cash balance
  • Resolution of going concern issue
  • Group repositioned for sustainable growth

OVERVIEW
This past financial year has seen the SacOil Board embark on a turnaround strategy driven by the rationalisation and balancing of the Group’s existing portfolio of assets. The intention of the turnaround strategy was to ensure that the future business activities of the Group are focused on exploration and production, with an income-producing asset. The activities undertaken as part of this exercise to reposition the Group were:

  • the acquisition by the Group of an oil-producing asset in Egypt;
  • the Group’s exit from OPL 281 and OPL 233 in Nigeria; and
  • the restructuring of the debt owed to the Group by Energy Equity Resources Norway Limited (“EERNL”).

The Group reported a loss of R277.0 million (2014: profit of R9.5 million), basic loss per share of 8.54 cents (2014: earnings per share of 1.37 cents) and headline loss per share of 4.67 cents (2014: headline earnings per share of 1.37 cents), for the year ended 28 February 2015. This was almost entirely attributable to the other operating costs of R510.1 million (2014: R100.2 million). These operating costs were primarily a result of the above transactions undertaken to rationalise the Group’s portfolio of assets and to restructure the EERNL loans to position the Group for sustainable growth. The Group’s loss for the year was partially off-set by the investment income generated by it and foreign exchange gains on translation of financial assets arising from the continued weakening of the Rand.

The reported Group loss for the year, however, needs to be viewed in the light of the Company being released from the significant capital commitments related to OPL 233 and OPL 281 that contributed to the resolution of the material uncertainty related to the going concern of the Group, as previously reported. In addition, the above actions will result in the Group’s cash balances of R229.4 million, including restricted cash of R116 million, benefiting from the restricted cash, related to the cash collateral, being released to the Company on the expiry of the performance bond on OPL 233 and the receipt of $12.5 million plus interest from Transcorp related to the OPL 281 exit.

The Group is now in a strong position to further expand its business activities, supported by a strong cash position, in line with its new strategy that is focused on income-producing activities. The Group is also better positioned to see through the challenging conditions in the industry and should benefit from the opportunities that will become available for acquisition or investment.

Dr Kgogo, the Chief Executive Officer, says, “The changes undertaken in the business in the financial year were critical to reset the business for sustainable growth in the future and address the legacy issues that have hampered our future prospects. We see SacOil’s new strategy driving increased shareholder value in the near term, with Lagia development activities progressing well to achieve our target of 1 000 barrels by Q4 2015. Our focus will remain on finding other attractive income-producing or near-term producing assets for the Group. I look forward to being part of building a stronger and more profitable SacOil.”