21st May 2015 10:21
LONDON (Alliance News) - SacOil Holdings Ltd Thursday said it swung to a huge pretax loss in the last financial year after it undertook a major restructuring of its portfolio and loans.
The South African oil and gas company swung to a a huge pretax loss of ZAR249.9 million for the year ended February 28, from a ZAR9.5 million profit a year earlier as the company announced maiden revenue of ZAR2.1 million after acquiring a producing asset in the period.
The swing to the substantial loss was caused by ZAR510.1 million of other operating costs, which was more than five times the ZAR100.2 million reported last year. These costs included the restructuring of its loans and exiting from licenses.
"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," said the company.
The ZAR510.1 million figure includes around ZAR420.0 million of costs that consisted of a ZAR194.1 million impairment of the OPL 233 license, a ZAR73.2 million write off of a loan it provided to Transcorp in relation to the OPL 281 license which it is no longer involved in, a ZAR65.4 million write off of bad debt, a ZAR87.5 million impairment provision against other loans and a ZAR23.8 million impairment of contingent consideration for Block Three.
That was all partially offset by finance costs falling to ZAR1,469 from ZAR12.9 million and investment income rising to ZAR158.1 million from ZAR130.6 million. Other income also increased, doubling to ZAR103.3 million from only ZAR47.4 million.
The rest of the operating cost rises were caused by general costs increasing to ZAR66.1 million from ZAR40.2 million, driven by Mena's operating costs, which it acquired in the year. The remainder was eaten up by other restructuring costs related to its loans.
At the end of the year, SacOil reported a cash balance of ZAR229.4 million, down from a balance of ZAR381.6 million at the end of the last financial year.
"The restructuring of the group's portfolio of assets and the resolution of legacy issues has positioned the group to pursue more opportunities on the African continent. In the execution of our revised strategy we will be adding more cash-generative assets, advancing our exploration assets and progressing studies in Mozambique. We intend to progress the development of the Lagia Oil Field and increase production to more than 1,000 barrels per day. Management will continue to focus on risk management across our portfolio," it said in a statement.
SacOil shares were down 2.2% to 1.10 pence per share on Thursday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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