TIDMSAVE
RNS Number : 0883O
Savannah Energy Plc
29 September 2023
29 September 2023
Savannah Energy PLC
("Savannah" or "the Company")
2023 Half-Year Results
Average Gross Daily Production up 12% YoY and Total Revenues(1)
& Adjusted EBITDA(2) both up 8% YoY
Savannah Energy PLC, the British independent energy company
focused around the delivery of Projects that Matter, is pleased to
announce its unaudited half-year results for the six months ended
30 June 2023.
Andrew Knott, CEO of Savannah Energy, said:
"I am pleased to report robust results for the first six months
of 2023, which demonstrate our continuing ability to deliver strong
operational performance. Average gross daily production increased
by 12% to 25.3 Kboepd, while Total Revenues(1) and Adjusted
EBITDA(2) both increased by 8% during the first half of the
year.
The expansion of our Renewable Energy division has continued
apace, with several new projects added to our development portfolio
in the first half of the year. We now have up to 676 MW of projects
in motion across three countries as we quickly move towards the
achievement of up to 1 GW+. At the same time, we continue to
progress our proposed acquisition of PETRONAS International
Corporation Limited's energy business in South Sudan, with the
intention to publish an AIM Admission Document in Q4 2023.
We continue to deliver on our strategy and remain unequivocally
an "AND" company, seeking to deliver strong performance both for
the short AND long term across multiple fronts, and pursuing growth
opportunities in both the hydrocarbon AND renewable energy
areas."
Operational Highlights
-- Average gross daily production from Nigerian operations was
25.3 Kboepd, a 12% increase from 22.5 Kboepd during H1 2022. Robust
customer demand led to a 15% increase in gas production from the
Uquo Field to 138.5 MMscfpd (H1 2022: 120.3 MMscfpd);
-- Strong safety record, with our Nigerian operations recording
one million working hours without a Lost Time Injury;
-- Gas sold to eight principal customers, with a number of new
and extended gas contracts agreed, including:
o An agreement with Amalgamated Oil Company Nigeria Limited
("AMOCON"), whereby Savannah's Accugas subsidiary agreed to
purchase up to 20 MMscfpd of gas from AMOCON over the course of the
next ten years for onward sale to our gas customers (with
deliveries having commenced in May); and
o New gas sales agreement with Shell Nigeria Gas Limited ("SNG")
and a contract extension with Shell Petroleum Development Company
of Nigeria Limited ("SPDC");
-- This strong momentum continued post-period end with contract
extensions signed with Central Horizon Gas Company Limited
("CHGC"), First Independent Power Limited ("FIPL") and Notore
Chemical Industries PLC ("Notore") for a total of up to 85
MMscfpd;
-- Up to 676 MW of renewable energy projects now in motion,
including agreements signed during the period for the up to 75 MW
Bini a Warak Hydroelectric Project in Cameroon and for the
development of two proposed solar photovoltaic power plants in
Niger with combined capacity of up to 200 MW; and
-- First disclosure report for Sustainability Accounting
Standards Board ("SASB") published today here .
Financial Highlights(3)
-- Total Revenues(1) increased by 8% to US$138.7 million (H1 2022: US$128.7 million);
-- Adjusted EBITDA(2) increased by 8% to US108.2 million (H1 2022: US$100.3 million);
-- Adjusted EBITDA(2) margin strong and stable at 78% (H1 2022: 78%);
-- Operating expenses plus administrative expenses(4) of US$27.4
million (H1 2022: US$24.5 million);
-- Profit after tax (including contribution from discontinued
operations) of US$46.8 million (H1 2022 loss after tax: US$20.5
million); and
-- Net debt position at period end of US$443.4 million (FY22:
US$404.9 million) with Leverage(5) broadly stable at 1.9x (Year-end
2022: 1.8x).
2023 Guidance
-- Total Revenues(1) guidance reiterated at 'greater than US$235 million';
-- Group Operating expenses plus administrative expenses(4)
guidance reiterated at 'up to US$75 million'; and
-- Total capital expenditures guidance reduced from 'up to US$60
million' to 'up to US$30 million', reflecting the rephasing of
certain planned capital projects in Niger and Nigeria.
South Sudan Acquisition Update
Further to the Company's announcement on 27 July 2023, the
Company continues to advance the various workstreams required to
complete the acquisition of PETRONAS International Corporation
Limited's energy business in South Sudan (the "PETRONAS
Acquisition") and now intends to publish an AIM Admission Document
in respect of the PETRONAS Acquisition on or before 15 December
2023, following such point the Company will seek restoration to
trading on AIM of its ordinary shares.
Niger Update
Savannah remains committed to the 35 MMstb (Gross 2C Resources)
R3 East oil development in South East Niger. As previously
announced, the intention was to carry out a well test programme on
our principal discoveries in Q4 2023. However, following recent
political events, this timeline will be subject to further revision
due to restrictions imposed by the Economic Community of West
African States on Niger, which has resulted in the closure of the
border between Benin and Niger. This has created logistical
challenges for companies operating in Niger and, specifically for
Savannah, in relation to the importation of the necessary equipment
to complete our planned well test programme. A further update in
relation to timing will be provided in Q4 2023.
Savannah continues to progress the up to 250 MW Parc Eolien de
la Tarka wind farm project, with all key required studies either
complete or at an advanced stage. Savannah also announced the
signing of an agreement for the development of two proposed solar
photovoltaic power plants, each up to 100 MW in scale, during the
period and work is at an initial stage on these projects.
Divestment of Interest in COTCo
On 20 April 2023, Savannah announced that its wholly owned
subsidiary, Savannah Midstream Investment Limited ("SMIL"), had
signed a Share Purchase Agreement with the national oil company of
Cameroon, Société Nationale Des Hydrocarbures ("SNH") for the sale
of 10% of the issued share capital in Cameroon Oil Transportation
Company ("COTCo"). The cash consideration for the shares was
US$44.9 million and SMIL also retained the right to the dividend
attaching to the shares up to the payment date of the
consideration. Formal completion of the sale shall occur upon
satisfaction of certain conditions precedent related to amendments
to the bylaws of COTCo. Please refer to Note 20 of the interim
financial statements for further information on the accounting
treatment of the transaction.
Board Update
Following the Annual General Meeting held on 30 June 2023, Steve
Jenkins retired as Chair but remains on the Board as an independent
Non-Executive Director. Joseph Pagop Noupoué was appointed
Non-Executive Chair, having joined the Board as a Non-Executive
Director in April 2023. Sylvie Rucar retired as a Non-Executive
Director from the Board post-period end due to personal
reasons.
Fenikso Limited ("Fenikso")
As previously detailed, in 2022 Savannah invested approximately
US$1 million ("the Initial Investment") in Fenikso (previously
known as Lekoil Limited) and, under the terms of the restructuring
agreements negotiated between Savannah and Fenikso entered into in
December 2022, the Company will receive payments of up to US$16.3
million over the course of the next nine years. Post-period end,
Savannah has fully recovered the Initial Investment with the
receipt from Fenikso of payments totalling US$1.3 million to
date.
Chad Assets Update
As previously disclosed in the Group's 2022 Annual Report, the
Republic of Chad nationalised the Group's interests in Chad owned
by its subsidiaries, Savannah Chad Inc ("SCI") and Savannah
Midstream Investment Limited ("SMIL"), (the "Chad Assets") by way
of a law passed on 31 March 2023 (the Nationalisation"). This
confirmed an announcement of the President of Chad of 23 March
2023.
The actions of the Republic of Chad are in breach of the
upstream conventions to which SCI and the Republic of Chad are,
amongst others, party, together with a breach of the convention
between Tchad Oil Transportation Company ("TOTCo") and the Republic
of Chad. Further details are provided in Notes 2, 22 and 23 of the
financial statements. Disputes under the upstream conventions and
the TOTCo convention are subject to the jurisdiction of ICC
arbitral tribunals, seated in Paris. SCI and SMIL have commenced
ICC arbitral proceedings against the Republic of Chad to seek full
recompense for the loss that they have and will suffer as a result
of the nationalisation of the Chad Assets.
Following the period end, a dispute has also arisen among the
shareholders of COTCo. SMIL has initiated appropriate court and ICC
arbitral proceedings to protect its interests as a shareholder in
COTCo.
For further information, please refer to the Company's website
www.savannah-energy.com or contact:
+44 (0) 20 3817
Savannah Energy 9844
Andrew Knott, CEO
Nick Beattie, CFO
Sally Marshak, Head of IR & Communications
+44 (0) 20 7409
Strand Hanson (Nominated Adviser) 3494
James Spinney
Ritchie Balmer
Rob Patrick
Cavendish Capital Markets Ltd (Joint Broker)
Derrick Lee +44 (0) 20 7220
Tim Redfern 0500
Panmure Gordon (UK) Ltd (Joint Broker)
John Prior
Hugo Rich +44 (0) 20 7886
James Sinclair-Ford 2500
+44 (0) 20 3757
Camarco 4983
Billy Clegg
Owen Roberts
Violet Wilson
The information contained within this announcement is considered
to be inside information prior to its release, as defined in
Article 7 of the Market Abuse Regulation No. 596/2014, as it forms
part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018, as amended, and is disclosed in accordance
with the Company's obligations under Article 17 of those
Regulations.
About Savannah Energy:
Savannah Energy PLC is an AIM quoted British independent energy
company focused around the delivery of Projects that Matter in
Africa.
Operational Review
Nigeria
Average gross daily production was 12% higher in H1 2023 with an
average of 25.3 Kboepd (H1 2022: 22.5 Kboepd).
In the first half of 2023 a number of new agreements have been
concluded, including:
-- An agreement with AMOCON for gas produced in the OML 156 sole
risk petroleum lease area. Under the terms of the agreement,
Accugas has agreed to purchase up to 20 MMscfpd of gas from AMOCON
over the course of the next ten years for onward sale to our
customers. Deliveries commenced in April 2023, with an average of
approximately 18 MMscfpd of gas purchased from AMOCON since
commencement to 30 June 2023;
-- An extension of the contract with SPDC was signed for an
additional 12-month period, whereby Accugas is supplying gas to
SPDC for use in off-grid power generation at the Shell Industrial
Area, Port Harcourt, Nigeria; and
-- A new agreement with SNG for gas supplies which commenced
post-period end in August 2023. SNG is a fully owned Shell PLC
company, incorporated for the downstream distribution of gas to
industries in Nigeria, and currently operates a gas transmission
and distribution network of over 138 km, together with several
distribution systems in Nigeria.
This strong momentum continued post-period end with additional
contracts finalised, including:
-- An extension of the agreement with CHGC for an additional
12-month period, whereby Accugas is supplying CHGC with up to 10
MMscfpd of gas on an interruptible basis. CHGC is a major gas
distribution company situated in the South-South region of Nigeria,
operating a 17 km gas pipeline infrastructure network providing
natural gas to industrial and commercial customers in the Trans
Amadi Industrial Area of Port Harcourt as well as the Greater Port
Harcourt Area, Nigeria;
-- An extension of the agreement with Notore for up to 10
MMscfpd was signed for an additional 12-month period, and
post-period end deliveries from July to September have averaged
more than twice this at 26.3 MMscfpd. Notore is a Nigeria-based
integrated agro-allied, chemicals and infrastructure company
located in the Onne Oil and Gas Free Zone area of Rivers State in
southern Nigeria. Notore's primary business is the production of
urea, ammonia and NPK blend fertilisers; and
-- An extension of the agreement with FIPL was signed for an
additional 12-month period, whereby Accugas is supplying FIPL's
FIPL Afam, Eleme and Trans Amadi power stations with up to 65
MMscfpd of gas. FIPL is an affiliate company of the Sahara Group, a
leading international energy and infrastructure conglomerate with
operations in over 42 countries across Africa, the Middle East,
Europe and Asia.
Savannah continues to progress its US$45 million compression
project at the Uquo Central Processing Facility. Following the
front-end engineering and the associated order of long lead items,
detailed design work has commenced and is on track to be completed
in Q4 2023. The compression project remains within budget and
startup is planned for mid-2024.
Chad
As noted, nationalisation of the Chad Assets occurred on 31
March 2023. Average (gross) production from 9 December 2022 until
31 March 2023 was 29.3 Kbopd.
Cameroon
COTCo owns and operates the 903 km Cameroon oil export pipeline
and the Kome Kribi 1 floating storage and offloading unit, which
transport and store oil on behalf of its customers who are in turn
charged a transportation tariff. During H1 2023, COTCo transported
approximately 135,705 bopd, with 26 liftings completed on behalf of
its customers.
Renewable Energy Division
The Renewable Energy division has made significant progress
during the first half of the year, with up to 676 MW of renewable
energy projects in motion. Savannah continues to advance towards
its short-term target of having up to 1 GW+ of projects in motion
and it is expected this will be achieved in mid-2024.
Bini a Warak Hydroelectric Project, Cameroon
Progress has continued on the Bini a Warak Hydroelectric Project
since the signing of the Memorandum of Agreement with the
Government of the Republic of Cameroon on 20 April 2023. The up to
75 MW project involves the construction of a hydroelectric dam on
the Bini River, located in the northern Adamawa region of Cameroon,
and is expected to increase current on-grid electricity generation
in northern Cameroon by over 50%.
Savannah hosted a successful site visit in May 2023 for key
stakeholders and distinguished guests, including representatives
from the Ministry of Water Resources and Energy, H.E. Kildadi
Taguieke Boukar, the Governor of the Adamawa Region, together with
local paramount and village chiefs. A drone-based topographic
survey has been completed and hydrological measurements have been
restarted. Design optimisation will be completed during Q4 2023 as
we work towards finalising the development and resumption of
construction of the project. Project sanction is currently
anticipated in 2024, with first power targeted in the 2027 to 2028
window.
Niger Projects
Savannah's up to 250 MW Parc Eolien de la Tarka wind farm
project in Niger, which has the potential to increase Niger's
on-grid electricity supply by over 40%, made significant progress
in H1 2023. All key studies required to achieve project sanction
(including wind measurement, environmental and social impact, grid
integration, security, cartography, road and aviation studies) were
either completed or made significant progress. The preliminary
on-site wind speed data measurements have proven to be highly
encouraging.
On 11 May 2023, Savannah announced the signing of an agreement
for the development of two proposed solar photovoltaic power
plants, with a combined installed power generation capacity of up
to 200 MW. During H1 2023 site identification work was undertaken
and a grid integration study initiated.
Sustainability
In line with our previous commitments, Savannah is today
publishing our first disclosure report in accordance with the SASB
which is available to download from our website here.
We continue to progress our 2023 sustainability performance
measurement and reporting in line with our sustainability
strategy.
Financial Review
The table below provides an overview of our results for H1 2023
with a comparison for H1 2022 (from continued operations, unless
otherwise stated):
Financial highlights
Six months Six months
ended ended
30 June 2023 30 June 2022
US$ million US$ million
Total Revenues(1) 138.7 128.7
-------------- --------------
Adjusted EBITDA(2) 108.2 100.3
-------------- --------------
Revenue 123.7 85.8
-------------- --------------
Operating expenses plus administrative
expenses(4) 27.4 24.5
-------------- --------------
Operating profit 37.3 27.9
-------------- --------------
The Group reports increased Total Revenues(1) of US$138.7
million and an increased Adjusted EBITDA(2) of US$108.2 million.
The 8% increase in both metrics is a reflection of the quality of
the assets in Nigeria where we see continued strong demand for gas
supply.
The Group's operating profit was 33% higher than the prior year
at US$37.3 million (H1 2022: US$27.9 million). The increase
resulted from a combination of the increase in revenues resulting
from strong customer offtake partially offset by a 12% increase in
operating expenses plus administrative expenses(4) . The increase
in these costs is a result of the investment being made to further
enhance the resilience, reliability and efficiency of the Nigerian
assets and to support the ongoing growth across the Group in both
hydrocarbons and renewable energy.
Revenue
Revenue during the period was 44% higher than the comparable
prior year period at US$123.7 million (H1 2022: US$85.8
million).
As previously highlighted, it is important to note the impact of
take-or-pay accounting rules under IFRS 15 on our Income Statement
as regards to revenue recognition for our gas sales agreements. The
Revenue shown in the Condensed Consolidated Statement of
Comprehensive Income includes only the gas, oil and condensate that
has been delivered. The Total Revenues(1) of US$138.7 million (H1
2022: US$128.7 million) includes the volume of gas that customers
are committed to pay for under the take-or-pay terms of the gas
sales agreements, which includes gas that has been delivered plus
gas invoiced but yet to be delivered, plus oil and condensate
revenues.
Savannah continues to benefit from over US$3.7 billion of
contracted future gas revenues in Accugas with annual price
escalation clauses related to US consumer price inflation.
Cost of Sales, administrative and other operating expenses
Cost of sales amounted to US$35.5 million (H1 2022: US$33.1
million) which includes US$14.9 million (H1 2022: US$13.8 million)
for facility operating and maintenance costs, US$2.7 million (H1
2022: US$2.9 million) royalty expenses and US$17.8 million (H1
2022: US$16.4 million) depletion and depreciation.
Administrative and other operating expenses for the period were
US$14.3 million (H1 2022: US$11.7 million), which includes US$1.8
million (H1 2022: US$0.9 million) of depreciation and amortisation
of intangibles. The increase in these costs was driven by the
investment into new business activities and the increased scale of
the business as it grows to support the operations across both
hydrocarbons and renewable energy.
Adjusted EBITDA(2)
Adjusted EBITDA(2) increased to US$108.2 million (1H 2022:
US$100.3 million) with the increase being driven by higher overall
Total Revenues and continued strong management of costs.
Finance Costs
The increase in Finance costs to US$51.8 million (H1 2022:
US$36.8 million) is a result primarily of higher underlying
interest rates combined with an increase in average debt
year-on-year and. The average interest rate was 13.4% (H1 2022:
10.7%) reflecting the higher US LIBOR rates during the period
compared to prior period.
Foreign Exchange loss
Foreign exchange losses amounted to US$54.0 million (H1 2022:
US$0.8 million). These losses are unrealised losses which occurred
following the harmonisation of the various exchange rates which was
implemented by the Central Bank of Nigeria in June. The impact of
this decision saw the official Naira/US$ exchange rate move from
approximately 460 to 755 at 30 June 2023 and this required Savannah
to revalue its Naira denominated assets and liabilities at this new
rate when preparing US$ denominated financial statements.
The principal Naira denominated asset on the balance sheet was
cash and this reduced in US$ terms by US$66.5 million when it was
translated. This was partially offset by the reduction in Naira
denominated liabilities which included borrowings and trade
payables.
Whilst the harmonisation resulted in a material unrealised loss,
the Naira devaluation which has occurred will be positive overall
as it is anticipated that this will lead to enhanced market
liquidity which will assist with the Accugas debt refinancing
process.
Cash flow
The cash flow results are for the consolidated group (including
discontinued operations).
As noted above, cash balances reduced in the period to US$135.7
million. This reduction arose despite the strong operating
performance during the period and was primarily due to a
combination of debt repayments of US$74 million (H1 2022: US$30.5
million) and the unrealised foreign exchange loss following Naira
exchange rate harmonisation of US$66.5 million (H1 2022: US$2.2
million). Capital and exploration expenditure for the period
totalled US$4.2 million (H1 2022: US$14.0 million). During the
period, Savannah also received US$44.9 million from SNH in relation
to the sale of a 10% interest in COTCo.
Debt
The net debt at 30 June 2023 was US$443.4 million an increase of
9% from year-end position (31 December 2022: US$404.9 million).
During the period US$74 million of debt was repaid however, there
was an overall increase seen in net debt due to the revaluation of
Naira cash balances (as discussed above). This has resulted in a
marginal increase in leverage(5) from 1.8x to 1.9x.
Work continues on the proposed refinancing of the Accugas US$
debt facility (as was detailed in the 2022 Annual Report). A
detailed term sheet has been executed with a consortium of lenders
for the provision of a Naira-denominated Transitional Facility and
it is anticipated this will be finalised in Q4 2023.
Discontinued Operations
As disclosed in the Group's 2022 Annual Report, the Republic of
Chad passed a law on 31 March 2023 confirming the nationalisation
of the Group's Chad Assets. Following this nationalisation, all of
the Groups' operations for the Chad Assets have been recognised as
discontinued operations in line with IFRS 5 for the current period.
The net profit and total comprehensive profit from discontinued
operations amounted to US$92.0 million, which is shown as a single
line in the Condensed Consolidated Statement of Comprehensive
Income. A breakdown of this is shown in Note 22 of the Notes to the
Condensed Consolidated Interim Financial Statements.
COTCo
Following the period end, a dispute has arisen among the
shareholders of COTCo. Savannah has initiated appropriate court and
ICC arbitral proceedings to protect its rights under the relevant
agreements.
Going Concern
The results have been presented on a going concern basis.
Details of the Group's assessment of going concern for the period
can be found in note 2.
Footnotes
(1) Total Revenues are defined as the total amount of invoiced
sales during the period. This number is seen by management as more
accurately reflecting the underlying cash generation capacity of
the business as opposed to Revenue recognised in the Condensed
Consolidated Statement of Comprehensive Income. A detailed
explanation of the impact of IFRS 15 revenue recognition rules on
our Consolidated Statement of Comprehensive Income is provided in
the Financial Review section of the Annual Report and Accounts
2020.
(2) Adjusted EBITDA is calculated as profit or loss before
finance costs, investment revenue, foreign exchange gains or
losses, expected credit loss and other related adjustments, fair
value adjustments, gain on acquisition, taxes, transaction and
other related expenses, depreciation, depletion and amortisation
and adjusted to include deferred revenue and other invoiced
amounts. Management believes that the alternative performance
measure of Adjusted EBITDA more accurately reflects the
cash-generating capacity of the business.
(3) From continuing operations unless otherwise stated.
(4) Group operating expenses plus administrative expenses are
defined as total cost of sales, administrative and other operating
expenses excluding royalty and depletion, depreciation and
amortisation and transaction costs.
(5) Leverage is defined as net debt/Adjusted EBITDA. For the
6-month period ended 30 June 2023, the Leverage calculation is
prepared on a rolling 12-month basis.
INDEPENT REVIEW REPORT TO SAVANNAH ENERGY PLC
Qualified conclusion
We have reviewed the condensed set of financial statements of
Savannah Energy plc (the "Company") included in the interim
financial report for the six months ended 30 June 2023 which
comprise the condensed consolidated statement of comprehensive
income, the condensed consolidated balance sheet, the condensed
consolidated statement of changes in equity, the condensed
consolidated cash flow statement and the notes to the interim
financial statements.
Except for the adjustments to the interim financial information
of which we might have become aware of had it not been for the
situation described below, based on our review, nothing has come to
our attention that causes us to believe that the accompanying
interim financial information for the six months ended 30 June 2023
is not prepared, in all material respects, in a form consistent
with that which will be adopted in the Company's annual accounts
having regard to the accounting standards applicable to such annual
accounts, and in accordance with the London Stock Exchange AIM
Rules for Companies.
Basis for Qualified Conclusion
As explained in note 2, the impact of the Republic of Chad's
nationalisation of the Group's interest in the Chad assets resulted
in these assets being impaired and accounted for as a discontinued
operation in the current period. The resulting accounting impact is
included in the net profit and total comprehensive profit from
discontinued activities in the income statement totalling $91.9m
and is derived from the financial records and supporting documents
that were available to the Group before the nationalisation date of
31 March 2023. The evidence available in respect of these assets
was limited due to the Directors not being able to access all the
underlying financial information, nor have access to the relevant
Chad-based employees of the affected entities subsequent to 31
March 2023. This has a consequential impact on our ability to
perform the required review procedures on this balance. Had we been
able to complete our review of the balance of $91.9m presented as
net profit and total comprehensive profit from discontinued
operations, matters might have come to our attention indicating
that adjustments might be necessary to the interim financial
information.
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK), "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this interim financial report have been prepared in a
form consistent with that which will be adopted in the Company's
annual accounts having regard to the accounting standards
applicable to such annual accounts.
Material uncertainty related to going concern
We draw attention to note 2 of the condensed set of financial
statements which explains that the Group's ability to continue as a
going concern is dependent on either the ongoing support from its
lenders to amend the terms of the Accugas US$ debt facility or a
refinancing of that the facility. As stated in note 2, these
conditions, along with the other matters referred to in note 2,
indicate that a material uncertainty exists that may cast
significant doubt on the Group's ability to continue as a going
concern. Our conclusion is not modified in respect of this
matter.
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410, however future events or conditions
may cause the Group to cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the interim
financial report in accordance with the London Stock Exchange AIM
Rules for Companies which require that the interim report be
presented and prepared in a form consistent with that which will be
adopted in the Company's annual accounts having regard to the
accounting standards applicable to such annual accounts.
In preparing the interim financial report, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of the financial
information
In reviewing the interim report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statement in the interim financial report. Our
conclusion, including our Conclusions Relating to Going Concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Qualified Conclusion
paragraph of this report.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the
rules of the London Stock Exchange AIM Rules for Companies for no
other purpose. No person is entitled to rely on this report unless
such a person is a person entitled to rely upon this report by
virtue of and for the purpose of our terms of engagement or has
been expressly authorised to do so by our prior written consent.
Save as above, we do not accept responsibility for this report to
any other person or for any other purpose and we hereby expressly
disclaim any and all such liability.
BDO LLP
Chartered Accountants
London
28 September 2023
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE
SIX MONTHSED 30 JUNE 2023
Six months ended Six months ended
30 June 30 June
2023 2022
US$ ' 000 US$ ' 000
Continuing operations Note Unaudited Unaudited
--------------------------------------------------- -------- ----------------------------- -----------------------
Revenue 4 123,728 85,847
Cost of sales 5 (35,464) (33,127)
--------------------------------------------------- -------- ----------------------------- -----------------------
Gross profit 88,264 52,720
Administrative and other operating expenses (14,284) (11,686)
Transaction and other related expenses 6 (2,833) (7,262)
Expected credit loss and other related
adjustments 14 (33,840) (5,918)
Operating profit 6 37,307 27,854
Finance income 7 1,440 273
Finance costs 8 (51,752) (36,827)
Income related to associates 20 3,580 -
Fair value adjustment 9 6,519 (1,768)
Foreign translation loss 10 (54,016) (846)
--------------------------------------------------- -------- ----------------------------- -----------------------
Loss before tax (56,922) (11,314)
Current tax expense 11 (9,756) (2,793)
Deferred tax credit/(expense) 11 21,489 (6,438)
--------------------------------------------------- -------- ----------------------------- -----------------------
Tax credit/( expense) 11 11,733 (9,231)
--------------------------------------------------- -------- ----------------------------- -----------------------
Net loss and total comprehensive loss
from continuing operations (45,189) (20,545)
--------------------------------------------------- -------- ----------------------------- -----------------------
Discontinued operations
Profit after tax for the period from discontinued
operations 22 91,962 -
--------------------------------------------------- -------- ----------------------------- -----------------------
Net profit/(loss) and total comprehensive
profit/(loss) 46,773 (20,545)
--------------------------------------------------- -------- ----------------------------- -----------------------
Net profit/(loss) and total comprehensive
profit/(loss) attributable to:
Owners of the Company 54,428 (20,264)
Non-controlling interests (7,655) (281)
--------------------------------------------------- -------- ----------------------------- -----------------------
46,773 (20,545)
--------------------------------------------------- -------- ----------------------------- -----------------------
US cents US cents
--------------------------------------------------- -------- ----------------------------- -----------------------
Loss per share for continuing operations
Basic 12 (3.09) (1.77)
Diluted 12 (3.09) (1.77)
Profit/(loss) per share including discontinued
operations
Basic 12 4.48 (1.77)
Diluted 12 4.48 (1.77)
--------------------------------------------------- -------- ----------------------------- -----------------------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
30 June 31 December
2023 2022
US$'000 US$'000
Note Unaudited Audited
---------------------------------- -------- --------------------- -----------------------
Assets
Non-current assets
Property, plant and equipment 13 508,449 623,118
Intangible assets 175,042 183,013
Investments in associates 20 142,105 188,350
Deferred tax assets 257,703 234,666
Right-of-use assets 3,136 3,658
Restricted cash 29 28
Other non-current receivables 9,981 7,032
---------------------------------- -------- --------------------- -----------------------
Total non-current assets 1,096,445 1,239,865
---------------------------------- -------- --------------------- -----------------------
Current assets
Inventory 6,715 40,374
Trade and other receivables 14 278,365 239,346
Cash at bank 15 135,657 240,888
---------------------------------- -------- --------------------- -----------------------
Total current assets 420,737 520,608
---------------------------------- -------- --------------------- -----------------------
Total assets 1,517,182 1,760,473
---------------------------------- -------- --------------------- -----------------------
Equity and liabilities
Capital and reserves
Share capital 1,835 1,828
Share premium 126,802 124,819
Treasury shares (136) (136)
Other reserves 531 531
Share-based payment reserve 9,900 9,974
Retained earnings 150,835 96,407
---------------------------------- -------- --------------------- -----------------------
Equity attributable to owners of
the Company 289,767 233,423
Non-controlling interests 2,991 10,646
---------------------------------- -------- --------------------- -----------------------
Total e quity 292,758 244,069
---------------------------------- -------- --------------------- -----------------------
Non-current liabilities
Other payables 16 2,104 7,712
Borrowings 17 155,565 102,392
Lease liabilities 3,194 3,453
Deferred tax liabilities 7,631 27,607
Provisions 68,936 94,845
Contract liabilities 18 321,138 314,018
---------------------------------- -------- --------------------- -----------------------
Total non- current liabilities 558,568 550,027
---------------------------------- -------- --------------------- -----------------------
Current l iabilities
Trade and other payables 16 98,315 279,448
Borrowings 17 423,462 543,397
Interest payable 19 109,634 105,600
Tax liabilities 14,896 18,514
Lease liabilities 1,757 1,626
Contract liabilities 18 17,792 17,792
Total current liabilities 665,856 966,377
---------------------------------- -------- --------------------- -----------------------
Total liabilities 1,224,424 1,516,404
---------------------------------- -------- --------------------- -----------------------
Total e quity and l iabilities 1,517,182 1,760,473
---------------------------------- -------- --------------------- -----------------------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 JUNE 2023
Six months ended Six months ended
30 June 2023 30 June 2022
US$'000 US$'000
Note Unaudited Unaudited
---------------------------------------------------------- ---- -------------------------- ------------------------
Cash flows from operating activities:
Profit/(loss) before tax including discontinued
operations 2,825 (11,314)
Adjustments for:
Depreciation 1,805 914
Depletion 17,832 16,432
Finance income (1,350) (190)
Finance costs 8 51,752 36,827
Income related to associates (4,155) -
Fair value adjustment (6,519) 1,768
Unrealised foreign exchange loss/(gain) 10 54,689 (99)
Share option (credit)/charge (74) 336
Expected credit loss and other related
adjustments 14 33,840 5,918
Impairment loss on discontinued operations 22 12,350 -
Operating cash flows before movements in working capital 162,995 50,592
Increase in inventory (1,521) (1,357)
Increase in trade and other receivables (83,517) (40,703)
Decrease in trade and other payables (54,209) (6,389)
Increase in contract liabilities 1,843 40,765
Income tax paid (1,975) (1,024)
---------------------------------------------------------- ---- -------------------------- ------------------------
Net cash generated from operating activities 23,616 41,884
---------------------------------------------------------- ---- -------------------------- ------------------------
Cash flows from investing activities:
Interest received 668 171
Payments for property, plant and equipment (2,379) (9,104)
Payments for exploration and evaluation assets (1,824) (4,888)
Acquisition deposits - (14,648)
Proceeds from disposal 44,900 -
Loans provided to third parties (2,512) (1,067)
Cash transferred from/(to) debt service accounts 83,633 (32,186)
Lessor receipts 147 196
---------------------------------------------------------- ---- -------------------------- ------------------------
Net cash generated from/(used in) investing activities 122,633 (61,526)
---------------------------------------------------------- ---- -------------------------- ------------------------
Cash flows from financing activities:
Finance costs (29,099) (24,758)
Proceeds from issues of equity shares, net of issue costs 2,013 61,141
Sale of Treasury shares - 73
Borrowing proceeds 19 - 12,810
Borrowing repayments 19 (73,783) (30,545)
Lease payments 19 (484) (527)
Net cash (used in)/generated from financing activities (101,353) 18,194
---------------------------------------------------------- ---- -------------------------- ------------------------
Net increase/(decrease) in cash and cash equivalents 44,896 (1,448)
Effect of exchange rate changes on cash and cash
equivalents (66,493) (2,214)
Cash and cash equivalents at beginning of period 104,147 45,739
Cash and cash equivalents at end of period 15 82,550 42,077
---------------------------------------------------------- ---- -------------------------- ------------------------
Amounts held for debt service at end of period 15 53,107 139,091
---------------------------------------------------------- ---- -------------------------- ------------------------
Cash at bank at end of period 15 135,657 181,168
---------------------------------------------------------- ---- -------------------------- ------------------------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 JUNE 2023
Equity
attributable
Share-based to the
Share Share Treasury Other payment Retained owners of Non-controlling Total
capital premium shares reserves reserve earnings the Company interest equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1
January 2023
(audited) 1,828 124,819 (136) 531 9,974 96,407 233,423 10,646 244,069
Profit/(loss)
for the period - - - - - 54,428 54,428 (7,655) 46,773
---------------- -------- -------- --------- --------- ------------ --------- ------------- ---------------- --------
Total
comprehensive
profit/(loss)
for the period - - - - - 54,428 54,428 (7,655) 46,773
Transactions
with
shareholders:
Equity-settled
share-based
payments - - - - (74) - (74) - (74)
Issue of
shares, net of
costs 7 1,983 - - - - 1,990 - 1,990
Balance at 30
June 2023
(unaudited) 1,835 126,802 (136) 531 9,900 150,835 289,767 2,991 292,758
---------------- -------- -------- --------- --------- ------------ --------- ------------- ---------------- --------
Equity
attributable
Shares Share-based to the
Share Share to be Treasury Other payment Retained owners of Non-controlling Total
capital premium issued shares reserves reserve earnings the Company interest equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1
January 2022
(audited) 1,409 61,204 63,956 (58) 458 8,706 157,221 292,896 13,842 306,738
Loss for the
period - - - - - - (20,264) (20,264) (281) (20,545)
---------------- -------- -------- --------- --------- --------- ------------ --------- ------------- ---------------- ---------
Total
comprehensive
loss for the
period - - - - - - (20,264) (20,264) (281) (20,545)
Transactions
with
shareholders:
Equity-settled
share-based
payments - - - - - 336 - 336 - 336
Issue of
shares, net of
costs 340 63,693 (63,956) (77) - - - - - -
Sale of
treasury
shares - - - - 73 - - 73 - 73
Issue of
warrants - - - - 7,850 - - 7,850 - 7,850
Balance at 30
June 2022
(unaudited) 1,749 124,897 - (135) 8,381 9,042 136,957 280,891 13,561 294,452
---------------- -------- -------- --------- --------- --------- ------------ --------- ------------- ---------------- ---------
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1. General information
Savannah Energy PLC ("Savannah" or "the Company") was
incorporated in England and Wales on 3 July 2014. The condensed
consolidated financial statements of Savannah and its subsidiaries
(together the "Group") for the six months ended 30 June 2023 were
approved and authorised for issuance by the board of directors
on
28 September 2023.
The Group's principal activities are the exploration,
development and production of natural gas and crude oil and
development of other energy related projects in Africa.
The Company is domiciled in the England for tax purposes and its
shares were listed on the Alternative Investment Market ("AIM") of
the London Stock Exchange on 1 August 2014. The Company's
registered address is 40 Bank Street, London, E14 5NR.
2. Accounting policies
Basis of Preparation
The condensed set of financial statements included in this
interim financial report have been prepared in a form consistent
with that which will be adopted in the Company's annual accounts
having regard to the accounting standards applicable to such annual
accounts, and in accordance with the London Stock Exchange AIM
Rules for Companies. The provisions of IAS 34: Interim Financial
Reporting have not been applied.
The interim condensed consolidated financial statements do not
include all disclosures that would otherwise be required in a
complete set of financial statements and should be read in
conjunction with the Group's 2022 Annual Report and audited
financial statements for the year ended 31 December 2022 ("the
Group's 2022 Annual Report"). The financial information for the six
months ended 30 June 2023 does not constitute statutory accounts
within the meaning of Section 434(3) of the Companies Act 2006 and
is unaudited.
The annual financial statements of Savannah for the year ended
31 December 2022 were prepared in accordance with UK-adopted
international accounting standards in conformity with the
requirements of the Companies Act 2006. The Independent Auditors'
Report on the Group's 2022 Annual Report contained a disclaimer of
opinion and as such contained a statement under 498(2) or 498(3) of
the Companies Act 2006.
The Group's statutory financial statements for the year ended 31
December 2022 have been filed with the Registrar of UK
Companies'.
All the Group's subsidiaries' functional currency is US Dollars
("US$"), and the consolidated financial statements are presented in
US Dollars and all values are rounded to the nearest thousand
(US$'000), except when otherwise stated.
The financial information presented herein has been prepared in
accordance with the accounting policies used in preparing the
Group's 2022 Annual Report. There are no other new or amended
standards or interpretations adopted from 1 January 2023 that have
a significant impact on the interim financial information.
As previously disclosed in the Group's 2022 Annual Report, the
Republic of Chad nationalised the Group's interests in Chad owned
by its subsidiaries, Savannah Chad Inc ("SCI") and Savannah
Midstream Investment Limited ("SMIL"), (the "Chad Assets") by way
of a law passed on 31 March 2023 (the Nationalisation"). This
confirmed an announcement of the President of Chad of 23 March
2023. As a result of the Nationalisation, the Group has not been
able to fully access all the underlying financial information, nor
have access to the relevant Chad-based employees of the affected
entities SCI and SMIL in order to prepare the financial information
for audit purposes to be consolidated into the Group's financial
statements for the year ended 31 December 2022 and for the
unaudited interim condensed consolidated financial statements for
the six months ended 30 June 2023.
As stated in the Group's 2022 Annual Report, as a result of the
Nationalisation, the activities of the Chad Assets will be
considered as a discontinued operation in accordance with IFRS 5 -
Non-current Assets for Sale and discontinued operations from 31
March 2023 and this will be reflected in the Group Financial
Statements for the year ending 31 December 2023 and for the
unaudited condensed consolidated financial statements for the six
months ended 30 June 2023. This is without prejudice to Group's
claims for compensation in respect of the Nationalisation. More
detail of the discontinued operations is set out at Note 22 of this
report.
Despite the limitation noted above, the financial information
that has been disclosed for the Chad Assets in the period was
primarily sourced from bank statements and any financial records
and supporting documents that were available before the date of
Nationalisation. Given the limited information available, the
Directors considered the best way to record and present
transactions during the period and agreed that the most reliable
basis to record any transactions was on a cash accounting basis
supported by bank statements. During the period there was an oil
lifting which resulted in a cash inflow and this was recorded
within revenue within discontinued operations. For cash out flows,
these were mainly considered to be settlement of outstanding
payables.
Included within discontinued operations is an impairment of the
net balance sheet position as at the date of Nationalisation, on
the basis that the Republic of Chad nationalised all the interests
and rights pertaining to the Chad Assets. Also, included within the
Chad Assets is the Group's interest in TOTCo held as an equity
investment. This investment has also been fully impaired. Note 23
sets out the position of any potential contingent liabilities in
connection with Chad Assets and the Nationalisation.
Going concern
The Group continues to trade strongly with revenues increasing
significantly over the same period last year. The Group's cash
balance amounted to US$135.7 million at the reporting date and a
significant volume of receivables are anticipated to be collected
from customers during over the next year. The Directors have
considered the factors relevant to support a statement of going
concern; in assessing the going concern assumption the Directors
have reviewed the Group's forecasted cash flows as well as the
funding requirements of the Group for at least the 12-month period
from the date of publication of this Interim Report.
This forecast was prepared on a "bottom-up" basis, at each major
asset and corporate level, and it reflects the Group's best
estimate of costs and revenues for the period. The capital
expenditure and operating costs used in this forecast are initially
based on the Group's approved corporate budget, and then revised
for expected trading performance, customer demand, timing of
capital expenditures, debt refinancing and any new corporate
transactions that have an impact on the Group's cash flows. The
principal assumptions made in relation to the going concern
assessment relate to the timely payments of our gas invoices by our
customers, the forecast commodity oil price environment and
continued access to FX markets (specifically in relation to
financing of US Dollar denominated costs and the refinancing of the
Accugas US$ Facility).
A detailed credit-approved term sheet has been executed with
lenders for a new Naira denominated debt facility (the
"Transitional Facility"). Whilst the process continues apace,
Accugas did not have a long-dated extension for the refinancing
process at the reporting date beyond the period of the going
concern review. As such the balance outstanding of the Accugas US$
Facility continues to be reflected within current borrowings until
the Transitional Facility is in place. The Group remains highly
confident that the Group will continue to access the FX markets as
required to maintain its operational needs and following the
harmonisation of the exchange rates conducted by the Central Bank
of Nigeria in June 2023 (and the unrealised foreign exchange loss
which resulted from the resulting devaluation) increased liquidity
has seen in the FX markets. Notwithstanding, a minimal risk exists
that the Group may not be able to continue to do so and/or Accugas
may not be able to complete its planned debt financing or to
continue to receive support from its lenders to amend the Accugas
US$ Facility to defer conversion of Naira balances to US Dollars.
These facts indicate that a material uncertainty exists that may
cast significant doubt on the Group's ability to continue to apply
the going concern basis of accounting.
The Directors are confident in the Group's forecast and have a
reasonable expectation that the Group will continue in operational
existence for the going concern assessment period and believe it is
appropriate to continue to adopt the going concern basis in
preparing these consolidated financial statements. As mentioned
above, it is recognised there is a material uncertainty, however,
this has not altered the Directors view on the basis of preparation
as a going concern.
3. Segmental reporting
For the purposes of resource allocation and assessment of
segment performance, the operations of the Group are divided into
four segments: three geographical locations and an Unallocated
segment. The current geographical segments are Nigeria, Cameroon
and Niger. All these geographical segments' principal activities
are exploration, development and extraction of oil and gas. The
Unallocated segment's principal activities are the governance and
financing of the Group, as well as undertaking business development
opportunities. Items not included within Operating profit/(loss)
are reviewed at a Group level and therefore there is no segmental
analysis for this information.
The following is an analysis of the Group's continuing
operations results by reportable segment for the six months ended
30 June 2023:
Nigeria Niger Unallocated Total
US$'000 US$'000 US$'000 US$'000
Unaudited Unaudited Unaudited Unaudited
Revenue 123,728 - - 123,728
Cost of sales(1) (35,150) (120) (194) (35,464)
---------------------------------------------------- ----------- ----------- ------------- -----------
Gross profit 88,578 (120) (194) 88,264
Administrative and other operating expenses (3,748) (107) (10,429) (14,284)
Transaction and other related expenses - - (2,833) (2,833)
Expected credit loss and other related adjustments (33,840) - - (33,840)
Operating profit/(loss) 50,990 (227) (13,456) 37,307
---------------------------------------------------- ----------- ----------- ------------- -----------
Finance income 1,440
Finance costs (51,752)
Income related to associates 3,580
Fair value adjustment 6,519
Foreign translation loss (54,016)
---------------------------------------------------- ----------- ----------- ------------- -----------
Loss before tax (56,922)
---------------------------------------------------- ----------- ----------- ------------- -----------
Segment depreciation, depletion and amortisation 19,030 112 495 19,637
---------------------------------------------------- ----------- ----------- ------------- -----------
Segment non-current asset additions (2) 2,816 3,211 29 6,056
---------------------------------------------------- ----------- ----------- ------------- -----------
1. Refer to Note 5 for items included within Cost of Sales.
2. Includes Third party investments, Property, plant and
equipment, Exploration and evaluation assets and Right-of-use
assets.
The following is an analysis of the Group's results by
reportable segment for the six months ended 30 June 2022:
Nigeria Niger Unallocated Total
US$'000 US$'000 US$'000 US$'000
Unaudited Unaudited Unaudited Unaudited
---------------------------------------------------- ----------- ----------- ------------- -----------
Revenue 85,847 - - 85,847
Cost of sales(1) (33,127) - - (33,127)
---------------------------------------------------- ----------- ----------- ------------- -----------
Gross profit 52,720 - - 52,720
Administrative and other operating expenses (3,446) (972) (7,268) (11,686)
Transaction and other related expenses - - (7,262) (7,262)
Expected credit loss and other related adjustments (5,918) - - (5,918)
Operating profit/(loss) 43,356 (972) (14,530) 27,854
---------------------------------------------------- ----------- ----------- ------------- -----------
Finance income 273
Finance costs (36,827)
Fair value adjustment (1,768)
Foreign translation loss (846)
---------------------------------------------------- ----------- ----------- ------------- -----------
Loss before tax (11,314)
---------------------------------------------------- ----------- ----------- ------------- -----------
Segment depreciation, depletion and amortisation 16,890 132 323 17,345
---------------------------------------------------- ----------- ----------- ------------- -----------
Segment non-current assets additions (2) 1,862 5,035 4,101 10,998
---------------------------------------------------- ----------- ----------- ------------- -----------
1. Refer to Note 5 for items included within Cost of Sales.
2. Includes Third party investments, Property, plant and
equipment, Exploration and evaluation assets and Right-of-use
assets.
The following is an analysis of the Group's financial position
by reportable segment for continuing operations as at 30 June
2023:
Nigeria Cameroon Niger Unallocated Total
US$'000 US$'000 US$'000 US$'000 US$'000
Unaudited Unaudited Unaudited Unaudited Unaudited
------------------------------- ----------- ----------- ----------- ------------- -----------
Non-Current assets
Property, plant and equipment 506,851 - 1,155 443 508,449
Intangible assets 3,337 - 170,873 832 175,042
Investments in associates - 142,105 - - 142,105
Deferred tax assets 257,703 - - - 257,703
Right-of-use assets 1,316 - - 1,820 3,136
Restricted cash 29 - - - 29
Other non-current assets 2,500 - - 7,481 9,981
------------------------------- ----------- ----------- ----------- ------------- -----------
Total non-current assets 771,736 142,105 172,028 10,576 1,096,445
------------------------------- ----------- ----------- ----------- ------------- -----------
Current assets
Inventory 6,715 - - - 6,715
Trade and other receivables 244,450 1,250 43 32,622 278,365
Cash at bank 98,199 - 1,185 36,273 135,657
------------------------------- ----------- ----------- ----------- ------------- -----------
Total current assets 349,364 1,250 1,228 68,895 420,737
------------------------------- ----------- ----------- ----------- ------------- -----------
Total assets 1,121,100 143,355 173,256 79,471 1,517,182
------------------------------- ----------- ----------- ----------- ------------- -----------
Non-current liabilities
Other payables 2,104 - - - 2,104
Borrowings 101,978 53,587 - - 155,565
Lease liabilities 835 - - 2,359 3,194
Deferred tax liabilities 7,631 - - - 7,631
Provisions 67,172 - 1,764 - 68,936
Contract liabilities 321,138 - - - 321,138
------------------------------- ----------- ----------- ----------- ------------- -----------
Total non-current liabilities 500,858 53,587 1,764 2,359 558,568
------------------------------- ----------- ----------- ----------- ------------- -----------
Current liabilities
Trade and other payables 40,351 - 17,071 40,893 98,315
Borrowings 352,526 58,529 12,407 - 423,462
Interest payable 102,378 - 7,256 - 109,634
Tax liabilities 14,896 - - - 14,896
Lease liabilities 815 - - 942 1,757
Contract liabilities 17,792 - - - 17,792
------------------------------- ----------- ----------- ----------- ------------- -----------
Total current liabilities 528,758 58,529 36,734 41,835 665,856
------------------------------- ----------- ----------- ----------- ------------- -----------
Total liabilities 1,029,616 112,116 38,498 44,194 1,224,424
------------------------------- ----------- ----------- ----------- ------------- -----------
The following is an analysis of the Group's financial position
by reportable segment as at 31 December 2022:
Nigeria Cameroon Niger Unallocated Sub-total Chad (1) Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Audited Audited Audited Audited Audited Audited Audited
Property, plant and equipment 501,387 - 1,180 488 503,055 120,063 623,118
Exploration and evaluation
assets 4,072 - 169,242 792 174,106 8,907 183,013
Investments in associates - 183,425 - - 183,425 4,925 188,350
Deferred tax assets 228,582 - - - 228,582 6,084 234,666
Right-of-use assets 1,621 - - 2,037 3,658 - 3,658
Restricted cash 28 - - - 28 - 28
Other non-current assets - - - 7,032 7,032 - 7,032
------------------------------- ---------- ---------- --------- ------------- ----------- ---------- ----------
Total non-current assets 735,690 183,425 170,422 10,349 1,099,886 139,979 1,239,865
------------------------------- ---------- ---------- --------- ------------- ----------- ---------- ----------
Current assets
Inventory 5,194 - - - 5,194 35,180 40,374
Trade and other receivables 188,881 379 24 37,669 226,953 12,393 239,346
Cash at bank 205,456 - 1,441 33,991 240,888 - 240,888
------------------------------- ---------- ---------- --------- ------------- ----------- ---------- ----------
Total current assets 399,531 379 1,465 71,660 473,035 47,573 520,608
------------------------------- ---------- ---------- --------- ------------- ----------- ---------- ----------
Total assets 1,135,221 183,804 171,887 82,009 1,572,921 187,552 1,760,473
------------------------------- ---------- ---------- --------- ------------- ----------- ---------- ----------
Non-current liabilities
Other payables 3,225 - - - 3,225 4,487 7,712
Borrowings 102,392 - - - 102,392 - 102,392
Lease liabilities 835 - - 2,618 3,453 - 3,453
Deferred tax liabilities - - - - - 27,607 27,607
Provisions 44,444 - 1,622 - 46,066 48,779 94,845
Contract liabilities 314,018 - - - 314,018 - 314,018
------------------------------- ---------- ---------- --------- ------------- ----------- ---------- ----------
Total non-current liabilities 464,914 - 1,622 2,618 469,154 80,873 550,027
------------------------------- ---------- ---------- --------- ------------- ----------- ---------- ----------
Current liabilities
Trade and other payables 43,935 18 17,372 60,804 122,129 157,319 279,448
Borrowings 369,110 162,023 12,264 - 543,397 - 543,397
Interest payable 98,582 1,243 5,775 - 105,600 - 105,600
Tax liabilities 7,824 - - - 7,824 10,690 18,514
Lease liabilities 755 - - 871 1,626 - 1,626
Contract liabilities 17,792 - - - 17,792 - 17,792
------------------------------- ---------- ---------- --------- ------------- ----------- ---------- ----------
Total current liabilities 537,998 163,284 35,411 61,675 798,368 168,009 966,377
------------------------------- ---------- ---------- --------- ------------- ----------- ---------- ----------
Total liabilities 1,002,912 163,284 37,033 64,293 1,267,522 248,882 1,516,404
------------------------------- ---------- ---------- --------- ------------- ----------- ---------- ----------
(1) Refer to the Note 2, Accounting Policies - Basis of
Preparation; Note 22, Discontinued operations and Note 23,
Contingent Liabilities, which collectively sets out the Company's
position with respect to the Chad Assets.
4. Revenue
Set out below is the disaggregation of the Group's revenue from
contracts with customers:
2023 2022
US$'000 US$'000
Six months ended 30 June Unaudited Unaudited
---------------------------------------- ----------- -----------
Gas sales 115,887 72,629
Oil and condensates sales 7,841 13,218
---------------------------------------- ----------- -----------
Revenue from contracts with customers 123,728 85,847
---------------------------------------- ----------- -----------
Gas sales represents gas deliveries made to the Group's
customers under gas sale agreements. The Group sells oil and
condensates at prevailing market prices.
Included within Revenue from contracts with customers is revenue
of US$101.5 million (30 June 2022: US$83.8 million) relating to two
(30 June 2022: four) of the Group's customers who each contribute
more than 10% of revenue US$78.1 million, and US$23.4 million
respectively (30 June 2022: US$36.6 million, US$21.7 million,
US$13.2 million, and US$12.3 million respectively).
5. Cost of sales
2023 2022
US$'000 US$'000
Six months ended 30 June Unaudited Unaudited
--------------------------------------------------------------- ----------- -----------
Depletion - oil and gas, and infrastructure assets (Note 13) 17,832 16,432
Facility operation and maintenance costs 14,928 13,770
Royalties 2,704 2,925
35,464 33,127
--------------------------------------------------------------- ----------- -----------
6. Operating profit
Operating profit has been arrived at after charging:
2023 2022
US$'000 US$'000
Six months ended 30 June Unaudited Unaudited
-------------------------------------------- ----------- -----------
Staff costs 18,275 11,896
Depreciation - other assets (Note 13) 261 370
Depreciation - right-of-use assets 522 544
Amortisation of intangibles 1,021 -
Transaction and other related expenses(1) 2,833 7,262
-------------------------------------------- ----------- -----------
1. Prior period Transaction and other related expenses pertain
to costs incurred in respect to the Group's acquisition of the Chad
and Cameroon Assets, integration and IT activities and other
business development opportunities. Current period Transaction and
other related expenses relate to costs incurred as part of the
Group's proposed acquisition of assets in South Sudan and other
business development opportunities.
7. Finance income
2023 2022
US$'000 US$'000
Six months ended 30 June Unaudited Unaudited
--------------------------- ----------- -----------
Lease income 11 19
Bank interest income 666 161
Other interest income 763 93
1,440 273
--------------------------- ----------- -----------
8. Finance costs
2023 2022
US$'000 US$'000
Six months ended 30 June Unaudited Unaudited
--------------------------------------------------------- ----------- -----------
Interest on bank borrowings and loan notes 41,350 27,949
Amortisation of balances measured at amortised cost(1) 5,667 3,898
Unwinding of decommissioning discount 2,119 2,749
Interest expense on lease liabilities 136 201
Bank charges & other finance costs 2,480 2,030
51,752 36,827
--------------------------------------------------------- ----------- -----------
1. Includes amounts due to unwinding of a discount on a
long-term payable, contract liabilities (Note 18) and amortisation
of debt fees.
9. Fair value adjustment
During 2019 the Group issued a Senior Secured Note of US$20
million that includes a voluntary prepayment option whereby early
repayment will result in a discount to the contractual loan value.
As an embedded derivative, the option has been separated from the
host loan instrument and valued separately and accounted for as
fair value through profit or loss ("FVTPL"). As at 30 June 2023 the
option value was approximately US$2.3 million (31 December 2022
audited: US$2.8 million), resulting in a charge of US$0.5 million
(30 June 2022: gain of US$1.8 million). The decrease in the option
value was due to a worsening in credit bond spreads observed during
the period as well as an increase in market expectations around
interest rates.
Warrants (recognised as a financial instrument), were issued to
LCP4L on 24 January 2022. The financial liability is valued at each
reporting period with the changes in the fair value being
recognised in the Consolidated Statement of Comprehensive Income.
The warrants were valued using a European option pricing model with
a value as at 30 June 2023 of US$20.2 million (31 December 2022
audited; US$19.7 million), resulting in a charge of US$0.5
million.
Contingent consideration relates to oil-price related contingent
payments which arose from the acquisition of the Chad and Cameroon
assets. This amount was measured at fair value at the completion
date and is remeasured at fair value at every reporting date. As
discussed in Note 2, due to the Nationalisation of the Chad Assets
by the Chad Government, the remaining value of this consideration
was fair valued to nil and resulted in a gain of US$9.2
million.
During the reporting period, the Group entered into hedging
arrangements to provide protection against adverse oil price
movements. The option was not exercised prior to expiry and the
premiums were fair valued to nil resulting in a fair value loss of
US$1.7 million through the profit and loss.
10. Foreign translation loss
2023 2022
US$'000 US$'000
Six months ended 30 June Unaudited Unaudited
--------------------------- ----------- -----------
Realised (gain)/loss (673) 945
Unrealised loss/(gain) 54,689 (99)
--------------------------- ----------- -----------
54,016 846
--------------------------- ----------- -----------
Unrealised loss relates to the revaluation of monetary items
held in currencies other than US Dollars. During the six months
ended 30 June 2023, the Nigerian Naira materially devalued against
the US Dollar which created an unrealised loss on monetary items
held in Naira.
11. Taxation
The tax expense/(credit) for the Group is:
2023 2022
US$'000 US$'000
Six months ended 30 June Unaudited Unaudited
--------------------------------------------------------------------------- ----------- -----------
Current tax -
- Adjustments in respect of prior years (42) (1,126)
- Current year 9,798 3,919
--------------------------------------------------------------------------- ----------- -----------
9,756 2,793
Deferred tax
- Adjustments in respect of prior years (989) 193
- Write down and reversal of previous write downs of deferred tax assets 5,300 4,353
- Origination and reversal of temporary differences (25,800) 1,892
--------------------------------------------------------------------------- ----------- -----------
(21,489) 6,438
--------------------------------------------------------------------------- ----------- -----------
Total tax (credit)/expense for the period (11,733) 9,231
--------------------------------------------------------------------------- ----------- -----------
Income tax expense is recognised based on the actual results for
the period.
The tax credit for the period of US$11.7 million (30 June 2022:
charge of US$9.2 million) is made up of a current tax charge of
US$9.8 million (30 June 2022: US$2.8 million) and a deferred tax
credit of US$21.5 million (30 June 2022: charge of US$6.4 million).
The current tax charge principally arises on Nigerian profits.
The deferred tax credit during the period principally relates to
the ECLs and unrealised foreign exchange losses, which are expected
to be reversed in line with expected forecasts.
12. Profit/(loss) per share
Basic earnings per share amounts are calculated by dividing the
profit or loss for the period attributable to owners of the Company
by the weighted average number of ordinary shares outstanding
during the period.
Diluted earnings per share amounts are calculated by dividing
the profit or loss for the periods attributable to owners of the
Company by the weighted average number of ordinary shares
outstanding during the period, plus the weighted average number of
shares that would be issued on the conversion of dilutive potential
ordinary shares into ordinary shares.
As there is a profit attributable to the owners of the Company
for the six months ended 30 June 2023, the diluted weighted average
number of shares has been calculated. In the comparative period,
the basic average number of shares was used to calculate the
diluted loss per share given there is a loss attributable to the
owners of the Company, meaning the diluted weighted average number
of shares reduces the loss per share. Therefore, the basic weighted
average number of shares was used to calculate the diluted loss per
share.
The weighted average number of shares outstanding excludes
treasury shares of 99,858,893 (30 June 2022: 99,858,893).
2023 2022
Unaudited Unaudited
Six months ended 30 June US$'000 US$'000
------------------------------------------------- ----------- -----------
Loss from continuing operations (45,189) (20,545)
------------------------------------------------- ----------- -----------
Loss attributable to owners of the Company(1) (37,534) (20,264)
Loss attributable to non-controlling interests (7,655) (281)
------------------------------------------------- ----------- -----------
(1.) The earnings per share calculation only takes into account
profit/(loss) attributed to owners of the Company.
Number of shares Number of shares
-------------------------------------------- ------------------ ------------------
Basic weighted average number of shares 1,214,693,115 1,142,656,405
Add: employee share options 63,727,684 5,243,720
-------------------------------------------- ------------------ ------------------
Diluted weighted average number of shares 1,278,420,799 1,147,900,125
-------------------------------------------- ------------------ ------------------
US cents US cents
------------------------------------------- ---------- ----------
Loss per share for continuing operations
Basic loss per share (3.09) (1.77)
Diluted loss per share (3.09) (1.77)
------------------------------------------- ---------- ----------
23,853,457 options granted under share option schemes are not
included in the calculation of diluted earnings per share because
they are anti-dilutive for the six months ended 30 June 2023 (30
June 2022: 50,233,574). These options could potentially dilute
basic earnings per share in the future.
To calculate the EPS inclusive of discontinued operations (Note
21), the weighted average number of ordinary shares
for both the basic and diluted EPS is as per the table above.
The following table provides the profit/(loss) amount in addition
to the above used:
2023 2022
Unaudited Unaudited
Six months ended 30 June US$'000 US$'000
----------------------------------------------------------------- ----------- -----------
Profit/(loss) for the period including discontinued operations
Profit/(loss) attributable to owners of the Company 54,428 (20,264)
----------------------------------------------------------------- ----------- -----------
US cents US cents
------------------------------------------------------------ ---------- ----------
Profit/(loss) per share including discontinued operations
Basic profit/(loss) per share 4.48 (1.77)
Diluted profit/(loss) per share 4.48 (1.77)
13. Property, plant and equipment
Oil and gas assets Infrastructure assets Other assets
Total
US$'000 US$'000 US$'000 US$'000
------------------------------------------ -------------------- ----------------------- -------------- -----------
Cost
Balance at 1 January 2022 (audited) 197,768 446,128 4,924 648,820
Additions 896 1,068 478 2,442
Transfer to intangible assets - - (390) (390)
Recognised on acquisition of subsidiary 121,672 - - 121,672
Decommissioning remeasurement adjustment (5,162) (24,856) - (30,018)
Balance at 31 December 2022 (audited) 315,174 422,340 5,012 742,526
Additions 355 2,523 85 2,963
Transfer to discontinued operations (121,672) - - (121,672)
Decommissioning remeasurement adjustment 2,027 18,611 - 20,638
Balance at 30 June 2023 (unaudited) 195,884 443,474 5,097 644,455
------------------------------------------ -------------------- ----------------------- -------------- -----------
Accumulated depreciation
Balance at 1 January 2022 (audited) (37,069) (40,891) (2,659) (80,619)
Transfer to intangibles - - 231 231
Depletion and depreciation charge (22,176) (16,227) (617) (39,020)
Balance at 31 December 2022 (audited) (59,245) (57,118) (3,045) (119,408)
Depletion and depreciation charge (10,618) (7,214) (261) (18,093)
Transfer to discontinued operations 1,495 - - 1,495
------------------------------------------ -------------------- ----------------------- -------------- -----------
Balance at 30 June 2023 (unaudited) (68,368) (64,332) (3,306) (136,006)
------------------------------------------ -------------------- ----------------------- -------------- -----------
Net book value
1 January 2022 (audited) 160,699 405,237 2,265 568,201
31 December 2022 (audited) 255,929 365,222 1,967 623,118
------------------------------------------ -------------------- ----------------------- -------------- -----------
30 June 2023 (unaudited) 127,516 379,142 1,791 508,449
------------------------------------------ -------------------- ----------------------- -------------- -----------
Upstream assets principally comprise the well and field
development costs relating to the Uquo and Stubb Creek oil and gas
fields in Nigeria. Infrastructure assets principally comprise the
Nigerian midstream assets associated with the Group's network of
gas transportation pipelines, oil and gas processing facilities and
gas receiving facilities. Other assets include vehicles, office
equipment (including IT software) and building improvements.
Decommissioning remeasurement adjustments reflect updated cost
estimates for the year. The new asset values will be depreciated
over the remaining life of the respective assets.
Each year, management performs a review of each CGU to identify
potential impairment triggers. During 6 months ended 30 June 2023
and the year ended 31 December 2022, no such triggers were
identified.
14. Trade and other receivables
30 June 2023 31 December 2022
US$'000 US$'000
Unaudited Audited
--------------------------------------- -------------- ------------------
Trade receivables 332,442 244,288
Receivables from a joint arrangement 6,834 8,673
Other financial assets 3,227 11,518
--------------------------------------- -------------- ------------------
342,503 264,479
Expected credit loss (102,680) (68,840)
--------------------------------------- -------------- ------------------
239,823 195,639
Loan receivable 2,210 2,194
VAT receivable 1,289 1,385
Prepayments and other receivables 35,043 40,128
--------------------------------------- -------------- ------------------
278,365 239,346
--------------------------------------- -------------- ------------------
The following has been recognised in the Condensed Statement of
Comprehensive Income relating to expected credit losses for the
period:
2023 2022
US$'000 US$'000
Six months ended 30 June Unaudited Unaudited
----------------------------------------------------- ----------- -----------
Provision of expected credit losses 33,840 5,918
Expected credit loss and other related adjustments 33,840 5,918
----------------------------------------------------- ----------- -----------
15. Cash at bank
30 June 2023 31 December 2022
US$'000 US$'000
Unaudited Audited
-------------------------------- -------------- ------------------
Cash and cash equivalents 82,550 104,147
Amounts held for debt service 53,107 136,741
135,657 240,888
-------------------------------- -------------- ------------------
Cash and cash equivalents includes US$1.3 million (31 December
2022: US$1.2 million) of cash collateral on the Orabank revolving
facility. The cash collateral was at a value of XOF760.3 million
(31 December 2022: XOF750.9 million).
Amounts held for debt service represents Naira denominated cash
balances which are held by the Group for debt service, and this has
been separately disclosed from Cash and cash equivalents.
16. Trade and other payables
30 June 2023 31 December 2022
US$'000 US$'000
Unaudited Audited
------------------------------- -------------- ------------------
Trade payables 28,551 159,068
Accruals 24,612 50,045
VAT and WHT payable 15,945 16,229
Royalty and levies 6,051 5,542
Employee benefits 42 71
Contingent consideration - 14,680
Financial liability 20,207 19,739
Other payables 2,907 14,074
------------------------------- -------------- ------------------
98,315 279,448
Other payables - non-current
Employee benefits 2,104 7,712
2,104 7,712
------------------------------- -------------- ------------------
100,419 287,160
------------------------------- -------------- ------------------
The Directors consider that the carrying amount of trade and
other payables approximates to their fair value.
17. Borrowings
30 June 2023 31 December 2022
US$'000 US$'000
Unaudited Audited
---------------------------- -------------- ------------------
Revolving credit facility 12,432 11,223
Bank loans 347,162 367,249
Senior Secured Notes 93,251 91,383
Other loan notes 126,182 175,934
579,027 645,789
---------------------------- -------------- ------------------
30 June 2023 31 December 2022
US$'000 US$'000
Unaudited Audited
------------------------- -------------- ------------------
Current borrowings 423,462 543,397
Non-current borrowings 155,565 102,392
579,027 645,789
------------------------- -------------- ------------------
18. Contract liabilities
Contract liabilities represent the value of gas supply
commitment to the Group's customers for gas not taken but invoiced
under the terms of the contracts. The amount has been analysed
between current and non-current, based on the customers' expected
future usage gas delivery profile. This expected usage is updated
periodically with the customer.
30 June 31 December
2023 2022
US$'000 US$'000
Unaudited Audited
------------------------------------------- ----------- -------------
Amount due for delivery within 12 months 17,792 17,792
Amount due for delivery after 12 months 321,138 314,018
338,930 331,810
------------------------------------------- ----------- -------------
30 June 31 December
2023 2022
US$'000 US$'000
Unaudited Audited
------------------------------------------------ ----------- -------------
As at 1 January 331,810 239,510
Additional contract liabilities 16,543 101,117
Contract liabilities utilised (14,700) (13,461)
Unwinding of discount on contract liabilities 5,277 4,644
As at end of period 338,930 331,810
------------------------------------------------ ----------- -------------
The unwinding of the discount on contract liabilities relates to
the fair value adjustments made under IFRS 3: Business Combinations
following the acquisition of the Nigerian assets and entities in
2019. The fair value adjustment was calculated as the discounted,
expected cost of the future deliveries of gas volumes under the
terms of customer take-or-pay contracts. This discounted amount
unwinds relative to an apportioned amount of the contract
liabilities volumes at the date of acquisition that have
subsequently been utilised.
19. Cash flow reconciliations
The changes in the Group's liabilities arising from financing
activities can be classified as follows:
Borrowings Interest payable Lease liabilities Total
US$'000 US$'000 US$'000 US$'000
-------------------------------------------------- ------------ ------------------ ------------------- -----------
At 1 January 2023 (audited) 645,789 105,600 5,079 756,468
-------------------------------------------------- ------------ ------------------ ------------------- -----------
Cash flows
Repayment (73,783) (28,545) (484) (102,812)
(73,783) (28,545) (484) (102,812)
Non-cash adjustments
Payment in kind adjustment/accretion of interest 9,723 32,694 136 42,553
Net debt fees 56 - - 56
Borrowing fair value adjustments 543 - - 543
Working capital movements - - 80 80
Foreign translation (3,301) (115) 140 (3,276)
Balance at 30 June 2023 (unaudited) 579,027 109,634 4,951 693,612
-------------------------------------------------- ------------ ------------------ ------------------- -----------
Borrowings Interest payable Lease liabilities Total
US$'000 US$'000 US$'000 US$'000
--------------------------------------------------- ------------ ------------------ ------------------- ----------
At 1 January 2022 (audited) 524,245 80,101 6,783 611,129
--------------------------------------------------- ------------ ------------------ ------------------- ----------
Cash flows
Repayment (30,545) (21,050) (527) (52,122)
Proceeds 12,810 - - 12,810
Realised loss on loan repayment 33 - - 33
--------------------------------------------------- ------------ ------------------ ------------------- ----------
(17,702) (21,050) (527) (39,279)
Non-cash adjustments
Payment in kind adjustment/accretion of interest 3,764 26,502 201 30,467
Net debt fees (1,236) - - (1,236)
Borrowing fair value adjustments 1,768 - - 1,768
Working capital movements - - 107 107
Foreign translation (913) 3 (453) (1,363)
Balance at 30 June 2022 (unaudited) 509,926 85,556 6,111 601,593
--------------------------------------------------- ------------ ------------------ ------------------- ----------
20. Investments in associates
The Group holds investments in two midstream pipeline entities
in Chad and Cameroon used for the distribution of oil to the market
from oil fields in Chad. In addition, the Cameroon entity operates
a floating storage and offloading ("FSO") facility which stores the
transported oil for delivery to oil tankers. Further details about
the entities are shown below:
Name Principal place of business 30 June 2023 Group shareholding 31 December 2022 Group shareholding
-------- ------------------------------ ----------------------------------- --------------------------------------
COTCo Cameroon *41.06% 41.06%
-------- ------------------------------ ----------------------------------- --------------------------------------
TOTCo Chad - 40.19%
-------- ------------------------------ ----------------------------------- --------------------------------------
(a) Income related to associates
Income related to associates relates to COTCo, from continuing
operations:
COTCo COTCo
2023 2022
US$'000 US$'000
Six months ended 30 June Unaudited Unaudited
Share of profit 4,400 -
Loss on disposal (820) -
------------------------------ ----------- -----------
Income related to associates 3,580 -
------------------------------ ----------- -----------
*In April 2023, an agreement was signed with Société Nationale Des Hydrocarbures
("SNH"), regarding the sale of a 10% shareholding in COTCo for a cash payment of US$44.9 million,
as set out below. There are conditions remaining to the completion of the sale however, under
the terms of the sale agreement SNH is entitled to the economic benefit of the 10% shareholding
from the date of payment for the shares. Therefore, in accordance with IAS 28 - Investment
in Associates, this has been recognised as a disposal for reporting purposes and results in
a decrease in the shareholding from 41.06% (as at 31 December 2022) to 31.06% (as of 30 June
2023):
US$'000
Unaudited
Consideration 44,900
Share of carrying value at disposal (45,720)
------------------------------------------------------------------------------- ----------------------
Loss on disposal (820)
------------------------------------------------------------------------------- ----------------------
Following this transaction, the fair value of the remaining
investment in COTCo is considered to be in excess of the carrying
value at the reporting date.
(b) Movement in Investment in associates
The following table shows the movements in Investments in
associates during the period:
TOTCo COTCo
US$'000 US$'000
Unaudited Unaudited
---------------------------------------- ----------- -----------
Balance at 1 January 2022 (audited) - -
Acquired investment at fair value 5,020 183,265
Share of profit (95) 160
---------------------------------------- ----------- -----------
Balance at 31 December 2022 (audited) 4,925 183,425
Share of profit 575 4,400
Impairment of TOTCo (5,500) -
Share of carrying value at disposal - (45,720)
---------------------------------------- ----------- -----------
Balance at 30 June 2023 (unaudited) - 142,105
---------------------------------------- ----------- -----------
The income statement movements related to TOTCo are disclosed
within discontinued operations in Note 22. As reported at Note 2
the Chad Assets were nationalised in March 2023 and the carry value
at the date of Nationalisation was fully impaired.
21. Capital commitments
At 30 June 2023, capital commitments amounted to US$6.6 million
(30 June 2022: US$4.8 million).
22. Discontinued Operations
As outlined in Note 2 Accounting Policies - Basis of
Preparation, because of the Nationalisation of the Chad Assets and
having the unavailability of essential financial data and access to
the pertinent employees of the affected entities, the Group has
classified all of its activities associated with the Chad Assets as
a discontinued operation in accordance with IFRS 5. Additionally,
the Group has concluded that all amounts should be provided for in
full. Further details on the position of the Chad Assets are set
out in Note 23. This is without prejudice to Group's rights to
compensation as a result of the Nationalisation.
This has resulted in a total pre-tax impairment loss of US$12.4
million (and excludes an associated tax credit write-off which
amounted to US$32.2 million). This amount and the results from the
Chad Assets up to the date of the Nationalisation have been
recognised as a single line in the Condensed Statement of
Comprehensive Income, which has been summarised in the table below.
The Condensed Statement of Financial Position for the Chad Assets
was fully provided for and therefore no remaining balances are
disclosed at the reporting date.
30 June 2023
US$'000
Six months ended 30 June Unaudited
------------------------------------------------------------------------- --------------
Revenue 76,560
Cost of sales (4,452)
------------------------------------------------------------------------- --------------
Gross profit 72,108
Administrative and other operating expenses (84)
Operating profit 72,024
Share of profit from associates 575
Foreign translation loss (501)
Net impairment of Savannah Chad Inc. (6,850)
Impairment of associate - TOTCo (5,500)
Profit before tax 59,748
Tax credit 32,214
------------------------------------------------------------------------- --------------
Net profit and total comprehensive profit from discontinued operations 91,962
------------------------------------------------------------------------- --------------
The net cash flows from the discontinued operations are as
follows:
2023
US$'000
Six months ended 30 June Unaudited
----------------------------------------------- -----------
Net cash generated from operating activities 33,738
Net cash used in investing activities (10,441)
Net cash used in financing activities (16,779)
----------------------------------------------- -----------
Net cash inflow 6,518
----------------------------------------------- -----------
23. Contingent liabilities
As set in Note 2, the impact of the Nationalisation of the Chad
Assets has resulted in the Group not being able to determine
liabilities within its subsidiary, SCI, as to both type and
quantum. The Directors have sought legal advice which has confirmed
that the scope of Law No. 003/PT/2023 promulgated by the President
of Chad on 31 March 2023 ("Nationalisation Law") is not specific in
relation to SCI's liabilities in Chad. The consequences of the
Nationalisation law for SCI will be established by an arbitration
which SCI has commenced against the Republic of Chad. Based upon
the legal advice received and the Group's inability to sufficiently
identify and quantify, through any reasonable means, the
liabilities associated with SCI or the Chad Assets, the Directors
believe that these should be considered as contingent liabilities
in line with the requirements of IAS 37 - Provisions, Contingent
Liabilities and Contingent Assets. As previously reported, for the
year ended 31 December 2022, the Group consolidated the Chad Assets
from the date of completion of their acquisition on 9 December 2022
to 31 December 2022 in accordance with Note 2 of the Financial
Statements, as set out in the Group's 2022 Annual Report. The
financial position of the assets and liabilities of the Chad Assets
as at 31 December 2022 is reproduced at Note 3 of this report.
One of the Group's subsidiaries ("the Subsidiary") had
previously received approval from the Nigerian Investment Promotion
Commission ("NIPC") that granted it an exemption from certain
corporate taxes for a period of five years from February 2014
("Pioneer Relief"). Subsequently, NIPC reduced the exemption period
to three years with the remaining two years subject to a further
extension request, which the Subsidiary submitted and subsequently
received certificates for the periods. During a tax audit by the
Nigerian tax authorities ("FIRS"), the validity of the extension
request was queried. The Group is of the view that it has fully
complied with all requirements necessary to obtain the extension
and has received certificates confirming the status from NIPC.
However, if FIRS are ultimately successful, an additional US$61.0
million of gas profits would be subject to corporate taxes of
approximately US$3.9 million together with a deferred tax charge of
approximately US$15.5 million reflecting the utilisation of capital
allowances.
24. Events after the reporting date
There are no events after the reporting date other than those
described within this announcement.
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END
IR NKFBDNBKBKCB
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