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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Savannah Petroleum Plc | LSE:SAVP | London | Ordinary Share | GB00BP41S218 | ORD GBP0.001 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 8.90 | 8.16 | 8.98 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2022 to May 2024
TIDMSAVE
RNS Number : 0644O
Savannah Energy Plc
07 June 2022
7 June 2022
Savannah Energy PLC
("Savannah", "the Company" or "the Group")
FY 2021 Preliminary Unaudited Annual Results
Notice of AGM and Posting of the 2021 Annual Report
Savannah Energy PLC, the British independent energy company focused around the delivery of Projects that Matter in Africa , is pleased to announce its preliminary unaudited results for the year ended 31 December 2021. The Notice of the Annual General Meeting ("AGM" or "Meeting") is available to download from the Company's website ( www.savannah-energy.com ). A copy of the 2021 Annual Report and Accounts ("Annual Report") and investor presentation will be available to download from the Company's website later today. The Notice of the AGM has been posted to shareholders today with the Annual Report to follow shortly.
Andrew Knott, CEO of Savannah Energy, said:
"2021 was a fantastic year for Savannah. Our Total Revenues(12) and Adjusted EBITDA(2) grew by 7% year-on-year to US$231m and US$175m respectively. We organically increased our Net 2P reserves by 20% to 77.7 MMboe. We announced our potentially transformational acquisition of a large portfolio of upstream and midstream assets in Chad and Cameroon, which upon completion we now expect will more than double our corporate free cashflow. We established a Renewable Energy Division which, post period, has signed agreements for up to 750 MW of large scale greenfield solar and wind projects. We successfully renewed and amalgamated our Niger PSC areas, paving the way for the progression of our intended 35 MMstb R3 East development and a return to exploration activity in the licence areas. Our performance against key industry sustainability metrics relating to HSE performance, carbon intensity, senior management gender diversity and local employee ratios remain industry leading.
Looking forward to the rest of 2022, I am confident in where we are as a business. We expect to deliver on our financial guidance. We expect to complete our entry to Chad and Cameroon during Q3 2022 and to likely announce further hydrocarbon acquisitions. We expect to further grow our Renewable Energy Division, with several new large-scale greenfield opportunities under review and negotiation. We expect to finalise the refinancing of our Nigerian debt and to announce the development and exploration plans for our assets in Niger.
I would urge shareholders to spend time reading through my CEO Letter to Shareholders which will be in the Annual Report, and which discusses our 2021 performance and 2022 plans in more detail, while also discussing our views of the "how" and the "why" we see the African energy transition evolving and how this relates to Savannah's hydrocarbon AND renewables business model.
Most of all we will maintain our focus around the delivery of Projects that Matter in Africa. I would like to express my gratitude to all of those who contributed to our success in 2021 - my incredibly dedicated and passionate colleagues, our host governments, communities, local authorities and regulators, our shareholders and lenders, and our customers, suppliers and partners. Thank you all."
Key FY 2021 Financial Highlights
-- FY 2021 Total Revenues [1] of US$230.5m (+7% on FY 2020 Total Revenues of US$215.9m(2) ). This is ahead of the Company's previously issued FY 2021 guidance of 'Total Revenues of greater than US$205m';
-- Average realised gas price of US$4.19/Mscf (+6% on the 2020 average realised gas price of US$3.96/Mscf) and an average realised liquids price of US$69.9/bbl (+51% compared to the 2020 average realised liquids price of US$46.2/bbl);
-- Total cash collections from the Company's Nigerian assets of US$208.2m (+24% on FY 2020 cash collections of US$167.4m [2] );
-- Adjusted EBITDA of US$175.0m (+7% on FY 2020 Adjusted EBITDA of US$163.2m(2) ); -- Adjusted EBITDA margin remained broadly unchanged at 76%;
-- Group operating expenses plus administrative expenses [3] of US$49.9m (FY 2021 initial guidance of US$55-65m);
-- Group Depreciation, Depletion and Amortisation of US$36.2m (FY 2021 initial guidance of US$38.3m based on the actual produced volumes);
-- Capital Expenditure for the year of US$32.5m (FY 2021 initial guidance of up to US$65m);
-- Group cash balances of US$154.3m [4] as at 31 December 2021 (+46% versus FY 2020 year-end Group cash balances of US$106.0m);
-- Group net debt of US$370.0m as at 31 December 2021 (-9% versus FY 2020 year-end Group net debt of US$408.7m);
-- Leverage [5] was 2.1x, (20% improvement on 2020 leverage of 2.5x), and an interest cover ratio [6] of 2.8x (FY 2020 ratio of 2.4x);
-- Total Group assets amounted to US$1,349m at year-end (2020: US$1,207m); and
-- Successfully announced a proposed placing to raise US$65.8m of equity financing and secured up to US$432m of debt financing for the proposed Chad and Cameroon Asset Acquisitions. The equity financing completed in January 2022.
Key FY 2021 Operational Highlights
-- FY 2021 average gross daily production from the Nigerian operations was 22.3 Kboepd, a 14% increase from the average gross daily production of 19.5 Kboepd in FY 2020;
-- Of the FY 2021 total average gross daily production of 22.3 Kboepd, 88% was gas, including a 15% increase in gas production from the Uquo gas field, from 103 MMscfpd (17.1 Kboepd) in FY 2020 to 118 MMscfpd (19.7 Kboepd) in FY 2021;
-- Successful drilling and completion of the Uquo-11 gas production well;
-- Publication of an updated Competent Person's Report ("CPR") [7] for Nigeria, with an o rganic 2P reserve upgrade on the Uquo field, resulting in a 20% increase in Nigeria 2P reserves to 77.7 MMboe (net);
-- Uquo compression project progressed with compressor packages acquired, completion of Front End Engineering & Design studies and long-lead items specified ready for ordering;
-- New gas sales agreement ("GSA") signed with Mulak Energy Limited in Nigeria in February 2021, re presenting Savannah's first Gas-to-CNG sales agreement;
-- Commencement of gas sales to First Independent Power Limited's ("FIPL") power plant, FIPL Afam, in Nigeria, in November 2021, marking Savannah's first entry into the high growth Port Harcourt Industrial area. Followed by the extension of the FIPL GSA in April 2022 p ost-year end, almost doubling the maximum contracted volume to up to 65 MMscfpd and extending coverage to a total of three of FIPL's power stations in Rivers State, Nigeria;
-- Post-year end, in February 2022, a new GSA was signed with the Central Horizon Gas Company, a major gas distribution company situated in the South-South region of Nigeria;
-- Post-year end, in June 2022, a further new GSA was signed with TransAfam Power Limited ("TAPL"), a subsidiary of Transnational Corporation of Nigeria plc, for the provision of gas to its power plants in Rivers State, Nigeria;
-- Niger Production Sharing Contract contractual and commercial framework completed and finalised with commercial terms agreed and announced in September 2021;
-- Savannah's Renewable Energy Division was established in 2021, with the announcement in March 2022 of the Company's inaugural renewable energy project, the up to 250 megawatts ("MW") Parc Eolien de la Tarka wind farm project in Niger. This is targeted to increase the country's on-grid electricity supply by up to 40%. Project sanction is targeted for 2023 with first wind power in 2025; and
-- This was followed in May 2022 with the signing of an agreement with the Ministry of Petroleum and Energy of the Republic of Chad for the development of up to 500 MW of renewable energy projects. The up to 300 MW Centrale Solaire de Komé project would represent the largest solar plant in sub-Saharan Africa (excluding South Africa) and potentially the largest battery storage project on the continent. The up to 200 MW Centrales d'Energie Renouvelable de N'Djamena in Chad would more than double the existing installed generation capacity supplying the capital city and increase the total installed on-grid power generation capacity in Chad by up to an estimated 63%.
Financial Guidance Reiterated for FY 2022
Savannah reiterates its financial guidance for the full year 2022 as follows:
Hot Features
Premium
Total Revenues(1) >=US$215 million
Group Operating expenses plus <=US$75 million
administrative expenses(3)
---------------------------
Depreciation, Depletion and Amortisation US$21 million + US$2.3/boe
---------------------------
Capital Expenditure <=US$85 million
---------------------------
Update on Savannah's Sustainability Strategy
Savannah's focus in 2021 was on articulating the level of ambition across the four pillars of our sustainability strategy: (1) Promoting socio-economic prosperity; (2) Ensuring safe and secure operations; (3) Supporting and developing our people; and (4) Respecting the environment. We conducted an exercise to benchmark the Company's performance against industry peers and leaders, which helped us to develop our strategy and link key performance metrics to our ambitions and to the 13 relevant United Nations Sustainable Development Goals which anchor our strategy. In particular, the following key performance metrics were identified to measure performance and progress, many of which are industry-leading:
-- Continued our strong health & safety record with a zero Lost Time Injury Rate ("LTIR") (2020: zero) and a 0.34 Total Recordable Incident Rate ("TRIR") in 2021 (2020: 0.28);
-- Increased our Total Contributions ([8]) to host nations Nigeria and Niger by 12% to US$55.1m (2020: US$49.3m);
-- Increased our investment in social impact projects in Nigeria and Niger by more than 50% to US$246,000 in 2021 (2020: US$161,000);
-- Number of transport related incidents remains exceptionally low with two in 2021 covering over 1.6 million transport kilometres travelled (2020: five incidents);
-- Maintained senior management female gender diversity at 35% (2020: 35%);
-- Established a multimillion-dollar, world class training scheme across our whole business for 2021-23, resulting in a 22% increase in training hours per employee and a 32% increase in total working hours of training;
-- Maintained a low carbon intensity of 13.3 kg CO2e/boe (2020: 12.8 kg CO2e/boe) compared to our industry peer group;
-- Maintained our zero hydrocarbon spills record defined as not greater than one barrel reaching the environment (2020: zero);
-- Measured our freshwater use for the first time, recording usage of approximately 5,359 m3 of freshwater from boreholes and mains supply; and
-- Minimised our negative impacts on biodiversity, putting in place Biodiversity Action Plans at our four operational sites to minimise any impact from our operations.
During 2021 and 2022, we have implemented the Company's new sustainability performance and reporting framework across the Group. We implemented a digital tool to track our performance on our key sustainability indicators on a month-by-month and country-by-country basis and have integrated seven leading sustainability reporting standards into our reporting framework. We plan to publish the respective detailed disclosure reports setting out our alignment to each standard during H2 2022.
Savannah is pleased to have been recognised for the progress in our sustainability reporting to date, having been shortlisted for 'ESG Initiative of the Year' at the Chartered Governance Institute UK & Ireland ("CGI") Awards in November last year and, more recently, shortlisted for 'Best ESG Materiality Reporting (Small Cap)' at the IR Magazine Awards - Europe 2022.
AGM
The AGM will be held at 10.30 a.m. on Thursday, 30 June 2022 at 40 Bank Street, London, E14 5NR. Details on how to submit your proxy vote are set out in the section of the Notice of AGM headed "Voting Arrangements - Action to be taken". The results of the AGM will be announced shortly after its conclusion and published on the Company's website at www.savannah-energy.com.
Presentation
The presentation from today's Retail Investor Webinar will be added to the Savannah Energy website this evening and can be found at www.savannah-energy.com/investors/reports-presentations/
For further information, please contact:
Savannah Energy +44 (0) 20 3817 9844 Andrew Knott, CEO N ick Beattie , CFO Sally Marshak, Head of IR & Communications Strand Hanson (Nominated Adviser) +44 (0) 20 7409 3494 James Spinney Ritchie Balmer Rob Patrick finnCap Ltd (Joint Broker) Christopher Raggett Tim Redfern +44 (0) 20 7220 0500 Panmure Gordon (UK) Ltd (Joint Broker) John Prior +44 (0) 20 7886 2500 Hugh Rich James Sinclair-Ford Camarco +44 (0) 203 757 4980 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 (EU) No. 596/2014, which forms part of United Kingdom 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 and is active in Cameroon, Chad, Niger and Nigeria.
Further information on Savannah Energy PLC can be found on the Company's website: www.savannah-energy.com .
Unaudited Consolidated Statement of Comprehensive Income
for the year ended 31 December 2021
Year ended Year ended
31 December 31 December
2021 2020
Unaudited Audited
Note US$'000 US$'000
-------------------------------------------------------------- ---- ----------- -----------
Revenue 4 185,799 169,005
Cost of sales 5 (65,011) (72,460)
-------------------------------------------------------------- ---- ----------- -----------
Gross profit 120,788 96,545
Administrative and other operating expenses (25,675) (14,691)
Transaction expenses (7,374) -
Expected credit loss and other related adjustments (26) 10,992
-------------------------------------------------------------- ---- ----------- -----------
Operating profit 87,713 92,846
Finance income 490 472
Finance costs 6 (76,604) (75,796)
Fair value adjustment (610) (1,682)
Foreign exchange loss (18,734) (5,396)
-------------------------------------------------------------- ---- ----------- -----------
(Loss)/profit before tax (7,745) 10,444
Current tax expense 7 (2,589) (4,197)
Deferred tax credit/(expense) 7 27,437 (12,685)
-------------------------------------------------------------- ---- ----------- -----------
Tax credit/(expense) 7 24,848 (16,882)
-------------------------------------------------------------- ---- ----------- -----------
Profit/(loss) after tax 17,103 (6,438)
-------------------------------------------------------------- ---- ----------- -----------
Other comprehensive income
Items not reclassified to profit or loss:
Actuarial gains/(losses) relating to post-employment benefits 1,827 (362)
Tax relating to items not reclassified to profit or loss (609) 308
-------------------------------------------------------------- ---- ----------- -----------
Other comprehensive profit/(loss) 1,218 (54)
-------------------------------------------------------------- ---- ----------- -----------
Total comprehensive profit/(loss) 18,321 (6,492)
-------------------------------------------------------------- ---- ----------- -----------
Profit/(loss) after tax attributable to:
Owners of the Company 768 (6,684)
Non-controlling interests 16,335 246
-------------------------------------------------------------- ---- ----------- -----------
17,103 (6,438)
-------------------------------------------------------------- ---- ----------- -----------
Total comprehensive profit/(loss) attributable to:
Owners of the Company 1,742 (6,738)
Non-controlling interests 16,579 246
-------------------------------------------------------------- ---- ----------- -----------
18,321 (6,492)
-------------------------------------------------------------- ---- ----------- -----------
Earnings/(loss) per share
Basic (US$) 8 0.00 (0.01)
Diluted (US$) 8 0.00 (0.01)
-------------------------------------------------------------- ---- ----------- -----------
All results in the current financial year derive from continuing operations.
Unaudited Consolidated Statement of Financial Position
as at 31 December 2021
2021 2020
Unaudited Audited
Note US$'000 US$'000
------------------------------------------------- ----- --------- ---------
Assets
Non-current assets
Property, plant and equipment 9 568,201 612,707
Exploration and evaluation assets 161,343 159,572
Deferred tax assets 223,814 196,986
Right-of-use assets 4,724 5,581
Restricted cash 1,635 1,635
Finance lease receivable 722 1,049
------------------------------------------------- ----- --------- ---------
Total non-current assets 960,439 977,530
------------------------------------------------- ----- --------- ---------
Current assets
Inventory 3,873 2,916
Trade and other receivables 10 231,631 122,400
Cash at bank 11 152,644 104,363
------------------------------------------------- ----- --------- ---------
Total current assets 388,148 229,679
------------------------------------------------- ----- --------- ---------
Total assets 1,348,587 1,207,209
------------------------------------------------- ----- --------- ---------
Equity and liabilities
Capital and reserves
Share capital 1,409 1,409
Share premium 61,204 61,204
Shares to be issued 63,956 -
Treasury shares (58) (59)
Capital contribution 458 458
Share-based payment reserve 8,706 7,104
Retained earnings 157,221 155,308
------------------------------------------------- ----- --------- ---------
Equity attributable to owners of the Company 292,896 225,424
Non-controlling interests 13,842 (2,737)
------------------------------------------------- ----- --------- ---------
Total equity 306,738 222,687
------------------------------------------------- ----- --------- ---------
Non-current liabilities
Other payables 12 3,415 4,648
Borrowings 13 108,652 424,667
Lease liabilities 5,308 7,057
Provisions 68,966 106,606
Contract liabilities 14 213,043 185,172
------------------------------------------------- ----- --------- ---------
Total non-current liabilities 399,384 728,150
------------------------------------------------- ----- --------- ---------
Current liabilities
Trade and other payables 12 116,771 106,225
Borrowings 13 415,593 89,995
Interest payable 15 80,101 51,544
Tax liabilities 7 2,058 2,539
Lease liabilities 1,475 1,004
Contract liabilities 14 26,467 5,065
------------------------------------------------- ----- --------- ---------
Total current liabilities 642,465 256,372
------------------------------------------------- ----- --------- ---------
Total liabilities 1,041,849 984,522
------------------------------------------------- ----- --------- ---------
Total equity and liabilities 1,384,587 1,207,209
------------------------------------------------- ----- --------- ---------
Unaudited Consolidated Statement of Cash Flows
for the year ended 31 December 2021
Year ended Year ended
31 December 31 December
2021 2020
Unaudited Audited
Note US$'000 US$'000
------------------------------------------------------------------- ---- ----------- -----------
Cash flows from operating activities:
Net cash generated from operating activities 15 128,115 115,569
------------------------------------------------------------------- ---- ----------- -----------
Cash flows from investing activities:
Interest received 193 110
Payments for property, plant and equipment (31,191) (9,381)
Exploration and evaluation payments (1,327) (2,167)
Payment for financial asset (7,500) -
Acquisition deposits (7,000) -
Lessor receipts 388 113
Cash to debt service accounts (76,800) (30,105)
Cash from restricted cash accounts - 181
------------------------------------------------------------------- ---- ----------- -----------
Net cash used in investing activities (123,237) (41,249)
------------------------------------------------------------------- ---- ----------- -----------
Cash flows from financing activities:
Finance costs (25,967) (21,767)
Borrowing proceeds 18,476 7,213
Borrowing repayments (15,818) (31,474)
Lease payments (1,850) (767)
Net cash used in financing activities (25,159) (46,795)
------------------------------------------------------------------- ---- ----------- -----------
Net (decrease)/increase in cash and cash equivalents (20,281) 27,525
Effect of exchange rate changes on cash and cash equivalents (8,238) 477
Cash and cash equivalents at beginning of year 74,258 46,256
------------------------------------------------------------------- ---- ----------- -----------
Cash and cash equivalents at end of year 11 45,739 74,258
------------------------------------------------------------------- ---- ----------- -----------
Amounts held for debt service at end of year 11 106,905 30,105
------------------------------------------------------------------- ---- ----------- -----------
Cash at bank at end of year as per Statement of Financial Position 11 152,644 104,363
------------------------------------------------------------------- ---- ----------- -----------
Unaudited Consolidated Statement of Changes in Equity
for the year ended 31 December 2021
Equity
Shares Share-based attributable Non-
to the
Share Share to be Treasury Capital payment Retained owners controlling Total
of the
capital premium issued shares contribution reserve earnings 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 2020
(audited) 1,393 61,204 - - 458 6,448 161,099 230,602 (2,983) 227,619
(Loss)/profit
for the year - - - - - - (6,684) (6,684) 246 (6,438)
Other
comprehensive
loss - - - - - - (54) (54) - (54)
--------------- ------- ------- ------- -------- ------------ ----------- -------- ------------ ------------ -------
Total
comprehensive
(loss)/profit
for the year - - - - - - (6,738) (6,738) 246 (6,492)
Transactions
with
shareholders:
Equity-settled
share-based
payments - - - - - 656 - 656 - 656
Share
adjustments 16 - - - - - 888 904 - 904
Treasury shares
recognition - - - (59) - - 59 - - -
--------------- ------- ------- ------- -------- ------------ ----------- -------- ------------ ------------ -------
Balance at
31 December
2020 (audited) 1,409 61,204 - (59) 458 7,104 155,308 225,424 (2,737) 222,687
Profit for the
year - - - - - - 768 768 16,335 17,103
Other
comprehensive
profit - - - - - - 974 974 244 1,218
--------------- ------- ------- ------- -------- ------------ ----------- -------- ------------ ------------ -------
Total
comprehensive
profit for the
year - - - - - - 1,742 1,742 16,579 18,321 Transactions with shareholders: Equity-settled share-based payments - - - - - 1,602 - 1,602 - 1,602 Share adjustments - - - 1 - - 171 172 - 172 Shares to be issued - - 63,956 - - - - 63,956 - 63,956 --------------- ------- ------- ------- -------- ------------ ----------- -------- ------------ ------------ ------- Balance at 31 December 2021 (unaudited) 1,409 61,204 63,956 (58) 458 8,706 157,221 292,896 13,842 306,738 --------------- ------- ------- ------- -------- ------------ ----------- -------- ------------ ------------ -------
Notes to the Unaudited Financial Information
for the year ended 31 December 2021
1. Corporate information
The Company was incorporated in the United Kingdom on 3 July 2014. Savannah's principal activity is 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 England for tax purposes and is a public company, 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. Basis of preparation
The unaudited consolidated financial statements of the Company and the Group have been prepared in accordance with International accounting standards as adopted by the United Kingdom, with future changes being subject to endorsement by the UK Endorsement Board. The unaudited consolidated financial statements have been prepared under the historical cost convention and incorporate the results for the year ended 31 December 2021. The financial information contained in this report for the year ended 31 December 2021 (the "Financial Information") does not constitute full statutory accounts as defined in sections 435 (1) and (2) of the Companies Act 2006. The statutory accounts for the year ended 31 December 2021 will be finalised on the basis of the financial information presented by the Directors in this announcement and will be delivered to the Registrar of Companies in due course. The statutory accounts are subject to completion of the audit and may change before the approval of the Annual Report.
Statutory accounts for the year ended 31 December 2020 have been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified, drew attention by way of emphasis of matter to the material uncertainty related to going concern without qualifying the accounts and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. Statutory accounts for the year ended 31 December 2021 will be delivered in due course.
The accounting policies applied are consistent with those adopted and disclosed in the Group's audited consolidated financial statements for the year ended 31 December 2021. There have been a number of amendments to accounting standards and new interpretations issued by the International Accounting Standards Board which were applicable from 1 January 2021, however these have not any impact on the accounting policies, methods of computation or presentation applied by the Group. Further details on new International Financial Reporting Standards adopted will be disclosed in the Annual Report.
Going concern
The Group places significant importance in managing its liquidity position and ensuring that all parts of the business have appropriate funding as needed to meet their obligations. The Directors have considered the Group's forecasted cash flows and funding requirements for the period to 31 December 2023 (including sensitivity analysis of key assumptions which has been undertaken) and in addition the Directors have considered the range of risks facing the business on an ongoing basis. The principal assumptions made in relation to the going concern assessment relate to (1) the timely receipts of our gas invoices by our customers, (2) the forecast commodity price environment and (3) continued access to FX markets for debt refinancing. Considering this last point, the Directors are highly confident that the Group will continue to be able to access US dollars as required to maintain its going concern status. However, a minimal risk exists that the Group may not be able to continue to do so and/or the Group may not be able to amend its debt facilities and/or complete its planned debt refinancing. These facts indicate that a material uncertainty exists that may cast significant doubt on the Group's, ability to continue to adopt the going concern basis of accounting. Notwithstanding this, the Directors have full confidence in the Group's forecasts and have continued to adopt the going concern basis in preparing the Group's unaudited consolidated financial statements.
3. Segmental reporting
For the purposes of resource allocation and assessment of segment performance, the operations of the Group are divided into three segments: two geographical locations and an Unallocated segment. The two geographical segments are Nigeria and Niger, and their principal activities are the exploration, development and extraction of oil and gas. These make up the total current and future revenue-generating operations of the Group. 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 revenue and results by reportable segment in 2021:
Nigeria Niger Unallocated Total
Unaudited Unaudited Unaudited Unaudited
US$'000 US$'000 US$'000 US$'000
--------------------------------------------------- --------- --------- ----------- -----------
Revenue 185,799 - - 185,799
Cost of sales1 (65,011) - - (65,011)
--------------------------------------------------- --------- --------- ----------- -----------
Gross profit 120,788 - - 120,788
--------------------------------------------------- --------- --------- ----------- -----------
Administrative and other operating expenses (6,814) (6,837) (12,024) (25,675)
Transaction expenses - - (7,374) (7,374)
Expected credit loss and other related adjustments (26) - - (26)
--------------------------------------------------- --------- --------- ----------- -----------
Operating profit/(loss) 113,948 (6,837) (19,398) 87,713
--------------------------------------------------- --------- --------- ----------- -----------
Finance income 490
Finance costs (76,604)
Fair value adjustment (610)
Foreign translation loss (18,734)
--------------------------------------------------- --------- --------- ----------- -----------
Loss before tax (7,745)
--------------------------------------------------- --------- --------- ----------- -----------
Segment depreciation, depletion and amortisation 35,402 282 543 36,227
Segment non-current assets 2 568,709 162,644 2,915 734,268
Segment non-current asset additions 32,535 1,779 184 34,498
Segment total assets 1,085,486 160,962 102,139 1,348,587
Segment total liabilities (938,513) (31,620) (71,716) (1,041,849)
--------------------------------------------------- --------- --------- ----------- -----------
1. Refer to note 5 for items included within Cost of sales.
2. Includes Property, plant and equipment, Exploration and evaluation assets and Right-of-use assets.
The following is an analysis of the Group's revenue and results by reportable segment in 2020:
Nigeria Niger Unallocated Total
Audited Audited Audited Audited
US$'000 US$'000 US$'000 US$'000
--------------------------------------------------- --------- -------- ----------- ---------
Revenue 169,005 - - 169,005
Cost of sales1 (72,460) - - (72,460)
--------------------------------------------------- --------- -------- ----------- ---------
Gross profit 96,545 - - 96,545
--------------------------------------------------- --------- -------- ----------- ---------
Administrative and other operating expenses (9,235) (282) (5,174) (14,691) Expected credit loss and other related adjustments 10,992 - - 10,992 --------------------------------------------------- --------- -------- ----------- --------- Operating profit/(loss) 98,302 (282) ( 5,174) 92,846 --------------------------------------------------- --------- -------- ----------- --------- Finance income 472 Finance costs (75,796) Fair value adjustment (1,682) Foreign translation loss (5,396) --------------------------------------------------- --------- -------- ----------- --------- Profit before tax 10,444 --------------------------------------------------- --------- -------- ----------- --------- Segment depreciation, depletion and amortisation 35,310 328 643 36,281 Segment non-current assets 2 613,439 161,147 3,274 777,860 Segment total assets 1,039,653 161,778 5,778 1,207,209 Segment total liabilities (919,067) (34,524) (30,931) (984,522) --------------------------------------------------- --------- -------- ----------- --------- 1. Refer to note 5 for items included within Cost of sales.
2. Includes Property, plant and equipment, Exploration and evaluation assets and Right-of-use assets.
4. Revenue
Set out below is the disaggregation of the Group's revenue from contracts with customers:
2021 2020
Unaudited Audited
Year ended 31 December US$'000 US$'000
-------------------------------------------- --------- -------
Gas sales 169,052 157,080
Oil, condensate and processing sales 16,747 11,925
-------------------------------------------- --------- -------
Total revenue from contracts with customers 185,799 169,005
-------------------------------------------- --------- -------
Gas sales represents gas deliveries made to the Group's customers under long-term, take-or-pay gas sale agreements. The Group sells oil and condensates at prevailing market prices.
5. Cost of sales
2021 2020
Unaudited Audited
Year ended 31 December US$'000 US$'000
-------------------------------------------------------------------- --------- -------
Depletion and depreciation - oil and gas, and infrastructure assets 34,463 34,789
Facility operation and maintenance costs 26,023 33,682
Royalties 4,525 3,989
-------------------------------------------------------------------- --------- -------
65,011 72,460
-------------------------------------------------------------------- --------- -------
6. Finance costs
2021 2020
Unaudited Audited
Year ended 31 December US$'000 US$'000
----------------------------------------------------- --------- -------
Interest on bank borrowings and loan notes 53,384 58,910
Amortisation of balances measured at amortised cost1 14,557 11,184
Unwinding of decommissioning discount 4,977 1,781
Interest expense on lease liabilities 511 372
Bank charges 327 352
Other finance costs 2,848 3,197
----------------------------------------------------- --------- -------
76,604 75,796
----------------------------------------------------- --------- -------
1. Includes amounts due to unwinding of a discount on a long-term payable, contract liabilities (note 14) and amortisation of debt fees.
7. Taxation
Income tax
The tax (credit)/expense recognised in the profit or loss statement for the Group is:
2021 2020
Unaudited Audited
Year ended 31 December US$'000 US$'000
------------------------------------------------------------------------- --------- -------
Current tax
- Current year 2,586 2,903
- Adjustments in respect of prior years 3 1,294
------------------------------------------------------------------------- --------- -------
2,589 4,197
------------------------------------------------------------------------- --------- -------
Deferred tax
- Current year 9,094 3,808
- Change in tax rates 25,871 -
- Write down and reversal of previous write downs of deferred tax assets (61,657) -
- Adjustments in respect of prior years (745) 8,877
------------------------------------------------------------------------- --------- -------
(27,437) 12,685
------------------------------------------------------------------------- --------- -------
Total tax (credit)/expense for the year (24,848) 16,882
------------------------------------------------------------------------- --------- -------
Corporation tax is calculated at the applicable tax rate for each jurisdiction based on the estimated taxable profit for the year. The Group's outstanding current tax liabilities of US$2.1 million (2020: US$2.5 million) principally relate to the corporation tax liabilities in Nigeria.
8. Earnings per share
Basic earnings per share is calculated by dividing the profit for the year attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share is calculated by dividing the profit for year attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the year, plus the weighted average number of shares that would be issued on the conversion of dilutive potential ordinary shares into ordinary shares. In the prior year, there was a loss attributable to the owners of the Company, which meant the diluted weighted average number of shares would reduce the loss per share. Therefore, the basic weighted average number of shares were used to calculate the diluted loss per share.
The weighted average number of shares outstanding excludes treasury shares of 41,966,942 (2020: 42,624,837).
2021 2020
Unaudited Audited
Year ended 31 December US$'000 US$'000
---------------------------------------------------- --------- -------
Profit/(loss)
Profit/(loss) attributable to owners of the Company 768 (6,684)
---------------------------------------------------- --------- -------
Unaudited Audited
Number of shares Number of shares
------------------------------------------ ---------------- ----------------
Basic weighted average number of shares 954,280,611 953,783,575
Add: employee share options 4,766,269 279,565
------------------------------------------ ---------------- ----------------
Diluted weighted average number of shares 959,046,880 954,063,140
------------------------------------------ ---------------- ----------------
Unaudited Audited
US$ US$
-------------------------- --------- -------
Earnings/(loss) per share
Basic 0.00 (0.01)
Diluted 0.00 (0.01)
-------------------------- --------- -------
50,233,574 options granted under share option schemes are not included in the calculation of diluted earnings per share because they are anti-dilutive for the year ended 31 December 2021 (2020: 49,973,168). These options could potentially dilute basic earnings per share in the future.
9. Property, plant and equipment
Oil and gas Infrastructure Other
assets assets assets Total
US$'000 US$'000 US$'000 US$'000
--------------------------------------------------- ----------- -------------- ------- --------
Cost
Balance at 1 January 2020 (audited) 167,890 457,414 2,879 628,183
Additions 1,757 1,831 534 4,122
Disposals - - (59) (59)
Decommissioning remeasurement adjustment (14,914) 10,236 - (4,678)
Transfer from Receivables from a joint arrangement 30,844 - - 30,844
Transfers to Exploration and evaluation assets - (284) - (284)
Reclassification of assets1 (1,725) 720 1,005 -
--------------------------------------------------- ----------- -------------- ------- --------
Balance at 31 December 2020 (audited) 183,852 469,917 4,359 658,128
Additions 16,212 15,780 565 32,557
Decommissioning remeasurement adjustment (2,296) (39,569) - (41,865)
Balance at 31 December 2021 (unaudited) 197,768 446,128 4,924 648,820
--------------------------------------------------- ----------- -------------- ------- --------
Accumulated depreciation
Balance at 1 January 2020 (audited) (3,269) (5,671) (957) (9,897)
Depletion and depreciation charge (17,234) (17,555) (751) (35,540)
Adjustment to accumulated depreciation 176 56 (216) 16
--------------------------------------------------- ----------- -------------- ------- --------
Balance at 31 December 2020 (audited) (20,327) (23,170) (1,924) (45,421)
Depletion and depreciation charge (16,742) (17,721) (735) (35,198)
--------------------------------------------------- ----------- -------------- ------- --------
Balance at 31 December 2021 (unaudited) (37,069) (40,891) (2,659) (80,619)
--------------------------------------------------- ----------- -------------- ------- --------
Net book value
Balance at 1 January 2020 (audited) 164,621 451,743 1,922 618,286
Balance at 31 December 2020 (audited) 163,525 446,747 2,435 612,707
--------------------------------------------------- ----------- -------------- ------- --------
Balance at 31 December 2021 (unaudited) 160,699 405,237 2,265 568,201
--------------------------------------------------- ----------- -------------- ------- --------
1. Certain assets have been reclassified between the various asset classes to ensure they are reported in the most appropriate class.
10. Trade and other receivables
2021 2020
Unaudited Audited
As at 31 December US$'000 US$'000
------------------------------------- --------- --------
Trade receivables 156,440 131,078
Receivables from a joint arrangement 67 419
Other financial assets 5,237 5,548
------------------------------------- --------- --------
161,744 137,045
Expected credit loss (29,345) (17,213)
------------------------------------- --------- --------
132,399 119,832
VAT receivables 694 185
Prepayments and other receivables 98,538 2,383
------------------------------------- --------- --------
231,631 122,400
------------------------------------- --------- --------
The following has been recognised in the Statement of Comprehensive Income relating to expected credit losses:
2021 2020
Unaudited Audited
Year ended 31 December US$'000 US$'000
--------------------------------------------------- --------- --------
Provision for expected credit loss (12,628) (16,782)
Gain on acquired credit impaired assets 12,602 27,774
--------------------------------------------------- --------- --------
Expected credit loss and other related adjustments (26) 10,992
--------------------------------------------------- --------- --------
For reporting purposes previously acquired assets were shown net of any related ECL. After acquisition, some of these assets have been fully recovered. Consequently, the associated ECL has been released, with a credit of US$12.6 million (2020: US$27.8 million) being recognised in the Statement of Comprehensive Income. The recoveries on the acquired credit impaired assets are reflective of management's improved credit control processes since acquisition. The remaining ECL of US$1.8 million (2020: US$14.4 million) that was netted within the fair value of the trade receivables at acquisition remains netted within the trade receivables balance and will only be released when the associated receivables have been fully realised.
The provision for expected credit loss that has been recognised in the year relates to an expected credit loss recognised on new invoices raised during the year as well as changes in expected credit loss rates because of non-payment of certain invoices. Set out below is the movement in the allowance for expected credit loss on trade and other receivables:
2021 2020
Unaudited Audited
US$'000 US$'000
----------------------------------- --------- -------
As at 1 January 17,213 431
Provision for expected credit loss 12,628 16,782
Other receivables written off (496) -
----------------------------------- --------- -------
As at 31 December 29,345 17,213
----------------------------------- --------- -------
Included within Prepayments and other receivables as at 31 December 2021 are amounts for shares to be issued following the
signing of placing agreements with shareholders of the Company in 2021 amounting to US$65.8 million (2020: US$nil), deposits
amounting to US$21.5 million (2020: US$nil) for the Group's proposed acquisition of the Chad and Cameroon assets as well as
debt fees associated with unutilised debt amounting to US$7.5 million (2020: US$nil).
11. Cash at bank
2021 2020
Unaudited Audited
As at 31 December US$'000 US$'000
------------------------------ --------- -------
Cash and cash equivalents 45,739 74,258
Amounts held for debt service 106,905 30,105
-------------------------------- --------- -------
152,644 104,363
------------------------------ --------- -------
The Directors consider that the carrying amount of cash at bank approximates their fair value.
Cash and cash equivalents includes US$1.1 million (2020: US$1.2 million) of cash collateral on the Orabank revolving facility. The cash collateral was at a value of XOF626.4 million (2020: XOF621.7 million).
Amounts held for debt service represents Naira denominated cash balances which are held by the Group for 2020 and 2021 debt service which has been separately disclosed from Cash and cash equivalents. In total, approximately US$ 132.8 million (2020: US$78.9 million) will be paid for the 2020 and 2021 debt service from bank accounts designated as Amounts held for debt service, and from Cash and cash equivalents.
12. Trade and other payables
2021 2020
Unaudited Audited
As at 31 December US$'000 US$'000
----------------------------- --------- -------
Trade and other payables
Trade payables 30,957 40,590
Accruals 62,927 35,565
VAT and WHT payable 13,783 12,075
Royalty and levies 5,196 6,261
Employee benefits 91 74
Deferred consideration - 7,500
Other payables 3,817 4,160
------------------------------- --------- -------
Trade and other payables 116,771 106,225
Other payables - non-current
Employee benefits 3,415 4,648
------------------------------- --------- -------
Other payables - non-current 3,415 4,648
------------------------------- --------- -------
120,186 110,873
----------------------------- --------- -------
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
Deferred consideration of US$7.5 million related to a loan note that was initially acquired via the acquisition of the Nigerian assets in November 2019, and was then acquired by the Company for future settlement. The amount was repaid in 2021.
13. Borrowings
2021 2020
Unaudited Audited
As at 31 December US$'000 US$'000
-------------------------- --------- -------
Revolving credit facility 9,916 12,998
Bank loans 379,002 376,509
Senior Secured Notes 100,717 106,513
Other loan notes 34,610 18,642
---------------------------- --------- -------
524,245 514,662
-------------------------- --------- -------
2021 2020
Unaudited Audited
As at 31 December US$'000 US$'000
----------------------- --------- -------
Current borrowings 415,593 89,995
Non-current borrowings 108,652 424,667
------------------------- --------- -------
524,245 514,662
----------------------- --------- -------
14. Contract liabilities
Contract liabilities represents the value of gas supply commitment to the Group's customers for gas not taken but invoiced under the terms of the contracts. The amount has been analysed between current and non-current liability, based on the customers' expected future usage gas delivery profile. This expected usage is updated periodically with the customer.
2021 2020
Unaudited Audited
As at 31 December US$'000 US$'000
----------------------------------------- --------- -------
Amount due for delivery within 12 months 26,467 5,065
Amount due for delivery after 12 months 213,043 185,172
----------------------------------------- --------- -------
239,510 190,237
----------------------------------------- --------- -------
2021 2020
Unaudited Audited
US$'000 US$'000
------------------------------------------- --------- --------
As at 1 January 190,237 121,994
Additional contract liabilities 61,033 86,881
Contract liabilities utilised (18,345) (23,632)
Unwind of discount on contract liabilities 6,585 4,994
------------------------------------------- --------- --------
As at 31 December 239,510 190,237
------------------------------------------- --------- --------
Following the purchase of the Nigerian assets on 14 November 2019, the contract liabilities balance was adjusted to reflect the fair value at the acquisition date. Discount amounting to US$6.6 million (2020: US$5.0 million) has been accreted during the year as make-up gas has been delivered.
15. Cash flow reconciliations
A reconciliation of profit before tax to net cash generated from operating activities is as follows:
Year ended Year ended
31 December 31 December
2021 2020
Unaudited Audited
US$'000 US$'000
--------------------------------------------------------- ----------- -----------
Loss/(profit) for the year before tax (7,745) 10,444
Adjustments for:
Depreciation 1,764 1,492
Depletion 34,463 34,789
Finance income (49) (388)
Finance costs 76,604 75,796
Fair value movement 610 1,682
Unrealised foreign translation loss 9,791 404
Share option charge 1,602 656
Expected credit loss and other related adjustments 26 (10,992)
--------------------------------------------------------- ----------- -----------
Operating cash flows before movements in working capital 117,066 113,883
(Increase)/decrease in inventory (956) 1,104
Increase in trade and other receivables (57,744) (49,281)
Increase/(decrease) in trade and other payables 29,455 (11,162)
Increase in contract liabilities 42,689 63,247
Income tax paid (2,395) (2,222)
--------------------------------------------------------- ----------- -----------
Net cash generated from operating activities 128,115 115,569
--------------------------------------------------------- ----------- -----------
Interest paid during the year amounted to US$22.6 million (2020: US$19.8 million).
The changes in the Group's liabilities arising from financing activities can be classified as follows:
Interest Lease
Borrowings payable liabilities Total
US$'000 US$'000 US$'000 US$'000
------------------------------------------------- ---------- -------- ----------- --------
At 1 January 2021 (audited) 514,662 51,544 8,061 574,267
------------------------------------------------- ---------- -------- ----------- --------
Cash flows
Repayment (15,818) (22,584) (1,850) (40,252)
Proceeds 18,476 - - 18,476
Realised foreign translation 175 - - 175
------------------------------------------------- ---------- -------- ----------- --------
2,833 (22,584) (1,850) (21,601)
Non-cash adjustments
Payment-in-kind adjustment/accretion of interest 10,544 51,327 511 62,382
Lease liability additions - - 138 138
Net debt fees (2,774) - - (2,774)
Borrowing fair value adjustments 610 - - 610
Working capital movements - - (29) (29)
Foreign translation (1,630) (186) (48) (1,864)
------------------------------------------------- ---------- -------- ----------- --------
At 31 December 2021 (unaudited) 524,245 80,101 6,783 611,129
------------------------------------------------- ---------- -------- ----------- --------
Interest Lease
Borrowings payable liabilities Total
US$'000 US$'000 US$'000 US$'000
------------------------------------------------- ---------- -------- ----------- --------
At 1 January 2020 (audited) 532,052 13,715 5,570 551,337
------------------------------------------------- ---------- -------- ----------- --------
Cash flows
Repayment (31,474) (19,785) (767) (52,026)
Proceeds 7,213 - - 7,213
------------------------------------------------- ---------- -------- ----------- --------
(24,261) (19,785) (767) (44,813)
Non-cash adjustments
Payment-in-kind adjustment/accretion of interest 3,991 57,612 372 61,975
Lease liability additions - - 3,050 3,050
Net debt fees 1,049 - - 1,049
Borrowing fair value adjustments 1,682 - - 1,682
Foreign translation 149 2 (164) (13)
------------------------------------------------- ---------- -------- ----------- --------
At 31 December 2020 (audited) 514,662 51,544 8,061 574,267
------------------------------------------------- ---------- -------- ----------- --------
16. Events after the reporting period
The Directors are not aware of any events after the reporting date that require reporting.
[1] Total Revenues refers to the total amount invoiced in the financial year. This number is seen by management as appropriately reflecting the underlying cash generation capacity of the business compared to Revenue recognised in the income statement. A detailed explanation of the impact of IFRS 15 revenue recognition rules on our income statement is provided in the Financial Review section of our 2020 Annual Report. For reference FY 2021 Revenues were US$185.8 million (up 10% on FY 2020 Revenues of US$169.0 million). 2020 Total Revenues are represented to exclude a one-off advance payment of US$20 million which was received on entering into an amended and extended Gas Sales Agreement with Lafarge Africa to enable a like-for-like comparison with 2021.
[2] Adjusted EBITDA is calculated as profit or loss before finance costs, investment revenue, foreign exchange gains or loss,
expected credit loss and other related adjustments, fair value adjustments, gain on acquisition, taxes, transaction costs,
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. 2020 cash collections and Adjusted EBITDA are represented to exclude a one-off advance payment of US$20 million which was received on entering into an amended and extended Gas Sales Agreement with Lafarge Africa to enable a like-for-like comparison with 2021.
[3] 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.
[4] Within cash balance of US$154.3m, US$132.8m is set aside for debt service, of which US$75.5m is for interest and US$57.3m is for scheduled principal repayments, and US$1.6m relates to monies held in escrow accounts.
[5] Leverage is calculated as Net debt/Adjusted EBITDA
[6] Interest cover ratio is Adjusted EBITDA(2) divided by Finance costs excluding (i) unwind of a discount on a long-term payable, (ii) unwind of discount on contract liabilities and (iii) unwinding of decommissioning discount, less Interest Finance Income
[7] CPR compiled by CGG Services (UK) Ltd ("CGG"), a well-known independent third-party reserves auditor. For an explanation of the defined terms in this announcement readers should refer to the updated Nigeria CPR, which is available to download from the Company's website at www.savannah-energy.com
[8] Total Contributions to Nigeria and Niger defined as payments to governments, employee salaries and payments to local suppliers and contractors.
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