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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 |
TIDMSAVE
RNS Number : 3103B
Savannah Energy Plc
30 September 2022
30 September 2022
--Savannah Energy PLC
("Savannah" or "the Company")
2022 Half Year Results
Savannah Energy PLC, the British independent energy company focused around the delivery of Projects that Matter in Africa, is pleased to announce its unaudited interim results for the six months ended 30 June 2022.
Andrew Knott, CEO of Savannah Energy, said:
"Our half year results again demonstrate the continued strong underlying progress we have made in our existing producing business with a 10% year-on-year increase reported for both Total Revenues (1) (to US$128.7m) and Adjusted EBITDA(2) (to US$100.3m). Further, I am pleased to report that our growth trajectory has continued into H2, with average daily production to 26 September 2022 having increased by 55% to 34.8 Kboepd versus the H1 average of 22.5 Kboepd and 118% versus the 16.0 Kboepd level at the time of acquisition in November 2019. This H2-to-date growth reflects the impact of the three new gas sales contracts and the contract extension we have announced in 2022, with Accugas now supplying gas to approximately 24% of Nigeria's thermal power generation capacity as compared to approximately 10% at the time of the original acquisition. In the first half, we also announced agreements for the development of up to 750 MW of large-scale greenfield solar and wind projects in Niger and Chad, which have the potential to transform the electricity access rates in both countries.
Looking forward to the rest of 2022 and 2023, I remain confident in where we are as a business. We look forward to closing our Proposed Acquisitions of the Chad and Cameroon Assets in Q4 of this year. We expect to deliver on or exceed our financial guidance. We expect to announce further hydrocarbon acquisitions and to expand our Renewable Energy Division with several new large-scale greenfield opportunities currently under review and negotiation. We continue to work towards completing the refinancing of our Nigerian debt and to announce the development and exploration plans for our assets in Niger.
Lastly, I would like to express my gratitude to all of those who contributed to the progress in our business in H1 - 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."
H1 2022 Financial Highlights
-- Total Revenues(1) of US$128.7m (up 10% on H1 2021: US$116.5m); -- Adjusted EBITDA(2) of US$100.3m (up 10% on H1 2021: US$91.5m); -- Operating expenses plus administrative expenses(3) of US$24.5m (H1 2021: US$22.4m); -- Loss before tax of US$11.3m (H1 2021 profit before tax: US$7.7m); -- Capital expenditure of US$14.0m (H1 2021: US$5.2m);
-- Net debt position as at 30 June 2022 of US$327.1m (Year-end 2021: US$370.0m) with Adjusted Leverage(4) of 2.0x (Year-end 2021: 2.5x); and
-- Total cash(5) of US$182.8m as at 30 June 2022 (Year end 2021: US$154.3m)
H1 2022 Operational Highlights
-- New gas sales agreements ("GSAs") were signed with Central Horizon Gas Company Limited ("CHGC"), a major gas distribution company situated in the South-South region of Nigeria, and TransAfam Power Ltd, a licensed power generation company in Nigeria and, post-period-end in August 2022, with Notore Chemical Industries PLC for its fertiliser plant. These customers are accessed via Accugas' pipeline network to Ikot Abasi and on to the Port Harcourt area via third party infrastructure, thus no capital expenditure is required;
-- A contract extension was signed with First Independent Power Limited ("FIPL") to supply gas to its Eleme and Trans Amadi power plants, bringing the total number of power plants supplied under the contract to three, including the FIPL Afam power plant;
-- During the period, Savannah commenced gas deliveries to three new customers in Nigeria, FIPL's Trans Amadi power plant, TransAfam's power plants in Rivers State, and CHGC. Savannah now has operational GSAs with power plants comprising 24% of Nigeria's thermal generation capacity;
-- Average gross daily production, of which 89% was gas, remained almost constant during H1 2022 at 22.5 Kboepd (H1 2021: 22.6 Kboepd). The broadening of our customer base during H1 2022 has enabled us to increase gas deliveries to support Nigeria's power generation needs;
-- A new gas production well, Uquo 11, commenced production in April 2022 and produced at an average rate of 68 MMscfpd up to 30 June 2022; and
-- Our Renewable Energy Division signed agreements for the development of up to 750 MW large-scale greenfield solar and wind projects with the Governments of Niger (Parc Eolien de la Tarka) and Chad (Centrale Solaire de Komé and Centrales d'Energie Renouvelable de N'Djamena).
Chad and Cameroon Assets
-- Work continues to complete our proposed acquisitions of ExxonMobil's and PETRONAS' assets in Chad and Cameroon (the "Chad and Cameroon Assets") by the end of the year.
-- Savannah has undertaken significant preparation work ahead of completion including recruitment of the operational team and enhancements to organisational systems to ensure that the transition of operatorship can be completed.
FY 2022 Guidance Reiterated
Savannah reiterates full year 2022 guidance as follows:
-- Total Revenues(1) greater than US$215.0m; -- Group Operating expenses plus administrative expenses(3) of up to US$75.0m;
-- Group Depreciation, Depletion and Amortisation of US$21m fixed for infrastructure assets plus US$2.3/boe for oil and gas assets; and
-- Capital expenditure of up to US$85.0m.
H1 2022 Corporate Events
-- In June 2022, Savannah announced several changes to the Board:
o Nick Beattie was appointed as Chief Financial Officer and was appointed to the Board of Directors;
o David Jamison retired from the Board at the Annual General Meeting on 30 June 2022, and assumed the (non-board) role as Honorary President of Savannah;
o Steve Jenkins will step down from his role as Non-Executive Chairman at or prior to the 2023 Annual General Meeting. A search for a Chair-Designate is underway and it is anticipated that an appointment will be made during H2 2022, and
o It is intended that three new non-executive directors (Sylvie Rucar, Sarah Clark and Dr Djamila Ferdjani) will be appointed to the Board following completion of the proposed acquisition of the ExxonMobil upstream and midstream assets in Chad and Cameroon.
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 finnCap Ltd (Joint Broker) Christopher Raggett +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, 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 .
H1 2022 Operational Review
Nigeria
Average gross daily production was flat in H1 2022 with an average of 22.5 Kboepd (H1 2021: 22.6 Kboepd). During H1 2022, the Company's subsidiary, Accugas, supplied gas to the Calabar, Ibom, TransAfam, FIPL Afam and FIPL Trans Amadi power stations. Gas was delivered throughout the period to Lafarge's Mfamosing cement factory in Cross Rivers State and deliveries to CHGC, a distributor of gas to industrial and commercial customers in the Port Harcourt area, commenced in June 2022.
Niger
During H1 2022, t he four licence areas in Niger were amalgamated into a single PSC (R1234) valid for up to a further 10 years. This has laid the foundation to progress plans for the R3 East Early Production Scheme and we expect to announce further details of this project later in the year.
Renewable Energy Division
Savannah's Renewable Energy division was established in 2021 and during H1 2022 signed three agreements for the development of a total of up to 750MW large-scale greenfield solar and wind projects with the governments of Chad and Niger.
The agreement signed in Chad covers two projects. The first comprises an up to 300 MW photovoltaic solar farm and battery energy storage system located in Komé, Southern Chad (the "Centrale Solaire de Komé"). This project is being developed to provide clean, reliable power generation for the Doba Oil Project and the surrounding towns of Moundou and Doba. The second involves the development of solar and wind projects of up to 100 MW each to supply power to the country's capital city, N'Djamena (the "Centrales d'Energie Renouvelable de N'Djamena"). The 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 Centrales d'Energie Renouvelable de N'Djamena 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%.
In Niger, an agreement was signed with the Ministry of Petroleum, Energy and Renewable Energies of the Republic of Niger for the construction and operation of the country's first wind farm, with a proposed installed power generation capacity of up to 250 MW on an independent power producer basis in the Tahoua Region of Southern 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.
These projects represent potentially substantial foreign direct investments that would make significant contributions to the economic development of the regions where they will be situated.
H1 2022 Financial Review
The Group reports Total Revenues(1) of US$128.7 million for the six months ended 30 June 2022, up 10% on H1 2021 and an Adjusted EBITDA(2) of US$100.3 million also up 10% on H1 2021, reflecting the quality of our gas producing assets in Nigeria as we broaden and diversify our customer base.
We have invested heavily during the period to scale up the business ahead of completion of the proposed acquisition of the Chad and Cameroon Assets and to enable the delivery of our wider business development plans. This has included a 21% increase in headcount in H1 2022, alongside a large investment into new systems and processes that will be required to support the enlarged scale of the Group.
Summary of results for H1 2022
The table below provides an overview of our results for H1 2022 with a comparison for H1 2021.
Financial highlights
Six months Six months ended ended 30 June 2022 30 June 2021 US$ million US$ million Total Revenues(1) 128.7 116.5 -------------- -------------- Adjusted EBITDA(2) 100.3 91.5 -------------- -------------- Revenue 85.8 99.4 -------------- -------------- Operating expenses plus administrative expenses(3) 24.5 22.4 -------------- -------------- Operating profit 27.9 54.0 -------------- -------------- (Loss)/profit before tax (11.3) 7.7 -------------- -------------- (Loss) after tax (20.5) (1.4) -------------- --------------
The Group's operating profit for the six months ended 30 June 2022 was US$27.9 million (H1 2021: US$54.0 million). The decrease resulted from a combination of lower revenues resulting from unscheduled downtime suffered by certain of our customers (which does not reduce Total Revenues(1) under the terms of the take-or-pay gas contracts) and a 10% increase in operating expenses plus administrative expenses(3) . The increase in these costs is a result of the investment being made in growing the business infrastructure in preparation for completion of the acquisition of the Chad and Cameroon Assets and continued investment into the efficiency of the Nigerian assets.
The Group's loss before tax was US$11.3 million (H1 2021 profit: US$7.7 million) and the loss after tax was US$20.5 million (H1 2021 loss: US$1.4 million).
Adjusted EBITDA(2) for H1 2022 was US$100.3 million, compared to US$91.5 million for H1 2021.
Revenue
Revenue during the period was 14% lower than the comparable prior year period at US$85.8 million (H1 2021: US$99.4 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$128.7 million (H1 2021: US$116.5m) 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. Total Revenues (1) showed a 10% increase compared to H1 2021. Management believes that Total Revenues(1) is the most appropriate method of reflecting the underlying cash generation capacity of the business.
Savannah continues to benefit from over US$4 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$33.1 million (H1 2021: US$34.3 million) which includes US$13.8 million (H1 2021: US$13.8 million) for facility operating and maintenance costs, US$2.9 million (H1 2021: US$2.2 million) royalty expenses and US$16.4 million (H1 2021: US$18.3 million) depletion and depreciation.
Administrative and other operating expenses for the period were US$11.7 million (H1 2021: US$9.5 million), which includes US$0.9 million (H1 2021: US$0.9 million) of depreciation.
Group Operating expenses plus administrative expenses(3) were US$24.5 million (H1 2021: US$22.4 million).
EBITDA and Adjusted EBITDA(2)
Presented below is the calculation of EBITDA and Adjusted EBITDA(2) . Management believes that the alternative performance measure of Adjusted EBITDA(2) more accurately reflects the cash generating capacity of the business. Adjusted EBITDA(2) includes gas that has been invoiced under take-or-pay contracts but not yet delivered and is adjusted for transaction and other related expenses to provide a meaningful comparison between periods.
Calculation of EBITDA and Adjusted EBITDA(2) for the Group
GROUP Six months Six months ended ended 30 June 30 June 2022 2021 US$ million US$ million Operating profit 27.9 54.0 Add: depletion, depreciation and amortisation 17.3 19.2 Add: transaction and other related expenses 7.3 2.3 EBITDA 52.5 75.5 Add: other invoiced amounts 42.9 17.1 Deduct: royalty payable on additional gas (1.0) (0.4) volume Deduct: expected credit loss & other related 5.9 (0.7) adjustments Adjusted EBITDA (2) 100.3 91.5
Finance Costs
Finance costs were US$36.8 million (H1 2021: US$38.7 million) - of these costs US$27.9 million (H1 2021: US$26.8 million) related to bank and loan note interest. The average interest rate was 10.7% (H1 2021: 10.3%) reflecting the higher US Libor rates during the period compared to prior year. The remainder of the finance costs are primarily a number of non-cash items which are itemised in Note 8 of the financial statements.
The interest cover ratio, on an Adjusted EBITDA(2) basis is 3.1 times (H1 2021: 2.9 times).
Foreign Exchange loss
Foreign exchange losses amounted to US$0.8 million (H1 2021: US$10.9 million). These losses were realised losses arising from US Dollar gas sales invoices which are settled in local currency, and from the translation of Naira into US Dollars to service US Dollar denominated obligations. Realised foreign exchange losses can be recovered through the "true up" mechanism in the Calabar GSA
In order to purchase US dollars to service US dollar obligations, Savannah accesses foreign exchange at market rates and there is typically a differential between this rate and the Central Bank of Nigeria exchange rate. The majority of these losses are recoverable through a foreign exchange "true-up" clause in the Calabar GSA.
Taxation
The tax charge of US$9.2 million (H1 2021: US$9.1 million) was made up of a current tax charge of US$2.8 million (H1 2021: US$2.2 million) and a deferred tax charge of US$6.4 million (H1 2021: US$6.9 million). The current tax charge principally arises on Nigerian profits and the deferred tax charge is a result of utilisation of unused losses in Nigeria.
Debt
The Group net debt as at 30 June 2022 was US$327.1 million (31 December 2021: US$370.0 million). During the period, the leverage ratio, and Adjusted Leverage ratio, improved as shown in the table below.
Work continues on the proposed refinancing of the Accugas debt facility as was detailed in the 2021 Annual Report and Accounts.
Leverage
30 June 31 December 2022 2021 US$ million US$ million Adjusted EBITDA(2 #) 100.3 175.0 ------------- ------------- Net debt 327.1 370.0 ------------- ------------- Naira held in cash for interest 80.9 75.5 ------------- ------------- Adjusted net debt 408.0 445.5 ------------- ------------- Leverage (Net debt/Adjusted EBITDA (2) ) 1.6 2.1 ------------- ------------- Adjusted Leverage(4) (Adjusted net debt/Adjusted EBITDA (2) ) 2.0 2.5 ------------- -------------
# Adjusted EBITDA(2) for 6 months to 30 June 2022 and for 12 months to 31 December 2021
Cash flow
A summary of the cash flows for the period is as follows:
Six months ended Six months ended 30 June 2022 30 June 2021 US$ million US$ million Net cash generated from operating activities 41.9 65.2 Net cash used in investing activities (29.3) (a) (4.8) (a) Net cash generated from/(used in) financing activities 18.1 (22.8) Impact of exchange rate changes on cash balances (2.2) (7.9) ----------------- ----------------- Net increase in cash 28.5 29.7 ----------------- ----------------- Cash balances at start of period (5) 154.3 106.0 ----------------- ----------------- Cash balances at end of period 5 182.8 135.7 ----------------- ----------------- (a) excludes US$32.2 million (H1 2021: US$31.0 million) transferred to debt service accounts
The net cash inflow from operating activities was US$41.9 million (H1 2021: US$65.2 million).
Net cash used in investing activities includes US$14.6 million deposits paid towards the acquisition of the Chad and Cameroon Assets (H1 2021: nil), payments for property, plant and equipment of US$9.1 million (H1 2021: US$4.1 million) and US$4.9 million (H1 2021: US$1.1 million) incurred on exploration and evaluation assets.
The net cash generated from and used in financing activities includes equity proceeds of US$61.1 million (H1 2021: nil), principal debt repayments of US$17.1 million (H1 2021: US$8.8 million) and finance costs of US$24.8 million (H1 2021: US$13.6 million).
Total Cash balances of the Group at the end of the period increased to US$182.8 million (H1 2021: US$135.7 million).
Nick Beattie
Chief Financial Officer
30 September 2022
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 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.
(4) Adjusted Leverage is defined as Adjusted net debt/Adjusted EBITDA. Adjusted net debt is calculated as the net debt balance adjusted for the Naira held in cash for interest (as shown in the financial review). For the 6 month period ended 30 June 2022, the Adjusted Leverage calculation is prepared on an annualised EBITDA basis
5 Within Cash balances, US$1.6m is restricted cash which includes deposits and stamp duty escrow balances.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHSED 30 JUNE 2022
Six months ended Six months ended 30 June 30 June 2022 2021 US$ ' 000 US$ ' 000 Note Unaudited Unaudited -------------------------------------------------- -------- --------------------- --------------------- Revenue 4 85,847 99,386 Cost of sales 5 (33,127) (34,286) -------------------------------------------------- -------- --------------------- --------------------- Gross profit 52,720 65,100 Administrative and other operating expenses (11,686) (9,505) Transaction and other related expenses 6 (7,262) (2,341) Expected credit loss and other related adjustments 14 (5,918) 739 Operating profit 6 27,854 53,993 Finance income 7 273 328 Finance costs 8 (36,827) (38,732) Fair value adjustment 9 (1,768) 3,042 Foreign translation loss 10 (846) (10,943) -------------------------------------------------- -------- --------------------- --------------------- (Loss)/profit before tax (11,314) 7,688 Current tax expense 11 (2,793) (2,172) Deferred tax expense 11 (6,438) (6,893) -------------------------------------------------- -------- --------------------- --------------------- Tax expense 11 (9,231) (9,065) -------------------------------------------------- -------- --------------------- --------------------- Net loss and total comprehensive loss (20,545) (1,377) -------------------------------------------------- -------- --------------------- --------------------- Total comprehensive (loss)/profit attributable to: Owners of the Company (20,264) (3,109) Non-controlling interests (281) 1,732 -------------------------------------------------- -------- --------------------- --------------------- (20,545) (1,377) -------------------------------------------------- -------- --------------------- --------------------- Loss per share US cents US cents -------------------------------------------------- -------- --------------------- --------------------- Basic 12 (1.77) (0.33) Diluted 12 (1.77) (0.33) -------------------------------------------------- -------- --------------------- ---------------------
All results derive from continuing operations.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
30 June 31 December 2022 2021 US$'000 US$'000 Note Unaudited Audited ---------------------------------------------- -------- --------------------- ----------------------- Assets Non-current assets Third-party investment 1,182 - Property, plant and equipment 13 557,368 568,201 Exploration and evaluation assets 166,373 161,343 Deferred tax assets 217,376 223,814 Right-of-use assets 4,180 4,724 Restricted cash 1,635 1,635 Finance lease receivable 581 722 ---------------------------------------------- -------- --------------------- ----------------------- Total non-current assets 948,695 960,439 ---------------------------------------------- -------- --------------------- ----------------------- Current assets Inventory 5,230 3,873 Trade and other receivables 14 206,667 231,631 Cash at bank 15 181,168 152,644 ---------------------------------------------- -------- --------------------- ----------------------- Total current assets 393,065 388,148 ---------------------------------------------- -------- --------------------- ----------------------- Total assets 1,341,760 1,348,587 ---------------------------------------------- -------- --------------------- ----------------------- Equity and liabilities Capital and reserves Share capital 1,749 1,409 Share premium 124,897 61,204 Shares to be issued - 63,956 Treasury shares (135) (58) Other reserves 8,381 458 Share-based payment reserve 9,042 8,706 Retained earnings 136,957 157,221 ---------------------------------------------- -------- --------------------- ----------------------- Equity attributable to owners of the Company 280,891 292,896 Non-controlling interests 13,561 13,842 ---------------------------------------------- -------- --------------------- ----------------------- Total e quity 294,452 306,738 ---------------------------------------------- -------- --------------------- ----------------------- Non-current liabilities Other payables 16 3,617 3,415 Borrowings 17 107,429 108,652 Lease liabilities 4,553 5,308 Provisions 71,714 68,966 Contract liabilities 18 269,435 213,043 ---------------------------------------------- -------- --------------------- ----------------------- Total non- current liabilities 456,748 399,384 ---------------------------------------------- -------- --------------------- ----------------------- Current l iabilities Trade and other payables 16 86,603 116,771 Borrowings 17 402,497 415,593 Interest payable 85,556 80,101 Tax liabilities 1,633 2,058 Lease liabilities 1,558 1,475 Contract liabilities 18 12,713 26,467 Total current liabilities 590,560 642,465 ---------------------------------------------- -------- --------------------- ----------------------- Total liabilities 1,047,308 1,041,849 ---------------------------------------------- -------- --------------------- ----------------------- Total e quity and l iabilities 1,341,760 1,348,587 ---------------------------------------------- -------- --------------------- -----------------------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 JUNE 2022
Six months ended Six months ended 30 June 30 June 2022 2021 US$'000 US$'000 Note Unaudited Unaudited ---------------------------------------------------------- ---- -------------------------- ------------------------ Cash flows from operating activities: (Loss)/profit before tax (11,314) 7,688 Adjustments for: Depreciation 914 888 Depletion 16,432 18,335 Finance income (190) (124) Finance costs 8 36,827 38,732 Fair value adjustment 1,768 (3,042) Unrealised foreign exchange (gain)/loss 10 (99) 6,981 Share option charge 336 1,375 Expected credit loss and other related adjustments 14 5,918 (739) Operating cash flows before movements in working capital 50,592 70,094 Increase in inventory (1,357) (689) Increase in trade and other receivables (40,703) (15,921) Decrease in trade and other payables (6,389) (4,467) Increase in contract liabilities 40,765 16,798 Income tax paid (1,024) (632) ---------------------------------------------------------- ---- -------------------------- ------------------------ Net cash generated from operating activities 41,884 65,183 ---------------------------------------------------------- ---- -------------------------- ------------------------ Cash flows from investing activities: Interest received 171 98 Payments for property, plant and equipment (9,104) (4,109) Payments for exploration and evaluation assets (4,888) (1,118) Acquisition deposits (14,648) - Loans provided to third parties (1,067) - Cash transferred to debt service accounts (32,186) (30,973) Lessor receipts 196 280
---------------------------------------------------------- ---- -------------------------- ------------------------ Net cash used in investing activities (61,526) (35,822) ---------------------------------------------------------- ---- -------------------------- ------------------------ Cash flows from financing activities: Finance costs (24,758) (13,580) Proceeds from issues of equity shares, net of issue costs 61,141 - Sale of Treasury shares 73 - Borrowing proceeds 19 12,810 - Borrowing repayments 19 (30,545) (8,794) Lease payments 19 (527) (335) Net cash generated from/(used in) financing activities 18,194 (22,709) ---------------------------------------------------------- ---- -------------------------- ------------------------ Net (decrease)/increase in cash and cash equivalents (1,448) 6,652 Effect of exchange rate changes on cash and cash equivalents (2,214) (7,938) Cash and cash equivalents at beginning of period 45,739 74,258 Cash and cash equivalents at end of period 15 42,077 72,972 ---------------------------------------------------------- ---- -------------------------- ------------------------ Amounts held for debt service at end of period 15 139,091 61,078 ---------------------------------------------------------- ---- -------------------------- ------------------------ Cash at bank at end of period 15 181,168 134,050 ---------------------------------------------------------- ---- -------------------------- ------------------------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 JUNE 2022
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 ---------------- -------- -------- --------- --------- --------- ------------ --------- ------------- ---------------- --------- 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 2021 (audited) 1,409 62,092 (59) 458 7,104 158,670 229,674 (2,737) 226,937 Profit/(loss) for the period - - - - - (3,109) (3,109) 1,732 (1,377) ---------------- -------- -------- --------- --------- ------------ --------- ------------- ---------------- -------- Total comprehensive profit/(loss) for the period - - - - - (3,109) (3,109) 1,732 (1,377) Transactions with shareholders: Equity-settled bonus payments - 171 1 - - - 172 - 172 Equity-settled share-based payments - - - - 1,375 - 1,375 - 1,375 Balance at 30 June 2021 (unaudited) 1,409 62,263 (58) 458 8,479 155,561 228,112 (1,005) 227,107 ---------------- -------- -------- --------- --------- ------------ --------- ------------- ---------------- --------
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. General information
Savannah Energy PLC ("Savannah" or "the Company") was incorporated in the United Kingdom on 3 July 2014. The principal activity of Savannah and its subsidiaries (together, the "Group") 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 the UK for tax purposes and its shares were admitted to trading on the AIM market ("AIM") of the London Stock Exchange plc on 1 August 2014. The Company's registered address is 40 Bank Street, London, E14 5NR.
2. Accounting policies
Basis of Preparation
On 31 December 2020, International Financial Reporting Standards ("IFRS") as adopted by the European Union at that date was brought into UK law and became international accounting standards as adopted by the United Kingdom ("UK-adopted IAS"), with future changes being subject to endorsement by the UK Endorsement Board. The Group transitioned to UK-adopted IAS in its consolidated financial statements from 1 January 2021. There was no impact on the Group from this transition, nor any changes in accounting policy. These condensed consolidated financial statements have been prepared in accordance with UK-adopted IAS. The provisions of IAS 34: Interim Financial Reporting have not been applied.
The 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 2021 Annual Report and audited financial statements for the year ended 31 December 2021 ("the Group's 2021 Annual Report"). The financial information for the six months ended 30 June 2022 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 2021 were prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. The Independent Auditors' Report on the Group's 2021 Annual Report was unqualified and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. The Independent Auditors' Report contained a material uncertainty related to going concern.
The Group's statutory financial statements for the year ended 31 December 2021 have been filed with the Registrar of 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 2021 Annual Report. There are no other new or amended standards or interpretations adopted from 1 January 2022 that have a significant impact on the interim financial information.
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 twelve months from the date of publication of this Interim Report (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 payments of our gas invoices by our customers, (2) the forecast commodity price environment and (3) continued access to FX markets. 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 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 as described in the Group's 2021 Annual Report. 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. Notwithstanding this, the Directors have full confidence in the Group's forecasts and have continued to adopt the going concern basis in preparing the 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 revenue generating operations of the Group. The Unallocated segments 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 results by reportable segment for the six months ended 30 June 2022:
Nigeria Niger Unallocated Total US$'000 US$'000 US$'000 US$'000 Unaudited Unaudited Unaudited Unaudited -------------------------------------- ----------- ----------- ------------- ------------- Revenue 85,847 - - 85,847 Cost of sales(1) (33,127) - - (33,127) -------------------------------------- ----------- ----------- ------------- ------------- Gross profit 52,720 - - 52,720 Administrative and other operating expenses (3,446) (972) (7,268) (11,686) Transaction and other related expenses - - (7,262) (7,262) Expected credit loss and other related adjustments (5,918) - - (5,918) Operating profit/(loss) 43,356 (972) (14,530) 27,854 -------------------------------------- ----------- ----------- ------------- ------------- Finance income 273 Finance costs (36,827) Fair value adjustment (1,768) Foreign translation loss (846) -------------------------------------- ----------- ----------- ------------- ------------- Profit before tax (11,314) -------------------------------------- ----------- ----------- ------------- ------------- Segment depreciation, depletion and amortisation 16,890 132 323 17,345 Segment non-current assets(2) 553,681 167,667 7,755 729,103 Segment non-current asset additions 1,862 5,035 4,101 10,998 Segment total assets 1,118,014 168,970 54,776 1,341,760 Segment total liabilities (974,629) (33,525) (37,154) (1,047,308) -------------------------------------- ----------- ----------- ------------- ------------- 1. Refer to note 5 for items included within Cost of Sales.
2. Includes Third party investments, Property, plant and equipment, Exploration and evaluation assets and Right-of-use assets.
The following is an analysis of the Group's results by reportable segment for the six months ended 30 June 2021:
Nigeria Niger Unallocated Total US$'000 US$'000 US$'000 US$'000 Unaudited Unaudited Unaudited Unaudited ------------------------------------ ----------- ----------- ------------- ----------- Revenue 99,386 - - 99,386 Cost of sales(1) (34,286) - - (34,286) ------------------------------------ ----------- ----------- ------------- ----------- Gross profit 65,100 - - 65,100 Administrative and other operating expenses (2,748) (2,410) (4,347) (9,505) Transaction and other related expenses - - (2,341) (2,341) Expected credit loss and other related adjustments 739 - - 739 Operating profit/(loss) 63,091 (2,410) (6,688) 53,993 ------------------------------------ ----------- ----------- ------------- ----------- Finance income 328 Finance costs (38,732) Fair value adjustment 3,042 Foreign translation loss (10,943) ------------------------------------ ----------- ----------- ------------- ----------- Profit before tax 7,688 ------------------------------------ ----------- ----------- ------------- -----------
The following is an analysis of the Group's results by reportable segment at 31 December 2021:
Nigeria Niger Unallocated Total US$'000 US$'000 US$'000 US$'000 Unaudited Unaudited Unaudited Unaudited Segment depreciation, depletion and amortisation 18,807 153 263 19,223 Segment non-current assets(2) 568,709 162,644 2,915 734,268 Segment non-current asset additions 32,535 1,779 184 34,498 Segment total assets 1,085,486 160,962 102,139 1,348,587 Segment total liabilities (938,513) (31,620) (71,716) (1,041,849) -------------------------------------- ----------- ----------- ------------- ------------- 1. Refer to note 5 for items included within Cost of Sales.
2. Includes Property, plant and equipment, Exploration and evaluation assets and Right-of-use assets.
4. Revenue
Set out below is the disaggregation of the Group's revenue from contracts with customers:
2022 2021 US$'000 US$'000 Six months ended 30 June Unaudited Unaudited ---------------------------------------- ----------- ----------- Gas sales 72,629 91,675 Oil and condensates sales 13,218 7,711 ---------------------------------------- ----------- ----------- Revenue from contracts with customers 85,847 99,386 ---------------------------------------- ----------- -----------
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.
Included within revenue from contracts with customers is revenue of US$83.8 million (30 June 2021: US$89.6 million) relating to four (30 June 2021: two) of the Group's customers who each contribute more than 10% of revenue US$36.6 million, US$21.7 million, US$13.2 million, and US$12.3 million respectively (30 June 2021: US$61.3 million and US$28.3 million, respectively).
5. Cost of sales 2022 2021 US$'000 US$'000 Six months ended 30 June Unaudited Unaudited ----------------------------------------------------- ----------- ----------- Depletion - oil and gas, and infrastructure assets (note 13) 16,432 18,335 Facility operation and maintenance costs 13,770 13,794 Royalties 2,925 2,157 33,127 34,286 ----------------------------------------------------- ----------- ----------- 6. Operating profit
Operating profit has been arrived at after charging:
2022 2021 US$'000 US$'000 Six months ended 30 June Unaudited Unaudited -------------------------------------------- ----------- ----------- Staff costs 11,896 12,112 Depreciation - other assets (note 13) 370 380 Depreciation - right-of-use assets 544 508 Transaction and other related expenses(1) 7,262 2,341 -------------------------------------------- ----------- -----------
1. Included within Transaction and other related expenses are costs incurred with respect of the Group's proposed acquisitions of the Chad and Cameroon Assets, integration and IT activities and other business development opportunities.
7. Finance income 2022 2021 US$'000 US$'000 Six months ended 30 June Unaudited Unaudited --------------------------- ----------- ----------- Lease income 19 26 Bank interest income 161 98 Other interest income 93 204 273 328 --------------------------- ----------- ----------- 8. Finance costs 2022 2021 US$'000 US$'000 Six months ended 30 June Unaudited Unaudited ------------------------------------------------- ----------- ----------- Interest on bank borrowings and loan notes 27,949 26,826 Amortisation of balances measured at amortised cost(1) 3,898 7,004 Unwinding of decommissioning discount 2,749 2,488 Interest expense on lease liabilities 201 262 Bank charges 191 131 Other finance costs 1,839 2,021 ------------------------------------------------- ----------- ----------- 36,827 38,732 ------------------------------------------------- ----------- -----------
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. As at 30 June 2022 the option value was approximately US$3.0 million (31 December 2021 audited: US$4.8 million), resulting in a charge of US$1.8 million (30 June 2021: gain of US$3.0 million). The decrease in the option value was due to a worsening in credit bond spreads observed during the period as well as an increase in market expectations around interest rates. The increase in the option value during the prior period was principally due to an improvement in credit bond spreads observed during the period.
10. Foreign translation loss
2022 2021 US$'000 US$'000 Six months ended 30 June Unaudited Unaudited --------------------------- ----------- ----------- Realised loss 945 3,962 Unrealised (gain)/loss (99) 6,981 --------------------------- ----------- ----------- 846 10,943 --------------------------- ----------- -----------
Realised foreign translation loss for the six months ended 30 June 2022 mainly relates to Nigerian trade receivables which are invoiced in US Dollars and where customers are able to pay in Naira. Foreign translation loss for the six months ended 30 June 2021 mainly relate to the translation of Naira into US Dollars to service US Dollar denominated obligations.
Unrealised foreign translation loss relates to the revaluation of monetary items held in currencies other than US Dollars. During the six months ended 30 June 2021 the Nigerian Naira devalued against the US Dollar in May 2021 which created a significant unrealised loss on monetary items held in Naira.
11. Taxation
The tax expense for the Group is:
2022 2021 US$'000 US$'000 Six months ended 30 June Unaudited Unaudited ------------------------------------------------------ ----------- ----------- Current tax - Adjustments in respect of prior years (1,126) 3 - Current year 3,919 2,169 ------------------------------------------------------ ----------- ----------- 2,793 2,172 Deferred tax - Adjustments in respect of prior years 193 15 - Write down and reversal of previous write downs 4,353 - of deferred tax assets - Origination and reversal of temporary differences 1,892 6,878 ------------------------------------------------------ ----------- ----------- 6,438 6,893 ------------------------------------------------------ ----------- ----------- 9,231 9,065 ------------------------------------------------------ ----------- -----------
Income tax expense is recognised based on the actual results for the period.
The tax charge for the period of US$9.2 million (30 June 2021: charge of US$9.1 million) is made up of a current tax charge of US$2.8 million (30 June 2021: US$2.2 million) and a deferred tax charge of US$6.4 million (30 June 2021: charge of US$6.9 million). The current tax charge principally arises on Nigerian profits. The deferred tax charge principally relates to the utilisation of losses in Nigeria, as well as a write down of deferred tax assets.
12. Loss per share
Basic earnings per share amounts are calculated by dividing the profit or loss for the period attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the period.
Diluted earnings per share amounts are calculated by dividing the profit or loss for the periods attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the period, plus the weighted average number of shares that would be issued on the conversion of dilutive potential ordinary shares into ordinary shares. As there is a loss attributable to the owners of the Company for the six months ended 30 June 2022, the diluted weighted average number of shares would reduce the loss per share. Therefore, the basic weighted average number of shares has been used to calculate the diluted loss per share.
The weighted average number of shares outstanding excludes treasury shares of 99,858,893 (30 June 2021: 41,966,942).
2022 2021 US$'000 US$'000 Six months ended 30 June Unaudited Unaudited --------------------------------------------- ----------- ----------- Loss Loss attributable to owners of the Company (20,264) (3,109) --------------------------------------------- ----------- ----------- Number of Number shares of shares -------------------------------------------- --------------- ------------- Basic weighted average number of shares 1,142,656,405 954,116,177 Add: employee share options 5,243,720 3,840,024 -------------------------------------------- --------------- ------------- Diluted weighted average number of shares 1,147,900,125 957,956,201 -------------------------------------------- --------------- ------------- US cents US cents ------------------------- ---------- ---------- Loss per share
Basic loss per share 1.77 0.33 Diluted loss per share 1.77 0.33 ------------------------- ---------- ----------
50,233,574 options granted under share option schemes are not included in the calculation of diluted earnings per share because they are anti-dilutive for the six months ended 30 June 2022 (30 June 2021: 50,233,574). These options could potentially dilute basic earnings per share in the future.
13. Property, plant and equipment
Oil and Infrastructure Other gas assets assets assets Total US$'000 US$'000 US$'000 US$'000 ------------------------------------------- ------------- ---------------- --------- ---------- Cost Balance at 1 January 2021 (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 (audited) 197,768 446,128 4,924 648,820 Additions 983 854 4,132 5,969 Balance at 30 June 2022 (unaudited) 198,751 446,982 9,056 654,789 ------------------------------------------- ------------- ---------------- --------- ---------- Accumulated depreciation Balance at 1 January 2021 (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 (audited) (37,069) (40,891) (2,659) (80,619) Depletion and depreciation charge (8,312) (8,120) (370) (16,802) ------------------------------------------- ------------- ---------------- --------- ---------- Balance at 30 June 2022 (unaudited) (45,381) (49,011) (3,029) (97,421) ------------------------------------------- ------------- ---------------- --------- ---------- Net book value 1 January 2021 (audited) 163,525 446,747 2,435 612,707 31 December 2021 (audited) 160,699 405,237 2,265 568,201 ------------------------------------------- ------------- ---------------- --------- ---------- 30 June 2022 (unaudited) 153,370 397,971 6,027 557,368 ------------------------------------------- ------------- ---------------- --------- ----------
Upstream assets principally comprise the well and field development costs relating to the Uquo and Stubb Creek oil and gas fields in Nigeria. The 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 typically include vehicles, office equipment (including IT software) and building improvements.
14. Trade and other receivables
30 June 31 December 2022 2021 US$'000 US$'000 Unaudited Audited --------------------------------------- ----------- ------------- Trade receivables 188,969 156,440 Receivables from a joint arrangement 3,645 67 Other financial assets 5,261 5,237 --------------------------------------- ----------- ------------- 197,875 161,744 Expected credit loss (35,263) (29,345) --------------------------------------- ----------- ------------- 162,612 132,399 VAT receivables 677 694 Prepayments and other receivables 43,378 98,538 --------------------------------------- ----------- ------------- 206,667 231,631 --------------------------------------- ----------- -------------
The following has been recognised in the Condensed Statement of Comprehensive Income relating to expected credit losses for the period:
2022 2021 US$'000 US$'000 Six months ended 30 June Unaudited Unaudited ----------------------------------------------------- ----------- ----------- Provision/(release) of expected credit losses 5,918 (739) Expected credit loss and other related adjustments 5,918 (739) ----------------------------------------------------- ----------- -----------
15. Cash at bank
30 June 31 December 2022 2021 US$'000 US$'000 Unaudited Audited -------------------------------- ----------- ------------- Cash and cash equivalents 42,077 45,739 Amounts held for debt service 139,091 106,905 181,168 152,644 -------------------------------- ----------- -------------
Cash and cash equivalents include US$1.2 million (31 December 2021: US$1.1 million) of cash collateral on the Orabank revolving facility. The cash collateral was at a value of XOF758.3 million (31 December 2020: XOF626.4 million).
Amounts held for debt service represents Naira denominated cash which is held by the Group for debt service, and this has been separately disclosed from Cash and cash equivalents. In total, approximately US$149.0 million (31 December 2021: US$132.8 million) will be paid for the debt service from bank accounts designated as Amounts held for debt service, and from Cash and cash equivalents.
16. Trade and other payables
30 June 31 December 2022 2021 US$'000 US$'000 Unaudited Audited ------------------------------- ----------- ------------- Trade and other payables Trade payables 31,489 30,957 Accruals 30,950 62,927 VAT and WHT payable 16,717 13,783 Royalty and levies 4,471 5,196 Employee benefits 88 91 Other payables 2,888 3,817 ------------------------------- ----------- ------------- 86,603 116,771 Other payables - non-current Employee benefits 3,617 3,415 3,617 3,415 ------------------------------- ----------- ------------- 90,220 120,186 ------------------------------- ----------- -------------
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
17. Borrowings
30 June 31 December 2022 2021 US$'000 US$'000 Unaudited Audited ---------------------------- ----------- ------------- Revolving credit facility 11,939 9,916 Bank loans 374,009 379,002 Senior Secured Notes 95,135 100,717 Other loan notes 28,843 34,610 509,926 524,245 ---------------------------- ----------- ------------- 30 June 31 December 2022 2021 US$'000 US$'000 Unaudited Audited ------------------------- ----------- ------------- Current borrowings 402,497 415,593 Non-current borrowings 107,429 108,652 509,926 524,245 ------------------------- ----------- -------------
18. Contract liabilities
Contract liabilities represents the value of gas supply commitment to the Group's customers for gas not taken but invoiced under the terms of the contracts. The amount has been analysed between current and non-current, based on the customers' expected future usage gas delivery profile. This expected usage is updated periodically with the customer.
30 June 31 December 2022 2021 US$'000 US$'000 Unaudited Audited ------------------------------------------- ----------- ------------- Amount due for delivery within 12 months 12,713 26,467 Amount due for delivery after 12 months 269,435 213,043 282,148 239,510 ------------------------------------------- ----------- ------------- 30 June 31 December 2022 2021
US$'000 US$'000 Unaudited Audited ------------------------------------------------ ----------- ------------- As at 1 January 239,510 190,237 Additional contract liabilities 46,175 61,033 Contract liabilities utilised (5,409) (18,345) Unwinding of discount on contract liabilities 1,872 6,585 As at end of period 282,148 239,510 ------------------------------------------------ ----------- -------------
The unwinding of the discount on contract liabilities relates to the fair value adjustments made under IFRS 3: Business Combinations following the acquisition of the Nigerian assets and entities in 2019. The fair value adjustment was calculated as the discounted, expected cost of the future deliveries of gas volumes under the terms of customer take-or-pay contracts. This discounted amount unwinds relative to an apportioned amount of the contract liabilities volumes at the date of acquisition that have subsequently been utilised.
19. Cash flow reconciliations
The changes in the Group's liabilities arising from financing activities can be classified as follows:
Borrowings Interest payable Lease liabilities Total US$'000 US$'000 US$'000 US$'000 --------------------------------------------------- ------------ ------------------ ------------------- ---------- At 1 January 2022 (audited) 524,245 80,101 6,783 611,129 --------------------------------------------------- ------------ ------------------ ------------------- ---------- Cash flows Repayment (30,545) (21,050) (527) (52,122) Proceeds 12,810 - - 12,810 Realised loss on loan repayment 33 - - 33 --------------------------------------------------- ------------ ------------------ ------------------- ---------- (17,702) (21,050) (527) (39,279) Non-cash adjustments Payment in kind adjustment/accretion of interest 3,764 26,502 201 30,467 Net debt fees (1,236) - - (1,236) Borrowing fair value adjustments 1,768 - - 1,768 Working capital movements - - 107 107 Foreign translation (913) 3 (453) (1,363) Balance at 30 June 2022 (unaudited) 509,926 85,556 6,111 601,593 --------------------------------------------------- ------------ ------------------ ------------------- ---------- Borrowings Interest payable Lease liabilities Total US$'000 US$'000 US$'000 US$'000 --------------------------------------------------- ------------ ------------------ ------------------- ---------- At 1 January 2021 (audited) 514,662 51,544 8,061 574,267 --------------------------------------------------- ------------ ------------------ ------------------- ---------- Cash flows Repayment (8,794) (10,981) (335) (20,110) Realised loss on loan repayment 175 - - 175 --------------------------------------------------- ------------ ------------------ ------------------- ---------- (8,619) (10,981) (335) (19,935) Non-cash adjustments Payment in kind adjustment/accretion of interest 1,380 26,025 262 27,667 Net debt fees 1,752 - - 1,752 Borrowing fair value adjustments (3,042) - - (3,042) Working capital movements - - (291) (291) Foreign translation (1,011) (90) 79 (1,022) Balance at 30 June 2021 (unaudited) 505,122 66,498 7,776 579,396 --------------------------------------------------- ------------ ------------------ ------------------- ----------
20. Capital commitments
At 30 June 2022, capital commitments amounted to US$ 4.8 million (30 June 2021: US$13.0 million).
21. Events after the reporting date
There are no events after the reporting date other than those described within this announcement.
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