PetroSA records operating profit (before impairment) of R2, 2billion for 2013/14 financial year
Cape Town, South Africa.
PetroSA, South Africa's National Oil Company (NOC), has recorded a solid performance in a challenging 2013/14 financial year that saw the NOC achieve an operating profit before impairment of R2, 2billion (2012/13: R983million).
The R3, 4billion impairment charge was against the NOC's onshore and offshore assets, resulting in an overall net loss of R1, 65billion. This is the result of a volatile economic environment; creep in project costs and delays in the feedstock drilling programme (Project Ikhwezi).
"PetroSA has had a trying year with the main focus being on the sustainability of the refinery, given the declining gas feedstock. The sustainability of our refinery is critical as it not only contributes to the sustainability of our business but also to our total revenue," Ms Nosizwe Nokwe-Macamo, the PetroSA Group CEO said.
Despite a challenging operating environment and tough macro-economic conditions, PetroSA managed to book a 12% increase in revenue to R21, 2 billion (2012/13: R18, 9billion). The R2, 2billion operating profit was also the highest the company has achieved in three years.
The better-than-expected revenues were the result of increased local trading of finished products, the good performance of the company’s subsidiary PetroSA Ghana and a positive impact of the Rands 15% weakening against the US Dollar and other major currencies. PetroSA Ghana contributed R328million towards net profit (2012/13: R232million).
PetroSA’s financial position also continues to remain strong. In the year under review the company had total assets valued at R34billion (2012/13: R35, 7billion), with a cash balance of R5, 5 billion (2012/13:R7, 4billion).
Due to diminishing gas feedstock, PetroSA has seen significant challenges at the Mossel Bay-based Gas-To-Liquids (GTL) refinery. In the 2013/14 financial year the GTL refinery produced 5.8 MMbbls of refined products, 14% below target.
“The Group experienced a challenging financial year, with lower than expected landed gas, production volumes as well as sales volumes not meeting the expectations of the corporate plan,” Ms Lindiwe Mthimunye-Bakoro, the PetroSA Group CFO said.
“The Board believes that the Group is a going concern and has adequate financial resources to continue operations into the foreseeable future,” she added.
In an effort to deal with the feedstock challenge, PetroSA has embarked on various initiatives aimed at sustaining the GTL refinery and viability of the company. These include the five-well drilling programme called Project Ikhwezi, the Asset Development Plan, an initiative to look at alternatives to sustain the GTL refinery, and a project to import Liquefied Natural Gas to South Africa.
The company has also embarked on a rigorous cost optimisation initiative that seeks to realise a R1billion permanent cost saving per annum over the next few financial years.
During the 2013/14 period PetroSA also made significant strides in reducing fruitless and wasteful expenditure from R31million in the 2012/13 financial year, to R6million. Payments to suppliers of goods and services totalled R24, 19billion. The total procurement expenditure for Broad-Based Black Economic Empowerment-compliant companies (as per the codes; level 1-8) equated to R13, 93billion for the period.
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