PetroSA Directors are confident that the Group and Company will continue as a going concern.
CAPE TOWN, 4 October
2017 – The Petroleum Oil and Gas Corporation of South Africa SOC Ltd.
(PetroSA), has recorded a loss for the year of R1.4billion for 2016/17 (2016: R449
The dwindling indigenous feedstock reserves
and the operational challenges at the GTL plant resulted in revenue falling 34%
on the previous year. Sales volumes were below expectations. The GTL plant and
purchased product sales were 16% and 46% below forecast. The Ghana
subsidiary’s performance was negatively impacted by the lower-than-average
crude prices, as well as by an incident on a production vessel that
The Groups financial position remains an area
for concern, as the total assets decreased to R17.1 billion from
R20.9billion in 2016. The available cash balance decreased from R3.7 billion in
2016 to R2.4billion in 2017. The Group is ungeared when presented as a
ratio of net debt (comprising gross debt net of cash and cash equivalents)
to equity. The optimal funding structure for the Group has been
considered, with a targeted long-term gearing ratio of 30% to 40%, in line
with the Group’s long-term strategy and growth initiatives.
A net reversal of
impairment (R1 billion) of assets contributed positively to the net operating
loss. The reversal of impairment emanated largely from a decrease in the
provision for future abandonment costs. The abandonment provision was revised
downwards at year-end following a value engineering exercise. The increase in
reserves from the Ghana subsidiary was another contributing factor.
Group CEO, Mr Kholly Zono, said the 2016/2017 financial year was one of the
most difficult periods in the life of the company. There were, however, areas
“Not only is our Ghanaian business a
commercially viable investment, but the business also grows our crude reserves
– an asset that can be leveraged to provide cash flow to sustain PetroSA” said Mr
On the issue of going concern, it is the considered opinion of the
PetroSA Board that the Group and Company will continue to operate as a going
concern for the foreseeable future. This opinion is informed by factoring in
current cash balances (in excess of R2billion) and unutilized bank facilities
and projected cash flows. Barring any unforeseen circumstances, PetroSA will be
able to pay all of its debts as they fall due and payable for the foreseeable
“The Group is
mindful of several exogenous factors that may negatively impact its financial
performance in the future. These include international crude oil prices and
foreign exchange volatility. Whilst these factors are not within the control of
the Company, any further negative deterioration in these factors will impact
the Group's profitability and place additional strain on the Group's financial resources.
These financial risks are continually monitored and mitigated where appropriate.“
said Webster Fanadzo, the Acting Group CFO
The new Interim
Board expects the year ahead to be challenging.
However, the new Interim Board is well geared to face such
challenges. The primary focus for the
Interim Board will be developing a strategy that will reposition the Company
for growth whilst advancing deeper transformation and creating sustainable job
security for employees.
Chairman, Mr Nhanhla Gumede, said “We will ensure that we improve efficiencies
and build synergies across the value chain, mindful of the importance to retain
and build scarce skills. We are
confident we can rebuild a strong PetroSA brand that inspires pride in all our