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Haha, I share your frustration, Tier. I'll be going for a swim, having a run and getting frustrated at what a completely rubbish guitarist I am. I'll also be planning what to do with my Savannah millions, a second passport being the first purchase.
It may be that they have to stick out an RNS as 17 May approaches simply to say what new extension date has been granted to the Company by the nomad and exchange.
All the best,
A couple of follow ups:
Re point number 4 on Cameroon, I think I was incorrect: on reflection, I expect the cash won't be booked, but rather a receivable (booked against the liability of deferred revenue that I mentioned before). At least, that's my hope.
The other thing well worth looking out for is a mention of the metrics associated with gross and net debt and any related comments on bank covenants.
Title should, of course, read FY23 financials.
Muppet.
4. Cameroonian income
I seem to recall (from all that Lower Manhattan Court filing stuff) that cash from Cameroonian midstream revenue is accumulating in a branch account of Citibank NA in Libreville, pending distribution after the arbitral proceedings are concluded (expected mid-2025). It will be very interesting indeed to see how the Company accounts for this. I assume they cannot recognise the revenue but (hopefully clearly!) this is a Savannah Asset. So I suspect we have another category of Contract Liabilities in lieu of revenue and that we recognise the cash in the balance sheet (our proportion of what is held in the Libreville bank accounts). The CL then gets released to P&L on successful completion of the arbitration. Clearly, if the arbitration goes against us (unlikely, I think) then we just unwind the balance sheet gross-up: no P&L impact, again it’s conservative. Of course, the Company may be directed by the auditors to recognise nothing at all and flag that this is without prejudice to the arbitral proceedings.
This begs another question concerning the Exxon debt facility which was originally attributed to the expropriated Chadian assets but was amended in early 2023 (“Following the Nationalisation [Chad], the terms of this facility were amended in 2023.” Note 30, page 169) and included in the FY22 segmental reporting under the Cameroonian business at USD162m. How is that now being serviced or is interest simply rolling up on it?
5. Revenue growth
The encouraging addition of customers in 2022 in Nigeria should begin to have a positive impact on revenue in the 2023 accounts. Too many moving parts to assess the impact but I am cautiously optimistic about this.
6. Transaction fees
These might be rather large given all that is going on. I wonder if they will be separately disclosed.
7. Audit opinion
This is in the FY22 report (page 87): “With respect to the opinion of the Group’s external auditors we do not anticipate that there will be any disclaimer opinion required for 2023 - this has only arisen for 2022 due to the specific and exceptional set of circumstances discussed above.” Let’s hope this holds true.
I’d expect a reported FY23 loss of around USD150m (admittedly, a guess). This belies the great asset base and contingent asset base of the company. I remain as positive on future prospects and I am highly critical of Company engagement with its equity providers.
Here's to some good news and a recommencement of trading soon.
Given the lack of investor engagement, the last meaningful update having been the 29 September interims, I thought I’d flag some key issues to look out for in the FY23 numbers. I am deliberately not commenting here on SS, CC, Niger, renewables: we’ve collectively discussed all those at length. Rather, I wanted to refocus on the financial aspects of the business. I am really hoping some of you will add to this and give your perspective on it.
A detailed update on the entire liability side of the balance sheet is clearly needed and I hope Nick Beattie will discuss matters up to the reporting date, rather than just to the balance sheet date.
Foreign exchange losses
USDNGN started the year at about 450 and ended it at 900-ish.
The reported net exposure in NGN at 31 December 2022 was USD177m (note 35(d) to the financial statements). Obviously payments in NGN in lieu of USD for FY23 will have been made across the board: these should amount to an invoiced dollar equivalent of USD300m or so for the year, perhaps a little more.
I’m envisaging unrealised FX losses for the year in the region of USD80-100m for the year (USD54m was reported for the first half when NGN finished at about 760). If unrealised losses were reported to current date now that USDNGN is around 1,380, I’d expect cumulative unrealised losses of up to USD150m-ish. These are guesses.
This is clearly a significant issue.
2. Debt service burden.
From page 90 of the FY22 financials: “The average interest rate on debt for the Group was 12.0% (2021: 10.2%), due to higher US LIBOR rates in 2022.”
Financing costs were USD79m in FY22 (page 88).
I’d guess the blended rate was perhaps 2.5% higher on average for 2023: so 14.5%. Given we still don’t seem to be able to swing our NGN into USD (see my note on FX losses above) the interest burden is likely to be a bit higher, I guess in the region of USD100m. Until we can switch our USD revenue, paid in NGN, for USD and apply it to the debt, the interest burden will remain a significant drag.
3. TOP contract impact on financials
Contract Liabilities for FY21 were USD213m, for FY22 USD314m (see note 32, page 170). It’s hard to know whether our customers will have begun to take the as-yet-untaken-but-paid-for gas or whether they will have continued to pay for contractual obligations in FY23 and continued to leave the gas in the ground. I’d hazard a guess that Contractual Liabilities will go up again for FY23, given Nigeria’s volatile year. It will be interesting to see what comment the Company offers on the commercial impact here if this is the case. The accounting treatment adopted is conservative anyway (we aren’t recognising profit on gas left in the ground but already paid for).
Apologies to you, RockyRide: I wrote RockyRoad in my note below.
I also left out the need for a detailed update on the entire liability side of the balance sheet. Step up, Nick, please.
I fully concur on IR: I feel more knowledgeable than they are, tbh.
AGM might end up like the Smithfield Market scene out of The Long Good Friday; or an old Eurotunnel AGM. Sadly, I won't be there in person.
2/2
The current level of engagement is woeful. Management need to respect shareholders if they want their support.
Ends.
1. You have a large number of long-term shareholders who are deeply dissatisfied with business progress and level of engagement on a number of fronts. Read recent comments on this bulletin board from me, TrustILie, RockyRoad, Zengas and StreetsOfGold, amongst others.
2. Suspension from trading is not an excuse for lack of communication on operating businesses and financial updates.
3. In AK's 31 Dec 2021 presentation to shareholders, quarterly operational updates were proposed. There have been none. Who has advised you to stop communication with investors? Why?
4. It is understood that South Sudan and Chad-Cameroon updates are not possible. This does not give you an excuse not to update on Nigeria and Niger. It does not give you an excuse not to provide operational and financial updates.
5. I (together with another shareholder) wrote to you at length in April with a list of questions and requested an operational update in May. The very short response from IR, flagging the publication of the 2023 financials and little more was wholly inadequate. I do not even know if either Andrew or Nick has read my letter.
6. If all we can expect is more of the same in terms of communication, I propose saving the overhead of an IR team and putting the money to work elsewhere.
7. I'll be voting against the reappointment of the NEDs in the AGM (except the incoming chairman) for failing to hold management to account on investor communication.
8. As Zengas pointed out on this BB, the Niger assets have been there for years and we still have close to zero visibility to first oil.
9. What, if anything, is going on with the renewables projects?
10. Where is the detailed explanation of the highly material impact of Naira volatility on cash held and on future receivables? Where on Earth are we on the debt restructuring? A single sentence that it remains wip is unacceptable.
11. The AGM will rightly be deeply dysfunctional if these issues aren't addressed in advance. Filibustering will not do. Andrew and Nick should both be there in person and both should make presentations.
12. Finally, I'm reposting an excerpt from Zengas' recent post. Please take note.
"Seriously, come results/agm there needs to be a credible plan of action. Six months of this year will be gone. We are not a charity no matter how much the company claims societal good. It's just no longer credible or acceptable to be doing nothing of meaningful size. To go back to my opening lines, 10 years is shameful and any further waffling about future intended plans will no longer wash. Management need a collective boot in the hole re this fiasco of a situation not to mention their divergence to wind and solar while the oil assets there go nowhere fast. I intend to voice this directly to them and i urge other shareholders to do the same that this situation in my view is no longer acceptable and can't be dodged come results/agm."
The current level of
Agreed, bangrak. I'm an investor in both BHP and AAL.
I like metals and oil & gas. London listing in that space finally getting a little bit of love.
I'll certainly reconsider buying here too, maybe you might too. Just with ex-cash PE at about 15 and the strong possibility of a dividend cut to zero, this is far too richly valued right now. It's a single-strategy commodity processor in SA, after all. Great exit price here before the Q3s drop.
Morning all.
I'm reposting the presentation which Andrew Knott made on new year's eve 2021 at the time of the CC announcement. I don't believe that it's on the website anymore.
I posted this a few weeks back but it got a bit lost in an RNS which fell immediately afterwards. Obviously it's a very long time ago but I thought some of you might want to revisit it.
Many of the Nigerian, Nigerien and Cameroonian elements are still relevant, I assume.
The Gantt chart at slide 23 is particularly interesting. It proposes quarterly operational updates. The Niger slides also set out progress to oil. Debt profiles also give an idea of ambition.
Clearly after this was published, the company’s attitude to investor engagement changed significantly. On who's advice, I wonder...
This is worth reading in conjunction with the upcoming 2023 financials in advance of the AGM. That meeting needs to significantly outperform last year's effort.
Best wishes,
https://wp-savannah-2020.s3.eu-west-2.amazonaws.com/media/2021/12/Restoration-to-AIM-and-major-acquisition-presentation-December-2021.pdf
I agree, bangrak.
It may be a while away, but when Ivanhoe brings phase 2 of this project on line, that could be a significant driver of global PGM supply.
https://m.youtube.com/watch?v=jbb-O6KOFbQ&feature=youtu.be
I expect a profit marginally higher than Q1 or Q2, but only marginally (on account of Rh having nudged up a little).
Profit for the year is heading for around USD8m, bar any exceptionals.
This is a pretty easy share for which to estimate value.
Https://twitter.com/Savannah_Energy/status/1782311038769156384
Quite the response (albeit somewhat garbled).
This is what happens when Investor Relations stop doing investor relations...
I'm out of patience on the lack of info on Nigeria and Niger as well as lack of meaningful financial updates (but not on SS or CC). Inadequate.
You understood perfectly, SoG. Was similar to Rocky's point on stranded gas. I probably wasn't v clear.
The reason I don't favour dividends, is that we must be paying about 15% interest right now: a distribution is unjustifiable in such circumstances.
Given the significant burden of servicing of debt finance, I'd sooner see debt paid down or money put to work in high-IRR, low-payback-period projects and capex than any distribution.
On the Chad stuff, it can't be appealed forever. Others understand arbitral timelines far better than me. Injunctive seizure of cargo, either at Kribi or at destination port is how we get paid (should the arbitration be successful), I believe.
It'll be interesting to see if the growth in deferred revenue leads to customers seeking relief.
Thanks Trust.
Whilst I'm here, thanks also for all your thoughtful posts here over many months. You're a big part of keeping this board alive and keeping us all thinking: it's appreciated.
Cash plus 4-5 times projected FY24 net profit gives a share price in the low-to-mid 40s. Add 5 pence for sound management and potential growth in ounces produced. Deduct 5 pence for country in a big political and financial mess. I still end up with FV around 43-45 pence.
...have rather a long way to catch up with the share price.