SAVANNAH ENERGY PLC

Interim / Quarterly Report • Jan 30, 2015

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RNS Number : 5561D

Savannah Petroleum PLC

29 January 2015

30 January 2015

Savannah Petroleum 1 Limited

("SP1L" or the "Company")

Half Year Results

Savannah Petroleum 1 Limited, the wholly owned subsidiary company of Savannah Petroleum PLC ("Savannah"), today announces its half year results for the six month period ended 31 October 2014. This is a requirement under AIM Rule 18 following the disclosure of financial information for SP1L in its AIM Admission Document which was published on 1 August 2014.  Savannah is a UK-domiciled oil and gas exploration company focused on the R1/R2 license area in south east Niger.

The publishing of these separate accounts for SP1L is a one off requirement under the AIM Rules and will not occur again at the end of future interim or annual periods for SP1L. Instead, the accounts of SP1L will be consolidated in the financial information of Savannah Petroleum PLC. Savannah intends to publish its consolidated results for the period ended 31 December 2014 on or before 30 June 2015.

The reader should therefore understand that these accounts do not provide a meaningful view of Savannah Petroleum PLC's financial position as at 31 October 2014.

Approved and authorised for issue by the board of directors on 29 January 2015 and signed on their behalf by:

Mark Iannotti

Director

Contact Information:

Savannah Petroleum 1 Limited / Savannah Petroleum PLC Andrew Knott, SP1L Director / Savannah Petroleum PLC CEO Jessica Hostage, Head of Investor Relations	+44 (0)20 3102 6899
Strand Hanson Limited - Nominated Advisor Rory Murphy James Spinney Ritchie Balmer	+44 (0)20 7409 3494
Mirabaud - Broker Peter Krens Rory Scott	+44 (0)20 7878 3360
Financial PR Mark Antelme	+44 (0)20 7520 9266

INDEPENDENT REVIEW REPORT TO SAVANNAH PETROLEUM 1 LIMITED

Introduction

We have been engaged by the Company to review the financial information in the half-yearly financial report for the six months ended 31 October 2014 which comprises the Condensed Consolidated Interim Statement of Financial Position, Condensed Consolidated Interim Statement of Comprehensive Income, Condensed Consolidated Interim Statement of Cash Flows and the Condensed Consolidated Interim Statement of Changes in Equity. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. This report is made solely to the Company in accordance with guidance contained in ISRE (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the Company those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusion we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The AIM rules of the London Stock Exchange require that the accounting policies and presentation applied to the financial information in the half-yearly financial report are consistent with those which will be adopted in the annual accounts having regard to the accounting standards applicable for such accounts. As disclosed in Note 2 of the Historical Financial Information within its AIM Admission Document, the annual financial statements of Savannah Petroleum PLC and its subsidiaries are prepared in accordance with IFRSs as adopted by the European Union. The financial information in the half-yearly financial report has been prepared in accordance with the basis of preparation in Note 2.

Our responsibility

Our responsibility is to express to the Company a conclusion on the financial information in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the financial information in the half-yearly financial report for the six months ended 31 October 2014 is not prepared, in all material respects, in accordance with the basis of accounting described in Note 2.

GRANT THORNTON UK LLP

AUDITOR

London

29 January 2015

	SAVANNAH PETROLEUM 1 LIMITED
	CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
	AT 31 October 2014
				31 October	30 April
				2014	2014
				US $	US $
		Note		Unaudited	Audited
Assets
Non-Current Assets
Property, plant and equipment				76,443	-
Exploration and evaluation assets		3		40,049,013	-
Total non-current assets				40,125,456	-
Current Assets
Trade and other receivables				619,846	2
Cash and cash equivalents				37,084	-
Total current assets				656,930	2
Total Assets				40,782,386	2
Equity and Liabilities
Capital and reserves
Issued capital		6		1	2
Accumulated deficit				(5,192,236)	(973,152)
Total equity				(5,192,235)	(973,150)
Non-Current Liabilities
Trade and other payables		4		45,830,977	-
Total non-current liabilities				45,830,977	-
Current Liabilities
Trade and other payables		4		143,644	973,152
Total current liabilities				143,644	973,152
Total Equity and Liabilities				40,782,386	2

SAVANNAH PETROLEUM 1 LIMITED
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIOD ENDED 31 October 2014

		Period from	Period from	Period from
		1 May 2014 to	3 July 2013 to	3 July 2013 to
		31 October 2014	30 April 2014	31 October 2013
		US $	US $	US $
	Note	Unaudited	Audited	Unaudited
Revenue		-	-	-
Operating Expenses		(4,225,719)	(973,152)	(176,348)
Loss from Operations		(4,225,719)	(973,152)	(176,348)
Net foreign exchange gain		6,635	-	-
Loss before taxes		(4,219,084)	(973,152)	(176,348)
Income tax expense		-	-	-
Total comprehensive loss for the period		(4,219,084)	(973,152)	(176,348)
Loss per share attributable to the equity owners	5
Basic and diluted		$(0.00)	$(0.00)	$(0.00)

SAVANNAH PETROLEUM 1 LIMITED
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIOD ENDED 31 October 2014
		Period from	Period from
	31 October	3 July 2013 to	3 July 2013 to
	2014	30 April 2014	31 October 2013
	US $	US $	US $
	Unaudited	Audited	Unaudited
Cash Flows From Operating Activities:
Loss from operations	(4,225,719)	(973,152)	(176,348)
Depreciation and amortisation of non-current assets	2,265	-	-
Net foreign exchange gain	6,635	-	-
Increase in debtors	(619,845)	-	-
(Decrease) / increase in trade and other payables	(829,508)	973,152	176,348
Net cash used in operating activities	(5,666,172)	-	-
Cash Flows From Investing Activities:
Purchase of tangible fixed assets	(78,708)	-	-
Purchase of intangible fixed assets	(40,049,013)	-	-
Net cash used in investing activities	(40,127,721)	-	-
Cash Flows From Financing Activities:
Parent company funding	45,830,977	-	-
Net cash provided by financing activities	45,830,977	-	-
Net increase in cash and cash equivalents	37,084	-	-
Cash and cash equivalents at beginning of period	-	-	-
Cash and cash equivalents at end of period	37,084	-	-

SAVANNAH PETROLEUM 1 LIMITED
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTH PERIODS ENDED 31 October 2014
	Share	Retained
	Capital	Deficit	Total
	US $	US $	US $
Balance at 3 July 2013 (Unaudited)	-	-	-
Issue of shares on incorporation	(2)	-	(2)
Total comprehensive loss for the period	-	176,348	176,348
Balance at 31 October 2013 (Unaudited)	(2)	176,348	176,346
Total comprehensive loss for the period	-	796,804	796,804
Balance at 30 April 2014 (Audited)	(2)	973,152	973,150
Cancellation of shares	1	-	1
Total comprehensive loss for the period	-	4,219,084	4,219,084
Balance at 31 October 2014 (Unaudited)	(1)	5,192,236	5,192,235

UNAUDITED NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX MONTH PERIOD ENDED 31 OCTOBER 2014

1.   General information

Savannah Petroleum 1 Limited (the "Company") was incorporated on 3 July 2013 and is the subsidiary company of Savannah Petroleum PLC. The Company operates from offices in London, UK and Niamey, Niger, with its current principal business being the exploration, appraisal and anticipated eventual development and production of conventional oil deposits located in the R1/R2 PSC Area. The R1/R2 PSC Area represents a significant oil and gas exploration license in Niger.

2.   Accounting policies

Basis of Preparation

The condensed consolidated interim financial statements have been prepared for the six month period ended 31 October 2014. This is a requirement under AIM Rule 18 following the disclosure of financial information for Savannah Petroleum 1 Limited in its AIM Admission Document which was published on 1 August 2014.  The publishing of these separate accounts for Savannah Petroleum 1 Limited is a one off requirement under the AIM Rules and will not occur again at the end of future interim or annual periods for the Company. Instead, the accounts of the Company will be consolidated in the financial information of Savannah Petroleum PLC.

The condensed consolidated interim financial statements have been prepared in respect of the Savannah Petroleum 1 Limited and includes the results of its subsidiary entities Savannah Petroleum 2 Limited and Savannah Petroleum Niger R1/R2 S.A. (together the "Group"). The Group is the same group that was included in the Historical Financial Information presented in the AIM Admission Document and does not include its parent entity Savannah Petroleum PLC.

The condensed consolidated interim financial information for the six month period ended 31 October 2014 set out in these interim financial statements does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. No accounts have been filed with respect to the Company. This condensed consolidated interim financial information has not been audited, but was the subject of an independent review carried out by the Company's auditors, Grant Thornton UK LLP.

The condensed consolidated interim financial information has been prepared using the same accounting policies that applied to the Historical Financial Information for the Company for the period 3 July 2013 to 30 April 2014 that was included in the AIM Admission Document unless stated otherwise. The Historical Financial Information for the period 3 July 2013 to 30 April 2014 was prepared in accordance with International Financial Reporting Standards as adopted by the European Union. In the opinion of the directors the condensed consolidated interim financial statements for the six month period to 31 October 2014 present fairly the financial position, and results from operations and cash flows for the period and have been prepared on a consistent basis. The condensed consolidated interim financial statements incorporate comparative unaudited figures for the period 3 July 2013 to 31 October 2013. A comparative Condensed Consolidated Statement of Financial Position has been provided as at 30 April 2014. The provisions of IAS 34 'Interim Financial Reporting' have not been applied in full.

All amounts have been prepared in US dollars, this being the Group's functional currency and its presentational currency.

Going concern

Capital and operational finance is provided by the Company's parent company Savannah Petroleum PLC and will continue to be provided for the foreseeable future. The majority of the Company's liabilities are trade and other payables and to Group undertakings. The Company is expected to generate sufficient future cash flows to meet its obligations in the long-term, but requires its parent company to fund its exploration activities in the short-term. The ultimate parent company has confirmed its willingness to continue to support the Company for the foreseeable future. The directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they adopt the going concern basis in preparing the condensed interim financial statements.

UNAUDITED NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

2.   Accounting policies (continued)

Intangible exploration and evaluation assets

Intangible assets relate to Exploration, evaluation and development expenditure and is accounted for under the 'successful efforts' method of accounting per IFRS 6 'Exploration for an Evaluation of Mineral Resources'. The successful efforts method means that only costs which relate directly to the discovery and development of specific oil and gas reserves are capitalised. Exploration and evaluation costs are valued at costs less accumulated impairment losses and capitalised within intangible assets. Development expenditure on producing assets is accounted for in accordance with IAS 16, 'Property, plant and equipment'. Costs incurred prior to obtaining legal rights to explore are expensed immediately to the income statement.

Segmental analysis

In the opinion of the directors, the Group is primarily organised into a single operating segment. This is consistent with the Group's internal reporting to the chief operating decision maker. Separate segmental disclosures have therefore not been included.

3.   Exploration and evaluation assets

Exploration and Evaluation assets consist of acquisition costs relating to the acquisition of exploration licenses and other costs associated directly with the discovery and development of specific oil and gas reserves in the R1/R2 license area.

Cost		Total
		$
Balance at 30 April 2014 (audited)		-
Additions		40,049,013
Balance at 31 October 2014 (unaudited)		40,049,013

4.   Trade and other payables

	31 October	30 April
	2014	2014
	Unaudited	Audited
	$	$
Non-current
Trade and other payables	45,830,977	-
Current
Trade and other payables	143,644	973,152

Non-current trade and other payables relate to amounts owed to the Company's parent entity Savannah Petroleum PLC.

UNAUDITED NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

5.   Loss per share

Basic loss per share amounts are calculated by dividing the loss for the period attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the period.

Diluted loss per share amounts are calculated by dividing the loss for the periods attributable to ordinary holders 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.

Details of share capital movements are given in note 6.

	31 October	30 April	31 October
	2014	2014	2013
	Unaudited	Audited	Unaudited
	$	$	$
Net loss attributable to equity holders used in basic calculation	(4,219,084)	(973,152)	(176,348)
Net loss attributable to equity holders used in dilutive calculation	(4,219,084)	(973,152)	(176,348)
Basic weighted average number of shares	1,000,000,020	1,000,000,064	1,000,000,020
Dilutive potential ordinary shares
Shares related to warrants	n/a	n/a	n/a
Shares related to options	n/a	n/a	n/a
Diluted weighted average number of shares	1,000,000,020	1,000,000,064	1,000,000,020
Loss Per Share
Basic	$(0.00)	$(0.00)	$(0.00)
Dilutive	$(0.00)	$(0.00)	$(0.00)

6.   Share capital

	31 October	30 April
	2014	2014
	Unaudited	Audited
	$	$
Authorised
1,000,000,000 of $0.000000001 each	1	1
64 deferred shares of $0.01 each	-	1
20 B ordinary shares of $0.00000001 each	-	-
	1	2

On 3 July 2013, 1 ordinary share of £1 was issued.

On 13 January 2014, the ordinary share of £1 was redenominated to $1.64, and subdivided to 1,000,000,000 B ordinary shares of $0.000000001 and 64 deferred shares of $0.01.

On 21 July 2014, 64 deferred shares of $0.01 were cancelled.

On21 July 2014, 20 B ordinary shares of $0.000000001 were issued.

UNAUDITED NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

7.   Capital commitments

As at 31 October 2014, the minimum work commitments for the R1/R2 license involved the construction of exploration wells and a minimum level of further survey work.

The license contract for the R1/R2 block also includes the following annual expenditure commitments for the next 4 years:

-     Legal and financial costs of EUR 500,000;

-     Local training costs of EUR 300,000;

-     Corporate Social Responsibility costs of $60,000; and

-     Land royalties of $26,460.

8.   Related parties

The related party transactions for the interim period are as follows:

Details of amounts owed to the Company's parent entity Savannah Petroleum PLC are given in note 4.

During the six month period to 31 October 2014 key management compensation amounted to $392,639 (period from 3 July 2013 to 30 April 2014: $Nil, period from 3 July 2013 to 31 October 2013: $Nil).

Lothian Oil & Gas Partners LLP ("LOGP") credited the Company $100,000 in the 6 month period to 31 October 2014 in relation to management fees (period from 3 July 2013 to 30 April 2014: $600,000 charge, period from 3 July 2013 to 31 October 2013: $Nil). Andrew Knott is a founding member of LOGP, a director of the Company, and Chief Executive Officer of Savannah Petroleum PLC.

On 4 July 2014, convertible loan notes were issued for $19.93 million. On 12 June 2014, convertible loan notes were issued for $1.1 million. Total convertible loan notes $21.03 million were transferred to the Company's parent Savannah Petroleum PLC.

9.   Subsequent events

On 28 November 2014 the Company issued 15,737,894 A1 ordinary shares of nominal value $0.000000001 each and 2 A2 ordinary shares of nominal value $0.000000001 each. Also on 28 November 2014 the Company's parent Savannah Petroleum PLC established a management long-term equity incentive plan.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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