While the company made an operating profit of R2.2bn, this was against the R3.4bn impairment charge against PetroSA’s onshore and offshore assets, spokesman Thabo Mabaso said in a statement.
“This is the result of a volatile economic environment, creep in project costs and delays in the feedstock drilling programme (Project Ikhwezi).”
Impairment is the reduction in a company’s stated capital.
Nosizwe Nokwe-Macamo, PetroSA group CEO, said the company 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,” she said.
Despite a challenging operating environment, and tough macro-economic conditions, PetroSA managed to book a 12 percent increase in revenue to R21.2bn.
The R2.2bn operating profit was also the highest the company had achieved in three years.
Mabaso said the better-than-expected revenues were due to increased local trading of finished products, subsidiary PetroSA Ghana’s good performance, and the rand’s 15 percent weakening against the US dollar and other major currencies.
“PetroSA Ghana contributed R328 million towards net profit,” Mabaso said.
“PetroSA’s financial position also continues to remain strong. In the year under review the company had total assets valued at R34bn, with a cash balance of R5.5bn.”
Owing to diminishing gas feedstock, PetroSA had seen significant challenges at the Mossel Bay-based gas-to-liquids (GTL) refinery.
In the 2013/14 financial year the GTL refinery produced 5.8m barrels, 14 percent below target.
CFO Lindiwe Mthimunye-Bakoro said the company had experienced a challenging financial year, with lower than expected landed gas, production volumes as well as sales volumes not meeting expectations.
“The board believes that the group is a going concern and has adequate financial resources to continue operations into the foreseeable future,” she said.
In an effort to deal with the feedstock challenge, PetroSA embarked on various initiatives aimed at sustaining the GTL refinery and viability of the company.
These included the Project Ikhwezi five-well drilling programme, the asset development plan, an initiative to look at alternatives to sustain the GTL refinery, and a project to import locally liquefied natural gas.
The company also began a “rigorous cost optimisation initiative” to save R1bn in costs a year over the next few financial years.
During the 2013/14 period, PetroSA also reduced fruitless and wasteful expenditure, from R31m in the 2012/13 financial year to R6m.
Payments to suppliers of goods and services totalled R24.19bn.
Total procurement expenditure for broad-based black economic empowerment-compliant companies — as per the codes; level 1-8 — equated to R13.93bn.