Home \ Investor Centre \ Company Announcements \ Operational update – Afric Oil

Operational update – Afric Oil


(Formerly SacOil Holdings Limited)

(Incorporated in the Republic of South Africa)

(Registration number 1993/000460/06)

Share Code: EEL

ISIN: ZAE000248258

(“Efora” or “the Company”)


Efora, the South African based independent oil and gas company, is pleased to provide the following update on Afric Oil, the wholesale fuel distribution business in which it holds 71% interest.


  • Significant improvements in working capital management, including recovery of R14m debt from customer
  • Considerable progress in implementation of cost saving initiatives
  • Appointment of a new Interim CEO
  • Restructuring of Zimbabwe business delivering volume growth
  • Agreement with new tier-one supplier and advanced discussions with a second

As announced in the Company’s interim results issued on 30 November 2017, the focus of Efora since completing the acquisition of Afric Oil on 31 May 2017 has been on seeking to implement cost savings and operating efficiencies to ensure the business is positioned to effectively compete in the competitive wholesale market, and is on a stable footing to deliver long-term, sustainable growth for Efora.

To that end, the core areas identified for review have been as follows: supplier agreements, volume and margin improvement, restructuring of the Zimbabwe business, logistics optimisation, working capital management, and cost reductions. Efora is pleased to note that Afric Oil has made progress in all of these areas throughout H2’17 and continues to identify and implement actions to continue the process of optimisation to underpin organic growth.

As part of the changes at Afric Oil, a new CEO has been appointed to oversee the business. Khumbu Luthuli has become CEO of Afric Oil as of 1st January 2018, on an interim basis for a one year period. Mr Luthuli has significant experience in the oil and gas space, including 10 years with BP in a senior role as General Manager for the International Major’s Distribution activities in South Africa, accountable for delivery of logistical efficiencies and marketing. After leaving BP in 2005, Mr Luthuli joined Masana, a BEE entity in the capacity as Sales and Operations Director. Since 2010, Mr Luthuli has been operating as a strategic consultant for a number of leading companies including Puma Energy and PetroSa, where he was responsible for developing the downstream commercial strategy for South Africa’s National Oil Company.

Following an ongoing period of restructuring of the business in Zimbabwe, sales volumes have increased markedly. The Zimbabwean operating environment continues to be challenging and the management team continues to implement efficiency initiatives in order to improve margins and grow volumes.

In terms of marketing, Afric Oil secured an agreement with a new, tier-one supplier, helping to diversify its supply and improve gross margins by leveraging the localised network and product pricing of this new supplier. Afric Oil also reports that it is in advanced discussions with another highly reputable tier-one supplier and expects to conclude an agreement in H1’18. By increasing the number of suppliers, Afric Oil is expanding its optionality on pricing in its diverse product markets across Southern Africa, all of which will contribute to improvements in the gross margin.

Afric Oil has made considerable progress in improving its working capital management during the period. The company is in advanced discussions to secure working capital facilities for the business, with an agreement for R40m due to be secured imminently and a further R100m expected in the coming months. This working capital facility will enable improved access to Basic Fuels Price (BFP) pricing which will improve Afric Oil’s competitive position.

Furthermore, following the implementation of a rigorous debt recovery strategy and effective controls, the Company has delivered significant improvements in debt recovery for the period. Pleasingly, Afric Oil has recovered a sum of R14m from one customer, the amount of which had previously been provided against.

Corporate and operational initiatives to achieve cost reductions have focussed on restructuring the workforce, where required, to ensure it is sufficiently streamlined in its local markets, rollout of new Enterprise Resource Planning (ERP) systems and training of the sales team and operational staff to ensure delivery of Operational Excellence for the customer base. The Company expects to reduce operating costs by R10m in 2018 (10% of overall costs) and has set a longer-term target of reducing overall operating costs by 20% in the next 2 years.

Commenting on the update, Efora CEO Dr Thabo Kgogo said: “Following a six-month period of stabilisation since completing the acquisition of our interest in Afric Oil, Efora has worked closely with the company to identify the areas to improve the performance and long-term growth potential of the business. This is a large task and the implementation of these initiatives identified will be ongoing, however we are pleased with the progress to date. We knew at the time of the acquisition that we were entering a highly competitive and challenging market, and therefore it is imperative to ensure Afric Oil is underpinned by sound business fundamentals in order to remain competitive and deliver long-term growth. We are confident that the corporate and operational initiatives implemented to date have set Afric Oil on a path to steadily grow volumes, improve margins and ultimately profitability.”


PSG Capital Proprietary Limited

17 January 2018

For further information please contact:

Efora Energy Limited

Damain Matroos

+27 (0)10 591 2260

Buchanan (Financial PR adviser)

Ben Romney / Chris Judd

+44 (0)20 7466 5000

About Efora

Efora Energy Limited is a South African based independent African oil and gas company, listed on the JSE. The Company has a diverse portfolio of assets spanning production in Egypt; exploration and appraisal in the Democratic Republic of Congo; midstream project relating to crude trading in Nigeria and material downstream distribution operations throughout Southern Africa. Our focus as a Group is on delivering energy for the African continent by using Africa’s own resources to meet the significant growth in demand expected over the next decade.


for news updates



If you are in any doubt as to what action you should take, consult your CSDP, Broker, Banker, Legal Adviser, Accountant or other professional advisers immediately.

Or visit our Shareholder Information page for more information regarding your shareholding and share certificate.