2013 overview

29 January 2014

2013 was a historic year for the Addax and Oryx Group as we repositioned from a group of energy companies to a diversified investment group; with a new name: AOG.

This important change reflects our evolution from what we began in 1987, providing a clear expression of who we are today, our values and what we do, all symbolised by a distinctive new visual identity that communicates that combination. From the positive feedback that we have received, we have succeeded in clearly projecting the modern, diversified, entrepreneurial, professional and principled organisation that we are. Clients, employees, journalists, and even competitors, have been extremely positive. The rebranding of our assets and applications is now almost complete, from offices and local points of sales to websites and presentation contents.

Oryx Energies – a new dynamic

2013 was a major year for Oryx Energies. Following the decision in 2012 to merge our trading and downstream operations into an integrated platform under the Oryx Energies brand, we started the year with the roll-out of the new strategy across more than 20 affiliates from East to West Africa. The launch took place with a commitment to invest strongly in the company’s expansion and build its position as the preferred energy brand across sub-Saharan Africa.

We strengthened our trading strategy and expertise with the appointment of Philippe Evrard in March, as co-Managing Director of Oryx Energies SA with Thierry Genthialon, and focused, more than ever, on our speciality products, particularly LPG and lubricants.

We confirmed our commitment to the region with the acquisition of BP’s LPG business in South Africa in August, and the launch of our operations in Guinea Conakry in September. We were also set to build our position in Uganda with the completion of the rebranding of the Engen service stations we bought in late 2012.

Meanwhile, construction work on our strategic Las Palmas terminal advanced well and was set to be commissioned in April 2014. We also moved forward with various new LPG storage and filling plants, as well as an innovative product distribution concept across Benin. In October, a concession agreement was signed with the Sierra Leone Government to build a new jetty at the Kissy Oil Terminal that will provide a key import and export facility for the country, and a modern export base for Addax Bioenergy’s ethanol.

In parallel, we have invested strongly in HSSE (Health, Safety, Security and the Environment), as an essential component of any seriously sustainable business. We have a resolute commitment to placing health, safety, security and environmental behaviours at the heart of Oryx Energies’ success. As part of this move, we began preparations for ISO 9001, 14001 and 18001 certifications, as a means to embed the right attitudes and behaviours across the organisation, at all times.

So, a busy, dynamic and successful year for Oryx Energies as it sets out on an exciting journey to become the preferred energy brand in sub-Saharan Africa.

Addax Bioenergy: a new CEO and first international certifications

In mid-January, we welcomed Simon Cleasby as the new CEO of Addax Bioenergy, our pioneering bioethanol project in Sierra Leone. Then, in February, Addax Bioenergy’s sugarcane estate received the first biofuels certification in Africa from the Roundtable for Sustainable Biomaterials (RSB). The stringent and globally recognised certification encompasses environmental, social and economic criteria. This was Addax Bioenergy’s first international certification and an important step on the road to sustainable biofuels production.

During the year, the planting of sugarcane and the construction of the ethanol distillery and electricity power plant (from sugarcane biomass) continued. Similarly, preparations started for the necessary transport, storage and sale of the ethanol, in close collaboration with sister company Oryx Energies (transport, storage and off-take agreements).

In October, the project became the first in the country to be registered as a Clean Development Mechanism (CDM) project of the United Nations Framework Convention on Climate Change (UNFCCC). In effect, our project in Sierra Leone will reduce greenhouse gas emissions by 56,000 tCO2 per year through the replacement of fossil fuel-intensive electricity production, thanks to the production of green electricity from for the sugarcane biomass for Sierra Leone’s national grid. We are particularly proud that this project contributes not only to local development and food security, but also to global efforts to reduce CO2 emissions and climate change.

Although the project had its share of challenges, our teams worked hard at resolving them. We are well positioned to launch production in Q1 2014, moving from a project phase to a commercial enterprise.

Oryx Petroleum: IPO

There were big changes for our upstream exploration company, Oryx Petroleum, in 2013. In May, we completed the company’s CAD$250 million IPO on the Toronto stock exchange. As planned, this enabled us to secure the additional capital necessary to pursue the company’s ambitious exploration plans. AOG invested over $700 million between 2010 and 2013, which enabled the company to build a sizeable and diversified portfolio of license areas and commence its exploration activities. AOG remains the majority shareholder with approximately 75% of the outstanding share capital.

We are happy to say that in 2013 Oryx Petroleum made one discovery in Congo (Brazzaville) and three discoveries in the Kurdistan Region of Iraq. The initial discovery at Demir Dagh is expected to start production in 2014.

AOG Real Estate: major redevelopment projects completed

AOG Real Estate had an important year, completing its first major redevelopment projects since AOG diversified into European and North American prime-location commercial real estate in 2010.

In July, we completed and sold our first, and emblematic, redevelopment project in Paris. Bought in August 2011, the former Panhard buildings represented 21,700 m2 of office space. This was redeveloped, rented and then sold for €164 million to a French real estate investment company. The project was conducted in collaboration with our Parisian real estate partner, Emerige.

This was followed in October by the completion of our second redevelopment in Hanover Street, in the exclusive Mayfair district of London. The development took place between August 2011 and September 2013 and involved the demolition of existing buildings and the construction of a high quality mixed-use property. The project was carried out in collaboration with our London real estate partner, Morgan Capital Partner.

The development includes 25,000 sq ft of Grade A offices on eight floors and a 1,600 sq ft ground-floor retail space that is now let to one of the city’s contemporary art galleries. This property forms part of AOG Real Estate’s core portfolio, which aims to ensure a low-risk, stable income for the long term. The scheme also comprised six luxury apartments, including a 1,500 sq ft penthouse, all of which were sold prior to completion.

During the year, we received planning consent for a new 21,000 sq ft development at Maillol in Paris, which is expected to be completed by end 2015, and a new 90,000 sq ft office and retail development in London’s Cannon Street, which should be completed in Q1 2016.

In North America our investments in Brookfield funds fared well during the year. One of our key indirect investments generated an Internal Rate of Return (IRR) of over 30%, more than doubling in three years.

In 2013, AOG Real Estate confirmed its position as a trusted and responsive real estate partner, capable of completing sizeable up-market redevelopments in major capitals.

2014 – an eventful year to come

Although we do not have a crystal ball, 2014 will undoubtedly be another eventful year for AOG, in particular for its energy companies:

• Oryx Energies will pursue its expansion. The new terminal in Las Palmas is due to be commissioned in April 2014, and we aim to continue to grow our current businesses and make more acquisitions.
• Addax Bioenergy is set to begin production of sugarcane bioethanol and renewable electricity, from Q1 2014.
• Oryx Petroleum is expected to begin commercial oil production in Kurdistan Region of Iraq, four years after its creation. Exploration efforts and licence acquisitions are also set to continue.
• AOG Real Estate’s operations will continue in cooperation with our key partners and will keep contributing to AOG’s bottom line.

At AOG, we thrive on the twists and turns of the unexpected, which plays to our instinctive ability to recognise opportunities and to take bold, but carefully calculated risks, without compromising our principles.

I extend my thanks to all our employees, and to our partners and service providers, who are so essential to our success, and I look forward to our new endeavours in 2014.

Jean Claude Gandur

Chairman of the Board, AOG