Wrap Text
ASX Appendix 4E – Preliminary Final Report
RENERGEN LIMITED
Incorporated in the Republic of South Africa
(Registration number: 2014/195093/06)
JSE Share code: REN
A2X Share code: REN
ISIN: ZAE000202610
Australian Business Number (ABN): 93 998 352 675
ASX Share code: RLT
(“Renergen” or “the Company”)
AUSTRALIAN STOCK EXCHANGE APPENDIX 4E – PRELIMINARY FINAL REPORT
The following information must be given to ASX under listing rule 4.3A.
1. Details of the reporting period and the previous corresponding period.
Entity Name: Renergen Limited
South African Company Registration number: 2014/195093/06
Johannesburg Stock Exchange share code: REN
ISIN: ZAE000202610
Australian Stock Exchange share code: RLT
ABN: 93998352675
Reporting Period: For the year ended 29 February 2020
Previous period: For the year ended 28 February 2019
2. Key information in relation to the following. This information must be identified as “Results for
announcement to the market”.
2.1 The amount and percentage change up or down from the previous corresponding period
of revenue from ordinary activities.
Group revenue decreased by 13% to R2.6 million (February 2019: R3.0 million)
2.2 The amount and percentage change up or down from the previous corresponding period
of profit (loss) from ordinary activities after tax attributable to members.
Net losses after tax attributable to ordinary shareholders increased by 17% to R52.6
million (February 2019: R45.0 million)
2.3 The amount and percentage change up or down from the previous corresponding period
of net profit (loss) for the period attributable to members.
Net losses after tax attributable to ordinary shareholders increased by 17% to R52.6
million (February 2019: R45.0 million)
2.4 The amount per security and franked amount per security of final and interim dividends or
a statement that it is not proposed to pay dividends.
No dividends were declared during the current period.
2.5 The record date for determining entitlements to the dividends (if any).
No dividends were declared during the current period.
2.6 A brief explanation of any of the figures in 2.1 to 2.4 necessary to enable the figures to be
understood.
- Group revenue decreased by 13% to R2.6 million (February 2019: R3.0 million) as a result
of the 5-month long Association of Mine Workers and Construction Union (AMCU) strike in
Virginia which saw a decrease in the Compressed Natural Gas (CNG) sales volumes in the
first quarter of the financial year.
- Operating losses from ordinary activities attributable to ordinary shareholders increased
by 46% to R67.3 million (February 2019: R46.0 million) due to once-off costs incurred in
completing the IPO on the ASX and conclusion of the US$40 million loan agreement with
the DFC during the year.
- Net losses after tax attributable to ordinary shareholders increased by 17% to R52.6 million
(February 2019: R45.0 million) Increased tax deductions in the current period as the Group
continues to invest in Phase 1 of the Virginia Plant.
- Total comprehensive loss for the year attributable to ordinary shareholders increased by
16% to R52.0 million (February 2019: R45.0 million)
3. A statement of comprehensive income together with notes to the statement, prepared in
compliance with AASB 101 Presentation of Financial Statements or the equivalent foreign
accounting standard.
Refer to consolidated financial report in page 4
4. A statement of financial position together with notes to the statement. The statement of financial
position may be condensed but must report as line items each significant class of asset, liability,
and equity element with appropriate sub-totals.
Refer to consolidated financial report in page 4
5. A statement of cash flows together with notes to the statement. The statement of cash flows may
be condensed but must report as line items each significant form of cash flow and comply with
the disclosure requirements of AASB 107 Statement of Cash Flows, or for foreign entities, the
equivalent foreign accounting standard.
Refer to consolidated financial report in page 4
6. A statement of retained earnings, or a statement of changes in equity, showing movements.
Refer to consolidated financial report in page 4
7. Details of individual and total dividends or distributions and dividend or distribution payments.
The details must include the date on which each dividend or distribution is payable and (if known)
the amount per security of foreign sourced dividend or distribution.
No dividends have been declared in the current year
8. Details of any dividend or distribution reinvestment plans in operation and the last date for the
receipt of an election notice for participation in any dividend or distribution reinvestment plan.
No dividends have been declared in the current year
9. Net tangible assets per security with the comparative figure for the previous corresponding
period.
Net tangible assets per share increased to 134.55 cents (February 2019: 93.61 cents)
10. Details of entities over which control has been gained or lost during the period, including the
following.
Not applicable, no control was been gained or lost over any investment during the year. Renergen
acquired the remaining 10% of its 90% held subsidiary, Tetra4, in December 2019, resulting in
Tetra4 being a 100% controlled subsidiary of Renergen.
11. Details of associates and joint venture entities including the following.
Not applicable
12. Any other significant information needed by an investor to make an informed assessment of the
entity’s financial performance and financial position.
Refer to consolidated financial report in page 4
13. For foreign entities, which set of accounting standards is used in compiling the report (e.g.
International Financial Reporting Standards).
International Financial Reporting Standards were used to prepare the final report.
14. A commentary on the results for the period. The commentary must be sufficient for the user to
be able to compare the information presented with equivalent information for previous periods.
The commentary must include any significant information needed by an investor to make an
informed assessment of the entity’s activities and results, which would include but not be limited
to discussion of the following.
Refer to consolidated financial report in page 4
15. A statement as to whether the report is based on +accounts which have been audited or subject
to review, are in the process of being audited or reviewed, or have not yet been audited or
reviewed
The financial statements are in the process of being audited.
Consolidated Financial Report
Commentary and Review of Operations
The 2019-20 reporting period has been our busiest and arguably our most successful to date. The major
milestones include:
1. Successfully completed an Initial Public Offering on the Australian Securities Exchange raising A$
10 million
2. Conclusion and first draw of the Overseas Private Investment Corporation (now known as the U.S
International Development Finance Corporation or DFC) loan for US$ 40 million to build Phase 1
3. Appointing EPCM Bonisana as the construction firm to build the gas gathering system
4. Appointing Western Shell Cryogenic Equipment Co. Ltd (WSCE) as the technology supplier for the
LNG (Liquified Natural Gas)/LHe (Liquid Helium) plant
5. Commissioning our second CNG (Compressed Natural Gas) station to service the Black Knight
contract in Johannesburg
6. Redemption of convertible notes with a face value of AUD$ 500 000
7. Achieving all the milestones on time as set in the project schedule up to the time of issuing this report
8. Purchase of the remaining 10% stake in Tetra4 previously held by our BEE partner for an amount of
R28.5 Million
9. Appointing Bohrmeister Technik to drill the horizontal well in the sandstone deposit within the
production right
10. A successful gas strike in the horizontal well recording Helium concentrations of 12%, and
11. A contract for 200 GJ per day of LNG executed by our sales department with Bulk Haulers Transport
International (BHIT)
The progress illustrated above demonstrates that the company is on track with program to execute the
Virginia Gas Project and continues to make great strides.
The global macro-economic picture is changing and has seen helium market remain in tight supply, with a
pro-longed depressed oil price further exacerbating this position as it will most likely have an impact on
future large scale LNG and Helium projects from a financing perspective by delaying the much needed
critical investment decisions. We believe this, together with decreasing supply from the US with Hugoton’s
production diminishing and the Bureau of Land Management (BLM) announcing its shutdown. This will put
significant pressure on the supply dynamics of Helium for the foreseeable future. Demand at this stage is
not expected to fall in line with the reduced supply shortages. In the medium term we believe many nations
will respond to the current pandemic by increasing preparedness against future pandemics with additional
medical facilities. It stands to reason that this could result in increased oncology wards and more MRIs,
which would place further demand on the Helium.
The full impact of COVID-19 has yet to be determined in the context of the South African economy, and
what this in turn means for the pricing structure for LNG domestically moving forward. Given however, that
South Africa is a net importer of crude oil and liquid fuels, the impact from lower oil prices have been offset
by a weakening currency. Supply chains will most likely be impacted and the extent of the problem could
worsen should countries and organizations not plan effectively to deal with this unprecedented crisis. The
Group has opted from the 18th of March to implement drastic measures:
• to self-isolate where possible and work remotely
• non-essential staff have been placed on special leave
• operations reduced to critical team members only
• all meetings with external parties are via digital platforms to ensure we limit and reduce contact
where possible
• Significant emphasis on personal hygiene with no physical contact allowed where practical
At present, the impact of COVID-19 has resulted in a temporary deceleration in progress of the liquefaction
equipment, gas gathering pipeline and balance of plant contracts. The construction of the pipeline has
been halted due to the lockdown imposed by the South African Government, however it was due to be
completed six month ahead of the liquefiers scheduled commissioning date and therefore does not pose
an immediate risk to the overall Virginia Gas Project’s timeline. We anticipate that pro-longed shutdowns
globally may impact the global supply chain, thus we will continue to monitor the situation and update
investors should circumstances change.
From a local economic perspective, the energy landscape is still constrained and front of mind for many
companies in South Africa, the government announced a carbon tax which came into effect earlier in this
financial year, resulting in many companies seeking cleaner alternatives to petrol and diesel to save on
this new tax. The new Integrated Resource Plan (IRP 2019) has demonstrated the Government is looking
to shift its reliance over the longer term towards cleaner forms of energy and natural gas play a prominent
role in the IRP 2019. This positions the company front and center of an enormous opportunity and will play
an important role in how we develop phase 2.
Virginia
The Megabus project continues to operate on a stable basis supply gas to the 10 buses. The buses have
now travelled in excess of 2 million kilometers combined and have saved a total of 3 million kilograms of
Co2. We have scaled up the operation to include two shifts in preparation to service the Black Knight CNG
contract. The CNG dispenser and additional CNG trailer were commissioned and the operation is to
commence shortly as our customer finalises its last remaining processes. The lockdown imposed by the
South African Government has seen the operation closed from the 27th March. Operations will resume on
the 1st of May 2020 as our customers will be in a position to resume with their respective operating
activities.
Evander
We continue to enjoy good prospects on this field and are proceeding with the necessary steps to bring
this field into production.
Overall the company continues to be an attractive investment to our shareholders as it participates in two
important commodities that are in short supply locally in the form of natural gas and globally strategic in
the form of helium.
Email investor queries to investorrelations@renergen.co.za.
Financial Review
1. The Group has a cash balance of R141 million at year end (February 2019: R98 million)
2. Renergen has not declared or paid dividends in the current year and prior years.
3. The Group property plant and equipment increased by more than 9 180%% to R350.8 million
(February 2019: R37.8 million) as a result of commencing construction of the New Liquified Natural Gas
(LNG) and Liquified Helium(LHe) Plant in September 2019 and acquisition of the farm on which the
plant operates. Phase 1 plant will also be constructed on the same farm. The land was revalued at year
end, resulting in revaluation reserves being recognised in the financial statements.
4. Tetra4’s drilling campaign commenced in September 2019 increasing the Intangible assets by 27%
to R89.2 million (February 2019: R70.5 million)
5. Tetra4 concluded a US$40 million finance agreement with Overseas Public Investment Corporation
(OPIC), now known as U.S International Development Finance Corporation (DFC), on 20 August 2019
to spend towards LNG and LHe plant. US$20 million of this facility was drawn in September 2019
increasing in the Group’s financial liabilities by more than 786%% R351.2 million (February 2019:
R39.6). The loan has a three-year capital repayment grace period, with the first capital repayment in
August 2022.
6. Renergen listed on the ASX in June 2019, raising AUD$10 million (R103.1 million) raised at the
initial public offering (IPO) and raising a further AUD$5.7 million (R56.8 million) in January 2020. The
Group’s Stated capital increase by 50% to R452.3 million (February 2019: R301.3 million).
7. On listing on ASX in June 2019, Renergen granted options with a fair value of R6.3 million to the
ASX listing transaction advisors, the options can only be exercised four years from grant date. This
has been accounted for in the share-based payment reserves, increasing reserves by 1 580%.
8. The eighteen-month term 500 convertible notes issued at AUD$1000 per note in prior year was settled
in cash during the current financial year.
9. Net tangible assets per share increased to 134.55 cents (February 2019: 93.61 cents)
Consolidated Statement of financial position
The statement of financial position of the Group as at 29 February 2020 are set out below:
Audited
Figures in R'000 Notes 29 February 2020 28 February 2019
Assets
Non-Current Assets
Property, plant and equipment 2 350 824 37 757
Intangible assets 3 89 223 70 494
Deferred tax 8 33 029 12 243
Restricted cash 2 729 2 178
475 805 122 672
Current Assets
Trade and other receivables 5 533 4 482
Financial assets 246 -
Restricted cash 10 161 -
Cash and cash equivalents 140 972 97 956
156 912 102 438
Total Assets 632 717 225 110
Equity and Liabilities
Equity
Stated capital 6 452 254 301 277
Share-based payment reserve 7 526 448
Revaluation reserve 598 -
Accumulated loss 10 (213 156) (121 091)
Equity Attributable to Parent 247 222 180 634
Non-controlling interest - (16 401)
247 222 164 233
Liabilities
Non-Current Liabilities
Financial liabilities 7 351 182 39 647
Deferred tax 8 6 233 -
Lease liability 4 382 208
Provisions 4 000 9 829
365 797 49 684
Current Liabilities
Trade and other payables 16 389 10 855
Lease liability 1 129 338
Provision 2 180 -
19 698 11 193
Total Liabilities 385 495 60 877
Total Equity and Liabilities 632 717 225 110
Consolidated Statement of profit or loss and other comprehensive income
The statement of profit or loss and other comprehensive income of the Group for the 12-month period 29
February 2020 are set out below:
Audited
Figures in R'000 Notes 29 February 2020 28 February 2019
Revenue 2 635 2 987
Cost of sales (3 302) (3 197)
Gross loss (667) (210)
Other income 1 413 851
Share - based payments (7 078) (334)
Impairment (938) (1 295)
Operating expenses 4 (60 035) (45 026)
Operating loss (67 305) (46 014)
Interest Income 5 352 1 604
Interest expense (5 325) (4 138)
Total loss before tax (67 278) (48 548)
Taxation 14 651 3 572
Total loss after tax (52 627) (44 976)
Other comprehensive income (loss):
Revaluation Reserve 598 -
Other comprehensive income for the year
net of taxation 598 -
Total Comprehensive loss for the year (52 029) (44 976)
Total loss attributable to:
Owners of the parent (52 627) (40 860)
Non-controlling interest - (4 116)
(52 627) (44 976)
Total comprehensive loss attributable to:
Owners of the parent (52 029) (40 860)
Non- controlling interest - (4 116)
(52 029) (44 976)
Loss per share
Basic loss per share (cents) (47,93) (47.03)
Diluted loss per ordinary share (cents) (47,93) (47.03)
Weighted average number of shares (‘000) 109 799 86 889
Number of shares in issue (‘000) 117 427 100 135
Consolidated Statement of Changes in Equity
The statement of changes in equity of the Group for the 12- month period ended 29 February 2020 are
set out below:
Figures in R'000 Share Share Revaluation Accumulated Total Non- Total
Capital based reserve loss attributable controlling equity
payment to the parent interest
reserve
GROUP
Balance at 01 161 065 114 - (80 231) 80 948 (12 285) 68 663
March 2018
Loss after tax - - - (40 860) (40 860) (4116) (44 976)
Issue of shares 146 760 - - - 146 760 - 146 760
Share issue (6 548) - - - (6 548) - (6 548)
costs
Share-based - 334 - - 334 - 334
payment
Balance at 01 301 277 448 - (121 091) 180 634 (16 401) 164 233
March 2019
*Adjustment on - - - (37) (37) - (37)
initial application
of
IFRS 16
Adjusted 301 277 448 - (121 128) 180 597 (16 401) 164 196
balance as at 01
March
2019
Total - - 598 (52 627) (52 029) - (52 029)
comprehensive
loss after tax
Issue of shares 159 746 - - - 159 746 159 746
Share issue cost (8 769) - - - (8 769) (8 769)
Changes in - - - (39 401) (39 401) 16 401 (23 000)
ownership
Share-based - 7 078 - - 7 078 - 7 078
payment
Balance at 29 452 254 7 526 598 (213 156) 247 222 - 247 222
February 2020
* IFRS 16 adjustment to retained earnings due to the adoption of IFRS 16. Using the modified
retrospective approach, the prior year IAS17 straight lining balance is adjusted to retained earnings.
Consolidated Statement of Cash Flows
The statement of cash flow of the Group for the 12- month period ended 29 February 2020 are set out
below:
Audited
Figures in R'000 Notes 29 February 2020 28 February 2019
Cash flows from operating activities
Cash used in operations 5 (42 636) (38 287)
Interest income 5 352 1 604
Interest expense (187) (185)
Net cash from operating activities (37 471) (36 868)
Cash flows from investing activities
Purchase of property, plant and equipment (298 347) (9 587)
Purchase of intangible assets (18 728) (3 756)
Purchase of options (8 256) -
Proceeds on exercise of options 9 518 -
Net cash from investing activities (315 814) (13 343)
Cash flows from financing activities
Proceeds on share issue 6 159 746 146 760
Share issue cost 6 (8 769) (6 548)
Increase in borrowings 7 295 976 5 149
Loan facility fee paid 7 (4 814) -
Settlement of Convertible note 7 (5 542) -
Right of use – lease payments (2 338) (231)
Non-controlling interest buy-out (23 000) -
Net cash from financing activities 411 349 145 130
Total cash movement for the year 58 064 94 919
Cash at the beginning of the year 97 956 3 037
Effects of exchange rate changes on cash and cash (15 048) -
equivalents
Total cash at end of the year 140 972 97 956
NOTES TO THE FINANCIAL STATEMENTS
The notes to the financial information as at 29 February 2020 are set out below:
1. Basis of preparation
The consolidated financial statements for the year ended 29 February 2020 have been prepared and
presented in accordance with the requirements of the requirements of the South African Companies Act 71
of 2008, as amended and the Financial Reporting Standards (“IFRS”) and Financial Reporting
Pronouncements issued by Financial Reporting Standards Council and to also, as a minimum, contain the
information required by IAS 34 Interim Financial Reporting.
JSE shareholders should note that this form does not meet the JSE reporting requirements as this
information is not reviewed or audited.
2. Property, plant and equipment
Accumulated
Figures in R’000 Cost depreciation Carrying Value
29 February 2020
Assets under construction 325 877 - 325 877
Right of use asset – Head 4 129 (1 376) 2 753
Office building
Land 3 473 - 3 473
Plant and machinery 20 333 (7 766) 12 566
Furniture and fixtures 1 145 (463) 682
Motor vehicles 2 050 (1 760) 290
Office equipment 598 (104) 494
IT equipment 541 (364) 177
Right of use - motor vehicle 2 184 (305) 1 879
Office building 2 065 (63) 2 002
Lease hold improvements:
- Office equipment 152 (84) 68
- Furniture and fixtures 888 (325) 563
Total 363 435 (12 611) 350 824
Comparatives
Accumulated
Figures in R’000 Cost depreciation Carrying Value
28 February 2019
Assets under construction 19 491 - 19 491
Land - - -
Plant and machinery 20 335 (5 610) 14 725
Furniture and fixtures 783 (322) 461
Motor vehicles 2 086 (1 425) 661
Office equipment 144 (80) 64
IT equipment 366 (219) 147
Computer Software* 1 434 (319) 1 115
Right of use - motor vehicle 857 (252) 605
Office building
Lease hold improvements:
- Office equipment 152 (59) 93
- Furniture and fixtures 567 (172) 395
Total 46 215 (8 458) 37 757
*Classification of Computer Software
In the prior year computer software was classified as property, plant and equipment, in the current year it
has been reclassified to intangible assets as it is a separable component from the computer.
3. Intangible assets
Accumulated Disposal Carrying
Figures in R’000 Cost Amortisation Value
29 February 2020
Exploration and 87 511 (32) - 87 479
development costs*
Computer software** 3 115 (474) (938) 1 703
Domain 41 - - 41
Total 90 667 (506) (938) 89 223
Comparatives
Accumulated Carrying
Figures in R’000 Cost Amortisation Impairment Value
28 February 2019
Exploration and 13 006 (32) - 12 974
development costs
Molopo project rights 57 479 57 479
Domain 41 - - 41
Total 70 526 (32) - 70 494
*Exploration and Development costs and Mopolo Project Mineral Rights
consolidation
In the prior year Exploration and development costs and Molopo project rights balances were shown
separately. In the current year they have been consolidated as they both relate to costs incurred by
Tetra4 in the exploration of natural gas.
**Classification of Computer Software
In the prior year computer software was classified as property, plant and equipment, in the current year it
has been reclassified to intangible assets as it is a separable component from the computer.
4. Operating expenses
Figures in R’000 29 February 2020 Audited 28 February 2019
Consulting and advisory fees 2 342 18 573
Listing fees 6 388 -
Operating lease charge - 983
Depreciation 3 542 1 165
Non-Executive Directors fees 2 581 1 470
Executive Directors annual guaranteed 9 808 8 019
packages
Employee costs 12 970 3 073
Net foreign exchange losses 11 386 -
Other Operating costs 11 018 11 743
60 035 45 026
5. Cash (used in) generated from operating activities
Figures in R’000 29 February 2020 Audit 28 February 2019
Loss before taxation (67 278) (48 548)
Cash adjustments:
Interest received (5 352) (1 604)
Cash interest paid 187 185
Capitalised interest on Convertible 264 -
notes
Allocation of restricted cash (551) (555)
Non-cash adjustments:
Imputed interest 4 442 3 953
Right of use liability – interest expense 430 -
Depreciation 4 760 3 150
Impairment of Computer software 938 1 295
Net fair value gains on Put Option (3 660) -
contracts
Share based payment expense 7 078 334
Expenses written off 144
Loss on disposal of leased vehicle 78 -
-Provision for IDC (reversal)/expense (3 649) 5 829
Effects of exchange rate changes on
cash and cash equivalents:
Net foreign exchange losses 15 047 -
Changes in working capital:
Trade and other receivables (1 049) (2 015)
Trade and other payables 5 535 (312)
(42 636) (38 287)
6. Stated Capital
Figures in R’000 29 February 2020 Audited 28 February 2019
Authorised number of shares
500 000 000 no par value shares 500 000 500 000
Reconciliation of number of shares
issued:
Opening balance 100 135 81 035
Issue of shares – ordinary shares 17 500 19 100
117 635 100 135
Reconciliation of issued stated
capital
Opening balance 301 277 161 065
Issue of shares – ordinary shares 159 746 146 760
issued for cash
Share issue costs (8 769) (6 548)
452 254 301 277
7. Financial Liabilities
Figures in R’000 29 February 2020 Audited 28 February 2019
Held at amortised cost
DFC, U.S International Development 312 242 -
Corporation
Molopo Energy Limited 38 940 34 498
Convertible notes - 5 149
351 182 39 647
DFC loan
Tetra4 (Pty) Ltd entered into a US$40 million finance agreement with DFC (formerly known as OPIC) on
20 August 2019. The first draw down of US$20million took place in September 2019. Tetra4 shall repay
the loan in approximately equal installments on each payment date beginning 1 August 2022 and ending
no later than the thirty-sevenths payment date, 15 August 2031. Loan bears interest at 2.11% per annum.
Molopo Energy Limited
Tetra4 (Pty) Ltd entered into a R50 million loan agreement on 01 May 2013. This loan was part of the
conditions of the sale of shares in Tetra4 (Pty) Ltd from Molopo Energy Limited to Windfall Energy (Pty)
Ltd. The loan agreement is for the period from inception of the loan on 1 May 2013 until 31 December 2022.
During this period, the loan is unsecured and interest free. The loan can only be repaid when Tetra4 (Pty)
Ltd declares a dividend and 36% of distributable profits must be repaid before a dividend is declared. In the
event that by 31 December 2022 the loan is not repaid, the loan shall bear interest at prime overdraft plus
2% and will have no repayment terms. Shareholders loans can only be repaid after the loans from Molopo
Energy Limited have been settled.
The loan is discounted to present value for the period that it is interest free at a discount rate which is equal
to the prime lending rate plus 2% which at 29 February 2020 is 11.75% (prime lending rate of 9.75% plus
2%). The imputed interest expense is included in profit and loss. The fair value of the loan amount
outstanding at 29 February 2020 amounts to R38.9 million.
Convertible note instrument
Renergen issued Convertible notes at face value AUD$ 500 000 (R5 .1 million) in December 2018. The
Notes carried interest at 15% per annum and were convertible into shares at an equivalent of AUD$ 0.74
(R7.84) per share.
The Note holders did not elect to redeem the notes on 20 June 2019, the notes including the capitalised
interest was settled in cash on 17 September 2019 for AUD$ 545 011.72 (R5.5 million).
8. Deferred tax
Figures in R’000 29 February 2020 Audited 28 February 2019
Deferred tax liability
Property Plant and Equipment 4 041 (4 433)
Intangible 2 123 (1 740)
Put Option contacts 69 -
Total deferred tax liability (6 233) (6 173)
Deferred tax asset
Unused tax losses 33 029 18 416
Total deferred tax asset 33 029 18 416
As at 29 February 2020, the Group's estimated tax losses were R425 million (28 February 2019: R217
million), these tax losses do not expire unless the tax entity concerned ceases to operate for a period longer
than a year. These are available to be offset against future taxable profits. A deferred taxation asset of R24
million has been recognized due to the predictability of future profit streams.
Estimated revenue growth rate of 85% in February 2021 from CNG sales due to the commissioning of the
Mobile Refueling Unit on the N3 highway in Gauteng, South Africa and more than 100% from Feb 2022
from the sale of Helium and LNG, growth rates costs were estimated at CPI of at 4.7%, South African Tax
rate of 28% was utilized in calculating the deferred tax assets raised on probable future taxable profits.
The company considered Tetra4's operating cashflows over the next ten years (2021 to 2031). At present
Tetra4 is in the enviable position that the current flow rates from the pilot site would enable an increase
production several times from current levels without any intervention. Tetra4 has several customers in a
competitive situation looking to off-take agreements in the run-up to Liquified Natural Gas (LNG) becoming
available in the February 2022 financial year. Once the pipeline reticulating all the wells is complete, the
level of production will see revenue significantly exceeding costs, and thus from February 2022, Tetra4
should be in a gross profit generating position owing to our low upstream cost of production and the high
cost of energy in South Africa. Being a first mover in a premium product such as LNG also means that we
can command better prices that would otherwise be available to gas suppliers.
9. Segmental analysis
Renergen Limited has two operating segments.
• Corporate Head Office
Corporate head office is a segment where all investment decisions are made. Renergen Limited is the
investment holding company focused on investing in prospective green projects. Green projects entail
pursuing knowledge and practices that can lead to more environmentally friendly and ecologically
responsible decisions and lifestyles which can help protect the environment and sustain its natural
resources for current and future generations.
• Tetra4 (Pty) Ltd
Tetra4 explores, develops and sells compressed natural gas to the South African market. Natural gas is a
renewable resource, since it is produced by living microbial organisms
Analysis of reportable segments as at 29 February 2020 is set out below:
Corporate Tetra4 Total Consolidating Consolidated
Head office Adjustments
Revenue 21 129 2 635 23 764 (21 129) 2 635
External - 2 635 2 635 - 2 635
Inter-segmental 21 129 - 21 129 (21 129) -
Depreciation* and amortisation (1 963) (2 797) 4 760 - 4 760
Interest income 3 340 2 012 5 352 - 5 352
Imputed interest - 4 442 4 442 - 4 442
Interest expense 883 - 883 - 883
Taxation 724 13 927 14 651 - 14 651
Comprehensive loss after tax (15 650) (36 977) (52 627) - (52 627)
Total assets 1 030 107 596 328 1 626 435 (993 718) 632 717
Total liabilities 11 903 744 497 756 400 (370 906) 385 494
Comparatives
Corporate Tetra4 Total Consolidating Consolidated
Head Adjustments
office
Revenue 16 487 2 987 19 473 (16 487) 2 987
External - 2 987 2 987 - 2 987
Inter-segmental 16 487 - 16 487 (16 487) -
Depreciation* and amortisation (714) (2 436) (3 150) - (3 150)
Interest income 1 484 120 1 604 - 1 604
Imputed interest - (3 953) (3 953) - (3 953)
Interest expense (185) - (185) - (185)
Taxation 306 3 266 3 572 - 3 572
Loss after tax (3 817) (41 159) (44 976) - (44 976)
Total assets 885 172 124 740 1 009 912 (784 802) 225 110
Total liabilities 8 330 237 432 245 762 (184 885) 60 877
*Depreciation of R2.2 million (2019: R2 million) relating to plant and equipment has been included in cost of
sales
10. Accumulated loss
Renergen acquired the non-controlling interest’s 10% shareholding in Tetra4 in December 2019 for R28.5
million. This resulted in the subsidiary becoming 100% own. On consolidation 100% of Tetra4’s net
losses after tax are attributable to Renergen. The increase of in accumulated loss is due to the purchase
of the 10% shareholding.
11. Contingent liabilities and commitments
a. Contingent liabilities
There are no contingent liabilities in the Annual Financial Statements for 29 February 2020.
b. Commitments
The board has approved capital expenditures of R512million to spend on the New Plant and drilling in the
prior year. As at the end of the reporting period the group has executed construction and drilling contracts
and has committed to expenditures of R265.5 million to be spent in the next 18 months after period end.
12. Events after the reporting period
On 10 March 2020, Renergen released a SENS announcement on the drilling update. Since the
announcement on 17 December 2019 of strong gas flows with high (up to 12%) helium, drilling and other
technical issues have necessitated significant changes from the original horizontal well design. The
sections penetrated by several side-tracks have provided valuable encouraging data for future
development drilling.
On 18 March 2020, Renergen released a SENS announcement on the safety measures taken by the Group
in response to COVID-19. On 15 March 2020, President Cyril Ramaphosa declared the COVID 19 outbreak
a National disaster, to allow the government to begin taking measures in counteracting the virus. The
company took swift and decisive measures to limit the impact of the virus to staff and from 18 March with
all staff in the Johannesburg office have been working from home in self isolation and with the company
continuing with “business as usual” under unusual times.
The country went into a National shutdown on 26 March 2020, management continues to assess the
requirements of the company and balance those with the expectations of our stakeholders namely,
employees and customers. Both the CNG pilot project in Virginia, South Africa and the project construction
has been halted due to the COVID-19 crisis. Management has successfully applied to the Government to
register Tetra4 as an essential service and is authorized to commence activity when management
determines it is appropriate to do so.
As at the date of approving these Annual finical statements, management have assessed that there is no
material impact on the financial statements for the year ended 29 February 2020. After the balance sheet
date, there has been significant fluctuations in the foreign currencies that the Group trades in. During the
year, the Group has entered into Put Option contracts to hedge the Group against ZAR: USD foreign
exchange fluctuations.
The devaluation of the SA Rand against the US dollar is continually being evaluated. Under IFRS, these
are non-adjusting events in respect of the year ended 29 February 2020, as these are events after the
reporting period that are indicative of a condition that arose after the reporting period. It was concluded
that the declaration of the COVID 19 pandemic as a National disaster and the National Lockdown is such
an event.
On 17 April 2020, Renergen announced the completion of the pipeline design. The milestone was
achieved 8 days behind schedule, which under current conditions is an achievement. This milestone is
not considered to be a critical path for the path for the completion date, and therefore the Company does
not anticipate that missing this milestone will lead to delays in the final project completion given the
pipeline is intended to be complete well before the liquefiers are intended to be delivered in South Africa.
Based on the current circumstances, management believes it has no reason to believe there will be any
material delays on our scheduled turn on date of the new LNG and LHe plant project.
13. Going concern
The Consolidated and Separate Financial Statements have been prepared assuming the Group will
continue as a going concern, which contemplates the realisation of assets and settlement of liabilities in
the normal course of business for the foreseeable future. The Group’s ability to achieve profitability is
dependent on the capital spend of proceeds raised from the currently underway capital raise. The Directors
have reviewed the Group’s forecasts for the next twelve months and are satisfied that the Group has
adequate financial resources to continue as a going concern, including with specific consideration of the
risk associated with COVID 19.
The Group has received a funding commitment of US$40million from the DFC to spend towards the New
Plant Project as well as a secondary listing on the Australian Stock Exchange wherein the Group raised an
additional AUD$15.7 million in the current financial year. The DFC commitment will not be affected by the
COVID 19 pandemic and the Group has made its first draw down on the loan in the current year. The
construction of the New Plant commenced in October 2019 and is on track for commissioning in the 2022
financial year. The Group has entered into off take agreements for the sale of both LNG and He.
Johannesburg
30 April 2020
Designated Advisor
PSG Capital
For Australian Investors & Media, contact Citadel-MAGNUS
Cameron Gilenko, 0466 984 953
Tom Kohlen, 0419 953 526
To readers reviewing this announcement on the Stock Exchange News Service (SENS), this
announcement may contain graphics and/or images which can be found in the PDF version posted on
the Company’s website.
www.renergen.co.za
Date: 30-04-2020 08:00:00
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