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Audited Provisional Report for the 14 Month Period Ended 29 February 2016
RENERGEN LIMITED
(previously Dominica Trade Proprietary Limited)
Incorporated in the Republic of South Africa
(Registration number: 2014/195093/06)
Share code: REN ISIN: ZAE000202610
(“Renergen” or “the Company” or "the Group")
Audited provisional report for the 14 month period ended 29 February 2016
HIGHLIGHTS
Renergen successfully listed as a special purpose acquisition company (“SPAC”) on the AltX of the JSE
Limited (“the JSE”) on 9 June 2015 being the first listed alternative energy company on the JSE.
Renergen acquired its first viable asset, Tetra4 Proprietary Limited (“Tetra4”) in November 2015 which holds
the 187,000 hectare Natural Gas field in Virginia, near Welkom, with proven reserves of 25 billion cubic feet
of Natural Gas and Helium as the first and only onshore petroleum (and Natural Gas) right in South Africa.
An offtake agreement for the Helium from the Virginia gas field was concluded between Renergen, the Linde
Group and African Oxygen Limited (“Afrox”) on 3 May 2016.
On 19 May 2016 Tetra4 signed an agreement with Megabus Proprietary Limited (“Megabus”) to supply
compressed Natural Gas to ten of their buses in the Free State.
The first compression site was completed in May 2016.
Revenue generation commenced in May 2016.
Stefano Marani Chief Executive Officer of Renergen commented:
“We have made pleasing progress in the few months since listing on the JSE and we look forward to
developing the full potential of our current and prospective alternative energy resources for the benefit of
shareholders and all our communities.”
Enquiries to investorrelations@renergen.co.za.
COMMENTARY
Viable Asset Acquisition
On 10 July 2015, Renergen announced it was in negotiations to acquire a viable asset pursuant to the
Listings Requirements of the JSE (the “Listings Requirements”) pertaining to SPACs.
On 18 August 2015, Renergen announced that an agreement had been entered into to acquire 90% of the
issued share capital and claims of Molopo South Africa Exploration and Production Proprietary Limited
(“Molopo”) (which was later rebranded to Tetra4) from Windfall Energy Proprietary Limited (“Windfall
Energy”) for a purchase consideration to be settled by the issue of 70 million ordinary Renergen shares at an
issue price of R9.28 per share and a cash payment of R5 million (the “Tetra4 Acquisition”), implying a deal
value of approximately R650 million, based on Renergen’s net asset value. The Tetra4 Acquisition as
described in circular to shareholders dated 28 October 2015, was approved by the requisite majority of
Renergen shareholders on 25 November 2015.
The salient features of the Tetra4 Acquisition include:
- Tetra4 having the first and only South African onshore petroleum production right enabling Renergen first
mover advantage in the local natural gas sector;
- Tetra4’s exploration assets being developed to production status and now in production;
- anticipated first revenue generated during the first half 2016;
- proven reserves of 25 billion cubic feet and a value of R2.2 billion; and
- significant attractive upside for Renergen shareholders as the resource is further developed.
The Tetra4 Acquisition closed on 2 December 2015, at which time Renergen became an operating company
listed on the AltX of the JSE and therefore no longer being classified as a SPAC.
Commercialisation of South Africa’s first onshore Helium and Natural Gas field
On 04 May 2016, Renergen and Afrox, a subsidiary of the Linde Group, announced on SENS the
commercialisation of South Africa’s first onshore Helium and Natural Gas field in the Free State. The 187
000 hectare Helium and Natural Gas field in Virginia, near Welkom, has proven reserves of 25 billion cubic
feet of Natural Gas and Helium and is the first and only onshore petroleum (and Natural Gas) right in South
Africa capable of supplying Helium to numerous specialised and industrial markets. Helium, despite being
the second most abundant gas, is relatively scarce and tends to be found trapped with Natural Gas in
relatively low concentrations, typically up to 1% by volume of the gas released. The Free State Helium and
Natural Gas field, however, enjoys concentrations of up to 4% by volume.
Linde Group’s high-tech extraction technology will separate Helium from Natural Gas through a single
system utilising a patented processing plant which purifies, compresses, liquefies and stores the Helium,
ready for distribution to customers. The Helium Plant, which will be designed and delivered by Linde
Engineering, is expected to commence operations in 2018/19.
The Linde Group’s Helium Plant reduces the energy required for, and cuts CO2 emissions of, traditional
Helium from Natural Gas extraction processes and represents the latest in engineering technology
advances. The Helium Plant is of modular design and will be precision manufactured in Europe before being
shipped to the Free State for fast and efficient construction.
Utilising the latest in land preservation techniques, Tetra4 has drilled wells, thousands of feet deep to tap the
Natural Gas source dome, while ensuring minimal visual and environmental impact on the gas field’s
landscape. Wells and well-heads are being interconnected underground via an intricate network of pipes.
These pipes will feed directly into the Helium Plant.
Tetra4 maintains a strong focus on upliftment of the community in the Free State, and has contributed
towards numerous improvements in a local primary school, as well as providing bursaries and learnerships
to learners in need of financial assistance. For one such learner who completed tertiary education through
our bursary programme has now found formal employment with Tetra4.
Investment in the Ivory Coast Hydro
On 25 November 2015, Renergen and two other parties jointly entered into an investment for a hydro-electric
scheme in the Ivory Coast. The feasibility stage of the project is nearing its completion.
Board Changes
Mr Brett Kimber was appointed as chairman of the board of the directors of Renergen (“the Board”) and Mr
Mbali Swana relinquished his duties as chairman, taking up the role of independent non-executive deputy
chairman of the Board with effect from 17 June 2015.
Mr Clive Angel resigned as executive director and Chief Financial Officer upon serving his term, which term
terminated on approval of the Tetra4 Acquisition. Mr Angel was replaced by Ms Fulu Ravele with effect from
25 November 2015. Ms Ravele, who completed her articles at Deloitte in 2012, held a position at Barclays
Capital prior to her appointment as Financial Director of Molopo in July 2015.
Mr Nick Mitchell was appointed executive director and Chief Operating Officer of the Company with effect
from 25 November 2015. Mr Mitchell was instrumental in the acquisition of Molopo from Molopo Energy
Limited in May 2013 and subsequently developed and implemented Molopo’s vertically integrated business
plan. Moreover, Mr Mitchell has extensive experience in infrastructure projects across the continent and has
an extensive network of contacts in territories such as Cote d’Ivoire, the Democratic Republic of Congo and
Mozambique, which the Board believes will assist Renergen in developing its growth strategy.
Mr Luigi Matteucci was appointed as an independent non-executive director with effect from 3 May 2016. Mr
Matteucci brings extensive industry knowledge, experience in best practice and strong skillset to complement
the Board. Mr Matteucci actively consults on strategic and business development initiatives in the mining and
engineering field. He served in senior management positions and as Financial Director of Highveld Steel and
Vanadium Corporation Limited for 18 years up to 2007 where he implemented successful cost reduction and
efficiency strategies.
Mr Reginald Edmond Cooke’s status as an independent non-executive director changed with effect from
3 May 2016 to an executive director due to the consulting services he is rendering to Tetra4 over a
prolonged, indefinite period. Mr Cooke will be receiving consulting fees for such services and will continue to
earn directors’ fees for meetings of the Board and its sub-committees.
Financial Information
Renergen acquired Tetra4 in November 2015. The purchase consideration was settled by way of a cash
payment of R5 million and a share issue of 70 million shares at an issue price of R9.28 per share. This
resulted in Windfall Energy, Tetra4’s previous holding company, holding 90% of Renergen and constitutes a
reverse acquisition under IFRS 3. Renergen is the accounting acquiree and Tetra4 is the accounting
acquirer. Refer to note 3 below.
The comparatives presented in the financial information below are the Tetra4 audited results for the year
ended 31 December 2014, being a 6 month period from 1 July 2014 to 31 December 2014. Tetra4 previously
had a June financial year end, which was subsequently changed during the 2014 financial period to a
December year end. On conclusion of the Tetra4 Acquisition, management took a decision to align Tetra4’s
year end with Renergen’s February year end. Renergen’s consolidated financial statements reflect a 14
month period ended 29 February 2016 (1 January 2015 to 29 February 2016).
AUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Notes Audited Audited
14 months 6 months ended
ended 31 December
Figures in R’000 29 February 2016 2014
Assets
Non-Current Assets
Property, Plant and Equipment 7 145 181
Intangible Assets 61 504 56 942
68 649 57 123
Current Assets
Investments 5 6 503 -
Trade and other receivables 4 134 56
Cash and cash equivalents 41 721 618
52 358 674
Total Assets 121 007 57 797
Equity and Liabilities
Equity
Share capital* 4 124 158 -*
Accumulated loss (25 330) (13 756)
Equity attributable to Parent 98 828 (13 756)
Equity attributable to Non-controlling interests 4 (7 923) -
Total Equity 90 905 (13 756)
Liabilities
Non-Current Liabilities
Loans from shareholders - 47 614
Financial Liability 23 857 20 911
Provisions 2 755 2 755
26 612 71 280
Current Liabilities
Trade and other payables 3 490 273
Total Equity and Liabilities 121 007 57 797
Net asset value per share (cents) 117.48 (13 756 198)
Tangible net asset value per share (cents) 38.00 (70 698 236)
*Prior year share capital is R100
CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Audited Audited
14 months ended 6 months ended
29 February 2016 31 December 2014
Figures in R’000
Other income 61 -
Total income 61 -
Operating Expenses (18 038) (1 956)
Operating Loss (17 977) (1 956)
Interest Income 3 023 -*
Interest expense (81) -*
Fair value adjustments (2 946) (1 122)
Share based payment on business (1 518)
combination
Loss before taxation (19 499) (3 078)
Tax expense - -
Total and comprehensive loss for the (19 499) (3 078)
period
Loss attributable to: (19 499) (3 078)
Owners of the Parent## (18 452) (3 078)
Non-controlling interest## (1 047) -
Total Comprehensive loss attributable to: (19 499) (3 078)
Owners of the Parent## (18 452) (3 078)
Non-controlling interest## (1 047) -
Basic and headline loss per ordinary share
Basic and headline loss per ordinary share# (cents) (36.53) (3 077 851)
Diluted basic and headline loss per ordinary share # (cents) (36.53) (3 077 851)
Average number of shares
Weighted average number of shares 53 382 652 100
Diluted average number of shares 53 382 652 100
*Prior year interest income of R121 and an interest expense of R352
## Renergen recognised a 10% non-controlling interest resulting from the Tetra4 Acquisition.
Headline loss reconciliation
# Headline loss per share is calculated on basic earnings. There are no adjusting transactions to basic
earnings in the 14 month period ended 29 February 2016.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share Capital Accumulated Total Parent Non- Total
Loss Equity controlling Equity
Figures in R’000 interest
Balance at 01 July -* (10 678) (10 678) - (10 678)
2014
Total and other - (3 078) (3 078) - (3 078)
comprehensive losses
Balance at 31 -* (13 756) (13 756) - (13 756)
December 2014
Retained earnings at - 5 503 5 503 - 5 503
acquisition
Issue of share 124 157 124 157 - # 124 157
Shareholder loan - - - #(5 500) (5 500)
issued at acquisition
Non-controlling interest 1 376 1 376 #(1 376) -
retained earnings at
acquisition
Loss for the period - (18 452) (18 452) (1 047) (19 499)
Balance at 29 124 157 (25 329) 98 828 (7 923) 90 905
February 2016
Notes 4
*Prior year share capital is R100
# Non-controlling interests hold 10% of Tetra4’s issued share capital, thus owning R10 of R100 share capital.
Non-controlling interests have an obligation to repay R5.5 million to Renergen. The total non-controlling
interests’ share of accumulated loss includes the share of Tetra4’s accumulated loss at acquisition date.
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
Notes Audited Audited
14 months ended 6 months ended
29 February 2016 31 December 2014
Figures in R’000
Net cash outflows from operating (21 180) (2 168)
activities
Net cash inflows from investing activities 49 512 (252)
Net cash inflows from financing activities 12 771 2 445
Total cash movement for the period 41 102 24
Cash at the beginning of the period 618 593
Total cash at the end of the period 41 720 618
*Prior year net interest expense of R231
NOTES TO THE FINANCIAL STATEMENTS
The notes to the historical financial information of the Company at 29 February 2016 are set out below:
1. Basis of preparation
The condensed consolidated financial results for the year ended 29 February 2016 have been prepared and
presented in accordance with IAS 34: Interim Financial Reporting, International Financial Reporting
Standards, the SAICA Financial Reporting Guides as issued by the Accounting Standards Committee and
Financial Reporting Pronouncements issued by the Financial Reporting Standards Council and the
requirements of the South African Companies Act, (Act 71 of 2008), as amended, and the Listings
Requirements. The accounting policies used in the preparation of the condensed consolidated financial
statements are in terms of IFRS and are consistent with those applied in the preparation of the consolidated
financial statements of Renergen (the Group) for the year ended 31 December 2014.
This condensed provisional report is extracted from audited financial statements, but is not itself audited. The
audited underlying Group financial statements are available for inspection at the Company’s registered
office. The directors take full responsibility for the preparation of the provisional report and the financial
information has been correctly extracted from the underlying annual financial statements.
These condensed consolidated financial statements have been prepared under the supervision of Ms FH Ravele CA(SA),
the Group’s Chief Financial Officer.
Audit opinion
These provisional condensed consolidated financial statements for the year ended 29 February 2016 have
been audited by the external auditor, Grant Thornton Johannesburg Partnership, who expressed an audit
opinion unmodified thereon. A copy of the auditor’s audit report is available for inspection at the company’s
registered office together with the financial information identified in the auditor’s report. The auditor’s audit
report does not necessarily report on all the information contained in these financial results. Shareholders
are therefore advised that in order to obtain a full understanding of the nature of the auditor’s engagement
they should obtain a copy of the auditor’s audit report together with the accompanying financial information
from the issuer’s registered office
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2. Operating Segments
The chief decision maker currently manages the Group as a single operating entity. Thus no operating
segment analysis is presented.
3. Acquisitions
3.1 Tetra4 Acquisition
On 25 November 2015, Renergen shareholders approved the Tetra4 Acquisition which was Renergen’s
first viable asset acquisition as a SPAC, thus converting Renergen to a business.
Reverse acquisition
The purchase consideration of the Tetra4 Acquisition was partly settled in cash and partly settled in
Renergen shares. To apply IFRS 3, the standard on business combination, the assets acquired and the
liabilities assumed must constitute a business, otherwise the reporting entity accounts for the transaction or
event as an asset acquisition. Renergen listed as a SPAC and was not a business prior to the acquisition of
Tetra4 but simply a cash shell. The Tetra4 Acquisition therefore, does not constitute a business
combination. Due to the transaction not being a business combination by definition of IFRS 3, it is a share
based payment transaction as per IFRS 2.
Renergen (listed entity) issued 70 million shares to Tetra4's (non-listed entity) former shareholder (Windfall
Energy) in exchange for a 90% shareholding in Tetra4. This resulted in Windfall Energy effectively holding
a controlling stake of 90% in Renergen. The former shareholders of the legal subsidiary obtained control of
the legal parent. It is appropriate to apply by analogy in accordance with paragraph 10-12 of IAS8,
guidance in paragraph B19-B27 of IFRS3 for reverse acquisitions. This results in the non-listed operating
entity being identified as the accounting acquirer and the listed entity as the accounting aquiree. The
accounting acquirer (Tetra4) is deemed to have issued shares to obtain control of the acquiree (Renergen).
The consolidated financial statements have been prepared as the continuation of Tetra4. Renergen was
thus reversed into Tetra4, with Tetra4 prior year results presented as comparatives.
Consideration paid
The purchase consideration was R 124 million.
Net identifiable assets
Renergen’s net assets at acquisition date were R67 454 207. Claims of R54 685 764 (loan granted to
Tetra4 by Windfall Energy) and R5 500 000 (loan granted to 10% shareholder by Windfall Energy) were
transferred to Renergen at acquisition date.
Share based payment
At acquisition date, Renergen had 7 375 528 shares in issue at R10 per share. An additional 70 million
shares were issued at R9.28 for the Tetra4 Acquisition bringing the total number of shares in issued to
77 375 528 and the total share capital to R723.4 million. Renergen shareholders therefore effectively hold
9.47% of the total issued shares of 77 375 528. The shareholding acquired by Tetra4 shareholders of the
70 000 000 share issue is effectively 90.47% (70 000 000 of the 77 375 528 shares in issue) in exchange
for 90% of issued shares in Tetra4. The amount required to purchase the remaining 9.47% of Renergen
shares is 9.53% of the total consideration paid of R654 600 000, which is R68 971 723 (effective share
consideration for Tetra4 purchase).
3.2 Windfall Resources Limited Acquisition
On 30 November 2015, Renergen acquired 100% of Windfall Resources Limited (“Windfall Resources”) for
R100. Windfall Resources’ net asset value was R100 at acquisition date. The subsidiary was dormant for the
14 month period ended 29 February 2016.
Audited Audited
14 months ended 6 months ended
Figures in R’000 29 February 2016 31 December 2014
4. Share Capital
Authorised
Authorised share capital was increased to 100 000 000
no par value shares during the period
100 000 100 000
Reconciliation of number of share in issue
Ordinary no par value shares of R1 each -* -*
Share issued on listing at R10 each 7 376
Shares issued on acquisition of Tetra4 at R9.28 70 000
Total number of shares issued 77 376 -*
*100 shares in issue
5. Investments in Joint Venture
On 25 November 2015, Renergen and two other parties jointly entered into an investment for a hydro-electric
scheme in the Ivory Coast. The feasibility stage is nearing its completion. The Ivory Coast Hydro project has
been accounted for in accordance with IAS28, equity accounted Joint Venture. There were no indications of
impairment as at 29 February 2016.
6. Events after reporting period
Mr Luigi Matteucci was appointed as an independent non-executive director with effect from 3 May 2016. Mr
Matteucci brings extensive industry knowledge, experience in best practice and strong skillset to complement
the Board. Mr Matteucci actively consults on strategic and business development initiatives in the mining and
engineering field. He served in senior management positions and as Financial Director of Highveld Steel and
Vanadium Corporation Limited for 18 years up to 2007 where he implemented successful cost reduction and
efficiency strategies.
As announced on SENS on 4 May 2016, Renergen, through its subsidiary Tetra4 and Afrox, a subsidiary of the
Linde Group, a world leading gases and engineering company, entered into an agreement to commercialise the
Free State Helium and Natural Gas. Tetra4 has contracted the Helium under an offtake agreement with The
Linde Group, via its Global Helium subsidiary, being assigned distribution rights for substantial reserves of
Helium. Afrox will operate the Helium Plant and market the Helium.
As announced on SENS on 19 May 2016, Renergen, and Unitrans Passenger Proprietary Limited signed a
contract through their respective subsidiaries, Tetra4 and Megabus, for the supply of compressed natural gas
by Tetra4 to Megabus, to power 10 buses operating from the Megabus depot in the town of Virginia, Free State.
7. Going Concern
We draw attention to the accumulated loss of R25.3 million at 29 February 2016. The total assets exceed
total liabilities by R90.9 million. The financial statements have been prepared on the basis of accounting
policies applicable to a going concern. The ability of the Company to continue as a going concern is not in
question as it remains liquid and solvent. The Group is expecting to start generating revenue in the first half
of the period ending 28 February 2017 and the cash flow is being closely monitored by management to
ensure that the Company remains in a position to repay its obligation when they become due and payable.
CORPORATE INFORMATION
Country of incorporation and domicile South Africa
Company registration number 2014/195093/06
JSE Share code REN
JSE ISIN ZAE000202610
Company registered office Unit 14 Boskruin Business Park
Bosbok Road
Randpark Ridge
2156
Nature of the business and principal activities Energy company focused on alternative and renewable
energy sectors in South Africa and sub-Saharan Africa. The
Company is listed on the JSE Alternative Exchange (“AltX”)
Executive Directors Stefano Marani (Chief Executive Officer)
Fulu Ravele (Chief Financial Officer)
Nick Mitchell (Chief Operating Officer)
Reginald Edmond Cooke (Executive Director)
Non-Executive Directors Brett Kimber (Independent Non-executive Chairman)
Mbali Swana (Independent Non-executive Deputy Chairman)
Russell Broadhead (Independent Non-executive Director)
Luigi Matteucci (Independent Non-executive Director)
Company Secretary Acorim Proprietary Limited
Transfer secretaries Computershare Investor Services Proprietary Limited
Registered Auditors Grant Thornton Johannesburg Partnership
Chartered Accountants (SA)
Registered Auditors
Member firm of Grant Thornton International
Designated Adviser Merchantec Capital
Date 27 May 2016
www.renergen.co.za
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Date: 27/05/2016 09:04:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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