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RENERGEN LIMITED - Condensed Consolidated Interim Report for the Six Months Ended 31 August 2016

Release Date: 18/10/2016 08:00
Code(s): REN     PDF:  
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Condensed Consolidated Interim Report for the Six Months Ended 31 August 2016

RENERGEN LIMITED
(formerly 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”)


CONDENSED CONSOLIDATED INTERIM REPORT FOR THE SIX MONTHS ENDED 31 AUGUST 2016


Highlights

First revenue generation due to completion of compression station.

Supplied over 63,000 diesel litres equivalent to Megabus up to 31 August 2016.

Independent Reserve Update indicate 24% increase of the total Proved and Probable Reserves to 100,927
million cubic feet (MMcf) from 2015.

Independent reserve valuation now valued at R6.6 billion.

Investigating meaningful base load power solutions to industrial companies in the Virginia area.

Having delivered on our milestones to date, we have the pleasure to report our reserves are up 24%, losses
per share are down by 95% as a result of our first revenue coming online, and operations are running
smoothly.

This has been a gratifying first six months with not only the plant coming into operation but also reserve
valuations increasing on the back of additional gas discoveries from our drilling campaign. We expect the
full-year will continue to be as eventful as we bulk up operations and prepare for bringing the whole field
into full-scale production.

Email investor queries to investorrelations@renergen.co.za


COMMENTARY

This is the first full six-month period, since the acquisition of Tetra4 Proprietary Limited (“Tetra4”), on which
Renergen is reporting.

Production commenced on 24 May 2016 with compression taking place from the first of our current 12 wells.
The buses commenced operation in two phases over the period of a month and saw the buses operating at
capacity during June 2016, well ahead of our intended schedule. July, August, and September 2016 have
seen all ten buses operating at full capacity.

A total capital expenditure of R11.4 million was incurred during the period relating to the construction of
the compression facility.

The plant faced some early challenges after commissioning, which enabled us to test and implement our
contingency measures to ensure that Megabus Proprietary Limited (“Megabus”) had a consistent gas supply.

The plant is now fully operational and operating according to design specifications.

As announced on SENS on 5 October 2016 significant work was done from a geological perspective which
has resulted in a 24% increase in the total Proved and Probable Reserves to 100,927 MMcf in comparison to
the Independent Reserves Update Report included in the circular distributed to shareholders on
28 October 2015 (“the 2015 Report”). Our independent reserve valuation is now valued at R6.6 billion based
on current economic factors.

Renergen continues to operate as going concern despite the losses incurred in the six months to
31 August 2016. Total assets remain significantly higher than total liabilities. The board of directors of
Renergen (“the Board”) has ensured that the Company has sufficient cash resources to meet its strategic
objectives and financial obligations.


COMPARATIVES

Comparative figures refer to the unconsolidated figures for the six months ended 31 August 2015, as well as
consolidated figures for the year ended 29 February 2016. Tetra4 was acquired in November 2015, which falls
outside the interim reporting period ended 31 August 2015. Hence the comparative interim figures relate to
Renergen’s unconsolidated results.


BOARD CHANGES

Russell Broadhead (independent non-executive director) notified the Board that he has decided to resign as an
independent non-executive director of the Company, effective as of 10 October 2016. The decision to resign
was made following his acceptance of a position as executive director of a company operating in the renewable
energy sector. In order to comply with good governance, the Board is in the process of appointing an
independent non-executive director to ensure that the composition of the Board still meets the requirements
of the code of Corporate Governance.


Condensed Consolidated Statement of financial position as at 31 August 2016


                                                Unaudited as at    *Unaudited as at         Audited as at
 Figures in R'000                                31 August 2016      31 August 2015      29 February 2016
 Assets
 Non - Current Assets
 Property, plant, and
 equipment                        5                      20,068                   -                 7,145

 Intangible assets                6                      62,600                   -                61,504

                                                         82,668                   -                68,649
 Current Assets

 Investment in joint venture                              6,992                   -                 6,503

 Trade and other receivables                              6,607                   -                 4,134

 Cash and cash equivalents        8                      14,576              68,616                41,721

                                                         28,175              68,616                52,358

 Total Assets                                           110,843              68,616               121,007
 Equity and Liabilities
 Equity


 Share capital                                          124,158              72,957               124,158

 Accumulated loss                                      (34,439)             (4,749)              (25,330)

 Non-controlling interest                               (8,670)                   -               (7,923)

                                                         81,049              68,208                90,905
 Liabilities
 Non - Current Liabilities

 Other financial liabilities                             25,398                   -                23,857

 Provisions                                                   -                   -                 2,755

                                                         25,398                   -                26,612
 Current Liabilities

 Trade and other payables                                 4,396                 408                 3,490
 Total Equity and Liabilities                           110,843              68,616               121,007

 Net asset value per share                               104.75              924.79                117.48
 Tangible net asset value per 
 share                                                    23.84              924.79                 38.00


*The results for the six months ended 31 August 2015 were before the acquisition of Tetra4 by Renergen,
 and are therefore not consolidated. Renergen acquired 90% of the issued share capital of Tetra4 in
 November 2015.

Condensed Consolidated Statement of profit or loss and other comprehensive income for the unaudited six
months ended 31 August 2016


                                                       Unaudited          * Unaudited               Audited
                                                      six months           six months             14 months
                                                           ended                ended                 ended
 Figures in R'000                      Notes      31 August 2016       31 August 2015      29 February 2016
 Sales                                   4                   512                    -                     -

 Cost of sales                                             (386)                    -                     -
 Gross Profit                                                126                    -                     -
 Other income                                                 16                    -                    61

 Operating expenses                      7               (9,407)              (4,749)              (18,038)
 Share-based payment                                           -                    -               (1,518)

 Operating loss                                          (9,265)              (4,749)              (19,495)
 Interest Income**                                           950                    -                 3,023

 Fair value adjustment                                   (1,541)                    -               (2,946)

 Finance costs                                                 -                    -                  (81)
 Total comprehensive loss for the
 period                                                  (9,856)              (4,749)              (19,499)

 Total comprehensive income
 attributable to:

 Owners of the parent                                    (9,109)                    -              (18,452)

 Non-controlling interest                                  (747)                    -               (1,047)

                                                         (9,856)                    -              (19,499)
 Loss per share
 Basic and diluted loss per share
 (cents)                                                   12.74               283.06                 36.53
 Basic and diluted loss                                    9,856                4,749                19,499
 Weighted average number of shares                    77,375,528            1,677,452            53,382,652

 Headline loss per share
 Basic and diluted headline loss per
 share (cents)                                             12.73               283.06                 36.53
 Headline loss                                             9,848                4,749                19,499
 Weighted average number of shares                    77,375,528            1,677,452            53,382,652

 Reconciliation of headline loss
 Loss attributable to ordinary equity
 holders                                                   9,856                4,749                19,499
 Less loss on disposal of assets                             7,7                    -                     -

 Headline loss                                             9,848                4,749                19,499

 *The results for the six months ended 31 August 2015 were before the acquisition of Tetra4 by Renergen,
  and are therefore not consolidated. Renergen acquired 90% of the issued share capital of Tetra4 in
  November 2015.
 **Prior year interest income for the six months ended 31 August 2015 was R265.


Condensed Consolidated Statement of Changes in Equity for the unaudited six months ended 31 August 2016

                                                                           Total
                                                                    Attributable
                                                                       to Equity           Non-
                                                   Accumulated    holders of the    Controlling       Total
 Figures in R'000                Share Capital            Loss             Group       interest      Equity
 Balance at 1 March 2015                     1               -                 1              -           1
 Total and other
 comprehensive loss                          0         (4,749)           (4,749)              -     (4,749)

 Share buy back                            (1)               -               (1)              -         (1)

 Share issue                            73,755               -            73,755              -      73,755

 Share issue costs                       (798)               -             (798)              -       (798)
 *Unaudited Balance as
 at 31 August 2015                      72,957         (4,749)            68,208              -      68,208
 Share capital at
 acquisition                          (72,957)                          (72,957)              -    (72,957)

 Loss at acquisition                                     4,749             4,749              -       4,749


 Loss of parent in prior
 year                                                 (13,756)          (13,756)                   (13,756)

 Issue of shares                       124,158               -           124,158              -     124,158
 Retained earnings at
 acquisition date                            -           5,502             5,502              -       5,502
 Loan from minority
 shareholder                                 -               -                 -        (5,500)#    (5,500)
 Non-controlling interest
 at acquisition                              -           1,376             1,376        (1,376)#          -

 Loss for the period                         -        (18,452)          (18,452)        (1,047)#   (19,499)
 Audited Balance as at 29
 February 2016                         124,158        (25,330)            98,828        (7,923)      90,905



 Loss for the period                                   (9,109)           (9,109)           (747)    (9,856)
 Unaudited Balance as at
 31 August 2016                        124,158        (34,439)            89,719         (8,670)     81,049

# Non-controlling interests hold 10% of Tetra4’s issued 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.
*The results for the six months ended 31 August 2015 were before the acquisition of Tetra4 by Renergen, and
 are therefore not consolidated. Renergen acquired 90% of the issued share capital of Tetra4 in November 2015.


Condensed Consolidated Statement of Cash Flows for the unaudited six months ended 31 August 2016


                                                        Unaudited          *Unaudited                 Audited
                                                       six months          six months               14 months
 Figures in R'000                         Notes             ended               ended                   ended
                                                   31 August 2016      31 August 2015        29 February 2016

 Cash flows from operating activities

 Cash used in operations                    11           (10,366)             (4,341)                (24,123)

 Interest income**                                            950                   -                   3,024

 Finance costs                                                  -                   -                    (81)
 Net cash outflow from operating
 activities                                               (9,416)             (4,341)                (21,180)

 Net cash (outflow)/inflow from
 investing activities                                    (14,484)                   -                  49,512

 Net cash (outflow)/inflow from
 financing activities                                     (3,245)              72,957                  12,771


 Total cash movement for the period                      (27,145)              68,616                  41,103

 Cash at the beginning of the period                       41,721                   -                     618

 Total cash at the end of the period         8             14,576              68,616                  41,721

*The results for the six months ended 31 August 2015 results were before the acquisition of Tetra4 by
 Renergen, and are therefore not consolidated. Renergen acquired 90% of the issued share capital of Tetra4
 in November 2015.
**Prior year interest income for the six months ended 31 August 2015 was R265.


NOTES TO THE FINANCIAL STATEMENTS

The notes to the historical financial information of the Company at 31 August 2016 are set out below.

1. Basis of preparation

The condensed interim financial statements are prepared in accordance with the Listings Requirements of JSE Limited
(“Listings Requirements”) for interim reports, and the requirements of the Companies Act (Act 71 of 2008 as amended)
applicable to condensed financial statements. The Listings Requirements require interim reports to be prepared in
accordance with International Financial Reporting Standards (“IFRS”), IAS 34 Interim Financial Reporting and the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee and the Financial Reporting Pronouncements
as issued by the Financial Reporting Standards Council.

The Board takes full responsibility for the preparation of this interim report. The condensed financial statements comprise
the condensed statement of financial position as at 31 August 2016 and the condensed statements of comprehensive
income, changes in equity and cash flows for the six months ended 31 August 2016. These condensed interim financial
statements are neither audited nor reviewed by the Company’s auditors and were prepared under the supervision of the
Chief Financial Officer, Miss F Ravele CA(SA).

2. Accounting policies

All accounting policies applied by the Group in these interim financial statements are in terms of IFRS and are the same
as those applied by the Group in its consolidated financial statements as at and for the year ended 29 February 2016.

3. Comparative figures

Comparative figures refer to the unconsolidated figures for the six months ended 31 August 2015, as well as consolidated
figures for the year ended 29 February 2016. The amounts in the comparative period (31 August 2015) are pre Tetra4
acquisition figures.

4. Sales

Sales were generated from the sale of Compressed Natural Gas.

5. Property, plant, and equipment

                                                                             Accumulated
         Figures in R'000                               Cost                Depreciation                      Total

 Plant and Equipment                                  18,009                       (568)                     17,441
 Motor Vehicles                                        2,082                       (609)                      1,473
 Computer Software                                       106                        (84)                         22
 Office Equipment                                        364                       (189)                        175
 Furniture and Fixtures                                  881                        (55)                        826
 IT Equipment                                            152                        (21)                        131
 Construction                                              -                           -                          -
 Balance at 31 August 2016                            21,594                     (1,526)                     20,068


Comparatives

Balance at 31 August 2015
Renergen had no plant and equipment as at 31 August 2015.
                                                                              Accumulated
         Figures in R'000                               Cost                 Depreciation                      Total

 Plant and Equipment                                   5,308                        (329)                      4,979
 Motor Vehicles                                        1,252                        (455)                        797
 Computer Software                                        94                         (80)                         14
 Office Equipment                                        209                        (169)                         40
 Furniture and Fixtures                                   27                         (18)                          9
 IT Equipment                                             77                          (9)                         68
 Construction                                          1,238                            -                      1,238
Balance at 29 February 2016                            8,205                      (1,060)                      7,145


6. Intangible assets


                                                                            Accumulated
 Figures in R’000                                           Cost           Depreciation        Carrying Value


 Exploration and Development Costs                         9,076                      -                 9,076

 Molopo Project Mineral Rights*                           53,479                      -                53,479

 Domain Name                                                  45                      -                    45

 Balance at 31 August 2016                                62,600                      -                62,600



 Comparatives

 Balance at 31 August 2015
 Renergen had no intangible assets at 31 August 2015
                                                                            Accumulated
 Figures in R'000                                           Cost           Depreciation        Carrying Value

 Exploration and Development Costs                         5,270                      -                 5,270
 Molopo Project Mineral Rights*                           56,234                                       53,479
 Domain Name                                                   -                      -                    45
 Balance at 29 February 2016                              61,504                      -                61,504

*Environmental rehabilitation provision of R2.7million was repaid in the current year due to production wells being over
insured. The Petroleum Agency of South Africa has allowed for the insurance provision to be reduced. The funds allocated
to environmental rehabilitation are provided for in Lombard Insurance and have been included in the cash and cash
equivalent.

7. Operating Expenses

Operating loss for the year is stated after taking the following expenses into account:

                                                            Unaudited        *Unaudited              Audited
                                                           six months        six months            14 months
                                                                ended             ended                ended
 Figures in R’000                                      31 August 2016    31 August 2015     29 February 2016

 Consulting and advisory fees                                   2,070             3,499                6,064

 Employee costs                                                 4,302                 -                5,250

 Depreciation                                                     465                 -                   88

 Directors fees                                                   760                                    863

 Other operating expenses                                       1,810             1,250                5,773

                                                                9,407             4,749               18,038

*The results for the six months ended 31 August 2015 were before the acquisition of Tetra4 by Renergen, and are
therefore not consolidated. Renergen acquired 90% of the issued share capital of Tetra4 in November 2015.

8. Cash and cash equivalents

Cash and cash equivalents consist of the following:

                                                          Unaudited        *Unaudited               Audited
                                                         six months        six months             14 months
                                                              ended             ended                 ended
 Figures in R’000                                    31 August 2016    31 August 2015      29 February 2016
 Bank balances                                               13,720            68,616                41,172
 Environmental rehabilitation guarantee                         856                 -                   549

                                                             14,576            68,616                41,721


*The results for the six months ended 31 August 2015 were before the acquisition of Tetra4 by Renergen, and are
 therefore not consolidated. Renergen acquired 90% of the issued share capital of Tetra4 in November 2015.

The Company has exploration rights over land in Evander (Mpumalanga) and exploration and production rights
over land in Virginia (Free State). The Company has had to provide for environmental guarantee as part of its
Environmental Management Programme associated with the exploration and production activities for the
rehabilitation and management of negative environmental impacts associated with the exploration and
production activities. The funds are currently invested with Lombard Insurance with interest earned being
capitalised into the account.

9. Related party transactions

There were no related party transactions entered into in the six months ended 31 August 2016.

10. Segment analysis

The chief decision maker currently manages the Group as a single operating entity. Thus no operating segment analysis
is presented.

11. Cash utilized in operations
 

                                                   Unaudited                  *Unaudited                   Audited
                                                  six months                  six months                 14 months
                                                       ended                       ended                     ended
 Figures in R’000                             31 August 2016              31 August 2015          29 February 2016

 Loss before taxation                                (9,825)                     (4,749)                  (19,499)

 Adjustments for:

 Interest income**                                     (950)                           -                   (3,023)

 Finance costs                                             -                           -                        81

 Fair value adjustments                                1,541                           -                     2,946

 Depreciation                                            465                           -                        88

 Share-based payment expense                               -                           -                     1,518

 Impairment of VAT asset                                   -                           -                        32

 Changes in working capital

 Trade and other receivables                         (2,473)                           -                   (5,702)

 Trade and other payables                                876                         408                     (564)

 Cash used in operations                            (10,366)                     (4,341)                  (24,123)

*The results for the six months ended 31 August 2015 were before the acquisition of Tetra4 by Renergen, and are
 therefore not consolidated. Renergen acquired 90% of the issued share capital of Tetra4 in November 2015.
 **Prior year interest income for the six months ended 31 August 2015 was R265.

12. Going Concern

The financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis
presumes that funds will be available to finance future operations and that the realisation of assets and settlement of
liabilities, contingent obligations and commitments will occur in the ordinary course of business. Renergen group started
generating revenue from July 2016, through its subsidiaries sale of compressed natural gas. Management has continued
to monitor the cash flows to ensure that the Group continues to be in a position to pay its debts when they become due.
The capital expenditure is approved by the Board after considering the impact on solvency and liquidity.

13. Events after the reporting period

Venmyn Deloitte determined the fair value of the Group’s gas reserves at R6.6 billion at 30 September 2016. Other than
events mentioned above, the Board is not aware of any other events that occurred after the reporting period.


Date of Release: 18 October 2016


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                         First Floor
                                                  1 Bompas Road
                                                  Dunkeld West
                                                  2196


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:
                                                  resigned on 10th October 2016)
                                                  Luigi Matteccui (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: 18/10/2016 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

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