RENERGEN LIMITED - Provisional Audited Annual Financial Results for the Year Ended 28 February 2017

Release Date: 30/05/2017 10:00
Code(s): REN
 
Wrap Text
Provisional Audited Annual Financial Results for the Year Ended 28 February 2017

RENERGEN 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”)

Provisional audited annual financial results for the year ended 28 February 2017

Commentary

The year to 28 February 2017 has been an exceptionally productive one, with the team achieving all major milestones on time
and on budget. Important milestones include, inter alia:

     -     The construction of the pilot plant which brought South Africa’s first onshore natural gas production facility into
           operation;
     -     10 Megabus buses brought into operation on natural gas supplied by Tetra4 delivering turnover of R1.7 million in the
           year under review;
     -     Successful drilling at the Virginia project with the detection of additional gas;
     -     Updating the resource statement by the international oil and gas team from Venmyn Deloitte showing a discounted
           cash flow value of R6.7 billion;
     -     Finalisation and submission of the Environmental Impact Assessment for the construction of the pipeline, implying
           that we have completed all the major regulatory hurdles and now await a record of decision on the uncontested
           submission.

“The Board believe a solid foundation has been laid during the year under review from which to build on and see Tetra4 scale
up as it goes into a year of construction and upscaling to deliver the next set of production and growth milestones”.

Renergen and the IDC announce term funding of R218 million for Tetra4 Virginia Project

On 24 May 2017, Renergen and the Industrial Development Corporation (IDC) announced funding of R218 million to develop
the pipeline and associated installations, compression station and the potential power and steam plant at Renergen subsidiary
Tetra4’s Virginia Project, subject to fulfilling conditions precedent, including the Environmental Impact Assessment for the
construction of the pipeline in Virginia, final review of geology and injection of additional capital. The funding can be drawn
down up until August 2019.

Operational review

Tetra4

Virginia

The plant has been operating at optimal capacity with positive results. Gas has been supplied to the Megabus operations for
several months and not only have customers been pleased with the improvement in the quality of the commute, but the
operator has begun to experience savings on the fuel cost. Further to this, significant progress has been made on the
environmental impact assessment (EIA) for the pipeline, and management is pleased to report that the EIA has now been
submitted to the Petroleum Agency of South Africa on time, thus achieving another major milestone for the Company.

Evander

We continue to enjoy good prospects on this field, and are proceeding with the necessary steps in order to bring this field into
production.

Financial review

Total comprehensive loss of the Group was R15.3 million (2016: R19.5 million) after income tax credit of R6.2million (2016: Rnil).

A deferred tax asset of R6.2 million (2016: Rnil) were raised during the period. The Group has accumulated significant tax losses
to date, the deferred tax asset relates to unused tax losses that can be utilised against future taxable income.

Major financing activities were:

     -     R13.4 million share capital raised during the period
     -     R10 million share capital raised after year end

The major investing activities were:
                                                                                                                          
    -     R14 million spent on plant, machinery and equipment on Tetra4’s Virginia operations
    -     R4 million on exploration and development of natural gas wells

Board Changes

Mr Russell Broadhead resigned as an independent non-executive director and board member on 10 October 2016.

Reginald Eddie Cooke’s status as an independent non-executive director changed to executive director due to the services he
renders to Tetra4 as a consultant. Mr Cooke resigned as an executive director on 07 December 2017, but continues to provide
consulting services to Renergen’s subsidiary, Tetra4 Proprietary Limited.

Dr Bane Maleke was appointed as an independent non-executive director with effect from 7 December 2016. Dr Maleke was
also appointed as a member of the Audit and Risk Committee on 20 January 2017.

PROVISIONAL CONSOLIDATED STATEMENT OF FINANCIAL POSITION

The statement of financial position of the Group as at 28 February 2017 are set out below:

                                                               Notes                           Audited            Audited
                                                                                      28 February 2017   29 February 2016
Figures in R’000
Assets

Non-Current Assets
Property Plant and Equipment                                    7                               21 756              7 145
Intangible Assets                                               6                               76 555             61 504
Deferred tax asset                                                                               6 234                  -
Total Non-Current Assets                                                                       104 545             68 649

Current Assets
Investment in Joint Venture                                     6                                    -              6 503
Trade and other receivables                                                                      8 933              4 134
Cash and cash equivalents                                                                       11 299             41 721
Total Current Assets                                                                            20 232             52 358

Total Assets                                                                                   124 777            121 007

Equity and Liabilities

Equity
Share capital*                                                  4                              137 585            124 158
Accumulated loss                                                                               (42 551)           (25 330)
Foreign Currency Translation Reserve                                                             3 389                  -
Equity attributable to Parent                                                                   98 423             98 828
Equity attributable to Non-controlling interests                                                (9 262)            (7 923)
Total Equity                                                                                    89 161             90 905

Liabilities
Non-Current Liabilities
Financial Liability                                                                             27 013             23 857
Provisions                                                                                       3 100              2 755
Total Non-Current Liabilities                                                                   30 113             26 612

Current Liabilities
Trade and other payables                                                                         5 503              3 490
Total Current Liabilities                                                                        5 503              3 490

Total Liabilities                                                                               35 616             30 102

                                                                                                                               
Total Equity and Liabilities                                                                   124 777            121 007

Net asset value per share (cents)                                                               113.71             117.48
Tangible net asset value per share (cents)                                                        8.13              38.00


PROVISIONAL 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 year ended 28 February 2017 are set
out below:

                                                            Notes             Audited                   Audited
                                                                              12 months                 14 months ended
                                                                              ended                     29 February 2016
Figures in R’000                                                              28 February 2017

Revenue                                                                                  1 722                         -
Cost of sales                                                                           (2 127)                        -
Gross loss                                                                                (405)                        -
Other income                                                                               375                        61
Share based payments                                                                         -                    (1 518)
Operating Expenses                                                                     (22 989)                  (18 038)
Operating Loss                                                                         (23 019)                  (19 495)
Interest Income                                                                          1 287                     3 023
Interest expense                                                                            (8)                      (81)
Fair value adjustments                                                                  (3 156)                   (2 946)
Loss before tax                                                                        (24 896)                  (19 499)
Taxation                                                                                 6 234
Total Loss after tax                                                                   (18 662)                  (19 499)
Other comprehensive income
Foreign currency translation reserves                                                    3 389                         -
Total comprehensive loss for the period                                                (15 273)                  (19 499)

Loss attributable to:
Owners of the parent                                                                   (17 221)                  (18 452)
Non-controlling interest                                                                (1 441)                   (1 047)
                                                                                       (18 662)                  (19 499)

Total comprehensive loss attributable to:
Owners of the parent                                                                   (13 832)                  (18 452)
Non-controlling interest                                                                (1 441)                   (1 047)
                                                                                       (15 273)                  (19 499)

Loss per ordinary share
Basic and diluted loss per ordinary share (cents)*                                      (22.19)                   (36.53)


*There is no difference between basic and diluted loss
                                                                                                                        
PROVISIONAL CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

The statement of changes in equity of the Group for the year ended 28 February 2017 is set out below:

                                                  Share         Accumulated       Foreign        Total           Non-    Total Equity
                                                 Capital               Loss      currency       Parent    controlling
Figures in R’000                                                              translation       Equity       interest
                                                                                  reserve

Balance at 01 January 2015                            -*           (13 756)             -     (13 756)             -       (13 756)
Total comprehensive loss                               -           (18 452)             -     (18 452)       (1 047)       (19 499)
Retained earnings at                                   -              5 502             -        5 502             -          5 502
acquisition
Non-controlling interest at                            -              1 376             -        1 376       (1 376)              -
acquisition
Issue of shares                                 124 158                   -             -     124 158              -        124 158
Loan from minority                                    -                   -             -           -        (5 500)        (5 500)
shareholder
Balance at 01 March 2016                        124 158            (25 330)             -       98 828       (7 923)         90 905
Issue of shares                                  13 482                   -                     13 482             -         13 482
Share issue costs                                   (55)                  -            -           (55)            -           (55)
Total loss                                                         (17 221)            -       (17 221)      (1 441)       (18 662)
Other comprehensive income                                                         3 389         3 389             -          3 389
Non-controlling interest at                            -                  -                           -          102            102
acquisition of Mega Power
Renewables
28 February 2017                                137 585            (42 551)        3 389        98 423       (9 262)         89 161

Notes                                                 4

*share capital is R100

PROVISIONAL CONSOLIDATED CASH FLOW STATEMENT

The statement of cash flow of the Group for the year ended 28 February 2017 are set out below:

Figures in R’000                                         Notes                    Audited                     Audited
                                                                                  12 months ended             14 months ended
                                                                                  28 February 2017            29 February 2016

Cash flows from operating activities
Cash utilised by operations                               5                               (24 414)                    (24 123)
Net Interest Income                                                                          1 279                       2 943
Net cash outflows from operating activities                                               (23 135)                    (21 180)

Cash flows from investing activities
Purchase of property, plant and equipment                                                 (16 469)                     (7 054)
Profit on sale of assets                                                                        15                           -
Purchase of intangible asset                                                               (4 260)                     (4 562)
Increased in Côte d’Ivoire Joint Venture                                                         -                     (2 750)
Cash inflow from business combination                                                            -                      69 184
Business combination transaction costs                                                           -                       (306)
Purchase of financial assets                                                                     -                     (5 000)
Net cash (outflows)/inflows from investing                                                (20 714)                      49 512
activities

Cash flows from financing activities
Net Proceeds on share issue                                                                13 427                       72 957
Repayment of shareholder loan                                                                   -                     (60 186)
Net cash inflows from financing activities                                                 13 427                       12 771

Total cash movement for the period                                                       (30 422)                       41 103
Cash at the beginning of the period                                                        41 721                          618
                                                                                                                                    
Total cash at the end of the period                                                        11 299                       41 721


NOTES TO THE FINANCIAL STATEMENTS

The notes to the historical financial information of the Company at 28 February 2017 are set out below:

1. Basis of preparation

The provisional consolidated financial statements for the year ended 28 February 2017 have been prepared and presented in
accordance with the requirements of the of the JSE Limited (“JSE Listings Requirements”) and the requirements of the South African
Companies Act 71 of 2008, as amended. The JSE Listings Requirements require summary reports to be prepared in accordance with
the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (“IFRS”)
and the SAICA Financial Reporting Guides issued by the Accounting Practices Committee and Financial Pronouncements issued by
Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim Financial
Reporting. The accounting policies used in the preparation of the provisional consolidated financial statements are in terms of IFRS and
are consistent with those applied in the preparation of the audited consolidated financial statements of Renergen (the Group) for the
year ended 29 February 2016.

These provisional consolidated financial statements are extracted from audited financial statements, but are not themselves audited.
The audited Group consolidated financial statements are available for inspection at the Company 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 provisional consolidated financial statements have been prepared under the supervision of Ms FH Ravele CA(SA), the Group’s
Chief Financial Officer.

Auditor’s opinion

The provisional consolidated financial statements have been derived from the Group’s audited consolidated annual financial
statements which have been audited by Grant Thornton. The auditor, Grant Thornton, has issued its opinion on the Group’s audited
consolidated annual financial statements for the year ended 28 February 2017. The audit was conducted in accordance with
International Standards on Auditing. Grant Thornton has issued an unmodified audit opinion on the Group’s audited consolidated
annual financial statements. This auditor’s report does not necessarily report on all the information contained in this announcement.
A copy of the auditor’s report on the consolidated annual financial statements is available for inspection at the Company’s registered
office, together with the financial statements identified in the respective auditor’s reports. Any reference to future financial
performance included in this announcement has not been reviewed or reported on by the Company’s auditor.


2.Operating Segments
An operating segment is a component of the Group that engages in business activities which may earn revenues and incur expenses
and whose operating results are regularly reviewed by the Group’s chief operating decision maker (this being the Renergen board of
directors), in order to allocate resources and assess performance and for which discrete financial information is available. The operating
segments are reported in a manner consistent with the Group. Renergen Limited has three operating segments;

   1.Corporate Head Office

Corporate head office is a segment where all investment decisions are made. Renergen Limited the investment holding
company focused on investing in prospective green projects

   2.Tetra4 Proprietary Limited

Tetra4 explores, develops and sells compressed natural gas to the South African market.

   3.Mega Power Renewables
                                                                                                                           
Mega Power Renewables is located in Côte d’Ivoire. The segment is managing the development of the Côte d’Ivoire hydro-
electric project. Its functional currency is Euros. Closing balances of assets and liabilities have been translated at the closing
Euro/ZAR exchange rate as at year end.


Analysis of reportable segments as at 28 February 2017 is set out below:

Figures in Rand                        Corporate       Tetra4    Mega Power      Total     Consolidating     Consolidated
thousands                            Head Office                 Renewables                  Adjustments



Revenue                                    5 098        1 722             -      6 820           (5 098)            1 722
External                                       -        1 722             -      1 722                -             1 722
Inter-segment                              5 098            -             -      5 098           (5 098)                -

Loss for the period                         (565)     (18 097)            -    (18 662)               -           (18 662)

Total Assets                             729 533      103 710        11 108    844 351         (719 574)          124 777

Total liabilities                          1 621      146 035         7 508    155 164         (119 551)           35 613


COMPARATIVES
Statements of financial position as at 29 February 2016 is set out below:

Figures in Rand                  Corporate           Tetra4      Mega Power           Total       Consolidating       Consolidated
thousands                       Head Office                      Renewables                         adjustments

Revenue                                   -            -                  -               -                   -                  -
External                                  -            -                  -               -                   -                  -
Inter-segment                             -            -                  -               -                   -                  -
Loss for the period                 (7 507)      (10 474)                 -         (17 981)             (1 518)           (19 499)
Total Assets                        717 228        73 657                 -          790 885           (669 878)           121 007
Total Liabilities                     2 178        97 887                 -          100 065            (69 963)            30 102

3.Acquisitions and Disposals

3.1 Mega Power Renewables Acquisition

In September 2016, Renergen gained effective control of Mega Power Renewables (disclosed as Investment in Joint Venture -
Côte d’Ivoire Hydro in February 2016 financial statements. The joint venture registered a company called Mega Power
Renewables during the year, through majority control and influence of the board of directors. Renergen occupies two seats
on the board of directors which consist of three board members. Renergen has 62% shareholding while two other parties
holds 38%.

                                                                                               Audited               Audited
                                                                                               12 months ended       14 months ended
Figures in R’000                                                                               28 February 2017      29 February 2016

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

                                                                                                                             
Opening balance                                                                                         77 376                     *-
Ordinary no par value shares of R1 each                                                                      -                      -
Share issued                                                                                             1 037                   7 376
Shares issued on acquisition of Tetra4 at R9.28                                                              -                  70 000
Total number of shares issued                                                                           78 413                  77 376

*100 shares in issue

5.Cash used in operations

Loss before taxation                                                                                   (24 896)                (19 499)
Adjustments:
Depreciation and Amortisation                                                                            1 841                      89
Impairment of assets                                                                                         3                      32
Interest expense                                                                                        (1 287)                 (3 024)
Interest income                                                                                              8                      81
Fair value adjustments                                                                                   3 156                   2 946
Share based payment on business combination                                                                  -                   1 518
Profit on sale of assets                                                                                    15                       -
Changes in working capital:
Trade and other receivables                                                                             (5 051)                 (5 702)
Trade and other payables                                                                                 1 797                    (564)
Cash used in operations                                                                                (24 414)                (24 123)


6.Intangible

                                            2017                                                2016
                                            Accumulated         Carrying                        Accumulated       Carrying
Figures in R’000                Cost        Amortisation           Value            Cost        Amortisation      Value

Exploration and                9 051                (13)           9 038           5 270                   -         5 270
Development Costs
Molopo Project                56 579                 -            56 579          56 234                   -        56 243
Mineral Rights
                                                                                      -                    -             -
Domain Name                       41                 -                41
Côte d’Ivoire                                                                         -                    -             -
Hydroelectric project*        10 897                              10 897

                              76 568                (13)          76 555          61 504                   -        61 504

*Côte d’Ivoire Hydro is a hydro-electric project managed by Mega Power Renewables in Côte d’Ivoire (in the west of the
African continent). The project was held as a Côte d’Ivoire joint venture in 2016; in the current year, Renergen obtained
control of Mega Power Renewables, thus consolidating the intangible asset in the group. The funds expended towards the
feasibility and pre-feasibility studies by Renergen have been converted to a loan that does not bear interest and repayable
on demand. The MOU under which Renergen has been developing the project recently expired and the management team
are confident that the extension will be issued by the Government of Cote D’Ivoire during the 2 nd quarter of 2017/18
reporting period.


7. Property Plant and
Equipment

                                                 2017                                                       2016
                                                                                                                              
                                                Accumulated         Carrying                         Accumulated        Carrying
Figures in R’000                   Cost        Depreciation          Value           Cost           Depreciation        Value

Computer software                    95               (86)                9            94                    (80)             14
Furniture and fixtures              577               (90)              487            27                    (18)              9
IT equipment                        163               (53)              110            77                     (9)             68
Construction                        506                  -              506         1 238                       -          1 238
Motor vehicles                    2 086              (771)            1 315         1 252                   (455)            797
Office equipment                    134               (47)               87           209                   (169)             40
Plant and machinery              20 305            (1 640)           18 665         5 308                   (329)          4 979
Leasehold
improvements
Furniture and                       300               (14)              286              -                      -               -
fixtures
Office Equipment                    110               (13)               97              -                      -               -
Finance Lease Motor
vehicle                             210              (16)               194              -                      -               -
Total                            24 486           (2 730)            21 756          8 205                (1 060)           7 145


8. Loss per share

Average number of shares
Weighted average number of shares                                                              77 611 356              53 382 652

Diluted average number of shares                                                               77 611 356              53 382 652

Basic loss on continuing operations                                                              (17 221)                (19 449)
Basic Earnings per share (cents)                                                                  (22.19)                 (36.53)

#Headline   loss reconciliation


Reconciliation of basic loss to headline loss
Basic loss on continuing operations                                                              (17 221)                (19 499)
Add Profit on disposal of assets                                                                     (15)                      -
Impairment of fixed asset                                                                              3                       -
Tax effects of disposal of fixed assets and impairments                                                4                       -
Headline loss                                                                                    (17 229)                (19 499)


Headline and diluted loss per share (cents)                                                       (22.20)                 (36.53)

9. Events after reporting period

Additional capital was raised in April 2017 with the issue of shares for cash which will facilitate the expansion of operations.
Management continue to raise funding to facilitate the development of renewable and alternative energy projects.

As per the SENS announcement dated 24 May 2017, Renergen and the Industrial Development Corporation (IDC) concluded
an agreement for the funding of R218 million to develop the pipeline and associated installations, compression station and
the potential power and steam plant at Renergen subsidiary Tetra4’s Virginia Project, subject to fulfilling conditions precedent,
including the Environmental Impact Assessment for the construction of the pipeline in Virginia, final review of geology and
injection of additional capital. The funding is over an eight-year term.

The directors are not aware of any other material event which occurred after the reporting period and up to the date
of this report.
                                                                                                                                    
10. Going Concern

The financial statements have been prepared on the basis of accounting policies applicable to a going concern. The directors
have reviewed the Group's budget and cash flow forecast for the year to 28 February 2018. On the basis of the current financial
position and the existing ability to obtain debt facilities from external parties, the directors are satisfied that the Group is a
going concern and will be able to settle liabilities, contingent obligations and commitments that are incurred in the ordinary
course of business.

Although the Group continues to make losses, management has been working closely with financial institutions to ensure that
when the need arises, project finance will be available for the construction of critical items to roll the company’s business
plan. To this end, management is of the opinion that conditions precedent to the IDC funding agreement will be met and the
group will continue to operate as a going concern.

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              Renergen Limited operates in the 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)

Non-Executive Directors                                      Brett Kimber (Independent Non-Executive Chairman)
                                                             Mbali Swana (Independent Non-Executive Deputy Chairman)
                                                             Luigi Matteucci (Independent Non-Executive Director)
                                                             Bane Maleke (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: 30/05/2017 10:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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