Wrap Text
Australian Stock Exchange Appendix 4E - Preliminary Final Report
RENERGEN LIMITED
Incorporated in the Republic of South Africa
(Registration number: 2014/195093/06)
JSE Share code: REN
A2X Share code: REN
ISIN: ZAE000202610
LEI: 378900B1512179F35A69
Australian Business Number (ABN): 93 998 352 675
ASX Share code: RLT
(“Renergen” or “the Company” or together with its subsidiaries “the Group”)
AUSTRALIAN STOCK EXCHANGE APPENDIX 4E - PRELIMINARY FINAL REPORT
Current reporting period Year ended 28 February 2023 (2023)
Previous period Year ended 28 February 2022 (2022)
RESULTS ANNOUNCEMENT TO THE MARKET
2023 2022 Change Change
Rm Rm Rm %
Revenue 12.7 2.6 10.1 388.5%
Loss after tax attributable to ordinary shareholders 26.7 33.8 (7.1) -21.0%
Total comprehensive loss attributable to ordinary
shareholders 26.7 33.8 (7.1) -21.0%
Change Change
Cents Cents Cents %
Basic and diluted loss per share 19.86 27.73 (7.87) -28.4%
• Renergen presents its first condensed consolidated annual financial statements as a production
company, through its subsidiary Tetra4 Proprietary Limited (“Tetra4”). The commissioning of the Virginia
Gas Project (“VGP”) in September 2022 transitioned Tetra4 from an exploration company. Tetra4
commenced the production and sale of liquefied natural gas (“LNG”) in September 2022 which increased
the Group’s revenue by 388.5%.
• The loss after tax and total comprehensive loss attributable to ordinary shareholders decreased
significantly by 21.0% or R7.1 million mainly as a result of the following:
o An increase of R4.8 million in the gross profit contribution;
o An increase of R9.9 million in other operating income primarily driven by net foreign exchange
gains and the selling profit on finance lease receivables; and
o An increase of R3.4 million in interest income due to higher cash balances from the Company’s
fund-raising initiatives and higher interest rates, which were offset by:
• An increase of R7.2 million in share-based payments expenses reflecting the implementation
of the Share Appreciation Rights Plan (“SAR Plan”) for a full 12-month period compared to 3
months in the prior comparative period. Awards under the SAR Plan were first granted in
December 2021.
• An increase of R4.7 million in other operating expenses mainly due to an increase in
marketing and advertising costs to improve brand visibility as the Group approached the
commissioning of Phase 1 of the VGP, higher listing costs due to an additional 20.8 million
shares which were issued during the year, and an increase in advisory fees relating to the
Group’s proposed listing on the Nasdaq Stock Market, strategy, risk management and legal
matters.
2023 2022 Change Change
Cents Cents Cents %
Tangible net asset value per share 413.38 106.74 306.64 287.3%
Change Change
Rm Rm Rm %
Total assets 1 900.9 1 164.7 736.2 63.2%
• The increase in the Group’s tangible net asset value per share is mainly attributable to further
investments in property, plant and equipment to complete Phase 1 of the VGP and an increase in
restricted cash, which were funded from capital raised during the year which amounted to R573.9
million from various placements on the Australian Securities Exchange (“ASX”) and the Johannesburg
Stock Exchange (“JSE”). The growth in tangible net assets was offset by increases in the Group’s debt
mainly driven by foreign exchange losses, an increase in the rehabilitation provision due to exploration
activities undertaken during the year, an increase in trade payables and revenue received in advance
from a customer. The tangible net asset value per share also reflects the impact of 20.8 million
additional shares issued during the year.
PRELIMINARY FINAL FINANCIAL STATEMENTS
Please refer to pages 10 to 34 of this report wherein the following are provided:
• Condensed consolidated statement of profit or loss and other comprehensive income for the year
ended 28 February 2023;
• Condensed consolidated statement of financial position as at 28 February 2023;
• Condensed consolidated statement of changes in equity for the year ended 28 February 2023;
• Condensed consolidated statement of cash flows for the year ended 28 February 2023; and
• Notes to the condensed consolidated financial statements.
The condensed consolidated financial statements presented have not been audited or subject to a review
by the external auditors. The audit of the Group’s financial statements for the year ended 28 February
2023 is currently ongoing.
OTHER DISCLOSURE REQUIREMENTS
Dividend or distribution reinvestment plans
Renergen did not declare dividends during the year ended 28 February 2023 (2022: nil).
Entities over which control has been gained or lost during the year
On 25 August 2022, Renergen formed a new wholly owned subsidiary, Cryovation Proprietary Limited
(“Cryovation”), to hold its CryovaccTM business. A description of the Cryovation operations is provided on
page 27 of this report.
Details of associates and joint ventures
The Group does not have associates or joint ventures.
Additional Appendix 4E disclosure requirements and commentary on significant features of the operating
performance, results of segments, trends in performance and other factors affecting the results for the
period are contained in the financial report accompanying this announcement.
ENTITY NAME: RENERGEN LIMITED
Incorporated in the Republic of South Africa
(Registration number: 2014/195093/06)
JSE Share code: REN, A2X Share code: REN, ISIN: ZAE000202610
Australian Business Number ABN: 93998352675 ASX Share code: RLT
(“Renergen” or “the Company” or together with its subsidiary “the Group”)
PRELIMINARY FINAL REPORT
RESULTS COMMENTARY
The year ended 28 February 2023 (“FY2023”) was both remarkable and momentous for all at Renergen
and to our various stakeholders who worked alongside us as we transitioned Renergen from an
exploration company to a production company with global ambitions. Renergen, through its wholly
owned subsidiary Tetra4, commenced production of LNG in September 2022 and successfully produced
liquefied helium (“LHe”) in January 2023. Not long after the commencement of LNG production, the South
African government designated the VGP as a strategic integrated project (“SIP”) under the Infrastructure
Development Act 23 of 2014, as Renergen has demonstrated its ability and intention to become a
significant player in alleviating South Africa’s energy crisis. This SIP status elevates Renergen’s VGP within
the hierarchy of local projects ensuring it benefits from significantly reduced timelines for all approvals
required from government whilst increasing visibility when government prepares the country’s strategic
energy objectives.
Going into FY2023, our strategic intent was clear – we aimed to commission Phase 1 of the VGP and
progress the Phase 2 expansion. As we review the outcomes of FY2023, despite the delays, we are
satisfied with what we achieved during the year. Noteworthy for the year under review is Tetra4’s first-
time generation of revenue from the production and sale of LNG under long-term take or pay agreements
since September 2022. Other key developments during the year under review are summarised below:
• Successful completion of the due diligence by the Central Energy Fund SOC Limited (“CEF”) to
invest R1.0 billion for a 10% ownership stake in Tetra4.
• Completion of due diligence for Phase 2 funding by the US International Development Finance
Corporation (“DFC”) and Standard Bank of South Africa (“SBSA”), who have commenced their
credit approval processes.
• Evaluated and selected Worley RSA Proprietary Limited (“Worley”) for the scope of Owners
Engineer role to execute the expansion of the VGP.
• Early success in the production drilling campaign from several wells.
• Completion of gravity and aeromagnetic surveys of the Phase 2 area, as well as obtaining and
reinterpreting 3D seismic data highlighting significantly more reservoir targets for drilling.
• Approval by shareholders for the issuance of 67.5 million shares through a listing and public
offering of Renergen shares on the Nasdaq Stock Market (post period).
Renergen continues to operate against a backdrop of increased demand for LNG and helium both locally
and globally. Many countries now see LNG in particular as one of the leading transition energies for the
foreseeable future. This growth in demand for LNG has been met with supply issues brought about by the
Russia/Ukraine war and a need for alternative energy sources, escalating the supply/demand tension on
energy prices. South Africa’s energy crisis has forced many companies to seek alternatives to the grid to
power their operations, which has significantly increased demand for LNG given its low carbon footprint
and versatility to provide stable energy around the clock. Helium prices have continued to surpass past
price records and with limited new suppliers coming online over the next few years and current suppliers
finding it difficult to maintain consistency of supply, prices are likely to remain elevated. Increased
semiconductor fabrication capability out of the USA, following their recent stimulus packages, has
significantly increased demand, which is increasing supply/demand, similar to LNG.
Renergen is perfectly positioned to become a significant player in the local LNG and international helium
markets given its exceptionally high helium concentrations and relatively low extraction costs.
Review of operations
VGP – Phase 1
LNG
The VGP commenced production of the South Africa’s first commercial LNG on 5 September 2022, and
from 19 September 2022 the plant began operating 24-hour shifts. Production will be ramped up to a
steady rate of 2 700 GJ per day in FY2024, which is the maximum capacity of the plant. During
commissioning of the plant, we announced a minor setback with the conduction oil system providing
lubrication and heating to the plant. Since the intervention in November 2022, where the conduction oil
system was repaired, this system has been operating as designed resulting in regular deliveries to our
customers. We are pleased to report that we are seeing a positive production trend with LNG deliveries
steadily increasing.
Helium
Since announcing initial helium liquefaction, the commissioning teams have been working hard to
integrate and optimize the two liquefaction trains, ensuring a smooth performance testing of the
combined LNG/LHe system. Production will be ramped up to a steady rate of 300 kg per day in FY2024,
which is the maximum capacity of the plant.
VGP – Phase 2
The Company commenced the development of the VGP Phase 2 expansion in March 2020. Phase 2 is
categorised as a standalone expansion of the VGP through the drilling of additional wells, the construction
of additional natural gas gathering pipelines and the construction of a significantly larger (c.12 times)
processing and liquefaction facility, and the associated road tanker distribution and downstream
customer dispensing facilities. Phase 1 operations are self-sufficient and will not be impacted by the
planned expansion.
To date, the Company has completed feasibility studies and front-end engineering design for the VGP
Phase 2 expansion and has selected Worley for the scope of owners engineer role, evaluated and
shortlisted potential engineers and submitted the environmental, social, impact assessment to regulatory
authorities. It is anticipated that Phase 2 will produce approximately 34 400 GJ of LNG and around 4 200
kg of liquid helium per day once in full production.
Renergen’s goal is to achieve commercial operation of Phase 2 during 2026 calendar year. In anticipation
of securing an attractive debt financing package for Phase 2, the Company has secured several 10 to 15
year take-or-pay offtake agreements with several top-tier global industrial gas companies for just over
half of the anticipated liquid helium production. The balance of the liquid helium is earmarked for sales
in the international spot market and will allow the Company to participate in the existing liquid helium
commodity price upside. All liquid helium sales agreements are denominated in US Dollars with pricing
increasing annually at the rate of growth of the United States Consumer Price Index.
With respect to LNG from Phase 2, Renergen expects to contract a majority of the Phase 2 LNG on 5 to 8
year take-or-pay agreements, servicing the industrial, logistics and gas to power industries. It is expected
that the LNG offtake agreements in Phase 2 will be finalised closer to the Phase 2 plant coming into
operation, and the Company anticipates being able to obtain favourable pricing given the scarcity of
energy sources in South Africa where energy prices have historically escalated at levels above those of
domestic inflation rates.
In line with previous announcements, the Company is pursuing several sources of funding for Phase 2,
which may include each, or any, of the following:
• An aggregate debt package of US$750.0 million. In this regard the Company has secured a debt
retainer letter with the DFC for the provision of a loan of up to US$500.0 million to finance the
development of Phase 2 and has mandated SBSA Africa to fully underwrite the remaining
US$250.0 million.
• A 10% disposal of Tetra4 to the CEF for R1.0 billion. In this regard the CEF successfully completed
due diligence pertaining to this acquisition and engagement with various stakeholders is currently
underway to bring this transaction to fruition.
• A potential international public offering (“IPO”), subject to market and other conditions, the
proceeds of which are intended to comprise a portion of the equity funding for Phase 2
construction (see IPO section below).
Upon completion of Phase 2 of the VGP, the Company expects that it will deliver a substantial amount of
energy to the South African economy and will also transform South Africa into one of the world’s large
helium exporting countries.
Exploration activities
In March 2022, we achieved early success from two wells in our drilling campaign – Frodo and Balrog and
saw an increase in the flow rate from a previously drilled well, R2D2, which following clean-up operations
increased its flow rate by 18 000 standard cubic feet (“scf”) per day (or 15%). Frodo achieved a flow rate
of 23 000 scf per day and Balrog a flow rate of 90 000 scf per day, the latter through a diverter and
following clean-up. The success of the exploration techniques applied to these wells will guide future
exploration initiatives. Frodo was sited using only the latest fault structure interpretation, while Balrog
was sited using Tetra4’s “conviction scoring” AI methodology, based on non-invasive markers with no
other geological input. The wells were drilled to intersect the planned fracture sets at around 500m total
vertical depth and will feed into Phase 1 of the VGP.
In June 2022 we drilled a new gas blower, Gandalf, the third well in our drilling campaign for the year
under review. Gas was intersected at 480m from surface with a flow rate of around 90 000 scf per day.
The target depth is 1 200m and after initial testing the well was cased in preparation to drill to the full
depth. At present the drillers are preparing to drill through the cement and further to the target depth.
During the second quarter of the financial year a new well, Han, was drilled to a measured depth of 624m,
striking gas of approximately 80 000 scf per day. Drilling was halted to log the well to delineate the gas
bearing features in the well. During the same period, the Don Vito well, previously drilled in June 2021 as
a vertical pilot hole to log and determine the depth to the base of the Karoo (to plan the trajectories of
wells R2D2 and C3PO), was examined and commenced flowing gas. This was interpreted to indicate that
with the passage of time the well cleaned up naturally. The well is now producing approximately 75 000
scf per day. Given that the well was a pilot well and was not anticipated to produce gas, it is now being
completed for production before being connected to the Phase 1 gas gathering pipeline.
In addition to the drilling campaign carried out during the year under review as outlined above, gravity
and aeromagnetic surveys were also undertaken and completed in September 2022. The data is now
being interpreted to improve the resolution of the geological model and optimise drillhole location
accuracy in the Phase 2 area. These surveys, together with seismic data reprocessed during the third
quarter, have provided enhanced resolution on a number of potential gas bearing features, including their
extent, depth and orientation. In addition, several significant magnetic highs have been identified in the
western part of the reserve area and are of particular interest as they are a series of cap rock above other
newly identified gas bearing structures.
IPO
On 8 March 2023, Renergen announced its intention to issue 67.5 million shares (“Specific Issue Shares”),
including such ordinary shares represented by American Depositary Shares and Chess Depositary
Interests, by way of a proposed IPO on the Nasdaq Stock Market in the United States of America.
Renergen obtained the approval of its shareholders to issue the Specific Issue Shares (“Special Authority”)
at a general meeting of shareholders held on 11 April 2023.
While the primary driver for Renergen seeking approval for the Specific Authority is to secure funding for
the continued development of Phase 2 of the VGP, not all the proceeds that can be raised in terms of the
Specific Authority are required immediately. Therefore, Renergen will place the Specific Issue Shares with
new investors and/or existing shareholders in various stages (“Placements”) and will utilise part of the
Specific Authority on each Placement, as and when required, to limit dilution to existing shareholders.
Renergen intends to raise US$150.0 million from the initial Placement during 2023, market permitting,
and no further equity funding is anticipated to be raised for the first 12 months following the successful
conclusion of the proposed IPO.
Further details pertaining to the proposed IPO are available in the circular issued to shareholders on 8
March 2023 which is available on the Renergen website at https://www.renergen.co.za/wp-
content/uploads/2023/03/RenCircular-Mar2023.pdf (“Circular”). Details in this announcement relating
to the proposed IPO should be read together with the information contained in the Circular.
Financial review
Financial performance
• The Group reported a loss after tax of R26.7 million for the year ended 28 February 2023 compared
to R33.8 million in the prior comparative period, a decrease of R7.1 million, primarily arising from an
improved gross margin contribution from the newly commissioned LNG operations, higher net
foreign exchange gains and other income, and higher interest income, which were offset by:
o higher interest and share-based payment expenses; and
o higher other operating expenses.
Gross margin contribution
The Group reported a gross profit of R4.0 million for the year under review compared to a gross loss of
R0.8 million in the prior comparative period, an improvement of R4.8 million. This reflects improved
margins from the LNG operations which commenced in September 2022. Prior to September 2022 the
Group only sold compressed natural gas (“CNG”) which had significantly lower margins. Sales of CNG
ceased when Phase 1 was commissioned in September 2022 and the Group is now focusing on its LNG
and liquefied helium operations. There were no helium sales during the year under review as the helium
module is yet to be fully commissioned.
Foreign exchange gains and other income
Net foreign exchange gains and the selling profit on finance lease receivables are included within other
operating income in the statement of profit or loss and other comprehensive income and are disclosed in
note 13 of the condensed consolidated annual financial statements presented. Overall, other operating
income increased by R9.9 million to R13.6 million (2022: R3.7 million) mainly due to the developments
outlined below.
• The further weakening of the Rand against major currencies during the year under review resulted in
an increase in net foreign exchange gains of R6.0 million to R9.6 million (2022: R3.6 million). The
Group holds cash balances denominated in US Dollars as security for the DFC borrowings (see note 4)
and transacts in currencies including the Australian Dollar, Euro and British Pound in undertaking its
operations.
• During the second half of the financial year, following the commissioning of Phase 1 of the VGP and
the commencement of operations at the plant, the Group entered new finance leases whereby it
leases storage tanks and related infrastructure to its customers under 8-year agreements. The
facilities are used by customers to store LNG supplied by Tetra4 and to convert it to natural gas for
use in their operations. The initial recording of these leasing arrangements resulted in the recognition
of a profit of R3.9 million.
Interest income
Overall, total interest income increased by R3.4 million to R3.7 million (2022: R0.3 million). Higher cash
balances from the Company’s fund-raising initiatives and higher interest rates during the year under
review resulted in an increase in interest income by R2.0 million to R2.3 million (2022: R0.3 million). In
addition, the Group’s new leasing arrangements contributed interest income amounting to R1.4 million
(2022: Rnil).
Share-based payment expenses
In December 2021, the Group implemented an equity-settled Share Appreciation Rights Plan (“SAR Plan”).
The increase in share-based payment expenses by R7.2 million to R10.3 million (2022: R3.1 million) is
attributable to the Plan being in effect for a full 12-month period compared to a 3-month period in the
prior year. The SAR Plan is a 5-year plan under the terms of which the Governance, Ethics, Transformation,
Social and Compensation Committee makes once-off awards of forfeitable shares to the Executive
Directors, prescribed officers, senior management, and general employees of the Group who can
influence the growth of the Company.
Interest expense
The Group’s interest expense primarily comprises imputed interest on borrowings and interest on leasing
arrangements (with the Group as lessee). Total interest expense increased by R0.4 million to R4.6 million
(2022: R4.2 million) primarily due to an increase in imputed interest on the Molopo borrowings
highlighted in note 9 of the condensed consolidated annual financial statements presented.
Interest on the DFC and Industrial Development Corporation borrowings is capitalised in line with the
Group’s policy which requires that borrowing costs directly attributable to the construction of assets that
take a substantial period of time to get ready for use are included in the cost of the asset. These capitalised
borrowing costs are disclosed in note 9 of the condensed consolidated annual financial statements
presented.
Other operating expenses
Overall, other operating expenses increased by R4.7 million to R42.9 million (2022: R38.2 million)
primarily due to:
• An increase in marketing and advertising costs by R2.7 million due to sponsorship costs which have
improved brand visibility as the Group approached the commissioning of Phase 1 of the VGP;
• An increase in listing costs by R1.2 million due to an additional 20.8 million shares issued and listed
during the year; and
• An increase of R2.1 million in advisory fees relating to the Group’s proposed IPO, strategy, risk
management and legal matters.
These increases in other operating expenses were offset by an overall decrease of R1.3 million in other
operating expenses arising from cost-saving initiatives, the impact of the Group’s capitalisation policy and
a decrease in depreciation during the year. Other operating expenses mainly comprise computer and IT
expenses, security costs, insurance, travel costs and depreciation.
Financial position
The Group’s Net Asset Value (“NAV”) increased by R553.9 million to R840.2 million as at 28 February
2023, an increase of 194% year-on-year. This growth in NAV can be attributed mainly to:
• Further investments in the Group’s property, plant and equipment (“PPE”) and intangible assets aided
mostly by equity proceeds raised during the year (see Fund Raising section below). As mentioned in
the operational review, the Group completed the construction of Phase 1 of the VGP and drilled a
number of exploratory wells during the year. The increase in PPE and intangible assets amounted to
R652.5 million which includes capitalised borrowing costs and foreign exchange differences after
considering annual depreciation of PPE. The additions outlined in notes 2 and 3 of the condensed
consolidated annual financial statements presented reflect expenditure on PPE and intangible assets
exclusive of capitalized borrowing costs and unrealised foreign exchange differences.
• Funds raised during the year were also applied to increase restricted cash balances which serve as
security for the repayment of the DFC and Industrial Development Corporation (“IDC”) borrowings.
At any given time, the balances held as restricted cash primarily represent amounts due to the DFC
and IDC within a six-month period and increased by R54.0 million during the year under review.
• The recognition of finance lease receivables amounting to R54.6 million arising from the Group’s
leasing of equipment and infrastructure required for the delivery, storage, utilisation and conversion
of LNG to natural gas. The leases came into effect for the first time during the year under review with
the Group as lessor.
• Increases totalling R14.5 million attributable to the Group’s remaining assets – trade and other
receivables, the deferred tax asset and inventory, offset by a decrease of R39.4 million in the Group’s
cash and cash equivalents.
Increases in the Group’s asset base as outlined above were offset by:
• A net increase in borrowings totalling R88.2 million arising from foreign exchange losses due to the
weakening of the Rand against the US Dollar and interest charged on borrowings, offset by payments
made during the year as fully set out in note 9 of the condensed consolidated annual financial
statements presented.
• An increase in trade and other payables amounting to R70.7 million primarily reflecting costs
associated with finalising the construction, testing and commissioning of Phase 1 of the VGP which
were payable at year-end.
• A net increase totalling R23.4 million in the Group’s other liabilities mainly attributable to revenue
received in advance from a customer and an increase in the rehabilitation provision due to the
exploration activities undertaken during the year.
Fund raising
FY2023 marked significant success in our fund-raising initiatives. The Company raised R573.9 million
(2022: R113.2 million) from various placements on the ASX and JSE as fully set out in note 8 of the
condensed consolidated annual financial statements presented. As highlighted above, funds raised from
these investments were applied to progress and complete Phase 1 of the VGP and to fund pre-
development costs relating to Phase 2.
Changes in directorate
On 6 February 2023, Renergen announced that Alex Pickard and Francois Olivier had stepped down from
their roles as Non-executive Directors of the Company with effect from that date. On the same day
Renergen announced the retirement with immediate effect of Bane Maleke.
Thembisa Skweyiya and Dumisa Hlatswayo were appointed as Independent Non-executive Directors of
Renergen on 6 February 2023, replacing the outgoing Directors. Thembisa Skweyiya was also appointed
to Renergen’s Governance, Ethics, Transformation, Social and Compensation Committee, and Dumisa
Hlatshwayo to Renergen’s Audit, Risk and IT Committee. It is further noted that this was in line with our
rotation and succession planning for Board members hence the immediate appointment of our incoming
Board members.
Biographies of the new Directors are available on the Renergen website www.renergen.co.za.
Litigation update
There have been no further developments since our last update contained in the reviewed condensed
consolidated interim financial statements for the six months ended 31 August 2022 published by the
Group on 28 October 2022.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
The Condensed Consolidated Statement of Financial Position of the Group as at 28 February 2023 is set
out below:
R’000 Notes 2023 2022
ASSETS
Non-current assets 1 729 356 1 008 317
Property, plant and equipment 2 1 371 748 807 027
Intangible assets 3 241 842 154 023
Deferred taxation 53 236 43 529
Restricted cash 4 14 435 3 738
Finance lease receivables 5 48 095 -
Current assets 171 525 156 377
Inventory 147 -
Finance lease receivables 5 6 464 -
Trade and other receivables 6 31 657 27 032
Restricted cash 4 77 552 34 257
Cash and cash equivalents 7 55 705 95 088
TOTAL ASSETS 1 900 881 1 164 694
EQUITY AND LIABILITIES
Equity 840 204 286 312
Share capital 8 1 134 750 563 878
Share-based payments reserve 21 099 11 354
Revaluation reserve 598 598
Accumulated loss (316 243) (289 518)
LIABILITIES
Non-Current Liabilities 860 323 803 949
Borrowings 9 806 558 773 056
Lease liabilities 1 108 1 407
Revenue received in advance 15 093 -
Provisions 37 564 29 486
Current Liabilities 200 354 74 433
Borrowings 9 104 457 49 784
Provisions 2 400 1 272
Lease liabilities 1 184 1 775
Trade and other payables 10 92 313 21 602
TOTAL LIABILITIES 1 060 677 878 382
TOTAL EQUITY AND LIABILITIES 1 900 881 1 164 694
CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
The Condensed Consolidated Statement of Profit and Loss and Other Comprehensive Income of the Group
for the 12-month period ended 28 February 2023 is set out below:
R’000 Notes 2023 2022
Revenue 12 12 687 2 637
Cost of sales (8 684) (3 412)
Gross profit/(loss) 4 003 (775)
Other operating income 13 13 630 3 736
Share-based payments expense (10 278) (3 115)
Other operating expenses (42 879) (38 207)
Operating loss (35 524) (38 361)
Interest income 3 675 275
Interest expense and imputed interest (4 583) (4 217)
Loss before taxation (36 432) (42 303)
Taxation 14 9 707 8 553
LOSS FOR THE YEAR (26 725) (33 750)
TOTAL COMPREHENSIVE LOSS FOR THE YEAR (26 725) (33 750)
Loss attributable to:
Owners of the Company (26 725) (33 750)
LOSS FOR THE YEAR (26 725) (33 750)
Total comprehensive loss attributable to:
Owners of the Company (26 725) (33 750)
TOTAL COMPREHENSIVE LOSS FOR THE YEAR (26 725) (33 750)
Loss per ordinary share
Basic and diluted loss per share (cents) 16 (19.86) (27.73)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
The Condensed Consolidated Statement of Changes in Equity of the Group for the 12- month period ended 28 February 2023 is set out below:
Total equity
attributable to
Share-based equity holders
payments Revaluation Accumulated of the
R’000 Share capital reserve reserve loss Company
BALANCE AT 1 MARCH 2021 453 078 8 500 598 (255 768) 206 408
Loss for the year - - - (33 750) (33 750)
Total comprehensive loss for the year - - - (33 750) (33 750)
Issue of shares 113 376 (261) - - 113 115
Share issue costs (2 576) - - - (2 576)
Share-based payments expense - 3 115 - - 3 115
BALANCE AT 28 FEBRUARY 2022 563 878 11 354 598 (289 518) 286 312
Loss for the year - - - (26 725) (26 725)
Total comprehensive loss for the year - - - (26 725) (26 725)
Issue of shares 574 447 (533) - - 573 914
Share issue costs (3 575) - - - (3 575)
Share-based payments expense - 10 278 - - 10 278
BALANCE AT 28 FEBRUARY 2023 1 134 750 21 099 598 (316 243) 840 204
Note 8
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
The Condensed Consolidated Statement of Cash Flows of the Group for the 12- month period ended 28
February 2023 is set out below:
R’000 Notes 2023 2022
Cash flows used in operating activities (70 904) (79 175)
Cash used in operations 15 (72 903) (78 941)
Interest received 2 307 275
Interest paid (308) (509)
Cash flows used in investing activities (440 781) (306 956)
Investment in property, plant and equipment 2 (352 448) (260 723)
Disposal of property, plant and equipment 2 55 -
Investment of intangible assets 3 (88 388) (46 233)
Cash flows from financing activities 471 233 347 227
Proceeds from share issue 8 573 914 113 115
Share issue costs 8 (1 367) (2 576)
Proceeds from borrowings 9 - 270 989
Repayment of borrowings 9 (99 186) (31 293)
Lease liabilities – lease payments (2 128) (3 008)
TOTAL CASH MOVEMENT FOR THE YEAR (40 452) (38 904)
Cash and cash equivalents at the beginning of the
year 7 95 088 130 878
Effects of exchange rate changes on cash and cash
equivalents 1 069 3 114
TOTAL CASH AND CASH EQUIVALENTS AT THE END
OF THE YEAR 7 55 705 95 088
NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS
1. Basis of preparation
The consolidated annual financial statements for the year ended 28 February 2023 have been prepared
in accordance with the framework concepts, the recognition and measurement criteria of International
Financial Reporting Standards (IFRS) and in accordance with and containing the information required by
the International Accounting Standard 34: Interim Financial Reporting (IAS 34) as issued by the
International Accounting Standards Board (IASB), Financial Reporting Pronouncements as issued by the
Financial Reporting Standards Council, the ASX Listing Rules and the requirements of the South African
Companies Act of 2008, as amended. The consolidated annual financial statements have been prepared
on the historical cost basis except for land that is carried at a revalued amount. Significant accounting
policies applied in the preparation of the consolidated annual financial statements are in terms of IFRS
and are consistent with those applied in the previous consolidated annual financial statements.
Amendments to accounting standards and new accounting pronouncements which came into effect for
the first time during the financial year did not have a material impact on the Group.
These condensed consolidated annual financial statements have been prepared on a going concern basis.
The condensed consolidated annual financial statements are presented in South African Rand which is
the Company's functional and presentation currency. All monetary information is rounded to the nearest
thousand (R'000), except where otherwise stated.
JSE shareholders should note that this form does not meet the JSE reporting requirements as this
information is issued in line with the ASX Listing Rules. The condensed consolidated annual financial
statements presented have not been audited or reviewed by the Group’s external auditor.
2. Property, plant and equipment
2023 2022
Cost or Accumulated Net book Cost or Accumulated Net book
R’000 valuation depreciation value valuation depreciation value
Assets under 1 342 450 - 1 342 450 785 460 - 785 460
construction
Right-of-use asset – 2 243 (2 243) - 2 243 (1 590) 653
head office building
Land – at revalued 3 473 - 3 473 3 473 - 3 473
amount
Plant and machinery 23 164 (13 504) 9 660 22 928 (11 345) 11 583
Furniture and fixtures 1 240 (846) 394 1 024 (691) 333
Motor vehicles 10 375 (1 924) 8 451 2 152 (1 962) 190
Office equipment 243 (135) 108 171 (108) 63
IT equipment 1 148 (772) 376 910 (581) 329
Right-of-use assets - 5 603 (2 488) 3 115 4 526 (1 462) 3 064
motor vehicle
Office building 2 065 (682) 1 383 2 065 (476) 1 589
Lease hold
improvements:
Office equipment 142 (140) 2 142 (128) 14
Furniture and fixtures 3 064 (728) 2 336 885 (609) 276
TOTAL 1 395 210 (23 462) 1 371 748 825 979 (18 952) 807 027
NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
2. Property, plant and equipment (continued)
Environmental
2023 At 1 March rehabilitation At 28 February
1
R’000 2022 Disposal costs2 Additions Depreciation 2023
Assets under construction 785 460 (50 309) 9 026 598 093 - 1 342 450
Right-of-use asset – head office building3 653 - - - (653) -
Land – at revalued amount 3 473 - - - - 3 473
Plant and machinery 11 583 - - 236 (2 159) 9 660
Furniture and fixtures 333 - - 216 (155) 394
Motor vehicles4 190 - - 8 557 (296) 8 451
Office equipment 63 - - 72 (27) 108
IT equipment 329 - - 238 (191) 376
Right-of-use assets - motor vehicle 3 064 - - 1 076 (1 025) 3 115
Office building 1 589 - - - (206) 1 383
Lease hold improvements:
Office equipment 14 - - - (12) 2
Furniture and fixtures 276 - - 2 179 (119) 2 336
TOTAL 807 027 (50 309) 9 206 610 667 (4 843) 1 371 748
1 - Attributable to the derecognition of the carrying amounts of assets leased by the Group to customers under finance leases (see note 5).
2 – Increase in the rehabilitation provision due to additional exploration activities undertaken during the year.
3 - The lease for the head office building expired in June 2022 and the Group is currently on a short-term lease for office space.
4 – A vehicle with a Rnil book value was disposed for R55 000.
NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
2. Property, plant and equipment (continued)
Pledge of assets
Tetra4 concluded finance agreements with the DFC on 20 August 2019 and the IDC on 17 December 2021. All
assets under construction and the land are held as security for the debt under these agreements. Pledged
assets under construction and land have a carrying amount of R1.3 billion as at 28 February 2023 (2022: R788.9
million), representing 100% (2022: 100%) of each of these asset categories.
Additions and borrowing costs
Additions include unrealised foreign exchange differences attributable to the DFC loan, interest capitalised as
part of borrowing costs in line with the Group’s policy and non-cash additions to right-of-use assets. These costs
and exchange differences were capitalised within assets under construction. The Group’s borrowings are
disclosed in note 9.
A reconciliation of additions to exclude the impact of capitalised borrowing costs, foreign exchange differences
and non-cash additions to right-of-use assets is provided below:
Capital commitments
R’000 2023 2022
Additions as shown above 610 667 305 866
Capitalised borrowing costs attributable to the DFC loan (note 9) (38 846) (31 293)
Unrealised foreign exchange losses attributable to the DFC loan (note 9) (120 290) (10 619)
Capitalised borrowing costs attributable to the IDC loan (note 9) (23 950) (3 231)
Non-cash additions (74 057) -
Non-cash additions to right-of-use assets (1 076) -
Additions as reflected in the cash flow statement 352 448 260 723
Capital commitments attributable to assets under construction are disclosed in note 17.
NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
3. Intangible assets
2023 2022
Accumulated Accumulated
amortisation amortisation
and Net book and
R’000 Cost impairment value Cost impairment Cost
Acquired intangible
assets
Exploration and 217 459 (32) 217 427 137 161 (32) 137 129
development costs
Computer software 6 647 (1 373) 5 274 4 184 (804) 3 380
Internally developed
intangible assets
Development costs – 15 666 - 15 666 11 466 - 11 466
Cryo-VaccTM
Development costs –
Helium Tokens System 3 475 - 3 475 2 048 - 2 048
TOTAL 243 247 (1 405) 241 842 154 859 (836) 154 023
Additions – Additions – At 28
At 1 March
separately internally February
2022 Amortisation
2023 acquired developed 2023
R’000
Exploration and development costs 137 129 80 298 - - 217 427
Computer software 3 380 2 463 - (569) 5 274
Development costs – Cryo-VaccTM 11 466 - 4 200 - 15 666
Development costs – Helium
Tokens System 2 048 - 1 427 - 3 475
TOTAL 154 023 82 761 5 627 (569) 241 842
Impairment of exploration and development costs
A Reserve and Resource Evaluation Report (“Evaluation Report”) was completed as at 1 September 2021 by
Sproule Incorporated (“Sproule”), an independent sub-surface consultancy based in Calgary, Canada. The
evaluation was both a geologic and economic update, based on technical and economic data supplied by Tetra4.
Material changes to this Evaluation Report compared to the last one completed in 2019 were the inclusion of 5
new completed wells, the initial flow testing of two wells with new “slant completions”, a more detailed sub-
surface geologic model, updated capital expenditure and operating costs, updated currency exchange rates, new
gas sales agreements and an updated field development plan. Management has not obtained an updated
evaluation report to support the impairment assessment as at 28 February 2023, as it is considered that such an
update will likely reflect an increase in the value of the Virginia Gas Field given the successful outcomes of
exploration activities undertaken during the year and the increase in liquid helium and LNG prices, amongst other
factors.
NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
3. Intangible assets (continued)
The independent Reserve and Resource estimates and associated economics contained in the Evaluation Report
are prepared in accordance with the Society of Petroleum Engineers (“SPE”) Petroleum Resources Management
(“PRMS”) guidance. Proved Plus Probable Helium and Methane Reserves (“2P Gas Reserves”) measured at 420.5
BCF (billion cubic feet) as at 1 September 2021 (2019: 142.4 BCF) with a net present value of R31.0 billion (2019:
R9.8 billion).
The net present value above equates to the recoverable amount and was determined using value-in-use
calculations were future estimated cash flows attributable to the 2P Gas Reserves were discounted at 15% (2019:
15%). In order to determine whether the Group’s exploration and evaluation assets were impaired as at 28
February 2023 the carrying amount of these assets of R217.4 million (2022: R137.1 million) was compared to the
recoverable amount of R31.0 billion (2022: R9.8 billion) which resulted in no impairment charge being recognised
for the year under review (2022: Rnil).
Management concluded that the impairment assessment is not sensitive to a change in the recoverable amount
or other factors due to the significant headroom of R30.8 billion (2022: R30.9 billion), being the difference
between the carrying amount of exploration and evaluation assets of R137.1 million (2022: R137.1 million) and
their recoverable amount of R31.0 billion (2022: R31.0 billion).
Development costs – Cryo-VaccTM
Development costs comprise expenditure incurred during the internal development of Cryo-VaccTM vaccine
storage units. No amortisation was recognised during the year as the storage units have not yet been brought
into use. Development costs include costs that meet the criteria required by IFRS and are directly attributable to
the development of the storage units. At 28 February 2023 the development costs are not impaired based on an
assessment performed by management.
Development costs – Helium Tokens System
Development costs comprise expenditure incurred during the internal development of the helium tokens system.
Once fully developed, these tokens will be traded and will allow holders to purchase helium from Tetra4. No
amortisation was recognised during the year as the tokens have not yet been brought into use. Development
costs include costs that meet the criteria required by IFRS and are directly attributable to the development of
the tokens. At 28 February 2023 the development costs are not impaired based on an assessment performed by
management.
NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
4. Restricted cash
R’000 2023 2022
Non-current
Environmental rehabilitation cash guarantee 6 021 3 738
Eskom Holdings SOC Limited ("Eskom") cash guarantee 8 414 -
14 435 3 738
Current
Debt Service Reserve Account (DSRAs) 77 552 34 257
DFC 61 733 34 257
IDC 15 819 -
TOTAL 91 987 37 995
Environmental Rehabilitation Cash Guarantee
The Group has an obligation to manage the negative environmental impact associated with its exploration and
drilling activities in the Free State. In this regard, the Group has recognised a rehabilitation provision of R40.0
million (2022: R30.8 million). Tetra4 has invested R6.0 million (2022: R3.7 million) in a cash deposit account which
has been ringfenced for use towards the settlement of the environmental rehabilitation obligation. Interest
earned on the cash deposit account is re-invested. This restricted cash has been classified as a non-current asset
as the rehabilitation programme is not expected to commence in the next 12 months.
Eskom cash guarantee
The Eskom guarantee represents amounts held as security for the due payment of electricity accounts and as
an early termination guarantee.
DSRAs
DFC
As part of the terms of the DFC finance agreement (see note 9) Tetra4 is required at any given date, to reserve
in a US dollar denominated bank account the sum of all payments of principal, interest and fees required to be
made to the DFC within the next 6 months. Should Tetra4 default on any payments due and payable, the DFC
reserves the right to fund the settlement of amounts due from this bank account. The bank account is restricted
and all interest earned accrues to Tetra4. This interest is recorded in interest income on the Statement of Profit
or Loss and Other Comprehensive Income.
IDC
Similar to the terms of the DFC finance agreement, Tetra4 is also required to reserve in a Rand denominated
bank account the sum of all payments of principal, interest and fees required to be made to the IDC within the
next 6 months. Should Tetra4 default on any payments due and payable, the IDC reserves the right to fund the
settlement of amounts due from this bank account. The bank account is restricted and all interest earned accrues
to Tetra4. This interest is recorded in interest income on the Statement of Profit or Loss and Other
Comprehensive Income.
The DRSAs are held as security for the DFC and IDC loans (see note 9). Foreign exchange gains amounting to R9.8
million (2022: R1.8 million) were recognised during the year under review with respect to the DFC DSRA.
NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
5. Finance lease receivables
R’000 2023 2022
Finance lease receivables 54 559 -
54 559 -
Non-current 48 095 -
Current 6 464 -
54 559 -
Finance lease arrangements
During the 2023 financial year end, Tetra4 entered into finance leasing arrangements, as a lessor, with Ceramics
and Ardagh Glass Packaging for certain equipment and infrastructure required for the delivery, storage,
utilisation and conversion of LNG to natural gas. The average term of finance leases entered into is 8 years.
Generally, these lease contracts do not include extension options and provide for the transfer of the ownership
of the leased assets to the lessees upon the fulfilment of contract provisions, including but not limited to the
settlement of all amounts due to Tetra4 under the lease contracts. Tetra4’s finance lease arrangements do not
include variable payments or lease modifications. The average effective interest rate contracted approximates
9.2% per cent per annum.
The directors of the Group estimate the loss allowance on finance lease receivables at the end of the reporting
period at an amount equal to lifetime ECLs using the simplified approach as the lessees are also the Group's only
trade debtors. None of the finance lease receivables at the end of the reporting period is past due. The directors
of the Group therefore consider that the finance lease receivables are not impaired.
NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
5. Finance lease receivables (continued)
The maturity analysis of finance lease receivables including the undiscounted lease payments to be received is
as follows:
R’000 2023 2022
Year 1 11 823 -
Year 2 10 040 -
Year 3 10 040 -
Year 4 10 040 -
Year 5 10 040 -
Year 6 onwards 26 457 -
Total undiscounted lease payments receivable 78 440 -
Less: unearned interest income (23 881) -
Net investment in the lease 54 559 -
Undiscounted lease payments analysed as:
Recoverable after 12 months 66 617 -
Recoverable within 12 months 11 823 -
78 440 -
Net investment in the lease analysed as:
Recoverable after 12 months 48 095 -
Recoverable within 12 months 6 464 -
54 559 -
The movements in finance lease receivables were as follows:
At 28
At 1 March
2023 February
2022 Repayments Interest
R’000 New leases 2023
Finance lease receivables - 54 233 (1 042) 1 368 54 559
- 54 233 (1 042) 1 368 54 559
The following table presents the amounts included in profit or loss:
R’000 Note 2023 2022
Selling profit on finance lease receivables 13 3 924 -
Interest income - net investment in finance leases 1 368 -
5 292 -
NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
6. Trade and other receivables
R’000 2023 2022
Financial instruments at amortised cost
Trade receivables 1 8 798 565
Other receivables 2 - 927
8 798 1 492
Non-financial instruments
Value-added tax 21 493 25 529
Deposits 1 279 -
Prepayments 87 11
22 859 25 540
Total trade and other receivables 31 657 27 032
1 - The increase in trade receivables is due to sales attributable to LNG which commenced in September 2022 following the commissioning of Phase 1 of the VGP and the commencement
of operations at the plant. Prior year trade receivables were attributable to the sale of CNG. The Group ceased selling CNG in September 2022.
2 - Prior year other receivables primarily comprised amounts that were due for shares issued in February 2022. Due to banking delays payments for these shares were received in March
2022.
Trade receivables are generally on 30 day terms and are not interest bearing. At 28 February 2023, the Group
is subjected to significant concentration risk as it only has two customers.
Trade and other receivables are categorised as follows in accordance with IFRS 9: Financial Instruments.
R’000 2023 2022
At amortised cost 8 798 1 492
Non-financial instruments 22 859 25 540
31 657 27 032
The Group applies a simplified approach of recognising lifetime expected credit losses for trade receivables as
these items do not have a significant financing component. The expected credit losses on trade receivables are
estimated using a provision matrix by reference to past default experience, adjusted as appropriate for current
observable data. Current observable data includes gross domestic product and interest rates. Expected credit
losses attributable to trade receivables were assessed as immaterial as at 28 February 2023 (2022: Rnil).
All trade and other receivables are denominated in South African Rands.
7. Cash and cash equivalents
Cash and cash equivalents consist of:
R’000 2023 2022
Cash at banks and on hand 17 301 36 714
Short-term deposits 38 404 58 374
TOTAL 55 705 95 088
Cash at banks earns interest at floating rates. Short-term deposits are made for varying periods depending on the
immediate cash requirements of the Group and earn interest at the respective short-term deposit rates. Included in
cash at banks and on hand is R5.8 million (2022: R2.2 million) denominated in Australian Dollars. The amounts
denominated in US Dollars at 28 February 2023 are immaterial (2022: Rnil). The Group banks with financial
institutions with a Ba2 Moody's standalone credit rating.
NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
8. Share capital
2023 2022
Authorised number of shares '000 '000
500 000 000 no par value shares 500 000 500 000
Reconciliation of number of shares issued:
Balance at 1 March 123 934 117 508
Issue of shares – ordinary shares issued for cash 20 777 6 400
Issue of shares – share incentive scheme, non-cash 37 26
BALANCE AT 28 FEBRUARY 144 748 123 934
Reconciliation of issued stated capital: R’000 R’000
Balance at 1 March 563 878 453 078
Issue of shares 574 447 113 376
Issue of shares – ordinary shares issued for cash 573 914 113 115
Issue of shares – share incentive scheme, non-cash 533 261
Share issue costs 1 (3 575) (2 576)
BALANCE AT 28 FEBRUARY 1 134 750 563 878
1- Share issue costs paid as at 28 February 2023 totalled R1.4 million (2022: R2.6 million) as presented in the statement of cash flows and the remaining amount totalling R2.2
million was unpaid as year-end (2022: Rnil).
Shares issued for cash during the year under review comprise:
Number of Value of
shares issued Issue price shares issued
Nature Date '000 Rand R'000
Ivanhoe Mines Limited 14 March 2022 5 632 35.62 200 632
Issue of shares on the Johannesburg
Stock Exchange2 Various 10 543 27.76 292 637
Issue of shares on the Australian Stock
Exchange2 Various 2 336 23.90 55 825
Exercise of options3 Various 2 266 10.95 24 820
Total 20 777 573 914
2
- Shares were issued to numerous parties consisting of existing and new domestic and international institutions and investors.
3
- Issue price represents the average exercise price of the options exercised during the year.
9. Borrowings
R’000 2023 2022
Non-current liabilities at amortised cost 806 558 773 056
Molopo Energy Limited (“Molopo”) 51 036 46 761
DFC 598 394 564 220
IDC 157 128 162 075
Current liabilities at amortised cost 104 457 49 784
DFC 79 786 49 784
IDC 24 671 -
Total 911 015 822 840
NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
9. Borrowings (continued)
The movement in borrowings for the year under review is as follows:
Non-cash
movements:
foreign At 28
At 1 March exchange Repayments- Repayments- February
R’000 2022 Interest1 losses2 capital interest3 2023
Molopo 46 761 4 275 - - - 51 036
DFC 614 004 38 846 120 290 (56 114) (38 846) 678 180
IDC 162 075 23 950 - - (4 226) 181 799
Total 822 840 67 071 120 290 (56 114) (43 072) 911 015
1 Interest on the Molopo loan is non-cash imputed interest representing the unwinding of the discount applied on initial recognition of the loan. Interest on the DFC and IDC loans is cash in
nature and is capitalised to assets under construction within property, plant and equipment (see note 2).
2 Exchange differences are capitalised to assets under construction within property, plant and equipment (see note 2) which is permissible under IAS 23 – Borrowing Costs.
3 Repayments of interest and fees attributable to the DFC loan in line with loan terms.
Molopo
Tetra4 entered into a R50.0 million loan agreement with Molopo on 1 May 2013. This loan was part of the conditions
of the sale of shares in Tetra4 from Molopo to Windfall Energy Proprietary Limited. The original loan term was for
the period from inception of the loan on 1 May 2013 until 31 December 2022. During this period, the loan was
unsecured and interest free.
As the loan was not repaid on 31 December 2022, it now accrues interest at the prime lending rate plus 2%. The
loan is still unsecured and does not have repayment terms. The loan can only be repaid when Tetra4 declares a
dividend and utilising a maximum of 36% of the distributable profits in order to pay the dividend. It is not expected
that the loan will be repaid in the next 12 months given the unavailability of distributable profits based on Tetra4's
most recent forecasts. As such, the loan has been classified as long term. The loan advanced to Tetra4 by Renergen
can only be repaid after the loan from Molopo has been settled.
The loan was discounted to present value for the period that it was interest free, at a discount rate which was equal
to the prime lending rate plus 2.00%. For the year under review the average discount rate applicable to the loan was
10.88% (2022: 9.50%). The imputed interest expense, representing the unwinding of the discount applied in
recognising the present value of the loan, is included in profit and loss under interest expense. The fair value of the
loan amount outstanding at 28 February 2023 amounts to R51.0 million (2022: R46.8 million).
DFC
Tetra4 entered into a US$40.0 million finance agreement with the DFC on 20 August 2019 (“Facility Agreement”).
The first draw down of US$20.0 million took place in September 2019, the second draw down of US$12.5 million
in June 2020 and the final drawdown of US$7.5 million on 28 September 2021. Tetra4 shall repay the loan in
equal quarterly instalments of US$1.1 million (R20.3 million using the rate at 28 February 2023) on each payment
date beginning on 1 August 2022 and ending on 15 August 2031. The loan is secured by a pledge of the Tetra4’s
assets under construction, land and the Debt Service Reserve Account disclosed in notes 2 and 4.
Interest
The first drawdown of $20.0 million attracts interest of 2.11% per annum. Interest on the second and final
drawdowns is 1.49% and 1.24% per annum, respectively.
Interest is payable by Tetra4 to the DFC quarterly on 15 February, 15 May, 15 August and 15 November of each year
(Repayment Dates) for the duration of the loan. This interest is capitalised to assets under construction within PPE
in line with the Group policy. Interest paid during the year totalled US$0.7 million (R11.7 million) (2022: US$0.6
million (R9.7 million)).
NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
9. Borrowings (continued)
Guaranty fee
A guaranty fee of 4% per annum is payable by Tetra4 to the DFC on any outstanding loan balance. The guaranty
fee is payable quarterly on the Repayment Dates. Tetra4 paid guaranty fees totalling US$1.6 million (R26.6
million) during the year under review (2022: US$1.3 million (R21.0 million)).
Commitment fees
A commitment fee of 0.5% per annum is payable by Tetra4 to the DFC on any undisbursed amounts under the
Facility Agreement. Commitment fees were payable quarterly on the Repayment Dates. Tetra4 did not pay any
commitment fees as there were no undrawn amounts during the year under review. (2022: US$2 500 million
(R38 250)).
Facility fee
A once-off facility fee of US$0.4 million (R4.8 million) was paid by Tetra4 to the DFC prior to is first drawdown on
26 September 2019.
Maintenance fee
An annual maintenance fee of US$0.04 million is payable by Tetra4 to the DFC for the duration of the loan term
and is payable on 15 November of each year, commencing on 15 November 2020. The maintenance fee covers
administrative costs relating to the loan. Tetra4 paid maintenance fees amounting to US$0.04 million (R0.6
million) during the year under review (2022: US$0.04 million (R0.5 million)).
Debt covenants
The following debt covenants apply to the DFC loan:
a) Tetra4 is required to maintain at all times i) a ratio of all interest-bearing Debt to EBITDA of not more than
3.0 to 1; (ii) a ratio of Current Assets to Current Liabilities of not less than 1 to 1; and (iii) a Reserve Tail Ratio
of not less than 25%.
b) Tetra4 is required to maintain at all times (i) a ratio of Cash Flow for the most recently completed four (4)
consecutive full fiscal quarters, taken as a single accounting period, to Debt Service for the most recently
completed four (4) consecutive full fiscal quarters, taken as a single accounting period, of not less than 1.30
to 1; and (ii) a ratio of Cash Flow for the most recently completed four (4) consecutive full fiscal quarters,
taken as a single accounting period, to Debt Service for the next succeeding four (4) consecutive full fiscal
quarters of not less than 1.3 to 1.
c) Tetra4 is required to ensure that the Debt Service Reserve Account (note 4) is funded in the aggregate of all
amounts due to the DFC within the next 6 months.
The covenants in a) and b) will apply 18 months after the completion of the construction of Phase 1 of the VGP.
Tetra4 has complied with the covenant under c) above for the year under review and believes that it will be able
to comply with the covenants throughout the tenure of the loan.
“Reserve Tail Ratio” means for any calculation date, the quotient obtained by dividing (a) all of the Borrower’s
remaining Proved Reserves as of such calculation date by (b) all of the Borrower’s Proved Reserves as of the
date of this Agreement.
IDC
Tetra4 entered into a R160.7 million loan agreement with the IDC on 17 December 2021. An amount of R158.8
million was drawn down on 22 December 2021 and is repayable in 102 equal monthly payments commencing
in July 2023. The loan terms include a 12-month interest capitalisation and an 18-month capital repayment
moratorium. The loan accrues interest at the prime lending rate plus 3.5% and is secured by a pledge of the
Tetra4’s assets under construction, land and the Debt Service Reserve Account disclosed in notes 2 and 4.
NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
9. Borrowings (continued)
The following debt covenants apply to the IDC loan.
a) Tetra4 is required to maintain the following the same financial and reserve tail ratios, and a Debt Service
Reserve Account as mentioned under the DFC loan.
b) In addition, Tetra4 shall not make any shareholder dividend distribution, repay any shareholders’ loans
and/or pay any interest on shareholders' loans or make any payments whatsoever to its shareholders
without the IDC’s prior written consent, if:
i. Tetra4 is in breach of any term of the loan agreement; or
ii. the making of such payment would result in a breach of any one or more of the financial ratios above.
The covenants in a) will apply from 1 August 2023. Tetra4 has complied with the covenant under b) above for
the year under review and believes that it will be able to comply with the covenants throughout the tenure of
the loan. Tetra4 also maintains a Debt Service Reserve Account with respect to the IDC loan.
The carrying values of the IDC and DFC loans closely approximate fair values.
10. Trade and other payables
R’000 2023 2022
Financial instruments
Trade payables1 71 070 6 225
Accrued expenses 13 769 9 275
84 839 15 500
Non-financial instruments
Accrued leave pay 3 029 2 758
Provision for bonus 4 445 3 344
92 313 21 602
1 The increase is trade payables reflects the increase in operations following the commissioning of the Virginia Gas Project in September 2022. The increase also reflects costs
associated with finalising the construction and commissioning of the plant.
The carrying values of the Group's trade and other payables are denominated in the following currencies:
US Dollars 18 292 28
Australian Dollars 59 144
Great British Pounds 1 075 -
Euros 32 112 40 775
South African Rands 40 775 21 430
92 313 21 602
NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
11. Segmental analysis
The Group has identified reportable segments that are used by the Group Executive Committee (chief operating
decision-maker) to make key operating decisions, allocate resources and assess performance. For management
purposes the Group is organised and analysed as follows:
Corporate head office
Corporate head office is a segment where all investment decisions are made. Renergen Limited is an investment
holding company focussed on investing in prospective green projects. Green projects entail pursuing knowledge
and practices that can lead to more environmentally friendly and ecologically responsible decisions and
lifestyles which can help protect the environment and sustain its natural resources for current and future
generations.
Tetra4
Tetra4 explores for, develops and sells LNG to the South African market. Up until September 2022, Tetra4 also
sold CNG locally. It operates in the Gauteng Province, Free State Province and Mpumalanga Province in the town
of Evander.
Cryovation
Cryovation developed the ground-breaking Cryo-VaccTM technology, which enables the safe transportation of
vaccines and biologics at extremely low temperatures without the need for electrical power. The Cryovation
business model is undergoing refinement and further development with insights from experts from various
fields with the intention of exploring several modifications that will improve the overall concept and operational
performance to enhance its appeal for the more niche biologics and gene-therapy market internationally.
NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
11. Segmental analysis (continued)
No geographical information is provided as all assets are situated in South Africa and all sales are made to two South African customers (three up until September
2022) (2022: one customer).
The analysis of reportable segments as at 28 February 2023 is set out below:
Corporate
2023 Head
R’000 Office Tetra4 Cryovation Total Eliminations Consolidated
Revenue - 12 687 - 12 687 - 12 687
External - 12 687 - 12 687 - 12 687
Depreciation and amortisation (194) (5 218) - (5 412) - (5 412)
Share-based payment expenses (7 905) (2 373) - (10 278) - (10 278)
Employee costs1 (8 555) 5 712 - (2 843) - (2 843)
Consulting and advisory fees (2 151) (2 787) (81) (5 019) - (5 019)
Listing costs (2 769) - - (2 769) - (2 769)
Computer and IT expenses (49) (3 751) (1) (3 801) - (3 801)
Marketing and advertising (684) (3 082) - (3 766) - (3 766)
Legal and professional fees (1 822) (1 651) - (3 473) - (3 473)
Net foreign exchange gains 818 8 751 - 9 569 - 9 569
Interest income 1 422 2 253 - 3 675 - 3 675
Imputed interest - (4 275) - (4 275) - (4 275)
Interest expense (5) (303) - (308) - (308)
Taxation (235) 9 942 - 9 707 - 9 707
LOSS FOR THE YEAR (25 513) (1 040) (172) (26 725) - (26 725)
TOTAL ASSETS 1 716 294 1 853 584 15 520 3 585 398 (1 684 517) 1 900 881
TOTAL LIABILITIES (29 928) (2 069 626) (3 284) (2 102 838) 1 042 161 (1 060 677)
1
Tetra4 employee costs impacted by the reversal of payroll related accruals.
NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
11. Segmental analysis (continued)
2022 Corporate
R’000 Head Office Tetra4 Total Eliminations Consolidated
Revenue - 2 637 2 637 - 2 637
External - 2 637 2 637 - 2 637
Depreciation and amortisation (322) (5 198) (5 520) - (5 520)
Share-based payment expenses (52) (3 063) (3 115) - (3 115)
Employee costs - (3 280) (3 280) - (3 280)
Consulting and advisory fees (1 148) (735) (1 883) - (1 883)
Listing costs (1 568) - (1 568) - (1 568)
Computer and IT expenses (16) (3 396) (3 412) - (3 412)
Marketing and advertising (21) (1 049) (1 070) - (1 070)
Legal and professional fees (2 230) (2 299) (4 529) - (4 529)
Net foreign exchange loss 12 3 557 3 569 - 3 569
Interest income 83 192 275 - 275
Imputed interest - (3 708) (3 708) - (3 708)
Interest expense - (509) (509) - (509)
Taxation 387 8 166 8 553 - 8 553
LOSS FOR THE YEAR (7 577) (26 173) (33 750) - (33 750)
TOTAL ASSETS 1 131 986 1 149 051 2 281 037 (1 116 343) 1 164 694
TOTAL LIABILITIES (724) (1 366 335) (1 367 059) 488 677 (878 382)
During the year ended 28 February 2023, R1.6 million or 12.2% (2022: R2.6 million or 100%) of the Group’s revenue
depended on the sales of CNG to one customer and R11.1 million or 87.8% (2022: Rnil or 0%) depended on the sales
of LNG to two customers. This revenue is reported under the Tetra4 operating segment.
Inter-segment revenues and balances are eliminated upon consolidation and are reflected in the ‘eliminations’
column.
12. Revenue
R’000 2023 2022
SALE OF PRODUCTS
CNG 1 550 2 637
LNG 11 137 -
Total revenue from contracts with customers 12 687 2 637
The Group's revenue is recognised when products are delivered to the destination specified by the customer and
the customer has gained control of the products through their ability to direct the use of and obtain substantially
all the benefits from the products.
Revenue increased by R10.1 million during the year under review as Tetra4 entered into supply agreements with
two new customers for the supply of LNG. Tetra4 commenced sales of LNG in September 2022.
This note should be read together with note 11 which provides details on the concentration of revenue.
NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
13. Other operating income
R’000 2023 2022
Profit on disposal of property, plant and equipment 1 55 -
Selling profit on finance lease receivables 3 924 -
Net foreign exchange gains 9 569 3 569
Other income 82 167
13 630 3 736
1 A motor vehicle with a net book value of Rnil was disposed of during the year for R55 000 resulting in the reported profit on disposal.
14. Taxation
R’000 2023 2022
MAJOR COMPONENTS OF THE TAX INCOME
Deferred
Originating and reversing temporary differences 9 707 8 553
9 707 8 553
RECONCILIATION OF EFFECTIVE TAX RATE
Accounting loss before taxation (36 432) (42 303)
Tax at the applicable tax rate of 28% (2022: 28%) 10 201 11 845
Tax effect of:
Non-deductible expenses
- Share-based payments (2 869) (872)
- Imputed interest expense (1 226) (568)
Current year losses for which no deferred tax asset has been recognised (22 762) (29 581)
Special oil and gas allowances 24 093 20 294
Increase in rehabilitation guarantee 2 485 9 057
Effect of change in tax rate (215) (1 622)
9 707 8 553
NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
15. Cash used in operations
R’000 2023 2022
Loss before taxation (36 432) (42 303)
Cash adjustments:
Interest received (3 675) (275)
Cash interest paid 6 29
Allocation of restricted cash (53 992) (17 184)
Lease liabilities – interest paid 302 480
Non-cash adjustments:
Imputed interest 4 275 3 708
Depreciation and amortisation 5 412 5 520
Share-based payments expense 10 278 3 115
Selling profit on finance lease receivables (3 924) -
Profit on disposal of property, plant and equipment (55) -
Decrease in IDC provision - (2 180)
Increase/(decrease) in leave pay accrual 140 (728)
Increase/(decrease) in bonus provision 1 877 (2 293)
Effects of exchange rate changes on cash and cash equivalents:
Net foreign exchange gains (933) (4 899)
Changes in working capital:
Inventory (147) -
Revenue received in advance 14 956 -
Finance lease receivables 1 042 -
Trade and other receivables (4 464) (19 263)
Trade and other payables (7 569) (2 668)
Cash used in operations (72 903) (78 941)
16. Loss per share
2023 2022
Cents Cents
Basic and diluted (cents) (19.86) (27.73)
R’000 R’000
Loss attributed to equity holders of the Company used in the calculation of (26 725) (33 750)
basic and diluted loss per share
000’s 000’s
Weighted average number of ordinary shares used in the calculation of 134 536 121 689
basic loss per share:
Issued shares at the beginning of the year 123 934 117 508
Effect of shares issued during the year (weighted) 10 602 4 181
Weighted average number of ordinary shares used in the calculation of
diluted loss per share 134 536 121 689
NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
16. Loss per share (continued)
The share options and bonus scheme shares have not been included in the weighted average number of shares
used to calculate the diluted loss per share or the diluted headline loss per share as they are anti-dilutive.
These options are anti-dilutive because of the loss position of the Group.
2023 2022
Headline loss per share Cents Cents
Basic and diluted (19.86) (27.73)
Reconciliation of headline loss R’000 R’000
Loss attributed to equity holders of the Company (26 725) (33 750)
Profit on disposal of property, plant and equipment (55) -
Tax effect 15 -
Headline loss (26 765) (33 750)
The headline loss has been calculated in accordance with Circular 1/2021 issued by the South African Institute
of Chartered Accountants.
17. Contingent liabilities and commitments
Contingent liabilities
There are no contingent liabilities as at 28 February 2023 (2022: nil) attributable to any of the Group companies.
Commitments
2023 Committed but
R’000 Spent to date not spent Total approved
Capital equipment 317.0 56.4 373.4
TOTAL 317.0 56.4 373.4
The Board approved total project costs amounting to R1.5 billion relating to the construction of the Virginia Gas
Plant. As at 28 February 2023 the Group had contractual commitments totalling R56.4 million (Feb 2022: R219.7
million) for the procurement of capital equipment. As at the end of the reporting period there were no other
material contractual commitments to acquire capital equipment.
18. Events after the reporting period
Proposed issue of 67.5 million ordinary shares of the Company
On 8 March 2023, the Company announced that it had resolved to proceed to obtain a specific authority from
its shareholders, in order to issue 67.5 million ordinary shares, including such ordinary shares represented by
American Depository Shares (“ADSs”) and CDIs (a unit of beneficial ownership in Renergen shares as defined in
the ASX Settlement Operating Rules) to be issued under the specific authority (“Specific Issue Shares”) or
convertible debt instruments that will be convertible into Specific Issue Shares (“Specific Authority”) in terms of
one or more placements (“Placements”), which Placements are expected to primarily be executed through the
proposed listing and public offering of Renergen shares represented by ADSs on the Nasdaq Stock Market.
NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
18. Events after the reporting period (continued)
A circular was issued to Shareholders on 8 March 2023, calling for a general meeting on 11 April 2023 to consider
and authorise the Specific Authority, which Specific Authority was authorised.
Increase in beneficial interests held by the Government Employees Pension Fund and the FRB ITF Northshore
Prime Flexible Qualified Investor Hedge Fund
On 7 March 2023, the Company announced that it had received notification from the Public Investment
Corporation, manager of the Government Employees Pension Fund, advising that it had acquired a beneficial
interest in the securities of the Company such that the total of all beneficial interests held by it amounts to
5.118% of the Company’s total issued ordinary share capital.
On 6 March 2023, the Company announced that it had received notification from the FRB ITF Northshore Prime
Flexible Qualified Investor Hedge Fund advising that it had acquired a beneficial interest in the securities of the
Company such that the total of all beneficial interests held by it amounts to 5.72% of the Company’s total issued
ordinary share capital.
19. Going concern
The annual financial statements presented have been prepared on a going concern basis, which assumes the
Group will be able to discharge its liabilities as they fall due. The Group regularly monitors its liquidity position
as part of its ongoing risk management programme. In conducting its most recent going concern assessment:
• The Group has considered the period up to 30 April 2024 (“Assessment Period”) as it has assessed that
key funding initiatives will be concluded during this period.
• The Group has reviewed its cash flow projections for the Assessment Period (“Cash Forecast”) and has
performed stress testing of the base case projections. The stress case scenarios include downward
variations in the selling prices of LNG (40%) and helium (30%) and a 10% increase in operating costs.
• The Group has considered volatilities in the exchange rates, interest rates and energy prices in
determining the Cash Forecast. Furthermore, based on information available on the assessment date, the
Group has concluded that developments with the Russia/Ukraine war and disruptions to global supply
chains will not materially impact its operations during the Assessment Period.
After consideration of the Cash Forecast and the outcome of the stress testing performed, the Group has
concluded that the going concern basis of preparation is appropriate. The Cash Forecast base case and stress
case scenarios assume the following fund-raising initiatives (“Funding Initiatives”) during the Assessment Period:
• The Group expects to complete the disposal of 10% of Tetra4 to the CEF for R1.0 billion. This disposal
remains subject to the CEF securing funding to acquire the interest in Tetra4.
• The Group expects to raise sufficient debt and equity to fund the Phase 2 expansion of the VGP as follows:
o The Group has completed a technical and commercial due diligence with the DFC and SBSA (“Lenders”)
for a debt package amounting to R13.6 billion ($750.0 million). The Lenders are expected to obtain their
final approvals in June 2023.
o The Group plans to raise capital by way of a proposed IPO on the Nasdaq Stock Market in the United
States of America and anticipates raising up to R2.6 billion (US$150.0 million) during the Assessment
Period. Shareholder approval for the issue of the shares pursuant to the proposed IPO was obtained
on 11 April 2023. The proposed IPO is dependent on market conditions which will determine whether
it is completed during the Assessment Period. The proposed IPO is also subject to exchange control
approvals.
NOTES TO THE CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued)
19. Going concern (continued)
The regulatory and other approvals highlighted above, and the completion of the Funding Initiatives during the
Assessment Period represent material uncertainties which may cast doubt on the Group’s ability to continue as
a going concern. The Board has a reasonable expectation that the approvals will be obtained, and that the
Funding Initiatives will be completed during the Assessment Period which enables the Group to have adequate
resources to meet its obligations and continue its operations in the normal course of business for the Assessment
Period. The Funding Initiatives highlighted above assume that the Group will be expanding into the larger Phase
2 project, and not simply operating with the current Phase 1 project alone.
20. COVID-19 AND RUSSIA/UKRAINE WAR
COVID-19
There were no material contractual obligations or supply chain impacts during the year under review, however
prior year COVID-19 global and local impacts contributed to an overall delay in the commissioning of the Virginia
Gas Project which occurred in September 2022 compared to the initial scheduling for Q2 2021. Management will
remain alert to developments that could impact the construction of Phase 2 of the Virginia Gas Project, especially
as this relates to imported components required for the project.
Russia/Ukraine war
The Russia/Ukraine war did not have a material effect on the operations of the Group for the year under review.
Management will continue to monitor the situation in order to identify and mitigate risks that may arise in future.
Johannesburg
2 May 2023
Authorised by: Stefano Marani
Chief Executive Officer
Designated Advisor
PSG Capital
For Investors & Media contact us on info@renergen.co.za or +27 10 045 6007
Date: 02-05-2023 08:00:00
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