Wrap Text
Condensed Consolidated Interim Results for the Six Months Ended 31 August 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”)
CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED
31 AUGUST 2017
Key Features
- Positive record of decision granted to Tetra4’s
Environmental Impact Assessment (“EIA”)
- Commence construction of natural gas liquefiers in early
2018; production of Liquefied Natural Gas (LNG) to commence
early 2019, following an additional equity raise
- Successful pilot project; more than 1,000,000 incident free
kilometres
- Significant savings during trials on two dual-fuel European
brand trucks; in advanced discussions with several large fleet
operators
COMMENTARY
About Renergen
Renergen is an integrated alternative and renewable energy
business that invests in early stage energy projects across
Africa and emerging markets. Through our investment in Tetra4,
we will be the first onshore company with a petroleum
production right in South Africa and the only one with an
environmental authorisation to commence full-scale production.
Commenting on the 2017 interim results, Stefano Marani, CEO of
Renergen, commented:
“We are very pleased about the positive record of decision of
the Tetra4’s Environmental Impact Assessment granted by the
Petroleum Agency of South Africa (“PASA”) on 29 September
2017. Because of significant engineering, Tetra4 will commence
construction of natural gas liquefiers in early 2018 with
production of Liquefied Natural Gas (LNG) to commence early in
2019.
“The trials on two European brand trucks, running on dual
fuel, have shown significant savings in both overall fuel
consumption as well as cost per kilometre metrics. We are in
advanced discussions with several large fleet operators and
Tetra4 is now capable of creating a nationwide filling network
for customers given the higher energy density of LNG achieving
significantly longer ranges compared to Compressed Natural Gas
(“CNG”).
“We are excited about the progress made on all fronts. This
will realise value far sooner than previously anticipated and
once the plant is in full production, we should be able to
explore and develop further opportunities at Tetra4.”
Operational overview
In the life of any project, delivery of milestones is critical
and we consider this period as having been the most important
to date in terms of delivery. The approval by PASA to commence
construction of the pipeline was the very last hurdle Tetra4
needed to overcome, to go into full-scale production. We now
enjoy the status of not only having the first onshore
petroleum production right in the country, but the only one
with an environmental authorisation to commence full-scale
production.
We have always maintained that Tetra4 is a unique opportunity,
and this has once again played a critical role in our
engineering. Given the very high concentration of helium in
our gas, it meant we were able to optimise plant design and
use the cryogenics from the helium liquefaction to produce LNG
instead of compressing the gas. This has many benefits, but
the most obvious of which is that LNG has a significantly
higher energy density than compressed natural gas. This means
that our original delivery footprint of 300km from Welkom has
now expanded to a national footprint, and the use of LNG in
vehicles means the range has been extended by multiples. For
all intent and purposes, the benefits of using LNG instead of
diesel in a heavy vehicle, include significant cost savings
and environmental benefits as a result of burning a cleaner
fuel with as much as 90% reduction in carbon emissions.
Our interim results have been modest, and losses increased
slightly primarily as a result of higher engineering costs and
external consultant fees for the finalisation of environmental
submissions. We do not expect to be net cash flow generative
until the plant goes into full scale production in 2019. This,
however, is normal for early-stage exploration companies.
Subsequent to the period end, our project in the Ivory Coast
reached a critical point where management had to take a
decision on whether to continue to fund it or write off the
investment to date. The total investment in the project to
date, shared by Renergen and Windfall Energy Proprietary
Limited, who sold the project along with Tetra4 in November
2015, has been R12.5m and will require a further R20m to
achieve finalisation of the studies. The studies to date have
shown that the tariff required to deliver reasonable
investment returns to Renergen are above the norm, and we
believe Renergen would benefit more from deploying that
investment to developing Tetra4’s Evander gas field as well as
bringing a second operation online. For this reason,
management has decided not to continue funding the Ivory Coast
hydro-electric projects further and will concentrate
exclusively on the South African natural gas market for the
time being. The impairment if required from this action will
be reflected in our full year financial statements which is in
keeping with accepted accounting practices given the decision
to impair was taken after the half-year period.
Email investor queries to investorrelations@renergen.co.za.
Financial review
Revenue increased by 179% to R1.4m (H1 2016: R0.5m) bolstered
by a higher diesel price following a weaker Rand and higher oil
prices. Cost of sales increased by 381% to R1.9m (H1 2016:
R0.4m) mainly as a result of incorporation of depreciation of
the pilot plant.
Operating expenditure increased by 77% to R16.7m (H1 2016:
R9.4m) on the back of early engineering and consulting services
in the preparation for the pipeline and liquefier.
Property plant and equipment (PPE) and Intangible assets
increased in line with the continued expansion of the
operations by the Group.
Condensed Consolidated Statement of financial position as at 31
August 2017
Restated
Unaudited Unaudited
Audited as
as at as at
at
28
31 August 31 August
Figures in R'000 February
2017 2016
Notes 2017
Assets
Non - Current Assets
Property, plant and
Equipment 32,732 20,068 21,756
Intangible assets# 6 76,595 62,600 75,453
Deferred tax asset 6,350 - 6,234
Total non-current
assets 115,677 82,668 103,443
Current Assets
Investment in joint
venture - 6,992 -
Trade and other
receivables 3,928 6,607 8,933
Cash and cash
equivalents# 8 4,139 14,576 12,401
Total current assets 8,067 28,175 21,334
Total Assets 123,744 110,843 124,777
Equity and
Liabilities
Equity
Stated capital 147,531 124,158 137,585
Accumulated loss (59,286) (34,439) (42,551)
Foreign currency
translation reserve 4,707 - 3,389
Equity attributable
to parent 92,952 89,719 98,423
Non-controlling
interest (11,029) (8,670) (9,262)
Total Equity 81,923 81,049 89,161
Liabilities
Non-Current
Liabilities
Other financial
liabilities 28,753 25,398 27,013
Provisions 3,100 - 3,100
Total non-current
liabilities 31,853 25,398 30,113
Current Liabilities
Trade and other
payables 9,968 4,396 5,503
Total Liabilities 41,821 29,794 35,616
Total Equity and
Liabilities 123,744 110,843 124,777
Net asset value per
share (cents) 103.16 104.75 113.71
Tangible net asset
value per share
(cents)# 6.71 23.84 17.48
# These numbers have been restated, refer to note 3
Condensed Consolidated Statement of profit or loss and other
comprehensive income for the unaudited six-month period ended 31
August 2017
Unaudited Unaudited Audited
31 August 31 August 28 February
Figures in R'000 Notes 2017 2016 2017
Sales 4 1,429 512 1,722
Cost of sales 5 (1,857) (386) (2,127)
Gross
(Loss)/Profit (428) 126 (405)
Other income 23 16 375
Operating
expenses 7 (16,694) (9,407) (22,989)
Operating loss (17,099) (9,265) (23,019)
Interest Income 222 950 1,287
Fair value
adjustment (1,740) (1,541) (3,156)
Finance costs - - (8)
Total loss before
tax (18,617) (9,856) (24,896)
Taxation 115 - 6,234
Total loss after
tax (18,502) (9,856) (18,662)
Foreign currency
translation
reserve 1,318 3,389
Total
Comprehensive
loss for the
period (17,184) (9,856) (15,273)
Total loss
attributable to:
Owners of the
parent (16,735) (9,109) (17,221)
Non-controlling
interest (1,767) (747) (1,441)
(18,502) (9,856) (18,662)
Total
comprehensive
loss attributable
to:
Owners of the
parent (15,417) (9,109) (13,832)
Non- controlling
interest (1,767) (747) (1,441)
(17,184) (9,856) (15,273)
Loss per share
Basic and diluted
loss per share
(cents)* # 21.15 11.77 22.19
Basic and diluted
loss # 16,735 9,109 17,221
Weighted average
number of shares 79,135,431 77,375,528 77,611,000
Number of shares
in issue 79,412,605 77,375,528 78,412,605
Headline loss per
share
Basic and diluted
headline loss per
share (cents)*# 21.15 11.76 22.20
Headline loss # 16,735 9,101 17,229
Weighted average
number of shares 79,135,431 77,375,528 77,611,000
Reconciliation of
headline loss
Loss attributable
to ordinary
equity holders # 16,735 9,109 17,221
(Loss)/Profit on
disposal of
assets - (8) 15
Impairment of
fixed asset - - (3)
Tax effects of
disposal and
impairments of
fixed assets - - (4)
Headline loss # 6,735 9,101 17,229
*There was no difference between basic earnings per share
and diluted earnings per share in the current period.
# These numbers have been restated, refer to note 3
Condensed Consolidated Statement of Changes in Equity for the
unaudited six-month period ended 31 August 2017
Foreig Total
n Attributab Non-
Stated Accumul
Figures in Curren le to Controlli Total
Capita ated
R'000 cy Equity ng Equity
l Loss
Reserv holders of interest
e the group
Balance at 01 -
124,15 (25,330
March 2016 - 98,828 (7,923) 90,905
8 )
Loss for the
period (9,109) - (9,109) (747) (9,856)
Balance at 31
124,15 (34,439
August 2016 - 89,719 (8,670) 81,049
8 )
Share issue
13,482 - - 13,482 13,482
Share issue
costs (55) - - (55) (55)
Total loss
- (8,112) - (8,112) (694) (8,806)
Other
comprehensive
- - 3,389 3,389 - 3,389
income
Non-
controlling
interest at
acquisition 102 102
of Mega Power
Renewables
Balance at 28
137,58 (42,551
February 2017 3,389 98,423 (9,262) 89,161
5 )
Share issue 10,000 - 10,000 - 10,000
Share issue
costs (54) (54) (54)
Other
comprehensive
income 1,318 1,318 1,318
Loss for the
(16,735
period (16,735) (1,767) (18,502)
)
Balance at 31
147,53 (59,286
August 2017 4,707 92,952 (11,029) 81,923
1 )
Condensed Consolidated Statement of Cash Flows for the unaudited
six-month period ended 31 August 2017
Restated
Unaudited
Unaudited Audited
28
31 August 31 August
Figures in R'000 Notes February
2017 2016
2017
Cash flows from
operating activities
Cash used in
operations 11 (6,330) (10,366) (24,414)
Interest Earned 222 950 1,287
Finance costs - - (8)
Net cash outflow from
operating activities (6,108) (9,416) (23,135)
Acquisition of
property, plant and
equipment (12,292) (14,484) (16,469)
Acquisition of
intangible assets (72) (4,260)
Profit on sale of
property, plant and
equipment - - 15
Net cash outflow from
investing activities (12,364) (14,484) (20,714)
Increase/(Reduction)
of environmental
rehabilitation
guarantee # 264 (2,755) 1,102
Ivory coast project
funding - (490) -
Net proceeds on share
issue 9,946 - 13,427
Net cash inflow/
(outflow) from
financing activities 10,210 (3,245) 14,529
Total cash movement
for the period (8,262) (27,145) (29,320)
Cash at the beginning
of the period 12,401 41,721 41,721
Total cash at the end
of the period 4,139 14,576 12,401
# These numbers have been restated, refer to note 3
NOTES TO THE FINANCIAL STATEMENTS
The notes to the financial information as at 31 August 2017 are
set out below:
1. Basis of preparation
The unaudited, unreviewed condensed interim financial statements are
prepared in accordance with the Listings Requirements of JSE Limited
(“Listings Requirements”) for interim reports, and the requirements of
the Companies Act (Act 71 of 2008 as amended) applicable to condensed
financial statements. The Listings Requirements require interim reports
to be prepared in accordance with International Financial Reporting
Standards, IAS 34 Interim Financial Reporting and the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and the
Financial Reporting Pronouncements as issued by the Financial Reporting
Standards Council.
The board of directors of Renergen Limited (“the Board”) takes full
responsibility for the preparation of this interim report. The condensed
financial statements comprise the condensed statement of financial
position as at 31 August 2017 and the condensed statements of
comprehensive income, changes in equity and cash flows for the period
ended 31 August 2017. These condensed interim financial statements are
neither audited nor reviewed by the Company’s auditors and were prepared
under the supervision of the Chief Financial Officer, Miss F Ravele
CA(SA).
2. Accounting policies
All accounting policies applied in these interim financial statements are
in terms of IFRS and are consistent with those applied by the Group in
its consolidated financial statements for the year ended 28 February
2017.
3. Correction of error
The following changes have restated the financial results for
comparatives
• Intangible assets as at 28 February 2017 of R76.5m incorrectly
included a cash reserves of R1,1m in Molopo Mineral Rights. This
amount has been restated to cash and cash equivalents. The cash
reserves are administered by Lombard Insurance on behalf of the
Company and are invested in an-interest bearing account.
• The calculation of the basic and diluted loss earnings per share and
headline earnings per share incorrectly used the total loss for the
period ending 31 August 2016 instead of the basic and diluted loss
attributable to owners. Basic and diluted loss per share has been
restated from R9 856 to R9 109, and headline loss to R9 101. This
resulted in basic and diluted loss per share restated from 12.73
cents to 11.77 cents, and headline loss per share restated from
12.74 cents to 11.76 cents.
• Tangible net asset value per share as at 28 February 2017 was
incorrectly calculated based on an incorrect tangible net asset
amount used. The figure was restated from 8.13 due to arithmetic
error, now restated to 17.48.
4. Sales
Sales were generated from the sale of Compressed Natural Gas.
5. Cost of sales
Cost of sales are comprised as follows:
Unaudited 31 Unaudited 31 Audited 28
Figures in R’000 August 2017 August 2016 February 2017
Gas purchased - 241 406
Production costs 1,857 145 1,721
1,857 386 2,127
6. Intangible assets
Accumulated Carrying
Figures in R’000 Cost Amortisation Value
Exploration and
Development costs 12,223 (26) 12,197
Molopo Project
Mineral Rights 52,112 - 52,112
Domain Name 41 - 41
Cote d’Ivoire
Hydroelectric
scheme project 12,245 - 12,245
Balance as at 31
August 2017 76,621 (26) 76,595
Comparatives
Accumulated Carrying
Figures in R’000 Cost Amortisation Value
Exploration and
Development costs 9,076 - 9,0976
Molopo Project
Mineral Rights 53,479 - 53,479
Domain Name 45 - 45
Balance as at 31
August 2016 62,600 - 62,600
Accumulated Carrying
Figures in R’000 Cost Amortisation Value
Exploration and
Development costs 9,051 (13) 9,038
Molopo Project
Mineral Rights # 55,477 - 55,477
Domain Name 41 - 41
Cote d’Ivoire
Hydroelectric
scheme project 10,897 - 10,897
Restated Balance
as at 28 February
2017 75,466 (13) 75,453
# These numbers have been restated, refer to note 3
7. Operating Expenses
Operating loss for the year is stated after taking the following expenses
into account:
Unaudited Audited
31 August Unaudited 28 February
Figures in R’000 2017 31 August 2016 2017
Consulting and
advisory fees 2,644 2,070 5,169
Employee costs 5,152 4,302 6,509
Depreciation* 316 465 1,025
Directors fees 648 760 1,276
Other operating
expenses 7,934 1,810 9,010
16,694 9,407 22,989
*Depreciation relating to production plant is included as part of cost of
sales and has not been included in the depreciation figure above.
8. Cash and cash equivalents
Cash and cash equivalents consist of the following:
Unaudited Audited
31 August Unaudited 28 February
Figures in R’000 2017 31 August 2016 2017
Bank balances 2,773 13,720 11,299
Environmental
rehabilitation
guarantee*# 1,366 856 1,102
4,139 14,576 12,401
*The company has exploration rights over land in Evander (Mpumalanga) and
in Virginia (Free State). Lombard has granted a guarantee to the Company
of R3.1m, the company contributes towards the guarantee in monthly
instalments reducing the value of the amount guaranteed by Lombard. The
contributions made are invested in an interest-bearing account
administered by Lombard on behalf of the Company. The balance in the
interest-bearing account is reflected in the cash and cash equivalent.
# These numbers have been restated, refer to note 3
9. Related party transactions
There were no related party transactions entered into in the six months
ended 31 August 2017.
10. Segment analysis
The operating segments are reported in a manner consistent with the Group.
Renergen Limited has three operating segments;
Corporate head office
Corporate head office is a segment where all investment decisions are made.
Renergen Limited, the investment holding company focuses on investing in
prospective green projects.
TETRA4 Proprietary Limited
Tetra4 explores, develops and sells compressed natural gas to the South
African market.
Mega Power Renewables
Mega Power Renewables is in Côte d’Ivoire.
The segment is managing the development of a hydro-electric project. Its
functional currency is Euros.
Closing balances of assets and liabilities have been translated at the closin
Euro/ZAR exchange rate as at 31 August 2017.
Analysis of reportable segments as at 31 August 2017 is set out below:
Mega Consolida
Corpora Power ting
Figures in te Head Renewab Adjustmen Consolidat
R'000 Office Tetra4 les Total ts ed
Revenue 5,000 1,429 - 6,429 (5,000) 1,429
External - 1,429 - 1,429 - 1,429
Inter -
segment 5,000 - - 5,000 (5,000) -
Loss for (18,502
the period (831) (17,671) - ) - (18,502)
Total
assets 738,650 102,439 12,481 853,570 (729,826) 123,744
Total
liabilitie
s 1,678 162,381 7,508 171,567 (129,746) 41,821
Comparatives
Analysis of reportable segments as at 31 August 2016 is set out below:
Mega Consolida
Corpora Power ting
Figures in te Head Renewab Adjustmen Consolidat
R'000 Office Tetra4 les Total ts ed
Revenue - 512 - 512 - 512
External - 512 - 512 - 512
Inter -
segment - - - - - -
Loss for
the period (2,388) (7,468) - (9,856) - (9,856)
Total
assets 715,830 90,654 - 806,484 (695,641) 110,843
Total
liabilitie
s 3,167 122,352 - 125,519 (95,725) 29,794
Analysis of reportable segments as at 28 February 2017 is set out below:
Mega Consolida
Corpora Power ting
Figures in te Head Renewab Adjustmen Consolidat
R'000 Office Tetra4 les Total ts ed
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 (18,662
the period (565) (18,097) - ) - (18,662)
Total
assets 729,533 103,710 11,108 844,351 (719,574) 124,777
Total
liabilitie
s 1,621 146,035 7,508 155,164 (119,548) 35,616
11. Cash utilized in operations
Unaudited Unaudited Audited
31 August 31 August 29 February
Figures in R’000 2017 2016 2017
Loss before taxation (18,617) (9,856) (24,896)
Adjustments for:
Interest Earned (222) (950) (1,287)
Finance costs - - 8
Fair value adjustments 1,740 1,541 3,156
Depreciation and
amortization 1,329 465 1,841
Impairment - - 3
Profit on sale of assets - - 15
Other non-cash items (30) - -
Changes in working
capital
Trade and other
receivables 5,005 (2,473) (5,051)
Trade and other payables 4,465 907 1,797
Cash used in operations (6,330) (10,366) (24,414)
12. Contingent liabilities and commitments
13.1 Contingent liabilities
There are no contingent liabilities in the annual financial
statements for 31 August 2017.
13.2 Commitments
The were no material changes to the commitments as disclosed
in the annual financial statements for 28 February 2017.
13. 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 period ending 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, share capital of R15 million
was raised in September 2017. Renergen and Industrial Development
Corporation (IDC) concluded an agreement for funding of R218 million
towards the development and installation of the gas pipeline and
expansion of the operating plant. The board 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.
14. Events after the reporting period
Share capital of R15 million was raised in September 2017.
On 29 September 2017, the Petroleum Agency of South Africa granted a
positive record of decision to Tetra4 ‘s environmental impact assessment.
The Cote d’Ivoire Hydroelectric scheme project Ivory reached a critical
point subsequent to the period ended, where management had to assess the
viability of continuing to fund the project or write off the investment
to date. The studies to date have shown that the tariff required to
deliver reasonable investment returns to Renergen are above the norm. A
decision has been taken not to continue funding the Cote d’Ivoire
Hydroelectric scheme project further, the impact of this decision will be
reflected in the full year financial statements as the decision to
discontinue funding and the indicators of impairment arose after 31
August 2017.
The board is unaware of any other events that occurred after the
reporting period.
Johannesburg
31 October 2017
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 across Africa and emerging
markets. 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
Chartered Accountants (SA)
Registered Auditors
Member firm of Grant Thornton
International
Designated Adviser PSG Capital
Date: 31/10/2017 12:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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