Renergen : Preliminary Final Report

Renergen Limited

Appendix 4EAPPENDIX 4E PRELIMINARY FINAL REPORT

For personal use only

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")

Reporting Period Previous PeriodYear ended 28 February 2022 (2022)

Year ended 28 February 2021 (2021)

RESULTS ANNOUNCEMENT TO THE MARKET

2022 Rm	2021 Rm	Change %
Revenue Loss after tax attributable to ordinary shareholders Total comprehensive loss attributable to ordinary shareholders		2.6 33.8 33.8	1.9 42.6 42.6	36.8% -20.7% -20.7% Change % -23.6%
Basic and diluted loss per share		Cents 27.73	Cents 36.29

•  Higher energy prices combined with the improvement in COVID-19 lockdown restrictions in South Africa during the year under review relative to the prior comparative period had a positive impact on the Group's revenue which increased by 36.8% or R0.7 million. Tetra4 Proprietary Limited ("Tetra4") is the only subsidiary of Renergen.

•  The loss after tax attributable to ordinary shareholders and the total comprehensive loss attributable to ordinary shareholders decreased by 20.7% or R8.8 million mainly as a result of the following:

  • o An increase in other operating income by R2.8 million primarily driven by net foreign exchange gains;

  • o An improvement in the operating cost base by R6.8 million mainly due to lower consulting fees, lower employee costs and the absence of net foreign exchange losses during the year, offset by increases in listing costs due to shares issued during the year, legal and professional fees and other costs;

  • o A deferred tax credit of R0.4 million and an improvement in net finance costs by R0.1 million; offset by

  • o An increase in share-based payments expenses by R1.3 million following the award of share options to employees pursuant to the new Share Appreciation Rights Plan approved in July 2021.

•  The Group is in the final stages of commissioning the Virginia Gas Project which is expected to become operational imminently.

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2022 Cents	2021 Cents	Change %
Tangible net asset value per share	106.74	80.21	33.1%

For personal use only

R'000	R'000	Change %
Total assets	1 164.7	49.2%

•  The increase in the Group's tangible net asset value per share is attributable to an increase in net tangible assets by R38.0 million for the year under review driven primarily by additional investments in property, plant and equipment ("PPE"), increases in the deferred tax asset, working capital and restricted cash and a decrease in lease liabilities, offset by increases in borrowings and provisions and the cash utilisation for the year. The tangible net asset value per share was further impacted by an increase of 6.4 million in the issued share capital.

•  The Group made a final drawdown of R112.1 million (US$7.5 million) on the loan facility from the US International Development Finance Corporation ("DFC") in September 2021 and acquired a new loan from the Industrial Development Corporation ("IDC") of R160.7 million in December 2021, of which R158.8 million was drawn down at year end. Part of these proceeds were utilised to fund the investments in the Group's PPE and intangible assets.

PRELIMINARY FINAL FINANCIAL STATEMENTS

Please refer to pages 7 to 31 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 2022;

• • Condensed consolidated statement of financial position as at 28 February 2022;

• • Condensed consolidated statement of changes in equity for the year ended 28 February 2022;

• • Condensed consolidated statement of cash flows for the year ended 28 February 2022; 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 2022 is currently ongoing.

Shareholders on the South African register should note that this announcement does not meet the JSE reporting requirements as the financial information presented herein is neither reviewed, nor audited and that this announcement is released in accordance with the requirements of the ASX Listing Rules. The Company expects to publish its audited financial results for the year ended 28 February 2022 on or about 19 May 2022.

OTHER DISCLOSURE REQUIREMENTS

Dividend or distribution reinvestment plans

Renergen did not declare dividends during the year ended 28 February 2022 (2021: nil).

Entities over which control has been gained or lost during the year

There was no acquisition or loss of controlling interest during the year ended 28 February 2022.

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Details of associates and joint ventures

The Group does not have associates or joint ventures.

For personal use only

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.

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For personal use only

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 financial year ended 28 February 2022 has been a challenging yet very exciting one for the Group. Having faced significant headwinds during the construction period in relation to several significant but distinct challenges highlighted below:

• • Impacts of the COVID-19 pandemic resulted in forced lockdowns, global shipping and supply chain delays

• • Nationwide strike action with workers affiliated to the National Union of Metalworkers of SA (NUMSA) in the steel and engineering industry during the 3rd quarter resulted in disruption of equipment and services required during construction

• • An extreme weather patternknown as La Niña has hit the country since December 2021and has resulted in above average rainfall which has resulted in further construction delays on site

Despite these extenuating circumstances the team has shown enormous maturity, resilience, and dedication to find solutions to mitigate these challenges and reduce the impact on the overall progress of the Virginia Gas Project. The speed at which the leadership team has rallied the employees, contractors, and other stakeholders is a true testament to their capability, culture and passion we are building across the Group operations. The transition from largely a project company to an operational focused company is well underway and we believe we are ready to take the next step in our exciting journey.

Key highlights for the year under review include:

• • 5 out of 6 drilling successes from our exploration campaign

• • The securing of a pre-paid forward sell agreement with Argonon Helium who will issue helium backed tokens known as ArgHe's

• • Completion of the third and final disbursement of the USDFC facility

• • Completion and drawdown of the IDC facility

• • Securing of Several Phase 1 LNG offtake agreements

• • Significant increase in our proven reserves

• • Completion of the Phase 2 Front End Engineering Design study

• • Securing of several phase 2 helium offtake agreements

• • Production and operation of the first CRYO-VACC™

Phase 1

The conclusion of two strategic contracts for the offtake and supply of LNG to Consol Glass Proprietary Limited and Ceramic Industries Proprietary Limited, a subsidiary of Italtile Limited, has signalled the confidence from key players within the South African Industrial Sector in our ability to deliver a high-quality and reliable product to market. These agreements equate to 60% of our planned phase 1 production with

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the remaining 40% is destined for the logistics markets in a dual fuel application for the heavy trucking sector.

For personal use only

The Group made the third and final drawdown against the USDFC loan facility to fund the ongoing construction of the Phase 1 LNG/LHe plant. The Group also secured a facility with the IDC and completed the draw down to finance the virtual pipeline infrastructure including trucks, trailers, and downstream dispensing equipment.

The construction of the Virginia Gas Plant is ongoing with hot commissioning having commenced post the year under review. We anticipate the start-up of the plant soon and are now taking every opportunity to double check and review before finally turning the plant on.

Phase 2

The global helium market has been dealt several debilitating blows recently further exacerbating a short supply in an already tight market. The helium market growth is expected to be driven by the growing demand from the healthcare, technology, and aerospace industry sectors. These are important factors that will continue to shape and manage how the Group continues to develop the next phase of the Virginia Gas Project.

The increase in our proven reserves has paved the way for the expansion of the Virginia Gas Project into a proposed phase 2 development. The FEED study supporting this development concept was completed in parallel and has resulted in us receiving Class 3 estimate sufficient to meet stringent requirements of credit committees for debt funding institutions and preparing suitable budgets to begin approaching potential equity and debt providers.

The securing of several helium offtake agreements has resulted in approximately 65% of the planned phase 2 production already contracted under long-term take or pay contracts ranging from 10 to 15 years in length. The contracts are all US Dollar dominated and increase annually at US CPI. The Group is strategically not looking to sell any additional helium under this type of arrangement and will look to place the balance into the spot market to enjoy the upside potential in the commodity movement. As alluded to earlier the helium market has faced several supply challenges and disruptions and the spot market has increased exponentially in the last six months.

Cryovations

The COVID-19 vaccination response programs started with much enthusiasm during the year under review but quickly tapered off during the 3rd Quarter. We completed the manufacturing and assembly during the 2nd and 3rd quarters of 2021 for the efficient transportation and storage of cold biologics for extended periods during transit which resulted in a mismatched timing opportunity. The waning support for ongoing vaccination has impacted the rollout and scale of the opportunity locally within South Africa. We believe the product has enormous potential and are 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. These companies currently face substantial challenges in their cold-chain logistics which Cryo-VaccTM is ideally placed to assist with solving these challenges.

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