APPENDIX 4E PRELIMINARY FINAL REPORT 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 subsidiaries “the Group”) Current reporting period Year ended 29 February 2024 (2024) Previous period Year ended 28 February 2023 (2023) RESULTS ANNOUNCEMENT TO THE MARKET 2024 2023 Change Change Rm Rm Rm % Revenue 29.0 12.7 16.3 128.4% Loss after tax attributable to owners of Renergen 110.3 26.7 83.6 313.1% Total comprehensive loss attributable to owners of Renergen 110.2 26.7 83.5 312.7% Change Change Cents Cents Cents % Basic and diluted loss per share 75.10 19.86 55.24 278.1% • Renergen through its wholly owned subsidiary Tetra4 Proprietary Limited (“Tetra4”) commenced the production and sale of liquefied natural gas (“LNG”) in September 2022. LNG production steadily increased in the first half of 2024 averaging approximately 17 tonnes a day prior to the LNG plant being placed on maintenance from September 2023 to early February 2024 as fully set out in the results commentary accompanying this announcement. The positive start to the 2024 financial year contributed to an overall increase in revenue by 128.4%. • The total comprehensive loss attributable to ordinary shareholders increased from 26.7 million to R110.2 million, or 312.7%, broadly as a result of the plant being down over 4 months during a protracted maintenance period resulting in lower than expected revenues, combined with higher costs1 (employee, security, repairs and maintenance costs, depreciation, and interest) and foreign exchange losses, which were offset by a higher gross profit contribution, higher interest income, marginally lower share-based payment expenses and an increase in the deferred tax credit. A further analysis of the financial performance of the Group for the year under review is contained in the financial review accompanying this announcement. 1 Following commissioning of Phase 1, certain employee costs, security costs, foreign exchange differences and interest expenses no longer qualify to be capitalised under IFRS Accounting Standards and were therefore recorded in the statement of profit or loss and other comprehensive loss resulting in significant increases in operating and interest costs of the Group for the year under review. For clarity the Group will continue to capitalise qualifying costs directly attributable to segments of the plant that are still under construction including in the near-term qualifying costs associated with the construction of Phase 2. 2024 2023 Change Change R R R % Tangible net asset value per share 8.40 4.13 4.27 103.4% Change Change Rm Rm Rm % Total assets 2 709.1 1 900.9 808.2 42.5% 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 and to progress Phase 2 of the VGP, an increase in cash and cash equivalents and restricted cash balances, and increases in trade and other receivables and inventory of the Group, which were funded primarily by debt amounting to R374.0 million and equity funding totalling R32.6 million acquired during the year under review. Year-end cash balances also include part of the proceeds received from Mahlako Gas Energy Proprietary Limited for a 5.5% interest in Tetra4 (see Fund Raising section in the accompanying announcement). Further commentary on the Group’s assets and liabilities is provided in the financial position review accompanying this announcement. PRELIMINARY FINAL FINANCIAL STATEMENTS Please refer to pages 10 to 34 of this report wherein the following are provided: • Consolidated statement of profit or loss and other comprehensive loss for the year ended 29 February 2024; • Consolidated statement of financial position as at 29 February 2024; • Consolidated statement of changes in equity for the year ended 29 February 2024; • Consolidated statement of cash flows for the year ended 29 February 2024; and • Notes to the 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 29 February 2024 is in process. OTHER DISCLOSURE REQUIREMENTS Dividend or distribution reinvestment plans Renergen did not declare dividends during the year ended 29 February 2024 (2023: nil). Entities over which control has been gained or lost during the year On 16 August 2022, Renergen formed a new wholly owned subsidiary, Renergen USA Inc. (“Renergen US”), to assist with various fund raising and business development activities of the Group in the United States market (see page 25 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 Renergen achieved critical milestones in advancing its strategic initiatives during the year ended 29 February 2024 (“FY2024”), the highlights of which securing US$535.0 million of debt funding from the United States government through the United States Development Finance Corporation (“DFC”) and a further US$260.0 million of debt from Standard Bank of South Africa (“SBSA”) for the Phase 2 operations; and concluding an investment by our new partners Mahlako Gas Energy Proprietary Limited (“MGE”) of R550.0 million in return for a 5.5% stake in the Virginia Gas Project (“VGP”). In addition, Renergen secured a strategic investment of US$7.0 million from an Italian specialist gases company, SOL S.p.A in the form of a convertible debenture which converts into equity in the upcoming Nasdaq initial public offering (“Nasdaq IPO”), and a further milestone was the South African government designating the VGP as a strategic integrated project (“SIP”) as defined in the Infrastructure Development Act 23 of 2014 due to its expected contribution to alleviating the energy crisis in the country by reducing reliance on energy imports whilst providing clean energy. This support, despite the challenges experienced this year, provides a strong positive indicator of the significance and viability of the VGP to investors and stakeholders. These achievements above were however met with some unexpected operational challenges at the VGP, the Group’s primary asset of which it now holds 94.5% subsequent to the sale of the 5.5% stake to MGE (“MGE Transaction”), relating to the LNG and helium operations, as previously reported. Despite these temporary setbacks, which have now been resolved, Renergen remains the only domestic onshore producer and supplier of LNG, and with its world-class Reserves is well placed to become a significant global Lhe supplier, as evidenced by the continued support of our customers, investors, and lenders. Key developments during FY2024 are summarised below: • FY2024 LNG production totalled 2 876 tonnes (2023: 977 tonnes). • Conclusion of an LNG offtake agreement with Time Link Cargo (“Time Link”) (supply expected to commence from the third quarter of the year ending 28 February 2025 (FY2025”) to be supplied from the remaining Phase 1 capacity). • Approval of senior debt funding by the DFC (US$535.0 million) and SBSA (US$260.0 million), which includes US$45.0 million approved for the refinancing of the existing Phase 1 debt, subject to the fulfilment of conditions precedent. • The subscription for Renergen debentures amounting to US$3.0 million (R56.0 million) by SOL, a transaction linked to the planned and broader initial public offering of Renergen shares on the Nasdaq Stock Market, with the remaining US$4.0 million (R75.0 million) being subscribed for post year end. • Completion of the MGE Transaction on 27 February 2024. • • Identification of additional gas reservoirs from the analysis of completed gravity and aeromagnetic surveys. • Granting of several of the Phase 2 required authorisations, licenses and / or permits including: o Environmental authorisation for the drilling, gas gathering pipeline and LNG and LHe processing plant including balance of plant construction and operations by the Department of Mineral Resources and Energy (“DMRE”). o Water Use License issued by the Department of Water and Sanitation “(DWS”) for water usage registration for the Phase 2 activities in relation to overhead power line and substation connection. o Environmental Authorization from the Department of Forestry, Fisheries and Environment (“DFFE”) for the Phase 2 activities in relation to overhead power line and substation connection. Operations review VGP The VGP comprises exploration and production rights over 187 000 hectares of gas fields across Welkom, Virginia and Theunissen, in the Free State Province in South Africa. This abundance of methane and helium reserves which can be extracted at a lower cost relative to our peers provides the Group with a competitive advantage in meeting the growing demand for LNG and helium worldwide. Phase 1 LNG There was a steady increase in LNG production during the first half of FY2024 averaging approximately 17 tonnes of LNG per day. During routine annual maintenance carried out in September 2023 which had originally been scheduled to last until December 2023, Tetra4 experienced challenges with the primary mixed refrigerant compressors which necessitated replacement of certain components. This prolonged the duration of the maintenance due to long lead times for the components. As a result of these challenges, the LNG plant was not operational from September 2023 up until early-February 2024 when LNG deliveries recommenced. This impacted FY2024 production volumes which totalled 2 876 tonnes for the year (2023: 977 tonnes). Tetra4 expects to increase LNG production over the coming months and plans to reach the maximum nameplate capacity of 50 tonnes later this year. The current drilling campaign continues with the last wells expected to be completed around H1FY25 while in parallel we construct the required gas gathering pipeline fixed infrastructure to tie in these wells. The interventions undertaken during the maintenance period will yield significant benefits and most likely lead to increased long-term uptime and production efficiency. Tetra4 currently sells all LNG produced from its operations to two local customers and will soon onboard a third customer following the conclusion of the agreement with Timelink in May 2023. Pursuant to this agreement, Tetra4 will supply Time Link with LNG from the remainder of the Phase 1 capacity during FY2025. Time Link, a South African based company, will transition its fleet from exclusive diesel operation to a dual-fuel LNG alternative, thereby reducing costs and improving their overall emissions footprint. The LNG will be dispensed from an LNG filling station based in Time Link’s depot. Helium As previously reported, following the initial commencement of helium operations, a leak in the helium cold box required the unit to be removed from site and repaired leading to significant delays. Following a successful repair, commissioning recommenced and the system was tested using third party gaseous helium in October 2023. Phase 2 The Phase 2 expansion will not impact the Phase 1 operations and is expected to achieve commercial operation during the 2027 calendar year. Phase 2 will produce 684 tonnes of LNG per day and 4.2 tonnes of LHe per day once fully ramped up to name plate capacity. Several take-or-pay agreements (10–15 year) have been concluded with several top-tier global industrial companies for just over 50% of the anticipated Phase 2 LHe production. The balance of the LHe is earmarked for sales in the international spot market and / or to strategic customers that will allow the Company to participate in the existing LHe commodity price upside as we begin to participate further downstream in the value chain. Renergen expects to also contract a majority of the Phase 2 LNG on 5–8 year take-or-pay agreements, servicing the industrial, logistics and gas-to-power industries. A significant gas shortage described as a “gas cliff” by local media is expected to occur in South Africa from H2 2026. The timing of the perceived gas cliff and the expected timing of the commencement of the Phase 2 operations is coincidental but also opportune. To date the following has been completed with respect to the Phase 2 expansion project: • Feasibility studies and front-end engineering design; • Worley RSA Proprietary Limited was selected for the scope of the owners engineer role; • Environmental authorisation was granted by the DMRE for the overhead powerline to feed Phase 2 of the plant; and • Confirmation was received from the DWS of the water usage registration for Phase 2. Funding initiatives for the VGP are discussed in the Fund Raising section below. Financial review Fund raising The Group’s equity funding raising initiatives are ongoing and were successful in FY2024 relative to our targets for the year. As mentioned earlier, the Group completed the MGE Transaction which raised R550.0 million for the acquisition of a 5.5% interest in Tetra4 by MGE. Part of the proceeds from the MGE Transaction will be utilised to progress the construction of the VGP with the remainder to be used to repay the debt owed to SBSA. The Company’s other equity transactions raised a further R32.6 million as outlined in note 5. The conclusion of the SBSA bridge loan of R303.0 million and the subscription for Renergen debentures amounting US$3.0 million (R56.0 million) by SOL were previously highlighted in our results for the six months ended 31 August 2023. Proceeds from these debt arrangements were mainly used to progress the construction of the VGP. The construction of Phase 2 is expected to cost US$1.2 billion. In addition to the equity proceeds available from the MGE Transaction, US$795.0 million of debt financing has been secured from the DFC and SBSA which have approved debt amounting US$535.0 million and US$260.0 million respectively, which includes US$45.0 million for the refinancing of the existing Phase 1 debt package subject to the fulfilment of standard conditions precedent – mainly the completion of an equity capital raise, which may include the Nasdaq IPO, and other conditions that are standard for loans of this nature and similar to those that were in place for Phase 1 funding. The Nasdaq IPO is expected to occur in two tranches which should lead to significantly reduced dilution over time. In order to mitigate risk from an execution perspective, the first placement will be sufficient to see the Group bring a 30 million standard cubic feet plant into operation. A plant of this size is sufficient to cover all debt payments while still producing healthy profits. The second placement which is not expected to occur within the first 12 months of the first placement, will see the plant expanded to a 45 million standard cubic feet capacity. Financial performance Broadly, the commissioning of Phase 1 of the VGP in the prior year and the challenges experienced with the primary mixed refrigerant compressors at the LNG plant during the second half of FY2024 had a significant impact on the financial performance of the Group. Whilst the commissioning of Phase 1 had a positive effect on the overall gross profit contribution from LNG operations, it impacted the accounting basis for several of the Group’s costs which were previously capitalised during the construction of Phase 1 of the plant. Following the commissioning of Phase 1, these costs no longer qualify to be capitalised under IFRS Accounting Standards and were therefore recorded in the statement of profit or loss and other comprehensive loss resulting in significant increases in operating and interest costs of the Group. The commissioning of Phase 1 also triggered the depreciation of assets which had been brought into use which resulted in significantly higher depreciation charges for the year compared to the prior year (classified within operating costs). On the other hand, challenges with the primary mixed refrigerant compressors necessitated repairs which resulted in a substantial increase in repairs and maintenance costs of the Group for the year under review (included under operating expenses). The increases in operating and interest costs were partially offset by increases in the gross profit contribution as mentioned, higher interest income, marginally lower share-based payment expenses and an increase in the deferred tax credit for the year due to the higher loss position of the Group. Overall, the Group reported a loss after taxation of R109.8 million (2023: R26.7 million) with a corresponding loss per share of 75.10 cents (2023: 19.86 cents). Gross profit contribution The implementation of the strategic plan to ramp up Phase 1 LNG operations resulted in increased production year-on-year despite the challenges experienced with the plant. Production averaged 17 tonnes per day before the plant was placed on maintenance between September 2023 and early February 2024. Overall, LNG produced during the year totalled 2 876 tonnes compared to 977 tonnes in the prior year, an increase of 194%, resulting in reported revenue of R29.0 million (2023: R12.7 million), an increase of 128%. The gross profit contribution for the year therefore increased by R6.1 million to R10.1 million (2023: R4.0 million), an increase of 153%. Other operating and interest expenses Operating expenses increased by R104.0 million to R146.9 million (2023: R42.9 million) year-on-year. Factors which broadly impacted these expenses are summarised below: • IFRS Accounting Standards permits the capitalisation of costs, including interest costs (see interest expense section below) and exchange differences, directly attributable to the acquisition or construction of a qualifying asset. As reflected in our past reporting, prior to the commissioning of Phase 1 of the VGP, the Group capitalised within assets under construction qualifying employee costs, interest costs, exchange differences and security costs, amongst other costs. Capitalisation of costs attributable to the construction of Phase 1 ceased when the plant was commissioned in September 2022 and the referred costs are now recorded within operating expenses. For clarity, the Group will continue to capitalise qualifying costs directly attributable to segments of the plant that are still under construction including in the near-term qualifying costs associated with the construction of Phase 2. The change in accounting outlined in this paragraph had the following impact on key operating expenses: o Employees costs increased by R22.9 million to R25.7 million (2023: R2.8 million); o Security costs increased by R7.2 million to R7.5 million (2023: R0.3 million); and o A net foreign exchange loss of R14.7 million was recognised primarily on the DFC loans (2023: net foreign exchange gain of R9.6 million included under other operating income). • As previously mentioned, the Group commenced the depreciation of plant and equipment and motor vehicles which were brought into use from July 2023 which significantly increased the depreciation and amortisation expense by R15.4 million to R18.4 million (2023: R3.0 million). The repairs and maintenance which were undertaken during the second half of the year to repair the primary mixed refrigerant compressors also resulted in an increase in repairs and maintenance costs by R16.6 million to R17.0 million (2023: R0.4 million). • The Group’s remaining operating costs increased by R27.2 million to R63.6 million (2023: R36.4 million) mainly due to increased operations relative to the prior year. This cost base primarily includes health and safety costs, insurance, travel costs, IT expenses, selling and distribution costs and marketing and advertising costs. Interest expenses Interest expenses increased by R18.1 million to R22.7 million (2023: R4.6 million) year-on-year mainly impacted by the change in accounting highlighted above. A less significant contributing factor was the increase of R3.5 million in imputed interest on the rehabilitation provision. Share-based payments expense The share-based payments expense decreased by R2.2 million to R8.1 million (2023: R10.3 million) impacted mainly by less share scheme awards in the current year relative to the prior year, the vesting of bonus share scheme awards and the lapsing of awards under the Share Appreciations Rights Plan. Interest income Interest income increased by R7.2 million to R10.9 million (2023: R3.7 million) year-on-year mainly due to interest earned on finance lease arrangements (with Group as lessor) which was higher by R4.4 million as the finance leases were in place for a full year compared to a partial year in the previous year. Interest on cash balances was also higher by R1.9 million relative to the prior year due to higher cash balances from the Company’s fund-raising initiatives and higher interest rates during the year under review. Deferred taxation credit The Group reported a deferred taxation credit of R37.2 million (2023: R9.7 million) mainly reflecting the impact of increased unutilised tax losses of the Group. Financial position The Group’s net asset value (“NAV”) increased by R481.0 million to R1.321 billion (2023: R0.840 billion), an increase of 57% and broadly a positive reflection of the progress on the VGP and the Group’s fund- raising initiatives. Specifically, the growth in NAV can be attributed to the following: • Further investments in the Group’s property, plant and equipment (“PPE”) and intangible assets aided mostly by debt and equity funding acquired during the year (see Fund Raising section). The Group’s PPE and intangible assets increased by R345.8 million year-on-year, on a net basis, primarily reflecting expenditure to increase the capacity of the plant (gas gathering and additional exploratory drilling expenditure) and the progression of Phase 2 of the VGP. For purposes of the cash flow statement additional investments in the Group’s PPE and intangible assets totalled R303.7 million exclusive of capitalised borrowing costs and non-cash additions attributable to right-of-use assets. The Group’s PPE and intangible assets totalled R1.959 billion as at 29 February 2024 (2023: R1.614 billion). • An increase in the deferred taxation asset by R37.2 million to R90.4 million (2023: R53.2 million) as highlighted under the Performance Review section. • An increase in restricted cash balances by R12.5 million to R104.5 million (2023: R92.0 million) primarily reflecting the impact of a weaker exchange rate on the US Dollar denominated DFC Debt Service Reserve Account (“DSRA”) and a higher prime lending rate on the Industrial Development Corporation (“IDC”) borrowings which affect the translation of year end balances and future repayment obligations, respectively. The Group is required to retain funds relating to future repayment obligations for the IDC and DFC debt for any given six-month period in DSRAs. • An increase in cash and cash equivalents by R415.4 million to R471.1 million (2023: R55.7 million). The cash and cash equivalents as at 29 February 2024 mainly reflect the proceeds from the MGE Transaction. • The Group’s trade and other receivables and inventory increased marginally by R3.0 million reflecting an overall increase in operations year-on-year. Increases in the above assets were offset by: • Increases in borrowings by R325.2 million to R1.236 billion (2023: R0.911 billion), on a net basis, primarily reflecting the acquisition of new debt totalling R374.0 million mainly from SOL and SBSA, interest expenses totalling R106.3 million1, foreign exchange losses totalling R29.7 million2, repayments totalling R175.2 million and a decrease of R9.6 million in the Molopo loan following remeasurement. • A net increase of R2.2 million in the Group’s remaining liabilities primarily reflecting an increase in lease liabilities attributable to the lease of the head office building, offset by a decrease in trade and other payables. • A net decrease of R5.6 million in the Group’s finance lease receivables mainly reflecting the impact of repayments made with respect to amounts owed to the Group by lessees. 1– R90.7 was capitalised to PPE and R15.4 million is included in the interest expense in the statement of profit or loss and other comprehensive loss. 2–R16.5 million was capitalised to PPE and R13.5 million is included in the foreign exchange loss of R14.7 million included in operating expenses. Changes in directorate Refer to note 15 for changes in directors post the reporting period. There were no other changes to directors for the year under review and up until the date of this report. Litigation update As reported in our 2023 Integrated Annual Report, it is reiterated that the Group, represented by its subsidiary Tetra4, continues to be involved in ongoing legal proceedings as outlined below. Despite the absence of significant developments or alterations in the status of all of these matters since the previous report, it is important to acknowledge the inherent uncertainty in predicting the outcomes of ongoing legal proceedings. Nevertheless, the Groupʼs management remains steadfast in its confidence that the resolution of any pending legal matter, whether assessed independently or in aggregate, will not have a substantial impact on the Group’s financial position, cash flows, or operational activities. Legal Proceedings Involving African Carbon Energy Proprietary Limited (“Africary”) Africary continues to pursue a mining right application for underground coal gasification in areas that overlap with Tetra4’s Production Right. The proposed method of underground coal gasification may potentially diminish Tetra4’s capacity to extract gas from the area of the Production Right where the overlap exists. Tetra4 submitted objections in respect of the said application to the relevant authorities. Tetra4 maintains confidence that the mining right will not be granted, given Tetra4’s priority in right and application, reinforced by established case law supporting our legal stance. Legal Proceeding involving, amongst other, the National Energy Regulator of South Africa (“NERSA”) On or about December 2021, Tetra4 initiated motion proceedings in the High Court of South Africa to seek clarification on the jurisdiction of NERSA regarding certain operational activities. Tetra4 contends that these activities fall under the regulatory purview of the Production Right granted in accordance with the Mineral and Petroleum Resources Development Act 28 of 2002. The sought-after order aims to resolve the ambiguity and potential contradictions arising from disparate sets of legislation affecting Tetra4. Notably, Tetra4 already holds all necessary licenses, and this action seeks legal clarity on the regulatory framework governing upstream versus downstream operations. The matter is now poised for adjudication, and proceedings will advance through the legal process accordingly. CONSOLIDATED STATEMENT OF FINANCIAL POSITION The Consolidated Statement of Financial Position of the Group as at 29 February 2024 is set out below: R’000 Notes 2024 2023 ASSETS Non-current assets 2 110 001 1 729 356 Property, plant and equipment 2 1 877 132 1 371 748 Intangible assets 3 82 212 241 842 Deferred taxation 11.2 90 435 53 236 Restricted cash 17 243 14 435 Finance lease receivables 42 979 48 095 Current assets 599 126 171 525 Inventory 2 073 147 Restricted cash 87 300 77 552 Finance lease receivables 5 969 6 464 Trade and other receivables 32 709 31 657 Cash and cash equivalents 4 471 075 55 705 TOTAL ASSETS 2 709 127 1 900 881 EQUITY AND LIABILITIES Stated capital 5 1 170 059 1 134 750 Share-based payments reserve 26 445 21 099 Other reserves 628 598 Accumulated profit/(loss) 46 515 (316 243) Equity attributable to equity holders of Renergen 1 243 647 840 204 Non-controlling interest 6 77 456 - TOTAL EQUITY 1 321 103 840 204 LIABILITIES Non-Current Liabilities 816 467 860 323 Borrowings 7 748 659 806 558 Lease liabilities 11 613 1 108 Deferred revenue 15 743 15 093 Provisions 40 452 37 564 Current Liabilities 571 557 200 354 Borrowings 7 487 470 104 457 Trade and other payables 82 272 92 313 Lease liabilities 1 815 1 184 Provisions - 2 400 TOTAL LIABILITIES 1 388 024 1 060 677 TOTAL EQUITY AND LIABILITIES 2 709 127 1 900 881 CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE LOSS The Consolidated Statement of Profit and Loss and Other Comprehensive Loss of the Group for the 12- month period ended 29 February 2024 is set out below: R’000 Notes 2024 2023 Revenue 9 28 952 12 687 Cost of sales (18 885) (8 684) Gross profit 10 067 4 003 Other operating income 9 778 13 630 Share-based payments expense (8 074) (10 278) Other operating expenses 10 (146 868) (42 879) Operating loss (135 097) (35 524) Interest income 10 853 3 675 Interest expense and imputed interest (22 747) (4 583) Loss before taxation (146 991) (36 432) Taxation 11.1 37 199 9 707 LOSS FOR THE YEAR (109 792) (26 725) Other comprehensive income: Items that may be reclassified to profit or loss in subsequent periods: Exchange differences on translation of foreign operation (74) - Items that may not be reclassified to profit or loss in subsequent periods: Revaluation of properties 110 - OTHER COMPREHENSIVE INCOME FOR THE YEAR 36 - TOTAL COMPREHENSIVE LOSS FOR THE YEAR (109 756) (26 725) Loss attributable to: Owners of Renergen (110 273) (26 725) Non-controlling interest 481 - LOSS FOR THE YEAR (109 792) (26 725) Total comprehensive loss attributable to: Owners of Renergen (110 243) (26 725) Non-controlling interest 487 - TOTAL COMPREHENSIVE LOSS FOR THE YEAR (109 756) (26 725) Loss per ordinary share Basic and diluted loss per share (cents) 12 (75.10) (19.86) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY The Consolidated Statement of Changes in Equity of the Group for the 12-month period ended 29 February 2024 is set out below: Total equity Foreign attributable Non- Share-based currency Accumu- to equity controlling Share payments Revaluation translation lated holders of interest R’000 capital reserve reserve reserve profit/(loss) Renergen (“NCI”) Total equity BALANCE AT 28 FEBRUARY 2022 563 878 11 354 598 - (289 518) 286 312 - 286 312 Loss for the year - - - - (26 725) (26 725) - (26 725) Total comprehensive loss for the year - - - - (26 725) (26 725) - (26 725) Issue of shares 574 447 (533) - - - 573 914 - 573 914 Share issue costs (3 575) - - - - (3 575) - (3 575) Share-based payments expense - 10 278 - - - 10 278 - 10 278 BALANCE AT 28 FEBRUARY 2023 1 134 750 21 099 598 - (316 243) 840 204 - 840 204 Loss for the year - - - - (110 273) (110 273) 481 (109 792) Other comprehensive income for the year - - 104 (74) - 30 6 36 Total comprehensive loss for the year - - 104 (74) (110 273) (110 243) 487 (109 756) Sale of interest in Tetra4 - - - - 473 031 473 031 76 969 550 000 Issue of shares 35 309 (2 728) - - - 32 581 - 32 581 Share-based payments expense - 8 074 - - - 8 074 - 8 074 BALANCE AT 29 FEBRUARY 2024 1 170 059 26 445 702 (74) 46 515 1 243 647 77 456 1 321 103 Notes 8 6 CONSOLIDATED STATEMENT OF CASH FLOWS The Consolidated Statement of Cash Flows of the Group for the 12- month period ended 29 February 2024 is set out below: R’000 Notes 2024 2023 Cash flows used in operating activities (53 847) (70 596) Cash used in operations 13 (64 700) (72 903) Interest received 10 853 2 307 Cash flows used in investing activities (303 740) (440 781) Investment in property, plant and equipment 2 (221 874) (352 448) Disposal of property, plant and equipment - 55 Investment in intangible assets 3 (81 866) (88 388) Cash flows from financing activities 773 717 470 925 Ordinary shares issued for cash 5 32 581 573 914 Share issue costs 5 (2 208) (1 367) Proceeds from part-disposal of interest in Tetra4 6 550 000 - Repayment of borrowings – capital 7 (105 245) (56 114) Repayment of interest on borrowings 7 (69 999) (43 072) Interest paid on leasing and other arrangements (3 683) (308) Proceeds from borrowings 7 373 972 - Payment of lease liabilities – capital (1 701) (2 128) TOTAL CASH MOVEMENT FOR THE YEAR 416 130 (40 452) Cash and cash equivalents at the beginning of the year 4 55 705 95 088 Effects of exchange rate changes on cash and cash equivalents (760) 1 069 TOTAL CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 4 471 075 55 705 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of preparation The consolidated financial statements for the year ended 29 February 2024 have been prepared in accordance with the framework concepts, the recognition and measurement criteria of IFRS Accounting Standards 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), the South African Reporting Requirements, the ASX Listing Rules and the requirements of the South African Companies Act of 2008, as amended. The consolidated 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 financial statements are in terms of IFRS and are consistent with those applied in the previous consolidated 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 consolidated financial statements have been prepared on a going concern basis. The consolidated 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 extracted summarised consolidated financial statements presented in this report have not been audited or reviewed by the Group’s external auditor. 2. Property, plant and equipment 2024 2023 Accumu- Accumu- lated lated Cost or deprecia- Net book Cost or deprecia- Net book R’000 valuation tion value valuation tion value Assets under 1 284 461 - 1 284 461 1 342 450 - 1 342 450 construction Development asset 238 962 (997) 237 965 - - - Right-of-use asset – 12 684 (1 101) 11 583 - - - head office building Land – at revalued 3 600 - 3 600 3 473 - 3 473 amount Plant and machinery 338 216 (24 446) 313 770 23 164 (13 504) 9 660 Furniture and fixtures 1 582 (982) 600 1 240 (846) 394 Motor vehicles 17 224 (4 458) 12 766 10 375 (1 924) 8 451 Office equipment 287 (162) 125 243 (135) 108 IT equipment 1 148 (986) 162 1 148 (772) 376 Right-of-use assets – 5 671 (3 475) 2 196 5 603 (2 488) 3 115 motor vehicles Office building 2 065 (888) 1 177 2 065 (682) 1 383 Lease hold improvements: Office equipment 142 (142) - 142 (140) 2 Furniture and fixtures 10 321 (1 594) 8 727 3 064 (728) 2 336 TOTAL 1 916 363 (39 231) 1 877 132 1 392 967 (21 219) 1 371 748 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 2. Property, plant and equipment (continued) Environ- mental At 29 At 1 March 2024 Revaluation Derecog- rehabilita- February 2023 Transfers2 Additions Depreciation R’000 nition1 tion costs 2024 Assets under construction 1 342 450 - - (3 055) (322 062) 267 128 - 1 284 461 Development asset3 - - - - 238 962 - (997) 237 965 Right-of-use asset – head office building - - - - - 12 684 (1 101) 11 583 Land – at revalued amount 3 473 127 - - - - - 3 600 Plant and machinery 9 660 - - - 315 052 - (10 942) 313 770 Furniture and fixtures 394 - - - - 342 (136) 600 Motor vehicles 8 451 - - - 7 010 - (2 695) 12 766 Office equipment 108 - - - - 44 (27) 125 IT equipment 376 - - - - - (214) 162 Right-of-use assets – motor vehicles 3 115 - (915) - - 984 (988) 2 196 Office building 1 383 - - - - - (206) 1 177 Lease hold improvements: Office equipment 2 - - - - - (2) - Furniture and fixtures 2 336 - - - - 7 257 (866) 8 727 TOTAL 1 371 748 127 (915) (3 055) 238 962 288 439 (18 174) 1 877 132 1 – The Group derecognised a leased motor vehicle with a book value of R0.9 million which was stolen during the year. 2 – Plant and equipment and motor vehicles totalling R322.1 million were brought into use during the year under review resulting in transfers out of assets under construction to plant and equipment (R315.1 million) and motor vehicles (R7.0 million). 3 – Costs amounting to R239.0 million were transferred from exploration and development costs due to the commercial viability of the extraction of LNG being demonstrable. NOTES TO THE CONSOLIDATED 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 (see note 7). 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 29 February 2024 (2023: R1.3 billion), representing 100% (2023: 100%) of each of these asset categories. Additions and borrowing costs Additions include foreign exchange differences attributable to the DFC loan and interest capitalised as part of borrowing costs in line with the Group’s policy. These costs and exchange differences were capitalised within assets under construction. Additions also include non-cash additions to right-of-use assets. The Group’s borrowings are disclosed in note 7. A reconciliation of additions to exclude the impact of capitalised borrowing costs (inclusive of foreign exchange differences) and non-cash additions to right-of-use assets is provided below: R’000 2024 2023 Additions as shown above 288 439 610 667 Capitalised interest attributable to the DFC loan (note 7) (32 927) (38 846) Unrealised foreign exchange losses attributable to the DFC loan (note 7) (16 548) (120 290) Capitalised interest attributable to the IDC loan (note 7) (23 398) (23 950) Capitalised interest attributable to the SBSA bridge loan (note 7) (30 798) - Capitalised interest attributable to the AIRSOL debentures (note 7) (3 648) - Net movement in accruals attributable to assets under construction 54 422 (74 057) Non-cash additions to right-of-use assets (13 668) (1 076) Additions as reflected in the cash flow statement 221 874 352 448 Capital commitments Capital commitments attributable to assets under construction are disclosed in note 14. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 3. Intangible assets 2024 2023 Accumulated Accumulated amortisation amortisation and Net book and R’000 Cost impairment value Cost impairment Cost Acquired intangible assets Exploration and 56 031 (32) 55 999 217 459 (32) 217 427 development costs Computer software 9 568 (3 907) 5 661 6 647 (1 373) 5 274 Internally developed intangible assets Development costs – 17 070 - 17 070 15 666 - 15 666 Cryo-VaccTM Development costs – Helium Tokens System 3 482 - 3 482 3 475 - 3 475 TOTAL 86 151 (3 939) 82 212 243 247 (1 405) 241 842 Additions At 1 Additions – At 29 – separa- 1 March internally Transfers Amorti- February tely 2023 developed sation 2024 2024 acquired R’000 Exploration and development costs 217 427 77 534 - (238 962) - 55 999 Computer software 5 274 2 921 - (2 534) 5 661 Development costs – Cryo- 15 666 - 1 404 - - 17 070 VaccTM Development costs – Helium 3 475 - 7 - - 3 482 Tokens System TOTAL 241 842 80 455 1 411 (238 962) (2 534) 82 212 1- Costs amounting to R239.0 million were transferred to property, plant and equipment due to the commercial viability of the extraction of LNG being demonstrable. Impairment of exploration and development costs A Reserve and Resource Evaluation Report (“Evaluation Report”) was completed as at 28 February 2023 by Sproule Incorporated (“Sproule”), an independent sub-surface consultancy based in Calgary, Canada (report was completed and issued in August 2023). The evaluation was both an engineering and an economic update, based on technical and economic data supplied by Tetra4, and has an effective date of 28 February 2023. Material changes to this Evaluation Report compared to the last one completed in 2021 were reservoir category changes; updates to capital expenditure and operating costs, currency exchange rates and methane and helium prices; and updates to the field development plan. The impairment assessment as at 29 February 2024 is based on the Evaluation Report (as at 28 February 2023), and management has not obtained an updated evaluation report due to the available headroom. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 3. Intangible assets (continued) The independent Reserve and Resource estimates and associated economics contained in the Evaluation Report were prepared in accordance with SEC rules and guidance as well as generally accepted geoscience and petroleum engineering and evaluation principles. Proved Plus Probable Helium and Methane Reserves (“2P Gas Reserves”) measured at 372.9 billion cubic feet (“BCF”) as at 28 February 2023 (2021: 420.5 BCF) with a net present value of R42.12 billion (2021: R31.0 billion). The net present value above equates to the recoverable amount which was determined using value-in-use calculations were future estimated cash flows attributable to the 2P Gas Reserves were discounted at 10% (2021: 15%). In order to determine whether the Group’s exploration and evaluation assets were impaired as at 29 February 2024 the carrying amount of these assets of R56.0 million (2023: R217.4 million) was compared to the recoverable amount of R42.12 billion (2023: R31.0 billion) which resulted in no impairment charge being recognised for the year under review (2023: 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 R42.06 billion (2023: R30.8 billion), being the difference between the carrying amount of exploration and evaluation assets of R56.0 million (2023: R217.4 million) and their recoverable amount of R42.12 billion (2023: R31.0 billion). The recoverable amount of R42.12 billion (2023: R31.0 billion) was determined from value-in-use calculations based on cash flow projections from formally approved budgets covering a fifteen-year period from commencement of operations, which takes into account the life of the VGP. The key assumptions used include: (i) estimated future production based on 2P Gas Reserves accordingly probability weighted, (ii) hydrocarbon prices estimated to be reasonable using empirical data, current prices and prices used in making its exploration and development decisions, and (iii) future operating and development costs as estimated by the Tetra4 and reviewed for reasonableness by Sproule. Methane prices A methane price of R357/Mmbtu which was held constant over the life of the project (2023: R250/Mmbtu which was escalated at the South African CPI of 3.2%/year (as reported in the March 2021 StatsSA Statistical Survey) and was held constant once the initial price had doubled). Helium prices The initial helium price of R5 904/Mcf which was held constant over the life of the project (2023: R3 555/Mcf (US$237/Mcf) was escalated at the average US CPI of 2.4%/year and was held constant once the initial price had doubled). Discount rate 10% (2023: 15%). The discount rate was aligned with that used by other market participants in the USA where the Company intends to complete the Nasdaq IPO, previously prepared in accordance with the Society of Petroleum Engineers (SPE), Petroleum Resources Management (PRMS) guidance. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 4. Cash and cash equivalents Cash and cash equivalents consist of: R’000 2024 2023 Cash at banks and on hand 24 711 17 301 Short-term deposits ...