May 30, 2024


Delighting finance buffs

Renergen reports 36.8% increase in revenue


JSE-listed helium and natural gas producer Renergen – in a ‘preliminary final report’ of its results for the year to end February 2022 published on Tuesday – reported a 36.8% increase in revenue, attributing the improvement to higher energy prices along with the easing of Covid-19 lockdown restrictions.

It reported that R2.6 million or 100% of the group’s revenue depended on the sales of compressed natural gas (CNG) to one customer – noting that its sole subsidiary Tetra4 is in the process of constructing the Virginia Gas Plant and conducting exploration activities. Its revenues have therefore been minimal to date.

The group confirmed an increase of R2.8 million in its operating income as a result of a significant increase in net foreign exchange gains.

There was a 33.1% increase in its tangible net asset value per share, due to a R38 million increase in tangible assets, primarily driven by extra investments in property, plant and equipment (PPE); increases in deferred tax assets, working capital and restricted cash, and a decrease in lease liabilities, offset by increases in borrowing provisions and cash utilisation for the year.

According to the financial statement, an increase of 6.4 million in the issued share capital also impacted the tangible net asset value per share.

This follows a surge in its stock price from R13 per share at the beginning of 2021 to R40.46 at the time of writing. The price reached a record high of R43.90 per share in March.

Virginia Gas Project

The group says it is in the final stages of commissioning the Virginia Gas Project which is expected to operate soon.

An additional R260.7 million was spent on the completion of the plant design classified within PPE.

Renergen announced that cold boxes are being pre-cooled in preparation for gas on the onshore petroleum plant. The plant site, which is owned and operated by Renergen’s subsidiary Tetra4 and covers areas in Welkom, Virginia and Theunissen, received a R1 billion investment from the Central Energy Fund (CEF) in March. In return, 10% of Tetra4 was sold to the state-owned fund.

The group says the evaluation of the oil system is the next major item to be completed for the unit’s start up. To date, it has completed and commissioned fire protection, instrument air systems and smaller sub-systems.

Renergen CEO Stefano Marani says: “The team is being extremely thorough and diligent in making sure every step in the commissioning process is done correctly. A key focus area which has been successfully completed is the testing and retesting of the fire systems, particularly in light of all the recent plant failures globally. Seeing the plant at cryogenic temperatures is such an amazing sight, knowing that this is soon to become the first commercial plant of its kind in South Africa.”

‘Significant challenges’

The group says it experienced significant challenges during the construction period due to the impact of the Covid-19 pandemic and subsequent lockdown restrictions, nationwide strike action by workers affiliated to the National Union of Metalworkers of South Africa (Numsa) and extreme weather pattern changes which have resulted in above average rainfall since December 2021.

“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 group says in its Sens statement.

“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.”

Growing demand for helium

Renergen notes that the global helium market has been dealt several debilitating blows recently, exacerbating short supply in an already tight market.

In addition, it says growth in this market is expected to be driven by increasing demand for helium 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.”

Nondumiso Lehutso is a Moneyweb intern.


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