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PET - Petmin Limited - Condensed Preliminary Consolidated Financial Statements

Release Date: 13/09/2011 08:51
Code(s): PET
Wrap Text

PET - Petmin Limited - Condensed Preliminary Consolidated Financial Statements for the year ended 30 June 2011 Petmin Limited (Incorporated in the Republic of South Africa) (Registration number 1972/001062/06) "Committed to growth, dedicated to value" JSE code: PET AIM code: PTMN ISIN: ZAE000076014 ("Petmin" or "the Group") Condensed Preliminary Consolidated Financial Statements for the year ended 30 June 2011 Another strong operational performance - Net cash flow from operating activities increased by 12% to R361 million from R322 million. - Headline earnings per share 17.50 cents, down 8% from 19.09 cents in 2010. - Normal dividend of 4 cents per share declared (prior year : 4 cents). - Cash on hand R269 million (2010: R283 million). - Operations performed well despite negative effect of stronger Rand/Dollar exchange rate. - Interest-bearing debt to equity ratio of 11.48% (2010: 7.55%). - Agreement for the sale of SamQuarz for R259 million concluded. - Construction of second plant at Somkhele to more than double capacity is on track for commissioning in early 2012. - Business of Tomorrow strategy delivers results with investments in iron and copper projects in Canada, Turkey and Liberia. Condensed Preliminary Consolidated Income Statement for the year ended 30 June 2011 Reviewed Audited Year ended Year ended 30 June 30 June 2011 2010
R`000 R`000 Note Revenue 471 385 334 880 Cost of sales (354 683) (217 368) Gross profit 116 702 117 512 Operating income 7 433 9 994 Administration expenses (13 694) (14 110) Results from operating activities 110 441 113 396 Net finance income 4 044 1 505 - Finance income 5 235 6 085 - Finance expenses (1 191) (4 580) Share of losses of equity accounted (524) - investees Profit before income tax 113 961 114 901 Income tax expense (37 060) (34 764) Profit for the year from continuing 76 901 80 137 operations Profit for the year from discontinued operation net of income tax 6 24 27 580 081 Profit for the year 100 982 107 717 Earnings per share Basic earnings per ordinary share (cents) 7 17.50 19.09 Diluted earnings per ordinary share 7 17.40 18.97 (cents) Earnings per share from continuing operations Basic earnings per ordinary share (cents) 7 13.33 14.21 Diluted earnings per ordinary share 7 13.25 14.12 (cents) Condensed Preliminary Consolidated Statement of Comprehensive Income for the year ended 30 June 2011 Reviewed Audited Year ended Year ended
30 June 30 June 2011 2010 R`000 R`000 Profit for the year 100 982 107 717 Other comprehensive income Foreign currency translation differences (319) - Effective portion of changes in fair value of cash - 636 flow hedges Other comprehensive income for the year net of income tax (319) 636 Total comprehensive income for the year 100 663 108 353 Condensed Preliminary Consolidated Statement of Financial Position as at 30 June 2011 Reviewed Audited as at as at
30 June 30 June 2011 2010
Note R`000 R`000 ASSETS Non-current assets 1 130 627 984 283 Property, plant and equipment 625 038 484 215 Intangible assets 1 889 4 407 Investment in equity accounted investee 470 138 470 661 Investments 33 562 25 000 Current assets 660 139 612 054 Inventories 22 134 28 436 Trade and other receivables 117 102 688 496
Current tax assets 4 656 4 186 Cash and cash equivalents 227 792 180 031 Assets classified as held for sale 6 288 061 296 713 Total assets 1 790 766 1 596 337 EQUITY AND LIABILITIES Ordinary share capital and reserves 1 317 1 241 421 162
Share capital 143 398 142 681 Share premium 337 807 331 337 Share option reserve 5 3 121 627
Foreign currency translation reserve (319) - Retained earnings 830 649 764 282 Non-current liabilities 249 604 159 357 Interest-bearing loans and borrowings 96 674 42 128 Deferred tax liabilities 133 206 99 519 Environmental rehabilitation provision 19 724 17 710 Current liabilities 224 000 195 559 Trade and other payables 88 131 75 365 Current portion of non-current liabilities 23 466 14 379 Shareholders for dividend 996 - Liabilities classified as held for sale 6 111 407 105 815 Total equity and liabilities 1 790 766 1 596 337 Condensed Preliminary Consolidated Statement of Cash Flows for the year ended 30 June 2011 Reviewed Audited Year ended Year ended 30 June 30 June
2011 2010 Note R`000 R`000 Cash generated by operations 142 018 149 449 Adjustments for: - depreciation and amortisation 185 792 118 226 - fair value of derivatives included in - 636 payables/receivables - impairment charges 3 769 4 983 - notional interest 3 187 2 733 - loss on disposal of property, plant and 10 - equipment - share-based payment included in 22 336 1 454 expenses - decommissioning asset - new mining 1 008 - areas - management share options granted 2 532 - Operating cash flows before changes in working capital 360 652 277 481 (Decrease)/Increase in trade and other (14 775) 87 121 receivables Decrease/(Increase) in inventories 834 (18 562) Increase/(Decrease) in trade and other 13 159 (17 payables 886) Cash generated by operations 359 870 328 154 Income tax paid (4 590) (10 010) Finance income 7 073 9 116 Finance expenses (1 548) (4 948) Net cash flow from operating activities 360 805 322 312 Cash flows from investing activities Long-term rehabilitation expenditure (236) (2 140) incurred Investment in jointly controlled entities 8 (13 552) - Investment in listed shares (8 216) - Acquisition of property, plant and equipment (361 (122 825) 376)
- to expand operations (148 056) (54 855) - to expand operations - capitalised pre- (181 (56 725) strip 565) - to maintain operations (31 755) (11 245) Proceeds from sale of property, plant and 5 10 equipment Net cash flows from investing activities (383 124 955) 375)
Cash flows from financing activities Proceeds from specific and general share issues for cash during the year 29 26 640 Treasury shares acquired (15 204) (14 085) Payment on options forfeited (55) (101) Repayment of borrowings (22 718) (53 093) Increase in borrowings 80 152 35 200 Dividends paid (33 617) - Net cash flows from financing activities 8 587 (5 439) Net increase in cash and cash equivalents (13 983) 191 918 Cash and cash equivalents at beginning of 283 014 91 096 year Cash and cash equivalents at end of year 269 031 283 014 Condensed Preliminary Consolidated Statement of Changes in Equity for the year ended 30 June 2011 Foreign Share currency Share Share translation Hedging option Retai
ned premium reserve reserve Total capital reserve earni ngs
R`000 R`000 R`000 R`000 R`000 R`000 R`000 Balance at 134 686 304 745 23 - (636) 656 1 119 1 July 2009 741 565 101 Shares issued during the year - Share 9 617 37 (20 - - - 26 700 options 661 578) exercised Share issue costs capitalised to share (60) - - - - (60) premium - Treasury shares acquired during the (1 (12 - - - - (14 year 804) 281) 085) Share - - (42) - - (42) options - forfeited during the year Share- 182 1 272 - - - - 1 454 based payment Effective - - - - 636 - 636 portion of changes in fair value of cash flow hedges Profit for - - - - 107 the year - 107 717 717 Balance at 142 681 331 337 3 121 - - 764 1 241 30 June 2010 282 421 Shares issued during the year - Share 11 43 - - - 28 options (26) exercised Share- 1 20 - - - 22 336 based 986 350 - payments Treasury (1 280) (13 923) - - - - (15 203) shares acquired during the year Share - - 2 546 - - - 2 546 options granted Share - - (14) - - - (14) options forfeited during the year Foreign - - - (319) - - (319) currency translation differences Profit for - - - - - 100 100 982 the year 982 Dividend - - - - - (34 (34 615) paid 615) Balance at 30 143 398 337 807 5 627 (319) - 830 1 317 June 2011 649 162 Segment reporting Segment information is presented in the condensed preliminary consolidated financial statements in respect of the Group`s segments. The segment reporting format reflects the Group`s management and internal reporting structure as reviewed by the chief operating decision-makers. Segment revenue represents revenue to external customers. There was no inter- segment revenue during the year ended 30 June 2011 or the prior year. Inter- segment pricing is determined on an arm`s length basis. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Reportable segments The Group comprises the following main reportable segments: - Silica mining and marketing ("Silica") - Discontinued operation; - Anthracite mining and marketing ("Anthracite"); and - Business of Tomorrow, which includes Petmin`s exploration and development projects. This segment has been designated as a reportable segment in order to achieve fairer presentation due to its significance. Segment Report for the year ended 30 June 2011 Silica Anthracite Busines Other Eliminati Con (Discontin s of (Corporate ons sol
ued) Tomorro office) ida w ted Year Year Year Year Ye Yea Year Year Year Yea Yea Yea ar r r r r
Uni ende ende ende ende en end ended ended ende end end end ts d d d d de ed d ed ed ed d of 30 30 30 30 30 30 30 30 30 30 30 30 June June June June Ju Jun June June June Jun Jun Jun ne e e e e mea 2011 2010 2011 2010 20 201 2011 2010 2011 201 201 201 sur 11 0 0 1 0 e Saleab (to 1 1 524 467 - - - - - - 1 1 le nne 325 255 006 843 849 723 tonnes s) 868 559 874 402 produc ed Tonnes (to 1 1 579 411 - - - - - - 1 1 sold nne 248 171 087 630 828 582 s) 989 355 076 985 Segmen R`0 170 154 471 334 - - - - - - 641 489 t 00 082 474 385 880 467 354 revenu e Segmen (R/ R136 R131 R814 R813 t ton .18 .88 .01 .55 revenu ne) e per tonne sold Segmen t financ e expens e)/inc ome
Financ R`0 1 3 569 1 - - 4 666 4 408 - - 7 9 e 00 838 031 677 073 116 income Financ R`0 (357 (368 (852 (4 - - (339) (517) - - (1 (4 e 00 ) ) ) 063) 548 948 expens ) ) e Segmen (R/ R26. R33. R202 R292 t ton 47 05 .05 .50 Profit ne) per tonne sold - R`0 33 38 117 120 (5 - (2 (5 - - 147 153 Segmen 00 058 715 006 402 66 479) 500) 019 617 t ) result Segmen R`0 33 38 117 120 (5 - (2 (5 - - 147 153 t 00 058 715 006 402 66 479) 500) 019 617 Profit ) /(loss ) before tax Segmen R`0 (8 (11 (33 (34 - - (3 (332) - - (46 (45 t tax 00 977) 135) 599) 433) 461) 037 900 (expen ) ) se) Segmen R`0 24 27 83 85 (5 - (5 (5 - - 100 107 t 00 081 580 407 969 66 940) 832) 982 717 Profit ) after tax Segmen R`0 63 21 268 81 46 - 29 547 19 - - 361 122 t 00 294 614 069 384 7 827 377 825 capita l expend iture - combin ed Segmen R`0 63 21 86 24 46 - 29 547 19 - - 180 66 t 00 294 614 718 659 7 827 026 100 capita l expend iture Segmen R`0 - - 181 56 - - - - - - 181 56 t 00 351 725 351 725 capita l expend iture - pre- strip Segmen R`0 16 12 166 102 - - 408 293 - - 183 115 t 00 560 433 307 984 275 710 deprec iation - combin ed Segmen R`0 16 12 9 15 - - 408 293 - - 26 28 t 00 560 433 458 288 426 014 deprec iation Segmen R`0 - - 156 87 - - - - - - 156 87 t 00 849 696 849 696 deprec iation - pre- strip Share option costs includ ed in segmen t Profit R`0 - - - - - - 2 546 - - - 2 - /(loss 00 546 ) before tax Segmen R`0 288 296 805 690 52 495 432 486 (262 (36 1 1 t 00 061 713 728 707 7 661 119 516 818) 7 790 602 assets 67 107 766 490 6 ) Segmen R`0 111 105 435 407 42 - 28 525 40 (101 (19 473 361 t 00 407 815 167 959 8 473 923) 3 604 069 liabil 178 ities ) *The open pit mining profile at Somkhele requires that overburden be removed from the pit before coal can be extracted. This overburden removal is capitalised to the development cost of the open pit (so called "pre-strip") and is then expensed on a units-of-production basis as the coal is extracted from the open pits. As disclosed last year, overburden removal volumes increased markedly this year to ensure supply of run-of-mine coal to feed both the existing and the second plant at Somkhele. Notes to the Condensed Preliminary Consolidated Financial Statements for the year ended 30 June 2011 1. Reporting entity Petmin is a company domiciled in South Africa. The condensed preliminary consolidated financial statements of the Group for the year ended 30 June 2011 comprise the Company and its subsidiaries (together referred to as the "Group") and the Group`s interests in associates and jointly controlled entities. The condensed preliminary consolidated financial statements were authorised for issue by the directors on 12 September 2011. 2. Statement of compliance The condensed preliminary consolidated financial statements have been prepared in accordance with the recognition, measurement, presentation and disclosure requirements of IAS 34 - Interim Financial Reporting, the AC 500 Standards as published by the Accounting Practices Board and the South African Companies Act. The condensed preliminary consolidated financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated annual financial statements for the year ended 30 June 2010, which are available upon request from the Company`s offices at 37 Peter Place, Bryanston, Johannesburg or at www.petmin.com. 3. Significant accounting policies The accounting policies have been applied consistently by the Group to all periods presented in these condensed preliminary consolidated financial statements and are consistent to those applied by the Group in its consolidated financial statements as at and for the year ended 30 June 2010. Accounting for investments in joint ventures The proportionate share of the financial results of joint ventures is consolidated into the Group`s results from acquisition date until disposal date. The Group combines its share of the joint venture`s individual income and expenses, assets and liabilities and cash flows on a line-by- line basis with similar items in the Group`s financial statements. The Group recognises the portion of gains and losses on the sale of assets by the Group to the joint venture that is attributable to the other venturers. The Group does not recognise its share of profits or losses from the joint venture that result from the purchase of assets by the Group from the joint venture until it resells the assets to an independent party, except where unrealised losses provide evidence of an impairment of the asset transferred. When the end date of the reporting period of the parent is different to that of the joint venture, the joint venture prepares, for consolidation purposes, additional financial statements as of the same date as the financial statements of the parent. Investments in joint ventures are accounted for at cost less any accumulated impairment losses in the separate financial statements of Petmin. Non-current assets held for sale Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale. Immediately before classification as held for sale, the assets, or components of a disposal group, are remeasured in accordance with the Group`s accounting policies. Thereafter the assets, or disposal group, are measured at the lower of their carrying amount and fair value less cost to sell. Any impairment loss on a disposal group first is allocated to goodwill, and then to remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets, investment property and biological assets, which continue to be measured in accordance with the Group`s accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss. Discontinued operations A discontinued operation is a component of the Group`s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative statement of comprehensive income is represented as if the operation had been discontinued from the start of the comparative period. New standards A number of new standards, amendments to standards and interpretations are not yet effective for the year ended 30 June 2011 and have not been applied in preparing these financial statements. The Group has not yet determined the potential effect of these standards and interpretations. Functional and presentation currency The condensed consolidated preliminary financial statements are presented in Rands, which is the Company`s functional currency. All financial information presented in Rands has been rounded to the nearest thousand. 4. Estimates and judgements The preparation of the condensed preliminary consolidated reviewed financial statements in conformity with IAS 34 - Interim Financial Reporting requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. The significant judgements made by management in applying the Group`s accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 30 June 2010. 5. Review of results The results of the Group as set out above have been reviewed by the Group`s auditors, KPMG Inc. The unqualified review report is available for inspection at the Group`s registered offices. 6. Discontinued operation At a meeting of the directors of Petmin held on 29 June 2011, pursuant to the receipt of an offer, Petmin committed to a plan to sell its investment in SamQuarz (Pty) Limited. SamQuarz, the Silica segment, was not classified as held for sale or a discontinued operation as at 30 June 2010 and the comparative income statement has been represented to show the discontinued operation separately from continuing operations. Please refer to note 11.4 for more information on the disposal process and rationale for the sale. Reviewed Audited
Year ended Year ended 30 June 2011 30 June 2010 R`000 R`000
Results of discontinued operation Revenue 170 082 154 474 Cost of sales (111 289) (93 081) Gross profit 58 793 61 393 Operating expenses (24 515) (24 242) Administration expenses (2 701) (1 099) Results from operating activities 31 577 36 052 Net finance income/(expense) 1 481 2 663 - Finance income 1 838 3 031 - Finance expenses (357) (368) Profit before income tax 33 058 38 715 Income tax expense (8 977) (11 135) Profit for the year 24 081 27 580 Earnings per share Basic earnings per share (cents) 4.17 4.88 Diluted earnings per share (cents) 4.15 4.85 Cash flows from/(used in) discontinued operation Net cash from operating activities 46 742 52 375 Net cash used in investing activities (62 286) (21 614) Net cash (used in)/from financing activities (6 200) 34 980 Net cash (used in)/from discontinued operation (21 744) 65 741 7. Earnings per share Earnings per share ("EPS") are based on the Group`s profit for the year, divided by the weighted average number of shares in issue during the year. Reviewed Audited Year ended Year ended 30 June 2011 30 June 2010
Profit Number of Per Profit Number Per for for of the shares in share the shares share year year in
R`000 thousands in R`000 thousa in cents nds cents Basic earnings per 100 982 576 908 17.50 107 564 19.09 share 717 135 Share options - 3 514 (0.10) - 3 559 (0.12) Diluted EPS 100 982 580 422 17.40 107 567 18.97 717 694
Headline earnings per share Headline earnings per share is based on the Group`s headline earnings divided by the weighted average number of shares in issue during the year. Reconciliation between earnings and headline earnings per share: Basic EPS 100 982 576 908 17.50 107 564 19.09 717 135 Headline EPS 100 982 576 908 17.50 107 564 19.09 717 135
Share options - 3 514 (0.10) - 3 559 (0.12) Diluted headline EPS 100 982 580 422 17.40 107 567 18.97 717 694
8. Investment in Jointly Controlled entities 2011 2010 R`000 R`000
Investment, net of cash received - Investment in 9 984 - exploration company in Canada - Investment in Iron 3 568 - Bird Resources Inc. 13 552 -
Investment in exploration company in Canada As previously announced, during the period under review, Petmin acquired a 5% interest in an exploration company in Canada ("Exploration Co.") for an amount of USD1.5 million. Exploration Co. is jointly controlled by Petmin and its Canadian partners from inception. For more information, please refer to Petmin`s reviewed results for the period ended 31 December 2010. Investment in Hummingbird Resources Plc As announced on 24 January 2011, Petmin entered into an agreement with Hummingbird Resources Plc (Hummingbird: AIM: HUM) and Hummingbird`s wholly-owned subsidiary, Iron Bird Resources Inc. ("Iron Bird"), relating to Hummingbird`s Mount Ginka Licence for the exploration for iron ore in Liberia. Petmin has invested USD500 000 for a 15% shareholding in Iron Bird and has agreed to invest a further USD1 500 000 to increase its shareholding in Iron Bird to 50%. 9. Related parties 9.1 Loan to and transactions with related party Dark Capital (Pty) Limited ("Dark Capital"), Petmin`s anchor black economic empowerment shareholder, is a material shareholder in Petmin and is therefore a related party as defined by section 10 of the JSE Limited Listings Requirements. Other than as previously disclosed in the annual financial statements for the year ended 30 June 2010, there have been no further related party transactions with Dark Capital. 9.2 Exercise of options As announced on 30 June 2011, the Company was informed that executive directors exercised 5 070 250 options with an exercise price of 65 cents per share. Additionally, 100 000 options with a strike price of 65 cents per share were bought by the Company for 275 cents per share. Between 1 July 2010 and 30 June 2011, the Company was informed that employees and former employees exercised 44 750 options with an exercise price of 65 cents per share. Additionally, 25 000 options with a strike price of 65 cents per share were bought by the Company for 285 cents per share. The options were awarded in terms of a share incentive scheme approved by shareholders on 19 July 2005. 9.3 Executive remuneration and share option scheme As previously announced, at the AGM held on 13 December 2010, shareholders approved the terms of the new Executive Share Option Scheme, the Executive Incentive Scheme and the subscription for 5.4 million shares at R2.84 per share to Ian Cockerill (that has now been completed). For more information on these items, please refer to Annexure 1 in the Petmin Limited Annual Financial Statements for the year ended 30 June 2010. In the eight months to 28 February 2011, P Nel was paid R1 117 846 (2010: R356 866) in consulting fees for advisory services to the Group. 9.4 Other transactions with related parties No other related party transactions were entered into. 10. Change in directors As previously announced during the year under review: - Petmin has appointed two independent non-executive directors, Ms Koosum Kalyan and Mr Millard Arnold, with effect from 1 March 2011; and - Mr Piet Nel has taken up the position as chairman of Petmin`s Technical Advisory Committee and announced his resignation as a director of Petmin with effect from 28 February 2011. 11. Subsequent events 11.1 Investment in Iron Bird Resources Inc. ("Iron Bird") On 11 July 2011, Petmin announced that it has invested a further USD1.5 million in Iron Bird. The investment takes Petmin`s total investment in Iron Bird to USD2 million and, under the terms of the joint venture agreement, Hummingbird and Petmin now each hold 50% in Iron Bird. 11.2 Investment in Red Crescent Resources Limited ("RCR") On 11 August 2011, Petmin announced that RCR had fulfilled all conditions precedent of the initial memorandum of understanding with Petmin and that Petmin`s farm-in agreement had been triggered. Under the terms of the investment agreement, which were first disclosed on 16 May 2011, Petmin would make an equity investment in RCR totalling CAD4.64 million. Petmin subscribed for and was issued 3 170 000 common shares on 24 May 2011 as part of the initial subscription. The balance was subscribed for and issued, after which, Petmin holds approximately 9.3 million shares in RCR, representing an approximate 10% ownership interest in RCR. Petmin will also invest up to a maximum of CAD17 million in four conditional tranches over a period of 3.5 years, to earn up to a 37.5% interest in the RCR-controlled joint venture, RCR Quantum AS, which is responsible for the management and development of the Sivas Copper project. 11.3 Investment in Joint Venture As announced previously, Petmin has invested USD1.5 million and acquired a 5% interest in an exploration company in Canada ("Exploration Co"). In accordance with the terms of the investment and subsequent to the initial evaluation phase, on 26 August 2011, Petmin made an additional investment in Exploration Co. of USD2 million for a further 5.714% interest therein. 11.4 Disposal of SamQuarz (Pty) Limited ("SamQuarz") On 13 September Petmin announced that it has concluded an agreement to dispose of 100% of its interest in SamQuarz to Thaba Chueu Mining (Pty) Limited for a cash consideration of R259 million adjusted for any move in the net asset value of SamQuarz from 30 June 2011 until conclusion of all outstanding regulatory approvals. The sale is subject to normal warranties applicable to a transaction of this nature. At 30 June 2011, SamQuarz has been accounted for as a non-current asset held for sale in terms of IFRS 5 and the comparatives have been restated accordingly. Petmin acquired the shares and loans in SamQuarz for R85 million in September 2004, since that date Petmin has received payments of R114 million from SamQuarz for repayment of loans and redemption of preference shares. Net cash returns to Petmin, after taking into account the sale proceeds, have yielded an annual, after-tax, average return to Petmin in excess of 45% per annum. Rationale for the Sale Petmin has a history of delivering superior returns to shareholders by cost- effectively purchasing and developing assets and disposing of them for superior returns, returning value to shareholders and reinvesting the gains in new assets. Petmin acquired SamQuarz as an underperforming asset and restructured the business into a long-term, sustainable, reliable cash-producing asset. The cash flows from SamQuarz provided Petmin with a stable base from which to build on its growth strategy. The disposal will provide Petmin with significant cash resources to be deployed in accelerating the Business of Tomorrow strategy and funding the various project development requirements in Petmin`s pipeline of projects. The Sale is subject to, amongst others, the following key conditions: - by 9 December 2011, the Sale being unconditionally or conditionally approved by the Competition Authorities in terms of the South African Competition Act; and - by 31 March 2012, the Sale and all agreements and transactions contemplated having been unconditionally or conditionally approved by the South African Minister of Minerals and Energy in terms of section 11 of the Mineral and Petroleum Resources Development Act (MPRDA). 11.5 Appointment of director Petmin is pleased to announce that, at a meeting held on 12 September 2011, Petmin approved the appointment of Mr Trevor Petersen as an independent non- executive director of Petmin and as a member of the audit and risk committee. Mr Petersen is a Chartered Accountant and is a former Managing Partner of the Cape Town office of audit firm PricewaterhouseCoopers ("PwC"). He also held the position of Chairman of PwC Western Cape and is the past Chairman of the South African Institute of Chartered Accountants. Mr Petersen has also been a member of the University of Cape Town Council since 2002. 11.6 Declaration of dividend On 13 September 2011, the Company announced that it had declared a dividend of 4 cents per share (prior year: 4 cents normal dividend plus 2 cents special dividend) which is in line with the approved dividend policy. The record date for payment of the cash dividend is 7 October2011. Please refer to the separate notice of the declaration of dividend dated 13 September 2011 for more details. 11.7 Subsequent events There have been no other events that have occurred subsequent to 30 June 2011 which require adjustment of, or disclosure in the financial statements or notes thereto in accordance with IAS 10 - Events After the Reporting Date. (i) General overview of performance Production and sales volumes increased by 7% and 12%, respectively, in order to ameliorate the impact of the stronger Rand and the increased mining cost due to higher strip ratios at Somkhele. Operational costs and revenues that were under the control of management were well controlled. The average Rand/Dollar exchange rate for Petmin`s Dollar inflows for the year ended 30 June 2011 was 6.60 (2010: 7.41) which reduced profit after tax by approximately R20 million or 3.47 cents per share. Sales tonnes were 1 828 076 (2010: 1 582 985), generating revenue of R641 million (2010: R489 million). With the stronger Rand and the increased strip ratios at Somkhele, gross profit margins reduced to 27% from 37%. The Group`s operations remain strongly cash-generative, generating R361 million in the year to 30 June 2011 (2010: R322 million). Capital expenditure increased to R361 million (2010: R123 million) of which R182 million (2010: R57 million) was spent on pre-stripping the open pits at Somkhele in anticipation of doubling production by the first quarter of 2012 in order to feed the second plant. At SamQuarz, development of the open pit has progressed well with the office move being completed and the mine now having access to additional shallow, glass-grade silica. In June 2011, the Group drew R80 million on loan from The Industrial Development Corporation to part finance the construction of the second plant at Somkhele. The loan bears interest at 6.3% per annum until 31 March 2015, whereafter the rate will be prime less 0.7%. The loan is repayable in 48 instalments, with the first payment commencing on the earlier of 30 April 2012 or one month after the second plant is commissioned. Petmin`s interest-bearing debt to equity ratio increased to 11.48% (2010: 7.75%). Anthracite division Somkhele anthracite mine and Petmin Logistics The Anthracite division produced 524 006 tonnes (2010: 467 843 tonnes) and sold 579 087 tonnes (2010: 411 630 tonnes) of anthracite in the year to 30 June 2011. Net profit margins of 25% (2010: 36%) were achieved in the anthracite division during the year ended 30 June 2011. The reduction in marginswas due to the stronger Rand which reduced revenues by approximately R28 million and due to the increased mining cost (as previously announced in November 2010 it was anticipated that mining costs will increase due to an increase in strip ratios in the deeper reserves in Area 1). The increased amount of overburden to be moved in this higher strip ratio environment resulted in an increase in mining cost of 56% when moving from a strip ratio of 1.7:1 in Area 2 to a strip ratio of 4:1 in Area 1. The increased production and sales volumes combined with efficiency improvements enabled Somkhele to curtail costs and achieve a margin of 25%. Capital expenditure of R268 million (2010: R81) million was incurred during the year ended 30 June 2011. R181 million (2010: R57 million) was spent on pre- stripping the open pits in Area 1 in order to ensure that there is sufficient coal available to feed the second plant once it is commissioned. The main focus of the balance of the capital expenditure was the construction of the second plant and the mineral resource exploration and evaluation drilling programme. 218 exploration and evaluation holes amounting to 29 385 metres were drilled in the 12 months to 30 June 2011 in Somkhele`s exploration programme. The programme aims to update Somkhele`s existing reserve and resource statement and to identify additional mining areas within the exploration permit Areas 4 and 5. Exploration for new blocks of coal has been aided by an aeromagnetic survey which has been conducted over Areas 4 and 5. Core evaluation drilling of the near-surface Emalahleni and KwaQubuka blocks is almost complete and will enable these previously categorised inferred resources to be upgraded to measured and indicated categories before June 2012. The construction of the second wash plant at Somkhele is progressing well and is expected to be commissioned during the first quarter of calendar 2012. The original plant design to double the current production capacity (from 530 000 tonnes to 1 060 000 tonnes) has been amended to allow for a 30% increase in the originally designed capacity with a 20% increase in the total project cost. Total capital expenditure on the plant is now expected to increase from R120 million to R144 million, of which R80 million is funded by a loan from the IDC and the balance funded internally by the operation`s cash flows. During the latter half of the year to 30 June 2011, the domestic ferrochrome market experienced a reduction in demand from the Chinese market. Despite this, Somkhele managed to increase its sales volumes to customers in the domestic market and has signed off-take agreements with major producers. Export sales remained underpinned by the take or pay export contract for 200 000 tonnes per annum until December 2013, with demand from the key Brazilian export market remaining steady. Silica division - SamQuarz silica mine SamQuarz produced 1 325 868 tonnes (2010: 1 255 559 tonnes) of silica and chert in the year ended 30 June 2011. Sales volumes increased by 7% to 1 248 989 tonnes (2009: 1 171 355 tonnes). Glass-grade sand demand remained steady despite reduced demand from the automotive and construction sectors in the year to 30 June 2011. Silica and chert rock sales remained at similar levels experienced in 2010 and were affected by the reduced demand from the construction sector, but (as experienced by the anthracite division) remained steady from the metallurgical sector. The Silica division`s profit before tax declined by 15% to R33 million (2010: R39 million) as profit margins were squeezed by the effects of long-term sales contract pricing mechanisms that do not match the inflationary increases of mining costs. Management is negotiating contract price adjustments to reverse this negative trend. Capital expenditure for the year amounted to R63 million (2010: R22 million), primarily on the development of the open pit and completion of the relocation of the old office block to allow for access to additional, near-surface, glass- grade ore. Business of Tomorrow ("BOT") division In the 12 months to 30 June 2011, Petmin has reviewed numerous expansion opportunities and this focus on the Business of Tomorrow has resulted in three investments: Pig-iron - Canada As announced previously, Petmin has invested USD1.5 million and acquired a 5% interest in an exploration company in Canada ("Exploration Co"). In terms of the agreement, Exploration Co. is jointly managed by Petmin and its Canadian partners from inception. Petmin has the option, solely at its discretion, to acquire up to 40% of Exploration Co. for a total investment of USD25 million. The investment is made on the condition of a properly certified SAMREC Code and CIM Standards compliant resource statement that defines a Measured Resource of magnetite for 20 years, based on the production of 500 000 tonnes of pig-iron per annum. In the period under review the exploration project drilled 1 376 metres and 1 123 samples were submitted for laboratory analysis. Once the results of the laboratory analysis are received, it is anticipated that there will be sufficient confidence to rapidly progress this project. Iron ore - Liberia As announced on 24 January 2011, Petmin entered into an agreement with Hummingbird and Hummingbird`s wholly-owned subsidiary, Iron Bird, relating to Hummingbird`s Mount Ginka Licence for the exploration for iron ore in Liberia. Petmin has invested USD500 000 for a 15% shareholding in Iron Bird and on 11 July 2011 invested a further USD1 500 000 to increase its shareholding in Iron Bird to 50%. On 27 June 2011, Hummingbird and Petmin announced that an aeromagnetic survey over the project had proved the presence of a significant continuous magnetic unit, interpreted as an iron formation extending along strike for approximately 20 kilometres. The unit has an at-surface width of between 150 to 250 metre and the unit is shown to extend to approximately 1 000 metre down dip. The deposit is located only 20 kilometres South of the Mount Nimba ridge, an historic major iron ore mine which operated between 1964 and 1989 and has recently been reopened by Arcelor Mittal. Approximately 15 kilometres to the West of the Mount Ginka ridge lies the railway built to transport the Mount Nimba iron ore to the deep water port of Buchanan. Iron Bird has commenced a programme of mapping, trenching and drilling to obtain samples for metallurgical test work. Iron-ore - South Africa (Veremo project) During the year under review, Veremo submitted a mining license application over its project areas. An Environmental Management Programme Report in support of this application was submitted to the Department of Mineral Resources ("DMR") in May 2011. Kermas Limited, the ultimate controlling shareholder of Veremo is assessing various development options to produce some 1 million tonnes of pig iron and potentially titanium slag and awaits the outcome of the mining license application. Copper - Turkey On 16 May 2011, Petmin announced that it had entered into a transaction with Red Crescent Resources Limited ("RCR"), a mineral exploration and development company focused on base metals development in Turkey and listed on the Toronto Stock Exchange in Canada (TSX: RCB), to subscribe for shares in RCR and to subsequently invest directly in RCR`s Sivas Copper project in central Turkey. The Sivas Copper project will be explored and developed by RCR Quantum Mining A.S. ("RCR Quantum"), which is 75% owned by RCR`s Turkey-based subsidiary, Red Crescent Resources Holding A.S. ("RCRH") and 25% owned by Gensay (A Turkish- controlled entity). In the year ended 30 June 2011, Petmin invested CAD1 585 000 for an initial 3.45% equity holding in RCR. Petmin has invested a further CAD3 055 000 to increase its equity holding in RCR to 10.1%. Petmin will then invest up to a maximum of CAD17 million in the project, in four conditional tranches over a period of 3.5 years, to earn up to a 37.5% interest in the Sivas Copper Project. Petmin will have joint management control of RCR Quantum. (ii) Net asset value Petmin`s calculated net asset value ("NAV") per share amounts to 495 cents (June 2010: 445 cents). This calculation is, inter alia, based on the sum of the NPV of Somkhele (discounted at 10%), adding the anticipated cash (after-tax) to be obtained from the sale of SamQuarz, adding the director`s value for Veremo, adding the net cash in Petmin and adding, at cost, the value of the BOT projects. It is Petmin`s intention to provide regular feedback as to the status of the BOT projects as the directors believe that these projects provides Petmin with material optionality that may substantially enhance the NAV per Petmin share. Details of the NAV calculation are disclosed on the Petmin website ("September Analyst Presentation"). (iii) Prospects Anthracite division Current production and sales levels are expected to be maintained in the six months to December 2011 with some improvement in pricing. It is anticipated that construction and commissioning will be completed during the first quarter of calendar 2012, whereafter the production from the second plant should see a material increase in sales and production tonnes from the mine. The exploration and evaluation programmeis expected to deliver an updated SAMREC compliant report by June 2012. Silica division We anticipate current sales and production volumes to be maintained in the year ahead as Petmin manages this asset until the regulatory approvals for the disposal are received. Capital expenditure is expected to reduce to R46 million from the R63 million spent in the year ended 30 June 2011. Business of Tomorrow division Bradley Doig, previously Chief Operating Officer, assumed responsibility for the Petmin offshore expansion and Business of Tomorrow with effect from 1 July 2011 in order to rapidly progress the various projects for which Petmin has budgeted project development investments of R86 million in the year ahead. (iv) General With its expansion at Somkhele and its various Business of Tomorrow projects, Petmin is delivering on its promise of "Committed to growth, dedicated to value". More details on Petmin can be found on our website www.petmin.com. By order of the Board I D Cockerill J C du Preez Executive Chairman Chief Executive Officer Johannesburg Sponsor 13 September 2011 River Group Directors: I Cockerill# (Executive Chairman) L Mogotsi (Deputy Chairman) J du Preez (Chief Executive Officer) B Doig B Tanner (Financial Director) M Arnold* E de V Greyling* K Kalyan* A Martin* T Petersen* J Strijdom* J Taylor* *Non-executive #British American Registered office: Parc Nouveau Third Floor Block C 225 Veale Street Brooklyn Pretoria 0002 (PO Box 899 Groenkloof 0027) Corporate office: 37 Peter Place Bryanston 2021 Tel: (011) 706 1644 Fax: (011) 706 1594 Website: www.petmin.co.za Secretary and sponsor - JSE: River Group Tel: +27 (0) 12 346 8540 Nominated adviser - AIM: Numis Securities Limited Tel: +44 (0) 207 260 1000 Transfer secretaries: JSE: Computershare Investor Services (Proprietary) Limited AIM: Computershare Investor Services PLC Auditors: KPMG Inc. A PDF version of these results is available on our website: www.petmin.com Date: 13/09/2011 08:51:10 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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