PTR MINERALS LTD — Interim / Quarterly Report 2013

Mar 13, 2013

Petratherm Ltd ACN 106 806 884

Half Year Report

for the half year ended 31 December 2012

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Petratherm Ltd – Half Year Report

Contents to Half Year Report

Directors’ Report......................................................................................................................... 3
Auditor's Independence Declaration............................................................................................ 8
Interim consolidated statement of profit or loss and other comprehensive income..................... 9
Interim consolidated statement of financial position.................................................................. 10
Interim consolidated statement of changes in equity................................................................. 11
Interim consolidated statement of cash flows............................................................................ 12
Notes to the Financial Statements............................................................................................. 13
1. Corporate information....................................................................................................... 13
2. Basis of preparation and change to the Group’s accounting policies................................ 13
3. Segment reporting............................................................................................................. 14
4. Exploration and evaluation assets..................................................................................... 17
5. Other non-current liabilities............................................................................................... 17
6. Issued capital.................................................................................................................... 18
7. Subsequent events............................................................................................................ 18
8. Contingent liabilities.......................................................................................................... 18
9. Commitments.................................................................................................................... 18
10. Going concern basis of accounting................................................................................... 19
Directors’ Declaration................................................................................................................ 20
Independent Auditor’s Review Report....................................................................................... 21

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Petratherm Ltd – Half Year Report

Directors’ Report

The directors of Petratherm Ltd (‘Petratherm’) present their Report together with the financial statements of the consolidated entity, being Petratherm (‘the Company’) and its controlled entities (‘the Group’) for the half year ended 31 December 2012 and the Independent Review Report thereon.

Director Details

The following persons were directors of Petratherm during or since the end of the financial year.

Mr. Derek Carter, Chairman

• Mr. Terry Kallis, Managing Director

Prof. Richard Hillis, Non-Executive Director

• Mr. Richard Bonython, Non-Executive Director

• Mr. Simon O’Loughlin, Non-Executive Director

• Mr. Lew Owens, Non-Executive Director

Operating Result

The group’s loss for the half year ended 31 December 2012 after providing for income tax amounted to $609,598 (2011: $897,662).

PRINCIPAL ACTIVITIES

The principal activities of the Company & Group during the financial year were:

• to test hot rocks, with high temperatures;

• establishing an economically viable, emission free, renewable source for power generation.

There have been no significant changes in the nature of those activities during the year.

Review of Operations

SUMMARY

During the six months to 31 December 2012 the Company’s primary focus was on funding its flagship Paralana project through a combination of Federal government grant monies, Joint Venture partner and the equity markets.

At the beginning of the period the Company held $1,314,578 in cash. During the period the Company expended $232,894 on exploration and evaluation activities. Of that expenditure $16,625 was funded by our joint venture partner. A total of $848,838 was raised and the Company holds $1,237,101 in cash at the end of the reporting period.

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Petratherm Ltd – Half Year Report

CORPORATE HIGHLIGHTS

During the period the Company has sought to contain costs and keep its Australian and Spanish Tenements in good stead while it seeks to address the funding need of the Paralana project. In September 2012, shareholders were invited to participate in the non-renounceable Rights Issue offer of one new share for every three shares currently held at an issue price of $0.03 for each new share issued together with one attaching option at no additional cost for every one new share issued.

In late September 2012, the Company submitted a $13 million funding application under the Australian Renewable Energy Agency (ARENA) $126 million Emerging Renewables Program (ERP) to fund up to half of the total costs for the next stage of works at Paralana. The Company believes it has submitted a compelling case and is confident about being successful in the grant funding.

Petratherm Ltd was one of four renewable energy companies selected by the State Government to showcase the Paralana Engineered Geothermal System (EGS) Project to the Prince of Wales who is known internationally for promoting environmental initiatives.

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Petratherm’s Managing Director, Terry Kallis greeting His Royal Highness, Prince Charles .

OPERATIONS HIGHLIGHTS

PARALANA PROJECT

During the reporting period Petratherm submitted its full funding application under the Australian Renewable Energy Agency (ARENA) $126 million Emerging Renewables Program (ERP) to fund up to half of the total costs for the next stage of works at Paralana.

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Petratherm Ltd – Half Year Report

These works cover drilling Paralana 3, fracture stimulation and demonstration of commercial flows between Paralana 2 and Paralana 3 and are budgeted at around $26 million. To date, the project has achieved successes for the objectives set around an optimum high temperature and the ability to engineer a large volume sub-surface heat exchanger (reservoir). The fundamental barrier along the technology innovation chain for EGS is the demonstration of commercial flow rates.

The next stage of Paralana works is the well design, drilling activity planning and site preparation towards the drilling of Paralana 3, the producer well. The well will aim at intercepting the stimulated volume of rock created through the hydraulic fracture stimulation in Paralana 2 to complete the fluid circulation loop. A second round of hydraulic stimulation will follow to increase the reservoir volume and connection to the well bores to ensure a commercial fluid circulation rate can be achieved. This will be followed by long term circulation testing.

The drilling and circulation work will be a precursor to constructing a 3.5MW electricity generation plant to meet local power needs at the neighbouring Beverley Uranium Mine (refer diagram below).

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Extraction model for a pumped EGS well showing expected net MW output for the Parlana project

In addition to the potential grant support, it should be noted that recent changes (effective from the 2011/12 financial year) to the R&D Tax Incentive now provide for companies with eligible R&D expenditure to receive refundable cash tax offsets equivalent to 45% of expenditure. Based on its 79% equity in the Paralana project the Company has estimated that it may receive up to $7.2 million in cash rebates under the R&D Tax Incentive from the next phase of works.

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Petratherm Ltd – Half Year Report

The Company is exploring further avenues to enable it to satisfy its remaining share of JV funding for the Paralana project. This will enable the JV to broaden its expertise in project management for the engineering, procurement and construction management phases of the surface facilities development.

The Company believes that the strong technical success to date at Paralana makes the project one of the best opportunities to demonstrate the commercial viability of Engineered Geothermal Systems Technology for large-scale power production here in Australia.

SPAIN

The Tenerife project in the Canary Islands is testing for conventional geothermal sources associated with recent volcanism. Processing and interpretation of the 2012 magneto-telluric (MT) survey highlighted a potential geothermal upwelling zone at approximately 1500m depth close to the town of Vilaflor on the southern side of Mt Tiede which forms the volcanic cone of the island.

During the reporting period a second phase of MT work was designed to map the precise form of the upwelling to define a drill target. This survey is planned for the first half of 2013. The Company is confident that ongoing discussions with a large company looking at Tenerife will lead to an agreement to fund the deep drill testing for geothermal sources on the Island. During the reporting period the Company applied for a licence over the southern half of the neighbouring island La Palma. The target areas exhibit recent volcanic activity and very high temperatures near the eruption sites.

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Petratherm’s Canary Island Tenement holdings. Tenerife and Gran Canaria licences are awarded and the La Palma licence is pending.

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Petratherm Ltd – Half Year Report

Auditor’s independence declaration

The auditor’s independence declaration is set out on page 8 and forms part of the directors’ report for the half year ended 31 December 2012.

Signed in accordance with a resolution of the directors.

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Mr Terry Kallis Managing Director 14 March 2013

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Level 1, 67 Greenhill Rd Wayville SA 5034 GPO Box 1270 Adelaide SA 5001 T 61 8 8372 6666 F 61 8 8372 6677 E info.sa@au.gt.com W www.grantthornton.com.au

AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF PETRATHERM LIMITED

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the review of Petratherm Limited for the half-year ended 31 December 2012, I declare that, to the best of my knowledge and belief, there have been:

• a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• b no contraventions of any applicable code of professional conduct in relation to the review.

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

J L Humphrey Director – Audit & Assurance

Adelaide, 14 March 2013

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.

Liability limited by a scheme approved under Professional Standards Legislation

Petratherm Ltd – Half Year Report

Interim consolidated statement of profit or loss and other comprehensive income For the half-year ended 31 December 2012

comprehensive income For the half-year ended 31 December 2012
	Consolidated Group Half-year ended
	31 Dec 2012 31 Dec 2011 $ $
Revenue from ordinary activities Loss on sale of Non-Current Assets Impairment of exploration assets Employee benefits expense Depreciation expense Finance costs Other expenses Loss before income tax expense Income tax benefit/(expense) Loss from continuing operations Loss attributable to members of the parent entity Other comprehensive income Exchange differences arising on translation of foreign operations Total comprehensive loss for the period Earnings per share: Basic earnings per share Diluted earnings per share	47,987 80,425 - (4,295) (16,650) - (287,401) (378,279) (11,334) (35,124) - (1,471) (316,523) (495,839)
	(583,921) (834,583)
	(25,677) (63,079)
	(609,598) (897,662)
	(609,598) (897,662)
	54,868 (154,736)
	(554,730) (1,052,398)
	Cents Cents (0.39) (0.66) (0.39) (0.66)

The interim consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the notes to the consolidated interim financial report.

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Petratherm Ltd – Half Year Report

Interim consolidated statement of financial position As at 31 December 2012

Interim consolidated statement of As at 31 December 2012	financial position
Note	Consolidated Group
	31 December 30 June 2012 2012 $ $
CURRENT ASSETS Cash and cash equivalents Trade and other receivables Other current assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Property, plant and equipment Exploration and evaluation assets 4 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Short-term provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Long-term provisions Other non-current liabilities 5 TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 6 Reserves Retained earnings TOTAL EQUITY	1,273,101 1,314,578 103,506 59,975 28,645 43,618
	1,405,252 1,418,171
	75,250 83,977 18,835,878 18,583,124
	18,911,128 18,667,101
	20,316,380 20,085,272
	142,314 156,098 51,253 44,090
	193,567 200,188
	12,158 8,624 2,898,000 2,898,000
	2,910,158 2,906,624
	3,103,725 3,106,812
	17,212,655 16,978,460
	32,239,418 31,450,493 (156,546) (211,414) (14,870,217) (14,260,619)
	17,212,655 16,978,460

The interim consolidated statement of financial position is to be read in conjunction with the notes to the consolidated interim financial report.

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Petratherm Ltd – Half Year Report

Interim consolidated statement of changes in equity For the half-year ended 31 December 2012

For the half-year ended 31 December 2012
Note	Consolidated Group
	Foreign Issued Share Currency Non- Capital Option Translation Retained Controlling Total Ordinary Reserve Reserve Earnings Interests Equity $ $ $ $ $ $
Balance at 1 July 2011 Profit/(Loss) for the period Issue of shares by way of private placement Issue of shares by way Security Purchase Plan Transaction costs (net of tax) Transfer from share based payment reserve upon lapse of options Balance at 31 December 2011 Balance at 1 July 2012 Profit/(Loss) for the period Issue of shares by way of rights issue Exercise of share options Transaction costs (net of tax) Balance at 31 December 2012	28,850,178 1,219,166 (712,073) (12,999,384) - 16,357,887 - - (154,736) (897,662) - (1,052,398) 2,289,000 - - - - 2,289,000 458,500 - - - 458,500 (147,185) - - - - (147,185) - (186,460) - 186,460 -
	31,450,493 1,032,706 (866,809) (13,710,586) - 17,905,804
	31,450,493 719,986 (931,400) (14,260,619) - 16,978,460 - - 54,868 (609,598) - (554,730) 847,339 - - - - 847,339 1,499 - - - - 1,499 (59,913) - - - - (59,913)
	32,239,418 719,986 (876,532) (14,870,217) - 17,212,655

The interim consolidated statement of changes in equity is to be read in conjunction with the notes to the consolidated interim financial report.

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Petratherm Ltd – Half Year Report

Interim consolidated statement of cash flows For the half-year ended 31 December 2012

	Consolidated Group
	Half year Half year ended ended 31 Dec 2012 31 Dec 2011 $ $
Payments to suppliers and employees Management Fee Interest received NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES Purchase of property, plant and equipment Joint Venture receipts Payments for exploration activities Proceeds from issue of shares Payment of transaction costs for issue of shares Repayment of borrowings Net increase/(decrease) in cash and cash equivalents Net foreign exchange differences Cash at the beginning of the period CASH AT THE END OF THE PERIOD NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES NET CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES CASH FLOWS FROM OPERATING ACTIVITIES	(617,512) (852,890)
	3,464 4,971
	27,084 47,822
	(586,964) (800,097)
	(2,974) (4,084) 16,625 352,502 (232,894) (1,573,168)
	(219,243) (1,224,750)
	848,838 2,747,500 (85,590) (210,264) - (26,898)
	763,248 2,510,338
	(42,959) 485,491 1,482 (2,015) 1,314,578 1,928,996
	1,273,101 2,412,472

The interim consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated interim financial report.

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Petratherm Ltd – Half Year Report

Notes to the condensed interim consolidated financial statements

FOR THE HALF YEAR ENDED 31 DECEMBER 2012

1. Corporate information

The interim consolidated financial statements of the Group for the six months ended 31 December 2012 were authorised for issue in accordance with a resolution of the directors on 14 March 2013.

Petratherm Ltd is a limited company incorporated and domiciled in Australia whose shares are publicly traded on the Australian Securities Exchange under the symbol PTR.

2. Basis of preparation and change to the Group’s accounting policies

Statement of compliance

The half-year financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 “Interim Financial Reporting”. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 “Interim Financial Reporting”. The half-year report does not include notes of the type normally included in an annual financial report and should be read in conjunction with the most recent annual financial report.

Basis of preparation

The financial statements have been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.

The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the Company’s 2012 annual financial report for the financial year ended 30 June 2012, except for the impact of the Standards and Interpretations described below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

New standards, interpretations and amendments adopted by the Company

The Company has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current half-year.

New and revised Standards and amendments thereof and Interpretations effective for the current half-year that are relevant to the Company include:

Amendments to AASB 1, 5, 7, 101, 112, 120, 121, 132, 133 and 134 as a consequence of AASB 2011-9 ‘Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income’.

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Petratherm Ltd – Half Year Report

Notes to the condensed interim consolidated financial statements

FOR THE HALF YEAR ENDED 31 DECEMBER 2012

The adoption of all the new and revised Standards and Interpretations has not resulted in any changes to the Company’s accounting policies and has no effect on the amounts reported for the current or prior half-years. However, the application of AASB 2011-9 has resulted in changes to the Company’s presentation of, or disclosure in, its half-year financial statements.

AASB 2011-9 introduces new terminology for the statement of comprehensive income and income statement. Under the amendments to AASB 101, the statement of comprehensive income is renamed as a statement of profit or loss and other comprehensive income and the income statement is renamed as a statement of profit or loss. The amendments to AASB 101 retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but consecutive statements. However, the amendments to AASB 101 require items of other comprehensive income to be grouped into two categories in the other comprehensive income section: (a) items that will not be reclassified subsequently to profit or loss and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis – the amendments do not change the option to present items of other comprehensive income either before tax or net of tax. Other than the above mentioned presentation changes, the application of the amendments to AASB 101 does not result in any impact on profit or loss, other comprehensive income and total comprehensive income.

Significant events and transactions

In the period the Company raised a total of $847,339 by way of a non-renounceable rights issue.

3. Segment reporting

Management identifies its operating segments based on the types of business segments encountered by the Group. The Group's four main operating segments are:

• Exploration activities - Australia (Other)

• Exploration activities - Paralana Project

• The Clean Energy Precinct; and

• Exploration activities – Spain.

During the six month period to 31 December 2012, there have been no changes from prior periods in the measurement methods used to determine operating segments and reported segment profit or loss.

The following is an analysis of the Group’s revenue and results by reportable operating segment for the periods under review.

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Petratherm Ltd – Half Year Report

Notes to the condensed interim consolidated financial statements

FOR THE HALF YEAR ENDED 31 DECEMBER 2012

3. Segment reporting (continued)

	Segment Revenue	Segment Result
	Half Year ended	Half Year ended
	31-Dec 31-Dec 2012 2011 $ $	31-Dec 31-Dec 2012 2011 $ $
Continuing Operations Australia (ex Paralana) Paralana Project Spain Clean Energy Precinct Finance costs Administration/Corporate Depreciation Consolidated revenue Loss before income tax Income tax expense Loss from continuing operations	- - 3,464 3,595 - - - -	(2,970) - - - - - (13,680) -
	3,464 3,595	(16,650) -
	- - 44,523 76,830 - -	- (1,471) (555,937) (797,988) (11,334) (35,124)
	47,987 80,425
		(583,921) (834,583) (25,677) (63,079)
		(609,598) (897,662)

The revenue reported above represents revenue generated from financial institutions, investments revenues and management fees earned from joint venture partners. There were no intersegment sales during the period.

Segment profit/(loss) represents the profit or (loss) earned/(incurred) by each segment without allocation of central administration costs, finance costs, depreciation and income tax (expense)/benefit. This is the measure reported to the Managing Director for the purposes of resource allocation and assessment of segment performance.

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Petratherm Ltd – Half Year Report

Notes to the condensed interim consolidated financial statements

FOR THE HALF YEAR ENDED 31 DECEMBER 2012

3. Segment reporting (continued)

Segment Assets

Where an asset is used across multiple segments, the asset is allocated to the segment that receives the majority of economic value from the asset. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and physical location. The following is an analysis of the Group’s assets by reportable operating segment.

	Opening Capital Balance Expenditure/ Impairment/ Revaluations 1/07/2012 Investment Share of loss /Translations $ $ $ $	Closing Balance 31/12/2012 $
Continuing Operations Australia (ex Paralana) Paralana Project Spain Clean Energy Precinct Total segment assets Other Administration/Corporate Total Assets	- 2,970 (2,970) - 16,250,463 119,496 - 2,332,661 81,945 - 51,313 - 13,680 (13,680) -	- 16,369,959 2,465,919 -
	18,583,124 218,091 (16,650) 51,313	18,835,878
	1,502,148 20,085,272	1,480,502
		20,316,380

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Petratherm Ltd – Half Year Report

Notes to the condensed interim consolidated financial statements

FOR THE HALF YEAR ENDED 31 DECEMBER 2012

4. Exploration and evaluation assets

4. Exploration and evaluation assets
	Consolidated
	As at As at 31 Dec 12 30 Jun 12 $ $
EXPLORATION AND EVALUATION ASSETS Exploration and evaluation costs carried forward in respect of Geothermal areas of interest Exploration and evaluation phases	18,835,878 18,583,124
	18,835,878 18,583,124

Consolidated entity

Consolidated entity Capitalised tenement expenditure movement reconciliation Balance at the beginning of the period Additions through expenditure capitalised Impairment of expenditure capitalised Translation movement Balance at end of year	Total
	18,583,124 218,091 (16,650) 51,313
	18,835,878

5. Other non-current liabilities

5. Other non-current liabilities
	Consolidated Group
	31 December 30 June 2012 2012 $ $
Deferred Government Grant
	2,898,000 2,898,000
	2,898,000 2,898,000

Deferred income is in relation to Petratherm’s share of the Paralana Joint Venture Geothermal Drilling Program received in prior periods. In accordance with Australian Accounting Standards the grant funds has been recognized as deferred income on the Statement of Financial Position. The deferred income will remain on the Statement of Financial Position until the project is transferred to a development asset.

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Petratherm Ltd – Half Year Report

Notes to the condensed interim consolidated financial statements

FOR THE HALF YEAR ENDED 31 DECEMBER 2012

6. Issued capital

Fully paid ordinary shares Ordinary shares Balance at beginning of financial period Issue of shares by way of rights issue Exercise of share options Transaction costs (net of tax) Balance at end of the financial period Share options Balance at beginning of financial period Issue of shares options by way of rights issue Exercise of share options Contra to share capital Balance at end of the financial period	As at As at 31 Dec 12 30 Jun 12 $ $ 32,239,418 31,450,493 Consolidated Group
	32,239,418 31,450,493
	Number $
	148,731,583 31,450,493 28,244,647 847,339 49,939 1,499 - (59,913)
	177,026,169 32,239,418
	7,780,000 719,986 28,244,647 - (49,939) 1,499 - (1,499)
	35,974,708 719,986

(a) Ordinary shares

(b) Share options

7. Subsequent events

No subsequent events have occurred after the balance date.

8. Contingent liabilities

There has been no change in contingent liabilities since the last reporting date. It is however noted that the Group has various bank guarantees totaling $177,543 at 31 December 2012 which act as collateral over tenements which Petratherm Ltd operate.

9. Commitments

There has been no material change to the commitments disclosed in the 30 June 2012 annual report.

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Petratherm Ltd – Half Year Report

Notes to the condensed interim consolidated financial statements

FOR THE HALF YEAR ENDED 31 DECEMBER 2012

10. Going concern basis of accounting

The financial report has been prepared on the basis of a going concern.

The consolidated entity incurred a net loss before tax of $583,921 during the period ended 31 December 2012, and had a net cash outflow of $806,207 from operating and investing activities. The consolidated entity continues to be reliant upon completion of capital raising for continued operations and the provision of working capital.

If additional capital is not obtained, the going concern basis may not be appropriate, with the result that the Group may have to realise its assets and extinguish its liabilities, other than in the ordinary course of business and at amounts different from those stated in the financial report. No allowance for such circumstances has been made in the financial report.

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Petratherm Ltd – Half Year Report

Directors’ Declaration

In the opinion of the directors of Petratherm Ltd:

• (a) the consolidated financial statements and notes of Petratherm Ltd are in accordance with the Corporations Act 2001, including:

• (i) give a true and fair view of its financial position as at 31 December 2012 and of its performance for the half-year ended on that date; and

(ii) comply with Accounting Standard AASB 134 Interim Financial Reporting; and

• (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

On behalf of the Board

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Mr Terry Kallis Managing Director

14 March 2013

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Level 1, 67 Greenhill Rd Wayville SA 5034 GPO Box 1270 Adelaide SA 5001 T 61 8 8372 6666 F 61 8 8372 6677 E info.sa@au.gt.com W www.grantthornton.com.au

INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF PETRATHERM LIMITED

We have reviewed the accompanying half-year financial report of Petratherm Limited (“Company”), which comprises the consolidated financial statements being the statement of financial position as at 31 December 2012, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, notes comprising a statement or description of accounting policies, other explanatory information and the directors’ declaration of the consolidated entity, comprising both the Company and the entities it controlled at the half-year’s end or from time to time during the half-year.

Directors’ responsibility for the half-year financial report

The directors of Petratherm Limited are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such controls as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express a conclusion on the consolidated half-year financial report based on our review. We conducted our review in accordance with the Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Petratherm Limited consolidated entity’s financial position as at 31 December 2012 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Petratherm Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.

Liability limited by a scheme approved under Professional Standards Legislation

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A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we complied with the independence requirements of the Corporations Act 2001.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Petratherm Limited is not in accordance with the Corporations Act 2001, including:

• a giving a true and fair view of the consolidated entity’s financial position as at 31 December 2012 and of its performance for the half-year ended on that date; and

• b complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

Material uncertainty regarding continuation as a going concern

The consolidated entity incurred a net loss before tax of $583,921 during the period ended 31 December 2012, and had a net cash outflow of $806,207 from operating and investing activities. The consolidated entity continues to be reliant upon completion of capital raising for continued operations and the provision of working capital.

Without qualifying our review conclusion attention is drawn to Note 10 – Going Concern Basis of Accounting to the half-year financial report. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the consolidated entity’s ability to continue as a going concern and therefore the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business and at amounts stated in the financial report.

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

J L Humphrey Director – Audit & Assurance

Adelaide, 14 March 2013