Petratherm Ltd ACN 106 806 884 Half Year Report for the half year ended 31 December 2012 1
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 2
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. 3
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. 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. 4
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). 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. 5
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. Petratherm s Canary Island Tenement holdings. Tenerife and Gran Canaria licences are awarded and the La Palma licence is pending. 6
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. Mr Terry Kallis Managing Director 14 March 2013 7
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 b no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and no contraventions of any applicable code of professional conduct in relation to the review. 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
Interim consolidated statement of profit or loss and other 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 47,987 80,425 Loss on sale of Non-Current Assets - (4,295) Impairment of exploration assets (16,650) - Employee benefits expense (287,401) (378,279) Depreciation expense (11,334) (35,124) Finance costs - (1,471) Other expenses (316,523) (495,839) Loss before income tax expense (583,921) (834,583) Income tax benefit/(expense) (25,677) (63,079) Loss from continuing operations (609,598) (897,662) Loss attributable to members of the parent entity (609,598) (897,662) Other comprehensive income Exchange differences arising on translation of foreign operations 54,868 (154,736) Total comprehensive loss for the period (554,730) (1,052,398) Earnings per share: Cents Cents Basic earnings per share (0.39) (0.66) Diluted earnings per share (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. 9
Interim consolidated statement of financial position As at 31 December 2012 Consolidated Group 31 December 30 June 2012 2012 Note $ $ CURRENT ASSETS Cash and cash equivalents 1,273,101 1,314,578 Trade and other receivables 103,506 59,975 Other current assets 28,645 43,618 TOTAL CURRENT ASSETS 1,405,252 1,418,171 NON-CURRENT ASSETS Property, plant and equipment 75,250 83,977 Exploration and evaluation assets 4 18,835,878 18,583,124 TOTAL NON-CURRENT ASSETS 18,911,128 18,667,101 TOTAL ASSETS 20,316,380 20,085,272 CURRENT LIABILITIES Trade and other payables 142,314 156,098 Short-term provisions 51,253 44,090 TOTAL CURRENT LIABILITIES 193,567 200,188 NON-CURRENT LIABILITIES Long-term provisions 12,158 8,624 Other non-current liabilities 5 2,898,000 2,898,000 TOTAL NON-CURRENT LIABILITIES 2,910,158 2,906,624 TOTAL LIABILITIES 3,103,725 3,106,812 NET ASSETS 17,212,655 16,978,460 EQUITY Issued capital 6 32,239,418 31,450,493 Reserves (156,546) (211,414) Retained earnings (14,870,217) (14,260,619) TOTAL EQUITY 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. 10
Interim consolidated statement of changes in equity For the half-year ended 31 December 2012 Consolidated Group Foreign Issued Share Currency Non- Capital Option Translation Retained Controlling Total Ordinary Reserve Reserve Earnings Interests Equity Note $ $ $ $ $ $ Balance at 1 July 2011 28,850,178 1,219,166 (712,073) (12,999,384) - 16,357,887 Profit/(Loss) for the period - - (154,736) (897,662) - (1,052,398) Issue of shares by way of private placement 2,289,000 - - - - 2,289,000 Issue of shares by way Security Purchase Plan 458,500 - - - 458,500 Transaction costs (net of tax) (147,185) - - - - (147,185) Transfer from share based payment reserve upon lapse of options - (186,460) - 186,460 - Balance at 31 December 2011 31,450,493 1,032,706 (866,809) (13,710,586) - 17,905,804 Balance at 1 July 2012 31,450,493 719,986 (931,400) (14,260,619) - 16,978,460 Profit/(Loss) for the period - - 54,868 (609,598) - (554,730) Issue of shares by way of rights issue 847,339 - - - - 847,339 Exercise of share options 1,499 - - - - 1,499 Transaction costs (net of tax) (59,913) - - - - (59,913) Balance at 31 December 2012 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. 11
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 $ $ CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees (617,512) (852,890) Management Fee 3,464 4,971 Interest received 27,084 47,822 NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES (586,964) (800,097) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (2,974) (4,084) Joint Venture receipts 16,625 352,502 Payments for exploration activities (232,894) (1,573,168) NET CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES (219,243) (1,224,750) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares 848,838 2,747,500 Payment of transaction costs for issue of shares (85,590) (210,264) Repayment of borrowings - (26,898) NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES 763,248 2,510,338 Net increase/(decrease) in cash and cash equivalents (42,959) 485,491 Net foreign exchange differences 1,482 (2,015) Cash at the beginning of the period 1,314,578 1,928,996 CASH AT THE END OF THE PERIOD 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. 12
Notes to the condensed interim consolidated financial statements FOR THE HALF YEAR ENDED 31 DECEMBER 2012 Notes to the Financial Statements 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. 13
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. 14
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 31-Dec 31-Dec 2012 2011 2012 2011 $ $ $ $ Continuing Operations Australia (ex Paralana) - - (2,970) - Paralana Project 3,464 3,595 - - Spain - - - - Clean Energy Precinct - - (13,680) - 3,464 3,595 (16,650) - Finance costs - - - (1,471) Administration/Corporate 44,523 76,830 (555,937) (797,988) Depreciation - - (11,334) (35,124) Consolidated revenue 47,987 80,425 Loss before income tax (583,921) (834,583) Income tax expense (25,677) (63,079) Loss from continuing operations (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. 15
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. Continuing Operations Opening Capital Closing Balance Expenditure/ Impairment/ Revaluations Balance 1/07/2012 Investment Share of loss /Translations 31/12/2012 $ $ $ $ $ Australia (ex Paralana) - 2,970 (2,970) - - Paralana Project 16,250,463 119,496-16,369,959 Spain 2,332,661 81,945-51,313 2,465,919 Clean Energy Precinct - 13,680 (13,680) - - Total segment assets 18,583,124 218,091 (16,650) 51,313 18,835,878 Other Administration/Corporate 1,502,148 1,480,502 Total Assets 20,085,272 20,316,380 16
Notes to the condensed interim consolidated financial statements FOR THE HALF YEAR ENDED 31 DECEMBER 2012 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 Total Capitalised tenement expenditure movement reconciliation Balance at the beginning of the period 18,583,124 Additions through expenditure capitalised 218,091 Impairment of expenditure capitalised (16,650) Translation movement 51,313 Balance at end of year 18,835,878 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. 17
Notes to the condensed interim consolidated financial statements FOR THE HALF YEAR ENDED 31 DECEMBER 2012 6. Issued capital Consolidated Group As at As at 31 Dec 12 30 Jun 12 $ $ Fully paid ordinary shares 32,239,418 31,450,493 32,239,418 31,450,493 (a) Ordinary shares Number $ Balance at beginning of financial period 148,731,583 31,450,493 Issue of shares by way of rights issue 28,244,647 847,339 Exercise of share options 49,939 1,499 Transaction costs (net of tax) - (59,913) Balance at end of the financial period 177,026,169 32,239,418 (b) Share options Balance at beginning of financial period 7,780,000 719,986 Issue of shares options by way of rights issue 28,244,647 - Exercise of share options (49,939) 1,499 Contra to share capital - (1,499) Balance at end of the financial period 35,974,708 719,986 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. 18
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. 19
Directors Declaration 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 Mr Terry Kallis Managing Director 14 March 2013 20
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
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. GRANT THORNTON AUDIT PTY LTD Chartered Accountants J L Humphrey Director Audit & Assurance Adelaide, 14 March 2013