| Mon 11 Sep 2006, 8:45 | | Petmin - Condensed Consolidated Reviewed Financial |
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PET
PET
Petmin - Condensed Consolidated Reviewed Financial Statements For the
year ended 30 June 2006
Petmin Limited
(Formerly Petra Mining Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1972/001062/06)
Share code: PET ISIN: ZAE000076014
("Petmin" or "the Company" or "the Group")
CONDENSED CONSOLIDATED REVIEWED FINANCIAL STATEMENTS
For the year ended 30 June 2006
Highlights
- Platform for growth established
- HEPS up 54% to 4.98 cents (2005: 3.24 cents)
- NAV per share up 53% to 81.94 cents (2005: 53.52 cents)
- Profit up 72% to R48.6 million (2005: R28.3 million)
- Somkhele development "on track" for plant commissioning in November 2006
- SARB in principle approval obtained for listing on the London Stock
Exchange"s
- Alternative Investment Market ("AIM")
- Black Economic Empowerment shareholding up from 28% to 43.54%
Condensed Consolidated Reviewed
Income Statements
for the year ended 30 June 2006
GROUP Reviewed Audited
Year ended Year ended
30 June 2006 30 June 2005
R"000 R"000
Revenue 176 676 58 737
Cost of sales (145 663) (41 597)
Gross profit 31 013 17 140
Profit on acquisition of subsidiary 33 822 22 829
Operating and administration expenses (7 859) (8 623)
Operating profit before financing costs 56 976 31 346
Net finance (expense)/income (800) 224
- Financial income 1 923 769
- Financial expenses (2 723) (545)
Profit before tax 56 176 31 570
Income tax expense (7 576) (3 257)
Profit for the year 48 600 28 313
Basic earnings per ordinary share (cents)* 16.38 16.74
Diluted earnings per ordinary share (cents)* 14.85 16.36
*Refer to note 4
Condensed Consolidated Reviewed
Balance Sheets
at 30 June 2006
GROUP Reviewed Audited
Year ended Year ended
30 June 2006 30 June 2005
R"000 R"000
ASSETS
Non-current assets 365 772 106 125
Property, plant and equipment 349 775 106 125
Intangible assets 6 735 -
Investments 9 262 -
Current assets 155 929 33 560
Inventories 41 228 8 511
Trade and other receivables 44 181 15 966
Taxation prepaid 386 -
Cash and cash equivalents 70 134 9 083
Total assets 521 701 139 685
EQUITY AND LIABILITIES
Ordinary share capital and reserves 360 466 104 373
Share capital 109 972 48 750
Share premium 134 821 19 767
Share option reserve 5 141 1 476
Contingent consideration reserve 27 552 -
Retained earnings 82 980 34 380
Non-current liabilities 82 432 20 419
Preference share liability - 13 000
Non-current liabilities 13 704 -
Deferred taxation 54 495 3 143
Environmental rehabilitation provision 14 233 4 276
Current liabilities 78 803 14 893
Trade and other payables 67 522 12 596
Current portion of non-current liabilities 11 197 1 667
Taxation payable 84 630
Total equity and liabilities 521 701 139 685
*Net asset value ("NAV") per share (cents) 81.94 53.52
*Fully diluted NAV per share (cents) 70.16 51.16
*Refer to note 5
Condensed Consolidated Reviewed
Cash Flow Statements
for the year ended 30 June 2006
GROUP Reviewed Audited
Year ended Year ended
30 June 2006 30 June 2005
R"000 R"000
Net cash flow from operating activities 58 218 9 457
Cash flows from investing activities
Acquistion of subsidiary net of cash acquired (4 850) (14 551)
Increase in investment in rehabilitation funds (1 430) -
Acquisition of property, plant and equipment (70 308) (4 853)
Proceeds from sale of property, plant and
equipment 240 562
Net cash flow from investing activities (76 348) (18 842)
Net cash flows from financing activities 79 181 (13 003)
Net increase/(decrease) in cash
and cash equivalents 61 051 (22 388)
Cash and cash equivalents at beginning
of year 9 083 31 471
Cash and cash equivalents at end
of year 70 134 9 083
Segment Reporting
Segment information is presented in the condensed consolidated reviewed
financial statements in respect of the Group"s business segments, which is the
Group"s primary basis of segment reporting. The business segment reporting
format reflects the Group"s management and internal reporting structure.
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.
Business segments
The Group comprises of the following main business segments:
- silica mining and marketing ("silica")
- anthracite mining and marketing ("anthracite")
Segment Reviewed Audited
Year ended Year ended
30 June 2006 30 June 2005
R"000 R"000
Segment revenue
- silica 90 603 58 737
- anthracite 86 073 -
176 676 58 737
Segment result
- silica 19 233 5 484
- anthracite 1 780 -
- other
# amortization of fair values
on consolidation (2 712) -
# other operations (corporate office) (3 523) -
# profit on acquisition of subsidiary 33 822 22 829
48 600 28 313
Condensed Consolidated Reviewed Statements of Changes in Equity
for the year ended 30 June 2006
GROUP Contingent
Share Share Share option consideration
capital premium reserve reserve
R"000 R"000 R"000 R"000
Balance at 1 July
2004 24,250 937 - -
Shares issued during
the year
- To acquire Samquarz 21,111 16,889 - -
- General issue for
cash 1,217 749 - -
- Specific issue for
cash 2,172 1,192 - -
- Share options
granted - - 1,476 -
- Fair value of cash
flow hedge - - - -
Profit for the year - - - -
Balance at 30 June
2005 48,750 19,767 1,476 -
Shares issued during
the year
- To acquire
Springlake 32,472 45,462 - -
- To acquire Samquarz
preference shares 4,875 8,125 - -
- Specific issue
for cash - Springlake
acquistion costs 1,042 1,458 - -
- Specific issue for
cash - Somkhele
project 20,833 52,635 - -
- General issue for
cash 2,000 7,374 - -
Contingent
consideration
to acquire Springlake - - - 27,552
- Share options
granted - - 3,665 -
Profit for the year - - - -
Balance at 30 June
2006 109,972 134,821 5,141 27,552
GROUP Cash flow
hedging Retained
reserve earnings Total
R"000 R"000 R"000
Balance at 1 July 2004 (6,150) 6,067 25,104
Shares issued during the year
- To acquire Samquarz - - 38,000
- General issue for cash - - 1,966
- Specific issue for cash - - 3,364
- Share options granted - - 1,476
- Fair value of cash flow hedge 6,150 - 6,150
Profit for the year 28,313 28,313
Balance at 30 June 2005 - 34,380 104,373
Shares issued during the year
- To acquire Springlake - - 77,934
- To acquire Samquarz
preference shares - - 13,000
- Specific issue
for cash - Springlake
acquistion costs - - 2,500
- Specific issue for
cash - Somkhele project - - 73,468
- General issue for cash - - 9,374
Contingent consideration
to acquire Springlake - - 27,552
- Share options granted - - 3,665
Profit for the year - 48,600 48,600
Balance at 30 June 2006 - 82,980 360,466
Significant Accounting Policies
for the year ended 30 June 2006
Petmin is a company domiciled in South Africa. The condensed consolidated
reviewed financial statements of the Company for the year ended 30 June
2006 comprise the Company and its subsidiaries (together referred to as
the "Group").
The reviewed financial statements were authorised for issue by the directors
on 7 September 2006.
1. Statement of compliance
The condensed consolidated reviewed financial statements have been prepared in
accordance with International Financial Reporting Standards ("IFRS") for
interim financial statements and its interpretations adopted by the
International Accounting Standards Board ("IASB") and the requirements of the
South African Companies Act. These are the Group"s first IFRS condensed
consolidated reviewed financial statements and IFRS 1 First-time Adoption of
International Financial Reporting Standards has been applied.
These condensed consolidated reviewed financial statements do not include all
the information required for the annual financial statements.
The transition to IFRS has had no effect on the reported financial position,
financial performance and cash flows of the Group.
1.1 Basis of preparation
The condensed consolidated reviewed financial statements are prepared on the
historical cost basis, except for financial instruments which are stated at
fair value, where applicable, in terms of IAS 32 - Financial instruments:
Disclosure and presentation and IAS 39 - Financial instruments: Recognition
and measurement.
The preparation of financial statements in conformity with IFRS 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 of 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 accounting policies have been applied consistently to all periods
presented in these consolidated financial statements and in preparing an
opening IFRS balance sheet at 1 July 2004. The accounting policies have been
applied consistently by Group entities.
2. Review of results
The results of the Group as set out above have been reviewed by the Group"s
auditors, KPMG Inc., as required by the JSE Limited ("JSE"). The review report
is available for inspection at the Group"s registered office.
3. Commentary
The past year reflects significant and successful transformation within the
Petmin Group:
- from a single commodity business, to a multi-commodity minerals business
that has established a platform for growth to potentially create substantial
shareholder value;
- from 28%, to over 51% Black Economic Empowerment (BEE) controlled entity
(prior to the capital raising in May 2006). BEE shareholding is now 43.54%.
The past year was spent mainly on expanding and strengthening the Group"s
platform for growth, key features of which include:
- a clear strategy that includes the "Petmin Disciplined Approach";
- a strengthened Board and executive management team and the implementation
of a performance based remuneration structure that aligns shareholders and
management interests;
- conclusion of the R116.7 million acquisition of Springlake (effectively
acquired on 30 November 2005) and its integration into the Petmin Disciplined
Approach;
- finalisation of a bankable feasibility study for Somkhele, obtaining Board
approval to proceed with its development and the raising of R83 million equity
funding and R40 million debt funding in order to finance the development of
the asset (discussed in more detail below);
- performance above expectation by SamQuarz and conclusion of a strategic
review that will ensure a continued and sustainable supply of quality silica
in the long term (in excess of 40 years);
- "in principle" approval from the South African Reserve Bank to list on the
London Stock Exchange"s Alternative Investment Market ("AIM") (obtained after
30 June 2006 and discussed in more detail below).
Board changes
Petmin has strengthened and transformed its board. Lebo Mogotsi, previously a
non-executive director, was appointed an executive director and deputy
chairperson; Alwyn Martin was appointed a non-executive director and Bradley
Doig was appointed a non-executive director, all effective from 30 November
2005. With effect from 1 February 2006 Jan du Preez and Bradley Doig were
appointed executive directors.
Executive management changes
As part of our strategy for developing a platform for organic and acquisitive
growth to ensure Petmin becomes a multi-commodity minerals business, Petmin
restructured its executive management team during the year. The Petmin
Executive Committee now consists of Jan du Preez (CEO), Bradley Doig (COO),
Lebo Mogotsi (Deputy Chairperson and executive director), Dawie Warmenhoven
(Executive director) and Bruce Tanner (Springlake financial director and
Petmin Group financial manager).
Furthermore, the Petmin executive team includes Johan Gloy (Managing director
- SamQuarz) and his team at SamQuarz and Mark Snelling (CEO - Springlake) and
his team at Springlake and Somkhele. The operational teams were also
strengthened with the appointment of Andre Knoppies (a metallurgist with 20
years" experience) as operations manager at SamQuarz and Tom Bower (a mining
engineer with 25 years" experience) as the underground manager at Springlake
Colliery.
Financial results and cash flow
In our second year of results since converting from a cash shell to an
operating mining company, Petmin enjoyed a profitable year with net profit
after tax increasing by R20.3 million (72%) from R28.3 million in 2005 to
R48.6 million in the current financial year. These results include 12 months
of results from SamQuarz (previously 9 months) and 7 months of results from
Springlake (previously no results were included).
We are reporting an increase of 54% in Headline Earnings Per Share ("HEPS") of
4.98 cents (2005: 3.24 cents) and a 2.15% decrease in Earnings Per Share
("EPS") from 16.74 cents in 2005 to 16.38 cents. Net asset value per share
increased by 53% from 53.52 cents to 81.94 cents.
Petmin forecasted a profit in the 7 November 2005 Circular to Shareholders, of
R46.6 million, HEPS of 2.58 and EPS of 15.12. Our results indicate an increase
of 93% in HEPS and an increase of 8.3% in EPS in comparison to the forecast.
As a result of the developing nature of Somkhele, and in order to reduce the
risk of the development, Petmin issued 83 million shares to fund the
development of Somkhele resulting in a dilution of earnings. The earnings
growth will only be fully realized once Somkhele is in full production during
the year ending June 2008. Revenue for the year to 30 June 2006 increased by
R118 million to R176.7 million, compared to 2005.
The Group generated R58 million of cash from operations and R84.6 million cash
from the issue of shares for the Somkhele project and R13 million cash from
the issue of shares to acquire the SamQuarz preference shares held by related
parties. R7 million was spent on capital at SamQuarz, R16 million was spent on
capital at Springlake and R47 million was spent in the development of
Somkhele, leaving the Group with a cash balance of R70 million.
Note that trade payables of R67.5 million include R16.7 million of amounts due
to contractors relating to the development of Somkhele.
The R27.5 million deferred payment relates to the Springlake profit warranty.
Approved capital expenditure for the next 12 months will amount to:
- SamQuarz R11 750 000
- Springlake R3 780 000
- Somkhele R60 000 000
SamQuarz
SamQuarz continues to be the largest producer of silica in South Africa,
producing about 35% of South African consumption in the past year. SamQuarz
services primarily the metallurgical and glass sectors. The company performed
exceptionally well under Johan Gloy"s leadership and exceeded its targets.
The company implemented a four-shift system during September 2005 to prepare
itself for increased customer demands, particularly to the glass producers.
Operational efficiencies continued to improve, with major successes achieved
on the two main sand production plants where recoveries improved due to better
control of process parameters.
Springlake
Springlake"s performance since the finalisation of the acquisition on 30
November 2005 has been disappointing. Springlake experienced a number of
operational difficulties at both underground and opencast operations in the
seven months since its acquisition.
Petmin implemented various measures to address those issues identified during
the due diligence (performed prior to the finalisation of the acquisition) of
Springlake to ensure long-term sustainable earnings and cash flows and is
confident that these measures will result in the significant turnaround of
Springlake during the next 12 months.
Key elements of the Performance Improvement Programme include:
- The introduction of the Petmin Disciplined Approach.
- Implementation of a revised underground mine plan that includes closure of
under-performing sections and the development of the Northern section of the
mine (as advised in the December Interim Report) - which has superior
geological conditions and anthracite qualities.
- The poor opencast pit design and contractor"s performance resulted in the
appointment of a new opencast contractor, Sandton Plant Hire during April
2006.
- Implementation of the Petmin philosophy regarding remuneration, one where a
significant portion of the employees" annual remuneration is based on
performance.
The terms of the acquisition agreement between Petmin and the Springlake
vendors, inter alia, includes a profit warranty in respect of Springlake
Colliery of R45.6 million profit after tax over the 28 month period from 1
March 2005 to 30 June 2007 ("profit warranty"). In terms of the agreement 45
920 000 shares to the value of R27.5 million have been deferred until the
profit warranty period expires on 30 June 2007. It is the Board"s view that it
is unlikely that the warranted profit will be achieved, however the situation
will be reviewed and an announcement in this respect will be made during the
interim reporting period for the six months ended 31 December 2006.
The Somkhele Project
On 30 November 2005 the Board approved the development of the Somkhele
Project. Subsequently, the specific issue for cash for a total of R75 million
at 90 cents per share was approved by shareholders at the general meeting of
12 May 2006. In addition the Company issued 8 million shares to a financial
institution at R1.20 per share as a general issue for cash. These shares were
issued to finance and "de-risk" the Somkhele Project. In addition an asset-
based finance facility for R40 million was secured from Standard Bank to
finance the balance of the project.
The Somkhele Project lies some 18 kilometers west of the village of Mtubatuba
in the Hlabisa district of KwaZulu-Natal. The closest rail line passes through
Mtubatuba. The project is approximately 75 km from Richards Bay, which can be
accessed by tarred road.
Under the leadership of Mark Snelling, the development of this high-quality
anthracite reserve is on track and the plant, with a design capacity of
approximately 120 000 tonnes a month, will be commissioned during November
2006. It is expected that the mine will have a run-of-mine production of 40
000 tonnes a month in Phase 1 (the first two years) and thereafter, 80 000
tonnes a month (Phase 2). Somkhele"s current life of mine is more than 12
years. First sales of production are expected during the second quarter of
2007.
Establishment of a performance driven remuneration structure including the
adoption of the Share Option Scheme
The newly appointed Executive Committee"s remuneration framework has been
approved by the Remuneration Committee. The Remuneration of the Executive
Committee is predominantly performance driven and incentives are determined as
follows:
- Guaranteed remuneration is between Rnil and R500 000 per annum.
- 1.5% of net assets under management is paid as a management fee (2006, R3.5
million, 2005: R0).
- Remuneration based on profitability will be a minimum of 6% and a maximum
of 6.75% of consolidated profit before tax, which will only be paid if a
benchmark of 20% growth in sustainable earnings per share is achieved.
Sustainable earnings are defined as headline earnings per share excluding the
cost of share options. The incentive earned during 2006 amounted to R3.5
million, (2005: R0).
The adoption of the Petmin share option scheme and the formation of the Petmin
share option trust were approved at the shareholders meeting of 31 January
2006. In terms of the rules of the option scheme, 12 million options at a
strike price of 65 cents and with a cost of R6.8 million has been earned
during the year. The options are exercisable and expensed over a 3 year
period.
Change of name from Petra Mining Limited to Petmin Limited
On 31 January 2006, shareholders" approval was obtained at a general meeting
for the change in the name of the Company to Petmin Limited. The change in
name was made to better reflect the changed nature and profile of the
Company"s business and corporate identity and to avoid confusion with Petra
Diamonds Limited, a company listed on AIM in London.
A winner in the Financial Mail Top 200 Companies 2006 review
Our efforts in respect of delivering sustainable shareholder value were
recognised in the Financial Mail"s Top Companies review. Petmin was ranked
seventh overall and was one of only two mining companies in the top 20.
We were the top performer in the investment category, reflecting our five-year
internal rate of return (IRR) of 134%, up from last year"s 54%. Our IRR has
risen six-fold in the past three years and three-fold in the past year.
Petmin"s track record of delivering value to shareholders is well recognised
by this survey. We expect Petmin"s new era of growth to continue to lead to a
sustainable and profitable company, delivering healthy returns for
shareholders.
4. Earnings per ordinary share
Earnings per ordinary share ("EPS") is based on the Group"s profit for the
year, divided by the weighted average number of shares in issue during the
period.
Reviewed
Year ended 2006
Net Number Per
Income of shares share
R"000 ("000) (cents)
Basic EPS 48 600 296 700 16.38
Share options
and contingent
consideration - 30 500 (1. 53)
Diluted EPS 48 600 327 200 14.85
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 period
Reconciliation
between earnings
and headline
earnings per share
Basic EPS 48 600 296 700 16.38
Adjustments:
- profit on acquistion
of subsidiary (33 822) - (11.40)
Headline EPS 14 778 296 700 4.98
Share options
and contingent
consideration - 30 500 (0.46)
Diluted headline EPS 14 778 327 200 4.52
Audited
Year ended 2005
Net Number Per
Income of shares share
R"000 ("000) (cents)
Basic EPS 28 313 169 134 16.74
Share options
and contingent
consideration - 3 931 (0.38)
Diluted EPS 28 313 173 065 16.36
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 period
Reconciliation
between earnings
and headline
earnings per share
Basic EPS 28 313 169 134 16.74
Adjustments:
- profit on acquistion
of subsidiary (22 829) - (13.50)
Headline EPS 5 484 169 134 3.24
Share options
and contingent
consideration - 3 931 (0.07)
Diluted headline EPS 5 484 173 065 3.17
5. Net asset value per share
Reviewed Audited
Year ended Year ended
2006 2005
Ordinary share capital and reserves (R"000) 360 466 104 373
Total number of shares in issue ("000) 439 890 195 000
NAV per share (cents) 81.94 53.52
Ordinary share capital and reserves (R"000) 360 466 104 373
Total number of shares in issue ("000) 439 890 195 000
Share options and contingent consideration ("000) 73 920 9 000
Fully diluted number of shares ("000) 513 810 204 000
Fully diluted NAV per share (cents) 70.16 51.16
6. Events after balance sheet date
Petmin advised its shareholders on 20 July 2006 that it has obtained an in-
principal approval from the South African Reserve Bank to list its securities
on the London Stock Exchange"s - Alternative Investment Market ("AIM"),
subject to final approval by shareholders. Petmin is in the process of
finalising a notice which will be distributed to shareholders for approval.
At the Board meeting of 7 September 2006, John Taylor, senior ex BHP Billiton
Metallurgist, was appointed a non-executive director of Petmin.
7. Related parties
7.1 Identity of related parties
Both NAMF Nominees (Proprietary) Limited and Dark Capital (Proprietary)
Limited are material shareholders in Petmin, and are therefore related parties
as defined by Section 10 of the Listings Requirements.
River Corporate Finance (Proprietary) Limited ("River Group"), is a related
party by virtue of their advisory role to Petmin.
7.2 Acquisition of subsidiary -Springlake (see note 3)
On 30 November 2005, the Group acquired the entire issued capital of and all
claims on loan account against Springlake Holdings (Pty) Limited
("Springlake") for an acquisition cost of R116.735 million.
The purchase price payable to the vendors was settled by the issue of 129 890
000 of the 175 810 000 consideration shares, at an issue price of 60 cents per
share and by the payment of R2 750 000 in cash to Umsobomvu Coal (Pty)
Limited, one of the vendors. The balance of the consideration shares amounting
to R27.552 million is shown as a contingent consideration on the balance sheet
and will be withheld until such time as the profit warranty is achieved.
The vendors have warranted that the aggregate of the 2006 and 2007 net profit
after tax of Tweewaters Fuel (Pty) Limited (a wholly owned subsidiary of
Springlake) will not be less than R53 670 000, subject to a 15% variation.
Should the warranted aggregate net profit after tax be achieved, these vendors
will be issued, as part of the purchase consideration, with 45 920 001
additional Petmin shares at 60 cents per share. This profit warranty covers
the period from 1 March 2005 to 30 June 2007.
The Springlake acquisition constitutes a related party transaction as defined
by section 10 of the Listings Requirements, as NAMF Nominees is a material
shareholder in both Petmin and Springlake. Accordingly, the directors
requested an independent professional expert to provide a fair and reasonable
opinion on the Springlake acquisition. The opinion of the independent
professional expert was included in the 7 November 2005 Circular to
Shareholders.
7.3 Specific issue of shares to acquire the SamQuarz preference shares
When SamQuarz was acquired in September 2004, NAMF Nominees and Dark Capital
funded R13, 0 million in junior loans to SamQuarz, being R 11,0 million and
R2,0 million respectively. These loans were subsequently converted into
redeemable, convertible preference shares. On approval of the Springlake
acquisition, the directors resolved to acquire these preference shares from
NAMF Nominees and Dark Capital through the issue of 19, 5 million Petmin
shares at 66 cents per share.
7.4 Specific issue of shares to River Group
In addition to the shares issued to acquire Springlake Holdings (Pty) Limited
and the Samquarz Preference Shares, the Group issued 4 166 667 ordinary shares
at 60 cents per share in a specific issue for cash to River Capital (Pty)
Limited. R1.042 million and R1.458 million were recorded in Share Capital and
Share Premium respectively.
7.5 Specific issue of an option to Dark Capital
Dark Capital was the owner of 8 000 000 options in Petmin. Each option allowed
Dark Capital to subscribe for one new Petmin share at the higher of 45 cents
per new share or a 10% discount to the 30 day volume weighted average price of
Petmin calculated at the day of exercise. The options had a maturity date of
30 June 2005.
On 23 March 2005 Dark Capital gave notice in writing to Petmin to exercise its
options. Petmin, Dark Capital and NAMF, one of Petmin"s material shareholders,
who also owned 16.8 million similar options then entered into discussions
regarding the restructuring of these options, the outcome of which was that
Dark Capital withdraw its notice of exercise and allow its options to lapse
provided that:
- Dark Capital will be granted an option to acquire 7 million Petmin shares
at 65 cents per share. This option is valid for a three year period ending 31
October 2008; and
- NAMF agreeing not to exercise their 16.8 million options and will allow all
of their options to lapse.
Petmin, Dark Capital and NAMF reached agreement in principal on this matter in
June 2005 and a definitive agreement was signed on 26 July 2005.
7.6 Specific issue of shares for cash - 12 May 2006
On 12 May 2006, the Group announced that it had secured R75 million equity
funding in a specific issue of shares for cash by way of issuing 83 333 333
shares at 90 cents per share. R50 million was received from NAMF Nominees
(Pty) Limited, R10 million from PSG Capital (Pty) Limited and R10 million from
another institution respectively.
Both NAMF Nominees and PSG are related parties by virtue of their material
shareholding in Petmin.
7.7 Petmin executive committee remuneration scheme and share option trust
(refer to note 3)
The Petmin executive committee remuneration scheme and share option scheme
affects the executive directors of the Company and constitutes a related party
transaction.
8. Prospects
The year ahead will see Petmin as a growth company:
- continue to implement its strategy to ensure its successful development
into a multi commodity minerals business;
- implement the "Petmin disciplined approach" at all its operations - a
process predicated on the mantra: "you cannot manage what you cannot measure";
- continue to optimise the performance of its assets;
- commission Somkhele towards the end of 2006. The project presents
significant earnings potential and a challenging opportunity for Petmin to
contribute to the upliftment and sustainable development of an impoverished
community;
- establish strategic partnerships with key customers and international
distributors in respect of long-term supply agreements;
- continue with an aggressive but disciplined acquisition strategy, targeting
investments that meet our critical investment criteria;
- establish a platform on the London Stock Exchange"s Alternative Investment
Market ("AIM").
9. Dividend
In view of the funding requirements of the Somkhele project and the expansion
plans in Springlake and SamQuarz, no dividend is recommended for the year
ended 30 June 2006.
On behalf of the board
J C du Preez P J Nel 11 September 2006
Chief Executive Officer Chairman Pretoria
Directors
P J Nel* (Chairman), L Mogotsi (Deputy Chairperson),
J C du Preez (Chief Executive Officer) B B Doig (Chief Operating Officer),
E de V Greyling*, J P Mabena*, A Martin*, J A Strijdom*, D H Warmenhoven,
J Taylor* *Non-executive
Registered Office
Parc Nouveaux, First Floor, Block C
225 Veale Street, Brooklyn, Pretoria, 0002
(PO Box 899, Groenkloof, 0027)
Tel: (011) 706 0443 Fax: (011) 463 7002
Secretary and Sponsor
River Sponsors (Pty) Limited
Transfer Secretaries
Computershare Investor Services 2004 (Proprietary) Limited
Auditors
KPMG Inc.
www.petmin.co.za
Date: 11/09/2006 08:45:32 AM Produced by the JSE SENS Department
