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PENRICE SODA HOLDINGS LIMITED 2011 ANNUAL REPORT

ABOUT PENRICE

Company Profile
Penrice Soda Holdings Limited is an Australian public company. It holds leading positions in the supply of soda ash, sodium bicarbonate and limestone in its domestic market and exports to 28 other nations. Headquartered in Adelaide, South Australia, Penrice employs 259 people. It has been listed on the Australian Securities Exchange since 2005, while the Company’s origins date back to 1935. Today, Penrice is the only manufacturer in Australia of soda ash and sodium bicarbonate and is a significant supplier of limestone and civil construction materials. Key end-users of Penrice products include world majors in glass manufacturing and mining, food and medical care organisations both in Australia and overseas, and large infrastructure projects. Penrice’s strategy is to build on its reputation as a reliable and quality supplier, using its technology to build share in higher value markets and to penetrate new high growth markets while improving operating efficiencies.

Operations
The operations of the Penrice Group are centred on two South Australian based divisions – its Chemicals business at Osborne in suburban Adelaide, and the Quarry & Mineral facility at Angaston in the Barossa Valley. The Company is committed to working safely and applying industry best practice to the health, safety and well-being of employees, contractors, suppliers, customers and communities in which it operates.

products and applications as diverse as food, pharmaceuticals, medical, personal care and stock feed. Over the past 10 years, Penrice has expanded the capacity of its sodium bicarbonate plant from 24,000 tonnes per annum to 100,000 tonnes per annum.

Quarry & Mineral
Penrice owns and operates the largest crystalline limestone mine in South Australia. The mine supplies limestone into the chemical process at Penrice’s Osborne Chemicals business. It is also a significant supplier of functional inputs to glass and cement manufacture, mineral processing and stock feed, and a supplier of aggregates and other materials to a variety of end-uses, such as civil and construction, roading, landfill, and landscaping.

Chemicals
Penrice’s Chemicals business manufactures soda ash and sodium bicarbonate using the Solvay process. It operates the largest soda ash plant in South East Asia and one of the five largest sodium bicarbonate plants in the world. The major inputs – salt and limestone – are both naturally occurring and locally supplied. Soda ash is sold in the Australian market as a vital ingredient in products ranging from glass containers (especially wine and beer bottles), flat glass for building and construction, and powder detergents. It is also used in the mining and water treatment industries. Sodium bicarbonate is a specialty chemical used in a variety of

Commitment
Penrice is a united, achievement-focused Company committed to producing quality products, providing excellent customer service and secure supply. The Penrice culture encourages and challenges its people to build on this to maintain a competitive edge and through this achieve growth and future prosperity.

CONTENTS Chairman’s Report Managing Director & Chief Executive Officer’s Report Sustainability Report Executive Team Directors Directors’ Report Corporate Governance Statement Financial Statements Income Statement Statement of Comprehensive Income Statement of Financial Position Statement of Changes in Equity Cash Flow Statement Notes to the Financial Statements Directors’ Declaration Independent Auditor’s Report ASX Additional Information Financial History Corporate Information

2 4 8 11 12 13 29 34 35 36 37 38 39 40 100 101 102 103 104

YEAR IN REVIEW PROFIT SUMMARY (A$M) • Normalised loss of $1.4 million due to impact on Chemical business of strong Australian dollar and forced plant shutdown caused by third party steam supply failure. • Reported loss of $26.2 million includes $21.7 million impairment charge largely on Chemical business reflecting outlook for continuing tough operating environment. • Quarry and Mineral business cash flow improved $2.1 million from previous year with gross margin increasing $1.1 million and total costs decreasing $0.9 million. • Strategic review underway, profitability improvement initiatives implemented. Sales revenue Normalised EBITDA* Depreciation/amortisation Normalised EBIT* Net interest expense Tax* Normalised NPAT* After tax unrealised gain/(loss) on hedges After tax significant once off items Statutory NPAT Underlying earnings per share* (cents) Statutory earnings per share (cents) Interim dividend per share (cents) Final dividend per share (cents) Gearing [net debt/(net debt + equity)] % Interest cover [EBITDA*/net interest] (times) 2011 152.9 15.7 (9.6) 6.1 (8.7) (1.2) (1.4) Nil 24.7 (26.2) (1.5) (28.7) Nil Nil 53% 1.8 2010 160.4 23.3 (8.8) 14.5 (8.2) (1.0) 5.3 1.0 Nil 6.3 6.6 7.8 Nil Nil 42% 2.8 % change** (5) (33) (9) (58) (6) (20)

*Excludes unrealised hedge gain/(loss), significant once off items. **Percentage changes based on numbers to $000.

The other major glass consumer – the housing and construction industry – remains more subdued than expected. These companies are themselves facing similar headwinds to Penrice. impairment charges booked on assets and no dividend declared. and • the inability of major customers. four dominated: • the exchange rate • the Osborne soda ash plant forced outage • the cost of coke. This takes time and there are no silver bullets and no magic wands. debt levels would be falling. squeezing margins. wet summer was not conducive to beer consumption. while imports of flat glass have been increasing. displacing a further 80 million bottles. In the context of reviewing our banking agreement. which relates to reduced AUD receipts from our export business.CHAIRMAN’S REPORT It gives me no pleasure to report that 2010–11 has been another difficult year for Penrice. one of Australia’s largest wine producers has announced that one of its consignments will. While the current management team inherited an under-invested and inefficient manufacturing plant and a mine requiring substantial short term investment to keep operating. At least there has been extensive debate recently of how the increased value of the Australian dollar and the so-called ‘two speed economy’ are eroding export returns. the relatively cool. Penrice obviously cannot influence these macro factors directly. Had our earnings not been so affected. We estimate that the exchange rateinduced earnings reduction in FY2011 versus an average over three years is in the range of $13 to $15 million. The Managing Director & Chief Executive Officer’s report provides a comprehensive assessment of the Company’s operations for the year to 30 June 2011. Sales of the Company’s soda ash are heavily concentrated to the glass manufacturers. be exported in bulk for bottling in the United Kingdom. and dividends would be flowing to shareholders. domestic market pricing pressures and domestic demand. more people now have a better understanding of pressures that Penrice has been experiencing for some time. FUTURE FOCUS The Board considers that debt levels are too high. In the 2010–11 year. in each of the 18 months to June 2011 monthly sales of beer in Australia have declined – an unprecedented situation. I will focus on the steps the Company is taking to enhance its position and summarise the issues we are confronting. Our banks fully understand the challenges facing the Company and remain supportive. including asset sales and raising equity. challenging competitiveness and dampening demand. the glass manufacturers. As a result. 2 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . reflecting uncertain global and domestic economic conditions. different factors contributed to the final FY2011 result. The deleveraging plan will consider all options. It is also of little comfort that the Company is not alone among Australian manufacturers large and small in facing trading pressures. which was completed soon after 30 June and announced to the market. we committed to reduce debt levels and undertake a broad strategic review of the Company’s operations. For example. with an operating loss incurred. Since then. for the first time. to purchase their forecast demand. 88 million fewer wine bottles were filled than the previous year. We are adjusting our business where possible so that we can remain sustainable in the face of continued external pressures. increasing import competition. there would have been no impairment charge on assets. In part. The strategic review is designed to improve performance and thereby returns to shareholders.

I acknowledge the diligence and commitment displayed by my Board colleagues and by Penrice’s senior management team. • We have secured EPA approval to enable calsilt to be stored and used in a blend to produce a quality landfill at our Gillman site. following damage caused to local suppliers by the earthquake and tsunami earlier this year. including in evidence before a Senate Committee. Penrice intends to operate the plant and market the salts – which comprise common salt. In commercialising this solution. soda ash and sodium bicarbonate in varying proportions according to the particular aquifers involved. • We have successfully completed a re-line of one of the six kilns at the soda ash plant. • A number of alternative materials have been identified that substitute effectively for coke currently used in chemical processing with substantial cost reductions available. • We have begun supplying significant quantities of aggregate material to a major road project in metropolitan Adelaide. APPRECIATION TO BOARD AND STAFF At the end of August 2011. we have decided to operate with a smaller Board. designed to prove and enhance the value of the limestone resource to JORC compliance. some significant substitution has been achieved already and plans are in development to bring further materials into use. • We have reviewed workforce levels across the Company. David Trebeck Chairman PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 3 . • We have negotiated improved terms for the supply of electricity to the Osborne plant. especially in exports. We hope to have more to say on this business initiative shortly. They represent a range of efficiency enhancements and productivity improvements that policy analysts have been advocating for manufacturing businesses. not only assisting with a significant by-product problem at Osborne but potentially opening up new commercial outlets for blended fill. increased margins and improved operating efficiencies – illustrate the Company’s determination to offset the competitiveness challenges it faces. these initiatives – through higher sales. following which plant performance has improved. I express my appreciation to Barbara’s chemicals expertise and general contribution to Board deliberations. a number of initiatives have been taken or will shortly commence: • Penrice has recently won a substantial contract to supply soda ash to a new glass line in South Australia. The fact that these products could then be sold into eastern Australian markets – at present prohibitive or very costly to service from Adelaide due to high coastal shipping freight rates – is a further advantage. about the damage that might be done to the environment by the discharge of this brine water into the environment.Already. Recent extensive community concern has been expressed. During the past year we announced the formation of a consortium with GE Power and Water to provide the technology that can remove salts occurring in the water streams associated with coal seam gas extraction. • We have commenced a major new program of drilling at the Angaston mine. Barbara Gibson retired from the Board after over five years of service. The Penrice /GE Power and Water Consortium may well provide the technology solution and is focussed on demonstrating its feasibility. • We have negotiated improved prices for bicarbonate and soda ash where market conditions allow. to assist in clawing back the impact of the falling US dollar. and the entire workforce in what has unquestionably been a year of relentless pressure. Penrice’s growing involvement with the coal seam gas industry is potentially a game changer for the Company. Collectively. • We have secured new customers for sodium bicarbonate in the premium food and pharmaceutical segment in Japan. In view of the current focus on costs across the Company. trimming staff numbers by approximately 10 percent. Finally. • Major efficiencies and quality improvements have been identified as being available through the installation of a new and much more efficient bag packing line in the bicarbonate plant and consideration is being given to making the appropriate investment. under Managing Director & Chief Executive Officer Guy Roberts.

the $0. a decrease of $2 million despite a fall of $7.5 million acquisition of buffer land around the Angaston mine.3 million in the new Gillman site. This has been partially off-set by an initial insurance recovery of $0. from $12.000 -20. Despite the difficult trading environment. and investment of $0.2 million for the year ended 30 June 2011. $0. including upon US dollar Chemical business export earnings which were eroded by approximately $4 million. The forced shutdown of the Chemicals plant for several days over October following the failure of a third-party steam supplier. In response to the ongoing operating issues caused by this outage.6 million in normalised EBITDA (excluding significant once off items).8 million in the decarbonator reboiler project. which averaged US$1. CHEMICALS Chemicals business revenue was $127. we delivered an improved cash outcome in the Quarry & Mineral business through lower inventory build and a dedicated ongoing project to improve working capital management also assisted cash flow.000 -10.4 million. Over the year we continued to investigate and introduce cost saving initiatives and implement plant efficiency improvements. resulted in lost production and ongoing operational issues particularly in the kilns section. CASH FLOW 15. In addition to facing continuing difficult trading conditions. the forced shutdown of the Chemicals plant in October and unseasonal wet weather resulted in a revised outlook forecast in February and the issuance of a profit guidance downgrade in May.7 million in a kiln reline. 4 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report .3 million as a consequence of current cash flow constraints. Borrowings increased by $8. 6% lower than the previous year.6 million.00 in FY2011 versus US $0. The strengthening Australian dollar. Excluding non-recurring items.2 million.9 million in FY2010. The largest non-recurring items were impairment charges of $16 million pretax relating to the Chemicals business and $10 million pre-tax in relation to landfill inventory.5 million. down 8%.0 million. This work is already contributing to a pleasing increase in output and improved reliability. in line with our revised profit guidance.000 5. This process is on-going. -5. with a second kiln reline planned for the second half of FY2012. planned maintenance work was brought forward on two of the six kilns. had a significant impact upon earnings.88 in the previous year. We reported a disappointing after-tax loss of $26. with major projects being investment of $2.000 -15. reflecting current tough operating conditions and lower demand forecast.000 -25. with the announced strategic review targeting further improvements to operating performance in addition to initiatives to reduce debt and improve cash flow. the normalised loss was $1. The Group booked operating cash flow of $5 million for FY2011. Normalised EBITDA was $14.000 10.000 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 OPERATING CASH FLOW INVESTING CASH FLOW NET FREE CASH The expected improvement in operating cash flow in FY2011 was impacted by the strong AUD and the forced plant shutdown cause by third party steam failure. the first of which was completed in July.MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER’S REPORT The past year has been a challenging one for Penrice.000 0 $000 Capital investment increased to $13. These interruptions to plant operations resulted in an 8% decline in soda ash production on the prior year and contributed to approximately $5 million of pre-tax losses to the reported earnings for this business.

when some of our major customers cut back production reflecting a loss of market share. The strength of the Australian dollar also eroded the competitive position of some of our domestic customers. We estimate that a one cent rise in the Australian dollar reduces export revenue by PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 5 .000 Ash sales fell 6% reflecting softer demand due to stronger AUD 54% 16% 9% 7% 12% 2% CONTAINER GLASS FLAT GLASS DETERGENTS MINING INDUSTRIAL WATER 53% 15% 11% 9% 11% 1% The strong Australian dollar hurt Chemicals business earnings. Overall. On a positive note. This reflects the tough operating conditions and our updated projections of the exchange rate and demand growth forecasts. Price increases were announced in the domestic market and will be introduced over FY2012. revenue was down. while the range of materials available for use as substitutes will be expanded. which was contrary to customer expectations.000 45. there are excellent prospects for commercialisation of the process.000 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 DOMESTIC ASH EXPORT ASH REVENUE 30.000 230. Local glass makers faced softer demand in both the flat glass and packaging glass segments. particularly in the glass making sector. an impairment charge of $16 million pre-tax relating to this business was taken.000 150. while the strong Australian dollar increased competition from imports. This was particularly the case in the second half. and increased competition from imports in the domestic market.000 75.000 SALES (TONNES) 90.SODA ASH SALES 350. there is confidence that these prices will be maintained given rising prices internationally and reduced exports from China.000 190. savings from this measure were offset by further rises in coke prices. putting pressure on margins. domestic demand for both soda ash and sodium bicarbonate was also affected by the unusually wet weather and floods in eastern Australia in the summer months. once US dollar export receipts were translated into Australian dollars. in spite of volume and US dollar price growth. which impacted activity in key sectors such as manufacturing.000 REVENUE ($ 000) 270. Our proprietary technology to produce soda ash and sodium chloride from water associated with coal seam gas extraction was further proved up during the year. SODA ASH Domestic demand for soda ash weakened in the second half. If this proves as successful as is expected. however. Through the first half. we introduced an alternative less costly material as a kiln fuel. In spite of the soft demand conditions.000 SODA ASH REVENUE FY2011 FY2010 310. A consortium has been formed with GE Power and Water for construction of a pilot plant expected to be operational in the FY2012. we recently won a contract to supply significant quantities of soda ash to a newly commissioned glass furnace in South Australia. SODIUM BICARBONATE Export demand for sodium bicarbonate remained strong and sales volumes grew by 4% on the previous year and prices in US dollars increased. The higher dollar reduced receipts from sodium bicarbonate export sales. Alternative fuel materials will continue to be used at increased rates in FY2012.000 105. the increase in coke costs in 2011 reduced earnings by $2 million compared to the previous year. However. construction and farming. In response to the steep rise in coke prices in FY2011.000 60. After reassessing the expected cash flows from the Chemicals business.

000 SODIUM BICARBONATE REVENUE FY2011 FY2010 80.3 million. and dependency of demand on the timing of large-scale projects.000 REVENUE Sales levels at plant capacity with increased export sales reflecting growth opportunity.8 million which was $2. The sodium bicarbonate plant ran well and is producing at capacity.000 per annum. an impairment charge of $10 million pre-tax was taken on the landfill inventory held on balance sheet.3 million expensed and $9.3 million.3 million. In the domestic market. other things being equal. There was zero inventory build of landfill during FY2011 and landfill extraction will be minimal over the next five years.1 million.2 million. This was achieved in the absence of any large civil projects. which was down $5. where total costs were $21. with gross margins improving by $1. Pleasingly.000 40. Revenue down due to stronger AUD. During the year sales of premium grade sodium bicarbonate commenced to new food and pharmaceutical customers in Japan.3 million expensed and $1. Inventory build was just 200. sodium bicarbonate demand was impacted by the extreme weather events on the Australian east coast.000 20. 40% FOOD 16% INDUSTRIAL 0% MINING & MINERAL PROCESSING 23% PERSONAL CARE / PHARMACEUTICAL 20% STOCKFEEDS 1% WATER 35% 13% 4% 23% 24% 1% 6 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report .000 tonnes of aggregates. down from $6. Total mine costs this year were $20. Sales revenue to external customers increased 1% on FY2010 despite 211. down 54% as a result of a higher proportion of mining costs being expensed compared to the previous year. This compares to last year.000 REVENUE ($ 000) 60. The Angaston mine has now moved into a new phase of minimal overburden extraction.000 0 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 DOMESTIC BICARB EXPORT BICARB 15. Demand for aggregates is increasing to more than 1 million tonnes per annum and aggregates inventory is expected to be sold out during the next five years at current sales rates. which impacted local supply.000 SALES (TONNES) 35. Normalised EBITDA was $5.9 million reduction in total mine costs reflect a planned 50% reduction in extraction rates.000 30. The reduction in capitalised costs was a result of a lower level of inventory build.8 million remained SODIUM BICARBONATE SALES 100. domestic market share was maintained partly due to a successful anti-dumping suit against Chinese imports. The $0. Given lower than expected levels of landfill sales in recent periods. with $19. Aggregate inventory carrying value of $19. with FY2011 being an outflow of $0. the rise in the Australian dollar is estimated to have reduced export receipts by $4 million versus the prior year. QUARRY AND MINERAL Our focus in the Quarry & Minerals business over FY2011 was on achieving increased sales of higher value industrial minerals and aggregates to new customers.000 25. a smaller mine operating fleet and reduced labour costs.4 million. However.4 million in the prior year. In FY2011. following that country’s devastating earthquake in March.000 fewer tonnes being sold.000 20.approximately $300. such as supply to the Northern Expressway project which bolstered last year’s sales.1 million capitalised.0 million capitalised. worth $1.000 40. with $12.1 million better than the previous year. the business has continued its recent trend of improving net free cash flow. The sodium bicarbonate price increases announced since the end of June have been accepted in most export markets and are expected to make a positive contribution to earnings in FY2012.

we will continue implementation of our cost cutting. will make a positive contribution to earnings in the current year.000 35. Despite this. With all necessary approvals now in place. As announced.000 5. These initiatives. OUR PEOPLE AND COMMUNITIES We continue to aim for zero injuries throughout our operations and continue to implement additional safety measures as we work towards this goal. A new mine plan is expected to be completed by April 2012. this site will be filled in a manner to render it suitable for later development with by-product from the Osborne plant and landfill from the Angaston mine.500 1.000 25.000 750 500 250 0 50.5 million. We will also accelerate the considerable potential of our coal seam gas water treatment opportunities. which will materially improve margins.000 15.250 1.000 REVENUE ($ 000) MILLIONS OF TONNES EXTRACTION TONNES OVERVIEW – 10 YEAR PERIOD 7 6 5 4 3 2 1 0 FY FY FY FY FY FY FY FY FY FY 2005 2006 2007 2008 2009 2010 2011 2012* 2013* 2014* *FY2012 onwards is forecast 5 year average INDUSTRIAL MINERALS AGGREGATE LAND FILL FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 CEMENT/LIME CHEMICAL CIVIL REVENUE 0 CHEMICAL OSBORNE LIMESTONE TOTAL EXTRACTION Sales volumes decreased due to the absence of a major road project in FY2011. the construction of a pilot plant and completion of technology proving trials in the 2012 financial year will deliver fee-based income and prospects for commercialisation are high.000 45. To achieve this. and further planned outcomes of the strategic review. demonstrating the capability of our landfill for numerous other development opportunities in the vicinity. This facility covers immediate and forecast liquidity and capital investment requirements. This is particularly so in the current environment where the expectation of a continuing high Australian dollar has necessitated a focus upon operational changes to lower costs and improve performance. principally in the export business. LOOKING AHEAD We remain focused on improving operating margin and cash flow performance in the current year. so as to better understand and value the mine. and I would like to thank all of the Penrice team for their continuing support and efforts.500 SALES (THOUSANDS OF TONNES) 2.000 1. revenue increased as a result of new higher margin chemical business and sales mix. We have started a major drilling programme at the Angaston mine to achieve JORC compliance. and soft demand. The results for FY2011 were in line with the Company’s current 5 year mine plan to reduce overburden removal and aggregate and landfill inventory build to improve cash flows. We have announced price increases. unchanged and at the end of FY2011 total landfill and aggregate inventory stood at $29. We have an updated banking agreement in place which includes an additional $10 million short term working capital facility.QUARRY AND MINERAL SALES 2.000 20. price rise and efficiency initiatives arising from the strategic review. During FY2011 infrastructure works on the Gillman site.000 10. generating savings of around $2 million in FY2012. and help to offset the impact of the expected continuing strong Australian dollar. a labour cost reduction programme has been implemented which resulted in a 10% cut in staffing numbers.3 million.000 40. the majority of which is repayable at the end of September 2012.750 1. We have completed a difficult year. costing $2. Guy Roberts Managing Director & Chief Executive Officer PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 7 .250 2.000 30. was progressed.

As a consequence of anticipated regulatory change in South Australia. and the communities and environments within which we operate. it goes without saying that safety is critical to the way we work at Penrice. • developing and implementing a “best practice” safety management system • embedding the right behaviour in all our people. and we understand that the way we conduct our business affects the various communities in which we operate. We strive to continually improve our performance in these areas.000 HRS WORKED sodium bicarbonate. the Group invested significantly in safety improvements across our operations covering procedures. A Penrice focus this year has been to further embed the Safety Foundations core principles. An increase of contractor injuries contributed heavily to the overall increased of the injury rate.69 was up on FY2010 despite continued improvements in our safety management system. Safety incident reporting continues to be a pillar on our performance as does an increased concentration on management accountability and proactive hazard and risk assessment. and reduce the impact that our activities have on our people. This effort will help to ensure an even more solid foundation for the desired safe workplace at Penrice. Penrice has in place staffing. involving all of the Company’s employees and principal contactors. the environment and our communities. MAJOR HAZARD FACILITY An intrinsic part of Penrice’s manufacturing process for soda ash and ALL WORKER RECORDABLE CASE RATE INJURY PER 200. COMMUNITY – “WORKING WITH OUR KEY STAKEHOLDERS” Penrice has been a company of significance and achievement in South Australia for over 70 years. we actively participate in independently chaired consultative forums for both Penrice sites – the Penrice Community Consultation Group (PCCG) – with the community around our Angaston mine in country South Australia and a community forum for our chemical operations located at Osborne. and in line with that belief. The findings from this review will ensure the Company is well placed to meet the high regulatory standards required of a Major Hazard Facility. social and governance issues that are material to our business. These committees are made up of representatives from Local 16 14 12 10 8 6 4 2 0 FY FY FY FY FY FY FY 2005 2006 2007 2008 2009 2010 2011 ALL WORKER RCR SAFETY – “NO INJURIES TO ANYONE EVER” As a mining and manufacturing Company. Our belief is that all injuries and environmental incidents are preventable. safety leadership and safe behaviour at all levels in the organisation. people and equipment. and has updated our community complaints and issues reporting and recording systems to improve our responsiveness. The Company continues to be well placed to achieve the “best practice” levels to which it aspires. and • finding solutions for the physical safety hazards that we face – as in any mining and manufacturing environment. During the year. Our performance for FY2011 of 2. our Osborne operation is likely to be categorised as a “Major Hazard Facility”. As part of our commitment to working better within the communities in which we operate. which is led at Board and Executive Management level. That includes a responsibility to understand and resolve social and environmental issues. when the legislation is enacted in 2012. The Company has undergone a formal review by SafeWork SA in 2009 and has since developed a comprehensive Safety Management System. In response to this a campaign was launched to insure the behaviours contractors exhibit on a daily basis is consistent with the Penrice safety vision. This effort will be tested further in late 2011 when an independent audit review is undertaken by a specialist Major Hazardous Facilities consultant. community. Our safety focus. Penrice’s progress in the past six years in reducing workplace injuries and illnesses – from a recordable injury rate of 14 to 2. which is in line with requirements in other Australian states. we have reconfirmed our safety vision “no injuries to anyone ever” and have adopted our environmental vision of “zero harm and waste”. is the storage and use of large quantities of chemicals. South Australia. processes and systems to better understand community perspectives.69 – represents a significant improvement. The Company is moving into its third year of a three year intensive program that will implement best practice safety procedures. Central to this policy is the Company’s strong commitment to the safety of the people we work with.SUSTAINABILITY REPORT Sustainability for Penrice means addressing the environmental. To this end we have a suite of short and long term programs designed to reach our new performance goals and reduce our footprint. is underpinned by three elements: 8 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report .

The water from the desalination plant is of a greater purity than that of towns water and has resulted in 1. our use of towns water was reduced by 0.00 2. ENVIRONMENT – “ZERO HARM AND WASTE” An economically and environmentally sustainable future is high on the list of Penrice priorities. electricity. Government.800 tonnes per annum less sulphuric acid and caustic soda being used to further process water for use in our businesses. Although higher than the previous year. this was caused by the fixed cost component of steam consumption being spread across fewer production tonnes resulting from the forced plant shutdown and subsequent plant reliability issues. and in particular lowering the amount of towns water used per tonne of product produced.60 7. we have established plans that are expected to result in further improvement.00 7. The water which was being used for lime slaking is directed to a new Reverse Osmosis (RO) plant. The majority of fresh water used at Penrice’s operations is utilised for the generation of steam. down from 1. This project has ensured the recovery waste streams and allowed them to be directed to feed the lime slaking plant. much in line with recent years but an improvement on historical usage. and the rejected water from the RO plant is now used in the slaking plant to supplement the waste water streams. WATER USE We continue to focus on reducing the water used by our operations.80 8. Department of Primary Industries and Resources of South Australia (PIRSA) and Penrice.20 8. Both forums meet on a quarterly basis. and after identifying a number of areas for significant energy savings. steam and coke in producing soda ash and sodium bicarbonate. Penrice is a participant in the Australian Government’s Energy Efficiency Opportunities (EEO) program.00 4. With the installation and commissioning of the Reverse Osmosis desalination plant in 2006. 2011 Annual Report 9 PENRICE SODA HOLDINGS LIMITED .26 GJ/MT in FY2011. The Company continues to make a steady improvement in the consumption of energy with the GigaJoule of energy use per metric tonne of product being 8. a project was initiated in Q3 of FY2010 to further reduce the amount of towns water and retain only a small portion for potable applications. When normalising for these issues the energy consumption would have been 7. the Environmental Protection Agency (EPA).40 8.9 Gl per annum – a 56% reduction. The permeate from the RO plant is used as process softened water (replacing towns water).00 0.80 7.TOWNS WATER CONSUMPTION (M3/MT PRODUCT) 5.3 Gl pa.00 3.97 GJ/ MT.40 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY FY FY FY FY FY FY FY 2005 2006 2007 2008 2009 2010 2011 2011* * Normalised for forced plant shutdown and subsequent plant reliability issues. ENERGY & GREENHOUSE GAS EMISSIONS The operations of the Penrice Group use a range of energy sources including gas.00 ENERGY CONSUMPTION (GJ/MT PRODUCT) 8.00 1. Buoyed by the good progress which Penrice has made in water savings.6Glpa in 2005. a further saving of 0. Penrice believes this is a strong indication of our commitment to listen to and understand our community stakeholders and to work to improve and ultimately resolve community issues. to discuss and share information around the Company’s operations and performance to agreed environmental outcomes and criteria. This makes the future usage of towns water only 0. community members.4 Gl per annum of towns water has been made in FY2011. As a result of making these changes. and we are licensed by the EPA in South Australia.60 8. We have an operational improvement program that addresses the environmental impact from our businesses. Energy use is closely monitored to ensure the conservation programme remains on target. This project was focused on reusing existing process water waste streams and was commissioned in June 2010. Our Environmental Management System focuses on meeting requirements of the international standard ISO 14001.

after the removal of solids in our onsite solids recovery plant. Penrice has also continued to support the targets set within the Adelaide Coastal Waters Study and has agreed with the EPA to meet a 2025 target of 300 tonnes of Ammonia discharged to the Port River. If the proposed Carbon Scheme is enacted Penrice will be eligible for the highest level of free permit allocation of 94. CARBON SCHEME In early 2011 the Company was accepted as an Energy Intensive Trade Exposed Entity. In order to meet the expectation of all stakeholders Penrice believes this will only be achieved through a global pricing mechanism. The FY2010 emissions were compliant with legislation.5%. Our commitment to lower the emissions further has included automating dust suppressant systems on fixed plant and installing dust monitoring equipment that complements our daily operational activities. The current view of the likely financial impact of the scheme on Penrice is that it will introduce significant cost to the manufacturer of soda ash and sodium bicarbonate. The EIP will be valid until December 2015. The revised EIP commits to a 15 tonne per year reduction of ammonia to the Port River for the next 5 years. QUALITY Penrice manufactures product to high quality standards and maintains manufacturing systems accredited to the Quality Management System international standards ISO 9001 and Food Safety Management System ISO 22000 which enables the supply into both food and pharmaceutical markets. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . AMMONIA Penrice continues its commitment to reducing its load of nitrogen on the Port River. and also the continuous monitoring of particulates on the plant with two dust monitoring stations. The EPA undertook dust emission monitoring over a 12 month period which confirmed that our operations are compliant with all standards and regulations. WASTE WATER EFFLUENT All storm water and cooling water drains located within our Osborne site are discharged to the local marine environment. AIR QUALITY In accordance with our EPA operating licence. This program includes the monitoring of chimney stacks on site that discharge particulates (dust) to the atmosphere.GREENHOUSE GAS Penrice is a significant greenhouse gas emitter and is subject to the National Greenhouse and Energy Reporting Scheme (NGERS) and is likely to be impacted by any Australian Government’s Carbon Scheme. Penrice fully supports a carbon reduction mechanism to reduce green house gas emission. Penrice produces pharmaceutical grade sodium bicarbonate which meets British Pharmacopoeia 2010 and European Pharmacopoeia (6th Edition) specifications. Penrice finished 2010 calendar year meeting the required reduction of ammonia discharged to the Port River as outlined in the 2005 – 2010 Environmental Improvement Program (EIP). In early 2011 the revised five year environmental improvement plan (EIP) was approved by the EPA. We have continued to report formal greenhouse gas inventory under NGERS as required by legislation. At our Angaston operation we have undertaken extensive air quality investigation and monitoring as part of our commitment to the PCCG. the Port River. As a sign of our continued commitment to reducing our environmental impact the Company has agreed to a new EIP for a further 5 years that encompasses dust 10 TONNES OF AMMONIA TO PORT RIVER 1200 1000 800 600 400 200 0 CY 2005 CY 2006 CY 2007 CY 2008 CY 2009 CY 2010 management and ammonia and solids discharge to the Port River. including our EPA operating licences and our EPA Environment Improvement Programs (EIP). LICENCE COMPLIANCE The Company is pleased to report continued compliance with all relevant environmental legislation. we monitor the release of contaminants to the atmosphere.

DARRIN WRIGHT MARNIE BROKENSHIRE General Manager – Human Resources BBus. She has worked nationally and internationally with GM Holden. BRETT SMITH PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 11 . Darrin has held senior roles with GM Holden. Having contributed significant improvement to the safety and environment management systems at Penrice. Belfast) Declan commenced with Penrice in May 2008 in the role of General Manager – Chemical Operations. Sensis. Grad Dip HRM/IR (RMIT). He has 20 years of experience in operational risk management. She is a Human Resources specialist with more than 15 years experience in senior generalist roles. BA (Acc) (Uni SA) Frank joined Penrice in May 2008. Mgmt Dip (Uni SA) Roy joined Penrice in 1994. DECLAN MACKLE ROY DOVETON General Manager – Major Projects BSc Eng (Mech) (Hons). He is an experienced supply chain professional in domestic and international markets within the chemical. Grad Dip Ed (CSU). Tennant Limited. Deloitte Consulting and Monsanto. production management and maintenance. General Manager – Chemicals Business Dip Ag Science (CSU). National Foods and Local Government. Grad Bus Studies (UNE) Brett joined Penrice in April. Brett’s previous roles were held with Elders and Incitec Pivot. Roy’s previous experience was gained from senior roles with Sappi Kraft Tugela (Pulp & Paper) and Iscor Newcastle (Iron & Steel). Grad Cert Change Mgmt (AGSM) Marnie joined Penrice in May 2007. agricultural and mining sectors. ANDREW CANNON General Manager – Supply Chain MBA (Merit) (Uni of Newcastle). the last four years as its CFO. Prior to this. General Manager – Quarry and Mineral Grad Dip Human Factors in Safety Mgt (Uni SA) (current) Darrin joined Penrice in December 2007. Shark Bay Salt and Botswana Ash Pty Ltd. GAICD Andrew joined Penrice in November 2007. procurement and distribution in chemical commodities. 2010 and possesses over 20 years experience in sales and marketing management. General Manager – Chemical Operations BEng (Hons) Chemical Engineering (Queen’s Uni. He brings an extensive and successful international career in senior management positions gained from roles held with Adelaide Brighton Cement. Frank spent six years with the South Australian Gas Company in various accounting roles. Incitec Limited and Western Mining Fertilisers. With over 25 years of experience in chemical and industrial manufacturing includes management responsibility for major projects. BSc Agriculture (Hons) (Melb Uni). he was promoted to the role of GM Quarry and Mineral in May 2010. Frank was with ASX listed Adelaide Bank for 18 years. Andrew’s previous senior management roles were held with Elders. MAICD.EXECUTIVE TEAM FRANK LUPOI Chief Financial Officer & Company Secretary FCPA. Prior to joining Penrice.

DIRECTORS DAVID GROVES GUY ROBERTS DAVID TREBECK BARBARA GIBSON ANDREW FLETCHER JOHN HIRST 12 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report .

During the past three years David also served on the following boards: • • • • • • Graincorp Limited * PrimeAg Australia Ltd * Maersk Australia Pty Ltd * Institute of Public Affairs National Water Commission Brumbies Rugby – Audit & Risk Committee GUY R. Asia. From 23 August 2011. plastics manufacturing and distribution. a former Commissioner of the National Water Commission and a Director of several other companies. including Managing Director and General Manager roles in chemical manufacturing and distribution. and with operations in the United States and the United Kingdom. paint manufacturing and retailing in Australia and New Zealand. During 2008 he served on a Government Panel reviewing Australia’s biosecurity and quarantine arrangements. His final Orica position prior to joining Penrice involved particular responsibility for setting Orica’s strategic growth agenda in water treatment and was General Manager of Orica Watercare. mergers and acquisitions across the Group’s portfolio in Australia. Further details are available in the Corporate Governance Statement.DIRECTORS’ REPORT The Board of Directors of Penrice Soda Holdings Limited has pleasure in submitting this report for the year ended 30 June 2011 as follows. Guy held a number of senior Executive positions with Orica. and until the date of this report are as follows. the Company has had a Nomination Committee and a Remuneration Committee. Australian Institute of Company Directors • Churchill Fellowship • Centenary of Federation Medal 2001 Experience David is a Director of ASX listed Graincorp Limited and PrimeAg Australia Ltd. plastics and consumer markets in Australia. It should be noted that the Company had a Remuneration and Nomination Committee in place throughout the 2011 financial year and up until 23 August 2011. Asia and the United States – all of which are relevant to Penrice’s operations. New Zealand. responsible for major projects. He has wide experience in chemical. including other directorships held for the past three years. Guy is also a former barrister and solicitor with Minter Ellison Lawyers and Senior Legal Counsel with Orica. ROBERTS Managing Director & Chief Executive Officer Commenced as Director December 2006 • Bachelor of Law (University of Adelaide) • Graduate Diploma in Legal Practice (University of Adelaide) Experience Guy is an experienced international chemical company executive who was with the Orica Australia group (formerly ICI Australia) for 15 years prior to being appointed Managing Director & Chief Executive Officer of Penrice in 2007. TREBECK Chairman Commenced as Director September 2007 (Appointed Chairman 29 October 2009) • Bachelor of Science in Agriculture (Hons) (University of Sydney) • Master of Economics (University of New England) • Fellow. New Zealand. the leading supplier of industrial and water treatment chemicals and equipment in Australia and New Zealand. Directors The names and details of the Company’s Directors in office during the financial year. Incitec Limited and Pipers Brook Vineyard Limited. Directors were in office for this entire period unless otherwise stated. Guy also currently serves on the following boards: • Adelaide Festival Centre Foundation • Business SA • Committee for Economic Development of Australia SA (CEDA) • National Lime Association of Australia * Indicates a current Directorship Special Responsibilities • Member of Audit and Risk Management Committee • Chair of Nomination Committee • Member of Remuneration Committee PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 13 . United States and the United Kingdom. David is a former Managing Director of ACIL Consulting Pty Ltd and a former Director of Incitec Pivot Limited. DAVID B.

3 billion business and the largest Chemicals business in Australia. Institution of Engineers Australia Fellow. GIBSON Commenced as Director November 2005 Retired as Director 31 August 2011 • Bachelor of Science (Biochemistry) (Monash University) • Fellow of the Australian Academy of Technological Sciences and Engineering • Centenary of Federation Medal 2003 Experience Barbara was formerly the Group General Manager of Chemicals for Orica Limited.) 14 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . FLETCHER Deputy Chairman Commenced as Director April 2005 • • • • Bachelor of Engineering (Civil) (University of Adelaide) Fellow.Directors’ report (continued) ANDREW V. She has extensive experience in running science based businesses and technology development. During the past three years Andrew has also served on the following boards: • Defence SA Advisory Board * • SA Environment Protection Authority Board * • Member of SA Economic Development Board * Indicates a current Directorship Special Responsibilities • Chairman of Audit and Risk Management Committee • Member of Nomination Committee * Indicates a current Directorship Special Responsibilities • Member of Nomination Committee • Member of Remuneration Committee (Barbara was Chair of the Remuneration and Nomination Committee up until 21 February 2011 and then was a member of the Remuneration and Nomination Committee post this date. Australian Institute of Company Directors BARBARA J. and Senior Vice President Asia Pacific for Brown & Root Services from 1998 until 2000. During the past three years Barbara has also served as a Non-Executive Director on the following boards: • • • • • Nuplex Industries Limited * Warakirri Asset Management Pty Ltd (Chairman) * Graincorp Limited * Biota Holdings Limited St Barbara Limited Experience Andrew is currently the Chief Executive Officer of Defence SA. a $1. America Society of Civil Engineers Foundation Fellow. His previous executive appointments include Senior Vice President Global Infrastructure and Asia Pacific for Kellogg Brown & Root from 2001 until 2005. and a member of the Orica Group Executive.

HIRST Commenced as Director September 2007 Experience John has over 40 years experience in the international chemical industry. He is a member of MIR Management Limited Advisory Council and also an executive director of a number of private investment companies. Australian Institute of Company Directors Experience David is Deputy Chairman of Equity Trustees Limited and a non-executive director of Tassal Group Ltd.A. he was a member of the Remuneration and Nomination Committee. During the past three years David served on the following boards: • • • • Equity Trustees Limited * Tassal Group Limited * Pipers Brook Vineyard Pty Ltd * Graincorp Limited * Indicates a current Directorship Special Responsibilities • Member of Audit and Risk Management Committee • Member of Nomination Committee • Member of Remuneration Committee PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 15 . GROVES Commenced as Director December 2010 • • • • Bachelor of Commerce (University of Wollongong) Master of Commerce (University of New South Wales) Chartered Accountant Fellow.Directors’ report (continued) JOHN W. Nuplex Industries Limited. and from 2001 to mid 2010 was Managing Director of ASX and NZX listed. Pipers Brook Vineyard Pty Ltd and Kambala. a leading manufacturer and distributor of functional chemical based materials with global operations. Prior to that date. a leading Australian girls’ school in Sydney. David is a former director of Graincorp Limited and Mason Stewart Publishing and a former executive with Macquarie Bank Limited and its antecedent.) DAVID F. During the past three years John has also served on the following board: • Nuplex Industries Limited Special Responsibilities • Member of Nomination Committee • Chair of Remuneration Committee • Member of Audit and Risk Management Committee (John was appointed Chair of the Remuneration and Nomination Committee on 21 February 2011. Hill Samuel Australia.

Roberts Board Meetings Eligible Scheduled Meetings Meetings Attended 14 14 14 14 14 14 8 8 14 14 * Although not a member of the committee.V.989 168.063 G.J. Skipsey (Power of Attorney) Kathryn Groves Edwina Groves G. Fletcher B.J. Groves G.R. Fletcher B.A. C & E Superfund DB Management Pty Ltd as Trustee for The D&B Family Trust J.R. Hirst D. at the date of this report is as follows: Director D.530 117.Directors’ report (continued) DIRECTORS’ INTERESTS No Director has any interest in a contract or proposed contract with the Company or any of its subsidiaries other than as disclosed in the Directors’ benefits section of this report. The relevant direct or indirect interest of each Director in the shares issued by the Company as notified by the Directors to the Australian Securities Exchange in accordance with S205G(I) of the Corporations Act 2001.000 83.931 87.900 5. 16 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report .R. Trebeck A.B. the Director attended.000 105. Groves Name of holder and nature of interest DB & DJ Trebeck as Trustee for Fairo Superannuation Fund Andrew Fletcher & Associates Pty Ltd Superannuation Fund Sunday Agencies Pty Ltd Superannuation Fund Hirst Supernnuation Fund Pty Ltd ATF The Hirst Superannuation Fund Superdeck Pty Ltd as Trustee for D.349 62.A Hirst D. Gibson J.F.F.W.608 500.598 488.Gibson J. Roberts DIRECTORS’ MEETINGS The number of Directors’ meetings and meetings of Committees of Directors held during the year and the number of meetings attended by each Director is as follows: Audit & Risk Management Committee Meetings Eligible Scheduled Meetings Meetings Attended 4 4 – 4* 4 4 2 2 – 4* Nomination & Remuneration Committee Meetings Eligible Scheduled Meetings Meetings Attended – 4* 4 4 4 4 2 2 4 4 A.W. K. Roberts Number of ordinary shares 715.V.W.

There have been no known breaches of the consolidated entity’s licence conditions during the financial year. Penrice was in negotiation with its banks and had reached agreement in principle to amend its finance facilities as announced to the ASX on Friday 12 August 2011. being the maturity date of the Banking Agreement of 31 March 2013. 2010: No interim or final dividend was paid. No repayments are due within the next 12 months.0 million funding facility to be available until 31 March 2012. senior leadership positions and non traditional roles within engineering and operations • Implement regular training to all employees to increase the awareness of the importance of diversity and equal opportunity • Provide for specific programs for the professional development and training of women within our workforce • Introduce a market competitive paid parental leave policy in line with Commonwealth legislation to encourage women into our workplace and to return after parental leave. DIVERSITY Penrice considers that business performance. Previously the termination date for this facility was 31 August 2011. These were to: • Develop and implement a policy on diversity that reflects the company’s objective to create a diverse workforce with specific focus on gender. ENVIRONMENTAL REGULATION AND PERFORMANCE The Company holds licences issued by the Environment Protection Authority (EPA). 30 June 2011 $000 (26. The measurable objectives set by the Board for the reporting period have been achieved. and equal opportunity • Update recruitment policies and procedures to reflect the company’s policy to encourage women into Board. SIGNIFICANT EVENTS AFTER THE BALANCE DATE Banking Agreement As at 30 June 2011. Result Operating profit/(loss) after income tax Dividends 2011: No interim dividend was paid and no final dividend has been declared. distribution and sale of quarry and mineral products. EMPLOYEES The consolidated entity employed 259 employees at 30 June 2011 (2010 – 257 employees).206) Nil 30 June 2010 $000 6. productivity and job satisfaction are enhanced by a diverse workforce. This agreement cancelled a $1. The consolidated entity has a policy of at least complying. senior management team. which then reduces to $8. The remaining facilities have no changes to their maturity date. exceeding its environmental performance obligations. being the termination date for this new facility. and Board. which enables discharge to the environment from the consolidated entity’s operations.Directors’ report (continued) Principal activities The principal activities of the Company consist of the manufacture. REVIEW OF OPERATIONS A review of operations of the consolidated entity during the financial year and the results of those operations are included earlier in the Managing Director & Chief Executive Officer’s Report. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There has been no significant change in the State of Affairs of the Company.8 million remains a current liability in the financial statements.0 million until 30 September 2012. Whilst this amendment does cancel the $1. it is considered a “non-adjusting subsequent event” under accounting standards and does not change the classification of the liability at 30 June 2011. LIKELY DEVELOPMENTS AND FUTURE RESULTS A detailed review of the likely developments and future results is included in the Managing Director & Chief Executive Officer’s Report. distribution and sales of soda ash and sodium bicarbonate and the mining. A detailed review of environmental regulation and performance is included in the Sustainability Report. and as a consequence is committed to promoting a culture where diversity is encouraged. As a result. from time to time. $8. All environmental performance obligations are monitored and are subjected.8 million amortisation payment and defers payment of the $7.277 Nil The amended agreement provides an additional $10. to Government Agency audits and site inspections. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 17 . but in most cases.8 million amortisation payment due on 30 June 2011 and amended the termination date of its $7.0 million facility beyond the 12 month period from balance date. age.0 million facility to 30 November 2012 or a later date to be agreed in writing.

We have been able to increase the number of women shortlisted in the recruitment process for vacant positions and have conducted diversity training for all employees. The Access. Remuneration packages can include a mix of fixed remuneration and performance-based remuneration. This report outlines the remuneration arrangements in place for the specified Directors and Executives of Penrice Soda Holdings Limited. The Remuneration Committee obtains independent advice on the appropriateness of remuneration packages. the Managing Director and Executives. INDEMNIFICATION OF OFFICERS The Company has paid a premium for Directors’ and Executive Officers’ liability insurance in respect of Directors and Executive Officers of the Company as permitted by the Corporations Act 2001. except where the liability arises out of conduct involving lack of good faith. SHARE OPTIONS AND RIGHTS As at the date of this Report there were 878.068 performance rights allocated in respect of the LTI plan for FY2010 which are subject to a 3 year performance period and will be eligible for vesting under the plan at the conclusion of FY2012 and 1. The Company has agreed to indemnify the current Directors of the Company against all liabilities to another person (other than the Company or a related body corporate) that may arise from their position as Directors of the Company and its controlled entities. Further. REMUNERATION REPORT (AUDITED) The Directors of Penrice Soda Holdings Limited present the Remuneration Report (which forms part of the Directors’ Report) prepared in accordance with section 300A of the Corporations Act 2001 and its Regulations for the Company and its controlled entities for the year ended 30 June 2011. Refer to the remuneration report for further details. the structure of Non-Executive Director and Executive remuneration are separate and distinct.073 performance rights allocated in respect of the LTI plan for FY2011 which are subject to a 3 year performance period and will be eligible for vesting under the plan at the conclusion of FY2013. and • performance incentives which allow executives to share the rewards of the success of the Company.Directors’ report (continued) In the reporting period. reviewing. The terms of the policy prohibit disclosure of details of the insurance cover and premium. The expected outcomes of the remuneration structure are: • attraction of quality management to the Company. REMUNERATION STRUCTURE In accordance with best practice corporate governance. • retention and motivation of key executives.913. • relevant employment market conditions. SUMMARY • Executive salaries were frozen as a result of 2011 performance year • No short term amounts under incentive schemes become payable for the 2011 financial year as a consequence of Company under performance • There are no benefits available for the 2011 financial year rising from any long term incentive scheme • Executives as a consequence earned between 53% and 77% of their approved Total Annual Remuneration • Directors Fees remained unchanged REMUNERATION COMMITTEE The Remuneration Committee of the Board of Directors of the Company is responsible for determining. and • external market data and comparable relativities. we have had two employees benefit from the improved provisions for paid parental leave. Details of the composition and responsibilities of the Remuneration Committee can be found on page 31. and recommending compensation arrangements for the NonExecutive Directors. employees have been sponsored to attend women-specific AICD courses and other like professional development training to support the progression of high performing women within our workforce. The Remuneration Committee further considers: • capacity to pay. they comprised the following elements: 18 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . taking particular note of trends in comparative companies. Indemnity and Insurance Deed stipulates that the Company will meet the full amount of any such liabilities including costs and expenses. collectively the Key Management Personnel (KMP).

Non–Executive Directors have no involvement in the day to day management of the business.2 3.2 3. directing and controlling the major activities of Penrice. Chemicals Business General Manager.7 6. previously General Manager. Human Resources Chairman Deputy Chairman Non-Executive Director Non-Executive Director Non-Executive Director 1.2 5. Chemical Operations General Manager. David Trebeck was appointed a Non-Executive Director effective 20 September 2007. Years service in current Role 4. Key Management Personnel (KMP) include Non-Executive Directors and members of the Executive Team. Quarry & Mineral General Manager.Directors’ report (continued) REMUNERATION REPORT (AUDITED) (CONTINUED) Compensation type Fixed remuneration Fees Salary Compulsory Superannuation Other Benefits At risk remuneration Post employment Short term incentive (STI) Long term incentive (LTI) Termination payments DIRECTORS Non-executive Executive ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ EXECUTIVE ✓ ✓ ✓ ✓ ✓ ✓ DETAILS OF KEY MANAGEMENT PERSONNEL (KMP) As deemed under AASB 124 Related Party Disclosures. “Executive” refers to Executive Key Management Personnel. Michael Carter.5 3.2 1. In this report. who have authority and responsibility for planning.2 4. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 19 .7 3.6 3.7 0. Supply Chain General Manager. Major Projects General Manager.5 29/10/2009 01/04/2005 23/11/2005 01/09/2007 20/12/2010 David Groves was appointed a Non-Executive Director effective 20 December 2010.2 1. There were no other changes of Key Management Personnel between reporting date and the date the financial report was authorised for issue. 2010.2 Start date in current role 19/12/2006 01/05/2008 07/04/2008 01/05/2010 12/04/2010 15/10/2007 07/04/2008 07/05/2007 Name Executive Guy Roberts Frank Lupoi Declan Mackle Darrin Wright Brett Smith Andrew Cannon Roy Doveton Marnie Brokenshire Non-Executive David Trebeck Andrew Fletcher Barbara Gibson John Hirst David Groves Role Managing Director & Chief Executive Officer Chief Financial Officer & Company Secretary General Manager. Quarry & Mineral retired July 1. consisting of an Executive Director and the most highly remunerated Executives listed below.

511. and • Create an environment where Executives act. Having an effective Executive is a key element in this and hence attracting and retaining the right people is critical to success. The Chairman does not receive any additional fees for being the Chair of the Nomination Committee. • ensure total remuneration is competitive by market standards. The mix between fixed and at-risk elements varies across the Executive and the table below shows the percentage of Total Annual Remuneration that is at risk against both Short Term and Long Term objectives: 20 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . with clear and meaningful targets.900 in relation to their service as a Director of the Board and as a member of any Board Committee for the year. and are encouraged to be owners of the business. The Board considers advice from external consultants as well as the fees paid to Non-Executive Directors of comparable companies when undertaking the annual review process and seeks shareholder approval when required. • Pay competitive. These fees include both committee and superannuation benefits paid in accordance with the Superannuation Guarantee Levy (SGL). median market aligned total compensation. so as to: • link reward with the strategic goals and profit performance of the Company. and reflect their risk. Non-Executive Director fees were not increased in 2011. motivate and retain the right people. The amount of aggregate remuneration required and the manner in which it is apportioned amongst Directors is reviewed annually. Total remuneration for Non-Executive directors for the year ending 30 June 2011 was $362. • Pay for performance with a transparent process linking outcomes and reward. In addition. Consequently. Remuneration is structured to contain both fixed and at-risk components to drive culture and behaviour towards higher performance. The Executive Remuneration Strategy is to strike a balance between rewarding performance and sustaining and growing the business profitably. Non-Executive directors are entitled to be reimbursed for reasonable travel and other expenses while engaged in the business of the Company. EXECUTIVE REMUNERATION The Company remunerates the Executive commensurate with their position and responsibilities. The Company recognises that to date it has underperformed investors’ expectations.100.Directors’ report (continued) REMUNERATION REPORT (AUDITED) (CONTINUED) NON-EXECUTIVE DIRECTOR REMUNERATION STRATEGY The Board sets Non-Executive director fees within the aggregate remuneration of $500. EXECUTIVE REMUNERATION STRATEGY Penrice’s Executive Remuneration Strategy encompasses the Managing Director. • align the interests of Executives with those of shareholders. feel. The Chairman received a fee of $126. General Managers and Secretaries of the Parent and the Group. and • minimise risk. The Board may pay additional remuneration to Non-Executive directors for significant extra work however no such payments were made in 2011. Fees are set at a level to attract and retain Directors of the highest calibre with relevant and complementary experience. The Directors believe that retention of the current Executive at this time is critical to achieving that aim and that competitive remuneration must therefore be maintained. the current focus of the Company is to achieve and then sustain above average returns to shareholders. Details are provided on page 25 of this report. time commitments and responsibilities.000 which was set at the time of the Company’s listing.690 reflecting the additional time commitments in fulfilling this role. NonExecutive Directors are not entitled to any form of incentive or any payments related to the company’s performance that may otherwise impinge on independence and impartiality. Chairs of the Audit and Risk Committee. NON-EXECUTIVE DIRECTOR REMUNERATION The fee received by each Non-Executive director in 2011 was $63. Its intent is to: • Attract. and the Remuneration Committee received an additional fee of $5.

corporate behaviour. Chemical Operations General Manager.000 $194.500 $214. where appropriate. external advice on policies and practices. The Remuneration Committee has access to professional advice independent of management. It may be taken in agreed form.000 $520. FAR was reviewed effective September 1. EXECUTIVE FIXED ANNUAL REMUNERATION (FAR) Fixed annual remuneration (FAR) is the aggregate of salary.000 $320.000 $194. This is consistent with the Board’s strategy of linking rewards with shareholder interests.000 $194. It is reviewed annually based on Company.000 $226. The following table provides FAR for Executives with effect from 1 September: FAR AS AT 1 SEPTEMBER 2009 2010 $500. Supply Chain General Manager. Chemicals Business ^ General Manager. Capital Projects General Manager.000 Name Executive Guy Roberts Frank Lupoi Declan Mackle Darrin Wright Brett Smith Andrew Cannon Roy Doveton Marnie Brokenshire Role Managing Director & Chief Executive Officer Chief Financial Officer & Company Secretary General Manager.000 $226. Human Resources 2011 $520. 2011 and there were no increases to any Executive FAR other than for Brett Smith. FAR was reviewed effective September 1. Health. 2010 and the average increase across the Executives was 3% (excluding promotion increase relating to General Manager.500 $214. Quarry & Mineral* General Manager.000 $225. compulsory superannuation payments and other benefits paid to each member of the Executive.Directors’ report (continued) REMUNERATION REPORT (AUDITED) (CONTINUED) % OF TOTAL ANNUAL REMUNERATION AT RISK Name Guy Roberts Frank Lupoi Declan Mackle Darrin Wright Brett Smith^ Andrew Cannon Roy Doveton Marnie Brokenshire Role MD & CEO CFO & Company Secretary General Manager General Manager General Manager General Manager General Manager General Manager Short term incentive 2010 2011 21% 21% 13% 18% 14% 20% 14% 20% n/a 15% 12% 12% 12% 12% 12% 12% Long term incentive 2010 2011 26% 26% 25% 24% 14% 13% 14% 13% n/a 11% 12% 12% 12% 12% 12% 12% Total at Risk 2010 2011 47% 47% 38% 42% 28% 33% 28% 33% n/a 26% 24% 24% 24% 24% 24% 24% ^ Appointed 12 April 2010 The above table reflects target performance. a loading of 20% on STI earned becomes payable.500 $214. The Company seeks to pay in the median range. Incentive payments are based on the FAR as at September 1.000 $320. relevant comparative market data and. Quarry and Mineral).000 $235. Executive performance against plan. The payment of any STI or LTI incentive earned is entirely dependent upon each Executive achieving a minimum satisfactory standard.000 $193.000 $218. business unit and individual performance. previously General Manager Safety. It is usual practice to provide Executives with stretch targets for key STI measures. capacity to pay. Environment and Quality ^ Appointed 12 April 2010 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 21 .000 * Appointed 1 May 2010.000 $300. and overall contribution to Company performance is reviewed annually. Not all Executives received an increase.500 $195.000 $218.000 $235.000 n/a $213.000 $210. In the event that these targets are met.

206) (28. The Managing Director & Chief Executive Officer reviews the performance of individual Executives and the Chairman reviews the performance of the Managing Director & Chief Executive Officer against a standard covering financial and non financial measures. There were no STI payments earned in the prior year. Non financial measures include safety. stretch target.178) 7.149 12. EXECUTIVE VARIABLE ANNUAL REMUNERATION – SHORT TERM INCENTIVE (STI) The STI program is a cash based incentive linked to the achievement of the Company’s predominantly financial targets which are set annually. yet is both achievable under reasonable circumstances.277 7. Board approved.Directors’ report (continued) REMUNERATION REPORT (AUDITED) (CONTINUED) The actual FAR payments provided in the tables in pages 25 and 26 vary from the above due to the disconnect between the July to June financial year being reported and the salary review period being September to August. behaviours and skills development.402) 6. It places a substantial percentage of each Executive’s earnings at risk.254 16. operating profit and positive cash flow are the principal STI targets. no STI payments were payable.9 2008 (19. $000 Net Free cash out flow NPAT Earnings per Share (cents) 2007 (1. Chemicals Business General Manager. and cost effective. Results of Net Profit After Tax and Net Free Cash Flow are shown in the following table. Supply Chain General Manager.845) 6.8 2011 (8. The aggregate of annual STI payments available for the Executive is subject to the approval of the Remuneration Committee. For the 2011 financial year the target was to achieve net profit after tax (NPAT) and net free cash flow at a budget level which was above the previous financial year’s actual NPAT and net free cash flow result. health and environmental performance.724 14.731) 7. no STI is payable under any circumstance. Chemical Operations General Manager. and projects with longer term strategic benefits. Human Resources 22 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . Quarry & Mineral General Manager.218) (26. Capital Projects General Manager.7) Having not met the specific performance objectives for the financial year 2011. In the event that a minimum personal performance rating is not met. Executives with superior and outstanding individual performance may receive additional STI payments up to a maximum of 120% but only in the event that the Company achieves a predetermined. STI EARNED IN FINANCIAL YEAR 2010 2011 $0 $0 $0 $0 $0 n/a $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Name Guy Roberts Frank Lupoi Declan Mackle Darrin Wright Brett Smith Andrew Cannon Roy Doveton Marnie Brokenshire Role Managing Director & Chief Executive Officer Chief Financial Officer & Company Secretary General Manager.9 2010 (5.1 2009 (22. In the Company’s current circumstances.

• If a participant is terminated on account of redundancy or redeployment all earned Performance Rights shall be paid and unearned Performance Rights will be forfeited. The Company grants Performance Rights to each eligible participant at the commencement of each performance year. It is measured over a three year period. • The vesting period or “performance measurement period” for the annual grants under the Scheme is three (3) years. or any other factors not reflective of underlying business performance. − The value of a performance right (prior to any adjustment/discount) is the VWAP (volume weighted average price) of share trading for 15 days immediately prior to the commencement of the measurement period. • The Scheme currently incorporates two performance measures (that is EPS and TSR) which align executive reward with shareholder interests. • Total shareholder return as a relative measure – it reflects superior performance compared witha general investment market. and vesting conditions. hence aligning compensation with shareholders’ risks and rewards. unless otherwise determined by the Board. Shares: is the daily average number of shares on issue in the performance measurement period. Details of the structure of the LTI Scheme are as follows: • The performance year commences on 1 July and continues until the next 30 June. vesting period. The current plan focusses on two areas of performance: • Earnings per share growth as an absolute measure – it has direct relevance to shareholders and potential to pay dividends. − A discount (adjusted value of a performance right) may be applied on account of the grant being subject to vesting conditions effectively reducing the value of the Performance Rights. • Each measure is weighted equally as a vesting condition and considered separately in the calculation of vesting. • The quantum of each annual grant is calculated firstly as a percentage of each Executive’s FAR determined by size and function of the role (Hay Evaluation). These function as vesting conditions with various hurdles required to be met before any vesting of Performance Rights will occur. Definitions EPS Earnings: is statutory net profit after tax. TSR Dividend paid in the performance measurement period plus the movement in the share price from the VWAP for the twenty trading days immediately prior to the commencement of the performance measurement period (1 July Year One) up to the VWAP for the twenty trading days immediately prior to the end of the performance measurement period (30 June Year Three). TSR performance is ranked relative to companies in a comparator group consisting of the smallest 50 companies other than Penrice in the ASX Small Industrials Index. • A participant must remain employed by the Company as at 30 June in the third year of the performance measurement period to be eligible to receive the Performance Rights. • The Company may in its discretion decide to pay earned Performance Rights in cash and/or shares and will take into account expressed wishes on behalf of an eligible participant in that regard. • In the case of retirement and resignation as a consequence of ill health or death. • Each grant will be subjected to vesting conditions or “performance measures”. The participant will receive 100% of the annual grant of Performance Rights at the commencement of each performance year. This discount is considered in light of the initial vesting conditions and its application is subject to change at the discretion of the Board in respect of each grant. • Takeovers/Ownership Change – all granted Performance Rights will be paid out (issued) upon takeover. Each grant will specify the value of the grant. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 23 . all earned Performance Rights shall be paid soon after termination. The hurdle is tested initially at the end of the Performance Period being the end of the three year period and if required is then subject to retesting at the end of the fourth year following the grant. and then as follows: − Number of Performance rights = Fixed Annual Remuneration for the Participant x LTI% / Adjusted Value of a Performance Right. Board discretion shall apply to the calculation of EPS growth so that eligible participants are neither advantaged nor disadvantaged by capital raisings or reductions. As a consequence of performance targets not being met. there were no benefits for participating Executives arising from the LTI Plan for FY2009 (Performance period FY2009– FY2011).Directors’ report (continued) REMUNERATION REPORT (AUDITED) (CONTINUED) EXECUTIVE VARIABLE ANNUAL REMUNERATION – LONG TERM INCENTIVE (LTI) The LTI Scheme is equity or cash based and provides eligible Executives with an additional reward for achieving Penrice’s long term strategic and financial objectives.

24 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . in the case of serious or wilful misconduct. • If in the Company’s reasonable opinion. • The Company may terminate this employment agreement at any time without notice or compensation in lieu. Employment Contracts – Other Executives All Executives have common law employment contracts. and only up to the date of termination. • Mr Roberts may resign from his position and thus terminate this contract by giving 12 months written notice. The Company may terminate the employment by providing four (4) months written notice or providing payment in lieu of the notice period (based on FAR) in the event of redundancy or termination. any unvested performance rights will immediately be forfeited. Under the terms of this contract: • Mr Roberts receives fixed annual remuneration (FAR) which is reviewed annually effective 1 September. • Mr Roberts is eligible for participation in the STI scheme with a quantum of 40% of FAR and the LTI scheme with a quantum of 50% of FAR. is employed under a rolling common law employment contract. • The Company may terminate this employment agreement by providing 12 months written notice or providing payment in lieu of the notice period (based on the FAR of Mr Roberts’ remuneration). Where termination with cause occurs the Executive is only entitled to that portion of remuneration that is fixed. The Company may terminate the contract at any time without notice if serious misconduct has occurred. the Executive is required to provide three (3) months written notice which the Company may elect to pay in lieu. having first been provided with not less that 28 days notice of the details of the alleged failure to exercise reasonable skill and care. EMPLOYMENT CONTRACTS Managing Director & Chief Executive Officer The Managing Director & Chief Executive Officer. The current employment contract commenced on 19 December 2006. the CEO fails to exercise reasonable skill and care in the performance of the CEO’s duties. In the event of voluntary resignation.Directors’ report (continued) REMUNERATION REPORT (AUDITED) (CONTINUED) While the tables on pages 25 and 26 show remuneration related to LTI. Mr Guy Roberts. Executives received no cash or equity benefit and the amounts represent an expense for the Company in accordance with AASB-2 Share Based Payments. and having failed to rectify that failure within that time. On termination with cause. the employment agreement may immediately terminate without notice.

(b) STI performance hurdle not met for performance year FY2011.200 $217.155 $3.461 $38.524 $223.78% – – – – – – – – – PENRICE SODA HOLDINGS LIMITED $2.399 – – $25.977 $303.408 $16.376 $29.010 $67.608 10.865 0.140 $365.703 $246.292 $15.00% – – – – – $116.472 – $17.493 $460.84% 3.796 – – – – – – – – – – $126. The FY2010 grants relate to performance hurdles over the three year period FY2010–2012 and the FY2011 grants over FY2011–2013.806 $251.768 $3.864 $1.289 $36.59% 3.973 $64. relating to the three year period FY2009–2011.703 $186.079 $2.229 $30.690 $69.813 $151.766 $21.295 $2.330 $19.973 $33.99% 9.243 $1.690 $25.830 $177.870 $13. and therefore no rights were vested. (c) The share base payment expense represents a proportion of the value of the rights granted in FY2010 and FY2011 in accordance with AASB2 Share Based Payments.597 $35.750 $16.437 $124.902 $683 $1. (d) LTI performance hurdle not met for the FY2009 scheme.312 $7.609 $33.000 $26.78% 3.915 $28.00% 0.325 $7.00% 0.502 $164.96% 3.08% 4.00% 0.046 $2.678 $31.306 $67.181 $9.122.069 Executives G Roberts F Lupoi D Mackle D Wright B Smith A Cannon R Doveton M Brokenshire – – – – – – – – – $274. no vesting or payments in relation to these LTI schemes have yet been made.459 $615.00% 0.698 $60.250 $48.234 $11.004 $197.701. As such.871 $192.821 $8.581 $4. of Pref Rights Vested (d) LTI(c) Total TABLE 1: COMPENSATION OF KEY MANAGEMENT PERSONNEL – 30 JUNE 2011 REMUNERATION REPORT (AUDITED) (CONTINUED) Non Executives D Trebeck A Fletcher B Gibson J Hirst D Groves ^ – – – – – – – – – – $10.686 $8.479 Notes ^ Appointed 20 December 2010 2011 Annual Report (a) Non monetary benefits relate to salary sacrifice motor vehicles unless otherwise noted.688 $206.197 $12.054 $151.96% 1.515 $24.SHORT TERM POST EMPLOYMENT BENEFITS LONG TERM BENEFITS SHARE BASED PAYMENTS Superannuation Long Service Leave STI (b) Directors’ report (continued) Non Monetary Benefits (a) Performance Related Pay % (c) Total Salary & Fees LTI No.821 $232. 25 .

066 $150. (e) Performance rights issued relate to allocation under LTI scheme for FY2008 which vested on 1 July 2010.915 Notes ^ Appointed 29 October 2009 ^^ Retired 29 October 2009 ~ Non monetary benefit amount relates to Reimbursement of relocation expenses * B Smith commenced on 12 April 2010 (a) (b) (c) (d) Paid in recognition of delivery of key strategic corporate initiatives in FY2009.190 $15.865 $218.00% 6.691 – 12.049 $810 $635 $60 $796 $3. STI performance hurdle not met for performance year FY2010.103 $22.340 $249.324 – – – – – $30.90% 0.215 $19.795.947 $69.790 $3. The share base payment expense represents a proportion of the value of the rights issued in FY2008 & FY2010 in accordance with AASB2 Share Based Payments.649 $222. Non monetary benefits relate to salary sacrifice motor vehicles unless otherwise noted.046 $29.000 $7.881 $36.665 14.00% 0.470 $63.301 $166.289 160.459 $224.030.561 $16.223 $3.757 $54.000 $126.865 $8. .50% 0.423 – – – – – REMUNERATION REPORT (AUDITED) (CONTINUED) $412.876 – $8.56% 4.558 $6. No actual payments have been made.382 $269.784 $94.117 $179.094 $215.Directors’ report (continued) TABLE 2: COMPENSATION OF KEY MANAGEMENT PERSONNEL – 30 JUNE 2010 26 SHORT TERM POST EMPLOYMENT BENEFITS SHARE BASED LONG TERM BENEFITS PAYMENTS Superannuation Performance Related Pay % Non Monetary Benefits (b) Salary & Fees Long Service Leave LTI No.056 $2.000 $6.885 $1.243 12.656 $39.693 $3.00% 97.43% 4.996 $103.855 $15.541 $59.912 $56.949 $1.280 $54.714 $39.10% 4.000 – $12.832 22.877 $207. of Pref Rights Issued (e) STI (c) LTI(d) Total Cash Bonus (a) PENRICE SODA HOLDINGS LIMITED 2011 Annual Report Directors G Roberts D Trebeck ^ A Fletcher B Gibson J Hirst J Heard^^ – – – – – – $37.612 $15.338 – – – – – $645.817 $363.151 $9.710 – 17.226 $249.90% 6.00% 0.399 $18.340 12.657 $15.00% 0.000 $7.257 $176.571 $185.535 $14.793 $43.735 $3.74% – – 11.000 – – – – – $48.826 $28.760 $69.575 – $3.192 $226.134 $2.698 $115.000 – $12.624 $18.003 $3.704 $39.387 $55.94% 4.053 $4.651 $2.00% 0.000 $7.461 $48.399 – – – – – Executives F Lupoi D Mackle~ D Wright B Smith* A Cannon R Doveton M Brokenshire M Carter – – – – – – – – – $339.000 $15.313 $1.

Directors’ report (continued) REMUNERATION REPORT (AUDITED) (CONTINUED) TABLE 3: COMPENSATION PERFORMANCE RIGHTS FOR FY2011 Compensation performance rights – granted and vested during the year Granted Vested subject to service condition Fair Value per No.24 0.722 91.64 – – – – – – – – – – – – 30/6/12 30/6/12 30/6/12 30/6/12 30/6/12 30/6/12 An additional 43.24 – – 30/6/13 406.64 0.64 – – 30/6/12 190.24 0.790 46.24 0.541 143. Granted Date Perf Right ($) No.939 1/2/10 0.191 performance rights were issued to other employees.011 69.24 0.819 1.913.128 49.671 46.008 149.64 0.24 0. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 27 .073 1/9/10 1/9/10 1/9/10 1/9/10 1/9/10 1/9/10 1/9/10 0.24 – – – – – – – – – – – – – – 30/6/13 30/6/13 30/6/13 30/6/13 30/6/13 30/6/13 30/6/13 TABLE 4: COMPENSATION PERFORMANCE RIGHTS FOR FY2010 Compensation performance rights – granted and vested during the year Granted Vested subject to service condition Fair Value per No.173 45. % Vesting Date Directors G Roberts Executives F Lupoi D Mackle A Cannon R Doveton D Wright M Brokenshire 387.24 0. % Vesting Date Directors G Roberts Executives F Lupoi D Mackle A Cannon B Smith R Doveton D Wright M Brokenshire 824.828 92.081 103. Granted Date Perf Right ($) No.371 101.64 0.877 1/2/10 1/2/10 1/2/10 1/2/10 1/2/10 1/2/10 0.703 1/9/10 0.165 834.64 0.64 0.

amounts in the financial statements and Directors’ report have been rounded to the nearest thousand dollars unless specifically stated otherwise. Signed at Adelaide this 27th day of September 2011. The Directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act.717 21.ey.196 $183.258 24.163 Ernst & Young This report has been signed in accordance with a resolution of the Directors. AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF PENRICE SODA HOLDINGS LIMITED In relation to our audit of the financial report of Penrice Soda Holdings Limited for the financial year ended 30 June 2011. to the best of my knowledge and belief. NON-AUDIT SERVICES The following non-audit services were provided by the entity’s auditor.6% Value of Perf Rights Granted during year $ Directors G Roberts Executives F Lupoi D Mackle A Cannon B Smith R Doveton D Wright M Brokenshire 195.021 35.5% 11.2% 14.8% ROUNDING OF AMOUNTS The entity is a Company of the kind specified in the Australian Securities and Investments Commission class order 98/0100.907 24. Mark Phelps Partner 27 September 2011 Ernst & Young Building 121 King William Street.0% 10.886 33. The nature and scope of each type of nonaudit service provided means that auditor independence was not compromised.441 – – – – – – – – – – – – – – 26. EXERCISED AND LAPSED DURING THE 2011 FINANCIAL YEAR Remuneration consisting of performance rights for the year % 31.080 452.7% 10.1% 13.Directors’ report (continued) REMUNERATION REPORT (AUDITED) (CONTINUED) TABLE 5: VALUE OF PERFORMANCE RIGHTS AWARDED. Ernst & Young received or are due to receive the following amount for the provision of non-audit services: Other assurance services Taxation Total $59.530 21. Adelaide SA 5000 Adelaide GPO Box 1271 Adelaide SA 5001 Tel: +61 8 8417 1600 Fax: +61 8 8417 1775 www.6% 10.042 Value of Perf Rights exercised during year $ – Value of Perf Rights lapsed during year $ – 96.com/au David Trebeck Chairman Guy Roberts Managing Director and Chief Executive Officer 28 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. In accordance with the class order. Ernst & Young.967 $123.

The roles of Chairman and Managing Director & Chief Executive Officer are not exercised by the same individuals. The Nomination Committee determines the necessary and desirable competencies of the Board members and will make recommendations to the Board on the composition of the Board and its Committees. The Charter also defines the matters that are reserved for the Board and its Committees and the Board members’ access rights to information and independent advice. their qualifications. Penrice Soda Holdings Limited’s Board Charter is available in the Corporate Governance section at www. including the appointment and removal of members.com. The Chairman of the Board and the Chairman of the Audit and Risk Management Committee are each considered to be independent Directors. • within the last three years has not been a principal or employee of a material professional adviser or a material consultant to the Company or another group member. BOARD SIZE AND COMPOSITION At the date of this Corporate Governance Statement. or otherwise associated. • has no material contractual relationship with the Company or another group member other than as a Director of the Company. Directors may obtain independent. The constitution requires a minimum of three and a maximum of eight Directors. or an officer of or otherwise associated.CORPORATE GOVERNANCE STATEMENT The Board of Directors of Penrice Soda Holdings Limited is responsible for establishing the corporate governance framework of the consolidated Group.penrice. The Company’s constitution requires that at the Annual General Meeting. directly or indirectly. The Board guides and monitors the business and affairs of Penrice Soda Holdings Limited on behalf of the shareholders by whom they are elected and to whom they are accountable. A retiring Director is eligible for re-election. must retire. All the non-executive Directors at the time of this report are considered independent. with a material supplier or customer. • has not within the last three years been employed in an executive capacity by the Company or another group member.au. with a shareholder of more than five percent of the voting shares of the Company. directly or indirectly. or could reasonably be perceived to materially interfere with the Director’s ability to act in the best interests of the Company. professional advice relevant to Penrice’s affairs to assist them in carrying out their duties as directors at Penrice’s PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 29 . The Board currently has five Directors and may review this from time to time. An independent Director is a Director who is not a member of management (a nonexecutive Director) and who: • holds less than five percent of the voting shares of the Company and is not an officer of. and • is free from any interest and any business or other relationship that could. BOARD ROLE AND RESPONSIBILITY The Board’s role and responsibilities are formalised in the Board Charter. experience and their period of office are stated in the Directors’ Report. then the number nearest to but not more than one third of the Directors. STRUCTURE OF THE BOARD The names of the Directors. the Board comprises four independent nonExecutive Directors and one Executive Director. • is not a material supplier or customer of the Company or another group member. The Board has considered the ASX Corporate Governance Council’s published guidelines as well as its Corporate Governance Principles and Recommendations and is pleased to report that its practices are largely consistent with those of the Council’s guidelines. among other matters. one third of the non-Executive Directors who have held office for the longest period. or if their number is not a multiple of three. or been a Director after ceasing to hold any such employment.

• Annual confirmation by the auditor that it has satisfied all professional regulations relating to auditor independence. • ensure appropriate and responsible funding is available to the Company. compliance and financial and operation risk management functions of the Company. and approve. • oversee succession plans for the Board. • oversee the Company’s employeerelations and legal. and • ensure that the Penrice Group has appropriate corporate governance structures in place including standards of ethical behaviour and promoting a culture of corporate and social responsibility. • oversee the Company’s financial reporting and communication to shareholders. In accordance with the Corporations Act 2001 and. trading performance and prospects to stakeholders). the business plan. Such approval is not to be unreasonably withheld. is responsible for the overall governance of the Company and its responsibilities include: • appoint and remove the Chief Executive Officer and senior executives. contracts and capital expenditure. • monitor and assess the performance of the Chief Executive Officer and the Company’s executive team. • establish incentive plans for Directors. All members must be non-Executive Directors. the maintenance of proper accounting records and the reliability of financial information as well as nonfinancial considerations. Directors. budget and compliance policies of the Company as prepared by management. The Penrice Soda Holdings Limited’s Board. • oversee the audit. Refer also to the Directors’ Report for details of the qualifications of the members of this committee. divestments. AUDITOR INDEPENDENCE The independence of the external auditor is of particular importance to shareholders and the Board.au. • approve the Company’s annual accounts. • provide input into. and • Specific exclusion of the audit firm from work which may give rise to a conflict. Remuneration Committee and the Audit and Risk Management Committee. the safeguarding of assets. • monitor business risks and oversee the risk management strategy. as the representative of the Company’s shareholders. • approve the remuneration (including financial incentives) of the Chief Executive Officer and executive team. executives and employees. Fletcher (Chairman) – Non-Executive Director • David B.expense subject to approval of the Chairman.penrice. approved by the Board. remuneration (including termination benefits) and the remuneration policy of senior executives. This includes internal controls to deal with the effectiveness of significant business processes. AUDIT AND RISK MANAGEMENT COMMITTEE The Audit and Risk Management Committee has a documented charter. based on the advice of the Audit and Risk Management Committee. The Board requires: • Rotation of the senior audit partner every five years. social and environmental behaviour. The Chairman may not be the Chairman of the Board. • recommend the appointment of and review the performance of. The committee advises on the establishment and maintenance of a framework of internal controls and ethical standards for the management of the consolidated entity.com. The committee also provides the Board with additional assurances regarding the reliability of financial information for inclusion in the financial reports. and determine the conditions of service. • approve all material acquisitions. • establish and appoint the members of subcommittees of the Board. • delegate an appropriate level of authority to management. the Directors have satisfied themselves that the provision of nonaudit services during the year by the auditor is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. • monitor the strategic and financial objectives and performance against the business plan and budget. the investment community and shareholder relations generally (including effectively communicating the Company’s financial position. 30 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . The current members of the Audit and Risk Management Committee are: • Andrew V. reports and other public documents. ethical. including the Nomination Committee. Chief Executive Officer and executive team. Trebeck Non-Executive Director (ex officio) • John Hirst Non-Executive Director • David Groves Non-Executive Director For details of Directors’ attendance at meetings of the Audit and Risk Management Committee refer to the Directors’ Report. Penrice Soda Holdings Limited’s Audit and Risk Management Committee Charter is available in the Corporate Governance section at www.

PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 31 .com. director appointments and removal.THE REMUNERATION AND NOMINATION COMMITTEE The Company had a Remuneration and Nomination Committee in place up until 23 August 2011. REMUNERATION COMMITTEE The Board has a Remuneration Committee which meets at least twice annually to ensure that the Board continues to operate within the established guidelines. The Chairman of the Board shall chair the Committee. which is contained within the Directors’ Report. For details of Directors’ attendance at meetings of the Remuneration and Nomination Committee. The Company separated the Committees into two for the purpose of more fulsome compliance with the relevant ASX principles and best practice. Remuneration levels are competitively set to attract and retain appropriately qualified and experienced executives. director induction. It is also responsible for share schemes. remuneration framework for the Managing Director & Chief Executive Officer. a copy of which is available upon request. NOMINATION COMMITTEE The Board has a Nomination Committee. remuneration of non executive directors. Remuneration packages can include a mix of fixed remuneration and performance-based remuneration. and • performance incentives which allow executives to share the rewards of the success of the Company.penrice. The current members of the Nomination Committee are: • David Trebeck Non-Executive Director (Chairman) • Andrew Fletcher Non-Executive Director • John Hirst Non-Executive Director • David Groves Non-Executive Director Penrice’s Nomination Committee Charter has been approved by the Board and is available in the Corporate Governance section at www.au. The Committee is appointed by the Board and shall consist of the Chairman of the Board and all Non Executive Directors in office at the time. continuing development and performance assessment and a process to ensure diversity obligations are met. of whom at least three shall be independent Directors. The Remuneration Committee obtains independent advice on the appropriateness of remuneration packages. The current members of the Remuneration Committee are: • John Hirst Non-Executive Director (Chairman) • David Trebeck Non-Executive Director • David Groves Non-Executive Director The Remuneration Committee reviews and makes recommendations to the Board on remuneration packages and policies applicable to the Managing Director. which meets at least annually to ensure that the Board continues to operate within the established guidelines.penrice. senior executives and Directors themselves. In particular. The purpose of the Nomination Committee is to recommend to the Board the composition of the Board and its Committees. and executives including direct reports to the Managing Director & Chief Executive Officer.com. The Remuneration and Nomination Committee operated under a Board approved charter as disclosed in last year’s annual report. refer to the Directors’ report. given trends in comparative companies.au. Penrice’s Remuneration Committee Charter has been approved by the Board and is available in the Corporate Governance section at www. In particular. The expected outcomes of the remuneration structure are: • retention and motivation of key executives. and then separate Remuneration and Nomination Committees after this date. the Committee is to undertake the functions of the Nomination Committee set out in the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations 2nd Edition (ASX Principles). The Remuneration Committee was approved by the Board to operate as a separate committee effective 23 August 2011. • attraction of quality management to the Company. The purpose of the Remuneration Committee is to fulfill its corporate governance requirements and provide recommendations to the Board in relation to strategic human resource policies. retirement and termination entitlements and fringe benefits policies. The Nomination Committee was approved by the Board to operate as a separate committee effective 23 August 2011. superannuation entitlements. please refer to the Remuneration Report. For a full discussion of the Company’s remuneration philosophy and framework and the remuneration received by Directors and Executives during the year. incentive performance packages. the Committee is to undertake the functions of the Remuneration Committee set out in the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations 2nd Edition (ASX Principles).

The Company commits to facilitating participation in shareholder meetings and dealing promptly with shareholder enquiries. • Placing diversity as a regular agenda item on Board and/or Nomination Committee meetings. addressing underrepresentation within specific work place groups. Delegation is subject to matters reserved for Board approval as detailed in the Board of Directors Charter. As part of this commitment. and as a consequence is committed to promoting a culture where diversity is embraced. • Programs targeting the development of broader and advanced skills relating to career advancement for members of the diversity focus groups into executive and board positions. human resources. capital projects. and where considered desirable. a performance evaluation for Executives has taken place during the reporting period. management. and Board structure. senior management team. raw material purchasing. The Remuneration Committee has oversight in relation to the setting of goals to be achieved by Executives in connection with both shortterm and long-term incentive schemes and monitors the performance of Executives in relation to the achievement of those goals. and Board specific. The performance criteria against which Directors and Executives are assessed is aligned with the Company’s financial and non-financial objectives. attends the annual general meeting and is available to answer shareholder questions about the conduct of the audit and the preparation and content of the 32 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . strategic planning. The Board has endorsed these policies.BOARD PERFORMANCE EVALUATION The performance of the Board and Executives is reviewed regularly against both measurable and qualitative indicators. productivity and job satisfaction are enhanced by a diverse workforce. Any Director whose performance is consistently unsatisfactory will be asked to retire. The Company is committed to dealing fairly. This commitment is formalised in the Shareholder Communications Policy which is available in the Corporate Governance section at www.penrice. Ernst & Young. press releases. CONTINUOUS DISCLOSURE Penrice has written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to enforce accountability at Executive level for that compliance.com. responsibility for the conduct of the affairs and day to day management of the Company. COMMUNICATION WITH SHAREHOLDERS Penrice has a communications policy to promote communication with shareholders.com. financial and treasury management.au. DIVERSITY The Company considers that business performance. notice of meetings and financial statements. During the reporting period. and Board. transparently and openly with both current and prospective shareholders using available channels and technologies to reach widely and communicate promptly. the Company has developed a Diversity Policy (Policy). legal compliance. A summary of the Board’s progress against diversity objectives is set out in the Directors’ report in this annual report. ROLE AND FUNCTION OF EXECUTIVES The Board has delegated to the Managing Director. operations and production facilities. diversity aims each year which may include: • The proportion of women employees in the whole organisation and executive positions and on the board. In addition there are seven Executives reporting to the Managing Director who have been delegated responsibility for managing areas of the business including: sales.penrice. In accordance with this process. The external auditor. • Age. • The gender pay equity gap across the organisation.au. • Linking the achievement of these objectives to key performance indicators for the board and the senior executive team. marketing. regulatory affairs and corporate secretarial. the Nomination and Remuneration Committee conducted performance evaluations that involved an assessment of each Board member and Executive’s performance against specific and measurable qualitative and quantitative performance criteria. The following were identified as the key Diversity objectives: • Gender. The Policy is targeted at facilitating diversity within the workforce. • Equal Opportunity. The Company’s website is where shareholders can obtain market announcements. The Company’s Diversity policy has been approved by the Board and is available in the Corporate Governance section at www. • Ensuring that each vacant position at board and senior executive level has at least one woman on the shortlist of candidates. • The selection criteria for board and senior executive positions to ensure the broadest candidate pool. The performance of Executives is reviewed periodically by the Managing Director against appropriate measures set by the Managing Director and the Remuneration Committee relative to the Executive’s role. The Board sets measurable objectives for achieving both Company wide. distribution.

Penrice’s Director and Employee Share Trading Policy is available in the Corporate Governance section at www. The Committee approves the Company’s accounting policies. As a matter of law. and reviews the adequacy of the Company’s procedures and internal controls in order to manage the company’s material business risks. The Company’s risk management structures and procedures are continually improved and have been enhanced or updated during the year. Penrice’s Risk Management Policy is available in the Corporate Governance section on the Penrice website at www. or used by Directors or employees for personal benefit or gain. CODE OF CONDUCT Penrice has adopted a code of conduct to guide compliance with legal and other obligations to legitimate stakeholders.au. The key elements of the Share Trading Policy are: • Strict recognition of the entity’s closed periods • The restrictions on trading that apply to the entity’s “key management personnel” • Any trading which is not subject to the entity’s trading policy • Any exceptional circumstances in which the entity’s key management personnel may be permitted to trade during a prohibited period with prior written clearance.com. The enterprise wide risk management framework has enabled the business to identify and assess strategic.au.com. The Company uses an enterprise wide risk management process and conducts annual reviews of its key risks. It considers external audit reports and other independent reports. Action plans and controls are identified to manage and mitigate the risks to an acceptable level. The internal audit function is outsourced to KPMG and operates to provide independent assurance over the control environment. financial.com. respond promptly and appropriately and continue to monitor risks and issues as they evolve. RISK MANAGEMENT The Board has overall responsibility for ensuring that there is a sound system of risk management and internal compliance and control across the business. appropriately assessed and rated and are being appropriately managed. Penrice’s Code of Conduct and Code of Conduct-Directors are available in the corporate governance section at www.penrice.com. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 33 . Specific monitoring and evaluation of the effectiveness of risk management and the internal control environment are delegated to the Audit and Risk Management Committee. reporting practices and production of financial statements. The annual review encompasses strategic. Directors and Company employees may not buy or sell shares in the Company if they possess information that. operational and compliance risks and the enterprise wide risk profile is updated accordingly. This internal audit function works to complement other assurance functions. A copy of the code of conduct is provided to all employees and Directors on joining Penrice. might have a material effect on the price or value of the Company’s shares. CEO AND CFO ASSURANCE The Board receives regular reports about the financial condition and operational results of the Company and its controlled entities.penrice. already in place and operating. DIRECTOR AND EMPLOYEE SHARE TRADING POLICY All information obtained or obtainable as a Director or employee of the Company is the property of the Company and may not be used for any purpose other than in the conduct of the affairs of the Company. The Board has received and considered the assurance received from the CEO and CFO that the declaration in accordance with section 295A of the Corporations Act 2001 is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks. It also has responsibility for establishing risk management policies and the risk appetite of the Company. and the procedures for obtaining prior written clearance for trading. operational. if disclosed publicly.au. both internal and external.auditor’s report. and monitors the application of appropriate management controls.au. Risk and compliance processes and reporting procedures provide assurance to the Board and the Audit and Risk Management Committee that the preparation of the financial statements and the control systems underlying them are adequate. compliance and reporting risks and controls. Throughout the year the Board has been appraised on the status of risk management. The Board considers material business risks with reference to materiality set in accordance with the accounting standards and other qualitative factors deemed relevant.penrice. All information of the Company is strictly confidential and must not be disclosed to any entity. Risks are reviewed and challenged on a regular basis to ensure they are relevant. except as required in the ordinary course of the operations of the Company.penrice. Penrice’s Shareholder Communications Policy is available in the Corporate Governance section at www. and ensuring that these are implemented.

FINANCIAL STATEMENTS Income Statement Statement of Comprehensive Income Statement of Financial Position Statement of Changes in Equity Cash Flow Statement Notes to the Financial Statements Note 1: Corporate Information Note 2: Statement of significant accounting policies Note 3: Financial risk management objectives and policies Note 4: Income statement items Note 5: Income tax Note 6: Dividends paid Note 7: Segment information Note 8: Earnings per share Note 9: Net tangible assets per security Note 10: Notes to the cash flow Statement Note 11: Trade and other receivables Note 12: Inventories Note 13: Derivative financial instruments Note 14: Other assets Note 15: Property. plant and equipment Note 16: Intangibles Note 17: Other assets/liabilities Note 18: Trade and other payables Note 19: Interest bearing liabilities Note 20: Provisions Note 21: Interest bearing liabilities Note 22: Provisions Note 23: Contributed equity Note 24: Retained earnings and reserves Note 25: Economic dependency Note 26: Remuneration of auditors Note 27: Employee entitlements Note 28: Share based payment plans Note 29: Commitments and contingent liabilities Note 30: Related party disclosures Note 31: Key management personnel Note 32: Parent entity information Note 33: Events occuring after balance date Directors’ Declaration Independent Auditor’s Report ASX Additional Information Financial History Corporate Information 35 36 37 38 39 40 40 40 58 64 65 68 68 72 72 73 75 76 77 78 79 81 82 82 83 83 84 85 86 87 88 88 88 91 94 95 96 99 99 100 101 102 103 104 34 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report .

934 98 891 153.044) 38.923 (115.857 (26.377) (4.8 7.900) – (568) 630 726 (8.214) 7.879 (25.725 (29.7) (28.063) 6.369) 6.7 The above Income Statement should be read in conjunction with the accompanying notes PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 35 .433) (8.174) (26.000) 690 85 (18) (8.827 (105.INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2011 Note Continuing Operations Sales of goods Interest revenue Other revenue Revenue Cost of sales Gross Profit Distribution expenses Other operating expenses Administration expenses Impairment expense 2d. 4 Exchange gains/(losses) Unrealised exchange gains on foreign currency options and forwards Unrealised (losses)/gains on fair value of interest rate swaps Borrowing costs 4 (Loss)/profit from continuing operations before income tax Income tax benefit/(expense) Net (loss)/profit after income tax for the period attributable to the owners of the parent entity 5 4 4 4 4 2011 $000 152.7) Consolidated 2010 $000 160.102) 55.376 101 350 160.277 Cents 7.646 (1.206) Cents Basic (loss)/earnings per share Diluted (loss)/earnings per share 8 8 (28.185) (7.568) (3.715) (33.

176 (653) 1.551) 465 (1.086) (245) 73 (172) 27 5 Total other comprehensive income/(losses) for the period.510) (1. net of tax: Cash flow hedges gains/(losses) taken to equity Deferred tax on cash flow hedges Net cash flow hedge gain/(losses) taken to equity Actuarial losses recognised directly through retained earnings Deferred tax on actuarial losses Net actuarial losses recognised directly through retained earnings (26.019 The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes 36 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report .STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2011 Note 2011 $000 Net (loss)/profit for the period Other comprehensive income.258) 5.181) 354 (827) (1.206) Consolidated 2010 $000 6.277 5 2. net of tax Total comprehensive (loss)/income 696 (25.523 (1.

994 93.485 38.086) 34 13.440 8.444 21.688 10.872 6.639 46.137 5.794 195.426 18 19 5 13 20 29.579 76.738 51.666 118.074 (1.139 127.957 117.016 23 24 24 24 80.530 Consolidated 30 June 2010 $000 5.824 119.STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2011 Note 30 June 2011 $000 Current Assets Cash and cash equivalents Trade and other receivables Inventories Income tax receivable Derivative financial instruments Other current assets Total Current Assets Non–Current Assets Property.410 93.069 – – 649 91.163 16.016 The above Statement of Financial Position should be read in conjunction with the accompanying notes PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 37 .039) 67.049 110 891 2.333 210.324 94.922 3.501 67.094 2.931 63.453 21 5 22 13 17 70.093 15 16 5 99.236 437 189 (13.715 – 205 5.803 10.362 29.823 80.853 1.587 20.042 8.190 2.249 62 692 81.639 2 1.823 69. plant and equipment Intangibles Deferred tax assets Total Non–Current Assets Total Assets Current Liabilities Trade and other payables Interest bearing liabilities Income tax payable Derivative financial instruments Provisions Total Current Liabilities Non–Current Liabilities Interest bearing liabilities Deferred tax liabilities Provisions Derivative financial instruments Other non–current liabilities Total Non–Current Liabilities Total Liabilities Net Assets Equity Contributed equity Cash flow hedge reserve Share based payments reserve Retained (losses)/earnings Total Equity 10 11 12 5 13 14 5.612 595 25 78.

459 93.994 (9) 26.823 At 1 July 2009 Profit for period Other comprehensive income for the period Total comprehensive income/(loss) for the period Transactions with owners in their capacity as owners: Share based payments Capital raising Balance at 30 June 2010 53.236 – – 437 155 – 189 – – (13.889 6.016 The above Statement of Changes in Equity should be read in conjunction with the accompanying notes 38 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report .547 6.523 34 – – – Contributed equity $000 At 1 July 2010 Loss for period Other comprehensive income for the period Total comprehensive income/(loss) for the period Transactions with owners in their capacity as owners: Share based payments October 2009 capital raising Balance at 30 June 2011 80.459 80.086) – 1.086) 43 – – – 7.016 (26.039) 155 162 67.277 (1.510) – 162 80.STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2011 Cash flow Share based Hedge payments reserve reserve $000 $000 (1.074 – – (1.105 61.033) Total $000 93.994 (26.086) (9) – 34 – – 13.523 1.277 (172) 6.206) (827) (27.615 – – – – – (1.019 – 26.074 – – – Retained earnings $000 13.258) 5.086) (1.206) 696 (25.

CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2011 Note 2011 $000 Inflow/(Outflow) Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Interest and other costs of finance paid Income taxes refund/(paid) Net cash flows provided by / (used in) operating activities Cash flows from investing activities Payments for property.163 25.921 (163.810 (1.886) 101 (7.366) 5.015 179.232) (9.154) (12.785) 31 (3.444 The above Cash Flow Statement should be read in conjunction with the accompanying notes PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 39 .306 5.232) – – (13.908) – 8.063 (13.936 (281) 5.979 – (12.965 (163.655 6.398) (1. plant and equipment Proceeds from sale of plant and equipment Payments for intangibles (mine development & software) Net cash flows (used in) investing activities Cash flows from financing activities Proceeds from issues of shares Proceeds from loans Payments for loans Payments for finance leases Net cash flows provided by financing activities Net increase/(decrease) in cash held Cash at beginning of the financial period Cash at the end of the financial period 10 Consolidated 2010 $000 Inflow/(Outflow) 10 174.770) 98 (7.444 5.317 – (381) 7.675) 7.584) 1.700) (624) 12.

there is significant uncertainty whether the Group will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at amounts stated in the financial report. a) COMPLIANCE WITH IFRS The financial report complies with Australian Accounting Standards as issued by the Australian Accounting Standards Board and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. if any. 40 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . On 12 August 2011. except for derivative financial instruments that are measured at fair value. The tables below outline each of these amended standards and the expected change in accounting policy when applied. the Group will continue to have the support of its financiers and will meet the obligations as and when they fall due. having regard to the matters set out above. comparative figures have been adjusted to conform with changes in presentation in the current year financial statements. This report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($’000) unless otherwise stated under the option available to the Group under ASIC Class Order 98/100. The strategic review will also contemplate the sale of material components of its business and associated deleveraging. with a dual view of improving the operating performance of the Group and deleveraging. The Group is an entity to which the class order applies. The financial report has been prepared on the basis that the consolidated Group can continue to meet its financial obligations as and when they fall due and can therefore continue normal activities. to return the Group to more normal credit metrics. the Group announced the commencement of a strategic review program. Penrice Soda Holdings Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange. The directors believe that at the date of the signing of the financial statements there are reasonable grounds to believe that. This report has also been prepared on a historical cost basis. Where necessary. The nature of the operations and principal activities of the Group are described in the Directors’ Report. b) AUSTRALIAN ACCOUNTING STANDARDS Australian Accounting Standards and interpretations that have recently been issued or amended but are not yet effective have not been adopted for the annual reporting period ending 30 June 2011.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 1: CORPORATE INFORMATION This consolidated financial report of Penrice Soda Holdings Limited for the year ended 30 June 2011 was authorised for issue in accordance with a resolution of the Directors on 20 September 2011. Successful completion of the strategic review and restoring the Group’s financial position to a longer term sustainable debt profile is critical to the ability of Penrice to continue as a going concern. Should the directors not achieve appropriate operating performance and deleveraging. including the settlement of liabilities and the realisation of assets in the ordinary course of business. In the current year the Group incurred trading losses and cash outflows from operations after capital expenditure. NOTE 2: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Basis of preparation This report is a set of general purpose financial statements that are prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standards.

Application date for Group* 1 July 2013 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 41 . These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of AASB 139. on different bases. AASB 9 allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. or recognising the gains and losses on them. if any. each of which had its own classification criteria. (2) the characteristics of the contractual cash flows. Application date of standard* 1 January 2013 Impact on Group financial report The Group has not yet determined the extent of the impact of the amendments. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 2: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Reference AASB 9 Title Financial Instruments Summary AASB 9 includes requirements for the classification and measurement of financial assets resulting from the first part of Phase 1 of the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement (AASB 139 Financial Instruments: Recognition and Measurement). The main changes from AASB 139 are described below. (c) Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities. Financial assets are classified based on (1) the objective of the entity’s business model for managing the financial assets. This replaces the numerous categories of financial assets in AASB 139.

Application date for Group* 1 July 2011 42 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . if any.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 2: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Reference AASB 124 (Revised) Title Related Party Disclosures (December 2009) Summary The revised AASB 124 simplifies the definition of a related party. the second and third entities are related to each other. Application date of standard* 1 January 2011 Impact on Group financial report The Group has not yet determined the extent of the impact of the amendments. (b) entities significantly influenced by one person and entities significantly influenced by a close member of the family of that person are no longer related parties of each other. including: (a) the definition now identifies a subsidiary and an associate with the same investor as related parties of each other. Entities that are related by virtue of being controlled by the same government can provide reduced related party disclosures. clarifying its intended meaning and eliminating inconsistencies from the definition. and (c) the definition now identifies that. A partial exemption is also provided from the disclosure requirements for government–related entities. whenever a person or entity has both joint control over a second entity and joint control or significant influence over a third party.

including amendments to reflect changes made to the text of IFRSs by the IASB. 136. it amends AASB 8 Operating Segments to require an entity to exercise judgement in assessing whether a government and entities known to be under the control of that government are considered a single customer for the purposes of certain operating segment disclosures. 131. the most significant of which includes: • two categories for financial assets being amortised cost or fair value • removal of the requirement to separate embedded derivatives in financial assets • strict requirements to determine which financial assets can be classified as amortised cost or fair value. 139. Financial assets can only be classified as amortised cost if (a) the contractual cash flows from the instrument represent principal and interest and (b) the entity’s purpose for holding the instrument is to collect the contractual cash flows • an option for investments in equity instruments which are not held for trading to recognise fair value changes through other comprehensive income with no impairment testing and no recycling through profit or loss on derecognition • reclassifications between amortised cost and fair value no longer permitted unless the entity’s business model for holding the asset changes • changes to the accounting and additional disclosures for equity instruments classified as fair value through other comprehensive income Application date of standard* 1 January 2013 Impact on Group financial report The Group has not yet determined the extent of the impact of the amendments. 112. 4. 101. 133. 4. 112. 118. Application date for Group* 1 July 2013 AASB 2009–12 Amendments to Australian Accounting Standards [AASBs 5. 128. 119. 1023 & 1038 and Interpretations 10 & 12] Summary The revised Standard introduces a number of changes to the accounting for financial assets. 1039 & 1052] This amendment makes numerous editorial 1 January changes to a range of Australian Accounting 2011 Standards and Interpretations. 1023 & 1031 and Interpretations 2. 16. 8. 1 July 2011 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 43 . 132. 139.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 2: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Reference AASB 2009–11 Title Amendments to Australian Accounting Standards arising from AASB 9 [AASB 1. 7. 137. 108. 127. if any. 108. It also makes numerous editorial amendments to a range of Australian Accounting Standards and Interpretations. 102. 5. 121. In particular. if any. 3. 110. The Group has not yet determined the extent of the impact of the amendments.

AASB 7. The amendment requires entities to treat the benefit of such an early payment as a pension asset. AASB 101. Application date for Group* 1 July 2011 These amendments arise from the issuance 1 January of Prepayments of a Minimum Funding 2011 Requirement (Amendments to IFRIC 14). AASB 2010–4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 1. 1 July 2011 AASB 1054 Australian Additional Disclosures The Group has not yet determined the extent of the impact of the amendments. The requirements of IFRIC 14 meant that some entities that were subject to minimum funding requirements could not treat any surplus in a defined benefit pension plan as an economic benefit. if any. the amount of discounts or incentives otherwise granted to customers not participating in the award credit scheme. is subject to the same analysis as if no prepayment had been made. Subsequently.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 2: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Reference AASB 2009–14 Title Amendments to Australian Interpretation – Prepayments of a Minimum Funding Requirement Summary Application date of standard* Impact on Group financial report The Group has not yet determined the extent of the impact of the amendments. with AASB 2011-1 relocates all Australian specific disclosures from other standards to one place and revises disclosures in the following areas: (a) Compliance with Australian Accounting Standards (b) The statutory basis or reporting framework for financial statements (c) Whether the financial statements are general purpose or special purpose (d) Audit fees (e) Imputation credits The Group has not yet determined the extent of the impact of the amendments. either in the statement of changes in equity or in the notes to the financial statements. if any. Provides guidance to illustrate how to apply disclosure principles in AASB 134 for significant events and transactions. This standard. Clarify that when the fair value of award credits is measured based on the value of the awards for which they could be redeemed. if any. 1 July 2011 44 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . if any. AASB 134 and Interpretation 13] Emphasises the interaction between 1 January quantitative and qualitative AASB 7 2011 disclosures and the nature and extent of risks associated with financial instruments. Clarifies that an entity will present an analysis of other comprehensive income for each component of equity. is to be taken into account. This standard is as a consequence of phase 1 July 2011 1 of the joint Trans-Tasman Convergence project of the AASB and FRSB. the remaining surplus in the plan.

if any. 140. if any. Application date of standard* 1 January 2011 Impact on Group financial report The Group has not yet determined the extent of the impact of the amendments. Disclosures require enhancements to the existing disclosures in IFRS 7 where an asset is transferred but is not derecognised and introduce new disclosures for assets that are derecognised but the entity continues to have a continuing exposure to the asset after the sale. including amendments to reflect changes made to the text of IFRS by the IASB. 115. 118.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 2: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Reference AASB 2010–5 Title Amendments to Australian Accounting Standards Summary This Standard makes numerous editorial amendments to a range of Australian Accounting Standards and Interpretations. 133. 119. 132 & 1042] AASB 2010–6 Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets [AASB 1 & AASB 7] Amendments to Australian Accounting Standards – Presentation of Other Comprehensive Income [AASB 101] AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements [AASB 124] This Standard makes amendments to remove individual key management personnel disclosure requirements from AASB 124. 127. 1 July 2011 The Group has not yet determined the extent of the impact of the amendments. Application date for Group* 1 July 2011 [AASB 1. 101. 134. 1 July 2011 AASB 2011–9 1 July 2012 The Group has not yet determined the extent of the impact of the amendments. These amendments have no major impact 112. The amendments increase the disclosure requirements for transactions involving transfers of financial assets. on the requirements of the amended 121. 1 July 2013 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 45 . 137. 1023 & 1038 and Interpretations 112. 1 July 2012 1 July 2013 The Group has not yet determined the extent of the impact of the amendments. 132. if any. if any. This Standard requires entities to group items presented in other comprehensive income on the basis of whether they are potentially reclassifiable to profit or loss in subsequent periods (reclassification adjustments). pronouncements. 3. 139. 5. 4. 107.

Joint ventures that give the venturers a right to the net assets is accounted for using the equity method. 1 July 2013 46 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . In addition it removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Application date of standard* 1 January 2013 Impact on Group financial report The Group has not yet determined the extent of the impact of the amendments. and to require summarised information about joint arrangements. joint arrangements. associates and structured entities and subsidiaries with non-controlling interests. The Group has not yet determined the extent of the impact of the amendments. accounting for a joint arrangement is dependent on the nature of the rights and obligations arising from the arrangement. Application date for Group* 1 July 2013 AASB 11 Joint Arrangements AASB 11 replaces AASB 131 Interests 1 January in Joint Ventures and UIG-113 Jointly2013 controlled Entities – Non-monetary Contributions by Ventures. Consequential amendments were also made to other standards via AASB 2011–7 and amendments to AASB 127. 1 July 2013 AASB 12 Disclosure of Interests in Other Entities AASB 12 includes all disclosures relating to an entity’s interests in subsidiaries. 1 January 2013 The Group has not yet determined the extent of the impact of the amendments. Joint operations that give the venturers a right to the underlying assets and obligations themselves is accounted for by recognising the share of those assets and obligations. This is likely to lead to more entities being consolidated into the group. if any. Consequential amendments were also made to other standards via AASB 2011–7 and amendments to AASB 128. The new control model broadens the situations when an entity is considered to be controlled by another entity and includes new guidance for applying the model to specific situations. New disclosures have been introduced about the judgements made by management to determine whether control exists. AASB 11 uses the principle of control in AASB 10 to define joint control. and therefore the determination of whether joint control exists may change. the impact of potential voting rights and when holding less than a majority voting rights may give control. associates and structures entities. Instead. including when acting as a manager may give control.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 2: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Reference AASB 10 Title Consolidated Financial Statements Summary AASB 10 establishes a new control model that applies to all entities. It replaces parts of AASB 127 Consolidated and Separate Financial Statements dealing with the accounting for consolidated financial statements and UIG-112 Consolidation – Special Purpose Entities. if any. if any. This may result in a change in the accounting for the joint arrangements held by the group.

The amendment removes the options for accounting for the liability. AASB 13 also expands the disclosure requirements for all assets or liabilities carried at fair value. It also revised the method of calculating the return on plan assets. AASB 13 does not change when an entity is required to use fair value. and requires that the liabilities arising from such plans is recognized in full with actuarial gains and losses being recognized in other comprehensive income. Application of this definition may result in different fair values being determined for the relevant assets. This includes information about the assumptions made and the qualitative impact of those assumptions on the fair value determined. but rather. if any. Consequential amendments were also made to other standards via AASB 2011–10. if any. provides guidance on how to determine fair value when fair value is required or permitted. Application date for Group* 1 July 2013 AASB 119 Employee Benefits The main change introduced by this 1 January standard is to revise the accounting for 2013 defined benefit plans. The Group has not yet determined the extent of the impact of the amendments.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 2: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Reference AASB 13 Title Fair Value Measurement Summary AASB 13 establishes a single source of guidance under AASB for determining the fair value of assets and liabilities. 1 July 2013 * designates the beginning of the applicable annual reporting period PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 47 . Consequential amendments were also made to other standards via AASB 2011–8. Application date of standard* 1 January 2013 Impact on Group financial report The Group has not yet determined the extent of the impact of the amendments.

Management continually evaluates its judgements and estimates in relation to assets. d) SIGNIFICANT ACCOUNTING JUDGEMENTS. estimates and assumptions are made. Quarry and Mineral Business CGU and landfill inventory asset. using discounted cash flow methodology. income and expenses and profit and losses resulting from intra–group transactions have been eliminated in full. For each segment the Group has prepared a detailed impairment analysis. timing of major infrastructure projects. Subsidiaries are all those entities over which the Group has the power to govern the financial and operating policies so as to obtain benefits from their activities.5%. estimates and assumptions that affect the reported amounts in the financial statements. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether a group controls another entity. • Landfill: pricing and margin. An estimate of the impact of this carbon scheme has been included in the assessment of the value in use of the cashgenerating units (CGU) required under impairment testing. Management bases its judgements and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances. Key drivers used in the models are as follows: • Chemical: foreign exchange (AUD:USD). product demand growth. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. the liabilities assumed and any non–controlling interest in the acquiree. based on the financial budget for year ended 30 June 2012 and the subsequent 4 year period included in the 10 year business plan. liabilities. Landfill has been identified as a “surplus asset” for the purposes of analysing the Quarry and Mining Business as its cash flows are most accurately assessed independently from the Quarry and Mineral business. Further details of the assumptions are detailed below in Impairment of Goodwill and other assets Impairment of Goodwill and other assets The Group determines whether goodwill and other non financial assets are impaired at least on an annual basis. revenue and expenses. all intercompany balances and transactions. Penrice will be impacted by the Carbon scheme. Further details of the nature of these assumptions and conditions may be found in the relevant notes to the financial statements. comprising Penrice Soda Holdings Limited and its subsidiaries (the Group). Climate Change Plan Under the current proposal. Management has identified the following critical accounting policies for which significant judgements. ESTIMATES AND ASSUMPTIONS The preparation of the financial statements requires management to make judgements. The Group has calculated the net present values for the Chemical Business CGU. product demand growth. contingent liabilities. 48 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . This requires an assessment of the value in use. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods. In preparing the consolidated financial statements. of the CGU to which the goodwill and other assets are allocated. The acquisition method of accounting involves recognising at acquisition date. There is uncertainty around the workings and hence the impact on the Group of the proposed scheme which is due to commence on 1 July 2012. • Quarry: pricing and cost increases. using consistent accounting policies. Penrice has been formally recognised as an Emissions Intensive Trade Exposed (EITE) entity under its renewable energy target legislation and will receive the full assistantce rate which in the first year of operation will be 94. as recently announced by the Federal Government. Subsidiaries and special purpose entities are fully consolidated from the date on which control is obtained by the Group and cease to be consolidated from the date on which control is transferred out of the Group. separately from goodwill.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 2: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) c) BASIS OF CONSOLIDATION The consolidated financial statements are those of the consolidated entity. the result of which forms the basis of the carrying values of assets and liabilities that are not readily apparent from other sources. hard coking coal costs. the identifiable assets acquired. The identifiable assets acquired and the liabilities assumed are measured at their acquisition date fair values.

000 Tax Effect – (1. employee departures. Employee benefits provisions Provisions for employee benefits include provisions for annual leave and long service leave.285) After Tax Impairment charge 11. the key assumptions used in the models are as follows: FX USD/AUD Hard coking coal US$/t Volume Growth FY2012 1. • Carbon emission allocation of free permits covering 94. Remediation provision As noted in 2(t) below. and • Raw materials price inflation – estimates are obtained from published indices. and was recorded at 30 June 2011: $000 Chemical – goodwill Chemical – other assets* Chemical – total impairment Q&M – landfill Total impairment charge Asset Value write off 11. Key judgements and assumptions in estimating this remediation provision include timing of remediation and the extent of remediation work required. salary rates. contribution tax rate.871k). PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 49 .15 and $25.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 2: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Using a pre tax discount rate of 12%.000 10.644k).998 14.285) (3. consumable stores ($1. The Group has an agreement with both the S. Penrice has maintained a provision to dredge this material and this provision will be adequate to cover the costs over the remaining period.00 210 1% FY2014 0. The directors have determined that the following impairment exists.285) (1. As noted in 2w).000 21. and timing of future payments. Forecast figures are used if data is publicly available otherwise past actual raw material price movements have been used as an indicator of future price movements.90 200 1% • Gross margins – based on known and anticipated raw material price fluctuations and the sales pricing structures in place for contracted and non contracted business. The agreement requires Penrice to dredge this material over a 10 year period. 2013 and 2014 based on a fixed price of $23. Defined benefit fund Various actuarial assumptions are required when determining the Group’s defined benefit fund obligations. • Carbon emission obligation in 2012. and the extent of remediation required. the calculation of long service leave includes the use of assumptions and judgements regarding future salary increases. coke inventory valuation ($1.000) (4.40 per tonne respectively and 3% thereafter. Further details on the defined benefit fund are provided in Note 27. Flinders Ports Pty Limited.000 26.715 *Chemical – other assets includes.00.717 4.3% per annum. this level of assistance will reduce by 1. expected return on plan assets in future years. These may be impacted in the future by changes to environmental legislation. $24. These include assumptions regarding discount rates for plan liabilities. As per draft Bill.96 200 1% FY2015 0. low quality finished goods ($768k). Recovery of deferred tax assets Deferred tax assets are recognised for deductible temporary differences and carry forward losses as management considers that it is probable that future taxable profits will be available to utilise those temporary differences.5% of direct emissions.283 16.93 200 1% FY2016 0.715 7. the Group recognises a provision for remediation in respect of dredging of the Port River and the remediation of the Osborne manufacturing site and Angaston mine site.A. in relation to the dredging of the Port River.03 268 1% FY2013 1. Government and the operator of the Port River. and administration expenses. technology. directly from suppliers or from the contracted pricing mechanisms in place. periods of service.717 2.

Notes to the Financial Statements for the year ended 30 June 2011 NOTE 2: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Share based payment transactions The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an external valuer using a Monte-Carlo simulation model. The accounting estimates and assumptions relating to equity-settled-share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and equity. Estimation of useful lives of assets The estimation of the useful lives of assets has been based on historical experience as well as manufactures’ warranties (for plant and equipment), lease terms (for leased equipment) and turnover policies (for motor vehicles). In addition, the condition of the assets is assessed at least once per year and considered against remaining useful life. Aggregates/Landfill The Group uses an independent source to produce a volumetric survey of storage dumps, stated in cubic metres. From this, a conversion factor known as a density factor is applied, to convert cubic metres to metric tonnes. The density factor initially came from a series of samples that was taken from across the Mine site by an independent laboratory employed to determine the density of the product. Since then, the average density is constantly compared to density ranges for products of similar geological composition to the Group’s products. This information is publicly available from a number of sources in the UK, Europe, USA and Australia. e) INCOME TAX EXPENSE Income tax on the profit or loss for the period comprises current and deferred tax. Income tax expense is recognised in the Income Statement except to the extent that it relates to items recognised directly through equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at the balance date, and any adjustment to tax payable in respect of previous years. Deferred income tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except: • when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or • when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the temporary differences can be utilised, except: • when the deferred income tax asset arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable loss; or • when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

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Notes to the Financial Statements for the year ended 30 June 2011 NOTE 2: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable Group and the same taxation authority. Income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend. Tax consolidation legislation Penrice Soda Holdings Limited and its wholly–owned Australian controlled entities implemented the tax consolidation legislation as of 31 May 2004. The head entity, Penrice Soda Holdings Limited and the controlled entities in the tax consolidated Group continue to account for their own current and deferred tax amounts. The Group has applied the group allocation approach in determining the appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated Group. In addition to its own current and deferred tax amounts, Penrice Soda Holdings Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused credits assumed from controlled entities in the tax consolidated Group. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the Group. Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly–owned tax consolidated entities. f) GOODS AND SERVICES TAX (GST) Revenues, expenses and assets are recognised net of the amount of GST except: • where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and • receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Balance Sheet. Cash flows are included in the Cash Flow Statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. g) FOREIGN CURRENCY TRANSACTIONS The functional currency is determined by each individual entity within the Group, whereas the presentational currency of the Group is determined by the parent entity. The presentational currency of the Group is Australian Dollars. Foreign currency items are translated to Australian currency on the following bases: • transactions are converted at exchange rates approximating those in effect at the date of each transaction; • amounts payable and receivable are translated at the rates available on the close of business on balance date; and • exchange differences relating to monetary items are included in the Income Statement, as exchange gains or losses, in the period when the exchange rates change. h) CASH AND CASH EQUIVALENTS Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short–term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Bank overdrafts are included within interest – bearing loans and borrowings in current liabilities on the balance sheet.

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Notes to the Financial Statements for the year ended 30 June 2011 NOTE 2: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

i) TRADE AND OTHER RECEIVABLES Trade receivables, which generally have 30–60 day terms, are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for impairment. Collectability of trade receivables is reviewed on an ongoing basis at an operating unit level. An impairment provision is recognised when there is objective evidence that the Group will not be able to collect the receivable. Financial difficulties of the debtor, default payments or debts more than 90 days overdue are considered objective evidence of impairment. The amount of the impairment loss is the receivable carrying amount compared to the present value of estimated future cash flows, discounted at the original effective interest rate. Bad debts are written off when identified. j) DERIVATIVE FINANCIAL INSTRUMENTS The consolidated Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risk arising from operational, financing and investment activities, refer Notes 3 and 13. Derivative financial instruments are recognised initially at fair value on the date the instrument is entered into. Subsequent to initial recognition, derivative financial instruments are remeasured to fair value. Held for trading derivative assets and liabilities are classified as current in the statement of financial position. Derivative assets and liabilities are classified as non–current when the remaining maturity is more than 12 months, or current when the remaining maturity is less than 12 months. The gain or loss on re-measurement to fair value is recognised immediately in the income statement unless the derivative is designated and is effective as a hedging instrument, in which event, the timing and the recognition of profit or loss depends on the nature of the hedging relationship. The consolidated Group designates derivatives as hedges of the exposure to variability in cash flows attributable to a recognised asset or liability or highly probable forecast transaction (cash flow hedges). The fair value of various derivative financial instruments used for hedging purposes are disclosed in Note 3 and 13. The consolidated Group documents, at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The consolidated Group also documents its assessment, both at hedge inception and on an ongoing basis, as to whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of hedged items. Where derivative instruments do not qualify for hedge accounting, changes in the fair value are recognised immediately in the income statement. Cash flow hedge Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a highly probable forecast transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in equity in the hedging reserve. The change in the fair value that is identified as ineffective is recognised immediately in the income statement. Amounts accumulated in equity are transferred to the income statement in the periods when the hedged item affects profit or loss (for instance, when the forecast sale that is hedged takes place). However, when the forecast transaction that is hedged results in the recognition of a non–financial asset (for example, inventory) or a non–financial liability, the gains and losses previously deferred in equity are transferred from equity and included in the measurement of the initial cost or carrying amount of the asset or liability. When a hedging instrument expires or is sold, terminated or exercised, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.

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PENRICE SODA HOLDINGS LIMITED 2011 Annual Report

The process of removing overburden and waste materials is referred to as stripping. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make their sale. The cost per tonne of chemicals and limestone is as discussed above. and for the periods over which the volumes of aggregates and landfill are expected to be realised. refer to Note 2(d). aggregates and landfill volumes are classified as inventories of finished goods. The cost of purchase comprises the purchase price including purchases of raw materials. Penrice produces two main types of stripping by-products. loading and haulage.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 2: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) k) INVENTORIES Inventories including raw materials and finished goods are valued at the lower of cost and net realisable value. On the basis that there is a market for the sale of these products and the products have a saleable value. For further details on the judgements and estimates used in quantifying finished goods. for which Penrice has determined that there is a market for their sale. l) PROPERTY. including drilling. Inventories of chemicals. Major spares purchased specifically for particular plant are included in the cost of plant. it is necessary to remove overburden and other waste materials to access ore and minerals which can be economically be extracted. as this is considered to be within the normal operating cycle and the volumes are ready for sale with no further processing required. and are depreciated accordingly. Volume discounts and rebates are included in determining the cost of purchase. Landfill is valued at net realisable value per metric tonne. transport. Costs are assigned on the basis of weighted average costs. However. first–out basis. Aggregates and Landfill In mining operations. PLANT AND EQUIPMENT All plant and equipment is carried at cost less accumulated depreciation and any impairment of value. and those costs directly linked to the removal of aggregate volumes. or the estimated useful life of the improvements. refer Note 12. blasting. Quantities of finished goods are assessed primarily through volumetric surveys which are carried out at half year and full year end. Production spares and consumable goods Production spares and consumable stores are included in inventories and expensed on a usage basis and are stated net of slow moving or obsolete items. aggregates and landfill. and inventories of limestone. the inventories of these products will be realised over a period greater than 12 months. Finished goods Finished goods comprise of chemicals inventories. Property. they are classified as current assets under AASB 101: Presentation of Financial Statements. handling and other costs directly attributable to the acquisition of raw materials. including any lease renewal period where Penrice has sole discretion to renew. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 53 . whichever is the shorter. limestone and aggregate are valued at cost. • Finished goods and goods for resale – cost of direct materials and labour and a proportion of variable and fixed manufacturing overheads based on normal operating capacity. The carrying amounts of these non–current assets are reviewed annually to ensure they do not exceed their recoverable amount. Life 40 years 4–40 years 3 years 10 years 3–7 years Method Straight Line Straight Line Straight Line Straight Line Straight Line Buildings Plant and equipment Computer equipment Furniture and fixtures Vehicles The costs of acquisition or improvements to leasehold properties are amortised over the unexpired period of the lease. The cost per tonne at which aggregates are recognised is limited to the cost of removal of the aggregates. aggregates and landfill. plant and equipment are depreciated over their useful economic lives. Costs incurred in bringing each product to its present location and condition are accounted for as follows: • Raw materials – purchase cost on a first–in. import duties and other taxes (other than those subsequently recoverable by the Group from the taxing authorities). which is lower than the cost per tonne of removal of this by–product from the mine. except for those listed in inventories. Based upon current contracted sales volumes.

technology. n) NON–CURRENT ASSETS CONSTRUCTED BY THE GROUP The cost of non–current assets constructed by the Group includes the cost of all materials used in construction. an impairment loss is recognised. plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. These costs are reviewed for impairment when facts and circumstances suggest the carrying amount is in excess of the recoverable amount. the difference is recognised in profit of loss. When goodwill forms part of a cash generating unit and an operation within that unit is disposed of. q) EXPLORATION AND EVALUATION COSTS Costs arising from exploration and evaluation activities are carried forward provided such costs are expected to be recouped through successful development. at reporting date. Goodwill is allocated to the cash–generating units for the purpose of impairment testing. Software Expenditure on significant commercial development. including major software applications and associated systems. direct labour on the project and an appropriate proportion of variable and fixed overhead costs based upon a time cost allocation methodology. If this consideration transferred is lower than the fair value of the net identifiable assets of the subsidiary acquired. including acquisition charges associated with the investment. If an impairment trigger exists. Subsequent to the initial investment. the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. typically between three to ten years. is capitalised and amortised on a straight–line basis over the period of time during which the benefits are expected to arise. or by sale. When the recoverable amount of the cash generating unit is less than the carrying amount. m) IMPAIRMENT OF NON FINANCIAL ASSETS OTHER THAN GOODWILL The Group assesses impairment of all assets at each reporting date by evaluating conditions specific to the Company and to the particular asset that may lead to impairment. As at 30 June 2011. the recoverable amount of the asset is determined. all costs have been fully amortised. The marble reserves are not brought to account in the group’s financial statements. Impairment is determined by assessing the recoverable amount of the cash generating unit to which the goodwill relates. investments in controlled entities are carried by the parent entity at cost less accumulated impairment losses. 54 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . or where exploration and evaluation activities have not.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 2: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) An item of property. o) MINE RESERVES The Group has a marble mine at Angaston consisting of freehold and leasehold land. These include product and manufacturing performance. Refer Note 2(d) for methodology. being the fair value of the consideration given. p) INVESTMENTS IN CONTROLLED ENTITIES All investments in controlled entities are initially recognised by the parent entity at cost. Costs are amortised over five years given further exploration and evaluation costs are expected to be incurred at that stage. All non financial assets have been tested for impairment in the current period. key drivers and assumptions. economic and political environments and future product expectations. r) INTANGIBLES Goodwill Goodwill acquired in a business combination is initially measured at cost of the business combination being the excess of the consideration transferred over the fair value of the Group’s net identifiable assets acquired and liabilities assumed. Goodwill disposed of in this manner is measured based on the relative values of the operation disposed of and the portion of the cash generating unit retained. reached a stage to allow a reasonable assessment regarding the existence of economically recoverable reserves.

When the Group expects some or all of a provision to be reimbursed. Penrice has maintained a provision to dredge this material and this provision will be adequate to cover the costs over the remaining period. The expense relating to any provision is presented in the Income Statement net of any reimbursement. A provision for dividends is not recognised as a liability unless the dividends are declared on or before the balance date. in relation to the dredging of the Port River. and the cost of the asset can be measured reliably. as discussed under 2(w) below. The Group completed the first campaign in late 2008 and the completion of the remediation is expected to be completed over the next 4–5 years. salaries. v) BORROWING COSTS Borrowing costs are recognised as an expense when incurred. the increase in the provision due to the passage of time is recognised as a borrowing cost. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the balance sheet date using a discounted cash flow methodology. Provisions are recognised for annual leave and long service leave. Mine Development Costs Mine development costs consist of top soil which was required by law to be removed from land that is being used a repository for landfill.A Government and the operator of the Port River. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 55 . Present value is based on the anticipated timing of when the cash outflows are expected to occur. t) PROVISIONS Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event. and any discount or premium on settlement. The agreement requires Penrice to dredge this material over a 10 year period. the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The Group has an agreement with both the S. Expenses for non–accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. annual leave and sick leave Liabilities for wages and salaries. This top soil will be used in mine remediation over ten years and is amortised on a straight line basis. annual leave and accumulating sick leave expected to be settled in 12 months of the reporting date are recognised in respect of employees’ services up to the reporting date. and for remediation. As such. They are measured at the amounts expected to be paid when the liabilities are settled. borrowing costs directly associated with these assets have been capitalised (including any other associated costs directly attributable to the borrowing and temporary investment income earned on the borrowing). u) INTEREST-BEARING LIABILITIES All loans are measured at the fair value of the consideration received net of issue costs associated with the borrowing. The amounts are unsecured and are usually paid within 30–62 days of recognition. Flinders Ports Pty Limited. The Group currently holds qualifying assets. w) EMPLOYEE BENEFITS Employee leave benefits Wages.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 2: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Software costs are capitalised as intangible assets if they are separable or arise from contractual or other legal rights and it is probable that the expected future economic benefits attributable to the asset will flow to the consolidated Group. for example under an insurance contract. Remediation provisions exist in relation to the cessation of operations at the Angaston mine. s) TRADE AND OTHER PAYABLES Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. including non–monetary benefits. When discounting is used. They are then measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs. it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

The fair value is determined by an external valuer using Monte–Carlo simulation model. An additional expense is recognised for any modification that increases the total fair value of the share–based payment arrangement. other than (if applicable): • Non-vesting conditions that do not determine whether the Group receives the services that entitle the employees to receive payment in equity or cash. This is a method of calculating the amortised cost of financial assets and allocating the interest income over the relevant period using the effective interest rate. Risks and rewards of ownership are considered passed to the buyer once the title has passed. no account is taken of any vesting conditions. over the period in which the performance and/ or service conditions are fulfilled (the vesting period). The expense recognised by the Group is the total expense associated with all such awards. As a result. The following specific recognition criteria must also be met before revenue is recognised: Sale of goods Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. as measured at the date of modification. Interest revenue Revenue is recognised as interest accrues using the effective interest method. The cost of equity–settled transactions is measured by reference to the fair value of the equity instruments at the date at which they are granted. the cancelled and new award are treated as if they were a modification of the original award.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 2: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Long Service Leave The liability for long service leave is recognised and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. The charge to the Income Statement for the period is the cumulative amount as calculated above less the amounts already charged in previous periods. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match. and • Conditions that are linked to the price of the shares of Penrice Soda Holdings Limited. Share based payment transactions Subject to shareholder approval. as closely as possible. Consideration is given to expected future wage and salary levels. ending on the date on which the relevant employees become fully entitled to the award (the vesting date). At each subsequent reporting date until vesting. Equity–settled awards granted by Penrice Soda Holdings Limited to employees of subsidiaries are recognised in the parent’s separate financial statements as an additional investment in the subsidiary with a corresponding credit to equity. • the current best estimate of the number of awards that will vest. The cost of equity–settled transactions is recognised. If the terms of an equity–settled award are modified. it is treated as if it had vested on the date of cancellation. as described in the previous paragraph. whereby employees render services in exchange for shares or rights over shares (equity–settled transactions). If an equity-settled award is cancelled. the estimated future cash outflows. and • the expired portion of the vesting period. experience of employee departures. if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted. Penrice provides benefits to its key management personnel in the form of share based payments. There is a corresponding credit to equity in a separate share based payments reserve. the expense recognised by Penrice Soda Holdings Limited in relation to equity–settled awards only represents the expense associated with grants to employees from the parent company. x) RECOGNITION OF REVENUES Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. However. and the periods of service. or is otherwise beneficial to the employee. the cumulative charge to the Income Statement is the product of: • the grant date fair value of the award. which 56 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . as a minimum an expense is recognised as if the terms had not been modified. and any expense not yet recognised for the award is recognised immediately. In valuing equity–settled transactions. together with a corresponding increase in equity.

aa) EARNINGS PER SHARE Basic earnings per share is calculated as net profit attributable to members of the parent. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 57 . over the expected useful life of the asset. adjusted to exclude any costs of servicing equity (other than dividends). adjusted for: • costs of servicing equity (other than dividends). Operating Leases The minimum lease payments of operating leases. where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased item. where ownership is expected on the expiration of the lease. Leased assets are amortised over the life of the relevant lease or. Dividend Revenue Revenue is recognised when the right to receive the payment is established. • the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received. are recognised as an expense on a straight–line basis.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 2: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Re-lifing of specific assets has resulted in a decrease in the depreciation charge for the year of $503k. Lease payments are allocated between interest expense and reduction in the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. divided by the weighted average number of ordinary shares and dilutive potential ordinary shares. Diluted earnings per share is calculated as net profit attributable to members of the parent. z) CONTRIBUTED EQUITY Contributed equity is recognised at the fair value of the consideration received by the Group. the present value of minimum lease payments. ac) CHANGE IN ACCOUNTING ESTIMATES Consistent with the Group’s accounting policy. Finance Leases Leases which effectively transfer substantially all of the risks and benefits incidental to ownership of the leased item to the Group are capitalised at their fair value if lower or. during the financial year 2011 the remaining useful lives of the assets of the Group were reassessed. y) GENERAL MAINTENANCE The costs of maintenance of manufacturing plant and equipment are charged to the Income Statement in the period in which they are incurred. divided by the weighted average number of ordinary shares. ab) LEASED ASSETS Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership. and • other non–discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares. The operating costs of a major plant shutdown are capitalised and subsequently amortised over the remainder of the financial year. adjusted for any bonus element.

Further detail is contained in Note 13. with a fair value of ($267k) (2010: $709k) and a notional value of $52. principally interest rate swap and forward currency contracts. These include monitoring levels of exposure to interest rate and foreign exchange risk and assessments of market forecasts for interest rate.3m swaps the Group has a $3. and future cash flow forecast projections. 58 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . At balance date. The main risks arising from the Group’s financial instruments are interest rate risk. Any hedge that is not designated as a hedge in accordance with AASB139 Financial Instruments: Recognition and Measurement does not qualify for hedge accounting and is classified as “held for trading” as its mark to market position is reflected directly to the income statement.856) Derivative financial instruments in the form of interest rate swap contracts. and has been throughout the year. foreign exchange and commodity prices.3m. Ageing analyses and monitoring of specific credit allowances are undertaken to manage credit risk. The Group enters into derivative transactions. The Board reviews and agrees policies for managing each of these risks as summarised below. These derivative contracts have various start and end dates. credit risk and liquidity risk. cash and short-term deposits and derivatives. bank loans. giving a varying degree of cover over the next two years. the Group had the following mix of non derivative financial assets and liabilities exposed to Australian variable interest rate risk. RISKS EXPOSURES AND RESPONSES Interest rate risk The Group’s exposure to market interest rates relates primarily to the Group’s long-term debt obligations and interest rate swaps in place at balance date. the Group’s policy that no trading in financial instruments shall be undertaken. All new hedge contracts entered into were designated as qualifying hedges for hedge accounting purposes. Liquidity risk is monitored through the modelling of future rolling cash flow forecasts.163 5.300) (70. credit allowances. payables.5m twelve month fixed rate loan contract (start date: 14 October 2010 end date: 14 October 2011). (2010: $59.137) (59. It is. outlined in Note 13. finance leases. The purpose is to manage the interest rate and currency risks arising from the Group’s operations and its sources of finance.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 3: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group’s principal financial instruments comprise receivables.300) (53. The Group uses different methods to measure and manage different types of risks to which it is exposed.3m) are exposed to fair value movements if interest rates change.444 (75. including interest rate and currency risk in accordance with the Group’s financial risk management policy. The Group manages its exposure to key financial risks. Consolidated 2011 2010 $000 $000 Financial Assets Cash and cash equivalents Financial Liabilities Bank Loan Net Exposure 5. including the hedging cover of foreign currency and interest rate risk. In addition to the $52. The Board reviews and agrees policies for managing each of the risks identified below. The objective of the policy is to support the delivery of the Group’s financial targets whilst protecting future financial security. The primary responsibility for identification and control of financial risks rests with the Audit and Risk Management Committee under the authority of the Board. foreign currency risk. The level of debt is disclosed in Note 21 and further details on interest rate swaps are provided in Note 13.

in which the Group agrees to exchange. At 30 June 2011. the Group enters into interest rate swap contracts. The bands require a minimum to maximum range of 40% to 80% of borrowings at fixed interest rates for 0-12 months. The exposure to the mark to market hedge movements are of a non cash nature and are reflected through the P&L for non qualifying hedges and Equity for those interest rate swaps that qualify for hedge accounting. The following sensitivity analysis is based on the interest rate exposures on financial assets and liabilities in existence at the balance sheet date. alternative financing. at specified intervals. if interest rates had moved. This % will vary throughout the year as contracts mature and further contracts are entered into. The Group constantly analyses its interest rate exposure. consideration is given to potential renewals of existing positions. Post tax profit Higher/(Lower) 2011 2010 $000 $000 Impact of interest rate movement on Interest Rate Swaps at balance date (mark to market impact) +1. To manage this risk in a cost-efficient manner. In broad terms. These swaps are designed to hedge underlying variable rate debt obligations.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 3: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) The Group’s policy is to manage its finance costs using a mix of fixed and variable rate debt.5% (50 basis points) 2010 $000 Other Comprehensive Income Higher/(Lower) 2011 $000 2010 $000 (192) 96 (28) 14 – – – – The above calculations take into account the exposures as at balance date and an interest rate movement that is then annualised. alternative hedging positions and the mix of fixed and variable interest rates. with all other variables held constant. Within this analysis. At 30 June 2011. The movement does not take into account the addition of new or maturity of existing derivative instruments such as interest rate swaps during the year or the progressive draw down or pay back of debt over the course of the year. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 59 . The Group’s senior debt facility is a variable rate facility and derivatives are used to swap a proportion of variable rates to fixed rates. the difference between fixed and variable rate interest amounts calculated by reference to an agreed upon notional principal amount. the framework takes a 3 year view and operates within band limits within time periods. approximately 58% of the Groups borrowings during FY2011 are at a fixed rate of interest (2010: 87%). 30% to 70% for 12 to 24 months and 20% to 60% for 24 to 36 months. It is acknowledged that derivative mark to market fair value exposure is a by-product of the Group’s attempt to manage its cash flow volatility arising from interest rate changes.0% (100 basis points) -0.0% (100 basis points) -0. profit and equity would have been affected as follows: Post tax profit Higher/(Lower) 2011 $000 Impact of interest rate movement on Balance Sheet exposures at balance date Judgements of reasonably possible movements: +1.5% (50 basis points) Other Comprehensive Income Higher/(Lower) 2011 2010 $000 $000 52 (8) 13 (3) 158 (99) 341 (176) The mark to market profit and loss impact of the interest rate swaps is calculated based on the swaps notional value as at 30 June 2011. as illustrated in the table below. after taking into account the effect of interest rate swaps.

0% (100 basis points) -0. the impact of a movement in interest rates would affect the profit and loss by the amount that is not hedged. In broad terms. in addition to the movement in the fair value of the non-qualifying derivative instruments.591 5.291 6. The Group constantly analyses its exchange rate exposure. Within this analysis consideration is given to potential renewals of existing positions. The +1%/-0.882 733 6.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 3: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) Post tax profit Higher/(Lower) 2011 $000 Net Movements +1. It operates within a policy framework that limits the amount of cash flow risk the group carries in relation to foreign exchange risk. the Group had the following exposure to US$ foreign currency from non derivative financial assets and financial liabilities that are not designated as cash flow hedges: Consolidated 2011 2010 $000 $000 Financial Assets Cash and cash equivalents Debtors Financial Liabilities Creditors Net exposure 792 4. alternative financing. The bands allow for a minimum to maximum range of 45% to 80% of FX exposure for 0-12 months. alternative hedging positions and the mix of option or fixed rate contracts. The Group seeks to mitigate the effect of its foreign currency exposure by entering into hedge contracts including option and forward exchange contracts. The following sensitivity analysis is based on the foreign exchange rate risk exposures from non derivative financial assets and financial liabilities in existence at the balance sheet date. FOREIGN CURRENCY RISK At 30 June 2011. profit and equity would have been affected as follows: 60 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . All new hedges qualify as effective hedges in accordance with AASB 139 Financial Instruments: Recognition and Measurement and “mark to market” movements in their fair valuation are taken to equity. given a change in interest rates. At 30 June 2011. as illustrated in the table below. had the Australian Dollar moved.061 3.149 As a result of significant export sales which are transacted in USD.5% sensitivities are the Group’s estimate of reasonably possible changes in interest rates over the following financial year.159 4. 20% to 60% for 12 to 24 months and 0% to 40% for 24 to 36 months. the framework takes a 3 year view and operates within band limits within time periods. the Group’s income and balance sheet can be affected significantly by movements in the USD/AUD exchange rates. comprises a change in the mark to market value of the derivative (non cash impact of $52k for +1%) and a change in interest expense.5% (50 basis points) (140) 88 2010 $000 (15) 11 Other Comprehensive Income Higher/(Lower) 2011 $000 158 (99) 2010 $000 341 (176) The overall profit and loss impact of the interest rate swaps.890 1. With derivatives in place at balance date. based on recent interest rate trends. with all other variables held constant.951 1.

are exposed to fair value movements if exchange rates change. coking coal and shipping costs. PRICE RISK The Group produces and sells soda ash and sodium bicarbonate domestically and internationally. (2010: $19m). the majority of their “mark to market” movement is reflected in equity. based on recent exchange rate trends. The Group’s sales into international markets is exposed to international pricing movements. The above tables do not take into account the forward sales of products denominated in USD and the possible impact on profitability.384 (781) (248) 143 (386) 222 225 (130) 1. less US dollar denominated purchases.384 (781) The +10%/-5% sensitivity is the Group’s estimate of reasonably possible changes to exchange rates over the following financial year. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 61 . The profit and loss impact on the “mark to market” of forward exchange contracts is calculated based on the movement between the instruments notional value and its fair value as at 30 June 2011. The Group’s sales of mine products into the domestic market have normal pricing risk to competitive rates. with a fair value of $891k (2010: $(1. Penrice has some natural hedging from the procurement of products and services that are denominated in USD such as imported soda ash.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 3: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) Post tax profit Higher/(Lower) 2011 2010 $000 $000 Impact of foreign exchange rate movement on Balance Sheet exposures at balance date Judgements of reasonably possible movements: AUD/USD +10% AUD/USD -5% Other Comprehensive Income Higher/(Lower) 2011 2010 $000 $000 (248) 143 (391) 227 – – – – Post tax profit Higher/(Lower) 2011 2010 $000 $000 Impact of foreign exchange rate movement on Foreign Currency Derivatives at balance date (mark to market impact) Judgements of reasonably possible movements: Mark to market impact USD/AUD +10% Mark to market impact USD/AUD -5% Net Movements Mark to market impact USD/AUD +10% Mark to market impact USD/AUD -5% Other Comprehensive Income 2011 2010 $000 $000 – – 5 (5) 225 (130) 1. Management believe the balance date risk exposures are representative of the risk exposure inherent in the financial instruments. but is limited to an extent by the higher quality offering of its sodium bicarbonate product. outlined in Note 13.8m.024k)) and a notional value of $3. The mark to market hedge movements are of a non cash nature and as all hedge contracts entered into qualify for hedge accounting. Therefore the balance of international chemical sales. Derivative financial instruments in the form of forward exchange contracts. In FY2011 the material strengthening of the AUD/USD has increased the price risk due to imported product being substantially cheaper to land in Australia. Its long term exposure to commodity price risk for its domestic sales is traditionally limited as a result of high transport costs of imported product relative to the product price. less derivative cover is the net exposure to currency fluctuations.

derivative instruments and the granting of financial guarantees.792 CONSOLIDATED Financial Liabilities Trade and other payables Interest bearing loans & borrowings (1) Derivatives – Interest Rate Swaps Financial guarantees 29. it is considered a “non-adjusting subsequent event” under accounting standards and does not change the classification of the liability at 30 June 2011.803 80. As a result. with a maximum exposure equal to the carrying amount of these instruments. No repayments are due within the 12 months to 30 June 2012. Previously the termination date for this facility was 31 August 2011. The contractual maturities of the Group’s financial assets and liabilities are: Year ended 30 June 2011 CONSOLIDATED Financial Assets Cash and cash equivalents Trade and other receivables Derivatives – FX contracts < 6 months $000 6–12 months $000 1–5 years $000 Total $000 5. setting an appropriate limit.0 million facility beyond the 12 month period from balance date. and amended the termination date of a $7.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 3: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) CREDIT RISK Credit risk arises from the financial assets of the Group. Penrice was in negotiation with its banks and reached agreement in principle to amend its finance facilities as announced to the ASX on Friday 12 August 2011.157) 29. trade and other receivables.095 62 70. including derivative financial instruments as at 30 June 2011.483 (17. Exposure at balance date is addressed in each applicable note.157 (70. Credit risk in trade receivables is managed in the following ways: • A risk assessment process is used for new customers to assess whether credit should be granted and. finance leases. which comprise cash and cash equivalents. Cash flows for financial assets and liabilities without fixed amount or timing are based on the conditions existing at 30 June 2011. $8. LIQUIDITY RISK The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans. The Group minimises concentrations of credit risk in relation to trade receivables by undertaking transactions with a large number of customers. These are confirmed by National Australia Bank.553 – – 239 239 – – – – 5. The Group does not hold any credit derivatives to offset its credit exposure. Whilst this amendment does cancel the amortisation payment and defers payment of the $7. if so. operating leases and working capital management. The table below reflects all contractually fixed pay-offs and receivables for settlement.930) 736 94 830 (591) 70.738 652 22. 62 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . Maturity analysis of financial assets and liabilities are based on management’s expectation. repayments and interest resulting from recognised financial assets and liabilities.470 (88.163 16.892 267 508 111.678) Net Outflow Note (1) As at 30 June 2011.061 111 508 40. This agreement cancelled a $1. • Letter of credit facilities are in place for overseas customers where the Group believes a credit risk exists. and • Payment terms are generally 30-60 days from end of month of supply.738 891 22.8 million amortisation payment due on 30 June 2011.0 million facility to 30 November 2012 or a later date to be agreed in writing.163 16. The Group’s exposure to credit risk arises from potential default of the counter party.8 million remains a current liability in the financial statements.803 10.

comparison to similar instruments for which market observable prices exist and other relevant models used by market participants.931 – 27. trade payables and other financial liabilities mainly originate from the financing of assets used in ongoing operations such as property.732 750 104. These assets are considered in the Group’s overall liquidity risk.g.444 21.375 – – – – – – – – 5. The fair value of the financial instruments as well as the methods used to estimate the fair value are summarised in the table below. FAIR VALUE The Group estimates the fair value of its derivative financial instruments using market observable inputs.444 21.190 461 480 750 30.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 3: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) Year ended 30 June 2010 CONSOLIDATED Financial Assets Cash and cash equivalents Trade and other receivables Derivatives CONSOLIDATED Financial Liabilities Trade and other payables Interest bearing loans & borrowings Derivatives Financial guarantees < 6 months $000 6–12 months $000 1–5 years $000 Total $000 5.506) – 2.511 1.808) Net Outflow The group expects to meet the above financial liabilities through effective management of future cash flows.797 (2.505 (70.872 633 – 70.375 29. inventories and trade receivables.190 72. Leasing obligations. Year ended 30 June 2011 Valuation Valuation Technique Technique – – market non market Quoted observable observable Market Price inputs inputs (Level 1) (Level 2) (Level 3) $000 $000 $000 Year ended 30 June 2010 Valuation Valuation Technique Technique – – market non market Quoted observable observable Market Price inputs inputs (Level 1) (Level 2) (Level 3) $000 $000 $000 CONSOLIDATED Financial Liabilities Derivative instruments Foreign exchange contracts Interest rate swaps – – – 891 (267) 624 – – – – – – (1. These techniques use both observable and unobservable market inputs. plant. equipment and investments in working capital e. Financial instruments that use valuation techniques with only observable market inputs or unobservable inputs that are not significant to the overall valuation include interest rate swaps and foreign exchange contracts not traded on a recognised exchange. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 63 .023) (709) (1.505) 29.931 – 27.797) – 69.732) – – – The Group uses valuation techniques such as present value techniques.183 (76.178 619 – 2.881 (3.

Notes to the Financial Statements for the year ended 30 June 2011

NOTE 4: INCOME STATEMENT ITEMS
Consolidated Profit from continuing operations is stated after crediting/charging the following amounts: Product sales Other revenues Interest from unrelated entities Other revenue items Other revenues Total revenues Depreciation Land, improvements and buildings Manufacturing plant and equipment Total depreciation Amortisation Amortisation of mine development and software Total amortisation Impairment Chemical goodwill Chemical – other assets Raw materials Finished goods Consumable stores Chemical total impairment Quarry & Mineral – landfill Total impairment charge Borrowing costs Interest paid or payable Amortisation of loan facility fees Finance charges related to leases Other borrowing costs (1) Total borrowing costs Employee benefit expense Wages and salaries Share based payment expense Workers compensation costs Defined benefit plan expense Defined contribution plan expense Long service leave provision Total employee benefits expense Other expense items Government royalties on mineral production Operating lease rentals Net (gain) /loss on sale of plant and equipment 2011 $000 152,934 98 891 989 153,923 504 8,631 9,135 468 468 11,717 1,871 768 1,644 16,000 10,000 26,000 6,689 730 98 1,198 8,715 24,583 155 921 193 3,110 132 29,094 113 3,824 (86) 2010 $000 160,376 101 350 451 160,827 497 8,078 8,575 244 244 – – – – – – – 6,408 560 141 1,105 8,214 23,817 61 898 333 2,360 13 27,482 116 3,936 22

(1) Other borrowing costs include the non cash interest charge for the Defined Benefit Fund of $821k (2010: $815k) as prescribed by AASB 119 – Employee Benefits.

64

PENRICE SODA HOLDINGS LIMITED 2011 Annual Report

Notes to the Financial Statements for the year ended 30 June 2011

NOTE 5: INCOME TAX

Consolidated 2011 $000 (a) THE MAJOR COMPONENTS OF INCOME TAX EXPENSE ARE: Current income tax: Current income tax (benefit)/expense Current income tax (over)/under provided in prior year Deferred income tax: Deferred income tax (benefits)/expense Deferred income tax under/(over) provided in the prior year Total income tax (benefit)/expense reported in the Income Statement (b) DEFERRED INCOME TAX CHARGED DIRECTLY TO EQUITY Equity raising costs Actuarial gains/(losses) on defined benefit superannuation fund Cash flow hedge reserve Other Total deferred income tax charged directly to equity (c) TAX EXPENSE RECONCILIATION (Loss)/Profit from ordinary activities Prima facie tax (benefit)/expense thereon at 30% Under/(over) provided in prior years Research and development expenditure Investment allowance Expenditure not allowable for income tax purposes Other Total income tax (benefit)/expense (d) INCOME TAX (RECEIVABLE)/PAYABLE Income tax (receivable)/payable 2010 $000

(2,809) (960) (3,769) (4,079) 991 (3,088) (6,857)

1,300 749 2,049 214 (894) (680) 1,369

– (354) 653 – 299

(465) (73) (465) (15) (1,018)

(33,063) (9,919) 30 (495) – 3,537 (10) (6,857)

7,646 2,294 (146) (577) (186) 19 (35) 1,369

(110)

2

PENRICE SODA HOLDINGS LIMITED

2011 Annual Report

65

Notes to the Financial Statements for the year ended 30 June 2011 NOTE 5: INCOME TAX (CONTINUED)

Opening balance $000 (e) DEFERRED TAX BALANCE – 2011 – CONSOLIDATED: Taxable and deductible temporary differences arising from the following: Deferred tax assets Provisions Inventory Leases Defined Benefit Fund Capital raising costs Cash flow hedge reserve Tax Losses Inventory impairment Other Deferred tax liabilities Cash flow hedge reserve Intangibles Inventory Depreciation Other

Charge to Charge to income equity $000 $000

Movement between DTA & DTL $000

Tax Losses $000

Closing balance $000

2,125 296 363 7 416 479 – – 138 3,824 – (21) (804) (5,842) (186) (6,853)

237 (77) (114) (154) (10) (13) – 4,284 (8) 4,145 – (127) 344 (1,243) (28) (1,054) 3,091

– – – 354 – (653) – – – (299) – – – – – – (299)

– – – – – 187 – – – 187 (187) – – – – (187)

– – – – – – 2,809 – – 2,809 – – – – – –

2,362 219 249 207 406 – 2,809 4,284 130 10,666 (187) (148) (460) (7,085) (214) (8,094)

Net deferred tax charge to income and equity per Note 5(a) & (b)

66

PENRICE SODA HOLDINGS LIMITED 2011 Annual Report

018 – – – – – – – – – – – – – – – 2.243) (8) 53 92 40 (220) (123) 14 (558) (710) (21) 1.824 (21) (804) (5.125 296 363 7 416 479 138 3.516 – (1.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 5: INCOME TAX (CONTINUED) Opening balance $000 (f) DEFERRED TAX BALANCE – 2010 – CONSOLIDATED: Taxable and deductible temporary differences arising from the following: Deferred tax assets Sale and restructure costs Provisions Inventory Leases Defined Benefit Fund Capital raising costs Cash flow hedge reserve Other Deferred tax liabilities Intangibles Inventory Depreciation Other Charge to income $000 Charge to equity $000 Movement between DTA & DTL $000 Closing balance $000 8 2.842) (186) (6.018 – – – – – 1.853) Net deferred tax charge to income and equity per Note 5(a) & (b) PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 67 .865) (6.378) – (8.072 204 323 154 74 – 681 3.390 680 – – – – 73 465 465 15 1.061 536 (186) 1.

Sodium bicarbonate is a product which is also used in a diverse range of applications such as pharmaceutical. No final dividend for the 2011 financial year has been declared and the DRP will not be utilised at this time. flat glass for building and construction and washing powder. sodium bicarbonate and quarry & mineral. food. CHEMICAL BUSINESS The reporting segment “Chemical business” is the aggregation of two operating segments. 68 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . Franking credit balance The amount of franking credits available for the subsequent years are: Franking account balance as at the end of the year at 30% (2010: 30%) The amount of franking credits available for future reporting periods: Impact on the franking account of dividends proposed of declared before the financial report was authorised for issue but not recognised as a distribution to equity holders during the period 2.512 – 3. The operating segments are soda ash. cleaning products and flue gas treatment.310 3. stock feed.310 – 2. Soda ash produced is predominantly sold in the Australian market as a vital ingredient in products ranging from glass containers (especially wine and beer bottles). The reportable segments are based on aggregated operating segments determined by the similarity of the products produced and sold. personal care products and industrial applications such as detergents. The operating segments are identified by the Group based on their location and type of operation. It is also used in the mining and water treatment industries.512 2011 $000 2010 $000 NOTE 7: SEGMENT INFORMATION IDENTIFICATION OF OPERATING AND REPORTABLE SEGMENTS The Group has identified its three operating segments based on the internal reports that are reviewed and used by the Managing Director & Chief Executive Officer and The Board (the chief operating decision makers “CODM”) in assessing performance and in determining the allocation of resources.310 2. Discrete financial information about each of these operating businesses is reported to the CODM and executive management team on at least a monthly basis.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 6: DIVIDENDS PAID There have been no dividends paid or declared since the end of the preceding financial year. DIVIDEND REINVESTMENT PLAN (DRP) The Penrice Soda Holdings Dividend Reinvestment Plan commenced on 16 April 2008 and remains in operation.512 3. being soda ash and sodium bicarbonate. the manner in which the product is sold and the nature of the product. as these are the sources of the Group’s major risks and have the most effect on the rates of return.

roads. then any associated assets and liabilities are also not allocated to segments. QUARRY & MINERAL BUSINESS The Group’s Quarry & Mineral business is located at the Penrice mine at Angaston in South Australia. The end result is that due to product and customer mix and foreign exchange impact. sales to one customer accounted for $34m (FY2010 $34m) of revenue earned. The Group believe the soda ash and sodium bicarbonate operating segments have similar economic characteristics. The following items and associated assets and liabilities are not allocated to operating segments as they are not considered part of the core operations of any segment: Interest income Other income Borrowing costs Fair value gains/losses on derivatives Corporate costs which are unable to be allocated on a reasonable basis Income tax expense and deferred tax assets and liabilities The Group accounts for intersegment sales and transfers as if the sales or transfers were to third parties at an arms length price. Both the soda ash and sodium bicarbonate operating segments have a reasonably wide variation in margin for their different products and customers. While the mine supplies limestone into the chemical process at Penrice’s Osborne plant. trade creditors and inventory. This is to avoid asymmetrical allocations within segments which the Group believe would be inconsistent.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 7: SEGMENT INFORMATION (CONTINUED) The nature of the products and the production process is similar as are the methods used to distribute the products to the customers. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 69 . Over the medium term the overall margins that can be achieved in these two operating segments will be similar. overall margins will depend on what part of the business cycle the business is operating in. landfill. such as civil and construction. it is also a significant supplier of aggregates and other materials to a variety of end-uses. glass and mineral processing. ACCOUNTING POLICIES AND INTER-SEGMENT TRANSACTIONS It is the Group’s policy that if items of revenue and expense are not allocated to operating segments. Each segment is responsible for the management of working capital which comprises of trade debtors. with the sodium bicarbonate segment more heavily exposed to variation in margin due to the impact of foreign exchange. Therefore these two operating segments have been aggregated into one reporting segment. Of this. which accounts for more than 42% (FY2010 39%) of the total group revenue. equating to $65m (FY2010 $63m) for this reporting period. CUSTOMER CONCENTRATION Glass manufacturing is a major customer group for the chemicals segment.

815 70 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report .128 91.607 157. net of recovery Tax effected – impairment Chemical Business Quarry & Minerals Profit from continuing operations after income tax Segment assets as at 30 June 2011 are as follows: Property.344 (1.742 489 (4.028 – 14.206) 98.028 (8.630) 1.715) (7.243 (1.934 – – – – – – 98 500 391 98 500 391 153.001) 6.563 25.048 21.701 219 13.688 49.603) 6.739 8.173) (3.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 7: SEGMENT INFORMATION (CONTINUED) Year ended 30 June 2011 Revenue Sales to external customers Inter-segment revenues Total segment revenue Non-segment revenues Interest from unrelated entities Other income insurance recovery other Total consolidated revenue Result Normalised EBITDA before unallocated expenses as reported to CODM Unallocated expenses Normalised EBITDA as reported to CODM Depreciation & amortisation Normalised EBIT as reported to CODM Borrowing costs Normalised loss before tax as reported to CODM Income tax expense Normalised net profit after tax as reported to CODM Chemical $000 Quarry & Mineral $000 Eliminations/ unallocated $000 Consolidated $000 127.934 – 152.423 – (6.715) (2.923 14.000) (26. plant & equipment Intangibles Working capital 77.173) 15.027 5.684) – (3.344 – 5.469 36.150) Tax effected unrealised exchange gains on foreign currency options and forwards Tax effected unrealised exchange gains on fair value of interest rate swaps Tax effected – insurance events.602) 3.687 – – – – (14.052 31.684) 19.563 – 127.497 66.371 6.052) 152.387) 59 (13) (3.440 8.052) (6.688 (9.085 (8.861 (4.

182 (7.319) 7.750 67.590 – 11.277 Tax effected unrealised exchange gains on foreign currency options and forwards Tax effected unrealised exchange gains on fair value of interest rate swaps Profit from continuing operations after income tax Segment assets as at 30 June 2010 are as follows: Property.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 7: SEGMENT INFORMATION (CONTINUED) Year ended 30 June 2010 Revenue Sales to external customers Inter-segment revenues Total segment revenue Non-segment revenues Interest from unrelated entities Other income Total consolidated revenue Result Normalised EBITDA before unallocated expenses as reported to CODM Unallocated expenses Normalised EBITDA as reported to CODM Depreciation & amortisation Normalised EBIT as reported to CODM Borrowing costs Normalised profit before tax as reported to CODM Income tax expense Normalised net profit after tax as reported to CODM Chemical $000 Quarry & Mineral $000 Eliminations/ unallocated $000 Consolidated $000 135.323 (8.328 441 508 6.182 – 15.900) 23.290 (962) 5.060 103.922 55.449) – (3.223 (3.062 8.819) 14.328) (6.376 – – – – 101 350 101 350 160.345 – (6.599 – – – – 94.827 15.328) 160.359 25.504 (8.135 16.376 – 160.525 12.090 451 (3.319 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 71 .214) 6.017 6.810 171.863 11. plant & equipment Intangibles Working capital 75.787 39.500) 10.587 20.449) 27.590 (1.359 – 135.328 31.900) (3.720 19.

361.576 530.523 2010 80.825.355.576 81. These executive share options could potentially dilute basic earnings per share in the future.277 The weighted average number of shares used for the purposes of calculating diluted earnings per share reconciles to the number used to calculate basic earnings per share as follows: 2011 Weighted average number of ordinary shares on issue for basic earnings per share Executive share options and performance rights Weighted average number of ordinary shares on issue used in the calculation of diluted earnings per share 91.8 7.7) 91.7) (28.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 8: EARNINGS PER SHARE Basic earnings per share based on operating profit after income tax (cents) Diluted earnings per share based on operating profit after income tax (cents) Weighted average number of ordinary shares on issue used in the calculation of basic earnings per share Weighted average number of ordinary shares on issue used in the calculation of diluted earnings per share Earnings used in calculating basic and diluted earnings per share ($000) 2011 (28.472.206) 2010 7.875 There are 2.523 (26.355.361.361.7 80.875 6.296 executive share options excluded from the calculation of diluted earnings per share because they are antidilutive for the 2011 period presented.825.361. NOTE 9: NET TANGIBLE ASSETS PER SECURITY Net tangible asset backing per ordinary security (cents) 2011 65 2010 79 72 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report .523 91.299 81.523 – 91.

163 5.015 6.819 22 (925) – (63) (734) – 201 2.444 5.088) (690) 1.791 (7.263) (6.206) 9.767) 58 (148) 7.986 322 (3.163 5.444 (26.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 10: NOTES TO THE CASH FLOW STATEMENT Consolidated 2011 $000 (a) CASH AND CASH EQUIVALENTS Cash at bank and in hand Reconciliation to cash flow statement For the purposes of the cash flow statement cash and cash equivalents comprise the following at 30 June: Cash at bank (b) RECONCILIATION OF NET PROFIT AFTER INCOME TAX TO CASH FLOWS FROM OPERATIONS Net (loss)/profit after income tax Depreciation/amortisation Net (gain)/loss on sale of non–current assets Net fair value change in derivatives Impairment expense Share based payment expense Non cash defined benefit fund expense Amortised borrowing costs Other Change in operating assets and liabilities: Decrease in receivables (Increase) in inventories (excluding impairment) (Increase) in deferred tax assets (Increase)/decrease in other assets (Increase)/decrease in income tax receivable Increase/(decrease) in trade creditors and accruals (Decrease)/increase in deferred tax liabilities (Decrease) in other provisions Net cash inflow from operating activities 5.193 (2.444 5.000 155 (514) 310 253 5.063 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 73 .842) (1.603 (86) (67) 26.930) (112) 613 1.277 8.241 (24) 5.163 2010 $000 5.

800 71.0 million facility to 30 November 2012 or a later date to be agreed in writing. THE FOLLOWING FINANCE FACILITIES HAD BEEN NEGOTIATED AND WERE AVAILABLE Note Total facilities: – bank loan current – bank loan non current Facilities used at reporting date: – bank loan Facilities unused at reporting date: – bank loan 2011 $000 8. and amended the termination date of its $7.800 78. For more information on banking arrangements. This agreement cancelled a $1.800 2010 $000 1. The amended agreement provides an additional $10 million funding facility to be available until 31 March 2012.800 70.800 As at 30 June 2011.800 – 71.000 71.800 19 – 78. please see Note 21.000 78. which then reduces to $8 million until 30 September 2012 being the termination date for this new facility. Penrice was in negotiation with its banks and reached agreement in principle to amend its facilities as announced to the ASX on Friday 12 August 2011. 74 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . 33.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 10: NOTES TO THE CASH FLOW STATEMENT (CONTINUED) (c) AT 30 JUNE. Previously the termination date for this facility was 31 August 2011.8 million amortization payment due on 30 June 2011.800 70.

479 2010 $000 21. A provision of $7k for impairment losses has been recognised for the year (2010: $7k) against those amounts that are >90 days past due.678 (7) 21. The maximum exposure to credit risk is the fair value of the receivables.259 16. Those amounts in 60-91+ days ageing category are considered past due but not impaired. (b) FAIR VALUE AND CREDIT RISK Due to the short term nature of these receivables. (c) FOREIGN EXCHANGE AND INTEREST RATE RISK Details regarding foreign exchange and interest rate exposure are disclosed in Note 3. the ageing of trade receivables is: Total $000 15.084 21.084 – 15.479 21.486 (7) 15.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 11: TRADE AND OTHER RECEIVABLES Consolidated 2011 $000 Trade debtors.738 253 21. their carrying value is assumed to approximate their fair value. Collateral is not held as security. net Non trade amounts owing by: Unrelated parties Total current trade and other receivables 15.455 31–60 Days $000 260 – 260 125 – 125 61–90 Days $000 32 – 32 41 – 41 +91 Days $000 110 (7) 103 63 (7) 56 2011 Consolidated Less provision for doubtful debts 2010 Consolidated Less provision for doubtful debts Those amounts that are considered impaired and have been provided for.671 0–30 Days $000 15. Net of provision for impairment loss.678 1.455 – 21. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 75 . A provision for impairment loss is recognised when there is objective evidence that an individual trade receivable is impaired.931 (a) ALLOWANCE FOR IMPAIRMENT LOSS Trade receivables are non-interest bearing and are generally on 30–62 day terms.

871k has been applied to coke stock to reflect the average density factor and moisture content of stock holdings.489 19. previously carried at cost.049 854 6.953 51. and therefore the products are classified as current assets under AASB 101: Presentation of Financial Statements.645 19.000k has been applied against the carrying value of landfill to reflect the change in expected timing of major infrastructure projects and associated sales and cash flows. and that there is a market for the sale of these products.657 8. in which large quantities of landfill in the order of millions of tonnes are required for land developments in a large number of low lying areas. 76 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report .184 4.588 63.777 1.620k) in relation to the difference between the cost of extracting landfill and its carrying value.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 12: INVENTORIES Consolidated 2011 $000 Raw Materials Raw Materials (at cost) (1) Finished Goods Chemical (at cost) Chemical (at net realisable value) (2) Quarry & Mineral – Limestone (at cost) Quarry & Mineral – Aggregates (at cost) Quarry & Mineral – Landfill (at net realisable value) (3) Production spares & consumable goods Quarry & Mineral (at cost) Chemical (at net realisable value) (4) Total current inventories 3. Based on 2012 sales forecasts of aggregates. the inventories of these products will be realised over a period greater than 12 months. (2) Impairment charge of $768k has been applied to greasy ash to reflect the net realisable value of this product as a result of additional processing and loss factor in production. sales in 2011 were in small volumes primarily to the civil market as a blended product for road base but forecast sales for 2012 are greater than 2011.102k) included in this amount is $1. this is considered to be within the normal operating cycle. Aggregates and landfill are classified as inventories of finished goods on the basis that these volumes are ready for sale with no further processing required.124k (2010: $1. The Group is actively pursuing these opportunities. It is therefore difficult to give an estimate for the time required to sell out the existing inventory.597 7.069 Note: (1) Impairment charge of $1. There are currently several such developments in the early stages of planning. Based upon current contracted sales volumes.736 158 4. (4) Impairment charge of $1.044k (2010: $105. it is estimated that inventory levels represent approximately 3 years’ sales.708 18.827 9.900 – 3. (3) Impairment charge of $10. The major market being targeted is the landfill market in the greater northern Adelaide region.045 2010 $000 4. Additions of landfill and aggregate volumes in future years will continue to decline as extraction rates reduce in the next phase of the mine plan. Inventory recognised as an expense for the year totalled $115. all of which could potentially be supplied by Penrice. However.644k has been applied to against the carrying value of aged and slow moving stores and spares parts. With regard to landfill.

the notional amount of the interest rate swap contracts was $52. These are economic cash flow hedges.87%).137) 2010 Current $000 (596) (596) Current (1–12 months) Total current derivatives Non-current Non-current (1 year+) Total non-current derivatives Interest Rate Swaps The Group has entered into interest rate swaps. The interest payable and receivable on the swap contract is settled net on a quarterly basis until expiry.9 5.8 Period Fixed interest rate contracts Fixed interest rate contracts Average current notional value 1 Jul 11 – 31 Dec 11 1 Jan 12 – 30 Jun 12 Foreign Exchange Contracts The Group enters into foreign exchange contracts to manage its USD revenue exposures from its export chemical business. Notional Value AUD $000 35.717 18. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 77 . The notional amount of interest rate swap contracts classified as current was $27.3m) with these contracts having various start and end dates.2m) at a weighted average rate of 0.3m (2010: $59.0 AUD.1m (2010: $40.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 13: DERIVATIVE FINANCIAL INSTRUMENTS Current Interest rate swaps 1–12 months $000 (205) (205) Interest rate swaps $000 (62) (62) Foreign exchange contracts $000 891 891 Foreign exchange contracts $000 – – 2011 Total $000 686 686 2011 Total $000 (62) (62) 2010 Current $000 (1.04% (2010: 5.8m (2010: USD $19.84 USD: 1. The weighted average balances and exchange rates for these contracts are shown in the table on the following page.058 Weighted Average Interest Rate % 5.137) (1. At 30 June 2011 the notional amount of the forward exchange contracts was USD $3. The weighted average balances and fixed rates for these contracts are shown in the table below. to swap floating rate interest to fixed rate interest. At 30 June 2011.3m) at a weighted average fixed rate of 6.400 27.

Notes to the Financial Statements for the year ended 30 June 2011 NOTE 13: DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED) Period Foreign Exchange Contracts Foreign Exchange Contracts 1 Jul 11 – 31 Dec 11 1 Jan 12 – 30 Jun 12 Notional Value USD $000 2.000 3.800 1.800 Weighted Average Exchange rate USD:AUD 0.84 Interest rate risk Information regarding interest rate risk exposure is set out in Note 3. Credit risk Credit risk arises from the potential failure of counter parties to meet their obligations at maturity of contracts.579 2. at any time. Foreign exchange risk Information regarding foreign exchange risk exposure is set out in Note 3. Management has established limits to ensure that.85 0. NOTE 14: OTHER ASSETS Consolidated Current Prepayments Total other current assets 2011 $000 2.83 0. the fair value of favourable contracts outstanding with any individual counter party is recoverable. This can arise on derivative financial instruments with unrealised gains. The Group’s derivative contracts are placed with its incumbent banks.579 2010 $000 649 649 78 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . NAB and Westpac.

135) (100.085 15.252 94. Included in plant and equipment at 30 June 2011 is an amount of $9.896) 79 (8.212 13.033 13.414) 6.470k (2010: $5.440 Plant and equipment with a carrying amount of $1.418) – (496) (2.854 (44) – (8) (52) (2.587 99.914k) related to expenditure for plant in the course of construction.945 13.997 79.379k) are pledged as securities for the finance lease liability as disclosed in Notes 19 and 21.266k (2010: $1.448) (91.114k) has been fully depreciated at 30 June 2011.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 15: PROPERTY. Plant and equipment with a gross carrying amount of $46. but remains in use at the reporting date.069 163.358) 79 (9.893 13.631) (97.422 437 181 45 – 7. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 79 .700 185.914) (8.630 439 – – – 16.985 – 45 (121) 199.914k (2010: $44. PLANT & EQUIPMENT Year ended 30 June 2011 Land & Improvements at Cost $000 Gross Carrying amount Balance as at 1 July 2010 Additions Reclassification transfer Transfer from intangibles Disposals Balance as at 30 June 2011 Accumulated Depreciation Balance as at 1 July 2010 Disposals Depreciation Expense Balance as at 30 June 2011 Net Book Value As at 1 July 2010 As at 30 June 2011 Consolidated Buildings at Cost $000 Plant & Equipment at Cost $000 Total $000 6.109 (181) – (121) 176. First mortgages of land and buildings have been granted as security on bank loans (refer Note 21).378 7.155 74.

418) (80.587 80 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report .152 112 158 – 6.212 73.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 15: PROPERTY.828 802 – – 15.239 158 (216) 185.117 6.893 175.575) (91.325 – (216) 163.078) (88.816 94.358) 6.378 12.930) – (488) (2.764 10.945 (35) – (9) (44) (1. PLANT & EQUIPMENT (CONTINUED) Year ended 30 June 2010 Land & Improvements at Cost $000 Gross Carrying amount Balance as at 1 July 2009 Additions Transfer from intangibles Disposals Balance as at 30 June 2010 Accumulated Depreciation Balance as at 1 July 2009 Disposals Depreciation expense Balance as at 30 June 2010 Net Book Value As at 1 July 2009 As at 30 June 2010 Consolidated Buildings at Cost $000 Plant & Equipment at Cost $000 Total $000 6.784 9.422 14.630 154.983) 165 (8.948) 165 (8.997 92.896) (82.801 74.898 13.

291 49 – 2.008 – – – 18. and • Quarry and Mineral Business The recoverable amount of both cash generating units has been determined based on a value-in-use of calculation using cash flow projections based on the financial budget for the year ended 30 June 2012 and forecasts for the subsequent four-year PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 81 .449 3.008 6.183 20.008 18.008 441 45 (158) (13) 315 – 2.436 – 429 18. Year ended 30 June 2010 Goodwill $000 Gross Carrying amount Balance as at 1 July 2009 Additions Transfer to Plant. Property & Equipment Write offs Balance at 30 June 2010 Accumulated Amortisation Balance as at 1 July 2009 Amortisation Balance at 30 June 2010 Net Book Value As at 1 July 2009 As at 30 June 2010 Exploration and evaluation costs $000 Consolidated Mine Development Costs $000 Software $000 Total $000 18.666 – – – (266) – (266) (150) (258) (408) (94) (210) (304) (510) (468) (978) 18.586 523 – – – 523 21.717) 9.688 Note: (1) Chemical Business goodwill of $11.432 (45) (4) (11.922 Impairment testing of goodwill Goodwill acquired through business combinations has been allocated to two individual cash generating units.008 175 49 – 2.586 – – 2. Property & Equipment Write offs Impairment (1) Balance at 30 June 2011 Accumulated Amortisation Balance as at 1 July 2010 Amortisation Balance at 30 June 2011 Net Book Value As at 1 July 2010 As at 30 June 2011 Consolidated Exploration and Mine Development evaluation costs Costs $000 $000 Software $000 Total $000 18.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 16: INTANGIBLES Year ended 30 June 2011 Goodwill $000 Gross Carrying amount Balance as at 1 July 2010 Transfer to Plant.717) 6. which are reportable segments for impairment testing as follows: • Chemical Business.922 8.291 315 (45) (4) – 266 2.008 – – (11.178 429 219 20.586 – – – 2.436 2.432 – – – (266) – (266) – (150) (150) – (94) (94) (266) (244) (510) 18.154 (158) (13) 21.586 – 523 – – 523 18.717k has been written off as a result of impairment testing of this cash generating unit.

The Directors have determined that impairment exists and Chemical business goodwill has been written-off.892 29.291 18.921 12.008 NOTE 17: OTHER LIABILITIES Consolidated Non-current Defined benefit fund liability Total other non-current liabilities Details of the defined benefit fund are included in Note 27. 2011 $000 16. FOREIGN EXCHANGE AND LIQUIDITY RISK Information regarding interest rate. (b) INTEREST RATE. (a) FAIR VALUE Due to the short term nature of these payables.0%) key drivers and assumptions are disclosed in Note 2d.291 11. Consolidated 2011 $000 Carrying amount of goodwill allocated to each business unit Osborne production facility Angaston mine Total goodwill 2010 $000 – 6. A pre-tax discount rate applied to cash flow projections is 12.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 16: INTANGIBLES (CONTINUED) period included in the 10 year business plan.717 6. their carrying value is assumed to approximate their fair value. 2011 $000 (692) (692) 2010 $000 (25) (25) NOTE 18: TRADE AND OTHER PAYABLES Consolidated Current Trade creditors Non trade creditors and other payables Total current trade and other payables Trade creditors are non-interest bearing and are normally settled on 30–62 day terms. foreign exchange and liquidity risk exposure is set out in Note 3.291 6.190 82 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report .803 2010 $000 16.0% (2010: 11.298 12.882 29.

2011 $000 8. This agreement cancelled a $1.639 2010 $000 5. Whilst this amendment does cancel the amortisation payment and defers payment of the $7.800 318 9. and amended the termination date of a $7.597 10.639 NOTE 20: PROVISIONS Consolidated Current Employee benefits Other Total current provisions 2011 $000 5. Previously the termination date for this facility was 31 August 2011.485 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 83 . $8.800 839 2.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 19: INTEREST BEARING LIABILITIES Consolidated Current Secured: Bank Loan (1) Finance lease liabilities Unsecured: Other Total current interest bearing liabilities Securities provided for finance leases are disclosed under Note 21. Penrice was in negotiation with its banks and reached agreement in principle to amend its finance facilities as announced to the ASX on Friday 12 August 2011. Note (1) As at 30 June 2011. As a result.639 – 2. it is considered a “non-adjusting subsequent event” under accounting standards and does not change the classification of the liability at 30 June 2011.0 million facility to 30 November 2012 or a later date to be agreed in writing.8 million remains a current liability in the financial statements.624 15 5.0 million facility beyond the 12 month period from balance date.8 million amortisation payment due on 30 June 2011.715 2010 $000 1. No repayments are due within the next 12 months.470 15 5.118 1.

Interest rate and liquidity risk Details regarding interest rate and liquidity risk are disclosed in Note 3. (b) Fair values The carrying amount of the Group’s current and non-current interest bearing liabilities approximate their fair value. 84 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report .500 69. Refer Note 15.042 2010 $000 372 69.266k (2010: $1.4% to 8. The carrying amount of these plant and equipment assets is $1.872 The finance leases have an average lease term of 3.530 70. The bank loan is secured by a fixed and floating charge over the assets of the Group.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 21: INTEREST BEARING LIABILITIES Consolidated Non-current Finance lease liabilities (a) Bank loan (b) Total non-current interest bearing liabilities (a) 2011 $000 512 69. The floating rate bills are predominantly 90 day BBSY bills and at balance date the interest rate ranged from 8.6% (includes 90 day BBSY rate plus bank margin). Penrice utilises floating rate bills for its debt funding and has hedges in place to hedge the interest rate risk on a portion of the floating rate bills.379k). as set out in Note 13. Assets pledged as security The lease liability is secured by a charge over the leased assets. There are no restrictions imposed by these lease agreements. The Group is obligated to pay out these residual values at the end of the lease terms.4 years) at an average interest rate of 9% (2010: 9%) with fixed residual values at the end of the leases based on Australian Taxation Office minimum residuals.3 years (2010: 3.

A. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 85 . Flinders Ports Pty Limited. in relation to the dredging of the Port River.612 Movements in provisions Wharf Dredging Carrying amount at the beginning of the period Amounts utilised during the period Carrying amount at the end of the period Remediation Carrying amount at the beginning of the period Amounts utilised during the period Amounts charged during the period Carrying amount at the end of the period 871 – 871 875 (4) 871 208 – 607 815 189 – 19 208 Wharf Dredging The group has an agreement with both the S. Government and the operator of the Port River. The agreement requires Penrice to dredge the material over a 10 year period. Remediation Provision The remediation provision relates to the activities of the Osborne manufacturing plant operations and the Angaston mine operation.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 22: PROVISIONS Consolidated Non-current Employee benefits Dredging Remediation Total non-current provisions 2011 $000 563 871 815 2.249 2010 $000 533 871 208 1. Penrice has maintained a provision to dredge this material over a 10 year period.

318 (1.615 – – – – – – 91.361.753 – – 21. The gearing ratios based on continuing operations at 30 June 2011 and 2010 were as follows: 86 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report .236 – 7.236 2010 $000 80. the shares issued do have a par value and there is no limit on the authorised share capital of the Group. the Group may change the amount of dividends to be paid to shareholders. Shares are allocated under the Plan at the issue price which is the average market price during the pricing period. Year Ended 30 June 2011 Shares Balance at the start of the period Issued during year Dividend Reinvestment Plan Share Placement Share Purchase Plan Share Purchase Plan underwritten Rights Issue Costs of October 2009 equity raising net of deferred tax Balance at the end of the period 91.453. the Board paid dividends of $Nil (2010: $Nil). the Group’s objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders. paid on 24 October 2008 and as a result 421.480 – – 30.361. As the market is constantly changing.074 In accordance with changes to the Corporations law effective 1 July 1998.074 Capital management When managing capital. The Board monitors capital through various measures.361. issue new shares or sell assets to reduce debt. No dividends have been paid subsequent to this date and therefore the dividend reinvestment plan has not been utilised since that time. During the 2011 financial year.963. rounded to the nearest cent.236 80. The Group continually reviews the capital structure to take advantage of favourable costs of capital or high returns on assets. The Penrice Soda Holdings Dividend Reinvestment Plan commenced on 16 April 2008 and remains in operation.499 shares were issued upon reinvestment of dividends.841 – 91.074 80.523 $000 80.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 23: CONTRIBUTED EQUITY Consolidated 2011 $000 Contributed equity Ordinary shares fully paid 80. The Plan was utilised for the 2008 final dividend.523 – – – – – 162 80.202 Year ended 30 June 2010 $000 53.612) 80.074 Shares 52. less any discount (if any) determined by the Board.523 – 6. including the gearing ratio [net debt/(net debt+total equity)]. The Group also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity.944.

417 53% 2010 $000 72.083 42% NOTE 24: RETAINED EARNINGS AND RESERVES Consolidated 2011 $000 (a) MOVEMENTS IN RETAINED EARNINGS: Retained earnings at the beginning of the period Net (loss)/profit for the period Less dividend paid Actuarial (losses) on defined benefit fund recognised directly through retained earnings Retained earnings at the end of the period (b) MOVEMENTS IN SHARE BASED PAYMENTS RESERVE: Balance at start of period Share-based payment expense for the period Purchase of shares on market Balance at end of period (c) MOVEMENTS IN CASH FLOW HEDGE RESERVE: Balance at start of period Derivatives movement for the period Balance at end of period 13.523 437 – (1.994 (26.444) 67.994 34 155 – 189 43 63 (72) 34 (1.067 93.206) – (827) (13.277 – (172) 13.163) 75. Refer to Note 28 for further details.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 23: CONTRIBUTED EQUITY (CONTINUED) Consolidated 2011 $000 Total borrowings (1) Less cash and cash equivalents Net debt Total equity Total net debt + equity Gearing ratio [Net debt/(Net debt+total equity)] (1) Borrowings include short and long term borrowings and include finance lease liabilities.594 67. The gearing ratio as at 30 June 2011 of 53% is outside the Board’s desired range.086) 1. 80.889 6. including key management personnel.823 143. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 87 . The reasons for the increased gearing have been documented elsewhere in this report and the Board has announced a strategic review of the Group’s operations will be conducted in FY2012 to improve operating performance and reduce debt and gearing to more normal credit metrics.757 (5.039) 2010 $000 7.016 160. as part of their remuneration.086) (1.086) The share based payments reserve is used to record the value of share based payments provided to employees.511 (5.

The Fund is a resident regulated superannuation fund that complies with superannuation laws.791 123. 88 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . Penrice sources its steam pursuant to a fixed price take-or-pay contract that expires in 2018 and salt under a fixed price contract that runs to 2019 with Penrice having options to extend the salt contract to 2033. coke and water.967 397.196 59. Members of the Fund contribute. salt. Mercer Human Resource Consulting Pty Ltd carried out an actuarial investigation of the Fund as at 30 June 2009.954 222.353 91.188 NOTE 27: EMPLOYEE ENTITLEMENTS Consolidated 2011 The number of full-time equivalents employed as at 30 June are: 259 2010 257 Employees are eligible to receive benefits from the Penrice Retirement Trust (“the Fund”).390 349. as well as limestone sand from the Quarry. The June 2011 actuarial estimates below were performed for the purposes of AASB119 – Employee Benefits disclosures and were provided by Mercer Human Resource Consulting Pty Ltd. Penrice contributes to the Fund in accordance with the recommendation of the actuary. at a rate that is from 1% to 7% of salary.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 25: ECONOMIC DEPENDENCY Subsidiary companies have long term customer supply agreements with three major corporates for the supply of soda ash and colour blending product for use in glass production. in general. death. NOTE 26: REMUNERATION OF AUDITORS Consolidated 2011 $000 Amounts received or due and receivable by Ernst & Young for: – Audit or review of the financial statements – Other services: – Taxation – Other Total remuneration of auditors 2010 $000 214. in accordance with the Fund’s Trust Deed and Rules. The Fund provides lump sum benefits. The major inputs for the production of soda ash are steam. limestone. disablement or leaving service.445 35. calculated either on a defined benefit basis (qualifying employees commenced prior to 1 December 1997) or on an accumulation basis. Defined benefits reflect a member’s period of Fund membership and final average salary. A benefit is payable on retirement.

225) 193 2010 $000 629 815 (1.126 18.203 17. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 89 .572 629 815 462 748 (1. The following tables summarise the components of net benefit expense recognised in the Income Statement and the Fund status recognised in the Statement of Financial Position. Interest cost is recognised within borrowing costs in the Income Statement. Consolidated PENRICE RETIREMENT TRUST (a) NET BENEFIT EXPENSE Service cost Interest cost Expected return on assets Superannuation expense (b) NET DEFINED BENEFIT ASSET/(LIABILITY) INCLUDED IN THE STATEMENT OF FINANCIAL POSITION Fair value of plan assets Present value of defined benefit obligation Total net defined benefit liability recognised on the Statement of Financial Position (Note 17) (c) CHANGES IN THE PRESENT VALUE OF THE DEFINED BENEFIT OBLIGATION Opening defined benefit obligation Current service cost Interest cost Contributions by plan participants Actuarial gains Benefits paid Taxes.151 597 821 429 992 (2.203 692 18.800) (275) – 18. The service cost and expected return on plan assets components of superannuation expense are recognised in the other expenses line within the Income Statement.151 The defined benefit obligation consists entirely of amounts from plans that are wholly or partly funded.511 18.151 25 18.731) (207) 151 18. The method used at the last review to determine the employer contribution recommendations was the “projected accrual benefit” funding method.111) 333 17. premiums and expenses paid Transfers in closing defined benefit obligation Closing defined benefit obligation 2011 $000 597 821 (1.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 27: EMPLOYEE ENTITLEMENTS (CONTINUED) Employer contributions to the Group’s defined benefit plan are based on recommendations by the fund’s actuary.

4.181) (2.467) 2011 $000 17.731) (207) 151 17.648 (469) 3.00% pa 2.800) (275) – 18. premiums and expenses paid Transfers in Closing fair value of plan assets (e) THE PERCENTAGE INVESTED IN EACH CLASS OF ASSET Australian equity International equity Fixed income Property Cash Alternatives /Other (f) AMOUNTS RECOGNISED IN STATEMENT OF COMPREHENSIVE INCOME Actuarial (losses) recognised in the year in the Statement of comprehensive income Cumulative actuarial (losses) recognised in the Statement of Comprehensive income 18.203 17.760) 19.111 503 1.126 1.60%pa 7.511 % 27 29 13 10 10 11 2011 $000 (1.807) 22.126 25 (503) 653 2010 $000 % 4.058 514 3.Plan liabilities 18.00%pa 3.058 1.244 (1.80% pa 7.419 (h) PRINCIPAL ACTUARIAL ASSUMPTIONS Discount rate Expected rate of return on plan assets Expected salary increase rate 90 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report .Notes to the Financial Statements for the year ended 30 June 2011 NOTE 27: EMPLOYEE ENTITLEMENTS (CONTINUED) Consolidated 2011 2010 $000 $000 (d) CHANGES IN THE FAIR VALUE OF THE PLAN ASSETS Opening fair value of plan assets Expected return on plan assets Actuarial gains/(losses) Employer contributions Contributions by plan participants Benefits paid Taxes. 4.0% pa thereafter 17.968 24.511 692 189 730 2011 $000 % 4.225 (189) 707 429 (2.0%pa in 2011/12.268) 2.843 (2.Plan assets Experience adjustments (gain)/loss .286) 2010 $000 2009 $000 2008 $000 2007 $000 (g) HISTORICAL INFORMATION FOR THE CURRENT AND PREVIOUS PERIODS Present value of defined benefit obligation Fair value of plan assets Deficit/(surplus) in plan Experience adjustments (gain)/loss .151 18.276) (2.179 19.572 17.067 462 (1.5% pa in 2010/11 and 2011/12.469 (2.126 % 29 32 12 10 7 10 2010 $000 (245) (1.0% pa thereafter 18.

the Group.036 Consolidated 2010 $000 1. (a) RECOGNISED SHARE-BASED PAYMENT EXPENSES The expense recognised for employee services received during the year is shown in the table below: Consolidated 2011 $000 Expense arising from equity-settled share-based payment transactions Total expense arising from share-based payment transactions 155 155 2010 $000 63 63 (b) TYPES OF SHARE BASED PAYMENT PLANS Performance Rights Plan (PRP) The performance rights plan is designed to align participant’s interests with those of shareholders by rewarding stakeholders for increasing the value of the Group’s shares. The returns used for each asset class are net of investment tax and investment fees and asset based fees. (j) ACTUAL RETURN ON PLAN ASSETS 2011 $000 1.614 (k) EXPECTED RATE OF RETURN ON PLAN ASSETS The expected return on assets assumption is determined by weighting the expected long term return for each asset class by the target allocation of assets to each asset class and allowing for the correlations of the investment returns between asset classes. or • any property occupied by. (l) EXPECTED CONTRIBUTIONS The Group expects to contribute $564k to the defined benefit superannuation fund in 2011/12. Penrice’s PRP is a long term incentive scheme with a performance period of three years made up of two equal tranches. One tranche of the PRP is subject to a relative Total Shareholder Return (TSR) hurdle. or other assets used by. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 91 . where Penrice’s TSR performance is ranked relative to companies in a comparator group consisting of the smallest 50 companies other than Penrice in the ASX Small Industrials Index.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 27: EMPLOYEE ENTITLEMENTS (CONTINUED) (i) FAIR VALUE OF PLAN ASSETS The fair value of Plan assets includes no amounts relating to: • any of the Groups own financial instruments. NOTE 28: SHARE-BASED PAYMENT PLANS The share-based payment plans are described below. Share based payments were expensed during FY2011 for the FY2010 and FY2011 plans. There have been no cancellations or modifications to the existing plan during 2011 and 2010. The hurdle is tested initially at the end of the 3 year Performance Period and if required is then subject to retesting at the end of the fourth year following the grant.

Notes to the Financial Statements for the year ended 30 June 2011 NOTE 28: SHARE-BASED PAYMENT PLANS (CONTINUED) The second tranche of the PRP is subject to an absolute EPS growth hurdle. The performance criteria for the EPS component of the PRP plan is as follows: Absolute EPS Growth Vesting Scale Absolute EPS Growth* 3% pa >3% & <6% pa 6% pa >6% & <9%pa ≥9% pa % of Rights in Grant to Vest 0% Pro rata 50% Pro rata 100% * The absolute EPS growth hurdle is the average EPS growth for the 3 year performance period of the respective tranche. the actual number of Share Based Payments that ultimately vest is expensed using the grant date fair value. it is deemed to be an internal (or non market based) performance hurdle and therefore in accordance with AASB2 Share-based Payment. allowance cannot be made for the impact of this hurdle in determining the award’s fair value. which makes allowance for the performance hurdle. who provides both the Group’s TSR and that of the pre-selected peer group. The amount taken up in FY2011 for this plan under AASB2 Share-based Payment is $154. however the total expense must be trued up when the actual number of SBP’s vesting is known. As the performance hurdle of the EPS growth tranche is not directly related to the share price of Penrice. measuring the average EPS growth over the 3 year performance period. which makes no allowance for the performance hurdle.887 (FY2010 $40. The vesting scale for the TSR tranche is as follows: Relative TSR <P40 ≥P40 to <P50 P50 >P50 & <P80 ≥P80 % of Rights in Grant to Vest 0% Pro rata 50% Pro rata 100% As the performance hurdle of the TSR tranche is related to the share price of Penrice. This tranche is also required to pass a threshold of positive TSR at the testing date before vesting conditions can apply. Therefore for this tranche the actual amount of Share Based Payments are expensed using the grant date fair value. Summary of Performance Criteria for the three Year Performance period In assessing whether the relative TSR hurdle has been met. 92 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report .620) which has been accounted for as a personnel cost in the income statement. for the 3 year performance period commencing 1 July 2011 have been granted to 8 eligible employees. Under AASB2 Share-based Payment estimates can be made for the number of SBP’s expected to vest. it is deemed to be a market based performance hurdle and therefore in accordance with AASB2 Share-based Payment. The impact of the EPS performance hurdle is instead taken into account during the expensing process. Penrice performance rights. allowance has been made for the impact of this hurdle in determining the award’s fair value. In this case. the Group receives independent data from an external advisor.

049.791.24c (FY2010 $0. and then can be used to “mark to market” the expense at subsequent reporting periods as likelihood of vesting (for nonmarket based hurdles) and employee turnover is considered.23c (FY2010 $0. (f) PERFORMANCE RIGHTS PRICING MODEL The Penrice performance rights plan has been valued independently using Black Scholes methodology to produce MonteCarlo simulations.855) – 2. (d) WEIGHTED AVERAGE REMAINING CONTRACTUAL LIFE The weighted average remaining contractual life for the performance rights outstanding as at 30 June 2011 is: PRP FY2010 FY2011 Total Performance Rights 878.068 – – – 1.923) performance rights over ordinary shares with an exercise price of $nil each.855 2010 WAEP – – – – – – – The outstanding balance as at 30 June 2011 is represented by 2.791.791.913. risk free rate and security price volatility.049.67c) for EPS growth tranche. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 93 .049.073 2. The Monte-Carlo simulation model allows for the incorporation of the market based performance hurdles that must be met before the SBP vests to the holder.073 – (171. The Monte-Carlo simulation is used to determine the fair value of the TSR element. It calculates the expense to Penrice at the grant date.855 – 878.923 171.913. exercisable upon meeting the performance hurdles noted above.62c) for TSR tranche and $0. and movements in performance rights granted during the year: 2011 No.068 1. In accordance with the rules of the PRP. exercise price (if applicable). The Black Scholes model is a valuation model.141 – 2011 WAEP – – – – – – 2010 No.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 28: SHARE-BASED PAYMENT PLANS (CONTINUED) (c) SUMMARIES OF RIGHTS GRANTED UNDER PRP ARRANGEMENTS The following table illustrates the number (No.141 (2010: 1. PRP Outstanding at the beginning of the year Cancelled during the year Granted during the year Forfeited/lapsed during the year Exercised during the year Expired during the year Outstanding at the end of the year Exercisable at the end of the year 1.923 – 1. the model simulates the Group’s TSR and compares it against the peer group over the three year performance period of each grant.) and weighted average exercise prices (WAEP) of. time to expiration.855 performance rights vested on 1 July 2010. 171.141 Weighted Ave Contractual life Years 1 2 – (e) WEIGHTED AVERAGE FAIR VALUE The weighted average fair value of rights granted during FY2011 was $0. The FY2008 PRP 171. that takes into account current security price at grant date.

973 The Group utilises a series of power by the hour (PBH) rental agreements for large capacity trucks and loaders used at the Angaston mine.800 to 18. 5% subsequent yrs 51% 4. The Group has entered into financial bank guarantees with third parties arising in the normal course of business totalling $507.000). The parent entity and all controlled entities in the Group are parties to various guarantees and indemnities pursuant to the Group’s banking facilities.211 318 512 830 839 372 1.859 18.600 (2010: $750. 1.36% – 0.088 18.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 28: SHARE-BASED PAYMENT PLANS (CONTINUED) Option pricing model: Performance Rights Pricing Dividend yield (pa) Expected volatility (pa) Risk-free interest rate (pa) Rights exercise price ($) Weighted average share price at measurement date ($) Expected life of right (years) Model used Fair value of rights granted ($) Performance Rights 2011 0% year 1.380 (169) 1. 94 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . or a specified number of operating hours has been reached.760 13.232. The remaining contracted time periods range from 3 months to 4 years.885 13. Each agreement runs until either a maximum time period.83 Monte Carlo Relative TSR $0.335 2.619 5. 5% subsequent yrs 46% 4.000 operating hours. The agreements contain minimum annual hourly rental charges.241 Performance Rights 2010 0% year 1. EPS $0.885 2. which total the amounts shown above as committed operating lease expenditure.615.670 NOTE 29: COMMITMENTS AND CONTINGENT LIABILITIES Consolidated 2011 $000 (a) CAPITAL EXPENDITURE CONTRACTED FOR IS PAYABLE AS FOLLOWS: Not later than one year (b) FINANCE LEASE EXPENDITURE CONTRACTED FOR IS PAYABLE AS FOLLOWS: Not later than one year Later than one year but not later than five years Less: Future finance charges Net finance lease liability (c) OTHER COMMITTED EXPENDITURE Reconciled to: Current liability (Note 19) Non-current liability (Note 21) Total other committed expenditure (d) OPERATING LEASE EXPENDITURE CONTRACTED FOR IS PAYABLE AS FOLLOWS: Not later than one year Later than one year but not later than five years Total operating lease expenditure 317 2010 $000 – 436 529 965 (135) 830 657 723 1.211 4.42 Monte Carlo Relative TSR $0. EPS $0. The minimum commitments are comparable to the amounts expended in the current year under the agreement.54% – 0. For Employee Contract Commitments refer to Note 31. or.

Key management personnel (KMP) Details relating to KMP. which owns Penrice Pty Limited directly and the other companies indirectly.037 $32. including remuneration paid. are included in Note 31.187.470. Dividends Penrice Soda Holdings Limited did not receive a dividend during the period (2010: $Nil) from Penrice Pty Limited.413 100 $23. Interest is not charged on the amount outstanding.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 30: RELATED PARTY DISCLOSURES The following were controlled entities at 30 June 2011.882.882. The financial years of all controlled entities are the same as that of the parent entity.470. and as such have been classified as current receivables. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 95 .321 $2 Book value of Investment % of Shares 2010 held 2010 $1 100 $58. Book value of investment 2011 $1 $58. Employees Contributions to superannuation funds on behalf of employees are disclosed in Note 4. WHOLLY-OWNED GROUP TRANSACTIONS Loans Loans made by Penrice Soda Holdings Limited to its subsidiaries have no set repayment date.187. a wholly owned subsidiary.037 100 $32.321 100 $2 100 Name of Controlled Entity Penrice Pty Limited PSP SPV Pty Limited Penrice Finance Pty Limited Penrice Holdings Pty Ltd Penrice Soda Products Pty Ltd Country of Incorporation Australia Australia Australia Australia Australia Class of Shares Ordinary Ordinary Ordinary Ordinary Ordinary % of Shares held in 2011 100 100 100 100 100 ULTIMATE PARENT Penrice Soda Holdings Limited is the ultimate Australian parent Company.413 $23.

Chairman Guy Roberts Andrew Fletcher Barbara Gibson (Retired 31 August 2011) John Hirst David Groves (Appointed 20 December 2010) Specified Executives Frank Lupoi Declan Mackle Darrin Wright Brett Smith Andrew Cannon Roy Doveton Marnie Brokenshire Chairman (Non Executive) Director and Chief Executive Officer Director (Non Executive) Director (Non Executive) Director (Non Executive) Director (Non Executive) Chief Financial Officer and Group Secretary General Manager – Chemical Operations General Manager – Quarry & Mineral General Manager – Chemicals Business General Manager – Supply Chain General Manager – Major Projects General Manager – Human Resources (b) COMPENSATION OF KEY MANAGEMENT PERSONNEL Compensation by category 2011 $000 Short term benefits Post employment benefits Long term benefits Share based payments Total Compensation No compensation is borne by the parent entity.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 31: KEY MANAGEMENT PERSONNEL (a) DETAILS OF DIRECTORS AND SPECIFIED EXECUTIVES WHO ARE DEEMED TO BE THE KEY MANAGEMENT PERSONNEL OF THE COMPANY: Specified Directors David Trebeck.247 275 29 151 2. 2.796 96 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report .702 Consolidated 2010 $000 2.381 340 16 59 2.

499 150.939 Vested Perf Rights – Net Change Other – 30 Jun 10 Perf Rights 485.512 138.165 834.790 46.714 188.416 56.819 61.651 190.950 # Performance rights for FY2008.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 31: KEY MANAGEMENT PERSONNEL (CONTINUED) (c) COMPENSATION PERFORMANCE RIGHTS Compensation performance rights Compensation performance rights – granted and issued during the year ended 30 June 2011 1 Jul 10 Perf Rights Directors G Roberts Executives F Lupoi D Mackle B Smith A Cannon R Doveton D Wright M Brokenshire 485.019 218.819 1.011 69.752 91.691 12.665 160. None of the performance rights are exercisable until 1 July 2012.362) – – – – – – – 596.243 11.828 150.877 – – – – – – – – – – – – – – – – 190.371 101.691) (12.830 995.243) (11.423) Net Change Other – 30 Jun 11 Perf Rights 1.011 69. Compensation performance rights – granted and issued during the year ended 30 June 2010 1 Jul 09 Perf Rights Directors G Roberts Executives F Lupoi D Mackle M Carter* A Cannon R Doveton D Wright M Brokenshire 97.828 103.642 190.671 – 46.008 149.703 Vested Perf Rights # (97.081 91.984 2.362 Granted as remuneration Perf Rights 824.128 49.528 * Michael Carter retired 1 July 2010 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 97 .340) (12.239 406.340 12.830 981.541 143.665) (146.173 45. vested 1 July 2010.073 – – – (12.289 59.671 14.289 12.747.362 – – 14.819 61.913.416 56.722 92.011 69.212.130 58.130 58.671 59.423 Granted as remuneration Perf Rights 387.

Carter (Retired 1 July 2010) * Includes direct.989 118.028^ Acquired / (sold) during the year 300.067 74.550 140.028 7.547 8.349 37.674 2.000 – 100.093 17.326 7.391 – 38. Brokenshire * Includes direct.349 87.423 – – 11. Heard (Retired October 2009) Executives* G. Roberts F.000 50.566 25.665 105. Wright B.850 – 700 – 26. Lupoi D.326 45. Cannon R.407 74. Gibson D. Hirst B.H.640 26. Wright B. Brokenshire M. Gibson J.954 133. Hirst B. indirect and related party ^ Balance at date of appointment 20 December 2010 30 June 2010 Balance at 1 July 09 Directors* D.900 – 700 – 10.950 – – – 15. indirect and related party 142.095. Trebeck A. Kuhndt (KMP until April 2010) M. Lupoi D. Smith A.608 62. Mackle D.349 37.850 – 700 – 26. Smith A. Doveton A.326 (50. Fletcher J.060 415.719 12. Cannon R.V.977 166.340 (493) 12.608 62.719 12.072 41. Fletcher J. Trebeck A.691 – 12.536 20.687 Balance at 30 June 10 or at cessation of employment 415.067 74.063 26.274 131.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 31: KEY MANAGEMENT PERSONNEL (CONTINUED) (d) SHAREHOLDINGS OF KEY MANAGEMENT PERSONNEL 30 June 2011 Balance at 1 July 10 Directors* D.000 Balance at 30 June 11 or at cessation of employment 715.790 12.931 1.000 98 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report .989 118.663 72.608 62.760) – 276 8.640 26. Groves (appointed 20 December 2010) Executives* G.000 50.790 100. Roberts F.195. Mackle D.931 300.931 1.850 – 12.297 25.783 12.373 Acquired / (sold) during the year 273.550 97.550 100.215 5.989 168.711 125. Doveton M.

which then reduces to $8 million until 30 September 2012 being the termination date for this new facility.162 437 189 (3.086) 34 (7.Notes to the Financial Statements for the year ended 30 June 2011 NOTE 32: PARENT ENTITY INFORMATION 2011 $000 Current assets Total assets Current liabilities Total liabilities Issued capital Cashflow hedge reserve Share based payments reserve Retained earnings Total Shareholders’ equity Profit or (loss) of the Parent entity Total other comprehensive income/(loss) of the parent entity 77.0 million facility beyond the 12 month period from balance date. even though no repayments are due within the next 12 months. NOTE 33: EVENTS OCCURRING AFTER BALANCE DATE BANKING AGREEMENT As at 30 June 2011. being the maturity date of the Banking Agreement of 31 March 2013.555 2010 $000 72.898) For details of guarantees entered into by the parent entity in relation to its subsidiaries refer to Note 29.8 million amortisation payment due on 30 June 2011.086) (2.0 million facility to 30 November 2012 or a later date to be agreed in writing.8 million remains a current liability in the financial statements.647 80.113 77. PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 99 .113 – – 80. The amended agreement provides an additional $10 million funding facility to be available until 31 March 2012. $8.881) 71. The remaining facilities have no changes to their maturity date.113 4.000 (1. As a result.067 (1. Whilst this amendment does cancel the $1. Penrice was in negotiation with its banks and reached agreement in principle to amend its finance facilities as announced to the ASX on Friday 12 August 2011.647 1. it is considered a “non-adjusting subsequent event” under accounting standards and does not change the classification of the liability at 30 June 2011.713 72.713 1. This agreement cancelled a $1.523 5. Previously the termination date for this facility was 31 August 2011. and amended the termination date of its $7.675) 77.8 million amortisation payment and defers payment of the $7.812) (1.032 1.

On behalf of the Board David B. (b) (c) (d) the Financial Statements and notes also comply with International Reporting Standards as disclosed in Note 2. this declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the Corporations Act 2001 for the financial year ending 30 June 2011. 27 September 2011 100 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report .DIRECTORS’ DECLARATION In accordance with a resolution of the directors of Penrice Soda Holdings Limited. including: (i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and of its performance for the year ended on that date. we state that: In the opinion of the directors: (a) the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001. Trebeck Chairman Guy R. and (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001. there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as and when they become due and payable. Roberts Managing Director & Chief Executive Officer Adelaide.

INDEPENDENT AUDITOR’S REPORT PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 101 .

077 (8.075.000 800.500 419.061 (6.65% of voting power).811 4.000 488.378 2.51% 0.946.430 1.001 to 100.78% 0.09% 1.001 to 10.071 5.526 1.258. gave notification of it ceasing to be a substantial shareholder.66% 0.55% 0.000 654 10.307 820.500.000 1. as a substantial shareholder. ON MARKET BUY BACK There is no current on market buy back.361.46% 0.598 500.911.55% 0.000 1. DISTRIBUTION OF EQUITY SECURITY HOLDERS Ordinary share capital • 91.218 100. gave notification of it ceasing to be a substantial shareholder.000 442 1.482 Percentage of capital held 5.45% 31% . as a substantial shareholder. By way of notice dated 9 June 2011 Hunter Hall Investment Management Ltd.920 428. in each class is: 1 to 1.001 to 5.001 and Over 124 Total 3.29% of voting power) to 6.74% 2.946.53% 0.500 1.578.92% 1.509 The number of shareholders holding less than a marketable parcel of ordinary shares is 1. By way of notice dated 9 November 2010 Invesco Australia Limited. by size of holding.523 fully paid ordinary shares are held by 3.018.261 411.47% 5.000 600.140.ASX ADDITIONAL INFORMATION Additional information required by the Australian Stock Exchange Limited Listing Rules not disclosed elsewhere in this report is set out below. The information is current at 5 September 2011.66% 0. as a substantial shareholder.509 shareholders • All issued ordinary shares carry one vote per share and carry the rights to dividends The number of shareholders. SUBSTANTIAL SHAREHOLDERS By way of notice dated 3 August 2011 London City Equities Limited and its related parties and bodies corporate together.47% 0.000 715.63% 1.13% 2.000 1.487.752.11% 0.000 500.90% 0. TWENTY LARGEST HOLDERS OF QUOTED SECURITIES AS AT 5 SEPTEMBER 2011 Ordinary Shareholders London City Equities Limited HSBC Custody Nominees (Australia) Limited Mr Victor John Plummer Phillip Securities Pte Ltd Brian Gregory Wright & Wendy Joy Wright ABN Amro Clearing Sydney Nominees Pty Ltd Ms Patricia Gladys Wright D B Management Pty Limited Mr Dirk Keizer & Mrs Lena Keizer Mr Ian David Forrest & Mrs James Gareth Forrest Mrs Diana Jeannette Trebeck & Mr David Bruce Trebeck Winpar Holdings Limited Mr Ian David Forrest Superdeck Pty Ltd Mr David John Nancarrow Nandi Holdings (Cootamundra) Pty Ltd DB Management Pty Ltd Big Red LLC Brazil Farming Pty Ltd Mr Alistair Peter Wright Mr Koo Sing Kuang & Mrs Lai Wah Kuang Mr Harry Karst Total 102 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report Number of ordinary shares held 4.000 28.989 600.000 500.732 452.530 461. notified a change of substantial shareholding from 7.50% 0.55% 0.88% 0.41% 2.000 1.997.

6) 11.0 8.7) 6.0 9.9 137.5 67.8 18.5 53.5 18.3 61.0 38.3 135.2 (12.2 2.2) 23.1 12.0 (7.4 162.7 (4.9 3.8 59% 3.8 3.2 5.6 8.0) 9.0 1.4 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report 103 .8% 14.7 62.9 10.8 (5.6 16.0 3.4) 67.7 77.0 2.7 94.5) 14. significant once off items ~ Restated EPS for FY2009 due to rights issues during FY2010 June 2011 June 2010 June 2009 June 2008 June 2007 152.2 48.9 14.2 44.1 19.8 3.2 16.1 10.4 93.7) Nil Nil Nil 6.3 (8.4 52% 4.5 117.6) 6.2 74.3) 9. tax.8 Nil Nil Nil 13.1 3.9 10.4 3.6 0.7 56.2 117.1 134.9 Nil Nil Nil 15.0% 18.6 20.7 32.0 0.1 3.7 21.2 0.3 47.1 59% 3.3 (5.7 1.5 14.2) 6.0 0.6 7.0) 5.0 45.3 1.5 4.1 (8.4 99.3 10.8 80.9 61.5 165.3 19.4 8.0 63.4 1.0 1.7 – (1.9 8.4) 19.9) 8.7 (9.6 69.0 (2.7 – 195.6 (8.8) (26.1 18.7 84.5% 14.5 1.4) – (24.6) 1.3 (5.0 5.8 70.1 15.3 129. plant and equipment Intangibles Deferred tax assets Other non-current assets Total assets Current borrowings Trade and other payables Tax payable Other current liabilities Non-current borrowings Deferred tax liabilities Other non current liabilities Total liabilities Net assets Share capital Retained profits Total shareholders funds Share information Return on shareholders’ funds (%) Normalised earnings per share (cents)* Statutory earnings per share (cents)~ Total dividend (cents) Interim dividend (cents) Final dividend (cents) Other information Gearing [net debt / (net debt+equity)] Interest cover [EBITDA* / net interest} times * excludes unrealised hedge losses/gains.5) (28.9 93.3 3.6 29.0 92.4 22.0 (1.7 44.7 29.0 5.9 2.0 – 6.8 – 5.3 1.8 2.9 20.8 42% 2.5 5.9 6.7 – – 6.0 5.8 5.0 6.6 0.9 160.7 45.7 – 7.3 84.9) – 7.4 (1.7 24.FINANCIAL HISTORY Year Ended ($ Million unless otherwise stated) Profit and Loss Sales revenue Normalised earnings before interest.7 0.3 5.2 (1.6 7.0 3.9 1. depreciation and amortisation * Depreciation Normalised earnings before interest and tax * Net interest expense Normalised net profit before tax* Tax benefit/(expense) Normalised net profit after tax* After tax unrealised gain/(loss) on hedges After tax significant once off items Net profit after tax Group Balance Sheet Cash Trade and other receivables Inventories Other current assets Property.3 27.4) 13.8) 14.6 24.4 2.3 (1.0 4.0 80.8% 6.4 (2.8 – 210.5 – 198.5 (8.2 16.7) (2.9 2.1 127.8) 6.0 53% 1.1 12.6 0.7 51.2 19.8 48.7 5.

au STOCK EXCHANGE The group is listed on the Australian Stock Exchange. The home exchange is Adelaide. Hirst GROUP SECRETARY F Lupoi PRINCIPAL REGISTERED OFFICE Solvay Road Osborne. W.B. 333 Collins Street Melbourne.CORPORATE INFORMATION PENRICE SODA HOLDINGS LIMITED ABN 83 109 193 419 DIRECTORS D. Fletcher D. Roberts (Managing Director & Chief Executive Officer) A.R. Groves J.com. is a publicly listed group limited by shares. Trebeck (Chairman) G. South Australia 5017 Telephone: (08) 8402 7000 Facsimile: (08) 8402 7250 BANKERS National Australia Bank Westpac Banking Corporation SHARE REGISTRY Link Market Services Limited Level 1.A. incorporated and domiciled in Australia. 104 PENRICE SODA HOLDINGS LIMITED 2011 Annual Report . INTERNET ADDRESS www. OTHER INFORMATION Penrice Soda Holdings Limited.V.penrice.F. Victoria 3000 EXTERNAL AUDITORS Ernst & Young INTERNAL AUDITORS KPMG SOLICITORS Kelly & Co.