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Keaton Energy Holdings Limited - Reviewed Condensed Interim Consolidated Results For The Six Months Ended 30 September 2013

Release Date: 18/11/2013 08:00:00      Code(s): KEH     
the six months ended 30 September 2013

Keaton Energy Holdings Limited 
(incorporated in the Republic of South Africa)
Registration number 2006/011090/06  
JSE share code: KEH ISIN ZAE000117420 
(Keaton Energy or the Company or the Group)

Reviewed condensed interim consolidated results for the six months ended 30 September 2013

 Salient Features 
 Continued good safety performance 
 R205 million cash generated from operations
 R117 million gross profit compared to a gross loss of R38 million in the comparable period
 HEPS up 192% from (21.1c) to 19.4c 
 R39 million debt repaid
 70% increase in group revenue to R710 million 
 Net profit after tax of R42 million compared to a net loss after tax of R64 million for the comparable period
 55% increase in Eskom sales to 1.1million tonnes 
 Commenced development of Pit 4 at Vanggatfontein
 Acquisition of Xceed Resources Limited 

Dear Shareholder

The six months under review saw continued good safety performances at both operations and substantial increases in 
group production, revenue and profit.

Safety
Our unrelenting focus on safety resulted in Vanggatfontein ending the period with a Lost Time Injury Frequency Rate 
(LTIFR) of 0.10 and Vaalkrantz with a significantly improved LTIFR of 0.17. 

Operational review
Vanggatfontein Colliery delivered 1 142 702t of washed 2- and 4-seam thermal coal to Eskom in the first half of the 
2014 financial year compared with 738 498t in the comparable half year, an increase of 55%.  5-seam metallurgical 
coal sales into the domestic market increased by 76% from 31 272t in the comparable half year to 55 154t.

In addition, Vanggatfontein washed 145 785t of third party coal during the first half of the 2014 financial year versus 
nil in the comparable half year.  Discard and slurry sales from Vanggatfontein totalled 555 963t for the period 
with 174 251t in the comparable half year, an increase of 220%, reducing both our environmental footprint and 
rehabilitation obligation.

Furthermore, the establishment of Pit 4 commenced from operational cash flows which will allow for even greater 
flexibility and optimisation of future mining activities. Vanggatfontein is a long-life asset which is now operating 
at steady state.

Production at Vaalkrantz Colliery continued to be affected by challenging geological conditions and labour disruptions. 
Vaalkrantz sold 154 145t of anthracite for the first half of this year versus 151 248t for the comparable half year, 
an increase of 2%, an excellent achievement given the difficult operational conditions.

Group operating and financial performance
Group revenue increased by 70% to R710 million in the first half of the 2014 financial year compared to R417 million in 
the corresponding of 2013. The majority of this increase was as a result of significantly improved performance at 
Vanggatfontein for both thermal coal deliveries to Eskom, where revenue increased by 98%, as well as metallurgical coal 
sales to the local market where revenue increased by 84%. Despite increased sales volumes at Vaalkrantz in the first half 
of the 2014 financial year compared to the corresponding period in 2013, revenue decreased by 6% as a result of reduced 
sales prices both locally and internationally.

The increase in revenue translated into a gross profit of R117 million or 17% of revenue for the period under review, 
compared to a gross loss of R38 million or (9%) of revenue for the corresponding period in 2013.  Cost of sales 
increased by R137 million or 30% on the back of increased production volumes mainly at Vanggatfontein.

Other income, more than doubled to R9 million mainly as a result of increased discard sales at Vanggatfontein.

The income taxation expense of R21 million for the first half of 2014 is mainly attributable to the utilisation of 
estimated tax losses and unredeemed capital expenditure relating to Vanggatfontein.

Net profit after tax for the period increased by 166% to R42 million compared to a net loss after tax of R64 million 
in the corresponding period. Headline earnings per share for the period increased to 19.4 cents or by 192%, compared 
to a loss per share of 21.1 cents for the corresponding period.

Capital investment for the group totalled R143 million for the period compared to R71 million for the corresponding 
period. The majority of capital was spent at Vanggatfontein, mainly on on-going mine development of R135 million.

Cash and cash equivalents increased by R43 million mainly due to cash generated from operations of R205 million. This 
was however offset by capital investments of R143 million and debt repayments of R39 million. 

Acquisition of Xceed Resources
It is anticipated that the Xceed acquisition will close by the end of February 2014 with production planned to commence 
in January 2015. It is intended that Xceeds Moabsvelden project will produce a combination of both export and Eskom 
quality thermal coal. Significant synergies exist between Moabsvelden and Vanggatfontein as a result of their proximity 
to each other which will provide substantial operational and financial benefits.  The Moabsvelden project already has a 
credit approved project finance term sheet, a Mining Right and NEMA approval.

Looking ahead
Our longer-term strategy of becoming a 5Mtpa producer remains our focus. With Vanggatfontein having achieved steady 
state it now forms a solid foundation from which we can maximise cash generation and expand and diversify our product 
mix.  Prudent operational and financial management will enable us to balance the funding of our growth whilst rewarding 
shareholders.  


On behalf of the Board

David Salter 		         Mandi Glad
(Non-Executive Chairman) 	(Chief Executive Officer) 		15 November 2013


Preparation of condensed interim consolidated financial statements
The condensed interim consolidated financial statements for the six months ended 30 September 2013 have been reviewed 
in terms of the Companies Act 71, 2008. Their preparation was supervised by the Chief Financial Officer, Jacques Rossouw, 
a Chartered Accountant (SA).

The condensed interim consolidated financial statements were published on 18 November 2013.


Condensed interim consolidated statement of comprehensive income
                                                                      Six months ended                    Year ended   
                                                              30 September        30 September              31 March   
                                                                      2013                2012                  2013   
  R000                                              Notes       (Reviewed)          (Reviewed)             (Audited)  
  Revenue                                                2         709 768             417 332               918 807   
  Cost of sales                                                   (592 609)           (455 237)             (946 081)   
  Gross profit/(loss)                                    2         117 159             (37 905)              (27 274)   
  Other income                                                       9 184               4 363                10 594   
  Mining and related expenses                                      (10 615)             (9 936)              (70 492)   
  Net gain on financial instruments                                    217               1 018                 2 485    
  Administrative and other operating expenses                      (31 306)            (27 460)              (54 723)   
  Operating profit/(loss) before net finance cost                   84 639             (69 920)             (139 410)   
  Net finance cost                                                 (20 907)            (13 797)              (32 199)   
  Finance income                                                       822               1 097                 2 109   
  Finance cost                                                     (21 729)            (14 894)              (34 308)   
                                                                                                                       
  Net profit/(loss) before taxation                                 63 732             (83 717)             (171 609)   
  Income taxation (expense)/credit                       3         (21 402)             19 477                39 335   
  Net profit/(loss) after taxation                                  42 330              (64 240)             (132 274)  
  Other comprehensive income for the period                              -                   -                     -   
  Total comprehensive income for the period                         42 330             (64 240)             (132 274)   
  Total comprehensive income attributable to:                                                                          
  Owners of the company                                             37 236             (40 015)              (84 491)   
  Non-controlling interest                                           5 094             (24 225)              (47 783)   
  Basic earnings per share (cents)                       4            19.4               (21.0)                (44.2)   
  Diluted earnings per share (cents)                     4            19.4               (21.0)                (44.2)   
  The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Condensed interim consolidated statement of financial position
                                                                                At             At                      At   
                                                                      30 September       31 March            30 September   
                                                                              2013           2013                    2012   
  R000                                                      Notes       (Reviewed)      (Audited)              (Reviewed)  
  Assets                                                                                                                    
  Property, plant and equipment                                  5         764 206        776 070                 772 977   
  Intangible assets                                              6         414 289        424 131                 424 358   
  Deferred tax                                                              31 164         51 832                  72 897   
  Restricted cash                                                            7 423          7 423                   7 423   
  Restricted investments                                                    30 009         26 683                  22 845   
  Total non-current assets                                               1 247 091      1 286 139               1 300 500   
  Inventory                                                                 41 428         38 493                  64 316   
  Trade and other receivables                                              163 085         85 215                  83 451   
  Cash and cash equivalents                                                 62 870         19 614                  27 468   
  Total current assets                                                     267 383        143 322                 175 235   
  Total assets                                                           1 514 474      1 429 461               1 475 735   
  Equity                                                                                                                    
  Stated capital                                                           640 903              -                       -   
  Share capital                                                                  -            192                     192   
  Share premium                                                                  -        640 711                 640 711   
  Share-based payment reserve                                               16 828         12 497                   9 344   
  Other reserves                                                           (18 751)       (18 751)                (18 751)   
  Retained earnings                                                        111 809         74 573                 119 049   
  Total equity attributable to owners of the company                       750 789        709 222                 750 545   
  Non-controlling interest                                                 (18 091)       (23 185)                    373   
  Total equity                                                             732 698        686 037                 750 918   
  Liabilities                                                                                                               
  Borrowings                                                     7         203 689        235 390                 241 060   
  Long-term financial liabilities                                              275            304                     290   
  Mine closure and environmental rehabilitation provision        8         170 888        137 451                  99 807   
  Deferred tax                                                              88 068         87 353                 129 944   
  Total non-current liabilities                                            462 920        460 498                 471 101   
  Borrowings                                                     7          63 315         49 428                  39 077   
  Mine closure and environmental rehabilitation provision        8             549          2 859                     225   
  Trade and other payables                                       9         254 608        229 801                 213 529   
  Taxation                                                                     384            838                     885   
  Total current liabilities                                                318 856        282 926                 253 716   
  Total equity and liabilities                                           1 514 474      1 429 461               1 475 735   
  The accompanying notes are an integral part of these condensed interim consolidated financial statements.                                                                   

Condensed interim consolidated statement of changes in equity
for the six months ended 30 September 2013                                                                      
                                                                                                 Share-               
                                                                                                  based               
                                                             Stated      Share        Share     payment        Other  
  R000                                                     capital    capital      premium     reserve     reserves  
  Balance at 31 March 2012                                        -        189      632 054       6 180     (18 751)  
  Total comprehen-sive income for the period                      -          -            -           -            -  
  Transactions with owners                                                                                            
  of the company recognised directly in equity                                                                        
  Share-based payments                                            -          -            -       3 164            -  
  Ordinary shares issued for cash                                 -          3        8 657           -            -  
  Balance at 30 September 2012                                    -        192      640 711       9 344      (18 751) 
  Balance at 31 March 2013                                        -        192      640 711      12 497      (18 751) 
  Total comprehensive income for the period                       -          -            -           -            -  
  Transfer of share capital and share premium to stated     640 903       (192)    (640 711)          -            -  
  capital(1)                                                                                                          
  Transactions with owners                                                                                            
  of the company recognised directly in equity                                                                        
  Share-based payments                                            -          -            -       4 331            -  
  Balance at 30 September 2013                              640 903          -            -      16 828      (18 751) 
  
 Condensed interim consolidated statement of changes in equity (continued)
 for the six months ended 30 September 2013
                                                                    Total equity         Non-                
                                                                    attributable     control-                
                                                                       to owners         ling                
                                                           Retained       of the     interest        Total   
  R000                                                    earnings      company         (NCI)      equity   
  Balance at 31 March 2012                                  159 064      778 736       24 598      803 334   
  Total comprehen-sive income for the period                (40 015)     (40 015)     (24 225)     (64 240)   
  Transactions with owners                                                                                   
  of the company recognised directly in equity                                                               
  Share-based payments                                            -        3 164            -        3 164   
  Ordinary shares issued for cash                                 -        8 660            -        8 660   
  Balance at 30 September 2012                              119 049      750 545          373      750 918   
  Balance at 31 March 2013                                   74 573      709 222      (23 185)     686 037   
  Total comprehensive income for the period                  37 236       37 236        5 094       42 330   
  Transfer of share capital and share premium to stated           -            -            -            -   
  capital(1)                                                                                                 
  Transactions with owners                                                                                   
  of the company recognised directly in equity                                                               
  Share-based payments                                            -        4 331            -        4 331   
  Balance at 30 September 2013                              111 809      750 789      (18 091)     732 698   
   
  (1)  A special resolution in terms of regulation 31 of the Companies Act Regulations 2011 was adopted at the general 
  meeting held on 28 May 2013, whereby all ordinary shares were converted into ordinary shares with no par value. It 
  was resolved that all 250 million authorised shares and 191.7 million issued ordinary shares with a par value of 
  0.1 cents be converted into ordinary shares with no par value and that the share capital account and the share premium 
  account of the company be transferred to the stated capital account.                                                                            

Condensed interim consolidated statement of cash flows
                                                                      Six months ended                    Year ended   
                                                              30 September        30 September              31 March   
                                                                      2013                2012                  2013   
  R000                                                          (Reviewed)          (Reviewed)             (Audited)  
  Cash flows from operating activities                             205 313              62 926               191 798   
  Cash flows from investing activities                            (134 016)            (81 123)             (216 946)   
  Cash flows from financing activities                             (28 041)            (14 884)              (15 787)   
  Net increase/(decrease) in cash and cash equivalents              43 256             (33 081)              (40 935)   
  Cash and cash equivalents at the beginning of the period          19 614              60 549                60 549   
  Cash and cash equivalents at the end of the period                62 870              27 468                19 614   


Segmental report
for the six months ended 30 September 2013                                                 
                                                                                           Operating profit/(loss) before                
                                                                  Revenue                    depreciation/amortisation                                  
                                                     6 months                6 months   6 months                  6 months    6 months   
                                                        ended      Year to      ended      ended      Year to        ended       ended   
                                                      30 Sept       31 Mar    30 Sept    30 Sept       31 Mar      30 Sept     30 Sept   
  R000                                                  2013         2013    2012(6)       2013         2013      2012(6)        2013   
  Vanggatfontein Colliery(1)(5)                       584 835      645 860    283 879    268 575       98 140       36 105    (152 676)   
  Sterkfontein Project                                      -            -          -          -            -            -           -   
  Keaton Energy Holdings Limited(2)(6)                 58 031       90 490     52 629     42 659       59 981       36 119           -   
  Keaton Administrative and Technical Services 
  (Proprietary) Limited(2)                             12 796       20 241     10 295      1 021        1 917          581        (219)   
  Vaalkrantz Colliery(1)(5)                           124 933      272 948    133 453      8 910       30 826       22 875     (19 896)   
  Leeuw Braakfontein Project                                -            -          -     (6 416)      (9 999)           -           -   
  Koudelager Project                                        -            -          -          -            -            -           -   
  Other segments(3)                                         -            -          -        752       (1 368)        (122)          -   
  Total segments                                      780 595    1 029 539    480 256    315 501      179 497       95 558    (172 791)   
  Reconciliation to statements of comprehensive 
  income and financial position                                                                                                          
  Intersegment and other consolidation adjustments    (70 827)    (110 732)   (62 924)   (58 071)     (91 800)     (50 175)          -   
                                                      709 768      918 807    417 332    257 430       87 697       45 383    (172 791)   
  Net finance cost(4)                                                                                                                            
  Net profit/(loss) before taxation                                                                                                              
  Total assets and liabilities    
                                                                                                                                                 
Segmental report (continued)
for the six months ended 30 September 2013
                                                                                                     Operating profit/(loss) after      
                                                          Depreciation/amortisation(7)                 depreciation/amortisation        
                                                     6 months                    6 months         6 months                   6 months   
                                                        ended       Year to         ended            ended       Year to        ended   
                                                      30 Sept        31 Mar       30 Sept          30 Sept        31 Mar      30 Sept   
  R000                                                  2013          2013          2012             2013          2013      2012(6)   
  Vanggatfontein Colliery(1)(5)                      (152 676)     (184 641)      (93 152)         115 899       (86 501)     (57 047)   
  Sterkfontein Project                                      -             -             -                -             -            -   
  Keaton Energy Holdings Limited(2)(6)                      -             -             -           42 659        59 981       36 119   
  Keaton Administrative and Technical Services 
  (Proprietary) Limited(2)                               (219)         (208)         (117)             802         1 709          464   
  Vaalkrantz Colliery(1)(5)                           (19 896)      (42 258)      (22 034)         (10 986)      (11 432)         841   
  Leeuw Braakfontein Project                                -             -             -           (6 416)       (9 999)           -   
  Koudelager Project                                        -             -             -                -             -            -   
  Other segments(3)                                         -             -             -              752        (1 368)        (122)   
  Total segments                                     (172 791)     (227 107)     (115 303)         142 710       (47 610)     (19 745)   
  Reconciliation to statements of comprehensive 
  income and financial position                                                                                                         
  Intersegment and other consolidation adjustments          -             -             -           (58 071)     (91 800)     (50 175)   
                                                     (172 791)     (227 107)     (115 303)           84 639     (139 410)     (69 920)   
  Net finance cost(4)                                                                                                         (20 907) 
  Net profit/(loss) before taxation                                                                                            63 732 
  Total assets and liabilities    
                                                                                                                                        
Segmental report (continued)
for the six months ended 30 September 2013    
                                                                   Segment assets                           Segment liabilities                                 
                                                                                                                                            
                                                            At        Year to             At             At        Year to             At   
                                                       30 Sept         31 Mar        30 Sept        30 Sept         31 Mar        30 Sept   
  R000                                                   2013           2013           2012           2013           2013           2012   
  Vanggatfontein Colliery(1)(5)                        885 427        807 140        794 293      1 199 233      1 135 924      1 044 619   
  Sterkfontein Project                                  73 752         65 513         65 271         59 159         56 783         55 049   
  Keaton Energy Holdings Limited(2)(6)                 855 491        801 365        790 065          5 676          4 061          7 950   
  Keaton Administrative and Technical Services 
  (Proprietary) Limited(2)                              11 572          7 424         10 067         19 640         16 186         19 999   
  Vaalkrantz Colliery(1)(5)                            232 194        196 697        283 595        270 405        329 599        343 198   
  Leeuw Braakfontein Project                           316 265        317 199        291 338        157 692         67 248         53 857   
  Koudelager Project                                    25 548         23 552         23 552          6 595              -              -   
  Other segments(3)                                      7 703         19 667         18 841         27 644         23 083         16 932   
  Total segments                                     2 407 952      2 238 557      2 277 022      1 746 044      1 632 884      1 541 604   
  Reconciliation to statements of comprehensive 
  income and financial position                                                               
  Intersegment and other consolidation adjustments    (893 478)      (809 096)      (801 287)      (964 268)      (889 460)      (816 787)   
                                                     1 514 474      1 429 461      1 475 735        781 776        743 424        724 817   
  Net finance cost(4)                                  (32 199)       (13 797)                                                                                            
  Net profit/(loss) before taxation                   (171 609)       (83 717)                                                                                            
  Total assets and liabilities                       1 514 474      1 429 461      1 475 735        781 776        743 424        724 817   
  
(1) Revenue represents sales to external customers only.
(2) Revenue represents intersegment sales only.
(3) Includes the subsidiaries Amalahle Exploration Proprietary Limited, Labohlano Trading 46 Proprietary Limited, the
mining right Impati (sold during the current period), the prospecting right Balgray and the mining permit for Klip
Colliery.
(4) Net finance cost is no longer reported as forming part of each segments profit or loss as it is not measured or
reported to the chief operating decision maker (CODM) in connection with the segment but rather on a collective
company/group basis.
(5) Coal sales to major customers as a percentage of revenue equals 92% (91% at 31 March 2013 and 91% at 30 September
2012).
(6) Finance income, for the six months ended 30 September 2012, received by Keaton Energy Holding Limited from its
subsidiaries has been restated from finance income to revenue, to be consistent with the disclosure in the 31 March 2013
annual report.
(7) Depreciation and amortisation for Vanggatfontein Colliery and Vaalkrantz Colliery include an adjustment for
depreciation capitalised to inventory, at every reporting period.


Notes to the condensed interim consolidated financial statements

 1. Accounting policies                        
 Basis of accounting                           
 The condensed interim consolidated financial statements for the six months ended 30 September 2013 have been prepared 
 in accordance with the recognition, measurement, presentation and disclosure requirements of IAS 34: Interim Financial 
 Reporting and are presented in accordance with the South African Companies Act and the SAICA Financial Reporting Guides 
 as issued by the Accounting Practices Committee. They should be read in conjunction with the audited financial statements 
 for the year ended 31 March 2013, which have been prepared in accordance with International Financial Reporting Standards 
 (IFRS) as issued by the International Accounting Standards Board. The accounting policies are consistent with those 
 described and applied in the audited financial statements.   
 
 2. Revenue and gross profit/(loss)                        
 Vanggatfontein delivered 1 142 702 tonnes of washed 2- and 4-Seam thermal coal to Eskom during the six months, an increase 
 55% when compared to the same period last year (30 September 2012: 738 498 tonnes and for the year ended 31 March 
 2013:1 509 681 tonnes). 5-Seam metallurgical coal sales increased by 76% to 55 154 tonnes during the six months, when 
 compared to 30 September 2012 sales of 31 272 tonnes (for the year ended 31 March 2013: 65 661 tonnes). In addition, 
 Vanggatfontein washed 145 785 tonnes of third party coal during the period under review (30 September 2012: nil and for 
 the year ended 31 March 2013: 106 873 tonnes).                        
 During the six months Vanggatfontein generated revenue of R400.1 million from coal sales (30 September 2012: R190.9 million 
 and for the year ended 31 March 2013: R433.7 million), R12.9 million from toll washing (30 September 2012: Rnil and for the 
 year ended 31 March 2013: R15.5 million) and transport revenue of R171.8 million (30 September 2012: R92.9 million and for 
 the year ended 31 March 2013: R196.6 million).                        
 Vaalkrantz sold 154 145 tonnes of anthracite to domestic and international metallurgical markets during the six months, an 
 increase of 2% when compared to the same period last year (30 September 2012: 151 318 tonnes and for the year ended 
 31 March 2013: 326 597 tonnes) and generated revenue of R124.9 million (30 September 2012: R133.5 million and for the year 
 ended 31 March 2013: R272.9 million).                        
 The group recorded a gross profit of R117.2 million or 17% of sales for the six months ended 30 September 2013 (30 September 
 2012: gross loss of R37.9 million and for the year ended 31 March 2013: gross loss of R27.3 million). The increase in gross 
 profit was as a result of increased production and sales.                        
 
 3. Income taxation (expense)/credit                        
 The income taxation expense of R21.4 million for the six months ended 30 September 2013 is mainly attributable to the 
 utilisation of estimated tax losses and unredeemed capital expenditure relating to Keaton Mining Proprietary Limited.                        

 4. Earnings and net asset value per share                  
 The calculation of basic and diluted earnings per share is based on a profit for the period ended 30 September 2013 (attributable 
 to owners of the company) of R37.2 million (30 September 2012: loss of R40.0 million and the year ended 31 March 2013: loss of 
 R84.5 million) and a weighted average number of shares in issue during the year of 191.7 million (30 September 2012: 190.3 million 
 and the year ended 31 March 2013: 190.9 million).    

                                                                        Six months ended                    Year ended   
                                                                30 September        30 September              31 March   
                                                                        2013                2012                  2013   
                                                                   (Reviewed)          (Reviewed)             (Audited)  
  Total earnings per ordinary share (cents)                                                                 
  Basic earnings                                                        19.4              (21.0)                (44.2)   
  Diluted earnings                                                      19.4              (21.0)                (44.2)   
  Headline earnings                                                     19.4              (21.1)                (30.2)   
  Diluted headline earnings                                             19.4              (21.1)                (30.2)   
  Reconciliation of headline earnings (net of tax and NCI):                                                                 
  R000                                                                 
  Total comprehensive income attributable to owners of the company    37 236            (40 015)              (84 491)   
  Loss on derecognition of assets                                          -                  -                27 276   
  Profit on disposal of property, plant and equipment                      -                (69)                 (476)   
  Total headline earnings                                             37 236            (40 084)              (57 691)   
  Net asset value per share                                                                 
  Number of shares in issue (millions)                                 191.7              191.7                 191.7   
  Net asset value per share (cents)                                      382                392                   358   
 
 5. Property, plant and equipment                                                                  
 The net decrease of R11.9 million from 31 March 2013 is mainly attributable to the following:                                                                  
 -  Capital investments at Vanggatfontein of R135.2 million (attributable mainly to ongoing mine development of R134.8 million). 
 The rehabilitation assets at Vanggatfontein also increased by R31.3 million, relating to the increase in the rehabilitation liability. 
 Refer to note 8.                                                                  
 - Capital investments at Vaalkrantz of R1.9 million.                                                                  
 - Other group capital investments of R2.6 million.                                                                  
 These were offset by depreciation charges of R182.9 million.                                                                  

 6. Intangible assets                                                                                                                                      
 On 20 June 2013 the sale of the Impati mining right held by Leeuw Mining and Exploration Proprietary Limited (LME), to Zinoju 
 Coal Proprietary Limited was effected following receipt of ministerial consent. The Impati mining right was acquired through the 
 acquisition of LME in the 2012 financial year. The sale resulted in an amount of R12 million received by LME on 25 June 2013.                                                                                                                                                             
 7. Borrowings                                                                                                                                                                                  
 Total borrowings decreased by R17.8 million, mainly as a result of debt repayments to the value of R38.6 million (R30.3 million 
 relates to the Nedbank project finance facility). The decrease was offset by finance costs of R14.4 million and a foreign 
 exchange loss of R6.4 million included in administrative and other operating expenses in the statement of comprehensive income.                 
 8. Mine closure and environmental rehabilitation provision                                                                            
 The rehabilitation liability at Vanggatfontein increased by R32.6 million during the period. The increase is mainly attributable 
 to the additional ground disturbances at Pit 3, the opening-up of Pit 4 as well as the unwinding of the interest on previously 
 recognised rehabilitation liability. The rehabilitation liability at Klip Colliery decreased by R2.3 million as a result of 
 rehabilitation of the site during the period. At Vaalkrantz, the previously recognised rehabilitation liability unwound by 
 R0.8 million during the period.    

 9. Trade and other payables                                                                                                                          
 Included in trade and other payables are amounts of R33 million and R42.5 million owing to DRA Mineral Projects Proprietary Limited 
 and Megacube Mining Proprietary Limited respectively as reported in the 31 March 2013 Annual report. These amounts are still under 
 legal dispute and there have been no significant changes to the status as reported in our 31 March 2013 Annual report.                                                                                                                                                     
 10. Commitments and contingencies                                                                 
 The groups capital commitments are:                                                                 
 R000                                                                 
                                                       At               At                      At   
                                             30 September         31 March            30 September   
                                                     2013             2013                    2012   
                                                (Reviewed)        (Audited)              (Reviewed)  
  Exploration and mine development 
  expenditure authorised and contracted             4 392            3 864                   1 780   
  Exploration and mine development 
  expenditure authorised but not contracted        60 005           66 845                  33 494   
                                                   64 397           70 709                  35 274   
												   
 All contracted amounts will be funded both through existing funding mechanisms within the group and cash generated from operations. 
 For a detailed disclosure on contingent liabilities refer to Keaton Energys annual report for the year ended 31 March 2013, available 
 on the groups website at www.keatonenergy.co.za.                                                                 

 11. Subsequent events  
 There were no significant events after 30 September 2013 up to the date of this report.                                                         
 12. Dividends                                                                                                                                  
 No dividends have been declared nor are any proposed for the period ended 30 September 2013 (30 September 2012: Rnil and the year 
 ended 31 March 2013: Rnil).                                                                                                                                                                                                    
 13. Coal reserve and resource statement                                                                                                         
 The Vanggatfontein run of mine coal reserve has been reduced by approximately 0.5 million tonnes, compared to the equivalent coal 
 reserve declared at 31 March 2013, as a result of the premature closure of Pit 1 as reported in the 31 March 2013 annual report. 
 Other than normal coal depletion as a result of mining activites during the six months to 30 September 2013, there were no further 
 significant changes to the previously reported coal resource and coal reserve estimates of the group.    

 14. Review report                                                                                                                                                                
 The condensed interim consolidated financial statements for the six months ended 30 September 2013 on pages 4 to 13, have been 
 reviewed by KPMG Inc. in accordance with International Standards on Review Engagements 2410 - Review of interim financial 
 information performed by the Independent Auditors of the entity. Their unmodified review report is available for inspection at 
 the companys registered office.                                                                                     

Registered Office:
Ground Floor, Eland House, The Braes, 3 Eaton Avenue, Bryanston, South Africa
(Postnet Suite 464, Private Bag X51, Bryanston, 2021)
Tel: +27 11 317 1700     
Telefax: +27 11 463 4759
E-mail: info@keatonenergy.co.za

Directors:
Dr JD Salter (Chairman)*+, AB Glad (Chief Executive Officer), J Rossouw (Chief Financial Officer), LX Mtumtum++,
P Pouroulis**+, OP Sadler++, APE Sedibe+, D Jonker***+, GH Kemp++
*British **South African / Cypriot ***Dutch
+non-executive, ++independent non-executive, lead independent director

Company Secretary:
Michelle Taylor

Transfer Secretaries:
Computershare Investor Services South Africa Proprietary Limited
Ground Floor, 70 Marshall Street, Johannesburg, South Africa  
(PO Box 61051, Marshalltown, 2107)

Auditors:
KPMG Inc. 1226 Francis Baard Street, Hatfield, Pretoria

www.keatonenergy.co.za
Date: 18/11/2013 08:00:00 Supplied by www.sharenet.co.za                     
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