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Keaton Energy Holdings Limited - Announcement Of Pro Forma Financial Effects As Well As The Withdrawal Of Cautionary Announcement

Release Date: 12/12/2013 15:00:00      Code(s): KEH     
Keaton Energy Holdings Limited
(A company incorporated in the Republic of South Africa with Registration number:
2006/011090/06)
ISIN: ZAE000117420
JSE Share Code: KEH
(?Keaton? or the ?Company?)

ANNOUNCEMENT OF PRO FORMA FINANCIAL EFFECTS AS WELL AS THE WITHDRAWAL
OF CAUTIONARY ANNOUNCEMENT

1. INTRODUCTION

Keaton shareholders are referred to the announcement released by Keaton on SENS on
Wednesday, 20 November 2013, as well as previous announcements regarding Keaton?s offer to
acquire the entire issued share capital of Xceed Resources Limited (?Xceed?) by way of a scheme
of arrangement in accordance with Part 5.1 of the Australian Corporations Act 2001, as amended
(the ?Transaction?) and the specific issue of 32 647 838 new Keaton ordinary shares to Plusbay
Limited (?Plusbay?), a wholly-owned subsidiary of Gunvor Group Ltd for cash, at an issue price of
R1.7782 per new Keaton ordinary no par value share (the ?Specific Issue?).

The pro forma financial effects of the Specific Issue and the Transaction have now been finalised
and is set out below.

2. PRO FORMA FINANCIAL EFFECTS

Based on Keaton?s reviewed results for the six months ended 30 September 2013, the pro forma
financial effects of the Specific Issue and the Transaction on Keaton?s earnings per share
(?EPS?), headline earnings per share (?HEPS?), net asset value per share (?NAV?) and net
tangible asset value per share (?NTAV?) are set out below. The pro forma financial effects are
prepared for illustrative purposes only, and because of their nature, may not give a fair
presentation of Keaton's financial position, changes in equity, results of operations and cash
flows or the effect and impact of the Specific Issue and the Transaction. The pro forma financial
effects are the responsibility of Keaton?s directors.

                                                             Before the                 After the     Change
                                                                Specific           Specific Issue          %
                                                          Issue and the                  and the
                                                          Transaction(1)           Transaction (2)

EPS (cents) (3)                                                    19.4                      22.6      16.5%
                (3)
HEPS (cents)                                                       19.4                       6.4     (67.0%)
              (4)
NAV (cents)                                                         382                      398        4.2%

NTAV (cents)(4)                                                     166                       75      (54.8%)
                          (5)
Total shares in issue                                       191,663,141              224,310,979        17.0%
Shares and weighted shares in issue net of                  191,663,141              224,310,979        17.0%
treasury shares(5)




       Notes:

1.    Based on Keaton?s reviewed results for the period ended 30 September 2013.
2.    Based on the assumption that Keaton acquires the entire issued share capital of Xceed, and as a result
      Xceed is accounted for as a subsidiary of Keaton. In calculating the pro forma financial effects, it was
      assumed that the Specific Issue and the Transaction were implemented on 1 April 2013 for statement of
      comprehensive income purposes and on 30 September 2013 for statement of financial position purposes.
      Xceed?s statement of comprehensive income for the six months ended 30 June 2013 was converted to
      Rand (?R?) from Australian Dollars (?AU$?) using the average exchange rate for the period 1 April 2013 to
      30 September 2013 of R9.25 to the AU$, with their audited statement of financial position as at 30 June
      2013 converted to R from AU$, using the spot exchange rate as at 30 September 2013 of R9.37. The
      statement of comprehensive income and the statement of financial position were adjusted to reflect the
      differences in accounting polices between Keaton and Xceed.
 3.   The EPS and HEPS were adjusted for:

            (a)    the inclusion of the consolidated earnings of Xceed for the six months ended 30 June 2013,
                   as well as the adjustments made to reflect the differences in accounting polices between
                   Keaton and Xceed;
            (b)    estimated transaction costs of R10,053,756 incurred by Keaton;
            (c)    provisionally assessed gain on the business combination amounting to R36,315,675 based on
                   the provisional assessments of fair value;

            (d)    assumed interest paid on the funding to be provided by Investec Bank Limited (?Investec?)
                   (?Investec Funding?) of R5,813,117; and
            (e)    assumed amortisation charge of R105,211 relating to the Investec debt raising fees
                   capitalised.
 4.   The NAV and NTAV were adjusted for:
           (a)     the inclusion of the consolidated assets and liabilities of Xceed as at 30 June 2013 as well as
                   the adjustments made to reflect the differences in accounting polices between Keaton and
                   Xceed;
           (b)     elimination of the subsidiary company share capital of R407,332,640;
           (c)     issue of the 32,647,838 new Keaton ordinary shares of no par value to Plusbay at R1.7782
                   per share for a cash consideration of R58,054,386;
           (d)     estimated transaction costs of R5,026,099 incurred by Keaton that have been capitalised;
           (e)     elimination of the subsidiary company share-based payment reserve of R402,910;
           (f)     accounting for R4,302,985 share-based payment reserve;
           (g)     elimination of the subsidiary company other reserves of R1,517,940;
           (h)     retained earnings adjusted for:
                       -    elimination of subsidiary company accumulated loss of R188,629,344;
                       -    transaction costs of R10,053,756 incurred by Keaton;
                       -    gain on business combination relating to the acquisition of Xceed of R36,315,675
                            based on the provisional assessments of fair values.
           (i)     Investec Funding of R126,254,085 received for the acquisition of Xceed. Debt raising fees of
                   R1,893,811 were capitalised to the Investec Funding. R28,267,233 was reclassified from
                   long-term borrowings to short-term borrowings;
           (j)     cash and cash equivalents have been adjusted for:

                       -    the issue of new Keaton ordinary shares to Plusbay for cash of R58,054,386;
                       -    Investec Funding of R126,254,085 received for the acquisition of Xceed;
                       -    payment of Investec debt raising fee of R1,893,811;
                             -   total transaction costs paid of R15,079,855; and
                             -   payment of the purchase consideration of R184,308,471 for the acquisition of Xceed.

 5. Shares in issue and the weighted average number of shares in issue were adjusted for the issue of
          32,647,838 new Keaton ordinary shares to Plusbay.
 6.   All of the above adjustments with the exception of transaction costs are expected to have a continuing effect
          on Keaton.




3. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

Keaton shareholders are referred to the cautionary announcements released by Keaton on SENS
on 23 August, 26 August, 8 October and 19 November 2013 and are advised that as the pro
forma financial effects of the Specific Issue and the Transaction have now been announced,
caution is no longer required to be exercised when dealing in the Company?s securities.

Johannesburg
12 December 2013

Joint financial advisors:                                         Qinisele Resources & Ceres Capital
Legal advisor in Australia:                                       Ashurst
Legal advisor to Keaton in South Africa:                          Norton Rose Fulbright
Investment Bank and Sponsor:                                      Nedbank Capital
Independent Expert:                                               BDO
Independent Reporting Accountants to Keaton:                      KPMG
Independent Reporting Accountants in relation to
Xceed:                                                            Moore Stephens FRRS Inc.
Tax and Exchange Control Advisors to Keaton:                      Webber Wentzel
Joint Competent Persons:                                          Venmyn Deloitte and Gemecs

Date: 12/12/2013 03:00:00 Supplied by www.sharenet.co.za                     
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