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Keaton Energy Holdings Limited - Reviewed Provisional Condensed Consolidated Results For The Year Ended 31 March 2015

Release Date: 24/06/2015 09:30:00      Code(s): KEH     
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 provisional condensed consolidated results for the year ended 31 March 2015

Salient features
Cash generated from operations up 29% to R536.9 million
R83 million of debt repaid
Vaalkrantz impairment of R56.5 million and reversal of related DTA of R35.9 million 
Significant coal theft and corruption discovered at Vaalkrantz
Revenue up 5% to R1.45 billion
Total coal sales up 10% to 2.85Mt
HEPS of 0.4 cents per share  down from 30.3 cents per share
Fatality at Vaalkrantz
New management team  at Vaalkrantz


Commentary
Dear shareholder
A solid first half of the year was marred by a fatality and the discovery of significant coal theft and corruption at
the group?s Vaalkrantz Colliery during the last quarter of the year. Although results from our long-life, thermal coal
Vanggatfontein Colliery were as forecast for the full year, the group?s results were considerably below plan. Management
has acted quickly to restructure, re-evaluate and optimise operations at Vaalkrantz.

The following commentary summarises the group?s key activities during the year. Our Integrated Annual Report will be
published on our website during July 2015. 

Safety
Zero harm remains a key focus for the group and safety is of paramount importance. Regrettably, a fatality occurred at
Vaalkrantz Colliery in February 2015 as reported previously, when Mr Sihle Petros Xulu lost his life in an isolated
fall of ground. We again extend our heartfelt condolences to the family, friends and colleagues of Mr Xulu. A full
investigation was conducted into the accident and, based on the findings, the entire safety system at Vaalkrantz was 
redesigned and our focus on safety reinforced. 

The Lost Time Injury Frequency Rate (per 200 000 hours worked) was 0.10 at Vanggatfontein (2014: 0.09) and 0.22 at
Vaalkrantz (2014: 0.23). 

Overview 
Our two collieries, Vanggatfontein and Vaalkrantz, produce thermal coal for supply to Eskom as well as a range of
specialist coals for the domestic and export metallurgical industries, namely: 5-Seam coal and premium anthracite for
domestic metallurgical customers; B-grade coal for domestic customers; and anthracite exported to Brazil through off-take
partner Glencore. 

Operational review
Vanggatfontein 
Vanggatfontein continued to achieve its targets while retaining its good safety record. The colliery delivered 2 278
761 tonnes of washed 2- and 4-Seam thermal coal to Eskom, up 4% on the previous year?s 2 192 519 tonnes, and 5-Seam
metallurgical coal sales increased 29% to 126 107 tonnes from 97 635 tonnes. Discard and slurry sales were negligible as the
materials were used for onsite activities, whereas in 2014 discard and slurry sales totalled 844 334 tonnes.No third
party toll washing took place during the year due to full utilisation of the dedicated 5-Seam plant for our own coal.
B-grade coal sales of 46 554 tonnes were achieved (2014: 10 328 tonnes) as the product gained market acceptance. 

Construction of the filter press plant progressed well during the year. Once commissioned, it will reduce the
colliery?s environmental footprint and improve raw water utilisation. 

Vaalkrantz 
The colliery suffered a tough year. The fatality and consequent disruption of production impacted performance.
Further, R24.7 million of product stock losses were identified in the last quarter of the financial year, which was deeply
disappointing. We took decisive action and initiated a thorough investigation by multiple agencies who not only confirmed
the loss, but also a variety of other corrupt practices at the colliery. Collusion between our employees and external
contractors has cost us dearly, notwithstanding production of anthracite coal being up 30% to 395 450 tonnes, including the
newly introduced high ash product. 
A new management team is in place at the colliery and is making progress towards overcoming the losses of the last year. 
A full review of all aspects of the Vaalkrantz business resulted in an impairment charge of R56.5 million and a related 
deferred tax asset reversal of R35.9 million.
 
Group financial performance
Group revenue increased by 5% to R1.45 billion from R1.37 billion in the previous year due to increased sales volumes
at both Vanggatfontein and Vaalkrantz. This translated into a gross profit of R203.5 million or 14% of revenue, down
slightly year-on-year given a decrease in overall yields at Vaalkrantz, a decrease in metallurgical sales prices at both
operations and the loss in production due to the fatality in February 2015. 

Other income increased from R13 million in FY14 to R19.9 million in FY15 as a result of the settlement of the DRA
matter.

Mining and related expenses increased from R11.5 million in FY14 to R126.4 million in FY15. The increase relates
mainly to the R56.5 million impairment recognised at Vaalkrantz, the R24.7 million provision raised for coal losses as a
result of theft at Vaalkrantz and incremental SLP spend at both operations.

Income taxation expense increased year-on-year as a result of the reversal of previously recognised deferred taxation
assets relating to Vaalkrantz as a result of the impairment assessment performed.

Net loss for the year was R71.9 million compared to a net profit of R64.4 million in FY14 as a result of the once-off
charges referred to above. Consequently, headline earnings per share declined to 0.4 cents from 30.3 cents.

Capital investment for the group totalled R452.3 million in FY15 compared to R301 million in FY14. The majority,
R431 million, was spent at Vanggatfontein primarily on ongoing mine development relating to stripping costs. Capital
investment at Vaalkrantz totalled R19.5 million mainly relating to the development of the new Enyati Alfred section.

During the year the group repaid debt of R83 million with R72.7 million being repaid against the Investec term
facility.

Cash and cash equivalents increased by R3 million year-on-year. Cash generated by operations of R536.9 million
compared to R416.9 million in FY14, was offset by capital development and debt repayments as described above.

Project update
Moabsvelden 
Moabsvelden remains our short-term growth priority. The initiation of construction of this expansion to Vanggatfontein
awaits the grant of its water use licence and the conclusion of a Coal Supply Agreement with Eskom. 

Resource and Reserve Statement 
Other than normal coal depletion as a result of mining activities during the year, there was a significant change to
the Vaalkrantz reserve following further evaluation of this geologically complex asset. An updated Resource and Reserve
Statement for the group will be released in July 2015 as part of the Integrated Annual Report. The full report will be
available on the company?s website at www.keatonenergy.co.za.

Directorate
Gunvor SA, the group?s largest shareholder, changed its nominated directors during the year. Dirk Jonker resigned on 1
July 2014 and Meindert Witteveen, Head of Coal and Iron Ore at Gunvor SA, was appointed as a non-executive director
with effect from 5 September 2014. The Board thanks Mr Jonker for his contribution over the past three years. Post
year-end, Jeroen Schurink resigned with effect from 30 June 2015 and Hoang Gia Mai, Gunvor SA Chief Investment Officer, 
was appointed as non-executive director effective 1 July 2015. The Board thanks Mr Schurink for his contribution to the 
company.
 
Outlook             
Vanggatfontein is expected to maintain its consistent performance, delivering into its long-term contract with Eskom
and also providing the local market with high-grade metallurgical and B-grade coal. We will continue to drive the
turnaround at Vaalkrantz and push towards profitable operations. We are confident that we have implemented the necessary
changes to overcome the operational setbacks at the colliery and optimistic that the new management team and systems will
improve performance. However, we will continue to evaluate the ongoing viability of this geologically challenging mine both
constantly and critically. 

At Moabsvelden we are addressing regulatory requirements and expect these to be resolved in the near future. Off-take
negotiations with Eskom are progressing well and we are confident of securing appropriate funding for the project. 

In addition, we are investigating the most strategic road to achieving Eskom?s B-BBEE requirements that will further
entrench this critical relationship while strengthening our balance sheet and future shareholder returns. 

Preparation of provisional condensed consolidated financial statements 
The provisional condensed consolidated financial statements for the year ended 31 March 2015 have been reviewed in
terms of the Companies Act, 71 of 2008. Their preparation was supervised by the Chief Financial Officer, Jacques Rossouw, 
a Chartered Accountant (SA). The directors of the company take responsibility for these results. The provisional
condensed consolidated financial statements were published on 24 June 2015 and can be found on the company?s website.

On behalf of the Board

David Salter                         Mandi Glad
(Non-Executive Chairman)            (Chief Executive Officer)
Bryanston
24 June 2015             
      
Any forward looking comments included in this announcement have not been reviewed by the auditors.
  

Provisional condensed consolidated statement of profit or loss and other comprehensive income 

                                                                           Year ended                        
  R?000                                               Notes      31 March            31 March       
                                                                     2015                2014           
                                                                (Reviewed)           (Audited)      
  Revenue                                                 2     1 447 701           1 372 605     
  Cost of sales                                                (1 244 182)         (1 153 869)   
  Gross profit                                            2       203 519             218 736       
  Other income                                            3        19 931              12 983        
  Mining and related expenses                             4      (126 390)            (11 476)      
  Administrative expenses                                         (60 206)            (70 112)      
  Operating profit before net finance cost                         36 854             150 131       
  Net finance cost                                                (49 743)            (47 734)      
  Finance income                                                    6 150               2 834         
  Finance cost                                                    (55 893)            (50 568)      
  Net (loss)/profit before taxation                               (12 889)            102 397       
  Income taxation expense                                 5       (58 966)            (37 975)      
  Net (loss)/profit for the year                                  (71 855)             64 422        
  Other comprehensive income                                                                      
  Items that may be reclassified to profit or loss                                                
  Foreign exchange translation (loss)/gain                           (130)                356           
  Total comprehensive income                                      (71 985)             64 778        
  Net (loss)/profit attributable to:                                                              
  Owners of the company                                           (31 029)             59 529        
  Non-controlling interest                                        (40 826)              4 893         
                                                                  (71 855)             64 422         
  Total comprehensive income attributable to:                                                     
  Owners of the company                                           (31 159)             59 885        
  Non-controlling interest                                        (40 826)              4 893         
                                                                  (71 985)             64 778        
  Basic earnings per share (cents)                        6         (13.8)               30.3          
  Diluted earnings per share (cents)                      6         (13.8)               30.0          
  The accompanying notes are an integral part of these provisional condensed consolidated financial statements.                                                


Provisional condensed consolidated statement of financial position

  R?000                                                      Notes            At             At    
                                                                        31 March       31 March    
                                                                            2015           2014    
                                                                       (Reviewed)      (Audited)  
  Assets                                                                                          
  Property, plant and equipment                                  7       768 618        797 155   
  Intangible assets                                                      716 434        700 688   
  Deferred taxation                                              5             -         17 144   
  Investments and loans                                                    5 216          5 152   
  Restricted cash                                                         10 780          7 423   
  Restricted investments                                                  68 306         47 269   
  Trade and other receivables                                    8             -         37 610   
  Total non-current assets                                             1 569 354      1 612 441   
  Restricted investments                                                       -          3 453   
  Inventory                                                               54 110         35 081   
  Trade and other receivables                                    9       179 456        151 336   
  Taxation                                                                 1 903              -   
  Cash and cash equivalents                                               72 546         69 556   
  Total current assets                                                   308 015        259 426   
  Total assets                                                         1 877 369      1 871 867   
  Equity                                                                                          
  Stated capital                                                         692 929        692 929   
  Share-based payment reserve                                             26 546         18 788   
  Other reserves                                                          19 085         19 215   
  Retained earnings                                                      103 073        134 102   
  Total equity attributable to owners of the company                     841 633        865 034   
  Non-controlling interest                                                (3 375)        51 183   
  Total equity                                                           838 258        916 217   
  Liabilities                                                                                     
  Borrowings                                                    10       251 741        341 838   
  Long-term financial liabilities                                              -            604   
  Mine closure and environmental rehabilitation provision       11       270 058        215 181   
  Provisions                                                              31 769         30 575   
  Deferred taxation                                              5       129 179         87 357   
  Deferred income                                                8         5 418              -   
  Total non-current liabilities                                          688 165        675 555   
  Borrowings                                                    10       109 375         51 713   
  Short-term financial liabilities                                            68              -   
  Trade and other payables                                      12       216 843        227 101   
  Taxation                                                                     -          1 281   
  Provisions                                                     4        24 660              -   
  Total current liabilities                                              350 946        280 095   
  Total equity and liabilities                                         1 877 369      1 871 867   
  The accompanying notes are an integral part of these provisional condensed consolidated financial statements.                                         


Provisional condensed consolidated statement of changes in equity

  R?000                                                                        Note       Stated      Share         Share      Share-        Other         
                                                                                         capital    capital       premium       based     reserves        
                                                                                                                              payment                      
                                                                                                                              reserve                     
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
  Balance at 31 March 2013                                                                     -        192       640 711      12 497      (18 751)        
 Net profit for the year                                                                       -          -             -           -            -        
 Other comprehensive income for the year                                                       -          -             -           -          356        
 Transfer of share capital and share premium to stated capital(1)                        640 903      ( 192)     (640 711)          -            -        
  Transactions with owners of the company recognised directly in equity                                                                                   
 Ordinary shares issued for cash                                                          58 048          -             -           -            -        
 Share issue expenses                                                                     (6 022)         -             -           -            -        
 Share-based payments                                                                          -          -             -       6 291            -        
 Share-based payment reserve relating to the issue of shares at a discount        8            -          -             -           -       37 610        
  Change in ownership interest in subsidiaries                                                                                                            
 Acquisition of Xceed Resources Limited                                                        -          -             -           -            -        
  Balance at 31 March 2014                                                               692 929          -             -      18 788       19 215        
 Net loss for the year                                                                         -          -             -           -            -        
 Other comprehensive income for the year                                                       -          -             -           -         (130)        
 Dividends(2)                                                                                  -          -             -           -            -        
  Transactions with owners of the company recognised directly in equity                                                                                   
 Share-based payments                                                                          -          -             -       7 758            -        
  Balance at 31 March 2015                                                               692 929          -             -      26 546       19 085        
 
 Provisional condensed consolidated statement of changes in equity (continued)

  R?000                                                                        Note   Retained        Total         Non-        Total    
                                                                                      earnings       equity  controlling       equity   
                                                                                                   attribu-     interest            
                                                                                                   table to        (NCI)            
                                                                                                     owners                         
                                                                                                     of the                             
                                                                                                    company                             
  Balance at 31 March 2013                                                              74 573      709 222      (23 185)      686 037   
 Net profit for the year                                                                59 529       59 529        4 893        64 422   
 Other comprehensive income for the year                                                     -          356            -           356   
 Transfer of share capital and share premium to stated capital(1)                            -            -            -             -   
  Transactions with owners of the company recognised directly in equity                                                                 
 Ordinary shares issued for cash                                                             -       58 048            -        58 048   
 Share issue expenses                                                                        -       (6 022)           -        (6 022)   
 Share-based payments                                                                        -        6 291            -         6 291   
 Share-based payment reserve relating to the issue of shares at a discount        8          -       37 610            -        37 610   
  Change in ownership interest in subsidiaries                                                                                          
 Acquisition of Xceed Resources Limited                                                      -            -       69 475        69 475   
  Balance at 31 March 2014                                                             134 102      865 034       51 183       916 217   
 Net loss for the year                                                                 (31 029)     (31 029)     (40 826)      (71 855)  
 Other comprehensive income for the year                                                     -         (130)           -          (130)   
 Dividends(2)                                                                                -            -      (13 732)      (13 732)   
  Transactions with owners of the company recognised directly in equity                                                                 
 Share-based payments                                                                        -        7 758            -         7 758   
  Balance at 31 March 2015                                                             103 073      841 633       (3 375)      838 258   

 (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 par value shares were converted into ordinary shares 
     with no par value. It was resolved that all 250 million authorised ordinary 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.                                                                                                                                       
 (2) On subsidiary level, Keaton Mining Proprietary Limited declared and paid dividends of R52.8 million 
     (2014: R nil) to its shareholders during the year. The company holds a 74% interest in Keaton Mining Proprietary 
     Limited.                                                                                                                                       


Provisional condensed consolidated statement of cash flows

                                                           Year ended                 
  R?000                                                      31 March      31 March     
                                                                 2015          2014         
                                                            (Reviewed)     (Audited)    
  Cash flows from operating activities                        536 917       416 913     
  Cash flows from investing activities                       (508 883)     (500 123)   
  Cash flows from financing activities                        (25 044)      133 152     
  Net increase in cash and cash equivalents                     2 990        49 942      
  Cash and cash equivalents at the beginning of the year       69 556        19 614      
  Cash and cash equivalents at the end of the year             72 546        69 556      


Segmental report

                                                                                       Operating profit/(loss)              Depreciation/       
                                                                     Revenue        before depreciation/amortisation        amortisation        
  R?000                                                      Year to        Year to       Year to      Year to          Year to       Year to  
                                                            31 March       31 March      31 March     31 March         31 March      31 March  
                                                                2015           2014          2015         2014             2015          2014 
 Vanggatfontein Colliery(1)(4)                             1 181 055      1 127 215       626 861      545 060         (423 026)     (308 632) 
 Vaalkrantz Colliery(1) (5)                                  266 647        245 390       (88 810)       2 119          (18 328)      (39 417) 
 Sterkfontein Project                                              -              -             -            -                -             - 
 Keaton Energy Holdings Limited(2)                           144 701        108 178       (26 702)       59 273                -             - 
 Keaton Administrative and Technical Services 
 Proprietary Limited(2)                                       38 137         26 469         5 261         (537)            (900)         (584) 
 Leeuw Braakfontein Project                                        -              -        (8 644)      (9 420)               -             - 
 Koudelager Project                                                -              -             -            -                -             - 
 Moabsvelden Project(2)                                           88            175           635         (278)               -             - 
 Other segments(2)(3)                                            225            450        (3 454)      (1 746)             (18)            - 
 Total segments                                            1 630 853      1 507 877       505 147      594 471         (442 272)     (348 633) 
  Reconciliation to statements of profit or loss 
  and other comprehensive income and financial position                                                                                       
 Intersegment, deferred taxation assets and liabilities
 and other consolidation adjustments                        (183 152)      (135 272)      (26 021)     (95 707)               -             -  
                                                           1 447 701      1 372 605       479 126      498 764         (442 272)     (348 633) 
 Net finance cost(6)                                                                                                                          
 Net (loss)/profit before taxation                                                                                                            
 Total assets and liabilities                                                                                                                 

Segmental report (continued)

                                                              Operating profit/(loss)             Segment assets           Segment liabilities                  
                                                                after depreciation
                                                                   amortisation                               
  R?000                                                         Year to      Year to             At              At             At             At    
                                                               31 March     31 March       31 March        31 March       31 March       31 March    
                                                                   2015         2014           2015            2014           2015           2014   
 Vanggatfontein Colliery(1)(4)                                  203 835      236 428        937 241         910 519      1 150 739      1 177 759   
 Vaalkrantz Colliery(1) (5)                                    (107 138)     (37 298)       137 444         176 429        357 639        294 685   
 Sterkfontein Project                                                 -            -         66 014          65 924         72 703         60 947   
 Keaton Energy Holdings Limited(2)                              (26 702)      59 273        961 941         962 794         23 967          4 450   
 Keaton Administrative and Technical Services 
 Proprietary Limited(2)                                           4 361       (1 121)        17 254          10 753         47 866         20 888   
 Leeuw Braakfontein Project                                      (8 644)      (9 420)       305 465         331 212         98 614         81 156   
 Koudelager Project                                                   -            -         26 140          25 990              -              -   
 Moabsvelden Project(2)                                             635         (278)       339 985         294 141         72 454         26 812   
 Other segments(2)(3)                                            (3 472)      (1 746)       333 232         330 819        113 421        109 421   
 Total segments                                                  62 875      245 838      3 124 716       3 108 581      1 937 403      1 776 118   
  Reconciliation to statements of profit or loss 
  and other comprehensive income and financial position                                              
 Intersegment, deferred taxation assets and liabilities
 and other consolidation adjustments                            (26 021)     (95 707)    (1 247 347)     (1 236 714)       (898 292)     (820 468)   
                                                                 36 854      150 131      1 877 369       1 871 867       1 039 111       955 650   
 Net finance cost(6)                                            (49 743)     (47 734)                                                                
 Net (loss)/profit before taxation                              (12 889)     102 397                                                                
 Total assets and liabilities                                                             1 877 369       1 871 867       1 039 111       955 650   


  (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, Ausco Finance Proprietary Limited, Ausco Services Proprietary Limited, Focus Coal Investments 
      Proprietary Limited, Xceed Resourced Limited and the Balgray prospecting rights.                                                                                                                                                                                   
  (4) Coal sales to a major customer as a percentage of revenue exceeded 90% (92% at 31 March 2014).                                                                                                                                                                                     
  (5) Coal sales to major customers as a percentage of revenue equals 39% and 37% (31 March 2014: 46%, and 37%).                                                                                                                                                                                   
  (6) Net finance cost is not reported as forming part of each segment profit or loss as these are not measured 
      or reported to the chief operating decision maker (CODM) in connection with the segment but rather on a 
      collective company/group basis.                                                                                                                                                                                   

Notes to the provisional condensed consolidated financial statements

  1.  Accounting policies                          
      1.1 Basis of accounting   
      The provisional condensed consolidated financial statements are prepared in accordance with the 
      requirements of the JSE Limited Listings Requirements for provisional reports and the requirements 
      of the Companies Act of South Africa. The Listings Requirements require provisional reports to be 
      prepared in accordance with the framework concepts and the measurement and recognition requirements 
      of International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as 
      issued by the Accounting Practices Committee and Financial Pronouncements as issued by Financial 
      Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 
      Interim Financial Reporting. The accounting policies applied in the preparation of the provisional 
      condensed consolidated financial statements are in terms of IFRS and are consistent with those 
      applied in the previous consolidated financial statements.                          
  2.  Revenue and gross profit                                                                                
      Vanggatfontein delivered 2 278 761 tonnes of washed 2- and 4-Seam thermal coal to Eskom during 
      the year, an increase of 4% from the previous year?s 2 192 519 tonnes. Sales of 5-Seam metallurgical 
      coal increased 29% to 126 107 tonnes from 97 635 tonnes. The increased utilisation of the dedicated 
      5-Seam plant did not allow for any third-party toll washing (31 March 2014: 145 785 tonnes) and B-grade 
      coal production was limited to 46 554 tonnes (31 March 2014: 10 328 tonnes). Negligible discard and 
      slurry sales took place due to the materials being used for onsite activities (31 March 2014: 844 334 tonnes).                              
      Vanggatfontein generated revenue of R865.7 million from coal sales (31 March 2014: R779.3 million) 
      and transport revenue of R315.3 million (31 March 2014: R336.8 million) during the year. The decrease 
      in transport revenue was as a result of a decrease in transport rates as received from Eskom and 
      shorter delivery distances.                              
      Vaalkrantz sold 395 450 tonnes of anthracite to domestic and international metallurgical markets, 
      a 30% increase over the previous year?s 303 837 tonnes and generated revenue of R266.6 million 
      (31 March 2014: R245.4 million) for the year.                              
      The group recorded a gross profit of R203.5 million or 14% of revenue for the year ended 31 March 2015 
      (31 March 2014: R218.7 million). The decrease in gross profit is mainly attributable to a decrease in 
      overall yields at Vaalkrantz, a decrease in metallurgical sales prices at both operations and the loss 
      in production due to the fatality in February 2015.                              
  3.  Other income                                                                                            
      The increase year-on-year relates to a R9.2 million credit on the settlement of the DRA Mineral Projects 
      Proprietary Limited (DRA) liability previously included under trade and other payables. Refer to note 12 
      for additional information.                              
  4.  Mining and related expenses                                                                             
      The increase in mining and related expenses year-on-year mainly relates to:                              
      (i) Impairment recognised on Vaalkrantz assets of R56.5 million. Vaalkrantz has been experiencing 
      challenging geological conditions. This, coupled with depressed coal prices, increased costs and lower 
      than expected yields, resulted in a critical re-review of the colliery?s life-of-mine plan. Using the 
      updated life-of-mine plan of five years, contractual coal prices and a real discount rate of 15% (2014: 12%) 
      the group calculated the recoverable amount for Vaalkrantz (using a value-in-use model), which resulted 
      an impairment charge of R56.5 million. A 5% decrease in the coal prices used in the model would have resulted 
      in an additional impairment of R52 million.                               
      The extent of the taxable profits to be realised over the revised life-of-mine plan did not support 
      the previously recognised deferred taxation asset relating to assessed losses and capital allowances. As 
      a result, the deferred taxation asset had to be reversed, as detailed in note 5.                                                                                                                                                                                                            
      (ii) Stock theft of R24.7 million, which was discovered at Vaalkrantz during the last quarter of the 
      financial year. A thorough investigation undertaken by multiple agencies pointed to collusion between an 
      employee and third parties. Criminal charges were laid against the employee. A provision for this amount 
      was raised to replace the stock that was sold to customers in anticipation of delivery.                              
      (iii) Incremental social and labour plan spend of R8.3 million and salary-related expenses of 
      R11.8 million.                              
      (iv) Loss on disposal of property, plant and equipment of R3.6 million.                              
  5.  Income taxation expense                                                                                 
      The income taxation expense of R59 million for the year ended 31 March 2015 is mainly attributable to:                              
      Keaton Mining Proprietary Limited taxation expense of R46.4 million, as a result of the utilisation of 
      unredeemed capital expenditure due to the continued profitable performance at Vanggatfontein. The deferred 
      taxation liability in the statement of financial position accordingly increased when compared to the 
      liability at 31 March 2014.                              
      Leeuw Mining and Exploration Proprietary Limited net taxation expense of R16.7 million after the reversal 
      of the previously recognised deferred taxation asset relating to Vaalkrantz Colliery of R35.9 million, 
      referred to in note 4. The non-recognition of this deferred taxation asset is the main reason for the 
      group?s high effective taxation rate in the current year.                              
  6.  Earnings and net asset value per share                                                                  
      The calculation of basic and diluted earnings per share is based on a loss for the year ended 31 March 2015 
      (attributable to owners of the company) of R31 million (31 March 2014: profit of R59.5 million). The weighted 
      average number of shares used in calculating basic earnings per share for the year was 224.4 million 
      (31 March 2014: 196.4 million). The weighted average number of shares used in calculating diluted earnings 
      per share for the year was 228 million (31 March 2014: 198.5 million).                              
                                                                                           Year ended                
                                                                                     31 March      31 March    
                                                                                         2015          2014        
                                                                                    (Reviewed)     (Audited)   
      Total earnings per ordinary share (cents)                                                               
      Basic earnings                                                                    (13.8)         30.3       
      Diluted earnings(1)                                                               (13.8)         30.0       
      Headline earnings                                                                   0.4          30.3       
      Diluted headline earnings                                                           0.4          30.0       
      (1) Anti-dilutive in current year                                                                       
      Reconciliation of headline earnings (net of tax and NCI):                                               
      R?000                                                                                                   
      Net (loss)/profit for the year attributable to owners of the company            (31 029)       59 529     
      Loss on disposal of property, plant and equipment                                 1 882            24         
      Loss on disposal of intangible asset                                                  -            27         
      Impairment of assets                                                             30 120             -           
      Total headline earnings                                                             973        59 580     
      Net asset value per share                                                                               
      Number of shares in issue (millions)                                              224.4         224.3      
      Net asset value per share (cents)                                                   373           408        
                                                                                                              
  7.  Property, plant and equipment                                                                           
      The net decrease of R28.5 million from 31 March 2014 is mainly attributable to the following:                              
      - Capital investments at Vanggatfontein of R431 million (attributable mainly to mine development of 
        R394.3 million and the construction of the filter press plant of R34.8 million). The rehabilitation 
        assets at Vanggatfontein also increased by R38.1 million, relating to the increase in the rehabilitation 
        liability. Refer to note 11; and                              
      - Capital investments at Vaalkrantz of R19.5 million (mainly relating to the development of the new Enyati 
        Alfred Central production section of R12.4 million).                              
      These were offset by depreciation charges of R462.3 million (31 March 2014: R359.3 million), as well as 
      the impairment charge of R56.5 million on Vaalkrantz, discussed in note 4.                              
  8.  Trade and other receivables and deferred income                                                         
      As reported in our 31 March 2014 Integrated Annual Report the non-current trade and other receivable of 
      R37.6 million represented the discount to the fair value of the shares issued to Plusbay Limited, a wholly 
      owned subsidiary of Gunvor Group Limited (as part of the acquisition of Xceed Resources Limited), which 
      was accounted for as a share-based payment. The discount was recognised as an asset as it then related to 
      future financing to be obtained in the form of a US$4 million prepayment for coal.                              
      During the current period, the prepayment of US$4 million (R43 million) was received, with the difference 
      of R5.4 million recognised as deferred income, relating to the coal to be delivered to Gunvor, once 
      production at the Moabsvelden Project commences.                              
  9.  Trade and other receivables                                                                             
      As disclosed in the 31 March 2014 Integrated Annual Report, the company entered into a share purchase 
      agreement with JPI Leeuw and Associates Proprietary Limited (JPI) to acquire 18% of the equity interest 
      held by JPI in Leeuw Mining and Exploration Proprietary Limited for a purchase consideration of R26 million. 
      As at 31 March 2015 the acquisition of this equity interest has not yet become effective and as such the 
      purchase consideration paid to date of R25.4 million is accounted for as a prepayment. Also refer to 
      note 15 for additional information.                              
  10. Borrowings                                                                                              
      Total borrowings decreased by R32.4 million, mainly as a result of debt repayments to the value of 
      R83 million of which R72.7 million relates to the Investec Bank Limited Term Loan. The decrease was offset 
      by finance costs of R34.8 million, a foreign exchange loss of R8.6 million included in administrative 
      expenses in the statement of profit or loss and a R5.5 million drawdown of the Investec Bank Limited 
      Working Capital Facility.                              
      The increase in current borrowings mainly relates to the inclusion of four (quarterly) Investec Bank 
      Limited repayments (2014: only three payments were included) as well as the IDC preference shares liability 
      of R32.2 million which is due 31 October 2015.                              
  11. Mine closure and environmental rehabilitation provision                                                 
      The rehabilitation liability at Vanggatfontein increased by R49.1 million during the period. The increase 
      is mainly attributable to the additional ground disturbances at Pit 3 and Pit 4 as well as the unwinding 
      of interest on previously recognised rehabilitation liabilities of R15.8 million. These increases were 
      offset by rehabilitation work completed at Pit 1 of R4.8 million. The rehabilitation liability at 
      Vaalkrantz increased by R5.7 million during the period, mainly due to the unwinding of interest on 
      previously recognised rehabilitation liabilities.                                                                                                                                                
  12. Trade and other payables                                                                                
      Settlement between Keaton Mining Proprietary Limited (Keaton) and DRA Mineral Projects Proprietary 
      Limited (DRA)                              
      As reported in our 31 March 2014 Integrated Annual Report, trade and other payables included an amount 
      of R33 million owing to DRA. On 9 September 2014, Keaton reached an agreement (the Settlement Agreement) 
      with DRA for the settlement of all claims and disputes, being both historic and future liabilities arising 
      out of the construction and commissioning of the Vanggatfontein Coal Processing Plant - Phase Two. As per 
      the Settlement Agreement, an amount of R23 million was paid to DRA.                              
      Keaton versus Megacube Mining Proprietary Limited (Megacube)                                             
      Included in trade and other payables is an amount of R42.5 million owing to Megacube as reported in the 
      31 March 2014 Integrated Annual Report. This amount is still under legal dispute and there have been no 
      significant changes to the status as reported in our 31 March 2014 Integrated Annual Report.                              
  13. Commitments and contingencies                                                                           
      The group?s capital commitments are:                                                                    
      R?000                                                                               At            At          
                                                                                    31 March      31 March    
                                                                                        2015          2014        
                                                                                   (Reviewed)     (Audited)   
      Exploration and mine development expenditure authorised and contracted          16 830         1 548      
      Exploration and mine development expenditure authorised but not contracted      44 549        61 361     
                                                                                      61 379        62 909     
      All contracted amounts will be funded both through existing funding mechanisms within the group and cash 
      generated from operations.                              
      There have been no significant changes to the status of the group?s contingent liabilities. For a detailed 
      disclosure on all contingent liabilities refer to Keaton Energy?s Integrated Annual Report for the year 
      ended 31 March 2014, available on the group?s website at www.keatonenergy.co.za.                                                                                                                                               
  14. Financial risk management activities                                                                    
      Fair value determination                                                                                
      The following table presents the group?s assets and liabilities that are measured at fair value by 
      level within the fair value hierarchy:                              
      Level 1: Quoted prices (unadjusted) in active markets for identical assets;                              
      Level 2:  Inputs other than quoted prices included within level 1 that are observable for the asset, 
      either directly or indirectly (that is as prices) or indirectly (that is derived from prices); and                              
      Level 3:  Inputs for the asset that are not based on observable market data (that is unobservable inputs).                              
      R?000                                                                               At            At          
                                                                                    31 March      31 March    
                                                                                        2015          2014        
                                                                                   (Reviewed)     (Audited)   
      Fair value through profit or loss                                                                       
      Level 1(1)                                                                      68 306        47 269     
      Level 2(2)                                                                         (68)         (604)      
      Level 2(3)                                                                         433             -           
      Level 3                                                                              -             -           
      (1)  Level 1 financial assets relate to restricted investments which serve as collateral mainly for 
      environmental guarantees provided to the DMR. Contributions are mainly invested in Momentum, Stanlib, 
      Sanlam and the Nedbank Bettabeta Green Exchange Traded Fund (BGreen ETF). These underlying funds invest 
      in equity instruments and money market investments, both local and foreign. The BGreen ETF index 
      consists of a selection of stocks from the top 100 largest South African companies listed on the JSE. 
      These investments are fair value through profit or loss financial assets and recognised at fair value.                              
      (2)  Level 2 financial liabilities relate to an IDC equity linked call option. The option under 
      consideration was valued by independent professional valuers, using a finite difference scheme for 
      valuation. Assumptions used to value the option includes a probability linked to the likely IDC preference 
      share redemption period, the spot share price of the company on date of valuation, a term structure with 
      the Johannesburg Interbank Agree Rate (JIBAR), Forward Rate Agreement (FRA) and swap data as inputs and 
      volatility.                              
      (3)  Level 2 financial assets relate to Forward Exchange Contracts (FECs). The FECs were valued by an 
      independent financial institution using forward looking market rates until the realisation date of the 
      relevant instrument.                              
      The carrying values (less any impairment allowance) of restricted cash, cash and cash equivalents, 
      investments and loans, trade and other receivables, borrowings, provisions and trade and other payables 
      are assumed to approximate their fair values.                              
  15. Significant events after 31 March 2015 up to the date of this report                                    
      Subsequent to year-end the company entered into a share purchase agreement with JPI to acquire the 
      remaining 8% of the equity interest held by JPI in Leeuw Mining and Exploration Proprietary Limited 
      for a purchase consideration of R11 million. Up to date of this report the acquisition of this equity 
      interest has not yet become effective.                              
  16. Dividends                                                                                               
      No dividends have been declared nor are any proposed for the year ended 31 March 2015 (31 March 2014: R nil).                              
  17. Review report                                                                                           
      These provisional condensed consolidated financial statements for the year ended 31 March 2015 have 
      been reviewed by KPMG Inc, in accordance with ISRE 2410, who expressed an unmodified review conclusion. 
      A copy of the auditor?s review report is available for inspection at the company?s registered office 
      together with the provisional condensed consolidated financial statements identified in the auditor?s 
      review report.                              
       
  
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
Non-executive
Dr JD Salter (Chairman)* 
LX Mtumtum (Lead Independent Director)
P Pouroulis** 
OP Sadler (Independent)
APE Sedibe
GH Kemp (Independent)
JHM Schurink***
MT Witteveen***
Executive
AB Glad (Chief Executive Officer)
J Rossouw (Chief Financial Officer)

*British **South African/Cypriot ***Dutch

Company Secretary
Anelia Schutte-Bouwer

Sponsor
Investec Bank Limited
100 Grayston Drive, Sandown, Sandton, 2196
South Africa
PO Box 785700, Sandton, 2146, South Africa

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: 24/06/2015 09:30:00 Supplied by www.sharenet.co.za                     
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