Wrap Text
Reviewed interim group results for the six months ended 30 September 2012
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 Interim Group Results for the six months ended 30 September 2012
Introduction
The period under review was a company maker. Despite losses being incurred, difficulties were overcome and opportunities taken at both mining
operations, which have laid the foundation for sustainable, safe and profitable operations going forward. The second half of FY2013 is expected to generate
a much improved financial performance following decisive actions taken during this period, which have already yielded demonstrable benefits in the
latter part of the first six months.
Salient features
Improvement in group safety performance
183% increase in group production to 1.8 million tonnes compared with 1H FY2012
Significantly improved performance at Vanggatfontein after changing mining contractor in June 2012
Productivity gains at Vaalkrantz despite poor geological conditions
255% increase in group revenue to R417.3 million compared with 1H FY2012
Loss of R64.2 million for 1H FY2013 compared with profit of R8.4 million for 1H FY2012
Sales of R31 million deferred to 2H FY2013 due to transport strike
Expected decline in 5-seam production and sales
Poor performance by original mining contractor at Vanggatfontein
Poor geological conditions at Vaalkrantz
Increased depreciation charges as a result of the early adoption of an accounting interpretation (IFRIC 20)
Commenced development of Pit 3 at Vanggatfontein
Sterkfontein and Braakfontein studies due by end 2012
Commentary
Safety, health and environment
The group continues to focus on safety, health and environmental matters. It is pleasing that the LTIFR (Lost Time Injury Frequency Rate)
at the open-pit Vanggatfontein Colliery decreased to 0.20 (0.38 for 2H FY2012), while that at the narrow-seam, underground
Vaalkrantz Anthracite Colliery maintained a LTIFR of 0.45 despite difficult geological conditions. We remain vigilant and continue to
strive towards a zero harm environment.
Operational summary
738 498 tonnes of 4 and 2-seam coal were delivered to Eskom in the period under review (1H FY2012: 230 042 tonnes). As expected, 5-seam coal
production declined in line with the mine plan, as 5-seam from Pit 1 was depleted; 31 272 tonnes of 5-seam were sold into the domestic metallurgical market
(1H FY2012: 99 232 tonnes). 5-seam coal production is set to increase in the second half of FY2013 as Pit 3 develops.
Vanggatfontein benefitted greatly from the appointment of a new mining contractor, Liviero Mining, in June 2012, replacing the previous
underperforming contractor. A smooth transition led to productivity improvements, successive monthly production records and simultaneous decreases in unit costs.
Mine managements optimisation of the available mining faces saw significant in-pit and run-of-mine inventories being available at the end of the
period. A significant quantity of product stock remained undelivered at the end of the period as a direct result of the transport strike during the last
week of September. This will deliver immediate benefits in the second half of the financial year.
Performance at Vaalkrantz was pleasing with investment in underground mining equipment leading to immediate productivity improvements. However,
difficult geological conditions encountered during the period offset much of these gains.
53 445 tonnes of mid-ash export anthracite were produced and sold during the period under review (since acquisition for the three months ended 31
March 2012: 43 500 tonnes), while 97 873 tonnes of premium low-ash anthracite were sold into the domestic metallurgical market (since acquisition for
the three months ended 31 March 2012: 69 463 tonnes).
Financial summary
The groups revenue for the period was R417.3 million (1H FY2012: R117.7 million). The significant increase is attributable to the ramp-up in sales
to Eskom, nearing full capacity, and the inclusion of six months sales from the recently acquired (in December 2011) Leeuw Mining and Exploration
Proprietary Limited (LME). These were offset by the impact of the transport strike, the under-performance of the original mining contractor at
Vanggatfontein, challenging geological conditions at the Vaalkrantz operation and the expected decline in 5-seam production.
The group recorded a gross loss of R37.9 million compared to the gross profit of R22.3 million for the comparative period in FY2012. The main reason
for the gross loss was the lower than expected sales as well as additional depreciation charges relating to the early adoption of IFRIC 20. Costs
were well contained during the first half of 2013 although were negatively impacted by winter electricity tariffs. Further cost-saving initiatives are
planned for the second half of FY2013.
The group recorded a total comprehensive loss of R64.2 million for 1H FY2013 compared to R8.4 million profit for the comparable period of FY2012 and
R103.7 million profit for 2H FY2012 (largely made up of a gain on the acquisition of LME). Headline loss per share of 21.1 cents for 1H FY2013
decreased when compared to the headline earnings for 1H FY2012 of 8.4 cents.
Cash and cash equivalents decreased by R33.1 million due to capital investment of R71.4 million largely at Vanggatfontein and the repayment of R34.7
million of the Nedbank project finance facility. These were offset by cash generated from operations and R8.7 million cash raised from investors in
July 2012.
Litigation
Keaton Mining terminated its contract mining agreement with Megacube Mining Proprietary Limited at Vanggatfontein on 5 July 2012 in accordance with
the provisions of the agreement. This subsequently led to Megacube lodging a claim for R42.5 million against Keaton Mining. We are defending this
claim vigorously in terms of the contracts dispute resolution provisions. Furthermore, Keaton Mining has lodged a damages claim for R119 million against
Megacube relating to breaches of several provisions of the contract.
Looking ahead
The group is well positioned with a balanced portfolio of producing assets and a pipeline of internal growth projects.
Operationally, Vanggatfontein is benefitting from a change in mining contractor and improved plant performance. The long term 4 and 2-seam Eskom
contract continues to provide the backbone of the operation. Stringent unit cost control and continuous performance improvement are paramount and will
receive attention in the months ahead.
The development of Pit 3 at Vanggatfontein, funded from cashflow, sees additional 5-seam coal becoming available. In addition, to ensure full
utilisation of the 5-seam plant, a 40 000 tonne per month toll washing contract has been entered into with Eskom.
Vaalkrantz continues to produce niche metallurgical coal and, when the current geologically difficult areas are worked through, will increase
production.
Two major internal growth projects, Braakfontein (48 million tonne resource) and Sterkfontein (69 million tonne resource), are the subject of
studies by external groups of consultants. It is expected that the various consultants will deliver their reports before the end of 2012, allowing the group
to make investment decisions early in 2013. In addition, work to extend the existing life of mine at Vaalkrantz continues.
The group continues to evaluate external growth opportunities in line with its stated growth objectives. However, the inflated price expectations
encountered in potential transactions of interest have precluded their closure.
Leadership
During the period under review, Paul Miller stepped down as Managing Director after having led the group from being an unlisted, greenfields
explorer to being a significant producer with a strong pipeline of growth projects. Rowan Karstel took over briefly before Mandi Glad, founder of Keaton and,
at various times, former operations director, sales and marketing director and business development director was appointed CEO on 7 September 2012.
On 27 November 2012, Gerard Kemp was appointed as an independent non-executive director to the board.
On behalf of the Board
David Salter Mandi Glad
(Executive chairman) (Chief executive officer)
27 November 2012
Preparation of condensed interim consolidated financial statements
The condensed interim consolidated financial statements for the six months ended 30 September 2012 have been reviewed in terms of the Companies Act
71, 2008. Their preparation was supervised by the group financial director, Jacques Rossouw, a Chartered Accountant (SA).
The condensed interim consolidated financial statements were published on 29 November 2012.
Condensed consolidated statement of comprehensive income
Six months ended Year ended
30 Sept 30 Sept 31 Mar
2012 2011 2012
R000 Note (Reviewed) (Reviewed)(1) (Audited)(2)
Revenue 2 417 332 117 695 474 366
Cost of sales (455 237) (95 388) (459 793)
Gross (loss)/profit 2 (37 905) 22 307 14 573
Other income 4 363 2 902 25 544
Mining and related expenses (9 936) (3 553) (10 350)
Net gain on financial instruments 1 018 - 1 690
Administrative and other operating expenses (27 460) (10 776) (26 521)
Results from operating activities (69 920) 10 880 4 936
Gain on business combination - - 114 385
Operating (loss)/profit before net finance (cost)/income (69 920) 10 880 119 321
Net finance (cost)/income (13 797) 180 (13 405)
Finance income 1 097 10 663 17 542
Finance costs (14 894) (10 483) (30 947)
Net (loss)/profit before taxation (83 717) 11 060 105 916
Income taxation credit/(expense) 4 19 477 (2 668) 6 184
Total comprehensive income for the period (64 240) 8 392 112 100
Total comprehensive income attributable to:
Owners of the company (40 015) 14 475 132 016
Non-controlling interest (24 225) (6 083) (19 916)
Basic earnings per share (cents) 3 (21.0) 8.4 75.2
Diluted earnings per share (cents) 3 (21.0) 8.4 75.2
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
(1) The comparative information has been re-presented as a result of the early adoption of IFRIC 20 Stripping cost in the
production phase of a surface mine, but had no effect on previously presented results.
(2) The comparative information has been re-presented as a result of the early adoption of IFRIC 20 Stripping cost in the
production phase of a surface mine. Refer to the notes to the condensed interim consolidated financial statements, note 1.3.
Condensed consolidated statement of financial position
At At At
30 Sept 31 Mar 30 Sept
2012 2012(1) 2011(1)
R000 Note (Reviewed) (Audited) (Reviewed)
Assets
Property, plant and equipment 5 772 977 832 703 636 067
Intangible assets 424 358 423 888 65 092
Deferred tax 72 897 16 638 3 740
Long-term financial assets - - 142 834
Restricted cash 7 423 7 423 13 023
Restricted investments 22 845 13 027 -
Total non-current assets 1 300 500 1 293 679 860 756
Inventory 64 316 23 117 9 502
Trade and other receivables 83 451 104 325 54 113
Restricted cash - 6 600 31 000
Cash and cash equivalents 27 468 60 549 26 281
Total current assets 175 235 194 591 120 896
Total assets 1 475 735 1 488 270 981 652
Equity
Share capital 192 189 171
Share premium 640 711 632 054 567 718
Share-based payment reserve 9 344 6 180 2 834
Other reserves (18 751) (18 751) -
Retained earnings 119 049 159 064 35 495
Total equity attributable to owners
of the company 750 545 778 736 606 218
Non-controlling interest 373 24 598 (15 840)
Total equity 750 918 803 334 590 378
Liabilities
Borrowings 7 241 060 248 156 188 041
Long-term financial liabilities 290 613 -
Mine closure and environmental rehabilitation provision 6 99 807 112 857 77 520
Deferred tax 129 944 93 838 -
Total non-current liabilities 471 101 455 464 265 561
Borrowings 7 39 077 49 176 19 075
Mine closure and environmental rehabilitation provision 6 225 326 326
Trade and other payables 8 213 529 179 356 106 271
Taxation 885 614 41
Total current liabilities 253 716 229 472 125 713
Total equity and liabilities 1 475 735 1 488 270 981 652
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
(1) The comparative information has been re-presented as a result of the early adoption of IFRIC 20 Stripping cost
in the production phase of a surface mine. Refer to the notes to the condensed interim consolidated financial statements, note 1.3.
Condensed consolidated statement of changes in equity
for the six months ended 30 September 2012
Total
equity
attribu-
Share- table to Non-
based owners control-
pay- of the ling Total
Share Share ment Retained Other com- interest Total
R000 capital premium reserve earnings reserves pany (NCI) equity
Balance at 31 March 2011 171 567 718 2 395 21 020 - 591 304 (9 757) 581 547
Total comprehensive income for the period - - - 14 475 - 14 475 (6 083) 8 392
Transactions with owners of the company recognised directly in equity
Share-based payments - - 439 - - 439 - 439
Balance at 30 September 2011 171 567 718 2 834 35 495 - 606 218 (15 840) 590 378
Balance at 31 March 2012 as previously reported 189 632 054 6 180 186 594 (18 751) 806 266 34 271 840 537
Effects of adopting IFRIC 20(1) - - - (27 530) - (27 530) (9 673) (37 203)
Revised balance at 31 March 2012 189 632 054 6 180 159 064 (18 751) 778 736 24 598 803 334
Total comprehensive 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 - 3 164
Ordinary shares issued for cash 3 8 657 - - - 8 660 - 8 660
Balance at 30 September 2012 192 640 711 9 344 119 049 (18 751) 750 545 373 750 918
(1) The comparative information has been re-presented as a result of the early adoption of IFRIC 20 Stripping cost in the production phase of a surface mine.
Refer to the notes to the condensed interim consolidated financial statements, note 1.3.
Condensed consolidated statement of cash flows
Six months ended Year ended
30 Sept 30 Sept 31 Mar
2012 2011 2012
R000 (Reviewed) (Reviewed)(1) (Audited)(2)
Cash flows from operating activities 62 926 39 787 129 520
Cash flows from investing activities (81 123) (242 099) (295 878)
Cash flows from financing activities (14 884) 201 593 199 907
Net (decrease)/increase in cash and cash equivalents (33 081) (719) 33 549
Cash and cash equivalents at the beginning of the period 60 549 27 000 27 000
Cash and cash equivalents at the end of the period 27 468 26 281 60 549
(1) The comparative information has been re-presented as a result of the early adoption of IFRIC 20 Stripping cost
in the production phase of a surface mine, but had no effect on previously presented results.
(2) The comparative information has been re-presented as a result of the early adoption of IFRIC 20 Stripping cost
in the production phase of a surface mine. Refer to the notes to the condensed interim consolidated financial statements, note 1.3.
Segmental report
for the six months ended 30 September 2012
Operating profit/(loss)
before depreciation/
Revenue 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 2012 2012 2011 2012 2012 2011
Vanggatfontein Mine (1) (5) 283 879 381 828 117 695 36 105 93 234 45 495
Sterkfontein Project - - - - - -
Klip Colliery - - - -
Keaton Energy Holdings Limited (2) 2 525 4 188 2 129 (13 985) (14 495) (7 251)
Keaton Administrative and Technical Services Proprietary Limited (2) 10 295 11 783 4 095 581 (1 618) (1 053)
Vaalkrantz Colliery (1) 133 453 92 538 - 22 875 36 763 -
Leeuw Braakfontein Colliery - - - - - -
Koudelager - - - - - -
Other segments (3) - - - (122) 2 053 870
Total segments 430 152 490 337 123 919 45 454 115 937 38 061
Reconciliation to statements of comprehensive income and financial position
Intersegment and other consolidation adjustments (12 820) (15 971) (6 224) (71) 12 207 109
417 332 474 366 117 695 45 383 128 144 38 170
Gain on business combination
Net finance (cost)/income (4)
Assets/liabilities not allocated to segments
Net profit/(loss) before taxation
Total assets and liabilities
(1) Revenue represents sales to external customers only.
(2) Revenue represents intersegment sales only.
(3) Includes the subsidiaries Amalahle Exploration Proprietary Limited and Labohlano Trading 46 Proprietary Limited and the Mpati and Balgray
prospecting rights acquired through the business combination during the year ended 31 March 2012.
(4) Net finance cost/income is no longer 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.
(5) Coal sales to major customers as a percentage of revenue equals 91% (92% at 31 March 2012. At 30 September 2011 two major customers as a
percentage of revenue were between 21% and 40% each).
(6) The comparative information for the period 30 September 2011 has been re-presented as a result of the early adoption of IFRIC 20 Stripping
cost in the production phase of a surface mine, but had no effect on previously presented results.
(7) The comparative information for the period 31 March 2012 has been re-presented as a result of the early adoption of IFRIC 20 Stripping cost
in the production phase of a surface mine. Refer to the notes to the condensed interim consolidated financial statements, note 1.3.
Segmental report (continued)
for the six months ended 30 September 2012
Operating profit/(loss)
after depreciation/
Depreciation/amortisation amortisation Segment assets Segment liabilities
6 months 6 months 6 months 6 months
ended Year to ended ended Year to ended At Year to At At Year to At
30 Sept 31 Mar 30 Sept 30 Sept 31 Mar 30 Sept 30 Sept 31 Mar 30 Sept 30 Sept 31 Mar 30 Sept
R000 2012 2012 2011 2012 2012 2011 2012 2012 2011 2012 2012 2011
Vanggatfontein Mine (1) (5) (93 152) (108 039) (27 137) (57 047) (14 805) 18 358 794 293 793 053 729 945 1 044 619 940 515 803 004
Sterkfontein Project 65 271 65 092 65 426 55 049 53 606 55 476
Klip Colliery 1 849 331
Keaton Energy Holdings Limited (2) (13 985) (14 495) (7 251) 790 065 739 697 605 973 7 950 3 373 2 625
Keaton Administrative and Technical Services
Proprietary Limited (2) (117) (315) (153) 464 (1 933) (1 206) 10 067 10 271 3 778 19 999 20 637 13 549
Vaalkrantz Colliery (1) (22 034) (14 854) 841 21 909 283 595 287 202 343 198 336 974
Leeuw Braakfontein Colliery 291 338 291 338 53 857 48 934
Koudelager 23 552 23 552
Other segments (3) (122) 2 053 870 18 841 19 999 1 072 16 932 18 333 16 576
Total segments (115 303) (123 208) (27 290) (69 849) (7 271) 10 771 2 277 022 2 230 204 1 408 043 1 541 604 1 422 372 891 561
Reconciliation to statements of comprehensive
income and financial position
Intersegment and other consolidation adjustments (71) 12 207 109 (801 287) (741 934) (453 902) (816 787) (737 436) (511 116)
(115 303) (123 208) (27 290) (69 920) 4 936 10 880 1 475 735 1 488 270 954 141 724 817 684 936 380 445
Gain on business combination 114 385
Net finance (cost)/income (4) (13 797) (13 405) 180
Assets/liabilities not allocated to segments 27 511 10 829
Net profit/(loss) before taxation (83 717) 105 916 11 060
Total assets and liabilities 1 475 735 1 488 270 981 652 724 817 684 936 391 274
(1) Revenue represents sales to external customers only.
(2) Revenue represents intersegment sales only.
(3) Includes the subsidiaries Amalahle Exploration Proprietary Limited and Labohlano Trading 46 Proprietary Limited and the Mpati and Balgray
prospecting rights acquired through the business combination during the year ended 31 March 2012.
(4) Net finance cost/income is no longer 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.
(5) Coal sales to major customers as a percentage of revenue equals 91% (92% at 31 March 2012. At 30 September 2011 two major customers as a
percentage of revenue were between 21% and 40% each).
(6) The comparative information for the period 30 September 2011 has been re-presented as a result of the early adoption of IFRIC 20 Stripping
cost in the production phase of a surface mine, but had no effect on previously presented results.
(7) The comparative information for the period 31 March 2012 has been re-presented as a result of the early adoption of IFRIC 20 Stripping cost
in the production phase of a surface mine. Refer to the notes to the condensed interim consolidated financial statements, note 1.3.
Notes to the condensed consolidated financial statements
1. Accounting policies
1.1 Basis of accounting
The condensed interim consolidated financial statements for the six months ended 30 September 2012 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 AC500 standards as issued by the
Accounting Practices Board. They should be read in conjunction with the annual financial statements for the year ended 31 March 2012, 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 annual financial statements, except for the early adoption of a new interpretation issued by the IFRS Interpretations Committee, IFRIC 20 Stripping costs in the production
phase of a surface mine. Refer to notes 1.2 and 1.3 in this regard.
1.2 Early adoption of IFRIC 20 Stripping costs in the production phase of a surface mine
Stripping costs incurred during the production phase of the groups surface operations, to remove overburden and expose the coal reserve, are capitalised as a stripping activity asset only when:
iii) it is probable that the future economic benefits (improved access to the coal reserve) associated with the stripping activity will flow to the group;
iii) the group can identify the component of the coal reserve exposed by the stripping activity; and
iii) the costs relating to the stripping activity associated with that component can be measured reliably.
The stripping activity asset is accounted for as an addition to, or as an enhancement of, an existing asset (mine development).The stripping activity asset is initially measured at cost,
being the accumulation of costs directly attributable to the stripping activity, plus an allocation of directly attributable overhead costs. The group identifies a component as the smallest
measurable portion of the coal reserve within a pit, which the stripping activity provides direct access to and is usually identified through survey results. After initial recognition, the stripping
activity asset is measured at cost less accumulated depreciation and accumulated impairment losses. The stripping activity asset is depreciated on a systematic basis, over the expected production life
of the identified component of the coal reserve.
1.3 Comparative information
As a result of adopting IFRIC 20 the comparative information has been re-presented to comply with the transitional provision as outlined in IFRIC 20 as follows:
Six months ending 30 September 2011 and at 30 September 2011
Reclassification of R63 million between categories of property, plant and equipment.
12 months ending 31 March 2012 and at 31 March 2012
Property, plant and equipment decreased by R13.2 million with a corresponding increase in cost of sales. This also decreased cash flows from operating activities and reduced the investment in cash flows
from investing activities by R13.2 million respectively in the condensed consolidated statement of cash flows.
Depreciation expense increased by R38.5 million with corresponding increase in accumulated depreciation.
Deferred tax asset increased by R14.5 million with a corresponding increase in income taxation credit/(expense) in the statement of comprehensive income.
Basic and diluted earnings per share decreased from 90.9 cents to 75.2 cents.
Headline and diluted headline earnings per share decreased from 25.2 cents to 9.5 cents.
2. Revenue and gross (loss) profit/margin
The group sold 31 272 tonnes of 5-seam coal from its Mpumalanga-based Vanggatfontein Colliery into the domestic metallurgical market for the six months ended 30 September 2012 (30 September 2011: 99 232 and 140 241
for the year ended 31 March 2012). Deliveries of thermal coal to Eskom for the six months ended 30 September 2012 amounted to 738 498 tonnes (30 September 2011: 230 042 and 955 504 for the year ended 31 March 2012).
From its recently acquired KwaZulu-Natal based Vaalkrantz Colliery (acquired in December 2011), the group sold 97 873 tonnes of anthracite into the domestic metallurgical market and 53 445 tonnes were exported for the
six months ended 30 September 2012 (since acquisition, for the three months ended 31 March 2012, the group sold 69 463 tonnes into the domestic metallurgical market and 43 500 tonnes were exported).
The group recorded a gross loss of R37.9 million or (9%) of sales for the period ended 30 September 2012 (30 September 2011: R22.3 million profit or 19% of sales and R14.6 million profit or 3% of sales for the year ended
31 March 2012). The decrease in gross margin is as a result of the lower than expected thermal coal sales attributable to lower production volumes during the first quarter of the 2013 financial year, a decrease in 5-seam
sales due to the anticipated depletion of Vanggatfontein pit ones 5-seam reserve and the impact of the transport strike during the last week of September 2012. Cost of sales was higher than expected, mainly due to additional
depreciation charges as a result of adopting IFRIC 20.
3. Earnings and net asset value per share
The calculation of basic and diluted earnings per share is based on a loss for the period ended 30 September 2012 (attributable to owners of the company) of R40.0 million (30 September 2011: profit of R14.5 million and year ended
31 March 2012: profit of R132 million) and a weighted average number of shares in issue during the period of 190.3 million (30 September 2011: 171.5 million and the year ended 31 March 2012: 175.6 million).
Six months ended Year ended
30 Sept 30 Sept 31 Mar
2012 2011 2012
R000 (Reviewed) (Reviewed)(1) (Audited)(2)
Total earnings per ordinary share (cents)
Basic earnings (21.0) 8.4 75.2
Diluted earnings (21.0) 8.4 75.2
Headline earnings (21.1) 8.4 9.5
Diluted headline earnings (21.1) 8.4 9.5
Reconciliation of headline earnings
(net of tax and NCI):
Total comprehensive income attributable to
owners of the company (40 015) 14 475 132 016
(Profit)/Loss on disposal of property,
plant and equipment (69) 65
(Profit) on disposal of intangible asset (287)
Reversal of impairment of intangible asset (648)
Gain on business combination (114 385)
Total headline earnings (40 084) 14 475 16 761
Net asset value per share
Number of shares in issue (millions) 191.6 171.5 188.7
Net asset value per share (cents) 392 344 426
(1) The comparative information has been re-presented as a result of the early adoption of IFRIC 20 Stripping cost in the production phase of a surface mine,
but had no effect on previously presented results.
(2) The comparative information has been re-presented as a result of the early adoption of IFRIC 20 Stripping cost in the production phase of a surface mine.
Refer to the notes to the condensed interim consolidated financial statements, note 1.3
4. Income taxation credit
The income taxation credit of R19.5 million for the six months ended 30 September 2012 is mainly attributable to the increase in estimated tax losses and unredeemed
capital expenditure relating to Keaton Mining Proprietary Limited. Refer to note 1.3 for the effect IFRIC 20 had on the income taxation credit for the year ended 31 March 2012.
5. Property, plant and equipment
The net decrease of R59.7 million from 31 March 2012 is mainly attributable to the following: Capital investments at Vanggatfontein Colliery of R71.4 million (attributable to boxcut development of R15.4 million, stripping activity assets of R43.0 million, mine infrastructure
of R13.0 million). This was offset by a decrease in the rehabilitation assets of R16.1 million due to a decrease in the rehabilitation liability. Refer to note 6.
Capital investments at Vaalkrantz Colliery of R7 million (mainly attributable to mine infrastructure and mine equipment).
These were offset by depreciation charges of R121.9 million.
6. Non-current provisions
The rehabilitation liability at the Vanggatfontein Colliery decreased by R16.1 million during the period as a result of a change in estimate, whilst the previously recognised rehabilitation
liability unwound with R2.5 million during the period. The rehabilitation liability at the Vaalkrantz Colliery decreased by R0.8 million during the period, whilst the previously recognised
rehabilitation liability unwound with R0.4 million during the period.
7. Borrowings
Total borrowings decreased by R17.2 million mainly attributable to the total repayments of R34.7 million against the Nedbank project finance facility. This was offset by finance costs of R12.2 million
and foreign exchange losses of R4.0 million.
8. Trade and other payables
Keaton Mining Proprietary Limited (Keaton) vs Megacube Mining Proprietary Limited (Megacube):
Included in trade and other payables in the Statement of Financial Position is an amount of R42.5 million for contract mining services rendered by Megacube for the period June 2012 to July 2012.
Keaton is currently disputing payment of these claims and has lodged a claim against Megacube for breaches of several provisions contained in the contract mining agreement (the agreement). Keaton delivered
notice of termination of the agreement, to Megacube on 16 May 2012. in accordance with the provisions of the agreement and subsequently terminated the agreement on 5 July 2012.
Keaton Mining Proprietary Limited (Keaton) vs DRA Mineral Projects Proprietary Limited (DRA):
Also included in trade and other payables is an amount of R33 million which DRA contends as owing as reported in Keaton Energys annual report for the year ended 31 March 2012. The litigation is on-going.
9. Commitments and contingencies
The groups capital commitments are:
R000
At At At
30 Sept 31 Mar 30 Sept
2012 2012 2011
(Reviewed) (Audited) (Reviewed)
Exploration and mine development expenditure authorised and contracted 1 780 13 955 1 049
Exploration and mine development expenditure authorised but not contracted 33 494 55 682 32 257
35 274 69 637 33 306
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 2012, available on the groups website at www.keatonenergy.co.za. There were no material changes to the matters reported as at 31 March 2012.
10. Subsequent events
There were no significant events after 30 September 2012 up to the date of this report.
11. Dividends
No dividends have been declared nor are any proposed for the period ended 30 September 2012 (30 September 2011: Rnil and the year ended 31 March 2012: Rnil).
12. Coal reserve and resource statement
The Vanggatfontein Colliery coal reserve has been reduced by approximately 4.2 million tonnes, compared to the coal reserve declared at 31 March 2012, as a result of the application of revised modifying factors.
In addition to this the Vanggatfontein Colliery coal reserve has been reduced by 0.009 million tonnes of metallurgical coal and 0.9 million tonnes of thermal coal mined during the period. The Vaalkrantz Colliery
anthracite reserve has been reduced by 0.3 million tonnes of anthracite mined during the period. There were no further significant changes to the previously reported resource and reserve statements.
13. Review report
The condensed interim consolidated financial statements for the six months ended 30 September 2012, have been reviewed in accordance with International Standards on
Review Engagements 2410 Review of interim financial information performed by the Independent Auditors of the entity by KPMG Inc. Their unmodified review report is available for inspection at the companys registered office.
Keaton Energy Holdings Limited
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 (executive chairman)*, AB Glad (chief executive officer), J Rossouw (financial director),
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 Schoeman Street, Hatfield, Pretoria
www.keatonenergy.co.za
Date: 29/11/2012 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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