Wrap Text
Summarised consolidated results , Notice of AGM &
release of Integrated Annual Report
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)
Summarised consolidated results for the year ended 31 March 2013, Notice of Annual General Meeting and release of Integrated Annual Report
Salient features
- Record safety performances at both Vanggatfontein and Vaalkrantz
- 94% increase in group revenue to R919 million
- R11 million gross profit for the second half of FY13, compared with a gross loss of R38 million for the first half
- 58% increase in Eskom sales to 1.5 million tonnes
- R42 million project finance facility repayment
- Pit 3 at Vanggatfontein developed from operational cash flows
- Studies on development projects advanced
- 25% reserve increase at Vanggatfontein to 45 million tonnes
Commentary
Dear Shareholder
The 2013 financial year saw the Keaton Energy group not only build successfully on the production platform it
established in the previous year, but also advance its portfolio of development projects significantly. The following
commentary summarises the groups key activities during the year.
Safety
Safety is of paramount importance to the Keaton Energy group. Our continuous focus on safety, coupled with intensive
safety training initiatives and rigorous management, resulted in record safety figures in FY13. It is pleasing to report
that Vanggatfontein ended the year with a zero Lost Time Injury Frequency Rate (LTIFR) compared with 0.38 for FY12
whilst Vaalkrantz LTIFR improved to 0.36 from 0.45 over the same period. We congratulate all involved in keeping our
workplaces safe.
Markets
Our coal is sold into three distinct markets:
1. Domestic thermal coal contracted to Eskom;
2. 5-Seam coal and premium anthracite to domestic metallurgical customers; and
3. Anthracite exported to Brazil, through our off-take partner Gunvor International BV.
Our relationship with Eskom, our biggest customer by volume, has continued to strengthen through the delivery of a
consistent quality product to a number of their power stations.
Our entire 5-Seam and premium anthracite production remains in great demand locally and all product is sold as it is
produced. Domestic metallurgical coal prices remained buoyant during the period despite furnace operators reducing
output. In contrast, our single export market for anthracite, the Brazilian iron ore pelletising industry, saw prices decline
in line with the softening of coal prices globally.
Operational review
Vanggatfontein
Vanggatfontein delivered 1 509 681t of washed 2- and 4-Seam thermal coal to Eskom during FY13, an increase of 58% from
the previous years 955 504t. As expected, 5-Seam metallurgical coal sales declined to 65 661t from 140 241t, as a
result of Pit 1 5-Seam coal being depleted in line with the mine plan. The spare capacity of the 5-Seam plant was utilised
for the toll washing of 106 873t of third party coal. The development of Pit 3 during the second half of the year,
however, provides renewed and consistent 5-Seam supply as well as better yielding 2- and 4-Seam coal.
Record safety and production performances were achieved at the colliery, despite significant challenges in terms of
the continuity of local electricity supply, continued poor performance of the front end of the 2- and 4-Seam plant and, of
course, the transport workers strike action during the middle of the year. Mining operations improved significantly
from August with the change in mining contractor. Eskom has worked diligently to resolve the power supply issues,
including a five day supply change-out in December - and we have started to see benefits in this regard. Work still remains
to be done to reach acceptable performance levels at the front end of the plant.
Vaalkrantz
Vaalkrantz dispatched 326 597t of anthracite to domestic and international metallurgical markets, a 7% decrease over
the previous years 351 331t. The operation suffered from extremely difficult mining conditions in the West Alfred
section of the mine which limited production. Nevertheless, it is pleasing to note that, notwithstanding these difficulties,
the collierys safety performance improved.
Group operating and financial performance
Group revenue increased by 94% from R474 million in FY12 to R919 million in FY13. The increase was as a result of
improved deliveries of thermal coal to Eskom and the inclusion of twelve months of Vaalkrantz sales compared to only three
and a half months in FY12. However, group revenue was impacted negatively by lower than planned thermal coal sales to
Eskom as a result of poor plant throughput at Vanggatfontein, and a decrease in sales tonnes and export prices at
Vaalkrantz.
The group recorded a gross loss of R27 million for FY13 compared to a gross profit of R15 million in FY12. This is
mainly due to lower than planned thermal coal sales as noted above and a higher depreciation charge of R227 million
compared to R123 million in FY12 as a result of an increase in coal production at Vanggatfontein and the early adoption of
IFRIC 20. However, the second half of FY13 saw improved performance resulting in a decrease of the gross loss reported at
half year from R38 million to R27 million for the year. Production costs were tightly controlled and cost reduction
remains a key focus at both operations.
During the year a decision was taken to close Pit 1 at Vanggatfontein as it was no longer economic. This decision
resulted in a loss on the derecognition of the asset of R51 million. Future coal production from Pit 2 will now be
supplemented by coal from Pit 3.
As a result total comprehensive income declined to a loss of R132 million compared to a profit of R112 million in FY12
which included the once off recognition of the gain on business combination of R114 million with the acquisition of LME
in FY12. Headline earnings per share reduced from a profit of 9.5 cents in FY12 to a loss of 30.2 cents in FY13.
Capital investment for the group totalled R210 million in FY13 compared to R252 million in FY12 (excluding the
acquisition of LME). The majority of capital was spent at Vanggatfontein, with some R204 million being invested, mainly
applied to stripping costs of R131 million, box cut development in both Pit 2 and Pit 3 of R55 million and infrastructure of
R14 million.
Cash and cash equivalents at the end of the year decreased by R41 million mainly due to the capital investment
discussed above, funding of additional rehabilitation commitments of R7 million and the repayment of R42 million of the Nedbank
project finance facility. These were offset by cash generated from operations of R217 million and cash raised by the
issue of shares in July 2012 of R9 million.
Development pipeline
During FY13 the group completed concept studies on both the Braakfontein and Sterkfontein projects resulting in a 32%
increase in the Sterkfontein resource. Both projects will be advanced in FY14 with Braakfontein taking priority.
Drilling for portal placement at Koudelager, Vaalkrantzs life extension project, will be completed during Q2 FY14 with the
intention of commencing mining activities during the course of the year.
Reserve and Resource Statement
The updated Reserve and Resource Statement for the group will be released in July 2013 as part of the Integrated
Annual Report.
Litigation
Group subsidiary 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. This matter is likely to be heard during FY14.
In addition, the matter between Keaton Mining and DRA Mineral Projects Proprietary Limited, relating
to the failure of the structure supporting the DMS feed bins in May 2011, has finally been set down for the
arbitration hearing in February 2014.
Corporate activities
The group was able to sustain its activities during the year without raising significant additional capital. A planned
capital raise in June 2012 was abandoned due to poor market conditions, with only some R9 million being raised, and the
development of Pit 3 at Vanggatfontein was instead funded from operational generated cash flows.
The group retained the financial support of its principal shareholders and pursued a number of M&A opportunities
during FY13. All of these foundered on price or technical aspects. We continue to evaluate opportunities but remain
committed to not overpaying for assets.
Founding Managing Director Paul Miller left the group in July 2012 having succeeded in his mandate of taking Keaton
Energy from an unlisted explorer to a listed producer. We thank him for all of his hard work and wish him well in his new
endeavours. Rowan Karstel replaced Paul for a brief period before being replaced in September 2012 by current CEO Mandi
Glad. Mandi, another founding executive of the group, was previously group COO and, prior to that, group Marketing
Director. To assist in the transition David Salter assumed a short-term Executive Chairmanship role and, in the interests
of good corporate governance, Lizwi Mtumtum was appointed Lead Independent Director. The board was strengthened further in
November 2012 when well-known mining industry leader Gerard Kemp joined the board as an Independent Non-executive
Director.
Looking ahead
We continue to pursue our longer-term strategy of becoming a 5Mtpa producer. Accordingly, we are now in a period of
optimising operations, advancing our internal pipeline of projects and aggressively pursuing acquisition opportunities
where these offer value for our shareholders. Although FY13 presented the Keaton Energy group with some challenges, we
believe that these have been or are in the process of being overcome and we remain confident that the current financial year
will be a year of profit and growth for the group. Our confidence is supported by Vanggatfonteins performance in both
April and May 2013 in delivering records across production, plant feed, Eskom deliveries and cash generation. This
performance augurs well for the group and for presenting much improved interim financial results in November 2013.
On behalf of the Board
David Salter Mandi Glad
(Executive Chairman) (Chief Executive Officer) 26 July 2013
Preparation of summarised consolidated financial statements
The summarised consolidated financial statements have been extracted from the complete set of financial statements.
The consolidated financial statements for the year ended 31 March 2013 have been audited in terms of the Companies Act 71,
2008. Their preparation was supervised by the Chief Financial Officer, Jacques Rossouw, a Chartered Accountant (SA).
The consolidated financial statements were published on 31 July 2013.
Summarised consolidated statement of comprehensive income
Year ended
31 March 31 March
2013 2012
R000 Note (Audited) (Audited)(1)
Revenue 2 918 807 474 366
Cost of sales (946 081) (459 793)
Gross (loss)/profit 2 (27 274) 14 573
Other income 10 594 25 544
Mining and related expenses 5 (70 492) (10 350)
Net gain on financial instruments 2 485 1 690
Administrative and other operating expenses 7 (54 723) (26 521)
Results from operating activities (139 410) 4 936
Gain on business combination - 114 385
Operating (loss)/profit before net finance cost (139 410) 119 321
Net finance cost (32 199) (13 405)
Finance income 2 109 17 542
Finance costs (34 308) (30 947)
Net (loss)/profit before taxation (171 609) 105 916
Income taxation credit 4 39 335 6 184
Total comprehensive income for the year (132 274) 112 100
Total comprehensive income attributable to:
Owners of the company (84 491) 132 016
Non-controlling interest (47 783) (19 916)
Basic earnings per share (cents) 3 (44.2) 75.2
Diluted earnings per share (cents) 3 (44.2) 75.2
The accompanying notes are an integral part of these summarised consolidated financial statements.
(1) The comparative information has been restated 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 summarised consolidated financial statements,
note 1.3.
Summarised consolidated statement of financial position
At At
31 March 31 March
2013 2012(1)
R000 Note (Audited) (Audited)
Assets
Property, plant and equipment 5 776 070 832 703
Intangible assets 424 131 423 888
Deferred tax 4 51 832 16 638
Restricted cash 7 423 7 423
Restricted investments 26 683 13 027
Total non-current assets 1 286 139 1 293 679
Inventory 38 493 23 117
Trade and other receivables 85 215 104 325
Restricted cash - 6 600
Cash and cash equivalents 19 614 60 549
Total current assets 143 322 194 591
Total assets 1 429 461 1 488 270
Equity
Share capital 192 189
Share premium 640 711 632 054
Share-based payment reserve 12 497 6 180
Other reserves (18 751) (18 751)
Retained earnings 74 573 159 064
Total equity attributable to owners of the company 709 222 778 736
Non-controlling interest (23 185) 24 598
Total equity 686 037 803 334
Liabilities
Borrowings 7 235 390 248 156
Long-term financial liabilities 304 613
Mine closure and environmental rehabilitation provision 6 137 451 112 857
Deferred tax 87 353 93 838
Total non-current liabilities 460 498 455 464
Borrowings 7 49 428 49 176
Mine closure and environmental rehabilitation provision 6 2 859 326
Trade and other payables 8 229 801 179 356
Taxation 838 614
Total current liabilities 282 926 229 472
Total equity and liabilities 1 429 461 1 488 270
The accompanying notes are an integral part of these summarised consolidated financial statements.
(1) The comparative information has been restated 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 summarised consolidated financial statements,
note 1.3.
Summarised consolidated statement of changes in equity
for the year ended 31 March 2013
Total
equity
attribu-
Share- table to Non-
based owners control-
pay- of the ling
Share Share ment Retained Other com- interest Total
R000 capital premium reserve earnings reserves pany (NCI) equity
Balance at 31 March 2011 as previously reported 171 567 718 2 395 21 018 - 591 302 (9 757) 581 545
Effects of adopting IFRIC 20(1) - - - - - - - -
Restated balance at 171 567 718 2 395 21 018 - 591 302 (9 757) 581 545
31 March 2011
Total comprehensive income for the year - - - 132 016 - 132 016 (19 916) 112 100
Transactions with owners
of the company recognised directly in equity
Ordinary shares issued for consideration other than cash 18 76 403 - - - 76 421 - 76 421
Share issue expenses - (67) - - - (67) - (67)
Share-based payments - - 3 785 - - 3 785 - 3 785
Reserves attributable to business combination - - - - (30 751) (30 751) - (30 751)
Share-based payments transferred - (12 000) - - 12 000 - - -
Changes in ownership interests in subsidiaries
Business combination - - - - - - 60 301 60 301
Dilution of non-controlling interests - - - 6 030 - 6 030 (6 030) -
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 year - - - (84 491) - (84 491) (47 783) (132 274)
Transactions with owners
of the company recognised directly in equity
Ordinary shares issued for cash 3 9 020 - - - 9 023 - 9 023
Share issue expenses - (363) - - - (363) - (363)
Share-based payments - - 6 317 - - 6 317 - 6 317
Balance at 31 March 2013 192 640 711 12 497 74 573 (18 751) 709 222 (23 185) 686 037
(1) The comparative information has been restated 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 summarised consolidated financial statements, note 1.3.
Summarised consolidated statement of cash flows
Year ended
31 March 31 March
2013 2012
R000 (Audited) (Audited)(1)
Cash flows from operating activities 191 798 129 520
Cash flows from investing activities (216 946) (295 878)
Cash flows from financing activities (15 787) 199 907
Net (decrease)/increase in cash and cash equivalents (40 935) 33 549
Cash and cash equivalents at the beginning of the period 60 549 27 000
Cash and cash equivalents at the end of the period 19 614 60 549
(1) The comparative information has been restated 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 summarised consolidated financial statements, note 1.3
Segmental report
for the year ended 31 March 2013
Operating profit/(loss)
before depreciation/
Revenue amortisation Depreciation/amortisation
Year to Year to Year to Year to Year to Year to
31 March 31 March 31 March 31 March 31 March 31 March
R000 2013 2012 2013 2012 2013 2012
Vanggatfontein Colliery (1) (5) (6) 645 860 381 828 98 140 93 234 (184 641) (108 039)
Sterkfontein Project - - - - - -
Keaton Energy Holdings Limited (2) (7) 90 490 77 941 59 981 59 259 - -
Keaton Administrative and Technical Services Proprietary Limited (2) 20 241 11 783 1 917 (1 618) (209) (315)
Vaalkrantz Colliery (1) (5) 272 948 92 538 30 826 36 763 (42 258) (14 854)
Leeuw Braakfontein Project - - (9 999) - - -
Koudelager Project - - - - - -
Other segments (3) - - (1 368) 2 053 - -
Total segments 1 029 539 564 090 179 497 189 691 (227 108) (123 208)
Reconciliation to statements of comprehensive income and financial position
Intersegment and other consolidation adjustments (110 732) (89 724) (91 800) (61 547) - -
918 807 474 366 87 697 128 144 (227 108) (123 208)
Gain on business combination
Net finance (cost)/income (4)
Assets/liabilities not allocated to segments
Net profit before taxation
Total assets and liabilities
Segmental report (continued)
for the year ended 31 March 2013
Operating (loss)/profit
after depreciation/
amortisation Segment assets Segment liabilities
Year to Year to Year to Year to Year to Year to
31 March 31 March 31 March 31 March 31 March 31 March
R000 2013 2012 2013 2012 2013 2012
Vanggatfontein Colliery (1) (5) (6) (86 501) (14 805) 807 140 793 053 1 135 924 940 515
Sterkfontein Project - - 65 513 65 092 56 783 53 606
Keaton Energy Holdings Limited (2) (7) 59 981 59 259 801 363 739 697 4 061 3 373
Keaton Administrative and Technical Services Proprietary Limited (2) 1 709 (1 933) 7 424 10 271 16 186 20 637
Vaalkrantz Colliery (1) (5) (11 431) 21 909 196 697 287 202 329 599 336 974
Leeuw Braakfontein Project (9 999) - 317 199 291 338 67 248 48 934
Koudelager Project - - 23 552 23 552 - -
Other segments (3) (1 368) 2 053 19 667 19 999 23 083 18 333
Total segments (47 609) 66 483 2 238 555 2 230 204 1 632 884 1 422 372
Reconciliation to statements of comprehensive income and financial position
Intersegment and other consolidation adjustments (91 800) (61 547) (809 094) (741 934) (889 460) (737 436)
(139 410) 4 936 1 429 461 1 488 270 743 424 684 936
Gain on business combination - 114 385 - - - -
Net finance (cost)/income (4) (32 199) (13 405) - - - -
Assets/liabilities not allocated to se
Net profit before taxation (171 609) 105 916
Total assets and liabilities 1 429 461 1 488 270 743 424 684 936
(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, Klip Colliery
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)
(6) The comparative information for the period 31 March 2012 has been restated as a result of the early adoption of IFRIC 20 -
Stripping cost in the production phase of a surface mine.
(7) Investment income received by Keaton Energy Holdings Limited from its subsidiaries has been reclassified from finance income to
revenue.
Notes to the summarised consolidated financial statements
1. Accounting policies
1.1 Basis of accounting
The summary consolidated financial statements are prepared in accordance with the framework concepts and the measurement and
recognition requirements of International Financial Reporting Standards(IFRS's), the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee, and also, as a minimum, to contain the information required by IAS 34 Interim Financial Reporting the
JSE listings requirements and the requirements of the Companies Act of South Africa. The accounting policies applied in the
preparation of the audited consolidated financial statements, from which the summary consolidated financial statements were derived,
are in terms of IFRS'S and are consistent with the accounting policies applied in the preparation of the previous audited consolidated
financial statements, except for the early adoption of IFRIC 20 noted below.
The directors are responsible for the preparation of these summary consolidated financial statements which have been extracted from
the complete set of financial statements on which the auditors, KPMG Inc., have expressed an unqualified audit opinion. This summarised
report is extracted from audited information, but is not itself audited.
The auditors report does not necessarily report on all of the information contained in this announcement. Shareholders are therefore
advised that in order to obtain a full understanding of the nature of the auditors engagement they should obtain a copy of the
auditors report together with the accompanying financial information from the Companys registered office.
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:
i) it is probable that the future economic benefits (improved access to the coal reserve) associated with the stripping
activity will flow to the group;
ii) 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 restated to comply with the transitional provision as
outlined in IFRIC 20 as follows:
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 summarised consolidated statement of cash flows.
- Depreciation expense increased by R38.5 million with a corresponding increase in accumulated depreciation.
- Deferred tax asset increased by R14.5 million with a corresponding increase in income taxation credit 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
Vanggatfontein delivered 1 509 681 tonnes of washed 2- and 4-Seam thermal coal to Eskom during the year, an increase of 58% from the
previous years 955 504 tonnes. As expected, 5-Seam metallurgical coal sales declined to 65 661 tonnes (31 March 2012: 140 241 tonnes),
as a result of depletion in Pit 1, in line with the mine plan. Vanggatfontein generated revenue of R433.7 million (31 March 2012:
R303.9 million) from coal sales, R15.5 million from toll washing (31 March 2012: nil) and transport revenue of R196.6 million
(31 March 2012: R78 million) during the year.
Vaalkrantz sold 326 597 tonnes of anthracite to domestic and international metallurgical markets, a 7% decrease over the previous years
351 331 tonnes. The operation suffered from extremely difficult mining conditions in the West Alfred section of the mine which limited
production. Vaalkrantz generated revenue of R272.9 million (three and a half months ended 31 March 2012: R92.5 million) for the year.
The group recorded a gross loss of R27.3 million or -3% of sales for the year ended 31 March 2013 (31 March 2012: R14.6 million gross profit
or 3% of sales). The decrease in gross profit was a result of lower than expected sales due to the operational factors noted above. Cost of
sales was higher, mainly due to an increase in coal production at Vanggatfontein and 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 year ended 31 March 2013 (attributable to owners of
the company) of R84.5 million (31 March 2012: profit of R132 million) and a weighted average number of shares in issue during the year
of 190.9 million 31 March 2012: 175.6 million).
Year ended
31 March 31 March
2013 2012
R000 (Audited) (Audited)(1)
Total earnings per ordinary share (cents)
Basic earnings (44.2) 75.2
Diluted earnings (44.2) 75.2
Headline earnings (30.2) 9.5
Diluted headline earnings (30.2) 9.5
Reconciliation of headline earnings (net of tax and NCI):
Total comprehensive income attributable to owners of the company (84 491) 132 016
Loss on derecognition of assets 27 276 65
Profit on disposal of property, plant and equipment (476) -
Profit on disposal of intangible asset - (287)
Reversal of impairment of intangible asset - (648)
Gain on business combination - (114 385)
Total headline earnings (57 691) 16 761
Net asset value per share
Number of shares in issue (millions) 191.7 188.7
Net asset value per share (cents) 358 426
(1) The comparative information has been restated 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 summarised consolidated financial statements, note 1.3.
4. Income taxation credit
The income taxation credit of R39.3 million for the year ended 31 March 2013 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 R56.6 million from 31 March 2012 is mainly attributable to the following:
- Capital investments at Vanggatfontein of R204 million (attributable mainly to mine development of R186.8 million and mine infrastructure
of R13.9 million). The rehabilitation assets at Vangatfontein also increased by R13.4 million, relating to the increase in the rehabilitation
liability. Refer to note 6.
- Capital investments at Vaalkrantz of R6.3 million. In addition the rehabilitation asset also increased by R6.8 million relating to the
increase in the rehabilitation liability. Refer to note 6.
These were offset by depreciation charges of R235.2 million (31 March 2012: R127.4 milion).
During the year a decision was taken to close Pit 1 at Vanggatfontein as it was no longer economic. This resulted in a loss on derecognition
of assets of R51.2 million recorded in mining and related expenses in the statement of comprehensive income with a corresponding decrease
in the mine development asset.
6. Mine closure and environmental rehabilitation provision
The rehabilitation liability at Vanggatfontein increased by R16.5 million during the year. The increase is mainly attributable to the additional
ground disturbances caused by the opening-up of Pit 3. The rehabilitation liability at Klip Colliery also increased by R2.5 million where
rehabilitation work is in its final stage. The rehabilitation liability at Vaalkrantz increased by R8 million during the year, due to additional
environmental disturbances.
7. Borrowings
Total borrowings decreased by R12.5 million, mainly as a result of debt repayments to the value of R47.9 million (R42.2 million relates to the
Nedbank project finance facility). The decrease was offset by finance costs of R25.1 million and a foreign exchange loss of R10 million,
included in administrative and other operating expenses in the statement of comprehensive income.
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 to Keaton for the period June 2012 to July 2012. As a result of several breaches of the contract mining agreement, Keaton disputes
that this amount is due and owing to Megacube. As a result of Megacubes breaches of the contract mining agreement, Keaton has lodged several
claims against Megacube for damages and losses sustained. Keaton delivered a 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 is owing to it as reported in Keaton Energys annual
report for the year ended 31 March 2012. The litigation relates to whether the amount claimed by DRA is due and payable (due to various
breaches of the construction, design and commissioning agreement by DRA) and the litigation is on-going.
9. Commitments and contingencies
The groups capital commitments are:
R000
At At
31 March 31 March
2013 2012
(Audited) (Audited)
Exploration and mine development expenditure authorised and contracted 3 864 13 955
Exploration and mine development expenditure authorised but not contracted 66 845 55 682
70 709 69 637
All contracted amounts will be funded both through existing funding mechanisms within the group and cash generated from operations. For a detailed
disclosure on contingent liabilities refer to Keaton Energys annual report for the year ended 31 March 2013, available on the groups website at
www.keatonenergy.co.za.
10. Subsequent events
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 the ordinary shares were converted into ordinary shares with no par value. It was resolved that all 250 million authorised shares and 191.7 million
issued ordinary shares with a par value of 0.1 cents be converted into ordinary shares with no par value and that the share capital account and the share
premium account of the Company be transferred to the stated capital account. It was also resolved that the authorised share capital increase from
250 million ordinary no par value shares to 750 million ordinary no par value shares.
At the same General Meeting it was resolved that the new Memorandum of Incorporation (MOI), ensuring harmonisation with the JSE Listing Requirements
and the Companies Act of South Africa be adopted.
On 20 June 2013 the sale of the Impati mining right held by LME, to Zinoju Coal Proprietary Limited was effected following receipt of ministerial consent.
The Impati mining right was acquired through the acquisition of LME in the 2012 financial year.
The sale resulted in an amount of R12 million received by LME on 25 June 2013.
11. Dividends
No dividends have been declared nor are any proposed for the year ended 31 March 2013 (31 March 2012: Rnil).
12. Coal reserve and resource statement
The Vanggatfontein east resource block Run-of-Mine (ROM) coal reserve increased by 25% from
35.9 million tonnes (31 March 2012) to 45.0 million tonnes on the back of a 20% increase in mineable in-situ coal resource from 58.4 million tonnes
(31 March 2012) to 70.3 million tonnes. This increase is exclusively due to the inclusion of the Pit 5 resource.
In addition, the Sterkfontein Project declared its first underground ROM coal reserve of 23.6 million tonnes on the back of a 32% increase in the
mineable in-situ coal resource from 68.9 million tonnes (31 March 2012) to 90.8 million tonnes. This increase is due to the inclusion of two newly
awarded Prospecting Rights over the contiguous properties.
There were no further significant changes to the previously reported resource and reserve statements.
13. Audit opinion
These summarised consolidated financial statements have been extracted from the complete set of financial statements on which the auditors, KPMG Inc.,
have expressed an unqualified opinion. This summarised report it extracted from audited information, but is not in itself audited.
14. Annual general meeting
Shareholders are advised that the annual general meeting of Keaton Energy will be held at the Lincontro Conference Room, Michelangelo Hotel,
Nelson Mandela Square, West Street, Sandton on Tuesday, 17 September 2013 at 09:00.
The board has determined that, in terms of section 62(3)(a) of the Companies Act (Act 71 of 2008), the record date for purposes of determining
which shareholders of the company are entitled to participate in and vote at the annual general meeting is Friday, 6 September 2013.
15. Integrated annual report
Shareholders are advised that the Integrated Annual Report for the year ended 31 March 2013 is available on Keaton Energy's website
(www.keatonenergy.co.za) and will be posted to shareholders during the first week of August 2013.
www.keatonenergy.co.za
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 (Chief Financial Officer),
LX Mtumtum++, P Pouroulis**+, OP Sadler++, APE Sedibe+, D Jonker***+, GH Kemp++
*British **South African / Cypriot ***Dutch
+non-executive, ++independent non-executive, lead independent director
Company Secretary:
Michelle Taylor
Transfer Secretaries:
Computershare Investor Services South Africa Proprietary Limited
Ground Floor, 70 Marshall Street, Johannesburg, South Africa
(PO Box 61051, Marshalltown, 2107)
Auditors:
KPMG Inc. 1226 Schoeman Street, Hatfield, Pretoria
Date: 31/07/2013 05:35:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
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