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TSX
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TSX - Trans Hex Group Limited - Audited results for the year ended 31 March 2009
Trans Hex Group Limited
(Incorporated in the Republic of South Africa)
Registration number: 1963/007579/06
ISIN: ZAE000018552
JSE share code: TSX
NSX share code: THX
("Trans Hex" or "the group")
Audited results for the year ended 31 March 2009
Audited consolidated income statement
2009 2008
Notes R`000 R`000
Continuing operations
Sales revenue 637 301 880 900
Cost of goods sold (786 799) (702 934)
Gross (loss)/profit (149 498) 177 966
Royalties: Namaqualand Diamond (24 103) (31 386)
Fund Trust
Selling and administration costs (61 698) (76 899)
Mining (loss)/income (235 299) 69 681
Exploration costs (52 557) (39 345)
Other (losses)/gains 1 (62) 5 660
Finance income 28 332 23 014
Finance costs (20 042) (5 963)
Impairment of assets 2 (536 913) 19 513
Impairment of available-for-sale 3 (2 433) (26 360)
investment
Share of results of associated (7) (7)
companies
(Loss)/profit before income tax (818 981) 46 193
Income tax 58 596 (47 683)
Loss for the year from continuing (760 385) (1 490)
operations
Discontinued operations
Loss for the year from 4 (37 188) (16 972)
discontinued operations
Loss for the year (797 573) (18 462)
Loss per share for continuing
operations
Basic (719,4) (1,4)
Diluted (719,4) (1,4)
Loss per share for discontinued
operations
Basic (35,2) (16,1)
Diluted (35,2) (16,1)
Dividend per share (cents)
Interim - 5,0
Final - 5,0
- 10,0
Total number of shares in issue 105 699 105 699
(`000)
Weighted average issued shares 105 699 105 643
(`000)
Headline (loss)/earnings per share (cents)
Continuing operations (585,1) 8,6
Discontinued operations (17,2) (16,1)
Adjusted headline (loss)/earnings
per share (cents)
Continuing operations (248,4) 8,6
Discontinued operations (15,8) (16,1)
Abridged audited consolidated balance sheet
2009 2008
Notes R`000 R`000
Assets
Property, plant and equipment 526 198 656 262
Goodwill - 37 096
Financial assets 40 197 270 176
Current assets 415 179 428 160
Inventories 6 160 223 112 720
Trade and other receivables 23 057 57 051
Current income tax - 24 401
Financial assets - 11 588
Cash and cash equivalents 231 899 222 400
Non-current assets classified as 3 111 153 595
held for sale
984 685 1 545 289
Equity and liabilities
Total shareholders` interest 186 298 994 472
Long-term borrowings 7 151 368 22 489
Deferred income tax liabilities 173 698 203 819
Provisions 65 999 54 844
Deferred income 24 508 -
Current liabilities 382 814 261 427
Trade and other payables 265 193 203 091
Borrowings 7 91 060 30 088
Bank overdraft 26 561 28 248
Liabilities directly associated with
non-current assets classified - 8 238
as held for sale
984 685 1 545 289
Net asset value per share (cents) 176 941
Abridged audited consolidated statement of changes in equity
2009 2008
R`000 R`000
Balance at 1 April 994 472 1 009 435
Net loss attributable to ordinary (797 573) (18 462)
shareholders
Dividends paid (5 303) (17 996)
Translation differences on foreign (5 298) (3 699)
subsidiaries
Fair value adjustment on available-for-sale - 26 360
financial assets
Share-based payments - 48
Treasury shares held by group - (1 816)
Issue of share capital - 602
Balance at end of year 186 298 994 472
Abridged audited consolidated cash flow statement
2009 2008
R`000 R`000
Cash (utilised by)/generated from operations (148 131) 151 619
Movements in working capital 10 308 45 485
Taxation received/(paid) 8 507 (51 043)
Dividend paid (5 303) (17 996)
Cash (utilised in)/generated from operating (134 619) 128 065
activities
Cash flows from investing activities 23 453 (166 463)
Proceeds from disposal of property, plant and 129 466 14 794
equipment
Replacement of property, plant and equipment (70 121) (152 077)
Addition to property, plant and equipment (41 198) (29 180)
Proceeds from sale of financial assets 5 306 -
Cash flows from financing activities 122 352 (16 720)
Borrowings 189 851 (18 061)
Investments, loans and issue of capital (67 499) 1 341
Net increase/(decrease) in cash and cash 11 186 (55 118)
equivalents
Notes
2009 2008
R`000 R`000
1. Other (losses)/gains
Net foreign exchange profit 9 366 8 871
Loss on other financial assets at fair (6 282) (912)
value through profit and loss
Rehabilitation provision - unwinding (3 146) (2 299)
of discount
(62) 5 660
2. Impairment of assets
As a result of the global economic
slowdown and a subsequent decrease in
rough diamond prices, the group
reviewed the carrying amounts of its
assets. The review indicated
impairment to the value of these
assets and the value of these assets
was reduced during the 2009 financial
year.
In the prior year, due to the
subsequent sale of the Tirisano Mine
(September 2007) the value of the
operation was reassessed, resulting in
an impairment reversal in the prior
period of R19,5 million.
Continuing operations
Details of the impairment
(charge)/reversal are as follows:
Goodwill (37 096) -
Land and buildings (3 087) -
Mining rights (71 504) 12 064
Mine development (6 660) -
Mining plant and equipment (50 419) 4 462
Long-term receivable from Angolan (345 546) -
joint ventures
Net current assets (22 601) 2 987
Impairment (charge)/reversal of (536 913) 19 513
assets before taxation
Taxation 47 401 -
Net asset impairment (489 512) 19 513
(charge)/reversal
2009 2008
R`000 R`000
Discontinued operations
Details of the impairment (charge) are
as follows:
Mining plant and equipment (27 058) -
Net current assets (2 131) -
Impairment (charge) of assets before (29 189) -
taxation
Taxation 596 -
Net asset impairment (charge) (28 593) -
3. Impairment of available-for-sale (2 433) (26 360)
investment
In light of a significant and
prolonged decline in the fair value of
the shares held in Diamond Fields
International Ltd, the cumulative loss
previously recognised in equity, has
been reclassified to the income
statement.
4.
Loss for the year from discontinued
operations
The group resolved on 7 March 2008 to
discontinue the deep water marine
operations as a result of continued
losses sustained. These operations
consisted of two mining vessels of
which one has been sold. This loss
includes the net asset impairment
disclosed above under note 2. The
results of these operations were as
follows :
Revenue 660 48 255
Expenses (17 603) (78 232)
(16 943) (29 977)
Impairment of assets (29 189) -
Profit on sale of assets 8 217 -
Loss before income tax (37 915) (29 977)
Income tax 727 13 005
Loss for the year (37 188) (16 972)
5. Reconciliation of headline earnings
Continuing operations
Loss for the year (760 385) (1 490)
Loss on sale of assets 8 000 3 141
Impairment of assets 168 766 (19 513)
Impairment of available-for-sale 2 433 26 360
investments
Taxation impact (37 203) 596
Headline (loss)/earnings (618 389) 9 094
Impairment of assets 368 148 -
Taxation impact (12 298) -
Adjusted headline (loss)/earnings (262 539) 9 094
Headline (loss)/earnings per share (585,1) 8,6
(cents)
Adjusted headline (loss)/earnings per (248,4) 8,6
share (cents)
Discontinued operations
Loss for the year (37 188) (16 972)
Profit on sale of assets (8 217) -
Impairment of assets 27 057 -
Taxation impact 150 -
Headline loss (18 198) (16 972)
Impairment of assets 2 132 -
Taxation impact (597) -
Adjusted headline (loss)/earnings (16 663) (16 972)
Headline loss per share (cents) (17,2) (16,1)
Adjusted headline loss per share (15,8) (16,1)
(cents)
6. Inventories
Diamonds 128 583 75 188
Consumables 31 640 37 532
160 223 112 720
The carrying value of diamond
inventories carried at net realisable
value amounted to R89,0 million (2008:
R12,3 million)
7. Interest bearing borrowings
Total interest bearing borrowings
increased by R190 million, primarily
as a result of the replacement of
earth moving equipment at the Group`s
Lower Orange operations.
The effect of the increase in
borrowings is an increase in the loss
per share and headline loss per share
of 1,9 cents.
8. Capital commitments
(including amounts authorised, but not 46 334 161 937
yet contracted)
These commitments of the group will be
financed from its own resources or
borrowed funds.
9. Contingent liabilities
The group is subject to claims which
arise in the ordinary course of
business. The Group has provided
performance guarantees to banks and
other third parties amounting to R11,5
million (2008: R10,9 million).
The Group has been advised that a
potential foreign claim exists in
respect of a guarantee on a loan from
a financial institution of R84,8
million. The directors have been
advised that such a claim would be
very unlikely to succeed.
10. Defaults and breaches
As at 31 March 2009 borrowings with a
principal amount of R91,2 million and
accrued interest of R4,9 million due
by joint ventures to external credit
providers, were in default.
11. Segment information
Primary segments
Continuing Dis-
continued
South
Africa Angola Liberia Total Namibia
2009 R`000 R`000 R`000 R`000 R`000
Revenue 588 326 48 975 - 637 301 660
Operating 13 478 (98 059) - (84 581) (8 726)
income/(loss)
Depreciation (118 630) (32 078) (10) (150 718) -
Mining loss (105 152) (130 137) (10) (235 299) (8 726)
Net financial 18 080 (9 852) - 8 228 -
income/(expense)
Exploration (5 805) (43 276) (3 476) (52 557) -
costs
Impairment of (69 403) (460 284) (7 226) (536 913) (29 189)
assets
Share of (7) - - (7) -
associates`
results
Profit/(loss) (162 287) (643 549) (10 712) (816 548) (37 915)
before taxation
Impairment of - - - (2 433) -
available-for-
sale investment
(other)
(162 287) (643 549) (10 712) (818 981) (37 915)
Assets 898 127 82 581 866 981 574 -
Non-current
assets - - - - 3 111
classified as
held-for-sale
Liabilities 545 529 252 858 - 798 387 -
Capital 78 039 33 280 - 111 319 -
expenditure
Net asset value 333 (161) 1 173 3
per share
(cents)
2008
Revenue 791 891 89 009 - 880 900 48 255
Operating 226 220 (37 425) - 188 795 (20 308)
income/(loss)
Depreciation (82 282) (36 832) - (119 114) (7 197)
Mining 143 938 (74 257) - 69 681 (27 505)
income/(loss)
Net financial 31 917 (9 206) - 22 711 -
income/(expense)
Exploration (4 691) (25 900) (8 754) (39 345) (2 472)
costs
Reversal of 19 513 - - 19 513 -
impairment of
assets
Share of (7) - - (7) -
associates`
results
Profit/(loss) 190 670 (109 363) (8 754) 72 553 (29 977)
before taxation
Impairment of
available-for- - - - (26 360) -
sale investment
(other)
190 670 (109 363) (8 754) 46 193 (29 977)
Assets 1 014 779 358 057 5 234 1 378 070 13 624
Non-current
assets 96 675 542 6 558 103 775 49 820
classified as
held-for-sale
Liabilities 401 619 147 440 - 549 059 1 758
Capital 177 607 5 454 - 183 061 -
expenditure
Net asset value 672 200 11 883 58
per share
(cents)
12. The accounting policies are consistent with those applied in the
previous year in accordance with International Financial Reporting
Standards. The abridged financial statements comply with IAS 34
"Interim Financial Reporting".
13. Report of independent auditor
The external auditors, Pricewaterhouse Coopers Inc. have audited the
group`s annual financial statements and the abridged financial
statements contained herein for the year ended 31 March 2009. Copies
of their unqualified audit reports are available on request at the
company`s registered office.
Trading statement
The trading statement released on 19 May 2009 reflected the loss per share for
continuing operations of 690,3 cents. This excluded the impairment of mining
rights for the marine operations, which had been incorrectly allocated to
discontinued operations. This has now been allocated to continuing operations,
which results in the reported loss per share for continuing operations of 719,4
cents per share, and for discontinued operations of 35,2 cents per share.
Detailed project information - 2009
Detailed project 2009
information
(Unaudited)
Average Carats Average Average
grade per produced carats price per
100m3 per stone carat
achieved (US
dollar)
South Africa
Baken 1.46 55,847 1.04 765
Richtersveld Operations 2.34 27,201 1.79 1,047
Shallow Water n/a 5,874 0.35 376
Angola
Fucauma 11.86 30,423 0.32 156
Luarica 12.97 48,338 0.35 215
Detailed project information - 2008
Detailed project 2008
information
(Unaudited)
Average Carats Average Average
grade produced carats price per
per per stone carat
100m3 achieved
(US$)
South Africa
Baken 1.63 71,856 1.03 905
Richtersveld Operations 1.8 24,083 1.57 1,391
Shallow Water n/a 11,366 0.4 478
Angola
Fucauma 12.35 41,800 0.37 181
Luarica 12.57 88,500 0.58 312
Overview
The Group has over the past three years been actively pursuing operating cost
reductions as well as the fixing, closing or sale of unprofitable operations.
As a result, the Middle Orange River operations were sold during 2008 and the
Group`s deep water mining vessels ceased operations in April 2008. One mining
vessel has been sold and the remaining mining vessel has been docked pending
sale.
Diamond prices dropped significantly from September 2008 to February 2009 and
the demand for rough diamonds fell to record lows due to the adverse effect on
the diamond market of the global economic crisis in the latter part of 2008.
This necessitated further and urgent cost cutting and rationalisation of
operations which was immediately implemented.
The Group`s tender sale in March 2009 resulted in all production being sold and
an increase in average prices achieved from the November 2008 lows. Indications
for the May 2009 tender sale reflect strengthened demand for Trans Hex`s
product.
The Group`s cash position remains solid at R205 million which, despite the
severe impact of the global economic crises, is higher than the prior year cash
balance of R194 million.
Response to the Global Economic Crisis
The following response to the global economic crisis was implemented:
The PK production plant, a satellite operation to the Baken Central Plant,
became cash flow negative, and was closed
South African production was stopped during December 2008 and January 2009
The Shallow Water Marine operations are in the process of being placed under
care and maintenance
The Fucauma operation in Angola, of which Trans Hex has management control, has
been placed under care and maintenance
No funding is being provided for the Luarica investment in Angola
All Head Office costs have been reviewed and reduced where possible as has non
essential capital expenditure
Financial Results
Net cash position at year end R205 million. (2008: R194 million)
Sales revenue of R637 million (2008: R881 million) was significantly impacted by
the lower diamond prices achieved in the second half of the financial year
Impairment of assets R569 million of which R460 million relates to the Angolan
operations
Loss for the year from continuing operations before impairments and taxation
amounted to R280 million
Adjusted headline loss per share for continuing operations of 248,4 cents
Operating performance
South African carat production decreased from 107 305 carats in 2008 to 88 933,
as a result of lower grades achieved in the first half and the cessation of
production during December 2008 and January 2009
Total sales amounted to US$73 million of which US$67 million was attributed to
the South African operations
Average price of sales from South Africa was US$805 per carat
Feasibility study completed at Luana
Outlook
The grade achieved at Baken is anticipated to improve as planned mining
operations move to areas which are expected to produce higher grades
The production of high quality and large size stones at the Richtersveld
operations of Nxodap and Bloeddrif, should continue
South African Land operations production of approximately 100 000 carats is
anticipated for the 2009/2010 financial year
The mining contract negotiations at the Luana project in Angola should be
concluded during the financial year
The demand for and the strengthening in prices for the Group`s product is
anticipated to continue through out the 2009/2010 financial year
Costs will be controlled to ensure the sustainability of the Group in current
market conditions
Change in directorship
As previously reported, Mr Denis Martin Falck resigned from the board of
directors effective 15 September 2008, following his retirement as financial
director of Remgro Limited. Advocate Theodore van Wyk, a Remgro Executive
Director, was appointed as a non-executive director on 15 September 2008.
The board announces the appointment of Mr Jan Willem Dreyer as a non-executive
director with effect from 25 May 2009. Mr Dreyer is an executive director of
Remgro Limited.
Dividend declaration
In order to maintain cash resources and until such time as the global economic
crisis situation stabilises, the directors deem it prudent not to declare a
dividend.
Shareholders` diary
The annual report will be mailed before 30 June 2009 and the annual general
meeting is scheduled for 7 August 2009.
By order of the board
PL Zim
Chairman
L Delport
Chief executive officer
Parow
26 May 2009
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Registered office
405 Voortrekker Road, Parow 7500 PO Box 723, Parow 7499
Transfer secretaries
South Africa Computershare Investor Services (Pty) Limited
PO Box 61051, Marshalltown 2107
Namibia Transfer Secretaries (Pty) LtdPO Box 2401, Windhoek
Directorate
PL Zim (chairman), BR van Rooyen (deputy chairman), L Delport (chief executive
officer), MJ Carstens, T de Bruyn, JW Dreyer, E de la H Hertzog, AR Martin, AG
Muller, PC Pienaar, T van Wyk
GJ Zacharias (company secretary)
Date: 26/05/2009 07:24:01 Produced by the JSE SENS Department.
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