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TSX
TSX
TSX - Trans Hex Group Limited - Unaudited interim results for the six
months ended 30 September 2009
TRANS HEX GROUP LIMITED
Incorporated in the Republic of South Africa
Registration number (1963/007579/06)
Share code: TSX
ISIN: ZAE000018552
("Trans Hex" or "the Company" or "the Group")
Unaudited interim results for the six months ended 30 September 2009
Abridged consolidated income statement
Six months ended Year ended
30/09/09 30/09/08 31/03/09
Unaudited Unaudited Audited
Notes R`000 R`000 R`000
Continuing operations
Sales revenue 370 839 329 694 637 301
Cost of goods sold (285 570) (307 187) (786 799)
Gross profit/(loss) 85 269 22 507 (149 498)
Royalties: Namaqualand (15 452) (12 775) (24 103)
Diamond Fund Trust
Selling and administration (38 232) (32 125) (61 698)
costs
Mining income/(expenses) 31 585 (22 393) (235 299)
Exploration costs (2 056) (22 105) (52 557)
Other (losses)/gains - net 1 (1 764) (6 279) (62)
Finance income 8 171 7 793 28 332
Finance costs (13 533) (3 585) (20 042)
Impairment of assets 2 - - (536 913)
Impairment of available- 3 - - (2 433)
for-sale-investment
Share of results of (7) (4) (7)
associated companies
Profit/(loss) before 22 396 (46 573) (818 981)
income tax
Income tax (12 151) (9 424) 58 596
Profit/(loss) for the 10 245 (55 997) (760 385)
period from continuing
operations
Discontinued operations
Loss for the period from 4 (1 520) (8 356) (37 188)
discontinued operations
Profit/(loss) for the 8 725 (64 353) (797 573)
period
Earnings per share from
continuing operations
(cents)
- Basic 9,7 (53,0) (719,4)
- Diluted 9,7 (53,0) (719,4)
Loss per share from
discontinued operations
(cents)
- Basic (1,4) (7,9) (35,2)
- Diluted (1,4) (7,9) (35,2)
Dividends per share - - -
(cents)
Total number of shares in 106 051 106 051 106 051
issue (`000)
Shares in issue adjusted 105 699 105 699 105 699
for treasury shares (`000)
Average US$ exchange rate 8,17 7,79 8,87
Headline earnings
- Continuing operations 9 624 (54 951) (618 389)
- Discontinued operations (1 520) (8 356) (18 198)
Headline earnings per
share (cents)
- Continuing operations 9,1 (52,0) (585,1)
(cents)
- Discontinued operations (1,4) (7,9) (17,2)
(cents)
Abridged consolidated statement of financial position
Six months ended Year ended
30/09/09 30/09/08 31/03/09
Unaudited Unaudited Audited
R`000 R`000 R`000
Assets
Property, plant and 479 262 649 359 526 198
equipment
Goodwill - 37 096 -
Financial assets 44 535 319 440 40 197
Current assets 458 814 375 962 415 179
Inventories 168 142 211 628 160 223
Trade and other receivables 23 056 34 560 23 057
Current income tax - 5 508 -
Cash and cash equivalents 267 616 124 266 231 899
Non-current assets 3 111 77 853 3 111
classified as held for sale
985 722 1 459 710 984 685
Equity and liabilities
Total shareholders` 233 224 929 966 186 298
interest
Borrowings 118 435 22 062 151 368
Deferred income tax 167 447 190 232 173 698
liabilities
Provisions 69 641 57 284 65 999
Deferred income 21 166 - 24 508
Current liabilities 375 809 260 166 382 814
Trade and other payables 246 448 203 009 256 880
Current income tax 23 284 - 8 313
liabilities
Borrowings 85 746 29 664 91 060
Bank overdraft 20 331 27 493 26 561
985 722 1 459 710 984 685
Net asset value per share 220 880 176
(cents)
Abridged consolidated statement of comprehensive income
Six months ended Year ended
30/09/09 30/09/08 31/03/09
Unaudited Unaudited Audited
R`000 R`000 R`000
Profit/(loss) for the period 8 725 (64 353) (797 573)
Other comprehensive income net
of tax:
Translation differences on 38 201 (1 249) (5 298)
foreign subsidiaries
Fair value adjustment on - 6 399 -
available-for-sale financial
assets
Total comprehensive income for 46 926 (59 203) (802 871)
the period
Abridged consolidated statement of changes in equity
Six months ended Year ended
30/09/09 30/09/08 31/03/09
Unaudited Unaudited Audited
R`000 R`000 R`000
Balance at 1 April 186 298 994 472 994 472
Total comprehensive 46 926 (59 203) (802 871)
income/(loss) for the period
Dividends paid - (5 303) (5 303)
Balance at end of period 233 224 929 966 186 298
Abridged consolidated statement of cash flows
Six months ended Year ended
30/09/09 30/09/08 31/03/09
Unaudited Unaudited Audited
R`000 R`000 R`000
Cash available from operating 63 981 4 733 (148 131)
activities
Movements in working capital 2 394 (71 503) 10 308
Income tax (paid)/received (2 632) (6 873) 8 507
Dividends paid - (5 303) (5 303)
Cash generated by/(utilised by) 63 743 (78 946) (134 619)
operations
Cash employed (21 796) (18 433) 145 805
Property, plant and equipment
- Proceeds from disposal 3 878 75 207 129 466
- Replacement (4 018) (46 552) (70 121)
- Additional (2 331) (12 808) (41 198)
Proceeds from sale of financial - - 5 306
assets
Borrowings (16 397) (851) 189 851
Investment, loans and issue of (2 928) (33 429) (67 499)
capital
Net cash flow for the period 41 947 (97 379) 11 186
Notes
Six months ended Year ended
30/09/09 30/09/08 31/03/09
Unaudited Unaudited Audited
R`000 R`000 R`000
1. Other (losses)/gains - net
Other (losses)/gains - net
consists mainly of the following
principal categories:
- Net foreign exchange gains 516 1 443 9 366
- Loss on other financial assets - (6 282) (6 282)
at fair value through profit or
loss
- Rehabilitation provision - (2 280) (1 440) (3 146)
unwinding of discount
(1 764) (6 279) (62)
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, which assets were
reduced during the 2009
financial year.
Details of the impairment are as
follows:
- Land and buildings - - (3 087)
- Mining rights - - (71 504)
- Mine development costs - - (6 660)
- Mining plant and equipment - - (50 419)
- Goodwill - - (37 096)
- Long-term receivable from - - (345 546)
Angolan joint ventures
- Net current assets - - (22 601)
Impairment of assets before tax - - (536 913)
Taxation - - 47 401
- - (489 512)
3. Impairment of available-for-
sale investment
In light of a significant and - - (2 433)
prolonged decline in the fair
value of the shares held in
Diamond Fields International
Ltd, a further impairment charge
was recorded during the 2009
financial year.
4. Discontinued operations
During the 2008 financial year
it was decided to discontinue
the group`s marine vessel
operations in Namibia. The
results of the operations were
as follows:
Revenue - 660 660
Expenses (1 520) (12 387) (17 603)
(1 520) (11 727) (16 943)
Impairment of assets - - (29 189)
Profit on sale of assets - - 8 217
Loss before income tax (1 520) (11 727) (37 915)
Taxation - 3 371 727
Loss for the year (1 520) (8 356) (37 188)
5. Reconciliation of headline
earnings
Continuing operations
Profit/(loss) for the period 10 245 (55 997) (760 385)
(Profit)/loss on sale of assets (863) 1 396 8 000
- Taxation impact 242 (350) (1 952)
Impairment of assets - - 168 766
- Taxation impact - - (35 251)
Impairment of available-for-sale- - - 2 433
investment
Headline earnings/(loss) 9 624 (54 951) (618 389)
Discontinued operations
Loss for the period (1 520) (8 356) (37 188)
Profit on sale of assets - - (8 217)
- Taxation impact - - 150
Impairment of assets - - 27 057
Headline loss (1 520) (8 356) (18 198)
6. Capital commitments
(including amounts authorised, 33 567 89 383 46 334
but not yet contracted)
7. Segment information
Primary segments
Continuing Discontinued
Six months ended South Angola Liberia Total Namibia
30 September 2009 Africa
R`000 R`000 R`000 R`000 R`000
Carats sold 49 458 1 220 - 50 678 -
Revenue 369 395 1 444 - 370 839 -
Cost of goods sold (273 673) (11 897) - (285 570) -
Gross 95 722 (10 453) - 85 269 (1 520)
profit/(loss)
Royalties: (15 452) - - (15 452) -
Namaqualand
Diamond Fund Trust
Selling and (31 252) (6 980) - (38 232) -
administration
costs
Mining 49 018 (17 433) - 31 585 (1 520)
income/(expense)
Exploration costs (1 804) - (252) (2 056) -
Other (1 817) 53 - (1 764) -
(losses)/gains -
net
Finance income 8 171 - - 8 171 -
Finance costs (8 424) (5 109) - (13 533) -
Share of results (7) - - (7) -
of associated
companies
Profit/(loss) 45 137 (22 489) (252) 22 396 (1 520)
before income
taxation
Depreciation (46 337) (3 237) - (49 574) -
included in the
above
Assets 895 726 86 885 - 982 611 -
Non-current assets - - - - 3 111
classified as held
for sale
Liabilities 543 983 208 515 - 752 498 -
Capital 4 933 1 416 - 6 349 -
expenditure
Net asset value 332 (115) - 217 3
per share (cents)
Continuing Discontinued
Six months ended South Angola Liberia Total Namibia
30 September 2008 Africa
R`000 R`000 R`000 R`000 R`000
Carats sold 32 690 12 878 - 45 568 417
Revenue 302 172 27 522 - 329 694 660
Cost of goods sold (245 631) (61 547) (9) (307 187) (12 387)
Gross 56 541 (34 025) (9) 22 507 (11 727)
profit/(loss)
Royalties: (12 775) - - (12 775) -
Namaqualand
Diamond Fund Trust
Selling and (23 591) (8 534) - (32 125) -
administration
costs
Mining 20 175 (42 559) (9) (22 393) (11 727)
income/(expense)
Exploration costs (2 186) (17 466) (2 453) (22 105) -
Other (6 279) - - (6 279) -
(losses)/gains -
net
Finance income 7 793 - - 7 793 -
Finance costs (387) (3 198) - (3 585) -
Share of results (4) - - (4) -
of associated
companies
Profit/(loss) 19 112 (63 223) (2 462) (46 573) (11 727)
before income
taxation
Depreciation (47 599) (16 205) (9) (63 813) -
included in the
above
Assets 971 458 403 202 7 197 1 381 857 -
Non-current assets 29 191 - - - 48 662
classified as held
for sale
Liabilities 372 348 157 396 - 529 744 -
Capital 51 984 7 376 - 59 360 -
expenditure
Net asset value 594 233 7 834 46
per share (cents)
Continuing Discon-
tinued
Six months ended South Angola Liberia Total Namibia
31 March 2009 Africa
R`000 R`000 R`000 R`000 R`000
Carats sold 83 188 28 272 - 111 460 417
Revenue 588 326 48 975 - 637 301 660
Cost of goods sold (623 567) (163 222) (10) (786 799) (9 386)
Gross loss (35 241) (114 247) (10) (149 498) (8 726)
Royalties: (24 103) - - (24 103) -
Namaqualand
Diamond Fund Trust
Selling and (45 808) (15 890) - (61 698) -
administration
costs
Mining (105 152) (130 137) (10) (235 299) (8 726)
income/(expense)
Exploration costs (5 805) (43 276) (3 476) (52 557) -
Other (62) - - (62) -
(losses)/gains -
net
Finance income 28 332 - - 28 332 -
Finance costs (10 190) (9 852) - (20 042) -
Impairment of (69 403) (460 284) (7 226) (536 913) (29 189)
assets
Share of results (7) - - (7) -
of associated
companies
Loss before income (162 287) (643 549) (10 712) (816 548) (37 915)
taxation
Impairment of - - - (2 433) -
available-for-sale
investment
Loss before income (162 287) (643 549) (10 712) (818 981) (37 915)
taxation
Depreciation (118 630) (32 078) (10) (150 718) -
included in the
above
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)
Revenues from transactions with certain customers amount to ten percent or
more of total revenue. During the period under review total revenue from
these customers amounted to R38 million (31/03/2009: R101 million;
30/09/2008: R124 million).
8. Mineral resources and mineral reserves
There have been no material changes to the mineral resources and mineral
reserves previously reported in the annual report.
9. Contingent liabilities
There have been no material changes to contingent liabilities previously
reported in the annual report.
10. The accounting policies are consistent with the annual report and the
corresponding prior year period in accordance with International Financial
Reporting Standards, except for the adoption of IAS 1 Presentation of
Financial Statements (Revised) and IFRS 8 Operating Segments. The adoption
of these new standards has resulted in certain disclosure reclassifications
but did not have any impact on the results of the group. These abridged
financial statements comply with IAS 34. Income does not accrue evenly
throughout the year and the income for the six months, therefore, does not
necessarily represent half of a full financial year`s income.
Overview
In this commentary, results are compared with the first six months of the
2008/2009 financial year (in brackets).
The directors of Trans Hex are pleased to report that the company has
recorded a successful six months for the period ending 30 September 2009.
The achievements for the period, and the company`s return to profitability,
are largely attributed to two factors; stringent cost management that
resulted in substantial reductions in cash operating costs against the
previous comparative period; and effective cash generation by their
operations that resulted in net cash flow increasing from a net outflow of
R97 million to a net inflow of R42 million.
Financial highlights
- Mining income increased to R32 million (R22 million loss).
- Sales revenue of R371 million (R330 million) improved through increased
volumes and weaker rand/US dollar exchange rate, offset by lower prices.
- Profit after taxation increased to R9 million (R64 million loss).
- Earnings per share from continuing operations increased to 9,7 cents from
a loss per share of 53,0 cents.
- Cash operating costs reduced by R85 million.
- Net cash generated increased to R42 million (R97 million utilised)
resulting in more than doubling the group`s net cash position to R247
million (R97 million).
- Net asset value per share increased by 25% from 31 March 2009.
Diamond prices and demand dropped significantly during the second half of
the previous financial year due to the adverse effect of the global
economic crisis on the diamond market. Sales during the current period have
been characterised by a steady stabilisation in prices and with all
production being sold.
Operating performance
Detailed project information (unaudited)
Six months ended 30 September Six months ended 30 September
2009 2008
Average Carats Average Average Average Carats Average Average
grade produced carats price grade produced carats price
per per per per per per
100 m3 stone carat 100 m3 stone carat
achieved achieved
(US$) (US$)
South Africa
Baken 1,93 27 123 1,07 683 1,39 29 799 1,04 1 130
Richtersveld 3,89 16 255 1,89 1 264 1,74 11 746 1,59 1 333
Operations
Shallow water - 1 992 0,31 431 - 2 126 0,50 508
Angola
Fucauma - - - - 12,38 15 588 0,33 200
Luarica - - - 145 12,71 28 999 0,31 304
Luana 36,34 16 803 0,41 - 31,80 2 838 0,33 -
Note: Fucauma and Luarica were under care and maintenance during the period
South Africa
- South African production increased from 43 670 carats to 45 502 carats as
a result of improved grades achieved, and in spite of the rationalisation
of operations.
- Total sales attributable to the South African operations amounted to
US$45 million.
- These sales were achieved at an average price of US$914 (US$1 186).
Angola
- Luana (in which the group holds a 33% share) had 26 450 carats available
for sale at the end of the period - the project is awaiting approval to
commence with the sale of these diamonds.
- The Luana feasibility study has been approved by the Angolan Ministry of
Geology and Mines.
Liberia
- As previously reported, due to unfavourable exploration results, the
exploration project in Liberia was terminated and activities were wound
down.
Sale of Namibia operations
- Following the sale of the one vessel in the previous reporting period,
the holding costs on the remaining vessel were reduced substantially to
R1,5 million (R11,7 million).
Outlook
- South African land operations production is anticipated around 100 000
carats for the current financial year.
- The grade at Baken, South Africa, is expected to improve as planned
mining operations have moved to areas which are expected to produce higher
grades.
- Both demand and pricing of the group`s product are expected to be stable
over the balance of the financial year.
- Tight cost and cash control will continue to be exerted.
- Negotiations at Luana are continuing and are expected to be concluded by
financial year-end.
Change in directorship
As previously reported, Mr P Lazarus Zim resigned as non-executive director
and chairman of the board effective 22 September 2009. Mr Bernard van
Rooyen has assumed the chairmanship of the board until such time a
replacement chairman is appointed.
In addition, Mr Pine Pienaar resigned as non-executive director effective 4
June 2009, following his resignation as chief executive officer and
director of Mvelaphanda Resources Limited.
The company secretary, Mr George Zacharias, has resigned effective 30
November 2009, and will be replaced by Mr Ian Hestermann, who currently
holds the position of financial director, Trans Hex Angola.
Dividend declaration
In order to maintain cash resources and until such time as the impact of
the global credit crisis situation stabilises, the directors deem it
prudent not to declare an interim dividend.
By order of the board
BR van Rooyen L Delport
Acting Chairman Chief Executive Officer
Parow
10 November 2009
Registered office:
405 Voortrekker Road, Parow 7500, PO Box 723, Parow 7499
JSE share code: TSX
NSX share code: THX
ISIN code: ZAE000018552
Registration number: 1963/007579/06
Incorporated in the Republic of South Africa ("Trans Hex" or "the group")
Transfer secretaries
South Africa Computershare Investor Services (Pty) Limited, PO Box 61051,
Marshalltown 2107
Namibia Irwin Jacob, Greene & Associates, PO Box 2401, Windhoek Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
Directorate
BR van Rooyen (Acting Chairman), L Delport (Chief Executive Officer),
AG Muller (Financial Director), MJ Carstens (SA Land Operations),
T de Bruyn, JW Dreyer, E de la H Hertzog, AR Martin, T van Wyk,
GJ Zacharias (Company Secretary)
Additional information on these results is available at www.transhex.co.za
Date: 10/11/2009 07:05:15 Produced by the JSE SENS Department.
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