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TSX
TSX
TSX - Trans Hex Group - Unaudited interim results for the six months ended 30
September 2010
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")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2010
Abridged consolidated income statement
Notes Six months ended Year ended
30/09/10 30/09/09 31/03/10
Unaudited Unaudited Audited
R`000 R`000 R`000
Continuing operations
Sales revenue 242 647 370 839 715 667
Cost of goods sold (291 438) (273 025) (527 611)
Gross (loss)/profit (48 791) 97 814 188 056
Other operating expenses 1 (10 236) (12 545) (31 568)
Royalties (13 088) (15 452) (29 837)
Selling and administration costs (40 581) (38 232) (74 671)
Mining (expenses)/income (112 696) 31 585 51 980
Exploration costs (1 845) (2 056) (4 046)
Other (losses)/gains - net 2 (4 936) 516 958
Finance income 6 229 8 171 17 649
Finance costs (13 943) (15 813) (29 636)
Share of results of associated (7) (7) (9)
companies
(Loss)/profit before income tax (127 198) 22 396 36 896
Income tax 25 039 (12 151) (11 747)
(Loss)/profit for the period from (102 159) 10 245 25 149
continuing operations
Discontinued operations
Loss for the period from 3 (828) (1 520) (3 543)
discontinued operations
(Loss)/profit for the period (102 987) 8 725 21 606
(Loss)/earnings per share from
continuing operations (cents)
- Basic (96,7) 9,7 23,8
- Diluted (96,7) 9,7 23,8
Loss per share from discontinued
operations (cents)
- Basic (0,8) (1,4) (3,4)
- Diluted (0,8) (1,4) (3,4)
Dividends per share (cents) - - -
Total number of shares in issue 106 051 106 051 106 051
(`000)
Shares in issue adjusted for 105 699 105 699 105 699
treasury shares (`000)
Average US$ exchange rate 7,46 8,17 7,85
Headline (loss)/earnings
- Continuing operations (102 081) 9 624 23 313
- Discontinued operations (641) (1 520) (2 775)
Headline (loss)/earnings per
share (cents)
- Continuing operations (cents) (96,6) 9,1 22,1
- Discontinued operations (cents) (0,6) (1,4) (2,6)
Abridged consolidated statement of comprehensive income
Six months ended Year ended
30/09/10 30/09/09 31/03/10
Unaudited Unaudited Audited
R`000 R`000 R`000
(Loss)/profit for the period (102 987) 8 725 21 606
Other comprehensive income net of
tax:
Translation differences on foreign 23 965 38 201 118 863
subsidiaries
- Before-tax amount 8 532 37 401 38 508
- Tax benefit 15 433 800 80 355
Fair value adjustment on available- 444 - 240
for-sale financial assets
- Before-tax amount 444 - 240
- Tax benefit/(expense) - - -
Total comprehensive (loss)/income (78 578) 46 926 140 709
for the period
Abridged consolidated statement of financial position
Note Six months ended Year ended
30/09/10 30/09/09 31/03/10
Unaudited Unaudited Audited
R`000 R`000 R`000
Assets
Property, plant and equipment 429 803 479 262 498 252
Investment in associates 5 56 006 123 120
Financial assets 45 146 44 412 43 342
Current assets 336 082 458 814 464 605
Inventories 120 175 168 142 162 792
Trade and other receivables 16 532 23 056 32 921
Cash and cash equivalents 199 375 267 616 268 892
Non-current assets classified as - 3 111 2 044
held for sale
867 037 985 722 1 008 363
Equity and liabilities
Total shareholders` interest 248 429 233 224 327 007
Borrowings 78 814 118 435 95 772
Deferred income tax liabilities 49 207 167 447 90 165
Provisions 79 588 69 641 75 886
Deferred income 14 482 21 166 17 824
Current liabilities 396 517 375 809 401 709
Trade and other payables 280 224 246 448 264 776
Current income tax liabilities 4 687 23 284 20 619
Borrowings 89 574 85 746 92 987
Bank overdraft 22 032 20 331 23 327
867 037 985 722 1 008 363
Net asset value per share (cents) 234 220 308
Abridged consolidated statement of changes in equity
Six months ended Year ended
30/09/10 30/09/09 31/03/10
Unaudited Unaudited Audited
R`000 R`000 R`000
Balance at 1 April 327 007 186 298 186 298
Total comprehensive (loss)/income (78 578) 46 926 140 709
for the period
Balance at end of period 248 429 233 224 327 007
Abridged consolidated statement of cash flows
Six months ended Year ended
30/09/10 30/09/09 31/03/10
Unaudited Unaudited Audited
R`000 R`000 R`000
Cash available from operating (96 674) 63 981 122 714
activities
Movements in working capital 74 674 2 394 20 924
Income tax paid (16 417) (2 632) (2 324)
Cash (utilised in)/generated from (38 417) 63 743 141 314
operations
Cash employed (29 805) (21 796) (101 087)
Property, plant and equipment
- Proceeds from disposal 1 914 3 878 5 696
- Replacement (22 406) (4 018) (30 396)
- Additional (10 560) (2 331) (43 011)
Borrowings (16 663) (16 397) (33 376)
Investment and loans 17 910 (2 928) -
Net (decrease)/increase in cash (68 222) 41 947 40 227
and cash equivalents
Cash and cash equivalents at 245 565 205 338 205 338
beginning of period
Cash and cash equivalents at end 177 343 247 285 245 565
of period
Notes
Six months ended Year
ended
30/09/10 30/09/09 31/03/10
Unaudited Unaudited Audited
R`000 R`000 R`000
1. Other operating expenses 10 236 12 545 31 568
Other operating expenses consist
of Luarica and Fucauma care and
maintenance costs.
2. Other (losses)/gains - net
Other (losses)/gains - net
consists mainly of the following
principal categories:
- Net foreign exchange (4 936) 516 958
(losses)/gains
3. Discontinued operations
During the 2008 financial year it
was decided to discontinue with
the group`s marine vessel
operations in Namibia. The results
of the operations were as follows:
Revenue - - 111
Expenses (641) (1 520) (2 886)
(641) (1 520) (2 775)
Impairment of assets - - (1 067)
Loss on sale of assets (187) - -
Loss before income tax (828) (1 520) (3 842)
Taxation - - 299
Loss for the period (828) (1 520) (3 543)
4. Reconciliation of headline
earnings
Continuing operations
(Loss)/profit for the period (102 159) 10 245 25 149
Loss/(profit) on sale of assets 108 (863) (2 550)
- Taxation impact (30) 242 714
Headline (loss)/earnings (102 081) 9 624 23 313
Discontinued operations
Loss for the period (828) (1 520) (3 543)
Loss on sale of assets 187 - -
- Taxation impact - - -
Impairment of assets - - 1 067
- Taxation impact - - (299)
Headline loss (641) (1 520) (2 775)
5. Investment in associates
On 12 May 2010, the group signed
the Luana mining contract and
thereby acquired a 33% equity
interest in the project and the
right to reimbursement of the
expenditure incurred during the
exploration phase. The investment
has been equity accounted and the
carrying value of the investment
in associate is based on the net
asset value of Luana on the date
of the signature of the mining
contract, less repayments
received.
6. Capital commitments 17 031 33 567 61 539
(including amounts authorised, but
not yet contracted)
7. Segment information
Operating segments
Six months ended 30 September 2010
Continuing Discon-
tinued
South Angola Liberia Total Namibia
Africa
Carats sold 36 641 - - 36 641 -
R`000 R`000 R`000 R`000 R`000
Revenue 242 647 - - 242 647 -
Cost of goods sold (288 658) (2 780) - (291 438) -
Gross loss (46 011) (2 780) - (48 791) -
Other operating - (10 236) - (10 236) (828)
expenses
Royalties (13 088) - - (13 088) -
Selling and (33 217) (7 364) - (40 581) -
administration costs
Mining expenses (92 316) (20 380) - (112 696) (828)
Exploration costs (1 845) - - (1 845) -
Other (losses)/gains (4 936) - - (4 936) -
- net
Finance income 6 229 - - 6 229 -
Finance costs (8 519) (5 424) - (13 943) -
Share of results of (7) - - (7) -
associated companies
Loss before income (101 394) (25 804) - (127 198) (828)
taxation
Depreciation (45 384) (1 137) - (46 521) -
included in the
above
Assets 783 007 84 009 21 867 037 -
Non-current assets - - - - -
classified as held
for sale
Liabilities 398 704 219 904 - 618 608 -
Capital expenditure 32 966 - - 32 966 -
Net asset value per 362 (128) - 234 -
share (cents)
Six months ended 30 September 2009
Continuing Discon-
tinued
South Angola Liberia Total Namibia
Africa
Carats sold 49 458 1 220 - 50 678 -
R`000 R`000 R`000 R`000 R`000
Revenue 369 395 1 444 - 370 839 -
Cost of goods sold (273 673) 648 - (273 025) (1 520)
Gross profit/(loss) 95 722 2 092 - 97 814 (1 520)
Other operating - (12 545) - (12 545) -
expenses
Royalties (15 452) - - (15 452) -
Selling and (31 252) (6 980) - (38 232) -
administration costs
Mining 49 018 (17 433) - 31 585 (1 520)
income/(expenses)
Exploration costs (1 804) - (252) (2 056) -
Other (losses)/gains 463 53 - 516 -
- net
Finance income 8 171 - - 8 171 -
Finance costs (10 704) (5 109) - (15 813) -
Share of results of (7) - - (7) -
associated companies
Profit/(loss) before 45 137 (22 489) (252) 22 396 (1 520)
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 expenditure 4 933 1 416 - 6 349 -
Net asset value per 332 (115) - 217 3
share (cents)
Twelve months ended 31 March 2010
Continuing Discon-
tinued
South Angola Liberia Total Namibia
Africa
Carats sold 95 251 1 220 - 96 471 -
R`000 R`000 R`000 R`000 R`000
Revenue 714 279 1 388 - 715 667 111
Cost of goods sold (520 562) (7 049) - (527 611) (2 886)
Gross profit/(loss) 193 717 (5 661) - 188 056 (2 775)
Other operating - (31 568) - (31 568) -
expenses
Royalties (29 837) - - (29 837) -
Selling and (63 643) (12 189) 1 161 (74 671) -
administration costs
Mining income/ 100 237 (49 418) 1 161 51 980 (2 775)
(expenses)
Exploration costs (4 046) - - (4 046) -
Other (losses)/gains 958 - - 958 -
- net
Finance income 17 649 - - 17 649 -
Finance costs (18 683) (10 953) - (29 636) -
Impairment of assets - - - - (1 067)
Share of results of (9) - - (9) -
associated companies
Profit/(loss) before 96 106 (60 371) 1 161 36 896 (3 842)
income taxation
Depreciation (95 490) (5 108) - (100 598) -
included in the
above
Assets 906 989 98 680 650 1 006 319 -
Non-current assets - - - - 2 044
classified as held
for sale
Liabilities 456 835 224 521 - 681 356 -
Capital expenditure 31 955 2 097 - 34 052 -
Net asset value per 424 (119) 1 306 2
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 R41 million (31/03/2010: R0,0 million;
30/09/2009: R38 million).
8. Mineral resources and mineral reserves
No adjustments have been made to the statement of mineral resources and mineral
reserves as contained in the 2010 annual report. Annual reconciliation of
production data will take place in March 2011 and an updated resource and
reserve statement will be published in the 2011 annual report.
9. Contingent liabilities
There have been no material changes to contingent liabilities previously
reported in the annual report.
10. Restatement of comparative figures
Unwinding of discount was previously included under "Other (losses)/gains - net"
in the income statement. In terms of IAS 37 "Provisions, contingent liabilities
and contingent assets" unwinding of discount should be presented as borrowing
cost. The effect of this reclassification on the prior year figures is that
"Finance costs" in the income statement increased by R3,2 million (31/03/2010)
and R2,3 million (30/09/2009) and "Other (losses)/gains - net" decreased by the
same amount.
The Luarica and Fucauma care and maintenance costs were reclassified as "Other
operating expenses" (note 1). "Cost of goods sold" decreased with the same
amount.
11. Accounting policies
The accounting policies are consistent with the annual report and the
corresponding prior year period in accordance with International Financial
Reporting Standards. 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
2009/2010 financial year (in brackets).
Results for the reporting period have been significantly affected by grade
underperformance at the South African operations. The continued strengthening of
the rand against the US dollar also had a negative effect.
Good progress has, however, been made in Angola, where production capacity at
Project Luana is being steadily increased and two successful sales have been
held.
South African production during the reporting period amounted to 32 288 carats
(Sep 2009: 45 502 carats). Whilst total gravels treated increased by 24% over
the corresponding reporting period in 2009 and the unit cost of production was
reduced by 9%, the average grade achieved decreased from 2,38 carats/100 m3 to
1,24 carats/100 m3.
Total sales attributable to the South African operations decreased by 27,3% to
US$33,0 million (Sep 2009: US$45,4 million), at an average price of US$901 per
carat (Sep 2009: US$913). The average price per carat reduced, despite general
market price increases, due to fewer carats sold originating from the
Richtersveld Operations which fetch a significantly higher price per carat than
those from other operating areas. In Rand terms, revenue was down by 34,5% to
R242,7 million (Sep 2009: R370,8 million).
As a result, the group reports an after-tax loss for the period of R103,0
million (Sep 2009: profit of R8,7 million).
Cash and cash equivalents at the end of the reporting period amounted to R177,3
million (Sep 2009: R247,3 million).
Prospects in Angola have improved significantly. Project Luana (in which Trans
Hex has a 33% stake) had sales amounting to US$11,3 million (Sep 2009: US$0,0
million), of which US$2,3 million was repaid to Trans Hex against the
outstanding investment amount.
Financial headlines
- Sales revenue down to R243 million (Sep 2009: R371 million) primarily as a
result of grade underperformance, but also affected by the stronger rand.
- Loss after tax of R103 million, against a profit of R9 million in September
2009.
- Net cash utilised during the reporting period was R68 million (Sep 2009: R42
million generated) resulting in the group`s net cash position being R177 million
(Sep 2009: R247 million).
- Headline loss per share amounted to 97,2 cents compared to earnings per share
of 7,7 cents in September 2009.
- Luana sales of US$11,3 million (Sep 2009: US$0,0 million), of which US$2,3
million repaid to Trans Hex.
Operating Performance
Detailed Project Information
Six months ended 30 September 2010
Average grade Carats Average Average price
per 100 m3 produced carats per per carat
stone achieved
(US dollar)
South Africa
Baken 1,23 21 104 1,01 935
Richtersveld 1,26 6 766 1,62 1 259
Operations
Shallow water - 4 207 0,24 257
Angola
Fucauma - - - -
Laurica - - - -
Luana 15,46 6 164 0,43 315
Six months ended 30 September 2009
Average grade Carats Average Average price
per 100 m3 produced carats per per carat
stone achieved
(US dollar)
South Africa
Baken 1,93 27 123 1,07 683
Richtersveld 3,89 16 255 1,89 1 264
Operations
Shallow water - 1 992 0,31 431
Angola
Fucauma - - - -
Laurica - - - 145
Luana 36,34 16 803 0,41 -
Note: Fucauma and Luarica were under care and maintenance during the period
South Africa
South African production decreased from 45 502 carats in September 2009 to 32
288 carats as a result of lower grades.
A 24% increase in total gravels treated was achieved, together with a 9%
reduction in the unit cost of production.
Total sales attributable to the South African operations amounted to US$33,0
million at an average price of US$901 per carat (Sep 2009: US$913). The average
price per carat reduced, despite general market price increases, due to fewer
carats sold originating from the Richtersveld Operations which fetch a
significantly higher price per carat than those from other operating areas.
Angola
The Luana Project commenced production build-up in June 2010, directly after the
signing of the mining contract. By the end of September, a total of 6 164 carats
at an average stone size of 0,43cts/st had been produced.
Total sales attributable to the project during the period amounted to US$11,3
million at an average price of over US$300 per carat. A total of US$2,3 million
was repaid to Trans Hex against the outstanding investment amount.
Expansion of production capacity is being funded through cash generated from
operations and the earthmoving fleet in particular has seen the addition of a
number of key production units.
Projects Luarica and Fucauma remain under care and maintenance.
Namibia
The last remaining vessel was sold during the reporting period and all
operations in Namibia have terminated.
Outlook
Towards the end of the reporting period, the grade at SA Land Operations started
to recover. However, at the same time the rand strengthened significantly and it
was decided to suspend stripping operations at Baken until the rand weakens. The
mine is now concentrating on lowering total costs and generating an acceptable
margin by processing existing low grade stockpiles at increased throughput
levels.
South African production for the 2011 financial year is now expected to be 74
000 carats.
In Angola, the forecast for Luana for the coming six months is to produce 31 000
carats. As of 1 October the operations are running on a continuous operations
shift system and a step change is already evident in the month to date figures
for October.
Trans Hex is continuing discussions with its Angolan partners over the future of
the Luarica and Fucauma projects.
Tight controls over cash and costs will continue to be exercised in all areas.
As far as new business opportunities are concerned, exploration activities are
continuing in South and southern Africa and potential new ventures are being
evaluated, as a priority, on an ongoing basis.
With regard to sales, it is anticipated that demand for rough will remain strong
given the future supply scenarios for high quality gem producers like Trans Hex.
Changes in Directorship
At the board meeting held on 27 May 2010, Mr Bernard van Rooyen was confirmed as
chairman of the board for a further period of one year.
Further to Remgro`s unbundling of its shareholding in Trans Hex,
Dr E de la H Hertzog, Advocate T van Wyk and Mr J Dreyer resigned as directors
of Trans Hex on 26 October 2010.
Dividend
In order to maintain cash resources, the directors deem it prudent not to
declare an interim dividend.
By order of the board
BR van Rooyen L Delport
Chairman Chief Executive Officer
Parow
28 October 2010
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) Ltd
PO Box 2401, Windhoek
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Directorate
BR van Rooyen (Chairman), L Delport (Chief Executive Officer),
MJ Carstens (SA Land Operations), IP Hestermann (Financial Director),
T de Bruyn, AR Martin, GM van Heerden (Company Secretary)
Date: 28/10/2010 07:05:23 Produced by the JSE SENS Department.
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