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TSX
TSX
TSX - Trans Hex - Unaudited Interim Results for the six months ended 30
September 2011
Trans Hex Group Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1963/007579/06)
ISIN: ZAE000018552
JSE share code: TSX
("Trans Hex" or "the group")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2011
Abridged consolidated income statement
30/09/11 30/09/10 31/03/11
Notes Unaudited Unaudited Audited
R`000 R`000 R`000
Continuing operations
Sales revenue 271 974 242 647 657 998
Cost of goods sold (214 362) (291 438) (578 003)
Gross profit/(loss) 57 612 (48 791) 79 995
Royalties (5 848) (13 088) (6 061)
Selling and administration costs (31 509) (40 581) (68 822)
Mining profit/(loss) 20 255 (102 460) 5 112
Exploration costs (6 363) (1 845) (5 699)
Other gains/(losses) - net 1 7 474 (4 936) (847)
Finance income 6 574 6 229 11 023
Finance costs (6 319) (8 519) (13 439)
Share of results of associated - (7) (10)
companies
Profit/(loss) before income tax 21 621 (111 538) (3 860)
Income tax (5 344) 25 039 (7 559)
Profit/(loss) for the period from 16 277 (86 499) (11 419)
continuing operations
Discontinued operations
Loss for the period from 2 (14 624) (16 488) (33 680)
discontinued operations
Profit/(loss) for the period 1 653 (102 987) (45 099)
Attributable to:
Continuing operations 16 277 (86 499) (11 419)
- Owners of the parent 14 954 (86 499) (9 203)
- Non-controlling interest 1 323 - (2 216)
Discontinuing operations
- Owners of the parent (14 624) (16 488) (33 680)
1 653 (102 987) (45 099)
Earnings/(loss) per share from
continuing operations (cents)
- Basic 15,4 (81,8) (10,8)
- Diluted 15,4 (81,8) (10,8)
Loss per share from discontinued
operations (cents)
- Basic (13,8) (15,6) (31,9)
- Diluted (13,8) (15,6) (31,9)
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 6,98 7,46 7,26
Headline earnings/(loss)
- Continuing operations 16 266 (86 421) (14 965)
- Discontinued operations (14 624) (16 301) (33 223)
Headline earnings/(loss) per
share (cents)
- Continuing operations (cents) 15,4 (81,8) (14,3)
- Discontinued operations (cents) (13,8) (15,4) (31,4)
Abridged consolidated statement of other comprehensive income
30/09/11 30/09/10 31/03/11
Unaudited Unaudited Audited
R`000 R`000 R`000
Profit/(loss) for the period 1 653 (102 987) (45 099)
Other comprehensive income net of
tax:
Translation differences on foreign (77 849) 23 965 29 452
subsidiaries
- Before-tax amount (38 768) 8 532 9 434
- Tax (cost)/benefit (39 081) 15 433 20 018
Fair value adjustment on available-
for-sale financial assets (757) 1 408
- Before-tax amount (757) 1 408
- Tax benefit/(expense) - - -
Reclassification of foreign currency
differences on repayment of long-
term receivable from foreign - - (3 375)
operations
Total comprehensive loss for the (76 953) (78 578) (17 614)
period
Attributable to:
- Owners of the parent (78 276) (78 578) (15 398)
- Non-controlling interest 1 323 - (2 216)
(76 953) (78 578) (17 614)
Abridged consolidated statement of financial position
30/09/11 30/09/10 31/03/11
Unaudited Unaudited Audited
R`000 R`000 R`000
Assets
Property, plant and equipment 398 174 429 803 408 678
Investment in associates - 113 108
Financial assets 101 072 101 039 93 591
Current assets 422 333 336 082 420 184
Inventories 172 634 120 175 114 528
Trade and other receivables 18 972 16 532 14 599
Cash and cash equivalents 230 727 199 375 291 057
921 579 867 037 922 561
Equity and liabilities
Total shareholders` interest 233 333 248 429 311 609
Non-controlling interest (893) - (2 216)
Borrowings 40 653 78 814 56 937
Deferred income tax liabilities 101 016 49 207 65 629
Provisions 86 971 79 588 82 990
Deferred income 7 798 14 482 11 140
Current liabilities 452 701 396 517 396 472
Trade and other payables 309 272 280 224 262 176
Current income tax liabilities 12 196 4 687 16 138
Borrowings 103 930 89 574 94 571
Bank overdraft 27 303 22 032 23 587
921 579 867 037 922 561
Net asset value per share (cents) 219 234 292
Abridged consolidated statement of changes in equity
30/09/11 30/09/10 31/03/11
Unaudited Unaudited Audited
R`000 R`000 R`000
Balance at 1 April 309 393 327 007 327 007
Total comprehensive (loss)/income for (76 953) (78 578) (17 614)
the period
Balance at end of period 232 440 248 429 309 393
Abridged consolidated statement of cash flows
30/09/11 30/09/10 31/03/11
Unaudited Unaudited Audited
R`000 R`000 R`000
Continuing operations:
Cash available from operating 27 095 (93 296) 43 902
activities
Movements in working capital (40 004) 74 674 54 211
Income tax paid (12 978) (16 417) (16 558)
Discontinued operations (1 010) (3 378) (5 013)
Cash (utilised in)/generated from (26 897) (38 417) 76 542
operations
Cash employed (37 149) (29 805) (54 637)
Property, plant and equipment
- Proceeds from disposal 15 1 914 2 093
- Replacement (12 860) (22 406) (34 276)
- Additional (7 733) (10 560) (15 962)
Borrowings (16 571) (16 663) (33 276)
Investment and loans - 17 910 26 784
Net (decrease)/increase in cash and (64 046) (68 222) 21 905
cash equivalents
Cash and cash equivalents at 267 470 245 565 245 565
beginning of year
Cash and cash equivalents at end of 203 424 177 343 267 470
period
Notes
30/09/11 30/09/10 31/03/11
Unaudite Unaudited Audited
d R`000 R`000
R`000
1. Other gains/(losses) - net
Other gains/(losses) - net
consists mainly of the following
principal categories:
- Net foreign exchange gains/(losses) 7 474 (4 936) (4 222)
- Foreign exchange gains on repayment
of long-term receivable from foreign - - 3 375
operation
7 474 (4 936) (847)
2. Discontinued operations
Luarica and Fucauma costs were
included in the group`s discontinued
Angolan segment as from the current
period as the mining licences have
been formally revoked by the Angolan
State. The marine mining vessels were
included in the group`s discontinued
Namibian segment for the
corresponding prior period.
Revenue - - -
Other operating expenses (10 660) (10 236) (25 284)
Finance costs (3 964) (5 424) (7 389)
Other expenses - (641) (550)
(14 624) (16 301) (33 223)
Loss on sale of assets - (187) (457)
Loss before income tax (14 624) (16 488) (33 680)
Taxation - - -
Loss for the period (14 624) (16 488) (33 680)
3. Reconciliation of headline earnings
Continuing operations
Profit/(loss) for the period 16 277 (86 499) (11 419)
- (Profit)/loss on sale of assets (15) 108 (237)
- Taxation impact 4 (30) 66
- Foreign exchange gains on repayment
of long-term receivable from foreign - - (3 375)
operation
- Taxation impact - - -
Headline earnings/(loss) 16 266 (86 421) (14 965)
Discontinued operations
Loss for the period (14 624) (16 488) (33 680)
- Loss on sale of assets - 187 457
- Taxation impact - - -
Headline loss (14 624) (16 301) (33 223)
4. Capital commitments (including amounts
authorised, but not yet contracted)
33 991 17 031 54 841
These commitments will be financed
from the group`s own resources or with
borrowed funds.
5. Segment information
Operating segments
Continuing
Six months ending 30 September 2011 South Africa Angola Total
Carats sold 28 771 - 28 771
R`000 R`000 R`000
Revenue 271 974 - 271 974
Cost of goods sold (213 915) (447) (214 362)
Gross profit/(loss) 58 059 (447) 57 612
Other operating expenses - - -
Royalties (5 848) - (5 848)
Selling and administration costs (28 697) (2 812) (31 509)
Mining profit/(loss) 23 514 (3 259) 20 255
Exploration costs (6 363) - (6 363)
Other gains/(losses) - net 7 474 - 7 474
Finance income 6 574 - 6 574
Finance costs (6 319) - (6 319)
Profit/(loss) before income taxation
24 880 (3 259) 21 621
Depreciation included in the above
(34 410) (447) (34 857)
Assets 852 173 69 406 921 579
Liabilities 406 539 8 762 415 301
Capital expenditure 20 489 - 20 489
Net asset value per share (cents) 420 57 477
Discontinued
Six months ending 30 September 2011 Angola Namibia Total
Carats sold - - -
R`000 R`000 R`000
Revenue - - -
Cost of goods sold - - -
Gross profit/(loss) - - -
Other operating expenses (10 660) - (10 660)
Royalties - - -
Selling and administration costs - - -
Mining profit/(loss) (10 660) - (10 660)
Exploration costs - - -
Other gains/(losses) - net - - -
Finance income - - -
Finance costs (3 964) - (3 964)
Profit/(loss) before income taxation
(14 624) - (14 624)
Depreciation included in the above
- - -
Assets - - -
Liabilities 273 838 - 273 838
Capital expenditure - - -
Net asset value per share (cents) (258) - (258)
5. Segment information (continued)
Operating segments (continued)
Continuing
Six months ending 30 September 2010 South Angola Total
Africa
Carats sold 36 641 - 36 641
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 expenses - - -
Royalties (13 088) - (13 088)
Selling and administration costs (33 217) (7 364) (40 581)
Mining loss (92 316) (10 144) (102
460)
Exploration costs (1 845) - (1 845)
Other (losses)/gains - net (4 936) - (4 936)
Finance income 6 229 - 6 229
Finance costs (8 519) - (8 519)
Share of results of associated
companies (7) - (7)
Loss before income taxation (101 394) (10 144) (111
538)
Depreciation included in the above
(45 384) (1 137) (46 521)
Assets 783 028 84 009 867 037
Liabilities 398 704 7 205 405 909
Capital expenditure 32 966 - 32 966
Net asset value per share (cents) 362 72 434
Discontinued
Angola Namibia Total
Six months ending 30 September 2010
Carats sold - - -
R`000 R`000 R`000
Revenue - - -
Cost of goods sold - - -
Gross loss - - -
Other operating expenses (10 236) (828) (11 064)
Royalties - - -
Selling and administration costs - - -
Mining loss (10 236) (828) (11 064)
Exploration costs - - -
Other (losses)/gains - net - - -
Finance income - - -
Finance costs (5 424) - (5 424)
Share of results of associated
companies - - -
Loss before income taxation (15 660) (828) (16 488)
Depreciation included in the above
- - -
Assets - - -
Liabilities 212 699 - 212 699
Capital expenditure - - -
Net asset value per share (cents) (200) - (200)
5. Segment information (continued)
Operating segments (continued)
Continuing
Twelve months ending 31 March 2011 South Angola Total
Africa
Carats sold 77 957 - 77 957
R`000 R`000 R`000
Revenue 657 998 - 657 998
Cost of goods sold (574 625) (3 378) (578 003)
Gross profit/(loss) 83 373 (3 378) 79 995
Other operating expenses - - -
Royalties (6 061) - (6 061)
Selling and administration costs (59 982) (8 840) (68 822)
Mining (loss)/profit 17 330 (12 218) 5 112
Exploration costs (5 699) - (5 699)
Other (losses)/gains - net 5 421 (6 268) (847)
Finance income 11 023 - 11 023
Finance costs (13 439) - (13 439)
Share of results of associated
companies (10) - (10)
(Loss)/profit before income
taxation 14 626 (18 486) (3 860)
Depreciation included in the above
(82 735) (1 788) (84 523)
Assets 859 330 63 231 922 561
Liabilities 383 100 7 320 390 420
Capital expenditure 51 573 298 51 871
Net asset value per share (cents) 449 53 502
Discontinued
Twelve months ending 31 March 2011 Angola Namibia Total
Carats sold - - -
R`000 R`000 R`000
Revenue - - -
Cost of goods sold - - -
Gross profit/(loss) - - -
Other operating expenses (25 284) (1 007) (26 291)
Royalties - - -
Selling and administration costs - - -
Mining (loss)/profit (25 284) (1 007) (26 291)
Exploration costs - - -
Other (losses)/gains - net - - -
Finance income - - -
Finance costs (7 389) - (7 389)
Share of results of associated -
companies - -
(Loss)/profit before income taxation
(32 673) (1 007) (33 680)
Depreciation included in the above
- - -
Assets - - -
Liabilities 222 748 - 222 748
Capital expenditure - - -
Net asset value per share (cents) (210) - (210)
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 R66,4 million (31/03/2011: R74,6 million; 30/09/2010:
R41,0 million).
6. Mineral resources and mineral reserves
No adjustments have been made to the statement of mineral resources and mineral
reserves as contained in the 2011 annual report. Annual reconciliation of
production data will take place in March 2012 and an updated resource and
reserve statement will be published in the 2012 annual report.
7. Contingent liabilities
There have been no material changes to contingent liabilities previously
reported in the annual report.
8. Accounting policies
The accounting policies are consistent with those applied in the audited annual
financial statements for the year ended 31 March 2011 and the corresponding
prior year period in accordance with International Financial Reporting
Standards, except for the adoption of IAS 27 Consolidated and Separate Financial
Statements (Revised). The adoption of this revised standard has resulted in a
debit balance being recognised for non-controlling interest which has not been
accounted for previously. These abridged financial statements comply with IAS34.
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.
9. Preparation of financial statements
The preparation of the abridged unaudited interim financial statements was
supervised by the financial director, IP Hestermann CA(SA).
Overview
In this commentary, results are compared with the first six months of the
2010/2011 financial year (in brackets).
South African operations showed a profit before tax of R24,9 million compared to
a loss before tax of R101,4 million in September 2010.
South African production during the reporting period amounted to 33,199 carats
(Sep 2010: 32,288 carats). The total volume of gravels treated at the land
operations remained stable and the average grade of 1,24 carats/100m3 was the
same as in the corresponding previous reporting period. The unit cost of
production was reduced by 3%.
Total sales attributable to the South African operations increased to US$39,5
million (Sep 2010: US$33,0 million), at an average price of US$1,372 per carat
(Sep 2010: US$901). In Rand terms, revenue was up by 12,1% to R272,0 million
(Sep 2010: R242,7 million).
In Angola, production at Somiluana, in which Trans Hex holds a 33% stake,
amounted to 20,473 carats during the period (Sep 2010: 6,164 carats). Total
sales amounted to US$9,8 million at an average price of US$434 per carat (Sep
2010: sales amounted to US$ 11,3 million, including the sale of pilot production
carats).
The loss from Angolan continuing operations, mainly attributable to the Angolan
head office costs amounted to R3,3 million.
As a result, the Group reports an after-tax profit for the period from
continuing operations of R16,3 million (Sep 2010: loss of R86,5 million).
Projects Luarica and Fucauma remained under care and maintenance throughout the
period and these costs, amounting to R14,6 million, were included in the group`s
discontinued Angolan segment.
The Group therefore reports a profit for the period of R1,7 million (Sep 2010:
loss of R103,0 million).
Cash and cash equivalents at the end of the reporting period amounted to R203,4
million (Sep 2010: R177,3 million).
Financial Headlines
- Sales revenue increased by 12,1% to R272,0 million (Sep 2010: R242,7 million).
- South African operations generated a profit before tax of R24,9 million,
compared to a loss before tax of R101,4 million in September 2010.
- Group profit after tax from continuing operations was R16,3 million, against a
loss of R86,5 million in September 2010.
- Loss after tax from discontinued operations amounted to R14,6 million against
a loss of R16,5 million in September 2010.
- Group net profit for the period was R1,7 million (Sep 2010: loss of R103,0
million).
- Net cash utilised during the reporting period was R64,1 million (Sep 2010:
R68,2 million) resulting in the Group`s net cash position at the end of the
period being R203,4 million (Sep 2010: R177,3 million).
- Headline earnings per share amounted to 1,6 cents, compared to loss per share
of 97,2 cents in September 2010.
- In Angola, Somiluana sales amounted to US$9,8 million (Sep 2010: US$11,3
million, including the sale of pilot production carats).
Operating performance
Detailed project information
Six months ended 30 September 2011
Detailed project information Average Carats Average Average
(unaudited) grade per produced carats per price per
100 m3 stone carat
achieved
(US$)
South Africa
Baken 1.31 23,789 1.36 1,235
Richtersveld operations 1.04 6,692 1.70 2,044
Shallow water - 2,718 0.32 616
Total SA 1.24 33,199 1.11 1,372
Angola
Somiluana 18.19 20,473 0.45 434
Note: Average grade in South Africa is calculated excluding Shallow water
production.
Detailed project information (continued)
Six months ended 30 September 2010
Detailed project information Average Carats Average Average
(unaudited) grade per produced carats price per
100 m3 per stone carat
achieved
(US$)
South Africa
Baken 1.23 21,314 1.01 935
Richtersveld operations 1.26 6,766 1.62 1,259
Shallow water - 4,208 0.24 282
Total SA 1.24 32,288 0.76 901
Angola
Somiluana 15.46 6,164 0.43 315
Note: Average grade in South Africa is calculated excluding Shallow water
production.
South Africa
South African production increased to 33,199 carats compared to 32,288 carats in
the corresponding prior period.
The total volume of gravels treated at the land operations remained stable and
the average grade of 1,24 carats/100m3 was the same as in the corresponding
previous reporting period.
Total sales attributable to the South African operations amounted to US$39,5
million at an average price of US$1,372 per carat (Sep 2010: US$33,0 million at
US$901 per carat).
Angola
Production at Somiluana, in which Trans Hex holds a 33% stake, increased to
20,473 carats compared to 6,164 carats in the previous period. The average grade
achieved was 18,19 carats/100m3, compared to 15,46 carats/100m3.
Total sales attributable to the mine during the period amounted to US$9,8
million, at an average price of US$434 per carat. No repayment was made to Trans
Hex against the outstanding investment amount as cash was retained to develop
the mine.
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 remained under care and maintenance throughout the
period and are now disclosed as discontinued operations as the mining licences
have been formally revoked by the Angolan State.
Outlook
Stripping operations at Baken will be resumed in the second half of the year,
but on a reduced scale. The mine is still concentrating on lowering total costs
and generating an acceptable margin, primarily by processing existing low grade
stockpiles at increased throughput levels.
South African production for the 2012 financial year is now expected to be
82,000 carats.
In Angola, the forecast is for Somiluana to produce 42,000 carats for the
financial year.
Exit procedures in respect of the Luarica and Fucauma projects, in which Trans
Hex holds minority stakes, are continuing.
Tight controls over cash and costs will continue to be exercised in all areas of
the Group`s business.
Although rough prices retracted in the latter part of the reporting period, they
remain some way above the highs of 2008, prior to the world financial crisis.
Market conditions are now expected to be subdued for the remainder of 2011, with
a strengthening in demand anticipated during 2012.
In respect of new business opportunities, an agreement with De Beers
Consolidated Mines Limited ("DBCM") was signed on 6 May 2011 in terms of which,
and subject to certain conditions precedent, Trans Hex`s 50% held joint venture
company, Emerald Panther Investments 78 (Pty) Limited, will acquire assets and
liabilities relating to Namaqualand Mines, a division of DBCM.
The proposed acquisition remains subject to a number of conditions precedent
being met, including all necessary statutory and regulatory approvals. The
following conditions had been met, as at 30 October 2011:
- Unconditional written approval of the relevant Competition Authorities in
terms of the Competition Act, No 89 of 1998; and
- Approval of the transaction by the shareholders and the board of
directors of DBCM.
Exploration activities are continuing in Southern Africa and potential new
ventures are being evaluated on an ongoing basis.
Changes in Directorship
Mr. Mervyn Carstens resigned as executive director for SA land operations
effective 5 April 2011 pursuant to his secondment on a full-time basis as
managing director of Trans Hex`s new joint-venture agricultural company.
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
9 November 2011
Registered office
405 Voortrekker Road, Parow 7500 PO Box 723, Parow 7499
Transfer secretaries
Computershare Investor Services (Pty) Limited
PO Box 61051, Marshalltown 2107
Directorate
BR van Rooyen (Chairman), L Delport (Chief Executive Officer),
IP Hestermann (Financial Director), T de Bruyn, AR Martin,
GM van Heerden (Company Secretary)
Sponsor
RAND MERCHANT BANK (a division of FirstRand Bank Limited)
Date: 09/11/2011 16:50:01 Produced by the JSE SENS Department.
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