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TSX
TSX
TSX - Trans Hex Group Limited - Audited annual results for the year ended 31
March 2012
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")
Audited annual results for the year ended 31 March 2012
Financial headlines
- Sales revenue increased by 14,7% to R754,5 million (2011: R658,0 million).
- South African operations generated a profit before tax of R114,6 million,
compared to a profit before tax of R14,6 million in March 2011.
- Group profit after tax from continuing operations was R80,9 million, against a
loss of R11,4 million in March 2011.
- Profit after tax from discontinued operations amounted to R127,4 million
against a loss of R33,7 million in March 2011.
- Group net profit for the period was R208,3 million (2011: loss of R45,1
million).
- Net cash generated during the reporting period was R79,9 million (2011: R21,9
million) resulting in the Group`s net cash position at the end of the period
being R347,4 million (2011: R267,5 million).
- Headline earnings per share amounted to 195,5 cents, compared to loss per
share of 43,5 cents in March 2011.
- In Angola, Somiluana sales amounted to US$21,7 million (2011: US$19,3 million,
including the sale of pilot production carats).
Abridged consolidated income statement
2012 2011
Notes R`000 R`000
Continuing operations
Sales revenue 754 484 657 998
Cost of goods sold (563 150) (578 003)
Gross profit 191 334 79 995
Royalties (21 447) (6 061)
Selling and administration costs (61 948) (68 822)
Mining profit 107 939 5 112
Exploration costs (9 225) (5 699)
Other gains/(losses) - net 1 7 795 (847)
Finance income 14 155 11 023
Finance costs (11 496) (13 439)
Share of results of associated companies 117 (10)
Profit/(loss) before income tax 109 285 (3 860)
Income tax (28 427) (7 559)
Profit/(loss) for the period from 80 858 (11 419)
continuing operations
Discontinued operations
Profit/(loss) for the period from 2 127 438 (33 680)
discontinued operations
Profit/(loss) for the period 208 296 (45 099)
Attributable to:
Continuing operations 80 858 (11 419)
- Owners of the parent 79 676 (9 203)
- Non-controlling interest 1 182 (2 216)
Discontinued operations
- Owners of the parent 127 438 (33 680)
208 296 (45 099)
Earnings/(loss) per share (cents)
- Continuing operations - Basic and diluted 75,4 (8,7)
- Discontinued operations - Basic and 120,6 (31,9)
diluted
- Total - Basic and diluted 196,0 (40,6)
Total number of shares in issue (`000) 106 051 106 051
Shares in issue adjusted for treasury 105 699 105 699
shares (`000)
Average US$ exchange rate 7,55 7,26
Headline earnings/(loss) 3
- Continuing operations 79 138 (12 749)
- Discontinued operations 127 438 (33 223)
- Total 206 576 (45 972)
Headline earnings/(loss) per share (cents)
- Continuing operations 74,9 (12,1)
- Discontinued operations 120,6 (31,4)
- Total 195,5 (43,5)
Abridged consolidated statement of other
comprehensive income
2012 2011
Notes R`000 R`000
Profit/(loss) for the period 208 296 (45 099)
Other comprehensive income net of tax:
Translation differences on foreign (47 201) 29 452
subsidiaries
- Before-tax amount (31 333) 9 434
- Tax (expense)/benefit (15 868) 20 018
Fair value adjustment on available-for- (1 411) 1 408
sale financial assets
- Before-tax amount (1 411) 1 408
- Tax benefit/(expense) - -
Reclassification of foreign currency - (3 375)
differences on repayment of long-term
receivable from foreign operations
Total comprehensive income/(loss) for the 159 684 (17 614)
period
Attributable to:
- Owners of the parent 158 502 (15 398)
- Non-controlling interest 1 182 (2 216)
159 684 (17 614)
Abridged consolidated statement of financial
position
2012 2011
Notes R`000 R`000
Assets
Property, plant and equipment 384 858 408 678
Investment in associates - 108
Financial assets 99 015 93 591
Current assets 466 720 420 184
Inventories 4 97 776 114 528
Trade and other receivables 21 593 14 599
Cash and cash equivalents 347 351 291 057
950 593 922 561
Equity and liabilities
Total shareholders` interest 470 111 311 609
Non-controlling interest (1 034) (2 216)
Borrowings 24 401 56 937
Deferred income tax liabilities 70 735 65 629
Provisions 91 473 82 990
Deferred income 4 456 11 140
Current liabilities 290 451 396 472
Trade and other payables 216 325 262 176
Current income tax liabilities 4 787 16 138
Borrowings 69 339 94 571
Bank overdraft - 23 587
950 593 922 561
Net asset value per share (cents) 442 292
Abridged consolidated statement of changes in
equity
2012 2011
R`000 R`000
Balance at 1 April 309 393 327 007
Total comprehensive income/(loss) for the 159 684 (17 614)
period
Balance at end of period 469 077 309 393
Abridged consolidated statement of cash flows
2012 2011
R`000 R`000
Cash available from operating 199 815 38 889
activities
Movements in working capital 12 770 54 211
Income tax paid (50 539) (16 558)
Cash generated from operations 162 046 76 542
Cash employed (82 165) (54 637)
Property, plant and equipment
- Proceeds from disposal 672 2 093
- Replacement (33 087) (34 276)
- Additional (17 056) (15 962)
Borrowings (32 694) (33 276)
Investment and loans - 26 784
Net increase in cash and cash 79 881 21 905
equivalents
Cash and cash equivalents at beginning 267 470 245 565
of period
Cash and cash equivalents at end of 347 351 267 470
period
Notes
2012 2011
R`000 R`000
1. Other gains/(losses) - net
Other gains/(losses) - net consists
of the following categories:
- Net foreign exchange gains/(losses) 7 795 (4 222)
- Foreign exchange gains on repayment of
long-term receivable from foreign - 3 375
operation
7 795 (847)
2. Discontinued operations
On 5 October 2011 the Angolan Ministry of Geology, Mines and Industry
revoked the mining rights of the Luarica and Fucauma joint ventures as
no mining activities had been performed at the sites for a period of
three years as a result of the projects being placed under care and
maintenance.
Trans Hex currently has a legally enforceable right to set off a
portion of the amounts owed by the other joint venture parties to Trans
Hex against its pro rata share of certain of the joint ventures`
liabilities. The amounts owed by the other joint venture parties were
previously disclosed as borrowings, trade and other payables and bank
overdraft. Due to the set-off, this portion of the liabilities owed by
the other joint venture parties to Trans Hex became recoverable which
resulted in a reversal of impairment of R84,6 million.
Other gains relate to the prescription of unclaimed debts of R38,2
million and a change in estimate of provisions of R20,9 million.
Revenue - -
Other operating expenses: Luarica and (12 301) (25 284)
Fucauma care and maintenance costs
Other gains - net 59 079 -
Finance costs (3 965) (7 389)
Other expenses - (550)
Reversal of impairment of assets 84 625 -
127 438 (33 223)
Loss on sale of assets - (457)
Profit/(loss) before income tax 127 438 (33 680)
Taxation - -
Profit/(loss) for the period 127 438 (33 680)
3. Reconciliation of headline earnings
Continuing operations
Profit/(loss) for the period 79 676 (9 203)
- Profit on sale of assets (423) (237)
- Taxation impact 118 66
- Profit on sale of listed investment (233) -
- Taxation impact - -
- Foreign exchange gains on repayment of - (3 375)
long-term receivable from foreign
operation
- Taxation impact - -
Headline earnings/(loss) 79 138 (12 749)
Discontinued operations
Profit/(loss) for the period 127 438 (33 680)
- Loss on sale of assets - 457
- Taxation impact - -
Headline profit/(loss) 127 438 (33 223)
4. Inventories
Diamonds 76 123 91 833
Consumables 21 653 22 695
97 776 114 528
5. Capital commitments
(including amounts authorised, but not yet 52 979 54 841
contracted)
These commitments will be financed from
the group`s own resources or with borrowed
funds.
6. Segment information
Operating segments
Continuing
Twelve months ending 31 March 2012 South Angola Total
Africa
Carats sold 83 324 - 83 324
R`000 R`000 R`000
Revenue 754 484 - 754 484
Cost of goods sold (562 345) (805) (563 150)
Gross profit/(loss) 192 139 (805) 191 334
Other operating expenses - - -
Royalties (21 447) - (21 447)
Selling and administration costs (57 396) (4 552) (61 948)
Mining profit/(loss) 113 296 (5 357) 107 939
Exploration costs (9 225) - (9 225)
Other gains - net 7 795 - 7 795
Finance income 14 155 - 14 155
Finance costs (11 496) - (11 496)
Reversal of impairment of assets - - -
Share of results of associated 117 - 117
companies
Profit/(loss) before income tax 114 642 (5 357) 109 285
Depreciation included in the above (81 082) (805) (81 887)
Assets 886 745 63 673 950 418
Liabilities 347 003 3 160 350 163
Capital expenditure 57 041 - 57 041
Net asset value per share (cents) 509 57 566
Operating segments (continued)
Discontinued
Twelve months ending 31 March Angola Namibia Total
2012
(continued)
Carats sold - - -
R`000 R`000 R`000
Revenue - - -
Cost of goods sold - - -
Gross profit/(loss) - - -
Other operating expenses (12 301) - (12 301)
Royalties - - -
Selling and administration costs - - -
Mining profit/(loss) (12 301) - (12 301)
Exploration costs - - -
Other gains - net 59 079 - 59 079
Finance income - - -
Finance costs (3 965) - (3 965)
Reversal of impairment of assets 84 625 - 84 625
Share of results of associated - - -
companies
Profit/(loss) before income tax 127 438 - 127 438
Depreciation included in the - - -
above
Assets 175 - 175
Liabilities 131 353 - 131 353
Capital expenditure - - -
Net asset value per share (cents) (124) - (124)
6. 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 gains/(losses) - net 5 421 (6 268) (847)
Finance income 11 023 - 11 023
Finance costs (13 439) - (13 439)
Share of results of associated (10) - (10)
companies
(Loss)/profit before income tax 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
6. Segment information (continued)
Operating segments (continued)
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 gains/(losses) - net - - -
Finance income - - -
Finance costs (7 389) - (7
389)
Share of results of associated - - -
companies
(Loss)/profit before income tax (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 R82,5 million (31/03/2011: R74,6
million).
7. Mineral resources and mineral reserves
There have been no material changes to the mineral resources and mineral
reserves previously reported in the 2011 annual report.
8. Contingent liabilities
There have been no material changes to contingent liabilities previously
reported in the 2011 annual report.
9. Accounting policies
The abridged group financial statements for the year ended 31 March 2012 were
prepared in accordance with the recognition and measurement principles of
IFRS, the presentation and disclosure requirements of IAS 34 Interim Financial
Reporting, the AC 500 standards as issued by the Accounting Practices Board,
the requirements of the South African Companies Act of 2008 and the Listings
Requirements of the JSE Limited. The accounting policies used to prepare these
financial statements are consistent with those applied in the group`s annual
financial statements for the year ended 31 March 2011.
10. Preparation of financial statements
The preparation of the abridged audited annual financial statements was
supervised by the financial director, IP Hestermann CA(SA).
11. Report of independent auditor
The external auditors, PricewaterhouseCoopers Inc. have audited the group`s
annual financial statements and the abridged financial statements contained
herein for the year ended 31 March 2012. Copies of their unqualified audit
reports are available for inspection on request at the company`s registered
office
Overview
In this commentary, results are compared with the twelve months of the
2010/2011 financial year (in brackets).
South African operations showed a profit before tax of R114,6 million compared
to a profit before tax of R14,6 million in March 2011.
South African production during the reporting period amounted to 84,409 carats
(2011: 69,508 carats). The total volume of gravels treated at the land
operations remained stable and the average grade increased to 1,57 carats/100
m3 (2011: 1,27 carats/100 m3). The unit cost of production increased by 4,8%.
Total sales attributable to the South African operations increased to US$100,0
million (2011: US$90,6 million), at an average price of US$1,200 per carat
(2011: US$1,162). In rand terms, revenue was up by 14,7% to R754,5 million
(2011: R658,0 million).
In Angola, production at Somiluana, in which Trans Hex holds a 33% stake,
amounted to 45,869 carats during the period (2011: 27,662 carats). Total sales
amounted to US$21,7 million at an average price of US$446 per carat (2011:
sales amounted to US$19,3 million, including the sale of pilot production
carats).
The loss from Angolan continuing operations, mainly attributable to the
Angolan head office costs, amounted to R5,4 million.
As a result, the Group reports an after-tax profit for the period from
continuing operations of R80,9 million (2011: loss of R11,4 million).
Profit from discontinued operations in Angola (Luarica and Fucauma) amounted
to R127,4 million (2011: loss of R33,7 million), primarily due to the
prescription of unclaimed debts amounting to R38,2 million, a change in
estimate of provisions of R20,9 million and a reversal of impairment of R84,6
million
The Group therefore reports a profit for the period of R208,3 million (2011:
loss of R45,1 million).
Cash and cash equivalents at the end of the reporting period amounted to
R347,4 million (2011: R267,5 million).
Operating performance
Detailed project information
2012
Detailed project Average grade per Carats Average Average price
information 100 m3 produced carats per per carat
(Unaudited) stone achieved (US$)
South Africa
Baken 1,72 63 869 0,98 1 112
Richtersveld 1,10 13 839 1,49 1 871
Operations
Shallow water - 6 701 0,31 590
Angola
Somiluana 19,16 45 869 0,45 446
Note: Average grade in South Africa is calculated excluding Shallow water
production.
Detailed project information (continued)
2011
Detailed project Average Carats Average Average
information (Unaudited) grade per produced carats per price per
100 m3 stone carat
achieved
(US$)
South Africa
Baken 1,21 46 350 1,02 1 121
Richtersveld 1,41 15 503 1,89 1 714
Operations
Shallow water - 7 655 0,27 366
Angola
Somiluana 18,36 27 662 0,46 351
Note: Average grade in South Africa is calculated excluding Shallow water
production.
South Africa
South African production increased to 84,409 carats compared to 69,508 carats
in the 2011 financial year.
The total volume of gravels treated at the land operations remained stable and
the average grade increased to 1,57 carats/100 m3 compared to the
corresponding previous reporting period of 1,27 carats/100 m3.
Total sales attributable to the South African operations amounted to US$100,0
million at an average price of US$1,200 per carat (2011: US$90,6 million at
US$1,162 per carat).
Angola
Production at Somiluana, in which Trans Hex holds a 33% stake, increased to
45,869 carats compared to 27,662 carats in the previous period. The average
grade achieved was 19,16 carats/100 m3, compared to 18,36 carats/100 m3.
Total sales attributable to the mine during the period amounted to US$21,7
million, at an average price of US$446 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 during the
period and are disclosed as discontinued operations as the mining licences
have been formally revoked by the Angolan State
Outlook
Baken mine continues to concentrate on lowering total costs and generating an
acceptable margin, primarily through processing existing low-grade stockpiles,
tailings and shallow gravels at increased throughput levels.
South African production for the 2013 financial year is expected to be 80,000
carats.
In Angola, the forecast is for Somiluana to produce 42,000 carats for the 2013
financial year.
Trans Hex is continuing with the appropriate course of action to exit from the
discontinued Luarica and Fucauma projects in Angola.
Tight controls over cash and costs will continue to be exercised in all areas
of the Group`s business.
With regard to market conditions, in the short to medium term, future growth
and demand for rough diamonds remain interlinked with the outcome in the
Eurozone, continued US recovery and the level of growth in China, but demand
for Trans Hex`s production is expected to remain strong as the company`s
production portfolio is popular amongst polished manufacturers.
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 the fulfilment of a number of
conditions precedent, including all necessary statutory and regulatory
approvals and approval of the transaction by Trans Hex shareholders in
accordance with the JSE Listings requirements.
Exploration activities are continuing in southern Africa and potential new
ventures are being evaluated on an ongoing basis.
Dividend
In order to maintain cash resources, the directors deem it prudent not to
declare a final dividend.
Change in directorship
As previously reported, Mr Mervyn Carstens resigned as executive director for
SA land operations with effect from 5 April 2011.
Shareholders` diary
The annual report will be mailed by 30 June 2012 and the annual general
meeting is scheduled for 8 August 2012.
By order of the board
BR van Rooyen L Delport
Chairman Chief
Executive Officer
Parow
1 June 2012
Registered office
405 Voortrekker Road, Parow 7500
PO Box 723, Parow 7499
JSE share code: TSX
ISIN: ZAE000018552
Registration number: 1963/007579/06
Incorporated in the Republic of South Africa
("Trans Hex" or "the group")
Transfer secretaries
Computershare Investor Services (Pty) Limited
PO Box 61051, Marshalltown 2107
JSE sponsor
Sasfin Capital
A division of Sasfin Bank Limited
Directorate
BR van Rooyen (Chairman), L Delport (Chief Executive Officer),
IP Hestermann (Financial Director), T de Bruyn, AR Martin,
GM van Heerden (Company Secretary)
Date: 01/06/2012 07:05:03 Produced by the JSE SENS Department.
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