| Mon 11 Nov 2002, 9:30 | | Trans Hex - Interim Results For The 6 Months Ended |
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Trans Hex - Interim results for the 6 months ended 30 September 2002
Trans Hex Group Limited
Financial Highlights
Headline earnings per share up 129%
Sales revenue up 90%
Dividend per share up 16%
"The many facets of our business provide an exceptional quality investment."
Tokyo Sexwale, Chairman
Financial summary
The board is pleased to report record interim results for the six months to 30
September 2002. Diamond sales were 90% higher in rand terms at R444,7 million
(2002: R233,9 million) and 51% higher in dollar terms at US$43,2 million (2002:
US$28,7 million) over the prior period. Attributable income is up 134% to R90,8
million (2002: R38,8 million) resulting in a 129% increase in headline earnings
per share to 107,4 cents (2002: 46,9 cents). Cash generated by operations
increased to R181,7 million (2002: R12,1 million) with cash equivalent earnings
per share rising 116% to 174,8 cents (2002: 81,1 cents). Diamond production at
106 000 carats (2002: 95 000 carats) together with cost containment impacted
positively on profitability with mining income increasing by 117% over the prior
period.
Land operations
The Baken Central Plant continues to perform well with average daily throughput
exceeding the budgeted 26 000 tons per day. Management is confident that this
level of throughput can be maintained.
Saxendrift increased production by 37% over the corresponding period for the
prior year. The operation continues to produce large stone sizes on average one
carat larger than those found lower down the Orange River. Results from two
independent crushing processing trials are very encouraging. This development is
likely to add reserves and result in enhanced processing methodology and plant
design, leading to significantly increased production for the operation.
At Jakkalsberg the life of the mine has been extended due to higher than
expected grade and stone size achieved from stockpiled gravel. In addition an
exploration trench on the Jakkalsberg Suidwes terrace has revealed additional
reserves.
The Hondeklip operation, which was scheduled to close during the year, continues
to generate profits and cash and will remain in operation for the foreseeable
future.
Exploration
The geological evaluation of the Bloeddrif project has been completed and mining
commenced in October.
Exploration bulk sampling at Niewejaarskraal in the Middle Orange River yielded
excellent results with a grade of 1,52 carats per 100 cubic metres and an
average stone size of 1,71 carats. An estimated 1,8 million cubic metres of
gravel is present over the central portion of the terrace. An extension of the
same terrace on an adjacent property is estimated to contain 1,0 million cubic
metres of drill delineated basal gravel and is the subject of a joint venture
with Pioneer Minerals (Pty) Limited.
Angola
As announced in September 2002, the company has secured two Angolan alluvial
diamond concessions with delineated resources exceeding 1,7 million carats.
These projects provide a very promising entry to Angola. Further opportunities
are under investigation.
The two concessions will be mined in joint venture with the Angolan State
Diamond Organisation (Endiama) and are expected to build up to more than 400 000
carats annually for the two projects.
Marine
Total production for the marine division amounted to 24 153 carats. The deep-
water mining vessel mv Ivan Prinsep has been deployed on charter to De Beers
Marine since August, whilst the mv Namakwa is conducting sampling and mining
activities in Trans Hex`s own concessions.
Shallow water contractors, together with Trans Hex`s shallow water vessel, mv
Pafuri, produced a total of 16 099 carats with production being boosted by the
contribution from surf zone contractors who are not as affected by adverse
weather conditions as shallow water contractors.
The rough diamond market
Despite little sign of economic recovery in the world`s largest diamond
consuming economy, the United States, the recovery in rough diamond demand, and
a subsequent strengthening of prices, continued from the previous financial
period.
Trans Hex production continues to be sold through the sealed tender process in
accordance with a recently renewed Section 59 Agreement with the Diamond Board.
This method allows the group to maximise the value of its high quality product.
Included in sales for the period were five stones each in excess of fifty carats
in weight. In addition several high value fancy coloured stones were sold, most
notably an 8,84 carat pink stone which realised a price in excess of $28 000 per
carat.
The Kimberley process
In the coming months the board expect to see the implementation of the Kimberley
process whereby diamonds exported amongst the world`s diamond centres must meet
strict criteria pertaining to origin, in order to be granted a requisite export
certificate. As Trans Hex only sells diamonds sourced from its own mines, they
are therefore conflict free. The new certification scheme is welcomed and is not
expected to cause any delay in the group`s export procedures. The certification
process should therefore further enhance the integrity of, and market confidence
in Trans Hex`s product.
Litigation
The group is defending an action instituted by Canadian registered Diamond
Fields International (DFI) during September against a Namibian registered
subsidiary for US$19,5 million resulting from an alleged repudiation of the
DFI/Trans Hex joint venture over certain marine concessions in Namibia. The
board is of the opinion that the DFI claim is without foundation.
A dispute with Bateman Materials Handling Limited, previously disclosed to
shareholders, has been amicably resolved and the mutually beneficial
relationship between the two companies should continue.
Prospects
Concerns exist within the industry as to the strength of diamond jewellery sales
during the important end of year sales period as consumer confidence levels
weaken in the USA, the industry`s largest market. Accordingly, the group enters
2003 with some caution regarding the demand levels for rough diamond production.
Measures to cut costs continue to be implemented at all our operations.
Significant increased production, in excess of 200 000 carats, is expected with
production flow from the Angolan operations anticipated towards the end of the
current financial year. Provided rand diamond prices do not weaken
significantly, enhanced profitability should be achieved.
Directorate
The following changes to the directorate have taken place since the last report
of the group. Mr Y P Mercier resigned on 31 May 2002. Mr A M Krige was appointed
on 27 May 2002. Mr T M G Sexwale was appointed chairman and Mr B R van Rooyen
deputy chairman effective 16 August 2002.
Dividend declaration
The directors of Trans Hex have resolved to declare dividend number 44 of 18
cents per share for the interim period ended 30 September 2002.
Last day to trade (cum dividend) Friday, 3 January 2003
First date of trading (ex dividend) Monday, 6 January 2003
Record date Friday, 10 January 2003
Payment date Monday, 13 January 2003
Shareholders may not rematerialise or dematerialise their holdings of Trans Hex
shares between Monday, 6 January 2003 and Friday, 10 January 2003, both days
inclusive.
By order of the board
T M G Sexwale C Gardner
Chairman Chief executive officer
Parow
8 November 2002
Abridged consolidated income statement
Six months ended Year ended
% 30/09/02 30/09/01 31/03/02
Increase Unaudited Unaudited Audited
R`000 R`000 R`000
Sales revenue 90 444 673 233 913 831 288
Cost of sales 78 292 908 164 133 515 287
Depreciation of mining 62 522 33 606 129 111
assets
Royalties: Namaqualand 12 287 7 109 23 406
Diamond Fund Trust
Other costs 218 099 123 418 362 770
Mining income 117 151 765 69 780 316 001
Net financial income 5 809 (3 505) (4 489)
(Note 1)
Exploration costs (16 654) (27 074) (61 871)
Research and development (2 541) (2 071) (1 277)
Exceptional items - - 550
Profit before taxation 273 138 379 37 130 248 914
Taxation 47 629 1 440 72 905
Profit after taxation 154 90 750 35 690 176 009
Outside shareholders` - 3 090 -
interest
Equity account adjustment 5 3 6
Attributable income 134 90 755 38 783 176 015
Earnings per share
(cents)
- Basic 107,4 46,9 211,6
- Diluted 102 91,1 45,2 202,8
- Headline 129 107,4 46,9 210,8
Dividend per share 16 18,0 15,5 52,5
(cents)
Total number of shares
in issue (`000) 85 212 83 411 84 002
Weighted average issued
shares (`000) 84 534 82 783 83 200
Abridged consolidated statement of changes in equity
Six months ended Year ended
30/09/02 30/09/01 31/03/02
Unaudited Unaudited Audited
R`000 R`000 R`000
Balance at 1 April 814 806 581 848 581 848
Net profit attributable to ordinary 90 755 38 783 176 015
shareholders
Dividends paid (31 176) (23 110) (36 039)
Translation differences on foreign (1 979) 2 735 2 896
subsidiaries
Issue of compulsory convertible - - 68 291
debentures
Deferred taxation asset raised on - - 25 113
compulsory convertible debentures
Fair value adjustment on available-for- (10 131) - (10 555)
sale financial assets
Issue of share capital 6 065 4 909 7 237
Balance at end of period 868 340 605 165 814 806
Abridged consolidated cash flow statement
Six months ended Year ended
30/09/02 30/09/01 31/03/02
Unaudited Unaudited Audited
R`000 R`000 R`000
Cash available from operating 203 299 72 778 384 735
activities
Movements in working capital 7 719 (56 102) 4 636
Taxation paid (29 287) (4 531) (9 235)
Dividend paid (31 176) (23 110) (36 039)
Cash retained from operating 150 555 (10 965) 344 097
activities
Cash employed (109 372) (124 646) (36 884)
Fixed assets - Replacement (6 928) (16 064) (3 958)
- Additional (49 337) (113 298) (200 270)
Compulsory convertible debentures (4 975) - 152 000
Installment sale agreement (9 708) - 9 708
Investments, loans and issue of (38 424) 4 716 5 636
capital
Net cash flow for the period 41 183 (135 611) 307 213
Abridged consolidated Balance sheet
Six months ended Year ended
30/09/02 30/09/01 31/03/02
Unaudited Unaudited Audited
R`000 R`000 R`000
ASSETS
Property, plant and equipment 742 049 772 630 751 371
Investments and loans (Note 2) 63 073 37 176 28 710
Deferred taxation 23 453 - 24 946
Current assets 453 249 150 390 385 913
Cash resources 305 642 - 264 459
Inventory 126 340 107 871 94 735
Other 21 267 42 519 26 719
1 281 824 960 196 1 190 940
Equity and Liabilities
Total shareholders` interest 868 340 605 165 814 806
Long-term liabilities 68 114 - 80 298
Deferred taxation 142 110 115 020 150 436
Deferred liabilities 33 273 22 741 31 961
Current liabilities 169 987 217 270 113 439
Short-term borrowings 10 620 178 365 13 119
Other 159 367 38 905 100 320
1 281 824 960 196 1 190 940
Net asset value per share (cents) 1 019 726 970
Notes
Six months ended Year
ended
30/09/02 30/09/01 31/03/02
Unaudited Unaudited Audited
R`000 R`000 R`000
1. Net financial income
Net financial income consists
mainly of the following principal
categories :
Interest received 16 042 1 085 1 917
Interest paid (5 731) (4 262) (14 664)
Total interest paid (5 731) (9 491) (20 258)
Less capitalised - (5 229) (5 594)
Net foreign exchange gain (3 720) 154 11 400
Rehabilitation provision - (782) (482) (3 142)
unwinding of discount
5 809 (3 505) (4 489)
2. Investments and loans
Listed investments at cost
Shares 8 318 29 234 18 493
Market value 8 318 14 736 18 506
Unlisted investments and loans at
carrying value
Associated company 177 170 172
Trans Hex Rehabilitation Trust Fund 10 155 7 275 9 630
Loan to Trans Hex Group Trust to 246 497 415
finance the share purchase scheme
Loan to Angolan Joint ventures 44 177 - -
54 755 7 942 10 217
Directors` valuation 54 755 7 942 10 217
3. Capital commitments (including 106 559 53 248 26 610
amounts authorised, but not yet
contracted)
These commitments will be funded
out of own resources or borrowed
funds
4. Segment information
Revenue - Land 393 964 210 598 746 829
- Marine 50 709 23 315 84 459
Mining income - Land 148 274 71 850 302 383
- Marine 3 491 (2 070) 13 618
5. Litigation
The group is defending the action instituted by Canadian registered Diamond
Fields International (DFI) during September 2002 against a Namibian registered
subsidiary for US$19,5 million resulting from an alleged repudiation of the
DFI/Trans Hex joint venture over certain marine concessions in Namibia.
6. The accounting policies are consistent with the annual report in accordance
with International Accounting Standards and GAAP. 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.
REGISTERED OFFICE
405 Voortrekker Road, Parow 7500. PO Box 723, Parow 7499, South Africa
Company registration number: 1963/007579/06)
JSE code: TSX Namibian code: THX ISIN code: ZAE000018552
TRANSFER SECRETARIES
South Africa: Computershare Services Ltd, 41 Fox Street, Johannesburg 2001.
PO Box 61051, Marshalltown 2107, South Africa.
Namibia: Transfer Secretaries (Pty) Ltd. PO Box 2401, Windhoek.
Directors:
TMG Sexwale (Chairman), BR van Rooyen (Deputy Chairman), C Gardner (Chief
executive officer), AC Louw (Executive director: Marine Division), MS Loubser
(Executive director: Finance), AM Krige (Executive director: Land Division), WE
Bhrmann, E de la H Hertzog, DM Hoogenhout, A Martin, MJ Willcox, GJ Zacharias
(Company secretary)
Date: 11/11/2002 07:02:00 AM Produced by the JSE SENS Department
