| Fri 31 Oct 2003, 8:11 | | INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTE |
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TRANS HEX GROUP LIMITED - INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER
2003
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
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2003
Financial highlights
Headline earnings per share up 18,7%
Sales revenue up 28,4%
Cash from operations up 18%
Dividend per share up 11,1%
COMMENTS
Financial Summary
The board is pleased to report record interim results for the six months to 30
September 2003. Diamond sales were 22% higher in rand terms at R542,2 million
(2002/03: R444,7 million) and 62% higher in dollar terms at US$69,8 million
(2002/03: US$43,2 million) over the prior year corresponding period. The average
rand exchange rate declined by 24,8% due to the stronger rand against the US
dollar compared to the prior year corresponding period.
Attributable income increased 24,4% to R112,9 million (2002/03: R90,8 million)
generating an 18,7% increase in headline earnings per share to 132,5 cents
(2002/03: 111,6 cents). Mining income increased by 68,7% to R256,1 million
(2002/03: R151,8 million). The continued focus on containing costs per carat
produced has impacted positively on profitability. The provision for taxation,
including secondary tax on companies, rose 40,1% to R66,8 million as a result of
higher taxable income largely from increased sales and prudent cost containment.
Cash available from operating activities increased 18% to R240,0 million
(2002/03: R203,3 million). Total diamond production amounted to 107 300 carats
(2002/03: 106 000 carats).
Land Operations
Carat production from Land Operations (excluding production from Hondeklip Bay
which came to its end of mine life during January 2003) was 38% higher than for
the prior year corresponding period. Increased production, together with higher
than budgeted grades from the Lower Orange River Projects (Baken, Bloeddrif and
Reuning), assisted in offsetting the impact of the strong rand.
Baken increased its production by 14% over the prior year corresponding period.
The Baken Central Plant underwent minor modifications during the period and
continues to perform satisfactorily. Negotiations for the implementation of 24
hours 7 days a week operations at Baken with the National Union of Mineworkers
at both regional and central level, are ongoing.
The scour pool feature at Bloeddrif produced grades four times higher than
originally anticipated. At Jakkalsberg the treatment of both stockpile and in
situ gravel has produced satisfactory results while production from the Nxodap
terrace, which was processed through the Suidhek plant, has exceeded
expectations.
Saxendrift increased production by 9% over the prior year corresponding period.
The operation continues to produce large average stone sizes in the region of
2,51 carats/stone. The new electronic security surveillance system was
implemented during March 2003, contributing to the average stone size increasing
by 4% over the last six months.
Exploration
Bulk sampling of the Niewejaarskraal property in the Middle Orange region was
completed in June 2003. The surface Rooikoppie gravel yielded good grades and
stone sizes, whereas the basal gravels are marginal under current economic
conditions. Full production of Rooikoppie gravel has commenced with an estimated
life of mine of three years.
Sampling on the Viegulands Put joint venture property, directly adjacent to
Niewejaarskraal, is ongoing with results to date indicating similar Rooikoppie
and basal grades to Niewejaarskraal. Drilling of the Remhoogte property has been
completed reflecting extensive Rooikoppie gravel but discontinuous basal gravel.
Angola
Production at the Luarica concession is on schedule with improved stone sizes
being achieved. The largest stone recovered since production commenced is a 76
carat stone. Consistently positive results established through trench sampling
ahead of mining faces, have led to significant additions to mining reserves. A
dredge sampling operation has been initiated on the Chuimbe River to evaluate
the wider potential of the 20 km long concession.
Bulk sampling of the Fucauma concession commenced in July 2003. Extensive gravel
terraces have been identified in the Cauma and Sampanho areas with a grade above
20 carats/100 m3 and stone size of 0,4 and 0,7 carats/stone.
An aeromagnetic survey was conducted over the Gango kimberlite and alluvial
exploration concession in the Cuanza Sul province. The results of the survey are
encouraging and promising targets have been identified.
The Luana concession, to the east of the Luarica concession, has been secured
and geological field mapping of the concession has commenced.
Marine
Total diamond production from the marine operations amounted to 13 805 carats.
The bulk of the carat production emanated from the Northern and Southern sector
shallow water diving operations, as the two deep-water mining vessels were both
committed to charter agreements with De Beers Marine in Namibia.
The Mv Namakwa and Mv Ivan Prinsep contributed combined income after
depreciation of approximately R5,1 million from their respective charter
agreements. The continuance of the charter agreements is currently being
negotiated. The Mv Ivan Prinsep is scheduled to conduct sampling operations in
Trans Hex"s South African concession areas in the latter part of 2003.
The Rough Diamond Market
A shortage of rough supply has ensured that the rough diamond market has
remained strong throughout the period. As the major producers pursue strategies
that encourage their core customers to develop downstream opportunities, the
Trans Hex production, characterised by its high quality and large stone sizes,
remains an important source of rough to the open market. This has translated
into sustained high demand levels and a strengthening of dollar prices. During
the period, five gem quality stones in excess of fifty carats and one stone in
excess of one hundred carats were sold.
In addition to regular South African sales, Trans Hex conducted two sales with a
combined weight in excess of 36 000 carats during the period from the Angolan
Luarica concession to ASCORP and SODIAM, the agencies responsible for purchasing
Angolan mine productions. This production complements Trans Hex"s South African
portfolio of very high quality gems.
Richtersveld Community
During the year Trans Hex submitted a proposal to the Government to acquire a
51% interest in Alexkor Limited and intends to discuss this proposal with the
community. In 1998, the Richtersveld community lodged a claim against the State
in respect of the Trans Hex mining lease area. Pursuant to the mining lease,
Trans Hex pays a royalty of 4,5% on gross diamond sales.
Prospects
The group remains optimistic that current dollar diamond prices will be
maintained or may even improve slightly although the current rand/dollar
exchange rate will negatively affect results for the full year. The ongoing
rationalisation of projects and the implementation of further stronger cost
control measures should however help to mitigate the negative impact of a strong
rand.
Dividend Declaration
The Directors of Trans Hex have resolved to declare dividend number 46 of 20
cents per share for the interim period ended 30 September 2003.
Declaration date Friday 31 October 2003
Last day to trade (cum dividend) Friday 5 December 2003
First date of trading (ex dividend) Monday 8 December 2003
Record date Friday 12 December 2003
Payment date Monday 15 December 2003
Share certificates may not be dematerialised or rematerialised between Monday
8 December 2003 and Friday 12 December 2003, both days inclusive.
By order of the board
TMG Sexwale
Chairman
C Gardner
Chief Executive Officer
Parow
30 October 2003
ABRIDGED CONSOLIDATED INCOME STATEMENT
Six months ended Year ended
% 30/09/03 30/09/02 31/03/03
Increase Reviewed Unaudited Audited
R"000 R"000 R"000
Sales revenue 28,4 570 895 444 673 972 220
Cost of sales 7,5 314 806 292 908 571 200
Depreciation of mining
assets 58 472 62 522 116 272
Royalties: Namaqualand
Diamond Fund Trust 17 022 12 287 28 086
Other costs 239 312 218 099 426 842
Mining income 68,7 256 089 151 765 401 020
Net financial
income/(expenditure)
(Note 1) (49 642) 5 809 (20 257)
Exploration costs (26 816) (16 654) (46 620)
Research and
development - (2 541) (2 635)
Share of results of
associated companies (3) 7 17
Profit before taxation 29,8 179 628 138 386 331 525
Taxation 66 752 47 631 106 480
Attributable income 24,4 112 876 90 755 225 045
Earnings per share
(cents)
- Basic 22,5 131,5 107,4 264,9
- Diluted 24,0 113,0 91,1 226,7
- Headline 18,7 132,5 111,6 270,2
Dividend per share
(cents) 11,1 20,0 18,0 66,0
Total number of shares
in issue ("000) 86 536 85 212 85 580
Weighted average issued
shares ("000) 85 833 84 534 84 962
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months ended Year ended
30/09/03 30/09/02 31/03/03
Reviewed Unaudited Audited
R"000 R"000 R"000
Balance at 1 April 961 770 814 806 814 806
Net profit attributable to
ordinary shareholders 112 876 90 755 225 045
Dividends paid (41 164) (31 176) (46 582)
Translation differences on
foreign subsidiaries (27 367) (1 979) (28 223)
Fair value adjustment on
available-for-sale
financial assets 6 859 (10 131) (11 262)
Issue of share capital 5 830 6 065 7 986
Balance at end of period 1 018 804 868 340 961 770
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Six months ended Year ended
30/09/03 30/09/02 31/03/03
Reviewed Unaudited Audited
R"000 R"000 R"000
Cash available
from operating
activities 239 950 203 299 453 908
Movements in
working capital (70 182) 7 719 (9 619)
Taxation paid (105 525) (29 287) (31 321)
Dividend paid (41 164) (31 176) (46 582)
Cash retained
from operating
activities 23 079 150 555 366 386
Cash employed (73 012) (109 372) (292 012)
Fixed assets -
Replacement (5 816) (6 928) (11 387)
- Additional (15 676) (49 337) (134 645)
Loan to Angolan
joint ventures (51 137) (44 177) (121 880)
Long-term
liabilities (6 348) - (10 357)
Instalment sale
agreement - (9 708) (9 708)
Investments,
loans and issue
of capital 5 965 778 (4 035)
Net cash flow for
the period (49 933) 41 183 74 374
ABRIDGED CONSOLIDATED BALANCE SHEET
Six months ended Year ended
30/09/03 30/09/02 31/03/03
Reviewed Unaudited Audited
R"000 R"000 R"000
Assets
Property, plant and
equipment 787 371 742 049 816 414
Goodwill 3 478 - 3 975
Investments and loans 122 429 63 073 109 592
Deferred taxation 20 331 23 453 22 006
Current assets 497 753 453 249 486 268
Inventory 122 309 126 340 106 640
Accounts receivable 86 544 21 267 40 795
Cash resources and
equivalents 288 900 305 642 338 833
1 431 362 1 281 824 1 438 255
Equity and liabilities
Total shareholders" interest 1 018 804 868 340 961 770
Long-term liabilities 55 835 68 114 62 183
Deferred taxation 150 274 142 110 164 590
Deferred liabilities 36 171 33 273 34 360
Current liabilities 170 278 169 987 215 352
Short-term borrowings 11 933 10 620 11 169
Other 158 345 159 367 204 183
1 431 362 1 281 824 1 438 255
Net asset value per share
(cents) 1 177 1 019 1 124
Notes
Six months ended Year ended
30/09/03 30/09/02 31/03/03
Reviewed Unaudited Audited
R"000 R"000 R"000
1. Net financial
income/(expenditure)
Net financial
income/(expenditure)
consists mainly of the
following principal
categories:
Interest received 5 408 16 042 21 390
Interest paid (9 457) (5 731) (12 823)
Net foreign exchange loss
(44 372) (3 720) (27 485)
Rehabilitation provision -
unwinding of discount
(1 221) (782) (1 339)
(49 642) 5 809 (20 257)
2. Reconciliation of headline
earnings
Attributable income 112 876 90 755 225 045
Loss on sale of assets 476 3 579 4 554
Goodwill 348 - -
Headline earnings 113 700 94 334 229 599
Headline earnings for the prior year corresponding period has been restated to
reflect the impact of Circular 7/2002, issued by the South African Institute of
Chartered Accountants in December 2002. Loss on sale of fixed assets, set out
above, was not previously adjusted.
3. Capital commitments
(including amounts
authorised, but not
yet contracted) 40 778 106 559 87 843
These commitments
will be funded out
of own resources or
borrowed funds.
4. Segment information
Revenue - Land 511 341 393 964 868 734
- Marine 59 554 50 709 103 486
Mining income - Land 245 874 148 274 395 411
- Marine 10 215 3 491 5 609
5. The Accounting Policies are consistent with the annual report and the
corresponding prior year period (save for note 2 above) in accordance with
International Financial Reporting Standards. These abridged financial
statements comply with IFRS34. 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.
6. Review by independent auditors. PricewaterhouseCoopers Inc. has reviewed
the interim results. A copy of their unqualified review report is available
for inspection at the company"s registered office.
Registered office:
405 Voortrekker Road,
Parow 7500,
PO Box 723,
Parow 7499
Transfer secretaries:
South Africa:
Computershare Ltd,
PO Box 1053,
Johannesburg 2000
Namibia:
Transfer Secretaries (Pty) Ltd,
PO Box 2401,
Windhoek
Directorate:
TMG Sexwale (Chairman), BR van Rooyen (Deputy Chairman), C Gardner (Chief
Executive Officer), WE Buhrmann, E de la H Hertzog, DM Hoogenhout, AM Krige,
MS Loubser, AC Louw, A Martin, MJ Willcox
GJ Zacharias (Company Secretary)
www.transhex.co.za
Date: 31/10/2003 07:30:11 AM Produced by the JSE SENS Department
