| Mon 30 May 2005, 8:37 | | Trans Hex Group - Audited results for the year end |
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Trans Hex Group - Audited results for the year ended 31 March 2005
Trans Hex Group
ISIN: ZAE000018552
Share code: TSX
Registration number: 1963/007579/06
Incorporated in the Republic of South Africa
Audited results for the year ended 31 March 2005
Abridged audited consolidated income statement
% 2005 2004
change R`000 R`000
Sales revenue (6,0) 1 014 798 1 079 734
Cost of sales 15,7 784 262 677 586
Depreciation of mining assets 135 592 112 284
Royalties: Namaqualand Diamond
Fund Trust 26 034 30 866
Other costs 622 636 534 436
Mining income (42,7) 230 536 402 148
Net financial income/(expenditure)
(Note 1) 6 882 (50 729)
Exploration costs 35,4 (67 306) (49 719)
Share of results of associated
companies (5) (5)
Profit before taxation (43,6) 170 107 301 695
Taxation 78 595 110 407
Attributable income (52,2) 91 512 191 288
Earnings per share (cents)
- Basic (53,2) 103,1 220,5
- Diluted (50,3) 96,1 193,4
- Headline (56,7) 96,2 222,0
Dividend per share (cents)
- Interim 20,0 20,0
- Final 20,0 53,0
(45,2) 40,0 73,0
Total number of shares in issue
(`000) 89 095 88 425
Weighted average issued shares
(`000) 88 767 86 750
Abridged audited consolidated balance sheet
2005 2004
R`000 R`000
Assets
Property, plant and equipment 934 186 765 825
Goodwill 37 096 37 096
Investments and loans 250 325 164 420
Deferred taxation 14 351 18 655
Current assets 365 002 521 064
Inventory 168 508 107 628
Accounts receivable 88 620 55 797
Cash and cash equivalents 107 874 357 639
1 600 960 1 507 060
Equity and liabilities
Total shareholders` interests 1 101 033 1 077 673
Long-term liabilities 35 055 49 487
Deferred taxation 197 142 146 859
Provisions 27 003 32 283
Current liabilities 240 727 200 758
Short-term borrowings 14 432 12 696
Other 226 295 188 062
1 600 960 1 507 060
Net asset value per share (cents) 1 236 1 219
Abridged audited consolidated cash flow statement
2005 2004
R`000 R`000
Cash available from operating activities 308 261 426 312
Movements in working capital (53 230) (30 250)
Taxation paid (131 959) (109 653)
Dividend paid (64 676) (58 710)
Cash retained from operations 58 396 227 699
Cash employed (308 161) (208 893)
Fixed assets - Replacement (15 714) (6 339)
- Additional (119 100) (70 889)
Subsidiaries acquired (79 323) -
Loan to Angolan joint ventures (63 771) (103 038)
Investment in Tirisano Mine (21 010) -
Long-term liabilities (12 696) (11 169)
Acquisition of profit-sharing rights - (35 256)
Investments, loans and issue of capital 3 453 17 798
Net increase in cash and cash equivalents (249 765) 18 806
Abridged audited consolidated statement of changes in equity
2005 2004
R`000 R`000
Balance at 1 April 1 077 673 961 770
Net profit attributable to ordinary
shareholders 91 512 191 288
Dividends paid (64 676) (58 710)
Translation differences on foreign
subsidiaries (6 963) (41 745)
Fair value adjustment on available-for-sale
financial assets (1 506) 4 314
Issue of share capital 4 993 20 756
Balance at end of year 1 101 033 1 077 673
Notes
2005 2004
R`000 R`000
1. Net financial income/(expenditure)
Net financial income/(expenses) consist
mainly of the following principal
categories:
Interest received 7 545 7 129
Interest paid (11 916) (19 460)
Net foreign exchange profit/(loss) 7 317 (41 063)
Rehabilitation provision - unwinding of
discount 3 936 2 665
6 882 (50 729)
2. Reconciliation of headline earnings
Attributable income 91 512 191 288
(Negative)/amortisation of goodwill (4 621) 2 135
Profit on sale of assets (1 485) (872)
Headline earnings 85 406 192 551
3. Capital commitments (including amounts
authorised, but not yet contracted) 54 373 120 826
These commitments of the group will be
financed from its own resources or
borrowed funds.
4. Segment information
Primary
segments
Un-allo-
RSA cated
Land Angola Marine Total
R`000 R`000 R`000 R`000 R`000
2005
Revenue 816 033 74 770 123 995 - 1 014 798
Operating income 362 939 2 782 (2 415) 2 822 366 128
Depreciation 92 899 24 469 15 402 2 822 135 592
Mining income 270 040 (21 687) (17 817) - 230 536
Net financial
income - - - 6 882 6 882
Exploration costs
(11 747) (52 152) (3 407) - (67 306)
Share of
associates`
results (5) - - - (5)
Profit before
taxation 258 288 (73 839) (21 224) 6 882 170 107
Assets 831 282 474 349 167 734 127 595 1 600 960
Cash and cash
equivalents - - - 107 874 107 874
Liabilities 280 118 107 799 10 226 101 784 499 927
Capital
expenditure 34 396 100 212 579 4 819 140 006
2004
Revenue 903 188 63 732 112 814 - 1 079 734
Operating income 497 203 (8 181) 22 497 2 913 514 432
Depreciation 81 463 13 875 14 033 2 913 112 284
Mining income 415 740 (22 056) 8 464 - 402 148
Net financial
expense - - - (50 729) (50 729)
Exploration
costs (36 848) (5 288) (7 583) - (49 719)
Share of
associates`
results (5) - - - (5)
Profit before
taxation 378 887 (27 344) 881 (50 729) 301 695
Assets 1 086 043 247 153 156 914 16 950 1 507 060
Cash and cash
equivalents - - - 357 639 357 639
Liabilities 343 015 15 007 4 295 67 070 429 387
Capital
expenditure 50 547 24 557 4 602 2 738 82 444
5. The accounting policies are consistent with those applied in the previous
year in accordance with International Financial Reporting Standards. These
abridged financial statements comply with IAS 34.
6. Report of independent auditor. The results have been audited by
PricewaterhouseCoopers Inc. (Stellenbosch). A copy of their unqualified report
is available for inspection at the company`s registered office.
Financial summary
Diamond sales were 3% lower in rand terms at R1 015 million (2004: R1 042
million) and 13% higher in dollar terms at US$162,2 million (2004: US$144,1
million). Attributable income is down 52% to R92 million (2004: R191 million)
resulting in a 57% decrease in headline earnings per share to 96,2 cents (2004:
222,0 cents). Diamond prices remained strong through the period. However, the
strengthening of the rand had a significant negative impact on earnings. In
constant exchange rate terms headline earnings per share would have been 184,5
cents. Increased exploration activities, especially in Angola, contributed to
the increased exploration cost of R67,3 million (2004: R49,7 million). Cash flow
available from operating activities was R308 million (2004: R426 million).
Operations
Land
South Africa
Carat production totalled 137 100 carats, marginally lower than the 140 300
carats produced during the previous year, due primarily to reduced production at
both Saxendrift and Reuning.
At Baken carat production was 87 400 carats (2004: 88 100 carats) with an
average stone size of 1,21 carats per stone (2004: 1,29 carats per stone). The
average grade realised exceeded expectations. The successful re-commissioning of
the Old Final Recovery plant has eliminated the concentrate treatment constraint
in the Lower Orange River operations.
A Maximised Shift System (MSS) was implemented in November 2004, which has
improved throughput at Baken by 25%. Unit costs since implementation have
decreased by 10%. The Baken life-of-mine utilising the MSS is anticipated to be
at least eight years.
The Richtersveld operation achieved 22 800 carats (2004: 30 000 carats). The
processing of the Nxodap terrace through the Suidhek plant was discontinued.
However, selected deposits in the Reuning central area are being treated through
this plant. The Jakkalsberg plant was mothballed at the end of October 2004 due
to the depletion of stockpiled material, uneconomic grades and the sustained
strong rand.
The Saxendrift operations achieved 22 300 carats (2004: 22 200 carats). In
accordance with the operational plan and due to diminishing grades and depleted
ore reserves, the Terrace A and Brakfontein plants were mothballed as at 31
March 2005. The dense medium separation plant has commenced treating recovery
plant tailings, in situ remnants and pan tailings dump material. Opportunities
for empowerment joint ventures are being investigated to mine some of the
indicated reserves on a revenue split basis.
Angola
Luarica produced 96 000 carats (2004: 95 000 carats) during the year. Some 98
000 carats were sold during the year under review at a price in excess of US$300
per carat providing an important dollar revenue base for the group. The Luarica
Association aims to improve monthly carat production to 14 000 by March 2006 by
spending US$6 million from Association internal reserves. Equipment orders have
been placed and the production ramp-up is planned to commence in December 2005.
The Fucauma plant is in the process of being commissioned. Pilot production
during the year under review produced 17 700 carats, which were sold at prices
in excess of US$200 per carat.
Marine
Total production from marine operations was 69 900 carats (2004: 37 900 carats).
The marine mining vessels were utilised for contract mining for the entire 2005
financial year, whereas in 2004 the major portion of revenue was generated from
charter fees. Despite adverse sea conditions, shallow water contractor
operations generated an 18% increase in carat recovery of 30 400 carats.
The Samicor contract was terminated due to lower than anticipated returns to
Trans Hex. Trans Hex entered into a joint venture agreement with Namibian
empowerment group, EPIA Minerals (Pty) Ltd, whereby the mining vessels are being
deployed in NAMDEB Diamond Corporation (Pty) Limited`s concession areas. Early
indications from the new concession areas are encouraging.
Exploration
South Africa
The group, together with joint venture partners, has commenced kimberlite
exploration in South Africa utilising new technology.
The phase one upgrading of the Tirisano plant was successfully completed in
December 2004. A steady increase in throughput and utilisation is being achieved
to a level of 81%, but grades in general were considerably lower than
anticipated. The group expects to meet the contractual earn-in criteria prior to
August 2005, which will result in the Trans Hex/Mvelaphanda Resources joint
venture company, Mvelaphanda Exploration, acquiring a 50% share in the Tirisano
operation.
Angola
Geological and analytical work undertaken to date on a large kimberlite anomaly
in the Gango concession indicates that the anomaly is diamondiferous but with
low to moderate diamond-bearing potential. Bulk sampling of the anomaly is
expected to commence in the third quarter of 2005. Further grid sampling of the
concession has revealed new anomalies, which will be further investigated.
Dredge sampling at the Luana concession has been completed and evaluation bulk
sampling is due to commence in the third quarter of 2005. Exploration results
indicate similar potential to that of Luarica.
The rough diamond market
Demand for rough diamonds was strong and is anticipated to remain firm in the
new financial year. The highest value stone for the year, a 96-carat D colour
Baken stone, was sold for US$2,5 million. In addition two stones each in excess
of 100 carats in weight, were sold, one of which exceeded US$1 million in value.
An additional government channel for rough diamond sales was established in
Angola. This has introduced further competition and is encouraging for diamond
producers.
Prospects
The group acquired an effective 39% interest in Matikara Prestacao De Servicos
SARL. This exploration joint venture holds the exploration rights in three
Angolan alluvial properties and has been granted kimberlite exploration rights
for one property.
The board has approved a R30 million plant upgrade for the PK facility located
in the Lower Orange River region to improve production by 2 100 carats per year.
This will replace production from the discontinued Saxendrift and Reuning
facilities.
The proposed amendments to the South African Diamond Act are envisaged to pose
challenges as well as provide opportunities for Trans Hex`s diamond marketing
system. Trans Hex is actively pursuing a beneficiation strategy that seeks to
satisfy the requirements of key stakeholders.
Diamond prices achieved through Trans Hex`s South African marketing system are
expected to remain firm or may even improve slightly.
Dividend declaration
The directors of Trans Hex have resolved to declare a final dividend number 49
of 20 cents per share.
Last day of trade (cum dividend) Friday, 1 July 2005
First date of trading (ex dividend) Monday, 4 July 2005
Record date Friday, 8 July 2005
Payment date Monday, 11 July 2005
Share certificates may not be dematerialised or rematerialised between Monday, 4
July 2005, and Friday, 8 July 2005, both days inclusive.
Change in directorship
Mr Llewellyn Delport was appointed managing director of the company on 1 July
2004. Messrs C Johnson and P Pienaar were appointed as alternate directors for
Messrs Sexwale and Willcox.
Mr Altie Krige, executive director land operations has applied for early
retirement due to medical reasons. He resigned from the board on 16 May 2005.
The board wishes to thank Altie for his loyal and dedicated service during his
23 years of employment with the group.
Shareholders` diary
The annual report will be mailed before 30 June 2005 and the annual general
meeting is scheduled for 5 August 2005.
By order of the board
TMG Sexwale L Delport
Chairman Managing director
Parow
30 May 2005
Registered office
Trans Hex Group Limited
405 Voortrekker Road, Parow 7500, PO Box 723, Parow 7499
JSE share code: TSX NSX share code: THX
ISIN: ZAE000018552
Registration number: 1963/007579/06
Incorporated in the Republic of South Africa
Transfer secretaries
South Africa: Computershare Investor Services 2004 (Pty) Ltd,
PO Box 61051, Marshalltown 2107
Namibia: Transfer Secretaries (Pty) Ltd, PO Box 2401, Windhoek
Directorate
TMG Sexwale (Chairman),
BR van Rooyen (Deputy chairman),
L Delport (Managing director),
WE Buhrmann, E de la H Hertzog,
DM Hoogenhout, CG Johnson (Alternate), MS Loubser, A Martin,
PC Pienaar (Alternate), MJ Willcox,
GJ Zacharias (Company secretary)
www.transhex.co.za
Date: 30/05/2005 08:00:07 AM
Produced by the JSE SENS Department
