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TRANS HEX GROUP LIMITED
REG NO. 1963/007579/06
INTERIM REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2000
TURNOVER UP 55,3%
HEADLINE EARNINGS UP 18,3%
ATTRIBUTABLE INCOME UP 65,3%
DIVIDEND UP 16,7%
ABRIDGED CONSOLIDATED INCOME STATEMENT
YEAR
ENDED SIX MONTHS ENDED
31/03/00 % 30/09/00 30/09/99
AUDITED INCREASE UNAUDITED UNAUDITED
R'000 R'000 R'000
366 476 SALES REVENUE 55,3 262 076 168 737
229 280 COST OF SALES 165 375 101 278
33 811 DEPRECIATION OF MINING ASSETS 25 102 16 449
12 451 ROYALTIES: NAMAQUALAND
DIAMOND FUND TRUST 7 661 6 617
183 018 OTHER COSTS 132 612 78 212
137 196 MINING INCOME 43,3 96 701 67 459
736 NET FINANCIAL INCOME (NOTE 1) 3 377 (458)
(20 163) EXPLORATION COSTS (15 713) (7 220)
(6 072) EXCEPTIONAL ITEMS (NOTE 3) 1 239 (2 307)
111 697 NET INCOME BEFORE TAXATION 48,9 85 604 57 474
36 539 TAXATION 20 061 18 034
75 158 NET INCOME AFTER TAXATION 66,2 65 543 39 440
2 647 OUTSIDE SHAREHOLDERS' INTEREST 1 787 1 251
(487) EQUITY ACCOUNT ADJUSTMENT 3 32
77 318 ATTRIBUTABLE INCOME 65,3 67 333 40 723
EARNINGS PER SHARE (CENTS)
122,0 - BASIC 25,6 82,0 65,3
120,4 - DILUTED 25,5 81,1 64,6
125,9 - HEADLINE 18,3 80,3 67,9
33,0 DIVIDEND PER SHARE (CENTS) 16,7 14,0 12,0
82 122 TOTAL NUMBER OF SHARES IN
ISSUE ('000) 27,6 82 122 64 382
63 354 WEIGHTED AVERAGE ISSUED
SHARES ('000) 31,8 82 122 62 326
ABRIDGED CONSOLIDATED BALANCE SHEET
ASSETS
419 123 FIXED ASSETS 508 924 262 764
36 411 INVESTMENTS AND LOANS (NOTE 4) 36 683 133 173
188 436 CURRENT ASSETS 162 455 50 007
101 387 CASH RESOURCES 75 823 (27 765)
87 049 OTHER 86 632 77 772
643 970 708 062 445 944
EQUITY AND LIABILITIES
456 255 TOTAL SHAREHOLDERS' INTEREST 516 653 320 366
2 123 OUTSIDE SHAREHOLDERS' INTEREST 408 218
97 759 DEFERRED LIABILITIES 117 253 69 831
87 833 CURRENT LIABILITIES 73 748 55 529
643 970 708 062 445 944
556 NET ASSET VALUE PER SHARE (CENTS) 629 498
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
255 369 BALANCE AT 1 APRIL 456 255 255 369
77 318 NET PROFIT ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS 67 333 40 723
(21 246) DIVIDENDS PAID AND PROVIDED (11 497) (7 726)
34 TRANSLATION DIFFERENCES ON FOREIGN
SUBSIDIARIES 4 562 (1 511)
144 780 ISSUE OF SHARE CAPITAL - 33 511
456 255 BALANCE AT END OF PERIOD 516 653 320 366
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
156 602 CASH AVAILABLE FROM OPERATING
ACTIVITIES 116 209 74 302
5 345 MOVEMENTS IN WORKING CAPITAL (12 675) (23 787)
(20 747) TAXATION PAID (1 844) (4 362)
(18 273) DIVIDEND PAID (13 520) (10 547)
122 927 CASH RETAINED FROM OPERATING
ACTIVITIES 88 170 35 606
(92 104) CASH EMPLOYED (113 734) (106 365)
10 723 FIXED ASSETS - REPLACEMENT (3 300) (3 297)
(113 453) - ADDITIONAL (110 434) (27 344)
10 626 INVESTMENTS AND LOANS - (75 724)
27 570 NET CASH FLOW ON ACQUISITION
OF SUBSIDIARIES - -
58 393 NET CASH FLOW FOR THE PERIOD (25 564) (70 759)
NOTES
YEAR
ENDED SIX MONTHS ENDED
31/03/00 30/09/00 30/09/99
AUDITED UNAUDITED UNAUDITED
R'000 R'000 R'000
1. NET FINANCIAL INCOME
NET FINANCIAL INCOME CONSISTS
MAINLY OF THE FOLLOWING
PRINCIPAL CATEGORIES:
800 DIVIDEND RECEIVED - -
4 690 INTEREST RECEIVED 3 004 2 465
(3 916) INTEREST PAID (339) (2 955)
145 NET FOREIGN EXCHANGE GAIN 1 259 524
(983) REHABILITATION PROVISION -
INFLATION ADJUSTMENT (547) (492)
736 3 377 (458)
2. RECONCILIATION OF HEADLINE EARNINGS
77 318 ATTRIBUTABLE INCOME 67 333 40 723
2 417 EXCEPTIONAL ITEMS (NOTE 3) (1 349) 1 615
79 735 HEADLINE EARNINGS 65 984 42 338
3. EXCEPTIONAL ITEMS
(15 246) RATIONALISATION OF LIME
DIVISION AND RELATED INTERESTS (409) (2 307)
9 174 PROFIT ON SALE OF INVESTMENTS /
SUBSIDIARIES 1 648 -
(6 072) 1 239 (2 307)
(3 655) TAXATION (110) (692)
(2 417) 1 349 (1 615)
4. INVESTMENTS AND LOANS
LISTED INVESTMENTS AT COST
29 005 SHARES 29 005 126 424
27 512 MARKET VALUE 20 338 144 554
UNLISTED INVESTMENTS AND LOANS
AT CARRYING VALUE
162 ASSOCIATED COMPANY 165 683
5 712 TRANS HEX REHABILITATION TRUST FUND 6 176 4 434
1 532 LOAN TO TRANS HEX GROUP TRUST
TO FINANCE THE SHARE PURCHASE SCHEME 1 337 1 632
7 406 7 678 6 749
7 406 DIRECTORS' VALUATION 7 678 6 749
189 910 5. CAPITAL COMMITMENTS
(INCLUDING AMOUNTS AUTHORIZED,
BUT NOT YET CONTRACTED) 77 980 63 129
THESE COMMITMENTS WILL BE FUNDED OUT OF
OWN RESOURCES OR BORROWED FUNDS
6. THE GROUP CHANGED ITS ACCOUNTING POLICY REGARDING ENVIRONMENTAL
OBLIGATIONS IN ORDER TO COMPLY WITH IAS 37: PROVISIONS, CONTINGENT LIABILITIES
AND CONTINGENT ASSETS , TO REFLECT THE NET PRESENT VALUE OF THE ESTIMATED COSTS
OF RESTORING ENVIRONMENTAL DISTURBANCE ASSOCIATED WITH OPERATIONS. THE ADOPTION
OF THIS POLICY HAD NO MATERIAL EFFECT ON PRIOR EARNINGS.
7. 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.
FINANCIAL RESULTS
ATTRIBUTABLE INCOME INCREASED BY 65,3% TO R67,3 MILLION (R40,7 MILLION) WHILE
HEADLINE EARNINGS PER SHARE INCREASED BY 18,3% FROM 67,9 CENTS TO 80,3 CENTS -
LARGELY DUE TO AN INCREASE OF 31,8% IN THE WEIGHTED AVERAGE NUMBER OF SHARES
ISSUED. TURNOVER INCREASED BY 55,3% TO R262,1 MILLION (R168,7 MILLION). CASH
FLOW AFTER TAXATION AND REPLACEMENT CAPITAL AMOUNTED TO R98,4 MILLION (R42,9
MILLION). IT SHOULD BE NOTED THAT THE MERGER OF GEM DIAMOND MINING CORPORATION
LTD AND BENGUELA CONCESSIONS LTD WITH THE COMPANY BECAME EFFECTIVE ON 31 MARCH
2000. THE FIGURES FOR THE COMPARATIVE PERIOD TO 30 SEPTEMBER THEREFORE DO NOT
INCLUDE THE RESULTS OF THE LATTER TWO COMPANIES.
DIVIDEND
AN INTERIM DIVIDEND OF 14 CENTS PER SHARE (1999: 12 CENTS PER SHARE) WAS
DECLARED ON 6 NOVEMBER 2000 PAYABLE TO ORDINARY SHAREHOLDERS REGISTERED IN THE
BOOKS OF THE COMPANY ON 24 NOVEMBER 2000. DIVIDEND CHEQUES WILL BE POSTED ON OR
BEFORE 5 JANUARY 2001.
OPERATIONS / EXPLORATION / RESEARCH AND DEVELOPMENT
91% OF OUR CARAT PRODUCTION TARGET FOR THE 6 MONTHS WAS ACHIEVED. LAND
OPERATIONS AND EXPLORATION PRODUCED 99% AND 61% RESPECTIVELY, WHILST MARINE
OPERATIONS ACHIEVED 75% OF THEIR TARGETS.
LAND DIVISION
PRODUCTION
BAKEN'S PRODUCTION REMAINED ON TARGET AND POSITIVE RESULTS WERE FORTHCOMING
FROM EXPLORATION MEGA TRENCH PK 31 RESULTING IN AN ADDITION TO PROVEN ORE
RESERVES. TRENCH PK 34 IS SCHEDULED FOR COMPLETION IN LATE NOVEMBER, AND AN
ADDITIONAL AND FINAL TRENCH (PK 46) WILL BE COMPLETED IN FEBRUARY 2001.
CONSTRUCTION OF THE NEW CENTRAL PLANT REMAINS ON SCHEDULE AND WITHIN BUDGET AND
WILL, AS PLANNED, BE FULLY COMMISSIONED BEFORE 1 APRIL 2001. THE HONDEKLIP BAY
AND SAXENDRIFT OPERATIONS BOTH EXCEEDED THEIR CARAT TARGETS FOR THE PERIOD.
BOTH THE CENTRAL AND JAKKALSBERG SECTIONS AT REUNING FAILED TO ACHIEVE CARAT
CALLS AS A RESULT OF LOW ORE GRADES ENCOUNTERED. THE PROCESSING PLANT, MINERAL
RIGHTS AND ALL FUTURE REHABILITATION RESPONSIBILITIES OF THE SO VER OPERATION
WERE SOLD FOR R1,9 MILLION.
EXPLORATION
BULK SAMPLING CONTINUED SATISFACTORILY ON THE B1 / B2 MEGA TRENCH AT BLOEDDRIF
WHICH IS NEARING COMPLETION. EARLY TERMINATION OF THE NXODAP PROSPECT (ITS
SAMPLING PLANT IS BEING MOVED TO REUNING SOUTH GATE) AND DISAPPOINTING RESULTS
AT JAKKALSBERG SOUTH WEST RESULTED IN THE SHORTFALL OF EXPLORATION CARATS
BUDGETED. REGIONAL EXPLORATION CONTINUED IN THE MID ORANGE / VAAL RIVERS AND ON
VARIOUS GRASS ROOTS KIMBERLITE TARGETS ELSEWHERE IN SOUTH AFRICA. TRANS HEX
INTERNATIONAL'S EXPLORATION ACTIVITIES AT THE BARRA GRANDE ALLUVIAL PROSPECT IN
BRAZIL PROGRESSED WELL WITH BULK SAMPLE EXCAVATION OF THE FIRST TRENCH HAVING
COMMENCED. PROCESSING OF THE FIRST GRAVELS IS SCHEDULED TO COMMENCE IN JANUARY
2001. THE NORTH-BANK PROSPECT IN NAMIBIA REMAINED DORMANT WITH THE NEXT ROUND
OF COURT PROCEEDINGS SCHEDULED FOR FEBRUARY 2001. THE SINGLE HOLE DRILLED INTO
THE CAROL MAGNETIC ANOMALY KIMBERLITE TARGET IN BOTSWANA, PROVED NEGATIVE
HOWEVER OTHER REGIONAL WORK IN BOTSWANA CONTINUES AND KIMBERLITE EXPLORATION IN
SOUTHERN ZIMBABWE CONTINUED TO PRODUCE ENCOURAGING RESULTS.
MARINE DIVISION
PRODUCTION
LOW DIVING PRODUCTIVITY, AS A RESULT OF INCLEMENT WEATHER CONDITIONS DURING THE
WINTER MONTHS, AND THE ONGOING COMPETITION FOR CONTRACTORS AND DIVERS CREATED
BY OTHER CONCESSION HOLDERS ISSUING DIVING CONTRACTS TO INDEPENDENT OPERATORS,
HAD A NEGATIVE IMPACT ON THE GROUP'S MARINE DIAMOND PRODUCTION, ESPECIALLY IN
THE PORT NOLLOTH AREA. THIS, TOGETHER WITH THE ANTICIPATED DELAY OF THE
COMMISSIONING OF THE WALKING JACK-UP MINING PLATFORM, HAS REQUIRED US TO REVISE
OUR ANNUAL MARINE PRODUCTION BUDGET DOWNWARDS BY 29%.
AFTER DECOMMISSIONING OF MV MOONSTAR, THE ONBOARD MINING AND PROCESSING
FACILITIES WERE DISMANTLED AND REMOVED, AND THE VESSEL WAS SOLD.
EXPLORATION
DURING THE REVIEW PERIOD WE ESTABLISHED AN EXPERIENCED MARINE EXPLORATION TEAM
WITH SEVERAL NEW APPOINTMENTS AND THE INCORPORATION OF FORMER BENCO STAFF AND
EXPLORATION FACILITIES. THIS TEAM REVIEWED ALL HISTORIC GEOLOGICAL AND
PRODUCTION DATA AND CONTINUED WITH THE DATA PROCESSING OF GEOPHYSICAL SURVEYS
OF ALL AREAS. THIS PROCESS WILL MOST IMPORTANTLY BETTER DEFINE DIAMOND
RESOURCES AND SUPPLY MEANINGFUL INFORMATION FOR THE SELECTION OF POTENTIAL
TARGET SITES FOR THE SHALLOW-WATER MINING TOOL AND WALKING JACK-UP PLATFORM. IN
ADDITION, THIS INFORMATION WILL BE USED TO ASSIST SHALLOW WATER CONTRACTORS
IMPROVE THEIR OVERALL PRODUCTIVITY.
RESEARCH AND DEVELOPMENT
A SUITABLE VESSEL, MV LEE G WAS PURCHASED IN THE USA AND RELOCATED TO CAPE TOWN
TO HOST THE SHALLOW WATER MINING TOOL. THE WHOLE PROJECT, COMPRISING THE
NECESSARY CONVERSIONS FOR HER FUTURE ROLE AS A DIAMOND MINING VESSEL, DEVELOPED
JOINTLY WITH PETREL ENGINEERING, IS NEARING COMPLETION AND WILL BE BROUGHT IN
ON TIME AND WITHIN THE BUDGET OF R6 MILLION IN NOVEMBER 2000.
WALKING JACK-UP MINING PLATFORM: THE FIRST PHASE OF THIS JOINT VENTURE PROJECT
WITH SEACORE LIMITED OF THE UK WAS COMPLETED WITH SUCCESSFUL SEA-TRIALS OFF THE
COAST OF CORNWALL. HOWEVER, AS A RESULT OF A CHANGE IN THE SCOPE AND OVERALL
TECHNICAL SPECIFICATIONS, THE PROJECT HAS BEEN DELAYED AND THE ANTICIPATED
COMMISSIONING WILL ONLY BE TOWARDS THE MIDDLE OF NEXT YEAR.
THE ROUGH DIAMOND MARKET
THE MARKET FOR ROUGH DIAMONDS REMAINED STRONG THROUGHOUT THE PERIOD. HOWEVER
THERE WAS A SLOWDOWN IN DEMAND AND A SUBSEQUENT EASING OF PRICES FOR SMALLER
SIZES IN THE SECOND QUARTER. KEEN DEMAND FOR OUR HIGH QUALITY PRODUCTION WAS
EXPERIENCED THROUGHOUT THE FINANCIAL PERIOD AND THIS HAS BEEN REFLECTED IN THE
PRICES ACHIEVED AT OUR REGULAR SOUTH AFRICAN TENDERS. PRICES ATTAINED FOR THE
ORANGE RIVER AND MARINE PRODUCTIONS, WHERE COMPARABLE, HAVE SHOWN INCREASES OF
23% AND 11% RESPECTIVELY OVER THE CORRESPONDING PERIOD LAST YEAR. THE
NON-CONFLICT NATURE OF ALL OUR SALES FURTHER ENHANCED THE STRONG DEMAND FOR OUR
PRODUCTION. THESE FACTORS RESULTED IN DIAMOND TURNOVER EXCEEDING OUR BUDGET BY
18% IN US $ TERMS AND BY 37% IN RAND TERMS DURING THE PERIOD. THE STRONG DEMAND
HAS CONTINUED AS A RESULT OF AN ESTIMATED GROWTH IN RETAIL JEWELLERY SALES OF
SOME 10% DURING 2000. THE UPCOMING HOLIDAY SEASON SALES SHOULD SHOW FURTHER
GROWTH, WITH THE US MARKET EXPECTED TO ACCOUNT FOR 50% OF WORLD DIAMOND
JEWELLERY SALES FOR THE YEAR.
SAXENDRIFT HAS PROVED TO BE AN EXCELLENT ADDITION WITH THE PRODUCTION REGULARLY
ACHIEVING AN AVERAGE RUN-OF-MINE PRICE IN EXCESS OF $1 000/ CT.
THE CHANGES IN DE BEERS' MARKETING STRATEGY REMAIN THE SUBJECT OF CLOSE
SCRUTINY. AS PREVIOUSLY, OUR EXPORTS WERE APPROVED BY THE GOVERNMENT DIAMOND
VALUATOR WITHOUT ANY DELAYS.
PROSPECTS
AN EXCITING PERIOD LIES AHEAD. DIAMOND PRICES ARE EXPECTED TO REMAIN BUOYANT
FOR THE BALANCE OF THE FISCAL YEAR. THE ONLY AREA OF CONCERN IS THE RISING
PRICES OF FUELS. WHEREAS THE BUDGETED PROPORTION OF DIESEL AND PETROL TO OUR
TOTAL OPERATING COST WAS 17%, WE NOW FIND OURSELVES IN A POSITION WHERE THIS
PROPORTION HAS EFFECTIVELY RISEN TO 23%.
OUR BOARD APPROVED THE ADDITION OF 2 NEW DMS SAMPLING PLANTS FOR SAXENDRIFT AND
ITS SURROUNDING PROSPECTS. BOTH OF THESE WILL BE FULLY OPERATIONAL BY JUNE
2001. THIS WILL ACCELERATE MUCH NEEDED EXPLORATION, PRIOR TO THE FULL
EXPLOITATION OF THIS REGION, WHICH IN A VERY SHORT PERIOD, HAS PROVIDED A
PROFITABLE SUPPLEMENT TO OUR PRODUCTION. INTRODUCTION OF THE NEW CENTRAL PLANT
AT BAKEN, ONGOING EXPLORATION SUCCESS AT BLOEDDRIF AND OUR VARIOUS NEW MARINE
INITIATIVES ALL CONTRIBUTE CONSIDERABLE IMPETUS TO OUR FUTURE GROWTH PLANS.
BY ORDER OF THE BOARD
B R VAN ROOYEN P D DANCHIN
CHAIRMAN MANAGING DIRECTOR - OPERATIONS
PAROW
6 NOVEMBER 2000
REGISTERED OFFICE TRANSFER SECRETARIES
405 VOORTREKKER ROAD COMPUTERSHARE SERVICES LTD
PAROW 41 FOX STREET, JOHANNESBURG 2001
7500 PO BOX 61051, MARSHALLTOWN 2107
WWW.TRANSHEX.CO.ZA
NEWS RELEASE
SOLID RETURNS FOR TRANS HEX INVESTORS
CONTINUED BUOYANT PRICES FOR TRANS HEX'S HIGH QUALITY 'CONFLICT-FREE' DIAMONDS
HAS ENABLED THE COMPANY TO DECLARE AN INTERIM DIVIDEND OF 14-CENTS (FOURTEEN
CENTS) PER SHARE FOR THE FIRST SIX MONTHS OF FINANCIAL 2000/01 - AN INCREASE OF
ALMOST 17% OVER LAST YEAR.
ACCORDING TO TRANS HEX CHAIRMAN BERNARD VAN ROOYEN THE FIRM DIAMOND MARKET,
COUPLED WITH A FAVOURABLE US DOLLAR EXCHANGE RATE, HAS RESULTED IN AN INCREASE
IN SALES TURNOVER OF 55% FOR THE PERIOD UNDER REVIEW.
"STRONG RETAIL JEWELLERY SALES ARE FUELLING DEMAND FOR DIAMONDS AND TRANS HEX
IS FORTUNATE TO PRODUCE GEM QUALITY STONES THAT ARE HIGHLY SOUGHT-AFTER," ADDS
VAN ROOYEN.
COMBINED LAND AND MARINE OPERATIONS PRODUCED 91% OF TARGETED CARAT PRODUCTION
ENDING SEPTEMBER 30. WHILE HONDEKLIP BAY AND THE RECENTLY ACQUIRED SAXENDRIFT
MINE EXCEEDED PRODUCTION BUDGETS, REUNING WAS BELOW TARGET DUE TO LOW ORE
GRADES.
MARINE DIAMOND PRODUCTION TARGETS HAVE BEEN ADJUSTED DUE TO INCLEMENT WEATHER
OFF THE SOUTH AFRICAN WEST COAST AND DELAYED IMPLEMENTATION OF THE WALKING
JACK-UP PLATFORM PROJECT.
TRANS HEX'S INNOVATIVE SHALLOW WATER MINING TOOL, DESIGNED TO ASSIST DIVERS
OPERATING IN WATER DEPTHS LESS THAN 20 METRES, HAS COMPLETED PRELIMINARY
TESTING AND WILL BE UNDERGOING SEA TRIALS DURING THE SECOND WEEK OF NOVEMBER.
COMMENTING ON TRANS HEX'S PERFORMANCE TO DATE THYS VISSER, MANAGING DIRECTOR OF
REMGRO - TRANS HEX'S LARGEST SHAREHOLDER - SAID : "WE REMAIN ENTHUSIASTICALLY
SUPPORTIVE OF THE COMPANY'S PROGRESS AND EXCITING FUTURE PLANS BECAUSE OF THE
SPECIAL NICHE IT OCCUPIES IN THE MARKET PLACE."
THE NEW CENTRAL PLANT UNDER CONSTRUCTION AT BAKEN - THE COMPANY'S FLAGSHIP MINE
ALONGSIDE THE ORANGE RIVER IN NAMAQUALAND - IS ON SCHEDULE AND SHOULD MEET THE
TARGET DATE FOR FULL PRODUCTION OF APRIL 2001.
"WE HAVE MANAGED TO ACHIEVE OUR FINANCIAL GOALS DURING THE FIRST SIX MONTHS OF
THE YEAR AND ARE CONFIDENT THAT THIS TREND WILL CONTINUE FOR THE BALANCE OF THE
FINANCIAL YEAR," CONCLUDES VAN ROOYEN.
ENDS.
FOR FURTHER INFORMATION : PETER DANCHIN
TRANS HEX GROUP
TEL: (021) 939-1105
ISSUED BY : CULLUM JOHNSTON
BHA COMMUNICATIONS
TEL: (021) 683-2685
DATE : 6 NOVEMBER 2000
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