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Trans Hex Group Ltd - Audited Results for the Year Ended 31 March 2002
TRANS HEX GROUP LIMITED
Reg no 1963/007579/06
SHARE CODE: JSE - TSX; NSX - THX ISIN: ZAE000018552
AUDITED RESULTS
FOR THE YEAR ENDED 31 MARCH 2002
CONSOLIDATED INCOME STATEMENT % 2002 2001
increase (R`000) (R`000)
Sales revenue 64,3 831 288 506 041
Cost of sales 515 287 303 233
Depreciation of mining assets 129 111 44 889
Royalties: Namaqualand Diamond 23 406 14 300
Fund Trust
Other costs 362 770 244 044
Mining income 55,8 316 001 202 808
Net financial income (note 1) (4 489) 834
Exploration costs (61 871) (37 944)
Research and development (1 277) (3 579)
Exceptional items (note 3) 550 875
Profit before taxation 52,7 248 914 162 994
Taxation 83,7 72 905 39 687
Profit after taxation 42,7 176 009 123 307
Outside shareholders` interest - 4 458
Equity account adjustment 6 6
Attributable income 37,8 176 015 127 771
Earnings per share (cents)
- Basic 36,1 211,6 155,5
- Diluted 33,7 202,8 151,7
- Headline 36,8 210,8 154,1
Dividend per share (cents)
- Interim 15,5 14,0
- Final 37,0 28,0
25,0 52,5 42,0
Total number of shares in issue 84 002 82 534
(`000)
Weighted average issued shares 1,3 83 200 82 150
(`000)
ABRIDGED AUDITED CONSOLIDATED BALANCE SHEET
2002 2001
(R`000) (R`000)
Assets
Property, plant and equipment 751 371 676 446
Investments and loans (Note 4) 28 710 36 983
Deferred taxation 24 946 -
Current assets 385 913 117 938
Cash resources 264 459 -
Inventory 94 735 72 013
Other 26 719 45 925
1 190 940 831 367
Equity and liabilities
Total shareholders` interests 814 806 581 848
Non-current liabilities 262 695 140 361
Current liabilities 113 439 109 158
Short-term borrowings 13 119 42 754
Other 100 320 66 404
1 190 940 831 367
Net asset value per share (cents) 970 705
ABRIDGED AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
2002 2001
(R`000) (R`000)
Balance at 1 April 581 848 456 255
Net profit attributable to ordinary 176 015 127 771
shareholders
Dividends paid (36 039) (11 497)
Translation differences on foreign 2 896 6 463
subsidiaries
Issue of compulsory convertible 68 291 -
debentures
Deferred taxation asset raised on
compulsory convertible debentures 25 113 -
Fair value adjustment on available-for-
sale financial assets (10 555) -
Issue of share capital 7 237 2 856
Balance at end of year 814 806 581 848
ABRIDGED AUDITED CONSOLIDATED CASH FLOW STATEMENT
2002 2001
(R`000) (R`000)
Cash available from operating 384 735 218 089
activities
Movement in working capital 4 636 (41 985)
Taxation paid (9 235) (3 161)
Dividend paid (36 039) (25 017)
Cash retained from operating 344 097 147 926
activities
Cash employed (36 884) (292 067)
Fixed assets - Replacement (3 958) (6 019)
- Additional (200 270) (290 781)
Compulsory convertible 152 000 -
debentures
Installment sale agreement 9 708 -
Investments, loans and issue of 5 636 4 733
capital
Net cash flow for the year 307 213 (144 141)
NOTES
1. NET FINANCIAL INCOME 2002 2001
(R`000) (R`000)
Net financial income consists
mainly of the following principal
categories:
Interest received 1 917 4 548
Interest paid (14 664) (2 977)
Total interest paid (20 258) (2 977)
Less capitalized (5 594) -
Net foreign exchange gain 11 400 1 457
Rehabilitation provision -
unwinding of discount (3 142) (2 194)
(4 489) 834
2. RECONCILIATION OF HEADLINE EARNINGS
Attributable income 176 015 127 771
Exceptional items (Note 3) (620) (1 153)
Headline earnings 175 395 126 618
3. EXCEPTIONAL ITEMS
Amount Amount Amount
per after after
income Taxation taxation taxation
statement
2002 2002 2002 2001
R`000 R`000 R`000 R`000
Rationalisation of
Lime Division 550 (70) 620 (209)
and related
interests
Profit on sale of - - - 1 362
investments
550 (70) 620 1 153
4. INVESTMENTS AND LOANS 2002 2001
R`000 R`000
Listed investments at cost
Shares 18 493 29 209
Market value 18 506 15 527
Unlisted investment and loans at
carrying value Associated Company 172 168
Trans Hex Rehabilitation Trust Fund 9 630 6 943
Loan to Trans Hex Group Trust to
finance the 415 663
share purchase scheme
10 217 7 774
Directors` valuation 10 217 7 774
5. Capital commitments (including
amounts authorised, but not yet 26 610 208 830
contracted)
These commitments will be funded out of own resources or borrowed
funds.
CONTINGENT LIABILITY
In April 2002 Bateman Materials Handling Limited issued summons against
a group subsidiary in an amount of R27,5 million allegedly related to
work performed by them on the Baken Central Plant. The Group, upon the
advise of senior counsel, intends defending the action and lodging a
substantial counterclaim against Bateman
7. Segment information
Revenue - Land 746 829 448 250
- Marine 84 459 57 791
Mining income - Land 302 383 196 915
- Marine 13 618 5 893
8. The accounting policies are consistent with those applied in the
previous year in accordance with International Accounting Standards,
except for the implementation of IAS 39 (Financial instruments:
Recognition and Measurement) and IAS 40 (Investment Properties).
Neither statement had a material impact on Group results. These
abridged financial statements comply with IAS 34.
Financial summary
Diamond sales were 64% higher in Rand terms at R831 million (2001: R506
million) and 20% higher in dollar terms at US$81,9 million (2001: US$ 68,5
million) over the prior period. Attributable income is up 38% to R176
million (2001: R128 million) resulting in a 37% increase in headline
earnings per share to 210,8 cents (2001: 154,1 cents). Cash generated by
operations increased 120% to R380 million (2001: R173 million) with cash
equivalent earnings per share rising 61% to 417,6 cents (2001: 260 cents).
Record diamond production at 221 000 carats (2001: 130 500 carats) together
with cost containment impacted positively on profitability with mining
income increasing by 56% over the prior period. Cost per carat produced
was 7% lower than last year.
Operations
Land
The land division recorded a 70% increase in diamond production over last
year at 176 641 carats (2001: 103 982 carats).
The Baken Central Plant failed to meet its production capability during the
first half of the year due to a variety of commissioning problems including
design inadequacies, equipment failures through poor engineering and
electrical faults. The introduction of contingency plans during the second
half of the year has resulted in the total Baken operation achieving record
production of 76 287 carats (2001 : 45 038 carats) - a 69% increase over
last year`s level.
Saxendrift produced 49% more diamonds during the year to 14 128 carats
(2001: 9 493 carats). The average stone size continues to be above 2,3
carats/stone.
Hondeklip Bay recorded a 80% increase over last year`s production to 75 562
carats (2001: 41 883 carats). Full-scale mining will cease during July 2002
bringing total production from the mine to more than one million carats
during its lifetime.
Marine
Increased output from the Company`s shallow-water contractors together with
new production from deep-water exploration and mining boosted the Division`s
total contribution by 69% to 44 847 carats (2001: 26 535 carats). The
Southern sector contributed 63% of marine production. Mining production
from the Mv Ivan Prinsep and Mv Namakwa on the Diamond Fields International
joint venture in Namibia yielded a total of 26 908 carats of which 40% (10
763 carats) are for Trans Hex`s account.
Exploration
The re-prioritised land exploration programme focused efforts on Bloeddrif
in the Lower Orange area, and Reads Drift and Niewejaarskraal in the Middle
Orange River.
Phase 1 exploration at Bloeddrif is expected to be completed in July with
3,3 million m3 expected to be economically mineable and mining is planned
for later this year. Exploration results from Reads Drift have proved
negative and test work is proceeding at Niewejaarskraal.
The Mv Ivan Prinsep was deployed in sampling and limited trial mining
operations in Trans Hex`s deep-water concession areas along the South
African coast.
Marketing
The decision to increase diamond inventory during the first half of the
financial year has been justified with significant price increases since
January. A scarcity of rough in the greater than 3 carats range has caused
prices to return to the highs experienced during 2000/01. Prices achieved
for the full financial year were 12% lower in dollar terms than in the prior
year.
Corporate activity
Mvelaphanda Diamonds (Pty) Limited (Mvela)
The issue of the 16 million convertible debentures has taken place and this
together with Mvela`s current holding brings their effective interest to
19,4%. The exercise of their Remgro option would increase this to 24,5%.
The strategic alliance with Mvela has already played an enabling role in the
process of identifying and securing new projects within, and outside of,
South Africa.
Trans Hex International Limited
The majority of the properties previously held by Trans Hex International
have now reverted to Trans Hex Group following the closure of the Toronto
office. Trans Hex International to be renamed Tsodilo Resources Ltd, will
continue under the control of the minority shareholders and will hold a 75%
interest in the Ngami project.
Odd-lot offer
An odd-lot offer received shareholder approval on 7 May 2002. The offer
price has been determined at R17,02 per share and the offer closes on 31 May
2002.
Prospects
An increased supply of rough into the existing strong diamond market is
expected to cause prices to soften over the next few months - a period
traditionally characterised by lower demand. Larger stones of the type
typically produced by Trans Hex have however historically proved to be more
resilient to price fluctuations.
Diamond production will again exceed 200 000 carats for the year. With
improved efficiencies and better performance net earnings are expected to
improve. Subject to diamond prices and the strength of the rand.
.
Dividend declaration
The directors of Trans Hex have resolved to declare a final dividend number
43 of 37,0 cents per share.
Declaration date Monday 27 May 2002
Last day to trade (cum dividend) Friday 28 June 2002
First date of trading (ex dividend) Monday 1 July 2002
Record date Friday 5 July 2002
Payment date Monday 8 July 2002
Shareholders may not dematerialise or rematerialise their holdings of Trans
Hex shares between Monday 24 June 2002 and Friday 5 July 2002, both days
inclusive.
Shareholders diary
The annual report will be mailed before 30 June 2002 and the Annual General
Meeting is scheduled for 16 August 2002.
By order of the board
B R van Rooyen C Gardner
Chairman Chief Executive Officer
Parow
27 May 2002
Transfer secretaries
South Africa: Namibia:
Computershare Services Ltd Transfer Secretaries (PTY) Ltd
PO Box 61051 PO Box 2401
Marshalltown Windhoek
2107
Date: 27/05/2002 05:00:00 PM Produced by the SENS Department
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