Wrap Text
Trans Hex Group Limited - Audited Results for the year ended 31 March 2003
And further cautionary announcement
TRANS HEX GROUP LIMITED
Reg no 1963/007579/06
("Trans Hex" or "the Group")
Share code: JSE - TSX; NSX - THX
ISIN: ZAE000018552
AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2003
* Sales revenue increased by 17% to R 972m (2002: R 831m) (Diamond sales in
US Dollars up 27% to $104m)
* Headline earnings per share increased by 27% to 270.2c (2002: 212.4c)
* Cash from operations increased by 18% to R 454m (2002: R 386m)
* Final dividend per share increased by 30% to 48.0c (2002: 37.0c)
* Record production at Baken operation of 87 552 cts (2002: 76 287 cts)
* Successful expansion of mining and exploration activities in Angola
Calvyn Gardner, Chief Executive, commented:
"These are very good results by any standards. The substantial increase in
earnings in both Rand and US Dollars is the result of much improved efficiencies
in our operations and record sales. We are very proud of the short time in which
we have brought Angola into production and the Group is well positioned to
continue on its growth path."
27 May 2003
Enquiries:
Trans Hex Group Ltd Tel: +27 21 937 2000
Calvyn Gardner, Chief Executive Tel: +27 82 444 3370
College Hill South Africa Tel: +27 11 447 3030
Nicholas Williams Tel: +27 83 607 0761
Johannes van Niekerk Tel: +27 82 921 9110
Financial Summary
Despite challenging world economic conditions, steady rough diamond demand with
limited seasonal pricing variations contributed to record diamond sales of $104
million, being an increase of 27% in dollar terms over the previous year.
Attributable income increased 28% to R225 million (2002: R176 million)
generating a 27% increase in headline earnings per share to 270.2 cents (2002:
212.4 cents). Mining income increased by 27% to R401 million (2002: R316
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 46% to R106 million as a result of higher
taxable income largely from increased sales and prudent cost containment.
Cash available from operations increased 18% to R454 million (2002: R386
million). Total diamond production amounted to 200 400 carats (2002: 221 000
carats).
Land Operations
Diamond production from land operations delivered 163 168 carats compared to 176
642 carats produced last year. This was achieved despite the closure of the
Hondeklip Bay operation which reached the end of its economic life, after
contributing 38 500 carats to production for the year under review.
The Baken Central Plant performed well with an average plant availability of 80%
resulting in the plant"s design production capability being consistently
achieved. The total Baken operation achieved record production of 87 552 carats
(2002: 76 287 carats) - a 15% increase over last year.
Saxendrift reflected a 27% increase in diamonds produced, reaching a record 17
912 carats (2002: 14 128 carats). The production mix from this Mid-Orange River
operation continues to be on average more than one carat per stone larger than
those found on the Lower Orange River.
At Reuning, the Jakkalsberg plant, which was scheduled for closure in June 2002,
was kept in operation due to positive results from exploration and the treatment
of stockpile gravel. While the Jakkalsberg"s plant was kept in production, the
re-commissioning of the Suidhek plant was postponed until March 2003, whereafter
the plant commenced treating higher grade gravel from the Nxodap terrace.
Ongoing exploration in the area could lead to additional reserves.
Increased production and continued efficient cost control by mine management
resulted in a lowering of the cost per carat at the continuing land operations.
Marine Operations
Total diamond production from marine operations declined by 17% to 37 275
carats, with the Southern sector contributing 75% of production. The suspension
of the joint venture operation with Diamond Fields International (DFI)
contributed to the lower production. Following termination of the DFI joint
venture, the Namakwa was chartered to De Beers Marine for utilisation in mid-
water concession areas in Namibia. The Ivan Prinsep conducted sampling
operations in parts of the group"s South African concessions. To date no
substantial mineable deposits were discovered following the sampling operations.
Exploration
An extended exploration programme at Bloeddrif was concluded in August 2002 with
the plant entering the full production phase in September 2002. Exceptionally
high grades achieved from a scour pool feature led to anticipated carat
production being exceeded by 33% (11 948 carats) (2002: 2 586 carats -
exploration phase). The proven and probable reserves point to an estimated life
of mine of four to five years, utilising the existing infrastructure.
Regional exploration sampling at Niewejaarskraal yielded good grades for the
surface Rooikoppies gravel with marginal grades for the basal gravel having been
achieved to date.
Drilling of the Viegulands Put and Remhoogte joint-venture properties has been
completed and sampling will commence in the second quarter of 2003.
Angola
As announced in September 2002 two Angolan alluvial diamond concessions (Luarica
and Fucauma) were secured, with delineated resources exceeding 1.7 million
carats. Both concessions are to be mined in a joint venture with the Angolan
State Diamond Organisation (Endiama), and are jointly expected to yield up to
400 000 carats annually.
The Luarica concession was brought into production in a record six months and is
currently producing grades of 30 carats/100 m3 at an average stone size of above
0.5 carats/stone and confirming the group"s belief that this is a world class
deposit. Evaluation sampling of the Fucauma concession is scheduled to commence
in June 2003 with production expected towards the latter part of 2003.
Both Angolan projects are ideal for start-up operations as they allow for almost
immediate cash-flow generation. They have a low-risk profile and a short
commissioning period; however the cost structure in Angola is significantly
higher than that of our South African operations.
The Group will continue to pursue suitable prospects in Angola and has concluded
an agreement with Endiama pertaining to the exploration of the Gango kimberlite
concession, in the Cuanza Sul province of Angola.
Diamond Market
The industry experienced more favourable trading conditions during the year
under review, compared to a difficult period in the previous year. The large
polished inventory was reduced during 2002. Polished jewellery sales figures
continue to show growth on an annual basis and rough diamond sales by the Group
in the final quarter have been excellent.
The high quality production mix of the Trans Hex mines, with 75% of value
concentrated in size ranges of three carats and greater, has maintained its
demand and pricing levels. During the period the Group achieved a record value
per carat paid for an individual stone when a 9,22 carat blue was sold for a
price in excess of $45 000 per carat. In addition to this, two pink stones of
8,84 carats and 19,85 carats realised prices in excess of $28 000 and $25 000
per carat respectively.
Kimberley Process
In January 2003 the Group"s first export under the Kimberley Process
Certification Scheme was concluded. The process is aimed at eliminating trade in
`conflict diamonds". In addition to guaranteeing the `conflict-free" nature of
the Group"s production to its customers, the Group also engaged the services of
accounting firm PricewaterhouseCoopers Inc. to perform an independent
verification of the company"s rough diamond trail from production through to
sales. Their report has confirmed the conflict-free status of our operations
thereby providing further confidence in our product.
Mining Charter and Mineral and Petroleum Royalty Bill
Trans Hex fully supports and is achieving the objectives as set out in the Broad
Based Socio-Economic Empowerment Charter for the South African Mining Industry.
The Group has submitted detailed comments on the draft Mineral and Petroleum
Royalty Bill to National Treasury. It is our view that the proposed royalty,
levied on revenue, is contrary to international trends and will be detrimental
to the preservation of the South African diamond industry. The Group will
continue to participate constructively in the ongoing process of submissions, in
the interest of promoting social and economic transformation in the mining
industry.
Prospects
The Group"s new operations particularly in Angola should generate increased
production. Provided that dollar diamond prices and the Rand/Dollar exchange
rate remain at current levels, the Group profit should at least be maintained.
Dividend declaration
The directors of Trans Hex have resolved to declare a final dividend number 45
of 48 cents per share.
Declaration date Monday 26 May 2003
Last day to trade (cum dividend) Friday 27 June 2003
First date of trading (ex dividend) Monday 30 June 2003
Record date Friday 4 July 2003
Payment date Monday 7 July 2003
Share certificates may not be dematerialised or rematerialised between Monday,
30 June 2003 and Friday, 4 July 2003, both days inclusive.
Shareholders" diary
The annual report will be mailed before 30 June 2003 and the Annual General
Meeting is scheduled for 15 August 2003.
Further Cautionary Announcement
Trans Hex shareholders are advised that certain of the conditions precedent
contained in the agreement referred to in the cautionary announcement of 6 May
2003, remain unfulfilled. Accordingly shareholders are advised to continue
exercising caution when dealing in Trans Hex shares until a further announcement
is made.
AUDITED RESULTS
FOR THE YEAR ENDED 31 MARCH 2003
AUDITED CONSOLIDATED INCOME % 2003 2002
STATEMENT increase R"000 R"000
Sales revenue 17,0 972 220 831 288
Cost of sales 571 200 515 287
Depreciation of mining assets 116 272 129 111
Royalties: Namaqualand Diamond 28 086 23 406
Fund Trust
Other costs 426 842 362 770
Mining income 26,9 401 020 316 001
Net financial expenditure (Note 1) (20 257) (4 489)
Exploration costs (46 620) (61 871)
Research and development (2 635) (1 277)
Share of results of associated 17 8
companies
Exceptional items - 550
Profit before taxation 33,2 331 525 248 922
Taxation 46,0 106 480 72 907
Attributable income 27,9 225 045
Earnings per share (cents)
- Basic 25,2 264,9
- Diluted 11,9 227,0 202,8
- Headline 27,2 270,2 212,4
Dividend per share (cents)
- Interim 18,0 15,5
- Final 29,7 48,0 37,0
25,7 66,0 52,5
Total number of shares in issue 85 580 84 002
(`000)
Weighted average issued shares 2,1 84 962 83 200
(`000)
ABRIDGED AUDITED CONSOLIDATED BALANCE SHEET
2003 2002
R"000 R"000
Assets
Property, plant and equipment 816 414 751 371
Goodwill 3 975 -
Investments and loans 109 592 28 710
Deferred taxation 22 006 24 946
Current assets 486 268 385 913
Inventory 106 640 94 735
Accounts receivable 40 795 26 719
Cash resources and equivalents 338 833 264 459
1 438 255 1 190 940
Equity and liabilities
Total shareholders" interests 961 770 814 806
Long-term liabilities 62 183 79 893
Deferred taxation 164 590 150 436
Deferred liabilities 34 360 31 961
Current liabilities 215 352 113 844
Short-term borrowings 11 169 13 524
Other 204 183 100 320
1 438 255 1 190 940
Net asset value per share (cents) 1 124 970
ABRIDGED AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
2003 2002
R"000 R"000
Balance at 1 April 814 806 581 848
Net profit attributable to ordinary 225 045 176 015
shareholders
Dividends paid (46 582) (36 039)
Translation differences on foreign (28 223) 2 896
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 (11 262) (10 555)
Issue of share capital 7 986 7 237
Balance at end of year 961 770 814 806
ABRIDGED AUDITED CONSOLIDATED CASH FLOW STATEMENT
2003 2002
R"000 R"000
Cash available from operating 453 908 385 849
activities
Movements in working capital (9 619) 3 522
Taxation paid (31 321) (9 235)
Dividend paid (46 582) (36 039)
Cash retained from operating 366 386 344 097
activities
Cash employed (292 012) (36 884)
Fixed assets - Replacement (11 387) (3 958)
- Additional (134 645) (200 270)
Loan to Angolan Joint ventures (121 880) -
Compulsory convertible - 152 000
debentures
Long-term liabilities (10 357) -
Instalment sale agreement (9 708) 9 708
Investments, loans and issue of (4 035) 5 636
capital
Net cash flow for the year 74 374 307 213
NOTES
1. NET FINANCIAL EXPENDITURE 2003 2002
R"000 R"000
Net financial expenditure consists
mainly of the following principal
categories:
Interest received 21 390 1 917
Interest paid (12 823) (14 664)
Total interest paid (12 823) (20 258)
Less capitalized - (5 594)
Net foreign exchange gain/(loss) (27 485) 11 400
Rehabilitation provision - unwinding (1 339) (3 142)
of discount
(20 257) (4 489)
2. RECONCILIATION OF HEADLINE EARNINGS
Attributable income 225 045 176 015
Loss on sale of assets 4 554 1 304
Exceptional items - (620)
Headline earnings 229 599 176 699
3. Capital commitments (including amounts
authorised, but not yet contracted) 87 843 26 610
These commitments will be funded out of own resources or borrowed
funds.
4. Segment information
Revenue - Land 868 734 746 829
- Marine 103 486 84 459
Mining income - Land 395 411 302 383
- Marine 5 609 13 618
5. The accounting policies are consistent with those applied in the
previous year in accordance with International Accounting Standards and
Generally Accepted Accounting Practice. These abridged financial
statements comply with IAS 34.
6. Report of independent auditor. The results have been audited by
PricewaterhouseCoopers Inc. A copy of their unqualified report is
available for inspection at the company"s registered office.
By order of the board
T M G Sexwale C Gardner
Chairman Chief Executive Officer
Parow
27 May 2003
Transfer secretaries
South Africa: Namibia:
Computershare Services Ltd Transfer Secretaries (Pty) Ltd
PO Box 61051 Box 2401
Marshalltown Windhoek
2107
Directorate
T M G Sexwale (Chairman), B R van Rooyen (Deputy Chairman), C Gardner (Chief
Executive Officer), W E Buhrmann, E de la H Hertzog, D M Hoogenhout, A M Krige,
M S Loubser, A C Louw, A Martin, M J Wilcox
G J Zacharias (Company Secretary)
Sponsor
Rand Merchant Bank
A division of FirstRand Bank Limited
Corporate Finance
Date: 27/05/2003 07:35:32 AM Supplied by www.sharenet.co.za
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