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TRANS HEX GROUP LIMITED - INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER

Release Date: 31/10/2003 07:30
Code(s): TSX
Wrap Text

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 Supplied by www.sharenet.co.za Produced by the JSE SENS Department

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