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TRANS HEX GROUP LTD - AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2004
TRANS HEX GROUP LTD
Registration number: 1963/007579/06
JSE share code: TSX
NSX share code: THX
ISIN: ZAE000018552
AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2004
Sales revenue up 11% to R1.1 billion (2003: R972.2 million), 38% up in US$ terms
Mining income maintained at R402,1 million (2003: R401,0 million)
Attributable income down 15% to R191.3 million (2003: R225.1 million)
Headline earnings per share down 18% to 222.0 cps (2003: 270.2 cps), up 29% in
constant currency and diamond price terms
Total dividend per share 73 cps (2003 : 66 cps)
Record production at Baken, Bloeddrif and Saxendrift
Average price per carat increase in excess of 18% in US$ terms (highest value
stone sold in excess of US$ 1.8 million)
Luarica sold 84 000 cts in excess of US$ 300 per ct
Fucauma feasibility study completed - production phase commenced
Bernard van Rooyen - Trans Hex Deputy Chairman commented :
"We"re proud of maintaining our mining income against a strong Rand, supported
by robust demand for our high-quality stones. After a difficult start-up period
our operations in Angola are beginning to meet our expectations and we look
forward to building on this platform."
Enquiries:
Trans Hex 021 937 2000
Bernard van Rooyen (Deputy Chairman) 082 659 1421
Altie Krige (Acting CEO) 082 568 5425
College Hill 011 447 3030
Johannes van Niekerk 082 921 9110
Sam Denoon-Stevens 083 450 7654
Audited results
for the year ended 31 March 2004
Consolidated income statement
% 2004 2003
change R"000 R"000
Sales revenue 11 1 079 734 972 220
Cost of sales 677 586 571 200
Depreciation of mining assets 112 284 116 272
Royalties: Namaqualand Diamond
Fund Trust 30 866 28 086
Other costs 534 436 426 842
Mining income 402 148 401 020
Net financial expenditure
(Note 1) (50 729) (20 257)
Exploration costs (49 719) (46 620)
Research and development - (2 635)
Share of results of associated
companies (5) 17
Profit before taxation (9) 301 695 331 525
Taxation 4 110 407 106 480
Attributable income (15) 191 288 225 045
Earnings per share (cents)
- Basic (17) 220,5 264,9
- Diluted (15) 193,4 226,7
- Headline (18) 222,0 270,2
Dividend per share (cents)
- Interim 20,0 18,0
- Final 53,0 48,0
11 73,0 66,0
Total number of shares in
issue ("000) 88 425 85 580
Weighted average issued shares
("000) 86 750 84 962
Abridged audited consolidated statement of changes in equity
2004 2003
R"000 R"000
Balance at 1 April 961 770 814 806
Net profit attributable to ordinary
shareholders 191 288 225 045
Dividends paid (58 710) (46 582)
Translation differences on foreign
subsidiaries (41 745) (28 223)
Fair value adjustment on available-for-
sale financial assets 4 314 (11 262)
Issue of share capital 20 756 7 986
Balance at end of year 1 077 673 961 770
Abridged audited consolidated balance sheet
2004 2003
R"000 R"000
Assets
Property, plant and equipment 765 825 816 414
Goodwill 37 096 3 975
Investments and loans 164 420 109 592
Deferred taxation 18 655 22 006
Current assets 521 064 486 268
Inventory 107 628 106 640
Accounts receivable 55 797 40 795
Cash and cash equivalents 357 639 338 833
1 507 060 1 438 255
Equity and liabilities
Total shareholders" interests 1 077 673 961 770
Long-term liabilities 49 487 62 183
Deferred taxation 146 859 164 590
Provisions 32 283 34 360
Current liabilities 200 758 215 352
Short-term borrowings 12 696 11 169
Other 188 062 204 183
1 507 060 1 438 255
Net asset value per share (cents) 1 219 1 124
Abridged audited consolidated cash flow statement
2004 2003
R"000 R"000
Cash available from operating
activities 426 312 453 908
Movements in working capital (30 250) (9 619)
Taxation paid (109 653) (31 321)
Dividend paid (58 710) (46 582)
Cash retained from operations 227 699 366 386
Cash employed (208 893) (292 012)
Fixed assets - Replacement (6 339) (11 387)
- Additional (70 889) (134 645)
Loan to Angolan joint ventures (103 038) (121 880)
Long-term liabilities (11 169) (10 357)
Instalment sale agreement - (9 708)
Acquisition of profit-sharing (35 256) -
rights
Investments, loans and issue of
capital 17 798 (4 035)
Net increase in cash and cash
equivalents 18 806 74 374
Notes
2004 2003
R"000 R"000
1. Net financial expenditure
Net financial
income/(expenses) consist
mainly of the following
principal categories:
Interest received 7 129 21 390
Interest paid (19 460) (12 823)
Net foreign exchange loss (41 063) (27 485)
Rehabilitation provision -
unwinding of discount 2 665 (1 339)
(50 729) (20 257)
2. Reconciliation of headline
earnings
Attributable income 191 288 225 045
Amortisation of goodwill 2 135 -
(Profit)/Loss on sale of (872) 4 554
assets
Headline earnings 192 551 229 599
3. Capital commitments (including
amounts authorised, but not
yet contracted) 120 826 87 843
These commitments of the Group
will be financed from its own
resources or borrowed funds.
4. Segment information
Primary segments
Revenue - Land 966 920 868 734
- Marine 112 814 103 486
Mining income - Land 393 684 395 411
- Marine 8 464 5 609
Geographical segments Southern Rest of
Africa Africa
(including (including
Namibia) Angola)
R,000 R,000
2004
Revenue 1 016 002 63 732
Assets 1 259 907 247 153
Capital expenditure 57 349 25 095
2003
Revenue 972 220 -
Assets 1 267 730 170 525
Capital expenditure 81 801 68 052
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. A copy of their unqualified report is
available for inspection at the company"s registered office.
Financial summary
Diamond sales were 9,5% higher in rand terms at R1 042 million (2003: R952
million) and 38% higher in dollar terms at US$144,1 million (2003: US$103,7
million). Attributable income is down 15% to R191 million (2003: R225 million)
resulting in an 18% decrease in headline earnings per share to 222,0 cents
(2003: 270,2 cents). In constant currency and diamond price terms, headline
earnings per share rose by 29% over last year. In dollar terms, the headline
earnings per share increased by 12% to 31,0 cents (2003: 27,8 cents). Cash flow
available from operating activities was R426 million (2003: R454 million). It
should be noted that the Angolan operations were brought into account from 1
April 2003. Excluding the Angolan operations, cost of sales increased by 6,3%.
Despite the strengthening in the average rand/dollar exchange rate by 26%,
mining income was maintained at R402 million (2003: R401 million).
Operations
Land
Carat production from continuing operations was 12% higher at 140 300 carats.
Both the Baken and Saxendrift operations achieved record production of 88 063
and 18 616 carats respectively.
Baken"s average stone size increased by 5% to 1,29 carats per stone. The Baken
Central Plant continues to perform satisfactorily with costs per carat being 14%
lower than in the prior year.
The scour pool feature at Bloeddrif attained exceptionally high grades and
produced 14 500 carats. At Reuning, the processing of the Nxodap terrace
production through the Suidhek Plant has exceeded expectations.
The Terrace B plant at Saxendrift has been mothballed at the end of January due
to uneconomical grades and the strengthening of the rand. The continuing
operation at Saxendrift produced high stone sizes with the average production
mix constituting a satisfactory 2,63 carats/stone. The operation produced 14
stones larger than 50 carats, including a 147 carat stone from Saxendrift and a
132 carat stone from Niewejaarskraal.
Exploration
Exploration sampling of Terrace A at Niewejaarskraal yielded marginal grades for
the basal gravels but good grades for the surface Rooikoppie gravels. The
existing plant was upgraded with commissioning by early June, which will result
in a significantly increased throughput. Sampling on the adjacent Viegulands Put
joint venture property revealed similar positive results on the Rooikoppie
gravel whilst certain portions of the basal gravel yielded payable grades.
Drilling of selected coincident gravity, magnetic and kimberlite indicator
mineral anomalies on the joint venture Ngami kimberlite project in Botswana has
identified kimberlitic crater fill sediments at two anomalies. Chemical and
micro diamond analysis of the drill samples is under way and will give further
insight into the potential of the area.
Angola
Production at Luarica met anticipated production levels in the first three
quarters of the year but was lower in the last quarter due primarily to low-
grade stockpiled material being treated and final recovery capacity problems.
The average grade achieved was 32% below the anticipated grade of 0,22 carats
per cubic metre. Trans Hex, together with its project partners, has implemented
corrective measures, and production is expected to return to anticipated levels
in the near future. During the initial ramp-up phase costs per carat averaged
less than US$250 per carat.
Some 84 000 carats from the Luarica concession were sold in Angola during the
year under review in excess of US$300 per carat, making it the highest value per
carat production in Angola to date.
At Fucauma, the second phase of bulk sampling and drilling was completed in
February. The project feasibility study was thereafter approved by all the
partners to the project. Pilot production is currently under way and full-scale
mining is expected to commence in approximately six months time.
Initial drilling and fieldwork at the Gango kimberlite concession indicate that
the kimberlite does not constitute a single kimberlite occurrence but rather a
multiple intrusion of kimberlites. Core drilling on other anomalies on the
concession during March resulted in approximately 180 metres of volcaniclastic
kimberlite being intersected in two boreholes. Soil sampling and ground magnetic
results have identified a number of additional anomalies in the area. The
drilling programme will be expanded to include these anomalies.
Data review of past exploration information at Luana concession has been
completed and geological field mapping is continuing. Dredge sampling of the
concession will commence in May 2004.
Marine
Total diamond production increased by 2% to 37 912 carats, with additional
income in lieu of budgeted carat production being generated from charter fees
earned by the two airlift mining vessels.
Shallow water contractor operations showed a 7% decline in production due to
adverse weather conditions but nevertheless provided 68% of the total marine
production.
In the latter part of the financial year the two vessels commenced contract
mining operations in Namibia with proceeds from the sale of 11 555 carats
accruing to Trans Hex.
The Group will continue to pursue contract work in Namibian territorial waters.
Various options to improve revenue in the Group"s marine exploration and mining
operations are being considered in both South Africa and Namibia.
The Rough Diamond Market
A shortage of rough diamonds in the cutting centres and strong demand for
diamond jewellery at consumer level resulted in rough prices strengthening with
Trans Hex experiencing an average dollar price per carat increase in excess of
18%.
The period saw the sale of the Group"s highest value stone to date, namely a 78
carat D colour Baken stone which achieved in excess of US$1,8 million. In
addition, a number of significant fancy colour stones were sold. An 8,61 carat
orange stone achieved almost US$43 000 per carat, a 27,67 carat pink stone
realised in excess of US$1 million or US$36 600 per carat and a 9,16 carat vivid
yellow stone sold for in excess of US$14 000 per carat, highlighting the fact
that Trans Hex continues to produce desirable and sought-after diamonds.
Prospects
Having resolved production impediments at Luarica, the Group, together with its
project partners, is encouraged by the progress made in developing the various
projects and looks forward to extracting sustainable value from these projects
in the medium-term.
The Group will continue to survey potential growth opportunities, in South
Africa and elsewhere in Africa, including Angola.
The recently concluded agreement between Mvelaphanda Exploration, in which Trans
Hex owns 50%, and Etruscan Diamonds is expected to add economically viable
gravel resources and reserves to the Group over the medium-term. The
Nooitgedacht property has some 12 million cubic metres of indicated resource at
2,8 ct/100 m3 whilst the Hartbeestlaagte/Zwartrand properties have an inferred
resource of 18 million cubic metres.
Production at Baken has been affected by an adverse grade cycle and measures
have been taken to address this. Provided the alternative shift system,
currently under negotiation with NUM, is successfully implemented, existing
production levels will be maintained.
It is anticipated that the dollar price of diamonds will further strengthen. If,
however, the rand/dollar exchange rate remains at its present level it will have
a substantially negative impact on earnings.
Dividend declaration
The directors of Trans Hex have resolved to declare a final dividend number 47
of 53 cents per share.
Last day to trade (cum dividend) Friday 25 June 2004
First date of trading (ex dividend) Monday 28 June 2004
Record date Friday 2 July 2004
Payment date Monday 5 July 2004
Share certificates may not be dematerialised or rematerialised between Monday 28
June 2004 and Friday 2 July 2004, both days inclusive.
On the payment date, where so mandated, dividends due to holders of certificated
securities will either be transferred electronically to such shareholders" bank
accounts or, alternatively, cheques will be posted to their registered
addresses.
Change in directorship
During the year under review, Calvyn Gardner and Andre Louw resigned as
directors of the company. The nominations committee of the board is engaged in
interviewing potential chief executive candidates and will make recommendations
to the board when a suitable candidate is found.
Shareholders" diary
The annual report will be mailed before 30 June 2004 and the Annual General
Meeting is scheduled for 6 August 2004.
By order of the board
TMG Sexwale
Chairman
BR van Rooyen
Deputy Chairman
Parow
25 May 2004
Registered office
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
Transfer secretaries
South Africa:
Computershare Ltd, PO Box 61051, Marshalltown 2107
Namibia:
Transfer Secretaries (Pty) Ltd, PO Box 2401, Windhoek
Directorate
TMG Sexwale (Chairman), BR van Rooyen (Deputy Chairman),
AM Krige, WE Buhrmann, E de la H Hertzog,
DM Hoogenhout, MS Loubser, A Martin, MJ Willcox
GJ Zacharias (Company Secretary)
www.transhex.co.za
Date: 25/05/2004 08:59:41 AM Supplied by www.sharenet.co.za
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