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TSX - Trans Hex Group Limited - Unaudited interim results for the six

Release Date: 10/11/2009 07:05
Code(s): TSX
Wrap Text

TSX - Trans Hex Group Limited - Unaudited interim results for the six months ended 30 September 2009 TRANS HEX GROUP LIMITED Incorporated in the Republic of South Africa Registration number (1963/007579/06) Share code: TSX ISIN: ZAE000018552 ("Trans Hex" or "the Company" or "the Group") Unaudited interim results for the six months ended 30 September 2009 Abridged consolidated income statement Six months ended Year ended 30/09/09 30/09/08 31/03/09
Unaudited Unaudited Audited Notes R`000 R`000 R`000 Continuing operations Sales revenue 370 839 329 694 637 301 Cost of goods sold (285 570) (307 187) (786 799) Gross profit/(loss) 85 269 22 507 (149 498) Royalties: Namaqualand (15 452) (12 775) (24 103) Diamond Fund Trust Selling and administration (38 232) (32 125) (61 698) costs Mining income/(expenses) 31 585 (22 393) (235 299) Exploration costs (2 056) (22 105) (52 557) Other (losses)/gains - net 1 (1 764) (6 279) (62) Finance income 8 171 7 793 28 332 Finance costs (13 533) (3 585) (20 042) Impairment of assets 2 - - (536 913) Impairment of available- 3 - - (2 433) for-sale-investment Share of results of (7) (4) (7) associated companies Profit/(loss) before 22 396 (46 573) (818 981) income tax Income tax (12 151) (9 424) 58 596 Profit/(loss) for the 10 245 (55 997) (760 385) period from continuing operations Discontinued operations Loss for the period from 4 (1 520) (8 356) (37 188) discontinued operations Profit/(loss) for the 8 725 (64 353) (797 573) period Earnings per share from continuing operations (cents) - Basic 9,7 (53,0) (719,4) - Diluted 9,7 (53,0) (719,4) Loss per share from discontinued operations (cents) - Basic (1,4) (7,9) (35,2) - Diluted (1,4) (7,9) (35,2) Dividends per share - - - (cents) Total number of shares in 106 051 106 051 106 051 issue (`000) Shares in issue adjusted 105 699 105 699 105 699 for treasury shares (`000) Average US$ exchange rate 8,17 7,79 8,87 Headline earnings - Continuing operations 9 624 (54 951) (618 389) - Discontinued operations (1 520) (8 356) (18 198)
Headline earnings per share (cents) - Continuing operations 9,1 (52,0) (585,1) (cents) - Discontinued operations (1,4) (7,9) (17,2) (cents) Abridged consolidated statement of financial position Six months ended Year ended
30/09/09 30/09/08 31/03/09 Unaudited Unaudited Audited R`000 R`000 R`000 Assets Property, plant and 479 262 649 359 526 198 equipment Goodwill - 37 096 - Financial assets 44 535 319 440 40 197 Current assets 458 814 375 962 415 179 Inventories 168 142 211 628 160 223 Trade and other receivables 23 056 34 560 23 057 Current income tax - 5 508 - Cash and cash equivalents 267 616 124 266 231 899 Non-current assets 3 111 77 853 3 111 classified as held for sale 985 722 1 459 710 984 685
Equity and liabilities Total shareholders` 233 224 929 966 186 298 interest Borrowings 118 435 22 062 151 368 Deferred income tax 167 447 190 232 173 698 liabilities Provisions 69 641 57 284 65 999 Deferred income 21 166 - 24 508 Current liabilities 375 809 260 166 382 814 Trade and other payables 246 448 203 009 256 880 Current income tax 23 284 - 8 313 liabilities Borrowings 85 746 29 664 91 060 Bank overdraft 20 331 27 493 26 561 985 722 1 459 710 984 685
Net asset value per share 220 880 176 (cents) Abridged consolidated statement of comprehensive income Six months ended Year ended
30/09/09 30/09/08 31/03/09 Unaudited Unaudited Audited R`000 R`000 R`000 Profit/(loss) for the period 8 725 (64 353) (797 573) Other comprehensive income net of tax: Translation differences on 38 201 (1 249) (5 298) foreign subsidiaries Fair value adjustment on - 6 399 - available-for-sale financial assets Total comprehensive income for 46 926 (59 203) (802 871) the period Abridged consolidated statement of changes in equity Six months ended Year ended 30/09/09 30/09/08 31/03/09
Unaudited Unaudited Audited R`000 R`000 R`000 Balance at 1 April 186 298 994 472 994 472 Total comprehensive 46 926 (59 203) (802 871) income/(loss) for the period Dividends paid - (5 303) (5 303) Balance at end of period 233 224 929 966 186 298 Abridged consolidated statement of cash flows Six months ended Year ended 30/09/09 30/09/08 31/03/09 Unaudited Unaudited Audited R`000 R`000 R`000
Cash available from operating 63 981 4 733 (148 131) activities Movements in working capital 2 394 (71 503) 10 308 Income tax (paid)/received (2 632) (6 873) 8 507 Dividends paid - (5 303) (5 303) Cash generated by/(utilised by) 63 743 (78 946) (134 619) operations Cash employed (21 796) (18 433) 145 805 Property, plant and equipment - Proceeds from disposal 3 878 75 207 129 466 - Replacement (4 018) (46 552) (70 121) - Additional (2 331) (12 808) (41 198) Proceeds from sale of financial - - 5 306 assets Borrowings (16 397) (851) 189 851 Investment, loans and issue of (2 928) (33 429) (67 499) capital Net cash flow for the period 41 947 (97 379) 11 186 Notes Six months ended Year ended 30/09/09 30/09/08 31/03/09 Unaudited Unaudited Audited R`000 R`000 R`000
1. Other (losses)/gains - net Other (losses)/gains - net consists mainly of the following principal categories: - Net foreign exchange gains 516 1 443 9 366 - Loss on other financial assets - (6 282) (6 282) at fair value through profit or loss - Rehabilitation provision - (2 280) (1 440) (3 146) unwinding of discount (1 764) (6 279) (62)
2. Impairment of assets As a result of the global economic slowdown and a subsequent decrease in rough diamond prices, the group reviewed the carrying amounts of its assets, which assets were reduced during the 2009 financial year. Details of the impairment are as follows: - Land and buildings - - (3 087) - Mining rights - - (71 504) - Mine development costs - - (6 660) - Mining plant and equipment - - (50 419) - Goodwill - - (37 096) - Long-term receivable from - - (345 546) Angolan joint ventures - Net current assets - - (22 601) Impairment of assets before tax - - (536 913) Taxation - - 47 401 - - (489 512) 3. Impairment of available-for- sale investment In light of a significant and - - (2 433) prolonged decline in the fair value of the shares held in Diamond Fields International Ltd, a further impairment charge was recorded during the 2009 financial year. 4. Discontinued operations During the 2008 financial year it was decided to discontinue the group`s marine vessel operations in Namibia. The results of the operations were as follows: Revenue - 660 660 Expenses (1 520) (12 387) (17 603) (1 520) (11 727) (16 943) Impairment of assets - - (29 189) Profit on sale of assets - - 8 217 Loss before income tax (1 520) (11 727) (37 915) Taxation - 3 371 727 Loss for the year (1 520) (8 356) (37 188) 5. Reconciliation of headline earnings Continuing operations Profit/(loss) for the period 10 245 (55 997) (760 385) (Profit)/loss on sale of assets (863) 1 396 8 000 - Taxation impact 242 (350) (1 952) Impairment of assets - - 168 766 - Taxation impact - - (35 251) Impairment of available-for-sale- - - 2 433 investment Headline earnings/(loss) 9 624 (54 951) (618 389) Discontinued operations Loss for the period (1 520) (8 356) (37 188) Profit on sale of assets - - (8 217) - Taxation impact - - 150 Impairment of assets - - 27 057 Headline loss (1 520) (8 356) (18 198) 6. Capital commitments (including amounts authorised, 33 567 89 383 46 334 but not yet contracted) 7. Segment information Primary segments Continuing Discontinued Six months ended South Angola Liberia Total Namibia 30 September 2009 Africa R`000 R`000 R`000 R`000 R`000
Carats sold 49 458 1 220 - 50 678 - Revenue 369 395 1 444 - 370 839 - Cost of goods sold (273 673) (11 897) - (285 570) - Gross 95 722 (10 453) - 85 269 (1 520) profit/(loss) Royalties: (15 452) - - (15 452) - Namaqualand Diamond Fund Trust Selling and (31 252) (6 980) - (38 232) - administration costs Mining 49 018 (17 433) - 31 585 (1 520) income/(expense) Exploration costs (1 804) - (252) (2 056) - Other (1 817) 53 - (1 764) - (losses)/gains - net Finance income 8 171 - - 8 171 - Finance costs (8 424) (5 109) - (13 533) - Share of results (7) - - (7) - of associated companies Profit/(loss) 45 137 (22 489) (252) 22 396 (1 520) before income taxation Depreciation (46 337) (3 237) - (49 574) - included in the above Assets 895 726 86 885 - 982 611 - Non-current assets - - - - 3 111 classified as held for sale Liabilities 543 983 208 515 - 752 498 - Capital 4 933 1 416 - 6 349 - expenditure Net asset value 332 (115) - 217 3 per share (cents) Continuing Discontinued Six months ended South Angola Liberia Total Namibia 30 September 2008 Africa R`000 R`000 R`000 R`000 R`000 Carats sold 32 690 12 878 - 45 568 417 Revenue 302 172 27 522 - 329 694 660 Cost of goods sold (245 631) (61 547) (9) (307 187) (12 387) Gross 56 541 (34 025) (9) 22 507 (11 727) profit/(loss) Royalties: (12 775) - - (12 775) - Namaqualand Diamond Fund Trust Selling and (23 591) (8 534) - (32 125) - administration costs Mining 20 175 (42 559) (9) (22 393) (11 727) income/(expense) Exploration costs (2 186) (17 466) (2 453) (22 105) - Other (6 279) - - (6 279) - (losses)/gains - net Finance income 7 793 - - 7 793 - Finance costs (387) (3 198) - (3 585) - Share of results (4) - - (4) - of associated companies Profit/(loss) 19 112 (63 223) (2 462) (46 573) (11 727) before income taxation Depreciation (47 599) (16 205) (9) (63 813) - included in the above Assets 971 458 403 202 7 197 1 381 857 - Non-current assets 29 191 - - - 48 662 classified as held for sale Liabilities 372 348 157 396 - 529 744 - Capital 51 984 7 376 - 59 360 - expenditure Net asset value 594 233 7 834 46 per share (cents) Continuing Discon- tinued
Six months ended South Angola Liberia Total Namibia 31 March 2009 Africa R`000 R`000 R`000 R`000 R`000 Carats sold 83 188 28 272 - 111 460 417 Revenue 588 326 48 975 - 637 301 660 Cost of goods sold (623 567) (163 222) (10) (786 799) (9 386) Gross loss (35 241) (114 247) (10) (149 498) (8 726) Royalties: (24 103) - - (24 103) - Namaqualand Diamond Fund Trust Selling and (45 808) (15 890) - (61 698) - administration costs Mining (105 152) (130 137) (10) (235 299) (8 726) income/(expense) Exploration costs (5 805) (43 276) (3 476) (52 557) - Other (62) - - (62) - (losses)/gains - net Finance income 28 332 - - 28 332 - Finance costs (10 190) (9 852) - (20 042) - Impairment of (69 403) (460 284) (7 226) (536 913) (29 189) assets Share of results (7) - - (7) - of associated companies Loss before income (162 287) (643 549) (10 712) (816 548) (37 915) taxation Impairment of - - - (2 433) - available-for-sale investment Loss before income (162 287) (643 549) (10 712) (818 981) (37 915) taxation Depreciation (118 630) (32 078) (10) (150 718) - included in the above Assets 898 127 82 581 866 981 574 - Non-current assets - - - - 3 111 classified as held for sale Liabilities 545 529 252 858 - 798 387 - Capital 78 039 33 280 - 111 319 - expenditure Net asset value 333 (161) 1 173 3 per share (cents) Revenues from transactions with certain customers amount to ten percent or more of total revenue. During the period under review total revenue from these customers amounted to R38 million (31/03/2009: R101 million; 30/09/2008: R124 million). 8. Mineral resources and mineral reserves There have been no material changes to the mineral resources and mineral reserves previously reported in the annual report. 9. Contingent liabilities There have been no material changes to contingent liabilities previously reported in the annual report. 10. The accounting policies are consistent with the annual report and the corresponding prior year period in accordance with International Financial Reporting Standards, except for the adoption of IAS 1 Presentation of Financial Statements (Revised) and IFRS 8 Operating Segments. The adoption of these new standards has resulted in certain disclosure reclassifications but did not have any impact on the results of the group. These abridged financial statements comply with IAS 34. 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. Overview In this commentary, results are compared with the first six months of the 2008/2009 financial year (in brackets). The directors of Trans Hex are pleased to report that the company has recorded a successful six months for the period ending 30 September 2009. The achievements for the period, and the company`s return to profitability, are largely attributed to two factors; stringent cost management that resulted in substantial reductions in cash operating costs against the previous comparative period; and effective cash generation by their operations that resulted in net cash flow increasing from a net outflow of R97 million to a net inflow of R42 million. Financial highlights - Mining income increased to R32 million (R22 million loss). - Sales revenue of R371 million (R330 million) improved through increased volumes and weaker rand/US dollar exchange rate, offset by lower prices. - Profit after taxation increased to R9 million (R64 million loss). - Earnings per share from continuing operations increased to 9,7 cents from a loss per share of 53,0 cents. - Cash operating costs reduced by R85 million. - Net cash generated increased to R42 million (R97 million utilised) resulting in more than doubling the group`s net cash position to R247 million (R97 million). - Net asset value per share increased by 25% from 31 March 2009. Diamond prices and demand dropped significantly during the second half of the previous financial year due to the adverse effect of the global economic crisis on the diamond market. Sales during the current period have been characterised by a steady stabilisation in prices and with all production being sold. Operating performance Detailed project information (unaudited) Six months ended 30 September Six months ended 30 September 2009 2008
Average Carats Average Average Average Carats Average Average grade produced carats price grade produced carats price per per per per per per 100 m3 stone carat 100 m3 stone carat
achieved achieved (US$) (US$) South Africa Baken 1,93 27 123 1,07 683 1,39 29 799 1,04 1 130 Richtersveld 3,89 16 255 1,89 1 264 1,74 11 746 1,59 1 333 Operations Shallow water - 1 992 0,31 431 - 2 126 0,50 508 Angola Fucauma - - - - 12,38 15 588 0,33 200 Luarica - - - 145 12,71 28 999 0,31 304 Luana 36,34 16 803 0,41 - 31,80 2 838 0,33 - Note: Fucauma and Luarica were under care and maintenance during the period South Africa - South African production increased from 43 670 carats to 45 502 carats as a result of improved grades achieved, and in spite of the rationalisation of operations. - Total sales attributable to the South African operations amounted to US$45 million. - These sales were achieved at an average price of US$914 (US$1 186). Angola - Luana (in which the group holds a 33% share) had 26 450 carats available for sale at the end of the period - the project is awaiting approval to commence with the sale of these diamonds. - The Luana feasibility study has been approved by the Angolan Ministry of Geology and Mines. Liberia - As previously reported, due to unfavourable exploration results, the exploration project in Liberia was terminated and activities were wound down. Sale of Namibia operations - Following the sale of the one vessel in the previous reporting period, the holding costs on the remaining vessel were reduced substantially to R1,5 million (R11,7 million). Outlook - South African land operations production is anticipated around 100 000 carats for the current financial year. - The grade at Baken, South Africa, is expected to improve as planned mining operations have moved to areas which are expected to produce higher grades. - Both demand and pricing of the group`s product are expected to be stable over the balance of the financial year. - Tight cost and cash control will continue to be exerted. - Negotiations at Luana are continuing and are expected to be concluded by financial year-end. Change in directorship As previously reported, Mr P Lazarus Zim resigned as non-executive director and chairman of the board effective 22 September 2009. Mr Bernard van Rooyen has assumed the chairmanship of the board until such time a replacement chairman is appointed. In addition, Mr Pine Pienaar resigned as non-executive director effective 4 June 2009, following his resignation as chief executive officer and director of Mvelaphanda Resources Limited. The company secretary, Mr George Zacharias, has resigned effective 30 November 2009, and will be replaced by Mr Ian Hestermann, who currently holds the position of financial director, Trans Hex Angola. Dividend declaration In order to maintain cash resources and until such time as the impact of the global credit crisis situation stabilises, the directors deem it prudent not to declare an interim dividend. By order of the board BR van Rooyen L Delport Acting Chairman Chief Executive Officer Parow 10 November 2009 Registered office: 405 Voortrekker Road, Parow 7500, PO Box 723, Parow 7499 JSE share code: TSX NSX share code: THX ISIN code: ZAE000018552 Registration number: 1963/007579/06 Incorporated in the Republic of South Africa ("Trans Hex" or "the group") Transfer secretaries South Africa Computershare Investor Services (Pty) Limited, PO Box 61051, Marshalltown 2107 Namibia Irwin Jacob, Greene & Associates, PO Box 2401, Windhoek Sponsor Rand Merchant Bank (A division of FirstRand Bank Limited) Directorate BR van Rooyen (Acting Chairman), L Delport (Chief Executive Officer), AG Muller (Financial Director), MJ Carstens (SA Land Operations), T de Bruyn, JW Dreyer, E de la H Hertzog, AR Martin, T van Wyk, GJ Zacharias (Company Secretary) Additional information on these results is available at www.transhex.co.za Date: 10/11/2009 07:05:15 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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