Wrap Text
TSX - Trans Hex - Audited Results For The Year Ended 31 March 2010
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
("Trans Hex" or "the group")
AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2010
Abridged consolidated income statement
2010 2009
Notes R`000 R`000
Continuing operations
Sales revenue 715 667 637 301
Cost of goods sold (527 611) (786 799)
Gross profit/(loss) 188 056 (149 498)
Other operating expenses 1 (31 568) -
Royalties (29 837) (24 103)
Selling and administration costs (74 671) (61 698)
Mining income/(expenses) 51 980 (235 299)
Exploration costs (4 046) (52 557)
Other (losses)/gains - net 2 958 3 084
Finance income 17 649 28 332
Finance costs (29 636) (23 188)
Impairment of assets 3 - (536 913)
Impairment of available-for-sale- 4 - (2 433)
investment
Share of results of associated (9) (7)
companies
Profit/(loss) before income tax 36 896 (818 981)
Income tax (11 747) 58 596
Profit/(loss) for the period from 25 149 (760 385)
continuing operations
Discontinued operations
Loss for the period from 5 (3 543) (37 188)
discontinued operations
Profit/(loss) for the period 21 606 (797 573)
Earnings per share from
continuing operations (cents)
Basic 23,8 (719,4)
Diluted 23,8 (719,4)
Loss per share from discontinued
operations (cents)
Basic (3,4) (35,2)
Diluted (3,4) (35,2)
Dividends per share (cents) - -
Total number of shares in issue 106 051 106 051
(`000)
Shares in issue adjusted for 105 699 105 699
treasury shares (`000)
Average US$ exchange rate 7,85 8,87
Headline earnings
Continuing operations 23 313 (618 389)
Discontinued operations (2 775) (18 198)
Headline earnings/(loss) per
share (cents)
Continuing operations (cents) 22,1 (585,1)
Discontinued operations (cents) (2,6) (17,2)
Abridged consolidated statement of comprehensive income
2010 2009
R`000 R`000
Profit/(loss) for the period 21 606 (797 573)
Other comprehensive income net of tax:
Translation differences on foreign 118 863 (5 298)
subsidiaries
Before-tax amount 38 508 43 115
Tax benefit/(expense) 80 355 (48 413)
Fair value adjustment on available-for- 240 -
sale financial assets
Before-tax amount 240 -
Tax benefit/(expense) - -
Total comprehensive income/(loss) for 140 709 (802 871)
the period
Abridged consolidated statement of financial position
2010 2009
Note R`000 R`000
Assets
Property, plant and equipment 498 252 526 198
Financial assets 43 462 40 197
Current assets 464 605 415 179
Inventories 7 162 792 160 223
Trade and other receivables 32 921 23 057
Cash and cash equivalents 268 892 231 899
Non-current assets classified as held 2 044 3 111
for sale
1 008 363 984 685
Equity and liabilities
Total shareholders` interest 327 007 186 298
Borrowings 95 772 151 368
Deferred income tax liabilities 90 165 173 698
Provisions 75 886 65 999
Deferred income 17 824 24 508
Current liabilities 401 709 382 814
Trade and other payables 264 776 256 880
Current income tax liabilities 20 619 8 313
Borrowings 92 987 91 060
Bank overdraft 23 327 26 561
1 008 363 984 685
Net asset value per share (cents) 308 176
Abridged consolidated statement of changes in equity
2010 2009
R`000 R`000
Balance at 1 April 186 298 994 472
Total comprehensive income/(loss) for 140 709 (802 871)
the period
Dividends paid - (5 303)
Balance at end of period 327 007 186 298
Abridged consolidated statement of cash flows
2010 2009
R`000 R`000
Cash available from operating activities 122 714 (148 131)
Movements in working capital 20 924 10 308
Income tax (paid)/received (2 324) 8 507
Dividends paid - (5 303)
Cash generated by/(utilised by) 141 314 (134 619)
operations
Cash employed (101 087) 145 805
Property, plant and equipment
Proceeds from disposal 5 696 129 466
Replacement (30 396) (70 121)
Additional (43 011) (41 198)
Proceeds from sale of financial assets - 5 306
Borrowings (33 376) 189 851
Investment, loans and issue of capital - (67 499)
Net increase in cash and cash equivalents 40 227 11 186
Cash and cash equivalents at beginning of 205 338 194 152
year
Cash and cash equivalents at end of year 245 565 205 338
Notes
2010 2009
R`000 R`000
1. Other operating expenses 31 568 -
The other operating expenses consist of
Luarica and Fucauma care and maintenance
costs.
2. Other (losses)/gains - net
Other (losses)/gains - net consists mainly
of the following principal categories:
Net foreign exchange gains 958 9 366
Loss on other financial assets at fair
value through profit or loss - (6 282)
958 3 084
3. 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 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 Angolan joint - (345 546)
ventures
Net current assets - (22 601)
Impairment of assets before tax - (536 913)
Taxation - 47 401
- (489 512)
4. Impairment of available-for-sale investment - (2 433)
In the light of a significant and prolonged
decline in the fair value of the shares
held in Diamond Field International Ltd, a
further impairment charge was recorded
during the 2009 financial year.
5. 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 111 660
Expenses (2 886) (17 603)
(2 775) (16 943)
Impairment of assets (1 067) (29 189)
Profit on sale of assets - 8 217
Loss before income tax (3 842) (37 915)
Taxation 299 727
Loss for the year (3 543) (37 188)
6. Reconciliation of headline earnings
Continuing operations
Profit/(loss) for the period 25 149 (760 385)
(Profit)/loss on sale of assets (2 550) 8 000
Taxation impact 714 (1 952)
Impairment of assets - 168 766
Taxation impact - (35 251)
Impairment of available-for-sale - 2 433
investment
Headline earnings/(loss) 23 313 (618 389)
Discontinued operations
Loss for the period (3 543) (37 188)
Profit on sale of assets - (8 217)
Taxation impact - 150
Impairment of assets 1 067 27 057
Taxation impact (299) -
Headline loss (2 775) (18 198)
7. Inventories
Diamonds 133 889 128 583
Consumables 28 903 31 640
162 792 160 223
The carrying value of diamond inventories
carried at net realisable value amounted to
R22 million (2009: R89 million).
8. Capital commitments (including amounts 61 539 46 334
authorised, but not yet contracted)
These commitments will be financed from the
group`s own resources or with borrowed
funds.
9. Segment information
Operating segments
Continuing Discontinued
South Angola Liberia Total Namibia
2010 Africa
Carats sold 95 251 1 220 - 96 471 -
R`000 R`000 R`000 R`000 R`000
Revenue 714 279 1 388 - 715 667 111
Cost of goods sold (520 562) (7 049) - (527 (2 886)
611)
Gross 193 717 (5 661) - 188 056 (2 775)
profit/(loss)
Other operating - (31 568) - (31 568) -
expenses
Royalties (29 837) - - (29 837) -
Selling and (63 643) (12 189) 1 161 (74 671) -
administration costs
Mining 100 237 (49 418) 1 161 51 980 (2 775)
income/(expense)
Exploration costs (4 046) - - (4 046) -
Other (losses)/gains 958 - - 958 -
- net
Finance income 17 649 - - 17 649 -
Finance costs (18 683) (10 953) - (29 636) -
Impairment of assets - - - - (1 067)
Share of results of
associated companies (9) - - (9) -
Profit/(loss) before 96 106 (60 371) 1 161 36 896 (3 842)
income taxation
Depreciation (95 490) (5 108) - (100 -
included in the 598)
above
Assets 906 989 98 680 650 1 006 -
319
Non-current assets - - - - 2 044
classified as held
for sale
Liabilities 456 835 224 521 - 681 356 -
Capital expenditure 31 955 2 097 - 34 052 -
Net asset value per 424 (119) 1 306 2
share (cents)
Continuing Discontinued
South
2009 Africa Angola Liberia Total Namibia
Carats sold 83 188 28 272 - 111 460 417
R`000 R`000 R`000 R`000 R`000
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) -
Selling and (45 808) (15 890) - (61 698) -
administration costs
Mining expense (105 152) (130 137) (10) (235 299) (8 726)
Exploration costs (5 805) (43 276) (3 476) (52 557) -
Other (losses)/gains 3 084 - - 3 084 -
- net
Finance income 28 332 - - 28 332 -
Finance costs (13 336) (9 852) - (23 188) -
Impairment of assets (69 403) (460 284) (7 226) (536 913) (29 189)
Share of results of
associated companies (7) - - (7) -
Loss before income (162 287) (643 549) (10 (816 548) (37 915)
tax 712)
Impairment of
available-for-sale - - - (2 433) -
investment
Loss before income (162 287) (643 549) (10 (818 981) (37 915)
tax 712)
Depreciation (118 630) (32 078) (10) (150 718) -
included in the
above
Assets 898 127 82 581 866 981 574 -
Non-current assets
classified as held - - - - 3 111
for sale
Liabilities 545 529 252 858 - 798 387 -
Capital expenditure 78 039 33 280 - 111 319 -
Net asset value per 333 (161) 1 173 3
share (cents)
Revenues from transactions with certain customers did not amount to 10 per cent
or more of total revenue (2009: R101 million).
10. Mineral resources and mineral reserves
There have been no material changes to the mineral resources and
mineral reserves previously reported in the annual report
11. Contingent liabilities and contingent assets
The group is subject to claims which arise in the ordinary course
of business. The group has provided performance guarantees to banks
and other third parties amounting to R11,2 million (2009: R11,5
million). The group has been advised that potential foreign claims
exist in respect of a guarantee on a loan from a financial
institution of US$8,7 million (2009: US$8,7 million) and other
legal claims of US$0,6 million (2009: US$ nil). The directors have
been advised that such claims would be very unlikely to succeed.
There were no contingent assets in the group at either 31 March
2010 or 31 March 2009.
12. Defaults and breaches
As at 31 March 2010, borrowings with a principal amount of R65,6
million (2009: R91,2 million) and accrued interest of R10,7 million
(2009: R4,9 million), due by joint ventures to external credit
providers, were in default.
13. Restatement of comparative figures
Unwinding of discount was previously included under "Other
(losses)/gains - net" in the income statement. In terms of IAS 37
"Provisions, contingent liabilities and contingent assets"
unwinding of discount should be presented as borrowing cost. The
effect of this reclassification on the prior year figures is that
"Finance costs" in the income statement increased with R3,2 million
and "Other (losses)/gains - net" decreased with the same amount.
14. Accounting policies
The accounting policies are consistent with those in the previous
reporting period in accordance with International Financial
Reporting Standards, except for the adoption of IAS 1 Presentation
of Financial Statements (Revised) and IFRS 8 Operating statements.
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.
15. Report of independent auditor
The external auditors, PricewaterhouseCoopers Inc. have audited the
group`s annual financial statements and the abridged financial
statements contained herein for the year ended 31 March 2010.
Copies of their unqualified audit reports are available on request
at the company`s registered office.
In this commentary, results are compared with the 12 months of the 2009
financial year (in brackets).
Overview
The directors of Trans Hex are pleased to report a profit after tax of R22
million, a significant turnaround compared to a loss of R798 million the
previous reporting period.
Cash generated by operations for the period was R141 million, compared to cash
utilised of R135 million the previous period, a turnaround of R276 million.
These achievements are largely attributed to two factors; stringent cost
management that resulted in substantial reductions in cash operating costs
against the previous comparative period; and the recovery of diamond prices.
Financial Highlights
Sales revenue of R716 million (R637 million) improved through increased volumes
and higher prices from the South African operations, offset by the stronger
rand/US dollar exchange rate
Cash operating costs reduced by R165 million
Mining income increased to R52 million (R235 million loss)
Profit after taxation increased to R22 million (R798 million loss)
Earnings per share from continuing operations increased to 23,8 cents from a
loss per share of 719,4 cents
Net cash generated was R40 million (R11 million generated) resulting in the
group`s net cash position increasing to R246 million (R205 million). The cash
balance at end of year would have been R307 million if the 10% lots of diamonds
tied up at the State Diamond Trader, valued at R61 million had been sold during
the current financial year.
After a difficult previous financial year when demand and prices for rough
diamond production fell significantly due to the global financial crisis, the
current year saw continual growth in both of these key areas. Prices have
improved significantly and demand for Trans Hex production has remained strong.
Operating performance
Detailed project information
Detailed project Avarage Carats produced Average Average price
information grade per carats per per carat
(Unaudited) 100 m3 stone achieved (US$)
2010
South Africa
Baken 1,90 58 760 1,10 921
Richtersveld 2,67 24 436 1,63 1 228
operations
Shallow water - 9 708 0,41 306
Angola
Fucauma - - - -
Luarica - - - -
Luana 33,91 20 510 0,41 -
2009
South Africa
Baken 1,46 55 847 1,04 765
Richtersveld 2,34 27 201 1,79 1 047
operations
Shallow water - 5 885 0,35 376
Angola
Fucauma 11,86 30 432 0,32 156
Luarica 12,97 48 338 0,35 215
Luana 28,93 6 950 0,34 -
Note: Fucauma and Luarica were under care and maintenance during the period
South Africa
South African production increased from 88 933 carats to 92 904 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$91
million (US$67 million)
These sales were achieved at an average price of US$957 (US$807)
Angola
Luana (in which the group holds a 33% share) continued with pilot mining during
the period and had 31,822 carats available for sale at the end of the period
The Luana feasibility study has been approved by the Angolan Ministry of Geology
and Mines
Luarica and Fucauma were under care and maintenance
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 R3 million
(R17 million)
Outlook
South African Land operations production is anticipated around 100,000 carats
for the 2011 financial year
The declining grade at Baken will be countered by increasing the plant
throughput
Tight cost and cash control will continue to be exerted
We remain positive for demand and pricing levels as sales since year-end have
continued to show a strengthening in prices. Longer-term, reduced rough
production levels globally and a gradual recovery in major economies from the
recession will likely see demand for rough production increase
The Luana mining contract was signed on 12 May 2010
Pilot production will continue with equipment already on site, and the partners
will in due course decide how the mine will be developed. Sale of Luana product
will commence imminently
Changes 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 R van Rooyen then
assumed the chairmanship of the board on an acting basis. At the Board meeting
held on 27 May 2010, Mr van Rooyen was confirmed as chairman of the board for a
further period of one year.
Mr Jan Willem Dreyer was appointed as a non-executive director with effect from
25 May 2009. Mr Dreyer is an executive director of Remgro Limited.
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.
Mr George Zacharias resigned as company secretary effective 30 November 2009 and
was replaced by Mr Ian Hestermann (previously financial director, Trans Hex
Angola).
Mr Graham Muller resigned as financial director effective 1 February 2010 and Mr
Ian Hestermann was appointed as acting director, whilst retaining his
responsibilities as company secretary.
Mr Hestermann has now been appointed financial director with effect from 27 May
2010.
Mr Greg van Heerden (currently Group Human Resources Manager) has been appointed
company secretary with effect from 27 May 2010.
Dividend declaration
In order to maintain cash resources the directors deem it prudent not to declare
a final dividend.
Shareholders` diary
The annual report will be mailed before 30 June 2010 and the annual general
meeting is scheduled for 5 August 2010.
By order of the board
BR van Rooyen L Delport
Chairman Chief Executive Officer
Parow
27 May 2010
Registered office
405 Voortrekker Road, Parow 7500 PO Box 723, Parow 7499
Transfer secretaries
South Africa
Computershare Investor Services (Pty) Limited
PO Box 61051, Marshalltown 2107
Namibia
Transfer Secretaries (Pty) Ltd
PO Box 2401, Windhoek
Directorate
BR van Rooyen (Chairman), L Delport (Chief Executive Officer),
MJ Carstens (SA Land Operations), IP Hestermann (Financial Director),
T de Bruyn, JW Dreyer, E de la H Hertzog, AR Martin, T van Wyk
GM van Heerden (Company Secretary)
Date: 31/05/2010 07:05:16 Supplied by www.sharenet.co.za
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