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TSX - Trans Hex - Unaudited Interim Results for the six months ended 30

Release Date: 09/11/2011 16:50
Code(s): TSX
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TSX - Trans Hex - Unaudited Interim Results for the six months ended 30 September 2011 Trans Hex Group Limited (Incorporated in the Republic of South Africa) (Registration number: 1963/007579/06) ISIN: ZAE000018552 JSE share code: TSX ("Trans Hex" or "the group") UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2011 Abridged consolidated income statement 30/09/11 30/09/10 31/03/11 Notes Unaudited Unaudited Audited
R`000 R`000 R`000 Continuing operations Sales revenue 271 974 242 647 657 998 Cost of goods sold (214 362) (291 438) (578 003) Gross profit/(loss) 57 612 (48 791) 79 995 Royalties (5 848) (13 088) (6 061) Selling and administration costs (31 509) (40 581) (68 822) Mining profit/(loss) 20 255 (102 460) 5 112 Exploration costs (6 363) (1 845) (5 699) Other gains/(losses) - net 1 7 474 (4 936) (847) Finance income 6 574 6 229 11 023 Finance costs (6 319) (8 519) (13 439) Share of results of associated - (7) (10) companies Profit/(loss) before income tax 21 621 (111 538) (3 860) Income tax (5 344) 25 039 (7 559) Profit/(loss) for the period from 16 277 (86 499) (11 419) continuing operations Discontinued operations Loss for the period from 2 (14 624) (16 488) (33 680) discontinued operations Profit/(loss) for the period 1 653 (102 987) (45 099) Attributable to: Continuing operations 16 277 (86 499) (11 419) - Owners of the parent 14 954 (86 499) (9 203) - Non-controlling interest 1 323 - (2 216) Discontinuing operations - Owners of the parent (14 624) (16 488) (33 680) 1 653 (102 987) (45 099) Earnings/(loss) per share from continuing operations (cents) - Basic 15,4 (81,8) (10,8) - Diluted 15,4 (81,8) (10,8) Loss per share from discontinued operations (cents) - Basic (13,8) (15,6) (31,9) - Diluted (13,8) (15,6) (31,9) Total number of shares in issue 106 051 106 051 106 051 (`000) Shares in issue adjusted for 105 699 105 699 105 699 treasury shares (`000) Average US$ exchange rate 6,98 7,46 7,26
Headline earnings/(loss) - Continuing operations 16 266 (86 421) (14 965) - Discontinued operations (14 624) (16 301) (33 223)
Headline earnings/(loss) per share (cents) - Continuing operations (cents) 15,4 (81,8) (14,3) - Discontinued operations (cents) (13,8) (15,4) (31,4) Abridged consolidated statement of other comprehensive income 30/09/11 30/09/10 31/03/11 Unaudited Unaudited Audited R`000 R`000 R`000
Profit/(loss) for the period 1 653 (102 987) (45 099) Other comprehensive income net of tax: Translation differences on foreign (77 849) 23 965 29 452 subsidiaries - Before-tax amount (38 768) 8 532 9 434 - Tax (cost)/benefit (39 081) 15 433 20 018 Fair value adjustment on available- for-sale financial assets (757) 1 408 - Before-tax amount (757) 1 408 - Tax benefit/(expense) - - -
Reclassification of foreign currency differences on repayment of long- term receivable from foreign - - (3 375) operations Total comprehensive loss for the (76 953) (78 578) (17 614) period
Attributable to: - Owners of the parent (78 276) (78 578) (15 398) - Non-controlling interest 1 323 - (2 216) (76 953) (78 578) (17 614)
Abridged consolidated statement of financial position 30/09/11 30/09/10 31/03/11 Unaudited Unaudited Audited R`000 R`000 R`000
Assets Property, plant and equipment 398 174 429 803 408 678 Investment in associates - 113 108 Financial assets 101 072 101 039 93 591 Current assets 422 333 336 082 420 184 Inventories 172 634 120 175 114 528 Trade and other receivables 18 972 16 532 14 599 Cash and cash equivalents 230 727 199 375 291 057 921 579 867 037 922 561 Equity and liabilities Total shareholders` interest 233 333 248 429 311 609 Non-controlling interest (893) - (2 216) Borrowings 40 653 78 814 56 937 Deferred income tax liabilities 101 016 49 207 65 629 Provisions 86 971 79 588 82 990 Deferred income 7 798 14 482 11 140 Current liabilities 452 701 396 517 396 472 Trade and other payables 309 272 280 224 262 176 Current income tax liabilities 12 196 4 687 16 138 Borrowings 103 930 89 574 94 571 Bank overdraft 27 303 22 032 23 587
921 579 867 037 922 561 Net asset value per share (cents) 219 234 292 Abridged consolidated statement of changes in equity 30/09/11 30/09/10 31/03/11
Unaudited Unaudited Audited R`000 R`000 R`000 Balance at 1 April 309 393 327 007 327 007 Total comprehensive (loss)/income for (76 953) (78 578) (17 614) the period Balance at end of period 232 440 248 429 309 393 Abridged consolidated statement of cash flows 30/09/11 30/09/10 31/03/11
Unaudited Unaudited Audited R`000 R`000 R`000 Continuing operations: Cash available from operating 27 095 (93 296) 43 902 activities Movements in working capital (40 004) 74 674 54 211 Income tax paid (12 978) (16 417) (16 558) Discontinued operations (1 010) (3 378) (5 013) Cash (utilised in)/generated from (26 897) (38 417) 76 542 operations Cash employed (37 149) (29 805) (54 637) Property, plant and equipment - Proceeds from disposal 15 1 914 2 093 - Replacement (12 860) (22 406) (34 276) - Additional (7 733) (10 560) (15 962) Borrowings (16 571) (16 663) (33 276) Investment and loans - 17 910 26 784 Net (decrease)/increase in cash and (64 046) (68 222) 21 905 cash equivalents Cash and cash equivalents at 267 470 245 565 245 565 beginning of year Cash and cash equivalents at end of 203 424 177 343 267 470 period Notes 30/09/11 30/09/10 31/03/11 Unaudite Unaudited Audited d R`000 R`000
R`000 1. Other gains/(losses) - net Other gains/(losses) - net consists mainly of the following principal categories: - Net foreign exchange gains/(losses) 7 474 (4 936) (4 222) - Foreign exchange gains on repayment of long-term receivable from foreign - - 3 375 operation 7 474 (4 936) (847) 2. Discontinued operations Luarica and Fucauma costs were included in the group`s discontinued Angolan segment as from the current period as the mining licences have been formally revoked by the Angolan State. The marine mining vessels were included in the group`s discontinued Namibian segment for the corresponding prior period. Revenue - - - Other operating expenses (10 660) (10 236) (25 284) Finance costs (3 964) (5 424) (7 389) Other expenses - (641) (550) (14 624) (16 301) (33 223) Loss on sale of assets - (187) (457) Loss before income tax (14 624) (16 488) (33 680) Taxation - - - Loss for the period (14 624) (16 488) (33 680)
3. Reconciliation of headline earnings Continuing operations Profit/(loss) for the period 16 277 (86 499) (11 419) - (Profit)/loss on sale of assets (15) 108 (237) - Taxation impact 4 (30) 66 - Foreign exchange gains on repayment of long-term receivable from foreign - - (3 375) operation - Taxation impact - - - Headline earnings/(loss) 16 266 (86 421) (14 965)
Discontinued operations Loss for the period (14 624) (16 488) (33 680) - Loss on sale of assets - 187 457 - Taxation impact - - - Headline loss (14 624) (16 301) (33 223) 4. Capital commitments (including amounts authorised, but not yet contracted) 33 991 17 031 54 841 These commitments will be financed from the group`s own resources or with borrowed funds. 5. Segment information Operating segments Continuing
Six months ending 30 September 2011 South Africa Angola Total Carats sold 28 771 - 28 771 R`000 R`000 R`000
Revenue 271 974 - 271 974 Cost of goods sold (213 915) (447) (214 362) Gross profit/(loss) 58 059 (447) 57 612 Other operating expenses - - - Royalties (5 848) - (5 848) Selling and administration costs (28 697) (2 812) (31 509) Mining profit/(loss) 23 514 (3 259) 20 255 Exploration costs (6 363) - (6 363) Other gains/(losses) - net 7 474 - 7 474 Finance income 6 574 - 6 574 Finance costs (6 319) - (6 319) Profit/(loss) before income taxation 24 880 (3 259) 21 621 Depreciation included in the above (34 410) (447) (34 857)
Assets 852 173 69 406 921 579 Liabilities 406 539 8 762 415 301 Capital expenditure 20 489 - 20 489 Net asset value per share (cents) 420 57 477 Discontinued Six months ending 30 September 2011 Angola Namibia Total Carats sold - - - R`000 R`000 R`000 Revenue - - - Cost of goods sold - - - Gross profit/(loss) - - - Other operating expenses (10 660) - (10 660) Royalties - - - Selling and administration costs - - - Mining profit/(loss) (10 660) - (10 660) Exploration costs - - - Other gains/(losses) - net - - - Finance income - - - Finance costs (3 964) - (3 964) Profit/(loss) before income taxation (14 624) - (14 624) Depreciation included in the above - - - Assets - - - Liabilities 273 838 - 273 838 Capital expenditure - - - Net asset value per share (cents) (258) - (258) 5. Segment information (continued) Operating segments (continued) Continuing Six months ending 30 September 2010 South Angola Total Africa
Carats sold 36 641 - 36 641 R`000 R`000 R`000 Revenue 242 647 - 242 647 Cost of goods sold (288 658) (2 780) (291 438) Gross loss (46 011) (2 780) (48 791) Other operating expenses - - - Royalties (13 088) - (13 088) Selling and administration costs (33 217) (7 364) (40 581) Mining loss (92 316) (10 144) (102 460) Exploration costs (1 845) - (1 845) Other (losses)/gains - net (4 936) - (4 936) Finance income 6 229 - 6 229 Finance costs (8 519) - (8 519) Share of results of associated companies (7) - (7) Loss before income taxation (101 394) (10 144) (111 538)
Depreciation included in the above (45 384) (1 137) (46 521) Assets 783 028 84 009 867 037 Liabilities 398 704 7 205 405 909 Capital expenditure 32 966 - 32 966 Net asset value per share (cents) 362 72 434
Discontinued Angola Namibia Total Six months ending 30 September 2010 Carats sold - - - R`000 R`000 R`000 Revenue - - - Cost of goods sold - - - Gross loss - - - Other operating expenses (10 236) (828) (11 064) Royalties - - - Selling and administration costs - - - Mining loss (10 236) (828) (11 064) Exploration costs - - - Other (losses)/gains - net - - - Finance income - - - Finance costs (5 424) - (5 424) Share of results of associated companies - - - Loss before income taxation (15 660) (828) (16 488) Depreciation included in the above - - - Assets - - - Liabilities 212 699 - 212 699 Capital expenditure - - - Net asset value per share (cents) (200) - (200) 5. Segment information (continued) Operating segments (continued) Continuing Twelve months ending 31 March 2011 South Angola Total Africa Carats sold 77 957 - 77 957 R`000 R`000 R`000 Revenue 657 998 - 657 998 Cost of goods sold (574 625) (3 378) (578 003) Gross profit/(loss) 83 373 (3 378) 79 995 Other operating expenses - - - Royalties (6 061) - (6 061) Selling and administration costs (59 982) (8 840) (68 822) Mining (loss)/profit 17 330 (12 218) 5 112 Exploration costs (5 699) - (5 699) Other (losses)/gains - net 5 421 (6 268) (847) Finance income 11 023 - 11 023 Finance costs (13 439) - (13 439) Share of results of associated companies (10) - (10) (Loss)/profit before income taxation 14 626 (18 486) (3 860) Depreciation included in the above (82 735) (1 788) (84 523)
Assets 859 330 63 231 922 561 Liabilities 383 100 7 320 390 420 Capital expenditure 51 573 298 51 871 Net asset value per share (cents) 449 53 502 Discontinued Twelve months ending 31 March 2011 Angola Namibia Total Carats sold - - - R`000 R`000 R`000 Revenue - - - Cost of goods sold - - - Gross profit/(loss) - - - Other operating expenses (25 284) (1 007) (26 291) Royalties - - - Selling and administration costs - - - Mining (loss)/profit (25 284) (1 007) (26 291) Exploration costs - - - Other (losses)/gains - net - - - Finance income - - - Finance costs (7 389) - (7 389) Share of results of associated - companies - - (Loss)/profit before income taxation (32 673) (1 007) (33 680)
Depreciation included in the above - - -
Assets - - - Liabilities 222 748 - 222 748 Capital expenditure - - - Net asset value per share (cents) (210) - (210) 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 R66,4 million (31/03/2011: R74,6 million; 30/09/2010: R41,0 million). 6. Mineral resources and mineral reserves No adjustments have been made to the statement of mineral resources and mineral reserves as contained in the 2011 annual report. Annual reconciliation of production data will take place in March 2012 and an updated resource and reserve statement will be published in the 2012 annual report. 7. Contingent liabilities There have been no material changes to contingent liabilities previously reported in the annual report. 8. Accounting policies The accounting policies are consistent with those applied in the audited annual financial statements for the year ended 31 March 2011 and the corresponding prior year period in accordance with International Financial Reporting Standards, except for the adoption of IAS 27 Consolidated and Separate Financial Statements (Revised). The adoption of this revised standard has resulted in a debit balance being recognised for non-controlling interest which has not been accounted for previously. These abridged financial statements comply with IAS34. 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. 9. Preparation of financial statements The preparation of the abridged unaudited interim financial statements was supervised by the financial director, IP Hestermann CA(SA). Overview In this commentary, results are compared with the first six months of the 2010/2011 financial year (in brackets). South African operations showed a profit before tax of R24,9 million compared to a loss before tax of R101,4 million in September 2010. South African production during the reporting period amounted to 33,199 carats (Sep 2010: 32,288 carats). The total volume of gravels treated at the land operations remained stable and the average grade of 1,24 carats/100m3 was the same as in the corresponding previous reporting period. The unit cost of production was reduced by 3%. Total sales attributable to the South African operations increased to US$39,5 million (Sep 2010: US$33,0 million), at an average price of US$1,372 per carat (Sep 2010: US$901). In Rand terms, revenue was up by 12,1% to R272,0 million (Sep 2010: R242,7 million). In Angola, production at Somiluana, in which Trans Hex holds a 33% stake, amounted to 20,473 carats during the period (Sep 2010: 6,164 carats). Total sales amounted to US$9,8 million at an average price of US$434 per carat (Sep 2010: sales amounted to US$ 11,3 million, including the sale of pilot production carats). The loss from Angolan continuing operations, mainly attributable to the Angolan head office costs amounted to R3,3 million. As a result, the Group reports an after-tax profit for the period from continuing operations of R16,3 million (Sep 2010: loss of R86,5 million). Projects Luarica and Fucauma remained under care and maintenance throughout the period and these costs, amounting to R14,6 million, were included in the group`s discontinued Angolan segment. The Group therefore reports a profit for the period of R1,7 million (Sep 2010: loss of R103,0 million). Cash and cash equivalents at the end of the reporting period amounted to R203,4 million (Sep 2010: R177,3 million). Financial Headlines - Sales revenue increased by 12,1% to R272,0 million (Sep 2010: R242,7 million). - South African operations generated a profit before tax of R24,9 million, compared to a loss before tax of R101,4 million in September 2010. - Group profit after tax from continuing operations was R16,3 million, against a loss of R86,5 million in September 2010. - Loss after tax from discontinued operations amounted to R14,6 million against a loss of R16,5 million in September 2010. - Group net profit for the period was R1,7 million (Sep 2010: loss of R103,0 million). - Net cash utilised during the reporting period was R64,1 million (Sep 2010: R68,2 million) resulting in the Group`s net cash position at the end of the period being R203,4 million (Sep 2010: R177,3 million). - Headline earnings per share amounted to 1,6 cents, compared to loss per share of 97,2 cents in September 2010. - In Angola, Somiluana sales amounted to US$9,8 million (Sep 2010: US$11,3 million, including the sale of pilot production carats). Operating performance Detailed project information Six months ended 30 September 2011
Detailed project information Average Carats Average Average (unaudited) grade per produced carats per price per 100 m3 stone carat achieved
(US$) South Africa Baken 1.31 23,789 1.36 1,235 Richtersveld operations 1.04 6,692 1.70 2,044 Shallow water - 2,718 0.32 616 Total SA 1.24 33,199 1.11 1,372
Angola Somiluana 18.19 20,473 0.45 434 Note: Average grade in South Africa is calculated excluding Shallow water production. Detailed project information (continued) Six months ended 30 September 2010 Detailed project information Average Carats Average Average (unaudited) grade per produced carats price per 100 m3 per stone carat achieved (US$) South Africa Baken 1.23 21,314 1.01 935 Richtersveld operations 1.26 6,766 1.62 1,259 Shallow water - 4,208 0.24 282
Total SA 1.24 32,288 0.76 901 Angola Somiluana 15.46 6,164 0.43 315 Note: Average grade in South Africa is calculated excluding Shallow water production. South Africa South African production increased to 33,199 carats compared to 32,288 carats in the corresponding prior period. The total volume of gravels treated at the land operations remained stable and the average grade of 1,24 carats/100m3 was the same as in the corresponding previous reporting period. Total sales attributable to the South African operations amounted to US$39,5 million at an average price of US$1,372 per carat (Sep 2010: US$33,0 million at US$901 per carat). Angola Production at Somiluana, in which Trans Hex holds a 33% stake, increased to 20,473 carats compared to 6,164 carats in the previous period. The average grade achieved was 18,19 carats/100m3, compared to 15,46 carats/100m3. Total sales attributable to the mine during the period amounted to US$9,8 million, at an average price of US$434 per carat. No repayment was made to Trans Hex against the outstanding investment amount as cash was retained to develop the mine. Expansion of production capacity is being funded through cash generated from operations and the earthmoving fleet in particular has seen the addition of a number of key production units. Projects Luarica and Fucauma remained under care and maintenance throughout the period and are now disclosed as discontinued operations as the mining licences have been formally revoked by the Angolan State. Outlook Stripping operations at Baken will be resumed in the second half of the year, but on a reduced scale. The mine is still concentrating on lowering total costs and generating an acceptable margin, primarily by processing existing low grade stockpiles at increased throughput levels. South African production for the 2012 financial year is now expected to be 82,000 carats. In Angola, the forecast is for Somiluana to produce 42,000 carats for the financial year. Exit procedures in respect of the Luarica and Fucauma projects, in which Trans Hex holds minority stakes, are continuing. Tight controls over cash and costs will continue to be exercised in all areas of the Group`s business. Although rough prices retracted in the latter part of the reporting period, they remain some way above the highs of 2008, prior to the world financial crisis. Market conditions are now expected to be subdued for the remainder of 2011, with a strengthening in demand anticipated during 2012. In respect of new business opportunities, an agreement with De Beers Consolidated Mines Limited ("DBCM") was signed on 6 May 2011 in terms of which, and subject to certain conditions precedent, Trans Hex`s 50% held joint venture company, Emerald Panther Investments 78 (Pty) Limited, will acquire assets and liabilities relating to Namaqualand Mines, a division of DBCM. The proposed acquisition remains subject to a number of conditions precedent being met, including all necessary statutory and regulatory approvals. The following conditions had been met, as at 30 October 2011: - Unconditional written approval of the relevant Competition Authorities in terms of the Competition Act, No 89 of 1998; and - Approval of the transaction by the shareholders and the board of directors of DBCM. Exploration activities are continuing in Southern Africa and potential new ventures are being evaluated on an ongoing basis. Changes in Directorship Mr. Mervyn Carstens resigned as executive director for SA land operations effective 5 April 2011 pursuant to his secondment on a full-time basis as managing director of Trans Hex`s new joint-venture agricultural company. Dividend In order to maintain cash resources, the directors deem it prudent not to declare an interim dividend. By order of the board BR van Rooyen L Delport Chairman Chief Executive Officer Parow 9 November 2011 Registered office 405 Voortrekker Road, Parow 7500 PO Box 723, Parow 7499 Transfer secretaries Computershare Investor Services (Pty) Limited PO Box 61051, Marshalltown 2107 Directorate BR van Rooyen (Chairman), L Delport (Chief Executive Officer), IP Hestermann (Financial Director), T de Bruyn, AR Martin, GM van Heerden (Company Secretary) Sponsor RAND MERCHANT BANK (a division of FirstRand Bank Limited) Date: 09/11/2011 16:50:01 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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