Wrap Text
Audited Financial Results for year ended 31 March 2013
Cautionary renewal - Update
TRANS HEX GROUP LIMITED
Incorporated in the Republic of South Africa
Registration number: 1963/007579/06
JSE share code: TSX
ISIN: ZAE000018552
("Trans Hex" or "the company" or "the group")
- AUDITED ANNUAL RESULTS FOR THE YEAR ENDED 31 MARCH 2013
- UPDATED DETAILS RELATING TO THE ACQUISITION OF NAMAQUALAND MINES; AND
- FURTHER CAUTIONARY ANNOUNCEMENT
FINANCIAL HEADLINES
- Sales revenue steady at R751,3 million (2012: R754,5 million).
- South African operations generated a profit before tax of R88,2 million (2012: R114,6
million).
- Group profit after tax from continuing operations was R65,0 million (2012: R80,9
million).
- Profit after tax from discontinued operations amounted to R20,4 million (2012: R127,4
million).
- Group net profit for the year was R85,4 million (2012: R208,3 million).
- Net cash generated during the reporting period was R36,0 million (2012: R79,9 million)
resulting in the group's net cash position at the end of the year being R383,4 million
(2012: R347,4 million).
- Earnings per share amounted to 79,7 cents (2012: 196,0 cents) and headline earnings
per share amounted to 69,9 cents (2012: 195,5 cents).
- Net asset value per share increased to 505,0 cents (2012: 442,0 cents).
- In Angola, Somiluana sales amounted to US$14,9 million (2012: US$21,7 million).
SUMMARY CONSOLIDATED INCOME STATEMENT
2013 2012
Notes R'000 R'000
Continuing operations
Sales revenue 751 304 754 484
Cost of goods sold (605 181) (563 150)
Gross profit 146 123 191 334
Royalties (19 832) (21 447)
Selling and administration costs (65 377) (61 948)
Mining profit 60 914 107 939
Exploration costs (5 213) (9 225)
Other gains – net 1 22 158 7 795
Finance income 17 566 14 155
Finance costs (8 403) (11 496)
Share of results of associated companies - 117
Profit before income tax 87 022 109 285
Income tax (22 017) (28 427)
Profit for the year from continuing operations 65 005 80 858
Discontinued operations
Profit for the year from discontinued operations 2 20 364 127 438
Profit for the year 85 369 208 296
Attributable to:
Continuing operations 65 005 80 858
Owners of the parent 63 847 79 676
Non-controlling interest 1 158 1 182
Discontinued operations
Owners of the parent 20 364 127 438
85 369 208 296
Earnings per share (cents)
Continuing operations - Basic and diluted 60,4 75,4
Discontinued operations - Basic and diluted 19,3 120,6
Total - Basic and diluted 79,7 196,0
Shares in issue adjusted for treasury shares ('000) 105 699 105 699
2013 2012
R'000 R'000
Headline earnings
Continuing operations 53 485 79 138
Discontinued operations 20 364 127 438
Total 73 849 206 576
Headline earnings per share (cents)
Continuing operations 50,6 74,9
Discontinued operations 19,3 120,6
Total 69,9 195,5
Average US$ exchange rate 8,62 7,55
SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2013 2012
R'000 R'000
Profit for the year 85 369 208 296
Other comprehensive income net of tax:
Translation differences on foreign subsidiaries (20 220) (47 201)
Before-tax amount (20 220) (31 333)
Tax expense - (15 868)
Fair value adjustment on available-for-sale financial assets (116) (1 178)
Before-tax amount (116) (1 178)
Tax benefit/(expense) - -
Reclassification of fair value adjustment on available-for-sale
financial assets on disposal (82) (233)
Before-tax amount (82) (233)
Tax benefit/(expense) - -
Total comprehensive income for the year 64 951 159 684
Attributable to:
Owners of the parent 63 793 158 502
Non-controlling interest 1 158 1 182
64 951 159 684
SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2013 2012
R'000 R'000
Assets
Property, plant and equipment 338 483 384 858
Financial assets 111 327 99 015
Current assets 540 637 466 720
Inventories 133 569 97 776
Trade and other receivables 23 672 21 593
Cash and cash equivalents 383 396 347 351
990 447 950 593
Equity and liabilities
Total shareholders' interest 533 904 470 111
Non-controlling interest 124 (1 034)
Borrowings 1 281 24 401
Deferred income tax liabilities 53 583 70 735
Provisions 98 853 91 473
Deferred income - 4 456
Current liabilities 302 702 290 451
Trade and other payables 231 144 216 325
Current income tax liabilities 2 584 4 787
Borrowings 68 974 69 339
990 447 950 593
Net asset value per share (cents) 505 442
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
2013 2012
R'000 R'000
Balance at 1 April 469 077 309 393
Total comprehensive income for the year 64 951 159 684
Balance at end of year 534 028 469 077
SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS
2013 2012
R'000 R'000
Cash available from operating activities 155 222 199 815
Movements in working capital (17 521) 12 770
Income tax paid (41 372) (50 539)
Cash generated from operations 96 329 162 046
Cash employed (60 284) (82 165)
Property, plant and equipment
Proceeds from disposal 13 561 672
Replacement (26 561) (33 087)
Additional (17 828) (17 056)
Borrowings repaid (29 456) (32 694)
Net increase in cash and cash equivalents 36 045 79 881
Cash and cash equivalents at beginning of year 347 351 267 470
Cash and cash equivalents at end of year 383 396 347 351
NOTES
2013 2012
R'000 R'000
1. Other gains – net
Other gains – net consists of the following categories:
Net foreign exchange gains 11 719 7 795
Profit on sale of assets and investments 10 439 -
(Profit on sale of assets and investments (immaterial) was
previously included under cost of goods sold)
22 158 7 795
2. Discontinued operations
On 5 October 2011 the Angolan Ministry of Geology, Mines and
Industry revoked the mining rights of the Luarica and Fucaúma joint
ventures as no mining activities had been performed at the sites
for a period of three years as a result of the projects being
placed under care and maintenance.
Trans Hex currently has a legally enforceable right to set off a
portion of the amounts owed by the other joint venture parties to
Trans Hex against its pro rata share of certain of the joint
ventures' liabilities. Due to the set-off, this portion of the
liabilities owed by the other joint venture parties to Trans Hex
became recoverable which resulted in a reversal of impairment of
R84,6 million during the 2012 financial year.
Other gains during the reporting period relate to the prescription
of unclaimed debts of R22,2 million (31/3/2012: prescription of
unclaimed debts of R38,2 million and a change in estimate of
provisions of R20,9 million).
Revenue - -
Other operating expenses: Luarica and Fucaúma care and
maintenance costs (1 866) (12 301)
Other gains – net 22 230 59 079
Finance costs - (3 965)
Reversal of impairment of assets - 84 625
Profit before income tax 20 364 127 438
Taxation - -
Profit for the year 20 364 127 438
3. Reconciliation of headline earnings
Continuing operations
Profit for the year 63 847 79 676
Profit on sale of assets (10 357) (423)
Taxation impact 77 118
Profit on sale of listed investment (82) (233)
Taxation impact - -
Headline earnings 53 485 79 138
Discontinued operation
Profit for the year 20 364 127 438
Headline earnings 20 364 127 438
4. Inventories
Diamonds 113 302 76 123
Consumables 20 267 21 653
133 569 97 776
2013 2012
R'000 R'000
5. Capital commitments
(including amounts authorised, but not yet contracted) 77 430 52 979
These commitments will be financed from the group's own resources
or with borrowed funds.
6. Segment information
Operating segments
Continuing Discontinued
Twelve months ending 31 March 2013 South Africa Angola Total Angola
Carats sold 65 339 - 65 339 -
R'000 R'000 R'000 R'000
Revenue 751 304 - 751 304 -
Cost of goods sold (605 181) - (605 181) -
Gross profit 146 123 - 146 123 -
Other operating expenses - - - (1 866)
Royalties (19 832) - (19 832) -
Selling and administration costs (58 961) (6 416) (65 377) -
Mining profit/(loss) 67 330 (6 416) 60 914 (1 866)
Exploration costs (5 213) - (5 213) -
Other gains – net 16 937 5 221 22 158 22 230
Finance income 17 566 - 17 566 -
Finance costs (8 403) - (8 403) -
Profit before income tax 88 217 (1 195) 87 022 20 364
Depreciation included in the above (89 247) (469) (89 716) -
Assets 915 667 74 759 990 426 21
Liabilities (318 816) (2 786) (321 602) (134 817)
Capital expenditure 44 386 3 44 389 -
Net asset value per share (cents) 565 68 633 (128)
Continuing Discontinued
Twelve months ending 31 March 2012 South Africa Angola Total Angola
Carats sold 83 324 - 83 324 -
R'000 R'000 R'000 R'000
Revenue 754 484 - 754 484 -
Cost of goods sold (562 345) (805) (563 150) -
Gross profit/(loss) 192 139 (805) 191 334 -
Other operating expenses - - - (12 301)
Royalties (21 447) - (21 447) -
Selling and administration costs (57 396) (4 552) (61 948) -
Mining profit/(loss) 113 296 (5 357) 107 939 (12 301)
Exploration costs (9 225) - (9 225) -
Other gains - net 7 795 - 7 795 59 079
Finance income 14 155 - 14 155 -
Finance costs (11 496) - (11 496) (3 965)
Reversal of impairment of assets - - - 84 625
Share of results of associated companies 117 - 117 -
Profit/(loss) before income tax 114 642 (5 357) 109 285 127 438
Depreciation included in the above (81 082) (805) (81 887) -
Assets 886 745 63 673 950 418 175
Liabilities (347 003) (3 160) (350 163) (131 353)
Capital expenditure 57 041 - 57 041 -
Net asset value per share (cents) 509 57 566 (124)
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 R0,0 million (31/03/2012: R82,5 million).
7. Mineral resources and mineral reserves
There have been no material changes to the mineral resources and mineral reserves
previously reported in the annual report.
8. Contingent liabilities
There have been no material changes to contingent liabilities previously reported in
the annual report.
9. Accounting policies
The summary consolidated financial statements are prepared in accordance with the
requirements of the JSE Limited Listings Requirements for preliminary reports and the
requirements of the Companies Act applicable to summary financial statements. The
Listings Requirements require preliminary reports to be prepared in accordance with
the framework concepts, the measurement and recognition requirements of International
Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee and must also, as a minimum, contain the
information required by IAS 34 Interim Financial Reporting. The accounting policies
applied in the preparation of the consolidated financial statements from which the
summary consolidated financial statements were derived are in terms of IFRS and are
consistent with the accounting policies applied in the preparation of the previous
consolidated annual financial statements.
10. Preparation of financial statements
The preparation of the summary consolidated financial statements was supervised by
the financial director, IP Hestermann CA(SA).
11. Report of independent auditor
The external auditors, PricewaterhouseCoopers Inc. have audited the group's
financial statements and the summary financial statements contained herein for the
year ended 31 March 2013. Copies of their unqualified audit reports are available on
request at the company's registered office.
OVERVIEW
In this commentary, results are compared with the 12 months of the 2011/2012
financial year (in brackets).
South African operations showed a profit before tax of R88,2 million (2012: R114,6
million). Total US$ sales attributable to the South African operations decreased to US
$87,2 million (2012: US$100,0 million), at an average price of US$1,334 per carat (2012:
US$1,200). In rand terms, revenue was steady at R751,3 million (2012: R754,5 million).
South African production during the reporting period amounted to 67,115 carats (2012:
84,409 carats). The total volume of gravels treated at the land operations increased by
10,9% and the average grade was 1,05 carats/100m3 (2012: 1,57 carats/100m3). The unit
cost of production increased by 4,4%.
The cost of goods sold increased to R605,2 million (2012: R563,2 million) due to the
higher volumes of gravel treated, together with above-inflation increases in the costs of
labour, fuel and electricity.
In Angola, production at Somiluana, in which Trans Hex holds a 33% stake, amounted to
41,313 carats during the period (2012: 45,869 carats). Total sales amounted to US$14,9
million at an average price of US$352 per carat (2012: sales amounted to US$21,7 million
at an average price of US$446 per carat).
The loss from Angolan continuing operations amounted to R1,2 million, mainly offset by
the profit of R5,2 million on the sale of assets by Trans Hex Angola to Somiluana.
The group reports an after-tax profit for the year from continuing operations of R65,0
million (2012: R80,9 million).
Profit from the discontinued Luarica and Fucaúma operations in Angola amounted to R20,4
million, due to the prescription of unclaimed debts compared to a profit of R127,4
million in 2012.
The group therefore reports a profit for the year of R85,4 million (2012: R208,3
million).
Net cash generated during the reporting period was R36,0 million (2012: R79,9 million)
resulting in the Group's net cash position at the end of the year being R383,4 million
(2012: R347,4 million).
OPERATING PERFORMANCE
Detailed Project Information
Twelve Months ended 31 March 2013 Twelve Months ended 31 March 2012
Average Average
Detailed Average Average price per Average Average price per
project grade carats carat grade carats carat
information per Carats per achieved per Carats per achieved
(Unaudited) 100 m3 produced stone (US$) 100 m3 produced stone (US$)
South Africa
Baken - total 1,03 44 465 1,11 1 313 1,72 63 869 0,98 1 112
Richtersveld
Operations 1,13 13 491 1,97 1 940 1,10 13 839 1,49 1 871
Shallow water - 9 159 0,31 515 - 6 701 0,31 590
Total
South Africa 1,05 67 115 0,88 1 334 1,57 84 409 0,88 1 200
Angola
Somiluana 16,60 41 313 0,42 352 19,16 45 869 0,45 446
Note: Average grade in South Africa is calculated excluding Shallow water production.
South Africa
South African operations produced 67 115 carats compared to 84 409 carats in the
corresponding previous reporting period.
The total volume of gravels treated at the land operations increased by 10,9% and the
average grade decreased to 1,05 carats/100 m3 compared to 1,57 carats/100 m3 in the
corresponding previous reporting period.
Total sales attributable to the South African operations amounted to US$87,2 million at
an average price of US$1 334 per carat (2012: US$100,0 million at US$1 200 per carat).
Angola
Production at Somiluana, in which Trans Hex holds a 33% stake, decreased to 41 313
carats compared to 45 869 carats in the corresponding previous reporting period. The
average grade achieved was 16,60 carats/100 m3, compared to 19,16 carats/100 m3.
Total sales attributable to the mine during the year amounted to US$14,9 million, at
an average price of US$352 per carat. No repayment was made to Trans Hex against the
outstanding investment amount as cash was retained to develop the mine.
Projects Luarica and Fucaúma remained under care and maintenance throughout the year
and are disclosed as discontinued operations as the mining licenses have been formally
revoked by the Angolan State.
UPDATED DETAILS RELATING TO THE ACQUISITION OF NAMAQUALAND MINES AND FURTHER CAUTIONARY
ANNOUNCEMENT
As reported previously on SENS, an agreement with De Beers Consolidated Mines Limited
("DBCM") was signed on 6 May 2011, in terms of which Trans Hex's 50% held company,
Emerald Panther Investments 78 (Pty) Limited ("EPI"), will acquire assets and
liabilities relating to Namaqualand Mines. The terms of the agreement were
subsequently amended in that DBCM will retain in excess of 50% of the Namaqualand
Mines environmental rehabilitation liability. The revised transaction is now valued at
R166 million.
The Department of Mineral Resources has formally approved the transfer of the applicable
prospecting and mining rights in respect of Namaqualand Mines from DBCM to EPI. All
necessary statutory and regulatory approvals required for entering into and implementing
the transaction have therefore now been obtained.
The only issue that remains outstanding is for DBCM and the State to reach agreement
in respect of the State's 20% interest in Namaqualand Mines, after which the necessary
shareholders processes will be completed.
Further cautionary
Shareholders are advised to continue to exercise caution when dealing in the company's
securities until a further announcement is released.
OUTLOOK
Improved economic conditions allowed the recommencement of stripping operations in the
Baken central channel during the reporting period. Work is now continuing to confirm
the potential of higher grades and better stone sizes. South African production for
the 2014 financial year is expected to be 70 000 carats.
In Angola, Somiluana is making progress to secure third party funding for the capital
required to increase production capacity. Internal cash flow is being used to increase
the production capacity and carat production for the 2014 financial year is therefore
expected to surpass the 41 300 carats achieved in 2013.
Trans Hex is continuing with the appropriate course of action to exit from
the discontinued Luarica and Fucaúma projects in Angola.
Tight controls over cash and costs will continue to be exercised in all areas of
the group's business.
Rough diamond prices are expected to remain stable during the 2014 financial
year. Interest and strong demand for Trans Hex production is expected to continue.
In respect of new business opportunities, the group continues to evaluate potential
new ventures on an ongoing basis.
DIVIDEND
In order to maintain cash resources given the pending transaction in respect
of Namaqualand Mines, the absence of any short-term credit facilities and the still
volatile nature of the global economy, the directors deem it prudent not to declare
a final dividend.
SHAREHOLDERS' DIARY
The annual report will be mailed before 30 June 2013 and the annual general meeting
is scheduled for 8 August 2013.
By order of the board
BR van Rooyen L Delport
Chairman Chief Executive Officer
Parow
3 June 2013
REGISTERED OFFICE
405 Voortrekker Road, Parow 7500 PO Box 723, Parow 7499
JSE share code: TSX
ISIN: ZAE000018552
Registration number: 1963/007579/06
Incorporated in the Republic of South Africa
("Trans Hex" or "the company" or "the group")
JSE SPONSOR
Sasfin Capital (a division of Sasfin Bank Limited)
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)
03 June 2013
Cape Town
Sponsor
Sasfin Capital
A division of Sasfin Bank Limited
Date: 03/06/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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