Wrap Text
Interim results for period ended September 2013
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 Group")
UNAUDITED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013
FINANCIAL HEADLINES
- Sales revenue amounted to R259,7 million (September 2012: R330,7 million).
- Group loss after tax from continuing operations was R69,0 million (September 2012: profit of R24,9 million).
- Profit after tax from discontinued operations amounted to R15,2 million (September 2012: profit of R8,0 million)
- Group net loss for the period was R53,9 million (September 2012: profit of R32,9 million).
- The Group’s net cash position at the end of the period was R294,6 million (September 2012: R351,7 million).
- Loss per share amounted to 51,0 cents (September 2012: earnings per share of 31,6 cents) and headline loss per share amounted
to 51,0 cents (September 2012: headline earnings of 21,5 cents).
- Net asset value per share was 450,0 cents at 30 September 2013 (September 2012: 466,0 cents).
- In Angola, Somiluana sales amounted to US$16,9 million (September 2012: US$7,9 million) and profit of US$5,9 million was
generated (September 2012: loss of US$0,9 million).
SUMMARY CONSOLIDATED INCOME STATEMENT
30/09/13 30/09/12 31/03/13
Unaudited Unaudited Audited
Notes R’000 R’000 R’000
Continuing operations
Sales revenue 259 747 330 647 751 304
Cost of goods sold (320 285) (267 594) (605 181)
Gross (loss)/profit (60 538) 63 053 146 123
Royalties (3 069) (9 225) (19 832)
Selling and administration costs (37 787) (33 843) (65 377)
Mining (loss)/profit (101 394) 19 985 60 914
Exploration costs (2 104) (3 237) (5 213)
Other gains – net 1 6 795 15 164 22 158
Finance income 8 040 8 599 17 566
Finance costs (3 612) (4 878) (8 403)
(Loss)/profit before income tax (92 275) 35 633 87 022
Income tax 23 232 (10 701) (22 017)
(Loss)/profit for the year from continuing operations (69 043) 24 932 65 005
Discontinued operations
Profit for the year from discontinued operations 2 15 186 7 994 20 364
(Loss)/profit for the period (53 857) 32 926 85 369
Attributable to:
Continuing operations (69 043) 24 932 65 005
Owners of the parent (69 090) 24 312 63 847
Non-controlling interest 47 620 1 158
Discontinuing operations
Owners of the parent 15 186 7 994 20 364
(53 857) 32 926 85 369
(Loss)/earnings per share (cents)
Continuing operations - Basic and diluted (65,4) 23,0 60,4
Discontinued operations - Basic and diluted 14,4 7,6 19,3
Total - Basic and diluted (51,0) 31,6 79,7
Shares in issue adjusted for treasury shares (‘000) 105 699 105 699 105 699
30/09/13 30/09/12 31/03/13
Unaudited Unaudited Audited
Notes R’000 R’000 R’000
Headline (loss)/earnings 3
Continuing operations (69 138) 14 679 53 485
Discontinued operations 15 186 7 994 20 364
Total (53 952) 22 673 73 849
Headline (loss)/earnings per share (cents)
Continuing operations (65,4) 13,9 50,6
Discontinued operations 14,4 7,6 19,3
Total (51,0) 21,5 69,9
Average US$ exchange rate 9,69 8,29 8,62
SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
30/09/13 30/09/12 31/03/13
Unaudited Unaudited Audited
R’000 R’000 R’000
(Loss)/profit for the period (53 857) 32 926 85 369
Other comprehensive income net of tax:
Translation differences on foreign subsidiaries (4 871) (7 482) (20 220)
Before-tax amount (4 871) (7 482) (20 220)
Tax benefit - - -
Fair value adjustment on available-for-sale financial assets (37) (192) (116)
Before-tax amount (37) (192) (116)
Tax benefit - - -
Reclassification of fair value adjustment on available-for-sale financial
assets on disposal - - (82)
Before-tax amount - - (82)
Tax benefit - - -
Total comprehensive (loss)/income for the period (58 765) 25 252 64 951
Attributable to:
Owners of the parent (58 812) 24 632 63 793
Non-controlling interest 47 620 1 158
(58 765) 25 252 64 951
SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30/09/13 30/09/12 31/03/13
Unaudited Unaudited Audited
Notes R’000 R’000 R’000
Assets
Property, plant and equipment 319 984 354 751 338 483
Financial assets 112 396 106 029 111 327
Current assets 437 426 509 964 540 637
Inventories 121 774 140 901 133 569
Trade and other receivables 21 020 17 364 23 672
Current income tax 58 - -
Cash and cash equivalents 294 574 351 699 383 396
869 806 970 744 990 447
Equity and liabilities
Total shareholders’ interest 475 092 494 743 533 904
Non-controlling interest 171 (414) 124
Borrowings 438 8 074 1 281
Deferred income tax liabilities 30 325 60 451 53 583
Provisions 102 730 95 206 98 853
Deferred income - 1 114 -
Current liabilities 261 050 311 570 302 702
Trade and other payables 206 176 223 721 231 144
Current income tax liabilities - 15 499 2 584
Borrowings 54 874 72 350 68 974
869 806 970 744 990 447
Net asset value per share (cents) 450 466 504
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
30/09/13 30/09/12 31/03/13
Unaudited Unaudited Audited
R’000 R’000 R’000
Balance at 1 April 534 028 469 077 469 077
Total comprehensive (loss)/income for the period (58 765) 25 252 64 951
Balance at end of period 475 263 494 329 534 028
SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS
30/09/13 30/09/12 31/03/13
Unaudited Unaudited Audited
R’000 R’000 R’000
Cash available from operating activities (36 569) 66 902 155 222
Movements in working capital (15 568) (32 015) (17 521)
Income tax paid (2 666) (10 283) (41 372)
Cash (utilised in)/generated from operations (54 803) 24 604 96 329
Cash employed (34 019) (20 256) (60 284)
Property, plant and equipment
Proceeds from disposal 80 13 368 13 561
Replacement (15 940) (13 120) (26 561)
Additional (8 725) (4 356) (17 828)
Investments and loans 7 584 - -
Borrowings repaid (17 018) (16 148) (29 456)
Net (decrease)/increase in cash and cash equivalents (88 822) 4 348 36 045
Cash and cash equivalents at beginning of period 383 396 347 351 347 351
Cash and cash equivalents at end of period 294 574 351 699 383 396
NOTES TO THE SUMMARY CONSOLIDATED INTERIM FINANCIAL STATEMENTS
30/09/13 30/09/12 31/03/13
Unaudited Unaudited Audited
R’000 R’000 R’000
1. Other gains – net
Other gains – net consists of the following categories:
Net foreign exchange gains 6 729 4 853 11 719
Profit on sale of assets and investments 66 10 311 10 439
6 795 15 164 22 158
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.
Other gains during the reporting period relate to the prescription of unclaimed
debts of R15,2 million (31/3/2013: R22,2 million; 30/9/2012: R9,7 million).
Revenue - - -
Other operating expenses : Luarica and Fucaúma care and maintenance costs - (1 754) (1 866)
Other gains – net 15 186 9 748 22 230
Profit before income tax 15 186 7 994 20 364
Taxation - - -
Profit for the period 15 186 7 994 20 364
3. Reconciliation of headline earnings
Continuing operations
(Loss)/profit for the period (69 090) 24 312 63 847
Profit on sale of assets (66) (10 231) (10 357)
Taxation impact 18 678 77
Profit on sale of listed investment - (80) (82)
Taxation impact - - -
Headline (loss)/earnings (69 138) 14 679 53 485
Discontinued operations
Profit for the period 15 186 7 994 20 364
Headline earnings 15 186 7 994 20 364
30/09/13 30/09/12 31/03/13
Unaudited Unaudited Audited
R’000 R’000 R’000
4. Capital commitments
(including amounts authorised, but not yet contracted) 46 524 35 397 77 430
These commitments will be financed from the group’s own resources
or with borrowed funds.
5. Segment information
Operating segments
Continuing Discontinued
Six months ending 30 September 2013 South Africa Angola Total Angola
Carats sold 26 076 - 26 076 -
R’000 R’000 R’000 R’000
Revenue 259 747 - 259 747 -
Cost of goods sold (320 285) - (320 285) -
Gross loss (60 538) - (60 538) -
Royalties (3 069) - (3 069) -
Selling and administration costs (34 150) (3 637) (37 787) -
Mining loss (97 757) (3 637) (101 394) -
Exploration costs (2 104) - (2 104) -
Other gains – net 6 795 - 6 795 15 186
Finance income 8 040 - 8 040 -
Finance costs (3 612) - (3 612) -
Loss before income tax (88 638) (3 637) (92 275) 15 186
Depreciation included in the above (44 096) (220) (44 316) -
Assets 788 284 81 522 869 806 -
Liabilities (254 977) (7 866) (262 843) (131 700)
Capital expenditure 24 665 - 24 665 -
Net asset value per share (cents) 505 70 574 (125)
Continuing Discontinued
Six months ending 30 September 2012 South Africa Angola Total Angola
Carats sold 33 093 - 33 093 -
R’000 R’000 R’000 R’000
Revenue 330 647 - 330 647 -
Cost of goods sold (267 170) (424) (267 594) -
Gross profit 63 477 (424) 63 053 -
Other operating expenses - - - (1 754)
Royalties (9 225) - (9 225) -
Selling and administration costs (30 640) (3 203) (33 843) -
Mining profit/(loss) 23 612 (3 627) 19 985 (1 754)
Exploration costs (3 237) - (3 237) -
Other gains – net 10 069 5 095 15 164 9 748
Finance income 8 599 - 8 599 -
Finance costs (4 878) - (4 878) -
Profit before income tax 34 165 1 468 35 633 7 994
Depreciation included in the above (45 054) (280) (45 334) -
Assets 900 550 70 194 970 744 -
Liabilities (339 436) (3 640) (343 076) (133 339)
Capital expenditure 17 473 3 17 476 -
Net asset value per share (cents) 529 63 592 (126)
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) 563 68 631 (127)
Revenues from transactions with certain customers can amount to ten percent or more of total revenue. During the period under
review individual customers were responsible for aggregate sales, in excess of 10% each of revenue, amounting to R68,7 million.
(31/03/2013: R0,0 million; 30/09/2012: R0,0 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 2013 Annual
Report. Annual reconciliation of production data will take place and an updated resource and reserve statement will be
published in the 2014 Annual Report.
7. Contingent liabilities
There have been no material changes to contingent liabilities previously reported in the Annual Report.
8. Accounting policies
These summary consolidated interim financial statements have been prepared in accordance with the recognition and measurement
criteria of International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB), the
preparation and disclosure requirements of IAS 34 "Interim Financial Reporting", the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee, the Listing Requirements of the JSE Limited and in the manner required by the
South African Companies Act No 71, 2008.
The Group has adopted all the new, revised or amended accounting pronouncements as issued by the IASB which were effective for
the Group from 1 April 2013. The adoption of these standards and amendments to standards and interpretations did not have any
material impact on the Group's results and cash flows for the six months ended 30 September 2013 and the financial position as
at 30 September 2013.
The principal accounting policies and methods of computation applied are consistent in all material respects with those
applied in the previous financial year.
9. Preparation of financial statements
The preparation of the unaudited consolidated 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 2012/2013 financial year (in brackets).
Total US$ sales attributable to the South African operations amounted to US$26,8 million (September 2012: US$39,9 million), at
an average price of US$1,028 per carat (September 2012: US$1,205). In Rand terms, revenue generated was R259,7 million
(September 2012: R330,7 million). The reduced revenue is attributable to a 21,2% decrease in carats sold, due to lower
production, and a 14,7% decrease in average prices, due to fewer special stones being recovered. Revenue was however positively
affected by an 11,3% weakening in the Rand.
South African production during the reporting period amounted to 21,849 carats (September 2012: 35,865 carats) due to a 35%
decrease in grade and a 21 day strike over annual pay increases. The average grade realized was 0,78 carats/100m3
(September 2012: 1,20 carats/100m3). The total volume of gravels treated at the land operations decreased by 14,7% due to the
strike and the termination of JV contractor operations at Baken, but partially offset by a 15,2% increase in volumes treated at
Baken’s BCP plant. The unit cost of production increased by 16,3% mainly due to the reduction in gravels treated. Operating costs
remained stable as the increase in overburden stripping costs at Baken and the costs of the strike were offset by a reduction in
JV contractor’s fees and lower treatment costs at Bloeddrift.
The cost of goods sold increased to R320,3 million (September 2012: R267,6 million), mainly due to stock movement of
R55,0 million.
The gross loss for the period ending September 2013 was R60,5 million compared to a gross profit of R63,1 million in
September 2012.
South African operations showed a loss before tax of R88,6 million (September 2012: profit of R34,2 million).
In Angola, production at Somiluana, in which Trans Hex holds a 33% stake, amounted to 35,779 carats during the period
(September 2012: 22,600 carats) due to an increase of 33,8% in volumes treated and an 18,3% increase in grade. Total sales
amounted to US$16,9 million at an average price of US$484 per carat (September 2012: sales of US$7,9 million at an average price
of US$337 per carat). Repayments of US$750 000 were made to Trans Hex against the outstanding investment amount and the balance
of cash generated was retained to develop the mine.
Somiluana’s operating margin for the period was 35% (September 2012: -11%) and the mine generated a net profit of US$5,9 million,
compared to a loss of US$0,9 million in the first six months of the previous financial year. The investment in Somiluana is
accounted for as an investment in an associate under the equity method. As the investment’s liabilities exceed its assets, no
equity accounted profit or loss was accounted for.
The loss from the Angolan head office operations amounted to R3,6 million (September 2012: profit of R1,5 million).
The Group reports an after-tax loss for the period from continuing operations of R69,0 million (September 2012: profit of
R24,9 million).
Profit from the discontinued Luarica and Fucaúma operations amounted to R15,2 million (September 2012: profit of R8,0 million).
The Group therefore reports a loss for the period of R53,9 million (September 2012: profit of R32,9 million).
Cash and cash equivalents at the end of the reporting period amounted to R294,6 million (September 2012: R351,7 million).
OPERATING PERFORMANCE
Detailed Project Information
Six months ended 30 September 2013 Six months ended 30 September 2012
Average Average
price price
Average Average per carat Average Average per carat
Detailed project grade per Carats carats per achieved grade per Carats carats per achieved
information (Unaudited) 100m3 produced stone (US$) 100m3 produced stone (US$)
South Africa
Baken 0,79 14 157 1,17 1 100 1,23 25 825 1,10 1 287
Richtersveld Operations 0,72 3 626 1,85 1 778 1,08 6 236 1,78 1 519
Shallow water - 4 066 0,29 379 - 3 804 0,32 411
Total SA 0,78 21 849 0,78 1 028 1,20 35 865 0,92 1 205
Angola
Somiluana 21,37 35 779 0,56 484 18,06 22 600 0,40 337
Note: Average grade in South Africa is calculated excluding Shallow water production.
OUTLOOK
Successfully concluding the acquisition of Namaqualand Mines from De Beers remains a priority for the Group as the assets
included in the transaction will add at least 10 years to the life of the South African operations. A detailed announcement
on progress with the acquisition was issued on SENS on 29 October 2013 and a copy is available on the Group's website.
Increased stripping of overburden in the main channel at Baken during the first six months of the year has opened up new
blocks for mining in the second half. These blocks are expected to yield higher grades and a higher proportion of special
stones than during the first half of the year.
The Richtersveld Operations are also expected to improve on the carat performance of the first six months of the year and
the Group’s total South African production for the 2014 financial year is now expected to be approximately 61,000 carats.
In Angola, Somiluana is increasing production capacity through internal cash flows. Drilling and sampling is continuing
on the east side of the river to maintain current production levels. Carat production for the 2014 financial year is now
expected to be at least 60,000 carats.
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 rest of 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
The board has resolved that it would not be prudent to re-commence dividend payments until there is a degree of confidence
that the Group has achieved a growing flow of new earnings. Accordingly, no interim dividend is declared.
By order of the board
BR van Rooyen L Delport
Chairman Chief Executive Officer
Parow
1 November 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)
Date: 01/11/2013 07:06:00 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.
Sharenet Sites 
