Wrap Text
Unaudited condensed consolidated interim
financial statements for the period ended 30 September 2018
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" or the "Company")
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2018
HEADLINES
Sale of the Lower Orange River ("LOR") operations
At the General Meeting held on 3 September 2018, Trans Hex shareholders approved the sale of the LOR operations,
effective 1 April 2018, for a cash consideration of R72 million. Consequently, the assets and liabilities
relating to these operations have been presented as a disposal group held-for-sale in terms of IFRS 5. The
results of the LOR operations are presented as discontinued operations as this represents a separate major
line of business.
Acquisition of an additional 27,2% interest in West Coast Resources (Pty) Ltd
On 1 February 2018, the Group acquired a further 27,2% equity interest in West Coast Resources (Pty) Ltd,
thereby increasing its interest to 67,2% and obtaining control of West Coast Resources (Pty) Ltd. Up to this
date, the 40% investment in West Coast Resources (Pty) Ltd was accounted for as an investment in an associate
under the equity method.
It should be noted that the consolidation of West Coast Resources (Pty) Ltd from 1 February 2018, and the
re-presentation of the results of the LOR operations as discontinued operations, impacted the comparability of
the results for the period ended 30 September 2018 with the results for the period ended 30 September 2017.
- Group net profit amounted to R52,0 million (September 2017: loss of R199,2 million).
- Sales revenue from the South African operations increased to R136,2 million (September 2017: R40,1 million).
- Group net loss from continuing operations amounted to R26,8 million (September 2017: loss of R2,3 million).
- Profit from the discontinued LOR operations amounted to R77,8 million (September 2017: loss of R197,7 million),
directly attributable to the proceeds from its sale.
- Equity accounting profit from Somiluana amounted to R25,9 million (September 2017: profit of R18,7 million).
- Other gains - net amounted to R29,7 million, primarily due to the re-measurement of the West Coast Resources
(Pty) Ltd rehabilitation provision which resulted in a gain of R94,1 million being recognised and a loss
on re-measurement to fair value and finalisation of gain with acquisition of subsidiary amounting to R86,1 million.
- The Group's net cash position at the end of the period was R42,9 million (September 2017: R41,3 million).
- Earnings per share amounted to 37,6 cents (September 2017: loss of 188,4 cents) and headline earnings per
share amounted to 41,5 cents (September 2017: loss of 195,1 cents).
- Adjusted headline loss per share amounted to 41,1 cents (September 2017: loss of 89,7 cents). The re-measurement
of the West Coast Resources (Pty) Ltd rehabilitation provision amounting to R94,1 million was reversed to arrive
at the adjusted headline earnings per share. In the previous corresponding period's figure, retrenchment costs
of R111,4 million at the LOR operations were added back.
- Net asset value per share amounted to 217,8 cents (September 2017: 142,0 cents).
CONDENSED CONSOLIDATED INCOME STATEMENT
30/09/18 30/09/17 31/03/18
Unaudited Unaudited Audited
Notes R'000 R'000 R'000
Continuing operations
Sales revenue 136 209 40 130 192 542
Cost of goods sold (173 341) (31 151) (172 205)
Gross (loss)/profit (37 132) 8 979 20 337
Share of results of associated companies 1 25 944 5 629 38 662
Royalties (622) (147) (1 005)
Selling and administration costs (25 518) (40 167) (61 192)
Mining loss (37 328) (25 706) (3 198)
Exploration costs (6 709) (2 061) (6 574)
Other gains - net 2 29 659 14 867 45 724
Finance income 8 603 12 658 25 020
Finance costs (22 798) (2 059) (32 981)
(Loss)/profit before income tax (28 573) (2 301) 27 991
Income tax 1 742 (1) (1 745)
(Loss)/profit for the period from continuing operations (26 831) (2 302) 26 246
Discontinued operations
Profit/(loss) for the period from discontinued operations 3 78 781 (196 862) (213 033)
Profit/(loss) for the period 51 950 (199 164) (186 787)
Attributable to:
Continuing operations (26 831) (2 302) 26 246
- Owners of the parent (35 447) (2 302) 24 777
- Non-controlling interest 8 616 - 1 469
Discontinued operations
- Owners of the parent 78 781 (196 862) (213 033)
51 950 (199 164) (186 787)
(Loss)/earnings per share - basic and diluted (cents)
- Continuing operations (30,8) (2,2) 23,1
- Discontinued operations 68,4 (186,2) (198,7)
Total 37,6 (188,4) (175,6)
Shares in issue adjusted for treasury shares ('000) 115 136 105 699 115 136
Headline earnings/(loss) 4
- Continuing operations 46 700 (4 604) (9 361)
- Discontinued operations 990 (201 570) (222 781)
Total 47 690 (206 174) (232 142)
Headline earnings/(loss) per share (cents)
- Continuing operations 40,6 (4,4) (8,7)
- Discontinued operations 0,9 (190,7) (207,8)
Total 41,5 (195,1) (216,5)
Average ZAR/US$ exchange rate 13,27 12,98 12,19
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
30/09/18 30/09/17 31/03/18
Unaudited Unaudited Audited
R'000 R'000 R'000
Profit/(loss) for the period 51 950 (199 164) (186 787)
Other comprehensive loss net of tax: (10 896) (7 381) (4 376)
Items that will not be reclassified to profit or loss
Re-measurements of post-employment benefit obligations - - 320
- Before-tax amount - - 320
- Tax expense - - -
Items that may be subsequently reclassified to profit or loss
Translation differences on foreign subsidiaries before and after tax (7 159) (5 079) 232
Recycling of foreign currency translation differences on repayment
of long-term receivables from foreign operations (3 737) (2 302) (4 928)
Total comprehensive income/(loss) for the period 41 054 (206 545) (191 163)
Attributable to:
Continuing operations (37 727) (9 683) 21 870
- Owners of the parent (46 343) (9 683) 20 401
- Non-controlling interest 8 616 - 1 469
Discontinued operations
- Owners of the parent 78 781 (196 862) (213 033)
41 054 (206 545) (191 163)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30/09/18 30/09/17 31/03/18
Unaudited Unaudited Audited
Notes R'000 R'000 R'000
ASSETS
Non-current assets 593 261 362 691 772 044
Property, plant and equipment 5 339 553 49 881 498 669
Investment in associates 6 98 953 241 709 75 458
Investments held by environmental trust 72 787 68 101 70 459
Other financial assets 81 968 3 000 127 458
Current assets 164 695 201 613 172 287
Inventories 7 68 348 94 652 74 522
Trade and other receivables 53 408 65 645 18 398
Current income tax 4 5 3
Cash and cash equivalents 42 935 41 311 79 364
Assets of a disposal group classified as held-for-sale 8 - - 36 308
Total assets 757 956 564 304 980 639
EQUITY AND LIABILITIES
Capital and reserves 214 583 149 830 182 145
Non-controlling interest 36 265 - 69 654
Non-current liabilities 254 728 134 220 338 213
Borrowings 9 94 391 - 111 813
Deferred income tax liabilities - - 33 943
Provisions 10 160 337 134 220 192 457
Current liabilities 252 380 280 254 291 024
Trade and other payables 74 992 166 735 63 243
Interest in joint ventures 3 82 250 81 519 69 595
Borrowings 9 95 138 32 000 158 186
Liabilities of a disposal group classified
as held-for-sale 8 - - 99 603
Total equity and liabilities 757 956 564 304 980 639
Net asset value per share (cents) 218 142 218
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
30/09/18 30/09/17 31/03/18
Unaudited Unaudited Audited
R'000 R'000 R'000
Balance at 1 April 251 799 356 375 356 375
Shares issued during the period - - 18 402
Total comprehensive income/(loss) for the period 41 054 (206 545) (191 163)
Acquisition of subsidiary (42 005) - 68 185
Balance at end of period 250 848 149 830 251 799
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
30/09/18 30/09/17 31/03/18
Unaudited Unaudited Audited
R'000 R'000 R'000
Cash utilised in operations (40 263) (211 971) (226 734)
Movements in working capital (17 087) 22 347 (37 730)
Income tax paid - - (3)
Net cash utilised in operating activities (57 350) (189 624) (264 467)
Cash flows from investment activities 119 645 (26 073) 36 385
Property, plant and equipment
- Proceeds from disposal 2 264 4 708 15 087
- Replacement (4 059) (2 943) -
- Additional (10 000) (1 839) (6 579)
Proceeds from repayment of loan to associate 15 328 - 20 160
Proceeds from the disposal of discontinued operations 50 000 - -
Loan to associate - (39 228) (8 903)
Proceeds from other financial assets 50 000 - -
Dividends received 9 837 4 347 10 716
Interest received 6 275 8 882 5 904
Cash flows from financing activities (100 066) 31 955 83 992
Proceeds from borrowings 40 000 32 000 95 000
Repayment of borrowings (132 964) - (6 848)
Interest paid (7 102) (45) (4 160)
Net decrease in cash and cash equivalents (37 771) (183 742) (144 090)
Cash and cash equivalents at beginning of period 79 364 225 400 225 400
Effects of exchange rates on cash and cash equivalents 1 342 (347) (1 946)
Cash and cash equivalents at end of period 42 935 41 311 79 364
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
30/09/18 30/09/17 31/03/18
Unaudited Unaudited Audited
R'000 R'000 R'000
1. SHARE OF RESULTS OF ASSOCIATED COMPANIES
Consists of the following categories:
- Somiluana - Sociedade Mineira, S.A. 25 944 18 743 47 503
The 33% investment in Somiluana is accounted for as an
investment in an associate under the equity method.
- West Coast Resources (Pty) Ltd - (13 114) (8 841)
On 1 February 2018, West Coast Resources (Pty) Ltd became
a subsidiary of the Group. Up to this date, the 40%
investment in West Coast Resources (Pty) Ltd was accounted
for as an investment in an associate under the equity method.
25 944 5 629 38 662
2. OTHER GAINS - NET
Other gains - net consist of the following categories:
- Loss on scrapping of property, plant and equipment - - (1 357)
- Net foreign exchange gains 13 513 7 446 4 371
- Provisional gain on bargain purchase with acquisition of
subsidiary - - 38 142
- Finalisation of gain on bargain purchase with acquisition
of subsidiary (adjustment) (34 833) - -
- Loss on re-measurement to fair value with acquisition
of subsidiary (51 225) - (7 575)
- Re-measurement of rehabilitation provision 94 064 - -
- Commission on third-party sale of diamonds 1 623 7 421 12 143
- Reversal of exploration costs previously expensed 6 343 - -
- Profit on sale of assets 174 - -
29 659 14 867 45 724
3. DISCONTINUED OPERATIONS
Consists of the following categories:
- Angolan joint ventures
On 5 October 2011, the Angolan Ministry of Geology,
Mines and Industry revoked the mining rights of the Luarica
and Fucauma 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.
The prescription of unclaimed debts of R1,0 million
(30/09/17: R0,9 million; 31/03/18: R2,3 million) is
included below.
Balance at beginning of period 69 595 81 539 81 539
Share of profit (990) (868) (2 314)
Foreign exchange loss/(profit) 12 754 848 (9 630)
Closing balance at end of period 82 250 81 519 69 595
Profit for the period 990 868 2 314
- Lower Orange River operations
In line with the Company's strategy of responsibly managing
the Lower Orange River ("LOR") operations in the final years
of their viable economic life cycles, these operations were
gradually downscaled. Production was finally halted on
31 October 2017 following the successful conclusion of a
formal consultation process with the National Union of
Mineworkers.
At the General Meeting held on 3 September 2018, Trans Hex
shareholders approved the sale of the LOR operations, effective
1 April 2018, for a cash consideration of R72 million.
The results of these operations were as follows:
Revenue - 109 599 205 874
Cost of goods sold - (309 573) (426 109)
Gross loss - (199 974) (220 235)
Royalties - (548) (1 029)
Mining loss - (200 522) (221 264)
Other gains - net 77 791 4 708 9 748
Finance costs - (1 916) (3 831)
Loss before income tax - (197 730) (215 347)
Income tax - - -
Profit/(loss) for the period 77 791 (197 730) (215 347)
Total 78 781 (196 862) (213 033)
4. RECONCILIATION OF HEADLINE EARNINGS
Continuing operations
(Loss)/profit for the period (35 447) (2 302) 24 777
- Provisional gain on bargain purchase with acquisition of
subsidiary - - (38 142)
- Finalisation of gain on bargain purchase with acquisition
of subsidiary (adjustment) 34 833 - -
- Loss on re-measurement to fair value with acquisition
of subsidiary 51 225 - 7 575
- (Profit)/loss on sale of assets (174) - 1 357
- Foreign currency translation differences on repayment
of long-term receivables from foreign operations
recycled to profit or loss (3 737) (2 302) (4 928)
Headline earnings/(loss) 46 700 (4 604) (9 361)
Discontinued operations
Profit/(loss) for the period 78 781 (196 862) (213 033)
- Profit on sale of assets (77 791) (4 708) (9 748)
Headline earnings/(loss) 990 (201 570) (222 781)
5. PROPERTY, PLANT AND EQUIPMENT
On 1 February 2018, the Group acquired a further 27,2% of
the equity and voting interest in West Coast Resources (Pty) Ltd,
thereby increasing its interest to 67,2%. Furthermore, the
LOR operations were classified as discontinued operations.
Reconciliation of carrying value at the beginning and
end of the period:
Mining
Land and Mining plant and
buildings rights equipment Total
R'000 R'000 R'000 R'000
30/09/18 unaudited
Opening balance 44 555 305 461 148 653 498 669
Additions - 10 000 4 059 14 059
Business combination (adjustment) 26 483 (186 747) - (160 264)
Disposals (16) - (1 384) (1 400)
Depreciation charge (change in estimate) - 5 041 - 5 041
Depreciation charge (385) (4 227) (11 940) (16 552)
Closing balance 70 637 129 528 139 388 339 553
30/09/17 unaudited
Opening balance 2 981 - 48 458 51 439
Additions - - 4 782 4 782
Disposals - - (50) (50)
Depreciation charge (179) - (6 111) (6 290)
Closing balance 2 802 - 47 079 49 881
31/03/18 audited
Opening balance 2 981 - 48 458 51 439
Additions 568 - 6 011 6 579
Acquired as part of a business combination 41 117 313 455 153 022 507 594
Classified as held-for-sale - - (33 064) (33 064)
Transfers 392 - (392) -
Disposals - - (6 697) (6 697)
Depreciation charge (503) (7 994) (18 685) (27 182)
Closing balance 44 555 305 461 148 653 498 669
30/09/18 30/09/17 31/03/18
Unaudited Unaudited Audited
R'000 R'000 R'000
6. INVESTMENT IN ASSOCIATES
- Loan to associate: Somiluana - Sociedade Mineira, S.A. - 30 159 7 945
Balance at beginning of period 7 945 29 840 29 840
Repayment of loan amount (8 985) - (20 159)
Foreign exchange profit/(loss) 1 013 319 (1 736)
The loan to Somiluana represents a portion of the
exploration costs previously incurred by the Group
which is recoverable from the mining company. In
terms of the Somiluana mining contract, the Group
has a contractual right to be reimbursed for the
exploration costs incurred and as at 30 September 2018,
the loan outstanding by Somiluana amounted to
US$19,0 million. During the 2011 financial year, an
amount of US$10,5 million was recognised as a loan
receivable by the Group. This represented the recoverable
amount of the loan receivable from Somiluana when the
entity was formed on 12 May 2010.
The recognised portion of the loan receivable by the
Group has been repaid. Repayments received in excess
of the recognised amount amounted to US$0,4 million
and has been disclosed under Other gains in the
Income Statement.
- Investment in associate: Somiluana - Sociedade Mineira, S.A. 98 953 54 042 67 513
Balance at beginning of period 67 513 38 820 38 820
Share of results of associated company 25 944 18 743 47 503
Dividends paid (9 837) (4 347) (10 716)
Foreign exchange differences 15 333 826 (8 094)
The 33% investment in Somiluana is accounted for as an
investment in an associate under the equity method.
- Loan to associate: West Coast Resources (Pty) Ltd - 71 487 -
Balance at beginning of period - 28 677 -
Loan advances during the period - 39 228 -
Capitalised interest - 3 582 -
- Investment in associate: West Coast Resources (Pty) Ltd - 86 021 -
Balance at beginning of period - 98 485 -
Share of results of associated company - (13 114) -
Capitalised interest - 650 -
On 1 February 2018, the Group increased its interest in
West Coast Resources (Pty) Ltd to 67,2%. Therefore effective
1 February 2018 the results of West Coast Resources (Pty) Ltd
have been consolidated and no current period and year numbers
are disclosed under the Investments in Associates Note.
7. INVENTORIES
Diamonds 52 708 88 680 61 622
Consumables 15 640 5 972 12 900
68 348 94 652 74 522
The carrying value of diamond inventories included above,
carried at net realisable value, amounted to R23,3 million
(30/09/17: R59,9 million; 31/03/18: R4,1 million).
Cost of inventories included in cost of goods sold amounted
to R185,6 million (30/09/17: R25,5 million; 31/03/18: R163 million).
8. ASSETS AND LIABILITIES OF A DISPOSAL GROUP HELD-FOR-SALE
The Board of Directors of the Company approved the sale of the
LOR operations on 27 March 2018 for a total consideration of
R72 million. Consequently, in the results for the year ended
31 March 2018, the assets and liabilities relating to these
operations have been presented as a disposal group held-for-sale.
The results are presented as discontinued operations as this
represents a separate major line of business. At the General
Meeting held on 3 September 2018, Trans Hex shareholders
approved the sale of the LOR operations, effective
1 April 2018, for a cash consideration of R72 million.
Assets of a disposal group classified as held-for-sale:
Property, plant and equipment - - 33 064
Consumables - - 3 244
- - 36 308
Liabilities of a disposal group classified as held-for-sale:
Rehabilitation liabilities - - 99 603
9. BORROWINGS
Non-current
Loan secured by a second mortgage bond to the value of
R38 775 000 over certain immovable properties and a general
notarial bond over certain movable assets to the value of
R173 383 700. The loan carries interest at the prime overdraft
rate plus 0,4% compounded monthly and is repayable in 66 monthly
installments, the first of which was paid on 1 September 2016.
The total amount, inclusive of capitalised interest, available
under this loan is R189 010 000. 128 756 - 146 178
Less: Portion of loan repayable within one year, included in
current liabilities (34 365) - (34 365)
94 391 - 111 813
Current
Revolving loan facilities secured by a special notarial bond
to the value of R264 000 000 over certain movable assets,
cession of certain book debts, shares and claims. The loans
carry interest at the rate of 2% per month. The total capital
amount available under the facility is R148 000 000 with
R128 000 000 still available for utilisation. 60 773 32 000 123 821
Portion of non-current liabilities repayable within one year,
included in current liabilities 34 365 - 34 365
95 138 32 000 158 186
10. PROVISIONS
Provision for post-employment medical benefits 11 017 11 446 11 017
Provision for long-service awards 3 016 13 917 3 016
Provision for guarantee liabilities 58 200 - -
Provision for rehabilitation liabilities 88 104 108 857 178 424
160 337 134 220 192 457
11. BUSINESS COMBINATIONS
The opening balance sheet of West Coast Resources (Pty) Ltd
has been fully consolidated within the Group as of 1 February 2018.
Accordingly, a provisional valuation of identifiable assets
acquired and liabilities assumed was made as at 31 March 2018
upon the conclusion of the 2018 annual financial statements.
The following table summarises the movements in identifiable
assets acquired and liabilities assumed from the provisional
valuation allocations to the final valuations:
01/02/2018 01/02/2018
Disclosure as Disclosure as
at 30/03/18 Adjustment at 30/09/18
R'000 R'000 R'000
Total assets 744 180 (160 264) 583 916
Property, plant and equipment 194 139 26 483 220 622
Mining rights 313 455 (186 747) 126 708
Other financial assets 123 016 - 123 016
Inventories 107 829 - 107 829
Trade and other receivables 5 603 - 5 603
Cash and cash equivalents 138 - 138
Total liabilities 536 300 (32 201) 504 099
Provisions 166 890 - 166 890
Deferred income tax liabilities 32 201 (32 201) -
Borrowings 202 934 - 202 934
Trade and other payables 134 275 - 134 275
Total identifiable net assets 207 880 (128 063) 79 817
Net asset value purchased (67,2%) 139 695 (86 058) 53 637
Fair value of consideration transferred (18 402) - (18 402)
Previously held equity (40,0%) (83 151) (51 224) (31 927)
Gain on bargain purchase 38 142 (34 834) 3 308
Provisional gain on bargain purchase at the end of March 2018
The net assets provisional fair value disclosed at the end
of the 2018 financial year amounted to R207,8 million and
took into account:
- Intangible assets of R313,5 million for the mining rights;
- Tangible assets of R194,1 million;
- Inventories of R107,8 million;
- Trade receivable of R5,6 million and trade payables of
R134,3 million;
- Other financial assets of R123,0 million;
- Net deferred tax liabilities of R32,2 million;
- Provisions of R166,9 million; and
- Financial net debt of R202,9 million.
Consequently, the resulting provisional gain on a bargain purchase
amounted to R38,1 million (difference between the total
consideration of R18,4 million plus the R83,2 million fair value
on acquisition and net assets provisional fair value of R139,7 million).
During the six-month measurement period, the fair values of the
identifiable assets acquired and liabilities assumed were further
refined (see column "Adjustments" in the table above and the
related notes below).
These adjustments reduced the provisional gain on a bargain
purchase by R34,8 million and increased the loss on re-measurement
to fair value with acquisition of subsidiary by R51,2 million and are
explained below:
1. The revaluation of the tangible assets (R67,6 million) and
mining rights (R126,7 million) based on conditions existing
at acquisition date.
2. The reduction in net deferred tax liabilities amounting to
R32,2 million results from (a) the reversal of net deferred tax assets
due to management's evaluation of taxable profits to operations
(R12,7 million), and (b) deferred tax liabilities related to
temporary differences resulting from other adjustments (R44,9 million).
30/09/18 30/09/17 31/03/18
Unaudited Unaudited Audited
R'000 R'000 R'000
12. CAPITAL COMMITMENTS
(including amounts authorised, but not yet contracted) 22 196 26 12 247
These commitments will be financed from the Group's own resources
or with borrowed funds.
13. FAIR VALUE ESTIMATION
Items carried at fair value are classified according to the
fair value hierarchy, by valuation method. The different
levels have been defined as follows:
- Quoted prices (unadjusted) in active markets for identical
assets or liabilities (Level 1).
- Inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is,
derived from prices) (Level 2).
- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs)
(Level 3).
Financial assets are classified as Level 1 according to the
fair value hierarchy. Investments held by the environmental
trust are the only financial assets carried at fair value.
However, this fund consists primarily of cash and cash
equivalents with the largest driver of the growth in the
trust fund being attributable to interest received.
The nominal value less impairment provisions of trade
receivables, cash and cash equivalents, trade payables,
other financial assets and borrowings are assumed to
approximate their fair values. The fair value of financial
liabilities for disclosure purposes is estimated by
discounting the future contractual cash flows at the current
market interest rate that is available for the Group for
similar financial instruments.
14. SEGMENT INFORMATION
Operating segments
CONTINUING DISCONTINUED
South South
Africa Angola Total Africa Angola Total
Period ended 30/09/18
Carats sold 66 130 - 66 130 - - -
R'000 R'000 R'000 R'000 R'000 R'000
Revenue 136 209 - 136 209 - - -
Cost of goods sold (173 341) - (173 341) - - -
Gross loss (37 132) - (37 132) - - -
Share of results of associated companies - 25 944 25 944 - - -
Royalties (622) - (622) - - -
Selling and administration costs (20 876) (4 642) (25 518) - - -
Mining (loss)/profit (58 630) 21 302 (37 328) - - -
Exploration costs (6 709) - (6 709) - - -
Other gains - net 24 290 5 369 29 659 77 791 - 77 791
Profit for the period from discontinued operations - - - - 990 990
Finance income 8 603 - 8 603 - - -
Finance costs (22 798) - (22 798) - - -
(Loss)/profit before income tax (55 244) 26 671 (28 573) 77 791 990 78 781
Depreciation included in the above (11 511) - (11 511) - - -
Net assets/(liabilities) 183 900 149 198 333 098 - (82 250) (82 250)
Capital expenditure 14 059 - 14 059 - - -
Net asset value per share (cents) 159 130 289 - (71) (71)
CONTINUING DISCONTINUED
South South
Africa Angola Total Africa Angola Total
Period ended 30/09/17
Carats sold 4 427 - 4 427 9 602 - 9 602
R'000 R'000 R'000 R'000 R'000 R'000
Revenue 40 130 - 40 130 109 599 - 109 599
Cost of goods sold (31 151) - (31 151) (309 573) - (309 573)
Gross profit/(loss) 8 979 - 8 979 (199 974) - (199 974)
Share of results of associated companies (13 114) 18 743 5 629 - - -
Royalties (147) - (147) (548) - (548)
Selling and administration costs (32 923) (7 244) (40 167) - - -
Mining (loss)/profit (37 205) 11 499 (25 706) (200 522) - (200 522)
Exploration costs (2 061) - (2 061) - - -
Other gains/(losses) - net 14 982 (115) 14 867 4 708 - 4 708
Profit for the period from discontinued operations - - - - 868 868
Finance income 12 658 - 12 658 - - -
Finance costs (2 059) - (2 059) (1 916) - (1 916)
(Loss)/profit before income tax (13 685) 11 384 (2 301) (197 730) 868 (196 862)
Depreciation included in the above (893) - (893) (5 396) - (5 396)
Net assets/(liabilities) 176 182 137 075 313 257 (81 908) (81 519) (163 427)
Capital expenditure 314 - 314 4 468 - 4 468
Net asset value per share (cents) 166 130 296 (77) (77) (154)
CONTINUING DISCONTINUED
South South
Africa Angola Total Africa Angola Total
Year ended 31/03/18
Carats sold 78 185 - 78 185 16 698 - 16 698
R'000 R'000 R'000 R'000 R'000 R'000
Revenue 192 542 - 192 542 205 874 - 205 874
Cost of goods sold (172 205) - (172 205) (426 109) - (426 109)
Gross profit/(loss) 20 337 - 20 337 (220 235) - (220 235)
Share of results of associated companies (8 841) 47 503 38 662 - - -
Royalties (1 005) - (1 005) (1 029) - (1 029)
Selling and administration costs (50 007) (11 185) (61 192) - - -
Mining (loss)/profit (39 516) 36 318 (3 198) (221 264) - (221 264)
Exploration costs (6 574) - (6 574) - - -
Other gains/(losses) - net 47 466 (1 742) 45 724 9 748 - 9 748
Profit for the year from discontinued operations - - - - 2 314 2 314
Finance income 25 020 - 25 020 - - -
Finance costs (32 981) - (32 981) (3 831) - (3 831)
(Loss)/profit before income tax (6 585) 34 576 27 991 (215 347) 2 314 (213 033)
Depreciation included in the above (16 319) (3) (16 322) (10 860) - (10 860)
Net assets/(liabilities) 302 742 81 947 384 689 (63 295) (69 595) (132 890)
Capital expenditure 2 111 - 2 111 4 468 - 4 468
Net asset value per share (cents) 262 71 333 (55) (60) (115)
Revenue from transactions with certain customers can amount to 10% or more of total revenue.
During the period under review, five individual customers were responsible for aggregate
sales in excess of 10% of revenue. Such individual customers were responsible for aggregate
sales of R91,0 million (30/09/17: R71,3 million; 31/03/18: Rnil).
15. CONTINGENT LIABILITIES
There have been no material changes to contingent liabilities previously reported in the
2018 Integrated Annual Report.
16. EVENTS AFTER THE REPORTING PERIOD
No events which may have a material effect on the Group occurred between the reporting date
and the issuing of this announcement.
17. ACCOUNTING POLICIES
The condensed consolidated interim financial statements are prepared in accordance with
International Financial Reporting Standards, (IAS) 34 Interim Financial Reporting, the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council. The accounting policies
applied in the preparation of these interim financial statements are in terms of International
Financial Reporting Standards and are consistent with those applied in the previous consolidated
annual financial statements, with the exception of the adoption of the amendments to IFRS 9:
Financial instruments and IFRS 15: Revenue from Contracts with Customers. The implementation
of these interpretations and amendments had no impact on the results of either the current or
prior periods.
18. PREPARATION OF FINANCIAL STATEMENTS
The preparation of the condensed consolidated financial statements was supervised by the Financial
Director, IP Hestermann CA(SA). The condensed consolidated financial statements have not been reviewed
or audited by the Company's external auditor.
OVERVIEW
In this commentary, results are compared with the first six months of the 2018 financial year (in brackets).
On 1 February 2018, West Coast Resources (Pty) Ltd became a subsidiary of the Group. Up to this date, the
40% investment in West Coast Resources (Pty) Ltd was accounted for as an investment in an associate under
the equity method.
In line with the Company's strategy of responsibly managing the LOR operations in the final years of their
economic life cycles, these operations were gradually downscaled and finally halted on 31 October 2017.
These operations are disclosed as discontinued operations. The LOR operations were sold effective
1 April 2018 at a profit of R77,8 million.
Sales revenue from continuing operations amounted to R136,2 million (September 2017: R40,1 million).
South African production reduced to 55 950 carats (September 2017: 76 261 carats, including West Coast
Resources' production), mainly due to West Coast Resources (Pty) Ltd producing less carats and the closure
of the LOR operations.
The cost of goods sold increased to R173,3 million (September 2017: R31,1 million), mainly as a result of
West Coast Resources (Pty) Ltd becoming a subsidiary of the Group on 1 February 2018.
Gross loss amounted to R37,1 million (September 2017: gross profit of R9,0 million).
Other gains - net amounted to R29,7 million, primarily due to the re-measurement of the West Coast Resources
(Pty) Ltd rehabilitation provision which resulted in a gain of R94,1 million being recognised and a loss on
re-measurement to fair value and finalisation of gain with acquisition of subsidiary amounting to R86,1 million
(September 2017: R14,9 million).
Loss before tax from the South African continuing operations amounted to R55,2 million (September 2017:
loss of R13,7 million).
Profit from the Angolan continuing operations amounted to R26,7 million (September 2017: profit of R11,4 million),
consisting of Somiluana's equity accounted profit of R25,9 million and repayment in excess of the recognised
loan amount of R6,3 million, less Angolan head office costs of R5,5 million.
After-tax loss for the period from continuing operations amounted to R26,8 million (September 2017:
loss of R2,3 million).
Profit from the discontinued operations amounted to R78,8 million (September 2017: loss of R196,9 million),
consisting of profit from the Luarica and Fucauma operations of R1,0 million (September 2017:
Profit of R0,9 million) and profit from the discontinued LOR operations of R77,8 million (September 2017:
loss of R197,7 million), directly attributable to the proceeds from its sale.
The Group therefore reports a profit for the period of R52,0 million (September 2017: loss of R199,2 million).
Cash and cash equivalents at the end of the period amounted to R42,9 million (September 2017: R41,3 million).
MINERAL RESOURCES AND MINERAL RESERVES
No adjustments have been made to the statement of mineral resources and mineral reserves as contained in the
2018 Integrated Annual Report. Reconciliation of production data takes place annually and an updated mineral
resources and reserves statement will be published in the 2019 Integrated Annual Report.
OPERATING PERFORMANCE
Detailed project information (unaudited)
Period ended 30/09/18 Period ended 30/09/17
Average price Average price
Average per carat Average per carat
Average Carats carats achieved Average Carats carats achieved
grade* produced per stone (US$) grade* produced per stone (US$)
South Africa
West Coast Resources 17,26 51 681 0,24 135 20,41 60 344 0,24 156
Baken - - - - 2,15 10 904 1,18 879
Bloeddrif - - - - 2,60 620 1,52 877
Shallow Water - 4 269 0,20 343 - 4 393 0,25 502
Angola
Somiluana 33,03 66 064 0,62 520 48,89 67 083 0,65 531
* Note:
1. Calculated per 100 cubic metres for South Africa and Angola, and per 100 tons for West Coast Resources (Pty) Ltd.
2. Average grade in South Africa is calculated excluding shallow water production.
West Coast Resources operations
During the period, production at West Coast Resources (Pty) Ltd, in which the Company holds a 67,2% stake, amounted to
51 681 carats compared to 60 344 carats in September 2017.
Sales amounted to R110,3 million at an average price of US$135 per carat (September 2017: sales of R118,5 million
at an average price of US$156 per carat).
The average grade decreased by 15,4% to 17,26 carats/100 tons compared to 20,41 carats/100 tons in September 2017
due to lower than expected grades achieved in targeted channel blocks. The average stone size amounted
to 0,24 carats per stone (September 2017: 0,24 carats per stone).
Operational and infrastructure improvements are continuing in order to further expand the operational footprint.
Lower Orange River operations
At the General Meeting held on 3 September 2018, Trans Hex shareholders approved the sale of the LOR operations,
effective 1 April 2018.
Angolan operations
Production at Somiluana Mine, in which Trans Hex holds a 33% stake, amounted to 66 064 carats (September 2017:
67 083 carats). Total sales amounted to US$35,8 million at an average price of US$520 per carat (September 2017:
sales of US$27,7 million at an average price of US$531 per carat). The Group received US$660 000 (September 2017:
US$330 000) in dividends and a US$1,15 million repayment on the loan account.
Somiluana Mine is pursuing an aggressive drilling programme in order to identify new resources in calonda formation
gravels, as well as terraces and floodplains.
OUTLOOK
West Coast Resources operations
Prospecting will continue to target high-priority areas that may identify additional resources for mining.
Mining activities will remain focused on the Langklip area and on other sections of the Koingnaas area.
Production for the 2019 financial year is expected to be in the order of 140 000 carats, compared to
2018 financial year actual production of 173 920 carats.
Shallow water operations
Production from the Shallow water operations for the 2019 financial year is expected to be in the order of
10 000 carats, compared to 2018 financial year actual production of 9 012 carats.
Angolan operations
Mining operations will continue on the east bank of the Luana River at Nzagi, in the south-west at Lulau,
and at other areas currently being evaluated.
Production results and geological work through drilling and bulk sampling indicate that carat production for
the 2019 financial year is expected to be in the order of 133 000 carats, compared to 2018 financial year
actual production of 136 402 carats.
New business
The Group is actively evaluating potential new diamond properties and pursuing opportunities to expand its
diamond-marketing activities.
DIVIDEND
The Board has resolved not to declare an interim dividend.
CHANGES TO THE BOARD OF Directors
Mr James Gurney resigned as Alternate Director, effective 26 November 2018.
By order of the Board
MVZ Wentzel L Delport
Chairman Chief Executive Officer
Parow
13 December 2018
REGISTERED OFFICE
405 Voortrekker Road, Parow 7500
PO Box 723, Parow 7499
JSE SPONSOR
One Capital Sponsor Services (Pty) Ltd
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Ltd
COMPANY SECRETARY
Statucor (Pty) Ltd
DIRECTORATE
MVZ Wentzel (Chairman), AG Rhoda, PG Viljoen, AJ Marais, L Delport (Chief Executive Officer),
IP Hestermann (Financial Director)
www.transhex.co.za
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