TRANS HEX GROUP LIMITED

Additional information on these results is available at www.transhex.co.za

UNAUDITED INTERIM FIN...
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Trans Hex Group Ltd HY 2014 results

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Trans Hex Group Ltd HY 2014 results

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Trans Hex Group Ltd HY 2014 results

  1. 1. TRANS HEX GROUP LIMITED Additional information on these results is available at www.transhex.co.za UNAUDITED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013 FINANCIAL HEADLINES • he Group’s net cash position at the end of the period was R294,6 million T (September 2012: R351,7 million). • oss per share amounted to 51,0 cents (September 2012: earnings per share of 31,6 cents) and L 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). • n Angola, Somiluana sales amounted to US$16,9 million (September 2012: US$7,9 million) and profit I of US$5,9 million was generated (September 2012: loss of US$0,9 million). SUMMARY CONSOLIDATED INCOME STATEMENT 30/09/13 30/09/12 31/03/13 Unaudited Unaudited Audited Notes R’000 R’000 R’000 Continuing operations Sales revenue 259 747 330 647 751 304 Cost of goods sold (320 285) (267 594) (605 181) Gross (loss)/profit (60 538) 63 053 146 123 Royalties (3 069) (9 225) (19 832) Selling and administration costs (37 787) (33 843) (65 377) Mining (loss)/profit (101 394) 19 985 60 914 Exploration costs (2 104) (3 237) (5 213) Other gains – net 1 6 795 15 164 22 158 Finance income 8 040 8 599 17 566 Finance costs (3 612) (4 878) (8 403) (Loss)/profit before income tax (92 275) 35 633 87 022 Income tax 23 232 (10 701) (22 017) (Loss)/profit for the year from continuing operations (69 043) 24 932 65 005 Discontinued operations Profit for the year from discontinued operations 2 15 186 7 994 20 364 (Loss)/profit for the period (53 857) 32 926 85 369 Attributable to: Continuing operations • Owners of the parent • Non-controlling interest Discontinued operations • Owners of the parent (Loss)/earnings per share (cents) • Continuing operations – Basic and diluted • Discontinued operations – Basic and diluted • Total – Basic and diluted Shares in issue adjusted for treasury shares (’000) Headline (loss)/earnings • Continuing operations • Discontinued operations • Total Headline (loss)/earnings per share (cents) • Continuing operations • Discontinued operations • Total Average US$ exchange rate (69 043) (69 090) 47 65 005 63 847 1 158 15 186 (53 857) 7 994 32 926 20 364 85 369 (65,4) 23,0 60,4 14,4 (51,0) 3 24 932 24 312 620 7,6 31,6 19,3 79,7 105 699 105 699 105 699 (69 138) 15 186 (53 952) 14 679 7 994 22 673 53 485 20 364 73 849 (65,4) 14,4 (51,0) 9,69 13,9 7,6 21,5 8,29 50,6 19,3 69,9 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 • Non-controlling interest (58 812) 47 (58 765) 24 632 620 25 252 SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION 30/09/13 30/09/12 Unaudited Unaudited R’000 R’000 Assets Property, plant and equipment 319 984 354 751 Financial assets 112 396 106 029 Current assets 437 426 509 964 Inventories 121 774 140 901 Trade and other receivables 21 020 17 364 Current income tax 58 – Cash and cash equivalents 294 574 351 699 63 793 1 158 64 951 31/03/13 Audited R’000 338 483 111 327 540 637 133 569 23 672 – 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 Other gains – net Profit before income tax Taxation Profit for the period – – – – 15 186 15 186 – 15 186 (1 754) 9 748 7 994 – 7 994 (1 866) 22 230 20 364 – 20 364 3. Reconciliation of headline earnings Continuing operations (Loss)/profit for the period • Profit on sale of assets • Taxation impact • Profit on sale of listed investment • Taxation impact Headline (loss)/earnings (69 090) (66) 18 – – (69 138) 24 312 (10 231) 678 (80) – 14 679 63 847 (10 357) 77 (82) – 53 485 15 186 15 186 7 994 7 994 20 364 20 364 Discontinued operations Profit for the period Headline earnings 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 Discontinued Continuing Six months ending 30 September 2013 Carats sold Revenue Cost of goods sold Gross loss Royalties Selling and administration costs Mining loss Exploration costs Other gains – net Finance income Finance costs Loss before income tax South Africa 26 076 R’000 259 747 (320 285) (60 538) (3 069) (34 150) (97 757) (2 104) 6 795 8 040 (3 612) (88 638) Angola Total – 26 076 R’000 R’000 – 259 747 – (320 285) – (60 538) – (3 069) (3 637) (37 787) (3 637) (101 394) – (2 104) – 6 795 – 8 040 – (3 612) (3 637) (92 275) Angola – R’000 – – – – – – – 15 186 – – 15 186 Depreciation included in the above Assets Liabilities Capital expenditure Net asset value per share (cents) (44 096) 788 284 (254 977) 24 665 505 (220) (44 316) 81 522 869 806 (7 866) (262 843) – 24 665 70 574 – – (131 700) – (125) Six months ending 30 September 2012 Carats sold Revenue Cost of goods sold Gross profit Other operating expenses Royalties Selling and administration costs Mining profit/(loss) Exploration costs Other gains – net Finance income Finance costs Profit before income tax 33 093 R’000 330 647 (267 170) 63 477 – (9 225) (30 640) 23 612 (3 237) 10 069 8 599 (4 878) 34 165 – R’000 – (424) (424) – – (3 203) (3 627) – 5 095 – – 1 468 33 093 R’000 330 647 (267 594) 63 053 – (9 225) (33 843) 19 985 (3 237) 15 164 8 599 (4 878) 35 633 – R’000 – – – (1 754) – – (1 754) – 9 748 – – 7 994 Depreciation included in the above Assets Liabilities Capital expenditure Net asset value per share (cents) (45 054) 900 550 (339 436) 17 473 529 (280) 70 194 (3 640) 3 63 (45 334) 970 744 (343 076) 17 476 592 – – (133 339) – (126) 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) Revenue Cost of goods sold Gross profit Other operating expenses Royalties Selling and administration costs Mining profit/(loss) Exploration costs Other gains – net Finance income Finance costs Profit before income tax 65 339 R’000 751 304 (605 181) 146 123 – (19 832) (58 961) 67 330 (5 213) 16 937 17 566 (8 403) 88 217 – R’000 – – – – – (6 416) (6 416) – 5 221 – – (1 195) 65 339 R’000 751 304 (605 181) 146 123 – (19 832) (65 377) 60 914 (5 213) 22 158 17 566 (8 403) 87 022 – R’000 – – – (1 866) – – (1 866) – 22 230 – – 20 364 Depreciation included in the above Assets Liabilities Capital expenditure Net asset value per share (cents) (89 247) 915 667 (318 816) 44 386 563 (469) 74 759 (2 786) 3 68 (89 716) 990 426 (321 602) 44 389 631 – 21 (134 817) – (127) Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 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). 869 806 970 744 990 447 Equity and liabilities Total shareholders’ interest Non-controlling interest Borrowings Deferred income tax liabilities Provisions Deferred income Current liabilities Trade and other payables Current income tax liabilities Borrowings 475 092 171 438 30 325 102 730 – 261 050 206 176 – 54 874 494 743 (414) 8 074 60 451 95 206 1 114 311 570 223 721 15 499 72 350 533 904 124 1 281 53 583 98 853 – 302 702 231 144 2 584 68 974 Net asset value per share (cents) 869 806 450 970 744 466 990 447 504 SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 30/09/13 30/09/12 Unaudited Unaudited R’000 R’000 Balance at 1 April 534 028 469 077 Total comprehensive (loss)/income for the period (58 765) 25 252 Balance at end of period 475 263 494 329 31/03/13 Audited R’000 469 077 64 951 534 028 (88 822) 383 396 294 574 4 348 347 351 351 699 36 045 347 351 383 396 Twelve months ending 31 March 2013 Carats sold 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 Listings 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$0,9 million in the first six months of the previous financial year. The investment in Somiluana is accounted for as an investment in an associate under the equity method. As the investment’s liabilities exceed its assets, no equity accounted profit or loss was accounted for. The loss from the Angolan head office operations amounted to R3,6 million (September 2012: profit of R1,5 million). The Group reports an after-tax loss for the period from continuing operations of R69,0 million (September 2012: profit of R24,9 million). Profit from the discontinued Luarica and Fucaúma operations amounted to R15,2 million (September 2012: profit of R8,0 million). The Group therefore reports a loss for the period of R53,9 million (September 2012: profit of R32,9 million). Cash and cash equivalents at the end of the reporting period amounted to R294,6 million (September 2012: R351,7 million). OPERATING PERFORMANCE Detailed Project Information Six months ended 30 September 2013 Six months ended 30 September 2012 Average Average Average price per Average Average price per Carats carats carat grade carats carat proper achieved per Carats per achieved duced stone (US$) 100 m3 produced stone (US$) Average grade per 100 m3 South Africa Baken Richtersveld Operations Shallow water Total SA Angola Somiluana 0,79 14 157 1,17 1 100 1,23 25 825 1,10 1 287 0,72 – 0,78 3 626 4 066 21 849 1,85 0,29 0,78 1 778 379 1 028 1,08 – 1,20 6 236 3 804 35 865 1,78 0,32 0,92 1 519 411 1 205 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 Chairman L Delport 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) GREYMATTER FINCH # 7227 • Sales revenue amounted to R259,7 million (September 2012: R330,7 million). • roup loss after tax from continuing operations was R69,0 million (September 2012: profit G of R24,9 million). • rofit after tax from discontinued operations amounted to R15,2 million (September 2012: profit P of R8,0 million). • Group net loss for the period was R53,9 million (September 2012: profit of R32,9 million).

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