9% is gross profit which wouldn't be influenced by the forex losses. They are unrealised so would appear as non-cash items on the HY statement and would be accounted for after gross profit.
The ann says operating costs declined marginally so suppressed margins is really the only explanation left IMO.
The forex losses themselves are a bit of a head scratcher for me. I assume they would be hedging their supply contracts against a fall in the AUD vs the CNY but unless they have been playing silly buggers with leverage it surprises me that these losses could be material, given the fact the CNY is a pegged currency and there haven't been any major fluctations in the AUD-CNY. The most it's fluctuated over the last 12 months is between 4.7 and 4.9 CNY.
Plus they should be offset by improvements in KGN's trade terms (as the whole point of hedging is it acts opposite to your exposure risk). So if they have taken a hit on hedging they should be benefitting in sales margin, but that hasn't happened.
The AUD-USD has been flat over the period as well, if the hedging was done against USD. So I have no idea what's going on. Hopefully the half year results will give us a clearer picture.
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