AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2010

Trans Hex Group Limited

(Incorporated in the Republic of South Africa)

Registration number: 1963/007579/06

ISIN: ZAE000018552
JSE share code: TSX

NSX share code: THX

(Trans Hex or the group)

AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2010

Abridged consolidated income statement

	Notes	2010 R’000	2009 R’000
Continuing operations
Sales revenue		715 667	637 301
Cost of goods sold		(527 611)	(786 799)
Gross profit/(loss)		188 056	(149 498)
Other operating expenses	1	(31 568)	-
Royalties		(29 837)	(24 103)
Selling and administration costs		(74 671)	(61 698)
Mining income/(expenses)		51 980	(235 299)
Exploration costs		(4 046)	(52 557)
Other (losses)/gains net	2	958	3 084
Finance income		17 649	28 332
Finance costs		(29 636)	(23 188)
Impairment of assets	3	-	(536 913)
Impairment of available-for-sale-investment	4	-	(2 433)
Share of results of associated companies		(9)	(7)
Profit/(loss) before income tax		36 896	(818 981)
Income tax		(11 747)	58 596
Profit/(loss) for the period from continuing operations		25 149	(760 385)
Discontinued operations
Loss for the period from discontinued operations	5	(3 543)	(37 188)
Profit/(loss) for the period		21 606	(797 573)

Earnings per share from continuing operations (cents)
Basic		23,8	(719,4)
Diluted		23,8	(719,4)
Loss per share from discontinued operations (cents)
Basic		(3,4)	(35,2)
Diluted		(3,4)	(35,2)
Dividends per share (cents)		-	-
Total number of shares in issue (’000)		106 051	106 051
Shares in issue adjusted for treasury shares (’000)		105 699	105 699
Average US$ exchange rate		7,85	8,87
Headline earnings
Continuing operations		23 313	(618 389)
Discontinued operations		(2 775)	(18 198)

Headline earnings/(loss) per share (cents)
Continuing operations (cents)		22,1	(585,1)
Discontinued operations (cents)		(2,6)	(17,2)

Abridged consolidated statement of comprehensive income

	2010 R’000	2009 R’000
Profit/(loss) for the period	21 606	(797 573)
Other comprehensive income net of tax:
Translation differences on foreign subsidiaries	118 863	(5 298)
Before-tax amount	38 508	43 115
Tax benefit/(expense)	80 355	(48 413)
Fair value adjustment on available-for-sale financial assets	240	-
Before-tax amount	240	-
Tax benefit/(expense)	-	-

Total comprehensive income/(loss) for the period	140 709	(802 871)

Abridged consolidated statement of financial position

	Note	2010 R’000	2009 R’000
Assets
Property, plant and equipment		498 252	526 198
Financial assets		43 462	40 197
Current assets		464 605	415 179
Inventories	7	162 792	160 223
Trade and other receivables		32 921	23 057
Cash and cash equivalents		268 892	231 899
Non-current assets classified as held for sale		2 044	3 111
		1 008 363	984 685
Equity and liabilities
Total shareholders’ interest		327 007	186 298
Borrowings		95 772	151 368
Deferred income tax liabilities		90 165	173 698
Provisions		75 886	65 999
Deferred income		17 824	24 508
Current liabilities		401 709	382 814
Trade and other payables		264 776	256 880
Current income tax liabilities		20 619	8 313
Borrowings		92 987	91 060
Bank overdraft		23 327	26 561

		1 008 363	984 685
Net asset value per share (cents)		308	176

Abridged consolidated statement of changes in equity

	2010 R’000	2009 R’000
Balance at 1 April	186 298	994 472
Total comprehensive income/(loss) for the period	140 709	(802 871)
Dividends paid	-	(5 303)
Balance at end of period	327 007	186 298

Abridged consolidated statement of cash flows

	2010 R’000	2009 R’000
Cash available from operating activities	122 714	(148 131)
Movements in working capital	20 924	10 308
Income tax (paid)/received	(2 324)	8 507
Dividends paid	-	(5 303)
Cash generated by/(utilised by) operations	141 314	(134 619)
Cash employed	(101 087)	145 805
Property, plant and equipment
Proceeds from disposal	5 696	129 466
Replacement	(30 396)	(70 121)
Additional	(43 011)	(41 198)
Proceeds from sale of financial assets	-	5 306
Borrowings	(33 376)	189 851
Investment, loans and issue of capital	-	(67 499)

Net increase in cash and cash equivalents	40 227	11 186
Cash and cash equivalents at beginning of year	205 338	194 152
Cash and cash equivalents at end of year	245 565	205 338

Notes

		2010 R’000	2009 R’000

1.	Other operating expenses	31 568	-
	The other operating expenses consist of Luarica and Fucauma care and maintenance costs.
2.	Other (losses)/gains – net Other (losses)/gains – net consists mainly of the following principal categories:
	Net foreign exchange gains	958	9 366
	Loss on other financial assets at fair value through profit or loss	-	(6 282)
		958	3 084

3.	Impairment of assets As a result of the global economic slowdown and a subsequent decrease in rough diamond prices, the group reviewed the carrying amounts of its assets during the 2009 financial year.
	Details of the impairment are as follows:
	Land and buildings	-	(3 087)
	Mining rights	-	(71 504)
	Mine development costs	-	(6 660)
	Mining plant and equipment	-	(50 419)
	Goodwill	-	(37 096)
	Long-term receivable from Angolan joint ventures	-	(345 546)
	Net current assets	-	(22 601)
	Impairment of assets before tax	-	(536 913)
	Taxation	-	47 401
		-	(489 512)

4.	Impairment of available-for-sale investment	-	(2 433)
	In the light of a significant and prolonged decline in the fair value of the shares held in Diamond Field International Ltd, a further impairment charge was recorded during the 2009 financial year.

5.	Discontinued operations During the 2008 financial year it was decided to discontinue the group’s marine vessel operations in Namibia. The results of the operations were as follows:

	Revenue	111	660
	Expenses	(2 886)	(17 603)
		(2 775)	(16 943)
	Impairment of assets	(1 067)	(29 189)
	Profit on sale of assets	-	8 217
	Loss before income tax	(3 842)	(37 915)
	Taxation	299	727
	Loss for the year	(3 543)	(37 188)

6.	Reconciliation of headline earnings
	Continuing operations
	Profit/(loss) for the period	25 149	(760 385)
	(Profit)/loss on sale of assets	(2 550)	8 000
	Taxation impact	714	(1 952)
	Impairment of assets	-	168 766
	Taxation impact	-	(35 251)
	Impairment of available-for-sale investment	-	2 433
	Headline earnings/(loss)	23 313	(618 389)

	Discontinued operations
	Loss for the period	(3 543)	(37 188)
	Profit on sale of assets	-	(8 217)
	Taxation impact	-	150
	Impairment of assets	1 067	27 057
	Taxation impact	(299)	-
	Headline loss	(2 775)	(18 198)

7.	Inventories
	Diamonds	133 889	128 583
	Consumables	28 903	31 640
		162 792	160 223

	The carrying value of diamond inventories carried at net realisable value amounted to R22 million (2009: R89 million).

8.	Capital commitments (including amounts authorised, but not yet contracted)	61 539	46 334
	These commitments will be financed from the group’s own resources or with borrowed funds.

9.	Segment information
	Operating segments
		Continuing				Discontinued
2010		South Africa	Angola	Liberia	Total	Namibia
Carats sold		95 251	1 220	-	96 471	-
		R’000	R’000	R’000	R’000	R’000
Revenue		714 279	1 388	-	715 667	111
Cost of goods sold		(520 562)	(7 049)	-	(527 611)	(2 886)
Gross profit/(loss)		193 717	(5 661)	-	188 056	(2 775)
Other operating expenses		-	(31 568)	-	(31 568)	-
Royalties		(29 837)	-	-	(29 837)	-
Selling and administration costs		(63 643)	(12 189)	1 161	(74 671)	-
Mining income/(expense)		100 237	(49 418)	1 161	51 980	(2 775)
Exploration costs		(4 046)	-	-	(4 046)	-
Other (losses)/gains - net		958	-	-	958	-
Finance income		17 649	-	-	17 649	-
Finance costs		(18 683)	(10 953)	-	(29 636)	-
Impairment of assets		-	-	-	-	(1 067)
Share of results of associated companies		(9)	-	-	(9)	-
Profit/(loss) before income taxation		96 106	(60 371)	1 161	36 896	(3 842)

Depreciation included in the above		(95 490)	(5 108)	-	(100 598)	-

Assets		906 989	98 680	650	1 006 319	-
Non-current assets classified as held for sale		-	-	-	-	2 044
Liabilities		456 835	224 521	-	681 356	-
Capital expenditure		31 955	2 097	-	34 052	-
Net asset value per share (cents)		424	(119)	1	306	2

	Continuing				Discontinued
2009	South Africa	Angola	Liberia	Total	Namibia
Carats sold	83 188	28 272	-	111 460	417
	R’000	R’000	R’000	R’000	R’000
Revenue	588 326	48 975	-	637 301	660
Cost of goods sold	(623 567)	(163 222)	(10)	(786 799)	(9 386)
Gross loss	(35 241)	(114 247)	(10)	(149 498)	(8 726)
Royalties	(24 103)	-	-	(24 103)	-
Selling and administration costs	(45 808)	(15 890)	-	(61 698)	-
Mining expense	(105 152)	(130 137)	(10)	(235 299)	(8 726)
Exploration costs	(5 805)	(43 276)	(3 476)	(52 557)	-
Other (losses)/gains net	3 084	-	-	3 084	-
Finance income	28 332	-	-	28 332	-
Finance costs	(13 336)	(9 852)	-	(23 188)	-
Impairment of assets	(69 403)	(460 284)	(7 226)	(536 913)	(29 189)
Share of results of associated companies	(7)	-	-	(7)	-
Loss before income tax	(162 287)	(643 549)	(10 712)	(816 548)	(37 915)
Impairment of available-for-sale investment	-	-	-	(2 433)	-
Loss before income tax	(162 287)	(643 549)	(10 712)	(818 981)	(37 915)

Depreciation included in the above	(118 630)	(32 078)	(10)	(150 718)	-

Assets	898 127	82 581	866	981 574	-
Non-current assets classified as held for sale	-	-	-	-	3 111
Liabilities	545 529	252 858	-	798 387	-
Capital expenditure	78 039	33 280	-	111 319	-
Net asset value per share (cents)	333	(161)	1	173	3

Revenues from transactions with certain customers did not amount to 10 per cent or more of total revenue (2009: R101 million).

10.	Mineral resources and mineral reserves
	There have been no material changes to the mineral resources and mineral reserves previously reported in the annual report
11.	Contingent liabilities and contingent assets
	The group is subject to claims which arise in the ordinary course of business. The group has provided performance guarantees to banks and other third parties amounting to R11,2 million (2009: R11,5 million). The group has been advised that potential foreign claims exist in respect of a guarantee on a loan from a financial institution of US$8,7 million (2009: US$8,7 million) and other legal claims of US$0,6 million (2009: US$ nil). The directors have been advised that such claims would be very unlikely to succeed. There were no contingent assets in the group at either 31 March 2010 or 31 March 2009.

12.	Defaults and breaches
	As at 31 March 2010, borrowings with a principal amount of R65,6 million (2009: R91,2 million) and accrued interest of R10,7 million (2009: R4,9 million), due by joint ventures to external credit providers, were in default.

13.	Restatement of comparative figures
	Unwinding of discount was previously included under "Other (losses)/gains - net" in the income statement. In terms of IAS 37 "Provisions, contingent liabilities and contingent assets" unwinding of discount should be presented as borrowing cost. The effect of this reclassification on the prior year figures is that "Finance costs" in the income statement increased with R3,2 million and "Other (losses)/gains - net" decreased with the same amount.

14.	Accounting policies
	The accounting policies are consistent with those in the previous reporting period in accordance with International Financial Reporting Standards, except for the adoption of IAS 1 Presentation of Financial Statements (Revised) and IFRS 8 Operating statements. The adoption of these new standards has resulted in certain disclosure reclassifications but did not have any impact on the results of the group. These abridged financial statements comply with IAS 34.

15.	Report of independent auditor
	The external auditors, PricewaterhouseCoopers Inc. have audited the group’s annual financial statements and the abridged financial statements contained herein for the year ended 31 March 2010. Copies of their unqualified audit reports are available on request at the company’s registered office.

In this commentary, results are compared with the 12 months of the 2009 financial year (in brackets).

Overview

The directors of Trans Hex are pleased to report a profit after tax of R22 million, a significant turnaround compared to a loss of R798 million the previous reporting period.

Cash generated by operations for the period was R141 million, compared to cash utilised of R135 million the previous period, a turnaround of R276 million.

These achievements are largely attributed to two factors; stringent cost management that resulted in substantial reductions in cash operating costs against the previous comparative period; and the recovery of diamond prices.

Financial Highlights

– Sales revenue of R716 million (R637 million) improved through increased volumes and higher prices from the South African operations, offset by the stronger rand/US dollar exchange rate

– Cash operating costs reduced by R165 million

– Mining income increased to R52 million (R235 million loss)

– Profit after taxation increased to R22 million (R798 million loss)

– Earnings per share from continuing operations increased to 23,8 cents from a loss per share of 719,4 cents

– Net cash generated was R40 million (R11 million generated) resulting in the group’s net cash position increasing to R246 million (R205 million). The cash balance at end of year would have been R307 million if the 10% lots of diamonds tied up at the State Diamond Trader, valued at R61 million had been sold during the current financial year.

After a difficult previous financial year when demand and prices for rough diamond production fell significantly due to the global financial crisis, the current year saw continual growth in both of these key areas. Prices have improved significantly and demand for Trans Hex production has remained strong.

Operating performance

Detailed project information

Detailed project information (Unaudited)	Avarage grade per 100 m3	Carats produced	Average carats per stone	Average price per carat achieved (US$)
2010
South Africa
Baken	1,90	58 760	1,10	921
Richtersveld operations	2,67	24 436	1,63	1 228
Shallow water	–	9 708	0,41	306
Angola
Fucauma	–	–	–	–
Luarica	–	–	–	–
Luana	33,91	20 510	0,41	–

2009
South Africa
Baken	1,46	55 847	1,04	765
Richtersveld operations	2,34	27 201	1,79	1 047
Shallow water	–	5 885	0,35	376
Angola
Fucauma	11,86	30 432	0,32	156
Luarica	12,97	48 338	0,35	215
Luana	28,93	6 950	0,34	–

Note: Fucauma and Luarica were under care and maintenance during the period

South Africa

– South African production increased from 88 933 carats to 92 904 carats as a result of improved grades achieved, and in spite of the rationalisation of operations

– Total sales attributable to the South African operations amounted to US$91 million (US$67 million)

– These sales were achieved at an average price of US$957 (US$807)

Angola

– Luana (in which the group holds a 33% share) continued with pilot mining during the period and had 31,822 carats available for sale at the end of the period

– The Luana feasibility study has been approved by the Angolan Ministry of Geology and Mines

– Luarica and Fucauma were under care and maintenance

Liberia

– As previously reported, due to unfavourable exploration results, the exploration project in Liberia was terminated and activities were wound down

Sale of Namibia operations

– Following the sale of the one vessel in the previous reporting period, the holding costs on the remaining vessel were reduced substantially to R3 million (R17 million)

Outlook

– South African Land operations production is anticipated around 100,000 carats for the 2011 financial year

– The declining grade at Baken will be countered by increasing the plant throughput

– Tight cost and cash control will continue to be exerted

– We remain positive for demand and pricing levels as sales since year-end have continued to show a strengthening in prices. Longer-term, reduced rough production levels globally and a gradual recovery in major economies from the recession will likely see demand for rough production increase

– The Luana mining contract was signed on 12 May 2010

– Pilot production will continue with equipment already on site, and the partners will in due course decide how the mine will be developed. Sale of Luana product will commence imminently

Changes in directorship

As previously reported, Mr P Lazarus Zim resigned as non-executive director and chairman of the board effective 22 September 2009. Mr Bernard R van Rooyen then assumed the chairmanship of the board on an acting basis. At the Board meeting held on 27 May 2010, Mr van Rooyen was confirmed as chairman of the board for a further period of one year.

Mr Jan Willem Dreyer was appointed as a non-executive director with effect from 25 May 2009. Mr Dreyer is an executive director of Remgro Limited.

Mr Pine Pienaar resigned as non-executive director effective 4 June 2009, following his resignation as chief executive officer and director of Mvelaphanda Resources Limited.

Mr George Zacharias resigned as company secretary effective 30 November 2009 and was replaced by Mr Ian Hestermann (previously financial director, Trans Hex Angola).

Mr Graham Muller resigned as financial director effective 1 February 2010 and Mr Ian Hestermann was appointed as acting director, whilst retaining his responsibilities as company secretary.

Mr Hestermann has now been appointed financial director with effect from 27 May 2010.

Mr Greg van Heerden (currently Group Human Resources Manager) has been appointed company secretary with effect from 27 May 2010.

Dividend declaration

In order to maintain cash resources the directors deem it prudent not to declare a final dividend.

Shareholders’ diary

The annual report will be mailed before 30 June 2010 and the annual general meeting is scheduled for 5 August 2010.

By order of the board

BR van Rooyen		L Delport
Chairman		Chief Executive Officer

Parow

27 May 2010

Registered office

405 Voortrekker Road, Parow 7500 PO Box 723, Parow 7499

Transfer secretaries

South Africa
Computershare Investor Services (Pty) Limited

PO Box 61051, Marshalltown 2107

Namibia
Transfer Secretaries (Pty) Ltd
PO Box 2401, Windhoek

Directorate

BR van Rooyen (Chairman), L Delport (Chief Executive Officer),

MJ Carstens (SA Land Operations), IP Hestermann (Financial Director),

T de Bruyn, JW Dreyer, E de la H Hertzog, AR Martin, T van Wyk

GM van Heerden (Company Secretary)