Unaudited interim results for the six months ended 30 September 2009

Trans Hex Group Limited

Abridged consolidated income statement

		Six months ended		Year ended
		30/09/09	30/09/08	31/03/09
		Unaudited	Unaudited	Audited
	Notes	R’000	R’000	R’000
Continuing operations
Sales revenue		370 839	329 694	637 301
Cost of goods sold		(285 570)	(307 187)	(786 799)
Gross profit/(loss)		85 269	22 507	(149 498)
Royalties: Namaqualand Diamond Fund Trust		(15 452)	(12 775)	(24 103)
Selling and administration costs		(38 232)	(32 125)	(61 698)
Mining income/(expenses)		31 585	(22 393)	(235 299)
Exploration costs		(2 056)	(22 105)	(52 557)
Other (losses)/gains – net	1	(1 764)	(6 279)	(62)
Finance income		8 171	7 793	28 332
Finance costs		(13 533)	(3 585)	(20 042)
Impairment of assets	2	–	–	(536 913)
Impairment of available-for-sale-investment	3	–	–	(2 433)
Share of results of associated companies		(7)	(4)	(7)
Profit/(loss) before income tax		22 396	(46 573)	(818 981)
Income tax		(12 151)	(9 424)	58 596
Profit/(loss) for the period from continuing operations		10 245	(55 997)	(760 385)
Discontinued operations
Loss for the period from discontinued operations	4	(1 520)	(8 356)	(37 188)
Profit/(loss) for the period		8 725	(64 353)	(797 573)
Earnings per share from continuing operations (cents)
– Basic		9,7	(53,0)	(719,4)
– Diluted		9,7	(53,0)	(719,4)
Loss per share from discontinued operations (cents)
– Basic		(1,4)	(7,9)	(35,2)
– Diluted		(1,4)	(7,9)	(35,2)
Dividends per share (cents)		–	–	–
Total number of shares in issue (’000)		106 051	106 051	106 051
Shares in issue adjusted for treasury shares (’000)		105 699	105 699	105 699
Average US$ exchange rate		8,17	7,79	8,87

Headline earnings
– Continuing operations	9 624	(54 951)	(618 389)
– Discontinued operations	(1 520)	(8 356)	(18 198)

Headline earnings per share (cents)

– Continuing operations (cents)

9,1

(52,0)

(585,1)

– Discontinued operations (cents)

(1,4)

(7,9)

(17,2)

Abridged consolidated statement of financial position

	Six months ended		Year ended
	30/09/09	30/09/08	31/03/09
	Unaudited	Unaudited	Audited
	R’000	R’000	R’000
Assets
Property, plant and equipment	479 262	649 359	526 198
Goodwill	–	37 096	–
Financial assets	44 535	319 440	40 197
Current assets	458 814	375 962	415 179
Inventories	168 142	211 628	160 223
Trade and other receivables	23 056	34 560	23 057
Current income tax	–	5 508	–
Cash and cash equivalents	267 616	124 266	231 899
Non-current assets classified as held for sale	3 111	77 853	3 111
	985 722	1 459 710	984 685
Equity and liabilities
Total shareholders’ interest	233 224	929 966	186 298
Borrowings	118 435	22 062	151 368
Deferred income tax liabilities	167 447	190 232	173 698
Provisions	69 641	57 284	65 999
Deferred income	21 166	–	24 508
Current liabilities	375 809	260 166	382 814
Trade and other payables	246 448	203 009	256 880
Current income tax liabilities	23 284	–	8 313
Borrowings	85 746	29 664	91 060
Bank overdraft	20 331	27 493	26 561

	985 722	1 459 710	984 685
Net asset value per share (cents)	220	880	176

Abridged consolidated statement of comprehensive income

	Six months ended		Year ended
	30/09/09	30/09/08	31/03/09
	Unaudited	Unaudited	Audited
	R’000	R’000	R’000
Profit/(loss) for the period	8 725	(64 353)	(797 573)
Other comprehensive income net of tax:
Translation differences on foreign subsidiaries	38 201	(1 249)	(5 298)
Fair value adjustment on available-for-sale financial assets	–	6 399	–
Total comprehensive income for the period	46 926	(59 203)	(802 871)

Abridged consolidated statement of changes in equity

	Six months ended		Year ended
	30/09/09	30/09/08	31/03/09
	Unaudited	Unaudited	Audited
	R’000	R’000	R’000
Balance at 1 April	186 298	994 472	994 472
Total comprehensive income/(loss) for the period	46 926	(59 203)	(802 871)
Dividends paid	–	(5 303)	(5 303)
Balance at end of period	233 224	929 966	186 298

Abridged consolidated statement of cash flows

	Six months ended		Year ended
	30/09/09	30/09/08	31/03/09
	Unaudited	Unaudited	Audited
	R’000	R’000	R’000
Cash available from operating activities	63 981	4 733	(148 131)
Movements in working capital	2 394	(71 503)	10 308
Income tax (paid)/received	(2 632)	(6 873)	8 507
Dividends paid	–	(5 303)	(5 303)
Cash generated by/(utilised by) operations	63 743	(78 946)	(134 619)
Cash employed	(21 796)	(18 433)	145 805
Property, plant and equipment
– Proceeds from disposal	3 878	75 207	129 466
– Replacement	(4 018)	(46 552)	(70 121)
– Additional	(2 331)	(12 808)	(41 198)
Proceeds from sale of financial assets	–	–	5 306
Borrowings	(16 397)	(851)	189 851
Investment, loans and issue of capital	(2 928)	(33 429)	(67 499)

Net cash flow for the period	41 947	(97 379)	11 186

Notes

	Six months ended		Year ended
	30/09/09	30/09/08	31/03/09
	Unaudited	Unaudited	Audited
	R’000	R’000	R’000
1. Other (losses)/gains – net
Other (losses)/gains – net consists mainly of the following principal categories:
– Net foreign exchange gains	516	1 443	9 366
– Loss on other financial assets at fair value through profit or loss	–	(6 282)	(6 282)
– Rehabilitation provision – unwinding of discount	(2 280)	(1 440)	(3 146)
	(1 764)	(6 279)	(62)

2. 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, which assets were reduced 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)

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

4. 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	–	660	660
Expenses	(1 520)	(12 387)	(17 603)
	(1 520)	(11 727)	(16 943)
Impairment of assets	–	–	(29 189)
Profit on sale of assets	–	–	8 217
Loss before income tax	(1 520)	(11 727)	(37 915)
Taxation	–	3 371	727
Loss for the year	(1 520)	(8 356)	(37 188)

5. Reconciliation of headline earnings
Continuing operations
Profit/(loss) for the period	10 245	(55 997)	(760 385)
(Profit)/loss on sale of assets	(863)	1 396	8 000
– Taxation impact	242	(350)	(1 952)
Impairment of assets	–	–	168 766
– Taxation impact	–	–	(35 251)
Impairment of available-for-sale-investment	–	–	2 433
Headline earnings/(loss)	9 624	(54 951)	(618 389)
Discontinued operations
Loss for the period	(1 520)	(8 356)	(37 188)
Profit on sale of assets	–	–	(8 217)
– Taxation impact	–	–	150
Impairment of assets	–	–	27 057
Headline loss	(1 520)	(8 356)	(18 198)

6. Capital commitments
(including amounts authorised, but not yet contracted)	33 567	89 383	46 334

7. Segment information
Primary segments
	Continuing						Discontinued
Six months ended 30 September 2009	South Africa	Angola		Liberia		Total	Namibia
	R’000	R’000		R’000		R’000	R’000
Carats sold	49 458	1 220		–		50 678	–
Revenue	369 395	1 444		–		370 839	–
Cost of goods sold	(273 673)	(11 897)		–		(285 570)	–
Gross profit/(loss)	95 722	(10 453)		–		85 269	(1 520)
Royalties: Namaqualand Diamond Fund Trust	(15 452)	–		–		(15 452)	–
Selling and administration costs	(31 252)	(6 980)		–		(38 232)	–
Mining income/(expense)	49 018	(17 433)		–		31 585	(1 520)
Exploration costs	(1 804)	–		(252)		(2 056)	–
Other (losses)/gains – net	(1 817)	53		–		(1 764)	–
Finance income	8 171	–		–		8 171	–
Finance costs	(8 424)	(5 109)		–		(13 533)	–
Share of results of associated companies	(7)	–		–		(7)	–
Profit/(loss) before income taxation	45 137	(22 489)		(252)		22 396	(1 520)
Depreciation included in the above	(46 337)	(3 237)		–		(49 574)	–
Assets	895 726	86 885		–		982 611	–
Non-current assets classified as held for sale	–	–		–		–	3 111
Liabilities	543 983	208 515		–		752 498	–
Capital expenditure	4 933	1 416		–		6 349	–
Net asset value per share (cents)	332	(115)		–		217	3
	Continuing						Discontinued
Six months ended 30 September 2008	South Africa	Angola			Liberia	Total	Namibia
	R’000	R’000			R’000	R’000	R’000
Carats sold	32 690		12 878		–	45 568	417
Revenue	302 172		27 522		–	329 694	660
Cost of goods sold	(245 631)		(61 547)		(9)	(307 187)	(12 387)
Gross profit/(loss)	56 541		(34 025)		(9)	22 507	(11 727)
Royalties: Namaqualand Diamond Fund Trust	(12 775)		–		–	(12 775)	–
Selling and administration costs	(23 591)		(8 534)		–	(32 125)	–
Mining income/(expense)	20 175		(42 559)		(9)	(22 393)	(11 727)
Exploration costs	(2 186)		(17 466)		(2 453)	(22 105)	–
Other (losses)/gains – net	(6 279)		–		–	(6 279)	–
Finance income	7 793		–		–	7 793	–
Finance costs	(387)		(3 198)		–	(3 585)	–
Share of results of associated companies	(4)		–		–	(4)	–
Profit/(loss) before income taxation	19 112		(63 223)		(2 462)	(46 573)	(11 727)
Depreciation included in the above	(47 599)		(16 205)		(9)	(63 813)	–
Assets	971 458		403 202		7 197	1 381 857	–
Non-current assets classified as held for sale	29 191		–		–	–	48 662
Liabilities	372 348		157 396		–	529 744	–
Capital expenditure	51 984		7 376		–	59 360	–
Net asset value per share (cents)	594		233		7	834	46
	Continuing						Discon-tinued
Six months ended 31 March 2009	South Africa	Angola			Liberia	Total	Namibia
	R’000	R’000			R’000	R’000	R’000
Carats sold	83 188		28 272		–	111 460	417
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: Namaqualand Diamond Fund Trust	(24 103)		–		–	(24 103)	–
Selling and administration costs	(45 808)		(15 890)		–	(61 698)	–
Mining income/(expense)	(105 152)		(130 137)		(10)	(235 299)	(8 726)
Exploration costs	(5 805)		(43 276)		(3 476)	(52 557)	–
Other (losses)/gains – net	(62)		–		–	(62)	–
Finance income	28 332		–		–	28 332	–
Finance costs	(10 190)		(9 852)		–	(20 042)	–
Impairment of assets	(69 403)		(460 284)		(7 226)	(536 913)	(29 189)
Share of results of associated companies	(7)		–		–	(7)	–
Loss before income taxation	(162 287)		(643 549)		(10 712)	(816 548)	(37 915)
Impairment of available-for-sale investment	–		–		–	(2 433)	–
Loss before income taxation	(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 amount to ten percent or more of total revenue. During the period under review total revenue from these customers amounted to R38 million (31/03/2009: R101 million; 30/09/2008: R124 million).

8. Mineral resources and mineral reserves

There have been no material changes to the mineral resources and mineral reserves previously reported in the annual report.

9. Contingent liabilities

There have been no material changes to contingent liabilities previously reported in the annual report.

10. The accounting policies are consistent with the annual report and the corresponding prior year period in accordance with International Financial Reporting Standards, except for the adoption of IAS 1 Presentation of Financial Statements (Revised) and IFRS 8 Operating Segments. 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. Income does not accrue evenly throughout the year and the income for the six months, therefore, does not necessarily represent half of a full financial year’s income.

Overview

In this commentary, results are compared with the first six months of the 2008/2009 financial year (in brackets).

The directors of Trans Hex are pleased to report that the company has recorded a successful six months for the period ending 30 September 2009. The achievements for the period, and the company’s return to profitability, are largely attributed to two factors; stringent cost management that resulted in substantial reductions in cash operating costs against the previous comparative period; and effective cash generation by their operations that resulted in net cash flow increasing from a net outflow of R97 million to a net inflow of R42 million.

Financial highlights

– Mining income increased to R32 million (R22 million loss).

– Sales revenue of R371 million (R330 million) improved through increased volumes and weaker rand/US dollar exchange rate, offset by lower prices.

– Profit after taxation increased to R9 million (R64 million loss).

– Earnings per share from continuing operations increased to 9,7 cents from a loss per share of 53,0 cents.

– Cash operating costs reduced by R85 million.

– Net cash generated increased to R42 million (R97 million utilised) resulting in more than doubling the group’s net cash position to R247 million (R97 million).

– Net asset value per share increased by 25% from 31 March 2009.

Diamond prices and demand dropped significantly during the second half of the previous financial year due to the adverse effect of the global economic crisis on the diamond market. Sales during the current period have been characterised by a steady stabilisation in prices and with all production being sold.

Operating performance

Detailed project information (unaudited)

	Six months ended 30 September 2009				Six months ended 30 September 2008
	Average grade per 100 m³	Carats produced	Average carats per stone	Average price per carat achieved (US$)	Average grade per 100 m³	Carats produced	Average carats per stone	Average price per carat achieved (US$)
South Africa
Baken	1,93	27 123	1,07	683	1,39	29 799	1,04	1 130
Richtersveld Operations	3,89	16 255	1,89	1 264	1,74	11 746	1,59	1 333
Shallow water	–	1 992	0,31	431	–	2 126	0,50	508
Angola
Fucauma	–	–	–	–	12,38	15 588	0,33	200
Luarica	–	–	–	145	12,71	28 999	0,31	304
Luana	36,34	16 803	0,41	–	31,80	2 838	0,33	–

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

South Africa

– South African production increased from 43 670 carats to 45 502 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$45 million.

– These sales were achieved at an average price of US$914 (US$1 186).

Angola

– Luana (in which the group holds a 33% share) had 26 450 carats available for sale at the end of the period – the project is awaiting approval to commence with the sale of these diamonds.

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

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 R1,5 million (R11,7 million).

Outlook

– South African land operations production is anticipated around 100 000 carats for the current financial year.

– The grade at Baken, South Africa, is expected to improve as planned mining operations have moved to areas which are expected to produce higher grades.

– Both demand and pricing of the group’s product are expected to be stable over the balance of the financial year.

– Tight cost and cash control will continue to be exerted.

– Negotiations at Luana are continuing and are expected to be concluded by financial year-end.

Change 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 van Rooyen has assumed the chairmanship of the board until such time a replacement chairman is appointed.

In addition, 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.

The company secretary, Mr George Zacharias, has resigned effective 30 November 2009, and will be replaced by Mr Ian Hestermann, who currently holds the position of financial director, Trans Hex Angola.

Dividend declaration

In order to maintain cash resources and until such time as the impact of the global credit crisis situation stabilises, the directors deem it prudent not to declare an interim dividend.

By order of the board

BR van Rooyen L Delport

Acting Chairman Chief Executive Officer

Parow

10 November 2009

Registered office:

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

JSE share code: TSX

NSX share code: THX

ISIN code: ZAE000018552

Registration number: 1963/007579/06

Incorporated in the Republic of South Africa (“Trans Hex” or “the group”)

Transfer secretaries

South Africa Computershare Investor Services (Pty) Limited, PO Box 61051, Marshalltown 2107

Namibia Irwin Jacob, Greene & Associates, PO Box 2401, Windhoek Sponsor

Rand Merchant Bank (A division of FirstRand Bank Limited)

Directorate

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

AG Muller (Financial Director), MJ Carstens (SA Land Operations),

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

GJ Zacharias (Company Secretary)

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