De Beers Embeds 2009 efficiencies while increasing production, prices and sales

2010 H1 Snapshot

• EBITDA of US$762 million has more than doubled compared with H1 2009, due to a stabilisation of, and improvement in, trading conditions in H1 2010.
• Sales of rough diamonds by the DTC, the marketing arm of De Beers, in H1 2010 were US$2.6 billion (including those through joint ventures), an 84 percent increase compared with H1 2009, as a result of increased demand from retail markets, particularly India and China, as well as restocking by the trade.
• Carats recovered in H1 2010 amounted to 15.4 million, more than double those for H1 2009 (6.6 million carats) in line with increased demand from DTC Sightholders.
• Production and operating costs were US$699 million (2009: US$479 million) as a result of increased production across the Group. However, the focus remains on cash management and continuing the efficiency improvements achieved in 2009.  After having reduced our cost base globally by 45 per cent, and staffing levels by 25 percent in 2009, many of those gains have remained permanent without impacting growth. 
• In March 2010, together with recapitalisation by its shareholders of US$1 billion, the Group successfully concluded a complex refinancing of all of its international and DBCM’s South African debt.  All debt facilities across the world were extended to August 2013.
• At the end of June, net debt amounted to US$1.98 billion compared with US$3.20 billion at the end of December 2009.  De Beers’ third party debt was US$ 1.87 billion (December 2009: US$3.09 billion), and gearing on this debt, was 28.8 percent compared with 45.2 per cent in December. Gearing on total debt, including US$785 million in shareholder loans and US$107 million of preference share capital, was 42.5 percent (December 2009: 57.9 percent).
  

Management Change

Having led De Beers for the past five years, and after overseeing the response to the global financial crisis and the company’s subsequent recovery, the CEO of De Beers, Gareth Penny, has advised the Board that he believes it is an appropriate time for him to step down.  The Board would like to thank Gareth for his substantial contribution to De Beers during his 22 years with the company, and wishes him every success as he pursues new opportunities.  Gareth will step down in the coming months. A process is underway to identify a successor, during which time Stuart Brown (Chief Financial Officer) and Bruce Cleaver (Chief Commercial Officer) will serve as acting joint-CEOs.

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