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DTA - Delta EMD - Unaudited group results for the six months ended 27 june 2009

Release Date: 07/08/2009 11:00:02      Code(s): DTA
DTA - Delta EMD - Unaudited group results for the six months ended 27 june 2009 
and declaration of special dividend                                             
Delta EMD Limited                                                               
Registration number: 1919/006020/06                                             
Share code: DTA                                                                 
ISIN: ZAE000132817                                                              
("Delta EMD" or "the Group")                                                    
(Formerly Delta Electrical Industries Limited)                                  
AND DECLARATION OF SPECIAL DIVIDEND                                             
CONDENSED GROUP INCOME STATEMENT                                                
Unaudited             Audited                  
                                 Six months to June    to December              
                                2009        2008        2008                    
Note  R`000       R`000       R`000                   
Revenue                           276,702     308,367     648,450               
Profit before closure             101,117     47,256      145,897               
costs, impairment,                                                              
interest, taxation and                                                          
Depreciation                      (11,950)    (6,956)     (12,776)              
Closure costs                     -           -           (28,934)              
Impairment overprovided /         627         -           (3,980)               
Net foreign exchange              (3,136)     (2,219)     3,777                 
(losses) / gains                                                                
Operating profit                  86,658      38,081      103,984               
Net interest received             9,835       11,335      22,198                
Profit before taxation            96,493      49,416      126,182               
Taxation                          (38,145)    (10,352)    (36,750)              
Normal taxation                   (28,312)    (13,375)    (34,608)              
Secondary taxation on             (9,833)     -           (5,165)               
Capital gains taxation            -           3,023       3,023                 
overprovided on disposal                                                        
of the industrial                                                               
services division                                                               
Profit after taxation for         58,348      39,064      89,432                
the period                                                                      
Attributable to:                                                                
Equity holders of parent          58,348      39,064      89,432                
Headline earnings          1      56,840      36,041      90,389                
attributable to ordinary                                                        
Number of shares in issue         49,166      49,166      49,166                
Weighted number of shares         49,060      48,989      48,990                
in issue (`000)                                                                 
Dilutive number of shares         49,060      48,989      49,002                
in issue (`000)                                                                 
Attributable earnings per                                                       
share (cents)                                                                   
- basic                          118.9       79.7        182.6                  
- diluted                        118.9       79.7        182.5                  
Capital reduction per             -           229.0       229.0                 
share (cents)                                                                   
Special dividend per              200.0       -           100.0                 
share (cents)                                                                   
CONDENSED GROUP BALANCE SHEET                                                   
                                 Unaudited             Audited                  
                                 Six months to June    to December              
                                2009        2008        2008                    
                                R`000       R`000       R`000                   
Property, plant and equipment     287,079     296,947     293,664               
Non-current assets held for sale  9,599       22,348      10,368                
Non-current asset                1,051        1,051       1,051                 
Bank balances and cash           351,254      343,327     230,077               
Current assets                    211,496     326,345     337,963               
Total assets                      860,479     990,018     873,123               
EQUITY AND LIABILITIES                                                          
Total shareholders funds         557,602      613,837     595,400               
Deferred taxation liabilities    61,220       38,715      59,865                
Non-current liabilities           23,758      120,586     49,307                
Capital reduction liability       -           112,185     -                     
Current liabilities                                                             
- Trade and other                 96,233      86,005      69,031                
- Short term provisions           121,666     18,690      99,520                
Total equity and liabilities      860,479     990,018     873,123               
Net asset value per share         1,134       1,248       1,211                 
CONDENSED GROUP CASH FLOW STATEMENT                                             
                                Unaudited             Audited                   
                                Six months to June    to December               
                               2009        2008       2008                      
                               R`000       R`000      R`000                     
Cash generated by trading       96,653       16,132     120,902                 
Decrease in working capital     119,096      70,810     29,514                  
Cash generated by operations     215,749     86,942     150,416                 
Net interest received           9,835        11,335     22,198                  
Taxation paid - normal          (776)        (758)      (7,352)                 
Taxation refund - Capital gains -            3,023      3,023                   
Cash inflow from operating       224,808     100,542    168,285                 
Replacement capital expenditure (5,366)      (2,884)    (5,422)                 
Proceeds on disposal of land,   2,073        -          8,430                   
property, plant and equipment                                                   
Net cash inflow before           221,515     97,658     171,293                 
financing activities                                                            
Capital reduction               -            -          (112,589)               
Dividend paid - special         (98,162)     -          (48,990)                
Proceeds on disposal of         701          -          787                     
treasury shares                                                                 
Net increase in cash and cash    124,054     97,658     10,501                  
Cash and cash equivalents at    230,077      218,342    218,342                 
beginning of period                                                             
Currency translation of cash in (2,877)      27,327     1,234                   
foreign subsidiary                                                              
Cash and cash equivalents at     351,254     343,327    230,077                 
end of period                                                                   
GROUP STATEMENT OF CHANGES IN EQUITY                                            
              Share     Foreign                                                 
Capital   currency               Accumu-                          
              and       translation  Treasury  lated                            
              premium   reserve      shares    profit   Total                   
              R`000     R`000        R`000     R`000    R`000                   
Balance at 27   117,445   106,378      (1,922)   428,600  650,501               
December 2007                                                                   
Increase in     -         16,259       -         -        16,259                
Realisation     -         (66,383)     -         66,383   -                     
of foreign                                                                      
Proceeds on     -         -            787       -        787                   
disposal of                                                                     
Net income      117,445   56,254       (1,135)   494,983  667,547               
directly in                                                                     
Net profit      -         -            -         89,432   89,432                
for the year                                                                    
Total           117,445   56,254       (1,135)   584,415  756,979               
income and                                                                      
Capital                   -            -         -                              
reduction      (112,589)                                 (112,589)              
Dividend paid   -         -            -                  (48,990)              
- special                                       (48,990)                        
Balance at 27   4,856     56,254       (1,135)   535,425  595,400               
December 2008                                                                   
Decrease in     -         (264)        -         -        (264)                 
Proceeds on     -         -            534       1,746    2,280                 
disposal of                                                                     
Net income      4,856     55,990       (601)     537,171  597,416               
directly in                                                                     
Net profit      -         -            -         58,348   58,348                
for the                                                                         
Total           4,856     55,990       (601)     595,519  655,764               
income and                                                                      
Dividend paid   -         -            -                  (98,162)              
- special                                       (98,162)                        
Balance at 27   4,856     55,990       (601)     497,357  557,602               
June 2009                                                                       
1. Reconciliation between attributable earnings and headline earnings           
                                   Unaudited           Audited year             
                                   Six months to June   to December             
2009       2008     2008                    
                                    R`000      R`000    R`000                   
Attributable earnings after         58,348      39,064   89,432                 
Impairment (overprovided)/charged   (627)       -        3,980                  
Over provision prior year CGT       -                    (3,023)                
Profit on disposal of fixed assets  (881)       -        -                      
Headline earnings attributable to    56,840     36,041   90,389                 
ordinary shareholders                                                           
Attributable headline earnings per                                              
- basic                           115.9       73.5     184.5                   
 - diluted                         115.9       73.5     184.5                   
2. Basis of presentation                                                        
The interim report has been prepared in accordance with the Group`s accounting  
policies which are consistent with those of the previous financial statements   
and comply with IFRS, the Listing Requirements of the JSE Limited and the       
Companies Act of South Africa (Act 61 of 1973), as amended. These condensed     
financial statements have been prepared in accordance with IAS 34 - interim     
                              Unaudited            Audited year                 
                              Six months to June    to December                 
                               2009        2008     2008                        
R`000       R`000    R`000                       
3. Commitments                                                                  
Capital commitments                                                             
- Authorised but not           1,705        6,795   11,058                      
Capital commitments                                                             
- contracted                   10,827       360      1,456                      
                              12,532       7,155    12,514                      
Operating lease commitment     1,200        797      1,262                      
Other                          -            1,156   980                         
COMMENT ON RESULTS                                                              
HALF YEAR RESULTS                                                               
The Group recorded a substantial improvement in earnings for the half year ended
June 2009. Earnings per share increased by 49% to 118.9 cents (2008: 79.7       
cents), and headline earnings per share increased to 115.9 cents (2008: 73.5    
Sales of the EMD produced at the Group`s former Australian plant concluded      
during 2008, and consequently the Group`s revenue for the half year decreased to
R276.7 million (2008: R308.4 million). Revenues from the Group`s South African  
plant compared favourably with the same period last year with improved selling  
prices and similar volumes sold.                                                
Operating profit of R86.7 million was recorded for the half year compared with  
an operating profit of R38.1 million for the same period last year, an increase 
of 128%. Increased selling prices and reduced overhead costs contributed to the 
improved result.                                                                
Net interest income for the half year totalled R9.8 million (2008: R11.3        
million), and a profit before taxation of R96.5 million was recorded compared   
with R49.4 million for the same period last year.                               
Taxation totalled R38.1 million (2008: R10.4 million) and included a R9.8       
million Secondary Taxation Charge in respect of the Group`s June 2009 special   
dividend. The Group`s 2008 taxation charge benefited from the recovery of a R3  
million overpayment in respect of the Group`s disposed Industrial Services      
businesses. Profit after taxation totalled R58.3 million for the half year and  
compared with R39.1 million for the same period last year.                      
Cash inflow during the period totalled R221.5 million (2008: R97.7 million).    
Improved cash inflow resulted from higher operating profit and substantial      
reductions in working capital.                                                  
The Group ended the half year with cash balances of R351.3 million after payment
of the R98.2 million special dividend, a significant increase from the 2008 year
end balance of R230.1 million.                                                  
PERFORMANCE OF THE DELTA EMD BUSINESS                                           
Changed global economic conditions resulted in reduced demand for disposable    
batteries and a contraction of the global EMD market during the period. EMD     
producers` market positions remained relatively stable, and Delta EMD`s market  
share met our expectations and tracked total market demand. Delta EMD enjoyed   
additional one-off sales during the period, as EMD inventories formerly held in 
offshore warehouses were sold to customers and Delta EMD`s terms of sale were   
changed to provide that sales are completed at the port of loading.             
Margins during the period benefited from improved selling prices and from cost  
of goods sold that reflected the lower input costs evident prior to recent cost 
increases.  Delta EMD`s rand denominated selling prices compared favourably     
during most of the period with competitors` US dollar and Euro denominated      
selling prices, but the more recent strengthening of the rand has reduced that  
The Group`s management is now based at the Group`s  plant and is better         
positioned to drive improvements across the business.  Efforts are underway to  
realise further operational efficiencies and to reduce overhead costs.          
Operating profit during the period reflected some of these improvements as well 
as additional investment in the business.                                       
Efforts to reduce working capital were successful during the period.  The sale  
of offshore inventories and change in terms of sale reduced inventory levels,   
and production was  reduced in line with demand.  Inventories will be           
consolidated further by year end to ensure optimal stock levels.  Substantial   
year end trade receivables, including those associated with the sale of         
Australian produced product, were collected during the period, as well as those 
from a substantial customer which sought protection under the US bankruptcy     
Delta EMD`s second half sales volumes are expected to reflect lower global      
demand similar to the first half and will not benefit from the same additional  
one-off sales.  Market prices are likely to reduce as some EMD producers benefit
from reduced manganese ore costs, and consequently Delta EMD`s sales volumes    
could be under pressure.  Trading profit is expected to reduce from the first   
half`s levels with lower sales volumes and higher cost of goods sold.           
Opportunities for improvement include the penetration of new market segments,   
improved operational efficiencies and reduced overheads, and any additional     
sales volumes and resulting increases in production would improve recovery of   
the Group`s substantial manufacturing overheads. Cash inflows are expected to   
remain strong.                                                                  
TRADING STATEMENT FOR THE 2009 FINANCIAL YEAR                                   
The development and possible disposals described immediately below are expected 
to result in earnings (and headline earnings) for the financial year ending 27  
December 2009 that will be more than 20% higher than those for the financial    
year ended 27 December 2008.  However due to the uncertainty surrounding the    
anticipated disposals, as well as with respect to trading, it is not possible   
with reasonable certainty to quantify earnings (and headline earnings) for the  
financial year ending 27 December 2009 within a 20% range as required by the JSE
Limited Listing Requirements.                                                   
- An amendment to the Environmental Protection Licence governing the            
rehabilitation of the Kooragang Island residue disposal site was agreed with the
New South Wales Department of Environment and Climate Change on 23 July 2009.   
The amended licence allows a more cost effective rehabilitation of the site, and
on the basis of quotes received for the required rehabilitation, the closure    
provision previously established for the site will be reduced by A$10 million.  
The adjustment will substantially enhance the Group`s second half result, and   
the certainty afforded by the amended licence affords an appropriate basis to   
negotiate the sale of the Kooragang Island site.                                
- Environmental assessments undertaken at the Australian plant site have        
provided greater certainty with respect to the limited remediation that might be
required at the former plant site, and we anticipate shortly the issuance of the
environmental clearances desired by prospective purchasers.                     
- Prospects for realising appropriate value for the Kooragang Island site and   
for the former plant site have improved as a consequence of the foregoing.  As  
the sites are carried at nominal book values, the Group`s full year results     
would be enhanced further by the gains realised on those sales should they be   
completed before year end. The resulting tax liabilities are expected to be     
reduced by earlier tax losses.                                                  
It is expected that a more detailed trading statement for the year to December  
2009 will be issued later in the reporting period.                              
The forecast financial information on which this trading statement is based has 
not been reviewed and reported on by the Group`s external auditors.             
SPECIAL DIVIDEND                                                                
The Group is pleased to announce a further special dividend of 300 cents per    
share, which shall be paid from cash accumulated from operating activities. The 
salient dates for the payment of the special dividend will be as follows:       
Last date to trade to qualify for the      Friday 28 August 2009                
Shares to commence trading ex-dividend on  Monday 31 August 2009                
the JSE Limited                                                                 
Record date                                Friday 4 September 2009              
Payment date                               Monday 7 September 2009              
The dividend is declared in the currency of the Republic of South Africa. Share 
certificates may not be dematerialised or rematerialised between Monday, 31     
August 2009 and Friday, 4 September 2009, both days inclusive.                  
The Group anticipates paying further special dividends when value is realised   
from the Group`s surplus Australian assets, and thereafter to resume payment of 
ordinary dividends from future earnings.                                        
CHANGE OF NAME                                                                  
Shareholders approved the change of the Group`s name from Delta Electrical      
Industries Limited to Delta EMD Limited. Trade under the name Delta EMD Limited,
share code: DTA and ISIN number: ZAE000132817, commenced on 18 May 2009.        
CHANGE IN JSE LISTING SECTOR                                                    
Application was made to the JSE Limited requesting that the Group be included in
the "Chemicals" listing sector instead of the "Electronics and Electrical"      
listing sector. The request was approved and the change will be effected on 21  
September 2009.                                                                 
T G Atkinson (Chairman)                                                         
P Baijnath (Chief Executive Officer)                                            
7 August 2009                                                                   
Registered Office        Transfer Secretaries                                   
15 Heyneke Street        Computershare Investor                                 
Industrial Site          Services (Proprietary) Limited                         
Nelspruit                70 Marshall Street, Johannesburg 2001                  
1200                     Marshalltown 2107                                      
Independent non executive:                                                      
LB Bird, AC Hicks, BR Wright                                                    
Non executive:                                                                  
TG Atkinson* (Chairman)                                                         
P Baijnath (Chief Executive Officer), CJ Jacobs                                 
RAND MERCHANT BANK (A division of FirstRand Bank Limited)                       
Date: 07/08/2009 11:00:01 Supplied by www.sharenet.co.za                     
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