Go Back Email this Link to a friend


Dta - Delta Emd Limited - Audited Group Results For The Year Ended 27 December

Release Date: 19/02/2010 10:00:02      Code(s): DTA
DTA - Delta EMD Limited - Audited Group Results For The Year Ended 27 December  
                   2009 And Declaration Of A Cash Dividend                      
DELTA EMD LIMITED                                                               
(Formerly Delta Electrical Industries Limited)                                  
Registration number: 1919/006020/06                                             
Share code: DTA       ISIN: ZAE000132817                                        
("Delta EMD" or "the Group")                                                    
AUDITED GROUP RESULTS FOR THE YEAR ENDED 27 DECEMBER 2009 AND DECLARATION OF A  
CASH DIVIDEND                                                                   
CONDENSED FINANCIAL STATEMENTS                                                  
CONDENSED GROUP INCOME STATEMENT                                                
Audited year Audited                   
                                         to           year to                   
                                         December     December                  
                                         2009         2008                      
Note   R`000        R`000                     
Revenue                                   478,122      648,450                  
Profit before closure costs,               154,854      145,897                 
impairment, interest, taxation                                                  
and depreciation                                                                
Depreciation                               (20,915)     (12,776)                
Closure costs reversal /                   81,748       (28,934)                
(charged)                                                                       
Impairment reversal / (charged)            7,155        (3,980)                 
Net foreign exchange (losses) /            (4,783)      3,777                   
gains                                                                           
Operating profit                           218,059      103,984                 
Net interest received                      17,123       22,198                  
Profit before taxation                     235,182      126,182                 
Taxation                                   (67,493)     (36,750)                
 Normal taxation                          (42,910)     (34,608)                 
Secondary taxation on companies          (24,583)     (5,165)                  
 Capital gains taxation                   -            3,023                    
overprovided on disposal of the                                                 
industrial services division                                                    
Profit for the year                        167,689      89,432                  
Attributable to:                                                                
Equity holders of parent company           167,689      89,432                  
Headline earnings attributable to  1       158,839      90,389                  
ordinary shareholders                                                           
Number of shares in issue (`000)           49,166       49,166                  
Weighted number of shares in               49,083       48,990                  
issue (`000)                                                                    
Dilutive number of shares in               49,105       49,002                  
issue (`000)                                                                    
Attributable earnings per share                                                 
(cents)                                                                         
- basic                                    341.6        182.6                   
- diluted                                  341.5        182.5                   
Capital reduction per share                -            229.0                   
(cents)                                                                         
Special dividend per share                 500.0        100.0                   
(cents)                                                                         
CONDENSED GROUP BALANCE SHEET                                                   
                                Audited year at   Audited year at               
December          December                      
                                2009              2008                          
                                R`000             R`000                         
ASSETS                                                                          
Property, plant and equipment     282,412           293,664                     
Non current assets held for sale  15,957            10,368                      
Non current asset                 1,051             1,051                       
Bank balances and cash            216,846           230,077                     
Other current assets              222,664           337,963                     
Total assets                      738,930           873,123                     
EQUITY AND LIABILITIES                                                          
Total shareholders funds          522,964           595,400                     
Deferred taxation liabilities     57,085            59,865                      
Other non current liabilities     7,229             49,307                      
Current liabilities                                                             
- Trade and other                 95,245            69,031                      
- Short term provisions           56,407            99,520                      
Total equity and liabilities      738,930           873,123                     
Net asset value per share         1,064             1,211                       
(cents)                                                                         
GROUP STATEMENT OF CHANGES IN EQUITY                                            
                                      Share        Foreign                      
                                      capital      currency                     
                                      and          translation      Treasury    
premium      reserve          shares      
                                      R`000        R`000            R`000       
Balance at 27 December 2007             117,445      106,378          (1,922)   
Increase in foreign currency            -            16,259           -         
translation reserve                                                             
Realisation of foreign currency         -            (66,383)         -         
translation reserve                                                             
Proceeds on disposal of treasury        -            -                787       
shares                                                                          
Net income recognised directly in      -             (50,124)         787       
equity                                                                          
Profit for the year                     -            -                -         
Total recognised income and expense     -            (50,124)         787       
Capital reduction                      (112,589)     -                -         
Dividend paid - special                 -            -                -         
Balance at 27 December 2008             4,856        56,254           (1,135)   
Increase in foreign currency            -            1,512            -         
translation reserve                                                             
Realisation of foreign currency         -           (32,208)          -         
translation reserve                                                             
Profit on disposal of treasury shares   -            -                954       
Net income recognised directly in       -            (30,696)         954       
equity                                                                          
Profit for the year                     -            -                -         
Total recognised income and expense     -            (30,696)         954       
Dividend paid - special                 -            -                -         
Balance at 27 December 2009             4,856        25,558           (181)     
                                                                                
Accumu-                         
                                                lated                           
                                                profit           Total          
                                                R`000            R`000          
Balance at 27 December 2007                       428,600          650,501      
Increase in foreign currency translation          -                16,259       
reserve                                                                         
Realisation of foreign currency translation       66,383           -            
reserve                                                                         
Proceeds on disposal of treasury shares           -                787          
Net income recognised directly in equity          66,383           667,547      
Profit for the year                               89,432           89,432       
Total recognised income and expense               155,815          756,979      
Capital reduction                                 -                (112,589)    
Dividend paid - special                           (48,990)         (48,990)     
Balance at 27 December 2008                       535,425          595,400      
Increase in foreign currency translation          -                1,512        
reserve                                                                         
Realisation of foreign currency translation       32 208           -            
reserve                                                                         
Profit on disposal of treasury shares             2,995            3,949        
Net income recognised directly in equity          35,203           600,861      
Profit for the year                               167,689          167,689      
Total recognised income and expense               202,892          768,550      
Dividend paid - special                           (245,586)        (245,586)    
Balance at 27 December 2009                       492,731          522,964      
CONDENSED GROUP CASH FLOW STATEMENT                                             
                                        Audited year Audited year               
to           to                         
                                        December     December                   
                                        2009         2008                       
                                        R`000        R`000                      
Cash generated by trading                 140,803      120,902                  
Decrease in working capital               105,760      29,514                   
Cash generated by operations              246,563      150,416                  
Net interest received                     17,123       22,198                   
Taxation paid - Normal                   (774)        (2,187)                   
Taxation paid - Secondary taxation on    (24,583)     (5,165)                   
companies                                                                       
Taxation refund - Capital gains          -            3,023                     
taxation                                                                        
Cash inflow from operating activities     238,329      168,285                  
Replacement capital expenditure           (13,056)     (5,422)                  
Proceeds on disposal of land, property,   2,313        8,430                    
plant and equipment                                                             
Cash (outflow)/inflow from financing     (10,743)      3,008                    
activities                                                                      
Net cash inflow before financing          227,586      171,293                  
activities                                                                      
Capital reduction                         -            (112,589)                
Dividend paid - special                   (245,586)    (48,990)                 
Proceeds on disposal of treasury shares   1,509        787                      
Cash outflow from financing activities   (244,077)     (160 792)                
Net (decrease)/increase in cash and       (16,491)     10,501                   
cash equivalents                                                                
Cash and cash equivalents at beginning    230,077      218,342                  
of year                                                                         
Currency translation of cash in foreign   3,260        1,234                    
subsidiary                                                                      
Cash and cash equivalents at end of       216,846      230,077                  
year                                                                            
NOTES                                                                           
1. Reconciliation between attributable earnings and headline earnings           
                                       Audited year   Audited year              
to December    to December               
                                       2009           2008                      
                                       R`000          R`000                     
Attributable earnings after taxation    167,689        89,432                   
Impairment (overprovided) / charged     (7,155)        3,980                    
Over provision prior year - Capital     -              (3,023)                  
gains taxation                                                                  
Profit on disposal of fixed assets      (1,695)        -                        
Taxation effect                        -               -                        
Headline earnings attributable to       158,839        90,389                   
ordinary shareholders                                                           
Attributable headline earnings per                                              
share                                                                           
 - basic                               323.6          184.5                     
 - diluted                             323.5          184.5                     
2. Basis of presentation                                                        
The audited results have been prepared in accordance with the                   
Group`s accounting policies which are consistent with those of the              
prior year and comply with International Financial Reporting                    
Standards, the Listing Requirements of the JSE Limited and the                  
Companies Act of South Africa. These condensed financial                        
statements have been extracted from the Group`s annual financial                
statements and have been prepared in accordance with IAS 34 -                   
Interim financial reporting.                                                    
Audited year   Audited year              
                                       to December    to December               
                                       2009           2008                      
                                       R`000          R`000                     
3. Commitments                                                                  
Capital commitments - Authorised but    6,442          11,058                   
not contracted                                                                  
Capital commitments - contracted        5,194          1,456                    
11,636         12,514                    
Operating lease commitment              1,207          1,262                    
Other                                   -              980                      
4. CONTINGENT LIABILITIES                                                       
4.1 South African Revenue Services     27 191         -                         
4.2 Guarantees                         -              980                       
Total contingent liabilities           27 191         980                       
4.1 Following the Group`s 2005 disposal of its industrial services businesses, a
Group subsidiary company discontinued business and filed final tax returns.  A  
tax assessment received by the subsidiary company during 2007 resulted in a tax 
refund as reported in the Group`s 2007 accounts.  Thereafter the subsidiary     
company satisfied its outstanding liabilities and distributed its assets.  A    
revised assessment of R27,2 million was recently issued by SARS for additional  
capital gains taxation in respect of the 2005 disposal.  The Group has objected 
to the revised assessment, and no provision has been raised for this revised    
assessment in the 2009 year end results. Given the uncertainty around the final 
outcome of this matter, the amount has been disclosed as a contingent liability.
5. GEOGRAPHICAL SEGMENTATION INFORMATION                                        
            United      Australia   Europe and                                  
            States                                                              
of America  and other   Africa      Asia      Total                 
            R`000       R`000       R`000       R`000     R`000                 
Year ended                                                                      
December                                                                        
2009                                                                            
Revenue (by  406 270     -           21 108       50 744   478 122              
destination)                                                                    
Segmental     -           93 381     645 549       -       738 930              
assets                                                                          
Capital      -           -               13 056  -         13 056               
expenditure                                                                     
Year ended                                                                      
December                                                                        
2008                                                                            
Revenue (by     257 205  -           16 901      374 344   648 450              
destination)                                                                    
Segmental      -         168 070      705 048        -     873 118              
assets                                                                          
Capital          -            -        5 422        -        5 422              
expenditure                                                                     
COMMENT ON RESULTS                                                              
Overview                                                                        
Delta EMD`s underlying performance remained strong notwithstanding the global   
economic crisis and reduced global demand for electrolytic manganese dioxide.   
The Group`s strengthened management team successfully managed the EMD business  
in more difficult market conditions, initiated significant operational          
improvements and charted a strategic course for further improvement and         
development of the business.                                                    
2009 Results                                                                    
Revenue at the Group`s South African plant recorded an 18% improvement over     
2008, with improved selling prices more than offsetting marginally lower sales  
volumes. With sales from the Group`s former Australian operation concluding     
during 2008, the Group`s total revenue reduced from R648.5 million to R478.1    
million, a 26% reduction.                                                       
2009 operating profit benefited substantially from the reversal of R81.7 million
of rehabilitation provisions previously established for the Group`s Australian  
plant and disposal sites (2008: R28.9 million charge), as well as from the      
reversal of impairment provisions of R7.2 million related to those sites (2008: 
R4.0 million charge). Including those provision adjustments, 2009 operating     
profit improved to R218.1 million (2008: R104.0 million). Excluding those       
provision adjustments, 2009 operating profit totaled R129.2 million, down from  
2008 operating profit of R136.9 million, which benefited from the sale of       
remaining Australian inventory.                                                 
Net interest received of R17.1 million ended lower than the R22.2 million       
received in 2008, because of lower interest rates and reduced cash balances.    
Profit before taxation of R235.2 million was recorded for the year compared with
R126.2 million in 2008. Excluding the provision adjustments noted above, profit 
before taxation for the year totaled R146.3 million (2008: R159.1 million).     
The 2009 taxation charge of R67.5 million (2008: R36.8 million) included        
Secondary Taxation on Companies of R24.6 million (2008: R5.2 million) relating  
to the R245.6 million of special dividends paid during the year.                
Profit after taxation for the year totaled R167.7 million (2008: R89.4 million),
and earnings per share improved to 341.6 cents (2008: 182.6 cents), whilst      
headline earnings per share improved to 323.6 cents (2009: 184.5 cents).        
2009 cash inflow from operating activities improved to R238.3 million (2008:    
R168.3 million). The collection of Australian trade debtors and of a substantial
account that was outstanding at year end 2008, changes in terms of sale, and    
planned reductions in stock levels contributed to the favorable cash flow for   
the year.                                                                       
Cash balances at year end totaled R216.8 million, after having paid R245.6      
million of special dividends and R24.6 million of Secondary Taxation on         
Companies.                                                                      
Following the Group`s 2005 disposal of its industrial services businesses, a    
Group subsidiary company discontinued business and filed final tax returns. A   
tax assessment received by the subsidiary company during 2007 resulted in a tax 
refund as reported in the Group`s 2007 accounts. Thereafter the subsidiary      
company satisfied its outstanding liabilities and distributed its assets. A     
revised assessment of R27.2 million was recently issued by SARS for additional  
capital gains taxation in respect of the 2005 disposal. An objection to the     
revised assessment has been filed, and no provision has been raised for this    
revised assessment in the 2009 year end results.                                
Performance and Prospects for the EMD Business                                  
2009 was a very good year for the Delta EMD business: a substantially           
strengthened senior management team relocated to the Delta EMD facility in      
Nelspruit, significant operational improvements were initiated, overhead costs  
were reduced, and financial performance remained strong notwithstanding reduced 
volumes sold.                                                                   
Global demand for electrolytic manganese dioxide reduced during the year as     
consumer demand for batteries weakened with the global recession. Sales volumes 
did not meet expectations and production at the Group`s South African plant was 
limited substantially to reduce stocks to desired levels. The global market     
nonetheless remained well balanced and selling prices afforded the margins      
necessary to compensate for the underrecovery of overheads and to provide an    
acceptable return.                                                              
The majority of the Group`s sales during the year were made in Rand denominated 
selling prices, effectively protecting the Group`s margins from foreign exchange
movements. This marks an important change from historic practice and assures    
more certain financial performance. The strengthening of the Rand during the    
year did, however, reduce the competitiveness of the Group`s selling prices.    
The Group`s product range and stocks were rationalised during the year to reduce
stock levels and to assure more responsive delivery to key customers. Our terms 
of sale also were changed to provide that ownership of goods transfers at the   
port of loading, also reducing the Group`s stock levels. These efforts together 
with effective collection of outstanding debtors provided reduced working       
capital levels and very good cash flow.                                         
The operational improvements underway at the Nelspruit facility will provide    
further efficiencies and cost savings as well, perhaps more importantly, the    
opportunity to participate in market segments requiring higher performance EMD. 
Production trials of EMD suitable for higher drain applications were successful 
during the year, and a substantial volume of lithium EMD was produced and sold  
for use in specialised batteries. These developments highlight the opportunities
for development of the EMD business.                                            
The Group expects the global EMD market to strengthen somewhat during the year  
as global economic conditions improve. Nonetheless, we do not expect to sell    
sufficient volumes during 2010 to fully utilise our plant, and consequently will
continue to suffer from poor overhead recoveries. Pricing pressure is likely to 
continue whilst market demand is relatively soft, and our price competitiveness 
will be partly shaped by foreign exchange rates and the Rand, which remains     
relatively strong. Nonetheless we remain confident in our competitive advantages
- favourable ore supply arrangements and relatively low conversion cost - and   
expect improved market demand and participation in new market segments to       
provide attractive prospects over the medium term.                              
Disposal of the Group`s Australian Plant and Residue Disposal Sites             
An environmental assessment was concluded successfully during the year at the   
Group`s former Australian plant site, and a site audit statement confirming that
the site is suitable for commercial and industrial uses without further         
remediation or rehabilitation was issued. This statement will facilitate the    
sale of the site, and a demolition contractor has been contracted to demolish   
the structures remaining on the site. Earlier efforts to sell the site with     
those structures proved unsuccessful, and the site will now be marketed as a    
vacant site.                                                                    
An amendment to the environmental license governing the rehabilitation of the   
Kooragang Island residue disposal site was agreed with regulatory authorities   
during the year and allows a more cost effective rehabilitation of the site.    
Negotiations toward the sale of the Kooragang Island site are underway.         
The net asset value of the Australian assets reflected on the Group`s balance   
sheet at year end totalled R34.7 million, and included creditors of R6.9        
million, Australian cash balances totalling R77.0 million, and provisions for   
the closure and rehabilitation of the Group`s Australian sites totalling R51.4  
million. During the year, R14.7 million of costs were incurred managing the     
site, net of gains realised on the sale of sundry assets. At year end 5         
employees and contractors were employed at the site overseeing security and the 
disposal of remaining assets.                                                   
Planned Disposal of the Delta EMD Business                                      
Shareholders were advised by a cautionary announcement dated 18 January 2010    
that the Group had commenced a process intended to realise shareholder value    
through a disposal of the Delta EMD business, the Group`s last remaining        
operation. The board decided upon this course of action having concluded the    
following. Firstly, that the Group`s substantially improved financial           
performance had not provided appropriate additional shareholder value, most     
likely because the Group remains a relatively small listed company with         
essentially no broker or analyst coverage, and with poor liquidity and          
tradability of its shares. And secondly, that the Delta EMD business does not   
benefit from ownership through a publicly listed group, nor does it enjoy the   
benefits of private ownership or of being part of a larger group with related   
businesses.                                                                     
The disposal process is now well underway with considerable interest indicated  
in the Delta EMD business. The board does not expect the disposal process to    
conclude until the second half of the year, and will advise shareholders        
appropriately during the process.                                               
Directorate                                                                     
As announced on 4 December 2009, Mr. Johan Seymore joined the board as an       
executive director with effect from 3 December 2009. Johan also serves as       
financial director of the Delta EMD business.                                   
At the board meeting on 18 February 2010, Mr. Seymore was appointed Financial   
Director of the Group, succeeding Chris Jacobs, who will remain on the board as 
a non-executive director. We thank Chris for his 24 years of service to the     
Group and for agreeing to continue supporting the Group, particularly in        
connection with the disposal process, as a consultant.                          
Dividend                                                                        
The Group is pleased to announce the declaration of a final dividend of 80 cents
per share, which represents an appropriate payout from the Group`s underlying   
2009 earnings. It shall be paid from existing cash balances. The salient dates  
for the payment of the dividend will be as follows:                             
Last date to trade to qualify for the         Friday 5 March 2010               
dividend                                                                        
Shares to commence trading ex-dividend on     Monday 8 March 2010               
the JSE Limited                                                                 
Record date                                   Friday 12 March 2010              
Payment date                                  Monday 15 March 2010              
The dividend is declared in the currency of the Republic of South Africa. Share 
certificates may not be dematerialised or rematerialised between Monday 8 March 
2010 and Friday 12 March 2010, both days inclusive.                             
The board also anticipates payment of special dividends when the 2005 tax matter
noted above is favourably resolved and when value is realised through the sale  
of the Group`s Australian EMD production and residue disposal sites.            
REPORT OF THE INDEPENDENT AUDITORS                                              
The auditors Deloitte & Touche have issued their unmodified audit opinion on the
Group`s condensed consolidated financial statements for the year ended 27       
December 2009. A copy of their audit report is available for inspection at the  
company`s registered office.                                                    
T.G. Atkinson (Chairman)                                                        
19 February 2010                                                                
Registered Office             Transfer Secretaries                              
15 Heyneke Street             Computershare Investor                            
Industrial Site               Services (Proprietary) Limited                    
Nelspruit                     70 Marshall Street, Johannesburg                  
1200                          Marshalltown 2107                                 
Directors: Independent non-executive:                                           
LB Bird, AC Hicks, BR Wright                                                    
Non-executive (non-independent):                                                
TG Atkinson* (Chairman)                                                         
Executive: P Baijnath (Chief Executive Officer), CJ Jacobs (Chief Financial     
Officer), J S Seymore           *USA                                            
Date: 19/02/2010 10:00:01 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                             .                  
The SENS service is an information dissemination service administered by the    
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or            
implicitly, represent, warrant or in any way guarantee the truth, accuracy or   
completeness of the information published on SENS. The JSE, their officers,     
employees and agents accept no liability for (or in respect of) any direct,     
indirect, incidental or consequential loss or damage of any kind or nature,     
howsoever arising, from the use of SENS or the use of, or reliance on,          
information disseminated through SENS.                                          



                                        
Email this JSE Sens Item to a Friend.

Send e-mail to
© 2017 SHARENET (PTY) Ltd, Cape Town, South Africa
Home     Terms & conditions    Privacy Policy
    Security Notice    Contact Details
Market Statistics are calculated by Sharenet and are therefore not the official JSE Market Statistics. The calculation/derivation may include underlying JSE data.