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Dta - Delta - Disposal Of The Group`s Australian Residue Disposal Site And

Release Date: 08/06/2010 09:00:02      Code(s): DTA
DTA - Delta - Disposal of the group`s Australian residue disposal site and      
trading statement                                                               
Delta EMD Limited                                                               
(Incorporated in the Republic of South Africa)                                  
Registration number: 1919/006020/06                                             
ISIN: ZAE000132817                                                              
Share Code: DTA                                                                 
("Delta" or "the Company" or "the Group")                                       
DISPOSAL OF THE GROUP`S AUSTRALIAN RESIDUE DISPOSAL SITE AND TRADING STATEMENT  
1.   INTRODUCTION                                                               
In December 2007 Delta shareholders ("shareholders") were informed of the       
closure of the Group`s Australian manufacturing plant, which is owned and       
operated by Delta EMD Australia (Pty) Limited ("Delta EMD Australia"), including
the demolition of plant and equipment and the subsequent sale of the plant site 
as well as the Kooragang Island residue disposal site ("Kooragang residue       
disposal site" or "the site").                                                  
Shareholders are advised that on 4th June 2010 Delta EMD Australia entered into 
a contract for sale with Port Waratah Coal Services Limited ("PWCS") to sell the
Kooragang residue disposal site (the "Disposal") to PWCS for an amount of AU$12 
million plus 10% goods and services tax ("the purchase price").                 
2.   THE DISPOSAL                                                               
2.1  Background                                                                 
The Kooragang residue disposal site is subject to both an Environmental Licence 
and an Environmental Deed.                                                      
The Environmental Licence regulates the use of the site and requires the        
rehabilitation of the site following discontinuation of use.  The Environmental 
Licence was amended during July 2009 allowing for a lower cost rehabilitation of
the site.  At the time of the amendment the Group`s provision for rehabilitation
was reduced from AUS$18.6 million to AUS$7.7 million, and the Group recognized  
AU$10.9 million of operating income in the 2009 financial year.                 
The Environmental Deed was agreed in 1988 by Delta, Delta EMD Australia and the 
former owner of the site ("Former Owner") and sets out the environmental        
responsibilities and liabilities of each party with respect to the site.  On    
completion of the contract for sale, Delta, Delta EMD Australia, Former Owner   
and PWCS, will enter into a new Environmental Deed ("the 2010 Environmental     
Deed").  Under the 2010 Environmental Deed, PWCS will agree to release and      
indemnify Delta EMD Australia and Delta from and against all environmental      
liabilities arising at the site.                                                
PWCS has undertaken environmental due diligence and has reviewed Delta EMD      
Australia`s historic compliance with the Environmental Licence.                 
2.2  Settlement of the purchase price                                           
Ten percent of the purchase price was paid to Delta EMD Australia by way of a   
deposit on 4th June 2010. The balance of the purchase price will be paid to     
Delta EMD Australia on the date of completion, which is expected to be 10 (ten) 
business days after the condition precedent listed in paragraph 2.3 below is    
satisfied.                                                                      
2.3  Condition precedent                                                        
Completion is subject to the execution of the 2010 Environmental Deed by Delta, 
Delta EMD Australia, PWCS and Former Owner.                                     
2.4  Environmental Licence                                                      
Delta EMD Australia is obligated under the contract for sale to procure the     
transfer of the Environmental Licence to PWCS.  Delta EMD Australia and PWCS    
will apply to the regulator to have the Environmental Licence transferred to    
PWCS with effect on the date on which the contract for sale completes and it is 
currently anticipated that this application will be approved by the regulator.  
On and from the completion date, PWCS will assume all responsibilities under the
Environmental License and will release and indemnify Delta and Delta EMD        
Australia from and against any liabilities arising from PWCS`s failure to       
fulfill any such responsibilities. Delta EMD Australia will have residual       
responsibilities under the Environmental Licence until it is transferred.       
2.5  Pro forma financial effects of the Disposal                                
The table below sets out the unaudited pro forma financial effects of the       
Disposal on earnings per share ("EPS"), headline EPS, and net asset value       
("NAV") based on the audited results of the Company for the period ended 27     
December 2009.                                                                  
The unaudited pro forma financial effects are the responsibility of the         
directors and have been prepared for illustrative purposes only to provide      
information about how the Disposal may impact shareholders on the relevant      
reporting date and because of its nature may not give a fair reflection of the  
Company`s financial position, changes in equity, results of operations or       
cashflows after implementation of the Disposal or of the Company`s future       
earnings.                                                                       
                             Before the        After the        Change          
                             Disposal(1)       Disposal (2,3,)  (%)             
                             (cents)           (cents)                          

EPS                           341.6             554.9            62%            
Headline EPS                  323.6             426.0            32%            
NAV per share                 1 064             1 277            20%            
Weighted average number of    49 083 000        49 083 000                      
shares in issue                                                                 
                                                                                
    Notes:                                                                      
1.   Extracted from the published audited results of the Company for the    
         period ended 27 December 2009.                                         
    2.   Adjustments to EPS and headline EPS have been made on the assumption   
         that:                                                                  
2.1. the Disposal was effective on 27 December 2009                    
         2.2. a company tax rate of 30% was applied.                            
    3.   Adjustments to NAV per share have been made on the assumption that:    
         3.1. the Disposal was effective on 27 December 2009 and                
3.2. the proceeds from the Disposal were held as cash on hand.         
4.   FURTHER TRADING STATEMENT                                                  
Shareholders are referred to the Group`s 2009 Annual Report and the Chairman`s  
Review contained therein, dated 19 February 2010, and to the Trading Statement  
released by the Group on SENS on 27 May 2010.                                   
Shareholders are advised that the Group will recognise a AUS$12 million gain on 
the sale of the Kooragang residue disposal site, and is expected to incur       
AUS$3.6 million of tax.  Further, given PWCS`s assumption of responsibility for 
rehabilitation of the site, the Group will reduce the outstanding provision for 
the rehabilitation of the site from AUS$7.7 million to zero, recognizing AUS$7.7
million of operating income, which will not be subject to tax.                  
Consequently, earnings after taxation for the six months ending 27 June 2010 are
forecast to be between R130 million and R141 million (2009 R58 million) and     
headline earnings after taxation for the six months ending 27 June 2010 are     
forecast to be between R76 million and R87 million (2009 R56 million).          
EPS for the six months ending 27 June 2010 are forecast to be between 265 cents 
and 288 cents (2009 118.9 cents) and headline EPS for the six months ending 27  
June 2010 are forecast to be between 154 cents and 177 cents (2009 115.9 cents) 
The forecast financial information on which this Trading Statement is based has 
not been reviewed and reported on by the Group`s external auditors.             
Nelspruit                                                                       
7 June 2010                                                                     
Merchant bank and sponsor                                                       
RAND MERCHANT BANK (A division of FirstRand Bank Limited)                       
Date: 08/06/2010 09:00:02 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                             .                  
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