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

Release Date: 14/02/2011 15:12:02      Code(s): DTA
DTA - Delta EMD Limited - Audited group results for the year ended 27 December  
2010                                                                            
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 2010                       
-  Revenue of R379 million (2009: R478 million)                                 
-  Operating profit of R168 million (2009: R218 million), including R133 million
of profit recognised on the sale of property in Australia                       
-  Cash generated by operations of R98 million (2009: R247 million)             
-  Total dividends of 380 cents per share (2009: 500 cents per share)           
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME                               
                                           Audited year   Audited year          
to December    to December           
                                           2010           2009                  
                                     Note  R`000          R`000                 
Revenue                                     378 661        478 122              
Profit before interest,                     56 296         154 854              
depreciation, closure costs,                                                    
impairment and taxation                                                         
Depreciation                                (20 909)       (20 915)             
Profit on sale of land                      80 520         -                    
Closure costs reversal                      52 049         81 748               
Impairment (raised)/reversal                (13)           7 155                
Net foreign exchange gains/(losses)         249            (4 783)              
Operating profit                            168 192        218 059              
Interest received                           9 918          17 123               
Profit before taxation                      178 110        235 182              
Taxation                                    (56 739)       (67 493)             
Normal taxation                           (16 524)       (42 910)              
 Secondary taxation on companies           (18 709)       (24 583)              
 Capital gains taxation on disposal        (21 506)       -                     
of land                                                                         
Profit for the year                         121 371        167 689              
Other comprehensive income                                                      
 (Decrease)/increase in foreign            (1 228)        1 512                 
currency translation reserve                                                    
Profit on disposal of treasury           181            3 949                 
shares                                                                          
Total comprehensive income for the          120 324        173 150              
year                                                                            
Attributable to equity holders of                                               
parent company                                                                  
Profit for the year                         121 371        167 689              
Total comprehensive income for the          120 324        173 150              
year                                                                            
Headline earnings attributable to     1     69 046         158 839              
ordinary shareholders                                                           
Number of shares in issue (`000)            49 166         49 166               
Weighted number of shares in issue          49 150         49 083               
(`000)                                                                          
Dilutive number of shares in issue          49 166         49 105               
(`000)                                                                          
Attributable earnings per share                                                 
(cents)                                                                         
-  basic                                    246,9          341,6                
-  diluted                                  246,9          341,5                
Dividend per share (cents)                  80,0           -                    
Special dividend per share (cents)          300,0          500,0                
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION                                 
                                     Audited year at   Audited year at          
December          December                 
                                     2010              2009                     
                                     R`000             R`000                    
ASSETS                                                                          
Property, plant and equipment         273 438           282 412                 
Non-current assets held for sale      9 979             15 957                  
Non-current asset                     5 971             1 051                   
Current assets                                                                  
-  Inventories                        102 251           124 355                 
-  Trade and other receivables        97 522            98 309                  
-  Taxation overpaid                  4 097             -                       
Bank balances and cash                112 964           216 846                 
Total assets                          606 222           738 930                 
EQUITY AND LIABILITIES                                                          
Total shareholders` funds             456 486           522 964                 
Deferred taxation liabilities         52 263            57 085                  
Non-current liabilities               7 981             7 229                   
Current liabilities                                                             
-  Trade and other payables           62 790            49 572                  
-  Short term provisions              4 882             56 407                  
-  Taxation payable                   21 820            45 673                  
Total equity and liabilities          606 222           738 930                 
Net asset value per share (cents)     928               1 064                   
CONDENSED GROUP STATEMENT OF CASH FLOWS                                         
Audited year   Audited year          
                                           to December    to December           
                                           2010           2009                  
                                           R`000          R`000                 
Cash generated by trading                   61 798         140 803              
Decrease in working capital                 36 066         105 760              
Cash generated by operations                97 864         246 563              
Net interest received                       9 918          17 123               
Taxation paid - normal                      (71 112)       (774)                
Taxation paid - secondary tax on companies  (18 709)       (24 583)             
Cash inflow from operating activities       17 961         238 329              
Replacement capital expenditure             (12 405)       (13 056)             
Increase in non-current asset               (4 920)        -                    
Proceeds on disposal of land, property,     80 634         2 313                
plant and equipment                                                             
Net cash inflow before financing            81 270         227 586              
activities                                                                      
Dividend paid - normal                      (39 313)       -                    
- special                                   (147 489)      (245 586)            
Proceeds on disposal of treasury shares     312            1 509                
Net (decrease) in cash and cash             (105 220)      (16 491)             
equivalents                                                                     
Cash and cash equivalents at beginning of   216 846        230 077              
year                                                                            
Currency translation of cash in foreign     1 338          3 260                
subsidiary                                                                      
Cash and cash equivalents at end of year    112 964        216 846              
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        4 856    56 254      (1 135)   535 425    595 400          
December 2008                                                                   
Total                -        1 512       954       170 684    173 150          
comprehensive                                                                   
income for the                                                                  
year                                                                            
Realisation of       -        (32 208)    -         32 208     -                
foreign currency                                                                
translation                                                                     
reserve                                                                         
Dividend paid -      -        -           -         (245 586)  (245 586)        
special                                                                         
Balance at 27        4 856    25 558      (181)     492 731    522 964          
December 2009                                                                   
Total                -        (1 228)     181       121 371    120 324          
comprehensive                                                                   
income for the                                                                  
year                                                                            
Realisation of       -        (27 630)    -         27 630     -                
foreign currency                                                                
translation                                                                     
reserve                                                                         
Dividend paid -      -        -           -         (39 313)   (39 313)         
normal                                                                          
Dividend paid -      -        -           -         (147 489)  (147 489)        
special                                                                         
Balance at 28        4 856    (3 300)     -         454 930    456 486          
December 2010                                                                   
NOTES                                                                           
                                           Audited year  Audited year           
                                           to December   to December            
2010          2009                   
                                           R`000         R`000                  
1. Reconciliation between attributable                                          
earnings and headline earnings                                                  
Attributable earnings after taxation        121 371       167 689               
Impairment raised/(overprovided)            13            (7 155)               
Profit on disposal of fixed assets          (73 844)      (1 695)               
Taxation effect                             21 506        -                     
Headline earnings attributable to ordinary  69 046        158 839               
shareholders                                                                    
Attributable headline earnings per share                                        
-  basic                                    140,5         323,6                 
-  diluted                                  140,4         323,5                 
2. Basis of presentation                                                        
The Group is domiciled in South Africa. The audited condensed consolidated      
financial results at and for the year ended 27 December 2010 comprise the       
company and its subsidiaries (the `Group`).                                     
The Group`s principal accounting policies have been applied consistently over   
the current and prior financial years.                                          
The Group`s condensed consolidated financial results have been prepared in      
accordance with the recognition and measurement criteria of International       
Financial Reporting Standards (IFRS), interpretations issued by the             
International Financial Reporting Interpretations Committee (IFRIC),and the     
presentation and disclosure requirements of International Accounting Standard   
(IAS) 34 "Interim Financial Reporting", the Companies Act of South Africa, as   
well as the AC 500 standards as issued by the Accounting Practices Board or its 
successor.                                                                      
The auditors, Deloitte & Touche, have issued an unmodified opinion on the       
Group`s financial statements for the year ended 27 December 2010. The audit was 
conducted in accordance with International Standards on Auditing. This abridged 
report has been derived from the group financial statements and consistent in   
all material respects, with the group financial statements. A copy of their     
audit report is available for inspection at the Company`s` registered office.   
Any reference to future financial performance included in this announcement, has
not been reviewed or reported on by the Company`s auditors.                     
2.1 New accounting policies adopted                                             
The Group has adopted IAS 1 Presentation of Financial Statements (Revised) (IAS 
1). This standard requires amongst other things the preparation of a "Statement 
of Comprehensive Income" which replaces the income statement. It had no impact  
on the recognition and measurement of assets and liabilities and consequently   
had no impact on profit or loss or equity for the period.                       
                                                    2010       2009             
                                                    R`000      R`000            
3. Commitments                                                                  
Capital commitments - authorised but not contracted  1 959      6 442           
Capital commitments - contracted                     11 737     5 194           
                                                    13 696     11 636           
Operating lease commitment                           4 720      1 207           
COMMENTARY                                                                      
Delta EMD`s full year financial performance was enhanced by the sale of assets  
formerly employed by the Group`s Australian operation. The Group`s underlying   
financial performance, whilst satisfactory, compared unfavourably to the prior  
year, with the second half proving more difficult than the first half. The year 
was characterised by weaker global demand for EMD; an erosion of the Group`s    
price competitiveness due to the strength of the Rand, and limited sales volumes
as the major battery producers sourced most of their EMD requirements           
domestically.                                                                   
GROUP RESULTS                                                                   
The Group`s operating profit for the year totalled R168 million (2009: R218     
million), and included R133 million of profit recognised upon the sale of the   
Group`s Australian residue disposal site.                                       
Net interest received of R10 million was lower than the R17 million received in 
2009, due to lower interest rates and reduced cash balances.                    
The Group`s profit before taxation totalled R178 million (2009: R235 million).  
Normal taxation decreased to R17 million (2009: R43 million) due to lower       
operating profit, and the dividends paid by the Group during the year required  
the payment of R19 million of secondary tax on companies (2009: R25 million).   
Recent changes in Australian tax law might prevent the utilisation of prior     
year`s assessed losses to offset the capital gains profit realised on the sale  
of the Kooragang Island residue site. Consequently the Group`s provision for    
taxes includes R22 million related to that sale.                                
Attributable earnings after taxation totalled R121 million (2009: R168 million).
The Group`s earnings per share for the year were 246, 9 cents (2009: 341, 6     
cents), and headline earnings per share, which excluded the Australian capital  
gains profit, were 140, 5 cents (2009: 323, 6 cents).                           
During the year the Group paid an ordinary dividend of 80 cents per share (2009:
nil) as well as a special dividend of 300 cents per share (2009: 500 cents).    
The Group`s net cash inflow before dividend payments totalled R81 million for   
the year (2009: R228 million). Working capital reduced by R36 million during the
year, compared with a reduction of R106 million during 2009. Capital            
expenditures totalled R12 million (2009: R13 million), and cash on hand reduced 
by R104 million to R113 million after payment of R205 million of dividends and  
secondary tax on companies.                                                     
PERFORMANCE OF DELTA EMD BUSINESS                                               
Global demand for EMD did not increase during the year as earlier anticipated.  
Market prices remained under pressure with major battery producers sourcing most
of their EMD requirements from domestic EMD suppliers, whose capacities were    
adequate to meet current demand, and who were not subject to foreign exchange   
exposure or anti-dumping duties. The strength of the Rand continued to erode the
Group`s price competitiveness and consequently the Group`s higher margin EMD    
sales volumes and market share reduced during the year. The Group`s sales       
volumes reduced 16% year on year, and sales revenue reduced 21%.                
Operating profit excluding the profit recognised on the sale of the Kooragang   
Island residue disposal site totalled R38 million (2009: R141 million), mainly  
due to lower sales volumes and lower average selling prices, as well as the     
resulting poor recovery of manufacturing overheads. Sales mix and average       
selling price were adversely affected by a reduction in high grade EMD sales    
volumes compared to 2009. Zinc carbon grade EMD sales, although at similar      
levels to 2009, produced lower revenues and lower contribution margin per unit  
due to the strong Rand and the adverse translation of those US dollar           
denominated sales.                                                              
The Group`s contribution margin percentage reduced to 33% (2009: 44%) as result 
of lower average sales revenue per unit as well as increases in manufacturing   
costs which could not be passed into the market. Energy and other direct costs  
increased, and reduced production volumes adversely affected manufacturing      
indirect costs per unit.                                                        
Overhead costs reduced to R31 million (2009: R33 million), resulting from the   
completion of group management restructuring and relocation of head office.     
Operating cash flows remained favourable with effective management of working   
capital and capital expenditures.                                               
Efforts to improve the plant`s production capability and quality continued      
during the year and the development of a new premium grade material continues   
with trial material tested at a leading battery manufacturer.                   
DISPOSAL OF THE GROUP`S AUSTRALIAN PLANT SITE AND RESIDUE DISPOSAL SITE         
During the year the Group`s Kooragang Island residue disposal site, located in  
Newcastle, Australia, was sold, benefitting the Group`s financial results as    
detailed above.                                                                 
Also during the year, production equipment and most structures on the Newcastle 
plant site were demolished and removed, and the Newcastle site`s operating      
license was cancelled.  An environmental audit clearance was also received      
confirming that no remediation is required.                                     
The Newcastle plant site is the remaining asset to be sold as part of the final 
closure of the Group`s Australian operation. Market demand and prices for       
industrial property in New South Wales remain low. The carrying value of the    
plant site at year end in the Group Statement of Financial Position was R9,9    
million.                                                                        
PROSPECTS                                                                       
Current market information suggests that total demand for alkaline grade EMD    
will not increase substantially during 2011.  Price competition is likely to    
remain vigorous, and the Group`s Rand denominated selling prices will remain    
unattractive should the Rand remain strong. Consequently the Group`s share of   
the global EMD market, particularly the higher margin EMD market segment, is    
likely to reduce, and the Group`s sales volume and sales mix are likely to be   
less favourable. Efforts to source additional sales volumes, to reduce operating
costs and to manage working capital closely continue.                           
DIVIDEND                                                                        
The board has determined not to declare a final dividend.                       
COMPANY SECRETARY                                                               
As announced on 13 December 2010, Statucor (Pty) Ltd resigned as company        
secretary and Mr. Johan Seymore was appointed as company secretary with effect  
from 10 December 2010.                                                          
TG Atkinson (Chairman)            P Baijnath (Chief Executive Officer)          
14 February 2011                                                                
Johannesburg                                                                    
Registered Office                 Transfer Secretaries                          
15 Heyneke Street                 Computershare Investor                        
Industrial Site                   Services (Proprietary) Limited                
Nelspruit 1200                    70 Marshall Street, Johannesburg 2001,        
Marshalltown 2107                              
Directors:                                                                      
Independent non executive:                                                      
LB Bird                                                                         
AC Hicks                                                                        
BR Wright                                                                       
Non executive:                                                                  
TG Atkinson* (Chairman)                                                         
Executive:                                                                      
P Baijnath (Chief Executive Officer)                                            
JS Seymore (CA)SA (Finance Director)                                            
*USA                                                                            
Sponsor:                                                                        
Rand Merchant Bank (A division of FirstRand Bank Limited)                       
Date: 14/02/2011 15:12:01 Supplied by www.sharenet.co.za                     
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