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Dta - Delta Emd Limited - Unaudited Group Results For The Six Months Ended

Release Date: 04/08/2011 09:00:02      Code(s): DTA
DTA - Delta EMD Limited - Unaudited group results for the six months ended      
27 June 2011                                                                    
DELTA EMD LIMITED                                                               
Registration number: 1919/006020/06                                             
Share code: DTA     ISIN: ZAE000132817                                          
("Delta EMD" or "the Group")                                                    
UNAUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED 27 JUNE 2011                   
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME                               
                                Unaudited                 Audited               
                                Six months                Year to               
                                to June                   December              
2011         2010         2010                  
                           Note R`000        R`000        R`000                 
Revenue                          129 563      198 898      378 661              
Gross profit                     42 141       85 530       153 623              
Investment income                2 112        5 748        9 918                
Distribution expenses            (10 286)     (14 139)     (27 685)             
Administrative expenses          (8 854)      (14 277)     (43 160)             
Closure costs reversal           -            51 975       52 049               
Profit on sale of land           -            80 520       80 520               
Other expenses                   (21 314)     (27 198)     (47 391)             
Impairment                       -            316          (13)                 
reversed/(raised)                                                               
Net foreign exchange             711          1 672        249                  
gains                                                                           
Profit before taxation           4 510        170 147      178 110              
Taxation                         (1 984)      (31 736)     (56 739)             
Normal taxation                  (1 984)      (24 803)     (16 524)             
Secondary taxation on            -            (3 933)      (18 709)             
companies                                                                       
Capital gains taxation           -            (3 000)      (21 506)             
Profit for the period            2 526        138 411      121 371              
Other comprehensive                                                             
income                                                                          
Increase/(decrease) in           690          (1 898)      (1 228)              
foreign currency                                                                
translation reserve                                                             
Proceeds on disposal of          -            -            181                  
treasury shares                                                                 
Total comprehensive              3 216        136 513      120 324              
income for the period                                                           
Attributable to equity                                                          
holders of parent company                                                       
Profit for the period            2 526        138 411      121 371              
Total comprehensive              3 216        136 513      120 324              
income for the period                                                           
Headline earnings           1    2 625        81 780       69 046               
attributable to ordinary                                                        
shareholders                                                                    
Number of shares in issue        49 166       49 166       49 166               
(`000)                                                                          
Weighted number of shares        49 166       49 144       49 150               
in issue (`000)                                                                 
Dilutive number of shares        49 166       49 144       49 166               
in issue (`000)                                                                 
Attributable earnings per                                                       
share (cents)                                                                   
- basic                          5,1          281,6        246,9                
- diluted                        5,1          281,6        246,9                
Dividend per share               -            80,0         80,0                 
(cents)                                                                         
Special dividend per             -            -            300,0                
share (cents)                                                                   
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION                                 
                                 Unaudited                 Audited              
                                 Six months                Year to              
                                 to June                   December             
2011         2010         2010                 
                                 R`000        R`000        R`000                
ASSETS                                                                          
Non-current assets                                                              
Property, plant and equipment     270 642      278 265      273 438             
Other non-current asset           6 470        1 051        5 971               
Current assets                                                                  
- Inventories                     130 221      106 884      102 251             
- Trade and other receivables     84 129       87 694       97 522              
- Taxation overpaid               133          -            4 097               
Bank balances and cash            104 478      213 109      112 964             
Outstanding proceeds from asset   -            80 450       -                   
disposal                                                                        
Non-current assets held for sale  10 487       9 856        9 979               
Total assets                      606 560      777 309      606 222             
EQUITY AND LIABILITIES                                                          
Total shareholders` funds         459 702      620 164      456 486             
Non-current liabilities                                                         
Deferred taxation liabilities     50 288       57 085       52 263              
Other non-current liabilities     8 380        7 605        7 981               
Current liabilities                                                             
- Trade and other payables        62 662       84 434       62 790              
- Short term provisions           2 500        8 021        4 882               
- Taxation payable                23 027       -            21 820              
Total equity and liabilities      606 560      777 309      606 222             
Net asset value per share         935          1 261        928                 
(cents)                                                                         
CONDENSED GROUP STATEMENT OF CASH FLOWS                                         
Unaudited                 Audited              
                                 Six months                Year to              
                                 to June                   December             
                                 2011         2010         2010                 
R`000        R`000        R`000                
Cash generated by trading         11 355       45 055       61 798              
(Increase)/decrease in working    (14 766)     34 158       36 066              
capital                                                                         
Cash (utilised)/generated by      (3 411)      79 213       97 864              
operations                                                                      
Net interest received             2 112        5 748        9 918               
Taxation paid - normal            -            (49 611)     (71 112)            
Taxation paid - secondary tax on  -            -            (18 709)            
companies                                                                       
Cash (outflow)/inflow from        (1 299)      35 350       17 961              
operating activities                                                            
Replacement capital expenditure   (8 361)      (5 784)      (12 405)            
Increase in non-current asset     (499)        -            (4 920)             
Proceeds on disposal of land,     152          6 440        80 634              
property, plant and equipment                                                   
Net cash (outflow)/inflow before  (10 007)     36 006       81 270              
financing activities                                                            
Dividend paid - ordinary          -            (39 313)     (39 313)            
Dividend paid - special           -            -            (147 489)           
Proceeds on disposal of treasury  -            -            312                 
shares                                                                          
Net decrease in cash and cash     (10 007)     (3 307)      (105 220)           
equivalents                                                                     
Cash and cash equivalents at      112 964      216 846      216 846             
beginning of period                                                             
Currency translation of cash in   1 521        (430)        1 338               
foreign subsidiary                                                              
Cash and cash equivalents at end  104 478      213 109      112 964             
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       4 856    25 558       (181)    492 731    522 964           
December 2009                                                                   
Total               -        (1 228)      181      121 371    120 324           
comprehensive                                                                   
income for the                                                                  
period                                                                          
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 27       4 856    (3 300)      -        454 930    456 486           
December 2010                                                                   
Total               -        690          -        2 526      3 216             
comprehensive                                                                   
income for the                                                                  
period                                                                          
Balance at 27       4 856    (2 610)      -        457 456    459 702           
June 2011                                                                       
NOTES                                                                           
                                        Unaudited            Audited            
Six months           Year to            
                                        to June              December           
                                        2011      2010       2010               
                                        R`000     R`000      R`000              
1. Reconciliation between attributable                                          
earnings and headline earnings                                                  
Attributable earnings after taxation     2 526     138 411    121 371           
Impairment (reversed)/raised             -         (316)      13                
Loss/(profit) on disposal of fixed       137       (80 450)   (73 844)          
assets                                                                          
Taxation effect                          (38)      24 135     21 506            
Headline earnings attributable to        2 625     81 780     69 046            
ordinary shareholders                                                           
Attributable headline earnings per                                              
share                                                                           
- basic                                  5,3       166,4      140,5             
- diluted                                5,3       166,4      140,4             
2. Basis of presentation                                                        
The Group is domiciled in South Africa. The unaudited condensed                 
consolidated interim financial results at and for the half-year ended 27        
June 2011 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 interim 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 in compliance with International Accounting Standard (IAS) 34 as well       
as the AC500 standards as issued by the Accounting Practices Board or its       
successor.                                                                      
                                       Unaudited            Audited             
                                       Six months           Year to             
to June              December            
                                       2011      2010       2010                
                                       R`000     R`000      R`000               
3. Commitments                                                                  
Capital commitments - authorised but    1 484     8 285      1 959              
not contracted                                                                  
Capital commitments - contracted        2 157     3 890      11 737             
                                       3 641     12 175     13 696              
Operating lease commitment              4 626     609        4 720              
COMMENTARY                                                                      
Delta EMD`s financial performance for the half year ended 27 June 2011          
reflects the continued soft global demand for EMD and the anticipated           
difficult trading environment, which resulted in a reduction in sales           
volumes, less favourable sales mix and reduced contribution margin on US        
dollar denominated sales. The Group`s Rand denominated selling prices           
remained less attractive to our global customers, consequently the Group`s      
share of the Global EMD market reduced, particularly in the higher margin       
EMD market segment.                                                             
GROUP RESULTS                                                                   
Revenue for the half year ended 27 June 2011 reduced to R130 million from       
R199 million for the comparable period last year. The decline was               
attributable to reduced sales volumes, a lower average selling price and no     
repeat of the lithium manganese sales recorded in the comparable period         
last year.                                                                      
The Group`s profit before tax of R4,5 million for the half year ending 27       
June 2011 was considerably lower than the profit before tax of R170,1           
million for the half year ended 27 June 2010, which included R132,5 million     
related to the sale of the Australian residue disposal site. Profit also        
was reduced by business interruption and additional expenses related to a       
transformer failure, for which a R6,1 million insurance recovery was            
received subsequent to period end.                                              
Net interest received of R2 million was lower than the R6 million received      
in the comparable period in 2010, due to lower interest rates and reduced       
cash balances after payment of a special dividend in the second half of         
2010.                                                                           
Attributable earnings after taxation totalled R2,5 million (2010: R138,4        
million).                                                                       
The Group`s earnings per share for the half year ended 27 June were 5,1         
cents (2010: 281,6 cents), and headline earnings per share were 5,3 cents       
(2010: 166,4 cents).                                                            
The Group`s net cash inflow from trading for the six months ended 27 June       
2011 totalled R11 million (2010: R45 million). Working capital for the          
period increased by R15 million due mainly to increased inventory. The          
Group`s capital expenditure for the half year ended 27 June totalled R8         
million (2010: R6 million). The Group`s period end cash balance of R104         
million reduced from the December 2010 cash balance of R113 million.            
PERFORMANCE OF SOUTH AFRICAN EMD BUSINESS                                       
Global demand for alkaline grade EMD continues to fall short of existing        
global production capacity. Consequently, market prices remain under            
pressure with major battery producers sourcing most of their EMD                
requirements from domestic suppliers, as the capacity of local suppliers        
remains adequate to meet current demand and is not subject to foreign           
exchange or anti-dumping duties. The strength of the Rand continues to          
erode Delta EMD`s price competitiveness in most large EMD markets,              
consequently Delta EMD`s market share of high margin EMD volumes has            
reduced.                                                                        
The EMD business recorded a trading operating profit of R5 million for the      
six months ended 27 June 2011, compared with a trading operating profit of      
R37 million during the comparable period in 2010. This reduction was            
attributed to lower sales volumes of high margin product, lower average         
selling prices, increased cost of sales, and a transformer failure which        
resulted in business interruption. Manufacturing overhead recovery improved     
substantially against the comparable period. The cost of sales per ton          
increased as a result of higher electricity cost and above inflation price      
increases for key raw materials which were unable to be recovered in            
pricing during the six months ended 27 June 2011. The sales mix and average     
selling price were adversely affected by the reduction in high grade EMD        
sales volumes compared to the comparable period in 2010. Overhead costs         
decreased by 21% to R21 million (2010: R27 million) with continuing focus       
on cost reduction.                                                              
DISPOSAL OF THE GROUP`S AUSTRALIAN PLANT SITE                                   
The Group continues to market the decommissioned plant site in Australia,       
the last remaining Australian asset, and has reduced ongoing administration     
expenses to the fullest extent possible.                                        
PROSPECTS                                                                       
The Group`s second half sales volumes are expected to improve over both the     
first half of 2011 and second half of 2010.  Whilst the average Rand            
selling prices are expected to be lower due to more competitive USD selling     
prices, the additional sales volume and revenue are expected to provide         
improved manufacturing overhead recoveries.                                     
DIVIDEND                                                                        
No interim dividend has been declared.                                          
TG Atkinson                       P Baijnath                                    
(Chairman)                        (Chief Executive Officer)                     
4 August 2011                                                                   
Johannesburg                                                                    
Registered Office                                                               
15 Heyneke Street, Industrial Site, Nelspruit, 1200                             
Transfer Secretaries                                                            
Computershare Investor Services (Proprietary) Limited                           
70 Marshall Street, Johannesburg 2001                                           
PO Box 61051 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: 04/08/2011 09:00:01 Supplied by www.sharenet.co.za                     
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