DELTA EMD LIMITED - Trading statement for the half year ended 27 June 2014Release Date: 01/07/2014 11:45:00 Code(s): DTA
Delta EMD Limited
(Incorporated in the Republic of South Africa)
Registration number 1919/006020/06
Share code: DTA
("Delta EMD" or "the Group")
TRADING STATEMENT FOR THE HALF YEAR ENDED 27 JUNE 2014
Shareholders are referred to the trading statement released on SENS
on 9 May 2014, wherein shareholders were advised that at the annual
general meeting held on 9 May 2014, a resolution to discontinue the
business was duly approved.
The discontinuation of the business is well underway and includes the
conversion of work-in-process and the final production of EMD. Good
progress has been made with many of the activities required by the
Severance packages as well as the staggered retrenchment of the
Nelspruit based employees were agreed with employee representatives.
The retrenchment of the first 82 employees, representing
approximately one-half of all Nelspruit employees, was completed by
27 June 2014 with payment of their retrenchment packages to be
completed on 10 July 2014. The total value of the severance packages
for all 160 Nelspruit employees is estimated to be approximately R40
million (Forty million rand).
The book value of fixed assets held for sale was reviewed and is
considered to reasonably reflect fair value. Inventory, WIP and
consumable goods values were impaired during the period by R30
million (thirty million rand).
The marketing of assets held for sale has begun. Proceeds from the
sale of assets will only be accounted for when ownership transfer on
receipt of payment takes place. No ownership of assets was
transferred during the period ended 27 June 2014.
The Group?s underlying trading results for the period are expected to
be lower than those of the prior period due to lower sales volume,
the required reduction of production volume, and the additional costs
detailed immediately below.
Following the decision to discontinue the business, the Group has
accounted for R78.5 million (Seventy eight million and five hundred
thousand rand) of expenses relating to the discontinuation for the
period ended 27 June 2014. This amount includes provisions for
inventory impairment of R30 million, retrenchment of R40 million,
retention incentives of R5 million and use of external advisors of
Cash flow for the period ended 27 June 2014 is estimated to be cash
positive due to the reduction in working capital, and cash balances
are forecasted to between R130 million and R133 million for the
period ended 27 June 2014. The period ending cash balances do not
reflect the payment of the first retrenchment payments, which will be
made during the second half.
Including the foregoing expenses the Group forecasts an after tax
loss for the period of between R96 million and R99 million (2013:
earnings after tax of R9.3 million).
The Group?s loss per share and headline loss per share for the period
is expected to be between 195 cents and 199 cents (2013: earnings &
headline earnings per share 18.90 cents).
The forecast financial information on which this trading statement is
based has not been reviewed and reported on by the Group?s external
Delta EMD?s interim results for the period are expected to be
released on SENS on or about 22 August 2014.
1 July 2014
Merchant bank and sponsor
RAND MERCHANT BANK (a division of FirstRand Bank Limited)
Date: 01/07/2014 11:45:00 Supplied by www.sharenet.co.za
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