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DELTA EMD LIMITED - Audited consolidated results and cash dividend declaration for the year ended 27 December 2014

Release Date: 09/02/2015 14:20:00      Code(s): DTA     
DELTA EMD LIMITED                        
Registration number 1919/006020/06
Income tax number: 9375057719
Share code: DTA  ISIN: ZAE000132817     
("Delta EMD" or "the Group")             



                                                                          Audited     Audited      
                                                                          Year to     Year to      
                                                                         December    December      
                                                                             2014        2013      
                                                                 Note       R'000       R'000      
Revenue                                                                   283 922     375 187      
Gross profit                                                              119 671     129 220      
Investment income                                                           6 859       6 073      
Under recovery of manufacturing overheads                                (12 258)    (29 422)      
Distribution expenses                                                    (25 668)    (34 469)      
Administrative expenses                                                  (70 717)    (39 214)      
Expenses related to discontinuation of business                         (175 283)           ?      
Other                                                                     (3 152)     (8 799)      
Profit on sale of assets                                                   23 257          46      
Impairments  raised                                                      (33 085)   (121 655)      
Net foreign exchange gains                                                  7 264       4 535      
Loss before taxation                                                    (163 112)    (93 685)      
Taxation                                                                   10 193      24 568      
Loss for the year                                                       (152 919)    (69 117)      
Other comprehensive income                                                                         
Increase in foreign currency translation reserve                              430         924      
Total comprehensive loss for the year                                   (152 489)    (68 193)      
Attributable to equity holders of parent company                                                   
Loss for the year                                                       (152 919)    (69 117)      
Total comprehensive loss for the year                                   (152 489)    (68 193)      
Headline (loss)/earnings attributable to ordinary shareholders      1   (145 843)      18 538      
Number of shares in issue ('000)                                           49 166      49 166      
Weighted dilutive number of shares in issue ('000)                         49 166      49 166      
Loss per share (cents)                                                                             
? basic and diluted                                                       (311.0)     (140.6)      
Dividend per share (cents)                                                      ?        25.0      


                                         Audited    Audited      
                                         Year to    Year to      
                                        December   December      
                                            2014       2013      
                                           R'000      R'000      
Non-current assets                                               
Property, plant and equipment             53 774    132 774      
Other non-current asset                        ?      2 274      
Current assets                                                   
? Inventories                             14 676    161 672      
? Trade and other receivables             78 315    112 507      
? Bank balances and cash                 227 378    121 128      
? Taxation receivable                        101          ?      
Non-current assets held for sale          45 466     13 182      
Total assets                             419 710    543 537      
EQUITY AND LIABILITIES                                           
Total shareholders' funds                291 970    444 278      
Non-current liabilities                                          
Deferred taxation liabilities                  ?     10 060      
Non-current provisions                     5 228      7 294      
Current liabilities                                              
? Trade and other payables                25 301     71 160      
? Short-term provisions                   97 065      3 000      
? Taxation payable                             8      7 745      
Non-current liabilities held for sale        138          ?      
Total equity and liabilities             419 710    543 537      
Net asset value per share (cents)            594        904      


                                                          Audited    Audited      
                                                          Year to    Year to      
                                                         December   December      
                                                             2014       2013      
                                                            R'000      R'000      
Cash (utilised from)/generated by trading                (57 994)     42 313      
Decrease/(Increase) in working capital                    135 511   (39 182)      
Cash generated by operations                               77 517      3 131      
Net interest received                                       6 859      6 073      
Taxation paid                                             (7 705)   (14 890)      
Cash inflow/(outflow) from operating activities            76 671    (5 686)      
Replacement capital expenditure                           (3 875)   (15 844)      
Decrease in other non-current asset                         2 274      1 017      
Proceeds on sale of assets                                 30 999         53      
Net cash  inflow/(outflow) before financing activities    106 069   (20 460)      
Dividend paid ? ordinary                                        ?   (12 291)      
Net increase/(decrease) in cash and cash equivalents      106 069   (32 751)      
Cash and cash equivalents at beginning of year            121 128    153 622      
Currency translation of cash in foreign subsidiary            181        257      
Cash and cash equivalents at end of year                  227 378    121 128      


                                           Share       Foreign                                
                                         capital      currency                                
                                             and   translation   Accumulated                  
                                         premium       reserve        profit       Total      
                                           R'000         R'000         R'000       R'000      
Balance at 27 December 2012                4 856         3 296       516 294     524 446      
Total comprehensive loss for the year          ?           924      (69 117)    (68 193)      
Dividend paid                                  ?             ?      (12 291)    (12 291)      
Prior year unclaimed dividend reversed         ?             ?           316         316      
Balance at 27 December 2013                4 856         4 220       435 202     444 278      
Total comprehensive loss for the year          ?           430     (152 919)   (152 489)      
Prior year unclaimed dividend reversed         ?             ?           181         181      
Balance at 27 December 2014                4 856         4 650       282 464     291 970      

                                                                                 Year to    Year to   
                                                                                December   December   
                                                                                    2014       2013   
                                                                                   R'000      R'000   
1.   Reconciliation between attributable earnings and headline earnings                               
     Loss after taxation                                                       (152 919)   (69 117)   
     Impairments raised                                                           33 085    121 655   
     Profit on sale of assets                                                   (23 257)       (46)   
     Taxation effect (reversed)                                                  (2 752)   (33 954)   
     Headline (loss)/earnings attributable to ordinary shareholders              145 843     18 538   
     Headline (loss)/earnings per share                                        (145 843)              
     ? basic & diluted                                                           (296.6)       37.7   

2.   Basis of presentation
     The Group is domiciled in South Africa. The audited summarised consolidated financial results at and for the year ended
     27 December 2014 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.

     On 5 March 2014 the company announced that the board of directors had taken the decision, subject to approval by the
     company's shareholders, to discontinue operations in a phased and orderly manner during 2014 and to realise value for the
     company's assets during 2014 and 2015. This decision was approved at the Annual General Meeting of the company held on
     9 May 2014. The company will be wound down and de-registered in due course. The above information highlights that the going 
     concern principle is not applicable in the preparation of the company?s financial statements. When the company ceases trading the
     directors are of the opinion that the company will be in a position to discharge all of its liabilities, due to the company's cash
     resources and to recover the assets at their carrying amounts.The effect, if any, of preparing the financial statements, other than
     on the going concern basis would be negligible. Consequently the financial statements have been prepared on a basis
     consistent with IFRS which among other things, requires writing assets down to their recoverable amounts. It also requires
     recognising a liability for contractual commitments that may have become onerous as a consequence of the decision to cease

     The Group's summarised consolidated financial results have been prepared in accordance with the requirements of the JSE
     Limited Listings Requirements for provisional reports, and the requirements of the Companies Act applicable to summary
     financial statements. The Listings Requirements require provisional reports to be prepared in accordance with the framework
     concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS), and the
     SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the Financial Pronouncements as
     issued by the Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS
     34 Interim Financial Reporting.

     The auditors, Deloitte & Touche, have issued their modified opinion on the Group's consolidated financial statements for the year
     ended 27 December 2014. The auditor's report contained an emphasis of matter paragraph regarding the basis of preparation
     used to prepare the consolidated and separate financial statements in the current year. The audit was conducted in accordance
     with International Standards on Auditing. This provisional report has been derived from the Group's consolidated financial
     statements and is consistent in all material respects with the Group's consolidated financial statements. A copy of their audit
     reports are available for inspection at the Company's registered office. The auditors have issued a modified opinion for the
     consolidated financial statements as well as a modified audit opinion for this extract from the consolidated financial statements.
     Any reference to future financial performance included in this announcement has not been reviewed or reported on by the

     Company's auditors.
                                                            2014    2013
                                                           R'000   R'000
3.   Commitments
     Capital commitments ? Authorised but not contracted       ?   7 007
     Capital commitments ? Contracted                          ?   2 815
                                                               ?   9 822
     Operating lease commitment                            2 368   3 038

      COMMENTARY - Unaudited
      Shareholders at the Group's annual general meeting held on 9 May 2014 voted in favour of a resolution approving the board's 
      decision to discontinue the Group's business and realise value for the Group's assets during 2014 and 2015.
      The Group's results for the year ended 27 December 2014 (the "year") reflect the actions taken with respect to the discontinuation of
      the business, which include reduced production and sales volumes, as well as expenses incurred or accrued relating to the discontinuation. 
      The results also include the sales of certain assets which were finalised during the year.

      Revenue totaled R283.9 million for the year (2013: R375.2 million). All work in progress was converted into inventory with the 
      majority of inventory being sold during the year.

      Remaining inventory will be sold by the end of March 2015.
      Production at the electrolytic cells was discontinued during April 2014 and all manufacturing overhead costs thereafter were 
      accounted for as administrative expenses. IFRS reporting standards require that where a probability of a future liability exists, 
      a provision of the current best estimate need be used as basis for raising a provision. To comply with this requirement a provision of 
      R40 million was raised for the remaining expense still to be quantified which relates to the decontamination, demolition and
      remediation of the Nelspruit production site. The magnitude of the expense is dependent on the approval of the decommissioning plan as 
      submitted to the Department of Economic Development, Environmental and Tourism, as well as reaching an agreement with respect to our 
      obligation required in terms of the termination of the Nelspruit manufacturing site lease agreement.

      The Group's expenses relating to the discontinuation of its business totalled R175.3 million for the year including provisions for 
      inventory impairment (R30.0 million), retrenchments (R41.3 million), employees outplacement and upskilling (R3.1 million), retention 
      incentives (R11.8 million), an estimated settlement related to the former use of a landfill site (R15.0 million), external advisors and 
      consultants (R9.8 million), environmental assessments and preparation of the required environmental reports (R5.4 million), an
      estimate for decontamination, demolition and remediation of the Nelspruit plant site(R40.0 million) and settlement of long-term contracts 
      (R4.0 million). Regulatory review of the Group's application for the regulatory approvals required for the decommissioning of the 
      Nelspruit plant is proceeding as planned. Following the completion of detailed site assessments and the required stakeholder engagement 
      process during October 2014 and November 2014, the final basic assessment report was submitted to the regulatory authorities during 
      December 2014. Regulatory approval for the decommissioning of the Nelspruit plant is expected to be granted during the first quarter of 2015.

      The sale of the majority of the Nelspruit assets (net book value: R53.8 million) must await decommissioning approval. Various loose assets,
      as well as assets not requiring the decommissioning approval, were sold during the second half of the year. The Group realised 
      R23.3 million of profits on the sale of these assets (net book value: R7.8 million. The Group undertook an impairment review of its 
      assets in accordance with IAS 36 and determined to reduce the carrying value of the Black Rock Calciner plant to a fair value  of 
      R31.0 million, resulting in a pre-tax impairment of R33.1 million. Assets classified as assets held for sale (net book value: R45.4 million)
      include the Black Rock Calciner plant and the former Australia plant site and redundant equipment at the Nelspruit plant.

      An agreement for the sale of the Black Rock Calciner plant was signed on 4 December 2014. The agreement is subject to the fulfilment of 
      certain suspensive conditions by 15 February 2015. An agreement for the sale of the Australian plant site was signed on 21 November 2014. 
      The agreement is subject to the fulfilment of certain suspensive conditions by 3 March 2015.

      Sales of assets, and any gains realised on those sales, will be accounted for as and when ownership transfers.
      The R94.1 million increase in the Group's short-term provisions to R97.1 million (2013: R3.0 million) relates to provisions for remaining 
      retrenchment costs (R18.1 million), incentives (R17.9 million), contract settlement (R4.0 million), an estimated settlement related to the 
      former use of a landfill site (R15.0 million), an estimate of decontamination, demolition and remediation of the Nelspruit plant site and 
      other miscellaneous provisions (R2.1 million).

      The Group's year-end cash balance increased by R106.3 million to R227.4 million (2013: R121.1 million).
      Net cash utilised by operations for the year totaled R58.0 million (2013 net cash generated: R42.3 million). Working capital decreased 
      during the year by R135.5 million (2013 increase: R39.2 million), and proceeds on the sale of assets totaled R31.0 million (2013: Nil).
      Interest received of R6.9 million was in line with prior year (2013: R6.1 million). The Group had a deferred tax credit of R10.2 million 
      (2013 tax credit: R24.6 million). Loss for the year totaled R152.9 million (2013: R69.1 million), and the loss per share was 311.0 cents 
      (2013: 140.6 cents). Headline loss per share for the year was 296.6 cents (2013 headline earnings per share: 37.7 cents).
      DIVIDEND - Unaudited
      The Group is pleased to announce the declaration of a final gross cash dividend of 250 cents (212.50 cents net of dividend withholding tax)
      per ordinary share for the year ended 27 December 2014. 
      The dividend has been declared from income reserves and no secondary tax on companies' credits has been used. A dividend withholding tax of
      15% will be applicable to all shareholders who are not exempt.

      The issued share capital at the declaration date is 49 165 553 ordinary shares.
      The salient dates are as follows:  
      Last day for trading to qualify and participate in the final dividend (and change of address of dividend Instructions):   Friday, 13 March 2015      
      Trading "ex dividend" commences:                                                                                          Monday, 16 March 2015      
      Record date:                                                                                                              Friday, 20 March 2015      
      Dividend payment date:                                                                                                    Monday, 23 March 2015      

       Share certificates may not be dematerialised or rematerialised between Monday, 16 March 2015 and Friday, 20 March 2015, both days inclusive.
       These summarised consolidated financial statements have been prepared under the supervision of JS Seymore CA(SA) in his capacity as Chief 
       Financial Officer of the Group.
       Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor's engagement they should 
       obtain a copy of that report together with the accompanying set of financial statements from the registered office of the Delta EMD Ltd.

       TG Atkinson                                                                                      P Baijnath
       (Chairman)                                                                                       (Chief Executive Officer)

       9 February 2015
       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  

       Independent non-executive: AC Hicks, BR Wright,
       L Matteucci

       Non-executive: TG Atkinson* (Chairman) *USA                          
       Executive: P Baijnath (Chief Executive Officer),
       JS Seymore, CA(SA) (Chief Financial Officer)

       Sponsor: Rand Merchant Bank (A division of FirstRand
       Bank Limited)

Date: 09/02/2015 02:20:00 Supplied by www.sharenet.co.za                     
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