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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. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
