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DTA - Delta EMD Limited - Unaudited group results for the six months ended 27
June 2010 and declaration of a special dividend
DELTA EMD LIMITED
(Formerly Delta Electrical Industries 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 2010 AND DECLARATION OF
A SPECIAL DIVIDEND
Condensed Group Statement of Comprehensive Income
Unaudited Audited
six months to year to
June December
2010 2009 2009
Note R`000 R`000 R`000
Revenue 198 898 276 702 478 122
Profit before interest, depreciation,
closure costs, impairment and taxation 120 683 101 117 154 854
Depreciation (9 931) (11 950) (20 915)
Closure costs reversal 51 975 - 81 748
Impairment reversal 316 627 7 155
Net foreign exchange
gains/(losses) 1 672 (3 136) (4 783)
Operating profit 164 399 86 658 218 059
Interest received 5 748 9 835 17 123
Profit before taxation 170 147 96 493 235 182
Taxation (31 736) (38 145) (67 493)
Normal taxation (24 803) (28 312) (42 910)
Secondary taxation on companies (3 933) (9 833) (24 583)
Capital gains taxation on
disposal of the
industrial services division (3 000) - -
Profit for the period 138 411 58 348 167 689
Other comprehensive income
(Decrease)/Increase in foreign
currency translation reserve (1 898) (264) 1 512
Proceeds on disposal of treasury shares - 2 280 3 949
Total comprehensive income for
the period 136 513 60 364 173 150
Attributable to equity holders
of parent company
Profit for the period 138 411 58 348 167 689
Total comprehensive income for the period 136 513 60 364 173 150
Headline earnings attributable to
ordinary shareholders 1 81 780 56 840 90 389
Number of shares in issue (`000) 49 166 49 166 49 166
Weighted number of shares in issue (`000) 49 144 49 060 49 083
Dilutive number of shares in issue (`000) 49 144 49 060 49 105
Attributable earnings per share (cents)
- basic 281.6 118.9 341.6
- diluted 281.6 118.9 341.5
Dividend per share (cents) 80.0 - -
Special dividend per share
(cents) - 200.0 500.0
Condensed Group Statement of Financial Position
Unaudited Audited
six months to year to
June December
2010 2009 2009
R`000 R`000 R`000
ASSETS
Property, plant and equipment 278 265 287 079 282 412
Non-current assets held for sale 9 856 9 599 15 957
Non-current asset 1 051 1 051 1 051
Bank balances and cash 213 109 351 254 216 846
Current assets 194 578 211 496 222 664
Outstanding proceeds from asset disposal 80 450 - -
Total assets 777 309 860 479 738 930
EQUITY AND LIABILITIES
Total shareholders` funds 620 164 557 602 522 964
Deferred taxation liabilities 57 085 61 220 57 085
Non-current liabilities 7 605 23 758 7 229
Capital reduction liability - - -
Current liabilities
- Trade and other 84 434 96 233 95 245
- Short-term provisions 8 021 121 666 56 407
Total equity and liabilities 777 309 860 479 738 930
Net asset value per share (cents) 1 261 1 134 1 064
Condensed Group Statement of Cash Flows
Unaudited Audited
six months to year to
June December
2010 2009 2009
R`000 R`000 R`000
Cash generated by trading 45 055 96 653 140 803
Decrease in working capital 34 158 119 096 105 760
Cash (utilised)/generated by operations 79 213 215 749 246 563
Net interest received 5 748 9 835 17 123
Taxation paid - normal (49 611) (776) (774)
Taxation refund - capital gains taxation - - (24 583)
Cash (outflow)/inflow from
operating activities 35 350 224 808 238 329
Replacement capital expenditure (5 784) (5 366) (13 056)
Proceeds on disposal of land,
property, plant and equipment 6 440 2 073 2 313
Net cash inflow before
financing activities 36 006 221 515 227 586
Dividend paid - normal (39 313) - -
- special - (98 162) (245 586)
Proceeds on disposal of treasury shares - 701 1 509
Net (decrease)/increase in cash and
cash equivalents (3 307) 124 054 (16 491)
Cash and cash equivalents at beginning
of period 216 846 230 077 230 077
Currency translation of cash in
foreign subsidiary (430) (2 877) 3 260
Cash and cash equivalents at end
of period 213 109 351 254 216 846
Group Statement of Changes in Equity
Share Foreign
capital currency
and translation Treasury
premium reserve shares
R`000 R`000 R`000
Balance at 27 December 2008 4 856 56 254 (1 135)
Total comprehensive income for the period - (30 696) 954
Dividend paid - special - - -
Balance at 27 December 2009 4 856 25 558 (181)
Total comprehensive income for the period - (1 898) -
Dividend paid - - -
Balance at 27 June 2010 4 856 23 660 (181)
Accumu-
lated
profit Total
R`000 R`000
Balance at 27 December 2008 535 425 595 400
Total comprehensive income for the period 202 892 173 150
Dividend paid - special (245 586) (245 586)
Balance at 27 December 2009 492 731 522 964
Total comprehensive income for the period 138 411 136 513
Dividend paid (39 313) (39 313)
Balance at 27 June 2010 591 829 620 164
Notes
Unaudited Audited
six months to year to
June December
2010 2009 2009
R`000 R`000 R`000
1. Reconciliation between attributable
earnings and headline earnings
Attributable earnings after taxation 138 411 58 348 167 689
Impairment (overprovided) (316) (627) (7 155)
Profit on disposal of fixed assets (80 450) (881) (1 695)
Taxation effect 24 135 - -
Headline earnings attributable to
ordinary shareholders 81 780 56 840 158 839
Attributable headline earnings per
share (cents)
- basic 166.4 115.9 323.6
- diluted 166.4 115.9 323.5
2. Basis of presentation
The Group is a company domiciled in South Africa. The unaudited condensed
consolidated interim financial results at and for the half-year ended 27 June
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 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 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.
2.1 New accounting policies adopted
The Group has adopted IAS 1 Presentation of Financial Statetments (Revised)
(IAS 1). This standard requires 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 2009
R`000 R`000 R`000
3. Commitments
Capital commitments - authorised but not
contracted 8 285 1 705 6 442
Capital commitments - contracted 3 890 10 827 5 194
12 175 12 532 11 636
Operating lease commitment 609 797 1 207
Other - 1 156 -
Comment on results
HALF-YEAR RESULTS
The gain realised on the sale of the Group`s Kooragang Island residue disposal
site, together with a write back of the remaining rehabilitation provision for
that site, provided exceptional earnings of R108.3 million. Inclusive of those
exceptional earnings, the Group`s earnings for the half-year totalled R138.4
million (2009: R58.3 million), and the Group`s headline earnings, which exclude
the gain realised on the sale of the Kooragang Island residue disposal site,
totalled R81.8 million (2009: R56.8 million).
The Group`s earnings per share for the half-year were 281.6 cents (2009: 118.9
cents), and headline earnings per share for the half-year were 166.4 cents
(2009: 115.9 cents).
First half sales volumes were not enhanced by the one-off sales enjoyed during
the same period last year and were further reduced by relatively soft market
demand and Delta EMD`s less attractive Rand denominated selling prices.
Gross sales revenue reduced to R198.9 million due to reduced sales volumes and
lower average selling prices, which resulted from a less favourable sales mix.
Operating profit, inclusive of the R132.4 million profit related to the
disposal of the Kooragang Island residue disposal site, totalled R164.4 million
(2009: R86.7 million). The Group`s operating profit also includes R3.21 million
of ongoing overhead costs associated with the Group`s former Australian
operation (2009: R6.24 million), which continue to be reduced.
Interest income for the half-year totalled R5.7 million (2009: R9.8 million),
and profit before taxation totalled R170.1 million (2009: R96.5 million). The
Group`s first half taxation charge totalled R31.7 million (2009: R38.1 million)
and included a R3.9 million secondary taxation charge in respect of the Group`s
2009 final dividend (2009: R9.8 million).
The Group`s cash balances reduced to R213.1 million from the 2009 year-end cash
balances of R216.8 million, after payment of R39.3 million of dividends and
R49.6 million of taxation.
PERFORMANCE OF THE DELTA EMD BUSINESS
Poor global economic conditions resulted in lower demand for alkaline batteries
and a contraction of the global alkaline grade EMD market. The majority of
Delta EMD`s sales were made in Rand denominated selling prices and the
continued strengthening of the Rand against the US Dollar, Euro and Yen reduced
Delta EMD`s price competitiveness and our alkaline grade market share.
Contribution during the period reduced as a result of lower sales volumes, the
lower average selling prices that resulted from a less favourable sales mix,
and higher costs of sales. Increased energy costs, reduced production levels
and additional planned maintenance contributed to the higher costs of sales.
Production levels were reduced during the first half as planned to maintain
desired stock levels, to allow for equipment maintenance, and to prepare for
the production of a new premium grade product. Reduced production resulted in a
substantial under-recovery of manufacturing overheads, which further reduced
Delta EMD`s operating profit.
Operating cash flows remained favourable with effective management of working
capital and well managed capital expenditures.
PROSPECTS
Delta EMD`s second half sales volumes are expected to be broadly in line with
first half sales volumes, as a recovery in demand for alkaline grade EMD is not
expected until 2011, and absent a weakening of the Rand, Delta EMD`s Rand
denominated selling prices are likely to remain less competitive. Sales volumes
are expected to be sustained through additional sales of lower grade EMD,
resulting in a less favourable sales mix and lower average selling prices.
Delta EMD`s operating profit for the second half is expected to be broadly in
line with first half levels due to better recovery of manufacturing overheads.
Increased production during the second half is expected to require some
additional working capital.
Delta EMD`s development of a premium alkaline grade product continues
successfully and is expected to present additional market opportunities during
2011.
The above forecast has not been reviewed and reported on by the company`s
external auditors.
DISPOSAL OF THE GROUP`S REMAINING AUSTRALIAN PLANT SITE
The demolition of structures and equipment on the Group`s former Australian
plant site is expected to conclude during the year, and efforts to market the
site continue. An environmental assessment was completed successfully during
2009 and no further remediation or rehabilitation of the site will be required
for future use of the site for commercial or industrial purposes.
DISPOSAL OF THE DELTA EMD BUSINESS
As previously advised, the Group has commenced a process intended to realise
value from the Delta EMD business, the Group`s last remaining operation. The
disposal process is ongoing, having been slowed somewhat by more difficult
market and trading conditions.
DIRECTORATE
As announced on 3 May 2010, Mr Chris Jacobs has resigned as a non-executive
director from the board of Delta EMD with effect from 29 April 2010.
SPECIAL DIVIDEND
Following the disposal of the Kooragang Island site and the resolution of the
2005 tax matter, previously noted as a contingent liability, the board is
pleased to announce a special dividend of 300 cents per share.
The salient dates for the payment of the special dividend will be as follows:
2010
Last date to trade to qualify for the special dividend Thursday, 16 September
Shares to commence trading ex-dividend on the JSE
Limited Friday, 17 September
Record date Thursday, 23 September
Payment date Monday, 27 September
The special dividend is declared in the currency of the Republic of South
Africa. Share certificates may not be dematerialised or rematerialised between
Friday, 17 September 2010 and Thursday, 23 September 2010, both days inclusive.
The Group also anticipates the payment of a final dividend, representing an
appropriate payout from the Group`s underlying 2010 earnings following
publication of the Group`s 2010 annual results, as well as possibly a special
dividend from any surplus cash realised through the eventual sale of the
Australian plant site.
TG Atkinson P Baijnath
Chairman Chief Executive Officer
Johannesburg
17 August 2010
Registered office Transfer secretaries
15 Heyneke Street Computershare Investor
Industrial Site Services (Proprietary) Limited
Nelspruit 70 Marshall Street, Johannesburg, 2001
1200 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 *USA
Sponsor
RAND MERCHANT BANK
A division of FirstRand Bank Limited
Date: 17/08/2010 12:45:02 Supplied by www.sharenet.co.za
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