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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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