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Unaudited group results for the six months ended 27 June 2014
DELTA EMD LIMITED
Registration number: 1919/006020/06
Income tax number: 9375057719
Share code: DTA ISIN: ZAE000132817
("Delta EMD" or "the Group")
UNAUDITED GROUP RESULTS
FOR THE SIX MONTHS ENDED 27 JUNE 2014
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
six months six months year to
to June to June December
2014 2013 2013
Note R'000 R'000 R'000
Revenue 120 265 171 031 375 187
Gross profit 43 068 62 408 129 220
Investment income 2 958 3 226 6 073
Under recovery of manufacturing overheads (12 382) (17 309) (29 422)
Distribution expenses (11 381) (15 997) (34 469)
Administrative expenses (30 795) (19 215) (39 214)
Expenses related to shut down of business (89 470) - -
Other (1 915) (3 245) (8 799)
Profit on sale of assets 8 - 46
Impairment raised on fixed assets - - (121 655)
Net foreign exchange gains/(losses) 1 719 4 158 4 535
(Loss)/profit before taxation (98 190) 14 025 (93 685)
Taxation (928) (4 732) 24 568
Normal taxation (928) (4 732) 24 568
(Loss)/profit for the period (99 118) 9 293 (69 117)
Other comprehensive income
Increase in foreign currency translation reserve 1 308 761 924
Total comprehensive (loss)/profit for the period (97 810) 10 054 (68 193)
Attributable to equity holders of parent company
(Loss)/profit for the period (99 118) 9 293 (69 117)
Total comprehensive (loss)/income for the period (97 810) 10 054 (68 193)
Headline earnings attributable to ordinary
shareholders 1 (99 126) 9 293 18 538
Number of shares in issue ('000) 49 166 49 166 49 166
Weighted number of shares in issue ('000) 49 166 49 166 49 166
Attributable earnings per share (cents)
- basic (201,6) 18,9 (140,6)
- diluted (201,6) 18,9 (140,6)
Dividend per share (cents) - 25,0 25,0
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
six months six months year to
to June to June December
2014 2013 2013
R'000 R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 128 016 255 271 132 774
Other non-current assets 2 754 3 707 2 274
Current assets
- Inventories 111 972 147 063 161 672
- Trade and other receivables 53 953 88 845 112 507
Bank balances and cash 134 001 148 901 121 128
Non-current assets held for sale 17 485 13 400 13 182
Total assets 448 181 657 187 543 537
EQUITY AND LIABILITIES
Total shareholders' funds 346 468 522 208 444 278
Non-current liabilities
Deferred taxation liabilities 10 988 45 264 10 060
Other non-current liabilities 7 427 8 401 7 294
Current liabilities
- Trade and other payables 83 256 70 844 71 160
- Short-term provisions - 3 727 3 000
- Taxation payable 42 6 743 7 745
Total equity and liabilities 448 181 657 187 543 537
Net asset value per share (cents) 705 1 062 904
CONDENSED GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
six months six months year to
to June to June December
2014 2013 2013
R'000 R'000 R'000
Cash (utilised)/generated by trading (98 549) 22 707 42 313
Decrease/(Increase) in working capital 120 344 (1 556) (39 182)
Cash generated by operations 21 795 21 151 3 131
Net interest received 2 958 3 226 6 073
Taxation paid - normal (7 704) (9 992) (14 890)
Cash inflow/(outflow) from operating activities 17 049 14 385 (5 686)
Replacement capital expenditure (3 981) (6 636) (15 844)
(Increase)/decrease in non-current asset (480) (416) 1 017
Proceeds on disposal of land, property, plant and equipment 26 - 53
Net cash inflow/(outflow) before financing activities 12 614 7 333 (20 460)
Dividend paid - ordinary - (12 291) (12 291)
Net increase/(decrease) in cash and cash equivalents 12 614 (4 958) (32 751)
Cash and cash equivalents at beginning of period 121 128 153 622 153 622
Currency translation of cash in foreign subsidiary 259 237 257
Cash and cash equivalents at end of period 134 001 148 901 121 128
GROUP STATEMENT OF CHANGES IN EQUITY
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 period - - (97 810) (97 810)
Balance at 27 June 2014 4 856 4 220 337 392 346 468
NOTES
Unaudited Unaudited Audited
six months six months year to
to June to June December
2014 2013 2013
R'000 R'000 R'000
1. Reconciliation between attributable earnings
and headline earnings
Attributable (loss)/earnings after taxation (99 118) 9 293 (69 117)
Impairment raised - - 121 655
Profit on disposal of fixed assets (8) - (46)
Taxation effect (reversed)/raised - - (33 954)
Headline earnings attributable to ordinary shareholders (99 126) 2 118 18 538
Attributable headline earnings per share (cents)
- basic (201,6) 18,9 37,7
- diluted (201,6) 18,9 37,7
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 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. The
accounting policies are continuously reviewed to ensure they are applicable and the correct policies to apply to the discontinuation
of the business.
The Group's condensed consolidated interim financial results have been prepared in accordance with the framework concepts
and measurement and recognition requirements 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.
3. Unaudited results
The report has not been audited or reviewed.
2014 2013
R'000 R'000
4. Commitments
Capital commitments - authorised but not contracted - -
Capital commitments - contracted 2 675 3 943
2 675 3 943
Operating lease commitment 1 860 3 160
COMMENTARY
Shareholders are referred to the statement released on SENS on 9 May 2014 wherein shareholders were advised that a
resolution to discontinue the business during 2014 and to realise value for the Company's assets during 2014 and 2015, was
approved at the annual general meeting held on 9 May 2014.
The Group's underlying trading results for the six-month period ended 27 June 2014 (the "period") reflect reduced production
and sales volumes, as well as certain expenses incurred or accrued relating to the discontinuation of the business.
Good progress has been made with respect to the discontinuation work plan.
PERFORMANCE FOR THE SIX MONTHS ENDED 27 JUNE 2014
The Group's trading results for the period are lower than for the period ended 27 June 2013 ("comparable period"), due to
lower sales volumes, reduced production volumes, and the additional costs detailed below.
Revenue for the period totalled R120,3 million (2013: R171,0 million).
The Group's average selling price was higher than for the comparable period. Per unit production costs for the period were
higher due to increased input costs.
The R12,3 million (2013: R17,3 million) of manufacturing overhead under recovery reflected in the statement of comprehensive
income relates to the first four months of the period after which electrolytic production was discontinued. All manufacturing
overhead costs thereafter were accounted for in administration expenses.
The period's results includes R89,5 million of expenses relating to the discontinuation, including a R30,0 million provision for
impairment of inventory, a R40,3 million provision for retrenchment expenses, a R6,0 million provision for retention incentives,
as well as R3,5 million paid to advisors and R1,2 million for employee support and outplacement.
Loss before tax was R98,2 million (2013: Profit before tax R14,0 million), and the Group's taxation charge for the period was
R1,0 million (2013: R4,7 million).
Attributable loss for the period totalled R99,1 million (2013: Profit R9,3 million), and loss and headline loss per share were
201,6 cents (2013: earnings and headline earnings per share 18,9 cents).
Assets held for sale increased to R17,5 million (2013: R13,4 million) and only include the former Australia plant site and
non-production property located in Nelspruit. Fixed assets are classified as assets held for sale only when they are
available for immediate transfer of ownership. The majority of the Group's assets require decommissioning before they will
be available for sale.
Net cash inflow before financing activities for the period totalled R12,6 million (2013: R7,3 million) and cash balances as at
27 June 2014 totalled R134,0 million (December 2013: R121,1 million). The reported reduction of working capital includes
significant additional provisions. The net reduction of working capital during the period resulted in the release of R43,4 million
of cash, a substantial portion of which was utilised to fund the expenses relating to the discontinuation of the business.
FORWARD LOOK
The sale of finished goods will continue during the second half with volumes similar to the first half. Product finishing will
continue during the second half, however all manufacturing overheads will be accounted for as administration expenses.
We anticipate further reductions in working capital and that the cash realised from those reductions will be utilised in part to
fund the further expenses relating to the discontinuation of the business.
The marketing of assets held for sale is in progress and efforts to sell the Group's former plant site in Australia continue. The
Group's fixed assets will be available for sale when required regulatory approvals are in hand, and decommissioning has been
completed. Satisfactory progress is being made with respect to both; however the value to be realised from these assets
remains uncertain. Similarly the expenses to be incurred decommissioning, demolishing and rehabilitating the plant sites also
remain uncertain and no provisions have been made for these expenses.
DIVIDEND
No interim dividend has been declared.
PREPARER OF FINANCIAL STATEMENTS
These condensed consolidated financial statements have been prepared under the supervision of JS Seymore CA(SA) in his
capacity as Chief Financial Officer of the Group.
TG Atkinson P Baijnath
(Chairman) (Chief Executive Officer)
Nelspruit
21 August 2014
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: 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)
Released on 22 August 2014
Date: 22/08/2014 10:38:00 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.
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