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TRIDELTA - INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 1998

Release Date: 21/11/1997 16:22
Code(s): TRT
Wrap Text

TRIDELTA MAGNET TECHNOLOGY HOLDINGS LIMITED - INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 1998 COMMENTS REVIEW
IT IS VERY PLEASING TO REPORT ON TRIDELTA'S UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 1998.
THE PAST SIX MONTHS HAVE BEEN CHARACTERISED BY THE CONTINUED INTEGRATION OF THE GERMAN FIRST WORLD TECHNOLOGY WITH THE MORE COST EFFECTIVE SOUTH AFRICAN MANUFACTURING OPERATIONS, AND THE CONTINUED IMPLEMENTATION OF A SENSIBLE HORIZONTAL AS WELL AS VERTICAL INTEGRATION OF OUR PRODUCT RANGES.
THE INSTALLATION AND COMMISSION OF OUR FERRITE MANUFACTURING PLANT AT ISITHEBE, KWAZULU-NATAL AND THE SOUND-DEADENING POWDER PLANT IN UNTERLOQUITZ, GERMANY FURTHER ENHANCES OUR RAW MATERIAL INDEPENDENCE AND WILL CONTRIBUTE TO IMPROVED MARGINS IN OUR MAGNET AND SYSTEMS COMPANIES IN THE ENSUING PERIOD.
THE CONTINUED BUILD UP OF "RARE EARTH" MAGNET PRODUCTION, COMPRISING SAMARIUM COBALT, ALNICO (ALUMINIUM, NICKEL, COBALT) AND NEODYMIUM-IRON-BORON PRODUCTION IN GERMANY AND SOUTH AFRICA, CONTINUES TO ENHANCE OUR PRODUCT RANGE. IT WILL ALSO ENABLE TRIDELTA TO FOLLOW ITS EUROPEAN CUSTOMER BASE INTO STRONG GROWTH MARKETS AROUND THE WORLD IN FUTURE, WHILST CONTINUING TO PROVIDE THESE CUSTOMERS WITH MORE COST EFFECTIVE, QUALITY PRODUCTS.
RESEARCH AND DEVELOPMENT PROJECTS WITH UNIVERSITIES AND TECHNICAL INSTITUTES IN GERMANY AND SOUTH AFRICA, PARTICULARLY IN THE FIELD OF MORE EFFICIENT RAW MATERIALS HAVE RECENTLY MADE SIGNIFICANT ADVANCES WHICH WILL IMPACT
DRAMATICALLY ON THE MAGNET MANUFACTURING INDUSTRY IN THE FUTURE. RESULTS
TURNOVER INCREASED 70,6% FROM R101 MILLION TO R172 MILLION, WHILST TAXABLE NET INCOME INCREASED FROM A START-UP LOSS OF (R1 MILLION) TO A PROFIT OF R55 MILLION. EARNINGS PER SHARE GREW FROM A LOSS OF (0,7 CENTS) TO 34 CENTS PER SHARE AND THE GROUP IS WELL ON TRACK TO ACHIEVE ITS FORECAST OF 63 CENTS PER SHARE FOR THE FULL YEAR TO 30 JUNE 1999.
THESE EARNINGS WERE ACHIEVED DESPITE AN INCREASE IN THE INTEREST CHARGE FROM R1,2 MILLION TO R4,8 MILLION, AS A RESULT OF CAPITAL EXPENDITURE ON ITS POWDER PLANTS IN GERMANY AND SOUTH AFRICA AND EXPANSION OF MAGNET PRODUCTION CAPACITIES IN DORTMUND AND HERMSDORF, GERMANY.
THE GROUP'S NEGLIGIBLE EFFECTIVE TAX RATE IS EXPECTED TO BE SUSTAINED AS A RESULT OF THE ALLOWANCES GRANTED TO SOUTH AFRICAN SUBSIDIARIES AND AN ASSESSED TAX LOSS IN THE GERMAN SUBSIDIARY OF APPROXIMATELY DM400 MILLION WHICH CAN BE FULLY UTILISED UNDER A TAX POOLING AGREEMENT.
THE BALANCE SHEET REMAINS STRONG AND REFLECTS THE POSITIVE GROWTH OF THE GROUP. THE INCREASE IN FIXED ASSETS ILLUSTRATES THE INVESTMENT IN NEW PLANTS AS WELL AS THE ENHANCEMENT OF EXISTING CAPACITIES.
LONG-TERM LIABILITIES CONSIST MAINLY OF EURO-LOANS, AND ARE SUBJECT TO EUROPEAN INTEREST RATES. SHARE CAPITAL
IN TERMS OF THE LOAN AGREEMENT WITH JENOPTIK AG, A FURTHER 1 731 381 SHARES WERE ISSUED AT A PREMIUM OF R4,74 ON 7 DECEMBER 1998, IN FULL SETTLEMENT OF THE OUTSTANDING LOAN AMOUNT. PROSPECTS
TRIDELTA'S BUSINESS CONCEPT HAS BEEN AND IS STILL BEING STRUCTURED AND IMPLEMENTED AND THE GROUP IS COMMITTED TO COMPLETING ITS VARIOUS INVESTMENT PROGRAMMES WITHIN THE NEXT TWO TO THREE YEARS.
THE GLOBAL MAGNET INDUSTRY HAS GROWN AT A CONSISTENT COMPOUND RATE OF 11% PER ANNUM OVER THE PAST 40 YEARS. INDUSTRY EXPERTS FORECAST GROWTH OF 13% PER ANNUM FROM THE PRESENT LEVEL OF APPROXIMATELY US$4 BILLION TO APPROXIMATELY US$10 BILLION BY THE YEAR 2005.
TRIDELTA NOW HAS FULL CONTROL OVER THE PRODUCTION CHAIN FROM THE MANUFACTURE AND SUPPLY OF THE RAW MATERIAL TO THE FINISHED PRODUCT, WHICH IS UNIQUE IN THE WORLD MAGNET INDUSTRY. THIS STRATEGY HAS PLACED TRIDELTA IN A POSITION TO COST-EFFECTIVELY SERVICE THE FULL RANGE OF ITS EUROPEAN-BASED CUSTOMERS' REQUIREMENTS.
GIVEN THE ABOVE GROWTH FACTORS AND THE EXPECTATIONS THAT THE RAND WILL REMAIN IN A DECLINING TREND, THE GROUP EXPECTS FURTHER HEALTHY GROWTH IN EARNINGS, SINCE MOST OF THE PRODUCTS ARE BEING SOLD TO HARD CURRENCY MARKETS. BOARD APPOINTMENTS
THE BOARD IS PLEASED TO WELCOME DR PETER KASSNER, MR WILFRIED EULER AND MR KEVIN SAMMONS AS EXECUTIVE DIRECTORS OF TRIDELTA.
DR PETER KASSNER HAS BEEN APPOINTED AS CHIEF EXECUTIVE OFFICER OF THE GROUP WITH EFFECT FROM 5 FEBRUARY 1999, WITH MR UWE KORNOL NOW CONCENTRATING ON THE DAILY OPERATIONS OF OUR GERMAN MANUFACTURING SUBSIDIARIES. YEAR 2000
THE INSTALLATION OF THE BAAN COMPUTER SYSTEM IN ALL OPERATING COMPANIES BY THE END OF JUNE 1999, WILL ENSURE THAT THE YEAR 2000 ADVENT WILL NOT CAUSE ANY MATERIAL OPERATING PROBLEMS. DIVIDENDS
IN ACCORDANCE WITH THE GROUP'S STATED POLICY, NO INTERIM DIVIDEND HAS BEEN DECLARED. PROPOSED RESTRUCTURING
TRIDELTA IS CURRENTLY INVOLVED IN NEGOTIATIONS REGARDING A RESTRUCTURING AND A PRIMARY LISTING ON THE NEUER MARKT OF THE FRANKFURT STOCK EXCHANGE ("FSE"). THE FSE HAS GRANTED TRIDELTA AN IN-PRINCIPLE APPROVAL FOR SUCH A LISTING. THE RESTRUCTURING AND LISTING ARE SUBJECT TO VARIOUS REGULATORY APPROVALS IN SOUTH AFRICA AND GERMANY. THE PROPOSED RESTRUCTURING AND LISTING COULD HAVE AN EFFECT ON THE SHARE PRICE OF TRIDELTA.
ACCORDINGLY, SHAREHOLDERS ARE ADVISED TO EXERCISE CAUTION WHEN DEALING IN THEIR TRIDELTA SHARES UNTIL A FURTHER ANNOUNCEMENT IS MADE. FOR AND ON BEHALF OF THE BOARD DR DENIS WORRALL CHAIRMAN DR PETER KASSNER CHIEF EXECUTIVE OFFICER 24 FEBRUARY 1999 ABRIDGED GROUP INCOME STATEMENT
SIX MONTHS SIX MONTHS 12 MONTHS 31 DEC 1998 31 DEC 1997 30 JUNE 1998 R'000 R'000 R'000
(UNAUDITED) (UNAUDITED) (AUDITED) TURNOVER 172 316 101 019 207 220 NET INCOME BEFORE FINANCING COSTS
AND TAXATION 59 730 64 25 793 FINANCING COSTS (4 852) (1 192) (3 508) NET INCOME BEFORE TAXATION 54 878 (1 128) 22 285 TAXATION - - (144)
NET INCOME/(LOSS) AFTER TAXATION 54 878 (1 128) 22 141 INCOME ATTRIBUTABLE TO OUTSIDE
SHAREHOLDERS (1 225) - (24) EARNINGS/(DEFICIT) ATTRIBUTABLE TO ORDINARY
SHAREHOLDERS 53 653 (1 128) 22 117 EARNINGS/(DEFICIT) PER SHARE (CENTS) 33,55 (0,71) 13,98 ABRIDGED GROUP BALANCE SHEET
31 DEC 1998 31 DEC 1997 30 JUNE 1998 R'000 R'000 R'000
(UNAUDITED) (UNAUDITED) (AUDITED) CAPITAL EMPLOYED
SHARE CAPITAL AND RESERVES 356 465 257 285 278 816 OUTSIDE SHAREHOLDERS' INTEREST 1 249 3 24
LONG-TERM LIABILITIES 51 085 48 986 38 715 408 799 306 274 317 555 EMPLOYMENT OF CAPITAL
FIXED ASSETS 321 186 268 302 287 348 LOAN TO SHARE INCENTIVE TRUST 9 523 9 523 9 523
CURRENT ASSETS 219 289 106 518 135 564 CURRENT LIABILITIES
ACCOUNTS PAYABLE (86 319) (53 173) (60 871) BANK OVERDRAFT (54 880) (24 896) (54 009) 408 799 306 274 317 555 NET ASSET VALUE (CENTS PER SHARE) 223 163 176
ISSUED SHARES 159 897 158 166 158 166 DIRECTORS
D WORRALL U KORNOL P KASSNER I SAMMONS B CLAYTON C FRAME P GONERT S MHLUNGU D WURTH W EULER K SAMMONS TRANSFER SECRETARIES
MERCANTILE REGISTRARS LTD 5TH FLOOR MERCANTILE BUILDING 94 PRESIDENT STREET JOHANNESBURG 2001 PO BOX 1053 JOHANNESBURG 2000 REGISTERED OFFICE SITE 42 3 BROWN STREET ISITHEBE 4490 KWAZULU-NATAL PO BOX 418 MANDINI 4490 TRIDELTA MAGNET TECHNOLOGY HOLDINGS LIMITED REGISTRATION NUMBER 97/00585/06 INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA
PRESS RELEASE - TRIDELTA INTERIM RESULTS: GROWTH IN TURNOVER OF 71%
TRIDELTA, THE INTEGRATED GERMAN AND SOUTH AFRICAN MAGNET PRODUCER, HAS TURNED LAST YEAR'S R1,1 MILLION LOSS AT THE HALF YEAR STAGE INTO A R54,9 MILLION PROFIT BEFORE INTEREST AND TAX FOR THE SIX MONTHS ENDED DECEMBER 1998. THE IMPROVEMENT IN RESULTS WAS SPARKED BY THE COMMISSIONING OF THE GROUP'S NEW FERRITE MANUFACTURING PLANT AT ISITHEBE, KWAZULU-NATAL, AND ENHANCEMENT OF THE PRODUCT RANGE FROM THE GERMAN PLANTS, WHICH HAS BOOSTED TURNOVER 70,6% FROM RL01-MILLION TO RL72-MILLION.
THE COMPANY IS ONE OF THE MOST RAND HEDGE-ORIENTATED INVESTMENTS ON THE JOHANNESBURG STOCK EXCHANGE. THE BULK OF ITS BUSINESS AND ASSETS ARE LOCATED IN EUROPE AND IT HAS A SECONDARY LISTING ON THE LUXEMBOURG STOCK EXCHANGE. THE TURNAROUND IN TRIDELTA'S PERFORMANCE, WHILE DRAMATIC, IS FULLY IN LINE WITH ITS LISTING FORECASTS. EARNINGS PER SHARE GREW FROM A LOSS OF 0,7 CENTS LAST YEAR TO 34 CENTS, AND FINANCIAL DIRECTOR IVAN SAMMONS SAYS THE GROUP IS ON ITS WAY TO ACHIEVING ITS FORECAST PROFIT OF 63 CENTS A SHARE FOR THE YEAR TO JUNE 1999.
"THE ISITHEBE PLANT WAS IN AN INVESTMENT STAGE LAST FINANCIAL YEAR, ONLY BREAKING EVEN DURING THE FINAL QUARTER. IT HAS THEREFORE MADE A STRONG CONTRIBUTION TO THIS YEAR'S RESULTS COMING AS IT DID OFF A NEGATIVE BASE," SAYS SAMMONS.
COMMENTS CHAIRMAN DR DENIS WORRALL: "TRIDELTA NOW HAS FULL CONTROL OVER THE PRODUCTION CHAIN, WHICH IS UNIQUE IN THE WORLD MAGNET INDUSTRY. THE PAST SIX MONTHS HAVE BEEN CHARACTERISED BY THE CONTINUED INTEGRATION OF GERMAN FIRST WORLD TECHNOLOGY WITH THE MORE COST EFFECTIVE SOUTH AFRICAN MANUFACTURING OPERATION. THE BENEFITS OF CHEAPER RAW MATERIALS AND PRODUCTS FROM THE ISITHEBE PLANT ARE NOW FLOWING THROUGH TO THE GERMAN OPERATIONS, WHICH ARE RECEIVING PRODUCTS CHEAPER THAN THEY COULD SOURCE THEM LOCALLY. THIS HAS CREATED ENORMOUS GROWTH IN TURNOVER, AND ALSO TO THE OPERATING MARGIN.
"AS A RESULT OF THESE EFFICIENCIES WE HAVE PENETRATED ADDITIONAL MARKETS IN EUROPE AND OVEN ESTABLISHED A DIRECT LINE OF SUPPLY FROM ISITHEBE TO NORTH AMERICAN MARKETS. TRIDELTA'S BUSINESS CONCEPT IS STILL BEING STRUCTURED AND THE GROUP IS COMMITTED TO COMPLETING ITS VARIOUS INVESTMENT PROGRAMMES WITHIN THE NEXT TWO TO THREE YEARS," SAYS WORRALL.
THE EARNINGS WERE ACHIEVED DESPITE AN INCREASE IN INTEREST CHARGES FROM R1,2-MILLION TO R4,8-MILLION. TRIDELTA HAS GEARED ITSELF FOR ITS CONSIDERABLE INVESTMENT IN PLANT IN BOTH GERMANY AND SOUTH AFRICA IN LOW-INTEREST BEARING EURO-DENOMINATED FACILITIES WHICH ARE BEING REPAID FROM THE PROCEEDS OF EXPORTS IN EUROPE.
TRIDELTA IS CURRENTLY INVOLVED IN NEGOTIATIONS REGARDING A RESTRUCTURING AND A PRIMARY LISTING ON THE NEUER MARKT OF THE FRANKFURT STOCK EXCHANGE (FSE), AND THE FSE HAS GRANTED TRIDELTA AN IN-PRINCIPLE APPROVAL FOR THE LISTING. HOWEVER, THE RESTRUCTURING AND LISTING ARE SUBJECT TO VARIOUS REGULATORY APPROVALS IN BOTH SOUTH AFRICA AND GERMANY AND IT IS THEREFORE NOT YET POSSIBLE TO COMMENT FURTHER ON THESE PROPOSED DEVELOPMENTS.
FINALLY, WORRALL SAYS THE ECONOMIC OUTLOOK FOR THE MAGNET INDUSTRY REMAINS STRONG. THE GLOBAL MAGNET INDUSTRY HAS GROWN AT A CONSISTENT COMPOUND RATE OF 11% A YEAR FOR OVER 40 YEARS, WHILE THE EXPORT MARKET IS OUTSHINING EVEN THAT. "GIVEN STRONG GROWTH FACTORS IN THE INDUSTRY, AND THE EXPECTATION THAT THE RAND WILL CONTINUE TO DECLINE, WE EXPECT FURTHER HEALTHY GROWTH IN EARNINGS," HE CONCLUDES. ENDS ISSUED BY : TISH STEWART PR ASSOCIATES FAX : (011) 325-4199 E-MAIL : TISH.STEWART.PR@PIXIE.CO.ZA
CONTACT : TISH STEWART (011) 325-4195 / 082 443 6399 ON BEHALF OF : TRIDELTA
CONTACT : MR IVAN SAMMONS (011) 966 1349 / 082 821 1697 DATE : 24 FEBRUARY 1999