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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