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DEL
DEL
DEL - Delta Electrical Industries - Trading update
Delta Electrical Industries Limited
Incorporated in the Republic of South Africa
(Registration number 1919/006020/06)
Share code: DEL ISIN: ZAE000002036
("Delta" or "the group")
Trading update
Delta Shareholders are referred to the Prospects Statement contained in the
Delta 2006 Year end Audited Results Announcement published on 19 February
2007 in which Delta directors drew shareholders attention to the fact that
the group expected to incur a headline loss for the first half of 2007.
Shareholders are advised that the trading loss of the business in the first
six months of 2007 is forecast to be higher than those incurred during the
first six months of 2006. The deterioration in trading results in the first
six months of 2007 compared with the comparable period in 2006 is
attributable to the under recovery of production overheads at the group`s
Australian operation due to the decision to reduce production in order to
liquidate stock levels. One off costs associated with retrenchments as
highlighted in the Prospects Statement referred to in the above paragraph,
costs associated with defending the anti dumping cases and the strength of
the Australian dollar against the Rand and the US dollar have also
contributed to the trading loss. The results for the first six months of
2006 were positively affected by interest earned on the Industrial Services
Division disposal proceeds ("sale proceeds") before the payment of the
final special dividend paid in March 2006, which has adversely affected the
year on year results comparison. This interest after taxation contributed
R8,5 million or 17,4 cents to the 2006 half year result.
A loss and headline loss before taxation of between R28 million and R34
million is forecast for the six months to 27 June 2007. This loss and
headline loss before taxation compares with the loss and headline loss
before taxation of R5 million for the six months ended June 2006.
Shareholders are advised that a loss and headline loss per share of between
55 cents and 67 cents is forecast for the six months to 27 June 2007, which
compares with the loss and headline loss per share of 181,6 cents for the
six months ended June 2006. The loss and headline loss per share for the
six months ended 27 June 2006, was negatively affected by the Secondary
Taxation on Companies ("STC") charge of R86 million (175 cents per share)
paid on the final special dividend in March 2006. Excluding the STC charge
on the final special dividend and the interest earned on the sale proceeds
before the payment of the final special dividend the loss and headline loss
per share would have been 23,8 cents.
Cash balances since year end 2006 were preserved during the six month
period despite cash utilized by the trading loss. Strict focus on working
capital management and capital expenditure offset the cash utilized by the
trading loss.
Volumes sold during the first half of 2007 were similar to the volumes sold
during the first half of 2006, and a recently agreed supply arrangement is
now expected to provide an overall increase in volume sold during the
second half of 2007. The additional volumes sold together with reduced
production in Australia are expected to substantially reduce stocks and
provide additional cash flows. Whilst operating costs have been reduced at
both plants, the adverse effect of exchange rate movements during the first
half has offset the benefits realized. Nonetheless, the savings will
continue in subsequent periods.
Delta EMD continues to co-operate fully with the European Commission in the
anti-dumping investigation initiated by a producer located in Greece and
controlled by Tosoh Corporation of Japan. A preliminary conclusion is
expected on this matter towards the end of September 2007.
On 27 April 2007 a producer located in Japan and controlled by Tosoh
Corporation of Japan requested the Japanese Commission to initiate an anti
dumping investigation concerning EMD produced by EMD producers in South
Africa, Australia, China and Spain. Delta EMD in South Africa and Australia
will provide information in response to that investigation. A conclusion on
the investigation is only expected from the Japanese authorities in April
2008.
This trading update has not been reviewed by Delta`s auditors and Delta`s
results for the six months ended 27 June 2007 are expected to be released
on or about 3 August 2007.
Johannesburg
13 July 2007
Sponsor
Nedbank Capital
Date: 13/07/2007 11:16:01 Produced by the JSE SENS Department.
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