| Thu 19 Nov 2009, 7:05 | | DTA - Delta EMD Limited - Trading Statement |
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DTA
DTA
DTA - Delta EMD Limited - Trading Statement
Delta EMD Limited
Incorporated in the Republic of South Africa
(Registration number 1919/006020/06)
Share code: DTA ISIN: ZAE000132817
("Delta" or "the Group")
TRADING STATEMENT
Delta shareholders are referred to the Group`s 2009 unaudited Group results
announcement for the six months ended 27 June 2009 and the trading statement
for the 2009 financial year contained therein, dated 7 August 2009.
Full year operating profit is forecast to be marginally better than in 2008
despite lower sales volumes associated with sales of the former Australian
plant stock being concluded during 2008. Improved sales prices implemented in
2008 and at the beginning of 2009 as well as savings associated with the
closure of the Sandton corporate office have contributed.
Operating profit is forecast to reduce in the second half of the year from
the first half levels due to lower sales volumes and product mix which
reflect a lower global demand for higher value product. The second half will
also not benefit from the additional one-off sales volumes during the first
half of the year, associated with the sale of offshore inventory.
Production volumes in the second six month period have been reduced in line
with the lower sales volumes and to reduce stock levels. Lower production
volumes have affected the trading profit due to the under recovery of
overheads.
Profit has been enhanced by the reversal of R64.4 million of a rehabilitation
provision previously established for the Australian Kooragang Island waste
disposal site. An amendment to the Environmental Protection Licence governing
the site allows a more cost effective rehabilitation process for the site.
Environmental clearance has also been obtained for the Australian main site,
which now has no rehabilitation requirement. As a result profit will be
further enhanced by the reversal of a R10.7 million rehabilitation provision.
Cash flow in the second half of the year is forecast to be lower than the
first half, which benefited from the collection of substantial year end trade
balances associated with Australian trade debtors, the change in terms of
sale and the collection of outstanding receivables from a substantial
customer. Cash balances at year end are however forecast to be in excess of
R200 million, having paid special dividends of R245.8 million and secondary
taxation on companies of R24.6 million thereon.
Efforts to dispose of the Group`s Australian plant main site and Kooragang
Island site continue and disposals will be announced when agreed.
Following the Group`s 2005 disposal of its industrial services businesses, a
Group subsidiary company discontinued business and filed final tax returns.
A tax assessment received by the subsidiary company during 2007 resulted in a
tax refund as reported in the Group`s 2007 accounts. Thereafter the
subsidiary company satisfied its outstanding liabilities and distributed its
assets. A revised assessment of R32 million has recently been issued by SARS
for additional capital gains taxation in respect of the 2005 disposal. The
Group will object to the revised assessment, and no provision has been raised
for this revised assessment.
Earnings and headline earnings after taxation for the twelve months ending 27
December 2009, inclusive of the secondary taxation on companies paid of R24.6
million in respect of the two special dividends paid during 2009 and
inclusive of the R75.1 million write back of the Australian Kooragang Island
and main site rehabilitation provisions are forecast to be as follows:
Earnings after taxation between R151 million and R169 million (2008: R89.4
million)
Headline earnings after taxation between R148 million and R166 million (2008:
R90.4 million)
Earnings and headline earnings per share for the twelve months ending 27
December 2009 are forecast to be as follows:
Earnings per share between 308 cents and 344 cents (2008: 182.6 cents)
Headline earnings per share between 302 cents and 338 cents (2008:184.5
cents)
Excluding secondary taxation on companies of R24.6 million (2008: R5.2
million) relating to special dividends and the Australian closure provisions
written back of R75.1 million (2008: R28.9 million charge), earnings after
taxation are forecast to be between R97 million and R121 million (2008:
R123.5 million) and earnings per share between 198 cents and 247 cents (2008:
252 cents); and
Headline earnings after taxation are forecast to be between R94 million and
R118 million (2008: R124.5 million) for the twelve months ended 27 December
2009 and headline earnings per share between 192 cents and 240 cents
(2008:254 cents).
The lower forecast underlying earnings and headline earnings compared with
2008 referred to above relate to lower forecast interest income, exchange
losses associated with a stronger Rand exchange rate and certain sundry gains
realised in 2008, not repeated in 2009.
The forecast financial information on which this trading statement is based
has not been reviewed and reported on by the Group`s auditors.
Nelspruit
19 November 2009
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 19/11/2009 07:05:06 Produced by the JSE SENS Department.
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