| Wed 5 Mar 2003, 16:48 | | Delta Electrical Industries - Reviewed Group Resul |
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Delta Electrical Industries - Reviewed group results for the year ended 27
December 2002
Delta Electrical Industries Limited
(Registration number 1919/006020/06)
Share code: DEL
ISIN: ZAE000002036
Directors:
PG Joubert (Chairman), EW van Zyl (Joint Managing), BR Wright (Joint Managing),
PL Campbell, DJ Gleeson, BG Hitchcock, MPW Robson, JP Scott-Maxwell*, RB Spoon
*British
* REVENUE UP 35%
* OPERATING PROFIT BEFORE FOREIGN EXCHANGE GAINS AND LOSSES UP 37%
* HEADLINE EARNINGS PER SHARE UP 9%
Reviewed group results for the year ended 27 December 2002
GROUP INCOME STATEMENT
2002 2001 %
R000 R000 Change
Revenue 1 513 406 1 123 465 35
Earnings before interest, 418 741 310 381 35
taxation, depreciation and
amortisation
Foreign exchange differences (28 242) 52 383
Depreciation (49 637) (40 018)
Amortisation (608) (589)
Operating profit 340 254 322 157 6
Interest received 55 098 25 382
Interest paid (33 072) (19 651)
Profit before taxation 362 280 327 888
Taxation 114 655 102 074
Profit after taxation 247 625 225 814
Outside shareholder`s interest 6 714 5 449
Attributable net profit 240 911 220 365 9
Shares in issue and on which 49 166 49 166
earnings per share are based
Attributable earnings per share 490.0 448.2 9
(cents) - Basic and diluted
Headline earnings per share 487.5 448.0 9
(cents) - Basic and diluted
Dividends per share (cents) 195.0 169.0 15
RECONCILIATION OF HEADLINE
EARNINGS
Attributable net profit for the 240 911 220 365
period
Goodwill amortisation 19 -
Profit on the disposal of (1 257) (85)
property, plant & equipment
Headline earnings 239 673 220 280 9
STATEMENT OF CHANGES IN EQUITY
Share Foreign
Currency
Capital and Translation Accumulated
Premium Reserves Profit Total
R000 R000 R000 R000
Balance at 27 117 445 30 296 369 723 517 464
December 2000
Net profit - - 220 365 220 365
for the year
Dividends - - (66 373) (66 373)
declared and
paid
Foreign - 28 876 - 28 876
currency
translation
movement
Balance at 27 117 445 59 172 523 715 700 332
December 2001
Net profit - - 240 911 240 911
for the year
Dividends - - (88 002) (88 002)
declared and
paid
Foreign - 7 389 - 7 389
currency
translation
movement
Other reserve - (1 020) 1 020 -
movements
Balance at 27 117 445 65 541 677 644 860 630
December 2002
SEGMENTAL ANALYSIS
%
Revenue Change
Electrolytic Manganese Dioxide 740 486 508 352 46
Repairs and Services 690 395 548 093 26
Replacement Parts 174 060 125 276 39
Intergroup elimination of revenue (91 535) (58 256)
1 513 406 1 123 465 35
Operating Profit
Electrolytic Manganese Dioxide 202 759 236 732 (14)
Repairs and Services 106 685 67 113 59
Replacement Parts 30 810 18 312 68
340 254 322 157 6
Depreciation and Amortisation
Electrolytic Manganese Dioxide 38 349 29 530
Repairs and Services 8 844 8 552
Replacement Parts 3 052 2 525
50 245 40 607
Capital Expenditure
Electrolytic Manganese Dioxide 92 036 118 946
Repairs and Services 12 414 14 313
Replacement Parts 2 939 3 404
107 389 136 663
Segmental Assets
Electrolytic Manganese Dioxide 779 604 745 511
Repairs and Services 236 816 185 693
Replacement Parts 85 856 63 265
Other 42 605 34 705
1 144 881 1 029 174
Cash & cash equivalents 181 114 166 971
Deferred taxation asset - 12 366
Total assets 1 325 995 1 208 511
Segmental Liabilities
Electrolytic Manganese Dioxide 227 185 251 740
Repairs and Services 109 486 88 791
Replacement Parts 33 165 23 464
Other 10 155 9 375
379 991 373 370
Taxation 51 899 113 681
Deferred taxation liability 9 064 -
Total liabilities 440 954 487 051
GROUP CASH FLOW STATEMENT
2002 2001
R000 R000
Cash generated from operations 415 801 297 799
(Increase)/decrease in working capital (15 831) 3 383
Taxation paid (153 618) (110 437)
Cash available from operating activities 246 352 190 745
Dividends paid (91 623) (69 046)
Cash retained from operating activities 154 729 121 699
Investment in businesses (3 662) -
Replacement of property, plant & equipment (37 333) (39 304)
Expansion of property, plant, & equipment (70 056) (97 359)
Disposal of property, plant and equipment 1 933 993
Net cash flow from investing activities (109 118) (135 670)
(Loans to)/repayment by share incentive (6 508) 3 140
schemes
Net cash flow from financing activities (6 508) 3 140
Movement in cash and cash equivalents 39 103 (10 831)
Translation difference on cash and cash 9 004 (8 589)
equivalents
Cash and cash equivalents at beginning of 19 749 39 169
year
Cash and cash equivalents at end of year 67 856 19 749
Comprising:
Cash and bank 181 114 166 971
Overdrafts and interest bearing loans (113 258) (147 222)
67 856 19 749
GROUP BALANCE SHEET
2002 2001
R000 R000
Assets
Property, plant & equipment 463 466 441 681
Trademarks and goodwill 2 796 2 657
Deferred taxation asset - 12 366
Loans to share incentive schemes 36 469 29 961
Current assets 823 264 721 846
Total assets 1 325 995 1 208 511
Equity and liabilities
Ordinary shareholders` equity 860 630 700 332
Outside shareholders` equity 24 411 21 128
Total equity and reserves 885 041 721 460
Deferred taxation liability 9 064 -
Current liabilities 431 890 487 051
Total equity and liabilities 1 325 995 1 208 511
Net asset value per share (cents) 1 750 1 424
Net gearing (%) nil nil
Capital commitments 118 192 159 824
Authorised but not contracted 87 312 118 738
Contracted 30 880 41 086
Operating lease commitment 20 791 21 867
Minority contingent liabilities 25 949 20 103
REVIEWED RESULTS
The results for the year ended 27 December 2002 have been reviewed by Deloitte &
Touche. Their unqualified reviewed opinion is available for inspection at the
registered office of the company.
ACCOUNTING POLICIES
Basis of preparation:
The accounting policies used to prepare these financial statements are
consistent with those used in the preparation of the 2002 annual financial
statements. These financial statements have been prepared in accordance with
South African Statements of Generally Accepted Accounting Practice.
COMMENT ON RESULTS
Financial:
Headline earnings per share increased by 9% to 487,5 cents from 448,0 cents in
2001. This is an excellent result considering the net foreign exchange loss
incurred during the year of R28,2 million compared to the gain recorded in 2001
of R52,4 million.
Revenue increased by 35%. All operations benefited from a general improvement in
trading volumes and the weaker Rand exchange rate against the US dollar which
averaged R10,47 during the year compared to R8,53 in 2001.
The group`s operating margin reduced from 27,6% to 22,5%. This was caused by the
strengthening of the Rand against the US dollar over the course of 2002 and the
reduction in average US dollar selling prices in the EMD business. All Repairs
and Services and Replacement Parts businesses managed to improve operating
margins through increased volumes and improved efficiencies.
Interest of R17,0 million was capitalised on the EMD plant expansion during the
year (2001: R7,7 million).
The group again generated substantial cash during the year. Cash retained from
operating activities increased by 27% to R154,7 million. The group continued to
invest in upgrading its plant, equipment and facilities with R37,3 million spent
on replacement capital and a further R70,1 million spent on the EMD plant
expansion in South Africa. As a result of the strong cash flow during the year
the group again ended the year with no gearing.
The net asset value per share increased by 23% to R17,50.
Operations:
EMD
After the destocking in the industry during 2001, the company increased sales
volumes significantly during 2002 with volumes in the second half of the year
exceeding all previous periods. While global EMD inventories stabilised during
2002, the EMD market remained oversupplied and highly competitive. As a result
US dollar selling prices came under pressure.
The company benefited from a weaker average Rand exchange rate during 2002 than
in the previous year. The strengthening of the Rand against the US dollar over
the course of 2002 resulted in net foreign exchange losses of R28,2 million
compared to the R52,4 million gain in 2001. This, together with the reduction in
average US dollar selling prices during the year, reduced operating margins
significantly.
Work continued on the South African plant expansion, which should be completed
by the end of the first quarter of 2003. Commissioning of the plant will be
dependent on market conditions and at this stage it is unlikely to be
commissioned until later in 2003.
Repairs and Services:
All operations in this division achieved excellent growth in earnings.
Electrical Repair Engineering ("ERE") benefited from growth in its heavy
transformer repair business. During the year the company acquired ABB`s
transformer field services and oil purification business, which enabled the
company to expand its products and services. ERE refurbished a further two
draglines this year making it the leader in this field in South Africa. In
addition, the company established a Black Economic Empowerment joint venture
focused on the transportation sector.
Transwire`s good performance was a result of growth in export related sales to
key market sectors due to a weaker exchange rate. The investment to increase
capacity in modern multi-paper covering capacity to meet local demand improved
efficiencies.
Wire Electric achieved good earnings growth in a buoyant local market with sales
volumes increasing. New products were introduced which should benefit the
company in the future.
Replacement Parts:
Replacement Parts achieved outstanding results due to generally improved
business conditions, the devaluation of the Rand and growth in the construction,
mining and rebuild sectors of the market. Working capital was well managed
despite the adverse effect of the devaluation of the Rand.
Prospects:
The company`s prospects in the local markets remain good with the South African
economy expected to grow by approximately 3% during 2003. The present oversupply
of EMD has resulted in a reduction in US dollar selling prices in order to
increase volumes. In addition the strong Rand relative to last year is expected
to influence the group`s results.
DIVIDEND
Policy:
It is the company`s policy to declare dividends for the year based on a dividend
cover of 2,5 times headline earnings per share.
Dividend No. 62:
Notice is hereby given that a final dividend number 62 of 142,0 cents per share
has been declared by the directors in respect of the twelve months ended 27
December 2002. The last date to trade in order to receive the dividend will be
Thursday 20 March 2003 and Delta Electrical Industries Limited shares will trade
ex-dividend from start of trade on Monday 24 March 2003. The record date will be
Friday 28 March 2003 and the date of payment of the dividend will be Monday 31
March 2003. The dividend is declared in the currency of the Republic of South
Africa. Share certificates may not be dematerialised or rematerialised between
Monday 24 March 2003 and Friday 28 March 2003 both days inclusive.
Withdrawal of cautionary announcement
Shareholders are referred to the cautionary announcement dated 7 February 2003
and are advised that negotiations which were in progress, have been terminated
and accordingly, caution is no longer required when dealing in the Company`s
shares.
PG Joubert
(Chairman)
EW van Zyl
(Joint Managing)
BR Wright
(Joint Managing)
5 March 2003
Registered Office Transfer Secretaries
11th Floor, Office Tower Computershare Investor Services Limited
Sandton City 70 Marshall Street
Rivonia Road Marshalltown
Sandown 2146 2001
website: www.dei.co.za
Date: 05/03/2003 04:00:04 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
