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Delta Electrical - Unaudited group results for the six months ended 30 June 2005
DELTA ELECTRICAL INDUSTRIES LIMITED
(REG. NO. 1919/006020/06)
Share code: DEL
ISIN: ZAE000002036
Directors:
TG Atkinson* (Chairman), BR Wright (Managing), LB Bird, PL Campbell, BG
Hitchcock, RB Spoon. *USA
Unaudited group results for the six months ended 30 June 2005
GROUP INCOME STATEMENT
Unaudited
Unaudited Year to
Six months to June December
2005 2004 2004
Restated Change Restated
R`000 R`000 % R`000
Continuing operations
Revenue 230,130 174,243 32 397,221
Group revenue 731,284 649,149 1,370,840
Less: Disposal Group 501,154 474,906 973,619
Earnings before interest,
taxation,
depreciation and amortisation 26,164 22,969 14 19,401
Depreciation (17,131) (18,341) (36,660)
Net foreign exchange 5,817 (7,945) (6,154)
gains/(losses)
Operating profit/(loss) 14,850 (3,317) (23,413)
Net interest paid (4,898) (4,698) (3,095)
Profit/(loss) before tax 9,952 (8,015) (26,508)
Tax expense (4,190) (5,079) (18) 14,048
Normal tax (3,974) 4,018 24,220
Secondary tax on companies (216) (9,097) (10,172)
Profit/(loss) after tax from 5,762 (13,094) (12,460)
continuing operations
Profit for the period from 71,347 51,162 127,362
disposal group
Operating profit 95,256 69,497 37 174,536
Interest received 4,857 4,753 9,284
Profit before tax 100,113 74,250 35 183,820
Tax expense (28,766) (23,088) 25 (56,458)
Profit after tax 71,347 51,162 39 127,362
Profit for the period 77,109 38,068 103 114,902
Attributable to:
Equity holders of parent 75,605 37,792 113,278
company
Minority interests 1,504 276 1,624
77,109 38,068 114,902
Headline earnings attributable 75,631 38,847 95 115,063
to ordinary shareholders
(note 1)
Number of shares in issue 49,166 49,166 49,166
(`000)
Weighted number of shares in 48,794 48,732 48,753
issue (`000)
Dilutive number of shares in 49,109 49,221 48,830
issue (`000)
Earnings per share (cents)
- basic 154.9 77.6 100 232.4
From continuing operations 11.8 (26.8) (25.5)
From disposal group 143.1 104.4 257.9
- diluted 154.0 76.8 101 232.0
From continuing operations 11.8 (26.6) (25.5)
From disposal group 142.2 103.4 257.5
Dividend per share (cents) 39.0 17.5 88.5
SEGMENTAL ANALYSIS
Unaudited
Six months to June
2005 2004 2004
Restated Change Restated
R`000 R`000 % R`000
Revenue
Electrolytic Manganese Dioxide 230,130 174,243 32 397,221
Repairs and Services 404,452 365,969 11 762,419
Replacement Parts 96,702 108,937 (11) 211,200
731,284 649,149 13 1,370,840
Operating profit
Electrolytic Manganese Dioxide 22,810 5,289 331 (3,432)
Repairs and services (note A) 88,539 64,513 37 162,720
Replacement parts (note A) 6,717 4,984 35 11,816
Corporate and other (7,960) (8,606) (8) (19,981)
110,106 66,180 66 151,123
Segmental assets
Electrolytic Manganese Dioxide 895,357 800,428 785,837
Repairs and Services 385,551 316,369 324,345
Replacement Parts 117,820 119,292 105,937
Corporate and other 2,891 2,165 2,172
1,401,619 1,238,254 1,218,291
Cash and cash equivalents 242,988 177,759 232,555
Tax overpaid 15,132 14,305 14,144
Total assets 1,659,739 1,430,318 1,464,990
Segmental liabilities
Electrolytic Manganese Dioxide 126,263 91,410 96,562
Repairs and Services 142,435 135,295 125,218
Replacement Parts 41,184 46,773 34,418
Corporate and other 21,873 23,457 23,098
331,755 296,935 279,296
Bank overdrafts and short-term 264,738 198,417 209,975
borrowings
Tax provision 40,423 47,123 33,726
Deferred tax liabilities 16,748 30,042 15,288
Total liabilities 653,664 572,517 538,285
Note A: In terms of IFRS 5, no depreciation has been charged for the six
months ended 30 June 2005 on the disposal group`s assets. Had
depreciation been charged, this would have amounted to R6.2 million in
respect of Repairs and Services and R1.6 million in respect of
Replacement Parts.
GROUP BALANCE SHEET
Unaudited Unaudited
June December
2005 2004 2004
Restated Restated
R`000 R`000 R`000
ASSETS
Property, plant and equipment 473,467 556,088 555,913
Goodwill and intangible assets - 6,672 6,897
Current assets 492,883 867,558 902,180
Assets classified as held for sale 693,389 - -
Property plant and equipment 97,343 - -
Goodwill and intangible assets 6,897 - -
Current assets 589,149 - -
Total assets 1,659,739 1,430,318 1,464,990
EQUITY AND LIABILITIES
Share capital and reserves 1,002,778 856,942 924,498
Minority interest 3,297 859 2,207
Total shareholders` funds 1,006,075 857,801 926,705
Deferred tax liabilities 16,748 30,042 15,288
Provision for long-term compensation - 24,480 18,611
benefits
Current liabilities 401,644 517,995 504,386
Liabilities classified as held for sale 235,272 - -
Total equity and liabilities 1,659,739 1,430,318 1,464,990
Net asset value per share (cents) 2,040 1,743 1,880
Net gearing (%) 2.2 2.4 -
STATEMENT OF CHANGES IN EQUITY
Share Foreign
Capital currency
and translation Treasury
premium reserve shares
R`000 R`000 R`000
Balance at 27 December 2003 as
previously stated
117,445 70,118 (10,136)
Change in accounting policy and
restatements in respect of IAS 17 - - -
IFRS restatements - - -
Balance at 27 December 2003 - restated
117,445 70,118 (10,136)
Net profit for the year - restated - - -
Dividend paid - - -
Decrease in Foreign
Currency Translation Reserve - (35,948) -
Proceeds on disposal
of treasury shares - - 2,582
Balance at 27 December 2004 restated
117,445 34,170 (7,554)
Net profit for the year - - -
Dividend paid - - -
Increase in Foreign
Currency Translation Reserve - 34,671 -
Proceeds on disposal
of treasury shares - - 2,646
117,445 68,841 (4,908)
STATEMENT OF CHANGES IN EQUITY
Accumulated Minority Total
profit Total interest equity
R`000 R`000 R`000 R`000
Balance at 27 December
2003
as previously stated 734,740 912,167 773 912,940
Change in accounting
policy and restatements in
respect of IAS 17
(19,470) (19,470) - (19,470)
IFRS restatements 29,604 29,604 - 29,604
Balance at 27 December
2003
- restated 744,874 922,301 773 923,074
Net profit for the year - 113,278 113,278 1,624 114,902
restated
Dividend paid (77,715) (77,715) (190) (77,905)
Decrease in Foreign
Currency Translation - (35,948) - (35,948)
Reserve
Proceeds on disposal
of treasury shares - 2,582 - 2,582
Balance at 27 December
2004
restated 780,437 924,498 2,207 926,705
Net profit for the year 75,605 75,605 1,504 77,109
Dividend paid (34,642) (34,642) (414) (35,056)
Increase in Foreign
Currency Translation - 34,671 - 34,671
Reserve
Proceeds on disposal of
treasury shares
- 2,646 - 2,646
821,400 1,002,778 3,297 1,006,075
GROUP CASH FLOW STATEMENT
Unaudited Audited
Six months to June
December
2005 2004 2004
R`000 R`000 R`000
Cash generated by trading 117,531 95,626 218,090
(Increase)/decrease in working capital (82,239) (19,499) (18,274)
Cash generated by operations 35,292 76,127 199,816
Interest (paid)/received (41) 55 6,189
Payments against long-term compensation - (7,783) (18,344)
benefits
Tax paid (23,757) (32,075) (74,151)
Cash available from operating activities 11,494 36,324 113,510
Dividend paid (35,056) (69,366) (77,905)
Cash (outflow)/ inflow from operating (23,562) (33,042) 35,605
activities
From continuing operations (9,045) (39,858) (36,378)
From disposal group (14,517) 6,816 71,983
Expansion capital expenditure (1,155) (28,824) (41,594)
Replacement capital expenditure (13,220) (22,350) (34,612)
Proceeds on disposal of business - 500 -
Investments in businesses - - (1,644)
Proceeds on disposal of property, plant 92 182 1,268
and equipment
Net cash outflow before financing (37,845) (83,534) (40,977)
activities
From continuing operations (14,586) (63,856) (77,562)
From disposal group (23,259) (19,678) 36,585
Proceeds on disposal of treasury shares 2,646 2,537 2,582
Net decrease in cash and cash (35,199) (80,997) (38,395)
equivalents
From continuing operations (11,940) (61,319) (74,980)
From disposal group (23,259) (19,678) 36,585
Cash and cash equivalents at beginning 22,580 57,242 57,242
of period
Translation of cash in foreign (9,131) 3,097 3,733
subsidiary
Cash and cash equivalents at end of (21,750) (20,658) 22,580
period
NOTES
1. Reconciliation between net profit and headline earnings
June June December
2005 2004 2004
Restated Restated
R`000 R`000 R`000
Net profit 75,605 37,792 113,278
Goodwill amortised - 1,135 2,262
Loss/(profit) on disposal of property, 26 (80) (477)
plant and equipment net of tax effect
Headline earnings attributable to 75,631 38,847 115,063
ordinary shareholders
Attributable headline earnings per share
- basic 155.0 79.7 236.0
From continuing operations 11.8 (26.9) (25.6)
From disposal group 143.2 106.6 261.6
- diluted 154.0 78.9 235.6
From continuing operations 11.8 (26.6) (25.5)
From disposal group 142.2 105.5 261.1
2. Basis of presentation
International Financial Reporting Standards (`IFRS`) are applicable to the
company`s financial year ending 27 December 2005. The abridged interim financial
statements have been prepared in terms of IFRS and IAS 34 - Interim Financial
Reporting. These standards are subject to ongoing review and may change. The
annual financial statements for the year ended 27 December 2004 were prepared in
accordance with South African Statements of Generally Accepted Accounting
Practice (`SA GAAP`). SA GAAP differs in some areas from IFRS. In preparing
these abridged interim financial statements, certain accounting policy changes
and reclassifications were applied to comply with IFRS. The comparative figures
in respect of 2004 were restated to reflect these adjustments. Reconciliations
and descriptions of the effect of the transition from SA GAAP to IFRS on the
group`s assets, equity and its net profit are provided below.
3. Transitional arrangements
The group`s financial statements for the year ending 27 December 2005 will be
the first set of annual financial statements that comply with IFRS. The group
has applied IFRS 1 (First Time Adoption of International Financial Reporting
Standards) in preparing these financial statements. Delta`s transition date is
28 December 2004. The group`s opening IFRS balance sheet at that date has been
restated to reflect all existing IFRS statements expected to be applicable at 27
December 2005. At transition date IFRS 1 allows a number of exemptions to this
retrospective application principle on adoption of IFRS.
4.Change in accounting policy
The company has changed its accounting policy with regard to the capitalisation
of borrowing costs. Borrowing costs directly related to the plant expansion were
previously capitalised to the cost of property plant and equipment. Borrowing
costs are now written off when they are incurred. No borrowing costs were
capitalised during the 2003 and 2004 financial years and accordingly the
comparative income statements are not affected by this change in accounting
policy. Comparative figures have been restated.
The effect of the change in accounting policy is as follows:
Gross Tax
Adjustment to opening 2004 (23,182) 6,954
retained profit
Net Minority Attributable
Interest
Adjustment to opening 2004 (16,228) - (16,228)
retained profit
5. Restatement in respect of IAS 17
Following circular 7/2005 issued by SAICA on 2 August 2005, there has been
clarification of the reinterpretation of IAS 17-Leases. As a result leases are
now recognised as an expense on a straight line basis over the lease term.
Previously lease expenses were recognised on a basis which reflected the cash
flows during that period. Comparative figures have been restated.
The effect of the change is as follows:
Gross Tax Net
Decrease in profit 2005 (328) 74 (254)
Increase in profit 2004 2,533 (760) 1,773
Net effect on opening 2004 (2,099) 630 (1,469)
retained profit
Minority
Interest Attributable
Decrease in profit 2005 2 (252)
Increase in profit 2004 5 1,778
Net effect on opening 2004 5 (1,464)
retained profit
June June December
2005 2004 2004
R`000 R`000 R`000
6. Commitments
Capital commitments - 74,104 76,189 55,098
Authorised but not
contracted
Capital commitments - 28,822 27,888 40,466
contracted
102,926 104,077 95,564
Operating lease 35,518 41,572 38,721
commitment
Other 4,798 10,652 5,739
7. Disposal group
The disposal group consists of the Repairs and Services and Replacement Parts
divisions. A number of offers were received for the Repairs and Services and
Replacement Parts divisions. On 09 June 2005 an agreement was reached for the
disposal of these divisions as going concerns to an Ethos and Actis led private
equity consortium for an aggregate consideration of R1,296 million.
8. Notes on the effect of transition to IFRS
8.1 Reconciliation of equity at 28 December 2004
Restatement
and change
Previously in accounting Previous
Note stated policy GAAP
1,2 Property, plant and 528,731 (23,182) 505,549
equipment
Goodwill 6,009 - 6,009
Intangible assets 888 - 888
Total non-current assets 535,628 (23,182) 512,446
Trade and other 241,379 - 241,379
receivables
Inventories 414,102 - 414,102
Tax overpaid 14,144 - 14,144
Cash and cash 232,555 - 232,555
equivalents
Total current assets 902,180 - 902,180
Total assets 1,437,808 (23,182) 1,414,626
3 Trade and other 222,409 2,099 224,508
payables
Provision for long-term
compensation
benefits 18,611 - 18,611
Provision 36,177 - 36,177
Current tax liability 33,726 - 33,726
4,5 Deferred tax 7,763 (7,584) 179
liability
Bank overdraft 209,975 - 209,975
Total liabilities 528,661 (5,485) 523,176
Total assets less total 909,147 (17,697) 891,450
liabilities
Issued capital 117,445 - 117,445
Treasury shares (7,554) - (7,554)
Foreign currency 34,170 - 34,170
translation reserve
6,7 Retained earnings 762,874 (17,692) 745,182
8 Minority interest 2,212 (5) 2,207
Total equity 909,147 (17,697) 891,450
Effect of
transition
Note to IFRS IFRS
1,2 Property, plant and 50,364 555,913
equipment
Goodwill - 6,009
Intangible assets - 888
Total non-current assets 50,364 562,810
Trade and other - 241,379
receivables
Inventories - 414,102
Tax overpaid - 14,144
Cash and cash - 232,555
equivalents
Total current assets - 902,180
Total assets 50,364 1,464,990
3 Trade and other - 224,508
payables
Provision for long-term
compensation benefits
- 18,611
Provision - 36,177
Current tax liability - 33,726
4,5 Deferred tax 15,109 15,288
liability
Bank overdraft - 209,975
Total liabilities 15,109 538,285
Total assets less total 35,255 926,705
liabilities
Issued capital - 117,445
Treasury shares - (7,554)
Foreign currency - 34,170
translation reserve
6,7 Retained earnings 35,255 780,437
8 Minority interest - 2,207
Total equity 35,255 926,705
Notes to the reconciliation of equity at 28 December 2004
1. The company has changed its accounting policy with regard to the
capitalisation of borrowing costs. Borrowing costs directly related to the
plant expansion were previously capitalised to the cost of property plant
and equipment. Borrowing costs are now written off when they are incurred.
The cumulative adjustment decreased the carrying amount of property plant
and equipment by R23,182k.
2. Significant components of property plant and equipment were not separately
depreciated where the useful life of that component was significantly
different from the useful life of the asset as a whole under previous GAAP.
Under IFRS components of property plant and equipment with a useful life
that differs significantly from the asset as a whole are depreciated
separately over their useful lives. The cumulative adjustment increased the
carrying amount of property, plant and equipment by R50,364k.
3. Following circular 7/2005 issued by SAICA on 2 August 2005, there has been
clarification of the reinterpretation of IAS 17-Leases. As a result leases
are now recognised as an expense on a straight line basis over the lease
term. Previously lease expenses were recognised on a basis which reflected
the cash flows during that period. The cumulative adjustment required to
increase the liability arising from this adjustment is R2,099k.
4. The above changes had the following impact on deferred tax:
R`000
Reversal of interest capitalised (note 1) (6,954)
Operating lease expenses (note 3) (630)
(7,584)
5 The IFRS restatement above (note 2) increased
the deferred tax liability by R15,109k.
6 The adjustment to retained profit is as
follows:
R`000
Reversal of interest capitalised (note 1) (16,228)
Operating lease expenses (note 3) (1,464)
(17,692)
7 The IFRS restatement above (note 2) increased the retained profit by R35,255k.
8 The minority interest decreased due to an increase in the operating lease
expenses relating to minorities. The cumulative adjustment decreased minority
interests by R5k.
8.2 RECONCILIATION OF profit and loss FOR THE YEAR ENDED 27 DECEMBER 2004
Adjustments
Previously in respect Previous
Note stated of IAS 17 GAAP
Revenue 1,370,840 - 1,370,840
1 Earnings before interest taxation
depreciation and amortisation
219,878 2,533 222,411
2 Depreciation (60,178) - (60,178)
Amortisation (2,852) - (2,852)
Net foreign exchange losses (16,330) - (16,330)
Operating profit 140,518 2,533 143,051
Net interest received 6,189 - 6,189
Profit before tax 146,707 2,533 149,240
3,4 Tax expense 39,229 760 39,989
Profit after tax 107,478 1,773 109,251
Attributable to:
Equity holders of parent company 105,849 1,778 107,627
5 Minority interests 1,629 (5) 1,624
107,478 1,773 109,251
Effect of
transition
Note to IFRS IFRS
Revenue - 1,370,840
1 Earnings before interest taxation
depreciation and amortisation - 222,411
2 Depreciation 8,072 (52,106)
Amortisation - (2,852)
Net foreign exchange losses - (16,330)
Operating profit 8,072 151,123
Net interest received - 6,189
Profit before tax 8,072 157,312
3,4 Tax expense 2,421 42 410
Profit after tax 5,651 114,902
Attributable to:
Equity holders of parent company 5,651 113,278
5 Minority interests - 1,624
5,651 114,902
Notes to the reconciliation of profit and loss for the year ended 27 December
2004
1. Following circular 7/2005 issued by SAICA on 2 August 2005, there has been
clarification of the reinterpretation of IAS 17-Leases. As a result leases
are now recognised as an expense on a straight line basis over the lease
term. Previously lease expenses were recognised on a basis which reflected
the cash flows during that period. The restatement increased earnings
before interest, taxation, depreciation and amortisation by R2,533k. The
restatement was positively impacted by the termination of a lease during
the period.
2. Significant components of property plant and equipment were not separately
depreciated where the useful life of that component was significantly
different from the useful life of the asset as a whole under previous GAAP.
Under IFRS components of property plant and equipment with a useful life
that differs significantly from the asset as a whole are depreciated
separately over their useful lives. The adjustment decreased the
depreciation charge for the year by R8,072k.
3. The restatement of operating lease expenses (note 1) increased the deferred
tax expense by R760k.
4. The restatement of depreciation (note 2) increased the deferred tax expense
by R2,421k.
5. Minority interests in profit decreased by R5k due to operating lease
expenses being written off on a straight-line basis over the period of the
lease.
8.3 RECONCILIATION OF PROFIT AND LOSS
For the six months ended 30 June 2005
Adjustments
Previously in respect
Note stated of IAS 17
1 Revenue 649,149 -
Earnings before interest taxation
depreciation and amortisation 103,934 2,742
2 Depreciation (29,889) -
Amortisation (1,433) -
Net foreign exchange losses (13,112) -
Operating profit 59,500 2,742
Net interest received 55 -
Profit before tax 59,555 2,742
3,4 Tax expense 26,163 823
Profit after tax 33,392 1,919
Attributable to:
Equity holders of parent company 33,114 1,921
5 Minority interests 278 (2)
33,392 1,919
Effect of
Previous transition
Note GAAP to IFRS IFRS
1 Revenue 649,149 - 649,149
Earnings before interest
taxation
depreciation and amortisation 106,676 - 106,676
2 Depreciation (29,889) 3,938 (25,951)
Amortisation (1,433) - (1,433)
Net foreign exchange losses (13,112) - (13,112)
Operating profit 62,242 3,938 66,180
Net interest received 55 - 55
Profit before tax 62,297 3,938 66,235
3,4 Tax expense 26,986 1,181 28,167
Profit after tax 35,311 2,757 38,068
Attributable to:
Equity holders of parent 35,035 2,757 37,792
company
5 Minority interests 276 - 276
35,311 2,757 38,068
Notes to the reconciliation of profit and loss for the six months ended 30 June
2004
1. Following circular 7/2005 issued by SAICA on 2 August 2005, there has been
clarification of the reinterpretation of IAS 17-Leases. As a result leases
are now recognised as an expense on a straight line basis over the lease
term. Previously lease expenses were recognised on a basis which reflected
the cash flows during that period. The restatement increased earnings
before interest, taxation, depreciation and amortisation by R2,742k. The
restatement was positively impacted by the termination of a lease during
the period.
2. Significant components of property plant and equipment were not separately
depreciated where the useful life of that component was significantly
different from the useful life of the asset as a whole under previous GAAP.
Under IFRS components of property plant and equipment with a useful life
that differs significantly from the asset as a whole are depreciated
separately over their useful lives. The adjustment decreased the
depreciation charge for the six months to June 2004 by R3,938k.
3. The restatement of operating lease expenses (note 1) increased the deferred
tax expense by R823k.
4. The restatement of depreciation (note 2) increased the deferred tax expense
by R1,181k.
Minority interests in profit decreased by R2k due to operating lease expenses
being written off on a straight-line basis over the period of the lease.
COMMENT ON RESULTS
Disposal of Repairs and Services and Replacement Parts Divisions
On 9 June 2005 Delta announced that, subject to the fulfilment of certain
conditions precedent, it had reached agreement for the disposal of the Repairs
and Services and Replacement Parts divisions, as going concerns. The two
divisions (the disposal group) are being sold to an Ethos and Actis led private
equity consortium for an aggregate consideration of R1,296 million. Shareholders
are referred to the announcements published on 9 June 2005, 18 August 2005 and
24 August 2005 and the circular to ordinary shareholders dated 25 July 2005 for
further details.
As a result, in terms of International Financial Reporting Standards, the
trading results of the disposal group for the six months ended 30 June 2005 have
been disclosed as discontinuing operations in the income statement. The assets
and liabilities of these divisions are disclosed under current assets as `Assets
classified as held for sale` and under current liabilities as `Liabilities
classified as held for sale` in the balance sheet. In compliance with IFRS 5, no
depreciation has been charged to the income statement in respect of the disposal
group for the six months ended 30 June 2005 as a sale of the disposal group was
highly probable during this period. Had depreciation been charged it would have
amounted to R7,8 million.
Financial Review
Headline earnings per share for the six months ended 30 June 2005 were 155
cents, 94% higher than the restated 79,7 cents earned for the six months ended
30 June 2004.
Group revenue grew by 13% to R731,3 million (2004: R649,2 million) for the
period and operating profit increased by 66% to R110,1 million (restated 2004:
R66,2 million). Growth in revenue was achieved in both the Electrolytic
Manganese Dioxide (`EMD`) and Repairs and Services divisions, with improved
operating profit in all the divisions.
The Group adopted the International Financial Reporting Standards (`IFRS`) with
effect from 28 December 2004. Prior year`s comparative figures have been
restated to reflect IFRS. The effect of the restatement is to increase operating
profit for the six months to 30 June 2004 by R3,9 million. Shareholders are
referred to the accounting notes which detail the changes made.
Cash generated by trading increased by 23% to R117,5 million (2004: R95,6
million). This was, however, negatively affected by a R82,2 million increase in
working capital resulting in Cash available from operating activities of R11,5
million (2004: R36,3 million). The increase in working capital is mainly due to
increased trading.
Operations
Electrolytic Manganese Dioxide (EMD)
Revenue for the six months to June 2005 increased by 32% to R230,1 million
(2004: R174,2 million). The business is benefiting from increased sales tonnages
to a broader customer base. The strong rand and Australian dollar exchange rates
however, had a negative effect on revenue during the period under review. On
average, the rand and Australian dollar were respectively 8% and the 4% stronger
against the US dollar during the first half of 2005 compared to the first half
of 2004.
Repairs and Services
The Repairs and Services Division, comprising Electrical Repair Engineering
(ERE), Transwire and
Wire Electric, continued its growth during the period. Revenue grew by 11% to
R404,5 million (2004:
R366,0 million) and operating profit by 37% to R88,5 million (restated 2004:
R64,5 million).
ERE continued to benefit from the refurbishment of the locomotive and metro
rolling stock in South Africa as well as from engineering services due to the
installation of production monitoring equipment on draglines. The capital
invested in the new Cape Town repair facility has delivered excellent returns
and work continues on the upgrading of the Denver transformer repair facility in
order to increase the capacity and improve quality.
Transwire achieved a satisfactory result with revenue benefiting from increased
sales into the transformer manufacturing and repair industry as well as from the
increase in the copper price. Difficulties were experienced in the lighting and
small motor manufacturing markets, which compete with low priced imports.
Wire Electric performed well with growth in revenue coming from transformer
materials and covered copper. Margins however came under pressure from increased
competition.
Replacement Parts
Revenue in the Equipment Spare Parts (ESP) division decreased by 11% to R96,7
million (2004: R108,9 million). This resulted from poor trading conditions in
the earthmoving sector of the construction market as well as price reductions
due to the strength of the rand.
Prospects
The sale of the disposal group referred to above is likely to take place on 30
September 2005. As set out in the circular to shareholders dated 25 July 2005,
the Group expects to realise a profit of approximately R900 million from the
disposal. This profit has not been included in the calculation of headline
earnings per share.
The headline earnings per share forecast for the year ended 27 December 2005,
taking into account the sale of the disposal group effective 30 September 2005,
does not differ by more than 20% from the restated headline earnings per share
reported for the year ended 27 December 2004. This forecast has not been
reviewed or reported on by the group`s auditors.
DIVIDEND
Dividend number 67
Notice is hereby given that an interim dividend of 39,0 cents per share has been
declared by the directors in respect of the six months ended 30 June 2005. The
following are the salient dates for the payment of the interim dividend:
Friday, 16 September 2005 Last day to trade to qualify for the
dividend
Monday, 19 September 2005 Shares commence trading ex-dividend
on the JSE Limited
Friday, 23 September 2005 Record date
Monday, 26 September 2005 Payment date
The dividend is declared in the currency of the Republic of South Africa. Share
certificates may not be dematerialised or rematerialised between Monday, 19
September 2005 and Friday, 23 September 2005 both days inclusive.
T G Atkinson (Chairman)
B R Wright (Managing Director)
2 September 2005
Registered Office Sponsor Transfer Secretaries
11th Floor, Office Tower Nedbank Capital Computershare Investor
Sandton City Services 2004
Rivonia Road Sandown 2146 (Proprietary) Limited
70 Marshall Street,
Johannesburg 2001
website: www.dei.co.za
Date: 02/09/2005 04:31:18 PM
Produced by the JSE SENS Department
