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DEL
DEL
DEL - Delta - Trading update
Delta Electrical Industries Limited
Incorporated in the Republic of South Africa
(Registration number 1919/006020/06)
Share code : DEL ISIN : ZAE000002036
("Delta")
Trading update
Delta Shareholders are referred to the Prospects Statement contained in the Un-
audited Group Results Announcement for the six months ended 27 June 2006
published on 28 August 2006. Delta directors highlighted that trading results of
the business for the second six months of 2006 would be dependent on exchange
rates and were expected to be lower than those achieved during the second six
months of 2005.
Shareholders are advised that trading profits of the business in the second six
months of 2006 are forecast to be materially lower than those achieved during
the second six months of 2005. The deterioration in trading results in the
second six months of 2006 compared with the comparable period in 2005 is
attributable to lower sales volumes into the USA and Asia. Hurricane activity in
the United States was limited in 2006, reducing demand for batteries and EMD and
demand otherwise failed to meet expectations.
Furthermore, whilst the South African operation remains profitable before
restructuring costs, Delta EMD has decided not to complete the construction of
the additional plant capacity in South Africa in the foreseeable future, and an
impairment review of the partially completed expansion in South Africa will be
included in results for the year ended 27 December 2006 ("2006 year"). The
impairment charge is forecast to be R27 million and will affect the loss rather
than the headline loss of the business.
A loss before taxation of between R56 million and R68 million and headline loss
before taxation of between R32 million and R38 million is forecast for the 2006
year. This loss and headline loss compares with the earnings and headline
earnings before taxation from continuing operations of R35,3 million for the
year ended 27 December 2005 ("2005 year").
A loss per share of between 279 cents and 340 cents and a headline loss per
share of between 234 cents and 285 cents is forecast for the 2006 year, which
compares with the loss per share of 29,2 cents and the headline loss per share
of 29,6 cents from continuing operations for the 2005 year.
Secondary Taxation Charge on Companies ("STC") of R35,7 million (72,8 cents per
share) was paid on the initial special dividend paid in November 2005 and
R86 million (175 cents per share) on the final special dividend paid in March
2006. Excluding the STC charge the forecast loss per share for the 2006 year
will be between 122 cents and 148 cents and the headline loss will be between 76
cents and 92 cents, which compares with the earnings and headline earnings per
share for the 2005 year from continuing operations of 43,6 cents and 43,2 cents.
An EMD producer located in Greece and controlled by Tosoh Corporation of Japan
requested the European Commission initiate an anti-dumping investigation
concerning EMD produced by Delta EMD South Africa. The European Commission
elected during December 2006 to do so, and Delta EMD will provide information in
response to that investigation.
Delta EMD`s 2007 supply arrangements are not yet final. Production levels will
be reduced in 2007 in order to reduce stock levels and provide enhanced cash
flow. The cost reductions completed during 2006 and those now underway will
benefit Delta EMD`s 2007 performance, although reduced production will result in
an under-recovery of overheads during 2007, adversely impacting profitability.
This statement has not been reviewed by Delta`s auditors and Delta`s results are
expected to be released on or about 19 February 2007
Johannesburg
15 January 2007
Sponsor
Nedbank Capital
Date: 15/01/2007 08:38:08 Produced by the JSE SENS Department.
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