integrated annual report - sharedata · of the companies act, 71 of 2008, as amended, for the year...

INTEGRATED ANNUAL REPORT

for the year ended 27 December 2013

DELTA EMD Integrated Annual Report 2013

Delta EMD is a global supplier of electrolytic manganese

dioxide (EMD), which is used as cathode material for the

manufacture of primary alkaline batteries world-wide, and

is Africa’s only producer of premium-quality EMD.

About this reportDelta EMD’s annual report covers the economic, environmental and social activities of the Group and their consequences for stakeholders for the fiscal year ended 27 December 2013.

The report provides an account of the Group’s progress to date and offers a forward-looking perspective in terms of future goals, targets and value-creating strategies. It aims to provide a broad range of stakeholders with a transparent, balanced and holistic view of the Group’s performance.

The report is evolving to present these aspects in an integrated manner, confirming operational responsibility and accountability for business sustainability and highlighting stakeholder interdependence.

This printed report is an abridged version of the full report, which is available on the CD attached to the back cover of this report. An electronic version of this annual report is also available on the Delta EMD website, www.deltaemd.com

The report includes comparative information on Delta EMD’s performance in prior years, with information disclosed in past annual reports being restated, where appropriate.

The front section summarises key aspects of the Group and provides a strategic overview of its activities. Salient indicators, an overview of operations and a strategic framework are underpinned by a commitment to corporate governance and ethical behaviour.

The Chairman’s Review and Chief Executive Officers’ Report give oversight of the business, addressing past performance, covering important aspects, indicating strategic direction and future opportunities.

Whilst progress is made towards disclosing sustainability issues throughout the report, the section on Stakeholders’ share of value created provides an overall perspective of the Group’s value creation activities to all stakeholders.

Delta EMD’s reporting continues to be influenced by the Global Reporting Initiative’s (GRI) G3 Sustainability Reporting Guidelines in determining relevant content and performance metrics.

Any questions or suggestions on the report can be forwarded to [email protected]

1DELTA EMD Integrated Annual Report 2013

Page

• Company overview

• About this report inside front cover

• Nature of business 2

• Administration 3

• Production facilities 4

• EMD manufacturing process 5

• Salient features 6

• Financial highlights 6

• Stakeholders’ share of value created 7

• Chairman’s Review 8

• Executive Directors’ Report 9

• Board of Directors 11

• Corporate Governance Report 14

• Equality and empowerment 22

• Our people 24

• Risk management 26

• Environmental footprint 29

• Remuneration report 31

• Customer geographical segments 35

• Annual financial statements 37

• Global Reporting Initiative 70

• Shareholders’ diary 78

• Notice to shareholders 79

• Form of proxy Attached

• Integrated Annual Report guidelines Inside back coverspace

TABLE OF CONTENTS

www.deltaemd.com

INTEGRATED ANNUAL REPORT

2013

2 DELTA EMD Integrated Annual Report 2013

NATURE OF BUSINESS

Delta EMD Limited (“Delta”) is a registered holding company for a group that manufactures and supplies Electrolytic Manganese Dioxide (“EMD”). EMD is mainly used in the manufacturing of dry alkaline batteries. Delta’s EMD product range covers the entire spectrum of EMD from high grade optimum performance, including lithium grade, to low grade slow discharge alkaline batteries.

Delta’s EMD is marketed under the Delta brand names:• Delta Silver• Green• TCA• TSS• TXL

Delta maintains a primary listing on the Main Board of the JSE Limited.

Financial results The financial results for the year ended 27 December 2013 are set out in detail in the annual financial statements on pages 37 to 69. An electronic copy of the annual financial statements is available on www.deltaemd.com

Audit Committee reportThe report of the Audit Committee in terms of section 94(7)f of the Companies Act, 71 of 2008, as amended, for the year ended 27 December 2013 is set out in detail on page 41.

Year under reviewThe year under review is fully covered in the Chairman’s Review, the Chief Executive Officer’s Report and the Chief Financial Officer’s Report.

Share capitalDetails of the authorised and issued share capital, appear in note 13 to the annual financial statements on page 37 to 69.

DividendsDetails of the dividends and distributions declared and paid are shown in note 6 to the annual financial statements on page 54. The directors considered the Group both solvent and liquid subsequent to such dividend declarations.

Assets held for saleProperty owned by Delta EMD Australia Proprietary Limited

Assets held for sale consist of the main plant site in the Steel River Valley, Newcastle, NSW, Australia. Any sale of property in the Steel River Valley requires the purchaser to enter into an environmental deed with Delta and BHP Billiton Group, the original owners of the property. The Group continues to actively market the site.

DirectorsBiographical notes of the current directors are given on pages 12 and 13. Details of directors’ remuneration appear on pages 54 and 56.

Changes in directorateAccording to the company’s Memorandum of Incorporation, at the forthcoming annual general meeting, Messrs AC Hicks and BR Wright retire by rotation. Both are eligible and have offered themselves for re-election. Mr Bird retired on 3 May 2013 after 10 years’ service.

Company Secretary and registered officeThe Company Secretary is Johan Seymore and his address and that of the registered office are:

Business address Postal address 15 Heyneke Street PO Box 2197Industrial Site, Nelspruit Nelspruit, 1200Mpumalanga, South Africa South Africaspace

AuditorsDeloitte & Touche continued in office as auditors for the company and its subsidiaries.

At the annual general meeting shareholders will be requested to re-appoint Deloitte & Touche as the independent external auditors of Delta EMD Limited and to confirm Dr DA Steyn as the designated lead independent external auditor.

InsuranceThe Group has placed cover in the South African traditional insurance markets.

Subsidiary companiesDetails of principal subsidiary companies appear on page 68 of the annual financial statements.

Special resolutionsThe following special resolutions were passed since the date of the previous Directors’ report:

1. Approval of the non-executive directors’ fees with effect from 1 January 2013.

2. Authorising the directors of Delta EMD Limited, in accordance with section 45 of the Companies Act, to authorise the company to provide direct or indirect financial assistance to any company which is related or inter-related to the company.


ADMINISTRATION

DELTA EMD LIMITED

(Incorporated in the Republic of South Africa)

(Registration number 1919/006020/06)

Share code: DTA ISIN: ZAE000132817

Secretary and registered office Transfer secretaries BankersJS Seymore, CA(SA) Computershare Investor Services ABSA Limited15 Heyneke Street Proprietary Limited Investec LimitedIndustrial Site 70 Marshall Street Nedbank LimitedNelspruit JohannesburgMpumalanga 2001PO Box 2197 Registered auditorsNelspruit Deloitte & Touche1200space

3. Resolved that the company and any subsidiary of the company be and are authorised, subject to provisions of the Companies Act, to acquire as a general repurchase up to 10% of the ordinary shares issued by the company, subject to certain conditions.

Full details of all the special resolutions passed are available at the company’s registered office.

International Financial Reporting Standards (IFRS)The company’s financial statements were prepared in accordance with International Financial Reporting Standards of the International Accounting Standards Board.

Going concernThe directors consider that the company has adequate resources to continue operating for the foreseeable future and that it is therefore appropriate to adopt the going-concern basis in preparing the company’s financial statements. The directors have satisfied themselves that the company is in a sound financial position and that it has access to sufficient cash balances and borrowing facilities to meet its foreseeable cash requirements.

Major shareholdersShareholders holding beneficially, directly or indirectly, in excess of 2% of the issued share capital of the company at 27 December 2013 are detailed on page 69 of the integrated annual report.

Stock exchange performance

Market value per share (cents)

• at year-end 600• highest 801• lowest 475

Number of shares traded (’000) 6 853Value of shares traded (R’000) 39 673Volume traded as percentage of issued shares (%) 14

Events after the reporting periodOn 5 March 2014 the company has announced that the board has taken the decision, subject to approval by the Company's Shareholders, to discontinue operations in a phased and orderly manner during 2014 and to realise value for the Company's assets during 2014 and 2015.


PRODUCTION FACILITIES

Production facilitiesDelta EMD’s manufacturing facilities are based in:• Blackrock Calcining Facility – Northern Cape • Main Production Site and Corporate Head Office

in Nelspruit, Mpumalanga

Black Rock: A modern manganese ore reduction plantIn 2003 Delta EMD Limited commissioned its own dedicated calcining facility with a capacity to produce 30 000 metric tonnes per annum of reduced manganese ore. Further investments in 2008 and 2010 increased the capacity of the ore reduction facility to 36 000 metric tonnes per annum. The calcining facility is situated in Black Rock, Northern Cape on 11 hectares of land owned by Delta EMD. The location is adjacent to one of the world’s largest and highest grade deposit of manganese with a number of manganese mining facilities being in close proximity to Delta’s calcining operation.

Nelspruit: EMD Production Facility and Head OfficeThe EMD manufacturing operation was established in Nelspruit in 1982 and built as a Greenfield facility with an annual production capacity of 5 000 metric tonnes, located in the Industrial Zone of Nelspruit which falls within the boundaries of Mbombela local municipality. The EMD production capacity has over the past 30 years increased to 30 000 metric tons per annum culminating in two independent chemical, electrolysis, and product finishing plants at the Nelspruit facility, each with similar capacity. This provides operating flexibility for producing different grades on independent production streams.

Delta’s installed production capacity can supply approximately 12% of the world’s alkaline grade EMD demand. The business exports 98% of all EMD manufactured at the facility. The production site also includes the corporate head office, main laboratories and an R&D facility.

The Nelspruit production site, also has a waste residue treatment plant that captures residue generated from the main EMD process for conversion into a co-product called Green-fill.


EMD MANUFACTURING PROCESS

The Delta EMD manufacturing of process material consists of six main chemical engineering processes:• Ore preparation• Ore reduction• Reduced ore digestion and purification• Electrolytic deposition of EMD• Final product washing, milling and screening and

classification• Treatment and management of waste residue generated

during the manufacturing process

Manganese ore sourced from the mines is first milled and classified and thereafter through carefully controlled conditions introduced into a rotary kiln (calciner) operating at high temperatures. Carbon which acts as a reducing agent is mixed with the ore and, through the reduction step, the ore is chemically converted to manganous oxide (MnO). After calcining, the MnO material passes through a cooler and is transferred to a milling section to break down agglomerates so that the ore has the correct particle size distribution for the next step of the process.

The reduced ore (MnO) which is now more acid soluble is passed through a series of advanced unit operations where the material is digested in sulphuric acid and purified to produce an electrolyte.

In the purification process, metals, insoluble ore components and contaminants are precipitated and the main manganese sulphate solution stream is clarified and filtered to produce a pure solution that is used as cell feed for the electrolytic deposition process.

The electrolytic deposition is carried out in electrolytic cells that contain alternating copper cathodes and titanium anodes and the vessels are equipped with heat exchangers. The manganese sulphate stream coming from the

purification process is pre-heated and the electrolyte solution passes through these cells for approximately three weeks where the manganese dioxide is plated onto the titanium anodes. The cell temperatures are maintained at near boiling point by the introduction of steam into the heat exchangers.

Plated EMD is stripped from the anode with pneumatic hammers and the EMD chips are transferred to the size reduction, washing and milling sections.

EMD chip is transported by means of conveyor belts to a crushing and screening plant where their size is reduced through a combination of two crushers and screens. The small chip is then fed into the washing plant where residual acid is washed off and the pH is adjusted. After the wash sequence, the material is fed by conveyor to one of two milling plants. Classified EMD powder is collected in the milling circuit and then pneumatically transferred to product blending and storage bins. Packaging can either be bulk bags or small bags. The final product is stored in on-site warehouses before it is loaded into containers, which are then placed on rail wagons or trucks for dispatch to customers.

The solid waste residue generated and captured during the clarification and filtration process is fed onto one of two belt filters to collect any soluble manganese sulphate solution and the filter cake is then sent to the residue treatment plant. Delta EMD has an innerting plant where the residue is treated with an inorganic material in specially designed mixers to produce a co-product called Green-fill.

Through its closely monitored in-process quality control systems and analytical laboratories, the company produces EMD which meets the high standards demanded of the world’s leading alkaline battery producers.


Revenue R375.2 million (2012: R365.5 million)

EBITDA R43.9 million (2012: R43.1 million)

HEPS from continuing operations 37.70 cents (2012: 36.2 cents)

Net cash generated by trading R42.3 million (2012: R45.8 million)

Zero debt

Total dividend of 25 cents (2012: 25 cents) per share

SALIENT FEATURES

FINANCIAL HIGHLIGHTS

2013 2012

Revenue* (R’000) 375 187 365 459EBITDA* (R’000) 43 899 43 089Operating profit* (R’000) 25 509 29 113HEPS (cents)* 37.7 36.2Ordinary dividends per share declared in respect of current year’s earnings (cents) - 25.0Net cash on hand (R’000) 121 128 153 622Total assets (R’000) 543 537 656 214Net asset value per share (cents) 904 1 067

* From continuing operations.

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Value-added statementA measure of the value created by the Group is the amount of value added to purchased materials and goods by the process of manufacture and conversion, and the sale of its products and services.

This statement shows how the value so added has been distributed:

2013 2012R’000 % R’000 %

Revenue from operations 375 187 100 365 459 100 Paid to suppliers for input materials, products and services 173 688 46 238 298 65

Value added 201 499 54 127 161 35Income from investments 5 961 2 6 228 2

Total value created 207 460 55 133 389 37

Value distribution Employees

Salaries, wages, overtime payments, commissions, bonuses and allowances 61 184 38 56 897 33Employer contributions 10 061 6 9 166 5

Capital providers

Dividends to Delta EMD Limited shareholders 12 291 8 12 291 7

Government

Current taxation 11 563 6 9 742 6Rates and taxes paid to local authorities 1 080 1 996 1Skills development levy 610 – 563 –

96 789 56 89 655 52

Reinvested in the Group to maintain and develop operations 110 671 43 734

Depreciation and Impairment 143 657 83 23 112 12Retained (loss)/profit (69 117) (40) 17 123 10Deferred taxation 36 131 21 3 499 2

Value-added ratios*Number of employees (27 December) 220 204Revenue per employee (R’000)† 1 705 1 692Value created per employee (R’000)† 752 878

* Based on operations excluding assets held for sale.† Based on average number of employees include temporary employees.

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STAKEHOLDERS’ SHARE OF VALUE CREATED


We are pleased to present to our shareholders this Integrated Annual Report, which provides an overview of the Company’s business, together with more detailed reports on the Company’s 2013 results.

2013 was a difficult year for the Company. Market conditions remained difficult and Delta EMD’s market share of the global EMD market provided inadequate sales volumes. A thorough review of the global EMD market and of Delta EMD’s market and competitive positions led to the board’s decision, in accordance with accounting statement IAS 36, to reduce the carrying value of the Nelspruit operation’s plant and equipment to fair value, which substantially affected the Company’s 2013 results. The efforts of Delta EMD’s management and employees nonetheless assured fairly good underlying operational performance.

Demand for electrolytic manganese di-oxide (EMD) remained soft during 2013. Migration to embedded rechargeable batteries and to smaller batteries that require less EMD reduced overall demand for EMD, and the migration of battery production from the US and Europe to Asia further reduced demand in Delta EMD’s historic markets. Price competition remained vigorous, particularly in Asia. Delta EMD’s historic competitive advantages have waned with increased input costs, higher transport costs, international customers’ preference for domestic supply and higher grade material, and antidumping duties in Europe and Japan.

The Company’s 2013 sales volumes reduced from the prior year and remained well below capacity, resulting in poor recovery of manufacturing overheads.Management’s efforts to improve sales mix were not as successful as planned, however foreign exchange and selling price movements in certain markets were favorable, resulting in modest improvement to average selling price and contribution.

Management did very well to offset substantial input cost increases with operational improvements, however per unit production costs again increased.

The Company’s 2013 results, prior to the impairment of the Nelspruit operation’s plant and equipment, were broadly in line with the prior year, which is a tribute to the efforts made by the Delta EMD management team to manage the business in most difficult market conditions. Revenue for the year totaled R375.2 million (2012: R365.5 million), and trading profit was R28.4 million (2012: R26.9 million). Anticipated working capital movements and dividend payments resulted in a cash outflow of R32.8 million (2012: cash inflow of R33.6 million)

Delta EMD’s annual IAS 36 impairment review identified various external and internal indicators which necessitated determining if our assets carrying values were fairly valued. Given the strategic circumstances noted immediately below, and in accordance with the principles of the accounting statement IAS 36, the board determined to reduce the

carrying values of the Nelspruit operation’s plant and equipment to fair value, resulting in a pre-tax impairment of R121.7 million. The carrying values of the Black Rock operation’s plant and equipment were not impaired.

Post Balance Sheet EventsThe strategic review undertaken by Delta EMD management has informed the board of several important circumstances: demand for EMD in Delta EMD’s historic markets (US, Europe and Japan) is unlikely to improve; the EU anti-dumping duty has been continued and the anti-dumping duty in Japan is likely to be continued; international battery producers continue to prefer domestic suppliers; further operational improvements are unlikely to offset continuing input cost increases absent substantial capital investments; and, Delta EMD is unlikely to secure adequate sales volumes to sustain current operations.

The foregoing circumstances were reflected in the decision by a substantial customer in North America to significantly reduce its 2014 purchases from Delta EMD in favor of a domestic supplier. The domestic supplier had additional product to sell following the migration of another customer’s battery production from the US to Asia. The board has determined that these trends are unlikely to reverse and that Delta EMD is unlikely to secure adequate sales volumes to sustain its business. Consequently the board has taken the decision, subject to approval by the Company’s shareholders, to discontinue operations in a phased and orderly manner during 2014 and to realise value for the Company’s assets during 2014 and 2015. This was not an easy decision to make but is believed to ensure that the Company can be wound up in an orderly manner, addressing outstanding liabilities, providing transitional support for employees, properly decommissioning plant and equipment, and protecting shareholder value.

The board also will encourage any third party’s interest in the purchase of the Company’s business or assets, and has determined not to declare a dividend for 2013

The board also would like to express its appreciation to the employees of Delta EMD for their dedication to the business over many years, for their support of the difficult decision made, and for their commitment to an orderly winding up of the business

TG AtkinsonChairman

7 March 2014

CHAIRMAN’S REVIEW


EXECUTIVE DIRECTORS’ REPORT

the Nelspruit EMD manufacturing plant and equipment, effectively reducing the carrying value of these assets to fair value. These assets are fully operational and the impairment to fair value per IAS 36 principles is as result of the continued capacity underutilisation at the current production and sales levels.

The Group’s taxation charge for the year of R11.5 million (2012: R9.7 million) was offset with an R36.1 million deferred tax credit arising from the impairment charge. The net tax for the year is a tax credit of R24.6 million.

Attributable loss for the year totalled R69.1 million (2012: attributable profit R17.1 million), and loss per share was 140.6 cents (2012: earnings per share 34.8 cents). Headline earnings for the year were R18.5 million (2012: headline earnings R17.8 million), and headline earnings per share for the year were 37.7 cents (2012: 36.2 cents).

Cash generated by operations for the year totalled R3.1 million (2012: R63.1 million) after an increase of R39.2 million in working capital during the year (2012: decrease of R17.3 million). Capital expenditures for the year totalled R15.9 million (2012: R14.1 million). Dividend payments totalled R12.3 million (2012: R12.3 million).

Year-end cash balances decreased to R121.1 million (2012: R153.6 million).

Total assets employed in the Group decreased by R112.7 million to R543.5 million, mainly as result of the R121.7 million impairment. The net asset value per share decreased to 904 cents (2012: 1 067 cents).

The Group continues to have no interest bearing debt.

Disposal of the Group’s former Australian plant siteMarketing efforts continue, on-going costs in Australia being reduced to a minimum.

The net asset value of the assets remaining in Australia reflected on the Group’s statement of financial position at year end totalled R16.9 million, this included assets held for sale of R13.2 million and cash balances totalling R3.7 million.

Outlook and Strategic FocusGlobal EMD market conditions continue to be difficult. Demand for EMD in the US, Europe and Japan has declined with battery production migrating to China and South East Asia, and with the replacement of larger batteries with smaller batteries that require less EMD. The EMD market remains oversupplied, particularly in the US, Europe and Japan.

OverviewThe Group’s underlying performance for 2013 reflects continued oversupply in the global electrolytic manganese dioxide (EMD) market, increasingly competitive pricing, and market selling prices that did not afford a full recovery of higher input costs. Operational improvements and improved average selling prices supported the satisfactory underlying Group performance.

Headline earnings per share increased to 37.7 cents (2012: 36.2 cents).

Performance of the Group’s EMD BusinessThe Group’s global EMD market share continued to reduce during 2013 as the demand for high grade EMD remained flat and the Group’s US top up market position was negatively affected through the migration of battery production into Asia which resulted in increased availability of domestic EMD supply. Market prices remained under pressure as supply exceeded demand and the major global battery producers’ preference to source most of their EMD from their domestic manufacturers.

Revenue totalled R375.2 million and exceeded the prior year (2012: R365.5 million). Sales volumes were marginally lower than in 2012. An improved sales mix, assisted by foreign exchange movements in certain markets resulted in slightly improved average selling prices. The majority of the Group’s sales were in Rand-denominated selling prices, which on average were slightly higher than the prior year. The average Rand selling price realized on US dollar denominated sales in certain markets was also slightly higher than the prior year, due to favourable foreign exchange movements, notwithstanding the lower average competitive US dollar selling prices in those markets.

Average per unit production cost for the year increased from the prior year due to input cost increases, particularly for electricity, transport, labour and maintenance. Input cost increases were only partly offset by operational improvements. The Group’s increased capacity underutilisation resulted in an increase in under recovery of manufacturing overheads to R29.4 million (2012 R25.4 million). A review of value realisation for certain inventory and work in progress material resulted in inventory written down by R9.6 million.

Administration costs increased to R39.2 million (2012: R31.3 million), and included once off costs for product and market development, costs responding to regulatory reviews of the EU and Japanese anti-dumping duties, and advisory costs associated with the Group’s strategic review.

The group has undertaken an impairment review in accordance with IAS 36, which gave rise to a pre-tax impairment of R121.7 million on the carrying value of


Delta EMD’s competitive position has also weakened due to higher input costs, overseas customers’ preference for domestic supply, relative product performance and anti-dumping duties.

The Group’s product research and development efforts have included work on cathode materials for electric vehicle batteries, as well as other manganese materials. Our review of opportunities available to Delta EMD has concluded that none of the possible investments would provide an acceptable return.

A substantial North American customer has advised Delta that its 2014 purchases from Delta EMD will be substantially lower than prior years. This longstanding customer has chosen domestic supply that is now available resulting from reduced demand from another customer that has migrated battery production to Southeast Asia. The reduced sales volumes will have an adverse effect on Delta EMD's financial results.

Management has revised the Group’s 2014 business plan and is reducing production in line with the reduced sales volumes expected during 2014, as well as reducing costs where possible. Discussions are underway with Delta EMD’s significant customers to assess their short and longer term EMD requirements and these will shape the medium term business performance.

P Baijnath J S SeymoreChief Executive Officer Chief Financial Officer

10 February 2014

EXECUTIVE DIRECTORS’ REPORT (continued)

Summarised statement of cash flows

2013 2012R’000 R’000

Operating cash flows before working capital 42 313 45 821(Increase)/Decrease in working capital (39 182) 17 288Replacement capital expenditure (15 844) (14 074)

Cash (utilised)/generated by operations (12 713) 49 035Other net cash flows (13 820) (9 369)Dividends paid (12 291) (12 291)

Cash (spend on)/retained from operating activities (38 824) 27 375Investment income 6 073 6 226

Net cash (outflow)/inflow (32 751) 33 601

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BOARD OF DIRECTORS

Non-executive Non-executive(Non-independent) (Independent) Executive Committee

TG Atkinson (USA) (57)

Chairman of Delta EMD Limited – Appointed 2003 and Chairman in 2004

3 NC, RC

P Baijnath (50) Chief Executive Officer of Delta EMD Limited – Appointed 2009

3 SC

AC Hicks (68) Director of Companies Appointed 2006 3 AC, NC, RC

BR Wright (67) Director of Companies Appointed 2006 3

AC, NC, RC, SC

L Matteucci (60) Director of Companies Appointed 2012 3 AC

JS Seymore (45) Chief Financial Officer of Delta EMD Limited – Appointed 2009

3 SC

AC Member of the Audit and Risk Committee.

NC Member of the Nominations Committee.

RC Member of the Remuneration Committee.

SC Member of the Social and Ethics Committee.

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BOARD OF DIRECTORS

Non-executive directors

Directors

The full names, ages and profiles of the directors at last practicable date are set out below:

Mr Todd G Atkinson – Chairman Age: 57

Qualifications: BSc (Accounting), Juris Doctorate, LLM

Profile: Todd G Atkinson has been Executive Vice President of Valmont Industries Inc. since July 2011. Prior to joining Valmont he was Chief Executive of Delta plc, a UK-listed group acquired by Valmont during 2010. He became Chairman of Delta EMD Limited in May 2004.

Business address: Valmont Industries Inc. One Valmont Plaza, Omaha, Nebraska 68154, USA

Nationality: American

Mr Alf C Hicks – Independent Non-executive Age: 68

Profile: Alf C Hicks has spent more than 30 years in the dry cell battery business as Sales and Marketing Director of Eveready South Africa and Business Director of Duracell in Poland. He joined the Delta Board in 2006 and is a member of the Delta Audit and Risk Committee and of the Remuneration and Nominations Committees.

Business address: 14 Greenacres Village,1 Ascot Road Greenacres, Port Elizabeth, Eastern Cape

Nationality: South African

Mr Brian R Wright – Independent Non-executive Age: 67

Qualifications: BCom, CA(SA)

Profile: Brian R Wright joined the Delta Group in 1974. During his career he held a number of senior executive positions in the Group and was appointed to the Delta Board in 1987. In 2006 he retired from his position as Group Managing Director and was appointed to the Delta Board as a Non-executive Director. He is a member of the Delta Audit and Risk Committee, Nominations and Remunerations Committee and Chairman of the Delta Social and Ethics Committee.

Business address: 2300 Waterfall Valley, 1 Country Estate Drive, Midrand, 1682


Mr Luigi Matteucci – Independent Non-executive Age: 60


Mr Matteucci is the chairman of the Delta Audit and Risk Committee. He is also currently a Non-executive Director and Chairman, Audit and Risk Committee, of Metmar Limited, and a Non-executive Director and Chairman, Audit Committee, of Small Enterprise Foundation.

Profile: Mr Matteucci retired as Financial Director of Highveld Steel and Vanadium Corporation Limited (“Highveld”) in 2007. He completed his articles at Coopers & Lybrand in 1978. He joined Highveld in 1979 as Chief Accountant and was appointed Financial Director in 1985.

Mr Matteucci is the chairman of the Delta Audit and Risk committee. He is also currently a Non-executive Director and acting Chairman of the Audit and Risk Committee, of Metmar Limited, and a Non-executive Director and Chairman, Audit Committee, of Small Enterprise Foundation.

Business address: 33 Sawgrass Avenue, Silver Lakes, Pretoria, 0054


Executive directors

Mr Praveen Baijnath – Chief Executive Officer Age: 50

Qualifications: ChemEng, MSAIChe, MBA (Wales), PMD (UCT)

Profile: Praveen Baijnath was appointed CEO for Delta EMD Limited on 26 January 2009 and currently has a total of 25 years’ experience in the industrial chemical, minerals processing and beneficiation industry. He was previously CEO for Gold Reef Speciality Chemicals, as well as director on the Operational Board of Frame Textile Group. His previous positions spanning a period of 20 years were with ICI/Huntsman Tioxide in Process/Chemical Engineering, Plant management and Senior Management roles in Operations, EHS, Technical and Strategic Development. Praveen is a Member of SA Institute of Chemical Engineers and Institute of Directors in Southern Africa.

Business address: 15 Heyneke Street, Nelspruit Mpumalanga


Mr Johan S Seymore – Chief Finance Officer and Company Secretary Age: 45


Profile: Johan S Seymore joined Delta as Executive Director on 3 December 2009 and appointed as CFO on 18 February 2010. He has 24 years’ diverse financial, strategic and operational management experience within global engineering, telecoms, defence, mining and industrial groups and served as CFO for VWS Envig (Pty) Limited and prior to that as CFO for SAAB Grintek Limited. He was appointed as Company Secretary for Delta on 10 December 2010.

Business address: 15 Heyneke Street, Nelspruit Mpumalanga



CORPORATE GOVERNANCE REPORT

Shareholder profileDelta EMD Limited is listed on the Johannesburg Stock Exchange (JSE) Main Board. Detailed analysis of its shareholders’ profile appears on page 69. The major shareholder of Delta EMD Limited (Delta) is Valmont EMD Holdings Limited, a private limited company incorporated in the United Kingdom which held 49.1% (2012: 52.2%) of the issued share capital of Delta at 27 December 2013.

Ethical leadership and corporate citizenshipGovernance of ethics

The Board provides effective leadership based on principled effective corporate governance. Delta subscribes to high ethical standards. Operating within the guidelines of the Code of Corporate Practices and Conduct as contained in the King Report on Corporate Governance in South Africa, the Directors recognise the need to conduct business with integrity and in accordance with generally accepted corporate practices. The fundamental objective will always be to do business ethically whilst building a sustainable company that recognises the short- and long-term impact of its activities on the economy, society and the environment.

In its deliberations, decisions and actions, the Board is sensitive to the legitimate interests and expectations of the company’s stakeholders. The Board as a whole acts as a steward of the company and each Director acts with intellectual honesty and independence of mind in the best interests of the Group and its stakeholders.

Management of ethics

Our commitment to building and sustaining an ethical organisational culture is fostered in our day-to-day management of the operations. While the Board has ultimate responsibility for the company’s ethics performance, executive management is responsible for setting up a properly implemented ethics management process, under the guidance of the Social and Ethics Committee.

The code of ethics enjoins Delta Directors, management and employees to:• Hold paramount the safety, health and welfare of the public

in the performance of their duties;• Act in such a manner as to uphold and enhance personal

and professional honour and integrity;• Treat with respect and consideration all persons,

regardless of race, religion, gender, sexual orientation, marital or family status, disability, age or national origin;

• Build professional reputations on the merit of our product and refrain from competing unfairly;

• Avoid any interest of activity that is in conflict with the conduct of their role in Delta;

• Demonstrate the highest standard of integrity, truthfulness, honesty and fortitude in all activities in order to inspire confidence and trust in all actions.

The company maintains an ethics hotline. This is an independent and confidential system for stakeholders to report unethical, dishonest or improper behaviour, including non-compliance with company policies as well as corruption and fraud. All reported incidents are investigated by the audit committee Chairman and, where appropriate, action is taken. The service is outsourced to an independent service provider. In line with legislation, our well-communicated commitment not to victimise whistleblowers ensures transparency and promotes ethical conduct, and the identity of whistleblowers is protected by the service provider.

The Group’s comprehensive risk management approach covers all operations and risks associated with corrupt and dishonest behaviour. These are analysed and assessed as part of the risk management process. Induction and other staff training programmes address aspects of expected behaviour in terms of the company’s ethics, codes, policies and procedures.

Ongoing communication through various media, including, letters of appointment, management briefings and structured team forum meetings, reinforce the company’s commitment to its values and expected behaviour.

Compliance with laws, rules, codes and standards

The Board is responsible for ensuring that Delta complies with applicable laws and considers adhering to non-binding rules, codes and standards.

Through the Audit and Risk and Social and Ethics Committees, the Board ensures that appropriate structures and systems with appropriate checks and balances are established to help it discharge its legal responsibilities and oversee legal compliance. Processes are also in place to ensure the Board is appraised of significant developments in applicable laws, rules, codes and standards. Compliance risk is thus an integral part of the company’s risk management process and the Board delegates to management the task of implementing an effective compliance framework and processes.

Corporate governance

We confirm that Delta applies the governance principles contained in King III and continues to further entrench and strengthen recommended practices in our governance structures, systems, processes and procedures. The financial impact of implementing all the relevant governance principles for a company of Delta’s size is material. In relevant sections of this integrated annual report Delta refers to areas where further improvements or enhancements in governance practices may be required or have explained where the Group applies a King III recommended practice differently.


Regulatory compliance

Delta is listed on the JSE. The Board annually confirms that the company complies with the Listings Requirements of the JSE.

The Board places strong emphasis on the highest standards of financial management, accounting and reporting. The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS). For non-financial aspects, the company has adopted the Global Reporting Initiative’s (GRI G3.1) sustainability reporting guidelines on economic, environmental and social performance.

Delta is a signatory to the Global Responsible Care programme. The world-wide chemical industry is committed to continuously improve all aspects of health, safety and environmental performance and to open communication about its activities and achievements. Delta completed the registration of its products with the European Union REACH programme in 2011. REACH is the European Community Regulation on chemicals and their safe use (EC 1907/2006). It deals with the registration, evaluation, authorisation and restriction of chemical substances.

Statutory compliance

Compliance remains a core focus of the Board which is ultimately responsible for ensuring that the Group identifies and complies with applicable laws.

The Board established in 2012 a separate Social and Ethics Committee at Board level and a Transformation Committee at executive management level. The Board believes that the current structure of a combined Audit and Risk Committee as well as the combined structure of a Remuneration and Nomination Committee are suitable for Delta’s size of operations. The combined committee structure provides adequate independence and support to the Board to ensure all the terms and references of the corporate governance charters for Audit, Risk, Remuneration and Nomination are adequately covered and that the company is not exposed to non-compliance. During the year under review the company did not receive any requests for access to information in terms of the Promotion of Access to Information Act, No. 2 of 2000.

Standards of directors’ conduct

The Board always acts consistently in its duties of care, skill and diligence as well as its fiduciary duties.

Conflict of interest

The Board recognises the importance of acting in the best interest of the company and protecting the legitimate interests and expectations of its stakeholders. The Board consistently applies the provisions of the Companies Act on disclosing or avoiding conflicts of interest. Directors are required to declare their interests in general annually and specifically at each meeting of the Board. Among other

measures to deal with conflicts of interest, the company has a policy that addresses the acceptance of gifts which requires that gifts be officially declared and registered in the company’s gift register.

Insider trading

Through appropriate procedures, the Board ensures that no director, manager, prescribed officer, employee or nominees or members of their immediate family deals, directly or indirectly, in the securities of the company on the basis of unpublished price-sensitive information nor during the closed period determined by the Board in terms of a formal policy implemented by the Company Secretary. Closed periods are from the end of the interim and annual periods to the start of the business day following the results announcement.

Statutory powers

Section 66(1) of the Companies Act provides that the business and affairs of a company must be managed by or under the direction of its Board which has the authority to exercise all the powers and perform all the functions of the company, except to the extent that the Act or the company’s memorandum of incorporation provides otherwise. The general powers of the directors are set out in the company’s memorandum of incorporation. The directors have further unspecified powers and authority for matters that may be exercised and dealt with by the company, which are not expressly reserved to shareholders of the company in general meeting.

Board of directorsRole and function of the Board

The Board functions in accordance with the requirements of King III and within the context of the Companies Act, the Listings Requirements of the JSE and other applicable laws, rules and codes of governance. The Board is responsible for, among other things, the governance of risk and information technology and has ensured that the company has an effective, independent Audit Committee and an effective outsourced risk-based internal audit function. On the recommendation of the Audit Committee, the Board has considered and approved the company’s integrated annual report. Based on the report of the Audit Committee and the written assessment of the company’s internal auditor, the Board is satisfied that the company’s system of internal controls is effective.

The main responsibilities of the Board, as set out in the Board Charter, are:• To determine the Group’s purpose, values and

stakeholders and to develop strategies to achieve its purpose, implement its values and satisfy its stakeholders;

• To exercise leadership, enterprise, integrity and judgement based on fairness, accountability, responsibility and transparency;


CORPORATE GOVERNANCE REPORT (continued)

• To safeguard the Group’s compliance with all the relevant laws, regulations and codes of best business practice;

• To promote the Group operating ethically by adopting and regularly reviewing and updating the Group’s code of ethics and by approving mechanisms implemented aimed at fraud prevention, detection and response;

• To manage conflicts of interest and independence issues by overseeing the development and enforcement of a code of conduct;

• To provide direction to and equip management to formulate strategy and planning processes to meet such strategy and to adopt the recommended strategic plan; and

• To appoint the Chief Executive Officer and maintain a succession plan for executive directors and senior management.

While retaining overall accountability and subject to matters reserved to itself, the Board has delegated to the Chief Executive and other executive directors authority to run the day-to-day affairs of the company. Annually, the Board considers a forward-looking strategic plan presented by the executive management.

Composition of the Board

The Delta Board is committed to the effective leadership, strategic direction and control of Delta. Delta has a unitary Board, consisting of executive directors who have an intimate knowledge of Delta’s business and non-executive directors who add a broader view to Delta’s activities. Collectively, the Board believes the current mix of knowledge, skills and experience meets the requirements to lead the business effectively. The Board has six directors, comprising four non-executive directors and two executive directors. Three non-executive directors are independent and only one non-executive director is not independent. Refer to pages 11 to 13 for detail of the Board of Directors.

Board appointment process

To ensure a rigorous and transparent procedure, any new appointment of a director is considered by the Board as a whole, on the recommendation of the Remuneration and Nominations Committees. The selection process involves considering the existing balance of skills and experience, and a continual process of assessing the needs of the company. Non-executive directors are required to devote sufficient time to the company’s affairs.

Independence of non-executive directors

The Board comprises a majority of non-executive directors of whom a majority is independent non-executive directors. The Board considered the issue of independence of directors, evaluating the rationale and meaning of the requirements of independence according to King III. An assessment, considering the salient factors and unique circumstances of each director, was performed for each non-executive director. The Board is satisfied that three of the four non-executive directors are independent.

Todd Atkinson is not regarded as independent in view of his position as Executive Vice President and Corporate Secretary of Valmont Industries Inc. as major shareholder of Delta. Despite the determination reached on Mr Atkinson, the Board believes the skills, knowledge and experience of this director remain valuable to the organisation.

Retirement of directors

In terms of the company’s Memorandum of Incorporation, at every annual general meeting, at least one-third of the directors retire from the Board. According to the Companies Act, a director appointed by the Board to fill a vacant seat will serve as a director of the company on a temporary basis until the vacancy has been filled by election.

Chairman and Chief Executive

No individual has unfettered powers of decision-making. Responsibility for running the Board and executive responsibility for conducting the business are differentiated. Todd Atkinson, a non-executive director, is Chairman of the Board and Praveen Baijnath, an executive director, is Chief Executive. The roles of the Chairman and Chief Executive are thus separate and clearly defined. The Chairman is responsible for leading the Board, ensuring its effectiveness and setting its agenda. The Chief Executive leads the executive team in running the business and co-ordinates proposals developed by the Executive Committee for consideration by the Board.

Board meetings and attendance

Board meetings are convened by formal notice incorporating a detailed agenda and relevant written proposals and reports. Information is distributed in good time before Board meetings to enable adequate preparation for thorough discussion at these meetings. Decisions are allowed to be taken between Board meetings, by written resolution, in accordance with the company’s Memorandum of Incorporation and these are tabled for noting at each subsequent Board meeting.

When directors are not able to attend in person, video and teleconferencing facilities allow them to participate fully. Where directors are unable to attend a meeting in person or via video/teleconference, they are able to make submissions in advance on matters to be discussed and these submissions are recorded at the meeting.

Director development

Directors are appraised, wherever relevant, of new legislation and changing commercial risks that may affect the company.

In certain circumstances, it may become necessary for a non-executive or independent director to obtain independent professional advice to act in the best interests of the company. Such a director also has unrestricted access to the Chairman, executive directors and Company Secretary. Where a non-executive or independent director takes reasonable action and costs are incurred, these are borne by the company.


Remuneration of directors and senior executives

Remuneration plays a critical role in attracting, motivating and retaining high-performing and talented individuals to achieve Delta’s business objectives. The remuneration report was prepared by the Remuneration and Nominations Committees and has been approved by the Board. The report sets out the company’s remuneration philosophy, policy and practice for executive directors, non-executive directors and senior executives. Details of the remuneration policy of the company as it pertains to executive and non-executive directors are set out in the Remuneration report commencing on page 31 of the integrated annual report.

Company Secretary

The Group Company Secretary is duly appointed by the Board in accordance with the Companies Act. The Company Secretary provides the Board as a whole and directors individually with guidance on discharging their responsibilities. He is also a central source of information and advice to the Board and the company on matters of ethics and good corporate governance. The Company Secretary ensures that, in accordance with pertinent laws, the proceedings and affairs of the Board and its members, the company itself and, where appropriate, the owners of securities in the company are properly administered.

The Company Secretary ensures compliance with the Listings Requirements of the JSE. He also assists in developing the annual Board plan, and ensures compliance with the statutory requirements of the company and its subsidiaries. In terms of section 3.84(i) of the JSE Listings Requirements the board must satisfy itself, on an annual basis, on the competence, qualifications and experience of the company secretary. The board satisfied itself of this requirement during the year

Board attendance

During the year under review five meetings were held:

Name12 February 3 May 21 August 25 October 19 November

2013 2013 2013 2013 2013

Todd Atkinson (Chairman) 3 3 3 3 3

Praveen Baijnath (CEO) 3 3 3 3 3

Lionel Bird (retired 3 May 2013) 3 3 n/a n/a n/a

Alf Hicks 3 3 3 3 3

Brian Wright 3 3 3 3 3

Luigi Matteucci (appointed 15 October 2012) 3 3 3 3 3

Johan Seymore (CFO) 3 3 3 3 3

space



Board committees

The Board has three sub-committees that assist in discharging its responsibilities. These committees, listed below, play an important role in enhancing good corporate governance, improving internal controls and, thus, the performance of the company: • Audit and Risk Committee;• Remuneration and Nominations Committee; and• Social and Ethics Committee.

Each Board committee acts according to written terms of reference, approved by the Board and reviewed annually, setting out its purpose, membership requirements, duties and reporting procedures (copies of the terms of reference, including the Board Charter, are posted on the company’s website: www.deltaemd.com). Board committees may take independent professional advice at the company’s expense. The committees are subject to annual evaluation by the Board on performance and effectiveness. Chairmen of the Board committees and the registered auditor are required to attend annual general meetings to answer questions raised by shareholders. The Board has determined that the three sub-committees have fulfilled their responsibilities for the year under review in compliance with their terms of reference.

Audit and Risk Committee

The Delta Board has elected to combine the role of the Audit Committee and Risk Committee. The committee comprises Messrs Luigi Matteucci (Chairman), Alf Hicks and Brian Wright, all of whom are independent non-executive directors. The Chairman of the company is not a member of the committee. The Audit and Risk Committee was appointed by the shareholders for the 2013 financial year. At the annual general meeting scheduled for 5 May 2014, shareholders will be asked to approve the appointment of the Chairman and members of the Audit and Risk Committee for the 2014 financial year. In terms of the Companies Act, the committee reports directly to shareholders. The Board recommends to the shareholders the appointment of Messrs Luigi Matteucci (Chairman), Alf Hicks and Brian Wright as members for the Audit and Risk Committee for the 2014 financial year.

The Audit and Risk Committee’s terms of reference include, inter alia:• Considering the independence of the external auditors

and making recommendations to the shareholders on the appointment or dismissal of the external auditors;

• Evaluating the independence, effectiveness, performance and terms of engagement of the external auditors and considering and confirming the external audit fees;

• Considering and pre-approving any non-audit services rendered by those auditors, including satisfying themselves as to the validity of the non-audit services and defining any limits in this regard;

• Considering and reviewing the reliability and accuracy of financial information and appropriateness of accounting policies and disclosure practices and recommending to the Board corrective actions to be taken as a consequence of audit findings;

• Examining and reviewing the interim report, final profit statement, annual financial statements, the integrated annual report or any other documentation to be published by the company, and recommending the adoption of such statements by the Board;

• Reviewing compliance with applicable laws, best corporate governance practices, accounting standards and regulatory requirements;

• Reviewing the effectiveness of the Group risk management assessment process, adequacy of accounting records and internal control systems;

• Assisting the Board in its deliberations regarding the company’s continuing viability as a going concern and the liquidity and solvency tests required in terms of the Companies Act;

• Considering the appropriateness of the expertise and adequacy of the resources in the Group’s financial function as well as the expertise of senior financial management;

• Reviewing and confirming the suitability and expertise of the Chief Financial Officer of the company;

• Monitoring and supervising the functioning and performance of internal audit; and

• To receive and deal appropriately with any concerns or complaints relating to accounting practise and internal audit of the company, the content or auditing of the company's financial statements and the internal financial controls of the company.

The committee reports annually to the Board and stakeholders on the effectiveness of the company’s internal financial controls, based on review of the reports prepared by the internal auditors, external auditors, management and other assurance providers.

The Chairman of the committee reports to the Board on the activities and recommendations made by the committee. The committee carried out its functions by meeting three times during the year and obtaining assurance from management and internal and external auditors.

The Chief Financial Officer, head of outsourced internal audit function and the external audit partner are invited to attend all meetings.

Attendance

During the year under review three scheduled meetings were held with attendance shown below:

Name6 February 18 June 6 August

2013 2013 2013

Luigi Matteucci (Chairman) 3 3 3

Lionel Bird (Retired 3 May 2012) 3 n/a n/a

Alf Hicks 3 3 3

Brian Wright 3 3 3

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Annually, the committee assesses the qualifications, expertise, resources and independence of the company’s internal and external auditors. This assessment is based on reports produced by the auditors, the committee’s own dealings with the auditors and feedback from the executive team.

The independence and objectivity of the auditors is regularly considered by the committee in relation to proposed non-audit services.

The report of the Audit Committee is on page 41 of the integrated annual report.

Risk management process

The risk management charter was approved by the Board during 2012.

Delta evaluates all risk through an ongoing systematic, enterprise-wide risk assessment process. This ensures risks and opportunities are adequately identified, evaluated and managed at the appropriate level in the business, and that their individual and joint impact on Delta is considered.

Senior managers conduct ongoing self-assessment of risk. This process identifies critical business, operational, financial and compliance exposures facing the Group and the adequacy and effectiveness of control factors at all levels. The assessment methodology considers severity and probability of occurrence and applies a rating based on the quality of control to rank risks and set priorities. Top risks are addressed through action plans with assigned responsibilities.

The internal auditors assist the Audit Committee in evaluating the effectiveness of the risk management process and comment on this in their own assessment reports.

IT governance

The Board, which bears ultimate responsibility for information technology (IT) governance, has delegated responsibility for developing an IT governance framework to the Audit and Risk Committee. The Audit and Risk Committee has approved the IT Governance Policy which defines the structures, processes and responsibilities for IT governance.

Considering the size and structures of the Delta business, the Chief Financial Officer has been allocated responsibility for managing IT and for reporting IT governance to the Audit and Risk Committee and the Board. The Audit Committee is responsible for monitoring disaster-recovery readiness and adherence to information security management policies. The internal audit function reports to the Audit Committee on the effectiveness of the disaster-recovery plan, IT security and IT internal control in their annual internal audit report.

Internal audit

Role of internal auditThe purpose, authority and responsibility of the internal audit function are defined in the Audit Committee Charter that is consistent with the Institute of Internal Auditors’ definition of internal auditing, and the principles of King III. The Board, on recommendations from the Audit Committee, elected to outsource the internal audit function to Valmont Industries Inc. internal audit for the 2013 financial year.

Internal audit’s independenceThe Head of the outsourced Internal Audit reports functionally to the Chairman of the Audit and Risk Committee. He has unrestricted access to members of the Audit and Risk Committee and executives of the organisation. In addition separate meetings took place between the Head of the outsourced Internal Audit and the Audit and Risk Committee during the year under review.

Internal audit’s approach and planA risk-based methodology has been applied for the year under review with input from management and aligned to the organisation’s risk management processes. Internal audit plans were approved in February 2013. Audit findings were formally reported to the Audit and Risk Committee in August 2013 and in February 2014 as part of the financial year-end review.

Internal audit continued to function independently and objectively in the past year. Internal audit has focused on the following main areas, as required by King III:• Evaluating the company’s governance processes,

including ethics;• Assessing the effectiveness of the internal control

framework;• Assessing the effectiveness of IT security and internal

control; and• Evaluating the effectiveness of the risk management

process.

Combined assuranceAlthough not reliant on external auditors for any resource support, the internal audit function continues to liaise with the external auditors, and other assurance providers identified, to maximise efficiencies in assurance coverage on key risks.

Internal audit assessmentBased on the work internal audit carried out during the year, controls evaluated were assessed as adequate and effective to provide a reasonable level of assurance that risks are being managed and that business objectives should be met. Systems and controls were adequate and could be relied upon for the preparation of the annual financial statements.



Social and Ethics Committee

The Board appointed a Social and Ethics Committee in May 2012. The Board has approved the charter for the Social and Ethics Committee which sets out the committee’s terms of reference.

The functions of the committee are prescribed by the Companies Act and cover the following broad areas:• Social and economic development;• Corporate citizenship;• Environment, health and public safety;• Consumer relationships; and• Labour and employment.

Attendance

During the year under review four meetings were held with attendance shown below:

Name6 February 2 May 5 August 15 November

2013 2013 2013 2013

Brian Wright (Chairman)

3 3 3 3

Praveen Baijnath (CEO)

3 3 3 3

Johan Seymore (CFO)

3 3 3 3

spaceRemuneration and Nominations Committee

The Board has elected to combine the roles of the Remuneration and Nomination Committees. A single charter sets out the terms of reference for the combined Remuneration and Nominations Committee. The committee comprises three non-executive directors of which two are independent, Messrs Todd Atkinson (Chairman), Alf Hicks and Brian Wright. The Chief Executive may be invited to attend meetings, but may not participate in any discussion pertaining to his own remuneration.

The committee makes recommendations to the Board on the structure and development of policy on executive and senior management remuneration, taking into account market conditions. It determines the criteria necessary to measure the performance of executive directors in discharging their functions and responsibilities. It also determines remuneration packages for the Chief Executive and executive directors.

For non-executive directors, the committee makes recommendations to the Board on fees to be paid to each director for services rendered as a member of the Board or a Board sub-committee.

The committee makes recommendations to the Board on the composition of the Board and balance between executive, non-executive and independent directors. Skill, experience and diversity are considered in this process. The committee reviews the succession planning for the executive and non-executive directors and makes recommendations to the Board where actions are required.

Where appropriate, the committee consults with the Chief Executive or other executive or non-executive directors to fulfil the duties set out in its terms of reference.

The key responsibilities and role of the committee include but are not limited to:• Ensuring that the remuneration policy is put to a

non-binding advisory vote at the general meeting of shareholders once every year;

• Determining, agreeing and developing the company’s general policy on executive and senior management remuneration so that it will promote the achievement of strategic objectives and encourage individual performance;

• Determining specific remuneration packages for executive directors of the company, including but not limited to basic salary, benefits in kind, any annual bonuses, performance-based incentives, share incentives, pensions and other benefits, and ensuring that the mix of these remuneration elements meets the company’s needs and strategic objectives;

• Determining any criteria necessary to measure the performance of executive directors in discharging their functions and responsibilities, and reviewing the outcomes of the implementation of the remuneration policy for whether the set objectives are being achieved;

• Reviewing (at least annually) the terms and conditions of executive directors’ service agreements, taking into account information from comparable companies, when relevant;

• Ensuring that all benefits, including retirement benefits and other financial arrangements, are justified and correctly valued;

• Considering the results of the evaluation of the performance of the CEO and other executive directors, both as directors and as executives in determining remuneration;

• Regularly reviewing incentive schemes to ensure continued contribution to shareholder value and that these are administered in terms of the rules;

• Advising on the remuneration of non-executive directors; and

• To perform any other function required by the Board.

During the year under review, the committee considered the issue of prescribed officers as required by the Companies Act, and resolved that due to the nature and structure of Delta and the role of the executive directors on the Board, the company has no prescribed officers within the meaning of such Act.


The remuneration report commences on page 34 of the integrated annual report.

Attendance

During the year under review, four scheduled meetings were held with attendance shown below:

Name11 February

20133 May 2013

20 August 2013

19 November 2013

Todd Atkinson (Chairman)

3 3 3 3

Lionel Bird (retired 3 May 2012)

3 3 n/a n/a

Alf Hicks 3 3 3 3

Brian Wright

n/a n/a 3 3

space

Stakeholder engagement Delta engages with stakeholders on matters considered material to its business, which helps identify many of the important commercial and sustainable development issues facing the business.

Engagement with shareholders

The company is a proponent of transparency, best-practice disclosure, consistent communication and equal and timely dissemination of information to shareholders. It welcomes the active participation of shareholders at general meetings.

The Chief Executive and Chief Financial Officer have dialogue with institutional shareholders. The interests of private shareholders remain key and, in recognition of their needs, the company’s website contains investor relations information and materials. Delta is mindful that King III encourages companies to inform their investors about important non-financial issues. Continued inclusion of these issues in the Group’s annual integrated report is indicative of the Group’s commitment to this principle.

The annual general meeting is normally attended by all directors. Shareholders are welcome to attend and to ask questions during the meeting. They also have the opportunity to meet with directors after formal proceedings have ended. The notice of the annual general meeting, detailing all proposed resolutions, is on pages 79 to 83 of this integrated annual report.

Engagement with employees

Delta engages with employees in different forums. Employee representation through trade unions stands at 77%. Monthly meetings between management, trade unions and employees address items relating to business performance, productivity and health and safety of employees, training and skills development as well as general input from employees into business sustainability. An employment equity forum helps to address workplace equality and assists Delta to work towards goals with regards to employment equity and EE initiatives.

Through the health and safety forum and employee representatives, Delta engages with its employees about continuously improving on-site safety practices, employee safety behaviour and potential health stress mitigation.

Engagement with customers

Delta engages regularly with current and potential customers. The limited number of battery manufacturers in the global market requires Delta to stay informed about the market and customer requirements at all times, including strategic directions of the battery producers. Engagements with current and potential customers are heavily reliant on technical engagement on product development and matching very stringent customer requirements. Delta also works with selected customers in its product development.

Engagement with government, authorities and regulators

Engagement with relevant government authorities occurs as the needs require. Focus is on the local government level as Delta is a major business in the Mbombela, Mpumalanga region. As environmental matters are a critical important focus for Delta, continuous engagement with the Departments of Water Affairs, Environmental Affairs and Tourism is key to ensuring the Lowveld bio-diversity is not affected by Delta.

Delta engages with national government through its input to and membership of The Manufacturing Circle and the Chemical and Allied Industry association.

Engagement with communities

Delta impacts communities in a number of ways, primarily by providing employment. Delta’s formalised Corporate Social Investement (CSI) Programme was established, with an employee CSI committee responsible for rolling out of the CSI plan.

The CSI plan includes the involvement of employees in long-term projects. The focus is on the communities in which Delta’s employees reside. One of the long-term commitments is the support of the Kamagugu Inclusive School for disabled children, which Delta supports.


EQUALITY AND EMPOWERMENT

Equality“Treat with respect and consideration all persons, regardless of race, religion, gender, sexual orientation, marital or family status, disability, age or national origin.” – extract from Delta’s ethics policy.

Delta’s diverse workforce represents its employment practices where equal employment opportunities exist with the goal to ensure our workforce reflects the demographics of the country. Delta’s operations are based in Nelspruit, Mpumalanga and Black Rock, Northern Cape, two areas which have shortages of most skilled labour. These two areas compete with major metropolitan areas to attract and retain the relevant skills required for the business.

Our approach to equality includes but is not limited to:• Uplifting the skills of the current workforce;• Non-discrimination on the grounds of gender, race,

religion, disability or sexual preference;• Complying with regulation and legislation of the country;• Identifying and eliminating employment barriers; and• Pro-actively pursuing programmes and initiatives to

achieve our equality objectives.

Board of Directors 2013 2012 2011

Non-White directors 1 1 1White directors 5 6 5Male directors 6 7 6Female directors – – –South African directors 5 6 5Non-South African directors 1 1 1Executive directors 2 2 2Non-executive directors 4 5 4

spacePolicies and processes to address any allegations or instances of discrimination are entrenched. These include transparent grievance and disciplinary procedures that allow union or industry support, the anonymous Delta ethics line and prevailing legal systems. Victimising complainants is prohibited in Delta.

Permanent employees by employment category and gender – Group

2013 2012 2011

Category Male Female Total Male Female Total Male Female Total

Board* 2 – 2 2 – 2 2 – 2

Executive 3 2 5 3 2 5 3 1 4

Senior management 5 1 6 4 1 5 9 4 13

Middle management 16 4 20 14 6 20 10 4 14

Skilled upper 18 3 21 17 4 21 38 4 42

Semi-skilled/Apprentices/Trainees 106 17 123 103 16 119 91 7 98

150 27 177 143 29 172 153 20 173

* Includes executive directors only.

Delta is committed to increasing its female workforce in all occupational categories, including management. Special emphasis and focus areas include improving the ratio at senior management, executive and Board levels.


B-BBEE ratings in terms of the Department of Trade and Industry’s scorecard

While great progress has been made, transformation and empowerment remain a key focus area for Delta. Delta undertook its first B-BBEE scorecard rating audit in 2012.

2013 2012 2011

8 7 n/a

spacePermanent employees by ethnic background in South Africa

2013 2012 2011

Category AIC** White AIC** White AIC** White

Board* 1 1 1 1 1 1

Executive 1 4 1 4 – 4

Senior management 3 3 3 2 4 9

Middle management 11 9 12 8 9 5

Skilled upper 11 10 15 6 23 19

Semi-skilled/Apprentices/Trainees 113 10 110 9 96 2

140 37 142 30 133 40

* Includes executive directors only.** African, Indian, Coloured.


OUR PEOPLE

Number of employees

Divisions 2013 2012 2011

Black Rock production 21 21 20Nelspruit production 131 128 128Administration (Finance, HR, IT) 10 9 8Laboratories 11 10 14Corporate 4 4 3

Total – Permanent employees 177 172 173Total – including Temporary employees 221 204 205

spaceProfile by age and gender

Male Female

2013 2012 2011 2013 2012 2011

18 – 30 42 29 33 17 10 1431 – 40 54 52 58 13 18 1641 – 50 41 40 36 4 4 351 – 55 20 23 23 – 1 255+ 26 23 17 4 4 3

Total including Temporary employees 183 167 167 38 37 38

* Temporary employees include students and learnerships.

Space Our people are a key pillar in our success. Employees with length of service of 20 years and more is not a strange phenomenon in Delta. Skills development and continuous training are two fundamentals that apply to every employee in the business. • Employee safety is a primary concern and conformance with safety rules and procedures is rigorously enforced. Occupational

health and safety are key determinants in our business success and adherence to safety rules and procedures is closely managed.

• Risk assessments that identify hazards associated with any particular job or task are standard procedure with implementing safe work or task procedures to address these hazards.

• Employees are trained in safe work procedures and planned task observations are conducted to evaluate compliance. Depending on the hazard or workplace conditions, engineering or work-practice controls to manage or eliminate hazards are implemented. These measures are complemented by personal protective equipment.

• All employees undergo an annual medical monitoring check-up at our on-site clinic. Basic medical treatment facilities are available at both operating sites.

• A number of employee wellness and support programmes are in place, including medical aid schemes and assistance programmes. Delta provides individual support in respect of HIV cases and participates in national HIV awareness programmes. Delta does not have a voluntary HIV testing programme and does not have HIV statistics for its employees.

• Forced or compulsory child labour is contrary to Delta’s values, policies and recruitment practices.

Health and safety statistics

2013 2012 2011 2010

Lost time injury frequency rate 0.27 0.28 1.16 0.12Medical treatment injury frequency rate 0.00 0.57 0.58 1.65First aid injury frequency rate 3.00 1.13 2.61 5.21All injury frequency rate 3.27 1.99 4.36 7.68

(Frequency rate based on 200 000 hours)

We recognise that achieving our vision and sustainable value-creation objectives rests on the ability of our people. Attracting, developing and retaining talented and globally competitive employees are central to ensuring competence and intellectual capital in the Group.


Employee education

Delta supports employees to further their education on various levels. Adult basic education and training (ABET) is a long-standing programme in the Delta business. The ABET programme has three levels that employees need to complete over a twenty-four to thirty-six-month period. During 2013, eleven employees were enrolled in ABET with seven employees completing their ABET level 2 skills development (2012, four employees completed level 2 and two employees level 1(b)).

Delta continues to invest in South Africa’s skills development drive by granting bursaries to employees’ dependants to further their careers in the fields of mathematics, science and business studies. During 2013 five bursaries were awarded (2012 four bursaries).

Learnership training remains of significant importance for students who require practical training to better understand the subject matter. Delta continued to provide the surrounding community students access to practical training opportunities. During 2013, eight learnerships (2012 nine learnerships) were completed in the areas of chemical engineering, environmental and analytical chemistry fields. The learnership training also provides Delta with the opportunity to employ qualified skilled employees from the local community rather than sourcing from outside the region.


RISK MANAGEMENT

Effective understanding, measurement and management of riskDelta classifies operational risk as the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events. Risks are assessed on their probability, severity and quality of the existing control environment. These measures produce residual risk scores that indicate the importance of the risk and enable progress in addressing these risks to be assessed.

Management present a risk review report to the Audit and Risk Committee twice annually. The committee analyses the residual risk scores.

Delta’s top risks – 2013

Key risks Category of risk and management response

Competitor actions Competitor risk

Competitor actions will erode our competitive position and have a significant impact on the value we create for shareholders.

• Continually improve product quality to provide customers with enhanced performance EMD to accommodate the rapidly evolving battery market.

• Continually improve production efficiencies to lower input cost of key raw materials and energy cost, the two main cost drivers for Delta.

• Develop key customer plans which contain all the information and strategies to satisfy the customer.

Currency volatility Financial risk

Movement of currencies against one another, mainly the movement of other currencies against the Rand which creates risks relative to the translation of non-Rand profits, and the marking-to-market of financial instruments taken out to hedge currency exposures.

• Limit exposure as far as possible by pricing export product in Rand sales price. This is effective as long as the Rand remains weak against major currencies. The strengthening of the Rand can result in Delta products pricing being uncompetitive in US Dollar terms. Management negotiate with customers with every order to eliminate the currency risk as far as possible.

• Any hedging requirement is determined by the Board on a case-by-case basis. Shipping and export cost priced in US Dollars is covered in part by limited sales revenue received in US Dollars.

Dependence on single source suppliers Strategic risk

Our business is dependent on single source suppliers for key raw materials.

• Management engagement with suppliers with regard to quality testing of raw materials and securing rolling 12-month supply of product.

Our success is therefore linked to their ongoing financial stability, the competitiveness and quality of their products and services.

• Continually improve/build our relationships with our major suppliers and attempt to ensure that we are a preferred customer.

• Continually analyse market trends to predict possible shortage of supply and short-term stockpiling if supply concerns are identified.

• Build long-term partnerships with suppliers.

• Build relationships with local authorities.

• Align strategies and targets with our major suppliers as far as possible.


Exposure to significant customers Market riskThe risk that we are exposed to certain large customers. Alkaline battery manufacturing world-wide is limited to a handful of producers. Due to the nature of the complex chemical specification of EMD, Delta can be exposed to a major portion of its sales going to a single customer for an extended period of time.

• Build long-term partnerships with customers.

• Diversify customer base into all geographies.

• Develop new channels.

• Assess customer support for Delta material over the medium term.

Slow recovery of global economies Financial riskThe effect of the prolonged slowdown on our business. EMD ultimately goes into a consumer goods product, batteries. As long as the global economy is under pressure, consumer spending is limited and battery producers often cut back production.

• Reduce costs and improve operating efficiencies.

• Monitor our customers’ manufacturing spend.

• Reduce working capital, limit capital expenditure and improve cash flow.

• Have access to secure adequate borrowing facilities.

Regulatory environment Regulatory riskDelta’s activities are governed by regulations. Due to the complexity and changing nature of these regulations, especially in respect of waste treatment and environmental laws, there are challenges in staying abreast of all developments and maintaining full compliance.

• Management is responsible for the ongoing monitoring of all pending and actual changes to the regulatory environment.

• Delta uses various industry bodies to stay informed of any possible regulatory changes and also gives input into proposed changes which might affect the business.

Strategic employee skills Employee riskDelta’s key asset is the intellectual capacities and skills of its employees. This necessitates ongoing management of the challenges regarding recruitment, succession planning skills retention and development.

• Delta has a comprehensive employee approach and related set of initiatives to align employees with the strategy of the organisation.

• Through performance management systems, employees’ purpose, role, function and accountabilities are defined and, using competency-based assessments, employees are regularly reviewed to ensure the appropriate skills sets are available to enable performance at optimum levels.

• Investments in training resources and facilities are continuing to assist and encourage employees to enhance their levels of competence and performance.

• An appropriate suite of reward and incentive schemes ensures recognition, value-creation for employees and retention of high-performing employees.




Electricity supply Strategic and financial riskDependence on single source electricity supplier which is experiencing capacity constraints as well as substantial annual price increases.

• Management is investigating potential efficiency improvements sources to reduce electricity consumption.

• Process improvements to increase efficiency and reduce cost.

Carbon taxation Financial riskThe implementation of carbon taxation in 2015 will increase the manufacturing cost base, which will reduce profitability as Global Market competitiveness will prevent the passing on of the increase in cost.

• Management is investigating the impact of carbon tax and alternate strategies to reduce our carbon footprint and associated taxes that can be levied on the business.

RISK MANAGEMENT (continued)


Environmental management – Our value system is aligned to the belief that it is unacceptable to harm the environment through our activities or those carried out on our behalf.

• Decisions include risk assessment and potential impact on environment.

• Commitment to environment management embedded in ethics and daily activities.

• Management focus to reduce negative environmental consequences, where appropriate.

• Measuring, reporting and managing of environmental impacts.

• On-site awareness campaign and training.• Capital investment to assist in reducing environmental

impact where necessary.

Delta’s current focus on environmental aspects include:• Water consumption reduction and partial recycling;• Energy usage reduction programme;• Limit generation of and disposing of hazardous material;• Waste recycling of wood, paper and scrap metal; and• Manganese dust exposure measuring and actions

to reduce.

Management of environmental activities is carried out on a daily basis with regular reporting ensuring that environmental issues are integrated into daily management activities and responsibilities. Data collection is designed to enhance the management and reporting of significant environmental aspects. Through its on-site chemical laboratories, samples of various elements from waste water and belt filter residue are analysed and reported on a daily basis with certain elements in waste water measured more frequently to ensure waste water discharged into the effluent system is compliant.

Delta acknowledges that it is not in a position to measure its carbon footprint and CO2 emissions.

Performance reviewDirect and indirect energy consumption

Petrol and diesel by division (L’000) 2013 2012 2011

Manufacturing process 65.34 74.60 90.42

Internal logistics 11.07 10.70 9.06

Outsourced transport 1 147.65 1 012.68 1 119.71

Waste removal 23.27 26.42 28.38

Delta Group 1 247.33 1 124.40 1 247.57

spaceElectricity by division (MWh)* 2013 2012 2011

Black Rock manufacturing site 18 180 15 799 14 148

Nelspruit manufacturing site 68 772 65 924 69 517

Delta Group 86 952 81 723 83 665

Total cost (R’000) 50 303 47 004 40 101

* Electricity consumption is variable depending on the production tonnage. Delta has a continuous focus on electricity consumption as it is the largest cost driver.

Space Coal and Charcoal (Metric tonnes) 2013 2012 2011

Black Rock manufacturing site 2 047 1 611 1 331Nelspruit manufacturing site 21 012 21 521 24 493Delta Group 23 059 23 132 25 824

Total cost (R’000) 24 047 26 582 25 244

spaceWater

• Scarcity of the resource is understood and optimisation on consumption continues.

• Daily measurement, analysis, reporting and management is in place.

• Recycling of water is a key process control on site.• Managing of on-site rain water and partial capture of

first flush.

Water is another key input material into the production process. Delta recognises the scarcity of the resource and strives to use water as efficiently as possible. Delta recycles some water and manages rain water exit from site.

We are committed to being a responsible custodian by measuring, monitoring, managing and reporting water use as part of standard business practice. All waste water is tested for compliance with regard to chemical composition before released in the local municipal waste treatment plant.

ENVIRONMENTAL FOOTPRINT

Electricity cost as % of Direct Manufacturing costKwh used per metric tonne EMD. 2009 used as a 100% base

17

(%)

(Kw

h)

100

2009 2010 2011 2012 201315

20

25

30

21

23

26

22

86

98

8988

80

85

90

95

100


Water consumption by division (L’000) 2013 2012 2011

Black Rock manufacturing site 13 992 13 334 18 603

Nelspruit manufacturing site 324 719 273 598 348 060

Delta Group 338 711 286 932 366 663

spaceMaterials

Improving manufacturing efficiencies is a key driver within Delta’s monthly operational performance review. Improved efficiencies reduce our material usage.

Materials are sourced from original equipment manufacturers and other suppliers and used to support the manufacturing process. Those with a high impact on the environment are monitored. Recycling of material is a key focus both from the reduction of cost and the impact on landfill sites.

Materials used 2013 2012 2011

Manganese ore (metric tonnes) 42 606 35 322 37 001

LPG (kl) 578 944 553 717 511 158

Coal (tonnes) 21 012 21 521 24 493

Sulphuric acid (tonnes) 7 021 5 642 6 042

Sodium hydroxide (tonnes) 350 278 248

Wood pallets (units) 24 541 23 166 22 275

Packing bags (unit) 24 840 16 200 14 583

Boiler chemicals (kl) 63 102 162

Lime (tonnes) 5 947 6 424 6 663

spaceThe above data is based on own consumption and does not include indirect (supplier) consumption.

Waste

The production process of EMD requires the extraction of manganese from manganese ore through a chemical leaching process. Only the pure manganese solution is used in the electrolytic process to manufacture EMD. Delta uses manganese ore with a manganese content of between 42% and 46% which is some of the highest concentration of manganese ore available.

The rest of the elements which makes up the composition of manganese ore is not utilised in the production of EMD. The result is a waste component of 1.1 metric tons of waste for every 1 metric ton of EMD produced. This waste is classified as hazardous waste and requires disposal at a high hazardous landfill site, which Delta has prevented by innerting it into a safe co-product called Green-fill.

Waste management at Delta is part of EMD production:• Significant waste generation takes place and is

managed daily.• Waste classified as hazardous waste and non-hazardous.• Cell scale and boiler ash waste classified as

non-hazardous waste.• Successful process to inert hazardous waste into a safe

by-product “Green-fill” which could be used in road construction.

• Waste recycling initiatives.

Both hazardous and non-hazardous waste streams are monitored by type, volume, disposal method and destination. All hazardous waste is disposed of through certified contractors.

Waste 2013 2012 2011

Non-hazardous

Industrial and recycled waste* – – –

Green-fill (metric tonnes) 27 979 31 529 25 815

Hazardous

Cell scale (tonnes) 424 637 936

Mud (tonnes) 12 360 8 807

Boiler ash (kg) 4 315 4 475 4 091

* All general industrial and recycled waste is controlled on site through Delta’s waste management policy, but no measurement activity is currently in place to record the volume. All recycled waste is delivered to certified waste recycled centres and non-recycled waste is disposed at general landfill site.

No waste was shipped internationally nor were there any significant spills during the year.

Notices and non-compliance

There were no government notices nor sanctions for non-compliance with environmental laws and regulations during the year.

ENVIRONMENTAL FOOTPRINT (continued)


REMUNERATION REPORT

The Board of Delta Limited and the Remuneration Committee present herewith their remuneration report setting out information applicable to the company’s remuneration policy, executive remuneration – both fixed and variable – and directors’ fees. The information provided in this report has been approved by the Board on the recommendation of the Remuneration Committee.

Delta’s executive remuneration policy continues to be driven by performance and rewarding executives for value added which results in shareholder returns. For these purposes financial performance measures and personal performance scorecards are linked to rewards provided to executive directors and senior management and are designed to retain management.

Delta has taken a balanced approach with regard to remuneration ensuring that both the short- and long-term strategic objectives of the company are supported by remuneration paid to executives. Short-term performance is measured against trading profit and performance objectives and current long-term incentives are linked to share price performance, and incorporate company performance conditions to ensure alignment with shareholder interests.

With the implementation of King III, the Remuneration Committee performed an analysis of the extent to which the company’s remuneration report complies with these principles. Following this review, the level of disclosure included in the remuneration report has been enhanced and the requirements of the Companies Act have been incorporated.

The issues covered by this remuneration report are:• A summary of the company’s remuneration policy/

philosophy;• The Remuneration Committee and its role;• Key remuneration decisions taken during the 2013

financial year;• Overview of the basis of remuneration and payments

made to executive directors;• Executive contracts and policies; and• Non-executive directors’ compensation.

The Remuneration Committee hereby reconfirms the commitment to sustained long-term growth underpinned by fair and transparent remuneration policies.

Remuneration philosophy and policyIt is the stated objective of Delta to provide a level of remuneration which attracts, retains and motivates executives and senior management of the highest possible calibre. Careful consideration is also given to aligning the remuneration paid with shareholder interests and best practice.

Objectives also include organic growth through new product development and expanding our footprint into new markets. The remuneration philosophy and metrics incorporated into both the short- and long-term incentive structures have been designed to support achievement of this plan.

Delta has adopted a holistic approach to its remuneration philosophy and has implemented a balanced design which consists of a guaranteed remuneration and a variable remuneration for the short and long-term incentive schemes.

Short-term remuneration

The weighting of the variable pay as a percentage of total remuneration for the on-target bonus:

Short-term remuneration Guaranteed Variableweighting 2012/13 2012/13

CEO 72% 28%CFO 72% 28%

spaceLong-term incentive scheme

The long-term incentive scheme consists of a pre 2012 scheme, 2012 scheme and 2013 scheme.

The executive directors and senior management participate in a long-term incentive scheme which is based on the allocation of notional shares (pre 2012 scheme) and an incentive grant (2012 and 2013 scheme). In terms of the rules of the schemes, these notional shares and incentive grants will vest over a period of three years from the grant date, or upon change of control of Delta (EMD) (Pty) Limited.

Pre 2012 scheme: The value of the shares when vested will equal the average market share price of twenty trading days following the release of the annual results announcement plus any dividend per share paid during the vesting period. The final value is subject to a minimum value equal to two-thirds of the initial value. This will be settled in cash at the end of the vesting period.

2013 scheme: The value of the incentive grants when vested will equal the initial value of the incentive grant multiply with the SPF. The SPF is a ratio of vesting share price plus dividend per share paid during the period divided by the share price at granting date.


Notional shares allocated to executive directors and senior managers

Rand2011 Total value Guaranteed

notional notional as at minimumshare shares 27 December Rand

allocation balance 2013 value

CEO – P Baijnath 122 902 122 902 798 863 683 333CFO – JS Seymore 57 554 57 554 374 101 320 000Snr. Man 1 30 110 30 110 195 715 167 411Snr. Man 2 26 018 26 018 169 117 144 660

Total 236 584 236 584 1 537 796 1 315 404

Notional shares vesting in

2014Shares Rand value*

CEO – P Baijnath 122 902 798 863CFO – JS Seymore 57 554 374 101Snr. Man 1 30 110 195 715Snr. Man 2 26 018 169 117

236 584 1 537 796

* The Rand value is based on the average 20 days trading value of Delta EMD Limited shares up to 27 December 2013.

Incentive grants allocated to executive directors and senior managers

2012 2013Incentive Incentive

grant grantRand value Rand Value

CEO – P Baijnath 1 000 000 1 200 000CFO – JS Seymore 600 000 700 000Snr. Man 1 350 000 400 000Snr. Man 2 350 000 400 000Snr. Man 3 300 000 500 000

Total 2 600 000 3 200 000

Space

Remuneration Committee Role of Remuneration Committee

The Remuneration Committee operates under terms of reference approved by the Board and which are subject to review every year. The terms of reference were reviewed and aligned with both King III and the Companies Act.

In terms of its charter, the key responsibilities and role of the Remuneration Committee are summarised below:• Determining and agreeing the remuneration and overall

compensation package for the CEO and other executive directors appointed to the Board;

• Determining any criteria necessary to measure the performance of executive directors in discharging their functions and responsibilities;

• Reviewing the terms and conditions of the CEO and executive directors’ service agreements, taking into account relevant market information and information from comparable companies, where relevant, to ensure that they are fairly, but responsibly appraised and rewarded for their individual contributions towards enhancing the company’s performance;

• Determining the company’s overall policy on executive and senior management remuneration, as well as a remuneration philosophy;

• Ensuring that competitive reward strategies and programmes are in place to facilitate the recruitment, motivation and retention of high-performance staff at all levels in support of realising corporate objectives and to safeguard stakeholder interests;

• Determining and recommending to the Board the level of non-executive director fees after receiving independent professional input;

• Reviewing and recommending to the Board the relevant criteria necessary to measure the performance of executives;

• Considering other special benefits or arrangements of a substantive financial nature; and

• Ensuring compliance with applicable laws and codes.

The Remuneration Committee’s Chairman reports formally to the Board on the proceedings of the Remuneration Committee after each meeting and, in line with King III, will attend the annual general meeting of Delta to respond to any questions from shareholders regarding the Remuneration Committee’s areas of responsibility.

Members of Remuneration Committee

The Remuneration Committee comprises three non-executive directors. PwC Remchannel provided independent external remuneration information to the committee during the period under review. The Remuneration Committee is chaired by the Chairman of the Delta Board – a non-executive director. This is not in line with the principles of King III, but due to the limited amount of non-executive directors is viewed as acceptable by the Board.

Membership of the Remuneration Committee is constituted as follows: • Todd Atkinson (Chairman and Chairman of the Delta

Board) (non-executive);• Alf Hicks (Independent Non-executive); and• Brian Wright (Independent Non-executive).

The CEO attends Remuneration Committee meetings by invitation. External advisors are used to provide market information as and when required.

Meeting attendance

The Remuneration Committee had an active year and met four times during the 2013 financial year. Attendance at meetings is set out on page 21 of the integrated annual report.

REMUNERATION REPORT (continued)


Key remuneration decisions taken in respect of the 2013 financial year

The Remuneration Committee discussed the following matters and took some key decisions:• Approval of the long-term incentive awards, inclusive of the mix of instruments to be used, and company performance

conditions relating thereto;• Approval of the targets and weighting of the performance measures of the short-term incentive plan;• Approval of executive directors’ and senior management’s salary increases;• Approval of the short-term incentive payments;• Review and approval of the company’s remuneration report and policy; and• Review and recommendation of non-executive director fees.

Overview of remuneration

The table below summarises the composition of the total remuneration package for executive directors and senior management during the 2013 financial year, as well as proposed policy changes to the total remuneration package for the 2014 financial year:

ElementFixed/Variable Objective Policy

Proposed changes for 2014

Base salary Fixed Reflects scope and nature of role, performance and experience.

In most cases, benchmarked around the median of the market.

None.

Benefits Fixed Providing employees with contractually agreed basic benefits such as medical aid, retirement funding and for executive directors a car allowance.

The company contribution to benefits:50% of medical aid and a 15% company contribution to retirement funds applies for executive directors and an 11% contribution to retirement funds for senior management.

No changes to standard employment benefits.

Short-term incentive

Variable Rewards and motivates achievement of agreed Group, and individual performance objectives.

The bonus percentages: 25% of executive director’s basic salary for on-target trading profit to a maximum of 40% for achieving above-target trading profit and 25% of executive director’s basic salary for specific strategic and performance metrics. Senior managers can earn up to 30% of basic salary as a bonus against achieving various financial and non-financial performance metrics.

Short-term incentive targets established based on 2013 profit plan.

Long-term incentive

Variable Creates loyalty and ownership among employees and acts as a retention mechanism. Also aligns with shareholder interests and long-term value creation.

Provide a longer-term incentive with three-year vesting period. Incentive grants allocation based on percentage of basic salary as determined by Remuneration Committee.

None.

spaceGuaranteed package/base salary

PolicyThe executive directors’ and senior management’s base salary and guaranteed package are reviewed annually. The current levels are benchmarked, in most cases around the median of the relevant PWC Remchannel market data, which is made up of local South African companies. Variations around the median may be influenced by factors such as the nature of the assignment, level of experience of the executive, changes in responsibilities, performance track record, and strategic importance of the role. Given the independent benchmarking done as well as the comparator companies used, this level is considered to be competitive in the appropriate labour market where the executive operates.

PaymentsDetails of the basic salary and guaranteed packages (basic salary plus benefits) paid to each of the executive directors during the 2013 financial year are set out on pages 54 and 55 of the integrated annual report.

The increases applicable to the guaranteed packages which will be applicable with effect from 1 January 2014 were in the range of 5% to 7%.


Short-term incentives

PolicyShort-term incentives (annual bonuses) are paid in cash and are based on achievement against 12-month targets aimed at increasing shareholder value.

The criteria for earning a bonus consist of two elements, namely personal objectives and financial performance targets. For executive directors, where on-target financial performance is achieved, a bonus of 25% of annual cash salary will be awarded and, in the case of meeting the financial objectives at stretch level, 40% of the annual basic salary is awarded as a bonus. The maximum bonus potential, including personal objectives, is capped at 65% of basic salary.

This remained the same as 2013:

2012/13/14 2012/13/14 on target Stretch

CEO 50% 65%CFO 50% 65%

spaceIn respect of personal objectives, a bonus of up to 25% of annual basic salary can be earned where 100% of personal objectives are achieved. The personal objectives component of the scheme is the same for the CEO and CFO.

During the year, the structure of bonuses awarded to executive directors and the threshold, target and stretch levels of performance were reviewed. The levels set take into account the current trading conditions and challenges being faced by the company or relevant division and incorporate a meaningful level of stretch to motivate and retain senior

employees. The threshold targets are set at a level which represents the minimum level of acceptable performance for the business.

Terms of employment contractsThe executive directors have employment contracts with a notice period not exceeding six months, other than in the circumstances of Praveen Baijnath, whose notice period shall be extended to a period of 12 months in the event of a change of control of Delta (E.M.D.) (Pty) Limited.

Remuneration CommitteeOn an annual basis, the Remuneration Committee determines the short term incentives financial measures, the weighting and vesting levels. In addition, the Remuneration Committee reviews the actual performance of the executives against the targets set at the beginning of the relevant year. The ultimate bonus payment is at the discretion of the Remuneration Committee.

Non-executive directors

Non-executive directors (NED’s) receive a base fee as well as an attendance fee per meeting as recommended by King III. The Remuneration Committee reviews the level of fees and makes recommendations to the Board for consideration.

In terms of Delta’s Memorandum of Incorporation, fees payable to NEDs must be approved by shareholders in general meeting. The current level of fees payable to non-executive directors was approved by Delta’s shareholders at the annual general meeting held on 3 May 2013.

Fees for NEDs during the current financial year and proposed fees for the 2014 financial year are set out in the notice to the annual general meeting on page 82 of the integrated annual report.

REMUNERATION REPORT (continued)


CUSTOMER GEOGRAPHICAL SEGMENTS

North AmericaSouth AmericaEuropeAfricaAustralia and Asia

59

50

34

2

Metric tonnes (%)

2013


67

30

29

1

Revenue (%)

2013


67

30

28

1

Distribution cost (note 1) Inland costs to export port

2013

Note 1Distribution cost includes all shipping, export duties, clearing agents and sales commission.



71

8

0

14

7

Metric tonnes (%)

2012


74

7

0

16

3

Revenue (%)

2012


73

11

0

14

2

2012

Note 1Distribution cost includes all shipping, export duties, clearing agents and sales commission.

Distribution cost (note 1) Inland costs to export port


CONTENTSThese annual financial statements comprise:

Page

Directors’ responsibility and approval 38

Certificate by Company Secretary 39

Preparer of financial statements 39

Independent auditor’s report 40

Audit and Risk Committee report 41

Statements of comprehensive income 42

Statements of financial position 43

Statements of changes in equity 44

Statements of cash flows 45

Notes to the statements of cash flows 46

Notes to the annual financial statements 47

Investments in subsidiary companies (Annexure A) 68

Shareholders' profile (Annexure B.) 69

ANNUAL FINANCIAL STATEMENTS


To the shareholders of Delta EMD LimitedThe directors of Delta EMD Limited have pleasure in presenting the annual financial statements for the year ended 27 December 2013.

In terms of the South African Companies Act, 2008, as amended, the directors are required to prepare annual financial statements that fairly present the state of affairs and business of the company and of the Group at the end of the financial year.

To achieve the highest standards of financial reporting, these annual financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) of the International Accounting Standards Board, Interpretations issued by the IFRS Interpretations Committee, the Companies Act of South Africa as well as the SAICA Financial Reporting Guidelines as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council.

These annual financial statements have been audited in compliance with the requirements of the South African Companies Act, 2008, as amended.

The Directors’ report, consisting of the Chairman’s review, the Chief Executive Director’s report, and the report of the Chief Financial Officer, on pages 8 to 13, discuss the results of operations for the year and those matters which are material for an appreciation of the state of affairs and business of the company and of the Delta EMD Group.

The directors’ responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of these financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.

The directors acknowledge their responsibility to ensure the integrity of the integrated report and are of the opinion that the integrated report fairly presents in all material respects the state of affairs and business of the company and the Group at 27 December 2013 and of the profit for the year to that date. The external auditors, who have unrestricted access to all records and information, as well as to the Audit and Risk Committee, concur with this agreement.

In addition, the directors have also reviewed the cash flow forecast for the year to 27 December 2014 and believe that the Delta EMD Group has adequate resources to continue in operation for the foreseeable future. Accordingly, the annual financial statements have been prepared on a going-concern basis.

The annual financial statements were approved by the Board of directors and were signed on their behalf by:

P Baijnath Chief Executive Officer

10 February 2014

DIRECTORS’ RESPONSIBILITY AND APPROVALfor the year ended 27 December 2013


In my capacity as Company Secretary, I hereby confirm, in terms of section 88(2)(e) of the Companies Act, 71 of 2008, as amended (Act), that for the year ended 27 December 2013, Delta EMD Limited has lodged with the Registrar of Companies all such returns as are required in terms of the Act. Further, those returns are true, correct and up to date.

JS Seymore, CA(SA)Company Secretary

Nelspruit

10 February 2014

The Group and company financial statements have been prepared under the supervision of JS Seymore, CA(SA).

JS Seymore, CA(SA)Company Secretary

Nelspruit

10 February 2014

CERTIFICATE BY COMPANY SECRETARYfor the year ended 27 December 2013

PREPARER OF FINANCIAL STATEMENTS


To the Shareholders of Delta EMD Limited We have audited the consolidated and separate financial statements of Delta EMD Limited set out on pages 42 to 69, which comprise the statements of financial position as at 27 December 2013, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.

Directors’ Responsibility for the Consolidated Financial StatementsThe company’s directors are responsible for the preparation and fair presentation of these consolidated and separate financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these consolidated and separate financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated and separate financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

INDEPENDENT AUDITOR’S REPORTfor the year ended 27 December 2013

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of Delta EMD Limited as at 27 December 2013, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards, and the requirements of the Companies Act of South Africa.

Other Reports required by the Companies Act As part of our audit of the consolidated and separate financial statements for the year ended 27 December 2013, we have read the Executive Directors’ report, the Audit and Risk Committee’s report and the Company Secretary’s Certificate for the purpose of identifying whether there are material inconsistencies between these reports and the audited consolidated and separate financial statements. These reports are the responsibility of the respective preparers. Based on reading these reports, we have not identified material inconsistencies between these reports and the audited consolidated and separate financial statements. However, we have not audited these reports and, accordingly, do not express an opinion on these reports.

Deloitte & ToucheRegistered AuditorsPer DA SteynPartner

10 February 2014Buildings 1 and 2Deloitte PlaceThe WoodlandsWoodlands DriveWoodmeadSandtonJohannesburg

National Executive: LL Bam Chief Executive AE Swiegers Chief Operating Officer GM Pinnock Audit DL Kennedy Risk Advisory NB Kader Tax TP Pillay Consulting K Black Clients & Industries

JK Mazzocco Talent & Transformation CR Beukman Finance M Jordan Strategy S Gwala Special Projects TJ Brown Chairman of the Board MJ Comber Deputy Chairman of the Board

A full list of partners and directors is available on request

B-BBEE rating: Level 2 contributor in terms of the Chartered Accountancy Profession Sector Code

Member of Deloitte Touche Tohmatsu Limited


This is the report of the Audit and Risk Committee (committee) of Delta EMD Limited appointed for the financial year ended 27 December 2013 in Compliance with section 94(7)(f)of the Companies Act, 2008, as amended (the Act), and in terms of the JSE Listings Requirements.

The Committee has detailed terms of reference that comply with the Act and King III and are approved by the Board. Copies of the terms of reference are available from the company Secretary on request.

Membership The committee for the 2013 financial year was appointed by the shareholders on 3 May 2013 at the annual general meeting. At the annual general meeting scheduled for 7 May 2014, shareholders will be asked to approve the appointment of the chairman and members of the committee for the 2014 financial year.

The committee consists solely of independent non-executive directors who are all financially literate. The current members are L Matteucci (Chairman), BR Wright and AC Hicks.

PurposeThe purpose of the committee is:• To assist the Board in discharging its duties relating to

the safeguarding of assets, the operation of adequate systems, control and reporting processes, and the preparation of accurate reporting and financial statements and accounting standards;

• to provide management, external and internal auditors access to the chairman or any other member of the committee about any matter within the committee’s scope;

• to meet separately with the external and internal auditors at least once a year;

• to provide a forum for discussing business risk and control issues and developing recommendations for consideration by the Board;

• to monitor enterprise-wide, operational, market, regulator, safety and other risks, and to monitor controls designed to minimise risk;

• 4to review the company’s integrated annual report, including the annual financial statements, as well as its interim report and any other public reports or announcements containing financial information;

• to consider and recommend to the Board whether external assurance should be provided on the sustainability report and, to ensure that the report is consistent with the annual financial statements;

• to pre-approve all permissible non-audit services to be provided by the external auditors, and where such services are to be rendered to the company or any of its subsidiaries, any proposed contract or the provision of such services;

• to oversee the activities of, and to ensure co-ordination between, the activities of internal and external audit;

• to perform duties assigned to it under the Act and other legislation, including statutory audit committee functions for subsidiary companies;

• to receive and deal with any complaints concerning the accounting practices, internal audit or the content and audit of its financial statements or related matter;

• to annually review the committee’s work and terms of reference annually and to make recommendations to the Board to ensure its effectiveness.

Duties carried outThe committee has performed its duties and responsibilities during the financial year according to its terms of reference.

External auditThe committee:• nominated Deloitte & Touche as auditors and Dr DA Steyn

as the independent auditor and designated audit partner, respectively, to the shareholders for appointment as auditors for the financial year ended 27 December 2013, and ensured that the appointments complied with legal and regulatory requirements for the appointment of an auditor;

• confirmed that the independent auditor and the designated audit partner are accredited by the JSE; and

• approved the external audit engagement letter, the audit plan and the budgeted audit payable to the external auditors.

Financial statements• Reviewed and recommended for adoption by the Board

such financial information that is publicly disclosed, which for the year, included:• the unaudited interim results for the six months ended

27 June 2013;• the Audited year-end results announcement for the year

ended 27 December 2013; and• the audited annual report for the year ended

27 December 2013.• The committee reviewed the performance,

appropriateness and expertise of the Chief Financial Officer, JS Seymore, CA(SA) and confirm his suitability for appointment as financial director in terms of the JSE requirements.

LB BirdAudit and Risk Committee Chairman

AUDIT AND RISK COMMITTEE REPORTfor the year ended 27 December 2013


STATEMENTS OF COMPREHENSIVE INCOMEfor the year ended 27 December 2013

Company Group

2013 2012 2013 2012R’000 R’000 Notes R’000 R’000

– – Revenue 375 187 365 459– – Cost of sales (245 967) (247 638)

– – Gross profit 129 220 117 821– – Investment income 3 6 073 6 226– – Under recovery of manufacturing overheads (29 422) (25 393)– – Distribution expenses (34 469) (32 034)

(2 916) (3 343) Administrative expenses (39 214) (31 282)– – Other (8 799) (4 006)– – Profit on sale of assets 46 –– – Impairment raised (121 655) (659)– – Net foreign exchange gains/(losses) 4 535 (3 808)

(2 916) (3 343) (Loss)/Profit before taxation 2 (93 685) 26 865 – (1 229) Taxation 4 24 568 (9 742)

– – – Normal taxation 24 568 (8 513) – (1 229) – Secondary taxation on companies – (1 229)

(2 916) (4 572) (Loss)/Profit for the year (69 117) 17 123

Other comprehensive income– – – Increase in foreign currency translation reserve 924 1 746

(2 916) (4 572) Total comprehensive (loss)/income for the year (68 193) 18 869

Attributable to equity holders of parent company(Loss)/Profit for the year 5 (69 117) 17 123Total comprehensive (loss)/income for the year (68 193) 18 869Headline earnings attributable to ordinary shareholders 5 18 538 17 782

Numbers of shares in issue ('000) 49 166 49 166Weighted number of shares in issue ('000) 49 166 49 166Dilutive number of shares in issue ('000) 49 166 49 166

Attributable (loss)/earnings per share (cents)– basic 5 (140.6) 34.8– diluted 5 (140.6) 34.8

Dividend per share – ordinary (cents) 6 25.0 25.0


STATEMENTS OF FINANCIAL POSITIONat 27 December 2013

Company Group

2013 2012 2013 2012R’000 R’000 Notes R’000 R’000

AssetsNon-current assets

– – Property, plant and equipment 8 132 774 260 251

346 549 361 943 Subsidiaries 9 – –

– – Other non-current assets 10 2 274 3 291

Current assets

– – Inventories 11 161 672 121 142

8 7 Trade and other receivables 12 112 507 105 037

25 13 Bank balances and cash 121 128 153 622

- – Non-current assets held for sale 8 13 182 12 871

346 582 361 963 Total assets 543 537 656 214

Equity and liabilities 4 856 4 856 Share capital and premium 13 4 856 4 856

– – Foreign currency translation reserve 4 220 3 296

340 547 355 438 Accumulated profit 435 202 516 294

345 403 360 294 Total shareholders’ funds 444 278 524 446

Non-current liabilities

– – Deferred taxation liabilities 15 10 060 46 191

– – Other non-current liabilities 16 7 294 8 108

Current liabilities

1 171 1 664 Trade and other payables 17 71 160 62 669

– – Short-term provisions 16 3 000 3 727

8 5 Taxation payable 7 745 11 073

346 582 361 963 Total equity and liabilities 543 537 656 214

703 733 Net asset value per share (cents) 904 1 067


STATEMENTS OF CHANGES IN EQUITYfor the year ended 27 December 2013

Share Foreign capital currency

and translation Accumulatedpremium reserve profit Total

R’000 R’000 R’000 R’000

Group

Balance at 27 December 2011 4 856 1 550 510 387 516 793

Total comprehensive income for the year – 1 746 17 123 18 869

Dividend paid – ordinary – – (12 291) (12 291)

Prior years unclaimed dividend reversed – – 1 075 1 075


Total comprehensive loss for the year – 924 (69 117) (68 193)


Prior years unclaimed dividends reversed – – 316 316


Company

Balance at 27 December 2011 4 856 371 226 376 082

Total comprehensive loss for the year – (4 572) (4 572)


Prior years unclaimed dividend reversed – – 1 075 1 075


Total comprehensive loss for the year – (2 916) (2 916)

Dividend paid – ordinary – (12 291) (12 291)

Prior years unclaimed dividends reversed – 316 316


space


STATEMENTS OF CASH FLOWS for the year ended 27 December 2013

Company Group

2013 2012 2013 2012R’000 R’000 Notes R’000 R’000

(2 916) (3 343) Cash generated by/(utilised from) trading A 42 313 45 821

(178) 1 (Increase)/Decrease in working capital B (39 182) 17 288

(3 094) (3 342) Cash generated by/(utilised from) operations 3 131 63 109

– – Net interest received 6 073 6 226

3 – Taxation paid – normal C (14 890) (9 296)

– (1 229) Taxation paid – secondary taxation on companies C – (1 229)

(3 091) (4 571) Cash (outflow)/inflow from operating activities (5 686) 58 810

– – Replacement capital expenditure (15 844) (14 074)

– – Decrease in non-current assets 1 017 1 156

– – Proceeds on sale of assets 53 –

– – Cash outflow from investing activities (14 774) (12 918)

(3 091) (4 571) Net cash (outflow)/inflow before financing activities (20 460) 45 892

(12 291) (12 291) Dividend paid – ordinary (12 291) (12 291)

15 394 16 874 Movement in loans to subsidiaries – –

3 103 4 583 Cash (outflow)/inflow from financing activities (12 291) (12 291)

12 12 Net (decrease)/ increase in cash and cash equivalents (32 751) 33 601

13 1 Cash and cash equivalents at beginning of the year 153 622 118 996

– – Currency translation of cash in foreign subsidiary 257 1 025

25 13 Cash and cash equivalents at end of the year D 121 128 153 622


Company Group

2013 2012 2013 2012

R’000 R’000 R’000 R’000

A. Cash generated by/(utilised from) trading

(2 916) (3 343) (Loss)/Profit before taxation (93 685) 26 865

Adjustments for:

– – Depreciation of property, plant and equipment 22 002 22 450

– – Impairment raised 121 655 659

– – Net interest received (6 073) (6 226)

– – Profit on sale of assets (46) –

– – Movement in non-current and current provisions (1 540) 2 073

(2 916) (3 343) Cash generated by/(utilised from) trading 42 313 45 821

B. (Increase)/Decrease in working capital

– – Increase in inventories (40 530) (6 109)

(1) (7) (Increase)/Decrease in receivables (7 470) 41 798

(177) 8 Increase/(Decrease) in payables 8 818 (18 401)

(178) 1 (Increase)/Decrease in working capital (39 182) 17 288

C. Taxation paid

(5) (5) Taxation owing at beginning of year (11 073) (8 357)

– (1 229) Normal, and Secondary Taxation on Companies (11 563) (13 241)

8 5 Taxation owing at end of year 7 745 11 073

3 (1 229) Taxation (paid)/receivable (14 890) (10 525)

D. Cash and cash equivalents

Cash and cash equivalents consist of:

25 13 Bank balances and cash 121 128 153 622

25 13 Cash and cash equivalents 121 128 153 622

NOTES TO THE STATEMENTS OF CASH FLOWS for the year ended 27 December 2012


NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 27 December 2013

Delta EMD Limited is a listed entity and is incorporated in the Republic of South Africa. The address of the registered office is disclosed on page 3. The principal place of business is at the South African manufacturing plant at 15 Heyneke Street, Industrial Site, Nelspruit. The annual financial statements have been audited in compliance with all applicable requirements of the Companies Act of South Africa.

1.1 Adoption of new and revised StandardsAt the date of authorisation of these financial statements, the following Standards and Interpretations or amendments were in issue but not yet effective: IFRS 7 Financial Instruments: Disclosures (effective annual periods beginning on or after 1 January 2013

and 1 January 2015);

IFRS 9 Financial Instruments (effective annual periods beginning on or after 1 January 2015);

IFRS 10 Consolidated Financial Statements (effective annual periods beginning on or after 1 January 2013 and 1 January 2014);

IFRS 12 Disclosure of Interests in Other Entities (effective annual periods beginning on or after 1 January 2013 and 1 January 2014);

IFRS 13 Fair Value Measurement (effective annual periods beginning on or after 1 January 2013);

IAS 1 Presentation of Financial Statements (effective annual periods beginning on or after 1 January 2013);

IAS 16 Property, Plant and Equipment (effective annual periods beginning on or after 1 January 2013);

IAS 27 Separate Financial Statements (effective annual periods beginning on or after 1 January 2014);

IAS 32 Financial Instruments: Presentation (effective annual periods beginning on or after 1 January 2013);

IAS 34 Interim Financial Reporting (effective annual periods beginning on or after 1 January 2013);

IAS 36 Impairment of Assets (effective annual periods beginning on or after 1 January 2014);

IAS 39 Financial Instruments: Recognition and Measurement (effective annual periods beginning on or after 1 January 2014);

IFRIC 20 Stripping costs in the production phase of a surface mine (effective annual periods beginning on or after 1 January 2013); and

IFRIC 21 Levies (effective annual periods beginning on or after 1 January 2014).

The adoption of the above Standards and Interpretations is not expected to have a material impact on the Group.

1.2 Significant accounting policiesThe Group’s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), Interpretations issued by the IFRS Interpretations Committee (IFRIC), containing the information required by the Companies Act of South Africa, as well as the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by Financial Reporting Standards Council.

The annual financial statements are prepared on the historical cost basis, except for the revaluation of certain financial instruments, assets and liabilities that are periodically revalued. They have been consistently applied in all material respects.

The principal accounting policies of the Group are set out below:

1.2.1 Consolidated results The consolidated annual financial statements include the results and financial position of the company and enterprises controlled by the company up to 27 December each year. Control is achieved where the company has the power to govern the financial and operating policies of an investee enterprise so as to obtain benefits from its activities. All inter-company transactions and balances between Group enterprises are eliminated on consolidation.

1.2.2 GoodwillGoodwill arising on consolidation represents the excess of the cost of the acquisition over the Group’s interest in the fair value of the identifiable assets and liabilities of a subsidiary or controlled enterprise. Goodwill is tested for impairment annually and an impairment is not released subsequently.


NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended 27 December 2012

1.2.3 RevenueRevenue represents the net value of sales to customers. Inter-Group revenue is eliminated. Sales of goods are recognised when goods are delivered and title has passed. Interest income is accrued on the time basis, by reference to the principal outstanding and the interest rate applicable. Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established.

1.2.4 Retirement benefitsThe policy of the Group is to provide retirement benefits for its employees via its defined contribution retirement benefit plan. The contributions by Group companies to fund the obligations for the payment of retirement benefits are charged against income in the year that they become payable. Payments to industry-managed retirement benefit schemes are dealt with as defined contribution plans where the Group’s obligations under the schemes are equivalent to those arising in a defined contribution retirement plan. For defined benefit funds the cost of providing the benefits is determined using the projected unit credit method. Actuarial valuations are conducted on a triennial basis. The retirement benefit obligation or asset represents the present value of the defined benefit obligation as reduced by the fair value of plan assets. A deficit is recognised immediately. To the extent that there is uncertainty regarding the entitlement to a surplus, no asset is recorded.

1.2.5 Foreign currenciesTransactions denominated in foreign currencies are recorded at the rate of exchange prevailing on the transaction date. Monetary assets and liabilities denominated in such currencies are retranslated at the rates prevailing on the statement of financial position date. Profits and losses arising on exchange are included in net profit or loss for the period. On consolidation, the assets and liabilities of foreign entities are translated at the exchange rates prevailing on the statement of financial position date. Income and expense items are translated at the average exchange rates for the year. Exchange differences are classified as equity through other comprehensive income and transferred to the Group’s Foreign Currency Translation Reserve. Such translation differences are recognised as income or expenses in the period in which the operation is disposed of. Foreign currency hedging instruments are treated in accordance with IAS 39.

1.2.6 Research and development expenditureResearch expenditure is written off in the year in which it is incurred. Development costs are reviewed annually and are expensed if they do not qualify for capitalisation.

1.2.7 LeasesLeases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease.

1.2.8 Impairment (excluding goodwill)At each statement of financial position date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If the recoverable amount of the asset is estimated to be less than its carrying amount, its carrying amount is reduced to its recoverable amount. Impairment losses are recognised in the statement of comprehensive income immediately.

1.2.9 Borrowing costsBorrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

1.2 Significant 87ies (continued)


1.2.10 Property, plant and equipmentProperty, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is charged so as to write off the cost of the assets, other than freehold land and assets under construction, over their estimated useful lives using the straight-line method. Assets which have been commissioned, but not brought into use, are depreciated in terms of the Group policy. Provision for depreciation or replacement of loose tools and moulds is not made as the costs of renewals are written off in the year in which they are incurred.

The residual value of assets and their useful lives are reviewed at each statement of financial position date. Gains and losses on disposal are determined by comparing proceeds with carrying amounts and are included in operating profit.

The estimates of useful lives as translated into depreciation rates are detailed below: Property, plant and equipment 2 – 50 years.

1.2.11 InventoriesInventories are valued at the lower of cost or net realisable value with due allowance being made for obsolescence, wherever applicable. Cost is determined on the following basis:

Raw materials – on the average cost method.

Work-in-progress – at cost of materials on the average cost method together with direct costs and appropriate works overheads according to the state of production reached.

Finished goods – on the average cost method together with direct costs and appropriate works overheads based on the production capacity.

Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

1.2.12 TaxationThe charge for current tax is based on the results for the year as adjusted for items which are non-taxable or disallowed. It is calculated using the tax rates that have been enacted or substantively enacted by the statement of financial position date.

Deferred taxation is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profit, and is accounted for using the statement of financial position liability method. Deferred taxation liabilities are recognised for all taxable temporary differences and deferred taxation assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

1.2.13 BorrowingsLoans which are repayable within one year of the statement of financial position date are classified as short-term loans and are included in current liabilities. Loans repayable after one year of the statement of financial position date are classified as non-current liabilities.

1.2.14 ProvisionsProvisions are recognised when the Group has a present legal or constructive obligation as a result of past events for which it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made for the amount of the obligation. Where the effect of discounting to present value is material, provisions are adjusted to reflect the time value of money.

1.2 Significant accounting policies (continued)



1.2.15 Long-term compensation benefitsObligations in respect of long-term employee benefits are recorded at the present value of the estimated future benefits payable.

1.2.16 Environmental rehabilitationThe cost of ongoing programmes to prevent and control pollution and to rehabilitate the environment is charged against income as incurred. Where a present constructive or legal obligation for future rehabilitation exists, a provision is raised for the future cost. Where the effect of discounting to present value is material, these provisions are adjusted to reflect the time value of money.

1.2.17 Non-current assets held for saleNon-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell.

1.2.18 Financial instrumentsFinancial assets

Investments are recognised and derecognised on trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs.

Financial assets are classified into the following specified categories: “held-to-maturity” (HTM) investments, “available-for-sale” (AFS) financial assets and “loans and receivables”. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. At the reporting dates included in these annual financial statements, the company had only loans and receivables on its statement of financial position.

(a) Effective interest methodThe effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset or, where appropriate, a shorter period.

Income is recognised on an effective interest basis for debt instruments.

(b) Loans and receivablesTrade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

(c) Impairment of financial assetsFinancial assets are assessed for indicators of impairment at each statement of financial position date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.

Objective evidence of impairment could include:• significant financial difficulty of the issuer or counterparty; or• default or delinquency in interest or principal payments; or• it becoming probable that the borrower will enter bankruptcy or financial re-organisation.



1.2.18 Financial instruments (continued)

Financial assets (continued)

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account.

When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment, at the date the impairment is reversed, does not exceed what the amortised cost would have been had the impairment not been recognised.

Financial liabilities

Equity and other financial liabilities

(a) Equity instrumentsAn equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.

(b) Other financial liabilitiesOther financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability or, where appropriate, a shorter period to the net carrying amount on initial recognition.

(c) Derecognition of financial liabilitiesThe Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.

1.3 Critical accounting judgements and key sources of estimation uncertaintyIn the application of the Group’s accounting policies, which are described in note 1.2, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The balances that are based on estimates are the Pappas Quarry rehabilitation provision, the provision for obsolete stock, the Sembcorp (Silulumanzi) provision for effluent discharge, the provision for doubtful debtors and the impairment raised on fixed assets.



2013 2012R’000 R’000

2. (Loss)/Profit before taxation(Loss)/Profit before taxation has been arrived at after taking into account:GroupEXPENSESCost of sales 245 967 247 638

Auditor's remuneration– audit fees – current year 998 950– audit fees – previous year (69) 196– fees for other services 83 101

Total auditor's remuneration 1 012 1 247

Internal auditor's remuneration 336 256

Profit on sale of assets 46 –

Impairment raised on plant and equipment 121 655 659

Depreciation of property, plant and equipment– buildings 742 704– plant and equipment 21 260 21 746

Total depreciation of property, plant and equipment 22 002 22 450

Operating lease expenses– land, buildings and equipment 2 085 2 002

Environmental provision (reversed)/raised (1 541) 2 073

Pension fund contributions 3 388 3 027

Staff costs 57 186 48 583

Operating expenses by function– distribution costs 34 469 32 034– administration costs – excluding foreign exchange losses and gains 39 214 31 282

Foreign exchange forward contracts– loss attributable to the hedged risks – 4 124

Group Company

2013 2012 2013 2012R’000 R’000 R’000 R’000

3. Investment incomeInterest received – bankers 6 349 6 226 – –Interest paid – receiver of revenue (276) – – –

Total net – interest received 6 073 6 226 – –



Group Company

2013 2012 2013 2012R’000 R’000 R’000 R’000

4. TaxationSouth African normal– current this year 11 530 12 012 – –– current previous year 33 – – –– deferred (36 131) (3 499) – –

Total current year (24 568) 8 513 – –Secondary taxation on companies – 1 229 – 1 229

Total taxation (24 568) 9 742 – 1 229

Reconciliation of rate of taxation on profit: % % % %South African company tax rate 28.0 28.0 28.0 28.0Decrease in rate of taxation due to:– Non-deductible expenses (1.6) – – – – Prior year tax (0.1) (1.2) – –

(1.7) (1.2) – –

Increase in rate of taxation due to:– Non-deductible expenses – 4.9 28.0 –– Secondary taxation on companies – 4.6 – 8.8

– 9.5 28.0 8.8

Effective rate of taxation 26.3 36.3 – 36.8

5. Attributable and headline (loss)/earnings per shareWeighted average number of sharesThe calculations are based on 49 165 553 (2012: 49 165 553) ordinary shares, being the weighted average number in issue during the year.

Dilutive average number of sharesThe calculation is based on 49 165 553 (2012: 49 165 553) ordinary shares.

5.1 Attributable earningsThe calculation of attributable loss per share is based on a loss of R69 117 048 (2012: R17 123 688 earnings)

5.2 Headline earningsThe calculation of headline earnings per share is based on earnings of R18 538 365 (2012: R17 782 756).Reconciliation of attributable earnings to headline earnings:Attributable (loss)/earnings (69 117) 17 123Impairment raised 121 655 659Profit on sale of assets (46) –Taxation effect (33 954) –

Headline earnings 18 538 17 782

Headline earnings per share (cents)– basic 37.7 36.2– diluted 37.7 36.2



Group Company

2013 2012 2013 2012R’000 R’000 R’000 R’000

6. Dividends paidOrdinary dividend of 25 cents (2012: 25 cents) per share 12 291 12 291 12 291 12 291

7. Directors’ emoluments and interestsPrescribed officers

Due to the nature and structure of the Group and the role of the executive directors on the Board of the company, the directors have concluded that there are no prescribed officers of the company.

Executive directorsThe directors’ remuneration for the year ended 27 December 2013:

Basic Retirement/ Total remune- Other Medical Cash Retirement emolu-

ration benefits benefits incentives benefits mentsR’000 R’000 R’000 R’000 R’000 R’000

P Baijnath 2 550 322 36 885 478 4 271JS Seymore 1 554 267 45 136 171 2 173

4 104 589 81 1 021 649 6 444

Year ended 27 December 2012

Executive directorsP Baijnath 2 255 279 32 2 072 334 4 972JS Seymore 1 347 229 40 787 150 2 553

3 602 508 72 2 859 484 7 525

Directors’ fees

2013 2012R’000 R’000

Non-executive directorsTG Atkinson 480 420LB Bird 170 300AC Hicks 285 250L Matteucci 295 45BR Wright 285 280

1 515 1 295

Total directors’ emoluments – paid by subsidiaries 6 444 7 525

The executive directors have employment contracts with a notice period not exceeding six months, other than in the circumstances of Mr Baijnath whose notice period shall be extended to a period of 12 months in the event of a change of control of Delta (EMD) (Pty) Limited.

Interests of directors in contractsThe directors have certified that they were not materially interested in any transaction of any significance with the company or any of its subsidiaries. Accordingly, a conflict of interest with regard to directors’ interests in contracts does not exist.


7. Directors’ emoluments and interests (continued)Long-term incentive schemeThe long-term incentive scheme consists of a pre 2012 scheme, 2012 scheme and 2013 scheme.The executive directors and senior management participate in a long-term incentive scheme which is based on the allocation of notional shares (pre 2012 scheme) and an incentive grant (2012 and 2013 scheme). In terms of the rules of the schemes, these notional shares and incentive grants will vest over a period of three years from the grant date, or upon change of control of Delta (EMD) (Pty) Limited. Pre 2012 scheme: The value of the shares when vested will equal the average market share price of twenty trading days following the release of the annual results announcement plus any dividend per share paid during the vesting period. The final value is subject to a minimum value equal to two-thirds of the initial value. This will be settled in cash at the end of the vesting period.

Notional shares allocated to executive directors and senior managers

Rand2011 Total value Guaranteed

notional notional as at minimumshare shares 27 December Rand

allocation balance 2013 value

CEO – P Baijnath 122 902 122 902 798 863 683 333CFO – JS Seymore 57 554 57 554 374 101 320 000Snr. Man 1 30 110 30 110 195 715 167 411Snr. Man 2 26 018 26 018 169 117 144 660

Total 236 584 236 584 1 537 796 1 315 404

Notional shares vesting in

2013 2014Shares Rand value* Shares Rand value*

CEO – P Baijnath 62 064 655 395 122 902 798 863CFO – JS Seymore – – 57 554 374 101Snr. Man 1 – – 30 110 195 715Snr. Man 2 – – 26 018 169 117

Total 62 064 655 395 236 584 1 537 796

* The Rand value is based on the average 20 days trading value of Delta EMD Limited shares up to 27 December 2013.

There are no changes envisaged to the terms of the national shares granted up to 27 December 2011.

2012 and 2013 schemes:

2012 scheme: The value of the incentive grants when vested will equal the initial value of the incentive grant multiply with the growth factor. The growth factor is the greater of share performance factor ("SPF") or financial performance factor ("FPF"). The SPF is a ratio of vesting share price plus dividend per share during the period divided by the share price at granting date. The FPF is per a predefined final value matrix of trading profit CAGR and averaged ROE. The FPF shall not exceed two. This will be settled in cash at end of vesting period.

2013 scheme: The value of the incentive grants when vested will equal the initial value of the incentive grant multiply with the SPF. The SPF is a ratio of vesting share price plus dividend per share paid during the period divided by the share price at granting date.



Incentive grants allocated to executive directors and senior managers

2012 2013Incentive Incentive

grant grantRand value Rand Value

CEO – P Baijnath 1 000 000 1 200 000CFO – JS Seymore 600 000 700 000Snr. Man 1 350 000 400 000Snr. Man 2 350 000 400 000Snr. Man 3 300 000 500 000

Total 2 600 000 3 200 000

Financial impact of notional share and incentive grant schemes

2013 2012R’000 R’000

– Expenses arising from notional share and incentive grant schemes 2 700 1 304– Closing balance of liability as recorded in the statements of financial position 4 338 2 410

Interests of directors of the company in share capital

The aggregate beneficial holdings as at 27 December 2013 of the directors of the company and their immediate families (none of which has a holding in excess of 1%) in the issued ordinary shares of the company are detailed below. There have been no changes in these shareholdings since that date and the date of this Integrated Annual Report.

2013 2012Direct Indirect Direct Indirect

Non-executive directorsBR Wright 6 823 2 002 6 823 2 002

6 823 2 002 6 823 2 002

7. Directors’ emoluments and interests (continued)


8. Property, plant and equipment

Freehold Plant andland Buildings equipment Total

Group R’000 R’000 R’000 R’000

Year ended 27 December 2013Opening net book value 6 579 20 145 233 527 260 251Capital expenditure – 2 133 13 711 15 844Depreciation charged – (742) (21 260) (22 002)Sale of asset – – (7) (7)Impairment – (14 737) (106 575) (121 312)

Closing net book value 6 579 6 799 119 396 132 774

At 27 December 2013Cost 6 579 28 940 437 292 472 811Accumulated depreciation and impairment – (22 141) (317 896) (340 037)


Efforts to sell the Australian Main site continue and Delta EMD Ltd. remains committed to its plan to sell the asset. This has been presented as non-current assets held for sale.

Year ended 27 December 2012Opening net book value 6 579 24 713 237 993 269 285Capital expenditure – 1 502 12 572 14 074Depreciation charged – (704) (21 746) (22 450)Reclassification – (5 367) 5 367 –Impairment – – (659) (659)


At 27 December 2012Cost 6 579 26 809 425 171 458 559Accumulated depreciation and impairment – (6 664) (191 644) (198 308)


The register of land and buildings is open for inspection at the registered office of the company.

Impairment of Assets

The group has undertaken an impairment review in accordance with IAS 36, which gave rise to a pre-tax impairment of R121.3 million on the carrying value of the Nelspruit EMD manufacturing plant and equipment, effectively reducing the carrying value of these assets to fair value. The indicators for the impairment applied by Delta were:

• Delta’ production capacity of 30 000mt of EMD has been under-utilised for a number of years due to availability of ore as well as market conditions.

• Export customers source their EMD first from domestic producers and Delta supply any shortfall. Due to this there is no opportunity for Delta to increase its market share in the global market.

• Delta’s share price has been trading at a substantial discount to NAV for more than two years.

• Delta’s EMD product offering is no longer suitable for the continuously higher performance standard required by major battery manufacturers.

• A detailed five-year profit plan and forecast capital expenditure plan prepared by management indicated a decline in net cash inflows and operations profits.

The value of the impairment was determined as per the prescribed methodology of IAS 36:



Group Company

2013 2012 2013 2012R’000 R’000 R’000 R’000

9. SubsidiariesShares at cost – 329 949 329 953Net amounts owing by subsidiaries – – 19 137 34 527Less: Provision for impairment – – (2 537) (2 537)

Net interest in subsidiaries – – 346 549 361 943

Details of subsidiary companies are set out in Annexure A.

10. Other non-current asset 2 274 3 291 – –Delta entered in 2004 into a Public-Private Partnership agreement with the Mbombela Local Municipality to part fund the development of a new regional waste disposal landfill site. Under the terms of the agreement Delta’s portion of the funding of the development will take the form of a non-interest-bearing usage prepayment loan. Delta will have use of the landfill site for disposal of its innerted non-hazardous waste at a preferential disposal rate. The usage pre-payment loan will be reduced by expensing to the statement of comprehensive income the equivalent cost to dispose waste at the preferential rate.

Current portion included in trade receivables 743 1 121 – –

11. InventoriesRaw materials 21 622 14 409 – –Work-in-progress 52 297 34 678 – –Finished goods 93 163 86 040 – –Provision for obsolete inventories (5 410) (13 985) – –

Total inventories 161 672 121 142 – –

12. Trade and other receivablesTrade receivables 103 882 89 893 – –Provision for doubtful debts (3 085) – – – Pre-payments 2 379 1 913 8 7Other receivables 9 331 13 231 – –

Total trade and other receivables 112 507 105 037 8 7

The average credit period taken on sales is 26 days (2012: 17 days).

The allowance made for estimated irrecoverable amounts from the sale of goods at year-end was R 3 084 779 (2012: R nil).

The directors consider that the carrying amount of trade and other receivables approximates their fair value.

1. The business has two cash generating units

a. Nelspruit EMD production site

b. Blackrock MnO productions site

2. For both cash generating units the calculated recoverable amount is the higher of:

a. Value in use and

b. Fair value less cost to sell

3. Only the Nelspruit plant valuation determined that its current carrying value was higher than its value in use and fair value.

4. The fair value of Nelspruit was used per the requirement of IAS 36 and Nelspruit plant and equipment was impaired by R121.3 million.

8. Property, plant and equipment (continued)


Group Company

2013 2012 2013 2012R’000 R’000 R’000 R’000

13. Share capital and premiumAuthorised share capital 75 000 000 no par value shares (2012: 75 000 000 no par value shares) 6 750 6 750 6 750 6 750

Issued share capital 49 165 553 no par value shares (2012: 49 165 553 no par value shares) 4 856 4 425 4 856 4 425Share premium transferred – 431 – 431

Total share capital 4 856 4 856 4 856 4 856

Share premiumBalance at beginning of year – 431 – 431Transferred to issued share capital – (431) – (431)

Balance at end of year – – – –

Total share capital and share premium 4 856 4 856 4 856 4 856

The balance of unissued shares are under the control of the directors until the forthcoming annual general meeting of the company.

Group

2013 2012

Maximum Maximumpermissible Actual permissible Actual

R’000 R’000 R’000 R’000

14. Borrowing limitationsThe company’s borrowings are limited by its Articles of Association to the aggregate of the paid-up issued shares plus the aggregate of the revenue reserves of the company and its subsidiary and undistributed profits standing to the credit of consolidated profit and loss account plus any goodwill or intangible asset that is shown as an asset less any goodwill that has arisen from the issue of any share capital.

Total Group borrowing limits 440 058 – 521 150 –

Group Company

2013 2012 2013 2012R’000 R’000 R’000 R’000

15. Deferred taxationMovement of deferred taxation:Liability at beginning of year 46 191 49 690 – –Statement of comprehensive income (36 131) (3 499) – –

Liability at end of year 10 060 46 191 – –

Comprising: – Capital allowances 14 823 50 354 – –Provisions (4 763) (4 163) – –

Total deferred taxation 10 060 46 191 – –

At the statement of financial position date, the Group had no unused tax losses.



Group Company

2013 2012 2013 2012R’000 R’000 R’000 R’000

16. Current and non-current provisionsRehabilitation and restoration

Balance at beginning of year 11 835 9 762 –

Reversal to the statement of comprehensive income (1 541) – –Expensed to the statement of comprehensive income – 2 073 –

Balance at end of year 10 294 11 835 –

Total current and non-current provisions 10 294 11 835 –

The rehabilitation and restoration balance includes the estimated cost of rehabilitating Delta (EMD) (Pty) Limited’s share of rehabilitating the Manganese Metal Company (Pty) Limited Pappas Quarry waste disposal facility in Nelspruit. An average weighted percentage cost increase of 4.92% (2012: 11.64%) was used to calculate potential future cost.

It also includes an estimated cost for the claim by Sembcorp (Silulumanzi) on the impurities in the effluent water discharged by the company.

17. Trade and other payablesTrade and other payables principally comprise amounts outstanding in respect of trade purchases and ongoing costs. The average credit period taken for trade purchases is 74 days (2012: 70 days).

The directors consider that the carrying amount of trade and other payables approximates their fair value.


Group

2013 2012R’000 R’000

18. Commitments18.1 Capital expenditure

– contracted 2 815 4 975– authorised but not contracted 7 007 6 475

Total capital commitments 9 822 11 450

This expenditure will be financed from available internal resources.

18.2 Delta EMD Limited issued a bank guarantee of R123 million to ABSA Bank during 2009 to cover the banking facilities of Delta (EMD) (Pty) Limited.

18.3 Lease commitmentsThe Group has entered into operating leases in respect of certain of its property, plant and equipment. The future minimum commitments in respect of these leases are as follows:OPERATING LEASESPlant and equipmentDue within one year 733 706Thereafter 632 1 365

Total plant and equipment 1 365 2 071

Period of leases 2 years 3 years

PropertyDue within one year 1 673 1 400Thereafter*Period of leases 1 year 1 year

Total property 1 673 1 400

Total operating lease commitments 3 038 3 471

* The Delta (EMD) (Pty) Limited lease with Manganese Metal Company (Pty) Limited in respect of the land has an indefinite term and will terminate when manufacture of Electrolytic Manganese Dioxide ceases. At year-end 27 December 2013 the monthly rental was R135 391 (2012: R112 190), escalating annually in May with the average CPIX over the last 12 months.



19. Related party transactionsVarious transactions are entered into by the company and its subsidiaries during the year with related parties. For 2013 there were no related party transactions. Group transactions are eliminated on consolidation.

SubsidiariesDetails of investments in subsidiaries are disclosed in note 9 and balances in Annexure A.

DirectorsDetails regarding directors’ remuneration and interests are disclosed in note 7.

ShareholdersThe principal shareholders of the company are disclosed on page 69.

20. Financial instrumentsThe Group has exposure to the following risks from its use of financial instruments: credit risk, liquidity risk and market risk (which comprises interest rate risk and market price risk). This note presents information about the Group’s exposure to each of the aforementioned risks, the Group’s objectives, policies and processes for measuring and managing risks and the Group’s management of capital. The Group’s financial instruments consist mainly of deposits with banks, accounts receivable and payable, loans to and from subsidiaries. The Group has no borrowings and consequently no gearing.


In respect of all financial instruments mentioned above, book value approximates fair value. Derivative instruments, if any, consist of forward exchange contracts which are used by the Group for economic hedging purposes. The Group does not trade in derivative instruments.

Non-Loans financial

and liabilities receivables or assets Equity Total

Categorisation R’000 R’000 R’000 R’000

20. Financial instruments (continued)At 27 December 2013ASSETSNon-current assetsProperty, plant and equipment – 132 774 – 132 774Other non-current assets – 2 274 – 2 274Non-current assets held for sale – 13 182 – 13 182Current assetsInventories – 161 672 – 161 672Trade and other receivables 103 882 8 625 – 112 507Bank and cash balances 121 128 – – 121 128

225 010 318 527 – 543 537

EQUITY AND LIABILITIESCapital and reservesShare capital and premium – – 4 856 4 856Foreign currency translation reserve – – 4 220 4 220Accumulated profit – – 435 202 435 202Non-current liabilitiesDeferred taxation liabilities – 10 060 – 10 060 Other non-current provisions – 7 294 – 7 294Current liabilitiesTrade and other payables 71 160 – – 71 160Short-term provisions – 3 000 – 3 000Taxation – 7 745 – 7 745

71 160 28 099 444 278 543 537

At 27 December 2012ASSETSNon-current assetsProperty, plant and equipment – 260 251 – 260 251Other non-current assets – 3 291 – 3 291Non-current assets held for sale – 12 871 – 12 871Current assetsInventories – 121 142 – 121 142Trade and other receivables 89 893 15 144 – 105 037Bank and cash balances 153 622 – – 153 622

243 515 412 699 – 656 214

EQUITY AND LIABILITIESCapital and reservesShare capital and premium – – 4 856 4 856Foreign currency translation reserve – – 3 296 3 296Accumulated profit – – 516 294 516 294Non-current liabilitiesDeferred taxation liabilities – 46 191 – 46 191Other non-current provisions – 8 108 – 8 108Current liabilitiesTrade and other payables 62 669 – – 62 669



Short-term provisions – 3 727 – 3 727Taxation – 11 073 – 11 073

62 669 69 099 524 446 656 21420. Financial instruments (continued)

20.1 Credit riskCredit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and short-term cash investments.

The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents the Group’s maximum exposure to credit risk. The carrying values, net of impairment allowances, amount to R100 797 000 (2012: R89 893 000) for trade receivables (refer note 12) and R11 710 000 (2012: R15 144 000) for other receivables.

The impairment allowance account in respect of trade and other receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible; at that point, the amount which is considered irrecoverable is written off against the financial assets directly.

The Group has a general credit policy of dealing with creditworthy counterparties and obtaining insurance through Lombard’s Insurance Group, where appropriate, as a means of mitigating the risk of financial loss from defaults. New customers are analysed for creditworthiness before payment and delivery terms are offered. Operational management are held responsible for monitoring the operations’ credit exposure.

Trade receivables consist of a relatively small number or customers, spread across diverse geographical areas. Ongoing credit evaluation is performed on the financial condition of the Group’s customers. Payment terms vary from cash on delivery to 60 days after bill of lading date.

Due to the concentration of credit risk to a small number of customers, the majority of trade receivables has been insured with Lombard’s Insurance Group.

When deemed necessary, the Group maintains an impairment allowance that represents its estimate of incurred losses in respect of trade and other receivables. The provision would be based on management’s estimate of the total specific loss that relates to individually significant exposures, when deemed necessary. The total impairment allowance raised in the current financial year is R 3 084 779. (2012: R nil) and the total amount written off to the statement of comprehensive income was R 3 084 779 (2012: R nil). The credit quality of assets that are neither past due nor impaired is considered to be good.

2013 2012Ageing of trade receivables at 27 December R’000 R’000

Not past due:Delta EMD South Africa 99 644 84 283Overdue:0 – 30 days (25) 5 31061 – 180 days 4 263 300

103 882 89 893

Investments

It is Group policy to deposit short-term cash investments with only the major banks with a limit of R50 million per institution.

At the year-end management did not consider there to be any material credit risk exposure that was not already covered by credit guarantee insurance or a bad debt provision.


20. Financial instruments (continued)20.2 Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The total balance of trade and other payables of R71,2 million (2012: R62,7 million) is payable within six months. Non-current liabilities represent mainly the long-term portion of the provision for environmental rehabilitation and restoration.

There were overdraft facilities with ABSA Bank Limited for the current year of R50 million (2012: R50 million).

20.3 Market riskMarket risk is the risk that changes in foreign exchange rates, interest rates and equity prices will affect the Group’s income or the fair value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.

Currency risk

The Group exposure to currency risk is in respect of sales to foreign customers and foreign purchases. It is the Group’s policy not to trade in derivative financial instruments for speculative purposes.

Changes in the fair value of forward exchange contracts that economically hedge monetary assets and liabilities in foreign currencies and for which no hedge accounting is applied are recognised in the statement of comprehensive income. Both the changes in fair value of the forward exchange contracts and the foreign exchange gains and losses relating to the monetary items are recognised in operating profit.



20. Financial instruments (continued)20.3 Market risk (continued)

Interest rate riskA sensitivity analysis has not been performed as the effect of changes in interest rates are not believed to have a significant effect on the Group’s profit for the year.

Interest rate profile of the Group’s interest-bearing financial instruments at 27 December was:

2013 2012Description Currency Interest rate R’000 R’000

Cash investmentsAustralia AUD 4.0% 3 796 4 945South Africa ZAR 4.9% 107 426 139 349South Africa ZAR 0% 336 3 222South Africa USD 0% 4 130 5 916South Africa EUR 0% 128 188South Africa JPY .02% 5 308 –

Total bank balances 121 124 153 620Cash on hand 4 2Total bank balances and cash 121 128 153 622

Equity riskThe Group does not have significant exposure to equity price risk as it does not hold equity investments classified as held-for-trading or available-for-sale.

21. Retirement benefitsThe Group participated in The Delta Pension Fund, up until 30 May 2006, a registered and approved fund governed by the South African Pension Funds Act, 1956, as amended. The majority of employees in South Africa were members of the Fund, other than those required by legislation to be members of the various industry funds.

The Delta Pension Fund has a defined contribution section and a defined benefit section. The Delta Pension Fund is valued by an independent actuary every three years. The most recent statutory valuation, at 31 December 2010, identified adequate funding being an excess of assets of the Fund over the past service liabilities. The projected unit credit method was used for this valuation. Details of the valuation are listed below:

2010 2007R’000 R’000

Valuation resultsFair value of fund assets 9 046 10 685Present value of plan obligations (5 767) (5 947)

Excess assets at end of year 3 279 4 738

AssumptionsValuation interest rate (pre-retirement) n/a n/aValuation interest rate (post-retirement) n/a n/aDiscount rate 2.6% 2.6%Rate of compensation increase n/a n/a


21. Retirement benefits (continued)There is no past service liability in respect of active members at the valuation date as all active members have exited out of the Fund.

The Fund’s surplus apportionment scheme, which identified surplus available only to former members of the Fund, was submitted to the Financial Services Board (FSB) on 16 January 2006 and was approved on 23 May 2006. As the surplus apportionment scheme recognised surplus available to former members of the Fund only, no asset has been recognised by the Group.

The Delta Pension Fund began payment of surplus in the last quarter of 2006 to former members who are entitled to share in the surplus and in respect of whom The Delta Pension Fund has sufficient detail. A resolution dated 17 October 2009 to appoint a Liquidator to The Delta Pension Fund was signed by the Board of Management of The Delta Pension Fund and submitted to the Financial Services Board. The Liquidation date will be the date the Registrar approves the appointment of the Liquidator selected by the Board of Management. To date the approval of the Liquidator remains outstanding. The Registrar has requested that the Board of Management submit additional information to support the appointment of the Liquidator. This additional information is a requirement in terms of a new Board Directive issued in 2009. Alexander Forbes, the appointed consultants to The Delta Pension Fund, are in the process of collating the required information for submission to the Registrar for consideration. It is anticipated that the approval will be granted shortly after the submission of the required information. Once the Liquidator is appointed, the management of the Fund will vest in the approved Liquidator.

On 1 June 2006 members of The Delta Pension Fund transferred to an umbrella retirement fund known as the Alexander Forbes Retirement Fund (Pension Section). This was as a result of the reduced membership in The Delta Pension Fund following the sale of Delta’s non-EMD businesses on 30 September 2005. The umbrella fund is more cost-effective to manage.

The Group has no obligation to fund post-retirement medical costs of employees.

22. Post-statement of financial position eventsThere were no events subsequent to the year-end that require disclosure.


Financial information in respect of interests in subsidiary companies:

Issued Nature of share Interest of holding company

Name of company Percentage holding business capital Shares Indebtedness

2013 2012 2013 2012 2013 2012% % R’000 R’000 R’000 R’000 R’000

DIRECT SUBSIDIARIES

EMD Investments (Pty) Limited 100 100

Investment holding company 2 129 327 412 327 412 19 137 34 531

Dormant companies – 100 Dormant 777 2 537 2 541 – (4)

Total direct subsidiary companies 329 949 329 953 19 137 34 527

INDIRECT SUBSIDIARIES

Delta (EMD) (Pty) Limited 100 100

Manufacture and distribution of electrolytic manganese dioxide – – –

Delta EMD Australia Proprietary Limited 100 100 Dormant – – –

Total investment in subsidiaries 329 949 329 953 19 137 34 527

Less: Provision for impairment (2 537) (2 541) – –

Total investment in subsidiaries after impairment 327 412 327 412 19 137 34 527

Profits after tax attributable to subsidiary companies were Rnil (2012: R22 644 565).

Losses after tax attributable to subsidiary companies for the year were R66 201 244 (2012: R651 472).

The directors confirmed that the book value of the investment in subsidiaries after impairment is not overstated.

INVESTMENTS IN SUBSIDIARY COMPANIES (ANNEXURE A)


SHAREHOLDERS’ PROFILE (ANNEXURE B)

By type of shareholder Ordinary shares issued

Number Number % in 000’s %

484 65.6 Individual shareholders 4 708 9.6253 34.3 Corporate bodies 20 302 41.31 0.1 Valmont EMD Holdings Limited 24 156 49.1

738 100.0 49 166 100.0

By size of shareholding

535 72.5 Held up to 7 000 shares 753 1.5117 15.9 Held between 7 001 and 35 000 shares 1 955 4.060 8.1 Held between 35 001 and 175 000 shares 4 532 9.226 3.5 Held over 175 000 shares 41 926 85.3

738 100.0 49 166 100.0

MAJOR INDIVIDUAL HOLDINGSAccording to the register of shareholders and having made enquiries of nominees and other registered holders at 27 December 2013, the following parties hold beneficial interest of 2% or more of the issued share capital:

Valmont EMD Holdings Limited (including directors’ qualification shares) 24 156 49.1Mr J Biccard 2 925 5.9Carolife Special Opportunities Fund 1 920 3.9CACEIS BANK 1 995 4.1Delta PLC Pension Fund 1 500 3.1Investec SA Value Fund 1 476 3.0

33 972 69.1

NON-PUBLIC SHAREHOLDER SPREAD ANALYSIS

Valmont EMD Holdings Limited (including Delta directors’ qualification shares) 24 156 49.1

Total non-public interests 24 156 49.1Balance as held by public as defined 25 010 50.9

49 166 100.0

Space


GLOBAL REPORTING INITIATIVE

Page reference

1. Strategy and analysis

1.1 Statement from the most senior decision-maker of the organisation. 8, 9

1.2 Description of key impacts, risks and opportunities. 8, 9, 10, 26

2. Organisational profile

2.1 Name of the reporting organisation. 3

2.2 Primary brands, products and/or services. inside front cover, 2

2.3 Operational structure of the organisation, including main divisions, operating companies, subsidiaries and joint ventures.

2, 3, 4, 68

2.4 Location of the organisation’s headquarters. 2, 3, 4

2.5 Number of countries where the organisation operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report.

2, 4, 36, 37

2.6 Nature of ownership and legal form. 2, 3, 13, 21,

2.7 Markets served (including geographic breakdown, sectors served, and types of customers/beneficiaries).

36, 37

2.8 Scale of reporting organisation, including: – Number of employees; – Net sales (for private sector organisations); or Net revenues (for public sector organisations); – Total capitalisation broken down in terms of debt and equity (for private sector organisations); and – Quantity of products or services provided.

4, 6, 7, 10, 24, 25, 36

2.9 Significant changes during the reporting period regarding its size, structure, or ownership including: – The location of, or changes in operations, including facility openings, closings, and expansions; and – Changes in the share capital structure and other capital formation, maintenance, and alteration operations (for private sector organisations).

2, 4, 6, 21

2.10 Awards received in the reporting period. 31

3. Report parameters

Report profile:

3.1 Reporting period (e.g. fiscal/calendar year) for information provided. inside front cover, inside back cover

3.2 Date of most recent previous report (if any). inside back cover

3.3 Reporting cycle (annual, bi-ennial, etc). inside back cover

3.4 Contact point for questions regarding the report or its contents. inside back cover

Report scope and boundary:

3.5 Process for defining report content, including: – Determining materiality; – Prioritising topics within the report; and – Identifying stakeholders the organisation expects to use the report.

inside front cover 2, 18,

24, 25, 26, 29

3.6 Boundary of the report (e.g. countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers). See GRI Boundary Protocol for further guidance.

inside front cover 2, 36, 39, 68, 49

3.7 State any specific limitations on the scope or boundary of the report. –

3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organisations.

49, 58, 61, 68


Page reference

3.9 Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report.

11, 14, 39, 41, 48, 49 – 52

3.10 Explanation of the effect of any restatements of information provided in earlier reports, and the reasons for such restatement (e.g. mergers/acquisitions, change of base years/periods, nature of business measurement methods).

–

3.11 Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report.

11

3.12 Table identifying the location of the Standard Disclosures in the report. 69 – 76

3.13 Policy and current practice with regard to seeking external assurance for the report. If not included in the assurance report accompanying the sustainability report, explain the scope and basis of any external assurance provided. Also explain the relationship between the reporting organisation and the assurance provider(s).

N/A

4. Governance, commitments and engagement

Governance:

4.1 Governance structure of the organisation, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organisational oversight.

inside front cover 13 – 21,

22-23

4.2 Indicate whether the chair of the highest governance body is also an executive officer (and, if so, their function within the organisation’s management and the reasons for this arrangement).

11

4.3 For organisations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive members.

11, 15

4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body.

20, 24, 25, 78

4.5 Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements), and the organisation’s performance (including social and environmental performance).

32 – 35

4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided. 15 – 16

4.7 Process for determining the qualifications and expertise of the members of the highest governance body for guiding the organisation’s strategy on economic, environmental and social topics.

–

4.8 Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation.

13 – 20, 22 – 35

4.9 Procedures of the highest governance body for overseeing the organisation’s identification and management of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct and principles.

13 – 20, 26 – 28 29 – 31

4.10 Processes for evaluating the highest governance body’s own performance, particularly with respect to economic, environmental and social performance.

–

Commitments to external initiatives

4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organisation.

–

4.12 Externally developed economic, environmental, and social charters, principles or other initiatives to which the organisation subscribes or endorses.

13, 14

4.13 Memberships in associations (such as industry associations) and/or national/international advocacy organisations in which the organisation: – Has positions in governance bodies; – Participates in projects or committees; – Provides substantive funding beyond routine membership dues; – Views membership as strategic.

–


Stakeholder engagement

4.14 List of stakeholder groups engaged by the organisation. 20

4.15 Basis for identification and selection of stakeholders with whom to engage. 20

4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group. Also please indicate the principles formulated at corporate level that guide your company’s stakeholder engagement at site level. Please attach/provide supporting documents or indicate website.

–

4.17 Key topics and concerns that have been raised through stakeholder engagement, and how the organisation has responded to those key topics and concerns, including through its reporting.

–

5. Management approach and performance indicators

Economic:

Economic: Disclosure on management approach

EC DISCLOSURE ON MANAGEMENT APPROACH

Provide a concise disclosure on the Management Approach items outlined below with reference to the following economic aspects:

• Economic performance;

• Market presence; and

• Indirect economic impacts.

Economic performance indicators:

Aspect: Economic performance

EC1 Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.

7

EC2 Financial implications and other risks and opportunities for the organisation’s activities due to climate change.

28

EC3 Coverage of the organisation’s defined benefit plan obligations. N/A

EC4 Significant financial assistance received from government. N/A

Aspect: Market presence

EC5 Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation.

–

EC6 Policy, practices and proportion of spending on local suppliers at significant locations of operation. –

EC7 Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation.

–

Aspect: Indirect economic impacts

EC8 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in kind, or pro bono engagement.

–

EC9 Understanding and describing significant indirect economic impacts, including the extent of impacts. 26 – 28

Page reference

GLOBAL REPORTING INITIATIVE (continued)


Page reference

Environmental

Environmental: Disclosure on management approach

EN DISCLOSURE ON MANAGEMENT APPROACH

Provide a concise disclosure on the Management Approach items outlined below with reference to the following environmental aspects:

• Materials;

• Energy;

• Water;

• Bio-diversity;

• Emissions, effluents and waste;

• Products and services;

• Compliance;

• Transport; and

• Overall.

Environmental performance indicators

Aspect: Materials

EN1 Materials used by weight or volume. See Indicator Protocol for guidance on calculation. 29 – 30

EN2 Percentage of materials used that are recycled input materials. –

Aspect: Energy

EN3 Direct energy consumption by primary energy source. 29

EN4 Indirect energy consumption by primary source. 29

EN5 Energy saved due to conservation and efficiency improvements. –

EN6 Initiatives to provide energy-efficient or renewable energy-based products and services, and reductions in energy requirements as a result of these initiatives.

–

EN7 Initiatives to reduce indirect energy consumption and reductions achieved. –

Aspect: Water

EN8 Total water withdrawal by source. 30

EN9 Water sources significantly affected by withdrawal of water. 30

EN10 Percentage and total volume of water recycled and reused. 29 – 30

Aspect: Bio-diversity

EN11 Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high bio-diversity value outside protected areas.

–

EN12 Description of significant impacts of activities, products and services on bio-diversity in protected areas and areas of high bio-diversity value outside protected areas.

–

EN13 Habitats protected or restored. –

EN14 Strategies, current actions and future plans for managing impacts on bio-diversity. –

EN15 Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk.

–

Aspect: Emissions, effluents and waste

EN16 Total direct and indirect greenhouse gas emissions by weight. –

EN17 Other relevant indirect greenhouse gas emissions by weight. –


Page reference

EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved. –

EN19 Emissions of ozone-depleting substances by weight. –

EN20 NOx, SOx, and other significant air emissions by type and weight. –

EN21 Total water discharge by quality and destination. –

EN22 Total weight of waste by type and disposal method. 31

EN23 Total number and volume of significant spills. 31

EN24 Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III and VIII and percentage of transported waste shipped internationally.

31

EN25 Identity, size, protected status and bio-diversity value of water bodies and related habitats significantly affected by the reporting organisation’s discharges of water and run-off.

–

Aspect: Products and services

EN26 Initiatives to mitigate environmental impacts of products and services and extent of impact mitigation. 29 – 31

EN27 Percentage of products sold and their packaging materials that are reclaimed by category. –

Aspect: Compliance

EN28 Monetary value of significant fines and total number of non-monetary sanctions/convictions for non-compliance with environmental laws and regulations.

31

Aspect: Transport

EN29 Significant environmental impacts of transporting products and other goods and materials used for the organisation’s operations and transporting members of the workforce.

–

Aspect: Overall

EN30 Total environmental protection expenditures and investments by type. –

Labour practices and decent work

Labour practices and decent work: Disclosure on management approach

LA DISCLOSURE ON MANAGEMENT APPROACH

Provide a concise disclosure on the following Management Approach items with reference to the labour aspects listed below. The ILO Tripartite Declaration Concerning Multi-national Enterprises and Social Policy (in particular the eight core conventions of the ILO) and the Organisation for Economic Co-operation and Development Guidelines for Multi-national Enterprises, should be the primary reference points:

• Employment;

• Labour/Management relations;

• Occupational health and safety;

• Training and education; and

• Diversity and equal opportunity.

Labour practices and decent work performance indicators

Aspect: Employment

LA1 Total workforce by employment type, employment contract and region. 25

LA2 Total number and rate of employee turnover by age group, gender and region. 25

LA3 Benefits provided to full-time employees who are not provided to temporary or part-time employees, by major operations.

–



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Aspect: Labour/Management relations

LA4 Percentage of employees covered by collective bargaining agreements. –

LA5 Minimum notice period(s) regarding significant operational changes, including whether it is specified in collective agreements.

–

Aspect: Occupational health and safety

LA6 Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programmes.

–

LA7 Rates of injury, occupational diseases, lost days and absenteeism and total number of work-related fatalities by region. Please include industry benchmarks, if available, in Additional Comments.

25

LA8 Education, training, counselling, prevention and risk-control programmes in place to assist workforce members, their families or community members regarding serious diseases.

25

LA9 Health and safety topics covered in formal agreements with trade unions. –

Aspect: Training and education

LA10 Average hours of training per year per employee by employee category. –

LA11 Programmes for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings.

–

LA12 Percentage of employees receiving regular performance and career development reviews. –

Aspect: Diversity and equal opportunity

LA13 Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership and other indicators of diversity.

24

LA14 Ratio of basic salary of women to men by employee category. –

Human rights: Disclosure on management approach

HR DISCLOSURE ON MANAGEMENT APPROACH

Provide a concise disclosure on the following Management Approach items with reference to the human rights aspects listed below: The ILO Tripartite Declaration Concerning Multi-national Enterprises and Social Policy (in particular the eight core conventions of the ILO, which consist of Conventions 100, 111, 87, 98, 138, 182, 20 and 1059), and the Organisation for Economic Co-operation and Development Guidelines for Multi-national Enterprises should be the primary reference points:

• Investment and procurement practices;

• Non-discrimination;

• Freedom of association and collective bargaining;

• Abolition of child labour;

• Prevention of forced and compulsory labour;

• Complaints and grievance practices;

• Security practices; and

• Indigenous rights.

Human rights performance indicators

Aspect: Investment and procurement practices

HR1 Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening.

–

HR2 Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken.

–

HR3 Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained.

–


Page reference

Aspect: Non-discrimination

HR4 Total number of incidents of discrimination and actions taken. –

Aspect: Freedom of association and collective bargaining

HR5 Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk and actions taken to support these rights.

–

Aspect: Child labour

HR6 Operations identified as having significant risk for incidents of child labour and measures taken to contribute to the elimination of child labour.

–

Aspect: Forced and compulsory labour

HR7 Operations identified as having significant risk for incidents of forced or compulsory labour, and measures taken to contribute to the elimination of forced or compulsory labour.

25

Aspect: Security practices

HR8 Percentage of security personnel trained in the organisation’s policies or procedures concerning aspects of human rights that are relevant to operations.

–

Aspect: Indigenous rights

HR9 Total number of incidents of violations involving rights of indigenous people and actions taken. –

Society

Society: Disclosure on management approach

SO DISCLOSURE ON MANAGEMENT APPROACH

Provide a concise disclosure on the following Management Approach items with reference to the society aspects:

• Community;

• Corruption;

• Public policy;

• Anti-competitive behaviour; and

• Compliance.

Society performance indicators

Aspect: Community

SO1 Nature, scope and effectiveness of any programmes and practices that assess and manage the impacts of operations on communities, including entering, operating and exiting.

–

Aspect: Corruption

SO2 Percentage and total number of business units analysed for risks related to corruption. –

SO3 Percentage of employees trained in organisation’s anti-corruption policies and procedures. –

SO4 Actions taken in response to incidents of corruption. –

Aspect: Public policy

SO5 Public policy positions and participation in public policy development and lobbying. –

SO6 Total value of financial and in-kind contributions to political parties, politicians and related institutions by country.

N/A

Aspect: Anti-competitive behaviour

SO7 Total number of legal actions for anti-competitive behaviour, anti-trust and monopoly practices and their outcomes.

N/A



Aspect: Compliance

SO8 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations (e.g. human rights).

–

Product responsibility: Disclosure on management approach

PR DISCLOSURE ON MANAGEMENT APPROACH

Provide a concise disclosure on the following Management Approach items with reference to the product responsibility aspects:

• Customer health and safety;

• Product and service labelling;

• Marketing communications;

• Customer privacy; and

• Compliance.

Product responsibility performance indicators

Aspect: Customer health and safety

PR1 Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures.

–

PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services, by type of outcomes.

–

Aspect: Product and service labelling

PR3 Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements.

–

PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling, by type of outcomes.

–

PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction.

–

Aspect: Marketing communications

PR6 Programmes for adherence to laws, standards and voluntary codes related to marketing communications, including advertising, promotion and sponsorship.

N/A

PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion and sponsorship, by type of outcomes.

N/A

Aspect: Customer privacy

PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data.

N/A

Aspect: Compliance

PR9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services.

–

Page reference


SHAREHOLDERS’ DIARY

Financial year-end 27 December 2013

Annual General Meeting 5 May 2014

Report and profit statements:

Interim for half-year to end June 2014 – Published August 2014

Final for year to 27 December 2013 – Published March 2015

Dividends:

Final

declared February 2014

paid March 2014

Details of final dividend declared for the year ended 27 December 2013:

No dividend has been declared


NOTICE TO SHAREHOLDERS

DELTA EMD LIMITED(Formerly Delta Electrical Industries Limited)(Incorporated in the Republic of South Africa)(Registration number: 1919/006020/06)Share code: DTA ISIN: ZAE000132817(“Delta” or “the company” or “the Group”)

Notice is hereby given that the ninety-seventh annual general meeting of shareholders of the company will be held in the Kensington Gardens Conference Room, Southern Sun Hyde Park, 1st Road Hyde Park, Sandton on Friday, 9 May 2014, at 11:00 for the purpose of considering the following business and if deemed fit, to pass, with or without modification, the ordinary shareholders resolutions set out below.

The record date on which shareholders must be recorded as such in the securities register maintained for the company for the purposes of determining which shareholders are entitled to attend and vote at the annual general meeting is Friday, 2 May 2014. Any person appointed as a proxy need to be a shareholder of the company.

1. Ordinary resolutions

1.1 Acceptance of annual financial statements

Ordinary resolution 1 is proposed to receive and accept the Group audited annual financial statements for the year ended 27 December 2013, including the Directors’ report, the report of the auditors and the report of the audit committee thereon. The financial statements, the Directors’ report, the report of the auditors and the report of the audit committee are set out on pages 38 to 67 of the integrated annual report attached to this notice.

1.1.1 Ordinary resolution 1

“Resolved that the Group audited annual financial statements for the year ended 27 December 2013, including the Directors’ report, the report of the auditors and the report of the audit committee thereon be and are hereby received and accepted.”

In order for this resolution to be adopted, the support of more than 50% of the voting rights exercised on the resolution by shareholders present or represented by proxy at the annual general meeting and entitled to exercise voting rights on the resolution is required.

1.2 Re-election of directors

In terms of the company’s memorandum of incorporation, at every annual general meeting at least one-third of the directors must retire and the directors to so retire shall be those who have been longest in office since their last election. The retiring directors shall be eligible for re-election.

Messrs A Hicks and B Wright are required to retire by rotation and they have offered themselves for re-election.

Ordinary resolutions 2 and 3 are proposed to re-elect the directors who retire as directors of the company by rotation in accordance with the company’s memorandum of incorporation and who, being eligible for re-election, offer themselves for re-election.

Brief biographical information of each of the retiring directors is set out on pages 12 and 13 of the integrated annual report accompanying this note.

The nomination committee of the company conducted an assessment of the performance of each of the retiring directors and the board of directors of the company (“the board”) considered the findings of the nomination committee. Based on these findings, the board recommends to shareholders the re-election of each of the retiring directors as set out in ordinary resolutions 2 and 3.



“Resolved that Mr A Hicks, who retires in terms of article 23 of the memorandum of incorporation of the company and who is eligible and available for re-election, be and is hereby re-elected as a director of the company.”



“Resolved that Mr B Wright, who retires in terms of article 23 of the memorandum of incorporation of the company and who is eligible and available for re-election, be and is hereby re-elected as a director of the company.”


1.3 Election of audit committee

Ordinary resolution 4 is proposed to elect an audit committee in terms of section 94(2) of the Companies Act, 71 of 2008 (as amended) (“the Companies Act”) and the King Report on Corporate Governance for South Africa (“King III”).

Section 94 of the Companies Act requires that, at each annual general meeting, shareholders of the company must elect an audit committee comprising at least three members.

The nomination committee conducted an assessment of the performance and independence of each of the directors proposed to be members of the audit committee and the board considered and accepted the findings of the nomination committee. The board is also satisfied that the proposed members meet the requirements of section 94(4) of the Companies Act, that they are independent according to King III and that they possess the required qualifications and experience as prescribed in Regulation 42 of the Companies Act Regulations, 2011, which requires that at least one-third of the members of a company’s audit committee at any particular time must have academic qualifications or experience in economics, law, corporate governance, finance, accounting, commerce, industry, public affairs or human resource management.

Brief biographical notes of each candidate available for election as a member of the audit committee are set out on page 12 of the integrated annual report.


“Resolved that an audit committee comprising the independent and non-executive directors set out below be and is hereby appointed in terms of section 94(2) of the Companies Act to hold office until the next annual general meeting and to perform the duties and responsibilities stipulated in section 94(7) of the Companies Act and in King III and to perform such other duties and responsibilities as may from time to time be delegated to it by the board.

Mr L Matteucci Chairman

Mr BR Wright Member*

Mr AC Hicks Member*

* Subject to his re-election as a director pursuant to ordinary resolution 2 and 3.”


NOTICE TO SHAREHOLDERS (continued)


1.4 Appointment of external auditors

Ordinary resolution 5 is proposed to approve the appointment of Deloitte & Touche as the external auditors of the company for the financial year ending 27 December 2014 and to remain in office until the conclusion of the next annual general meeting, and to authorise the directors to determine their remuneration.

Subject to the passing of the resolution, Dr D Steyn will be the individual registered auditor who will undertake the audit during the financial year ending 27 December 2014.

Section 90(1) of the Companies Act requires the company to appoint an auditor each year at its annual general meeting. The audit committee conducted an assessment of the performance and the independence of the external auditors and considered whether or not the external auditors comply with the requirements of sections 90(2) and (3) of the Companies Act and Section 22 of the Listings Requirements of the JSE Limited (“JSE”), and the board considered and accepted the audit committee findings. The board is satisfied that Deloitte & Touche auditors and Dr D Steyn comply with the relevant provisions and are duly accredited by the JSE.


“Resolved that Deloitte & Touche be appointed as the external auditors of the company and of the Group for the financial year ending 27 December 2014 and to remain in office until the conclusion of the next annual general meeting, and that their remuneration for the financial year ending 27 December 2014 be determined by the directors.”


1.5 Non-binding advisory vote on remuneration policy

Resolution 6 is proposed, as recommended by King III, to allow shareholders to endorse, by way of a non-binding advisory vote, the remuneration policy elements in the remuneration report on page 31 to 34 of the integrated annual report.

The board is responsible for determining the remuneration of executive directors in accordance with the remuneration policy of the company. The remuneration committee assists the board in its responsibility for setting and administering remuneration policies in the company’s long-term interests. The remuneration committee considers and recommends remuneration for all levels of employees and directors in the company, including the remuneration of senior executives and executive directors, and advises on the remuneration of non-executive directors. King III recommends that every year the company’s remuneration policy should be presented to shareholders for a non-binding advisory vote at the annual general meeting. This process enables shareholders to express their views on the remuneration policies adopted. The remuneration committee prepared and the board considered and accepted the remuneration policies, as set out in the remuneration report on pages 31 to 34 of the integrated annual report, and shareholders are required to vote on it.

1.5.1 Non-binding advisory resolution – resolution 6

““Resolved that the company’s remuneration policy, as set out in the remuneration report on pages 31 to 34 of the integrated annual report, be and is hereby endorsed by way of a non-binding advisory vote.” In order for this resolution to be adopted, the support of more than 50% of the voting rights exercised on the resolution by the shareholders present or represented by proxy at the annual general meeting and entitled to exercise voting rights on the resolution is required.

2. Special resolutions2.1 To approve the non-executive directors’ fees

Section 66(8) (read with section 66(9)) of the Companies Act provides that, to the extent permitted in the company’s memorandum of incorporation, the company may pay remuneration to its directors for their services as directors, provided that such remuneration may only be paid in accordance with a special resolution approved by shareholders within the previous two years. The remuneration committee has considered the remuneration for non-executive directors and the board has accepted the recommendations of the remuneration committee.


2.1.1 Special resolution 1:“Resolved that the fees payable to the non-executive directors for their services as directors be revised with effect from 1 January 2014 as follows:

Non-executive directors’ fees Present Proposed*

Chairman of the board – base fee R400 000 R350 000– board meeting fee – R25 000– board call meeting fee – R5 000

Non-executive directors – base fee R160 000 R100 000– board meeting fee – R20 000– board call meeting fee – R4 000

Chairman of the audit and risk committee R135 000 R150 000Members of the audit and risk committee R80 000 R90 000Chairman of other board committees** R80 000 R100 000Member of other board committees** R45 000 R50 000Chairman of the nomination committee – –Member of the nomination committee – –

* Per calendar year, commencing on 1 January 2014, and subsisting until another special resolution dealing with the fees payable to non-executive directors is adopted, or this special resolution expires, whichever happens first.”

** This excludes the nomination committee.

In order for this resolution to be adopted, the support of at least 75% of the voting rights exercised on the resolution by shareholders present or represented by proxy at the annual general meeting and entitled to exercise voting rights on the resolution is required.

2.2 Loans or other financial assistance to related or inter-related companies

Section 45 of the Companies Act provides, among other things that, except to the extent that the memorandum of incorporation of a company provides otherwise, the board may authorise the company to provide direct or indirect financial assistance (which includes lending money, guaranteeing a loan or other obligation and securing any debt or obligation) to a related or inter-related company, provided that such authorisation shall be made pursuant to a special resolution of the shareholders adopted within the previous two years, which approved such assistance either for the specific recipient or generally for a category of potential recipients and the specific recipient falls within that category.

It may be necessary for the company to provide financial assistance from time to time to its subsidiaries. In the circumstances and in order to ensure that the company’s subsidiaries have access to financial assistance from the company (as opposed to from external sources), it is necessary in terms of section 45 to obtain the approval of shareholders, as set out in special resolution 2.

Section 45 of the Companies Act also provides, among other things, that the Board must be satisfied that:

(a) immediately after providing the financial assistance, the company would satisfy the solvency and liquidity test contained in section 4 of the Companies Act; and

(b) the terms under which the financial assistance is proposed to be given are fair and reasonable to the company.

2.2.1 Special resolution 2:

“Resolved that the directors of the company be and are hereby authorised, in accordance with section 45 of the Companies Act, to authorise the company to provide direct or indirect financial assistance to any company which is a subsidiary company of the company.”

In order for this resolution to be adopted, the support of at least 75% of the voting rights exercised on the resolution by shareholders present or represented by proxy at the annual general meeting and entitled to exercise voting rights on the resolution is required.

NOTICE TO SHAREHOLDERS (continued)


3. Shareholders’ resolution – discontinuation of the business and realisation of value for assets

3.1 Resolution to approve the decision to discontinue the business and realise value for assets

The shareholders’ resolution below is proposed to approve the board’s decision taken on 3 March 2014 that, subject to approval by shareholders by way of a resolution adopted with the support of more than 50% of the voting rights exercised on the resolution, the company discontinue Its business during 2014 and realise value for its assets during 2014 and 2015, all in compliance with applicable statutory and regulatory requirements.

The rationale for the board’s decision to discontinue the business of the company and realise value for Its assets, and a high level Closing Plan, is summarised in the memorandum attached to this notice (“Memorandum”).

3.1.1 Shareholders’ resolution – discontinuation of the business and realisation of value for its assets

“Resolved that the Board’s decision taken on 3 March 2014 that the company discontinue Its business during 2014 and realise value for its assets during 2014 and 2015, all in compliance with applicable statutory and regulatory requirements, be and is hereby approved.”

In order for this resolution to be adopted, the support of more than 50% of the voting rights exercised on the resolution by the shareholders present or represented by proxy at the annual general meeting and entitled to exercise voting rights on the resolution is required.


Certificated shareholders/dematerialised shareholders with own name registration

Registered holders of certificated ordinary shares and holders of dematerialised ordinary shares in their own name, may attend, speak and vote at the annual general meeting or are entitled to appoint a proxy or more than one proxy to attend, speak and, on a poll, vote in his/her stead.

Dematerialised shareholders

Shareholders who have dematerialised their shares through a Central Securities Depositary Participant (“CSDP”) or broker, and who have not elected own name registration and wish to attend the annual general meeting, should timeously inform their CSDP or broker of their intention to attend the annual general meeting and request such CSDP or broker to issue them with the necessary authority to attend. If they do not wish to attend the annual general meeting, they may provide such CSDP or broker with their voting instructions.

Voting and proxies

A shareholder of the company entitled to attend and vote at the annual general meeting is entitled to appoint one or more proxies (who need not be a shareholder of the company) to attend, vote and speak in his/her stead. Forms of proxy may also be obtained on request from the company’s registered office. Any shareholder who completes and lodges a form of proxy will nevertheless be entitled to attend and vote in person at the annual general meeting should the shareholder subsequently decide to do so.

Voting rights

The ordinary shareholders are entitled to vote on all the resolutions set out in this notice. On a show of hands, every ordinary shareholder who is present in person or by proxy at the annual general meeting will have one vote (irrespective of the number of ordinary shares held in the company) and, on a poll, every ordinary shareholder will have one vote for every ordinary share held or represented. All the resolutions set out in this notice will be voted on by poll.

Identification

In terms of section 63(1) of the Companies Act, any person attending or participating in the annual general meeting must present reasonably satisfactory identification and the person presiding at the annual general meeting must be reasonably satisfied that the right of any person to participate in and vote whether as a shareholder or as a proxy for a shareholder has been reasonably verified. Acceptable forms of identification include valid identity documents, drivers’ licences and passports.

Electronic participation by shareholders

Should any shareholder (or a proxy for a shareholder) wish to participate in the annual general meeting by way of electronic participation, that shareholder should make an application in writing to so participate to the transfer secretaries, at the transfer secretaries’ address, 70 Marshall Street, Johannesburg, 2001, to be received by the transfer secretaries at least five business days prior to the annual general meeting in order for the transfer secretaries to arrange for the shareholder (or its representative or proxy) to provide reasonably satisfactory identification to the transfer secretaries for the purposes of section 63(1) of the Companies Act and for the transfer secretaries to provide the shareholder (or its representative or proxy) with details as to how to access any electronic participation to be provided. The costs of accessing any means of electronic participation provided by the company will be borne by the company.

By order of the board

J S Seymore, CA(SA)Company Secretary

Nelspruit, Mpumalanga

10 February 2014


FORM OF PROXY

DELTA EMD LIMITED(Formerly Delta Electrical Industries Limited)(Incorporated in the Republic of South Africa)(Registration number 1919/006020/06)Share code: DTA ISIN: ZAE000132817(“Delta” or “the company”)

For use by certificated shareholders and dematerialised shareholders with own name registration only, at the ninety-seventh annual general meeting of shareholders of the company to be held at the Kensington Gardens Conference Centre, Southern Sun Hyde Park, 1st Road, Hyde Park, Sandton, on Friday 9 May 2014 at 11:00.

Dematerialised shareholders without own name registration must inform their CSDP or broker of their intention to attend the annual general meeting and request their CSDP or broker to issue them with the necessary Letter of Representation to attend the annual general meeting in person and vote or provide their CSDP or broker with their voting instructions should they not wish to attend the annual general meeting in person. These shareholders must not use this form of proxy.

I/We(NAME IN BLOCK LETTERS)Of(address)being the holders of shares in the Company, do herebyappoint (see note 3):

1. or failing him/her,

2. or failing him/her,

3. the Chairperson of the annual general meeting,

as my/our proxy to act for me/us at the annual general meeting for purposes of considering and, if deemed fit, passing, with or without modification, the shareholders resolutions to be proposed thereat and at each adjournment thereof; and to abstain from voting for and/or against such resolutions in respect of the ordinary shares registered in my/our name in accordance with the following instructions:

*In favour of *Against *Abstain

Ordinary resolution 1: Acceptance of annual financial statements

Ordinary resolution 2: Re-Election of A Hicks as a director

Ordinary resolution 3: Re-Election of B Wright as a director

Ordinary resolution 4: Election of Audit Committee

Ordinary resolution 5: Re-Appointment of Deloitte & Touche as external auditors

Non-Binding advisory resolution 6: Non-binding advisory note on remuneration policy

Special resolution 1: Approval of non-executive directors’ fees

Special resolution 2: Approval of general authority to grant loans or other financial assistance to related or inter-related companies

Shareholders' resolution

Shareholders' resolution to approve the decision to discontinue the business and realise value for assets

* insert an “X” or the number of ordinary shares (see note 9).

Signed at on 2014

Signature

Assisted by (where applicable)

Each shareholder is entitled to appoint one or more proxies (who need not be a shareholder of the company) to attend, speak and vote in place of that shareholder at the annual general meeting.

Please read the instructions and Companies Act summary on the reverse hereof.


NOTES TO THE FORM OF PROXY

Instructions on signing and lodging of this annual general meeting form of proxy1. A deletion of any printed matter and the completion of any blank spaces need not be signed or initialled. Any alterations must be signed, not initialled.2. The Chairperson of the annual general meeting shall be entitled to decline to accept the authority of a signatory:

(a) under a power of attorney; or(b) on behalf of a company,

unless the power of attorney or authority is deposited with the transfer secretaries, Computershare Investor Services (Pty) Limited, Ground Floor, 70 Marshall Street, Johannesburg, 2001 or PO Box 61051, Marshalltown, 2107 by no later than 11:00 on Wednesday, 7 May 2014.

3. The signatory may insert the name of any person(s) whom the signatory wishes to appoint as his/her proxy in the blank space/s provided for that purpose.4. When there are joint holders of shares and if more than one such joint holder be present or represented, then the person whose name appears first in the

securities register in respect of such shares or his/her proxy, as the case may be, shall alone be entitled to vote in respect thereof.5. The completion and lodging of this form of proxy will not preclude the signatory from attending the annual general meeting and speaking and voting in person

thereat should such person wish to do so, to the exclusion of any proxy appointed in terms hereof.6. If, in the appropriate place on the face of this form of proxy, there is no indication of how to vote in respect of any resolution, the proxy shall be deemed to

have been instructed to vote in favour of the resolution.7. The Chairperson of the annual general meeting may reject or accept any form of proxy which is completed, other than in accordance with these instructions,

provided that, in the event of acceptance, the Chairperson is satisfied as to the manner in which a shareholder wishes to vote.8. If the shareholding is not indicated on this form of proxy, the proxy will be deemed to be authorised to vote the total shareholding registered in the

shareholder’s name.9. Please insert an “X” in the relevant space according to how you wish to vote. In respect of a lesser numbers of shares than you own in the company,

insert the number of shares held in respect of which you wish to vote. Failure to comply with the above will be deemed to be on Instruction to the proxy to vote in favour of the resolution. A shareholder or his/her proxy is not obliged to use all the votes exercisable by the shareholder or by his/her proxy, but the total of the votes cast and/or in respect of which abstention is recorded may not exceed the total number of votes exercisable by the shareholder or by his/her proxy.

10. A form of proxy sent by electronic medium to the Company Secretary or transfer secretaries within the time allowed for submission, shall be deemed to constitute an instrument of proxy.

11. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy unless previously recorded by the Company Secretary or waived by the Chairperson of the annual general meeting.

12. A minor must be assisted by his/her parent or guardian unless the relevant documents establishing his/her legal capacity are produced or have been registered by the Company Secretary.

13. Forms of proxy should be lodged with or mailed to Computershare Investor Services (Pty) Limited:Hand deliveries to: Postal deliveries to:Ground Floor, 70 Marshall Street PO Box 61051Johannesburg, 2001 Marshalltown, 2107to be received by no later than 11:00 on Wednesday, 7 May 2014 (or 48 hours before any adjournment of the annual general meeting which date, if necessary, will be published in the press or in effect of any adjustment of the annual general meeting, by no later than 48 hours before any adjustment such which date is necessary will be published in the press). A proxy form not lodged by this time may be handed to the Chairman before the due commencement of the meeting.

Summary in terms of section 58(8)(b)(i) of the Companies ActSection 58(8)(b)(i) provides that, if a company supplies a form of instrument for appointing a proxy, the form of proxy supplied by the company for the purpose of appointing a proxy must bear a reasonably prominent summary of the rights established by section 58 of the Companies Act, 2008, as amended, which summary is set out below:For purposes of this summary, the term “shareholder” shall have the meaning ascribed thereto in section 57(1) of the Companies Act.A proxy appointment:• must be in writing, dated and signed by the shareholder; and• remains valid for:

– one year after the date on which it was signed; or– any longer or shorter period expressly set out in the appointment, unless it is revoked in a manner contemplated in section 58(4)(c) of the Companies Act; or

expires earlier as contemplated in section 58(8)(d) of the Companies Act.The memorandum of incorporation of the company prohibits:• the concurrent appointment of two or more persons as proxy, therefore shareholders are not permitted to concurrently appoint two or more persons as proxy; and• the delegation of authority to act by a proxy, therefore proxies are not permitted to delegate their authority to act to another person.A copy of the instrument appointing a proxy must be delivered to the company, or to any other person on behalf of the company, before the proxy exercises any rights of the shareholder at a shareholders’ meeting.Irrespective of the form of instrument used to appoint a proxy:• the appointment is suspended at any time and to the extent that the shareholder chooses to act directly and in person in the exercise of any rights as a

shareholder;• the appointment is revocable unless the proxy appointment expressly states otherwise; and• if the appointment is revocable, a shareholder may revoke the proxy appointment by:

– cancelling it in writing, or making a later inconsistent appointment of a proxy; and– delivering a copy of the revocation instrument to the proxy and to the company.

The revocation of a proxy appointment constitutes a complete and final cancellation of the proxy’s authority to act on behalf of the shareholder as of the later of the date:• stated in the revocation instrument, if any; or• upon which the revocation instrument is delivered to the proxy and the relevant company as required in section 58(4)(c)(ii) of the Companies Act.Should the instrument appointing a proxy or proxies have been delivered to the company, as long as that appointment remains in effect, any notice that is required by the Companies Act or the company’s memorandum of incorporation to be delivered by the company to the shareholder must be delivered by the company to: • the shareholder, or; • the proxy or proxies if the shareholder has in writing directed the company to do so and has paid any reasonable fee charged by the company for doing so.The memorandum of incorporation of the Company provides that the vote of a proxy must be in accordance with the express directions as to voting the shares in question specified in the applicable proxy form or instrument appointing the proxy, failing which the Company will be entitled to disregard the proxy form or instrument appointing the proxy. Accordingly, a proxy will not be entitled to exercise, or abstain from exercising, any voting right of the relevant shareholder without direction.If the company issues an invitation to shareholders to appoint one or more persons named by such company as a proxy, or supplies a form of instrument for appointing a proxy:• such invitation must be sent to every shareholder who is entitled to receive notice of the meeting at which the proxy is intended to be exercised;• the company must not require that the proxy appointment be made irrevocable; and• the proxy appointment remains valid only until the end of the relevant meeting at which it was intended to be used, unless revoked as contemplated in

section 58(5) of the Companies Act.


This integrated annual report comprehensively discloses the factors that affect the financial and non-financial performance of Delta EMD Limited. It has been prepared using the guidelines for sustainability reporting developed by the Global Reporting Initiative (GRI).

The report covers the activities of Delta EMD Limited, including all subsidiaries for the financial year ended 27 December 2013.

Delta Group’s continuing operations is based in South Africa. This report includes the consolidation of the Group’s discontinued operations in Australia.

The business principles and practices described can be verified by reference to Board minutes and established standards and policies (both written and unwritten). The report discusses the implementation of these principles and practices including the financial and non-financial measurement mechanisms used by the company to assess its performance.

Our internal confidence level on the accuracy of the information presented is high. Delta EMD Group has strong administration systems and the management systems that yield the financial data reflected in the report are well-established.

Some elements of the report have been externally verified by independent auditors. The independent auditor’s report on the Annual Financial Statements is presented in terms of International Financial Reporting Standards.

Accounting policies are set out on pages 47 to 51. There have been no significant changes to the measurement methods used in the report.

The previous report was published in February 2013. There have been no significant changes in the operations of the company since that date.

A full GRI index is included on pages 70 to 77 All aspects of the guidelines have been addressed in the report unless indicated.

For background or additional information concerning the company’s activities which are covered in this report, contact:

Johan Seymore, Company Secretary, Delta EMD Limited15 Heyneke StreetNelspruit, Mpumalanga, 1200South Africa

Tel: +27 13 759 3506, email: [email protected]

www.deltaemd.com

INTEGRATED ANNUAL REPORT GUIDELINES


www.deltaemd.com

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