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Omnia Holdings Limited - Audited Results

Release Date: 17/03/1999 07:59:02      Code(s): OMN
(REG. NO. 67/03680/06)
THE AUDITED RESULTS OF THE GROUP FOR THE YEAR ENDED 31 DECEMBER 1998 COMPARED
WITH THE AUDITED RESULTS FOR THE PREVIOUS YEAR APPEAR BELOW:
HIGHLIGHTS
* HEADLINE EARNINGS R66,2 MILLION VS R66,6 MILLION IN 1997
* DIVIDEND INCREASED TO 76 CENTS PER SHARE
* REAL INCREASE IN 1999 EPS BUDGETED FOR
AUDITED RESULTS
FOR THE YEAR ENDED 31 DECEMBER 1998
CONSOLIDATED INCOME STATEMENTS
                                                  1998       1997
                                                  R000       R000       %
SALES                                             1 155 093  1 066 213  8%
CONTINUING OPERATIONS                             1 155 093  1 064 803
DISCONTINUED OPERATIONS                           -          1 410
OPERATING PROFIT                                  121 781    124 742
CONTINUING OPERATIONS                             121 781    118 495    3%
DISCONTINUED OPERATIONS                           -          6 247
FINANCIAL COSTS                                   49 321     33 989     45%
PROFIT BEFORE TAXATION                            72 460     90 753     -20%
TAXATION                                          6 570      18 322
PROFIT BEFORE RETAINED PROFIT OF ASSOCIATES       65 890     72 431     -9%
SHARE OF RETAINED PROFIT OF ASSOCIATES            916        1 285
PROFIT AFTER TAXATION                             66 806     73 716     -9%
ATTRIBUTABLE TO OUTSIDE SHAREHOLDERS              558        614
NET PROFIT                                        66 248     73 102     -9%
ORDINARY DIVIDENDS                                29 461     28 686     3%
RETAINED EARNINGS FOR THE YEAR                    36 787     44 416
DEPRECIATION                                      22 632     20 782
HEADLINE EARNINGS PER SHARE (CENTS)               170,9      171,9      -1%
EARNINGS PER SHARE (CENTS)                        170,9      188,6      -9%
SHARES IN ISSUE (000'S)                           38 765     38 765
DIVIDENDS PER SHARE (CENTS)                       76         74         3%
DIVIDEND COVER                                    2,2        2,5
FULLY DILUTED EARNINGS                            66 806     73 716     -9%
FULLY DILUTED NO. OF SHARES IN ISSUE (000'S)*     40 265     40 745
FULLY DILUTED EARNINGS PER SHARE (CENTS)          165,9      180,9      -8%
RETURN ON ORDINARY SHAREHOLDER'S EQUITY           23,9%      31,5%
*FULLY DILUTED NUMBER OF SHARES IN ISSUE IS AFTER TAKING INTO ACCOUNT THE
DILUTION THAT WILL ARISE ON THE ISSUE OF 1,5 MILLION SHARES IN TERMS OF THE
PARTNERSHIP WITH MANAGEMENT SCHEME .
CONSOLIDATED ABRIDGED BALANCE SHEETS
                                                  1998       1997
                                                  R000       R000
CAPITAL EMPLOYED
ORDINARY SHAREHOLDERS EQUITY                      298 032    255 852
OUTSIDE SHAREHOLDERS' INTEREST                    1 500      1 500
LONG-TERM LIABILITIES                             96 230     32 798
DEFERRED TAXATION                                 -          528
                                                  395 762    290 678
EMPLOYMENT OF CAPITAL
FIXED ASSETS AND INVESTMENTS                      316 827    208 130
NET CURRENT ASSETS                                78 935     82 548
CURRENT ASSETS                                    522 940    427 700
CURRENT LIABILITIES                               444 005    345 152
                                                  395 762    290 678
CURRENT RATIO                                     1,18       1,24
NET INTEREST BEARING DEBT                         134 421    33 309
DEBT TO EQUITY                                    45%        13%
NET WORTH PER SHARE (CENTS)                       769        660
CAPITAL EXPENDITURE - INCURRED                    120 276    46 840
- AUTHORISED AND NOT COMMITTED                    126 899    98 808
- AUTHORISED AND COMMITTED                        23 459     32 835
CONSOLIDATED ABRIDGED CASH FLOW
                                                  1998       1997
                                                  R000       R000
GENERATED BY OPERATIONS                           141 934    142 568
FINANCIAL COSTS AND TAXATION                      (65 902)   (45 309)
(RETAINED FOR)/GENERATED FROM WORKING CAPITAL     (19 327)   20 158
AVAILABLE FROM OPERATING ACTIVITIES               56 705     117 417
DIVIDENDS PAID                                    (29 297)   (24 581)
CASH FLOW FROM OPERATING ACTIVITIES               27 408     92 836
GENERATED FROM/UTILISED IN INVESTMENT ACTIVITIES  (131 880)  27 188
NET CASH (OUTFLOW)/INFLOW FOR YEAR                (104 472)  120 024
COMMENT
OPERATING PERFORMANCE
IN A YEAR OF GREAT TURBULENCE, GLOBALLY BY UPHEAVELS IN FINANCIAL AND COMMODITY
MARKETS, AND LOCALLY BY RECORD HIGH REAL INTEREST RATES AND THROUGH
UNCERTAINTIES GENERATED BY FERTILIZER INDUSTRY CHANGES, IT IS PLEASING TO
REPORT HEADLINE EARNINGS OF R66,2 MILLION, ALMOST UNCHANGED FROM THE R66,6
MILLION OF 1997. THIS IS MORE CREDITABLE GIVEN TOUGH FERTILIZER MARKET
CONDITIONS AND AN INCREASE IN FINANCE COSTS OF R15,3 MILLION OVER 1997. SALES
INCREASED BY 8% TO R1,16 BILLION, DESPITE RSA FERTILIZER SALES PRICE INCREASES
BEING LIMITED TO 2%. OPERATING PROFIT FROM CONTINUING OPERATIONS IMPROVED 3%
REACHING A NEW HIGH OF R121,8 MILLION. A VERY LATE FERTILIZER SALES SEASON,
WHICH CAUSED A SUBSTANTIAL INCREASE IN WORKING CAPITAL FUNDING, COMBINED WITH
THE HIGH INTEREST RATES INCREASED FINANCIAL COSTS BY 45% TO R49,3 MILLION. THE
REDUCTION IN PROFIT BEFORE TAX OF 20% WAS PARTIALLY OFFSET BY THE LOWER TAX
RATE, AND PROFIT AFTER TAX WAS 9% DOWN ON 1997. HOWEVER, HEADLINE EARNINGS PER
SHARE WAS ONLY 1% DOWN ON 1997.
CONSOLIDATION OF FOCUS
THE GROUP WILL CONTINUE TO FOCUS ON THE THREE CORE ACTIVITIES OF FERTILIZER,
MINING EXPLOSIVES AND INDUSTRIAL CHEMICALS WITH EMPHASIS BEING PLACED ON GROWTH
IN THE LATTER TWO AS WELL AS IN NICHE SPECIALITY FERTILIZER.
FERTILIZER
THE EXCESS SUPPLY IN THE GLOBAL NITROGEN MARKET CAUSED A STEADY DECLINE DURING
THE YEAR IN THE US DOLLAR PRICE FOR UREA AND AMMONIA, WHICH ENDED THE YEAR AT
THEIR LOWEST LEVELS IN A DECADE. THIS RESULTED IN LOCAL FERTILIZER SALES PRICES
DECLINING IN THE FIRST HALF OF THE YEAR, BUT THE DROP IN THE VALUE OF THE RAND
FROM JUNE CAUSED PRICES TO INCREASE IN THE SECOND HALF. EXCESSIVE VOLATILITY IN
THE RAND MADE PRICING EXTREMELY DIFFICULT AND BY YEAR END, AVERAGE LOCAL
FERTILIZER SALES PRICES HAD INCREASED BY LESS THAN 2%. OMNIA'S STRATEGY OF
POSITIONING ITSELF AS AN INTERMEDIATE CONVERTER OF NITROGEN, AND NOT A PRIMARY
PRODUCER, AGAIN PROVED ITS WORTH IN THAT GROSS MARGINS WERE SUBSTANTIALLY
MAINTAINED.
ALTHOUGH IDEAL CLIMATIC CONDITIONS PREVAILED, HIGH INTEREST RATES AND WEAK CROP
PRICES CAUSED FARMERS TO ADOPT A MORE CAUTIOUS APPROACH WHICH LED TO A
REDUCTION IN THE ACREAGE OF CROPS PLANTED. THIS IN TURN RESULTED IN A REDUCTION
OF 1% IN TOTAL RSA FERTILIZER DEMAND.
THE SPECIALITY FERTILIZER DIVISION RECORDED A FURTHER HEALTHY INCREASE IN NET
PROFIT.
CONSTRUCTION OF THE NEW GRANULATION PLANT REMAINS ON TRACK WITH COMMISSIONING
SCHEDULED FOR MAY 1999. OVERALL, THE FERTILIZER DIVISION RECORDED A REAL GROWTH
IN OPERATING INCOME BEFORE FINANCE COSTS AND TAXATION.
MINING EXPLOSIVES
AFTER THE RAPID GROWTH OF THE PAST THREE YEARS, 1998 WAS A YEAR OF
CONSOLIDATION FOR THE MINING EXPLOSIVES DIVISION, WHICH PRODUCED A SMALL
DECREASE IN PROFIT BEFORE TAX. THE BULK MINING EXPLOSIVES DIVISION PERFORMED
WELL, AIDED BY REDUCTIONS IN THE PRICE OF NITROGEN, ITS PRIMARY INPUT. THE
TECHNICAL DIFFICULTIES AT THE CARTRIDGE EXPLOSIVES PLANT WERE SUBSTANTIALLY
RESOLVED IN THE FIRST QUARTER AND THE PLANT OPERATED AT SATISFACTORY LEVELS
OVER THE REST OF THE YEAR. THE ACCESSORIES DIVISION INCREASED ITS NET INCOME
THROUGH AN INCREASE IN VOLUME AND BETTER GROSS MARGINS.
INDUSTRIAL CHEMICALS
INTABA CHEMICALS WAS AFFECTED BY THE GLOBAL PRICE AND VOLUME PRESSURE IN
INDUSTRIAL CHEMICALS, WHICH CAUSED NET PROFIT TO HALVE. THE R14,4 MILLION
ALUMINIUM SULPHATE PLANT COMMISSIONED IN JANUARY 1999 AND THE ALUMINIUM
TRIHYDRATE PLANT TO BE COMMISSIONED IN APRIL 1999 WILL INCREASE THE RANGE OF
PRODUCTS MARKETED BY INTABA CHEMICALS AND WILL SIGNIFICANTLY CONTRIBUTE TO
EARNINGS IN 1999.
INTERNATIONAL
CHEMICAL HOLDINGS INTERNATIONAL LIMITED, THE GROUP'S INTERNATIONAL INVESTMENT,
TRADING AND FINANCING ARM CONTINUED TO DEVELOP INTO AFRICAN MARKETS IN 1998
INCREASING ITS PENETRATION OF THE SMALLHOLDER SECTOR IN ZAMBIA AND INTO
TANZANIA WITH THE ESTABLISHMENT OF A BULK MINING EXPLOSIVES OPERATION TO
SERVICE THE OPEN CAST MINING INDUSTRY. THE ZAMBIA FERTILIZER OPERATION
CONTINUED TO PERFORM WELL AND THE ZIMBABWE FERTILIZER OPERATION HAD ITS BEST
YEAR EVER. THE KENYA SPECIALITY FERTILIZER OPERATION IS NOW FIRMLY ESTABLISHED
AND IS POISED FOR GOOD GROWTH. THE GHANA EXPLOSIVES JOINT VENTURE CONTINUES TO
ESTABLISH ITSELF. THE TANZANIA EXPLOSIVES OPERATION PERFORMED WELL AND PRODUCED
A PROFIT IN ITS FIRST FOUR MONTHS OF OPERATION.
PROSPECTS
BUSINESS CONDITIONS IN THE MARKETS IN WHICH THE GROUP OPERATES ARE NOT EXPECTED
TO IMPROVE MARKEDLY IN 1999 BUT INTEREST RATES, THE PRIMARY CAUSE OF THE
REDUCTION IN 1998 EARNINGS, ARE EXPECTED TO DECREASE WHICH WILL PROVIDE WELCOME
RELIEF. AGAINST THIS BACKGROUND, THE GROUP IS BUDGETING FOR A SATISFACTORY REAL
INCREASE IN EARNINGS PER SHARE.
DIVIDENDS
THE TOTAL DIVIDEND FOR 1998 HAS BEEN INCREASED BY 3% TO 76 CENTS PER SHARE.
BY ORDER OF THE BOARD
16 MARCH 1999
J G PRETORIUS - CHAIRMAN                   N J CROSSE - MANAGING DIRECTOR
DECLARATION OF FINAL DIVIDEND
A FINAL DIVIDEND OF 42 CENTS PER ORDINARY SHARE IN RESPECT OF THE FINANCIAL
YEAR ENDED 31 DECEMBER 1998 HAS BEEN DECLARED PAYABLE TO SHAREHOLDERS
REGISTERED IN THE BOOKS OF THE COMPANY AT THE CLOSE OF BUSINESS ON 9 APRIL
1999. DIVIDEND CHEQUES WILL BE POSTED BY 3 MAY 1999 TO SHAREHOLDERS AT THEIR
REGISTERED ADDRESSES OR IN ACCORDANCE WITH INSTRUCTIONS GIVEN TO THE TRANSFER
SECRETARIES AND RECEIVED BY THEM ON OR BEFORE 9 APRIL 1999.
BY ORDER THE BOARD
P R JANSE VAN RENSBURG - COMPANY SECRETARY   16 MARCH 1999
TRANSFER SECRETARIES: OPTIMUM REGISTRARS (PTY) LIMITED, 40 COMMISSIONER STREET,
JOHANNESBURG, 2001. PO BOX 62391, MARSHALLTOWN, 2107.
DIRECTORS: J G PRETORIUS (CHAIRMAN), N J CROSSE (MANAGING DIRECTOR), N K H
FITZ-GIBBON, A G FLETCHER, M GERMENA, W T MARAIS (DEPUTY CHAIRMAN), DR W T
MARAIS (ALTERNATIVE), J C ROBBERTZE, P A SPRINGETT, DR. R K J WINKLER*, O J
WINKLER* (DEPUTY CHAIRMAN).  *GERMAN



                                        
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