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Omnia Holdings Interim Results

Release Date: 02/09/1999 09:40:36      Code(s): OMN
OMNIA HOLDINGS LIMITED
(REG. NO. 67/03680/06)
GROUP INTERIM RESULTS FOR THE HALF YEAR ENDED 30 JUNE 1999
CONSOLIDATED INCOME STATEMENT
                                           UNAUDITED   UNAUDITED   AUDITED
                                           HALF YEAR   HALF YEAR   YEAR
                                           ENDED       ENDED       ENDED
                                           30/06/99    30/06/98    31/12/98
                                           R000        R000        R000
SALES                                      352 113     383 244     1 155 093
COST OF SALES                              230 896     231 145     762 410
GROSS PROFIT                               121 217     152 099     392 683
OPERATING COSTS NET OF OTHER INCOME        151 400     135 539     270 902
OPERATING (LOSS)/INCOME                    (30 183)    16 560      121 781
FINANCIAL COSTS                            24 349      14 927      49 321
(LOSS)/INCOME BEFORE TAXATION              (54 532)    1 633       72 460
TAXATION                                   -           -           6 570
(LOSS)/INCOME AFTER TAXATION               (54 532)    1 633       65 890
SHARE OF RETAINED INCOME OF ASSOCIATES     272         175         916
NET (LOSS)/INCOME                          (54 260)    1 808       66 806
ATTRIBUTABLE TO OUTSIDE SHAREHOLDERS       -           108         558
(LOSS)/INCOME ATTRIBUTABLE
 TO ORDINARY SHAREHOLDERS                  (54 260)    1 700       66 248
DIVIDENDS                                  -           -           29 461
RETAINED (LOSS)/INCOME                     (54 260)    1 700       36 787
DEPRECIATION                               13 416      11 359      22 632
(LOSS)/EARNINGS PER SHARE (CENTS)          (139,7)     4,4         170,9
WEIGHTED AVERAGE NUMBER OF SHARES
 IN ISSUE (000)                            38 835      38 765      38 765
DIVIDENDS PER SHARE (CENTS)                -           -           76,0
FULLY DILUTED (LOSS)/EARNINGS              (54 260)    1 808       66 806
FULLY DILUTED (LOSS)/EARNINGS
 PER SHARE (CENTS)                         (139,7)     4,4         165,9
FULLY DILUTED NUMBER OF SHARES
 IN ISSUE (000)                            38 835      40 745      40 265
CONSOLIDATED ABRIDGED BALANCE SHEET
                                           UNAUDITED   UNAUDITED   AUDITED
                                           30/06/99    30/06/98    31/12/98
                                           R000        R000        R000
CAPITAL EMPLOYED
ORDINARY SHAREHOLDERS' EQUITY              250 161     261 706     298 032
OUTSIDE SHAREHOLDERS' INTEREST             -           1 500       1 500
LONG-TERM LIABILITIES                      89 212      104 991     96 230
                                           339 373     368 197     395 762
EMPLOYMENT OF CAPITAL
FIXED ASSETS AND INVESTMENTS               387 449     238 640     316 827
NET CURRENT (LIABILITIES)/ASSETS           (48 076)    129 557     78 935
CURRENT ASSETS                             485 626     492 496     522 940
CURRENT LIABILITIES                        533 702     362 939     444 005
                                           339 373     368 197     395 762
NET INTEREST BEARING DEBT                  406 748     257 838     134 421
CAPITAL EXPENDITURE
INCURRED                                   81 370      35 993      120 275
AUTHORISED AND COMMITTED                   58 787      68 976      23 459
CONSOLIDATED ABRIDGED CASH FLOW
                                           UNAUDITED   UNAUDITED   AUDITED
                                           HALF YEAR   HALF YEAR   YEAR
                                           ENDED       ENDED       ENDED
                                           30/06/99    30/06/98    31/12/98
                                           R000        R000        R000
CASH (UTILISED IN)/GENERATED BY OPERATIONS (16 420)    24 253      143 038
FINANCIAL COSTS AND TAXATION               (24 105)    (18 052)    (65 902)
UTILISED FOR WORKING CAPITAL               (122 660)   (160 971)   (20 431)
(UTILISED IN)/AVAILABLE FROM OPERATIONS    (163 185)   (154 770)   56 705
DIVIDENDS PAID                             (30 014)    (29 298)    (29 297)
CASH FLOW (UTILISED BY)/FROM
 OPERATING ACTIVITIES                      (193 199)   (184 068)   27 408
UTILISED IN INVESTMENT ACTIVITIES          (79 129)    (40 460)    (131 880)
NET CASH OUTFLOW                           (272 328)   (224 528)   (104 472)
FUNDED BY
DECREASE/(INCREASE) IN LONG-TERM LIABILITIES 8 464      (89 116)    (80 499)
INCREASE IN BANK BORROWINGS                (280 792)   (135 412)   (23 973)
                                           (272 328)   (224 528)   (104 472)
COMMENTS
OPERATING PERFORMANCE
RESULTS FOR THE PERIOD WERE ADVERSELY AFFECTED BY EXTREMELY UNSTABLE CONDITIONS
IN THE SOUTH AFRICAN FERTILIZER MARKET, WHICH MANIFESTED IN A REDUCTION IN
FERTILIZER SALES VOLUMES AND MARGINS. THESE CONDITIONS WERE THE PRIMARY CAUSE
OF SALES FOR THE GROUP BEING 8% LOWER THAN IN THE SAME PERIOD LAST YEAR AS WELL
AS THE REDUCTION IN THE GROSS PROFIT MARGIN FROM 39,7% IN 1998 TO 34,4% IN
1999. AS THE BULK OF GROUP SALES OCCUR IN THE SECOND HALF BUT OVERHEADS ARE
INCURRED FAIRLY EVENLY THROUGHOUT THE YEAR, ANY VARIATIONS IN FIRST HALF SALES
AND MARGINS HAVE A DISPROPORTIONATE EFFECT ON NET INCOME. AS EVIDENCED BY THE
OPERATING LOSS OF R30,2 MILLION. FINANCIAL COSTS INCREASED DUE TO THE HIGHER
FUNDING NEEDS CAUSED BY CAPITAL EXPENDITURE AND OPERATIONAL LOSSES AS WELL AS
THE HIGHER COST OF FUNDS RELATIVE TO THE SAME PERIOD LAST YEAR. THE NET LOSS
BEFORE AND AFTER TAXATION OF P.54,5 MILLION INDICATES THE EXTENT OF THE
DIFFICULT TRADING CONDITIONS EXPERIENCED IN THE SOUTH AFRICAN FERTILIZER MARKET
IN THE FIRST HALF. THERE ARE SIGNS THAT THE WORST IS BEHIND US AND THAT
CONDITIONS ARE IMPROVING. FERTILIZER GLOBAL FERTILIZER MARKETS REMAIN UNDER
PRESSURE WITH NITROGEN PRICES AT HISTORIC LOWS. LOCALLY, IN THE WAKE OF THE
CANCELLED 1998 BID BY SASOL FOR AECI, MARKET CONDITIONS SWIFTLY DETERIORATED
BEYOND EXPECTATIONS IN THE SECOND QUARTER AS FIERCE COMPETITION ERUPTED AMONGST
THE LOCAL PRODUCERS FOR ADDITIONAL MARKET SHARE. AT THE SAME TIME, OVERALL
MARKET VOLUMES SHRUNK BY 14% AS FARMERS DELAYED FERTILIZER PURCHASES PENDING
SALES OF THEIR MAIZE CROPS AND THE HECTARAGE OF WINTER WHEAT PLANTED REDUCED
FROM THE PREVIOUS YEAR. THESE CONDITIONS RESULTED IN SALES PRICES REDUCING TO
LEVELS WELL BELOW IMPORT PARITY, AND WITH INPUT COSTS REMAINING RELATIVELY
STABLE, GROSS MARGINS WERE SEVERELY IMPACTED. THE LOWER SALES VOLUMES, COMBINED
WITH REDUCED MARGINS AND OVERHEAD LEVELS THAT ACCRUE EVENLY OVER THE YEAR,
RESULTED IN AN OPERATING LOSS COMPARED TO THE OPERATING INCOME EARNED IN THE
PREVIOUS YEAR. THE OTHER AFRICAN FERTILIZER OPERATIONS PERFORMED IN LINE WITH
THE PREVIOUS YEAR. THE NEW WORLD CLASS GRANULATION PLANT WAS SUCCESSFULLY
COMMISSIONED AND IS PRODUCING TOP QUALITY PRODUCT. MINING EXPLOSIVES TURNOVER
IMPROVED OVER THE PREVIOUS YEAR, A NOTABLE ACHIEVEMENT IN THE LIGHT OF THE
PRESSURES FACED BY THE LOCAL MINING INDUSTRY. HOWEVER, INCREASED INPUT COSTS
AND PRICE COMPETITION RESULTED IN A MARGINAL REDUCTION IN NET INCOME. THE
LOSBERG CARTRIDGE EXPLOSIVES PLANT IS OPERATING WELL AND NOW HAS THE LOWEST
OPERATING COST STRUCTURE IN THE INDUSTRY. THE TANZANIA VENTURE CONTINUES ITS
GOOD PERFORMANCE, AND THE GHANA VENTURE, WHILST IMPROVING OVER THE PREVIOUS
YEAR, HAS YET TO TRADE PROFITABLY.
INDUSTRIAL CHEMICALS NO IMPROVEMENT HAS BEEN SEEN IN VOLUMES AND PRICES, WHICH
REMAIN SUBDUED. NET INCOME WAS IN LINE WITH THE PREVIOUS YEAR. THE
COMMISSIONING OF THE ALUMINIUM TRIHYDRATE PLANT HAS BEEN DELAYED DUE TO
UNEXPECTED TECHNICAL DIFFICULTIES AROUND THE CHEMISTRY OF THE PRODUCT. INTENSE
EFFORT TO RESOLVE THE PROBLEM CONTINUE AND A SUCCESSFUL RESOLUTION IS EXPECTED
SHORTLY. THE ALUMINIUM SULPHATE PLANT, WHICH UTILISES PRODUCT FROM THE
ALUMINIUM TRIHYDRATE PLANT, OPERATES WELL, BUT AT CHOSEN LOW LEVELS, AS IT USES
MORE COSTLY SUBSTITUTE IMPORTED INPUTS WHICH REDUCES PLANT PROFITABILITY.
YEAR 2000
THE GROUP'S YEAR 2000 COMPLIANCE PROJECT IS NEARING COMPLETION AND MANAGEMENT
DOES NOT EXPECT THAT PROBLEMS ASSOCIATED WITH THE YEAR 2000 WILL CAUSE ANY
MATERIAL OPERATIONAL DISRUPTION. SIMILAR ASSURANCES CONTINUE TO BE SOUGHT FROM
KEY SUPPLIERS AND CUSTOMERS.
PROSPECTS
PROSPECTS FOR THE SECOND HALF ARE FAR MORE ENCOURAGING THAN THE PERFORMANCE OF
THE FIRST HALF. THE BETTER THAN EXPECTED 1998/99 MAIZE CROP, COMBINED WITH GOOD
MAIZE PRICES, HAVE IMPROVED FARMERS' FINANCIAL POSITION WHICH SHOULD LEAD TO
BETTER FERTILIZER SALES. FERTILIZER VOLUMES ARE EXPECTED TO BE HIGHER THAN THAT
OF THE 1998 SECOND HALF AS PROCEEDS FROM DELAYED MAIZE SALES ARE APPLIED TO
FERTILIZER PURCHASES AND FROM EXPECTED HIGHER LIQUID FERTILIZER SALES. AFTER
THE SEVERE FERTILIZER PRICE COMPETITION OF THE FIRST HALF, THE LOCAL MARKET HAS
STABILISED WITH CONSIDERABLE IMPROVEMENT EVIDENT IN PRICES AND TERMS. AS INPUT
COSTS ARE EXPECTED TO REMAIN CONSTANT, MARGINS WILL IMPROVE TO MORE ACCEPTABLE
LEVELS. ACCORDINGLY, THE LOCAL FERTILIZER OPERATION EXPECTS TO GENERATE NET
INCOME IN THE SECOND HALF AT A HIGHER LEVEL THAN THAT OF THE PREVIOUS YEAR.
THE OTHER AFRICAN FERTILIZER OPERATIONS ARE EXPECTED TO IMPROVE THEIR SECOND
HALF PERFORMANCE OVER THAT OF THE PREVIOUS YEAR.
THE MINING EXPLOSIVES OPERATION'S PERFORMANCE IN THE SECOND HALF WILL BETTER
THAT OF THE 1998 SECOND HALF, DUE TO NEW CONTRACTS SECURED AND IMPROVED
PROFITABILITY OF THE LOSBERG CARTRIDGE PLANT.
AS THE ALUMINIUM TRIHYDRATE PLANT WILL NOT MAKE ANY SIGNIFICANT CONTRIBUTION TO
EARNINGS THIS YEAR AND NO RECOVERY IS EXPECTED IN THE OTHER MARKETS OF THE
INDUSTRIAL CHEMICALS OPERATION, NET INCOME FOR THE SECOND HALF WILL BE BELOW
THAT OF THE PREVIOUS YEAR.
IN THE LIGHT OF THE PROFIT WARNING ISSUED ON 26 AUGUST 1999 AND THESE FIRST
HALF RESULTS, IN AN EFFORT TO ASSIST STAKEHOLDERS, THE BOARD BELIEVES IT
NECESSARY TO DISCLOSE THAT THE GROUP'S UPDATED FORECASTS INDICATE EARNINGS FOR
THE FULL YEAR OF R50 MILLION AFTER TAX. THE ACHIEVEMENT THEREOF WILL, AS USUAL,
BE DEPENDENT ON NORMAL SUMMER RAINFALL.
DIVIDENDS
IN LINE WITH PAST PRACTICE, THE INTERIM DIVIDEND WILL BE CONSIDERED AT THE
NOVEMBER BOARD MEETING.
BY ORDER OF THE BOARD
JG PRETORIUS - CHAIRMAN
RB HUMPHRIS - MANAGING DIRECTOR
2 SEPTEMBER 1999
TRANSFER SECRETARIES:                  REGISTERED OFFICE:
COMPUTERSHARE SERVICES LIMITED         LST FLOOR, OMNIA HOUSE
EDURA, 41 FOX STREET                   13 SLOANE STREET
JOHANNESBURG, 2001                     EPSOM DOWNS
PO BOX 61051, MARSHALLTOWN, 2107       BRYANSTON, 2021
DIRECTORS:
JG PRETORIUS (CHAIRMAN), RB HUMPHRIS (MANAGING DIRECTOR), NKH FITZ-GIBBON, AG
FLETCHER, M GERMENA, WT MARAIS (DEPUTY CHAIRMAN), WT MARAIS (JNR) (ALTERNATE),
JC ROBBERTZE, NJ CROSSE, PA SPRINGETT*, 0J WINKLER** (DEPUTY CHAIRMAN), ML
THOMAS***
*BRITISH  *GERMAN  ***AMERICAN



                                        
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