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Omnia 1999 Audited Results

Release Date: 24/03/2000 07:24:49      Code(s): OMN
OMNIA HOLDINGS LIMITED
(REGISTRATION NUMBER 67/03680/06)
AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 1999
THE AUDITED RESULTS OF THE GROUP FOR THE YEAR ENDED 31 DECEMBER 1999 COMPARED
WITH THE AUDITED RESULTS FOR THE PREVIOUS YEAR APPEAR BELOW.
* HEADLINE EARNINGS R44,8 MILLION VS R66,2 MILLION IN 1998
* DIVIDEND DECREASED TO 42 CENTS PER SHARE
* REAL INCREASE IN 2000 EPS BUDGETED FOR
CONSOLIDATED INCOME STATEMENT
                                      1999      1998
                                      R000      R000      %
REVENUE                               1 144 083 1 155 093 -1
PROFIT FROM OPERATIONS                98 660    121 781   -19
FINANCIAL COSTS                       50 790    49 321    3
INCOME FROM ASSOCIATES                970       916
PROFIT BEFORE TAXATION                48 840    73 376    -33
TAXATION                              3 687     6 570
PROFIT AFTER TAXATION                 45 153    66 806    -32
MINORITY INTEREST                     305       558
NET PROFIT                            44 848    66 248    -32
TRANSFER FROM/TO NON-DISTRIBUTABLE
RESERVES                              110       271
ORDINARY DIVIDENDS                    17 103    29 461    -42
RETAINED EARNINGS FOR THE YEAR        27 855    37 058
DEPRECIATION                          29 233    22 632
HEADLINE EARNINGS PER SHARE (CENTS)   118,8     178,8     -34
EARNINGS PER SHARE (CENTS)            118,8     178,8     -34
WEIGHTED AVERAGE NUMBER OF
SHARES IN ISSUE (000'S)               37 741    37 055
DIVIDENDS PER SHARE (CENTS)           42        76        -36
DIVIDEND COVER                        2,8       2,4
FULLY DILUTED EARNINGS                44 848    66 806     -33
FULLY DILUTED NUMBER OF SHARES
IN ISSUE (000'S)                      37 780    38 625
FULLY DILUTED EARNINGS
PER SHARE (CENTS)                     118,7     173,0     -31
RETURN ON ORDINARY
SHAREHOLDERS' EQUITY (%)              14,2      23,9
CONSOLIDATED ABRIDGED BALANCE SHEET
                                      1999      1998
                                      R000      R000
ASSETS
NON-CURRENT ASSETS                    417 056   316 827
CURRENT ASSETS                        553 783   522 940
                                      970 839   839 767
EQUITY AND LIABILITIES
ORDINARY SHAREHOLDERS' EQUITY         331 945   298 032
MINORITY INTEREST                     1 500     1 500
NON-CURRENT LIABILITIES               83 406    96 230
CURRENT LIABILITIES                   553 988   444 005
                                      970 839   839 767
CURRENT RATIO                         1,00      1,18
NET INTEREST BEARING DEBT             243 690   134 421
DEBT TO EQUITY (%)                    73        45
NET WORTH PER SHARE (CENTS)           880       804
CAPITAL EXPENDITURE - INCURRED        128 358   120 276
- AUTHORISED AND NOT COMMITTED        63 033    126 899
- AUTHORISED AND COMMITTED            21 375    23 459
CONSOLIDATED ABRIDGED CASH FLOW
                                      1999      1998
                                      R000      R000
GENERATED BY OPERATIONS               126 793   143 038
FINANCIAL COSTS AND TAXATION          (57 449)  (65 902)
RETAINED FOR WORKING CAPITAL          (22 008)  (20 431)
AVAILABLE FROM OPERATING ACTIVITIES   47 336    56 705
DIVIDENDS PAID                        (30 014)  (29 297)
CASH FLOW FROM OPERATING ACTIVITIES   17 322    27 408
CASH FLOW FROM INVESTING ACTIVITIES   (110 425) (118 335)
NET CASH OUTFLOW FOR YEAR             (93 103)  (90 927)
COMMENT
OPERATING PERFORMANCE
THE GROUP EARNED A RECORD NET INCOME OF R99,1 MILLION IN THE SECOND HALF
COMPARED TO THE FIRST HALF LOSS OF R54,3 MILLION, TO PROVIDE AN OVERALL NET
INCOME OF R44,8 MILLION, AGAINST THE R50,0 MILLION NET INCOME FORECAST AT THE
INTERIM STAGE. NET INCOME IS SLIGHTLY LOWER THAN FORECAST BECAUSE OF LATE
SUMMER RAINS LEADING TO SOME FERTILIZER SALES BEING DEFERRED TO JANUARY 2000.
SALES REVENUE WAS IN LINE WITH THE PREVIOUS YEAR, REFLECTING STATIC PRICES AND
VOLUMES IN THE GROUP'S MARKET. GROSS MARGINS IMPROVED FROM 34,7% TO 35,9% AS
THE STRATEGY OF PRODUCT DIFFERENTIATION TOOK EFFECT. OPERATING COSTS NET OF
OTHER INCOME INCREASED BY 12% DUE PRIMARILY TO THE DEVELOPMENT OF NEW BUSINESS
OPPORTUNITIES AND DEPRECIATION CHARGES. TAX ALLOWANCES ON CAPITAL EXPENDITURE
HAD A BENEFICIAL IMPACT ON THE GROUP'S EFFECTIVE TAX CHARGE. OVERALL, THE GROUP
SUCCESSFULLY MANAGED SOME OF THE MORE DIFFICULT TRADING CONDITIONS EXPERIENCED
IN THE GROUP'S ACTIVITIES IN AGRICULTURE AND MINING THIS DECADE AND TURNED IN A
MOST CREDITABLE PERFORMANCE IN THE SECOND SIX MONTHS.
HEADLINE EARNINGS PER SHARE REDUCED TO 118,8 CENTS PER SHARE FROM THE 178,8
CENTS PER SHARE FOR THE PREVIOUS YEAR.
THE DEBT TO EQUITY RATIO ROSE TO 73% AT YEAR-END AS A RESULT OF THE SUBSTANTIAL
CAPITAL EXPENDITURE PROGRAMME OF THE PAST THREE YEARS IN UPGRADING THE GROUP'S
FERTILIZER ASSETS. AS THIS PROCESS HAS BEEN SUBSTANTIALLY COMPLETED, CAPITAL
EXPENDITURE WILL REDUCE CONSIDERABLY OVER THE NEXT FEW YEARS AND THE DEBT TO
EQUITY RATIO IS EXPECTED TO IMPROVE.
STRATEGIC FOCUS
THE GROUP HAS CONSOLIDATED IT'S POSITION INTO FOUR FOCUSED OPERATIONS, NAMELY
FERTILIZER, SPECIALITY FERTILIZER, MINING EXPLOSIVES AND INDUSTRIAL CHEMICALS.
THE GROUP CONTINUES TO EXPAND OUTSIDE SOUTH AFRICA AND HAS DERIVED OVER 50% OF
IT'S OPERATING INCOME FROM US DOLLAR-BASED INTERNATIONAL OPERATIONS. THE GROUP
HAS CONTINUED TO MOVE AWAY FROM IT'S ROOTS OF A HIGHVELD SOUTH AFRICAN
FERTILIZER COMPANY, EXPOSED TO A LOCALISED WEATHER RISK, TO BEING A CHEMICAL
COMPANY BROADLY SPREAD THROUGHOUT AFRICA WITH LIMITED EXPOSURE TO ANY SINGLE
WEATHER SYSTEM.
FERTILIZER
THE GLOBAL EXCESS CAPACITY OF NITROGEN CONTINUED WITH BOTH UREA AND AMMONIA
PRICES LANGUISHING AT DECADE LOWS. THE GLOBAL PHOSPHATE MARKETS ALSO MOVED INTO
EXCESS CAPACITY IN THE SECOND HALF OF 1999. THE COMBINATION OF WEAK
INTERNATIONAL PRICES TOGETHER WITH A RELATIVELY STABLE RAND RESULTED IN
DOMESTIC FERTILIZER SALES PRICES REMAINING UNDER PRESSURE. THE DISAPPROVED BID
BY SASOL FOR AECI IN LATE 1998, LED TO INTENSE PRICE COMPETITION IN THE EARLIER
PART OF THE YEAR RESULTING IN PRICE LEVELS WELL BELOW IMPORT PARITY. ONCE AGAIN
IN THESE DIFFICULT CIRCUMSTANCES, OMNIA'S STRATEGY OF POSITIONING ITSELF AS AN
INTERMEDIATE CONVERTER OF NITROGEN, AND NOT A PRIMARY PRODUCER, BUFFERED THE
MARGINS.
THE LATE BUT EXCELLENT SUMMER RAINS OF 1999 COMPRESSED THE SUMMER PLANTING
SEASON RESULTING IN NOT ONLY ENORMOUS PRESSURE TO DELIVER BUT ALSO CARRY OVER
OF FERTILIZER VOLUMES INTO 2000.
THE AFRICAN FERTILIZER OPERATIONS CONTINUED TO PERFORM WELL. THE NEW
GRANULATION PLANT HAS STEADILY INCREASED ITS VOLUMES AND THE WIDE RANGE OF
PRODUCTS OF WORLD-CLASS QUALITY WAS WELL RECEIVED IN THE MARKET.
SPECIALITY FERTILIZER
WITH THE DEREGULATION OF AGRICULTURAL MARKETS, THE ADVANCEMENT OF NUTRIENT
TECHNOLOGY AND THE INCREASE IN EXPORT SPECIALITY CROPS, THE DEMAND FOR
SPECIALITY FERTILIZERS IS EXPANDING RAPIDLY. SPECIALITY FERTILIZER HAS
DEVELOPED A COMPREHENSIVE RANGE OF LIQUID AND DRY WATER SOLUBLE PRODUCTS WHICH
HAVE SHOWN EXCELLENT RESULTS IN IMPROVING AGRICULTURAL YIELDS AND QUALITY.
MINING EXPLOSIVES
THE GENERAL MINING ENVIRONMENT WAS VERY DIFFICULT WITH THE DOWNTURN IN COAL AND
GOLD MARKETS. WITH THE RESULTANT MINING OF HIGHER GRADE ORES, MINING VOLUMES
REDUCED LEADING TO A REDUCTION IN THE EXPLOSIVES MARKET AND THE INEVITABLE
SALES PRICE PRESSURE. NEVERTHELESS, A SMALL IMPROVEMENT IN BULK EXPLOSIVES
VOLUMES WERE MAINTAINED. THE LOSBERG CARTRIDGE EXPLOSIVES PLANT CONTINUES TO
OPERATE WELL WITH ARGUABLY THE LOWEST COST STRUCTURE IN THE INDUSTRY. THE
TANZANIA OPERATION'S VOLUMES ARE GROWING IN LINE WITH NEW MINING DEVELOPMENT IN
TANZANIA, ALLOWING THE ESTABLISHMENT OF A SMALL EXPLOSIVES PLANT THERE. WITH
THE SHRINKAGE OF MINING IN GHANA, THE GHANA OPERATION DID WELL TO CONTAIN THE
SMALL LOSS TO LAST YEAR'S LEVEL.
INDUSTRIAL CHEMICALS
TURNOVER REMAINED AT THE SAME LEVELS AS IN 1998, BUT WITH THE DEPRESSED MARKET,
OPERATING INCOME REDUCED. THE NEW ALUMINIUM TRIHYDRATE PLANT IS CURRENTLY
EXPERIENCING TECHNICAL PRODUCTION DIFFICULTIES AND INTENSE EFFORTS CONTINUE IN
AN ATTEMPT TO RESOLVE THESE. THE NEW MAGNESIUM CHLORIDE PLANT HAS BEEN
SUCCESSFULLY COMMISSIONED AND SALES ARE STEADILY INCREASING.
YEAR 2000 COMPLIANCE
THE UPGRADING OF THE GROUP'S I.T. AND OPERATIONAL SYSTEMS PROCEEDED WELL AND NO
Y2K PROBLEMS WERE EXPERIENCED.
PROSPECTS
THE GROUP IS WELL POSITIONED TO TAKE ADVANTAGE OF AN UPSWING IN ITS MARKETS AND
IS SET TO CONTINUE ITS SUCCESSFUL STRATEGY OF DIVERSIFYING ITS PRODUCTS AND
SERVICES.
WITH THE CAPITAL PROGRAM OF RECENT YEARS, WHICH IS NOW ESSENTIALLY AT AN END,
THE FERTILIZER OPERATION HAS WORLD-CLASS NITRIC ACID, GRANULATION AND LIQUID
FERTILIZER FACILITIES. THE FERTILIZER OPERATIONS WITH ITS UNIQUE SPECIALISED
AGRONOMIC KNOWLEDGE AND ITS EXPANSION OF SPECIALITY FERTILIZERS WILL BENEFIT
FROM THE INCREASE IN DIVERSITY OF CROPS IN AFRICA. WORLD GRAIN STOCKS ARE
APPROACHING LOW LEVELS CAUSING WORLD GRAIN PRICES TO RISE WHICH, TOGETHER WITH
THE EXCELLENT SUMMER RAINS AND THE WEAKER RAND/DOLLAR EXCHANGE RATE ARE SET TO
BOOST AGRICULTURAL PROSPECTS.
HIGH WORLD OIL PRICES ARE LEADING TO INCREASING COAL SUBSTITUTION WHICH SHOULD
RESULT IN HIGHER COAL DEMAND. IN THIS ENVIRONMENT, THE GROUP'S WORLD-CLASS
EXPLOSIVES BUSINESS WILL GROW VOLUMES AND WITH THE STATE OF THE ART PLANT AT
LOSBERG, CARTRIDGE EXPLOSIVES VOLUMES WILL ALSO INCREASE. THE PRIVATISATION OF
THE ZAMBIAN COPPER BELT WILL ALSO LEAD TO FURTHER OPPORTUNITIES.
THE GROUP IS BUDGETING FOR A SUBSTANTIAL IMPROVEMENT IN EARNINGS IN 2000,
RESTORING THE GROUP'S HISTORICAL PROFIT TREND AND REDUCING THE DEBT TO EQUITY
RATIO FACILITATED BY A MUCH IMPROVED CASH FLOW.
DIVIDENDS
THE TOTAL DIVIDEND FOR 1999 IS 42 CENTS PER SHARE. THE DIVIDEND COVER IMPROVES
FROM 2,4 IN 1998 TO 2,8 REFLECTING THE BOARD'S DESIRE TO RETAIN A GREATER
PORTION OF EARNINGS TO FUND FUTURE GROWTH.
BY ORDER OF THE BOARD
J G PRETORIUS - CHAIRMAN              R B HUMPHRIS - MANAGING DIRECTOR
24 MARCH 2000
DECLARATION OF FINAL DIVIDEND
A FINAL DIVIDEND OF 22 CENTS PER ORDINARY SHARE IN RESPECT OF THE FINANCIAL
YEAR ENDED 31 DECEMBER 1999 HAS BEEN DECLARED PAYABLE TO SHAREHOLDERS
REGISTERED IN THE BOOKS OF THE COMPANY AT THE CLOSE OF BUSINESS ON 14 APRIL
2000. DIVIDEND CHEQUES WILL BE POSTED BY 15 MAY 2000 TO SHAREHOLDERS AT THEIR
REGISTERED ADDRESSES OR IN ACCORDANCE WITH INSTRUCTIONS GIVEN TO THE TRANSFER
SECRETARIES AND RECEIVED BY THEM ON OR BEFORE 14 APRIL 2000.
BY ORDER OF THE BOARD   P R JANSE VAN RENSBURG - COMPANY SECRETARY
TRANSFER SECRETARIES: COMPUTERSHARE SERVICES LIMITED, EDURA, 41 FOX STREET,
JOHANNESBURG, 2001. PO BOX 61051, MARSHALLTOWN, 2107.
DIRECTORS: J G PRETORIUS (CHAIRMAN), R B HUMPHRIS (MANAGING DIRECTOR), D L
EGGERS, N J CROSSE,  N K H FITZ-GIBBON, W T MARAIS (DEPUTY CHAIRMAN), DR W T
MARAIS (ALTERNATIVE). J C ROBBERTZE, P A SPRINGETT, M M DOYLE, M L THOMAS*, O J
WINKLER** (DEPUTY CHAIRMAN).   *AMERICAN **GERMAN



                                        
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