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Omnia: Group Interim Results

Release Date: 27/09/2000 07:04:18      Code(s): OMN
OMNIA HOLDINGS LIMITED
  (INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
  (REGISTRATION NUMBER 1967/003680/06)
  ("OMNIA" OR THE GROUP")
GROUP INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2000
CONSOLIDATED INCOME STATEMENT
     UNAUDITED                                   UNAUDITED          AUDITED
6 MONTHS    6 MONTHS                     12 MONTHS   12 MONTHS   12 MONTHS
1/1/1999 TO 1/1/2000 TO                  1/7/1999 TO 1/7/1998 TO 1/1/1999 TO
30/6/1999 30/6/2000   R'000              30/06/2000  30/06/1999  31/12/1999
352 113   490 223   REVENUE              1 282 193   1 123 961   1 144 083
(230 896) (334 698) COST OF SALES        (836 865)   (762 161)   (733 063)
121 217   155 525   GROSS PROFIT         445 328     361 800     411 020
(151 400) (184 682) OPERATING COSTS      (345 641)   (286 763)   (312 360)
                    NET OF OTHER INCOME
(30 183)  (29 157)  PROFIT/(LOSS)        99 687      75 037      98 660
                    FROM OPERATIONS
(24 349)  (22 637)  FINANCIAL COSTS      (49 078)    (58 743)    (50 790)
272       -         INCOME FROM ASSOCIATES 698         1 013       970
(54 260)  (51 794)  PROFIT/(LOSS)         51 307      17 307      48 840
                    BEFORE TAXATION
4 070     5 697     TAXATION              5 885       (1 142)     375
(50 190)  (46 097)  PROFIT/(LOSS)         57 192      16 165      49 215
                    AFTER TAXATION
-         -         MINORITY INTEREST     (305)       (450)       (305)
(50 190)  (46 097)  NET PROFIT/(LOSS)     56 887      15 715      48 910
13 416    17 190    DEPRECIATION          33 007      24 689      29 233
(135 5)   (122 1)   HEADLINE EARNINGS/(LOSS)1 507       424         1 296
                    PER SHARE (CENTS)
(135 5)   (122 1)   BASIC EARNINGS/(LOSS) 1 507       424         1 296
                    PER SHARE (CENTS)
37 054    37 741    WEIGHTED AVERAGE      37 741      37 054      37 741
                    NUMBER OF SHARES
                    IN ISSUE ('000)
-         -         DIVIDENDS             42          76          42
                    PER SHARE (CENTS)
(50 190)  (46 097)  FULLY DILUTED         56 887      15 715      48 910
                    EARNINGS/(LOSS)
(129 9)   (122 0)   FULLY DILUTED         150,6       40,7        129,5
                    EARNINGS/(LOSS)
                    PER SHARE (CENTS)
                    WEIGHTED AVERAGE
                    NUMBER OF FULLY DILUTED
38 625    37 780    SHARES IN ISSUE ('000)* 37 780    38 625      37 780
CONSOLIDATED BALANCE SHEET
UNAUDITED                                           UNAUDITED   AUDITED
30/06/1999          R'000                           30/06/2000  31/12/1999
                    ASSETS
364 219             FIXED ASSETS                    404 431     395 593
19 580              INVESTMENTS AND LOANS           21 093      21 463
485 626             CURRENT ASSETS                  526 176     553 783
869 425                                             951 700     970 839
                    EQUITY AND LIABILITIES
226 967             ORDINARY SHAREHOLDERS' EQUITY   273 537     312 393
-                   MINORITY INTEREST               1 500       1 500
89 212              LONG-TERM LIABILITIES           79 086      83 406
19 544              DEFERRED TAX                    13 855      19 552
533 702             CURRENT LIABILITIES             583 722     553 988
869 425                                             951 700     970 839
406 748             NET INTEREST BEARING DEBT       402 605     243 690
                    CAPITAL EXPENDITURE
81 370              INCURRED                        23 202      128 358
58 787              AUTHORISED AND COMMITTED        27 150      21 375
18 996              AUTHORISED BUT NOT CONTRACTED FOR 13 441    30 386
CONSOLIDATED CASH FLOW STATEMENT
     UNAUDITED                                 UNAUDITED          AUDITED
6 MONTHS    6 MONTHS                    12 MONTHS   12 MONTHS   12 MONTHS
1/1/1999 TO 1/1/2000 TO                 1/7/1999 TO 1/7/1998 TO 1/1/1999 TO
30/6/1999 30/6/2000   R'000             30/06/2000  30/06/1999  31/12/1999
(16 420)  (24 137)  CASH (UTILISED IN)/ 119 076     102 365     126 793
                    GENERATED BY OPERATIONS
(24 105)  (28 231)  FINANCIAL COSTS     (61 575)    (71 955)    (57 449)
                    AND TAXATION
(122 660) (83 309) (UTILISED FOR)/      17 343      17 880      (22 008)
                   GENERATED
                   BY WORKING CAPITAL
(163 185) (135 677) (UTILISED IN)/      74 844      48 290      47 336
                    AVAILABLE
                    FROM OPERATIONS
(30 014)  (16 735)  DIVIDENDS PAID      (16 735)    (30 013)    (30 013)
(193 199) (152 412) CASH INFLOW/(OUTFLOW) 58 109    18 277      17 323
                    FROM OPERATING
                    ACTIVITIES
(79 129)  (25 100)  CASH OUTFLOW FROM    (56 396)   (170 549)   (110 425)
                    INVESTMENT ACTIVITIES
(8 464)   (7 505)   CASH OUTFLOW FROM    (21 741)    (17 081)    (22 700)
                    FINANCING ACTIVITIES
(280 792) (185 017) NET INCREASE IN      (20 028)    (169 353)   (115 802)
                    BORROWINGS
(6 076)   (121 581) NET BANK BORROWINGS  (286 868)   (120 732)   (6 076)
                    AT BEGINNING OF PERIOD
                    AT EFFECTS
-         -         OF EXCHANGE           298         3 217       296
                    RATE CHANGES
(286 868) (306 598) NET BANK BORROWINGS   (306 598)   (286 868)   (121 582)
                    AT THE END OF PERIOD
SEGMENT ANALYSIS
6 MONTHS    6 MONTHS                     12 MONTHS   12 MONTHS   12 MONTHS
1/1/1999 TO 1/1/2000 TO UNAUDITED        1/7/1999 TO 1/7/1998 TO 1/1/1999 TO
30/6/1999 30/6/2000     R'000            30/6/2000   30/6/1999   31/12/1999
352 113   490 223   REVENUE:             1 282 193   1 123 961   1 144 083
26 441    370 795   FERTILIZER:          1 118 006   934 947     1 008 653
(36 883)  (29 514)  - LESS;              (113 894)   (88 755)    (121 263)
                      INTERSEGMENT SALES
132 573   148 942   EXPLOSIVES           285 878     289 525     269 509
                    AND CHEMICALS
(5 018)   -         - LESS:              (7 797)     (11 756)    (12 816)
                    INTERSEGMENT SALES
(54 260)  (51 794)  PROFIT/(LOSS)        51 307      17 307      48 840
                    BEFORE TAXATION
(67 462)  (60 910)  FERTILIZER           31 998      (10 494)    25 445
13 202    9 116     EXPLOSIVES           19 309      27 801      23 395
                    AND CHEMICALS
STATEMENT OF CHANGES IN ORDINARY SHAREHOLDERS' EQUITY
                                                NON-
                                SHARE CAPITAL  DISTRIBU   RETAINED
                                AND PREMIUM    -TABLE     EARNINGS  TOTAL
UNAUDITED RESERVES AT 1
JANUARY 1999                    73 707         22 101      202 224   298 032
CHANGE IN ACCOUNTING POLICY
- DEFERRED TAX                  -              -          (23 614)  (23 614)
AT 1 JANUARY 1999
RESTATED                        73 707         22 101     178 610   274 418
NET LOSS FOR THE PERIOD         -              -          (50 190)  (50 190)
MOVEMENT IN FOREIGN CURRENCY
TRANSLATION RESERVE             -              2 739      -         2 739
AT 30 JUNE 1999                 73 707         24 840     128 420   226 967
AT 1 JANUARY 2000               87 996         23 938         220 011   331 945
CHANGE IN ACCOUNTING POLICY
- DEFERRED TAX                  -              -          (19 552)  (19 552)
AT 1 JANUARY 2000 RESTATED      87 996         23 938     200 459   312 393
NET LOSS FOR THE PERIOD         -              -          (46 097)  (46 097)
MOVEMENT IN FOREIGN CURRENCY
TRANSLATION RESERVE             -              7 241      -         7 241
AT 30 JUNE 2000                 87 998         31 179     154 362   273 537
COMMENTS
OPERATING PERFORMANCE
THE RESULTS FOR THE SIX MONTHS TO JUNE 2000, REFLECTING A LOSS OF R51,8 MILLION
BEFORE TAX, WERE IN LINE WITH EXPECTATIONS. THEY REFLECT THE NORMALLY LOW SALES
LEVELS USUALLY EXPERIENCED IN THE FIRST HALF OF THE YEAR, BEFORE THE FERTILIZER
SUMMER SEASON STARTS WHILST FULL OVERHEADS ARE INCURRED. NEVERTHELESS, REVENUE
INCREASED BY 39% OVER THE COMPARABLE PRIOR PERIOD LAST YEAR AND GROSS PROFIT
INCREASED BY 28%. THE INCREASE IN REVENUE CAN LARGELY BE ATTRIBUTED TO THE
SPILL-OVER OF THE FERTILIZER SEASON INTO JANUARY AND FEBRUARY AS WELL AS THE
LOW MARGIN MAIZE TRADING BUSINESS IN ZAMBIA. FERTILIZER PRICES HAVE, FOR THE
FIRST TIME IN THE PAST FOUR YEARS, INCREASED IN A MEANINGFUL MANNER. THERE IS
HOWEVER A TIME DELAY BEFORE THESE INCREASES MANIFEST THEMSELVES IN IMPROVED
MARGINS. FERTILIZER MARGINS THEREFORE REMAINED RELATIVELY LOW WHICH, TOGETHER
WITH PRESSURES ON THE EXPLOSIVES MARGINS, CAUSED A 2,7% DROP IN THE GROSS
MARGIN PERCENTAGE FROM 34,4% TO 31,7%.
OVERHEADS, EXCLUDING DEPRECIATION, INCREASED BY 21%. SOME VARIABLE COSTS,
INCLUDED IN OVERHEADS, INCREASED IN LINE WITH THE VOLUME INCREASE (OF SOME 20%)
THAT HAS TAKEN PLACE COMPARED TO THE SAME PERIOD LAST YEAR. IN ADDITION,
SUBSTANTIAL COSTS WERE INCURRED IN THE ENHANCEMENT OF THE GROUP'S INFORMATION
SYSTEMS, CONTRIBUTING TO THE INCREASE IN OVERHEADS. THE BALANCE OF OVERHEAD
COSTS HAVE ALSO BEEN WELL CONTROLLED.
THE ASSET ENHANCEMENT PROGRAM, EMBARKED UPON THREE YEARS AGO, WAS CONCLUDED
WITH THE COMMISSIONING OF THE NEW PHOSPHORIC ACID REACTOR AT RUSTENBURG DURING
THE PERIOD UNDER REVIEW.
DUE TO THE SEASONALITY OF THE BULK OF THE BUSINESS A COMPARISON FOR THE 12
MONTHS ENDED JUNE 2000 WITH THE COMPARABLE PREVIOUS 12 MONTH PERIOD IS
INCLUDED. SEVERAL FACTORS, MAINLY RELATING TO THE FERTILIZER DIVISION, NEED TO
BE RECOGNISED IN COMPARING THE PROFIT BEFORE TAX. FIRSTLY, WINTER WHEAT
PLANTINGS IN THE FIRST HALF OF LAST YEAR (JANUARY - JUNE 1999) HAD REDUCED, IN
SOME AREAS BY AS MUCH AS 40%, DEPRESSING VOLUMES IN THIS FIRST HALF. COMPARED
AGAINST THIS, LAST YEAR'S SUMMER SEASON SPILLED OVER INTO THIS YEAR'S JANUARY
TO JUNE PERIOD RESULTING IN A 13% INCREASE IN VOLUMES. SECONDLY DELAYED FARMER
PURCHASING PATTERNS ALSO INCREASED THE SEASONALITY RESULTING IN HIGHER SALES
VOLUMES IN THE SECOND HALF OF LAST YEAR (JULY - DECEMBER 1999). THE PRICE WAR
THAT EXISTED AT THE BEGINNING OF LAST YEAR, WHERE PRICES WERE AS MUCH AS 20%
BELOW IMPORT PARITY ALSO RESULTED IN LOW MARGINS IN THE FIRST HALF TO JUNE
1999. MARGINS WERE RESTORED IN THE SECOND HALF OF THE YEAR, WHICH, TOGETHER
WITH THE HIGHER VOLUME RESULTED IN THE IMPROVEMENT IN THE PROFIT BEFORE TAX.
FERTILIZER
A SIGNIFICANT CHANGE IN THE GLOBAL "NITROGEN" CYCLE HAS TAKEN PLACE SINCE LAST
YEAR, WHICH WILL BENEFIT THE FERTILIZER PRODUCERS. AFTER STEADILY DECLINING
FROM A PEAK OF US$230 PER TON IN JANUARY 1996 TO A HISTORICAL LOW OF
APPROXIMATELY US$75 PER TON REACHED IN DECEMBER 1999, UREA FOB PRICES INCREASED
BY 80% TO US$135 PER TON OVER THE SIX MONTHS TO JUNE 2000. LOCAL FERTILIZER
PRICES ARE INFLUENCED BY THE IMPORT PARITY PRICE OF UREA AND DI-AMMONIUM
PHOSPHATE.
HOWEVER, THE COST OF THE BASIC INPUT, AMMONIA, HAS ALSO FOLLOWED THIS PATTERN.
DUE TO THE WORLDWIDE RATIONALISATION OF AMMONIA FACILITIES, THE SUPPLY OF
AMMONIA HAS NOT MATCHED ITS DEMAND. THIS, TOGETHER WITH COST PRESSURES FROM
HIGHER GAS PRICES THAT FOLLOW THE OIL PRICE, HAS RESULTED IN AMMONIA PRICES
INCREASING. THUS, AFTER STEADILY DECLINING FROM A PEAK OF US$210 PER TON IN
JANUARY 1997 TO A LOW OF APPROXIMATELY US$65 PER TON IN JULY 1999, AMMONIA
PRICES HAVE INCREASED TO THE PEAK OF US$155 PER TON REACHED IN APRIL BUT HAVE
SINCE RECEDED TO US$120 PER TON.
AS A CONSEQUENCE, AND IN THE LIGHT OF THE FURTHER DEVALUATION OF THE RAND,
FERTILIZER PRICES HAVE MOVED SHARPLY UPWARDS SINCE THE BEGINNING OF THE YEAR.
HOWEVER, BECAUSE PHOSPHATE PRICES HAVE REDUCED, THE INCREASE IN THE PRICE OF
GENERAL FERTILIZER HAS BEEN LIMITED TO APPROXIMATELY 20%. ON THE OTHER HAND
PRODUCTS WITH A HIGH NITROGEN CONTENT, SPECIFICALLY LAN (LIMESTONE AMMONIUM
NITRATE) INCREASED BY A FAR GREATER 60%.
EXPLOSIVES AND CHEMICALS
EXPLOSIVES AND CHEMICALS INCREASED REVENUE BY 12% OVER THE COMPARABLE PERIOD
LAST YEAR. THE IMPROVEMENT IN STEAM COAL PRICES FROM THE LOWS OF US$19 PER TON
TO THE CURRENT LEVELS OF US$26 PER TON HAS LED TO HIGHER COAL TONNAGES BEING
MINED WITH A CONCOMITANT PLEASING INCREASE IN SALES VOLUMES OF THE GROUP'S
EXPLOSIVES PRODUCTS. HOWEVER THE RAPID INCREASE IN AMMONIA PRICES DESCRIBED
ABOVE, COUPLED WITH AN INCREASE IN OIL PRICES, HAS RESULTED IN A SQUEEZE IN
MARGINS, AS THESE INCREASES WERE NOT PASSED ON TO CUSTOMERS. THE LOSBERG
CARTRIDGE EXPLOSIVES PLANT CONTINUES TO PERFORM WELL AND INCREASED MARKET
PENETRATION HAS BEEN ACHIEVED.
ENCOURAGING PROGRESS HAS BEEN ACHIEVED IN RESOLVING THE TECHNICAL DIFFICULTIES
IN THE ALUMINIUM TRIHYDRATE PLANT BUT COMMERCIAL PRODUCTION IS ONLY EXPECTED BY
YEAR END.
PROSPECTS
THE FERTILIZER DIVISION HAS RECENTLY CONCLUDED NEW FERTILIZER SUPPLY
AGREEMENTS, WHICH WILL OFF-SET SOME ANTICIPATED SHRINKAGE IN SECTIONS OF THE
MARKET CAUSED BY THE CURRENT OVERSUPPLY OF MAIZE. HOWEVER, THE SOIL MOISTURE
LEVELS ARE EXCELLENT WHICH AUGERS WELL FOR A GOOD PLANTING SEASON. NEW MARKETS
THAT THE GROUP HAS ENTERED, ESPECIALLY THE LIQUID SPECIALITY FERTILIZERS AND
ANIMAL FEEDS SHOW ENCOURAGING GROWTH PROSPECTS. THE IMPACT OF THE PRICE
ADJUSTMENTS TO FERTILIZER PRODUCTS WILL MATERIALISE IN THE SECOND HALF OF THE
YEAR.
THE GROUP'S SHARE OF THE FERTILIZER MARKET IN ZIMBABWE IS LOW AND IT IS
ANTICIPATED THAT THE DECLINE IN FARMING ACTIVITIES THERE WILL HAVE A MINIMAL
EFFECT ON THE GROUP'S OPERATIONS.
THERE IS AN INCREASE IN MINING ACTIVITY IN AFRICA, FROM WHICH MINING EXPLOSIVES
IS WELL POSITIONED TO BENEFIT. FURTHERMORE, SHOULD THE RECENT REDUCTIONS SINCE
THE APRIL HIGH IN THE AMMONIA PRICE CONTINUE, THE INCREASE IN THE EXPLOSIVES
VOLUMES SHOULD RESULT IN MINING EXPLOSIVES IMPROVING EARNINGS.
AS THE CAPITAL EXPENDITURE PROGRAM HAS BEEN COMPLETED, THE PLANNED REDUCTION IN
THE DEBT : EQUITY RATIO IS ON TRACK. THE GROUP LOOKS WELL SET TO IMPROVE ON
LAST YEAR'S EARNINGS FOR THE COMPARABLE 12-MONTH PERIOD TO DECEMBER 2000.
IDIVIDENDS
IN LINE WITH PAST PRACTICE, THE INTERIM DIVIDEND WILL BE CONSIDERED AT THE
NOVEMBER BOARD MEETING.
NOTES
THESE CONSOLIDATED INTERIM CONDENSED FINANCIAL STATEMENTS ARE PREPARED IN
ACCORDANCE WITH AC 127 - INTERIM FINANCIAL REPORTING. THE ACCOUNTING POLICIES
USED IN THE PREPARATION OF THE INTERIM FINANCIAL STATEMENTS ARE CONSISTENT WITH
THOSE USED IN THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER
1999 EXCEPT AS DESCRIBED IN THE PARAGRAPHS BELOW.
THE GROUP HAS ADOPTED THE REVISED AC102 - "INCOME TAXES" AND RECOGNISED
DEFERRED TAX LIABILITIES FOR TEMPORARY DIFFERENCES. THE CUMULATIVE PRIOR YEAR
NET EFFECT ARISING FROM THE DEFERRED TAX OF R23,614 MILLION (WHICH HAVE BEEN
CALCULATED USING A STATUTORY TAX RATE OF 30%) HAVE BEEN INCLUDED IN THE RESULTS
FOR THE SIX MONTHS ENDED JUNE 1999 AND FOR THE YEAR ENDED DECEMBER 1999.
FURTHERMORE THE GROUP ALSO ADOPTED THE REVISED AC115 - "SEGMENT REPORTING".
IN ORDER TO PRESENT A FAR CLEARER PICTURE OF THE YEAR'S RESULTS, THE GROUP HAS
CHANGED ITS YEAR-END TO MARCH 31. THIS WILL ENSURE THAT FIGURES ARE NOT
CONTAMINATED BY SEASONAL SPILL-OVERS AND WILL BENEFIT THE OPERATIONAL AS WELL
AS ADMINISTRATIVE FUNCTIONS OF THE BUSINESS. AS WOULD BE NORMAL IN SUCH CASES,
FURTHER INTERIM REPORTS WILL BE PRODUCED FOR THE 12 MONTHS ENDING DECEMBER 2000
BY ORDER OF THE BOARD
J G PRETORIUS - CHAIRMAN
WEBSITE ADDRESS: WWW.OMNIA.CO.ZA
TRANSFER SECRETARIES: ULTRA REGISTRARS (PTY) LIMITED, 11 DIAGONAL STREET,
JOHANNESBURG, 2001, PO BOX 4844 JOHANNESBURG, 2000 TELEPHONE (011) 370-5775
DIRECTORS: J G PRETORIUS (CHAIRMAN), R B HUMPHRIS (MANAGING DIRECTOR), D L
EGGERS, M M DOYLE, N K H FITZ-GIBBON, W T MARAIS (DEPUTY CHAIRMAN), DR W T
MARAIS (ALTERNATE), J C ROBBERTZE, N J CROSSE, P A SPRINGETT, O J WINKLER*, M L
THOMAS**
* GERMAN ** AMERICAN



                                        
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