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Omnia Holdings Limited - Interim Results

Release Date: 03/12/2002 08:01:17      Code(s): OMN
Omnia Holdings Limited - Interim Results                                        
Omnia Holdings Limited                                                          
(Incorporated in the Republic of South Africa)                                  
(Registration number 1967/003680/06)                                            
Share code: OMN  ISIN: ZAE000005153                                             
("Omnia" or the "Group")                                                        
-  Revenue up 46%                                                               
-  Operating profit up 410%                                                     
-  Headline earnings per share up 482%                                          
-  Operating margins improved to 11,8%                                          
-  Interim dividend resumed                                                     
INTERIM RESULTS for the period ended 30 September 2002                          
COMMENTARY                                                                      
The Chairman`s report for the past financial year stated that several           
factors suggested the Group had excellent earnings prospects for the            
2003 financial year. The Group`s business model of adding value to              
its customers by leveraging its intellectual capital and technology             
provided the basis for this view as, in each of its markets, the                
Group model continues to drive benefits for all stakeholders.                   
The Board is therefore very pleased with the results for the six                
months ended September 2002. All divisions delivered results                    
substantially better than the previous year. Market conditions were             
buoyant while raw material input costs remained stable. Revenue                 
increased by 46% to R1,1 billion over the comparable prior year                 
period for the reasons set out below. Operating costs, which include            
production costs, rose by 28% to R219 million, reflecting the                   
increased level of activity. An increase in operating margins from              
3,4% to 11,8% resulted in operating profit improving to R126 million            
and a profit after tax of R68 million. Fully diluted headline                   
earnings per share improved more than five fold to 169,4 cents,                 
compared to those achieved at the interim stage last year.                      
The Group`s continued strong cash generation resulted in a                      
significant reduction in the mid-year debt-equity ratio from 104% a             
year ago to 31%, notwithstanding an increased level of funding                  
required to finance the growth in working capital.                              
The reduction in debt, with the subsequent reduction in interest                
paid, also contributed to the improved results, and saw an increase             
in interest cover from 1,9 times to 12 times. Due to the seasonality            
of the Fertilizer business the funding requirements for working                 
capital increased over the peak planting season between October and             
November.                                                                       
The 8% strengthening of the Rand against the US Dollar since the end            
of the previous financial year has decreased the Foreign Currency               
Translation Reserve by R11 million.                                             
Advice was received in October from insurers that the loss of profits           
insurance claim for damage to the nitric acid compressor, amounting             
to R26 million, has been finalised and accepted. It will be brought             
to account in the second half of the financial year.                            
Agriculture                                                                     
Several factors have combined to deliver exceptional interim results.           
- The maize shortage in the region, reinforced by high maize prices             
has led to an increased demand for fertilizer in anticipation of an             
increase in local plantings this year.                                          
- Export volumes have increased substantially over the comparable               
period in 2001, caused in part by early sales due to anticipated                
transport problems in the region.                                               
- The substantial devaluation of the Rand that took place late last             
year has seen an increase of 34% in year-on-year fertilizer prices.             
- The prevailing good agricultural prices and the improved financial            
position of the farming sector made it possible for Omnia`s customers           
to place orders earlier than usual.                                             
- The company has toll produced granular fertilizer for a third party           
during the interim period. This tolling arrangement will cease in the           
foreseeable future.                                                             
Operating margins of 9% in the fertilizer segment for the year ended            
March 2002 have increased to 12% and, with an increase of 45% in net            
revenue, operating profit has increased to R90,5 million for the                
period under review.                                                            
Mining and industrial chemicals                                                 
Demand for both our surface and underground explosives products                 
continued to grow over the comparable six-month period. Volumes in              
the industrial chemical market also increased mainly as a result of             
the addition of new animal feed product ranges. The operating margin            
of the mining and industrial chemicals division improved by 2,5% to             
12% over that for the year to March 2002.                                       
The industry wide export of ammonium nitrate based products continued           
and resulted in the predicted shortfall in supply to the local                  
explosives market. As a result, local prices of explosives are                  
expected to increase.                                                           
Prospects                                                                       
As announced at the company`s annual general meeting, the outlook for           
the markets in which the Omnia Group operates looks bright. The                 
positive momentum achieved in the six months to September 2002 is               
expected to continue for the full year to March 2003, provided that             
normal weather patterns prevail. Maize plantings are expected to                
increase, leading to an escalation in demand for fertilizer, and for            
the Group`s Speciality Fertilizer products. Although an El-Nino event           
is a possibility, its effects on the current financial year should be           
mild.                                                                           
The outlook for mining explosives also looks positive with the                  
development of new mines, particularly in the platinum sector.                  
Increased sales into the animal feeds sector is expected to result in           
further growth in the industrial chemicals business.                            
The strong cash flow generation will continue and the Group is                  
expecting to end the year ungeared.                                             
Dividends                                                                       
In view of the positive cash generation, the interim results and the            
prospects for the full year, the Board has recommended an interim               
dividend of 47,5 cents per share payable on 13 January 2003.                    
The last day to trade cum dividend will be Friday 3 January 2003. The           
shares will commence trading ex dividend as from Monday 6 January               
2003 and the record date will be Friday 10 January 2003. Share                  
certificates may not be dematerialised or rematerialised between                
Monday 6 January 2003 and Friday 10 January 2003, both days                     
inclusive.                                                                      
NJ Crosse RB Humphris                                                           
Chairman  Managing Director                                                     
Johannesburg                                                                    
3 December 2002                                                                 
Directors                                                                       
NJ Crosse (Chairman), WT Marais (Deputy Chairman),                              
JG Pretorius, RB Humphris* (Group Managing Director),                           
FD Butler, DL Eggers* (Group Finance Director), NKH Fitz-Gibbon, Dr             
WT Marais (Alternate to WT Marais), PA Springett                                
*Executive Directors                                                            
Registered office                                                               
1st Floor, Omnia House                                                          
13 Sloane Street, Epsom Downs                                                   
Bryanston, Sandton                                                              
PO Box 69888, Bryanston 2021                                                    
Telephone (011) 709-8888                                                        
Transfer secretaries                                                            
Ultra Registrars (Pty) Ltd                                                      
11 Diagonal Street, Johannesburg 2001                                           
PO Box 4844, Johannesburg 2000                                                  
CONSOLIDATED INCOME STATEMENTS                                                  
                           Unaudited    Unaudited    Audited                    
6 months     6 months     12 months                  
R`000                      30/9/2002    30/9/2001    31/3/2002                  
Revenue                    1 062 058    729 498      1 851 947                  
Cost of sales              (695 966)    (514 253)    (1 201 814)                
Gross profit               366 092      215 245      650 133                    
Operating costs before                                                          
depreciation                                                                    
and net of other income    (218 977)    (171 066)    (440 549)                  
EBITDA                     147 115      44 179       209 584                    
Depreciation               (21 109)     (19 471)     (38 005)                   
Operating profit           126 006      24 708       171 579                    
Finance costs                                                                   
- Net interest paid        (12 214)     (23 803)     (33 608)                   
- Forward cover costs      (8 584)      (5 664)      (11 912)                   
- Net monetary gain/(loss) (9 264)      16 716       19 714                     
Loss from associates       -            -            (4)                        
Profit before taxation     95 944       11 957       145 769                    
Taxation                   (27 907)     (121)        (36 395)                   
Profit after taxation      68 037       11 836       109 374                    
Minority interest          (304)        (137)        (459)                      
Net profit for the period  67 733       11 699       108 915                    
Headline and basic                                                              
earnings per share (cents) 178,2        30,6         284,5                      
Fully diluted headline                                                          
and basic earnings                                                              
per share (cents)          169,4        30,6         273,2                      
Weighted average number                                                         
of shares in issue (`000)  38 008       38 292       38 277                     
Dividends per share                                                             
(cents)                    81,5         -            -                          
EBITDA interest cover      12,04        1,86         6,24                       
CONSOLIDATED BALANCE SHEETS                                                     
Unaudited    Unaudited    Audited                    
R`000                      30/9/2002    30/9/2001    31/3/2002                  
Assets                                                                          
Fixed assets               423 533      413 888      416 565                    
Unlisted investments                                                            
and loans                  315          1 284        127                        
Current assets             981 468      764 986      553 725                    
                           1 405 316    1 180 158    970 417                    
Equity and liabilities                                                          
Ordinary shareholders`                                                          
Equity                     486 508      327 038      465 292                    
Minority interest          1 804        1 637        1 959                      
Deferred taxation          58 872       4 407        36 888                     
Long-term liabilities      15 570       55 616       29 963                     
Current liabilities        842 562      791 460      436 315                    
                           1 405 316    1 180 158    970 417                    
Net interest-bearing debt  150 019      342 869      12 884                     
Net asset value per                                                             
share (Rand)               12,84        8,58         12,20                      
Capital expenditure                                                             
Incurred                   28 078       15 833       66 818                     
Authorised and committed   21 088       22 342       6 530                      
Authorised but not                                                              
contracted for             38 496       9 773        53 083                     
CONSOLIDATED CASH FLOW STATEMENTS                                               
                           Unaudited    Unaudited    Audited                    
                           6 months     6 months     12 months                  
R`000                      30/9/2002    30/9/2001    31/3/2002                  
Cash generated from                                                             
Operations                 112 743      56 793       349 759                    
Finance costs and taxation (16 141)     (29 235)     (46 850)                   
(Utilised by)/generated                                                         
from working capital       (172 349)    (99 149)     42 339                     
(Utilised by)/available                                                         
from operations            (75 747)     (71 591)     345 248                    
Dividends paid             (33 121)     -            -                          
Cash (outflow)/inflow                                                           
from operating activities  (108 868)    (71 591)     345 248                    
Cash outflow from                                                               
investing activities       (28 266)     (20 674)     (42 152)                   
Cash outflow from                                                               
financing activities       (24 020)     (2 027)      (14 608)                   
Net (cash outflow)/cash                                                         
Inflow                     (161 154)    (94 292)     288 488                    
Net cash/(bank overdrafts)                                                      
at beginning of period     57 097       (167 637)    (231 391)                  
Net cash/(bank overdrafts)                                                      
at end of period           (104 057)    (261 929)    57 097                     
SEGMENTAL ANALYSIS                                                              
                           Unaudited    Unaudited    Audited                    
                           6 months     6 months     12 months                  
R`000                      30/9/2002    30/9/2001    31/3/2002                  
Revenue                    1 062 058    729 498      1 851 947                  
Fertilizer                 831 167      571 598      1 506 268                  
- Less: Intersegmental                                                          
sales                      (64 586)     (42 663)     (89 034)                   
Explosives and Chemicals   295 477      200 563      434 713                    
Operating profit           126 006      24 708       171 579                    
Fertilizer                 90 478       6 981        129 978                    
Explosives and Chemicals   35 528       17 727       41 601                     
STATEMENT OF CHANGES IN ORDINARY SHAREHOLDERS` EQUITY                           
Unaudited               Share        Non-                                       
                        capital and  distri-   Retained                         
                        premium      butable                                    
R`000                                reserves  earnings    Total                
At 31 March 2001        65 513       48 896    196 350     310 759              
Net profit for                                                                  
the period              -            -         11 699      11 699               
Increase in                                                                     
foreign currency                                                                
translation reserve     -            4 580     -           4 580                
At 30 September 2001    65 513       53 476    208 049     327 038              
Net profit for the                                                              
Period                                         97 216      97 216               
Increase in                                                                     
foreign currency                                                                
translation reserve     -            42 534    -           42 534               
Transfer to retained                                                            
income of                                                                       
post-acquisition                                                                
retained earnings                                                               
and reserves of                                                                 
associate               -            (720)    720          -                    
Treasury shares        (1 496)       -        -            (1 496)              
At 31 March 2002       64 017        95 290   305 985      465 292              
Net profit for the                                                              
Period                 -             -        67 733       67 733               
Ordinary                                                                        
dividends paid                                (33 189)     (33 189)             
Decrease in                                                                     
foreign currency                                                                
translation reserve    -            (10 658)  -            (10 658)             
Treasury shares        (2 670)      -         -            (2 670)              
At 30 September 2002   61 347       84 632    340 529      486 508              
NOTES                                                                           
These condensed consolidated interim financial statements are                   
prepared in accordance with AC127 - "Interim Financial Reporting" -             
and schedule 4 of the South African Companies Act. The accounting               
policies used in the preparation of the interim financial statements            
are consistent with GAAP and those used in the annual financial                 
statements for the period ended 31 March 2002.                                  
The future minimum lease payments under non-cancellable operating               
leases are R4 million within one year and R7,5 million between two              
and five years, giving a total of R11,5 million.                                
Taxation is disproportionate to the profit before taxation, mainly as           
a result of the different treatment of interest for tax and                     
accounting purposes. The effect of the change to a residence basis of           
taxation has been taken into account in determining the liability for           
taxation. Notification has been received that SARS intends to                   
reassess the Group and disallow the interest paid in respect of                 
convertible loans. The impact of this, should SARS be successful,               
will be to increase the tax charged for the current year by R30                 
million, of which R26 million will relate to adjustments in respect             
of prior years.                                                                 
A dividend of 81,5 cents per share was declared on 10 June 2002 in              
respect of the earnings of the previous financial year. This dividend           
is reflected in the current period to 30 September 2002.                        
The hyperinflation adjustments, as required by the accounting                   
standard AC124, result from the continued devaluation in the Zambian            
Kwacha and the Zimbabwean Dollar. The most significant adjustment is            
that which reduced the gross profit for the period by R1,7 million.             
The net monetary loss of R9,3 million for the period is as a result             
of a change in the source of funding of the Zimbabwe business, and is           
offset by foreign exchange gains of R16,1 million in Zimbabwe and               
Zambia. The net impact to the Group, including the offsetting of                
foreign exchange gains, is a net profit of R4,2 million.                        
An additional R7 million was advanced by some directors to the                  
company, bringing the total loans from directors to R8,3 million.               
Interest on these loans was paid to the directors concerned at an               
average rate of 11,5%.                                                          
Date: 03/12/2002 08:01:00 AM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                                             



                                        
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