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Omnia - Reviewed Interim Results For The Six Months Ended 30 September 2004

Release Date: 01/12/2004 08:00:01      Code(s): OMN
OMNIA - REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2004     
OMNIA HOLDINGS LIMITED                                                          
(Incorporated in the Republic of South Africa)                                  
(Registration number 1967 / 003680 / 06)                                        
Share code: OMN ISIN: ZAE000005153                                              
Reviewed interim results                                                        
for the six months ended 30 September 2004                                      
-   Revenue up 73% to R2,0 billion                                              
-   Headline earnings up 116% to R 77 million                                   
-   Headline earnings per share up 100% to 187,4 cents per share                
www.omnia.co.za                                                                 
Consolidated Income Statements                                                  
                       Reviewed                 Reviewed            Audited     
                       6 months                 6 months          12 months     
R"000                 30/9/2004                30/9/2003          31/3/2004     
Revenue               1 989 954        73%     1 153 072          3 278 590     
Cost of sales        (1 479 261)       87%      (790 292)        (2 253 656)    
Gross profit            510 693        41%       362 780          1 024 934     
Operating costs                                                                 
before depreciation                                                             
and net of other                                                                
income                 (338 199)       28%      (264 654)          (621 259)    
EBITDA                  172 494        76%        98 126            403 675     
Depreciation and                                                                
amortisation of                                                                 
intangible assets                                                               
other than goodwill     (34 621)       30%       (26 534)           (63 130)    
Amortisation of                                                                 
goodwill                      -                   (1 203)            (8 098)    
Operating profit        137 873        96%        70 389            332 447     
Finance costs                                                                   
- Net interest paid     (29 205)      130%       (12 695)           (35 323)    
- Fair value profit/                                                            
  (loss) on derivative                                                          
  instruments               660      -106%       (11 379)           (50 609)    
- Net monetary                                                                  
   gain/(loss)            6 592       -43%        11 485             (4 077)    
Profit before taxation  115 920       101%        57 800            242 438     
Taxation                (39 180)       68%       (23 348)           (75 770)    
Profit after taxation    76 740       123%        34 452            166 668     
Minority interest             -                     (186)              (505)    
Net profit for                                                                  
the period               76 740       124%        34 266            166 163     
Basic earnings per                                                              
share (cents)             187,8                     90,4              423,1     
Headline earnings                                                               
per share (cents)         187,8                     93,6              443,7     
Fully diluted                                                                   
basic earnings per                                                              
share (cents)             184,1                     81,4              393,8     
Weighted average                                                                
number of shares                                                                
in issue ("000)          40 867                    37 910            39 277     
Dividends per                                                                   
share (cents)             120,0*                     72,5*             72,5*    
EBITDA interest cover      5,91                      7,73             11,43     
*  in respect of prior year                                                     
Calculation of Headline Earnings                                                
                       Reviewed                  Reviewed            Audited    
6 months                  6 months          12 months    
R"000                 30/9/2004                 30/9/2003          31/3/2004    
Net profit for the                                                              
period                   76 740        124%        34 266           166 163     
Amortisation of goodwill      -                     1 203             8 098     
Headline earnings        76 740        116%        35 469           380 973     
Segmental Analysis                                                              
                       Reviewed                  Reviewed            Audited    
6 months                  6 months          12 months    
R"000                 30/9/2004                 30/9/2003          31/3/2004    
Revenue               1 989 954         73%     1 153 072         3 278 590     
Fertilizer              796 621         -1%       803 173         1 778 720     
- Less: Intersegmental                                                          
  sales                (105 597)        40%       (75 226)         (169 085)    
Mining                  317 965         26%       252 322           577 445     
Chemicals               982 491        469%       172 803         1 095 969     
- Less: Intersegmental                                                          
  sales                  (1 526)                        -            (4 459)    
Operating profit        137 873         96%        70 389           332 447     
Fertilizer               30 185         31%        23 031           203 690     
Mining                   46 762         34%        34 945            64 238     
Chemicals                60 926        391%        12 413            64 519     
Consolidated Balance Sheets                                                     
                                   Reviewed      Reviewed            Audited    
6 months      6 months          12 months    
R"000                             30/9/2004     30/9/2003          31/3/2004    
Assets                                                                          
Property, plant and equipment       573 424       521 024            570 525    
Intangible assets                   451 803       509 707            460 958    
Unlisted investments and loans           60            60                 60    
Current assets                    1 561 829     1 459 523          1 074 300    
                                  2 587 116     2 490 314          2 105 843    
Equity and liabilities                                                          
Ordinary shareholders" equity       793 593       579 158            715 529    
Minority interest                         -         1 686              2 005    
Deferred taxation                    52 479        59 117             62 935    
Non-current interest bearing debt   162 655       232 838            162 595    
Current portion of Prochem                                                      
 purchase consideration                   -       393 575                  -    
Current liabilities               1 578 389     1 223 940          1 162 779    
2 587 116     2 490 314          2 105 843    
Net interest bearing debt           482 687       546 443            227 052    
Net asset value per share (Rand)      18,63         15,32              17,97    
Directors" valuation of                                                         
unlisted shares                          60            60                 60    
Capital expenditure                                                             
Incurred                             31 977        18 694            116 610    
Authorised and committed             11 946        26 545             28 921    
Authorised but not contracted for    95 186        55 634            114 722    
Consolidated Cash Flow Statements                                               
                                   Reviewed      Reviewed           Audited     
                                   6 months      6 months         12 months     
R"000                             30/9/2004     30/9/2003         31/3/2004     
Operating profit                    137 873        70 389           332 447     
Depreciation and amortisation        34 621        27 737            71 228     
Adjustments for non-cash and                                                    
other items                          29 648       (44 619)          (72 639)    
Finance costs and taxation         (145 184)      (97 380)         (159 768)    
(Utilised by)/generated from                                                    
working capital                    (260 790)     (102 329)           82 101     
(Utilised by)/available                                                         
from operations                    (203 832)     (146 202)          253 368     
Dividends paid                      (17 971)      (27 611)          (28 584)    
Cash (outflow)/inflow from                                                      
operating activities               (221 803)     (173 813)          224 784     
Cash outflow from                                                               
investing activities                (31 977)      (18 628)         (707 511)    
Cash (outflow)/inflow from                                                      
financing activities                 (4 980)       (1 099)          219 074     
Net decrease in bank balances      (258 760)     (193 540)         (263 653)    
Net bank balances at beginning                                                  
of period                            21 750       281 967           285 403     
Net bank balances at end                                                        
of period                          (237 010)       88 427            21 750     
Statement of Changes in Ordinary Shareholders" Equity                           
Reviewed                            Share           Non-                        
capital and  distributable  Retained              
R"000                             premium       reserves  earnings    Total     
At 31 March 2003                   57 152         24 372   496 590  578 114     
Net impact of adoption of AC 133:                                               
Financial Instruments - Recognition                                             
and Measurement                                             1 264     1 264     
As restated at 1 April 2003        57 152        24 372   497 854   579 378     
Net profit for the period                                   34 266   34 266     
Ordinary dividends paid                                    (27 718) (27 718)    
Decrease in foreign currency                                                    
translation reserve                             (45 634)            (45 634)    
Ordinary shares issued in                                                       
terms of the Prochem                                                            
acquisition                        35 632                            35 632     
Treasury shares                     3 234                             3 234     
At 30 September 2003               96 018       (21 262)   504 402  579 158     
Net profit for the period                                  131 897  131 897     
Increase in foreign currency                                                    
 translation reserve                              4 287               4 287     
Fair value gain on interest rate swap               915                 915     
Treasury shares                      (728)                             (728)    
At 31 March 2004                   95 290       (16 060)   636 299  715 529     
Net profit for the period                                   76 740   76 740     
Capitalisation award and                                                        
ordinary dividends paid           35 759                 (53 710) (17 951)     
Increase in foreign currency                                                    
 translation reserve                             13 789             13 789      
Ordinary shares issued              1 500                            1 500      
Treasury shares                     3 986                            3 986      
At 30 September 2004              136 535        (2 271)  659 329  793 593      
Notes                                                                           
Accounting policies                                                             
These condensed consolidated interim financial statements are prepared in       
accordance with South African Generally Accepted Practices including 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 those used in the annual financial statements for
the year ended 31 March 2004, except for the adoption of IFRS 3 (AC 140):       
"Business Combinations", AC 128: "Impairment of assets (revised)" and AC 129:   
"Intangible Assets (revised)" which were adopted on 1 April 2004. In accordance 
with IFRS 3 (AC 140), the Group no longer amortises goodwill with effect from 1 
April 2004. An annual impairment test on the balance of goodwill has been       
performed at 30 September 2004 and will be performed annually on this date. No  
impairment loss has occurred.                                                   
Review opinion                                                                  
The Group"s auditors, PricewaterhouseCoopers Inc., have reviewed the condensed  
consolidated financial information for the 6 months ended 30 September 2004     
contained in this report. The review opinion is available for inspection at the 
company"s registered office during normal business hours.                       
Hyperinflation                                                                  
The hyperinflation adjustments, as required by the accounting standard AC124:   
"Financial Reporting in Hyperinflationary Economies", result from the continued 
devaluation in the Zimbabwean Dollar. The most significant adjustment is that   
which reduced the gross profit for the period by R4,5 million. The net monetary 
gain of R6,5 million for the period is offset by foreign exchange losses of R2,9
million in Zimbabwe. The net impact to the Group, is a net profit of R1,9       
million.                                                                        
Capitalisation award and dividends                                              
Capitalisation shares were awarded to shareholders emanating from distributable 
reserves on 16 July 2004 resulting in 1 199 967 no par value shares been issued 
for R35,8 million. Some shareholders elected to receive a cash dividend of 120  
cents per share resulting in R17,9 million being paid out in cash. This dividend
is reflected in the current period to 30 September 2004.                        
An interim dividend of 60 cents per share was declared on 30 November 2004. This
will be reflected in the second six month period together with the              
abovementioned 120 cents per share declared in respect of the previous financial
year.                                                                           
Commitments                                                                     
The future minimum lease payments under non-cancellable operating leases are    
R16,1 million (2003: R14,5 million) within one year and R53,3 million between   
two and five years (2003: R56,8 million), and Rnil beyond five years (2003:     
R15,833 million), giving a total of R69,4 million (2003: R87,183 million).      
Security structure                                                              
There is a security structure in place in terms of which an Special Purpose     
Vehicle ("SPV") has provided guarantees to the Group"s banking facility         
providers. The main operating companies as well as various other Group companies
have in turn provided the SPV with indemnities and guarantees. Furthermore, as  
security for the loans that have been entered into, some fixed assets and       
moveable assets at the company"s plant at Sasolburg (as opposed to other plants)
have been encumbered by a mortgage and a general notarial bond respectively in  
favour of the SPV. Furthermore, receivables arising only out of the South       
African operations of the Group have also been ceded in favour of the SPV.      
Partnership with Management Schemes                                             
In terms of the second partnership with management scheme 1 424 000 shares were 
issued to management on 23 July 2004 giving rise to an increase in share capital
of R1,5 million as reflected in the statement of changes in shareholders"       
equity.                                                                         
The third partnership with management scheme was approved by shareholders on 30 
September 2004.                                                                 
Commentary                                                                      
Introduction                                                                    
Omnia is a specialist chemical services company providing customised solutions  
in the agricultural, mining and chemical markets.                               
The Group focuses on responding to the needs of its customers and the commercial
challenges they face, through the deployment of advanced technology solutions   
and innovative products in its markets.                                         
The interim results for the six-month period ended 30 September 2004 include the
Prochem results for the full six months compared to only one month for the six  
months to 30 September 2003.                                                    
Financial review                                                                
With the inclusion of Prochem for the full period, many income statement items  
have substantially increased over the comparable prior period. Group revenue    
increased by 73% to R2,0 billion and gross profit increased by 41% to R511      
million. Operating profit increased by 96% from the prior comparable period,    
primarily as a result of Prochem. Omnia"s other businesses, Agriculture and     
Mining - representing 56% of Group operating profit - both grew in operating    
profit in excess of 30%.                                                        
The Group operating margin improved to 6,9% from the 6,1% in the prior          
comparable period. This reflects the improved balance of the Group"s interests, 
as there is a smaller contribution from the seasonal agriculture business on the
Group"s results.                                                                
Net interest paid more than doubled from the R12,7 million incurred in the      
comparable prior period to R29,2 million in the period under review, due to a   
R200 million term loan to fund the acquisition of Prochem.                      
In terms of the new SA GAAP (the precursor to the IFRS accounting standards),   
the Group assessed the recoverability of the carrying value of the goodwill     
carried on the balance sheet as at 30 September 2004. In terms of this          
assessment, no impairment of the goodwill is required. In addition, due to the  
change in accounting standards, no amortisation of goodwill has been provided.  
Headline earnings of R77 million increased by 116%, also reflecting the         
inclusion of the Prochem results for the full period. Besides the impact of the 
Prochem results both the Group"s agriculture as well as mining divisions showed 
improvements in excess of 30% in their respective operating profits over the    
prior comparable period, as reflected in the segmental analysis.                
The seasonal nature of Omnia"s agriculture operations causes the Group"s working
capital requirements to peak at or around the September interim stage. Although 
net interest-bearing debt was R64 million below the level at the comparable     
prior period ended 30 September 2003, it has increased by R256 million to R483  
million since the 30 March 2004 year end as a result of this peak. In this      
interim period the agriculture division contributed 22% of operating income.    
Cash utilised by operations for the period under review increased by R58 million
over the comparable prior period to R204 million. This increase is mainly       
attributable to an increase in working capital and tax payments and reflects the
increased level of activity and profitability achieved during the period under  
review.                                                                         
Operational review                                                              
Agriculture                                                                     
Revenue declined by 5% compared with the same period last year. This was due to 
the strengthening rand which reduced fertilizer sales prices by a few percentage
points. However the impact of the strengthening rand has been counteracted to an
extent by the record high international fertilizer raw material prices,         
effectively limiting the price reduction of fertilizer in the local markets.    
Volumes in the bulk product lines were comparable with the prior period while   
considerable growth was experienced in both speciality fertilizers and precision
agricultural services.                                                          
Aggressive management of costs during the period under review has resulted in   
the division achieving an operating margin up from 3,2% in the prior period to  
4,4% in the period under review, notwithstanding the reduction in fertilizer    
prices. Due to the seasonality of the operations, operating margins in the      
agriculture division are traditionally considerably lower in the first six-month
period compared with those in the second six-months of the financial year.      
The Group"s speciality fertilizer operations in Australia and New Zealand       
continue to progress well, in particular the humate business in Australia which 
was acquired 18 months ago. Progress with the joint venture in New Zealand is on
track, while another joint venture in Australia is in the process of being      
established.                                                                    
Mining                                                                          
The Group"s explosives operations received the benefit from the higher levels of
activity that prevailed, particularly in coal mining. This resulted in a        
pleasing growth in bulk explosives volumes. The international price of ammonia  
has increased over the period under review in line with the increase in oil and 
energy prices, and since the majority of the Group"s bulk explosives contracts  
are linked to the international price of ammonia, these price increases have    
been passed on.                                                                 
A significant reduction in underground gold production resulted in volume       
declines in this segment of the business. However, the Group"s market share of  
underground gold production is fairly small and thus the impact of this volume  
reduction is minimal. The reduction in local underground explosives volumes has 
to some extent been off-set by an increase in export volumes, albeit at lower   
prices and margins.                                                             
Numerous technical improvements and cost reductions are being applied in the    
development of the Deltadet electronic detonator. The Group"s explosives experts
have integrated the Group"s advanced electronic detonator software into its     
unique blasting software, resulting in the integrated blasting software becoming
a world leader. Full commercialisation will only begin within the next 12 months
once the technical changes are fully implemented.                               
The mining division achieved a 26% growth in sales and a 34% growth in operating
profit over the comparable prior period. This was mainly due to the combined    
impact of increased bulk explosives volumes, Prochem"s mining service activities
and ammonia linked price increases. The division has continued its aggressive   
cost optimisation programme which has resulted in a small increase in operating 
margin to 14,7%.                                                                
Chemicals                                                                       
The Prochem activities now reflect a full six months trading as opposed to the  
prior period in which only one month was included. Sales have therefore         
increased to R981 million for the period under review compared to the R173      
million achieved in the previous comparable period.                             
The strength of the rand caused chemical prices in the local market to reduce by
12%. However, Prochem responded by increasing its volumes and adding new        
products and customers to its business. In particular the restructuring of the  
Polymer unit into a single integrated business has gone exceptionally well.     
The acquisition of Prochem gave rise to goodwill of R281 million in September   
2003. In terms of previous accounting standards, this goodwill was amortised    
over a 20 year period and resulted in a charge of R8,1 million in the income    
statement for the year ended 30 March 2004. In terms of the new SA GAAP         
accounting standards, goodwill has to be assessed and if necessary impaired. The
Group has undertaken this assessment and no impairment is necessary.            
Operating profit from the chemicals division has grown from R12 million in the  
prior period to R61 million in the current period. Due to a new business that   
Prochem brings with it, operating margins are, as expected, below those achieved
for the full year to 30 March 2004.                                             
Prospects                                                                       
In the Agriculture business, the excellent late summer rain of the last season  
has resulted in good soil moisture levels. Hectares planted to this year"s      
summer crops, such as maize, are therefore expected to be up on last year"s     
plantings.                                                                      
In the Mining business, buoyant mineral commodity prices are expected to result 
in a similar trend to that achieved in the period under review, but with growth 
prospects coming from new projects in Africa.                                   
In the Chemicals business, an element of optimism prevails for the remainder of 
the financial year. There are signs that the manufacturing sector of the South  
African economy is improving, which will in turn drive demand for chemicals. It 
is foreseen that the high oil price will drive price increases in the downstream
petrochemical products and their derivatives. International chemical prices are 
also increasing, in sympathy with the improvement in the global economic        
environment.                                                                    
With the addition of the Prochem business and the balance this brings, the      
impact of the agricultural season on the first and second half of the financial 
year will not be as pronounced as in the past. The Group also continues to      
benefit from the reduction in local interest rates.                             
The Group therefore expects to show an improvement over the results achieved for
the year ended March 2004.                                                      
Dividends                                                                       
The board is pleased to announce that an interim dividend of 60 cents per share 
has been declared in respect of shareholders recorded in the register on Friday 
7 January 2005. The last day to trade cum dividend will be Friday 31 December   
2004. The shares will commence trading ex dividend on Monday,                   
3 January 2005 and the record date will be Friday, 7 January 2005. The payment  
date will be Monday, 10 January 2005. Share certificates may not be             
dematerialised or rematerialised between Monday, 3 January 2005 and Friday, 7   
January 2005, both dates inclusive.                                             
NJ CROSSE                       RB HUMPHRIS                                     
Chairman                  Managing Director                                     
Johannesburg                1 December 2004                                     
Date: 01/12/2004 08:00:19 AM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                                             
                                                                                
                                                                                
                                                                                



                                        
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