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Omnia - Reviewed Provisional Results For The Year Ended 31 March 2005

Release Date: 22/06/2005 08:00:01      Code(s): OMN
Omnia - Reviewed provisional results for the year ended 31 March 2005           
OMNIA HOLDINGS LIMITED                                                          
(Incorporated in the Republic of South Africa)                                  
Registration number: 1967/003680/06                                             
Share code: OMN & ISIN: ZAE000005153                                            
("Omnia" or the "Group")                                                        
Reviewed provisional results for the year ended 31 March 2005                   
*    Revenue increased by 30%                                                   
*    Net profit for the year increased by 33%                                   
*    Basic earnings per share increased by 26%                                  
Extending footprint into Africa with an acquisition in the Chemicals division   
Final distribution to shareholders of 78 cents per share                        
Condensed consolidated income statements                                        
for the year ended 31 March 2005                                                
                                    Reviewed               Audited              
R"000                               2005          %       2004                  
Revenue                             4 263 974     30      3 278 590             
Cost of sales                       (3 067 776)           (2 253 656)           
Gross profit                        1 196 198     17      1 024 934             
Operating expenses                  (801 865)     16      (692 487)             
Operating profit                     394 333      19       332 447              
Finance costs                                                                   
- Net interest paid                 (57 734)      63      (35 323)              
- Net monetary gain/(loss)           17 186               (4 077)               
Fair value loss on financial        (21 536)              (50 609)              
instruments                                                                     
- Forward contract transactions     (27 332)              (45 363)              
not qualifying as hedges                                                        
- Other financial instruments        5 796                (5 246)               
Profit before taxation               332 249      37       242 438              
Taxation                            (111 368)             (75 770)              
Profit after taxation                220 881      33       166 668              
Minority interest                   (417)                 (505)                 
Net profit for the year              220 464      33       166 163              
Basic earnings per share (cents)     516,3        26       410,5                
Headline earnings per share          516,3        20       430,5                
(cents)                                                                         
Fully diluted basic earnings per     486,6        27       382,9                
share (cents)                                                                   
Fully diluted headline earnings      486,6        21       401,6                
per share (cents)                                                               
Dividend paid per share (cents) in   120,0                 72,5                 
respect of prior year                                                           
Interim dividend per share (cents)                                              
declared in respect                                                             
 of current year                     60,0                 -                     
Weighted average number of shares    42 699       5        40 477               
in issue ("000)                                                                 
Weighted average number of                                                      
 fully diluted shares in issue       45 305       4        43 395               
("000)                                                                          
Fully diluted earnings (R"000)       220 464      33       166 163              
Number of shares in issue            43 424                39 932               
Segmental analysis                                                              
for the year ended 31 March 2005                                                
Reviewed               Audited              
R"000                               2005          %       2004                  
Revenue                             4 263 974     30      3 278 590             
Agriculture, net of intersegmental  1 624 602             1 609 635             
sales                                                                           
Mining, net of intersegmental        715 760      24       577 445              
sales                                                                           
Chemicals, net of intersegmental    1 923 612     76      1 091 510             
sales                                                                           
Operating profit                     394 333      19       332 447              
Agriculture                          152 714      (25)     203 690              
Mining                               108 531      69       64 238               
Chemicals                            133 088      106      64 519               
Calculation of headline earnings                                                
                                    Reviewed               Audited              
R"000                               2005                  2004                  
Net profit for the year              220 464      33       166 163              
Amortisation of goodwill                                   8 098                
Headline earnings                    220 464      27       174 261              
Condensed consolidated balance sheets                                           
as at 31 March 2005                                                             
                                   Reviewed                Audited              
R"000                              2005           %       2004                  
Assets                                                                          
Property, plant and equipment       598 352       5        570 525              
Intangible assets                   450 799                460 958              
Unlisted investments and loans     60                     60                    
Current assets                     1 453 681      35      1 074 300             
2 502 892              2 105 843             
Equity and liabilities                                                          
Ordinary shareholders" equity       895 164       25       715 529              
Minority interest                   2 067                  2 005                
Deferred taxation                   70 216                 62 935               
Non-current interest bearing debt   91 883                 162 595              
Current liabilities                1 443 562      24      1 162 779             
                                   2 502 892              2 105 843             
Net interest-bearing debt           372 993                227 052              
Net asset value per share (Rand)    20,66         15       17,97                
Directors" valuation of unlisted    60                     60                   
shares                                                                          
Capital expenditure                                                             
Incurred                            87 798                 116 610              
Authorised and committed            58 560                 28 921               
Authorised but not contracted for   76 985                 114 722              
Condensed consolidated cash flow statements                                     
for the year ended 31 March 2005                                                
                                   Reviewed                Audited              
R"000                              2005            %      2004                  
Operating profit                    394 333        19      332 447              
Depreciation and amortisation       71 982                 71 228               
Adjustment for non-cash items      (13 505)               (72 640)              
Finance costs and taxation         (181 082)              (159 768)             
(Utilised by)/generated from       (295 618)               82 101               
working capital                                                                 
(Utilised by)/available from       (23 890)                253 368              
operations                                                                      
Dividends paid                     (44 227)               (28 584)              
Cash(outflow)/inflow from          (68 117)                224 784              
operating activities                                                            
Cash outflow from investing        (85 297)               (707 511)             
activities                                                                      
Cash (outflow)/inflow from         (64 816)                219 074              
financing activities                                                            
Net decrease in cash               (218 230)              (263 653)             
Net cash at beginning of year       21 750                 281 967              
Effects of exchange rate movements (88)                    3 436                
Net (overdraft)/cash at end of     (196 568)               21 750               
year                                                                            
Statements of changes in ordinary shareholders" equity                          
                                Non-                                            
                    Stated      distributable  Retained                         
R"000               capital     reserves       earnings   Total                 
At 31 March 2003     57 152      24 372         496 590    578 114              
Net impact on                                                                   
opening balance of                                                              
adoption of AC 133:                                                             
Financial                                       1 264      1 264                
Instruments -                                                                   
Recognition and                                                                 
Measurement                                                                     
As restated at 1     57 152      24 372         497 854    579 378              
April 2003                                                                      
Net profit                                      166 163    166 163              
attributable to                                                                 
ordinary                                                                        
shareholders                                                                    
Decrease in foreign                                                             
currency                                                                        
translation reserve             (41 347)                  (41 347)              
Fair value gain on              915                       915                   
interest rate swap                                                              
Ordinary shares      35 632                                35 632               
issued                                                                          
Treasury shares      2 506                                 2 506                
Ordinary dividends                             (27 718)   (27 718)              
paid                                                                            
At 31 March 2004     95 290     (16 060)        636 299    715 529              
Net profit                                      220 464    220 464              
attributable to                                                                 
ordinary                                                                        
shareholders                                                                    
Decrease in foreign             (3 208)                   (3 208)               
currency                                                                        
translation reserve                                                             
Fair value loss on              (1 305)                   (1 305)               
interest rate swap                                                              
Ordinary shares      41 652                    (40 152)    1 500                
issued                                                                          
Treasury shares      5 906                                 5 906                
Capitalisation       35 771                    (35 771)                         
award                                                                           
Ordinary dividends                             (43 722)   (43 722)              
paid                                                                            
At 31 March 2005     178 619    (20 573)        737 118    895 164              
Notes                                                                           
Accounting policies                                                             
These condensed consolidated provisional financial statements are prepared in   
accordance with Generally Accepted Accounting Practice in South Africa,         
including AC 127: "Interim Financial Statements", which is relevant for         
provisional financial information, and Schedule 4 of the South African Companies
Act. The accounting policies used in the preparation of the provisional         
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.                                          
Hyperinflation                                                                  
The hyperinflation adjustments, as required by the accounting standard AC 124   
"Financial Reporting in Hyperinflationary Economies", result from the continued 
devaluation in the Zimbabwean Dollar. The most significant adjustment is a      
reduction in gross profit for the year by R16,6 million (2004: R13,1 million).  
The net impact of these hyperinflation adjustments to the group is a net loss of
R13,4 million (2004: R17,8 million).                                            
Cashflow statement                                                              
Non-cash flow items on the cash flow statement comprise foreign exchange, FCTR  
movements and hyperinflation adjustments.                                       
Security Structure for banking facilities                                       
There is a security structure in place in terms of which a 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         
collateral bond respectively in favour of the SPV.                              
Additionally, receivables arising only out of the South African operations of   
the Group have been ceded in favour of the SPV.                                 
These securities have been put in place in respect of the net interest-bearing  
debt comprising the R133 million loan facility and other short-term facilities. 
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 being issued
at R29,25 per share. Some shareholders elected to receive a cash dividend of 120
cents per share resulting in R17,9 million being paid out in cash.              
Prior year basic earnings and headline earnings per share and fully diluted     
earnings and headline earnings per share have been restated as follows to adjust
for the capitalisation issue in line with the requirements of AC 104, Earnings  
per Share:                                                                      
                          As restated     As previously stated                  
Basic earnings per share  410,5           423,1                                 
(cents)                                                                         
Headline earnings per     430,5           443,7                                 
share (cents)                                                                   
Fully diluted basic       382,9           393,8                                 
earnings per share                                                              
(cents)                                                                         
Fully diluted headline    401,6           413,0                                 
earnings per share                                                              
(cents)                                                                         
An interim dividend of 60 cents per share was declared on 30 November 2004 and  
R27,1 million was paid out in cash. These dividends are reflected in the current
year ended 31 March 2005.                                                       
Commitments                                                                     
The future minimum lease payments under non-cancelable operating leases are     
R17,6 million (2004: R10,9 million) within one year, R48,9 million (2004:       
R51,5million) between two and five years and R2,9 million (2004: R6,5 million)  
later than five years, giving a total of R69,4 million (2004: R69,1 million).   
Headline earnings per share                                                     
The headline earnings per share is calculated by dividing the headline earnings 
by the weighted average number of ordinary shares in issue, which excludes      
shares held as treasury shares.                                                 
Partnership with Management Scheme                                              
In terms of the second partnership with management scheme 1 424 000 shares were 
issued to management on 23 July 2004, when the market price of Omnia shares was 
R29,25, giving rise to a net increase in share capital of R1,5 million as       
reflected in the statement of changes in shareholders" equity. (Being R41,6     
million representing the market price of Omnia shares issued less the R40,1     
million reflected as transactions with minorities).                             
The third partnership with management scheme was approved by the shareholders on
30 September 2004.                                                              
Business Combinations                                                           
Acquisition of African Polymers                                                 
In January 2005, the Group acquired the net assets of African Polymers for a    
purchase consideration of                                                       
R9,3 million, which has been allocated mainly to intangible assets (distribution
contracts) which will be amortised over a period of ten years.                  
Review opinion                                                                  
The condensed consolidated financial information for the year ended 31 March    
2005 included in this report has been reviewed by the auditors,                 
PricewaterhouseCoopers Inc. A review opinion is available for inspection at the 
company"s registered office during normal business hours.                       
Commentary                                                                      
Introduction                                                                    
Omnia, a specialist chemical services company providing customised solutions in 
the agriculture, mining and chemical markets, produced pleasing results for the 
year ended 31 March 2005.                                                       
The acquisition of Prochem took effect on 1 September 2003, therefore the       
results for the prior year include Prochem for only seven months. As a          
consequence and as expected, the reported interim increase in net profit of 124%
for the first six months ended 30 September 2004 was not sustainable for the    
full year.                                                                      
Omnia continues to deliver on its strategy to diversify the Group and achieve a 
better balance between its interest in the agricultural, mining and chemical    
businesses. This is demonstrated by the increased contribution made to operating
profit by the mining and chemicals sectors, which collectively increased to 61% 
(2004: 39%).                                                                    
In line with the strategy of diversifying into new markets, both domestic and   
international, the Group made a small acquisition during the year to expand its 
polymer interests in East Africa. This acquisition fits into the Omnia strategy 
of becoming a significant player in the sub-Saharan chemical markets, while     
retaining the essential Omnia business model of adding value to customers by    
leveraging its intellectual capital and technology.                             
Financial review                                                                
Net profit for the year increased by 33% to R220 million (2004: R166 million)   
while basic earnings per share increased by 26% to 516 cents (2004: 411 cents). 
During the year, the weighted average number of shares in issue increased by 5% 
to 42,699 million.                                                              
A focused strategy and diversified business model have positioned Omnia well for
profitable growth. With the inclusion of Prochem for the full year, revenue     
increased by 30% to R4,3 billion (2004: R3,3 billion). The impact of the lower  
margin business model of Prochem reduced the gross margin to 28% (2004: 31%) and
impacted on the operating profit margin, reducing it to 9% (2004: 10%).         
Operating expenses net of other income increased by 16% to R802 million (2004:  
R692 million) principally as a result of the inclusion of Prochem for a full    
year. The debt incurred to acquire Prochem has also been in place for the full  
year, and this, together with higher levels of working capital, has resulted in 
the interest charge increasing by 63% for the year to R58 million (2004: R35    
million).                                                                       
The cost of forward contract transactions not qualifying as hedges in terms of  
the requirements of AC 133: Financial Instruments - Recognition and Measurement 
- has reduced to R27 million (2004: R45 million). On the other hand, hedging    
contracts entered into during the course of the year resulted in a profit of R6 
million compared to a loss of R5 million for the comparable prior period.       
Due to steeply increasing international commodity prices, particularly nitrogen 
and petro-chemical products, a decision was taken by management in January 2005 
to increase the Group"s inventory in anticipation of further raw material       
commodity price increases. This action was taken in the knowledge that it would 
have a negative impact on cash and as such is the main contributing factor to   
the R296 million cash utilised in respect of working capital for the year ended 
31 March 2005.                                                                  
As a result of the above-mentioned early investment in inventory and the        
inclusion of Prochem for the full year, net interest bearing debt, increased by 
64% to R373 million (2004: R227 million) at year end, resulting in the debt:    
equity ratio increasing to 42% (2004: 32%). However, the debt: net tangible     
worth improved from 89% at the end of last year to 84% this year.               
Operational review                                                              
Chemicals                                                                       
The Chemicals division, comprising the Prochem Group, is the leading distributor
of speciality and other chemicals in Southern Africa. It has a presence in      
almost every sector of the chemical distribution market.                        
During the year the division introduced new products into the market, expanded  
into new market segments and penetrated new geographical markets into Africa.   
The Group acquired African Polymers, a polymer business operating in East       
Africa, which will augment the Group"s chemical exports into these markets.     
This year"s results reflect Prochem for the full 12 months while the comparative
year includes seven months of Prochem"s results. The division posted a strong   
financial performance for the year with revenue of R1,9 billion (2004: R1,1     
billion (7 months)) and operating profits of R133 million (2004: R64 million (7 
months)). Despite the strength of the Rand and its negative impact on Rand      
margins, this division produced a solid performance for the year.               
Mining                                                                          
The Mining division is a market leader in blended bulk explosives formulations  
for surface mines and manufactures packaged explosives for underground mines and
specialised surface blasting. It also supplies blasting accessories and is      
currently commercialising a state-of-the-art electronic detonator system.       
The division showed an outstanding financial performance both locally and       
internationally. The exceptional results were primarily due to volume growth,   
particularly in the surface explosives business. Revenue increased by 24% to    
R716 million (2004: R577 million) and operating profits increased by 69% to R109
million (2004: R64 million), contributing 28% to Group operating profits. This  
was mainly due to sound working capital management, improved productivity and   
the implementation of operational efficiencies. However, the relatively strong  
Rand during the period adversely affected South African mining operations       
resulting in a loss of explosives sales to underground gold mines in particular.
The Deltadets operation achieved the successful development of Deltadet 3       
miniaturisation to meet market requirements. This product is a miniaturised     
Electronic Delayed Detonator used to initiate commercial explosives. It is      
extremely accurate and programmable to allow for optimised blasting efficiency. 
Development costs, which are written off as incurred, are currently still       
exceeding revenues but this situation is expected to reverse in the 2006        
financial year.                                                                 
Agriculture                                                                     
The Agricultural division produces and supplies granular, liquid and speciality 
fertilizers to individual farmers, co-operatives and wholesalers throughout     
South Africa, Swaziland, Zimbabwe, Zambia, Namibia, Botswana, Tanzania, Malawi, 
Angola, Madagascar, Australia and New Zealand.                                  
Revenue remained constant at R1,6 billion (2004: R1,6 billion) while operating  
profit decreased by 25% to                                                      
R153 million (2004: R204 million). Operating margins decreased to 9,4% (2004:   
12,7%). Two main factors influenced the operating performance of the division:  
* an environment of increasing commodity prices resulted in a squeeze on Rand   
margins; and                                                                    
* the effect of the strong Rand led to reduced margins in the export market.    
The Speciality Fertilizer business has shown positive growth particularly in    
Australasia. The business experienced a robust year with profitability more than
doubling as a consequence of higher volumes, but primarily due to increased     
efficiency through lower operational costs. The precision farming operations    
have also expanded considerably with major successes being achieved with        
perennial crops. The Group remains convinced that this venture has the potential
to become a significant part of the agricultural business.                      
Prospects                                                                       
We are pleased with the performance of Prochem for the first full year with the 
Group. This acquisition has bedded down well following the division"s           
restructuring and is well positioned for growth and expansion in the year ahead.
The continued strong growth in world mineral demand is positive for the Mining  
Division"s markets and even after taking into account the continued costs of    
further detonator development, a substantial improvement in earnings is         
anticipated for the coming year.                                                
In the short term, the low maize price and high inventory will lead to crop     
finance for farmers to be significantly tighter leading to a reduction in maize 
plantings in the coming summer season. This will result in a reduction in       
fertilizer consumption and, in all likelihood, lower fertilizer margins as      
competitive pressures increase. Fortunately, Omnia"s strategy of firstly        
focusing its fertilizer operations on the commercial farmer who demands high    
levels of agronomic service and secondly, the development of significant        
infrastructure in the Southern African countries will enable the volume risk to 
be mitigated to some extent. Nevertheless, a tough year can be anticipated for  
the fertilizer division.                                                        
The Group has largely adapted to operating at an exchange rate of R6 to the US  
dollar, however should the Rand move to weaker levels, a positive impact on the 
group"s earnings can be expected. Although the significant growth in earnings   
per share over the last few years will be difficult to match in the coming year,
the Group remains positive that earnings will continue to grow in line with the 
Group"s five-year target.                                                       
Dividend                                                                        
The Board is pleased to announce that it has declared a final dividend of 78    
cents in respect of shareholders recorded in the register on Friday 15 July     
2005. This final dividend brings the dividend for the full year ended           
31 March 2005 to 138 cents (after inclusion of the interim dividend of 60 cents 
per share) compared to the 120 cents paid in respect of the prior period.       
The last day to trade in the company"s shares cum dividend will be Friday 8 July
2005. The shares will commence trading ex dividend on Monday 11 July 2005 and   
the record date will be Friday 15 July 2005. The payment date will be Monday 18 
July 2005. Share certificates may not be dematerialised or rematerialised       
between Monday 11 July and Friday 15 July 2005, both dates inclusive.           
NJ Crosse                 RB Humphris                                           
Chairman                  Managing Director                                     
Bryanston                 22 June 2005                                          
Directors                                                                       
NJ Crosse (Chairman), FD Butler, DL Eggers* (Group Finance Director), NKH Fitz- 
Gibbon, RB Humphris* (Group Managing Director),                                 
Prof SS Loubser, Dr WT Marais (Alternate to WT Marais), WT Marais (Deputy       
Chairman), JG Pretorius, TR Scott, 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                                                  
www.omnia.co.za                                                                 
Date: 22/06/2005 08:00:12 AM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                                             
                                                                                
                                                                                
                                                                                



                                        
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