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Omnia - Interim Results For The Six Months Ended 30 September 2006

Release Date: 29/11/2006 08:00:01      Code(s): OMN
Omnia - Interim Results for the six months ended 30 September 2006              
OMNIA HOLDINGS LIMITED                                                          
(Incorporated in the Republic of South Africa)                                  
Registration number 1967 / 003680 / 06                                          
JSE code: OMN & ISIN: ZAE000005153                                              
Revenue up 18% to R2.4 billion                                                  
Headline earnings up 48% to R 80 million                                        
Headline earnings per share up 47% to 182.2 cents                               
Interim dividend of 70 cents per share declared                                 
Condensed Consolidated Income Statements                                        
for the six months ended 30 September 2006                                      
                                    Unaudited        Reviewed     Audited       
6 months        6 months   12 months       
R million                             9/30/06         9/30/05     3/31/06       
Revenue                                 2,438    18%    2,069       4,331       
Gross profit                              438    13%      386         868       
Operating profit                          144    30%      111         289       
Net finance cost                         (21)            (30)        (59)       
Interest paid                            (28)   -10%     (31)        (70)       
Interest received                           3   -40%        5          13       
Forex gain/(loss)                           4  -200%      (4)         (2)       
Profit before taxation                    123    52%       81         230       
Taxation                                 (43)    59%     (27)        (76)       
Net profit for the period                  80    48%       54         154       
Attributable to:                                                                
Equity holders of the company              80    48%       54         154       
Basic earnings per share (cents)        182.2    47%    123.8       353.2       
Fully diluted basic earnings per        179.2    48%    121.4       347.0       
share (cents)                                                                   
Final dividend paid per share                                                   
(cents) in respect of                                                           
prior year                               85.0     9%     78.0        78.0       
Interim dividend per share                 70            60.0        60.0       
(cents) declared in respect of                                                  
current year                                                                    
Weighted average number of shares          44              43          44       
in issue (million)                                                              
Weighted average number of fully                                                
diluted shares in                                                               
issue (million)                            44              44          44       
Number of shares in issue                  44     1%       43          44       
Condensed Consolidated Balance Sheets                                           
as at 30 September 2006                                                         
                                    Unaudited   Reviewed     Audited            
R million                             9/30/06    9/30/05     3/31/06            
Property, plant and equipment             679        634         642            
Intangible assets                         445        457         455            
Deferred taxation                           1          3           4            
Inventories                               929        901         619            
Trade and other receivables             1,148        846         746            
Other current assets                       58         46          32            
                                        3,260      2,887       2,498            
Equity and liabilities                                                          
Shareholders" equity                    1,131        942       1,020            
Deferred taxation                          91         65          88            
Non-current liabilities                    15         23          29            
Trade and other payables                1,334      1,023       1,014            
Taxation                                    4         23          25            
Other current liabilities                 685        811         322            
                                        3,260      2,887       2,498            
Net interest-bearing debt                 637        788         303            
Net asset value per share (Rand)        25.87      21.76       23.38            
Forex (loss)/gain net of fair                                                   
value and other                                                                 
adjustments included in operating        (31)          4         (1)            
Depreciation                               28         26          55            
Amortisation                               10         10          20            
Capital expenditure                                                             
Incurred                                   65         43          93            
Authorised and committed                   47         14          12            
Authorised but not contracted for          98         44         197            
Condensed Consolidated Cash Flow Statements                                     
for the six months ended 30 September 2006                                      
                                    Unaudited   Reviewed    Audited             
                                     6 months   6 months  12 months             
R million                             9/30/06    9/30/05    3/31/06             
Operating profit                          144        111        289             
Depreciation and amortisation              38         36         75             
Adjustment for non-cash items               3          -        (5)             
Finance cost                             (25)       (25)       (57)             
Taxation paid                            (58)       (57)       (83)             
(Utilised by)/generated from            (399)      (398)          1             
working capital                                                                 
(Utilised by)/generated from            (297)      (333)        220             
Dividends paid                           (39)       (35)       (60)             
Cash (outflow)/inflow from              (336)      (368)        160             
operating activities                                                            
Cash outflow from investing              (65)       (43)       (87)             
Cash outflow from financing               (3)      (138)      (147)             
Net decrease in cash for the            (404)      (549)       (74)             
Movement in foreign currency               66        (4)        (4)             
translation reserve                                                             
Net overdraft at beginning of           (275)      (197)      (197)             
Net overdraft at end of period          (613)      (750)      (275)             
Condensed Segmental Analysis                                                    
for the six months ended 30 September 2006                                      
                                      Unaudited          Reviewed      Audited  
6 months          6 months    12 months  
R million                               9/30/06           9/30/05      3/31/06  
Revenue, net of intersegmental            2,438   18%       2,069        4,331  
Chemicals                                 1,162   11%       1,050        2,103  
Mining                                      470   15%         409          841  
Agriculture                                 806   32%         610        1,387  
Operating profit                            144   30%         111          289  
Chemicals                                    63   21%          52          112  
Mining                                       65    3%          63          129  
Agriculture                                  16               (4)           48  
Statement of Changes in Shareholders" Equity                                    
Ordinary Shareholders" Equity                    
                         Stated  Treasury    Other  Retained Minority           
R million               Capital    Shares Reserves  Earnings Interest   Total   
At 31 March 2005            201      (22)     (14)       755        2     922   
Net profit for the                                        54               54   
Decrease in foreign                                                             
translation reserve                            (4)                        (4)   
Share-based payment                              3                          3   
Treasury shares sold                    2                                   2   
Ordinary dividends                                      (35)             (35)   
At 30 September 2005        201     (20)      (15)       774        2      942  
Net profit for the                                       100               100  
Share-based payment                              3                           3  
Ordinary dividends                                      (25)              (25)  
At 31 March 2006            201     (20)      (12)       849        2    1,020  
Net profit for the                                        80                80  
Increase in foreign                                                             
translation reserve                             66                          66  
Share-based payment                              4                           4  
Ordinary dividends                                      (39)              (39)  
At 30 September 2006        201     (20)        58       890        2    1,131  
Other Reserves                                                                  
                                        Unaudited   Reviewed     Audited        
                                         6 months   6 months   12 months        
R million                                 9/30/06    9/30/05     3/31/06        
Other reserves comprise of:                                                     
Share-based payment reserves                   17         10          13        
Foreign currency translation reserve           38       (27)        (28)        
Hedging reserve                                          (1)                    
Net discount arising on acquisition                                             
shares of subsidiaries                          3          3           3        
                                               58       (15)        (12)        
Accounting policies                                                             
The consolidated condensed financial statements for the six months ended 30     
September 2006 were prepared in accordance with International Financial         
Reporting Standards (IFRS), IAS 34 - Interim Financial Reporting and in         
compliance with the Listing Requirements of the JSE Limited.  The consolidated  
condensed interim financial statements do not include all of the information    
required by IFRS for full annual financial statements.                          
The principal policies used in the preparation of the results for the period    
ended 30 September 2006 are consistent with those applied in the annual         
financial statements for the year ended 31 March 2006.                          
Headline earnings                                                               
Headline earnings equates to basic earnings.                                    
Restatement of comparative numbers                                              
Comparatives for the six months ended 30 September 2005 have been amended to    
ensure a more relevant presentation of results as per the requirements of IAS 1.
These adjustments have been set out in detail in the Transition Report (note 1) 
to the annual financial statements for the year ended 31 March 2006 and had no  
significant impact on the reported results.  These adjustments relate to the    
reclassification of forex losses, forward cover cost, fair value gains and net  
monetary gain to sales, cost of sales and operating expenses.  In addition the  
opening balance sheet at 1 April 2004 has been adjusted by R 6 million following
a more detailed review of the estimated useful lives of fixed assets.           
The hyperinflation adjustments, as required by the accounting standard IAS 29 - 
Financial Reporting in Hyperinflationary Economies, result from the devaluation 
in the Zimbabwean Dollar.  The most significant adjustment is a decrease in     
gross profit for the period by R3,8 million (2005:  R6,8 million increase).  The
net impact of these hyperinflation adjustments to the group, is a net loss of   
R2,2 million (2005:  R5,1 million profit).                                      
A final dividend of 85 cents per share was declared on 19 June 2006 in respect  
of the earnings of the previous financial year.  This dividend is reflected in  
the current period to 30 September 2006.                                        
An interim dividend of 70 cents per share has been declared in respect of the   
current period.                                                                 
The future minimum lease payments under non-cancellable operating leases are    
R17,2 million (2005:  R13,1 million) within one year and R51,4 million (2005:   
R44,7 million) between two and five years and Rnil million (2005:  Rnil) beyond 
five years, giving a total of R68,6 million (2005:  R57,9 million).             
An annual impairment test on the balance of goodwill has been performed at 30   
September 2006.  No impairment loss has occurred.                               
Basic and diluted earnings per share                                            
Earnings of R79,532 million were used in calculating basic and diluted earnings 
per share.  The weighted average number of shares in issue was 43,648 million   
while the weighted average number of fully diluted shares in issue was 44,385   
Omnia is a diversified, specialist chemical services provider with its business 
interests balanced across chemical, mining and agricultural markets.            
The Group is fundamentally a knowledge business, which leverages its leading    
intellectual capital and world-class production assets to differentiate its     
product and service offerings. Omnia"s unique business model creates            
extraordinary value for its customers, thus allowing the Group to earn a premium
in its markets and build long-term customer relationships.                      
Improved fertilizer sales contributed to a solid performance in the first half  
of 2006 following the previous season when a significant maize stock overhang in
South Africa resulted in prices being driven down to export parity levels,      
making it uneconomical for farmers to plant.                                    
The major activities of the Agriculture division customarily occur in the second
six-month period which is the main planting season.                             
In line with expectations, the Chemical division"s polymer business also        
returned to normality during this period with the overstocked position of the   
plastics industry at the beginning of the previous year having been eliminated. 
FINANCIAL REVIEW                                                                
The Group results are reported in accordance with International Financial       
Reporting Standards (IFRS).  All comparatives have been restated in compliance  
with IFRS.                                                                      
Group revenue increased by 18% to R 2.4 billion (2005: R 2.1 billion), due to   
increased sales across all businesses, the largest increase being attributable  
to the agriculture business. Operating profit increased by 30% to R 144 million 
(2005: R 111 million), with the margin increasing to 5.9% from the 5.3% achieved
in the prior period mainly due to improved performance"s from the chemical and  
agricultural divisions.                                                         
Interest paid reduced by 10 % to R 28 million (2005: R 31 million). Net finance 
cost was positively influenced by a R 4 million foreign exchange gain compared  
with a R 4 million foreign exchange loss in the prior period.                   
Net profit increased by 48% to R 80 million (2005: R 54 million).               
The seasonal nature of Omnia"s agriculture operations causes the Group"s working
capital requirements to peak at or around September each year. Although raw     
material prices remained at high levels, net interest bearing debt reduced to R 
637 million (2005: R 788 million). Cash utilised by operations for the period   
under review reduced by R 36 million to R 297 million (2005: R 333 million),    
mainly due to the increase in operating profit of R 33 million. With the        
weakening of the rand there was a R 66 million positive movement in the foreign 
currency translation reserve for the period (2005 : -R 4 million).              
OPERATIONAL REVIEW                                                              
The Protea Chemicals division is the leading speciality, functional and effect  
chemicals distributor in southern Africa. It has a significant presence in every
sector of the chemical distribution market and contributed 44% to Group         
operating profit (2005: 47%).                                                   
Revenue increased by 11% to R 1 162 million (2005: R 1 050 million). The bulk of
this increase came from the lower margin polymer business. Modest price         
increases have recently been recorded on other product lines following the      
weakening of the rand.                                                          
In accordance with previous expectations international polymer prices increased 
during the period, and with the optimisation of stock levels operating margins  
in the Polymer division returned to acceptable levels.                          
The increased revenue resulted in operating profit increasing by 21% to R 63    
million (2005: R 52 million). Operating margins improved marginally from 5 % to 
The Mining division is the market leader in blended bulk explosives formulations
for surface mines, and in addition manufactures packaged explosives for         
underground mines and specialised surface blasting applications. It also        
supplies a diverse range of mining chemicals as well as blasting accessories,   
and is currently commercialising a state-of-the-art electronic detonator system.
The Mining division contributed 45% to Group operating profit (2005: 57%).      
The Mining division benefited from the continued high level of mining activity  
that prevailed during the period, particularly in coal, copper and iron ore.    
This resulted in another period of noteworthy growth in BME"s bulk explosives   
volumes. With the volume growth experienced in the recent past, and in          
anticipation of further growth in the near future, additional resources have    
been allocated to the mining business. The expected growth, however, has been   
slow in materialising, in line with the pace of mining licence approvals being  
experienced in the industry. This impacted the operating margin which declined  
from 15.4% to 13.8%.                                                            
Technical improvements and cost reductions continue to be applied to the        
development of the Deltadet electronic detonator. Full commercialisation of the 
next generation detonator system is expected shortly.                           
The Mining division achieved a 15% growth in revenue to R 470 million (2005: R  
409 million) but the reduction in operating margin to 13.8% saw operating profit
increase by 3% to R 65 million (2005: R 63 million).                            
The Agriculture division manufactures and supplies granular, liquid and         
speciality fertilizers to individual farmers, co-operatives and wholesalers     
across southern Africa. In addition, it supplies speciality fertilizers to      
farmers in Australia and New Zealand. Agriculture contributed 11% to Group      
operating profit (2005: -4%).                                                   
Revenue increased by 32% to R 806 million (2005: R 610 million). As experienced 
in the previous years, the summer rainfall which heralds the onset of the main  
planting season had not yet materialised. Some of the increase in revenue that  
materialised in the period under review, when compared with the previous period,
is from low margin trade in Africa that normally only materialises in the second
six month period. That said, operating margins in the Agriculture division are  
traditionally considerably lower in the first half of the financial year        
compared with those in the second half. The Agriculture division"s operating    
margin was 2% in the period (2005: -1%).                                        
While the Group"s speciality fertilizer operations in both Australia and New    
Zealand continue to progress, in particular the Australian humate business, the 
Group"s agriculture activities in Africa generated lower margins than those     
achieved in the comparable first half of the previous year.                     
SHORT TERM                                                                      
It is expected that conditions for the Chemicals division will remain positive  
for the remainder of the financial year. Demand for the Group"s chemical product
offering will be driven by the expected improvements in the manufacturing sector
of the South African economy, while the relatively high oil price will ensure   
price increases for the downstream petrochemical products and their derivatives.
International chemical prices are increasing in line with the improvement in the
global economic environment, and coupled with the recent depreciation of the    
rand, will undoubtedly impact on local prices in South Africa.                  
The continued strong demand for world metals and minerals will benefit both the 
explosives and mining chemical markets, and even after taking into account the  
continued costs of ongoing detonator development, continued real growth should  
be achieved. There remains significant potential for the Mining division"s      
future growth into Africa and renewed focus and energy is being directed at     
taking advantage of the opportunities that arise from the division"s presence in
Insofar as the Agriculture division"s short-term prospects are concerned, the   
oversupply of maize that led farmers to limit their planting in the previous    
comparable period has now turned into a considerable maize shortage. As a       
consequence the hectares planted to maize is expected to revert to previous     
levels. The latest crop estimate forecasts that 2.8 million hectares will be    
planted to maize, up from the 1.6 million hectares achieved in the previous     
season. Therefore domestic fertilizer volumes for the full year should revert to
normal, thus positively impacting this aspect of Group activities.              
The excellent rainfall in the recent past has resulted in high underground      
water, soil moisture and dam levels. This environment should impact favourably  
on the fertilizer business and the Group as a whole in the period going forward.
The Group therefore expects a pleasing improvement in earnings for the year     
ended March 2007 compared with those achieved in the prior financial year ended 
March 2006.                                                                     
LONG TERM                                                                       
The Group remains well positioned, and is regularly being presented with        
opportunities to grow its chemical manufacturing and distribution activities,   
both nationally and internationally.                                            
In the Mining division, continued buoyant metals and mineral resource prices are
expected to result in a similar trend to that achieved in the period under      
review, with further growth prospects coming from new projects in Africa.       
The need for fertilizers is a long-term reality. The South African fertilizer   
market is showing every sign of recovery and will be complemented by continued  
sales to other African countries. The trend towards speciality fertilizer sales 
and services continues to grow.                                                 
The Group progressed its application to utilise the Clean Development Mechanism 
("CDM"), created by the Kyoto Accord, to reduce greenhouse gas emissions. If    
Omnia"s plans come to fruition, these efforts may lead to a substantial         
financial benefit. A Project Development Document ("PDD") has been approved by  
the Designated National Authority in South Africa and is now awaiting           
registration by the CDM executive board in Bonn, Germany. It is anticipated that
commissioning of the project will occur in the 2008 financial year.             
Omnia remains focused on diversifying its risk profile and pursuing new growth  
opportunities, while maintaining a firm focus on the Group"s core competencies. 
The board is pleased to announce that an interim dividend of 70 cents per share 
has been declared in respect of shareholders recorded in the register on Friday 
5 January 2007. The last day to trade cum dividend will be Thursday, 28 December
2006. The shares will commence trading ex dividend on Friday, 29 December 2006  
and the record date will be Friday, 5 January 2007. The payment date will be    
Monday, 8 January 2007. Share certificates may not be dematerialised or         
rematerialised between Friday, 29 December 2006 and Friday, 5 January 2007, both
dates inclusive.                                                                
NJ CROSSE                     RB HUMPHRIS                                       
Chairman                      Managing Director                                 
29 November 2006.                                                               
Date: 29/11/2006 08:00:11 AM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                                             

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