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OMN - Omnia Holdings Limited - Reviewed Provisional Results For The Year

Release Date: 20/06/2007 09:21:27      Code(s): OMN
OMN - Omnia Holdings Limited - Reviewed Provisional Results For The Year        
                   Ended 31 March 2007 and dividend distribution                
OMNIA HOLDINGS LIMITED                                                          
(Incorporated in the Republic of South Africa)                                  
Registration number: 1967 / 003680 / 06                                         
Share code: OMN & ISIN: ZAE000005153                                            
Reviewed provisional results for the year ended 31 March 2007                   
Balanced business continues to deliver                                          
-    Revenue increased by 28% to R5.5 billion                                   
-    Net profit for the year increased by 60% to R246 million                   
-    Basic earnings per share increased by 59% to 560.3 cents                   
-    Headline earnings per share increased by 58% to 558.2 cents                
-    Final dividend distribution to shareholders of 90 cents (160 cents for     
the full year, an increase of 10%)                                              
Condensed Consolidated Income Statements                                        
for the year ended 31 March 2007                                                
                                      Reviewed            Audited               
R million                              2007        %       2006                 
Revenue                                5 537       28%     4 331                
Cost of sales                          (4 398)             (3 463)              
Gross profit                           1 139       31%     868                  
Operating expenses                     (717)       24%     (579)                
Operating profit                       422         46%     289                  
Net finance cost                       (58)                (59)                 
Interest paid                         (80)                (70)                  
Interest received                     18                  13                    
Forex gain/(loss)                     4                   (2)                   
Profit before taxation                 364         58%     230                  
Taxation                               (118)               (76)                 
Net profit for the year                246         60%     154                  
Attributable to:                                                                
- Equity holders of the Company        246                 154                  
Basic earnings per share (cents)       560.3       59%     353.2                
Fully diluted basic earnings per       553.2       59%     347.0                
share (cents)                                                                   
Final dividend paid per share (cents)  85.0        9%      78.0                 
in respect of prior year                                                        
Interim dividend per share (cents)                                              
paid in respect of                                                              
the current year                       70.0                60.0                 
Weighted average number of shares in   43 772      1%      43 509               
issue (`000)                                                                    
Weighted average number of fully       44 338              44 291               
diluted shares in issue (`000)                                                  
Number of shares in issue (`000)       43 943              43 607               
Condensed Consolidated Balance Sheets                                           
as at 31 March 2007                                                             
                                      Reviewed             Audited              
R million                              2007          %      2006                
Property, plant and equiment           760           18%    642                 
Intangible assets                      436                  455                 
Deferred taxation                      3                    4                   
Current assets                         1 924         38%    1 398               
3 123                2 499                
Equity and liabilities                                                          
Shareholders` equity                   1 250         23%    1 020               
Deferred taxation                      83                   88                  
Non-current liabilities                33            13%    29                  
Current liabilities                    1 757         29%    1 362               
                                      3 123                2 499                
Net interest-bearing debt              265                  303                 
Net asset value per share (Rand)       28.44         22%    23.39               
Capital expenditure                                                             
Depreciation                           59                   55                  
Amortisation                           20                   20                  
Incurred                               188                  93                  
Authorised and committed               33                   12                  
Authorised but not contracted for      174                  197                 
Condensed Consolidated Cash Flow Statements                                     
for the year ended 31 March 2007                                                
                                     Reviewed           Audited                 
R million                             2007        %      2006                   
Operating profit                      422         46%    289                    
Depreciation and amortisation         79                 75                     
Adjustment for non-cash items         (6)                (10)                   
(Utilised)/generated by working       (60)               1                      
435                355                     
Interest paid                         (80)               (70)                   
Interest received                     18                 13                     
Taxation paid                         (100)              (83)                   
Dividends paid                        (68)               (60)                   
Generated by operations               205                155                    
Cash outflow from investing           (175)              (87)                   
Cash inflow/(outflow) from financing  8                  (147)                  
Net increase/(decrease) in cash       38                 (79)                   
Net overdraft at beginning of year    (275)              (196)                  
Effects of exchange rate movements    3                  -                      
Net overdraft at end of year          (234)              (275)                  
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      201       (22)     (14)      755      2         922            
Net profit for                                                                  
the year ended                                                                  
31 March 2006                                 154                154            
Decrease in                                                                     
translation                         (4)                          (4)            
Share-based                         6                            6              
Treasury shares            2                                     2              
Ordinary                                      (60)               (60)           
dividends paid                                                                  
At 31 March      201       (20)     (12)      849      2         1 020          
Net profit for                                                                  
the year ended                                                                  
31 March 2007                                 246                246            
Increase in                                                                     
translation                         42                           42             
Share-based                         6                            6              
Treasury shares            4                                     4              
Ordinary                                      (68)               (68)           
dividends paid                                                                  
At 31 March      201       (16)     36        1 027    2         1 250          
Other Reserves                                                                  
                                          2007  2006                            
Reserves comprise of:                                                           
Net discount arising on acquisition of     3     3                              
shares of subsidiaries                                                          
Foreign currency translation reserve       14    (28)                           
Share-based payment reserve                19    13                             
                                          36    (12)                            
Condensed Segmental Analysis                                                    
for the year ended 31 March 2007                                                
                                        Reviewed         Audited                
R million                                2007      %      2006                  
Revenue, net of intersegmental sales     5 537     28%    4 331                 
Chemicals                                2 624     25%    2 103                 
Mining                                   1 001     19%    841                   
Agriculture                              1 912     38%    1 387                 
Operating profit                         422       46%    289                   
Chemicals                                127       13%    112                   
Mining                                   138       7%     129                   
Agriculture                              157       227%   48                    
Reconciliation of headline earnings                                             
                                        Reviewed    Audited                     
R million                                2007        2006                       
Net profit for the year                  246         154                        
Profit on disposal of fixed assets       (1)         -                          
Headline earnings                        245         154                        
Accounting policies                                                             
The condensed consolidated financial statements for the year ended 31 March     
2007 were prepared in accordance with IAS 34 - Interim Financial Reporting      
and in compliance with the Listing Requirements of the JSE Limited. The         
condensed consolidated 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 year      
ended 31 March 2007 are consistent with those applied for the year ended 31     
March 2006.                                                                     
Headline earnings                                                               
Headline earnings are 558.2 cents per share (2006: 354.3 cents per share).      
Diluted headline earnings are 551.1 cents per share (2006: 348.0 cents per      
The hyperinflation adjustments, as required by the accounting standard IAS      
29 - Financial Reporting in Hyperinflationary Economies, result from the        
continued devaluation in the Zimbabwean Dollar. The most significant            
adjustment is an increase in gross profit for the year by R2.2 million          
(2006: R0.3 million increase). The net impact of these hyperinflation           
adjustments to the group is a net loss of R0.4 million (2006: R1.9 million      
A 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 year to 31 March 2007. In addition an interim dividend of 70        
cents per share was declared on 27 November 2006 in respect of the current      
A final dividend of 90 cents per share was declared on 15 June 2007,            
bringing the dividend for the year to 160 cents per share, compared to 145      
cents in respect of the prior year.                                             
Review opinion                                                                  
The Group`s auditors, PricewaterhouseCoopers Inc., have reviewed the            
condensed consolidated financial information for the year ended 31 March        
2007 contained in this report. The review opinion is available for              
inspection at the company`s registered office during normal business hours.     
The future minimum lease payments under non-cancellable operating leases are    
R21.1 million (2006: R17.1 million) within one year, R46.9 million (2006:       
R57.3 million) between two and five years and R0.2 million (2006: R0.6          
million) later than five years, giving a total of R68.2 million (2006: R75.0    
An annual impairment test on the balance of goodwill has been performed at      
30 September 2006. No impairment loss has occurred.                             
Subsequent Events                                                               
Omnia has undergone an internal restructure to simplify its structure and       
facilitate the introduction of an employee owned BEE company as a 10% equity    
partner. Shareholders are referred to a more detailed recent announcement in    
this regard.                                                                    
Omnia is a diversified and specialist chemical services company which           
provides customised solutions in the chemicals, mining and agriculture          
markets.  The results for the year ended 31 March 2007 reinforces the           
benefits arising from the improved balance of business provided by the          
diversification within the Group.                                               
As anticipated, in the year to March 2007, the earnings of the Agriculture      
division reverted to historical levels, returning overall earnings for the      
Group to acceptable levels. The upturn in the market, resulting from the        
resumption of hectares planted to maize following its price recovery, also      
enabled the Group to maintain its challenging target of an annual 10% real      
growth in earnings over the five year period that began in 2005.                
Despite an improved financial performance, the year was again marked by         
significant increases in raw material prices, particularly nitrogen             
products, which continued to increase steeply, reaching record highs in the     
year under review. This exerted pressure on margins in both the agricultural    
and mining businesses significantly impacted the working capital required to    
fund the increasing value of inventory.                                         
Financial review                                                                
The Group results are reported in accordance with International Financial       
Reporting Standards ("IFRS").                                                   
Revenue for the year increased by 28% to R5,5 billion (2006: R4,3 billion)      
while net profit increased by 60% to R246 million (2006: R154 million). The     
basic earnings per share rose to 560.3 cents per share (2006: 353.2 cents       
per share), reflecting a 59% increase, in line with previous guidance, while    
headline earnings per share rose to 558.2 cents.                                
Operating expenses net of other income, increased by 24% to R717 million        
(2006: R579 million). This increase is below the increased level of activity    
as focus on containing costs remains a priority.                                
The resumption in hectares planted to maize in South Africa to more normal      
levels, resulted in operating margins in the Agriculture business reverting     
to the levels previously achieved. However, the marked increase in raw          
material prices, particularly nitrogen products, depressed margins in both      
the Agriculture and Mining businesses. The Chemicals business had a             
noteworthy year, benefiting from the growth in national manufacturing           
output, the weakening in the average exchange rate and the marked recovery      
from the overstocked position in the Polymer division that prevailed during     
the previous financial year.                                                    
Operating profit rose by 46% to R422 million (2006: R289 million) and, as a     
result of the improved margins in Agriculture, Group operating margin           
increased to 7.6% (2006: 6.7%) for the year under review.                       
With the continued increase in raw material prices, working capital levels      
are higher than those that prevailed during the prior period. This has          
resulted in an increase in net interest paid of 9% to R62 million (2006: R57    
million). A foreign currency gain of R4million (2006: R2 million loss)          
mainly in respect of foreign bank balances was recorded, due to the decline     
in the rand against most major currencies.                                      
The Group generated R205 million (2006: R155 million) in cash from its          
operating activities before capital expenditure during the year under           
review. Capital expenditure doubled to R175 million (2006: R87 million)         
reflecting the investment being made by the Group in various expansion          
Some of these projects include:                                                 
* the construction of an "EcoGypsum" plant for the processing of forced-        
arising gypsum for subsequent use in the cement industry                        
* the building of a reactor to reduce greenhouse gas emissions at the           
Agriculture division`s Sasolburg plant                                          
* the building of a shocktube assembly plant to benefit from the market         
moving away from the outdated capped fuse product                               
Notwithstanding this increase in capital investment, the Group achieved a       
reduction in net interest bearing debt at year end to R265 million (2006:       
R303 million) and a related reduction in the debt : equity ratio to 21%         
(2006: 30%).                                                                    
Operational review                                                              
The Chemicals division, Protea Chemicals, is the leading distributor of         
speciality, functional and effect chemicals in Africa. It has an established    
presence in every sector of the chemical distribution market.                   
As a supplier to the manufacturing industry, Protea Chemicals has benefited     
significantly from the growth in the South African economy. Volumes have        
increased across almost all business units while the weakening of the rand      
has contributed further to price increases. In certain instances price          
increases also occurred as a result of global product shortages.                
Revenue increased by 25% to R2,6 billion (2006: R2,1 billion) with operating    
profit increased by 13% to R127 million (2006: R112 million). A change in       
product mix, with notably greater polymer volumes, coupled with a change in     
an important agency contract, has resulted in a decrease in operating margin    
to 4.8% (2006: 5.3%). The division contributed 30% to Group operating           
profits (2006: 39%), the reduction in contribution being due to the             
appreciable increase in Agriculture`s contribution in the financial year.       
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 a complete range of mining chemicals.                  
The division continued its volume growth, particularly in mining chemicals,     
both locally and internationally. Revenue increased by 19% to R1 billion        
(2006: R841 million) and operating profit increased by 7% to R138 million       
(2006: R129 million), contributing 33% to Group operating profits (2006:        
45%).  However, the operating margin decreased to 13.8% (2006: 15.4%).          
Several factors contributed to the reduction in margins:                        
* competitive pressures in the face of increasing raw material input costs      
* significant increases in transport costs that could not be passed on to       
* the increased cost of capital and human resources required to manage the      
planned future business growth. Some new contracts have yet to result in        
material increases in volumes                                                   
* the loss of significant explosives business due to the division`s             
inability to secure the continued supply of the required initiating systems.    
These factors are seen as being temporary in nature as volumes from new         
contracts start to manifest themselves, contract renewals are adjusted to       
cater for the increased cost of transport and the Group`s own shocktube         
assembly plant reaches its commissioning stage. Notwithstanding these           
actions, the margins in the Mining division will tend to be lower than those    
achieved in the past due to the impact of the increasing volumes of lower       
margin mining chemicals.                                                        
The Agricultural division produces and supplies granular, liquid and            
speciality fertilizers to individual farmers, co-operatives and wholesalers     
throughout South Africa, and increasingly sub-Saharan Africa, as well as to     
Australia and New Zealand.                                                      
The environment within which the Agriculture division operates has              
normalised to a great extent following the considerable reduction in            
hectares planted to maize during the prior year.                                
However, the mid-summer heat wave destroyed much of the maize crop, thus        
eliminating any further fertilizer applications in some areas, reducing the     
positive impact of improved markets.                                            
Revenue returned to previous levels increasing by 38% to R1.9 billion (2006:    
R1.4 billion) while operating profit increased by 227% to R157 million          
(2006: R48 million) and the operating margin increased to 8.2 % (2006:          
3.4%). The margin was nevertheless still somewhat depressed as a result of      
the unprecedented increase in input costs, notably the nitrogen products.       
The South African economy has seen significant growth recently, driven by       
low interest rates and an upsurge in Gross Domestic Fixed Investment            
expenditure. The weakening rand has enabled the manufacturing sector to         
contribute to this growth. Protea Chemicals, as a supplier to the               
manufacturing sector, benefited from this growth, finding new applications      
in the process and continues to grow its volumes. The division is well          
positioned to embrace further growth opportunities and to deliver an            
enhanced value proposition.                                                     
The continued strong growth in world metal and mineral demand has benefited     
the explosives and mining chemical markets and, notwithstanding the             
depressed margins of the past year, continued real growth should be             
achieved. There is significant potential for the Mining division`s future       
growth into Africa and renewed focus and energy will be directed at taking      
advantage of the opportunities that arise from the division`s increasing        
presence both in South Africa and in countries to the north of it.              
The elimination of the maize stockpile that prevailed prior to the previous     
planting season saw the demand for fertilizer return to normal levels in the    
year under review. The restored environment, coupled with the substantial       
increase in international grain prices, and the related focus on renewable      
energy resources, should impact favourably on the fertilizer business and       
the Group as a whole going forward. The division has a strong position in       
Africa, which is considered a growth opportunity with the prospect of more      
tonnage being sold.                                                             
After the third year, the Group is on target to meet its five year              
management plan.                                                                
The Group has embarked on a number of innovative projects that will impact      
significantly on improved logistical and raw material efficiencies, as well     
as environmental improvements. As mentioned earlier, one such project is the    
reduction in greenhouse gases. Omnia`s Clean Development Mechanism ("CDM")      
project has been validated and certified by the Executive Board of the Kyoto    
Protocol. Commissioning of the project will commence in the second half of      
the 2008 financial year and will allow Omnia Fertilizer, at its Sasolburg       
plant, to generate approximately 500 000 Certified Emission Reduction           
("CER") units per annum. Based on current price levels Omnia could              
potentially earn approximately R60 million per annum in revenue from            
calendar year 2008, over the five year period of the accord. These CER units    
are traded as commodities and future price movements will depend on supply      
and demand factors.                                                             
Omnia has undergone an internal restructure effective 1 April 2007 to           
simplify its structure and facilitate the introduction of an employee owned     
Black Economic Empowerment ("BEE") company as a 10% equity partner in the       
Group. A more detailed announcement has been made under a separate SENS         
The Board is pleased to announce that it has declared a final dividend of 90    
cents in respect of shareholders recorded in the register on Friday 13 July     
2007. This final dividend brings the dividend for the full year ended 31        
March 2007 to 160 cents (after inclusion of the interim dividend of 70 cents    
per share) compared with the 145 cents paid in respect of the prior full        
The last day to trade in the company`s shares cum dividend will be Friday 6     
July 2007. The shares will commence trading ex dividend on Monday 9 July        
2007 and the record date will be Friday 13 July 2007. The payment date will     
be Monday 16 July 2007. Share certificates may not be dematerialised or         
rematerialised between Monday 9 July and Friday 13 July 2007, both dates        
NJ CROSSE                   RB HUMPHRIS                                         
Chairman                    Managing Director                                   
Bryanston                   20 June 2007                                        
NJ Crosse (Chairman), FD Butler, DL Eggers* (Group Finance Director), NKH       
Fitz-Gibbon*, RB Humphris* (Group Managing Director), Prof SS Loubser, Dr WT    
Marais, RR Masebelanga, JG Pretorius, DC Radley, TR Scott                       
*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                                                            
Link Market Services South Africa (Pty) Ltd                                     
11 Diagonal Street, Johannesburg 2001                                           
PO Box 4844, Johannesburg 2000                                                  
Date: 20/06/2007 09:21:26 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                             .                  

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