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Omn - Omnia - Interim Results For The Six Months Ended 30 September 2008

Release Date: 26/11/2008 08:00:02      Code(s): OMN
OMN - Omnia - Interim results for the six months ended 30 September 2008        
OMNIA HOLDINGS LIMITED                                                          
(Incorporated in the Republic of South Africa)                                  
Registration number 1967/003680/06                                              
JSE code: OMN                                                                   
ISIN: ZAE000005153                                                              
("Omnia" or "the Group")                                                        
INTERIM RESULTS                                                                 
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008                                      
-    Revenue up 78% to R5,5 billion                                             
-    Operating profit up 209% to R594 million                                   
-    Headline earnings per share up 281% to 839 cents                           
-    Interim dividend of 100 cents per share declared                           
CONDENSED CONSOLIDATED INCOME STATEMENT                                         
for the six months ended 30 September 2008                                      
                           Unaudited        Unaudited  Audited                  
                           6 months         6 months   12 months                
R million                   30/09/08   %     30/09/07   31/03/08                
Revenue                     5 454      78    3 061      7 340                   
Operating profit            594        209   192        584                     
Net finance cost            (61)             (45)       (112)                   
Interest paid               (65)       48    (44)       (143)                   
Interest received           2          100   1          25                      
Forex gain/(loss)           2                (2)        6                       
Profit before taxation      533        263   147        472                     
Taxation                    (160)      220   (50)       (159)                   
Net profit for the period   373        285   97         313                     
Attributable to:                                                                
Equity holders of the       372        284   97         317                     
Minority interest           1                -          (4)                     
                           373              97         313                      
Basic earnings per share    839,0      281   220,3      718,2                   
Fully diluted basic         803,5      268   218,3      687,9                   
earnings per share (cents)                                                      
Final dividend paid per     117        30    90         90                      
share (cents) in respect                                                        
of prior year                                                                   
Interim dividend declared   100        20    83         83                      
per share (cents) in                                                            
respect of current year                                                         
Weighted average number of  44 285           44 038     44 132                  
shares in issue (`000)                                                          
Weighted average number of  46 241           44 448     46 073                  
fully diluted shares in                                                         
issue (`000)                                                                    
Number of shares in issue   44 321           44 189     44 263                  
CONDENSED CONSOLIDATED BALANCE SHEET                                            
as at 30 September 2008                                                         
                                  Unaudited     Unaudited       Audited         
                                  6 months      6 months        12 months       
R million                          30/09/08      30/09/07        31/03/08       
Property, plant and equipment      1 025         819             965            
Intangible assets                  507           429             517            
Available-for-sale financial       30            -               30             
Deferred taxation                  3             3               8              
Inventories                        2 855         1 446           1 380          
Trade and other receivables        1 937         1 373           1 457          
Other current receivables          44            33              82             
                                  6 401         4 103           4 439           
Equity and liabilities                                                          
Shareholders` equity               1 915         1 291           1 581          
Deferred taxation                  103           91              104            
Non-current liabilities            350           258             288            
Trade and other payables           2 728         1 474           2 142          
Taxation                           69            31              79             
Other current liabilities          1 236         958             245            
                                  6 401         4 103           4 439           
Net interest-bearing debt          1 542         1 184           451            
Net asset value per share (Rand)   43,2          29,2            35,7           
Capital expenditure                                                             
Depreciation                       43            28              71             
Amortisation                       12            10              21             
Incurred                           93            86              284            
Authorised and committed           34            124             -              
Authorised but not contracted for  134           77              102            
CONDENSED CONSOLIDATED CASH FLOW STATEMENT                                      
for the six months ended 30 September 2008                                      
Unaudited      Unaudited      Audited      
                                     6 months       6 months       12 months    
R million                             30/09/08       30/09/07       31/03/08    
Operating profit                      594            192            584         
Depreciation and amortisation         54             38             92          
Adjustment for non-cash items         (17)           (31)           11          
Utilised in working capital           (1 369)        (889)          (138)       
                                     (738)          (690)          549          
Interest paid                         (65)           (44)           (143)       
Interest received                     2              1              25          
Taxation paid                         (167)          (61)           (134)       
Dividends paid                        (55)           (39)           (76)        
(Utilised)/generated by operations    (1 023)        (833)          221         
Cash outflow from investing           (83)           (86)           (413)       
Cash inflow from financing activities 17             228            323         
Net (decrease)/increase in cash       (1 089)        (691)          131         
Net overdraft at beginning of period  (103)          (234)          (234)       
Net overdraft at end of period        (1 192)        (925)          (103)       
OTHER RESERVES                                                                  
Unaudited      Unaudited     Audited       
                                     6 months       6 months      12 months     
R million                             30/09/08       30/09/07      31/03/08     
Share-based payment reserve           63             31            45           
Foreign currency                      75             (16)          79           
translation reserve                                                             
Net discount arising on acquisition   3              3             3            
of shares of subsidiaries                                                       
141            18            127           
RECONCILIATION OF HEADLINE EARNINGS                                             
                              Unaudited  Unaudited   Audited                    
                              6 months   6 months    12 months                  
R million                      30/09/08   30/09/07    31/03/08                  
Net profit for the year        372        97          317                       
Loss on disposal               -          -           2                         
of fixed assets                                                                 
Impairment of assets           -          2           -                         
Headline earnings              372        99          319                       
Headline earnings                                                               
Headline earnings are 839,0 cents per share (2007: 224,5 cents per share)       
Diluted headline earnings are 803,5 cents per share (2007: 222,4 cents per      
STATEMENT OF CHANGES IN SHAREHOLDERS` EQUITY                                    
                                     Stated            Treasury     Other       
R million                             capital           shares       reserves   
At 31 March 2007 (audited)            201               (16)         36         
Recognised income and expenses                                                  
Net profit for the period                                                       
Decrease in foreign currency                                                    
translation reserve                                                  (30)       
Share-based payment reserve                                          12         
Transaction with shareholders                                                   
Ordinary dividends paid                                                         
Treasury shares sold                                    1                       
At 30 September 2007 (unaudited)      201               (15)         18         
Recognised income and expenses                                                  
Net profit for the period                                                       
Increase in foreign currency                                                    
translation reserve                                                  95         
Share-based payment reserve                                          14         
Transaction with shareholders                                                   
Ordinary dividends paid                                                         
Treasury shares sold                                    2                       
At 31 March 2008 (audited)            201               (13)         127        
Recognised income and expenses                                                  
Net profit for the period                                                       
Decrease in foreign currency                                                    
translation reserve                                                  (4)        
Share-based payment reserve                                          18         
Transaction with shareholders                                                   
Ordinary dividends paid                                                         
Treasury shares sold                                    3                       
Movement in minorities                                                          
At 30 September 2008 (unaudited)      201               (10)         141        
                                          Retained     Minority                 
R million                                  earnings     interest    Total       
At 31 March 2007 (audited)                 1 027        2           1 250       
Recognised income and expenses                                                  
Net profit for the period                  97                       97          
Decrease in foreign currency                                                    
translation reserve                                                 (30)        
Share-based payment reserve                                         12          
Transaction with shareholders                                                   
Ordinary dividends paid                    (39)                     (39)        
Treasury shares sold                                                1           
At 30 September 2007 (unaudited)           1 085        2           1 291       
Recognised income and expenses                                                  
Net profit for the period                  220          (4)         216         
Increase in foreign currency                                                    
translation reserve                                                 95          
Share-based payment reserve                                         14          
Transaction with shareholders                                                   
Ordinary dividends paid                    (37)                     (37)        
Treasury shares sold                                                2           
At 31 March 2008 (audited)                 1 268        (2)         1 581       
Recognised income and expenses                                                  
Net profit for the period                  372          1           373         
Decrease in foreign currency                                                    
translation reserve                                                 (4)         
Share-based payment reserve                                         18          
Transaction with shareholders                                                   
Ordinary dividends paid                    (55)                     (55)        
Treasury shares sold                                                3           
Movement in minorities                                  (1)         (1)         
At 30 September 2008 (unaudited)           1 585        (2)         1 915       
SEGMENTAL ANALYSIS                                                              
for the six months ended 30 September 2008                                      
                           Unaudited        Unaudited  Audited                  
6 months         6 months   12 months                
R million                   30/09/08   %     30/09/07   31/03/08                
Revenue, net of             5 454      78    3 061      7 340                   
intersegmental sales                                                            
Chemicals                   2 294      52    1 509      3 334                   
Mining                      1 006      73    581        1 281                   
Agriculture                 2 154      122   971        2 725                   
Operating profit            594        209   192        584                     
Chemicals                   156        160   60         148                     
Mining                      126        125   56         125                     
Agriculture                 312        311   76         311                     
Accounting policies                                                             
The consolidated condensed financial statements for the six months ended 30     
September 2008 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 six months
ended 30 September 2008 are consistent with those applied in the annual         
financial statements for the year ended 31 March 2008.                          
A final dividend of 117 cents per share was declared on 13 June 2008 in respect 
of the earnings of the previous financial year. This dividend is reflected in   
the current period to 30 September 2008.                                        
The future minimum lease payments under non-cancellable operating leases are R22
million (2007: R24 million) within one year and R17 million (2007: R38 million) 
between two and five years and R1 million (2007: R2 million) beyond five years, 
giving a total of R40 million (2007: R64 million).                              
Omnia is a diversified, specialist chemical services provider with business     
interests balanced across chemical, mining and agricultural markets. It 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, and builds long-term customer relationships, ensuring            
maximisation of shareholder value.                                              
All three of Omnia`s business divisions, which are diversified into three       
different markets, achieved revenue growth in excess of 50% for the period under
review to September 2008, when compared with the period to September 2007 mainly
driven by a weaker rand on the back of steeply rising international prices.     
Market conditions                                                               
Omnia continued to experience exceptional market conditions in the period under 
review. The extraordinarily high prices for those raw materials of key          
importance in the Group`s manufacturing processes, as well as for a wide range  
of basic commodities of similar importance, continued to exert considerable     
market influence.                                                               
In the Chemicals division, the unprecedented oil and gas prices similarly drove 
both commodity and speciality chemical prices upwards, while the weakening rand 
resulted in increased revenue.                                                  
In the Mining division, although metals pricing started to decrease in the      
period under review, demand for coal, copper, uranium and iron ore remained     
robust, and in consequence mining activity during the period was healthy. This  
benefited demand for explosives and related products and services, as well as   
the Group`s expanding range of mining chemicals.                                
The dominant contributor to Group profit was the Agriculture division. This is  
due to imbalances in supply and demand during the period under review, which saw
internationally determined fertilizer raw material prices reach unprecedented   
highs. This resulted in Omnia`s fertilizer input costs being driven to similar  
unprecedented highs, and concomitant higher fertilizer prices.                  
Many of the Agriculture division`s customers, mindful of international market   
conditions and recognising the inevitable rise in fertilizer prices arising     
therefrom, purchased and paid for their requirements earlier than usual, and in 
so doing fixed their price. Volumes sold during the period under review were    
greater than normal as a result of these early sales. As a consequence the      
margin achieved in the period was also greater than normally achieved in the    
first half of a financial year. This will impact on fertilizer sales (and       
margin) during the second half of the financial year which is the normal        
planting season.                                                                
The Agriculture division`s activities beyond the borders of South Africa fared  
well, particularly in Australasia, contributing considerably to the increase in 
operating profits.                                                              
The economic and financial crisis resulted in a sharp drop in commodity prices  
and demand after the period under review, however the long term fundamentals of 
all the divisions, particularly the Agriculture division, remain strong.        
Financial review                                                                
Group revenue increased by 78% to R5,5 billion (2007: R3,1 billion). Operating  
profit increased by 209% to R594 million (2007: R192 million). The operating    
margin increased to 10,9% (2007: 6,3%) with margins in all three divisions      
improving to acceptable levels. Net profit for the period increased by 283% to  
R373 million (2007: R97 million), led by the solid contribution from            
Agriculture, and supported by increases in operating profits in excess of 120%  
from the Chemical and Mining divisions.                                         
The seasonal nature of Omnia`s Agriculture division causes the Group`s working  
capital requirements to peak around September each year. As mentioned, raw      
material prices - notably ammonia, urea, potash, phosphates and oil derived     
products - continued their upward spiral to new highs. This resulted in net     
interest bearing debt increasing by 30% to R1,5 billion (2007: R1,2 billion). As
a consequence, and coupled with increases in interest rates, net interest paid  
increased by 48% to R63 million (2007: R43 million) for the period under review.
This interest charge is, however, lower than expected because numerous          
Agriculture division`s customers in South Africa purchased and paid for their   
fertilizer requirements in advance of actual requirement.                       
With the increase in shareholders` equity to R1,9 billion (2007: R1,3 billion)  
the debt: equity ratio reduced to 80% (2007: 92%) when compared with the prior  
period. Cash utilised by operations for the period under review increased by    
R190 million to R1 023 million (2007: R833 million), mainly due to the increase 
in working capital of R480 million when compared with the prior period.         
Operational review                                                              
The division, comprising Protea Chemicals and Zetachem, 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. 
Zetachem is a significant producer of speciality chemicals and provides         
innovative solutions for the water treatment industry.                          
Revenue increased 52% to R2 294 million (2007: R1 509 million). While part of   
the revenue increase arose from traditional volume growth, it also reflects     
international chemical price increase trends, as well as the influence of the   
weakening rand and an increase in volumes from the division`s expanding but     
lower margin polymer businesses. A renewed focus on the business models within  
the division, and the actions taken and referred to previously, have resulted in
the operating margin achieved recovering to 6,8% (2007: 4,0%). Operating profit 
increased by 160% to R156 million (2007: R60 million).                          
The Mining division is the market leader in blended bulk explosives formulations
for surface mines, and through the BME brand, also manufactures packaged        
explosives for underground mines and specialised surface blasting applications. 
The division also supplies a diverse range of mining chemicals and blasting     
The robust demand environment, both for the supply of mining chemicals,         
explosives and related services, together with rapidly increasing international 
prices, particularly of nitrate products, resulted in revenue growth of 73% to  
R1 006 million (2007: R581 million). Operating profit rose by 125% to R126      
million (2007: R56 million). Previous communications to Omnia shareholders      
indicated that the explosives market had become intensely competitive, with     
rapidly rising raw material costs pressurising margins. Following the           
unacceptable 14% decline in operating profit in the period to September 2007,   
the division opted to withdraw from unprofitable contracts and renegotiate the  
pricing of others. This decisive action resulted in a recovery in the operating 
margin to 12,5% (2007: 9,7%), although it still remains below historic levels.  
Costs for additional resources are also being incurred in respect of new        
contracts where these contracts have yet to deliver intended volumes. Costs are 
also being impacted negatively by the shortage of competent skills in the       
industry, with the division having to face significant additional costs to      
retain such skills.                                                             
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 53% to Group      
operating profit (2007: 40%).                                                   
Revenue increased by 122% to R2 154 million (2007: R971 million) while the      
operating profit increased by 311% to R312 million (2007: R76 million).         
Although operating margins in the Agriculture division are traditionally        
considerably lower in the first half of the financial year than those in the    
second, in the period under review they increased to 14,5% (2007: 7,8%). As     
mentioned earlier, sales that would normally have been expected during the      
second half of the year occurred during the first period under review, causing  
an increase in margin. Reference has also been made to the strong performance of
the division from markets beyond the borders of South Africa, particularly      
Australasia, contributing significantly toward the total fertilizer margin. The 
margin contribution from these international markets increased more than six-   
fold when compared with the prior period.                                       
Demand for the Group`s chemical products will be influenced by the broader      
economic environment. The Rand`s recent weakening could have a positive effect  
on manufacturing, as exports become more competitive and imported manufactured  
components more expensive. The reduction in oil prices from all time high       
levels, will impact positively on prices of downstream petrochemical products   
and their derivatives. While international chemical prices increased in the     
review period in line with an improvement in the global economic environment, it
is anticipated that there may well be price reductions in the near future as is 
already evident opposite some industrial chemicals as well as polymer products. 
Zetachem`s contribution to divisional results will be for a full 12 month period
as at March 2009.                                                               
The demand for certain commodities, particularly coal and uranium, remains      
strong and will benefit both the explosives and mining chemical markets.        
The coal mining sector is set to grow domestically due to Eskom`s requirements  
and the strong growth of the uranium sector is particularly encouraging given   
Omnia`s solid position in this market. Mining activity throughout Africa remains
healthy, with several major projects coming on line.                            
Growth, particularly within the mining chemicals market is expected to continue,
with margins remaining at acceptable levels. The Mining division is focused on  
taking advantage of the opportunities that arise from its growing presence in   
Africa where there is significant potential for future growth, notwithstanding  
the recently noted decline in commodity prices.                                 
Domestic fertilizer volumes for the current season are expected to be some 5%   
below the normal 2 million tons. As indicated there has been a pattern change in
the current season in South Africa, with advance purchasing taking place.       
Traditionally, the division`s main activities occur in the second half of the   
year which is the normal planting season but the sudden decrease in raw material
prices, coupled with reduced volumes, will place fertilizer operating margins   
under pressure in the second period to March 2009.                              
Thus the division`s performance in the second half of the year will not be at   
the same levels relative to the first half, as has been evident in the past.    
However, the need for fertilizers is a long-term reality, and is crucial for    
achieving an African Green Revolution in the face of a rapidly rising population
and declining soil fertility.                                                   
Omnia group                                                                     
The Group expects a considerable improvement in earnings for the year ending    
March 2009 compared with those achieved in the financial year ended March 2008. 
Omnia remains well positioned to take advantage of the opportunities in         
agriculture and mining, sectors recognised as being key to Africa`s sustainable 
In the last quarter of the previous financial year Omnia completed the erection 
of its Envinox Clean Development Mechanism plant at the Sasolburg production    
facility, through which the company will earn carbon emission reduction ("CER") 
credits. No CER`s have been delivered as yet, although the verification of these
is expected in the near future enabling the company to earn the anticipated R30 
million in respect of the CER`s generated for approximately half a year.        
Omnia is well positioned to benefit from any demand for biofuels which will     
positively impact fertilizer products. In line with Omnia`s strategic focus on  
pursuing new growth opportunities, both nationally and internationally, the     
Group has announced plans to complete a detailed study to erect a second nitric 
acid plant and expand nitrate production capacity at its Sasolburg facilities.  
This new facility will address the growing demand for products in its           
Agricultural and Mining regional markets, and will reduce Omnia`s dependence on 
third parties, and in particular on urea imports.                               
The board is pleased to announce that an interim dividend of 100 cents per share
has been declared in respect of shareholders recorded in the register on Friday 
9 January 2009. The last day to trade cum dividend will be Friday 2 January     
2009. The shares will commence trading ex dividend on Monday 5 January 2009 and 
the record date will be Friday 9 January 2009. The payment date will be Monday  
12 January 2009. Share certificates may not be dematerialised or rematerialised 
between Monday 5 January 2009 and Friday 9 January 2009, both dates inclusive.  
NJ CROSSE               RB HUMPHRIS                                             
Chairman                Managing Director                                       
26 November 2008                                                                
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, R Havenstein, HH Hickey    *Executive Directors                       
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: 26/11/2008 08:00:01 Supplied by www.sharenet.co.za                     
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information disseminated through SENS.                                          

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