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Omnia Holdings Limited - Audited Results For The Year Ended 31 March 2016

Release Date: 28/06/2016 07:05:00      Code(s): OMN     
OMNIA HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1967/003680/06
JSE code OMN
ISIN ZAE000005153 
(?Omnia? or ?the Group?)


AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2016

FINANCIAL FEATURES

- Revenue remained flat at R16.8 billion
- Operating profit down 19% to R1 189 million
- Profit before tax of R1 012 million down 24%
- Profit after tax of R702 million down 25%
- Headline earnings per share down 29% to 1 033 cents
- A-Credit rating affirmed by Global Credit Rating in July 2015 at A- (long-term) 
  and A1- (short-term), with a positive ratings outlook
- Ungeared balance sheet at year-end compares favourably with the 12% gearing 
  recorded at FY2015
- Cash generated from operations increased to R2.3 billion up R1.3 billion 
  year-on-year


SUMMARY CONSOLIDATED INCOME STATEMENT
for the year ended 31 March 2016
Rm                                            Audited                    Audited 
                                                 2016            %          2015 
Revenue                                        16 774            -        16 835
Cost of sales                                 (13 369)           4       (12 898)
Gross profit                                    3 405          (14)        3 937
Distribution expenses                          (1 400)          (8)       (1 524)
Administrative expenses                          (802)         (12)         (907)
Other operating expenses                          (93)           3           (90)
Other operating income                             79           32            60
Operating profit                                1 189          (19)        1 476
Finance expenses                                 (239)          24          (192)
Finance income                                     60           28            47
Share of profit of investments 
accounted for using the
equity method                                       2                          -
Profit before taxation                          1 012          (24)        1 331
Income tax expense                               (310)         (22)         (397)
Profit for the year                               702          (25)          934
Attributable to:
Owners of Omnia Holdings Limited                  701          (25)          939
Non-controlling interest                            1                         (5)
Profit for the year                               702          (25)          934

Earnings per share from profit 
attributable to owners of 
Omnia Holdings Limited
Basic earnings per share (cents)                1 042          (26)        1 402
Diluted earnings per share (cents)                988          (24)        1 308
Headline earnings per share (cents)             1 033          (29)        1 465
Diluted headline earnings per share (cents)       979          (28)        1 366


SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2016
                                              Audited                    Audited 
Rm                                               2016            %          2015 
Profit for the year                               702          (25)          934 
Other comprehensive income, net of tax
  Currency translation differences                682           86           367 
Total comprehensive income for 
the year attributable to:                       1 384            6         1 301 
  Owners of Omnia Holdings Limited              1 383            6         1 306 
  Non-controlling interest                          1                         (5)
                                                1 384            6         1 301 


SUMMARY CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March 2016
                                                           Audited       Audited 
Rm                                                            2016          2015 
Operating profit                                             1 189         1 476 
Depreciation and amortisation                                  373           353 
Adjustment for non-cash items                                  484            17 
Generated from/(utilised) by working capital                   258          (878)
Cash generated from operations                               2 304           968
Interest paid                                                 (263)         (208)
Interest received                                               60            47 
Taxation paid                                                 (245)         (341)
Net cash inflow from operating activities                    1 856           466 
Cash outflow from investing activities                        (469)         (578)
Cash outflow from financing activities                        (432)         (466)
Net increase/(decrease) in cash and cash equivalents           955          (578)
Net cash and cash equivalents at beginning of year            (699)         (131)
Exchange rate movements on cash and cash equivalents            54            10 
Net cash and cash equivalents at end of year                   310          (699)


SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2016
                                                     Attributable to the owners of
                                                         Omnia Holdings Limited
                                                                                                       Non-
                                                 Stated     Treasury       Other     Retained   controlling
Rm                                              capital       shares    reserves     earnings      interest     Total 
At 31 March 2014                                  1 289           (6)        655        3 980            (6)    5 912
Recognised income and expenses
  Profit for the year ended 31 March 2015                                                 939            (5)      934
  Currency translation difference                                            367                                  367
  Change in functional currency of subsidiary                                 11          (12)                     (1)
Transactions with shareholders
  Ordinary shares issued                            211                      (37)        (405)                   (231)
  Ordinary dividends paid                                                                (322)                   (322)
  Treasury shares purchased                                      (66)                      15                     (51)
  Treasury shares sold                                             2           18                                  20
  Share-based payment ? 
  value of services provided                                                   14                                  14
At 31 March 2015                                  1 500          (70)       1 028       4 195           (11)    6 642
Recognised income and expenses
  Profit for the year ended 31 March 2016                                                 701             1       702
  Currency translation difference                                             682                                 682
  Change in functional currency of subsidiary                                  67         (66)                      1
Transactions with shareholders
  Ordinary dividends paid                                                                (324)                   (324)
  Treasury shares purchased                                      (51)                                             (51)
  Share-based payment ? 
  value of services provided                                                   10                                  10
At 31 March 2016                                  1 500         (121)       1 787       4 506           (10)    7 662


SUMMARY CONSOLIDATED BALANCE SHEET
as at 31 March 2016
                                              Audited                    Audited 
Rm                                               2016            %          2015 
ASSETS
Non-current assets                              4 701            5         4 473 
Property, plant and equipment                   4 060            3         3 927 
Intangible assets                                 543            5           519 
Investment accounted for using 
the equity method                                  26           30            20 
Trade and other receivables                        64          100             - 
Deferred income tax assets                          8           14             7 
Current assets                                  7 677            3         7 431 
Inventories                                     3 850           (1)        3 886 
Trade and other receivables                     3 167            3         3 077 
Derivative financial instruments                   67           63            41 
Income tax assets                                  21          (22)           27 
Cash and cash equivalents                         572           43           400 
Total assets                                   12 378            4        11 904 
EQUITY
Capital and reserves attributable to 
the owners of Omnia Holdings Limited            7 672           15         6 653 
Stated capital                                  1 500            -         1 500 
Treasury shares                                  (121)                       (70)
Other reserves                                  1 787           74         1 028 
Retained earnings                               4 506            7         4 195 
Non-controlling interest                          (10)                       (11)
Total equity                                    7 662           15         6 642 
LIABILITIES
Non-current liabilities                           621            3           605 
Deferred income tax liabilities                   565           13           502 
Trade and other payables                           19          (49)           37 
Debt                                               37          (44)           66 
Current liabilities                             4 095          (12)        4 657 
Trade and other payables                        3 606            4         3 478 
Debt                                               45          (18)           55 
Derivative financial instruments                  182          628            25 
Bank overdrafts                                   262          (76)        1 099 
Total liabilities                               4 716          (10)        5 262 
Total equity and liabilities                   12 378            4        11 904 
Net (cash)/debt                                  (228)                       820 
Net asset value per share (Rand)                  114                         98 
Capital expenditure
Depreciation                                      333                        322 
Amortisation                                       40                         31 
Incurred                                          494                        587 
Authorised and committed                          293                         92 
Authorised but not contracted for                  68                         96 


RECONCILIATION OF HEADLINE EARNINGS
for the year ended 31 March 2016
                                              Audited                    Audited 
Rm                                               2016            %          2015 
Profit for the year attributable to 
owners of Omnia Holdings Limited                  701          (25)          939 
Adjusted for (profit)/loss on disposal 
of fixed assets/intangible assets                  (6)                         3 
Adjusted for impairment of 
available-for-sale financial asset                  ?                         39 
Headline earnings                                 695          (29)          981 


SEGMENTAL ANALYSIS
for the year ended 31 March 2016
                                                         Operating                   Operating 
                                              Revenue       profit       Revenue        profit 
                                                   Rm*          Rm            Rm*           Rm 
                                                 2016         2016          2015          2015 
Agriculture RSA                                 4 650          452         4 274           450 
Agriculture Trading                             1 632           (1)        1 055            32 
Agriculture Other                               1 936           43         1 958           174 
Total Agriculture                               8 218          494         7 287           656 
Mining RSA                                      1 875          253         2 286           378 
Mining Other                                    2 676          273         3 065           342 
Total Mining                                    4 551          526         5 351           720 
Chemicals RSA                                   3 822          179         3 979            90 
Chemicals Other                                   183          (10)          218            10 
Total Chemicals                                 4 005          169         4 197           100 
Total                                          16 774        1 189        16 835         1 476 
*Revenue, net of inter-segmental sales


OTHER RESERVES
as at 31 March 2016
                                                           Audited       Audited 
Rm                                                            2016          2015 
Share-based payment reserve                                    111           101 
Foreign currency translation reserve                         1 655           906 
Gain on treasury shares sold                                    18            18 
Net discount arising on acquisition of 
shares of subsidiaries                                           3             3 
                                                             1 787         1 028 


ADDITIONAL INFORMATION
for the year ended 31 March 2016
                                                           Audited       Audited 
000?s                                                         2016          2015 
Weighted average number of shares in issue                  67 277        66 970 
Weighted average number of diluted shares in issue          70 975        71 799 
Number of shares in issue (excluding treasury shares)       67 173        67 471 


NOTES

BASIS OF PREPARATION
These provisional summarised financial statements have been prepared in 
accordance with the framework concepts and the measurement and recognition 
requirements of International Financial Reporting Standards (IFRS), the SAICA 
Financial Reporting Guides as issued by the Accounting Practices Committee and 
Financial Pronouncements as issued by the Financial Reporting Standards Council, 
presentation and disclosures as required by IAS 34 Interim Financial Reporting, 
the JSE Listings Requirements and the requirements of the Companies Act of South 
Africa. The summarised financial statements do not include all of the information 
required by IFRS for full annual financial statements. The preparation of these 
financial statements was supervised by the Group finance director, WG Koonin 
CA(SA).

The financial statements have been prepared using accounting policies that comply 
with IFRS and which are consistent with those applied in the preparation of the 
financial statements for the year ended 31 March 2015, unless otherwise stated.

The accounting standards, amendments to issued accounting standards and 
interpretations, which are not yet effective as at 31 March 2016, have not been 
adopted by the Group.

The directors take full responsibility for the preparation of these summarised 
financial statements and the financial information has been correctly extracted 
from the underlying annual financial statements.

AUDIT OPINION
The Group?s auditors, PricewaterhouseCoopers Inc., have issued their opinion on 
the Group?s financial statements for the year ended 31 March 2016. The audit was 
conducted in accordance with International Standards on Auditing. They have 
issued an unmodified audit opinion. These summarised financial statements have 
been derived from the Group financial statements and are consistent in all 
material respects with the Group financial statements. A copy of their audit 
report is available for inspection at the company?s registered office. Any 
reference to future financial performance included in this announcement, has not 
been reviewed or reported on by the auditors.

COMMENTARY

INTRODUCTION
Omnia is a diversified provider of specialised chemicals products and services 
used in the agriculture, mining and chemical sectors. Omnia?s corporate office is 
based in Johannesburg, South Africa and its main production facility in 
Sasolburg, some 70 kilometres south of Johannesburg. The Group has a physical 
presence in 23 countries and its operations extend into 18 countries on the 
Africa continent, including South Africa, with focused operations also in 
Australasia, Brazil and China. Omnia?s client base extends across southern and 
West Africa and to other regions such as Europe, South America and South East 
Asia. Omnia differentiates itself from other commodity chemical providers by 
adding value at every stage of the supply and service chain through technological 
innovation and by deploying the company?s intellectual capital. The 
sustainability of the business model is based on and strengthened by the Group?s 
targeted backward integration through installing technologically advanced plants 
to manufacture core materials such as nitric acid and explosives emulsions. In 
addition to securing sources of supply, this also enabled Omnia to improve 
operational efficiencies throughout the product development and production chain. 
Omnia provides customised, knowledge-based solutions through its Agriculture, 
Mining and Chemicals divisions. The Group?s proven business model makes Omnia a 
market leader in the distribution of industrial chemicals. Omnia continues to 
grow and prosper, offering extraordinary value to the Group?s customers by 
tailoring solutions to their business needs through product and service 
innovation, with the expert application thereof.

GLOBAL ECONOMIC ENVIRONMENT
The past year?s global macro-economic environment was characterised with metals 
and minerals remaining in oversupply, with most metal prices continuing to fall 
during the year under review. Mines and mining groups are under significant 
pressure to reduce debt and restructure their businesses to face the harsh new 
realities of lower commodity prices. Downsizing and large-scale retrenchments in 
the mining industry have been occurring on a global basis and most mineral 
exploration projects have been halted or significantly reduced. As a result, 
there is little growth in the mining industry with few, if any, greenfield 
start-ups. This has the potential to create supply shortages in the medium- to 
long-term, which should support a recovery in metal and mineral prices.

Omnia?s business model, to a large extent, depends on commodity prices ? those of 
ammonia, its principal bulk feedstock on the cost side, and those of agricultural 
and minerals products on the demand side. Feedstock prices declined steadily 
during the first three quarters of the past financial year in response to falling 
natural-gas prices. Although the free-on-board (FOB) price of ammonia dropped to 
a low of $265/tonne in March 2016 from $405/tonne at the start of April 2015, 
urea prices also moved in line with those of ammonia. As a result Omnia did not 
gain any particular advantage from changes in the ammonia price. Urea prices were 
also affected in calendar 2015 by the significant increase in supply from Chinese 
manufacturers into the global market seeking to dispose of their production 
surplus to domestic demand. Omnia continues to evaluate market conditions and 
apply the hedging policy to mitigate these risks wherever applicable.

FINANCIAL REVIEW
INCOME STATEMENT
Group revenue marginally decreased to R16 774 million (2015: R16 835 million) 
based on an improved performance by the Agriculture division which was offset by 
weaker performances by the Mining and Chemicals divisions due to a general 
slowdown in both sectors.

Gross profit decreased by 14% to R3 405 million (2015: R3 937 million) due to 
lower volumes in all three divisions and competitive pricing that affected the 
performance of the Mining division. The gross margin percentage decreased from 
23% in FY2015 to 20% in the current year.

Distribution expenses decreased by 8% to R1 400 million (2015: R1 524 million), 
due to sales volumes decreasing in all three divisions resulting in lower 
distribution expenses.

Administrative expenses of R802 million (2015: R907 million) were 12% lower year-
on-year, with the decrease in costs partially attributable to the prior year?s 
write-offs and once off restructuring charges relating to both the West Africa 
business unit?s in the Mining division and the Angolan and Mozambique business 
units in the Agriculture division. Included in administrative expenses is the 
impairment of available-for-sale financial assets of nil (2015: R39 million). 

Other operating expenses of R93 million (2015: R90 million) included R53 million 
(2015: R59 million) in foreign exchange losses, largely driven by the weaker 
US dollar exchange rate and volatility of the local currencies of various African 
countries in which Omnia operates, that fix their currencies against the 
US dollar. Amortisation of intangible assets of R40 million (2015: R31 million) 
for the year includes the amortisation of that portion of the new Microsoft 
Dynamics AX ERP system that came into operation in the current financial year.

Other operating income of R79 million (2015: R60 million) was higher year-on-year. 

Operating profit of R1 189 million (2015: R1 476 million) was down 19% year-on-
year. The Agriculture division had a challenging year due to the effect of the 
El-Ni?o weather phenomena, with a decrease of 25% in operating profit to 
R494 million (2015: R656 million) due to several factors. This included the lower 
production volumes achieved at the nitric acid 2 complex due to the decreased 
sales to the Mining division as a result of the slowdown in mining activities. 
The lower production volumes at the downstream granulation plants were due to 
higher levels of stock at the beginning of the year that resulted in a planned 
reduction in volumes produced for the year. As a result, these factors reduced 
the overhead recovery cost at the Sasolburg factory. Overall the Agriculture 
division?s volumes were down by only 4% despite a 27% reduction in the maize 
hectares planted and the overall reduction of summer hectares planted in South 
Africa. The Mining division returned a lower operating profit of R526 million 
(2015: R720 million), down 27% year-on-year with continued low commodity market 
prices resulting in lower volumes being mined and price pressures leading most 
mines to reduce output volume and expenditure on explosives and services across 
all markets. Market oversupply and customer focus on pricing has led to increased 
price competition which in turn has resulted in lower margins. To counteract 
these effect on margins, various internal initiatives and projects were 
implemented to reduce overall cost elements in the final products sold to 
customers. The Chemicals division?s operating profit of R169 million 
(2015: R100 million) was 69% higher year-on-year which is commendable when 
considering the poor economic environment in South Africa where the manufacturing 
sector remains under pressure. Despite the poor market conditions, steps taken to 
counter this affect were implemented from January 2015 with the successful 
restructuring and simplification of the business as well as the focus on the 
revamp of the IT systems and business process. Collectively this has resulted in 
a more focused operation with better controls over pricing of product and service 
delivery. 

Operating profit margin of 7.1% (2015: 8.8%) for the year under review was lower 
year-on-year, with the comparison of the divisional operating margins in 
percentage terms mixed. The Agriculture division was down at 6.0% (2015: 9.0%), 
the Mining division down at 11.6% (2015: 13.5%) and the Chemicals division up at 
4.2% (2015: 2.4%). With reference to the past year?s guidance on operating profit 
margin and the outlook for the 2017 financial year, the guidance for Agriculture 
remains unchanged at 7.0% ? 9.0%, Mining revised downwards due to the 
prevailing market conditions at 12.0% ? 14.0% and Chemicals revised upwards at 
4.0% ? 5.0% as this business continues to rebuild. 

Net finance expenses of R179 million (2015: R145 million) increased year-on-year 
due to the cost of hedging the US dollar equity position of R86 million 
(2015: R47 million), the high stock levels in the Agriculture divisions and the 
higher funding rates due to the increased cost of borrowing in South Africa. 
Finance expenses of R239 million (2015: R192 million) are net of the 
capitalisation of R24 million (2015: R16 million) of interest costs relating to 
capital projects under construction during the current financial year. Finance 
income of R60 million (2015: R47 million) increased as a result of higher cash 
balances on hand during the year and at year-end.

Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) was lower 
at R1 562 million (2015: R1 829 million), with the year-on-year reduction 
attributable to the operating profit decreasing by R287 million and partially due 
to depreciation and amortisation charges of R20 million being higher at 
R373 million (2015: R353 million).

Profit before tax of R1 012 million (2015: R1 331 million) was R319 million or 
24% lower year-on-year.

Taxation of R310 million (2015: R397 million) decreased by 22% or R87 million 
lower year-on-year. The effective tax rate of 30.6% (2015: 29.8%) remained higher 
than normal, with the marginal percentage increase due to a combination of the 
losses made by separate legal entities in various countries that could not be 
offset against profits made elsewhere in the Group, the mix of profits, varying 
tax rates and the year-on-year changes to the tax formulas in the various 
countries in which Omnia operates. This was countered in part by the Section 12I 
tax incentives claimed in the current financial year of R16 million 
(2015: R2 million), that related to the expenditure on the qualifying capital 
project, namely the new Dryden HEF plant and distribution centre. 

Profit after tax of R702 million (2015: R934 million) was 25% lower year-on-year, 
due to the lower operating profit, which is still commendable under the tough 
macro-economic environment and prevailing weather conditions.

Total comprehensive income was higher year-on-year at R1 384 million 
(2015: R1 301 million), due to the higher foreign-currency translation 
differences of R682 million in the 2016 financial year (2015: R367 million), 
because of the 21% decrease year-on-year of the year-end rand:US dollar exchange 
rate. The majority of the foreign-currency translation reserve relates to the 
revaluation of the US dollar denominated equity.

Headline earnings per share of R10.33 (2015: R14.65) was down 29% year-on-year.

LONG-TERM INCENTIVE PLAN CHARGES
The current year?s long-term incentive plan (LTIP) charges resulted in an income 
of R1 million (2015: R18 million charge) which consists of: R3 million 
(2015: R8 million) for the new cash- and equity-settled Partnership with 
Management 5 Share Scheme (Partner 5), reversal of R10 million (2015: R1 million) 
for the Share Appreciation Rights scheme due to the year-on-year decrease in 
share price and R6 million (2015: R11 million) for the equity-settled Sakhile 1 
and Sakhile 2 schemes. This compares to an estimated charge in the order of 
R75 million for the current year, if the target for year two of the five-year 
plan was met. The lower charge in the current year is due to the cumulative 
shortfall in the profit before tax for year one and two of the new five-year plan 
that commenced on 1 April 2014. The R10 million year-on-year reduction in the 
LTIP charge for the Share Appreciation Rights scheme, is due to the year-on-year 
decrease in the share price from R172.50 at 31 March 2015 to R136.50 at 
31 March 2016. 

BALANCE SHEET
The balance sheet continues to strengthen with total assets increasing by 4% or 
R474 million to R12 378 million (2015: R11 904 million). The increase in current 
assets of R246 million was largely attributable to the R172 million increase in 
cash and cash equivalents as a result of the emphasis on cash generation and 
working capital management in recent years resulting in a net debt-free balance 
sheet at year-end, a first for the past decade. The net increase in non-current 
assets of R228 million is largely attributable to the capital expenditure of 
R494 million (2015: R587 million) based on capital projects planned for the year 
which are offset by the higher depreciation charges of R333 million 
(2015: R322 million) together with trade and other receivables, with an increase 
of R64 million which consist of the financial assistance provided for the 
emerging farmers project. 

Total liabilities at financial year end were R4 716 million 
(2015: R5 262 million), down R546 million or 10%. Current liabilities decreased 
by R562 million or 12% to R4 095 million (2015: R4 657 million), with trade and 
other payables increasing to R3 606 million (2015: R3 478 million) and bank 
overdrafts falling from R1 099 million to R262 million, largely due to the strong 
emphasis on cash generation and working capital management throughout the year. 

Non-current liabilities increased by R16 million to R621 million 
(2015: R605 million), with the increase in deferred tax of R63 million, offset by 
the decrease in trade and other payables of R18 million and long-term debt of 
R29 million. 

Net debt was eliminated at year-end with a net cash positive position of 
R228 million (2015: negative R820 million) resulting in a debt free balance sheet 
at year-end. The ungeared balance sheet at year-end compares favourably with the 
12% gearing recorded at the end of the prior year. The net cash positive position 
is expected to continue to increase as the market conditions improve and the 
underlying assets continue to generate higher levels of profitability and cash 
flow with an emphasis on strict working capital management.

Total equity increased to R7 662 million (2015: R6 642 million), a R1 020 million 
or 15% net movement year-on-year, due to the net profit after tax of R702 million 
and the total increase in the foreign currency translation reserve of 
R682 million. This was offset by dividends paid of R324 million, treasury shares 
having been purchased in the open market for the new Partner 5 scheme of 
R51 million and R11 million for other items. The increase in the foreign currency 
translation reserve is due to the weakening of the rand: US dollar exchange rate 
at financial year-end that is used to translate the net assets denominated in 
US dollars at financial year-end from R12.14 at 31 March 2015 to R14.72 at 
31 March 2016. At year-end, the total foreign currency translation reserve was 
R1 655 million (2015: R906 million).

CASH FLOW STATEMENT
Cash flow generated from operations rose by R1 336 million to R2 304 million 
(2015: R968 million) with the year-on-year increase largely attributable to the 
positive R258 million (2015: negative R878 million) net cash funding released for 
working capital which normalised in the 2016 financial year compared to the 2015 
financial year. 

Cash flow from investing activities of R469 million (2015: R578 million) was 
lower due to the reduction in expenditure on major capital projects, which 
remained in line with the business plan.

Cash flow from financing activities of R432 million (2015: R466 million) was 
lower due to slight increase in dividend payments of R324 million 
(2015: R322 million), the net settlement of debt amounting to R57 million 
(2015: R83 million) and treasury shares purchased for R51 million 
(2015: R61 million).

The net increase in cash and cash equivalents for the year was R955 million 
(2015: R578 million net decrease) and net borrowings and cash on hand at year end 
totalled R310 million (2015: R699 million borrowings and overdrafts).

DIVISIONAL REVIEW 
AGRICULTURE
Omnia?s Agriculture division comprises of Omnia Fertilizer and Omnia Specialities 
and is the market leader in its field in South Africa and southern Africa. The 
division produces and trades in granular, liquid and speciality fertilizers for a 
broad customer base of farmers, co-operatives and wholesalers throughout South 
Africa, southern and East Africa and to select markets in Australasia, Brazil and 
Mauritius.

The Agriculture division?s competitive edge lies in Nutriology?, or what Omnia 
calls the ?science of growing?. The science of growing is Omnia?s business 
philosophy and involves more than just selling fertilizer to farmers ? it is 
about optimising yield and crop quality to maximize returns while reducing 
farming and environmental risk. Achieving this, entails becoming intricately 
involved in the producers? businesses to better understand their objectives and 
targets. Nutriology? also includes cutting-edge research and development that 
results in the development of new products, services and farming practices. The 
Omnia Nutriology? brand is highly regarded in the regional market and strongly 
supports management?s vision of creating wealth through knowledge.

Omnia Fertilizer services the South African market through regional sales offices 
and a comprehensive network of agents and representatives supported by qualified 
agronomists and state of the art research facilities located at the Sasolburg 
site. The rest of the southern Africa market is supported from Omnia?s regional 
offices located in Mauritius, Mozambique, Zambia and Zimbabwe, while other 
markets such as Botswana, Democratic Republic of the Congo (DRC), Kenya, Lesotho, 
Tanzania, Malawi, Namibia and Swaziland are supported from South Africa. 

Omnia Specialities supplies a comprehensive range of water-soluble and foliar 
products, trace elements and organic soil conditioners to the South Africa and 
southern African markets and through offices in Australia, New Zealand and 
Brazil. Selected speciality products are exported to Europe, Asia and South 
America. 

The Agriculture division achieved good growth in revenue of 13% to R8 218 million 
(2015: R7 287 million) on the back of a 4% decrease in total volumes. South 
Africa volumes were down only 1% despite a 27% reduction in the maize total 
hectares planted and an overall reduction of 22% in the summer crop hectares 
planted. The international volumes were down 3% due to lower sales in Mozambique, 
Botswana, the DRC and Namibia as the impact of the drought was felt. 

Despite difficult market conditions the Agriculture Trading segment showed solid 
volume growth into Africa. However, margins were negatively impacted by losses in 
Australia due to a poor inventory position carried forward from the previous 
year, resulting in a 100% or R33 million reduction in operating profit. This is a 
1.5% reduction in the overall operating margin of the Agriculture division.

The total operating profit margin of 6.0% is lower than the previous year?s 
margin of 9.0%, and was below the current year?s guidance of 7.0% to 9.0%. The 
3.0% year-on-year decrease in margin was attributable to the 1.5% reduction in 
the Agriculture Trading segment, the continued unfavourable ammonia to urea ratio 
that negatively impacted the conversion margins at the production facilities and 
the reduction in production throughput volumes at Sasolburg, resulting in a 
reduction in overhead cost recoveries at the Sasolburg factory and higher unit 
costs. Downstream sales of ammonia nitrates to the Mining division also decreased 
due to the slowdown in mining activities and related volumes sold to customers. 
To counter the effect in part is the improved performance on reducing raw 
material costs which depend on the timing of purchases, strong price 
negotiations, hedging and management of exchange rate risks. Overall, this 
resulted in the current year?s operating profits decreasing by 25% to 
R494 million (2015: R656 million).

Net working capital increased by 12% to R2 036 million (2015: R1 821 million) due 
to the impact of the year-on-year increase in exchange rates, increasing the rand 
unit costs of raw materials, work in progress and finished goods.

MINING
Omnia?s Mining division services the mining industry through BME and Protea 
Mining Chemicals.
 
BME operates throughout Africa with a strong presence in South Africa, southern 
and West Africa. BME is a market leader in bulk emulsion and blended bulk 
explosives formulations for the opencast mining industry; it produces electronic 
delay detonators and shocktube initiating systems; it has its own range of 
explosive boosters, and it manufactures packaged explosives for underground 
mining and specialised surface blasting operations. BME adds value to its 
products through its world-class blasting consultancy service. Omnia?s industry 
experts, experienced mining engineers and geologists advise and support customers 
in the planning and execution of blasting operations. This is achieved by using 
BME?s unique and proprietary BlastMap? software solution in combination with the 
accuracy of the AXXIS? electronic delay detonators that is used to control the 
electronic delay detonators in the blasting process.

Protea Mining Chemicals provides a suite of value-added services to complement a 
wide range of chemicals and reagents supplied for use by the processing plants on 
mines in South Africa and Africa. This includes Protea Process?, a comprehensive 
service that covers the design of equipment, logistics and on-site management and 
make up of chemicals and reagents.

The Mining division?s total revenue decreased by 15% to R4 551 million 
(2015: R5 351 million) on the back of a 17% reduction in volumes with the 
continued low commodity market prices and price pressures leading most mines to 
seek price reduction through renegotiations with current suppliers or via tender 
with potentially new suppliers, reduce output volume and expenditure on 
explosives and services across all markets. Market oversupply and customer focus 
on pricing has led to increased price competition which in turn has impacted and 
resulted in lower margins. Overall, market conditions remain challenging and some 
of the key factors affecting market conditions are as follows: softer demand in 
mining commodity and mineral markets throughout Africa, especially in gold, 
platinum, copper and iron ore; reduced mining activity in metals and minerals 
such as coal, uranium, vanadium, gold and platinum; reduced greenfield mining 
project activity in sub-Sahara Africa, as well as brownfield expansion 
opportunities on existing mines. However despite these market conditions the 
division continues to find opportunities and has recently been successful in 
securing large volumes in the copper belt of Zambia.

Despite the downturn in world mining revenues and volumes, the Mining division 
has been remarkably resilient and continues to forge ahead in maintaining its 
position as a leading player in the open cast mining industry on the African 
continent. The operating profit of R526 million was at an operating margin of 
11.6% (2015: 13.5%), which was 1.9% down on the previous year. This is below the 
current year?s guidance of 13.0%?15.0%. This can be attributable to the weakening 
rand that was positive for BME?s South African-sourced and manufactured products 
sold into Africa, also negatively impacted on product categories where the inputs 
are purchased in US dollars. Average sales prices increased by 2% year-on-year 
mainly due to the weaker rand. Volumes decreased by 17%, largely attributable to 
two major contracts that were lost during the last quarter of FY2015 with the 
full effect realised in FY2016. If the contracts were excluded in FY2015 the 
volume decrease would have been 5% year-on-year.

Net working capital was well controlled and decreased to R842 million 
(2015: R1 090 million), due to the reduction in overall sales revenue causing a 
reduction in total net working capital.

CHEMICALS
The Chemicals division?s main business, Protea Chemicals, is a long-established 
and well-known manufacturer and distributor of specialty, functional and effect 
chemicals and polymers. It has a significant presence in every sector of the 
broader chemicals distribution market throughout South Africa, southern and East 
Africa. Protea Chemicals represents many leading domestic and international 
chemical producers, providing cost-effective and efficient distribution channels 
for Omnia?s products into the African market. Protea Chemicals continues to be 
rated as the largest chemical distributor in Africa by the respected industry 
journal, ICIS Chemical Business. Protea Chemicals also manufactures and 
distributes chemicals for the treatment of water to render it potable, a function 
mostly undertaken through municipalities. 

Revenue decreased by 5% to R4 005 million (2015: R4 197 million) with a 5% 
decrease in volumes sold. The operating margin increased by a commendable 1.8% to 
4.2% (2015: 2.4%) and was above the current year?s target of 3.0% ? 4.0%, with 
the exchange rate assisting the rand/kg selling prices to an extent. Disciplined 
management of selling prices effectively minimised the decline in US dollar-
denominated unit prices of chemical products partially offsetting the weaker 
rand: US dollar exchange rate. As a result, the net impact has not been as marked 
as the decline in the oil price alone would suggest. Overall, Protea Chemicals 
saw an unchanged unit price over the past year, whilst total turnover declined 
mostly due to lower volumes as a result of rationalised product range. 

The strategy to divert the division?s marketing and sales efforts in addition to 
South Africa to neighbouring countries and throughout Africa has started to 
produce encouraging results, though oil based economies continue to struggle 
under poor liquidity of US dollars caused by the sustained drop in oil prices. 
Further developments beyond Protea Chemicals? existing operations will continue 
to be explored, to allow for sustainable growth in the geographic areas within 
which the division operates and the broader chemicals distribution sector. 

The strategy to develop a realigned business model to effectively provide an 
improved product and service offering to meet customer expectations has 
progressed well throughout FY2016 and is on its way to deliver further benefits 
in the coming financial year.

Significant restructuring of the division?s resources required to service the 
business took place in the second half of the financial year. These savings 
assisted in further reducing overhead costs and providing a robust platform for 
the new financial year, where the full impact will be seen in the income 
statement. The conclusion of the strategy to move away from a product-based model 
to a customer-based model has been well managed and has provided a trimmed down 
but effective product range sufficient to meet customer expectations. Further 
improvements to information technology systems have also assisted the already 
successfully restructured business to respond to market dynamics. Such 
development has improved margin control and provides a solid platform from which 
to further grow the business. All of this has resulted in gross profit percentage 
increasing from 11.4% in FY2015 to 14.8% in the current year contributing 
significantly to the improvement in operating margin.

Net working capital was well controlled and decreased to R533 million 
(2015: R575 million).

PROSPECTS 
The domestic and international Agriculture divisions are poised for a good 
performance with record high agriculture produce prices and the prospect of the 
drought receding, favouring a normal planting season this coming year. Gains made 
in establishing new fertilizer markets in the course of last year are likely to 
drive volume growth. 

The international mining sector has gone through very difficult times since late 
2014, but the prices for commodities appear to be stabilising for the moment and 
showing modest signs of recovery. Going forward, with the prospect of a better 
balance between demand and supply for most commodities, the price recovery in the 
near term is more likely and the business is well placed to respond to the 
improvement in market conditions. Although the demand for explosives in South 
Africa and in Africa has been hard hit over the last two years, with BME?s very 
competitive offering, a number of large contracts have been secured which will 
have a favourable impact the new financial year. This will ensure that the 
division is well placed to restore its level of profitability and also have a 
positive impact on the Agriculture division due to higher production throughput 
and lower unit costs per unit produced. 

Protea Mining Chemicals continues to perform above expectation as it increases 
its footprint in regional Africa and is budgeted to have another year of growth.
The Chemicals division has undoubtedly turned a corner and is expected to build 
on the considerable improvement in earnings achieved in the FY2016. This will be 
done in the face of considerable pressure on margins and volumes in the market 
place.

The Business Development team is focusing on raw material backward integration 
opportunities, potential acquisitions and energy projects of which a number have 
been assessed, and a few of which are in the process of receiving further 
consideration.

The Group?s balance sheet is very strong with a positive cash position. This has 
positioned the company to investigate a number of investment opportunities, of 
which a certain number are at an advanced stage of investigation and analysis.

DIVIDENDS
The board has declared a final gross cash dividend of 180 cents (2015: 300 cents) 
per ordinary share payable from income in respect of the year ended 31 March 
2016. Together with the interim dividend of 180 cents (2015: 190 cents) per 
share, this provides shareholders with a total dividend this financial year of 
360 cents (2015: 490 cents) per ordinary share. The number of ordinary shares in 
issue at the date of this declaration is 68 293 352 (including 1 120 640 treasury 
shares held by the Group). The gross dividend is subject to local dividends tax 
of 15% for those shareholders to which local dividends tax is applicable. The 
resultant net dividend amount is 153 cents per share for those shareholders 
subject to local dividends tax and 180 cents share for those shareholders not 
subject to local dividends tax. The company?s tax reference number is 9400087715.

The salient dates for the final dividend are as follows:

Last day to trade cum dividend               Tuesday, 19 July 2016
Shares trade ex-dividend                     Wednesday, 20 July 2016
Record date                                  Friday, 22 July 2016
Payment date                                 Monday, 25 July 2016

Share certificates may not be dematerialised or materialised between Wednesday,
20 July 2016 and Friday, 22 July 2016, both dates inclusive.

CHANGES TO THE BOARD
Mr Noel Fitz-Gibbon retired as non-executive director with effect from 
22 June 2015 and Ms Khumo Shongwe resigned as independent non-executive director 
with effect from 17 July 2015. 

Ms Tina Eboka was appointed as an independent non-executive director with effect 
from 26 February 2016.

NJ Crosse            RB Humphris                 WG Koonin
Chairman             Group managing director     Group finance director 

28 June 2016

Directors: 
RC Bowen (British), FD Butler, NJ Crosse (Chairman), TNM Eboka, 
R Havenstein, HH Hickey, RB Humphris* (Group managing director), 
WG Koonin* (Group finance director), Prof SS Loubser, Dr WT Marais, 
HP Marais (alternate), SW Mncwango, D Naidoo       
*Executive directors

Registered office: 
2nd Floor, Omnia House, Epsom Downs Office Park, 13 Sloane Street, Epsom Downs, 
Bryanston, 2021. PO Box 69888, Bryanston, 2021

Telephone: (011) 709 8888

Transfer secretaries: 
Link Market Services South Africa Proprietary Limited, 13th Floor, Rennie House, 
19 Ameshoff Street, Braamfontein

Sponsor: 
Merchantec Capital, 2nd Floor, North Block, Hyde Park Office Tower, corner 6th 
Road and Jan Smuts Avenue, Hyde Park, 2196

www.omnia.co.za

Date: 28/06/2016 07:05:00 Supplied by www.sharenet.co.za                     
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