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OMN - Omnia Holdings Limited - Audited results for the year ended 31 March
2012
OMNIA HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1967/003680/06
JSE code OMN
ISIN ZAE000005153
("Omnia" or "the Group")
www.omnia.co.za
Growth catalyst for the balance of life
Audited results for the year ended 31 March 2012
HIGHLIGHTS
- Profit for the year up 39% to a record high R629 million
- Operating margin up from 7,3% to 8,1%
- EPS up 24% to 949,6 cents per share on 14% more average shares in issue
- Total dividend for the year 280 cents
- Debt: equity ratio at 19% after capex on new nitric acid complex
- New nitric acid complex commissioned on time and within budget
Condensed consolidated income statement
for the year ended 31 March 2012
Audited Audited
Rm 2012 % 2011
Continuing operations
Revenue 10 945 17 9 368
Cost of sales (8 552) 16 (7 403)
Gross profit 2 393 22 1 965
Other operating income 70 (18) 85
Administrative expenses (591) 11 (532)
Distribution expenses (928) 17 (790)
Other operating expenses (59) (41)
Operating profit 885 29 687
Finance expenses (80) (34) (122)
Finance income 36 (8) 39
Share of loss of associate (5) (2)
Profit before taxation 836 39 602
Income tax expense (207) (151)
Profit for the year 629 39 451
Attributable to:
Owners of Omnia Holdings Limited 630 448
Non-controlling interest (1) 3
629 451
Earnings per share from profit attributable
to owners of Omnia Holdings Limited
Basic earnings per share (cents) 949,6 24 768,2
Diluted earnings per share (cents) 948,3 24 766,8
Condensed consolidated statement of comprehensive income
for the year ended 31 March 2012
Audited Audited
Rm 2012 2011
Profit for the year 629 451
Other comprehensive income, net of tax
Currency translation differences 114 (67)
Cash flow hedge (1) 9
Total comprehensive income for the year 742 393
Attributable to:
Owners of Omnia Holdings Limited 743 390
Non-controlling interest (1) 3
742 393
Condensed consolidated balance sheet
as at 31 March 2012
Audited Audited
Rm 2012 % 2011
ASSETS
Non-current assets 3 293 29 2 561
Property, plant and equipment 2 705 40 1 938
Intangible assets 522 - 523
Available-for-sale financial assets 18 13 16
Investments in associates 42 (46) 78
Deferred income tax assets 6 - 6
Current assets 4 226 13 3 743
Inventories 2 079 40 1 488
Trade and other receivables 1 943 13 1 722
Cash and cash equivalents 204 533
Total assets 7 519 6 304
Equity and liabilities
Equity attributable to owners of Omnia 4 027 21 3 338
Holdings Limited
Stated capital 1 289 - 1 289
Treasury shares (15) (19)
Other reserves 133 11
Retained earnings 2 620 27 2 057
Non-controlling interest in equity 1 1
Total equity 4 028 21 3 339
Liabilities
Non-current liabilities 470 14 411
Deferred income tax liabilities 257 98 130
Debt 213 (24) 281
Current liabilities 3 021 18 2 554
Trade and other payables 2 224 14 1 953
Debt 131 (75) 523
Current income tax liabilities 29 7
Bank overdrafts 637 71
Total liabilities 3 491 2 965
Total equity and liabilities 7 519 6 304
Net debt 777 342
Net asset value per share (Rand) 60,63 50,35
Capital expenditure
Depreciation 151 127
Amortisation 29 28
Incurred 993 801
Authorised and committed 187 322
Authorised but not contracted for 322 604
Condensed consolidated cash flow statement
for the year ended 31 March 2012
Audited Audited
Rm 2012 2011
Operating profit 885 687
Depreciation and amortisation 180 155
Adjustment for non-cash items 13 (22)
Cash generated from operations 1 078 820
Utilised by working capital (448) (755)
Interest paid (79) (119)
Interest received 36 39
Taxation paid (58) (94)
Net cash inflow/(outflow) from operating 529 (109)
activities
Cash outflow from investing activities (917) (783)
Cash (outflow)/inflow from financing activities (524) 852
Net decrease in cash (912) (40)
Net cash at beginning of year 462 508
Effects of exchange rate movements 17 (6)
Net (overdraft)/cash at end of year (433) 462
Condensed consolidated statement of changes in equity
Attributable to the owners of
Omnia Holdings Limited
Stated Treasury Other
Rm capital shares reserves
At 31 March 2010 318 (8) 54
Recognised income and expense
Profit for the year ended 31 March
2011
Cash flow hedge 9
Currency translation difference (67)
Transactions with shareholders
Ordinary shares issued 971
Treasury shares purchased (12)
Treasury shares sold 1
Share-based payment - value of 15
services provided
At 31 March 2011 1 289 (19) 11
Recognised income and expenses
Profit for the year ended 31 March
2012
Currency translation difference 114
Cash flow hedge (1)
Transactions with shareholders
Ordinary dividends paid
Treasury shares purchased 4
Share-based payment - value of 9
services provided
Transfer from non-controlling interest
At 31 March 2012 1 289 (15) 133
Condensed consolidated statement of changes in equity (continued)
Attributable to the owners of
Omnia Holdings Limited
Non-con-
Retained trolling
Rm earnings interest Total
At 31 March 2010 1 609 (2) 1 971
Recognised income and expense
Profit for the year ended 31 March 448 3 451
2011
Cash flow hedge 9
Currency translation difference (67)
Transactions with shareholders
Ordinary shares issued 971
Treasury shares purchased (12)
Treasury shares sold 1
Share-based payment - value of 15
services provided
At 31 March 2011 2 057 1 3 339
Recognised income and expenses
Profit for the year ended 31 March 630 (1) 629
2012
Currency translation difference 114
Cash flow hedge (1)
Transactions with shareholders
Ordinary dividends paid (66) (66)
Treasury shares purchased 4
Share-based payment - value of 9
services provided
Transfer from non-controlling interest (1) 1 -
At 31 March 2012 2 620 1 4 028
Reconciliation of headline earnings
for the year ended 31 March 2012
Audited Audited
Rm 2012 2011
Profit for the year attributable to owners of Omnia 630 448
Holdings Limited
Adjusted for loss/(profit) on disposal of fixed 3 (4)
assets
Adjusted for insurance proceeds for replacement of (5) -
property, plant and equipment
Adjusted for profit on disposal of investment (2) -
Adjusted for impairment of property, plant and 10 -
equipment
Adjusted for impairment of intangible assets - 3
Headline earnings 636 447
Headline earnings per share
Headline earnings are 958,6 cents per share (2011:
766,5 cents per share)
Diluted headline earnings are 957,3 cents per share
(2011: 765,1 cents per share)
Segmental analysis
for the year ended 31 March 2012
Audited Audited
Rm 2012 % 2011
Revenue, net of intersegmental sales 10 945 17 9 368
Mining 3 051 46 2 092
Agriculture 4 476 22 3 680
Chemicals 3 418 (5) 3 596
Operating profit 885 29 687
Mining 476 53 311
Agriculture 323 4 312
Chemicals 86 34 64
Other reserves
as at 31 March 2012
Audited Audited
Rm 2012 2011
Reserves comprise:
Share-based payment reserve 105 96
Foreign currency translation reserve 25 (89)
Cash flow hedge - 1
Net discount arising on acquisition of shares of 3 3
subsidiaries
133 11
Notes
ACCOUNTING POLICIES
The condensed consolidated financial statements for the year ended 31 March
2012 were prepared in accordance with International Financial Reporting
Standards (IFRS), IAS 34 - Interim Financial Reporting and in compliance with
the Listings 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 2012 are consistent with those applied for the year ended 31
March 2011.
The accounting standards, amendments to issued accounting standards and
interpretations, which are not yet effective at 31 March 2012, have not been
early adopted by the Group.
DIVIDENDS
An interim dividend of 100 cents was declared on 22 November 2011 in respect
of the current year. A final dividend of 180 cents per share was declared on
21 June 2012 bringing the dividend for the year to 280cents per share.
AUDIT OPINION
The Group`s auditors, PricewaterhouseCoopers Inc., have issued their opinion
on the Group`s financial statements for the year ended 31 March 2012. 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.
Additional information
for the year ended 31 March 2012
Audited Audited
2012 2011
Interim dividend declared per share (cents) in 100 -
respect of current year
Weighted average number of shares in issue (`000) 66 342 58 316
Weighted average number of diluted shares in 66 433 58 427
issue (`000)
Number of shares in issue, excluding treasury 66 437 66 307
shares (`000)
Commentary
INTRODUCTION
Omnia has been in business for 58 years and is a diversified provider of
specialised chemical products and services used in the mining, agricultural
and chemical sectors. The Group differentiates itself from commodity chemical
providers by adding value at every stage of the supply and service chain
through technological innovation and by deploying our intellectual capital. We
make our business model sustainable by targeted backward integration through
installing technologically-advanced plants to manufacture core materials such
as nitric acid and explosives emulsions. Besides securing sources of supply,
this enables us to improve operational efficiencies throughout the product
development and production chain.
Omnia provides customised, knowledge-based solutions through our mining,
agricultural and chemical divisions. The Group`s proven business model makes
us a market leader in chemical services. We prosper through offering
extraordinary value to our customers by tailoring our solutions to their
business needs through product and service innovation and expert application
of these.
MACRO ENVIRONMENT
The macro environment for this year was exceptionally good for our Mining
division, positive for our Agriculture division and difficult for our
Chemicals division. Global economic performance was somewhat mixed, with good
growth in emerging economies and a moderate recovery in the USA economy being
offset by substantial turmoil in the Eurozone economies. The net impact was
continued strong demand for mining commodities, while the mining and
agricultural commodities experienced moderate price increases and minimal
price increases were evident for chemical products. The rand was strong
against the US dollar in the first half, which negatively impacted all our
divisions` selling prices and margins. Rand weakening in the second half
benefited our Mining division, but was too late in the season to fully benefit
the Agriculture division, whereas the benefit to the Chemicals division was
offset by the drop in international chemical prices. Despite low interest
rates, economic activity levels in the South African manufacturing sector
remained muted due, in part, to rand strength against the US dollar. This
hindered our Chemicals division, as its primary customer base is drawn from
the South African manufacturing sector.
FINANCIAL REVIEW
Group revenue rose 16,8% to R10 945 million (2011: R9 368 million) on the back
of volume and sales price increases in the Mining and Agriculture divisions.
Gross profit increased 21,8% to R2 393 million (2011: R1 965 million) and
improved to 21,9% of revenue (2011: 21,0%) due to improved gross margins in
the Mining division being partially offset by reduced margins in the
Agriculture division. The gross margin in the Chemicals division remained on a
par with the prior year.
Other operating income of R70 million (2011: R85 million) included an
insurance claim receipt of R22 million (2011: R44 million).
Administration overheads increased by 11,1% to R591 million (2011: R532
million). Included in administration expenses are share-based payment charges
of R9 million (2011: R15 million) and higher provisions for incentive bonuses.
Taking these into account, administration costs were well controlled.
Distribution overheads increased by 17,4% to R928 million (2011: R790
million), primarily due to higher volumes in the Mining and Agriculture
divisions. Other operating expenses comprise foreign exchange loss of R30
million (2011: R30 million) and amortisation of intangible assets of R29
million (2011: R11 million).
Operating profit increased 28,8% to R885 million (2011: R687 million), on the
back of the improved operating margins of our Mining and Chemicals divisions,
offset by a reduction in the operating margin of the Agriculture division. The
Mining division improved its operating margin to 15,6% (2011: 14,9%) as a
result of an improved gross margin and operating leverage. The Agriculture
division operating margin declined to 7,2% (2011: 8,5%), due to margin
compression caused by increased use of more expensive purchased nitrates,
increased competitor activity in South Africa and significantly lower margins
in our Zambia operation. Overhead costs were tightly controlled. Although the
Chemicals division improved its operating margin to 2,5% (2011: 1,8%) due to
vigorous cost control, its operating margin fell somewhat short of the
targeted 4,5% to 5,5%.
Finance expenses of R80 million comprise net interest paid of R79 million
(2011: R119 million) and foreign exchange losses on the conversion of foreign
bank balances of R1 million (2011: R3 million). Net interest paid reduced
from R119 million to R79 million due to the continued benefit of the receipt
of the net proceeds of R971 million from the rights offer received on 14
September 2010, and the lower overall cost of debt due to repayment of the
higher interest rate DMTN debt in November 2011. This was partially offset by
higher average working capital requirements as a result of higher fertilizer
commodity prices.
Income tax expense increased to R207 million (2011: R151 million), incurring
an effective tax rate of 24,8% (2011: 25,0%). Income tax expense was reduced
by R23 million due to the Sect12i tax allowance attributable to the new nitric
acid complex.
Total assets increased by 19,3% from R6 304 million to R7 519 million due to
increased capex spend on the new nitric acid complex and higher inventory
levels.
Property, plant and equipment increased by R767 million to R2 705 million
mainly as a result of R591 million spent on the new nitric acid complex.
Included in property, plant and equipment is R1 212 million cumulative spend
on the new complex, which includes capitalised interest of R89,4 million.
Although the main plants in the nitric acid complex were commissioned in March
2012, there are still a number of ancillary items around the logistics and
downstream plants that are still in progress and the costs thereof will be
incurred in FY2013.
Inventory increased by R591 million from R1 488 million to R2 079 million,
primarily due to an increase of R355 million in the Agriculture division
inventory, based on raised unit costs because of higher fertilizer commodity
prices and early purchasing in anticipation of rising prices. Trade and other
receivables increased only 12,8% from R1 722 million to R1 943 million on a
16,8% rise in revenue, due mainly to the inclusion in the prior year of an
earlier-than-normal advance payment of USD22,5 million made to a supplier that
was not incurred this year.
Equity increased by 20,7% from R3 338 million to R4 027 million as a result of
retained current-year earnings of R629 million and an increase of R114 million
in foreign currency translation reserve due to the impact of the weaker rand:
US dollar year end rate of 7,66 (2011: 6,75) on our US dollar-denominated
equity, partially offset by the interim dividend payment of R66 million.
Cash flow generated from operating activities was R529 million compared to
cash utilised by operations of R109 million in the prior year, due to better
cash generated through operating profits and lower investment in net working
capital. In the prior year, cash outflow on working capital increased by R755
million, due to higher inventory and receivables and lower payables. This
year, cash outflow on working capital increased by R448 million as a result of
R544 million increase in inventory, the reasons for which were explained
earlier, R125 million increase in receivables, offset by an increase in
payables of R221 million. Cash outflow from investing activities of R917
million (2011: R783 million) is due primarily to capex on the nitric acid
complex of R591 million. After taking into account the cash outflow from
finance activities of R524 million (2011: Inflow R852 million), to which the
repayment of the DMTN note contributed R405 million, there was a net cash
outflow of R912 million (2011: R40 million).
The year ended with a pleasingly strong balance sheet, net debt of R777
million (2011: R342 million) and a net debt: equity ratio of 19,3% (2011:
10,2%). Net debt in the prior year had been reduced by an amount of R350
million from the equity raised in September 2010 that had not yet been
expended on the nitric acid complex. This position is particularly pleasing
given the substantial expenditure on the new nitric acid complex and that the
expected cash flow benefits from operating the complex will only start to flow
from FY2013.
DIVISIONAL REVIEW
Mining
The Mining division services the mining industry through BME and Protea Mining
Chemicals.
BME operates throughout Africa with a strong presence in southern and West
Africa. BME is a market leader in bulk emulsion and blended bulk explosives
formulations for the opencast mining industry; produces electronic delay
detonators and shocktube initiating systems; has its own range of boosters,
and manufactures packaged explosives for underground mining and specialised
surface blasting operations. BME adds value to its products through its world
class blasting consultancy service, through which industry experts and
experienced mining engineers advise and support customer operations,
particularly in using its unique and proprietary AxxiSoftTrade Mark and
BlastMapTrade Mark software solutions.
In southern Africa, Protea Mining Chemicals offers value-added services to
complement a wide range of chemical products. These include Protea
ProcessTrade Mark, a comprehensive service that covers the handling, logistics
and on site formulation of chemicals.
Revenue increased 45,8% to R3 051 million (2011: R2 092 million) on the back
of strong volume growth and higher sales prices. The South Africa and the West
Africa operations demonstrated strong growth. Gross margins improved and
operating leverage kicked in as a result of well controlled overhead costs,
resulting in a 53,1% increase in operating profit to R476 million (2011: R311
million) and the operating margin rising from 14,9% to 15,6%.
Agriculture
The Agriculture division comprises Omnia Fertilizer and Omnia Specialities and
is the market leader in southern Africa in its field. This division produces
granular, liquid and speciality fertilizers for a broad customer base of
farmers, co-operatives and wholesalers throughout southern and east Africa,
Australasia and Brazil.
The Agriculture division`s range of specialised products and services are
coordinated through its pioneering NutriologyRegistered offering, which
incorporates leading edge research and development of new products and
services to assist customers to optimise crop yield and quality for maximised
returns. The Omnia NutriologyRegistered brand is highly regarded in the
regional market and its core concept of value-added service is being
increasingly recognised.
Revenue increased 21,6% to R4 476 million (2011: R3 680 million) on the back
of higher fertilizer commodity prices and higher volumes. Operating profit
only grew by 3,5% to R323 million (2011: R312 million), due to margin
compression caused by the increased use of more expensive purchased nitrates
as more own produced lower cost nitric acid was channeled to supply BME`s
increased requirements due to its volume growth, pricing pressure due to an
increase in competitor activity in South Africa as other fertilizer suppliers
tried to stabilize their businesses after the industry restructure in the
previous year and significantly lower margins in our Zambia operation as a
result of significant increase in competitor activity. Overhead costs were
exceptionally well controlled.
Chemicals
Protea Chemicals, active throughout southern and eastern Africa, is a well-
established manufacturer and distributor of specialty, functional and effect
chemicals and polymers, with a major presence in every sector of the broader
chemical distribution market. It represents a large number of domestic and
international principals, counting among its suppliers many of the world`s
leading chemical producers. Protea Chemicals was recently rated the 13th
largest chemical distribution company in a global survey by the respected
industry journal, ICIS Chemical Business.
Revenue reduced by 4,9% to R3 418 million (2011: R3 596 million), on the back
of a volume decline of 5,5% partially offset by a small improvement in selling
prices. Volumes in the Polymer distribution business declined 49% following
the implementation of a strategy to focus on more quality and less risky
business, while volumes in the remainder of the Chemical division increased by
2,6%. As the gross margin percentage was on par with the previous year, the
gross profit reduced in line with the revenue drop, while overheads were lower
than the prior year due to cost-reduction measures, thus enabling operating
profit to increase 34,4% to R86 million (2011: R64 million). The operating
margin at 2,5% is an improvement on the prior years` 1,8%, but is well below
the target of 4,5% to 5,5%.
PROSPECTS
The macro environment for next year appears promising, but it will be strongly
influenced by the direction of the global economy and the rand. Recent rand
weakness will benefit the Group and its customers. Interest rates are
expected to remain at current levels for most of next year, while inflation is
expected to be contained within the 6% limit set by the SARB.
Our Mining division anticipates further volume growth across the division`s
entire product range. Our Agriculture division anticipates favourable
conditions as agriculture product prices are expected to remain at high
levels. This should support generous planting levels which, combined with
rising international fertilizer commodity prices, bode well for next year. Our
Chemicals division is expecting to improve its performance in the year ahead
by a renewed focus on growing revenue through volume growth in South Africa,
supported by efficiency improvements and tight cost management.
The benefits of the new nitric acid complex will contribute to earnings for
the first time in FY2013.
DIVIDENDS
The Group took the decision to proceed with the new nitric acid complex in
early 2010 and subsequently raised R971 million of equity in September 2010.
At the time of the equity raising, the Board indicated that the Group would
not pay dividends in FY2011 and would expect to only resume dividends in
FY2013 after the new nitric acid complex was commissioned. In the light of
the better than expected cash flow, the better earnings, the strong balance
sheet and the commissioning of the new nitric acid complex on time and within
budget, the Board is pleased to resume dividend payments a year ahead of
expectation.
The Board has declared a final gross cash dividend of 180 cents per ordinary
share payable out of income in respect of the year ended 31 March 2012, which,
together with the interim dividend of 100 cents per share provides
shareholders with a total dividend this year of 280 cents per share. The total
STC credits utilised as part of this declaration amount to R121 million. The
number of ordinary shares in issue at the date of this declaration is 67 249
825 and consequently the STC credits utilised amount to 180 cents per share.
The gross dividend is therefore not subject to local dividends tax. The
resultant net dividend amount is 180 cents per share. The company`s tax
reference number is 9400087715.
The salient dates for the final dividend are as follows:
Last day to trade cum dividend Friday, 13 July 2012
Shares trade ex-dividend Monday, 16 July 2012
Record date Friday, 20 July 2012
Payment date Monday, 23 July 2012
Share certificates may not be dematerialised or materialised between Monday,
16 July 2012 and Friday, 20 July 2012, both dates inclusive.
NJ Crosse RB Humphris NKH Fitz-Gibbon
Chairman Group managing director Group finance director
Bryanston21 June 2012
The preparation of the Group`s condensed consolidated audited results was
supervised by NKH Fitz-Gibbon, B Com, CA(SA).
Directors: RC Bowen (British), FD Butler, NJ Crosse (Chairman), NKH Fitz-
Gibbon* (Finance director), R Havenstein, HH Hickey, RB Humphris* (Managing
director), Prof SS Loubser, Dr WT Marais, HP Marais (alternate), SW Mncwango,
D Naidoo *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, 13th Floor,
Rennies House, 19 Ameshoff Street, Braamfontein.
Sponsor: One Capital, 17 Fricker Road, Illovo 2196
Date: 26/06/2012 07:05:02 Supplied by www.sharenet.co.za
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