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Unaudited results for the six months ended 30 September 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)
Unaudited results for the six months ended 30 September 2012
- Profit for the period up 58% to R363 million
- Operating margin up from 7.1% to 9.1%
- Earnings per share up 58% to 546.3 cents per share
- Dividend up 50% to 150 cents per share
- New nitric acid complex operating well
Condensed consolidated income statement
Unaudited Unaudited Audited
for the six months ended 30 September 2012 6 months 6 months 12 months
Rm 30/09/2012 % 30/09/2011 31/03/2012
Revenue 6 017 22 4 952 10 945
Cost of sales (4 701) 20 (3 915) (8 552)
Gross profit 1 316 27 1 037 2 393
Other operating income 71 27 56 70
Administrative expenses (280) 22 (230) (591)
Distribution expenses (542) 14 (474) (928)
Other operating expenses (18) (53) (38) (59)
Operating profit 547 56 351 885
Finance cost (43) 19 (36) (80)
Finance income 9 3 36
Share of losses of associates (2) (1) (5)
Profit before taxation 511 61 317 836
Income tax expense (148) (87) (207)
Profit for the period 363 58 230 629
Attributable to:
Owners of Omnia Holdings Limited 363 58 230 630
Non-controlling interest - - (1)
363 58 230 629
Earnings per share from profit attributable to owners
of Omnia Holdings Limited during the period
Basic earnings per share (cents) 546.3 58 346.8 949.6
Diluted earnings per share (cents) 527.0 52 346.1 948.3
Condensed consolidated statement
of comprehensive income
Unaudited Unaudited Audited
for the six months ended 30 September 2012 6 months 6 months 12 months
Rm 30/09/2012 30/09/2011 31/03/2012
Profit for the period 363 230 629
Other comprehensive income, net of tax
Currency translation difference 103 197 114
Cash flow hedge - (1) (1)
Total comprehensive income for the period 466 426 742
Attributable to:
Owners of Omnia Holdings Limited 466 426 743
Non-controlling interest - - (1)
466 426 742
Condensed consolidated cash flow statement
Unaudited Unaudited Audited
for the six months ended 30 September 2012 6 months 6 months 12 months
Rm 30/09/2012 30/09/2011 31/03/2012
Operating profit 547 351 885
Depreciation and amortisation 125 79 180
Adjustment for non-cash items (3) 20 13
Cash generated from operations 669 450 1 078
Utilised by working capital (1 251) (1 029) (448)
Interest paid (43) (36) (79)
Interest received 9 3 36
Taxation paid (51) (7) (58)
Net cash outflow from operating activities (667) (619) 529
Cash outflow from investing activities (309) (370) (917)
Cash outflow from financing activities (180) (1) (524)
Net decrease in cash (1 156) (990) (912)
Net cash at beginning of the period (433) 462 462
Effects of exchange rate movements - 25 17
Net cash and cash equivalents (1 589) (503) (433)
Condensed consolidated balance sheet
Unaudited Unaudited Audited
as at 30 September 2012 6 months 6 months 12 months
Rm 30/09/2012 30/09/2011 31/03/2012
ASSETS
Non-current assets 3 474 2 862 3 293
Property, plant and equipment 2 897 2 277 2 705
Intangible assets 517 516 522
Available-for-sale financial assets 19 19 18
Investments in associates 40 47 42
Deferred income tax assets 1 3 6
Current assets 5 920 4 911 4 226
Inventories 3 048 2 489 2 079
Trade and other receivables 2 766 2 329 1 943
Cash and cash equivalents 106 93 204
Total assets 9 394 7 773 7 519
EQUITY AND LIABILITIES
Capital and reserves attributable to the
owners of Omnia Holdings Limited 4 380 3 769 4 027
Stated capital 1 289 1 289 1 289
Treasury shares (12) (18) (15)
Other reserves 241 211 133
Retained earnings 2 862 2 287 2 620
Non-controlling interest in equity 1 1 1
Total equity 4 381 3 770 4 028
Liabilities
Non-current liabilities 433 406 470
Deferred income tax liabilities 250 126 257
Debt 183 280 213
Current liabilities 4 580 3 597 3 021
Trade and other payables 2 659 2 391 2 224
Debt 98 523 131
Current income tax liabilities 128 87 29
Bank overdrafts 1 695 596 637
Total liabilities 5 013 4 003 3 491
Total equity and liabilities 9 394 7 773 7 519
Net debt 1 870 1 306 777
Net asset value per share (rand) 65.9 56.8 60.6
Capital expenditure
Depreciation 110 65 151
Amortisation 15 14 29
Incurred 309 406 993
Authorised and committed 182 474 187
Authorised but not contracted for 183 633 322
Condensed consolidated statement of changes in equity
Attributable to the owners of
Omnia Holdings Limited
Non-
for the six months ended 30 September 2012 Stated Treasury Other Retained controlling
Rm capital shares reserves earnings interest Total
At 31 March 2011 (audited) 1 289 (19) 11 2 057 1 3 339
Recognised income and expense for the period
Profit for the period 230 - 230
Cash flow hedge (1) (1)
Currency translation difference 197 197
Transactions with shareholders
Treasury shares sold 1 1
Share-based payment value of service provided 4 4
At 30 September 2011 (unaudited) 1 289 (18) 211 2 287 1 3 770
Recognised income and expense for the period
Profit for the period 400 (1) 399
Currency translation difference (83) (83)
Transactions with shareholders
Ordinary dividends paid (66) (66)
Treasury shares sold 3 3
Share-based payment value of services provided 5 5
Transfer from non-controlling interest (1) 1 -
At 31 March 2012 (audited) 1 289 (15) 133 2 620 1 4 028
Recognised income and expense for the period
Profit for the period 363 - 363
Currency translation difference 103 103
Transactions with shareholders
Ordinary dividends paid (121) (121)
Treasury shares sold 3 3
Share-based payment value of services provided 5 5
At 30 September 2012 (unaudited) 1 289 (12) 241 2 862 1 4 381
Segmental analysis
Unaudited Unaudited Audited
for the six months ended 30 September 2012 6 months 6 months 12 months
Rm 30/09/2012 % 30/09/2011 31/03/2012
Revenue, net of intersegmental sales 6 017 22 4 952 10 945
Mining 2 007 46 1 378 3 051
Agriculture 2 181 16 1 881 4 476
Chemicals 1 829 8 1 693 3 418
Operating profit 547 56 351 885
Mining 335 79 187 476
Agriculture 187 75 107 323
Chemicals 25 (56) 57 86
Other reserves
Unaudited Unaudited Audited
as at 30 September 2012 6 months 6 months 12 months
Rm 30/09/2012 30/09/2011 31/03/2012
Share-based payment reserve 110 100 105
Foreign currency translation reserve 128 108 25
Net discount arising on acquisition of shares of subsidiaries 3 3 3
241 211 133
Reconciliation of headline earnings
Unaudited Unaudited Audited
for the six months ended 30 September 2012 6 months 6 months 12 months
Rm 30/09/2012 30/09/2011 31/03/2012
Net profit for the period 363 230 630
Adjusted for loss on disposal of fixed assets - - 3
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 equipment - - 10
Headline earnings 363 230 636
Headline earnings per share
Headline earnings per share (cents) 546.3 346.8 958.6
Diluted headline earnings per share (cents) 527.0 346.1 957.3
Notes
Accounting Policies
The unaudited consolidated condensed interim financial statements for the six months ended 30 September 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 unaudited consolidated condensed interim financial statements do not include all of the information for full annual financial statements.
The principal policies used in the preparation of the results for the six months ended 30 September 2012 are consistent with those applied in the
annual financial statements for the year ended 31 March 2012.
The unaudited consolidated condensed interim financial statements and information for the six months ended 30 September 2012 has not been reviewed
or reported on by the Groups auditors, PricewaterhouseCoopers. Any reference to future financial performance included in this announcement, has also
not been reviewed or reported on by the Groups auditors.
Additional information
Unaudited Unaudited Audited
for the six months ended 30 September 2012 6 months 6 months 12 months
30/09/2012 30/09/2011 31/03/2012
Weighted average number of shares in issue (000) 66 448 66 322 66 342
Weighted average number of diluted shares in issue (000) 68 885 66 464 66 433
Number of shares in issue (000) excluding treasury shares 66 480 66 340 66 437
Commentary
INTRODUCTION
Omnia has been in business for 59 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. The business model is made 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 Groups proven business model
makes us a market leader in chemical services. The Group prospers 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 period 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 moderate growth in emerging economies and a weak recovery in the USA economy
being offset by substantial turmoil in the Eurozone economies. The net impact was continued with good demand for mining commodities, lower mining
commodity prices, higher agricultural commodity prices and fairly flat prices for chemical products. A significant increase was seen in the international
ammonia price whereas the international urea price increased at a much lower rate resulting in a less favorable urea to ammonia ratio. The rand was
weaker against the US dollar which positively impacted all our divisions selling prices. Despite low interest rates, economic activity levels in the
South African manufacturing sector remained muted which hindered our Chemicals division, as its primary customer base is drawn from the South African
manufacturing sector.
FINANCIAL REVIEW
Group revenue rose 21.5% to R6 017 million (2011: R4 952 million) on the back of strong volume growth in the Mining division and good sales price
increases in the Mining and Agriculture divisions.
Gross profit increased 26.9% to R1 316 million (2011: R1 037 million) and improved to 21.9% of revenue (2011: 20.9%) due to improved gross margins
in the Mining and Agriculture divisions being partially offset by reduced margins in the Chemicals division.
Other operating income of R71 million (2011: R56 million) included an insurance claim receipt of R21 million (2011: Nil).
Administration overheads increased by 21.7% to R280 million (2011: R230 million). Included in administration expenses are share-based payment
charges of R10 million (2011: R4 million), higher provisions for incentive bonuses and additional costs relating to the new nitric acid complex. Taking
these into account, administration costs were well controlled. Distribution overheads increased by 14.3% to R542 million (2011: R474 million), primarily
due to higher volumes in the Mining division. Other operating expenses comprise foreign exchange loss of R3 million (2011: R24 million) and
amortisation of intangible assets of R15 million (2011: R14 million).
Operating profit increased 55.8% to R547 million (2011: R351 million), on the back of the improved operating margins of our Mining and Agriculture
divisions, offset by a reduction in the operating margin of the Chemicals division. The Mining division improved its operating margin to 16.7% (2011:
13.6%) as a result of an improved gross margin and operating leverage. The Agriculture division operating margin improved to 8.6% (2011: 5.7%) due to
improved gross margins arising from the operation of the new nitric acid complex. Overhead costs remain tightly controlled. The Chemicals division
operating margin reduced to 1.4% (2011: 3.4%) despite overhead costs being contained at the prior year level due to a reduction in the gross margin
percentage.
Finance cost increased from R36 million to R43 million due to higher levels of working capital offset by the lower overall cost of debt due to the
repayment of the high interest rate DMTN debt in November 2011.
Income tax expense increased to R148 million (2011: R87 million), incurring an effective tax rate of 28.9% (2011: 27.4%).
Total assets increased by 20.9% from R7 773 million to R9 394 million due to higher levels of inventories and receivables and capex spend on the new
nitric acid complex.
Property, plant and equipment increased by R620 million to R2 897 million mainly as a result of capex spend on the new nitric acid complex of R488
million, of which R366 million was spent in the second half of FY2012 and R122 million in the current period, and on plant and equipment required to
service increased volumes for the Mining division.
Inventory increased by R559 million from R2 489 million to R3 048 million, primarily due to an increase of R277 million in the Mining division
inventory as a result of raised unit costs caused by substantially higher ammonia prices and an increase in the safety stock levels in West Africa. Trade
and other receivables increased by 18.8% from R2 329 million to R2 766 million in line with the 21.5% rise in revenue.
Equity increased by 16.2% from R3 770 million to R4 381 million as a result of retained earnings of R763 million, an increase of R20 million in
foreign currency translation reserve, offset by R187 million dividend payments.
Cash utilised by operating activities of R667 million was in line with the R619 million utilised by operations in the prior year. Cash outflow from
investing activities of R309 million (2011: R370 million) is due primarily to capex on plant and equipment for the Mining division and the final capex
on the nitric acid complex referred to above. After taking into account the cash outflow from finance activities of R180 million (2011: R1 million),
which included a dividend payment of R121 million (2011: Nil), there was a net cash outflow of R1 156 million (2011: R990 million).
The period ended with a pleasingly strong balance sheet, net debt of R1 870 million (2011: R1 306 million) and a net debt:equity ratio of 42.7%
(2011: 34.6%). Net debt in the prior year had been reduced by an amount of R125 million from the equity raised in September 2010 that had not yet been
expended on the nitric acid complex.
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 western 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 AxxiSoft and BlastMap software solutions.
In southern Africa, Protea Mining Chemicals offers value-added services to complement a wide range of chemical products. These include Protea
Process, a comprehensive service that covers the handling, logistics and on site formulation of chemicals.
Revenue increased 45.6% to R2 007 million (2011: R1 378 million) on the back of strong volume growth especially outside of South Africa and higher
sales prices on the back of the higher ammonia prices and weaker rand. Gross margins improved and operating leverage kicked in as a result of well
controlled overhead costs, resulting in a 79.1% increase in operating profit to R335 million (2011: R187 million) and the operating margin rising from
13.6% to 16.7%.
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
eastern Africa, Australasia and Brazil.
The Agriculture divisions range of specialised products and services are coordinated through its pioneering Nutriology® 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 Nutriology® brand is highly regarded in the regional market and its core concept of value-added service is being increasingly recognised.
Revenue increased 15.9% to R2 181 million (2011: R1 881 million) on the back of higher fertilizer sales prices. Operating profit grew by 74.8% to
R187 million (2011: R107 million), due to gross margin improvement from replacing more expensive purchased nitrates with lower cost nitric acid produced
from the new nitric acid complex. 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 worlds leading chemical producers.
Revenue increased by 8.0% to R1 829 million (2011: R1 693 million), on the back of a volume increase of 4.3% and a 3.7% increase in selling prices.
The reduction in the gross margin percentage more than offset the increase in revenue and with overheads being on par with the previous year, resulted
in the operating profit reducing by 56.1% to R25 million (2011: R57 million). The operating margin at 1.4% is well below the target of 4.5% to 5.5%.
PROSPECTS
The macro environment for the second half appears promising, but it will be strongly influenced by the direction of the global economy and the rand.
Recent further rand weakness will benefit the Group and its customers.
Our Mining division anticipates maintaining the level of first half volumes in the second half and continued high prices for ammonia based products.
Our Agriculture division anticipates favourable planting conditions as agriculture produce prices are expected to remain at high levels. Margins will
continue to be positively affected by the benefits of the new nitric acid plant but will be negatively affected by the unfavorable urea to ammonia
ratio, which is approaching historic lows, caused by the ammonia prices increasing at a much higher pace than the urea price. Ammonia is the key
feedstock used to produce nitrogen fertilizer, whereas the sales price of nitrogen fertilizer is determined by the urea price. Our Chemicals division is
expecting to improve its performance in the second half but is not likely to better the operating margin achieved in FY2012.
DIVIDENDS
The Board has declared an interim gross cash dividend of 150 cents per ordinary share (2011: 100 cents per ordinary share) payable out of income in
respect of the period ended 30 September 2012. The number of ordinary shares in issue at the date of this declaration is 67 249 825. As the company
does not have any STC credits to utilise, 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 127.50 cents per share for those shareholders subject to local dividends tax and 150 cents per
share for those shareholders not subject to local dividends tax. The companys tax reference number is 9400087715.
The salient dates for the interim dividend are as follows:
Last day to trade cum dividend Friday, 11 January 2013
Shares trade ex-dividend Monday, 14 January 2013
Record date Friday, 18 January 2013
Payment date Monday, 21 January 2013
Share certificates may not be dematerialised or materialised between Monday, 14 January 2013 and Friday, 18 January 2013, both dates inclusive.
NJ Crosse RB Humphris NKH Fitz-Gibbon
Chairman Group Managing Director Group Finance Director
22 November 2012
The preparation of the Groups condensed consolidated unaudited interim 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 Advisory (Pty) Ltd, 17 Fricker Road, Illovo 2196
www.omnia.co.za
Date: 27/11/2012 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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