Wrap Text
Unaudited results for the six months ended 30 September 2015
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 2015
FINANCIAL HIGHLIGHTS
- Revenue increased by 2.2% to R7.8bn
- Profit for the period down by 18.1% to R331m
- Operating margin down by 1.4% to 6.9%
- Headline earnings per share down 19.0% to 494.0 cents
- Debt: equity ratio improves from 29.7% to 22.8%
- Dividend down 5.3% to 180 cents per share
SUMMARY CONSOLIDATED INCOME STATEMENT
for the six months ended 30 September 2015
Unaudited Unaudited Audited
6 months 6 months 12 months
Rm 30 Sep 2015 % 30 Sep 2014 31 Mar 2015
Revenue 7 754 2 7 585 16 835
Cost of sales (6 048) 3 (5 858) (12 898)
Gross profit 1 706 (1) 1 727 3 937
Administrative expenses (403) 8 (374) (907)
Distribution expenses (757) 2 (742) (1 524)
Other operating expenses (71) 145 (29) (90)
Other operating income 61 27 48 60
Operating profit 536 (15) 630 1 476
Finance expenses (97) 20 (81) (192)
Finance income 17 (23) 22 47
Share of profit of investments
accounted for using the equity method 1 - 1 -
Profit before taxation 457 (20) 572 1 331
Income tax expense (126) (25) (168) (397)
Profit for the period 331 (18) 404 934
Attributable to: 333 (18) 406 939
Owners of Omnia Holdings Limited
Non-controlling interest (2) - (2) (5)
331 (18) 404 934
Earnings per share from profit attributable
to owners of Omnia Holdings Limited
Basic earnings per share () 494 (18) 606 1 402
Diluted earnings per share () 465 (14) 542 1 308
Headline earnings per share () 494 (19) 610 1 465
Diluted headline earnings per share () 465 (15) 546 1 366
SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 September 2015
Unaudited Unaudited Audited
6 months 6 months 12 months
Rm 30 Sep 2015 30 Sep 2014 31 Mar 2015
Profit for the period 331 404 934
Other comprehensive income, net of tax
Currency translation difference 374 161 367
Total comprehensive income for the period 705 565 1 301
Total comprehensive income attributable to:
Owners of Omnia Holdings Limited 707 567 1 306
Non-controlling interest (2) (2) (5)
705 565 1 301
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 September 2015
Unaudited Unaudited Audited
6 months 6 months 12 months
Rm 30 Sep 2015 30 Sep 2014 31 Mar 2015
Operating profit 536 630 1 476
Depreciation and amortisation 181 170 353
Adjustment for non-cash items 98 49 17
Cash generated from operations 815 849 1 846
Utilised by working capital (949) (1 619) (878)
Interest paid (97) (81) (208)
Interest received 17 22 47
Taxation paid (128) (235) (341)
Net cash (outflow)/inflow from operating
activities (342) (1 064) 466
Cash outflow from investing activities (239) (276) (578)
Cash outflow from financing activities (283) (236) (466)
Net decrease in cash and cash equivalents (864) (1 576) (578)
Net cash and cash equivalents at beginning of
period (699) (131) (131)
Exchange rate movements on cash and cash
equivalents 36 5 10
Net cash and cash equivalents at end of period (1 527) (1 702) (699)
SUMMARY CONSOLIDATED BALANCE SHEET
as at 30 September 2015
Unaudited Unaudited Audited
6 months 6 months 12 months
Rm 30 Sep 2015 30 Sep 2014 31 Mar 2015
ASSETS
Non-current assets 4 537 4 366 4 473
Property, plant and equipment 3 975 3 783 3 927
Intangible assets 535 528 519
Available-for-sale financial assets - 24 -
Investment accounted for using the equity
method 24 31 20
Deferred income tax assets 3 - 7
Current assets 9 159 8 287 7 431
Inventories 5 073 4 484 3 886
Trade and other receivables 3 704 3 461 3 118
Income tax assets 17 - 27
Cash and cash equivalents 365 342 400
Total assets 13 696 12 653 11 904
EQUITY
Capital and reserves attributable to the
owners of Omnia Holdings Limited 7 111 6 295 6 653
Stated capital 1 500 1 289 1 500
Treasury shares (120) (6) (70)
Other reserves 1 408 821 1 028
Retained earnings 4 323 4 191 4 195
Non-controlling interest (13) (8) (11)
Total equity 7 098 6 287 6 642
LIABILITIES
Non-current liabilities 558 424 605
Deferred income tax liabilities 488 331 502
Trade and other payables 37 - 37
Long term debt 33 93 66
Current liabilities 6 040 5 942 4 657
Trade and other payables 4 088 3 820 3 503
Short term debt 60 70 55
Income tax liabilities - 8 -
Bank overdrafts and short term facilities 1 892 2 044 1 099
Total liabilities 6 598 6 366 5 262
Total equity and liabilities 13 696 12 653 11 904
Net debt 1 620 1 865 820
Net working capital 4 689 4 125 3 501
Net asset value per share (Rand) 106 94 98
Capital expenditure
Depreciation 163 153 322
Amortisation 18 17 31
Incurred 239 288 587
Authorised and committed 116 237 92
Authorised but not contracted for 290 231 96
SEGMENTAL ANALYSIS
for the year ended 30 September 2015
Unaudited Unaudited Audited
6 months 6 months 12 months
Rm 30 Sep 2015 % 30 Sep 2014 31 Mar 2015
Revenue, net of inter-segmental sales 7 754 2 7 585 16 835
Agriculture 3 506 23 2 842 7 287
Mining 2 244 (16) 2 676 5 351
Chemicals 2 004 (3) 2 067 4 197
Operating profit 536 (15) 630 1 476
Agriculture 160 (6) 171 656
Mining 305 (28) 424 720
Chemicals 71 103 35 100
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2015
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 (audited) 1 289 (6) 655 3 980 (6) 5 912
Recognised income and
expense for the period:
Profit for the period 406 (2) 404
Currency translation
difference 161 161
Transactions with
shareholders: (195)
Ordinary dividends paid (195)
Share-based payment -
value of services provided 5 5
At 30 September 2014 (unaudited) 1 289 (6) 821 4 191 (8) 6 287
Total recognised income and
expense for the period:
Profit for the period 533 (3) 530
Currency translation
difference 206 206
Change in functional
currency of subsidiary 11 (12) (1)
Transactions with
shareholders:
Ordinary shares issued 211 (37) (405) (231)
Ordinary dividends paid (127) (127)
Treasury shares purchased (66) 15 (51)
Treasury shares sold 2 18 20
Share-based payment -
value of services provided 9 9
At 31 March 2015 (audited) 1 500 (70) 1 028 4 195 (11) 6 642
Total recognised income and
expense for the period:
Profit for the period 333 (2) 331
Currency translation
difference 374 374
Transactions with
shareholders:
Ordinary dividends paid (205) (205)
Treasury shares purchased (50) (50)
Share-based payment -
value of services provided 6 6
At 30 September 2015 (unaudited) 1 500 (120) 1 408 4 323 (13) 7 098
OTHER RESERVES
as at 30 September 2015
Unaudited Unaudited Audited
6 months 6 months 12 months
Rm 30 Sep 2015 30 Sep 2014 31 Mar 2015
Share-based payment reserve 107 129 101
Foreign currency translation reserve 1 280 689 906
Gain on treasury shares sold 18 - 18
Net discount arising on acquisition of shares
of subsidiaries 3 3 3
1 408 821 1 028
RECONCILIATION OF HEADLINE EARNINGS
for the six months ended 30 September 2015
Unaudited Unaudited Audited
6 months 6 months 12 months
Rm 30 Sep 2015 30 Sep 2014 31 Mar 2015
Profit for the period attributable to owners of
Omnia Holdings Limited 333 406 939
Adjusted for loss on disposal of fixed assets - 1 3
Adjusted for impairment of available-for-sale
financial asset - - 39
Headline earnings 333 407 981
NOTES
Basis of preparation
This interim report has 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
Reporting 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 preparation of this interim report 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 interim results have neither been reviewed nor audited by the Group’s auditors.
ADDITIONAL INFORMATION
for the six months ended 30 September 2015
Unaudited Unaudited Audited
6 months 6 months 12 months
000’s 30 Sep 2015 30 Sep 2014 31 Mar 2015
Weighted average number of shares in issue 67 381 66 687 66 970
Weighted average number of diluted shares
in issue 71 665 74 492 71 799
Number of shares in issue
(excluding treasury shares) 67 173 66 782 67 471
COMMENTARY
Introduction
Omnia is a diversified provider of specialised chemical products and services used in the
agriculture, mining and chemical sectors. Omnia’s corporate office is in Johannesburg,
South Africa and its main production facility in Sasolburg, some 70 kilometers south of
Johannesburg. The Group’s operations extend into 16 countries on the African continent,
including South Africa, with focused operations also in Australasia, Brazil, China and
Mauritius. Our 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 its intellectual capital. The sustainability
of the business model is based on and strengthened by its targeted backward integration,
through installing technologically advanced plants to manufacture core materials such as
nitric acid and explosives emulsions. Omnia provides customised, knowledge-based solutions
through its Agriculture, Mining and Chemicals divisions. The Group’s proven business model
makes it a market leader in the distribution of industrial chemicals. Omnia continues to grow
and prosper, offering extraordinary value to customers by tailoring solutions to their business
needs through product and service innovation, and the expert application thereof.
Macro environment
The global economy is facing headwinds on several fronts, with most commodities - whether
they be metals, oil or grains - in complete oversupply. The chief driving factor seems to be the
realisation that growth in China is slowing down, following many years of strong growth.
Mining has been the primary growth engine for the Group for the last five years. The downturn
in the mining sector, which started in the last quarter of the 2014 calendar year continues.
In the short-term, the situation is expected to remain weak or to deteriorate further and
will probably not turn the corner for another few years. Although the weakening of the
Rand:US dollar exchange rate has been mostly positive for our business, similar to the previous
financial year, this effect has been neutralised by weakening US dollar denominated commodity
prices across the board caused by general markets’ oversupply and the strengthening of the
US dollar against all major currencies. These factors contribute to the slowdown in mining activity
across the globe.
Changing weather patterns and the prospect of an El Niño effect over southern Africa continue
to affect the early part of the rainy season.
Statistics show that the weak manufacturing sector in South Africa continues to slow, making for
a continued difficult environment for the Chemicals division.
FINANCIAL REVIEW
Group revenue rose by 2.2% to R7 754 million (2014: R7 585 million) on the back of mixed
results from the three divisions, with encouraging volume growth in the Agriculture division,
lower volumes in the Mining division and flat prices achieved in the Chemicals division.
Gross profit decreased by 1.2% to R1 706 million (2014: R1 727 million) and gross profit percentage
was marginally lower at 22.0% of revenue (2014: 22.8%) due to higher gross margins in the
Mining and Chemicals divisions, offset by lower gross margins in the Agriculture division.
Administrative expenses increased by 7.8% to R403 million (2014: R374 million) as a result of weaker
exchange rates and further provisions for bad debts. Distribution overheads increased by 2.0% to
R757 million (2014: R742 million), which is in line with the increase in revenue. Other operating
expenses of R71 million (2014: R29 million), included R53 million (2014: R12 million) in foreign
exchange losses, largely driven by the weaker Rand:US dollar exchange rate and volatility of the local
currencies of various African countries in which we operate. Amortisation of intangible assets, at
R18 million (2014: R17 million), increased marginally.
Operating profit decreased by 14.9% to R536 million (2014: R630 million), with the improved
operating profit in the Chemicals division offset by the reduction in the Agriculture and Mining
divisions. Overall, the operating margin for the six month period reduced from 8.3% to 6.9%.
Whereas the Chemicals division’s operating margin increased to 3.5% (2014: 1.7%) as a result
of the positive effect of the restructuring exercise, improved product mix and margin focus, the
Mining division’s operating margin was lower at 13.6% (2014: 15.8%) due to pricing pressure
and additional provisions in the first six months. The Agriculture division’s operating margin
decreased to 4.6% (2014: 6.0%) due to sales mix and pricing pressure at the early stage of the
planting season.
Net finance expenses increased by R21 million to R80 million (2014: R59 million) due to higher
levels of borrowings during the period, due to higher fertilizer inventory levels carried over from
year end.
Income tax expense decreased by 25.0%, or R42 million, to R126 million (2014: R168 million)
due to the lower levels of profitability. The effective tax rate at the half year was lower period-
on-period at 27.6% (2014: 29.4%).
Profit after tax decreased by 18.1%, or R73 million, from R404 million in the previous
corresponding period to R331 million in the current period.
Total assets increased by 8.2%, or R1 043 million, from R12 653 million in the previous
corresponding period to R13 696 million in the current period primarily as a result of higher levels
of inventories, receivables and capital expenditure.
Property, plant and equipment increased by R192 million to R3 975 million primarily as a result
of capital expenditure incurred in the period under review, that relates to normal replacement
capital.
Inventory increased by 13.1%, or R589 million, from R4 484 million in the previous corresponding
period to R5 073 million, primarily due to an increase of R710 million in the Agriculture division.
This increase is attributable to higher production efficiency resulting in increased production
output ahead of the planting season, delayed commencement of fertilizer deliveries pending
the start of the seasonal rains in South Africa and higher commodity input prices in Rand terms.
Inventory in the Mining division decreased by R96 million while inventory in the Chemicals
division decreased by R25 million.
Trade and other receivables increased by 7.0%, or R243 million, from R3 461 million in the
previous corresponding period to R3 704 million in the current period, due to increased sales
outside South Africa. Current trade and other payables increased by 7.0%, or R268 million, from
R3 820 million in the previous corresponding period to R4 088 million, due to the timing of the
working capital cycle. Total net working capital increased period-on-period by 13.7%, or
R564 million, from R4 125 million to R4 689 million, represented mostly by the increase in inventories.
Equity increased by 12.9%, or R811 million, from R6 287 million in the previous corresponding
period to R7 098 million in the current period. The net increase in equity was due to an increase
in retained earnings of R461 million, foreign currency translation reserves of R579 million and
R6 million in other reserves and movements, offset by R332 million in dividend payments. Period
on period ordinary shares of R211 million were issued and treasury shares of R114 million were
purchased.
Cash utilised by operating activities of R342 million (2014: R1 064 million) was R722 million lower
than the previous six month period due to the decrease of R670 million in net working capital
utilised and the R107 million decrease in taxation paid. Cash outflow from investing activities
of R239 million (2014: R276 million) was R37 million lower due to the completion of certain
capital projects in the prior corresponding period. After taking into account the R283 million
(2014: R236 million) cash outflow from financing activities, which included a dividend payment
of R205 million (2014: R190 million), the negative cash and cash equivalents position at the end
of the six month period was lower by R175 million at R1 527 million (2014: R1 702 million).
Net debt at the end of the six month period was R245 million lower at R1 620 million
(2014: R1 865 million) and the net debt:equity ratio improved by 6.9% to 22.8% (2014: 29.7%).
DIVISIONAL REVIEW
Agriculture
The Agriculture division comprises Omnia Fertilizer and Omnia Specialities and is
the market leader in its field in 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 southern and East Africa and to select markets in
Australasia and Brazil.
The Agriculture division’s competitive edge lies in Nutriology(R), or what we call the "science of
growing". The science of growing is our business philosophy and involves more than just selling
fertilizer to farmers - it is about optimising yield and crop quality to maximise 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(R)
also includes cutting-edge research and development that results in the development of new
products, services and farming practices. The Omnia Nutriology(R) brand is highly regarded in
the regional market and strongly supports management’s vision of creating customer wealth
through leveraging knowledge.
Revenue increased by 23.4% to R3 506 million (2014: R2 842 million) due to higher volumes.
Sales volumes in the lower margin wholesale business increased period on period. New business
development in the Western Cape has been encouraging. Operating profit decreased by 6.4%
to R160 million (2014: R171 million) due to a combination of lower margins and increased
expenses. During the period under review, the ammonia to urea ratio remained at unfavourable
levels in relation to the long-term average.
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: it produces electronic delay detonators and shocktube initiating
systems; it has its own range of 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. Its 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
solutions in combination with the accuracy of the AXXIS(R) Digital Initiation System that is used to
control the electronic delay detonators in the blasting process. BME continues to make advances
in developing new markets for the AXXIS(R) Digital Initiation System, with a number of successful
trials in new foreign markets.
Protea Mining Chemicals provides a suite of value-adding 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(R), a comprehensive service that covers the design of
equipment, logistics and on-site management and make up of chemicals and reagents.
Revenue decreased by 16.1% to R2 244 million (2014: R2 676 million) due to volume reductions
and pricing pressure across all markets. The gross margin improved due to changes in product
mix and improved efficiency in raw material procurement. Operating margin was lower, due
to the US dollar denominated costs reported in South African rands and the lead time to
proportionately reduce overheads and other costs in the local and international businesses,
with the fall in margin and reduction in volumes. Overall, the Mining division’s operating profit
decreased by 28.1% to R305 million (2014: R424 million) and the operating margin was lower
at 13.6% (2014: 15.8%).
Chemicals
The Chemicals division’s main business, Protea Chemicals, is a long-established
and well-known manufacturer and distributor of speciality, functional and effect
chemicals and polymers. It has a significant presence in every sector of the
broader chemicals distribution market throughout southern and East Africa. Protea
Chemicals represents many leading domestic and international chemical producers, providing
cost-effective and efficient distribution channels for their 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. The business operation, Zetachem, manufactures
and distributes chemicals for the treatment of water to render it potable, a function mostly
undertaken through municipalities.
Revenue decreased marginally to R2 004 million (2014: R2 067 million) on the back of slightly
higher volumes, marginal reduction in unit selling prices and a change in product mix. The
gross margin improved slightly due to competitive pricing achieved compared to the prior
corresponding period. Overheads decreased slightly. Operating profits increased sharply to
R71 million (2014: R35 million) and at an operating margin of 3.5% (2014: 1.7%), with the
benefits of the restructuring exercise taking effect.
PROSPECTS
The Group expects that all three divisions - Agriculture, Mining and Chemicals - will continue
to face different challenges in the short- to medium-term based on various factors. Omnia will
continue to drive organic growth opportunities to build on the strengths in each division and
expand the underlying businesses where possible. In addition, the Group remains focused on
identifying acquisition opportunities considered to be appropriate for the business. In terms of
the markets in which Omnia operates, a key area of concern is the international mining sector
which is expected to remain in a depressed state for the next few years until global commodity
prices start to improve. Management continues to focus on opportunities in this sector, including
the development of markets for the AXXIS(R) Digital Initiation System and the recently launched
underground mobile pumping system with the inherent safety and security benefits to mining
customers. Overall, the Mining division faces a number of challenges over the next few years.
The Agriculture division is appropriately positioned ahead of the summer planting season, with
a strong performance expected in the second half of the year, subject to favourable rainfalls in
southern Africa. The Chemicals division’s increased performance is expected to continue in the
second half of the year, with the full benefits of the restructuring exercise taking effect.
For the past couple of years a multi-disciplinary team has also been working on identifying and
investigating numerous opportunities to create further growth for the Group. The opportunities
currently being explored include backward integration, market diversification as a possible
fourth leg to the Group’s strategy/structure and potential mergers and acquisitions in similar
or related businesses. The focus areas are sufficiently broad and exciting to present numerous
opportunities worth pursuing. However, the timing of these potential events remains uncertain
at this stage.
The weakening of the South African Rand against the US dollar is positive for the Group. The
weaker Rand is a fundamental driver of the Group’s profitability not only driving margins, which
are principally denominated in US dollars, but also driving volumes as in the main our customers,
benefit from a weaker exchange rate.
CHANGES TO THE BOARD DURING THE PERIOD
Mr Noel Fitz-Gibbon resigned as non-executive director with effect from 22 June 2015.
Ms Khuma Shongwe resigned as independent non-executive director with effect from
17 July 2015.
DIVIDENDS
The Board has declared an interim gross cash dividend of 180 cents per ordinary share (2014: 190 cents
per ordinary share) payable out of income in respect of the period ended 30 September 2015.
The number of ordinary shares in issue at the date of this declaration is 68 293 352 participation
shares. 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 shareholders subject to local dividends tax and 180 cents per share for those shareholders
not subject to local dividends tax. Omnia’s tax reference number is 9400087715.
The salient dates for the interim dividend are as follows:
Last day to trade cum dividend Friday, 8 January 2016
Shares trade ex-dividend Monday, 11 January 2016
Record date Friday, 15 January 2016
Payment date Monday, 18 January 2016
Share certificates may not be dematerialised or materialised between Monday, 11 January 2016
and Friday, 15 January 2016, both dates inclusive.
NJ Crosse RB Humphris WG Koonin
Chairman Group managing director Group finance director
24 November 2015
Directors:
RC Bowen (British), FD Butler, NJ Crosse (chairman), 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
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