| Wed 20 Jun 2007, 9:21 | | OMN - Omnia Holdings Limited - Reviewed Provisiona |
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OMN
OMN
OMN - Omnia Holdings Limited - Reviewed Provisional Results For The Year
Ended 31 March 2007 and dividend distribution
OMNIA HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1967 / 003680 / 06
Share code: OMN & ISIN: ZAE000005153
Reviewed provisional results for the year ended 31 March 2007
Balanced business continues to deliver
Highlights
- Revenue increased by 28% to R5.5 billion
- Net profit for the year increased by 60% to R246 million
- Basic earnings per share increased by 59% to 560.3 cents
- Headline earnings per share increased by 58% to 558.2 cents
- Final dividend distribution to shareholders of 90 cents (160 cents for
the full year, an increase of 10%)
Condensed Consolidated Income Statements
for the year ended 31 March 2007
Reviewed Audited
R million 2007 % 2006
Revenue 5 537 28% 4 331
Cost of sales (4 398) (3 463)
Gross profit 1 139 31% 868
Operating expenses (717) 24% (579)
Operating profit 422 46% 289
Net finance cost (58) (59)
Interest paid (80) (70)
Interest received 18 13
Forex gain/(loss) 4 (2)
Profit before taxation 364 58% 230
Taxation (118) (76)
Net profit for the year 246 60% 154
Attributable to:
- Equity holders of the Company 246 154
Basic earnings per share (cents) 560.3 59% 353.2
Fully diluted basic earnings per 553.2 59% 347.0
share (cents)
Final dividend paid per share (cents) 85.0 9% 78.0
in respect of prior year
Interim dividend per share (cents)
paid in respect of
the current year 70.0 60.0
Weighted average number of shares in 43 772 1% 43 509
issue (`000)
Weighted average number of fully 44 338 44 291
diluted shares in issue (`000)
Number of shares in issue (`000) 43 943 43 607
Condensed Consolidated Balance Sheets
as at 31 March 2007
Reviewed Audited
R million 2007 % 2006
Assets
Property, plant and equiment 760 18% 642
Intangible assets 436 455
Deferred taxation 3 4
Current assets 1 924 38% 1 398
3 123 2 499
Equity and liabilities
Shareholders` equity 1 250 23% 1 020
Deferred taxation 83 88
Non-current liabilities 33 13% 29
Current liabilities 1 757 29% 1 362
3 123 2 499
Net interest-bearing debt 265 303
Net asset value per share (Rand) 28.44 22% 23.39
Capital expenditure
Depreciation 59 55
Amortisation 20 20
Incurred 188 93
Authorised and committed 33 12
Authorised but not contracted for 174 197
Condensed Consolidated Cash Flow Statements
for the year ended 31 March 2007
Reviewed Audited
R million 2007 % 2006
Operating profit 422 46% 289
Depreciation and amortisation 79 75
Adjustment for non-cash items (6) (10)
(Utilised)/generated by working (60) 1
capital
435 355
Interest paid (80) (70)
Interest received 18 13
Taxation paid (100) (83)
Dividends paid (68) (60)
Generated by operations 205 155
Cash outflow from investing (175) (87)
activities
Cash inflow/(outflow) from financing 8 (147)
activities
Net increase/(decrease) in cash 38 (79)
Net overdraft at beginning of year (275) (196)
Effects of exchange rate movements 3 -
Net overdraft at end of year (234) (275)
Statement of Changes in Shareholders` Equity
Ordinary Shareholders` Equity
Stated Treasury Other Retained Minority
R million capital shares reserves earnings interest Total
At 31 March 201 (22) (14) 755 2 922
2005
Net profit for
the year ended
31 March 2006 154 154
Decrease in
foreign
currency
translation (4) (4)
reserve
Share-based 6 6
payment
Treasury shares 2 2
sold
Ordinary (60) (60)
dividends paid
At 31 March 201 (20) (12) 849 2 1 020
2006
Net profit for
the year ended
31 March 2007 246 246
Increase in
foreign
currency
translation 42 42
reserve
Share-based 6 6
payment
Treasury shares 4 4
sold
Ordinary (68) (68)
dividends paid
At 31 March 201 (16) 36 1 027 2 1 250
2007
Other Reserves
2007 2006
Reserves comprise of:
Net discount arising on acquisition of 3 3
shares of subsidiaries
Foreign currency translation reserve 14 (28)
Share-based payment reserve 19 13
36 (12)
Condensed Segmental Analysis
for the year ended 31 March 2007
Reviewed Audited
R million 2007 % 2006
Revenue, net of intersegmental sales 5 537 28% 4 331
Chemicals 2 624 25% 2 103
Mining 1 001 19% 841
Agriculture 1 912 38% 1 387
Operating profit 422 46% 289
Chemicals 127 13% 112
Mining 138 7% 129
Agriculture 157 227% 48
Reconciliation of headline earnings
Reviewed Audited
R million 2007 2006
Net profit for the year 246 154
Profit on disposal of fixed assets (1) -
Headline earnings 245 154
Notes
Accounting policies
The condensed consolidated financial statements for the year ended 31 March
2007 were prepared in accordance with IAS 34 - Interim Financial Reporting
and in compliance with the Listing 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 2007 are consistent with those applied for the year ended 31
March 2006.
Headline earnings
Headline earnings are 558.2 cents per share (2006: 354.3 cents per share).
Diluted headline earnings are 551.1 cents per share (2006: 348.0 cents per
share).
Hyperinflation
The hyperinflation adjustments, as required by the accounting standard IAS
29 - Financial Reporting in Hyperinflationary Economies, result from the
continued devaluation in the Zimbabwean Dollar. The most significant
adjustment is an increase in gross profit for the year by R2.2 million
(2006: R0.3 million increase). The net impact of these hyperinflation
adjustments to the group is a net loss of R0.4 million (2006: R1.9 million
loss).
Dividends
A dividend of 85 cents per share was declared on 19 June 2006 in respect of
the earnings of the previous financial year. This dividend is reflected in
the current year to 31 March 2007. In addition an interim dividend of 70
cents per share was declared on 27 November 2006 in respect of the current
year.
A final dividend of 90 cents per share was declared on 15 June 2007,
bringing the dividend for the year to 160 cents per share, compared to 145
cents in respect of the prior year.
Review opinion
The Group`s auditors, PricewaterhouseCoopers Inc., have reviewed the
condensed consolidated financial information for the year ended 31 March
2007 contained in this report. The review opinion is available for
inspection at the company`s registered office during normal business hours.
Commitments
The future minimum lease payments under non-cancellable operating leases are
R21.1 million (2006: R17.1 million) within one year, R46.9 million (2006:
R57.3 million) between two and five years and R0.2 million (2006: R0.6
million) later than five years, giving a total of R68.2 million (2006: R75.0
million).
Goodwill
An annual impairment test on the balance of goodwill has been performed at
30 September 2006. No impairment loss has occurred.
Subsequent Events
Omnia has undergone an internal restructure to simplify its structure and
facilitate the introduction of an employee owned BEE company as a 10% equity
partner. Shareholders are referred to a more detailed recent announcement in
this regard.
Commentary
Introduction
Omnia is a diversified and specialist chemical services company which
provides customised solutions in the chemicals, mining and agriculture
markets. The results for the year ended 31 March 2007 reinforces the
benefits arising from the improved balance of business provided by the
diversification within the Group.
As anticipated, in the year to March 2007, the earnings of the Agriculture
division reverted to historical levels, returning overall earnings for the
Group to acceptable levels. The upturn in the market, resulting from the
resumption of hectares planted to maize following its price recovery, also
enabled the Group to maintain its challenging target of an annual 10% real
growth in earnings over the five year period that began in 2005.
Despite an improved financial performance, the year was again marked by
significant increases in raw material prices, particularly nitrogen
products, which continued to increase steeply, reaching record highs in the
year under review. This exerted pressure on margins in both the agricultural
and mining businesses significantly impacted the working capital required to
fund the increasing value of inventory.
Financial review
The Group results are reported in accordance with International Financial
Reporting Standards ("IFRS").
Revenue for the year increased by 28% to R5,5 billion (2006: R4,3 billion)
while net profit increased by 60% to R246 million (2006: R154 million). The
basic earnings per share rose to 560.3 cents per share (2006: 353.2 cents
per share), reflecting a 59% increase, in line with previous guidance, while
headline earnings per share rose to 558.2 cents.
Operating expenses net of other income, increased by 24% to R717 million
(2006: R579 million). This increase is below the increased level of activity
as focus on containing costs remains a priority.
The resumption in hectares planted to maize in South Africa to more normal
levels, resulted in operating margins in the Agriculture business reverting
to the levels previously achieved. However, the marked increase in raw
material prices, particularly nitrogen products, depressed margins in both
the Agriculture and Mining businesses. The Chemicals business had a
noteworthy year, benefiting from the growth in national manufacturing
output, the weakening in the average exchange rate and the marked recovery
from the overstocked position in the Polymer division that prevailed during
the previous financial year.
Operating profit rose by 46% to R422 million (2006: R289 million) and, as a
result of the improved margins in Agriculture, Group operating margin
increased to 7.6% (2006: 6.7%) for the year under review.
With the continued increase in raw material prices, working capital levels
are higher than those that prevailed during the prior period. This has
resulted in an increase in net interest paid of 9% to R62 million (2006: R57
million). A foreign currency gain of R4million (2006: R2 million loss)
mainly in respect of foreign bank balances was recorded, due to the decline
in the rand against most major currencies.
The Group generated R205 million (2006: R155 million) in cash from its
operating activities before capital expenditure during the year under
review. Capital expenditure doubled to R175 million (2006: R87 million)
reflecting the investment being made by the Group in various expansion
projects.
Some of these projects include:
* the construction of an "EcoGypsum" plant for the processing of forced-
arising gypsum for subsequent use in the cement industry
* the building of a reactor to reduce greenhouse gas emissions at the
Agriculture division`s Sasolburg plant
* the building of a shocktube assembly plant to benefit from the market
moving away from the outdated capped fuse product
Notwithstanding this increase in capital investment, the Group achieved a
reduction in net interest bearing debt at year end to R265 million (2006:
R303 million) and a related reduction in the debt : equity ratio to 21%
(2006: 30%).
Operational review
Chemicals
The Chemicals division, Protea Chemicals, is the leading distributor of
speciality, functional and effect chemicals in Africa. It has an established
presence in every sector of the chemical distribution market.
As a supplier to the manufacturing industry, Protea Chemicals has benefited
significantly from the growth in the South African economy. Volumes have
increased across almost all business units while the weakening of the rand
has contributed further to price increases. In certain instances price
increases also occurred as a result of global product shortages.
Revenue increased by 25% to R2,6 billion (2006: R2,1 billion) with operating
profit increased by 13% to R127 million (2006: R112 million). A change in
product mix, with notably greater polymer volumes, coupled with a change in
an important agency contract, has resulted in a decrease in operating margin
to 4.8% (2006: 5.3%). The division contributed 30% to Group operating
profits (2006: 39%), the reduction in contribution being due to the
appreciable increase in Agriculture`s contribution in the financial year.
Mining
The Mining division is a market leader in blended bulk explosives
formulations for surface mines, and manufactures packaged explosives for
underground mines and specialised surface blasting. It also supplies
blasting accessories and a complete range of mining chemicals.
The division continued its volume growth, particularly in mining chemicals,
both locally and internationally. Revenue increased by 19% to R1 billion
(2006: R841 million) and operating profit increased by 7% to R138 million
(2006: R129 million), contributing 33% to Group operating profits (2006:
45%). However, the operating margin decreased to 13.8% (2006: 15.4%).
Several factors contributed to the reduction in margins:
* competitive pressures in the face of increasing raw material input costs
* significant increases in transport costs that could not be passed on to
customers
* the increased cost of capital and human resources required to manage the
planned future business growth. Some new contracts have yet to result in
material increases in volumes
* the loss of significant explosives business due to the division`s
inability to secure the continued supply of the required initiating systems.
These factors are seen as being temporary in nature as volumes from new
contracts start to manifest themselves, contract renewals are adjusted to
cater for the increased cost of transport and the Group`s own shocktube
assembly plant reaches its commissioning stage. Notwithstanding these
actions, the margins in the Mining division will tend to be lower than those
achieved in the past due to the impact of the increasing volumes of lower
margin mining chemicals.
Agriculture
The Agricultural division produces and supplies granular, liquid and
speciality fertilizers to individual farmers, co-operatives and wholesalers
throughout South Africa, and increasingly sub-Saharan Africa, as well as to
Madagascar,
Australia and New Zealand.
The environment within which the Agriculture division operates has
normalised to a great extent following the considerable reduction in
hectares planted to maize during the prior year.
However, the mid-summer heat wave destroyed much of the maize crop, thus
eliminating any further fertilizer applications in some areas, reducing the
positive impact of improved markets.
Revenue returned to previous levels increasing by 38% to R1.9 billion (2006:
R1.4 billion) while operating profit increased by 227% to R157 million
(2006: R48 million) and the operating margin increased to 8.2 % (2006:
3.4%). The margin was nevertheless still somewhat depressed as a result of
the unprecedented increase in input costs, notably the nitrogen products.
Prospects
The South African economy has seen significant growth recently, driven by
low interest rates and an upsurge in Gross Domestic Fixed Investment
expenditure. The weakening rand has enabled the manufacturing sector to
contribute to this growth. Protea Chemicals, as a supplier to the
manufacturing sector, benefited from this growth, finding new applications
in the process and continues to grow its volumes. The division is well
positioned to embrace further growth opportunities and to deliver an
enhanced value proposition.
The continued strong growth in world metal and mineral demand has benefited
the explosives and mining chemical markets and, notwithstanding the
depressed margins of the past year, continued real growth should be
achieved. There is significant potential for the Mining division`s future
growth into Africa and renewed focus and energy will be directed at taking
advantage of the opportunities that arise from the division`s increasing
presence both in South Africa and in countries to the north of it.
The elimination of the maize stockpile that prevailed prior to the previous
planting season saw the demand for fertilizer return to normal levels in the
year under review. The restored environment, coupled with the substantial
increase in international grain prices, and the related focus on renewable
energy resources, should impact favourably on the fertilizer business and
the Group as a whole going forward. The division has a strong position in
Africa, which is considered a growth opportunity with the prospect of more
tonnage being sold.
After the third year, the Group is on target to meet its five year
management plan.
The Group has embarked on a number of innovative projects that will impact
significantly on improved logistical and raw material efficiencies, as well
as environmental improvements. As mentioned earlier, one such project is the
reduction in greenhouse gases. Omnia`s Clean Development Mechanism ("CDM")
project has been validated and certified by the Executive Board of the Kyoto
Protocol. Commissioning of the project will commence in the second half of
the 2008 financial year and will allow Omnia Fertilizer, at its Sasolburg
plant, to generate approximately 500 000 Certified Emission Reduction
("CER") units per annum. Based on current price levels Omnia could
potentially earn approximately R60 million per annum in revenue from
calendar year 2008, over the five year period of the accord. These CER units
are traded as commodities and future price movements will depend on supply
and demand factors.
Omnia has undergone an internal restructure effective 1 April 2007 to
simplify its structure and facilitate the introduction of an employee owned
Black Economic Empowerment ("BEE") company as a 10% equity partner in the
Group. A more detailed announcement has been made under a separate SENS
announcement.
Dividend
The Board is pleased to announce that it has declared a final dividend of 90
cents in respect of shareholders recorded in the register on Friday 13 July
2007. This final dividend brings the dividend for the full year ended 31
March 2007 to 160 cents (after inclusion of the interim dividend of 70 cents
per share) compared with the 145 cents paid in respect of the prior full
year.
The last day to trade in the company`s shares cum dividend will be Friday 6
July 2007. The shares will commence trading ex dividend on Monday 9 July
2007 and the record date will be Friday 13 July 2007. The payment date will
be Monday 16 July 2007. Share certificates may not be dematerialised or
rematerialised between Monday 9 July and Friday 13 July 2007, both dates
inclusive.
NJ CROSSE RB HUMPHRIS
Chairman Managing Director
Bryanston 20 June 2007
Directors
NJ Crosse (Chairman), FD Butler, DL Eggers* (Group Finance Director), NKH
Fitz-Gibbon*, RB Humphris* (Group Managing Director), Prof SS Loubser, Dr WT
Marais, RR Masebelanga, JG Pretorius, DC Radley, TR Scott
*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
11 Diagonal Street, Johannesburg 2001
PO Box 4844, Johannesburg 2000
www.omnia.co.za
Date: 20/06/2007 09:21:26 Produced by the JSE SENS Department.
