| Fri 30 Mar 2001, 0:00 | | Omnia Holdings 12 Months Interim Results |
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OMNIA HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 67/03680/06)
("Omnia" or the Group")
Group Interim Results
For the 12 months to 31 December 2000
Consolidated income statements
Unaudited Audited
12 months 12 months
1/1/2000 to 1/1/1999 to
R'000 31/12/2000 31/12/1999
Revenue 1 466 523 1 144 083
Cost of sales (1 065 453) (733 063)
Gross profit 401 070 411 020
- At historical cost 430 947 414 078
- Hyperinflation adjustments
(offset by R39 020 included in
finance costs) (29 877) (3 058)
Operating costs before depreciation
and net of other income (341 726) (283 127)
Historical operating costs before
depreciation and net of other income (336 208) (282 331)
Hyperinflation adjustments (5 518) (796)
Earnings before interest,
taxation and depreciation 59 344 127 893
Depreciation (34 105) (29 233)
Operating profit 25 239 98 660
Finance costs
- Interest paid (42 716) (42 435)
- Forward cover costs (10 707) (7 959)
- Net monetary gain/(loss) 39 020 (396)
Income from associates 788 970
Profit before taxation 11 624 48 840
Taxation (789) 375
Profit after taxation 10 835 49 215
Minority interest (173) (305)
Net profit for period 10 662 48 910
Headline earnings per share (cents) 27,8 129,6
Basic earnings per share (cents) 27,8 129,6
Weighted average number of
shares in issue ('000) 38 290 37 741
Dividends per share (cents) 22 62
Fully diluted earnings (R'000) 10 662 48 910
Fully diluted earnings
per share (cents) 27,8 129,5
Weighted average number of
fully diluted shares in issue ('000) 38 307 37 780
Consolidated balance sheets
Unaudited Audited
R'000 31/12/2000 31/12/1999
Assets
Fixed assets 408 083 395 593
Investments and loans 3 355 1 455
Current assets 622 389 553 783
1 033 827 950 831
Equity and liabilities
Ordinary shareholders' equity 319 539 301 344
Minority interest 1 500 1 500
Long-term liabilities 60 736 83 406
Deferred tax 19 781 19 552
Current liabilities 632 271 545 029
1 033 827 950 831
Net interest bearing debt 238 924 243 690
Net asset value per share (Rands) 8,35 7,81
Capital expenditure
Incurred 46 595 128 358
Authorised and committed 16 839 21 375
Authorised but not contracted for 3 168 30 386
Consolidated cash flow statements
Unaudited Audited
12 months 12 months
1/1/2000 to 1/1/1999 to
R'000 31/12/2000 31/12/1999
Cash generated by operations 116 686 127 089
Financial costs and taxation (59 433) (57 449)
Generated by/(utilised for)
working capital 11 011 (22 008)
Available from operations 68 264 47 632
Dividends paid (17 104) (30 013)
Cash inflow from operating activities 51 160 17 619
Cash outflow from investment activities (46 390) (110 425)
Cash outflow from financing activities (26 456) (22 700)
Net increase in bank borrowings (21 686) (115 506)
Net bank borrowings at
beginning of period (121 582) (6 076)
Net bank borrowings at end of period (143 268) (121 582)
Segment analysis
Unaudited Audited
12 months 12 months
1/1/2000 to 1/1/1999 to
R'000 31/12/2000 31/12/1999
Revenue 1 466 523 1 144 083
Fertilizer 1 283 026 1 008 653
Less: Intersegment sales (120 047) (121 263)
Explosives and chemicals 303 544 269 509
Less: Intersegment sales - (12 816)
Operating profit 25 239 98 660
Fertilizer 14 103 80 234
Explosives and chemicals 11 136 18 426
Statement of changes in ordinary shareholders' equity
Non-
R'000 Share capital distributable Retained
Unaudited and premium reserves earnings Total
At 1 January 1999 73 707 22 101 202 224 298 032
Change in accounting policy -
provision for dividends - - 16 281 16 281
Change in accounting policy -
loan to share incentive scheme (18 631) - - (18 631)
Change in accounting policy -
deferred taxation - - (23 614) (23 614)
At 1 January 1999 restated 55 076 22 101 194 891 272 068
Movement in foreign currency
translation reserve - 1 947 - 1 947
Transfer to income statement of
post-acquisition retained
earnings and reserves
of associates - (110) 110 -
Loan to
Omnia Share Incentive Scheme (1 377) - - (1 377)
Earnings attributable to
ordinary shareholders - - 48 910 48 910
Goodwill arising on acquisition
of subsidiary written-off - - (886) (886)
Goodwill arising on issue of
shares in terms of the
partnership with management
scheme written-off - - (9 182) (9 182)
Issue of ordinary shares 14 289 - 14 289
Ordinary dividends paid - - (24 425) (24 425)
At 31 December 1999 67 988 23 938 209 418 301 344
Movement in foreign currency
translation reserve - 17 368 - 17 368
Transfer to income statement of
post-acquisition retained
earnings and reserves
of associates - (89) 89 -
Loan to
Omnia Share Incentive Scheme (876) (876)
Earnings attributable to
ordinary shareholders - - 10 662 10 662
Ordinary dividends paid - - (8 959) (8 959)
At 31 December 2000 67 112 41 217 211 210 319 539
COMMENTS
As announced on 25 August 2000, the Group has changed its year-end from 31
December 2000 to 31 March 2001. As a result, the current financial year will be
for a 15-month period.
The overproduction of maize from the 1999/2000 season together with a high
proportion of poor quality maize, resulting from excessive rain, led to lower
maize prices and therefore lower returns to the farmers. Agriculture responded
in 2000/2001 by reducing maize hectarage by 18% when compared to the previous
year, despite the excellent agricultural conditions at planting.
The price of ammonia, the major raw material component in fertilizer and
explosives, rose steeply from September just prior to the start of the
fertilizer season. Although price adjustments were made to all products as
reflected in the 28% increase in revenue, the cost of sales increased by 45%
leading to significant cost absorption.
Shareholders were advised on 9 February 2001 that the group's earnings would be
reduced by approximately R30 million caused by a reduction in earnings in one
of its African subsidiaries. Further commentary is contained in the discussion
on the Fertilizer division below.
Notwithstanding the poorer margins, cash inflow from operating activities
improved by 190% which, when combined with the reduction in capital expenditure
resulted in the Debt:Equity ratio improving to 75% from the comparable 81% at
the end of December 1999.*
On 26 September 2000 a critical component of the nitric acid plant had to be
shut down due to a component failure. This event has given rise to an insurance
claim for loss of profits aggregating R5 million. As the claim is not yet fully
finalised it has not been recognised in the results to the end of December.
FERTILIZER
Volumes in the Fertilizer division were comparable with those achieved in the
previous 12-month period. It is becoming clear that the approach of adding
value to our customers through agronomic and other services is beginning to
reap benefits. This is complemented by a new wave of technical developments in
the field of plant nutrition in which Omnia is a leader.
As a result of the sharp upward movement in fertilizer prices, revenue
increased by 31% to R1,163 million. The rapid increase in the input costs
however had the effect of reducing the margin by 82% to R14,1 million at the
operating profit line.
The Zimbabwean operation managed the decline in farming activities in Zimbabwe
extremely well limiting the impact on the Group results to December. A pleasing
increase in sales has taken place in the first quarter of 2001.
As noted above the Group would be adversely affected by the reduced earnings in
one of its African subsidiaries. This resulted from three circumstances which
arose in Zambia. The bulk of the reduced profits is attributed to the late
award of a substantially reduced annual tender which was material to the
business. Delivery was also delayed from 31 December 2000 to January 2001. As a
result, management has rationalised the overhead structure in Zambia. Secondly
there was an unprecedented weakening in the Zambian Kwacha in the last two
months of the year to 31 December 2000. Since then the currency has recovered
back to its previous levels. Finally, traditional sales volumes were further
reduced as we were not prepared to match what we believe to be high risk terms
being offered by a competitor.
EXPLOSIVES AND CHEMICALS
Explosives and Chemicals increased their turnover by 18% to R303 million but
here also the rapid increase in the ammonia price was the main cause for a
reduction in the operating profit margins by 40%.
The increase in coal prices brought with it increased volumes in the South
African surface mining operations which led to an increase in the demand for
explosives.
As a result of successful pilot scale tests, the Aluminium Trihydrate plant is
undergoing limited commercial testing with the installation of a newly designed
reactor.
PROSPECTS
Shareholders are reminded that the 15-month period to the end of March 2001
will now incorporate a second traditional loss-making January to March quarter
resulting in a loss for the financial year to 31 March 2001.
The circumstances of a rapidly increasing dollar price of ammonia together with
a major weakening of the Rand are not expected to repeat themselves in 2001.
Indications are that the prospects for the new financial year are promising and
will be elaborated on in the Group's annual financial statements.
CHAIRMAN
Although he will continue to serve on the board, Mr J Pretorius has retired as
Chairman of the board after serving in that capacity for the past six years.
The board thanks Mr Pretorius for his service as Chairman and welcomes, as the
new Chairman, Mr N J Crosse, previously the Group Managing Director, who took
office on
28 November 2000.
NOTES
These consolidated interim condensed financial statements are prepared in
accordance with AC 127 - "Interim Financial Reporting". The accounting policies
used in the preparation of the interim financial statements are consistent with
those used in the annual financial statements for the year ended 31 December
1999 except as described in the paragraphs below.
The group has adopted the revised AC 102 - "Income Taxes" and recognised
deferred tax liabilities for temporary differences. The cumulative prior year
net effect arising from the deferred tax of R23,614 million (which have been
calculated using a statutory tax rate of 30%) have been included in the results
for the 12 months ended 31 December 2000. Furthermore, the Group also adopted
the revised AC 115 - "Segment Reporting".
During the period the group changed its policy to treat the Omnia Share
Incentive Scheme ("the Scheme") as a special purpose entity and to therefore
consolidate the Scheme. The consolidation of the Scheme has resulted in the
shares owned by the Scheme being classified as treasury shares, which have been
offset against share capital. The comparative figures have been restated
accordingly.
The requirements of AC 107 (revised) "Events after the balance sheet date" have
been implemented by the group during the period, in advance of its effective
date. This has resulted in a change in accounting policy, as dividends proposed
or declared after the balance sheet date are no longer recognised as a
liability at the balance sheet date. The comparative figures have been restated
accordingly.
*The previous year's debt: equity ratio of 81% is arrived at after the
restating of the prior period equity necessitated by the abovementioned changes
in accounting policies. These changes bring to account, besides the
non-recognition of dividends proposed or declared after the balance sheet date,
deferred tax as well as the consolidation of the staff share incentive scheme
as detailed in the statement of changes in ordinary shareholders' equity.
The significant devaluations that occurred in the Zambian Kwacha and the
Zimbabwean Dollar during the year have necessitated material hyperinflation
adjustments as required by the accounting standard AC 124. The most significant
adjustment is that which affects the gross profit by R29,9 million which is
offset by the net monetary gain of R39 million as disclosed. The net impact on
the Group results of all these hyperinflation adjustments is a net gain of R3,4
million.
By order of the board
N J Crosse
Chairman
Website address: www.omnia.co.za
Transfer secretaries:
Ultra Registrars (Pty) Limited, 11 Diagonal Street, Johannesburg, 2001. PO Box
4844 Johannesburg, 2000. Telephone (011) 370-5775
Directors:
N J Crosse (Chairman), R B Humphris (Managing Director), D L Eggers, M M Doyle,
D J King (alternate), N K H Fitz-Gibbon, W T Marais (Deputy Chairman), Dr W T
Marais (alternate), J C Robbertse, J G Pretorius, P A Springett, O J Winkler*
* German
