| Wed 12 Jun 2002, 0:00 | | Omnia Holdings Limited - Audited Results For |
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Omnia Holdings Limited - Audited Results For The Financial Year Ended 31
March 2002
Omnia Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1967/003680/06)
Share Code: OMN
ISIN Code: ZAE000005153
("Omnia" or the "Group")
AUDITED RESULTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2002
Headline earnings up 5-fold
EBITDA up 110% to R210 million
Strong operating cash flow
Significant growth in export sales
95% reduction in debt
Resumption of dividend payments
Omnia is a market-facing, service-driven Group providing customised
solutions in the agricultural, mining and industrial chemical markets. The
Group`s strategy is focused on responding to the needs of its customers and
the commercial challenges they face through the deployment of advanced
technology solutions and innovative products. This specialised service
proposition, which sees the Group creating extraordinary service value for
customers, is unmatched in the Group`s chosen markets.
OPERATING PERFORMANCE
As indicated at the time of the last interim results announcement, a
substantial improvement in the Group`s results for the full year ended 31
March 2002 was expected over the previous 12 month period to 31 March 2001.
(Shareholders are reminded of the change in year end to March a year ago
which resulted in the previous financial year being a 15 month period). The
comparable unaudited results for the previous period ended 31 March 2001 are
given and comments made relate to this more meaningful comparable period.
Towards the close of the agricultural season in late January 2002 several
factors indicated a greater improvement than originally expected. The
devaluation of the Rand, the stabilisation of the ammonia price back to
economically favourable historical levels and the volume growth in exports
together with an improvement in explosives earnings were the main
influencing factors.
Revenue has grown by 25% and headline earnings per share increased 5-fold to
284.5 cents relative to the previous 12 month period, rendering the share
price of R 9.55 at the end of March 2002 at a PE of 3,4. This increase in
headline earnings does not take into account the increase in the Rand value
of the Group`s off-shore US Dollar assets which have been accounted for in a
"Foreign Currency Translation Reserve" (FCTR) within Non-Distributable
Reserves. Had this increase in the value of off-shore assets been taken
through the income statement the headline earnings of 284.5 cents per share
would have increased by an additional 123 cents (66 cents) per share.
EBITDA has improved by 110% to R210m and Net Profit before Taxation has
improved 7-fold to R146m. The Group`s export sales again showed good growth
of 26% giving rise to US Dollar denominated earnings. The Group`s foreign
operations are now subject to South African normal tax giving rise to the
comparatively large R36m tax charge.
The focus on working capital management intensified, limiting the rise in
the level of current assets, despite cost increases driven by the weakening
Rand, to a modest 3.5%. Capital expenditure increased moderately to R67m, of
which R21m relates to a compressor replacement. The balance represents
normal replacements.
The Group continued to generate strong cash flows which has resulted in the
net interest bearing debt being reduced to below R13m. As a consequence of
this debt reduction and lower interest rates, interest payments dropped by
R14m and EBITDA interest cover has improved to 6,2 times from the 2,1 times
in the previous period.
Equity rose by R155m during the year, R47m (R25m) of which is as a result of
the re-valuation of the Group`s off-shore US Dollar based assets taken to
the Non-Distributable FCTR as mentioned above.
The increase in equity combined with the strong cash generation has resulted
in a low debt : equity ratio of 3% at the year end compared with 81% in
March 2001.
The Zimbabwe operations performed well despite the difficult and uncertain
trading environment. This uncertainty led to the board taking the
conservative view of impairing R3.3m of the immovable fixed assets in
Zimbabwe. The impact of the high inflation conditions in both Zambia and
Zimbabwe led to the hyperinflation adjustments referred to in the notes.
A substantial insurance claim for loss of profits, relating to a component
failure within the Nitric Acid plant in September 2000 has been formulated
and submitted to the insurer who is in the process of evaluating the claim.
The claim has not been recognised in the results to the end of March 2002.
FERTILIZER
Several factors contributed to the strong operating performance of Omnia`s
fertilizer division.
Overall the agricultural sector showed good growth. Grain prices increased
dramatically over the year under review. White maize prices increased 100%
from a level of R 900 per ton in March 2001 to R 1 800 per ton in March
2002, having come off a peak of R 2 000 in February this year. Both wheat as
well as sunflower seed also showed substantial increases of 35% and 30%
respectively. These significant price increases were a direct result of the
weakening Rand/US Dollar exchange rate and the shortage of grain in Southern
Africa. Although most farmers did not achieve these prices in full, the
profitability of the agricultural sector has been restored to improved
levels.
Fertilizer prices increased frequently as a result of the significant
devaluation of the Rand against the US Dollar.
The international price of ammonia stabilised down to more economically
favourable historical levels resulting in a favourable ratio between the
international price of the raw material, ammonia and the international price
of urea, in turn leading to improved margins.
Compared to the previous 12 months, bulk fertilizer export volumes grew by
22% while in the domestic market, the unique speciality products volumes
grew by 20%.
Through the ongoing differentiation of its product and service range the
division has improved the sales mix and in the process added value to its
customers. The division showed strong improvements in margins from the
unacceptably low 3.0% achieved in the comparable previous year to the more
normal levels of 9.2% achieved for the year under review.
The focused marketing of exports together with the more favourable exchange
rate has also enabled the Group to realise improved margins in addition to
the foreign exchange earnings.
EXPLOSIVES AND INDUSTRIAL CHEMICALS
Revenue in the Explosives and Industrial Chemicals Division increased by 32%
over the previous 12 month period. International surface bulk explosives
volumes showed a satisfactory year on year volume growth. The local packaged
cartridge explosives volumes showed good growth over the previous 12 months.
This facility is considered to be at the forefront of cartridge technology
which gives the division a distinct competitive advantage. Operating margins
remained virtually the same at 9%.
The market in Ghana was found to be oversupplied and as a result, at the
close of the financial year, the loss making explosives operations in Ghana
were terminated and the assets sold off.
The weak Rand has resulted in significant increases in the export of any
ammonium nitrate based products by local producers. With export parity
prices being substantially higher than the local explosive prices the local
market is set to either face fundamental increases in explosive prices or
alternatively face a shortfall in supply.
Intaba Chemicals had an improved year of trading, however the continued
burden of the development of the Aluminium Tri-hydrate (ATH) process
impacted negatively on results. After detailed consideration of both the
process economics as well as a significant reduction in the market size, the
Omnia Board took the decision to terminate this project. The majority of the
plant and equipment is suitable for the production of fertilizer and Omnia
Fertilizers has agreed to take over the plant with immediate effect. This
will leave Intaba free to continue to investigate alternative avenues for
growth.
PROSPECTS
With the Government formulating a new strategic plan for agriculture, better
prices for produce, excellent growth in exports and the relatively good
season, there is optimism in the agricultural industry.
Omnia`s plants are operating well and with the company continuously
developing new technologies, Omnia is positioned to take advantage of this
renewed optimism and further create value for its customers.
The export marketing of both conventional fertilizers and speciality
products has taken the Omnia name to several countries around the world
allowing the Group to spread its customer base and further spread its risk
to any inclement weather. With the improved performances from the Losberg
plant, the Group is anticipating improved results from its explosives
division.
Earnings prospects for the ensuing financial year to March 2003 appear to be
good with all divisions expected to deliver results that are better than
those achieved during the year under review.
At the end of December 1998 the management team was given a five-year
target for the cumulative earnings per share of R 13.44, based on the
accounting policies of the Group that existed at the time. Subsequently this
target has been revised to R 12.43 to allow for the change in year end,
which now incorporates an additional loss-making quarter to March 2004. At
the end of March 2002 the cumulative earnings had reached R 4.62 per share
leaving R 7.81 to be achieved in accumulated earnings per share over the
remaining two years. Management continuously aims to achieve this target,
which will entitle the management team to a specified number of shares in
the company at the end of the March 2004 financial year.
DIVIDENDS
The Board had prioritised the strengthening of the balance sheet and has not
declared a dividend for the past 24 months. With the pleasing strengthening
of the balance sheet and the prospects for the year ahead, a final dividend
of 81,5 cents per ordinary share has been declared, showing a dividend cover
of 3.5 times and a dividend yield of 8.5 % on the year end price of R 9.55
per share.
The last day to trade cum dividend will be Friday, 28 June 2002. The shares
will commence trading ex dividend as from Monday, 1 July 2002 and the record
date will be Friday, 5 July 2002. The dividend will be paid on Monday, 8
July 2002.
Share certificates may not be dematerialised or rematerialised between
Monday, 24 June 2002 and Friday, 5 July 2002, both days inclusive.
SHARE LIQUIDITY
Omnia`s major shareholder, Alpha, has always been a supportive shareholder
but believes that the Omnia investment is non-core. Alpha has therefore
indicated to the Board of Omnia that it is actively seeking a way to reduce
its shareholding in an orderly manner. Omnia believes this is a positive
development as it will significantly improve the share liquidity.
Omnia`s chairman has been tasked with taking this initiative forward and
Omnia expects a further announcement on this issue in due course.
NJ Crosse RB Humphris
Chairman Managing Director
Johannesburg
12 June 2002
CONSOLIDATED INCOME
STATEMENTS
Audited Unaudited Audited
12 months 12 months 15 months
1/4/2001 1/4/2000 1/1/2000 to
to to
R`000 31/3/2002 % 31/3/2001 31/3/2001
Revenue 1 851 947 25 1 481 006 1 769 054
Cost of sales (1 201 (1 007 (1 219 364)
814) 464)
Gross profit 650 133 37 473 542 549 690
Operating costs
before depreciation
and net of other ( 440 549) ( 373 676) ( 467 939)
income
EBITDA 209 584 110 99 866 81 751
Depreciation (38 005) ( 34 314) ( 43 154)
Operating profit 171 579 162 65 552 38 597
Finance costs
- Net interest paid (33 608) ( 47 859) ( 55 278)
- Forward cover (11 912) (10 341) (12 467)
costs
- Net monetary gain 19 714 11 830 14 788
(Loss)/income from (4) 797 842
associates
Profit/(loss) 145 769 630 19 979 (13 518)
before taxation
Taxation (36 395) (230) 12 042
Profit/(loss) after 109 374 454 19 749 (1 476)
taxation
Minority interest (459) (147) (183)
Net profit/(loss) 108 915 456 19 602 (1 659)
for the period
Basic and headline 284.5 51.2 (4.3)
earnings/(loss) per
share (cents)
Fully diluted 73.2 51.2 (4.3)
headline
earnings/(loss) per
share (cents)
Dividends per share 81.5 * - 22.0
(cents)
Weighted average 38 277 38 292 38 292
number of shares in
issue (`000)
Weighted average
number of
fully diluted 39 867 38 308 38 308
shares in issue
(`000)
Fully diluted 108 915 19 602 ( 1 659)
earnings/(loss)
(R`000)
EBITDA interest 6.2 2.1 1.5
cover
* Declared
subsequent to year-
end
CONSOLIDATED BALANCE SHEETS
Audited Audited
R`000 31/3/2002 31/3/2001
Assets
Property, plant and 416 565 411 485
equipment
Unlisted investments and 127 1 784
loans
Current assets 553 725 534 931
970 417 948 200
Equity and liabilites
Ordinary shareholders` 465 292 310 759
equity
Minority interest 1 959 1 683
Deferred taxation 36 888 4 291
Long-term liabilities 29 963 49 336
Current liabilities 436 315 582 131
970 417 948 200
Net interest-bearing debt 12 884 250 603
Net asset value per share 12.20 8.12
(Rand)
Directors valuation of 9 9
unlisted shares
Capital expenditure
Incurred 66 818 57 396
Authorised and committed 6 530 11 259
Authorised but not 53 083 35 126
contracted for
