| Tue 3 Dec 2002, 16:36 | | Omnia Holdings Limited - Interim Results Sep 02 |
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Omnia Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1967/003680/06)
Share code: OMN ISIN: ZAE000005153
("Omnia" or the "Group")
- Revenue up 46%
- Operating profit up 410%
- Headline earnings per share up 482%
- Operating margins improved to 11,8%
- Interim dividend resumed
INTERIM RESULTS for the period ended 30 September 2002
COMMENTARY
The Chairman`s report for the past financial year stated that several
factors suggested the Group had excellent earnings prospects for the
2003 financial year. The Group`s business model of adding value to
its customers by leveraging its intellectual capital and technology
provided the basis for this view as, in each of its markets, the
Group model continues to drive benefits for all stakeholders.
The Board is therefore very pleased with the results for the six
months ended September 2002. All divisions delivered results
substantially better than the previous year. Market conditions were
buoyant while raw material input costs remained stable. Revenue
increased by 46% to R1,1 billion over the comparable prior year
period for the reasons set out below. Operating costs, which include
production costs, rose by 28% to R219 million, reflecting the
increased level of activity. An increase in operating margins from
3,4% to 11,8% resulted in operating profit improving to R126 million
and a profit after tax of R68 million. Fully diluted headline
earnings per share improved more than five fold to 169,4 cents,
compared to those achieved at the interim stage last year.
The Group`s continued strong cash generation resulted in a
significant reduction in the mid-year debt-equity ratio from 104% a
year ago to 31%, notwithstanding an increased level of funding
required to finance the growth in working capital.
The reduction in debt, with the subsequent reduction in interest
paid, also contributed to the improved results, and saw an increase
in interest cover from 1,9 times to 12 times. Due to the seasonality
of the Fertilizer business the funding requirements for working
capital increased over the peak planting season between October and
November.
The 8% strengthening of the Rand against the US Dollar since the end
of the previous financial year has decreased the Foreign Currency
Translation Reserve by R11 million.
Advice was received in October from insurers that the loss of profits
insurance claim for damage to the nitric acid compressor, amounting
to R26 million, has been finalised and accepted. It will be brought
to account in the second half of the financial year.
Agriculture
Several factors have combined to deliver exceptional interim results.
- The maize shortage in the region, reinforced by high maize prices
has led to an increased demand for fertilizer in anticipation of an
increase in local plantings this year.
- Export volumes have increased substantially over the comparable
period in 2001, caused in part by early sales due to anticipated
transport problems in the region.
- The substantial devaluation of the Rand that took place late last
year has seen an increase of 34% in year-on-year fertilizer prices.
- The prevailing good agricultural prices and the improved financial
position of the farming sector made it possible for Omnia`s customers
to place orders earlier than usual.
- The company has toll produced granular fertilizer for a third party
during the interim period. This tolling arrangement will cease in the
foreseeable future.
Operating margins of 9% in the fertilizer segment for the year ended
March 2002 have increased to 12% and, with an increase of 45% in net
revenue, operating profit has increased to R90,5 million for the
period under review.
Mining and industrial chemicals
Demand for both our surface and underground explosives products
continued to grow over the comparable six-month period. Volumes in
the industrial chemical market also increased mainly as a result of
the addition of new animal feed product ranges. The operating margin
of the mining and industrial chemicals division improved by 2,5% to
12% over that for the year to March 2002.
The industry wide export of ammonium nitrate based products continued
and resulted in the predicted shortfall in supply to the local
explosives market. As a result, local prices of explosives are
expected to increase.
Prospects
As announced at the company`s annual general meeting, the outlook for
the markets in which the Omnia Group operates looks bright. The
positive momentum achieved in the six months to September 2002 is
expected to continue for the full year to March 2003, provided that
normal weather patterns prevail. Maize plantings are expected to
increase, leading to an escalation in demand for fertilizer, and for
the Group`s Speciality Fertilizer products. Although an El-Nino event
is a possibility, its effects on the current financial year should be
mild.
The outlook for mining explosives also looks positive with the
development of new mines, particularly in the platinum sector.
Increased sales into the animal feeds sector is expected to result in
further growth in the industrial chemicals business.
The strong cash flow generation will continue and the Group is
expecting to end the year ungeared.
Dividends
In view of the positive cash generation, the interim results and the
prospects for the full year, the Board has recommended an interim
dividend of 47,5 cents per share payable on 13 January 2003.
The last day to trade cum dividend will be Friday 3 January 2003. The
shares will commence trading ex dividend as from Monday 6 January
2003 and the record date will be Friday 10 January 2003. Share
certificates may not be dematerialised or rematerialised between
Monday 6 January 2003 and Friday 10 January 2003, both days
inclusive.
NJ Crosse RB Humphris
Chairman Managing Director
Johannesburg
3 December 2002
Directors
NJ Crosse (Chairman), WT Marais (Deputy Chairman),
JG Pretorius, RB Humphris* (Group Managing Director),
FD Butler, DL Eggers* (Group Finance Director), NKH Fitz-Gibbon, Dr
WT Marais (Alternate to WT Marais), PA Springett
*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
Ultra Registrars (Pty) Ltd
11 Diagonal Street, Johannesburg 2001
PO Box 4844, Johannesburg 2000
CONSOLIDATED INCOME STATEMENTS
Unaudited Unaudited Audited
6 months 6 months 12 months
R`000 30/9/2002 30/9/2001 31/3/2002
Revenue 1 062 058 729 498 1 851 947
Cost of sales (695 966) (514 253) (1 201 814)
Gross profit 366 092 215 245 650 133
Operating costs before
depreciation
and net of other income (218 977) (171 066) (440 549)
EBITDA 147 115 44 179 209 584
Depreciation (21 109) (19 471) (38 005)
Operating profit 126 006 24 708 171 579
Finance costs
- Net interest paid (12 214) (23 803) (33 608)
- Forward cover costs (8 584) (5 664) (11 912)
- Net monetary gain/(loss) (9 264) 16 716 19 714
Loss from associates - - (4)
Profit before taxation 95 944 11 957 145 769
Taxation (27 907) (121) (36 395)
Profit after taxation 68 037 11 836 109 374
Minority interest (304) (137) (459)
Net profit for the period 67 733 11 699 108 915
Headline and basic
earnings per share (cents) 178,2 30,6 284,5
Fully diluted headline
and basic earnings
per share (cents) 169,4 30,6 273,2
Weighted average number
of shares in issue (`000) 38 008 38 292 38 277
Dividends per share
(cents) 81,5 - -
EBITDA interest cover 12,04 1,86 6,24
CONSOLIDATED BALANCE SHEETS
Unaudited Unaudited Audited
R`000 30/9/2002 30/9/2001 31/3/2002
Assets
Fixed assets 423 533 413 888 416 565
Unlisted investments
and loans 315 1 284 127
Current assets 981 468 764 986 553 725
1 405 316 1 180 158 970 417
Equity and liabilities
Ordinary shareholders`
Equity 486 508 327 038 465 292
Minority interest 1 804 1 637 1 959
Deferred taxation 58 872 4 407 36 888
Long-term liabilities 15 570 55 616 29 963
Current liabilities 842 562 791 460 436 315
1 405 316 1 180 158 970 417
Net interest-bearing debt 150 019 342 869 12 884
Net asset value per
share (Rand) 12,84 8,58 12,20
Capital expenditure
Incurred 28 078 15 833 66 818
Authorised and committed 21 088 22 342 6 530
Authorised but not
contracted for 38 496 9 773 53 083
CONSOLIDATED CASH FLOW STATEMENTS
Unaudited Unaudited Audited
6 months 6 months 12 months
R`000 30/9/2002 30/9/2001 31/3/2002
Cash generated from
Operations 112 743 56 793 349 759
Finance costs and taxation (16 141) (29 235) (46 850)
(Utilised by)/generated
from working capital (172 349) (99 149) 42 339
(Utilised by)/available
from operations (75 747) (71 591) 345 248
Dividends paid (33 121) - -
Cash (outflow)/inflow
from operating activities (108 868) (71 591) 345 248
Cash outflow from
investing activities (28 266) (20 674) (42 152)
Cash outflow from
financing activities (24 020) (2 027) (14 608)
Net (cash outflow)/cash
Inflow (161 154) (94 292) 288 488
Net cash/(bank overdrafts)
at beginning of period 57 097 (167 637) (231 391)
Net cash/(bank overdrafts)
at end of period (104 057) (261 929) 57 097
SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
6 months 6 months 12 months
R`000 30/9/2002 30/9/2001 31/3/2002
Revenue 1 062 058 729 498 1 851 947
Fertilizer 831 167 571 598 1 506 268
- Less: Intersegmental
sales (64 586) (42 663) (89 034)
Explosives and Chemicals 295 477 200 563 434 713
Operating profit 126 006 24 708 171 579
Fertilizer 90 478 6 981 129 978
Explosives and Chemicals 35 528 17 727 41 601
STATEMENT OF CHANGES IN ORDINARY SHAREHOLDERS` EQUITY
Unaudited Share Non-
capital and distri- Retained
premium butable
R`000 reserves earnings Total
At 31 March 2001 65 513 48 896 196 350 310 759
Net profit for
the period - - 11 699 11 699
Increase in
foreign currency
translation reserve - 4 580 - 4 580
At 30 September 2001 65 513 53 476 208 049 327 038
Net profit for the
Period 97 216 97 216
Increase in
foreign currency
translation reserve - 42 534 - 42 534
Transfer to retained
income of
post-acquisition
retained earnings
and reserves of
associate - (720) 720 -
Treasury shares (1 496) - - (1 496)
At 31 March 2002 64 017 95 290 305 985 465 292
Net profit for the
Period - - 67 733 67 733
Ordinary
dividends paid (33 189) (33 189)
Decrease in
foreign currency
translation reserve - (10 658) - (10 658)
Treasury shares (2 670) - - (2 670)
At 30 September 2002 61 347 84 632 340 529 486 508
NOTES
These condensed consolidated interim financial statements are
prepared in accordance with AC127 - "Interim Financial Reporting" -
and schedule 4 of the South African Companies Act. The accounting
policies used in the preparation of the interim financial statements
are consistent with GAAP and those used in the annual financial
statements for the period ended 31 March 2002.
The future minimum lease payments under non-cancellable operating
leases are R4 million within one year and R7,5 million between two
and five years, giving a total of R11,5 million.
Taxation is disproportionate to the profit before taxation, mainly as
a result of the different treatment of interest for tax and
accounting purposes. The effect of the change to a residence basis of
taxation has been taken into account in determining the liability for
taxation. Notification has been received that SARS intends to
reassess the Group and disallow the interest paid in respect of
convertible loans. The impact of this, should SARS be successful,
will be to increase the tax charged for the current year by R30
million, of which R26 million will relate to adjustments in respect
of prior years.
A dividend of 81,5 cents per share was declared on 10 June 2002 in
respect of the earnings of the previous financial year. This dividend
is reflected in the current period to 30 September 2002.
The hyperinflation adjustments, as required by the accounting
standard AC124, result from the continued devaluation in the Zambian
Kwacha and the Zimbabwean Dollar. The most significant adjustment is
that which reduced the gross profit for the period by R1,7 million.
The net monetary loss of R9,3 million for the period is as a result
of a change in the source of funding of the Zimbabwe business, and is
offset by foreign exchange gains of R16,1 million in Zimbabwe and
Zambia. The net impact to the Group, including the offsetting of
foreign exchange gains, is a net profit of R4,2 million.
An additional R7 million was advanced by some directors to the
company, bringing the total loans from directors to R8,3 million.
Interest on these loans was paid to the directors concerned at an
average rate of 11,5%.
Date: 03/12/2002 08:01:00 AM Produced by the JSE SENS Department
