Omnia Holdings Limited · JSE:OMN
Omnia — H1 FY2023 Earnings Presentation
65 slides from Omnia's earnings presentation, November 2022
Slide 1: Interim Financial Results
INTERIM FINANCIAL RESULTS Presentation for the six months ended 30 September 2022
Slide 2: Forward Looking Statements
2 FORWARD LOOKING STATEMENTS Throughout this presentation there are certain statements made that are “forward-looking” statements. Any statements preceded or followed by, or that include the words “forecasts”, “believes”, “expects”, “intends”, “plans”, “predictions”, “will”, “may”, “should”, “could”
Slide 3: Content
3 CONTENT ESG BUSINESS UPDATE FINANCIAL RESULTS GROWTH OPPORTUNITIES OUTLOOK
Slide 4: An Exceptional Operating and Financial Performance
4 AN EXCEPTIONAL OPERATING AND FINANCIAL PERFORMANCE In a volatile and challenging macroeconomic environment REVENUE Zero fatalities recorded 19% R11 566m Continued delivery against ESG goals for 2030 OPERATING PROFIT 47% R1 066m Security of supply to customers OPERATING MARGIN Enhanced operating pe
Slide 5: Environmental, Social and Governance
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Slide 6: Innovating to Enhance Life, Together Creating a Greener Future
6 INNOVATING TO ENHANCE LIFE, TOGETHER CREATING A GREENER FUTURE We are a purpose driven business We have a significant impact on food, water and mineral security We sustain livelihoods, creating employment and opportunities for growth We apply technology for efficient use of natural resources We ca
Slide 7: Safety Is Our First Priority
7 SAFETY IS OUR FIRST PRIORITY Our objective is zero harm Group benchmarking 0.87 Recordable case rate 0.67 0.43 0.37 0.38 0.26 0.30 0.20 0.20 0.21 0.23 0.24 0.14 0.15 0.16 0.18 Dow Chemicals Mining Shell Omnia Yara Akzo AECI Agriculture Sasol BASF Bayer Huntsman Solvay Orica Incitec Group Nobel Piv
Slide 8: Progressing Our ESG Objectives
8 PROGRESSING OUR ESG OBJECTIVES A strategy for positive change Carbon emissions (Tonnes CO2e) Water efficiency (KL per tonne manufactured) Scope 1 Scope 2 Total 0.51 111 500 113 830 78 143 0.46 0.46 HY21 HY22 HY23 HY21 HY22 HY23 Carbon emissions decreased by 31% Water use efficiency remained consta
Slide 9: Drive for a Sustainable Greener Future
9 DRIVE FOR A SUSTAINABLE GREENER FUTURE Through innovative solutions Sasolburg Solar Plant Commissioned Reverse Osmosis Water Treatment Plant Commissioned • In-house management, engineering and procurement • Saving 180 megalitres of potable water per annum • Generating close to 10 500MWh per annum
Slide 10: Business Update
BUSINESS UPDATE
Slide 11: A Complex and Challenging Environment
11 A COMPLEX AND CHALLENGING ENVIRONMENT Supported by higher but volatile commodity prices Macro Micro Commodity Prices $1 300 20 Rising inflation, currency and Road and rail infrastructure 19 commodity volatility challenges $1 100 18 17 Port and supply chain $900 Ongoing geopolitical instability di
Slide 12: Innovating to Enhance Life, Together Creating a Greener Future
12 INNOVATING TO ENHANCE LIFE, TOGETHER CREATING A GREENER FUTURE We are a purpose driven business We have a significant impact on food, water and mineral security We sustain livelihoods, creating employment and opportunities for growth We apply technology for efficient use of natural resources We c
Slide 13: Disciplined Execution of Our Strategic Plan
13 DISCIPLINED EXECUTION OF OUR STRATEGIC PLAN Enabling delivery on our financial and operational objectives 1. Stabilise 2. Fix 3. Renew 4. Grow • Turnaround plan • Operating leverage (cost • Manufacturing excellence • ESG aligned savings) • Optimise balance sheet • Invest in R&D and innovation • F
Slide 14: Performance Underpinned by Operating Model
14 PERFORMANCE UNDERPINNED BY OPERATING MODEL Accelerating productivity gains and efficiency SADC focused businesses International growth Agriculture International Strengthen and grow the core Mining International PMC Agriculture Mining & Solutions Solutions Other Other Integrate and synergise SADC
Slide 15: Financial Highlights
15 FINANCIAL HIGHLIGHTS Resilient performance across financial metrics Revenue1 Operating Profit1 Operating Margin1 R11 566m R1 066m 9.2% (HY22: R9 684m) (HY22: R723m) (HY22: 7.5%) 19% 47% 23% EBITDA1 Net Cash Position Net Working Capital R1 412m R140m R5 207m (HY22: R1 084m) (HY22: R1 130m) (HY22:
Slide 16: Strong Growth in Operating Profit
16 STRONG GROWTH IN OPERATING PROFIT Driven by improved margins and supportive prices R million R220m adverse impact R343m 47% increase 15 54 109 264 165 44 679 723 1 066 802 HY22 HY22 HY22 Agriculture Mining Chemicals Head HY23 HY23 HY23 Operating profit Agri Zimbabwe Operating profit office Operat
Slide 17: Delivering on Our Strategic Objectives
17 DELIVERING ON OUR STRATEGIC OBJECTIVES Well positioned to improve and grow our business segments Agriculture Mining Chemicals • Maintain security of supply to customers • Maintain supply chain security • Segment and differentiate service delivery through optimised and integrated supply and soluti
Slide 18: Operating Margin Increase Across Segments
18 OPERATING MARGIN INCREASE ACROSS SEGMENTS Supported by product mix, price and cost discipline Omnia Group Agriculture Mining Chemicals 11.3% 9.9% 9.2% 8.3% 7.5% 7.6% 7.2% 3.5% HY22 HY23 HY22 HY23 HY22 HY23 HY22 HY23 • Continuous improvement of revised • Elevated but volatile commodity price • Mul
Slide 19: Working Capital Well Managed
19 WORKING CAPITAL WELL MANAGED In a high commodity price environment Movement in Net Working Capital Rm 30 Sep 2022 % 30 Sep 2021 Net working capital 5 207 69 3 077 Inventory 8 094 64 4 927 Receivables 5 220 18 4 442 HY23 R2 940 + R1 646 + R675 + (R54) = R5 207 Payables (8 107) 35 (6 027) Movement
Slide 20: Prudent Capital Expenditure
20 PRUDENT CAPITAL EXPENDITURE Advancing our strategic priorities to enhance returns Capital Expenditure R million Strengthening core SADC business Additional ammonia tankers FY23 forecast 550 BME international expansion 989 292 284 415 35 131 99 125 103 135 Delivering ESG priorities FY19 FY20 FY21
Slide 21: A Track Record of Delivery
21 A TRACK RECORD OF DELIVERY Asset quality and operating performance underpin margin and returns Operating Margins1 Return on Average Equity 11.6% 9.2% 9.1% 7.5% 3.3% 3.3% 3.9% 0.7% HY20 HY21 HY22 HY23 HY20 HY21 HY22 HY23 Working Capital Net Cash R billion Days R billion 3 5 200 2 4 1 150 3 0 100 (
Slide 22: Disciplined Capital Allocation
22 DISCIPLINED CAPITAL ALLOCATION Supporting investment for sustainable earnings growth Capital Allocation Framework Strong and Flexible Financial Position Capital productivity Operating productivity • Credit rating maintained with improved outlook Maximise cash flow • Provides optionality for growt
Slide 23: Financial Results
FINANCIAL RESULTS for the six months ended 30 September 2022
Slide 24: SARS Update on International Tax Audit
24 SARS | UPDATE ON INTERNATIONAL TAX AUDIT 17 15 30 12 21 05 Jun Nov Sept Dec Feb Jul 2021 2021 2022 2022 2023 2023 Assessments Objection SARS Lodge SARS response ADR outcome received submitted response appeal to appeal (earliest) Developments from FY22 • On 30 September 2022, SARS ruled on our obj
Slide 25: Zimbabwe Risk Management Yields Positive Results, Generates Cash
25 ZIMBABWE RISK MANAGEMENT YIELDS POSITIVE RESULTS, GENERATES CASH Hyperinflation economy and currency volatility Operating Model Underlying performance Stock procurement (Cost of sales) • USD cash outflow • Net cash generation of • Inventory purchased via Omnia's integrated supply chain USD2.7 mil
Slide 26: Statement of Comprehensive Income
26 STATEMENT OF COMPREHENSIVE INCOME Unaudited Unaudited Audited Rm 30 Sep 22 % 30 Sep 21 31 Mar 22 Commentary HY23 vs HY22 Revenue 12 164 23 9 902 21 437 Revenue increased by 23% supported by higher Cost of sales (9 220) (20) (7 679) (16 815) commodity prices Gross profit 2 944 32 2 223 4 622 Gross
Slide 27: Movement in EBITDA (From Continuing Operations)
27 MOVEMENT IN EBITDA (FROM CONTINUING OPERATIONS) R328m R million 30% increase 63 2 115 261 152 42 1 042 1 084 1 412 1 151 HY22 Zim HY22 Agriculture Mining Chemicals Head HY23 Zim HY23 impact ex Zim Office ex Zim impact Excludes IFRS16 HY2023 RESULTS PRESENTATION | NOVEMBER 2022
Slide 28: Agriculture | Operating Profit
28 AGRICULTURE1 | OPERATING PROFIT RSA International (ex Zim) Margins 0.9% 11.0% 10.0% 10.5% 7.4% 16.7% R million R million 190 136 108 105 19 385 468 97 76 39 32 85 HY21 HY22 HY23 HY21 HY22 HY23 AUS & BRAZIL: 34.2% 26.6% 32.3% AFRICA: 3.8% 2.7% 10.5% RSA: International (ex Zim): Commentary Revenue
Slide 29: Mining | Operating Profit
29 MINING | OPERATING PROFIT RSA International Margins 8.8% 7.0% 8.5% 7.2% 8.2% 8.2% R million R million 93 116 177 103 134 182 HY21 HY22 HY23 HY21 HY22 HY23 RSA: International: Commentary Revenue h26%, Operating profit h53% Revenue h37%, Operating profit h36% • Secured multiple contract extensions
Slide 30: Chemicals | Operating Profit
30 CHEMICALS | OPERATING PROFIT Margins 3.9% 3.5% 7.2% R million 55 50 104 HY21 HY22 HY23 Commentary Protea Chemicals: Revenue h0.3%, Operating profit h108% • Product mix improvements in key sectors in line with strategy reduced volumes and increased profitability • Supply chain excellence ensured s
Slide 31: Statement of Financial Position
31 STATEMENT OF FINANCIAL POSITION Unaudited Restated Audited Rm % 30 Sep 22 30 Sep 21 31 Mar 22 Property, plant & equipment 4 565 (3) 4 700 4 593 Total assets increased by 20% due to Right-of-use assets 412 44 287 227 investment in inventory as a result of high Goodwill and intangible assets 211 (3
Slide 32: Movement in Net Cash from FY22
32 MOVEMENT IN NET CASH FROM FY22 R million 1 343 1 364 1 647 523 63 2 352 1 009 140 FY22 Dividend paid Net cash generated from Net working capital Income tax paid Other cash from Operating, HY23 Net cash operations investment Investing and Financing Net cash activities HY2023 RESULTS PRESENTATION |
Slide 33: Statement of Cash Flows
33 STATEMENT OF CASH FLOWS Unaudited Restated Audited Rm 30 Sep 22 30 Sep 21 31 Mar 22 Net cash (outflow)/inflow from operating activities (693) 658 1 367 Cash (utilised in) / generated from operations (126) 739 1 941 Cash outflow from operating activities due Other cash generated from operations 1
Slide 34: Growth Opportunities
GROWTH OPPORTUNITIES
Slide 35: Unlocking Further Value from the Core
35 1 UNLOCKING FURTHER VALUE FROM THE CORE Manufacturing and supply chain excellence Plant Utilisation 100% • Strengthened leadership capability, investing in people skills and competence • Opportunity to supply increased demand with low capital requirement • Nitrophos value unlock with alternate pr
Slide 36: AgriBio Is a Key Growth Sector
36 2 AGRIBIO IS A KEY GROWTH SECTOR Driven by demand for natural crop production and nutrition products Biostimulant Market Size • A growing market with increasing adoption as growers Others 6% Trace minerals focus on NUE1 and WUE2 9% Microbials Seaweed • Quality products recognised by customers glo
Slide 37: Continued Expansion into New Markets
37 2 CONTINUED EXPANSION INTO NEW MARKETS We are actively selling K-Humates into a growing customer base • Brazil growing K-Humates and kelp volumes • Sales in established channels India, Pakistan and Southeast Asia improving • Expansion in the USA • New markets established in Turkey and Bulgaria •
Slide 38: Trial Assessments by Omnia in Over 30 Countries
38 2 TRIAL ASSESSMENTS BY OMNIA IN OVER 30 COUNTRIES Underpinned by our strong research and development capability ✓ Improved plant health & increased yields ✓ Biotic and abiotic stress mitigation & recovery Untreated K-humate ✓ Higher nutrient density & quality Rice Paddy Field Test ✓ Increased uti
Slide 39: Solid Growth Pipeline for Mining
39 3 SOLID GROWTH PIPELINE FOR MINING Focused on partnerships and organic growth Canada • Major surface mine project awarded • Production site progress • Product / equipment certifications Indonesia • Pending JV partner USA • AXXISTM trials set up Australia • Trading business • Building infrastructu
Slide 40: Positively Leveraged to Global Mega Trends
40 POSITIVELY LEVERAGED TO GLOBAL MEGA TRENDS Population growth, climate change, decarbonisation will drive demand for fertilizer and minerals Population Growth Decarbonisation Climate change and food security Markets for critical minerals used in To meet global food demand green energy technologies
Slide 41: Outlook
OUTLOOK
Slide 42: Medium Term Margin Guidance
42 MEDIUM TERM MARGIN GUIDANCE Agriculture and Chemicals in line with guidance range, Mining slightly below for FY23 Omnia Group Agriculture Mining Chemicals 8% to 10% 9% to 12% 10% to 12% 6% to 8% 11.3% 10.9% 9.9% 9.2% 8.2% 8.3% 7.9% 7.5% 7.6% 7.7% 7.3% 7.2% 6.9% 5.5% 4.9% 4.8% 4.5% 4.1% 3.9% 3.7%
Slide 43: Enhancing Shareholder Returns
43 ENHANCING SHAREHOLDER RETURNS Focused on executing our strategic pursuits Zero harm and enhance ESG priorities Competency based growth – expansion through innovation and R&D Protect, defend and grow our home base Expand internationally with partnerships Explore value accretive organic and inorgan
Slide 44: Omnia Provides an Attractive Investor Proposition
44 OMNIA PROVIDES AN ATTRACTIVE INVESTOR PROPOSITION Primary markets, asset quality, strong returns 1. Robust capital 2. Focused 3. Operational 4. Distinct competitive 5. Operate in management business model excellence advantage primary sectors • Strong and flexible • Geographical and • Integrated •
Slide 45: Questions
QUESTIONS
Slide 46: Annexures
ANNEXURES
Slide 47: Governance | Board
47 GOVERNANCE | BOARD Independent Executive BOARD MEMBERS Non-Executive directors directors Tina Eboka Seelan Gobalsamy Stephan Serfontein Chair1 Chief Executive Officer Finance Director Appointed in 2016 with over Appointed in 2019 with Appointed in 2020 with 27 years’ board level strategy close to
Slide 48: Management Team
48 MANAGEMENT TEAM Seelan Gobalsamy Stephan Serfontein Tiaan Kotzé Michelle Nana Simphiwe Mdluli Nerina Bodasing CEO FD COO Company Secretary Legal and Communications and Chartered Accountant Chartered Accountant Chartered Accountant B Arts, LLB, FCIS, CD Compliance Investor Relations (SA) AMP (Harv
Slide 49: Innovations Towards High Growth Future-Oriented Offerings
49 INNOVATIONS TOWARDS HIGH GROWTH FUTURE-ORIENTED OFFERINGS Transitioning to creating resources essential to life Core = common AN value chain Core = green innovations for resource security OMNIA TODAY Operations focus OMNIA VISION Market focus NPK Fertilizers, Agrochemicals, AgriBio Agronomist adv
Slide 50: Strengthening Our ESG Commitment
50 STRENGTHENING OUR ESG COMMITMENT ESG underpins our capital allocation framework Agriculture Mining • Nutriology® - NUE (nutrient use efficiency) and WUE (water • Dual salt technology use efficiency) • Used oil as a fuel agent for emulsions - CAIA Responsible • Ammonium Nitrate fertilizer < carbon
Slide 51: Expanding Our Agriculture Presence in Africa
51 EXPANDING OUR AGRICULTURE PRESENCE IN AFRICA Partnerships, products and sector distribution Tunisia Kenya • Core market • Expanding into surrounding East African markets • Established distribution agreements in Uganda Zambia • Diversify portfolio from commercial sector to retail, emerging and sma
Slide 52: Positive Trends in Mine Exploration and Capital Expenditure
52 POSITIVE TRENDS IN MINE EXPLORATION AND CAPITAL EXPENDITURE Robust outlook for the mining sector Performance Trend Capital Expenditure Pipeline Activity Index USD bn USD bn Indexes 1 250 300 90 200 80 1 000 70 200 60 150 750 50 40 500 100 30 100 250 20 10 0 0 0 50 2020 2021 2022F 2020 2021 2022F
Slide 53: Revenue Growth from Volume and Price Mix
53 REVENUE GROWTH FROM VOLUME AND PRICE MIX % Revenue Volumes Average Comments price Lower volumes driven by later purchases from farmers, with sales cycle Agriculture RSA 34 (14) 48 experiencing more normal patterns (compared to HY22) Delayed implementation of contract in Zambia led to lower volume
Slide 54: Revenue Growth (From Continuing Operations)
54 REVENUE GROWTH (FROM CONTINUING OPERATIONS) Revenue growth in HY23 of 23% R1 224m R1 034m R4m R million 4 599 435 330 380 1 174 9 902 10 746 12 164 HY22 Agri Agri Agri Mining Mining Chemicals HY23 RSA Int Zim RSA Int ex Zim % Growth of division 34% (22%) 174% 26% 37% 0.3% % Contribution to Group
Slide 55: Statement of Comprehensive Income (Ex Zimbabwe)
55 STATEMENT OF COMPREHENSIVE INCOME (EX ZIMBABWE) As reported Zimbabwe Ex Zimbabwe Ex Zimbabwe Zimbabwe As reported Rm 30 Sep 22 30 Sep 22 30 Sep 22 % 30 Sep 21 30 Sep 21 30 Sep 21 Revenue 12 164 598 11 566 19 9 684 218 9 902 Cost of sales (9 220) (340) (8 880) (18) (7 506) (174) (7 679) Gross prof
Slide 56: Hyperinflation Impact in Zimbabwe
56 HYPERINFLATION IMPACT IN ZIMBABWE Unaudited Unaudited Audited Rm 6 months 6 months 12 months 30 Sep 22 30 Sep 21 31 Mar 22 Statement of comprehensive income Net revenue 598 218 621 Expenses (391) (200) (791) Operating profit before items below 207 18 (170) Hyperinflation in Zimbabwe remains, Net
Slide 57: Tax Rate Reconciliation
57 TAX RATE RECONCILIATION Unaudited Unaudited Rm 30 Sep 22 30 Sep 21 Profit before taxation 771 670 Tax calculated at 27% (HY22: 28%) 208 188 * Expenses of capital nature include legal fees, Adjusted for: consulting fees and overseas travel Non-deductible expenses 43 71 Expenses of capital nature*
Slide 58: Reconciliation of Earnings Measures
58 RECONCILIATION OF EARNINGS MEASURES (cents per share) The Group has presented its earnings on an adjusted basis by excluding the Zimbabwe operations from the current and prior year periods. The Zimbabwe operations include the hyperinflation net monetary adjustments attributable to IAS 29.The adju
Slide 59: Commodities
COMMODITIES
Slide 60: Rand/USD Exchange Rate
60 RAND/USD EXCHANGE RATE USD R14.50 15.18 R17.84 R17.19 R14.77 R15.05 R14.60 R17.97 $22 R13.80 14.64 R15.00 R16.75 R16.19 R14.43 R14.84 R16.58 $20 $18 $16 $14 $12 $10 Sep 2018 Mar 2019 Sep 2019 Mar 2020 Sep 2020 Mar 2021 Sep 2021 Mar 2022 Sep 2022 Closing rate Average rate 23.93% movement 31 Mar 22
Slide 61: Ammonia vs Urea | USD per Tonne
61 AMMONIA VS UREA | USD PER TONNE Prices at 30 Sep USD $1 200 2.0 UREA (GRAN) 1.8 2018 312 $1 000 2019 260 1.6 2020 278 1.4 2021 615 $800 1.31 1.49 2022 643 1.2 AMMONIA 1.04 $600 0.91 1.0 2018 358 0.88 2019 238 0.8 2020 250 $400 0.6 2021 580 2022 955 0.4 6 MONTH AVERAGE $200 AMMONIA:UREA RATIO 0.2
Slide 62: Energy/Commodity Prices: USD
62 ENERGY/COMMODITY PRICES: USD Prices at 30 Sep USD $500 BRENT CRUDE $450 2018 83 2019 62 $400 2020 39 $350 2021 78 2022 88 $300 COAL $250 2018 100 2019 60 $200 2020 52 $150 2021 173 2022 329 $100 U URANIUM $50 2018 27 2019 26 $0 2020 31 Mar 2018 Sep 2018 Mar 2019 Sep 2019 Mar 2020 Sep 2020 Mar 202
Slide 63: International Crop Prices | USD per Tonne
63 INTERNATIONAL CROP PRICES | USD PER TONNE Prices at 30 Sep USD $700 YELLOW MAIZE 2018 127 $600 2019 133 2020 130 2021 188 $500 2022 242 WHEAT $400 2018 182 2019 174 $300 2020 194 2021 258 2022 329 $200 SOYA 2018 303 $100 2019 315 2020 358 $0 2021 459 Mar 2018 Sep 2018 Mar 2019 Sep 2019 Mar 2020 S
Slide 64: Precious Metals | USD per Ounce
64 PRECIOUS METALS | USD PER OUNCE Gold, Platinum Palladium Prices at 30 Sep USD $2 500 $3 500 AU GOLD 2018 1 192 $3 000 2019 1 497 $2 000 2020 1 899 $2 500 2021 1 750 2022 1 660 $1 500 Pt PLATINUM $2 000 2018 812 2019 931 $1 500 2020 882 $1 000 2021 982 2022 859 $1 000 Pd PALLADIUM $500 2018 1 073
Slide 65: Metal Commodity Prices | USD per Tonne
65 METAL COMMODITY PRICES | USD PER TONNE Copper Iron Ore Prices at 30 Sep USD $12 000 $250 COPPER 2018 6 260 $10 000 $200 2019 5 749 2020 6 554 $8 000 2021 9 342 $150 2022 7 688 $6 000 IRON ORE 2018 69 $100 2019 93 $4 000 2020 121 $50 2021 120 $2 000 2022 93 $0 $0 Mar 2018 Sep 2018 Mar 2019 Sep 201