FINANCIAL RESULTS6 m o n t h s e n d e d
3 0 S e p t e m b e r 2 0 1 9
CONTENTS
General
Business update
Financial results
Conclusion
Annexures
01
02
03
04
Further Annexures: www.omnia.co.za
05
3 INTERIM RESULTS | 30 SEPTEMBER 2019
GOVERNANCE – BOARD COMPOSITION
INDEPENDENT NON-EXECUTIVES
Prof. Nick Binedell
Tina Eboka
Ronnie Bowen
Thoko Mokgosi-
Mwantembe
Wim Plaizier
Frank Butler
Ralph Havenstein
Sizwe Mncwango
Linda de Beer
Independent Chairman
of the Board.
Appointed in 2007 with
over 22 years executive
leadership experience
Appointed in 2016 with
over 27 years’ board level
strategy consulting
experience
Appointed in 2011 with
over 35 years’ senior
executive experience
Appointed in 2017 with
over 30 years’ business
leadership and strategy
experience
Appointed in 2002 with
close to 30 years’
business strategy
experience
Appointed in 2017 with
over 10 years’
corporate governance
experience
Appointed in 2010 with
17 years’ executive
management experience
Appointed in 2019 with
35 years’ global and
senior management
experience
Chief Executive Officer
Appointed in 2018 with
close to 20 years’ executive
leadership experience
Appointed in 2017 with
extensive experience as
a director of various
multinationals
EXECUTIVES
George Cavaleros
Appointed in 2019
30 years’ experience
in financial services
Seelan Gobalsamy
Bernard Swanepoel
Appointed in 2019 with
30 years’ experience
in mining industry
BOARD MEMBERS 12
11Independent
Non-Executive
directors1 Executive director
Appointment to be made
Chief Finance Officer
4 INTERIM RESULTS | 30 SEPTEMBER 2019
25+ years’ experience in explosives industry
MANAGEMENT TEAM
Jan Vermaak
MD Fertilizer International
Lennon Phillip
General counsel
Stephan Serfontein
Acting Interim CFO
Mike Smith
MD Protea Mining
Chemicals
Funani Mojono
MD Chemicals
Appointed in 2018
Admitted attorney with
19 years’ experience
Appointed in 2001
Over 20 years’ industry
experience
Appointed in 2018
Over 15 years’ executive
business experience
Appointed in 2006
Over 25 years’ in
petrochemical & mining
experience
Appointed in 2019 with
close to 20 years’
executive leadership
experience
Appointed in 2011
17 years’ international
corporate finance
experience
Jacques de Villiers
MD Fertilizer RSASeelan Gobalsamy
CEO
Francois Visagie
Business Initiatives
Appointed in 2015
30 years’ experience
in mining industry
EXCO 11
10 Management 1 Executive director
Kavita Pema
Safety, Sustainability & Risk
Michelle Nana
Company Secretary
Appointed in 2018
25 years’ experience in
JSE-listed + unlisted
companies
Joe Keenan
MD BME
Appointed in 2001
Over 20 years’ industry
experience
Appointed in 2007
20 years’ industry
experience
Appointed in 2013
20 years’ industry
experience
Appointment to be made
Human Resources
BUSINESS UPDATE
6 INTERIM RESULTS | 30 SEPTEMBER 2019
SALIENT FEATURES HY2020
REVENUE INCREASEDWITH 1% TO R8.7BNFROM R8.6BN
OPERATING PROFIT
INCREASEDBY 137% TO R294M FROM R124M
NO INTERIM DIVIDENDHY2019: 75 CENTS
PROFIT AFTER TAXOF R35M(HY2019: R93M LOSS)
HEADLINE EARNINGS PER
SHARE INCREASEDTO 49 CENTS PROFITFROM 122 CENTS LOSS
EARNINGS PER SHAREOF 39 CENTS (HY2019: 120 CENTS LOSS)
OVERSUBSCRIBED RIGHTS
OFFER OF R2BNSUCCESSFULLY CONCLUDED WITH
SHAREHOLDER UNDERWRITE
NET DEBT DECREASED BY R1.4BN FROM R4.65BN
AT HY2019 TO R3.3BN (FY2019: R4.4BN)
NET DEBT: EBITDA
RATIO DOWN TO 2.35*(FY2019: 4.50)
* Excluding IFRS 16 impact
7 INTERIM RESULTS | 30 SEPTEMBER 2019
MACRO ENVIRONMENT
7
AGRICULTURE MINING
• Sector globally in recovery with
gains in commodity prices,
aided in RSA by a weaker Rand
• Increased competition and
oversupply of explosives led to
margin pressure
• SA manufacturing sector remains
in low growth / stagnation
• Price competitiveness in highly
fragmented market
• Increased demand for specialised
product and service solutions
across various sectors including
food, oil and gas
CHEMICALS
• Low maize prices cause switching of
crops and reduced fertilizer demand
• Soil moisture content good -
cautiously optimistic regarding rainfall
• Increasing use of technology to
maintain and increase crop yield
• Strong demand of AgriBio products
globally
• Hyperinflation in Zimbabwe creating
volatility in our earnings results
• Zambia concerns – drought, inflation,
exchange rate
The “new normal” requires Omnia to undertake a holistic review of its portfolio and
structure as well as strategy and business practices to succeed in long-term
8 INTERIM RESULTS | 30 SEPTEMBER 2019
SHORT TERM STRATEGY SET OUT PREVIOUSLY
HY2020 immediate action 12 - 18 months Focus way forward
1. Stabilise
• Elicit lender & shareholder support
• Deep dive into sustainability and operational matters
• Consider, then execute
• Capital restructure
• Debt structure
2. Fix
• Within existing structures
• Cut cost where possible without major business disruption
• Quick fixes
• Change managementwhere required
• Significantly reduce capital expenditure and working capital
3. Renewal Strategy
4. Executeand Grow• Rethink the business model under
new market conditions
• Challenge current beliefs on competitive advantage
• Seek group synergies
• Create high performance culture
• Stabilise new operating cost base and operating model
• Capital light expansion strategy going forward: Heavy assets in RSA; Expansion around Oro Agri and BME’s new detonators
Operating leverage:
• Cost saving
Financial leverage:
• Reduce net working capital
• Capital investment
Margins:
• Cost saving
• Nitrophos
9 INTERIM RESULTS | 30 SEPTEMBER 2019
HY2020 SATISFACTORY PROGRESS
Completed capital restructure
• Elicited lender and shareholder support
• Capital restructure and bridge loan
• Rights issue complete with asset manager
underwrite and oversubscription of excess
shares
• Net proceeds used to pay down the term
portion of the bridge facility
• Debt restructure in final stages
• Optimised peak season net working capital
STABILISE FIX
Good progress made
• Reduced NWC whilst increasing inventory
• Cash and capex management
• Return to profitability
• Share schemes unwind – no share dilution
Further focus needed
• Cost savings outstrip inflation
• Nitrophosphate Plant 2 ramp up
• Capital light expansions
• Operational stability
• B-BBEE level 3 verification
• Carbon emissions
RENEWAL
Started
• Strengthened financial control
(focus on – return on capital)
• Cross-divisional collaboration
• Business reviews
Going forward
• Group operating model change for
synergy & scale benefits
• Asset base review
• Culture change
• Rebuild trust in the market
10 INTERIM RESULTS | 30 SEPTEMBER 2019
DEBT RESTRUCTURE
• Improved capital structure in place
• Commercial & structural terms pertaining to the refinance of
existing bridge loan & working capital facilities are agreed
• Clearing pricing for refinance is better than bridge pricing
• The bridge package will be replaced by:
• Core term facilities of R2bn
• 5 year revolving credit facility of R1bn
• Committed, structured working capital facilities of R1.8bn
• Legal implementation in final stages
Debt restructure
Bridge package, post partial repayment utilising net proceeds of
rights offer comprises:
• Bridge loan: 12-months bullet term loan of c.R3.1bn
• General short-term banking facility limited to R1.6bn committed
for 12 months, excluding soft lines
Bridge package
Facilities profile as at 30 Sep 2019*
R’m Drawn Available Total
Bridge 3 066 - 3 066
GBF’s 595 1 005 1 600
Total 3 661 1 005 4 666
* South Africa only
11 INTERIM RESULTS | 30 SEPTEMBER 2019
-
1
2
3
4
5
6
7
-
1 000
2 000
3 000
4 000
5 000
6 000
7 000
Ap
r-17
Ma
y-1
7
Jun
-17
Jul-
17
Au
g-1
7
Se
p-1
7
Oct-
17
Nov-1
7
Dec-1
7
Jan
-18
Fe
b-1
8
Ma
r-1
8
Ap
r-18
Ma
y-1
8
Jun
-18
Jul-
18
Au
g-1
8
Se
p-1
8
Oct-
18
Nov-1
8
Dec-1
8
Jan
-19
Fe
b-1
9
Ma
r-1
9
Ap
r-19
Ma
y-1
9
Jun
-19
Jul-
19
Au
g-1
9
Se
p-1
9
EBITDA (cum 12m rolling) - actual Net Debt - actual Net debt to EBITDA (Actual)
Umongo,
Nitrophos & AX
Oro Agri,
Nitrophos &
high NWC
Nitrophos & AX
Rights issue
• R2 billion rights issue fully underwritten by shareholders
• Priced early vs. conventional recapitalisations
• Shareholders subscribed to 96.6% of total number of rights
offer shares available for subscription
• Excess applications which were oversubscribed by 84m
shares
• No requirement for underwrite commitments to be called on
• Proceeds of R2bn utilised to partially repay the bridge loan
Commentary
30 Sep 19 31 Mar 19
Net debt (Rm) * 2 781 4 403
12 month rolling EBITDA (Rm) * 1 180 979
Ratio * 2.35 4.50
Key metrics
R2BN NEW CAPITAL INJECTIONR
mill
ion
s
Ne
t d
eb
t: E
BIT
DA
ra
tio
** Incl. IFRS 16 impact, net debt is R3 292m and ratio is 2.5
* Excl. IFRS 16 impact
12 INTERIM RESULTS | 30 SEPTEMBER 2019
GROUP’S COMPARATIVE EBITDA – R612MR
‘0
00
S
• Cumulative YTD EBITDA tracking in
line with 2017 & 2018 despite
difficult market conditions
• Excludes impact of adoption of
leases (IFRS 16) & first-time
application of Hyperinflation (IAS
29) accounting in Zimbabwe
• Including all accounting treatments
EBITDA is at R752m
-100
100
300
500
700
900
1 100
1 300
1 500
1 700
1 900
April May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2013 2014 2015 2016 2017 2018 2019 2020 Actual (cum)
Commentary
13 INTERIM RESULTS | 30 SEPTEMBER 2019
REDUCTION IN CAPEX
• Omnia has reached the end of its high capital
investment cycle
• Capex has reduced in line with plan
• Capex spend in HY2020 of R164m includes
• Nitrophosphate plant – R57m
• EnviNox catalyst
• BME
• YTD maintenance capex:
• R57m (HY2019: R151m)
Commentary
R M
illio
n
817 887 1 120 570 2600
200
400
600
800
1 000
1 200
FY2017 FY2018 FY2019 HY2019 HY2020
14 INTERIM RESULTS | 30 SEPTEMBER 2019
-
1.00
-
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
Ap
r-14
Ma
y-1
4
Jun
-14
Jul-
14
Au
g-1
4
Se
p-1
4
Oct-
14
Nov-1
4
Dec-1
4
Jan
-15
Fe
b-1
5
Ma
r-1
5
Ap
r-15
Ma
y-1
5
Jun
-15
Jul-
15
Au
g-1
5
Se
p-1
5
Oct-
15
Nov-1
5
Dec-1
5
Jan
-16
Fe
b-1
6
Ma
r-1
6
Ap
r-16
Ma
y-1
6
Jun
-16
Jul-
16
Au
g-1
6
Se
p-1
6
Oct-
16
Nov-1
6
Dec-1
6
Jan
-17
Fe
b-1
7
Ma
r-1
7
Ap
r-17
Ma
y-1
7
Jun
-17
Jul-
17
Au
g-1
7
Se
p-1
7
Oct-
17
Nov-1
7
Dec-1
7
Jan
-18
Fe
b-1
8
Ma
r-1
8
Ap
r-18
Ma
y-1
8
Jun
-18
Jul-
18
Au
g-1
8
Se
p-1
8
Oct-
18
Nov-1
8
Dec-1
8
Jan
-19
Fe
b-1
9
Ma
r-1
9
Ap
r-19
Ma
y-1
9
Jun
-19
Jul-
19
Au
g-1
9
Se
p-1
9
Inventories Net working capital - actual
REDUCTION IN NWC BY R714MR
Mill
ion
• NWC down by R714m (HY2019: R5.3bn to R4.6bn)
• Year-on-year stock down by R1.4bn but up by R860m
since Mar 2019
• FY2018 to HY2019 NWC up by R917m
• FY2019 to HY2020 NWC up by R368m
• Lower NWC volatility, but inventory in line with prior years
(R727m) (R179m) (R176m)
NWC reduction by
division *
* R368m for Head office
R917m
R368m
15 INTERIM RESULTS | 30 SEPTEMBER 2019
• RSA: Higher bulk volumes
• Cost cutting initiatives implemented, partially offset by once off restructuring cost
• International: New business awarded
• Mining Chemicals increased margins
• RSA: Cost cutting initiatives implemented
• Difficult trading conditions
• International: Increased volumes and net revenues combined with lower expenses
• Trading: Restructured to reduce NWC
• Biological: Strong demand for Agri Bio products globally
OPERATING PROFIT – INCREASED BY 137% TO R294M
• Improved overall margins for Chemicals division
• Protea Chemicals: Lower revenue but higher margin product mix
• Reduced cost base due to restructuring from prior year
• Umongo Petroleum: Increase in volumes and selling prices
Key D
rivers
Operating profit (Rm) Operating profit (Rm) Operating profit (Rm)
395 13 98
FY2019 HY2019 HY2020
234 104 169
FY2019 HY2019 HY2020
13 19 91
FY2019 HY2019 HY2020
MarginMargin Margin
Agriculture ChemicalsMining
0.7% 3.5%0.2%4.2% 8.9%3.5%0.4% 2.8%4.8%
16 INTERIM RESULTS | 30 SEPTEMBER 2019
NITROPHOSPHATE PLANT 2
Our manufacturing competency, its unique design in terms of efficiencies and low environmental impact,
will provide Omnia with strong competitive advantage in coming years
Slower ramp-up than anticipated
due to technical difficulties
Capacity
• More than expected start-up difficulties
• Modifications to crystallizers
• Capital requirement for modifications expected to be
circa 5% of total capital spend
• At start up, instantaneous capacity of 60% achieved
• 1 Apr 2019 to 30 Sep 2019, lower average capacity
achieved and hence benefits expected not realised
• Expected to achieve about 60% - 85% of instantaneous
capacity by end of FY2020 but with average capacity less
than expected for the year
17 INTERIM RESULTS | 30 SEPTEMBER 2019
RENEWAL STRATEGY IN PROGRESS
People alignment
Capital light geographic
expansion
Operating model restructure
& B-BBEE strategy
Strengthened financial
discipline
Recognising the need for higher overall returns to shareholders, we embarked on key strategic projects
FINANCIAL RESULTS
19 INTERIM RESULTS | 30 SEPTEMBER 2019
INCOME STATEMENT
Rm 30 Sep 2019 % 30 Sep 2018 31 Mar 2019
Revenue 8 723 1 8 654 18 628
Cost of sales (6 561) 2 (6 669) (14 495)
Gross profit 2 162 9 1 985 4 133
Distribution expenses (1 034) 3 (1 067) (2 140)
Administrative expenses (672) (6) (632) (1 500)
Other operating income 68 (9) 75 325
Other operating expenses (200) (6) (189) (384)
Impairment losses on non-financial assets (8) - - (340)
Impairment losses on financial assets (15) 73 (56) (97)
Share of net profit of investments:
equity method(7) (>100) 8 27
Operating profit 294 >100 124 24
Monetary gain on hyperinflation 50 - - -
Finance expense (313) (29) (242) (481)
Finance income 23 (4) 24 43
Profit/(loss) before taxation 54 >100 (94) (414)
Income tax expense (19) >100 1 7
Profit/(loss) for the period 35 >100 (93) (407)
Operating margin 3.4% 1.4% 0.1%
• HY2020 gross profit margin 25% versus 23% in PY
• Administration expenses closely managed
• Other operating income:
• Forex gains of R26m - revaluation on foreign balances
• HY2019 incl. R52m release of Umongo earn out
• Other operating expenses:
• Forex loss of R90m, R80m of which relates to
Zimbabwe operations partly offset by higher GP
• Increase in amortisation of intangibles of R13m
• Impairments: non financial assets R8m,
ECL (IFRS 9) of R15m
• Higher interest costs on bridge loan & interest on
Nitrophosphate plant which was previously capitalised to
asset while under construction
Commentary
20 INTERIM RESULTS | 30 SEPTEMBER 2019
MOVEMENT TO ADJUSTED EBITDA
294 752 612
341
109
8 15
125
0
500
1 000
R M
illio
n
30 Sep 19
Operating
Profit
Depreciation Amortisation 30 Sep 19AdjustedEBITDA
ZimbabweHyperinflation
30 Sep 19EBITDA
IFRS 16 impact
Impairment
21 INTERIM RESULTS | 30 SEPTEMBER 2019
BALANCE SHEET
Rm 30 Sep 2019 % 30 Sep 2018 31 Mar 2019
Non-current assets 8 470 4 8 138 8 140
Current assets 10 251 (12) 11 655 8 507
Inventories 4 741 (22) 6 105 3 883
Trade and other receivables 4 473 (2) 4 557 3 838
Other current assets 167 (38) 268 142
Cash and cash equivalents 870 20 725 644
Total assets 18 721 (5) 19 793 16 647
Total equity 9 116 14 8 013 7 225
Deferred tax 523 39 851 733
Trade and other payables 4 920 9 5 421 3 613
Lease liabilities 539 (100) - -
Derivative financial instrument - 100 129 29
Debt – short, long-term & overdraft 3 623 33 5 379 5 047
Total equity and liabilities 18 721 (5) 19 793 16 647
Net debt (incl. lease) 3 292 29 4 654 4 403
Net working capital 4 632 13 5 346 4 264
• Increase in right of use assets of R539m relating to the
first-time adoption of IFRS 16
• Inventory levels in line with prior FY2019 experience
• Other current assets: Reduction in income tax assets
• Cash incl. 38 foreign entities where no facilities exist &
pooling of cash ahead of peak procurement season
• Unwinding of deferred tax in acquisitions
• Increase in lease liabilities relating to the first-time adoption
of IFRS 16
• NWC reduction includes provisions & non-current trade
receivables, payables & derivatives
Commentary
22 INTERIM RESULTS | 30 SEPTEMBER 2019
MOVEMENT IN NET DEBT
31 Mar 19Net debt
R M
illio
n
4 654 4 403 3 292
1 603
300
24550
376
49 53 186290
37 260
2 000 23 511
0
1 000
2 000
3 000
4 000
5 000
30 Sep 19Net debt
Cash generated
fromoperations
Net interest
paid
Taxationpaid
Capital expenditure
Forex &ECL
movements
Rights Issue
proceeds
IFRS 16Lease
Liabilitiesexcl. finance
leases previous recognised
30 Sep 18Net debt
Acquisitions Cash generated
fromoperations
Net interest
paid
Taxationpaid
Capital expenditure
Forex &disposal
Dividendspaid
23 INTERIM RESULTS | 30 SEPTEMBER 2019
CASHFLOW STATEMENT
Rm 30 Sep 2019 30 Sep 2018 31 Mar 2019
Net cash (outflow)/inflow from operating activities (141) (968) 311
Cash generated/(utilised) by from operations 186 (605) 998
Finance expense (313) (242) (561)
Finance income 23 24 43
Income taxes paid (37) (145) (169)
Net cash outflow from investing activities (260) (1 135) (2 059)
Purchase of PP&E (221) (460) (977)
Proceeds on disposal of PP&E - - 2
Additions to goodwill, intangible and other assets (39) (110) (143)
Acquisition of a business - (565) (941)
Net cash inflow from financing activities 2 386 1 861 1 463
Interest bearing borrowings raised 386 1 965 1 616
Proceeds from share issue 2 000 - -
Dividends paid - (104) (153)
Net increase/(decrease) in cash & cash equivalents 1 985 (242) (285)
Net cash & cash equivalents - beginning of period (1 613) (1 459) (1 459)
Exchange rate movements 21 157 131
Net cash/(overdraft) balance at end of period 393 (1 544) (1 613)
Long-term debt (34) (2 534) (45)
Net debt (including lease liabilities) (3 292) (4 654) (4 403)
• Cash generated from operations: Lower NWC through
reduction of slow-moving inventory, lower inventory holding
& improved debtor collections
• Finance expense: Nitrophosphate plant interest no longer
capitalised during HY2020
• Addition of intangibles incl. Microsoft Dynamics AX in
comparatives
• Acquisition of business: Oro Agri
• Long term Debt: R2.5bn was replaced by bridge loan -
repayable during Jun 2020
Commentary
OPERATIONAL
FINANCIALS
25 INTERIM RESULTS | 30 SEPTEMBER 2019
HY20
NET REVENUE
Rm
OPERATING
PROFIT (Rm) &
MARGIN %
SOUTH AFRICA:
• Revenue 3%, Operating profit 40%
• Margins reduced due to higher cost inventory being sold in declining
market, countered by focused cost reductions
INTERNATIONAL:
• Revenue 8%, Operating profit 13%
• Brazilian & Australian entities tracking ahead, sales of humates increasing
• Australian humate drying project on track and construction underway
• Zimbabwe’s performance in line with strategy; focus on expatriation of funds
• Zambia sales exceeded expectation with strict credit control
• Reduced retail store footprint in Africa
TRADING:
• Revenue 48%, Operating profit 100%
• Model realigned to improve returns, generation of cash & for better leverage
of the Group’s market position
BIOLOGICAL:
• Revenue 43%, Operating profit 100%
• Higher sales volumes in Brazil, USA & RSA
• Increased sales from new products
• New product registrations in Europe and Brazil
• Portugal factory performing in line with expectations
1 7
88
1 1
23
43
1
27
9
1 8
48
1 0
31 22
5
39
9
0
500
1 000
1 500
2 000
-77
62 1 27
-46
70
-2
76
-100
-50
0
50
100
COMMENTARY
HY19 HY20 HY19 HY20 HY19 HY20 HY19 HY20
-4.3%
HY19 HY20
HY19 HY20 HY19 HY19 HY20
-
2.5%
5.5%6.8%
0.2%
-1.0%
9.6%
19.0%
RSA Int’l Trade Bio
AGRICULTURE - REVENUE AND OPERATING PROFIT
26 INTERIM RESULTS | 30 SEPTEMBER 2019
MINING - REVENUE AND OPERATING PROFIT
COMMENTARY
SOUTH AFRICA:
• Revenue 10%, Operating profit 67%
• Increase in bulk volumes
• Various cost cutting initiatives
• Awarded new contracts at various colliers
INTERNATIONAL:
• Revenue 4%, Operating profit 100%
• Increased bulk volumes in Zambia & Mali
• Decrease in staff employment costs in West Africa
• Lower ammonia prices create margin pressure
• Prior year stock write-off, once-off costs and provision for debtor in Angola
PROTEA MINING CHEMICALS:
• Improved profitability mainly from new sales and services
• Depressed cobalt sector impacting negatively on sales
NET REVENUE
Rm
OPERATING
PROFIT (Rm) &
MARGIN %
1 0
48
1 4
30
1 1
52
1 4
85
-
400
800
1 200
1 600
HY19 HY20 HY19 HY20
49 55 82 152 -
40
80
120
160
HY19 HY20 HY19 HY20
4.7%
7.2%
3.9%
10.2%
RSA International
27 INTERIM RESULTS | 30 SEPTEMBER 2019
CHEMICALS - REVENUE AND OPERATING PROFIT
NET REVENUE
(Rm)
OPERATING
PROFIT (Rm) &
MARGIN %
COMMENTARY
PROTEA CHEMICALS:
• Revenue 2%, Operating profit 100%
• Lower revenue but higher margin product mix
• Operating costs saving
UMONGO PETROLEUM:
• Revenue 11%, Operating profit 100%
• Increase in volumes
• Base oils increased revenue largely due to exports & sale to independent
lube market customers
• Increase in specialty sales
1 9
96
55
9
1 9
63
62
0
-
400
800
1 200
1 600
2 000
2 400
- 19 53 38 -
20
40
60
0.0%
2.7%
HY19 HY20 HY19 HY20
HY19 HY20 HY19 HY20
6.1%
Protea Umongo
3.5%
CONCLUSION
29 INTERIM RESULTS | 30 SEPTEMBER 2019
GOING FORWARD
29
AGRICULTURE MINING
• Lower agri-commodity prices and climate
change impacting negatively
• Reduced fertilizer demand
• Cautiously optimistic regarding rainfall
• Hyperinflation in Zimbabwe and Zambia
concerns creating volatility in our earnings
• Strong demand of AgriBio products globally
• Sector globally in recovery with gains in
commodity prices, aided in South Africa by a
weaker Rand
• Increased competition and oversupply of
explosives led to margin pressure
• Locally, tender business has high dependency
on B-BBEE levels and community inclusion
• SA manufacturing sector remains in low growth /
stagnation
• High level of competitor activity in highly
fragmented market
• Increased demand for specialised product and
service solutions across various sectors
including food, oil and gas
CHEMICALS
CORE FOCUS
• Improving production efficiencies and
ramping up Nitrophosphate production
• Integrated operating model across Agri BUs
• Axioteq, AgriBio and Oro Agri to target
higher margin opportunities
• Further operating cost savings
• Expanding geographical footprint leveraging
current distribution infrastructure
• Strong pipeline of new products (several
patented)
CORE FOCUS
• Further development of AXXIS™ technology &
digital solutions - to be launched in H2
• New business in RSA
• Set-up plants and equipment in Canada (JV
with Consbec)
• Through distribution partnerships, expand into
Alaska, Texas, Mexico & Latin America
• Growth and operational set-up in Australia
• Set up execution in Indonesia
• Various growth opportunities in solvent
extraction business
CORE FOCUS
• Further profitability enhancement by reducing
high asset base and explore JV opportunities
• Strategic supplier relationships
• Penetrate export market
• Increase sale of speciality products
30 INTERIM RESULTS | 30 SEPTEMBER 2019
ROADMAP
Stabilise
Fix
Renewal Strategy
Execute& Grow
✓GOOD
PROGRESS
MADE
ROAD STILL TO TRAVEL
“We are making good progress, but more work lies ahead to position Omnia for
the new normal in an environment where both the climatic conditions and the
sectors we service are increasingly unpredictable and volatile.”
✓
QUESTIONS
32 INTERIM RESULTS | 30 SEPTEMBER 2019
FORWARD LOOKING STATEMENTS
Throughout this report 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’,
‘anticipates’, ‘estimates’, ‘seeks’, ‘continues’, or similar expression or the negative thereof, are forward-looking statements. By
their nature, forward-looking statements are speculative and allude to known and unknown risks, opportunities, macroeconomic
issues and any factors that could cause the actual results, performance or achievements of the Group to be materially different
from the future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking
statements are not guarantees of future performance and reflect the Group’s view at the date of publication of this report. The
Group is not obliged to publicly update or revise these forward-looking statements for events or circumstances occurring after
the date of publication of this report. Any forward looking statement contained herein based on current trends and/or activities of
the Group should not be taken as a representation that such trends or activities will continue in the future. No statement in this
document is intended to be a profit forecast or to imply that the earnings of the Group for the current year or future years will
necessarily match or exceed the historical or published earnings of the Group. Forward-looking statements should not be relied
on because they involve uncertainties and known and unknown risks which risk factors are described throughout the
commentary in this report, and include economic, business and political conditions in South Africa and elsewhere.
Comprehensive additional information is available on our website: www.omnia.co.za
Or email queries: [email protected]
Annexures
34 INTERIM RESULTS| 30 SEPTEMBER 2019
OMNIA PORTFOLIO
MainPortfolio
Omnia Nutriology: Ammonia nitrate-based fertilizer
(granular, liquid, direct application), specialty fertilizers,
AgriBio products, Farming R&D and retail
Oro Agri: Biostimulants, adjuvants, crop protection
products, liquid foliar
Innofert:Trading
Axioteq: Consulting, analytics services
BME:
Bulk emulsion, packaged explosive, initiating
systems,blasting accessories, detonators
Protea Mining Chemicals: Chemicals for
Mining industry, value added services
Protea Chemicals: • Chemicals supply chain management
(representing global companies in South
Africa and Africa); Specialty chemicals
Umongo Petroleum: • Lubricants, additives, base and process oils
• Distribution partner to global oil companies
• Advanced technology through Chevron
With its vision of leaving a better world as a footprint, the Group’s solutions promote the responsible use of chemicals for health,
safety and a lower environmental impact → shift towards cleaner technologies
Agriculture Mining Chemicals
Ammonium Nitrate:
N H4 N O3
Fertilizer requires
the Nitrate
Explosives requires
the Oxidiser
35 INTERIM RESULTS | 30 SEPTEMBER 2019
INVESTOR PROPOSITION
LEADER IN ENVIRONMENTALLY
FRIENDLY PRODUCTION• Leading innovation in used oil recycling
• Continental leader in generation of carbon credits
• Proactive implementation of best in class GHG
emission mitigation
BLASTING CONTRACTS Commenced for Indonesia & Canada
NEXT GENERATION
TECHNOLOGYIn soil & plant tissue testing
FORERUNNER IN AGRIBIO
PRODUCTSWith secure, highest quality humate supply
(Australia) and patented high margin
biocontrol products in Oro Agri
LEADING MINING TECHNOLOGY:
AXXIS™ TITANIUM Has the longest firing
time of any electronic detonator
PROGRESSIVELY
EMBEDDING SDG’SIn business strategy
36 INTERIM RESULTS | 30 SEPTEMBER 2019
RCR - SAFETY PERFORMANCE BENCHMARKED
1.1
1
0.5
8
0.5
2
0.4
8
0.4
4
0.3
9
0.3
4
0.3
0
0.2
7
0.2
0
0.1
8
0.1
8
0
0.2
0.4
0.6
0.8
1
1.2
Ashland AECI Omnia Orica DuPont Bayer Huntsman BASF Sasol Akzo Nobel Dow Shell
* The RCR rates relate to the 2018 and 2019 years for companies, depending on when the RCR rate was published; Omnia rate as at 30 September 2019
37 INTERIM RESULTS | 30 SEPTEMBER 2019
SHARE SCHEMES AND B-BBEE
SAKHILE 1
• Offer to settle in cash - No share dilution
• 96.5% of participants accepted the offer
• Settlement in cash likely to occur in December
Employee Share Schemes
SCORECARD
FY19 FY18
Ownership 24.06 25
Management control 11.01 12.82
Skills 17.05 22.61
Enterprise & Supplier Development 34.03 27.42
Socio-Economic Development 5 2.82
TOTAL 91.15 90.67
SAKHILE 2
• Vested tranches settled in shares bought in the open
market in the name of the participants (66 000 shares)
• No share dilution
OTHER MANAGEMENT SHARE SCHEMES
• EPS / ROE Performance targets not met
• No intention to issue any further tranches
• Maintained Level 3 rating in Oct 2019
• Improved overall score
• Assessing new strategy with focus on ownership structure
and enhanced skill development initiatives
B-BBEE
38 INTERIM RESULTS | 30 SEPTEMBER 2019
CONTINUOUS FOCUS ON CARBON MANAGEMENT
• Response to climate change – SDG’s being embedded in business strategy
• Omnia has emerged as a leader in the mitigation of Greenhouse gases
(GHG):
• Implementing advanced technological mitigation measures
(measured reduction of NOX & N2O being > 90%)
• Focusing on green chemistry & optimising blasting solutions
• Co-generation of electricity from waste heat
• No CERs in stock - contract with NEFCO to sell all CP2 CERs until Jun 2020
• Some unregistered CP1 CERs that are currently not tradeable through
UNFCCC - these can be used to reduce carbon tax liability into the future
• Carbon tax liability
• Well managed mitigation measures implemented as early as 2008
• Current 2019 tax liability higher due to end of life catalyst to be installed
early next year
93%
4% 3%
TOTAL GHG EMISSIONS BY DIVISION 2019
Agriculture
Mining
Chemicals
0
50 000
100 000
150 000
200 000
250 000
300 000
350 000
FY2014FY2015FY2016FY2017FY2018FY2019FY2020FY2021
Scope 1 Scope 2
^ ^
^ Estimated
GHG EMISSIONS
FINANCE
40 INTERIM RESULTS | 30 SEPTEMBER 2019
8 654 8 723
60 92
206 120
104
55 39 61
6
8 000
8 500
9 000
MOVEMENT IN REVENUE
30 Sep 18
R M
illio
n
30 Sep 19RSA Int Trading RSA Int Chemicals OtherBiological UmongoPetroleum
Movement R(118)m Movement R159m Movement R22m
41 INTERIM RESULTS | 30 SEPTEMBER 2019
1 067 1 034
17 39
9
46
1 000
1 010
1 020
1 030
1 040
1 050
1 060
1 070
1 080
1 090
1 100
MOVEMENT IN DISTRIBUTION EXPENSE
30 Sep 18
R M
illio
n
30 Sep 19
Increase relating to Agriculture Biological in correlation with the increase in revenue
IFRS 16 impact
Decrease largely attributable to the decrease in staff related costs due to restructuring in line with rightsizing the business
42 INTERIM RESULTS | 30 SEPTEMBER 2019
MOVEMENT IN ADMINISTRATIVE EXPENSE
30 Sep 18
R M
illio
n
632 672
21
50
25
41
45
500
600
700
30 Sep 19IFRS 16 impact
Head office
Include restructuring cost of R15m
43 INTERIM RESULTS | 30 SEPTEMBER 2019
124 294
41
99
88
78
136
0
50
100
150
200
250
300
350
400
450
500
30 Sep 18 Forex movement Head Office 30 Sep 19
R M
illio
n
• RSA: Difficult trading conditions due to subdued commodity prices
• International: Performed better due to earlier deliveries• Biological: Strong demand for Agri Bio products• Cost cutting initiatives implemented
• RSA: Higher bulk volumes • Cost cutting initiatives implemented, partially offset by
once-off restructuring cost• International: New business awarded• Protea Mining Chemicals: Increased margins
• Increase in volumes and sales for Umongo Petroleum• Improved margins for Chemicals division• Reduced cost base in Protea Chemicals due to restructuring from prior year
• R52m: Umongo earn out reversal in HY19• R48m: IAS19 & bonus reversals in HY19• R12m: Debt restructure cost• R8m: IFRS16 impact • R8m: Impairment of software
MOVEMENT IN OPERATING PROFIT – INCREASED BY 137% (R170M)
44 INTERIM RESULTS | 30 SEPTEMBER 2019
13 98
28
14 7
4
28 83
11 24
0
20
40
60
80
100
120
30 Sep 18 30 Sep 19
R M
illio
nAGRICULTURE’S MOVEMENT IN OPERATING PROFIT
Forex movement
Acquisition cost not
repeated in HY20
IFRS16Leases impact
Zimbabwe hyperinflation
impact
RSA
• RSA: Difficult trading conditions due to subdued commodity prices• International: Performed better due to earlier deliveries• Biological: Strong demand for Agri Bio products• Cost cutting initiatives implemented
International Trading Biological
Excludes a forex loss of R80m offset by an increase in gross margin
45 INTERIM RESULTS | 30 SEPTEMBER 2019
MINING’S MOVEMENT IN OPERATING PROFIT
104 234
27
17
16
42
15 6 37
0
50
100
150
200
250
30 Sep 18 30 Sep 19Bad debt provision not repeating in
HY20
Stock write offs not
repeating in HY20
International set up cost not
repeating in HY20
Forex movement
RSA
R M
illio
n
Restructuring cost
• Higher bulk volumes in RSA • New international business awarded• Cost cutting initiatives implemented, partially offset by once off restructuring cost• Protea Mining Chemicals increased margins
International
46 INTERIM RESULTS | 30 SEPTEMBER 2019
CHEMICALS MOVEMENT IN OPERATING PROFIT
19 91
11
6 3 19
67
0
50
100
30 Sep 18 30 Sep 19IFRS16Lease impact
Zimbabwe hyperinflation
impact
Forex movement
Umongo Petroleum
R M
illio
n
Protea Chemicals
• Increase in volumes and selling prices for Umongo Petroleum• Improved margins for Chemicals division• Reduced cost base in Protea Chemicals due to restructuring from prior year
47 INTERIM RESULTS | 30 SEPTEMBER 2019
(12)
(129)
(52)
(24)
(24)
(12) (8)(11) (13)
-200
0
200
OPERATING PROFIT ALLOCATION – HEAD OFFICE MOVEMENT
30 Sep 19
Umongo earn out reversal not in HY20
IAS 19 reversal
not in HY20
Head Office unallocated
cost
Debt restructure
costIFRS 1630 Sep 18
BonusReversal
not in HY20
19
Forex movement
Additional amort for Oro Agri
HY19 5 months vs HY20 6 months
R M
illio
n
8
Softwareimpairment
48 INTERIM RESULTS | 30 SEPTEMBER 2019
VOLUMES
% Revenue Volumes Average price Comments
Agriculture RSA 3 (1) 4 Cyclical nature with most sales occurring in H2 of FY2020
Agriculture International (5) 6 (11)
Mozambique - lower blender throughput with cyclone in Beira.
Zimbabwe in line with expectations underpinned by breakeven
strategy and a focus on expatriation of funds. Zambia sales
exceeded expectations. Australia & Brazil performed well due
largely to increased humate sales
Agriculture Trading (48) (50) 2Change in operating model, decreasing volumes with low
margins on products
Agriculture Biological 43 25 18
HY19 included 5 months, HY20 included 6 months, on
normalised basis, average price remained unchanged with 25%
volume increase
Total Agriculture (3)
Mining RSA 10 3 7 Sales of non-electronic detonators declined
Mining International excluding PMC 16 - 16 Strengthening of the dollar
Protea Mining Chemicals (22) 38 (60) Change in product mix
Total Mining 6
Protea Chemicals (2) (0.5) (1.5) Decommissioning of EcoGypsum plant
Umongo Petroleum 11 4 7 Exports and sale to independent lube market customers
Total Chemicals 1
49 INTERIM RESULTS | 30 SEPTEMBER 2019
REDUCING WORKING CAPITAL – R714M ACHIEVED YEAR ON YEAR
5 346 4 264 4 632
169
234
336 12 103
20
64 75
155
3 500
3 750
4 000
4 250
4 500
4 750
5 000
5 250
5 500
30 Sep 18NWC
R M
illio
n
30 Sep 19NWC
31 Mar 19NWC
RSA Int Trading Bio Int Umongo HOProteaRSA
Movement (R81m) Movement (R123m) Movement (R11m)
50 INTERIM RESULTS | 30 SEPTEMBER 2019
PLANT UTILISATION – NICTRIC ACID PLANTS
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 HY2020 FY2020
• FY17: Extended plant breakdown
• FY20: Forecast utilisation
51 INTERIM RESULTS | 30 SEPTEMBER 2019
THANK YOU
THANK YOU
Further Annexures
53 INTERIM RESULTS | 30 SEPTEMBER 2019
SEGMENT RECON – GROSS REVENUE H1 FY2019 AND FY2019
Reconciling items for 30 Sep 2018 and 31 Mar 2019 are detailed below:
GROSS REVENUE (Rm)Agriculture
RSA
Agriculture
International
Agriculture
Trading
Agriculture
Biological
Mining
RSA
Mining
International
Protea
Chemicals
Umongo
Petroleum
Head office &
Eliminations Total
H1 2019 Published AFS 2 494 1 403 431 - 1 048 1 430 2 430 161 (743) 8 654
Change to include intercompany 588 - 14 - 717 93 - 15 (1 426) -
Segment disclosed seperately - (280) - 279 - - (399) 399 - -
H1 2019 Restated AFS 3 082 1 123 445 279 1 765 1 523 2 031 575 (2 169) 8 654
FY 2019 Published AFS 5 661 2 081 961 711 2 104 3 001 4 108 1 193 (164) 19,656
Change to include intercompany 1 246 5 107 15 1 344 74 112 60 (3 991) (1 028)
FY 2019 Restated AFS 6 907 2 086 1 068 726 3 448 3 075 4 220 1 253 (4 155) 18 628
Segment for period
ended 30 Sep 2019
includes
intercompany
balances
This impacted
amounts published
on segment at
31 Mar 2019 &
30 Sep 2018 since
these only included
intersegmental
balances
At Sept 2018
Umongo Petroleum
& Agriculture
Biological were
included as part of
the Chemicals and
Agriculture
International
segments
respectively
54 INTERIM RESULTS | 30 SEPTEMBER 2019
SEGMENT RECON – OPERATING PROFIT & PBT H1 FY2019
• At Sep 2018 Umongo Petroleum & Agriculture Biological were included as part of the Chemicals and Agriculture International segments respectively
• Acquisition costs relating to Umongo Petroleum & Oro Agri were included as part of the Chemicals & Agriculture International segments respectively
• At 30 Sep 2018 Protea Angola was included as part of the Chemicals International segment this has now been reallocated to the Chemicals segment
Reconciling items for 30 Sep 2018 are detailed below:
• Interest expense is calculated per each business unit based on their individual net-controlled assets. Previously the interest was allocated to Head office
Reconciling items for 30 Sep 2018 are detailed below:
OPERATING PROFIT (Rm)Agriculture
RSA
Agriculture
International
Agriculture
Trading
Agriculture
Biological
Mining
RSA
Mining
International
Protea
Chemicals
Umongo
Petroleum
Head office &
Eliminations Total
H1 2019 Published AFS (95) 57 1 - 82 23 39 26 (9) 124
Segment disclosed seperately - (33) - 33 - - (20) 20 - -
Protea Angola reallocated - - - - - - 20 (20) - -
Transfer of forex - 9 - - - - (9) - - -
Management Fee 12 (5) - (6) - - - - - -
Oro Amortisation reallocated - 40 - - - - - - (40) -
Unearned profit reallocated 6 (6) - - - - - - - -
Bad debt reallocated - - - - (17) 17 - - - -
Restructing costs reallocated - - - - (16) 16 - - - -
Umongo Amortisation reallocated - - - - - - 20 - (20) -
Earn out reallocated - - - - - - (52) - 52 -
Share based payment reallocated - - - - - - - (7) 7 -
H1 2019 Restated AFS (77) 62 1 27 49 55 - 19 (12) 124
PROFIT BEFORE TAXATION (Rm)Agriculture
RSA
Agriculture
International
Agriculture
Trading
Agriculture
Biological
Mining
RSA
Mining
International
Protea
Chemicals
Umongo
Petroleum
Head office &
Eliminations Total
H1 2019 Published AFS (190) 27 - - 79 9 21 14 (54) (94)
Operating profit adj (refer above) 18 5 - 27 (33) 33 (40) (7) (2) -
Interest reallocation 7 7 (2) (4) (22) (2) (13) - 28 -
H1 2019 Restated AFS (165) 39 (2) 23 24 40 (32) 7 (28) (94)
55 INTERIM RESULTS | 30 SEPTEMBER 2019
SEGMENT RECON – OPERATING PROFIT & PBT FY2019
Reconciling items for 31 Mar 2019 are detailed below:
• Interest expense is calculated per each business unit based on their individual net controlled assets
• Interest reallocation as a result of change in net controlled assets recognised for respective business units
Reconciling items for 31 March 2019 are detailed below:
OPERATING PROFITAgriculture
RSA
Agriculture
International
Agriculture
Trading
Agriculture
Biological Mining RSA
Mining
International
Protea
Chemicals
Umongo
Petroleum
Head office &
Eliminations Total
FY 2019 Published AFS 93 169 3 105 21 148 (68) 78 (525) 24
Reallocation of ECL (10) 22 - - - - - (12) -
Forex adjustment - - - - - - 4 - (4) -
Reallocation of associate - - - - - - 30 - (30) -
Transfer of forex - 13 - - - - (13) - - -
Share based payment reallocated - - - - - - - (18) 18 -
FY 2019 Restated AFS 93 172 25 105 21 148 (47) 60 (553) 24
PROFIT BEFORE TAXATIONAgriculture
RSA
Agriculture
International
Agriculture
Trading
Agriculture
Biological Mining RSA
Mining
International
Protea
Chemicals
Umongo
Petroleum
Head office &
Eliminations Total
FY 2019 Published AFS (58) 131 (3) 88 (16) 114 (102) 68 (636) (414)
Operating profit adj (refer above) - 3 22 - - - 21 (18) (28) -
Interest reallocation (14) (7) - 10 - - - 11 -
FY 2019 Restated AFS (72) 127 19 98 (16) 114 (81) 50 (653) (414)
56 INTERIM RESULTS | 30 SEPTEMBER 2019
SEGMENT RECON – NET WORKING CAPITAL
• Balance sheet segment was not disclosed at 30 Sep 2018
• Net working capital published did not include long term receivables and payables, derivative
receivables and derivatives payables.
Net working capital for 30 September 2018 was restated as per below:
Net working capital for 31 Mar 2019 was restated as per below:
H1 FY2019 NWC published 5 415
H1 FY2019 NWC restated 5 346
Difference 69
Include long term trade receivables 134
Include derivatives - receivables 57
Include long term trade payables (174)
Include derivatives - liabilities (129)
Tax liability 43
(69)
NET WORKING CAPITAL (Rm)Agriculture
RSA
Agriculture
International
Agriculture
Trading
Agriculture
Biological Mining RSA
Mining
International
Protea
Chemicals
Umongo
Petroleum
Head office &
Eliminations Total
FY 2019 Published AFS 965 1 053 217 304 363 833 876 278 (625) 4 264
Inventory reallocated to PPE (142) - - - - - - - 142 -
Land bank loan reallocated to trade payables (79) - - - - - - - 79
Business reallocation - 12 - - - - - - (12) -
Reallocation of ECL - (10) 22 - - - - - (12) -
FY 2019 Restated AFS 744 1 055 239 304 363 833 876 278 (428) 4 264
57 INTERIM RESULTS | 30 SEPTEMBER 2019
SEGMENT RECON – NET CONTROLLED ASSETS
Oro Agri acquisition adjustments were recognised as part of the Agriculture
Biological segment which is now being disclosed separately and included with
Head office & eliminations
Net controlled assets for 31 Mar 2019 were restated as per below:
NET CONTROLLED ASSETSAgriculture
RSA
Agriculture
International
Agriculture
Trading
Agriculture
BiologicalMining RSA
Mining
International
Protea
Chemicals
Umongo
Petroleum
Head office &
EliminationsTotal
FY 2019 Published AFS 4 508 1 318 217 588 1 148 1 083 1 275 295 1 905 12 337
Inventory reallocated to PPE (142) - - - - - - - 142 -
Land bank loan reallocated to trade payables (79) - - - - - - - 79 -
Business reallocation - 12 - - - - - - (12) -
Reallocation of ECL - (10) 22 - - - - - (12) -
Acquisition adjustment reallocated - - - 21 - - - - (21) -
FY 2019 Restated AFS 4 287 1 320 239 609 1 148 1 083 1 275 295 2 081 12 337
58 INTERIM RESULTS | 30 SEPTEMBER 2019
HYPERINFLATION - KEY POINTS
• In a hyperinflationary economy, reporting of operating results &
financial position in local currency without restatement is not useful
• Decrease in purchasing power at such a rate that comparison of
amounts from transactions and other events that have occurred at
different times, even within same accounting period, is misleading
• In a hyperinflationary economy, financial statements are useful, only
if they are expressed in terms of the measuring unit current at the
end of the reporting period
• Any gains or losses on the net monetary position shall be included in
profit & loss and separately disclosed
• An entity with an excess of monetary liabilities over monetary assets,
gains purchasing power
Month CPI ZWL:USD Index-CPI Index-ROE
Oct-18 74.60 4.1597 3.8928 4.6234
Nov-18 81.50 4.7501 3.5632 4.0488
Dec-18 88.80 5.0750 3.2703 3.7896
Jan-19 98.40 5.2879 2.9512 3.6370
Feb-19 100.00 4.5313 2.9040 4.2443
Mar-19 104.40 5.0003 2.7816 3.8462
Apr-19 110.10 5.9228 2.6376 3.2471
May-19 124.00 8.9673 2.3419 2.1447
Jun-19 172.60 8.7312 1.6825 2.2027
Jul-19 208.90 11.9913 1.3901 1.6038
Aug-19 246.70 15.0280 1.1771 1.2797
Sep-19 290.40 19.2320 1.0000 1.0000
Hyperinflation-Indices:
Commentary
59 INTERIM RESULTS | 30 SEPTEMBER 2019
SUMMARY IMPACT OF HYPERINFLATION - ZIMBABWE
• Equity adjustment at 1 Apr 2019 of R50m
• Effect of hyperinflation on 30 Sep 2019:
• Increase in local currency but decrease in ZAR
• Due to exchange rates applied to translate
performance & balances
Rm
Before
hyperinflation
After
hyperinflation Impact
Income statement
Revenue 267 203 (64)
Expenses (152) (119) 33
Foreign exchange (109) (80) 29
Hyperinflation - 50 50
Tax 4 (7) (11)
Profit for the year 1 (1) (2)
Balance sheet 11 46 35
Assets
Liabilities 217 224 7
Equity (441) (450) 10
FCTR(288) (82) 206
Commentary
60 INTERIM RESULTS| 30 SEPTEMBER 2019
ADOPTION OF IFRS 16 - LEASES
Impact of adopting IFRS 16 - Leases
• All operating leases now capitalised to the balance sheet as right-of-use
assets with corresponding lease liabilities
• Right of use assets are depreciated over the lease term
• Finance costs accrued on lease liabilities at the incremental borrowing rate
and lease liability reduced by lease payments
On initial application (1 April 2019)
• Lease liabilities were measured at the PV of remaining lease payments,
discounted using lessee’s incremental borrowing rate as at 1 Apr 2019
• Right of use assets was measured at an amount equal to the remaining lease
liabilities
✓ No impact on opening retained earnings at 1 Apr 2019
• Leases previously classified as finance leases
• Lease asset was transferred to right of use assets
• Lease liability treated as before
• Impact at 1 April 2019:
BALANCE SHEET (Rm)
Impact as at
30 Sep 2019
Right of use assets
At 1 April 2019 543
Additions 116
Depreciation (112)
Foreign exchange movement (9)
At 30 September 2019 538
Lease liability
At 1 April 2019 536
Additions 100
Finance costs (25)
Lease payments (122)
At 30 September 2019 539
Commentary
INCOME STATEMENT (Rm)
Impact as at
30 Sep 2019
Lease expenses no longer recognised 130
Depreciation of right of use assets (112)
Operating profit 18
Finance expenses (25)
Profit before tax (7)
BALANCE SHEET (Rm) Lease liability
Right of use
assets
Operating leases capitalized 494 494
Finance leases transferred 42 49
IFRS 16 impact at 1 April 2019 536 543
Impact
61 INTERIM RESULTS | 30 SEPTEMBER 2019
IFRIC 23 – UNCERTAIN TAX POSITIONS SUMMARY
Background
• Tax positions taken are included in normal & deferred tax
calculations as per IAS 12
• Group previously recognised tax liabilities on most likely outcome in
accordance with IAS 12
• IFRIC 23 now requires weighted probability approach where there is
a wide range of outcomes
Application
• Retrospective implementation, cumulative adjustment for prior years
in opening retained earnings of R144m
Commentary
BALANCE SHEET (Rm) Retained earnings
Income tax
liability
At 31 March 2019 4 594 20
Adoption of IFRIC 23 (144) 144
At 1 April 2019 4 450 164
AGRICULTURE DIVISION
63 INTERIM RESULTS | 30 SEPTEMBER 2019
AGRICULTURE – OUR UNIQUE POSITIONING
Agro chemicals
Data science
Farming retail
Omnia’s brand is globally known for improving yield and providing state-of-the-art agriculture solutions
Growth opportunities exist in Africa (low fertilizer use compared to rest of world) and Rest of the world due to fears on health and a lower
environmental impact
Omnia is the only provider of granulated fertilizer in Africa –
now at lower cost
Omnia provides farmers with integrated solutions for
sustainable and responsible food production
The integration of Omnia and Oro Agri provides both
businesses with expanded market reach
1 2
3
High potential globally in AgriBio and Agro Chemical products – a 12%-
18% growth market with no dominant player at the moment.
MINING DIVISION
65 INTERIM RESULTS | 30 SEPTEMBER 2019
MINING – BME MARKETING POSITION
International expansion to key markets in progress• Product registrations obtained
• International distribution channels have been developed
• Competing in Indonesia through a secured local partnership
• JV in Canada completed, product trials being developed & funding model
to be addressed
• USA direct to market with opportunities identified in Alaska and Texas
• Mexico and Colombia – partnership models being developed
• Nitrophosphate plant to deliver lower cost CN to improve BME’s competitive
position in Africa
• Well positioned for new customers growth & market upturn
BME has operations across 20 African countries, as well as Australia, South-East Asia and South America
Recently secured operating licenses for USA & Canada
New state-of-the-art detonators to be
launched in FY2020 AXXIS-Titanium™
• Axxis Titanium™ is built on he latest technology, which represents a step
change in terms of utility & safety for users & adaptability to further
developments in technology & digital solutions at a cheaper cost of production
vs. existing products
• Axxis Titanium™ technology is adaptable to new developments such as
wireless
Complete range of high-quality blasting products &
services with a focus on lower ‘total cost of
ownership” than competitors
• Highly stable & re-pumpable emulsion formulations allow for specialised use
(e.g. larger sleep time)
• Modular automation plants and remote emulsion manufacturing
facilities offer clients security & continuity of supply
RESULTS PRESENTATION | 25 June 2019
1
2
3
66 INTERIM RESULTS | 30 SEPTEMBER 2019
REVENUE BY COMMODITY AND MARKET
68%
9%
24%
64%9%
26%
HY19HY20
O Other (civils, contractors, distributors)
S Surface & quarry
U Underground
36%
17%13%
9%
8%
5%
5%
4% 3%31%
22%16%
9%
7%
5%
5%3% 2%
HY20 HY19
Copper, Cobalt &
Nickel
Coal Other
Diamonds
PlatinumPt
GoldAU
Iron Ore
Surface & quarry
Manganese
REVENUE BY MARKETREVENUE BY COMMODITY
M
SD
O
MACRO-ECONOMICS
68 INTERIM RESULTS | 30 SEPTEMBER 2019
RAND: USD EXCHANGE RATE
R 11.00
R 11.50
R 12.00
R 12.50
R 13.00
R 13.50
R 14.00
R 14.50
R 15.00
R 15.50
R 16.00
Sep 2017 Mar 2018 Sep 2018 Mar 2019 Sep 2019
Average rate8% mvmt 30 Sep 18 to 30 Sep 19
6% mvmt 31 Mar 19 to 30 Sep 19
Closing rate7% mvmt 30 Sep 18 to 30 Sep 19
5% mvmt 31 Mar 19 to 30 Sep 19
R14.50
R13.80
R11.85
R12.90
HY2019HY2020
R14.17
R13.49
R15.18
R14.64
69 INTERIM RESULTS | 30 SEPTEMBER 2019
INTERNATIONAL CROP PRICES: USD PER TONNE
$100
$150
$200
$250
$300
$350
$400
$450
Sep 2015 Sep 2016 Sep 2017 Sep 2018 Sep 2019
Yellow maize Wheat Soya
Yellow Maize1%
Wheat-6%
Soya2%
Prices at 30 Sep USD
YELLOW MAIZE
2015 138
2016 120
2017 127
2018 132
2019 133
WHEAT
2015 181
2016 143
2017 160
2018 186
2019 174
SOYA
2015 317
2016 340
2017 345
2018 310
2019 315
% Movement is for the year 30 Sep 18 to 30 Sep 19
70 INTERIM RESULTS | 30 SEPTEMBER 2019
SOUTH AFRICA CROP PRICES: RAND PER TONNE
R 0
R 1 000
R 2 000
R 3 000
R 4 000
R 5 000
R 6 000
R 7 000
R 8 000
Sep 2015 Sep 2016 Sep 2017 Sep 2018 Sep 2019
Yellow maize Wheat Soya
Yellow Maize16%
Wheat7%
Soya31%
Prices at 30 Sep ZAR
YELLOW MAIZE
2015 2 890
2016 3 016
2017 1 953
2018 2 352
2019 2 722
WHEAT
2015 4 089
2016 4 202
2017 4 063
2018 4 305
2019 4 600
SOYA
2015 5 350
2016 6 120
2017 4 682
2018 4 526
2019 5 910
% Movement is for the year 30 Sep 18 to 30 Sep 19
71 INTERIM RESULTS | 30 SEPTEMBER 2019
0.0
0.5
1.0
1.5
2.0
2.5
$100
$200
$300
$400
$500
$600
$700
Sep 2015 Mar 2016 Sep 2016 Mar 2017 Sep 2017 Mar 2018 Sep 2018 Mar 2019 Sep 2019
Urea gran Ammonia Ammonia:urea ratio
0.83
AMMONIA VS UREA: USD PER TONNE
Urea Gran-20%
Ammonia-34%
Ammonia:Urea ratio-25%
Prices at 30 Sep USD
UREA (GRAN)
2015 252
2016 194
2017 273
2018 312
2019 260
AMMONIA
2015 413
2016 175
2017 253
2018 358
2019 238
SIX MONTH AVERAGE
AMMONIA:UREA RATIO
2015 1.41
2016 1.51
2017 1.29
2018 1.11
2019 0.83
1.51
1.29
1.11
% Movement is for the year 30 Sep 18 to 30 Sep 19
1.63
1.001.20
1.08
72 INTERIM RESULTS | 30 SEPTEMBER 2019
PRECIOUS METALS USD PER OUNCE
Gold26%
Platinum15%
Palladium57%
Prices at 30 Sep USD
GOLD
2015 1 146
2016 1 327
2017 1 279
2018 1 192
2019 1 497
PLATINUM
2015 951
2016 1 029
2017 909
2018 812
2019 931
PALLADIUM
2015 668
2016 721
2017 935
2018 1 073
2019 1 681
Pt
Pt
AU
AU
Pd
Pd
Pa
llad
ium
$0
$200
$400
$600
$800
$1 000
$1 200
$1 400
$1 600
$1 800
$2 000
$0
$500
$1 000
$1 500
$2 000
$2 500
Mar 2015 Mar 2016 Mar 2017 Mar 2018 Mar 2019
Gold Platinum Palladium
% Movement is for the year 30 Sep 18 to 30 Sep 19
Go
ld a
nd
Pla
tin
um
73 INTERIM RESULTS | 30 SEPTEMBER 2019
ENERGY/COMMODITY PRICES IN USD
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
$110
Sep 2015 Sep 2016 Sep 2017 Sep 2018 Sep 2019
Brent Crude $/barrel Coal $/ton Uranium $/lb
Brent Crude-25%
Coal-40%
Uranium-4%
Prices at 30 Sep USD
BRENT CRUDE
2015 49
2016 49
2017 58
2018 83
2019 62
COAL
2015 51
2016 74
2017 91
2018 100
2019 60
URANIUM
2015 37
2016 22
2017 20
2018 27
2019 26
U
U
% Movement is for the year 30 Sep 18 to 30 Sep 19
74 INTERIM RESULTS | 30 SEPTEMBER 2019
METAL COMMODITY PRICES IN USD PER TONNE
Copper-8%
Iron Ore+35%
Prices at 30 Sep USD
COPPER
2015 5 041
2016 4 844
2017 6 447
2018 6 260
2019 5 749
IRON ORE
2015 57
2016 57
2017 70
2018 69
2019 93
Iro
n O
re
$0
$40
$80
$120
$160
$0
$2 000
$4 000
$6 000
$8 000
Sep 2015 Sep 2016 Sep 2017 Sep 2018 Sep 2019
Copper Iron Ore
% Movement is for the year 30 Sep 18 to 30 Sep 19
75 INTERIM RESULTS | 30 SEPTEMBER 2019
COBALT PRICES IN USD PER TONNE
$0
$10 000
$20 000
$30 000
$40 000
$50 000
$60 000
$70 000
$80 000
$90 000
$100 000
Sep 2015 Sep 2016 Sep 2017 Sep 2018 Sep 2019
Cobalt- 41%
Prices at 30 Sep USD
COBALT
2015 27 695
2016 27 500
2017 59 094
2018 62 250
2019 37 000
Co
Co
% Movement is for the year 30 Sep 18 to 30 Sep 19
76 INTERIM RESULTS | 30 SEPTEMBER 2019
INDEX OF PHYSICAL VOLUME OF MANUFACTURING
Stagnant for a period of 7 years
60
70
80
90
100
110
120
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019