Omnia Holdings Limited · JSE:OMN
Omnia — FY2014 Earnings Presentation
61 slides from Omnia's earnings presentation, 2014
Slide 1: Results presentation for the year ended 31 March 2014
Results presentation for the year ended 31 March 2014 1
Slide 2: Agenda
AGENDA GROUP AT A GLANCE MINING OVERVIEW AGRICULTURE OVERVIEW CHEMICALS OVERVIEW FINANCIAL OVERVIEW PROSPECTS 2
Slide 3: Group at a glance
GROUP AT A GLANCE Agriculture Mining Chemicals 3
Slide 4: Geographical scope
GEOGRAPHICAL SCOPE 78. ry 0 0 fe) “9 SF? eo: 8 | a & E t G is Ge Ge BW: BF rf: uw
Slide 5: Our vision and strategy
OUR VISION AND STRATEGY Vision • Create customer wealth by leveraging knowledge Strategy • Providing specialised solutions to the mining, agricultural and chemical markets • Focusing on unique market offerings that create value and, in so doing, earn a premium • Diversifying geographically beyond So
Slide 6: Our value proposition
OUR VALUE PROPOSITION 6
Slide 7: Key drivers – FY2014
KEY DRIVERS – FY2014 • Good demand for mining and agriculture commodities • Good growth in mining volumes from African economies • Weaker Rand • Low activity levels in South African manufacturing sector 7
Slide 8: Overview of results
OVERVIEW OF RESULTS 2014 % 2013 2012 Revenue R 16.3bn +21 R 13.4bn R 10.9bn Profit for year R 992m +13 R 880m R 629m LTIP / Share Appreciation Rights expenses for year R200m +174 R73m R12m Profit for year – adjusting for abnormal portion of LTIP R 1 049m +20 R 873m R 629m Basic earnings per share -
Slide 9: Other key highlights
OTHER KEY HIGHLIGHTS • Successful completion of 4th Five Year plan – achieved 10.3% compound real growth in profits vs. Target of 8% – Market capitalisation increased from R2.3bn to R14.2bn over the 5 years • Revenue generated outside South Africa at 35% from 24% five years ago • Safety record maint
Slide 10: Mining overview
MINING OVERVIEW
Slide 11: Overview - Mining
OVERVIEW - MINING 2014 % 2013 2012 Revenue R 5.5bn +25 R 4.4bn R 3.1bn Operating profit R 829m +13 R 735m R 476m Operating margin 15.2% 16.8% 15.6% LTIP / SAR’s expenses R60m R26m R3m • Good demand for mining metals and minerals from Africa • Reduction in mining activities in commodities like uraniu
Slide 12: Commodity prices - Energy
COMMODITY PRICES - ENERGY $ 140 $ 120 $ 100 $ 80 $ 60 $ 40 $ 20 $- 31 Mar 09 31 Mar 10 31 Mar 11 31 Mar 12 31 Mar 13 31 Mar 14 Brent Crude $/barrel Coal $/ton Uranium $/lb 12
Slide 13: Commodity prices - Metals
COMMODITY PRICES - METALS $ 2,000 $ 12,000 $ 1,800 $ 10,000 $ 1,600 Gold and Platinum $ 1,400 $ 8,000 $ 1,200 Copper $ 1,000 $ 6,000 $ 800 $ 4,000 $ 600 $ 400 $ 2,000 $ 200 $0 $0 31 Mar 09 31 Mar 10 31 Mar 11 31 Mar 12 31 Mar 13 31 Mar 14 Gold $/oz Platinum $/oz Copper $/ton 13
Slide 14: Overview - Mining
OVERVIEW - MINING 2014 % 2013 2012 Revenue R 5.5bn +25 R 4.4bn R 3.1bn Operating profit R 829m +13 R 735m R 476m Operating margin 15.2% 16.8% 15.6% LTIP / SAR’s expenses R60m R26m R3m • Second half headwinds – Impact of illegal strike activity at BME’s Losberg accessories assembly facility – Unusual
Slide 15: Agriculture overview
AGRICULTURE OVERVIEW Ge > “omnia
Slide 16: Overview - Agriculture
OVERVIEW - AGRICULTURE 2014 % 2013 2012 Revenue R 6.7bn +24 R 5.4bn R 4.5bn Operating profit R 431m -3 R 443m R 323m Operating margin 6.5% 8.2% 7.2% LTIP / SAR’s expenses R93m R26m R5m • Good local agricultural commodity prices supported farming profitability 16
Slide 17: Crop prices
CROP PRICES $ 400 $ 700 $ 350 $ 600 $ 300 $ 500 Maize and Wheat $ 250 Soybean $ 400 $ 200 $ 300 $ 150 $ 200 $ 100 $ 100 $ 50 $0 $0 31 Mar 09 31 Mar 10 31 Mar 11 31 Mar 12 31 Mar 13 31 Mar 14 Maize $/ton Wheat $/ton Soybean $/ton 17
Slide 18: Overview - Agriculture
OVERVIEW - AGRICULTURE 2014 % 2013 2012 Revenue R 6.7bn +24 R 5.4bn R 4.5bn Operating profit R 431m -3 R 443m R 323m Operating margin 6.5% 8.2% 7.2% LTIP / SAR’s expenses R93m R26m R5m • Good local agricultural commodity prices supported farming profitability • South Africa maize plantings down 4% o
Slide 19: Ammonia vs urea price
AMMONIA VS UREA PRICE $ 800 $ 700 $ 600 $ 500 $ 400 $ 300 $ 200 $ 100 $0 31 Mar 09 31 Mar 10 31 Mar 11 31 Mar 12 31 Mar 13 31 Mar 14 Urea Gran Ammonia 19
Slide 20: Ammonia vs urea FOB costs / kg N
AMMONIA VS UREA FOB COSTS / KG N 1.25 1.05 0.85 US cents per kg 0.65 0.45 0.25 0.05 31-Mar-09 31-Mar-10 31-Mar-11 31-Mar-12 31-Mar-13 31-Mar-14 NH3/kg N Urea/kg N 20
Slide 21: Phosphate and potash prices
PHOSPHATE AND POTASH PRICES $ 700 $ 800 $ 700 $ 600 $ 600 $ 500 $ 500 $ 400 MOP DAP $ 400 $ 300 $ 300 $ 200 $ 200 $ 100 $ 100 $0 $0 31-Mar-09 31-Mar-10 31-Mar-11 31-Mar-12 31-Mar-13 31-Mar-14 DAP US Gulf MOP NW Europe 21
Slide 22: Overview - Agriculture
OVERVIEW - AGRICULTURE 2014 % 2013 2012 Revenue R 6.7bn +24 R 5.4bn R 4.5bn Operating profit R 431m -3 R 443m R 323m Operating margin 6.5% 8.2% 7.2% LTIP / SAR’s expenses R93m R26m R5m • Operating margin impacted positively by – increased production volumes achieved on the new nitric acid complex –
Slide 23: Overview - Agriculture
OVERVIEW - AGRICULTURE • Expansion of cash-sale depots in Zimbabwe • Production volumes increased • Production volumes of PGAN™ improved significantly 23
Slide 24: Chemicals overview
CHEMICALS OVERVIEW
Slide 25: Overview - Chemicals
OVERVIEW - CHEMICALS Restated Restated 2014 % 2013 2012 Revenue R 4.1bn +13 R 3.7bn R 3.3bn Operating profit R 156m +194 R 53m R 82m Operating margin 3.8% 1.5% 2.5% LTIP / SAR’s expenses R48m R21m R4m • Depressed South Africa manufacturing sector • Marginal volume increase 25
Slide 26: Index – physical manufacturing volumes – South Africa
Index 100 105 110 115 120 125 80 85 90 95 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 AFRICA JANUARY 2008 – APRIL 2014 Seasonally adjusted Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 INDEX – PHYSICAL MANUFA
Slide 27: Overview - Chemicals
OVERVIEW - CHEMICALS Restated Restated 2014 % 2013 2012 Revenue R 4.1bn +13 R 3.7bn R 3.3bn Operating profit R 156m +194 R 53m R 82m Operating margin 3.8% 1.5% 2.5% LTIP / SAR’s expenses R48m R21m R4m • Lower global chemical price volatility – prices weaker in first half, stronger in second half • G
Slide 28: Financial overview
FINANCIAL OVERVIEW
Slide 29: Key drivers of revenue and profits
KEY DRIVERS OF REVENUE AND PROFITS • USD : Rand exchange rate – Affects selling prices and material costs – Translation of earnings of foreign operations – Effects translation of US Dollar denominated equity • Commodity prices – Affects selling prices and material costs • Volumes • Urea : Ammonia ra
Slide 30: USD : ZAR exchange rate – average and year end
USD : ZAR EXCHANGE RATE – AVERAGE AND YEAR END 13 FY2012 Ave - R7.41 FY2013 Ave – R8.55 FY2014 Ave – R10.16 +4% +15% +19% 12 11 10 9 8 7 6 Y/E – R7.66 Y/E – R9.23 Y/E – R10.53 +13% +20% +14% 5 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 30
Slide 31: Income statement - Rm
INCOME STATEMENT - Rm Restated Audited Audited 2014 % 2013 Revenue 16 259 +21 13 432 Revenue Volumes Ave Price • Mining +24.6% +12.7% +11.9% • Agriculture +23.7% +12.4% +11.3% – excl Wholesale +11.3% - +11.3% • Chemicals +12.8% +1.8% +11.0% 31
Slide 32: Income statement - Rm
INCOME STATEMENT - Rm Restated Audited Audited 2014 % 2013 Revenue 16 259 +21 13 432 Cost of sales (12 647) +22 (10 360) Gross profit 3 612 +18 3 072 Gross profit % 22.2% 22.9% • Mining – GP% reduced due to – increased competitor pricing – high cost of bought-in replacement product due to Losberg st
Slide 33: Income statement - Rm
INCOME STATEMENT - Rm Restated Audited Audited 2014 % 2013 Revenue 16 259 +21 13 432 Cost of sales (12 647) +22 (10 360) Gross profit 3 612 +18 3 072 Other operating income 115 +72 67 Administrative expenses (708) +5 (671) LTIP / SAR’s (200) +127 (73) Distribution expenses (1 324) +16 (1 137) Other
Slide 34: Income statement - Rm
INCOME STATEMENT - Rm Restated Audited Audited 2014 % 2013 Revenue 16 259 +21 13 432 Cost of sales (12 647) +22 (10 360) Gross profit 3 612 +18 3 072 Expenses / other income (2 196) +19 (1 841) Operating profit 1 416 +15 1 231 Finance expense – net (87) +6 (82) Share of loss of investments accounted
Slide 35: Income statement - Rm
INCOME STATEMENT - Rm Restated Audited Audited 2014 % 2013 Revenue 16 259 +21 13 432 Cost of sales (12 647) +22 (10 360) Gross profit 3 612 +18 3 072 Expenses / Other income (2 196) +19 (1 841) Operating profit 1 416 +15 1 231 Finance expense - net (87) +6 (82) Share of loss of investments accounted
Slide 36: LTIP charges to income statement over 5 years
LTIP charges to Income Statement over 5 years 2010 2011 2012 2013 2014 TOTAL Cash settled LTIP 0 0 0 34.3 127.9 162.2 Share Appreciation Rights 1.0 2.0 3.0 29.8 61.7 97.5 Equity settled LTIP – IFRS 2 42.0 15.0 9.0 8.4 10.6 85.0 43.0 17.0 12.0 72.5 200.2 344.7 36
Slide 37: Performance based cash settled LTIPs
Performance based Cash Settled LTIP’s - 5 year target real earnings growth of 8% • 5 year plan completed in FY2014 – Minimum participation threshold of 5% real growth exceeded for first time in FY2013 at 6% – Therefore certain charges accrued first time in FY2013 – Final result – 10.3% compound real
Slide 38: Share appreciation rights – cash settled
Share Appreciation Rights – cash settled • Retention mechanism that straddles 5 year plans – Limited wide range of key employees • Entitlement - 20% in 2, 3 and 4 years after issue & 40% in year 5 – Must be taken up within 6 months of each entitlement year – First 20% entitlement is in March 2014 •
Slide 39: Long term broad based BEE equity settled incentive schemes
Long term Broad Based BEE Equity settled Incentive Schemes • Sakhile 1 – 2080 South Africa employees excluding employees in other share schemes – Commenced 2007 – 12 year time based participation – IFRS 2 charge of R4m (2013: R4m) - no further charges to come – EPS dilutive effect of 4.2m shares (20
Slide 40: Performance based equity settled LTIPs
Performance based Equity settled LTIP’s - 5 year target real earnings growth of 8% • Executive share scheme “Nanotron” – 20 executives – Dilution effect for first time in FY2014 – 1.9m shares – Share issue to settle scheme likely in FY2015 40
Slide 41: Cash settled LTIP costs - normalization
CASH SETTLED LTIP costs - normalization 2010 2011 2012 2013 2014 TOTAL PAT - Actual 58 451 629 880 992 Inventory writedown 252 PAT - normalised 310 451 629 880 992 41
Slide 42: Cash settled LTIP costs - normalization
CASH SETTLED LTIP costs - normalization 2010 2011 2012 2013 2014 TOTAL PAT - Actual 58 451 629 880 992 Inventory writedown 252 PAT - normalised 310 451 629 880 992 Actual cash settled LTIP costs Chemicals 0 0 0 10.1 34.5 44.6 Mining 0 0 0 9.1 25.6 34.7 Agriculture 0 0 0 15.1 67.7 82.9 0 0 0 34.3 127
Slide 43: Income statement adjusting for abnormal portion of LTIP
INCOME STATEMENT - Rm Adjusting for abnormal portion of LTIP Restated Audited Audited 2014 % 2013 Revenue 16 259 +21 13 432 Cost of sales (12 647) +22 (10 360) Gross profit 3 612 +18 3 072 Expenses / Other income (2 117) +14 (1 850) Operating profit 1 495 +22 1 222 Finance expense - net (87) +6 (82)
Slide 44: Segmental review - Mining
SEGMENTAL REVIEW - MINING 2010 2011 2012 2013 2014 Revenue 1 776 2 092 3 051 4 379 5 458 Operating profit 212 311 476 735 829 Operating margin 11.9% 14.9% 15.6% 16.8% 15.2% Adjusting for abnormal portion of LTIP Operating profit 208 305 467 735 844 Operating margin 11.7% 14.6% 15.3% 16.8% 15.5% Oper
Slide 45: Segmental review - Agriculture
SEGMENTAL REVIEW - AGRICULTURE 2010 2011 2012 2013 2014 Revenue 3 337 3 680 4 476 5 399 6 680 Operating profit 310 312 323 443 431 Operating margin 9.3% 8.5% 7.2% 8.2% 6.5% Excluding new wholesale business Revenue 5 384 5 998 Operating profit 446 412 Operating margin 8.3% 6.9% Excluding new wholesal
Slide 46: Segmental review - Chemicals
SEGMENTAL REVIEW - CHEMICALS 2010 2011 2012 2013 2014 Revenue 3 683 3 542 3 327 3 654 4 121 Operating profit 151 63 82 53 156 Operating margin 4.1% 1.8% 2.5% 1.5% 3.8% Adjusting for abnormal portion of LTIP / Nalco profit Operating profit 148 58 77 51 125 Operating margin 4.0% 1.6% 2.3% 1.4% 3.0% Op
Slide 47: Segmental performance - Revenue
SEGMENTAL PERFORMANCE - REVENUE 18 16 14 12 R billions 10 8 6 4 2 0 10 11 12 13 14 Mining Agriculture Chemicals 47
Slide 48: Segmental performance – Operating profit
SEGMENTAL PERFORMANCE – OPERATING PROFIT 1,600 1,400 1,200 1,000 R millions 800 600 400 200 0 10 11 12 13 14 -200 Mining Agriculture Chemicals 48
Slide 49: Balance sheet – Rm
BALANCE SHEET – Rm Restated Audited Audited 2014 % 2013 Assets Non-current assets 4 270 +15 3 714 Current assets 5 964 +18 5 036 Inventories 3 213 +11 2 892 Trade and other receivables 2 751 +28 2 144 10 234 +17 8 750 • Non-current assets - capex R838m – Expansion R622m : Chlorine packing plant R91m
Slide 50: Balance sheet - Rm
BALANCE SHEET - Rm Restated Audited Audited 2014 % 2013 Total equity 5 912 +19 4 952 Deferred tax 342 +17 293 Current liabilities 3 645 +24 2 941 Debt 335 -41 564 10 234 +17 8 750 Debt : equity 6% 11% Increase in FCTR – R255m 50
Slide 51: Cash flow - Rm
CASH FLOW - Rm Restated Audited Audited 2014 2013 Operating profit before depreciation / amortisation / non-cash items 1 769 1 534 Utilised by working capital (52) (170) 1 717 1 364 Finance costs – net (113) (82) Taxation paid (289) (207) Generated from operations 1 315 1 075 Cash outflow from inves
Slide 52: Debt : equity ratio
DEBT : EQUITY RATIO 7 000 25% 6 000 Debt : equity Ratio ( %) Debt and equity (Rm) 20% 5 000 15% 4 000 3 000 10% 2 000 5% 1 000 0 0% 10 11 12 13 14 Equity Debt Debt:equity ratio 52
Slide 53: Prospects
At home in Africa PROSPECTS
Slide 54: Group outlook
GROUP OUTLOOK • Well positioned in mining and agriculture • Direction of China economy • Rand – recent weakness will benefit Group and its customers • Next 5 year LTIP being finalised – Target 8% real compound growth in EPS and 11% real average ROE • Much lower LTIP and SAR’s costs • Positive 54
Slide 55: Outlook - Mining division
OUTLOOK - MINING DIVISION • Good volume growth across entire product range but at lower rates than past 2 years • Increased competitor pricing will affect margins • Rand weakness will benefit earnings • Positive impact from resolution of strike at Losberg and likely settlement of South Africa underg
Slide 56: Outlook - Agriculture division
OUTLOOK - AGRICULTURE DIVISION • Plantings expected to be maintained at good levels – Supported by agriculture produce price levels – Agronomic conditions good – water table and dam levels • Favourable competitive landscape • International fertilizer prices looking weaker • Unfavourable ammonia : ur
Slide 57: Outlook - Chemicals division
OUTLOOK - CHEMICALS DIVISION • South African Manufacturing sector to remain under pressure • International chemical prices to remain subdued • Rand weakness will benefit Chemicals division and its customer base • Significant structural re-organisation implemented in April 2014 – Improve sales price
Slide 58: Thank you
THANK YOU www.omnia.co.za 58
Slide 59: Cash flow – working capital analysis
CASH FLOW – WORKING CAPITAL ANALYSIS Restated Restated Restated 2014 2013 2012 2011 Revenue 16 259 13 432 10 854 9 314 Working capital at year end Agriculture – Inventory 1 795 1 658 1 190 835 Agriculture – Receivables 1 016 789 746 692 Agriculture – Payables (2 046) (1 488) (1 111) (898) Agricultur
Slide 60: Segmental review
SEGMENTAL REVIEW Restated Restated Restated Restated 2014 2013 2012 2011 2010 Mining Revenue (External) 5 458 4 379 3 051 2 092 1 776 Operating profit 829 735 476 311 212 Operating margin (target 15% - 16%) 15.2% 16.8% 15.6% 14.9% 11.9% Total assets 2 604 2 003 1 440 1 062 828 Agriculture Revenue (E
Slide 61: Market capitalisation - Rbn
MARKET CAPITALISATION - Rbn 16 14 12 10 8 6 4 2 0 01/04/09 01/04/10 01/04/11 01/04/12 01/04/13 01/04/14 Market Cap - Rand billions 61