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OMNIA HOLDINGS LIMITED - Audited results for the year ended 31 March 2020

Release Date: 07/07/2020 07:05
Code(s): OMN     PDF:  
Wrap Text
Audited results for the year ended 31 March 2020

OMNIA HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1967/003680/06
JSE code OMN  ISIN ZAE000005153
("Omnia" or "the Group")

SHORT FORM ANNOUNCEMENT  
Audited results for the year ended 31 March 2020

FINANCIAL HIGHLIGHTS AND SALIENT FEATURES
- Continued robust execution of turnaround plan
- Oversubscribed rights issue of R2 billion successfully concluded
- Sustainable debt package finalised
- Revenue stable at R18.7 billion (2019: R18.6 billion)
- Operating profit increased to R789 million (2019: R24 million)
- Profit after tax increased to R129 million (2019: R407 million loss)
- Earnings per share of 99 cents (2019: 530 cents loss)
- Headline earnings per share of 189 cents (2019: 97 cents loss)
- EBITDA, excluding impairments, increased to R1.8 billion (2019: R979 million)
- Net debt reduced to R1.88 billion (2019: R4.40 billion)
- Net debt to EBITDA ratio, excluding impairments down to 1.0 (2019: 4.5)
- Net working capital decreased to R3.9 billion (2019: R4.2 billion)
- Net asset value increased to R9.7 billion (2019: R7.2 billion)
- No final dividend declared (2019: nil cents)
- The Recordable Case Rate increased to 0.49 (2019: 0.36)
- Level 3 B-BBEE rating

"The robust execution of our turnaround plan has placed Omnia in a strong position. The excellent results achieved thus 
far in a challenging environment provide the foundation to continue driving long-term sustainable value, enhancing 
efficiencies and optimising returns. This approach remains especially critical given the significant structural changes 
in our sectors and the uncertainty created by the COVID-19 pandemic." - Seelan Gobalsamy (CEO)

COVID-19 pandemic
The Group operates across a number of countries. Omnia's response to COVID-19 has been guided firstly by relevant 
national authorities, and secondly by international guidelines such as those issued by the World Health Organization. 
As a responsible corporate citizen, Omnia continues to take extensive measures to ensure the welfare of its people and 
partners around the world, while delivering essential services to its customers during this difficult period. Omnia's 
internal policies and risk management practices are constantly reviewed and updated to ensure that they continue to 
align with the rapidly evolving health and economic situations.

Since the start of the pandemic, Omnia has continued to deliver essential services, including primary chemicals and 
solutions for the agriculture, mining, manufacturing and fuel sectors which play an essential role in food security, 
economic stability and the livelihoods of people globally. The beginning of the financial year is traditionally a 
quieter time and a number of Omnia's manufacturing plants in South Africa have undergone planned maintenance shutdowns 
over the past few weeks. These plants are back in operation at the capacities required for the upcoming planting 
season and demand by the mining sector. All operations are working in line with lockdown regulations and under strict 
conditions to minimise the potential for COVID-19 transmission.

Financial results
Omnia continues to implement its turnaround plan and restructuring processes. During the 2020 financial year, this plan 
focused on creating a sustainable platform for growth while addressing cost reduction, effectively managing working 
capital and ensuring a return on capital previously invested. Omnia's prudent cash management strategy and disciplined 
execution has strengthened its balance sheet and resulted in strong earnings growth.

The Group's operating profit amounted to R789 million for FY2020 compared to R24 million for the comparative period and 
profit after tax of R129 million for FY2020 compared to a loss after tax of R407 million for the comparative period. 

The key factors driving operating profit in the three main divisions were as follows:

The Agriculture division experienced a difficult year in the Southern African Development Community but showed 
strong growth in the international AgriBio sector. Improved agronomic conditions and timely rain across southern Africa 
supported reasonable fertilizer sales volumes, while the weakening Rand/US Dollar exchange rate and an improved 
ammonia-to-urea ratio supported margins. These factors were unfortunately offset by increased margin pressure due to 
sustained low international commodity prices (both fertilizers and grain commodities) and above inflationary cost 
increases. Reduced sales to the Mining division, following the extended electricity shortage in December 2019, also 
negatively impacted production recoveries. Decisive management action to improve efficiencies across the business has 
been taken and this will continue into FY2021. Growth in the AgriBio sector was supported by increased humate export 
sales from Australia and a strong performance from Oro Agri. Agriculture was classified an essential service across 
all territories in which Omnia operates, and other than occasional supply chain delays, the COVID-19 impact on the 
division has not been significant. Hyperinflation in Zimbabwe continues to impact earnings; hence, operations have 
been rationalised to cope with the negative impact of liquidity constraints and hyperinflation. Operating profit for 
the division increased to R593 million for the year (2019: R370 million).

The Mining division delivered a mixed performance in the year. In South Africa, the mining sector had a difficult year, 
as it was significantly affected by load shedding, which caused several mines to close or significantly reduce production 
for the majority of December 2019 and January 2020. Lower sales volumes and the lower ammonia price, partly offset by 
a weakening Rand/US Dollar exchange rate, has contributed to the margin pressure. Outside South Africa, the division 
performed very well due to an increase in volumes sold in Zambia and Mali, as well as the weaker Rand increasing 
international revenue. Protea Mining Chemicals reflected improved profitability mainly from new sales of products and 
services into the copper and precious metals markets. Overall operating profit for the division increased to 
R356 million (2019: R169 million).

The Chemicals division returned to profitability, mainly due to the benefits of the restructuring process concluded 
in FY2019 and improved margins relating to optimised product mixes sold, despite lower sales volumes. Operating profit 
for Umongo Petroleum was down due to unrealised market-to-market forex losses. Operating profit for the division 
increased to R173 million (2019: R10 million).

The Group's results include the following items:
- Impairment of Umongo Petroleum goodwill amounting to R105 million
- Debt restructure costs of R24 million 
- Retrenchment costs across the Group amounting to R22 million
- EcoGypsumTM closure costs of R6 million
- Net gain on legal settlement of R14 million
- Monetary gain on hyperinflation amounting to R22 million

The Group's financial position strengthened significantly during the year. The execution and delivery against the 
turnaround plan, the successful oversubscribed R2 billion rights issue and the subsequent restructure of the Group's 
debt profile concluded in December 2019, contributed to the sustainable capital restructure. As at 31 March 2020, 
total assets increased by 9% to R18 088 million (2019: R16 647 million) and net debt reduced to R1 880 million, this 
includes the effects of IFRS 16 Leases, adopted for the first time from 1 April 2019 and R1 267 million, this excludes 
the impact of IFRS 16 Leases (2019: R4 403 million). As at 31 March 2020, covenant requirements were comfortably met 
and the Group had access to R3.7 billion undrawn facilities.

Net working capital reduced to R3 907 million (2019: R4 264 million). The improvement in working capital relates to 
a change in the inventory purchasing profile in Agriculture RSA, lower average inventory holding across the Group and 
better management of payables. Foreign debtor balances across all divisions reflected an increase due to the sharp 
deterioration in the Rand/US Dollar exchange rate at year-end. In addition to this, March is typically peak season 
in Agriculture Biological and as a result, debtor balances will increase in line with the increase in revenue.

SHORT FORM ANNOUNCEMENT - This announcement is a condensed version of the full announcement in respect of the audited 
financial results for the year ended 31 March 2020 of Omnia Holdings Limited and its subsidiaries and, as such, it does 
not contain full or complete details pertaining to the Group's results. The results have been audited by the company's 
external auditor, PricewaterhouseCoopers Inc., who expressed an unmodified opinion. Shareholders are advised that, in 
order to obtain a full understanding of the nature of the auditor's engagement and more specifically, the nature of 
the information that has been audited, they should obtain a copy of the auditor's report (available through the following
link: https://www.omnia.co.za/downloads/send/79-2020/257-group-financial-statements-2020), which sets out key audit 
matters and the basis for the unmodified opinion together with the accompanying audited Group consolidated annual 
financial statements, both of which are available for inspection at the company's registered office, 2nd Floor, Omnia 
House, Epsom Downs Office Park, 13 Sloane Street, Epsom Downs, Bryanston, and the offices of Omnia's sponsor Java Capital 
Trustees and Sponsors Proprietary Limited, 2nd Floor, 6A Sandown Valley Crescent, Sandown, 2196, from 09:00 to 16:00 
weekdays at no charge. Any investment decisions should be made based on the full announcement. The full announcement 
is available through the following link: https://senspdf.jse.co.za/documents/2020/JSE/ISSE/OMN/FY20.pdf and can also 
be found on the Group's website (www.omnia.co.za) or requested from Investor Relations at omniaIR@omnia.co.za. This 
condensed announcement is the responsibility of the board of directors of Omnia (the board) and has been approved.

Executive directors: T Gobalsamy (chief executive officer), S Serfontein (finance director) 
Non-executive directors: R Havenstein (chair), Prof N Binedell, R Bowen (British), F Butler, G Cavaleros, L de Beer, 
T Eboka, S Mncwango, T Mokgosi-Mwantembe, W Plaizier (Dutch), Z Swanepoel 
Company secretary: M Nana

www.omnia.co.za

7 July 2020

JSE Sponsor
Java Capital

Date: 07-07-2020 07:05:00
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