Omnicane Limited (MTMD.mu) 2021 Abridged Report
HIGHLIGHTS FOR THE YEAR ENDED 31 DECEMBER 2021
Normalised industrial EBITDA for the year improved by Rs 335 M while loss after tax was significantly reduced by Rs 2.3 Bn
Sugar & ethanol segment – Increase of Rs 379 M
Operating profit for the sugar segment was fuelled by an increase in sugar price from Rs 12,226/T to Rs 18,300/T, principally due to the additional Rs 3,300/T of sugar as remuneration for bagasse used to produce electricity and to the depreciation of MUR against EUR. The higher sugar price also impacted positively the fair value of standing canes for an amount of Rs 23 M. In addition, crop 2020 being declared an event year, a compensation of Rs 68 M was accounted for in 2021.In respect of the ethanol segment, the results improved by Rs 19 M on the back of greater volumes sold in higher value-added markets.
Energy segment – Decrease of Rs 252 M
The financial performance of the energy segment was adversely impacted by the price timing difference in purchasing and invoicing of coal. This difference was more important in 2021 due to the increase in the average price of coal from USD 94/T to USD 130/T.
Hospitality segment – Increase of Rs 10 M
The hotel operated as a quarantine facility up to October 2021 with an increased occupancy rate from 27% to 32% and this together with the wage assistance scheme contributed to a reduced loss by Rs 10 M.
Property segment – Increase of Rs 6 M
Property results improved by Rs 6 M due to lower project expenses incurred in 2021.
Impairment of assets and allowance for credit losses – Decrease of Rs 1.8 Bn
Impairment of assets relates mainly to the impairment of Rs 171 M of property, plant and equipment in the energy segment, inventory of Rs 34 M in the property segment and investment of Rs 41 M in joint venture.
Finance costs – Decrease of Rs 83 M
The Group realised the first part of the MIC transaction with the sale of the Mon Trésor Smart City for an amount of Rs 2.4 Bn in June 2021. The net proceeds of this sale was fully used to repay bonds which carried a higher cost of capital. This contributed in the reduction of finance costs in 2021.
Sugar and ethanol segment
The sugar price on the world and European market has increased by 22% and 13% respectively since the start of the year 2022. This positive trend, together with the appreciation of the Euro against the Mauritian Rupee, bodes well for the crop 2022 MSS ex-factory sugar price.
The refinery is expected to benefit from higher margins compared to 2021 for the Mauritian sugar production and non-originating sugar, on the back of expected better prices in the EU market and higher premium in preferential markets.
The results of the ethanol plant are expected to remain stable as a reduced availability of molasses, resulting in lower ethanol production, will be compensated by higher ethanol prices.
Following the start of war in Ukraine, the price of coal on the world market increased significantly to a historical high of USD 460/tonne on 09 March 2022 compared to an average of USD 130/tonne in 2021. The price is still around USD 330/tonne and we are monitoring the situation closely to mitigate the financial impact. The hydro-electric power plant in Rwanda was successfully commissioned in March 2022 and is performing as per expectations.
The completion of the Greenview morcellement project will be the focal point for 2022. This major development which consists of 980 land plots has already achieved all its infrastructure works and is now awaiting the morcellement permit, after which the sales deeds will be signed. This project is expected to contribute significantly to the Group’s profitability in 2022.
The Group is pursuing its deleveraging plan in 2022. Group gearing after the completion of the MIC transaction in February 2022 now stands at 50% compared to 58% in December 2021.The reduced finance costs and improved forecasted operational results are expected to bring back the Group’s 2022 results in positive territory.
Omnicane Management & Consultancy Ltd
Managers & Secretaries
31 May 2022