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Acquisition of Umongo Petroleum Proprietary Limited – Additional Detail Regarding Financial Data
Omnia Holdings Limited
Incorporated in the Republic of South Africa
(Registration number 1967/003680/06)
Share code: OMN ISIN: ZAE000005153
(“Omnia” or “the Company”)
ACQUISITION OF UMONGO PETROLEUM PROPRIETARY LIMITED – ADDITIONAL DETAIL
REGARDING FINANCIAL DATA
Omnia shareholders are referred to the SENS announcement released on 11 May 2017 and the related
shareholder presentation posted on the Omnia website on 12 May 2017, regarding the acquisition of
Umongo Petroleum Limited (“Umongo”) which included the normalised profit attributable to the net
assets acquired. Omnia hereby provides additional detail regarding the nature of the normalisation
adjustments, the rationale for these adjustments as well as the unadjusted profit attributable to the net
assets. The adjustment to normalise the results pertained only to the realised and unrealised foreign
exchange losses.
Umongo has various US Dollar money market accounts in terms of which they hold a US Dollar cash
balance as collateral for their distribution agreements. Umongo do not hedge these foreign exchange
exposures and accordingly, in terms of IFRS, the mark-to-market of these collateralised cash balances
into SA Rands resulted in unrealised gains in the 2016 financial year and losses in the 2017 financial
year.
These collateralised agreements lapse between September and October 2017. Subject to negotiation
with the relevant distributor and following fulfillment of the conditions precedent and closing, Omnia
intends to replace the collateralised agreements with an appropriate instrument that will eliminate the
unrealised foreign exchange gains or losses. In terms of the remainder of the foreign exchange
exposure, Umongo is both an import and an export business and therefore the foreign exchange
exposure from supplier and customer transactions are largely offset, with realised net gains and losses
on foreign exchange arising therefrom.
In the 2017 financial year, Umongo recorded a net foreign exchange loss of ZAR34.0 million, consisting
of an unrealised loss of ZAR38.2 million and a realised gain of ZAR4.2 million. The exclusion of the
ZAR34.0 million net foreign exchange loss resulted in a normalised net profit after tax of ZAR77.4
million compared to an unadjusted net profit after tax of ZAR52.9 million.
In the 2016 financial year, Umongo recorded a net foreign exchange gain of ZAR47.4 million,
consisting of an unrealised gain of ZAR60.7 million and a realised loss of ZAR13.3 million. The
exclusion of the ZAR47.4 million net foreign exchange gain resulted in a normalised net profit after tax
of ZAR71.9 million compared to an unadjusted net profit after tax of ZAR106.4 million.
On closing of the transaction, Omnia intends to address the foreign exchange gains and losses by
substituting the collateralised foreign cash deposits with an appropriate instrument and implementing
an appropriate hedging strategy. On this basis, the Omnia board are of the view that the normalised
net profit after tax of Umongo, excluding the impact of foreign exchange gains or losses, provides a
more representative perspective of Umongo’s performance for Omnia shareholders.
23 May 2017
Financial advisor
Rand Merchant Bank (A division of FirstRand Bank Limited)
Legal advisor
Webber Wentzel
Sponsor 1
Merchantec Capital
2
Date: 23/05/2017 04:50:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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