TIDMOMU
RNS Number : 0079J
Old Mutual Limited
18 August 2021
Old Mutual Limited
Incorporated in the Republic of South Africa
Registration number: 2017/235138/06
ISIN: ZAE000255360
LEI: 213800MON84ZWWPQCN47
JSE Share Code: OMU
LSE Share Code: OMU
NSX Share Code: OMM
MSE Share Code: OMU
ZSE Share Code: OMU
("Old Mutual" or "Company" or "Group")
Ref 18/21
18 August 2021
OLD MUTUAL TRADING STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE
2021
Shareholders are advised that Old Mutual is currently in the
process of finalising its interim results for the six months ended
30 June 2021 ("current period"). Following on the Old Mutual
Voluntary Operating Update on 23 June 2021, this trading statement
provides an indication of a range for headline earnings per
ordinary share (HEPS) and earnings attributable to equity holders
of the Group per ordinary share (EPS) in terms of paragraph 3.4(b)
of the JSE Limited Listings Requirements compared to the six months
ended 30 June 2020 ("comparative period"). The Group's interim
results will be released on the Stock Exchange News Service of the
JSE Limited on Tuesday, 31 August 2021.
The local and global equity markets have recovered given the
improvement in corporate profits as lockdown restrictions have
eased. Markets have rallied ahead of pre-COVID-19 levels, however,
the environment remains volatile as we navigate the challenging
impact of the pandemic.
We continue to demonstrate agility in our response to the impact
of the pandemic on our business, with good recovery in sales and
earnings for the first half of the year. Productivity levels in our
South African retail segments, Mass and Foundation Cluster and
Personal Finance have materially improved in the first half of the
year. There has been a strong customer take up in the Old Mutual
Protect (OMP) proposition, which has seen rapid growth supporting
the recovery in risk sales. In Mass and Foundation Cluster, issued
sales in the first half of the year were above the comparative
period due to the significant impact that lockdown had on issued
sales in 2020. This was supported by improved credit experience in
the banking business. Personal Finance had higher single and
recurring premiums, driven by an increase in productivity. In Old
Mutual Corporate, SuperFund umbrella quote activity improved
relative to the comparative period. The recovery in local equity
markets, combined with positive flows in our Asset Management
business have benefited Old Mutual Investments. In Rest of Africa,
we continue to upgrade the digital channels to improve customers
experience and providing connectivity support to enable
intermediaries to work remotely.
The mortality claims paid relating to COVID-19 in our life
businesses are driving negative Net Client Cash Flows (NCCF),
however this is offset by inflows in our Asset Management and
Wealth businesses. Our mortality experience has been worse than
anticipated with impact on profits mitigated by a partial release
of provisions raised at the end of 2020. Our COVID-19 provisions
have been increased by R2 billion as at 30 June 2021 to take into
account the emerging expectations of wave 3 and 4 as well as
potential future waves . The provisions have been updated to take
into account the additional available data to date as well as the
anticipated impact of the proposed vaccination rollout plan.
In Old Mutual Insure, business interruption claims paid in the
first half of the year were offset by the reserves raised at the
end of 2020. The reserves raised in the comparative period still
remain as the best estimate and no further provisions were raised.
There was a significant turnaround in the Credit Guarantee
Insurance Corporation (CGIC) business profitability due to large
COVID-19 related claims in prior year that did not repeat, as well
as lower attritional claims in the current year.
Taking into account the increase in operating earnings and the
significant improvement in sales momentum outlined above
shareholders are advised that the Group's key profit measures are
expected to fall within the ranges outlined below:
Key Performance Indicators
(R million unless stated Estimated Estimated
otherwise) % change 30 June 2021 30 June 2020
Results from Operations 37% to 47% 2,113 - 2,267 1,541
------------ --------------- ---------------
Adjusted Headline Earnings 65% to 75% 2,813 - 2,984 1,704
------------ --------------- ---------------
AHEPS (cents)(1) 65% to 75% 61.6 - 65.3 37.3
------------ --------------- ---------------
(1) AHEPS defined as Adjusted Headline Earnings divided by WANS
adjusted to reflect the Group's B-BBEE shares and shares held in
policyholder and consolidated investment funds.
HEPS and Basic EPS are expected to fall within the ranges
outlined below:
Key Performance Indicators
(R million unless stated Estimated Estimated 30
otherwise) % change June 2021 30 June 2020
IFRS profit after tax attributable
to equity holders of the
parent >100% 2,704 - 3,266 (5,621)
-------------- -------------- --------------
Basic EPS (cents) >100% 61,4 - 74,3 (128.5)
-------------- -------------- --------------
Headline Earnings (20%) - (30%) 2,946 - 3,368 4,215
-------------- -------------- --------------
HEPS (cents) (21%) - (31%) 66,9 - 76,5 96.3
-------------- -------------- --------------
Shareholders are reminded that the impairments in respect of the
carrying value of our investment in Nedbank and the goodwill
related to our investment in Old Mutual Finance were recognised in
the IFRS income statement in H1 2020 and were not repeated. These
are however, not recognised in Headline Earnings, and accordingly
not recognised in Adjusted Headline Earnings (AHE), as this is an
explicit adjusting item in accordance with the JSE Headline Earning
Circular 1/2021.
Headline earnings is lower than the prior year as AHE excludes
adjustments in respect of equity and debt instruments held in life
funds, the impact of restructuring as well as the results related
to Residual Plc which were all lower than H1 2020, partially offset
by higher results related to Zimbabwe.
On the 23 June 2021 Old Mutual announced its intention to
unbundle a portion of its shareholding in Nedbank Group Limited
("Nedbank"). Subject to regulatory approval, Old Mutual will
unbundle all the Nedbank ordinary shares currently held by Old
Mutual Emerging Markets Limited (being 62,131,692 Nedbank ordinary
shares and comprising 12.2% of the issued ordinary share capital of
Nedbank). The remaining Nedbank Stake held by Old Mutual Life
Assurance Company South Africa ("OMLACSA") (comprising c.7.2% of
the Nedbank ordinary shares currently in issue) continues to
support the capital structure of OMLACSA and will be managed in
line with the Group's Financial Management Framework. In order to
optimally manage the capital structure, we have entered into a zero
cost collar arrangement on the majority of the OMLACSA exposure to
Nedbank.
The financial information in this trading statement is the
responsibility of the Old Mutual Limited Board of Directors and has
not been reviewed or reported on by the Group's external
auditors.
Sandton
Sponsors
JSE Merrill Lynch South Africa (Pty) Limited
t/a BofA Securities
Namibia PSG Wealth Management (Namibia) (Proprietary)
Limited
Zimbabwe Imara Capital Zimbabwe plc
Malawi Stockbrokers Malawi Limited
Enquiries
Investor Relations
Sizwe Ndlovu T: +27 (0)11 217 1163
Head of Investor Relations M: +27 (83) 500 8019
E: tndlovu6@oldmutual.com
Communications
Vuyo Mtawa M: +27 68 422 8125
Head: Group Communications E: VMtawa@oldmutual.com
Notes to Editors
About Old Mutual Limited
Old Mutual is a premium African financial services group that
offers a broad spectrum of financial solutions to retail and
corporate customers across key market segments in
14 countries. Old Mutual's primary operations are in South
Africa and the Rest of Africa and it has a niche business in Asia.
With over 176 years of heritage across sub-Saharan Africa, Old
Mutual is a crucial part of the communities they serve and the
broader society on the continent.
For further information on Old Mutual and its underlying
businesses, please visit the corporate website at www.oldmutual.com
.
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END
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