TIDMOMU
RNS Number : 7988E
Old Mutual Limited
15 March 2022
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: OMUMSE Share Code: OMU
NSX Share Code: OMM
ZSE Share Code: OMU
("Old Mutual" or "OM" or "the Company")
Ref 02/22
15 March 2022
Short-form announcement: Reviewed annual results for the year
ended 31 December 2021 and Final dividend declaration
A MESSAGE FROM OUR CEO
OVERVIEW
2021 was a significant year for the Group, with a strong
recovery from the impact that COVID-19 had on our operational and
financial performance. Whilst the operating environment was
challenging in most of our markets, the easing of lockdown
restrictions compared to 2020 supported considerable growth in our
productivity levels.
Our employees were central to delivering on our strategic goals
and helping us get closer to our vision of becoming our customers'
first choice to sustain, grow and protect their prosperity. They
continue to bring to life our Truly Mutual strategy which seeks to
create sustainable long-term value for all our stakeholders.
We continued to actively manage our balance sheet through
various strategic asset allocation and capital optimisation
initiatives. We remained committed to returning capital to our
shareholders, with R13.3 billion returned through dividends and the
unbundling of 12.2% of Nedbank in November 2021.
OPERATING CONTEXT
In 2021, global economic growth rebounded after the decline in
2020, supported by the roll-out of vaccines and the relaxation or
removal of COVID-19 related restrictions, resulting in increased
demand and economic activity. Economic growth in emerging markets
and developing economies was boosted by increases in commodity
prices and demand. However, overall growth was constrained by the
continued outbreak of new COVID-19 variants, slower vaccination
rates in various developing countries and continuing consequent
restrictions in mobility and activity imposed by the
governments.
In South Africa, our biggest market, high infection rates from
the second and third wave of COVID-19 continued to impact our
business and our employees. The Group has seen an increase in the
number of death claims, resulting in poor mortality experience,
which negatively impacted our results. Since the beginning of the
pandemic, we have mourned the passing of 57 colleagues across the
Group and we extend our deepest condolences to their families, and
to all those who have suffered due to COVID-19.
The South African economy grew by 4.9% in 2021, a strong rebound
from the low base in 2020. Much of this growth was despite the
impact of the July civil unrests, electricity supply constraints
and continued pressure from COVID-19 lockdown restrictions. Average
consumer inflation for 2021 was 4.5%, higher than the 3.3% recorded
for 2020. High fuel prices driven by rising global oil prices, and
rising food prices were the primary drivers of the increase in
inflation levels. In November 2021, the Monetary Policy Committee
(MPC) increased the repo rate by 25 basis points to 3.75% amid
increasing concerns about inflation risks. The unemployment rate
increased to 34.9% in the third quarter. These challenges continue
to exacerbate the financial pressure experienced by our retail
customers, putting pressure on persistency levels, and further
impact our corporate customers' growth and liquidity levels.
The South African equities market improved with the JSE SWIX up
17% at the end of the year, positively impacting our average assets
base.
In our Rest of Africa markets, there was a gradual return to
normal economic activity, which helped sustain economic growth
across the countries. The growth across these markets, specifically
Southern Africa markets, was partially impacted by the third wave
of COVID-19, which resulted in an increase in infection rates
across the countries. Namibia was impacted much more than the other
countries, with a significant increase in both infections and
deaths, resulting in a worse mortality experience over the
period.
Climate change remains a systemic risk that poses a threat to
countries where we operate and existing ways of working, whilst
providing us with an opportunity to accelerate change into more
sustainable activities and operations.
SUMMARY OF GROUP RESULTS
I am proud and very pleased with the resilience and the agility
we demonstrated as we responded to the challenging operating
environment and opportunities encountered by our businesses,
resulting in a strong recovery in sales and earnings.
Gross flows increased by 4% to R194.8 billion due to strong
inflows in Old Mutual Investments and Wealth Management. Life APE
sales increased by 16% to R11.4 billion, due to a strong recovery
in sales following improved productivity levels. Despite improved
inflows, net client cash flows declined to R0.1 billion from R9.6
billion recognised in 2020, mainly as a result of COVID-19 related
mortality claims from the Life businesses and lower inflows
compared to the prior year in Rest of Africa. In South Africa, our
retail segments paid approximately R13 billion in mortality claims,
maintaining our commitment to supporting our customers in their
time of need.
Value of new business (VNB) grew to R1.3 billion from R621
million in 2020 due to strong new business sales. VNB margin
improved from 1.1% to 1.9%, recovering to just below our medium
term target range of 2% and 3%.
Results from Operations (RFO) increased to R4.4 billion, despite
a R4.7 billion direct COVID-19 impact recognised for the year.
Adjusted Headline Earnings (AHE) increased to R5.4 billion due to
the significant growth in RFO and higher shareholder investment
returns. Return on Net Asset Value (RoNAV) increased by 520 bps to
9.0% as a result of the strong growth in AHE and lower average
adjusted IFRS equity.
Our businesses had worse mortality claims experience than
anticipated, with R6.8 billion in excess deaths claims. We released
R5.3 billion from our pandemic provisions, which partially offset
the impact of excess deaths on our profit. We have R2.9 billion in
pandemic provisions remaining to be utilised against future
COVID-19 related mortality claims. There remains uncertainty around
the pace of vaccination rollouts across most of our markets, the
emergence of new COVID-19 variants and the changes in expected
immunity. However, we continue to closely monitor our mortality
claims experience.
The Group solvency ratio decreased by 1500 basis points to 184%,
mainly as a result of a higher prescribed equity risk stress
factor. Despite this decrease, our Group solvency remains robust.
Old Mutual Life Assurance Company (SA) issued R1.5 billion of
subordinated debt, helping to optimise the Group's weighted average
cost of capital.
I would like to thank all our employees for the courage,
resilience and inspiring commitment they have shown over the past
year. Last but not least, I would like to thank all our customers,
intermediaries, investors and communities for their continued
support and loyalty throughout 2021.
Iain Williamson
Chief Executive Officer of Old Mutual Limited
GROUP HIGHLIGHTS
% change
(FY 2021 vs
(Rm unless otherwise stated) FY 2021 FY 2020 FY 2020)
Gross flows 194,757 187,137 4%
-------- -------- -------------
Life APE sales 11,400 9,786 16%
-------- -------- -------------
Net Client Cash Flows (Rbn) 0.1 9.6 -99%
-------- -------- -------------
Funds Under Management (Rbn) 1,273.6 1,104.6 15%
-------- -------- -------------
VNB 1,266 621 >100%
-------- -------- -------------
RFO 4,384 1,663 >100%
-------- -------- -------------
RFO excluding direct COVID-19 impacts 9,103 7,742 18%
-------- -------- -------------
AHE 5,402 2,484 >100%
-------- -------- -------------
AHE per share (cents)(1) 118.5 54.3 >100%
-------- -------- -------------
RoNAV (%) 9.0% 3.8% 520 bps
-------- -------- -------------
Free Surplus Generated from Operations 6,149 4,7 31%
-------- -------- -------------
% of AHE converted to Free Surplus Generated 114% 189% (7 500 bps)
-------- -------- -------------
Group Solvency ratio (%)(2,3) 184% 199% (1 500 bps)
-------- -------- -------------
Final dividend per share (cents) 51 35 46%
-------- -------- -------------
Notes:
1 Weighted average number of shares (WANS) used in the calculation of the AHE per share is 4,558
million
(FY 2020: 4,574 million).
2 FY 2020 amounts have been re-presented to account for the use of the accounting consolidation
method.
3 These metrics include the results of Zimbabwe. All other key performance indicators exclude
Zimbabwe.
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 the comparative period and were not
repeated. These are however, not recognised in Headline Earnings,
and accordingly not recognised in AHE, as this is an explicit
adjusting item in accordance with the JSE Headline Earning Circular
1/2021.
Headline Earnings is higher than AHE, as AHE excludes higher
earnings related to Zimbabwe, partially offset by adjustments in
respect of equity and debt instruments held in life funds as well
as the impact of restructuring which were lower than FY 2020.
% change
GROUP HIGHLIGHTS CONTINUED(1) (FY 2021
Reviewed Reviewed vs
(Rm unless otherwise stated) FY 2021 FY 2020 FY 2020)
IFRS Profit/(Loss) after tax
attributable to equity holders
of the parent 6,662 (5,097) >100%
--------- --------- ----------
Headline Earnings 7,209 5,088 42%
--------- --------- ----------
Basic earnings/(loss) per share
(cents) 151,3 (116.3) >100%
--------- --------- ----------
Headline Earnings per share
(cents) 163.8 116.1 41%
--------- --------- ----------
Note:
1 These metrics include the results of Zimbabwe. All other
key performance indicators exclude Zimbabwe.
OUTLOOK
Global growth is expected to continue in 2022, albeit at a lower
rate than 2021, reflecting the uncertainty around further COVID-19
variants. The International Monetary Fund (IMF) forecasts global
economic growth at 4.4% for 2022.
The sub-Saharan Africa economic growth is projected at 3.8% for
2022, as low vaccination rates, COVID-19 related restrictions and
other challenges continue to pose a risk. The IMF revised South
Africa's growth forecast downward to 1.9% for 2022, with a weaker
outlook for investment as business sentiment remains subdued. In
January 2022, the MPC increased the repo rate by 25 basis points to
4.0%, and has further indicated that a gradual increase in the repo
rate could be implemented to manage inflation levels.
The conflict in Ukraine-Russia has dramatically increased the
level of uncertainty around the global economic growth and
inflation, with a stagflation scenario now more likely. The recent
oil price hikes and the risk of negative sentiment towards emerging
markets are also likely to lead to an increase in inflation and
lower growth in our local markets.
Despite a subdued growth outlook, we remain confident of
delivering our medium-term targets. Our balance sheet remains well
capitalised with strong liquidity to help us withstand the
challenging operating environment. Our focus for 2022 is to
continue putting our customers first, and consolidating and
simplifying systems and processes that remain a barrier to building
an agile business by leveraging technology and partnerships. We
will continue to focus on driving shared value and sustainable
growth, and tackling the most pressing challenges faced by our
customers, employees and the communities in which we operate.
The recent corporate activities from our businesses position us
well for the future, and will enhance our shared value and
sustainable growth. In February 2022, Old Mutual Insure acquired a
51% stake in One Finance Services Holdings, unlocking new growth
opportunities for the business. Old Mutual Investments sold 21.2%
of its stake in Futuregrowth to African Women Chartered Accountants
Investment Holdings, in line with our commitment to drive the
advancement of transformation in the asset management industry.
Our preparation for the IFRS 17 implementation date is
progressing in line with plans. We finalised the opening balance
sheet methodology and approaches for the Group. Our solution build
and enhancements to reporting and disclosure tools are close to
completion.
FINAL DIVID DECLARATION
The Board of directors has approved and declared a final
dividend of 51 cents per ordinary share.
The final dividend of 51 cents per share, results in a full
dividend cover of 1.51 times for the 2021 year which is in line
with Old Mutual Limited's dividend cover target range of 1.50 times
to 2.00 times. The final dividend will be paid out of distributable
reserves and is payable on 23 May 2022 to all ordinary shareholders
recorded on the record date.
Shareholders on the London, Malawian, Namibian and Zimbabwean
registers will be paid in the local currency equivalents of the
final dividends.
Old Mutual Limited's income tax number is 9267358233. The number
of ordinary shares in issue in the company's share register at the
date of declaration is 4,708,553,649.
Declaration date Tuesday, 15 March 2022
Finalisation announcement and exchange rates announced Tuesday, 22 March 2022 by 11.00
------------------------------------------------
Transfers suspended between registers Close of business on Tuesday,
22 March 2022
------------------------------------------------
Last day to trade cum dividend for shareholders on the South Tuesday, 12 April 2022
African Register and Malawi,
Namibia and Zimbabwe branch registers
------------------------------------------------
Ex-dividend date for shareholders on the South African Register and Wednesday, 13 April 2022
Malawi, Namibia and Zimbabwe
branch registers
------------------------------------------------
Last day to trade cum dividend for shareholders on the UK register Wednesday, 13 April 2022
------------------------------------------------
Ex-dividend date for shareholders on the UK register Thursday, 14 April 2022
------------------------------------------------
Record date (South African Register and Malawi, Namibia and Zimbabw Close of business on Tuesday,
e branch registers)
19 April 2022
------------------------------------------------
Record date (UK register) Tuesday, 19 April 2022
------------------------------------------------
Transfers between registers restart Opening of business on Wednesday, 20 April 2022
------------------------------------------------
Final Dividend payment date Monday, 23 May 2022
------------------------------------------------
Share certificates for shareholders on the South African
register may not be dematerialised or rematerialised between
Wednesday, 13 April and Tuesday, 19 April 2022, both dates
inclusive. Transfers between the registers may not take place
between Tuesday, 22 March and Tuesday, 19 April 2022, both dates
inclusive. Trading in shares held on the Namibian branch register
through Old Mutual (Namibia) Nominees (Pty) Limited will not be
permitted between Tuesday, 22 March and Tuesday, 19 April 2022,
both dates inclusive.
For South African shareholders, the dividend will be subject to
dividend withholding tax of 20% for all shareholders who are not
exempt from or do not qualify for a reduced rate of withholding
tax. International shareholders who are not exempt or are not
subject to a reduced rate in terms of a double taxation agreement
will be subject to dividend withholding tax at a rate of 20%. The
net dividend payable to shareholders subject to withholding tax at
a rate of 20% amounts to 41 cents per ordinary share. Distributions
made through the dividend access trust or similar arrangements
established in a country will not be subject to South African
withholding tax but may be subject to withholding tax in the
relevant country. We recommend that you consult with your tax
advisor regarding the in country withholding tax consequences.
Shareholders that are tax resident in jurisdictions other than
South Africa may qualify for a reduced rate under a double taxation
agreement with South Africa. To apply for this reduced rate, non-SA
taxpayers should complete and submit a declaration form to the
respective registrars. The declaration form can be found at:
https://www.oldmutual.com/investor-relations/dividend-information/
SHORT-FORM ANNOUNCEMENT
This short-form announcement is the responsibility of the
directors. It is only a summary of the information contained in the
full announcement and does not contain full or complete details.
Any investment decision should be based on the full announcement
accessible via the JSE link
https://senspdf.jse.co.za/documents/2022/jse/isse/OMUE/FY21Result.pdf
and also available on the Company's website at
https://www.oldmutual.com/investor-relations/reporting-centre/results.
The full announcement is available for inspection at the
registered office or other designated office of the issuer and the
offices of the sponsor, that such inspection is available to
investors and/or shareholders at no charge, the hours of such
inspection and days on which such inspection is available. Copies
of the full announcement may also be requested by contacting
Investor Relations per details below.
The short-form announcement has itself not been reviewed,
however, the financial information included herein has been
extracted from the reviewed condensed consolidated financial
statements which has been reviewed by the independent joint
auditors, KPMG Inc. and Deloitte & Touche, who expressed an
unmodified review conclusion. Any reference to future financial
performance has not been reviewed by or reported on by the Group's
auditors. The reviewed condensed consolidated financial statements
and the independent joint auditors review report is available on
the Company's website
https://www.oldmutual.com/investor-relations/reporting-centre/reports.
A webcast of the presentation of the 2021 Final Results and
Q&A will be broadcast live on 15 March 2022 at 11.00 am South
African time on the Company's website www.oldmutual.com. Analysts
and investors who wish to participate in the webcast can
pre-register using the following link:
https://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=5862657&linkSecurityString=a84728b19
Analysts and investors who wish to participate in the call may
do so using the following link or telephone numbers below:
https://78449.themediaframe.com/links/oldmutual220315.html
South Africa +27 10 500 4108
UK +44 203 608 8021
Australia +61 73 911 1378
USA +1 412 317 0088
International +27 10 500 4108
Replay Access Code 40216
The replay will be available until 15 April 2022.
Sponsors
Johannesburg Stock Exchange
Merrill Lynch South Africa (Pty) Limited t/a BofA Securities
Malawi
Stockbrokers Malawi Limited
Namibia
PSG Wealth Management (Namibia) Proprietary Limited
Zimbabwe
Imara Capital Zimbabwe plc
Enquiries
Investor Relations
Sizwe Ndlovu
Head of Investor Relations
T: +27 (0)11 217 1163
E: tndlovu6@oldmutual.com
Communications
Vuyo Mtawa
Head: Group Communications
M: +27 68 422 8125
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
MSCBKPBBPBKKKND
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March 15, 2022 03:00 ET (07:00 GMT)
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