TIDMOMU
RNS Number : 1912K
Old Mutual Limited
31 August 2021
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 19/21
31 August 2021
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2021 AND TRADING
STATEMENT
A MESSAGE FROM OUR CEO
During the first half of 2021, we maintained focus on driving
the recovery of our underlying business activity from the
disruptions caused by COVID-19 and the associated hard lockdown of
2020. The impact of the pandemic continued to create a challenging
operating environment for our organisation, however we remained
focused on driving recovery in Results from Operations (RFO) to
surpass 2019 levels and improving Return on Net Asset Value (RoNAV)
to above cost of equity. We have seen a significant improvement in
most of our key performance indicators and momentum from our
strategic initiatives in the first half of the year which has
provided the base for us to increase our medium term targets for
2023. Our diversified business model and strong balance sheet have
enabled us to consistently demonstrate resilience in the face of
great adversity and keep our promise of being a certain friend in
uncertain times. Despite the challenging operating environment we
have remained true to our purpose of championing mutually positive
futures every day. The latest Brand Finance Report ranked Old
Mutual as the fourth most valuable brand in South Africa, an
improvement from fifth in 2020 and the only insurer in the top
10.
Throughout the pandemic, our focus has been on safeguarding the
health of all of our stakeholders and contributing to initiatives
that support the recovery of the economy. As part of our ongoing
initiatives, we have joined forces with leading healthcare provider
Netcare, to open a large private vaccination centre at our
Mutualpark campus in Pinelands. We also launched the Sisonke
campaign to create public vaccination awareness. Our business in
Namibia launched the campaign using #OnsIsSaam, contributing
towards the procurement of vaccines through the Vaccines for Hope
coalition, an alliance of more than 50 private sector partners and
individuals who are coordinating support towards the procurement
and administration of COVID-19 vaccines. We are encouraged that the
vaccination programme in South Africa appears to have gained
momentum and we encourage all those eligible to take the vaccine to
do so promptly, as this remains our key defence mechanism against
the virus. In South Africa, our premium free cover for frontline
healthcare workers was extended to the end of 2021, with R9 million
benefits paid since inception.
Our employees and intermediaries continue to adapt to new ways
of working. Intermediaries are servicing customers while taking
necessary precautions in branches and worksites. Some of our
employees continue to work from home, with critical employees being
on site in office locations as we embark on a managed process
toward a hybrid model of working. We have rolled out an extensive
pandemic support programme across the continent, providing our
employees with care packs if they test positive for COVID-19. We
extend our deepest condolences to the families of our 46 colleagues
who have sadly passed away due to COVID-19.
Our Truly Mutual strategy is anchored in our long-term victory
condition of becoming our customers' first choice to sustain, grow
and protect their prosperity. This is underpinned by our
fundamental belief that becoming our customers' first choice will
result in sustainable returns to our shareholders over the long
term. We recently introduced 'Rectify-Simplify-Amplify' as the
execution framework for our strategy and I am pleased with the
progress we have made across our businesses.
Our efforts to rectify and simplify our business processes
continue to bear fruit. We remain on track to deliver the
previously communicated R750 million cost savings target by end of
2022 through our South African insurance and savings businesses,
allowing us to further our investment in innovation and other
initiatives. We continue to simplify our business by building
digital capabilities that have enabled enhanced engagement with
customers and intermediaries.
We have made significant progress to amplify our customer and
adviser experiences through digital offerings. We are on track to
add the savings and income propositions in South Africa and Namibia
alongside the OMP range utilising the same core infrastructure. We
are embarking on initiatives to support growth adjacent to our
traditional channels and markets and will actively partner with
international and local players to explore opportunities relating
to fintech, insurtech, transactional services and value added
services.
Productivity levels in Mass and Foundation Cluster and Personal
Finance improved materially in the first half of the year. Customer
take-up of the Old Mutual Protect (OMP) proposition continued to be
strong, supporting the recovery in risk sales. In Mass and
Foundation Cluster, issued sales in the first half of the year were
above the prior year due to the significant impact that lockdown
had on issued sales in 2020. Sales remain below 2019 levels given
the tough economic environment but are expected to exceed 2019
levels in the near-term. In Personal Finance, issued sales were
above those of the prior year and 11% above the first half of 2019.
In Old Mutual Corporate, SuperFund umbrella quote activity improved
relative to the levels seen in 2020.
Value of new business (VNB) recovered well from 2020 levels due
to higher sales volumes and a shift towards a more profitable mix
of new business. At 2.3%, VNB margin was 180 bps above the prior
year and well within our medium-term target range of 1.5% -
3.0%.
Mass and Foundation Cluster and Personal Finance reported a good
recovery in RFO excluding COVID-19 impacts in the first half of the
year. In Mass and Foundation Cluster, RFO excluding direct COVID-19
impacts increased due to higher sales volumes and a combination of
lower credit losses compared to the prior year and improved credit
experience in Old Mutual Finance. In Personal Finance, RFO was up
largely due to the partial release of discretionary margins
following enhancements to the modelling and hedging methods behind
the new investment strategy for risk products and higher asset
based fees driven by the recovery in market levels. Old Mutual
Investments and Wealth Management benefitted from the recovery in
local and global equity markets with strong inflows reported in the
first half of the year. Net Client Cash Flows (NCCF) in Old Mutual
Corporate continue to be under pressure due to a combination of
lower new business sales and higher outflows due to the weak
economic environment. Old Mutual Insure showed good growth in gross
written premiums from the Credit Guarantee Insurance Corporation
(CGIC) business, iWYZE and Specialty divisions. Rest of Africa
reported an increase in RFO excluding COVID-19 impacts, driven by
positive investment variances in the Life business, higher
management fees and positive fair value movements on investment
properties in the Asset Management business.
Our segments had worse mortality claims experience than
anticipated during the first half of the year. We continue to
monitor our mortality claims experience closely. Based on current
expectations and with the information currently on hand, we expect
that our pandemic provisions will be sufficient to cover the
expected future costs of the pandemic.
When I reflect on the first six months of this year, I am
extremely proud of the progress that our efforts to rectify,
simplify and amplify our underlying businesses have produced. These
have enabled us to strengthen our position in the market, with
continued progress towards becoming our customers' first
choice.
Iain Williamson
Chief Executive Officer
GROUP HIGHLIGHTS (EXCLUDING ZIMBABWE)
% change
(H1 2021 vs
(Rm unless otherwise stated) H1 2021 H1 2020 H1 2020)
Gross flows 96,989 90,835 7%
-------- -------- -------------
Life APE sales 5,343 4,716 13%
-------- -------- -------------
NCCF (Rbn) (3.4) 1.5 (>100%)
-------- -------- -------------
FUM (Rbn) 1 1,171.2 1,057.2 6%
-------- -------- -------------
VNB 740 125 >100%
-------- -------- -------------
VNB margin (%) 2.3% 0.5% 180 bps
-------- -------- -------------
Results from Operations (RFO) 2,190 1,541 42%
-------- -------- -------------
RFO excluding direct COVID-19 impacts 4,665 4,334 8%
-------- -------- -------------
Adjusted Headline Earnings (AHE) 2,899 1,704 70%
-------- -------- -------------
Adjusted Headline Earnings per share (cents) 2 63.4 37.3 70%
-------- -------- -------------
Return on Net Asset Value (RoNAV) (%) 9.0% 5.2% 380 bps
-------- -------- -------------
Free Surplus Generated from Operations 3,090 808 >100%
-------- -------- -------------
% of AHE converted to Free Surplus Generated 107% 47% 6 000 bps
-------- -------- -------------
Group Solvency ratio(%)1,3 177% 190% (1 300 bps)
-------- -------- -------------
Interim dividend per share (cents) 25 - >100%
-------- -------- -------------
(1) The % change has been calculated with reference to FY 2020.
(2) WANS used in the calculation of the Adjusted Headline Earnings per share is 4,570 million
(H1 2020: 4,574 million).
(3) We have re-presented the December 2020 solvency position to align with the Prudential Authority
(PA) submission.
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.
% change
(H1 2021
IFRS HIGHLIGHTS vs
(Rm unless otherwise stated) H1 2021 H1 2020 H1 2020)
IFRS Profit/(Loss) after tax attributable
to equity holders of the parent 2,984 (5,621) >100%
-------- -------- ----------
Headline Earnings (HE) 3,155 4,215 (25%)
-------- -------- ----------
Headline Earnings per share (HEPS) 71.7 96.3 (26%)
-------- -------- ----------
Basic earnings/(loss) per share (cents) 67.8 (128.5) >100%
-------- -------- ----------
OUTLOOK
We have seen a significant improvement in RFO, RoNAV and VNB
margin. Our sales volumes and productivity levels have improved
which has led to a recovery in our VNB margin. Further provisions
of R1,977 million have been established for the expected impact of
remaining claims from wave 3 and future waves, taking into account
the government vaccination rollout plan and an allowance for
management actions.
Despite the challenging operating environment, during the second
half of the year we are focused on efforts to rectify, simplify and
amplify our business through various management actions. We remain
committed to support our productivity levels in order to continue
the momentum gained in the first half of 2021, coupled with growing
our rewards base as we continue to give value back to our
customers. We will also continue to rollout Old Mutual Protect
across our business.
Taking the above into account, we have revised our medium term
targets for 2023. We have increased our Results from Operations
target to deliver 2019 plus 5% to 10% by the end of 2023. We strive
to achieve RoNAV of between Cost of Equity +2% and Cost of Equity
+4%. We expect cost savings to be delivered from our South African
insurance and savings businesses, allowing us to further our
investment in innovation and other initiatives. We have tightened
the range on our VNB margin to be between 2.0% and 3.0%. Our
solvency and dividend cover targets remain unchanged.
Work is underway to understand the impact of IFRS 17 on our
revised medium term targets and additional information will be
provided once greater certainty is available. The targets included
in this announcement do not constitute profit forecasts and have
not been reviewed or reported on by the Group's auditors.
INTERIM DIVID DECLARATION
The Board of directors has approved and declared an interim
dividend of 25 cents per ordinary share.
The interim dividend of 25 cents per share is in line with Old
Mutual Limited's dividend policy, which is set at 40% of Adjusted
Headline Earnings. The interim dividend will be paid out of
distributable reserves and is payable on 11 October 2021 to all
ordinary shareholders recorded on the record date.
Shareholders on the London, Zimbabwean, Malawian and Namibian
registers will be paid in the local currency equivalents of the
interim dividend.
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, 31 August 2021
Transfers suspended between registers Close of business on Monday, 06 September 2021
-------------------------------------------------
Exchange rates announced Tuesday, 07 September 2021 by 10.00am SA
-------------------------------------------------
Last day to trade cum dividend for shareholders on the South Tuesday, 14 September 2021
African Register and Malawi,
Namibia and Zimbabwe branch registers
-------------------------------------------------
Ex-dividend date for shareholders on the South African Register Wednesday, 15 September 2021
and Malawi, Namibia and Zimbabwe
branch registers
-------------------------------------------------
Last day to trade cum dividend for shareholders on the UK register Wednesday, 15 September 2021
-------------------------------------------------
Ex-dividend date for shareholders on the UK register Thursday, 16 September 2021
-------------------------------------------------
Record date (all registers) Close of business on Friday, 17 September 2021
-------------------------------------------------
Transfers between registers restart Opening of business on Monday, 20 September 2021
-------------------------------------------------
Interim Dividend payment date Monday, 11 October 2021
-------------------------------------------------
Share certificates for shareholders on the South African
register may not be dematerialised or rematerialised between
Wednesday, 15 September and Friday, 17 September 2021, both dates
inclusive. Transfers between the registers may not take place
between Tuesday, 07 September and Friday, 17 September 2021, both
dates inclusive. Trading in shares held on the Namibian section of
the principal register through Old Mutual (Namibia) Nominees (Pty)
Limited will not be permitted between Tuesday, 07 September and
Thursday, 16 September 2021, 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 20 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 from Tuesday, 31 August 2021, via the JSE link
https://senspdf.jse.co.za/documents/2021/jse/isse/OMUE/HY21Result.pdf
and also available on the Company's website at www.oldmutual.com.
The short form announcement has not been reviewed or reported on by
the external auditors.
A webcast of the presentation of the 2021 Interim Results and
Q&A will be broadcast live on 31 August 2021 at 11.00 am South
African time on the Company's website www.oldmutual.com. Analysts
and investors who wish to participate in the call may do so using
the following link or telephone numbers below:
https://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=8723702&linkSecurityString=ea15ddda2
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
Pre-registration to participate in the call is available at the
following link:
https://78449.themediaframe.com/links/oldmutual210831.html
TRADING STATEMENT
In terms of paragraph 3.4(b) of the Listings Requirements of the
JSE Limited, shareholders are advised that we expect EPS for the
year ended 31 December 2021 to be more than 20% higher than the
reported EPS for the comparable period (FY 2020 EPS: -116.3 cents)
due to the non-repeat of the Nedbank impairment in H1 2020. We will
publish a further update once there is more certainty on the
probable ranges of the expected increase in EPS.
Shareholders are advised that the information in this trading
statement has not been reviewed or reported on by the group's joint
auditors.
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
IR UAAVRAKUWORR
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