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Trading Statement and Performance Update for the 6 Months ended 30 June 2019
Old Mutual Limited
Incorporated in the Republic of South Africa
Registration number: 2017/235138/06
ISIN: ZAE000255360
LEI: 213800MON84ZWWPQCN47
JSE Share Code: OMU
NSX Share Code: OMM
MSE Share Code: OMU
ZSE Share Code: OMU
("Old Mutual" or “Company” or “Group”)
Ref 34/19
22 August 2019
TRADING STATEMENT AND PERFORMANCE UPDATE FOR THE 6 MONTHS ENDED 30 JUNE 2019
Financial performance
Shareholders are advised that Old Mutual Limited is currently in the process of
finalising its interim results for the six months ended 30 June 2019 (“current
period”). 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 2018 (“comparative
period”). The Group’s interim results will be released on the Stock Exchange
News Service of the JSE Limited on Monday, 2 September 2019.
Results from Operations (RFO) is expected to be between a decrease by 1% and an
increase of 4% compared to the comparative period. Adjusted Headline Earnings
(AHE) is expected to increase by approximately 6% to 12% mainly driven by higher
shareholder investment return in South Africa. Accordingly AHE per share is
expected to increase by approximately 7% to 13% to 106 -111 cents in the current
period compared to 98.9 cents for the comparative period.
Key Performance Indicators Estimated 30 30 June 2018(1) Estimated %
(KPIs) June 2019 change
RFO (Rm) 4,377 – 4,426 (1%) to 4%
4,602
AHE (Rm) 5,054 – 4,750 6% to 12%
5,315
AHEPS (cents)(2) 106 – 111.4 98.9 7% to 13%
1
Restated to exclude the results of Zimbabwe.
2
AHEPS defined as Adjusted Headline Earnings divided by WANS adjusted to reflect the Group’s BBE
shares and shares held in policyholder and consolidated investment funds.
IFRS profits in the 2018 financial year include the accounting impacts of the
transactions executed to complete the Managed Separation. These transactions
included the distribution of Quilter plc and the unbundling of Nedbank. Profit
after tax for the comparative period therefore included the consolidated profits
in respect of the Quilter plc and Nedbank businesses, these were classified as
profit from discontinued operations. Profits for the comparative period also
included the profit recognised on the distribution of Quilter plc on 24 June
2018. Profit after tax for the current period no longer includes the impact of
these items related to the execution of Managed Separation, which is the main
driver of the expected decrease. IFRS profit after tax attributable to equity
holders of the parent on a comparable basis is expected to increase by
approximately 8% to 13%.
The table below sets out the impact of the Managed Separation transactions
included in profit after tax attributable to equity holders of the parent for
the comparative period:
R million 30 June 2018(1)
Profit from discontinued operations - 1,275
Quilter
Profit from discontinued operations - 4,133
Nedbank
Profit on Quilter distribution 4,023
1
The profit in respect of the distribution of Quilter plc was restated to correct the allocation of
foreign exchange differences recycled to profit. Further the consolidated profits in respect of
Nedbank and Quilter plc were restated to reverse the amortisation reported as part of these results
as required under IFRS 5 “Non-current assets held for sale and discontinued operations”. The IFRS
profits reported for December 2018 corrected for these items, therefore will not be restated. The
condensed consolidated financial statements for the six months ended 30 June 2019 will include
further detail and disclosure on these restatements.
Accordingly we expect Basic earnings per share to decrease by approximately 53%
to 55% to 123.5 - 129.8 cents compared to 277.2 cents in the comparative period.
Headline Earnings (HE) is expected to decrease by approximately 33% to 36%. We
expect Headline Earnings per share (HEPS) to decrease by approximately 31% to
35% to 124.3 - 130.7 cents compared to 190.6 cents in the comparative period.
Estimated 30 30 June 2018(1) Estimated %
June 2019 change
IFRS profit after tax 5,642 – 5,933 12,867 (54%) to (56%)
attributable to equity
holders of the parent
(Rm)
Basic EPS (cents) 123.5 – 129.8 277.2 (53%) to (55%)
Headline Earnings (Rm) 5,678 – 5,971 8,848 (33%) to (36%)
HEPS (cents) 124.3 – 130.7 190.6 (31%) to (35%)
1
Restated to reflect the revised profit from discontinued operations. The profit in respect of the
distribution of Quilter plc was restated to correct the allocation of foreign exchange differences
recycled to profit. Further the consolidated profits in respect of Nedbank and Quilter plc were
restated to reverse the amortisation reported as part of these results as required under IFRS 5
“Non-current assets held for sale and discontinued operations”. The IFRS profits reported for December
2018 corrected for these items, therefore will not be restated. The condensed consolidated financial
statements for the six months ended 30 June 2019 will include further detail and disclosure on these
restatements.
Treatment of Zimbabwe
During the first half of 2019, the Group concluded that Zimbabwe was a
hyperinflationary economy and made a decision to account for it as such. This
decision was supported by a rapid increase in the inflation rate, which at the
end of June 2019 was far in excess of 100% at 176%, the significant
deterioration in the traded interbank RTGS dollar exchange rate over the period
and the lack of access in Zimbabwe to foreign currency to pay foreign
denominated liabilities.
We have applied hyperinflation accounting from 1 October 2018 and used the
Zimbabwe Consumer Price Index (CPI) to inflation adjust reported numbers. The
results, net assets and cash flows are then translated into rand at the closing
rate of 1 RTGS to 2.13 ZAR. The closing rate used to translate the December
2018 results was 1 RTGS to 4.35 ZAR.
Until such time as we are able to access capital by way of dividends from our
business in Zimbabwe, we will manage it on a ring fenced basis. Consequently,
the results of this business have been removed from RFO and AHE. The ability to
access capital is exacerbated by the volatility that hyperinflationary economy
and the reporting thereof introduces. This adjustment has been applied from 1
January 2019 and we have restated comparatives to reflect this decision.
The financial information in this trading statement is the responsibility of the
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
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 E: tndlovu6@oldmutual.com
Communications
Tabby Tsengiwe T: +27 (11) 217 1953
Head of Communications M: +27 (0)60 547 4947
E: ttsengiwe@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
markets 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
170 years of heritage across sub-Saharan Africa, we are a crucial part of the
communities we serve and broader society on the continent.
For further information on Old Mutual, and its underlying businesses, please
visit the corporate website at www.oldmutual.com.
Date: 22/08/2019 08:45:00
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