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OUTSURANCE GROUP LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 2010/005770/06
ISIN: ZAE000314084
Share code: OUT
("OGL" or "the group")
VOLUNTARY TRADING UPDATE FOR OUTSURANCE HOLDINGS LIMITED AND TRADING
STATEMENT FOR THE SIX MONTHS ENDED 31 DECEMBER 2022
INTRODUCTION
OGL's (formerly Rand Merchant Investment Holdings Limited) disposal of
Hastings Group (Consolidated) Limited (Hastings) and settlement of preference
share debt in December 2021, and unbundling of its interests held in Discovery
Limited (Discovery) and Momentum Metropolitan Holdings Limited (Momentum
Metropolitan) in April 2022, have significantly changed the group's earnings
base. The group's earnings base for the six months ended 31 December 2022
and subsequent reporting periods is primarily impacted by the performance of
OUTsurance Holdings Limited (OHL), the group's 90% held subsidiary and owner
of the OUTsurance South Africa and Youi Australia insurance operations.
VOLUNTATRY TRADING UPDATE FOR OUTSURANCE HOLDINGS LIMITED
The performance of OHL for the six months to 31 December 2022 was positively
impacted by a significant increase in Youi's earnings. This positive outcome
is attributed to strong premium growth, a material decrease in natural perils
claims incurred following more favourable weather exposure and higher
investment income attributed to the rising interest rate environment.
OUTsurance South Africa experienced favourable operating conditions owing to
premium growth and claims experience, which is in line with historic
performance.
Shareholders are advised that normalised earnings for OHL, excluding the
normalised earnings impact of its stake in Hastings, are expected to increase
by more than 20% for the six-month period.
TRADING STATEMENT FOR OUTSURANCE GROUP LIMITED
Paragraph 3.4(b) of the JSE Limited Listings Requirements requires companies
to publish a trading statement as soon as they become reasonably certain
that their financial results for the period to be reported on next (current
period) will differ by at least 20% from those of the previous corresponding
period (comparative period).
Shareholders are referred to the group's summary results announcement and
cash dividend declaration for the year ended 30 June 2022, released on the
Stock Exchange News Service (SENS) on 22 September 2022, where the accounting
treatment of the group's investments in Hastings, Discovery and Momentum
Metropolitan was explained as follows:
- The earnings of Hastings were equity accounted until 8 December 2021, the
effective date of the sale. The proceeds on the sale of Hastings were
utilised to, inter alia, repay all the group's outstanding preference
share debt.
- The earnings of Discovery and Momentum Metropolitan were also equity
accounted until 8 December 2021, the date on which the unbundling of the
group's shareholdings in these entities met the accounting definition of
being highly probable.
- The financial results of all these investee companies were treated as
discontinued operations in the group's financial results.
The following non-recurring, material item, originating from the sale of
Hastings, was included in the group's results from discontinued operations
for the six months ended 31 December 2021:
- The profit on the sale of Hastings of R4.7 billion (including
reclassification of accumulated comprehensive income to the income
statement), which was excluded from headline earnings and normalised
earnings.
The following amounts were included in the earnings attributable to the
equity holders of OGL in the comparative period, which did not recur in the
current period:
- R5.7 billion included under results from discontinued operations relating
to the equity accounted earnings of Hastings, Discovery and Momentum
Metropolitan and the profit on the sale of Hastings.
- R418 million of funding costs included under results from continuing
operations.
Due to these material, non-recurring items, earnings per share (EPS) from
continuing and discontinued operations for the six months ended 31 December
2022 is expected to be more than 70% (more than 287.6 cents per share) lower
than the EPS from continuing and discontinued operations of 410.9 cents per
share reported in the comparative period.
Normalised earnings per share (NEPS) from continuing and discontinued
operations is expected to be more than 20% (more than 25.1 cents per share)
lower than the NEPS from continuing and discontinued operations of 125.5
cents per share reported in the comparative period, which excludes, inter
alia, the profit on the sale of Hastings.
A further trading statement will be released on SENS as soon as OGL has
reasonable certainty on the ranges of the expected EPS, headline earnings
per share and NEPS for the current period.
OGL regards normalised earnings (which excludes non-operational items and
accounting anomalies) as the key indicator of the group's operational
performance.
The financial information on which this trading statement is based has not
been reviewed and reported on by the group's external auditor.
OGL's financial results for the six months ended 31 December 2022 are expected
to be released on SENS on Wednesday, 22 March 2023.
Centurion
26 January 2023
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 26-01-2023 08:00:00
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