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MMIG - Availability of the Annual Financial Statements of MML for the year ended 30 June 2021
MOMENTUM METROPOLITAN LIFE LIMITED
Incorporated in the Republic of South Africa
Registration number: 1904/002186/06
Company code: MMIG
(“Momentum Metropolitan Life” or “MML” or “MML Group”)
Availability of the Annual Financial Statements of MML for
the year ended 30 June 2021
Noteholders are advised that the consolidated audited annual financial statements (“AFS”) of Momentum
Metropolitan Life for the year ended 30 June 2021 (“F2021”), has been published on the Momentum
Metropolitan Holdings Limited website at https://www.momentummetropolitan.co.za/en/investor-relations/debt-
investor.
The consolidated AFS for F2021 have been audited by MML’s auditors, Ernst & Young Inc. (“EY”), and their
unqualified audit report for the year ended 30 June 2021, together with the AFS identified in the audit opinion,
are available for inspection at the registered offices of MML by appointment, whilst observing the necessary
Covid-19 restrictions, from Monday to Friday between 09:00 - 16:00.
In the MML Group AFS, the following restatements are disclosed:
1. MML changed its accounting policy relating to the timing of the release of the revaluation reserve
relating to owner-occupied properties to retained income. IAS 16 paragraph 41 states that an entity
may transfer to retained income, throughout the period the asset is used by the entity, the difference
between the depreciation calculated based on the revalued carrying amount of the asset and the
depreciation calculated based on the asset’s original cost. MML elected to apply the above accounting
policy in previous financial years. The application of this accounting policy has proven to be quite
cumbersome in terms of the calculation and MML is of the opinion that this accounting policy choice
does not provide the users of the financial statements with any meaningful information. MML has thus
changed its accounting policy to transfer the revaluation reserve to retained income on the disposal of
the asset.
2. During the financial year ended 30 June 2019 (F2019), assets in a pure linked investment contract
portfolio were transferred between administration platforms. Due to an administrative error, a portion of
the transferred assets’ cash was double counted and resulted in an increase in investment contract
liabilities. There was no earnings impact and only the gross assets and gross liabilities were overstated
on the statement of financial position. This has led to the restatement of cash and cash equivalents and
investment contracts designated at fair value through profit and loss.
3. For investment contract liabilities, the contract administration fee income is derived as the difference in
the movement of the investment contract liabilities and the assets backing those liabilities. This is then
reconciled to the actuarial earnings reported. For linked investment contracts this methodology is sound
as the only difference between the asset and liability movements are fees. However, for non-linked
investment contracts, this movement is not entirely related to fees. There is also an element of
mismatch between the assets and liabilities. The non-linked investment contract liabilities are well
matched and so this mismatch is typically very small, however given the volatility observed in yield
movements over the past year, the mismatch measured became material. This mismatch component
was not specifically identified in the financial year ended 30 June 2020 (F2020) and was thus reported
as part of fees. This has led to the restatement of fee income and fair value adjustments on investment
contracts. MML has now allowed for this explicitly in the methodology to derive the fees on the non-
linked investment contracts.
4. The receivable and payable position of the derivative financial assets and liabilities, interest rate swaps
were not netted off on a per instrument basis in prior periods. Each interest rate swap position has
subsequently been restated to correctly present the fair value of each derivative at a contract level,
resulting in a reallocation between debt securities and unsettled trades to derivative financial assets
and liabilities. This has led to the restatement of these lines.
5. Carry position assets and liabilities were inappropriately reported as unsettled trade assets and
liabilities. This resulted in reclassifications between financial assets and liabilities measured at
amortised cost to financial assets and liabilities measured at fair value through profit or loss. This has
led to the restatement of these lines.
6. Cash and cash equivalents were incorrectly classified as other payables, specifically as unsettled
trades. The balance has been correctly reclassified as cash and cash equivalents. This has led to the
restatement of these lines.
7. Momentum Metropolitan Life accounts for a loan between itself and a subsidiary. Historically the loan
was classified at amortised cost, but during the year, this classification was reassessed in terms of
IFRS 9 and it was viewed that at initial recognition, the loan did not pass the Solely Payments of
Principal and Interest test. The ability of the subsidiary to repay the loan is closely linked to the value
of the underlying properties on the subsidiary’s balance sheet. Because of this, it was deemed that the
loan should have been classified at fair value through profit and loss. This has led to a restatement of
the fair value gains and expected credit losses lines. This has no impact on the MML financial
statements.
9 September 2021
Debt Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
Date: 09-09-2021 03:10:00
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