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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 OUTSURANCE GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2023
INTRODUCTION
As communicated in the voluntary trading update and trading statement
released on 26 January 2023, OGL's (formerly Rand Merchant Investment
Holdings Limited) disposal of Hastings Group (Consolidated) Limited
(Hastings) and the 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 year ended 30 June 2023 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. As indicated
in the interim results announcement released on 22 March 2023, the expansion
to the Republic of Ireland represents an exciting opportunity for diversified
long-term growth. An authorisation process has commenced and if successful,
a market entry in Ireland is anticipated during the second half of the 2024
financial year.
VOLUNTATRY TRADING UPDATE FOR OUTSURANCE HOLDINGS LIMITED
The performance of OHL for the year to 30 June 2023 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.
Shareholders are advised that normalised earnings for OHL and its major
operating subsidiaries are expected to increase as follows for the year ended
30 June 2023:
Reported Guidance
Year ended Year ended
30 June 30 June
2022 2023
R million % increase
OHL (group consolidated) 2 316 35% to 45%
OUTsurance (SA short-term operations) 1 743 0% to 10%
OUTsurance Life 100 5% to 15%
Youi Group 413 220% to 250%
Following a strategic review of OUTvest, which remains a sub-scale business,
the group has decided to consider a restructuring of OUTvest which includes
the possibility of a disposal. Client investments will not be affected by
this decision. All client obligations will continue to be honoured without
operational disruption. OUTvest is a regulated Financial Services Provider
and a 100% held subsidiary of OHL.
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 trading statement for the year ended
30 June 2022, released on 20 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 items, originating from the sale of
Hastings and the unbundling of OGL's shareholdings in Discovery and Momentum
Metropolitan, influenced OGL's financial results for the year ended 30 June
2022 (comparative period):
- 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 gain on the distribution of OGL's shareholdings in Discovery and
Momentum Metropolitan of R15.2 billion (including reclassification of
accumulated comprehensive income to the income statement), which was also
excluded from headline earnings and normalised earnings. This amount
comprised the difference between the carrying amount and the fair value
of the investments in Discovery and Momentum Metropolitan on 20 April
2022, the first day OGL shares traded 'ex' the entitlement to receive the
unbundled Discovery and Momentum Metropolitan shares and the cumulative
comprehensive income reclassified to the income statement.
The following guidance is provided to OGL shareholders regarding the group's
expected earnings from continuing operations for the year ended 30 June 2023:
Reported Guidance for the year ended
Year ended 30 June 2023
30 June
2022 Expected Expected range
(cents) % increase (cents)
Continuing operations
Normalised earnings per share 115.8 55% to 65% 179.5 to 191.1
Headline earnings per share 95.0 95% to 105% 185.3 to 194.8
Earnings per share 94.1 95% to 105% 183.5 to 192.9
The following guidance is provided to OGL shareholders regarding the group's
expected earnings from continuing and discontinued operations for year ended
30 June 2023:
Guidance for the year ended
30 June 2023
Reported
Year ended Expected
30 June %(decrease)/ Expected range
2022 increase (cents)
(cents)
Continuing and discontinued operations
Normalised earnings per share 192.8 (10%) to 0% 173.5 to 192.8
Headline earnings per share 169.7 5% to 15% 178.2 to 195.2
Earnings per share 1 463.2 (90%) to (80%) 146.3 to 292.6
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 voluntary trading update and trading
statement is based is the responsibility of the OGL directors and has not
been reviewed and reported on by the group's external auditor.
OGL's financial results for the year ended 30 June 2023 are expected to be
released on SENS on Friday, 15 September 2023.
Centurion
2 August 2023
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 02-08-2023 08:00:00
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