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Preliminary operating update for Old Mutual Limited for the year ended 31 December 2020
Old Mutual Limited
Incorporated in the Republic of South Africa
Registration number: 2017/235138/06
ISIN: ZAE000255360
LEI: 213800MON84ZWWPQCN47
JSE Share Code: OMU
Alpha Code: OMLI
MSE Share Code: OMU
NSX Share Code: OMM
ZSE Share Code: OMU
("Old Mutual" or “the Company”)
Ref 01/21
25 January 2021
PRELIMINARY OPERATING UPDATE FOR OLD MUTUAL LIMITED FOR THE YEAR ENDED 31
DECEMBER 2020, INCLUDING FINALISATION OF THE BUSINESS INTERRUPTION CLAIMS
PROCESS FOR OLD MUTUAL INSURE
PRELIMINARY OPERATING UPDATE FOR OLD MUTUAL LIMITED
Operating conditions across our business have remained challenging during
the second half of 2020.
Despite the tough economic and operating environment many of our volume
related KPIs have shown recovery in the second half, demonstrating the
resilience of our franchise. Our Gross Flows for the 12 months ended 31
December 2020 are R188 billion, 10% up on the prior year. Positive NCCF of
R10,1 billion is R7,0 billion higher than the prior year, driven by strong
investment flows across the Group in the second half of the period, which
were partially offset by higher outflows in Old Mutual Corporate as a result
of the deteriorating economic environment. We have also seen continued
improvement in adviser productivity with sales trending towards historic
levels.
Whilst there are encouraging signs of recovery in our sales metrics, we are
concerned about the rapidly increasing rate of COVID-19 infections in our
key geographies and the impact that the pandemic could have on our customers,
economic recovery, and mortality rates. We are currently in the process of
finalising our life reserves, considering the global experience of the impact
of the pandemic and the potential of a more sustained spread of the virus.
There remains a large degree of variability in the data and we are monitoring
infection and mortality related claims data on a weekly basis. We expect to
communicate the outcome in the near term.
FINALISATION OF THE BUSINESS INTERRUPTION CLAIMS PROCESS FOR OLD MUTUAL
INSURE
Following a lengthy period of legal uncertainty, shareholders are advised
that Old Mutual Insure has commenced the process of finalising all
outstanding valid claims for business interruption for our affected
customers.
The complex question as to whether customers with business interruption
extensions for infectious and contagious diseases are entitled to cover for
the COVID-19 pandemic and the related government enforced national lockdown
has been the subject matter of several court cases.
The recent rulings on this matter by the Supreme Court of Appeal of South
Africa have provided legal certainty and we have therefore commenced with
processing valid business interruption claims with specific conditions that
are materially the same in nature as those already decided by the courts.
We anticipate that the net business interruption and business rescue reserves
reported for the year ended December 2020 will increase by between R85 million
to R140 million compared to the amount reported for six months ended 30 June
2020. The net business interruption and business rescue claims (including
reserves) of R464 million reported for the first half of the year included
an amount to settle business interruption claims of SMME customers with an
annual sum insured of R5 million or below to enable them to continue operating
in a tough economic environment. This settlement was applied to all our
qualifying SMME customers who had the infectious disease extension at the
time of loss.
TRADING STATEMENT
Consistent with our communication of the interim results in September 2020,
in terms of paragraph 3.4(b) of the Listings Requirements of the JSE Limited,
shareholders are advised that we expect HEPS and EPS for the year ended 31
December 2020 to be more than 20% lower than the reported HEPS and EPS for
the comparable period (FY 2019 HEPS: 236.1 cents, FY 2019 EPS: 208.3 cents)
due to the significant impact COVID-19 has had on our business operations
and results. A further trading statement will be published to provide more
specific guidance once we have reasonable certainty regarding the extent of
the decline and the related ranges of the expected decrease in HEPS and EPS.
Sandton
Sponsors
Johannesburg Stock Merrill Lynch South Africa (Pty) Limited
Exchange
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 E: tndlovu6@oldmutual.com
Relations
Tokelo Mulaudzi T: +27 (0)11 217 1042
Investor Relations E: tmulaudzi3@oldmutual.com
Manager
Communications
Tabby Tsengiwe T: +27 (11) 217 1953
Head of Communications M: +27 (0)60 547 4947
E: ttsengiwe@oldmutual.com
Notes to Editors
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 we have a niche business in China.
With 175 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: 25-01-2021 07:05:00
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