Old Mutual cautious about economy, excludes Zim in financials

The trading of Old Mutual shares was suspended in 2020 as authorities alleged that the fungibility of the share was leading to a rout of the local currency.
JOHANNESBURG Stock Exchange-listed entity, Old Mutual Limited, says it has excluded Zimbabwe’s adjusted headline earnings from its interim financials set to be released next week due to hyperinflationary pressures and difficulties in remitting dividends.

Adjusted headline earnings calculations is a key financial metric used to measure profitability, while providing a more normalised view of a company’s performance which allows investors and analysts to make more accurate comparisons with other companies.

Zimbabwe is going through a series of financial woes exacerbated by high inflation as the currency dynamics keep shifting.

On the other hand, the decade-long of challenges around currencies have also made it difficult to remit dividends out of the country.

Old Mutual is in talks to reinstate trading of its shares on Zimbabwe Stock Exchange.

The trading of Old Mutual shares was suspended in 2020 as authorities alleged that the fungibility of the share was leading to a rout of the local currency.

In a trading update for the six months ended June 30, 2024, Old Mutual said there were still barriers to access capital through dividends in Zimbabwe.

Old Mutual said the main contributor to the growth in headline earnings was higher shareholder portfolio profits in the Zimbabwean business.

“Adjusted headline earnings and adjusted headline earnings per share growth was bolstered by increased shareholder investment returns as a result of improved performance in South African equities,” the financial behemoth said.

“We excluded the Zimbabwe profits from adjusted headline earnings as the economy is currently hyperinflationary and there are barriers to accessing capital through dividends.

“The main contributor to higher growth in headline earnings relative to adjusted headline earnings is higher shareholder portfolio profits in the Zimbabwean business.”

According to the statement, strong operational performance in Old Mutual Insure, Old Mutual Corporate, Mass and Foundation Cluster was expected to be offset by lower life profits in personal finance due to increased large claims and higher central costs.

“Investors are advised that Old Mutual is currently in the process of finalising its interim results for the six months ended June 30, 2024, which will be released on the Stock Exchange News Service of the JSE Limited on Thursday September 26, 2024.

“This trading statement provides an indication of a range for headline earnings per ordinary share and earnings attributable to equity holders of the group per ordinary share in terms of paragraph 3.4(b) of the JSE Limited Listings Requirements compared to the six months ended June 30, 2023,” it read.

“Strong operational performance in Old Mutual Insure, Old Mutual Corporate and Mass and Foundation Cluster was offset by lower life profits in personal finance, primarily driven by an increased number of large claims and higher central costs compared to the prior period but in line with our expectations as we continue to invest in our future capabilities.”

The group also noted that the share repurchase programme implemented in 2023 was expected to contribute to a reduction in the weighted average number of ordinary shares to 4 359 million at June 30, 2024 compared to 4 503 million at June 30, 2023.

“The movement between IFRS profit after tax attributable to equity holders of the parent (IFRS profit) and headline earnings was primarily driven by the loss recognised on the disposal of our Nigeria business,” Old Mutual said.

“Results from operations per share, adjusted headline earnings per share, headline earnings per share and earnings per share growth benefited from the share repurchase programme implemented in 2023 which contributed to a reduction in the weighted average number of ordinary shares to 4 359 million at June 30, 2024 (4 503 million at June 30, 2023).”

Old Mutual operates in several countries including South Africa, Namibia, Botswana and Zimbabwe, among others.-chrocile