- It projects declines in various metrics
- But strong growth in Adjusted Headline Earnings
- The Group anticipates that adjusted headline earnings will exceed 20% compared to the comparative period
Harare- Old Mutual Limited, a diversified financial services group, anticipates a combination of outcomes in its half-year results for the period ended 30 June 2023. The Group foresees a decline in results from operations, basic earnings per share, headline earnings, headline earnings per share, and profit after tax.
However, adjusted headline earnings and adjusted headline earnings per share are projected to experience significant increases.
In a trading update, the Group stated, "The ranges provided in this trading statement are relative to the IFRS 17 results for the comparative period. It is not expected that results will differ by more than 20% compared to previously disclosed comparative period results under IFRS 4."
This indicates that the Group anticipates the current results to remain within a certain range and not deviate significantly from the results reported in the previous period under the applicable accounting standard.
According to the Group's statement, results from operations are anticipated to range from a decrease of 7% (equivalent to 3,939) to an increase of 13% (equivalent to 4,790) compared to the previous figure of 4,254. Similarly, the projected decline in profit after tax attributable to equity holders of the parent is estimated at 20% (ranging from 3,869 to 4,836) from the previous figure of 4,831. This decline suggests a possibility of reaching a breakeven point, where the business neither makes a profit nor incurs a loss.
The variation in overall operations is attributed to the combination of good operational performance and ongoing challenges related to adverse persistency. Specifically, provisions for short-term persistency were raised in the Mass and Foundation Cluster segment, impacting the overall performance.
Nevertheless, there is a forecasted increase in adjusted headline earnings ranging from 13% to 33% compared to the previous period. Similarly, adjusted headline earnings per share are expected to grow by 11% to 31%. These projections indicate a positive upward trend for both adjusted headline earnings and adjusted headline earnings per share.
The Group anticipates that adjusted headline earnings will exceed 20% compared to the comparative period. This projection is attributed to an increase in shareholder investment return resulting from higher interest rates and a recovery in equity markets. The improved performance in these areas is expected to contribute to the growth of adjusted headline earnings.
Basic earnings per share in cents are projected to fall within a range of -19% to -1%, specifically between 86 and 107.4, compared to the figure of 106.8 recorded last year while headline earnings are expected to decrease within a percentage range of -18% to 2%, resulting in a range of 3,884 to 4,834, compared to the value of 4,749 reported last year.
Headline earnings per share in cents are projected to decrease within a range of -18% to 2%, specifically between 86.3 and 107.3, compared to the figure of 104.9 reported last year. This forecast suggests a potential decline in headline earnings per share for the current period compared to the previous year.
Headline earnings, as reported, surpass adjusted headline earnings due to the exclusion of earnings from operations in Zimbabwe and adjustments for accounting mismatches.
These accounting mismatches encompass hedging mismatch losses resulting from the transition of guaranteed product-related hedging programs to IFRS 17.
However, it is expected that the impact of these mismatches will diminish significantly in future reporting periods as the hedging mismatch has been largely resolved, and the hedging strategies are now materially aligned with IFRS 17 positions.
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