While a spin-off from South Africa’s savings and investments behemoth Old Mutual dubbed Quilter was due to release its own results today, perhaps given market conditions the firm has held back at time of writing.
Instead, Old Mutual itself has reported to the market how it did in 2019 and at first glance, not too shabby. The firm increased its headline earnings by 5 percent to ZAR 9.8 billion while at the same time boosting its dividend per share to 7 cents, both on year-on-year basis.
Interim Chief Executive Officer Iain Williamson said in a statement: “Our business was resilient against significant headwinds in 2019. We faced challenging macroeconomic conditions in South Africa, our largest market, and many of our operating countries in the Rest of Africa. This put pressure on the disposable income levels of our customers and on the ability of our businesses to grow value for our customers and investors.
“We remain confident that our diversified business allows us to protect value for stakeholders in tough economic times. After careful consideration of the relevant facts and actions, our Board took the difficult decision to dismiss our former chief executive, Peter Moyo. We remained focused on reassuring our customers, investors and employees during the heightened media attention and scrutiny that followed, through transparent and regular communication. The Board remains confident that the decision made was in the best interests of our stakeholders and that their duties were discharged in line with the high standard of governance and ethics expected of an established and respected organisation like ours.”
The firm also quantified to impact of its disassociation with Quilter and Nedgroup, stating that the unbundling of Nedgroup and distribution of Quilter brought in over ZAR 23 million for the year.
However, the devil is in the details and according to International Financial Reporting Standards (IFRS) (as opposed to the US’s GAAP system) the results didn’t make for pleasant for reading.
Profit after tax attributable to equity holders of the parent was done by a massive 74 percent to ZAR 9.3 billion while headline EPS had dipped by the same amount both on a year-on-year basis.
The firm did explain that IFRS profits for the comparative period also included the profit recognised on the distribution of Quilter plc and Nedbank of ZAR 23,175 million. IFRS profit after tax for the current period no longer includes the impact of these items, which is the main driver of the decrease.
There is often a period of adjustment when a company engages in a+ demerger/spin-off and given the size of the institutions involved it was always going to have a hefty financial impact.
