“Shareholders are advised that the core headline earnings per share, the group´s main earnings measure to monitor the operational performance of the group, are expected to be down by between 0 and 10 percent for the six month period,” said MMI in a trading statement issued on the Namibian Stock Exchange.
According to MMI: “Core headline earnings continue to be affected by weak underwriting experience on group disability business (approximately R60m lower than in prior period) and by decline in health administration operating earnings following the loss of two large clients subsequent to 1H16 reporting period (approximately R70m lower than in prior period).
It further said: “The weak investment return on policyholder assets has also negatively affected the growth in asset-based fee income across the group. Persistency remains broadly in line with actuarial assumptions whereas retail risk experience remains ahead of actuarial assumptions.”
The company however assured shareholders that it[MMI] remains well capitalised as at 31 December 2016.
“Shareholders are further advised that the group’s interim period basic earnings per share are expected to be between 59 cents and 69 cents compared to 98.7 cents, a decrease of between 30 and 40 percent to the comparative period. Basic headline earnings per share are expected to be between 59 cents and 68 cents compared to 91.3 cents, showing a decrease of between 25 and 35 percent on the comparative period results,” it said.
The difference between the expected decline in core headline earnings and in basic earnings is largely driven by two items, it said.
“Firstly, a significant (approximately R130m) decline in level of fair value gains earned on shareholders´ investment portfolio. The decline in fair value gains includes the impact of currency movements on foreign assets over the two relevant time periods.”
Secondly, MMI said there was a material (approximately R140m) year-on-year change in earnings arising from the technical IFRS treatment of MMI shares held in policyholder funds as treasury shares.
MMI excludes fair value gains, movement in value of MMI shares held in policyholder funds, investment variances and non-recurring items from core headline earnings whereas basic earnings include all these non- operational items.
“The financial information on which this trading statement is based has not been reviewed and reported on by MMI’s external auditors. MMI will be releasing interim results for the six months ending 31 December 2016 on 2 March 2017,” cautioned the company.[nsx.com.na]
Issued on 20 February 2017