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Unaudited interim results for the six months ended 31 December 2024 and dividend declaration
MOMENTUM GROUP LIMITED
(previously MOMENTUM METROPOLITAN HOLDINGS LIMITED)
Incorporated in the Republic of South Africa
Registration number: 2000/031756/06
JSE share code: MTM
A2X share code: MTM
NSX share code: MMT
ISIN code: ZAE000269890
("Momentum Group" or "the Group")
MOMENTUM METROPOLITAN LIFE LIMITED
Incorporated in the Republic of South Africa
Registration number: 1904/002186/06
LEI: 378900E0A78B7549C212
Bond issuer code: MMIG
("Momentum Metropolitan Life")
Unaudited interim results for the six months ended 31 December 2024 and dividend declaration
Basic Diluted
Restated(1) Restated(1)
1HF2025 1HF2024 change % 1HF2025 1HF2024 change %
Earnings (R million) 3 320 2 156 54% 3 320 2 175 53%
Headline earnings (R million) 3 311 2 156 54% 3 311 2 175 52%
Normalised headline earnings (NHE, R million)(2) 3 437 2 389 44%
Operating profit (R million)(3) 2 842 2 129 33%
Investment return (R million) 595 260 >100%
Earnings per share (cents) 244.3 157.4 55% 239.9 153.9 56%
Headline earnings per share (cents) 243.6 157.4 55% 239.2 153.9 55%
Normalised headline earnings per share (cents) 244.8 165.6 48%
Interim dividend per share (cents) 85 60 42%
Present value of new business premiums (PVNBP, R million) 38 928 39 103 (0)%
Value of new business (VNB, R million) 279 200 40%
Value of new business margin 0.7% 0.5%
Diluted embedded value per share (R) 39.29 34.93
Return on embedded value per share 16.8% 11.6%
Return on equity(4) 24.6% 17.4%
(1)The Group further refined its IFRS 17 policies and methodologies during the 30 June 2024 audit and reporting process. The adjustments
recognised resulted in the restatement of the prior period's financial statements. Refer to the condensed consolidated interim financial
statements for the six months ended 31 December 2024 (including in the detailed Operating Update) ("Interim Results") for more information.
(2)NHE adjusts the JSE definition of headline earnings for the impact of finance costs related to preference shares that can be converted
into ordinary shares of the Group when it is anti-dilutive, the impact of treasury shares held by the iSabelo Trust, the amortisation of
intangible assets arising from business combinations and broad-based black economic empowerment (B-BBEE) costs. Additionally, the iSabelo
special purpose vehicle, which houses preference shares issued as part of the employee share ownership scheme's funding arrangement, is
deemed to be external from the Group, and the discount at which the iSabelo Trust acquired the Momentum Group Limited's treasury shares is
amortised over a period of 10 years and recognised as a reduction to NHE. NHE is the responsibility of the directors and is presented for
additional information purposes only.
(3)Operating profit represents the profit (net of tax) that is generated from the Group's operational activities and reflects NHE excluding
the investment return on shareholder funds.
(4)Return on equity expresses NHE as a percentage of start-of-year net asset value. In this calculation, net asset value is adjusted for the
items outlined in footnote 2, consistent with NHE.
Momentum Group delivers excellent results across all businesses
Introduction
Momentum Group delivered an excellent set of results across all business units in the six months ended 31 December 2024. This is the result of every
business in the Group's diversified portfolio of businesses performing well, largely driven by management interventions to enhance the new business mix.
Positive contributions included a significantly improved underwriting result in Momentum Insure, strong underwriting performance in Guardrisk, profits
released from annuities in Momentum Investments, improved new business profitability in Metropolitan Life, and higher earnings from the group risk
business in Momentum Corporate. Earnings were further supported by improved persistency experience across the majority of the
Group's operations and a favourable external investment and underwriting environment.
Cash generation remains strong and is supported by the Group's solvency capital and liquidity position.
Group financial performance
Momentum Group achieved normalised headline earnings (NHE) growth of 44% to R3 437 million for the six months ended 31 December 2024. NHE per share
increased by 48% from 165.6 cents to 244.8 cents, reflecting the enhancement from the share buyback programme over the period. Headline earnings per share
improved by 55% from 157.4 cents to 243.6 cents and earnings per share increased by 55% from 157.4 cents to 244.3 cents.
Operating profit increased by 33% from R2 129 million to R2 842 million. This robust performance in operating profit follows higher releases of the CSM
across the life businesses (reflecting a larger CSM balance compared to the prior period), improved new business profitability and persistency experience
variances in Metropolitan Life, a significant improvement in Momentum Insure's underwriting result as well as strong fee income and underwriting profit
growth in Guardrisk. The Group's results were further aided by higher market returns and favourable yield curve shifts over the period. Momentum Retail
reported marginally lower operating profit, mainly due to lower positive mortality and morbidity experience variances and a reduction in market variances.
The decline in Africa's operating profit follows lower market variances, driven by unfavourable yield curve shifts in Namibia, Botswana and Lesotho. The
operating loss in India narrowed, aided by strong gross written premium growth, a reduction in the loss component and an improved combined ratio.
Investment return from the Group's shareholder asset portfolios more than doubled relative to the comparative period, bolstered by higher investment returns
during the period and the non-repeat of significant fair value losses on venture capital funds in the Shareholders segment. Most business units benefited
from the higher investment income.
Net asset value
R million 1HF2025 F2024 change %
Total assets 752 632 706 635 7%
Total liabilities (720 475) (676 578) 6%
Total equity 32 157 30 057 7%
The following table outlines the contribution from operating profit and investment return to NHE per business unit:
1HF2025 Restated 1HF2024(1) change %
Normalised Normalised Normalised
R million Operating Investment headline Operating Investment headline Operating Investment headline
profit/(loss) return earnings profit/(loss) return earnings profit return earnings
Momentum Retail 576 98 674 627 70 697 (8)% 40% (3)%
Momentum Investments 447 28 475 241 37 278 85% (24)% 71%
Metropolitan Life 373 65 438 255 42 297 46% 55% 47%
Momentum Corporate 756 101 857 553 66 619 37% 53% 38%
Health 125 - 125 124 - 124 1% - 1%
Guardrisk 394 (14) 380 284 2 286 39% <(100)% 33%
Momentum Insure 153 77 230 (40) 59 19 >100% 31% >100%
Africa 17 221 238 71 218 289 (76)% 1% (18)%
India (49) 1 (48) (117) - (117) 58% - 59%
Normalised headline earnings
from operating business units 2 792 577 3 369 1 998 494 2 492 40% 17% 35%
Shareholders segment 50 18 68 131 (234) (103) (62)% >100% >100%
Normalised headline earnings 2 842 595 3 437 2 129 260 2 389 33% >100% 44%
Group new business performance
Key metrics 1HF2025 1HF2024 change %
Recurring premiums (R million) 2 105 2 038 3%
Single premiums (R million) 29 257 29 626 (1)%
PVNBP (R million) 38 928 39 103 (0)%
VNB (R million) 279 200 40%
New business margin 0.7% 0.5%
The Group's new business sales, as measured by the present value of new business premiums (PVNBP), remained flat at R38.9 billion. Momentum Retail saw an
increase in protection new business volumes while long-term savings new business volumes remained flat. Momentum Investments delivered solid growth in the
long-term savings business, partially offset by decreased annuity sales. Metropolitan Life achieved an increase in long-term savings new business volumes,
partially offset by lower protection and life annuities new business volumes. Momentum Corporate's PVNBP declined because of lower structured investment
flows and lower protection new business volumes. Africa saw an increase in new business volumes following increased corporate protection new business
volumes in Lesotho and Namibia and higher retail new business volumes across all countries.
The Group achieved solid value of new business (VNB) growth of 40% to R279 million, largely supported by the change in new business mix towards more
profitable protection business in Momentum Retail, an improvement in Metropolitan's VNB, and the positive contribution from life annuities in Momentum
Investments. Overall, the Group's new business margin improved to 0.7%.
Contractual service margin
Under IFRS 17, the CSM is a component of the insurance liability that represents the present value of expected future earnings. This becomes an important
metric for assessing the earnings prospects of an insurance entity. The CSM increased from R19.4 billion (30 June 2024) to R20.2 billion, with new business
contributing R0.8 billion, expected growth adding R1.0 billion, and changes in estimates adding R0.4 billion to the opening balance. This was offset by
R1.4 billion released from the CSM into earnings.
Return on equity and embedded value
Return on equity (ROE) was 24.6% (annualised) for the period, an increase from 17.4% in the prior period. This follows the higher NHE reported for the
six-month period. Group embedded value per share was R39.29 as at 30 June 2024, and the annualised return on embedded value per share was 16.8%.
Solvency
The regulatory solvency positions of most of the Group's regulated entities remain above the upper end of their specified target solvency ranges. For
Momentum Metropolitan Life (MML), the Group's main life insurance entity, the solvency cover strengthened from 2.10 times the Solvency Capital Requirement
(SCR) at 30 June 2024 to 2.15 times SCR (pre-foreseeable dividend) at 31 December 2024. This is above the upper end of MML's target range of 1.6 to 2.0
times SCR. Momentum Group Limited's solvency cover increased from 1.6 times SCR to 1.7 times SCR over the reporting period.
Share buyback programme
Given our strong capital and liquidity position and considering our Capital Management Framework, the Board has approved a further R1 billion for the
buyback programme of the Group's ordinary shares, given the prevailing discount to embedded value.
The prior R1 billion share buyback programme communicated to investors at the F2024 annual results announcement was largely completed by 5 February 2025.
The Group bought back 31 million shares at an average price of R30.14 per share for a total consideration of R934 million. This represents an average
discount of 23% to the embedded value of R39.29 per share on 31 December 2024. The balance (R66 million) will be executed following the results announcement.
Dividends
The Momentum Group has declared an interim dividend of 85 cents per ordinary share. The 1HF2025 dividend represents a payout ratio of 35% of NHE, close to
the lower end of the Group's dividend payout range. The Group's policy of declaring dividends within a range of 33% to 50% of NHE remains unchanged. Work on
reviewing the appropriateness of the current capital coverage targets and the dividend policy is well advanced. The outcome of this review will be
communicated to shareholders in the year-end results announcement.
The interim dividend is payable from income reserves to all holders of ordinary shares recorded in the Company's register on the record date. The interim
dividend will be subject to local dividend withholding tax at a rate of 20% unless the shareholder is exempt from paying dividend tax or is entitled to a
reduced rate. This will result in a net interim dividend of 68 cents per ordinary share for those shareholders who are not exempt from paying dividend tax.
The number of ordinary shares at the declaration date was 1 374 161 994.
The income tax number of the Momentum Group is 975 2050 147.
Publication of declaration date Thursday, 20 March 2025
Last date to trade cum-dividend Tuesday, 8 April 2025
Trading ex-dividend Wednesday, 9 April 2025
Record date Friday, 11 April 2025
Payment date Monday, 14 April 2025
Share certificates may not be dematerialised or rematerialised between Wednesday, 9 April 2025 and Friday, 11 April 2025, both days inclusive.
Outlook
We are proud of the strong results delivered by Momentum Group, reflecting the resilience and agility of our empowered, accountable business units. This
outstanding performance was achieved despite a challenging operating environment characterised by intensified competitive pressures and sluggish economic
growth. While the results of the past six months were supported by a favourable external investment and underwriting environment, similar conditions may
not necessarily persist in the second half of the financial year.
We are optimistic about the potential impact of the softening of the repo rate and lower inflation in South Africa on clients' disposable income. While
structural constraints persist, a reduction in load shedding and incremental improvements in rail and port logistics could provide a slight boost to overall
economic activity. We thus remain cautiously optimistic as to the prospects for the country and the responsible fiscal oversight. However, lingering risks
from global economic uncertainty and local fiscal pressures could keep financial market volatility elevated.
We remain steadfast in improving VNB and driving sales volume growth. Our Impact strategy positions us well for the remainder of the financial year. Advice
will be a key differentiator for us and carves out a unique space in the market to provide great value to our clients. Our leading market share in the IFA
segment places us well to deliver value. By leveraging technology to enhance the client experience and empower our advisers, we will ensure that our
solutions remain relevant, accessible, and tailored to evolving client needs.
We continue our focus on delivering on the Impact strategy and believe that the financial ambitions for F2027 (NHE of R7 billion, ROE of 20% and VNB margin
of 1% to 2%) remain achievable.
Results announcement statement
The information in this results announcement, including the financial information on which the outlook is based and any non-IFRS financial measures (which
are presented for additional information purposes only), is the responsibility of the directors and has not been reviewed and reported on by Momentum Group
Limited's external auditors.
The Interim Results, accessible from Thursday, 20 March 2025, can be found on the Group's website at:
https://www.momentumgroupltd.co.za/investor-relations/reporting-centre/interim-results and via the JSE cloudlink at: https://senspdf.jse.co.za/documents/2025/jse/isse/MTME/1H25Result.pdf
Any investment decisions should be based on the Interim Results as the information in this results announcement does not provide all the details.
In addition, shareholders are advised that a combined pack including the Interim Results and the results presentation is accessible from Thursday,
20 March 2025, via the Group's website at https://www.momentumgroupltd.co.za/investor-relations/reporting-centre/interim-results and a printed copy may also be
requested from the Group Company Secretary, Gcobisa Tyusha, Tel: +27 12 673 1931 or gcobisa.tyusha@mmltd.co.za, and is available for inspection by
appointment at the Group's registered office, weekdays Monday to Friday from 09:00 to 16:00.
SENS issue: 20 March 2025
Equity sponsor
Tamela Holdings (Pty) Limited
Sponsor in Namibia
Simonis Storm Securities (Pty) Limited
Debt sponsor
Nedbank Corporate and Investment Banking, a division of Nedbank Limited
Date: 20-03-2025 07:05:00
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