Group says normalised headline earnings were supported by higher investment income
09 September 2024 - 05:00
byNompilo Goba
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Momentum Group says it expects strong earnings growth for the year to the end of June, indicating potential for increased shareholder value through higher dividends and capital appreciation, despite a minor impact from goodwill impairment.
Headline earnings per share (HEPS) are projected to grow 41%-46% to 293c-304c compared with the restated 207.9c for the previous year.
The group expects earnings per share (EPS) to increase 30%-35% to a range of 278c-288c, up from the restated 212.8c in the previous year.
The group’s normalised headline earnings per share, which adjust for non-operational factors, are set to rise by 33%-38% to 304c-315c.
The restated figures for 2023 reflected the implementation of the IFRS 17 (International Financial Reporting Standards), which became effective from July 2023, the group said.
The IFRS 17 is an accounting standard that requires insurers to measure contracts based on estimates of future cash flows, risk adjustments and a contractual service margin. It aims to improve transparency and comparability in financial statements by recognising revenue over time and providing detailed disclosures about insurance contracts.
“Normalised headline earnings were further supported by higher investment income following a favourable interest rate environment. This performance was slightly dampened by fair value losses on the group’s investment in venture capital funds,” Momentum said.
The increase in earnings per share was tempered by a goodwill impairment at Momentum Investments, linked to the Momentum Global Investment Management business.
Momentum attributes its strong performance to several factors. The group said its life annuities business in Momentum Investments saw robust profits, while persistency improvements in Metropolitan Life also contributed to the bottom line.
Guardrisk benefited from growth in fee income and underwriting profits while Momentum Insure experienced an earnings recovery.
Momentum bought Guardrisk for R1.6bn from Alexforbes a decade ago. It has identified SA’s largest cell captive insurer as a key cog in its strategy to unlock value for shareholders in the next three years.
The group previously indicated that work is under way to beef up Guardrisk with acquisitions and possible international expansion as part of the group’s new strategy that aims to push up its earnings to R7bn by 2027 from R4.8bn now.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Momentum signals strong annual earnings growth
Group says normalised headline earnings were supported by higher investment income
Momentum Group says it expects strong earnings growth for the year to the end of June, indicating potential for increased shareholder value through higher dividends and capital appreciation, despite a minor impact from goodwill impairment.
Headline earnings per share (HEPS) are projected to grow 41%-46% to 293c-304c compared with the restated 207.9c for the previous year.
The group expects earnings per share (EPS) to increase 30%-35% to a range of 278c-288c, up from the restated 212.8c in the previous year.
The group’s normalised headline earnings per share, which adjust for non-operational factors, are set to rise by 33%-38% to 304c-315c.
The restated figures for 2023 reflected the implementation of the IFRS 17 (International Financial Reporting Standards), which became effective from July 2023, the group said.
The IFRS 17 is an accounting standard that requires insurers to measure contracts based on estimates of future cash flows, risk adjustments and a contractual service margin. It aims to improve transparency and comparability in financial statements by recognising revenue over time and providing detailed disclosures about insurance contracts.
“Normalised headline earnings were further supported by higher investment income following a favourable interest rate environment. This performance was slightly dampened by fair value losses on the group’s investment in venture capital funds,” Momentum said.
The increase in earnings per share was tempered by a goodwill impairment at Momentum Investments, linked to the Momentum Global Investment Management business.
Momentum attributes its strong performance to several factors. The group said its life annuities business in Momentum Investments saw robust profits, while persistency improvements in Metropolitan Life also contributed to the bottom line.
Guardrisk benefited from growth in fee income and underwriting profits while Momentum Insure experienced an earnings recovery.
Momentum bought Guardrisk for R1.6bn from Alexforbes a decade ago. It has identified SA’s largest cell captive insurer as a key cog in its strategy to unlock value for shareholders in the next three years.
The group previously indicated that work is under way to beef up Guardrisk with acquisitions and possible international expansion as part of the group’s new strategy that aims to push up its earnings to R7bn by 2027 from R4.8bn now.
goban@businesslive.co.za
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