Integrated Financial Services Group, Old Mutual Plc says recent announcements in the Monetary Policy Statement (MPS) have led to an estimated R1,5 billion negative adjustment on its market value added (MVA).
MVA is a calculation that shows the difference between the market value of a company and the capital contributed by all investors, both bondholders and shareholders. In other words, it is the sum of all capital claims held against the company plus the market value of debt and equity.
In an interview with CNBC Africa, Old Mutual chief executive officer Peter Moyo, said while the announcements made in the MPS were a step in the right direction, there was a negative impact on business operations.
“The monetary policy statement is a good starting line but — we are possibly the biggest custodian of the nation’s savings in Zimbabwe so when you announce over night that the rate is no longer 1:1 it is 3:1 it is essentially reducing the people’s savings by as much as 33 percent.
“The adjustment that we made in our books effective from the first of October 2018 was $233 million. I think the impact on our MAV might actually be to the order of R1,3-1,5 billion, that has actually been the impact to shareholders,” said Moyo
Moyo, however, lamented on the group`s inability to remit its profits, but remained upbeat about making further investments onto the country`s investment climate if it continues to show signs of improvement.
“We cannot remit dividends that is why I was desirous of having the change much sooner than we did . . . by the way our business is making very good money in Zimbabwean terms but you simply cannot remit those profits.
“…as far as investments on the Zimbabwe Stock Exchange (ZSE) we are possibly the largest investor and the biggest property owner. It is in our interest that Zimbabwe succeeds and I have written to the President (Mnangagwa) that we are interested to come to the party but the conditions must enable us to deploy the capital that we have tied up in Zimbabwe,” he said.
On the financials, Old Mutual Plc posted an 8 percent growth in headline earnings for the year to December 31, 2018.
Headline earnings for the 12-month period under review rose to R14,2 billion from R13,1 billion in the prior year.
In a statement accompanying the results, Moyo expressed satisfaction with the group’s performance.
“We continue to be a highly cash generative business with R6,6 billion of free cash generated in 2018, which has more than covered our dividends to our shareholders.
“Our group capital position remains robust with a solvency ratio of 170 percent, near the upper end of our target range,” said Moyo.
The CEO commended the company’s ability to manoeuvre through a tough operating environment.
“We delivered particularly good sales and Net Client Cash Flows (NCCF) in a tough economic and competitive environment. We delivered very well against the promises we made to investors,” he said.