MMIG – Availability of the Annual Financial Statements of MML for the year ended 30 June 2022

MOMENTUM METROPOLITAN LIFE LIMITED
Incorporated in the Republic of South Africa
Registration number: 1904/002186/06
LEI: 378900E0A78B7549C212
Company code: MMIG
(“Momentum Metropolitan Life” or “MML” or “MML Group”)

Availability of the Annual Financial Statements of MML
for the year ended 30 June 2022

Noteholders are advised that the consolidated audited annual financial statements (“AFS”) of Momentum
Metropolitan Life for the year ended 30 June 2022 (“F2022”), has been published on the Momentum
Metropolitan Holdings Limited website at https://www.momentummetropolitan.co.za/en/investor-relations/debt-
investor.

The consolidated AFS for F2021 have been audited by MML’s auditors, Ernst & Young Inc. (“EY”), and their
unqualified audit report for F2022, together with the AFS identified in the audit opinion, are available for
inspection at the registered offices of MML.

In the MML Group AFS, the following mandatory restatements are disclosed:
1. The Group invests into Qualified Investor Hedge funds that, as a result of the requirements in IFRS 10 –
Consolidated financial statements, are consolidated. As a result of a further detailed review of the
financial instruments held by these hedge funds, a number of refining correcting adjustments were
required to the MML statement of financial position and income statement. These adjustments do not
impact the net asset value of the hedge fund nor that of MML. The adjustments made in respect of the
statement of financial position relate to the following:

– the offset and classification of interest rate derivatives and carry positions; and

– the offset and recording of financed trade positions carried out in the funds.

The statement of financial position has been restated accordingly. The adjustments made in respect of
the income statement relate to the following:

– inappropriate application of the offsetting criteria applied in respect of interest income and finance
costs; and

– consolidation of the full income statement disclosures of the hedge funds, which resulted in a
reclassification between the relevant lines of the income statement and fair value adjustments on
Collective Investment Schemes (CIS) liabilities.

The income statement has therefore been restated accordingly.

2. In accordance with the Financial Advisory and Intermediary Services Act 37 of 2002 as well as the
Policyholder Protection Rules, there is an obligation to re-intermediate clients that are not linked to a
financial advisor. Accumulated balances that were due to the financial advisors originally linked to
policyholders, were previously reported as other payables. However, when these financial advisors went
out of force, the balance was no longer contractually payable and therefore the balance should have
been changed to a provision for the expected cost of reintermediation that is required in order to settle
the obligation towards policyholders. In the previous reporting periods, this balance was however
reported as a payable and has therefore been retrospectively reclassified from a payable to a provision
to provide for the cost that is required to re-intermediate these clients with in-force policies, but no
financial advisors. The statement of financial position has been restated accordingly.

3. As a result of the requirements in IFRS 10 – Consolidated financial statements, the Group consolidates
certain CISs and as such consolidates the complete statement of profit or loss and statement of financial
position of such funds. It is often the case that funds of this nature incur asset management expenses
and conversely the investment managers earn fee income. A number of eliminations are required as
many entities within the Group perform the function of inhouse investment manager for a number of
consolidated funds and as such these asset management fees are considered to be inter-company. Upon
further analysis of sub-investment manager arrangements, a number of additional external sub-
investment managers were identified. As a result, a portion of asset management fee expenses and
income that were previously considered to be associated with inhouse investment managers and
therefore inter-company and subsequently eliminated, were in fact external and should not have been
eliminated entirely. This has led to the restatement of fee income and the asset management expenses.

4. Long-term insurance companies are required to pay tax on behalf of policyholders according to the five-
funds tax approach as required by section 29A of the South African Income Tax Act of 1962. The
approach requires the insurer to collect taxation in respect of policies held, determined with reference to
different rates of tax (including effective capital gains tax rates) to be applied to different categories of
policyholders. In practice, the collection of tax from policyholders and specifically capital gains tax, follows
a more simplistic approach than the calculation that is used for the income tax calculation when
submitting a tax return to the South African tax authorities. This difference in methodology resulted in
over-recoveries from policyholders. The over-recovery was accounted for as an ‘other payable’.
Management has re-assessed the recognition of this balance and has created an actuarial data reserve.
As such, the balance has subsequently been re-classified from other payables to insurance liabilities.
The statement of financial position has been restated accordingly.

5. Share portfolios reclassification: Investments held in share portfolios were previously incorrectly
classified as cash and cash equivalents. These share portfolios have now been correctly split into the
underlying assets. The balance sheets for the financial years ended 30 June 2020 and 30 June 2021
(prior year), have been restated as a result. Additionally, realised fair value gains on certain share
portfolios incorrectly included dividends received. The prior year income statement has been restated.

6. Finance cost correction: Finance costs and net realised and unrealised fair value gains/(losses) have
been corrected related to the elimination of an intercompany transaction. This has led to the
restatement of these lines.

16 September 2022

Debt Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)

Date: 16-09-2022 05:41:00
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