Old Mutual : Solid financial delivery by Old Mutual Limited and R46.8 billion to be returned to shareholders

Old Mutual Limited (OML) today announced its first interim results since its primary listing on the Johannesburg Stock Exchange in June 2018, and confirmed it was making good progress on its strategic priorities. It stated its solid financial delivery in a tough operating environment, growing its Results from Operations by 7% compared to the same period last year. The group also highlighted a total of R46.8 billion it will return to shareholders by year-end, including the expected unbundling of 32% of its shareholding in Nedbank.

Delivering R46.8 billion in returns to shareholders

An interim dividend of 45 cents per ordinary share has been declared, which is in line with Old Mutual Limited's dividend target. The Group also announced plans to pay a special dividend* of R1 per ordinary share. Both interim and special dividends will be paid on 16 October 2018.

Old Mutual CEO Peter Moyo commented, 'This is part of our programme to return value to Old Mutual Limited shareholders and demonstrates our commitment to managing capital efficiently. Taking into account the planned unbundling of Nedbank, the total distribution (including the dividends) of R46.8 billion that we will return to our shareholders equals about a third of our current market capitalisation.'

Following the unbundling, Old Mutual will retain a 19.9% stake in Nedbank. The Group views this shareholding as a long-term investment underpinned by the significant commercial benefits derived from the continuation of its relationship.

Financial and operational highlights

Despite ongoing weak economic conditions in South Africa, global market volatility, and geopolitical tensions, Old Mutual delivered a solid set of results for the period, Moyo said.

'All in all, our Results from Operations grew by 7% to R4,848 million. This was driven by good operational performance on the back of deliberate management actions across our battlegrounds, and clearly demonstrates the resilience of our group.'

Key financial highlights:

• Results from Operations up 7% to R4, 848 million (H1 2017: R4,530 million)
• Net Client Cash Flows (NCCF) up to R9.4 billion, a significant increase of R7.8 billion on H1 2017.
• Adjusted Headline Earnings of R5,393 million (112.3 cents per share), marginally up on prior year.
• Improvement in Old Mutual Insure underwriting margin to 6.4% ( H1 2017: 2.3%)
• IFRS profit after tax attributable to equity holders of the parent of R10,648 million up 42%
• Return on Net Asset Value (RONAV) of 17.5% in line with the target range (H1 2017: 19.4%)
• Funds under Management are up 2% to R1.1 trillion since 31 December 2017.
• Strongly capitalised with a Group solvency ratio of 164% (H1 2017: 167%), after allowing for the impact of both the interim and special dividend.

Key operational highlights from the Group's segments:

• Strong life and loan sales were recorded in the Mass and Foundation Cluster, despite increased competition. The segment also grew its branch footprint, number of ATMs and Money Account activity.
• Old Mutual Corporate delivered umbrella Life APE sales which doubled compared to the prior period.
• A higher incidence of death and disability claims adversely affected the Personal Finance segment profit growth. Sales were below the prior year, but a number of initiatives have been launched to drive sales, including the Old Mutual Rewards programme.
• Wealth and Investments delivered good NCCF growth with high quality flows driven by an improved wealth proposition and sustained investment performance.
• There were solid signs of improvement at Old Mutual Insure as the segment continued to focus on remediation work. The segment delivered an excellent underwriting margin of 6.4% which is slightly above the top end of its medium-term range.
• In the Rest of Africa segment, there has been continued progress with the turnaround of the East Africa. SADC remains the largest contributor to the segment's returns.
• The cost efficiency savings target of R1 billion is on track for delivery by the end of 2019, with R270 million of gross cost savings achieved in the first half of 2018.

Looking ahead

'There is renewed momentum and excitement in the Group following our listing and this is captured in our new vibrant brand campaign launched on 19 August 2018. In spite of the deteriorating South African growth outlook and increased competitive pressures in our markets, we are on track to deliver 2018 results in line with our communicated targets', Moyo concluded.

Old Mutual Limited remains one of the largest custodians of customers' savings and recognises its deep responsibility to manage and grow clients' assets in a sustainable manner. As a responsible business committed to contributing significantly to the inclusive growth and wellbeing of the communities and economies in which it operates in, Old Mutual will continue to make a positive socio-economic impact.

* Subject to the requisite SA Reserve Bank approval required for special dividends.

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