Old Mutual Emerging Markets (OMEM) today announced pre-tax Adjusted Operating Profit (AOP) of R13.3 billion for the year ended 31 December 2017, despite the tough operating environment. This result signifies a 5% increase on the prior year profits and reflects the exceptional growth in Old Mutual Insure (previously Mutual & Federal) and the Rest of Africa business.
Peter Moyo, OMEM CEO and CEO designate of Old Mutual Limited (OML), commented: “Our business performed well in a tough economic and competitive environment, thanks to the momentum we gained as we continued to make progress on our eight battlegrounds.”
He added that “following the approval by the Competition Commission to the Competition Tribunal for the newly incorporated Old Mutual Limited to acquire Old Mutual plc with the conditions agreed between OMEM and the Economic Development Department (EDD), we are on track for independence through the primary listing of OML on the Johannesburg Stock Exchange.”
Three critical public interest issues – enterprise and supplier development, employment within our ecosystem and BEE ownership – are the focus of the agreement with the EDD.
OML will also have a standard listing on the London Stock Exchange and secondary listings on stock exchanges in Malawi, Namibia and Zimbabwe.
A key step towards the listing will be the publishing of the Pre-Listing Statement, which will provide more information about OML, including its investment case, historic performance and associated risks.
Key Results Highlights for the year ended December 2017:
* IFRS profit up 46% to R10,210m (2016: R6,999m)
* Adjusted Operating Profit (AOP) of R13,326m up 5% (2016: R12,731m)
* Adjusted Return on Equity (ROE) of 20.6%: (2016: 21.6%)
* OMLAC(SA) estimated SAM ratio of 243%
According to Moyo, 2017 was a tale of two halves with good growth in gross flows in the Mass and Foundation Cluster, Wealth and Investments and in Latin America during the second half of 2017.
“We delivered full year Net Client Cash Flow (NCCF) of R14.5 billion. Particularly pleasing was the positive NCCF from Wealth and Investments of R14.1 billion, compared to R1.8 billion at the half year. Funds under management closed at an impressive R1.2 trillion.”
Moyo says it has been a busy but exciting period at Old Mutual as it prepares for the listing of OML. “We have agreed heads of terms of the new relationship agreement with Nedbank, in which OML will be retaining a strategic shareholding of 19.9%.”
OML’s investment case is strong, he believes. “Our business remains highly cash generative and is well-positioned, in the right markets, to drive added value from our franchises. We are privileged to have a business with a robust capital and liquidity position, which will further benefit from residual OM plc net assets following the managed separation.
“We are targeting compounded average annual growth in our results from Operations of Nominal GDP + 2% over the three years to 2020 and a sustainable Return on Net Asset Value at our average cost of equity + 4%. We will deliver this through active and comprehensive management actions which will see us win on our strategic battlegrounds. One of the key components of this is a programme designed to see OML achieve R1.0 billion of pre-tax run rate cost savings by the end of 2019.
“I am encouraged by the progress we have made since I rejoined. Exciting opportunities lie ahead for us as an independently listed business and we look forward to delivering sustainable profit growth and returns for our shareholders, and making positive contributions to the societies in which we operate,” concludes Moyo.