- Preliminary Results 2009
Old Mutual plc Preliminary Results for the year ended 31 December 2009 and Strategy Update
Focus on Long-Term Value Creation
|Adjusted operating profit before tax (IFRS basis)*||
|Adjusted operating earnings per share (IFRS basis)**||
|Adjusted MCEV per share||
|IFRS book value per share||
|Funds under management||
Strong performance in challenging year
- Substantial progress in delivering against the five strategic priorities set last year
- Positive second half sales momentum with fourth quarter life APE sales up 29%, strongest quarter for the LTS business for at least 2 years
- Long-Term Savings (LTS): IFRS pre-tax AOP up 52% to £685 million (2008: £452 million) reflecting turnaround in US Life
- Nedbank: resilient performance in tough market and improved capital strength
- US Asset Management: funds under management at 31 December 2009 up 9% to $261 billion
- FGD surplus at 31 December 2009 increased to £1.5 billion (31 December 2008: £0.7 billion)
- Increase in IFRS book value and MCEV per share during the year
- Return to dividend payments - Board recommending 1.5p final dividend for 2009 with scrip alternative
Clear strategy focused on building a long-term savings, protection and investment group
- Anticipated partial IPO of US Asset Management to fund growth, enhance market profile and provide valuation visibility
- Group-wide cost saving target of £100 million per annum by the end of 2012; further cost and revenue synergies identified
- Specific cost saving and return on equity targets for LTS businesses; overall LTS return on equity target of 16%-18% by the end of 2012
- Further rationalisation planned, including exiting markets with sub-scale operations or no prospect of meeting 15% RoE hurdle
- Reducing exposure to US by exploring disposal of US Life business following completion of turnaround
- Proceeds from the rationalisation and from retained earnings expected to be used to reduce Group debt by at least £1.5 billion
Julian Roberts, Group Chief Executive, commented:
"Our operating results for 2009 are ahead of the previous year despite the highly volatile markets over the period. We benefited from improved market conditions in the second half, which resulted in greater demand for equity-based products from our clients, but the improvement also reflects our aggressive expense management as part of our drive to improve business performance. In the fourth quarter we saw especially good sales growth, with the strongest LTS quarterly sales performance for two years.
"During 2009 our priority was to stabilise the business by addressing the issues in US Life and Bermuda and restoring the Group's capital and liquidity positions, while implementing more effective governance and controls. With substantial improvements in place, we started the process of simplifying our portfolio of businesses and improving our operational performance, while further examining the Group to determine its optimal future shape. We are today setting out a clear strategy to build a cohesive long-term savings, protection and investment group by leveraging the strength of our capabilities in South Africa and around the world.
"We will rigorously drive performance improvement across all of our businesses and have introduced challenging three-year cost saving and return on equity targets. We have also identified specific synergy opportunities from our businesses working together. We anticipate further rationalisation of our activities and will exit markets where we do not have scale or our operations are not capable of achieving a return on equity of 15% over the next three years. We are exploring the disposal of US Life and anticipate a partial IPO of US Asset Management. However, we will only execute transactions when markets allow us to maximise value for shareholders.
"We are determined that over the medium to long-term these measured and fully-funded actions will provide considerable value for shareholders. Together with further growth in assets under management as market conditions continue to improve, these actions are expected to have a significantly positive impact on underlying operating profitability and return on equity. Accordingly, the Board has every confidence in the Group's prospects, as reflected by the resumption of a dividend."
|Patrick Bowes||UK||+44 (0)20 7002 7440|
|Deward Serfontein||SA||+27 (0)82 810 5672|
|Matthew Gregorowski||UK / SA||+44 (0)20 7002 7133|
|+44 (0)7748 183 834|
|Don Hunter (Finsbury)||UK||+44 (0)20 7251 3801|
Unless otherwise stated, wherever the terms asterisked in the Financial Highlights are used, whether in the Financial Highlights, the Group Chief Executive's Statement, the Group Finance Director's Review or the Business Review, the following definitions apply:
* For long-term business and general insurance businesses, adjusted operating profit is based on a long-term investment return, includes investment returns on life funds' investments in Group equity and debt instruments, and is stated net of income tax attributable to policyholder returns. For the US Asset Management business, it includes compensation costs in respect of certain long-term incentive schemes defined as non-controlling interests in accordance with IFRS. For all businesses, adjusted operating profit excludes goodwill impairment, the impact of acquisition accounting, put revaluations related to long-term incentive schemes, profit/(loss) on disposal of subsidiaries, associated undertakings and strategic investments, dividends declared to holders of perpetual preferred callable securities, and fair value (profits)/losses on certain Group debt movements.
** Adjusted operating earnings per ordinary share is calculated on the same basis as adjusted operating profit. It is stated after tax attributable to adjusted operating profit and non-controlling interests. It excludes income attributable to Black Economic Empowerment (BEE) trusts of listed subsidiaries. The calculation of the adjusted weighted average number of shares includes own shares held in policyholders' funds and BEE trusts.
This announcement has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. It should not be relied on by any other party or for any other purpose.
This announcement contains forward-looking statements with respect to certain of Old Mutual plc's plans and its current goals and expectations relating to its future financial condition, performance and results. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that are beyond Old Mutual plc's control, including, among other things, UK domestic and global economic and business conditions, market-related risks such as fluctuations in interest rates and exchange rates, policies and actions of regulatory authorities, the impact of competition, inflation, deflation, the timing and impact of other uncertainties or of future acquisitions or combinations within relevant industries, as well as the impact of tax and other legislation and other regulations in territories where Old Mutual plc or its affiliates operate.
As a result, Old Mutual plc's actual future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in Old Mutual plc's forward-looking statements. Old Mutual plc undertakes no obligation to update any forward-looking statements contained in this announcement or any other forward-looking statements that it may make.
Notes to Editors:
A webcast of the presentation and Q&A will be broadcast live at 9:00am (GMT), 10:00am (CET), 11:00am (South African time) today on the Company's website www.oldmutual.com. Analysts and investors who wish to participate in the call should dial the following numbers:
|UK (toll-free)||0500 5510 77|
|US (toll-free)||+1 877 491 0064|
|Sweden (toll-free)||0200 8876 51|
|South Africa (toll-free)||0800 9914 68|
|International||+44 (0)20 7162 0077|
Playback (available until midnight on 25 March 2010), using pass-code 859189:
|UK (toll-free)||0800 3581 860|
|US (toll-free)||+1 888 365 0240|
|International||+44 (0)20 7031 4064|
Copies of these Preliminary Results, together with high-resolution images and biographical details of the Executive Directors of Old Mutual plc, are available in electronic format to download from the Company's website at www.oldmutual.com.
A Financial Disclosure Supplement relating to the Company's Preliminary Results can be found on the website. This contains key financial data for 2009 and 2008.