Wrap Text
Unaudited Interim results and interim dividend declaration for the six months ended 30 June 2024
Old Mutual Limited
Incorporated in the Republic of South Africa
Registration number: 2017/235138/06
ISIN: ZAE000255360
LEI: 213800MON84ZWWPQCN47
JSE Share Code: OMU
LSE Share Code: OMU
NSX Share Code: OMM
MSE Share Code: OMU
ZSE Share Code: OMU
("Old Mutual" or "Company" or "Group")
Ref: 61/24
26 September 2024
Interim results announcement: Unaudited interim results and interim dividend declaration
for the six months ended 30 June 2024
A message from the Chief Executive Officer
We are pleased with the solid performance delivered while investing for the future. Adjusted headline earnings, an
important metric for distributable earnings, grew by 3% supported by a robust 14% increase in shareholder investment
returns due to improved performance in South African equities. Adjusted headline earnings per share increased by 7%
to 73.5 cents bolstered by the R1.5 billion share buyback executed in 2023.
Return on net asset value increased by 70 bps to 12.6%, driven by the growth in earnings and capital optimisations.
The return on net asset value excluding new growth initiatives increased by 210 bps to 15.5% which is within our
medium-term target range of cost of equity plus 2% to 4%.
Operating environment
Positive investor sentiment on South Africa following the general election outcome and the forecasted policy rate
cuts reset the base case for growth during the second quarter of the period under review. While business and consumer
confidence remains low, there has been a slight improvement in the period. Significant currency depreciation and inflation
in our Africa regions added strong headwinds to the operating environment.
Despite the complexity in the operating environment, we increased our life sales by 6% and grew our gross written
premiums by 9%. Positive market performance led to a 5% rise in funds under management. Gross flows increased by 7%,
with net client cash flow improving by 56%.
In an increasingly competitive environment, our continued investment in new growth engines and technology
modernisation reflects our intention to future-proof the business and achieve our victory condition to be our customers' first
choice to sustain, grow and protect their prosperity.
Key performance overview
Life APE sales increased by 6% to R6 598 million benefiting from strong growth in risk sales across all channels in
Mass and Foundation Cluster, and higher guaranteed annuities sales, better recurring premium savings sales in Personal
Finance. This was partially offset by lower group risk sales in Old Mutual Corporate due to the non-repeat of a large risk
product deal secured in the prior period.
Gross written premiums increased by 9% to R13.8 billion, supported by strong new customer acquisitions and intermediary
productivity in Old Mutual Insure, particularly in the Specialty business, and better renewals in the general and
health insurance businesses in Kenya and Uganda.
Results from operations declined by 3%, with our short-term results impacted by our deliberate strategy to invest in
new growth engines. Excluding new growth engines, results from operations increased by 4%. This was driven by improved
performance in the Mass and Foundation Cluster and Old Mutual Insure, partially offset by lower life profits in Personal
Finance mainly due to lower economic variances and an increased number of large claims. The disposable income of our
customers in the Mass and Foundation Cluster remained constrained and we continue to monitor persistency trends.
We delivered value of new business margin of 2.4% which is well within our medium-term target range of 2% to 3%. Coming
from a high base in the first half of 2023, value of new business of R858 million was lower by 8%. Our growth trend in
value of new business remains strong as evidenced by a compound annual growth rate of 10% from June 2022, with
continued market share growth in retail from Mass and Foundation Cluster.
Gross flows increased by 7% to R101 billion, driven by higher inflows in local collective investment schemes, Private
Clients and the offshore platform in Wealth Management. New mandates secured in Malawi and strong unit trust flows in
Uganda also contributed to higher gross flows.
Net client cash outflows improved by a material 56% to R3.2 billion, reflecting a positive turnaround in Wealth Management
due to robust inflows and the non-repeat of higher outflows recorded in the prior period. This was partially offset by
higher retrenchment benefit outflows in Old Mutual Corporate and significant outflows in Old Mutual Investments'
money market and low margin indexation funds where large investors continue to adjust their investment strategies.
Funds under management grew by 5% to R1.4 trillion largely due to improved equity market performance.
The Group return on embedded value remained strong at 12.5% supported by higher expected returns, profitable new
business written and positive risk experience variances, partially offset by worse persistency and once-off expense
experience.
Our balance sheet remained robust with a Group shareholder solvency ratio of 188% for the half year ended 30 June 2024,
which is well within our target range of 170% to 200%. Old Mutual Life Assurance Company (South Africa) Limited's (OMLACSA)
regulatory solvency ratio remained strong at 201% and within our target range of 175% to 210%. As part of our debt
management and cost of capital optimisation strategy, the total value of subordinated debt in issue was reduced to
R9.5 billion with OMLACSA issuing R1 billion and redeeming R2 billion in subordinated debt.
Our dividend policy targets an ordinary dividend cover range of 1.5 times to 2.0 times adjusted headline earnings.
Considering our strong liquidity levels and well capitalised balance sheet, the Old Mutual Board declared an interim
dividend of 34 cents per share, which amounts to 6% growth and a dividend cover of 2.0 times.
Headline earnings were up by 34% mainly as a result of increased profits from our Zimbabwe operations which we exclude
from adjusted headline earnings due to barriers to access capital.
We are evaluating the functional currency of the Zimbabwean banking business, CABS, as we see a shift in the banking
environment towards US dollar denominated loans. If we change the functional currency from ZiG to US dollars, we do
not expect CABS to continue reporting the same level of foreign exchange gains, and we expect reduced transfers to the
foreign currency translation reserve in the future. This will substantially reduce IFRS profits and headline earnings
but will have no impact on adjusted headline earnings.
Strategic overview
I am proud of the continued progress in the disciplined execution of our strategy and considered capital allocation.
This has translated into the successful completion of industry testing and integration of OM Bank into the National
Payment System in line with the Prudential Authority's section 17 conditions.
We have made progress in our perimeter review in Old Mutual Africa Regions, setting us on the path to achieve our ambition
to be in the top three market positions. We remain focused on simplifying our IT estate and delivering efficiencies
following the successful Greenlight migration in 2023.
We expect the delivery of these strategic initiatives to significantly enhance our competitive strengths, revenue growth,
capital efficiencies and operating margins in the medium to long term.
Growing and protecting the core
With our life IT estate now moved to the cloud, our focus is on cost optimisation and leveraging the potential scale
benefits. We continue to reduce our legacy estate by decommissioning and migrating to new platforms across our technology
systems. The build phase of our new Savings and Income proposition is materially complete, with national rollout
planned for 2025.
From a customer and adviser experience perspective, we recorded a slight decrease in our Net Promoter Score to 68,
marginally down from 70 at December 2023. Despite continued service improvement, customers' perceptions of Old Mutual
was negatively impacted by the social media case in March 2024.
Unlocking new growth engines
Our South African bank initiative, OM Bank, remains a key priority of our strategy to build an integrated financial
services business. The technical and operational progress is ahead of schedule, with successful industry testing and
integration into the National Payments System already completed. Pending the remaining Section 17 regulatory conditions,
unrelated to technical readiness, we anticipate the public launch in Q1 2025. For the rest of the year, we are focused
on meeting the remaining Section 17 conditions and continue refining systems and capabilities to ensure a seamless launch.
Across our Africa regions, the execution of our perimeter review supported disciplined capital allocation and shareholder
value creation. We concluded the exit of the life and general insurance lines of business in Nigeria and Tanzania. The
turnaround in Property and Casualty in Southern and East Africa supported by actions to improve claims management and
experience-based pricing led to improved underwriting margins in these regions. This was more than offset by a negative
net underwriting margin in West Africa. Excluding Nigeria there was improvement in the net underwriting margin. Our
'pivot to corporate' strategy continues to yield results with increased profitability in our Life insurance business across
East and West Africa.
Sustainable value creation
Sustainability is integral to our business, driving positive economic and social outcomes while delivering value. As a
leader in responsible investing, Old Mutual Investment Group integrates ESG factors across investment decisions, practices
active stewardship, and develops return-seeking and sustainability focused products. Old Mutual Investment Group was
recognised as the Leading Sustainable African Investment Manager by the European Magazine Awards for the third
consecutive year and received the Best Asset Manager - Sustainable Investing in South Africa award.
Outlook for H2 2024
We are encouraged by the cautiously optimistic outlook in South Africa following the formation of the Government of
National Unity. Growth is expected to be muted with GDP forecasted between 1% and 1.4%. Moderate inflation outlook and
the 25 bps rate cut, the first since 2020, ushering in an interest rates easing cycle from the latter half of the year
should bolster consumer spending, alleviate pressure on households' disposable income and boost sentiment.
The outlook for our Africa regions suggests a challenging yet slightly improved economic environment. Growth for Sub-Saharan
Africa is expected to rise to between 3.5% and 3.7%, reflecting gradual recovery despite continued elevated debt levels, high
inflation, external financing pressures and climate change impacts in some parts of the regions.
East Africa's economies are showing resilience with growth projected at approximately 5.1% in 2024, while inflation is likely
to moderate by the end of the year. We expect fiscal risks in East and West Africa to remain largely contained either through
debt restructuring or recourse to debt markets.
Iain Williamson
Chief Executive Officer of Old Mutual
Group highlights
Key performance indicators
Rm (unless otherwise stated) H1 2024 H1 2023 FY 2023 Change
Results from operations 4 243 4 366 8 343 (3%)
Adjusted headline earnings 3 267 3 160 5 861 3%
Headline earnings(1) 5 825 4 358 7 380 34%
IFRS profit after tax attributable to equity holders of the parent(1) 5 241 4 354 7 065 20%
Return on net asset value (%) 12.6% 11.9% 11.1% 70 bps
Return on net asset value excluding new growth initiatives (%)(2) 15.5% 13.4% 13.1% 210 bps
Group equity value(3) 89 761 91 624 90 114 (0.4%)
Discretionary capital (Rbn)(3) 1.4 1.0 1.1 40%
Shareholder solvency ratio (%)(1),(3),(4) 188% 186% 190% (200 bps)
Regulatory solvency ratio (%)(1),(3) 175% 186% 177% (200 bps)
Dividend cover (times) 2.0 2.0 1.5 -
Per share measures
Cents H1 2024 H1 2023 FY 2023 Change
Results from operations per share(5) 95.5 95.1 183.6 0.4%
Adjusted headline earnings per share(6) 73.5 68.8 129.0 7%
Headline earnings per share(1) 133.6 96.8 165.5 38%
Basic earnings per share(1) 120.2 96.7 158.4 24%
Total dividend per share 34 32 81 6%
Interim 34 32 32 6%
Final 49
Group equity value per share(3),(7) 1 873.5 1 880.6 1 880.9 (0.4%)
Supplementary performance indicators
Rm (unless otherwise stated) H1 2024 H1 2023 FY 2023 Change
Life and Savings
Life APE sales 6 598 6 249 14 604 6%
Value of new business 858 937 1 921 (8%)
Value of new business margin (%) 2.4% 2.6% 2.3% (20 bps)
Life and Savings and Asset Management
Gross flows(8) 101 487 95 160 198 863 7%
Net client cash flow (3 165) (7 254) (7 510) 56%
Funds under management (Rbn)(3) 1 394.4 1 300.4 1 331.0 5%
Banking and Lending
Loans and advances(3) 19 919 19 255 19 391 3%
Net lending margin (%) 8.3% 10.7% 11.3% (240 bps)
Property and Casualty
Gross written premiums 13 764 12 591 25 513 9%
Insurance revenue 13 336 12 245 25 204 9%
Net underwriting margin (%) 4.4% 0.2% 0.1% 420 bps
(1) These metrics include the results of Zimbabwe. All other key performance indicators exclude Zimbabwe
(2) Return on net asset value excluding new growth initiatives excludes adjusted headline earnings and equity impacts as
well as any expected investment over the next 12 months into these initiatives. The June 2023 core return on net asset
value of 13.1% has been re-presented as return on net asset value excluding new growth initiatives to 13.4%
(3) The % change was calculated with reference to FY 2023
(4) Shareholder solvency ratio is a new key performance indicator which represents the regulatory solvency ratio
adjusted for material differences in the way the Group manages capital and is consistent with the basis on which the
current Old Mutual target range was established
(5) Results from operations per share is calculated as results from operations divided by the adjusted weighted average
number of shares. The adjusted weighted average number of shares is adjusted to reflect the Group's BEE shares and
retail scheme shares as being in the hands of third parties, consistent with the treatment of the related revenue in
results from operations. Adjusted weighted average number of shares used is 4 443 million (H1 2023: 4 590 million)
(6) Adjusted headline earnings per share is calculated with reference to adjusted weighted average number of ordinary
shares
(7) Group equity value per share is calculated with reference to closing number of ordinary shares. Closing number of
shares used in the calculation of the Group equity value per share is 4 791 million (FY 2023: 4 791 million)
(8) The comparative amounts for Old Mutual Investments were re-presented to include institutional products that are an
alternative to bank deposits on a net flow basis
Interim results announcement
This results announcement is the responsibility of the Old Mutual Board. It is only a summary of the information contained
in the Group Interim results for the six months ended 30 June 2024 (Interim results). The Interim results can be found on
our website at https://www.oldmutual.com/investor-relations/reporting-centre/reports. This results announcement has not been
reviewed or reported on by Old Mutual's independent joint auditors.
Any investment decisions by investors and/or shareholders should be based on consideration of the Interim results
accessible via the JSE cloudlink https://senspdf.jse.co.za/documents/2024/jse/isse/OMUE/HY24Result.pdf and on our website
above as the information in this announcement does not provide all the details. The Interim results are available for
inspection at the registered office of the Company and the Sponsors, at no charge during office hours from the date of
this announcement for a period of 30 days.
Interim dividend declaration
The Old Mutual Board declared an interim dividend of 34 cents per share. This results in a dividend cover of 2.0 times
for the half year ended 30 June 2024, which is in line with Old Mutual's dividend cover target range of 1.5x to 2.0x
adjusted headline earnings over the financial year. The growth in the interim dividend from the prior period was due to
our resilient operational performance and strong capital and liquidity position. The interim dividend will be paid out of
distributable income reserves to all ordinary shareholders recorded on the record date.
Shareholders on the London, Malawian and Namibian registers will be paid in the local currency equivalents of the interim
dividend. Shareholders on the Zimbabwean register will be paid the equivalent of the interim dividend in United States
dollars.
Old Mutual's income tax number is 9267358233. The number of ordinary shares in issue in the Company's share register
at the date of declaration is 4 790 906 428.
JSE, MSE, NSX, ZSE LSE
Declaration date Thursday, 26 September 2024 Thursday, 26 September 2024
Finalisation announcement and exchange rates announced Tuesday, 1 October 2024 Tuesday, 1 October 2024
Transfers suspended between registers Tuesday, 1 October 2024 Tuesday, 1 October 2024
Last day to trade cum dividend for shareholders on the
South African register and Malawi, Namibia and Zimbabwe
branch registers Tuesday, 15 October 2024 N/A
Ex-dividend date for shareholders on the South African
register and Malawi, Namibia and Zimbabwe branch registers Wednesday, 16 October 2024 N/A
Last day to trade cum dividend for shareholders on
the UK register N/A Wednesday, 16 October 2024
Ex-dividend date for shareholders on the UK register N/A Thursday, 17 October 2024
Record date (South African register and Malawi, Namibia Close of business on
and Zimbabwe branch registers) Friday, 18 October 2024 N/A
Record date (UK register) N/A Friday, 18 October 2024
Transfers between registers restart Opening of business on Opening of business on
Monday, 21 October 2024 Monday, 21 October 2024
Interim dividend payment date Monday, 21 October 2024 Friday, 15 November 2024
Share certificates for shareholders on the South African register may not be dematerialised or rematerialised between
Wednesday, 16 October and Friday, 18 October 2024, both dates inclusive. Transfers between the registers may not take
place between Tuesday, 1 October and Friday, 18 October 2024, both days inclusive. Trading in shares held on the Namibian
branch register through Old Mutual (Namibia) Nominees Proprietary Limited will not be permitted between Tuesday,
1 October and Friday, 18 October 2024, both days inclusive.
The dividend for South African shareholders will be subject to dividend withholding tax of 20% for all shareholders
who are not exempt from or do not qualify for a reduced rate of withholding tax. International shareholders who are not
exempt or are not subject to a reduced rate in terms of a double taxation agreement will be subject to dividend
withholding tax of 20%. The net dividend payable to shareholders subject to withholding tax of 20% amounts to 27.20000
cents per ordinary share. Distributions made through the dividend access trust or similar arrangements established in a
country will not be subject to South African withholding tax, but may be subject to withholding tax in the relevant country.
We recommend that shareholders consult with their tax adviser regarding the in-country withholding tax consequences.
Shareholders that are tax residents in jurisdictions other than South Africa may qualify for a reduced rate under a
double taxation agreement with South Africa. To apply for this reduced rate, non-South African taxpayers should complete
and submit a declaration form to the respective registrars. The declaration form can be found at:
https://www.oldmutual.com/investor-relations/dividend-information/
Notes to editors
A webcast of the presentation for the 2024 Interim results and Q&A will be broadcast live on Thursday, 26 September
2024 at 11:00 South African time on the Investor Relations website: https://www.oldmutual.com/investor-relations/.
Analysts and investors who wish to participate in the call may do so using the following link or telephone numbers below:
https://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=8554084&linkSecurityString=23421b6d3c
South Africa +27 10 500 4108
UK +44 203 608 8021
Australia +61 73 911 1378
USA +1 412 317 0088
International +27 10 500 4108
Replay access code 46631
To access the replay using an international dial-in number, please select the link below:
https://services.choruscall.com/ccforms/replay.html
The replay will be available until 1 October 2024.
Sponsors
JSE equity sponsor: Tamela Holdings (Proprietary) Limited
JSE debt sponsor: Nedbank Corporate and Investment Banking, a division of Nedbank Limited
NSX: PSG Wealth Management (Namibia) (Proprietary) Limited
ZSE: Imara Capital Zimbabwe plc
MSE: Stockbrokers Malawi Limited
Enquiries
Investor Relations
Langa Manqele
M: +27 (0)82 295 9840
E: investorrelations@oldmutual.com
Communications
Wendy Tlou
M: +27 (0)82 906 5008
E: oldmutualnews@oldmutual.com
About Old Mutual
Old Mutual is a premium African financial services group that offers a broad spectrum of financial solutions to retail
and corporate customers across key market segments in 12 countries. Old Mutual's primary operations are in Africa and
it has a niche business in China. With over 179 years of heritage across sub-Saharan Africa, Old Mutual is a crucial part
of the communities it serves as well as broader society on the continent. For further information on Old Mutual and its
underlying businesses, please visit the Corporate website at www.oldmutual.com.
Date: 26-09-2024 07:40:00
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