To view the PDF file, sign up for a MySharenet subscription.

OML - Old Mutual Plc - Old Mutual plc Interim Management Statement for the

Release Date: 10/05/2012 08:00
Code(s): OML
Wrap Text

OML - Old Mutual Plc - Old Mutual plc Interim Management Statement for the three months ended 31 March 2012 OLD MUTUAL PLC ISIN CODE: GB00B77J0862 JSE SHARE CODE: OML NSX SHARE CODE: OLM ISSUER CODE: OLOML 10 May 2012 Old Mutual plc Interim Management Statement For the three months ended 31 March 2012 Business improvement continues - Funds under management in core operations up 6% to GBP284.2 billion - NCCF of GBP3.7 billion, USAM NCCF GBP2.5 billion - Sale of Nordic completed for GBP2.1 billion Julian Roberts, Group Chief Executive, commented: "With growth in funds under management and further strategic progress, overall this has been another good quarter for Old Mutual. We have seen positive net client cash flows throughout the Group including at USAM where investment performance is improving. "Sales continued to be strong in Emerging Markets, with another excellent performance in the South African mass foundation cluster. The prolonged turmoil in the eurozone has continued to undermine investor confidence creating a subdued retail investment market in Europe as a whole. "Nedbank maintained the momentum it established last year by delivering positive margins, strong growth in non-interest revenue and continued reductions in credit losses. "Our strong franchises and significant exposure to higher growth emerging markets underpin prospects for the year as a whole." Enquiries External communications Patrick Bowes UK +44 (0)20 7002 7440
Investor relations Kelly de Kock SA +27 (0)21 509 8709
Media William Baldwin-Charles +44 (0)20 7002 7133 +44 (0)7834 524 833
GROUP RESULTS Group highlights for the three Q1 2012 Q1 2011 % of Q1 2011 months to (constan openin (as 31 March 2012 (GBPbn) t g reported currency FUM(1) ) basis)
Net client cash flow Long-Term Savings 0.8 0.7 3% 0.7 Nedbank 0.4 0.2 16% 0.2 US Asset Continuing 2.6 (0.6) 8% (0.6) Management operations(2) Held for sale or (0.1) (3.2) (2)% (3.1) disposed(2) NCCF from core operations 3.7 (2.9) 6% (2.8) Group highlights at 31 March 2012 31 31 % 31 % (GBPbn) March December change December chang 2012 2011 2011 (as e (constan reported t ) currency
basis) Funds under management Long-Term Savings 116.1 109.8 6% 108.5 7% Nedbank 10.6 9.9 7% 9.7 9% Mutual & Federal 0.2 0.2 - 0.2 - US Asset Continuing 138.3 125.3 10% 128.8 7% Management operations(2) Held for sale or 19.0 19.5 (3)% 20.0 (5)%
disposed(2) FUM from core operations 284.2 264.7 7% 267.2 6% Group highlights for the three Q1 2012 Q1 2011 % Q1 2011 % months to (constan change (as chang 31 March 2012 (GBPm) t reported e currency ) basis)
Life assurance sales (APE) Emerging Markets 116 106 10% 115 1% Wealth Management 153 193 (21)% 193 (21)% Total life assurance sales 269 299 (10)% 308 (13)% (APE)
Non-covered sales(3) Emerging Markets 1,941 1,403 38% 1,527 27% Wealth Management 1,117 1,168 (4)% 1,168 (4)% Long-Term Savings 3,058 2,571 19% 2,695 13% US Asset Continuing 271 383 (29)% 375 (28)% Management operations(2) Held for sale or 73 173 (58)% 170 (57)% disposed(2)
Total non-covered sales 3,402 3,127 9% 3,240 5% Note percentage movements on reported figures in the above table are based on rounded sterling numbers. 1) Annualised NCCF 2) Continuing operations exclude the results of OMCAP, Lincluden and Dwight, which were held for sale or disposed at 31 March 2012 3) Non-covered sales includes mutual funds, unit trust and other sales Overview Unless otherwise stated, the figures given throughout this document are for the three months to 31 March 2012 (the period) and comparative figures are for the same period in 2011 (the comparative period). Comparative figures presented in GBP are on a constant currency basis. Group funds under management Funds under management (FUM) increased by GBP19.5 billion (7%) from 31 December 2011 to GBP284.2 billion at 31 March 2012. Equity markets contributed GBP16.9 billion of the GBP19.5 billion increase, with the S&P 500 up 12%, the FTSE 100 up 4% and the JSE ALSI up 5%. In our Long-Term Savings division (LTS) FUM increased 6% to GBP116.1 billion. Emerging Markets increased by 3% to GBP52.7 billion, due to increased net client cash flows (NCCF) supported by strong non-covered sales and a general improvement in markets. Wealth Management FUM increased 8% from GBP58.6 billion at 31 December 2011 to GBP63.4 billion at 31 March 2012, also driven by positive market movements and net client cash inflows. UK FUM increased 6% over the period to GBP35.6 billion, with UK Platform FUM of GBP20.4 billion up 15% from 31 March 2011 and up 8% from 31 December 2011. FUM from continuing operations1 at USAM increased 10% to GBP138.3 billion, of which 8% was due to positive market movements and 2% was due to improvements in NCCF. Long-Term Savings Net client cash flow LTS achieved positive NCCF of GBP0.8 billion (Q1 2011: GBP0.7 billion), driven by strong inflows in Latin America and large deals secured into Emerging Markets` OMIGSA boutiques. Wealth Management NCCF was GBP0.5 billion (Q1 2011: GBP1.0 billion), with gross inflows of GBP2.6 billion (Q1 2011: GBP2.9 billion). NCCF for the UK Platform fell to GBP0.5 billion from GBP1.0 billion, as continued market volatility weakened investor confidence. Sales LTS sales on an annual premium equivalent (APE) basis decreased by 10% to GBP269 million, with weak UK and European sales partially offset by strong regular premium sales in Emerging Markets. LTS non-covered sales, including unit trust and mutual fund sales, increased by 19% to GBP3,058 million. APE sales in Emerging Markets increased by 10% to GBP116 million, driven by growth of 17% in the Mass Foundation Cluster (MFC). Non-covered sales increased by 38% to GBP1,941 million, with strong unit trust and mutual fund sales in South Africa and Latin America. Other non-life sales were boosted by the inclusion of the other African countries (Kenya, Malawi, Zimbabwe and Swaziland) in Q1 2012 but not in the comparative period and significant inflows into OMIGSA`s Dibanisa boutique. Wealth Management APE sales decreased by 21% to GBP153 million, reflecting continued market volatility and weakening investor confidence. This has particularly impacted the single premium dominated propositions that we offer in most of our markets. Wealth Management sales were up 13% on Q4 2011. The UK Platform gross sales were GBP1.1 billion (Q1 2011: GBP1.4 billion). Wealth Management mutual fund and unit trust sales were down 4% to GBP1,117 million. We continue to make good progress on our preparations for the Retail Distribution Review (RDR), while waiting for the definitive rules to be finalised. In April we announced that we will be combining Old Mutual Asset Managers UK (OMAM UK) and Skandia Investment Group (SIG). US Asset Management Net client cash inflow from continuing business1 was GBP2.6 billion, with strong investment performance and reduced volatility in global markets. There was GBP0.1 billion of net outflows from USAM`s affiliates held for sale at 31 March 2012. Gross inflows(1) were GBP6.4 billion (Q1 2011: GBP4.2 billion), driven predominantly by sales from long-term fixed income products, while international value equities, global value equities, and emerging market equities also experienced strong sales. The fees on fixed income AUM tend to be lower than USAM`s overall average, though flows in this key asset class help further diversify our sources of earnings. Gross outflows1 were GBP3.8 billion (Q1 2011: GBP4.8 billion), largely in US equities. 1) Excludes results of OMCAP, Lincluden, and Dwight Asset Management, which were held for sale or disposed at 31 March 2012. US and international equity strategies outperformed benchmarks contributing to enhanced investment performance. For the one-year period ended 31 March 2012, 80% of assets in continuing business outperformed benchmarks (Q1 2011: 47%). Over the three- and five-year periods, 70% (Q1 2011: 48%) and 65% (Q1 2011: 57%) of assets outperformed benchmarks. The sale of USAM`s domestic retail business, OMCAP, to Touchstone Investments closed on 13 April 2012. USAM will retain assets through its role as sub- advisor to 13 of the 17 mutual funds reorganised into Touchstone Funds as part of the strategic transaction to exit the US mutual fund business. The previously announced sale of USAM`s fixed income affiliate, Dwight Asset Management Company LLC, to Goldman Sachs Asset Management is progressing as planned and is expected to close in Q2 2012. Nedbank Nedbank maintained the momentum established in 2011. Net interest income grew by 11% to R4.8 billion and non-interest revenue increased 15% to R4.1 billion. The credit loss ratio from impairments improved from 1.15% in the comparative period to 1.09%. Nedbank`s capital ratios remained well above current regulatory minima and expected Basel III regulatory minima, with a Core Tier 1 ratio of 10.7% (31 December 2011: 11.0%). The full text of Nedbank`s Q1 2012 trading update, released on 4 May 2012 and also announced by Old Mutual plc on the same day, can be accessed on Nedbank`s website at: http://www.nedbankgroup.co.za/financialQuaterlyResults.asp Mutual & Federal At Mutual & Federal gross written premiums for the period increased by 7% to R2.4 billion. The trading environment continued to be highly competitive. Capital and liquidity The pro-forma Financial Groups Directive (FGD) surplus was GBP2.7 billion at 31 March 2012 (31 December 2011: GBP2.0 billion). The profit on the sale of Nordic increased the FGD surplus by GBP1.6 billion, but this was partially offset by GBP1.2 billion committed by the Group to pay special and ordinary dividends on 7 June 2012. The remaining GBP0.3 billion increase in the FGD surplus was primarily due to improved surpluses in Bermuda, Emerging Markets and Wealth Management during the period, and the strengthening of the Rand from the year-end closing-rate. This was partially offset by increased capital requirements at Nedbank. All our businesses remained well capitalised throughout the period. At 31 March 2012, the holding company had total liquidity headroom of GBP3.4 billion (31 December 2011: GBP1.5 billion). From these resources the Group will pay GBP1.0 billion of special dividend and GBP0.1 billion in ordinary dividends on 7 June 2012. As part of the dividend payment process, the Group settled its intercompany loan with its South African holding company. The Group repaid the remaining Euro200 million of the Euro750 million euro bond during the period. We do not intend to repay further debt until after the payment of the special dividend. The Group has no exposure to the sovereign debt of Portugal, Italy, Ireland, Greece and Spain. The Group`s exposure to French sovereign debt is GBP2 million. Material events and transactions During the quarter, the Group completed the sale of its Nordic businesses for GBP2.1 billion. The Group also announced the combination of its Retail Europe businesses into Wealth Management. Share consolidation and share count A share consolidation was completed, in the period between close of business on Friday 20 April 2012 and opening of business on Monday 23 April 2012, reducing the number of shares in issue from 5,567 million to 4,871 million, with 7 new shares being issued in exchange for 8 existing shares. As a consequence the share consolidation reduces the weighted average number of shares (WANS) used to determine the Group`s per share calculations. The WANS for the market consistent embedded value (MCEV) and basic earnings per share (EPS) calculations reflects the share consolidation from the date it occurred. The WANS used for the adjusted operating EPS calculation will treat the share consolidation as having taken place at 1 January 2012 and is 4,756 million. The comparative period will be restated for adjusted operating EPS only. Dividends per share will be declared and calculated on the actual share count. As previously announced, we expect to set the 2012 interim dividend as 30% of the 2011 full-year dividend. The long-term rate for the long-term investment return (LTIR) for Emerging Markets will remain at 9% for 2012. The long-term rate for 2012 for Mutual & Federal and Wealth Management was reduced to 8.6% (2011: 9.0%) and 1.5% (2011: 2.0%) respectively. The reduction in nominal yields on fixed income and cash, and lower equity appreciation in recent years is likely to reduce the long- term rate in the future. Bermuda At 31 March 2012, the estimated gross cash cost of meeting fifth anniversary guarantees to Guaranteed Minimum Accumulation Benefit (GMAB) policyholders over the next two years reduced to approximately $463 million (31 December 2011: $689 million; 30 September 2011: $738 million) due to higher equity markets. In March 2012 Bermuda enhanced its hedging strategy by implementing an option-based hedging arrangement to protect the cost of meeting fifth anniversary payments. Notes to Editors: A conference call for analysts and investors will take place at 09.00 (UK time), 10.00 (Central European time) and 10.00 (South African time) today. Analysts and investors who wish to participate in the call should dial the following numbers quoting conference ID 311209#: UK and International (outside South Africa and US) +44 (0)20 3140 0668 South Africa +27 (0)11 019 7051 US +1 631 510 7490 Please dial in 10 minutes before the scheduled start time of the call to avoid excess holding. A replay facility will be available until midnight on 24 May 2012 on the following numbers, quoting access code 384194#: UK / standard international +44 (0)20 3140 0698 Copies of this update, 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 http://www.oldmutual.com. This Interim Management Statement has been prepared in accordance with section 4.3 of the Disclosure and Transparency Rules (DTR) and covers the period 1 January 2012 to 9 May 2012. The business update is included in this Interim Management Statement. A Disclosure Supplement relating to the Company`s business update can be found on our website. This contains key financial data for the three months ended 31 March 2012. Life assurance APE sales are calculated as the sum of (annualised) new regular premiums and 10% of the new single premiums written in an annual reporting period. Our joint ventures in India and China are not consolidated for APE purposes. Foreign exchange rates used for constant currency calculations Q1 2012 Q1 2011 Appreciation / FY 2011 Appreciation / (depreciation) (depreciation)
of local of local currency currency Rand Average 12.19 11.20 (9)% 11.64 (5)% Rate Closing 12.23 10.87 (13)% 12.56 3% Rate USD Average 1.57 1.60 2% 1.60 2% Rate Closing 1.60 1.61 1% 1.56 (3)% Rate Cautionary statement 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 and its subsidiaries` 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 subsidiaries 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 out 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. Interim Management Statement - Appendix Financial History Year Adjusted Reported Year-end Adjusted Dividend WANS (m) adjusted shares in Group per share operating issue MCEV per (p)(2) EPS (p)(1) less share treasury (p)(2)
shares (m) 2011 - after share 4,756 18.0 4,866 207.8(4) 5.71 consolidation(3) 2011 5,435 15.7 5,562 194.1 5.00 2010 5,359 14.3 5,456 202.2 4.00 2009 5,229 11.6 5,279 171.0 1.50 2008 5,230 14.9 5,277 117.6 2.45 2007 5,411 16.9 5,405 166.3 6.85 1) Latest reported figure 2) Dividends were paid on ordinary shares in issue (excluding treasury shares) at the Record Date. Adjusted Group MCEV per share is calculated on shares in issue (excluding treasury shares) at 31 December 2011 3) Figures were not reported for 2011 and have been included here for illustrative purposes only 4) Including proceeds from disposal of Nordic and payments of GBP1.0 billion special dividend Long-term Savings - Emerging Markets APE Sales Rm
By Cluster: Gross single Gross regular Total APE premiums premiums Q1 Q1 % Q1 Q1 % Q1 Q1 % `12 `11 `12 `11 `12 `11
South Africa Mass Foundation 7 14% 494 423 17% 495 424 17% Cluster 8 Retail Affluent 2,054 2,412 (15)% 340 312 9% 545 553 (1)% Corporate 1,081 (39)% 88 35 151% 154 143 8% 656 OMIGSA 700 (52)% - - n/a 33 70 (53)% 333
Total South Africa 4,200 (27)% 922 770 20% 1,227 1,190 3% 3,051 Rest of Africa 194 105% 109 48 127% 149 67 122% 397 Asia & Latin America* 64 58 10% 33 24 38% 39 30 30%
Total Emerging 3,512 4,452 (21)% 1,064 842 26% 1,415 1,287 10% Markets Rm
By Product: Gross single Gross regular Total APE premiums premiums Q1 Q1 % Q1 Q1 % Q1 Q1 % `12 `11 `12 `11 `12 `11
South Africa Savings 2,484 3,666 (32)% 427 382 12% 675 749 (10)% Protection - - n/a 495 388 28% 495 388 28% Annuity 567 534 6% - - n/a 57 53 8% Total South Africa 3,051 4,200 (27)% 922 770 20% 1,227 1,190 3% * Includes Mexico only Non-covered sales* including unit trust / mutual fund sales Rm
Unit trust/ mutual Other non-covered sales Total non-covered fund sales sales Q1 `12 Q1 % Q1 `12 Q1 `11 % Q1 `12 Q1 `11 %
`11 South 6,189 4,609 34% 10,846 7,513 44% 17,035 12,122 41% Africa Rest of 932 1,143 (18)% 575 66 >100% 1,507 1,209 25% Africa Asia & 4,727 3,242 46% 386 531 (27)% 5,113 3,773 36% Latin America Emerging 11,848 8,994 32% 11,807 8,110 46% 23,655 17,104 38% markets * Non-covered sales exclude Zimbabwe CABS deposits Long-term Savings - Wealth Management APE Sales GBPm Gross single Annualised regular Total APE premiums premiums
Life new Q1 `12 Q1 % Q1 Q1 % Q1 Q1 % business `11 `12 `11 `12 `11 UK market Pensions 475 569 (17)% 14 18 (22)% 62 75 (18)% Bonds 90 126 (29)% - - n/a 9 13 (31)% Protection - - n/a 2 2 - 2 2 - Savings - - n/a 1 2 (50)% 1 2 (50)% Total UK 565 695 (19)% 17 22 (23)% 74 92 (19)% Of which UK 506 611 (17%) 8 9 (11)% 59 70 (16)% Platform Of which UK 59 84 (30)% 9 13 (31)% 15 22 (29)% Legacy International Unit-linked 29 70 (59)% 3 9 (67)% 6 16 (63)% Bonds 282 314 (10)% 7 6 17% 35 37 (5)% Total 311 384 (19)% 10 15 (33)% 41 53 (23)% International Wealth Management Europe Unit-linked 245 306 (20)% 14 18 (22)% 38 48 (21)% Total Wealth 1,121 1,385 (19)% 41 55 (25)% 153 193 (21)% Management Unit trust / mutual fund sales GBPm Mutual fund new business Q1 `12 Q1 `11 % Institutional 230 56 >100% Mutual funds 316 470 (33)% ISA 245 324 (24)% Total UK market 791 850 (7)% Of which UK Platform 561 766 (27)% Of which UK Legacy 230 84 >100% International 317 309 3% Wealth Management Europe 9 9 - Total Wealth Management 1,117 1,168 (4)% Bermuda reserve development The sensitivity to capital markets on GMABs with UGO is highlighted in the table below, showing quarterly GMAB reserves and estimated fifth-anniversary guarantees over the past 21 months: $m Period UGO GMAB reserve Estimated UGO fifth-anniversary top-up 30 June 2010 996 775 30 September 2010 824 458 31 December 2010 660 334 31 March 2011 573 303 30 June 2011 620 346 30 September 2011 1,144 738 31 December 2011 1,035 689 31 March 2012 794 463 Date: 10/05/2012 08:00:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

Share This Story