Wrap Text
Annual Financial Report 2015
OLD MUTUAL PLC
ISIN CODE: GB00B77J0862
JSE SHARE CODE: OML
NSX SHARE CODE: OLM
ISSUER CODE: OLOMOL
Ref 267/16
13 April 2016
ANNUAL FINANCIAL REPORT 2015
Old Mutual plc (the “Company”) has today published its Annual Financial Report for 2015. Copies of
the Annual Financial Report and the Strategic Report for 2015 have been submitted to the National
Storage Mechanism and will shortly be available for inspection at www.hemscott.com/nsm.do.
These documents will also be available later today on the Company’s own website at
www.oldmutual.com. Copies of the Annual Financial Report may also be obtained from Investor
Relations, Old Mutual plc, 5th Floor, Millennium Bridge House, 2 Lambeth Hill, London EC4V 4GG or
Old Mutual Square, Isibaya Building, 2nd Floor, 93 Grayston Drive, Sandton 2196, South Africa.
The Company’s Annual General Meeting (“AGM”) will be held in the Presentation Suite, 2nd Floor,
Millennium Bridge House, 2 Lambeth Hill, London EC4V 4GG on Tuesday, 28 June 2016 at 11.00
a.m. (UK time). A further announcement will be made when the Notice of the AGM is published.
Today, Old Mutual plc also publishes its Positive Futures Plan, launched in 2015, which focuses on
two areas where it can have the greatest influence on sustainable growth; namely enabling financial
wellbeing and responsible investment. Activities in these areas include scaling up financial education
programmes and investing funds under management in the green economy and infrastructure. For
more details, read our ‘Positive Futures Plan’ and our ‘How we add value to Africa report’ at
www.oldmutual.com/reportingcentre
In compliance with the Company's obligations under DTR 6.3.5, additional information is set out below
which has been extracted in full unedited text from the Annual Financial Report. Accordingly, page
references and section numbers in the text below refer to page numbers and section numbers in the
Annual Financial Report. This extracted information should be read in conjunction with the
Company’s preliminary results announcement, which was released on 11 March 2016 and is available
on our website.
“Risks
The Group’s risk philosophy is to hold capital where the risks lie. We only take on risks that we can
understand, price appropriately and have the skills to monitor and manage.
The risk landscape is changing rapidly, particularly in context of the persistent volatile, uncertain,
complex and ambiguous (VUCA) macro-economic environment. In addition, our business is
experiencing a period of change as we execute the managed separation. Our approach to risk
management considers a mix of factors – capital, earnings, liquidity and reputation – whose relative
weights and degree of granularity vary according to the business and the external environment. We
make extensive use of multi-year scenario analysis to highlight creeping risks that may not be evident
over a one-year horizon. The results of our analysis has shown that the Group’s capital position is
resilient in times of stress. Our businesses in the UK and US explicitly seek market risk as part of their
business strategies and are exposed to secondary market risk arising from asset-based fees risk.
Therefore, the VUCA environment and market downturns will impact these businesses. Within OM
Asset Management (OMAM), the business is positioned to withstand market volatility to a certain
degree, due to the affiliate profit-share model that provides structural variability to expenses.
The economic outlook for South Africa and more generally for emerging markets has weakened. This
is due to a number of macro-economic reasons, including continuing concerns over China’s economic
growth and falling oil prices. In addition, ratings agencies have noted South Africa’s lower GDP
growth forecasts and political developments that threaten its commitment to fiscal discipline. This has
substantially increased the risk of a sovereign downgrade to below-investment grade status by at
least one major agency over the next year. As a result of this and wider political issues in the regions
where we operate, we are more explicit on political risk in our principal risks for 2016.
The rand depreciated significantly over 2015, reaching historic lows against the dollar and sterling. This
adversely impacts the translation of rand earnings (and balance sheet values) to sterling, and
consequently impacts cash remittances from businesses and sterling dividend affordability. The rand
remains volatile, with a high risk of further decline in the event of a sovereign downgrade –
emphasising currency translation (in particular, its impacts on cash remittances from our businesses)
as one of our principal risks.
Over the past few years the Group has been investing substantially – in growing the business through
acquisitions, and in IT initiatives driven by our commitment to improve the customer experience and
to respond to the breadth of regulatory change impacting all our businesses. Our focus now is on
execution and delivery of strategy, as we integrate several key acquisitions and progress a significant
number of large-scale change projects across the Group, in particular in Emerging Markets and
Nedbank. Strategic execution risk therefore remains a primary concern. The costs and timing of the
Old Mutual Wealth initiative for outsourcing technology and administration to IFDS have run
substantially ahead of initial estimates. In response to a detailed independent review we have
strengthened the governance of the project and increased oversight by both the Old Mutual Wealth
and Old Mutual plc Boards. We have also shared key learnings from the review across businesses
with similar initiatives.
As in previous years, it remains important to keep a close eye on the changing pattern of credit risk
across the Group’s businesses. Given the growth of our lending businesses in Emerging Markets and
the relative immaturity of these businesses relative to other parts of the Group such as Nedbank,
further development of credit risk oversight is a key priority. We are taking steps to strengthen
governance and oversight to ensure that we build sufficient expertise to manage credit risk as we
grow.
With the backdrop of highly volatile global conditions, regulatory, strategic change and where our
businesses are in the investment cycle, we have revised our capital management and dividend
policies, including setting of our Solvency II capital appetite. The new Group CEO has performed a
strategic review which leads the Group towards a managed separation – four independent businesses
operating in the capital markets and environment most appropriate to each of them. This brings a new
chapter for the Group and adds to the strategic execution risks in the short to medium term. The
Group’s underlying risk philosophy of holding capital where the risks lie, combined with strong
subsidiary Board governance processes, provides a stable basis from which to move to four
independent businesses. Extensive work has been carried out to consider the risks from the new
strategy, drawing on external advice on the various legal, regulatory and stakeholder issues as well
as stress and scenario testing to evaluate the cash and capital implications. We will continue to
adhere to the governance principles set out in the Group Operating Model during this transition,
however the practical application will evolve to remain fit for purpose. For more information on our
strategic direction, refer to the Strategy section on page 8.
Our principal risks have been determined by assessing the possible effects on our reputation, our
stakeholders, our earnings, capital and liquidity, and the future sustainability of our business. They are
summarised in the table below. They are closely monitored and overseen by Group management and
reported to the Board on a regular basis.
Our business is also affected by a number of risks inherent to the products we offer and the industry
we operate in, such as exposure to market levels, interest rates and insurance liability risk. These
drive a significant proportion of our capital requirements and earnings volatility exposure. Given the
nature of our product offering, market and environment risks are material: market movement impacts
on our asset-based fees, generated from client-selected investments, and credit risk within Nedbank
and Emerging Markets is correlated to the market conditions. You can read more information on our
risk and capital management and risk profile in this section, after the principal risks and uncertainties.
Additional risk information is disclosed in the consolidated financial statements, note F, on page 208.
1. Uncertain global economic conditions
How it impacts Old Mutual 2015 and beyond Risk mitigation and management
actions
Like all global financial services The global economic outlook We monitor multiple external
firms, the Group is exposed to remains uncertain, impacting all of economic factors and incorporate
global economic conditions. The the Group’s businesses. Volatility them into stress and scenario
main impact is on Group in global equity markets over testing to understand our
profitability. The current 2015 and the early part of 2016 earnings, liquidity and capital
persistently volatile, uncertain, had a negative impact on asset resilience to severe macro-
complex and ambiguous growth and net client cash flows economic events.
macroeconomic and geopolitical for Old Mutual Wealth
environments exacerbate this and OMAM. Within Emerging Markets, market
impact. risk arising from guaranteed
While the South African economy products is actively managed by
The Group’s US and UK shares in global economic their Balance Sheet Management
businesses and Emerging conditions – and is therefore team. Guaranteed products in Old
Markets asset management affected by the interest rate Mutual Bermuda are managed via
businesses are explicitly seeking trajectory in the US, the slowdown various hedging programmes. For
market risk as part of their in China and lower-for-longer oil more detail on Old Mutual
business strategies. Volatile and prices – it is also impacted by Bermuda’s hedging programmes,
uncertain global markets could domestic factors. please refer to page 227, note G
therefore adversely affect of the consolidated financial
earnings levels. Old Mutual During 2015, amidst a benign statements
Wealth, Old Mutual Investment global economic recovery, South
Group (within Emerging Markets) Africa’s economic growth The key impact on Group from a
and OMAM are exposed to forecasts were revised South African sovereign rating
secondary market risk through downwards. Key factors were downgrade is reduced
asset-based fee risk. Market risk volatile emerging market remittances from the South
also arises through guaranteed economies, driven by weaker African businesses and
business in Emerging Markets growth in China, and muted consequently the adjustment to
and residual guarantees in Old domestic prospects arising from dividends. During the heightened
Mutual Bermuda, as the sale of weaker commodity prices and market volatility following the
that business only related to the energy supply constraints. These South African finance minister
non-guarantee business. contributed to a sovereign credit changes in December 2015 and
downgrade by Fitch in December. China slowdown in early 2016, the
In our insurance and investment Group’s position was monitored
businesses, and especially in A prolonged period of low oil on a daily basis and has remained
Emerging Markets, our earnings prices, cutting transport and food within risk appetite. The
are at risk if our customers are costs, could help to support deterioration in the rand, interest
unable to keep up premiums, disposable incomes and rates, credit spreads and other
cancel existing policies or spending, and reduce inflationary economic measures were within
withdraw their savings earlier pressures, despite rand
of the bounds of our scenario
than anticipated (collectively weakness. However, this has analysis. Our business plans are
known as lapse risk). been somewhat offset by drought- also regularly updated and include
Additionally, our future profits induced upward pressure on food consideration of severe adverse
will be at risk if customers do not prices. scenarios.
buy insurance policies from us or
invest their savings with us at the If the sovereign credit rating was We are actively engaging with the
levels we anticipate. further downgraded to below South African government – see
investment grade status, the the following page on Political risk
In our banking and credit impact on the Group’s business for more detail.
businesses, our earnings are at outside South Africa would be We step up our activity to help
risk if counterparties fail to meet limited. Within South Africa, the clients during periods of volatility,
their contractual servicing of impact would come from the with a focus on understanding
interest and principal. economic and market-related individual customers' financial
Uncertainty and deterioration in consequences, such as changes positions at the point of sale.
global economic conditions may in interest rates, foreign exchange Refer to the Business Review
affect the capacity of rates and international capital sections for case studies on how
counterparties to meet flows. Market interest rates, we partner with and help our
these obligations. exchange rates and credit default customers.
spreads have priced in the impact
(Credit risk is further assessed of a ‘soft’ downgrade. However, Our businesses manage premium
as a principal risk on page 89.) the range of consequences is collections and credit payments,
Our exposure to South African wide, meaning more severe while monitoring for early
sovereign debt and parastatals impacts are possible. indicators of financial distress.
lies only within the South African We manage our cost base
businesses, in line with market judiciously, while investing
and regulatory expectations. sustainably for the future.
2. Political risk
How it impacts Old Mutual 2015 and beyond Risk mitigation and management
actions
Changing government and South African policymakers will Old Mutual will continue to engage
public sentiment in the key continue to face challenging and work with relevant
countries where we operate economic conditions, as well as stakeholders to be alert to adverse
could potentially influence the increasing prominence of political developments. The
external perceptions of the opposition parties and a more Boards of both our South African
Group. Political risk may also difficult fiscal position. Political businesses and the Group
present additional risks in the risk and uncertainty are likely to continue to monitor and assess
macro-economic environment. increase. the impact of political risks.
Given the significant portion of Possible negative events that We are actively engaging with the
our business in South Africa, we might affect Old Mutual are South African government. This
are particularly exposed described below. includes leading the engagement
to political developments there. with government and
In South Africa:
Exposures include the South Africa’s ‘big businesses’
substantial business we receive Change to the regulations and across financial services, mining,
from collective labour taxation governing the products industrial and telecommunications
organisations in South Africa, we sell or manage sectors, on ways to
which could be adversely improve sentiment on South
impacted by a change in Change in the ownership of the
sentiment. Africa’s investment case and
businesses we invest in or do managing the sovereign ratings
business with, impacting our downgrade risk. These
customer base discussions fed into the 2016
The nature of a disruptive State of the Nation Address and
political event, and the possible Restrictions on the ability of our the 2016/17 Budget statement.
consequences for our South South African business to remit
African business, are particularly profits to Group, impacting the In 2015 we commissioned
difficult to foresee, as are the affordability of shareholder independent political risk
triggers that might cause such dividends consultants to further analyse the
an event. An event may affect medium- to long-term implications
In the UK: for the Group.
any of our key cash flow, capital
or liquidity metrics. See more on The likelihood of a Brexit Political risk scenarios have been
possible impacts in the Own following the EU referendum in included in business planning and
Risk and Solvency Assessment 2016 (set for 23 June) has in our Own Risk and Solvency
section on page 94. increased, with polling suggesting Assessment process.
a very close split between Britain
Brexit’ following the 2016 EU remaining in or leaving the EU.
referendum impacts a small part This brings economic and legal
of the UK heritage business in uncertainty.
Old Mutual Wealth, which
continues to manage EEA In Zimbabwe:
legacy business, but is not
expected to be material. Old The risks on government debt,
Mutual Global Investors and which are offset by the US dollar-
Quilter Cheviot might need to set denominated currency and
up European Economic Area assurances that the country will
subsidiaries in order to continue not be reverting to the Zimbabwe
to sell business in Europe. dollar. However, government
policy moves on reverting to the
local currency are uncertain
Though the economic
implications of Brexit are
uncertain, one possible The timing of the pensions
consequence is sterling commission inquiry and
depreciation, which has already indigenisation law implementation
been observed in early 2016. If is uncertain and may take time to
the rand strengthens relative to fully conclude.
sterling as a result of Brexit,
from a Group reporting
perspective, this could mitigate
rand depreciation from a South
African sovereign rating
downgrade.
In Zimbabwe, the local
government has begun re-
engaging internationally with the
IMF on its debt programme ($1.8
billion owed to the ECB and
IMF) and will have repaid its
debts by April 2016, diverting
funding into Zimbabwe. A key
concern for Old Mutual is our
exposure to the government
(<£200m as at December 2015)
and its potential to default on its
debt. The situation in Zimbabwe
is exacerbated by current
economic conditions and severe
drought.
3. Currency translation risk, location of capital and sources of remittances
How it impacts Old Mutual 2015 and beyond Risk mitigation and management
actions
Our Group earnings, dividend and In 2015 the rand depreciated by a We hold our capital resources
regulatory surplus capital are further 28%, with an average rate including much of the Group’s
reported in sterling but c.70% of of R19.51 against the pound. This issued debt) to meet capital
our earnings and surplus capital followed depreciations of 4% in requirements in matched
are denominated in South 2014 and 27% in 2013. It currencies, and service interest on
African rand. reflected the relative weakness of debt with matching earnings and
South Africa’s economic outlook, cash flows.
The translation of our rand political uncertainty and, in part, a
earnings and balance sheet declining appetite for emerging We closely monitor the balance of
value will reflect exchange market currencies. cash flows earned in rand and
rate movements. other currencies, and our dividend
We see macro-economic factors policy helps to address this risk
Our capital is held where our pointing to further rand weakness through its link to earnings.
risks are located and in the in the medium term. These
appropriate currency for those include the continuing current We use forward currency
risks; so risk would only be account deficit and the possibility contracts to hedge expected rand
realised if we were to require a of further capital outflows from and other currency cash flows
transfer of surplus capital between South Africa. For example, some over the year ahead, needed to
regions during periods of stress. external investors may sell their make dividend and other
Due to exchange controls and holdings of South African payment in sterling.
terms of the demutualisation government bonds if global Regular stress and scenario
agreement, capital from South interest rates rise and/or the testing helps us understand and
Africa is not fully freely country’s sovereign rating is monitor the resilience of our
transferable. For the stress further downgraded. capital and capacity to pay
scenarios we assess, the key dividends over the business plan
impact on Group is through cash horizon. The chosen scenarios
and dividends, as referred to in include a decline in the rand,
the principal risk ‘Uncertain alongside further significant
global economic conditions’. currency movements or
restrictions (however remote) on
The Group’s overall solvency
the flow of funds from South
position is further desensitised to
Africa. Our modelling shows we
currency movements by the
are sufficiently capitalised in line
Solvency II fungibility restrictions.
with our philosophy of holding
Clarification on the treatment of
capital where the risks lie.
surplus fungibility has been
However, to maintain the dividend
confirmed and non-EU surpluses
cover required in our dividend
may not be included in our
policy in severe scenarios, a fall in
Solvency II calculations.
the sterling value of rand-based
earnings could result in
significantly lower sterling-based
dividends.
The managed separation will
ensure that each business will be
able to access capital more easily
from, and be more closely aligned
to, its natural shareholder bases.
This addresses challenges the
Group has faced with translation
of rand earnings,
cash remittances and consequent
impact on dividends amidst
significant rand depreciation, and
lack of transparency of underlying
businesses capital strength in the
Group’s overall solvency position
due to fungibility constraints.
4. Strategic execution risk and breadth of regulatory change across the Group
How it impacts Old Mutual 2015 and beyond Risk mitigation and management
actions
Currently, and for the As part of delivering the strategy The risks associated
foreseeable future, there is a for each of our businesses, we with managed separation have
high degree of execution risk have agreed various acquisitions, been subject to detailed external
across the Group. Regulatory partnerships and transformation review covering business
changes affect the entire programmes over the past competitiveness, and the
industry but the risks of two years. The challenge now is regulatory, legal and stakeholder
integration of newly acquired to execute the stated strategy risks relating to a managed
business in Emerging Markets within each of the businesses and separation. The managed
and Old Mutual Wealth as well deliver the intended benefits. separation execution is against
as IT and business process the backdrop of challenging
In addition, the strategy of a
transformations will be specific macro-economic conditions, as
managed separation announced
to our businesses. While many referred to previously. There has
in March 2016 will bring a new set
of these regulatory changes been extensive stress and
of execution risks.
represent opportunities for our scenario testing of the potential
businesses, the cumulative Emerging Markets completed the impact on cash, capital and
impact could result in margin acquisition of a majority holding in earnings.
compression and increased UAP in 2015. Emerging Markets’
An executive steering group and a
operational risk during the transformation initiative aims to
bespoke Board oversight
transition. invest in strategic IT-enabled
committee has been established
business change, with priorities to
Emerging Markets is impacted to facilitate regular monitoring.
improve customer and
by the Retirement Fund Reform The Group’s Long-Term Incentive
intermediary experience
and the Retail Distribution Plan is being revised to reflect the
and deliver business-critical
review in South Africa, which objectives and risks of the
infrastructure. Preparations
will mean significant managed separation.
continue for the SAM regulatory
transformation in the medium
requirements, initially expected to We seek external input for
term. The National Credit Act will
impact the unsecured lending be implemented on 1 January material initiatives across our
business. 2016, but delayed until at least 1 businesses requiring specialist
January 2017. skills.
Nedbank is affected by the
substantial changes in banking Nedbank intends to continue Within Emerging Markets, there is
regulation, in particular Basel III,rationalising and simplifying core a structured programme for the
that will be phased in by 2019, systems as part of its strategy, integration of the business in
as well as increased focus on with significant IT programmes Kenya following the UAP
financial crime prevention and focused on regulatory change, acquisition. In addition, oversight
customer-related regulations compliance, strategic security, committees at both executive and
such as the National Credit Act client experience, business Board levels have been
and FAIS. processes and growth. established to oversee the IT and
business transformation initiative.
Twin Peaks regulation is likely to We have established a
come into effect in 2017, programme for meeting Twin Nedbank has a mature Board-
potentially affecting both OMEM Peaks requirements. We level governance framework for
and Nedbank as domestic will continue to work towards management of major IT change
systemically important financial readiness of governance and risk and this approach has been
institutions. This will be followed structures, dovetailed with the extended to cover the regulatory
by SAM regulatory capital managed separation programme. change programmes, including
requirements. external reviews.
Old Mutual Wealth aims to
For Old Mutual Wealth, there transform itself into a simpler, In Old Mutual Wealth, on
have been substantial changes vertically integrated business with encountering delays and cost
to the UK pensions regime updated IT systems. While the increases in the transformation
resulting in higher inflows and level of operational risk in Old programme, we commissioned a
outflows across the industry and Mutual Wealth is within our risk detailed independent review of the
increased need for customers to appetite, it remains high in the governance and risk frameworks
have access to advice to short term – pending the which has resulted in replanning
understand the impact of the implementation of the outsourcing and onboarding of external
new choices available to them. arrangement and business programme managers to work
New pensions freedoms became transformation programme with through remedial actions. Lessons
effective on 6 April 2015 and Old IFDS and the integration of from this key change project have
Mutual Wealth needs to continue Intrinsic and Quilter Cheviot. been shared across businesses
to develop propositions to with similar initiatives.
OMAM will endeavour to identify
remain competitive. Many other
and seize new partnership Within OMAM, new partnership
regulatory developments and
opportunities as they arise, in line opportunities are reviewed and
actions which continue to be
with its strategy of building long- evaluated according to strict
managed as is appropriate.
term value for shareholders. It did investment criteria and
Within OMAM the key execution not conclude any transactions in appropriate governance
risks relate to development of its 2015. processes.
long-term strategy,
which includes seeking new
partnership opportunities.
5. Credit risk and location of credit risk across the Group
How it impacts Old Mutual 2015 and beyond Risk mitigation and management
actions
One of our largest risks to Group Our credit risk remains within Stress testing is carried out at
earnings is our exposure to appetite. However, the high levels Nedbank and Emerging Markets
banking credit risk from lending of personal indebtedness and (and, by extension, Group) to
and other financing activities pressure on consumers in South understand exposure to credit
through our ownership of Africa remain a challenge, as events.
Nedbank – and to a lesser but does the impact on corporate
Nedbank has defined risk limits
growing extent within Emerging credit performance from
and early warning thresholds for
Markets. continuing weakness in
credit loss ratios, which are
commodity prices. Short-term
Nedbank is a universal bank continuously monitored and
pressure on credit spreads is
offering diversified product lines, remained within their target range
increasing on state-owned
across secured and unsecured throughout 2015. Nedbank also
enterprises such as Eskom.
lending. reviews the quality of credit
However, the risk of
portfolios to ensure impairment
Our exposure through Nedbank default is low, given explicit South
provisions are adequate.
is primarily a risk to earnings and African government guarantees.
remittances, as Nedbank’s As the Emerging Markets portfolio
The appetite for consumption of
capital and liquidity requirements has grown, we are in the process
Group products depends on
are both met from its own of strengthening our own expertise
macro-economic factors that are
available resources. and the governance of credit risks.
outside our control, as discussed
We have also sought external
Within Emerging Markets, earlier in this section.
views on areas of greater risk,
banking credit risk is expected to
Our lending credit exposure is such as our exposures to
increase due to planned growth
concentrated in secured lending unsecured lending. Further
as part of the strategy to become
by Nedbank. Nedbank intends to development of the credit risk and
an integrated financial services
grow its transactional banking liquidity risk management
business. Banking credit risk
franchise and balance its funding framework will continue.
arises in our unsecured lending
mix to reduce reliance on
business, Old Mutual Finance For unsecured lending, OMF
wholesale funding through its
(OMF), Faulu, a Kenyan continues to focus on quality
strategic portfolio tilt initiative.
consumer finance business, and business through regular
Unsecured lending growth is
our building society in Zimbabwe adjustment of affordability and
expected to remain slow.
known as CABS. credit scorecards and risk-based
In line with Group strategy, credit product metrics (loan term, size
Associated funding risk arises as
risk increased in 2015 – across and interest rates), based
funds flow from insurance to
the Group, but mainly in on changing market conditions.
banking/lending businesses in
Emerging Markets’ growing
Emerging Markets, which Refer to the Nedbank and
lending and annuity businesses.
requires a robust liquidity Emerging Markets detailed
management framework. Within Emerging Markets, OMF Business Review, found in
has achieved controlled growth in the 2015 Preliminary Results
Investment credit risk arises in
unsecured lending from a low statement, for more information on
Old Mutual Specialised Finance
base, applying stringent credit exposures.
and the South African
affordability requirements and
life business, predominantly
strict credit criteria. However, in
through the management of
the context of the challenging
assets backing annuity products.
macro-economic environment,
Credit risk outside Nedbank and there has been some
Emerging Markets is relatively deterioration in the average
limited. credit quality of loans and
advances.
Emerging Markets is planning
further lending growth in Faulu,
CABS, and OMF. This will be
accompanied by strong credit risk
and liquidity risk management
together with risk oversight and
governance.”
“Related parties
The Group provides certain pension fund, insurance, banking and financial services to related parties.
These are conducted on an arm’s-length basis and are not material to the Group’s results.
(a) Transactions with key management personnel, remuneration and other compensation
Key management personnel are those persons having authority and responsibility for planning,
directing and controlling the activities of the Group, directly or indirectly, including any director
(whether executive or otherwise) of the Group. Details of the compensation paid to the Board of
directors as well as their shareholdings in the Company are disclosed in the Remuneration Report on
pages 124 to 151.
(b) Key management personnel remuneration and other
Year ended Year ended
31 December 2015 31 December 2014
Value Value
Number of Number of
personnel £’000 personnel £’000
Directors’ fees 11 1,388 11 1,366
Remuneration 24,293 22,593
Cash remuneration 12 5,308 12 4,931
Short-term employee benefits 12 8,678 12 7,879
Long-term employee benefits 12 378 12 343
Share-based payments 12 9,929 11 9,440
25,681 23,959
Year ended Year ended
31 December 2015 31 December 2014
Number of
Number
of options/
Number of options/ Number of shares
Share options personnel shares personnel ’000s
’000s
Outstanding at beginning of the year 5 48 5 1,103
Leavers 1 (11) – –
New appointments – – 1 7
Granted during the year 29 22
Exercised during the year (14) (1,084)
Outstanding at end of the year 4 52 5 48
Year ended Year ended
31 December 2015 31 December 2014
Number
of Number of
options/ options/
Number of shares Number of shares
Restricted shares personnel ’000s personnel ’000s
Outstanding at beginning of the year 9 13,753 9 20,618
Leavers 1 (3,538) 1 (4,230)
New appointments 1 2,056 1 787
Granted during the year 3,055 5,163
Exercised during the year (944) (418)
Vested during the year (3,316) (4,884)
Effect of share exchange in connection
with the OM Asset Management plc
IPO –
Outstanding at end of the year 9 11,066 9 13,753
(c) Key management personnel transactions
Key management personnel and members of their close family have undertaken transactions with Old
Mutual plc and its subsidiaries, joint ventures and associated undertakings in the normal course of
business, details of which are given below. For current accounts positive values indicate assets of the
individual whilst for credit cards and mortgages positive values indicate liabilities of the individual.
Year ended Year ended
31 December 2015 31 December 2014
Number
of Number of
options/ options/
Number of shares Number of shares
Personnel ’000s personnel ’000s
Current accounts
Balance at beginning of the year 5 2,435 4 2,535
Net movement during the year (227) (100)
Balance at end of the year 5 2,208 5 2,435
Credit cards
Balance at beginning of the year 4 29 2 24
Net movement during the year (9) 5
Balance at end of the year 4 29 2 24
Mortgages
Balance at beginning of the year 5 465 1 143
Net movement during the year (355) 322
Balance at end of the year 3 110 5 465
Property & casualty contracts
Total premium paid during the year 3 10 4 15
Claims paid during the year – – 2 7
Life insurance products
Total sum assured/value of investment
at end of the year 10 23,258 10 25,739
Pensions, termination benefits paid
Value of pension plans as at end of the
year 10 4,675 10 4,889
Various members of key management personnel hold or have at various times during the year held,
investments managed by asset management businesses of the Group. These include unit trusts,
mutual funds and hedge funds. None of the amounts concerned is material in the context of the funds
managed by the Group business concerned, and all of the investments have been made by
the individuals concerned either on terms which are the same as those available to external clients
generally or, where that is not the case, on the same preferential terms as were available to
employees of the business generally.”
“Related parties
Old Mutual plc enters into transactions with its subsidiaries in the normal course of business. These
are principally related to funding of the Group’s businesses and head office functions. Details of loans,
including balances due from/to the Company, are set out below. Disclosures in respect of the key
management personnel of the Company are included in the Group’s related parties disclosures in
note J3.
There are no transactions entered into by the Company with associated undertakings
£m
At At
31 31
December December
2015 2014
Balances due from subsidiaries 4,940 4,161
Balances due to subsidiaries (4,368) (4,367)
Balances due from other related parties – Fairbairn Trust Company Limited 2 2
Income statement information
£m
Year ended 31 December 2015 Year ended 31 December 2014
Ordinary Other Ordinary Other
dividends amounts dividends amounts
At 31 December 2015 Interest paid received paid Interest paid received paid
Subsidiaries 60 321 (97) 23 632 (84)”
“Responsibility statement of the directors in respect of the annual financial report
We confirm that to the best of our knowledge:
- The financial statements, prepared in accordance with the applicable set of accounting
standards, give a true and fair view of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation taken as a whole, and
- The strategic report includes a fair review of the development and performance of the
business and the position of Old Mutual plc and the undertakings included in the consolidation
taken as a whole, together with a description of the principal risks and uncertainties that they
face.
We consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to assess the Group’s position and
performance, business model and strategy.
Bruce Hemphill Ingrid Johnson
Group Chief Executive Group Finance Director
11 March 2016”
Enquiries
External communications
Patrick Bowes UK +44 20 7002 7440
Investor relations
Dominic Lagan UK +44 20 7002 7190
Sizwe Ndlovu SA +27 11 217 1163
Media
William Baldwin-Charles +44 20 7002 7133
+44 7834 524833
Sponsor:
Merrill Lynch South Africa (Pty) Ltd
Joint Sponsor:
Nedbank Capital
Notes to Editors
Old Mutual provides investment, savings, insurance and banking services to 18.9 million customers in Africa, the
Americas, Asia and Europe. Originating in South Africa in 1845, Old Mutual has been listed on the London and
Johannesburg Stock Exchanges, among others, since 1999.
In the year ended 31 December 2015, the Group reported adjusted operating profit before tax of £1.7 billion and
had £304 billion of funds under management from core operations (excluding Rogge).
For further information on Old Mutual plc, please visit the corporate website at www.oldmutual.com
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