OLD MUTUAL PLC - Old Mutual Annual General Meeting and Update on Trading and Managed Separation

Old Mutual Annual General Meeting and Update on Trading and Managed Separation

       OLD MUTUAL PLC
       ISIN CODE: GB00B77J0862
       JSE SHARE CODE: OML
       NSX SHARE CODE: OLM
       ISSUER CODE: OLOML
       Old Mutual plc

       Ref 392/16
       28 June 2016

       OLD MUTUAL ANNUAL GENERAL MEETING AND UPDATE ON TRADING AND MANAGED
       SEPARATION

       Old Mutual plc (“Old Mutual”) will be holding its Annual General Meeting at 11am today, 28 June
       2016. It will also hold a General Meeting immediately afterwards to consider a revised Directors’
       Remuneration Policy and adoption of a new long-term incentive plan. At the meeting, Chief Executive
       Bruce Hemphill will give an update on trading for the year and update on the managed separation that
       Old Mutual announced as its new strategy on 11 March 2016 with the 2015 Results.

       Old Mutual Chief Executive Bruce Hemphill said: “We have started executing the managed separation
       and I am pleased with the progress that we have made since the announcement three months ago.
       We are now in a position to provide further guidance on our plans. Increased market volatility
       following the referendum decision to leave the EU does not affect our strategy although it may impact
       the performance of the underlying businesses.

       “The expected headwinds of weaker and more volatile foreign exchange and equity markets to which
       we made reference at our preliminary results have materialised. However, the average value of the
       rand year-to-date 2016 has decreased by 22% as compared to the first half of 2015. We continue to
       keep operational management focused on maximising returns.

       “We are working intensively with the businesses to prepare them for separation. We remain confident
       that the managed separation process will lead to the creation of shareholder value, and strong
       businesses for our customers, staff and other stakeholders.”

       Current trading

       In the 2015 preliminary announcement, Old Mutual announced that it would discontinue reporting
       quarterly following changes in regulatory obligations and market practice. OM Asset Management
       (“OMAM”), Nedbank Group (“Nedbank”) and Old Mutual Wealth (“OMW”) have made their own public
       announcements in respect of business performance for Q1 2016 and on 13 April we published the
       Old Mutual plc Annual Report & Accounts which includes risk disclosures. Old Mutual as a whole
       expects to report next to shareholders on 11 August 2016 with its Interim Results.

       At our preliminary results, we stated that we expected 2016 to be a challenging year if the rand
       remained weak for an extended period and if lower market levels continued. Following the occurrence
       of both in the year to date, Old Mutual has traded broadly in line with the Board’s expectations. Gross
       sales in the year to date have been strong but we have seen continued weakness of the rand, the
       currency in which we generate most of our profits, volatility in other African currencies and lower
       average equity markets. Additionally, in OMW we will incur one-off expenses regarding the capping of
       exit fees in our Heritage book and in South Africa for the year to date we have seen larger than
       expected claims experiences in both Property & Casualty and the Corporate business.

       Managed separation update

       At Old Mutual’s preliminary results for 2015, the company announced that the long term interests of
       its shareholders and other stakeholders would best be served by a managed separation of the Group
       into its four constituent businesses: Old Mutual Emerging Markets (“OMEM”), Nedbank, OMW and
       OMAM.

       The managed separation will be effected in a manner that maximises value to shareholders over time
       and we expect it to be materially complete by the end of 2018. Implementing the managed separation
       will require a balance to be struck between the key criteria of value, cost, time and risk. During this
       period Old Mutual will:

           -  Continue to work with the businesses in delivering enhanced performance relative to their
               peer groups
           -   Manage Group debt obligations, central cost reductions and distributions to shareholders
           -   Fulfil its on-going regulatory obligations.

       Since the announcement, we have reinforced the senior management team by adding specialist
       capacity to drive the planning and execution of the managed separation. The change in plc
       responsibilities is resulting in a significant redesign of the head office to ensure its structure and
       functions are aligned to discharging the objectives outlined above. These include supporting the
       efficient running of the business, transitioning plc activities to the underlying businesses as
       appropriate and managing the orderly and phased winding down of the London head office. We have
       consulted with head office staff and reduced full time equivalent (“FTE”) headcount at plc by 15%, and
       will see further phased reductions in FTEs as the managed separation progresses.

       We have made it clear that there are a number of different means by which to achieve the managed
       separation. We have set out below our current plans which have been formulated following extensive
       engagement with our key stakeholders and technical advisors. These discussions are continuing. It
       should be noted that the managed separation of a diverse multi-national group is a highly complex
       matter. Thus, the initial plans outlined below remain subject to change as a result of factors such as
       stakeholder consent and/or the readiness of the underlying businesses. Equally, we may receive
       approaches for some or all of our businesses. We will evaluate these carefully and rigorously,
       balancing the criteria of value, cost, time and risk relative to our broad stakeholder interests.

       Subject to the above considerations we intend to pursue one or more transactions in the context of
       the managed separation which will ultimately deliver two separate entities, listed on both the London
       and Johannesburg stock exchanges, into the hands of Old Mutual’s shareholders. One will consist
       principally of the Group’s Wealth operations and the primary means of achieving this outcome is likely
       to be through a demerger. The other will consist principally of the Emerging Markets operations
       through the creation of a new South African holding company. There are various means to achieve
       this outcome and we will update the market on the precise steps we intend to follow in due course.

       In the meantime, we intend to continue the phased reduction of our 65.8% holding in OMAM in an
       orderly manner while supporting the development of its strategy, as evidenced by its recently-
       announced acquisition of a majority stake in Landmark Partners.

       Through Old Mutual plc’s asset disposals and use of its surplus cash, we intend to materially reduce
       Old Mutual’s holding company debt.

       Following the creation of the new South African holding company referred to above, we intend to
       distribute, in an orderly manner, a significant proportion of the Group’s shareholding in Nedbank to the
       shareholders on the register of the new South African holding company at that time, leaving OMEM
       as the principal business within that group. Through its ownership of Old Mutual Life Assurance
       Company South Africa, the new South African group will retain an appropriate strategic minority stake
       in Nedbank, with the exact level still to be determined together with Nedbank based on OMEM’s
       commercial relationship with Nedbank and influenced by the implications of the incoming Twin Peaks
       regulation. The boards of directors and management teams of Old Mutual and Nedbank continue to
       work closely together on these matters.

       Old Mutual remains well capitalised, resilient to stress scenarios including taking into account the
       managed separation process. As indicated previously, we plan to hold an update on the businesses in
       early Q4 2016.

       New developments and other corporate activity
       Trevor Manuel will join the Board of Old Mutual Group Holdings Limited (“OMGH”), which is the
       existing SA parent company of OMEM and owns 54% of Nedbank, and become non-executive
       Chairman on 1 July 2016. This follows the previously announced departure of the Chairman of
       OMGH, Paul Hanratty. Bruce Hemphill and Ingrid Johnson are also on the Board of OMGH.

       On 1 June 2016, we announced the completion of the sale of Rogge Global Partners to Allianz Global
       Investors. On 14 June 2016, OMAM announced that it would acquire a 60% equity interest in
       Landmark Partners, a leading global secondary private equity, real estate and real asset investment
       firm. Separately, in order to advance the on-going separation of OMAM and Old Mutual, an
       acceleration and subsequent termination of the Deferred Tax Asset Deed and Seed Capital
       Management Agreement has been agreed. This will result in OMAM’s on-going liabilities to Old
       Mutual under both agreements being satisfied earlier than disclosed in OMAM’s initial public offering
       prospectus.

       Outlook
       When we announced our preliminary results in 2015, we indicated that an extended period of a
       weaker rand would have an impact on our reported sterling results and lower equity market levels
       may put pressure on revenues. It is our expectation that the outcome of the EU Referendum on 23
       June 2016 may add increased levels of market volatility which may impact the performance of the
       underlying businesses.

       Ends

       Cautionary statement

       This announcement contains forward-looking statements relating 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, global, and UK and South
       African, domestic, 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, future acquisitions or combinations within relevant industries, as well
       as the impact of tax and other legislation and 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 out in its 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.


       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) Limited

       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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