OLD MUTUAL PLC - Old Mutual Plc - Capital Markets Day 2016

Old Mutual Plc - Capital Markets Day 2016

OLD MUTUAL PLC
ISIN CODE: GB00B77J0862
JSE SHARE CODE: OML
NSX SHARE CODE: OLM
ISSUER CODE: OLOMOL
Ref 520/16
11 October 2016


OLD MUTUAL PLC – CAPITAL MARKETS DAY 2016

Old Mutual plc (“Old Mutual” or “plc”) is holding a Capital Markets Day today 11 October 2016 which is
scheduled to start at 12.30pm BST.

The event is being webcast (details of which are at the end of the announcement). It will be hosted by
Bruce Hemphill, Group Chief Executive of Old Mutual and will include presentations from the Chief
Executive and Chief Operating Officer of Old Mutual Wealth (“OMW”), and the Chief Executives of Old
Mutual Emerging Markets (“OMEM”), Nedbank and OM Asset Management (“OMAM”), as well as an
update on the managed separation process by the Director of Managed Separation, Rob Leith.

Slides and transcripts will be available after the event on the plc’s website www.oldmutual.com

Bruce Hemphill, Chief Executive of Old Mutual plc, said: “Old Mutual has four good businesses. We are
now in the process of getting the unlisted entities of Old Mutual Wealth and Old Mutual Emerging
Markets ready for independence. The managed separation process is acting as a catalyst for delivering
long-term sustainable earnings and growth and positioning the underlying businesses to be great on a
standalone basis.”


Managed separation

At Old Mutual’s preliminary results for 2015, the company announced that the long term interests of its
shareholders and other stakeholders would be best served by a managed separation of the Group into
its four constituent businesses: OMEM, Nedbank, OMW and OMAM. Old Mutual’s current plan for the
managed separation envisages one or more transactions 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 entity will consist principally of the UK Old Mutual Wealth operations, with the
primary means of achieving this being through a demerger, and the other will consist principally of the
Emerging Markets operations through the creation of a new South African holding company.

We intend to continue with the phased reduction of our 66% holding in OMAM in an orderly manner
while supporting the development of its strategy. Through asset disposals and the use of Old Mutual’s
surplus cash, we intend to materially reduce Old Mutual's holding company debt.

Following the creation of the new South African holding company, we intend to distribute, in an orderly
manner, a significant proportion of the Group's shareholding in Nedbank to the shareholders 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 regulations. The respective boards of
directors and management teams of Old Mutual and Nedbank continue to work closely together on
these matters.

The announced target date for the material completion of the managed separation is by the end of
2018, with material completion including the reduction of the stake in OMAM and the creation of the two
separate listed entities. This remains the target date which ideally would include the distribution of the
Nedbank stake but, if circumstances dictated otherwise, the distribution could occur after that date.
The managed separation is highly complex and subject to ongoing discussions with key stakeholders,
as well as legal and financial advisers. The plans are subject to change as a result of factors such as
stakeholder consent, regulatory conditions and/or the readiness of the underlying businesses. Equally,
Old Mutual may receive approaches for some or all of its businesses. There can be no certainty as to
the nature of the final outcome.


Business readiness

The key determinant of the timing for the managed separation is the readiness of the businesses for
independence. The process of preparing for independence is more significant for the unlisted
businesses, OMEM and OMW. This process for each of these businesses will include reviewing, inter
alia, businesses and operating models, capital and governance structures and management. In
addition, OMW has announced that for the three months ended 30 September 2016, it recorded net
client cash flow of £0.9 billion (Q3 2015: £2.3 billion) and had funds under management of £119 billion
(FY 2015: £104 billion). It will also provide an update to the IT business transformation programme. A
future-ready wealth platform, which will improve the sales of new business and the retention of existing
customer assets, remains very important for OMW’s strategy. To simplify and de-risk the overall project
and focus resources on the open book build, the building of the Heritage platform has been paused. In
addition to the £225 million spent to the end of June 2016, we estimate that the remainder of the
revised programme will cost a further £200 million to £225 million to complete. This will mean the total
cost to complete the re-platforming will be in the range of £425 million to £450 million, excluding any
further spend on Heritage.


Costs of the managed separation

The plc defines managed separation costs as costs relating directly to the managed separation
process. These include: the transaction costs to give effect to the corporate actions set out above,
which cannot be subject to advance guidance; the recurring incremental costs directly associated with
the listing of the OMW and OMEM entities, currently estimated at £5 million to £10 million per annum;
and the one-off costs of between £50-£65 million for winding down the head office and its activities in
London.

There will be additional one-off and recurring incremental costs for the unlisted business units so they
can function as standalone entities through strengthening capabilities and infrastructure. The
businesses will seek to mitigate these incremental recurring costs through capturing cost efficiencies.
Plc will develop clear disclosure to allow stakeholders to track both the managed separation and
business stand-alone costs and associated cost savings.

H2 2016 cost guidance

Plc corporate costs are expected to reduce as the plc head office winds down. Corporate costs in 2016
are expected to be in line with 2015, due to the costs of new appointments during H1 being offset by
savings attributable to redundancies during H2.
Managed separation costs incurred by plc head office during 2016, including advisory and redundancy
costs, will be recognised in other net shareholder expenses. Plc head office managed separation costs
are expected to be higher in 2016 than one-off costs recognised during 2015. However, plc 2016 other
net shareholder expenses are not expected to exceed those of 2015, assuming the revaluation gains
related to non-sterling plc assets recognised during H1 do not reverse during H2 2016.

For OMW, managed separation costs and business stand-alone costs in the second half of 2016 are
expected to be approximately £10 million.


Analyst and investor engagement

This is a multi-year project and we are committed to updating the market on a regular basis. The next
scheduled update will be on 9 March 2017 when the plc will publish its 2016 FY financial results.
Management teams from the businesses will be conducting investor meetings following the Capital
Markets Day in both South Africa and the UK.


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

1. 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.

2. For the year ended 31 December 2015, Old Mutual reported an adjusted operating profit before
   tax of £1.7 billion and had £304 billion of funds under management. For further information on
   Old Mutual plc and the underlying businesses, please visit the corporate website at
   www.oldmutual.com

3. Managed separation entails separating the Group through a series of steps that will ultimately
    result in four standalone entities:
   o Old Mutual Emerging Markets: An African financial services leader, providing long-term
       savings, protection, investment and lending to retail and corporate customers
   o Nedbank: Old Mutual owns a 54% stake in Nedbank, one of South Africa’s top four banks,
       providing wholesale and retail banking, insurance and asset management for individuals and
       businesses
   o Old Mutual Wealth: a leading wealth management business in the UK and international
       markets
   o OM Asset Management: Old Mutual owns 65.8% in the New York Stock Exchange listed OM
       Asset Management which offers a diverse range of investment strategies and products for
       institutions, delivered worldwide through seven US-based boutiques.


Details of the webcast

A webcast of the presentations and Q&A will be broadcast live at 12:30 BST / 13:30 SAT today.
Those wishing to participate in the call can register for the webcast on the company website
www.oldmutual.com, dial the following numbers and quote the pass-code 18055153#:

UK/International: +44 20 3139 4830

US: +1 718 873 9077

South Africa: +27 21 672 4008

Playback will be available for 30 days from 11 October 2016, using pass-code 677392# at the
following numbers:

UK/International: +44 20 3426 2807

US: +1 866 535 8030

South Africa: 0800 002 877

Transcripts will be available from the company website following the event.

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