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Old Mutual - Old Mutual to split into four

Nicholas Hyett | 11 March 2016 | A A A
Old Mutual - Old Mutual to split into four

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Old Mutual Plc ORD 11 3/7P

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Along with its full year results Old Mutual has this morning announced that it intends to separate the group's four constituent businesses. The shares were down by around 1% in morning trading.

2015 Full Year Results:

The Group reported pre-tax operating profit growth of 11% to £1.7bn, up 4% in reported currency. The full year dividend is due to rise 2% to 8.9p. The Group will look to retain more capital during the separation process, adopting a reduced dividend payout ratio, which may lead to lower dividend payments in future.

Excluding the Rogge business, which is being sold to Allianz Global Investors following net outflows of £8.1bn, total funds under management rose 8% (6% in reported currency) to £303.8bn.

Free surplus rose to £945m, from £897m in 2014, with group return on equity of 14.2%.

The group's Solvency II ratio was 135%, which the group described as "conservative" adding that it was "appropriately, but not excessively, capitalised".

Strategy update:

Old Mutual has completed its strategy review, launched following the appointment of Bruce Hemphill as CEO. It has concluded that the four key businesses offer only limited tangible synergies and shareholder value would be improved via a separation, which the group intends to have completed by the end of 2018.

The group will be split into:

Old Mutual Emerging Markets - A provider of financial services, predominantly, in sub-Saharan Africa. It offers life and general insurance as well as assets management and banking services. The business current has market leading positions in South Africa, Namibia and Zimbabwe, contributing 95% of total profits. Profits have grown at a constant rate of 12.5% over the last three years with a return on equity of 23%.

Nedbank - Among South Africa's four largest banks with operations in six other South and East African countries. In West and Central Africa it holds a 20% stake in Ecobank which has 2,350 branches across 39 countries.

It is intended that Old Mutual Emerging Markets will retain a stake in Nedbank to facilitate product distribution.

Old Mutual Wealth - Focussed on the upper and middle sections of the UK wealth management market. Continuing operations have delivered compound annual growth rates of 25% over the last three years.

OM Asset Management - An institutionally focussed asset manager listed on the NYSE, in which Old Mutual Group continues to hold a 65.8% stake. Funds under management stand at $212.4bn, down 4% on last year as a result of market movements and $5.1 of net outflows.

Group Chief Executive, Bruce Hemphill commented:

"Our new strategy will allow each business to have simpler access to capital markets to fund its growth more easily and be valued more appropriately, with more straight forward regulatory arrangements. We are announcing today a strategy that will allow us to release the potential within the Group for the benefit of all its stakeholders for many years to come."

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research for more information.