Old Mutual (LON:OML) has updated investors on its full-year performance this morning.
Highlights from the company statement:
Bruce Hemphill, Group Chief Executive, said:
"We are delivering on our promises: we sold down part of our stake in OM Asset Management, materially reduced our debt, cut head office costs and made significant strides in preparing the businesses for independence. While the macroeconomic conditions have been tough in 2016, our businesses have performed resiliently, with a stronger performance in the second half, demonstrating the underlying strengths of the franchises. We expect 2017 to be a year characterised by the hard work required to get the businesses ready for separation in 2018. We are confident that the managed separation will unlock and deliver long-term shareholder value."
Summary financial results:
· Adjusted Net Asset Value (NAV) at 228.6p per share (2015: 178.9p per share), due to favourable currency movements and an increase in the market value of Nedbank;
· Pre-tax adjusted operating profit (AOP) of £1.7 billion, broadly flat year-on-year in constant and reported currency;
· AOP earnings per share (EPS) of 19.4p broadly flat (2015: 19.3p) in constant and reported currency, basic EPS of 11.9p (2015: 12.7p);
· IFRS pre-tax profit of £1.2 billion (2015: £1.2 billion), including impairments of £160 million in 2016 in respect of Ecobank Transnational Incorporated (ETI), Old Mutual Southern and East Africa (OMSEA) and Old Mutual Wealth Italy;
· Second interim dividend of 3.39p; total dividend of 6.06p, representing a cover ratio of 3.2 times on AOP;
· FUM (excluding Rogge) at £394.9 billion up 30%; NCCF of £6.4 billion, excluding Rogge (2015: £6.6 billion).
Delivering the managed separation:
Managed separation aims to deliver value through the removal of plc central operational costs, by unlocking the conglomerate discount and by delivering enhanced performance of the underlying businesses.
Removal of plc central operational costs:
· Plc net operational cost savings identified of circa £95 million by 2019 from a base of 2015. The one-off costs to unlock these net operational savings will be circa £130 million.
Unlocking the conglomerate discount:
· Progressing preparations for the transactions needed to execute the managed separation which we expect to occur in 2018;
· Reduced stake in OMAM to 51% raising net proceeds of £230 million;
· Sold Old Mutual Wealth (OMW) Italy for net proceeds of £210 million;
· Materially reduced holding company debt by £385 million, reducing annual finance costs by £21 million in 2017;
· Expected one-off transaction advisory and listing costs (excluding capital items) estimated to be at least £100 million.
Enhanced business performance:
· Old Mutual Emerging Markets' (OMEM) future focus will be on sub-Saharan Africa and, following a review of its business, OMEM will be implementing a new target operating model designed to deliver meaningful cost savings and build a foundation for cost discipline while delivering business growth;
· OMEM Board strengthened by the appointment of Trevor Manuel as Chairman;
· OMW's strategy has been re-articulated, the perimeter simplified and is now implementing a new target operating model to support the investment case by driving top line growth and increasing operating leverage;
· OMW executive and non-executive capabilities strengthened by the recruitment of functional and industry specialists including the appointment of Glyn Jones as Chairman of OMW along with 5 other new non-executive Directors (NEDs).