REG - Old Mutual Ltd - Final Results
27/03/2024 07:00
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RNS Number : 4833I Old Mutual Limited 27 March 2024
Old Mutual Limited
Incorporated in the Republic of South Africa
Registration number: 2017/235138/06
ISIN: ZAE000255360
LEI: 213800MON84ZWWPQCN47
JSE Share Code: OMU
LSE Share Code: OMU
NSX Share Code: OMM
MSE Share Code: OMU
ZSE Share Code: OMU
("Old Mutual" or "Company" or "Group")
Ref: 26/24
27 March 2024
Group annual results and final dividend declaration for the year ended 31
December 2023
A message from the Chief Executive Officer
Overview
Our robust operational and financial performance in 2023, underpinned by
exceptional sales growth, demonstrates both our sound strategic choices and
resilience in a challenging economic climate. Our business remains well
positioned for growth and continues to demonstrate its ability to provide
customers with high quality solutions that sustain, grow and protect their
prosperity. Our customer focused approach has enabled us to generate strong
new business and continued sales momentum in 2023. We delivered double digit
sales growth of 17% across our life segments as we grow market share
profitably within our key markets. Consequently, we delivered exceptional
value of new business growth of 37%. We also delivered good growth of 14% on
gross flows and gross written premiums.
Our strategic choice to build an integrated financial services business of the
future is focused on holistic coverage of our customers' financial needs. It
is built around our unmatched distribution and digital engagement capabilities
that deliver personalised advice and solutions tailored to these needs, while
also driving operational efficiencies and opportunities for strategic growth.
During the year, various strategic corporate actions were concluded and we
remain confident that these strategic relationships will deliver enhanced
growth and profitability for the Group.
One of the key strategic partnerships, the Two Mountains Group, immediately
increases our distribution footprint across five provinces and enables us to
vertically integrate the funeral services value chain into our value
proposition. Our bank build, which is central to our integrated financial
services business of the future, remains on track to be launched within the
next 12 months subject to regulatory approvals.
Operating environment
The global economy proved resilient in 2023 despite substantial interest rate
hikes over the past 18 months. China recorded 5.2% economic growth in 2023,
slightly above their 5% target. Many central banks have paused interest rate
increases as inflation continued to decline since the second quarter of the
year.
The South African economy grew by 0.6% in 2023, lower than the 1.9% recorded
in 2022. Despite resilience from the private sector, mining and agricultural
production recorded negative growth rates during 2023. Inflation eased during
2023 at an average of 6%, slightly lower than the 6.9% recorded in 2022,
despite the impact of food and petrol price increases in August to October
2023. In the second half of 2023, the South African Reserve Bank's Monetary
Policy committee kept rates unchanged after the cumulative 475 basis points
rate increases since November 2021 given the easing of inflation. Our
customers' disposable income remains under pressure due to high inflation,
elevated interest rates and ongoing confidence crisis. Some of this financial
pressure was alleviated by continued employment recovery with a total of 2.2
million jobs added to the workforce between the start of 2022 and the third
quarter of 2023.
The energy and logistical challenges in our ports and railways, and service
delivery challenges remain key constraints to economic growth. We have a
collective responsibility to partner across the private sector, public sector
and civil society to alleviate these challenges. As a responsible business, we
are actively engaging in industry organisations such as Business Leadership
South Africa (BLSA). Through Business for South Africa (B4SA), a structure of
BLSA, our membership enabled us to play a part in supporting government to
implement key priority interventions in the areas of energy, transport and
logistics, crime and corruption, together with government counterparts. This
included supporting the National Energy Crisis committee (NECOM). The NECOM
Energy Action Plan has shown progress in its first year, addressing objectives
such as ending load shedding, regulatory reforms, approval process
streamlining and encouraging private sector investment in energy.
The South African equities market saw muted performance during the year with
improvements in December as anticipated interest rate cuts supported
confidence.
In our Africa regions, the operating environment was similarly challenging
across all markets. Several African markets have experienced severe currency
depreciation against the US dollar and dollar shortages remain a challenge.
High inflation continues to impact most economies and central banks have
maintained interest rates at elevated levels. Kenya faces substantial
maturities of domestic debt and foreign US dollar-denominated debt within the
next year. Malawi's total public debt increased by 37.6% year-on-year to 75.0%
of GDP. These factors continue to impact our customers' disposable income.
Malawi's equity market significantly increased relative to December 2022 due
to the rally in the local equity market. All other selected equity indices in
East Africa remain subdued.
Key performance overview
Life APE sales recorded robust growth of 17% from the prior year. This was
primarily due to strong savings sales in Old Mutual Corporate, resilient
retail and corporate sales in East Africa as well as higher guaranteed
annuities sales in Personal Finance.
Gross flows increased by 14% from the prior year mainly due to strong single
premium inflows in Old Mutual Corporate, new business secured and higher unit
trust sales in East Africa.
Our value of new business increased by 37%, with a corresponding increase of
10 bps in the value of new business margin. This was driven by increased risk
sales and effective cost management in the Mass and Foundation Cluster and a
higher proportion of profitable corporate sales in East and West Africa. The
strong growth in guaranteed annuities sales and a shift in mix towards higher
margin funds in Personal Finance contributed positively to the value of new
business and value of new business margin. The value of new business margin of
2.3% remains within our medium term target range of 2% to 3%.
Gross written premiums were up by 14% from the prior year. This was largely
driven by an increase of 17% in Old Mutual Insure due to strong new business
growth, renewals and the acquisition of Genric Insurance Company. Excluding
Genric Insurance Company, gross written premiums in Old Mutual Insure
increased by 13%.
Net client cash outflows of R7 510 million improved by 40% from the prior
year, primarily driven by good inflows across our life businesses. In Old
Mutual Investments and Wealth Management, client liquidity requirements in
challenging economic conditions resulted in increased outflows. Wealth
Management experienced outflows from a number of large clients across both
local and offshore platforms, coupled with lower treasury advisory inflows.
Old Mutual Investments saw low margin indexation outflows from a large
offshore investor that is implementing a change in their investment strategy,
low margin money market fund outflows as well as structural pension fund
outflows. Funds under management of R1.3 trillion increased by 8% from the
prior year, due to the improvement in equity markets and valuations on
unlisted portfolio assets, partially offset by higher outflows.
The Group delivered return on embedded value of 11.2%. The contribution of
profitable new business written, positive risk variances and risk assumption
changes was partially offset by increased once-off expenses, worse than
expected persistency experience and strengthening of our persistency
assumptions.
Results from operations increased by 14% from the prior year. This was
primarily driven by higher expected returns on the contractual service margin
across our life businesses as well as positive economic variances due to good
market performance. Profits also benefited from positive risk experience in
Old Mutual Corporate and higher risk sales volumes in Mass and Foundation
Cluster.
Return on net asset value of 11.1% increased by 170 bps from the prior year.
This was largely driven by robust growth in results from operations and
shareholder investment returns as a result of higher interest rates and
resilient equity markets. Return on net asset value excluding new growth
initiatives increased by 210 bps from the prior year to 13.1%. We remain
committed to optimising our capital allocation to enhance returns to
shareholders, with R60.8 billion returned through special distributions since
2018. This includes the share buyback of R1.5 billion completed in October
2023.
The Group solvency ratio remains solid at 178% for the year ended 31 December
2023, within our target range of 170% to 200%. Old Mutual Life Assurance
Company (South Africa) Limited (OMLACSA's) solvency ratio remains strong at
204%, which was at the upper end of our target range of 175% to 210%. OMLACSA
issued R1.5 billion of floating rate subordinated debt to optimise the Group's
weighted average cost of capital and there were no redemptions in 2023.
Our dividend policy targets an ordinary dividend cover range of 1.5x to 2.0x
adjusted headline earnings. The Old Mutual Limited Board declared a final
dividend of 49 cents per share, with total dividends declared in 2023
amounting to 81 cents per share.
Outlook for 2024
The global economy continues to show more resilience than expected. Inflation
has reached its peak and no further interest rate hikes are expected.
In South Africa, inflation is expected to ease in 2024 which will create an
environment more conducive for interest rate cuts. The South African Reserve
Bank's Monetary Policy Committee left rates unchanged for the fourth
consecutive meeting in late January. The downcycle in interest rates is likely
to be far slower than the upcycle. The combination of lower inflation, lower
interest rates and ongoing employment recovery will bring financial relief to
customers and improve confidence levels over time.
In our Africa regions, significant improvement in the overall economic growth
is expected, particularly in East Africa. Inflation is likely to remain high
in most markets and monetary policy is expected to remain tight with no
further interest rate hikes expected. Several key elections will take place in
Botswana, Namibia, Ghana, Malawi, Rwanda and South Sudan which will likely
extend the period of political uncertainty.
We remain committed to deliver profitable top line growth and new business by
delivering an integrated holistic suite of solutions to our customers that
leverages our leading distribution and digital capabilities. We will drive
effective cost management to enable growth and profitability for the Group as
we build our integrated financial services business of the future.
We will continue to deliver on strategic initiatives to achieve our victory
condition of becoming our customers' first choice to sustain, grow and protect
their prosperity. In March, Old Mutual was selected as the winner of the
News24 Long-Term Insurer of the Year award. The award recognises high client
satisfaction scores in a News24 survey of more than 4 000 people, along with
the assessment of our strategy, societal contribution and transparency. Our
integrated financial services business of the future, which has our customers'
financial wellness at its core, and the planned launch of our bank are
important building blocks to get even closer to our customers and be part of
their everyday lives.
Our section 16 submission for the bank build was completed and submitted early
in 2024 and we are now awaiting approval from the Prudential Authority. As
part of the section 16 submission, we were required to have the banking
systems and processes independently verified in a working end to end scenario.
This was successfully demonstrated and signed off prior to the aforementioned
section 16 submission. Section 17 allows us to notify the industry via the
Payments Association of South Africa, that we intend testing in the National
Payments system in the latter half of 2024. This is a regulated activity and
follows a predetermined process of testing with partner banks in the industry.
In January 2024, we announced the sale of our full stake in UAP Insurance
Tanzania, our short term insurance business to a group of current minority
shareholders, pending regulatory approval. This decision follows a strategic
review that identified challenges in achieving the desired returns on capital
for the Tanzanian business. We remain committed to East Africa and will
continue to strengthen our investment in corporate and retail propositions to
position the business as a leading integrated financial service provider. We
will expand our corporate offering, distribution channels, and customer base
in East and West Africa.
I want to thank all my colleagues for their passion and commitment in putting
our customers front and centre of everything we do, which has enabled us to
deliver robust operational and financial performance in a difficult operating
environment. I thank our customers for trusting us to help them navigate their
financial affairs as we remain that certain friend in uncertain times. To all
our stakeholders, we appreciate your continued support and engagement. Our
focus remains on building the integrated financial services business of the
future, anchored in our victory condition of becoming our customers' first
choice and in doing so responsibly building the most valuable business in our
industry.
Iain Williamson
Chief Executive Officer of Old Mutual Limited
Group Highlights
We completed a share buyback of R1.5 billion in 2023.
Key performance indicators
Rm (unless otherwise stated) FY 2023 FY 2022 Change
Results from operations 8 343 7 310 14%
Adjusted headline earnings 5 861 4 850 21%
Headline earnings(1) 7 380 5 854 26%
IFRS profit after tax attributable to equity holders of the parent(1) 7 065 5 231 35%
Return on net asset value (%) 11.1% 170 bps
9.4%
Return on net asset value excluding new growth initiatives (%)(2) 13.1% 11.0% 210 bps
Group equity value 90 114 89 477 1%
Discretionary capital (Rbn) 1.1 3.5 (69%)
Group solvency ratio (%)(1,3) 178% (>100 bps)
188%
Dividend cover (times)(4) 1.5 1.7 (12%)
Per share measures
Cents FY 2023 FY 2022 Change
Adjusted headline earnings per share(5) 129.0 106.4 21%
Headline earnings per share(1) 165.5 129.2 28%
Basic earnings per share(1) 158.4 115.5 37%
Total dividend per share 81 76 7%
Interim dividend 32 25 28%
Final dividend 49 51 (4%)
Group equity value per share(6) 1 880.9 1 820.9 3%
Supplementary performance indicators
Rm (unless otherwise stated) FY 2023 FY 2022 Change
Life and Savings and Asset Management
Gross flows 203 802 178 027 14%
Net client cash flow (7 510) (12 425) 40%
Funds under management (Rbn) 1 331.0 1 231.1 8%
Life and Savings
Life APE sales 14 604 12 501 17%
Value of new business 1 921 1 400 37%
Value of new business margin (%) 2.3% 2.2% 10 bps
Banking and Lending
Loans and advances 19 391 19 009 2%
Net lending margin (%) 11.3% 13.1% (180 bps)
Property and Casualty
Gross written premiums 25 513 22 344 14%
Insurance revenue 25 204 22 082 14%
Net underwriting margin (%) 0.1% 1.4% (130 bps)
1 These metrics include the results of Zimbabwe. All other key performance
indicators exclude Zimbabwe
2 Return on net asset value excluding new growth initiatives was previously
reported as core return on net asset value. This key performance indicator
excludes adjusted headline earnings and equity impacts as well as any expected
investment over the next 12 months into these initiatives. The prior year has
been re-presented from 10.8% to 11.0%
3 The prior year has been re-presented to align results to the audited
Prudential Authority submission
4 The dividend declared of 76 cents per share which amounted to a dividend
cover of 1.7 times on an IFRS 4 basis was approved by the Board in 2022
5 Adjusted headline earnings per share is calculated with reference to
adjusted weighted average number of ordinary shares. Weighted average number
of shares used in the calculation of the adjusted headline earnings per share
is 4 544 million (FY 2022: 4 557 million)
6 Group equity value per share is calculated with reference to closing
number of ordinary shares. Closing number of shares used in the calculation of
the Group equity per share is 4 791 million (FY 2022: 4 914 million)
Short form announcement
This short form announcement is the responsibility of the Board. It is only a
summary of the information contained in the Group annual results and the
annual reporting suite which can be found on our website at
https://www.oldmutual.com/investor-relations/reporting-centre/reports
(https://www.oldmutual.com/investor-relations/reporting-centre/reports) and
the dividend declaration can be found on our website at
https://www.oldmutual.com/investor-relations/dividend-information/
(https://www.oldmutual.com/investor-relations/dividend-information/) .
This short form SENS has itself not been audited but contains extracts from
the consolidated annual financial statements. The annual reporting suite
includes the consolidated annual financial statements which is also available
on the JSE cloudlink and has been audited by the independent joint auditors,
Deloitte & Touche and Ernst & Young Inc, who expressed an unmodified
opinion thereon. Any reference to future financial performance has not been
audited by or reported on by the Group's independent joint auditors. The Group
annual results include non-IFRS financial measures which have not been audited
or reported on by the independent joint auditors. The non-IFRS measures
provide information that is useful to investors and are appropriate to assess
the Group's operational results and financial performance.
The consolidated annual financial statements and the independent joint
auditors audit opinion is available on the Company's website at
https://www.oldmutual.com/investor-relations/reporting-centre/reports/
(https://www.oldmutual.com/investor-relations/reporting-centre/reports/) . Any
investment decisions by investors and/or shareholders should therefore be
based on consideration of the consolidated annual financial statements
accessible via the JSE cloudlink
https://senspdf.jse.co.za/documents/2024/jse/isse/OMUE/FY23Result.pdf
(https://senspdf.jse.co.za/documents/2024/jse/isse/OMUE/FY23Result.pdf) and on
our website above as the information in this announcement does not provide all
the details. While the consolidated annual financial statements are available
on the JSE cloudlink, the rest of the annual reporting suite and Group annual
results are only available on the Company's website. The consolidated annual
financial statements are available for inspection at the registered office of
the Company and the Sponsor, at no charge, during office hours from the date
of this announcement for a period of 30 days.
Final dividend declaration
The Old Mutual Limited Board declared a final dividend of 49 cents per share.
This results in a full year dividend of 81 cents per share and a dividend
cover of 1.5 times for the 2023 year, which is in line with Old Mutual
Limited's dividend cover target range of 1.5x to 2.0x adjusted headline
earnings over the financial year. The growth in the full year dividend from
the prior year is as a result of our robust operational performance and strong
capital and liquidity position. The final dividend will be paid out of
distributable income reserves to all ordinary shareholders recorded on the
record date.
Shareholders on the London, Zimbabwean, Malawian and Namibian registers will
be paid in the local currency equivalents of the final dividend. Shareholders
on the Zimbabwean register will be paid the equivalent of the final dividend
in United States Dollars.
Old Mutual's income tax number is 9267358233. The number of ordinary shares in
issue in the Company's share register at the date of declaration is 4 790 906
428.
JSE, MSE, NSX, ZSE LSE
Declaration date Wednesday, Wednesday,
27 March 2024 27 March 2024
Finalisation announcement and exchange rates announced Tuesday, Tuesday,
9 April 2024 by 11.00 9 April 2024 by 11.00
Transfers suspended between registers Close of business on Tuesday, Close of business on Tuesday,
9 April 2024 9 April 2024
Last day to trade cum dividend for shareholders on the South African register Tuesday,
and Malawi, Namibia and Zimbabwe branch registers
16 April 2024
Ex-dividend date for shareholders on the South African register and Malawi, Wednesday,
Namibia and Zimbabwe branch registers
17 April 2024
Last day to trade cum dividend for shareholders on the UK register Wednesday,
17 April 2024
Ex-dividend date for shareholders on the UK register Thursday,
18 April 2024
Record date (South African register and Malawi, Namibia and Zimbabwe branch Close of business on Friday,
registers)
19 April 2024
Record date (UK register) Friday,
19 April 2024
Transfers between registers restart Opening of business on Monday, Opening of business on Monday,
22 April 2024 22 April 2024
Final dividend payment date Monday, Tuesday,
22 April 2024 21 May 2024
Share certificates for shareholders on the South African register may not be
dematerialised or rematerialised between Wednesday, 17 April 2024 and Friday,
19 April 2024, both dates inclusive. Transfers between the registers may not
take place between Tuesday, 9 April 2024 at close of business and Friday, 19
April 2024. Trading in shares held on the Namibian branch register through Old
Mutual (Namibia) Nominees Proprietary Limited will not be permitted between
Tuesday, 9 April 2024 at close of business and Friday, 19 April 2024, both
days inclusive.
The dividend for South African shareholders will be subject to dividend
withholding tax of 20% for all shareholders who are not exempt from or do not
qualify for a reduced rate of withholding tax. International shareholders who
are not exempt or are not subject to a reduced rate in terms of a double
taxation agreement will be subject to dividend withholding tax of 20%. The net
dividend payable to shareholders subject to withholding tax of 20% amounts to
39.20000 cents per ordinary share. Distributions made through the dividend
access trust or similar arrangements established in a country will not be
subject to South African withholding tax, but may be subject to withholding
tax in the relevant country. We recommend that shareholders consult with their
tax adviser regarding the in-country withholding tax consequences.
Shareholders that are tax residents in jurisdictions other than South Africa
may qualify for a reduced rate under a double taxation agreement with South
Africa. To apply for this reduced rate, non-South African taxpayers should
complete and submit a declaration form to the respective registrars. The
declaration form can be found
at:https://www.oldmutual.com/investor-relations/dividend-information/
(https://www.oldmutual.com/investor-relations/dividend-information/) .
The Company's Notice of Annual General Meeting, together with a form of proxy,
will be distributed to shareholders before 30 April 2024.
Notes to editors
A webcast of the presentation for the 2023 Annual results and Q&A will be
broadcast live on Wednesday, 27 March 2024 at 12:00 South African time on the
Investor Relations website: https://www.oldmutual.com/investor-relations/
(https://www.oldmutual.com/investor-relations/) . Analysts and investors who
wish to participate in the call may do so using the following link or
telephone numbers below:
https://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=9466404&
(https://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=9466404&linkSecurityString=1db3b86f10)
linkSecurityString=1db3b86f10
(https://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=9466404&linkSecurityString=1db3b86f10)
South Africa +27 10 500 4108
UK +44 203 608 8021
Australia +61 73 911 1378
USA +1 412 317 0088
International +27 10 500 4108
Replay access code 45908
To access the replay using an international dial-in number, please select the
link below:
https://services.choruscall.com/ccforms/replay.html
(https://services.choruscall.com/ccforms/replay.html)
The replay will be available until 1 April 2024.
Sponsors
JSE equity sponsor: Tamela Holdings (Proprietary) Limited
JSE debt sponsor: Nedbank Corporate and Investment Banking, a division of
Nedbank Limited
NSX: PSG Wealth Management (Namibia) (Proprietary) Limited
ZSE: Imara Capital Zimbabwe plc
MSE: Stockbrokers Malawi Limited
Enquiries
Investor Relations
Langa Manqele
M: +27 (0)82 295 9840
E: investorrelations@oldmutual.com (mailto:investorrelations@oldmutual.com)
Communications
Wendy Tlou
M: +27 (0)83 301 9663
E: oldmutualnews@oldmutual.com (mailto:oldmutualnews@oldmutual.com)
About Old Mutual Limited
Old Mutual is a premium African financial services group that offers a broad
spectrum of financial solutions to retail and corporate customers across key
market segments in 14 countries. Old Mutual's primary operations are in Africa
and it has a niche business in China. With over 178 years of heritage across
sub-Saharan Africa, Old Mutual is a crucial part of the communities it serves
as well as broader society on the continent. For further information on Old
Mutual Limited and its underlying businesses, please visit the Corporate
website at www.oldmutual.com.
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