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
earnings1
|
7
380
|
5
854
|
26%
|
IFRS profit after tax attributable
to equity holders of the parent1
|
7
065
|
5
231
|
35%
|
Return on net asset value
(%)
|
11.1%
|
9.4%
|
170
bps
|
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%
|
188%
|
(>100
bps)
|
Dividend cover
(times)4
|
1.5
|
1.7
|
(12%)
|
Per share measures
Cents
|
FY 2023
|
FY
2022
|
Change
|
Adjusted headline earnings per
share5
|
129.0
|
106.4
|
21%
|
Headline earnings per
share1
|
165.5
|
129.2
|
28%
|
Basic earnings per
share1
|
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
share6
|
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
and the dividend declaration can be found on our
website at
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/.
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
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,
27 March
2024
|
Wednesday,
27 March
2024
|
Finalisation announcement and
exchange rates announced
|
Tuesday,
9 April
2024 by 11.00
|
Tuesday,
9 April
2024 by 11.00
|
Transfers suspended between
registers
|
Close of
business on Tuesday,
9 April
2024
|
Close of
business on Tuesday,
9 April
2024
|
Last day to trade cum dividend for
shareholders on the South African register and Malawi, Namibia and
Zimbabwe branch registers
|
Tuesday,
16 April
2024
|
|
Ex-dividend date for shareholders on
the South African register and Malawi, Namibia and Zimbabwe branch
registers
|
Wednesday,
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 registers)
|
Close of
business on Friday,
19 April
2024
|
|
Record date (UK register)
|
|
Friday,
19 April
2024
|
Transfers between registers
restart
|
Opening of
business on Monday,
22 April
2024
|
Opening of
business on Monday,
22 April
2024
|
Final dividend payment
date
|
Monday,
22 April
2024
|
Tuesday,
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/.
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/.
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&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
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
Communications
Wendy Tlou
M: +27 (0)83 301
9663
E: 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.