Slide 1: 2019 Interim Results
2019 INTERIM RESULTS
Slide 2: Agenda
AGENDA 1 H1 2019 OVERVIEW Iain Williamson, Interim Group CEO 2 2019 INTERIM RESULTS Casper Troskie, Group CFO 3 CONCLUDING REMARKS Iain Williamson, Interim Group CEO 4 Q&A 2
Slide 3: H1 2019 Overview
H1 2019 OVERVIEW Strong financial Operational Optimisation of Distributions to delivery effectiveness balance sheet shareholders • AHE up 10% from • 122 Bots have • New debt of • Interim strong investment saved 2.8 million R2 billion at dividend of returns minutes of improved rates 45 cents per • RF
Slide 4: Impact of the South African Macro Environment
IMPACT OF THE SOUTH AFRICAN MACRO ENVIRONMENT Equity market levels - SWIX 13 500 Impact on our business 13 000 Average market levels have not 12 500 12 000 recovered to H1 2018 levels 11 500 Although SA equity markets are up 7% in 11 000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec H1 2019 20
Slide 5: Overview of the Rest of Africa Macro Environment
OVERVIEW OF THE REST OF AFRICA MACRO ENVIRONMENT Zimbabwe Kenya Real GDP Equity market levels 1 Real GDP growth and inflation2,3 Inflation % 700 6.0% 5.7% 5.7% 5.8% 5.8% 600 5.6% 500 4.4% 400 300 200 100 0 N/A Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 FY 2018 Q1 2019 Q2 2
Slide 6: Our Strategy
OUR STRATEGY 1. Defend and grow SA market share in Mass and Corporate markets Meet the core needs of our customers every day 8. Cost efficiency 2. Defend and grow leadership in SA Personal ACCELERATE GROWTH Finance market Become a digital platform business 7. Refresh the STRENGTHEN THE 3. Improv
Slide 7: Technology Refresh
TECHNOLOGY REFRESH Customer lead Simplified estate Always on We focus on helping our We simplify our estate to be We focus on delivering an business deliver a better nimble, more cost efficient always-on service, based on experience for end customers and more flexible in order to cost-effective but
Slide 8: H1 2019 - Robotics Highlights
H1 2019 - ROBOTICS HIGHLIGHTS
Slide 9: Defend and Grow SA Market Share in Mass Market
DEFEND AND GROW SA MARKET SHARE IN MASS MARKET -6% +9% 2,142 18,073 Commendable performance in tough environment 2,019 16,518 Life APE sales down due to lower productivity H1 2018 H1 2019 NCCF growth driven by savings inflows and growth in life in-force book Life APE sales Loans and advances Loa
Slide 10: Defend and Grow SA Market Share in Corporate Market
DEFEND AND GROW SA MARKET SHARE IN CORPORATE MARKET +24% -3.1 1,793 0.8 Strong Life APE sales with healthy pipeline of flows 1,451 Life APE sales up 24% with growth in recurring premiums driven by umbrella fund sales H1 2018 H1 2019 Single premium flows down 26% led to a Life APE sales -2.3 decl
Slide 11: Defend and Grow in SA Personal Finance Market
DEFEND AND GROW IN SA PERSONAL FINANCE MARKET +2% +0.2 Recovery of profits in a tough environment 1,221 1,242 Life APE sales up 2% due to growth in recurring premium risk and savings sales H1 2018 Profit improvement largely due to improved H1 2019 mortality and morbidity experience -1.6 Life APE
Slide 12: Improve the Competitiveness of Wealth and Investments
IMPROVE THE COMPETITIVENESS OF WEALTH AND INVESTMENTS -14% Investor sentiment putting pressure on flows -8.3 Gross flows down 14% due to shift to income 45.1 10.9 38.8 type solutions Annuity revenue up 2% in line with Average 2.6 AUM increase of 2% H1 2018 H1 2019 Gross flows NCCF Restructuring
Slide 13: H1 2019 - Investment Activity
H1 2019 - INVESTMENT ACTIVITY
Slide 14: Continued Turnaround of Old Mutual Insure
CONTINUED TURNAROUND OF OLD MUTUAL INSURE +14% -21% 370 Strong top line growth, catastrophe claims 7,198 reduced underwriting margin 6,293 294 CATS GWP growth across all lines of business and RFO 153 growth from strategic partnerships H1 2018 141 H1 2019 Catastrophe losses below the reinsurance
Slide 15: Turnaround in East Africa and Improved Returns Across RoA
TURNAROUND IN EAST AFRICA AND IMPROVED RETURNS ACROSS ROA +12% +7% Strong RFO growth across all regions driven by top line growth 1,682 3,917 1,505 3,666 Southern Africa – profit growth due to strong unit trust inflows in Asset Management and good H1 2018 performance in the Banking and Lending H1
Slide 16: Financial Review
FINANCIAL REVIEW Casper Troskie
Slide 17: Financial Delivery in H1 2019
FINANCIAL DELIVERY IN H1 2019 AHE RoNAV Free surplus Group solvency RoEV R5,211 16,4% R3,739 166% 11.7% million million Up 10 % Reflecting Free cash Remains well Higher reflecting higher levels more than within target investment higher of covering range return and shareholder shareholder dividend im
Slide 18: Complexities of Zimbabwe Accounting
COMPLEXITIES OF ZIMBABWE ACCOUNTING FX difference between average and closing rate FX difference on 42 opening to closing 493 NAV 1 108 2 407 1 780 1 464 180 Opening NAV IFRS profits translated Impact of Translation of FX translation of NAV Other Closing NAV – at 31 Dec 2018 at average rate hyperinf
Slide 19: Segment Delivery
SEGMENT DELIVERY Segment contribution to Rm H1 2019 H1 2018 % Change Results from operations Mass and Foundation Cluster 1,512 1,534 (1%) 5%(4%) 3% Personal Finance 1,227 918 34% 34% 19% Wealth and Investments 710 783 (9%) Old Mutual Corporate 870 854 2% Old Mutual Insure 141 370 (62%) 16% 27% Rest
Slide 20: Sources of Earnings
SOURCES OF EARNINGS RFO by line of business (Rm) Life and Savings RFO (Rm) 7% 3,590 -315 H1 2018 3,574 3,365 -200 306 593 536 -530 H1 2019 389 3,552 344 270 137 431 102 H1 2018 H1 2019 Life and Savings Banking and Lending New business strain Non-economic experience Asset Management Property and Casu
Slide 21: Adjusted Headline Earnings
ADJUSTED HEADLINE EARNINGS Rm H1 2019 H1 2018 % Change 1 Central expenses reflect full run rate Operating segments 4,674 4,515 4% for incremental listing costs offset by one off income items and lower 1 Central expenses (162) (89) (82%) project expenses Results from Operations 4,512 4,426 2% 2 Assis
Slide 22: IFRS Profit Impacted by Managed Separation Transactions
IFRS PROFIT IMPACTED BY MANAGED SEPARATION TRANSACTIONS IFRS profit (Rm) 12 867 Impact of Managed Separation 5 408 +20% 5 817 49 162 4 023 4 834 1 204 10 1 398 IFRS Profit Nedbank and Profit on Nedbank equity OML perimeter Nedbank equity Reduction in Decrease in Other IFRS Profit H1 2018 Quilter pro
Slide 23: Cash Generation in H1 2019
CASH GENERATION IN H1 2019 Impact on conversion 101% (21%) 80% (18%) 72% ratio (%) 3,862 3,739 817 694 3,045 Free surplus generation (Rm) Gross operating segments Capital requirements Net operating segments Nedbank Free surplus generated from operations ■ Increase in capital requirements due to the
Slide 24: Balance Sheet Optimisation
BALANCE SHEET OPTIMISATION Debt Financing Share Buybacks OMLACSA successfully issued R2 billion of unsecured Completed a R2.5 billion share buyback in H1 2019, representing subordinated debt on 11 June 2019, guaranteed by OML 2.24% of issued share capital Floating rate of 155 bps above the 3 m
Slide 25: Group Solvency Position
GROUP SOLVENCY POSITION Ratio (%) 218% (10%) (31%) (2%) (1%) (8%) 166% 101.7 25.4 75.7 3.7 1.2 25.4 21.1 Own Funds (Rbn) OMLACSA Consolidation Nedbank Old Mutual Insure Residual plc Other Old Mutual adjustments Limited Group ■ Strong capital position where risks are managed, even after ■ Residual pl
Slide 26: Analysis of Embedded Value
ANALYSIS OF EMBEDDED VALUE 68 397 10 560 64 103 2 994 116 862 64 146 A B C D E F Opening EV New business value Existing business Experience Development Assumption and Economic Closing Closing EV contributions variances cost variances model changes variances adjustments A Value of profitable new bu
Slide 27: Group Equity Value
GROUP EQUITY VALUE R116.7 R24.16 per share Multiple on VNB Valuation AHE Category technique (Rm) Covered Embedded value 3,183 102.4 business Non covered Fair value 757 +40.9 -26.6 Nedbank Market value 1,388 68.4 75.8 Residual plc Economic NAV n/a Zimbabwe Discounted IFRS n/a NAV 36.2 Other Includes
Slide 28: Outlook on Our Medium Term Targets
OUTLOOK ON OUR MEDIUM TERM TARGETS Performance FY 2019 KPI Target H1 2019 Outlook RETURNS RoNAV Average COE + 4% 16.4% Challenging Results from GROWTH CAGR of Nominal GDP + 2% Up 2% Challenging operations R750 million in 2018 Cost and an additional R1 billion by end 2019 pre-tax run rate cost saving
Slide 29: Concluding Remarks
CONCLUDING REMARKS Iain Williamson
Slide 30: Outlook for H2 2019
OUTLOOK FOR H2 2019 Diversified and Operational Value creation for Resilient effectiveness shareholders • Well positioned • Old Mutual • Continued to withstand Protect delivery focus on economic • Continued simplification of headwinds in improvement of balance sheet H2 of 2019 customer • R4.9 billio
Slide 31: Q&A
Q&A
Slide 32: Thank You
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Slide 33: Disclaimer
DISCLAIMER This presentation may contain certain forward-looking statements with respect to certain of Old Mutual Limited’s plans and its current goals and expectations relating to its future financial condition, performance and results and, in particular, estimates of future cash flows and costs. B