Slide 1: Group Interim Results 2018
GROUP INTERIM RESULTS 2018 31 August 2018
Slide 2: Agenda
AGENDA 1 H1 2018 OVERVIEW Peter Moyo, Group CEO 2 FINANCIAL REVIEW Casper Troskie, Group CFO 3 CONCLUDING REMARKS Peter Moyo, Group CEO 4 Q&A 2
Slide 3: H1 2018 Overview
H1 2018 OVERVIEW Starting our journey, creating momentum and re-energising the business Significant capital returns to shareholders, a total of R46.8 billion in Q4 2018 Strategic delivery on our battlegrounds, with good progress during H1 2018 Good financial delivery against key targets 3
Slide 4: Starting our journey
STARTING OUR JOURNEY “What’s most exciting about our listing as an independent, standalone entity is that it enables us to unlock shareholder value and create a business with a strong strategic focus on sub-Saharan Africa” 4
Slide 5: Core components of value
CORE COMPONENTS OF VALUE Operating segments Other Group Activities Crystalising value Distribution Mass and Personal Foundation Finance Investment in Latin 32% Cluster associates1 America of Nedbank Old Mutual Wealth and Corporate Investments Enabling Residual Dividends Old Mutual Rest of functions
Slide 6: Delivering returns to shareholders in Q4 2018
DELIVERING RETURNS TO SHAREHOLDERS IN Q4 2018 16 October 20185 16 October 20185 Q4 20185 First interim Special Nedbank Total dividend dividend unbundling value R2.2 billion1 R4.9 billion2 R39.6 billion3 R46.8 billion6 45 cents per share 100 cents per share 801 cents per share 946 cents per share Cap
Slide 7: On track to complete Nedbank unbundling
ON TRACK TO COMPLETE NEDBANK UNBUNDLING Preparation for unbundling Unbundling process Long term strategic relationship • Shareholder register transitioning • Expect unbundling to happen in • Long term holder of 19.9% to SA and emerging markets Q4 2018 • Underpins continuing relationship focused inve
Slide 8: Good progress on our 8 battlegrounds
GOOD PROGRESS ON OUR 8 BATTLEGROUNDS 1. Defend SA market share in mass and corporate markets 1 8. Cost efficiency 2. Defend and grow in SA leadership 8 Personal Finance market 7. Refresh the Management 3. Improve the technology 7 actions 3 competitiveness of Wealth and Investments offering 6. Win th
Slide 9: Solid financial delivery
R7.8bn SOLID FINANCIAL DELIVERY +13% 9.4 5,810 5,139 • NCCF up R7.8 billion – excellent NCCF in Wealth and Investments and Old Mutual Corporate. • Life APE sales up 13% - strong covered sales in 1.6 Mass and Foundation Cluster and Old Mutual NCCF Life APE sales H1 2017 Corporate (Rbn) (Rm) H1 2018 •
Slide 10: Solid overall segment delivery
SOLID OVERALL SEGMENT DELIVERY Segment contribution to Results Rm H1 2018 H1 2017 Change % from Operations Mass and Foundation Cluster 1,534 1,306 17% -2% 10% Personal Finance 918 1,394 (34%) 7% 32% Wealth and Investments 783 638 23% 18% Old Mutual Corporate 854 800 7% 19% Old Mutual Insure 370 200
Slide 11: Mass and Foundation Cluster
MASS AND FOUNDATION CLUSTER +21% +11% 2,142 13,432 12,070 1,766 Excellent sales growth • Life APE sales up 21%, due to growth in advisers and improvement in productivity Life APE sales Loans and advances H1 2017 • 9 new additional branches, our branch network (Rm) (Rm) 1 H1 2018 continues to deliver
Slide 12: Old Mutual Corporate
R1.1bn OLD MUTUAL CORPORATE +25% 1,451 0.8 1,159 Strong sales performance in H1 2018 • Life APE sales up 25% due to strong single premium deals • NCCF up R1.1 billion due to strong sales growth H1 2017 Life APE sales -0.3 supported by improved termination experience (Rm) H1 2018 NCCF (Rbn) Stable pr
Slide 13: Personal Finance
PERSONAL FINANCE -2% R(0.5)bn 1,241 1,221 Top line growth marginally down but strong contribution to other segments • Life APE sales down 2% due to lower recurring -1.3 premium sales on savings and risk products -1.8 H1 2017 reflecting pricing discipline. Single premium sales Life APE sales (Rm) NCC
Slide 14: Wealth and Investments
R9.1bn WEALTH AND INVESTMENTS +6% 45,114 10.9 42,405 Good flows in a subdued market • Gross flows up 6% due to strong flows in both Old Mutual International and SA retail platform 1.8 • NCCF up R9.1 billion reflecting a strong H1 2017 Gross flows NCCF contribution from retail Wealth flows and a lowe
Slide 15: Old Mutual Insure
OLD MUTUAL INSURE +3% +85% 6,098 6,293 370 Conservative growth in tough markets 200 • GWP up 3% - slow new business volumes due to tough market conditions and tighter underwriting criteria Gross written premiums (GWP) RFO H1 2017 • iWYZE delivered strong growth (Rm) (Rm) H1 2018 Strong profit growth
Slide 16: Rest of Africa
R(0.9)bn REST OF AFRICA +26% 1.6 14,206 11,241 Mixed sales performance 0.7 • NCCF down R0.9 billion as a result of large outflows in Namibia due to regulatory rebalancing H1 2017 NCCF Loans and advances • Growth in loans and advances of 26% driven by (Rbn) (Rm)1 H1 2018 CABS in Zimbabwe Significant
Slide 17: Financial Review
FINANCIAL REVIEW Casper Troskie
Slide 18: Overview of macro environment
OVERVIEW OF MACRO ENVIRONMENT Equity markets ZSE Industrial Index Rebased to 100 130 600 500 120 400 110 300 100 200 JSE Top40 JSE SWIX All Share 100 90 Jan-17 Mar-17 Jun-17 Aug-17 Nov-17 Jan-18 Apr-18 Jun-18 Jan-17 Mar-17 Jun-17 Aug-17 Nov-17 Jan-18 Apr-18 Jun-18 Currency (USD vs ZAR) Real GDP Grow
Slide 19: Continued delivery on our financial promises
CONTINUED DELIVERY ON OUR FINANCIAL PROMISES Strong financial delivery against key targets Consistent cash generation supporting dividends Progress in simplifying balance sheet Simplifying balance sheet 19
Slide 20: Mapping components to key profit measures
MAPPING COMPONENTS TO KEY PROFIT MEASURES Operating segments Other Group Activities Mass and Personal Results Foundation Cluster Finance from Old Mutual Wealth and Operations Corporate Investments Central expenses Old Mutual Rest of Insure Africa Shareholder investment return Adjusted Headline Finan
Slide 21: Our results at a glance
OUR RESULTS AT A GLANCE Results from operations Adjusted headline earnings IFRS profit (Rmillion) (Rmillion) (Rmillion) +7% +1% +42% 4,848 5,359 5,393 10,648 4,530 7,503 H1 2017 H1 2018 H1 2017 H1 2018 H1 2017 H1 2018 ■ 7% increase in RFO from H1 2017 ■ AHE negatively impacted by lower ■ 42% increas
Slide 22: Adjusted headline earnings
ADJUSTED HEADLINE EARNINGS Rm H1 2018 H1 2017 Change % 1 Reduction due to allocation of Operating segments 4,937 4,706 5% project expenses to segments, 1 Central expenses (89) (176) 49% partially offset by increase in costs relating to listing capability Results from operations 4,848 4,530 7% 2 Shar
Slide 23: Impact of expense allocation
IMPACT OF EXPENSE ALLOCATION R414m of project costs allocated to …. Impacting segment RFO growth rates in H1 20181 segments in H1 2018… Reported Impact on Adjusted 42 RFO growth RFO growth RFO growth rate rate rate 19 129 Mass and Foundation Cluster 17% (10%) +27% 37 414 Personal Finance (34%) (10%)
Slide 24: Adjusted headline earnings to IFRS profit in H1 2018
ADJUSTED HEADLINE EARNINGS TO IFRS PROFIT IN H1 2018 3 5 10,648 4 7 1,398 2,855 1 2 901 7,800 4,536 5,393 620 450 Rm Adjusted Investment return Impact of Discontinued Nedbank (19.9%) Residual plc Headline Earnings Profit on disposal Other IFRS profit Headline Earnings in respect of restructuring Ope
Slide 25: Evolution of income statement over time
EVOLUTION OF INCOME STATEMENT OVER TIME H1 2017 H1 2018 Illustrative future view -6% 2% 13% 27% Adjusted Headline Earnings 51% Residual plc R7,503 71% R10,648 Discontinued operations 42% Profit on disposal of subsidiaries Other adjusting items 29% -20% -9% ■ Managed Separation transactions create vo
Slide 26: Strong cash generation in H1 2018
STRONG CASH GENERATION IN H1 2018 Impact on conversion 100% (15%) 85% (13%) 72% (8%) 64% ratio (%) 5,393 823 4,570 699 3,871 400 3,471 Free Surplus generation (Rm) Adjusted Capital requirements Free surplus 50% of Nedbank Free surplus Fungibility restriction Free Surplus headline earnings and other
Slide 27: Our balance sheet at a glance
OUR BALANCE SHEET AT A GLANCE RoNAV Gearing1 Group solvency ratio2 (%) (%) (%) -1.9 -1.0 -3.0 19.4 13.0 167.0 164.0 17.5 12.0 H1 2017 H1 2018 FY 2017 H1 2018 FY 2017 H1 2018 ■ Reduction largely as a result of lower ■ Reduction in gearing as a result of increase ■ Reduction due to declaration of 2018
Slide 28: Resilient group solvency position at 30 June 2018
RESILIENT GROUP SOLVENCY POSITION AT 30 JUNE 2018 Ratio (%) 240% (31%) (23%) (8%) (13%) 164% 102 76 33 4 29 18 Own Funds (Rbn) OMLACSA Consolidation adjustments Nedbank Residual plc Other Old Mutual Limited Group ■ Strong capital position where risks are managed, ■ Residual plc included at 100% refl
Slide 29: Group equity value
GROUP EQUITY VALUE Uplift of nearly R54 billion to NAV…. before placing any additional value on non covered assets TBD 138.0 4.2 7.2 -33 Headline earnings2 104.6 +54 39.6 Category Valuation technique (R million) 16.1 Non covered Peer multiples 984 3.7 11.2 24.8 Latin America Contractual selling n/a
Slide 30: On track to deliver our financial targets
ON TRACK TO DELIVER OUR FINANCIAL TARGETS Performance Outlook for KPI Target H1 2018 FY 2018 RETURNS RoNAV • Average COE + 4% 17.5% On track (weighted average COE of 13.4%) GROWTH Results from • CAGR of Nominal GDP + 2% over the three years Up 7% On track operations to 2020 (average nominal GDP grow
Slide 31: Concluding Remarks
CONCLUDING REMARKS Peter Moyo
Slide 32: Closing remarks
CLOSING REMARKS Significant capital returns to shareholders, continuing to unlock value Continue to drive progress on our battlegrounds Confident we will deliver full year 2018 results in line with our targets Confident we will deliver full year 2018 results in line with our targets 32
Slide 33: Q&A
Q&A
Slide 34: 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