Slide 1: 2018 Results
2018 RESULTS
Slide 2: Agenda
AGENDA 2018 OVERVIEW Peter Moyo, Group CEO FINANCIAL REVIEW Casper Troskie, Group CFO CONCLUDING REMARKS Peter Moyo, Group CEO Q&A 2
Slide 3: 2018 – A Year of Delivery and Execution
2018 – A YEAR OF DELIVERY AND EXECUTION Progress on our eight battlegrounds Managed Separation activities and transactions completed On track to deliver against our medium term targets, although some headwinds ahead Delivered in a sustainable and responsible way 3
Slide 4: Impact of the South Africa Macro Environment
IMPACT OF THE SOUTH AFRICA MACRO ENVIRONMENT Equity market levels 1 Impact on our business 14,000 Closing equity market levels down 14%1 13,000 in 2018 Average FUM levels in SA of R957 billion, 12,000 up 3%, supported by strong NCCF 11,000 10,000 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18
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 and inflation growth2 Inflation % 600 6.2% 5.8% 6.0% 5.7% 5.7% 500 4.8% 400 4.3% 300 200 100 0 Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Q1 2018 Q2 2018 Q3 2018 Q4 2018 17
Slide 6: Delivering Against Our Medium Term Targets
DELIVERING AGAINST OUR MEDIUM TERM TARGETS Performance KPI Target 2018 RETURNS RoNAV Average COE1 + 4% 18.6% Results from GROWTH operations CAGR of Nominal GDP + 2% Down 4% Cost efficiencies R1 billion by end 2019 pre-tax run-rate cost savings R750 million EFFICIENCY Underwriting result Old Mu
Slide 7: Attractive Capital Returns in 2018 and Beyond
ATTRACTIVE CAPITAL RETURNS IN 2018 AND BEYOND R45.9 billion distributed in 2018 At least R5.6 billion to be Total 930 cents per share distributed in 2019 value Interim Special Nedbank Final Share dividend dividend unbundling dividend buyback R51.5 billion R2.2 billion R4.9 billion R38.8 billion1 R3.
Slide 8: Solid Progress on Our Battlegrounds
SOLID PROGRESS ON OUR BATTLEGROUNDS 1. Defend and grow SA market share in Mass and Corporate markets 8. Cost efficiency 2. Defend and grow in SA leadership Personal Finance market 7. Refresh the Management 3. Improve the competitiveness of Wealth and Investments technology offering actions 6. Win th
Slide 9: Defend and Grow SA Market Share in Mass Market
DEFEND AND GROW SA MARKET SHARE IN MASS MARKET +12% +37% Strong sales despite economic headwinds 4,579 16,518 4,091 Life APE sales up 12% due to higher average 12,070 adviser headcount and improved productivity 2017 Loans and advances up 37% due to higher 2018 consultant productivity, customer t
Slide 10: Defend and Grow SA Market Share in Corporate Market
DEFEND AND GROW SA MARKET SHARE IN CORPORATE MARKET +9.1 +15% 3,133 2.0 2,719 Excellent flows in competitive environment Life APE sales up 15% - reflects good growth across all major product lines except annuities 2017 2018 Life APE sales -7.1 NCCF improved following new mandates (Rm) NCCF secur
Slide 11: Defend and Grow in SA Personal Finance Market
DEFEND AND GROW IN SA PERSONAL FINANCE MARKET +2% -0.8 2,502 2,556 Stable Life APE sales, decline in NCCF Good growth in single premium and annuity sales 2017 Lower recurring premium savings sale, risk flat -2.8 2018 Life APE sales -3.6 (Rm) NCCF NCCF weaker due to poor claims experience and (
Slide 12: Improve the Competitiveness of Wealth and Investments
IMPROVE THE COMPETITIVENESS OF WEALTH AND INVESTMENTS +1% -3.3 Strong flows in difficult market and competitor 88.3 89.2 14.1 environment 10.8 Strong retail flows in Old Mutual International and on the Wealth platform 2017 Positive NCCF supported by excellent retail 2018 flows (up 35%). Outflows
Slide 13: Continued Turnaround of Old Mutual Insure
CONTINUED TURNAROUND OF OLD MUTUAL INSURE +6% +28% Modest Gross Written Premium (GWP) growth in 12,481 13,218 670 challenging market conditions 524 Growth driven by pricing improvements 2017 Increase in flows through strategic partnerships 2018 GWP RFO Strong growth in iWyze (Rm) (Rm) Underwri
Slide 14: Turnaround East African Business and Improve Returns Across ROA
TURNAROUND EAST AFRICAN BUSINESS AND IMPROVE RETURNS ACROSS ROA -4% -1% -36% +37% Mixed top line growth reflects difficult economic 3,654 3,512 11,241 environment 7,219 Southern Africa – gross flows flat despite impact of recession in Namibia. Large non life inflows 2017 secured in Malawi 2018 E
Slide 15: Win the War for Talent
WIN THE WAR FOR TALENT Built a diverse, engaged and talented Extensive engagement with our employees Executive team to lead the organisation to drive required culture shifts Executive team build completed with Engaged 10,000 employees through appointments of Khaya Gobodo and face to face and mobile
Slide 16: Refresh the Technology Offering
REFRESH THE TECHNOLOGY OFFERING Launched Rapid adoption of AI MyOldMutual, our new technologies including Deliver in line with our Simplified and digital secure customer customers’ changing robotic process and enabled advice tools portal, on cloud system automations wants and needs infrastructure Wh
Slide 17: Cost Efficiency Leadership
COST EFFICIENCY LEADERSHIP +480 Rm 750 52 145 R750 million of gross recurring Consultants and procurement 59 savings achieved in 2018, on IT and IT processes Marketing and distribution track for R1 billion in 2019 and People and operating model Property and facilities expect to maintain expense 322
Slide 18: Financial Review
FINANCIAL REVIEW Casper Troskie
Slide 19: Key Reporting Judgements in 2018
KEY REPORTING JUDGEMENTS IN 2018 Zimbabwe Change in functional currency to RTGS applied from 1 October 2018 functional Estimated rate of 3.3 RTGS to 1 USD currency Material impact on reported profits and net asset value IFRS profits include profits of R23.2 billion related to the distributio
Slide 20: Financial Delivery in 2018
FINANCIAL DELIVERY IN 2018 Headline Earnings RoNAV Free surplus generated Group solvency ratio from operations R14,241 million 18.6% R6,585 million 170% Mainly reflecting Above COE1 +4% Free cash Mainly reflecting lower Residual covering higher holding plc losses dividend company cash payments and l
Slide 21: Segment Delivery
SEGMENT DELIVERY Segment contribution to Rm FY 2018 FY 2017 % Change Results from operations Mass and Foundation Cluster 3,129 3,052 3% -4% 13% Personal Finance 2,021 3,150 (36%) 31% 7% Wealth and Investments 1,611 1,490 8% Old Mutual Corporate 1,703 1,576 8% 17% Old Mutual Insure 670 524 28% 20% 16
Slide 22: Adjusted Headline Earnings
ADJUSTED HEADLINE EARNINGS Rm FY 2018 FY 2017 % Change 1 Reflects benefit of cost allocation to Operating segments 10,388 10,873 (4%) segments, offset by increase in costs to establish standalone listed 1 Central expenses (425) (506) 16% functions Results from operations 9,963 10,367 (4%) 2 SA retur
Slide 23: AHE to IFRS Profit in 2018
AHE TO IFRS PROFIT IN 2018 5 6 36,566 627 214 3 4 23,166 1 2 2,132 14,241 8,129 2,349 11,512 219 700 Rm Adjusted Investment return Impact of Discontinued Nedbank (19.9%) Residual plc Headline Earnings Profit on disposal Impairment of Other IFRS profit Headline Earnings in respect of restructuring Op
Slide 24: Cash Generation in 2018
CASH GENERATION IN 2018 Impact on conversion 101% (29%) 72% (5%) 67% (10%) 57% ratio (%) 8,912 7,742 2,510 1,340 1,157 6,585 6,402 Free surplus generation (Rm) Gross operating Capital requirements Net operating 50% of Nedbank Before fungibility Fungibility restriction Free surplus segments segments
Slide 25: Progress on Balance Sheet Simplification
PROGRESS ON BALANCE SHEET SIMPLIFICATION Latin America Residual plc Majority of regulatory approvals received Dividends of R4.7 billion remitted to OML during On track to complete in H1 2019 2018 Proceeds of $308m – transaction, tax and No outstanding international debt associated costs ex
Slide 26: Group Solvency Position at 31 Dec 2018
GROUP SOLVENCY POSITION AT 31 DEC 2018 Ratio (%) 225% (31%) (20%) (1%) (1%) (2%) 170% 101 29 78 3 4 32 18 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 ■ Residual plc dil
Slide 27: Group Equity Value
GROUP EQUITY VALUE 124.0 R25.75 Multiple on VNB per share 110.7 +46.0 AHE -32.7 66.4 Category Valuation technique (Rm) Covered business Embedded value 6,893 78.0 Non covered Fair value 2,244 28.9 Nedbank Market value 2,681 28.3 Residual plc Economic NAV n/a 15.1 Latin America Contractual selling pri
Slide 28: Outlook on Medium Term Targets
OUTLOOK ON MEDIUM TERM TARGETS Performance 2019 KPI Target 2018 Outlook RETURNS RoNAV Average COE + 4% 18.6% Improving Results from Improving but GROWTH CAGR of Nominal GDP + 2% Down 4% operations challenging Cost R1 billion by end 2019 pre-tax run-rate cost savings R750 million On track efficiencie
Slide 29: Concluding Remarks
CONCLUDING REMARKS Peter Moyo
Slide 30: Responsible Business Update
RESPONSIBLE BUSINESS UPDATE Responsible Business BBBEE score and ownership ESD commitment R91.5 billion Expect to maintain our Level 2 R500 million paid to customers in claims and BBBEE status allocated to new Enterprise Supplier benefits Development Fund to support small Listing commitments – BBBEE
Slide 31: 2018 – A Year of Delivery
2018 – A YEAR OF DELIVERY Meeting medium term targets, although some headwinds ahead Continued progress on all battlegrounds On track to deliver recurring savings of R1 billion in 2019, continue to manage expense growth within inflation thereafter IT transformation continuing to deliver at p
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Slide 33: Thank You
THANK YOU
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