Old Mutual Ltd. · JSE:OMU
Old Mutual — FY2014 Earnings Presentation
31 slides from Old Mutual's earnings presentation, Feb 27, 2015
Slide 1: Preliminary Results 2014
PRELIMINARY RESULTS 2014 27 February 2015 INVESTMENT | SAVINGS | INSURANCE | BANKING
Slide 2: Disclaimer
DISCLAIMER This presentation may contain certain forward-looking statements with respect to certain of Old Mutual plc’s plans and its current goals and expectations relating to its future financial condition, performance and results. By their nature, all forward-looking statements involve risk and u
Slide 3: Agenda
AGENDA Group performance and strategy Julian Roberts, CEO Financial review Ingrid Johnson, GFD Conclusion & summary Julian Roberts, CEO 3
Slide 4: Good performance in 2014: doing what we said we would do
GOOD PERFORMANCE IN 2014: DOING WHAT WE SAID WE WOULD DO Delivered strong financial results In Africa: build a financial services champion. In the UK: build the leading retail investment business. Invested in line with our strategy In the US: grow our institutional asset management business. In all
Slide 5: Strong financial delivery
STRONG FINANCIAL DELIVERY AOP1 £1.6bn, up 16%2 Adjusted EPS 17.9 pence, up 13%2 NCCF £4.9bn3 (2% of opening FuM) Funds under Management £319bn3, up 6%2 Full year dividend 8.7 pence per share, up 7% 1. AOP, pre-tax and NCI, based on core business only. 2. Changes in constant currency. 3. Core busines
Slide 6: Building an African financial services champion
BUILDING AN AFRICAN FINANCIAL SERVICES CHAMPION South Africa Strategy 2014 • Integrated P&C businesses into OMEM. • Continue to develop in the growth markets. • Increased stake in Old Mutual Finance. • Drive growth in Nedbank. • Successful launch of new products in key areas • Inter-group collaborat
Slide 7: African expansion: UAP
AFRICAN EXPANSION: UAP UAP profile1 Market Market Country Business share position • Acquisition of 60.7% of UAP Holdings Limited: Kenya • • General Health 7% 13% 3rd 2nd Life 4% 8th • Announced in January 2015. • • General 15% 2nd Uganda Health 21% 2nd • Pending regulatory approvals. • • Life 12% 3r
Slide 8: Old Mutual Emerging Markets
OLD MUTUAL EMERGING MARKETS1 Rbn 2014 ∆ Operating results2 (Rbn) AOP (pre-tax) (Rm) 11,033 23% +16% 3.5 Gross sales 185 12% 3.0 +36% 2.5 Covered sales (APE) 9.7 15% 2.0 Non-covered sales 134 15% 1.5 +7% +2% 1.0 +11% NCCF 21.3 (14%) +39% 0.5 FuM 904.9 8% 0.0 RoE 22.8% 50 bps -0.5 SA SA SA OMIG P&C Re
Slide 9: Nedbank
NEDBANK Rm 2014 ∆ Headline Earnings1 (Rbn) AOP (pre-tax)1 13,757 14% +16% 3.0 Net interest income 22,961 8% +16% 2.5 Non-interest revenue 20,312 5% +23% 2.0 1.5 Rm 2013 2014 +18% +16% 1.0 Impairments 5,565 4,506 0.5 >100% Credit loss ratio 1.06% 0.79% 0.0 Common equity Nedbank Nedbank Nedbank Nedban
Slide 10: Building the leading retail investment business in the UK
BUILDING THE LEADING RETAIL INVESTMENT BUSINESS IN THE UK New world New model Fundamental changes arising from QE. Vertically integrated; Profound changes to UK pensions regime. offering affluent & high net worth customers Low consumer trust in financial services. Banks exited the advice market. tai
Slide 11: Update on Intrinsic & Quilter Cheviot
UPDATE ON INTRINSIC & QUILTER CHEVIOT Intrinsic Quilter Cheviot • Acquisition completed July 2014 (Cirilium • Acquisition completed February 2015: fully acquired December 2014) integration plans in place • Now integrated into Old Mutual Wealth • Adds discretionary investment • 930 restricted adviser
Slide 12: Old Mutual Wealth
OLD MUTUAL WEALTH £bn 2014 ∆ Pre-tax AOP (£m) AOP (pre-tax) (£m) 227 5% +18% AOP excluding divested 120 (8%) 199 11% businesses (£m) 100 Gross sales 16.0 11% NCCF 3.7 61% 80 FuM 82.5 5% 60 Operating margin 36% - 40 RoE 16.5% 60 bps OMGI £33m 20 • 12% of Platform funds managed by OMGI OMGI • OMGI acc
Slide 13: OMAM: growing our institutional asset management business in the US
OMAM1: GROWING OUR INSTITUTIONAL ASSET MANAGEMENT BUSINESS IN THE US $bn 2014 ∆ Annualised revenue on NCCF ($m)3 AOP2 (pre-tax) ($m) 211 32% NCCF 9.5 (0.6) 20 FuM 220.8 11% 15 Operating margin2 33% 300 bps RoE 16.4% 130 bps 10 • Successful partial IPO on the NYSE. 5 • Global distribution: $5.5bn gro
Slide 14: Financial Review
FINANCIAL REVIEW 27 February 2015 INVESTMENT | SAVINGS | INSURANCE | BANKING
Slide 15: Agenda
AGENDA Macro background Profit Cash, debt & capital Dividend Financial summary 15
Slide 16: Equity markets, currency & GDP
EQUITY MARKETS, CURRENCY & GDP Macro Profit Cash, debt, capital Dividend Financial Summary Currency (ZAR:GBP) Equity markets1 20 120 18 2014 ave: 17.871 16 110 2013 ave: 15.096 14 H1 2014 H2 2014 100 GDP growth2 2013 2014 90 5.2% 4.8% 2.6% 80 2.2% 2.2% 2.4% H1 2014 H2 2014 1.5% 1.7% Sub-Saharan Sout
Slide 17: Sources of earnings (AOP)
SOURCES OF EARNINGS (AOP) Macro Profit Cash, debt, capital Dividend Financial Summary 2014 AOP1 (£868m) 2014 AOP1 (£868m) by geography by line of business US Banking UK, 9% 3 Europe & Life & & lending Int. savings 33% 20% 44% SA Asia & 64% 2 Asset Mgt Lat Am 21% Property & 2% Casualty 2% 2013 Rest o
Slide 18: Operating profit analysis (AOP)
OPERATING PROFIT ANALYSIS (AOP) Macro Profit Cash, debt, capital Dividend Financial Summary 2013 2013 at Change in £m reported const.curr 2014 const.curr Old Mutual Emerging Markets1 594 502 617 23% Nedbank 797 673 770 14% Old Mutual Wealth 217 217 227 5% Institutional Asset Management 111 106 131 2
Slide 19: AOP & returns
AOP & RETURNS Macro Profit Cash, debt, capital Dividend Financial Summary Shareholders’ Return on ave. AOP equity excl. shareholders’ post-tax & Intangibles at equity excl. Local 2014 (£m) NCI BU level1 intangibles2 RoE Old Mutual Emerging Markets 410 1,654 25.7% 22.8% Nedbank 301 1,811 17.2% 17.2%
Slide 20: Conversion of business unit AOP to plc cash
CONVERSION OF BUSINESS UNIT Macro Profit Cash, debt, capital Dividend AOP TO PLC CASH1 Financial Summary % of AOP AOP Gross free converted 2013 % of (post-tax surplus BU into BU AOP 2014 (£m) & NCI) generated Investment2 remittance3 remittance remitted OM Emerging 410 359 23 1695 41% 46% Markets4 Ne
Slide 21: Sources and uses of plc cash
SOURCES AND USES OF PLC CASH Macro Profit Cash, debt, capital Dividend Financial Summary £m 2013 2014 PLC opening balance 472 545 BU remittances - Rand1 334 310 Total £464m - Hard currency1 210 154 Central costs & dividend SA register: £227m - Ordinary cash dividends (335) (411) UK register: £184m -
Slide 22: Liquidity & debt
LIQUIDITY & DEBT Macro Profit Cash, debt, capital Dividend Financial Summary 31 Dec 31 Dec £bn 2013 2014 Holding company cash & 0.5 1.0 Since the year-end £566m of liquid assets cash was used in the RCF 0.8 0.8 settlement of the Quilter Cheviot acquisition. Liquidity 1.3 1.8 Group gross debt7 First
Slide 23: Local capital
LOCAL CAPITAL Macro Profit Cash, debt, capital Dividend Financial Summary Local statutory cover OMLACSA Nedbank (31 Dec 2014) (Rbn) M&F (Rbn) 1 (Rbn) UK (£m) Capital resources 47.8 2.9 64.4 581 Capital requirement 15.3 2.1 44.1 219 Our businesses have strong local capital cover. Surplus 32.5 0.8 20.
Slide 24: Group capital
GROUP CAPITAL Macro Profit Cash, debt, capital Dividend Financial Summary £550m (£394m) £58m (£218m) (£64m) Group capital surplus resilient to stress scenarios and FX. £2.1bn £2.0bn Future regulatory capital FGD Statutory Ordinary Net Change in FX & FGD methodology considerations: 31/12/2013 profits
Slide 25: Dividend
DIVIDEND Macro Profit Cash, debt, capital Dividend Financial Summary • Recommended 2014 final ordinary Dividend (GBP pence per share)2 dividend 6.25 p/share: • 2014 full year dividend 8.7 p/share, up 7%. • 13% increase in full-year rand dividend1. • Coverage ratio 2.06x AOP earnings. • Dividend poli
Slide 26: Financial summary: 2014
FINANCIAL SUMMARY: 2014 Macro Profit Cash, debt, capital Dividend Financial Summary • Good underlying profit growth • £1.6bn AOP pre-tax & NCI, up 16% in constant currency • Well diversified earnings • Continued good cash generation • Strong balance sheet • Appropriate capitalisation, liquidity & ge
Slide 27: Conclusion & Summary
CONCLUSION & SUMMARY 27 February 2015 INVESTMENT | SAVINGS | INSURANCE | BANKING
Slide 28: Delivering value from the transformation of Old Mutual
DELIVERING VALUE FROM THE TRANSFORMATION OF OLD MUTUAL Sustainable future growth Operational execution Investment in transformation Strategic decisions De-risk & simplify In Africa: build a financial services champion. Stabilise In the UK: build the leading retail investment business. & fix In the U
Slide 29: Summary
SUMMARY Good trading performance across the Group Business growth continues Businesses are appropriately capitalised, supporting future growth Strategic execution has transformed the shape of Old Mutual Operational execution is key to future growth Delivering value to our stakeholders 29
Slide 30: Q&A
Q&A 27 February 2015 INVESTMENT | SAVINGS | INSURANCE | BANKING
Slide 31: Preliminary Results 2014
PRELIMINARY RESULTS 2014 27 February 2015 INVESTMENT | SAVINGS | INSURANCE | BANKING