Old Mutual hails profit benefits as separation enters final stretch

Old Mutual reported a 22% increase in underlying operating profits to £2bn as the Anglo-South African financial services group continued the process of splitting itself up.

Able to lift the total annual dividend 17% to 7.1p as adjusted earnings per share rose 25% to 24.3p, chief executive Bruce Hemphill said the separation had "improved the performance of the underlying businesses and set them up for continued future growth".

Material completion of the managed separation is on track for the end of 2018, Hemphill said, with around £95m of savings to be gained annually in central costs.

Old Mutual Emerging Markets and UK-based Old Mutual Wealth businesses are ready for independence with balance sheets finalised. OM Wealth will be renamed Quilter Plc when it is listed separately in London and Johannesburg, while the residual Old Mutual Plc will be part of a South African holding company along with OMEM and a stake in Nedbank.

In the last calendar year the South African businesses generated mid-single digit growth, with Old Mutual Emerging Markets reporting adjusted operating profits up 5% to 13.3bn rand and Nedbank a profit of 16.5bn rand, up 4%.

The wealth business reported a 40% increase in adjusted operating profits to £363m, with £101m of net performance fees from the single strategy business.

Hemphill said the separation process "has already delivered significant value through cost and debt reduction, and we are on track for material completion of the managed separation with the listings of Old Mutual Limited and Quilter within our expected timetable."

Among the necessary next steps will be to complete regulatory and tax approvals, the administration processes and addressing any remaining issues, which may include investigations in the UK and new US legal claim earlier this week from two US insurers that appeared to relate to legacy items from Old Mutual’s US life operations court matter being added to ongoing investigations in the UK.

There will be shareholder documentation published in coming months, with Quilter and Old Mutual Ltd capital markets events and then meetings for Old Mutual plc shareholder votes to approve final separation. Quilter's listing is expected to be coupled with an institutional placing of up to 9.6%.

The anticipated distribution of the majority of the stake in Nedbank to Old Mutual Ltd shareholders is currently targeted for approximately six months after its listing, with OML to retain 19.9% of Nedbank afterwards.