Rand fluctuations help Old Mutual pare profit declines

Old Mutual posted its interim results for the six months to 30 June on Thursday, amid a managed separation into four different entities.

The FTSE 100 firm said the macro-environment had been challenging, with a weaker South African rand against the first half of 2015 and lower average market levels.

Pre-tax adjusted operating profit was £708m for the period, down 9% in constant currencies or down 22% in reported currency.

Old Mutual’s IFRS pre-tax profit was £608m, down from £683m.

AOP earnings per share of 8p were down 11% in constant currencies and 22% in reported currency.

The company’s first interim dividend was 2.67p, with its second interim dividend expected to be in the mid to upper end of the cover range of 2.5 to 3.5 times AOP.

Its adjusted net asset value was reported at 193.3p per share, up from 178.9p per share, which Old Mutual’s board put down to a strengthened rand and dollar from year-end levels.

Net cumulative cash flow hit £3.5bn, down 13% in constant currencies, and funds under management was reported at £342.7bn, up 4% in constant currencies and up 13% in reported - both excluding Rogge.

“The first six months of the year were characterised by volatile currencies and lower average equity markets but our underlying performance demonstrated the strength of our franchises and the positive momentum within each of our businesses,” said group chief executive Bruce Hemphill.

“We are making good progress with our managed separation strategy we announced in March 2016 and which we expect to be materially complete by the end of 2018.”

Hemphill said the board is doing much preparation work to lay the foundations for the future and is critical for success.

“We are clear about the task at hand and we are absolutely confident that this is the right strategy to unlock value,” he explained.