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Directors' Report on Corporate Governance and Other Matters

Introduction and Combined Code compliance

The Group is committed to achieving high standards of corporate governance. The organisation is directed and controlled by its Board of Directors, and through systems of delegation and escalation, so as to achieve its business objectives responsibly and in accordance with high standards of accountability and integrity.

The principal governance rules that apply to UK companies listed on the London Stock Exchange are set out in the Combined Code appended to the Listing, Prospectus, Disclosure and Transparency Rules of the Financial Services Authority (the Combined Code). As the Company's primary listing is on the London Stock Exchange, this report mainly addresses the matters covered by the Combined Code, but the Company also has regard to governance expectations in the four other territories where its shares are listed (South Africa, Malawi, Namibia and Zimbabwe).

In the year ended 31 December 2007 and in the preparation of this Annual Report and these Accounts, the Company has complied with the main and supporting principles and provisions set out in the Combined Code as described in the following sections of this Report. The Company's compliance with Combined Code provisions C1.1, C2.1, C3.1 to C3.7, and the statement relating to the going concern basis adopted in preparing the financial statements, have been reviewed by the Company's auditors, KPMG Audit Plc, in accordance with guidance published by the Auditing Practices Board.

Board of Directors
Membership and directors' interests

The Board currently has 12 members, consisting of three executive and nine non-executive directors. All of the current directors except for Mr Nqwababa and Mr Pym (who were appointed to the Board in April and September 2007 respectively) served throughout the year ended 31 December 2007. Mr Michael Marks retired from the Board as a nonexecutive director and as a member of the Nomination and Remuneration Committees at the end of the Annual General Meeting on 24 May 2007.

Details of the directors' interests (including interests of their connected persons) in the share capital of the Company and quoted securities of its subsidiaries at the beginning and end of the year under review are set out in the following tables, while their interests in share options and restricted share awards are described in the section of the Remuneration Report entitled 'Directors' interests under employee share plans'. There have been no changes to any of these interests between 31 December 2007 and 27 February 2008

	Old Mutual plc Number of shares	Nedbank Group Limited Number of shares
At 31 December 2007
N D T Andrews	7,000	-
R Bogni	19,000	-
N N Broadhurst	2,416	-
C D Collins	75,000	-
R P Edey	25,000	2,604
R J Khoza	-	2,0621
J C Nicholls	106,7642	-
B Nqwababa	-	-
L H Otterbeck	-	-
R A Pym	20,000	-
J V F Roberts	806,5462	-
J H Sutcliffe	1,692,7692	-

	Old Mutual plc Number of shares	Nedbank Group Limited Number of shares
At 1 January 2007 (or date of appointment as a director, if later)
N D T Andrews	7,000	-
R Bogni	19,000	-
N N Broadhurst	2,416	-
C D Collins	50,000	-
R P Edey	25,000	2,550
R J Khoza	-	2,0621
J C Nicholls	-2	-
B Nqwababa	-	-
L H Otterbeck	-	-
R A Pym	-	-
J V F Roberts	562,5432	-
J H Sutcliffe	1,318,9712	-

Former director (at 1 January 2007 and date of resignation)
M J P Marks	-	-

1 This figure does not include shares in the Aka-Nedbank Eyethu Trust, one of Nedbank's Eyethu BEE trusts.

2 These figures do not include rights to restricted shares that have not yet vested, which are described in the Remuneration Report.

No director had a material interest in any significant contract with the Company or any of its subsidiaries during the year. Additional details of various non-material transactions between the directors and the Group are reported, on an aggregated basis along with other transactions by senior managers of the Company, in note 47 to the Accounts.

Non-Executive Directors' Engagement Letters

Christopher Collins (2 MB)
Nigel Andrews (356 KB)
Rudi Bogni (686 KB)
Norman Broadhurst (680 KB)
Russell_Edey (120 KB)
Reuel Khoza (52 KB)
Bongani Nqwababa (52 KB)
Richard Pym (62KB)

The Company has entered into a Deed of Indemnity in favour of each of its Directors. A specimen copy of the terms of such indemnities is available below.

Deed of Indemnity Directors Pro Forma.pdf (41KB)

Rotation and re-election of directors

The Articles of Association of the Company require that any newly appointed directors should be subject to election at the next following Annual General Meeting and also that at least one third of the directors (excluding those appointed by the Board during the year) should retire by rotation each year. These provisions are applied in such a manner that each director submits himself for election or re-election at regular intervals and at least once every three years.

The Nomination Committee considered the candidates who are standing for election or re-election at this year's Annual General Meeting (as referred to in Ordinary Resolutions 3 (i) to (iv) in the Notice of Annual General Meeting) at its meeting in February 2008. In accordance with its findings, it recommends to shareholders the election of Mr Pym, and the re-election of Mr Andrews, Mr Edey and Mr Sutcliffe as directors based upon their respective professional qualifications, prior business experience and contribution to the Board. Biographical details of each of the candidates are contained in the Board of Directors section of this website.

Memorandum & Articles of Association of Old Mutual plc

Skills, experience and review

Plans for refreshing and renewing the Board's composition are managed proactively by the Nomination Committee so as to ensure that changes take place without undue disruption and that there is an appropriate balance of experience and length of service. That Committee also has regard, in making recommendations, to independence of candidates and their suitability and willingness to serve on other Committees of the Board. All of these aspects are currently believed by that Committee to be satisfactory and appropriate for the requirements of the Group's business. While there are currently only three executive directors, members of the Board have regular contact with the other most senior executive management (including the regional heads of the most significant business units of the Group), through the periodic participation in Board meetings and other briefing sessions by those executives.

Mandate, governance and Scheme of Delegated Authority

The Board's role is to provide entrepreneurial leadership to the Company within a framework of prudent and effective controls that enable risk to be assessed and managed. The Board sets the Company's strategic aims, ensures that the necessary financial and human resources are in place for it to meet its objectives and reviews management performance. It regularly reviews strategic issues through the Chief Executive's report and also holds one or more strategy sessions each year at which high-level strategic matters are debated. The Board sets the Company's values and standards, and ensures that its obligations to shareholders and others are understood and met.

The Board receives a wide array of information on the Group's businesses on a regular basis. Monthly management accounts are circulated to each member of the Board within three weeks of the month end. These contain detailed analysis of the businesses' financial performance, including comparisons against budget. Any issues arising from these are addressed at Board meetings or can be raised directly with management. The Board calendar ensures that all key matters are dealt with on a scheduled basis over the course of the year, including presentations on each of the Group's major businesses. Board meetings are held regularly in the principal overseas territories where the Group operates, at which local management makes detailed presentations of business and strategic issues affecting those businesses.

The Board has oversight of the Group's wholly-owned businesses, but also: (i) delegates specific responsibilities for certain matters to its committees (Executive, Nomination, Remuneration, and Group Audit and Risk), subject to their respective terms of reference; and (ii) receives assurance from boards (and their respective committees) at the Group's principal subsidiaries. The governance relationships with the Group's majority-owned subsidiaries, Nedbank Group Limited and Mutual & Federal Insurance Company Limited, are somewhat different, in recognition of their own governance expectations as separately-listed entities on the JSE and the fact that they each have minority shareholders.

With respect to Nedbank Group, the Company entered into a relationship agreement in February 2004 setting out the Company's requirements and expectations as its majority shareholder. The full text of that relationship agreement is available on the Company's website. Among the matters covered are: (i) transactions involving members of the Nedbank Group that require prior consultation with or agreement by the Company; (ii) provision of information, including that required for assuring the Company about various aspects of corporate governance; (iii) consultation over senior appointments; and (iv) business co-operation.

The policyholders' funds of the Group's African life assurance operations have holdings representing in aggregate in excess of 20% of the issued share capital of companies listed on the stock exchanges of the countries in which those businesses operate. These are held purely as investments, and the companies concerned are not subject to the governance or control structures of the Group.

The Chairman and Company Secretary are both involved in ensuring good information flows within the Board and its committees and between senior management and the nonexecutive directors, as well as in facilitating induction and encouraging non-executive directors to attend courses at the Company's expense to update their skills and knowledge. On appointment, new directors receive induction, including information about matters of immediate importance to the Group, such as the current budget and strategy documents, management accounts, the Scheme of Delegated Authority and details of the Company's directors' and officers' liability policy. They also have a series of meetings with other directors, senior management and external advisers (such as the auditors). Processes are in place for any potential conflicts of interest to be disclosed and for directors to recuse themselves from participation in any decisions where they may have any such conflict or potential conflict.

The directors may take independent professional advice at the Company's expense for the furtherance of their duties, whether as members of the Board or of any of its committees.

The Company maintains directors' and officers' liability insurance in respect of legal action against its directors.

Directors have access to the Company Secretary, who is responsible to the Board for ensuring that Board procedures are complied with. There is an agreed list of matters reserved for the Board's decision. These are set out in the Company's Scheme of Delegated Authority and currently include, among other things, the following:

payment or recommendation of dividends;
approval of results announcements, annual reports and any other public statements relating to the Group's financial position likely to have a material impact on the Group's reputation;
approval of the Group's budgets and the formulation of medium- and long-term direction and strategy for the Group; > establishment of committees of the Board, their constitution and terms of reference;
monitoring of compliance with the Group's environmental policies;
approval of the acquisition or disposal of any business or investment for a consideration of £25 million or more;
approval of capital expenditure by a principal subsidiary in excess of its delegated expenditure authority;
approval of significant changes to the accounting policies or practices of the Group;
approval of any proposal as a result of which either Nedbank Group Limited or Mutual & Federal Insurance Company Limited would cease to be a majority-owned subsidiary of the Company;
approval of appointments to the Board and renewal of non-executive directors' appointments, following prior review by the Nomination Committee;
approval of any major decision relating to the conduct or settlement of any material litigation involving the Company or its subsidiaries;
appointment and removal of the Company Secretary;
appointment or termination of appointment of key professional advisers to the Group; and
any other matters that are likely to have a material effect on the Group's financial position, future strategy or reputation.

Executive and non-executive roles

The executive element of the Board is balanced by a strong independent group of non-executive directors so that no individual or small group of individuals can dominate the Board's decision-making.

The non-executive directors scrutinise the performance of management in meeting agreed goals and objectives, and monitor the reporting of performance. Procedures are in place to enable them to satisfy themselves on the integrity of the Group's financial information and that financial controls and systems of risk management are robust and sustainable. Those non-executive directors who are members of the Remuneration Committee are responsible for determining appropriate levels of remuneration for the executive directors. Members of the Nomination Committee have a primary role in recommending the appointment and, where necessary, removal of executive directors. The Board as a whole receives and considers regular reports on talent management and succession planning.

Separately from the formal Board meeting schedule, the Chairman holds meetings with the other non-executive directors, without any executives being present, in order to provide a forum for any issues to be raised. He also conducts an annual performance evaluation of each of the other non-executive directors, with any resulting action points being reported to the Nomination Committee. These are designed to ensure that each director is continuing to contribute effectively and to demonstrate commitment to the role (including commitment of time for Board and Committee meetings and any other duties). The outputs from these performance evaluations are taken into account by the Nomination Committee in deciding whether to recommend to the Board the extension of engagement of non-executive directors and also whether to recommend to shareholders the re-election of any non-executive directors who are due to retire by rotation at the Annual General Meeting. They would also form the basis, if the need arose, for the Chairman to act to address any weaknesses identified in the Board by seeking the resignation of underperforming directors or proposing, through the Nomination Committee, that additional directors should be appointed.

Informal meetings among the non-executive directors, without the Chairman or any executive being present, are also facilitated by the Company. Among the activities carried out at such meetings is the annual review of the Chairman's own performance, under the aegis of the senior independent director, who also obtains such input as he considers appropriate for such purpose from the executive directors.

Where directors have concerns that cannot be resolved about the running of the Company or a proposed action, they are encouraged to make their views known and these are recorded in the minutes of the Board meeting. No written statements on resignation containing matters of concern, such as are referred to in paragraph A.1.4 of the Combined Code, were received by the Chairman during 2007.

The assignment of responsibilities between the Chairman, Mr Collins, and the Chief Executive, Mr Sutcliffe, is documented so as to ensure that there is a clear division between the running of the Board and executive responsibility for running the Company's business. This, together with the Scheme of Delegated Authority and the matters reserved for decision by the Board, ensures that no single individual has unfettered powers of decision.

Responsibilities of Mr Collins as Chairman include those contained in the Supporting Principle to paragraph A.2 of the Combined Code, namely leadership of the Board, ensuring its effectiveness in all aspects of its role and setting its agenda; ensuring that the directors receive accurate, timely and clear information; ensuring effective communication with shareholders; facilitating the effective contribution to the Board of non-executive directors in particular; and ensuring constructive relationships between the executive and non-executive directors.

The Board has determined that, in the absence of exceptional circumstances, no non-executive director's three-year cycle of appointment (which is itself subject to re-election and to Companies Act provisions relating to the removal of a director) should be renewed more than twice, i.e. that non-executive directors should serve a maximum of nine years in that role. The renewal of non-executive directors' terms for successive three-year cycles is not automatic and the continued suitability of each non-executive director is assessed by the Nomination Committee before renewal of his appointment takes place. A particularly searching review is carried out at the end of six years. The section of the Remuneration Report entitled 'Non-Executive Directors' Terms of Engagement' describes the current position of each of the non-executive directors with respect to their maximum three terms of three years and how the extension process has been applied to the directors concerned.

The Board conducts an annual self-assessment exercise to evaluate the effectiveness of its procedures. In 2007, this process was carried out through a detailed questionnaire, with returns being submitted to the Company Secretary, who collated a report on the outputs for the Chairman and the Board. The Chairman took these into account in one-to-one meetings between himself and the other directors, so as to ensure that any concerns about Board processes or capabilities were identified and aired. Various action points were identified as a consequence of the 2007 survey.

Independence of non-executive directors

Seven of the eight current non-executive directors other than the Chairman (Messrs. Andrews, Bogni, Broadhurst, Edey, Nqwababa, Otterbeck and Pym) are considered by the Board to be independent within the meaning of, and having regard to the criteria set out in, paragraph A.3.1 of the Combined Code - i.e. independent in character and judgement and there being no relationships or circumstances which are likely to affect, or could appear to affect, their judgement. Mr Marks, who retired during the year, was also considered to be independent. The Board decided in February 2006, following a review by the Nomination Committee, that it was not appropriate to classify Mr Khoza as independent in view of the business interests between his company, Aka Capital, and the Company's banking subsidiary, Nedbank.

Mr Broadhurst has been the senior independent director since May 2005 and will be succeeded in that role, following his retirement from the Board at the Annual General Meeting on 8 May 2008, by Mr Bogni. The senior independent director is available to shareholders if they have concerns that are unresolved after contact through the normal channels of the Chairman, Chief Executive or Group Finance Director or where such contact would be inappropriate. The senior independent director's contact details can be obtained from the Company Secretary (martin.murray@omg.co.uk).

The terms and conditions of engagement of each of the nonexecutive directors are available in the Corporate Governance section of the Company's website. These include details of the expected time commitment involved (which each of the nonexecutive directors has accepted). Other significant commitments of potential appointees are considered by the Nomination Committee as part of the selection process and are disclosed to the Board when recommendation of an appointment is submitted. Non-executive directors are also required to inform the Board of any subsequent changes to such commitments, which must be pre-cleared with the Chairman if material.

The executive directors are permitted to hold one external (i.e. non-Group) non-executive directorship (but not a chairmanship) of another listed company, subject to prior clearance by the Board and the directorship concerned not being in conflict or potential conflict with any of the Group's businesses. Mr Sutcliffe was appointed as a non-executive director of Lonmin plc from 10 August 2007. Neither Mr Nicholls nor Mr Roberts currently holds any external non-executive directorships of another publicly quoted company.

2007 operations

The Board meets regularly during the year and met nine times on a scheduled basis during 2007. Meetings are co-ordinated with the Company's reporting calendar to allow for detailed consideration of interim and preliminary results and quarterly business updates. Scheduled sessions are also devoted specifically to strategy and business planning. In addition, the Board meets ad hoc, as and when required, to deal with specific matters requiring its consideration. It met ad hoc twice during 2007.

The scheduled Board meetings in 2007 included visits to the Group's businesses in South Africa and to Skandia UK in Southampton. These visits included presentations to the Board by the senior management teams of the local businesses.

Group Executive

The Group Executive (formerly known as the Old Mutual Executive) is the executive management committee through which the Company exercises its co-ordination and stewardship of the Group.

In addition to the executive directors of the Company (Mr Sutcliffe, Mr Nicholls and Mr Roberts), the other members of the Old Mutual Executive at 31 December 2007 were Mr Head and Mr Powers as the regional heads of South Africa and the USA respectively, and Mrs Harris, the Group Risk Director. The Company Secretary also serves as Secretary to the Group Executive.

Board Committees

The Board has a number of standing committees or subcommittees, to which various matters are delegated in accordance with their respective terms of reference. The Board also establishes committees on an ad hoc basis to deal with particular matters as and when thought fit. In doing so, it specifies a remit, quorum and appropriate mix of executive and non-executive participation. Further information on the main standing committees and sub-committees of the Board is set out below.

Group Audit and Risk Committee

Members and years of appointment: N N Broadhurst (Chairman) (1999), N D T Andrews (2003), R Bogni (2002), R P Edey (2004), B Nqwababa (2007), R A Pym (2007). Secretary and year of appointment: M C Murray (1999)
All of the members of the Group Audit and Risk Committee are independent non-executive directors. The Chairman, Mr Broadhurst, is a Chartered Accountant and has recent and relevant financial experience as a former finance director and as Chairman or non-executive director of a number of other major UK companies. Upon his retirement from the Board at the Annual General Meeting on 8 May 2008 he will be succeeded as Chairman of the Committee by Mr Pym (subject to Mr Pym himself being duly elected at that meeting). Mr Pym is also a Chartered Accountant with a wide range of recent and relevant financial experience, having been Chief Executive of the major UK banking group, Alliance & Leicester plc, until July 2007. All members of the Committee are expected to be financially literate and to have relevant corporate finance experience.

The Committee:

monitors the integrity of the financial statements of the Company and any formal announcements relating to the Company's financial performance, including reviewing significant financial reporting judgements contained in them;
reviews the Company's internal financial controls;
monitors and reviews the independence and effectiveness of the Company's internal audit function and its activities. An internal audit charter, reviewed and approved by the Committee, governs internal audit activity within the Group and such activities are conducted in accordance with an annual audit plan. Progress against that plan is reported regularly to the Committee;
receives and reviews reports on risk matters;
makes recommendations to the Board, for it to put to shareholders for their approval in general meeting, in relation to appointment, reappointment and removal of the external auditors and approving their remuneration and terms of engagement;
reviews and monitors the external auditors' independence and objectivity and the effectiveness of the audit process, taking into consideration relevant UK professional and regulatory requirements;
develops and implements policy on the engagement of the external auditors to supply non-audit services, taking into account relevant ethical guidance regarding the provision of non-audit services by the external audit firm, reporting to the Board any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken; and
reviews the Group's whistleblowing arrangements.

At its meetings during 2007, the Committee received reports covering, among other things:

the accounting principles, policies and practices adopted in the Group's accounts;
significant accounting and actuarial issues;
Economic Capital principles that are being adopted by the Group;
tax, litigation and contingent liabilities affecting the Group;
any significant findings or control issues arising from internal audits carried out around the Group;
environmental and corporate responsibility matters; and
significant risks and related risk management practices across the Group.

A number of audit or audit and risk committees operated at subsidiary level during 2007, including at Old Mutual Life Assurance Company (South Africa) Limited, Old Mutual (US) Holdings, Inc., Skandia AB, Skandia UK, Skandia Nordic, Skandia Europe & Latin America (the latter two from the fourth quarter of the year), Nedbank Group Limited and Mutual & Federal Insurance Company Limited, with terms of reference (in relation to the businesses under their respective remit) broadly equivalent to those of the Committee. The Committee received minutes of the proceedings and reports from subsidiary audit committees on a regular basis and the Chairmen of various of these subsidiary audit committees were invited to attend meetings of and report to the Committee periodically. A planning meeting was held between the Chairman of the Committee and the Chairmen of the main subsidiary audit committees, the regional heads of internal audit and representatives of the Group's auditors during November 2007, to co-ordinate the audit committees' activities and to review and approve the scope of internal audit plans for 2008. Such planning meetings take place annually.

During 2007, the Group established Internal Review Committees through which Group Finance reviews in detail the results of the major businesses on a half-yearly basis in conjunction with the Chief Executives and Finance Directors of the businesses covered. Alongside these meetings, an Internal Actuarial Review Committee meets to review the actuarial aspects of the results of the life businesses around the Group. Findings from these meetings are incorporated into reports to the Group Audit and Risk Committee.

The Committee is responsible for the development, implementation and monitoring of the Group's policy on external audit. The policy assigns overall responsibility for monitoring the independence and objectivity of, and compliance with ethical and regulatory requirements by, the external auditors to the Committee and day-to-day responsibility to the Group Finance Director.

The Group's policy on external audit sets out the categories of non-audit services that the external auditors are and are not allowed to provide to the Group. Further details of this policy are set out under the heading 'Auditors' later in this report.

To fulfil its responsibility regarding the independence of the external auditors, the Committee reviewed:

changes in key external audit staff in the external auditors' plan for the year;
the arrangements for day-to-day management of the audit relationship;
a report from the external auditors describing their arrangements to identify, report and manage any conflicts of interest; and
the overall extent of non-audit services provided by the external auditors, in addition to their case-by-case approval of the provision of non-audit services by the external auditors.

To assess the effectiveness of the external auditors, the Committees reviewed:

the external auditors' fulfilment of the agreed audit plan and variations from the plan; and
the robustness and perceptiveness of the auditors in their handling of the key accounting and audit judgements.

To fulfil its responsibility for oversight of the external audit process, the Committee reviewed:

the terms, areas of responsibility, associated duties and scope of the audit as set out in the external auditors' engagement letter for the year;
the external auditors' overall work plan for the year;
the external auditors' fee proposal;
any major issues that arose during the course of the audit and their resolution;
the key accounting and audit judgements;
the levels of errors identified during audit; and
any recommendations made by the external auditors in their management letter and the adequacy of management's response.

Based on its satisfaction with the results of the activities outlined above, the Committee has recommended to the Board that the external auditors should be reappointed for 2008.

The Committee's role in relation to monitoring of risk is explained in more detail in the 'Risk governance' section of this report.

In relation to internal audit, the Committee reviewed:

internal audit's terms of reference, reporting lines and access to the Committee and members of the Board;
internal audit's plans and resources and its achievement of the activities planned as part of its agreed programme for the year;
the results of key audits and other significant findings, the adequacy of management's responses and the timeliness of resolution; and
statistics on staff numbers, qualifications and experience and timeliness of reporting.

The Group's whistleblowing arrangements enable employees of the Group and others to report, in confidence, via a dedicated hotline operated by an independent firm of accountants, complaints on accounting, risk issues, internal controls, auditing issues and related matters. Any matters so reported are investigated and escalated to the Committee as appropriate. Efforts are also made to educate staff around the Group about the existence of the whistleblowing facility and to help them detect the signs of possible fraudulent or improper activity.

The Committee holds private meetings with the external auditors twice yearly (or more often, if requested by the auditors) to review key issues. The Chairman of the Committee also has regular interaction with the external auditors, the Group Internal Audit Director and the Group Risk Director, as well as with the Chairmen of subsidiary audit committees and the Group Finance Director, so as to remain abreast of issues as they arise during the year.

Remuneration Committee

Members and years of appointment: R Bogni (Chairman) (2005), N D T Andrews (2002), N N Broadhurst (1999), R P Edey (2007). Other member during part of the year: M J P Marks (appointed 2004, ceased on 24 May 2007). Secretary and year of appointment: M C Murray (1999)
Details of the role and activities of the Remuneration Committee and how the Remuneration Committee and the Board have applied the main and supporting principles and the Code Provisions in Section B of the Combined Code relating to remuneration matters are provided in the Remuneration Report.

Nomination Committee

Members and years of appointment: C D Collins (1999, became Chairman in May 2005), N D T Andrews (2005), R Bogni (2003), N N Broadhurst (1999), R P Edey (2005), J H Sutcliffe (2003). Other member during part of the year: M J P Marks (appointed 2005, ceased on 24 May 2007). Secretary and year of appointment: M C Murray (1999)
The Nomination Committee makes recommendations to the Board in relation to the appointment of directors, the structure of the Board and membership of the Board's main standing committees. It also reviews development and succession plans for the most senior executive management of the Group and proposed appointments to the boards and standing committees of principal subsidiaries where these are material in the context of the Group as a whole. It is chaired by the Chairman of the Board, Mr Collins, and a majority of its members (four out of six) are independent non-executive directors.

The Nomination Committee seeks to ensure that its process for identifying candidates for recommendation to the Board as new directors is formal, rigorous and transparent. Vacancies generally arise in the context of either planned refreshing and renewal of the Board, replacing directors who are due to retire, or adjusting the balance of knowledge, skills or independence of the Board.

Mr Nqwababa's appointment (which took effect from 1 April 2007) was recommended by the Committee to replenish South African representation on the Board following the resignation of Professor Nkuhlu in October 2006, and his candidature was established through a shortlisting of potential suitable appointees against a job specification, with assistance from external advisers. Mr Pym was appointed as a non-executive director from 1 September 2007 following a search conducted through independent headhunters for a candidate with appropriate financial services and accounting experience to be a potential successor to Mr Broadhurst (who is retiring at the Annual General Meeting in May 2008) as Chairman of the Group Audit and Risk Committee.

In identifying candidates, appropriate regard is paid to ensuring that they will have sufficient time available in the light of their other commitments to discharge their duties as directors of the Company.

Executive Committee

Members: J C Nicholls, J V F Roberts, J H Sutcliffe
The Executive Committee is a committee comprising the executive directors of the Company, to which executive control and decision-making are delegated, subject to reservation of matters that require approval by the Board itself. A quorum comprises two of the executive directors. The Committee met ten times during 2007.

Group Capital Management Committee

Members and years of appointment: J C Nicholls (Chairman) (2006), A Duncan (2006), R Harris (2007), D I Hope (2002), M Mittal (2006), J H Sutcliffe (2002). Secretary and year of appointment: J Simpson (2007)
The Group Capital Management Committee is a sub-committee of the Executive Committee. Its role is: (i) to agree capital allocation up to the delegated authority of the Executive Committee, or make recommendations to the Board for allocations in excess of the Executive Committee's authority; (ii) to recommend to the Board the most appropriate capital structure for the Group having regard to long-term strategic objectives, the current business plan, risk appetite parameters and target credit ratings; (iii) to sign off a capital plan for the Group as part of the annual business planning process; (iv) to allocate capital in accordance with the business plan; (v) to approve the overall investment strategy of the Group's shareholders' funds; (vi) to set an appropriate framework for managing capital and to issue guidelines and/or recommend targets in order to ensure the appropriate management of capital; (vii) to receive reports from Group Finance, Group Risk and business units so that it can monitor performance against agreed criteria; and (viii) to consider and approve any changes in required capital outside that agreed in the business plan, including the remittance or withdrawal of capital from business units.

Terms of reference

The terms of reference of each of the principal committees of the Board are available in the Corporate Governance section of the Company's website.

The membership and chairmanship of the Board's standing committees are regularly reviewed by the Nomination Committee so as to ensure that they are refreshed and that undue reliance is not placed on particular individuals.

Each of the Group Audit and Risk, Remuneration and Nomination Committees conducted a self-assessment exercise during 2007 to address, among other things, whether their respective terms of reference had been fulfilled satisfactorily during the year, whether the Committees had the necessary skills and resources and were receiving a satisfactory level of information in order to discharge their responsibilities, and whether their processes and methods could be improved. These were each conducted via questionnaires to members of the Committee concerned and other key participants in the Committee's activities (including the external auditors, in the case of the Group Audit and Risk Committee). The results were collated by the Company Secretary and reported to the Committees for consideration.

Attendance record

The table below sets out the number of meetings held and individual directors' attendance at meetings of the Board and its principal standing committees (based on membership of those committees, rather than attendance as an invitee) during 2007.

Messrs Collins, Nicholls and Sutcliffe attended all of the Group Audit and Risk Committee meetings held during the year, at the invitation of the Chairman of that Committee (but members of management were absent for the private sessions between members of that Committee and the auditors). Mr Collins and Mr Sutcliffe also attended all of the Remuneration Committee meetings at the invitation of the Chairman of that Committee, but absented themselves for any matters relating to their own respective remuneration arrangements. Attendance at Committee meetings by persons other than the members is always at the invitation of the Chairman of the Committee concerned.

	Board (scheduled and ad hoc)	Group Audit and Risk Committee	Remuneration Committee	Nomination Committee
Number of meetings held	11	5	5	5
N D T Andrews	11/11	5/5	4/5	4/5
R Bogni	11/11	5/5	5/5	4/5
N N Broadhurst	11/11	5/5	5/5	5/5
C D Collins	11/11	-	-	5/5
R P Edey	11/11	5/5	3/3	5/5
R J Khoza	11/11	-	-	-
J C Nicholls	10/11	-	-	-
B Nqwababa	8/9	1/2	-	-
L H Otterbeck	11/11	-	-	-
R A Pym	5/5	1/1	-	-
J V F Roberts	11/11	-	-	-
J H Sutcliffe	11/11	-	-	5/5

Former director
M J P Marks	4/4	-	2/2	2/2

Auditors

During the year ended 31 December 2007, fees paid by the Group to KPMG Audit Plc, the Group's auditors, and its associates (KPMG) totalled £9.6 million for statutory audit services (2006: £9.9m), £0.4 million for other audit and assurance services relating to European Embedded Value reporting (2006: £0.3 million), and £3.9 million for tax and other services (2006: £3.4 million). In addition to the above, Nedbank Group paid a further £2.5 million (2006: £2.9 million) to Deloitte in respect of joint audit arrangements.

The following guidelines have been approved by the Group Audit and Risk Committee as part of the Group's policy on non-audit services:

prior to accepting a proposed non-audit engagement, the lead audit engagement partner and management will assess the threats to objectivity and independence and consider safeguards to be applied. Such assessment will be repeated whenever the scope and objectives of the non-audit service change significantly. Before accepting a proposed engagement to provide a non-audit service to the Group and its subsidiaries, the audit engagement partner and management will:
- consider whether it is probable that a reasonable and informed third party would regard the proposed engagement as being inconsistent with the objectives of the audit of the financial statements;
- identify and assess the significance of any related threats to the firm's objectivity including any perceived loss of independence; and
- identify and assess the effectiveness of the available safeguards to eliminate or reduce threats to an acceptable level;
where it is assessed that it is probable that an informed party would regard the proposed service as being inconsistent with the objectives of the firm as auditors, the firm will not be permitted to undertake the non-audit service;
reports are tabled quarterly at Group Audit and Risk Committee meetings setting out the details of the non-audit services being provided by the Group's auditors. These include a comparison of fees paid for audit services and fees paid to other accounting firms engaged for similar services;
the Company and its auditors have agreed that they will not, directly or indirectly, solicit the employment of key senior staff and management of the respective organisations without prior written mutual consent. Partners and directors of the audit firm who have acted as lead partner or as a key audit partner for the Group will not be permitted to join Old Mutual Group as a director or in a senior management position until at least two years have passed since the partner/director ceased to be associated with the audit.

The following process governs the provision of non-audit services provided by the auditors:

there is a schedule of non-audit services that need to be approved in principle on an annual basis and are reported, as and when provided, on a regular basis. This is in line with the SEC's guidelines on auditor independence;
all non-audit work costing less than £50,000 placed with the external auditors is to be approved by the Head of Group Finance or Business Unit Chief Financial Officer;
all non-audit work in excess of £50,000 placed with the external auditors is to be agreed by the Group Finance Director or his designate;
all non-audit work in excess of £300,000 placed with the external auditors is to be subject to competitive tender and agreed by the Group Finance Director and Group Chief Executive;
all non-audit work in excess of £1 million placed with external auditors is to be approved by the Group Audit and Risk Committee;
cumulative fees in respect of non-audit services for any financial quarter should not exceed £250,000 without approval of the Group Audit and Risk Committee or its Chairman; and
cumulative fees in respect of non-audit work for the Group should not exceed total statutory audit and audit-related fees in any one year without the approval of the Group Audit and Risk Committee.

KPMG Audit Plc has expressed its willingness to continue in office as auditor to the Company and, following a recommendation by the Group Audit and Risk Committee to the Board, a resolution proposing its reappointment will be put to the Annual General Meeting (Resolution 4 in the Notice of Annual General Meeting).

Arrangements have been made, in conjunction with KPMG Audit Plc, for appropriate audit partner rotation in accordance with recommendations of the Institute of Chartered Accountants in England and Wales. The current lead audit partner in the UK, Mr Alastair Barbour, has been in place since 2005.

General Meetings

The Board uses the Annual General Meeting (AGM) to comment on the Group's trading performance during the first quarter of the year. A record of the AGM proceedings is made available on the Company's website shortly after the end of the Meeting. All items of formal business at the AGM are conducted on a poll, rather than by a show of hands. The Company has arrangements in place through its registrars, Computershare Investor Services, to ensure that all validly submitted proxy votes are counted, and a senior member of Computershare's staff acts as scrutineer to ensure that votes cast are properly received and recorded.

Each substantially separate issue at the AGM is dealt with by a separate resolution and the business of the AGM always includes a resolution relating to the approval of the Report and Accounts. The Chairmen of the Group Audit and Risk, Remuneration and Nomination Committees are available to answer any questions on the matters covered by these Committees at AGMs. All of the directors who were in office at the date of the meeting attended the AGM in 2007, except Mr Edey, who was prevented from doing so by an injury.

The notice of AGM and related materials contained in the Report and Accounts or Summary Financial Statements are sent out to shareholders in time to arrive in the ordinary course of the post at least 20 working days before the date of the AGM.

Results of the Annual General Meeting 2007

The results of the polls on the resolutions at the Annual General Meeting held on 24 May 2007 were as follows:

Ordinary resolutions

Resolution 1
To receive and adopt the directors' report and accounts for the year ended 31 December 2006

In favour	Against	% in favour	Votes withheld*
2,810,830,189	1,967,510	99.93	6,413,431

Resolution 2
To declare a final dividend of 4.15 pence per ordinary share

In favour	Against	% in favour	Votes withheld*
2,815,469,616	168,829	99.99	3,592,776

Resolution 3 (i)
Election of Mr J C Nicholls as a director of the Company

In favour	Against	% in favour	Votes withheld*
2,810,691,700	1,119,976	99.96	7,397,855

Resolution 3 (ii)
Election of Mr B Nqwababa as a director of the Company

In favour	Against	% in favour	Votes withheld*
2,809,858,333	1,303,057	99.95	8,048,141

Resolution 3 (iii)
Re-election of Mr L H Otterbeck as a director of the Company

In favour	Against	% in favour	Votes withheld*
2,811,788,762	1,114,560	99.96	6,305,399

Resolution 3 (iv)
Re-election of Mr C D Collins as a director of the Company

In favour	Against	% in favour	Votes withheld*
2,812,692,028	958,766	99.97	5,580,427

Resolution 3 (v)
Re-election of Mr J V F Roberts as a director of the Company

In favour	Against	% in favour	Votes withheld*
2,786,118,762	9,971,030	99.64	23,123,449

Resolution 4
Reappointment of KPMG Audit Plc as auditors to the Company

In favour	Against	% in favour	Votes withheld*
2,783,940,615	10,549,301	99.62	24,711,305

Resolution 5
Authority to the Group Audit and Risk Committee of the Company to settle the remuneration of the auditors

In favour	Against	% in favour	Votes withheld*
2,810,056,611	3,168,099	99.89	5,975,899

Resolution 6
Approval of the Remuneration Report in the Company's report and accounts

In favour	Against	% in favour	Votes withheld*
2,453,741,960	334,922,846	87.68	20,545,643

Resolution 7
Approval of proposals arising from the closure of the Company's Unclaimed Shares Trusts

In favour	Against	% in favour	Votes withheld*
2,800,708,336	4,574,525	99.84	13,926,854

Resolution 8
Authority to allot relevant securities up to an aggregate nominal amount of £55,009,000

In favour	Against	% in favour	Votes withheld*
2,438,807,540	374,173,883	86.70	5,826,885

Special resolutions
Resolution 9
Authority to allot equity securities up to a maximum nominal aggregate amount of £27,504,000

In favour	Against	% in favour	Votes withheld*
2,459,018,515	353,633,160	87.43	6,158,842

Resolution 10
Authority in accordance with section 166 of the Companies Act 1985 to purchase up to 550,090,000 Ordinary Shares of 10p each in the Company by way of market purchase

In favour	Against	% in favour	Votes withheld*
2,810,630,662	3,563,066	99.87	4,614,579

Resolution 11
Approval of contingent purchase contracts to enable shares to be bought back on the overseas stock exchanges where the Company's shares then had secondary listings

In favour	Against	% in favour	Votes withheld*
2,807,228,994	4,278,373	99.85	7,222,098

* A vote withheld is not a vote in law and is therefore not counted in the calculation of votes.

Each of the resolutions at the 2007 AGM was accordingly duly passed.

Internal control environment

The Board retains its overall responsibility for the Group's system of internal control and for reviewing its effectiveness, while the role of executive management is to implement Board policies on risk and control.

Executive management has implemented an internal control system designed to facilitate the effective and efficient operation of the Group and its business units, enabling management to respond appropriately to significant risks to achieving the Group's business objectives. It should be noted that the system is designed to manage, rather than eliminate, the risk of failure to achieve the Group's business objectives, and can only provide reasonable, and not absolute, assurance against material misstatement or loss.

This system of internal control helps to ensure the quality of internal and external reporting, compliance with applicable laws and regulations, and internal policies with respect to the conduct of business.

The Board has reviewed the effectiveness of the system of internal control during and at the end of the year. This review covered all material controls, including financial, operational and compliance controls and the risk management framework.

The Board is of the view that there is a sufficient ongoing process for identifying, evaluating and managing the significant risks faced by the Group, and that this process has been in place for the year ended 31 December 2007 and up to the date of approval of this Report. The process accords with the Turnbull guidance set out in 'Internal Control Guidance for Directors on the Combined Code' and is regularly reviewed by the Board.

Internal audit

The Group Internal Audit (GIA) function operates on a decentralised basis, with teams established at all major businesses. Internal audit carries out regular risk-focused reviews of the control environment and reports on these to local executive management. The Director, Group Internal Audit has access to all reports issued by each audit team, and prepares a report to the Group Audit and Risk Committee. He reports functionally to the Chairman of the Group Audit and Risk Committee and administratively to the Group Risk Director and also enjoys unrestricted access to the Chief Executive and the audit committees of the Group's principal subsidiaries.

The internal audit function has adopted a single audit methodology, aligned to current international standards by Group Risk Services, which is a centralised function responsible for ensuring quality and consistency of risk management practices and internal audit working practices around the Group.

An extensive independent review of internal audit by external experts was carried out in 2007, in keeping with the IIA's Standards of Professional Practice and GIA was found to be in compliance with the requirements of the IIA.

Categorisation as a Major Retail Group

Old Mutual plc was recategorised as a Major Retail Group by the UK Financial Services Authority for the purposes of regulatory supervision following the Group's acquisition of Skandia during 2006.

Risk governance

The Group's risk governance model is based on three lines of defence. This model distinguishes between functions owning and managing risks, functions overseeing the management of risks, and functions providing independent assurance.

Risk management

Under the first line of defence, the Board sets the Group's risk appetite, approves the strategy for managing risk and is responsible for the Group's system of internal control. Management and staff within each business have the primary responsibility for managing risk, while the Chief Executive, supported by the Group Executive, has overall responsibility for the management of risks facing the Group. Management and staff within the businesses are responsible for the identification, assessment, management, monitoring and reporting of enterprise risks arising within their respective areas.

Risk oversight

The second line of defence is provided by the Group Risk Director supported by subsidiary Chief Risk Officers and their respective Risk functions. In addition, other specialist in-house functions at Company and subsidiary levels, such as Treasury, Actuarial and Legal, provide technical support and advice to operating management to assist them with the identification, assessment, management, monitoring and reporting of financial and nonfinancial risks. The Group risk function recommends Group Risk Principles to the Board for approval, provides objective oversight and co-ordinates enterprise risk management (ERM) activities in conjunction with other specialist risk-related functions.

Independent assurance

The third line of defence is designed to provide independent objective assurance on the effectiveness of the management of enterprise risks across the Group. This is provided to the Board through GIA, the external auditors and the Group Audit and Risk Committee, supported by Audit and Risk Committees at subsidiaries.

Approach to risk management

The Group derives its approach to risk management and control from a shareholder value perspective. As a result, the risk process is based on an ERM concept, which takes a holistic approach to the managed acceptance of risks on an enterprise-wide basis. This involves identifying the key risks that affect the achievement of the Group's objectives. Risks are assessed on an inherent basis, by establishing the main influences on the risks in the absence of any controls. The residual risk is assessed after identifying the controls in operation. Where the residual level is outside the risk appetite, further controls and action are identified to bring the risks within the risk appetite. Risk management is not limited solely to the downside or risk avoidance, but is about taking risk knowingly and using this for competitive advantage.

In order to meet its ERM objectives, the Group follows a framework which contains the following components: (i) a robust risk governance structure; (ii) risk appetites established at Group and subsidiary level; (iii) Group-wide risk policies and risk language; and (iv) methodologies that focus on risk identification, risk measurement, risk assessment, action plans, monitoring and reporting. Each component is explained in more detail in the sections below.

A review of the Group's ERM practices and framework was initiated in late 2007. The results will be used to enhance existing practices and to ensure that the Group continues to employ world-class risk management practices.

Risk appetite

The Group's risk appetite defines the Group's willingness to balance risk exposures with reward, and the management and monitoring of those exposures. Risks or events outside the agreed risk appetite are identified and reviewed with remedial action agreed and then are subject to oversight by executive management and agreed by the Group Audit and Risk Committee. The Group's risk appetite encompasses: (i) volatility and quantum of returns to shareholders; (ii) value for money for customers; (iii) financial strength ratings; (iv) regulatory solvency; and (v) how risks are monitored and controlled. Compliance with the risk appetite is monitored through the quarterly business review process.

Group risk principles

Group risk principles have been established for each major risk category to which the Group is exposed. These are designed to provide management teams across the Group with guiding principles and requirements within which to manage risks. Business unit risk policies expand on these principles and contain detailed requirements for the specific business concerned.

Adherence to these principles provides the Board and the Company's stakeholders with assurance that high-level common standards are consistently applied throughout the Group and also contributes to strong governance within the Group.

Risk methodologies

Risk identification

Strategic objectives, reflecting management's choice as to how the Group will seek to create value for its stakeholders, are translated into business unit objectives. Risks (and risk events) that would prevent the achievement of both the strategic and business objectives are then identified. Risk identification is thus part of the annual business planning process as well as an ongoing process.

Risk assessment and measurement

Various means of assessing, categorising and measuring enterprise risks and risk events are used throughout the Group. These include estimating the financial impact and the likelihood of risk occurrence, trend and 'traffic light' assessments and high/medium/low assessments.

Action plans

Action plans to implement the risk management strategy in respect of key risks or to remedy a material breakdown in control are recorded on risk and control logs maintained by each business unit. The expected date of mitigation of the risk is recorded, along with the person responsible for the mitigating action.

Monitoring and control

The Board regularly receives and reviews reports on risks and controls across the Group. These reviews cover all material controls, including financial, operational and compliance controls and risk management systems.

Management teams in each subsidiary and business unit perform annual reviews of the control environment in their business.

Risk monitoring is undertaken at Group, principal subsidiary and business unit level by management, specialised risk management functions, internal audit and subsidiary audit committees. The following are some of the other key processes for risk monitoring used around the Group:

the Group Finance Director provides the Board with monthly performance information, which includes key performance indicators;
items on risk logs and control logs (which contain details of any control failures) are reported pursuant to an escalation protocol to the appropriate level of management board or committee, where rectification procedures and progress are closely monitored;
significant corrective actions are independently monitored for timely completion by internal audit and, as appropriate, by the relevant Audit and Risk Committee;
exposure reporting, risk concentrations and solvency and capital adequacy reports are submitted to the relevant credit and capital management committees in the normal course of business. Where exposures are in excess of limits, they are treated in the same way as control breakdowns and reported on the relevant control log for Audit and Risk Committee review.

Reporting

As part of the Board's review process, the Chief Executive of each of the Group's major businesses completes a Letter of Representation at half year and for the full year. This Letter confirms that there has been no indication of any significant business risk occurring, nor any material malfunction in controls, procedures or systems during the reporting period, resulting in loss or reputational damage, which impacts negatively on the attainment of the business's objectives during the year and up to the date of approval of the Annual Report. Exceptions are noted and reported. In addition the Letter confirms that the business unit will continue as a going concern for the year ahead. The collated results of these Letters are reported to the Group Audit and Risk Committee via a Letter of Representation from the Group Chief Executive.

Monthly management reports, reports by the Group Finance Director, risk logs, control logs and exposure reports described under 'Monitoring and control' above also form part of the reporting process.

Management of specific risks

Details of some of the principal risks arising at Group level and in each key subsidiary are contained in the Business Review - Group Finance Director's Report earlier in this Annual Report.

Treasury management

The Group operates a centralised treasury function, which is responsible for recommending and implementing the funding strategy for the Group, including the ongoing management of debt facilities, managing relationships with banks and ratings agencies and managing Old Mutual plc's operational cash flow requirements.

It is also responsible for the provision of capital to the Group's subsidiaries, as approved by the Old Mutual plc Board and the Group Capital Management Committee.

Other Directors' Report matters
Relations with shareholders and analysts

The Company regards clear and direct dialogue with its shareholders and analysts as important in raising their understanding of the Group's strategy, operational and financial performance, management and prospects. Its Investor Relations department has a dedicated programme for facilitating regular communication between the executive management team and a wide range of institutions and investors worldwide within the constraints of the Listing, Prospectus, Disclosure and Transparency Rules.

During 2007, around 100 meetings were held with institutional investors in the UK, South Africa, North America and Europe. In most cases the meetings involved the Chief Executive, Group Finance Director or another member of the senior management team. In addition, institutional investors and analysts were given the opportunity to attend presentations on the Skandia and OMSA businesses given by members of the local management teams.

Currently 12 sell-side analysts from the UK and South Africa actively provide coverage on the Company. Further encouragement is given to other sell-side analysts to cover the Company's shares in order to assist investors in assessing the Group's valuation, its performance and the business environment in which it operates and in making meaningful comparisons with peers.

The Company, through its Investor Relations team, responds to a variety of enquiries from investors and analysts.

The Chairman makes contact with major investors during the year and arranges to meet them as required. The Board is updated regularly by the Investor Relations department on key issues arising from any shareholder communications and provided with reports to monitor changes in market or shareholder opinion. The Company also periodically commissions independent surveys of its major investors, the most recent of which was carried out in June 2006.

Group activities, operational and financial performance and outlook are communicated to financial markets through annual and interim reports, regulatory news releases, speeches, transcripts and presentations, using a wide range of communication channels. The Company holds two results meetings a year, at the time of its preliminary and interim results, which are hosted and webcast simultaneously in London and Johannesburg.

Old Mutual plc de-listed its shares from the Stockholm Stock Exchange in September 2007, following which it has ceased full quarterly reporting. However, in May and November, the Company issues an update on its sales performance in the previous quarter-year accompanied by a teleconference call for analysts and institutional investors. From 2008, these business updates will be made in accordance with the requirements of the Disclosure and Transparency Rules relating to interim management statements.

The Company's public announcements, statements and presentations to the investor community are posted on the Company's website in a timely fashion. The website provides a valuable source of both historical and current information, as well as useful tools relating to share price and dividend calculations, for use by investors. In addition, all major announcements by the Company and its affiliates are emailed to the Investor Relations department's investor database as they are made public.

Employment matters

The Group's employment policies are designed to promote a working environment that supports the recruitment and retention of highly effective employees, improves productivity and fosters relationships that build on the diversity of its workforce. They are regularly reviewed and updated to ensure their relevance for the locations to which they apply. While local employment policies and procedures are developed by each business according to its own circumstances, the following key principles of employment are applied consistently throughout the Group:

employees are recruited, retained, trained and promoted on the basis of their suitability for the job, without discrimination in terms of race, religion, national origin, colour, gender, age, marital status, sexual orientation or disability (whether in existence at the commencement of employment or developing subsequently) unrelated to the task at hand. In South Africa this principle is balanced with the requirement to address issues of employment equity and transformation, and the local businesses' practices take due account of this;
clear goals are established, together with training and feedback on performance, to deliver the Group or business objectives;
a working environment is provided that meets the health and safety standards of the Group and local regulations and allows employees to work to the best of their abilities, free from discrimination and harassment;
employee involvement, consultation and communication are promoted through in-house publications, briefings, roadshows and internet-based channels and relevant employee representative bodies; and
the efforts of employees in contributing to the success of the Group are appropriately recognised. Compensation systems are structured to recognise and reward both the efforts of individuals and the performance of the business sector in which they work.

Group values

The Group values were communicated across Skandia through a series of workshops held during the year. Employees were encouraged to explore their meaning and to understand the related behaviours they were expected to adopt as part of the Group.

In addition to the four common values of Integrity, Respect, Accountability and Pushing Beyond Boundaries, each business may select a fifth value for itself and, at a senior management meeting in July 2007, Skandia senior managers selected Passion as its additional value.

The values were also introduced into Skandia:BSAM, the Group's joint venture in China, through a series of employee workshops.

The annual Group Values Survey measured wider aspects of employee engagement and discretionary effort, both of which are lead indicators of performance. The survey showed that the Group's employees generally delivered high levels of discretionary effort. It also identified that retention in the Group's South African businesses needed to be addressed better. Each business is accountable for determining the actions required to address issues identified through the survey and these will be reported to the Group Executive at the end of the first quarter of 2008, with progress reports made quarterly thereafter.

Executive talent review

The identification and retention of talented staff are important to Old Mutual. Businesses are required annually to review their current and future people needs as well as to understand the career aspirations of their employees, and to establish development plans to meet these twin needs. A significant amount of both Group Executive and Board time was spent this year reviewing the Group's executive talent and succession plans. To support this review and provide greater insight, a quantitative analytical tool has been developed to identify areas of greater risk and enable targeted action plans to be applied.

Profile of the senior leadership group

Turnover in the senior leadership group during 2007 was 17%, of which 4% was voluntary, 4% attributable to retirements and 9% to managed exits. The Company continued to strengthen its leadership bench through the development of high-potential internal candidates and the targeted selection of external candidates for specific roles.

The senior leadership group continues to grow in experience, with more than 60% of its members having over five years' experience with the Group, and 7% new to the Group in 2007. 16% of people have been in position for less than one year, which compares with over 50% in 2006 following the acquisition of Skandia and other restructuring undertaken during that year.

Diversity

A single measure for ethnic diversity is not practical given the geographic spread of Old Mutual's business activities. Each region has therefore been tasked with determining its own appropriate ethnic diversity targets. The Group will begin tracking progress against these targets during 2008.

The Group Executive has committed to a Group-wide target of 30% for gender diversity in the senior leadership group. Women currently represent 20% of the senior leadership group, which already exceeds the Corporate Leadership Council benchmark of 18%.

The Group's South African businesses continue to implement recruitment and retention policies and practices aimed at ensuring that Old Mutual plays a leading role in the employment equity transformation of the country. Additional effort is being made to develop and retain black employees so that local businesses are able to meet and, where possible, exceed the code targets prescribed by the South African Department of Labour.

Succession planning

The Group has established targets for its businesses for the number of succession candidates over various timeframes. Planned successors in the one- to three-year timeframe have improved over 2006. In South Africa 60% of planned succession candidates are black, which underlines the businesses' focus on meeting the transformation targets referred to above.

International mobility

During 2007, 71 people were on secondments outside their home country as compared to 44 in 2006, demonstrating the Group's commitment to developing its talent.

Management Development Programme

The Company continued during 2007 to roll out to all regions its Management Development Programme initiated in 2006. The programme architecture provides clarity across the Group on management accountabilities at all levels and enables each business to map its development programmes accordingly.

The pilot Business Manager programme in October brought together people from across the Group to develop the specific skills essential for success and to share experiences, create networks and learn from each other. This programme has actively involved the Group Executive and the Board.

Directors' shareholdings and share dealings

The Remuneration Committee has established guidelines on shareholdings by executive directors of the Company. Under these, the Chief Executive is expected to build up a holding of shares in the Company equal in value to at least 150% of annual base salary within five years of appointment; the equivalent figure for other executive directors is 100% of annual base salary. Further details of the executive directors' shareholdings and interests in awards under the Company's employee share plans are contained in the Remuneration Report. The Board has considered whether to adopt a shareholding requirement for nonexecutive directors, but does not consider this to be appropriate.

All directors of the Company, together with other persons discharging managerial responsibilities in relation to the Company, are restricted persons for the purposes of the Model Code annexed to section LR9 of the Listing Rules of the Financial Services Authority. The Company continues to operate provisions equivalent to those set out in the Model Code for a wider category of employee insiders who hold certain senior positions around the Group, even though the Model Code itself no longer requires this. The Model Code imposes restrictions on the periods when restricted persons may deal in affected securities (which comprise shares and other listed securities of the Company and other quoted entities within the Group). Dealings by restricted persons during open periods must be pre-cleared through the appropriate designated officer of the Company, and any dealings in affected securities by the directors or other persons discharging managerial responsibilities are required to be publicly announced once they have been notified to the Company. The lists of persons discharging managerial responsibilities and other employee insiders are regularly reviewed. Currently all members of the Group Executive, together with certain other heads of major businesses, are regarded as persons discharging managerial responsibilities.

Directors' indemnities

Following a change in applicable UK law introduced by the Companies (Audit, Investigations and Community Enterprise) Act 2004, the Company has entered into formal deeds of indemnity in favour of each of the directors. These are dated as follows: Messrs Andrews, Bogni, Broadhurst, Collins, Edey, Roberts and Sutcliffe - 19 October 2005; Mr Khoza - 24 February 2006; Messrs Nicholls and Otterbeck - 15 November 2006; Messrs Nqwababa and Pym - 17 December 2007. A specimen copy of the indemnities is available in the Corporate Governance section of the Company's website.

Supplier payment policy

In most cases suppliers of goods or services to the Group do so under standard terms of contract that lay down terms of payment. In other cases, specific terms are agreed to beforehand. It is the Group's policy to ensure that terms of payment are notified in advance and adhered to. The Company has signed the Better Payment Practice Code, an initiative promoted by the Department for Business, Enterprise and Regulatory Reform in the UK to encourage prompt settlement of invoices.

The total outstanding indebtedness of the Company (and its service company subsidiary, Old Mutual Business Services Limited) to trade creditors at 31 December 2007 amounted to £2,956,000, corresponding to 26 days' payments when averaged over the year then ended.

Charitable contributions

The Group made a wide range of significant donations to charitable causes and social development projects during 2007, as described in more detail in the Corporate Responsibility section of this document. The Company, its subsidiaries in the UK, and the Old Mutual Bermuda Foundation collectively made charitable donations of £352,000 during the year (2006: £359,000).

Environmental matters

A description of the Group's environmental policy and activities during 2007 is contained in the Corporate Responsibility section of this document.

Political donations

The Group made no EU or other political donations during the year.

Dividend policy

The Board's policy on dividends is to seek to achieve steadily increasing returns to shareholders over time, reflecting the underlying rate of progress and the cash flow requirements of the Group's businesses. The Board anticipates declaring an interim dividend for the current year in August 2008, for payment at the end of November 2008.

Share capital

The Company has a single class of share capital, which is divided into Ordinary Shares of 10p each. The Company's issued share capital at 31 December 2007 was £551,027,253.70 divided into 5,510,272,537 Ordinary Shares of 10p each (2006: £550,089,550.80 divided into 5,500,895,508 Ordinary Shares of 10p each). During the year ended 31 December 2007, 9,377,029 shares were issued under the Company's employee share option schemes at an average price of 93.2p each.

Authorities from the shareholders for the Company to make market purchases of, and/or to purchase pursuant to contingent purchase contracts relating to each of the overseas exchanges on which the Company's shares are listed, up to an aggregate of 550,090,000 of its own shares were in force at 31 December 2007.

Out of the 5,510,272,537 shares in issue at 31 December 2007:

97,074,907 were held by the Company in treasury and a further 8,026,152 shares had been contracted to be bought back by the Company into treasury, but had not yet at that date been settled into the Company's treasury shares account on the UK register; and
a total of 239,734,104 shares were held by African life subsidiaries of the Company, with 225,462,006 of these shares being held on books for the benefit of the Group's South African life operations and related businesses. These shares cannot be voted while they are held by subsidiaries of Old Mutual plc because of applicable provisions of UK company law.

The 105,101,059 shares bought back into treasury at 31 December 2007 comprised 74,153,587 shares repurchased on the London Stock Exchange under the authority granted by Resolution 10 passed at the 2007 AGM at an average price of £1.657 per share and 30,947,472 shares repurchased on the JSE under the South African contingent purchase contracts approved as part of Resolution 11 passed at the 2007 AGM at an average price of R23.14 per share.

The total number of voting rights in the Company's issued ordinary share capital at 31 December 2007 (which excludes the 97,074,907 shares held in treasury and the further 8,026,152 shares contracted to be bought into treasury, but includes the shares held by the African life subsidiaries) was 5,405,171,478.

Subsequent to the year end, in the period up to and including 26 February 2008, the Company has issued 65,589 shares under its share option schemes at an average price of 97.02p each and has bought back into treasury a further 79,025,116 shares on the London Stock Exchange at an average price of £1.366p each. The Company's issued share capital at 26 February 2008 was accordingly £551,033,812.60 divided into 5,510,338,126 Ordinary Shares of 10p each of which 184,126,175 were held or had been bought into treasury. The total number of voting rights at 26 February 2008 was 5,326,211,951.

Rights and obligations attaching to shares

The following description summarises certain provisions of the current Articles of Association of the Company (as adopted by special resolution passed on 14 May 2004 and amended on 6 July 2005 (the Articles)) and applicable English law concerning companies (the Companies Act 1985 and the Companies Act 2006, together referred to as the Companies Acts). This is a summary only and the relevant provisions of the Companies Acts or of the Articles should be consulted if further information is required. Certain amendments will be proposed to these provisions in the new Articles that are proposed to be adopted at the Annual General Meeting on 8 May 2008. Further details are set out in the Notice of the Annual General Meeting. Copies of the Company's current and proposed new Articles of Association are available for inspection at the Company's registered office and also in the Annual General Meeting section of its website.

Issue of shares

Subject to applicable statutes and other shareholders' rights, shares may be issued with such rights and restrictions as the Company may by ordinary resolution approve or as the directors may decide. Subject to the Articles, the Companies Acts and other shareholders' rights, unissued shares are at the disposal of the Board. At each Annual General Meeting the Company seeks shareholder authority for the directors to allot up to a certain amount of unissued shares, and up to a lower limit for cash. These limits are established having regard to the guidelines of the UK Investor Protection Committees.

Voting

Subject to any rights or restrictions attaching to any class of shares, every member present in person at a general meeting or class meeting has, upon a show of hands, one vote. In the case of joint holders of a share, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of votes of the other joint shareholders and seniority shall be determined by the order in which the names stand in the register in respect of the joint holding. Under the Companies Acts, members are entitled to appoint a proxy to exercise all or any of their rights to attend and to speak and vote on their behalf at a general meeting or class meeting. A member may appoint more than one proxy in relation to a general meeting or class meeting provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that member. The Articles currently only entitle proxies to vote on a poll, whereas the Companies Acts now entitle proxies to vote on a show of hands. It is therefore proposed that the new Articles to be adopted at the Annual General Meeting on 8 May 2008 will reflect this change in legislation.

A member that is a corporation may appoint one or more individuals to act on its behalf at a general me