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Old Mutual plc Interim Results for the six months ended 30 June 2010

06 August 2010

Excellent overall performance

Financial Summary
H1 2010
H1 2009
Adjusted operating profit before tax (IFRS basis)*
£735m
£513m
Adjusted operating earnings per share (IFRS basis)**
8.3p
4.9p
Group ROE
11.6%
7.6%
Adjusted MCEV per share
166.6p
171.0p^
IFRS book value per share
154p
147p^
Net client cash flows
(£1.6bn)
£0.2bn
Funds under management
£292.3bn
£285.0bn^
Interim dividend
1.1p
-

^ FY 2009

Continued strong performance in the first half of 2010

  • Adjusted operating profit before tax (IFRS basis) up 43%, improved product mix and tight focus on cost management
    • Profits up in all businesses, particularly strong in Wealth Management
    • Strong profit improvement in Mutual & Federal and US Asset Management
  • APE sales up 28% to £814 million, momentum from Q4'09 continued in H1'10 for the Long-term Savings (LTS) Division
    • Rapid rise in sales on the UK platform, APE sales up 145%
    • UK pension sales up 66%, mutual funds doubled and ISA's up 116%
    • South Africa APE sales up 17%, savings products up 18% with strong single premiums growth in Retail Affluent
  • Unit trust sales up 43% to £4.6 billion
  • Net client cash flows negative overall
    • Inflows of £2.8 billion in LTS, Wealth Management contributed £2.3 billion
    • Outflows of £5.2 billion in US Asset Management
  • Funds under management up 3% from 31 December 2009
  • Resilient performance in Nedbank but markets remain tough

Robust financial position

  • FGD surplus increase to £1.7 billion at 30 June 2010 (£1.5 billion at 31 December 2009)
  • Increase in IFRS book value to 154p per share; MCEV 166.6p per share at 30 June 2010
  • Board declaring 1.1p interim dividend for 2010 with scrip alternative

Good progress on financial targets

  • Run-rate cost savings of £42 million delivered to date against target of £100 million by 2012
  • On track for 2012 return on equity target of 16%-18% for LTS business (excluding US Life)

Sale of US Life operations (see separate announcement)

  • Sale to Harbinger Capital Partners for $350 million
  • Transaction lowers Group risk profile

Julian Roberts, Group Chief Executive, commented:

"We are very pleased with our performance in the first half of 2010. Our operating results were substantially ahead of the comparative period with strong sales performance particularly in the South African retail markets and in Wealth Management.

We are driving change throughout the Group and are making good progress on our strategy to simplify the Group and improve financial performance. We are today announcing the sale of US Life to Harbinger and we are also on track to deliver on our cost reduction and return on equity targets.

We are confident about the outlook for the full year although market uncertainties remain."

Enquiries

External Communications    
Patrick Bowes UK +44 (0)20 7002 7440
Investor Relations    
Deward Serfontein SA +27 (0)82 810 5672
Aleida White UK +44 (0)20 7002 7287
Media    
Don Hunter (Finsbury) UK +44 (0)20 7251 3801

Notes

Unless otherwise stated, wherever the terms asterisked in the Financial Highlights are used, whether in the Financial Highlights, the Group Chief Executive's Statement, the Group Finance Director's Review or the Business Review, the following definitions apply:
* For long-term business and general insurance businesses, adjusted operating profit is based on a long-term investment return, includes investment returns on life funds' investments in Group equity and debt instruments, and is stated net of income tax attributable to policyholder returns. For the US Asset Management business, it includes compensation costs in respect of certain long-term incentive schemes defined as non-controlling interests in accordance with IFRS. For all businesses, adjusted operating profit excludes goodwill impairment, the impact of acquisition accounting, put revaluations related to long-term incentive schemes, profit/(loss) on disposal of subsidiaries, associated undertakings and strategic investments, dividends declared to holders of perpetual preferred callable securities, and fair value (profits)/losses on certain Group debt movements.
** Adjusted operating earnings per ordinary share is calculated on the same basis as adjusted operating profit. It is stated after tax attributable to adjusted operating profit and non-controlling interests. It excludes income attributable to Black Economic Empowerment (BEE) trusts of listed subsidiaries. The calculation of the adjusted weighted average number of shares includes own shares held in policyholders' funds and BEE trusts.

Cautionary statement

This announcement has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. It should not be relied on by any other party or for any other purpose.

This announcement contains 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 uncertainty because they relate to future events and circumstances that are beyond Old Mutual plc's control, including, among other things, UK domestic and global economic and business conditions, market-related risks such as fluctuations in interest rates and exchange rates, policies and actions of regulatory authorities, the impact of competition, inflation, deflation, the timing and impact of other uncertainties or of future acquisitions or combinations within relevant industries, as well as the impact of tax and other legislation and other regulations in territories where Old Mutual plc or its affiliates operate.

As a result, Old Mutual plc's actual future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in Old Mutual plc's forward-looking statements. Old Mutual plc undertakes no obligation to update any forward-looking statements contained in this announcement or any other forward-looking statements that it may make.

Notes to Editors:

A webcast of the presentation and Q&A will be broadcast live at 9:00am (BST), 10:00am (CET and South African time) today on the Company's website www.oldmutual.com. Analysts and investors who wish to participate in the call should dial the following numbers:

UK 0844 493 3800
US +1 866 966 9439
Sweden 0850 336 434
South Africa (toll-free) 0800 980 759
International +44 1452 555 566

Playback (available for 14 days from 6 August), using pass-code 89787073#:

UK 0845 245 5205
US +1 866 247 4222
International +44 1452 550 000

Copies of these Interim Results, together with high-resolution images and biographical details of the Executive Directors of Old Mutual plc, are available in electronic format to download from the Company's website at www.oldmutual.com.

A Financial Disclosure Supplement relating to the Company's Interim Results can be found on the website. This contains key financial data for 2010 and 2009