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FINANCIAL HIGHLIGHTS

 

06 August 2008

Old Mutual plc Interim Results for the six months ended 30 June 2008

Solid progress in turbulent markets

  • Net client cash inflows of £3.2 billion, 2% of opening funds under management (FUM) on an annualised basis despite volatile market conditions
  • FUM down 7% from 31 December 2007 to £259.4 billion, steady in the second quarter
  • Life APE sales up 2% to £872 million
  • Mutual fund sales down 18% to £3,420 million: strong Nordic (up 103%) and SA growth more than offset by market declines in UK and US
  • Value of new business down 10% at £112 million
  • Profit before tax from continuing operations (IFRS) down 2% to £835 million, with basic earnings per share of 11.2p
  • Adjusted operating profit* from continuing operations (IFRS basis) up 3% to £745 million (30 June 2007: £721 million)
  • Bermuda variable annuity guarantee reserve strengthened, £63 million impacting adjusted operating profit, with a total £107 million impact on IFRS earnings; remedial management actions underway
  • Adjusted operating profit* from continuing operations (EEV basis) up 26% to £937 million (30 June 2007: £746 million)
  • Adjusted operating earnings per share** (IFRS basis) of 7.7p (30 June 2007: 8.2p)
  • Adjusted Embedded Value per share of 143.2p at 30 June 2008 (31 December 2007: 173.3p)
  • Interim dividend up 6.5% to 2.45p (34.84 cents***) per share
  • Capital position remains strong; £1.5 billion pro-forma FGD surplus

Jim Sutcliffe, Chief Executive, commented:

"We have maintained our earnings at a similar level to last year despite extremely difficult market conditions, which is a testament to our strategy. We have big brands, a leading open architecture business and a track record of providing good investment returns to our clients.

I am determined to resolve the difficulties in our US Life business and to return it to a proper level of profitability.

We have solid foundations, a clear strategy and a robust business that is operating well. The dividend increase reflects our strong capital position and the Board's confidence in Old Mutual's prospects."

Notes

* 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 minority 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, the impact of closure of unclaimed shares trusts, 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 minority 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.

*** Indicative only, being the Rand equivalent of 2.45p converted at the exchange rate prevailing on 4 August 2008. The actual amount to be paid by way of final dividend to holders of shares on the South African branch register will be calculated by reference to the exchange rate prevailing at the close of business on 16 October 2008, as determined by the Company, and will be announced on 17 October 2008.