Old Mutual on course on splitting units

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OLD Mutual PLC says the management separation process for the group is progressing well and its implementation requires a balance between value, cost, time and risk and using the full flexibility of the capital management policy.

BY TARISAI MANDIZHA

The group announced in March that it would split its businesses into Ned Bank, Old Mutual Asset Management, Old Mutual Emerging Markets and Old Mutual Wealth (OMW).

In a statement accompanying the group half-year results ended June 30 2016, Old Mutual PLC group chief executive Bruce Hemphill said significant work was being undertaken to prepare the business for independence, which was critical for success of management separation.

He said business readiness, particularly for OMEM and OMW, was the main determinant for the timing of the process.

“The first six months of the year were characterised by volatile currencies and lower average equity markets but our underlying performance demonstrated the strength of our franchises and the positive momentum within each of our businesses.

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

“At this stage, we are doing a lot of preparation work that will lay the foundations for the future and is critical for success. We are clear about the task at hand and we are absolutely confident that this is the right strategy to unlock value.”

In the period under review, Old Mutual PLC recorded a 9% decline in constant currencies and 22% in reported currencies to £708 million.

Hemphill said the macro environment was challenging with weaker rand against the first half of 2015 and lower average market levels.

The group announced a new management policy in March, with the aim to provide flexibility, recognising the need to balance complex considerations including the background of volatile markets, costs associated with the management separation and continued investment in the businesses while increasing their capital strength.

He, however, said the group was still at an early stage in the managed separation with significant variables ahead of the company , and therefore any dividend under consideration for three year ending December 31 2016, was likely to be at the mid to upper end of the cover range of 2,5 to 3,5 times adjusted operating profit.