Preliminary Results Announcement

Transcription

1 Preliminary Results Announcement

2 JIM SUTCLIFFE Chief Executive Introduction

3 23 rd February Day s agenda UK 09:00 10:00 10:30 11:00 12:00 12:45 SA 11:00 12:00 12:30 13:00 14:00 14:45 OM analyst presentation OM Q&A Coffee (UK), Lunch (SA) Nedcor analyst presentation Nedcor Q&A Wrap up Slide 3

4 Key financial highlights Sterling m % change Adjusted operating profit (10%) Adjusted operating EPS 10.0p 11.3p (12%) Life new business* (5%) FUM ( bn bn) ** 13% Dividend per share 4.8p 4.8p Unch Slide 4 Solid results in 5 of 6 businesses * Annual premium equivalent ** 31 Dec 2002 adjusted to exclude Gerrard

5 Key financial highlights Rand Rm % change Adjusted operating profit 8,041 11,431 (30%) Adjusted operating EPS 123.8c 179.0c (31%) Life new business* 6,532 8,791 (26%) FUM (Rbn( Rbn) 1,495 1,538** (3%) Dividend per share 56.5c 66.0c (14%) Slide 5 Solid results in 5 of 6 businesses * Annual premium equivalent ** 31 Dec 2002 adjusted to exclude Gerrard P&L exchange rate B/S exchange rate

6 A solid year Assets under Management grown: SA life market share maintained Strong fund inflows in US Better equity markets after a weak Q1 Margins improved in H2 Good profit growth, except Nedcor Capital strengthened Slide 6

7 whilst managing challenges Pilgrim Baxter being resolved Gerrard recovered and sold Decisive action at Nedcor Slide 7

8 Nedcor New management put in place OM teams closely involved Conservative balance sheet established New relationship established Nedcor is a key part of Old Mutual Slide 8

9 Nedcor rights issue R5bn, fully underwritten R2bn OM funding will be repaid Brings overall capital adequacy ratio to 11% Tier 1 goal 7.5% 3-3.5X headline earnings dividend cover Target ROE 20% Nedcor is a key part of Old Mutual Slide 9

10 Strategy reaffirmed Use a strong SA base to build an international financial services group Provide high quality investment skills to build and protect client assets Target customer-focused regional businesses Strength of diversity, power of focus Slide 10

11 further steps completed in 2003 Seizing opportunities at home Mutual & Federal minorities to be acquired BEE investments extended (WIP, J&J, etc) Investing in international growth Significant organic growth in US life Bermuda variable annuity company acquired Selestia, OMAM(UK) and Bright Capital external funds produce 341m net cash flow Slide 11

12 Using a strong SA base to build an international financial services company Life new business (APE) Embedded value (pre-debt & 529m, -5% preferred security) 5.3bn, +4% 4% 45% 51% 33% 7% 60% Funds under management* 125bn, +13% Adjusted operating profit** 650m, -10% 12% 65% 23% 23% 3% 74% * Excluding Gerrard in 2002 * * Pie chart excludes debt servicing & group admin Slide 12 South Africa USA UK & Rest

13 Preliminary Results Announcement

14 JULIAN ROBERTS Group Finance Director Finance and Operating Review

15 2003 financial perspective Good operating profits offset by Nedcor Positioned for market recovery Assets and premiums have grown Investment performance is good Margins improved Capital position is strong Gearing 19.4% Ability to meet challenges and support strategy Slide 15

16 2003 financial perspective Good operating profits offset by Nedcor Positioned for market recovery Capital position is strong Slide 16

17 Good operating profits offset by banking Sterling V=(10%) Banking 221 (6) USA South Africa % UK & ROW Debt Servicing & Group Admin 20 (80) (88) (1) Slide 17

18 Good operating profits offset by banking Rand Rand 11,431 8,041 V=(30%) Banking 3,489 (70) USA South Africa 7,942 2,810 +2% 8,111 2,062 UK & ROW 6,411 6,887 Debt Servicing & Group Admin 249 (1,263) (1,087) (16) Slide 18

19 2003 financial perspective Good operating profits offset by Nedcor Positioned for market recovery Capital position is strong Slide 19

20 Old Mutual s key markets A tale of two halves. Rebased to S&P 500 low 12 March FTSE low 12 March JSE low 30 April 70 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec S&P 500 JSE FTSE 100 Slide 20

21 driving our regionally focused businesses Complementary Regions US UK South Africa Operational Focus and Synergies Life Assurance Asset Management Asset Management Life Assurance Asset Management Banking General Insurance Slide 21

22 USA Particularly strong inflows at OMAM(US) H H FY FY 2002 Gross cash inflow($bn) Net cashflow($bn) FUM as at period end($bn) FUM average($bn) Adjusted operating profits($m) Operating margin 23% 24% 24% 25% All numbers excluding affiliates sold Slide 22

23 US life Another year of progress Sales APE ($m) Funds under management ($bn bn) New business margin** 15% 19% 15% Adjusted operating profit ($m) * 12.2% return on embedded value * Pro-forma full year acquisition of US life June 2001 ** Post tax Slide 23

24 UK & ROW Good performance by Selestia and OMAM(UK) UK fund management % change Net external cashflow ( m) % FUM as at period end ( bn bn) % Total revenue ( m) % Total UK and ROW Adjusted operating profit ( m) 20 (1) Fav Slide 24

25 SA life A better second half % change Life new business (APE): Single premiums*(rm Rm) 1,169 1,601 (27%) Recurring premiums*(rm Rm) 2,160 2,104 3% Total* (Rm) 3,329 3,705 (10%) New business margins** 25% 30% Life Company FUM (Rbn( Rbn) % * Annual premium equivalent ** Net of tax Slide 25

26 and resilient profits and margins at OMSA Rm % change Life Assurance profit Individual business Group business LTIR Asset management 5,322 2, , ,414 2, , (2%) (4%) (7%) 3% 21% Adjusted operating profit before tax ROC 5,854 22% 5,855 22% 0% Slide 26

27 An outstanding year for Mutual & Federal 2003* 2002* 2* % change Gross premiums (Rm( Rm) 6,486 5,603 16% Expense ratio 7.9% 8.5% Combined ratio 93.1% 97.6% Solvency ratio 61.5% 60.1% Operating profit (LTIR) (Rm( Rm) % * As per Mutual & Federal s accounts Slide 27

28 Banking Disappointing operating results Adjusted operating profit UK GAAP (Rm( Rm) Total banking assets* (Rbn( Rbn) 2003 (70) , Return on average equity* Efficiency ratio** Capital adequacy ratio* 0.3% 70.1% 10.1% 14.1% 59.2% 11.0% * Based on Nedcor announcement SA GAAP ** Based on Nedcor announcement excluding fx Slide 28

29 Nedcor trading and capital drivers Trading & cost base Increased expenses FX losses on large offshore capital base R400m GRP release in 2002 Investment banking trading environment More prudent taxation regime Accounting & funding Interest rate mismatches Regulatory changes AC133, AC105 Goodwill impairment Balance sheet review Slide 29

30 Nedcor capital - Sizing the rights issue Current Rbn % Post rights issue * Rbn % End 2004 % Restore Tier 1 capital Tier 1 capital Tier 2 capital Tier 3 capital Total capital Risk weighted assets % 4.9% 0.2% 10.1% % 3.7% 0.2% 11.2% 7.5%+ Optimise Tier 1 & Tier 2 mix Anticipate regulatory requirements Foundation for future * R5bn rights issue & repayment of R2bn to Old Mutual & R0.5bn additional Tier 2 capital Slide 30

31 Nedcor recovery plan will target ROE>20% Review of asset profitability no sacred cows Reduction in expenses BoE synergies must be delivered Repatriation of foreign capital Target ROE 20% by 2006 Slide 31

32 2003 financial perspective Good operating profits offset by Nedcor Positioned for market recovery Capital position is strong Slide 32

33 Group capital position has been strengthened in 2003 m Gearing* Interest cover (EBITDA)** Interest cover non Africa incl. Group admin. (EBITDA)** Dec % Dec % * Restated for change in accounting for own shares held in policyholder funds ** Excludes pref. Dividend Slide 33

34 OMLAC(SA) s capital strength maintained Multiple 2.4x 2.2x 2.3x Capital strength (Rbn) Dec-03 Jun-03 Dec-02 Statutory capital adequacy requirements Capital Slide 34

35 affording strategic flexibility Excess capital Capital required R12.1bn Dec-03 M&F transaction M&F plus Nedcor Portfolio OM plc loan M&F Nedcor Slide 35

36 Old Mutual is well funded to meet challenges and support strategy OMAM cash generative Organic growth at US life well covered by US earnings PBA exposure Surplus cash following Gerrard sale Start-ups moving towards break-even Increased investment in M&F and Nedcor funded locally OMLACSA cash generative Slide 36

37 Summary 317m cash Undemanding gearing ratio at 19.4% Committed undrawn facilities totalling 1.3bn EV at 107.5p (103.8p) per share Basic EPS 8.0p (5.9p) with no contribution from Nedcor RoE 13.9% Slide 37

38 Preliminary Results Announcement

39 JIM SUTCLIFFE Chief Executive Outlook

40 Progress towards 2004 financial targets US AM US Life OMSA M&F Nedcor UK $5bn pa of net inflows 10% ROI $1bn pa of net inflows 12% ROI Profits growth 2-3x 2 GDP 20%-25% 25% ROE Profits growth 2-3x 2 GDP 20%-25% 25% ROE Profits growth 2-3x 2 GDP 20%-25% 25% ROE 1bn pa of net inflows 25m of OPAT Ratings demand more capital than planned 99-03, 10% pa Sale of Gerrard produced nearly 10x this Needs some more market uplift Three year recovery programme Start-ups produced 341m X Slide 40

41 Building an international business Complementary Regions South Africa US UK Operational Focus and Synergies Life Assurance Asset Management Banking General Insurance Life Assurance Asset Management Asset Management Value Creation Imperatives Generate Cash / Grow Optimise Performance Build Slide 41

42 South Africa Generate cash and grow OMSA Develop Best Value Administration Continue to build distribution Meet A targets in Financial Sector Charter Mutual & Federal Continue underwriting surplus Slide 42

43 Nedcor - Unlocking the value of the franchise Brand, bancassurance, capital strength and efficiency Balance sheet review complete, de-risking underway New governance: Relationship agreement to unite strategy Better information flow Internal audit reports to audit committee chairman Board changes Checks and balances New leadership Recovery programme in place RoE driven asset growth A powerful South African franchise Why important for Old Mutual What will be different in the future Why rights are a good opportunity Slide 43

44 US Optimise performance US AM Invest in retail asset management capability Leverage Callan performance attribution system US Life Take market opportunities Finalise low-cost outsourcing Build complementary channels and products Slide 44

45 UK & ROW Build Selestia and OMAM to continue to focus on key strengths in asset management Guernsey products sold back into SA Leverage SA to expand existing businesses in Namibia, India etc Slide 45

46 Looking ahead Strong capital position Good market opportunities in USA Benefiting from market recovery in OMSA Recovery at Nedcor Leverage SA base internationally Slide 46

47 These materials, which have been issued by Old Mutual plc ( Old Mutual ), relate to the proposed offering of rights (the Offering ) by Nedcor Limited ( Nedcor ). These materials do not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares in Nedcor, nor shall these materials or any part of them nor the fact of their distribution form the basis of, or be relied upon in connection with, any contract or investment decision in relation thereto. Recipients of these materials who are considering a purchase of rights in Nedcor in the Offering following publication of the Offering Circular in connection therewith are reminded that any such purchase should be made solely on the basis of the information contained in the Offering Circular. No reliance may be placed for any purposes whatsoever on the information contained in these materials or on their completeness. No representation or warranty, express or implied, is given by or on behalf of Old Mutual, Nedcor, or any of their respective shareholders, directors, officers or employees or any other person as to the accuracy or completeness of the information or opinions contained in these materials, and no liability is accepted for any such information or opinions. Neither these materials nor any copy of them are for distribution, directly or indirectly, in or into the United States, Australia, Canada or Japan. These materials are not an offer of securities for sale into the United States or in any other jurisdiction where such an offer would be unauthorised. Neither the rights nor the ordinary shares represented thereby may be offered or sold in the United States (as such term is defined in Regulation S under the Securities Act of 1933) unless they are registered or exempt from registration. There will be no public offer of securities in the United States. Prices and values of, and income from, shares may go down as well as up and an investor may not get back the amount invested. It should be noted that past performance is no guide to future performance. Persons needing advice should consult an independent adviser. Slide 47

48 Preliminary Results Announcement