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OML
OLOML
OML - Old Mutual plc - Proposed sale of old mutual`s Nordic business:
Issue of circular and proposed GBP1 billion special dividend
OLD MUTUAL plc
Issuer code: OLOML
JSE Share code: OML
NSX share code: OLM
ISIN: GB0007389926
Ref 8/12
3 February 2012
Old Mutual plc
PROPOSED SALE OF OLD MUTUAL`S NORDIC BUSINESS:
ISSUE OF CIRCULAR AND PROPOSED GBP1 BILLION SPECIAL DIVIDEND
Further to the announcement by Old Mutual plc on 15 December 2011 that it
intends to divest its Nordic business, comprising Old Mutual`s long-term
savings and banking operations in Sweden, Denmark and Norway, to Skandia
Liv for net cash consideration of SEK22.4 billion (GBP2.1 billion), Old
Mutual announces that a circular containing further details of the
Disposal, the related Special Dividend and Share Consolidation, together
with a notice convening a General Meeting is today being sent to Ordinary
Shareholders.
The General Meeting will be held in the Presentation Suite, 2nd Floor, Old
Mutual Place, 2 Lambeth Hill, London, EC4V 4GG at 11:00 a.m. on 14 March
2012, to approve the Disposal and the Share Consolidation.
A copy of the circular is now available on the Group`s website at
www.oldmutual.com/ir. Definitions found in this announcement are
consistent with those set out in the circular.
Key Points (which should be read in conjunction with the full text of the
circular):
* Old Mutual intends to return approximately GBP1 billion of net
proceeds from the Disposal to Ordinary Shareholders by means of a
Special Dividend (equivalent to 18 pence per Ordinary Share, or its
equivalent in other applicable local currencies).
* Old Mutual intends to use the remaining GBP1.1 billion of net
proceeds, subject to regulatory approvals, to reduce indebtedness.
* Old Mutual`s capital flexibility will be enhanced by retaining an
increased proportion of the cash flows expected to be generated from
operational activity and other corporate actions planned for 2012.
* As at 31 January 2012, the Group had repaid approximately GBP600
million of debt and, based on the use of net proceeds from the
Disposal, will meet its GBP1.5 billion debt reduction target by the
end of 2012, subject to regulatory approvals.
* The Group expects a total of approximately GBP1.7 billion to be repaid
under the Group`s increased debt repayment plan.
* If the Disposal is approved at the General Meeting on 14 March 2012,
Completion is currently expected to occur on or around 21 March 2012.
The timing of Completion is dependent upon, amongst other things, the
satisfaction of regulatory conditions.
* The necessary competition authority approvals have already been
obtained and regulatory approvals are expected during February 2012.
* Subject to the timely receipt of regulatory approvals, it is expected
that the timing of the payment of the Special Dividend and the Share
Consolidation (if approved) will be announced with the Group`s 2011
preliminary results. It is the Board`s current intention for the
Special Dividend to be paid at the same time as the Group`s 2011 final
dividend. This is likely to be in early to mid-June 2012.
* The Group will announce its preliminary results for 2011 on 9 March
2012 and expects these to reflect continued strong operational
performance in the second half of 2011. Extracts from the circular
regarding current trading are set out in the Appendix to this
announcement.
Enquiries:
Media Investors/Analysts
William Baldwin-+44 20 7002 7133 Patrick Bowes +44 20 7002 7440
Charles +44 7834 524 833 Kelly de Kock +27 21 509 8709
Finsbury
Andrew Dowler +44 20 7251 3801
Sponsor:
Merrill Lynch SA (Pty) Limited
About Old Mutual plc
Old Mutual is an international long-term savings, protection and investment
Group. Originating in South Africa in 1845, the Group provides life
assurance, asset management, banking and general insurance to more than 15
million customers in Europe, the Americas, Africa and Asia. Old Mutual is
listed on the London Stock Exchange and the Johannesburg Stock Exchange,
among others.
In the year ended 31 December 2010, the Group reported adjusted operating
profit before tax of GBP1.5 billion (on an IFRS basis) and had GBP309
billion of funds under management from core operations, and shareholders`
equity of GBP9.0 billion.
Forward-Looking Statements
This statement may contain certain `forward-looking statements` with
respect to certain of Old Mutual`s plans and its current goals and
expectations relating to its future financial condition, performance,
results, strategy and objectives. Statements containing the words
`believes`, `intends`, `expects`, `plans`, `seeks` and `anticipates`, and
words of similar meaning, are forward-looking. By their nature, all forward-
looking statements involve risk and uncertainty because they relate to
future events and circumstances which are beyond Old Mutual`s control
including among other things, economic and business conditions, market
related risks such as fluctuations in interest rates and exchange rates,
and the performance of financial markets generally; the policies and
actions of regulatory authorities, the impact of competition, inflation,
and deflation; experience in particular with regard to mortality and
morbidity trends, lapse rates and policy renewal rates; the timing, impact
and other uncertainties of future acquisitions or combinations within
relevant industries; and the impact of changes in capital, solvency or
accounting standards, and tax and other legislation and regulations in the
jurisdictions in which Old Mutual and its affiliates operate. This may for
example result in changes to assumptions used for determining results of
operations or re-estimations of reserves for future policy benefits. As a
result, Old Mutual`s actual future financial condition, performance and
results may differ materially from the plans, goals, and expectations set
forth in Old Mutual`s forward-looking statements. Old Mutual undertakes no
obligation to update the forward-looking statements contained in this
statement or any other forward-looking statements it may make.
This announcement is for information purposes only and does not constitute
an offer or invitation to acquire or dispose of any securities or
investment advice in any jurisdiction.
Appendix
Current Trading
The Group will announce its preliminary results for 2011 on 9 March 2012
and expects these to reflect continued strong operational performance in
the second half of 2011.
Sterling earnings from the Group`s South African businesses were favourably
impacted by Rand movements in the first half of 2011. The Rand has weakened
in the second half, which negatively impacted Sterling earnings for the
full 2011 year and reduced the Group`s Sterling unaudited net asset value
at 31 December 2011. The translation impact on the Group`s Sterling net
asset value as at 30 June 2011 of the Rand depreciation was approximately
GBP940m. However, this reduction in net assets will be partially offset by
profits earned over the period, the inclusion of the other African
operations in the consolidated results of the Group and other financial and
foreign exchange movements.
Management information indicates that in the fourth quarter of 2011 net
client cash flows in the Long Term Savings business remained positive and
although APE life assurance sales for the fourth quarter were below those
of the equivalent period in 2010, unit trust sales were ahead of the fourth
quarter of 2010.
The Nordic business within Long Term Savings has continued to benefit from
its product depth and good operational performance.
Nedbank is in a good position to deliver solid earnings growth in the
second half of 2011, notwithstanding the strong second half of 2010. In the
US Asset Management business, net client cash outflows are expected to
continue during the fourth quarter of 2011 largely due to short-term
outflows.
The carrying value of goodwill included in the US Asset Management
statement of financial position is dependent on growth rate assumptions. As
part of its results process, the Group is reviewing these assumptions in
the context of the outlook for US nominal GDP growth. It is likely that the
growth rate will be reduced as a result of the review, in which case it is
expected that there would be a goodwill impairment charge of approximately
GBP270 million. The impairment charge would be excluded from Adjusted
Operating Profit but would reduce IFRS net income and the net asset value
in the 31 December 2011 statement of financial position.
As indicated in the third quarter interim management statement, certain
African businesses will be consolidated for the first time for the year
ended 31 December 2011. It is expected that this will result in an increase
in net assets of approximately GBP200 million.
Treasury and capital
The pro-forma Financial Groups Directive surplus was GBP1.9 billion at 30
September 2011. All the Group`s businesses remained well capitalised
throughout the period. The Financial Groups Directive surplus at 31
December 2011 is estimated to be in line with that at 30 September 2011.
Since the third quarter interim management statement, the Group repaid on
18 January 2012 the remaining Euro200 million (GBP166.5 million) of the
Euro750 million Euro bond that was partially redeemed in July 2011. The
Group has therefore completed the repayment of GBP0.6 billion in cash
towards the Group`s target of GBP1.5 billion debt repayment by 31 December
2012.
Non-core businesses
Bermuda remains a non-core business in run-off. Reserves in respect of
Guaranteed Minimum Accumulation Benefits, to which shareholders are
exposed, reduced by $42 million (GBP26.6 million) in the first half of
2011, but increased by $541 million (GBP342.2 million) in the third quarter
of 2011. The Group estimates Guaranteed Minimum Accumulation Benefits
reserves as at 31 December 2011 to be below those announced for 30
September 2011 in the third quarter interim management statement.
Date: 03/02/2012 14:00:01 Produced by the JSE SENS Department.
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