Financial Results

Old Mutual To Split Main Business Lines Into Standalone Units; Wealth Arm Logs Sharp Profit Rise

Tom Burroughes, Group Editor, London, 11 March 2016

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The UK-headquartered wealth management group reported strong results for 2015, while its parent confirmed that it will split its main business lines into standalone units.

Old Mutual Wealth, part of UK-listed financial services group Old Mutual, today reported a 35 per cent year-on-year rise in adjusted pre-tax profit to £307 million ($438.3 million) in 2015. The parent group also confirmed it will split its four major business lines into separate, standalone entities, following media speculation a few days ago.

Net client cash flow surged 86 per cent in 2015, from 2014, to £6.9 billion, Old Mutual Wealth said. Gross sales rose 30 per cent to £20.8 billion; funds under management rose 27 per cent to £104.4 billion.

Following a strategic review of business, the group has decided that the “long-term interests” of shareholders and other stakeholders will be “best served” by separating the four businesses – Old Mutual Emerging Markets, Nedbank, Old Mutual Wealth and OM Asset Management (US).   

Nedbank and OM Asset Management (US) are already publicly traded and the managed separation may involve equity market activity for Old Mutual Wealth and Old Mutual Emerging Markets as well, Old Mutual said in its statement today.

“By putting client needs at the heart of our business strategy, Old Mutual Wealth has transformed from a standalone platform into an award-winning, next generation wealth management business. Beating the objectives we set three years ago, our company has delivered outstanding results for 2015 despite being faced with some of the most difficult global stock markets I have ever seen. By outperforming many of our peers in the industry in 2015, we have kept the promises we made in 2012 to create a new force in wealth management,” said Paul Feeney, Old Mutual Wealth's chief executive.

Shares in Old Mutual were down almost 3 per cent on the open around midday in London trade, at 179 pence per share.

“While we are supportive of Old Mutual’s plans to strengthen its business, a low growth environment and global volatility remains a challenge. As a result, we are currently recommending Old Mutual as a ‘hold’, as the volatility of the South African Rand and financial pressures on consumers continue to be a significant headwind to the group’s performance,” Helal Miah, investment research analyst, said in a note today.

The Old Mutual Wealth brand has been pushed forward in recent years; the company has entered a four-year title sponsorship of the RFU Autumn Rugby International Series and become a principal partner of England rugby, taking in both the men’s and women’s senior teams.

The group’s investment division, formed last year, is made up of Old Mutual Global Investors and Quilter Cheviot. Last September, the company combined the multi-asset capabilities from Quilter Cheviot and Old Mutual Global Investors to form one dedicated unit focused on investment solutions for customers. The brand names and market facing activities of both businesses continue as normal, the statement said. The combined funds under management of Quilter Cheviot (£17.8 billion) and Old Mutual Global Investors (£24.7 billion) resulted in 41 per cent of Old Mutual Wealth’s total FuM being managed by the asset and investment management businesses.  

Old Mutual Wealth acquired Sesame Bankhall’s Financial Adviser School in January 2016. At least 75 student financial advisors are expected to be trained through the Financial Adviser School in the first year. More than 200 advisors from Sesame Bankhall Group were transitioned onto the restricted financial planning network within Intrinsic. Production volumes from the new advisors have been higher than expected, the firm said.

 

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