Black Economic Empowerment Transactions Mature
Old Mutual plc
Ref 351/15
7 May 2015
OLD MUTUAL'S BROAD-BASED BLACK ECONOMIC EMPOWERMENT TRANSACTIONS MATURE
Old Mutual plc ("Old Mutual" or "the Group") today announces the maturity of its Broad-Based Black Economic Empowerment transactions ("BEE transactions") that to date have created net value of over R7.9 billion, based on current market prices, for Old Mutual's South African empowerment partners, staff and communities ("BEE participants").
The BEE transactions originally entered into by Old Mutual and Mutual & Federal Insurance Company Limited ("M&F"), (collectively "Old Mutual South Africa") during 2005, involved shares valued at R4.1 billion[1], and representing approximately 13% of the equity value of Old Mutual's South African operations at the time, being issued to our BEE participants. The subscription terms for the shares issued were designed to facilitate the ownership levels required under South African Broad-Based Black Economic Empowerment legislation by enabling the BEE participants to benefit from the increase in the Group's value over ten years.
Our Black Business Partners ("BBPs") included the WIPHOLD Consortium, the Brimstone Consortium and Mtha, for whom a combined R2.1 billion in net value was created.
Old Mutual South Africa staff also benefited through various employee share trusts that formed part of the BEE transactions, creating net value of R4.6 billion for around 9,000 management and employees.
The Group further undertook to support the development and growth of emerging financial advisors and brokers through the Old Mutual Black Distributors Trust and M&F Black Broker Trust. In addition, the Old Mutual Education Trust provides scholarships for higher education to members and staff of the participating trade unions, and their dependants. The M&F Community Trust focused on micro enterprise development, education and skills capacity building, as well as social development and welfare projects. Collectively, these trusts delivered a net value in excess of R1.2 billion, of which R925 million is available for future distributions to qualifying beneficiaries.
The aggregate value that remains within these trusts will continue to be used to support and develop critical transformation initiatives.
Financial impact
The process of unwinding the BEE transactions includes settlement of the balance of the cash undertakings given by certain of the BEE participants when the shares were originally issued. This totals R3.2 billion (c. £175 million) as at 30 April 2015. Of this, R1.7 billion has already been received by the Group, with the balance expected to be received by the end of June 2015. The proceeds will result in an increase in the net assets of the Group of R3.2 billion (c. £175 million) and will be included in the Group's Financial Group Directive ("FGD") calculations at the half year.
There is no impact on the Group's Adjusted Operating Profit per share (known as "AOP Earnings per share") as a result of the maturity of these BEE transactions. However, if the maturity of these BEE transactions had taken place on 1 January 2015, then there would be a pro-forma dilution of approximately 2.7% to IFRS Basic Earnings per share and Headline Earnings per share following the sale/transfer of approximately 125 million Old Mutual plc shares.
Patrick O'Sullivan, Chairman of Old Mutual, said: "We are clear about the role we play in society and our responsibility to help drive positive change. We are pleased that our BEE transactions have contributed positively to improving the quality of lives of communities across South Africa."
Old Mutual remains committed to ongoing transformation and development of South Africa through our focus on investment in socially responsible projects, BEE funding, infrastructure investment and support of education initiatives.
The Group has announced its future plans regarding the BEE schemes on the Old Mutual South Africa website:
http://www.oldmutual.co.za/about-us/media-centre/press-releases.aspx
Enquiries
External communications
Patrick Bowes UK +44 20 7002 7440
Investor relations
Dominic Lagan UK +44 20 7002 7190
Sizwe Ndlovu SA +27 11 217 1163
Media
William Baldwin-Charles +44 20 7002 7133
+44 7834 524833
Notes to Editors
Old Mutual provides investment, savings, insurance and banking services to more than 17 million customers in Africa, the Americas, Asia and Europe. Originating in South Africa in 1845, Old Mutual has been listed on the London and Johannesburg Stock Exchanges, among others, since 1999.
In the year ended 31 December 2014, the Group reported adjusted operating profit before tax of £1.6 billion (on an IFRS basis) and had £319 billion of funds under management from core operations.
For further information on Old Mutual plc, please visit the corporate website at www.oldmutual.com
[1] including M&F shares that were replaced by Old Mutual plc shares when M&F became a wholly-owned subsidiary of the Group
This information is provided by RNS
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