Subsid's Interim Results
OLD MUTUAL PLC
5 August 1999
The headline for the Old Mutual PLC - 'Interim Results, etc.' announcement
released today should read 'Subsid's Interim Results'.
The full text shown below remains unchanged.
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OLD MUTUAL PLC
Nedcor Interim Results
Old Mutual is the largest Southern African life assurance and
financial services group. Its shares were listed on the London,
Johannesburg, Malawi, Namibia and Zimbabwe stock exchanges on 12th
July 1999.
Nedcor Limited, the South African banking group, in which Old
Mutual plc ('Old Mutual') has a 53.3% holding, has today issued
financial results for the six months ended 30th June 1999. The
full text of the Nedcor announcement is attached.
Commenting on Nedcor's results, Mike Levett, Chairman and CEO of Old
Mutual, and a Director of Nedcor, said:
'These are excellent results from Nedcor. The benefits of the
strategy of the Nedcor management team are reflected in the
continuing strong performance of the company.'
5th August 1999
Further information is available on Nedcor's internet site: http:
//www.nedcor.co.za
Issued by:
Investor Relations
Old Mutual plc
London
Notes to Editors:
The Board of Old Mutual plc currently expects to announce the
interim results for the whole of the Old Mutual group for the
period ended 30 June 1999 on Tuesday 7 September 1999.
An announcement regarding the interim results of Old Mutual group
associate-company, Mutual & Federal Insurance Company Limited, is
expected on 18th August 1999.
Nedcor Limited is separately quoted on the Johannesburg Stock
Exchange and in addition has GDR's traded in London.
Old Mutual consolidates the results of Nedcor in its own figures.
As of June 30th 1999 the group had a stake equivalent to 53.3% of
the common equity of Nedcor.
Details of Nedcor's interim results presentation will be available
on the corporate website at www:Nedcor.co.za.
Nedcor Limited
Interim results and capitalisation share award
for the six months ended 30 June 1999
* Attributable income up 28% to R969 million
* Earnings per share up 26% to 415 cents
* Expense-to-income ratio 54,1%
Nedcor
Interim results and capitalisation share award
for the six months ended 30 June 1999
Financial highlights
Unaudited Proforma
% 6 months 6 months 12
months
change 30.6.99 30.6.98 31.12.98
Income statement
Net operating income 22 1 251 1 026 2 430
before taxation (Rm
Net income after 26 918 727 1 841
taxation (Rm)
Income attributable to 28 969 759 1 900
shareholders (Rm)
Earnings per share 26 415 330 822
(cents)
Selected returns
Return on average 20,6 20,1 23,3
shareholders' funds (%)
Return on average total 1,60 1,48 1,74
assets (%)
Non-interest revenue 42,9 45,6 45,0
(NIR) to total income
(%)
Expenses to total income 54,1 58,4 56,2
(%)
Capital adequacy
Shareholders' funds (Rm) 23 9 862 8 006 9 131
Total assets (Rm) 20 126 817 105 436 117 527
Risk-weighted assets 92 585 78 878 88 977
(Rm)
Capital ratio (%) 11,0 10,5 10,8
Share statistics
Share price (cents) 7 13 600 12 700 10 020
Number of shares in 2 235,1 230,8 232,7
issue (m)
Weighted average number 2 233,9 230,2 231,2
of shares (m)
Price-earnings ratio 15,0 17,5 12,2
(historical)
Market capitalisation 9 32,0 29,3 23,3
(Rbn)
Nedcor
Interim results and capitalisation share award
for the six months ended 30 June 1999
Consolidated income statement
Unaudited Proforma
6 months 6 months 12
months
% 30.6.99 30.6.98 31.12.98
change Rm Rm Rm
Interest income 19 8 531 7 190 16 494
Interest expense 19 6 352 5 356 12 569
Net interest income 19 2 179 1 834 3 925
Non-interest revenue 6 1 636 1 537 3 211
Total income 13 3 815 3 371 7 136
Specific and general 33 501 378 698
provisions
Net income 11 3 314 2 993 6 438
Expenses 6 2 063 1 967 4 008
Net operating income 22 1 251 1 026 2 430
before tax
Add: Capital profit on 193 - -
sale of NedTravel
Less: Special general 193 - -
provision supplement
(net of tax)
Net income before 22 1 251 1 026 2 430
taxation
Taxation 11 333 299 589
Net income after 26 918 727 1 841
taxation
Attributable earnings 57 51 32 59
of associates
Income attributable to 28 969 759 1 900
shareholders
Nedcor
Interim results and capitalisation share award
for the six months ended 30 June 1999
Consolidated Balance Sheet
Unaudited Proforma
6 months 6 months 12
months
% 30.6.99 30.6.98 31.12.98
change Rm Rm Rm
Share capital 2 235 231 233
Reserves 24 9 627 7 775 8 898
Shareholders' funds 23 9 862 8 006 9 131
Long-term subordinated 61 572 355 583
debt instruments
Deposit, current and 21 115 537 95 877 106 900
other accounts
Liabilities under 846 1 198 913
acceptances
Capital, reserves and 20 126 817 105 436 117 527
liabilities
Assets
Cash and short-term (50) 2 963 5 973 5 250
funds
Other short-term 147 12 716 5 147 7 154
securities
Government and public 91 6 086 3 182 4 023
sector securities
Advances and other 15 100 057 86 874 96 483
accounts
Customers' indebtedness 846 1 198 913
for acceptances
Other investments 59 2 094 1 314 1 826
Fixed property 20 1 051 877 983
Equipment 15 1 004 871 895
Total assets 20 126 817 105 436 117 527
Confirmed letters of 2 367 3 037 2 798
credit and other
Guarantees 5 675 4 920 5 826
Contingent liabilities 1 8 042 7 957 8 624
Nedcor
Interim results and capitalisation share award
for the six months ended 30 June 1999
Consolidated cash flow statement
Unaudited Proforma
6 6 months 12
months months
30.6.99 30.6.98 31.12.98
Rm Rm Rm
Cash flows from operating 1 508 1 517 3 329
activities
Cash receipts from customers 10 115 8 697 19 613
Cash paid to customers,
employees and suppliers (8 269) (7 207) (16 336)
Dividends received 42 27 80
Dividends paid (380) - (28)
Net increase in operating funds (3 622) (278) (2 066)
Taxation paid (247) (424) (467)
Net cash used in investing (71) (450) (1 169)
activities
Net cash provided by financing 145 36 51
activities
Net increase in cash and short- (2 287) 401 (322)
term funds
Cash and short-term funds at 5 250 5 572 5 572
beginning of period
Cash and short-term funds at end 5 963 5 973 5 250
of period
Comparative figures are restated, where necessary, to afford a
proper comparison.
Percentages are calculated using actual numbers.
Commentary on results
The group again achieved excellent results, with attributable
income for the six months increasing by 28% to R969 million (1998:
R759 million). Earnings per share increased by 26%, resulting in a
three-year compound annual growth rate of 25%.
Average total assets showed satisfactory growth of 18%, while net
interest income increased by 19%. These margins improved slightly
to 3,72% (1998: 3,69%), reflecting improved money market
conditions. These margins were, however, negatively affected by a
doubling of interest reserved, which further reflects the
concerning credit environment. While the level of real interest
rates remains high, margins are lower than those of international
peers.
Non-interest revenue to total income at 43% (1998: 46%) is better
than forecast and in line with the long-term target. Exchange and
securities dealing profits continued to grow well. Total non-
interest revenue reduced due to income from deconsolidated
operations now being equity-accounted and the sale of NedTravel,
which realised a capital profit of R193 million. The opportunity
was taken to use this gain as a prudent supplement to the general
provision.
The aftermath of the high interest rates prevailing during the last
12 months continues to be in evidence and the charge for bad and
doubtful debts increased by 33% to R501 million. Including interest
reserved, the income statement charge for the six months amounts to
R652 million, 44% worse than last year. Total provisioning to
average advances stands at 3,2% (1998: 2,0%), appropriately
conservative under current circumstances, and at 2,5%, including
the special supplement to the general provision.
Effective cost control efficiencies resulted in a 4,8% increase in
expenses and in a 54,1% reduction (1998: 58,4%) the expense-income
ratio. Should this trend continue, this ratio will be in the low
50s by year-end, which will position Nedcor favourably against
international benchmarks.
The effective tax rate decreased from 29,2% to 26,6% as a result of
the 5% decrease in the corporate tax rate, partly offset by the
release, in 1998, of certain non-recurring tax credits.
Shareholders' funds now total R9,9 billion, with a capital adequacy
ratio of 11,0% (1998: 10,5%). Return on equity increased to 20,6%
(1998: 20,1%) on an equity base, which grew 23% over the period.
Return on assets is 1,60% (1998: 1,48%).
Operating companies
30.06.99 30.06.98 %
Rm Rm increase
Nedcor Bank, including group operations 685 524 31
Nedcor Investment Bank 250 208 20
Cape of Good Hope Bank 34 27 26
969 759 28
Nedcor Bank, contributing 70% (1998: 69%) of group income, had a
particularly good half-year, especially in the Treasury,
International and Corporate divisions. Nedcor Investment Bank's 20%
increase in net income is based on the newly restructured business,
while major reconfiguration costs have been set off against the
bottom line. Cape of Good Hope Bank grew 26%, based on good asset
growth, improved margins and the inclusion of associate income from
recent investments in the property development sector.
Year 2000
The year 2000 project, covering all the systems and channels of the
group, has been completed. All backend applications, files and
databases are now year 2000 compliant and the frontend branch
roleout is nearing completion. Most workstations have had software
upgrades or have been replaced with compliant machines. All
applications are being tested for special dates and ongoing
compliants.
Nedcor Investment Bank Holdings Limited
(NIBH) listing
Nedcor Limited has offered 15% of its holding in NIB to Nedcor
Limited shareholders in the ratio of 1 NIB share for each Nedcor
share held at a subscription price of R4,30 per NIB share. The
renounceable letters of allocation commenced trading on the
Johannesburg Stock Exchange on 2 August 1999 and NIB will be listed
on 26 August 1999. Prelisting documentation has been distributed to
shareholders. Nedcor Limited will realise gross capital proceeds of
R1 billion from the NIB listing.
Prospects
The ongoing interest rate reductions are welcome and, enhanced by
the benefits of the recent Old Mutual demutualsiation and listing,
we anticipate a positive effect on our client base. Stringent cost
control remains a key focus. Major technological developments
initiated in prior years have positioned the group well for future
growth. These factors should contribute to the current positive
results continuing for the remainder of the year.
Nedcor's primary challenge is to continue to achieve business
efficiencies and improved profitability, enabling investment for
the future, which will result in extended client and product
reach, improved client service and the expansion of our franchise
into the new millennium.
Capitalisation share award and cash dividend
The directors have resolved to issue fully paid ordinary shares in
the company as a capitalisation share award to ordinary
shareholders registered in the books of the company at the close of
business on Friday, 20 August 1999.
Such shareholders will be entitled, in respect of all or part of
their shareholding, to elect to receive instead a cash dividend of
128 cents per ordinary share ('the election'). New fully paid
ordinary shares in the company will be issued only to those
ordinary shareholders who do not elect in respect of all or part of
their shareholding before 12:00 on Friday, 17 September 1999, to
receive the aforementioned dividend.
The number of capitalisation shares to which shareholders are
entitled will be determined in the ratio that 128 cents per
ordinary share multiplied by 1,05 bears to the weighted average
price of Nedcor's ordinary shares on the Johannesburg Stock
Exchange ('the JSE') for the four business days ending Thursday, 16
September 1999. Where entitlements to new Nedcor ordinary shares
result in fractions of shares, these fractions will rank for a
residual cash dividend.
Documentation dealing with the capitalisation share award and
election will be posted to shareholders on or about 27 August 1999.
To be valid, completed election forms will need to be received by
Nedcor's transfer secretaries by no later than 12:00 on Friday, 17
September 1999. Election forms in envelopes postmarked on or prior
to Friday, 17 September 1999, will be accepted only if received by
no later than 12:00 on Wednesday, 22 September 1999.
Subject to the approval of the JSE, a listing for the new ordinary
shares to be issued pursuant to the capitalisation share award will
commence on Monday, 27 September 1999.
It is expected that dividend cheques and share certificates will be
posted to shareholders on or about Monday, 27 September 1999.
A further announcement will be made on or about Monday, 27
September 1999, reporting on the result of the election.
For and on behalf of the Board
C F Liebenberg R C M Laubscher
Chairman Chief Executive
6 August 1999
Registered office Transfer secretaries
Nedcor Limited Mercantile Registrars Limited
(Reg No 66/10630/06) 7th Floor
100 Main Street 11 Diagonal Street
Johannesburg, 2001 Johannesburg, 2001
PO Box 1144, PO Box 1053, Johannesburg 2000
Johannesburg, 2000 Tel: (011) 370-5000
Directors: C F Liebenberg (Chairman); R J Goss (Deputy Chairman);
R C M Laubscher (Chief Executive); C S Adcock; EEAnstee; G H
Bulterman; P T W Curtis;
Dr J de V Graaff; PGJoubert; Prof M M Katz; M J Levett; J B
Magwaza; ME Mkwanazi;
SGMorris (Financial Director); L M Ndlovu; C C Parker; A A
Routledge (Executive Director: Strategic and Corporate Activities);
AJTrahar; GSvan Niekerk; Dr W P Venter
Company Secretary: GSNienaber
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