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DURBAN – Old Mutual Limited (OML), the financial services group, is planning to spend R2billion in 2019 in a share buy-back programme.

Chief financial officer Casper Troskie said yesterday that at the moment the group was well capitalised, has declared a dividend of 72cents a share in the year to end December to take the total dividend to 117cents.

“We are pleased to announce a share buy-back programme following a review of all capital available at the end of December 2018, and taking into account capital and liquidity projections to the end of the 2019 financial year, we have identified sufficient excess capital available to conduct on market share buy-backs for up to R2billion,” Troskie said.

The group said the repurchase of OML shares will take place on both the JSE and London Stock Exchange from March 12 to May 24.

“The share repurchase programme will be effected in accordance with the general authority received by way of a shareholder resolution passed at the AGM, held on March 6 last year, allowing the company to repurchase up to 247.10million ordinary shares, equivalent to 5percent of the issued share capital of the company,” the group said.

OML was trading at a discount to its intrinsic value and Troskie felt a share repurchase programme would deliver longer-term incremental value to shareholders.

The group reported its first full-year financial results following its successful primary listing on the JSE in June last year.

The group reported an 8percent increase in headline earnings to R14.24bn during the period, up from R13.14bn compared to last year, while adjusted headline earnings declined by 11percent to R11.51bn, with Troskie stating that the adjusted numbers were negatively impacted by Zimbabwe’s dysfunctional currency in the fourth quarter.

Adjusted headline earnings per share declined by 12 percent to 239.1c a share, down from 271.1c.

The group also reported a return on the net asset value of 18.6percent compared to 22.9 percent last year. Chief executive Peter Moyo said the group delivered on its medium-term targets and commitments made to investors.

“We delivered a return on the net asset value of 18.6 percent which exceeds our cost of equity +4 percent target, which sat at 17.4 percent for 2018. We continue to be a high cash generative business with R6.6bn of free cash generated in 2018 which has more than covered our dividends to our shareholders,” Moyo said.

Ron Klipin, a senior analyst at Cratos Capital, said progress on cost reduction at R750m was impressive and the group is on target to reach R1bn by year-end. “Capital solvency at 170percent was above the target of between 155 to 175percent and a turnaround in Africa operations is on track despite challenges posed by Zimbabwe,” Klipin said.

However, he added that the middle-income market was impacted by the lack of disposable income spend while the mass market, a traditional strength, is still prevailing, particularly in funeral products.

“Old Mutual Insure had positive underwriting margins bolstered by low claims while Personal Finance cluster showed negative returns and this impacted on results,” Klipin said.

Old Mutual shares closed 5.46 percent lower at R20.59 on the JSE yesterday.

BUSINESS REPORT