OLD MUTUAL plc (OM) shareholders will enjoy a cash boost after the insurance and banking group announced a 23% growth in dividend payout for the year ended December 31, 2012 following an 18% increase in in its full year earnings to £1,614million from £1,363million in 2011.
Report by Clive Mphambela
The company, which said its strong financial performance was driven primarily by growth in emerging markets and its flagship banking unit Nedbank Group, proposed a final dividend of 5,5 pence a share, bringing the total dividend for the year to 7,0 pence a share, 23% more than the 2011 dividend of 5,25 pence a share.
According to the company, the 23% increase in total dividend in cash terms delivered a 2,5 times dividend cover.
The company is continuously reviewing its dividend policy and is progressively targeting a 2,25 times cover.
Being cash rich, OM has routinely paid aggressive dividends to its shareholders. The company set about 30% of prior year total dividend as an interim dividend for each ensuing year.
Last year the global insurer returned £1,2billion to its investors in a special cash dividend following the successful disposal of its Nordic businesses for £2 billion. Old Mutual Group CE Julian Roberts, in comments accompanying the results said, “This has been a very good year for Old Mutual. We have produced strong results, with our Emerging Markets business and Nedbank performing particularly well.”
He said over the past three years, the company had significantly de-risked its business, more than met its operational targets and made substantial returns of capital to both equity and debt holders. The group could now move forward from a position of strength.
“Old Mutual has four strategic priorities: expanding in Africa; developing our business in the fast growing South African markets; building our Wealth business; and growing US asset management. We will achieve these priorities while maintaining a strong balance sheet; putting customers at the centre of everything we do; and promoting a responsible corporate culture,” Roberts asserted.
He said while the economic environment remained uncertain, the company was focused on the markets which fit its criteria and where it saw long-term, structural growth. The company was clear on its priorities and confident it would continue to deliver sustainable value to its shareholders and customers.”
The ZSE-listed Old Mutual is one of the companies targeted by most investors in Zimbabwe, and has a market capitalisation of over US$110 million.
The company runs the country’s largest life assurance and controls Cabs building society, Royal Mutual Insurance and MBCA Bank through Nedbank.