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Old Mutual profits up but South Africa struggles continue

Old Mutual's adjusted operating profit grew by 37% to £969 million in the first half, an increase of 6% in constant currency terms, reflecting the weakness of sterling against the rand.

Pre-tax profit was £940 million, an increase of 76%, benefiting from a profit of £108 million from the sale of OM Asset Management (OMAM) partially offset by a goodwill impairment of £71 million in respect of UAP-Old Mutual in East Africa.

The group said the first six months of the year saw a continuation of tough macroeconomic conditions in its largest market of South Africa, with the South African government's sovereign credit rating downgraded in April.

There was also continued volatility in the main currencies in which Old Mutual conducts its business.

"In this context, our businesses have delivered resilient operational performances demonstrating the underlying strength of their franchises," it stated.

Old Mutual hiked its interim dividend by 32% to 5.53p, in line with its capital management policy.

Bruce Hemphill, group chief executive, said the company is making progress in delivering the managed separation of Old Mutual having materially reduced debt and largely disposed of its stake in OM Asset Management.

"Our focus for the next phase of managed separation is first to finalise the appropriate standalone balance sheets for our two unlisted businesses and second, subject to the necessary approvals, deliver them to our shareholders at the earliest opportunity in 2018 after our 2017 full year results," he added.

Old Mutual Wealth's adjusted operating profit grew by 29% to £134 million, with net client cash flow growth of 53%.

Nedbank's adjusted operating profit was R7.9 billion, an increase of 3%.

Old Mutual Emerging Markets' adjusted operating profit was R6.0 billion, up 1% year-on-year.

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