| Tue 16 Sep 2003, 10:05 | | Richard Laubscher Announces Plans To Step Down By |
|
Old Mutual Plc - Richard Laubscher Announces Plans To Step Down By Year End
Old Mutual Plc
ISIN CODE: GB0007389926
JSE SHARE CODE: OML
NSX SHARE CODE: OLM
ISSUER CODE: OLOML
Nedcor Limited (NED SJ)
Nedcor Ltd. ("Nedcor"), the South African banking group, in which Old Mutual plc
("Old Mutual") has a 53% holding, has today issued a statement (below).
It is expected that Richard Laubscher will stand down as an Executive Director
of Old Mutual plc in due course as a consequence of his ceasing to hold the
office of Chief Executive, Nedcor.
Richard Laubscher Announces Plans to Step Down by Year End
15 September 2003
Chief Executive
After 32 years at Nedcor, the last ten as Chief Executive, Richard Laubscher has
given notice of his intention to stand down by 31 December 2003 as Chief
Executive and as a director. Richard will remain with the Group until a suitable
candidate has been appointed and will ensure that a smooth handover occurs. For
some time Richard has indicated to the Chairman, Chris Liebenberg, and also
publicly, that he felt it was time to stand down as Chief Executive. Following
the BoE acquisition, he was asked to commit to remain as Chief Executive to
oversee the merger and reorganisation (M & R) process with BoE, NIB and Cape of
Good Hope Bank before handing over the reins to a successor. The M & R process
is continuing to progress smoothly and the board expects that operational
synergies will exceed R660 million. These synergies will be realised over time
with the full benefit from 2006 onwards. The M & R process is now at a point
where Richard and the Board feel comfortable for a successor to take over. This
has been expedited to ensure that Richard and Chris Liebenberg who retires in
October 2004 do not leave at the same time. The Board takes this opportunity to
publicly thank Richard for his considerable contribution to the group over many
years. Widely regarded as a charismatic leader, Richard has led Nedcor"s
strategic drive to participate in banking consolidation and grow from being the
smallest of the big four banks to a bank of significant scale matching its major
competitors. This culminated last year in the acquisition of BoE. Under
Richard"s leadership, since 1994 Nedcor has grown from total assets of R54
billion to R316 billion at June 2003, from core profits of R603 million to R3,3
billion in 2002 and from a market capitalisation of R5,9 billion to a current
value of R20 billion. The Board has an ongoing succession planning process and
the Nominations Committee has identified a number of excellent potential
internal successors. At the same time, the board is reviewing external
candidates to ensure the best person possible is selected for the position.
Results expectations
The Board wishes to take this opportunity to align market and analysts"
expectations for 2003. Following Nedcor"s disappointing interim results for the
six months ended 30 June 2003, which were below market expectations, analysts
have updated their estimates of results for the full year to 31 December 2003.
Due to the volatility of interest and exchange rates, the uncertain nature of
various revenue streams and the accounting complexities of the mergers,
analysts" expectations of Nedcor"s core earnings cover a wide range. Nedcor"s
statutory results for the year will be published on a post-AC 133 basis.
However, due to the inherent volatility and unpredictability of the AC 133
results, analysts have prepared their estimates of core earnings largely on a
pre-AC 133 basis. The current analysts" consensus estimate of core earnings per
share (based on Nedcor"s internal view of consensus) is 1204 cents (2002 - 1330
cents). Nedcor"s pre-AC 133 core earnings for the first half of 2003 were 445
cents per share, meaning that analysts" consensus estimates anticipate
substantially improved earnings of 759 cents per share for the second half of
2003. While the Group remains solidly profitable, indications at this early
stage are that earnings for the second half are unlikely to be lower than the
first half, but will not meet the levels of the analysts" consensus estimates.
As communicated during the interim results process, the bank has taken a
conservative stance on its funding, particularly over the merger period, by
having a higher proportion of longer dated fixed interest deposits. This
conservative funding profile at a time of falling interest rates, together with
the endowment effect of lower rates on capital and reduced asset growth in a
competitive environment, is a contributing factor to the lower anticipated
earnings. All the banks within the Group (Nedbank, Peoples Bank, Imperial Bank
and Gerrard Private Bank) operate with statutory capital ratios comfortably in
excess of the regulatory minimums. Nedcor Limited, the bank holding company, has
a lower capital ratio at close to the regulatory requirement of 10%, and the
Group is looking to raise additional capital in due course to act as a buffer
against undue volatility. The capital raised is likely to include a blend of
preference shares, secondary and tertiary capital. Management"s action plan to
improve the group"s profitability is being vigorously pursued. The actions
include changing the funding mix, improving returns on low yielding assets,
increasing transactional income, focusing on annuity income, continually
improving credit quality, containing expense growth and the sale of non-core
investments and assets.
Chris Liebenberg
Chairman Nedcor Limited
ENQUIRIES:
Old Mutual, London
James Poole
Tel: +44 20 7569 0100
Date: 16/09/2003 08:00:15 AM Produced by the JSE SENS Department
