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Trouble for Peter Moyo as Old Mutual plans to exit his company

by Staff reporter
02 Sep 2019 at 08:15hrs | Views
In its half-year results, released on Monday morning, Old Mutual says it is planning to exit a company founded by its on-again, off-again CEO Peter Moyo.

Moyo was axed in June following a suspension in May, with Old Mutual citing conflict of interest and a breakdown in trust. Moyo owns 25% of a company called NMT, which he cofounded, while Old Mutual also owns 20% in NMT. Since 2004, Old Mutual invested almost R300m in various NMT companies.

NMT Capital held stakes in various companies, including Basil Read (which went bust last year), employee benefits consultants Amabubesi, Zimbabwean insurance group WFDR, oil and petroleum group Falconmere and the large American multinational DXC Technology.

Old Mutual's board cited NMT's breach of dividend payments as the reason for their problem with Moyo.

It appears that Moyo was paid dividends of R31m, while Old Mutual was still owed payouts from NMT. But Moyo has in turn argued that the claims against him were "artificially manufactured" and that his "deteriorating" relationship with Old Mutual chairman Trevor Manuel was central to his dismissal.

Old Mutual says it is currently negotiating with NMT to exit its stake in the company and related businesses, and it is also aware that the Industrial Development Corporation (IDC) had raised a dispute with the directors of NMT over the payment of an ordinary dividend in 2018, which they viewed to be unlawful.

The Sunday Times reported this weekend that NMT is facing a claim of more than R150m from the IDC.

Old Mutual says it has paid R480 000 in legal costs to defend its chairman Trevor Manuel in the past six months, with an amount of R1.6m that still need to be settled with lawyers.

Profit boost

Old Mutual's results for the six months to end-June show a 10% increase in its headline profit to R5.2bn - thanks in part to higher investment returns in South Africa.

But the company says there is pressure on disposable income and South Africans have less money to save. Annual premium equivalent sales of its life assurance products were 6% behind the prior year, but profits improved thanks to fewer claims.

Its loans business saw 9% growth, but its short-term insurance unit saw a sharp fall in earnings due to "catastrophe losses". Last week, Santam's results showed the impact of "significant catastrophe events", including fires in the Western Cape, as well as storm and flood damage in KwaZulu-Natal during April.

Old Mutual achieved R750m of recurring savings in the 2018, and now has 122 chatbots that have saved 2.8 million minutes of processing time. An online chatbot (a computer programme) can answer questions from clients in "natural" language and respond like a real person.

Old Mutual's interim dividend remains unchanged from the previous year, at 45c per share.

Source - fin24