September 2, 2019 / 5:53 AM / 19 days ago

UPDATE 2-Old Mutual to buy back more shares after 10% rise in H1 profit

* Old Mutual to do another share buyback, CFO says more possible

* CFO says large financial settlement for sacked CEO unlikely

* Half-year profits up 10% (Adds details from CFO interview, shares)

By Emma Rumney

JOHANNESBURG, Sept 2 (Reuters) - South African insurer Old Mutual will on Tuesday launch its second share buyback of the year in a bid to bolster its stock price which has been pummelled by a public dispute with sacked CEO Peter Moyo.

The country’s second biggest insurer said it would buy back up to 2.4 billion rand ($157.51 million) worth of shares subject to market conditions in a bid to get its share price back to what it sees as its true value.

“We’ll continue to do buybacks in circumstances where we think we will add value to our shareholders,” chief financial officer Casper Troskie said by phone.

The company believes its shares’ intrinsic value stands at just over 24 rand per share, he said after Old Mutual reported a 10% rise in half-year profits and declared an interim dividend of 45 cents per share.

The stock rose 0.5% to 18.29 rand at market open on Monday.

In the past few years, the 173-year-old company has broken up an international conglomerate structure to return to its roots as an African financial services group with its primary listing in Johannesburg.

Shareholders had hoped this homecoming would bolster the value of the group’s stock. But since May, when it first suspended Moyo in a dispute related to a conflict of interest, Old Mutual shares have declined by around 18%.

The company launched one buyback programme at the end of its last financial year in March, again intended to placate shareholders after a more than one-third drop in its share price since listing in 2018.

SHAREHOLDER FRUSTRATION

The insurer fired Moyo in June but he was temporarily reinstated by a judge - a decision Old Mutual is appealing - and relations between the two have descended into a messy, and very public, battle.

This has hit the reputation of one of South Africa’s oldest companies and left some shareholders frustrated over its handling of the situation and the falling value of their investment.

Troskie said Old Mutual was open to approaching Moyo for a settlement, but there would have to be some signs from him that he wants to bring the matter to a close in that way first.

Any settlement was “unlikely” to include a large financial component, though, Troskie said. Some of the company’s largest shareholders are opposed to handing Moyo a big payout.

Old Mutual said its adjusted headline earnings per share (HEPS) - the main profit measure in South Africa - stood at 109.1 cents in the six months to June 30, compared with 98.9 cents a year earlier.

Old Mutual adjusted its HEPS to account for the spin-off of its majority stake in South African lender Nedbank in September 2018 and to make the results comparable.

The result is also adjusted following the ring-fencing of its Zimbabwean unit, where its capital is trapped amid an economic crisis including a severe shortage of foreign currency and soaring inflation.

Old Mutual said earlier in August it now classified Zimbabwe as a hyperinflationary economy, and accounts for it as such. (Reporting by Emma Rumney; Editing by Subhranshu Sahu and Emelia Sithole-Matarise)

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