Managing Director's Review

The notion of "corporate citizenship" has become common currency in recent years, as more business leaders realise that an organisation's health is largely dependent on the condition of the society in which it operates.

At Old Mutual, we first produced this Corporate Citizenship Report in 2001, to inform our stakeholders of Old Mutual's commitment to good business practice, and to South African society in the wider sense.

Although this report is separate from our annual financial report, corporate citizenship should not be seen as an "extra", in which the company makes contributions to social causes and needs, mainly in order to ensure a licence to operate. Rather, at Old Mutual we believe that corporate citizenship must play a central role in business decision-making. Stronger still, we believe that being a good corporate citizen is directly good for business.

So, for example, when we practice employment equity, we seek to employ black managers in line positions - to the extent that now over half of our profits are directly managed by black managers. And when we provide finance for third-party black empowerment companies, our first criterion is whether they are likely to provide a satisfactory risk-related return. That way, we are also more likely to help empowerment to succeed.

The Old Mutual Group's recently proposed broad-based black ownership transaction epitomises this approach. The biggest beneficiaries of this transaction will be staff - and value creation lies in their hands. The external business partners we have chosen have significant financial services experience - and will be delivering according to clearly defined performance contracts. And we have ensured that a very wide range of beneficiaries will enjoy the fruits of a growing business.

This virtuous circle, in which direct contributions to social development help this company to grow; and the growth of this company in itself contributes to social development, lies at the heart of our strategy.

Going forward, under the new chairmanship of Jim Sutcliffe - following the retirement of Mike Levett in April 2005 - we will continue to follow this path of business-led corporate citizenship, for the genuine benefit of all of our stakeholders: customers, employees, shareholders and a rapidly transforming South Africa.

Personally, I shall be very sorry to lose the wise counsel and tremendous business knowledge Mike has shared with me. He has been with Old Mutual for 46 years, and of course, has been Chairman of the company since our historic demutualisation.

The vision and international perspective that Mike brought to the group before and after our demutualisation must be admired: that insight has seen the group progress from, for example, managing R60 billion in client funds in 1990 when he became Chief Executive to over R1 500 billion today.

Consequently, Old Mutual can look ahead to making positive future contributions to South Africa from a position of strength.