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Corporate Governance and Directors' Report

INTRODUCTION AND COMBINED CODE COMPLIANCE
 The directors of Old Mutual plc submit their report and the audited financial statements of the Group for the year ended 31 December 2004.

The Company is the holding company of the Old Mutual group of companies, whose principal activities are life assurance (including retirement savings), asset management (including unit trusts and portfolio management), banking and general insurance.

The Chief Executive's Statement, the Group Finance Director's Review and the Business Reviews contained in this document include a review of the year and the outlook for the Group. The Group's profit, appropriations and financial position are shown in the financial statements.

The Group is committed to the objective of achieving high standards of corporate governance. In the year ended 31 December 2004 and in the preparation of this Annual Report and Accounts, the Company has complied with the main and supporting principles and provisions set out in the Combined Code on Corporate Governance of the Financial Reporting Council (the Combined Code) as described in the following sections of this Report. The Company's compliance with Combined Code provisions C1.1, C2.1, C3.1, C3.2, C3.3, C3.4, C3.5, C3.6 and C3.7 and the statement relating to the going concern basis adopted in preparing the financial statements have been reviewed by the Company's auditors, KPMG Audit Plc, in accordance with guidance published by the Auditing Practices Board.

BOARD OF DIRECTORS

Membership and directors' interests
 The Board currently has ten members, consisting of two executive and eight non-executive directors. All of the current directors except for Mr M J P Marks and Mr R P Edey (who were appointed to the Board on 1 February and 24 June 2004 respectively) served throughout the year ended 31 December 2004. Mr C F Liebenberg retired from the Board as a non-executive director on 2 October 2004, upon reaching his seventieth birthday.

The Company has recently announced the appointment of an additional non-executive director, Professor Wiseman Nkuhlu, who will join the Board from 1 March 2005.

Mr M J Levett is the Chairman of the Board and Mr C D Collins is the current senior independent director.

Details of the directors' interests (within the meaning of section 346 of the Companies Act 1985, including interests of connected persons) in the share capital of the Company and quoted securities of its subsidiaries at the beginning and end of the year under review are set out in the following tables, whilst their interests in share options and restricted share awards are described in the section of the Remuneration Report entitled "Directors' Interests Under Employee Share Plans". There have been no changes to any of these interests between 31 December 2004 and 28 February 2005.

 
Old Mutual plc Number of shares
Nedcor Limited Number of shares
Mutual & Federal Insurance Company Limited Number of shares
At 31 December 2004
N D T Andrews
-
-
-
R Bogni
19,000
-
-
N N Broadhurst
2,416
-
-
W A M Clewlow
30,700
2,849
-
C D Collins
5,541
-
-
R P Edey
-
-
-
M J Levett
5,465,130
17,804
5001
M J P Marks
-
-
-
J V F Roberts
250,103
-
5001
J H Sutcliffe
815,996
-
-
 
 
Old Mutual plc Number of shares
Nedcor Limited Number of shares
Mutual & Federal Insurance Company Limited Number of shares
At 1 January 2004 (or date of appointment as a director, if later)
N D T Andrews
-
-
-
R Bogni
19,000
-
-
N N Broadhurst
2,416
-
-
W A M Clewlow
30,700
2,000
-
C D Collins
5,541
-
-
R P Edey
-
-
-
M J Levett
4,159,518
12,333
864,1001
M J P Marks
-
-
-
J V F Roberts
178,948
-
5001
J H Sutcliffe
766,689
-
-

Note:
1 Included in the above interests are non-beneficial interests in 500 shares in Mutual & Federal Insurance Company Limited held as qualification shares by each of M J Levett and J V F Roberts at both 1 January and 31 December 2004.

No director had a material interest in any significant contract with the Company or any of its subsidiaries during the year.

Rotation and re-election of directors
 The Articles of Association of the Company require that any newlyappointed directors be subject to election at the next following Annual General Meeting and also that at least one-third of the directors (excluding those appointed by the Board during the year) shall retire by rotation each year. These provisions are applied in such a manner that each director will submit himself for election or re-election at regular intervals and at least once every three years.

The Nomination Committee considered the candidates who are standing for election or re-election at this year's Annual General Meeting (as referred to in Ordinary Resolutions 3 (i) to (iv) in the Notice of Annual General Meeting on pages 160 to 164 of this document) at its meeting in February 2005. In accordance with its findings, it recommends to shareholders the election of each of Mr Edey and Professor Nkuhlu and the re-election of Mr Collins as non-executive directors (and, in the case of Mr Collins, as Chairman to succeed Mr Levett) based upon their professional qualifications, prior business experience and actual or prospective contribution to the Board, and the re-election of Mr Sutcliffe as Chief Executive on the basis of his satisfactory performance since being promoted to that role in November 2001. Biographical details of each of the candidates are contained in the descriptions accompanying their photographs on pages 42 and 43 of this document.

Skills, experience and review
 The balance of skills and experience and of executive and non-executive representation on the Board, the independence of non-executive directors and the overall size of the Board are each kept under review by the Nomination Committee. All of these aspects are currently believed by that Committee to be satisfactory and appropriate for the requirements of the Group's business. Whilst there are currently only two executive directors, the Board has regular contact with the other most senior executive management (including the chief executives of the six most significant business units of the Group, together with the Director of Group HR and Strategy) through the periodic attendance at or participation in Board meetings by those executives. The Board also receives copies of Minutes of Management Board meetings, which are attended by those executives, the Chief Executive and the Group Finance Director and at which high-level business matters are considered and debated.

Plans for refreshing and renewing the Board's composition are proactively managed by the Nomination Committee so as to ensure that changes take place without undue disruption.

Mandate, governance and Scheme of Delegated Authority
 The Board's role is to provide entrepreneurial leadership to the Company within a framework of prudent and effective controls which enables risk to be assessed and managed. The Board sets the Company's strategic aims, ensures that the necessary financial and human resources are in place for it to meet its objectives and reviews management performance. It regularly reviews strategic issues through the Chief Executive's report and has a two-day strategy session during the second quarter of each year at which high-level strategic matters are thoroughly debated. The Board sets the Company's values and standards, and ensures that its obligations to its shareholders and others are understood and met.

The Board acknowledges its collective responsibility for the success of the Company. It receives a wide array of information on the Group's businesses on a regular basis. Detailed monthly management accounts are circulated to each member of the Board, usually within three weeks of the month-end, and these contain detailed analysis of the businesses' financial performance, including comparisons against budget. Any issues arising from these are addressed at Board Meetings or can be raised directly with management. There is a Board calendar which ensures that all key matters are dealt with over the course of the year. These include presentations on the Group's major businesses, and one or more Board meetings are held each year in the overseas territories where the Group operates.

The Board has oversight of the Group's wholly-owned businesses but also: (i) delegates specific responsibilities for certain matters to its committees (Executive, Group Capital Management, Nomination, Chairman's Selection, Remuneration, Group Audit, and Actuarial Review), subject to their respective terms of reference; and (ii) receives assurance from boards (and their respective committees) at the Group's subsidiaries, Old Mutual Life Assurance Company (South Africa) Limited, Old Mutual (US) Holdings, Inc. and Old Mutual Financial Services (UK) plc (the Principal Subsidiaries).

The governance relationships with the Group's majority-owned subsidiaries, Nedcor Limited and Mutual & Federal Insurance Company Limited, are somewhat different, in recognition of their own governance expectations as separately listed entities on the JSE Securities Exchange South Africa and the fact that they each have minority shareholders.

With respect to Nedcor, the Company entered into a relationship agreement in February 2004 setting out the Company's requirements and expectations as its majority shareholder. The full text of that relationship agreement is available on the Company's website, www.oldmutual.com. Among the matters covered are: (i) transactions involving members of the Nedcor group that require prior consultation with or agreement by the Company; (ii) provision of information, including that required for assuring the Company about various aspects of corporate governance; (iii) consultation over senior appointments; and (iv) business co-operation.

The policyholders' funds of the Group's South African and Zimbabwean life assurance operations have holdings representing in aggregate in excess of 20% of the issued share capital of a number of major South African and Zimbabwean companies listed on the JSE Securities Exchange South Africa and the Zimbabwe Stock Exchange, respectively. These are held purely as investments, and the companies concerned are not subject to the governance or control structures of the Group.

The Chairman and Company Secretary are both involved in ensuring good information flows within the Board and its committees and between senior management and the non-executive directors, as well as in facilitating induction and encouraging non-executive directors to attend courses at the Company's expense to update their skills and knowledge.

On appointment, new directors receive induction, including a package of information about matters of immediate importance to the Group, such as the current budget, strategy document, management accounts, the Scheme of Delegated Authority and details of the Company's directors' and officers' liability policy. They are also invited to have such meetings with other directors, senior management, external advisors (such as the auditors), and major shareholders as they wish.

Processes are in place for any potential conflicts of interest to be disclosed and for directors to recuse themselves from participation in any decisions where they may have any such conflict or potential conflict.

The directors may take independent professional advice at the Company's expense, if necessary, for the furtherance of their duties, whether as members of the Board or of any of its committees.

The Company maintains directors' and officers' liability insurance in respect of legal action against its directors.

All directors have access to the Company Secretary, who is responsible to the Board for ensuring that Board procedures are complied with.

There is an agreed list of matters reserved for the Board's decision: these are set out in the Company's Scheme of Delegated Authority and currently include, inter alia, the following:

Executive and non-executive roles
 The executive element of the Board is balanced by a strong independent group of non-executive directors, such that no individual or small group of individuals can dominate the Board's decision making. The non-executive directors scrutinise the performance of management in meeting agreed goals and objectives, and monitor the reporting of performance. Procedures are in place to enable them to satisfy themselves on the integrity of the Group's financial information and that financial controls and systems of risk management are robust and defensible.

Those non-executive directors who are members of the Remuneration Committee are responsible for determining appropriate levels of remuneration for the executive directors, and members of the Nomination Committee have a primary role in recommending the appointment, and where necessary removal, of executive directors. The Board as a whole receives and considers regular reports on succession planning.

Separately from the formal Board meeting schedule, the Chairman holds periodic meetings with the other non-executive directors, without any executives being present, in order to provide a forum for any issues to be raised. He also conducts, in consultation with the senior independent non-executive director, an annual performance evaluation of each of the other non-executive directors, the results of which are reported to the Nomination Committee. These are designed to ensure that each director is continuing to contribute effectively and to demonstrate commitment to the role (including commitment of time for Board and Committee meetings and any other duties). The outputs from these performance evaluations are taken into account by the Nomination Committee in deciding whether to recommend to the Board the extension of engagement of any non-executive director and also whether to recommend to shareholders the re-election of any non-executive director who is due to retire by rotation at the Annual General Meeting. They would also form the basis, if the need arose, for the Chairman to act to address any weaknesses identified in the Board by seeking the resignation of underperforming directors or proposing, through the Nomination Committee, that additional directors be appointed.

Informal meetings among the non-executive directors, without the Chairman or any executive being present, are also facilitated by the Company. Among the activities carried out at such meetings is the annual review of the Chairman's own performance, under the aegis of the senior independent non-executive director, who also obtains input for such purpose from the executive directors.

Where directors have concerns that cannot be resolved about the running of the Company or a proposed action, they are encouraged to make their views known and these would be recorded in the Minutes of the Board meeting. No written statements on resignation containing matters of concern, such as are referred to in paragraph A.1.4 of the Combined Code, have been received by the Chairman.

The division of responsibilities between the current Chairman, Mr Levett, and the Chief Executive, Mr Sutcliffe, is documented so as to ensure that there is a clear division of responsibilities between the running of the Board and executive responsibility for running the Company's business. This was put in place and approved by the Board when Mr Sutcliffe succeeded Mr Levett as Chief Executive in November 2001 and a similar arrangement has been made for when Mr Collins succeeds Mr Levett as Chairman in May 2005. This, together with the Scheme of Delegated Authority and the matters reserved for decision by the Board, ensures that no one individual has unfettered powers of decision.

For both Mr Levett as outgoing Chairman and Mr Collins as incoming Chairman, responsibilities include those contained in the Supporting Principle to paragraph A.2 of the Combined Code, namely that the Chairman is responsible for leadership of the Board, ensuring its effectiveness on all aspects of its role and setting its agenda; ensuring that the directors receive accurate, timely and clear information; ensuring effective communication with shareholders; facilitating the effective contribution to the Board of non-executive directors in particular; and ensuring constructive relationships between the executive and non-executive directors.

The Board has determined that, in the absence of exceptional circumstances, no non-executive director's three-year cycle of appointment (which is itself subject to re-election and to Companies Act provisions relating to the removal of a director) should be renewed more than twice, i.e. that non-executive directors should serve a maximum of nine years in that role, and that no non-executive director should continue beyond his seventieth birthday. The renewal of non-executive directors' terms for successive three-year cycles is not automatic and the continued suitability of each non-executive director is assessed by the Nomination Committee before renewal of his appointment takes place. A particularly searching review is carried out at the end of six years. The section of the Remuneration Report entitled "Non-Executive Directors' Terms of Engagement" describes the current position of each of the non-executive directors with respect to their maximum three terms of three years and how the extension process has been applied to the directors concerned.

The current Chairman, Mr Levett, was Chairman and Chief Executive until November 2001, when he was succeeded as Chief Executive by Mr Sutcliffe. His appointment as non-executive Chairman was carefully considered by the Board, which decided at that time that this was in the best interests of the Company in view of his long experience with the Group's South African businesses, depth of relevant knowledge and wealth of ability. Mr Levett is a director of the Company's 87%-owned general insurance subsidiary, Mutual & Federal Insurance Company Limited, and was, until the end of 2004, also a director of its 52%-owned banking subsidiary, Nedcor Limited and its main banking operation, Nedbank Limited. He is also a non-executive director of the non-Group companies, Barloworld Limited and Old Mutual South Africa Trust plc. Until July 2004 he was a non-executive director of SAB Miller plc. These external interests do not adversely affect his ability to discharge his duties as Chairman of the Board.

The Board conducts an annual self-assessment exercise to evaluate the effectiveness of its procedures. For 2004, it decided to carry out this process through a detailed questionnaire exercise, with returns being submitted anonymously to the Company Secretary, who collated a report on the outputs for the Board. The areas covered by the survey included Governance and Processes (Board meetings, Board functions, Board structure, Board Committees, financial and operational reporting and compliance) and strategic matters (planning and objectives, risk management, new business opportunities and projects, and human resources). The feedback was generally positive, but where suggestions for improvements were made, these have been noted by the Board and efforts will be made to address them in 2005.

Independence of non-executive directors
 Six of the seven non-executive directors other than the Chairman (Messrs Andrews, Bogni, Broadhurst, Collins, Edey and Marks) are considered by the Board to be independent within the meaning of, and having regard to the criteria set out in, paragraph A.3.1 of the Combined Code - i.e. independent in character and judgement and there being no relationships or circumstances which are likely to affect, or could appear to affect, their judgement. Professor Nkuhlu, who will join the Board as a non-executive director on 1 March 2005, is also considered by the Board to be independent.

The Board decided in December 2004, following a review by the Nomination Committee, that it was no longer appropriate to classify Mr Clewlow as independent, in view of his increased involvement, as Chairman of Nedcor, in supporting the executive management of that company. He thereupon stepped down as a member of the Remuneration and Group Audit Committees so that all members of those Committees remained independent as required by the Combined Code.

Mr Collins has served as the senior independent non-executive director since February 2003 and will be succeeded in that role by Mr Broadhurst when Mr Collins becomes non-executive Chairman of the Company at the end of the AGM in May 2005. The senior independent non-executive director is available to shareholders if they have concerns that are unresolved after contact through the normal channels of the Chairman, Chief Executive or Group Finance Director or where such contact would be inappropriate. His contact details can be obtained from the Company Secretary at the registered office.

The terms and conditions for each of the non-executive directors are available in the Corporate Governance section of the Company's website, www.oldmutual.com, and these include details of the expected time commitment involved (which each of the non-executive directors has accepted). Other significant commitments of potential appointees are considered by the Nomination Committee as part of the selection process and are disclosed to the Board when recommendation of the appointment is submitted. Non-executive directors are also required to inform the Board of any subsequent changes to such commitments, which must be pre-cleared with the Chairman if material.

The executive directors are permitted to hold one external (i.e. non-Group) non-executive directorship (but not a chairmanship) of another listed company, subject to prior clearance by the Board and the directorship concerned not being in conflict or potential conflict with any of the Group's businesses. Neither Mr Sutcliffe nor Mr Roberts currently holds such a directorship.

2004 operations and Turnbull statement
 The Board met on a scheduled basis regularly during the year. Meetings were co-ordinated with the Company's reporting calendar to allow for detailed consideration of the interim and preliminary results and the first and third quarters' trading updates. Two further sessions were specifically devoted to strategy and business planning respectively. The Board also met ad hoc as and when required to deal with specific matters requiring its consideration. During 2004, there were nine scheduled Board meetings and four ad hoc meetings.

The scheduled meetings included a three-day site visit to the Group's businesses in South Africa, which included presentations to the Board by Nedcor and Mutual & Federal as well as by Old Mutual South Africa.

During the year the Board approved and adopted four core Group values - Integrity, Respect, Accountability and Pushing beyond Boundaries. These have been communicated throughout the Group and incorporated into management's performance statements so as to ensure they are lived and observed by all key employees.

The Board has reviewed the effectiveness of the system of internal control during and at the end of the year. This review covered all material controls, including financial, operational and compliance controls and risk management systems.

The Board is of the view that there is a sufficient ongoing process for identifying, evaluating and managing the significant risks faced by the Group, and that this process has been in place for the year ended 31 December 2004 and up to the date of approval of this Report. The process accords with the Turnbull guidance set out in "Internal Control Guidance for Directors on the Combined Code" and is regularly reviewed by the Board.

The Company referred in its Directors' Report for 2003 to civil suits that had been filed against a subsidiary, Pilgrim Baxter & Associates, Ltd (PBA) (now renamed Liberty Ridge Capital, Inc.), by the United States Securities and Exchange Commission (SEC) and the office of the New York State Attorney General (NYAG). In June 2004 PBA reached agreements with the SEC and the NYAG, which settled all charges brought by those authorities against PBA in relation to market timing in the US mutual fund business. PBA neither admitted nor denied any wrongdoing. Under the settlement PBA agreed to pay $40 million disgorgements of past fees plus $50 million in penalties. In addition PBA agreed to reduce fees to investors by approximately $10 million over the next five years.

Some class actions related to the above remain pending. It is not possible to determine what the outcome of these class actions will be and whether there will be any costs to the Group.

The Directors' Report for 2003 also made reference to Nedcor, whose 2003 results were poor due to the effect of adverse currency and interest rate movements, amongst other things. This resulted in Nedcor launching a rights issue to raise R5 billion of ordinary share capital to strengthen its capital position. During 2004 the bank's interest rate and currency risks were minimised through proactive management. Nedcor's results for 2004 also contributed to an improvement in its capital position.

COMMITTEES
 The Board has a number of standing committees or sub-committees, to which it has delegated various matters in accordance with terms of reference contained in the Scheme of Delegated Authority. It also establishes committees on an ad hoc basis to deal with particular matters as and when thought fit: in doing so, it specifies a remit, quorum and appropriate mix of executive and non-executive participation. Further information on the main standing committees and sub-committees of the Board is set out below.

Group Audit Committee
 Current members: N N Broadhurst (Chairman), N D T Andrews, R Bogni, C D Collins, R P Edey. Other member during part of 2004: W A M Clewlow. Secretary: M C Murray
All of the members of the Group Audit Committee are independent non-executive directors. The Chairman of the Committee, Mr Broadhurst, is a Chartered Accountant and has recent and relevant financial experience, having been Finance Director of Railtrack plc until 2000.

The terms of reference of the Committee set out its role and responsibilities and these include:

A number of audit or audit, risk and compliance committees operated at subsidiary level during 2004, including at Old Mutual Financial Services (UK) plc, Old Mutual Life Assurance Company (South Africa) Limited, Old Mutual (US) Holdings, Inc., Nedcor Limited and Mutual & Federal Insurance Company Limited, with terms of reference (in relation to the businesses under their respective remit) broadly equivalent to those of the Committee. The Committee receives minutes of the proceedings and reports from subsidiary audit committees on a regular basis and Chairmen of these subsidiary audit committees are invited to attend meetings of and report to the Committee periodically. A planning meeting was held between the Chairman of the Committee and the Chairmen of the subsidiary audit committees mentioned above, the regional heads of internal audit and representatives of the Group's auditors in October 2004 to co-ordinate the audit committees' activities and to review and approve the scope of internal audit plans for 2005. Similar planning meetings will take place on an annual basis going forward.

Actuarial Review Committee
 Current members: R Bogni (Chairman), M J Levett, J V F Roberts. Secretary: M Carey
The Actuarial Review Committee is a sub-committee of the Group Audit Committee and covers the Group's life operations worldwide. The role of the Committee is: (i) to review the actuarial content of the life assurance figures included in the Group's externally published financial statements (annual and interim); (ii) to verify the appropriateness of the actuarial methods and assumptions used and changes thereto and the appropriateness of the financial results which depend on actuarial calculations; and (iii) to review the financial soundness of each of the life assurance companies within the Group. The Committee met four times during 2004 and each meeting was attended by all of the members.

Upon Mr Levett's retirement in May 2005, Mr Broadhurst will replace him as a member of this Committee and Mr Sutcliffe will replace Mr Roberts, so that there will continue to be a qualified actuary as a member of the Committee.

Remuneration Committee
 Current members: C D Collins (Chairman), N D T Andrews, N N Broadhurst, M J P Marks. Other member during part of 2004: W A M Clewlow. Secretary: M C Murray
Details of the role and activities of the Remuneration Committee and how the Remuneration Committee and the Board have applied the main and supporting principles and the Code Provisions in Section B of the Combined Code are provided in the Remuneration Report.

Nomination Committee
 Current members: M J Levett (Chairman), N D T Andrews, R Bogni, N N Broadhurst, W A M Clewlow, C D Collins, R P Edey, M J P Marks, J H Sutcliffe. Secretary: M C Murray
The Nomination Committee makes recommendations to the Board in relation to the appointment of directors, the structure of the Board and membership of the Board's main standing committees. It also reviews development and succession plans for the most senior executive management of the Group and proposed appointments to the Boards and standing committees of principal subsidiaries where these are material in the context of the Group as a whole. It is chaired by the Chairman of the Board, Mr Levett, and a majority of its members (six out of nine) are independent non-executive directors.

The Nomination Committee seeks to ensure that its process for identifying candidates for recommendation to the Board as new directors is formal, rigorous and transparent. Vacancies generally arise in the context of either planned refreshing and renewal of the Board, or replacing directors who are due to retire, or rebalancing the balance of knowledge, skills or independence of the Board. The two new independent non-executive directors appointed during 2004, Mr Marks and Mr Edey, were selected to increase the cadre within the Board who had direct experience of international financial services markets. External search agents were provided with guidelines on objective criteria for the individuals sought and recruitment of the two new non-executive directors followed a shortlisting and interview process which involved a majority of members of the Board. Professor Nkuhlu, who is joining the Board from 1 March 2005, was selected from a short list of eligible South African candidates to replenish South African representation on the Board following Mr Liebenberg's and ahead of Mr Levett's retirements. In identifying candidates, appropriate regard is paid to ensuring that they will have sufficient time available in the light of their other commitments to devote to discharging their duties as directors of the Company.

Chairman's Selection Committee
 The question of Chairman's succession was dealt with during 2004 through a separate committee established by the Board, comprising Messrs Andrews, Bogni, Broadhurst and Clewlow. Objective criteria for the successor were agreed by members of the Committee: these included an assessment of the time commitment expected (an average of two to three days per week) and the need for the person appointed to be available in the event of crises.

The results of an external confidential search for potential candidates were reviewed against internal candidates. Having weighed up the respective merits of all potential candidates who had been identified, the Chairman's Selection Committee recommended to the Board that Mr Collins be appointed as Chairman elect to succeed Mr Levett in May 2005. This recommendation was unanimously endorsed by the Board (in the absence of Mr Collins himself), subject to Mr Collins' confirmation that he would, by the time the appointment took effect, have stepped down as Chairman of Hanson PLC, so as to avoid his being chairman of two FTSE 100 companies at the same time. This was subsequently confirmed. Mr Collins' main other commitments are as Chairman of Forth Ports PLC and as a non-executive director of The Go-Ahead Group plc and Alfred McAlpine PLC. He has confirmed to the Company that these will not adversely affect his ability to discharge his role as Chairman of the Company.

Executive Committee
 Current members : J V F Roberts, J H Sutcliffe
The Executive Committee is a committee comprising the executive directors of the Company, to which executive control and decisionmaking are delegated, subject to reservation of matters that require approval by the Board itself. A quorum comprises the two executive directors. The Committee met 16 times during 2004.

Group Capital Management Committee
 Current members : J V F Roberts (Chairman), D I Hope, A Patterson, M Walton, J H Sutcliffe. Secretary: D I Hope
The Group Capital Management Committee is a sub-committee of the Executive Committee. Its role is: (i) to set an appropriate framework and guidelines to ensure the appropriate management of the Group's capital;
(ii) to support the Business Planning and Quarterly Business Review process in terms of allocating capital to the Group's businesses; and
(iii) to monitor the return based on allocated capital per business relative to the hurdle rate and limit the allocation of capital to underperforming businesses, as appropriate. In addition, it is tasked: (i) to ensure that the strategic investment goals of the Group are clearly disseminated; (ii) to consider and approve the overall investment strategy of the Group's shareholders' funds, including those supporting regulatory and solvency capital, in order that the shareholders' assets are managed prudently having regard to risk, liquidity, tax and the need to support the Group's businesses; and (iii) to consider projects referred to it and to approve (or, where appropriate, refer up for approval) those deemed most likely to support the Group's core strategies and to build shareholder value. The Committee met twice during 2004 and both meetings were attended by all of the members.

Terms of reference
 The terms of reference of each of the principal committees of the Board are available in the Corporate Governance section of the Company's website, www.oldmutual.com, and may also be obtained upon request free of charge from the Company Secretary at the registered office.

The membership and chairmanship of the Board's standing committees are regularly reviewed by the Nomination Committee so as to ensure that they are refreshed and that undue reliance is not placed on particular individuals.

Each of the Group Audit, Remuneration and Nomination Committees conducted a self-assessment exercise during 2004 to address, inter alia, whether their respective terms of reference had been satisfactorily fulfilled during the year, whether the Committees had the necessary skills and resources and were receiving a satisfactory level of information in order to discharge their responsibilities, and whether their processes and methods could be improved. These were each conducted by anonymous questionnaires to members of the Committee concerned and other key participants in the Committee's activities (including the external auditors, in the case of the Group Audit Committee) and the results were collated by the Company Secretary and reported to the Committees for consideration.

ATTENDANCE RECORD
 The following table sets out the number of meetings held and individual directors' attendance records at the Board and its principal standing committees in 2004:

 
Board
(scheduled)
Board
(ad hoc)
Group
Audit
Committee
Remuneration
Committee
Nomination
Committee
No. of meetings held
9
4
5
3
5
N D T Andrews
9/9
4/4
4/5
2/3
-
R Bogni
8/9
3/4
4/5
-
4/5
N N Broadhurst
8/9
2/4
5/5
3/3
5/5
W A M Clewlow
8/9
3/4
5/5
2/3
4/5
C D Collins
9/9
2/4
4/5
3/3
5/5
R P Edey
6/6
2/2
1/2
-
-
M J Levett
9/9
4/4
-
-
5/5
C F Liebenberg
6/6
3/3
-
-
4/4
M J P Marks
6/8
3/3
-
1/2
-
J V F Roberts
9/9
4/4
-
-
-
J H Sutcliffe
9/9
4/4
-
-
5/5

Messrs Levett, Roberts and Sutcliffe attended all of the Group Audit Committee Meetings held during 2004 at the invitation of the Chairman of that Committee (but were absent for the private sessions between members of that Committee and the auditors). Messrs Levett and Sutcliffe also attended all of the Remuneration Committee Meetings at the invitation of the Chairman of the Remuneration Committee, but absented themselves for any matters relating to their own respective remuneration arrangements. No one other than the Chairman and the members of the Group Audit Committee, Nomination Committee or Remuneration Committee has a right to be present at their respective meetings: attendance by others is always at the invitation of the Chairman of the Committee concerned.

AUDITORS
 During the year ended 31 December 2004 fees paid by the Group to KPMG Audit Plc, the Group's auditors, and its associates (KPMG) totalled £5.2 million for statutory audit services, £2.2 million for other audit and assurance services, and £4.9 million for tax and other services. In addition to the above, Nedcor paid a further £2.5 million to Deloitte & Touche in respect of joint audit arrangements. The primary component within the £4.9 million paid to KPMG for tax and other services was advisory work in connection with the Group's transition to reporting under International Financial Reporting Standards.

The following guidelines have been approved by the Group Audit Committee and are applied in placing non-audit work:

KPMG Audit Plc has expressed its willingness to continue in office as auditors to the Company and, following a recommendation by the Audit Committee to the Board, a resolution proposing its re-appointment will be put to the Annual General Meeting (Resolution 4 in the Notice of Annual General Meeting).

Arrangements have been made, in conjunction with KPMG, for appropriate audit partner rotation in accordance with recommendations of the Institute of Chartered Accountants in England and Wales. As a result of these, the current lead audit partner in the UK, Mr Richard Bennison, will be succeeded during 2005 by Mr Alastair Barbour.

ANNUAL GENERAL MEETING
 The Board uses the Annual General Meeting (AGM) to provide an update on the Group's first quarter's trading. A full transcript of the AGM proceedings is made available on the Company's website as soon as practicable after the end of the Meeting. All items of formal business at the AGM are now conducted on a poll, rather than by a show of hands. The Company has arrangements in place through its registrars, Computershare Investor Services, to ensure that all validly submitted proxy votes are counted, and a senior member of Computershare's staff acts as scrutineer to ensure that votes cast are properly received and recorded.

Each substantially separate issue at the AGM is dealt with by a separate resolution and the business of the AGM always includes a resolution relating to the approval of the Report and Accounts. All directors, including the Chairmen of the Group Audit, Remuneration and Nomination Committees (who are available to answer any questions on the matters covered by these Committees), are expected to attend the AGM and all of them did so in 2004.

The notice of AGM and related materials contained in the Report and Accounts or Summary Financial Statements are sent out to shareholders in time to arrive in the ordinary course of the post at least 20 working days before the date of the AGM.

Results of the AGM and Court Meeting in 2004
 All resolutions considered at the Company's AGM held on 14 May 2004 and the Meeting of Shareholders convened by order of the UK High Court (the Court Meeting) on 14 May 2004 to consider a scheme of arrangement to authorise the directors to extend the Company's unclaimed shares trust arrangements were dealt with on a poll. The results of the polls on each of the resolutions were announced to the markets later on 14 May 2004 and were as follows:

ORDINARY RESOLUTIONS
Resolution 1
To receive and adopt the directors' report and accounts
In favour Against % in favour
1,783,591,896 2,899,368 99.84%
Resolution 2
To declare a final dividend of 3.1 pence per ordinary share
In favour Against % in favour
1,826,191,939 96,335 99.99%
Resolution 3 (i)
Election of Michael Marks as a director of the Company
In favour Against % in favour
1,815,895,358 1,073,589 99.94%
Resolution 3 (ii)
Re-election of Rudi Bogni as a director of the Company
In favour Against % in favour
1,815,787,183 1,105,695 99.94%
Resolution 3 (iii)
Re-election of Norman Broadhurst as a director of the Company
In favour Against % in favour
1,805,146,590 6,303,783 99.65%
Resolution 3 (iv)
Re-election of Julian Roberts as a director of the Company
In favour Against % in favour
1,809,742,666 7,356,819 99.60%
Resolution 4
Re-appointment of KPMG Audit Plc as auditors to the Company
In favour Against % in favour
1,797,800,999 7,506,721 99.58%
Resolution 5
To authorise the Audit Committee of the Company to settle the remuneration of the auditors
In favour Against % in favour
1,804,581,632 3,823,078 99.79%
Resolution 6
To approve the Remuneration Report in the Company's report and accounts
In favour Against % in favour
1,649,850,335 33,853,841 97.99%
Resolution 7*
Authority to allot relevant securities up to an aggregate nominal amount of £127,917,000
In favour Against % in favour
1,350,584,574 468,340,374 74.25%

*During the meeting the Chairman, Mr Levett, made the following statement:

"This Resolution, which is in accordance with UK institutional investors' guidelines, does not accord with what is now regarded as best practice in South Africa.

In the light of this, the Board undertakes that the Company will not use the authority to be granted by this resolution beyond 10% of the existing issued shares - that is, to an aggregate nominal value of £38,374,000 - without coming back to shareholders, notwithstanding the higher figure contained in the resolution."

SPECIAL RESOLUTIONS
Resolution 8
Authority to allot equity securities up to maximum nominal aggregate amount of £19,187,000
In favour Against % in favour
1,394,035,668 424,243,718 76.67%
Resolution 9
Authority in accordance with section 166 of the Companies Act 1985 to purchase up to 383,752,930 Ordinary Shares of 10p each in the Company by way of market purchase
In favour Against % in favour
1,817,474,833 4,974,669 99.73%
Resolution 10 (i)
Approval of contingent purchase contract to enable shares to be bought back on the JSE Securities Exchange South Africa
In favour Against % in favour
1,817,316,278 1,495,217 99.92%
Resolution 10 (ii)
Approval of contingent purchase contract to enable shares to be bought back on the Namibian Stock Exchange
In favour Against % in favour
1,816,549,384 1,674,309 99.91%
Resolution 10 (iii)
Approval of contingent purchase contract to enable shares to be bought back on the Zimbabwe Stock Exchange
In favour Against % in favour
1,816,778,772 1,568,199 99.91%
Resolution 10 (iv)
Approval of contingent purchase contract to enable shares to be bought back on the Malawi Stock Exchange
In favour Against % in favour
1,816,431,152 1,686,756 99.91%
Resolution 11
Adoption of amended Articles of Association
In favour Against % in favour
1,861,828,092 322,342 99.98%
Resolution 12
Approval of arrangements relating to the proposed extension of the Unclaimed Shares Trusts, including amendment of the Company's objects clause
In favour Against % in favour
1,853,573,012 607,237 99.97%
Each of the resolutions at the 2004 AGM was accordingly duly passed.
Court Meeting relating to the Company's Unclaimed Shares Trusts
Resolution to approve the proposed scheme of arrangement
In favour Against % in favour
1,711,443,781 527,488 99.97%

The Court Meeting resolution was accordingly duly passed and the scheme of arrangement authorising the directors of the Company to extend the period within which claims can be made to certain entitlements that arose upon demutualisation of the Group was subsequently confirmed, without amendment, by the UK High Court.

INTERNAL CONTROL ENVIRONMENT
 The Board acknowledges its overall responsibility for the Group's system of internal control and for reviewing its effectiveness, whilst the role of executive management is to implement Board policies on risk and control.

Executive management have implemented an internal control system designed to facilitate the effective and efficient operation of the Group and its business units and aimed at enabling management to respond appropriately to significant business, operational, financial, compliance and other risks to achieving the Group's business objectives. These include protecting policyholders' interests, safeguarding shareholders' investments, safeguarding assets from inappropriate use or from loss or fraud, ensuring that liabilities are identified and managed, and addressing any social, environmental or ethical matters that have significance for the Group's businesses.

The system of internal control also helps to ensure the quality of internal and external reporting, compliance with applicable laws and regulations, and internal policies with respect to the conduct of business.

The Group's internal control system is designed to manage, rather than eliminate, the risk of failure to achieve the Group's business objectives, and can only provide reasonable, and not absolute, assurance against material misstatement or loss.

Approach to risk management
 Creating shareholder value is the Group's overriding business objective, and the Group therefore derives its approach to risk management and control from a shareholder value perspective. As a result, the risk process covers a much broader range than the narrowly defined traditional risk categories and specifically includes strategic risk, also referred to as business risk, and Enterprise Risk Management (ERM).

The Group's overall approach is to understand the diversity and full breadth of risk and then to manage it, with a strong emphasis on implementing controls that reduce residual risk to a level calculated to optimise the level of return on investment. However, risk management is not limited solely to the downside or risk avoidance; it is about taking risk knowingly.

The Group operates a risk management framework, which is based on COSO's ERM Framework, and the Group is planning to transition more fully to the COSO framework. The current risk framework contains the following components: (i) a robust risk governance structure; (ii) risk appetites established at Group and subsidiary level; (iii) Group-wide risk policies; and (iv) methodologies that focus on risk identification, risk measurement, risk assessment, action plans, monitoring and reporting. Each component is explained in more detail below.

Risk governance
 The formal governance structures described earlier in this report are complemented by a risk governance model based on three lines of defence. This model distinguishes between functions owning and managing risks, functions overseeing risks and functions providing independent assurance:

Risk appetite
 The fundamental purpose of the Group's risk appetite is to define how much risk the Group is willing to take. Risks or events falling outside the agreed risk appetite are identified for immediate remedial action and subjected to executive management and audit committee oversight. The Group's risk appetite framework is currently under development and will encompass: (i) a process for setting the Group risk appetite; (ii) a process for allocating the Group risk appetite among the business units, including the identification of existing appetites for risk within those businesses; (iii) risk reporting against those limits; (iv) application of stress and scenario testing; and (v) risk appetite governance laid down in a Group risk appetite policy.

Some components of the Group risk appetite are dependent on the completion of the Group's Economic Capital project, which is currently scheduled for completion in 2006.

Group risk principles
 Group risk principles have been established for each major risk category to which the Group is exposed. These are designed to provide management teams across the Group with guiding principles within which to manage risks. Business unit risk policies expand on these principles and contain detailed requirements and/or limits for the specific business concerned.

Adherence to these principles provides the Board and the Company's stakeholders with assurance that high-level common standards are consistently applied throughout the Group and also contributes to how the Group governs itself.

Group risk principles are reviewed annually.

Risk methodologies
 Risk identification
 Strategic objectives reflect management's choice as to how the Group will seek to create value for its stakeholders. Strategic objectives are translated into business unit objectives. Risks (and risk events) are then identified that would prevent the achievement of both the strategic and business objectives, i.e. objective-setting is a pre-condition to the risk management process. For this reason, risk identification is part of the annual business planning process. The resultant risks are recorded in a risk register, with details of existing controls or actions to mitigate the risks and any associated time frame, details of who owns the control or action plans and a measure of the residual risk. Where the residual risk is deemed to be outside the risk appetite, it is transferred to a control log for remedial action.

Risk assessment and measurement
 Various means of assessing and measuring enterprise risks and risk events are used throughout the Group. These include estimating the financial impact and the likelihood of risk occurrence, trend and traffic light assessments and high/medium/low assessments. With regard to credit risk, asset and liability risk and market risk, a mixture of quantitative and qualitative measurement methods is used by the business units commensurate with the complexity of the risk, such as exposures against limits, stress and scenario testing, sensitivity analysis and value-at-risk measures.

Action plans
 Detailed action plans to mitigate the occurrence of a risk or to remedy a breakdown in control are recorded on risk and control logs maintained by each business grouping.

Monitoring and control
 The Board reviews the effectiveness of the system of internal control. This review covers all material controls, including financial, operational and compliance controls and risk management systems.

Management teams in each subsidiary and business unit have applied the Criteria of Control Model (CoCo) developed by the Canadian Institute of Chartered Accountants, and have produced a control integrity profile for successive assurances given at increasingly higher levels of management and finally to the Group Audit Committee. This process is co-ordinated by the Group risk function.

Risk monitoring is also undertaken at Group, Principal Subsidiary and business unit level by management, ERM functions, specialised risk management functions, internal audit and subsidiary audit committees.

The following are some of the other key processes of risk monitoring used around the Group:

Reporting
 As part of the Board's annual review process, the Chief Executive of each of the Group's major businesses completes a letter of representation. This letter confirms that there has been no indication of any significant business risk occurring, nor any material malfunction in controls, procedures or systems during the reporting period, resulting in loss or reputational damage, which impacts negatively on the attainment of the business's objectives during the year and up to the date of approval of the Annual Report. Exceptions are noted and reported. In addition the letter confirms that the business unit will continue as a going concern for the year ahead. The collated results of these letters are reported to the Group Audit Committee.

Monthly management reports, reports by the Group Finance Director, risk logs, control logs and exposure reports described under "Monitoring and control" above also form part of the reporting process.

MANAGEMENT OF SPECIFIC RISKS
 At Company level, the principal risks are the volatility of the major currencies in which the Group operates (Rand and US$) to Sterling, and investment market and interest rate movements.

Given the lack of deep and liquid markets for African trading currencies and the size of currency-related risks, the Group does not currently hedge translation risk for African currencies, although action may be taken to hedge specific forecast cash flows, such as the payment of dividends from South Africa.

In order to manage investment risk, the Group makes limited use of derivative contracts, outside regulated entities, only for the purposes of risk reduction or efficient portfolio management. Speculative activity is not permitted and all transactions must be fully covered by cash or corresponding assets and liabilities. The total income from all derivative instruments outside regulated entities is not material to the Group.

The other principal risks managed by the Group's businesses are described below.

South Africa - Life business
 Underwriting risk is controlled by underwriting principles governing product repricing procedures and authority limits. The underwriting process takes into account actual and prospective mortality, morbidity and expense experience. The impact of HIV/AIDS is mitigated wherever possible by writing products that allow for repricing on a regular basis or are priced to allow for the expected effects of AIDS. The Group also conducts HIV and other tests for lives insured above certain values and offers reduced premiums for those willing to undergo regular testing.

For fixed annuities, market risks are managed by investing in fixed interest securities with a duration closely corresponding to those liabilities. Market risks on policies where the terms are guaranteed in advance and the investment risk is carried by the shareholders, principally reside in the South African guaranteed non-profit annuity book, which is closely matched with gilts and semi-gilts. Other non-profit policies are also suitably matched through comprehensive investment guidelines. Market risks on with-profit policies, where investment risk is shared, are minimised by appropriate bonus declaration practices.

Equity price risk and interest rate risk (on the value of securities) are modelled by the Group's risk-based capital practices, which require sufficient capital to be held in excess of the statutory minimum to allow the Group to manage significant equity exposures. Credit risk is monitored by the business's Credit Committee covering life and third party funds, which has established appropriate exposure limits.

Old Mutual Asset Managers (South Africa)
 The exposure of the Group's asset management businesses to market fluctuations gives rise to potential impacts on revenue levels, which are a function of the value of client portfolios. Investment risk is principally borne by the client. Compliance risks faced by these businesses are monitored and reviewed by compliance and risk committees established for this purpose. The risk of loss of key employees is managed by the use of long term incentive schemes aligned with shareholder value targets, and by competition restrictions in employment agreements.

Nedcor
 Risk is an integral component and driver of Nedcor's success in achieving shareholder value. Nedcor does not, however, look to avoid risk, but rather seeks to understand it, manage it effectively and measure it in the context of an appropriate system that derives its approach to risk management and control from a shareholder value perspective.

Nedcor's risk process covers the entire range of risk categories and specifically includes strategic risk and enterprise-wide risk management.

As a bank, Nedcor's core activity is risk taking, and accordingly risk management is seen as a core competency.

Risks relating to trading and non-trading activities are managed through a framework of policies, methods and independent monitoring committees.

Asset and liability management is conducted within a formal structure which monitors the levels of acceptable financial risk. This structure is not heavily reliant on trading securities and derivatives, but focuses on using on-balance sheet mechanisms.

Interest rate risk for Nedcor is its net income exposure to adverse movements in rates arising as a result of mismatches in the repricing terms of assets and liabilities. Prospective repricing of assets and liabilities is assessed using gap analysis and earnings at risk modelling techniques to quantify the potential impact.

Liquidity risk is the risk of being unable to raise funds at market prices to meet commitments as they fall due or to satisfy client demands for funds. This risk is managed by the maintenance of adequate capital, combined with sophisticated cash flow forecasting and strategic planning, maintaining an adequate pool of high quality marketable assets and ensuring appropriate diversity in liabilities.

Credit risk is governed by policy guidelines and administered by an appropriately constituted committee at Nedcor, which approves all facilities in excess of 10% of capital, and also monitors other large exposures, risk limits, provisions and non-performing loans. Concentrations in country credit risk are similarly managed.

Nedcor's trading in foreign exchange and interest rate markets primarily involves interest rate swaps, forward rate agreements, bonds and bond options. Currency options, equities and equity derivatives are also traded on a limited basis. Trading exposures are measured using sensitivity analysis, value at risk and scenario testing, and Nedcor operates a formal system of monitoring and oversight on market trading risk.

Mutual & Federal
 Underwriting risks are controlled through a formal system of parameters within Mutual & Federal, which is regularly updated and only deviated from following approval by senior management. Reinsurance cover is in place, with retentions set at conservative levels. Equity price risk is covered by the capital strength of the Mutual & Federal group.

US businesses
 US Life
 Underwriting risk is controlled by underwriting principles governing product repricing procedures and authority limits. The underwriting process takes into account prospective mortality, morbidity and expense experience. A large amount of the mortality and morbidity risk is reinsured to highly rated companies.

For fixed annuities, policyholder option risk is managed by investing in fixed securities with durations within a half-year of the duration of the liabilities. Cash flows in any period are closely aligned to ensure any mismatch is not material. Extensive interest rate scenario testing is required by regulatory authorities to ensure that the amounts reserved are sufficient to meet the guaranteed obligations.

The guaranteed returns provided under Equity Index Annuities are dynamically hedged to ensure a close matching of option payoffs to the liability growth. Hedging positions are reviewed daily to re-adjust them as necessary.

Credit risk is monitored by the business's Investment Committee, which has established appropriate exposure limits.

US Asset Management
 The exposure of the Group's US asset management businesses to market fluctuations gives rise to potential impacts on revenue levels, which are a function of the value of client portfolios. Investment risk is principally borne by the client. Compliance risks faced by these businesses are independently monitored and reviewed by compliance functions and committees, which also need to meet stringent US regulatory requirements. The risk of loss of key employees is managed by the use of long-term incentive schemes aligned with shareholder value targets, and by competition restrictions in employment agreements.

UK
 The UK asset management business is exposed to market fluctuations in terms of the potential impacts on revenue levels, which are a function of the value of client portfolios. This exposure is reduced through product diversification, including through the portfolio of hedge funds managed by Old Mutual Asset Managers (UK).

The business is exposed to operational risk. The means of managing this include: tight control environment, careful planning and controlled execution of business integration, stress testing and parallel running of new operational systems and software, monitoring of operational key risk indicators, performing regular audit reviews, and maintaining insurance policies.

The Group's UK businesses operate in a highly regulated and changing environment. Compliance risk is mitigated through embedded compliance procedures and controls, ensuring adherence to regulations, and ongoing compliance monitoring by internal compliance functions.

The risk of loss of key employees is managed by the use of long-term incentive schemes aligned with shareholder value targets, and by competition restrictions in employment agreements.

POLICY MATTERS

Relations with shareholders and analysts
 The Company is committed to a continuing open dialogue with investors and analysts in order to raise understanding and awareness of the Group's strategy, operations, management and plans and to realise a fair valuation for the Company's shares.

Under the programme for 2004, the Chief Executive and/or the Group Finance Director hosted over 100 one-to-one meetings across South Africa, the UK, the USA and Europe with current and potential investors. A divisional executive accompanied them to almost half of these meetings, in order to offer greater insight into their specific business. The programme was complemented by educational seminars on the Group's US life and asset management businesses held in the UK and South Africa.

In addition to the above, the Corporate Affairs team carried out almost 100 meetings around the world, some in conjunction with the Treasury team on non-deal roadshows.

Group strategy and performance are communicated to financial markets through annual and interim reports, news releases, speeches, transcripts and presentations, using a wide range of internal and external communication channels. The Company holds two results meetings a year, at the time of its preliminary and interim results, and these are hosted and webcast simultaneously in London and Johannesburg. In addition, in May and November the Company holds analyst teleconference calls to present its quarterly trading statements. Transcripts and materials are held on the Company's website to allow access (subject to applicable legal restrictions) for those unable to be present. All major announcements by the Company are e-mailed to Corporate Affairs' investor database as they are made public.

The Company's shares are now covered by 20 analysts in South Africa and the UK and they offer commentary and views on valuation in the Company's two major listed regions. Corporate Affairs continued to strive during 2004 to increase the coverage of the Company's shares outside South Africa so that a balanced spread of benchmarks and peer comparisons would be available.

The Company's website has undergone continued development in 2004, creating state-of-the-art tools for retail investors and allowing access to materials and records of all public presentations, as well as media and regulatory communications.

Frequently asked questions are posted on the website and the Company responds to many direct requests for information and also provides answers to specific queries. The website offers a wide range of services for investors, including the Company's share price, details of dividends, procedures for electing to receive communications electronically and other relevant data for shareholders.

The Company's share registrars in the UK and each country where its shares are listed offer services to personal shareholders to deal with specific requests that they may have. The Company's brokers in each of the five markets where Old Mutual's shares are listed also maintain active communication with, and provide other services for, the Company's shareholders.

The Board monitors investor relations matters closely and receives a report on the subject at each of its scheduled meetings. It also receives the results of an annual externally-conducted survey by Makinson Cowell, which seeks to capture the views of the Company's largest shareholders on a wide range of issues. These include feedback on governance and strategy. The use of an external agency to collate these views enables shareholders to be more open about any concerns or issues they may have. In addition, the Chairman, the senior independent non-executive director and the other non-executive directors attend various functions during the year to which major shareholders are invited, thereby enabling them to understand any issues or concerns that such shareholders may wish to raise. Press cuttings and brokers' and analysts' comments on the Company are also provided to all of the directors on a weekly basis by the Corporate Affairs department.

The senior independent non-executive director, Mr Collins, currently obtains an understanding of issues and concerns of major shareholders primarily through the Makinson Cowell survey referred to above, but he also dealt with direct representations or issues from shareholders and other stakeholders during 2004.

Employment matters
 The Group's employment policies are designed to promote a working environment that supports the recruitment and retention of highly effective employees, improves productivity and fosters relationships that build on the diversity of its workforce. They are regularly reviewed and updated to ensure their relevance for the locations to which they apply. Whilst local employment policies and procedures are developed by each business according to its own circumstances, the following key principles of employment are applied consistently throughout the Group:

Various initiatives have been implemented to enhance talent management processes across the Group including:

The benefits of a continuous drive to promote performance management across the Group over the last three years are now being seen in improvements in performance management processes and culture, measurement of performance and delivery, and the relationship between performance and reward.

Key initiatives at the Group's South African businesses during 2004 included:

Supplier payment policy
 In most cases suppliers of goods or services to the Group do so under standard terms of contract which lay down terms of payment. In other cases, specific terms are agreed beforehand. It is the Group's policy to ensure that the terms of payment are notified in advance and adhered to. The Company has signed the Better Payment Practice Code, an initiative promoted by the Department of Trade and Industry in the UK to encourage prompt settlement of invoices.

The total outstanding indebtedness of the Company (and its service company subsidiary, Old Mutual Business Services Limited) to trade creditors at 31 December 2004 amounted to £1,281,000, corresponding to 20 days' payments when averaged over the year then ended.

Charitable contributions
 The Company, its subsidiaries in the UK, and the Old Mutual Bermuda Foundation collectively made charitable donations of £234,000 during 2004 (2003: £222,000). In addition, the Group made a wide range of other significant donations to charitable causes and social development projects, as described in more detail in the Corporate Citizenship section of this document.

Environmental matters
 A description of the Group's environmental policy and activities during 2004 is contained in the Corporate Citizenship section of this document.

OTHER DIRECTORS' REPORT MATTERS

Political donations
 The Group made no EU political donations during the year. US political donations totalling $3,000 were made by the Group's US businesses during 2004.

Dividend
 The directors recommend a final dividend of 3.5p per share, which, together with the interim dividend of 1.75p per share paid in November 2004, makes a total dividend for the year of 5.25p per share. Subject to shareholders' approval at the Annual General Meeting, the final dividend will be paid on 31 May 2005 to members on the register at the close of business on 22 April 2005. Shareholders on the South African, Malawi and Zimbabwe branch registers and the Namibian section of the principal register will be paid the final dividend in the respective local currencies of those territories by reference to the relevant exchange rates prevailing on 31 March 2005 (30 March 2005, in the case of Zimbabwe), as determined by the Company. The equivalents of the recommended Sterling dividend in these currencies will be announced by the Company on 1 April 2005. It is expected that payment will be made via dividend access trust mechanisms in each country concerned. This means that holders of shares on the South African branch register will receive their dividend from a South African domestic entity and will therefore not be subject to the South African tax on foreign dividends in relation to it.

The Board's policy on dividends is to seek to achieve steadily increasing returns to shareholders over time, reflecting the underlying rate of progress and the cash flow requirements of its businesses. The Board anticipates declaring an interim dividend for the current year in August 2005, for payment in November 2005.

Share capital
 The Company's issued share capital at 31 December 2004 was £385,394,299.00 divided into 3,853,942,990 Ordinary Shares of 10p each (2003: £383,689,581.10 divided into 3,836,895,811 Ordinary Shares of 10p each). During the year ended 31 December 2004, a total of 17,047,179 shares in the Company were issued at an average price of 85.08p each under the Group's share option schemes.

Authorities from the shareholders for the Company to make market purchases of, and/or to purchase pursuant to contingent purchase contracts relating to each of the four African stock exchanges on which the Company's shares are listed, up to an aggregate of 383,752,930 of its own shares were in force at 31 December 2004. No purchases of shares were made pursuant to any of those authorities during the year then ended.

Substantial interests in shares
 At 28 February 2005, the following substantial share interests had been declared to the Company in accordance with Part VI of the Companies Act 1985:

 
Number of shares
% of total issued shares
Barclays plc
159,868,102
4.15%
Legal & General Investment
Management Limited
131,113,007
3.40%
Old Mutual Life Assurance Company (South Africa) Limited
274,950,790
7.13%
Public Investment Commissioners of the Republic of South Africa
398,417,574
10.34%

Going concern
 The Board has satisfied itself that the Group has adequate resources to continue in operation for the foreseeable future. The Group's financial statements have accordingly been prepared on a going concern basis.

By order of the Board

Martin C Murray
Group Company Secretary
28 February 2005


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