Interim Results 2015 - Part 2
Part 3 - Financial Information
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Index to the financial information For the six months ended 30 June 2015 |
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Statement of directors' responsibilities in respect of the interim financial statements for the six months ended 30 June 2015
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46 |
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Independent review report to Old Mutual plc for the six months ended 30 June 2015
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47 |
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Consolidated income statement
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48 |
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Consolidated statement of comprehensive income
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49 |
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Reconciliation of adjusted operating profit to profit after tax
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50 |
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Consolidated statement of financial position
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52 |
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Consolidated statement of cash flows
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53 |
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Consolidated statement of changes in equity
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54 |
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Notes to the consolidated financial statements
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A: Significant accounting policies
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60 |
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B: Segment information
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62 |
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C: Other key performance information
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76 |
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D: Other income statement notes
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83 |
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E: Financial assets and liabilities
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85 |
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F: Other statement of financial position notes |
103 |
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G: Other notes
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104 |
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H: Discontinued operations and disposal groups held for sale
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107 |
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Statement of directors' responsibilities in respect of the interim financial statements
For the six months ended 30 June 2015
We confirm that to the best of our knowledge:
§ The Group interim financial statements contained herein are presented in accordance with the requirements of IAS 34 'Interim Financial Reporting' as adopted by the EU.
§ The interim management statement includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.
Julian Roberts Ingrid Johnson
Group Chief Executive Group Finance Director
6 August 2015 6 August 2015
Independent review report to Old Mutual plc
For the six months ended 30 June 2015
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2015 which comprises the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity and the related explanatory notes, which include the reconciliation of adjusted operating profit to profit after tax.
We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ('the DTR') of the UK's Financial Conduct Authority ('the UK FCA'). Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.
The annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2015 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.
Philip Smart
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London E14 5GL
6 August 2015
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Consolidated income statement |
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For the six months ended 30 June 2015 |
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£m |
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Notes |
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 December 2014 |
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Revenue |
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Gross earned premiums |
B2 |
1,589 |
1,618 |
3,209 |
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Outward reinsurance |
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(151) |
(154) |
(308) |
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Net earned premiums |
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1,438 |
1,464 |
2,901 |
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Investment return (non-banking) |
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3,186 |
3,529 |
6,304 |
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Banking interest and similar income |
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1,691 |
1,415 |
3,057 |
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Banking trading, investment and similar income |
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110 |
83 |
197 |
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Fee and commission income, and income from service activities |
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1,537 |
1,413 |
2,894 |
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Other income |
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70 |
54 |
125 |
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Total revenue |
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8,032 |
7,958 |
15,478 |
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Expenses |
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Claims and benefits (including change in insurance contract provisions) |
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(1,738) |
(2,260) |
(4,098) |
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Reinsurance recoveries |
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120 |
66 |
215 |
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Net claims and benefits incurred |
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(1,618) |
(2,194) |
(3,883) |
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Change in investment contract liabilities |
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(2,035) |
(1,845) |
(3,544) |
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Impairment losses on loans and advances |
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(134) |
(130) |
(252) |
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Finance costs |
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(45) |
(64) |
(54) |
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Banking interest payable and similar expenses |
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(962) |
(770) |
(1,672) |
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Fee and commission expenses, and other acquisition costs |
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(459) |
(437) |
(863) |
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Change in third-party interest in consolidated funds |
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(207) |
(194) |
(322) |
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Other operating and administrative expenses |
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(1,928) |
(1,760) |
(3,548) |
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Total expenses |
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(7,388) |
(7,394) |
(14,138) |
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Share of associated undertakings' and joint ventures' profit after tax |
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37 |
10 |
26 |
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Profit/(loss) on disposal of subsidiaries, associated undertakings and strategic investments |
C1(c) |
2 |
(10) |
(2) |
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Profit before tax |
|
683 |
564 |
1,364 |
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Income tax expense |
D1 |
(243) |
(218) |
(462) |
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Profit from continuing operations after tax |
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440 |
346 |
902 |
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Discontinued operations |
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Loss from discontinued operations after tax |
H1 |
(21) |
(10) |
(50) |
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Profit after tax for the financial period |
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419 |
336 |
852 |
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Attributable to |
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Equity holders of the parent |
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260 |
213 |
582 |
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Non-controlling interests |
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Ordinary shares |
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149 |
114 |
252 |
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Preferred securities |
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10 |
9 |
18 |
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Profit after tax for the financial period |
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419 |
336 |
852 |
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Earnings per share |
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Basic earnings per share based on profit from continuing operations (pence) |
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5.9 |
4.7 |
13.5 |
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Basic earnings per share based on profit from discontinued operations (pence) |
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(0.5) |
(0.2) |
(1.1) |
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Basic earnings per ordinary share (pence) |
C2(a) |
5.4 |
4.5 |
12.4 |
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Diluted basic earnings per share based on profit from continuing operations (pence) |
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5.4 |
4.3 |
12.5 |
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Diluted basic earnings per share based on profit from discontinued operations (pence) |
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(0.4) |
(0.2) |
(1.0) |
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Diluted basic earnings per ordinary share (pence) |
C2(b) |
5.0 |
4.1 |
11.5 |
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Weighted average number of ordinary shares (millions) |
C2(a) |
4,598 |
4,462 |
4,485 |
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Consolidated statement of comprehensive income |
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For the six months ended 30 June 2015 |
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£m |
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Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 December 2014 |
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Profit after tax for the financial period |
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419 |
336 |
852 |
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Other comprehensive income for the financial period |
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Items that will not be reclassified subsequently to profit or loss |
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Fair value movements |
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Property revaluation |
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(2) |
6 |
22 |
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Measurement movements on defined benefit plans |
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8 |
1 |
2 |
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Income tax on items that will not be reclassified subsequently to profit or loss |
D1(c) |
- |
- |
(1) |
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6 |
7 |
23 |
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Items that may be reclassified subsequently to profit or loss |
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Fair value movements |
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Net investment hedge |
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6 |
14 |
(9) |
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Available-for-sale investments |
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Fair value (losses)/gains |
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(9) |
15 |
21 |
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Recycled to profit or loss |
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- |
- |
(20) |
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Exchange difference recycled to profit or loss on disposal of business |
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(30) |
(1) |
(85) |
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Shadow accounting |
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- |
- |
(5) |
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Currency translation differences on translating foreign operations |
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(442) |
(269) |
(68) |
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Other movements |
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(13) |
2 |
(18) |
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Income tax on items that may be reclassified subsequently to profit or loss |
D1(c) |
- |
(3) |
(5) |
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(488) |
(242) |
(189) |
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Total other comprehensive income for the financial period |
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(482) |
(235) |
(166) |
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Total comprehensive income for the financial period |
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(63) |
101 |
686 |
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Attributable to |
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Equity holders of the parent |
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(86) |
36 |
434 |
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Non-controlling interests |
|
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Ordinary shares |
|
13 |
56 |
234 |
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Preferred securities |
|
10 |
9 |
18 |
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Total comprehensive income for the financial period |
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(63) |
101 |
686 |
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Reconciliation of adjusted operating profit to profit after tax |
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For the six months ended 30 June 2015 |
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£m |
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Notes |
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 December 2014 |
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Core operations |
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Emerging Markets |
B3 |
333 |
291 |
617 |
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Nedbank |
B3 |
404 |
361 |
770 |
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Old Mutual Wealth |
B3 |
151 |
120 |
227 |
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Institutional Asset Management |
B3 |
83 |
54 |
131 |
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|
|
971 |
826 |
1,745 |
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Finance costs |
B3 |
(42) |
(41) |
(78) |
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Long-term investment return on excess assets |
|
11 |
13 |
24 |
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Interest payable to non-core operations |
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(2) |
(2) |
(5) |
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Corporate costs |
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(24) |
(25) |
(55) |
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Other net shareholder expenses |
|
(10) |
(10) |
(26) |
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Adjusted operating profit before tax |
B3 |
904 |
761 |
1,605 |
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Adjusting items |
C1(a) |
(260) |
(255) |
(301) |
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Non-core operations |
B3 |
4 |
14 |
1 |
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Profit before tax (net of policyholder tax) |
|
648 |
520 |
1,305 |
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Income tax attributable to policyholder returns |
D1(d) |
35 |
44 |
59 |
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Profit before tax |
|
683 |
564 |
1,364 |
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Total tax expense |
D1(a) |
(243) |
(218) |
(462) |
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Profit from continuing operations after tax |
|
440 |
346 |
902 |
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Loss from discontinued operations after tax |
H1 |
(21) |
(10) |
(50) |
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Profit after tax for the financial period |
|
419 |
336 |
852 |
|
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|
|
|
|
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Adjusted operating profit after tax attributable to ordinary equity holders of the parent |
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£m |
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Notes |
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 December 2014 |
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Adjusted operating profit before tax |
B3 |
904 |
761 |
1,605 |
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Tax on adjusted operating profit |
D1(d) |
(235) |
(202) |
(439) |
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Adjusted operating profit after tax |
|
669 |
559 |
1,166 |
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Non-controlling interests - ordinary shares |
|
(157) |
(126) |
(280) |
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Non-controlling interests - preferred securities |
|
(10) |
(9) |
(18) |
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Adjusted operating profit after tax attributable to ordinary equity holders of the parent |
B3 |
502 |
424 |
868 |
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Adjusted weighted average number of shares (millions) |
C2(c) |
4,855 |
4,840 |
4,845 |
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Adjusted operating earnings per share (pence) |
C2(c) |
10.3 |
8.8 |
17.9 |
Basis of preparation of adjusted operating profit
Adjusted operating profit (AOP) reflects the directors' view of the underlying long-term performance of the Group. AOP is a measure of profitability which adjusts the IFRS profit measures for the specific items detailed in note C1 and, as such, it is a non-IFRS measure. The reconciliation set out above explains the differences between AOP and profit after tax as reported under IFRS.
For core life assurance and property & casualty businesses, AOP is based on a long-term investment return, including returns on investments held by life funds in Group equity and debt instruments, and is stated net of income tax attributable to policyholder returns. For all core businesses, AOP excludes goodwill impairment, the impact of accounting for intangibles acquired in a business combination and costs related to completed acquisitions, revaluations of put options related to long-term incentive schemes, profit/(loss) on acquisition/disposal of subsidiaries, associated undertakings and strategic investments, fair value profits/(losses) on certain Group debt instruments, cost of hedging equity instruments and costs related to the fundamental restructuring of continuing businesses. AOP includes dividends declared to holders of perpetual preferred callable securities. Old Mutual Bermuda is treated as a non-core operation in the AOP disclosure. As such they are not included in AOP. Refer to note B1 for further information on the basis of segmentation.
Adjusted operating earnings per share is calculated on the same basis as AOP. It is stated after tax attributable to AOP and non-controlling interests. It excludes income attributable to Black Economic Empowerment trusts of listed subsidiaries. The calculation of the adjusted weighted average number of shares includes own shares held in policyholders' funds and Black Economic Empowerment trusts.
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Consolidated statement of financial position |
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At 30 June 2015 |
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£m |
|
||||
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Notes |
At 30 June 2015 |
At 30 June 2014 |
At 31 December 2014 |
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Assets |
|
|
|
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|
||||
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Goodwill and other intangible assets |
F1 |
3,344 |
2,500 |
2,763 |
|
||||
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Mandatory reserve deposits with central banks |
|
808 |
767 |
829 |
|
||||
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Property, plant and equipment |
|
726 |
730 |
765 |
|
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Investment property |
|
1,318 |
1,778 |
1,678 |
|
||||
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Deferred tax assets |
|
247 |
247 |
283 |
|
||||
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Investments in associated undertakings and joint ventures |
|
470 |
201 |
518 |
|
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Deferred acquisition costs |
|
804 |
909 |
862 |
|
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Reinsurers' share of policyholder liabilities |
E3 |
2,394 |
1,987 |
2,314 |
|
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Loans and advances |
E2 |
34,655 |
33,727 |
34,857 |
|
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Investments and securities |
|
87,033 |
86,198 |
87,547 |
|
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Current tax receivable |
|
95 |
101 |
92 |
|
||||
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Trade, other receivables and other assets |
|
2,938 |
2,780 |
2,362 |
|
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Derivative financial instruments |
|
1,161 |
1,104 |
1,227 |
|
||||
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Cash and cash equivalents |
|
5,034 |
4,289 |
4,944 |
|
||||
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Non-current assets held for sale |
H2 |
1,114 |
4,473 |
1,475 |
|
||||
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Total assets |
|
142,141 |
141,791 |
142,516 |
|
||||
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Liabilities |
|
|
|
|
|
||||
|
Long-term business insurance policyholder liabilities |
E3 |
9,851 |
11,737 |
10,519 |
|
||||
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Investment contract liabilities |
E3 |
68,786 |
66,355 |
68,841 |
|
||||
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Property & casualty liabilities |
E3 |
394 |
319 |
319 |
|
||||
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Third-party interests in consolidated funds |
|
5,678 |
6,456 |
5,986 |
|
||||
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Borrowed funds |
E4 |
3,566 |
2,783 |
3,044 |
|
||||
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Provisions and accruals |
|
228 |
198 |
284 |
|
||||
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Deferred revenue |
|
291 |
367 |
330 |
|
||||
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Deferred tax liabilities |
|
476 |
424 |
454 |
|
||||
|
Current tax payable |
|
169 |
205 |
189 |
|
||||
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Trade, other payables and other liabilities |
|
5,173 |
4,068 |
4,276 |
|
||||
|
Amounts owed to bank depositors |
|
36,000 |
34,540 |
36,243 |
|
||||
|
Derivative financial instruments |
|
1,161 |
1,174 |
1,201 |
|
||||
|
Non-current liabilities held for sale |
H2 |
833 |
4,294 |
1,285 |
|
||||
|
Total liabilities |
|
132,606 |
132,920 |
132,971 |
|
||||
|
Net assets |
|
9,535 |
8,871 |
9,545 |
|
||||
|
Shareholders' equity |
|
|
|
|
|
||||
|
Equity attributable to equity holders of the parent |
|
7,188 |
7,062 |
7,406 |
|
||||
|
Non-controlling interests |
|
|
|
|
|
||||
|
Ordinary shares |
|
2,075 |
1,536 |
1,867 |
|
||||
|
Preferred securities |
|
272 |
273 |
272 |
|
||||
|
Total non-controlling interests |
|
2,347 |
1,809 |
2,139 |
|
||||
|
Total equity |
|
9,535 |
8,871 |
9,545 |
|
||||
|
Consolidated statement of cash flows |
|
||||||||
|
For the six months ended 30 June 2015 |
|
|
|
|
|||||
|
|
|
|
|
£m |
|||||
|
|
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 December 2014 |
|||||
|
Cash flows from operating activities |
|
|
|
|
|||||
|
Profit before tax |
|
683 |
564 |
1,364 |
|||||
|
Non-cash movements in profit before tax |
|
1,134 |
806 |
2,058 |
|||||
|
Net changes in working capital |
|
866 |
(370) |
739 |
|||||
|
Taxation paid |
|
(252) |
(175) |
(402) |
|||||
|
Net cash inflow from operating activities |
|
2,431 |
825 |
3,759 |
|||||
|
Cash flows from investing activities |
|
|
|
|
|||||
|
Net acquisitions of financial investments |
|
(1,787) |
(824) |
(2,873) |
|||||
|
Acquisition of investment properties |
|
(37) |
(31) |
(48) |
|||||
|
Proceeds from disposal of investment properties |
|
4 |
39 |
115 |
|||||
|
Acquisition of property, plant and equipment |
|
(35) |
(65) |
(154) |
|||||
|
Proceeds from disposal of property, plant and equipment |
|
3 |
5 |
14 |
|||||
|
Acquisition of intangible assets |
|
(40) |
(29) |
(76) |
|||||
|
Acquisition of interests in subsidiaries, associated undertakings joint ventures and strategic investments |
|
(625) |
(58) |
(429) |
|||||
|
Proceeds from the disposal of interests in subsidiaries, associated undertakings joint ventures and strategic investments |
|
9 |
48 |
95 |
|||||
|
Net cash outflow from investing activities |
|
(2,508) |
(915) |
(3,356) |
|||||
|
Cash flows from financing activities |
|
|
|
|
|||||
|
Dividends paid to |
|
|
|
|
|||||
|
Ordinary equity holders of the Company |
|
(296) |
(279) |
(394) |
|||||
|
Non-controlling interests and preferred security interests |
|
(108) |
(90) |
(177) |
|||||
|
Dividends received from associated undertakings |
|
3 |
4 |
5 |
|||||
|
Interest paid (excluding banking interest paid) |
|
(24) |
(24) |
(48) |
|||||
|
Proceeds from issue of ordinary shares (including by subsidiaries to non-controlling interests) |
|
2 |
9 |
12 |
|||||
|
Net acquisition of treasury shares |
|
(12) |
38 |
72 |
|||||
|
Disposal of a non-controlling interest in OM Asset Management plc |
|
163 |
- |
184 |
|||||
|
Sale of shares held by BEE trusts |
|
172 |
- |
- |
|||||
|
Proceeds from issue of subordinated and other debt |
|
880 |
357 |
584 |
|||||
|
Subordinated and other debt repaid |
|
(349) |
(196) |
(290) |
|||||
|
Net cash inflow/(outflow) from financing activities |
|
431 |
(181) |
(52) |
|||||
|
Net increase/(decrease) in cash and cash equivalents |
|
354 |
(271) |
351 |
|||||
|
Effects of exchange rate changes on cash and cash equivalents |
|
(270) |
(234) |
(193) |
|||||
|
Cash and cash equivalents at beginning of the period |
|
5,786 |
5,628 |
5,628 |
|||||
|
Cash and cash equivalents at end of the period |
|
5,870 |
5,123 |
5,786 |
|||||
|
|
|
|
|
|
|||||
|
Consisting of |
|
|
|
|
|||||
|
Cash and cash equivalents |
|
5,034 |
4,289 |
4,944 |
|||||
|
Mandatory reserve deposits with central banks |
|
808 |
767 |
829 |
|||||
|
Cash and cash equivalents included in assets held for sale |
|
28 |
67 |
13 |
|||||
|
Total |
|
5,870 |
5,123 |
5,786 |
|||||
Cash and cash equivalents in the cash flow statement above include mandatory reserve deposits, in line with market practice in South Africa. Except for mandatory reserve deposits with central banks of £808 million (30 June 2014: £767 million; 31 December 2014: £829 million) and cash and cash equivalents subject to consolidation of funds of £1,372 million (30 June 2014: £1,733 million; 31 December 2014: £1,639 million), management do not consider that there are any material amounts of cash and cash equivalents which are not available for use in the Group's day-to-day operations.
|
Consolidated statement of changes in equity |
|||||||
|
For the six months ended 30 June 2015 |
|
|
|
|
|
|
|
|
|
|
Millions |
|
|
|||
|
Six months ended 30 June 2015 |
Notes |
Number of shares issued and fully paid |
|
Share capital |
Share premium |
Merger reserve |
Available-for-sale reserve |
|
Shareholders' equity at beginning of the period |
|
4,907 |
|
561 |
856 |
1,342 |
48 |
|
Profit after tax for the financial period |
|
- |
|
- |
- |
- |
- |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
|
Fair value gains |
|
|
|
|
|
|
|
|
Property revaluation |
|
- |
|
- |
- |
- |
- |
|
Measurement gains on defined benefit plans |
|
- |
|
- |
- |
- |
- |
|
Income tax on items that will not be reclassified subsequently to profit or loss |
D1(c) |
- |
|
- |
- |
- |
- |
|
|
|
- |
|
- |
- |
- |
- |
|
Items that may be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
|
Fair value gains/(losses) |
|
|
|
|
|
|
|
|
Net investment hedge |
|
- |
|
- |
- |
- |
- |
|
Available-for-sale investments |
|
|
|
|
|
|
|
|
Fair value (losses)/gains1 |
|
- |
|
- |
- |
- |
- |
|
Exchange differences recycled to profit or loss on disposal of business2 |
|
- |
|
- |
- |
- |
- |
|
Currency translation differences on translating foreign operations1 |
|
- |
|
- |
- |
- |
- |
|
Other movements |
|
- |
|
- |
- |
- |
- |
|
Income tax on items that may be reclassified subsequently to profit or loss |
D1(c) |
- |
|
- |
- |
- |
- |
|
Total comprehensive income for the financial period |
|
- |
|
- |
- |
- |
- |
|
Dividends for the period |
C3 |
- |
|
- |
- |
- |
- |
|
Tax relief on dividends paid |
|
- |
|
- |
- |
- |
- |
|
Equity share-based payment transactions |
|
- |
|
- |
- |
- |
- |
|
Other movements in share capital |
|
2 |
|
- |
2 |
- |
- |
|
Shares issued for the acquisition of Quilter Cheviot |
|
19 |
|
2 |
40 |
- |
- |
|
Share of movement in associate reserves |
|
- |
|
- |
- |
- |
- |
|
Proceeds from BEE transactions |
A2 |
- |
|
- |
141 |
- |
- |
|
Merger reserve released3 |
|
- |
|
- |
- |
(68) |
- |
|
Disposal of a non-controlling interest in OM Asset Management plc |
A2 |
- |
|
- |
- |
- |
- |
|
Non-controlling interests in subsidiaries acquired |
G3(b) |
- |
|
- |
- |
- |
- |
|
Change in participation in subsidiaries |
|
- |
|
- |
- |
- |
- |
|
Transactions with shareholders |
|
21 |
|
2 |
183 |
(68) |
- |
|
Shareholders' equity at end of the period |
|
4,928 |
|
563 |
1,039 |
1,274 |
48 |
1 Included in other reserves is a loss of £9 million relating to Economic Transactional Bank (ETI) available-for-sale reserve. Currency translation differences on translating foreign operations include £61 million relating to foreign exchange losses on translation of ETI.
2 Following the disposal of Old Mutual Wealth's European businesses foreign currency translation reserves of £30 million have been recycled to profit or loss. Foreign currency translation reserves of £35 million have been recycled directly to retained earnings following the OM Asset Management plc public offering. Refer to note A2 for further information.
3 On disposal of Old Mutual Wealth's European businesses, merger reserves of £68 million have been released directly to retained earnings.
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
£m |
||||||||
|
Property revaluation reserve |
Share-based payments reserve |
Other reserves |
Foreign currency translation reserve |
Retained earnings |
Perpetual preferred callable securities |
Attributable to equity holders of the parent |
Total non-controlling interests |
Total equity |
||||||||
|
178 |
337 |
37 |
(1,370) |
4,891 |
526 |
7,406 |
2,139 |
9,545 |
||||||||
|
- |
- |
- |
- |
246 |
14 |
260 |
159 |
419 |
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
(2) |
- |
- |
- |
- |
- |
(2) |
- |
(2) |
||||||||
|
- |
- |
- |
- |
6 |
- |
6 |
2 |
8 |
||||||||
|
- |
- |
- |
- |
- |
- |
- |
- |
- |
||||||||
|
(2) |
- |
- |
- |
6 |
- |
4 |
2 |
6 |
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
- |
- |
- |
6 |
- |
- |
6 |
- |
6 |
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
- |
- |
(9) |
- |
4 |
- |
(5) |
(4) |
(9) |
||||||||
|
- |
- |
- |
(65) |
35 |
- |
(30) |
- |
(30) |
||||||||
|
- |
- |
- |
(306) |
- |
- |
(306) |
(136) |
(442) |
||||||||
|
- |
- |
- |
- |
(15) |
- |
(15) |
2 |
(13) |
||||||||
|
- |
- |
- |
- |
- |
- |
- |
- |
- |
||||||||
|
(2) |
- |
(9) |
(365) |
276 |
14 |
(86) |
23 |
(63) |
||||||||
|
- |
- |
- |
- |
(296) |
(17) |
(313) |
(91) |
(404) |
||||||||
|
- |
- |
- |
- |
- |
3 |
3 |
- |
3 |
||||||||
|
- |
(15) |
- |
- |
(3) |
- |
(18) |
(4) |
(22) |
||||||||
|
- |
- |
- |
- |
(14) |
- |
(12) |
- |
(12) |
||||||||
|
- |
- |
- |
- |
(42) |
- |
- |
- |
- |
||||||||
|
- |
- |
10 |
- |
- |
- |
10 |
- |
10 |
||||||||
|
- |
- |
- |
- |
31 |
- |
172 |
- |
172 |
||||||||
|
- |
- |
- |
- |
68 |
- |
- |
- |
- |
||||||||
|
- |
- |
- |
- |
48 |
- |
48 |
114 |
162 |
||||||||
|
- |
- |
- |
- |
- |
- |
- |
98 |
98 |
||||||||
|
- |
- |
- |
- |
(22) |
- |
(22) |
68 |
46 |
||||||||
|
- |
(15) |
10 |
- |
(230) |
(14) |
(132) |
185 |
53 |
||||||||
|
176 |
322 |
38 |
(1,735) |
4,937 |
526 |
7,188 |
2,347 |
9,535 |
||||||||
|
Consolidated statement of changes in equity |
|
|||||||||||||||
|
For the six months ended 30 June 2015 |
|
|
|
|
|
|
|
|
||||||||
|
|
|
Millions |
|
|
|
|||||||||||
|
Six months ended 30 June 2014 |
Notes |
Number of shares issued and fully paid |
|
Share capital |
Share premium |
Merger reserve |
Available-for-sale reserve |
|
||||||||
|
Shareholders' equity at beginning of the period |
|
4,897 |
|
560 |
845 |
1,717 |
52 |
|
||||||||
|
Profit after tax for the financial period |
|
- |
|
- |
- |
- |
- |
|
||||||||
|
Other comprehensive income |
|
|
|
|
|
|
|
|
||||||||
|
Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
|
||||||||
|
Fair value gains |
|
|
|
|
|
|
|
|
||||||||
|
Property revaluation |
|
- |
|
- |
- |
- |
- |
|
||||||||
|
Measurement gains on defined benefit plans |
|
- |
|
- |
- |
- |
- |
|
||||||||
|
Income tax on items that will not be reclassified subsequently to profit or loss |
D1(c) |
- |
|
- |
- |
- |
- |
|
||||||||
|
|
|
- |
|
- |
- |
- |
- |
|
||||||||
|
Items that may be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
|
||||||||
|
Fair value gains/(losses) |
|
|
|
|
|
|
|
|
||||||||
|
Net investment hedge |
|
- |
|
- |
- |
- |
- |
|
||||||||
|
Available-for-sale investments |
|
|
|
|
|
|
|
|
||||||||
|
Fair value losses |
|
- |
|
- |
- |
- |
14 |
|
||||||||
|
Exchange differences recycled to profit or loss |
|
- |
|
- |
- |
- |
- |
|
||||||||
|
Currency translation differences on translating foreign operations |
|
- |
|
- |
- |
- |
- |
|
||||||||
|
Other movements |
|
- |
|
- |
- |
- |
- |
|
||||||||
|
Income tax on items that may be reclassified subsequently to profit or loss |
D1(c) |
- |
|
- |
- |
- |
(3) |
|
||||||||
|
Total comprehensive income for the financial period |
|
- |
|
- |
- |
- |
11 |
|
||||||||
|
Dividends for the period |
C3 |
- |
|
- |
- |
- |
- |
|
||||||||
|
Tax relief on dividends paid |
|
- |
|
- |
- |
- |
- |
|
||||||||
|
Equity share-based payment transactions |
|
- |
|
- |
- |
- |
- |
|
||||||||
|
Other movements in share capital |
|
8 |
|
1 |
8 |
- |
- |
|
||||||||
|
Expiry of Skandia AB shareholder claims |
|
- |
|
- |
- |
- |
- |
|
||||||||
|
Merger reserve realised in the period |
|
- |
|
- |
- |
(116) |
- |
|
||||||||
|
Change in participation in subsidiaries |
|
- |
|
- |
- |
- |
- |
|
||||||||
|
Transactions with shareholders |
|
8 |
|
1 |
8 |
(116) |
- |
|
||||||||
|
Shareholders' equity at end of the period |
|
4,905 |
|
561 |
853 |
1,601 |
63 |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
£m |
|
|||||||
|
Property revaluation reserve |
Share-based payments reserve |
Other reserves |
Foreign currency translation reserve |
Retained earnings |
Perpetual preferred callable securities |
Attributable to equity holders of the parent |
Total non-controlling interests |
Total equity |
|
|||||||
|
161 |
316 |
37 |
(1,234) |
4,290 |
526 |
7,270 |
1,767 |
9,037 |
|
|||||||
|
- |
- |
- |
- |
199 |
14 |
213 |
123 |
336 |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
6 |
- |
- |
- |
- |
- |
6 |
- |
6 |
|
|||||||
|
- |
- |
- |
- |
1 |
- |
1 |
- |
1 |
|
|||||||
|
- |
- |
- |
- |
- |
- |
- |
- |
- |
|
|||||||
|
6 |
- |
- |
- |
1 |
- |
7 |
- |
7 |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
- |
- |
- |
14 |
- |
- |
14 |
- |
14 |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
- |
- |
- |
- |
- |
- |
14 |
1 |
15 |
|
|||||||
|
- |
- |
- |
(1) |
- |
- |
(1) |
- |
(1) |
|
|||||||
|
- |
- |
- |
(211) |
- |
- |
(211) |
(58) |
(269) |
|
|||||||
|
- |
- |
3 |
- |
- |
- |
3 |
(1) |
2 |
|
|||||||
|
- |
- |
- |
- |
- |
- |
(3) |
- |
(3) |
|
|||||||
|
6 |
- |
3 |
(198) |
200 |
14 |
36 |
65 |
101 |
|
|||||||
|
- |
- |
- |
- |
(279) |
(17) |
(296) |
(73) |
(369) |
|
|||||||
|
- |
- |
- |
- |
- |
3 |
3 |
- |
3 |
|
|||||||
|
- |
5 |
- |
- |
1 |
- |
6 |
(3) |
3 |
|
|||||||
|
- |
- |
- |
- |
38 |
- |
47 |
(1) |
46 |
|
|||||||
|
- |
- |
- |
- |
12 |
- |
12 |
- |
12 |
|
|||||||
|
- |
- |
- |
- |
116 |
- |
- |
- |
- |
|
|||||||
|
- |
- |
- |
- |
(16) |
- |
(16) |
54 |
38 |
|
|||||||
|
- |
5 |
- |
- |
(128) |
(14) |
(244) |
(23) |
(267) |
|
|||||||
|
167 |
321 |
40 |
(1,432) |
4,362 |
526 |
7,062 |
1,809 |
8,871 |
|
|||||||
|
Consolidated statement of changes in equity |
||||||||||||||||
|
For the six months ended 30 June 2015 |
|
|
|
|
|
|
|
|||||||||
|
|
|
Millions |
|
|
||||||||||||
|
Year ended 31 December 2014 |
Notes |
Number of shares issued and fully paid |
|
Share capital |
Share premium |
Merger reserve |
Available-for-sale reserve |
|||||||||
|
Shareholders' equity at beginning of the year |
|
4,897 |
|
560 |
845 |
1,717 |
52 |
|||||||||
|
Profit after tax for the financial year |
|
- |
|
- |
- |
- |
- |
|||||||||
|
Other comprehensive income |
|
|
|
|
|
|
|
|||||||||
|
Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
|||||||||
|
Fair value gains |
|
|
|
|
|
|
|
|||||||||
|
Property revaluation |
|
- |
|
- |
- |
- |
- |
|||||||||
|
Measurement gains on defined benefit plans |
|
- |
|
- |
- |
- |
- |
|||||||||
|
Income tax on items that will not be reclassified subsequently to profit or loss |
D1(c) |
- |
|
- |
- |
- |
- |
|||||||||
|
|
|
- |
|
- |
- |
- |
- |
|||||||||
|
Items that may be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
|||||||||
|
Fair value gains/(losses) |
|
|
|
|
|
|
|
|||||||||
|
Net investment hedge |
|
- |
|
- |
- |
- |
- |
|||||||||
|
Available-for-sale investments |
|
|
|
|
|
|
|
|||||||||
|
Fair value gains |
|
- |
|
- |
- |
- |
21 |
|||||||||
|
Recycled to profit or loss |
|
- |
|
- |
- |
- |
(20) |
|||||||||
|
Exchange differences recycled to profit or loss on disposal of business |
|
- |
|
- |
- |
- |
- |
|||||||||
|
Shadow accounting |
|
- |
|
- |
- |
- |
- |
|||||||||
|
Currency translation differences on translating foreign operations |
|
- |
|
- |
- |
- |
- |
|||||||||
|
Other movements |
|
- |
|
- |
- |
- |
- |
|||||||||
|
Income tax on items that may be reclassified subsequently to profit or loss |
D1(c) |
- |
|
- |
- |
- |
(5) |
|||||||||
|
Total comprehensive income for the financial year |
|
- |
|
- |
- |
- |
(4) |
|||||||||
|
Dividends for the year |
C3 |
- |
|
- |
- |
- |
- |
|||||||||
|
Tax relief on dividends paid |
|
- |
|
- |
- |
- |
- |
|||||||||
|
Equity share-based payment transactions |
|
- |
|
- |
- |
- |
- |
|||||||||
|
Other movements in share capital |
|
10 |
|
1 |
11 |
- |
- |
|||||||||
|
Expiry of Skandia AB shareholder claims |
|
- |
|
- |
- |
- |
- |
|||||||||
|
Merger reserve released |
|
- |
|
- |
- |
(375) |
- |
|||||||||
|
Disposal of a non-controlling interest in OM Asset Management plc |
A2 |
- |
|
- |
- |
- |
- |
|||||||||
|
Non-controlling interests in subsidiaries acquired |
A2 |
- |
|
- |
- |
- |
- |
|||||||||
|
Change in participation in subsidiaries |
|
- |
|
- |
- |
- |
- |
|||||||||
|
Transactions with shareholders |
|
10 |
|
1 |
11 |
(375) |
- |
|||||||||
|
Shareholders' equity at end of the year |
|
4,907 |
|
561 |
856 |
1,342 |
48 |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
£m |
|
|||||||
|
Property revaluation reserve |
Share-based payments reserve |
Other reserves |
Foreign currency translation reserve |
Retained earnings |
Perpetual preferred callable securities |
Attributable to equity holders of the parent |
Total non-controlling interests |
Total equity |
|
|||||||
|
161 |
316 |
37 |
(1,234) |
4,290 |
526 |
7,270 |
1,767 |
9,037 |
|
|||||||
|
- |
- |
- |
- |
557 |
25 |
582 |
270 |
852 |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
22 |
- |
- |
- |
(5) |
- |
17 |
5 |
22 |
|
|||||||
|
- |
- |
- |
- |
2 |
- |
2 |
- |
2 |
|
|||||||
|
- |
- |
- |
- |
(1) |
- |
(1) |
- |
(1) |
|
|||||||
|
22 |
- |
- |
- |
(4) |
- |
18 |
5 |
23 |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
- |
- |
- |
(9) |
- |
- |
(9) |
- |
(9) |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
- |
- |
- |
- |
- |
- |
21 |
- |
21 |
|
|||||||
|
- |
- |
- |
- |
- |
- |
(20) |
- |
(20) |
|
|||||||
|
- |
- |
- |
(85) |
- |
- |
(85) |
- |
(85) |
|
|||||||
|
(5) |
- |
- |
- |
- |
- |
(5) |
- |
(5) |
|
|||||||
|
- |
- |
- |
(45) |
- |
- |
(45) |
(23) |
(68) |
|
|||||||
|
- |
- |
- |
3 |
(21) |
- |
(18) |
- |
(18) |
|
|||||||
|
- |
- |
- |
- |
- |
- |
(5) |
- |
(5) |
|
|||||||
|
17 |
- |
- |
(136) |
532 |
25 |
434 |
252 |
686 |
|
|||||||
|
- |
- |
- |
- |
(394) |
(32) |
(426) |
(145) |
(571) |
|
|||||||
|
- |
- |
- |
- |
- |
7 |
7 |
- |
7 |
|
|||||||
|
- |
21 |
- |
- |
(3) |
- |
18 |
4 |
22 |
|
|||||||
|
- |
- |
- |
- |
72 |
- |
84 |
1 |
85 |
|
|||||||
|
- |
- |
- |
- |
11 |
- |
11 |
- |
11 |
|
|||||||
|
- |
- |
- |
- |
375 |
- |
- |
- |
- |
|
|||||||
|
- |
- |
- |
- |
52 |
- |
52 |
163 |
215 |
|
|||||||
|
- |
- |
- |
- |
- |
- |
- |
53 |
53 |
|
|||||||
|
- |
- |
- |
- |
(44) |
- |
(44) |
44 |
- |
|
|||||||
|
- |
21 |
- |
- |
69 |
(25) |
(298) |
120 |
(178) |
|
|||||||
|
178 |
337 |
37 |
(1,370) |
4,891 |
526 |
7,406 |
2,139 |
9,545 |
|
|||||||
A: Significant accounting policies
A1: Basis of preparation
The Group interim financial statements contained herein are presented in accordance with the requirements of IAS 34 'Interim Financial Reporting' and are in compliance with IAS 34 as adopted by the EU. The Group's results for the six months ended 30 June 2015 and the financial position at that date have been prepared using accounting policies consistent with those applied in the preparation of the Group's 2014 Annual Report and Accounts.
The Group interim financial statements have been prepared on the going concern basis, which the directors believe is appropriate. Part 2 - Financial Performance of the Interim Management Statement provides further details on the performance of the Group and the principal risks and uncertainties.
The comparative figures for the financial year ended 31 December 2014 represent the consolidated performance of the Group. They are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditor and delivered to the Registrar of Companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
Translation of foreign operations
The assets and liabilities of foreign operations are translated from their respective functional currencies into the Group's presentation currency using the period end exchange rates, and their income and expenses using the average exchange rates. Other than in respect of cumulative translation gains and losses up to 1 January 2004, cumulative unrealised gains or losses resulting from translation of functional currencies to the presentation currency are included as a separate component of shareholders' equity. To the extent that these gains and losses are effectively hedged, the cumulative effect of such gains and losses arising on the hedging instruments are also included in that component of shareholders' equity. Upon the disposal of subsidiaries the cumulative amount of exchange differences deferred in shareholders' equity, net of attributable amounts in relation to net investments, is recognised in the income statement.
The exchange rates used to translate the operating results, assets and liabilities of key foreign business segments to pounds sterling are:
|
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 December 2014 |
|||
|
|
Income statement (average rate) |
Statement of financial position (closing rate) |
Income Statement (average rate) |
Statement of financial position (closing rate) |
Income statement (average rate) |
Statement of financial position (closing rate) |
|
Rand |
18.1583 |
19.1081 |
17.8499 |
18.1755 |
17.8712 |
17.9976 |
|
US dollars |
1.5240 |
1.5725 |
1.6690 |
1.7102 |
1.6474 |
1.5581 |
|
Euro |
1.3640 |
1.4099 |
1.2174 |
1.2492 |
1.2399 |
1.2877 |
New standards, interpretations and amendments adopted by the Group affecting the financial statements for the six months ended 30 June 2015
During the period, there were no new standards implemented that had a material effect on the financial statements of the Group.
A2: Significant corporate activity and business changes during the period
Acquisitions completed during the period
Acquisition of Quilter Cheviot
On 25 February 2015, the Group completed the acquisition of 100% of Quilter Cheviot, a leading UK-based discretionary investment manager for a total consideration of £585 million, comprising of £543 million cash and £42 million of deferred consideration that was settled in Old Mutual plc shares. An additional £23 million was paid to the seller to compensate for the increase in the net asset value of Quilter Cheviot between the date at which the acquisition was agreed and the completion of the transaction. The purchase consideration for the acquisition of Quilter Cheviot was the total cash paid of £566 million.
Goodwill of £292 million and intangible assets of £288 million (£273 million customer relationships and £15 million brand) have been recognised as a result of the transaction. Refer to note G3(a) for further information.
Acquisition of UAP Holdings Limited
On 24 June 2015 the Group obtained control of UAP Holdings Limited (UAP) through the acquisition, in two tranches, of a 60.7% ownership interest in UAP for £152 million. UAP is a Kenyan pan-African financial services group that mainly operates in East Africa.
An initial stake of 23.3% was acquired on 1 February 2015, while the remaining 37.3% stake was acquired on 24 June 2015. The results and movements in reserves were equity accounted from 1 February 2015 to the date that control was obtained. Subsequently, from 24 June 2015, the financial results and financial position were consolidated in the Group financial statements.
Due to the date of obtaining control being close to the date of the interim financial statements, the purchase price has been allocated based on a provisional estimate of the fair value of assets acquired and liabilities assumed at the date of acquisition. Goodwill and other intangible assets of £161 million have been recognised. The additional intangible assets identified, but not yet recognised, include brand, customer lists and present value of in-force business. Refer to note G3(b) for further information.
Disposals completed during the period
Disposal of Skandia Luxembourg and Skandia France
On 2 February 2015, the Group completed the sale of Skandia Luxembourg and Skandia France, part of Old Mutual Wealth. The Group has recognised a profit on disposal of £1 million. Merger reserves of £68 million relating to these businesses have been released directly to equity.
Disposals announced but not completed during the period
Disposal of Skandia Switzerland
On 29 May 2015, the Group announced that terms have been agreed to sell Skandia Leben AG, part of Old Mutual Wealth. The transaction is subject to regulatory approval and is expected to complete in the second half of 2015.
The net asset value of goodwill and intangible assets of the business has been written down to reflect the fair value of the business on expected proceeds from the sale, less costs associated with the sale. As a result, an impairment loss before tax of £94 million has been recognised in profit or loss. This comprises impairments of goodwill (£41 million), present value of acquired in-force business (£28 million) and net deferred acquisition costs and deferred revenue (£25 million).
Unwinding of Black Economic Empowerment (BEE) Schemes
The majority of the Group's South African BEE schemes, established in 2005, have unwound during 2015. The total value of cash that the Group businesses have received in relation to this is £172 million. The BEE schemes comprise business partner and community schemes in Nedbank and Emerging Markets (OMEM).
All the schemes involved the granting of shares to various BEE vehicles in 2005. In 2015, participants' access to these shares has become unrestricted following the settlement of funding provided to them by Group companies and the meeting of vesting criteria in the first six months of 2015. The notional funding associated with the OMEM schemes was settled with proceeds from the sale of shares by the trusts. The notional funding associated with the Nedbank schemes has been settled by calling back sufficient shares to settle the amount due to Nedbank.
Shares held by the BEE schemes were previously classified as treasury shares, but are now recognised as issued for Group financial reporting purposes.
OM Asset Management plc (OMAM) public share offering
On 22 June 2015 the Group disposed of 13.3 million OMAM shares for a consideration of $257 million (£163 million). A profit of £48 million was recognised directly in equity reflecting the excess of the consideration over the share of net assets disposed of. In addition foreign currency translation reserves of £35 million have been transferred to retained earnings. Additional non-controlling interests of £114 million have been recognised in the statement of financial position.
Financing activities during the period
Emerging Markets
On 19 March 2015, following the successful completion of a bond auction, which took place on 16 March 2015, OMLAC(SA) has issued R2,061 million (£106 million) of floating rate and fixed instruments, which have been classified as subordinated debt. These are SII/SAM compliant hybrid instruments and have maturity dates ranging from 2025 to 2030. The instruments were issued through the existing Zar Unsecured Subordinated Callable Note Programme.
Nedbank
Nedbank has issued and redeemed debt instruments in the normal course of the bank's funding program.
A3: Critical accounting estimates and judgements
In the preparation of these condensed financial statements, the Group is required to make estimates and judgements that affect items reported in the consolidated income statement, statement of financial position, and other primary statements and related supporting notes.
Critical accounting estimates and judgements are those which involve the most complex or subjective judgements or assessments. Where applicable, the Group applies estimation and assumption setting techniques that are aligned with relevant actuarial and accounting guidance based on knowledge of the current situation and require assumptions and predictions of future events and actions. The principal areas where estimates and judgement is typically required were set out in the 2014 Annual Report and Accounts on page 136 and were described in further detail in the Report of the Chairman of the Group Audit Committee on page 84. The Group has applied significant judgement in performing the purchase price allocation for acquisitions in the period. During the period, there have been no other significant changes to the areas of critical accounting estimates and judgements that the Group applied at 31 December 2014.
The Annual Report and Accounts is available in the Investor Relations section of the Group's website at www.oldmutual.com.
B: Segment information
B1: Basis of segmentation
Segment presentation
There have been no changes to the presentation of segment information for the six months ended 30 June 2015.
The Group's reported segments are Emerging Markets, Nedbank, Old Mutual Wealth and Institutional Asset Management. The Other segment includes central activities. For all reporting periods, these businesses have been classified as continuing operations in the IFRS income statement and as core operations in determining the Group's adjusted operating profit (AOP).
For all reporting periods, Old Mutual Bermuda is classified as a continuing operation in the IFRS income statement, but as non-core in determining the Group's AOP.
For the six months ended 30 June 2015, discontinued operations relate to the sale of US Life in 2011. For the six months ended 30 June 2014, discontinued operations related to the disposal of Nordic in 2012. For the year ended 31 December 2014, discontinued operations related to the disposals of Nordic and US Life. Refer to note H1 for further information.
The Group's segmental results are analysed and reported on a basis consistent with the way that management and the Board of directors of Old Mutual plc assesses performance of the underlying businesses and allocates resources. Information is presented to the Board on a consolidated basis in pounds sterling (the presentation currency) and in the functional currency of each business.
Adjusted operating profit (AOP) is one of the key measures reported to the Group's management and Board of directors for their consideration in the allocation of resources to and the review of performance of the segments. As appropriate to the business line, the Board reviews additional measures to assess the performance of each of the segments. These typically include sales, net client cash flows, funds under management, gross earned premiums, underwriting results, net interest income and non-interest revenue and credit losses.
Consistent with internal reporting, assets, liabilities, revenues and expenses that are not directly attributable to a particular segment are allocated between segments where appropriate and where there is a reasonable basis for doing so. The Group accounts for inter-segment revenues and transfers as if the transactions were with third parties at current market prices. Given the nature of the operations, there are no major trading activities between the segments.
The revenues generated in each reported segment can be seen in the analysis of profits and losses in note B3. The segmental information in notes B3 and B4, reflects the adjusted and IFRS measures of profit or loss and the assets and liabilities for each operating segment as provided to management and the Board of directors. There are no differences between the measurement of the assets and liabilities reflected in the primary statements and that reported for the segments.
There are four primary business activities from which the Group generates revenue. These are life assurance (premium income), asset management business (fee and commission income), banking (banking interest receivable and investment banking income) and property & casualty (premium income). Other revenue includes gains and losses on investment securities. An analysis of segment revenues and expenses and the Group's revenues and expenses is shown in note B3.
The principal lines of business from which each operating segment derives its revenues are as follows:
Core operations
Emerging Markets - life assurance, property & casualty, asset management and banking
Nedbank - banking, asset management and life assurance
Old Mutual Wealth - life assurance and asset management
Institutional Asset Management - asset management
Non-core operations
Old Mutual Bermuda - life assurance
B2: Gross earned premiums and deposits to investment contracts
|
|
|
|
£m |
|
Six months ended 30 June 2015 |
Emerging Markets |
Old Mutual Wealth |
Total |
|
Life assurance - insurance contracts |
634 |
71 |
705 |
|
Life assurance - investment contracts with discretionary participation features |
540 |
- |
540 |
|
General insurance |
344 |
- |
344 |
|
Gross earned premiums |
1,518 |
71 |
1,589 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m |
|
Six months ended 30 June 2014 |
Emerging Markets |
Old Mutual Wealth |
Total |
|
Life assurance - insurance contracts |
678 |
155 |
833 |
|
Life assurance - investment contracts with discretionary participation features |
454 |
- |
454 |
|
General insurance |
331 |
- |
331 |
|
Gross earned premiums |
1,463 |
155 |
1,618 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m |
|
Year ended 31 December 2014 |
Emerging Markets |
Old Mutual Wealth |
Total |
|
Life assurance - insurance contracts |
1,299 |
280 |
1,579 |
|
Life assurance - investment contracts with discretionary participation features |
961 |
- |
961 |
|
General insurance |
669 |
- |
669 |
|
Gross earned premiums |
2,929 |
280 |
3,209 |
B: Segment information continued
B3: Adjusted operating profit statement - segment information for the six months ended 30 June 2015
|
|
||||
|
|
Notes |
|
Emerging Markets |
Nedbank |
|
Revenue |
|
|
|
|
|
Gross earned premiums |
B2 |
|
1,518 |
- |
|
Outward reinsurance |
|
|
(109) |
- |
|
Net earned premiums |
|
|
1,409 |
- |
|
Investment return (non-banking) |
|
|
1,518 |
- |
|
Banking interest and similar income |
|
|
122 |
1,569 |
|
Banking trading, investment and similar income |
|
|
5 |
105 |
|
Fee and commission income, and income from service activities |
|
|
261 |
455 |
|
Other income |
|
|
45 |
10 |
|
Inter-segment revenues |
|
|
48 |
5 |
|
Total revenue |
|
|
3,408 |
2,144 |
|
Expenses |
|
|
|
|
|
Claims and benefits (including change in insurance contract provisions) |
|
|
(1,688) |
- |
|
Reinsurance recoveries |
|
|
82 |
- |
|
Net claims and benefits incurred |
|
|
(1,606) |
- |
|
Change in investment contract liabilities |
|
|
(668) |
- |
|
Losses on loans and advances |
|
|
(7) |
(127) |
|
Finance costs |
|
|
(6) |
- |
|
Banking interest payable and similar expenses |
|
|
(55) |
(910) |
|
Fee and commission expenses, and other acquisition costs |
|
|
(162) |
(4) |
|
Change in third-party interest in consolidated funds |
|
|
- |
- |
|
Other operating and administrative expenses |
|
|
(560) |
(697) |
|
Income tax attributable to policyholder returns |
|
|
(16) |
- |
|
Inter-segment expenses |
|
|
(5) |
(26) |
|
Total expenses |
|
|
(3,085) |
(1,764) |
|
Share of associated undertakings' and joint ventures' profit after tax |
|
|
10 |
24 |
|
Profit on disposal of subsidiaries, associated undertakings and strategic investments |
C1(c) |
|
- |
- |
|
Adjusted operating profit/(loss) before tax and non-controlling interests |
|
|
333 |
404 |
|
Income tax expense |
D1 |
|
(95) |
(100) |
|
Non-controlling interests |
|
|
(12) |
(143) |
|
Adjusted operating profit/(loss) after tax and non-controlling interests |
|
|
226 |
161 |
|
Adjusting items after tax and non-controlling interests |
C1(a) |
|
(49) |
6 |
|
Profit/(loss) after tax from continuing operations |
|
|
177 |
167 |
|
Loss from discontinued operations after tax |
H1 |
|
- |
- |
|
Profit/(loss) after tax attributable to equity holders of the parent |
|
|
177 |
167 |
1 Non-core operations for the six months ended 30 June 2015 relate to Old Mutual Bermuda and US Life. Old Mutual Bermuda profit after tax for the six months ended 30 June 2015 was £4 million. Expenses of £21 million were incurred in relation to the disposal of US Life in 2011. Further information on discontinued operations is provided in note H1.
|
|
|
|
|
|
|
|
£m |
|
Old Mutual Wealth |
Institutional Asset Management |
Other |
Consolidation adjustments |
Adjusted operating profit |
Adjusting items (note C1) |
Discontinued and non-core operations¹ |
IFRS Income statement |
|
|
|
|
|
|
|
|
|
|
71 |
- |
- |
- |
1,589 |
- |
- |
1,589 |
|
(42) |
- |
- |
- |
(151) |
- |
- |
(151) |
|
29 |
- |
- |
- |
1,438 |
- |
- |
1,438 |
|
1,408 |
- |
4 |
280 |
3,210 |
(41) |
17 |
3,186 |
|
- |
- |
- |
- |
1,691 |
- |
- |
1,691 |
|
- |
- |
- |
- |
110 |
- |
- |
110 |
|
570 |
263 |
- |
1 |
1,550 |
(13) |
- |
1,537 |
|
9 |
4 |
- |
- |
68 |
- |
2 |
70 |
|
1 |
- |
- |
(56) |
(2) |
- |
2 |
- |
|
2,017 |
267 |
4 |
225 |
8,065 |
(54) |
21 |
8,032 |
|
|
|
|
|
|
|
|
|
|
(41) |
- |
- |
- |
(1,729) |
- |
(9) |
(1,738) |
|
38 |
- |
- |
- |
120 |
- |
- |
120 |
|
(3) |
- |
- |
- |
(1,609) |
- |
(9) |
(1,618) |
|
(1,367) |
- |
- |
- |
(2,035) |
- |
- |
(2,035) |
|
- |
- |
- |
- |
(134) |
- |
- |
(134) |
|
- |
(1) |
(42) |
- |
(49) |
4 |
- |
(45) |
|
- |
- |
- |
- |
(965) |
3 |
- |
(962) |
|
(269) |
(3) |
- |
(63) |
(501) |
44 |
(2) |
(459) |
|
- |
- |
- |
(207) |
(207) |
- |
- |
(207) |
|
(187) |
(182) |
(26) |
(11) |
(1,663) |
(259) |
(6) |
(1,928) |
|
(19) |
- |
- |
- |
(35) |
35 |
- |
- |
|
(21) |
(1) |
(3) |
56 |
- |
- |
- |
- |
|
(1,866) |
(187) |
(71) |
(225) |
(7,198) |
(173) |
(17) |
(7,388) |
|
- |
3 |
- |
- |
37 |
- |
- |
37 |
|
- |
- |
- |
- |
- |
2 |
- |
2 |
|
151 |
83 |
(67) |
- |
904 |
(225) |
4 |
683 |
|
(19) |
(25) |
4 |
- |
(235) |
(8) |
- |
(243) |
|
- |
(12) |
- |
- |
(167) |
8 |
- |
(159) |
|
132 |
46 |
(63) |
- |
502 |
(225) |
4 |
281 |
|
(174) |
2 |
(10) |
- |
(225) |
225 |
- |
- |
|
(42) |
48 |
(73) |
- |
277 |
- |
4 |
281 |
|
- |
- |
- |
- |
- |
- |
(21) |
(21) |
|
(42) |
48 |
(73) |
- |
277 |
- |
(17) |
260 |
B: Segment information continued
B3: Adjusted operating profit statement - segment information for the six months ended 30 June 2014
|
|
||||
|
|
Notes |
|
Emerging Markets |
Nedbank |
|
Revenue |
|
|
|
|
|
Gross earned premiums |
B2 |
|
1,463 |
- |
|
Outward reinsurance |
|
|
(111) |
- |
|
Net earned premiums |
|
|
1,352 |
- |
|
Investment return (non-banking) |
|
|
2,101 |
- |
|
Banking interest and similar income |
|
|
- |
1,415 |
|
Banking trading, investment and similar income |
|
|
- |
83 |
|
Fee and commission income, and income from service activities |
|
|
243 |
438 |
|
Other income |
|
|
41 |
6 |
|
Inter-segment revenues |
|
|
41 |
5 |
|
Total revenue |
|
|
3,778 |
1,947 |
|
Expenses |
|
|
|
|
|
Claims and benefits (including change in insurance contract provisions) |
|
|
(2,056) |
- |
|
Reinsurance recoveries |
|
|
21 |
- |
|
Net claims and benefits incurred |
|
|
(2,035) |
- |
|
Change in investment contract liabilities |
|
|
(766) |
- |
|
Losses on loans and advances |
|
|
- |
(130) |
|
Finance costs |
|
|
- |
- |
|
Banking interest payable and similar expenses |
|
|
- |
(770) |
|
Fee and commission expenses, and other acquisition costs |
|
|
(150) |
(4) |
|
Change in third-party interest in consolidated funds |
|
|
- |
- |
|
Other operating and administrative expenses |
|
|
(501) |
(660) |
|
Income tax attributable to policyholder returns |
|
|
(38) |
- |
|
Inter-segment expenses |
|
|
(4) |
(23) |
|
Total expenses |
|
|
(3,494) |
(1,587) |
|
Share of associated undertakings' and joint ventures' profit after tax |
|
|
7 |
1 |
|
Profit on disposal of subsidiaries, associated undertakings and strategic investments |
C1(c) |
|
- |
- |
|
Adjusted operating profit/(loss) before tax and non-controlling interests |
|
|
291 |
361 |
|
Income tax expense |
D1 |
|
(83) |
(92) |
|
Non-controlling interests |
|
|
(6) |
(129) |
|
Adjusted operating profit/(loss) after tax and non-controlling interests |
|
|
202 |
140 |
|
Adjusting items after tax and non-controlling interests |
C1(a) |
|
2 |
8 |
|
Profit/(loss) after tax from continuing operations |
|
|
204 |
148 |
|
Loss from discontinued operations after tax |
H1 |
|
- |
- |
|
Profit/(loss) after tax attributable to equity holders of the parent |
|
|
204 |
148 |
1 Non-core operations for the six months ended 30 June 2014 related to Old Mutual Bermuda and Nordic. Old Mutual Bermuda profit after tax for the six months ended 30 June 2014 was £14 million. Divestment expenses of £10 million incurred in relation to the Nordic business sold in 2012 are also included. Further information on discontinued operations is provided in note H1.
|
|
|
|
|
|
|
|
£m |
|
Old Mutual Wealth |
Institutional Asset Management |
Other |
Consolidation adjustments |
Adjusted operating profit |
Adjusting items (note C1) |
Discontinued and non-core operations¹ |
IFRS Income statement |
|
|
|
|
|
|
|
|
|
|
155 |
- |
- |
- |
1,618 |
- |
- |
1,618 |
|
(43) |
- |
- |
- |
(154) |
- |
- |
(154) |
|
112 |
- |
- |
- |
1,464 |
- |
- |
1,464 |
|
1,160 |
- |
17 |
240 |
3,518 |
(13) |
24 |
3,529 |
|
- |
- |
- |
- |
1,415 |
- |
- |
1,415 |
|
- |
- |
- |
- |
83 |
- |
- |
83 |
|
563 |
193 |
- |
4 |
1,441 |
(28) |
- |
1,413 |
|
4 |
1 |
- |
1 |
53 |
- |
1 |
54 |
|
1 |
- |
- |
(49) |
(2) |
- |
2 |
- |
|
1,840 |
194 |
17 |
196 |
7,972 |
(41) |
27 |
7,958 |
|
|
|
|
|
|
|
|
|
|
(198) |
- |
- |
- |
(2,254) |
- |
(6) |
(2,260) |
|
45 |
- |
- |
- |
66 |
- |
- |
66 |
|
(153) |
- |
- |
- |
(2,188) |
- |
(6) |
(2,194) |
|
(1,079) |
- |
- |
- |
(1,845) |
- |
- |
(1,845) |
|
- |
- |
- |
- |
(130) |
- |
- |
(130) |
|
- |
- |
(41) |
- |
(41) |
(23) |
- |
(64) |
|
- |
- |
- |
- |
(770) |
- |
- |
(770) |
|
(270) |
(2) |
- |
(42) |
(468) |
33 |
(2) |
(437) |
|
- |
- |
- |
(194) |
(194) |
- |
- |
(194) |
|
(192) |
(140) |
(39) |
(9) |
(1,541) |
(214) |
(5) |
(1,760) |
|
(6) |
- |
- |
- |
(44) |
44 |
- |
- |
|
(20) |
- |
(2) |
49 |
- |
- |
- |
- |
|
(1,720) |
(142) |
(82) |
(196) |
(7,221) |
(160) |
(13) |
(7,394) |
|
- |
2 |
- |
- |
10 |
- |
- |
10 |
|
- |
- |
- |
- |
- |
(10) |
- |
(10) |
|
120 |
54 |
(65) |
- |
761 |
(211) |
14 |
564 |
|
(19) |
(12) |
4 |
- |
(202) |
(16) |
- |
(218) |
|
- |
- |
- |
- |
(135) |
12 |
- |
(123) |
|
101 |
42 |
(61) |
- |
424 |
(215) |
14 |
223 |
|
(182) |
(7) |
(36) |
- |
(215) |
215 |
- |
- |
|
(81) |
35 |
(97) |
- |
209 |
- |
14 |
223 |
|
- |
- |
- |
- |
- |
- |
(10) |
(10) |
|
(81) |
35 |
(97) |
- |
209 |
- |
4 |
213 |
B: Segment information continued
B3: Adjusted operating profit statement - segment information for the year ended 31 December 2014
|
|
|
|
|
|
|
|
Notes |
|
Emerging Markets |
Nedbank |
|
Revenue |
|
|
|
|
|
Gross earned premiums |
B2 |
|
2,929 |
- |
|
Outward reinsurance |
|
|
(223) |
- |
|
Net earned premiums |
|
|
2,706 |
- |
|
Investment return (non-banking) |
|
|
3,422 |
- |
|
Banking interest and similar income |
|
|
116 |
2,941 |
|
Banking trading, investment and similar income |
|
|
7 |
190 |
|
Fee and commission income, and income from service activities |
|
|
506 |
919 |
|
Other income |
|
|
80 |
22 |
|
Inter-segment revenues |
|
|
86 |
11 |
|
Total revenue |
|
|
6,923 |
4,083 |
|
Expenses |
|
|
|
|
|
Claims and benefits (including change in insurance contract provisions) |
|
|
(3,707) |
- |
|
Reinsurance recoveries |
|
|
79 |
- |
|
Net claims and benefits incurred |
|
|
(3,628) |
- |
|
Change in investment contract liabilities |
|
|
(1,208) |
- |
|
Losses on loans and advances |
|
|
- |
(252) |
|
Finance costs |
|
|
- |
- |
|
Banking interest payable and similar expenses |
|
|
(42) |
(1,628) |
|
Fee and commission expenses, and other acquisition costs |
|
|
(318) |
(8) |
|
Change in third-party interest in consolidated funds |
|
|
- |
- |
|
Other operating and administrative expenses |
|
|
(1,074) |
(1,387) |
|
Income tax attributable to policyholder returns |
|
|
(36) |
- |
|
Inter-segment expenses |
|
|
(11) |
(47) |
|
Total expenses |
|
|
(6,317) |
(3,322) |
|
Share of associated undertakings' and joint ventures' profit after tax |
|
|
11 |
9 |
|
Loss on disposal of subsidiaries, associated undertakings and strategic investments |
C1(c) |
|
- |
- |
|
Adjusted operating profit/(loss) before tax and non-controlling interests |
|
|
617 |
770 |
|
Income tax expense |
D1 |
|
(189) |
(195) |
|
Non-controlling interests |
|
|
(18) |
(274) |
|
Adjusted operating profit/(loss) after tax and non-controlling interests |
|
|
410 |
301 |
|
Adjusting items after tax and non-controlling interests |
C1(a) |
|
(15) |
14 |
|
Profit/(loss) after tax from continuing operations |
|
|
395 |
315 |
|
Profit from discontinued operations after tax |
H1 |
|
- |
- |
|
Profit/(loss) after tax attributable to equity holders of the parent |
|
|
395 |
315 |
1 Non-core operations for the year ended 31 December 2014 related to the Old Mutual Bermuda, Nordic and US Life businesses. Old Mutual Bermuda profit after tax for the year ended 31 December 2014 was £1 million. Non-core operations also included £31 million cost relating to the disposal of Nordic in 2012 and £19 million relating to the disposal of US Life in 2011. Further information on discontinued operations is provided in note H1.
|
|
|
|
|
|
|
|
£m |
|
Old Mutual Wealth |
Institutional Asset Management |
Other |
Consolidation adjustments |
Adjusted operating profit |
Adjusting items (note C1) |
Discontinued and non-core operations¹ |
IFRS Income statement |
|
|
|
|
|
|
|
|
|
|
280 |
- |
- |
- |
3,209 |
- |
- |
3,209 |
|
(85) |
- |
- |
- |
(308) |
- |
- |
(308) |
|
195 |
- |
- |
- |
2,901 |
- |
- |
2,901 |
|
2,493 |
- |
28 |
438 |
6,381 |
(91) |
14 |
6,304 |
|
- |
- |
- |
- |
3,057 |
- |
- |
3,057 |
|
- |
- |
- |
- |
197 |
- |
- |
197 |
|
1,085 |
422 |
- |
9 |
2,941 |
(47) |
- |
2,894 |
|
8 |
11 |
- |
1 |
122 |
- |
3 |
125 |
|
2 |
- |
2 |
(105) |
(4) |
- |
4 |
- |
|
3,783 |
433 |
30 |
343 |
15,595 |
(138) |
21 |
15,478 |
|
|
|
|
|
|
|
|
|
|
(385) |
- |
- |
- |
(4,092) |
- |
(6) |
(4,098) |
|
136 |
- |
- |
- |
215 |
- |
- |
215 |
|
(249) |
- |
- |
- |
(3,877) |
- |
(6) |
(3,883) |
|
(2,336) |
- |
- |
- |
(3,544) |
- |
- |
(3,544) |
|
- |
- |
- |
- |
(252) |
- |
- |
(252) |
|
- |
- |
(78) |
- |
(78) |
24 |
- |
(54) |
|
- |
- |
- |
- |
(1,670) |
(2) |
- |
(1,672) |
|
(479) |
(4) |
- |
(108) |
(917) |
58 |
(4) |
(863) |
|
- |
- |
- |
(322) |
(322) |
- |
- |
(322) |
|
(429) |
(303) |
(86) |
(18) |
(3,297) |
(241) |
(10) |
(3,548) |
|
(23) |
- |
- |
- |
(59) |
59 |
- |
- |
|
(40) |
(1) |
(6) |
105 |
- |
- |
- |
- |
|
(3,556) |
(308) |
(170) |
(343) |
(14,016) |
(102) |
(20) |
(14,138) |
|
- |
6 |
- |
- |
26 |
- |
- |
26 |
|
- |
- |
- |
- |
- |
(2) |
- |
(2) |
|
227 |
131 |
(140) |
- |
1,605 |
(242) |
1 |
1,364 |
|
(48) |
(29) |
22 |
- |
(439) |
(23) |
- |
(462) |
|
- |
(6) |
- |
- |
(298) |
28 |
- |
(270) |
|
179 |
96 |
(118) |
- |
868 |
(237) |
1 |
632 |
|
(216) |
(19) |
(1) |
- |
(237) |
237 |
- |
- |
|
(37) |
77 |
(119) |
- |
631 |
- |
1 |
632 |
|
- |
- |
- |
- |
- |
- |
(50) |
(50) |
|
(37) |
77 |
(119) |
- |
631 |
- |
(49) |
582 |
B: Segment information continued
B4: Statement of financial position - segment information at 30 June 2015
|
|
|
|
|
|
|
|
Notes |
|
Emerging Markets |
Nedbank |
|
Assets |
|
|
|
|
|
Goodwill and other intangible assets |
F1 |
|
408 |
437 |
|
Mandatory reserve deposits with central banks |
|
|
4 |
804 |
|
Property, plant and equipment |
|
|
294 |
394 |
|
Investment property |
|
|
1,302 |
16 |
|
Deferred tax assets |
|
|
56 |
16 |
|
Investments in associated undertakings and joint ventures |
|
|
64 |
373 |
|
Deferred acquisition costs |
|
|
99 |
- |
|
Reinsurers' share of policyholder liabilities |
E3 |
|
163 |
5 |
|
Loans and advances |
E2 |
|
909 |
33,572 |
|
Investments and securities |
|
|
28,500 |
6,447 |
|
Current tax receivable |
|
|
16 |
24 |
|
Trade, other receivables and other assets |
|
|
724 |
440 |
|
Derivative financial instruments |
|
|
247 |
750 |
|
Cash and cash equivalents |
|
|
848 |
1,512 |
|
Non-current assets held for sale |
H2 |
|
212 |
- |
|
Inter-segment assets |
|
|
679 |
405 |
|
Total assets |
|
|
34,525 |
45,195 |
|
Liabilities |
|
|
|
|
|
Long-term business insurance policyholder liabilities |
E3 |
|
8,746 |
211 |
|
Investment contract liabilities |
E3 |
|
19,159 |
638 |
|
Property & casualty liabilities |
E3 |
|
394 |
- |
|
Third-party interests in consolidated funds |
|
|
- |
- |
|
Borrowed funds |
E4 |
|
489 |
2,305 |
|
Provisions and accruals |
|
|
167 |
1 |
|
Deferred revenue |
|
|
19 |
1 |
|
Deferred tax liabilities |
|
|
204 |
33 |
|
Current tax payable |
|
|
91 |
13 |
|
Trade, other payables and other liabilities |
|
|
1,906 |
1,223 |
|
Amounts owed to bank depositors |
|
|
429 |
35,571 |
|
Derivative financial instruments |
|
|
353 |
768 |
|
Non-current liabilities held for sale |
H2 |
|
- |
- |
|
Inter-segment liabilities |
|
|
493 |
647 |
|
Total liabilities |
|
|
32,450 |
41,411 |
|
Net assets |
|
|
2,075 |
3,784 |
|
Equity |
|
|
|
|
|
Equity attributable to equity holders of the parent |
|
|
1,866 |
1,942 |
|
Non-controlling interests |
|
|
209 |
1,842 |
|
Ordinary shares |
|
|
209 |
1,570 |
|
Preferred securities |
|
|
- |
272 |
|
|
|
|
|
|
|
Total equity |
|
|
2,075 |
3,784 |
|
|
|
|
|
|
£m |
|
Old Mutual Wealth |
Institutional Asset Management |
Other |
Consolidation adjustments |
Non-core operations |
Total |
|
|
|
|
|
|
|
|
1,668 |
831 |
- |
- |
- |
3,344 |
|
- |
- |
- |
- |
- |
808 |
|
20 |
18 |
- |
- |
- |
726 |
|
- |
- |
- |
- |
- |
1,318 |
|
7 |
167 |
- |
- |
1 |
247 |
|
- |
23 |
10 |
- |
- |
470 |
|
686 |
19 |
- |
- |
- |
804 |
|
2,226 |
- |
- |
- |
- |
2,394 |
|
174 |
- |
- |
- |
- |
34,655 |
|
47,176 |
45 |
397 |
4,175 |
293 |
87,033 |
|
55 |
- |
- |
- |
- |
95 |
|
702 |
117 |
30 |
650 |
275 |
2,938 |
|
- |
- |
67 |
79 |
18 |
1,161 |
|
751 |
129 |
401 |
1,372 |
21 |
5,034 |
|
902 |
- |
- |
- |
- |
1,114 |
|
72 |
- |
942 |
(2,265) |
167 |
- |
|
54,439 |
1,349 |
1,847 |
4,011 |
775 |
142,141 |
|
|
|
|
|
|
|
|
258 |
- |
- |
- |
636 |
9,851 |
|
48,953 |
- |
- |
- |
36 |
68,786 |
|
- |
- |
- |
- |
- |
394 |
|
- |
- |
- |
5,678 |
- |
5,678 |
|
- |
92 |
680 |
- |
- |
3,566 |
|
35 |
2 |
23 |
- |
- |
228 |
|
271 |
- |
- |
- |
- |
291 |
|
221 |
- |
18 |
- |
- |
476 |
|
23 |
12 |
30 |
- |
- |
169 |
|
1,160 |
268 |
48 |
558 |
10 |
5,173 |
|
- |
- |
- |
- |
- |
36,000 |
|
- |
- |
- |
40 |
- |
1,161 |
|
833 |
- |
- |
- |
- |
833 |
|
757 |
102 |
266 |
(2,265) |
- |
- |
|
52,511 |
476 |
1,065 |
4,011 |
682 |
132,606 |
|
1,928 |
873 |
782 |
- |
93 |
9,535 |
|
|
|
|
|
|
|
|
1,928 |
577 |
782 |
- |
93 |
7,188 |
|
- |
296 |
- |
- |
- |
2,347 |
|
- |
296 |
- |
- |
- |
2,075 |
|
- |
- |
- |
- |
- |
272 |
|
|
|
|
|
|
|
|
1,928 |
873 |
782 |
- |
93 |
9,535 |
B: Segment information continued
B4: Statement of financial position - segment information at 30 June 2014
|
|
|
|
|
|
|
|
Notes |
|
Emerging Markets |
Nedbank |
|
Assets |
|
|
|
|
|
Goodwill and other intangible assets |
|
|
134 |
434 |
|
Mandatory reserve deposits with central banks |
|
|
- |
767 |
|
Property, plant and equipment |
|
|
313 |
388 |
|
Investment property |
|
|
1,409 |
7 |
|
Deferred tax assets |
|
|
73 |
12 |
|
Investments in associated undertakings and joint ventures |
|
|
92 |
79 |
|
Deferred acquisition costs |
|
|
107 |
- |
|
Reinsurers' share of policyholder liabilities |
E3 |
|
128 |
11 |
|
Loans and advances |
E2 |
|
339 |
33,212 |
|
Investments and securities |
|
|
28,856 |
5,588 |
|
Current tax receivable |
|
|
17 |
13 |
|
Trade, other receivables and other assets |
|
|
729 |
709 |
|
Derivative financial instruments |
|
|
266 |
719 |
|
Cash and cash equivalents |
|
|
928 |
753 |
|
Non-current assets held for sale |
|
|
- |
1 |
|
Inter-segment assets |
|
|
628 |
269 |
|
Total assets |
|
|
34,019 |
42,962 |
|
Liabilities |
|
|
|
|
|
Long-term business insurance policyholder liabilities |
E3 |
|
9,303 |
212 |
|
Investment contract liabilities |
E3 |
|
19,135 |
677 |
|
Property & casualty liabilities |
E3 |
|
319 |
- |
|
Third-party interests in consolidated funds |
|
|
- |
- |
|
Borrowed funds |
E4 |
|
196 |
1,899 |
|
Provisions |
|
|
145 |
1 |
|
Deferred revenue |
|
|
15 |
- |
|
Deferred tax liabilities |
|
|
184 |
35 |
|
Current tax payable |
|
|
125 |
6 |
|
Trade, other payables and other liabilities |
|
|
1,803 |
798 |
|
Amounts owed to bank depositors |
|
|
310 |
34,230 |
|
Derivative financial instruments |
|
|
338 |
798 |
|
Non-current liabilities held for sale |
|
|
- |
- |
|
Inter-segment liabilities |
|
|
347 |
613 |
|
Total liabilities |
|
|
32,220 |
39,269 |
|
Net assets |
|
|
1,799 |
3,693 |
|
Equity |
|
|
|
|
|
Equity attributable to equity holders of the parent |
|
|
1,747 |
1,934 |
|
Non-controlling interests |
|
|
52 |
1,759 |
|
Ordinary shares |
|
|
52 |
1,486 |
|
Preferred securities |
|
|
- |
273 |
|
|
|
|
|
|
|
Total equity |
|
|
1,799 |
3,693 |
|
|
|
|
|
|
£m |
|
Old Mutual Wealth |
Institutional Asset Management |
Other |
Consolidation adjustments |
Non-core operations |
Total |
|
|
|
|
|
|
|
|
1,168 |
764 |
- |
- |
- |
2,500 |
|
- |
- |
- |
- |
- |
767 |
|
15 |
14 |
- |
- |
- |
730 |
|
- |
- |
- |
362 |
- |
1,778 |
|
4 |
157 |
- |
- |
1 |
247 |
|
- |
20 |
10 |
- |
- |
201 |
|
791 |
11 |
- |
- |
- |
909 |
|
1,848 |
- |
- |
- |
- |
1,987 |
|
176 |
- |
- |
- |
- |
33,727 |
|
46,367 |
37 |
554 |
4,399 |
397 |
86,198 |
|
71 |
- |
- |
- |
- |
101 |
|
503 |
114 |
24 |
387 |
314 |
2,780 |
|
- |
- |
72 |
40 |
7 |
1,104 |
|
621 |
79 |
146 |
1,733 |
29 |
4,289 |
|
4,472 |
- |
- |
- |
- |
4,473 |
|
129 |
19 |
901 |
(2,212) |
266 |
- |
|
56,165 |
1,215 |
1,707 |
4,709 |
1,014 |
141,791 |
|
|
|
|
|
|
|
|
1,485 |
- |
- |
- |
737 |
11,737 |
|
46,496 |
- |
- |
- |
47 |
66,355 |
|
- |
- |
- |
- |
- |
319 |
|
- |
- |
- |
6,456 |
- |
6,456 |
|
- |
1 |
687 |
- |
- |
2,783 |
|
24 |
2 |
26 |
- |
- |
198 |
|
352 |
- |
- |
- |
- |
367 |
|
184 |
- |
21 |
- |
- |
424 |
|
23 |
3 |
48 |
- |
- |
205 |
|
774 |
212 |
46 |
427 |
8 |
4,068 |
|
- |
- |
- |
- |
- |
34,540 |
|
- |
- |
- |
38 |
- |
1,174 |
|
4,294 |
- |
- |
- |
- |
4,294 |
|
314 |
581 |
357 |
(2,212) |
- |
- |
|
53,946 |
799 |
1,185 |
4,709 |
792 |
132,920 |
|
2,219 |
416 |
522 |
- |
222 |
8,871 |
|
|
|
|
|
|
|
|
2,219 |
418 |
522 |
- |
222 |
7,062 |
|
- |
(2) |
- |
- |
- |
1,809 |
|
- |
(2) |
- |
- |
- |
1,536 |
|
- |
- |
- |
- |
- |
273 |
|
|
|
|
|
|
|
|
2,219 |
416 |
522 |
- |
222 |
8,871 |
B: Segment information continued
B4: Statement of financial position - segment information at 31 December 2014
|
|
|
|
|
|
|
|
Notes |
|
Emerging Markets |
Nedbank |
|
Assets |
|
|
|
|
|
Goodwill and other intangible assets |
F1 |
|
275 |
452 |
|
Mandatory reserve deposits with central banks |
|
|
- |
829 |
|
Property, plant and equipment |
|
|
304 |
432 |
|
Investment property |
|
|
1,290 |
7 |
|
Deferred tax assets |
|
|
87 |
17 |
|
Investments in associated undertakings and joint ventures |
|
|
61 |
426 |
|
Deferred acquisition costs |
|
|
100 |
- |
|
Reinsurers' share of policyholder liabilities |
E3 |
|
132 |
7 |
|
Loans and advances |
E2 |
|
909 |
33,773 |
|
Investments and securities |
|
|
29,584 |
6,359 |
|
Current tax receivable |
|
|
11 |
16 |
|
Trade, other receivables and other assets |
|
|
622 |
585 |
|
Derivative financial instruments |
|
|
239 |
849 |
|
Cash and cash equivalents |
|
|
1,024 |
741 |
|
Non-current assets held for sale |
|
|
155 |
1 |
|
Inter-segment assets |
|
|
644 |
305 |
|
Total assets |
|
|
35,437 |
44,799 |
|
Liabilities |
|
|
|
|
|
Long-term business insurance policyholder liabilities |
E3 |
|
9,276 |
232 |
|
Investment contract liabilities |
E3 |
|
19,956 |
653 |
|
Property & casualty liabilities |
E3 |
|
319 |
- |
|
Third-party interests in consolidated funds |
|
|
- |
- |
|
Borrowed funds |
E4 |
|
420 |
1,833 |
|
Provisions and accruals |
|
|
198 |
1 |
|
Deferred revenue |
|
|
22 |
- |
|
Deferred tax liabilities |
|
|
203 |
42 |
|
Current tax payable |
|
|
107 |
7 |
|
Trade, other payables and other liabilities |
|
|
1,845 |
790 |
|
Amounts owed to bank depositors |
|
|
385 |
35,858 |
|
Derivative financial instruments |
|
|
286 |
843 |
|
Non-current liabilities held for sale |
|
|
- |
- |
|
Inter-segment liabilities |
|
|
384 |
615 |
|
Total liabilities |
|
|
33,401 |
40,874 |
|
Net assets |
|
|
2,036 |
3,925 |
|
Equity |
|
|
|
|
|
Equity attributable to equity holders of the parent |
|
|
1,929 |
2,067 |
|
Non-controlling interests |
|
|
107 |
1,858 |
|
Ordinary shares |
|
|
107 |
1,586 |
|
Preferred securities |
|
|
- |
272 |
|
|
|
|
|
|
|
Total equity |
|
|
2,036 |
3,925 |
|
|
|
|
|
|
£m |
|
Old Mutual Wealth |
Institutional Asset Management |
Other |
Consolidation adjustments |
Non-core operations |
Total |
|
|
|
|
|
|
|
|
1,197 |
839 |
- |
- |
- |
2,763 |
|
- |
- |
- |
- |
- |
829 |
|
13 |
16 |
- |
- |
- |
765 |
|
- |
- |
- |
381 |
- |
1,678 |
|
6 |
172 |
- |
- |
1 |
283 |
|
- |
21 |
10 |
- |
- |
518 |
|
746 |
16 |
- |
- |
- |
862 |
|
2,175 |
- |
- |
- |
- |
2,314 |
|
175 |
- |
- |
- |
- |
34,857 |
|
46,631 |
40 |
554 |
4,038 |
341 |
87,547 |
|
64 |
1 |
- |
- |
- |
92 |
|
385 |
134 |
36 |
302 |
298 |
2,362 |
|
- |
- |
71 |
60 |
8 |
1,227 |
|
689 |
130 |
696 |
1,639 |
25 |
4,944 |
|
1,319 |
- |
- |
- |
- |
1,475 |
|
154 |
- |
321 |
(1,615) |
191 |
- |
|
53,554 |
1,369 |
1,688 |
4,805 |
864 |
142,516 |
|
|
|
|
|
|
|
|
291 |
- |
- |
- |
720 |
10,519 |
|
48,188 |
- |
- |
- |
44 |
68,841 |
|
- |
- |
- |
- |
- |
319 |
|
- |
- |
- |
5,986 |
- |
5,986 |
|
- |
114 |
677 |
- |
- |
3,044 |
|
40 |
3 |
42 |
- |
- |
284 |
|
308 |
- |
- |
- |
- |
330 |
|
190 |
- |
19 |
- |
- |
454 |
|
35 |
3 |
37 |
- |
- |
189 |
|
913 |
278 |
76 |
364 |
10 |
4,276 |
|
- |
- |
- |
- |
- |
36,243 |
|
- |
- |
1 |
70 |
1 |
1,201 |
|
1,285 |
- |
- |
- |
- |
1,285 |
|
179 |
144 |
293 |
(1,615) |
- |
- |
|
51,429 |
542 |
1,145 |
4,805 |
775 |
132,971 |
|
2,125 |
827 |
543 |
- |
89 |
9,545 |
|
|
|
|
|
|
|
|
2,125 |
653 |
543 |
- |
89 |
7,406 |
|
- |
174 |
- |
- |
- |
2,139 |
|
- |
174 |
- |
- |
- |
1,867 |
|
- |
- |
- |
- |
- |
272 |
|
|
|
|
|
|
|
|
2,125 |
827 |
543 |
- |
89 |
9,545 |
C: Other key performance information
C1: Operating profit adjusting items
(a) Summary of adjusting items for determination of adjusted operating profit (AOP)
In determining the AOP of the Group for core operations, certain adjustments are made to profit before tax to reflect the directors' view of the underlying long-term performance of the Group. The following table shows an analysis of those adjustments from AOP to profit before and after tax.
|
|
|
£m |
||
|
|
Notes |
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 December 2014 |
|
(Expense)/income |
|
|
|
|
|
Goodwill impairment and impact of acquisition accounting |
C1(b) |
(171) |
(181) |
(128) |
|
Profit/(loss) on disposal of subsidiaries, associated undertakings and strategic investments |
C1(c) |
2 |
(10) |
(2) |
|
Short-term fluctuations in investment return |
C1(d) |
(15) |
(15) |
(49) |
|
Investment return adjustment for Group equity and debt instruments held in life funds |
C1(e) |
(26) |
2 |
(42) |
|
Dividends declared to holders of perpetual preferred callable securities |
C1(f) |
15 |
16 |
32 |
|
Institutional Asset Management equity plans |
C1(g) |
(6) |
(9) |
(42) |
|
Credit-related fair value losses on Group debt instruments |
C1(h) |
(19) |
(39) |
(10) |
|
Restructuring costs |
C1(i) |
(40) |
(19) |
(60) |
|
Total adjusting items |
|
(260) |
(255) |
(301) |
|
Tax on adjusting items |
|
27 |
28 |
36 |
|
Non-controlling interest in adjusting items |
|
8 |
12 |
28 |
|
Total adjusting items after tax and non-controlling interests |
|
(225) |
(215) |
(237) |
(b) Goodwill impairment and impact of acquisition accounting
When applying acquisition accounting, deferred acquisition costs and deferred revenue existing at the point of acquisition are not recognised under IFRS. These are reversed on acquisition in the statement of financial position and replaced by goodwill, other intangible assets and the value of the acquired present value of in-force business (acquired PVIF). In determining AOP, the Group recognises deferred revenue and acquisition costs and deferred revenue in relation to policies sold by acquired businesses pre-acquisition. The Group excludes the impairment of goodwill, the amortisation and impairment of acquired other intangibles and acquired PVIF as well as the movements in certain acquisition date provisions. Costs incurred on completed acquisitions are also excluded from AOP. If the intangible assets recognised as a result of a business combination are subsequently impaired, this is excluded from AOP. The effect of these adjustments to determine AOP are summarised below:
|
|
|
|
|
£m |
|
Six months ended 30 June 2015 |
|
Emerging Markets |
Old Mutual Wealth |
Total |
|
Impairment of goodwill and other intangible assets |
|
- |
(94) |
(94) |
|
Amortisation of acquired PVIF |
|
(5) |
(27) |
(32) |
|
Amortisation of acquired deferred costs and revenue |
|
- |
7 |
7 |
|
Amortisation of other acquired intangible assets |
|
(7) |
(26) |
(33) |
|
Acquisition costs |
|
(3) |
(9) |
(12) |
|
Deferred consideration |
|
- |
(7) |
(7) |
|
|
|
(15) |
(156) |
(171) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m |
|
Six months ended 30 June 2014 |
|
Emerging Markets |
Old Mutual Wealth |
Total |
|
Impairment of goodwill and other intangible assets |
|
- |
(125) |
(125) |
|
Amortisation of acquired PVIF |
|
- |
(37) |
(37) |
|
Amortisation of acquired deferred costs and revenue |
|
- |
5 |
5 |
|
Amortisation of other acquired intangible assets |
|
(1) |
(22) |
(23) |
|
Change in acquisition date provisions |
|
- |
(1) |
(1) |
|
|
|
(1) |
(180) |
(181) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
£m |
|
Year ended 31 December 2014 |
|
Emerging Markets |
Old Mutual Wealth |
Total |
|
Impairment of goodwill and other intangible assets |
|
- |
(14) |
(14) |
|
Amortisation of acquired PVIF |
|
(3) |
(67) |
(70) |
|
Amortisation of acquired deferred costs and revenue |
|
- |
11 |
11 |
|
Amortisation of other acquired intangible assets |
|
(7) |
(47) |
(54) |
|
Change in acquisition date provisions |
|
- |
(1) |
(1) |
|
|
|
(10) |
(118) |
(128) |
(c) Profit/(loss) on disposal of subsidiaries, associated undertakings and strategic investments
Profit/(loss) on disposal of subsidiaries, associated undertakings and strategic investments is analysed below:
|
|
|
|
£m |
|
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 December 2014 |
|
Emerging Markets |
- |
4 |
66 |
|
Old Mutual Wealth |
1 |
(15) |
(70) |
|
Institutional Asset Management |
1 |
1 |
2 |
|
Profit/(loss) on disposal of subsidiaries, associated undertakings and strategic investments |
2 |
(10) |
(2) |
Emerging Markets
Prior period transactions
On 30 April 2014, following the termination of the management agreement with SA Corporate Real Estate Fund, a JSE listed real estate trust, the Group agreed to sell and transfer the business to the new manager when the transaction became unconditional. A profit of £4 million was recognised in profit or loss for the period.
On 1 September 2014, the Group completed the acquisition of an additional 25% stake in Old Mutual Finance (Pty) Ltd. The accounting related to the step up in ownership from 50% to 75% effectively involved a simultaneous sale of 50% of the business, followed by an acquisition of the fair value of 75% of the business. Consequently a profit of £62 million was realised on the transaction, calculated as the difference between the fair value of the initial 50% and the carrying amount of the investment in Old Mutual Finance (Pty) Ltd at 1 September 2014.
Old Mutual Wealth
Current period transactions
On 2 February 2015, the Group completed the sale of Skandia Luxembourg and Skandia France, part of Old Mutual Wealth. The Group has recognised a profit on disposal of £1 million, which comprises a loss on disposing the net assets of the sold business of £29 million and a gain of £30 million recycled from foreign currency translation reserve.
Prior period transactions
On 30 May 2014, the Group completed the disposal of Skandia Poland, part of Old Mutual Wealth. For the year ended 31 December 2014, a loss on disposal of £21 million was recognised in profit or loss. For the six months ended 30 June 2014, a provisional loss of £15 million was recognised in profit or loss.
On 1 October 2014, the Group completed the disposal of Skandia Austria and Skandia Germany. A loss on disposal of £43 million was recognised in profit or loss.
On 6 November 2014, the Group completed the disposal of Skandia Liechtenstein. A loss on disposal of £6 million was recognised in profit or loss.
Institutional Asset Management
Current period transactions
During the six months ended 30 June 2015, the Group received additional earn-out income of £1 million (six months ended 30 June 2014: £nil; year ended 31 December 2014: £2 million) from earn-outs on affiliates disposed of in prior periods.
Prior period transactions
During the six months ended 30 June 2014, the Group released a £1 million accrual relating to the disposal of Echo Point which was effective during the year ended 31 December 2013.
C: Other key performance information continued
C1: Operating profit adjusting items continued
(d) Short-term fluctuations in investment return
Profit before tax, as disclosed in the consolidated IFRS income statement, includes actual investment returns earned on the shareholder assets of the Group's life assurance and property & casualty businesses. AOP is stated after recalculating shareholder asset investment returns based on a long-term investment return rate. The difference between the actual and the long-term investment returns is referred to as the short-term fluctuation in investment return.
Long-term rates of return are based on achieved rates of return appropriate to the underlying asset base, adjusted for current inflation expectations, default assumptions, costs of investment management and consensus economic investment forecasts. The underlying rates are principally derived with reference to 10-year government bond rates, cash and money market rates and an explicit equity risk premium for South African businesses. The rates set out below reflect the apportionment of underlying investments in cash deposits, money market instruments and equity assets. Long-term rates of return are reviewed annually by the Board for appropriateness. The review of the long-term rates of return seeks to ensure that the returns credited to AOP are consistent with the actual returns expected to be earned over the long-term.
For Emerging Markets, the return is applied to an average value of investible shareholders' assets, adjusted for net fund flows. For Old Mutual Wealth, the return is applied to average investible assets.
|
|
|
|
% |
|
Long-term investment rates |
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 December 2014 |
|
Emerging Markets |
|
|
|
|
Mutual & Federal1 |
7.4 |
7.4 |
7.4 |
|
Old Mutual South Africa |
8.0 |
8.0 |
8.0 |
|
Rest of Africa |
8.5 |
8.0 |
8.0 |
|
Old Mutual Wealth |
1.0 |
1.0 |
1.0 |
1 The long-term investments rate of Mutual & Federal relates to the South African businesses only.
Analysis of short-term fluctuations in investment return
|
|
||||
|
|
£m |
|||
|
Six months ended 30 June 2015 |
Emerging Markets |
Old Mutual Wealth |
Other |
Total |
|
Actual shareholder investment return |
57 |
(2) |
8 |
63 |
|
Less: Long-term investment return |
64 |
3 |
11 |
78 |
|
Short-term fluctuations in investment return |
(7) |
(5) |
(3) |
(15) |
|
|
|
|
|
|
|
|
£m |
|||
|
Six months ended 30 June 2014 |
Emerging Markets |
Old Mutual Wealth |
Other |
Total |
|
Actual shareholder investment return |
44 |
8 |
10 |
62 |
|
Less: Long-term investment return |
61 |
3 |
13 |
77 |
|
Short-term fluctuations in investment return |
(17) |
5 |
(3) |
(15) |
|
|
|
|
|
|
|
|
£m |
|||
|
Year ended 31 December 2014 |
Emerging Markets |
Old Mutual Wealth |
Other |
Total |
|
Actual shareholder investment return |
64 |
23 |
16 |
103 |
|
Less: Long-term investment return |
123 |
5 |
24 |
152 |
|
Short-term fluctuations in investment return |
(59) |
18 |
(8) |
(49) |
(e) Investment return adjustment for Group equity and debt instruments held in policyholder funds
AOP includes investment returns on policyholder investments in Group equity and debt instruments held by the Group's life funds. These include investments in the Company's ordinary shares and the subordinated liabilities and ordinary shares issued by the Group. These investment returns are eliminated within the consolidated income statement in arriving at profit before tax in the IFRS income statement, but are included in AOP. This ensures consistency of treatment with the measures in the related policyholder liability. During the six months ended 30 June 2015, the investment return adjustment increased AOP by £26 million (six months ended 30 June 2014: decrease of £2 million; year ended 31 December 2014: increase of £42 million).
(f) Dividends declared to holders of perpetual preferred callable securities
Dividends declared to the holders of the Group's perpetual preferred callable securities on an AOP basis were £15 million for the six months ended 30 June 2015 (six months ended 30 June 2014: £16 million; year ended 31 December 2014: £32 million). For the purpose of determining AOP, these are recognised in finance costs on an accrual basis. In accordance with IFRS, the total cash distribution is recognised directly in equity.
(g) Institutional Asset Management equity plans
Institutional Asset Management has a number of long-term incentive arrangements with senior employees in its asset management affiliates.
As part of the incentive schemes in the Institutional Asset Management business, the Group has granted put options over the equity of certain affiliates to senior affiliate employees. The impact of revaluing these instruments is recognised in accordance with IFRS, but excluded from AOP. At 30 June 2015, these instruments were revalued, the impact of which was a loss of £6 million (six months ended 30 June 2014: loss of £9 million: year ended 31 December 2014: loss of £42 million).
(h) Credit-related fair value losses on Group debt instruments
The widening of the credit spread on the Group's debt instruments can cause the market value of these instruments to decrease, resulting in gains being recognised in profit or loss. Conversely, if the credit spread narrows the market value of debt instruments will increase causing losses to be recognised in the consolidated income statement. In the directors' view, such movements are not reflective of the underlying performance of the Group and will reverse over time. Therefore they have been excluded from AOP. For the six months ended 30 June 2015, due to narrowing of credit spreads, a net loss of £19 million was recognised (six months ended 30 June 2014: net loss of £39 million; year ended 31 December 2014: net loss of £10 million).
(i) Old Mutual Wealth restructuring expenditure
The Old Mutual Wealth business embarked on a significant programme of operational change in 2013. This will fundamentally restructure the way in which its UK platform business operates. Over the next two years, it will migrate certain elements of service provision to International Financial Data Services (IFDS). Costs related to decommissioning of existing technology and service provision and the migration of service to IFDS are excluded from AOP. These costs comprise payments to IFDS and are directly attributable to internal project costs and totalled £40 million for the six months ended 30 June 2015 (six months ended 30 June 2014: £19 million; year ended 31 December 2014: £60 million).
C2: Earnings and earnings per share
The Group calculates earnings per share (EPS) on a number of different bases as appropriate to prevailing international, UK and South African practices and guidance. IFRS requires the calculation of basic and diluted EPS. Adjusted operating EPS reflects earnings per share that is consistent with the Group's alternative profit measure. JSE Limited (JSE) listing requirements also require the Group to calculate headline EPS. The Group's EPS on these different bases are summarised below:
|
|
|
|
|
|
Pence |
|
|
Source of guidance |
Notes |
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 December 2014 |
|
Basic earnings per share |
IFRS |
C2(a) |
5.4 |
4.5 |
12.4 |
|
Diluted basic earnings per share |
IFRS |
C2(b) |
5.0 |
4.1 |
11.5 |
|
Adjusted operating earnings per share |
Group policy |
C2(c) |
10.3 |
8.8 |
17.9 |
|
|
|
|
|
|
|
|
Headline earnings per share (Gross of tax) |
JSE Listing Requirements |
C2(d) |
7.4 |
7.5 |
12.3 |
|
Headline earnings per share (Net of tax) |
JSE Listing Requirements |
C2(d) |
7.4 |
7.6 |
12.6 |
|
|
|
|
|
|
|
|
Diluted headline earnings per share (Gross of tax) |
JSE Listing Requirements |
C2(d) |
6.9 |
6.9 |
11.4 |
|
Diluted headline earnings per share (Net of tax) |
JSE Listing Requirements |
C2(d) |
6.9 |
7.0 |
11.6 |
C: Other key performance information continued
C2: Earnings per share continued
(a) Basic earnings per share
Basic earnings per share is calculated by dividing the profit for the financial period attributable to ordinary equity shareholders by the weighted average number of ordinary shares in issue during the year excluding own shares held in policyholder funds, Employee Share Ownership Plan Trusts (ESOP), Black Economic Empowerment trusts and other related undertakings.
The table below reconciles the profit attributable to equity holders of the parent to profit attributable to ordinary equity holders:
|
|
|
|
|
£m |
|
|
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 December 2014 |
|
Profit for the financial period attributable to equity holders of the parent from continuing operations |
|
281 |
223 |
632 |
|
Loss for the financial period attributable to equity holders of the parent from discontinued operations |
|
(21) |
(10) |
(50) |
|
Profit for the financial period attributable to equity holders of the parent |
|
260 |
213 |
582 |
|
Dividends paid to holders of perpetual preferred callable securities, net of tax credits |
|
(14) |
(14) |
(25) |
|
Profit attributable to ordinary equity holders |
|
246 |
199 |
557 |
Total dividends paid to holders of perpetual preferred callable securities of £14 million for the six months ended 30 June 2015 (six months ended 30 June 2014: £14 million; year ended 31 December 2014: £25 million) are stated net of tax credits of £3 million (six months ended 30 June 2014 £3 million; year ended 31 December 2014: £7 million).
The table below summarises the calculation of the weighted average number of ordinary shares for the purposes of calculating basic earnings per share:
|
|
|
|
|
Millions |
|
|
Notes |
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 December 2014 |
|
Weighted average number of ordinary shares in issue |
|
4,920 |
4,897 |
4,901 |
|
Shares held in charitable foundations |
|
(6) |
(6) |
(6) |
|
Shares held in ESOP trusts |
|
(59) |
(51) |
(50) |
|
Adjusted weighted average number of ordinary shares |
C2(c) |
4,855 |
4,840 |
4,845 |
|
Shares held in life funds |
|
(80) |
(141) |
(127) |
|
Shares held in Black Economic Empowerment trusts |
|
(177) |
(237) |
(233) |
|
Weighted average number of ordinary shares used to calculate basic earnings per share |
|
4,598 |
4,462 |
4,485 |
|
|
|
|
|
|
|
Basic earnings per ordinary share (pence) |
|
5.4 |
4.5 |
12.4 |
(b) Diluted basic earnings per share
Diluted basic EPS recognises the dilutive impact of shares and options held in ESOP trusts and Black Economic Empowerment trusts, to the extent they have value, in the calculation of the weighted average number of shares, as if the relevant shares were in issue for the full period.
The table below reconciles the profit attributable to ordinary equity holders to diluted profit attributable to ordinary equity holders and summarises the calculation of weighted average number of shares for the purpose of calculating diluted basic earnings per share:
|
|
|
|
|
|
|
|
Notes |
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 December 2014 |
|
Profit attributable to ordinary equity holders (£m) |
|
246 |
199 |
557 |
|
Dilution effect on profit relating to share options issued by subsidiaries (£m) |
|
(5) |
(4) |
(10) |
|
Diluted profit attributable to ordinary equity holders (£m) |
|
241 |
195 |
547 |
|
Weighted average number of ordinary shares (millions) |
C2(a) |
4,598 |
4,462 |
4,485 |
|
Adjustments for share options held by ESOP trusts (millions) |
|
36 |
59 |
48 |
|
Adjustments for shares held in Black Economic Empowerment trusts (millions) |
|
177 |
237 |
233 |
|
Weighted average number of ordinary shares used to calculate diluted basic earnings per share (millions) |
|
4,811 |
4,758 |
4,766 |
|
|
|
|
|
|
|
Diluted basic earnings per ordinary share (pence) |
|
5.0 |
4.1 |
11.5 |
(c) Adjusted operating earnings per share
The following table presents a reconciliation of profit for the financial period to adjusted operating profit after tax attributable to ordinary equity holders and summarises the calculation of adjusted operating earnings per share:
|
|
|
|
|
|
|
|
Notes |
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 December 2014 |
|
Profit for the financial period attributable to equity holders of the parent |
|
260 |
213 |
582 |
|
Adjusting items |
C1(a) |
260 |
255 |
301 |
|
Tax on adjusting items |
|
(27) |
(28) |
(36) |
|
Non-core operations |
B3 |
(4) |
(14) |
(1) |
|
Loss from discontinued operations |
H1 |
21 |
10 |
50 |
|
Non-controlling interest on adjusting items |
|
(8) |
(12) |
(28) |
|
Adjusted operating profit after tax attributable to ordinary equity holders (£m) |
|
502 |
424 |
868 |
|
Adjusted weighted average number of ordinary shares used to calculate adjusted operating earnings per share (millions) |
C2(a) |
4,855 |
4,840 |
4,845 |
|
|
|
|
|
|
|
Adjusted operating earnings per share (pence) |
|
10.3 |
8.8 |
17.9 |
C: Other key performance information continued
C2: Earnings per share continued
(d) Headline earnings per share
The Group is required to calculate headline earnings per share (HEPS) in accordance with the JSE Limited (JSE) Listing Requirements, determined by reference to the South African Institute of Chartered Accountants' circular 02/2013 (Revised) 'Headline Earnings'. The table below sets out a reconciliation of basic EPS and HEPS in accordance with that circular. Disclosure of HEPS is not a requirement of IFRS, but it is a commonly used measure of earnings in South Africa. The table below reconciles the profit for the financial year attributable to equity holders of the parent to headline earnings and summarises the calculation of basic HEPS:
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 December 2014 |
|||
|
|
Notes |
Gross |
Net |
Gross |
Net |
Gross |
Net |
|
Profit for the financial period attributable to equity holders of the parent |
|
260 |
260 |
213 |
213 |
582 |
582 |
|
Dividends paid to holders of perpetual preferred callable securities |
|
(14) |
(14) |
(14) |
(14) |
(25) |
(25) |
|
Profit attributable to ordinary equity holders |
|
246 |
246 |
199 |
199 |
557 |
557 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Impairments of goodwill and other intangible assets |
|
94 |
94 |
125 |
125 |
14 |
14 |
|
(Profit)/loss on disposal of subsidiaries, associated undertakings and strategic investments |
|
(2) |
(2) |
10 |
15 |
2 |
14 |
|
Realised gains (net of impairments) on available-for-sale financial assets |
|
- |
- |
- |
- |
(20) |
(20) |
|
Headline earnings |
|
338 |
338 |
334 |
339 |
553 |
565 |
|
Dilution effect on earnings relating to share options issued by subsidiaries |
|
(5) |
(5) |
(4) |
(4) |
(10) |
(10) |
|
Diluted headline earnings (£m) |
|
333 |
333 |
330 |
335 |
543 |
555 |
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares (millions) |
C2(a) |
4,598 |
4,598 |
4,462 |
4,462 |
4,485 |
4,485 |
|
Diluted weighted average number of ordinary shares (millions) |
C2(b) |
4,811 |
4,811 |
4,758 |
4,758 |
4,766 |
4,766 |
|
|
|
|
|
|
|
|
|
|
Headline earnings per share (pence) |
|
7.4 |
7.4 |
7.5 |
7.6 |
12.3 |
12.6 |
|
Diluted headline earnings per share (pence) |
|
6.9 |
6.9 |
6.9 |
7.0 |
11.4 |
11.6 |
C3: Dividends
|
|
|
|
£m |
|
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 December 2014 |
|
2013 Final dividend paid - 6.00p per 11 3/7p share |
- |
- |
279 |
|
2014 Interim dividend paid - 2.45p per 11 3/7p share |
- |
279 |
115 |
|
2014 Final dividend paid - 6.25p per 11 3/7p share |
296 |
- |
- |
|
Dividends to ordinary equity holders |
296 |
279 |
394 |
|
Dividends paid to holders of perpetual preferred callable securities |
17 |
17 |
32 |
|
Dividend payments for the period |
313 |
296 |
426 |
Final and interim dividends paid to ordinary equity holders are calculated using the number of shares in issue at the record date less own shares held in ESOP trusts, life funds of Group entities, Black Economic Empowerment trusts and related undertakings.
As a consequence of the exchange control arrangements in place in certain African territories, dividends to ordinary equity holders on the branch registers of those countries (or, in the case of Namibia, the Namibian section of the principal register) are settled through Dividend Access Trusts established for that purpose.
An interim dividend of 2.65 pence (or its equivalent in other applicable currencies) per ordinary share in the Company has been recommended by the directors in relation to the six months ended 30 June 2015. The interim dividend will be paid on 30 October 2015 to shareholders on the registers at the close of business on 25 September 2015. The Company is not offering a scrip dividend alternative.
In March 2015, £17 million was declared and paid to holders of perpetual preferred callable securities (March 2014: £17 million, November 2014: £15 million).
D: Other income statement notes
D1: Income tax expense
(a) Analysis of total income tax expense
|
|
|
|
£m |
|
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 December 2014 |
|
Current tax |
|
|
|
|
United Kingdom |
24 |
7 |
19 |
|
Overseas tax |
|
|
|
|
- Africa |
166 |
180 |
336 |
|
- Europe |
9 |
4 |
32 |
|
- Rest of the world |
18 |
- |
5 |
|
Withholding taxes |
5 |
4 |
16 |
|
Adjustments to current tax in respect of prior years |
- |
4 |
31 |
|
Total current tax |
222 |
199 |
439 |
|
Deferred tax |
|
|
|
|
Origination and reversal of temporary differences |
21 |
17 |
43 |
|
Adjustments to deferred tax in respect of prior years |
- |
2 |
(20) |
|
Total deferred tax |
21 |
19 |
23 |
|
Total income tax expense |
243 |
218 |
462 |
(b) Reconciliation of total income tax expense
|
|
|
|
£m |
|
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 December 2014 |
|
Profit before tax |
683 |
564 |
1,364 |
|
Tax at UK standard rate of 20.25% (2014: 21.5%) |
138 |
121 |
293 |
|
Different tax rate or basis on overseas operations |
60 |
41 |
95 |
|
Untaxed and low taxed income |
(30) |
(29) |
(56) |
|
Disallowable expenses |
42 |
38 |
67 |
|
Net movement on deferred tax assets not recognised |
3 |
13 |
7 |
|
Withholding taxes |
2 |
2 |
8 |
|
Income tax attributable to policyholder returns |
28 |
35 |
46 |
|
Other |
- |
(3) |
2 |
|
Total income tax expense |
243 |
218 |
462 |
(c) Income tax relating to components of other comprehensive income
|
|
|
|
£m |
|
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 December 2014 |
|
Measurement gains on defined benefit plans |
- |
- |
1 |
|
Income tax on items that will not be reclassified subsequently to profit or loss |
- |
- |
1 |
|
Income tax on items that may be reclassified subsequently to profit or loss |
- |
3 |
5 |
|
Income tax expense relating to components of other comprehensive income |
- |
3 |
6 |
D: Other income statement notes continued
D1: Income tax expense continued
(d) Reconciliation of income tax expense in the IFRS income statement to income tax on adjusted operating profit
|
|
|
|
£m |
|
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 December 2014 |
|
Income tax expense |
243 |
218 |
462 |
|
Tax on adjusting items |
|
|
|
|
Goodwill impairment and impact of acquisition accounting |
17 |
26 |
15 |
|
(Profit)/loss on disposal of subsidiaries, associates and strategic investments |
- |
(5) |
(11) |
|
Short-term fluctuations in investment return |
(2) |
2 |
6 |
|
Tax on dividends declared to holders of perpetual preferred callable securities recognised in equity |
(3) |
(3) |
(7) |
|
Institutional Asset Management equity plans |
7 |
3 |
20 |
|
Restructuring costs |
8 |
5 |
13 |
|
Total tax on adjusting items |
27 |
28 |
36 |
|
Income tax attributable to policyholders returns |
(35) |
(44) |
(59) |
|
Income tax on adjusted operating profit |
235 |
202 |
439 |
E: Financial assets and liabilities
E1: Group statement of financial position
The Group is exposed to financial risk through its financial assets (investments and loans), financial liabilities (investment contracts, customer deposits and borrowings), derivative financial instruments, reinsurance assets and insurance liabilities. The key focus of financial risk management for the Group is ensuring that the proceeds from its financial assets are sufficient to fund the obligations arising from its insurance and banking operations. The most important components of financial risk are credit risk, market risk (arising from changes in equity and bond prices, interest and foreign exchange rates), and liquidity risk. Note E1 in the 2014 Annual Report and Accounts contains more detail on financial instruments.
(a) Categories of financial instruments
The analysis of assets and liabilities into their categories as defined in IAS 39 'Financial Instruments: Recognition and Measurement' is set out in the following table. Assets and liabilities of a non-financial nature, or financial assets and liabilities that are specifically excluded from the scope of IAS 39, are reflected in the non-financial assets and liabilities category.
|
At 30 June 2015 |
|
|
|
|
|
|
|
£m |
|
Measurement basis |
|
Fair value (note E1(b)) |
Amortised cost
|
|
||||
|
|
Total |
Held-for-trading |
Designated |
Available-for-sale financial assets |
Held-to-maturity investments |
Loans and receivables |
Financial liabilities amortised cost |
Non-financial assets and liabilities |
|
Assets |
|
|
|
|
|
|
|
|
|
Mandatory reserve deposits with central banks |
808 |
- |
- |
- |
- |
808 |
- |
- |
|
Investments in associated undertakings and joint ventures1 |
470 |
- |
54 |
- |
- |
- |
- |
416 |
|
Reinsurers' share of policyholder liabilities |
2,394 |
- |
2,082 |
- |
- |
5 |
- |
307 |
|
Loans and advances |
34,655 |
2,017 |
3,425 |
2 |
- |
29,211 |
- |
- |
|
Investments and securities |
87,033 |
953 |
82,866 |
647 |
2,512 |
55 |
- |
- |
|
Trade, other receivables and other assets |
2,938 |
71 |
288 |
- |
- |
1,565 |
- |
1,014 |
|
Derivative financial instruments |
1,161 |
1,161 |
- |
- |
- |
- |
- |
- |
|
Cash and cash equivalents |
5,034 |
- |
- |
- |
- |
5,034 |
- |
- |
|
Total assets that include financial instruments |
134,493 |
4,202 |
88,715 |
649 |
2,512 |
36,678 |
- |
1,737 |
|
Total other non-financial assets |
7,648 |
- |
- |
- |
- |
- |
- |
7,648 |
|
Total assets |
142,141 |
4,202 |
88,715 |
649 |
2,512 |
36,678 |
- |
9,385 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
Long-term business insurance policyholder liabilities |
9,851 |
- |
- |
- |
- |
- |
- |
9,851 |
|
Investment contract liabilities |
68,786 |
- |
60,905 |
- |
- |
- |
- |
7,881 |
|
Third-party interest in consolidation of funds |
5,678 |
- |
5,678 |
- |
- |
- |
- |
- |
|
Borrowed funds |
3,566 |
- |
802 |
- |
- |
- |
2,764 |
- |
|
Trade, other payables and other liabilities |
5,173 |
704 |
430 |
- |
- |
- |
2,395 |
1,644 |
|
Amounts owed to bank depositors |
36,000 |
4,565 |
2,585 |
- |
- |
- |
28,850 |
- |
|
Derivative financial instruments |
1,161 |
1,161 |
- |
- |
- |
- |
- |
- |
|
Total liabilities that include financial instruments |
130,215 |
6,430 |
70,400 |
- |
- |
- |
34,009 |
19,376 |
|
Total other non-financial liabilities |
2,391 |
- |
- |
- |
- |
- |
- |
2,391 |
|
Total liabilities |
132,606 |
6,430 |
70,400 |
- |
- |
- |
34,009 |
21,767 |
1 Investments in associated undertakings and joint ventures classified as non-financial assets and liabilities are equity accounted.
E: Financial assets and liabilities continued
E1: Group statement of financial position continued
(a) Categories of financial instruments continued
|
|
|
|
|
|
|
|
|
|
|
30 June 2014 |
|
|
|
|
|
|
|
£m |
|
Measurement basis |
|
Fair value (note E1(b)) |
Amortised cost
|
|
||||
|
|
Total |
Held-for-trading |
Designated |
Available-for-sale financial assets |
Held-to-maturity investments |
Loans and receivables |
Financial liabilities amortised cost |
Non-financial assets and liabilities |
|
Assets |
|
|
|
|
|
|
|
|
|
Mandatory reserve deposits with central banks |
767 |
- |
- |
- |
- |
767 |
- |
- |
|
Investments in associated undertakings and joint ventures1 |
201 |
- |
51 |
- |
- |
- |
- |
150 |
|
Reinsurers' share of policyholder liabilities |
1,987 |
- |
1,765 |
- |
- |
17 |
- |
205 |
|
Loans and advances |
33,727 |
2,476 |
3,377 |
3 |
- |
27,871 |
- |
- |
|
Investments and securities |
86,198 |
996 |
83,318 |
678 |
1,116 |
90 |
- |
- |
|
Trade, other receivables and other assets |
2,780 |
129 |
325 |
- |
- |
1,753 |
- |
573 |
|
Derivative financial instruments |
1,104 |
1,104 |
- |
- |
- |
- |
- |
- |
|
Cash and cash equivalents |
4,289 |
- |
- |
- |
- |
4,289 |
- |
- |
|
Total assets that include financial instruments |
131,053 |
4,705 |
88,836 |
681 |
1,116 |
34,787 |
- |
928 |
|
Total other non-financial assets |
10,738 |
- |
- |
- |
- |
- |
- |
10,738 |
|
Total assets |
141,791 |
4,705 |
88,836 |
681 |
1,116 |
34,787 |
- |
11,666 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
Long-term business insurance policyholder liabilities |
11,737 |
- |
- |
- |
- |
- |
- |
11,737 |
|
Investment contract liabilities |
66,355 |
- |
58,732 |
- |
- |
- |
- |
7,623 |
|
Third-party interest in consolidation of funds |
6,456 |
- |
6,456 |
- |
- |
- |
- |
- |
|
Borrowed funds |
2,783 |
- |
686 |
- |
- |
- |
2,097 |
- |
|
Trade, other payables and other liabilities |
4,068 |
199 |
272 |
- |
- |
- |
2,535 |
1,062 |
|
Amounts owed to bank depositors |
34,540 |
3,724 |
3,463 |
- |
- |
- |
27,353 |
- |
|
Derivative financial instruments |
1,174 |
1,174 |
- |
- |
- |
- |
- |
- |
|
Total liabilities that include financial instruments |
127,113 |
5,097 |
69,609 |
- |
- |
- |
31,985 |
20,422 |
|
Total other non-financial liabilities |
5,807 |
- |
- |
- |
- |
- |
- |
5,807 |
|
Total liabilities |
132,920 |
5,097 |
69,609 |
- |
- |
- |
31,985 |
26,229 |
1 Investments in associated undertakings and joint ventures classified as non-financial assets and liabilities are equity accounted.
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2014 |
|
|
|
|
|
|
|
£m |
|
Measurement basis |
|
Fair value (note E1(b)) |
Amortised cost
|
|
||||
|
|
Total |
Held-for-trading |
Designated |
Available-for-sale financial assets |
Held-to-maturity investments |
Loans and receivables |
Financial liabilities amortised cost |
Non-financial assets and liabilities |
|
Assets |
|
|
|
|
|
|
|
|
|
Mandatory reserve deposits with central banks |
829 |
- |
- |
- |
- |
829 |
- |
- |
|
Investments in associated undertakings and joint ventures1 |
518 |
- |
50 |
- |
- |
- |
- |
468 |
|
Reinsurers' share of policyholder liabilities |
2,314 |
- |
2,027 |
- |
- |
12 |
- |
275 |
|
Loans and advances |
34,857 |
1,497 |
3,523 |
2 |
- |
29,835 |
- |
- |
|
Investments and securities |
87,547 |
839 |
83,568 |
754 |
2,325 |
61 |
- |
- |
|
Trade, other receivables and other assets |
2,362 |
117 |
310 |
- |
- |
1,260 |
- |
675 |
|
Derivative financial instruments |
1,227 |
1,227 |
- |
- |
- |
- |
- |
- |
|
Cash and cash equivalents |
4,944 |
- |
- |
- |
- |
4,944 |
- |
- |
|
Total assets that include financial instruments |
134,598 |
3,680 |
89,478 |
756 |
2,325 |
36,941 |
- |
1,418 |
|
Total other non-financial assets |
7,918 |
- |
- |
- |
- |
- |
- |
7,918 |
|
Total assets |
142,516 |
3,680 |
89,478 |
756 |
2,325 |
36,941 |
- |
9,336 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
Long-term business policyholder liabilities |
10,519 |
- |
- |
- |
- |
- |
- |
10,519 |
|
Investment contract liabilities |
68,841 |
- |
60,904 |
- |
- |
- |
- |
7,937 |
|
Third-party interest in consolidation of funds |
5,986 |
- |
5,986 |
- |
- |
- |
- |
- |
|
Borrowed funds |
3,044 |
- |
734 |
- |
- |
- |
2,310 |
- |
|
Trade, other payables and other liabilities |
4,276 |
251 |
341 |
- |
- |
- |
2,217 |
1,467 |
|
Amounts owed to bank depositors |
36,243 |
4,290 |
2,199 |
- |
- |
- |
29,754 |
- |
|
Derivative financial instruments |
1,201 |
1,201 |
- |
- |
- |
- |
- |
- |
|
Total liabilities that include financial instruments |
130,110 |
5,742 |
70,164 |
- |
- |
- |
34,281 |
19,923 |
|
Total other non-financial liabilities |
2,861 |
- |
- |
- |
- |
- |
- |
2,861 |
|
Total liabilities |
132,971 |
5,742 |
70,164 |
- |
- |
- |
34,281 |
22,784 |
1 Investments in associated undertakings and joint ventures classified as non-financial assets and liabilities are equity accounted.
E: Financial assets and liabilities continued
E1: Group statement of financial position continued
(b) Fair value hierarchy
The table below presents the Group's financial assets and liabilities that are measured at fair value in the consolidated statement of financial position according to their IAS 39 classification, as set out in note E1(a), and in terms of the fair value hierarchy as required by IFRS 7 'Financial Instruments: Disclosures'.
|
|
|
|
|
£m |
|
At 30 June 2015 |
Total |
Level 1 |
Level 2 |
Level 3 |
|
Financial assets measured at fair value |
|
|
|
|
|
Held-for-trading (fair value through profit or loss) |
4,202 |
239 |
3,945 |
18 |
|
Loans and advances |
2,017 |
- |
2,017 |
- |
|
Investments and securities |
953 |
167 |
786 |
- |
|
Other financial assets |
71 |
71 |
- |
- |
|
Derivative financial instruments - assets |
1,161 |
1 |
1,142 |
18 |
|
|
|
|
|
|
|
Designated (fair value through profit or loss) |
88,715 |
77,806 |
9,524 |
1,385 |
|
Investments in associated undertakings and joint ventures |
54 |
- |
- |
54 |
|
Reinsurers' share of policyholder liabilities |
2,082 |
2,082 |
- |
- |
|
Loans and advances |
3,425 |
175 |
3,248 |
2 |
|
Investments and securities |
82,866 |
75,261 |
6,276 |
1,329 |
|
Other financial assets |
288 |
288 |
- |
- |
|
|
|
|
|
|
|
Available-for-sale financial assets (fair value through equity) |
649 |
127 |
522 |
- |
|
Loans and advances |
2 |
2 |
- |
- |
|
Investments and securities |
647 |
125 |
522 |
- |
|
|
|
|
|
|
|
Total assets measured at fair value |
93,566 |
78,172 |
13,991 |
1,403 |
|
Financial liabilities measured at fair value |
|
|
|
|
|
Held-for-trading (fair value through profit or loss) |
6,430 |
690 |
5,739 |
1 |
|
Other liabilities |
704 |
686 |
18 |
- |
|
Amounts owed to bank depositors |
4,565 |
- |
4,565 |
- |
|
Derivative financial instruments - liabilities |
1,161 |
4 |
1,156 |
1 |
|
|
|
|
|
|
|
Designated (fair value through profit or loss) |
70,400 |
46,277 |
23,522 |
601 |
|
Investment contract liabilities1 |
60,905 |
45,507 |
14,797 |
601 |
|
Third-party interests in consolidated funds |
5,678 |
- |
5,678 |
- |
|
Borrowed funds |
802 |
726 |
76 |
- |
|
Other liabilities |
430 |
44 |
386 |
- |
|
Amounts owed to bank depositors |
2,585 |
- |
2,585 |
- |
|
|
|
|
|
|
|
Total liabilities measured at fair value |
76,830 |
46,967 |
29,261 |
602 |
1 Investment contract liabilities amount excludes £7,881 million discretionary participating investment contracts. These contracts are classified as non-financial liabilities and are not analysed according to their fair value hierarchy as permitted by IFRS 7 'Financial Instruments: Disclosures'.
|
|
|
|
|
£m |
|
At 30 June 2014 |
Total |
Level 1 |
Level 2 |
Level 3 |
|
Financial assets measured at fair value |
|
|
|
|
|
Held-for-trading (fair value through profit or loss) |
4,705 |
329 |
4,368 |
8 |
|
Loans and advances |
2,476 |
- |
2,476 |
- |
|
Investments and securities |
996 |
196 |
799 |
1 |
|
Other financial assets |
129 |
129 |
- |
- |
|
Derivative financial instruments - assets |
1,104 |
4 |
1,093 |
7 |
|
|
|
|
|
|
|
Designated (fair value through profit or loss) |
88,836 |
74,992 |
12,174 |
1,670 |
|
Investments in associated undertakings and joint ventures |
51 |
- |
- |
51 |
|
Reinsurers' share of policyholder liabilities |
1,765 |
1,765 |
- |
- |
|
Loans and advances |
3,377 |
1 |
3,374 |
2 |
|
Investments and securities |
83,318 |
72,901 |
8,800 |
1,617 |
|
Other financial assets |
325 |
325 |
- |
- |
|
|
|
|
|
|
|
Available-for-sale financial assets (fair value through equity) |
681 |
195 |
485 |
1 |
|
Loans and advances |
3 |
3 |
- |
- |
|
Investments and securities |
678 |
192 |
485 |
1 |
|
|
|
|
|
|
|
Total assets measured at fair value |
94,222 |
75,516 |
17,027 |
1,679 |
|
Financial liabilities measured at fair value |
|
|
|
|
|
Held-for-trading (fair value through profit or loss) |
5,097 |
196 |
4,901 |
- |
|
Other liabilities |
199 |
190 |
9 |
- |
|
Amounts owed to bank depositors |
3,724 |
- |
3,724 |
- |
|
Derivative financial instruments - liabilities |
1,174 |
6 |
1,168 |
- |
|
|
|
|
|
|
|
Designated (fair value through profit or loss) |
69,609 |
45,265 |
23,540 |
804 |
|
Investment contract liabilities1 |
58,732 |
44,611 |
13,317 |
804 |
|
Third-party interests in consolidated funds |
6,456 |
- |
6,456 |
- |
|
Borrowed funds |
686 |
606 |
80 |
- |
|
Other liabilities |
272 |
48 |
224 |
- |
|
Amounts owed to bank depositors |
3,463 |
- |
3,463 |
- |
|
|
|
|
|
|
|
Total liabilities measured at fair value |
74,706 |
45,461 |
28,441 |
804 |
1 Investment contract liabilities amount excludes £7,623 million discretionary participating investment contracts. These contracts are classified as non-financial liabilities and are not analysed according to their fair value hierarchy as permitted by IFRS 7 'Financial Instruments: Disclosures'.
E: Financial assets and liabilities continued
E1: Group statement of financial position continued
(b) Fair value hierarchy continued
|
|
|
|
|
£m |
|
At 31 December 2014 |
Total |
Level 1 |
Level 2 |
Level 3 |
|
Financial assets measured at fair value |
|
|
|
|
|
Held-for-trading (fair value through profit or loss) |
3,680 |
373 |
3,299 |
8 |
|
Loans and advances |
1,497 |
- |
1,497 |
- |
|
Investments and securities |
839 |
254 |
585 |
- |
|
Other financial assets |
117 |
117 |
- |
- |
|
Derivative financial instruments - assets |
1,227 |
2 |
1,217 |
8 |
|
|
|
|
|
|
|
Designated (fair value through profit or loss) |
89,478 |
73,554 |
14,320 |
1,604 |
|
Investments in associated undertakings and joint ventures |
50 |
- |
- |
50 |
|
Reinsurers' share of policyholder liabilities |
2,027 |
2,027 |
- |
- |
|
Loans and advances |
3,523 |
177 |
3,344 |
2 |
|
Investments and securities |
83,568 |
71,040 |
10,976 |
1,552 |
|
Other financial assets |
310 |
310 |
- |
- |
|
|
|
|
|
|
|
Available-for-sale financial assets (fair value through equity) |
756 |
137 |
618 |
1 |
|
Loans and advances |
2 |
2 |
- |
- |
|
Investments and securities |
754 |
135 |
618 |
1 |
|
|
|
|
|
|
|
Total assets measured at fair value |
93,914 |
74,064 |
18,237 |
1,613 |
|
Financial liabilities measured at fair value |
|
|
|
|
|
Held-for-trading (fair value through profit or loss) |
5,742 |
245 |
5,497 |
- |
|
Other liabilities |
251 |
243 |
8 |
- |
|
Amounts owed to bank depositors |
4,290 |
- |
4,290 |
- |
|
Derivative financial instruments - liabilities |
1,201 |
2 |
1,199 |
- |
|
|
|
|
|
|
|
Designated (fair value through profit or loss) |
70,164 |
44,274 |
25,136 |
754 |
|
Investment contract liabilities1 |
60,904 |
43,571 |
16,579 |
754 |
|
Third-party interests in consolidated funds |
5,986 |
- |
5,986 |
- |
|
Borrowed funds |
734 |
653 |
81 |
- |
|
Other liabilities |
341 |
50 |
291 |
- |
|
Amounts owed to bank depositors |
2,199 |
- |
2,199 |
- |
|
|
|
|
|
|
|
Total liabilities measured at fair value |
75,906 |
44,519 |
30,633 |
754 |
1 Investment contract liabilities amount excludes £7,937 million discretionary participating investment contracts. These contracts are classified as non-financial liabilities and are not analysed according to their fair value hierarchy as permitted by IFRS 7 'Financial Instruments: Disclosures'.
(c) Determination of fair value
The best evidence of fair value is a quoted price in an active market. In the event that the market for a financial asset or liability is not active, or quoted prices cannot be obtained without undue effort, another valuation technique is used.
The judgement as to whether a market is active may include, for example, consideration of factors such as the magnitude and frequency of trading activity, the availability of prices and the size of bid/offer spreads. In inactive markets, obtaining assurance that the transaction price provides evidence of fair value or determining the adjustments to transaction prices that are necessary to measure the fair value of the asset or liability requires additional work during the valuation process.
The majority of valuation techniques employ only observable data and so the reliability of the fair value measurement is high. However, certain financial assets and liabilities are valued on the basis of valuation techniques that feature one or more significant inputs that are unobservable and, for them, the derivation of fair value is more judgemental. A financial asset or liability in its entirety is classified as valued using significant unobservable inputs if a significant proportion of that asset or liability's carrying amount is driven by unobservable inputs.
In this context, 'unobservable' means that there is little or no current market data available for which to determine the price at which an arm's length transaction would be likely to occur. It generally does not mean that there is no market data available at all upon which to base a determination of fair value. Furthermore, in some cases the majority of the fair value derived from a valuation technique with significant unobservable data may be attributable to observable inputs. Consequently, the effect of uncertainty in determining unobservable inputs will generally be restricted to uncertainty about the overall fair value of the asset or liability being measured. Details of the Group's valuation techniques can be found in note E1(q) (iii) of the 2014 Annual Report and Accounts. There have been no significant changes to the valuation techniques applied.
There have been no significant transfers between Level 1 and 2 financial instruments during the period.
Financial assets and liabilities carried at amortised cost have fair values that are similar to their carrying amounts. Such assets and liabilities primarily comprise variable-rate financial assets and liabilities that re-price as interest rates change, short-term deposits or current assets. Note E1(p)(i) in the 2014 Annual Report and Accounts provides further information.
The following is taken into account when evaluating the fair value of financial instruments:
§ Assessing whether instruments are trading with sufficient frequency and volume, that they can be considered liquid
§ The inclusion of a measure of the counterparties non-performance risk in the fair-value measurement of loans and advances, which involves the modelling of dynamic credit spreads
§ The inclusion of credit valuation adjustment (CVA) and debit valuation adjustment (DVA) in the fair-value measurement of derivative instruments, with particular emphasis on DVA and
§ The inclusion of own credit risk in the calculation of the fair value of financial liabilities.
(d) Movements in financial instruments measured at Level 3 in terms of the hierarchy
The fair values of Level 3 financial instruments are based on valuation techniques that rely largely on unobservable market inputs and require a significant level of judgement. As such, the fair values of Level 3 financial instruments are often less reliable than Level 1 and Level 2 financial instruments. Movements in the fair values of Level 3 instruments are generally due to movements in key assumptions and macroeconomic factors.
The tables below reconcile the opening balances of Level 3 financial assets and to closing balances at the end of the period:
|
|
|
|
|
|
|
£m |
|
|
Held-for-trading |
Designated fair value through profit or loss |
Available-for-sale |
Total |
||
|
Six months ended 30 June 2015 |
Derivatives |
Investments in associated undertakings and joint ventures |
Loans and advances |
Investments and securities |
Investments and securities |
|
|
Level 3 financial assets |
|
|
|
|
|
|
|
At beginning of the period |
8 |
50 |
2 |
1,552 |
1 |
1,613 |
|
Total net fair value gains recognised in the profit or loss for the period |
- |
2 |
- |
2 |
- |
4 |
|
Purchases and issues |
11 |
5 |
- |
143 |
- |
159 |
|
Sales and settlements |
- |
- |
- |
(309) |
(1) |
(310) |
|
Transfers in |
- |
- |
- |
48 |
- |
48 |
|
Transfers out |
- |
- |
- |
(59) |
- |
(59) |
|
Foreign exchange and other |
(1) |
(3) |
- |
(48) |
- |
(52) |
|
Total level 3 financial assets |
18 |
54 |
2 |
1,329 |
- |
1,403 |
|
|
|
|
|
|
|
|
|
Fair value gains/(losses) relating to assets held at 30 June 2015 recognised in profit or loss |
- |
2 |
- |
(14) |
- |
(12) |
|
|
|
|
|
|
|
|
|
£m |
|
Six months ended 30 June 2015 |
Held-for-trading - Derivatives |
Designated fair value through profit or loss - Investment contract liabilities |
Total |
|
Level 3 financial liabilities |
|
|
|
|
At beginning of the period |
- |
754 |
754 |
|
Total net fair value gains recognised in profit or loss for the period |
- |
(38) |
(38) |
|
Purchases and issues |
- |
65 |
65 |
|
Sales and settlements |
- |
(228) |
(228) |
|
Transfers in |
1 |
48 |
49 |
|
Total level 3 financial liabilities |
1 |
601 |
602 |
|
|
|
|
|
|
Fair value gains relating to liabilities held at 30 June 2015 recognised in profit or loss |
- |
(38) |
(38) |
E: Financial assets and liabilities continued
E1: Group statement of financial position continued
(d) Movements in financial instruments measured at Level 3 in terms of the hierarchy continued
|
|
|
|
|
|
|
£m |
|
|
|
Held-for-trading |
Designated at fair value through profit or loss |
Available- for-sale |
Total |
|||
|
Six months ended 30 June 2014 |
Investments and securities |
Derivatives |
Investments in associated undertakings and joint ventures |
Loans and advances |
Investments and securities |
Investments and securities |
|
|
Level 3 financial assets |
|
|
|
|
|
|
|
|
At beginning of the period |
3 |
8 |
49 |
2 |
1,708 |
2 |
1,772 |
|
Total net fair value (losses)/gains recognised in the profit or loss for the period |
(1) |
(1) |
- |
- |
20 |
- |
18 |
|
Purchases and issues |
- |
- |
- |
- |
73 |
- |
73 |
|
Sales and settlements |
- |
- |
- |
- |
(188) |
(1) |
(189) |
|
Transfers in |
- |
- |
- |
- |
57 |
- |
57 |
|
Transfers out |
- |
- |
- |
- |
(16) |
- |
(16) |
|
Foreign exchange and other |
(1) |
- |
2 |
- |
(37) |
- |
(36) |
|
Total level 3 financial assets |
1 |
7 |
51 |
2 |
1,617 |
1 |
1,679 |
|
|
|
|
|
|
|
|
|
|
Fair value gains relating to assets held at 30 June 2014 recognised in profit or loss |
- |
- |
- |
- |
9 |
- |
9 |
|
|
£m |
|||||||
|
Six months ended 30 June 2014 |
Investment contract liabilities |
|||||||
|
Level 3 financial liabilities (Designated fair value through profit or loss) |
|
|||||||
|
At beginning of the period |
932 |
|||||||
|
Total net fair value gains recognised in profit or loss for the period |
(49) |
|||||||
|
Purchases and issues |
1 |
|||||||
|
Sales and settlements |
(126) |
|||||||
|
Transfers in |
50 |
|||||||
|
Foreign exchange and other |
(4) |
|||||||
|
Total level 3 financial liabilities |
804 |
|||||||
|
|
|
|||||||
|
Fair value gains relating to assets held at 30 June 2014 recognised in profit or loss |
(49) |
|||||||
|
|
|
|
|
|
|
£m |
||
|
|
Held-for-trading |
Designated at fair value through profit or loss |
Available- for-sale |
Total |
||||
|
Year ended 31 December 2014 |
Investments and securities |
Derivatives |
Investments in associated undertakings and joint ventures |
Loans and advances |
Investments and securities |
Investments and securities |
|
|
|
Level 3 financial assets |
|
|
|
|
|
|
|
|
|
At beginning of the period |
3 |
8 |
49 |
2 |
1,708 |
2 |
1,772 |
|
|
Total net fair value (losses)/gains recognised in the profit or loss for the period |
- |
(1) |
- |
- |
53 |
- |
52 |
|
|
Purchases and issues |
- |
- |
(1) |
- |
136 |
- |
135 |
|
|
Sales and settlements |
(3) |
- |
- |
- |
(319) |
(1) |
(323) |
|
|
Transfers in |
- |
- |
- |
- |
54 |
- |
54 |
|
|
Transfers out |
- |
- |
- |
- |
(36) |
- |
(36) |
|
|
Foreign exchange and other |
- |
1 |
2 |
- |
(44) |
- |
(41) |
|
|
Total level 3 financial assets |
- |
8 |
50 |
2 |
1,552 |
1 |
1,613 |
|
|
|
|
|
|
|
|
|
|
|
|
Fair value (losses)/gains relating to assets held at 31 December 2014 recognised in profit or loss |
- |
(1) |
- |
- |
22 |
- |
21 |
|
|
|
£m |
|
Year ended 31 December 2014 |
Investment contract liabilities |
|
Level 3 financial liabilities (Designated fair value through profit or loss) |
|
|
At beginning of the period |
932 |
|
Total net gains recognised in profit or loss for the period |
(47) |
|
Purchases and issues |
8 |
|
Sales and settlements |
(137) |
|
Foreign exchange and other |
(2) |
|
Total level 3 financial liabilities |
754 |
|
|
|
|
Fair value gains relating to liabilities held at 31 December 2014 recognised in profit or loss |
(47) |
E: Financial assets and liabilities continued
E1: Group statement of financial position continued
(e) Effect of changes in significant unobservable assumptions to reasonable possible alternatives
Favourable and unfavourable changes are determined on the basis of changes in the value of the financial asset or liability as a result of varying the levels of the unobservable parameter using statistical techniques. When parameters are not amenable to statistical analysis, quantification of the impact of uncertainty is judgemental.
When the fair value of a financial asset or liability is affected by more than one unobservable assumption, the figures shown reflect the most favourable or most unfavourable change from varying the assumptions individually.
In respect of private equity investments which are included as investment securities and investment in associated undertakings and joint ventures, the valuations are assessed on an asset-by-asset basis using a valuation methodology appropriate to the specific investment (both industry and type of investment), in line with industry guidelines. In many of the methodologies, the principal assumption is the valuation multiple to be applied to the main financial indicators including, for example, multiples for comparable listed companies and discounts for marketability.
For asset-backed securities whose prices are unobservable, models are used to generate the expected value of the asset, incorporating benchmark information on factors such as prepayment patterns, default rates, loss severities and the historical performance of the underlying assets. The models used are calibrated by using securities for which external market information is available.
For structured notes and other derivatives, principal assumptions concern the future volatility of asset values and the future correlation between asset values. These principle assumptions include credit volatilities and correlations used in the valuation of the structured credit derivatives. For such unobservable assumptions, estimates are based on available market data, which may include the use of a proxy method to derive a volatility or correlation from comparable assets for which market data is more readily available, and examination of historical levels.
(f) Alternative assumptions
Accounting standards require consideration of the effect of reasonable possible alternative assumptions on the fair value of Level 3 financial assets and liabilities.
Alternative assumptions are assessed in terms of possible favourable and unfavourable changes in the key market inputs for the major types of Level 3 financial assets and liabilities, ranging from, for example, a 10% change in the price earnings multiple for equity securities, to a 25% change in the discount rates applied to debt securities and volatility assumptions in derivative contracts. Changes in business risk inputs such as lapses and non-performance risk were also considered.
The table below summarises the significant inputs to value instruments categorised as Level 3 hierarchy and their sensitivity to changes in the inputs used.
|
Types of financial instruments |
Fair value At 30 June 2015
£m |
Valuation techniques |
Significant unobservable input |
Range of estimates for unobservable inputs |
Fair value measurement sensitivity to unobservable inputs At 30 June 2015
£m |
|
Assets |
|
|
|
|
|
|
Investments in associated undertakings and joint ventures
|
54 (June 2014: 51) (December 2014: 50) |
Discounted cash flows (DCF) Price earnings ratios
|
Valuation multiples |
-9% to +9% |
Favourable: 4 (June 2014: 7) (December 2014: 7)
Unfavourable: 5 (June 2014: 7) (December 2014: 7) |
|
Investments and securities |
1,329 (June 2014: 1,619) (December 2014: 1,553) |
Discounted cash flows (DCF) EBITDA multiple Price earnings ratios Adjusted net asset values supplied by fund managers |
Valuation multiples Correlations Volatilities Credit spreads Dividend growth rates Internal rates of return, cost of capital Inflation rates Market adjusted price (infrequently traded shares) |
Nedbank: -12% to +12% Emerging Markets: -10% to +10% OMAM: -10% to +10% |
Favourable: 211 (June 2014: 203) (December 2014: 202)
Unfavourable: 208 (June 2014: 199) (December 2014: 190) |
|
Loans and advances |
2 (June 2014: 2) (December 2014: 2) |
Discounted cash flows (DCF) |
Correlations Volatilities Credit spreads |
-12% to 12% |
Favourable: £nil (June 2014: £nil) (December 2014: £nil)
Unfavourable: £nil (June 2014: £nil) (December 2014: £nil) |
|
Derivatives |
18 (June 2014: 7) (December 2014: 8) |
Option pricing model |
Interest rates Volatilities |
-10% to 10% |
Favourable: 6 (June 2014: 7) (December 2014: 6)
Unfavourable: £nil (June 2014: £nil) (December 2014: £nil) |
|
Liabilities |
|
|
|
|
|
|
Investment contract liabilities |
601 (June 2014: 804) (December 2014: 754) |
Adjusted net asset values supplied by fund managers Option pricing model |
Interest rates Volatilities |
-10% to 10% |
Favourable: 55 (June 2014: 70) (December 2014: 70)
Unfavourable: 65 (June 2014: 84) (December 2014: 80) |
The impact of reasonable possible alternative assumptions on other comprehensive income was £nil in all periods.
E: Financial assets and liabilities continued
E2: Loans and advances
The table below provides detail of the categories of the Group's loans and advances. The Group extends advances to individuals, corporate, commercial and public sector. Advances made to individuals are mostly in the form of mortgages, instalment credit, overdrafts, personal loans and credit card borrowings. Further detail on loans and advances can be found in note E3 of the 2014 Annual Report and Accounts.
|
|
|
|
£m |
|
|
At 30 June 2015 |
At 30 June 2014 |
At 31 December 2014 |
|
Home loans |
7,461 |
7,476 |
7,909 |
|
Commercial mortgages |
6,901 |
6,332 |
6,870 |
|
Term loans |
6,231 |
5,398 |
6,436 |
|
Other loans to clients |
5,625 |
6,013 |
4,856 |
|
Net finance leases and instalment debtors |
5,053 |
4,857 |
5,236 |
|
Deposits placed under reverse purchase agreements |
1,043 |
1,202 |
1,016 |
|
Overdrafts |
891 |
848 |
929 |
|
Preference shares and debentures |
889 |
994 |
1,006 |
|
Credit cards |
741 |
685 |
745 |
|
Factoring accounts |
267 |
255 |
277 |
|
Policyholder loans |
243 |
232 |
248 |
|
Properties in possession |
30 |
31 |
33 |
|
Remittances in transit |
15 |
19 |
11 |
|
Trade, other bills and bankers' acceptances |
- |
17 |
16 |
|
Gross loans and advances |
35,390 |
34,359 |
35,588 |
|
|
|
|
|
|
Provisions for impairment |
(735) |
(632) |
(731) |
|
Specific provisions |
(505) |
(409) |
(494) |
|
Portfolio provision |
(230) |
(223) |
(237) |
|
|
|
|
|
|
Total net loans and advances |
34,655 |
33,727 |
34,857 |
E3: Insurance and investment contracts
The tables below provide a summary of the Group's long-term business insurance policyholder liabilities and investment contract liabilities. Details of insurance contract accounting for the Group can be found in note E8 of the 2014 Annual Report and Accounts.
|
|
|
|
|
|
|
£m |
|
|
At 30 June 2015 |
At 30 June 2014 |
||||
|
|
Gross |
Reinsurance |
Net |
Gross |
Reinsurance |
Net |
|
Life assurance policyholder liabilities |
|
|
|
|
|
|
|
Long-term business insurance policyholder liabilities |
9,851 |
(201) |
9,650 |
11,737 |
(117) |
11,620 |
|
Life assurance policyholder liabilities |
9,730 |
(191) |
9,539 |
11,593 |
(104) |
11,489 |
|
Outstanding claims |
121 |
(10) |
111 |
144 |
(13) |
131 |
|
|
|
|
|
|
|
|
|
Investment contract liabilities |
68,786 |
(2,079) |
66,707 |
66,355 |
(1,767) |
64,588 |
|
Unit-linked investment contracts and similar contracts |
60,186 |
(2,079) |
58,107 |
57,954 |
(1,767) |
56,187 |
|
Other investment contracts |
719 |
- |
719 |
778 |
- |
778 |
|
Discretionary participating investment contracts |
7,881 |
- |
7,881 |
7,623 |
- |
7,623 |
|
|
|
|
|
|
|
|
|
Total life assurance policyholder liabilities |
78,637 |
(2,280) |
76,357 |
78,092 |
(1,884) |
76,208 |
|
Property & casualty liabilities |
|
|
|
|
|
|
|
Claims incurred but not reported |
62 |
(12) |
50 |
45 |
(9) |
36 |
|
Unearned premiums |
120 |
(40) |
80 |
88 |
(39) |
49 |
|
Outstanding claims |
212 |
(62) |
150 |
186 |
(55) |
131 |
|
Total property & casualty liabilities |
394 |
(114) |
280 |
319 |
(103) |
216 |
|
Total policyholder liabilities |
79,031 |
(2,394) |
76,637 |
78,411 |
(1,987) |
76,424 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m |
|
|
|
|
|
At 31 December 2014 |
||
|
|
|
|
|
Gross |
Reinsurance |
Net |
|
Life assurance policyholder liabilities |
|
|
|
|
|
|
|
Long-term business insurance policyholder liabilities |
|
|
|
10,519 |
(172) |
10,347 |
|
Life assurance policyholder liabilities |
|
|
|
10,369 |
(154) |
10,215 |
|
Outstanding claims |
|
|
|
150 |
(18) |
132 |
|
|
|
|
|
|
|
|
|
Investment contract liabilities |
|
|
|
68,841 |
(2,026) |
66,815 |
|
Unit-linked investment contracts and similar contracts |
|
|
|
60,158 |
(2,026) |
58,132 |
|
Other investment contracts |
|
|
|
746 |
- |
746 |
|
Discretionary participating investment contracts |
|
|
|
7,937 |
- |
7,937 |
|
|
|
|
|
|
|
|
|
Total life assurance policyholder liabilities |
|
|
|
79,360 |
(2,198) |
77,162 |
|
Property & casualty liabilities |
|
|
|
|
|
|
|
Claims incurred but not reported |
|
|
|
47 |
(10) |
37 |
|
Unearned premiums |
|
|
|
96 |
(45) |
51 |
|
Outstanding claims |
|
|
|
176 |
(61) |
115 |
|
Total property & casualty liabilities |
|
|
|
319 |
(116) |
203 |
|
Total policyholder liabilities |
|
|
|
79,679 |
(2,314) |
77,365 |
The reinsurers' share of policyholder liabilities relating to investment contracts is where the direct management of assets are ceded to a third party through a reinsurance arrangement. Due to the nature of the arrangement, there is no transfer of insurance risk.
E: Financial assets and liabilities continued
E4: Borrowed funds
The table below presents an analysis of the Group's borrowed funds net of any holdings that are principally held by policyholder funds.
|
|
|
|
|
|
|
|
|
|
£m |
|
|
Notes |
|
Non-banking |
Banking1 |
At 30 June 2015 |
|
Non- banking |
Banking1 |
At 30 June 2014 |
|
Senior debt securities and term loans |
|
|
112 |
1,683 |
1,795 |
|
113 |
1,271 |
1,384 |
|
Floating rate notes |
E4(a)(i) |
|
- |
722 |
722 |
|
- |
708 |
708 |
|
Fixed rate notes |
E4(a(ii) |
|
112 |
838 |
950 |
|
113 |
532 |
645 |
|
Term loans |
E4(a)(iii) |
|
- |
123 |
123 |
|
- |
31 |
31 |
|
Revolving credit facilities |
E4(b) |
|
92 |
51 |
143 |
|
- |
- |
- |
|
Mortgage-backed securities |
E4(c) |
|
- |
119 |
119 |
|
- |
57 |
57 |
|
Subordinated debt securities |
E4(d) |
|
883 |
626 |
1,509 |
|
740 |
602 |
1,342 |
|
Borrowed funds |
|
|
1,087 |
2,479 |
3,566 |
|
853 |
1,930 |
2,783 |
|
Other instruments treated as equity for accounting purposes |
|
|
|
|
|
||||
|
€374 million perpetual preferred callable securities at 5.00%2 |
|
|
253 |
|
|
|
253 |
|
|
|
£273 million perpetual preferred callable securities at 6.38%3 |
|
|
273 |
|
|
|
273 |
|
|
|
Total: Book value |
|
|
1,613 |
|
|
|
1,379 |
|
|
|
Nominal value of the above |
|
|
1,560 |
|
|
|
1,350 |
|
|
|
|
|||||||||
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
£m |
|
|
Notes |
|
|
|
|
|
Non- banking |
Banking1 |
At 31 December 2014 |
|
Senior debt securities and term loans |
|
|
|
|
|
|
112 |
1,264 |
1,376 |
|
Floating rate notes |
E4(a)(i) |
|
|
|
|
|
- |
563 |
563 |
|
Fixed rate notes |
E4(a(ii) |
|
|
|
|
|
112 |
576 |
688 |
|
Term loans |
E4(a)(iii) |
|
|
|
|
|
- |
125 |
125 |
|
Revolving credit facilities |
E4(b) |
|
|
|
|
|
114 |
72 |
186 |
|
Mortgage-backed securities |
E4(c) |
|
|
|
|
|
- |
52 |
52 |
|
Subordinated debt securities |
E4(d) |
|
|
|
|
|
788 |
642 |
1,430 |
|
Borrowed funds |
|
|
|
|
|
|
1,014 |
2,030 |
3,044 |
|
Other instruments treated as equity for accounting purposes |
|
|
|
|
|
||||
|
€374 million perpetual preferred callable securities at 5.00%2 |
|
|
|
|
|
|
253 |
|
|
|
£273 million perpetual preferred callable securities as 6.38%3 |
|
|
|
|
|
|
273 |
|
|
|
Total: Book value |
|
|
|
|
|
|
1,540 |
|
|
|
Nominal value of the above |
|
|
|
|
|
|
1,512 |
|
|
1 Borrowed funds identified as Banking are those which are directly related to the lending businesses in Emerging Markets and Nedbank.
2 The €374 million perpetual preferred callable securities are redeemable at the discretion of the Group at their principal amount from 4 November 2015.
3 The £273 million perpetual preferred callable securities are redeemable at the discretion of the Group at their principal amount from 24 March 2020.
(a) Senior debt securities and term loans
(i) Floating rate notes (net of Group holdings)
|
|
|
|
|
£m |
|
|
Maturity date |
At 30 June 2015 |
At 30 June 2014 |
At 31 December 2014 |
|
Banking - Floating rate unsecured senior debt |
|
|
|
|
|
R1,075 million at JIBAR + 0.94% |
Repaid |
- |
60 |
- |
|
R1,297 million at JIBAR + 1.00% |
Repaid |
- |
73 |
72 |
|
R1,027 million at JIBAR + 1.75% |
Repaid |
- |
57 |
57 |
|
R250 million at JIBAR + 1.00% |
August 2015 |
13 |
14 |
14 |
|
R1,044 million at JIBAR + 2.20% |
September 2015 |
55 |
58 |
59 |
|
R677 million at JIBAR + 1.25% |
March 2016 |
35 |
37 |
38 |
|
R3,056 million at JIBAR + 0.8% |
July 2016 |
161 |
170 |
169 |
|
R694 million at JIBAR + 0.75% |
November 2016 |
37 |
38 |
39 |
|
R405 million at JIBAR + 1.30% |
February 2017 |
21 |
22 |
23 |
|
R1,035 million at JIBAR + 0.85% |
March 2017 |
54 |
57 |
58 |
|
R786 million at JIBAR + 1.30% |
August 2017 |
37 |
38 |
39 |
|
R806 million at JIBAR + 0.9% |
June 2017 |
42 |
44 |
45 |
|
R241 million at JIBAR + 1.12% |
November 2017 |
13 |
- |
14 |
|
R472 million at JIBAR + 1.25% |
February 2018 |
25 |
- |
- |
|
R1,427 million at JIBAR + 1.30% |
June 2018 |
75 |
- |
- |
|
R90 million at JIBAR + 1.45% |
February 2020 |
5 |
- |
- |
|
R80 million at JIBAR + 2.15% |
April 2020 |
4 |
4 |
5 |
|
R650 million at JIBAR + 1.30% |
June 2021 |
34 |
36 |
36 |
|
R12 million at JIBAR + 1.55% |
February 2022 |
1 |
- |
- |
|
R1,980 million at JIBAR + 2.00% |
February 2025 |
105 |
- |
- |
|
R500 million at JIBAR + 2.10% |
April 2026 |
27 |
- |
- |
|
|
|
744 |
708 |
668 |
|
Less: floating rate notes held by other Group companies |
|
(22) |
- |
(105) |
|
Total floating rate notes |
|
722 |
708 |
563 |
All floating rate unsecured senior debt are non-qualifying for the purposes of regulatory tiers of capital.
E: Financial assets and liabilities continued
E4: Borrowed funds continued
(ii) Fixed rate notes (net of Group holdings)
|
|
|
|
|
£m |
|
|
Maturity date |
At 30 June 2015 |
At 30 June 2014 |
At 31 December 2014 |
|
Banking - Fixed rate unsecured senior debt |
|
|
|
|
|
R478 million at 9.68% |
Repaid |
- |
27 |
27 |
|
R3,244 million at 10.55% |
September 2015 |
175 |
184 |
186 |
|
R1,137 million at 9.36% |
March 2016 |
61 |
64 |
65 |
|
R151 million at 6.91% |
July 2016 |
8 |
9 |
9 |
|
R1,273 million at 11.39% |
September 2019 |
72 |
77 |
77 |
|
R380 million at 9.26% |
June 2020 |
20 |
- |
- |
|
R1,888 million at 8.92% |
November 2020 |
100 |
105 |
106 |
|
R855 million at 9.38% |
March 2021 |
46 |
48 |
49 |
|
R500 million at 9.29% |
June 2021 |
26 |
28 |
28 |
|
R215 million at 8.79% |
February 2022 |
12 |
- |
- |
|
R280 million at 9.64% |
June 2022 |
15 |
- |
- |
|
R391 million at 9.73% |
March 2024 |
21 |
22 |
22 |
|
R660 million at zero coupon |
October 2024 |
14 |
13 |
15 |
|
R2607 million at 9.44% |
February 2025 |
141 |
- |
- |
|
R800 million at 9.95% |
April 2026 |
43 |
- |
- |
|
R1,739 million at 10.36% |
June 2026 |
92 |
- |
- |
|
|
|
846 |
577 |
584 |
|
Less: Fixed rate notes held by other Group companies |
|
(8) |
(45) |
(8) |
|
Banking fixed rate unsecured senior debt (net of Group holdings) |
|
838 |
532 |
576 |
|
|
|
|
|
|
|
Non-banking |
|
|
|
|
|
$2 million secured senior debt at 5.23% |
Repaid |
- |
1 |
- |
|
£112 million eurobond at 7.125% |
October 2016 |
112 |
112 |
112 |
|
|
|
112 |
113 |
112 |
|
Total fixed rate notes |
|
950 |
645 |
688 |
All fixed rate notes are non-qualifying for the purpose of regulatory tiers of capital.
(iii) Term loans
|
|
|
|
|
£m |
|
|
Maturity date |
At 30 June 2015 |
At 30 June 2014 |
At 31 December 2014 |
|
Banking - Floating rate loans |
|
|
|
|
|
KES550 million at KBRR + 4.87% |
October 2015 |
4 |
4 |
4 |
|
R1,500 million at JIBAR + 2.95% |
August 2017 |
84 |
- |
84 |
|
KES500 million at KBRR + 3.87% |
March 2019 |
3 |
- |
- |
|
|
|
|
|
|
|
Banking - Fixed rate loans |
|
|
|
|
|
$20 million at 9.50% |
Repaid |
- |
3 |
- |
|
KES466 million at 9.83% |
Repaid |
- |
4 |
- |
|
$6 million at 8.10% |
August 2017 |
3 |
- |
4 |
|
$19 million at 8.10% |
September 2017 |
10 |
- |
12 |
|
$10 million at 8.30% |
May 2020 |
6 |
6 |
7 |
|
$5 million at 11.00% |
September 2022 |
3 |
3 |
3 |
|
$10 million at 10.00% |
December 2023 |
6 |
6 |
6 |
|
KES170 million at 14.00% to 14.75% |
October 2015 |
1 |
1 |
1 |
|
KES175 million at 11.70% |
October 2016 |
1 |
1 |
1 |
|
KES225 million at 11.70% |
August 2017 |
1 |
2 |
2 |
|
KES200 million at 5.00% |
July 2022 |
1 |
1 |
1 |
|
Total term loans and other loans |
|
123 |
31 |
125 |
These term loans are used to fund the lending operations of the Emerging Markets banking businesses.
(b) Revolving credit facilities
|
|
|
|
|
£m |
|
|
Maturity date |
At 30 June 2015 |
At 30 June 2014 |
At 31 December 2014 |
|
Banking |
|
|
|
|
|
R475 million (31 December 2014: R1,000 million) drawn of a R1,200 million facility at 3 month JIBAR + 2.95% |
August 2017 |
25 |
- |
44 |
|
R500 million fully drawn at 3 month JIBAR + 3.10% |
October 2019 |
26 |
- |
28 |
|
|
|
51 |
- |
72 |
|
Non-banking |
|
|
|
|
|
$145 million drawn of a $350 million facility at USD LIBOR + 1.25% |
October 2019 |
92 |
- |
114 |
|
Total revolving credit facilities |
|
143 |
- |
186 |
The Group has access to a £800 million (June 2014: £800 million, December 2014: £800 million) five-year multi-currency revolving credit facility which matures in August 2019, with an optional further one year extension at both the first and second year anniversary. At 30 June 2015, 31 December 2014 and 30 June 2014, none of this facility was drawn and there were no irrevocable letters of credit in issue against this facility.
In March 2015, the Group obtained access to a R5,250 million (£275 million) revolving credit facility which matures in March 2016. At 30 June 2015 none of this facility was drawn and there were no irrevocable letters of credit in issue against this facility.
(c) Mortgage-backed securities (net of Group holdings)
|
|
|
|
|
|
£m |
|
|
Tier |
Maturity date |
At 30 June 2015 |
At 30 June 2014 |
At 31 December 2014 |
|
Banking |
|
|
|
|
|
|
R480 million (class A1) at JIBAR + 1.10% |
Tier 2 |
Repaid |
- |
7 |
2 |
|
R336 million (class A2) at JIBAR + 1.25% |
Tier 2 |
October 2039 |
14 |
19 |
19 |
|
R900 million (class A3) at JIBAR + 1.54% |
Tier 2 |
October 2039 |
48 |
50 |
51 |
|
R110 million (class B) at JIBAR + 1.90% |
Tier 2 |
October 2039 |
6 |
6 |
6 |
|
R650 million at JIBAR +1.20% |
Tier 2 |
February 2042 |
27 |
- |
- |
|
R400 million at JIBAR +1.45% |
Tier 2 |
February 2042 |
5 |
- |
- |
|
R680 million at JIBAR +1.55% |
Tier 2 |
February 2042 |
36 |
- |
- |
|
R80 million at JIBAR +2.20% |
Tier 2 |
February 2042 |
4 |
- |
- |
|
R65 million at JIBAR + 3.00% |
Tier 2 |
February 2042 |
3 |
- |
- |
|
|
|
|
143 |
82 |
78 |
|
Less: Mortgage backed securities held by other Group companies |
(24) |
(25) |
(26) |
||
|
Total mortgage-backed securities |
|
|
119 |
57 |
52 |
E: Financial assets and liabilities continued
E4: Borrowed funds continued
(d) Subordinated debt securities (net of Group holdings)
|
|
|
|
|
|
£m |
|
|
Tier |
Maturity date |
At 30 June 2015 |
At 30 June 2014 |
At 31 December 2014 |
|
Banking |
|
|
|
|
|
|
R1,265 million at JIBAR + 4.75%1 |
Tier 2 |
Repaid |
- |
70 |
74 |
|
R487 million at 15.05%1 |
Tier 2 |
Repaid |
- |
32 |
32 |
|
R1,000 million at 10.54% |
Non-core Tier 1 |
September 2020 |
54 |
58 |
58 |
|
$100 million at 3 month USD LIBOR |
Non-core Tier 1 |
March 2022 |
64 |
59 |
64 |
|
R2,000 million at JIBAR + 0.47% |
Tier 2 |
July 2022 |
106 |
112 |
113 |
|
R1,800 million at JIBAR + 2.75% |
Tier 2 Secondary |
July 2023 |
96 |
101 |
102 |
|
R1,200 million at JIBAR + 2.55% |
Tier 2 |
November 2023 |
63 |
67 |
67 |
|
R450 million at 10.49% |
Tier 2 |
April 2024 |
24 |
25 |
26 |
|
R1,737 million at 3 month JIBAR + 2.55% |
Tier 2 |
April 2024 |
93 |
97 |
98 |
|
R300 million at JIBAR + 2.75% |
Tier 2 |
April 2024 |
16 |
- |
17 |
|
R225 million at JIBAR +2.75% |
Tier 2 |
January 2025 |
12 |
- |
- |
|
R1,624 million at JIBAR + 3.50% |
Tier 2 |
July 2025 |
85 |
- |
- |
|
R407 million at 11.29% |
Tier 2 |
July 2025 |
21 |
- |
- |
|
|
|
|
634 |
621 |
651 |
|
Less: Banking subordinated debt securities held by other Group companies |
(8) |
(19) |
(9) |
||
|
Banking subordinated securities |
|
626 |
602 |
642 |
|
|
|
|
|
|
|
|
|
Non-banking |
|
|
|
|
|
|
R3,000 million at 8.92% |
Lower Tier 2 |
October 2020 |
157 |
165 |
167 |
|
£500 million at 8.00% |
Lower Tier 2 |
June 2021 |
568 |
575 |
565 |
|
R300 million at 9.26% |
Lower Tier 2 |
November 2024 |
15 |
- |
17 |
|
R700 million at 3 month JIBAR + 2.20% |
Lower Tier 2 |
November 2024 |
37 |
- |
39 |
|
R537 million at 3 Month JIBAR + 2.30%2 |
Lower Tier 2 |
March 2025 |
28 |
- |
- |
|
R425 million at 9.76%2 |
Lower Tier 2 |
March 2025 |
22 |
- |
- |
|
R409 million at 10.32%2 |
Lower Tier 2 |
March 2027 |
21 |
- |
- |
|
R690 million at 10.96%2 |
Lower Tier 2 |
March 2030 |
35 |
- |
- |
|
|
|
|
883 |
740 |
788 |
|
Total subordinated debt securities |
|
1,509 |
1,342 |
1,430 |
|
1 The first call date of the R1,265 million and R487 million subordinated debt securities is November 2018. All other callable subordinated debt securities have a first call date five years before the maturity date.
2 On 19 March 2015, OMLAC(SA) has issued a mixture of floating rate and fixed instruments with several maturities through its existing local SA programme. Accordingly, the JSE Limited has granted a listing to OMLAC(SA) on the South African Interest Rate Market with effect from 19 March 2015 under its Unsecured Subordinated Callable Note Programme dated 4 September 2014. Refer to note A2 for further information.
Nedbank has issued and redeemed debt instruments in the normal course of the bank's funding program.
F: Other statement of financial position notes
F1: Goodwill and other intangible assets
Analysis of goodwill and other intangible assets
This note shows the movements in cost, amortisation and impairment of goodwill and other intangible assets for the six months ended 30 June 2015 and year ended 31 December 2014.
|
|
|
|
|
|
|
|
|
|
|
£m |
|
|
Goodwill |
Present value of acquired in-force business development costs |
Software development costs |
Other intangible assets |
Total |
|||||
|
|
2015 |
2014 |
2015 |
2014 |
2015 |
2014 |
2015 |
2014 |
2015 |
2014 |
|
Cost |
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of the period |
2,756 |
2,641 |
1,107 |
1,464 |
669 |
630 |
402 |
538 |
4,934 |
5,273 |
|
Acquisitions through business combinations1 |
453 |
155 |
- |
17 |
- |
14 |
288 |
69 |
741 |
255 |
|
Purchase price adjustment2 |
7 |
- |
- |
- |
- |
- |
- |
- |
7 |
- |
|
Additions |
- |
- |
- |
- |
38 |
72 |
2 |
4 |
40 |
76 |
|
Disposal of interests in subsidiaries |
- |
(86) |
- |
(335) |
- |
(22) |
- |
(192) |
- |
(635) |
|
Disposals or retirements |
- |
- |
- |
- |
(6) |
(18) |
- |
- |
(6) |
(18) |
|
Transfer to non-current assets held for sale |
- |
- |
(131) |
(14) |
(1) |
(3) |
- |
- |
(132) |
(17) |
|
Foreign exchange and other movements |
(42) |
46 |
5 |
(25) |
(42) |
(4) |
- |
(17) |
(79) |
- |
|
Balance at beginning of the period |
3,174 |
2,756 |
981 |
1,107 |
658 |
669 |
692 |
402 |
5,505 |
4,934 |
|
Amortisation and impairment losses |
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of the period |
(624) |
(598) |
(792) |
(946) |
(449) |
(437) |
(306) |
(457) |
(2,171) |
(2,438) |
|
Amortisation charge for the period |
- |
- |
(32) |
(70) |
(25) |
(46) |
(33) |
(54) |
(90) |
(170) |
|
Impairment losses3 |
(41) |
(14) |
(28) |
- |
- |
- |
- |
- |
(69) |
(14) |
|
Disposal of interests in subsidiaries |
- |
- |
- |
198 |
- |
20 |
- |
192 |
- |
410 |
|
Disposals or retirements |
- |
- |
- |
- |
6 |
17 |
- |
- |
6 |
17 |
|
Transfer to non-current assets held for sale |
- |
- |
131 |
8 |
1 |
3 |
- |
- |
132 |
11 |
|
Foreign exchange and other movements |
7 |
(12) |
(1) |
18 |
25 |
(6) |
- |
13 |
31 |
13 |
|
Accumulated amortisation and impairment losses at end of the period |
(658) |
(624) |
(722) |
(792) |
(442) |
(449) |
(339) |
(306) |
(2,161) |
(2,171) |
|
Carrying amount |
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of the period |
2,132 |
2,043 |
315 |
518 |
220 |
193 |
96 |
81 |
2,763 |
2,835 |
|
Balance at end of the period |
2,516 |
2,132 |
259 |
315 |
216 |
220 |
353 |
96 |
3,344 |
2,763 |
1 Goodwill acquired through business combinations comprise £292 million in respect of the acquisition of Quilter Cheviot and £161 million in respect of the acquisition of UAP Holdings Limited. Refer to note G3 for further information.
2 The purchase price adjustment to goodwill of £7 million is the result of an increase in the value of liabilities identified by the Group in the 12 month period following the completion of the acquisition of Intrinsic Financial Services Limited on 1 July 2014.
3 The impairments of goodwill (£41 million) and present value of in-force business (£28 million) relates to the write-down in the value of Skandia Switzerland prior to its expected disposal in the second half of 2015. Refer to note H2 for further information.
G: Other notes
G1: Related parties
The nature of the related party transactions of the Group has not changed from those referred to in the 2014 Annual Report and Accounts.
There were no transactions with related parties during the six months ended 30 June 2015 that had a material effect on the results or the financial position of the Group.
G2: Contingent liabilities and commitments
Contingent liabilities - tax
The Revenue authorities in the principal jurisdictions in which the Group operates (South Africa, the United Kingdom and the United States) routinely review historic transactions undertaken and tax law interpretations made by the Group. The Group is committed to conducting its tax affairs in accordance with the tax legislation of the jurisdictions in which they operate. All interpretations made by management are made with reference to the specific facts and circumstances of the transaction and the relevant legislation.
There are occasions where the Group's interpretation of tax law may be challenged by the Revenue authorities. The financial statements include provisions that reflect the Group's assessment of liabilities which might reasonably be expected to materialise as part of their review. The Board is satisfied that adequate provisions have been made to cater for the resolution of tax uncertainties and that the resources required to fund such potential settlements are sufficient.
Due to the level of estimation required in determining tax provisions, amounts eventually payable may differ from the provision recognised.
South Africa
During the course of 2015, discussions have been ongoing with the South African Revenue Services (SARS) in relation to the tax treatment of investments supporting Fixed Bond products sold by OMLAC(SA) between 2004 and 2013. SARS has submitted an assessment for amounts due. OMLAC(SA) has appealed the assessments and discussions regarding the merits of the OMLAC(SA) treatment of these items are continuing with SARS.
Expected future transactions
As part of its corporate development, the Group may undertake acquisitions and disposals. In certain transactions the Group may obtain options to acquire additional stakes at market value. The Group has previously entered into a combination of put and call options to acquire an additional 23% stake in its Indian life joint venture from the current holding of 26%, which would be settled at the fair value of the stake if and when exercised.
G3: Businesses acquired during the year
(a) Acquisition of Quilter Cheviot
On 25 February 2015, the Group acquired the Quilter Cheviot group of companies. The Quilter Cheviot group is based in the United Kingdom and is a discretionary investment manager specialising in the high net worth and affluent segment of the industry. The results from the business have been consolidated since the date of acquisition.
The table below sets out the consolidated assets and liabilities acquired as a result of the acquisition of Quilter Cheviot:
|
|
|
£m |
|
|
Acquiree's carrying amount |
Fair value |
|
Assets |
|
|
|
Intangible assets |
- |
288 |
|
Property, plant and equipment |
8 |
8 |
|
Deferred tax asset |
1 |
1 |
|
Current tax receivable |
3 |
3 |
|
Cash and cash equivalents |
69 |
69 |
|
Trade, other receivables and other assets |
128 |
128 |
|
Total assets |
209 |
497 |
|
Liabilities |
|
|
|
Deferred tax liabilities |
- |
(58) |
|
Provisions and accruals |
(50) |
(53) |
|
Current tax payable |
(5) |
(5) |
|
Trade, other payables and other liabilities |
(107) |
(107) |
|
Total liabilities |
(162) |
(223) |
|
Total net assets acquired |
47 |
274 |
|
|
|
|
|
Total consideration paid |
|
566 |
|
|
|
|
|
Goodwill recognised |
|
292 |
The purchase price has been allocated based on a provisional estimate of the fair value of assets acquired and liabilities assumed at the date of acquisition determined in accordance to IFRS 3 'Business Combinations'. The provisional allocation required significant assumptions and the use of external expertise and it is possible that the preliminary estimates may change materially as the purchase price allocations are finalised. The accounting must be finalised within 12 months of the acquisition date.
The carrying value of assets and liabilities in Quilter Cheviot's consolidated statement of financial position on acquisition date approximates the fair value of these items determined by the Group, with the exception of identified intangible assets of £288 million, additional provisions of £3 million and an additional deferred tax liability of £58 million. The intangible assets recognised relate to customer distribution channels (£273 million) and to the Quilter Cheviot brand (£15 million). The value of the intangible assets was determined by applying cash flows to standard industry valuations models. Goodwill is attributable to the delivery of significant cost and revenue synergies that cannot be linked to identifiable intangible assets. This goodwill is not expected to be deductible for tax purposes.
Of the acquired receivables, £121 million represent short dated receivables that arise from the normal course of business and represent the gross cash flows that are expected to be received over a period of three months. No contingent liability has been recognised on acquisition.
In addition to the £566 million cash consideration paid, 19.3 million Old Mutual plc ordinary shares of 11 3/7p with a value on issue of £42 million were placed into an employee benefit trust. 50% of these shares will be released to the participants after three years and the other 50% after four years, on the fulfilment of conditions relating to the maintenance of the level of funds under management. These expenses will be recognised in the profit or loss over the vesting periods of three and four years and will be excluded from the determination of AOP.
Transaction costs incurred of £9 million relating to the acquisition have been recognised within other operating expenses in the consolidated income statement, but not included within adjusted operating profit. The Group has included £5 million in net profit attributable to equity holders since the effective date of acquisition and £17 million in adjusted operating profit.
G: Other notes continued
G3: Businesses acquired during the year continued
(b) Acquisition of UAP Holdings Limited
On 24 June 2015, Old Mutual acquired an aggregate stake of 60.7% in UAP Holdings Limited ('UAP'), a Kenyan Pan-African financial services group for an aggregate consideration of £152 million. The reason for the acquisition was the expansion of the Group's footprint in East Africa. The transaction was financed by the Group through existing funds, without the issuance of any new debt or own shares.
An initial stake of 23.3% was acquired on 1 February 2015, while the remaining 37.3% stake was acquired on 24 June 2015. The results and movements in reserves were equity accounted from 1 February 2015 to the date that control was obtained. There was no amount recognised in the profit or loss as a result of the step up acquisition. A loss of £0.4m has been equity accounted in the consolidated income statement for the period from 1 February 2015 to 24 June 2015. Subsequently, from 24 June 2015, the financial results and financial position were consolidated in the Group financial statements.
The assets and liabilities acquired have been recorded at their fair values for purposes of the opening balance sheet and included in the consolidated accounts of the Group using the Group's accounting policies in accordance with IFRS.
The table below sets out the consolidated assets and liabilities acquired as a result of the acquisition of UAP Holdings Limited:
|
|
|
£m |
|
|
Acquiree's carrying amount |
Fair value |
|
Assets |
|
|
|
Investment property |
103 |
103 |
|
Investments & securities |
89 |
89 |
|
Cash and cash equivalents |
24 |
24 |
|
Trade, other receivables and other assets |
65 |
54 |
|
Total assets |
281 |
270 |
|
Liabilities |
|
|
|
Long-term business policyholder liabilities |
(84) |
(90) |
|
Property & casualty liabilities |
(37) |
(37) |
|
Provisions and accruals |
(3) |
(3) |
|
Deferred tax liabilities |
(3) |
(3) |
|
Current tax payable |
- |
(4) |
|
Trade, other payables and other liabilities |
(44) |
(44) |
|
Total liabilities |
(171) |
(181) |
|
Total net assets acquired |
110 |
89 |
|
|
|
|
|
Total value of the business |
|
250 |
|
Consideration |
|
152 |
|
Non-controlling interests recognised |
|
98 |
|
|
|
|
|
Goodwill and other intangible assets recognised |
|
161 |
The purchase price has been allocated based on a provisional estimate of the fair value of assets acquired and liabilities assumed at the date of acquisition determined in accordance to IFRS 3 'Business Combinations'. The purchase price allocation required significant assumptions and the use of external expertise and it is possible that the preliminary estimates may change materially when this is finalised. The identification and measurement of intangible assets has commenced, however, due to the date of control being obtained being close to the date of the interim financial statements there has been no further allocation between goodwill and other intangible assets. The additional intangible assets identified, but not yet recognised, include brand, customer lists and present value of in-force business development cost.
The fair value of investment properties has been determined by independent valuers appointed by UAP on the basis of open market value using current prices. Investment and securities have been fair value based on the market value of the assets and/or an analysis of the contractual cash flows. Other assets and liabilities, including long-term policyholder liabilities and property & casualty liabilities, have been recorded at their estimated fair value.
The fair value of the non-controlling interests in UAP has been determined in accordance with the Group policy and is in proportion to the fair value paid by the Group.
The Group has measured the fair value of the separately recognisable identifiable assets acquired and the liabilities assumed as of the acquisition date. The value of UAP, £250 million, was greater than the provisional fair value of the net assets acquired and resulted in goodwill and other intangible assets of £161 million being recorded in the statement of financial position of the Group. The value of goodwill and other intangible assets will change as the work on the purchase price allocation is completed.
Acquisition related expenses of £3 million are included in other operating and administrative line in the consolidated income statement but has been reversed out of adjusted operating profit in line with Group policy.
G4: Events after the reporting date
On 6 August 2015, the Group announced that it acquired an additional 33.6% stake in Credit Guarantee Insurance Corporation of Africa Limited (CGIC), subject to regulatory approval.
The transaction will increase the Group's total holding in CGIC to 86.1%. The acquisition of the additional 33.6% is expected to be completed in the second half of 2015.
H: Discontinued operations and disposal groups held for sale
H1: Discontinued operations
|
Income statement from discontinued operations |
|||
|
|
|
|
£m |
|
|
Six months ended 30 June 2015 |
Six months ended 30 June 2014 |
Year ended 31 December 2014 |
|
Loss before tax from discontinued operations - trading activities (expenses) |
- |
(11) |
(35) |
|
Loss on disposal |
(21) |
- |
(19) |
|
Loss before tax from discontinued operations |
(21) |
(11) |
(54) |
|
Income tax credit |
- |
1 |
4 |
|
Loss after tax from discontinued operations |
(21) |
(10) |
(50) |
The loss on disposal for the six months ended 30 June 2015 and year ended 31 December 2014 related to the settlement of litigation arising on the disposal of US Life in 2011, following a court ruling in favour of the plaintiff on the main matter in dispute.
The loss before tax from discontinued operations for the six months ended 30 June 2014 and the year ended 31 December 2014 related to the disposal of Nordic in 2012. The Group continued to incur costs directly related to the sale of these businesses relating to the transition of IT and other services back to the Group. Nordic previously provided these services to the wider Group.
H2: Non-current assets and liabilities held for sale
Non-current assets held for sale of £1,114 million relate to Old Mutual Wealth (£902 million) and Emerging Markets (£212 million). Non-current liabilities held for sale of £833 million relate to Old Mutual Wealth.
Old Mutual Wealth
On 29 May 2015, the Group announced that terms have been agreed to dispose of Skandia Leben AG. At 30 June 2015, the total value of the assets and liabilities reclassified as held for sale in the statement of financial position were £898 million (including £851 million investments and securities) and £833 million (including £805 million long-term policyholder liabilities) respectively. Impairment losses after tax of £83 million have been recognised in the period as a result of the transaction. The transaction is subject to regulatory approval and is expected to complete in the second half of 2015. In addition to the above, Old Mutual Wealth has classified property, plant and equipment of £4 million as held for sale.
Emerging Markets
At 30 June 2015, Emerging Markets classified £212 million of investment properties as held for sale. These transactions are subject to regulatory approval and are expected to complete in the second half of 2015. The investment properties form part of the policyholder assets and therefore have no impact on profit or loss of the Group.
This information is provided by RNS
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