Old Mutual PLC Interim Results 2014 - Part 2
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Index to the financial information For the six months ended 30 June 2014 |
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Statement of directors' responsibilities in respect of the interim financial statements for the six months ended 30 June 2014
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40 |
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Independent review report to the members of Old Mutual plc for the six months ended 30 June 2014
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41 |
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Consolidated income statement
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42 |
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Consolidated statement of comprehensive income
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43 |
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Reconciliation of adjusted operating profit to profit after tax
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44 |
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Consolidated statement of financial position
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46 |
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Consolidated statement of cash flows
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47 |
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Consolidated statement of changes in equity
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48 |
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Notes to the consolidated financial statements
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A: Significant accounting policies
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54 |
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B: Segment information
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56 |
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C: Other key performance information
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70 |
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D: Other income statement notes
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76 |
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E: Financial assets and liabilities
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78 |
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F: Other notes
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90 |
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G: Discontinued operations and disposal groups held for sale
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91 |
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MCEV information
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92 |
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Statement of directors' responsibilities in respect of the interim financial statements
For the six months ended 30 June 2014
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
7 August 2014 7 August 2014
Independent review report to the members of Old Mutual plc
For the six months ended 30 June 2014
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the interim financial report for the six months ended 30 June 2014 which comprises the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Statement of Cash Flows 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 interim 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 interim financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim 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 interim 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 interim 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 interim financial report for the six months ended 30 June 2014 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 (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London E14 5GL
7 August 2014
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Consolidated income statement |
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For the six months ended 30 June 2014 |
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£m |
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Notes |
Six months ended 30 June 2014 |
Six months ended 30 June 2013 |
Year ended 31 December 2013 |
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Revenue |
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Gross earned premiums |
B2 |
1,618 |
1,995 |
3,701 |
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Outward reinsurance |
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(154) |
(162) |
(317) |
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Net earned premiums |
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1,464 |
1,833 |
3,384 |
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Investment return (non-banking) |
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3,529 |
4,489 |
9,986 |
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Banking interest and similar income |
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1,415 |
1,573 |
3,050 |
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Banking trading, investment and similar income |
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83 |
110 |
195 |
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Fee and commission income, and income from service activities |
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1,413 |
1,576 |
3,095 |
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Other income |
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54 |
60 |
100 |
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Total revenue |
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7,958 |
9,641 |
19,810 |
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Expenses |
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Claims and benefits (including change in insurance contract provisions) |
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(2,260) |
(2,295) |
(5,410) |
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Reinsurance recoveries |
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66 |
118 |
246 |
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Net claims and benefits incurred |
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(2,194) |
(2,177) |
(5,164) |
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Change in investment contract liabilities |
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(1,845) |
(3,000) |
(5,873) |
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Losses on loans and advances |
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(130) |
(234) |
(368) |
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Finance costs |
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(64) |
(23) |
(81) |
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Banking interest payable and similar expenses |
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(770) |
(832) |
(1,616) |
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Fee and commission expenses, and other acquisition costs |
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(437) |
(538) |
(976) |
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Change in third-party interest in consolidated funds |
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(194) |
(271) |
(564) |
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Other operating and administrative expenses |
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(1,760) |
(1,770) |
(3,653) |
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Total expenses |
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(7,394) |
(8,845) |
(18,295) |
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Share of associated undertakings' and joint ventures' profit after tax |
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10 |
10 |
21 |
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Loss on disposal of subsidiaries, associated undertakings and strategic investments |
C1(c) |
(10) |
(1) |
(4) |
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Profit before tax |
|
564 |
805 |
1,532 |
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Income tax expense |
D1 |
(218) |
(250) |
(552) |
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Profit from continuing operations after tax |
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346 |
555 |
980 |
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Discontinued operations |
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(Loss)/profit from discontinued operations after tax |
G1 |
(10) |
(8) |
3 |
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Profit after tax for the financial period |
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336 |
547 |
983 |
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Attributable to |
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Equity holders of the parent |
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213 |
414 |
705 |
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Non-controlling interests |
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Ordinary shares |
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114 |
124 |
259 |
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Preferred securities |
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9 |
9 |
19 |
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Profit after tax for the financial period |
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336 |
547 |
983 |
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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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4.7 |
9.1 |
14.9 |
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Basic earnings per share based on profit from discontinued operations (pence) |
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(0.2) |
(0.2) |
0.1 |
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Basic earnings per ordinary share (pence) |
C2(a) |
4.5 |
8.9 |
15.0 |
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Diluted basic earnings per share based on profit from continuing operations (pence) |
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4.3 |
8.5 |
13.8 |
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Diluted basic earnings per share based on profit from discontinued operations (pence) |
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(0.2) |
(0.2) |
0.1 |
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Diluted basic earnings per ordinary share (pence) |
C2(b) |
4.1 |
8.3 |
13.9 |
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Weighted average number of ordinary shares (millions) |
C2(a) |
4,462 |
4,436 |
4,442 |
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Consolidated statement of comprehensive income |
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For the six months ended 30 June 2014 |
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£m |
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Notes |
Six months ended 30 June 2014 |
Six months ended 30 June 2013 |
Year ended 31 December 2013 |
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Profit after tax for the financial period |
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336 |
547 |
983 |
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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 gains/(losses) |
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Property revaluation |
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6 |
(3) |
23 |
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Measurement gains on defined benefit plans |
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1 |
2 |
70 |
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Income tax on items that will not be reclassified subsequently to profit or loss |
D1(c) |
3 |
4 |
(12) |
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10 |
3 |
81 |
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Items that may be reclassified subsequently to profit or loss |
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Fair value gains/(losses) |
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Net investment hedge |
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14 |
9 |
43 |
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Available-for-sale investments |
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Fair value gains/(losses) |
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15 |
(7) |
(5) |
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Recycled to profit or loss |
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- |
(8) |
(9) |
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Exchange difference recycled to profit or loss on disposal of business |
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(1) |
- |
- |
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Currency translation differences on translating foreign operations |
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(269) |
(346) |
(1,257) |
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Other movements |
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2 |
4 |
9 |
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Income tax on items that may be reclassified subsequently to profit or loss |
D1(c) |
(3) |
1 |
2 |
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(242) |
(347) |
(1,217) |
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Total other comprehensive income for the financial period from continuing operations |
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(232) |
(344) |
(1,136) |
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Total other comprehensive income for the financial period |
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(232) |
(344) |
(1,136) |
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Total comprehensive income for the financial period |
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104 |
203 |
(153) |
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Attributable to |
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Equity holders of the parent |
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39 |
202 |
(96) |
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Non-controlling interests |
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Ordinary shares |
|
56 |
(8) |
(76) |
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Preferred securities |
|
9 |
9 |
19 |
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Total comprehensive income for the financial period |
|
104 |
203 |
(153) |
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Reconciliation of adjusted operating profit to profit after tax |
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For the six months ended 30 June 2014 |
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£m |
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Notes |
Six months ended 30 June 2014 |
Six months ended 30 June 2013 |
Year ended 31 December 2013 |
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Core operations |
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Emerging Markets |
B3 |
291 |
300 |
594 |
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Nedbank |
B3 |
361 |
387 |
797 |
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Old Mutual Wealth |
B3 |
120 |
108 |
217 |
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Institutional Asset Management |
B3 |
54 |
54 |
111 |
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|
826 |
849 |
1,719 |
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Finance costs |
B3 |
(41) |
(46) |
(92) |
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Long-term investment return on excess assets |
|
13 |
25 |
43 |
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Net interest payable to non-core operations |
|
(2) |
(6) |
(11) |
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Corporate costs |
|
(25) |
(21) |
(54) |
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Other net (costs)/income |
|
(10) |
- |
7 |
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Adjusted operating profit before tax |
B3 |
761 |
801 |
1,612 |
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Adjusting items |
C1(a) |
(255) |
(69) |
(286) |
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Non-core operations |
B3 |
14 |
2 |
32 |
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Profit before tax (net of policyholder tax) |
|
520 |
734 |
1,358 |
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Income tax attributable to policyholder returns |
D1(d) |
44 |
71 |
174 |
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Profit before tax |
|
564 |
805 |
1,532 |
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Total tax expense |
D1(a) |
(218) |
(250) |
(552) |
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Profit from continuing operations after tax |
|
346 |
555 |
980 |
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(Loss)/profit from discontinued operations after tax |
G1 |
(10) |
(8) |
3 |
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Profit after tax for the financial period |
|
336 |
547 |
983 |
|
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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 2014 |
Six months ended 30 June 2013 |
Year ended 31 December 2013 |
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Adjusted operating profit before tax |
B3 |
761 |
801 |
1,612 |
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Tax on adjusted operating profit |
D1(d) |
(202) |
(207) |
(424) |
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Adjusted operating profit after tax |
|
559 |
594 |
1,188 |
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Non-controlling interests - ordinary shares |
B3 |
(126) |
(137) |
(279) |
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Non-controlling interests - preferred securities |
B3 |
(9) |
(9) |
(19) |
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Adjusted operating profit after tax attributable to ordinary equity holders of the parent |
B3 |
424 |
448 |
890 |
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Adjusted weighted average number of shares (millions) |
C2(c) |
4,840 |
4,835 |
4,836 |
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Adjusted operating earnings per share (pence) |
C2(c) |
8.8 |
9.3 |
18.4 |
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 standard IFRS profit measures for the specific items detailed in note C1 and, as such, it is a non-GAAP 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 and 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 successful 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 and costs related to the fundamental restructuring of continuing businesses. AOP includes dividends declared to holders of perpetual preferred callable securities. Old Mutual Bermuda and Nordic are treated as non-core and discontinued operations respectively 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 2014 |
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£m |
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Notes |
30 June 2014 |
30 June 2013 |
31 December 2013 |
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Assets |
|
|
|
|
|
Goodwill and other intangible assets |
|
2,500 |
3,056 |
2,835 |
|
Mandatory reserve deposits with central banks |
|
767 |
760 |
759 |
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Property, plant and equipment |
|
730 |
794 |
722 |
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Investment property |
|
1,778 |
1,911 |
1,811 |
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Deferred tax assets |
|
247 |
334 |
303 |
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Investments in associated undertakings and joint ventures |
|
201 |
130 |
168 |
|
Deferred acquisition costs |
|
909 |
1,264 |
1,211 |
|
Reinsurers' share of policyholder liabilities |
|
1,987 |
1,629 |
1,875 |
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Loans and advances |
|
33,727 |
37,418 |
33,583 |
|
Investments and securities |
|
86,198 |
88,915 |
88,220 |
|
Current tax receivable |
|
101 |
109 |
128 |
|
Trade, other receivables and other assets |
|
2,780 |
2,955 |
2,583 |
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Derivative financial instruments |
|
1,104 |
1,417 |
1,259 |
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Cash and cash equivalents |
|
4,289 |
5,035 |
4,869 |
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Non-current assets held for sale |
G2 |
4,473 |
5 |
5 |
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Total assets |
|
141,791 |
145,732 |
140,331 |
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Liabilities |
|
|
|
|
|
Long-term business policyholder liabilities |
|
78,092 |
81,443 |
81,141 |
|
General insurance liabilities |
|
319 |
350 |
332 |
|
Third-party interests in consolidated funds |
|
6,456 |
5,479 |
5,478 |
|
Borrowed funds |
E2 |
2,752 |
2,563 |
2,629 |
|
Provisions |
|
198 |
207 |
195 |
|
Deferred revenue |
|
367 |
664 |
628 |
|
Deferred tax liabilities |
|
424 |
435 |
491 |
|
Current tax payable |
|
205 |
250 |
237 |
|
Trade, other payables and other liabilities |
|
4,099 |
5,076 |
4,315 |
|
Amounts owed to bank depositors |
|
34,540 |
38,009 |
34,370 |
|
Derivative financial instruments |
|
1,174 |
1,623 |
1,478 |
|
Non-current liabilities held for sale |
G2 |
4,294 |
- |
- |
|
Total liabilities |
|
132,920 |
136,099 |
131,294 |
|
Net assets |
|
8,871 |
9,633 |
9,037 |
|
Shareholders' equity |
|
|
|
|
|
Equity attributable to equity holders of the parent |
|
7,062 |
7,729 |
7,270 |
|
Non-controlling interests |
|
|
|
|
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Ordinary shares |
|
1,536 |
1,632 |
1,502 |
|
Preferred securities |
|
273 |
272 |
265 |
|
Total non-controlling interests |
|
1,809 |
1,904 |
1,767 |
|
Total equity |
|
8,871 |
9,633 |
9,037 |
|
Consolidated statement of cash flows |
|
|||
|
For the six months ended 30 June 2014 |
|
|
|
|
|
|
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|
£m |
|
|
|
Six months ended 30 June 2014 |
Six months ended 30 June 2013 |
Year ended 31 December 2013 |
|
Cash flows from operating activities |
|
|
|
|
|
Profit before tax |
|
564 |
805 |
1,532 |
|
Non-cash movements in profit before tax |
|
806 |
620 |
1,423 |
|
Net changes in working capital |
|
(370) |
228 |
447 |
|
Taxation paid |
|
(175) |
(225) |
(458) |
|
Net cash inflow from operating activities |
|
825 |
1,428 |
2,944 |
|
Cash flows from investing activities |
|
|
|
|
|
Net acquisitions of financial investments |
|
(824) |
(590) |
(1,658) |
|
Acquisition of investment properties |
|
(31) |
(7) |
(47) |
|
Proceeds from disposal of investment properties |
|
39 |
9 |
22 |
|
Acquisition of property, plant and equipment |
|
(65) |
(50) |
(113) |
|
Proceeds from disposal of property, plant and equipment |
|
5 |
6 |
6 |
|
Acquisition of intangible assets |
|
(29) |
(31) |
(86) |
|
Acquisition of interests in subsidiaries, associated undertakings joint ventures and strategic investments |
|
(58) |
(31) |
(119) |
|
Disposal of interests in subsidiaries, associated undertakings joint ventures and strategic investments |
|
48 |
12 |
8 |
|
Net cash outflow from investing activities |
|
(915) |
(682) |
(1,987) |
|
Cash flows from financing activities |
|
|
|
|
|
Dividends paid to |
|
|
|
|
|
Ordinary equity holders of the Company |
|
(279) |
(238) |
(336) |
|
Non-controlling interests and preferred security interests |
|
(90) |
(95) |
(183) |
|
Dividends received from associated undertakings |
|
4 |
12 |
13 |
|
Interest paid (excluding banking interest paid) |
|
(24) |
(26) |
(51) |
|
Proceeds from issue of ordinary shares (including by subsidiaries to non-controlling interests) |
|
9 |
9 |
11 |
|
Net disposal/(acquisition) of treasury shares |
|
38 |
(29) |
55 |
|
Issue of subordinated and other debt |
|
357 |
- |
586 |
|
Subordinated and other debt repaid |
|
(196) |
(262) |
(578) |
|
Net cash outflow from financing activities |
|
(181) |
(629) |
(483) |
|
Net (decrease)/increase in cash and cash equivalents |
|
(271) |
117 |
474 |
|
Effects of exchange rate changes on cash and cash equivalents |
|
(234) |
(304) |
(828) |
|
Cash and cash equivalents at beginning of the year |
|
5,628 |
5,982 |
5,982 |
|
Cash and cash equivalents at end of the period |
|
5,123 |
5,795 |
5,628 |
|
Consisting of |
|
|
|
|
|
Cash and cash equivalents |
|
4,289 |
5,035 |
4,869 |
|
Mandatory reserve deposits with central banks |
|
767 |
760 |
759 |
|
Cash and cash equivalents included in assets held for sale |
|
67 |
- |
- |
|
Total |
|
5,123 |
5,795 |
5,628 |
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 £767 million (30 June 2013: £760 million; 31 December 2013: £759 million) and cash and cash equivalents subject to consolidation of funds of £1,733 million (30 June 2013: £1,757 million; 31 December 2013: £1,667 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 2014 |
|
|
|
|
|
|
|
|
|
|
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 gains |
|
- |
|
- |
- |
- |
14 |
|
Exchange differences recycled to profit or loss on disposal of business |
|
- |
|
- |
- |
- |
- |
|
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 |
- |
|
- |
- |
- |
- |
|
Equity share-based payment transactions |
|
- |
|
- |
- |
- |
- |
|
Other movements in share capital |
|
8 |
|
1 |
8 |
- |
- |
|
Expiry of Skandia AB shareholder claims |
|
- |
|
- |
- |
- |
- |
|
Merger reserve released |
|
- |
|
- |
- |
(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 |
|
- |
- |
- |
- |
- |
3 |
3 |
- |
3 |
|
6 |
- |
- |
- |
1 |
3 |
10 |
- |
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
14 |
- |
- |
14 |
- |
14 |
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
- |
- |
- |
14 |
1 |
15 |
|
- |
- |
- |
(1) |
- |
- |
(1) |
- |
(1) |
|
- |
- |
- |
(211) |
- |
- |
(211) |
(58) |
(269) |
|
- |
- |
3 |
- |
- |
- |
3 |
(1) |
2 |
|
- |
- |
- |
- |
- |
- |
(3) |
- |
(3) |
|
6 |
- |
3 |
(198) |
200 |
17 |
39 |
65 |
104 |
|
- |
- |
- |
- |
(279) |
(17) |
(296) |
(73) |
(369) |
|
- |
5 |
- |
- |
1 |
- |
6 |
(3) |
3 |
|
- |
- |
- |
- |
38 |
- |
47 |
(1) |
46 |
|
- |
- |
- |
- |
12 |
- |
12 |
- |
12 |
|
- |
- |
- |
- |
116 |
- |
- |
- |
- |
|
- |
- |
- |
- |
(16) |
- |
(16) |
54 |
38 |
|
- |
5 |
- |
- |
(128) |
(17) |
(247) |
(23) |
(270) |
|
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 2014 |
|
|
|
|
|
|
|
|
|
|
Millions |
|
|
|||
|
Six months ended 30 June 2013 |
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 |
|
4,892 |
|
559 |
835 |
1,717 |
65 |
|
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 |
|
- |
|
- |
- |
- |
(7) |
|
Recycled to profit or loss |
|
- |
|
- |
- |
- |
(8) |
|
Currency translation differences on translating foreign operations |
|
- |
|
- |
- |
- |
- |
|
Other movements |
|
- |
|
- |
- |
- |
- |
|
Income tax on items that may be reclassified subsequently to profit or loss |
D1(c) |
- |
|
- |
- |
- |
1 |
|
Total comprehensive income for the financial period |
|
- |
|
- |
- |
- |
(14) |
|
Dividends for the period |
C3 |
- |
|
- |
- |
- |
- |
|
Equity share-based payment transactions |
|
- |
|
- |
- |
- |
- |
|
Other movements in share capital |
|
4 |
|
- |
8 |
- |
- |
|
Change in participation in subsidiaries |
|
- |
|
- |
- |
- |
- |
|
Transactions with shareholders |
|
4 |
|
- |
8 |
- |
- |
|
Shareholders' equity at end of the period |
|
4,896 |
|
559 |
843 |
1,717 |
51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£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 |
|
144 |
268 |
33 |
(378) |
3,891 |
682 |
7,816 |
1,957 |
9,773 |
|
- |
- |
- |
- |
397 |
17 |
414 |
133 |
547 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) |
- |
- |
- |
- |
- |
(3) |
- |
(3) |
|
- |
- |
- |
- |
2 |
- |
2 |
- |
2 |
|
- |
- |
- |
- |
(1) |
5 |
4 |
- |
4 |
|
(3) |
- |
- |
- |
1 |
5 |
3 |
- |
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
9 |
- |
- |
9 |
- |
9 |
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
- |
- |
- |
(7) |
- |
(7) |
|
- |
- |
- |
- |
- |
- |
(8) |
- |
(8) |
|
- |
- |
- |
(221) |
- |
- |
(221) |
(125) |
(346) |
|
- |
- |
1 |
- |
10 |
- |
11 |
(7) |
4 |
|
- |
- |
- |
- |
- |
- |
1 |
- |
1 |
|
(3) |
- |
1 |
(212) |
408 |
22 |
202 |
1 |
203 |
|
- |
- |
- |
- |
(238) |
(22) |
(260) |
(73) |
(333) |
|
- |
(8) |
- |
- |
- |
- |
(8) |
(2) |
(10) |
|
- |
- |
- |
- |
(29) |
- |
(21) |
(3) |
(24) |
|
- |
- |
- |
- |
- |
- |
- |
24 |
24 |
|
- |
(8) |
- |
- |
(267) |
(22) |
(289) |
(54) |
(343) |
|
141 |
260 |
34 |
(590) |
4,032 |
682 |
7,729 |
1,904 |
9,633 |
|
Consolidated statement of changes in equity |
|||||||
|
For the six months ended 30 June 2014 |
|
|
|
|
|
|
|
|
|
|
Millions |
|
|
|||
|
Year ended 31 December 2013 |
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 |
|
4,892 |
|
559 |
835 |
1,717 |
65 |
|
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 gain 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 |
|
- |
|
- |
- |
- |
(6) |
|
Recycled to profit or loss |
|
- |
|
- |
- |
- |
(9) |
|
Currency translation differences on translating foreign operations |
|
- |
|
- |
- |
- |
- |
|
Other movements |
|
- |
|
- |
- |
- |
- |
|
Income tax on items that may be reclassified subsequently to profit or loss |
D1(c) |
- |
|
- |
- |
- |
2 |
|
Total comprehensive income for the financial year |
|
- |
|
- |
- |
- |
(13) |
|
Dividends for the year |
C3 |
- |
|
- |
- |
- |
- |
|
Equity share-based payment transactions |
|
- |
|
- |
- |
- |
- |
|
Other movements in share capital |
|
5 |
|
1 |
10 |
- |
- |
|
Preferred securities purchased |
|
- |
|
- |
- |
- |
- |
|
Change in participation in subsidiaries |
|
- |
|
- |
- |
- |
- |
|
Transactions with shareholders |
|
5 |
|
1 |
10 |
- |
- |
|
Shareholders' equity at end of the year |
|
4,897 |
|
560 |
845 |
1,717 |
52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£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 |
|
144 |
268 |
33 |
(378) |
3,891 |
682 |
7,816 |
1,957 |
9,773 |
|
- |
- |
- |
- |
668 |
37 |
705 |
278 |
983 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17 |
- |
- |
- |
- |
- |
17 |
6 |
23 |
|
- |
- |
- |
- |
52 |
- |
52 |
18 |
70 |
|
- |
- |
- |
- |
(14) |
10 |
(4) |
(8) |
(12) |
|
17 |
- |
- |
- |
38 |
10 |
65 |
16 |
81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
43 |
- |
- |
43 |
- |
43 |
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
- |
- |
- |
(6) |
1 |
(5) |
|
- |
- |
- |
- |
- |
- |
(9) |
- |
(9) |
|
- |
- |
- |
(899) |
- |
- |
(899) |
(358) |
(1,257) |
|
- |
- |
4 |
- |
(1) |
- |
3 |
6 |
9 |
|
- |
- |
- |
- |
- |
- |
2 |
- |
2 |
|
17 |
- |
4 |
(856) |
705 |
47 |
(96) |
(57) |
(153) |
|
- |
- |
- |
- |
(336) |
(47) |
(383) |
(136) |
(519) |
|
- |
48 |
- |
- |
13 |
- |
61 |
(17) |
44 |
|
- |
- |
- |
- |
55 |
- |
66 |
3 |
69 |
|
- |
- |
- |
- |
(21) |
(156) |
(177) |
- |
(177) |
|
- |
- |
- |
- |
(17) |
- |
(17) |
17 |
- |
|
- |
48 |
- |
- |
(306) |
(203) |
(450) |
(133) |
(583) |
|
161 |
316 |
37 |
(1,234) |
4,290 |
526 |
7,270 |
1,767 |
9,037 |
Notes to the consolidated financial statements
For the six months ended 30 June 2014
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 International Financial Reporting Standards (IFRS) adopted by the EU. The Group's results for the six months ended 30 June 2014 and the financial position at that date have been prepared using accounting policies consistent with those applied in the preparation of the Group's 2013 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 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 2013 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 2014 |
Six months ended 30 June 2013 |
Year ended 31 December 2013 |
|||
|
|
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 |
17.8499 |
18.1755 |
14.2269 |
15.0827 |
15.0959 |
17.4284 |
|
US dollars |
1.6690 |
1.7102 |
1.5448 |
1.5185 |
1.5650 |
1.6566 |
|
Euro |
1.2174 |
1.2492 |
1.1763 |
1.1676 |
1.1782 |
1.2014 |
New standards, interpretations and amendments adopted by the Group affecting the financial statements for the six months ended 30 June 2014
The new standards that were adopted in the current period were the amendments to IAS 32 'Financial Instruments: Presentation (Offsetting)' and IFRIC 21 'Levies'. Neither standard had a material effect on the financial statements of the Group.
A2: Significant corporate activity and business changes during the period
Transactions completed during the interim reporting period
Acquisition of Faulu Kenya DTM LTD
On 1 April 2014, the Group completed the acquisition of a controlling stake in the micro-lender Faulu Kenya DTM LTD for £17 million, with goodwill of £3 million being recognised.
Disposal of Skandia Poland
On 30 May 2014, the Group completed the disposal of Skandia Poland, part of Old Mutual Wealth. A loss on disposal of £15 million has been recognised in profit of loss.
Acquisition of a significant interest in Banco Unico
On 12 June 2014, the Group announced that it had completed the acquisition of a 36.4% stake in Bank Unico for US$24 million. Bank Unico is equity accounted as a joint venture in these financial statements.
Transactions agreed but not yet completed
Disposal of Skandia Austria and Skandia Germany
On 27 March 2014, the Group announced that terms had been agreed to sell two of its Old Mutual Wealth businesses, Skandia Austria and Skandia Germany. This transaction is subject to regulatory approvals and consequently the assets and liabilities of these businesses have been classified as held for sale in the statement of financial position. Refer to note G2 for further information.
Terms have been agreed to sell Skandia Liechtenstein, also part of Old Mutual Wealth. The transaction is subject to regulatory approval and the fulfilment of certain closing conditions.
The net asset value of goodwill and intangible assets of these businesses has been written down to the net realisable value given expected losses on disposal. As a result, an impairment loss of £125 million has been recognised in profit or loss.
The disposal of these businesses is expected to be completed during the second half of the year.
Acquisition of Intrinsic Financial Services Limited
On 1 July 2014, the Group announced the completion of the acquisition of Intrinsic Financial Services, one of the largest networks of financial advisers in the UK. Additionally, the Group announced that it intends to acquire the remaining 50% stake of Cirilium, the core investment proposition for Intrinsic's restricted financial advisers.
Acquisition of Old Mutual Finance (Pty) Ltd
Subject to regulatory approval, the Group is expected to complete the acquisition of a further stake in Old Mutual Finance (Pty) Ltd from Business Doctors in the second half of the year. Old Mutual Finance (Pty) Ltd is currently accounted for as joint venture and will be consolidated when the additional stake is acquired.
Financing activities
On 10 July 2014, Nedbank Group Limited announced its intention to issue new preference shares which will be utilised to raise funding for Nedbank's business activities in general.
A3: Critical accounting estimates and judgements
In the preparation of these interim 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 Annual Report and Accounts on page 144 and were described in further detail in the Report of the Chairman of the Group Audit Committee on page 97. During the period, there have been no significant changes to the areas of critical accounting estimates and judgements that the Group applied at 31 December 2013.
The Annual Report and Accounts is available in the Investor Relations section of the Group's website at www.oldmutual.com.
Notes to the consolidated financial statements
For the six months ended 30 June 2014
B: Segment information
B1: Basis of segmentation
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 net client cash flows, funds under management, gross earned premiums, underwriting results, net interest income and non-interest revenue and credit losses.
A reconciliation between segment revenues and expenses and the Group's revenues and expenses is shown in note B3. 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 and 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 property and casualty (premium income). The principal lines of business from which each operating segment derives its revenues are as follows:
Core operations
Emerging Markets - life assurance, property and casualty, asset management and banking
Nedbank - banking and asset management
Old Mutual Wealth - life assurance and asset management
Institutional Asset Management - asset management
Non-core operations
Old Mutual Bermuda - life assurance
Segment presentation
The results of the property and casualty business were previously disclosed separately. However, following changes in management oversight, these have been included in the Emerging Markets segment with effect from 1 January 2014. This change has been applied to all periods presented and comparative information has been re-presented accordingly.
The USAM segment has been renamed to Institutional Asset Management.
There have been no other changes to the presentation of segment information.
The Group's reported segments are now Emerging Markets, Nedbank, Old Mutual Wealth and Institutional Asset Management. The Other segment includes Group Head Office. 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 adjusted operating profit.
As set out in the 2013 Annual Report and Accounts, the Group continues to incur costs related to the sale of its Nordic business in 2012. These costs largely relate to the transition of IT information and support services that were previously provided by the Nordic business to the wider Group back to the Group. These costs are included in the expenses related to the discontinued operations in the IFRS consolidated income statement for the six months ended 30 June 2014 and as non-core for determining the Group's AOP for the six months ended 30 June 2014. Further information on the results of discontinued operations is provided in note G1.
All other businesses have been classified as continuing operations for all reporting periods.
|
B2: Gross earned premiums and deposits to investment contracts |
|||
|
|
|
|
£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 |
|
Six months ended 30 June 2013 |
Emerging Markets |
Old Mutual Wealth |
Total |
|
Life assurance - insurance contracts |
967 |
175 |
1,142 |
|
Life assurance - investment contracts with discretionary participation features |
476 |
- |
476 |
|
General insurance |
377 |
- |
377 |
|
Gross earned premiums |
1,820 |
175 |
1,995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m |
|
Year ended 31 December 2013 |
Emerging Markets |
Old Mutual Wealth |
Total |
|
Life assurance - insurance contracts |
1,616 |
336 |
1,952 |
|
Life assurance - investment contracts with discretionary participation features |
1,025 |
- |
1,025 |
|
General insurance |
724 |
- |
724 |
|
Gross earned premiums |
3,365 |
336 |
3,701 |
|
Notes to the consolidated financial statements |
||||
|
For the six months ended 30 June 2014 |
|
|
|
|
|
|
|
|
|
|
|
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 (including interest and similar expenses) |
|
|
- |
- |
|
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 |
|
Loss 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 net of tax and non-controlling interests |
C1(a) |
|
2 |
8 |
|
Profit/(loss) after tax from continuing operations |
|
|
204 |
148 |
|
Loss from discontinued operations after tax |
G1 |
|
- |
- |
|
Profit/(loss) after tax attributable to equity holders of the parent |
|
|
204 |
148 |
1 Non-core operations relate to Old Mutual Bermuda. Old Mutual Bermuda profit after tax for the six months ended 30 June 2014 was £14 million. Non-core operations also include £10 million divestment costs incurred relation to the Nordic business sold in 2012. Further information on discontinued operations is provided in note G1.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£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 |
|
Notes to the consolidated financial statements |
||||
|
For the six months ended 30 June 2014 |
|
|
|
|
|
|
|
|
|
|
|
B: Segment information continued |
||||
|
B3: Adjusted operating profit statement - segment information for the six months ended 30 June 2013 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
Emerging Markets |
Nedbank |
|
Revenue |
|
|
|
|
|
Gross earned premiums |
B2 |
|
1,820 |
- |
|
Outward reinsurance |
|
|
(119) |
- |
|
Net earned premiums |
|
|
1,701 |
- |
|
Investment return (non-banking) |
|
|
1,991 |
- |
|
Banking interest and similar income |
|
|
- |
1,573 |
|
Banking trading, investment and similar income |
|
|
- |
110 |
|
Fee and commission income, and income from service activities |
|
|
276 |
537 |
|
Other income |
|
|
23 |
18 |
|
Inter-segment revenues |
|
|
38 |
7 |
|
Total revenue |
|
|
4,029 |
2,245 |
|
Expenses |
|
|
|
|
|
Claims and benefits (including change in insurance contract provisions) |
|
|
(2,168) |
- |
|
Reinsurance recoveries |
|
|
93 |
- |
|
Net claims and benefits incurred |
|
|
(2,075) |
- |
|
Change in investment contract liabilities |
|
|
(888) |
- |
|
Losses on loans and advances |
|
|
- |
(234) |
|
Finance costs (including interest and similar expenses) |
|
|
- |
- |
|
Banking interest payable and similar expenses |
|
|
- |
(832) |
|
Fee and commission expenses, and other acquisition costs |
|
|
(176) |
(25) |
|
Change in third-party interest in consolidated funds |
|
|
- |
- |
|
Other operating and administrative expenses |
|
|
(563) |
(740) |
|
Income tax attributable to policyholder returns |
|
|
(22) |
- |
|
Inter-segment expenses |
|
|
(12) |
(27) |
|
Total expenses |
|
|
(3,736) |
(1,858) |
|
Share of associated undertakings' and joint ventures' profit after tax |
|
|
7 |
- |
|
Loss on disposal of subsidiaries, associated undertakings and strategic investments |
C1(c) |
|
- |
- |
|
Adjusted operating profit/(loss) before tax and non-controlling interests |
|
|
300 |
387 |
|
Income tax expense |
D1 |
|
(78) |
(100) |
|
Non-controlling interests |
|
|
(12) |
(134) |
|
Adjusted operating profit/(loss) after tax and non-controlling interests |
|
|
210 |
153 |
|
Adjusting items net of tax and non-controlling interests |
C1(a) |
|
(4) |
4 |
|
Profit/(loss) after tax from continuing operations |
|
|
206 |
157 |
|
Loss from discontinued operations after tax |
G1 |
|
- |
- |
|
Profit/(loss) after tax attributable to equity holders of the parent |
|
|
206 |
157 |
1 Non-core operations relate to Old Mutual Bermuda. Old Mutual Bermuda profit after tax for the six months ended 30 June 2013 was £2 million. Non-core operations also include £8 million divestment costs incurred relation to the Nordic business sold in 2012. Further information on discontinued operations is provided in note G1.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£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 |
|
|
|
|
|
|
|
|
|
|
175 |
- |
- |
- |
1,995 |
- |
- |
1,995 |
|
(43) |
- |
- |
- |
(162) |
- |
- |
(162) |
|
132 |
- |
- |
- |
1,833 |
- |
- |
1,833 |
|
2,195 |
- |
34 |
304 |
4,524 |
(17) |
(18) |
4,489 |
|
- |
- |
- |
- |
1,573 |
- |
- |
1,573 |
|
- |
- |
- |
- |
110 |
- |
- |
110 |
|
608 |
185 |
- |
4 |
1,610 |
(34) |
- |
1,576 |
|
13 |
2 |
- |
- |
56 |
- |
4 |
60 |
|
- |
- |
5 |
(56) |
(6) |
- |
6 |
- |
|
2,948 |
187 |
39 |
252 |
9,700 |
(51) |
(8) |
9,641 |
|
|
|
|
|
|
|
|
|
|
(148) |
- |
- |
- |
(2,316) |
- |
21 |
(2,295) |
|
25 |
- |
- |
- |
118 |
- |
- |
118 |
|
(123) |
- |
- |
- |
(2,198) |
- |
21 |
(2,177) |
|
(2,112) |
- |
- |
- |
(3,000) |
- |
- |
(3,000) |
|
- |
- |
- |
- |
(234) |
- |
- |
(234) |
|
- |
- |
(46) |
- |
(46) |
23 |
- |
(23) |
|
- |
- |
- |
- |
(832) |
- |
- |
(832) |
|
(340) |
(2) |
- |
(32) |
(575) |
40 |
(3) |
(538) |
|
- |
- |
- |
(271) |
(271) |
- |
- |
(271) |
|
(205) |
(134) |
(35) |
(5) |
(1,682) |
(80) |
(8) |
(1,770) |
|
|
|
|
|
|
|
|
|
|
(49) |
- |
- |
- |
(71) |
71 |
- |
- |
|
(11) |
- |
(6) |
56 |
- |
- |
- |
- |
|
(2,840) |
(136) |
(87) |
(252) |
(8,909) |
54 |
10 |
(8,845) |
|
- |
3 |
- |
- |
10 |
- |
- |
10 |
|
- |
- |
- |
- |
- |
(1) |
- |
(1) |
|
108 |
54 |
(48) |
- |
801 |
2 |
2 |
805 |
|
(20) |
(13) |
4 |
- |
(207) |
(43) |
- |
(250) |
|
- |
- |
- |
- |
(146) |
13 |
- |
(133) |
|
88 |
41 |
(44) |
- |
448 |
(28) |
2 |
422 |
|
(54) |
(9) |
35 |
- |
(28) |
28 |
- |
- |
|
34 |
32 |
(9) |
- |
420 |
- |
2 |
422 |
|
- |
- |
- |
- |
- |
- |
(8) |
(8) |
|
34 |
32 |
(9) |
- |
420 |
- |
(6) |
414 |
|
Notes to the consolidated financial statements |
|
|
|
|
|
For the six months ended 30 June 2014 |
|
|
|
|
|
|
|
|
|
|
|
B: Segment information continued |
||||
|
B3: Adjusted operating profit statement - segment information for the year ended 31 December 2013 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
Emerging Markets |
Nedbank |
|
Revenue |
|
|
|
|
|
Gross earned premiums |
B2 |
|
3,365 |
- |
|
Outward reinsurance |
|
|
(230) |
- |
|
Net earned premiums |
|
|
3,135 |
- |
|
Investment return (non-banking) |
|
|
5,184 |
- |
|
Banking interest and similar income |
|
|
- |
3,050 |
|
Banking trading, investment and similar income |
|
|
- |
195 |
|
Fee and commission income, and income from service activities |
|
|
552 |
1,048 |
|
Other income |
|
|
39 |
31 |
|
Inter-segment revenues |
|
|
61 |
11 |
|
Total revenue |
|
|
8,971 |
4,335 |
|
Expenses |
|
|
|
|
|
Claims and benefits (including change in insurance contract provisions) |
|
|
(5,061) |
- |
|
Reinsurance recoveries |
|
|
201 |
- |
|
Net claims and benefits incurred |
|
|
(4,860) |
- |
|
Change in investment contract liabilities |
|
|
(1,952) |
- |
|
Losses on loans and advances |
|
|
- |
(368) |
|
Finance costs (including interest and similar expenses) |
|
|
- |
- |
|
Banking interest payable and similar expenses |
|
|
- |
(1,616) |
|
Fee and commission expenses, and other acquisition costs |
|
|
(341) |
(12) |
|
Change in third-party interest in consolidated funds |
|
|
- |
- |
|
Other operating and administrative expenses |
|
|
(1,165) |
(1,495) |
|
Income tax attributable to policyholder returns |
|
|
(62) |
- |
|
Inter-segment expenses |
|
|
(11) |
(49) |
|
Total expenses |
|
|
(8,391) |
(3,540) |
|
Share of associated undertakings' and joint ventures' profit after tax |
|
|
14 |
2 |
|
Loss on disposal of subsidiaries, associated undertakings and strategic investments |
C1(c) |
|
- |
- |
|
Adjusted operating profit/(loss) before tax and non-controlling interests |
|
|
594 |
797 |
|
Income tax expense |
D1 |
|
(155) |
(200) |
|
Non-controlling interests |
|
|
(16) |
(282) |
|
Adjusted operating profit/(loss) after tax and non-controlling interests |
|
|
423 |
315 |
|
Adjusting items net of tax and non-controlling interests |
C1(a) |
|
(84) |
12 |
|
Profit/(loss) after tax from continuing operations |
|
|
339 |
327 |
|
Profit from discontinued operations after tax |
G1 |
|
- |
- |
|
Profit/(loss) after tax attributable to equity holders of the parent |
|
|
339 |
327 |
1 Non-core operations relate to Old Mutual Bermuda. Old Mutual Bermuda profit after tax for the year ended 31 December 2013 was £32 million. Non-core operations also include a net gain of £3 million divestment cost and additional proceeds received in relation to the Nordic business sold in 2012. Further information on discontinued operations is provided in note G1.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£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 |
|
|
|
|
|
|
|
|
|
|
336 |
- |
- |
- |
3,701 |
- |
- |
3,701 |
|
(87) |
- |
- |
- |
(317) |
- |
- |
(317) |
|
249 |
- |
- |
- |
3,384 |
- |
- |
3,384 |
|
4,159 |
- |
68 |
634 |
10,045 |
(94) |
35 |
9,986 |
|
- |
- |
- |
- |
3,050 |
- |
- |
3,050 |
|
- |
- |
- |
- |
195 |
- |
- |
195 |
|
1,173 |
381 |
- |
8 |
3,162 |
(67) |
- |
3,095 |
|
21 |
3 |
(2) |
2 |
94 |
- |
6 |
100 |
|
1 |
- |
8 |
(92) |
(11) |
- |
11 |
- |
|
5,603 |
384 |
74 |
552 |
19,919 |
(161) |
52 |
19,810 |
|
|
|
|
|
|
|
|
|
|
(347) |
- |
- |
- |
(5,408) |
- |
(2) |
(5,410) |
|
45 |
- |
- |
- |
246 |
- |
- |
246 |
|
(302) |
- |
- |
- |
(5,162) |
- |
(2) |
(5,164) |
|
(3,921) |
- |
- |
- |
(5,873) |
- |
- |
(5,873) |
|
- |
- |
- |
- |
(368) |
- |
- |
(368) |
|
- |
- |
(92) |
- |
(92) |
11 |
- |
(81) |
|
- |
- |
- |
- |
(1,616) |
- |
- |
(1,616) |
|
(622) |
(4) |
- |
(70) |
(1,049) |
78 |
(5) |
(976) |
|
- |
- |
- |
(564) |
(564) |
- |
- |
(564) |
|
(408) |
(274) |
(78) |
(10) |
(3,430) |
(210) |
(13) |
(3,653) |
|
(112) |
- |
- |
- |
(174) |
174 |
- |
- |
|
(21) |
- |
(11) |
92 |
- |
- |
- |
- |
|
(5,386) |
(278) |
(181) |
(552) |
(18,328) |
53 |
(20) |
(18,295) |
|
- |
5 |
- |
- |
21 |
- |
- |
21 |
|
- |
- |
- |
- |
- |
(4) |
- |
(4) |
|
217 |
111 |
(107) |
- |
1,612 |
(112) |
32 |
1,532 |
|
(40) |
(27) |
(2) |
- |
(424) |
(128) |
- |
(552) |
|
- |
- |
- |
- |
(298) |
20 |
- |
(278) |
|
177 |
84 |
(109) |
- |
890 |
(220) |
32 |
702 |
|
(139) |
(30) |
21 |
- |
(220) |
220 |
- |
- |
|
38 |
54 |
(88) |
- |
670 |
- |
32 |
702 |
|
- |
- |
- |
- |
- |
- |
3 |
3 |
|
38 |
54 |
(88) |
- |
670 |
- |
35 |
705 |
|
Notes to the consolidated financial statements |
|
|
|
|
|
For the six months ended 30 June 2014 |
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
128 |
11 |
|
Loans and advances |
|
|
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 |
G2 |
|
- |
1 |
|
Inter-segment assets |
|
|
628 |
269 |
|
Total assets |
|
|
34,019 |
42,962 |
|
Liabilities |
|
|
|
|
|
Life assurance policyholder liabilities |
|
|
28,438 |
889 |
|
General insurance liabilities |
|
|
319 |
- |
|
Third-party interests in consolidated funds |
|
|
- |
- |
|
Borrowed funds |
E2 |
|
165 |
1,899 |
|
Provisions |
|
|
145 |
1 |
|
Deferred revenue |
|
|
15 |
- |
|
Deferred tax liabilities |
|
|
184 |
35 |
|
Current tax payable |
|
|
125 |
6 |
|
Trade, other payables and other liabilities |
|
|
1,834 |
798 |
|
Amounts owed to bank depositors |
|
|
310 |
34,230 |
|
Derivative financial instruments |
|
|
338 |
798 |
|
Non-current liabilities held for sale |
G2 |
|
- |
- |
|
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 |
|
|
|
|
|
|
|
|
47,981 |
- |
- |
- |
784 |
78,092 |
|
- |
- |
- |
- |
- |
319 |
|
- |
- |
- |
6,456 |
- |
6,456 |
|
- |
1 |
687 |
- |
- |
2,752 |
|
24 |
2 |
26 |
- |
- |
198 |
|
352 |
- |
- |
- |
- |
367 |
|
184 |
- |
21 |
- |
- |
424 |
|
23 |
3 |
48 |
- |
- |
205 |
|
774 |
212 |
46 |
427 |
8 |
4,099 |
|
- |
- |
- |
- |
- |
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 |
|
Notes to the consolidated financial statements |
||||
|
For the six months ended 30 June 2014 |
|
|
|
|
|
|
|
|
|
|
|
B: Segment information continued |
|
|
|
|
|
B4: Statement of financial position - segment information at 30 June 2013 |
||||
|
|
|
|
|
|
|
|
Notes |
|
Emerging Markets |
Nedbank |
|
Assets |
|
|
|
|
|
Goodwill and other intangible assets |
|
|
134 |
494 |
|
Mandatory reserve deposits with central banks |
|
|
- |
760 |
|
Property, plant and equipment |
|
|
344 |
424 |
|
Investment property |
|
|
1,555 |
14 |
|
Deferred tax assets |
|
|
96 |
21 |
|
Investments in associated undertakings and joint ventures |
|
|
65 |
35 |
|
Deferred acquisition costs |
|
|
110 |
- |
|
Reinsurers' share of policyholder liabilities |
|
|
158 |
12 |
|
Loans and advances |
|
|
418 |
36,812 |
|
Investments and securities |
|
|
30,412 |
5,839 |
|
Current tax receivable |
|
|
15 |
30 |
|
Trade, other receivables and other assets |
|
|
794 |
623 |
|
Derivative financial instruments |
|
|
358 |
862 |
|
Cash and cash equivalents |
|
|
1,038 |
1,113 |
|
Non-current assets held for sale |
|
|
- |
1 |
|
Inter-segment assets |
|
|
466 |
142 |
|
Total assets |
|
|
35,963 |
47,182 |
|
Liabilities |
|
|
|
|
|
Life assurance policyholder liabilities |
|
|
29,826 |
906 |
|
General insurance liabilities |
|
|
350 |
- |
|
Third-party interests in consolidated funds |
|
|
- |
- |
|
Borrowed funds |
E2 |
|
199 |
1,726 |
|
Provisions |
|
|
125 |
(6) |
|
Deferred revenue |
|
|
17 |
1 |
|
Deferred tax liabilities |
|
|
157 |
28 |
|
Current tax payable |
|
|
161 |
8 |
|
Trade, other payables and other liabilities |
|
|
2,469 |
1,061 |
|
Amounts owed to bank depositors |
|
|
83 |
37,926 |
|
Derivative financial instruments |
|
|
401 |
1,112 |
|
Non-current liabilities held for sale |
|
|
- |
- |
|
Inter-segment liabilities |
|
|
231 |
451 |
|
Total liabilities |
|
|
34,019 |
43,213 |
|
Net assets |
|
|
1,944 |
3,969 |
|
Equity |
|
|
|
|
|
Equity attributable to equity holders of the parent |
|
|
1,892 |
2,140 |
|
Non-controlling interests |
|
|
52 |
1,829 |
|
Ordinary shares |
|
|
52 |
1,557 |
|
Preferred securities |
|
|
- |
272 |
|
|
|
|
|
|
|
Total equity |
|
|
1,944 |
3,969 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m |
|
Old Mutual Wealth |
Institutional Asset Management |
Other |
Consolidation adjustments |
Non-core operations |
Total |
|
|
|
|
|
|
|
|
1,556 |
872 |
- |
- |
- |
3,056 |
|
- |
- |
- |
- |
- |
760 |
|
13 |
12 |
1 |
- |
- |
794 |
|
- |
- |
- |
342 |
- |
1,911 |
|
32 |
181 |
2 |
- |
2 |
334 |
|
- |
13 |
17 |
- |
- |
130 |
|
1,145 |
9 |
- |
- |
- |
1,264 |
|
1,459 |
- |
- |
- |
- |
1,629 |
|
188 |
- |
- |
- |
- |
37,418 |
|
48,306 |
36 |
426 |
3,323 |
573 |
88,915 |
|
64 |
- |
- |
- |
- |
109 |
|
480 |
103 |
37 |
501 |
417 |
2,955 |
|
- |
- |
56 |
133 |
8 |
1,417 |
|
633 |
104 |
259 |
1,757 |
131 |
5,035 |
|
4 |
- |
- |
- |
- |
5 |
|
75 |
22 |
1,390 |
(2,759) |
664 |
- |
|
53,955 |
1,352 |
2,188 |
3,297 |
1,795 |
145,732 |
|
|
|
|
|
|
|
|
49,520 |
- |
- |
- |
1,191 |
81,443 |
|
- |
- |
- |
- |
- |
350 |
|
- |
- |
- |
5,479 |
- |
5,479 |
|
- |
11 |
627 |
- |
- |
2,563 |
|
51 |
3 |
34 |
- |
- |
207 |
|
646 |
- |
- |
- |
- |
664 |
|
234 |
- |
16 |
- |
- |
435 |
|
40 |
2 |
39 |
- |
- |
250 |
|
764 |
203 |
71 |
472 |
36 |
5,076 |
|
- |
- |
- |
- |
- |
38,009 |
|
- |
- |
4 |
105 |
1 |
1,623 |
|
- |
- |
- |
- |
- |
- |
|
631 |
548 |
898 |
(2,759) |
- |
- |
|
51,886 |
767 |
1,689 |
3,297 |
1,228 |
136,099 |
|
2,069 |
585 |
499 |
- |
567 |
9,633 |
|
|
|
|
|
|
|
|
2,069 |
562 |
499 |
- |
567 |
7,729 |
|
- |
23 |
- |
- |
- |
1,904 |
|
- |
23 |
- |
- |
- |
1,632 |
|
- |
- |
- |
- |
- |
272 |
|
|
|
|
|
|
|
|
2,069 |
585 |
499 |
- |
567 |
9,633 |
|
Notes to the consolidated financial statements |
|
|
|
|
|
For the six months ended 30 June 2014 |
|
|
|
|
|
|
|
|
|
|
|
B: Segment information continued |
|
|
|
|
|
B4: Statement of financial position - segment information at 31 December 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
Emerging Markets |
Nedbank |
|
Assets |
|
|
|
|
|
Goodwill and other intangible assets |
|
|
134 |
446 |
|
Mandatory reserve deposits with central banks |
|
|
- |
759 |
|
Property, plant and equipment |
|
|
303 |
391 |
|
Investment property |
|
|
1,443 |
11 |
|
Deferred tax assets |
|
|
104 |
11 |
|
Investments in associated undertakings and joint ventures |
|
|
76 |
63 |
|
Deferred acquisition costs |
|
|
107 |
- |
|
Reinsurers' share of policyholder liabilities |
|
|
174 |
11 |
|
Loans and advances |
|
|
255 |
33,145 |
|
Investments and securities |
|
|
28,592 |
5,387 |
|
Current tax receivable |
|
|
12 |
32 |
|
Trade, other receivables and other assets |
|
|
713 |
585 |
|
Derivative financial instruments |
|
|
349 |
791 |
|
Cash and cash equivalents |
|
|
702 |
1,196 |
|
Non-current assets held for sale |
|
|
- |
- |
|
Inter-segment assets |
|
|
635 |
77 |
|
Total assets |
|
|
33,599 |
42,905 |
|
Liabilities |
|
|
|
|
|
Life assurance policyholder liabilities |
|
|
28,043 |
852 |
|
General insurance liabilities |
|
|
332 |
- |
|
Third-party interests in consolidated funds |
|
|
- |
- |
|
Borrowed funds |
E2 |
|
172 |
1,813 |
|
Provisions |
|
|
133 |
(1) |
|
Deferred revenue |
|
|
18 |
- |
|
Deferred tax liabilities |
|
|
182 |
34 |
|
Current tax payable |
|
|
125 |
17 |
|
Trade, other payables and other liabilities |
|
|
1,947 |
873 |
|
Amounts owed to bank depositors |
|
|
280 |
34,083 |
|
Derivative financial instruments |
|
|
466 |
974 |
|
Non-current liabilities held for sale |
|
|
- |
- |
|
Inter-segment liabilities |
|
|
197 |
567 |
|
Total liabilities |
|
|
31,895 |
39,212 |
|
Net assets |
|
|
1,704 |
3,693 |
|
Equity |
|
|
|
|
|
Equity attributable to equity holders of the parent |
|
|
1,654 |
1,976 |
|
Non-controlling interests |
|
|
50 |
1,717 |
|
Ordinary shares |
|
|
50 |
1,452 |
|
Preferred securities |
|
|
- |
265 |
|
|
|
|
|
|
|
Total equity |
|
|
1,704 |
3,693 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m |
|
Old Mutual Wealth |
Institutional Asset Management |
Other |
Consolidation adjustments |
Non-core operations |
Total |
|
|
|
|
|
|
|
|
1,461 |
794 |
- |
- |
- |
2,835 |
|
- |
- |
- |
- |
- |
759 |
|
12 |
15 |
1 |
- |
- |
722 |
|
- |
- |
- |
357 |
- |
1,811 |
|
20 |
167 |
- |
- |
1 |
303 |
|
- |
19 |
10 |
- |
- |
168 |
|
1,094 |
10 |
- |
- |
- |
1,211 |
|
1,690 |
- |
- |
- |
- |
1,875 |
|
183 |
- |
- |
- |
- |
33,583 |
|
49,868 |
33 |
378 |
3,502 |
460 |
88,220 |
|
84 |
- |
- |
- |
- |
128 |
|
426 |
113 |
43 |
351 |
352 |
2,583 |
|
- |
- |
62 |
49 |
8 |
1,259 |
|
687 |
117 |
457 |
1,667 |
43 |
4,869 |
|
5 |
- |
- |
- |
- |
5 |
|
93 |
21 |
976 |
(2,083) |
281 |
- |
|
55,623 |
1,289 |
1,927 |
3,843 |
1,145 |
140,331 |
|
|
|
|
|
|
|
|
51,327 |
- |
- |
- |
919 |
81,141 |
|
- |
- |
- |
- |
- |
332 |
|
- |
- |
- |
5,478 |
- |
5,478 |
|
- |
2 |
642 |
- |
- |
2,629 |
|
32 |
2 |
29 |
- |
- |
195 |
|
610 |
- |
- |
- |
- |
628 |
|
254 |
- |
21 |
- |
- |
491 |
|
52 |
3 |
40 |
- |
- |
237 |
|
786 |
248 |
40 |
412 |
9 |
4,315 |
|
7 |
- |
- |
- |
- |
34,370 |
|
- |
- |
- |
36 |
2 |
1,478 |
|
- |
- |
- |
- |
- |
- |
|
312 |
487 |
520 |
(2,083) |
- |
- |
|
53,380 |
742 |
1,292 |
3,843 |
930 |
131,294 |
|
2,243 |
547 |
635 |
- |
215 |
9,037 |
|
|
|
|
|
|
|
|
2,243 |
547 |
635 |
- |
215 |
7,270 |
|
- |
- |
- |
- |
- |
1,767 |
|
- |
- |
- |
- |
- |
1,502 |
|
- |
- |
- |
- |
- |
265 |
|
|
|
|
|
|
|
|
2,243 |
547 |
635 |
- |
215 |
9,037 |
Notes to the consolidated financial statements
For the six months ended 30 June 2014
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 2014 |
Six months ended 30 June 2013 |
Year ended 31 December 2013 |
|
|
(Expense)/income |
|
|
|
|
|
|
Goodwill impairment and impact of acquisition accounting |
C1(b) |
(181) |
(57) |
(141) |
|
|
Loss on disposal of subsidiaries, associated undertakings and strategic investments |
C1(c) |
(10) |
(1) |
(4) |
|
|
Short-term fluctuations in investment return |
C1(d) |
(15) |
16 |
6 |
|
|
Investment return adjustment for Group equity and debt instruments held in life funds |
C1(e) |
2 |
(33) |
(100) |
|
|
Dividends declared to holders of perpetual preferred callable securities |
C1(f) |
16 |
22 |
42 |
|
|
Institutional Asset Management equity plans |
C1(g) |
(9) |
(17) |
(38) |
|
|
Credit-related fair value (losses)/gains on Group debt instruments |
C1(h) |
(39) |
1 |
(31) |
|
|
Restructuring costs |
C1(i) |
(19) |
- |
(20) |
|
|
Total adjusting items |
|
(255) |
(69) |
(286) |
|
|
Tax on adjusting items |
D1(d) |
28 |
28 |
46 |
|
|
Non-controlling interest in adjusting items |
|
12 |
13 |
20 |
|
|
Total adjusting items after tax and non-controlling interests |
|
(215) |
(28) |
(220) |
|
(b) Goodwill impairment and impact of acquisition accounting
When applying acquisition accounting, deferred acquisition costs and deferred revenues 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 and the amortisation and impairment of acquired other intangibles and acquired PVIF and the movements in certain acquisition date provisions. Costs incurred on successful 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 2014 |
|
Emerging Markets |
Old Mutual Wealth |
Total |
|
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) |
|
Impairment of goodwill and other intangible assets |
|
- |
(125) |
(125) |
|
|
|
(1) |
(180) |
(181) |
|
|
|
|
|
|
|
Impairment of goodwill and other intangible assets of £125 million relates to the write down of goodwill and intangible assets as a result of the prospective sales of Skandia Germany, Skandia Austria and Skandia Liechtenstein. |
||||
|
|
|
|
|
|
|
|
|
|
|
£m |
|
Six months ended 30 June 2013 |
|
Emerging Markets |
Old Mutual Wealth |
Total |
|
Amortisation of acquired PVIF |
|
- |
(38) |
(38) |
|
Amortisation of acquired deferred costs and revenue |
|
- |
6 |
6 |
|
Amortisation of other acquired intangible assets |
|
(1) |
(23) |
(24) |
|
Impairment of goodwill and other intangible assets |
|
(1) |
- |
(1) |
|
|
|
(2) |
(55) |
(57) |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m |
|
Year ended 31 December 2013 |
|
Emerging Markets |
Old Mutual Wealth |
Total |
|
Amortisation of acquired PVIF |
|
- |
(76) |
(76) |
|
Amortisation of acquired deferred costs and revenue |
|
- |
11 |
11 |
|
Amortisation of other acquired intangible assets |
|
(2) |
(46) |
(48) |
|
Impairment of goodwill and other intangible assets |
|
(8) |
(20) |
(28) |
|
|
|
(10) |
(131) |
(141) |
(c) Loss on disposal of subsidiaries, associated undertakings and strategic investments
Loss on disposal of subsidiaries, associated undertakings and strategic investments is analysed below:
|
|
|
|
£m |
|
|
Six months ended 30 June 2014 |
Six months ended 30 June 2013 |
Year ended 31 December 2013 |
|
Emerging Markets |
4 |
- |
- |
|
Old Mutual Wealth |
(15) |
- |
- |
|
Institutional Asset Management |
1 |
(1) |
(4) |
|
Loss on disposal of subsidiaries, associated undertakings and strategic investments |
(10) |
(1) |
(4) |
Emerging Markets
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 once the transaction becomes unconditional. A profit of £4 million has been recognised on this transaction.
Old Mutual Wealth
On 30 May 2014, the Group completed the disposal of Skandia Poland, part of Old Mutual Wealth. A loss on disposal of £15 million has been recognised in the income statement.
Institutional Asset Management
The Group released a £1 million accrual relating to the disposal of Echo Point which was effective during the year ended 31 December 2013. The Group had previously recognised a loss on disposal of £3 million.
On 2 January 2013, the Group completed the sale of five of its affiliates and recognised a loss of £1 million.
(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 general insurance 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 frequently by the Board, usually annually, 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 2014 |
Six months ended 30 June 2013 |
Year ended 31 December 2013 |
|
Emerging Markets |
7.4 - 8.0 |
7.4 - 8.0 |
7.4 - 8.0 |
|
Old Mutual Wealth |
1.0 |
1.0 |
1.0 |
Notes to the consolidated financial statements
For the six months ended 30 June 2014
C: Other key performance information continued
C1: Operating profit adjusting items continued
|
(d) Short-term fluctuations in investment return continued |
|||||
|
|
|||||
|
Analysis of short-term fluctuations in investment return |
|||||
|
|
£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 |
||||
|
Six months ended 30 June 2013 |
Emerging Markets |
Old Mutual Wealth |
Other |
Total |
|
|
Actual shareholder investment return |
100 |
24 |
18 |
142 |
|
|
Less: Long-term investment return |
72 |
29 |
25 |
126 |
|
|
Short-term fluctuations in investment return |
28 |
(5) |
(7) |
16 |
|
|
|
|
|
|
|
|
|
|
£m |
||||
|
Year ended 31 December 2013 |
Emerging Markets |
Old Mutual Wealth |
Other |
Total |
|
|
Actual shareholder investment return |
160 |
22 |
34 |
216 |
|
|
Less: Long-term investment return |
137 |
30 |
43 |
210 |
|
|
Short-term fluctuations in investment return |
23 |
(8) |
(9) |
6 |
|
(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 Nedbank. 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 2014, the investment return adjustment decreased AOP by £2 million (six months ended 30 June 2013: increase of £33 million; year ended 31 December 2013: increase of £100 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 £16 million for the six months ended 30 June 2014 (six months ended 30 June 2013: £22 million; year ended 31 December 2013: £42 million). For the purpose of determining AOP, these are recognised in finance costs on an accruals 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.
The Group has issued put options over the equity of certain affiliates to senior affiliate employees as part of its US affiliate incentive schemes. The impact of revaluing these instruments is recognised in accordance with IFRS, but excluded from AOP. At 30 June 2014, these instruments were revalued, the impact of which was a loss of £9 million (six months ended 30 June 2013: loss of £17 million; year ended 31 December 2013: loss of £38 million).
(h) Credit-related fair value (losses)/gains on Group debt instruments
The widening of the credit spread on the Group's debt instruments causes the market value of these instruments to decrease, resulting in gains being recognised in the consolidated income statement. Conversely, if the credit spread narrows the market value of debt instruments increases 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 2014, due to narrowing of credit spreads, a net loss of £39 million was recognised (six months ended 30 June 2013: net gain of £1 million; year ended 31 December 2013: net loss of £31 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 directly attributable internal project costs and totalled £19 million for the six months ended 30 June 2014 (six months ended 30 June 2013: £nil; year ended 31 December 2013: £20 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 2014 |
Six months ended 30 June 2013 |
Year ended 31 December 2013 |
|
Basic earnings per share |
IFRS |
C2(a) |
4.5 |
8.9 |
15.0 |
|
Diluted basic earnings per share |
IFRS |
C2(b) |
4.1 |
8.3 |
13.9 |
|
Adjusted operating earnings per share |
Group policy |
C2(c) |
8.8 |
9.3 |
18.4 |
|
|
|
|
|
|
|
|
Headline earnings per share (Gross of tax) |
JSE Listing Requirements |
C2(d) |
7.5 |
8.8 |
15.6 |
|
Headline earnings per share (Net of tax) |
JSE Listing Requirements |
C2(d) |
7.6 |
8.5 |
15.2 |
|
|
|
|
|
|
|
|
Diluted headline earnings per share (Gross of tax) |
JSE Listing Requirements |
C2(d) |
6.9 |
8.2 |
14.4 |
|
Diluted headline earnings per share (Net of tax) |
JSE Listing Requirements |
C2(d) |
7.0 |
7.9 |
14.1 |
(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 2014 |
Six months ended 30 June 2013 |
Year ended 31 December 2013 |
|
Profit for the financial period attributable to equity holders of the parent from continuing operations |
|
223 |
422 |
702 |
|
(Loss)/profit for the financial period attributable to equity holders of the parent from discontinued operations |
|
(10) |
(8) |
3 |
|
Profit for the financial period attributable to equity holders of the parent |
|
213 |
414 |
705 |
|
Dividends paid to holders of perpetual preferred callable securities, net of tax credits |
|
(14) |
(17) |
(37) |
|
Profit attributable to ordinary equity holders |
|
199 |
397 |
668 |
Total dividends paid to holders of perpetual preferred callable securities of £14 million for the six months ended 30 June 2014 (six months ended 30 June 2013: £17 million; year ended 31 December 2013: £37 million) are stated net of tax credits of £3 million (six months ended 30 June 2013: £5 million; year ended 31 December 2013: £10 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 2014 |
Six months ended 30 June 2013 |
Year ended 31 December 2013 |
|
Weighted average number of ordinary shares in issue |
|
4,897 |
4,894 |
4,897 |
|
Shares held in charitable foundations |
|
(6) |
(6) |
(6) |
|
Shares held in ESOP trusts |
|
(51) |
(53) |
(55) |
|
Adjusted weighted average number of ordinary shares |
C2(c) |
4,840 |
4,835 |
4,836 |
|
Shares held in life funds |
|
(141) |
(160) |
(155) |
|
Shares held in Black Economic Empowerment trusts |
|
(237) |
(239) |
(239) |
|
Weighted average number of ordinary shares used to calculate basic earnings per share |
|
4,462 |
4,436 |
4,442 |
|
|
|
|
|
|
|
Basic earnings per ordinary share (pence) |
|
4.5 |
8.9 |
15.0 |
Notes to the consolidated financial statements
For the six months ended 30 June 2014
C: Other key performance information continued
C2: Earnings per share continued
(b) Diluted basic earnings per share
Diluted basic EPS recognises the dilutive impact of share 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 tables below reconcile 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 2014 |
Six months ended 30 June 2013 |
Year ended 31 December 2013 |
|
Profit attributable to ordinary equity holders (£m) |
|
199 |
397 |
668 |
|
Dilution effect on profit relating to share options issued by subsidiaries (£m) |
|
(4) |
(4) |
(10) |
|
Diluted profit attributable to ordinary equity holders (£m) |
|
195 |
393 |
658 |
|
Weighted average number of ordinary shares (millions) |
C2(a) |
4,462 |
4,436 |
4,442 |
|
Adjustments for share options held by ESOP trusts (millions) |
|
59 |
46 |
45 |
|
Adjustments for shares held in Black Economic Empowerment trusts (millions) |
|
237 |
239 |
239 |
|
Weighted average number of ordinary shares used to calculate diluted basic earnings per share (millions) |
|
4,758 |
4,721 |
4,726 |
|
|
|
|
|
|
|
Diluted basic earnings per ordinary share (pence) |
|
4.1 |
8.3 |
13.9 |
(c) Adjusted operating earnings per share
The following table presents a reconciliation of profit for the financial year 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 2014 |
Six months ended 30 June 2013 |
Year ended 31 December 2013 |
|
Profit for the financial period attributable to equity holders of the parent |
|
213 |
414 |
705 |
|
Adjusting items |
|
255 |
69 |
286 |
|
Tax on adjusting items |
|
(28) |
(28) |
(46) |
|
Non-core operations |
|
(14) |
(2) |
(32) |
|
Profit from discontinued operations |
|
10 |
8 |
(3) |
|
Non-controlling interest on adjusting items |
|
(12) |
(13) |
(20) |
|
Adjusted operating profit after tax attributable to ordinary equity holders (£m) |
|
424 |
448 |
890 |
|
Adjusted weighted average number of ordinary shares used to calculate adjusted operating earnings per share (millions) |
C2(a) |
4,840 |
4,835 |
4,836 |
|
|
|
|
|
|
|
Adjusted operating earnings per share (pence) |
|
8.8 |
9.3 |
18.4 |
(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:
|
|
|
|
|
|
|
|
£m
|
|
|
|
Six months ended
30 June 2014
|
Six months ended
30 June 2013
|
Year ended
31 December 2013
|
|||
|
|
Notes
|
Gross
|
Net
|
Gross
|
Net
|
Gross
|
Net
|
|
Profit for the financial period attributable to equity
holders of the parent
|
|
213
|
213
|
414
|
414
|
705
|
705
|
|
Dividends paid to holders of perpetual preferred callable
securities
|
|
(14)
|
(14)
|
(17)
|
(17)
|
(37)
|
(37)
|
|
Profit attributable to ordinary equity holders
|
|
199
|
199
|
397
|
397
|
668
|
668
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Impairments of goodwill and intangible assets
|
|
125
|
125
|
1
|
1
|
28
|
28
|
|
Loss/(profit) on disposal of subsidiaries, associated
undertakings and strategic investments
|
|
10
|
15
|
1
|
(14)
|
4
|
(12)
|
|
Realised gains (net of impairments) on available-for-sale
financial assets
|
|
-
|
-
|
(8)
|
(8)
|
(8)
|
(8)
|
|
Headline earnings
|
|
334
|
339
|
391
|
376
|
692
|
676
|
|
|
|
|
|
|
|
|
|
|
Dilution effect on earnings relating to share options
issued by subsidiaries (£m)
|
|
(4)
|
(4)
|
(4)
|
(4)
|
(10)
|
(10)
|
|
|
|
|
|
|
|
|
|
|
Diluted headline earnings
|
|
330
|
335
|
387
|
372
|
682
|
666
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary
shares (millions)
|
C2(a)
|
4,462
|
4,462
|
4,436
|
4,436
|
4,442
|
4,442
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average number of ordinary
shares (millions)
|
C2(b)
|
4,758
|
4,758
|
4,721
|
4,721
|
4,726
|
4,726
|
|
|
|
|
|
|
|
|
|
|
Headline earnings per share (pence)
|
|
7.5
|
7.6
|
8.8
|
8.5
|
15.6
|
15.2
|
|
|
|
|
|
|
|
|
|
|
Diluted headline earnings per share (pence)
|
|
6.9
|
7.0
|
8.2
|
7.9
|
14.4
|
14.1
|
|
C3: Dividends |
|
|
|
|
|
|
|
£m |
|
|
Six months ended 30 June 2014 |
Six months ended 30 June 2013 |
Year ended 31 December 2013 |
|
2012 Final dividend paid - 5.25p per 11 3/7p share |
- |
238 |
238 |
|
2013 Interim dividend paid - 2.10p per 11 3/7p share |
- |
- |
98 |
|
2013 Final dividend paid - 6.00p per 11 3/7p share |
279 |
- |
- |
|
Dividends to ordinary equity holders |
279 |
238 |
336 |
|
Dividends paid to holders of perpetual preferred callable securities |
17 |
22 |
47 |
|
Dividend payments for the period |
296 |
260 |
383 |
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 2.45 pence (or its equivalent in other applicable currencies) per ordinary share in the Company has been recommended by the directors in relation to the year ending 31 December 2014. The interim dividend will be paid on 31 October 2014 to shareholders on the register at the close of business on 17 September 2014 for the Malawi register, 18 September 2014 for the South African register, 19 September for the Zimbabwe and Namibian registers and 23 September 2014 for the UK register. The Company is not offering a scrip dividend alternative.
In March 2014, £17 million was declared and paid to holders of perpetual preferred callable securities (March 2013: £22 million, November 2013: £25 million).
Notes to the consolidated financial statements
For the six months ended 30 June 2014
D: Other income statement notes
D1: Income tax expense
|
(a) Analysis of total income tax expense |
|
|
|
|
|
|
|
£m |
|
|
Six months ended 30 June 2014 |
Six months ended 30 June 2013 |
Year ended 31 December 2013 |
|
Current tax |
|
|
|
|
United Kingdom |
7 |
9 |
(3) |
|
Overseas tax |
|
|
|
|
- Africa |
180 |
198 |
407 |
|
- Europe |
4 |
10 |
19 |
|
- Rest of the world |
- |
- |
7 |
|
Withholding taxes |
4 |
- |
16 |
|
Adjustments to current tax in respect of prior years |
4 |
(19) |
(25) |
|
Total current tax |
199 |
198 |
421 |
|
Deferred tax |
|
|
|
|
Origination and reversal of temporary differences |
17 |
40 |
142 |
|
Effect on deferred tax of changes in tax rates |
- |
- |
(15) |
|
Recognition of deferred tax assets |
- |
- |
1 |
|
Adjustments to deferred tax in respect of prior years |
2 |
12 |
3 |
|
Total deferred tax |
19 |
52 |
131 |
|
Total income tax expense |
218 |
250 |
552 |
|
(b) Reconciliation of total income tax expense |
|
|
|
|
|
|
|
£m |
|
|
Six months ended 30 June 2014 |
Six months ended 30 June 2013 |
Year ended 31 December 2013 |
|
Profit before tax |
564 |
805 |
1,532 |
|
Tax at UK standard rate of 21.5% (2013: 23.25%) |
121 |
187 |
356 |
|
Different tax rate or basis on overseas operations |
41 |
33 |
57 |
|
Untaxed and low taxed income |
(29) |
(31) |
(76) |
|
Disallowable expenses |
38 |
(4) |
35 |
|
Net movement on deferred tax assets not recognised |
13 |
13 |
31 |
|
Effect on deferred tax of changes in tax rates |
- |
- |
(15) |
|
Withholding taxes |
2 |
- |
10 |
|
Income tax attributable to policyholder returns |
35 |
49 |
133 |
|
Tax on Group equity held in life funds |
- |
- |
21 |
|
Other |
(3) |
3 |
- |
|
Total income tax expense |
218 |
250 |
552 |
|
(c) Income tax relating to components of other comprehensive income |
|
|
|
|
|
|
|
£m |
|
|
Six months ended 30 June 2014 |
Six months ended 30 June 2013 |
Year ended 31 December 2013 |
|
Preferred perpetual callable securities |
(3) |
(5) |
(10) |
|
Measurement gains on defined benefit plans |
- |
1 |
22 |
|
Income tax on items that will not be reclassified subsequently to profit or loss |
(3) |
(4) |
12 |
|
Income tax on items that may be reclassified subsequently to profit or loss |
3 |
(1) |
(2) |
|
Income tax (credit)/expense - continuing operations |
- |
(5) |
10 |
|
Income tax (credit)/expense relating to components of other comprehensive income |
- |
(5) |
10 |
|
(d) Reconciliation of income tax expense in the IFRS income statement to income tax on adjusted operating profit |
|||
|
|
|
|
£m |
|
|
Six months ended 30 June 2014 |
Six months ended 30 June 2013 |
Year ended 31 December 2013 |
|
Income tax expense |
218 |
250 |
552 |
|
Tax on adjusting items |
|
|
|
|
Goodwill impairment and impact of acquisition accounting |
26 |
6 |
26 |
|
(Loss)/profit on disposal of subsidiaries, associates and strategic investments |
(5) |
15 |
16 |
|
Short-term fluctuations in investment return |
2 |
3 |
(2) |
|
Tax on dividends declared to holders of perpetual preferred callable securities recognised in equity |
(3) |
(5) |
(10) |
|
Institutional Asset Management equity plans |
3 |
9 |
11 |
|
Restructuring costs |
5 |
- |
5 |
|
Total tax on adjusting items |
28 |
28 |
46 |
|
Income tax attributable to policyholders returns |
(44) |
(71) |
(174) |
|
Income tax on adjusted operating profit |
202 |
207 |
424 |
Notes to the consolidated financial statements
For the six months ended 30 June 2014
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), 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.
(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.
|
30 June 2014 |
|
|
|
|
|
|
|
£m |
|
Measurement basis |
|
Fair value |
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 |
- |
- |
|
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 |
130,852 |
4,705 |
88,785 |
681 |
1,116 |
34,787 |
- |
778 |
|
Total non-financial assets |
10,939 |
- |
- |
- |
- |
- |
- |
10,939 |
|
Total assets |
141,791 |
4,705 |
88,785 |
681 |
1,116 |
34,787 |
- |
11,717 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
Life assurance policyholder liabilities |
78,092 |
- |
60,412 |
- |
- |
- |
- |
17,680 |
|
Third-party interest in consolidation of funds |
6,456 |
- |
6,456 |
- |
- |
- |
- |
- |
|
Borrowed funds |
2,752 |
- |
686 |
- |
- |
- |
2,066 |
- |
|
Trade, other payables and other liabilities |
4,099 |
199 |
272 |
- |
- |
- |
2,566 |
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 |
71,289 |
- |
- |
- |
31,985 |
18,742 |
|
Total non-financial liabilities |
5,807 |
- |
- |
- |
- |
- |
- |
5,807 |
|
Total liabilities |
132,920 |
5,097 |
71,289 |
- |
- |
- |
31,985 |
24,549 |
|
|
|
|
|
|
|
|
|
|
|
30 June 2013 |
|
|
|
|
|
|
|
£m |
|
Measurement basis |
|
Fair value |
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 |
760 |
- |
- |
- |
- |
760 |
- |
- |
|
Reinsurers' share of policyholder liabilities |
1,629 |
- |
1,386 |
- |
- |
19 |
- |
224 |
|
Loans and advances |
37,418 |
2,467 |
3,778 |
2 |
- |
31,171 |
- |
- |
|
Investments and securities |
88,915 |
1,237 |
84,937 |
811 |
1,550 |
380 |
- |
- |
|
Trade, other receivables and other assets |
2,955 |
176 |
393 |
- |
- |
1,882 |
- |
504 |
|
Derivative financial instruments |
1,417 |
1,417 |
- |
- |
- |
- |
- |
- |
|
Cash and cash equivalents |
5,035 |
- |
- |
- |
- |
5,035 |
- |
- |
|
Total assets that include financial instruments |
138,129 |
5,297 |
90,494 |
813 |
1,550 |
39,247 |
- |
728 |
|
Total non-financial assets |
7,603 |
- |
- |
- |
- |
- |
- |
7,603 |
|
Total assets |
145,732 |
5,297 |
90,494 |
813 |
1,550 |
39,247 |
- |
8,331 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
Life assurance policyholder liabilities |
81,443 |
- |
61,876 |
- |
- |
209 |
- |
19,358 |
|
Third-party interest in consolidation of funds |
5,479 |
- |
5,479 |
- |
- |
- |
- |
- |
|
Borrowed funds |
2,563 |
- |
880 |
- |
- |
- |
1,683 |
- |
|
Trade, other payables and other liabilities |
5,076 |
416 |
472 |
- |
- |
211 |
2,778 |
1,199 |
|
Amounts owed to bank depositors |
38,009 |
3,661 |
5,032 |
- |
- |
- |
29,316 |
- |
|
Derivative financial instruments |
1,623 |
1,623 |
- |
- |
- |
- |
- |
- |
|
Total liabilities that include financial instruments |
134,193 |
5,700 |
73,739 |
- |
- |
420 |
33,777 |
20,557 |
|
Total non-financial liabilities |
1,906 |
- |
- |
- |
- |
- |
- |
1,906 |
|
Total liabilities |
136,099 |
5,700 |
73,739 |
- |
- |
420 |
33,777 |
22,463 |
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements
For the six months ended 30 June 2014
E: Financial assets and liabilities continued
E1: Group statement of financial position continued
(a) Categories of financial instruments continued
|
|
|
|
|
|
|
|
|
|
|
31 December 2013 |
|
|
|
|
|
|
|
£m |
|
Measurement basis |
|
Fair value |
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 |
759 |
- |
- |
- |
- |
759 |
- |
- |
|
Reinsurers' share of policyholder liabilities |
1,875 |
- |
1,624 |
- |
- |
16 |
- |
235 |
|
Loans and advances |
33,583 |
2,147 |
3,668 |
4 |
- |
27,764 |
- |
- |
|
Investments and securities |
88,220 |
971 |
84,873 |
807 |
1,461 |
108 |
- |
- |
|
Trade, other receivables and other assets |
2,583 |
193 |
347 |
- |
- |
1,447 |
- |
596 |
|
Derivative financial instruments |
1,259 |
1,259 |
- |
- |
- |
- |
- |
- |
|
Cash and cash equivalents |
4,869 |
- |
- |
- |
- |
4,869 |
- |
- |
|
Total assets that include financial instruments |
133,148 |
4,570 |
90,512 |
811 |
1,461 |
34,963 |
- |
831 |
|
Total non-financial assets |
7,183 |
- |
- |
- |
- |
- |
- |
7,183 |
|
Total assets |
140,331 |
4,570 |
90,512 |
811 |
1,461 |
34,963 |
- |
8,014 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
Life assurance policyholder liabilities |
81,141 |
- |
63,187 |
- |
- |
- |
- |
17,954 |
|
Third-party interest in consolidation of funds |
5,478 |
- |
5,478 |
- |
- |
- |
- |
- |
|
Borrowed funds |
2,629 |
- |
747 |
- |
- |
- |
1,882 |
- |
|
Trade, other payables and other liabilities |
4,315 |
263 |
294 |
- |
- |
- |
2,413 |
1,345 |
|
Amounts owed to bank depositors |
34,370 |
3,303 |
5,179 |
- |
- |
- |
25,888 |
- |
|
Derivative financial instruments |
1,478 |
1,478 |
- |
- |
- |
- |
- |
- |
|
Total liabilities that include financial instruments |
129,411 |
5,044 |
74,885 |
- |
- |
- |
30,183 |
19,299 |
|
Total non-financial liabilities |
1,883 |
- |
- |
- |
- |
- |
- |
1,883 |
|
Total liabilities |
131,294 |
5,044 |
74,885 |
- |
- |
- |
30,183 |
21,182 |
|
|
|
|
|
|
|
|
|
|
(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'.
|
The table below analyses the financial assets and liabilities according to fair value hierarchy: |
||||
|
|
|
|
|
£m |
|
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) |
88,785 |
74,992 |
12,174 |
1,619 |
|
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 |
94,171 |
75,516 |
17,027 |
1,628 |
|
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) |
71,289 |
46,733 |
23,752 |
804 |
|
Life assurance policyholder liabilities |
60,412 |
46,079 |
13,529 |
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 |
76,386 |
46,929 |
28,653 |
804 |
Notes to the consolidated financial statements
For the six months ended 30 June 2014
E: Financial assets and liabilities continued
E1: Group statement of financial position continued
(b) Fair value hierarchy continued
|
|
|
|
|
£m |
|
30 June 2013 |
Total |
Level 1 |
Level 2 |
Level 3 |
|
Financial assets measured at fair value |
|
|
|
|
|
Held-for-trading (fair value through profit or loss) |
5,297 |
474 |
4,811 |
12 |
|
Loans and advances |
2,467 |
- |
2,467 |
- |
|
Investments and securities |
1,237 |
294 |
936 |
7 |
|
Other financial assets |
176 |
176 |
- |
- |
|
Derivative financial instruments - assets |
1,417 |
4 |
1,408 |
5 |
|
|
|
|
|
|
|
Designated (fair value through profit or loss) |
90,494 |
72,482 |
16,788 |
1,224 |
|
Reinsurers' share of policyholder liabilities |
1,386 |
1,386 |
- |
- |
|
Loans and advances |
3,778 |
2 |
3,772 |
4 |
|
Investments and securities |
84,937 |
70,703 |
13,014 |
1,220 |
|
Other financial assets |
393 |
391 |
2 |
- |
|
|
|
|
|
|
|
Available-for-sale financial assets (fair value through equity) |
813 |
371 |
439 |
3 |
|
Loans and advances |
2 |
2 |
- |
- |
|
Investments and securities |
811 |
369 |
439 |
3 |
|
|
|
|
|
|
|
Total assets measured at fair value |
96,604 |
73,327 |
22,038 |
1,239 |
|
Financial liabilities measured at fair value |
|
|
|
|
|
Held-for-trading (fair value through profit or loss) |
5,700 |
412 |
5,288 |
- |
|
Other liabilities |
416 |
408 |
8 |
- |
|
Amounts owed to bank depositors |
3,661 |
- |
3,661 |
- |
|
Derivative financial instruments - liabilities |
1,623 |
4 |
1,619 |
- |
|
|
|
|
|
|
|
Designated (fair value through profit or loss) |
73,739 |
44,675 |
28,529 |
535 |
|
Life assurance policyholder liabilities |
61,876 |
43,806 |
17,535 |
535 |
|
Third-party interests in consolidated funds |
5,479 |
- |
5,479 |
- |
|
Borrowed funds |
880 |
865 |
15 |
- |
|
Other liabilities |
472 |
4 |
468 |
- |
|
Amounts owed to bank depositors |
5,032 |
- |
5,032 |
- |
|
|
|
|
|
|
|
Total liabilities measured at fair value |
79,439 |
45,087 |
33,817 |
535 |
|
|
|
|
|
£m |
|
31 December 2013 |
Total |
Level 1 |
Level 2 |
Level 3 |
|
Financial assets measured at fair value |
|
|
|
|
|
Held-for-trading (fair value through profit or loss) |
4,570 |
493 |
4,066 |
11 |
|
Loans and advances |
2,147 |
- |
2,147 |
- |
|
Investments and securities |
971 |
295 |
673 |
3 |
|
Other financial assets |
193 |
193 |
- |
- |
|
Derivative financial instruments - assets |
1,259 |
5 |
1,246 |
8 |
|
|
|
|
|
|
|
Designated (fair value through profit or loss) |
90,512 |
76,822 |
11,980 |
1,710 |
|
Reinsurers' share of policyholder liabilities |
1,624 |
1,624 |
- |
- |
|
Loans and advances |
3,668 |
1 |
3,665 |
2 |
|
Investments and securities |
84,873 |
74,850 |
8,315 |
1,708 |
|
Other financial assets |
347 |
347 |
- |
- |
|
|
|
|
|
|
|
Available-for-sale financial assets (fair value through equity) |
811 |
348 |
461 |
2 |
|
Loans and advances |
4 |
4 |
- |
- |
|
Investments and securities |
807 |
344 |
461 |
2 |
|
|
|
|
|
|
|
Total assets measured at fair value |
95,893 |
77,663 |
16,507 |
1,723 |
|
Financial liabilities measured at fair value |
|
|
|
|
|
Held-for-trading (fair value through profit or loss) |
5,044 |
265 |
4,779 |
- |
|
Other liabilities |
263 |
256 |
7 |
- |
|
Amounts owed to bank depositors |
3,303 |
- |
3,303 |
- |
|
Derivative financial instruments - liabilities |
1,478 |
9 |
1,469 |
- |
|
|
|
|
|
|
|
Designated (fair value through profit or loss) |
74,885 |
48,237 |
25,716 |
932 |
|
Life assurance policyholder liabilities |
63,187 |
47,538 |
14,717 |
932 |
|
Third-party interests in consolidated funds |
5,478 |
- |
5,478 |
- |
|
Borrowed funds |
747 |
663 |
84 |
- |
|
Other liabilities |
294 |
36 |
258 |
- |
|
Amounts owed to bank depositors |
5,179 |
- |
5,179 |
- |
|
|
|
|
|
|
|
Total liabilities measured at fair value |
79,929 |
48,502 |
30,495 |
932 |
(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 2013 Annual Report. There have been no significant changes to the valuation techniques applied.
Notes to the consolidated financial statements
For the six months ended 30 June 2014
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
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 financial assets and liabilities measured in terms of Level 3 fair value to closing balances at the end of the period:
|
|
|
|
|
|
|
£m |
|
||
|
Six months ended 30 June 2014 |
Held-for-trading - Investments and securities |
Held- for-trading - Derivatives |
Designated fair value through profit or loss - Loans and advances |
Designated fair value through profit or loss - Investments and securities |
Available-for- sale - Investments and securities |
Total |
|
||
|
Level 3 financial assets |
|
|
|
|
|
|
|
||
|
At beginning of the year |
3 |
8 |
2 |
1,708 |
2 |
1,723 |
|
||
|
Total net (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) |
- |
- |
(37) |
- |
(38) |
|
||
|
Total level 3 financial assets |
1 |
7 |
2 |
1,617 |
1 |
1,628 |
|
||
|
Gains relating to assets held at 30 June 2014 recognised in: |
|
|
|
|
|
|
|
||
|
- profit or loss |
- |
- |
- |
9 |
- |
9 |
|
||
|
|
|
|
|||||||
|
|
|
£m |
|||||||
|
Six months ended 30 June 2014 |
Designated fair value through profit or loss - Life assurance policyholder liabilities (investment contracts) |
Total |
|||||||
|
Level 3 financial liabilities |
|
|
|||||||
|
At beginning of the year |
932 |
932 |
|||||||
|
Total net gains recognised in profit or loss for the period |
(49) |
(49) |
|||||||
|
Purchases and issues |
1 |
1 |
|||||||
|
Sales and settlements |
(126) |
(126) |
|||||||
|
Transfers in |
50 |
50 |
|||||||
|
Transfers out |
- |
- |
|||||||
|
Foreign exchange and other |
(4) |
(4) |
|||||||
|
Total level 3 financial liabilities |
804 |
804 |
|||||||
|
Gains relating to liabilities held at 30 June 2014 recognised in: |
|
|
|||||||
|
- profit or loss |
(49) |
(49) |
|||||||
|
|
|
|
|||||||
|
|
|
|
|
|
|
£m |
|
Six months ended 30 June 2013 |
Held-for-trading - Investments and securities |
Held- for-trading - Derivatives |
Designated fair value through profit or loss - Loans and advances |
Designated fair value through profit or loss - Investments and securities |
Available-for- sale - Investments and securities |
Total |
|
Level 3 financial assets |
|
|
|
|
|
|
|
At beginning of the year |
4 |
- |
9 |
1,051 |
2 |
1,066 |
|
Total net gains/(losses) recognised in the profit or loss for the period |
4 |
- |
(5) |
54 |
- |
53 |
|
Total gains recognised in other comprehensive income |
- |
- |
- |
1 |
- |
1 |
|
Purchases and issues |
- |
5 |
- |
24 |
- |
29 |
|
Sales and settlements |
(1) |
- |
- |
(21) |
- |
(22) |
|
Transfers in |
- |
- |
- |
151 |
1 |
152 |
|
Transfers out |
- |
- |
- |
- |
- |
- |
|
Foreign exchange and other |
- |
- |
- |
(40) |
- |
(40) |
|
Total level 3 financial assets |
7 |
5 |
4 |
1,220 |
3 |
1,239 |
|
Gains relating to assets held at 30 June 2013 recognised in: |
|
|
|
|
|
|
|
- profit or loss |
- |
- |
- |
52 |
- |
52 |
|
|
|
£m |
|
Six months ended 30 June 2013 |
Designated fair value through profit or loss - Life assurance policyholder liabilities (investment contracts) |
Total |
|
Level 3 financial liabilities |
|
|
|
At beginning of the year |
480 |
480 |
|
Total net losses recognised in profit or loss for the period |
72 |
72 |
|
Purchases and issues |
1 |
1 |
|
Sales and settlements |
(104) |
(104) |
|
Transfers in |
77 |
77 |
|
Foreign exchange and other |
9 |
9 |
|
Total level 3 financial liabilities |
535 |
535 |
|
Losses relating to liabilities held at 30 June 2013 recognised in: |
|
|
|
- profit or loss |
74 |
74 |
Notes to the consolidated financial statements
For the six months ended 30 June 2014
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 |
|
Year ended 31 December 2013 |
Held-for-trading - Investments and securities |
Held- for-trading - Derivatives |
Designated fair value through profit or loss - Loans and advances |
Designated fair value through profit or loss - Investments and securities |
Available-for- sale - Investments and securities |
Total |
|
Level 3 financial assets |
|
|
|
|
|
|
|
At beginning of the year |
4 |
- |
9 |
1,122 |
2 |
1,137 |
|
Total net gains/(losses) recognised in the profit or loss for the period |
1 |
- |
- |
65 |
- |
66 |
|
Purchases and issues |
- |
9 |
- |
290 |
- |
299 |
|
Sales and settlements |
(1) |
- |
(6) |
(77) |
- |
(84) |
|
Transfers in |
- |
- |
- |
464 |
- |
464 |
|
Transfers out |
- |
- |
- |
(21) |
- |
(21) |
|
Foreign exchange and other |
(1) |
(1) |
(1) |
(135) |
- |
(138) |
|
Total level 3 financial assets |
3 |
8 |
2 |
1,708 |
2 |
1,723 |
|
Gains relating to assets held at 31 December 2013 recognised in: |
|
|
|
|
|
|
|
- profit or loss |
- |
- |
- |
55 |
- |
55 |
|
|
|
£m |
|
Year ended 31 December 2013 |
Designated fair value through profit or loss - Life assurance policyholder liabilities (investment contracts) |
Total |
|
Level 3 financial liabilities |
|
|
|
At beginning of the year |
480 |
480 |
|
Total net gains recognised in profit or loss for the period |
(8) |
(8) |
|
Purchases and issues |
106 |
106 |
|
Sales and settlements |
(114) |
(114) |
|
Transfers in |
464 |
464 |
|
Transfers out |
- |
- |
|
Foreign exchange and other |
4 |
4 |
|
Total level 3 financial liabilities |
932 |
932 |
|
Losses relating to liabilities held at 30 June 2013 recognised in: |
|
|
|
- profit or loss |
(12) |
(12) |
(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 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, the valuations are assessed on an asset-by-asset basis using a valuation methodology appropriate to the specific 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 shows the income statement effect of reasonable possible alternative assumptions on the fair value of Level 3 financial assets and liabilities:
|
|
|
|
|
|
|
£m |
|
|
30 June 2014 |
30 June 2013 |
31 December 2013 |
|||
|
Reflected in profit or loss |
Favourable changes |
Unfavourable changes |
Favourable changes |
Unfavourable changes |
Favourable changes |
Unfavourable changes |
|
Level 3 financial assets |
|
|
|
|
|
|
|
Designated (fair value through profit or loss) |
210 |
199 |
123 |
120 |
218 |
198 |
|
Loans and advances |
- |
- |
1 |
1 |
- |
- |
|
Investments and securities |
203 |
199 |
122 |
119 |
212 |
198 |
|
Derivative financial instruments |
7 |
- |
- |
- |
6 |
- |
|
|
|
|
|
|
|
|
|
Total Level 3 financial assets |
210 |
199 |
123 |
120 |
218 |
198 |
|
Level 3 financial liabilities |
|
|
|
|
|
|
|
Designated (fair value through profit or loss) |
70 |
84 |
20 |
48 |
85 |
74 |
|
Life assurance policyholder liabilities (investment contracts) |
70 |
84 |
20 |
48 |
85 |
74 |
|
|
|
|
|
|
|
|
|
Total Level 3 financial liabilities |
70 |
84 |
20 |
48 |
85 |
74 |
The impact of reasonable possible alternative assumptions on other comprehensive income was £nil in all periods.
Notes to the consolidated financial statements
For the six months ended 30 June 2014
E: Financial assets and liabilities continued
E2: Borrowed funds
|
|
|
|
|
|
|
|
|
|
£m |
|
|
Notes |
|
Group excluding Nedbank |
Nedbank |
30 June 2014 Group |
|
Group excluding Nedbank |
Nedbank |
30 June 2013 Group |
|
Senior debt securities and term loans |
|
|
113 |
1,240 |
1,353 |
|
123 |
994 |
1,117 |
|
Floating rate notes |
E2(a) |
|
- |
708 |
708 |
|
- |
525 |
525 |
|
Fixed rate notes |
E2(b) |
|
113 |
532 |
645 |
|
123 |
469 |
592 |
|
Mortgage-backed securities |
E2(d) |
|
- |
57 |
57 |
|
- |
114 |
114 |
|
Subordinated debt securities |
E2(e) |
|
740 |
602 |
1,342 |
|
714 |
618 |
1,332 |
|
Borrowed funds |
|
|
853 |
1,899 |
2,752 |
|
837 |
1,726 |
2,563 |
|
Other instruments treated as equity for accounting purposes |
|
|
|
|
|
|
|
|
|
|
€374 million perpetual preferred callable securities at 5.00% |
|
|
253 |
|
|
|
334 |
|
|
|
£273 million perpetual preferred callable securities as 6.40% |
|
|
273 |
|
|
|
348 |
|
|
|
Total: Book value |
|
|
1,379 |
|
|
|
1,519 |
|
|
|
Nominal value of the above |
|
|
1,350 |
|
|
|
1,594 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m |
|
|
|
|
|
|
|
|
Group excluding Nedbank |
Nedbank |
31 December 2013 Group |
|
Senior debt securities and term loans |
|
|
|
|
|
|
113 |
1,151 |
1,264 |
|
Floating rate notes |
E2(a) |
|
|
|
|
|
- |
673 |
673 |
|
Fixed rate notes |
E2(b) |
|
|
|
|
|
113 |
478 |
591 |
|
Mortgage-backed securities |
E2(d) |
|
|
|
|
|
- |
65 |
65 |
|
Subordinated debt securities |
E2(e) |
|
|
|
|
|
703 |
597 |
1,300 |
|
Borrowed funds |
|
|
|
|
|
|
816 |
1,813 |
2,629 |
|
Other Group instruments treated as equity for accounting purposes |
|
|
|
|
|
|
|
|
|
|
€374 million perpetual preferred callable securities at 5.00% |
|
|
|
|
|
|
253 |
|
|
|
£273 million perpetual preferred callable securities as 6.40% |
|
|
|
|
|
|
273 |
|
|
|
Total: Book value |
|
|
|
|
|
|
1,342 |
|
|
|
Nominal value of the above |
|
|
|
|
|
|
1,370 |
|
|
|
Senior debt securities and term loans |
|
|
|
|
|
(a) Floating rate notes |
|
|
|
|
|
|
|
|
|
£m |
|
|
Maturity date |
30 June 2014 |
30 June 2013 |
31 December 2013 |
|
Nedbank - Floating rate unsecured senior debt |
|
|
|
|
|
R988 million at JIBAR + 1.05% |
Repaid |
- |
64 |
50 |
|
R500 million at JIBAR + 1.00% |
Repaid |
- |
30 |
26 |
|
R1,075 million at JIBAR + 0.94% |
October 2014 |
60 |
72 |
62 |
|
R1,297 million at JIBAR + 1.00% |
February 2015 |
73 |
87 |
75 |
|
R1,027 million at JIBAR + 1.75% |
April 2015 |
57 |
69 |
60 |
|
R250 million at JIBAR + 1.00% |
August 2015 |
14 |
17 |
14 |
|
R1,044 million at JIBAR + 2.20% |
September 2015 |
58 |
70 |
61 |
|
R677 million at JIBAR + 1.25% |
March 2016 |
37 |
45 |
39 |
|
R3,056 million at JIBAR + 0.8% |
July 2016 |
170 |
- |
176 |
|
R694 million at JIBAR + 0.75% |
November 2016 |
38 |
- |
40 |
|
R405 million at JIBAR + 1.30% |
February 2017 |
22 |
27 |
23 |
|
R1,035 million at JIBAR + 0.85% |
March 2017 |
57 |
- |
- |
|
R786 million at JIBAR + 1.30% |
August 2017 |
38 |
39 |
42 |
|
R806 million at JIBAR + 0.9% |
June 2017 |
44 |
- |
- |
|
R80 million at JIBAR + 2.15% |
April 2020 |
4 |
5 |
5 |
|
R650 million at JIBAR + 1.3% |
June 2021 |
36 |
- |
- |
|
Total floating rate notes |
|
708 |
525 |
673 |
All floating rate notes are non-qualifying for the purposes of regulatory tiers of capital.
|
(b) Fixed rate notes (net of Group holdings) |
|
|
|
|
|
|
|
|
|
£m |
|
|
Maturity date |
30 June 2014 |
30 June 2013 |
31 December 2013 |
|
Nedbank - Fixed rate unsecured senior debt |
|
|
|
|
|
R450 million at 8.39% |
Repaid |
- |
30 |
26 |
|
R478 million at 9.68% |
April 2015 |
27 |
32 |
28 |
|
R3,244 million at 10.55% |
September 2015 |
184 |
222 |
192 |
|
R1,137 million at 9.36% |
March 2016 |
64 |
77 |
67 |
|
R151 million at 6.91% |
July 2016 |
9 |
- |
9 |
|
R1,273 million at 11.39% |
September 2019 |
77 |
93 |
80 |
|
R1,888 million at 8.92% |
November 2020 |
105 |
- |
109 |
|
R855 million at 9.38% |
March 2021 |
48 |
- |
- |
|
R500 million at 9.29% |
June 2021 |
28 |
- |
- |
|
R391 million at 9.73% |
March 2024 |
22 |
- |
- |
|
R660 million at zero coupon |
October 2024 |
13 |
15 |
14 |
|
|
|
577 |
469 |
525 |
|
Less: Fixed rate notes held by other Group companies |
|
(45) |
- |
(47) |
|
Banking fixed rate unsecured senior debt (net of Group holdings) |
|
532 |
469 |
478 |
|
|
|
|
|
|
|
Group excluding Nedbank |
|
|
|
|
|
$2 million secured senior debt at 5.23% |
July 2014 |
1 |
11 |
1 |
|
£112 million eurobond at 7.125% |
October 2016 |
112 |
112 |
112 |
|
|
|
113 |
123 |
113 |
|
Total fixed rate notes |
|
645 |
592 |
591 |
All fixed rate notes are non-qualifying for the purpose of regulatory tiers of capital.
(c) Revolving credit facilities and irrevocable letters of credit
The Group has access to a £800 million (June 2013: £1,200 million, December 2013: £800 million) five-year multi-currency revolving credit facility which matures in April 2016. At 30 June 2014, 31 December 2013 and 30 June 2013, none of this facility was drawn and there were no irrevocable letters of credit in issue against this facility.
Notes to the consolidated financial statements
For the six months ended 30 June 2014
E: Financial assets and liabilities continued
E2: Borrowed funds continued
|
(d) Mortgage-backed securities (net of Group holdings) |
|
|
|
|
|
|
|
|
|
|
|
£m |
|
|
Tier |
Maturity date |
30 June 2014 |
30 June 2013 |
31 December 2013 |
|
Nedbank |
|
|
|
|
|
|
R480 million (class A1) at JIBAR + 1.10% |
Tier 2 |
25 October 2039 |
7 |
24 |
13 |
|
R336 million (class A2) at JIBAR + 1.25% |
Tier 2 |
25 October 2039 |
19 |
23 |
20 |
|
R900 million (class A3) at JIBAR + 1.54% |
Tier 2 |
25 October 2039 |
50 |
60 |
52 |
|
R110 million (class B) at JIBAR + 1.90% |
Tier 2 |
25 October 2039 |
6 |
7 |
6 |
|
|
|
|
82 |
114 |
91 |
|
Less: Mortgage backed securities held by other Group companies |
(25) |
- |
(26) |
||
|
Total mortgage-backed securities |
|
|
57 |
114 |
65 |
|
(e) Subordinated debt securities (net of Group holdings) |
||||||
|
|
|
|
|
|
|
£m |
|
|
Tier |
First call date |
Maturity date |
30 June 2014 |
30 June 2013 |
31 December 2013 |
|
Nedbank |
|
|
|
|
|
|
|
R300 million at JIBAR + 2.50% |
Tier 2 |
Repaid |
Repaid |
- |
10 |
- |
|
R1,800 million at 9.84% |
Tier 2 |
Repaid |
Repaid |
- |
124 |
- |
|
R1,700 million at 8.90% |
Tier 2 |
Repaid |
Repaid |
- |
118 |
101 |
|
R1,265 million at JIBAR + 4.75% |
Non-core Tier 1 |
November 2018 |
November 2018 |
70 |
85 |
74 |
|
R487 million at 15.05% |
Non-core Tier 1 |
November 2018 |
November 2018 |
32 |
37 |
32 |
|
R1,000 million at 10.54% |
Tier 2 |
September 2015 |
September 2020 |
58 |
72 |
62 |
|
$100 million at 3 month USD LIBOR |
Tier 2 Secondary |
March 2017 |
March 2022 |
59 |
66 |
60 |
|
R2,000 million at JIBAR + 0.47% |
Tier 2 |
July 2017 |
July 2022 |
112 |
134 |
116 |
|
R1,800 million at JIBAR + 2.75% |
Tier 2 |
July 2018 |
July 2023 |
101 |
- |
105 |
|
R1,200 million at JIBAR + 2.55% |
Tier 2 |
November 2018 |
November 2023 |
67 |
- |
69 |
|
R450 million at 10.49% |
Tier 2 |
April 2019 |
April 2024 |
25 |
- |
- |
|
R1,737 million at 3 month JIBAR + 2.55% |
Tier 2 |
April 2019 |
April 2024 |
97 |
- |
- |
|
|
|
|
|
621 |
646 |
619 |
|
Less: Banking subordinated debt securities held by other Group companies |
(19) |
(28) |
(22) |
|||
|
Banking subordinated securities (net of Group holdings) |
|
602 |
618 |
597 |
||
|
Group excluding Nedbank |
|
|
|
|
|
|
|
R3,000 million at 8.92% until October 2015 and 3 month JIBAR + 1.59% thereafter |
Lower Tier 2 |
October 2015 |
October 2020 |
165 |
199 |
172 |
|
£500 million at 8.00% |
Lower Tier 2 |
- |
June 2021 |
575 |
515 |
531 |
|
|
|
|
|
740 |
714 |
703 |
|
Total subordinated debt securities |
|
1,342 |
1,332 |
1,300 |
||
F: Other notes
F1: Related parties
The nature of the related party transactions of the Group has not changed from those referred to in the 2013 Annual Report and Accounts.
There were no transactions with related parties during the six months ended 30 June 2014, that had a material effect on the results or the financial position of the Group.
F2: Events after the reporting date
On 1 July 2014, the Group announced the completion of the acquisition of Intrinsic Financial Services, one of the largest networks of financial advisers in the UK. The acquisition was announced on 28 February 2014 and is part of Old Mutual Wealth's strategy of building an integrated customer proposition comprising financial advice, asset management and tax efficient products. Additionally, the Group announced that it intends to acquire the remaining 50% stake of Cirilium, the core investment proposition for Intrinsic's restricted financial advisers.
On 4 July 2014, Old Mutual Bermuda received formal written approval from the Bermuda Monitory Authority (BMA) to repatriate $160 million via cancellation of OM Group (UK) Limited loan notes.
On 10 July 2014, Nedbank Group Limited announced its intention to issue new preference shares. These preference shares will be utilised to raise funding for Nedbank's' business activities in general.
Terms have been agreed to sell Skandia Liechtenstein, part of Old Mutual Wealth. The transaction is subject to regulatory approval and the fulfilment of certain closing conditions and is expected to complete during the second half of the year.
F3: Contingent liabilities
Contingent liabilities - tax
The Group is regularly in discussion with the respective tax authorities in each of the jurisdictions where the Group is active. The Group applies its judgement to determine if a provision for future tax uncertainties should be recognised based on detailed reviews of any potential exposure to tax authorities and the assessment of the most probable outcome of the tax uncertainty. As these provisions are based on estimates and rely on judgements made by the Group, the actual amount of future taxes paid by the Group could be different to the amounts provided.
G: Discontinued operations and disposal groups held for sale
G1: Discontinued operations
Amounts disclosed in relation to discontinued operations relate to the sale, in 2012, of the Group's Swedish, Danish and Norwegian life businesses, collectively Nordic. The disposal of Nordic was completed on 21 March 2012 following shareholder and regulatory approval, and the Nordic business was consolidated and reported up until that date. The Group continues to incur costs that are directly related to the sale of Nordic. These costs relate to the transition of IT and other services, previously provided by Nordic to the wider Group, back to the Group.
|
Income statement from discontinued operations (Nordic) |
|||
|
|
|
|
£m |
|
|
Six months ended 30 June 2014 |
Six months ended 30 June 2013 |
Year ended 31 December 2013 |
|
Revenue |
- |
- |
- |
|
Expenses |
(11) |
(9) |
(26) |
|
Loss before tax from discontinued operations - trading activities |
(11) |
(9) |
(26) |
|
Profit on disposal |
- |
- |
27 |
|
(Loss)/profit before tax from discontinued operations |
(11) |
(9) |
1 |
|
Income tax credit |
1 |
1 |
2 |
|
(Loss)/profit after tax from discontinued operations |
(10) |
(8) |
3 |
G2: Disposal groups held for sale
On 27 March 2014, the Group announced that terms had been agreed to sell two of its Old Mutual Wealth businesses, Skandia Austria and Skandia Germany. This transaction is subject to regulatory approvals and consequently the assets and liabilities of these businesses have been classified as held for sale in the statement of financial position. At 30 June 2014, the total value of the assets and liabilities reclassified as held for sale in the statement of financial position were £4,468 million and £4,294 million respectively. The disposal of these businesses is expected to be completed during the second half of the year.
The Group had additional non-current assets held for sale of £5 million (30 June 2013: £5 million; 31 December 2013: £5 million).
G3: Contingent liabilities in respect of the disposal of US Life
Following its disposal in April 2011 of US Life to the Harbinger Group (Harbinger), the Group has retained certain residual commitments and contingent liabilities relating to that business. These arise from sale warranties and indemnities that are typical in transactions of this nature, including in respect of certain litigation (including class actions) and regulatory enforcement actions arising from events that occurred before completion of the sale. The residual commitments are in effect for varying periods of time.
The sale agreement contemplated that Harbinger would establish certain internal reinsurance arrangements after completion, which were subject to regulatory approval. If such regulatory approval was not forthcoming, there was potential for a reduction in the purchase price of US Life of up to a maximum of $50 million. In July 2012, Harbinger filed a lawsuit against the Group, claiming payment of a purchase price adjustment of $50 million. The Group has filed its defence and is vigorously defending this claim. In view of the ongoing uncertainty and the Group's current assessment of this claim, the Group has not raised a provision against this exposure.
This information is provided by RNS
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