Preliminary results 2011 - Part 2 IFRS
Index to the financial information
For the year ended 31 December 2011
Statement of directors' responsibilities in respect of the preliminary announcement of the Annual Report and the financial statements 42
Consolidated income statement 43
Consolidated statement of comprehensive income 44
Reconciliation of adjusted operating profit to profit after tax 45
Consolidated statement of financial position 46
Condensed consolidated statement of cash flows 47
Consolidated statement of changes in equity 48
A1: Accounting policies 50
A2: Significant corporate activity and business changes 50
B: Segment information 51
C: Other key performance information 62
D: Other income statement notes 68
E: Borrowed funds 70
F: Other statement of financial position notes 73
G: Other notes 76
H: Discontinued operations and held for sale operations 78
Statement of directors' responsibilities in respect of the preliminary
announcement of the Annual Report and the financial statements
We confirm that to the best of our knowledge:
· The financial statements, prepared in accordance with the applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit of the Group and the undertakings included in the consolidation taken as a whole;
· The Group Finance Director's review and the Business review include a fair view of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the important events, principal risks and uncertainties that they face.
Julian Roberts Philip Broadley
Group Chief Executive Group Finance Director
9 March 2012 9 March 2012
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2011
|
£m |
||||
|
|
Notes |
Year ended 31 December 2011 |
Year ended 31 December 2010* |
|
|
Revenue |
|
|
||
|
Gross earned premiums |
B3 |
3,584 |
3,460 |
|
|
Outward reinsurance |
|
(325) |
(300) |
|
|
Net earned premiums |
|
3,259 |
3,160 |
|
|
Investment return (non-banking) |
|
(567) |
9,553 |
|
|
Banking interest and similar income |
|
3,669 |
3,913 |
|
|
Banking trading, investment and similar income |
|
217 |
199 |
|
|
Fee and commission income, and income from service activities |
|
3,035 |
2,823 |
|
|
Other income |
|
171 |
149 |
|
|
Total revenues |
|
9,784 |
19,797 |
|
|
Expenses |
|
|
||
|
Claims and benefits (including change in insurance contract provisions) |
|
(3,331) |
(4,956) |
|
|
Reinsurance recoveries |
|
123 |
222 |
|
|
Net claims and benefits incurred |
|
(3,208) |
(4,734) |
|
|
Change in investment contract liabilities |
|
1,889 |
(5,833) |
|
|
Losses on loans and advances |
|
(458) |
(548) |
|
|
Finance costs |
|
(58) |
(269) |
|
|
Banking interest payable and similar expenses |
|
(2,095) |
(2,441) |
|
|
Fee and commission expenses, and other acquisition costs |
|
(1,007) |
(917) |
|
|
Other operating and administrative expenses |
|
(3,852) |
(3,643) |
|
|
Goodwill impairment |
C1(b) |
(264) |
(1) |
|
|
Change in third-party interest in consolidated funds |
|
2 |
(299) |
|
|
Total expenses |
|
(9,051) |
(18,685) |
|
|
Share of associated undertakings and joint ventures' profit after tax |
|
10 |
5 |
|
|
Profit/(loss) on acquisition/disposal of subsidiaries, associated undertakings and strategic investments |
C1(c) |
251 |
(22) |
|
|
Profit before tax |
|
994 |
1,095 |
|
|
Income tax expense |
D1(a) |
(225) |
(391) |
|
|
Profit from continuing operations after tax |
|
769 |
704 |
|
|
Discontinued operations |
|
|
|
|
|
Profit/(loss) from discontinued operations after tax |
H1(a) |
198 |
(728) |
|
|
Profit/(loss) after tax for the financial year |
|
967 |
(24) |
|
|
Attributable to |
|
|
|
|
|
Equity holders of the parent |
|
667 |
(282) |
|
|
Non-controlling interests |
|
|
|
|
|
Ordinary shares |
F2(a) |
238 |
196 |
|
|
Preferred securities |
F2(a) |
62 |
62 |
|
|
Profit/(loss) after tax for the financial year |
|
967 |
(24) |
|
|
Earnings per share |
|
|
||
|
Basic earnings per share based on profit from continuing operations (pence) |
|
8.9 |
8.5 |
|
|
Basic earnings per share based on profit/(loss) from discontinued operations (pence) |
|
4.0 |
(15.0) |
|
|
Basic earnings per ordinary share (pence) |
C3(a) |
12.9 |
(6.5) |
|
|
Diluted earnings per share based on profit from continuing operations (pence) |
|
8.0 |
7.7 |
|
|
Diluted earnings per share based on profit/(loss) from discontinued operations (pence) |
|
3.7 |
(13.8) |
|
|
Diluted earnings per ordinary share (pence) |
C3(a) |
11.7 |
(6.1) |
|
|
Weighted average number of shares - millions |
C3(a) |
4,935 |
4,859 |
|
* The year ended 31 December 2010 has been restated to reflect Nordic as discontinued (see note A2).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2011
|
|
|
|
£m |
|
|
Notes |
Year ended 31 December 2011 |
Year ended 31 December 2010* |
|
Profit/(loss) after tax for the financial year |
|
967 |
(24) |
|
Other comprehensive income for the financial year |
|
|
|
|
Fair value gain/(losses) |
|
|
|
|
Property revaluation |
|
39 |
26 |
|
Net investment hedge |
|
28 |
(87) |
|
Available-for-sale investments |
|
|
|
|
Fair value (losses)/gains |
|
(1) |
37 |
|
Recycled to the income statement |
|
(6) |
- |
|
Shadow accounting |
|
(22) |
(15) |
|
Currency translation differences/exchange differences on translating foreign operations |
|
(1,240) |
882 |
|
Other movements |
|
(49) |
17 |
|
Income tax relating to components of other comprehensive income |
D1(c) |
12 |
13 |
|
Total other comprehensive income for the financial year from continuing operations |
|
(1,239) |
873 |
|
Total other comprehensive income for the financial year from discontinued operations |
H1(b) |
(161) |
278 |
|
Total other comprehensive income for the financial year |
|
(1,400) |
1,151 |
|
Total comprehensive income for the financial year |
|
(433) |
1,127 |
|
Attributable to |
|
|
|
|
Equity holders of the parent |
|
(408) |
594 |
|
Non-controlling interests |
|
|
|
|
Ordinary shares |
|
(87) |
428 |
|
Preferred securities |
|
62 |
105 |
|
Total comprehensive income for the financial year |
|
(433) |
1,127 |
* The year ended 31 December 2010 has been restated to reflect Nordic as discontinued (see note A2).
RECONCILIATION OF ADJUSTED OPERATING PROFIT TO PROFIT AFTER TAX
For the year ended 31 December 2011
|
£m |
|||
|
|
Notes |
Year ended 31 December 2011 |
Year ended 31 December 2010* |
|
Core operations |
|
|
|
|
Long-Term Savings |
B2 |
793 |
787 |
|
Nedbank |
B2 |
755 |
601 |
|
Mutual and Federal |
B2 |
89 |
103 |
|
USAM |
B2 |
67 |
72 |
|
|
|
1,704 |
1,563 |
|
Finance costs |
|
(128) |
(128) |
|
Long term investment return on excess assets |
|
37 |
31 |
|
Net interest payable to non-core operations |
|
(23) |
(39) |
|
Corporate costs |
|
(57) |
(60) |
|
Other net (expenses)/income |
|
(18) |
4 |
|
Adjusted operating profit before tax |
|
1,515 |
1,371 |
|
Adjusting items |
C1(a) |
(329) |
(392) |
|
Non-core operations |
B2 |
(183) |
15 |
|
Profit before tax (net of policyholder tax) |
|
1,003 |
994 |
|
Income tax attributable to policyholder returns |
B2 |
(9) |
101 |
|
Profit before tax |
|
994 |
1,095 |
|
Total tax expense |
D1(a) |
(225) |
(391) |
|
Profit from continuing operations after tax |
|
769 |
704 |
|
Profit/(loss) from discontinued operations after tax |
H1(a) |
198 |
(728) |
|
Profit/(loss) after tax for the financial year |
|
967 |
(24) |
Adjusted operating profit after tax attributable to ordinary equity holders of the parent
|
£m |
|||
|
|
Notes |
Year ended 31 December 2011 |
Year ended 31 December 2010* |
|
Adjusted operating profit before tax |
|
1,515 |
1,371 |
|
Tax on adjusted operating profit |
D1(d) |
(341) |
(327) |
|
Adjusted operating profit after tax |
|
1,174 |
1,044 |
|
Non-controlling interests - ordinary shares |
F2(a) |
(257) |
(217) |
|
Non-controlling - preferred securities |
F2(a) |
(62) |
(62) |
|
Adjusted operating profit after tax attributable to ordinary equity holders of the parent |
|
855 |
765 |
|
Adjusted weighted average number of shares (millions) |
C3(a) |
5,435 |
5,359 |
|
Adjusted operating earnings per share (pence) |
C3(b) |
15.7 |
14.3 |
* The year ended 31 December 2010 has been restated to reflect Nordic as discontinued and non-core (see note A2).
Basis of preparation
The reconciliation of adjusted operating profit has been prepared so as to reflect the directors' view of the underlying long-term performance of the Group. The statement reconciles adjusted operating profit to profit after tax as reported under IFRS as adopted by the EU.
For core life assurance and general insurance businesses, adjusted operating profit is based on a long-term investment return, including investment returns on life funds' investments in Group equity and debt instruments, and is stated net of income tax attributable to policyholder returns. For the US Asset Management business it includes compensation costs in respect of certain long-term incentive schemes defined as non-controlling interests in accordance with IFRS. For all core businesses, adjusted operating profit excludes goodwill impairment, the impact of acquisition accounting, revaluations of put options related to long-term incentive schemes, profit/(loss) on acquisition/disposal of subsidiaries, associated undertakings and strategic investments, and fair value profits/(losses) on certain Group debt movements but includes dividends declared to holders of perpetual preferred callable securities. Bermuda, which is non-core, and Nordic and US Life, which are discontinued and non-core, are not included in adjusted operating profit.
Adjusted operating earnings per share is calculated on the same basis as adjusted operating profit. It is stated after tax attributable to adjusted operating profit 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.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 December 2011
|
£m |
|||
|
|
Notes |
At 2011 |
At |
|
Assets |
|
|
|
|
Goodwill and other intangible assets |
|
3,358 |
4,965 |
|
Mandatory reserve deposits with central banks |
|
951 |
1,079 |
|
Property, plant and equipment |
|
925 |
1,015 |
|
Investment property |
|
2,064 |
2,040 |
|
Deferred tax assets |
|
339 |
416 |
|
Investments in associated undertakings and joint ventures |
|
111 |
162 |
|
Deferred acquisition costs |
|
1,351 |
1,534 |
|
Reinsurers' share of policyholder liabilities |
|
989 |
1,104 |
|
Loans and advances |
|
39,764 |
51,778 |
|
Investments and securities |
|
81,253 |
106,153 |
|
Current tax receivable |
|
138 |
156 |
|
Client indebtedness for acceptances |
|
237 |
190 |
|
Trade, other receivables and other assets |
|
3,348 |
3,934 |
|
Derivative financial instruments - assets |
|
1,795 |
2,503 |
|
Cash and cash equivalents |
|
3,624 |
4,132 |
|
Non-current assets held for sale |
H2 |
22,138 |
12,391 |
|
Total assets |
|
162,385 |
193,552 |
|
Liabilities |
|
|
|
|
Life assurance policyholder liabilities |
|
76,350 |
98,631 |
|
General insurance liabilities |
|
325 |
397 |
|
Third-party interests in consolidated funds |
|
1,893 |
3,584 |
|
Borrowed funds |
E1 |
3,656 |
4,204 |
|
Provisions |
F1 |
269 |
260 |
|
Deferred revenue |
|
701 |
730 |
|
Deferred tax liabilities |
|
504 |
858 |
|
Current tax payable |
|
199 |
238 |
|
Trade, other payables and other liabilities |
|
4,243 |
5,661 |
|
Liabilities under acceptances |
|
237 |
190 |
|
Amounts owed to bank depositors |
|
40,978 |
53,236 |
|
Derivative financial instruments - liabilities |
|
1,755 |
1,870 |
|
Non-current liabilities held for sale |
H2 |
20,417 |
12,219 |
|
Total liabilities |
|
151,527 |
182,078 |
|
Net assets |
|
10,858 |
11,474 |
|
Shareholders' equity |
|
|
|
|
Equity attributable to equity holders of the parent |
|
8,488 |
8,951 |
|
Non-controlling interests |
|
|
|
|
Ordinary shares |
F2(b) |
1,652 |
1,763 |
|
Preferred securities |
F2(b) |
718 |
760 |
|
Total non-controlling interests |
|
2,370 |
2,523 |
|
Total equity |
|
10,858 |
11,474 |
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2011
|
£m |
||||
|
|
Year ended 31 December 2011 |
Year ended 2010* |
||
|
Cash flows from operating activities - continuing operations |
|
|
||
|
Profit before tax |
994 |
1,095 |
||
|
Non-cash movements in profit before tax |
1,372 |
(515) |
||
|
Changes in working capital |
(1,415) |
3,195 |
||
|
Taxation paid |
(402) |
(356) |
||
|
Net cash inflow from operating activities - continuing operations |
549 |
3,419 |
||
|
Cash flows from investing activities |
|
|
||
|
Net disposals/(acquisitions) of financial investments |
43 |
(2,349) |
||
|
Acquisition of investment properties |
(57) |
(162) |
||
|
Proceeds from disposal of investment properties |
6 |
272 |
||
|
Acquisition of property, plant and equipment |
(184) |
(145) |
||
|
Proceeds from disposal of property, plant and equipment |
43 |
- |
||
|
Acquisition of intangible assets |
(91) |
(76) |
||
|
Acquisition of interests in subsidiaries, associated undertakings and strategic investments |
103 |
(75) |
||
|
Disposal of interests in subsidiaries, associated undertakings and strategic investments |
(329) |
(16) |
||
|
Net cash outflow from investing activities - continuing operations |
(466) |
(2,551) |
||
|
Cash flows from financing activities |
|
|
||
|
Dividends paid to |
|
|
||
|
Ordinary equity holders of the Company |
(97) |
(102) |
||
|
Non-controlling interests and preferred security interests |
(206) |
(196) |
||
|
Interest paid (excluding banking interest paid) |
(87) |
(79) |
||
|
Proceeds from issue of ordinary shares (including by subsidiaries to non-controlling interests) |
10 |
5 |
||
|
Net acquisition of treasury shares |
(17) |
(25) |
||
|
Issue of subordinated and other debt |
890 |
492 |
||
|
Subordinated and other debt repaid |
(905) |
(104) |
||
|
Net cash outflow from financing activities - continuing operations |
(412) |
(9) |
||
|
Net (decrease)/increase in cash and cash equivalents - continuing operations |
(329) |
859 |
||
|
Net increase/(decrease) in cash and cash equivalents - discontinued operations |
346 |
(364) |
||
|
Effects of exchange rate changes on cash and cash equivalents |
(594) |
376 |
||
|
Cash and cash equivalents at beginning of the year |
5,632 |
4,761 |
||
|
Cash and cash equivalents at end of the year |
5,055 |
5,632 |
||
|
Consisting of |
|
|
||
|
Cash and cash equivalents in the statement of financial position |
3,624 |
4,132 |
||
|
Mandatory reserve deposits with central banks |
951 |
1,079 |
||
|
Cash and cash equivalents included in assets held for sale |
480 |
421 |
||
|
Total |
5,055 |
5,632 |
||
* The year ended 31 December 2010 has been restated to reflect Nordic as discontinued (see note A2).
Cash flows presented in this statement include all cash flows relating to policyholders' funds for life assurance.
Except for mandatory reserve deposits with central banks of £951 million (2010: £1,079 million) and cash and cash equivalents subject to consolidation of funds of £756 million (2010: £689 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. Mandatory reserve deposits are, however, included in cash and cash equivalents for the purposes of the cash flow statement in line with market practice in South Africa.
Included within the above is interest income received (including banking interest) of £4,936 million (2010: £5,196 million), dividend income received of £371 million (2010: £360 million) and interest paid (including banking interest) of £2,143 million (2010: £2,198 million).
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2011
|
|
|
Millions |
|
£m |
|||
|
Year ended 31 December 2011 |
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 |
|
5,695 |
|
570 |
795 |
2,845 |
225 |
|
Profit after tax for the financial year |
|
- |
|
- |
- |
- |
- |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
Fair value gains/(losses) |
|
|
|
|
|
|
|
|
Property revaluation |
|
- |
|
- |
- |
- |
- |
|
Net investment hedge |
|
- |
|
- |
- |
- |
- |
|
Available-for-sale investments |
|
|
|
|
|
|
|
|
Fair value gains |
|
- |
|
- |
- |
- |
51 |
|
Recycled to the income statement |
|
- |
|
- |
- |
- |
(10) |
|
Realised on disposal |
|
- |
|
- |
- |
- |
(157) |
|
Exchange differences realised on disposal |
|
- |
|
- |
- |
- |
- |
|
Shadow accounting |
|
- |
|
- |
- |
- |
(58) |
|
Currency translation differences/exchange differences on translating foreign operations |
|
- |
|
- |
- |
- |
- |
|
Other movements |
|
- |
|
- |
- |
- |
- |
|
Income tax relating to components of other comprehensive income |
D1(c) |
- |
|
- |
- |
- |
2 |
|
Total comprehensive income for the financial year |
|
- |
|
- |
- |
- |
(172) |
|
Dividends for the year |
C4 |
- |
|
- |
- |
- |
- |
|
Other movements in share capital and payment reserve |
|
7 |
|
- |
10 |
- |
- |
|
Merger reserve realised in the year |
|
- |
|
- |
- |
(313) |
|
|
Change in participation in subsidiaries |
F2 |
- |
|
- |
- |
- |
- |
|
Reclassification of translation differences on non controlling interests |
|
- |
|
- |
- |
- |
- |
|
Shares issued in lieu of cash dividend |
|
99 |
|
10 |
- |
- |
- |
|
Transactions with shareholders |
|
106 |
|
10 |
10 |
(313) |
- |
|
Shareholders' equity at end of the year |
|
5,801 |
|
580 |
805 |
2,532 |
53 |
|
|
|
Millions |
|
|
|
|
£m |
|
Year ended 31 December 2010 |
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 |
|
5,518 |
|
552 |
771 |
2,716 |
82 |
|
Loss after tax for the financial year |
|
- |
|
- |
- |
- |
- |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
Fair value gains/(losses) |
|
|
|
|
|
|
|
|
Property revaluation |
|
- |
|
- |
- |
- |
- |
|
Net investment hedge |
|
- |
|
- |
- |
- |
- |
|
Available-for-sale investments |
|
|
|
|
|
|
|
|
Fair value gains |
|
- |
|
- |
- |
- |
562 |
|
Recycled to the income statement |
|
- |
|
- |
- |
- |
(12) |
|
Shadow accounting |
|
- |
|
- |
- |
- |
(343) |
|
Currency translation differences/exchange differences on translating foreign operations |
|
- |
|
- |
- |
- |
- |
|
Other movements |
|
- |
|
- |
- |
- |
2 |
|
Income tax relating to components of other comprehensive income |
D1(c) |
- |
|
- |
- |
- |
(66) |
|
Total comprehensive income for the financial year |
|
- |
|
- |
- |
- |
143 |
|
Dividends for the year |
C4 |
- |
|
- |
- |
- |
- |
|
Other movements in share capital and payment reserve |
|
6 |
|
1 |
7 |
- |
- |
|
Acquisition of non-controlling interest in Mutual & Federal |
F2 |
147 |
|
15 |
- |
129 |
- |
|
Change in participation in other subsidiaries |
F2 |
- |
|
- |
- |
- |
- |
|
Shares issued in lieu of cash dividend |
|
24 |
|
2 |
17 |
- |
- |
|
Transactions with shareholders |
|
177 |
|
18 |
24 |
129 |
- |
|
Shareholders' equity at end of the year |
|
5,695 |
|
570 |
795 |
2,845 |
225 |
|
£m |
||||||||
|
Property revaluation reserve |
Share-based payments reserve |
Other reserves |
Translation reserve |
Retained earnings |
Perpetual preferred callable securities |
Attributable to equity holders of the parent |
Total |
Total |
|
101 |
215 |
5 |
1,176 |
2,331 |
688 |
8,951 |
2,523 |
11,474 |
|
- |
- |
- |
- |
635 |
32 |
667 |
300 |
967 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 |
- |
- |
- |
- |
- |
30 |
9 |
39 |
|
- |
- |
- |
28 |
- |
- |
28 |
- |
28 |
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
- |
- |
- |
51 |
(1) |
50 |
|
- |
(1) |
- |
- |
- |
- |
(11) |
- |
(11) |
|
- |
- |
- |
- |
- |
- |
(157) |
- |
(157) |
|
- |
- |
- |
24 |
- |
- |
24 |
- |
24 |
|
(7) |
- |
- |
- |
- |
- |
(65) |
- |
(65) |
|
|
|
- |
(970) |
- |
- |
(970) |
(313) |
(1,283) |
|
- |
(34) |
- |
- |
15 |
- |
(19) |
(20) |
(39) |
|
|
|
- |
- |
- |
12 |
14 |
- |
14 |
|
23 |
(35) |
- |
(918) |
650 |
44 |
(408) |
(25) |
(433) |
|
- |
- |
- |
- |
(221) |
(44) |
(265) |
(162) |
(427) |
|
- |
50 |
- |
- |
(17) |
- |
43 |
16 |
59 |
|
- |
- |
- |
- |
313 |
- |
- |
- |
- |
|
- |
- |
- |
- |
- |
- |
- |
61 |
61 |
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
43 |
- |
- |
43 |
(43) |
- |
|
- |
- |
- |
- |
114 |
- |
124 |
- |
124 |
|
- |
50 |
- |
43 |
189 |
(44) |
(55) |
(128) |
(183) |
|
124 |
230 |
5 |
301 |
3,170 |
688 |
8,488 |
2,370 |
10,858 |
|
|
|
|
|
|
|
|
|
£m |
|
Property revaluation reserve |
Share-based payments reserve |
Other reserves |
Translation reserve |
Retained earnings |
Perpetual preferred callable securities |
Attributable to equity holders of the parent |
Total controlling interests |
Total |
|
87 |
191 |
11 |
469 |
2,897 |
688 |
8,464 |
2,247 |
10,711 |
|
- |
- |
- |
- |
(314) |
32 |
(282) |
258 |
(24) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21 |
- |
- |
- |
- |
- |
21 |
5 |
26 |
|
- |
- |
- |
(87) |
- |
- |
(87) |
- |
(87) |
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
- |
- |
- |
562 |
- |
562 |
|
- |
- |
- |
- |
- |
- |
(12) |
- |
(12) |
|
(6) |
- |
- |
- |
- |
- |
(349) |
- |
(349) |
|
- |
- |
- |
794 |
- |
- |
794 |
274 |
1,068 |
|
(1) |
20 |
(6) |
- |
(14) |
- |
1 |
(4) |
(3) |
|
- |
- |
- |
- |
- |
12 |
(54) |
- |
(54) |
|
14 |
20 |
(6) |
707 |
(328) |
44 |
594 |
533 |
1,127 |
|
|
|
|
- |
(131) |
(44) |
(175) |
(152) |
(327) |
|
- |
4 |
- |
- |
(25) |
- |
(13) |
3 |
(10) |
|
- |
- |
- |
- |
(93) |
- |
51 |
(51) |
- |
|
- |
- |
- |
- |
- |
- |
- |
(57) |
(57) |
|
- |
- |
- |
- |
11 |
- |
30 |
- |
30 |
|
- |
4 |
- |
- |
(238) |
(44) |
(107) |
(257) |
(364) |
|
101 |
215 |
5 |
1,176 |
2,331 |
688 |
8,951 |
2,523 |
11,474 |
Retained earnings were reduced in respect of own shares held in policyholders' funds, ESOP trusts, Black Economic Empowerment trusts and other related undertakings at 31 December 2011 by £501 million (2010: £478 million).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011
A1: Accounting policies
Basis of preparation
The consolidated financial information contained herein has been prepared in accordance with the recognition and measurement principles of International financial Reporting Standards adopted by the EU. The Group's results for the year ended 31 December 2011 and the position at that date have been prepared using accounting policies consistent with those applied in the preparation of the Group's 2010 Annual Report and Accounts.
The consolidated financial statements have been prepared on the going concern basis which the directors believe to be appropriate.
The financial information set out herein does not constitute the Company's statutory accounts for the years ended 31 December 2011 or 2010. Statutory accounts for 2010 have been delivered to the Registrar of Companies, and those for 2011 will be delivered in due course. The auditor has reported on those accounts; the reports were (i) unqualified, (ii) did not include references to any matters to which the auditor draws attention by way of emphasis without qualifying the reports, and (iii) did not contain statements under section 498(2) or (3) of the Companies Act 2006.
A2: Significant corporate activity and business changes
Disposal of US Life
As previously reported at 31 December 2010 the Group was in advanced stage negotiations for the disposal of its life assurance operations in the United States, which represented almost the entirety of the US Life operating segment. Following US regulatory approval the disposal of US Life was completed on 7 April 2011. The sale represented the Group's exit from the life assurance market in the United States and therefore met the criteria of a discontinued operation. For the purposes of adjusted operating profit US Life has been classified as a discontinued and non-core operation and consequently is not included.
Skandia Liv and the disposal of Nordic
In line with previous periods the consolidated financial statements do not include the company Livförsäkringsaktiebolaget Skandia (Skandia Liv) and its subsidiaries. Skandia Liv's business is a mutual life assurance company that is highly regulated within a strict legal framework for mutual life assurance companies in Sweden, particularly in relation to its relationship with its holding company. The Group does not have the power to control Skandia Liv in such a way as to access the benefits usually associated with share ownership due to the legal and regulatory restrictions. Those benefits accrue to the policyholders of Skandia Liv. Consequently, Skandia Liv is not consolidated. The shares in Skandia Liv are accounted for in accordance with the accounting policies for equity financial instruments.
As announced on 15 December 2011, the Group has agreed to sell the Nordic business unit comprising the life assurance, asset management and banking operations in Sweden, Denmark and Norway to Skandia Liv. As a result the assets and liabilities of the Nordic disposal group have been classified as held for sale in the statement of financial position for the current year in accordance with IFRS 5. This sale will result in the Group's exit from the life assurance, asset management and banking operations in the Nordic region and therefore meets the criteria of a discontinued operation. Consequently the comparative information in the income statement, statement of comprehensive income, statement of cash flows and the related notes have been restated where applicable to reflect this. For the purposes of adjusted operating profit, Nordic has been reclassified as a discontinued and non-core operation for the year ended 31 December 2011 with the comparative restated accordingly.
Disposal of the Finnish branch in Wealth Management
On 21 December 2011 the Group announced that it had agreed terms to sell the Finnish branch of Wealth Management to OP-Pohjola osk. As a result of this the assets and liabilities of the Finnish branch have been classified as held for sale in the statement of financial position for the current year.
Further details of the impact for discontinued operations and disposal groups are provided in notes H1 and H2. In addition, certain comparative information has been revised in accordance with changes to presentation made in the current year.
Consolidation of other African businesses
In preparing the consolidated financial statements for the year ended 31 December 2010 the Emerging Markets segment included its South African and Namibian businesses but excluded all other African businesses. This was consistent with prior periods. Nedbank and Mutual & Federal consolidated the results of all African businesses under their control.
Following a period of greater political and currency stability in Zimbabwe and an expectation that the Group will be able to extract benefits from its Zimbabwean business the Group re-evaluated its ability to control this business within the meaning of accounting standards. As a result the Group's Zimbabwean business has been consolidated for the first time together with operations in Kenya, Malawi, Swaziland and Nigeria (collectively the other African businesses), with this being effective from 1 January 2011.
The acquisition has been accounted for at the net asset value of the underlying businesses on 1 January 2011, being the fair value of the Group's investment in these operations for the assets and liabilities acquired. Deemed consideration for the acquisition is the fair value of the Group's investment immediately prior to control. The result was a gain for the Group in these businesses that is accounted for as a profit on acquisition in the year. This profit has been excluded from adjusted operating profit. On initial recognition the assets directly associated with other African businesses consisted of £290 million of investment property, £576 million of investments and securities and £115 million of other assets, with liabilities at this time being £624 million of policyholder liabilities and £108 million of other liabilities.
The trading results of the other African businesses for the year ending 31 December 2011 have been included in the Group's income statement and adjusted operating profit. In anticipation of the indigenisation of the Zimbabwe business a non-controlling interest adjustment has been included for this operation in respect of adjusted operating profit to reflect the most likely expected indigenous shareholding to be provided. At 31 December 2011 the Group retained a 100% holding in the ordinary shares of Zimbabwe and consequently the operation has been consolidated as a wholly owned subsidiary for the purposes of IFRS reporting.
B: Segment information
B1: Basis of segmentation
The Group's results are analysed and reported on a basis consistent with the way that management and the Board of Directors considers information when making operating decisions and the basis on which resources are allocated and performance assessed by management and the Board of Directors, being in line with that reported in the previous financial year. This information is presented to the Board in local currency, however this note is presented in pounds sterling, the presentation currency of the Group. As detailed in note A2, Nordic has been reclassified as discontinued and as a result also non-core, with the comparative segment information restated accordingly, resulting in a reduction in adjusted operating profit before tax and non-controlling interests of £110 million for the year ended 31 December 2010.
There are four principal business activities from which the Group generates revenues. These are life assurance (premium income), asset management business (fee and commission income), banking (banking interest receivable) and general insurance (premium income). The revenues generated in each reported segment can be seen in the analysis of profits and losses in note B2.
The information reflects the measures of profit and loss, assets and liabilities for each operating segment as regularly 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. A reconciliation between the segment revenues and expenses and the Group's revenues and expenses is shown in note B2.
In line with internal reporting, assets, liabilities, revenues or 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 customers within any of the segments.
The types of products and services from which each operating segment derives its revenues are as follows:
Core operations
Long Term Savings
Emerging Markets - life assurance and asset management
Retail Europe - life assurance and asset management
Wealth Management - life assurance and asset management
Other core operations
Nedbank - banking and asset management
Mutual & Federal - general insurance
US Asset Management - asset management
Other - other operating segments and business activities
Discontinued and non-core operations
Bermuda - life assurance (non-core)
Nordic - life assurance, asset management and banking (discontinued and non-core)
US Life - life assurance (discontinued and non-core)
Income statement segmentation
For the IFRS income statement Nordic and US Life have been classified as discontinued operations. All other businesses including Bermuda are classified as continuing.
The profits of the Nordic, US Life and Bermuda businesses are excluded in determining adjusting operating profit in both periods, on the basis that they are either discontinued (Nordic and US Life) or non-core (Bermuda).
Statement of financial position segmentation
The segmental analysis of the statement of financial position at both 31 December 2011 and 31 December 2010 discloses Bermuda as non-core, consistent with the treatment of the business for AOP purposes.
Nordic is disclosed as discontinued in the statement of financial position consistent with the income statement classification. The agreement to dispose of Nordic announced on 15 December 2011 resulted in the assets and liabilities of the business being classified as held for sale at 31 December 2011. For the corresponding period Nordic has been reported on a line by line basis.
US Life is disclosed as discontinued at 31 December 2010, being classified as held for sale. The disposal of US Life was completed on 7 April 2011.
Adjusted operating profit 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. The Group utilises additional measures to assess the performance of each of the segments, in particular the level of net client cash flows and funds under management. Additional performance measures considered by management and the Board of Directors in assessing the performance of the segments can be found in the Market Consistent Embedded Value basis supplementary information.
In the analysis that follows, consolidation adjustments include the elimination of inter-segment revenues, expenses, assets and liabilities together with the impacts of the consolidation of the Group's interest in unit trusts, mutual funds and similar entities.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011 continued
B: Segment information continued
B2: Adjusted operating profit statement - segment information year ended 31 December 2011
|
|
|
|||
|
|
Long-Term Savings |
|||
|
|
Retail |
Wealth Management |
Total Long-Term Savings |
|
|
Revenue |
|
|
|
|
|
Gross earned premiums |
2,542 |
30 |
274 |
2,846 |
|
Outward reinsurance |
(88) |
(8) |
(80) |
(176) |
|
Net earned premiums |
2,454 |
22 |
194 |
2,670 |
|
Investment return (non-banking) |
2,626 |
(214) |
(2,664) |
(252) |
|
Banking interest and similar income |
- |
- |
- |
- |
|
Banking trading, investment and similar income |
- |
- |
- |
- |
|
Fee and commission income, and income from service activities |
411 |
201 |
982 |
1,594 |
|
Other income |
68 |
2 |
21 |
91 |
|
Inter-segment revenues |
66 |
5 |
6 |
77 |
|
Total revenues |
5,625 |
16 |
(1,461) |
4,180 |
|
Expenses |
|
|
|
|
|
Claims and benefits (including change in insurance contract provisions) |
(2,854) |
(20) |
(82) |
(2,956) |
|
Reinsurance recoveries |
73 |
3 |
6 |
82 |
|
Net claims and benefits incurred |
(2,781) |
(17) |
(76) |
(2,874) |
|
Change in investment contract liabilities |
(925) |
226 |
2,588 |
1,889 |
|
Losses on loans and advances |
- |
(1) |
- |
(1) |
|
Finance costs (including interest and similar expenses) |
- |
- |
- |
- |
|
Banking interest payable and similar expenses |
- |
- |
- |
- |
|
Fee and commission expenses, and other acquisition costs |
(223) |
(84) |
(580) |
(887) |
|
Other operating and administrative expenses |
(1,076) |
(93) |
(311) |
(1,480) |
|
Goodwill impairment |
- |
- |
- |
- |
|
Change in third-party interest in consolidated funds |
- |
- |
- |
- |
|
Income tax attributable to policyholder returns |
(53) |
- |
62 |
9 |
|
Inter-segment expenses |
(7) |
(3) |
(43) |
(53) |
|
Total expenses |
(5,065) |
28 |
1,640 |
(3,397) |
|
Share of associated undertakings' and joint ventures' profit after tax |
10 |
- |
- |
10 |
|
Profit on disposal of subsidiaries, associated undertakings and strategic investments |
- |
- |
- |
- |
|
Adjusted operating profit/(loss) before tax and non-controlling interests |
570 |
44 |
179 |
793 |
|
Income tax expense |
(120) |
(11) |
(15) |
(146) |
|
Non-controlling interests |
(3) |
- |
- |
(3) |
|
Adjusted operating profit/(loss) after tax and non-controlling interests |
447 |
33 |
164 |
644 |
|
Adjusting items net of tax and non-controlling interests |
126 |
(30) |
(57) |
39 |
|
Profit/(loss) after tax from continuing operations |
573 |
3 |
107 |
683 |
|
Profit from discontinued operations after tax |
- |
- |
- |
- |
|
Profit/(loss) after tax attributable to equity holders of the parent |
573 |
3 |
107 |
683 |
Of the total revenues, excluding intercompany revenues, (£1,492) million was generated in the UK (2010: £5,143 million), (£81) million in rest of Europe (2010: £1,160 million), £11,007 million in Southern Africa (2010: £12,575 million), £270 million in United States (2010: £829 million) and £80 million relates to other operating segments (2010: £90 million).
*Non-core operations relates to Bermuda with the exception of £22 million and £5 million of inter-segment revenue and expenses and the profit from discontinued operations after tax, with these reflecting the results of Nordic and US Life both of which have been classified as discontinued operations as detailed in notes A2 and B1. Bermuda loss after tax for 2011 was £201 million. Further detail on the results of discontinued operations is provided in note H1.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m |
|
Nedbank |
M&F |
USAM |
Other |
Consolidation adjustments |
Adjusted operating profit |
Adjusting items (note C1) |
Discontinued and non-core operations* |
IFRS Income statement |
|
|
|
|
|
|
|
|
|
|
|
- |
736 |
- |
- |
- |
3,582 |
- |
2 |
3,584 |
|
- |
(149) |
- |
- |
- |
(325) |
- |
- |
(325) |
|
- |
587 |
- |
- |
- |
3,257 |
- |
2 |
3,259 |
|
- |
54 |
- |
52 |
30 |
(116) |
(241) |
(210) |
(567) |
|
3,669 |
- |
- |
- |
- |
3,669 |
- |
- |
3,669 |
|
217 |
- |
- |
- |
- |
217 |
- |
- |
217 |
|
1,051 |
34 |
447 |
- |
- |
3,126 |
(91) |
- |
3,035 |
|
50 |
- |
10 |
- |
- |
151 |
- |
20 |
171 |
|
27 |
18 |
1 |
16 |
(185) |
(46) |
- |
46 |
- |
|
5,014 |
693 |
458 |
68 |
(155) |
10,258 |
(332) |
(142) |
9,784 |
|
|
|
|
|
|
|
|
|
|
|
- |
(422) |
- |
- |
- |
(3,378) |
- |
47 |
(3,331) |
|
- |
41 |
- |
- |
- |
123 |
- |
- |
123 |
|
- |
(381) |
- |
- |
- |
(3,255) |
- |
47 |
(3,208) |
|
- |
- |
- |
- |
- |
1,889 |
- |
- |
1,889 |
|
(457) |
- |
- |
- |
- |
(458) |
- |
- |
(458) |
|
- |
- |
- |
(128) |
- |
(128) |
70 |
- |
(58) |
|
(2,091) |
- |
- |
- |
- |
(2,091) |
(4) |
- |
(2,095) |
|
(9) |
(109) |
(12) |
- |
(24) |
(1,041) |
104 |
(70) |
(1,007) |
|
(1,641) |
(95) |
(379) |
(81) |
(8) |
(3,684) |
(154) |
(14) |
(3,852) |
|
- |
- |
- |
- |
- |
- |
(264) |
- |
(264) |
|
- |
- |
- |
- |
2 |
2 |
- |
- |
2 |
|
- |
- |
- |
- |
- |
9 |
(9) |
- |
- |
|
(61) |
(19) |
- |
(48) |
185 |
4 |
|
(4) |
- |
|
(4,259) |
(604) |
(391) |
(257) |
155 |
(8,753) |
(257) |
(41) |
(9,051) |
|
- |
- |
- |
- |
- |
10 |
- |
- |
10 |
|
- |
- |
- |
- |
- |
- |
251 |
- |
251 |
|
755 |
89 |
67 |
(189) |
- |
1,515 |
(338) |
(183) |
994 |
|
(188) |
(22) |
(8) |
23 |
- |
(341) |
117 |
(1) |
(225) |
|
(269) |
(8) |
- |
(39) |
- |
(319) |
19 |
- |
(300) |
|
298 |
59 |
59 |
(205) |
- |
855 |
(202) |
(184) |
469 |
|
16 |
(24) |
(260) |
27 |
- |
(202) |
202 |
- |
- |
|
314 |
35 |
(201) |
(178) |
- |
653 |
- |
(184) |
469 |
|
- |
- |
- |
- |
- |
- |
- |
198 |
198 |
|
314 |
35 |
(201) |
(178) |
- |
653 |
- |
14 |
667 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011 continued
B: Segment information continued
B2: Adjusted operating profit statement - segment information year ended 31 December 2010 (restated)
|
|
|
|||
|
|
Long-Term Savings |
|||
|
|
Retail Europe |
Wealth Management |
Total Long-Term Savings |
|
|
Revenue |
|
|
|
|
|
Gross earned premiums |
2,353 |
28 |
351 |
2,732 |
|
Outward reinsurance |
(72) |
(8) |
(79) |
(159) |
|
Net earned premiums |
2,281 |
20 |
272 |
2,573 |
|
Investment return (non-banking) |
4,072 |
392 |
4,409 |
8,873 |
|
Banking interest and similar income |
- |
- |
- |
- |
|
Banking trading, investment and similar income |
- |
- |
- |
- |
|
Fee and commission income, and income from service activities |
372 |
198 |
912 |
1,482 |
|
Other income |
72 |
- |
11 |
83 |
|
Inter-segment revenues |
54 |
5 |
12 |
71 |
|
Total revenues |
6,851 |
615 |
5,616 |
13,082 |
|
Expenses |
|
|
|
|
|
Claims and benefits (including change in insurance contract provisions) |
(3,943) |
(25) |
(303) |
(4,271) |
|
Reinsurance recoveries |
83 |
5 |
75 |
163 |
|
Net claims and benefits incurred |
(3,860) |
(20) |
(228) |
(4,108) |
|
Change in investment contract liabilities |
(1,261) |
(382) |
(4,190) |
(5,833) |
|
Losses on loans and advances |
- |
(1) |
- |
(1) |
|
Finance costs (including interest and similar expenses) |
- |
- |
- |
- |
|
Banking interest payable and similar expenses |
- |
- |
- |
- |
|
Fee and commission expenses, and other acquisition costs |
(219) |
(75) |
(500) |
(794) |
|
Other operating and administrative expenses |
(941) |
(84) |
(390) |
(1,415) |
|
Goodwill impairment |
- |
- |
- |
- |
|
Change in third-party interest in consolidated funds |
- |
- |
- |
- |
|
Income tax attributable to policyholder returns |
(32) |
- |
(69) |
(101) |
|
Inter-segment expenses |
(2) |
(2) |
(43) |
(47) |
|
Total expenses |
(6,315) |
(564) |
(5,420) |
(12,299) |
|
Share of associated undertakings' and joint ventures' profit after tax |
3 |
- |
1 |
4 |
|
Loss on disposal of subsidiaries, associated undertakings and strategic investments |
- |
- |
- |
- |
|
Adjusted operating profit/(loss) before tax and non-controlling interests |
539 |
51 |
197 |
787 |
|
Income tax expense |
(146) |
(13) |
(44) |
(203) |
|
Non-controlling interests |
(1) |
- |
- |
(1) |
|
Adjusted operating profit/(loss) after tax and non-controlling interests |
392 |
38 |
153 |
583 |
|
Adjusting items net of tax and non-controlling interests |
(1) |
(25) |
(140) |
(166) |
|
Profit/(loss) after tax from continuing operations |
391 |
13 |
13 |
417 |
|
Loss from discontinued operations after tax |
- |
- |
- |
- |
|
Profit/(loss) after tax attributable to equity holders of the parent |
391 |
13 |
13 |
417 |
*Non-core operations relates to Bermuda with the exception of £18 million and £21 million of inter-segment revenue and expenses and the loss from discontinued operations after tax, with these reflecting the results of Nordic and US Life both of which have been classified as discontinued operations as detailed in notes A2 and B1. Bermuda profit after tax for 2010 was £22 million. Further detail on the results of discontinued operations is provided in note H1.
|
|
|
|
|
|
|
|
|
£m |
|
Nedbank |
M&F |
USAM |
Other |
Consolidation adjustments |
Adjusted operating profit |
Adjusting items (note C1) |
Discontinued and non-core operations* |
IFRS Income statement |
|
|
|
|
|
|
|
|
|
|
|
- |
728 |
- |
- |
- |
3,460 |
- |
- |
3,460 |
|
- |
(140) |
- |
- |
- |
(299) |
- |
(1) |
(300) |
|
- |
588 |
- |
- |
- |
3,161 |
- |
(1) |
3,160 |
|
- |
56 |
1 |
76 |
340 |
9,346 |
(92) |
299 |
9,553 |
|
3,913 |
- |
- |
- |
- |
3,913 |
- |
- |
3,913 |
|
199 |
- |
- |
- |
- |
199 |
- |
- |
199 |
|
946 |
28 |
465 |
1 |
- |
2,922 |
(99) |
- |
2,823 |
|
35 |
- |
9 |
(1) |
1 |
127 |
- |
22 |
149 |
|
20 |
20 |
4 |
29 |
(207) |
(63) |
- |
63 |
- |
|
5,113 |
692 |
479 |
105 |
134 |
19,605 |
(191) |
383 |
19,797 |
|
|
|
|
|
|
|
|
|
|
|
- |
(436) |
- |
- |
- |
(4,707) |
- |
(249) |
(4,956) |
|
- |
58 |
- |
- |
- |
221 |
- |
1 |
222 |
|
- |
(378) |
- |
- |
- |
(4,486) |
- |
(248) |
(4,734) |
|
- |
- |
- |
- |
- |
(5,833) |
- |
- |
(5,833) |
|
(548) |
- |
- |
1 |
- |
(548) |
- |
- |
(548) |
|
- |
- |
- |
(128) |
- |
(128) |
(141) |
- |
(269) |
|
(2,422) |
- |
- |
- |
- |
(2,422) |
(19) |
- |
(2,441) |
|
(3) |
(109) |
(23) |
- |
(29) |
(958) |
126 |
(85) |
(917) |
|
(1,485) |
(83) |
(384) |
(93) |
(13) |
(3,473) |
(144) |
(26) |
(3,643) |
|
- |
- |
- |
- |
- |
- |
(1) |
- |
(1) |
|
- |
- |
- |
|
(299) |
(299) |
- |
- |
(299) |
|
- |
- |
- |
- |
- |
(101) |
101 |
- |
- |
|
(54) |
(20) |
- |
(77) |
207 |
9 |
- |
(9) |
- |
|
(4,512) |
(590) |
(407) |
(297) |
(134) |
(18,239) |
(78) |
(368) |
(18,685) |
|
- |
1 |
- |
- |
- |
5 |
- |
- |
5 |
|
- |
- |
- |
- |
- |
- |
(22) |
- |
(22) |
|
601 |
103 |
72 |
(192) |
- |
1,371 |
(291) |
15 |
1,095 |
|
(128) |
(24) |
(13) |
41 |
- |
(327) |
(68) |
4 |
(391) |
|
(232) |
(5) |
- |
(41) |
- |
(279) |
21 |
- |
(258) |
|
241 |
74 |
59 |
(192) |
- |
765 |
(338) |
19 |
446 |
|
10 |
(11) |
(20) |
(151) |
- |
(338) |
338 |
- |
- |
|
251 |
63 |
39 |
(343) |
- |
427 |
- |
19 |
446 |
|
- |
- |
- |
- |
- |
- |
- |
(728) |
(728) |
|
251 |
63 |
39 |
(343) |
- |
427 |
- |
(709) |
(282) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011 continued
B: Segment information continued
B3: Gross earned premiums
|
Year ended 31 December 2011 |
|
|
|
|
|
|
£m |
|
Emerging Markets |
Retail Europe |
Wealth Management |
Long-Term Savings |
M&F |
Bermuda |
Total |
|
|
Life assurance - insurance contracts |
1,567 |
30 |
274 |
1,871 |
- |
2 |
1,873 |
|
Life assurance - investment contracts with discretionary participation features |
975 |
- |
- |
975 |
- |
- |
975 |
|
General insurance |
- |
- |
- |
- |
736 |
- |
736 |
|
Gross earned premiums |
2,542 |
30 |
274 |
2,846 |
736 |
2 |
3,584 |
|
Life assurance - other investment contracts recognised as deposits |
2,088 |
666 |
5,740 |
8,494 |
- |
- |
8,494 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m |
|
Year ended 31 December 2010 |
Emerging Markets |
Retail Europe |
Wealth Management |
Long-Term Savings |
M&F |
Bermuda |
Total Restated |
|
Life assurance - insurance contracts |
1,498 |
28 |
351 |
1,877 |
- |
- |
1,877 |
|
Life assurance - investment contracts with discretionary participation features |
855 |
- |
- |
855 |
- |
- |
855 |
|
General insurance |
- |
- |
- |
- |
728 |
- |
728 |
|
Gross earned premiums |
2,353 |
28 |
351 |
2,732 |
728 |
- |
3,460 |
|
Life assurance - other investment contracts recognised as deposits |
1,829 |
656 |
6,287 |
8,772 |
- |
- |
8,772 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011 continued
B: Segment information continued
B4: Statement of financial position - segment information year ended 31 December 2011
|
|
|
|
|
|
£m |
|
At 31 December 2011 |
Notes |
Emerging Markets |
Retail Europe |
Wealth Management |
Total Long-Term Savings |
|
Assets |
|
|
|
|
|
|
Goodwill and other intangible assets |
|
104 |
474 |
1,282 |
1,860 |
|
Mandatory reserve deposits with central banks |
|
- |
- |
- |
- |
|
Property, plant and equipment |
|
374 |
3 |
13 |
390 |
|
Investment property |
|
1,666 |
- |
- |
1,666 |
|
Deferred tax assets |
|
81 |
22 |
43 |
146 |
|
Investments in associated undertakings and joint ventures |
|
32 |
- |
- |
32 |
|
Deferred acquisition costs |
|
113 |
334 |
830 |
1,277 |
|
Reinsurers' share of policyholder liabilities |
|
31 |
8 |
836 |
875 |
|
Loans and advances |
|
299 |
1 |
189 |
489 |
|
Investments and securities |
|
30,064 |
4,188 |
37,320 |
71,572 |
|
Current tax receivable |
|
10 |
9 |
61 |
80 |
|
Client indebtedness for acceptances |
|
- |
- |
- |
- |
|
Trade, other receivables and other assets |
|
711 |
56 |
254 |
1,021 |
|
Derivative financial instruments - assets |
|
298 |
- |
- |
298 |
|
Cash and cash equivalents |
|
339 |
108 |
408 |
855 |
|
Non-current assets held for sale |
H2(a) |
- |
- |
1,161 |
1,161 |
|
Inter-segment assets |
|
1,025 |
52 |
86 |
1,163 |
|
Total assets |
|
35,147 |
5,255 |
42,483 |
82,885 |
|
Liabilities |
|
|
|
|
|
|
Life assurance policyholder liabilities |
|
30,270 |
4,201 |
37,958 |
72,429 |
|
General insurance liabilities |
|
- |
- |
- |
- |
|
Third-party interests in consolidated funds |
|
- |
- |
- |
- |
|
Borrowed funds |
E1 |
239 |
- |
- |
239 |
|
Provisions |
F1 |
137 |
4 |
60 |
201 |
|
Deferred revenue |
|
17 |
219 |
454 |
690 |
|
Deferred tax liabilities |
|
185 |
102 |
87 |
374 |
|
Current tax payable |
|
120 |
16 |
23 |
159 |
|
Trade, other payables and other liabilities |
|
1,667 |
77 |
596 |
2,340 |
|
Liabilities under acceptances |
|
- |
- |
- |
- |
|
Amounts owed to bank depositors |
|
- |
- |
- |
- |
|
Derivative financial instruments - liabilities |
|
230 |
- |
- |
230 |
|
Non-current liabilities held for sale |
H2(a) |
- |
- |
1,120 |
1,120 |
|
Inter-segment liabilities |
|
141 |
1 |
461 |
603 |
|
Total liabilities |
|
33,006 |
4,620 |
40,759 |
78,385 |
|
Net assets |
|
2,141 |
635 |
1,724 |
4,500 |
|
Equity |
|
|
|
|
|
|
Equity attributable to equity holders of the parent |
|
2,144 |
635 |
1,724 |
4,503 |
|
Non-controlling interests |
|
(3) |
- |
- |
(3) |
|
Ordinary shares |
F2(b) |
(3) |
- |
- |
(3) |
|
Preferred securities |
F2(b) |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
Total equity |
|
2,141 |
635 |
1,724 |
4,500 |
|
|
|
|
|
|
|
|
£m |
|
Nedbank |
M&F |
USAM |
Other |
Consolidation adjustments |
Non-core operations - Bermuda |
Discontinued operations* |
Total |
|
|
|
|
|
|
|
|
|
|
557 |
23 |
904 |
13 |
- |
1 |
- |
3,358 |
|
951 |
- |
|
- |
- |
- |
- |
951 |
|
502 |
21 |
11 |
1 |
- |
- |
- |
925 |
|
49 |
- |
- |
- |
349 |
- |
- |
2,064 |
|
21 |
14 |
165 |
(8) |
- |
1 |
- |
339 |
|
49 |
1 |
2 |
27 |
- |
- |
- |
111 |
|
- |
16 |
9 |
- |
- |
49 |
- |
1,351 |
|
16 |
98 |
- |
- |
- |
- |
- |
989 |
|
39,274 |
1 |
- |
- |
- |
- |
- |
39,764 |
|
6,403 |
416 |
41 |
216 |
874 |
1,731 |
- |
81,253 |
|
56 |
2 |
- |
- |
- |
- |
- |
138 |
|
237 |
- |
- |
- |
- |
- |
- |
237 |
|
943 |
75 |
126 |
54 |
293 |
836 |
- |
3,348 |
|
1,022 |
- |
- |
86 |
388 |
1 |
- |
1,795 |
|
1,071 |
113 |
197 |
467 |
756 |
165 |
- |
3,624 |
|
1 |
- |
16 |
- |
- |
- |
20,960 |
22,138 |
|
206 |
23 |
21 |
1,136 |
(3,155) |
566 |
40 |
- |
|
51,358 |
803 |
1,492 |
1,992 |
(495) |
3,350 |
21,000 |
162,385 |
|
|
|
|
|
|
|
|
|
|
815 |
- |
- |
- |
- |
3,106 |
- |
76,350 |
|
- |
325 |
- |
- |
- |
- |
- |
325 |
|
- |
- |
- |
- |
1,893 |
- |
- |
1,893 |
|
2,273 |
- |
11 |
1,133 |
- |
- |
- |
3,656 |
|
- |
32 |
3 |
33 |
- |
- |
- |
269 |
|
1 |
10 |
- |
- |
- |
- |
- |
701 |
|
93 |
13 |
- |
24 |
- |
- |
- |
504 |
|
10 |
- |
(3) |
32 |
- |
1 |
- |
199 |
|
1,123 |
108 |
219 |
96 |
348 |
9 |
- |
4,243 |
|
237 |
- |
- |
- |
- |
- |
- |
237 |
|
40,978 |
- |
- |
- |
- |
- |
- |
40,978 |
|
1,103 |
- |
- |
3 |
419 |
- |
- |
1,755 |
|
- |
- |
8 |
- |
- |
- |
19,289 |
20,417 |
|
501 |
2 |
598 |
1,451 |
(3,155) |
- |
- |
- |
|
47,134 |
490 |
836 |
2,772 |
(495) |
3,116 |
19,289 |
151,527 |
|
4,224 |
313 |
656 |
(780) |
- |
234 |
1,711 |
10,858 |
|
|
|
|
|
|
|
|
|
|
2,347 |
294 |
625 |
(1,226) |
- |
234 |
1,711 |
8,488 |
|
1,877 |
19 |
31 |
446 |
- |
- |
- |
2,370 |
|
1,605 |
19 |
31 |
- |
- |
|
- |
1,652 |
|
272 |
- |
- |
446 |
- |
|
- |
718 |
|
|
|
|
|
|
|
|
|
|
4,224 |
313 |
656 |
(780) |
- |
234 |
1,711 |
10,858 |
* Discontinued operations relates to Nordic. Further detail is provided in note H2.
The net assets of Emerging Markets are stated after eliminating investments in Group equity and debt instruments of £368 million (2010: £399 million) held in policyholder funds. These include investments in the Company's ordinary shares and subordinated liabilities and preferred securities issued by the Group's banking subsidiary Nedbank Limited. All Emerging Markets debt relates to life assurance. All other debt relates to other shareholders' net assets.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011 continued
B: Segment information continued
B4: Statement of financial position - segment information year ended 31 December 2010
|
|
|
|
|
|
|
|
At 31 December 2010 |
Notes |
Emerging Markets |
Retail Europe |
Wealth Management |
Total Long-Term Savings |
|
Assets |
|
|
|
|
|
|
Goodwill and other intangible assets |
|
120 |
522 |
1,463 |
2,105 |
|
Mandatory reserve deposits with central banks |
|
- |
- |
- |
- |
|
Property, plant and equipment |
|
396 |
3 |
16 |
415 |
|
Investment property |
|
1,679 |
- |
- |
1,679 |
|
Deferred tax assets |
|
96 |
27 |
27 |
150 |
|
Investments in associated undertakings and joint ventures |
|
26 |
- |
1 |
27 |
|
Deferred acquisition costs |
|
139 |
316 |
855 |
1,310 |
|
Reinsurers' share of policyholder liabilities |
|
24 |
8 |
907 |
939 |
|
Loans and advances |
|
343 |
1 |
185 |
529 |
|
Investments and securities |
|
34,519 |
4,466 |
40,856 |
79,841 |
|
Current tax receivable |
|
4 |
9 |
95 |
108 |
|
Client indebtedness for acceptances |
|
- |
- |
- |
- |
|
Trade, other receivables and other assets |
|
854 |
58 |
274 |
1,186 |
|
Derivative financial instruments - assets |
|
557 |
- |
- |
557 |
|
Cash and cash equivalents |
|
1,141 |
93 |
336 |
1,570 |
|
Non-current assets held for sale |
|
- |
- |
6 |
6 |
|
Inter-segment assets |
|
947 |
56 |
294 |
1,297 |
|
Total assets |
|
40,845 |
5,559 |
45,315 |
91,719 |
|
Liabilities |
|
|
|
|
|
|
Life assurance policyholder liabilities |
|
35,676 |
4,460 |
41,468 |
81,604 |
|
General insurance liabilities |
|
- |
- |
- |
- |
|
Third-party interests in consolidated funds |
|
- |
- |
- |
- |
|
Borrowed funds |
E1 |
291 |
- |
1 |
292 |
|
Provisions |
F1 |
158 |
4 |
50 |
212 |
|
Deferred revenue |
|
22 |
197 |
498 |
717 |
|
Deferred tax liabilities |
|
225 |
124 |
224 |
573 |
|
Current tax payable |
|
123 |
4 |
65 |
192 |
|
Trade, other payables and other liabilities |
|
2,246 |
94 |
544 |
2,884 |
|
Liabilities under acceptances |
|
- |
- |
- |
- |
|
Amounts owed to bank depositors |
|
- |
- |
- |
- |
|
Derivative financial instruments - liabilities |
|
135 |
- |
- |
135 |
|
Non-current liabilities held for sale |
|
- |
- |
- |
- |
|
Inter-segment liabilities |
|
123 |
4 |
99 |
226 |
|
Total liabilities |
|
38,999 |
4,887 |
42,949 |
86,835 |
|
Net assets |
|
1,846 |
672 |
2,366 |
4,884 |
|
Equity |
|
|
|
|
|
|
Equity attributable to equity holders of the parent |
|
1,847 |
672 |
2,366 |
4,885 |
|
Non-controlling interests |
|
(1) |
- |
- |
(1) |
|
Ordinary shares |
F2(b) |
(1) |
- |
- |
(1) |
|
Preferred securities |
F2(b) |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
Total equity |
|
1,846 |
672 |
2,366 |
4,884 |
|
|
|
|
|
|
|
|
£m |
|
Nedbank |
M&F |
USAM |
Other |
Consolidation adjustments |
Non-core operations - Bermuda |
Discontinued operations* |
Total |
|
|
|
|
|
|
|
|
|
|
637 |
33 |
1,181 |
14 |
- |
- |
995 |
4,965 |
|
1,079 |
- |
- |
- |
- |
- |
- |
1,079 |
|
546 |
25 |
16 |
1 |
- |
- |
12 |
1,015 |
|
19 |
- |
- |
1 |
341 |
- |
- |
2,040 |
|
28 |
12 |
156 |
(8) |
- |
- |
78 |
416 |
|
96 |
2 |
8 |
25 |
- |
- |
4 |
162 |
|
1 |
19 |
14 |
- |
- |
124 |
66 |
1,534 |
|
31 |
122 |
- |
- |
- |
- |
12 |
1,104 |
|
46,032 |
1 |
- |
- |
- |
- |
5,216 |
51,778 |
|
6,886 |
553 |
42 |
285 |
2,587 |
2,567 |
13,392 |
106,153 |
|
47 |
- |
- |
- |
- |
- |
1 |
156 |
|
190 |
- |
- |
- |
- |
- |
- |
190 |
|
943 |
84 |
138 |
62 |
292 |
1,038 |
191 |
3,934 |
|
1,350 |
- |
- |
109 |
476 |
1 |
10 |
2,503 |
|
841 |
131 |
171 |
458 |
689 |
74 |
198 |
4,132 |
|
1 |
- |
- |
- |
- |
- |
12,384 |
12,391 |
|
202 |
23 |
4 |
975 |
(3,480) |
874 |
105 |
- |
|
58,929 |
1,005 |
1,730 |
1,922 |
905 |
4,678 |
32,664 |
193,552 |
|
|
|
|
|
|
|
|
|
|
846 |
- |
- |
- |
- |
3,933 |
12,248 |
98,631 |
|
- |
397 |
- |
- |
- |
- |
- |
397 |
|
- |
- |
- |
- |
3,584 |
- |
- |
3,584 |
|
2,456 |
- |
11 |
1,443 |
- |
- |
2 |
4,204 |
|
(4) |
40 |
3 |
47 |
- |
- |
(38) |
260 |
|
1 |
11 |
- |
- |
- |
- |
1 |
730 |
|
158 |
13 |
- |
16 |
- |
- |
98 |
858 |
|
12 |
1 |
7 |
13 |
- |
1 |
12 |
238 |
|
1,717 |
114 |
210 |
120 |
350 |
7 |
259 |
5,661 |
|
190 |
- |
- |
- |
- |
- |
- |
190 |
|
47,279 |
- |
- |
- |
- |
- |
5,957 |
53,236 |
|
1,172 |
- |
- |
102 |
451 |
- |
10 |
1,870 |
|
- |
- |
- |
- |
- |
- |
12,219 |
12,219 |
|
431 |
2 |
646 |
2,017 |
(3,480) |
- |
158 |
- |
|
54,258 |
578 |
877 |
3,758 |
905 |
3,941 |
30,926 |
182,078 |
|
4,671 |
427 |
853 |
(1,836) |
- |
737 |
1,738 |
11,474 |
|
|
|
|
|
|
|
|
|
|
2,643 |
409 |
821 |
(2,282) |
- |
737 |
1,738 |
8,951 |
|
2,028 |
18 |
32 |
446 |
- |
- |
- |
2,523 |
|
1,714 |
18 |
32 |
- |
- |
- |
- |
1,763 |
|
314 |
- |
- |
446 |
- |
- |
- |
760 |
|
|
|
|
|
|
|
|
|
|
4,671 |
427 |
853 |
(1,836) |
- |
737 |
1,738 |
11,474 |
* Discontinued operations relates to Nordic with the exception of non-current assets and liabilities held for sale which are in respect of US Life. Further detail is provided in note H2.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011 continued
C: Other key performance information
C1: Operating profit adjusting items
(a) Summary of adjusting items
In determining the adjusted operating profit 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 adjusted operating profit to profit before and after tax.
|
Year ended 31 December 2011 |
Notes |
£m |
|||
|
Emerging Markets |
Retail Europe |
Wealth Management |
Total Long-Term Savings |
||
|
Income/(expense) |
|
|
|
|
|
|
Goodwill impairment and impact of acquisition accounting |
C1(b) |
(2) |
(40) |
(87) |
(129) |
|
Profit on acquisition/disposal of subsidiaries, associated undertakings and strategic investments |
C1(c) |
249 |
- |
- |
249 |
|
Short-term fluctuations in investment return |
C1(d) |
(98) |
(1) |
(13) |
(112) |
|
Investment return adjustment for Group equity and debt instruments held in life funds |
C1(e) |
(71) |
- |
- |
(71) |
|
Dividends declared to holders of perpetual preferred callable securities |
C1(f) |
- |
- |
- |
- |
|
US Asset Management equity plans and non-controlling interests |
C1(g) |
- |
- |
- |
- |
|
Credit-related fair value gains/(losses) on Group debt instruments |
C1(h) |
- |
- |
- |
- |
|
Total adjusting items |
|
78 |
(41) |
(100) |
(63) |
|
Tax on adjusting items |
D1(d) |
43 |
11 |
43 |
97 |
|
Non-controlling interest in adjusting items |
F2(a)(iii) |
5 |
- |
- |
5 |
|
Total adjusting items after tax and non-controlling interests |
|
126 |
(30) |
(57) |
39 |
|
Year ended 31 December 2010* |
Notes |
£m |
|||
|
Emerging Markets |
Retail Europe |
Wealth Management |
Total Long-Term Savings |
||
|
Income/(expense) |
|
|
|
|
|
|
Goodwill impairment and impact of acquisition accounting |
C1(b) |
(2) |
(41) |
(74) |
(117) |
|
Loss on disposal of subsidiaries, associated undertakings and strategic investments |
C1(c) |
- |
- |
- |
- |
|
Short-term fluctuations in investment return |
C1(d) |
1 |
1 |
(71) |
(69) |
|
Investment return adjustment for Group equity and debt instruments held in life funds |
C1(e) |
(10) |
- |
- |
(10) |
|
Dividends declared to holders of perpetual preferred callable securities |
C1(f) |
- |
- |
- |
- |
|
US Asset Management equity plans and non-controlling interests |
C1(g) |
- |
- |
- |
- |
|
Credit-related fair value losses on Group debt instruments |
C1(h) |
- |
- |
- |
- |
|
Total adjusting items |
|
(11) |
(40) |
(145) |
(196) |
|
Tax on adjusting items |
D1(d) |
10 |
15 |
5 |
30 |
|
Non-controlling interest in adjusting items |
F2(a)(iii) |
- |
- |
- |
- |
|
Total adjusting items after tax and non-controlling interests |
|
(1) |
(25) |
(140) |
(166) |
* The year ended 31 December 2010 has been restated to reflect Nordic as non-core and discontinued.
|
Year ended 31 December 2011 |
Notes |
£m |
|
|||||
|
Long-Term Savings |
Nedbank |
M&F |
USAM |
Other |
Total |
|||
|
Income/(expense) |
|
|
|
|
|
|
|
|
|
Goodwill impairment and impact of acquisition accounting |
C1(b) |
(129) |
- |
- |
(272) |
- |
(401) |
|
|
Profit on acquisition/disposal of subsidiaries, associated undertakings and strategic investments |
C1(c) |
249 |
- |
- |
2 |
- |
251 |
|
|
Short-term fluctuations in investment return |
C1(d) |
(112) |
- |
(28) |
- |
(31) |
(171) |
|
|
Investment return adjustment for Group equity and debt instruments held in life funds |
C1(e) |
(71) |
- |
- |
- |
- |
(71) |
|
|
Dividends declared to holders of perpetual preferred callable securities |
C1(f) |
- |
- |
- |
- |
44 |
44 |
|
|
US Asset Management equity plans and non-controlling interests |
C1(g) |
- |
- |
- |
(4) |
- |
(4) |
|
|
Credit-related fair value gains/(losses) on Group debt instruments |
C1(h) |
- |
(4) |
- |
- |
27 |
23 |
|
|
Total adjusting items |
|
(63) |
(4) |
(28) |
(274) |
40 |
(329) |
|
|
Tax on adjusting items |
D1(d) |
97 |
1 |
3 |
20 |
(13) |
108 |
|
|
Non-controlling interest in adjusting items |
F2(a)(iii) |
5 |
19 |
1 |
(6) |
- |
19 |
|
|
Total adjusting items after tax and non-controlling interests |
|
39 |
16 |
(24) |
(260) |
27 |
(202) |
|
|
Year ended 31 December 2010* |
Notes |
£m |
|
|||||
|
Long-Term Savings |
Nedbank |
M&F |
USAM |
Other |
Total |
|||
|
Income/(expense) |
|
|
|
|
|
|
|
|
|
Goodwill impairment and impact of acquisition accounting |
C1(b) |
(117) |
(6) |
- |
(2) |
- |
(125) |
|
|
Loss on disposal of subsidiaries, associated undertakings and strategic investments |
C1(c) |
- |
(1) |
- |
(21) |
- |
(22) |
|
|
Short-term fluctuations in investment return |
C1(d) |
(69) |
- |
(7) |
- |
(6) |
(82) |
|
|
Investment return adjustment for Group equity and debt instruments held in life funds |
C1(e) |
(10) |
- |
- |
- |
- |
(10) |
|
|
Dividends declared to holders of perpetual preferred callable securities |
C1(f) |
- |
- |
- |
- |
44 |
44 |
|
|
US Asset Management equity plans and non-controlling interests |
C1(g) |
- |
- |
- |
6 |
- |
6 |
|
|
Credit-related fair value losses on Group debt instruments |
C1(h) |
- |
(20) |
- |
- |
(183) |
(203) |
|
|
Total adjusting items |
|
(196) |
(27) |
(7) |
(17) |
(145) |
(392) |
|
|
Tax on adjusting items |
D1(d) |
30 |
7 |
(4) |
6 |
(6) |
33 |
|
|
Non-controlling interest in adjusting items |
F2(a)(iii) |
- |
30 |
- |
(9) |
- |
21 |
|
|
Total adjusting items after tax and non-controlling interests |
|
(166) |
10 |
(11) |
(20) |
(151) |
(338) |
|
* The year ended 31 December 2010 has been restated to reflect Nordic as non-core and discontinued.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011 continued
C: Other key performance information continued
C1: Operating profit adjusting items continued
(b) Goodwill impairment and impact of acquisition accounting
Acquisition date deferred acquisition costs and deferred revenues are not recognised. These are reversed in the acquisition 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 its adjusted operating profit the Group recognises deferred revenue and acquisition costs in relation to policies sold by acquired businesses pre-acquisition, and excludes the impairment of goodwill and the amortisation of acquired other intangibles and acquired PVIF and the movements in certain acquisition date provisions.
Goodwill impairment and acquisition accounting adjustments to adjusted operating profit are summarised below:
|
Year ended 31 December 2011 |
£m |
||||||||
|
Emerging Markets |
Retail Europe |
Wealth Management |
Nedbank |
USAM |
Total |
||||
|
Amortisation of acquired PVIF |
- |
(20) |
(70) |
- |
- |
(90) |
|||
|
Amortisation of acquired deferred costs and revenue |
- |
(7) |
20 |
- |
- |
13 |
|||
|
Amortisation of other acquired intangible assets |
(2) |
(13) |
(37) |
- |
(8) |
(60) |
|||
|
Change in acquisition date provisions |
- |
- |
- |
- |
- |
- |
|||
|
Goodwill impairment |
- |
- |
- |
- |
(264) |
(264) |
|||
|
|
(2) |
(40) |
(87) |
- |
(272) |
(401) |
|||
|
Year ended 31 December 2010* |
£m |
||||||||
|
Emerging Markets |
Retail Europe |
Wealth Management |
Nedbank |
USAM |
Total |
||||
|
Amortisation of acquired PVIF |
- |
(21) |
(77) |
- |
- |
(98) |
|||
|
Amortisation of acquired deferred costs and revenue |
- |
(7) |
34 |
- |
- |
27 |
|||
|
Amortisation of other acquired intangible assets |
(1) |
(13) |
(35) |
(6) |
(2) |
(57) |
|||
|
Change in acquisition date provisions |
- |
- |
4 |
- |
- |
4 |
|||
|
Goodwill impairment |
(1) |
- |
- |
- |
- |
(1) |
|||
|
|
(2) |
(41) |
(74) |
(6) |
(2) |
(125) |
|||
* The year ended 31 December 2010 has been restated to reflect Nordic as discontinued and non-core.
(c) Profit/(loss) on acquisition/disposal of subsidiaries, associated undertakings and strategic investments
Profit/(loss) on the acquisition/disposal of subsidiaries, associated undertakings and strategic investments is analysed below:
|
|
|
£m |
|
|
Year ended 31 December 2011 |
Year ended 31 December 2010 |
|
Emerging Markets |
249 |
- |
|
Long-Term Savings |
249 |
- |
|
Nedbank |
- |
(1) |
|
USAM |
2 |
(21) |
|
Profit/(loss) on acquisition/disposal of subsidiaries, associated undertakings and strategic investments |
251 |
(22) |
|
|
|
|
In preparing the consolidated financial statements for the year ended 31 December 2010 the Emerging Markets segment included the South African and Namibian businesses but excluded all other African businesses. This was consistent with prior periods. Following a period of greater political and currency stability in Zimbabwe and an expectation that the Group will be able to extract benefits from its Zimbabwean business it has been consolidated for the first time together with operations in Kenya, Malawi, Swaziland and Nigeria. Further detail has been provided in note A2.
On 30 December 2011 USAM disposed of Lincluden Management Ltd, a subsidiary, at a profit of £2 million. On 27 August 2010 USAM disposed of Thomson, Horstmann & Bryant, a subsidiary, for a loss of £21 million.
(d) Short-term fluctuations in investment return
Profit before tax includes actual investment returns earned on the shareholder assets of the Group's life assurance and general insurance businesses. Adjusted operating profit 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 are short-term fluctuations 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 long-term rates of return are reviewed frequently, usually annually, for appropriateness. These rates of return have been selected with a view to ensuring that returns credited to adjusted operating profit 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 Retail Europe and Wealth Management, the return is applied to average investible assets. For M&F general insurance business, the return is an average value of investible assets supporting shareholders' funds and insurance liabilities, adjusted for net fund flows.
|
|
|
% |
|
Long-term investment rates |
Year ended 31 December 2011 |
Year ended 31 December 2010 |
|
Emerging Markets |
9.0 |
9.4 |
|
Retail Europe |
2.1 |
2.5 |
|
Wealth Management |
2.0 |
2.0 |
|
M&F |
9.0 |
9.4 |
Analysis of short-term fluctuations in investment return
|
|
|
|
|
|
|
|
£m |
|
Year ended 31 December 2011 |
Emerging Markets |
Retail Europe |
Wealth Management* |
Total |
M&F |
Other |
Total |
|
Actual shareholder investment return |
14 |
1 |
65 |
80 |
26 |
6 |
112 |
|
Less: Long-term investment return |
112 |
2 |
78 |
192 |
54 |
37 |
283 |
|
Short-term fluctuations in investment return |
(98) |
(1) |
(13) |
(112) |
(28) |
(31) |
(171) |
|
|
£m |
||||||
|
Year ended 31 December 2010** |
Emerging Markets |
Retail Europe |
Wealth Management* |
Total |
M&F |
Other |
Total |
|
Actual shareholder investment return |
109 |
2 |
61 |
172 |
49 |
25 |
246 |
|
Less: Long-term investment return |
108 |
1 |
132 |
241 |
56 |
31 |
328 |
|
Short-term fluctuations in investment return |
1 |
1 |
(71) |
(69) |
(7) |
(6) |
(82) |
* Wealth Management long-term investment return includes £65 million (2010: £121 million) in respect of income tax attributable to policyholder returns.
** The year ended 31 December 2010 has been restated to reflect Nordic as discontinued and non-core.
(e) Investment return adjustment for Group equity and debt instruments held in life funds
Adjusted operating profit 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 securities of Nedbank. These investment returns are eliminated within the consolidated income statement in arriving at profit before tax, but are included in adjusted operating profit. In 2011 the investment return adjustment increased adjusted operating profit by £71 million (2010: increase of £10 million).
(f) Dividends declared to holders of perpetual preferred callable securities
Dividends declared to the holders of the Group's perpetual preferred callable securities were £44 million in the year ended 31 December 2011 (2010: £44 million). These are recognised in finance costs on an accruals basis for the purpose of determining adjusted operating profit. In the IFRS financial statements this cost is recognised in equity.
(g) US Asset Management equity plans and non-controlling interests
US Asset Management has a number of long-term incentive arrangements with senior employees in its asset management affiliates.
In accordance with IFRS requirements the cost of these schemes is disclosed as being attributable to non-controlling interests. However, this is treated as a compensation expense in determining adjusted operating profit. The loss recognised in 2011 was £6 million (2010: loss £9 million).
The Group has issued put options to senior employees as part of some of its US affiliate incentive schemes. The impact of revaluing these instruments is recognised in accordance with IFRS, but excluded from adjusted operating profit. At 31 December 2011 these instruments were revalued, the impact of which was a profit of £10 million (2010: profit £3 million).
(h) Credit-related fair value gains and losses on Group debt instruments
The widening of credit spread of the Group's debt instruments in the market price has resulted in gains of £27 million (2010: losses due to narrowing of £183 million) on Other operating segments and losses of £4 million (2010: losses of £20 million) in Nedbank being recorded in the Group's income statement for those instruments that are recorded at fair value.
In the directors' view, such movements are not reflective of the underlying performance of the Group and will reverse over time. They have therefore been excluded from adjusted operating profit.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011 continued
C: Other key performance information continued
C2: Foreign currencies
The principal exchange rates used to translate the operating results, assets and liabilities of key foreign business segments to pounds sterling are:
|
|
Year ended 31 December 2011 |
Year ended 31 December 2010 |
||
|
|
Income statement (average rate) |
Statement of financial position (closing rate) |
Income statement (average rate) |
Statement of financial position (closing rate) |
|
Rand |
11.6445 |
12.5643 |
11.3095 |
10.2796 |
|
US dollars |
1.6037 |
1.5553 |
1.5459 |
1.5530 |
|
Swedish kronor |
10.4144 |
10.6801 |
11.1364 |
10.4227 |
|
Euro |
1.1519 |
1.1970 |
1.1650 |
1.1614 |
C3: Earnings and earnings per share
(a) Basic and diluted earnings per share
Basic earnings per share is calculated by dividing the profit for the financial year 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, ESOP trusts, Black Economic Empowerment trusts and other related undertakings.
|
|
£m |
|
|
|
Year ended 31 December 2011
|
Year ended 31 December 2010 Restated |
|
Profit for the financial year attributable to equity holders of the parent from continuing operations |
469 |
446 |
|
Profit/(loss) for the financial year attributable to equity holders of the parent from discontinued operations |
198 |
(728) |
|
Profit/(loss) for the financial year attributable to equity holders of the parent |
667 |
(282) |
|
Dividends declared to holders of perpetual preferred callable securities |
(32) |
(32) |
|
Profit/(loss) attributable to ordinary equity holders |
635 |
(314) |
Total dividends declared to holders of perpetual preferred callable securities of £44 million in 2011 (2010: £44 million) are stated net of tax credits of £12 million (2010: £12 million).
|
Millions |
||
|
|
Year ended 31 December 2011 |
Year ended 31 December 2010 |
|
Weighted average number of ordinary shares in issue |
5,502 |
5,422 |
|
Shares held in charitable foundations |
(6) |
(7) |
|
Shares held in ESOP trusts |
(61) |
(56) |
|
Adjusted weighted average number of ordinary shares |
5,435 |
5,359 |
|
Shares held in life funds |
(201) |
(205) |
|
Shares held in Black Economic Empowerment trusts |
(299) |
(295) |
|
Weighted average number of ordinary shares |
4,935 |
4,859 |
|
Basic earnings per ordinary share (pence) |
12.9 |
(6.5) |
Diluted earnings per share recognises the dilutive impact of share options held in ESOP trusts and Black Economic Empowerment trusts which are currently in the money in the calculation of the weighted average number of shares, as if the relevant shares were in issue for the full period.
|
|
Year ended 31 December 2011 |
Year ended 31 December 2010 |
|
|
Profit/(loss) attributable to ordinary equity holders (£m) |
635 |
(314) |
|
|
Dilution effect on profit/(loss) relating to share options issued by subsidiaries (£m) |
(8) |
(8) |
|
|
Diluted profit/(loss) attributable to ordinary equity holders (£m) |
627 |
(322) |
|
|
Weighted average number of ordinary shares (millions) |
4,935 |
4,859 |
|
|
Adjustments for share options held by ESOP trusts (millions) |
133 |
137 |
|
|
Adjustments for shares held in Black Economic Empowerment trusts (millions) |
299 |
295 |
|
|
|
5,367 |
5,291 |
|
|
Diluted earnings per ordinary share (pence) |
11.7 |
(6.1) |
|
(b) Adjusted operating earnings per ordinary share
The reconciliation of profit/(loss) for the financial year to adjusted operating profit after tax attributable to ordinary equity holders is as follows:
|
£m |
||
|
|
Year ended 31 December 2011
|
Year ended 31 December 2010 Restated |
|
Profit/(loss) for the financial year attributable to equity holders of the parent |
667 |
(282) |
|
Adjusting items |
329 |
392 |
|
Tax on adjusting items |
(108) |
(33) |
|
Non-core operations |
184 |
(19) |
|
(Profit)/loss from discontinued operations |
(198) |
728 |
|
Non-controlling interest on adjusting items |
(19) |
(21) |
|
Adjusted operating profit after tax attributable to ordinary equity holders |
855 |
765 |
|
Adjusted weighted average number of ordinary shares (millions) |
5,435 |
5,359 |
|
Adjusted operating earnings per ordinary share (pence) |
15.7 |
14.3 |
(c) Headline earnings per share
In accordance with the JSE Limited (JSE) listing requirements, the Group is required to calculate a 'headline earnings per share' (HEPS), determined by reference to the South African Institute of Chartered Accountants' circular 3/2009 'Headline Earnings'. The table below sets out a reconciliation of basic earnings per ordinary share and HEPS in accordance with that circular. Disclosure of HEPS is not a requirement of IFRS.
|
£m |
||||
|
|
Year ended 31 December 2011 |
Year ended 31 December 2010 |
||
|
|
Gross |
Net |
Gross |
Net |
|
Profit/(loss) for the financial year attributable to equity holders of the parent |
667 |
667 |
(282) |
(282) |
|
Dividends declared to holders of perpetual preferred callable securities |
(32) |
(32) |
(32) |
(32) |
|
Profit/(loss) attributable to ordinary equity holders |
635 |
635 |
(314) |
(314) |
|
Adjustments: |
|
|
|
|
|
Impairments of goodwill and intangible assets |
264 |
264 |
20 |
20 |
|
Impairment of discontinued operations |
- |
- |
827 |
827 |
|
(Profit)/loss on acquisition/disposal of subsidiaries, associated undertakings and strategic investments |
(222) |
(228) |
22 |
17 |
|
Realised gains (including impairments) on available-for-sale financial assets |
(144) |
(144) |
(12) |
(12) |
|
Headline earnings |
533 |
527 |
543 |
538 |
|
Weighted average number of ordinary shares |
4,935 |
4,935 |
4,859 |
4,859 |
|
Diluted weighted average number of ordinary shares |
5,367 |
5,367 |
5,291 |
5,291 |
|
Headline earnings per share (pence) |
10.8 |
10.7 |
11.2 |
11.1 |
|
Diluted headline earnings per share (pence) |
9.8 |
9.7 |
10.1 |
10.0 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011 continued
C: Other key performance information continued
C4: Dividends
Dividends paid were as follows:
|
|
|
£m |
|
|
|
|
Year ended 31 December 2011 |
Year ended 31 December 2010 |
|
2009 Final dividend paid - 1.5p per 10p share |
|
- |
77 |
|
2010 Interim dividend paid - 1.1p per 10p share |
|
- |
54 |
|
2010 Final dividend paid - 2.9p per 10p share |
|
145 |
- |
|
2011 Interim dividend paid - 1.5p per 10p share |
|
76 |
- |
|
Dividends to ordinary equity holders |
|
221 |
131 |
|
Dividends declared to holders of perpetual preferred callable securities |
|
44 |
44 |
|
Dividend payments for the year |
|
265 |
175 |
Dividends paid to ordinary equity holders, as above, are calculated using the number of shares in issue at the record date, less treasury shares held in ESOP trusts, life funds of Group companies, 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.
In March and November 2011, £22 million and £22 million respectively were declared and paid to holders of perpetual preferred callable securities (March 2010: £22 million and November 2010: £22 million).
A final dividend of 3.5 pence per 10p share has been recommended by the directors. Subject to shareholders' approval, the dividend will be paid on 7 June 2012 to shareholders on the register at the close of business on 20 April 2012. The dividend will absorb an estimated £175 million of shareholders' funds. The Company is not planning to offer a scrip dividend alternative.
In addition the Company announced on 3 February 2012 that as part of the proposed sale of the Nordic business unit a special dividend of 18.0 pence per 10p share has been recommended by the directors. The special dividend will be paid on 7 June 2012 to shareholders on the register at the close of business on 20 April 2012 subject to both shareholder approval of the Nordic disposal and the related share consolidation and completion of the Nordic disposal. The special dividend will absorb an estimated £1.0 billion of shareholders' funds. Further details of the disposal of the Nordic business unit have been provided in notes A2, H1 and H2.
D: Other income statement notes
D1: Income tax expense
(a) Analysis of total income tax expense
|
|
£m |
|
|
|
Year ended 31 December 2011
|
Year ended 31 December 2010 Restated |
|
Current tax |
||
|
United Kingdom tax |
22 |
23 |
|
Overseas tax |
||
|
South Africa |
390 |
346 |
|
United States |
(2) |
(4) |
|
Europe |
20 |
10 |
|
Secondary Tax on Companies (STC) |
14 |
4 |
|
Prior year adjustments |
(7) |
(1) |
|
Total current tax |
437 |
378 |
|
Deferred tax |
||
|
Origination and reversal of temporary differences |
(204) |
10 |
|
Changes in tax rates/bases |
(8) |
(4) |
|
Recognition of deferred tax assets |
- |
7 |
|
Total deferred tax |
(212) |
13 |
|
Total income tax expense |
225 |
391 |
(b) Reconciliation of total income tax expense
|
|
|
£m |
|
|
Year ended 31 December 2011
|
Year ended 31 December 2010 Restated |
|
Profit before tax |
994 |
1,095 |
|
Tax at standard rate of 26.5% (2010: 28%) |
263 |
307 |
|
Different tax rate or basis on overseas operations |
57 |
(19) |
|
Untaxed and low taxed income |
(166) |
(146) |
|
Disallowable expenses |
93 |
90 |
|
Net movement on deferred tax assets not recognised |
5 |
85 |
|
Effect on deferred tax of changes in tax rates |
(8) |
(7) |
|
STC |
19 |
(3) |
|
Income tax attributable to policyholder returns |
(28) |
96 |
|
Other |
(10) |
(12) |
|
Total income tax expense |
225 |
391 |
(c) Income tax relating to components of other comprehensive income
|
|
£m |
|
|
|
Year ended 31 December 2011
|
Year ended 31 December 2010 Restated |
|
Preferred perpetual callable securities |
(12) |
(12) |
|
Other |
- |
(1) |
|
Income tax credit - continuing operations |
(12) |
(13) |
|
Fair value gains |
2 |
181 |
|
Shadow accounting |
(4) |
(114) |
|
Income tax (credit)/expense - discontinued operations |
(2) |
67 |
|
Income tax (credit)/expense relating to components of other comprehensive income |
(14) |
54 |
(d) Income tax on adjusted operating profit
|
|
£m |
|
|
|
Year ended 31 December 2011
|
Year ended 31 December 2010 Restated |
|
Income tax expense |
225 |
391 |
|
Tax on adjusting items |
|
|
|
Impact of acquisition accounting |
35 |
31 |
|
Profit on disposal of subsidiaries, associated undertakings and strategic investments |
6 |
5 |
|
Short-term fluctuations in investment return |
75 |
4 |
|
Income tax attributable to policyholders returns |
9 |
(101) |
|
Tax on dividends declared to holders of perpetual preferred callable securities recognised in equity |
(12) |
(12) |
|
Fair value gains and losses on Group debt instruments |
2 |
5 |
|
US Asset Management equity plans |
2 |
- |
|
Tax on non-core operations |
(1) |
4 |
|
Income tax on adjusted operating profit |
341 |
327 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011 continued
E: Financial assets and liabilities
E1: Borrowed funds
|
|
|
|
|
|
|
|
£m |
|
|
|
Notes |
Group excluding Nedbank |
Nedbank |
At 31 December 2011 Group |
|
Group excluding Nedbank |
Nedbank |
At 31 December 2010 Group |
|
Senior debt securities and term loans |
|
507 |
1,355 |
1,862 |
|
550 |
1,186 |
1,736 |
|
Floating rate notes |
E1(a) |
- |
844 |
844 |
|
32 |
720 |
752 |
|
Fixed rate notes |
E1(b) |
507 |
511 |
1,018 |
|
516 |
466 |
982 |
|
Revolving credit facility |
E1(c) |
- |
- |
- |
|
- |
- |
- |
|
Term loan and other loans |
|
- |
- |
- |
|
2 |
- |
2 |
|
Mortgage backed securities |
E1(d) |
- |
77 |
77 |
|
- |
112 |
112 |
|
Subordinated debt securities (net of Group holdings) |
E1(e) |
876 |
841 |
1,717 |
|
1,198 |
1,158 |
2,356 |
|
Borrowed funds |
|
1,383 |
2,273 |
3,656 |
|
1,748 |
2,456 |
4,204 |
|
|
|
|
|
|
|
|
|
|
|
Other issues treated as equity for accounting purposes |
|
|
|
|
|
|
|
|
|
US$750 million cumulative preference securities |
F2(b) (ii) |
458 |
|
|
|
458 |
|
|
|
€500 million perpetual preferred callable securities |
|
338 |
|
|
|
338 |
|
|
|
£350 million perpetual preferred callable securities |
|
350 |
|
|
|
350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: Book value |
|
2,529 |
|
|
|
2,894 |
|
|
|
Nominal value of the above |
|
2,666 |
|
|
|
3,045 |
|
|
The table below is a maturity analysis of liability cash flows based on contractual maturity dates for borrowed funds. Maturity analysis is undiscounted and based on year end exchange rates.
|
|
|
|
|
|
|
£m |
|
|
|
|
Group excluding Nedbank |
Nedbank |
At 31 December 2011 Group |
Group excluding Nedbank |
Nedbank |
At 31 December 2010 Group |
|
Less than 1 year |
|
272 |
512 |
784 |
498 |
323 |
821 |
|
Greater than 1 year and less than 5 years |
|
898 |
1,936 |
2,834 |
921 |
2,164 |
3,085 |
|
Greater than 5 years |
|
998 |
556 |
1,554 |
880 |
722 |
1,602 |
|
Total |
|
2,168 |
3,004 |
5,172 |
2,299 |
3,209 |
5,508 |
Senior notes
(a) Floating rate notes
|
|
|
|
£m |
|
|
At 31 December 2011 |
At 31 December 2010 |
Maturity date |
|
Nedbank |
|
|
|
|
R1,690 million unsecured senior debt at 3 month JIBAR + 1.5% |
119 |
166 |
September 2012 |
|
R1,044 million unsecured senior debt at 3 month JIBAR + 2.20% |
84 |
102 |
September 2015 |
|
R1,750 million unsecured senior debt inflation linked (3.9% real yield) |
158 |
180 |
March 2013 |
|
R98 million unsecured senior debt inflation linked (3.8% real yield) |
9 |
10 |
March 2013 |
|
R1,552 million unsecured senior debt at 3 month JIBAR + 1.48% |
125 |
153 |
April 2013 |
|
R1,027 million unsecured senior debt at 3 month JIBAR + 1.75% |
83 |
101 |
April 2015 |
|
R80 million unsecured senior debt JIBAR + 2.15% |
6 |
8 |
April 2020 |
|
R837 million unsecured senior debt at 3 month JIBAR + 1.05% |
79 |
- |
March 2014 |
|
R677 million unsecured senior debt at 3 month JIBAR + 1.25% |
54 |
- |
March 2016 |
|
R500 million unsecured senior debt at 3 month JIBAR + 1% |
40 |
- |
April 2014 |
|
R1,075 million unsecured senior debt at 3 month JIBAR + 0.94% |
87 |
- |
October 2014 |
|
|
844 |
720 |
|
|
Group excluding Nedbank |
|
|
|
|
US $50 million at 3 month LIBOR plus 0.50% |
- |
32 |
Repaid |
|
|
- |
32 |
|
|
Total floating rate notes |
844 |
752 |
|
All floating rate notes are non-qualifying for the purposes of regulatory tiers of capital.
(b) Fixed rate notes
|
|
|
|
£m |
|
|
At 31 December 2011 |
At 31 December 2010 |
Maturity date |
|
Nedbank |
|
|
|
|
R130 million unsecured senior debt at zero coupon |
14 |
16 |
October 2024 |
|
R3,244 million unsecured senior debt at 10.55% |
265 |
326 |
September 2015 |
|
R762 million unsecured senior debt at 11.39% |
63 |
77 |
September 2019 |
|
R478 million unsecured senior debt at R157 + 1.75% |
39 |
47 |
April 2015 |
|
R450 million unsecured senior debt at R206 + 1.28% |
37 |
- |
March 2014 |
|
R1,137 million unsecured senior debt at R157 + 1.5% |
93 |
- |
March 2016 |
|
|
511 |
466 |
|
|
Group excluding Nedbank |
|
|
|
|
£500 million euro bond at 7.125% |
496 |
496 |
October 2016 |
|
US $16.5 million secured senior debt at 5.23% |
11 |
11 |
August 2014 |
|
R100 million floating rate note repayable February 2011 (3 months ZAR-JIBAR-SAFEX plus 4.5%) |
- |
9 |
Repaid |
|
|
507 |
516 |
|
|
Total fixed rate notes |
1,018 |
982 |
|
All fixed rate notes are non-qualifying for the purposes of regulatory tiers of capital.
(c) Revolving credit facilities and irrevocable letters of credit
In April 2011 the Group signed a new £1,200 million five-year multi-currency revolving credit facility, replacing the £1,232 million facility due to mature in September 2012.
At 31 December 2011 £160 million (2010: £499 million) of this facility was utilised, £nil (2010: £nil) in the form of drawn debt and £160 million (2010: £499 million) in the form of irrevocable letters of credit.
The Group had a SEK1,500 million revolving credit facility with a maturity date of 1 July 2011 which was subsequently extended on similar terms to 1 July 2012 and revised to SEK1,000 million. At 31 December 2011 this facility was undrawn (31 December 2010: undrawn). On 22 February 2012 the facility was terminated.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011 continued
E: Financial assets and liabilities continued
E1: Borrowed funds continued
(d) Mortgage backed securities - Nedbank
|
|
|
|
|
£m |
|
|
At 31 December 2011 |
At 31 December 2010 |
Tier |
Maturity date |
|
Nedbank |
|
|
|
|
|
R291 million notes (class A1) at11.467% |
- |
4 |
Tier 2 |
Repaid |
|
R1.4 billion notes (class A2A) at 11.817% |
67 |
96 |
Tier 2 |
November 2039 |
|
R98 million notes (class B note) at 12.067% |
6 |
7 |
Tier 2 |
November 2039 |
|
R76 million notes (class C note) at 13.317% |
4 |
5 |
Tier 2 |
November 2039 |
|
Total mortgage backed securities |
77 |
112 |
|
|
(e) Subordinated debt securities (net of Group holdings)
|
|
|
|
|
|
£m |
|
|
At 31 December 2011 |
At 31 December 2010 |
Tier |
First call date |
Maturity date |
|
Nedbank |
|
|
|
|
|
|
R1.5 billion (7.85%) |
- |
148 |
Tier 2 |
- |
Repaid |
|
R1.8 billion (9.84%) |
153 |
186 |
Tier 2 |
September 2013 |
September 2018 |
|
R650 million (9.03%) |
54 |
67 |
Tier 2 |
February 2012 |
February 2017 |
|
R1.7 billion (8.9%) |
144 |
171 |
Tier 2 |
February 2014 |
February 2019 |
|
R2.0 billion (3 month JIBAR plus 0.47%) |
161 |
198 |
Tier 2 |
July 2017 |
July 2022 |
|
R500 million (3 month JIBAR plus 0.45%) |
40 |
49 |
Tier 2 |
August 2012 |
August 2017 |
|
R1.0 billion (10.54%) |
87 |
105 |
Tier 2 |
September 2015 |
September 2020 |
|
R500 million (3 month JIBAR plus 0.70%) |
40 |
49 |
Tier 2 |
December 2012 |
December 2017 |
|
R120 million (10.38%) |
10 |
12 |
Tier 2 |
December 2012 |
December 2017 |
|
R487 million (15.05%) |
42 |
51 |
Tier 2 |
November 2018 |
November 2018 |
|
R1,265 million (JIBAR plus 4.75%) |
102 |
125 |
Non-core Tier 1 |
November 2018 |
November 2018 |
|
R300 million (JIBAR + 2.5%) |
12 |
15 |
Non-core Tier 1 |
December 2013 |
December 2013 |
|
US$100 million (3 month USD LIBOR) |
65 |
65 |
Tier 2 Secondary |
March 2017 |
March 2022 |
|
|
910 |
1,241 |
|
|
|
|
Less: banking subordinated debt securities held by other Group companies |
(69) |
(83) |
|
|
|
|
Banking subordinated debt securities (net of Group holdings) |
841 |
1,158 |
|
|
|
|
Group excluding Nedbank |
|
|
|
|
|
|
R3.0 billion (8.9% to October 2015, 3 month JIBAR plus 1.59% thereafter) |
239 |
293 |
Lower Tier 2 |
October 2015 |
October 2020 |
|
£300 million (5.0%) |
- |
296 |
Lower Tier 2 |
January 2011 |
Repaid |
|
€200 million (2010: €750 million) (4.5% to January 2012 and 6 month EURIBOR plus 0.96% thereafter)* |
166 |
609 |
Lower Tier 2 |
January 2012 |
January 2017 |
|
£500 million 8.0%** |
471 |
- |
Lower Tier 2 |
- |
June 2021 |
|
|
876 |
1,198 |
|
|
|
|
Total subordinated debt securities |
1,717 |
2,356 |
|
|
|
* The principal and coupon on the bond were swapped equally into Sterling and US Dollars with coupons of 6 month LIBOR plus 0.34% and 6 month US LIBOR plus 0.31% respectively. During the year a €550 million partial repayment, together with settlements of associated currency swaps, was made. On 18 January 2012 the remaining €200 million was repaid.
** The principal and coupon on the bonds was swapped into floating rate of quarterly STIBOR plus 5.46%. The currency swaps have a five year mandatory break clause.
F: Other statement of financial position notes
F1: Provisions
|
|
£m |
|||||
|
Year ended 31 December 2011 |
Client compensation |
Liability for long service leave |
Restructuring |
Provision for donations |
Other |
Total |
|
Balance at beginning of the year |
39 |
57 |
34 |
89 |
92 |
311 |
|
Unused amounts reversed |
- |
(1) |
- |
- |
(14) |
(15) |
|
Charge to income statement |
- |
33 |
11 |
- |
14 |
58 |
|
Utilised during the year |
(3) |
(30) |
(7) |
- |
(3) |
(43) |
|
Foreign exchange and other movements |
7 |
(8) |
(1) |
(11) |
(18) |
(31) |
|
Transfer to non-current assets held for sale |
- |
(4) |
- |
- |
(9) |
(13) |
|
|
43 |
47 |
37 |
78 |
62 |
267 |
|
Post employment benefits |
|
|
|
|
2 |
2 |
|
Balance at end of the year |
43 |
47 |
37 |
78 |
64 |
269 |
|
|
£m |
|||||
|
Year ended 31 December 2010 |
Client compensation |
Liability for long service leave |
Restructuring |
Provision for donations |
Other |
Total |
|
Balance at beginning of the year |
30 |
49 |
42 |
84 |
90 |
295 |
|
Unused amounts reversed |
- |
- |
(10) |
- |
(19) |
(29) |
|
Charge to income statement |
7 |
28 |
9 |
- |
25 |
69 |
|
Utilised during the year |
(9) |
(27) |
(4) |
- |
(5) |
(45) |
|
Foreign exchange and other movements |
11 |
7 |
(3) |
5 |
1 |
21 |
|
|
39 |
57 |
34 |
89 |
92 |
311 |
|
Post employment benefits |
|
|
|
|
(51) |
(51) |
|
Balance at end of the year |
39 |
57 |
34 |
89 |
41 |
260 |
Provisions in relation to client compensation were £43 million (2010: £39 million), primarily relating to possible mis-selling of guarantee contracts in Wealth Management. £1 million (2010: £1 million) is estimated to be payable after more than one year.
The liability for long service leave of £47 million (2010: £57 million) relates to provision for staff payments for long serving employees, all of which is estimated to be payable in less than one year.
Provisions in relation to restructuring were £37 million (2010: £34 million), primarily in respect of consolidation and related office relocation for elements of Wealth Management. £21 million (2010: £30 million) is estimated to be payable after more than one year.
The provision for donations is held by Long-Term Savings in respect of South African operations, relating to the payment of charitable donations in future periods to which the Group is committed to use these funds. The funds were made available on the closure of the Group's unclaimed shares trusts which were set up as part of the demutualisation in 1999 and closed in 2006, with £78 million (2010: £70 million) estimated to be payable after more than one year.
Other provisions include provisions for long-term staff benefits and legal fees.
Where material, provisions are discounted at discount rates specific to the risks inherent in the liability. The timing and final amounts of payments in respect of some of the provisions, particularly those in respect of litigation claims and similar actions against the Group, are uncertain and could result in adjustments to the amounts recorded. Of the total provisions recorded above, £129 million (2010: £163 million) is estimated to be payable after more than one year.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011 continued
F: Other statement of financial position notes continued
F2: Non-controlling interests
(a) Income statement
(i) Ordinary shares
The non-controlling interests share of profit for the financial year has been calculated on the basis of the Group's effective ownership of the subsidiaries in which it does not own 100% of the ordinary equity. The principal subsidiaries where a non-controlling interest exists are the Group's banking business in South Africa and, prior to the acquisition of the non-controlling interest in Mutual & Federal in February 2010 (see F2(b)), the general insurance business in South Africa. For the year ended 31 December 2011 the non-controlling interests attributable to ordinary shares was £238 million (2010: £196 million).
(ii) Preferred securities
|
|
£m |
||
|
|
Year ended 31 December 2011 |
Year ended 31 December 2010 |
|
|
R2,000 million non-cumulative preference shares |
14 |
14 |
|
|
R773 million non-cumulative preference shares |
5 |
5 |
|
|
R355 million non-cumulative preference shares |
2 |
2 |
|
|
US$750 million cumulative preferred securities |
37 |
38 |
|
|
R363 million non-cumulative preference shares |
3 |
3 |
|
|
R92 million non-cumulative preference shares |
1 |
- |
|
|
Non-controlling interests - preferred securities |
62 |
62 |
|
(iii) Non-controlling interests - adjusted operating profit
The following table reconciles non-controlling interests' share of profit for the financial year to non-controlling interests' share of adjusted operating profit:
|
|
£m |
|
|
Reconciliation of non-controlling interests' share of profit for the financial year |
Year ended 31 December 2011 |
Year ended 31 December 2010 |
|
The non-controlling interests share is analysed as follows: |
||
|
Non-controlling interests - ordinary shares |
238 |
196 |
|
Goodwill impairment and impact of acquisition accounting |
- |
2 |
|
Short-term fluctuations in investment return |
1 |
- |
|
Income attributable to Black Economic Empowerment trusts of listed subsidiaries |
22 |
22 |
|
Fair value gains on Group debt instruments |
1 |
6 |
|
Income attributable to US Asset Management non-controlling interests |
(5) |
(9) |
|
Non-controlling interests share of adjusted operating profit |
257 |
217 |
The Group uses revised weighted average effective ownership interests when calculating the non-controllable interest applicable to the adjusted operating profit of its South Africa banking and, prior to the acquisition of the non-controlling interest in February 2010, general insurance businesses. This reflects the legal ownership of these businesses following the implementation for Black Economic Empowerment (BEE) schemes in 2005. In accordance with IFRS accounting rules the shares issued for BEE purposes are deemed to be, in substance, options. Therefore the effective ownership interest of the minorities reflected in arriving at profit after tax in the consolidated income statement is lower than that applied in arriving at adjusted operating profit after tax. In 2011 the increase in adjusted operating profit attributable to non-controlling interests as a result of this was £22 million (2010: £22 million).
F2: Non-controlling interests
(b) Statement of financial position
(i) Ordinary shares
|
Reconciliation of movements in non-controlling interests |
£m |
|
|
At 31 December 2011 |
At 31 December 2010 |
|
|
Balance at beginning of the year |
1,763 |
1,537 |
|
Non-controlling interests' share of profit |
238 |
196 |
|
Non-controlling interests' share of dividends paid |
(100) |
(88) |
|
Net disposal/(acquisition) of interests |
61 |
(116) |
|
Foreign exchange and other movements |
(310) |
234 |
|
Balance at end of the year |
1,652 |
1,763 |
Acquisition of non-controlling interest in Mutual & Federal
On 5 February 2010, the Group completed the acquisition of the remaining non-controlling shareholdings in Mutual & Federal Insurance Company Limited, following the fulfilment of all outstanding conditions precedent. On 8 February 2010, 147,313,449 new Old Mutual plc ordinary shares were issued in exchange for Mutual & Federal shares and listed on the London Stock Exchange, of which 68,378,851 were issued to Black Economic Empowerment trusts and 78,934,598 to other previous holders.
Other acquisitions
On 8 February 2010 Nedbank announced that it had obtained regulatory approval for the acquisition of the remaining 49.9% indirect interest in Imperial Bank Limited thereby satisfying all conditions precedent for the acquisition.
The purchase consideration was approximately £162 million (£155 million plus a Johannesburg Interbank Agreed Rate (JIBAR) factor applied up to 5 February 2010) which was settled in four instalments out of existing cash resources of Nedbank Limited. The total amount, which included interest at the three month JIBAR, amounted to £165 million.
(ii) Preferred securities
|
|
£m |
|
|
|
At 31 December 2011 |
At 31 December 2010 |
|
R2,000 million non-cumulative preference shares1 |
140 |
140 |
|
R773 million non-cumulative preference shares2 |
71 |
71 |
|
US$750 million cumulative preferred securities3 |
458 |
458 |
|
R355 million non-cumulative preference shares4 |
25 |
25 |
|
R363 million non-cumulative preference shares5 |
29 |
29 |
|
R92 million non-cumulative preference shares6 |
8 |
50 |
|
|
731 |
773 |
|
Unamortised issue costs |
(13) |
(13) |
|
Total in issue at 31 December |
718 |
760 |
Preferred securities are held at historic value of consideration received less unamortised issue costs.
1. 200 million R10 preference shares issued by Nedbank Limited (Nedbank), the Group's banking subsidiary. These shares are non-redeemable and non-cumulative and pay a cash dividend equivalent to 75% of the prime overdraft interest rate of Nedbank. Preference shareholders are only entitled to vote during periods when a dividend or any part of it remains unpaid after the due date for payment or when resolutions are proposed that directly affect any rights attaching to the shares or the rights of the holders. Preference shareholders will be entitled to receive their dividends in priority to any payment of dividends made in respect of any other class of Nedbank's shares.
2. 77.3 million R10 preference shares issued at R10.68 per share by Nedbank on the same terms as the securities described in (1) above.
3. US$750 million guaranteed cumulative perpetual preference securities issued on 19 May 2003 by Old Mutual Capital Funding L.P., a subsidiary of the Group. Subject to certain limitations, holders of these securities are entitled to receive preferential cash distributions at a fixed rate of 8.0% per annum payable in arrears on a quarterly basis. The Group may defer payment of distributions at its sole discretion, but such an act may restrict Old Mutual plc from paying dividends on its ordinary shares for a period of 12 months. Arrears of distributions are payable quarterly cumulatively only on redemption of the securities or at the Group's option. The securities are perpetual, but may be redeemed at the discretion of the Group from 22 December 2008.
4. 35 million R10 preference shares issued in 16 April 2007 at R10.27 per share by Nedbank on the same terms as the securities described in (1) above.
5. 36.3 million R10 preference shares issued by Nedbank in seven instalments between September 2009 and December 2009 on the same terms as the securities described in (1) above.
6. 9.2 million R10 preference shares issued by Nedbank on 11 March 2010 on the same terms as the securities described in (1) above.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011 continued
G: Other notes
G1: Contingent liabilities
|
£m |
||
|
|
At 31 December 2011 |
At 31 December 2010 |
|
Guarantees and assets pledged as collateral security |
2,251 |
2,883 |
|
Irrevocable letters of credit |
193 |
207 |
|
Secured lending |
515 |
775 |
|
Other contingent liabilities |
72 |
55 |
The Group has pledged debt securities amounting to £1,196 million (2010: £1,379 million) as collateral for deposits received under re-purchase agreements. These amounts represent assets that have been transferred but do not qualify for derecognition under IAS 39. These transactions are entered into under terms and conditions that are standard industry practice to securities borrowing and lending activities.
Contingent liabilities - tax
The Revenue authorities in the principle jurisdictions in which the Group operates (South Africa and the United Kingdom) are reviewing certain historic transactions undertaken and tax law interpretations made by the Group. More generally the Group is also experiencing increased review by fiscal authorities of routine matters. Whilst provisions are made for liabilities which might reasonably be expected to materialise, and whether or not legal proceedings will be required to resolve them, the outcome is uncertain at this stage.
Nedbank structured financing
Historically the Group's South African banking business entered into structured finance transactions with third parties using the tax base of these companies. Pursuant to the terms of the majority of these transactions, the underlying third-party has contractually agreed to accept the risk of any tax being imposed by the South African Revenue Service (SARS), although the obligation to pay in the first instance rests with the Group. It is only in limited cases where, for example, the credit quality of a client becomes doubtful, or where the client has specifically contracted out of the re-pricing of additional taxes, that the recovery from a client could be less than the liability that could arise on assessment, in which case provisions are made. SARS has examined the tax aspects of some of these types of structures and SARS could assess these structures in a manner different to that initially envisaged by the contracting parties. As a result the Group could be obliged to pay additional amounts to SARS and recover these from clients under the applicable contractual arrangements.
Nedbank litigation
There are a number of legal or potential claims against Nedbank and its subsidiary companies, the outcome of which cannot at present be foreseen. The largest of these potential actions is a claim in the High Court for R1.3 billion against Nedbank by certain shareholders in Pinnacle Point Group Limited, alleging that Nedbank had a legal duty of care to them arising from a share swap transaction.
During 2011 further actions were instituted against Nedbank by other stakeholders relating to this same issue. Nedbank and its legal advisers remain of the opinion that the claims are extremely ambitious and that the claimants will have great difficulty succeeding.
Nedbank Securitisations
The Group through Nedbank uses securitisation primarily as a funding diversification tool and to add flexibility in mitigating structural liquidity risk. Nedbank currently has two active traditional securitisation transactions:
n Synthesis Funding Limited (Synthesis), an asset- backed commercial paper (ABCP) programme launched in 2004; and
n GreenHouse Funding (Pty) Limited, Series 1 (GreenHouse), a residential mortgage-backed securitisation programme launched in December 2007.
During October 2011 Octane ABS 1(Pty) Limited (Octane), a securitisation of motor vehicle loans launched in 2007, exercised its clean up call option. The remaining portfolio of securitised motor vehicle loans were acquired by Nedbank at fair value and the proceeds used by Octane to fully redeem all outstanding notes.
Synthesis primarily invests in long-term rated bonds and offers capital market funding to South African corporates. These assets are funded through the issuance of short-dated investment-grade commercial paper to institutional investors. All the commercial paper issued by Synthesis is assigned the highest short-term RSA local-currency credit rating by Fitch, and is listed on JSE Limited.
Under GreenHouse Series 1, R2 billion of residential mortgages originated by Nedbank were securitised. The commercial paper issued by GreenHouse has been assigned credit ratings by both Fitch and Moody's and is listed on JSE Limited. Fitch placed the GreenHouse commercial paper on rating watch negative as a result of changes it is effecting to its rating criteria for South African residential mortgage backed securities transactions. This process is ongoing. As the GreenHouse transaction was undertaken for funding and liquidity purposes, only the senior notes were placed with third party investors and the junior notes and subordinated loans to the special purpose entity were retained by Nedbank. The assets transferred to the special purpose entity have continued to be recognised as financial assets. GreenHouse continues to direct all capital repayments it receives on the residential mortgage portfolio to noteholders as a result of the stop purchase activated by a breach of the arrear trigger in 2010. The GreenHouse commercial paper is scheduled to be redeemed in November 2012.
G1: Contingent liabilities continued
Nedbank Securitisations continued
The following table shows the carrying amount of securitised assets, stated at the amount of the Group's continuing involvement where appropriate, together with the associated liabilities, for each category of asset in the statement of financial position:*
|
|
|
|
|
£m |
|
|
Carrying amount of assets |
Associated liabilities |
||
|
|
At 31 December 2011 |
At 31 December 2010 |
At 31 December 2011 |
At 31 December 2010 |
|
Loans and advances to customers |
|
|
|
|
|
Residential mortgage loans |
116 |
165 |
132 |
171 |
|
Motor vehicle financing |
- |
59 |
- |
78 |
|
|
|
|
|
|
|
Other financial assets |
|
|
|
|
|
Corporate and bank paper |
116 |
155 |
- |
- |
|
Other securities |
199 |
327 |
- |
- |
|
Commercial paper |
- |
- |
320 |
484 |
|
Total |
431 |
706 |
452 |
733 |
This table presents the gross balances within the securitisation schemes and does not reflect any eliminations of intercompany and cash balances held by the various securitisation vehicles.
* The value of any derivative instruments taken out to hedge any financial asset or liability is adjusted against such instrument in this disclosure.
G2: Events after the reporting date
On 18 January 2012 the Group redeemed the remaining €200 million of the €750 million Lower Tier 2 Bond which had not been repaid during 2011. On 3 February 2012, the Group issued a circular in respect of the proposed disposal of the Nordic business unit. Additional details have been provided in notes A2, H1 and H2. On 7 February 2012 the Group announced that it had sold Dwight Asset Management subject to certain conditions. On 22 February 2012 the Group announced that a preliminary non-binding offer had been accepted by Ecobank Transnational Incorporated for the acquisition of Oceanic Life. In March 2012 Bermuda enhanced its hedging strategy by implementing an option based hedging arrangement. On 8 March 2012 final regulatory approval was received in respect of the disposal of the Nordic business unit.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011 continued
H: Discontinued operations and held for sale operations
H1: Discontinued operations
The results of the Group's Swedish, Danish and Norwegian life businesses, collectively Nordic, and United States life business, US Life, are shown as discontinued operations in these financial statements. At 31 December 2011 the Group had entered into an agreement to dispose of the controlling interest in Nordic to Skandia Liv, which remains subject to shareholder approval for the sale. The disposal of US Life was completed on 7 April 2011 following regulatory approval, and has been reported up until that date.
Analysis of the results is given below.
(a) Income statement from discontinued operations
|
|
|
|
|
|
|
£m |
|
|
Nordic |
US Life |
Total |
|||
|
For the year ended 31 December |
2011 |
2010 |
2011 |
2010 |
2011 |
2010 |
|
Revenue |
(421) |
1,779 |
342 |
1,608 |
(79) |
3,387 |
|
Expenses |
541 |
(1,729) |
(330) |
(1,557) |
211 |
(3,286) |
|
Profit before tax from discontinued operations |
120 |
50 |
12 |
51 |
132 |
101 |
|
Impairment on remeasurement to fair value less costs to sell |
- |
- |
- |
(827) |
- |
(827) |
|
Loss on disposal |
- |
- |
(29) |
- |
(29) |
- |
|
Realised available-for-sale investment gains and exchange differences on disposal |
- |
- |
133 |
- |
133 |
- |
|
Profit/(loss) before tax |
120 |
50 |
116 |
(776) |
236 |
(726) |
|
Income tax (charge)/credit |
(52) |
(65) |
14 |
63 |
(38) |
(2) |
|
Profit/(loss) from discontinued operations after tax |
68 |
(15) |
130 |
(713) |
198 |
(728) |
(b) Statement of comprehensive income from discontinued operations
|
|
|
|
|
|
|
£m |
|
|
Nordic |
US Life |
Total |
|||
|
For the year ended 31 December |
2011 |
2010 |
2011 |
2010 |
2011 |
2010 |
|
Profit/(loss) after tax for the financial year |
68 |
(15) |
130 |
(713) |
198 |
(728) |
|
Other comprehensive income for the financial year |
|
|
|
|
|
|
|
Fair value gains/(losses) |
|
|
|
|
|
|
|
Available-for-sale investments |
|
|
|
|
|
|
|
Fair value gains/(losses) |
3 |
(5) |
48 |
530 |
51 |
525 |
|
Recycled to the income statement |
- |
- |
(5) |
(12) |
(5) |
(12) |
|
Realised on disposal |
- |
- |
(157) |
- |
(157) |
- |
|
Exchange differences realised on disposal |
- |
- |
24 |
- |
24 |
- |
|
Shadow accounting |
- |
- |
(43) |
(334) |
(43) |
(334) |
|
Currency translation differences/exchange differences on translating foreign operations |
(43) |
157 |
- |
29 |
(43) |
186 |
|
Other movements |
10 |
14 |
- |
(34) |
10 |
(20) |
|
Aggregate tax on transfers from equity |
(1) |
- |
3 |
(67) |
2 |
(67) |
|
Total other comprehensive (loss)/income for the financial year |
(31) |
166 |
(130) |
112 |
(161) |
278 |
|
Total comprehensive income/(loss) for the financial year |
37 |
151 |
- |
(601) |
37 |
(450) |
|
Attributable to |
|
|
|
|
|
|
|
Equity holders of the parent |
37 |
151 |
- |
(601) |
37 |
(450) |
(c) Net cash flows from discontinued operations
|
|
|
|
|
|
|
£m |
|
|
Nordic |
US Life |
Total |
|||
|
For the year ended 31 December |
2011 |
2010 |
2011 |
2010 |
2011 |
2010 |
|
Operating activities |
1,609 |
144 |
2 |
(167) |
1,611 |
(23) |
|
Investing activities |
(1,411) |
(404) |
146 |
63 |
(1,265) |
(341) |
|
Net cash flows from discontinuing operations |
198 |
(260) |
148 |
(104) |
346 |
(364) |
H2: Disposal groups held for sale
The assets and liabilities of the Group's Nordic business, Skandia Insurance Company Ltd (publ) (Nordic), comprising Old Mutual's long-term savings and banking operations in Sweden, Denmark and Norway operating under the Skandia brand, are shown as held for sale in these financial statements. The Group has entered into an agreement to dispose of the controlling interest in Nordic to Skandia Liv which remains subject to shareholder approval for the sale. On 8 March 2012 final regulatory approval was received. Further detail has been provided in note A2.
In addition to the above the Group has agreed to sell the Finnish branch of Skandia Life Assurance Company Ltd, a part of Wealth Management, to OP-Pohjola osk and as a result of this the assets and liabilities of the Finnish branch have been classified as held for sale.
(a) Statement of financial position
Assets directly associated with disposal groups held for sale
|
|
|
|
£m |
|
At 31 December 2011 |
Nordic |
Finnish |
Total |
|
Assets |
|
|
|
|
Goodwill and other intangible assets |
901 |
72 |
973 |
|
Property, plant and equipment |
10 |
- |
10 |
|
Deferred tax assets |
87 |
- |
87 |
|
Investments in associated undertakings and joint ventures |
5 |
- |
5 |
|
Deferred acquisition costs |
75 |
45 |
120 |
|
Reinsurers' share of life assurance policyholder liabilities |
17 |
- |
17 |
|
Loans and advances |
5,194 |
- |
5,194 |
|
Investments and securities |
14,127 |
1,034 |
15,161 |
|
Current tax receivable |
3 |
- |
3 |
|
Trade, other receivables and other assets |
240 |
1 |
241 |
|
Derivative financial instruments - assets |
10 |
- |
10 |
|
Cash and cash equivalents |
291 |
4 |
295 |
|
Total assets |
20,960 |
1,156 |
22,116 |
|
Liabilities |
|
|
|
|
Life assurance policyholder liabilities |
10,889 |
1,034 |
11,923 |
|
Third-party interests in consolidated funds |
1,383 |
- |
1,383 |
|
Borrowed funds |
2 |
- |
2 |
|
Provisions |
(54) |
- |
(54) |
|
Deferred revenue |
1 |
55 |
56 |
|
Deferred tax liabilities |
103 |
26 |
129 |
|
Current tax payable |
9 |
- |
9 |
|
Trade, other payables and other liabilities |
388 |
4 |
392 |
|
Amounts owed to bank depositors |
6,552 |
- |
6,552 |
|
Derivative financial instruments - liabilities |
16 |
- |
16 |
|
Total liabilities |
19,289 |
1,119 |
20,408 |
Of the financial assets and liabilities included within disposal groups held for sale, namely the Nordic business and the Finnish branch, all are level one or level two in respect of the fair value hierarchy. In addition to the disposal groups held for sale, the Group had additional non-current assets held for sale of £22 million (2010: £7 million) and non-current liabilities of £9 million (2010: £nil).
Included within investments and securities is £185 million of short term cash balances.
(b) Equity attributable to equity holders of the parent directly associated with disposal groups held for sale
|
|
|
|
£m |
|
At 31 December 2011 |
Nordic |
Finnish |
Total |
|
Retained earnings |
1,667 |
37 |
1,704 |
|
Available-for-sale investment reserve |
2 |
- |
2 |
|
Share-based payment reserve |
2 |
- |
2 |
|
|
1,671 |
37 |
1,708 |
At 31 December 2010 the assets and liabilities of the Group's United States life business, US Life, were shown as held for sale in the financial statements, being £12,384 million and £12,219 million respectively. The disposal of US Life was completed on 7 April 2011 following US regulatory approval. At the time of disposal the assets directly associated with US Life consisted of £10,518 million of investments and securities and £1,412 million of other assets, with liabilities at this time being £11,494 million of long-term policyholder liabilities and £235 million of other liabilities. Included within investments and liabilities was £565 million of short term cash balances.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011 continued
H: Discontinued operations and held for sale operations continued
H3: Contingent liabilities in respect of the disposal of US Life
Following completion of the disposal of US Life to the Harbinger group ('Harbinger') on 7 April 2011, the Group has retained certain residual commitments and contingent liabilities. These relate to sale warranties and indemnities that are typical in transactions of this nature including in respect of litigation (including class actions) and regulatory enforcement actions arising from events occurring before completion. The specific conditions are in effect for varying periods of time, the longest dated of these will expire on 31 December 2015. The main elements are summarised below:
n Harbinger intends to establish certain internal reinsurance arrangements which are subject to regulatory approval. In the event that regulatory approval of the full amount of reinsurance is not forthcoming there is potential for a reduction in the purchase price, up to a maximum of US$50 million.
n US statutory regulations require reserving on a worst case scenario basis for deferred annuity policies that permit free partial withdrawals ('CARVM Reserves'). As such there is redundancy when comparing the worst case scenario and the economic scenarios. These CARVM redundant reserves are currently reinsured from US Life to Old Mutual Reassurance until no later than the end of 2015. Old Mutual plc provides a $255 million letter of credit to back these redundant reserves. In the event that this letter of credit is drawn upon Harbinger are obligated to fully reimburse Old Mutual plc.
This information is provided by RNS
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