Preliminary Results 2013 - Part 2
|
Index to the financial information For the year ended 31 December 2013 |
|
|
|
|
|
|
|
Statement of directors' responsibilities in respect of the preliminary announcement of the Annual Report and the financial statements
|
52 |
|
|
Consolidated income statement
|
53 |
|
|
Consolidated statement of comprehensive income
|
54 |
|
|
Reconciliation of adjusted operating profit to profit after tax
|
55 |
|
|
Consolidated statement of financial position
|
56 |
|
|
Condensed consolidated statement of cash flows
|
57 |
|
|
Consolidated statement of changes in equity
|
58 |
|
|
Notes to the consolidated financial statements
|
|
|
|
|
A: Significant accounting policies
|
62 |
|
|
B: Segment information
|
66 |
|
|
C: Other key performance information
|
76 |
|
|
D: Other income statement notes
|
82 |
|
|
E: Financial assets and liabilities
|
84 |
|
|
F: Other statement of financial position notes
|
87 |
|
|
G: Other notes
|
88 |
|
|
H: Discontinued operations and disposal groups held for sale
|
90 |
|
|
I: Changes in accounting policies
|
91 |
|
|
|
|
|
Adjusted Group MCEV by line of business |
94 |
|
|
Adjusted operating group MCEV statement of earnings |
95 |
|
|
Adjusted operating Group MCEV earnings per share |
96 |
|
|
Group MCEV statement of earnings |
97 |
|
|
Notes to the MCEV basis supplementary information |
98 |
|
|
|
A: MCEV policies |
98 |
|
|
B: Segment information |
107 |
|
|
C: Other supporting information |
114 |
|
|
D: Sensitivity tests |
117 |
Statement of directors' responsibilities
in respect of the preliminary announcement of the Annual Report and the financial statements
The directors confirm that to the best of their knowledge:
n The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
n The Annual Report includes a fair review of the development and performance of the business and the position of Old Mutual plc and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
Julian Roberts Philip Broadley
Group Chief Executive Group Finance Director
28 February 2014
|
Consolidated income statement |
|
||
|
For the year ended 31 December 2013 |
|
|
|
|
|
|
|
£m |
|
|
Notes |
Year ended 31 December 2013 |
Year ended 31 December 2012 Restated¹ |
|
Revenue |
|
|
|
|
Gross earned premiums |
B2 |
3,701 |
3,725 |
|
Outward reinsurance |
|
(317) |
(322) |
|
Net earned premiums |
|
3,384 |
3,403 |
|
Investment return (non-banking) |
|
9,986 |
9,880 |
|
Banking interest and similar income |
|
3,050 |
3,431 |
|
Banking trading, investment and similar income |
|
195 |
214 |
|
Fee and commission income, and income from service activities |
|
3,095 |
3,039 |
|
Other income |
|
100 |
125 |
|
Total revenue |
|
19,810 |
20,092 |
|
Expenses |
|
|
|
|
Claims and benefits (including change in insurance contract provisions) |
|
(5,410) |
(5,612) |
|
Reinsurance recoveries |
|
246 |
221 |
|
Net claims and benefits incurred |
|
(5,164) |
(5,391) |
|
Change in investment contract liabilities |
|
(5,873) |
(5,361) |
|
Losses on loans and advances |
|
(368) |
(400) |
|
Finance costs |
|
(81) |
(214) |
|
Banking interest payable and similar expenses |
|
(1,616) |
(1,887) |
|
Fee and commission expenses, and other acquisition costs |
|
(976) |
(1,064) |
|
Change in third-party interest in consolidated funds |
|
(564) |
(651) |
|
Other operating and administrative expenses |
|
(3,653) |
(3,715) |
|
Total expenses |
|
(18,295) |
(18,683) |
|
Share of associated undertakings' and joint ventures' profit after tax |
|
21 |
32 |
|
Loss on disposal of subsidiaries, associated undertakings and strategic investments |
C1(c) |
(4) |
(56) |
|
Profit before tax |
|
1,532 |
1,385 |
|
Income tax expense |
D1 |
(552) |
(471) |
|
Profit from continuing operations after tax |
|
980 |
914 |
|
Discontinued operations |
|
|
|
|
Profit from discontinued operations after tax |
H1(a) |
3 |
564 |
|
Profit after tax for the financial year |
|
983 |
1,478 |
|
Attributable to |
|
|
|
|
Equity holders of the parent |
|
705 |
1,172 |
|
Non-controlling interests |
|
|
|
|
Ordinary shares |
F1(a) |
259 |
256 |
|
Preferred securities |
F1(a) |
19 |
50 |
|
Profit after tax for the financial year |
|
983 |
1,478 |
|
Earnings per share |
|
|
|
|
Basic earnings per share based on profit from continuing operations (pence) |
|
14.9 |
12.6 |
|
Basic earnings per share based on profit from discontinued operations (pence) |
|
0.1 |
12.3 |
|
Basic earnings per ordinary share (pence) |
C2(a) |
15.0 |
24.9 |
|
Diluted basic earnings per share based on profit from continuing operations (pence) |
|
13.8 |
11.6 |
|
Diluted basic earnings per share based on profit from discontinued operations (pence) |
|
0.1 |
11.5 |
|
Diluted basic earnings per ordinary share (pence) |
C2(b) |
13.9 |
23.1 |
|
Weighted average number of ordinary shares (millions) |
C2(a) |
4,442 |
4,587 |
1 The prior year has been restated for the impact of changes in accounting policies. Refer to note I1 for further details
|
Consolidated statement of comprehensive income |
|||
|
For the year ended 31 December 2013 |
|
|
|
|
|
|
|
£m |
|
|
Notes |
Year ended 31 December 2013 |
Year ended 31 December 2012 Restated¹ |
|
Profit after tax for the financial year |
|
983 |
1,478 |
|
Other comprehensive income for the financial year |
|
|
|
|
Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
Fair value gains |
|
|
|
|
Property revaluation |
|
23 |
20 |
|
Measurement gains on defined benefit plans |
|
70 |
8 |
|
Income tax on items that will not be reclassified subsequently to profit or loss |
D1(c) |
(12) |
6 |
|
|
|
81 |
34 |
|
Items that may be reclassified subsequently to profit or loss |
|
|
|
|
Fair value gains |
|
|
|
|
Net investment hedge |
|
43 |
160 |
|
Available-for-sale investments |
|
|
|
|
Fair value (losses)/gains |
|
(5) |
30 |
|
Recycled to profit or loss |
|
(9) |
(21) |
|
Shadow accounting |
|
- |
6 |
|
Currency translation differences on translating foreign operations |
|
(1,257) |
(641) |
|
Other movements |
|
9 |
(22) |
|
Income tax on items that may be reclassified subsequently to profit or loss |
D1(c) |
2 |
(5) |
|
|
|
(1,217) |
(493) |
|
Total other comprehensive income for the financial year from continuing operations |
|
(1,136) |
(459) |
|
Total other comprehensive income for the financial year from discontinued operations² |
H1(b) |
- |
(348) |
|
Total other comprehensive income for the financial year |
|
(1,136) |
(807) |
|
Total comprehensive income for the financial year |
|
(153) |
671 |
|
Attributable to |
|
|
|
|
Equity holders of the parent |
|
(96) |
503 |
|
Non-controlling interests |
|
|
|
|
Ordinary shares |
|
(76) |
118 |
|
Preferred securities |
|
19 |
50 |
|
Total comprehensive income for the financial year |
|
(153) |
671 |
1 The prior year has been restated for the impact of changes in accounting policies. Refer to note I1 for further details.
2 Total other comprehensive income from discontinued operations for the year ended 31 December 2012 includes £350 million cumulative foreign exchange translation gains, previously included in foreign currency translation reserves that was realised on the disposal of Nordic.
|
Reconciliation of adjusted operating profit to profit after tax |
|||
|
For the year ended 31 December 2013 |
|
|
|
|
|
|
|
£m |
|
|
Notes |
Year ended 31 December 2013 |
Year ended 31 December 2012 Restated¹ |
|
Core operations |
|
|
|
|
Emerging Markets |
B3 |
590 |
611 |
|
Old Mutual Wealth |
B3 |
217 |
195 |
|
Property & Casualty |
B3 |
4 |
37 |
|
Nedbank |
B3 |
797 |
825 |
|
USAM |
B3 |
111 |
91 |
|
|
|
1,719 |
1,759 |
|
Finance costs |
B3 |
(92) |
(130) |
|
Long-term investment return on excess assets |
|
43 |
54 |
|
Net interest payable to non-core operations |
|
(11) |
(18) |
|
Corporate costs |
|
(54) |
(54) |
|
Other net income |
|
7 |
1 |
|
Adjusted operating profit before tax |
|
1,612 |
1,612 |
|
Adjusting items |
C1(a) |
(286) |
(467) |
|
Non-core operations |
B3 |
32 |
165 |
|
Profit before tax (net of policyholder tax) |
|
1,358 |
1,310 |
|
Income tax attributable to policyholder returns |
D1(d) |
174 |
75 |
|
Profit before tax |
|
1,532 |
1,385 |
|
Total tax expense |
D1(a) |
(552) |
(471) |
|
Profit from continuing operations after tax |
|
980 |
914 |
|
Profit from discontinued operations after tax |
H1(a) |
3 |
564 |
|
Profit after tax for the financial year |
|
983 |
1,478 |
|
|
|
|
|
|
Adjusted operating profit after tax attributable to ordinary equity holders of the parent |
|||
|
|
|
|
£m |
|
|
Notes |
Year ended 31 December 2013 |
Year ended 31 December 2012 Restated¹ |
|
Adjusted operating profit before tax |
B3 |
1,612 |
1,612 |
|
Tax on adjusted operating profit |
D1(d) |
(424) |
(440) |
|
Adjusted operating profit after tax |
|
1,188 |
1,172 |
|
Non-controlling interests - ordinary shares |
F1(a) |
(279) |
(281) |
|
Non-controlling interests - preferred securities |
F1(a) |
(19) |
(50) |
|
Adjusted operating profit after tax attributable to ordinary equity holders of the parent |
B3 |
890 |
841 |
|
Adjusted weighted average number of shares (millions) |
C2(c) |
4,836 |
4,818 |
|
Adjusted operating earnings per share (pence) |
C2(c) |
18.4 |
17.5 |
1 The prior year has been restated for the impact of changes in accounting policies. Refer to note I1 for further details.
Basis of preparation of adjusted operating profit
Adjusted operating profit (AOP) reflects the directors' view of the underlying long-term performance of the Group. AOP is a measure of profitability which adjusts the standard IFRS profit measures for the specific items detailed in note C1 and, as such, it is a non-GAAP measure. This reconciliation explains the differences between adjusted operating profit and profit after tax as reported under IFRS.
For core life assurance and property & casualty businesses, AOP is based on a long-term investment return, including returns on investments held by life funds in Group equity and debt instruments, and is stated net of income tax attributable to policyholder returns. For all core businesses, AOP excludes goodwill impairment, the impact of acquisition accounting intangibles and costs related to successful acquisitions, revaluations of put options related to long-term incentive schemes, profit/(loss) on acquisition/disposal of subsidiaries, associated undertakings and strategic investments, fair value profits/(losses) on certain Group debt movements and costs related to the fundamental restructuring of continuing businesses. AOP includes dividends declared to holders of perpetual preferred callable securities. Old Mutual Bermuda and Nordic are treated as non-core operations in the AOP disclosure, as such they are not included in AOP. Refer to note B1 for further information on the basis of segmentation.
Adjusted operating earnings per share is calculated on the same basis as AOP. It is stated after tax attributable to AOP and non-controlling interests. It excludes income attributable to Black Economic Empowerment trusts of listed subsidiaries. The calculation of the adjusted weighted average number of shares includes own shares held in policyholders' funds and Black Economic Empowerment trusts.
|
Consolidated statement of financial position |
|||
|
At 31 December 2013 |
|
|
|
|
|
|
|
£m |
|
|
Notes |
At 31 December 2013 |
At 31 December 2012 Restated¹ |
|
Assets |
|
|
|
|
Goodwill and other intangible assets |
|
2,835 |
3,056 |
|
Mandatory reserve deposits with central banks |
|
759 |
921 |
|
Property, plant and equipment |
|
722 |
847 |
|
Investment property |
|
1,811 |
1,947 |
|
Deferred tax assets |
|
303 |
345 |
|
Investments in associated undertakings and joint ventures |
|
168 |
152 |
|
Deferred acquisition costs |
|
1,211 |
1,288 |
|
Reinsurers' share of policyholder liabilities |
|
1,875 |
1,406 |
|
Loans and advances |
|
33,386 |
38,495 |
|
Investments and securities |
|
88,417 |
88,513 |
|
Current tax receivable |
|
128 |
103 |
|
Trade, other receivables and other assets |
|
2,583 |
3,006 |
|
Derivative financial instruments |
|
1,259 |
1,780 |
|
Cash and cash equivalents |
|
4,869 |
5,061 |
|
Non-current assets held for sale |
|
5 |
42 |
|
Total assets |
|
140,331 |
146,962 |
|
Liabilities |
|
|
|
|
Long-term business policyholder liabilities |
|
81,141 |
80,188 |
|
General insurance liabilities |
|
332 |
346 |
|
Third-party interests in consolidated funds |
|
5,478 |
6,116 |
|
Borrowed funds |
E1 |
2,629 |
3,050 |
|
Provisions and accruals |
|
236 |
265 |
|
Deferred revenue |
|
628 |
689 |
|
Deferred tax liabilities |
|
491 |
404 |
|
Current tax payable |
|
237 |
287 |
|
Trade, other payables and other liabilities |
|
4,274 |
4,940 |
|
Amounts owed to bank depositors |
|
34,370 |
39,499 |
|
Derivative financial instruments |
|
1,478 |
1,402 |
|
Non-current liabilities held for sale |
|
- |
3 |
|
Total liabilities |
|
131,294 |
137,189 |
|
Net assets |
|
9,037 |
9,773 |
|
Shareholders' equity |
|
|
|
|
Equity attributable to equity holders of the parent |
|
7,270 |
7,816 |
|
Non-controlling interests |
|
|
|
|
Ordinary shares |
F1(b) |
1,502 |
1,684 |
|
Preferred securities |
F1(b) |
265 |
273 |
|
Total non-controlling interests |
|
1,767 |
1,957 |
|
Total equity |
|
9,037 |
9,773 |
1 The prior year has been restated for the impact of changes in accounting policies. Refer to note I1 for further details.
|
Consolidated statement of cash flows |
|
||
|
For the year ended 31 December 2013 |
|
|
|
|
|
|
|
£m |
|
|
|
Year ended 31 December 2013 |
Year ended 31 December 2012 Restated¹ |
|
Cash flows from operating activities |
|
|
|
|
Profit before tax |
|
1,532 |
1,385 |
|
Non-cash movements in profit before tax |
|
1,423 |
249 |
|
Changes in working capital |
|
447 |
1,039 |
|
Taxation paid |
|
(458) |
(295) |
|
Net cash inflow from operating activities |
|
2,944 |
2,378 |
|
Cash flows from investing activities |
|
|
|
|
Net acquisitions of investments and securities |
|
(1,658) |
(1,449) |
|
Acquisition of investment properties |
|
(47) |
(55) |
|
Proceeds from disposal of investment properties |
|
22 |
67 |
|
Acquisition of property, plant and equipment |
|
(113) |
(120) |
|
Proceeds from disposal of property, plant and equipment |
|
6 |
7 |
|
Acquisition of intangible assets |
|
(86) |
(72) |
|
Acquisition of interests in subsidiaries, associated undertakings and strategic investments |
|
(119) |
(23) |
|
Disposal of interests in subsidiaries, associated undertakings and strategic investments |
|
8 |
1,883 |
|
Net cash (outflow)/inflow from investing activities |
|
(1,987) |
238 |
|
Cash flows from financing activities |
|
|
|
|
Dividends paid to |
|
|
|
|
Ordinary equity holders of the Company |
|
(336) |
(1,172) |
|
Non-controlling interests and preferred security interests |
|
(183) |
(211) |
|
Dividends received from associated undertakings |
|
13 |
7 |
|
Interest paid (excluding banking interest paid) |
|
(51) |
(85) |
|
Proceeds from issue of ordinary shares (including by subsidiaries to non-controlling interests) |
|
11 |
35 |
|
Net disposal of treasury shares |
|
55 |
19 |
|
Issue of subordinated and other debt |
|
586 |
290 |
|
Subordinated and other debt repaid |
|
(578) |
(1,293) |
|
Net cash outflow from financing activities |
|
(483) |
(2,410) |
|
Net increase in cash and cash equivalents |
|
474 |
206 |
|
Net decrease in cash and cash equivalents - discontinued operations |
|
- |
(129) |
|
Effects of exchange rate changes on cash and cash equivalents |
|
(828) |
(380) |
|
Cash and cash equivalents at beginning of the year |
|
5,982 |
6,285 |
|
Cash and cash equivalents at end of the year |
|
5,628 |
5,982 |
|
Consisting of |
|
|
|
|
Cash and cash equivalents |
|
4,869 |
5,061 |
|
Mandatory reserve deposits with central banks |
|
759 |
921 |
|
Total |
|
5,628 |
5,982 |
1 The prior year has been restated for the impact of changes in accounting policies. Refer to note I1 for further details.
Cash flows presented in this statement include all cash flows relating to policyholders' funds.
Except for mandatory reserve deposits with central banks of £759 million (2012: £921 million) and cash and cash equivalents subject to consolidation of funds of £1,667 million (2012: £1,893 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 statement of cash flows in line with market practice in South Africa.
|
Consolidated statement of changes in equity |
|||||||
|
For the year ended 31 December 2013 |
|
|
|
|
|
|
|
|
|
|
Millions |
|
|
|||
|
Year ended 31 December 2013 |
Notes |
Number of shares issued and fully paid |
|
Share capital |
Share premium |
Merger reserve |
Available-for-sale reserve |
|
Shareholders' equity at beginning of the year |
|
4,892 |
|
559 |
835 |
1,717 |
65 |
|
Impact of changes in accounting policies |
I1 |
- |
|
- |
- |
- |
- |
|
Restated shareholders' equity at beginning of the year |
|
4,892 |
|
559 |
835 |
1,717 |
65 |
|
Profit after tax for the financial year |
|
- |
|
- |
- |
- |
- |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
|
Fair value gains |
|
|
|
|
|
|
|
|
Property revaluation |
|
- |
|
- |
- |
- |
- |
|
Measurement gains on defined benefit plans |
|
- |
|
- |
- |
- |
- |
|
Income tax on items that will not be reclassified subsequently to profit or loss |
D1(c) |
- |
|
- |
- |
- |
- |
|
|
|
- |
|
- |
- |
- |
- |
|
Items that may be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
|
Fair value gains/(losses) |
|
|
|
|
|
|
|
|
Net investment hedge |
|
- |
|
- |
- |
- |
- |
|
Available-for-sale investments |
|
|
|
|
|
|
|
|
Fair value losses |
|
- |
|
- |
- |
- |
(6) |
|
Recycled to profit or loss |
|
- |
|
- |
- |
- |
(9) |
|
Currency translation differences on translating foreign operations |
|
- |
|
- |
- |
- |
- |
|
Other movements |
|
- |
|
- |
- |
- |
- |
|
Income tax on items that may be reclassified subsequently to profit or loss |
D1(c) |
- |
|
- |
- |
- |
2 |
|
Total comprehensive income for the financial year |
|
- |
|
- |
- |
- |
(13) |
|
Dividends for the year |
C3 |
- |
|
- |
- |
- |
- |
|
Equity share-based payment transactions |
|
- |
|
- |
- |
- |
- |
|
Other movements in share capital |
|
5 |
|
1 |
10 |
- |
- |
|
Preferred securities purchased |
|
- |
|
- |
- |
- |
- |
|
Change in participation in subsidiaries |
|
- |
|
- |
- |
- |
- |
|
Transactions with shareholders |
|
5 |
|
1 |
10 |
- |
- |
|
Shareholders' equity at end of the year |
|
4,897 |
|
560 |
845 |
1,717 |
52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m |
|
Property revaluation reserve |
Share-based payments reserve |
Other reserves |
Foreign currency translation reserve |
Retained earnings |
Perpetual preferred callable securities |
Attributable to equity holders of the parent |
Total non-controlling interests |
Total equity |
|
144 |
268 |
33 |
(378) |
3,908 |
682 |
7,833 |
1,965 |
9,798 |
|
- |
- |
- |
- |
(17) |
- |
(17) |
(8) |
(25) |
|
144 |
268 |
33 |
(378) |
3,891 |
682 |
7,816 |
1,957 |
9,773 |
|
- |
- |
- |
- |
668 |
37 |
705 |
278 |
983 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17 |
- |
- |
- |
- |
- |
17 |
6 |
23 |
|
- |
- |
- |
- |
52 |
- |
52 |
18 |
70 |
|
- |
- |
- |
- |
(14) |
10 |
(4) |
(8) |
(12) |
|
17 |
- |
- |
- |
38 |
10 |
65 |
16 |
81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
43 |
- |
- |
43 |
- |
43 |
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
- |
- |
- |
(6) |
1 |
(5) |
|
- |
- |
- |
- |
- |
- |
(9) |
- |
(9) |
|
- |
- |
- |
(899) |
- |
- |
(899) |
(358) |
(1,257) |
|
- |
- |
4 |
- |
(1) |
- |
3 |
6 |
9 |
|
- |
- |
- |
- |
- |
- |
2 |
- |
2 |
|
17 |
- |
4 |
(856) |
705 |
47 |
(96) |
(57) |
(153) |
|
- |
- |
- |
- |
(336) |
(47) |
(383) |
(136) |
(519) |
|
- |
48 |
- |
- |
13 |
- |
61 |
(17) |
44 |
|
- |
- |
- |
- |
55 |
- |
66 |
3 |
69 |
|
- |
- |
- |
- |
(21) |
(156) |
(177) |
- |
(177) |
|
- |
- |
- |
- |
(17) |
- |
(17) |
17 |
- |
|
- |
48 |
- |
- |
(306) |
(203) |
(450) |
(133) |
(583) |
|
161 |
316 |
37 |
(1,234) |
4,290 |
526 |
7,270 |
1,767 |
9,037 |
Retained earnings were reduced in respect of own shares held in policyholder's funds, ESOP trusts, Black Economic Empowerment trusts and other undertakings at 31 December 2013 by £428 million. (2012: £489 million).
|
Consolidated statement of changes in equity |
|||||||
|
For the year ended 31 December 2013 |
|
|
|
|
|
|
|
|
|
|
Millions |
|
|
|||
|
Year ended 31 December 2012 Restated¹ |
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 |
|
5,801 |
|
580 |
805 |
2,532 |
53 |
|
Impact of changes in accounting policies |
I1 |
- |
|
- |
- |
- |
- |
|
Restated shareholders' equity at beginning of the year |
|
5,801 |
|
580 |
805 |
2,532 |
53 |
|
Profit after tax for the financial year |
|
- |
|
- |
- |
- |
- |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
|
Fair value gains |
|
|
|
|
|
|
|
|
Property revaluation |
|
- |
|
- |
- |
- |
- |
|
Measurement gain on defined benefit plans |
|
- |
|
- |
- |
- |
- |
|
Income tax on items that will not be reclassified subsequently to profit or loss |
D1(c) |
- |
|
- |
- |
- |
- |
|
|
|
- |
|
- |
- |
- |
- |
|
Items that may be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
|
Fair value gains/(losses) |
|
|
|
|
|
|
|
|
Net investment hedge |
|
- |
|
- |
- |
- |
- |
|
Available-for-sale investments |
|
|
|
|
|
|
|
|
Fair value gains |
|
- |
|
- |
- |
- |
33 |
|
Recycled to profit or loss |
|
- |
|
- |
- |
- |
(21) |
|
Exchange differences recycled to profit or loss |
|
- |
|
- |
- |
- |
- |
|
Shadow accounting |
|
- |
|
- |
- |
- |
6 |
|
Currency translation differences on translating foreign operations |
|
- |
|
- |
- |
- |
- |
|
Other movements |
|
- |
|
- |
- |
- |
- |
|
Income tax on items that may be reclassified subsequently to profit or loss |
D1(c) |
- |
|
- |
- |
- |
(6) |
|
Total comprehensive income for the financial year |
|
- |
|
- |
- |
- |
12 |
|
Dividends for the year |
C3 |
- |
|
- |
- |
- |
- |
|
Equity share-based payment transactions |
|
- |
|
- |
- |
- |
- |
|
Other movements in share capital |
|
27 |
|
3 |
30 |
- |
- |
|
Cancellation of treasury shares |
|
(239) |
|
(24) |
- |
- |
- |
|
Share consolidation |
|
(697) |
|
- |
- |
- |
- |
|
Preferred securities purchased |
|
- |
|
- |
- |
- |
- |
|
Merger reserve realised in the year |
|
- |
|
- |
- |
(815) |
- |
|
Change in participation in subsidiaries |
|
- |
|
- |
- |
- |
- |
|
Transactions with shareholders |
|
(909) |
|
(21) |
30 |
(815) |
- |
|
Shareholders' equity at end of the year |
|
4,892 |
|
559 |
835 |
1,717 |
65 |
1 The prior year has been restated for the impact of changes in accounting policies. Refer to note I1 for further details.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m |
|
Property revaluation reserve |
Share-based payments reserve |
Other reserves |
Foreign currency translation reserve |
Retained earnings |
Perpetual preferred callable securities |
Attributable to equity holders of the parent |
Total non-controlling interests |
Total equity |
|
124 |
230 |
5 |
301 |
3,170 |
688 |
8,488 |
2,370 |
10,858 |
|
- |
- |
- |
- |
(20) |
- |
(20) |
- |
(20) |
|
124 |
230 |
5 |
301 |
3,150 |
688 |
8,468 |
2,370 |
10,838 |
|
- |
- |
- |
- |
1,140 |
32 |
1,172 |
306 |
1,478 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19 |
- |
- |
- |
- |
- |
19 |
1 |
20 |
|
- |
- |
- |
- |
8 |
- |
8 |
- |
8 |
|
- |
- |
- |
- |
(4) |
10 |
6 |
- |
6 |
|
19 |
- |
- |
- |
4 |
10 |
33 |
1 |
34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
160 |
- |
- |
160 |
- |
160 |
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
- |
- |
- |
33 |
1 |
34 |
|
- |
- |
- |
- |
- |
- |
(21) |
- |
(21) |
|
- |
- |
- |
(350) |
- |
- |
(350) |
- |
(350) |
|
- |
- |
- |
- |
- |
- |
6 |
- |
6 |
|
- |
- |
- |
(489) |
- |
- |
(489) |
(150) |
(639) |
|
1 |
- |
4 |
- |
(40) |
- |
(35) |
10 |
(25) |
|
- |
- |
- |
- |
- |
- |
(6) |
- |
(6) |
|
20 |
- |
4 |
(679) |
1,104 |
42 |
503 |
168 |
671 |
|
- |
- |
- |
- |
(1,172) |
(42) |
(1,214) |
(169) |
(1,383) |
|
- |
38 |
- |
- |
- |
- |
38 |
13 |
51 |
|
- |
- |
- |
- |
7 |
- |
40 |
- |
40 |
|
- |
- |
24 |
- |
- |
- |
- |
- |
- |
|
- |
- |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
- |
- |
(13) |
(6) |
(19) |
(445) |
(464) |
|
- |
- |
- |
- |
815 |
- |
- |
- |
- |
|
- |
- |
- |
- |
- |
- |
- |
20 |
20 |
|
- |
38 |
24 |
- |
(363) |
(48) |
(1,155) |
(581) |
(1,736) |
|
144 |
268 |
33 |
(378) |
3,891 |
682 |
7,816 |
1,957 |
9,773 |
Notes to the consolidated financial statements
For the year ended 31 December 2013
A: Significant accounting policies
A1: Basis of preparation
The Group financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU. The accounting policies adopted by the Group, unless otherwise stated, have been applied consistently with those applied in the preparation of the Group's 2012 Annual Report and Accounts.
The Group financial statements are prepared on the historical cost basis except that the following assets and liabilities are stated at their fair value: derivative financial instruments, financial assets and liabilities designated as fair value through the income statement or as available-for-sale, owner-occupied property and investment property. Non-current assets and disposal groups held for sale are stated at the lower of the previous carrying amount and the fair value less costs to sell.
The Group financial statements have been prepared on the going concern basis which the directors believe to be appropriate.
The financial statements contained herein do not constitute the Company's statutory accounts for the financial years ended 31 December 2013 and 31 December 2012 within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the financial year ended 31 December 2012 have been reported on by the Company's auditor and delivered to the Registrar of Companies. The statutory accounts for the financial year ended year ended 31 December 2013 will be delivered in due course. The report of the auditor for the financial year ended 31 December 2012 was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
Translation of foreign operations
The assets and liabilities of foreign operations are translated from their respective functional currencies into the Group's presentation currency using the year end exchange rates, and their income and expenses using the average exchange rates. Other than in respect of cumulative translation gains and losses up to 1 January 2004, cumulative unrealised gains or losses resulting from translation of functional currencies to the presentation currency are included as a separate component of shareholders' equity. To the extent that these gains and losses are effectively hedged, the cumulative effect of such gains and losses arising on the hedging instruments are also included in that component of shareholders' equity. Upon the disposal of subsidiaries the cumulative amount of exchange differences deferred in shareholders' equity, net of attributable amounts in relation to net investments, is recognised in the income statement. Cumulative translation gains and losses up to 1 January 2004 were reset to zero.
|
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 2013 |
Year ended 31 December 2012 |
||
|
|
Income statement (average rate) |
Statement of financial position (closing rate) |
Income statement (average rate) |
Statement of financial position (closing rate) |
|
Rand |
15.0959 |
17.4284 |
13.0123 |
13.7696 |
|
US dollars |
1.5650 |
1.6566 |
1.5850 |
1.6242 |
|
Euro |
1.1782 |
1.2014 |
1.2326 |
1.2307 |
A2: Significant corporate activity and business changes during the period
Acquisitions effective during the year
Life assurance in Nigeria
On 22 February 2012, the Group announced that it had made an offer to acquire a majority stake in Oceanic Life, the life assurance operations of Ecobank Transitional Incorporated. The Group consolidated the financial results of Oceanic Life with effect from 1 January 2013.
General insurance in Nigeria
In December 2013 the Group completed its acquisition of the majority stake in the general insurance business of Oceanic General, the general insurance operations of Ecobank Transitional Incorporated. The balance sheet has been included in the Group consolidated statement of financial position as at 31 December 2013.
Life assurance in Ghana
On 3 June 2013, the Group announced that it would expand its African presence through the acquisition of a majority stake in Provident Life Assurance Company Limited. The Group consolidated the financial results of Provident Life with effect from 12 September 2013.
Platform and distribution business in Uruguay
On 19 November 2012, the Group announced that it had acquired a majority stake in AIVA Holding Group SA, a business platform and distribution business based in Uruguay and spanning the Latin American region. The Group consolidated the financial results with effect from 19 November 2012.
Refer to note G2 for further information on the Group's acquisitions during the year.
The Group is currently progressing the following transactions
Lending in Kenya
On 3 July 2013, the Group announced that it is to enter into a strategic partnership with Faulu Kenya DTM LTD through the acquisition of a controlling stake in the business. The completion of this transaction is subject to the conclusion of the relevant closing conditions.
Lending in Mozambique
On 3 May 2013, the Group announced that Nedbank had entered into an agreement to acquire an initial 36.4% shareholding of Banco Unico, SA, located in Mozambique and to increase the stake to a majority shareholding over time. The completion of this transaction is subject to certain conditions precedent being met.
Skandia Poland
On 12 November 2013, the Group announced that terms have been agreed to sell Skandia Poland, part of Old Mutual Wealth. The transaction is subject to regulatory approvals and is expected to be completed during 2014.
The Group has completed the following intra-Group transfers during 2013
Transfer of Latin American business to Old Mutual South Africa
The Financial Services Board has approved the acquisition of Skandia Europe and Latin America Holdings Limited by Old Mutual South Africa from Old Mutual plc and the transaction was completed on 12 July 2013. This resulted in a remittance of £120 million to Old Mutual plc.
Transfer of Old Mutual Guodian Life Insurance Company Limited (Guodian) to Old Mutual Life Assurance Company (South Africa) Limited (OMLACSA)
Legal ownership of the Guodian business, the Group's Chinese joint venture, was transferred to OMLACSA during the year in order to align legal ownership and management structures. Guodian was previously owned by the Skandia Insurance Company Limited (SICL), which was sold as part of the sale of the Nordic businesses in 2012. The transfer of Guodian from SICL had been subject to regulatory approval. Upon transfer OMLACSA paid consideration of £44 million, which was ultimately remitted to Old Mutual plc. The results of the Guodian business were reported in the Emerging Markets segmental result in both of the years ended 31 December 2012 and 2013.
Financing activities
Repayment of Group debt
On 19 November 2013, the Group repurchased £75 million of its £348 million Tier 1 preferred callable securities and €121 million of its €495 million Upper Tier 2 preferred callable securities via a Modified Dutch Auction tender. At 31 December 2013, £273 million Tier 1 and €374 million Upper Tier 2 preferred callable securities remained outstanding. For the year ended 31 December 2013, the Group recognised a loss of £21 million directly in equity, as these securities are classified as equity instruments for accounting purposes.
A total $14 million of the outstanding $16 million secured senior debt was repaid in two tranches on 1 November 2013 and 15 December 2013.
New debt issued by Nedbank
During the year, Nedbank issued R3.0 billion new-style, fully loss-absorbent, Basel lll compliant, Tier 2 subordinated-debt capital to replace the R2.1 billion of Basel II tier 2 capital that matured in September 2013 and December 2013.
Repatriation of Old Mutual Bermuda capital
In July 2013, Old Mutual Bermuda received formal written approval from the Bermuda Monitory Authority (BMA) to repatriate $450 million via cancellation of OM Group (UK) Limited loan notes. In December 2013, the BMA approved an additional repatriation of $100 million via cancellation of further loan notes.
Notes to the consolidated financial statements
For the year ended 31 December 2013
A: Significant accounting policies continued
(a) Loans and advances
Provisions for impairment of loans and advances
The majority of loans and advances are in respect of Nedbank, which assesses its loan portfolios for impairment at each financial reporting date. Nedbank actively manages its exposure to loans and advances through robust credit approval processes. The credit loss ratio at year ended 31 December 2013 was 1.06% (2012: 1.05%). The impairment for performing loans is calculated on a portfolio basis, based on historical loss experience, adjusted for national and industry specific economic conditions and other indicators present at the reporting date that correlate with defaults on the portfolio. These include early arrears and other indicators of potential default, such as changes in macro-economic conditions and legislation affecting credit recovery. These annual loss ratios are applied to loan balances in the portfolio and scaled to the estimated loss emergence period.
For portfolios which comprise large numbers of small homogenous assets with similar risk characteristics where credit scoring techniques are generally used, statistical techniques are used to calculate impairment allowances on the portfolio, based on historical recovery rates and assumed emergence periods. There are a number of models in use, each tailored to a product, line of business or client category. Judgement and knowledge are needed in selecting the statistical methods to use when the models are developed or revised.
For wholesale (larger) exposures impairment allowances are calculated on an individual basis and all relevant considerations that have a bearing on the expected future cash flows are taken into account. The level of impairment allowance is the difference between the value of the discounted expected future cash flows and its carrying amount. Subjective judgements are made in the calculations of future cash flows and change with time as new information becomes available or as strategies evolve, resulting in frequent revisions to the impairment provision as individual decisions are taken.
Further detail is provided in note E3 in the Annual Report and Accounts.
(b) Policyholder liabilities
Emerging Markets discretionary reserves
Technical provisions in South Africa are derived as the aggregate of:
§ Best estimate liabilities, with assumptions allowing for the best estimate of future experience and a market-consistent valuation of financial options and guarantees
§ Compulsory margins, prescribed in the South African professional actuarial guidance note (SAP 104) as explicit changes to actuarial assumptions that increase the level of technical provisions held, and
§ Discretionary margins, permitted by SAP 104, to allow for the uncertainty inherent in estimates of future experience after considering available options of managing that experience over time, or to defer the release of profits consistent with policy design or company practice
Discretionary margins are held as either implicit or explicit margins. Explicit discretionary margins are derived as conscious changes to assumptions used to project future experience to increase technical provisions. Implicit discretionary margins arise where the method used to calculate overall technical provisions results in liabilities that are greater than the sum of best estimate liabilities and compulsory margins.
Explicit discretionary margins of £489 million (1.9% of total technical provisions) were held at 31 December 2013. This consisted largely of:
§ Margins held for Mass Foundation Cluster protection business, which allow for the uncertainty related to the future progression of the AIDS pandemic in South Africa, as well as future lapse experience and future investment returns, and to ensure that profit is released appropriately over the term of the policies
§ Margins to allow for the uncertainty inherent in the assumptions used to value financial options and guarantees, implied volatility assumptions in particular, which are difficult to hedge due to the short term nature of the equity option market in South Africa
§ Margins on non-profit annuities, due to the inability to fully match assets to liabilities as a result of the limited availability of long-dated bonds, and to provide for longevity risk, and
§ A margin set up in 2013 to allow for the uncertainty inherent in future economic assumptions used to calculate, mainly protection product liabilities, in the Retail Affluent business. Although interest rate hedging is used to manage interest rate risk on these products, the volatility of bond yields in South Africa means that it is difficult to maintain appropriate hedging positions without incurring significant trading costs. The discretionary margin therefore caters for the residual uncertainty present after allowing for the hedge programme that is in place.
Emerging Markets Financial Soundness Valuation discount rate
The calculation of the Group's South African life assurance contract liabilities is sensitive to the discount rate used to value the liabilities. The methodology applied by the Group requires discount rates to be set according to the South African professional guidance note (SAP 104). In line with these principles, the reference rate is selected as the Bond Exchange of South Africa (BESA) par bond 10-year yield.
The reference rate was relatively volatile over 2013, ranging from 6.2% to 8.5% during the year ended 31 December 2013 (2012: 6.9% to 8.2%). At 31 December 2013 the reference discount rate was 8.1% (31 December 2012: 6.9%). The volatile interest rate environment had a much smaller impact on the operating profit for the South African life assurance businesses in 2013, given the management actions taken over 2013 to mitigate these impacts. These included the continuance of the hedging program put in place during the second half of 2012, the establishment of discretionary margins to allow for the uncertainty in respect of interest rate volatility in Retail Affluent, and changes to the annual premium and cover increase policy on Mass Foundation Cluster funeral products.
The Group estimates that a 1% reduction in the reference discount rate will result in an increase in policyholder liabilities of £6 million (2012: £39 million), allowing for the impact of the hedging program. The 2013 impact is significantly lower than 2012 mainly, due to the management actions taken to reduce the impact of changing discount rates on operating profit, as well as the depreciation of the rand which reduced the impact in sterling terms.
Further disclosure of the policyholder sensitivity to interest rates is provided in note E8(g) in the Annual Report and Accounts.
Old Mutual Bermuda guarantees
Since the closure of Old Mutual Bermuda to new business in March 2009, management's key priorities have been to de-risk the business, manage the risk and solvency position and preserve shareholder value. The run-off of the book and hedging of the guarantees significantly reduces the Group's risk exposure. The active contracts for which reserves are held are deferred and fixed index annuity investments and variable annuity products, which include guaranteed minimum accumulation benefits (GMAB) and guaranteed minimum death benefits (GMDB). The key risk to the Group relates to the 120% of the initial deposit (or, if elected, the highest anniversary account value) on the 10th anniversary which will commence in 2017. The Group has implemented a hedging strategy to protect against markets rising above the 120% guarantee and then subsequently falling, which would reset some guarantees above 120%, with account values at a lower level. This reduces the uncertainty and volatility of capital exposure and cash flows arising from the highest anniversary value guarantees. The remaining 120% of premium guarantee, relating to equity and foreign exchange downside risks, for the 10-year obligations are being managed by the dynamic hedge programme. There are no significant risks to the Group associated with GMDB and management continues to operate strong oversight over the business.
During 2013 the business continued to experience high rates of surrender activity which can be attributed to the variable annuity UGO (Universal Guarantee Option) GMAB policyholders passing through a top-up process on the fifth anniversary following product inception. This process was completed in 2013. The reduced size of the book has meant that the associated GMAB reserves have reduced from $229 million at 31 December 2012 to $84 million at 31 December 2013.
(c) Tax
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in profit or loss except to the extent that it relates to items recognised directly in other comprehensive income, in which case it is recognised in other comprehensive income.
The Group is regularly in discussion with the respective tax authorities in each of the jurisdictions where the Group is active. The Group applies its judgement to determine if a provision for future tax uncertainties should be recognised based on detailed reviews of any potential exposure to tax authorities and the assessment of the most probable outcome of the tax uncertainty. As these provisions are based on estimates and rely on judgements made by the Group, the actual amount of future taxes paid by the Group could be different to the amounts provided.
(d) Consolidation set of standards
The Group has applied the following key judgements in the application of the requirements of the consolidation set of standards (IFRS 10 'Consolidated Financial Statements' and IFRS 11 'Joint Arrangements'):
Consolidation of investment funds and securitisation vehicles
The Group acts as a fund manager to a number of investment funds. In determining whether the Group controls such a fund, it will focus on an assessment of the aggregate economic interests of the Group (comprising any carried interests and expected management fees) and the investor's rights to remove the fund manager. The Group assesses, on an annual basis, such interests to determine if the fund will be consolidated. See note G3(b) in the Annual Report and Accounts for disclosures in respect of the investment funds in which the Group has an interest.
The Group has sponsored certain asset backed financing (securitisation) vehicles under its securitisation programme which are run according to pre-determined criteria that are part of the initial design of the vehicles. The Group is exposed to variability of returns from the vehicles through its holding of junior debt securities in the vehicles. It has concluded that it controls these vehicles and therefore has consolidated these asset backed financing vehicles.
Structured entities
The Group is required to make judgements on what constitutes a structured entity. Accounting standards define a structured entity as an entity designed so that its activities are not governed by way of voting rights. In assessing whether the Group has power over such investees in which it has an interest, the Group considers factors such as the purpose and design of the investee, its practical ability to direct the relevant activities of the investee, the nature of its relationship with the investee and the size of its exposure to the variability of returns of the investee. The Group has evaluated all exposures and has concluded that all investments in investment funds and securitisation vehicles represent investments in structured entities.
Notes to the consolidated financial statements
For the year ended 31 December 2013
B: Segment information
B1: Basis of segmentation
The Group's segmental results are analysed and reported on a basis consistent with the way that management and the Board of directors assesses performance and allocates resources. Information is presented to the Board on a consolidated basis in pounds sterling (the presentation currency) and in the functional currency of each business.
Adjusted operating profit 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, depending on the business line, this typically includes net client cash flows, funds under management, gross earned premiums, underwriting results, net interest income and non-interest revenue and credit losses.
A reconciliation between the segment revenues and expenses and the Group's revenues and expenses is shown in note B3. Consistent with internal reporting, assets, liabilities, revenues and expenses that are not directly attributable to a particular segment are allocated between segments where appropriate and where there is a reasonable basis for doing so. The Group accounts for inter-segment revenues and transfers as if the transactions were with third parties at current market prices. Given the nature of the operations, there are no major trading activities between the segments.
The revenues generated in each reported segment can be seen in the analysis of profits and losses in note B3. The segmental information in notes B3 and B4, reflects the adjusted and IFRS measures of profit and loss and the assets and liabilities for each operating segment as provided to management and the Board of directors. There are no differences between the measurement of the assets and liabilities reflected in the primary statements and that reported for the segments.
There are four primary business activities from which the Group generates revenues. These are life assurance (premium income), asset management business (fee and commission income), banking (banking interest receivable) and general insurance (premium income). The principal lines of business from which each operating segment derives its revenues are as follows:
Core operations
Emerging Markets - life assurance and asset management
Old Mutual Wealth - life assurance and asset management
Property & Casualty - general insurance
Nedbank - banking and asset management
US Asset Management - asset management
Non-core operations
Old Mutual Bermuda - life assurance
Segment presentation
In the 2012 Annual Report and Accounts, the Group announced that, with effect from 1 January 2013, all of the Group's Property & Casualty activities would be reported as a single segment. Consequently, the Mutual & Federal (M&F) segment has been renamed as Property & Casualty. This segment includes M&F, 100% of iWyze, previously reported as a 50% joint venture between Emerging Markets and M&F, and the general insurance businesses in Namibia and Botswana. The name change has been applied to all reporting periods. Comparative information for the year ended 31 December 2012 has been restated accordingly.
In addition to the above, the Long-Term Savings aggregation has been removed from the adjusted operating profit statement, segmental information and in the statement of financial position in notes B3 and B4 of the annual financial statements. The Long-Term Savings segment was a sub total of the Emerging Markets and Old Mutual Wealth segments which the Group previously elected to disclose. This presentational change has been applied to all reporting periods.
The Group's reported segments are now Emerging Markets, Old Mutual Wealth, Property & Casualty, Nedbank and US Asset Management (USAM). The Other segment includes Group head office. Old Mutual Bermuda is the principal component of the non-core operations. For all reporting periods, Old Mutual Bermuda is classified as a continuing operation in the IFRS income statement, but as non-core in determining the Group's adjusted operating profit.
The Group continues to incur costs related to the sale of its Nordic business in 2012. These costs largely relate to the transition of IT information and support services that were previously provided by the Nordic business to the wider Group, back to the Group. These costs are included in the expenses related to the discontinued operations in the annual financial statements for the year ended 31 December 2013. Further information on the results of discontinued operations is provided in note H1. The Nordic business has been classified as a discontinued operation in the IFRS consolidated income statement and its results as non-core in determining the Group's adjusted operating profit.
All other businesses have been classified as continuing operations for all reporting periods.
|
B2: Gross earned premiums and deposits to investment contracts |
||||
|
|
|
|
|
£m |
|
Year ended 31 December 2013 |
Emerging Markets |
Old Mutual Wealth |
Property & Casualty |
Total |
|
Life assurance - insurance contracts |
1,616 |
336 |
- |
1,952 |
|
Life assurance - investment contracts with discretionary participation features |
1,025 |
- |
- |
1,025 |
|
General insurance |
- |
- |
724 |
724 |
|
Gross earned premiums |
2,641 |
336 |
724 |
3,701 |
|
Life assurance - other investment contracts recognised as deposits |
2,015 |
5,889 |
- |
7,904 |
|
|
|
|
|
|
|
|
|
|
|
£m |
|
Year ended 31 December 2012 |
Emerging Markets |
Old Mutual Wealth |
Property & Casualty |
Total |
|
Life assurance - insurance contracts |
1,673 |
362 |
- |
2,035 |
|
Life assurance - investment contracts with discretionary participation features |
970 |
- |
- |
970 |
|
General insurance |
- |
- |
720 |
720 |
|
Gross earned premiums |
2,643 |
362 |
720 |
3,725 |
|
Life assurance - other investment contracts recognised as deposits |
2,022 |
5,699 |
- |
7,721 |
|
Notes to the consolidated financial statements |
|||||
|
For the year ended 31 December 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
B: Segment information continued |
|
|
|
|
|
|
B3: Adjusted operating profit statement - segment information for the year ended 31 December 2013 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
Emerging Markets |
Old Mutual Wealth |
Property & Casualty |
|
Revenue |
|
|
|
|
|
|
Gross earned premiums |
B2 |
|
2,641 |
336 |
724 |
|
Outward reinsurance |
|
|
(80) |
(87) |
(150) |
|
Net earned premiums |
|
|
2,561 |
249 |
574 |
|
Investment return (non-banking) |
|
|
5,153 |
4,159 |
31 |
|
Banking interest and similar income |
|
|
- |
- |
- |
|
Banking trading, investment and similar income |
|
|
- |
- |
- |
|
Fee and commission income, and income from service activities |
|
|
527 |
1,173 |
25 |
|
Other income |
|
|
39 |
21 |
- |
|
Inter-segment revenues |
|
|
61 |
1 |
14 |
|
Total revenue |
|
|
8,341 |
5,603 |
644 |
|
Expenses |
|
|
|
|
|
|
Claims and benefits (including change in insurance contract provisions) |
|
|
(4,505) |
(347) |
(556) |
|
Reinsurance recoveries |
|
|
79 |
45 |
122 |
|
Net claims and benefits incurred |
|
|
(4,426) |
(302) |
(434) |
|
Change in investment contract liabilities |
|
|
(1,952) |
(3,921) |
- |
|
Losses on loans and advances |
|
|
- |
- |
- |
|
Finance costs (including interest and similar expenses) |
|
|
- |
- |
- |
|
Banking interest payable and similar expenses |
|
|
- |
- |
- |
|
Fee and commission expenses, and other acquisition costs |
|
|
(228) |
(622) |
(113) |
|
Change in third-party interest in consolidated funds |
|
|
- |
- |
- |
|
Other operating and administrative expenses |
|
|
(1,088) |
(408) |
(77) |
|
Income tax attributable to policyholder returns |
|
|
(62) |
(112) |
- |
|
Inter-segment expenses |
|
|
(6) |
(21) |
(19) |
|
Total expenses |
|
|
(7,762) |
(5,386) |
(643) |
|
Share of associated undertakings' and joint ventures' profit after tax |
|
|
11 |
- |
3 |
|
Loss on disposal of subsidiaries, associated undertakings and strategic investments |
C1(c) |
|
- |
- |
- |
|
Adjusted operating profit/(loss) before tax and non-controlling interests |
|
|
590 |
217 |
4 |
|
Income tax expense |
D1 |
|
(155) |
(40) |
- |
|
Non-controlling interests |
|
|
(11) |
- |
(5) |
|
Adjusted operating profit/(loss) after tax and non-controlling interests |
|
|
424 |
177 |
(1) |
|
Adjusting items net of tax and non-controlling interests |
C1(a) |
|
(74) |
(139) |
(10) |
|
Profit/(loss) after tax from continuing operations |
|
|
350 |
38 |
(11) |
|
Profit from discontinued operations after tax |
H1(a) |
|
- |
- |
- |
|
Profit/(loss) after tax attributable to equity holders of the parent |
|
|
350 |
38 |
(11) |
1 Non-core operations relate to Old Mutual Bermuda. Old Mutual Bermuda profit after tax for the year ended 31 December 2013 was £32 million. Non-core operations also include a net gain of £3 million divestment cost and additional proceeds received in relation to the Nordic business sold in 2012. Further information on discontinued operations is provided in note H1.
Of the total revenues, excluding intercompany revenues, £4,947 million was generated in the UK (2012: £4,318), £864 million in the rest of Europe (2012: £1,196 million), £13,446 million in Southern Africa (2012: £13,966 million), £439 million in United States (2012: £529 million) and £114 million relates to other operating segments (2012: £83 million).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
£m |
|
Nedbank |
USAM |
Other |
Consolidation adjustments |
Adjusted operating profit |
Adjusting items (note C1) |
Discontinued and non-core operations¹ |
IFRS Income statement |
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
- |
3,701 |
- |
- |
3,701 |
|
- |
- |
- |
- |
(317) |
- |
- |
(317) |
|
- |
- |
- |
- |
3,384 |
- |
- |
3,384 |
|
- |
- |
68 |
634 |
10,045 |
(94) |
35 |
9,986 |
|
3,050 |
- |
- |
- |
3,050 |
- |
- |
3,050 |
|
195 |
- |
- |
- |
195 |
- |
- |
195 |
|
1,048 |
381 |
- |
8 |
3,162 |
(67) |
- |
3,095 |
|
31 |
3 |
(2) |
2 |
94 |
- |
6 |
100 |
|
11 |
- |
8 |
(106) |
(11) |
- |
11 |
- |
|
4,335 |
384 |
74 |
538 |
19,919 |
(161) |
52 |
19,810 |
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
- |
(5,408) |
- |
(2) |
(5,410) |
|
- |
- |
- |
- |
246 |
- |
- |
246 |
|
- |
- |
- |
- |
(5,162) |
- |
(2) |
(5,164) |
|
- |
- |
- |
- |
(5,873) |
- |
- |
(5,873) |
|
(368) |
- |
- |
- |
(368) |
- |
- |
(368) |
|
- |
- |
(92) |
- |
(92) |
11 |
- |
(81) |
|
(1,616) |
- |
- |
- |
(1,616) |
- |
- |
(1,616) |
|
(12) |
(4) |
- |
(70) |
(1,049) |
78 |
(5) |
(976) |
|
- |
- |
- |
(564) |
(564) |
- |
- |
(564) |
|
(1,495) |
(274) |
(78) |
(10) |
(3,430) |
(210) |
(13) |
(3,653) |
|
- |
- |
- |
- |
(174) |
174 |
- |
- |
|
(49) |
- |
(11) |
106 |
- |
- |
- |
- |
|
(3,540) |
(278) |
(181) |
(538) |
(18,328) |
53 |
(20) |
(18,295) |
|
2 |
5 |
- |
- |
21 |
- |
- |
21 |
|
- |
- |
- |
- |
- |
(4) |
- |
(4) |
|
797 |
111 |
(107) |
- |
1,612 |
(112) |
32 |
1,532 |
|
(200) |
(27) |
(2) |
- |
(424) |
(128) |
- |
(552) |
|
(282) |
- |
- |
- |
(298) |
20 |
- |
(278) |
|
315 |
84 |
(109) |
- |
890 |
(220) |
32 |
702 |
|
12 |
(30) |
21 |
- |
(220) |
220 |
- |
- |
|
327 |
54 |
(88) |
- |
670 |
- |
32 |
702 |
|
- |
- |
- |
- |
- |
- |
3 |
3 |
|
327 |
54 |
(88) |
- |
670 |
- |
35 |
705 |
|
Notes to the consolidated financial statements |
|||||
|
For the year ended 31 December 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
B: Segment information continued |
|
|
|
|
|
|
B3: Adjusted operating profit statement - segment information for the year ended 31 December 2012 Restated¹ |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
Emerging Markets |
Old Mutual Wealth |
Property & Casualty |
|
Revenue |
|
|
|
|
|
|
Gross earned premiums |
B2 |
|
2,643 |
362 |
720 |
|
Outward reinsurance |
|
|
(82) |
(87) |
(153) |
|
Net earned premiums |
|
|
2,561 |
275 |
567 |
|
Investment return (non-banking) |
|
|
5,288 |
3,806 |
44 |
|
Banking interest and similar income |
|
|
- |
- |
- |
|
Banking trading, investment and similar income |
|
|
- |
- |
- |
|
Fee and commission income, and income from service activities |
|
|
440 |
1,199 |
26 |
|
Other income |
|
|
61 |
26 |
1 |
|
Inter-segment revenues |
|
|
83 |
3 |
18 |
|
Total revenue |
|
|
8,433 |
5,309 |
656 |
|
Expenses |
|
|
|
|
|
|
Claims and benefits (including change in insurance contract provisions) |
|
|
(4,813) |
(387) |
(485) |
|
Reinsurance recoveries |
|
|
89 |
59 |
73 |
|
Net claims and benefits incurred |
|
|
(4,724) |
(328) |
(412) |
|
Change in investment contract liabilities |
|
|
(1,756) |
(3,605) |
- |
|
Losses on loans and advances |
|
|
- |
- |
- |
|
Finance costs (including interest and similar expenses) |
|
|
- |
- |
- |
|
Banking interest payable and similar expenses |
|
|
- |
- |
- |
|
Fee and commission expenses, and other acquisition costs |
|
|
(227) |
(677) |
(113) |
|
Change in third-party interest in consolidated funds |
|
|
- |
- |
- |
|
Other operating and administrative expenses |
|
|
(1,066) |
(446) |
(82) |
|
Income tax attributable to policyholder returns |
|
|
(49) |
(26) |
- |
|
Inter-segment expenses |
|
|
(20) |
(32) |
(14) |
|
Total expenses |
|
|
(7,842) |
(5,114) |
(621) |
|
Share of associated undertakings' and joint ventures' profit after tax |
|
|
20 |
- |
2 |
|
Loss on disposal of subsidiaries, associated undertakings and strategic investments |
C1(c) |
|
- |
- |
- |
|
Adjusted operating profit/(loss) before tax and non-controlling interests |
|
|
611 |
195 |
37 |
|
Income tax expense |
D1 |
|
(164) |
(43) |
(9) |
|
Non-controlling interests |
|
|
(9) |
- |
(8) |
|
Adjusted operating profit/(loss) after tax and non-controlling interests |
|
|
438 |
152 |
20 |
|
Adjusting items net of tax and non-controlling interests |
C1(a) |
|
(153) |
(134) |
(15) |
|
Profit/(loss) after tax from continuing operations |
|
|
285 |
18 |
5 |
|
Profit from discontinued operations after tax |
H1(a) |
|
- |
- |
- |
|
Profit/(loss) after tax attributable to equity holders of the parent |
|
|
285 |
18 |
5 |
1 The prior year has been restated for the impact of changes in accounting policies. Refer to note I1 for further details.
2 Non-core operations relate to Old Mutual Bermuda. Old Mutual Bermuda profit after tax for the year ended 31 December 2012 was £161 million. It also includes £4 million of inter-segment revenue and the after tax results of the Group's discontinued operations. Further information on discontinued operations is provided in note H1.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
£m |
|
Nedbank |
USAM |
Other |
Consolidation adjustments |
Adjusted operating profit |
Adjusting items (note C1) |
Discontinued and non-core operations² |
IFRS Income statement |
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
- |
3,725 |
- |
- |
3,725 |
|
- |
- |
- |
- |
(322) |
- |
- |
(322) |
|
- |
- |
- |
- |
3,403 |
- |
- |
3,403 |
|
- |
1 |
75 |
722 |
9,936 |
(191) |
135 |
9,880 |
|
3,431 |
- |
- |
- |
3,431 |
- |
- |
3,431 |
|
214 |
- |
- |
- |
214 |
- |
- |
214 |
|
1,084 |
360 |
- |
6 |
3,115 |
(76) |
- |
3,039 |
|
23 |
1 |
- |
(1) |
111 |
- |
14 |
125 |
|
21 |
- |
7 |
(156) |
(24) |
- |
24 |
- |
|
4,773 |
362 |
82 |
571 |
20,186 |
(267) |
173 |
20,092 |
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
- |
(5,685) |
- |
73 |
(5,612) |
|
- |
- |
- |
- |
221 |
- |
- |
221 |
|
- |
- |
- |
- |
(5,464) |
- |
73 |
(5,391) |
|
- |
- |
- |
- |
(5,361) |
- |
- |
(5,361) |
|
(400) |
- |
- |
- |
(400) |
- |
- |
(400) |
|
- |
- |
(130) |
- |
(130) |
(84) |
- |
(214) |
|
(1,886) |
- |
- |
- |
(1,886) |
(1) |
- |
(1,887) |
|
- |
(5) |
- |
(67) |
(1,089) |
88 |
(63) |
(1,064) |
|
- |
- |
- |
(651) |
(651) |
- |
- |
(651) |
|
(1,604) |
(276) |
(67) |
(9) |
(3,550) |
(147) |
(18) |
(3,715) |
|
- |
- |
- |
- |
(75) |
75 |
- |
- |
|
(58) |
- |
(32) |
156 |
- |
- |
- |
- |
|
(3,948) |
(281) |
(229) |
(571) |
(18,606) |
(69) |
(8) |
(18,683) |
|
- |
10 |
- |
- |
32 |
- |
- |
32 |
|
- |
- |
- |
- |
- |
(56) |
- |
(56) |
|
825 |
91 |
(147) |
- |
1,612 |
(392) |
165 |
1,385 |
|
(221) |
(15) |
12 |
- |
(440) |
(31) |
- |
(471) |
|
(287) |
- |
(27) |
- |
(331) |
25 |
- |
(306) |
|
317 |
76 |
(162) |
- |
841 |
(398) |
165 |
608 |
|
16 |
(10) |
(102) |
- |
(398) |
398 |
- |
- |
|
333 |
66 |
(264) |
- |
443 |
- |
165 |
608 |
|
- |
- |
- |
- |
- |
- |
564 |
564 |
|
333 |
66 |
(264) |
- |
443 |
- |
729 |
1,172 |
|
Notes to the consolidated financial statements |
|||||
|
For the year ended 31 December 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
B: Segment information continued |
|
|
|
|
|
|
B4: Statement of financial position - segment information at 31 December 2013 |
|||||
|
|
|
|
|
||
|
|
Notes |
|
Emerging Markets |
Old Mutual Wealth |
Property & Casualty |
|
Assets |
|
|
|
|
|
|
Goodwill and other intangible assets |
|
|
123 |
1,461 |
11 |
|
Mandatory reserve deposits with central banks |
|
|
- |
- |
- |
|
Property, plant and equipment |
|
|
281 |
12 |
22 |
|
Investment property |
|
|
1,443 |
- |
- |
|
Deferred tax assets |
|
|
88 |
20 |
16 |
|
Investments in associated undertakings and joint ventures |
|
|
73 |
- |
3 |
|
Deferred acquisition costs |
|
|
91 |
1,094 |
16 |
|
Reinsurers' share of policyholder liabilities |
|
|
61 |
1,690 |
113 |
|
Loans and advances |
|
|
58 |
183 |
- |
|
Investments and securities |
|
|
28,492 |
49,868 |
297 |
|
Current tax receivable |
|
|
9 |
84 |
3 |
|
Trade, other receivables and other assets |
|
|
617 |
426 |
96 |
|
Derivative financial instruments |
|
|
349 |
- |
- |
|
Cash and cash equivalents |
|
|
611 |
687 |
91 |
|
Non-current assets held for sale |
|
|
- |
5 |
- |
|
Inter-segment assets |
|
|
610 |
93 |
25 |
|
Total assets |
|
|
32,906 |
55,623 |
693 |
|
Liabilities |
|
|
|
|
|
|
Life assurance policyholder liabilities |
|
|
28,043 |
51,327 |
- |
|
General insurance liabilities |
|
|
- |
- |
332 |
|
Third-party interests in consolidated funds |
|
|
- |
- |
- |
|
Borrowed funds |
E1 |
|
172 |
- |
- |
|
Provisions |
|
|
125 |
32 |
8 |
|
Deferred revenue |
|
|
7 |
610 |
11 |
|
Deferred tax liabilities |
|
|
169 |
254 |
13 |
|
Current tax payable |
|
|
125 |
52 |
- |
|
Trade, other payables and other liabilities |
|
|
1,821 |
786 |
126 |
|
Amounts owed to bank depositors |
|
|
280 |
7 |
- |
|
Derivative financial instruments |
|
|
466 |
- |
- |
|
Non-current liabilities held for sale |
|
|
- |
- |
- |
|
Inter-segment liabilities |
|
|
197 |
312 |
- |
|
Total liabilities |
|
|
31,405 |
53,380 |
490 |
|
Net assets |
|
|
1,501 |
2,243 |
203 |
|
Equity |
|
|
|
|
|
|
Equity attributable to equity holders of the parent |
|
|
1,471 |
2,243 |
183 |
|
Non-controlling interests |
|
|
30 |
- |
20 |
|
Ordinary shares |
F1(b) |
|
30 |
- |
20 |
|
Preferred securities |
F1(b) |
|
- |
- |
- |
|
|
|
|
|
|
|
|
Total equity |
|
|
1,501 |
2,243 |
203 |
The net assets of Emerging Markets are stated after eliminating investments in Group equity and debt instruments of £302 million (2012: £364 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m |
|
Nedbank |
USAM |
Other |
Consolidation adjustments |
Non-core operations |
Total |
|
|
|
|
|
|
|
|
446 |
794 |
- |
- |
- |
2,835 |
|
759 |
- |
- |
- |
- |
759 |
|
391 |
15 |
1 |
- |
- |
722 |
|
11 |
- |
- |
357 |
- |
1,811 |
|
11 |
167 |
- |
- |
1 |
303 |
|
63 |
19 |
10 |
- |
- |
168 |
|
- |
10 |
- |
- |
- |
1,211 |
|
11 |
- |
- |
- |
- |
1,875 |
|
33,145 |
- |
- |
- |
- |
33,386 |
|
5,387 |
33 |
378 |
3,502 |
460 |
88,417 |
|
32 |
- |
- |
- |
- |
128 |
|
585 |
113 |
43 |
351 |
352 |
2,583 |
|
791 |
- |
62 |
49 |
8 |
1,259 |
|
1,196 |
117 |
457 |
1,667 |
43 |
4,869 |
|
- |
- |
- |
- |
- |
5 |
|
77 |
21 |
976 |
(2,083) |
281 |
- |
|
42,905 |
1,289 |
1,927 |
3,843 |
1,145 |
140,331 |
|
|
|
|
|
|
|
|
852 |
- |
- |
- |
919 |
81,141 |
|
- |
- |
- |
- |
- |
332 |
|
- |
- |
- |
5,478 |
- |
5,478 |
|
1,813 |
2 |
642 |
- |
- |
2,629 |
|
40 |
2 |
29 |
- |
- |
236 |
|
- |
- |
- |
- |
- |
628 |
|
34 |
- |
21 |
- |
- |
491 |
|
17 |
3 |
40 |
- |
- |
237 |
|
832 |
248 |
40 |
412 |
9 |
4,274 |
|
34,083 |
- |
- |
- |
- |
34,370 |
|
974 |
- |
- |
36 |
2 |
1,478 |
|
- |
- |
- |
- |
- |
- |
|
567 |
487 |
520 |
(2,083) |
- |
- |
|
39,212 |
742 |
1,292 |
3,843 |
930 |
131,294 |
|
3,693 |
547 |
635 |
- |
215 |
9,037 |
|
|
|
|
|
|
|
|
1,976 |
547 |
635 |
- |
215 |
7,270 |
|
1,717 |
- |
- |
- |
- |
1,767 |
|
1,452 |
- |
- |
- |
- |
1,502 |
|
265 |
- |
- |
- |
- |
265 |
|
|
|
|
|
|
|
|
3,693 |
547 |
635 |
- |
215 |
9,037 |
|
Notes to the consolidated financial statements |
|||||
|
For the year ended 31 December 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
B: Segment information continued |
|
|
|
|
|
|
B4: Statement of financial position - segment information at 31 December 2012 Restated¹ |
|||||
|
|
|
|
|
||
|
|
Notes |
|
Emerging Markets |
Old Mutual Wealth |
Property & Casualty |
|
Assets |
|
|
|
|
|
|
Goodwill and other intangible assets |
|
|
98 |
1,594 |
14 |
|
Mandatory reserve deposits with central banks |
|
|
- |
- |
- |
|
Property, plant and equipment |
|
|
336 |
13 |
20 |
|
Investment property |
|
|
1,588 |
- |
- |
|
Deferred tax assets |
|
|
82 |
44 |
20 |
|
Investments in associated undertakings and joint ventures |
|
|
57 |
- |
2 |
|
Deferred acquisition costs |
|
|
103 |
1,159 |
18 |
|
Reinsurers' share of policyholder liabilities |
|
|
55 |
1,236 |
100 |
|
Loans and advances |
|
|
142 |
180 |
- |
|
Investments and securities |
|
|
31,157 |
45,402 |
397 |
|
Current tax receivable |
|
|
16 |
64 |
5 |
|
Trade, other receivables and other assets |
|
|
714 |
333 |
92 |
|
Derivative financial instruments |
|
|
612 |
- |
- |
|
Cash and cash equivalents |
|
|
816 |
576 |
109 |
|
Non-current assets held for sale |
|
|
- |
5 |
- |
|
Inter-segment assets |
|
|
562 |
101 |
43 |
|
Total assets |
|
|
36,338 |
50,707 |
820 |
|
Liabilities |
|
|
|
|
|
|
Life assurance policyholder liabilities |
|
|
31,124 |
46,455 |
- |
|
General insurance liabilities |
|
|
- |
- |
346 |
|
Third-party interests in consolidated funds |
|
|
- |
- |
- |
|
Borrowed funds |
E1 |
|
218 |
- |
- |
|
Provisions |
|
|
120 |
54 |
11 |
|
Deferred revenue |
|
|
11 |
667 |
10 |
|
Deferred tax liabilities |
|
|
130 |
189 |
21 |
|
Current tax payable |
|
|
198 |
39 |
- |
|
Trade, other payables and other liabilities |
|
|
2,238 |
669 |
146 |
|
Amounts owed to bank depositors |
|
|
86 |
- |
- |
|
Derivative financial instruments |
|
|
377 |
- |
- |
|
Non-current liabilities held for sale |
|
|
- |
- |
- |
|
Inter-segment liabilities |
|
|
216 |
587 |
2 |
|
Total liabilities |
|
|
34,718 |
48,660 |
536 |
|
Net assets |
|
|
1,620 |
2,047 |
284 |
|
Equity |
|
|
|
|
|
|
Equity attributable to equity holders of the parent |
|
|
1,606 |
2,047 |
261 |
|
Non-controlling interests |
|
|
14 |
- |
23 |
|
Ordinary shares |
F1(b) |
|
14 |
- |
23 |
|
Preferred securities |
F1(b) |
|
- |
- |
- |
|
|
|
|
|
|
|
|
Total equity |
|
|
1,620 |
2,047 |
284 |
1 The prior year has been restated for the impact of changes in accounting policies. Refer to note I1 for further details.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£m |
|
Nedbank |
USAM |
Other |
Consolidation adjustments |
Non-core operations |
Total |
|
|
|
|
|
|
|
|
534 |
816 |
- |
- |
- |
3,056 |
|
921 |
- |
- |
- |
- |
921 |
|
465 |
12 |
1 |
- |
- |
847 |
|
15 |
- |
- |
344 |
- |
1,947 |
|
34 |
162 |
2 |
- |
1 |
345 |
|
49 |
18 |
26 |
- |
- |
152 |
|
- |
8 |
- |
- |
- |
1,288 |
|
15 |
- |
- |
- |
- |
1,406 |
|
38,173 |
- |
- |
- |
- |
38,495 |
|
6,303 |
37 |
368 |
3,897 |
952 |
88,513 |
|
18 |
- |
- |
- |
- |
103 |
|
733 |
105 |
62 |
372 |
595 |
3,006 |
|
1,003 |
- |
97 |
50 |
18 |
1,780 |
|
1,049 |
115 |
379 |
1,892 |
125 |
5,061 |
|
37 |
- |
- |
- |
- |
42 |
|
111 |
21 |
1,366 |
(2,877) |
673 |
- |
|
49,460 |
1,294 |
2,301 |
3,678 |
2,364 |
146,962 |
|
|
|
|
|
|
|
|
907 |
- |
- |
- |
1,702 |
80,188 |
|
- |
- |
- |
- |
- |
346 |
|
- |
- |
- |
6,116 |
- |
6,116 |
|
2,163 |
10 |
659 |
- |
- |
3,050 |
|
49 |
1 |
30 |
- |
- |
265 |
|
1 |
- |
- |
- |
- |
689 |
|
40 |
- |
24 |
- |
- |
404 |
|
9 |
6 |
34 |
- |
1 |
287 |
|
1,122 |
193 |
80 |
400 |
92 |
4,940 |
|
39,413 |
- |
- |
- |
- |
39,499 |
|
977 |
- |
8 |
39 |
1 |
1,402 |
|
3 |
- |
- |
- |
- |
3 |
|
596 |
554 |
922 |
(2,877) |
- |
- |
|
45,280 |
764 |
1,757 |
3,678 |
1,796 |
137,189 |
|
4,180 |
530 |
544 |
- |
568 |
9,773 |
|
|
|
|
|
|
|
|
2,283 |
507 |
544 |
- |
568 |
7,816 |
|
1,897 |
23 |
- |
- |
- |
1,957 |
|
1,624 |
23 |
- |
- |
- |
1,684 |
|
273 |
- |
- |
- |
- |
273 |
|
|
|
|
|
|
|
|
4,180 |
530 |
544 |
- |
568 |
9,773 |
Notes to the consolidated financial statements
For the year ended 31 December 2013
C: Other key performance information
C1: Operating profit adjusting items
(a) Summary of adjusting items for determination of AOP
In determining the AOP of the Group for core operations, certain adjustments are made to profit before tax to reflect the directors' view of the underlying long-term performance of the Group. The following table shows an analysis of those adjustments from AOP to profit before and after tax.
|
|
|
£m |
|
|
|
Notes |
Year ended 31 December 2013 |
Year ended 31 December 2012 |
|
Income/(expense) |
|
|
|
|
Goodwill impairment and impact of acquisition accounting |
C1(b) |
(141) |
(123) |
|
Loss on disposal of subsidiaries, associated undertakings and strategic investments |
C1(c) |
(4) |
(56) |
|
Short-term fluctuations in investment return |
C1(d) |
6 |
(78) |
|
Investment return adjustment for Group equity and debt instruments held in life funds |
C1(e) |
(100) |
(113) |
|
Dividends declared to holders of perpetual preferred callable securities |
C1(f) |
42 |
42 |
|
US Asset Management equity plans |
C1(g) |
(38) |
(13) |
|
Credit-related fair value losses on Group debt instruments |
C1(h) |
(31) |
(126) |
|
Restructuring costs |
C1(i) |
(20) |
- |
|
Total adjusting items |
|
(286) |
(467) |
|
Tax on adjusting items |
D1(d) |
46 |
44 |
|
Non-controlling interest in adjusting items |
|
20 |
25 |
|
Total adjusting items after tax and non-controlling interests |
|
(220) |
(398) |
(b) Goodwill impairment and impact of acquisition accounting
When applying acquisition accounting, deferred acquisition costs and deferred revenues existing at the point of acquisition are not recognised under IFRS. These are reversed 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 AOP, the Group recognises deferred revenue and acquisition costs and deferred revenue in relation to policies sold by acquired businesses pre-acquisition. The Group excludes the impairment of goodwill and the amortisation and impairment of acquired other intangibles and acquired PVIF and the movements in certain acquisition date provisions. Costs incurred on successful acquisitions are also excluded from AOP. If the intangible assets recognised as a result of a business combination are subsequently impaired, this is excluded from AOP. The effect of these adjustments to determine AOP are summarised below:
|
|
|
|
|
£m |
|
Year ended 31 December 2013 |
Emerging Markets |
Old Mutual Wealth |
USAM |
Total |
|
Amortisation of acquired PVIF |
- |
(76) |
- |
(76) |
|
Amortisation of acquired deferred costs and revenue |
- |
11 |
- |
11 |
|
Amortisation of other acquired intangible assets |
(2) |
(46) |
- |
(48) |
|
Impairment of goodwill and other intangible assets |
(8) |
(20) |
- |
(28) |
|
|
(10) |
(131) |
- |
(141) |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
£m |
|
Year ended 31 December 2012 |
Emerging Markets |
Old Mutual Wealth |
USAM |
Total |
|
Amortisation of acquired PVIF |
- |
(84) |
- |
(84) |
|
Amortisation of acquired deferred costs and revenue |
- |
12 |
- |
12 |
|
Amortisation of other acquired intangible assets |
(2) |
(48) |
(1) |
(51) |
|
Impairment of goodwill and other intangible assets |
- |
- |
- |
- |
|
|
(2) |
(120) |
(1) |
(123) |
(c) Loss on disposal of subsidiaries, associated undertakings and strategic investments
Loss on disposal of subsidiaries, associated undertakings and strategic investments is analysed below:
|
|
|
£m |
|
|
Year ended 31 December 2013 |
Year ended 31 December 2012 |
|
USAM |
(4) |
(16) |
|
Emerging Markets |
- |
(15) |
|
Old Mutual Wealth |
- |
(25) |
|
Loss on disposal of subsidiaries, associated undertakings and strategic investments |
(4) |
(56) |
USAM
On 2 January 2013, USAM completed the sale of five of its affiliates incurring a loss of £1 million.
On 11 October 2013, USAM committed to a plan to cease the operations of Echo Point. The incremental cost of £3 million associated with discontinuing the entity was recognised in full during October 2013.
On 13 April 2012, USAM disposed of Old Mutual Capital, Inc, a subsidiary, at a profit of £12 million. On 15 May 2012, USAM disposed of Dwight Asset Management Company LLC, a fixed income affiliate, at a profit of £7 million. On 11 October 2012, the Group announced that it had finalised agreements to sell five USAM affiliates at a loss of £32 million. A £3 million loss was also recognised during the year ended 31 December 2012 in relation to disposals of other USAM subsidiaries in previous periods.
Emerging Markets
On 20 November 2012, the Emerging Markets segment recognised a profit of £3 million on the acquisition of a strategic investment Curo Fund Services (Pty) Ltd. Also during the year ended 31 December 2012, the Group incurred expenses of £18 million as initial costs regarding Zimbabwean Indigenisation and Black Economic Empowerment Schemes. These costs were directly related to the acquisition of the Zimbabwean business.
Old Mutual Wealth
On 31 August 2012, Old Mutual Wealth completed the sale of its Finnish branch at a loss of £27 million. A profit of £2 million was recognised on the sale of Skandia Services AG (Switzerland) on 30 June 2012.
(d) Short-term fluctuations in investment return
Profit before tax, as disclosed in the consolidated IFRS income statement, includes actual investment returns earned on the shareholder assets of the Group's life assurance and general insurance businesses. AOP is stated after recalculating shareholder asset investment returns based on a long-term investment return rate. The difference between the actual and the long-term investment returns is referred to as the short-term fluctuation in investment return.
Long-term rates of return are based on achieved rates of return appropriate to the underlying asset base, adjusted for current inflation expectations, default assumptions, costs of investment management and consensus economic investment forecasts. The underlying rates are principally derived with reference to 10-year government bond rates, cash and money market rates and an explicit equity risk premium for South African businesses. The rates set out below reflect the apportionment of underlying investments in cash deposits, money market instruments and equity assets. Long-term rates of return are reviewed frequently by the Board, usually annually, for appropriateness. The review of the long-term rates of return seeks to ensure that the returns credited to 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 Old Mutual Wealth, the return is applied to average investible assets. For Property & Casualty, 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 2013 |
Year ended 31 December 2012 |
|
Emerging Markets |
8.0 |
9.0 |
|
Old Mutual Wealth |
1.0 |
1.5 - 2.0 |
|
Property & Casualty |
7.4 |
8.6 |
Notes to the consolidated financial statements
For the year ended 31 December 2013
C: Other key performance information continued
C1: Operating profit adjusting items continued
|
(d) Short-term fluctuations in investment return continued |
||||||
|
|
||||||
|
Analysis of short-term fluctuations in investment return |
||||||
|
|
£m |
|||||
|
Year ended 31 December 2013 |
Emerging Markets |
Old Mutual Wealth¹ |
Property & Casualty |
Other |
Total |
|
|
Actual shareholder investment return |
135 |
22 |
25 |
34 |
216 |
|
|
Less: Long-term investment return |
106 |
30 |
31 |
43 |
210 |
|
|
Short-term fluctuations in investment return |
29 |
(8) |
(6) |
(9) |
6 |
|
|
|
|
|
|
|
|
|
|
|
£m |
|||||
|
Year ended 31 December 2012 |
Emerging Markets |
Old Mutual Wealth¹ |
Property & Casualty |
Other |
Total |
|
|
Actual shareholder investment return |
81 |
65 |
34 |
34 |
214 |
|
|
Less: Long-term investment return |
124 |
67 |
47 |
54 |
292 |
|
|
Short-term fluctuations in investment return |
(43) |
(2) |
(13) |
(20) |
(78) |
|
1 Old Mutual Wealth long-term investment return includes £25 million (2012: £59 million) transitional adjustments to restate the effects of policyholder tax in arriving at AOP.
(e) Investment return adjustment for Group equity and debt instruments held in policyholder funds
AOP includes investment returns on policyholder investments in Group equity and debt instruments held by the Group's life funds. These include investments in the Company's ordinary shares and the subordinated liabilities and ordinary shares issued by Nedbank. These investment returns are eliminated within the consolidated income statement in arriving at profit before tax in the IFRS income statement, but are included in adjusted operating profit. During the year ended 31 December 2013, the investment return adjustment increased AOP by £100 million (2012: increase of £113 million).
(f) Dividends declared to holders of perpetual preferred callable securities
Dividends declared to the holders of the Group's perpetual preferred callable securities on an adjusted operating profit basis were £42 million for the year ended 31 December 2013 (2012: £42 million). These are recognised in finance costs on an accruals basis for the purpose of determining adjusted operating profit. In accordance with IFRS the total cash distribution of £47 million (2012: £42 million) is recognised directly in equity. This distribution included £5 million accrued interest paid in respect of securities accepted for repurchase.
(g) US Asset Management equity plans
US Asset Management has a number of long-term incentive arrangements with senior employees in its asset management affiliates.
The Group has issued put options in equities in the affiliates to senior employees as part of its US affiliate incentive schemes. The impact of revaluing these instruments is recognised in accordance with IFRS, but excluded from AOP. At 31 December 2013, these instruments were revalued, the impact of which was a loss of £38 million (2012: loss of £13 million).
(h) Credit-related fair value gains and losses on Group debt instruments
The widening of credit spread is related to the Group's debt instruments causes the market value of these instruments to decrease, resulting in gains being recognised in the consolidated income statement. Conversely, if the credit spread narrows and the market value of debt instruments rises then losses are recognised in the consolidated income statement. In the directors' view, such movements are not reflective of the underlying performance of the Group and will reverse over time and they have therefore been excluded from AOP. For the year ended 31 December 2013 a net loss of £31 million was recognised (2012: loss of £55 million).
On 1 August 2012, the Group redeemed £388 million of the £500 million senior bond due in 2016 at a cash consideration of £459 million. The £71 million excess over the nominal value reflected the market value of the instrument prior to redemption.
(i) Old Mutual Wealth restructuring expenditure
The Old Mutual Wealth business embarked on a significant change project to fundamentally restructure the way in which its UK platform business operates. Over the next two to three years, it will migrate certain elements of service provision to International Financial Data Services (IFDS). Costs related to decommissioning of existing technology and service provision and the migration of service to IFDS will be excluded from AOP.
These costs will comprise payments to IFDS and directly attributable internal project costs and totalled £20 million in 2013.
C2: Earnings and earnings per share
The Group calculates earnings per share (EPS) on several different bases. IFRS requires the calculation of basic and diluted EPS. Adjusted operating EPS reflects earnings per share consistent with the Group's alternative profit measure. JSE Limited (JSE) Listing Requirements also require the Group to calculate headline EPS. The Group's EPS on these different bases are summarised below:
|
|
|
|
|
Pence |
|
|
Source of guidance |
Notes |
Year ended 31 December 2013 |
Year ended 31 December 2012 Restated |
|
Basic earnings per share¹ |
IFRS |
C2(a) |
15.0 |
24.9 |
|
Diluted basic earnings per share1 |
IFRS |
C2(b) |
13.9 |
23.1 |
|
Adjusted operating earnings per share1 |
Group policy |
C2(c) |
18.4 |
17.5 |
|
Headline earnings per share (Gross of tax)2 |
JSE Listing Requirements |
C2(d) |
15.6 |
13.5 |
|
Headline earnings per share (Net of tax)2 |
JSE Listing Requirements |
C2(d) |
15.2 |
13.8 |
|
Diluted headline earnings per share (Gross of tax)2 |
JSE Listing Requirements |
C2(d) |
14.6 |
12.7 |
|
Diluted headline earnings per share (Net of tax)2 |
JSE Listing Requirements |
C2(d) |
14.3 |
12.9 |
1 Restatement for the impact of changes in policies did not result in changes to basic, diluted basic and adjusted operating earnings per share for the year ended 31 December 2012.
2 The prior year has been restated for the impact of changes in accounting policies. Refer to note I1 for further details.
(a) Basic 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.
The table below reconciles the profit attributable to equity holders of the parent to profit attributable to ordinary equity holders:
|
|
|
£m |
|
|
Year ended 31 December 2013 |
Year ended 31 December 2012 Restated¹ |
|
Profit for the financial year attributable to equity holders of the parent from continuing operations |
702 |
608 |
|
Profit for the financial year attributable to equity holders of the parent from discontinued operations |
3 |
564 |
|
Profit for the financial year attributable to equity holders of the parent |
705 |
1,172 |
|
Dividends paid to holders of perpetual preferred callable securities, net of tax credits |
(37) |
(32) |
|
Profit attributable to ordinary equity holders |
668 |
1,140 |
1 The prior year has been restated for the impact of changes in accounting policies. Refer to note I1 for further details.
Total dividends paid to holders of perpetual preferred callable securities of £37 million for the year ended 31 December 2013 (year ended 31 December 2012: £32 million) are stated net of tax credits of £10 million (year ended 31 December 2012: £10 million).
The table below summarises the calculation of the weighted average number of ordinary shares for the purposes of calculating basic earnings per share:
|
|
|
Millions |
|
|
Year ended 31 December 2013 |
Year ended 31 December 2012 |
|
Weighted average number of ordinary shares in issue |
4,897 |
5,096 |
|
Shares held in charitable foundations |
(6) |
(6) |
|
Shares held in ESOP trusts |
(55) |
(61) |
|
Adjusted weighted average number of ordinary shares |
4,836 |
5,029 |
|
Shares held in life funds |
(155) |
(181) |
|
Shares held in Black Economic Empowerment trusts |
(239) |
(261) |
|
Weighted average number of ordinary shares used to calculate basic earnings per share |
4,442 |
4,587 |
|
|
|
|
|
Basic earnings per ordinary share (pence)¹ |
15.0 |
24.9 |
1 Restatement for the impact of changes in policies did not result in changes to basic earnings per share for the year ended 31 December 2012.
Notes to the consolidated financial statements
For the year ended 31 December 2013
C: Other key performance information continued
C2: Earnings per share continued
(b) Diluted basic earnings per share
Diluted basic EPS recognises the dilutive impact of share options held in ESOP trusts and Black Economic Empowerment trusts, to the extent they have value, in the calculation of the weighted average number of shares, as if the relevant shares were in issue for the full period.
The tables below reconcile the profit attributable to ordinary equity holders to diluted profit attributable to ordinary equity holders and summarises the calculation of weighted average number of shares for the purpose of calculating diluted basic earnings per share:
|
|
|
|
|
|
|
Notes |
Year ended 31 December 2013 |
Year ended 31 December 2012 Restated¹ |
|
Profit attributable to ordinary equity holders (£m) |
|
668 |
1,140 |
|
Dilution effect on profit relating to share options issued by subsidiaries (£m) |
|
(10) |
(10) |
|
Diluted profit attributable to ordinary equity holders (£m) |
|
658 |
1,130 |
|
Weighted average number of ordinary shares (millions) |
C2(a) |
4,442 |
4,587 |
|
Adjustments for share options held by ESOP trusts (millions) |
|
45 |
53 |
|
Adjustments for shares held in Black Economic Empowerment trusts (millions) |
|
239 |
261 |
|
Weighted average number of ordinary shares used to calculate diluted basic earnings per share (millions) |
|
4,726 |
4,901 |
|
|
|
|
|
|
Diluted basic earnings per ordinary share (pence)² |
|
13.9 |
23.1 |
1 The prior year has been restated for the impact of changes in accounting policies. Refer to note I1 for further details.
2 Restatement for the impact of changes in policies did not result in changes to diluted basic earnings per share for the year ended 31 December 2012.
(c) Adjusted operating earnings per share
The following table presents a reconciliation of profit for the financial year to adjusted operating profit after tax attributable to ordinary equity holders and summarises the calculation of adjusted operating earnings per share:
|
|
|
|
|
|
|
Notes |
Year ended 31 December 2013 |
Year ended 31 December 2012 Restated¹ |
|
Profit for the financial year attributable to equity holders of the parent (£m) |
|
705 |
1,172 |
|
Adjusting items (£m) |
|
286 |
467 |
|
Tax on adjusting items (£m) |
|
(46) |
(44) |
|
Non-core operations (£m) |
|
(32) |
(165) |
|
Profit from discontinued operations (£m) |
|
(3) |
(564) |
|
Non-controlling interest on adjusting items (£m) |
|
(20) |
(25) |
|
Adjusted operating profit after tax attributable to ordinary equity holders (£m) |
|
890 |
841 |
|
Adjusted weighted average number of ordinary shares used to calculate adjusted operating earnings per share (millions)² |
C2(a) |
4,836 |
4,818 |
|
|
|
|
|
|
Adjusted operating earnings per share (pence) |
|
18.4 |
17.5 |
1 The prior year has been restated for the impact of changes in accounting policies. Refer to note I1 for further details.
2 For the year ended 31 December 2012, the weighted average number of shares used in the calculation of basic and diluted basic EPS was adjusted for the seven-for-eight share consolidation that was affected on 23 April 2012. For adjusted operating EPS, the adjustment of the weighted average number of shares has been made effective from 1 January 2012. This adjustment had the effect of presenting adjusted EPS on a more consistent basis, but resulted in a difference between the adjusted weighted average number of shares for IFRS and AOP.
(d) Headline earnings per share
The Group is required to calculate headline earnings per share (HEPS) in accordance with the JSE Limited (JSE) Listing Requirements, determined by reference to the South African Institute of Chartered Accountants' circular 02/2013 (Revised) 'Headline Earnings'. The table below sets out a reconciliation of basic EPS and HEPS in accordance with that circular. Disclosure of HEPS is not a requirement of IFRS, but it is a commonly used measure of earnings in South Africa.
The table below reconciles the profit for the financial year attributable to equity holders of the parent to headline earnings and summarises the calculation of basic and diluted HEPS:
|
|
|
|
|
|
£m |
|
|
|
Year ended 31 December 2013 |
Year ended 31 December 2012 Restated¹ |
||
|
|
Notes |
Gross |
Net |
Gross |
Net |
|
Profit for the financial year attributable to equity holders of the parent |
|
705 |
705 |
1,172 |
1,172 |
|
Dividends paid to holders of perpetual preferred callable securities |
|
(37) |
(37) |
(32) |
(32) |
|
Profit attributable to ordinary equity holders |
|
668 |
668 |
1,140 |
1,140 |
|
Adjustments: |
|
|
|
|
|
|
Impairments of goodwill and intangible assets |
|
28 |
28 |
35 |
35 |
|
Loss/(profit) on disposal of subsidiaries, associated undertakings and strategic investments |
|
4 |
(12) |
(183) |
(173) |
|
Realised gains (net of impairments) on available-for-sale financial assets |
|
(8) |
(8) |
(21) |
(21) |
|
Exchange differences realised on disposal |
|
- |
- |
(350) |
(350) |
|
Headline earnings |
|
692 |
676 |
621 |
631 |
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares |
C2(a) |
4,442 |
4,442 |
4,587 |
4,587 |
|
|
|
|
|
|
|
|
Diluted weighted average number of ordinary shares |
C2(b) |
4,726 |
4,726 |
4,901 |
4,901 |
|
|
|
|
|
|
|
|
Headline earnings per share (pence) |
|
15.6 |
15.2 |
13.5 |
13.8 |
|
|
|
|
|
|
|
|
Diluted headline earnings per share (pence) |
|
14.6 |
14.3 |
12.7 |
12.9 |
1 The prior year has been restated for the impact of changes in accounting policies. Refer to note I1 for further details. Impairment of intangible assets is now excluded from the determination of HEPS.
|
C3: Dividends |
|
|
|
|
|
£m |
|
|
Year ended 31 December 2013 |
Year ended 31 December 2012 |
|
2011 Final dividend paid - 3.5p per 10p share |
- |
178 |
|
Special dividend - 18.0p per 10p share |
- |
915 |
|
2012 Interim dividend paid - 1.75p per 11 3/7p share |
- |
79 |
|
2012 Final dividend paid - 5.25p per 11 3/7p share |
238 |
- |
|
2013 Interim dividend paid - 2.10p per 11 3/7p share |
98 |
- |
|
Dividends to ordinary equity holders |
336 |
1,172 |
|
Dividends paid to holders of perpetual preferred callable securities |
47 |
42 |
|
Dividend payments for the period |
383 |
1,214 |
Final and interim dividends paid to ordinary equity holders are calculated using the number of shares in issue at the record date less own shares held in ESOP trusts, life funds of Group entities, Black Economic Empowerment trusts and related undertakings.
As a consequence of the exchange control arrangements in place in certain African territories, dividends to ordinary equity holders on the branch registers of those countries (or, in the case of Namibia, the Namibian section of the principal register) are settled through Dividend Access Trusts established for that purpose.
A final dividend of 6.0 pence (or its equivalent in other applicable currencies) per ordinary share in the Company has been recommended by the directors. The final dividend will be paid on 30 May 2014 to shareholders on the register at the close of business on 14 April 2014 for the Malawi register, 16 April 2014 for the South African, Zimbabwe and Namibian registers and 22 April 2014 for the UK register. The dividend will absorb an estimated £275 million of shareholders' funds. The Company is not planning to offer a scrip dividend alternative.
In March and November 2013, £22 million and £25 million respectively, were declared and paid to holders of perpetual preferred callable securities (March 2012: £22 million, November 2012: £20 million).
Notes to the consolidated financial statements
For the year ended 31 December 2013
D: Other income statement notes
D1: Income tax expense
|
(a) Analysis of total income tax expense |
|
|
|
|
|
£m |
|
|
Year ended 31 December 2013 |
Year ended 31 December 2012 Restated¹ |
|
Current tax |
|
|
|
United Kingdom |
(3) |
18 |
|
Overseas tax |
|
|
|
- Africa |
407 |
501 |
|
- Europe |
19 |
30 |
|
- Rest of the world |
7 |
16 |
|
Withholding taxes (STC) |
16 |
23 |
|
Adjustment to current tax in respect of prior years |
(25) |
5 |
|
Total current tax |
421 |
593 |
|
Deferred tax |
|
|
|
Origination and reversal of temporary differences |
142 |
(122) |
|
Effect on deferred tax of changes in tax rates |
(15) |
2 |
|
Recognition of deferred tax assets |
1 |
(2) |
|
Adjustments to deferred tax in respect of prior years |
3 |
- |
|
Total deferred tax |
131 |
(122) |
|
Total income tax expense |
552 |
471 |
1 The prior year has been restated for the impact of changes in accounting policies. Refer to note I1 for further details.
|
(b) Reconciliation of total income tax expense |
|
|
|
|
|
£m |
|
|
Year ended 31 December 2013 |
Year ended 31 December 2012 Restated¹ |
|
Profit before tax |
1,532 |
1,385 |
|
Tax at UK standard rate of 23.25% (2012: 24.5%) |
356 |
339 |
|
Different tax rate or basis on overseas operations |
57 |
19 |
|
Untaxed and low taxed income |
(76) |
(83) |
|
Disallowable expenses |
35 |
48 |
|
Net movement on deferred tax assets not recognised |
31 |
48 |
|
Effect on deferred tax of changes in tax rates |
(15) |
2 |
|
Withholding taxes (STC) |
10 |
20 |
|
Income tax attributable to policyholder returns |
133 |
59 |
|
Tax on Group equity held in life funds |
21 |
26 |
|
Other |
- |
(7) |
|
Total income tax expense |
552 |
471 |
1 The prior year has been restated for the impact of changes in accounting policies. Refer to note I1 for further details.
|
(c) Income tax relating to components of other comprehensive income |
|
|
|
|
|
£m |
|
|
Year ended 31 December 2013 |
Year ended 31 December 2012 Restated¹ |
|
Preferred perpetual callable securities |
(10) |
(10) |
|
Measurement gains on defined benefit plans |
22 |
4 |
|
Income tax on items that will not be reclassified subsequently to profit or loss |
12 |
(6) |
|
Income tax on items that may be reclassified subsequently to profit or loss |
(2) |
5 |
|
Income tax expense/(credit) - continuing operations |
10 |
(1) |
|
Income tax expense on fair value movements - discontinued operations |
- |
1 |
|
Income tax expense relating to components of other comprehensive income |
10 |
- |
1 The prior year has been restated for the impact of changes in accounting policies. Refer to note I1 for further details.
|
(d) Reconciliation of income tax expense in the IFRS income statement to income tax on adjusted operating profit |
||
|
|
|
£m |
|
|
Year ended 31 December 2013 |
Year ended 31 December 2012 Restated¹ |
|
Income tax expense |
552 |
471 |
|
Tax on adjusting items |
|
|
|
Goodwill impairment and impact of acquisition accounting |
26 |
51 |
|
Profit/(loss) on disposal of subsidiaries, associates and strategic investments |
16 |
(10) |
|
Short-term fluctuations in investment return |
(2) |
7 |
|
Tax on dividends declared to holders of perpetual preferred callable securities recognised in equity |
(10) |
(10) |
|
US Asset Management equity plans |
11 |
6 |
|
Restructuring costs |
5 |
- |
|
Total tax on adjusting items |
46 |
44 |
|
Income tax attributable to policyholders returns |
(174) |
(75) |
|
Income tax on adjusted operating profit |
424 |
440 |
1 The prior year has been restated for the impact of changes in accounting policies. Refer to note I1 for further details.
Notes to the consolidated financial statements
For the year ended 31 December 2013
E: Financial assets and liabilities
E1: Borrowed funds
|
|
|
|
|
|
|
|
|
|
£m |
|
|
Notes |
|
Group excluding Nedbank |
Nedbank |
At 31 December 2013 Group |
|
Group excluding Nedbank |
Nedbank |
At 31 December 2012 Group |
|
Senior debt securities and term loans |
|
|
113 |
1,151 |
1,264 |
|
122 |
1,363 |
1,485 |
|
Floating rate notes |
E1(a) |
|
- |
673 |
673 |
|
- |
849 |
849 |
|
Fixed rate notes |
E1(b) |
|
113 |
478 |
591 |
|
122 |
514 |
636 |
|
Mortgage-backed securities |
E1(d) |
|
- |
65 |
65 |
|
- |
131 |
131 |
|
Subordinated debt securities (net of Group holdings) |
E1(e) |
|
703 |
597 |
1,300 |
|
765 |
669 |
1,434 |
|
Borrowed funds |
|
|
816 |
1,813 |
2,629 |
|
887 |
2,163 |
3,050 |
|
Other instruments treated as equity for accounting purposes |
|
|
|
|
|
|
|
|
|
|
€374 million perpetual preferred1 callable securities |
|
|
253 |
|
|
|
334 |
|
|
|
£273 million perpetual preferred2 callable securities |
|
|
273 |
|
|
|
348 |
|
|
|
Total: Book value |
|
|
1,342 |
|
|
|
1,569 |
|
|
|
Nominal value of the above |
|
|
1,370 |
|
|
|
1,590 |
|
|
1 The €374 million perpetual callable security was previously €495 million with €121 million being acquired via a Modified Dutch Auction tender on 19 November 2013.
2 The £273 million perpetual callable security was previously £348 million with £75 million being acquired via a Modified Dutch Auction tender on 19 November 2013.
|
The table below is a maturity analysis of the 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 2013 Group |
Group excluding Nedbank |
Nedbank |
At 31 December 2012 Group |
|
Less than 1 year |
98 |
385 |
483 |
110 |
522 |
632 |
|
Greater than 1 year and less than 5 years |
751 |
1,727 |
2,478 |
907 |
1,820 |
2,727 |
|
Greater than 5 years |
1,099 |
236 |
1,335 |
1,311 |
314 |
1,625 |
|
Total |
1,948 |
2,348 |
4,296 |
2,328 |
2,656 |
4,984 |
Contractual maturity tables include all the data available for both years as at 31 December 2013.
|
Senior debt securities and term loans
|
|
|
|
|
(a) Floating rate notes |
|
|
|
|
|
|
|
£m |
|
|
Maturity date |
At 31 December 2013 |
At 31 December 2012 |
|
Nedbank - Floating rate unsecured senior debt |
|
|
|
|
R98 million at inflation linked (3.80% real yield) |
Repaid |
- |
8 |
|
R1,750 million at inflation linked (3.90% real yield) |
Repaid |
- |
151 |
|
R1,552 million at JIBAR + 1.48% |
Repaid |
- |
114 |
|
R988 million at JIBAR + 1.05% |
March 2014 |
50 |
71 |
|
R500 million at JIBAR + 1.00% |
April 2014 |
26 |
33 |
|
R1,075 million at JIBAR + 0.94% |
October 2014 |
62 |
79 |
|
R1,297 million at JIBAR + 1.00% |
February 2015 |
75 |
95 |
|
R1,027 million at JIBAR + 1.75% |
April 2015 |
60 |
76 |
|
R250 million at JIBAR + 1.00% |
August 2015 |
14 |
18 |
|
R1,044 million at JIBAR + 2.20% |
September 2015 |
61 |
76 |
|
R677 million at JIBAR + 1.25% |
March 2016 |
39 |
49 |
|
R3,056 million at JIBAR + 0.8% |
July 2016 |
176 |
- |
|
R694 million at JIBAR + 0.75% |
November 2016 |
40 |
- |
|
R405 million at JIBAR + 1.30% |
February 2017 |
23 |
30 |
|
R786 million at JIBAR + 1.30% |
August 2017 |
42 |
43 |
|
R80 million at JIBAR + 2.15% |
April 2020 |
5 |
6 |
|
Total floating rate notes |
|
673 |
849 |
All floating rate notes are non-qualifying for the purposes of regulatory tiers of capital.
|
(b) Fixed rate notes |
|
|
|
|
|
|
|
£m |
|
|
Maturity date |
At 31 December 2013 |
At 31 December 2012 |
|
Nedbank - Fixed rate unsecured senior debt (net of Group holdings) |
|
|
|
|
R450 million at 8.39% |
March 2014 |
26 |
33 |
|
R478 million at 9.68% |
April 2015 |
28 |
35 |
|
R3,244 million at 10.55% |
September 2015 |
192 |
242 |
|
R1,137 million at 9.36% |
March 2016 |
67 |
85 |
|
R151 million at 6.91% |
July 2016 |
9 |
- |
|
R1,273 million at 11.39% |
September 2019 |
80 |
102 |
|
R1,888 million at 8.92% |
November 2020 |
109 |
- |
|
R660 million at zero coupon |
October 2024 |
14 |
17 |
|
|
|
525 |
514 |
|
Less: fixed rate notes held by other Group companies |
|
(47) |
- |
|
Banking fixed rate unsecured senior debt (net of Group holdings) |
|
478 |
514 |
|
|
|
|
|
|
Group excluding Nedbank |
|
|
|
|
US$2 million secured senior debt at 5.23%1 |
August 2014 |
1 |
10 |
|
£112 million eurobond at 7.125% |
October 2016 |
112 |
112 |
|
|
|
113 |
122 |
|
Total fixed rate notes |
|
591 |
636 |
All fixed rate notes are non-qualifying for the purpose of regulatory tiers of capital.
1 $14 million of the $16 million senior bond was repaid, with repayment of $12 million on 1 November 2013 and $2 million on 15 December 2013.
Notes to the consolidated financial statements
For the year ended 31 December 2013
E: Financial assets and liabilities continued
E1: Borrowed funds continued
(c) Revolving credit facilities and irrevocable letters of credit
Following an internal review of Group funding requirements, the Group reduced its revolving credit facility by £400 million in August 2013. The Group now has access to a £800 million (2012: £1,200 million) five-year multi-currency revolving credit facility which matures in April 2016. At 31 December 2013 and 31 December 2012, none of this facility was drawn down and there were no irrevocable letters of credit in issue against this facility.
|
(d) Mortgage-backed securities (net of Group holdings) |
|
|
|
|
|
|
|
|
|
£m |
|
|
Tier |
Maturity date |
At 31 December 2013 |
At 31 December 2012 |
|
Nedbank |
|
|
|
|
|
R480 million (class A1) at JIBAR + 1.10% |
Tier 2 |
25 October 2039 |
13 |
32 |
|
R336 million (class A2) at JIBAR + 1.25% |
Tier 2 |
25 October 2039 |
20 |
25 |
|
R900 million (class A3) at JIBAR + 1.54% |
Tier 2 |
25 October 2039 |
52 |
66 |
|
R110 million (class B) at JIBAR + 1.90% |
Tier 2 |
25 October 2039 |
6 |
8 |
|
|
|
|
91 |
131 |
|
Less: Mortgage backed securities held by other Group companies |
|
|
(26) |
- |
|
Total mortgage-backed securities |
|
|
65 |
131 |
|
(e) Subordinated debt securities (net of Group holdings) |
|||||
|
|
|
|
|
|
£m |
|
|
Tier |
First call date |
Maturity date |
At 31December 2013 |
At 31December 2012 |
|
Nedbank |
|
|
|
|
|
|
R300 million at JIBAR + 2.50% |
Tier 2 |
Repaid |
Repaid |
- |
11 |
|
R1,800 million at 9.84% |
Tier 2 |
Repaid |
Repaid |
- |
137 |
|
R1,265 million at JIBAR + 4.75% |
Non-core Tier 1 |
November 2018 |
November 2018 |
74 |
93 |
|
R487 million at 15.05% |
Non-core Tier 1 |
November 2018 |
November 2018 |
32 |
43 |
|
R1,700 million at 8.90% |
Tier 2 |
February 2014 |
February 2019 |
101 |
132 |
|
R1,000 million at 10.54% |
Tier 2 |
September 2015 |
September 2020 |
62 |
81 |
|
US$100 million at 3 month USD LIBOR |
Tier 2 Secondary |
March 2017 |
March 2022 |
60 |
62 |
|
R2,000 million at JIBAR + 0.47% |
Tier 2 |
July 2017 |
July 2022 |
116 |
146 |
|
R1,800 million at JIBAR + 2.75% |
Tier 2 |
July 2018 |
July 2023 |
105 |
- |
|
R1,200 million at JIBAR + 2.55% |
Tier 2 |
November 2018 |
November 2023 |
69 |
- |
|
|
|
|
|
619 |
705 |
|
Less: Banking subordinated debt securities held by other Group companies |
|
|
|
(22) |
(36) |
|
Banking subordinated securities (net of Group holdings) |
|
|
|
597 |
669 |
|
Group excluding Nedbank |
|
|
|
|
|
|
R3,000 million at 8.92% until October 2015 and 3 month JIBAR + 1.59% thereafter |
Lower Tier 2 |
October 2015 |
October 2020 |
172 |
218 |
|
£500 million at 8.00%1 |
Lower Tier 2 |
- |
June 2021 |
531 |
547 |
|
|
|
|
|
703 |
765 |
|
Total subordinated debt securities |
|
|
|
1,300 |
1,434 |
1 The principal and coupon on the bond were initially swapped into floating rate Swedish kronor, at 3 month STIBOR plus 5.46%. Following the Nordic sale, £375 million of the coupon is now swapped into floating rate sterling at 6 month GBP LIBOR plus 4.15% and £125 million of principal and coupon is swapped into US dollars at 6 month USD LIBOR plus 5.49%.
F: Other statement of financial position notes
F1: Non-controlling interests
(a) Profit or loss
(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 is the Group's banking business in South Africa, Nedbank. For the year ended 31 December 2013 the non-controlling interests attributable to ordinary shares was £259 million (2012: £256 million).
|
(ii) Preferred securities |
|
|
|
|
|
£m |
|
|
At 31 December 2013 |
At 31 December 2012 |
|
Nedbank |
|
|
|
R3,583 million non-cumulative preference shares |
19 |
23 |
|
|
|
|
|
Group excluding Nedbank |
|
|
|
US$750 million cumulative preferred securities1 |
- |
27 |
|
Non-controlling interests - preferred securities |
19 |
50 |
1 On 24 September 2012, the Group repaid the US$750 million cumulative preference securities at their nominal value.
|
(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 2013 |
Year ended 31 December 2012 Restated¹ |
|
The non-controlling interests share is analysed as follows: |
|
|
|
Non-controlling interests - ordinary shares |
259 |
256 |
|
Income attributable to Black Economic Empowerment trusts |
20 |
25 |
|
Non-controlling interests share of adjusted operating profit |
279 |
281 |
1 The prior year has been restated for the impact of changes in accounting policies. Refer to note I1 for further details.
The Group uses revised weighted average effective ownership interests when calculating the non-controllable interest applicable to the adjusted operating profit of its Southern African 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 2013 the increase in adjusted operating profit attributable to non-controlling interests as a result of this was £20 million (2012: £25 million).
|
(b) Statement of financial position |
|
|
|
|
|
|
|
(i) Ordinary shares |
|
|
|
|
|
£m |
|
Reconciliation of movements in non-controlling interests |
At 31 December 2013 |
At 31 December 2012 Restated¹ |
|
Balance at beginning of the year |
1,684 |
1,652 |
|
Non-controlling interests' share of profit |
259 |
256 |
|
Non-controlling interests' share of dividends paid |
(117) |
(119) |
|
Net disposal of interests |
20 |
20 |
|
Foreign exchange and other movements |
(344) |
(125) |
|
Balance at end of the year |
1,502 |
1,684 |
1 The prior year has been restated for the impact of changes in accounting policies. Refer to note I1 for further details.
Notes to the consolidated financial statements
For the year ended 31 December 2013
F: Other statement of financial position notes continued
F1: Non-controlling interests continued
|
(ii) Preferred securities |
|
|
|
|
|
£m |
|
|
At 31 December 2013 |
At 31 December 2012 |
|
Nedbank |
|
|
|
R3,583 million non-cumulative preference shares1 |
265 |
273 |
|
Total in issue at 31 December |
265 |
273 |
Preferred securities at 31 December 2013 are held at historic value of consideration received less unamortised issue costs and are stated net of securities held by Group companies
1 3,583 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.
G: Other notes
G1: Contingent liabilities
|
|
|
£m |
|
|
At 31 December 2013 |
At 31 December 2012 |
|
Guarantees and assets pledged as collateral security |
2,052 |
2,521 |
|
Irrevocable letters of credit |
184 |
177 |
|
Secured lending |
304 |
492 |
|
Other contingent liabilities |
30 |
57 |
The Group, through its South African banking business, has pledged debt securities amounting to £703 million (2012: £1,203 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 principal jurisdictions in which the Group operates (South Africa and the United Kingdom) routinely review historic transactions undertaken and tax law interpretations made by the Group. The financial statements accordingly include provisions that reflect the Group's assessment of liabilities which might reasonably be expected to materialise.
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. As previously disclosed, the largest of these potential actions are claims in the High Court against Nedbank by certain shareholders in Pinnacle Point Group Ltd, alleging that Nedbank had a legal duty of care to them arising from a share swap transaction. In 2013 two of these claims of R147 million and of R802 million were dismissed by the North Gauteng High Court. The only claim remaining is for R355 million.
Originally these shareholders and others lodged proceedings with the Securities Regulation Panel (SRP) for an order declaring that an affected transaction took place. The SRP ruled that no affected transaction took place. The last remaining claimant brought an application to the South Gauteng High Court for the review of the SRP ruling. This application was dismissed with costs on 15 November 2013. The applicant filed a notice to apply for leave to appeal this judgment, which Nedbank will oppose.
During 2011 further actions were instituted against Nedbank Ltd by other stakeholders for R210 million, and by Absa Bank Limited for R773 million. In both these actions Nedbank have filed exceptions against the claims.
Nedbank Ltd and its legal advisers remain of the opinion that the remaining claims are ambitious, and that the remaining claimants will have great difficulty succeeding.
Consumer protection
Old Mutual is committed to supporting its customers in meeting their lifetime goals and treating customers fairly is central to how our businesses operate. We routinely engage with customers and regulators to ensure that we meet this commitment, but there is the risk of regulatory intervention across various jurisdictions, giving rise to the potential for customer redress which can result in retrospective changes to policyholder benefits, penalties or fines. Where this occurs, the Group makes financial provision for the related costs.
G2: Businesses acquired during the year
The Group continued to expand operations in Africa and Latin America through the following completed acquisitions:
|
Acquiree |
Country |
Nature of business |
Consideration paid (£m) |
Shares acquired |
Effective date |
|
Oceanic Life |
Nigeria |
Life insurance |
9 |
70% |
20 December 2012 |
|
Aiva Holdings Group S.A |
Uruguay |
Business platform and distribution business |
22 |
86% |
2 January 2013 |
|
Provident Life Assurance Company Limited |
Ghana |
Life insurance |
7 |
90% |
12 September 2013 |
|
Oceanic General |
Nigeria |
General insurance |
12 |
70% |
26 November 2013 |
Goodwill of £30 million has been recognised on these acquisitions. Refer to note F1 in the Annual Report and Accounts for further analysis of the goodwill recognised. Acquisition costs of £2 million are included in operating expenses and have been excluded from the Group's adjusted operating profit. The net profit received from the above acquisitions has been consolidated for the 31 December 2013 financial year.
The table below sets out the consolidated assets and liabilities acquired as a result of these acquisitions:
|
|
£m |
|
|
Acquirees' carrying amount |
|
Assets |
|
|
Investment property |
13 |
|
Investments and securities |
20 |
|
Cash and cash equivalents |
17 |
|
Trade, other receivables and other assets |
5 |
|
Total assets |
55 |
|
Liabilities |
|
|
Long-term business policyholder liabilities |
18 |
|
Current tax payable |
1 |
|
Trade, other payables and other liabilities |
10 |
|
Total liabilities |
29 |
|
Net assets acquired |
26 |
|
|
|
|
Group's portion of net assets acquired |
20 |
|
Consideration paid |
50 |
|
Goodwill recognised |
30 |
The carrying value of assets and liabilities in the entities statement of financial position on acquisition date approximates the fair value of these items determined by the Group. The receivables recognised by the Group are included in other assets and represent their fair value due to their short-term nature. No indemnification assets or contingent liabilities were recognised on acquisition of the above business. Contingent consideration of £11 million is payable to the sellers of Aiva Holdings Group SA in 2016 and 2018 dependent on the achievement of pre-determined performance indicators, an estimate which has been included in the purchase consideration.
G3: Events after the reporting date
On 28 February 2014, the Group announced the acquisition of Intrinsic Financial Services Limited, the third largest adviser network in the UK with more than 3,000 advisers, both restricted and independent. This will enable the Old Mutual Wealth business to provide advice to UK retail customers. The purchase of Intrinsic Financial Services Limited is a critical part of the Old Mutual Wealth strategy to create a leading wealth management business that combines financial advice, investment solutions and high quality asset management to deliver first class outcomes for our customers.
On 28 February 2014, the Group announced that during 2014 it intends to proceed with an Initial Public Offering of a minority stake in its US Asset Management Business (USAM), subject to market conditions. The offering will enhance USAM's financial and operating flexibility to deploy capital to continue to grow and further develop the business. This transaction will require a registration statement to be filed with the U.S. Securities and Exchange Commission. The registration statement will include additional information. The announcement was made pursuant to and in accordance with Rule 135 under the U.S. Securities Act (1933). This disclosure does not constitute an offer to sell or the solicitation of an offer to buy securities, and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of that jurisdiction.
In line with Nedbank's scheduled capital plans, there was a full capital redemption of NED8, the R1.7 billion unsecured subordinated note that qualified as Tier 2 capital under Basel II, with effect from 8 February 2014. This event is not an adjusting post balance sheet event.
Notes to the consolidated financial statements
For the year ended 31 December 2013
H: Discontinued operations and disposal groups held for sale
H1: Discontinued operations
Discontinued operations relate to the results of the Group's Swedish, Danish and Norwegian life businesses, collectively Nordic. The disposal of Nordic was completed on 21 March 2012 following shareholder and regulatory approval and was reported up until that date. The Group continues to incur costs that are directly related to the sale of Nordic. These costs relate to the transition of IT and other services, previously provided by Nordic to the wider Group, back to the Group. These costs are included in the expenses related to the discontinued operations. The profit on disposal of discontinued operations for the year ending 31 December 2013 was recognised following the finalisation of the transfer of Old Mutual Guodian Life Assurance Company Ltd, the Group's Chinese joint venture, from Nordic to Old Mutual Life Assurance Company (South Africa) Limited. This transaction was included in the Nordic sale agreement and was subject to regulatory approval which was obtained in June 2013.
|
(a) Income statement from discontinued operations (Nordic) |
||
|
|
|
£m |
|
|
Year ended 31 December 2013 |
Year ended 31 December 2012 |
|
Revenue |
- |
842 |
|
Expenses |
(26) |
(866) |
|
Loss before tax from discontinued operations - trading activities |
(26) |
(24) |
|
Profit on disposal |
27 |
239 |
|
Realised available-for-sale investment gains and exchange differences on disposal |
- |
350 |
|
Profit before tax from discontinued operations |
1 |
565 |
|
Income tax credit/(charge) |
2 |
(1) |
|
Profit after tax from discontinued operations |
3 |
564 |
|
|
|
|
|
(b) Statement of comprehensive income from discontinued operations (Nordic) |
||
|
|
|
£m |
|
|
Year ended 31 December 2013 |
Year ended 31 December 2012 |
|
Profit from discontinued operations after tax |
3 |
564 |
|
Other comprehensive income for the financial year |
|
|
|
Fair value gains |
- |
4 |
|
Exchange differences realised on disposal |
- |
(350) |
|
Currency translation differences/exchange differences on translating foreign operations |
- |
2 |
|
Other movements |
- |
(3) |
|
Aggregate tax on transfers from equity |
- |
(1) |
|
Total other comprehensive loss from discontinued operations |
- |
(348) |
|
Total comprehensive income for the financial year from discontinued operations |
3 |
216 |
|
Attributable to |
|
|
|
Equity holders of the parent |
3 |
216 |
|
|
|
|
|
(c) Net cash flows from discontinued operations (Nordic) |
||
|
|
|
£m |
|
|
Year ended 31 December 2013 |
Year ended 31 December 2012 |
|
Operating activities |
- |
(8) |
|
Investing activities |
- |
(121) |
|
Net cash flows from discontinued operations |
- |
(129) |
H2: Contingent liabilities in respect of the disposal of US Life
Following its disposal in April 2011 of US Life to the Harbinger group (Harbinger), the Group has retained certain residual commitments and contingent liabilities relating to that business. These arise from sale warranties and indemnities that are typical in transactions of this nature, including in respect of certain litigation (including class actions) and regulatory enforcement actions arising from events that occurred before completion of the sale. The residual commitments are in effect for varying periods of time.
The sale agreement contemplated that Harbinger would establish certain internal reinsurance arrangements after completion, which were subject to regulatory approval. If such regulatory approval was not forthcoming, there was potential for a reduction in the purchase price of US Life of up to a maximum of US$50 million. In July 2012, Harbinger filed a lawsuit against the Group, claiming payment of a purchase price adjustment of US$50 million. The Group has filed its defence and is vigorously defending this claim. In view of the ongoing uncertainty and the Group's current assessment of this claim, the Group has not raised a provision against this exposure.
I: Changes in accounting policies
I1: Accounting policies adopted for the year ended 31 December 2013
Several new accounting standards are applicable to the Group for the year ended 31 December 2013, with restatement of the comparative information for the year ended 31 December 2012 as required and restatement of the opening statement of financial position as at 1 January 2012.
The standards that were relevant and have required restatement include IAS 1 'Presentation of Financial Statements', IAS 19 (Revised 2011) 'Employee Benefits', IFRS 10 'Consolidated Financial Statements' and IFRS 11 'Joint Arrangements'.
Three other standards and amendments have also been applied for the first time in 2013 but these are disclosure standards and have not required a restatement of the statement of financial position. These include IFRS 7 'Financial Instruments: Disclosures (Amended 2011), IFRS 12 'Disclosure of Interest in Other Entities' and IFRS 13 'Fair Value Measurement' and IAS 36 (Amended) 'Impairment of Assets'. Refer to note A5 in the Annual Report and Accounts for further information.
IFRS 11 'Joint Arrangements' replaces IAS 31 'Interests in Joint Ventures' and SIC-13 'Jointly Controlled Entities' and removes the option to account for joint arrangements using proportionate consolidation. Jointly controlled entities that meet the definition of a joint arrangement under IFRS 11 'Joint Arrangements' must now be accounted for using the equity method. This did not have a material impact on the Group's statement of financial position.
The following standards adopted by the Group had an impact on the financial statements:
Amendments to IAS 1 'Presentation of Items of Other Comprehensive Income'
The amendments to IAS 1 'Presentation of Items of Other Comprehensive Income' require that an entity present separately the items of other comprehensive income (OCI) that may be reclassified to profit or loss in the future, from those that will never be reclassified to profit or loss. The amendment affected presentation only and had no impact on the shareholders' equity or profit.
IAS 19 'Employee Benefits' (Revised 2011)
The Group has adopted IAS 19 'Employee Benefits' (Revised 2011) with a date of initial application of 1 January 2013.
The key amendments are:
n The corridor method has been removed and all actuarial gains and losses are required to be recognised in OCI rather than in profit or loss. Expected returns on plan assets are no longer recognised in profit or loss. Instead, interest is recognised on the net defined benefit liability or asset in profit or loss, calculated using the discount rate used to measure the defined benefit obligation.
n Past service costs arising from plan amendments or curtailment are now recognised in profit or loss at the earlier of when the amendment occurs or when the related restructuring or termination cost are recognised. The option to amortise such cost over future years has also been eliminated.
n Administration costs, other than costs of managing plan assets, are recognised in the profit and loss when the service is provided.
The change in accounting policy has been applied retrospectively and as a result, the comparative information for the year ended 31 December 2012 has been restated accordingly.
The major impact of the adoption of the standard was an increase in operating and administrative expenses and a net increase in OCI. The overall impact on the Group was a decrease in equity, an increase in the assets and an increase in the liabilities of the Group. The standard affects the accounting for certain defined pension schemes in Emerging Markets, Nedbank and Old Mutual plc.
The transitional adjustment, applied to the opening statement of financial position as at 1 January 2013, had an effect of decreasing equity by £17 million, increasing total assets by £81 million and increasing total liabilities by £98 million.
Notes to the consolidated financial statements
For the year ended 31 December 2013
I: Changes in accounting policies continued
I1: Accounting policies adopted for the year ended 31 December 2013 continued
IFRS 10 'Consolidated Financial Statements'
The Group has early adopted IFRS 10 'Consolidated Financial Statements' with a date of initial application of 1 January 2013.
IFRS 10 'Consolidated Financial Statements'introduces a single control model that applies to all entities, including special purpose entities. IFRS 10 'Consolidated Financial Statements' replaces the parts of IAS 27 'Consolidated and Separate Financial Statements' that dealt with consolidated financial statements and SIC-12 'Consolidation - Special Purpose Entities'. IFRS 10 'Consolidated Financial Statements' changes the definition of control such that an investor controls an investee when it has power over the investee, when it is exposed, or has rights, to variable returns from its involvement with the investee and when it has the ability to use its power over the investee to affect those returns. To meet the definition of control in IFRS 10 'Consolidated Financial Statements', all three of these criteria must be met.
The implementation of this standard did not have a significant financial impact on the Group's assessment of its interests in investment funds, but it did increase the number of investment funds consolidated. The principal effect was a gross up of the consolidated statement of financial position for the difference between the value of the newly consolidated assets and liabilities and the carrying value of the Group's interest, and the equal and opposite liability for the interests of external parties in these investment funds.
The transitional adjustment, applied to the opening statement of financial position as at 1 January 2013, had an effect of decreasing non-controlling interest by £8 million, increasing total assets by £3,384 million and increasing total liabilities by £3,392 million.
The Group has only considered the consolidation suite of standards for interests that existed at 1 January 2013. The change in accounting policy has been applied retrospectively and as a result, the comparative information for the year ended 31 December 2012 and the opening position at 1 January 2012 have been restated accordingly.
Effect of the adoption of IAS 19 (Revised) and IFRS 10 'Consolidated Financial Statements'
The following tables summarise the impact of the restatements in the financial statements:
|
|
|
|
|
£m |
|
Year ended 31 December 2012 |
As previously reported |
Adjustments for adoption of IAS 19 |
Adjustments for adoption of IFRS 10 |
As restated |
|
Consolidated income statement |
|
|
|
|
|
Profit after tax from continuing operations |
923 |
(1) |
(8) |
914 |
|
Profit after tax for the financial year |
1,487 |
(1) |
(8) |
1,478 |
|
Non-controlling interests |
314 |
- |
(8) |
306 |
|
Consolidated statement of comprehensive income |
|
|
|
|
|
Total other comprehensive income for the financial year1 |
(811) |
4 |
- |
(807) |
|
Total comprehensive income for the financial year1 |
676 |
3 |
(8) |
671 |
|
Reconciliation of adjusted operating profit to profit after tax |
|
|
|
|
|
Adjusting items |
(459) |
- |
(8) |
(467) |
|
Adjusted operating profit after tax attributable to equity holders of the parent |
842 |
(1) |
- |
841 |
|
Consolidated statement of financial position |
|
|
|
|
|
Total assets |
143,497 |
81 |
3,384 |
146,962 |
|
Total liabilities |
133,699 |
98 |
3,392 |
137,189 |
|
Equity attributable to ordinary shareholders of the parent |
7,833 |
(17) |
- |
7,816 |
|
Non-controlling interests |
1,965 |
- |
(8) |
1,957 |
1 The comparative information has been restated to reflect the fact that all movements on the share-based payment reserve are reflected directly in equity and no longer in other comprehensive income.
|
|
|
|
|
£m |
|
At 1 January 2012 |
As previously reported |
Adjustments for adoption of IAS 19 |
Adjustments for adoption of IFRS 10 |
As restated |
|
Consolidated statement of financial position |
|
|
|
|
|
Total assets |
162,385 |
(12) |
2,798 |
165,171 |
|
Total liabilities |
151,527 |
8 |
2,798 |
154,333 |
|
Equity attributable to ordinary shareholders of the parent |
8,488 |
(20) |
- |
8,468 |
This information is provided by RNS
Latest directors dealings
- 6 hours ago ASOS
- 7 hours ago MJ Gleeson
- 7 hours ago Rolls-Royce Holdings
- 7 hours ago Crest Nicholson Holdings
- 8 hours ago Naked Wines