Preliminary Results Part 2 IF
Statement of directors' responsibilities in respect of the preliminary announcement of the Annual Report and the financial statements
We confirm that to the best of our knowledge:
Ÿ The financial statements, prepared in accordance with the applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit of the Group and the undertakings included in the consolidation taken as a whole;
Ÿ The Group Finance Director's review and the Business review include a fair view of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the important events, principal risks and uncertainties that they face.
Julian Roberts Philip Broadley
Group Chief Executive Group Finance Director
11 March 2010 11 March 2010
Consolidated income statement
For the year ended 31 December 2009
|
£m |
|||
|
|
Notes |
Year ended 31 December 2009 |
Year ended 31 December 2008 |
|
Revenue |
|
|
|
|
Gross earned premiums |
B3 |
3,820 |
5,156 |
|
Outward reinsurance |
|
(369) |
(335) |
|
Net earned premiums |
|
3,451 |
4,821 |
|
Investment return (non-banking) |
|
11,616 |
(11,578) |
|
Banking interest and similar income |
|
3,989 |
4,059 |
|
Banking trading, investment and similar income |
|
168 |
162 |
|
Fee and commission income, and income from service activities |
|
2,422 |
2,313 |
|
Other income |
|
202 |
270 |
|
Total revenues |
|
21,848 |
47 |
|
Expenses |
|
|
|
|
Claims and benefits (including change in insurance contract provisions) |
|
(5,069) |
(3,610) |
|
Reinsurance recoveries |
|
328 |
262 |
|
Net claims and benefits incurred |
|
(4,741) |
(3,348) |
|
Change in investment contract liabilities |
|
(8,345) |
10,051 |
|
Losses on loans and advances |
|
(511) |
(319) |
|
Finance costs |
|
(322) |
392 |
|
Banking interest payable and similar expenses |
|
(2,627) |
(2,853) |
|
Fee and commission expenses, and other acquisition costs |
|
(806) |
(937) |
|
Other operating and administrative expenses |
|
(3,139) |
(2,834) |
|
Goodwill impairment |
C1(b) |
(266) |
(74) |
|
Change in third party interest in consolidated funds |
|
(470) |
779 |
|
Amortisation of PVIF and other acquired intangibles |
C1(b) |
(326) |
(361) |
|
Total expenses |
|
(21,553) |
496 |
|
|
|
|
|
|
Share of associated undertakings' profit/(loss) after tax |
|
2 |
(1) |
|
(Loss)/profit on disposal of subsidiaries, associated undertakings and strategic investments |
C1(c) |
(50) |
53 |
|
Profit before tax |
|
247 |
595 |
|
Income tax (expense)/credit |
D1(a) |
(365) |
88 |
|
(Loss)/profit after tax for the financial year |
|
(118) |
683 |
|
Attributable to |
|
|
|
|
Equity holders of the parent |
|
(340) |
441 |
|
Non-controlling interests |
|
|
|
|
Ordinary shares |
F2(a) |
158 |
188 |
|
Preferred securities |
F2(a) |
64 |
54 |
|
(Loss)/profit after tax for the financial year |
|
(118) |
683 |
|
Earnings per share |
|
|
|
|
Basic earnings per ordinary share (pence) |
C3(a) |
(7.8) |
8.6 |
|
Diluted earnings per ordinary share (pence) |
C3(a) |
(7.8) |
8.1 |
|
Weighted average number of shares - millions |
C3(a) |
4,758 |
4,755 |
Consolidated statement of comprehensive income
For the year ended 31 December 2009
|
|
|
|
£m |
|
|
Notes |
Year ended 31 December 2009 |
Year ended 31 December 2008 |
|
(Loss)/profit after tax for the financial year |
|
(118) |
683 |
|
Other comprehensive income for the financial year |
|
|
|
|
Fair value (losses)/gains |
|
|
|
|
Property revaluation |
|
(10) |
16 |
|
Net investment hedge |
|
(41) |
281 |
|
Available-for-sale investments |
|
|
|
|
Fair value gains/(losses) |
|
1,087 |
(1,635) |
|
Recycled to the income statement |
|
239 |
414 |
|
Shadow accounting |
|
27 |
26 |
|
Currency translation differences/exchange differences on translating foreign operations |
|
302 |
429 |
|
Other movements |
|
21 |
68 |
|
Income tax relating to components of other comprehensive income |
D1(c) |
(397) |
366 |
|
Total other comprehensive income for the financial year |
|
1,228 |
(35) |
|
Total comprehensive income for the financial year |
|
1,110 |
648 |
|
Attributable to |
|
|
|
|
Equity holders of the parent |
|
709 |
305 |
|
Non-controlling interests |
|
|
|
|
Ordinary shares |
|
334 |
299 |
|
Preferred securities |
|
67 |
44 |
|
Total comprehensive income for the financial year |
|
1,110 |
648 |
Reconciliation of adjusted operating profit to profit after tax
For the year ended 31 December 2009
|
£m |
|||
|
|
Notes |
Year ended 31 December 2009 |
Year ended 31 December 2008 |
|
Core operations |
|
|
|
|
Long Term Savings |
B2 |
685 |
452 |
|
Nedbank |
B2 |
470 |
575 |
|
M&F |
B2 |
70 |
76 |
|
USAM |
B2 |
83 |
97 |
|
|
|
1,308 |
1,200 |
|
Finance costs |
|
(104) |
(140) |
|
Long term investment return on excess assets |
|
91 |
108 |
|
Interest payable to non-core operations - Bermuda |
|
(40) |
- |
|
Other shareholders' expenses |
|
(85) |
(32) |
|
Adjusted operating profit |
B2 |
1,170 |
1,136 |
|
Adjusting items |
C1(a) |
(1,137) |
60 |
|
Non core operations - Bermuda |
|
22 |
(365) |
|
Profit before tax (net of policyholder tax) |
|
55 |
831 |
|
Income tax attributable to policyholder returns |
|
192 |
(236) |
|
Profit before tax |
|
247 |
595 |
|
Total income tax (expense)/credit |
D1(a) |
(365) |
88 |
|
(Loss)/profit after tax for the financial year |
|
(118) |
683 |
Adjusted operating profit after tax attributable to ordinary equity holders
|
£m |
|||
|
|
Notes |
Year ended 31 December 2009 |
Year ended 31 December 2008 |
|
Adjusted operating profit |
|
1,170 |
1,136 |
|
Tax on adjusted operating profit |
D1(d) |
(292) |
(86) |
|
Adjusted operating profit after tax |
|
878 |
1,050 |
|
Non-controlling interests - ordinary shares |
F2(a) |
(180) |
(218) |
|
Non-controlling interests - preferred securities |
F2(a) |
(65) |
(54) |
|
Adjusted operating profit after tax attributable to ordinary equity holders |
|
633 |
778 |
|
Adjusted weighted average number of shares - (millions) |
C3(b) |
5,229 |
5,230 |
|
Adjusted operating earnings per share - (pence) |
C3(b) |
12.1 |
14.9 |
Basis of preparation
The reconciliation of adjusted operating profit has been prepared so as to reflect the Directors' view of the underlying long-term performance of the Group. The statement reconciles adjusted operating profit to profit after tax as reported under IFRS as adopted by the EU.
For core life assurance and general insurance businesses, adjusted operating profit is based on a long-term investment return, including investment returns on life funds' investments in Group equity and debt instruments, and is stated net of income tax attributable to policyholder returns. For the US Asset Management business it includes compensation costs in respect of certain long-term incentive schemes defined as non-controlling interests in accordance with IFRS. For all core businesses, adjusted operating profit excludes goodwill impairment, the impact of acquisition accounting, revaluations of put options related to long-term incentive schemes, the impact of closure of unclaimed shares trusts, profit/(loss) on disposal of subsidiaries, associated undertakings and strategic investments, dividends declared to holders of perpetual preferred callable securities, and fair value profits/(losses) on certain Group debt movements. Bermuda, which is non-core, is not included in adjusted operating profit.
Adjusted operating earnings per ordinary share is calculated on the same basis as adjusted operating profit. It is stated after tax attributable to adjusted operating profit and non-controlling interests. It excludes income attributable to Black Economic Empowerment trusts of listed subsidiaries. The calculation of the adjusted weighted average number of shares includes own shares held in policyholders' funds and Black Economic Empowerment trusts.
Consolidated statement of financial position
At 31 December 2009
|
£m |
|||
|
|
|
At 31 December 2009 |
At 31 December 2008 |
|
|
|
|
Restated |
|
Assets |
|
|
|
|
Goodwill and other intangible assets |
|
5,159 |
5,882 |
|
Mandatory reserve deposits with central banks |
|
882 |
734 |
|
Property, plant and equipment |
|
828 |
682 |
|
Investment property |
|
1,759 |
1,478 |
|
Deferred tax assets |
|
570 |
1,590 |
|
Investments in associated undertakings and joint ventures |
|
135 |
111 |
|
Deferred acquisition costs |
|
3,138 |
3,199 |
|
Reinsurers' share of life assurance policyholder liabilities |
|
1,296 |
1,148 |
|
Reinsurers' share of general insurance liabilities |
|
120 |
115 |
|
Deposits held with reinsurers |
|
146 |
164 |
|
Loans and advances |
|
42,393 |
35,745 |
|
Investments and securities |
|
98,461 |
83,522 |
|
Current tax receivable |
|
169 |
118 |
|
Client indebtedness for acceptances |
|
170 |
220 |
|
Trade, other receivables and other assets |
|
3,051 |
3,137 |
|
Derivative financial instruments - assets |
|
2,546 |
3,228 |
|
Cash and cash equivalents |
|
2,982 |
3,203 |
|
Non-current assets held-for-sale |
|
1 |
7 |
|
Total assets |
|
163,806 |
144,283 |
|
Liabilities |
|
|
|
|
Life assurance policyholder liabilities |
|
93,876 |
81,269 |
|
General insurance liabilities |
|
372 |
344 |
|
Third party interests in consolidated funds |
|
2,906 |
2,591 |
|
Borrowed funds |
E1 |
3,309 |
2,295 |
|
Provisions |
|
263 |
477 |
|
Deferred revenue |
|
654 |
598 |
|
Deferred tax liabilities |
|
905 |
1,452 |
|
Current tax payable |
|
210 |
219 |
|
Trade, other payables and other liabilities |
|
4,305 |
4,074 |
|
Liabilities under acceptances |
|
170 |
220 |
|
Amounts owed to bank depositors |
|
44,135 |
38,171 |
|
Derivative financial instruments - liabilities |
|
1,990 |
2,990 |
|
Non-current liabilities held-for-sale |
|
- |
6 |
|
Total liabilities |
|
153,095 |
134,706 |
|
Net assets |
|
10,711 |
9,577 |
|
Shareholders' equity |
|
|
|
|
Equity attributable to equity holders of the parent |
|
8,464 |
7,737 |
|
Non-controlling interests |
|
|
|
|
Ordinary shares |
F2(b) |
1,537 |
1,147 |
|
Preferred securities |
F2(b) |
710 |
693 |
|
Total non-controlling interests |
|
2,247 |
1,840 |
|
Total equity |
|
10,711 |
9,577 |
Consolidated statement of cash flows
For the year ended 31 December 2009
|
£m |
|||
|
|
Year ended 31 December 2009 |
Year ended 31 December 2008 |
|
|
|
|
Restated |
|
|
Cash flows from operating activities |
|||
|
Profit before tax |
247 |
595 |
|
|
Capital (gains)/losses included in investment income |
(9,762) |
14,183 |
|
|
Loss on disposal of property, plant and equipment |
1 |
3 |
|
|
Depreciation of property, plant and equipment |
86 |
74 |
|
|
Amortisation and impairment of goodwill and other intangible assets |
648 |
504 |
|
|
Impairment of loans and receivables |
770 |
320 |
|
|
Share-based payment expense |
21 |
21 |
|
|
Share of associated undertakings' (profit)/loss after tax |
(2) |
1 |
|
|
Loss/(profit) arising on disposal of subsidiaries, associated undertakings and strategic investments |
50 |
(53) |
|
|
Other non-cash amounts in profit |
(465) |
(294) |
|
|
Non-cash movements in profit before tax |
(8,653) |
14,759 |
|
|
Reinsurers' share of life assurance policyholder liabilities |
(148) |
486 |
|
|
Reinsurers' share of general insurance liabilities |
(5) |
(49) |
|
|
Deferred acquisition costs |
62 |
(370) |
|
|
Loans and advances |
(6,589) |
(5,206) |
|
|
Insurance liabilities |
(652) |
282 |
|
|
Investment contracts |
13,163 |
(10,260) |
|
|
Amounts owed to bank depositors |
5,964 |
6,110 |
|
|
Other operating assets and liabilities |
(1,798) |
(3,901) |
|
|
Changes in working capital |
9,997 |
(12,908) |
|
|
Taxation paid |
(373) |
(458) |
|
|
Net cash inflow from operating activities |
1,218 |
1,988 |
|
|
Cash flows from investing activities |
|||
|
Net acquisitions of financial investments |
(2,674) |
(1,170) |
|
|
Acquisition of investment properties |
(82) |
(145) |
|
|
Proceeds from disposal of investment properties |
57 |
13 |
|
|
Acquisition of property, plant and equipment |
(138) |
(99) |
|
|
Proceeds from disposal of property, plant and equipment |
29 |
11 |
|
|
Acquisition of intangible assets |
(43) |
(18) |
|
|
Acquisition of interests in subsidiaries |
(5) |
(93) |
|
|
Disposal of interests in subsidiaries, associated undertakings and strategic investments |
40 |
1,138 |
|
|
Net cash outflow from investing activities |
(2,816) |
(363) |
|
|
Cash flows from financing activities |
|||
|
Dividends paid to |
|||
|
Equity holders of the Company |
- |
(352) |
|
|
Non-controlling interests and preferred security interests |
(190) |
(208) |
|
|
Interest paid (excluding banking interest paid) |
(57) |
(87) |
|
|
Proceeds from issue of ordinary shares (including by subsidiaries to non-controlling interests) |
100 |
31 |
|
|
Net sale of treasury shares |
38 |
5 |
|
|
Shares repurchased in buyback programme |
- |
(175) |
|
|
Issue of subordinated and other debt |
1,049 |
374 |
|
|
Subordinated and other debt repaid |
(441) |
(225) |
|
|
Net cash inflow/(outflow) from financing activities |
499 |
(637) |
|
|
£m |
||
|
|
Year ended 2009 |
Year ended 31 December 2008 |
|
|
|
Restated |
|
Net increase/(decrease) in cash and cash equivalents |
(1,099) |
988 |
|
Effects of exchange rate changes on cash and cash equivalents |
160 |
399 |
|
Cash and cash equivalents at beginning of the year |
4,983 |
3,596 |
|
Cash and cash equivalents at end of the year |
4,044 |
4,983 |
|
Consisting of |
|
|
|
Coins and bank notes |
263 |
221 |
|
Money at call and short notice |
2,412 |
2,794 |
|
Balances with central banks (other than mandatory reserve deposits) |
307 |
188 |
|
Cash and cash equivalents in the statement of financial position |
2,982 |
3,203 |
|
Mandatory reserve deposits with central banks |
882 |
734 |
|
Short term cash balances held in policy holder funds |
897 |
2,043 |
|
Cash and cash equivalents subject to consolidation of funds |
(717) |
(997) |
|
Total |
4,044 |
4,983 |
|
Other supplementary cash flow disclosures |
|
|
|
Interest income received (including banking interest) |
5,394 |
5,384 |
|
Dividend income received |
335 |
493 |
|
Interest paid (including banking interest) |
2,544 |
3,078 |
The 31 December 2008 cash flows have been restated as detailed in note A.
Cash flows presented in this statement include all cash flows relating to policyholders' funds for life assurance.
Except for mandatory reserve deposits with central banks and cash and cash equivalents subject to consolidation of funds, management do not consider that there are any material amounts of cash and cash equivalents which are not available for use in the Group's day to day operations. Mandatory reserve deposits are, however, included in cash and cash equivalents for the purposes of the cash flow statement in line with market practice in South Africa.
Consolidated statement of changes in equity
For the year ended 31 December 2009
|
|
|
Millions |
|
|
|
£m |
|
Year ended 31 December 2009 |
Notes |
Number of shares issued and fully paid |
|
Attributable to equity holders of the parent |
Total non-controlling interests |
Total equity |
|
Shareholders' equity at beginning of the year |
|
5,516 |
|
7,737 |
1,840 |
9,577 |
|
Profit after tax for the financial year |
|
- |
|
(340) |
222 |
(118) |
|
Other comprehensive income |
|
|
|
|
|
|
|
Fair value gains/(losses) |
|
|
|
|
|
|
|
Property revaluation |
|
- |
|
(12) |
2 |
(10) |
|
Net investment hedge |
|
- |
|
(41) |
- |
(41) |
|
Available-for-sale investments |
|
|
|
|
|
|
|
Fair value gains |
|
- |
|
1,087 |
- |
1,087 |
|
Recycled to the income statement |
|
- |
|
239 |
- |
239 |
|
Shadow accounting |
|
- |
|
27 |
- |
27 |
|
Currency translation differences/exchange differences on translating foreign operations |
|
- |
|
124 |
178 |
302 |
|
Other movements |
|
- |
|
22 |
(1) |
21 |
|
Income tax relating to components of other comprehensive income |
D1(c) |
- |
|
(397) |
- |
(397) |
|
Total comprehensive income for the financial year |
|
- |
|
709 |
401 |
1,110 |
|
Dividends for the year |
C4 |
- |
|
(45) |
(145) |
(190) |
|
Net sale of treasury shares |
|
- |
|
39 |
- |
39 |
|
Issue of ordinary share capital by the Company |
|
- |
|
2 |
- |
2 |
|
Change in participation in subsidiaries |
|
- |
|
- |
150 |
150 |
|
Exercise of share options |
|
2 |
|
3 |
- |
3 |
|
Change in share-based payments reserve |
|
- |
|
19 |
1 |
20 |
|
Transactions with shareholders |
|
2 |
|
18 |
6 |
24 |
|
Shareholders' equity at end of the year |
|
5,518 |
|
8,464 |
2,247 |
10,711 |
|
|
|
|
|
|
|
|
|
£m |
|
Year ended 31 December 2009 |
Notes |
Share capital |
Share premium |
Other reserves |
Translation reserve |
Retained earnings |
Perpetual preferred callable securities |
Total |
|
Attributable to equity holders of the parent at beginning of the year |
|
552 |
766 |
2,130 |
386 |
3,215 |
688 |
7,737 |
|
Profit for the financial year attributable to equity holders of the parent |
|
- |
- |
- |
- |
(372) |
32 |
(340) |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
Fair value gains/(losses) |
|
|
|
|
|
|
|
|
|
Property revaluation |
|
- |
- |
(12) |
- |
- |
- |
(12) |
|
Net investment hedge |
|
- |
- |
- |
(41) |
- |
- |
(41) |
|
Available-for-sale investments |
|
|
|
|
|
|
|
|
|
Fair value gains |
|
- |
- |
1,087 |
- |
- |
- |
1,087 |
|
Recycled to income statement |
|
- |
- |
239 |
- |
- |
- |
239 |
|
Shadow accounting |
|
- |
- |
27 |
- |
- |
- |
27 |
|
Currency translation differences/exchange differences on translating foreign operations |
|
- |
- |
- |
124 |
- |
- |
124 |
|
Other movements |
|
- |
- |
7 |
- |
15 |
- |
22 |
|
Income tax relating to components of other comprehensive income |
|
- |
- |
(410) |
- |
- |
13 |
(397) |
|
Total comprehensive income for the financial year |
|
- |
- |
938 |
83 |
(357) |
45 |
709 |
|
Dividends for the year |
C4 |
- |
- |
- |
- |
- |
(45) |
(45) |
|
Net sale of treasury shares |
|
- |
- |
- |
- |
39 |
- |
39 |
|
Issue of ordinary share capital by the Company |
|
- |
2 |
- |
- |
- |
- |
2 |
|
Exercise of share options |
|
- |
3 |
- |
- |
- |
- |
3 |
|
Change in share-based payments reserve |
|
- |
- |
19 |
- |
- |
- |
19 |
|
Transactions with shareholders |
|
- |
5 |
19 |
- |
39 |
(45) |
18 |
|
Attributable to equity holders of the parent at end of the year |
|
552 |
771 |
3,087 |
469 |
2,897 |
688 |
8,464 |
|
|
|
|
|
|
|
|
£m |
|
Other reserves attributable to equity holders of the parent |
|
Merger reserve |
Available-for-sale reserve |
Property revaluation reserve |
Share-based payments reserve |
Other reserves |
Total |
|
At the beginning of the year |
|
2,716 |
(844) |
85 |
171 |
2 |
2,130 |
|
Fair value gains/(losses) |
|
|
|
|
|
|
|
|
Property revaluation |
|
- |
- |
(12) |
- |
- |
(12) |
|
Available-for-sale investments |
|
|
|
|
|
|
|
|
Fair value gains |
|
- |
1,087 |
- |
- |
- |
1,087 |
|
Recycled to income statement |
|
- |
239 |
- |
- |
- |
239 |
|
Shadow accounting |
|
- |
9 |
18 |
- |
- |
27 |
|
Other movements |
|
- |
1 |
(4) |
1 |
9 |
7 |
|
Income tax relating to components of other comprehensive income |
|
- |
(410) |
- |
- |
- |
(410) |
|
Change in share-based payments reserve |
|
- |
- |
- |
19 |
- |
19 |
|
At end of the year |
|
2,716 |
82 |
87 |
191 |
11 |
3,087 |
Retained earnings were reduced by £379 million at 31 December 2009 in respect of own shares held in policyholders' funds, ESOP trusts, Black Economic Empowerment trusts and other related undertakings.
Consolidated statement of changes in equity
For the year ended 31 December 2009 continued
|
|
|
Millions |
|
|
|
£m |
|
Year ended 31 December 2008 |
Notes |
Number of shares issued and fully paid |
|
Attributable to equity holders of the parent |
Total non-controlling interests |
Total equity |
|
Shareholders' equity at beginning of the year |
|
5,510 |
|
7,961 |
1,636 |
9,597 |
|
Profit after tax for the financial year |
|
- |
|
441 |
242 |
683 |
|
Other comprehensive income |
|
|
|
|
|
|
|
Fair value gains/(losses) |
|
|
|
|
|
|
|
Property revaluation |
|
- |
|
16 |
- |
16 |
|
Net investment hedge |
|
- |
|
281 |
- |
281 |
|
Available-for-sale investments |
|
|
|
|
|
|
|
Fair value losses |
|
- |
|
(1,635) |
- |
(1,635) |
|
Recycled to the income statement |
|
- |
|
414 |
- |
414 |
|
Shadow accounting |
|
- |
|
26 |
- |
26 |
|
Currency translation differences/exchange differences on translating foreign operations |
|
- |
|
419 |
10 |
429 |
|
Other movements |
|
- |
|
(23) |
91 |
68 |
|
Income tax relating to components of other comprehensive income |
D1(c) |
- |
|
366 |
- |
366 |
|
Total comprehensive income for the financial year |
|
- |
|
305 |
343 |
648 |
|
Dividends for the year |
C4 |
- |
|
(395) |
(165) |
(560) |
|
Net sale of treasury shares |
|
- |
|
5 |
- |
5 |
|
Shares repurchased in the buyback programme |
|
- |
|
(175) |
- |
(175) |
|
Issue of ordinary share capital by the Company |
|
- |
|
5 |
- |
5 |
|
Change in participation in subsidiaries |
|
- |
|
- |
26 |
26 |
|
Exercise of share options |
|
6 |
|
5 |
- |
5 |
|
Change in share-based payments reserve |
|
- |
|
26 |
- |
26 |
|
Transactions with shareholders |
|
6 |
|
(529) |
(139) |
(668) |
|
Shareholders' equity at end of the year |
|
5,516 |
|
7,737 |
1,840 |
9,577 |
|
|
|
|
|
|
|
|
|
£m |
|
Year ended 31 December 2008 |
Notes |
Share capital |
Share premium |
Other reserves |
Translation reserve |
Retained earnings |
Perpetual preferred callable securities |
Total |
|
Attributable to equity holders of the parent at beginning of the year |
|
551 |
757 |
2,908 |
(304) |
3,361 |
688 |
7,961 |
|
Profit for the financial year attributable to equity holders of the parent |
|
- |
- |
- |
- |
410 |
31 |
441 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
Fair value gains/(losses) |
|
|
|
|
|
|
|
|
|
Property revaluation |
|
- |
- |
16 |
- |
- |
- |
16 |
|
Net investment hedge |
|
- |
- |
- |
281 |
- |
- |
281 |
|
Available-for-sale investments |
|
|
|
|
|
|
|
|
|
Fair value losses |
|
- |
- |
(1,635) |
- |
- |
- |
(1,635) |
|
Recycled to income statement |
|
|
|
414 |
- |
- |
- |
414 |
|
Shadow accounting |
|
- |
- |
26 |
- |
- |
- |
26 |
|
Currency translation differences/exchange differences on translating foreign operations |
|
- |
- |
- |
419 |
- |
- |
419 |
|
Other movements |
|
- |
- |
8 |
3 |
(34) |
- |
(23) |
|
Income tax relating to components of other comprehensive income |
|
- |
- |
367 |
(13) |
- |
12 |
366 |
|
Total comprehensive income for the financial year |
|
- |
- |
(804) |
690 |
376 |
43 |
305 |
|
Dividends for the year |
C4 |
- |
- |
- |
- |
(352) |
(43) |
(395) |
|
Net sale of treasury shares |
|
- |
- |
- |
- |
5 |
- |
5 |
|
Shares repurchased in the buyback Programme |
|
- |
- |
- |
- |
(175) |
- |
(175) |
|
Issue of ordinary share capital by the Company |
|
- |
5 |
- |
- |
- |
- |
5 |
|
Exercise of share options |
|
1 |
4 |
- |
- |
- |
- |
5 |
|
Change in share-based payments reserve |
|
- |
- |
26 |
- |
- |
- |
26 |
|
Transactions with shareholders |
|
1 |
9 |
26 |
- |
(522) |
(43) |
(529) |
|
Attributable to equity holders of the parent at end of the year |
|
552 |
766 |
2,130 |
386 |
3,215 |
688 |
7,737 |
|
|
|
|
|
|
|
|
£m |
|
Other reserves attributable to equity holders of the parent |
|
Merger reserve |
Available-for-sale reserve |
Property revaluation reserve |
Share-based payments reserve |
Other reserves |
Total |
|
At beginning of the year |
|
2,716 |
(30) |
75 |
147 |
- |
2,908 |
|
Fair value gains/(losses) |
|
|
|
|
|
|
|
|
Property revaluation |
|
- |
- |
16 |
- |
- |
16 |
|
Available-for-sale investments |
|
|
|
|
|
|
|
|
Fair value losses |
|
- |
(1,635) |
- |
- |
- |
(1,635) |
|
Recycled to income statement |
|
- |
414 |
- |
- |
- |
414 |
|
Shadow accounting |
|
- |
41 |
(15) |
- |
- |
26 |
|
Other movements |
|
- |
(1) |
9 |
(2) |
2 |
8 |
|
Income tax relating to components of other comprehensive income |
|
- |
367 |
- |
- |
- |
367 |
|
Change in share-based payments reserve |
|
- |
- |
- |
26 |
- |
26 |
|
At end of the year |
|
2,716 |
(844) |
85 |
171 |
2 |
2,130 |
Retained earnings were reduced by £280 million at 31 December 2008 in respect of own shares held in policyholders' funds, ESOP trusts, Black Economic Empowerment trusts and other related undertakings.
Notes to the consolidated financial statements
For the year ended 31 December 2009
A: Accounting policies
Basis of preparation
The consolidated financial information contained herein has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards adopted by the EU. The Group's results for the year ended 31 December 2009 and the position at that date have been prepared using accounting policies consistent with those applied in the preparation of the Group's 2008 Annual Report and Accounts, except for the revised IAS 1 set out below.
The consolidated financial statements have been prepared on the going concern basis which the directors believe to be appropriate.
The 31 December 2008 financial position has been restated to reduce both derivative financial assets and liabilities by an amount of £1,405 million and to increase both cash and cash equivalents and other liabilities by £305 million on a consistent basis to 31 December 2009, with a corresponding restatement made to the cash flows where applicable. In addition certain comparative information including segmentation has been revised in accordance with changes to presentation made in the current year. There was no impact on the consolidated net assets at 31 December 2008 as a result of the restatement. The 31 December 2007 statement of financial position has not been presented on the basis that there were no changes required to that statement as a consequence of the 2008 restatements.
The financial information set out herein does not constitute the Company's statutory accounts for the years ended 31 December 2009 or 2008. Statutory accounts for 2008 have been delivered to the Registrar of Companies, and those for 2009 will be delivered in due course. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports, and (iii) did not contain statements under section 498(2) or (3) of the Companies Act 2006.
Implementation of revised IAS 1 'Presentation of Financial Statements'
The financial information set out herein incorporates changes introduced as a result of the publication of a revised version of IAS 1 'Presentation of Financial Statements', effective for accounting periods commencing on or after 1 January 2009. The principal change is the inclusion of a new statement, a consolidated statement of comprehensive income, separately from the consolidated statement of changes in equity. Comparative information has been restated accordingly. There were no impacts on the Group's results or net assets as a result of the introduction of the revised standard.
Segment presentation
The Group's results are analysed and reported consistent with the way that management and the Board of Directors considers information when making operating decisions and the basis on which resources are allocated and performance assessed by management and the Board of Directors. The operating segments are Emerging Markets, Nordic, Retail Europe, Wealth Management and US Life (collectively being the newly formed Long Term Savings) plus Nedbank, Mutual & Federal (M&F), US Asset Management and Other operating segments (comprising the Group head office functions). The Bermuda segment is treated as a non-core operation. The above reported segments have been revised during the year to reflect the change in the way that management and the Board of Directors consider information, with the comparative information having been revised to report on a consistent basis to the amended structure.
There are four principal business activities from which the Group generates revenues. These are life assurance (premium income), asset management business (fee and commission income), banking (banking interest receivable) and general insurance (premium income). The revenues generated in each reported segment can be seen in the analysis of profits and losses in note B.
The information reflected in note B reflects the measures of profit and loss, assets and liabilities for each operating segment as regularly provided to management and the Board of Directors. There are no differences between the measurement of the assets and liabilities reflected in the primary statements and that reported for the segments. A reconciliation between the segment revenues and expenses and the Group's revenues and expenses is shown in note B.
In line with internal reporting, assets, liabilities, revenues or expenses that are not directly attributable to a particular segment are allocated between segments where appropriate and where there is a reasonable basis for doing so. The Group accounts for inter-segment revenues and transfers as if the transactions were with third parties at current market prices. Given the nature of the operations, there are no major customers within any of the segments.
Reclassifications of comparative segment information have been made to align segment information to the Group's revised management reporting structure described above. There was no impact on net profit or net assets.
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
B: Segment information
B1: Basis of segmentation
The Group's core operations are Emerging Markets, Nordic, Retail Europe, Wealth Management and US Life (collectively Long Term Savings), Nedbank, Mutual & Federal, US Asset Management and Other operating segments (comprising the Group head office functions). The Bermuda operating segment is regarded as non core. This represents a change in structure from that reported in the previous financial year end is consistent with the revised way that management and the Board of Directors considers information when making operating decisions and is the basis on which resources are allocated and performance assessed by management and the Board of Directors. Comparative segment information has been changed accordingly. The Group generates revenue from four principal business activities: life assurance, asset management, banking and general insurance. The types of products and services from which each operating segment derives its revenues are as follows:
Core operations
Emerging Markets - life assurance and asset management
Nordic - life assurance, asset management and banking
Retail Europe - life assurance and asset management
Wealth Management - life assurance and asset management
US Life - life assurance
Nedbank - banking and asset management
Mutual & Federal - general insurance
US Asset Management - asset management
Other operating segments
Non core operations
Bermuda - life assurance
Adjusted operating profit is one of the key measures reported to the Group's management and Board of Directors for their consideration in the allocation of resources to and the review of performance of the segments. The Group utilises additional measures to assess the performance of each of the segments, in particular the level of funds under management. Additional performance measures considered by management and the Board of Directors in assessing the performance of the segments can be found in the Old Mutual Market Consistent Embedded Value information presented on pages 84 to 132.
In the analysis that follows, consolidation adjustments include the elimination of inter-segment revenues, expenses, assets and liabilities together with the impacts of the consolidation of the Group's interest in unit trusts, mutual funds and similar entities.
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
B: Segment information continued
B2: Adjusted operating profit statement - segment information year ended 31 December 2009
|
|
Long Term Savings |
||||
|
|
Nordic |
Retail Europe |
Wealth Management |
US Life |
|
|
Revenue |
|
|
|
|
|
|
Gross earned premiums |
1,946 |
109 |
31 |
315 |
800 |
|
Outward reinsurance |
(56) |
(5) |
(8) |
(81) |
(102) |
|
Net earned premiums |
1,890 |
104 |
23 |
234 |
698 |
|
Investment return (non-banking) |
2,636 |
2,035 |
564 |
4,997 |
654 |
|
Banking interest and similar income |
- |
157 |
- |
- |
- |
|
Banking trading, investment and similar income |
- |
- |
- |
- |
- |
|
Fee and commission income, and income from service activities |
305 |
190 |
189 |
746 |
- |
|
Other income |
65 |
6 |
- |
24 |
6 |
|
Inter-segment revenues |
55 |
32 |
10 |
27 |
- |
|
Total revenues |
4,951 |
2,524 |
786 |
6,028 |
1,358 |
|
Expenses |
|
|
|
|
|
|
Claims and benefits (including change in insurance contract provisions) |
(2,551) |
(72) |
(37) |
(255) |
(1,283) |
|
Reinsurance recoveries |
76 |
2 |
5 |
46 |
128 |
|
Net claims and benefits incurred |
(2,475) |
(70) |
(32) |
(209) |
(1,155) |
|
Change in investment contract liabilities |
(1,040) |
(1,972) |
(554) |
(4,775) |
- |
|
Losses on loans and advances |
- |
(5) |
(1) |
- |
- |
|
Finance costs (including interest and similar expenses) |
- |
- |
- |
- |
- |
|
Banking interest payable and similar expenses |
- |
(70) |
- |
- |
- |
|
Fee and commission expenses, and other acquisition costs |
(184) |
(53) |
(79) |
(394) |
(78) |
|
Other operating and administrative expenses |
(768) |
(215) |
(96) |
(380) |
(67) |
|
Goodwill impairment |
- |
- |
- |
- |
- |
|
Change in third party interest in consolidated funds |
- |
- |
- |
- |
- |
|
Amortisation of PVIF and other acquired intangibles |
- |
- |
- |
- |
- |
|
Income tax attributable to policyholder returns |
(37) |
(39) |
- |
(116) |
- |
|
Inter-segment expenses |
(5) |
(38) |
(2) |
(48) |
(9) |
|
Total expenses |
(4,509) |
(2,462) |
(764) |
(5,922) |
(1,309) |
|
Share of associated undertakings' profit/(loss) after tax |
4 |
- |
- |
- |
- |
|
Profit on disposal of subsidiaries, associated undertakings and strategic investments |
- |
- |
- |
- |
- |
|
Adjusted operating profit/(loss) before tax and non-controlling interests |
446 |
62 |
22 |
106 |
49 |
|
Tax expense |
(130) |
9 |
(8) |
(20) |
(9) |
|
Non-controlling interests |
(2) |
- |
- |
- |
- |
|
Adjusted operating profit/(loss) after tax and non-controlling interests |
314 |
71 |
14 |
86 |
40 |
|
Adjusting items net of tax and non-controlling interests |
(200) |
(4) |
(228) |
(225) |
(120) |
|
Profit/(loss) after tax attributable to equity holders of the parent |
114 |
67 |
(214) |
(139) |
(80) |
Of the total revenues, excluding intercompany revenues, £5,544 million was generated in UK (2008: £5,826 million loss), £3,938 million in rest of Europe (2008: £3,045 million loss), £10,084 million in South Africa (2008: £6,676 million), £2,201 million in the United States (2008: £2,194 million) and £81 million relates to Other operating segments (2008: £48 million).
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
B: Segment information continued
B2: Adjusted operating profit statement - segment information year ended 31 December 2009 continued
|
|
|
|
|
|
|
|
|
|
£m |
|
Total Long Term Savings |
Nedbank |
M&F |
USAM |
Other operating segments |
Consolidation adjustments |
Adjusted operating profit |
Adjusting items (Note C1) |
Non core operations - Bermuda |
IFRS Income statement |
|
|
|
|
|
|
|
|
|
|
|
|
3,201 |
- |
612 |
- |
- |
- |
3,813 |
- |
7 |
3,820 |
|
(252) |
- |
(117) |
- |
- |
- |
(369) |
- |
- |
(369) |
|
2,949 |
- |
495 |
- |
- |
- |
3,444 |
- |
7 |
3,451 |
|
10,886 |
- |
58 |
13 |
91 |
509 |
11,557 |
(425) |
484 |
11,616 |
|
157 |
3,832 |
- |
- |
- |
- |
3,989 |
- |
- |
3,989 |
|
- |
168 |
- |
- |
- |
- |
168 |
- |
- |
168 |
|
1,430 |
663 |
22 |
429 |
- |
(6) |
2,538 |
(116) |
- |
2,422 |
|
101 |
70 |
1 |
7 |
- |
1 |
180 |
- |
22 |
202 |
|
124 |
31 |
29 |
6 |
21 |
(251) |
(40) |
- |
40 |
- |
|
15,647 |
4,764 |
605 |
455 |
112 |
253 |
21,836 |
(541) |
553 |
21,848 |
|
|
|
|
|
|
|
|
|
|
|
|
(4,198) |
- |
(412) |
- |
- |
- |
(4,610) |
- |
(459) |
(5,069) |
|
257 |
- |
72 |
- |
- |
- |
329 |
- |
(1) |
328 |
|
(3,941) |
- |
(340) |
- |
- |
- |
(4,281) |
- |
(460) |
(4,741) |
|
(8,341) |
- |
- |
- |
- |
- |
(8,341) |
- |
(4) |
(8,345) |
|
(6) |
(505) |
- |
- |
- |
- |
(511) |
- |
- |
(511) |
|
- |
- |
- |
- |
(104) |
- |
(104) |
(218) |
- |
(322) |
|
(70) |
(2,557) |
- |
- |
- |
- |
(2,627) |
- |
- |
(2,627) |
|
(788) |
(2) |
(106) |
(18) |
- |
(12) |
(926) |
167 |
(47) |
(806) |
|
(1,526) |
(1,167) |
(64) |
(354) |
(84) |
(22) |
(3,217) |
97 |
(19) |
(3,139) |
|
- |
- |
- |
- |
- |
- |
- |
(266) |
- |
(266) |
|
- |
- |
- |
- |
- |
(470) |
(470) |
- |
- |
(470) |
|
- |
- |
- |
- |
- |
- |
- |
(326) |
- |
(326) |
|
(192) |
- |
- |
- |
- |
- |
(192) |
192 |
- |
- |
|
(102) |
(65) |
(25) |
- |
(58) |
251 |
1 |
- |
(1) |
- |
|
(14,966) |
(4,296) |
(535) |
(372) |
(246) |
(253) |
(20,668) |
(354) |
(531) |
(21,553) |
|
4 |
2 |
- |
- |
(4) |
- |
2 |
- |
- |
2 |
|
|
- |
- |
- |
- |
- |
- |
(50) |
- |
(50) |
|
|
470 |
70 |
83 |
(138) |
- |
1,170 |
(945) |
22 |
247 |
|
(158) |
(96) |
(15) |
(19) |
(4) |
- |
(292) |
(84) |
11 |
(365) |
|
(2) |
(193) |
(16) |
- |
(34) |
- |
(245) |
23 |
- |
(222) |
|
|
181 |
39 |
64 |
(176) |
- |
633 |
(1,006) |
33 |
(340) |
|
(777) |
15 |
- |
(3) |
(241) |
- |
(1,006) |
1,006 |
- |
- |
|
(252) |
196 |
39 |
61 |
(417) |
- |
(373) |
- |
33 |
(340) |
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
B: Segment information continued
B2: Adjusted operating profit statement - segment information year ended 31 December 2008
|
|
Long Term Savings |
||||
|
|
Nordic |
Retail Europe |
Wealth Management |
US Life |
|
|
Revenue |
|
|
|
|
|
|
Gross earned premiums |
1,687 |
92 |
22 |
186 |
1,269 |
|
Outward reinsurance |
(48) |
(4) |
(7) |
(78) |
(106) |
|
Net earned premiums |
1,639 |
88 |
15 |
108 |
1,163 |
|
Investment return (non-banking) |
(420) |
(2,317) |
(997) |
(6,610) |
211 |
|
Banking interest and similar income |
- |
266 |
- |
- |
- |
|
Banking trading, investment and similar income |
- |
24 |
- |
- |
- |
|
Fee and commission income, and income from service activities |
252 |
184 |
178 |
775 |
- |
|
Other income |
98 |
20 |
1 |
14 |
3 |
|
Inter-segment revenues |
237 |
104 |
18 |
108 |
- |
|
Total revenues |
1,806 |
(1,631) |
(785) |
(5,605) |
1,377 |
|
Expenses |
|
|
|
|
|
|
Claims and benefits (including change in insurance contract provisions) |
(721) |
(68) |
(26) |
(94) |
(1,478) |
|
Reinsurance recoveries |
42 |
4 |
2 |
34 |
106 |
|
Net claims and benefits incurred |
(679) |
(64) |
(24) |
(60) |
(1,372) |
|
Change in investment contract liabilities |
204 |
2,390 |
1,011 |
6,442 |
- |
|
Losses on loans and advances |
- |
(4) |
- |
- |
- |
|
Finance costs |
- |
- |
- |
- |
- |
|
Banking interest payable and similar expenses |
- |
(183) |
- |
- |
- |
|
Fee and commission expenses, and other acquisition costs |
(174) |
(49) |
(72) |
(401) |
(158) |
|
Other operating and administrative expenses |
(563) |
(193) |
(82) |
(388) |
(68) |
|
Goodwill impairment |
- |
- |
- |
- |
- |
|
Change in third party interest in consolidated funds |
- |
- |
- |
- |
- |
|
Amortisation of PVIF and other acquired intangibles |
- |
- |
- |
- |
- |
|
Income tax attributable to policyholder returns |
6 |
(52) |
(1) |
283 |
- |
|
Inter-segment expenses |
(188) |
(126) |
(18) |
(121) |
(9) |
|
Total expenses |
(1,394) |
1,719 |
814 |
5,755 |
(1,607) |
|
Share of associated undertakings' profit/(loss) after tax |
3 |
- |
- |
- |
- |
|
Profit on disposal of subsidiaries, associated undertakings and strategic investments |
- |
- |
- |
- |
- |
|
Adjusted operating profit/(loss) before tax and non-controlling interests |
415 |
88 |
29 |
150 |
(230) |
|
Tax expense |
(138) |
(11) |
(10) |
(57) |
76 |
|
Non-controlling interests |
(5) |
- |
- |
- |
- |
|
Adjusted operating profit/(loss) after tax and non-controlling interests |
272 |
77 |
19 |
93 |
(154) |
|
Adjusting items net of tax and non-controlling interests |
147 |
(122) |
(28) |
50 |
(341) |
|
Profit/(loss) after tax attributable to equity holders of the parent |
419 |
(45) |
(9) |
143 |
(495) |
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
B: Segment information continued
B2: Adjusted operating profit statement - segment information year ended 31 December 2008
|
|
|
|
|
|
|
|
|
|
£m |
|
Total Long Term Savings |
Nedbank |
M&F |
USAM |
Other operating segments |
Consolidation adjustments |
Adjusted operating profit |
Adjusting items (Note C1) |
Non core operations - Bermuda |
IFRS Income statement |
|
|
|
|
|
|
|
|
|
|
|
|
3,256 |
- |
570 |
- |
- |
- |
3,826 |
- |
1,330 |
5,156 |
|
(243) |
- |
(91) |
- |
- |
- |
(334) |
- |
(1) |
(335) |
|
3,013 |
- |
479 |
- |
- |
- |
3,492 |
- |
1,329 |
4,821 |
|
(10,133) |
- |
56 |
(3) |
94 |
(713) |
(10,699) |
(108) |
(771) |
(11,578) |
|
266 |
3,793 |
- |
- |
- |
- |
4,059 |
- |
- |
4,059 |
|
24 |
138 |
- |
- |
- |
- |
162 |
- |
- |
162 |
|
1,389 |
533 |
16 |
473 |
- |
(1) |
2,410 |
(97) |
- |
2,313 |
|
136 |
85 |
- |
17 |
- |
13 |
251 |
- |
19 |
270 |
|
467 |
19 |
26 |
8 |
66 |
(586) |
- |
- |
- |
- |
|
(4,838) |
4,568 |
577 |
495 |
160 |
(1,287) |
(325) |
(205) |
577 |
47 |
|
|
|
|
|
|
|
|
|
|
|
|
(2,387) |
- |
(401) |
- |
- |
- |
(2,788) |
- |
(822) |
(3,610) |
|
188 |
- |
72 |
- |
- |
- |
260 |
- |
2 |
262 |
|
(2,199) |
- |
(329) |
- |
- |
- |
(2,528) |
- |
(820) |
(3,348) |
|
10,047 |
- |
- |
- |
- |
- |
10,047 |
- |
4 |
10,051 |
|
(4) |
(315) |
- |
- |
- |
- |
(319) |
- |
- |
(319) |
|
- |
- |
- |
- |
(140) |
- |
(140) |
532 |
- |
392 |
|
(183) |
(2,684) |
- |
- |
- |
- |
(2,867) |
14 |
- |
(2,853) |
|
(854) |
- |
(101) |
(10) |
- |
(44) |
(1,009) |
178 |
(106) |
(937) |
|
(1,294) |
(928) |
(59) |
(388) |
(38) |
(34) |
(2,741) |
(77) |
(16) |
(2,834) |
|
- |
- |
- |
- |
- |
- |
- |
(74) |
- |
(74) |
|
- |
- |
- |
- |
- |
779 |
779 |
- |
- |
779 |
|
- |
- |
- |
- |
- |
- |
- |
(361) |
- |
(361) |
|
236 |
- |
- |
- |
- |
- |
236 |
(236) |
- |
- |
|
(462) |
(71) |
(12) |
- |
(37) |
586 |
4 |
- |
(4) |
- |
|
5,287 |
(3,998) |
(501) |
(398) |
(215) |
1,287 |
1,462 |
(24) |
(942) |
496 |
|
3 |
5 |
- |
- |
(9) |
- |
(1) |
- |
- |
(1) |
|
|
- |
- |
- |
- |
- |
- |
53 |
- |
53 |
|
452 |
|
76 |
97 |
(64) |
- |
1,136 |
(176) |
(365) |
595 |
|
(140) |
(123) |
(17) |
2 |
192 |
- |
(86) |
174 |
- |
88 |
|
(5) |
(227) |
(19) |
- |
(21) |
- |
(272) |
30 |
- |
(242) |
|
307 |
|
40 |
99 |
107 |
- |
778 |
28 |
(365) |
441 |
|
(294) |
29 |
(49) |
1 |
341 |
- |
28 |
(28) |
- |
- |
|
13 |
254 |
(9) |
100 |
448 |
- |
806 |
- |
(365) |
441 |
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
B: Segment information continued
B3: Gross earned premiums
|
Year ended 31 December 2009 |
Long Term Savings |
||||
|
Emerging Markets |
Nordic |
|
Wealth Management |
US Life |
|
|
Life assurance - insurance contracts |
1,287 |
109 |
31 |
315 |
800 |
|
Life assurance - investment contracts with discretionary participation features |
659 |
- |
- |
- |
- |
|
General insurance |
- |
- |
- |
- |
- |
|
Gross earned premiums |
1,946 |
109 |
31 |
315 |
800 |
|
Life assurance - other investment contracts recognised as deposits |
2,726 |
1,199 |
733 |
4,906 |
171 |
|
|
Long Term Savings |
||||
|
Year ended 31 December 2008 |
|
Nordic |
Retail Europe |
Wealth Management |
US Life |
|
Life assurance - insurance contracts |
1,163 |
92 |
22 |
186 |
1,269 |
|
Life assurance - investment contracts with discretionary participation features |
524 |
- |
- |
- |
- |
|
General insurance |
- |
- |
- |
- |
- |
|
Gross earned premiums |
1,687 |
92 |
22 |
186 |
1,269 |
|
Life assurance - other investment contracts recognised as deposits |
1,409 |
976 |
690 |
5,236 |
115 |
B4: Impairments of financial assets
|
|
|
|
|
£m |
|
|
|
|
|
Year ended 31 December 2009 |
Year ended 31 December 2008 |
|
|
Nordic |
|
|
5 |
5 |
|
|
US Life |
|
|
248 |
384 |
|
|
Total Long Term Savings |
|
|
253 |
389 |
|
|
Nedbank |
|
|
504 |
315 |
|
|
Bermuda |
|
|
13 |
30 |
|
|
Total |
|
|
770 |
734 |
|
B5: Funds under management
|
|
|
|
|
|
£m |
||
|
|
Long Term Savings |
||||||
|
As at 31 December 2009 |
Emerging Markets |
Nordic |
Retail Europe |
|
US Life |
||
|
Life assurance policyholder funds |
25,454 |
9,221 |
3,569 |
34,721 |
6,689 |
||
|
Unit trusts and mutual funds |
7,686 |
1,428 |
391 |
11,308 |
- |
||
|
Third party client funds |
8,229 |
- |
- |
- |
- |
||
|
Total client funds under management |
41,369 |
10,649 |
3,960 |
46,029 |
6,689 |
||
|
Shareholder funds |
2,130 |
360 |
210 |
830 |
- |
||
|
Total funds under management |
43,499 |
11,009 |
4,170 |
46,859 |
6,689 |
||
|
|
Long Term Savings |
||||||
|
As at 31 December 2008 |
Emerging Markets |
Nordic |
Retail Europe |
|
US Life |
||
|
Life assurance policyholder funds |
20,599 |
6,605 |
2,881 |
29,200 |
241 |
||
|
Unit trusts and mutual funds |
7,678 |
1,000 |
416 |
8,777 |
- |
||
|
Third party client funds |
10,325 |
- |
- |
- |
- |
||
|
Total client funds under management |
38,602 |
7,605 |
3,297 |
37,977 |
241 |
||
|
Shareholder funds |
1,672 |
418 |
213 |
943 |
- |
||
|
Total funds under management |
40,274 |
8,023 |
3,510 |
38,920 |
241 |
||
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
B: Segment information continued
B3: Gross earned premiums continued
|
|
|
|
|
|
|
£m |
|
Total Long Term Savings |
Nedbank |
M&F |
USAM |
Total core operations |
Non-core operations - |
Total |
|
2,542 |
- |
- |
- |
2,542 |
7 |
2,549 |
|
|
- |
- |
- |
659 |
- |
659 |
|
- |
- |
612 |
- |
612 |
- |
612 |
|
3,201 |
- |
612 |
- |
3,813 |
7 |
3,820 |
|
|
- |
- |
- |
9,735 |
8 |
9,743 |
|
|
|
|
|
|
|
|
|
Total Long Term Savings |
Nedbank |
M&F |
USAM |
Total core operations |
Non-core operations - |
Total |
|
2,732 |
- |
- |
- |
2,732 |
1,330 |
4,062 |
|
524 |
|
- |
- |
524 |
- |
524 |
|
- |
- |
570 |
- |
570 |
- |
570 |
|
3,256 |
- |
570 |
- |
3,826 |
1,330 |
5,156 |
|
8,426 |
|
- |
- |
8,426 |
115 |
8,541 |
B5: Funds under management
|
|
|
|
|
|
|
£m |
|
Total Long Term Savings |
Nedbank |
M&F |
USAM |
Total core operations |
Non-core operations - |
Total |
|
79,654 |
658 |
- |
6,789 |
87,101 |
2,913 |
90,014 |
|
20,813 |
3,775 |
- |
4,095 |
28,683 |
- |
28,683 |
|
8,229 |
3,800 |
- |
150,423 |
162,452 |
- |
162,452 |
|
108,696 |
8,233 |
- |
161,307 |
278,236 |
2,913 |
281,149 |
|
3,530 |
- |
162 |
169 |
3,861 |
- |
3,861 |
|
112,226 |
8,233 |
162 |
161,476 |
282,097 |
2,913 |
285,010 |
|
|
|
|
|
|
|
£m |
|
|
|
|
|
|
|
|
|
Total Long Term Savings |
Nedbank |
M&F |
USAM |
Total core operations |
Non-core operations - |
Total |
|
59,526 |
425 |
- |
13,623 |
73,574 |
2,401 |
75,975 |
|
17,871 |
2,617 |
- |
3,127 |
23,615 |
- |
23,615 |
|
10,325 |
3,375 |
- |
147,956 |
161,656 |
- |
161,656 |
|
87,722 |
6,417 |
- |
164,706 |
258,845 |
2,401 |
261,246 |
|
3,246 |
- |
145 |
177 |
3,568 |
- |
3,568 |
|
90,968 |
6,417 |
145 |
164,883 |
262,413 |
2,401 |
264,814 |
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
B: Segment information continued
B6: Statement of financial position - segment information year ended 31 December 2009
|
|
Long Term Savings |
|||||
|
At 31 December 2009 |
Notes |
|
Nordic |
Retail Europe |
Wealth Management |
US Life |
|
Assets |
|
|
|
|
|
|
|
Goodwill and other intangible assets |
|
106 |
1,035 |
563 |
1,602 |
94 |
|
Goodwill |
|
91 |
219 |
204 |
656 |
- |
|
Present value of acquired in-force business |
|
- |
624 |
265 |
671 |
89 |
|
Software development |
|
6 |
1 |
3 |
35 |
5 |
|
Other intangibles |
|
9 |
191 |
91 |
240 |
- |
|
Mandatory reserve deposits with central banks |
|
- |
- |
- |
- |
- |
|
Property, plant and equipment |
|
336 |
7 |
4 |
19 |
1 |
|
Investment property |
|
1,518 |
- |
- |
2 |
- |
|
Deferred tax assets |
|
54 |
108 |
17 |
23 |
183 |
|
Investments in associated undertakings and joint ventures |
|
20 |
2 |
- |
- |
- |
|
Deferred acquisition costs |
|
123 |
49 |
275 |
778 |
1,671 |
|
Insurance contracts |
|
- |
2 |
- |
50 |
1,671 |
|
Investment contracts |
|
107 |
47 |
271 |
654 |
- |
|
Asset management |
|
16 |
- |
4 |
74 |
- |
|
Reinsurers' share of life assurance policyholder liabilities |
|
11 |
10 |
6 |
772 |
475 |
|
Insurance contracts |
|
11 |
7 |
4 |
45 |
450 |
|
Unit-Linked investment contracts and similar contracts |
|
- |
- |
- |
717 |
- |
|
Outstanding claims |
|
- |
3 |
2 |
10 |
25 |
|
Reinsurers share of general insurance liabilities |
|
- |
- |
- |
- |
- |
|
Deposits held with reinsurers |
|
- |
108 |
- |
- |
35 |
|
Loans and advances |
|
340 |
4,209 |
2 |
148 |
54 |
|
Policyholder loans |
|
58 |
2 |
2 |
148 |
53 |
|
Other loans and advances |
|
282 |
4,207 |
- |
- |
1 |
|
Investments and securities |
|
27,603 |
10,836 |
3,693 |
35,120 |
10,045 |
|
Government and government-guaranteed securities |
|
3,586 |
150 |
60 |
251 |
302 |
|
Listed other debt securities, preference shares and debentures |
|
1,825 |
1,453 |
53 |
- |
6,766 |
|
Unlisted other debt securities, preference shares and debentures |
|
2,989 |
- |
2 |
104 |
2,439 |
|
Listed equity securities |
|
8,854 |
1 |
10 |
- |
- |
|
Unlisted equity securities |
|
1,223 |
15 |
- |
- |
- |
|
Listed pooled investments |
|
457 |
547 |
- |
437 |
3 |
|
Unlisted pooled investments |
|
6,123 |
8,670 |
3,568 |
34,327 |
16 |
|
Short-term funds and securities treated as investments |
|
2,543 |
- |
- |
1 |
519 |
|
Other securities |
|
3 |
- |
- |
- |
- |
|
Current tax receivable |
|
4 |
4 |
16 |
86 |
- |
|
Client indebtedness for acceptances |
|
- |
- |
- |
- |
- |
|
Trade, other receivables and other assets |
|
630 |
155 |
58 |
232 |
213 |
|
Derivative financial instruments - assets |
|
327 |
9 |
- |
- |
187 |
|
Cash and cash equivalents |
|
189 |
344 |
81 |
278 |
4 |
|
Non-current assets held-for-sale |
|
- |
- |
- |
- |
- |
|
Inter-segment assets |
|
1,352 |
59 |
23 |
277 |
74 |
|
Total assets |
|
32,613 |
16,935 |
4,738 |
39,337 |
13,036 |
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
B: Segment information continued
B6: Statement of financial position - segment information year ended 31 December 2009
|
|
|
|
|
|
|
|
£m |
|
Total Long Term Savings |
Nedbank |
M&F |
USAM |
Bermuda |
Other operating segments |
Consolidation adjustments |
Total |
|
|
|
|
|
|
|
|
|
|
3,400 |
543 |
30 |
1,171 |
2 |
13 |
- |
5,159 |
|
1,170 |
393 |
11 |
1,142 |
- |
13 |
- |
2,729 |
|
1,649 |
- |
- |
- |
- |
- |
- |
1,649 |
|
50 |
150 |
19 |
1 |
2 |
- |
- |
222 |
|
531 |
- |
- |
28 |
- |
- |
- |
559 |
|
- |
882 |
- |
- |
- |
- |
- |
882 |
|
367 |
417 |
23 |
19 |
- |
2 |
- |
828 |
|
1,520 |
18 |
- |
- |
- |
- |
221 |
1,759 |
|
385 |
24 |
6 |
147 |
- |
8 |
- |
570 |
|
22 |
82 |
- |
7 |
- |
24 |
- |
135 |
|
2,896 |
2 |
17 |
29 |
194 |
- |
- |
3,138 |
|
1,723 |
- |
17 |
- |
194 |
- |
- |
1,934 |
|
1,079 |
- |
- |
- |
- |
- |
- |
1,079 |
|
94 |
2 |
- |
29 |
- |
- |
- |
125 |
|
1,274 |
22 |
- |
- |
- |
- |
- |
1,296 |
|
517 |
22 |
- |
- |
- |
- |
- |
539 |
|
717 |
- |
- |
- |
- |
- |
- |
717 |
|
40 |
- |
- |
- |
- |
- |
- |
40 |
|
- |
- |
120 |
- |
- |
- |
- |
120 |
|
143 |
- |
3 |
- |
- |
- |
- |
146 |
|
4,753 |
37,638 |
2 |
- |
- |
- |
- |
42,393 |
|
263 |
- |
- |
- |
- |
- |
- |
263 |
|
4,490 |
37,638 |
2 |
- |
- |
- |
- |
42,130 |
|
87,297 |
5,501 |
425 |
162 |
2,942 |
43 |
2,091 |
98,461 |
|
4,349 |
2,044 |
- |
- |
- |
- |
1,775 |
8,168 |
|
|
2,532 |
2 |
- |
461 |
- |
1,729 |
14,821 |
|
|
- |
4 |
- |
167 |
- |
- |
5,705 |
|
8,865 |
41 |
87 |
- |
- |
- |
9,503 |
18,496 |
|
1,238 |
209 |
6 |
- |
37 |
- |
- |
1,490 |
|
1,444 |
675 |
41 |
122 |
2,059 |
- |
1,400 |
5,741 |
|
52,704 |
- |
- |
40 |
- |
- |
(12,678) |
40,066 |
|
3,063 |
- |
285 |
- |
218 |
- |
293 |
3,859 |
|
3 |
- |
- |
- |
- |
43 |
69 |
115 |
|
110 |
51 |
- |
- |
- |
8 |
- |
169 |
|
- |
170 |
- |
- |
- |
- |
- |
170 |
|
1,288 |
432 |
96 |
126 |
878 |
111 |
120 |
3,051 |
|
523 |
1,067 |
- |
- |
- |
154 |
802 |
2,546 |
|
896 |
660 |
79 |
173 |
32 |
425 |
717 |
2,982 |
|
- |
1 |
- |
- |
- |
- |
- |
1 |
|
1,785 |
148 |
48 |
1 |
564 |
1,363 |
(3,909) |
- |
|
106,659 |
47,658 |
849 |
1,835 |
4,612 |
2,151 |
42 |
163,806 |
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
B: Segment information continued
B6: Statement of financial position - segment information year ended 31 December 2009 continued
|
|
Long Term Savings |
|||||
|
At 31 December 2009 |
Notes |
|
Nordic |
Retail Europe |
Wealth Management |
US Life |
|
Liabilities |
|
|
|
|
|
|
|
Life assurance policyholder liabilities |
|
28,655 |
9,514 |
3,689 |
35,554 |
11,625 |
|
Insurance contracts |
|
11,783 |
74 |
121 |
901 |
10,787 |
|
Unit-Linked investment contracts and similar contracts |
|
9,838 |
9,335 |
3,560 |
34,639 |
- |
|
Other investment contracts |
|
115 |
- |
- |
- |
788 |
|
Discretionary participating investment contracts |
|
6,639 |
- |
- |
- |
- |
|
Outstanding claims |
|
280 |
105 |
8 |
14 |
50 |
|
General insurance liabilities |
|
- |
- |
- |
- |
- |
|
Third party interests in consolidated funds |
|
- |
- |
- |
- |
- |
|
Borrowed funds |
E1 |
272 |
26 |
- |
- |
- |
|
Senior debt securities |
|
- |
26 |
- |
- |
- |
|
Mortgage backed securities |
|
- |
- |
- |
- |
- |
|
Subordinated debt securities |
|
272 |
- |
- |
- |
- |
|
Provisions |
|
147 |
11 |
8 |
33 |
- |
|
Deferred revenue |
|
23 |
5 |
160 |
456 |
- |
|
Life assurance |
|
16 |
5 |
155 |
379 |
- |
|
Asset management |
|
7 |
- |
5 |
77 |
- |
|
General insurance |
|
- |
- |
- |
- |
- |
|
Deferred tax liabilities |
|
200 |
113 |
124 |
167 |
126 |
|
Current tax payable |
|
70 |
20 |
2 |
37 |
- |
|
Trade, other payables and other liabilities |
|
1,512 |
203 |
79 |
550 |
359 |
|
Liabilities under acceptances |
|
- |
- |
- |
- |
- |
|
Amounts owed to bank depositors |
|
- |
5,448 |
- |
- |
- |
|
Derivative financial instruments - liabilities |
|
141 |
22 |
- |
- |
9 |
|
Non-current liabilities held-for-sale |
|
- |
- |
- |
- |
- |
|
Inter-segment liabilities |
|
51 |
37 |
- |
181 |
170 |
|
Total liabilities |
|
31,071 |
15,399 |
4,062 |
36,978 |
12,289 |
|
Net assets |
|
1,542 |
1,536 |
676 |
2,359 |
747 |
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
Equity attributable to equity holders of the parent |
|
1,540 |
1,536 |
676 |
2,359 |
747 |
|
Non-controlling interests |
|
2 |
- |
- |
- |
- |
|
Non-controlling interests - ordinary shares |
F2(b) |
2 |
- |
- |
- |
- |
|
Non-controlling interests - preference shares |
F2(b) |
- |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
Total equity |
|
1,542 |
1,536 |
676 |
2,359 |
747 |
The net assets of Emerging Markets are stated after eliminating investments in Group equity and debt instruments of £340 million (2008: £236 million) held in policyholder funds. These include investments in the Company's ordinary shares and subordinated liabilities and preferred securities issued by the Group's banking subsidiary Nedbank Limited. All Emerging Markets debt relates to life assurance. All other debt relates to other shareholders' net assets.
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
B: Segment information continued
B6: Statement of financial position - segment information year ended 31 December 2009 continued
|
|
|
|
|
|
|
|
£m |
|
Total Long Term Savings |
Nedbank |
M&F |
USAM |
Bermuda |
Other operating segments |
Consolidation adjustments |
Total |
|
|
|
|
|
|
|
|
|
|
89,037 |
661 |
- |
- |
4,178 |
- |
- |
93,876 |
|
23,666 |
95 |
- |
- |
3,788 |
- |
- |
27,549 |
|
57,372 |
- |
- |
- |
- |
- |
- |
57,372 |
|
903 |
566 |
- |
- |
390 |
- |
- |
1,859 |
|
6,639 |
- |
- |
- |
- |
- |
- |
6,639 |
|
457 |
- |
- |
- |
- |
- |
- |
457 |
|
- |
- |
372 |
- |
- |
- |
- |
372 |
|
- |
- |
- |
- |
- |
- |
2,906 |
2,906 |
|
298 |
1,614 |
- |
- |
- |
1,397 |
- |
3,309 |
|
26 |
484 |
- |
- |
- |
636 |
- |
1,146 |
|
- |
118 |
- |
- |
- |
- |
- |
118 |
|
272 |
1,012 |
- |
- |
- |
761 |
- |
2,045 |
|
199 |
1 |
21 |
2 |
- |
40 |
- |
263 |
|
644 |
1 |
9 |
- |
- |
- |
- |
654 |
|
555 |
1 |
- |
- |
- |
- |
- |
556 |
|
89 |
- |
- |
- |
- |
- |
- |
89 |
|
- |
- |
9 |
- |
- |
- |
- |
9 |
|
730 |
148 |
2 |
- |
- |
25 |
- |
905 |
|
129 |
21 |
- |
10 |
5 |
45 |
- |
210 |
|
2,703 |
897 |
118 |
221 |
(9) |
120 |
255 |
4,305 |
|
- |
170 |
- |
- |
- |
- |
- |
170 |
|
5,448 |
38,687 |
- |
- |
- |
- |
- |
44,135 |
|
172 |
969 |
- |
- |
- |
59 |
790 |
1,990 |
|
- |
- |
- |
- |
- |
- |
- |
- |
|
439 |
697 |
- |
1,202 |
- |
1,571 |
(3,909) |
- |
|
99,799 |
43,866 |
522 |
1,435 |
4,174 |
3,257 |
42 |
153,095 |
|
6,860 |
3,792 |
327 |
400 |
438 |
(1,106) |
- |
10,711 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,858 |
2,084 |
265 |
371 |
438 |
(1,552) |
- |
8,464 |
|
2 |
1,708 |
62 |
29 |
- |
446 |
- |
2,247 |
|
2 |
1,444 |
62 |
29 |
- |
- |
- |
1,537 |
|
- |
264 |
- |
- |
- |
446 |
- |
710 |
|
|
|
|
|
|
|
|
|
|
6,860 |
3,792 |
327 |
400 |
438 |
(1,106) |
- |
10,711 |
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
B: Segment information continued
B6: Statement of financial position - segment information year ended 31 December 2008
|
|
Long Term Savings |
|||||
|
At 31 December 2008 |
Notes |
Emerging Markets |
Nordic |
Retail Europe |
Wealth Management |
US Life |
|
Assets |
|
|
|
|
|
|
|
Goodwill and other intangible assets |
|
111 |
1,183 |
865 |
1,814 |
132 |
|
Goodwill |
|
95 |
222 |
420 |
742 |
- |
|
Present value of acquired in-force business |
|
(2) |
742 |
326 |
764 |
120 |
|
Software development |
|
4 |
1 |
5 |
23 |
12 |
|
Other intangibles |
|
14 |
218 |
114 |
285 |
- |
|
Mandatory reserve deposits with central banks |
|
- |
- |
- |
- |
- |
|
Property, plant and equipment |
|
277 |
4 |
6 |
25 |
1 |
|
Investment property |
|
1,282 |
- |
- |
2 |
- |
|
Deferred tax assets |
|
68 |
78 |
45 |
172 |
1,036 |
|
Investments in associated undertakings and joint ventures |
|
33 |
- |
- |
- |
- |
|
Deferred acquisition costs |
|
116 |
34 |
253 |
698 |
1,896 |
|
Insurance contracts |
|
- |
2 |
- |
49 |
1,896 |
|
Investment contracts |
|
96 |
32 |
248 |
585 |
- |
|
Asset management |
|
20 |
- |
5 |
64 |
- |
|
Reinsurers' share of life assurance policyholder liabilities |
|
6 |
13 |
5 |
607 |
505 |
|
Insurance contracts |
|
6 |
10 |
3 |
42 |
477 |
|
Unit-Linked investment contracts and similar contracts |
|
- |
- |
- |
551 |
- |
|
Outstanding claims |
|
- |
3 |
2 |
14 |
28 |
|
Reinsurers share of general insurance liabilities |
|
- |
- |
- |
- |
- |
|
Deposits held with reinsurers |
|
- |
121 |
- |
- |
40 |
|
Loans and advances |
|
59 |
3,846 |
2 |
139 |
62 |
|
Policyholder loans |
|
59 |
- |
2 |
138 |
61 |
|
Other loans and advances |
|
- |
3,846 |
- |
1 |
1 |
|
Investments and securities |
|
22,447 |
7,595 |
2,958 |
29,477 |
10,284 |
|
Government and government-guaranteed securities |
|
3,769 |
214 |
- |
699 |
97 |
|
Listed other debt securities, preference shares and debentures |
|
1,805 |
813 |
26 |
2 |
7,021 |
|
Unlisted other debt securities, preference shares and debentures |
|
2,113 |
- |
45 |
22 |
2,488 |
|
Listed equity securities |
|
6,932 |
- |
- |
1 |
- |
|
Unlisted equity securities |
|
885 |
12 |
5 |
26 |
- |
|
Listed pooled investments |
|
411 |
155 |
- |
649 |
8 |
|
Unlisted pooled investments |
|
4,263 |
6,401 |
2,882 |
28,078 |
18 |
|
Short-term funds and securities treated as investments |
|
2,264 |
- |
- |
- |
652 |
|
Other securities |
|
5 |
- |
- |
- |
- |
|
Current tax receivable |
|
6 |
- |
6 |
81 |
- |
|
Client indebtedness for acceptances |
|
- |
- |
- |
- |
- |
|
Trade, other receivables and other assets |
|
455 |
138 |
67 |
228 |
252 |
|
Derivative financial instruments - assets |
|
209 |
- |
- |
- |
36 |
|
Cash and cash equivalents |
|
467 |
372 |
134 |
236 |
(18) |
|
Non-current assets held-for-sale |
|
7 |
- |
- |
- |
- |
|
Inter-segment assets |
|
1,326 |
264 |
10 |
238 |
46 |
|
Total assets |
|
26,869 |
13,648 |
4,351 |
33,717 |
14,272 |
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
B: Segment information continued
B6: Statement of financial position - segment information year ended 31 December 2008 continued
|
|
|
|
|
|
|
|
£m |
|
Total Long Term Savings |
Nedbank |
M&F |
USAM |
Bermuda |
Other operating segments |
Consolidation adjustments |
Total |
|
|
|
|
|
|
|
|
|
|
4,105 |
425 |
29 |
1,305 |
5 |
13 |
- |
5,882 |
|
1,479 |
308 |
10 |
1,271 |
- |
13 |
- |
3,081 |
|
1,950 |
- |
- |
- |
- |
- |
- |
1,950 |
|
45 |
117 |
19 |
1 |
5 |
- |
- |
187 |
|
631 |
- |
- |
33 |
- |
- |
- |
664 |
|
- |
734 |
- |
- |
- |
- |
- |
734 |
|
313 |
316 |
24 |
26 |
- |
3 |
- |
682 |
|
1,284 |
15 |
- |
- |
- |
- |
179 |
1,478 |
|
1,399 |
25 |
8 |
158 |
- |
- |
- |
1,590 |
|
33 |
75 |
- |
- |
- |
3 |
- |
111 |
|
2,997 |
2 |
15 |
40 |
145 |
- |
- |
3,199 |
|
1,947 |
- |
15 |
- |
145 |
- |
- |
2,107 |
|
961 |
- |
- |
- |
- |
- |
- |
961 |
|
89 |
2 |
- |
40 |
- |
- |
- |
131 |
|
1,136 |
9 |
- |
- |
3 |
- |
- |
1,148 |
|
538 |
9 |
- |
- |
3 |
- |
- |
550 |
|
551 |
- |
- |
- |
- |
- |
- |
551 |
|
47 |
- |
- |
- |
- |
- |
- |
47 |
|
- |
- |
115 |
- |
- |
- |
- |
115 |
|
161 |
- |
3 |
- |
- |
- |
- |
164 |
|
4,108 |
31,634 |
2 |
- |
- |
1 |
- |
35,745 |
|
260 |
- |
- |
- |
- |
- |
- |
260 |
|
3,848 |
31,634 |
2 |
- |
- |
1 |
- |
35,485 |
|
72,761 |
5,043 |
322 |
177 |
3,676 |
88 |
1,455 |
83,522 |
|
4,779 |
2,255 |
- |
- |
- |
- |
1,942 |
8,976 |
|
|
2,172 |
1 |
- |
534 |
- |
1,695 |
14,069 |
|
4,668 |
- |
2 |
- |
202 |
- |
175 |
5,047 |
|
6,933 |
38 |
67 |
- |
- |
- |
7,938 |
14,976 |
|
928 |
152 |
5 |
- |
118 |
- |
- |
1,203 |
|
1,223 |
426 |
36 |
135 |
2,085 |
- |
1,310 |
5,215 |
|
41,642 |
- |
- |
42 |
- |
- |
(11,853) |
29,831 |
|
2,916 |
- |
211 |
- |
737 |
- |
125 |
3,989 |
|
5 |
- |
- |
- |
- |
88 |
123 |
216 |
|
93 |
25 |
- |
- |
- |
- |
- |
118 |
|
- |
220 |
- |
- |
- |
- |
- |
220 |
|
1,140 |
486 |
68 |
139 |
789 |
96 |
419 |
3,137 |
|
245 |
1,627 |
- |
- |
21 |
226 |
1,109 |
3,228 |
|
1,191 |
631 |
56 |
220 |
29 |
79 |
997 |
3,203 |
|
7 |
- |
- |
- |
- |
- |
- |
7 |
|
1,884 |
19 |
46 |
99 |
377 |
1,339 |
(3,764) |
- |
|
92,857 |
41,286 |
688 |
2,164 |
5,045 |
1,848 |
395 |
144,283 |
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
B: Segment information continued
B6: Statement of financial position - segment information year ended 31 December 2008 continued
|
|
Long Term Savings |
|||||
|
At 31 December 2008 |
Notes |
Emerging Markets |
Nordic |
Retail Europe |
Wealth Management |
US Life |
|
Liabilities |
|
|
|
|
|
|
|
Life assurance policyholder liabilities |
|
23,261 |
6,884 |
2,973 |
29,603 |
13,337 |
|
Insurance contracts |
|
10,619 |
71 |
92 |
694 |
12,365 |
|
Unit-Linked investment contracts and similar contracts |
|
6,690 |
6,704 |
2,874 |
28,893 |
- |
|
Other investment contracts |
|
105 |
- |
- |
- |
914 |
|
Discretionary participating investment contracts |
|
5,646 |
- |
- |
- |
- |
|
Outstanding claims |
|
201 |
109 |
7 |
16 |
58 |
|
General insurance liabilities |
|
- |
- |
- |
- |
- |
|
Third party interests in consolidated funds |
|
- |
- |
- |
- |
- |
|
Borrowed funds |
E1 |
237 |
- |
- |
1 |
- |
|
Senior debt securities |
|
- |
- |
- |
1 |
- |
|
Mortgage backed securities |
|
- |
- |
- |
- |
- |
|
Subordinated debt securities |
|
237 |
- |
- |
- |
- |
|
Provisions |
|
132 |
203 |
8 |
29 |
- |
|
Deferred revenue |
|
31 |
3 |
128 |
428 |
- |
|
Life assurance |
|
17 |
3 |
122 |
347 |
- |
|
Asset management |
|
14 |
- |
6 |
81 |
- |
|
General insurance |
|
- |
- |
- |
- |
- |
|
Deferred tax liabilities |
|
176 |
93 |
173 |
256 |
578 |
|
Current tax payable |
|
98 |
22 |
- |
28 |
(15) |
|
Trade, other payables and other liabilities |
|
1,197 |
198 |
88 |
573 |
267 |
|
Liabilities under acceptances |
|
- |
- |
- |
- |
- |
|
Amounts owed to bank depositors |
|
- |
4,622 |
- |
- |
- |
|
Derivative financial instruments - liabilities |
|
31 |
- |
- |
1 |
- |
|
Non-current liabilities held-for-sale |
|
6 |
- |
- |
- |
- |
|
Intersegment liabilities |
|
66 |
174 |
40 |
258 |
1 |
|
Total liabilities |
|
25,235 |
12,199 |
3,409 |
31,178 |
14,169 |
|
Net assets |
|
1,634 |
1,449 |
942 |
2,539 |
103 |
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
Equity attributable to equity holders of the parent |
|
1,626 |
1,449 |
942 |
2,539 |
103 |
|
Non-controlling interests |
|
8 |
- |
- |
- |
- |
|
Non-controlling interests - ordinary shares |
F2(b) |
8 |
- |
- |
- |
- |
|
Non-controlling interests - preference shares |
F2(b) |
- |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
Total equity |
|
1,634 |
1,449 |
942 |
2,539 |
103 |
The 31 December 2008 financial position has been restated to reduce both derivative financial instruments assets and liabilities by an amount of £1,405 million and to increase both cash and cash equivalents and other liabilities by £305 million on a consistent basis to 31 December 2009. There was no impact on the consolidated net assets at 31 December 2008 as a result of the restatement.
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
B: Segment information continued
B6: Statement of financial position - segment information year ended 31 December 2008 continued
|
|
|
|
|
|
|
|
£m |
|
Total Long Term Savings |
Nedbank |
M&F |
USAM |
Bermuda |
Other operating segments |
Consolidation adjustments |
Total |
|
|
|
|
|
|
|
|
|
|
76,058 |
426 |
- |
- |
4,785 |
- |
- |
81,269 |
|
23,841 |
- |
- |
- |
4,265 |
- |
- |
28,106 |
|
45,161 |
- |
- |
- |
- |
- |
- |
45,161 |
|
1,019 |
426 |
- |
- |
520 |
- |
- |
1,965 |
|
5,646 |
- |
- |
- |
- |
- |
- |
5,646 |
|
391 |
- |
- |
- |
- |
- |
- |
391 |
|
- |
- |
344 |
- |
- |
- |
- |
344 |
|
- |
- |
- |
- |
- |
- |
2,591 |
2,591 |
|
238 |
960 |
- |
- |
- |
1,097 |
- |
2,295 |
|
1 |
- |
- |
- |
- |
556 |
- |
557 |
|
- |
104 |
- |
- |
- |
- |
- |
104 |
|
237 |
856 |
- |
- |
- |
541 |
- |
1,634 |
|
372 |
1 |
21 |
3 |
- |
80 |
- |
477 |
|
590 |
- |
8 |
- |
- |
- |
- |
598 |
|
489 |
- |
- |
- |
- |
- |
- |
489 |
|
101 |
- |
- |
- |
- |
- |
- |
101 |
|
- |
- |
8 |
- |
- |
- |
- |
8 |
|
1,276 |
162 |
2 |
- |
- |
12 |
- |
1,452 |
|
133 |
18 |
2 |
8 |
19 |
39 |
- |
219 |
|
2,323 |
747 |
71 |
299 |
9 |
160 |
465 |
4,074 |
|
- |
220 |
- |
- |
- |
- |
- |
220 |
|
4,622 |
33,549 |
- |
- |
- |
- |
- |
38,171 |
|
32 |
1,731 |
- |
- |
- |
124 |
1,103 |
2,990 |
|
6 |
- |
- |
- |
- |
- |
- |
6 |
|
539 |
427 |
(1) |
1,452 |
3 |
1,344 |
(3,764) |
- |
|
86,190 |
38,241 |
447 |
1,762 |
4,815 |
2,856 |
395 |
134,706 |
|
6,667 |
3,045 |
241 |
402 |
230 |
(1,008) |
- |
9,577 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,659 |
1,717 |
193 |
365 |
230 |
(1,427) |
- |
7,737 |
|
8 |
1,328 |
48 |
37 |
- |
419 |
- |
1,840 |
|
8 |
1,081 |
48 |
37 |
- |
(27) |
- |
1,147 |
|
- |
247 |
- |
- |
- |
446 |
- |
693 |
|
|
|
|
|
|
|
|
|
|
6,667 |
3,045 |
241 |
402 |
230 |
(1,008) |
- |
9,577 |
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
C: Other key performance information
C1: Operating profit adjusting items
(a) Summary of adjusting items
In determining the adjusted operating profit of the Group for core operations certain adjustments are made to profit before tax to reflect the directors' view of the underlying long-term performance of the Group. The following table shows an analysis of those adjustments from adjusted operating profit to profit before and after tax.
|
£m |
||||||
|
Year ended 31 December 2009 |
Notes |
Long Term Savings |
||||
|
Emerging Markets |
Nordic |
Retail Europe |
Wealth Management |
US Life |
||
|
Income/(expense) |
||||||
|
Goodwill impairment and impact of acquisition accounting |
C1(b) |
(1) |
(12) |
(243) |
(167) |
(14) |
|
(Loss)/profit on disposal of subsidiaries, associated undertakings and strategic investments |
C1(c) |
(51) |
- |
- |
(7) |
- |
|
Short-term fluctuations in investment return |
C1(d) |
(38) |
(1) |
1 |
(88) |
(150) |
|
Investment return adjustment for Group equity and debt instruments held in life funds |
C1(e) |
(109) |
- |
- |
- |
- |
|
Dividends declared to holders of perpetual preferred callable securities |
C1(f) |
- |
- |
- |
- |
- |
|
US Asset Management equity plans and non-controlling interests |
C1(g) |
- |
- |
- |
- |
- |
|
Credit-related fair value losses on Group debt instruments |
C1(h) |
- |
- |
- |
- |
- |
|
Total adjusting items |
|
(199) |
(13) |
(242) |
(262) |
(164) |
|
Tax on adjusting items |
D1(d) |
(1) |
9 |
14 |
37 |
44 |
|
Non-controlling interest in adjusting items |
F2(a)(ii) |
- |
- |
- |
- |
- |
|
Total adjusting items after tax and non-controlling interests |
|
(200) |
(4) |
(228) |
(225) |
(120) |
|
£m |
||||||
|
Year ended 31 December 2008 |
Notes |
Long Term Savings |
||||
|
Emerging Markets |
Nordic |
Retail Europe |
Wealth Management |
US Life |
||
|
Income/(expense) |
||||||
|
Goodwill impairment and impact of acquisition accounting |
C1(b) |
(1) |
(195) |
(46) |
(100) |
(96) |
|
(Loss)/profit on disposal of subsidiaries, associated undertakings and strategic investments |
C1(c) |
(11) |
55 |
- |
- |
- |
|
Short-term fluctuations in investment return |
C1(d) |
(95) |
4 |
1 |
140 |
(248) |
|
Investment return adjustment for Group equity and debt instruments held in life funds |
C1(e) |
234 |
- |
- |
- |
- |
|
Dividends declared to holders of perpetual preferred callable securities |
C1(f) |
- |
- |
- |
- |
- |
|
US Asset Management equity plans and non-controlling interests |
C1(g) |
- |
- |
- |
- |
- |
|
Credit-related fair value gains on Group debt instruments |
C1(h) |
- |
- |
- |
- |
- |
|
Total adjusting items |
|
127 |
(136) |
(45) |
40 |
(344) |
|
Tax on adjusting items |
D1(d) |
20 |
14 |
17 |
10 |
3 |
|
Non-controlling interest in adjusting items |
F2(a)(ii) |
- |
- |
- |
- |
- |
|
Total adjusting items after tax and non-controlling interests |
|
147 |
(122) |
(28) |
50 |
(341) |
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
C: Other key performance information continued
C1: Operating profit adjusting items continued
(a) Summary of adjusting items continued
|
|
|
|
|
|
£m |
|
|
|
|
|
|
|
|
Total Long Term Savings |
Nedbank |
M&F |
USAM |
Other |
Total |
|
|
|
|
|
|
|
|
(437) |
(4) |
- |
(2) |
- |
(443) |
|
|
- |
- |
1 |
7 |
(50) |
|
(276) |
- |
(10) |
- |
(30) |
(316) |
|
|
- |
- |
- |
- |
(109) |
|
|
- |
- |
- |
45 |
45 |
|
- |
- |
- |
(1) |
- |
(1) |
|
- |
- |
- |
- |
(263) |
(263) |
|
(880) |
(4) |
(10) |
(2) |
(241) |
(1,137) |
|
103 |
- |
3 |
2 |
- |
108 |
|
- |
19 |
7 |
(3) |
- |
23 |
|
(777) |
15 |
- |
(3) |
(241) |
(1,006) |
|
|
|
|
|
|
£m |
|
|
|
|
|
|
|
|
Total Long Term Savings |
Nedbank |
M&F |
USAM |
Other |
Total |
|
|
|
|
|
|
|
|
(438) |
- |
- |
- |
- |
(438) |
|
|
1 |
(10) |
1 |
17 |
53 |
|
(198) |
- |
(72) |
- |
(72) |
(342) |
|
|
- |
- |
- |
- |
234 |
|
|
- |
- |
- |
43 |
43 |
|
- |
- |
- |
7 |
- |
7 |
|
- |
14 |
- |
- |
489 |
503 |
|
(358) |
15 |
(82) |
8 |
477 |
60 |
|
64 |
(4) |
14 |
- |
(136) |
(62) |
|
- |
18 |
19 |
(7) |
- |
30 |
|
(294) |
29 |
(49) |
1 |
341 |
28 |
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
C: Other key performance information continued
C1: Operating profit adjusting items continued
(b) Goodwill impairment and impact of acquisition accounting
Acquisition date deferred acquisition costs and deferred revenues are not recognised. These are reversed in the acquisition statement of financial position and replaced by goodwill, other intangible assets and the value of the acquired present value of in-force business ('acquired PVIF'). In determining its adjusted operating profit the Group recognises deferred revenue and acquisition costs in relation to policies sold by acquired businesses pre-acquisition, and excludes the impairment of goodwill and the amortisation of acquired other intangibles and acquired PVIF and the movements in certain acquisition date provisions.
Goodwill impairment and acquisition accounting adjustments to adjusted operating profit are summarised below:
|
Year ended 31 December 2009 |
£m |
|||||||
|
Emerging Markets |
Nordic |
Retail Europe |
Wealth Management |
US |
Nedbank |
USAM |
Total |
|
|
Amortisation of acquired PVIF |
- |
(106) |
(37) |
(86) |
(14) |
- |
- |
(243) |
|
Amortisation of acquired deferred costs and revenue |
1 |
21 |
(5) |
34 |
- |
- |
- |
51 |
|
Amortisation of other acquired intangible assets |
(2) |
(25) |
(14) |
(36) |
- |
(4) |
(2) |
(83) |
|
Change in acquisition date provisions |
- |
98 |
- |
- |
- |
- |
- |
98 |
|
Goodwill impairment |
- |
- |
(187) |
(79) |
- |
- |
- |
(266) |
|
|
(1) |
(12) |
(243) |
(167) |
(14) |
(4) |
(2) |
(443) |
|
Year ended 31 December 2008 |
£m |
|||||||
|
Emerging Markets |
Nordic |
Retail Europe |
Wealth Management |
US |
Nedbank |
USAM |
Total |
|
|
Amortisation of acquired PVIF |
- |
(105) |
(49) |
(97) |
(35) |
- |
- |
(286) |
|
Amortisation of acquired deferred costs and revenue |
1 |
22 |
16 |
42 |
- |
- |
- |
81 |
|
Amortisation of other acquired intangible assets |
(1) |
(24) |
(13) |
(37) |
- |
- |
- |
(75) |
|
Change in acquisition date provisions |
- |
(76) |
- |
(8) |
- |
- |
- |
(84) |
|
Goodwill impairment |
(1) |
(12) |
- |
- |
(61) |
- |
- |
(74) |
|
|
(1) |
(195) |
(46) |
(100) |
(96) |
- |
- |
(438) |
C: Other key performance information continued
C1: Operating profit adjusting items continued
(c) (Loss)/profit on disposal of subsidiaries, associated undertakings and strategic investments
On 6 March 2009 the Group disposed of its interest in Old Mutual Australia at a loss of £8 million.
In August 2008, an agreement with ABN AMRO Asset Management Asia and their parent company, Fortis Bank was entered into to acquire the 49% stake that Fortis holds in AATEDA, a major Chinese asset management joint venture for €165 million. On 27 May 2009 the termination of this agreement with ABN AMRO Asset Management Asia and Fortis Bank was announced, with an exit fee of £41 million which has been accounted for as a loss on disposal.
On 11 June 2008, the Group completed the disposal of its controlling shareholding in Palladyne, an asset management business, resulting in a profit on disposal of £17 million.
Part of the Nordic segment's banking business, Skandia's Nordic vehicle finance operation, Skandiabanken Bilfinans, was sold in the previous financial year, resulting in a profit on disposal of £55 million.
In the previous financial year, the Group has closed its project to develop a direct financial services capability in South Africa due to adverse market conditions. Costs relating to the closure amounting to £25 million have been excluded from the adjusted operating profit. Emerging Markets realised a profit of £4 million on the sale of its administration business and Nedbank recognised a £1 million profit on the disposal of Bond Choice.
(Loss)/profits on the disposal of subsidiaries, associated undertakings and strategic investments are analysed below:
|
|
|
£m |
|
|
Year ended 31 December 2009 |
Year ended 31 December 2008 |
|
Emerging Markets |
(51) |
(11) |
|
Nordic |
- |
55 |
|
Wealth Management |
(7) |
- |
|
US Life |
- |
- |
|
Total Long Term Savings |
(58) |
44 |
|
Nedbank |
- |
1 |
|
M&F |
- |
(10) |
|
USAM |
1 |
1 |
|
Other |
7 |
17 |
|
(Loss)/profit on disposal of subsidiaries, associated undertakings and strategic investments |
(50) |
53 |
(d) Long-term investment return
Profit before tax includes actual investment returns earned on the shareholder assets of the Group's life assurance and general insurance businesses. Adjusted operating profit is stated after recalculating shareholder asset investment returns based on a long-term investment return rate. The difference between the actual and the long-term investment returns are short-term fluctuations in investment return.
Long-term rates of return are based on achieved real 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, and are reviewed frequently, usually annually, for appropriateness. These rates of return have been selected with a view to ensuring that returns credited to adjusted operating profit are consistent with the actual returns expected to be earned over the long-term.
For Emerging Markets, the return is applied to an average value of investible shareholders' assets, adjusted for net fund flows. For Nordic, Retail Europe, Wealth Management and US Life, the return is applied to average investible assets. For M&F general insurance business, the return is an average value of investible assets supporting shareholders' funds and insurance liabilities, adjusted for net fund flows.
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
C: Other key performance information continued
C1: Operating profit adjusting items continued
(d) Long-term investment return continued
|
|
|
% |
|
Long-term investment rates |
Year ended 31 December 2009 |
Year ended 31 December 2008 |
|
Emerging Markets |
13.3 |
16.6 |
|
Nordic |
1.8 |
3.5 |
|
Retail Europe |
2.8 |
3.1 |
|
Wealth Management |
5.0 |
5.0 |
|
US Life |
5.9 |
5.9 |
|
M&F |
13.3 |
16.6 |
Analysis of short-term fluctuations in investment return
|
|
|
|
|
|
|
|
|
|
£m |
|
|
Long Term Savings |
|
|
|
|||||
|
Year ended 31 December 2009 |
Emerging Markets |
Nordic |
Retail Europe |
Wealth Management |
US Life |
Total Long Term Savings |
M&F |
Other |
Total |
|
Long-term investment return |
126 |
1 |
1 |
109 |
539 |
776 |
60 |
91 |
927 |
|
Less: Actual shareholder investment return |
88 |
- |
2 |
21 |
389 |
500 |
50 |
61 |
611 |
|
Short-term fluctuations in investment return |
38 |
1 |
(1) |
88 |
150 |
276 |
10 |
30 |
316 |
|
|
|
|
|
|
|
|
|
|
£m |
|
|
Long Term Savings |
|
|
|
|||||
|
Year ended 31 December 2008 |
Emerging Markets |
Nordic |
Retail Europe |
Wealth Management |
US Life |
Total Long Term Savings |
M&F |
Other |
Total |
|
Long-term investment return |
133 |
1 |
- |
65 |
440 |
639 |
60 |
108 |
807 |
|
Less: Actual shareholder investment return |
38 |
5 |
1 |
205 |
192 |
441 |
(12) |
36 |
465 |
|
Short-term fluctuations in investment return |
95 |
(4) |
(1) |
(140) |
248 |
198 |
72 |
72 |
342 |
The actual investment return attributable to shareholders for US life assurance reflects total investment income, as a distinction is not drawn between shareholder and policyholder funds.
C: Other key performance information continued
C1: Operating profit adjusting items continued
(e) Investment return adjustment for Group equity and debt instrument held in life funds
Adjusted operating profit includes investment returns on policyholder investments in Group equity and debt instruments held by the Group's life funds. These include investments in the Company's ordinary shares, and the subordinated liabilities and ordinary securities of Nedbank. These investment returns are eliminated within the consolidated income statement in arriving at profit before tax, but are included in adjusted operating profit. In 2009 the investment return adjustment increased adjusted operating profit by £109 million (2008: decrease of £234 million).
(f) Dividends declared to holders of perpetual preferred callable securities
Dividends declared to the holders of the Group's perpetual preferred callable securities were £45 million in the year ended 31 December 2009 (2008: £43 million). These are recognised in finance costs on an accruals basis for the purpose of determining adjusted operating profit. In the IFRS financial statements this cost is recognised in equity.
(g) US Asset Management equity plans and non-controlling interests
US Asset Management has a number of long-term incentive arrangements with senior employees in its asset management affiliates.
In accordance with IFRS requirements the cost of these schemes is disclosed as being attributable to non-controlling interests. However, this is treated as a compensation expense in determining adjusted operating profit. The gain recognised in 2009 was £1 million (2008: loss £7 million).
The Group has issued put options to senior employees as part of some of its US affiliate incentive schemes. The impact of revaluing these instruments is recognised in accordance with IFRS, but excluded from adjusted operating profit. As at 31 December 2009 these instruments were revalued, the impact of which was £nil (2008: £nil).
(h) Credit-related fair value gains and losses on Group debt instruments
The narrowing of credit spread of the Group's debt instruments in the market price has resulted in losses of £263 million (2008: gains due to widening of £489 million) on Other operating segments and £nil (2008: £14 million gain) in Nedbank being recorded in the Group's income statement for those instruments that are recorded at fair value.
In the directors' view, such movements are not reflective of the underlying performance of the Group and will reverse over time. They have therefore been excluded from adjusted operating profit.
C2 Foreign currencies
The principal exchange rates used to translate the operating results, assets and liabilities of key foreign business segments to Sterling are:
|
|
Income statement (average rate) |
Statement of financial position (closing rate) |
|
31 December 2009 |
||
|
Rand |
13.1746 |
11.9172 |
|
US dollars |
1.5655 |
1.6148 |
|
Swedish kronor |
11.9743 |
11.5562 |
|
Euro |
1.1227 |
1.1268 |
|
31 December 2008 |
||
|
Rand |
15.2948 |
13.7194 |
|
US dollars |
1.8524 |
1.4575 |
|
Swedish kronor |
12.2209 |
11.4494 |
|
Euro |
1.2594 |
1.0446 |
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
C: Other key performance information continued
C3: Earnings and earnings per share
(a) Basic and diluted earnings per share
Basic earnings per share is calculated by dividing the profit for the financial year attributable to ordinary equity shareholders by the weighted average number of ordinary shares in issue during the year excluding own shares held in policyholder funds, ESOP trusts, Black Economic Empowerment trusts and other related undertakings.
|
|
£m |
|
|
|
Year ended 31 December 2009 |
Year ended 31 December 2008 |
|
(Loss)/profit for the financial year attributable to equity holders of the parent |
(340) |
441 |
|
Dividends declared to holders of perpetual preferred callable securities |
(32) |
(31) |
|
(Loss)/profit attributable to ordinary equity holders |
(372) |
410 |
Total dividends declared to holders of perpetual preferred callable securities of £45 million in 2009 (2008: £43 million) are stated net of tax credits of
£13 million (2008: £12 million).
|
Millions |
||
|
|
Year ended 31 December 2009 |
Year ended 31 December 2008 |
|
Weighted average number of ordinary shares in issue |
5,277 |
5,294 |
|
Shares held in charitable foundations |
(7) |
(19) |
|
Shares held in ESOP trusts |
(41) |
(45) |
|
Adjusted weighted average number of ordinary shares |
5,229 |
5,230 |
|
Shares held in life funds |
(236) |
(240) |
|
Shares held in Black Economic Empowerment trusts |
(235) |
(235) |
|
Weighted average number of ordinary shares |
4,758 |
4,755 |
|
Basic earnings per ordinary share (pence) |
(7.8) |
8.6 |
Diluted earnings per share recognises the dilutive impact of share options held in ESOP trusts and Black Economic Empowerment trusts which are currently in the money in the calculation of the weighted average number of shares, as if the relevant shares were in issue for the full period.
|
Millions |
|||
|
|
Year ended 31 December 2009 |
Year ended 31 December 2008 |
|
|
Weighted average number of ordinary shares |
4,758 |
4,755 |
|
|
Adjustments for share options held by ESOP trusts |
- |
61 |
|
|
Adjustments for shares held in Black Economic Empowerment trusts |
- |
235 |
|
|
|
4,758 |
5,051 |
|
|
Diluted earnings per ordinary share (pence) |
(7.8) |
8.1 |
|
No adjustments to the weighted average number of ordinary shares have been effected for 2009 in order to calculate the diluted earnings per ordinary share as any adjustments would be antidilutive.
C: Other key performance information continued
C3: Earnings and earnings per share continued
(b) Adjusted operating earnings per ordinary share
Adjusted operating earnings per ordinary share is determined based on adjusted operating profit. Adjusted operating profit represents the directors' view of the underlying performance of the Group. For long-term and general insurance business adjusted operating profit is based on a long-term investment return, includes investment returns on life funds' investments in Group equity and debt instruments and is stated net of income tax attributable to policyholder returns. For the US Asset Management business it includes compensation costs in respect of certain long-term incentive schemes defined as non-controlling interests in accordance with IFRS. For all businesses, adjusted operating profit excludes goodwill impairment, the impact of acquisition accounting, revaluations of put options related to long-term incentive schemes, the impact of closure of unclaimed shares trusts, profit/(loss) on disposal of subsidiaries, associated undertakings and strategic investments, dividends declared to holders of perpetual preferred callable securities, income/(expense) from closure of unclaimed shares trusts and fair value gains/(losses) on Group debt instruments.
The reconciliation of profit for the financial year to adjusted operating profit after tax attributable to ordinary equity holders is as follows:
|
£m |
||
|
|
Year ended 31 December 2009 |
Year ended 31 December 2008 |
|
(Loss)/profit for the financial year attributable to equity holders of the parent |
(340) |
441 |
|
Adjusting items |
1,137 |
(60) |
|
Non core operations - Bermuda |
(33) |
365 |
|
Tax on adjusting items |
(108) |
62 |
|
Non-controlling interest on adjusting items |
(23) |
(30) |
|
Adjusted operating profit after tax attributable to ordinary equity holders |
633 |
778 |
|
Adjusted weighted average number of ordinary shares - (millions) |
5,229 |
5,230 |
|
Adjusted operating earnings per ordinary share - (pence) |
12.1 |
14.9 |
(c) Headline earnings per share
In accordance with the JSE Limited (JSE) listing requirements, the Group is required to calculate a 'headline earnings per share' (HEPS), determined by reference to the South African Institute of Chartered Accountants' circular 8/2007 'Headline Earnings'. The table below sets out a reconciliation of basic earnings per ordinary share and HEPS in accordance with that circular. Disclosure of HEPS is not a requirement of International Financial Reporting Standards.
|
£m |
||||
|
|
Year ended 31 December 2009 |
Year ended 31 December 2008 |
||
|
|
Gross |
Net |
Gross |
Net |
|
(Loss)/profit for the financial year attributable to equity holders of the parent |
(340) |
(340) |
441 |
441 |
|
Dividends declared to holders of perpetual preferred callable securities |
(32) |
(32) |
(31) |
(31) |
|
(Loss)/profit attributable to ordinary equity holders |
(372) |
(372) |
410 |
410 |
|
Adjustments: |
|
|
|
|
|
Impairments of goodwill and intangible assets |
266 |
266 |
100 |
100 |
|
Loss/(profit) on disposal of subsidiaries, associated undertakings and strategic investments |
50 |
53 |
(53) |
(67) |
|
Realised gains/losses (including impairments) on available-for-sale financial assets |
239 |
239 |
414 |
381 |
|
Headline earnings |
183 |
186 |
871 |
824 |
|
Weighted average number of ordinary shares |
4,758 |
4,758 |
4,755 |
4,755 |
|
Diluted weighted average number of ordinary shares |
5,109 |
5,109 |
5,051 |
5,051 |
|
Headline earnings per share (pence) |
3.8 |
3.9 |
18.3 |
17.3 |
|
Diluted headline earnings per share (pence) |
3.6 |
3.6 |
17.2 |
16.3 |
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
C: Other key performance information continued
C4: Dividends
Dividends paid were as follows:
|
|
|
£m |
|
|
|
Note |
Year ended 31 December 2009 |
Year ended 31 December 2008 |
|
2007 Final dividend paid - 4.55p per 10p share |
|
- |
227 |
|
2008 Interim dividend paid - 2.45p per 10p share |
|
- |
125 |
|
Dividends to ordinary equity holders |
|
- |
352 |
|
Dividends declared to holders of perpetual preferred callable securities |
|
45 |
43 |
|
Dividend payments for the year |
|
45 |
395 |
Dividends paid to ordinary equity holders, as above, are calculated using the number of shares in issue at the record date, less treasury shares held in ESOP trusts, life funds of Group companies, Black Economic Empowerment trusts and related undertakings.
As a consequence of the exchange control arrangements in place in certain African territories, dividends to ordinary equity holders on the branch registers of those countries (or, in the case of Namibia, the Namibian section of the principal register) are settled through Dividend Access Trusts established for that purpose.
In March and November 2009, £22 million and £23 million respectively were declared and paid to holders of perpetual preferred callable securities (March 2008: £23 million and November 2008: £20 million).
A final dividend of 1.5 pence per 10p share has been recommended by the directors. Subject to shareholders' approval, the dividend will be paid on 25 June 2010 to shareholders on the register at the close of business on 14 May 2010. The dividend will absorb an estimated £81 million of shareholders' funds. The Company is planning to offer, for the first time, a scrip dividend alternative for eligible shareholders subject to finalising the associated logistics and timetable.
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
D: Other income statement notes
D1: Income tax expense/(credit)
(a) Analysis of total income tax expense/(credit)
|
|
£m |
|
|
|
Year ended 31 December 2009 |
Year ended 31 December 2008 |
|
Current tax |
||
|
United Kingdom tax |
||
|
Corporation tax |
46 |
93 |
|
Double tax relief |
- |
(145) |
|
Overseas tax |
||
|
South Africa |
257 |
264 |
|
United States |
- |
4 |
|
Europe |
49 |
68 |
|
Secondary Tax on Companies (STC) |
13 |
22 |
|
Prior year adjustments |
14 |
1 |
|
Total current tax |
379 |
307 |
|
Deferred tax |
||
|
Origination and reversal of temporary differences |
45 |
(548) |
|
Changes in tax rates/bases |
- |
(1) |
|
Write down/recognition of deferred tax assets |
(59) |
154 |
|
Total deferred tax |
(14) |
(395) |
|
Total income tax expense/(credit) |
365 |
(88) |
(b) Reconciliation of total income tax expense/(credit)
|
|
|
£m |
|
|
Year ended 31 December 2009 |
Year ended 31 December 2008 |
|
Profit before tax |
247 |
595 |
|
Tax at standard rate of 28% (2008: 28.5%) |
69 |
169 |
|
Different tax rate or basis on overseas operations |
(9) |
(23) |
|
Untaxed and low taxed income |
(86) |
(218) |
|
Disallowable expenses |
180 |
8 |
|
Net movement on deferred tax assets not recognised |
83 |
123 |
|
Effect on deferred tax of changes in tax rates |
(2) |
(5) |
|
STC |
19 |
53 |
|
Income tax attributable to policyholder returns |
142 |
(169) |
|
Other |
(31) |
(26) |
|
Total income tax expense/(credit) |
365 |
(88) |
(c) Income tax relating to components of other comprehensive income
|
|
£m |
|
|
|
Year ended 31 December 2009 |
Year ended 31 December 2008 |
|
Fair value gains/(losses) |
428 |
(383) |
|
Shadow accounting |
(18) |
16 |
|
Currency translation differences/exchange differences on translating foreign operations |
- |
13 |
|
Other |
(13) |
(12) |
|
Income tax expense/(credit) relating to components of other comprehensive income |
397 |
(366) |
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
D: Other income statement notes continued
D1: Income tax expense/(credit) continued
(d) Income tax on adjusted operating profit
|
|
£m |
||
|
|
Year ended 31 December 2009 |
Year ended 31 December 2008 |
|
|
Income tax expense/(credit) |
365 |
(88) |
|
|
Tax on adjusting items |
|
|
|
|
Impact of acquisition accounting |
40 |
46 |
|
|
Profit on disposal of subsidiaries, associated undertakings and strategic investments |
(2) |
12 |
|
|
Short-term fluctuations in investment return |
83 |
35 |
|
|
Income tax attributable to policyholders returns |
(192) |
236 |
|
|
Tax on dividends declared to holders of perpetual preferred callable securities recognised in equity |
(13) |
(12) |
|
|
Fair value gains and losses on group debt instruments |
- |
(143) |
|
|
Tax on non-core operations |
11 |
- |
|
|
Income tax on adjusted operating profit |
292 |
86 |
|
E: Borrowed funds
E1: Borrowed funds
|
|
|
|
|
|
|
£m |
|
|
|
Notes |
Group excluding Nedbank |
Nedbank |
At 31 December 2009 |
Group excluding Nedbank |
Nedbank |
At 31 December 2008 |
|
Senior debt securities and term loans |
E9(a) |
662 |
484 |
1,146 |
557 |
- |
557 |
|
Mortgage backed securities |
E9(b) |
- |
119 |
119 |
- |
104 |
104 |
|
Subordinated debt securities (net of Group holdings) |
E9(c) |
1,034 |
1,010 |
2,044 |
779 |
855 |
1,634 |
|
Borrowed funds |
|
1,696 |
1,613 |
3,309 |
1,336 |
959 |
2,295 |
|
|
|
|
|
|
|
|
|
|
Other issues treated as equity for accounting purposes |
|
|
|
|
|
|
|
|
US$750 million cumulative preference securities |
F11(b) |
458 |
|
|
458 |
|
|
|
€500 million perpetual preferred callable securities |
F10(b) |
338 |
|
|
338 |
|
|
|
£350 million perpetual preferred callable securities |
F10(b) |
350 |
|
|
350 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross debt (IFRS basis) |
|
2,842 |
|
|
2,482 |
|
|
|
Nominal value of gross debt |
|
3,162 |
|
|
3,154 |
|
|
The table below is a maturity analysis of liability cash flows based on contractual maturity dates for borrowed funds. Maturity analysis is undiscounted and based on year end exchange rates.
|
|
|
|
|
|
|
£m |
|
|
|
|
Group excluding Nedbank |
Nedbank |
At 31 December 2009 |
Group excluding Nedbank |
Nedbank |
At 31 December 2008 |
|
Less than 1 year |
|
219 |
156 |
375 |
495 |
104 |
599 |
|
Greater than 1 year and less than 5 years |
|
1,413 |
1,226 |
2,639 |
1,397 |
774 |
2,171 |
|
Greater than 5 years |
|
899 |
1,033 |
1,932 |
238 |
666 |
904 |
|
Total |
|
2,531 |
2,415 |
4,946 |
2,130 |
1,544 |
3,674 |
E: Borrowed funds
E1: Borrowed funds
(a) Senior debt securities and term loans
|
|
|
|
|
|
|
£m |
|
|
|
|
Group excluding Nedbank |
Nedbank |
At 31 December 2009 |
Group excluding Nedbank |
Nedbank |
At 31 December 2008 |
|
Floating rate notes1 |
|
114 |
265 |
379 |
85 |
- |
85 |
|
Fixed rate notes2 |
|
548 |
219 |
767 |
152 |
- |
152 |
|
Revolving credit facility3 |
|
- |
- |
- |
294 |
- |
294 |
|
Term loan and other loans |
|
- |
- |
- |
26 |
- |
26 |
|
Total senior debt securities and term loan |
|
662 |
484 |
1,146 |
557 |
- |
557 |
Senior debt securities and term loan comprise:
1 Floating rate notes
£3 million note repayable in December 2010, with holders having the option to elect for early redemption every six months with coupon referenced against six month LIBOR less 0.50%.
US$50 million repayable September 2011 at 3 month LIBOR plus 0.50%.
US$10 million repayable September 2009 at 3 month LIBOR plus 0.35% - repaid.
SEK100 million repayable March 2009 at 3 month STIBOR plus 0.20% - repaid.
€22 million repayable January 2010 at 3 month EURIBOR plus 0.35%.
SEK50 million repayable March 2010 at 3 month STIBOR plus 0.38%.
R1,000 million unsecured senior debt repayable September 2012 at 3 month JIBAR + 1.5%.
R250 million unsecured senior debt repayable September 2015 at JIBAR + 2.20%.
R1,750 million unsecured senior debt repayable March 2013 inflation linked (3.9% real yield).
R98 million unsecured senior debt repayable March 2013 inflation linked (3.8% real yield).
R550 million repayable August 2010 at 3 month ZAR - JIBAR-SAFEX + 4.5%.
R100 million repayable February 2011 at 3 month ZAR - JIBAR-SAFEX + 4.5%.
2 Fixed rate notes
€30 million Euro bond repayable July 2010, capital and interest swapped into fixed rate US dollars at 5.28%.
€10 million Euro bond repayable December 2010, capital and interest swapped into floating rate US dollars at 3 month LIBOR + 0.95%.
€20 million Euro bond repayable August 2013, capital and interest swapped into floating rate US dollars at 3 month LIBOR + 1.30%.
€100 million Euro bond repayable December 2009 at 3.46% - repaid.
R130 million unsecured senior debt repayable October 2024 at zero coupon.
R2,000 million unsecured senior debt repayable September 2015 at 10.55%.
R400 million unsecured senior debt repayable September 2019 at 11.39%.
£500 million Euro bond repayable October 2016 at 7.125%.
The total fair value of the swap derivatives associated with the Senior notes is £12 million (2008: £11 million). These are recognised as assets.
3 Revolving credit facilities and irrevocable letters of credit
The Group has a £1,250 million five-year multi-currency revolving credit facility, which had an original maturity date of September 2010. On 18 August 2007 syndicate banks agreed to extend the maturity date of £1,232 million of the facility until September 2012. At 31 December 2009
£480 million (2008: £826 million) of this facility was utilised, £nil (2008: £294 million) in the form of drawn debt and £480 million (2008: £532 million) in the form of irrevocable letters of credit.
The Group has a SEK1,000 million revolving credit facility, which has a maturity date of 2 July 2010. At 31 December 2009 this facility was undrawn.
(b) Mortgage backed securities - Nedbank
|
|
£m |
|
|
At 31 December 2009 |
At 31 December 2008 |
|
|
R291 million notes (class A1) repayable 18 November 2039 (11.467%) |
25 |
22 |
|
R1.4 billion notes (class A2A) repayable 18 November 2039 (11.817%) |
84 |
73 |
|
R98 million notes (class B note) repayable 18 November 2039 (12.067%) |
6 |
5 |
|
R76 million notes (class C note) repayable 18 November 2039 (13.317%) |
4 |
4 |
|
|
119 |
104 |
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
E: Borrowed funds
E1: Borrowed funds
(c) Subordinated debt securities
|
|
£m |
|
|
At 31 December 2009 |
At 31 December 2008 |
|
|
Nedbank |
|
|
|
US$18 million repayable 31 August 2009 (6 month LIBOR less 1.5%) - repaid1 |
- |
12 |
|
R1.5 billion repayable 24 April 2016 (7.85%)2 |
126 |
108 |
|
R1.8 billion repayable 20 September 2018 (9.84%)3 |
149 |
135 |
|
R515 million repayable on 4 December 2008 (13.5%)4 - repaid |
- |
- |
|
R500 million repayable on 30 December 2010 (8.38%)5 |
41 |
36 |
|
R650 million repayable 8 February 2017 (9.03%)6 |
55 |
49 |
|
R1.7 billion repayable 8 February 2019 (8.9%)7 |
138 |
125 |
|
R2.0 billion repayable 6 July 2022 (3 month JIBAR plus 0.47%)8 |
171 |
150 |
|
R500 million repayable 15 August 2012 (3 month JIBAR plus 0.45%)9 |
42 |
37 |
|
R1.0 billion repayable 17 September 2015 (10.54%)10 |
84 |
77 |
|
R500 million repayable 14 December 2017 (3 month JIBAR plus 0.70%)11 |
42 |
37 |
|
R120 million repayable 14 December 2017 (10.38%)12 |
10 |
9 |
|
R487 million repayable 20 November 2018 (15.05%)13 |
41 |
40 |
|
R1,265 million repayable 20 November 2018 (JIBAR plus 4.75%)14 |
108 |
94 |
|
R300 million repayable on 4 December 2013 (JIBAR + 2.5%)15 |
13 |
11 |
|
US$100 million repayable on 3 March 2022 (3 month USD LIBOR)16 |
62 |
- |
|
|
1,082 |
920 |
|
Less: banking subordinated debt securities held by other Group companies |
(72) |
(65) |
|
Banking subordinated debt securities (net of Group holdings) |
1,010 |
855 |
|
Group excluding Nedbank |
|
|
|
R3.0 billion repayable 27 October 2020 (8.9%)17 |
252 |
219 |
|
£300 million repayable 21 January 2016 (5.0%)18 |
252 |
239 |
|
R250 million preference shares repayable 9 June 201119 |
21 |
18 |
|
€750 million repayable 18 January 2017 (4.5%)20 |
509 |
303 |
|
|
1,034 |
779 |
|
|
|
|
|
Total subordinated liabilities |
2,044 |
1,634 |
The subordinated notes rank behind the claims against the Group depositors and other unsecured, unsubordinated creditors. None of the Group's subordinated notes are secured.
1. This instrument is matched either by advances to clients or covered against exchange rate fluctuations - repaid.
2. Unsecured secondary callable note was issued 24 April 2005 with a call date of 24 April 2011.
3. Unsecured secondary callable note was issued 20 September 2006 at R1.5 billion with a call date of 20 September 2013. On 18 May 2007 an additional R0.3 billion was issued.
4. Unsecured callable Bonds issued 10 June 2002.
5. Unsecured callable Bonds issued 30 March 2006.
6. Unsecured secondary callable note was issued 8 February 2007 with a call date of 8 February 2012.
7. Unsecured secondary callable note was issued 8 February 2007 at R1.0 billion. On 19 March 2007 an additional R0.7 billion was issued.
8. Unsecured secondary capital callable note issued 6 July 2007 and has a call date of 6 July 2017.
9. This bond issued on 15 August 2007 is an unsecured secondary capital callable floating rate note with a call date 15 August 2012.
10. This bond issued on 17 September 2007 is an unsecured fixed rate note with a term of 13 years (non-call 8 year).
11. This bond issued on 14 December 2007 is a 10 year (non-call 5 year) floating rate note. After its call date on 14 December 2012 its terms become JIBAR plus 1.70% until maturity.
12. This bond issued on 14 December 2007 is a 10 year (non-call 5 year) fixed rate note. After its call date its terms become floating 3 month JIBAR plus initial margin over mid swaps plus 1.0% until maturity.
13. This bond issued on 20 May 2008 is a perpetual (non-call 10 year) fixed rate note with a call date on 20 November 2018.
14. This bond issued on 20 May 2008 is a perpetual (non-call 10 year) floating rate note with a call date of 20 November 2018.
15. This bond issued on 4 December 2008 is a floating rate note with a call date of 4 December 2013.
16. Dated Tier 2 notes issued 3 March 2009 with call date 2 March 2017.
17. These bonds have a maturity date of 27 October 2020 and pay a coupon of 8.92% to 27 October 2015 and 3 month JIBAR plus 1.59% thereafter. The Group has the option to repay the bonds at par on 27 October 2015 and at 3 monthly intervals thereafter.
18. These bonds, issued on 20 January 2006, have a maturity date of 21 January 2016 and pay a coupon of 5.0% to 21 January 2011 and 6 month LIBOR plus 1.13% thereafter. The coupon on the bonds was swapped into floating rate of 6 month STIBOR plus 0.50%. The Group has the option to repay the bonds at par on 21 January 2011 and at 6 monthly intervals thereafter.
19. These preference shares are redeemable on 9 June 2011 and pay a variable cumulative coupon of 61.0% of the Prime Rate as quoted by Nedbank Limited. The Group has the option to redeem the shares at par at any time before the final redemption date but after giving an agreed period of notice.
20. This bond, issued on 16 January 2007, has a maturity date of 18 January 2017 and pays a coupon of 4.5% to 17 January 2012 and 6 month EURIBOR plus 0.96% thereafter. The principal and coupon on the bond were swapped equally into Sterling and US Dollars with coupons of 6 month LIBOR plus 0.34% and 6 month US LIBOR plus 0.31% respectively. The Group has the option to repay the bonds at par on 17 January 2012 and at 6 monthly intervals thereafter.
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
F: Other statement of financial position notes
F1: Provisions
|
|
£m |
|
|
|
At 31 December 2009 |
At 31 December 2008 |
|
Surplus property |
20 |
23 |
|
Client compensation |
30 |
27 |
|
Warranties on sale of business |
17 |
111 |
|
Liability for long service leave |
49 |
38 |
|
Provision for donations |
84 |
80 |
|
Litigation claims |
- |
36 |
|
Other provisions |
95 |
165 |
|
|
295 |
480 |
|
Post employment benefits |
(32) |
(3) |
|
Total |
263 |
477 |
|
|
|
|
|
|
|
|
|
£m |
|
Year ended 31 December 2009 |
Surplus property |
Client compensation |
Warranties on sale of business |
Liability for long service leave |
Provision for donations |
Litigation claims |
Other |
Total |
|
Balance at beginning of the year |
23 |
27 |
111 |
38 |
80 |
36 |
165 |
480 |
|
Unused amounts reversed |
- |
(2) |
(54) |
- |
- |
(11) |
(41) |
(108) |
|
Unwind of discount |
1 |
- |
- |
- |
- |
- |
- |
1 |
|
Charge to income statement |
3 |
(3) |
- |
24 |
- |
- |
13 |
37 |
|
Utilised during the year |
(7) |
(2) |
(26) |
(20) |
- |
(6) |
(59) |
(120) |
|
Foreign exchange and other movements |
- |
10 |
(14) |
7 |
4 |
(19) |
17 |
5 |
|
Balance at end of the year |
20 |
30 |
17 |
49 |
84 |
- |
95 |
295 |
|
|
|
|
|
|
|
|
|
£m |
|
Year ended 31 December 2008 |
Surplus property |
Client compensation |
Warranties on sale of business |
Liability for long service leave |
Provision for donations |
Litigation claims |
Other |
Total |
|
Balance at beginning of the year |
29 |
19 |
87 |
34 |
82 |
64 |
183 |
498 |
|
Unused amounts reversed |
(1) |
(5) |
(5) |
- |
- |
- |
(40) |
(51) |
|
Unwind of discount |
1 |
- |
- |
- |
- |
- |
- |
1 |
|
Charge to income statement |
- |
8 |
22 |
4 |
- |
37 |
20 |
91 |
|
Utilised during the year |
(7) |
(14) |
(3) |
1 |
(2) |
(74) |
(24) |
(123) |
|
Foreign exchange and other movements |
1 |
19 |
10 |
(1) |
- |
9 |
26 |
64 |
|
Balance at end of the year |
23 |
27 |
111 |
38 |
80 |
36 |
165 |
480 |
2009 provisions in relation to surplus property amounted to £20 million (2008: £23 million). These relate to the onerous costs of vacant properties leased by the Group of which £13 million (2008: £23 million) is estimated to be payable after more than 1 year.
Provisions in relation to client compensation were £30 million (2008: £27 million), primarily relating to possible mis-selling of guarantee contracts in Wealth Management. £5 million (2008: £6 million) is estimated to be payable after more than one year.
Provisions in relation to warranties on the sale of businesses amounted to £17 million (2008: £111 million). £9 million (2008: £9 million) is estimated to be payable after more than one year. During the year, settlement was reached in relation to certain outstanding litigations in connection with the acquisition of Skandia. Corresponding provisions have been accordingly utilised or released.
The liability for long service leave of £49 million (2008: £38 million) relates to provision for staff payments for long serving employees, all of which estimated to be payable in less than one year.
F: Other statement of financial position notes continued
F1: Provisions continued
The provision for donations is held by Emerging Markets. It relates to the payment of charitable donations in future periods to which the Group is committed, out of the funds made available on the closure of the Group's unclaimed shares trusts, which were set up as part of the demutualisation in 1999 and closed in 2006 of which £84 million (2008: £80 million) is estimated to be payable after more than one year.
Other provisions includes provisions for tax on long term staff benefits, restructuring and legal fees.
At 31 December 2009 provisions in relation to litigation claims amounted to £nil (2008: £36 million). During the year £36 million of the provision was utilised, principally in respect of payments made in connection with the outcome of the Skandia Liv arbitration.
Where material, provisions are discounted at discount rates specific to the risks inherent in the liability. The timing and final amounts of payments in respect of some of the provisions, particularly those in respect of litigation claims and similar actions against the Group, are uncertain and could be result in adjustments to the amounts recorded. Of the total provisions recorded above, £188 million (2008: £271 million) is estimated to be payable after more than one year.
F2: Non-controlling interests
(a) Income statement
(i) Non-controlling interests - ordinary shares
The non-controlling interests charge to profit for the financial year has been calculated on the basis of the Group's effective ownership of the subsidiaries in which it does not own 100% of the ordinary equity. The principal subsidiaries where a non-controlling interest exists are the Group's banking and general insurance businesses in South Africa. For the year ended 31 December 2009 the non-controlling interests attributable to ordinary shares was £158 million (2008: £188 million).
|
|
£m |
|
|
|
At 31 December 2009 |
At 31 December 2008 |
|
R2,000 million non-cumulative preference shares |
16 |
14 |
|
R792 million non-cumulative preference shares |
6 |
5 |
|
R300 million non-cumulative preference shares |
3 |
1 |
|
US$750 million cumulative preferred securities |
38 |
32 |
|
R364 million non-cumulative preference shares |
2 |
2 |
|
Non-controlling interests - preferred securities |
65 |
54 |
(ii) 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 2009 |
Year ended 31 December 2008 |
|
The non-controlling interests charge is analysed as follows: |
||
|
Non-controlling interests - ordinary shares |
158 |
188 |
|
Goodwill impairment and impact of acquisition accounting |
1 |
- |
|
Profit on disposal of subsidiaries, associated undertakings and strategic investments |
- |
2 |
|
Short-term fluctuations in investment return |
1 |
11 |
|
Income attributable to Black Economic Empowerment trusts of listed subsidiaries |
23 |
30 |
|
Fair value gains on group debt instruments |
- |
(6) |
|
Income attributable to US Asset Management non-controlling interests |
(3) |
(7) |
|
Non-controlling interests share of adjusted operating profit |
180 |
218 |
The Group uses revised weighted average effective ownership interests when calculating the non-controllable interest applicable to the adjusted operating profit of its South Africa banking and general insurance businesses. This reflects the legal ownership of these businesses following the implementation for Black Economic Empowerment (BEE) schemes in 2005. In accordance with IFRS accounting rules the shares issued for BEE purposes are deemed to be, in substance, options. Therefore the effective ownership interest of the minorities reflected in arriving at profit after tax in the consolidated income statement is lower than that applied in arriving at adjusted operating profit after tax. In 2009 the increase in adjusted operating profit attributable to non-controlling interests as a result of this was £23 million (2008: £30 million).
Notes to the consolidated financial statements
For the year ended 31 December 2009 continued
F: Other statement of financial position notes
F2: Non-controlling interests
(b) Statement of financial position
(i) Ordinary shares
|
Reconciliation of movements in non-controlling interests |
£m |
|
|
Year to 31 December 2009 |
Year to 31 December 2008 |
|
|
Balance at beginning of the year |
1,147 |
933 |
|
Non-controlling interests' share of profit |
158 |
188 |
|
Non-controlling interests' share of dividends paid |
(80) |
(111) |
|
Net acquisition of interests |
63 |
25 |
|
Foreign exchange and other movements |
249 |
112 |
|
Balance at end of the year |
1,537 |
1,147 |
(ii) Preferred securities
|
|
£m |
|
|
|
At 31 December 2009 |
At 31 December 2008 |
|
R2,000 million non-cumulative preference shares1 |
140 |
140 |
|
R792 million non-cumulative preference shares2 |
71 |
71 |
|
R300 million non-cumulative preference shares3 |
12 |
12 |
|
US$750 million cumulative preferred securities4 |
458 |
458 |
|
R364 million non-cumulative preference shares5 |
25 |
25 |
|
R363 million non-cumulative preference shares6 |
17 |
- |
|
|
723 |
706 |
|
Unamortised issue costs |
(13) |
(13) |
|
Total in issue at 31 December |
710 |
693 |
Preferred securities are held at historic value of consideration received less unamortised issue costs.
1. 200 million R10 preference shares issued by Nedbank Limited (Nedbank), the Group's banking subsidiary. These shares are non-redeemable and non-cumulative and pay a cash dividend equivalent to 75% of the prime overdraft interest rate of Nedbank. Preference shareholders are only entitled to vote during periods when a dividend or any part of it remains unpaid after the due date for payment or when resolutions are proposed that directly affect any rights attaching to the shares or the rights of the holders. Preference shareholders will be entitled to receive their dividends in priority to any payment of dividends made in respect of any other class of Nedbank's shares.
2. 77.3 million R10 preference shares issued at R10.68 per share by Nedbank on the same terms as the securities described in (1) above.
3. 30 million R10 preference shares issued on 22 June 2006 by Imperial Bank Limited a subsidiary of Nedbank Limited, on the same terms as the securities described in (1) above.
4. US$750 million Guaranteed Cumulative Perpetual Preference Securities issued on 19 May 2003 by Old Mutual Capital Funding L.P., a subsidiary of the Group. Subject to certain limitations, holders of these securities are entitled to receive preferential cash distributions at a fixed rate of 8.0% per annum payable in arrears on a quarterly basis. The Group may defer payment of distributions at its sole discretion, but such an act may restrict Old Mutual plc from paying dividends on its ordinary shares for a period of 12 months. Arrears of distributions are payable quarterly cumulatively only on redemption of the securities or at the Group's option. The securities are perpetual, but may be redeemed at the discretion of the Group from 22 December 2008. The costs of issue have been amortised over the period to 22 December 2008.
5. 35 million R10 preference shares issued in 16 April 2007 at R10.27 per share by Nedbank on the same terms as the securities described in (1) above.
6. 36.3 million R10 preference shares issued by Nedbank in seven instalments between September 09 and December 09 on the same terms as the securities described in (1) above.
G: Other notes
G1: Contingent liabilities
|
£m |
||
|
|
At 31 December 2009 |
At 31 December 2008 |
|
Guarantees and assets pledged as collateral security |
2,375 |
1,839 |
|
Irrevocable letters of credit |
605 |
760 |
|
Secured lending |
555 |
383 |
|
Other contingent liabilities |
49 |
393 |
The Group has pledged debt securities amounting to £1,253 million (2008: £1,533 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 IAS39.These transactions are entered into under terms and conditions that are standard industry practice to securities borrowing and lending activities.
Nedbank structured financing
Historically a number of the Group's South African banking businesses entered into structured finance transactions with third parties using the tax base of these companies. Pursuant to the terms of the majority of these transactions, the underlying third party has contractually agreed to accept the risk of any tax being imposed by the South African Revenue Service (SARS), although the obligation to pay in the first instance rests with the Group's companies. It is only in limited cases where, for example, the credit quality of a client becomes doubtful, or where the client has specifically contracted out of the re-pricing of additional taxes, that the recovery from a client could be less than the liability that could arise on assessment, in which case provisions are made. SARS has examined the tax aspects of some of these types of structures and SARS could assess these structures in a manner different to that initially envisaged by the contracting parties. As a result Group companies could be obliged to pay additional amounts to SARS and recover these from clients under the applicable contractual arrangements.
Nedbank litigation
There are a number of legal or potential claims against Nedbank and its subsidiary companies, the outcome of which cannot at present be foreseen. The largest of these potential actions is a claim in the High Court for R1.3 billion against Nedbank by certain shareholders in Pinnacle Point Group Limited, alleging that Nedbank had a legal duty of care to them arising from a share swap transaction. Nedbank and its legal advisers are of the opinion that the claim is without merit and will be defended vigorously.
G2: Events after the reporting date
On 8 February 2010, Nedbank announced that it had received regulatory approval of the acquisition of Imperial Holdings' 49.9% indirect interest in Imperial Bank Limited, thereby satisfying all conditions precedent for the acquisition. The purchase consideration, of approximately £153 million will be settled out the existing cash resources of Nedbank Limited over a period of six months, commencing from 8 February 2010. Nedbank intends to submit an application to the South African Reserve whereby it will amalgamate all the assets of Imperial Bank with those of Nedbank.
On 5 February 2010, the group announced the completion of the acquisition of the remaining minority shareholdings in Mutual & Federal Insurance Company Limited, following the fulfilment of all outstanding conditions precedent. On 8 February 2010, 147,313,449 new Old Mutual plc ordinary shares were listed on the London Stock Exchange in connection with the acquisition.
This information is provided by RNS
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