Interim Results 2010 - Part 2

RNS Number : 6450Q

Old Mutual PLC

06 August 2010

 



Index to the financial information

For the six months ended 30 June 2010

Statement of directors' responsibilities in respect of the half-yearly financial statements                                                                                   34

Independent review report by KPMG Audit Plc to Old Mutual plc                                                                                                                          35

Consolidated income statement                                                                                                                                                                             36

Consolidated statement of comprehensive income                                                                                                                                               37

Reconciliation of adjusted operating profit to profit after tax                                                                                                                                38

Consolidated statement of financial position                                                                                                                                                         39

Consolidated statement of changes in equity                                                                                                                                                        40

Condensed consolidated statement of cash flows                                                                                                                                               46

Notes to the consolidated financial statements                                                                                                                                                        

      A: Accounting policies                                                                                                                                                                                     47

      B: Segment information                                                                                                                                                                                    47

      C: Other key performance information                                                                                                                                                             64

      D: Other income statement notes                                                                                                                                                                     74

      E: Financial assets and liabilities                                                                                                                                                                      76

      F: Other notes                                                                                                                                                                                                  80

Group Market Consistent Embedded Value statement of earnings                                                                                                                       81

Adjusted operating Group MCEV earnings per share                                                                                                                                           82

Components of Group MCEV and adjusted Group MCEV information                                                                                                                   83

Notes to the Old Mutual Market Consistent Embedded Value basis supplementary information                                                                              

      A: MCEV policies                                                                                                                                                                                             85

      B: Segment information                                                                                                                                                                                    92

      C: Other key performance information                                                                                                                                                          112

      D: Other income statement notes                                                                                                                                                                  119

      E: Sensitivity tests                                                                                                                                                                                          121

Shareholder information                                                                                                                                                                                      123

Statement of directors' responsibilities in respect of the half-yearly financial statements

For the six months ended 30 June 2010

We confirm that to the best of our knowledge:

●              the consolidated financial information has been prepared in accordance with the recognition and measurement principles of International                 Financial Reporting Standards adopted by the EU and in accordance with the requirements of IAS34 'Interim Financial Reporting'

●              the interim management report includes a fair review of the information required by:

(a)           DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b)           DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

Julian Roberts                                                                          Philip Broadley
Group Chief Executive                                                                Group Finance Director
6 August 2010                                                                            6 August 2010

Combined IFRS and MCEV report 

Independent review report by KPMG Audit Plc to Old Mutual plc

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2010 which comprises the Consolidated income statement, the Consolidated statement of comprehensive income, the Consolidated statement of financial position, the Consolidated statement of changes in equity, Condensed consolidated statement of cash flows and the related explanatory notes.  We have also reviewed the reconciliation of adjusted operating profit to profit after tax which has been prepared on the basis as set out on page 38. 

We have also been engaged by the company to review the Market Consistent Embedded Value (MCEV) basis supplementary information ("the supplementary information") for the six months ended 30 June 2010 as set out on pages 81 to 122. 

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements or the supplementary information. 

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Services Authority ("the UK FSA") and also to provide a review conclusion to the company on the supplementary information.  Our review of the condensed set of financial statements has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose.  Our review of the supplementary information has been undertaken so that we might state to the company those matters we have been engaged to state in this report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached. 

Directors' responsibilities 

The half-yearly financial report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FSA.  The directors have accepted responsibility for preparing the supplementary information contained in the half-yearly financial report on an MCEV basis in accordance with the CFO Forum MCEV Principles as issued in June 2008 and updated in October 2009 ('the MCEV Principles'). 

As disclosed in note A, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU.  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. 

The supplementary information has been prepared in accordance with the MCEV principles, using the methodology and assumptions as detailed in the basis of preparation of the supplementary information on page 85.  The supplementary information should be read in conjunction with the group's condensed set of financial statements. 

Our responsibility 

Our responsibility is to express to the company a conclusion on the condensed set of financial statements and the supplementary information in the half-yearly financial report based on our review. 

Scope of review 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK.  A review of interim financial information and supplementary information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion. 

Conclusion 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2010 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA. 

Based on our review, nothing has come to our attention that causes us to believe that the supplementary information for the six months ended 30 June 2010 is not prepared, in all material respects, in accordance with the MCEV principles, using the methodology and assumptions as detailed in the basis of preparation of the supplementary information on page 85. 

Alastair W S Barbour 

for and on behalf of KPMG Audit Plc 

Chartered Accountants, 8 Salisbury Square, London EC4Y 8BB, 6 August 2010 

Consolidated income statement

For the six months ended 30 June 2010

£m
	Notes	6 months ended 30 June 2010		6 months ended 30 June 2009	Year ended 31 December  2009
Revenue
Gross earned premiums	B3	2,201		1,817	3,820
Outward reinsurance		(199)		(180)	(369)
Net earned premiums		2,002		1,637	3,451
Investment return (non-banking)		1,582		1,553	11,616
Banking interest and similar income		2,005		2,112	3,989
Banking trading, investment and similar income		82		73	168
Fee and commission income, and income from service activities		1,420		1,119	2,422
Other income		108		61	202
Total revenues		7,199		6,555	21,848
Expenses
Claims and benefits (including change in insurance contract provisions)		(1,983)		(1,377)	(5,069)
Reinsurance recoveries		173		176	328
Net claims and benefits incurred		(1,810)		(1,201)	(4,741)
Change in investment contract liabilities		(876)		(1,142)	(8,345)
Losses on loans and advances		(285)		(253)	(511)
Finance costs		(127)		(19)	(322)
Banking interest payable and similar expenses		(1,252)		(1,437)	(2,627)
Fee and commission expenses, and other acquisition costs		(504)		(406)	(806)
Other operating and administrative expenses		(1,764)		(1,446)	(3,139)
Goodwill impairment	C1(b)	-		-	(266)
Change in third party interest in consolidated funds		28		(282)	(470)
Amortisation of PVIF and other acquired intangibles	C1(b)	(146)		(164)	(326)
Total expenses		(6,736)		(6,350)	(21,553)
Share of associated undertakings' profit/(loss) after tax		2		-	2
Loss on disposal of subsidiaries, associated undertakings and strategic investments	C1(c)	(22)		(45)	(50)
Profit before tax		443		160	247
Income tax expense	D1(a)	(63)		(133)	(365)
Profit/(loss) after tax for the financial period		380		27	(118)
Attributable to
Equity holders of the parent		265		(70)	(340)
Non-controlling interests
Ordinary shares		84		63	158
Preferred securities		31		34	64
Profit/(loss) after tax for the financial period		380		27	(118)
Earnings per share
Basic earnings per ordinary share (pence)	C3(a)		5.1	(1.8)	(7.8)
Diluted earnings per ordinary share (pence)	C3(a)		4.7	(1.8)	(7.8)
Weighted average number of shares - millions			4,849	4,757	4,758

Consolidated statement of comprehensive income

For the six months ended 30 June 2010

£m
		6 months ended 30 June 2010	6 months ended 30 June 2009	Year ended 31 December  2009
Profit/(loss) after tax for the financial period		380	27	(118)
Other comprehensive income for the financial period
Fair value gains/(losses)
Property revaluation		5	2	(10)
Net investment hedge		(34)	2	(41)
Available-for-sale investments
Fair value gains		472	453	1,087
Recycled to the income statement		(43)	117	239
Shadow accounting		(246)	(63)	27
Currency translation differences/exchange differences on translating foreign operations		318	(248)	302
Other movements		11	47	21
Income tax relating to components of other comprehensive income		(53)	(149)	(397)
Total other comprehensive income for the financial period		430	161	1,228
Total comprehensive income for the financial period		810	188	1,110
Attributable to
Equity holders of the parent		640	1	709
Non-controlling interests
Ordinary shares		139	151	334
Preferred securities		31	36	67
Total comprehensive income for the financial period		810	188	1,110

Reconciliation of adjusted operating profit to profit after tax

For the six months ended 30 June 2010

£m
	Notes	6 months ended 30 June 2010	6 months ended 30 June 2009*	Year ended 31 December 2009
Core operations
Long Term Savings	B2	477	317	685
Nedbank	B2	266	211	470
M&F	B2	33	20	70
USAM	B2	40	30	83
		816	578	1,308
Finance costs		(68)	(47)	(104)
Long-term investment return on excess assets		16	46	91
Interest payable to non-core operations - Bermuda		(18)	(21)	(40)
Other shareholders' expenses		(11)	(43)	(85)
Adjusted operating profit		735	513	1,170
Adjusting items	C1(a)	(238)	(354)	(1,137)
Non core operations - Bermuda		(54)	(24)	22
Profit before tax (net of policyholder tax)		443	135	55
Income tax attributable to policyholder returns	B2	-	25	192
Profit before tax		443	160	247
Total income tax expense	D1(a)	(63)	(133)	(365)
Profit/(loss) after tax for the financial period		380	27	(118)

Adjusted operating profit after tax attributable to ordinary equity holders

£m
	Notes		6 months ended 30 June 2010	6 months ended 30 June 2009*	Year ended 31 December 2009
Adjusted operating profit before tax			735	513	1,170
Tax on adjusted operating profit	D1(c)		(165)	(149)	(292)
Adjusted operating profit after tax			570	364	878
Non-controlling interest - ordinary shares			(95)	(72)	(181)
Non-controlling interest - preferred securities			(31)	(34)	(64)
Adjusted operating profit after tax attributable to ordinary equity holders			444	258	633
Adjusted weighted average number of shares (millions)	C3(b)		5,342	5,232	5,229
Adjusted operating earnings per share (pence)	C3(b)		8.3	4.9	12.1

* Interim 2009 results have been restated to include Bermuda as a non-core operation.

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 30 June 2010

£m
	Notes	At 30 June 2010	At 30 June 2009	At 31 December 2009
Assets
Goodwill and other intangible assets		5,003	5,397	5,159
Mandatory reserve deposits with central banks		985	856	882
Property, plant and equipment		871	763	828
Investment property		2,026	1,578	1,759
Deferred tax assets		668	1,434	570
Investments in associated undertakings and joint ventures		145	115	135
Deferred acquisition costs		3,096	2,933	3,138
Reinsurers' share of life assurance policyholder liabilities		1,325	1,162	1,296
Reinsurers' share of general insurance liabilities		125	130	120
Deposits held with reinsurers		41	137	146
Loans and advances		45,071	37,835	42,393
Investments and securities		102,270	84,493	98,461
Current tax receivable		166	149	169
Client indebtedness for acceptances		159	146	170
Trade, other receivables and other assets		3,739	3,229	3,051
Derivative financial instruments - assets		1,933	2,486	2,546
Cash and cash equivalents		3,267	2,672	2,982
Non-current assets held-for-sale		18	-	1
Total assets		170,908	145,515	163,806
Liabilities
Life assurance policyholder liabilities		96,826	80,801	93,876
General insurance liabilities		389	403	372
Third party interests in consolidated funds		2,860	2,610	2,906
Borrowed funds	E1	3,928	2,515	3,309
Provisions		226	409	263
Deferred revenue		661	604	654
Deferred tax liabilities		930	1,466	905
Current tax payable		198	195	210
Trade, other payables and other liabilities		4,899	3,947	4,305
Liabilities under acceptances		159	146	170
Amounts owed to bank depositors		47,116	40,590	44,135
Derivative financial instruments - liabilities		1,460	2,109	1,990
Total liabilities		159,652	135,795	153,095
Net assets		11,256	9,720	10,711

Shareholders' equity
Equity attributable to equity holders of the parent		9,047	7,731	8,464
Non-controlling interests
Ordinary shares		1,492	1,293	1,537
Preferred securities		717	696	710
Total non-controlling interests		2,209	1,989	2,247
Total equity		11,256	9,720	10,711

Consolidated statement of changes in equity

For the six months ended 30 June 2010

		Millions			£m
Six months ended 30 June 2010	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 period		5,518	8,464	2,247	10,711
Profit after tax for the financial period		-	265	115	380
Other comprehensive income
Fair value gains/(losses)
Property revaluation		-	5	-	5
Net investment hedge		-	(34)	-	(34)
Available-for-sale investments
Fair value gains		-	473	(1)	472
Recycled to the income statement		-	(43)	-	(43)
Shadow accounting		-	(246)	-	(246)
Currency translation differences/exchange differences on translating foreign operations		-	259	59	318
Other movements		-	14	(3)	11
Income tax relating to components of other comprehensive income		-	(53)	-	(53)
Total comprehensive income for the financial period		-	640	170	810
Dividends for the period	C4	-	(99)	(77)	(176)
Net acquisition of treasury shares		-	(29)	-	(29)
Acquisition of non-controlling interest in Mutual & Federal	F2	147	51	(51)	-
Change in participation in other subsidiaries	F2	-	-	(81)	(81)
Shares issued in lieu of cash dividend		14	15	-	15
Exercise of share options		2	3	-	3
Other issues of ordinary share capital by the Company		1	1	-	1
Change in share-based payments reserve		-	1	1	2
Transactions with shareholders		164	(57)	(208)	(265)
Shareholders' equity at end of the period		5,682	9,047	2,209	11,256

 

								£m
Six months ended 30 June 2010	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 period		552	771	3,087	469	2,897	688	8,464
Profit for the financial year attributable to equity holders of the parent		-	-	-	-	249	16	265
Other comprehensive income
Fair value gains/(losses)
Property revaluation		-	-	5	-	-	-	5
Net investment hedge		-	-	-	(34)	-	-	(34)
Available-for-sale investments
Fair value gains		-	-	473	-	-	-	473
Recycled to income statement		-	-	(43)	-	-	-	(43)
Shadow accounting		-	-	(246)	-	-	-	(246)
Currency translation differences/exchange differences on translating foreign operations		-	-	-	259	-	-	259
Other movements		-	-	7	-	7	-	14
Income tax relating to components of other comprehensive income		-	-	(59)	-	-	6	(53)
Total comprehensive income for the financial period		-	-	137	225	256	22	640
Dividends for the period		-	-	-	-	(77)	(22)	(99)
Net acquisition of treasury shares		-	-	-	-	(29)	-	(29)
Acquisition of non-controlling interest in Mutual & Federal	F2	15	-	129	-	(93)	-	51
Shares issued in lieu of cash dividends		1	3	-	-	11	-	15
Exercise of share options		-	3	-	-	-	-	3
Other issues of ordinary share capital by the Company		-	1	-	-	-	-	1
Change in share-based payments reserve		-	-	1	-	-	-	1
Transactions with shareholders		16	7	130	-	(188)	(22)	(57)
Attributable to equity holders of the parent at end of the period		568	778	3,354	694	2,965	688	9,047

							£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 period		2,716	82	87	191	11	3,087
Fair value gains/(losses)
Property revaluation		-	-	5	-	-	5
Available-for-sale investments
Fair value gains		-	473	-	-	-	473
Recycled to income statement		-	(43)	-	-	-	(43)
Shadow accounting		-	(241)	(5)	-	-	(246)
Other movements		-	-	(1)	8	-	7
Income tax relating to components of other comprehensive income		-	(59)	-	-	-	(59)
Acquisition of non-controlling interest in M&F		129	-	-	-	-	129
Change in share-based payments reserve		-	-	-	1	-	1
At end of the period		2,845	212	86	200	11	3,354

Retained earnings were reduced by £381 million at 30 June 2010 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 continued

For the six months ended 30 June 2010

Six months ended 30 June 2009		Millions			£m
	Notes	Number of shares issued and fully paid	Attributable to equity holders of the parent	Total non-controlling interest	Total equity
Shareholders' equity at beginning of the period		5,516	7,737	1,840	9,577
(Loss)/profit after tax for the financial period		-	(70)	97	27
Other comprehensive income
Fair value gains:
Property revaluation		-	2	-	2
Net investment hedge		-	2	-	2
Available-for-sale investments
Fair value gains		-	453	-	453
Recycled to the income statement		-	117	-	117
Shadow accounting		-	(63)	-	(63)
Currency translation differences/exchange differences on translating foreign operations		-	(327)	79	(248)
Other movements		-	36	11	47
Income tax relating to components of other comprehensive income		-	(149)	-	(149)
Total comprehensive income		-	1	187	188
Dividends for the period	C4	-	(22)	(81)	(103)
Net sale of treasury shares		-	5	(1)	4
Change in participation in subsidiaries		-	(4)	42	38
Change in share-based payments reserve		-	14	2	16
Transactions with shareholders		-	(7)	(38)	(45)
Shareholders' equity at end of the period		5,516	7,731	1,989	9,720

Six months ended 30 June 2009	£m
	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 period		552	766	2,130	386	3,215	688	7,737
(Loss)/profit for the financial period attributable to equity holders of the parent		-	-	-	-	(86)	16	(70)
Other comprehensive income
Fair value gains
Property revaluation		-	-	2	-	-	-	2
Net investment hedge		-	-	-	2	-	-	2
Available-for-sale investments
Fair value gains		-	-	453	-	-	-	453
Recycled to income statement		-	-	117	-	-	-	117
Shadow accounting		-	-	(63)	-	-	-	(63)
Currency translation differences/exchange differences on translating foreign operations		-	-	-	(327)	-	-	(327)
Other movements		-	3	(6)	2	37	-	36
Income tax relating to components of other comprehensive income		-	-	(150)	-	(5)	6	(149)
Total comprehensive income		-	3	353	(323)	(54)	22	1
Dividends for the period	C4	-	-	-	-	-	(22)	(22)
Net sale of treasury shares		-	-	-	-	5	-	5
Change in participation in subsidiaries		-	-	(4)	-	-	-	(4)
Change in share-based payments reserve		-	-	14	-	-	-	14
Transactions with shareholders		-	-	10	-	5	(22)	(7)
Attributable to equity holders of the parent at end of the period		552	769	2,493	63	3,166	688	7,731

							£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 period		2,716	(844)	85	171	2	2,130
Fair value gains
Property revaluation		-	-	2	-	-	2
Available-for-sale investments
Fair value gains		-	453	-	-	-	453
Recycled to income statement		-	117	-	-	-	117
Shadow accounting		-	(61)	(2)	-	-	(63)
Other movements		-	3	(2)	(6)	(1)	(6)
Income tax relating to components of other comprehensive income		-	(150)	-	-	-	(150)
Change in participation in subsidiaries		-	-	-	-	(4)	(4)
Change in share-based payments reserve		-	-	-	14	-	14
At end of the period		2,716	(482)	83	179	(3)	2,493

Retained earnings were reduced by £342 million at 30 June 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 continued

For the six months ended 30 June 2010

		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
(Loss)/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		-	(397)	-	(397)
Total comprehensive income for the financial year		-	709	401	1,110
Dividends for the year		-	(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
(Loss)/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.

Condensed consolidated statement of cash flows

For the six months ended 30 June 2010

£m
	6 months ended 30 June 2010	6 months ended 30 June 2009	Year ended 31 December 2009
Cash flows from operating activities
Profit before tax	443	160	247
Non-cash movements in profit before tax	1,124	1,851	(8,653)
Changes in working capital	1,204	(2,616)	9,997
Taxation paid	(187)	(160)	(373)
Net cash (outflow)/inflow from operating activities	2,584	(765)	1,218
Cash flows from investing activities
Net disposal/(acquisitions) of financial investments	(2,864)	477	(2,674)
Acquisition of investment properties	(224)	(72)	(82)
Proceeds from disposal of investment properties	19	50	57
Acquisition of property, plant and equipment	(69)	(124)	(138)
Proceeds from disposal of property, plant and equipment	10	26	29
Acquisition of intangible assets	(30)	(12)	(43)
Acquisition of interests in subsidiaries	(124)	(2)	(5)
Disposal of interests in subsidiaries, associated undertakings and strategic investments	2	16	40
Net cash inflow/(outflow) from investing activities	(3,280)	359	(2,816)
Cash flows from financing activities
Dividends paid to
Ordinary equity holders of the Company	(62)	-	-
Non-controlling interests and preferred security interests	(99)	(103)	(190)
Interest paid (excluding banking interest paid)	(38)	(120)	(57)
Proceeds from issue of ordinary shares (including by subsidiaries to non-controlling interests)	4	46	100
Net (purchase)/sale of treasury shares	(29)	4	38
Issue of subordinated and other debt	584	290	1,049
Subordinated and other debt repaid	(41)	(33)	(441)
Net cash inflow from financing activities	319	84	499
Net decrease in cash and cash equivalents	(377)	(322)	(1,099)
Effects of exchange rate changes on cash and cash equivalents	128	(175)	160
Cash and cash equivalents at beginning of the period	4,044	4,983	4,983
Cash and cash equivalents at end of the period	3,795	4,486	4,044
Consisting of
Cash and cash equivalents in the statement of financial position	3,267	2,672	2,982
Mandatory reserve deposits with central banks	984	856	882
Short term cash balances held in policyholder funds	441	1,743	897
Cash and cash equivalents subject to consolidation of funds	(897)	(785)	(717)
Total	3,795	4,486	4,044

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.

Notes to the consolidated financial statements

For the six months ended 30 June 2010

A Accounting policies

A1 Basis of preparation

The Group financial information contained herein has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards adopted by the EU and in accordance with the requirements of IAS 34 'Interim Financial Reporting'. The Group's results for the six months ended 30 June 2010 and the position at that date have been prepared using accounting policies consistent with those applied in the preparation of the Group's 2009 Annual Report and Accounts.

The Group financial information has been prepared on the going concern basis which the directors believe appropriate having taken into consideration the matters discussed in the Group Finance Director's Review in the section headed Risk and Uncertainties.

The comparative figures for the financial year ended 31 December 2009 are not the company's statutory accounts for that financial year. Those accounts have been reported on by the company's auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

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 is consistent with the 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, being in line with that reported in the previous financial year. 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.

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.   The 30 June 2009 comparative has been restated to reflect the revised reporting structure introduced in the second half of 2009.

Notes to the consolidated financial statements

For the six months ended 30 June 2010

B2 Adjusted operating profit statement - segment information six months ended 30 June 2010

	Long Term Savings
	Emerging Markets	Nordic	Retail Europe	Wealth Management	US Life
Revenue
Gross earned premiums	1,111	61	13	163	501
Outward reinsurance	(35)	(3)	(4)	(38)	(52)
Net earned premiums	1,076	58	9	125	449
Investment return (non-banking)	541	190	238	358	284
Banking interest and similar income	-	79	(1)	-	-
Banking trading, investment and similar income	-	-	-	-	-
Fee and commission income, and income from service activities	180	114	99	433	-
Other income	20	9	-	6	1
Inter-segment revenues	32	9	2	3	-
Total revenues	1,849	459	347	925	734
Expenses
Claims and benefits (including change in insurance contract provisions)	(891)	(41)	(14)	(151)	(632)
Reinsurance recoveries	44	-	2	38	55
Net claims and benefits incurred	(847)	(41)	(12)	(113)	(577)
Change in investment contract liabilities	(201)	(141)	(231)	(303)	-
Losses on loans and advances	-	(2)	(1)	-	-
Finance costs (including interest and similar expenses)	-	-	-	-	-
Banking interest payable and similar expenses	-	(36)	-	-	-
Fee and commission expenses, and other acquisition costs	(99)	(29)	(37)	(223)	(95)
Other operating and administrative expenses	(436)	(128)	(40)	(186)	(28)
Goodwill impairment	-	-	-	-	-
Change in third party interest in consolidated funds	-	-	-	-	-
Amortisation of PVIF and other acquired intangibles	-	-	-	-	-
Income tax attributable to policyholder returns	8	(24)	-	16	-
Inter-segment expenses	(5)	(1)	(1)	(21)	(4)
Total expenses	(1,580)	(402)	(322)	(830)	(704)
Share of associated undertakings' profit/(loss) after tax	-	1	-	-	-
Loss on disposal of subsidiaries, associated undertakings and strategic investments	-	-	-	-	-
Adjusted operating profit/(loss) before tax and non-controlling interests	269	58	25	95	30
Income tax (expense)/credit	(61)	(13)	(7)	(11)	(10)
Non-controlling interests	-	-	-	-	-
Adjusted operating profit/(loss) after tax and non-controlling interests	208	45	18	84	20
Adjusting items net of tax and non-controlling interests	(19)	(39)	(15)	(45)	98
Profit/(loss) after tax attributable to equity holders of the parent	189	6	3	39	118

 

 

B2 Adjusted operating profit statement - segment information six months ended 30 June 2010 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
1,849	-	352	-	-	-	2,201	-	-	2,201
(132)	-	(67)	-	-	-	(199)	-	-	(199)
1,717	-	285	-	-	-	2,002	-	-	2,002
1,611	-	25	(2)	35	(2)	1,667	(47)	(38)	1,582
78	1,927	-	-	-	-	2,005	-	-	2,005
-	82	-	-	-	-	82	-	-	82
826	408	11	231	-	(5)	1,471	(51)	-	1,420
36	50	1	6	-	4	97	-	11	108
46	10	12	2	7	(95)	(18)	-	18	-
4,314	2,477	334	237	42	(98)	7,306	(98)	(9)	7,199
(1,729)	-	(233)	-	-	-	(1,962)	-	(21)	(1,983)
139	-	34	-	-	-	173	-	-	173
(1,590)	-	(199)	-	-	-	(1,789)	-	(21)	(1,810)
(876)	-	-	-	-	-	(876)	-	-	(876)
(3)	(282)	-	-	-	-	(285)	-	-	(285)
-	-	-	-	(68)	-	(68)	(59)	-	(127)
(36)	(1,207)	-	-	-	-	(1,243)	(9)	-	(1,252)
(483)	(2)	(53)	(9)	-	(19)	(566)	74	(12)	(504)
(818)	(688)	(42)	(188)	(33)	(6)	(1,775)	22	(11)	(1,764)
-	-	-	-	-	-	-	-	-	-
-	-	-	-	-	28	28	-	-	28
-	-	-	-	-	-	-	(146)	-	(146)
-	-	-	-	-	-	-	-	-	-
(32)	(32)	(8)	-	(22)	95	1	-	(1)	-
(3,838)	(2,211)	(302)	(197)	(123)	98	(6,573)	(118)	(45)	(6,736)
1	-	1	-	-	-	2	-	-	2
-	-	-	-	-	-	-	(22)	-	(22)
477	266	33	40	(81)	-	735	(238)	(54)	443
(102)	(53)	(8)	(4)	2	-	(165)	102	-	(63)
-	(106)	(1)	-	(19)	-	(126)	11	-	(115)
375	107	24	36	(98)	-	444	(125)	(54)	265
(20)	6	(19)	(17)	(75)	-	(125)	125	-	-
355	113	5	19	(173)	-	319	-	(54)	265

Notes to the consolidated financial statements

For the six months ended 30 June 2010 continued

B2 Adjusted operating profit statement - segment information six months ended 30 June 2009

	Long Term Savings
	Emerging Markets	Nordic	Retail Europe	Wealth Management	US Life
Revenue
Gross earned premiums	884	51	14	143	421
Outward reinsurance	(28)	(3)	(4)	(40)	(51)
Net earned premiums	856	48	10	103	370
Investment return (non-banking)	(90)	867	186	59	303
Banking interest and similar income	-	96	-	-	-
Banking trading, investment and similar income	-	-	-	-	-
Fee and commission income, and income from service activities	126	86	92	363	-
Other income	12	2	1	8	1
Inter-segment revenues	32	2	9	9	-
Total revenues	936	1,101	298	542	674
Expenses
Claims and benefits (including change in insurance contract provisions)	(231)	(38)	(18)	(150)	(589)
Reinsurance recoveries	28	1	2	52	54
Net claims and benefits incurred	(203)	(37)	(16)	(98)	(535)
Change in investment contract liabilities	(114)	(841)	(179)	(6)	-
Losses on loans and advances	-	(3)	-	-	-
Finance costs (including interest and similar expenses)	-	-	-	-	-
Banking interest payable and similar expenses	-	(51)	-	-	-
Fee and commission expenses, and other acquisition costs	(82)	(24)	(40)	(188)	(71)
Other operating and administrative expenses	(316)	(101)	(50)	(186)	(32)
Goodwill impairment	-	-	-	-	-
Change in third party interest in consolidated funds	-	-	-	-	-
Amortisation of PVIF and other acquired intangibles	-	-	-	-	-
Income tax attributable to policyholder returns	(2)	(19)	-	(4)	-
Inter-segment expenses	(6)	(3)	(5)	(17)	(7)
Total expenses	(723)	(1,079)	(290)	(499)	(645)
Share of associated undertakings' profit/(loss) after tax	2	-	-	-	-
Loss on disposal of subsidiaries, associated undertakings and strategic investments	-	-	-	-	-
Adjusted operating profit/(loss) before tax and non-controlling interests	215	22	8	43	29
Income tax (expense)/credit	(66)	1	(3)	(2)	(8)
Non-controlling interests	(2)	-	-	-	-
Adjusted operating profit/(loss) after tax and non-controlling interests	147	23	5	41	21
Adjusting items net of tax and non-controlling interests	(109)	(32)	(21)	(61)	(98)
Profit/(loss) after tax attributable to equity holders of the parent	38	(9)	(16)	(20)	(77)

 

 

B2 Adjusted operating profit statement - segment information six months ended 30 June 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
1,513	-	297	-	-	-	1,810	-	7	1,817
(126)	-	(54)	-	-	-	(180)	-	-	(180)
1,387	-	243	-	-	-	1,630	-	7	1,637
1,325	-	26	-	43	310	1,704	(226)	75	1,553
96	2,016	-	-	-	-	2,112	-	-	2,112
-	73	-	-	-	-	73	-	-	73
667	293	9	206	-	-	1,175	(56)	-	1,119
24	24	-	2	-	-	50	-	11	61
52	14	18	5	7	(117)	(21)	-	21	-
3,551	2,420	296	213	50	193	6,723	(282)	114	6,555
(1,026)	-	(221)	-	-	-	(1,247)	-	(130)	(1,377)
137	-	40	-	-	-	177	-	(1)	176
(889)	-	(181)	-	-	-	(1,070)	-	(131)	(1,201)
(1,140)	-	-	-	-	-	(1,140)	-	(2)	(1,142)
(3)	(250)	-	-	-	-	(253)	-	-	(253)
-	-	-	-	(47)	-	(47)	28	-	(19)
(51)	(1,392)	-	-	-	-	(1,443)	6	-	(1,437)
(405)	-	(53)	(8)	-	(25)	(491)	81	4	(406)
(685)	(529)	(30)	(175)	(38)	(3)	(1,460)	22	(8)	(1,446)
-	-	-	-	-	-	-	-	-	-
-	-	-	-	-	(282)	(282)	-	-	(282)
-	-	-	-	-	-	-	(164)	-	(164)
(25)	-	-	-	-	-	(25)	25	-	-
(38)	(40)	(12)	-	(26)	117	1	-	(1)	-
(3,236)	(2,211)	(276)	(183)	(111)	(193)	(6,210)	(2)	(138)	(6,350)
2	2	-	-	(4)	-	-	-	-	-
-	-	-	-	-	-	-	(45)	-	(45)
317	211	20	30	(65)	-	513	(329)	(24)	160
(78)	(48)	(4)	(9)	(10)	-	(149)	16	-	(133)
(2)	(84)	(4)	-	(16)	-	(106)	9	-	(97)
237	79	12	21	(91)	-	258	(304)	(24)	(70)
(321)	10	(5)	11	1	-	(304)	304	-	-
(84)	89	7	32	(90)	-	(46)	-	(24)	(70)

Notes to the consolidated financial statements

For the six months ended 30 June 2010 continued

B2 Adjusted operating profit statement - segment information year ended 31 December 2009

	Long Term Savings
	Emerging Markets	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	-	-	-	-
Loss on disposal of subsidiaries, associated undertakings and strategic investments	-	-	-	-	-
Adjusted operating profit/(loss) before tax and non-controlling interests	446	62	22	106	49
Income tax (expense)/credit	(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)

 

 

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)
685	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)
525	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 six months ended 30 June 2010

B3 Gross earned premiums

Six months ended 30 June 2010	Long Term Savings
	Emerging Markets	Nordic	Retail Europe	Wealth Management	US Life
Life assurance - insurance contracts	726	61	13	163	501
Life assurance - investment contracts with discretionary participation features	385	-	-	-	-
General insurance	-	-	-	-	-
Gross earned premiums	1,111	61	13	163	501
Life assurance - other investment contracts recognised as deposits	983	561	365	3,489	124

	Long Term Savings
Six months ended 30 June 2009	Emerging Markets	Nordic	Retail Europe	Wealth Management	US Life
Life assurance - insurance contracts	589	51	14	143	421
Life assurance - investment contracts with discretionary participation features	295	-	-	-	-
General insurance	-	-	-	-	-
Gross earned premiums	884	51	14	143	421
Life assurance - other investment contracts recognised as deposits	1,223	611	315	2,128	82

	Long Term Savings
Year ended 31 December 2009	Emerging Markets	Nordic	Retail Europe	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

B4 Impairments of financial assets

		£m
		6 months ended 30 June 2010	6 months ended 30 June 2009	Year ended 31 December 2009
Nordic		3	3	5
US Life		(20)	133	248
Total Long Term Savings		(17)	136	253
Nedbank		282	250	504
Bermuda		-	14	13
Total		265	400	770

 

 

B3 Gross earned premiums continued

						£m
Total Long Term Savings	Nedbank	M&F	USAM	Total core operations	Non-core operations - Bermuda	Total
1,464	-	-	-	1,464	-	1,464
385	-	-	-	385	-	385
-	-	352	-	352	-	352
1,849	-	352	-	2,201	-	2,201
5,522	-	-	-	5,522	-	5,522

						£m
Total Long Term Savings	Nedbank	M&F	USAM	Total core operations	Non-core operations - Bermuda	Total
1,218	-	-	-	1,218	7	1,225
295	-	-	-	295	-	295
-	-	297	-	297		297
1,513	-	297	-	1,810	7	1,817
4,359	-	-	-	4,359	8	4,367

						£m
Total Long Term Savings	Nedbank	M&F	USAM	Total core operations	Non-core operations - Bermuda	Total
2,542	-	-	-	2,542	7	2,549
659	-	-	-	659	-	659
-	-	612	-	612	-	612
3,201	-	612	-	3,813	7	3,820
9,735	-	-	-	9,735	8	9,743

Notes to the consolidated financial statements

For the six months ended 30 June 2010

B5 Funds under management

	Long Term Savings
As at 30 June 2010	Emerging Markets	Nordic	Retail Europe	Wealth Management			US Life
Life assurance policyholder funds	25,636	9,509	3,731	35,636			7,058
Unit trusts and mutual funds	8,677	1,465	370	12,239			-
Third party client funds	9,469	-	-	-			-
Total client funds under management	43,782	10,974	4,101	47,875			7,058
Shareholder funds	2,370	408	199	899			-
Total funds under management	46,152	11,382	4,300	48,774			7,058

	Long Term Savings
As at 30 June 2009	Emerging Markets	Nordic	Retail Europe	Wealth Management	US Life
Life assurance policyholder funds	21,743	7,108	2,871	29,017	347
Unit trusts and mutual funds	6,451	1,026	361	8,874	-
Third party client funds	6,988	-	-	-	-
Total client funds under management	35,182	8,134	3,232	37,891	347
Shareholder funds	1,819	237	167	842	-
Total funds under management	37,001	8,371	3,399	38,733	347

	Long Term Savings
As at 31 December 2009	Emerging Markets	Nordic	Retail Europe	Wealth Management	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

 

 

B5 Funds under management continued

						£m
Total Long Term Savings	Nedbank	M&F	USAM	Total core operations	Non-core operations - Bermuda	Total
81,570	711	-	7,667	89,948	2,877	92,825
22,751	4,341	-	3,992	31,084	-	31,084
9,469	3,973	-	150,706	164,148	-	164,148
113,790	9,025	-	162,365	285,180	2,877	288,057
3,876	-	171	192	4,239	-	4,239
117,666	9,025	171	162,557	289,419	2,877	292,296

						£m
Total Long Term Savings	Nedbank	M&F	USAM	Total core operations	Non-core operations - Bermuda	Total
61,086	549	-	12,359	73,994	2,327	76,321
16,712	2,863	-	3,132	22,707	-	22,707
6,988	3,361	-	134,529	144,878	-	144,878
84,786	6,773	-	150,020	241,579	2,327	243,906
3,065	-	139	163	3,367	-	3,367
87,851	6,773	139	150,183	244,946	2,327	247,273

						£m
Total Long Term Savings	Nedbank	M&F	USAM	Total core operations	Non-core operations - Bermuda	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

Notes to the consolidated financial statements

For the six months ended 30 June 2010

B6 Statement of financial position - segment information at 30 June 2010

	Long Term Savings
At 30 June 2010	Emerging Markets	Nordic	Retail Europe	Wealth Management	US Life
Assets
Goodwill and other intangible assets	109	960	510	1,536	42
Mandatory reserve deposits with central banks	-	-	-	-	-
Property, plant and equipment	345	11	3	14	-
Investment property	1,648	-	-	-	-
Deferred tax assets	66	94	70	24	197
Investments in associated undertakings and joint ventures	28	1	-	-	-
Deferred acquisition costs	126	56	261	828	1,589
Reinsurers' share of long-term business policyholder liabilities	19	8	7	744	520
Reinsurers' share of general insurance liabilities	-	-	-	-	-
Deposits held with reinsurers	-	-	-	-	40
Loans and advances	285	4,444	1	165	57
Investments and securities	28,185	11,145	3,854	36,151	11,264
Current tax receivable	6	4	18	106	-
Client indebtedness for acceptances	-	-	-	-	-
Trade, other receivables and other assets	727	164	55	243	236
Derivative financial instruments - assets	322	6	-	-	57
Cash and cash equivalents	384	374	73	223	8
Non-current assets held-for-sale	-	-	-	7	-
Inter-segment assets	1,078	44	31	250	62
Total assets	33,328	17,311	4,883	40,291	14,072
Liabilities
Long-term business policyholder liabilities	29,364	9,704	3,852	36,531	12,439
General insurance liabilities	-	-	-	-	-
Third party interests in consolidated funds	-	-	-	-	-
Borrowed funds	283	2	-	-	-
Provisions	143	(14)	4	33	-
Deferred revenue	22	1	148	481	-
Deferred tax liabilities	203	109	172	138	126
Current tax payable	64	25	2	38	2
Trade, other payables and other liabilities	1,456	260	76	515	261
Liabilities under acceptances	-	-	-	-	-
Amounts owed to bank depositors	-	5,666	-	-	-
Derivative financial instruments - liabilities	109	14	4	-	9
Inter-segment liabilities	87	4	1	169	172
Total liabilities	31,731	15,771	4,259	37,905	13,009
Net assets	1,597	1,540	624	2,386	1,063
`
Equity attributable to equity holders of the parent	1,593	1,540	624	2,386	1,063
Non-controlling interests	4	-	-	-	-
Non-controlling interests - ordinary shares	4	-	-	-	-
Non-controlling interests - preference shares	-	-	-	-	-
Total equity	1,597	1,540	624	2,386	1,063

 

 

B6 Statement of financial position - segment information at 30 June 2010 continued

							£m
Total Long Term Savings	Nedbank	M&F	USAM	Bermuda	Other operating segments	Consolidation adjustments	Total
3,157	568	31	1,233	1	13	-	5,003
-	985	-	-	-	-	-	985
373	454	23	18	-	3	-	871
1,648	18	-	-	-	-	360	2,026
451	36	10	162	-	9	-	668
29	83	1	8	-	24	-	145
2,860	2	16	26	192	-	-	3,096
1,298	27	-	-	-	-	-	1,325
-	-	125	-	-	-	-	125
40	-	1	-	-	-	-	41
4,952	40,117	2	-	-	-	-	45,071
90,599	6,341	464	184	2,870	39	1,773	102,270
134	32	-	-	-	-	-	166
-	159	-	-	-	-	-	159
1,425	541	92	128	919	58	576	3,739
385	1,115	-	-	6	89	338	1,933
1,062	704	90	160	55	299	897	3,267
7	-	-	11	-	-	-	18
1,465	161	29	-	614	1,467	(3,736)	-
109,885	51,343	884	1,930	4,657	2,001	208	170,908
91,890	712	-	-	4,224	-	-	96,826
-	-	389	-	-	-	-	389
-	-	-	-	-	-	2,860	2,860
285	2,237	-	-	-	1,406	-	3,928
166	(4)	25	3	-	36	-	226
652	1	8	-	-	-	-	661
748	153	7	-	-	22	-	930
131	13	1	8	6	39	-	198
2,568	1,164	120	171	8	106	762	4,899
-	159	-	-	-	-	-	159
5,666	41,450	-	-	-	-	-	47,116
136	952	-	-	-	50	322	1,460
433	496	-	1,324	-	1,483	(3,736)	-
102,675	47,333	550	1,506	4,238	3,142	208	159,652
7,210	4,010	334	424	419	(1,141)	-	11,256
7,206	2,296	321	392	419	(1,587)	-	9,047
4	1,714	13	32	-	446	-	2,209
4	1,443	13	32	-	-	-	1,492
-	271	-	-	-	446	-	717
7,210	4,010	334	424	419	(1,141)	-	11,256

Notes to the consolidated financial statements

For the six months ended 30 June 2010

B6 Statement of financial position - segment information at 30 June 2009

	Long Term Savings
At 30 June 2009	Emerging Markets	Nordic	Retail Europe	Wealth Management	US Life
Assets
Goodwill and other intangible assets	95	1,005	744	1,734	101
Mandatory reserve deposits with central banks	-	-	-	-	-
Property, plant and equipment	336	3	5	21	1
Investment property	1,406	-	-	2	-
Deferred tax assets	58	73	42	168	918
Investments in associated undertakings and joint ventures	5	1	-	-	-
Deferred acquisition costs	115	40	237	719	1,554
Reinsurers' share of long-term business policyholder liabilities	11	11	6	665	450
Reinsurers' share of general insurance liabilities	-	-	-	-	-
Deposits held with reinsurers	-	99	-	-	35
Loans and advances	151	3,598	2	139	56
Investments and securities	23,581	8,429	2,962	29,483	9,376
Current tax receivable	6	2	11	85	-
Client indebtedness for acceptances	-	-	-	-	-
Trade, other receivables and other assets	573	158	60	237	288
Derivative financial instruments - assets	99	6	-	-	68
Cash and cash equivalents	92	618	76	220	(17)
Inter-segment assets	1,210	275	43	229	57
Total assets	27,738	14,318	4,188	33,702	12,887
Liabilities
Long-term business policyholder liabilities	24,493	7,388	2,969	29,797	11,475
General insurance liabilities	-	-	-	-	-
Third party interests in consolidated funds	-	-	-	-	-
Borrowed funds	255	24	-	1	-
Provisions	136	138	7	32	-
Deferred revenue	23	4	133	436	-
Deferred tax liabilities	169	85	150	235	647
Current tax payable	64	30	2	20	(9)
Trade, other payables and other liabilities	946	147	80	435	331
Liabilities under acceptances	-	-	-	-	-
Amounts owed to bank depositors	1	4,906	-	-	-
Derivative financial instruments - liabilities	6	22	-	1	16
Inter-segment liabilities	57	261	38	242	142
Total liabilities	26,150	13,005	3,379	31,199	12,602
Net assets	1,588	1,313	809	2,503	285
Equity
Equity attributable to equity holders of the parent	1,589	1,313	809	2,503	285
Non-controlling interests	(1)
Non-controlling interests - ordinary shares	(1)	-	-	-	-
Non-controlling interests - preference shares	-	-	-	-	-
Total equity	1,588	1,313	809	2,503	285

 

 

B6 Statement of financial position - segment information at 30 June 2009 continued

							£m
Total Long Term Savings	Nedbank	M&F	USAM	Bermuda	Other operating segments	Consolidation adjustments	Total
3,679	508	31	1,163	3	13	-	5,397
-	856	-	-	-	-	-	856
366	351	22	21	-	3	-	763
1,408	18	-	-	-	-	152	1,578
1,259	17	8	141	-	9	-	1,434
6	76	-	7	-	26	-	115
2,665	2	17	34	215	-	-	2,933
1,143	18	-	-	1	-	-	1,162
-	-	130	-	-	-	-	130
134	-	3	-	-	-	-	137
3,946	33,886	3	-	-	-	-	37,835
73,831	5,194	370	156	2,915	76	1,951	84,493
104	44	1	-	-	-	-	149
-	146	-	-	-	-	-	146
1,316	376	84	124	831	45	453	3,229
173	1,401	-	-	(35)	163	784	2,486
989	632	80	125	38	23	785	2,672
1,814	33	45	2	508	691	(3,093)	-
92,833	43,558	794	1,773	4,476	1,049	1,032	145,515
76,122	548	-	-	4,131	-	-	80,801
-	-	403	-	-	-	-	403
-	-	-	-	-	-	2,610	2,610
280	1,064	-	-	-	1,171	-	2,515
313	-	18	2	-	76	-	409
596	-	8	-	-	-	-	604
1,286	158	1	-	-	21	-	1,466
107	18	-	7	16	47	-	195
1,939	877	97	180	20	99	735	3,947
-	146	-	-	-	-	-	146
4,907	35,683	-	-	-	-	-	40,590
45	1,244	-	-	-	40	780	2,109
740	412		803	3	1,135	(3,093)	-
86,335	40,150	527	992	4,170	2,589	1,032	135,795
6,498	3,408	267	781	306	(1,540)	-	9,720
6,499	1,941	217	754	306	(1,986)	-	7,731
(1)	1,467	50	27	-	446	-	1,989
(1)	1,217	50	27	-	-	-	1,293
-	250	-	-	-	446	-	696
6,498	3,408	267	781	306	(1,540)	-	9,720

Notes to the consolidated financial statements

For the six months ended 30 June 2010

B6 Statement of financial position - segment information at 31 December 2009

	Long Term Savings
At 31 December 2009	Emerging Markets	Nordic	Retail Europe	Wealth Management	US Life
Assets
Goodwill and other intangible assets	106	1,035	563	1,602	94
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
Reinsurers' share of long-term business policyholder liabilities	11	10	6	772	475
Reinsurers' share of general insurance liabilities	-	-	-	-	-
Deposits held with reinsurers	-	108	-	-	35
Loans and advances	340	4,209	2	148	54
Investments and securities	27,603	10,836	3,693	35,120	10,045
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
Liabilities
Long-term business policyholder liabilities	28,655	9,514	3,689	35,554	11,625
General insurance liabilities	-	-	-	-	-
Third party interests in consolidated funds	-	-	-	-	-
Borrowed funds	272	26	-	-	-
Provisions	147	11	8	33	-
Deferred revenue	23	5	160	456	-
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
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	2	-	-	-	-
Non-controlling interests - preference shares	-	-	-	-	-
Total equity	1,542	1,536	676	2,359	747

 

 

B6 Statement of financial position - segment information at 31 December 2009 continued

							£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
-	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
1,274	22	-	-	-	-	-	1,296
-	-	120	-	-	-	-	120
143	-	3	-	-	-	-	146
4,753	37,638	2	-	-	-	-	42,393
87,297	5,501	425	162	2,942	43	2,091	98,461
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
89,037	661	-	-	4,178	-	-	93,876
-	-	372	-	-	-	-	372
-	-	-	-	-	-	2,906	2,906
298	1,614	-	-	-	1,397	-	3,309
199	1	21	2	-	40	-	263
644	1	9	-	-	-	-	654
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 six months ended 30 June 2010

C Other key performance information

C1 Operating profit adjusting items

(a) Summary of adjusting items

In determining the adjusted operating profit of the Group 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.

Six months ended 30 June 2010	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)	(40)	(21)	(38)	(1)
(Loss)/profit on disposal of subsidiaries, associated undertakings and strategic investments	C1(c)	-	-	-	-	-
Short-term fluctuations in investment return	C1(d)	(39)	-	-	(19)	23
Investment return adjustment for Group equity and debt instruments held in life funds	C1(e)	19	-	-	-	-
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		(21)	(40)	(21)	(57)	22
Tax on adjusting items		2	1	6	12	76
Non-controlling interest in adjusting items		-	-	-	-	-
Total adjusting items after tax and non-controlling interests		(19)	(39)	(15)	(45)	98

Six months ended 30 June 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)	(35)	(27)	(46)	(9)
(Loss)/profit on disposal of subsidiaries, associated undertakings and strategic investments	C1(c)	(46)	-	-	-	-
Short-term fluctuations in investment return	C1(d)	(32)	(1)	-	(26)	(93)
Investment return adjustment for Group equity and debt instruments held in life funds	C1(e)	(40)	-	-	-	-
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		(119)	(36)	(27)	(72)	(102)
Tax on adjusting items		10	4	6	11	4
Non-controlling interest in adjusting items		-	-	-	-	-
Total adjusting items after tax and non-controlling interests		(109)	(32)	(21)	(61)	(98)

 

 

C1 Operating profit adjusting items

(a) Summary of adjusting items

									£m
Total Long Term Savings		Nedbank		M&F		USAM		Other		Total
(101)		-		-		(1)		-		(102)
-		(2)		-		(20)		-		(22)
(35)		-		(19)		-		(12)		(66)
19		-		-		-		-		19
-		-		-		-		22		22
-		-		-		1		-		1
-		(9)		-		-		(81)		(90)
(117)		(11)		(19)		(20)		(71)		(238)
97		3		-		6		(4)		102
-		14		-		(3)		-		11
(20)		6		(19)		(17)		(75)		(125)

					£m
Total Long Term Savings	Nedbank	M&F	USAM	Other	Total
(118)	-	-	-	-	(118)
(46)	-	-	1	-	(45)
(152)	-	(11)	-	(23)	(186)
(40)	-	-	-	-	(40)
-	-	-	-	22	22
-	-	-	1	-	1
-	6	-	-	6	12
(356)	6	(11)	2	5	(354)
35	(2)	3	9	(4)	41
-	6	3	-	-	9
(321)	10	(5)	11	1	(304)

Notes to the consolidated financial statements

For the six months ended 30 June 2010

C1 Operating profit adjusting items continued

(a) Summary of adjusting items continued

£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		(1)	9	14	37	44
Non-controlling interest in adjusting items		-	-	-	-	-
Total adjusting items after tax and non-controlling interests		(200)	(4)	(228)	(225)	(120)

 

 

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)
(58)	-	-	1	7	(50)
(276)	-	(10)	-	(30)	(316)
(109)	-	-	-	-	(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)

Notes to the consolidated financial statements

For the six months ended 30 June 2010

C1 Operating profit adjusting items continued

(b) Goodwill impairment and impact of acquisition accounting

In applying acquisition accounting in accordance with IFRS deferred acquisition costs and deferred revenue 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.

Goodwill impairment and acquisition accounting adjustments to adjusted operating profit are summarised below:

Six months ended 30 June 2010	£m
	Emerging Markets	Nordic	Retail Europe	Wealth Management	US Life	Nedbank	USAM	Total
Amortisation of acquired PVIF	-	(57)	(10)	(38)	(1)	-	-	(106)
Amortisation of acquired deferred costs and revenue	-	13	(4)	14	-	-	-	23
Amortisation of other acquired intangible assets	(1)	(13)	(7)	(18)	-	-	(1)	(40)
Change in acquisition date provisions	-	17	-	4	-	-	-	21
	(1)	(40)	(21)	(38)	(1)	-	(1)	(102)

Six months ended 30 June 2009	£m
	Emerging Markets	Nordic	Retail Europe	Wealth Management	US Life	Nedbank	USAM	Total
Amortisation of acquired PVIF	-	(55)	(19)	(43)	(9)	-	-	(126)
Amortisation of acquired deferred costs and revenue	-	9	(1)	15	-	-	-	23
Amortisation of other acquired intangible assets	(1)	(12)	(7)	(18)	-	-	-	(38)
Change in acquisition date provisions	-	23	-	-	-	-	-	23
	(1)	(35)	(27)	(46)	(9)	-	-	(118)

Year ended 31 December 2009	£m
	Emerging Markets	Nordic	Retail Europe	Wealth Management	US Life	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)

 

C1 Operating profit adjusting items continued

(c) (Loss)/profit on disposal of subsidiaries, associated undertakings and strategic investments

At 30 June 2010 a subsidiary of USAM was classified as held-for-sale in anticipation of its pending disposal.  On reclassification the disposal group was impaired to reflect expected net consideration with the resulting loss reported in the period as a loss on disposal.

In August 2008, an agreement with ABN AMRO Asset Management Asia and their parent company, Fortis Bank had been 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 termination of AATEDA transaction 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.

(Loss)/profits on the disposal of subsidiaries, associated undertakings and strategic investments are analysed below:

			£m
	6 months ended 30 June 2010	6 months ended 30 June 2009	Year ended 31 December 2009
Emerging Markets	-	(46)	(51)
Wealth Management	-	-	(7)
Total Long Term Savings	-	(46)	(58)
Nedbank	(2)	-	-
USAM	(20)	1	1
Other	-	-	7
Loss on disposal of subsidiaries, associated undertakings and strategic investments	(22)	(45)	(50)

(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 six months ended 30 June 2010

C1 Operating profit adjusting items continued

(d) Long-term investment return continued

			%
Long-term investment rates	6 months ended 30 June 2010	6 months ended 30 June 2009	Year ended 31 December 2009
Emerging Markets	9.4%	13.3%	13.3%
Nordic	1.8%	1.8%	1.8%
Retail Europe	2.5%	2.8%	2.8%
Wealth Management	2.0%	5.0%	5.0%
US Life	5.9%	5.6%	5.9%
M&F	9.4%	13.3%	13.3%

 

Analysis of short-term fluctuations in investment return

	£m
Six months ended 30 June 2010	Emerging Markets	Nordic	Retail Europe	Wealth Management	US Life	Total Long Term Savings	M&F	Other	Total
Long-term investment return	52	-	1	61	283	397	27	16	440
Less: Actual shareholder investment return	13	-	1	42	306	362	8	4	374
Short-term fluctuations in investment return	39	-	-	19	(23)	35	19	12	66

									£m
Six months ended 30 June 2009	Emerging Markets	Nordic	Retail Europe	Wealth Management	US Life	Total Long Term Savings	M&F	Other	Total
Long-term investment return	61	-	1	52	303	417	28	46	491
Less: Actual shareholder investment return	29	(1)	1	26	210	265	17	23	305
Short-term fluctuations in investment return	32	1	-	26	93	152	11	23	186

									£m
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

The actual investment return attributable to shareholders for the US long-term business reflects total investment income, as a distinction is not drawn between shareholder and policyholder funds.

C1 Operating profit adjusting items continued

 (e) Investment return adjustment for Group equity and debt instruments held in life funds

Adjusted operating profit includes investment returns on policyholder investments in Group equity and debt instruments held by the Group's life funds. These include investments in the Company's ordinary shares, and the subordinated liabilities and ordinary securities of Nedbank. These investment returns are eliminated within the consolidated income statement in arriving at profit before tax, but are included in adjusted operating profit. In the six months ended 30 June 2010 the investment return adjustment decreased adjusted operating profit by £19 million (six months ended 30 June 2009: increase of £40 million, year ended 31 December 2009: increase of £109 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 £22 million for the six months ended 30 June 2010 (six months ended 30 June 2009: £22 million, year ended 31 December 2009: £45 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 entered into a number of long-term incentive arrangements with 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 the six months ended 30 June 2010 was £1 million (six months ended 30 June 2009: less than £1 million, year ended 31 December 2009: £1 million).

The Group has issued put options to 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 30 June 2010 these instruments were revalued, the impact of which was £nil million (six months ended 30 June 2009: £1 million, year ended 31 December 2009: £nil).

(h) Credit-related fair value gains on Group debt instruments

The narrowing of credit spread of the Group's debt instruments in the market price has resulted in a reversal of previous gains in the six months ended 30 June 2010 of £81 million (six months ended 30 June 2009: gains of £6 million, year ended 31 December 2009: losses of £263 million) on Other operating segments and a reversal of previous gains in the six months ended 30 June 2010 of £9 million (six months ended 30 June 2009: gains of £6 million, year ended 31 December 2009: £nil) 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 foreign operations to Sterling are:

	Income statement (average rate)		Statement of financial position (closing rate)
30 June 2010
Rand	11.4878		11.4531
US Dollars	1.5265		1.4963
Swedish Kronor	11.2744		11.6254
Euro	1.1487		1.2208
30 June 2009
Rand	13.7363		12.7351
US Dollars	1.4947		1.6453
Swedish Kronor	12.1787		12.6989
Euro	1.1193		1.1725
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

Notes to the consolidated financial statements

For the six months ended 30 June 2010

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 period attributable to ordinary equity shareholders by the weighted average number of ordinary shares in issue during the period excluding own shares held in policyholder funds, ESOP trusts, Black Economic Empowerment trusts and other related undertakings.

£m
	6 months ended 30 June 2010	6 months ended 30 June 2009	Year ended 31 December 2009
Profit/(loss) for the financial period attributable to equity holders of the parent	265	(70)	(340)
Dividends declared to holders of perpetual preferred callable securities	(16)	(16)	(32)
Profit/(loss) attributable to ordinary equity holders	249	(86)	(372)
Total dividends declared to holders of perpetual preferred callable securities of £22 million for the six months ended 30 June 2010 (six months ended 30 June 2009: £22 million, year ended 31 December 2009: £45 million) are stated net of tax credits of £6 million (six months ended 30 June 2009: £6 million, year ended 31 December 2009: £13 million).
Millions
	6 months ended 30 June 2010	6 months ended 30 June 2009	Year ended 31 December 2009
Weighted average number of ordinary shares in issue	5,397	5,277	5,277
Shares held in charitable foundations	(7)	(7)	(7)
Shares held in ESOP trusts	(48)	(38)	(41)
Adjusted weighted average number of ordinary shares	5,342	5,232	5,229
Shares held in life funds	(206)	(239)	(236)
Shares held in Black Economic Empowerment trusts	(287)	(236)	(235)
Weighted average number of ordinary shares	4,849	4,757	4,758
Basic earnings/(loss) per ordinary share (pence)	5.1	(1.8)	(7.8)
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
	6 months ended 30 June 2010	6 months ended 30 June 2009	Year ended 31 December 2009
Weighted average number of ordinary shares	4,849	4,757	4,758
Adjustments for share options held by ESOP trusts	173	-	-
Adjustments for shares held in Black Economic Empowerment trusts	287	-	-
	5,309	4,757	4,758
Diluted earnings/(loss) per ordinary share (pence)	4.7	(1.8)	(7.8)

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.

 

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/(loss) for the financial period to adjusted operating profit after tax attributable to ordinary equity holders is as follows:

£m
	6 months ended 30 June 2010	6 months ended 30 June 2009	Year ended 31 December 2009
Profit/(loss) for the financial period attributable to equity holders of the parent	265	(70)	(340)
Adjusting items	238	354	1,137
Non core operations - Bermuda	54	24	(33)
Tax on adjusting items	(102)	(41)	(108)
Non-controlling interest on adjusting items	(11)	(9)	(23)
Adjusted operating profit after tax attributable to ordinary equity holders	444	258	633
Adjusted weighted average number of ordinary shares (millions)	5,342	5,232	5,229
Adjusted operating earnings per ordinary share (pence)	8.3	4.9	12.1

(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
	6 months ended 30 June 2010		6 months ended 30 June 2009		Year ended 31 December 2009
	Gross	Net	Gross	Net	Gross	Net
Profit/(loss) for the financial period attributable to equity holders of the parent	265	265	(70)	(70)	(340)	(340)
Dividends declared to holders of perpetual preferred callable securities	(16)	(16)	(16)	(16)	(32)	(32)
Profit/(loss) attributable to ordinary equity holders	249	249	(86)	(86)	(372)	(372)
Adjustments:
Impairments of goodwill and intangible assets	-	-	-	-	266	266
Loss on disposal of subsidiaries, associated undertakings and strategic investments	22	16	45	45	50	53
Realised gains/(losses) (including impairments) on available-for-sale financial assets	(43)	(43)	117	111	239	239
Headline earnings	228	222	76	70	183	186
Weighted average number of ordinary shares	4,849	4,849	4,757	4,757	4,758	4,758
Diluted weighted average number of ordinary shares	5,309	5,309	5,102	5,102	5,109	5,109
Headline earnings per share (pence)	4.7	4.6	1.6	1.5	3.8	3.9
Diluted headline earnings per share (pence)	4.3	4.2	1.5	1.4	3.6	3.6

Notes to the consolidated financial statements

For the year ended 30 June 2010

C4 Dividends

Dividends paid were as follows:

						£m
	Note	6 months ended 30 June 2010	6 months ended 30 June 2009		Year ended 31 December 2009
2009 Final dividend paid - 1.5p per 10p share		77	-		-
Dividends to ordinary equity holders		77	-		-
Dividends declared to holders of perpetual preferred callable securities		22	22		45
Dividend payments for the period		99	22		45

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 2010 £22 million was declared and paid to holders of perpetual preferred callable securities (March 2009: £22 million and November 2009: £23 million).

An interim dividend of 1.1 pence per 10p share has been declared by the directors.  The dividend will be paid on 30 November 2010 to shareholders on the register at the close of business on 15 October 2010.  The dividend will absorb an estimated £60 million of shareholders' funds.  The Company is planning to offer, as with the final dividend for 2009, a scrip dividend alternative for eligible shareholders.

D Other income statement notes

D1 Income tax expense

(a) Analysis of total income tax expense/(credit)

£m
	6 months ended 30 June 2010	6 months ended 30 June 2009	Year ended 31 December 2009
Current tax
United Kingdom tax
Corporation tax	16	65	46
Double tax relief	-	(44)	-
Overseas tax
South Africa	128	107	257
United States	2	2	-
Europe	25	22	49
Secondary Tax on Companies (STC)	(2)	5	13
Prior year adjustments	-	6	14
Total current tax	169	163	379
Deferred tax
Origination and reversal of temporary differences	(41)	(73)	45
Changes in tax rates/bases	-	-	-
Write down/recognition of deferred tax assets	(65)	43	(59)
Total deferred tax	(106)	(30)	(14)
Total income tax expense	63	133	365

Notes to the consolidated financial statements

For the year ended 30 June 2010

D1 Income tax expense continued

(b) Reconciliation of total income tax expense/(credit)

£m
	6 months ended 30 June 2010	6 months ended 30 June 2009	Year ended 31 December 2009
Profit before tax	443	160	247
Tax at standard rate of 28% (2009: 28%)	124	44	69
Different tax rate or basis on overseas operations	(2)	9	(9)
Untaxed and low taxed income	(66)	(49)	(86)
Disallowable expenses	22	66	180
Net movement on deferred tax assets not recognised	(5)	49	83
Effect on deferred tax of changes in tax rates	-	(2)	(2)
STC	(1)	6	19
Income tax attributable to policyholder returns	2	20	142
Other	(11)	(10)	(31)
Total income tax expense	63	133	365

 

(c) Income tax on adjusted operating profit

£m
	6 months ended 30 June 2010	6 months ended 30 June 2009	Year ended 31 December 2009
Income tax expense	63	133	365
Tax on adjusting items
Impact of acquisition accounting	14	19	40
Loss/profit on disposal of subsidiaries, associated undertakings and strategic investments	5	-	(2)
Short-term fluctuations in investment return	86	23	83
Income tax attributable to policyholders returns	-	(25)	(192)
Tax on dividends declared to holders of perpetual preferred callable securities recognised in equity	(6)	(6)	(13)
Fair value gains and losses on group debt instruments	3	(3)	-
IAS 34 effective tax rate adjustment	-	8	-
Tax on non core operations	-	-	11
Income tax on adjusted operating profit	165	149	292

Notes to the consolidated financial statements

For the year ended 30 June 2010

E Financial assets and liabilities

E1 Borrowed funds

		Group excluding Nedbank	Nedbank	At 30 June 2010
Senior debt securities and term loans		622	1,061	1,683
Mortgage backed securities		-	114	114
Subordinated debt securities (net of Group holdings)		1,069	1,062	2,131
Borrowed funds		1,691	2,237	3,928
Other issues treated as equity for IFRS accounting purposes
US$750 million cumulative preference securities		458
€500 million perpetual preferred callable securities		338
£350 million perpetual preferred callable securities		350
		1,146
Total: Book value		2,837
Nominal value of the above		3,085
		Group excluding Nedbank	Nedbank	At 30 June 2009
Senior debt securities and term loans		732	-	732
Mortgage backed securities		-	111	111
Subordinated debt securities (net of Group holdings)		720	952	1,672
Borrowed funds		1,452	1,063	2,515
Other issues treated as equity for IFRS accounting purposes
US$750 million cumulative preference securities		458
€500 million perpetual preferred callable securities		338
£350 million perpetual preferred callable securities		350
		1,146
Total: Book value		2,598
Nominal value of the above		3,154
		Group excluding Nedbank	Nedbank	At 31 December 2009
Senior debt securities and term loans		662	484	1,146
Mortgage backed securities		-	119	119
Subordinated debt securities (net of Group holdings)		1,034	1,010	2,044
Borrowed funds		1,696	1,613	3,309
Other issues treated as equity for IFRS accounting purposes
US$750 million cumulative preference securities		458
€500 million perpetual preferred callable securities		338
£350 million perpetual preferred callable securities		350
		1,146
Total: Book value		2,842
Nominal value of the above		3,162

Notes to the consolidated financial statements

For the year ended 30 June 2010

E1 Borrowed funds continued

 (a) Senior debt securities and term loans

				£m
		At 30 June 2010	At 30 June 2009	At 31 December 2009
Floating rate notes1		737	67	379
Fixed rate notes2		946	137	767
Revolving credit facility3		-	528	-
Total senior debt securities and term loan		1,683	732	1,146

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%.

·      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%.

·      €22 million repayable January 2010 at 3 month EURIBOR plus 0.35% - repaid.

·      SEK50 million repayable March 2010 at 3 month STIBOR plus 0.38% - repaid.

·      R1,690 million unsecured senior debt repayable September 2012 at 3 month JIBAR + 1.5%.

·      R1,044 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).

·      R1,552 million unsecured senior debt repayable April 2013 JIBAR +1.48%.

·      R1,027 million unsecured senior debt repayable April 2015 JIBAR +1.75%.

·      R80 million unsecured senior debt repayable April 2020 JIBAR +2.15%.

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%. Repaid 15 April 2010

·      £500 million Euro bond repayable October 2016 at 7.125%.

·      R130 million unsecured senior debt repayable October 2024 at zero coupon.

·      R3,244 million unsecured senior debt repayable September 2015 at 10.55%.

·      R762 million unsecured senior debt repayable September 2019 at 11.39%.

·      R478 million unsecured senior debt repayable April 2013 JIBAR +1.48%.

The total fair value of the swap derivatives associated with the Senior notes is £5 million (June 2009: £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 30 June 2010
£517 million (June 2009: £999 million, December 2009 £480 million) of this facility was utilised, £nil (June 2009: £528 million, December 2009: £nil) in the form of drawn debt and £517 million (June 2009: £471 million, December 2009: £480 million) in the form of irrevocable letters of credit.

The Group has a SEK1,000 million revolving credit facility, which had a maturity date of 2 July 2010 which has subsequently been extended to 1 July 2011.  At 30 June 2010 this facility was undrawn (June 2009 and December 2009: undrawn)

 

E1 Borrowed funds continued

(b) Mortgage backed securities - Nedbank

	£m
	At 30 June 2010	At 30 June 2009	At 31 December 2009
R291 million notes (class A1) repayable 18 November 2039 (11.467%)1	17	23	25
R1.4 billion notes (class A2A) repayable 18 November 2039 (11.817%)1	87	78	84
R98 million notes (class B note) repayable 18 November 2039 (12.067%)1	6	6	6
R76 million notes (class C note) repayable 18 November 2039 (13.317%)1	4	4	4
	114	111	119

1      Issued on 10 December 2007 by the Group's South African banking business and are callable on 18 November 2012.

(c) Subordinated debt securities

	£m
	At 30 June 2010	At 30 June 2009	At 31 December 2009
Nedbank
US$18 million repayable 31 August 2009 (6 month LIBOR less 1.5%) - repaid1	-	10	-
R1.5 billion repayable 24 April 2016 (7.85%)2	132	116	126
R1.8 billion repayable 20 September 2018 (9.84%)3	160	139	149
R500 million repayable on 30 December 2010 (8.38%)4	44	38	41
R650 million repayable 8 February 2017 (9.03%)5	58	51	55
R1.7 billion repayable 8 February 2019 (8.9%)6	147	125	138
R2.0 billion repayable 6 July 2022 (3 month JIBAR plus 0.47%)7	178	160	171
R500 million repayable 15 August 2017 (3 month JIBAR plus 0.45%)8	44	40	42
R1.0 billion repayable 17 September 2015 (10.54%)9	92	78	84
R500 million repayable 14 December 2017 (3 month JIBAR plus 0.70%)10	44	40	42
R120 million repayable 14 December 2017 (10.38%)11	11	9	10
R487 million repayable 20 November 2018 (15.05%)12	45	38	41
R1,265 million repayable 20 November 2018 (JIBAR plus 4.75%)13	112	101	108
R300 million repayable on 4 December 2013 (JIBAR + 2.5%)14	13	12	13
US$100 million repayable on 3 March 2022 (3 month USD LIBOR)15	67	61	62
	1,147	1,018	1,082
Less: banking subordinated debt securities held by other Group companies	(85)	(66)	(72)
Banking subordinated debt securities (net of Group holdings)	1,062	952	1,010
Group excluding Nedbank
R3.0 billion repayable 27 October 2020 (8.9%)16	262	235	252
£300 million repayable 21 January 2016 (5.0%)17	273	147	252
R250 million preference shares repayable 9 June 201118	22	20	21
€750 million repayable 18 January 2017 (4.5%)19	512	318	509
	1,069	720	1,034
Total subordinated liabilities	2,131	1,672	2,044

Notes to the consolidated financial statements

For the year ended 30 June 2010

E1 Borrowed funds continued

(c) Subordinated debt securities

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 30 March 2006.

5.     Unsecured secondary callable note was issued 8 February 2007 with a call date of 8 February 2012.

6.     Unsecured secondary callable note was issued 8 February 2007 at R1.0 billion. On 19 March 2007 an additional R0.7 billion was issued.

7.     Unsecured secondary capital callable note issued 6 July 2007 and has a call date of 6 July 2017.

8.     This bond issued on 15 August 2007 is an unsecured secondary capital callable floating rate note with a call date 15 August 2012.

9.     This bond issued on 17 September 2007 is an unsecured fixed rate note with a term of 13 years (non-call 8 year).

10.   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.

11.   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.

12.   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.

13.   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.

14.   This bond issued on 4 December 2008 is a floating rate note with a call date of 4 December 2013.

15.   Dated Tier 2 notes issued 3 March 2009 with call date 2 March 2017.

16.   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.

17.   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.

18.   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.

19.   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.

F Other notes

F1 Contingent liabilities

£m
	At 30 June 2010	At 30 June 2009	At 31 December 2009
Guarantees and assets pledged as collateral security	2,484	2,038	2,375
Irrevocable letters of credit	130	110	125
Secured lending	697	412	555
Other contingent liabilities	36	36	49

The Group has pledged debt securities 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 South African 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 it will be defended vigorously.

F2 Acquisition of non-controlling interests

Acquisition of non-controlling interest in Mutual & Federal

On 5 February 2010, the Group completed the acquisition of the remaining non-controlling shareholdings in Mutual & Federal Insurance Company Limited, following the fulfilment of all outstanding conditions precedent.  On 8 February 2010, 147,313,449 new Old Mutual plc ordinary shares were issued in exchange for Mutual & Federal shares and listed on the London Stock Exchange, of which 68,378,851 were issued to Black Economic Empowerment trusts and 78,934,598 to other previous holders.

Other acquisitions

On 8 February 2010 Nedbank announced that it had obtained regulatory approval for the acquisition of the remaining 49.9% indirect interest in Imperial Bank Limited thereby satisfying all conditions precedent for the acquisition.

The purchase consideration was approximately £162 million (£155 million plus a Johannesburg Interbank Agreed Rate (JIBAR) factor applied up to 5 February 2010) which is being settled in four instalments out of existing cash resources of Nedbank Limited. The total amount, which will include interest at the three-month JIBAR, amounts to £165 million with only the final instalment of £42 million (including interest) outstanding which will be settled on 13 August 2010.

F3 Sale of US Life

The Group announced today that it has agreed terms to sell 100% of its interest in US Life to Harbinger Capital Partners for a consideration of $350 million (£220 million at a $1.59:£ exchange rate). Completion is expected before 31 December 2010 and is subject to inter- alia regulatory approvals. This has resulted in a write-off of £689 million in the Group’s net assets on an IFRS basis at 30 June 2010 or (12.7) pence per share. The Market Consistent Embedded Value (‘MCEV’) as at 30 June 2010 increases by £718 million or a Group MCEV value per share of 13.2 pence. Old Mutual Reassurance (Ireland) Limited which has previously been reported within US Life will remain part of the Group and its net assets have been excluded from the above. As a result of this sale agreement the US Life business will be treated as non-core and as a discontinued operation in the 2010 Annual Report. 

 

END

 

 

IR UGUUARUPUPUA