Interim Results 2012 - part 2 IFRS

RNS Number : 5262J

Old Mutual PLC

08 August 2012

 



Index to the financial information

For the six months ended 30 June 2012

Statement of directors' responsibilities in respect of the interim financial statements                                                                                          38

Interim review report for the six months ended 30 June 2012 to Old Mutual plc                                                                                                  39

Consolidated income statement                                                                                                                                                                             41

Consolidated statement of comprehensive income                                                                                                                                               42

Reconciliation of adjusted operating profit to profit after tax                                                                                                                                43

Consolidated statement of financial position                                                                                                                                                         44

Condensed consolidated statement of cash flows                                                                                                                                               45

Consolidated statement of changes in equity                                                                                                                                                        46

Notes to the consolidated financial statements                                                                                                                                                        

      A: Accounting policies                                                                                                                                                                                     52

      B: Segment information                                                                                                                                                                                    54

      C: Other key performance information                                                                                                                                                             68

      D: Other income statement notes                                                                                                                                                                     74

      E: Borrowed funds                                                                                                                                                                                          76

      F: Discontinued and held for sale operations                                                                                                                                                  79

      G: Other notes                                                                                                                                                                                                 80

Adjusted Group MCEV by line of business                                                                                                                                                           82

Adjusted operating Group MCEV                                                                                                                                                                           83

Commentary on key changes in the MCEV 30 June 2012 primary statements compared to 2011                                                                       83

Adjusted operating Group MCEV earnings per share                                                                                                                                           84

Group market consistent embedded value statement of earnings                                                                                                                        85

Notes to the MCEV basis supplementary information

      A: MCEV policies                                                                                                                                                                                              87

      B: Segment information                                                                                                                                                                                    95

      C: Other key performance information                                                                                                                                                           111

      D: Sensitivity tests                                                                                                                                                                                         116

Statement of directors' responsibilities in respect of the interim financial statements

For the six months ended 30 June 2012

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 MCEV supplementary information has been prepared in accordance with the Market Consistent Embedded Value Principles (Copyright © Stichting CFO Forum Foundation 2008) issued in June 2008 and updated in October 2009 by the CFO Forum ('the Principles') and the basis of preparation as set out on page 87.

·        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 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
8 August 2012                                                                            8 August 2012

Interim review report for the six months ended 30 June 2012 to Old Mutual plc

Introduction

We have been engaged by the company to review the condensed set of financial statements in the interim financial report for the six months ended 30 June 2012 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, the Condensed Consolidated Statement of Cash Flows and the related notes, set out on pages 41 to 81, which include the Reconciliation of Adjusted Operating Profit to Profit after Tax.

We have also been engaged by the company to review the Market Consistent Embedded Value (MCEV) basis supplementary information ('the supplementary information'), set out on pages 82 to 117, for the six months ended 30 June 2012.

We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements 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 interim 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 interim 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 interim 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. 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, based on our review, on the condensed set of financial statements and the supplementary information in the interim financial report.

 

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 interim financial report for the six months ended 30 June 2012 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 2012 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.

Philip Smart

for and on behalf of KPMG Audit Plc

Chartered Accountants, 15 Canada Square, London, E14 5GL, 8 August 2012

Consolidated income statement
For the six months ended 30 June 2012
				£m
	Notes	6 months ended 30 June 2012	6 months ended 30 June 2011¹	Year ended 31 December 2011
Revenue
Gross earned premiums	B2	1,774	1,879	3,584
Outward reinsurance		(155)	(163)	(325)
Net earned premiums		1,619	1,716	3,259
Investment return (non-banking)		3,353	1,221	(567)
Banking interest and similar income		1,780	1,881	3,669
Banking trading, investment and similar income		107	105	217
Fee and commission income, and income from service activities		1,513	1,500	3,035
Other income		70	89	171
Total revenues		8,442	6,512	9,784
Expenses
Claims and benefits (including change in insurance contract provisions)		(2,326)	(1,650)	(3,331)
Reinsurance recoveries		125	104	123
Net claims and benefits incurred		(2,201)	(1,546)	(3,208)
Change in investment contract liabilities		(1,840)	(430)	1,889
Losses on loans and advances		(216)	(251)	(458)
Finance costs		(90)	(85)	(58)
Banking interest payable and similar expenses		(997)	(1,093)	(2,095)
Fee and commission expenses, and other acquisition costs		(494)	(468)	(1,007)
Other operating and administrative expenses		(1,837)	(1,901)	(3,852)
Goodwill impairment		-	-	(264)
Change in third party interest in consolidated funds		(64)	(84)	2
Total expenses		(7,739)	(5,858)	(9,051)
Share of associated undertakings and joint ventures' profit after tax		10	6	10
Profit on acquisition/disposal of subsidiaries, associated undertakings   and strategic investments	C1(c)	20	249	251
Profit before tax		733	909	994
Income tax expense	D1	(241)	(178)	(225)
Profit from continuing operations after tax		492	731	769
Discontinued operations
Profit from discontinued operations after tax	F1	595	150	198
Profit after tax for the financial period		1,087	881	967
Attributable to
Equity holders of the parent		931	738	667
Non-controlling interests
Ordinary shares		126	112	238
Preferred securities		30	31	62
Profit after tax for the financial period		1,087	881	967
Earnings per share
Basic earnings per share based on profit from continuing operations (pence)		6.7	11.7	8.9
Basic earnings per share based on profit from discontinued operations (pence)		12.5	3.0	4.0
Basic earnings per ordinary share (pence)	C3(a)	19.2	14.7	12.9
Diluted earnings per share based on profit from continuing operations (pence)		6.2	10.7	8.0
Diluted earnings per share based on profit from discontinued operations   (pence)		11.5	2.8	3.7
Diluted earnings per ordinary share (pence)	C3(a)	17.7	13.5	11.7
Weighted average number of ordinary shares - millions		4,759	4,897	4,935
1 The results for the six months ended 30 June 2011 have been restated to reflect Nordic as discontinued and non-core and include the African businesses not previously consolidated (see note A2).

Consolidated statement of comprehensive income
For the six months ended 30 June 2012
				£m
	Notes	6 months ended 30 June 2012	6 months ended 30 June  2011¹	Year ended 31 December 2011
Profit after tax for the financial period		1,087	881	967
Other comprehensive income for the financial period
Fair value gains/(losses)
Property revaluation		(1)	-	39
Net investment hedge		123	(25)	28
Available-for-sale investments
Fair value gains/(losses)		10	3	(1)
Recycled to the income statement		(6)	(5)	(6)
Shadow accounting		1	-	(22)
Currency translation differences/exchange differences on translating foreign   operations		(203)	(358)	(1,240)
Other movements		(1)	(42)	(49)
Income tax relating to components of other comprehensive income	D1(c)	5	6	12
Total other comprehensive income for the financial period from   continuing  operations		(72)	(421)	(1,239)
Total other comprehensive income for the financial period from discontinued   operations		(348)	(78)	(161)
Total other comprehensive income for the financial period		(420)	(499)	(1,400)
Total comprehensive income for the financial period		667	382	(433)
Attributable to
Equity holders of the parent		546	340	(408)
Non-controlling interests
Ordinary shares		91	11	(87)
Preferred securities		30	31	62
Total comprehensive income for the financial period		667	382	(433)
1 The result for the six months ended 30 June 2011 have been restated to reflect Nordic as discontinued and non-core and include the African businesses not previously consolidated (see note A2).

Reconciliation of adjusted operating profit to profit after tax
For the six months ended 30 June 2012
				£m
	Notes	6 months ended 30 June  2012	6 months ended 30 June 2011¹	Year ended 31 December   2011
Core operations
Long-Term Savings	B3	384	414	793
Nedbank	B3	406	359	755
Mutual and Federal	B3	34	47	89
USAM	B3	42	39	67
		866	859	1,704
Finance costs		(75)	(60)	(128)
Long term investment return on excess assets		25	18	37
Net interest payable to non-core operations		(13)	(9)	(23)
Corporate costs		(25)	(28)	(57)
Other net income/(expenses)		13	5	(18)
Adjusted operating profit before tax		791	785	1,515
Adjusting items	C1(a)	(145)	66	(329)
Non-core operations	B3	53	34	(183)
Profit before tax (net of policyholder tax)		699	885	1,003
Income tax attributable to policyholder returns	B3	34	24	(9)
Profit before tax		733	909	994
Total tax expense	D1(a)	(241)	(178)	(225)
Profit from continuing operations after tax		492	731	769
Profit from discontinued operations after tax	F1(a)	595	150	198
Profit after tax for the financial period		1,087	881	967
Adjusted operating profit after tax attributable to ordinary equity holders of the parent
				£m
	Notes	6 months ended 30 June 2012	6 months ended 30 June 2011¹	Year ended 31 December  2011²
Adjusted operating profit before tax		791	785	1,515
Tax on adjusted operating profit	D1(d)	(210)	(189)	(341)
Adjusted operating profit after tax		581	596	1,174
Non-controlling interests - ordinary shares		(135)	(120)	(257)
Non-controlling - preferred securities		(30)	(31)	(62)
Adjusted operating profit after tax attributable to ordinary equity holders   of the parent		416	445	855
Adjusted weighted average number of shares (millions)	C3(b)	4,806	4,722	4,756
Adjusted operating earnings per share (pence)	C3(b)	8.7	9.4	18.0
1 The results for the six months ended 30 June 2011 have been restated to reflect Nordic as discontinued and non-core, the African businesses not previously consolidated, and the seven for eight share consolidation (see note A2).
2 The results for the year ended 31 December 2011 have been restated to reflect the seven for eight share consolidation (see note A2).

Basis of preparation

The reconciliation of adjusted operating profit has been prepared so as to reflect the directors' view of the underlying long-term performance of the Group. The statement reconciles adjusted operating profit to profit after tax as reported under IFRS as adopted by the EU.

For core life assurance and general insurance businesses, adjusted operating profit is based on a long-term investment return, including investment returns on life funds' investments in Group equity and debt instruments, and is stated net of income tax attributable to policyholder returns. For the US Asset Management business it includes compensation costs in respect of certain long-term incentive schemes defined as non-controlling interests in accordance with IFRS. For all core businesses, adjusted operating profit excludes goodwill impairment, the impact of acquisition accounting, revaluations of put options related to long-term incentive schemes, profit/(loss) on acquisition/disposal of subsidiaries, associated undertakings and strategic investments, and fair value profits/(losses) on certain Group debt movements but includes dividends declared to holders of perpetual preferred callable securities. Bermuda, which is non-core, and Nordic and US Life, which are discontinued and non-core, are not included in adjusted operating profit.

Adjusted operating earnings per share is calculated on the same basis as adjusted operating profit. It is stated after tax attributable to adjusted operating profit and non-controlling interests. It excludes income attributable to Black Economic Empowerment trusts of listed subsidiaries. The calculation of the adjusted weighted average number of shares includes own shares held in policyholders' funds and Black Economic Empowerment trusts.

Consolidated statement of financial position
At 30 June 2012
				£m
	Notes	At  30 June 2012	At   30 June    2011¹	At  31 December 2011
Assets
Goodwill and other intangible assets		3,252	4,833	3,358
Mandatory reserve deposits with central banks		964	1,073	951
Property, plant and equipment		925	1,008	925
Investment property		2,046	2,254	2,064
Deferred tax assets		313	403	339
Investments in associated undertakings and joint ventures		130	176	111
Deferred acquisition costs		1,324	1,565	1,351
Reinsurers' share of policyholder liabilities		1,204	1,230	989
Loans and advances		40,424	49,452	39,764
Investments and securities		83,285	106,973	81,253
Current tax receivable		183	151	138
Client indebtedness for acceptances		200	254	237
Trade, other receivables and other assets		3,431	4,152	3,348
Derivative financial instruments - assets		2,209	1,770	1,795
Cash and cash equivalents		4,088	4,544	3,624
Non-current assets held for sale	F2	1,178	6	22,138
Total assets		145,156	179,844	162,385
Liabilities
Long-term business policyholder liabilities		77,583	98,020	76,350
General insurance liabilities		343	386	325
Third-party interests in consolidated funds		2,571	4,711	1,893
Borrowed funds	E1	3,536	4,497	3,656
Provisions		272	233	269
Deferred revenue		694	774	701
Deferred tax liabilities		457	850	504
Current tax payable		226	244	199
Trade, other payables and other liabilities		4,433	5,116	4,243
Liabilities under acceptances		200	254	237
Amounts owed to bank depositors		41,471	51,638	40,978
Derivative financial instruments - liabilities		1,863	1,355	1,755
Non-current liabilities held for sale	F2	1,132	-	20,417
Total liabilities		134,781	168,078	151,527
Net assets		10,375	11,766	10,858
Shareholders' equity
Equity attributable to equity holders of the parent		7,965	9,266	8,488
Non-controlling interests
Ordinary shares		1,692	1,783	1,652
Preferred securities		718	717	718
Total non-controlling interests		2,410	2,500	2,370
Total equity		10,375	11,766	10,858
1 The results for the six months ended 30 June 2011 have been restated to reflect the consolidation of other African businesses (see note A2).

Condensed consolidated statement of cash flows
For the six months ended 30 June 2012
				£m
		6 months ended 30 June 2012	6 months ended 30 June  2011¹	Year ended 31 December   2011
Cash flows from operating activities - continuing operations
Profit before tax		733	909	994
Non-cash movements in profit before tax		(271)	(108)	1,372
Changes in working capital		247	220	(1,415)
Taxation paid		(269)	(180)	(402)
Net cash inflow from operating activities - continuing operations		440	841	549
Cash flows from investing activities
Net (acquisitions)/disposals of financial investments		(563)	(966)	43
Acquisition of investment properties		(21)	(23)	(57)
Proceeds from disposal of investment properties		17	2	6
Acquisition of property, plant and equipment		(56)	(54)	(184)
Proceeds from disposal of property, plant and equipment		1	9	43
Acquisition of intangible assets		(27)	(29)	(91)
Acquisition of interests in subsidiaries, associated undertakings and strategic   investments		(4)	68	103
Disposal of interests in subsidiaries, associated undertakings and strategic   investments		1,772	(353)	(329)
Net cash inflow/(outflow) from investing activities - continuing operations		1,119	(1,346)	(466)
Cash flows from financing activities
Dividends paid to
Ordinary equity holders of the Company		(1,093)	(53)	(97)
Non-controlling interests and preferred security interests		(118)	(106)	(206)
Interest paid (excluding banking interest paid)		(52)	(36)	(87)
Proceeds from issue of ordinary shares (including by subsidiaries to   non-controlling interests)		-	4	10
Net acquisition of treasury shares		(2)	(18)	(17)
Issue of subordinated and other debt		137	831	890
Subordinated and other debt repaid		(245)	(448)	(905)
Net cash (outflow)/inflow from financing activities - continuing operations		(1,373)	174	(412)
Net increase/(decrease) in cash and cash equivalents - continuing   operations		186	(331)	(329)
Net (decrease)/increase in cash and cash equivalents - discontinued operations		(129)	501	346
Effects of exchange rate changes on cash and cash equivalents		(59)	(185)	(594)
Cash and cash equivalents at beginning of the period		5,055	5,632	5,632
Cash and cash equivalents at end of the period		5,053	5,617	5,055
Consisting of
Cash and cash equivalents in the statement of financial position		4,088	4,544	3,624
Mandatory reserve deposits with central banks		964	1,073	951
Cash and cash equivalents included in assets held for sale		1	-	480
Total		5,053	5,617	5,055
1 The results for the six months ended 30 June 2011 have been restated to reflect Nordic as discontinued and non-core and include the African businesses not previously consolidated (see note A2).

Cash flows presented in this statement include all cash flows relating to policyholders' funds for life assurance.

Except for mandatory reserve deposits with central banks of £964 million (30 June 2011: £1,073 million; 31 December 2011: £951 million) and cash and cash equivalents subject to consolidation of funds of £575 million (30 June 2011: £1,028 million; 31 December 2011: £756 million), management do not consider that there are any material amounts of cash and cash equivalents which are not available for use in the Group's day-to-day operations. Mandatory reserve deposits are, however, included in cash and cash equivalents for the purposes of the cash flow statement in line with market practice in South Africa.

Included within the above is interest income received (including banking interest) of £2,275 million (30 June 2011: £2,421 million; 31 December 2011: £4,936 million), dividend income received of £280 million (30 June 2011: £256 million; 31 December 2011: £371 million) and interest paid (including banking interest) of £1,195 million (30 June 2011: £1,199 million; 31 December 2011: £2,143 million).

Consolidated statement of changes in equity
For the six months ended 30 June 2012
		Millions		£m
Six months ended 30 June 2012	Notes	Number of shares issued and fully paid		Share capital	Share premium	Merger reserve	Available-for-sale reserve
Shareholders' equity at beginning of the period		5,801		580	805	2,532	53
Profit after tax for the financial period		-		-	-	-	-
Other comprehensive income
Fair value gains/(losses)
Property revaluation		-		-	-	-	-
Net investment hedge1		-		-	-	-	-
Available-for-sale investments
Fair value gains		-		-	-	-	14
Recycled to the income statement		-		-	-	-	(6)
Exchange differences recycled to the income statement1	F1(a)	-		-	-	-	-
Shadow accounting		-		-	-	-	1
Currency translation differences/exchange differences on   translating foreign operations		-		-	-	-	-
Other movements		-		-	-	-	-
Income tax relating to components of other   comprehensive income	D1(c)	-		-	-	-	(1)
Total comprehensive income for the financial period		-		-	-	-	8
Dividends	C4	-		-	-	-	-
Other movements in share capital and payment reserve		22		2	23	-	-
Cancellation of treasury shares		(239)		(24)	-	-	-
Share consolidation		(697)		-	-	-	-
Merger reserve realised in the period		-		-	-	(815)	-
Change in participation in subsidiaries		-		-	-	-	-
Transactions with shareholders		(914)		(22)	23	(815)	-
Shareholders' equity at end of the period		4,887		558	828	1,717	61
1Following the sale of the Nordic business on 21 March 2012, foreign exchange translation gains of £350 million relating to the Nordic operations, and foreign exchange hedge losses of £102 million relating to net investment hedges in respect of the Nordic investment were recognised in the income statement. These amounts are included in the £595 million profit on sale.

			£m
Property revaluation reserve	Share-based payments reserve	Other reserves	Translation reserve	Retained earnings	Perpetual preferred callable securities	Attributable to equity holders  of the parent	Total non-controlling interests	Total equity
124	230	5	301	3,170	688	8,488	2,370	10,858
-	-	-	-	914	17	931	156	1,087
(1)	-	-	-	-	-	(1)	-	(1)
-	-	-	123	-	-	123	-	123
-	-	-	-	-	-	14	-	14
-	-	-	-	-	-	(6)	-	(6)
-	-	-	(350)	-	-	(350)	-	(350)
-	-	-	-	-	-	1	-	1
-	-	-	(165)	-	-	(165)	(36)	(201)
1	15	-	(8)	(13)	-	(5)	1	(4)
-	-	-	-	-	5	4	-	4
-	15	-	(400)	901	22	546	121	667
-	-	-	-	(1,093)	(22)	(1,115)	(96)	(1,211)
-	23	-	-	(2)	-	46	8	54
-	-	-	-	24	-	-	-	-
-	-	-	-	-	-	-	-	-
-	-	-	-	815	-	-	-	-
-	-	-	-	-	-	-	7	7
-	23	-	-	(256)	(22)	(1,069)	(81)	(1,150)
124	268	5	(99)	3,815	688	7,965	2,410	10,375

Consolidated statement of changes in equity
For the six months ended 30 June 2012
		Millions		£m
Six months ended 30 June 2011¹	Notes	Number of shares issued and fully paid		Share capital	Share premium	Merger reserve	Available- for-sale reserve
Shareholders' equity at beginning of the period		5,695		570	795	2,845	225
Profit after tax for the financial period		-		-	-	-	-
Other comprehensive income
Fair value gains/(losses)
Net investment hedge		-		-	-	-	-
Available-for-sale investments
Fair value gains		-		-	-	-	53
Recycled to the income statement		-		-	-	-	(166)
Shadow accounting		-		-	-	-	(43)
Currency translation differences/exchange differences on   translating foreign operations		-		-	-	-	-
Other movements		-		-	-	-	-
Income tax relating to components of other   comprehensive income	D1(c)	-		-	-	-	3
Total comprehensive income for the financial period		-		-	-	-	(153)
Dividends	C4	-		-	-	-	-
Other movements in share capital and payment reserve		4		-	4	-	-
Change in participation in other subsidiaries		-		-	-	-	-
Reclassification of translation differences on non   controlling interests		-		-	-	-	-
Shares issued in lieu of cash dividend		69		7	-	-	-
Transactions with shareholders		73		7	4	-	-
Shareholders' equity at end of the period		5,768		577	799	2,845	72
1 The results for the six months ended 30 June 2011 have been restated to reflect the consolidation of other African businesses (see note A2).

			£m
Property revaluation reserve	Share-based payments reserve	Other reserves	Translation reserve	Retained earnings	Perpetual preferred callable securities	Attributable to equity holders  of the parent	Total non-controlling interests	Total equity
101	215	5	1,176	2,331	688	8,951	2,523	11,474
-	-	-	-	722	16	738	143	881
-	-	-	(25)	-	-	(25)	-	(25)
-	-	-	-	-	-	53	-	53
-	(1)	-	24	-	-	(143)	-	(143)
-	-	-	-	-	-	(43)	-	(43)
-	-	-	(224)	-	-	(224)	(86)	(310)
(1)	(41)	-	-	17	-	(25)	(15)	(40)
-	-	-	-	-	6	9	-	9
(1)	(42)	-	(225)	739	22	340	42	382
-	-	-	-	(145)	(22)	(167)	(84)	(251)
-	21	-	-	(18)	-	7	6	13
-	-	-	-	-	-	-	50	50
-	-	-	43	-	-	43	(43)	-
-	-	-	-	85	-	92	6	98
-	21	-	43	(78)	(22)	(25)	(65)	(90)
100	194	5	994	2,992	688	9,266	2,500	11,766

Consolidated statement of changes in equity
For the six months ended 30 June 2012
		Millions		£m
Year ended 31 December 2011	Notes	Number of shares issued and fully paid		Share capital	Share premium	Merger reserve	Available-for-sale reserve
Shareholders' equity at beginning of the year		5,695		570	795	2,845	225
Profit after tax for the financial year		-		-	-	-	-
Other comprehensive income
Fair value gains/(losses)
Property revaluation		-		-	-	-	-
Net investment hedge		-		-	-	-	-
Available-for-sale investments
Fair value gains		-		-	-	-	51
Recycled to the income statement		-		-	-	-	(10)
Realised on disposal		-		-	-	-	(157)
Exchange differences realised on disposal		-		-	-	-	-
Shadow accounting		-		-	-	-	(58)
Currency translation differences/exchange differences on   translating foreign operations		-		-	-	-	-
Other movements		-		-	-	-	-
Income tax relating to components of other   comprehensive income	D1(c)	-		-	-	-	2
Total comprehensive income for the financial year		-		-	-	-	(172)
Dividends	C4	-		-	-	-	-
Other movements in share capital and payment reserve		7		-	10	-	-
Merger reserve realised in the year		-		-	-	(313)	-
Change in participation in subsidiaries		-		-	-	-	-
Reclassification of translation differences on   non-controlling interests		-		-	-	-	-
Shares issued in lieu of cash dividend		99		10	-	-	-
Transactions with shareholders		106		10	10	(313)	-
Shareholders' equity at end of the year		5,801		580	805	2,532	53

			£m
Property revaluation reserve	Share-based payments reserve	Other reserves	Translation reserve	Retained earnings	Perpetual preferred callable securities	Attributable to equity holders  of the parent	Total non-controlling interests	Total equity
101	215	5	1,176	2,331	688	8,951	2,523	11,474
-	-	-	-	635	32	667	300	967
30	-	-	-	-	-	30	9	39
-	-	-	28	-	-	28	-	28
-	-	-	-	-	-	51	(1)	50
-	(1)	-	-	-	-	(11)	-	(11)
-	-	-	-	-	-	(157)	-	(157)
-	-	-	24	-	-	24	-	24
(7)	-	-	-	-	-	(65)	-	(65)
-	-	-	(970)	-	-	(970)	(313)	(1,283)
-	(34)	-	-	15	-	(19)	(20)	(39)
-	-	-	-	-	12	14	-	14
23	(35)	-	(918)	650	44	(408)	(25)	(433)
-	-	-	-	(221)	(44)	(265)	(162)	(427)
-	50	-	-	(17)	-	43	16	59
-	-	-	-	313	-	-	-	-
-	-	-	-	-	-	-	61	61
-	-	-	43	-	-	43	(43)	-
-	-	-	-	114	-	124	-	124
-	50	-	43	189	(44)	(55)	(128)	(183)
124	230	5	301	3,170	688	8,488	2,370	10,858

Notes to the consolidated financial statements

For the six months ended 30 June 2012

A: Accounting policies

A1: Basis of preparation

The Group interim financial statements contained herein have 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 2012 and the financial position at that date have been prepared using accounting policies consistent with those applied in the preparation of the Group's 2011 Annual Report and Accounts.

The Group interim financial statements have been prepared on the going concern basis, which the directors believe appropriate. The Group Finance Director's review includes further details about risks and uncertainties and discloses how the Group actively manages these risks, including updates to the Group's exposure to Bermuda guarantees, the impact to the Group of regulatory changes and an overview of the Group's Capital and liquidity position.

The comparative figures for the financial year ended 31 December 2011 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.

A2: Significant corporate activity and business changes

Disposal of Nordic

As previously reported the Group had agreed at 31 December 2011 to the disposal of its life assurance operations, asset management and banking operations in Sweden, Denmark and Norway to Skandia Liv. Following final regulatory approval on 8 March 2012 and subsequent shareholder approval the sale was completed on 21 March 2012. The sale represented the Group's exit from the life assurance market in the Nordic region and therefore met the criteria of a discontinued operation. The comparative information in the Income Statement, Statement of Comprehensive Income, Statement of Cash Flows and the related notes has been restated, where applicable, to reflect this. The assets and liabilities of Nordic were classified as non-current assets and liabilities held for sale at 31 December 2011. At 30 June 2012 following the completion of the disposal there are no assets and liabilities of Nordic remaining in the Statement of Financial Position.  The position at 30 June 2011 reported Nordic on a line by line basis. For the purposes of adjusted operating profit, Nordic is classified as a non-core operation and the comparative information for the six months ended 30 June 2011 has been restated. Further details of the impact of discontinued operations are provided in note F1.

Special dividend and share consolidation

On 9 March 2012, the Group declared a special dividend of 18p per 10p ordinary share to all holders of those shares on the register at 20 April 2012 and the dividend was subsequently paid on 7 June 2012. A seven-for-eight share consolidation was effected on 23 April 2012 and from that date only new ordinary shares of 11^3/7 pence have been in issue. For basic and diluted earnings per share, the weighted average number of shares is adjusted with effect from 23 April 2012. For adjusted operating earnings per share the adjustment of the weighted average number of shares has been made effective 1 January 2012. Consequently the comparative information in the adjusted operating earnings per share note for the six months ended 30 June 2011 and the year ended 31 December 2011 has been restated accordingly.

Disposal of Finnish branch in Wealth Management

On 21 December 2011 the Group announced that it had agreed terms to sell the Finnish branch of Wealth Management to OP-Pohjola osk. The assets and liabilities of the Finnish branch have been classified as non-current assets and liabilities held for sale in the Statement of Financial Position at 30 June 2012, and 31 December 2011. The 30 June 2011 position reported the Finnish branch on a line by line basis. Details of the non-current assets and liabilities held for sale are provided in note F2.

Consolidation of other African businesses 

As reported in the Group's 2011 Annual Report and Accounts the Group's operations in Zimbabwe, Kenya, Malawi, Swaziland and Nigeria ('the other African businesses'), were consolidated effective from 1 January 2011. The net asset value of the underlying businesses on 1 January 2011 was deemed to be the fair value of these operations on that date. As a result of the consolidation of these businesses, the Group recognised a gain on 1 January 2011, which was disclosed as a profit on acquisition of subsidiaries. The comparatives for the six months ended 30 June 2011 have been restated to include the results of the other African businesses.  

In anticipation of the indigenisation of the Zimbabwe business a non-controlling interest adjustment has been included for this operation in respect of adjusted operating profit to reflect the agreed indigenous shareholding to be provided. At 30 June 2012 the Group had substantially completed the transfer of the agreed indigenous shareholding to approved indigenisation and economic empowerment trusts, which are fully consolidated for the purposes of IFRS reporting.

Reporting of Retail Europe within Wealth Management

On 24 January 2012 the Group announced that that it would combine its Wealth Management Continental Europe business (France and Italy) with the Skandia Retail Europe business unit (Germany, Austria, Poland and Switzerland). As a result the businesses previously reported as the Retail Europe segment are now reported within the Wealth Management segment for the six months ended 30 June 2012. The comparative information for the six months ended 30 June 2011 and the year ended 31 December 2011 has been reclassified where applicable.

Integration of OMAM UK with Skandia Investment Group

On 26 April 2012 the Group announced the integration of Old Mutual Asset Management UK (OMAM UK) with Skandia Investment Group. OMAM UK was previously reported within the US Asset Management segment and Skandia Investment Group is reported within the Wealth Management segment. Consequently OMAM UK is included within the Wealth Management segment for the six months ended 30 June 2012.

Cancellation of treasury shares

On 13 January 2012 the Group announced that it had cancelled 239,434,888 Ordinary Shares of 10p each previously held in treasury.

A3: Critical accounting estimates and judgements

In the preparation of these financial statements, the Group is required to make estimates and judgements that affect items reported in the consolidated income statement, statement of financial position, other primary statements and related supporting notes.

Critical accounting estimates and judgements are those which involve the most complex or subjective judgments or assessments, with estimates based on knowledge of the current situation and circumstances and assumptions based on that knowledge and predictions of future events and actions. There has been no significant change to the critical accounting estimates and judgements that the Group applied at 31 December 2011.

Notes to the consolidated financial statements

For the six months ended 30 June 2012

B: Segment information

B1: Basis of segmentation

Income statement segmentation

For all periods presented, Nordic has been classified as a discontinued operation and its results are non-core in determining the Group's adjusted operating profits.

In all reported periods, Bermuda is disclosed as a continuing operation in the IFRS income statement, and is classified as non-core in determining the Group's adjusted operating profit.

At 30 June 2012 all other businesses, including those held for sale are classified as continuing operations. US Life was classified as a discontinued operation in comparative periods.

The results of OMAM UK (previously included within US Asset Management) and Retail Europe are included within the Wealth Management segment for the six months ended 30 June 2012. Except for OMAM UK, the income statement segmental presentation for the six months ended 30 June 2011 and the year ended 31 December 2011 is consistent with the above.

Statement of financial position segmentation

At 30 June 2012 no assets and liabilities relating to Nordic remain. At 31 December 2011 the assets and liabilities of Nordic were classified as non-current assets and liabilities held for sale. At 30 June 2011 the assets and liabilities of Nordic were disclosed on a line by line basis.

The segmental analysis of the statement of financial position at 30 June 2012, 30 June 2011 and 31 December 2011 discloses Bermuda as non-core.

The assets and liabilities of the Finnish branch were classified as non-current assets and liabilities held for sale at 30 June 2012. At 30 June 2011 and 31 December, the assets and liabilities of the Finnish branch were reported on a line by line basis.

Segmental analysis

The Group's segmental results are analysed and reported on a basis consistent with the way that management and the Board of Directors assesses performance and allocates resources. Information is presented to the Board on a consolidated basis in pounds sterling (the presentational currency) and in local currency of each business.

The revenues generated in each reported segment can be seen in the analysis of profits and losses in note B3.The segmental information in notes B3 and B4, reflects the adjusted and IFRS measures of profit and loss, assets and liabilities for each operating segment as provided to management and the Board of Directors. There are no differences between the measurement of the assets and liabilities reflected in the primary statements and that reported for the segments.

Adjusted operating profit is one of the key measures reported to the Group's management and Board of Directors for their consideration in the allocation of resources to and the review of performance of the segments. The Group utilises additional measures to assess the performance of each of the segments, in particular the level of net client cash flows and funds under management. Additional performance measures considered by management and the Board of Directors in assessing the performance of the segments can be found in the Market Consistent Embedded Value supplementary information.

A reconciliation between the segment revenues and expenses and the Group's revenues and expenses is shown in note B3. In line with internal reporting, assets, liabilities, revenues or expenses that are not directly attributable to a particular segment are allocated between segments where appropriate and where there is a reasonable basis for doing so. The Group accounts for inter-segment revenues and transfers as if the transactions were with third parties at current market prices. Given the nature of the operations, there are no major customers within any of the segments.

There are four principal business activities from which the Group generates revenues. These are life assurance (premium income), asset management business (fee and commission income), banking (banking interest receivable) and general insurance (premium income). The lines of business in each operating segment derives its revenues are as follows:

Core operations

Long-Term Savings

Emerging Markets - life assurance and asset management

Wealth Management - life assurance and asset management

Other core operations

Nedbank - banking and asset management

Mutual & Federal - general insurance

US Asset Management - asset management

Other - other operating segments and business activities

Discontinued and non-core operations

Bermuda - life assurance (non-core)

Nordic - life assurance, asset management and banking (discontinued and non-core)

US Life - life assurance (discontinued and non-core)

B: Segment information continued
B2: Gross earned premiums
						£m
Six months ended 30 June 2012	Emerging Markets	Wealth Management	Long-Term Savings	M&F	Bermuda	Total
Life assurance - insurance contracts	768	177	945	-	-	945
Life assurance - investment contracts    with discretionary participation features	470	-	470	-	-	470
General insurance	-	-	-	359	-	359
Gross earned premiums	1,238	177	1,415	359	-	1,774
Life assurance - other investment contracts   recognised as deposits	1,020	2,743	3,763	-	-	3,763
						£m
Six months ended 30 June 2011¹	Emerging Markets	Wealth Management	Long-Term Savings	M&F	Bermuda	Total
Life assurance - insurance contracts	819	183	1,002	-	-	1,002
Life assurance - investment contracts    with discretionary participation features	502	-	502	-	-	502
General insurance	-	-	-	375	-	375
Gross earned premiums	1,321	183	1,504	375	-	1,879
Life assurance - other investment contracts   recognised as deposits	1,030	3,318	4,348	-	-	4,348
1The results for the six months ended 30 June 2011 have been restated to reflect Nordic as discontinued and non-core (see note A2).
						£m
Year ended 31 December 2011	Emerging Markets	Wealth Management	Long-Term Savings	M&F	Bermuda	Total
Life assurance - insurance contracts	1,567	304	1,871	-	2	1,873
Life assurance - investment contracts    with discretionary participation features	975	-	975	-	-	975
General insurance	-	-	-	736	-	736
Gross earned premiums	2,542	304	2,846	736	2	3,584
Life assurance - other investment contracts   recognised as deposits	2,088	6,406	8,494	-	-	8,494

Notes to the consolidated financial statements
For the six months ended 30 June 2012
B: Segment information continued
B3: Adjusted operating profit statement - segment information six months ended 30 June 2012
		Long-Term Savings
	Notes	Emerging Markets	Wealth Management	Total Long-Term Savings
Revenue
Gross earned premiums		1,238	177	1,415
Outward reinsurance		(41)	(43)	(84)
Net earned premiums		1,197	134	1,331
Investment return (non-banking)		2,017	1,246	3,263
Banking interest and similar income		-	-	-
Banking trading, investment and similar income		-	-	-
Fee and commission income, and income from service activities		201	597	798
Other income		35	14	49
Inter-segment revenues		33	2	35
Total revenues		3,483	1,993	5,476
Expenses
Claims and benefits (including change in insurance contract provisions)		(1,958)	(174)	(2,132)
Reinsurance recoveries		49	34	83
Net claims and benefits incurred		(1,909)	(140)	(2,049)
Change in investment contract liabilities		(663)	(1,177)	(1,840)
Losses on loans and advances		-	-	-
Finance costs (including interest and similar expenses)		-	-	-
Banking interest payable and similar expenses		-	-	-
Fee and commission expenses, and other acquisition costs		(111)	(335)	(446)
Other operating and administrative expenses		(497)	(216)	(713)
Change in third-party interest in consolidated funds		-	-	-
Income tax attributable to policyholder returns		(23)	(11)	(34)
Inter-segment expenses		-	(19)	(19)
Total expenses		(3,203)	(1,898)	(5,101)
Share of associated undertakings' and joint ventures' profit after tax		9	-	9
Profit on disposal of subsidiaries, associated undertakings and strategic   investments		-	-	-
Adjusted operating profit/(loss) before tax and non-controlling   interests		289	95	384
Income tax expense		(70)	(13)	(83)
Non-controlling interests		(3)	-	(3)
Adjusted operating profit/(loss) after tax and non-controlling interests		216	82	298
Adjusting items net of tax and non-controlling interests	C1(a)	(72)	(54)	(126)
Profit/(loss) after tax from continuing operations		144	28	172
Profit from discontinued operations after tax		-	-	-
Profit/(loss) after tax attributable to equity holders of the parent		144	28	172
1 Non-core operations relates to Bermuda with the exception of £4 million of inter-segment revenue and the profit from discontinued operations after tax, with these reflecting the results of Nordic which has been classified as discontinued operations as detailed in notes A2 and B1. Bermuda profit after tax for the six months ended 30 June 2012 was £49 million. Further details on the results of discontinued operations is provided in note F1.

								£m
Nedbank	M&F	USAM	Other	Consolidation adjustments	Adjusted operating profit	Adjusting items  (note C1)	Discontinued and non-core operations1	IFRS Income statement
-	359	-	-	-	1,774	-	-	1,774
-	(71)	-	-	-	(155)	-	-	(155)
-	288	-	-	-	1,619	-	-	1,619
-	23	1	53	80	3,420	(86)	19	3,353
1,780	-	-	-	-	1,780	-	-	1,780
107	-	-	-	-	107	-	-	107
533	12	209	-	-	1,552	(39)	-	1,513
13	-	-	-	-	62	-	8	70
14	8	-	7	(81)	(17)	-	17	-
2,447	331	210	60	(1)	8,523	(125)	44	8,442
-	(235)	-	-	-	(2,367)	-	41	(2,326)
-	42	-	-	-	125	-	-	125
-	(193)	-	-	-	(2,242)	-	41	(2,201)
-	-	-	-	-	(1,840)	-	-	(1,840)
(216)	-	-	-	-	(216)	-	-	(216)
-	-	-	(75)	-	(75)	(15)	-	(90)
(997)	-	-	-	-	(997)	-	-	(997)
-	(53)	(2)	-	(15)	(516)	45	(23)	(494)
(800)	(41)	(167)	(36)	(1)	(1,758)	(70)	(9)	(1,837)
-	-	-	-	(64)	(64)	-	-	(64)
-	-	-	-	-	(34)	34	-	-
(28)	(10)	-	(24)	81	-	-	-	-
(2,041)	(297)	(169)	(135)	1	(7,742)	(6)	9	(7,739)
-	-	1	-	-	10	-	-	10
-	-	-	-	-	-	20	-	20
406	34	42	(75)	-	791	(111)	53	733
(113)	(9)	(6)	1	-	(210)	(31)	-	(241)
(139)	(4)	-	(19)	-	(165)	9	-	(156)
154	21	36	(93)	-	416	(133)	53	336
8	(6)	5	(14)	-	(133)	133	-	-
162	15	41	(107)	-	283	-	53	336
-	-	-	-	-	-	-	595	595
162	15	41	(107)	-	283	-	648	931

Notes to the consolidated financial statements
For the six months ended 30 June 2012
B: Segment information continued
B3: Adjusted operating profit statement - segment information six months ended 30 June 2011
		Long-Term Savings
	Notes	Emerging Markets1	Wealth Management	Total Long-Term Savings
Revenue
Gross earned premiums		1,321	183	1,504
Outward reinsurance		(44)	(44)	(88)
Net earned premiums		1,277	139	1,416
Investment return (non-banking)		1,006	129	1,135
Banking interest and similar income		-	-	-
Banking trading, investment and similar income		-	-	-
Fee and commission income, and income from service activities		198	594	792
Other income		32	9	41
Inter-segment revenues		28	3	31
Total revenues		2,541	874	3,415
Expenses
Claims and benefits (including change in insurance contract provisions)		(1,327)	(147)	(1,474)
Reinsurance recoveries		47	39	86
Net claims and benefits incurred		(1,280)	(108)	(1,388)
Change in investment contract liabilities		(324)	(106)	(430)
Losses on loans and advances		-	(1)	(1)
Finance costs (including interest and similar expenses)		-	-	-
Banking interest payable and similar expenses		-	-	-
Fee and commission expenses, and other acquisition costs		(103)	(311)	(414)
Other operating and administrative expenses		(508)	(216)	(724)
Goodwill impairment		-	-	-
Change in third-party interest in consolidated funds		-	-	-
Income tax attributable to policyholder returns		(28)	4	(24)
Inter-segment expenses		(1)	(21)	(22)
Total expenses		(2,244)	(759)	(3,003)
Share of associated undertakings' and joint ventures' profit after tax		2	-	2
Profit on disposal of subsidiaries, associated undertakings and strategic   investments		-	-	-
Adjusted operating profit/(loss) before tax and non-controlling interests		299	115	414
Income tax expense		(65)	(20)	(85)
Non-controlling interests		-	-	-
Adjusted operating profit/(loss) after tax and non-controlling interests		234	95	329
Adjusting items net of tax and non-controlling interests	C1(a)	208	(57)	151
Profit/(loss) after tax from continuing operations		442	38	480
Profit from discontinued operations after tax		-	-	-
Profit/(loss) after tax attributable to equity holders of the parent		442	38	480
1 Emerging Markets has been restated to reflect the African businesses not previously consolidated (see note A2).
2 Non-core operations relates to Bermuda with the exception of £11 million and £4 million of inter-segment revenue and expenses and the profit from discontinued operations after tax, with these reflecting the results of Nordic and US Life both of which have been classified as discontinued operations. More detail is provided in notes A2 and B1. Bermuda profit after tax for the six months ended 30 June 2011 was £25 million. Further detail on the results of discontinued operations is provided in note F1.

								£m
Nedbank	M&F	USAM	Other	Consolidation adjustments	Adjusted operating profit	Adjusting items  (note C1)	Discontinued and non-core operations2	IFRS Income statement
-	375	-	-	-	1,879	-	-	1,879
-	(75)	-	-	-	(163)	-	-	(163)
-	300	-	-	-	1,716	-	-	1,716
-	28	-	36	101	1,300	(86)	7	1,221
1,881	-	-	-	-	1,881	-	-	1,881
105	-	-	-	-	105	-	-	105
515	16	223	-	-	1,546	(46)	-	1,500
20	-	6	-	12	79	-	10	89
13	10	3	7	(86)	(22)	-	22	-
2,534	354	232	43	27	6,605	(132)	39	6,512
-	(212)	-	-	-	(1,686)	-	36	(1,650)
-	18	-	-	-	104	-	-	104
-	(194)	-	-	-	(1,582)	-	36	(1,546)
-	-	-	-	-	(430)	-	-	(430)
(250)	-	-	-	-	(251)	-	-	(251)
-	-	-	(60)	-	(60)	(25)	-	(85)
(1,089)	-	-	-	-	(1,089)	(4)	-	(1,093)
(1)	(55)	(6)	-	(17)	(493)	54	(29)	(468)
(806)	(46)	(187)	(39)	(12)	(1,814)	(76)	(11)	(1,901)
-	-	-	-	-	-	-	-	-
-	-	-	-	(84)	(84)	-	-	(84)
-	-	-	-	-	(24)	24	-	-
(29)	(12)	-	(22)	86	1	-	(1)	-
(2,175)	(307)	(193)	(121)	(27)	(5,826)	(27)	(5)	(5,858)
-	-	-	4	-	6	-	-	6
-	-	-	-	-	-	249	-	249
359	47	39	(74)	-	785	90	34	909
(93)	(11)	(8)	8	-	(189)	13	(2)	(178)
(128)	(4)	-	(19)	-	(151)	8	-	(143)
138	32	31	(85)	-	445	111	32	588
6	(8)	(5)	(33)	-	111	(111)	-	-
144	24	26	(118)	-	556	-	32	588
-	-	-	-	-	-	-	150	150
144	24	26	(118)	-	556	-	182	738

Notes to the consolidated financial statements
For the six months ended 30 June 2012
B: Segment information continued
B3: Adjusted operating profit statement - segment information year ended 31 December 2011
		Long-Term Savings
	Notes	Emerging Markets	Wealth Management	Total Long-Term Savings
Revenue
Gross earned premiums		2,542	304	2,846
Outward reinsurance		(88)	(88)	(176)
Net earned premiums		2,454	216	2,670
Investment return (non-banking)		2,626	(2,878)	(252)
Banking interest and similar income		-	-	-
Banking trading, investment and similar income		-	-	-
Fee and commission income, and income from service activities		411	1,183	1,594
Other income		68	23	91
Inter-segment revenues		66	11	77
Total revenues		5,625	(1,445)	4,180
Expenses
Claims and benefits (including change in insurance contract provisions)		(2,854)	(102)	(2,956)
Reinsurance recoveries		73	9	82
Net claims and benefits incurred		(2,781)	(93)	(2,874)
Change in investment contract liabilities		(925)	2,814	1,889
Losses on loans and advances		-	(1)	(1)
Finance costs (including interest and similar expenses)		-	-	-
Banking interest payable and similar expenses		-	-	-
Fee and commission expenses, and other acquisition costs		(223)	(664)	(887)
Other operating and administrative expenses		(1,076)	(404)	(1,480)
Goodwill impairment		-	-	-
Change in third-party interest in consolidated funds		-	-	-
Income tax attributable to policyholder returns		(53)	62	9
Inter-segment expenses		(7)	(46)	(53)
Total expenses		(5,065)	1,668	(3,397)
Share of associated undertakings' and joint ventures' profit after tax		10	-	10
Profit on disposal of subsidiaries, associated undertakings and strategic investments		-	-	-
Adjusted operating profit/(loss) before tax and non-controlling interests		570	223	793
Income tax expense		(120)	(26)	(146)
Non-controlling interests		(3)	-	(3)
Adjusted operating profit/(loss) after tax and non-controlling interests		447	197	644
Adjusting items net of tax and non-controlling interests	C1(a)	126	(87)	39
Profit/(loss) after tax from continuing operations		573	110	683
Profit from discontinued operations after tax		-	-	-
Profit/(loss) after tax attributable to equity holders of the parent		573	110	683
1 Non-core operations relates to Bermuda with the exception of £22 million and £5 million of inter-segment revenue and expenses and the profit from discontinued operations after tax, with these reflecting the results of Nordic and US Life both of which have been classified as discontinued operations. More detail is provided in notes A2 and B1. Bermuda loss after tax for the year ended 31 December 2011 was £201 million. Further detail on the results of discontinued operations is provided in note F1.

								£m
Nedbank	M&F	USAM	Other	Consolidation adjustments	Adjusted operating profit	Adjusting items  (note C1)	Discontinued and non-core operations1	IFRS Income statement
-	736	-	-	-	3,582	-	2	3,584
-	(149)	-	-	-	(325)	-	-	(325)
-	587	-	-	-	3,257	-	2	3,259
-	54	-	52	30	(116)	(241)	(210)	(567)
3,669	-	-	-	-	3,669	-	-	3,669
217	-	-	-	-	217	-	-	217
1,051	34	447	-	-	3,126	(91)	-	3,035
50	-	10	-	-	151	-	20	171
27	18	1	16	(185)	(46)	-	46	-
5,014	693	458	68	(155)	10,258	(332)	(142)	9,784
-	(422)	-	-	-	(3,378)	-	47	(3,331)
-	41	-	-	-	123	-	-	123
-	(381)	-	-	-	(3,255)	-	47	(3,208)
-	-	-	-	-	1,889	-	-	1,889
(457)	-	-	-	-	(458)	-	-	(458)
-	-	-	(128)	-	(128)	70	-	(58)
(2,091)	-	-	-	-	(2,091)	(4)	-	(2,095)
(9)	(109)	(12)	-	(24)	(1,041)	104	(70)	(1,007)
(1,641)	(95)	(379)	(81)	(8)	(3,684)	(154)	(14)	(3,852)
-	-	-	-	-	-	(264)	-	(264)
-	-	-	-	2	2	-	-	2
-	-	-	-	-	9	(9)	-	-
(61)	(19)	-	(48)	185	4	-	(4)	-
(4,259)	(604)	(391)	(257)	155	(8,753)	(257)	(41)	(9,051)
-	-	-	-	-	10	-	-	10
-	-	-	-	-	-	251	-	251
755	89	67	(189)	-	1,515	(338)	(183)	994
(188)	(22)	(8)	23	-	(341)	117	(1)	(225)
(269)	(8)	-	(39)	-	(319)	19	-	(300)
298	59	59	(205)	-	855	(202)	(184)	469
16	(24)	(260)	27	-	(202)	202	-	-
314	35	(201)	(178)	-	653	-	(184)	469
-	-	-	-	-	-	-	198	198
314	35	(201)	(178)	-	653	-	14	667

Notes to the consolidated financial statements
For the six months ended 30 June 2012
B: Segment information continued
B4: Statement of financial position - segment information at 30 June 2012
				£m
	Notes	Emerging Markets	Wealth Management	Total Long-Term Savings
Assets
Goodwill and other intangible assets		105	1,673	1,778
Mandatory reserve deposits with central banks		-	-	-
Property, plant and equipment		390	14	404
Investment property		1,599	-	1,599
Deferred tax assets		74	63	137
Investments in associated undertakings and joint ventures		48	-	48
Deferred acquisition costs		111	1,160	1,271
Reinsurers' share of policyholder liabilities		52	1,028	1,080
Loans and advances		401	194	595
Investments and securities		30,412	42,427	72,839
Current tax receivable		21	84	105
Client indebtedness for acceptances		-	-	-
Trade, other receivables and other assets		751	332	1,083
Derivative financial instruments - assets		443	-	443
Cash and cash equivalents		516	553	1,069
Non-current assets held for sale	F2	-	1,176	1,176
Inter-segment assets		432	116	548
Total assets		35,355	48,820	84,175
Liabilities
Life assurance policyholder liabilities		30,747	43,310	74,057
General insurance liabilities		-	-	-
Third-party interests in consolidated funds		-	-	-
Borrowed funds	E1	234	-	234
Provisions		144	45	189
Deferred revenue		13	672	685
Deferred tax liabilities		158	195	353
Current tax payable		144	35	179
Trade, other payables and other liabilities		1,757	643	2,400
Liabilities under acceptances		-	-	-
Amounts owed to bank depositors		93	-	93
Derivative financial instruments - liabilities		306	(4)	302
Non-current liabilities held for sale	F2	-	1,132	1,132
Inter-segment liabilities		73	460	533
Total liabilities		33,669	46,488	80,157
Net assets		1,686	2,332	4,018
Equity
Equity attributable to equity holders of the parent		1,686	2,332	4,018
Non-controlling interests		-	-	-
Ordinary shares		-	-	-
Preferred securities		-	-	-
Total equity		1,686	2,332	4,018

						£m
Nedbank	M&F	USAM	Other	Consolidation adjustments	Non-core operations Bermuda	Total
548	21	891	14	-	-	3,252
964	-	-	-	-	-	964
487	22	11	1	-	-	925
48	-	-	-	399	-	2,046
21	13	139	2	-	1	313
51	1	3	27	-	-	130
-	15	7	-	-	31	1,324
16	108	-	-	-	-	1,204
39,828	1	-	-	-	-	40,424
6,589	429	42	430	1,543	1,413	83,285
76	2	-	-	-	-	183
200	-	-	-	-	-	200
902	82	115	45	429	775	3,431
1,137	-	-	96	403	130	2,209
922	109	107	1,208	575	98	4,088
2	-	-	-	-	-	1,178
166	21	21	1,093	(2,379)	530	-
51,957	824	1,336	2,916	970	2,978	145,156
887	-	-	-	-	2,639	77,583
-	343	-	-	-	-	343
-	-	-	-	2,571	-	2,571
2,281	-	11	1,010	-	-	3,536
1	28	2	52	-	-	272
1	8	-	-	-	-	694
66	15	-	23	-	-	457
4	-	1	42	-	-	226
1,213	113	165	77	406	59	4,433
200	-	-	-	-	-	200
41,378	-	-	-	-	-	41,471
1,189	-	-	-	372	-	1,863
-	-	-	-	-	-	1,132
441	2	566	836	(2,379)	1	-
47,661	509	745	2,040	970	2,699	134,781
4,296	315	591	876	-	279	10,375
2,381	294	563	430	-	279	7,965
1,915	21	28	446	-	-	2,410
1,643	21	28	-	-	-	1,692
272	-	-	446	-	-	718
4,296	315	591	876	-	279	10,375

Notes to the consolidated financial statements
For the six months ended 30 June 2012
B: Segment information continued
B4: Statement of financial position - segment information at 30 June 2011
				£m
	Notes	Emerging Markets1	Wealth Management	Total Long-Term Savings
Assets
Goodwill and other intangible assets		125	1,942	2,067
Mandatory reserve deposits with central banks		-	-	-
Property, plant and equipment		403	18	421
Investment property		1,884	-	1,884
Deferred tax assets		83	59	142
Investments in associated undertakings and joint ventures		24	-	24
Deferred acquisition costs		130	1,230	1,360
Reinsurers' share of policyholder liabilities		35	1,036	1,071
Loans and advances		454	195	649
Investments and securities		33,675	46,163	79,838
Current tax receivable		11	80	91
Client indebtedness for acceptances		-	-	-
Trade, other receivables and other assets		994	403	1,397
Derivative financial instruments - assets		527	-	527
Cash and cash equivalents		235	543	778
Non-current assets held for sale	F2	-	5	5
Inter-segment assets		1,189	322	1,511
Total assets		39,769	51,996	91,765
Liabilities
Life assurance policyholder liabilities		34,407	47,019	81,426
General insurance liabilities		-	-	-
Third-party interests in consolidated funds		-	-	-
Borrowed funds	E1	276	-	276
Provisions		160	54	214
Deferred revenue		19	743	762
Deferred tax liabilities		248	309	557
Current tax payable		104	60	164
Trade, other payables and other liabilities		1,913	669	2,582
Liabilities under acceptances		-	-	-
Amounts owed to bank depositors		74	4	78
Derivative financial instruments - liabilities		162	1	163
Non-current liabilities held for sale	F2	-	-	-
Inter-segment liabilities		163	471	634
Total liabilities		37,526	49,330	86,856
Net assets		2,243	2,666	4,909
Equity
Equity attributable to equity holders of the parent		2,242	2,666	4,908
Non-controlling interests		1	-	1
Ordinary shares		1	-	1
Preferred securities		-	-	-
Total equity		2,243	2,666	4,909
1 Emerging markets has been restated to reflect the African businesses not previously consolidated (see note A2).
2 Discontinued operations relate to Nordic and US Life (see note A2).

							£m
Nedbank	M&F	USAM	Other	Consolidation adjustments	Non-core operations Bermuda	Discontinued operations2	Total
604	28	1,140	13	-	-	981	4,833
1,073	-	-	-	-	-	-	1,073
537	24	13	2	-	1	10	1,008
19	-	-	-	351	-	-	2,254
21	15	142	-	-	-	83	403
108	2	8	30	-	-	4	176
1	17	12	-	-	98	77	1,565
29	115	-	-	-	-	15	1,230
43,221	2	-	59	-	-	5,521	49,452
7,180	452	43	231	3,326	2,052	13,851	106,973
57	-	-	2	-	-	1	151
254	-	-	-	-	-	-	254
697	90	149	39	660	959	161	4,152
763	-	-	138	331	-	11	1,770
1,081	137	142	781	1,028	59	538	4,544
1	-	-	-	-	-	-	6
227	25	2	982	(3,558)	604	207	-
55,873	907	1,651	2,277	2,138	3,773	21,460	179,844
848	-	-	-	-	3,281	12,465	98,020
-	386	-	-	-	-	-	386
-	-	-	-	4,711	-	-	4,711
2,511	-	10	1,698	-	-	2	4,497
(6)	30	2	39	-	-	(46)	233
-	10	-	-	-	-	2	774
155	11	-	25	-	-	102	850
5	2	4	33	-	1	35	244
1,204	125	179	110	660	19	237	5,116
254	-	-	-	-	-	-	254
44,791	-	-	-	-	-	6,769	51,638
819	-	-	38	325	1	9	1,355
-	-	-	-	-	-	-	-
688	2	573	1,661	(3,558)	-	-	-
51,269	566	768	3,604	2,138	3,302	19,575	168,078
4,604	341	883	(1,327)	-	471	1,885	11,766
2,599	322	854	(1,773)	-	471	1,885	9,266
2,005	19	29	446	-	-	-	2,500
1,734	19	29	-	-	-	-	1,783
271	-	-	446	-	-	-	717
4,604	341	883	(1,327)	-	471	1,885	11,766

Notes to the consolidated financial statements
For the six months ended 30 June 2012
B: Segment information continued
B4: Statement of financial position - segment information at 31 December 2011
				£m
	Notes	Emerging Markets	Wealth Management	Total Long-Term Savings
Assets
Goodwill and other intangible assets		104	1,756	1,860
Mandatory reserve deposits with central banks		-	-	-
Property, plant and equipment		374	16	390
Investment property		1,666	-	1,666
Deferred tax assets		81	65	146
Investments in associated undertakings and joint ventures		32	-	32
Deferred acquisition costs		113	1,164	1,277
Reinsurers' share of policyholder liabilities		31	844	875
Loans and advances		299	190	489
Investments and securities		30,064	41,508	71,572
Current tax receivable		10	70	80
Client indebtedness for acceptances		-	-	-
Trade, other receivables and other assets		711	310	1,021
Derivative financial instruments - assets		298	-	298
Cash and cash equivalents		339	516	855
Non-current assets held for sale	F2	-	1,161	1,161
Inter-segment assets		1,025	138	1,163
Total assets		35,147	47,738	82,885
Liabilities
Life assurance policyholder liabilities		30,270	42,159	72,429
General insurance liabilities		-	-	-
Third-party interests in consolidated funds		-	-	-
Borrowed funds	E1	239	-	239
Provisions		137	64	201
Deferred revenue		17	673	690
Deferred tax liabilities		185	189	374
Current tax payable		120	39	159
Trade, other payables and other liabilities		1,667	673	2,340
Liabilities under acceptances		-	-	-
Amounts owed to bank depositors		-	-	-
Derivative financial instruments - liabilities		230	-	230
Non-current liabilities held for sale	F2	-	1,120	1,120
Inter-segment liabilities		141	462	603
Total liabilities		33,006	45,379	78,385
Net assets		2,141	2,359	4,500
Equity
Equity attributable to equity holders of the parent		2,144	2,359	4,503
Non-controlling interests		(3)	-	(3)
Ordinary shares		(3)	-	(3)
Preferred securities		-	-	-
Total equity		2,141	2,359	4,500
1 Discontinued operations relate to Nordic and US Life (see note A2).

							£m
Nedbank	M&F	USAM	Other	Consolidation adjustments	Non-core operations Bermuda	Discontinued operations1	Total
557	23	904	13	-	1	-	3,358
951	-	-	-	-	-	-	951
502	21	11	1	-	-	-	925
49	-	-	-	349	-	-	2,064
21	14	165	(8)	-	1	-	339
49	1	2	27	-	-	-	111
-	16	9	-	-	49	-	1,351
16	98	-	-	-	-	-	989
39,274	1	-	-	-	-	-	39,764
6,403	416	41	216	874	1,731	-	81,253
56	2	-	-	-	-	-	138
237	-	-	-	-	-	-	237
943	75	126	54	293	836	-	3,348
1,022	-	-	86	388	1	-	1,795
1,071	113	197	467	756	165	-	3,624
1	-	16	-	-	-	20,960	22,138
206	23	21	1,136	(3,155)	566	40	-
51,358	803	1,492	1,992	(495)	3,350	21,000	162,385
815	-	-	-	-	3,106	-	76,350
-	325	-	-	-	-	-	325
-	-	-	-	1,893	-	-	1,893
2,273	-	11	1,133	-	-	-	3,656
-	32	3	33	-	-	-	269
1	10	-	-	-	-	-	701
93	13	-	24	-	-	-	504
10	-	(3)	32	-	1	-	199
1,123	108	219	96	348	9	-	4,243
237	-	-	-	-	-	-	237
40,978	-	-	-	-	-	-	40,978
1,103	-	-	3	419	-	-	1,755
-	-	8	-	-	-	19,289	20,417
501	2	598	1,451	(3,155)	-	-	-
47,134	490	836	2,772	(495)	3,116	19,289	151,527
4,224	313	656	(780)	-	234	1,711	10,858
2,347	294	625	(1,226)	-	234	1,711	8,488
1,877	19	31	446	-	-	-	2,370
1,605	19	31	-	-	-	-	1,652
272	-	-	446	-	-	-	718
4,224	313	656	(780)	-	234	1,711	10,858

Notes to the consolidated financial statements

For the six months ended 30 June 2012

C: Other key performance information 

C1: Operating profit adjusting items

(a) Summary of adjusting items

In determining the adjusted operating profit of the Group for core operations certain adjustments are made to profit before tax to reflect the directors' view of the underlying long-term performance of the Group. The following table shows an analysis of those adjustments from adjusted operating profit to profit before and after tax.

		£m
Six months ended 30 June 2012	Notes	Emerging Markets	Wealth Management	Total Long- Term Savings
Income/(expense)
Goodwill impairment and impact of acquisition accounting	C1(b)	(1)	(62)	(63)
Profit on acquisition/disposal of subsidiaries, associated undertakings and   strategic investments	C1(c)	-	-	-
Short-term fluctuations in investment return	C1(d)	(44)	1	(43)
Investment return adjustment for Group equity and debt instruments held in life   funds	C1(e)	(37)	-	(37)
Dividends declared to holders of perpetual preferred callable securities	C1(f)	-	-	-
Credit-related fair value losses on Group debt instruments	C1(h)	-	-	-
Total adjusting items		(82)	(61)	(143)
Tax on adjusting items	D1(d)	6	7	13
Non-controlling interest in adjusting items		4	-	4
Total adjusting items after tax and non-controlling interests		(72)	(54)	(126)
		£m
Six months ended 30 June 2011¹	Notes	Emerging          Markets	Wealth Management	Total Long- Term Savings
Income/(expense)
Goodwill impairment and impact of acquisition accounting	C1(b)	(1)	(63)	(64)
Profit on acquisition/disposal of subsidiaries, associated undertakings and   strategic investments	C1(c)	249	-	249
Short-term fluctuations in investment return	C1(d)	(23)	(14)	(37)
Investment return adjustment for Group equity and debt instruments held in life   funds	C1(e)	(31)	-	(31)
Dividends declared to holders of perpetual preferred callable securities	C1(f)	-	-	-
Credit-related fair value gains/(losses) on Group debt instruments	C1(h)	-	-	-
Total adjusting items		194	(77)	117
Tax on adjusting items	D1(d)	14	20	34
Non-controlling interest in adjusting items		-	-	-
Total adjusting items after tax and non-controlling interests		208	(57)	151
1 The results for the six months ended 30 June 2012 have been restated to reflect Nordic as discontinued and non-core and the African businesses not previously consolidated (see note A2).
		£m
Year ended 31 December 2011	Notes	Emerging  Markets	Wealth Management	Total Long- Term Savings
Income/(expense)
Goodwill impairment and impact of acquisition accounting	C1(b)	(2)	(127)	(129)
Profit on acquisition/disposal of subsidiaries, associated undertakings and   strategic investments	C1(c)	249	-	249
Short-term fluctuations in investment return	C1(d)	(98)	(14)	(112)
Investment return adjustment for Group equity and debt instruments held in life   funds	C1(e)	(71)	-	(71)
Dividends declared to holders of perpetual preferred callable securities	C1(f)	-	-	-
US Asset Management equity plans and non-controlling interests	C1(g)	-	-	-
Credit-related fair value gains/(losses) on Group debt instruments	C1(h)	-	-	-
Total adjusting items		78	(141)	(63)
Tax on adjusting items	D1(d)	43	54	97
Non-controlling interest in adjusting items		5	-	5
Total adjusting items after tax and non-controlling interests		126	(87)	39

£m
Nedbank	M&F	USAM	Other	Total
-	-	(1)	-	(64)
-	-	20	-	20
-	(6)	-	-	(49)
-	-	-	-	(37)
-	-	-	22	22
-	-	-	(37)	(37)
-	(6)	19	(15)	(145)
-	(1)	(10)	1	3
8	1	(4)	-	9
8	(6)	5	(14)	(133)
£m
Nedbank	M&F	USAM	Other	Total
(3)	-	(2)	-	(69)
-	-	-	-	249
-	(11)	-	(6)	(54)
-	-	-	-	(31)
-	-	-	22	22
(4)	-	-	(47)	(51)
(7)	(11)	(2)	(31)	66
2	2	1	(2)	37
11	1	(4)	-	8
6	(8)	(5)	(33)	111
£m
Nedbank	M&F	USAM	Other	Total
-	-	(272)	-	(401)
-	-	2	-	251
-	(28)	-	(31)	(171)
-	-	-	-	(71)
-	-	-	44	44
-	-	(4)	-	(4)
(4)	-	-	27	23
(4)	(28)	(274)	40	(329)
1	3	20	(13)	108
19	1	(6)	-	19
16	(24)	(260)	27	(202)

Notes to the consolidated financial statements

For the six months ended 30 June 2012

C: Other key performance information continued

C1: Operating profit adjusting items continued

(b) Goodwill impairment and impact of acquisition accounting

Acquisition date deferred acquisition costs and deferred revenues are not recognised. These are reversed in the acquisition statement of financial position and replaced by goodwill, other intangible assets and the value of the acquired present value of in-force business ('acquired PVIF'). In determining its adjusted operating profit the Group recognises deferred revenue and acquisition costs in relation to policies sold by acquired businesses pre-acquisition, and excludes the impairment of goodwill and the amortisation of acquired other intangibles and acquired PVIF and the movements in certain acquisition date provisions. Goodwill impairment and acquisition accounting adjustments to adjusted operating profit are summarised below:

	£m
Six months ended 30 June 2012	Emerging Markets	Wealth Management	Nedbank	USAM	Total
Amortisation of acquired PVIF	-	(43)	-	-	(43)
Amortisation of acquired deferred costs and revenue	-	6	-	-	6
Amortisation of other acquired intangible assets	(1)	(25)	-	(1)	(27)
	(1)	(62)	-	(1)	(64)
	£m
Six months ended 30 June 2011¹	Emerging Markets	Wealth Management	Nedbank	USAM	Total
Amortisation of acquired PVIF	-	(46)	-	-	(46)
Amortisation of acquired deferred costs and revenue	-	8	-	-	8
Amortisation of other acquired intangible assets	(1)	(25)	(3)	(2)	(31)
	(1)	(63)	(3)	(2)	(69)
1 The results for the six months ended 30 June 2011 have been restated to reflect Nordic as discontinued and non-core (see note A2).
	£m
Year ended 31 December 2011	Emerging Markets	Wealth Management	Nedbank	USAM	Total
Amortisation of acquired PVIF	-	(90)	-	-	(90)
Amortisation of acquired deferred costs and revenue	-	13	-	-	13
Amortisation of other acquired intangible assets	(2)	(50)	-	(8)	(60)
Goodwill impairment	-	-	-	(264)	(264)
	(2)	(127)	-	(272)	(401)

(c) Profit on acquisition/disposal of subsidiaries, associated undertakings and strategic investments Profit on acquisition/disposal of subsidiaries, associated undertakings and strategic investments is analysed below:
			£m
	6 months ended 30 June 2012	6 months ended 30 June  2011¹	Year ended 31 December 2011
Emerging Markets	-	249	249
Long-Term Savings	-	249	249
USAM	20	-	2
Profit on acquisition/disposal of subsidiaries, associated undertakings   and strategic investments	20	249	251
1 The results for the six months ended 30 June 2011 have been restated to reflect the African businesses not previously consolidated (see note A2).

On 13 April 2012 USAM disposed of Old Mutual Capital, Inc, a subsidiary, at a profit of £12 million. On 15 May 2012 USAM disposed of Dwight Asset Management Company LLC, a fixed income affiliate, at a profit of £8 million.

In preparing the consolidated financial statements for the six months ended 30 June 2011 the Emerging Markets segment included the South African and Namibian businesses but excluded all other African businesses. This was consistent with prior periods. Following a period of greater political and currency stability in Zimbabwe and an expectation that the Group would be able to extract benefits from its Zimbabwean business it was consolidated for the first time for the year ended 31 December 2011 together with operations in Kenya, Malawi, Swaziland and Nigeria. Further detail has been provided in note A2.

d) Short-term fluctuations in investment return

Profit before tax includes actual investment returns earned on the shareholder assets of the Group's life assurance and general insurance businesses. Adjusted operating profit is stated after recalculating shareholder asset investment returns based on a long-term investment return rate. The difference between the actual and the long-term investment returns are short-term fluctuations in investment return.

Long-term rates of return are based on achieved rates of return appropriate to the underlying asset base, adjusted for current inflation expectations, default assumptions, costs of investment management and consensus economic investment forecasts. The long-term rates of return are reviewed frequently, usually annually, for appropriateness. These rates of return have been selected with a view to ensuring that returns credited to adjusted operating profit are consistent with the actual returns expected to be earned over the long-term.

For Emerging Markets, the return is applied to an average value of investible shareholders' assets, adjusted for net fund flows. For Wealth Management, the return is applied to average investible assets. For M&F general insurance business, the return is an average value of investible assets supporting shareholders' funds and insurance liabilities, adjusted for net fund flows.

			%
Long-term investment rates	6 months ended 30 June 2012	6 months ended 30 June 2011	Year ended 31 December 2011
Emerging Markets	9.0	9.0	9.0
Wealth Management	1.5-2.1	2.0-2.1	2.0-2.1
M&F	8.6	9.0	9.0

Analysis of short-term fluctuations in investment return
	£m
Six months ended 30 June 2012	Emerging Markets	Wealth Management	Total Long-Term Savings	M&F	Other	Total
Actual shareholder investment return	19	19	38	18	25	81
Less: Long-term investment return	63	18	81	24	25	130
Short-term fluctuations in investment return	(44)	1	(43)	(6)	-	(49)
	£m
Six months ended 30 June 2011¹	Emerging Markets	Wealth Management	Total Long- Term Savings	M&F	Other	Total
Actual shareholder investment return	29	22	51	17	12	80
Less: Long-term investment return	52	36	88	28	18	134
Short-term fluctuations in investment return	(23)	(14)	(37)	(11)	(6)	(54)
	£m
Year ended 31 December 2011	Emerging Markets	Wealth Management	Total Long- Term Savings	M&F	Other	Total
Actual shareholder investment return	14	66	80	26	6	112
Less: Long-term investment return	112	80	192	54	37	283
Short-term fluctuations in investment return	(98)	(14)	(112)	(28)	(31)	(171)
1 The results for the six months ended 30 June 2011 have been restated to reflect Nordic as discontinued and non-core (see note A2).
2 Wealth Management long term investment return includes £14 million (six months ended 30 June 2011 £28 million; year ended 31 December 2011 £65 million) in respect of income tax attributable to policyholder returns.

(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 2012 the investment return adjustment increased adjusted operating profit by £37 million (six months ended 30 June 2011: increase of £31 million; year ended 31 December 2011: increase £71 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 2012 (six months ended 30 June 2011: £22 million year ended 31 December 2011: £44 million). These are recognised in finance costs on an accruals basis for the purpose of determining adjusted operating profit. In the IFRS financial statements this cost is recognised in equity.

(g) US Asset Management equity plans and non-controlling interests

US Asset Management has a number of long-term incentive arrangements with senior employees in its asset management affiliates.

In accordance with IFRS requirements the cost of these schemes is disclosed as being attributable to non-controlling interests. However, this is treated as a compensation expense in determining adjusted operating profit. The loss recognised in the six months ended 30 June 2012 was £4 million (six months ended 30 June 2011: £nil; year ended 31 December 2011: loss £6 million).

The Group has issued put options in equities in the affiliates to senior employees as part of its US affiliate incentive schemes. The impact of revaluing these instruments is recognised in accordance with IFRS, but excluded from adjusted operating profit. At 30 June 2012 these instruments were revalued, the impact of which was a profit of £4 million (six months ended 30 June 2011: £nil; year ended 31 December 2011: profit £10 million).

Notes to the consolidated financial statements

For the six months ended 30 June 2012

C: Other key performance information continued

C1: Operating profit adjusting items continued

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

The widening of credit spread of the Group's debt instruments in the market price has resulted in losses in the six months ended 30 June 2012 of £37 million in Other operating segments and £nil in Nedbank (six months ended 30 June 2011: losses of £47 million and £4 million respectively; year ended 31 December 2011: gains of £27 million and losses of £4 million respectively) 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
	6 months ended  30 June 2012		6 months ended  30 June 2011		Year ended  31 December 2011
	Income Statement (average   rate)	Statement of financial position (closing rate)	Income Statement (average rate)	Statement of financial position (closing rate)	Income Statement (average rate)	Statement of financial position (closing rate)
Rand	12.5247	12.8401	11.1428	10.8616	11.6445	12.5643
US dollars	1.5769	1.5682	1.6165	1.6067	1.6037	1.5553
Swedish kronor	10.8030	10.8604	10.3023	10.1564	10.4144	10.6801
Euro	1.2154	1.2396	1.1513	1.1073	1.1519	1.1970

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 year excluding own shares held in policyholder funds, ESOP trusts, Black Economic Empowerment trusts and other related undertakings.

			£m
	6 months ended 30 June 2012	6 months ended 30 June  2011 restated	Year ended 31 December   2011
Profit for the financial period attributable to equity holders of the parent from continuing   operations	336	588	469
Profit for the financial period attributable to equity holders of the parent from   discontinued operations	595	150	198
Profit for the financial period attributable to equity holders of the parent	931	738	667
Dividends declared to holders of perpetual preferred callable securities	(17)	(16)	(32)
Profit attributable to ordinary equity holders	914	722	635
Total dividends declared to holders of perpetual preferred callable securities of £17 million in 2012 (30 June 2011: £16 million; 31 December 2011:
£32 million) are stated net of tax credits of £5 million (30 June 2011: £6 million; 31 December 2011: £12 million).
			Millions
	6 months ended 30 June 2012	6 months ended 30 June  2011 restated	Year ended 31 December   2011
Weighted average number of ordinary shares in issue	5,303	5,470	5,502
Shares held in charitable foundations	(6)	(7)	(6)
Shares held in ESOP trusts	(66)	(66)	(61)
Adjusted weighted average number of ordinary shares	5,231	5,397	5,435
Shares held in life funds	(193)	(201)	(201)
Shares held in Black Economic Empowerment trusts	(279)	(299)	(299)
Weighted average number of ordinary shares	4,759	4,897	4,935
Basic earnings per ordinary share (pence)	19.2	14.7	12.9

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.

	6 months ended 30 June 2012	6 months ended 30 June 2011 restated	Year ended    31 December  2011
Profit attributable to ordinary equity holders (£m)	914	722	635
Dilution effect on profit relating to share options issued by subsidiaries (£m)	(2)	(3)	(8)
Diluted profit attributable to ordinary equity holders (£m)	912	719	627
Weighted average number of ordinary shares (millions)	4,759	4,897	4,935
Adjustments for share options held by ESOP trusts (millions)	106	149	133
Adjustments for shares held in Black Economic Empowerment trusts (millions)	279	299	299
	5,144	5,345	5,367
Diluted earnings per ordinary share (pence)	17.7	13.5	11.7

(b) Adjusted operating earnings per ordinary share
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 2012	6 months ended 30 June 2011 restated	Year ended 31 December  2011 restated
Profit for the financial period attributable to equity holders of the parent	931	738	667
Adjusting items	145	(66)	329
Tax on adjusting items	(3)	(37)	(108)
Non-core operations	(53)	(32)	184
Profit from discontinued operations	(595)	(150)	(198)
Non-controlling interest on adjusting items	(9)	(8)	(19)
Adjusted operating profit after tax attributable to ordinary equity holders	416	445	855
Adjusted weighted average number of ordinary shares (millions)	4,806	4,722	4,756
Adjusted operating earnings per ordinary share (pence)	8.7	9.4	18.0

(c) Headline earnings per share

In accordance with the JSE Limited (JSE) listing requirements, the Group is required to calculate a 'headline earnings per share' (HEPS), determined by reference to the South African Institute of Chartered Accountants' circular 3/2009 'Headline Earnings'. The table below sets out a reconciliation of basic earnings per ordinary share and HEPS in accordance with that circular. Disclosure of HEPS is not a requirement of IFRS.

						£m
	6 months ended  30 June 2012		6 months ended 30 June 2011 restated		Year ended  31 December 2011
	Gross	Net	Gross	Net	Gross	Net
Profit for the financial period attributable to   equity holders of the parent	931	931	738	738	667	667
Dividends declared to holders of perpetual preferred   callable securities	(17)	(17)	(16)	(16)	(32)	(32)
Profit attributable to ordinary equity holders	914	914	722	722	635	635
Adjustments:
Impairments of goodwill and intangible assets	-	-	-	-	264	264
(Profit)/loss on acquisition/disposal of subsidiaries,   associated undertakings and  strategic investments	(262)	(256)	29	29	(222)	(228)
Realised gains (including impairments) on available-for-   sale financial assets	(6)	(6)	(167)	(167)	(144)	(144)
Exchange differences realised on disposal	(350)	(350)	24	24	-	-
Headline earnings	296	302	608	608	533	527
Weighted average number of ordinary shares	4,759	4,759	4,897	4,897	4,935	4,935
Diluted weighted average number of ordinary   shares	5,144	5,144	5,345	5,345	5,367	5,367
Headline earnings per share (pence)	6.2	6.3	12.4	12.4	10.8	10.7
Diluted headline earnings per share (pence)	5.7	5.8	11.3	11.3	9.8	9.7

Notes to the consolidated financial statements
For the six months ended 30 June 2012
C: Other key performance information continued
C4: Dividends
			£m
	6 months ended 30 June 2012	6 months ended 30 June 2011	Year ended 31 December 2011
2010 Final dividend paid - 2.9p per 10p share	-	145	145
2011 Interim dividend paid - 1.5p per 10p share	-	-	76
2011 Final dividend paid - 3.5p per 10p share	178	-	-
Special dividend - 18.0p per 10p share	915	-	-
Dividends to ordinary equity holders	1,093	145	221
Dividends declared to holders of perpetual preferred callable securities	22	22	44
Dividend payments for the period	1,115	167	265

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 2012 £22 million was declared and paid to holders of perpetual preferred callable securities (March 2011: £22 million; November 2011: £22 million).

Following the disposal of Nordic a special dividend of 18.0 pence per 10p share was recommended by the directors and a seven for eight share consolidation proposed, with the consolidation approved at the Company's general meeting on 14 March 2012. The special dividend was paid on 7 June 2012. Further details of the disposal of the Nordic business unit have been provided in notes A2 and F1.

An interim dividend of 1.75 pence (or its equivalent in other applicable currencies) per ordinary share in the Company has been recommended by the directors. This interim dividend will be paid on 30 November 2012 to shareholders on the register at the close of business on 26 October 2012. The dividend will absorb an estimated £77 million of shareholders' funds. The Company is not planning to offer a scrip dividend alternative.

D: Other income statement notes
D1: Income tax expense
(a) Analysis of total income tax expense
			£m
	6 months ended 30 June 2012	6 months ended 30 June 2011 restated	Year ended 31 December   2011
Current tax
United Kingdom tax	6	17	22
Overseas tax
South Africa	208	155	390
United States	-	2	(2)
Europe	8	12	20
Secondary Tax on Companies (STC)	20	9	14
Prior year adjustments	2	(26)	(7)
Total current tax	244	169	437
Deferred tax
Origination and reversal of temporary differences	(3)	13	(204)
Changes in tax rates/bases	-	(5)	(8)
Recognition of deferred tax assets	-	1	-
Total deferred tax	(3)	9	(212)
Total income tax expense	241	178	225
(b) Reconciliation of total income tax expense
			£m
	6 months ended 30 June 2012	6 months ended 30 June  2011 restated	Year ended  31 December  2011
Profit before tax	733	909	994
Tax at standard rate of 24.5% (2011: 26.5%)	180	242	263
Different tax rate or basis on overseas operations	27	3	57
Untaxed and low taxed income	(47)	(98)	(166)
Disallowable expenses	11	6	93
Net movement on deferred tax assets not recognised	22	21	5
Effect on deferred tax of changes in tax rates	2	(3)	(8)
STC	18	14	19
Income tax attributable to policyholder returns	28	17	(28)
Other	-	(3)	(10)
Prior period adjustments	-	(21)	-
Total income tax expense	241	178	225
(c) Income tax relating to components of other comprehensive income
			£m
	6 months ended 30 June 2012	6 months ended 30 June 2011	Year ended 31 December   2011
Preferred perpetual callable securities	(5)	(6)	(12)
Income tax credit - continuing operations	(5)	(6)	(12)
Fair value gains	1	1	2
Shadow accounting	-	(4)	(4)
Income tax expense/(credit) - discontinued operations	1	(3)	(2)
Income tax credit relating to components of other comprehensive   income	(4)	(9)	(14)
(d) Income tax on adjusted operating profit
			£m
	6 months ended 30 June 2012	6 months ended 30 June  2011 restated	Year ended  31 December   2011
Income tax expense	241	178	225
Tax on adjusting items
Goodwill impairment and impact of acquisition accounting	13	17	35
Profit on disposal of subsidiaries, associated undertakings and strategic investments	(8)	-	6
Short-term fluctuations in investment return	7	25	75
Income tax attributable to policyholders returns	(34)	(24)	9
Tax on dividends declared to holders of perpetual preferred callable securities   recognised in equity	(5)	(6)	(12)
Fair value gains and losses on Group debt instruments	-	1	2
US Asset Management equity plans	(2)	-	2
Tax on dividends received in trusts	(2)	-	-
Tax on non-core operations	-	(2)	(1)
Income tax on adjusted operating profit	210	189	341

Notes to the consolidated financial statements
For the six months ended 30 June 2012
E: Borrowed funds
E1: Borrowed funds
								£m
		Group Excluding Nedbank	Nedbank	At 30 June 2012 Group		Group Excluding Nedbank	Nedbank	At 30 June 2011 Group
Senior debt securities and term loans		507	1,427	1,934		539	1,464	2,003
Floating Rate Notes		-	926	926		31	873	904
Fixed Rate Notes		507	501	1,008		506	591	1,097
Term loan and other loans		-	-	-		2	-	2
Mortgage Backed Securities		-	70	70		-	97	97
Subordinated debt securities (net of Group holdings)		747	785	1,532		1,447	950	2,397
Borrowed funds		1,254	2,282	3,536		1,986	2,511	4,497
Other issues treated as equity for accounting   purposes
US$750 million cumulative preference securities		458				458
€500 million perpetual preferred callable securities		338				338
£350 million perpetual preferred callable securities		350				350
Total: Book value		2,400				3,132
Nominal value of the above		2,476				3,277
								£m
						Group Excluding Nedbank	Nedbank	At 31 December 2011 Group
Senior debt securities and term loans						507	1,355	1,862
Floating Rate Notes						-	844	844
Fixed Rate Notes						507	511	1,018
Mortgage Backed Securities						-	77	77
Subordinated debt securities (net of Group holdings)						876	841	1,717
Borrowed funds						1,383	2,273	3,656
Other issues treated as equity for accounting   purposes
US$750 million cumulative preference securities						458
€500 million perpetual preferred callable securities						338
£350 million perpetual preferred callable securities						350
Total: Book value						2,529
Nominal value of the above						2,666

Senior notes
(a) Floating Rate Notes
				£m
	At 30 June 2012	At 30 June 2011	At 31 December 2011	Maturity date
Nedbank
R1,690 million unsecured senior debt at 3 month JIBAR + 1.5%	81	147	119	September 2012
R1,044 million unsecured senior debt  at JIBAR + 2.20%	82	97	84	September 2015
R1,750 million unsecured senior debt at inflation linked   (3.9% real yield)	158	176	158	March 2013
R98 million unsecured senior debt at inflation linked (3.8% real yield)	9	10	9	March 2013
R1,552 million unsecured senior debt at JIBAR + 1.48%	123	145	125	April 2013
R1,027 million unsecured senior debt at JIBAR + 1.75%	81	96	83	April 2015
R80 million unsecured senior debt at JIBAR + 2.15%	6	7	6	April 2020
R988 million unsecured senior debt at JIBAR + 1.05%	75	86	79	March 2014
R677 million unsecured senior debt at JIBAR + 1.25%	53	62	54	March 2016
R500 million unsecured senior debt at JIBAR + 1%	39	47	40	April 2014
R1,075 million unsecured senior debt at JIBAR + 0.94%	85	-	87	October 2014
R1,297 million unsecured senior debt at JIBAR + 1%	102	-	-	February 2015
R405 million unsecured senior debt at JIBAR + 1.3%	32	-	-	February 2017
	926	873	844
Group excluding Nedbank
US$50 million at 3 month LIBOR plus 0.5%	-	31	-	Repaid
	-	31	-
Total floating rate notes	926	904	844
All floating rate notes are non-qualifying for the purposes of regulatory tiers of capital.
(b) Fixed Rate Notes
				£m
	At 30 June 2012	At 30 June 2011	At  31 December 2011	Maturity date
Nedbank
R660 million unsecured senior debt at zero coupon	15	15	14	October 2024
R3,244 million unsecured senior debt at 10.55%	260	308	265	September 2015
R762 million unsecured senior debt at 11.39%	61	73	63	September 2019
R478 million unsecured senior debt at R157 + 1.75%	38	45	39	April 2015
R450 million unsecured senior debt at R206 + 1.28%	36	42	37	March 2014
R1,137 million unsecured senior debt at R157 + 1.5%	91	108	93	March 2016
	501	591	511
Group excluding Nedbank
£500 million euro bond at 7.125%	496	496	496	October 2016
US$16.5 million secured senior debt at 5.23%	11	10	11	August 2014
	507	506	507
Total fixed rate notes	1,008	1,097	1,018

All fixed rate notes are non-qualifying for the purposes of regulatory tiers of capital.

(c) Revolving credit facilities and irrevocable letters of credit

The Group has access to a £1,200 million five-year multi-currency revolving credit facility (agreed in April 2011). At 30 June 2012 £nil (30 June 2011: £nil, 31 December 2011: £nil) of this facility was utilised in the form of drawn debt and there is £168 million (30 June 2011: £174 million, 31 December 2011: £160 million) in the form of an undrawn irrevocable letter of credit.

Notes to the consolidated financial statements
For the six months ended 30 June 2012
E: Borrowed funds
E1: Borrowed funds continued
(d) Mortgage backed securities - Nedbank
					£m
	At 30 June 2012	At 30 June 2011	At  31 December 2011	Tier	Maturity date
Nedbank
R1.4 billion (class A2A) at 11.817%	60	85	67	Tier 2	November 2039
R98 million (class B note) at 12.067%	6	7	6	Tier 2	November 2039
R76 million (class 3 note) at 13.317%	4	5	4	Tier 2	November 2039
Total mortgage backed securities	70	97	77

(e) Subordinated debt securities (net of Group holdings)
						£m
	At 30 June 2012	At 30 June 2011	At 31 December 2011	Tier	First call date	Maturity date
Nedbank
R1.8 billion (9.84%)	150	175	153	Tier 2	September 2013	September 2018
R650 million (9.03%)	-	63	54	Tier 2	-	Repaid
R1.7 billion (8.9%)	143	165	144	Tier 2	February 2014	February 2019
R2.0 billion (3 month JIBAR plus 0.47%)	157	187	161	Tier 2	July 2017	July 2022
R500 million (3 month JIBAR plus 0.45%)	39	46	40	Tier 2	August 2012	August 2012
R1.0 billion (10.54%)	86	98	87	Tier 2	September 2015	September 2020
R500 million (3 month JIBAR plus 0.70%)	39	46	40	Tier 2	December 2012	December 2017
R120 million (10.38%)	10	11	10	Tier 2	December 2012	December 2017
R487 million (15.05%)	43	48	42	Tier 2	November 2018	November 2018
R1,265 million (JIBAR plus 4.75%)	100	118	102	Non-core Tier 1	November 2018	November 2018
R300 million (JIBAR + 2.5%)	12	14	12	Non-core Tier 1	December 2013	December 2013
US$100 million (3 month USD LIBOR)	64	63	65	Tier 2 Secondary	March 2017	March 2022
	843	1,034	910
Less: banking subordinated debt   securities held by other Group companies	(58)	(84)	(69)
Banking subordinated debt securities (net of Group holdings)	785	950	841
Group excluding Nedbank
R3.0 billion (8.9% to October 2015, 3 month JIBAR plus 1.59% thereafter)	234	276	239	Lower Tier 2	October 2015	October 2020
€200 million (2010: €750 million) (4.5% to January 2012 and 6 month EURIBOR plus 0.96 thereafter)1	-	671	166	Lower Tier 2	-	Repaid
£500 million (8.0%)2	513	500	471	Lower Tier 2	-	June 2021
	747	1,447	876
Total subordinated debt securities	1,532	2,397	1,717
1The principal and coupon on the bond were swapped at issue equally into Sterling and US dollars with coupons of 6 month GBP LIBOR plus 0.34% and 6 month USD LIBOR plus 0.31% respectively. During 2011 a €550 million partial repayment, together with settlements of associated currency swaps, was made. On 18 January 2012 the remaining €200 million was repaid on the first call date.
2The principal and coupon on the bond were initially swapped into floating rate Swedish Kroner, at 3 month STIBOR plus 5.46%. Following the Nordic sale, £375 million of the coupon is now swapped into floating rate sterling at 6 month GBP LIBOR plus 4.15% and £125 million of principal and coupon is swapped into US dollars at 6 month USD LIBOR plus 5.49%.

F: Discontinued operations and disposal groups held for sale

F1: Discontinued operations

The results of the Group's Swedish, Danish and Norwegian life businesses, collectively Nordic, and United States life business, US Life, are shown as discontinued operations in these financial statements. The disposal of Nordic was completed on 21 March 2012 following shareholder and regulatory approval, and has been reported up until that date. The disposal of US Life was completed on 7 April 2011 following regulatory approval, and has been reported up until that date. Further detail is provided in note A2.

(a) Income statement from discontinued operations
									£m
	6 months ended 30 June 2012			6 months ended 30 June 2011			Year ended 31 December 2011
	Nordic	US Life	Total	Nordic	US Life	Total	Nordic	US Life	Total
Revenue	842	-	842	(57)	342	285	(421)	342	(79)
Expenses	(831)	-	(831)	104	(330)	(226)	541	(330)	211
Profit before tax from discontinued   operations	11	-	11	47	12	59	120	12	132
Profit/(loss) on disposal1	242	-	242	-	(29)	(29)	-	(29)	(29)
Realised available-for-sale investment gains and   exchange differences on disposal1	350	-	350	-	133	133	-	133	133
Profit before tax	603	-	603	47	116	163	120	116	236
Income tax (charge)/credit	(8)	-	(8)	(27)	14	(13)	(52)	14	(38)
Profit from discontinued operations after tax	595	-	595	20	130	150	68	130	198
1Cumulative foreign exchange translation gains of £350 million previously included in equity translation reserves are realised on the disposal of the Nordic business. Net investment currency hedge losses of £102 million also previously included in equity translation reserves have been included in the profit on disposal.
(b) Statement of comprehensive income from discontinued operations
									£m
	6 months ended  30 June 2012			6 months ended   30 June 2011			Year ended   31 December 2011
	Nordic	US Life	Total	Nordic	US Life	Total	Nordic	US Life	Total
Profit from discontinued operations after tax	595	-	595	20	130	150	68	130	198
Other comprehensive income for the   financial period
Fair value gains/(losses)
Available-for-sale investments
Fair value gains	4	-	4	2	48	50	3	48	51
Recycled to the income statement	-	-	-	-	(5)	(5)	-	(5)	(5)
Realised on disposal	-	-	-	-	(157)	(157)	-	(157)	(157)
Exchange differences realised on disposal	(350)	-	(350)	-	24	24	-	24	24
Shadow accounting	-	-	-	-	(43)	(43)	-	(43)	(43)
Currency translation differences/exchange   differences on translating foreign operations	2	-	2	49	-	49	(43)	-	(43)
Other movements	(3)	-	(3)	1	-	1	10	-	10
Aggregate tax on transfers from equity	(1)	-	(1)	-	3	3	(1)	3	2
Total other comprehensive (loss)/income   from discontinued operations	(348)	-	(348)	52	(130)	(78)	(31)	(130)	(161)
Total comprehensive income for the financial   period  from discontinued operations	247	-	247	72	-	72	37	-	37
Attributable to
Equity holders of the parent	247	-	247	72	-	72	37	-	37
Notes to the consolidated financial statements
For the six months ended 30 June 2012
(c) Net cash flows from discontinued operations
									£m
	6 months ended 30 June 2012			6 months ended  30 June 2011			Year ended 31 December 2011
	Nordic	US Life	Total	Nordic	US Life	Total	Nordic	US Life	Total
Operating activities	(8)	-	(8)	1,229	2	1,231	1,609	2	1,611
Investing activities	(121)	-	(121)	(876)	146	(730)	(1,411)	146	(1,265)
Net cash flows from discontinuing   operations	(129)	-	(129)	353	148	501	198	148	346

F2: Disposal group held for sale
(a) Statement of financial position
	£m
At 30 June 2012	Finnish Branch
Assets
Goodwill and other intangible assets	67
Deferred acquisition costs	43
Investments and securities	1,058
Other assets	3
Cash and balances with central banks	1
Total assets	1,172
Liabilities
Long-term business policyholder liabilities	1,057
Provisions	3
Deferred revenue	54
Deferred tax liabilities	15
Other liabilities	3
Total liabilities	1,132
In addition to the disposal groups held for sale, the Group had additional non-current assets held for sale of £6 million (June 2011: £6 million; December 2011: £22 million) and non-current liabilities of £nil (June 2011: £nil; December 2011 £9 million)
(b) Equity attributable to equity holders of the parent directly associated with disposal group held for sale
	£m
At 30 June 2012	Finnish Branch
Retained earnings	40
	40

At 31 December 2011 the assets and liabilities of the Group's Nordic business were shown as held for sale in the financial statements, being £20,960 million and £19,289 million respectively. At 31 December 2011 the assets and liabilities of the Group's Finnish branch were also shown as held for sale in the financial statements, being £1,156 million and £1,119 million respectively.

G: Other notes

G1: Contingent liabilities in respect of the disposal of US Life

Following completion of the disposal of US Life to the Harbinger group ('Harbinger') on 7 April 2011, the Group has retained certain residual commitments and contingent liabilities. These relate to sale warranties and indemnities that are typical in transactions of this nature including in respect of litigation (including class actions) and regulatory enforcement actions arising from events occurring before completion.  The specific conditions are in effect for varying periods of time, the longest dated of these will expire on 31 December 2015. The main elements are summarised below:

§ Harbinger intended to establish certain internal reinsurance arrangements, which were subject to regulatory approval. In the event that regulatory approval is not forth coming, there is potential for a reduction to the purchase price, of up to a maximum of US$50 million. On 9 July 2012, Harbinger formally filed a legal claim against the Group for the payment of a purchase price adjustment of US$50 million. In view of the ongoing uncertainty and the current assessment of this matter, the Group has not raised a provision against this exposure.

§ On 3 August 2012, the Group received formal notification of a number of claims from Harbinger under the warranty terms included in the sale agreement. This notification is consistent with the final date for submission of such claims of 6 August 2012. The Group has purchased insurance protection in respect of such warranty claims and is in the process of assessing the merit of each claim.

§ US statutory regulations require reserving on a worst case scenario basis for deferred annuity policies that permit free partial withdrawals ('CARVM Reserves'). As such there is redundancy when comparing the worst case scenario and the economic scenarios. These CARVM redundant reserves are currently reinsured from US Life to Old Mutual Reassurance until no later than the end of 2015. Old Mutual plc provides a $265 million letter of credit to back these redundant reserves. In the event that this letter of credit is drawn upon, Harbinger is obligated to fully reimburse Old Mutual plc.

G2: Events after the reporting date

The Group routinely reviews events occurring after the reporting date but prior to the announcement date. Since 30 June 2012, the following events have occurred:

(a)   Debt repurchase

Following a tender issued by the Group on 19 July 2012, £388 million of the £500 million Senior Eurobond (7.125%) fixed rate note was repurchased on 1 August 2012. The cost of the repurchase was £459 million.

(b)   Recapitalisation of OM Bermuda

New Bermudan regulatory requirements were issued late in 2011, to be enacted for the 31 December 2011 filing. Following discussions with the Bermudan monetary authority, the Group has clarified how the requirements are to be applied in order to implement these in the local filing which was submitted on 31 July 2012. In order to address these, the Group allocated US$571 million of capital to its Bermuda business. Further details of the impact of the regulatory changes and the capital allocated are included in the Finance Director's review.

 

END

 

 

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