Interim Results - Part 2
Old Mutual PLC
10 August 2005
Part 2
European Embedded Value Supplementary Information
for the six months to 30 June 2005
1 SUMMARY INCOME STATEMENT ON A EUROPEAN EMBEDDED VALUE BASIS
GBPm
6 months to 6 months to Year to
30 June 30 June 31 December
2005 2004 2004
Africa
Covered business 261 281 652
Asset management 37 22 54
Banking 162 54 203
General insurance 49 52 101
509 409 1,010
North America
Covered business 83 53 77
Asset management 51 47 87
134 100 164
United Kingdom & Rest of World
Covered business 1 - 4
Asset management 7 7 (5)
Banking 14 11 23
22 18 22
Debt service costs (19) (24) (49)
Other shareholders' income /
(expenses) (8) (6) (23)
Adjusted operating profit* 638 497 1,124
Goodwill impairments (2) (33) (33)
(Loss) / profit on disposal of
investments in subsidiaries (4) 12 (27)
Short term fluctuations in
investment returns (including
economic
assumption changes)
Covered business 210 (216) 271
Other 23 (16) 39
Other covered business changes** 49 - (230)
Income from hedging activities
that do not qualify for hedge - 5 31
accounting
Investment return adjustment
for Group equity and debt
instruments (28) (26) (99)
held in life funds
Fines and penalties - (49) (49)
Profit before tax 886 174 1,027
Income tax attributable to
equity holders (218) (53) (271)
Profit for the financial period 668 121 756
Minority interests - ordinary
shares (78) (24) (74)
- preferred securities (28) (27) (59)
Profit for the financial period
attributable to equity holders 562 70 623
* For life assurance and general insurance business, EEV adjusted operating
profit is based on the expected investment return and includes investment
returns on own shares held within policyholders' funds. For all businesses,
adjusted operating profit excludes goodwill impairments, fines and penalties,
income from hedging activities that do not qualify for hedge accounting, and
(loss)/profit on disposal of subsidiaries. Adjusted operating earnings per
share are similarly based, but are stated after tax and minority interests,
with the calculation of the weighted average number of shares including own
shares held in policyholders' funds.
** Refer to analysis of covered business embedded value results in Section 7.
European Embedded Value Supplementary Information
for the six months to 30 June 2005
1 SUMMARY INCOME STATEMENT ON A EUROPEAN EMBEDDED VALUE BASIS continued
The adjusted operating profit after tax attributable to equity holders is
determined as follows:
GBPm
6 months to 6 months to Year to
30 June 30 June 31 December
2005 2004 2004
Adjusted operating profit 638 497 1,124
Tax on adjusted operating profit (154) (133) (230)
484 364 894
Minority interests - ordinary
shares (76) (36) (94)
- preferred securities (28) (27) (59)
Adjusted operating profit after
tax attributable to equity
holders 380 301 741
p
6 months to 6 months to Year to
30 June 30 June 31 December
Embedded value earnings per
share attributable to equity
holders 2005 2004 2004
Adjusted operating earnings per
share 10.1 8.1 19.8
Basic earnings per share 16.2 2.0 18.2
Adjusted weighted average
number of shares - millions 3,753 3,735 3,738
Weighted average number of
shares - millions 3,467 3,419 3,422
European Embedded Value Supplementary Information
for the six months to 30 June 2005
1 SUMMARY INCOME STATEMENT ON A EUROPEAN EMBEDDED VALUE BASIS continued
GBPm
6 months to 6 months to Year to
30 June 30 June 31 December
2005 2004 2004
Adjusted operating profit for
the covered business 345 334 733
Africa 261 281 652
North America 83 53 77
United Kingdom & Rest of World 1 - 4
Tax on adjusted operating
profit for the covered business 99 101 203
Africa 75 85 180
North America 24 16 23
United Kingdom & Rest of World - - -
Adjusted operating profit after
tax for the covered business 246 233 530
Africa 186 196 472
North America 59 37 54
United Kingdom & Rest of World 1 - 4
Reconciliation of tax on
adjusted operating profit
Tax on adjusted operating
profit for the covered business 99 101 203
Tax on adjusted operating
profit for other business 55 32 27
Tax on adjusted operating profit 154 133 230
European Embedded Value Supplementary Information
for the six months ended 30 June 2005
2 RECONCILIATION OF MOVEMENTS IN GROUP EMBEDDED VALUE
GBPm
6 months to 6 months to Year to
30 June 30 June 31 December
2005 2004 2004
Group embedded value at the
beginning of the year 4,407 3,641 3,641
Change in equity arising in the
period
Fair value gains / (losses) 23 40 64
Fair value of equity settled
share options 4 1 3
Currency translation
differences / exchange
differences on translating
foreign operations (223) 171 138
Cash flow hedge amortisation 2 (2) (4)
Aggregate tax effect of items
taken directly to or
transferred from equity - (6) -
Other (168) (10) 68
Net income recognised (362) 194 269
Profit for the period 562 70 623
Total recognised income and
expense for the period 200 264 892
Dividend for the period (118) (106) (166)
Purchase / sale of treasury
shares (7) (5) 25
Issue of perpetual preferred
callable securities 347 - -
Exercise of share options 3 8 15
Group embedded value at the end
of the period 4,832 3,802 4,407
3 COMPONENTS OF GROUP EMBEDDED VALUE
GBPm
At At At
30 June 31 December 30 June
2005 2004 2004
Shareholders' adjusted net worth 3,180 2,933 2,573
Equity shareholders' funds 3,844 3,286 2,796
Adjustment to include life subsidiaries
on a statutory solvency basis:
Africa 79 216 156
North America (756) (577) (370)
United Kingdom & Rest of World (8) (7) (13)
Adjustment for discounting CGT 21 15 4
Value of in-force business 1,652 1,474 1,229
Value of in-force business before items
listed below 2,032 1,918 1,482
Additional time-value reserves for
financial options and guarantees (67) (74) (66)
Cost of required capital (310) (368) (185)
Minority interest in value of in-force (3) (2) (2)
Group embedded value 4,832 4,407 3,802
European Embedded Value Supplementary Information
for the six months to 30 June 2005
3 COMPONENTS OF GROUP EMBEDDED VALUE continued
GBPm
At At At
30 June 31 December 30 June
2005 2004 2004
Pro-forma adjustments to bring Group
investments to market value
Group embedded value 4,832 4,407 3,802
Adjustment to bring listed subsidiaries
to market value 482 609 272
Adjustment for market value of Group
equity and debt instruments held in
life funds 339 368 312
Adjustment to remove perpetual
preferred callable securities (350) - -
Adjusted Group embedded value 5,303 5,384 4,386
p p p
Adjusted Group embedded value per share 137.5 139.7 114.0
Return on adjusted Group embedded value (ROEV) %
p.a. 15.4% 19.0% 15.3%
Number of shares in issue at the end of the
period including own shares held in
policyholders' funds - millions 3,857 3,854 3,849
The adjustments to include life subsidiaries on a statutory solvency basis
reflect the difference between the net worth of each life subsidiary on the
statutory basis (as required by the local regulator) and their portion of the
group's consolidated equity shareholders' funds. In Africa, these values
exclude items that are eliminated or shown separately on consolidation (such as
Nedbank, Mutual & Federal and inter-company loans).
The ROEV is calculated as the adjusted operating profit after tax and
minorities of GBP380 million together with an expected equity return on the
pro-forma adjustment of GBP32 million divided by the opening adjusted embedded
value increased / (reduced) by the weighted value of any capital raised /
(dividends paid).
European Embedded Value Supplementary Information
for the six months to 30 June 2005
4 RECONCILIATION OF EMBEDDED VALUE OF THE COVERED BUSINESS WITH THE
ADJUSTED EMBEDDED VALUE
GBPm
At At At
30 June 31 December 30 June
2005 2004 2004
Embedded value of the covered business 3,603 3,555 2,944
Adjusted net worth 1,951 2,081 1,715
Value of in-force business* 1,652 1,474 1,229
Adjusted net worth of asset management
businesses 1,174 990 969
Africa 145 101 132
North America 1,029 889 837
Market value banking
Africa 1,368 1,442 1,102
Market value general insurance
Africa 414 486 405
Net other business 160 168 134
Preferred securities (458) (458) (458)
Perpetual preferred callable securities (350) - -
Debt (608) (799) (710)
Rand denominated (46) (60) (59)
US$ denominated (517) (687) (651)
GBP denominated (45) (52) -
Adjusted Group embedded value 5,303 5,384 4,386
* Net of minority interests
European Embedded Value Supplementary Information
for the six months to 30 June 2005
5 COMPONENTS OF EMBEDDED VALUE OF THE COVERED BUSINESS
GBPm
At At At
30 June 31 December 30 June
2005 2004 2004
Embedded value of the covered business 3,603 3,555 2,944
Adjusted net worth 1,951 2,081 1,715
Value of in-force business 1,652 1,474 1,229
Africa
Adjusted net worth 1,407 1,537 1,224
Required capital (equivalent to 152% of
statutory minimum capital at 30 June
2005) 1,395 1,595 1,480
Free surplus 12 (58) (256)
Value of in-force business 1,014 1,005 852
Value of in-force business before items
listed below 1,284 1,343 1,013
Additional time-value reserves for
financial options and guarantees* (37) (49) (44)
Cost of required capital (230) (287) (115)
Minority interest in value of in-force (3) (2) (2)
North America
Adjusted net worth 514 515 468
Required capital (equivalent to 282% of
statutory minimum capital at 30 June
2005) 444 451 406
Free surplus 70 64 62
Value of in-force business 613 444 352
Value of in-force business before items
listed below 720 547 441
Additional time-value reserves for
financial options and guarantees (30) (25) (22)
Cost of required capital (77) (78) (67)
United Kingdom & Rest of World
Adjusted net worth 30 29 23
Required capital 10 10 10
Free surplus 20 19 13
Value of in-force business 25 25 25
Value of in-force business before items
listed below 28 28 28
Additional time-value reserves for
financial options and guarantees - - -
Cost of required capital (3) (3) (3)
* These time-value reserves in respect of financial options and guarantees are
in addition to those already held within the policyholder liabilities.
The shareholders' adjusted net worth includes goodwill relating to the North
American life subsidiaries of GBP63 million (December 2004: GBP59 million, June
2004: GBP62 million).
European Embedded Value Supplementary Information
for the six months to 30 June 2005
6 BASIS OF PREPARATION
This supplementary information has been prepared in accordance with the
European Embedded Value (EEV) Principles issued in May 2004 by the European
Chief Financial Officers' Forum. The results for the six months to 30 June 2005
and the position at that date have been prepared on the same basis as that used
in the Group's EEV press release dated 20 June 2005.
There has been no change in the definition of business covered by the EEV
Principles ('covered business') as compared with the 20 June 2005 press
release. The treatment within this supplementary information of all business
other than covered business is unchanged from the primary financial
information.
The comparative figures for the financial year ended 31 December 2004, and the
results for the six months to 30 June 2004, were presented in the 20 June 2005
EEV press release. However, where necessary, certain comparatives have been
corrected to ensure consistency in preparation and presentation of results.
Note 13 to the primary financial information describes the post balance sheet
event in respect of the issue of new shares in connection with Black Economic
Empowerment. Such shares are subject to a deferred consideration, and the
present value of the deferred consideration will be included within the
adjusted Group embedded value at 31 December 2005.
European Embedded Value Supplementary Information
for the six months to 30 June 2005
7 ANALYSIS OF COVERED BUSINESS EMBEDDED VALUE RESULTS (after tax)
GBPm
6 months to 30 June 2005
Value of
Adjusted In-force
Total covered business net worth business Total
Embedded value of the covered
business at the beginning of the
period 2,081 1,474 3,555
New business contribution (55) 109 54
Expected return on existing
business - return on VIF - 89 89
Expected return on existing
business - transfer to net worth 101 (101) -
Experience variances 4 22 26
Operating assumption changes (22) 29 7
Expected return on adjusted net
worth 70 - 70
Adjusted operating profit after
tax 98 148 246
Investment return variances on
in-force business 19 32 51
Investment return variances on
adjusted net worth 86 - 86
Effect of economic assumption
changes - 26 26
Effect of changes in and cost of
required capital - 32 32
Profit after tax 203 238 441
Exchange rate movements (108) (60) (168)
Capital injected to covered
business 14 - 14
Amounts released from covered
business (119) - (119)
Transfer from covered business to
other segments (120) - (120)
Embedded value of the covered
business at the end of the period 1,951 1,652 3,603
GBPm
6 months to 30 June 2004
Value of
Adjusted In-force
Total covered business net worth business Total
Embedded value of the covered
business at the beginning of the
period 1,832 1,232 3,064
New business contribution (47) 93 46
Expected return on existing
business - return on VIF - 73 73
Expected return on existing
business - transfer to net worth 126 (126) -
Experience variances 25 14 39
Operating assumption changes - (6) (6)
Expected return on adjusted net
worth 81 - 81
Adjusted operating profit after
tax 185 48 233
Investment return variances on
in-force business 3 (28) (25)
Investment return variances on
adjusted net worth (66) - (66)
Effect of economic assumption
changes - (61) (61)
Effect of changes in and cost of
required capital - - -
Profit after tax 122 (41) 81
Exchange rate movements 53 38 91
Capital injected to covered
business 9 - 9
Amounts released from covered
business (30) - (30)
Transfer from covered business to
other segments (271) - (271)
Embedded value of the covered
business at the end of the period 1,715 1,229 2,944
GBPm
Year to 31 December 2004
Value of
Adjusted In-force
Total covered business net worth business Total
Embedded value of the covered
business at the beginning of the
period 1,832 1,232 3,064
New business contribution (103) 211 108
Expected return on existing
business - return on VIF - 148 148
Expected return on existing
business - transfer to net worth 194 (194) -
Experience variances 13 35 48
Operating assumption changes 15 48 63
Expected return on adjusted net
worth 163 - 163
Adjusted operating profit after
tax 282 248 530
Investment return variances on
in-force business 30 25 55
Investment return variances on
adjusted net worth 72 - 72
Effect of economic assumption
changes - 51 51
Effect of changes in and cost of
required capital - (143) (143)
Profit after tax 384 181 565
Exchange rate movements 104 61 165
Capital injected to covered
business 164 - 164
Amounts released from covered
business (122) - (122)
Transfer from covered business to
other segments (281) - (281)
Embedded value of the covered
business at the end of the
period 2,081 1,474 3,555
European Embedded Value Supplementary Information
for the six months to 30 June 2005
7 ANALYSIS OF COVERED BUSINESS EMBEDDED VALUE RESULTS (after tax) continued
GBPm
6 months to 30 June 2005
Adjusted Value of
net In-force business
Africa covered business worth Individual Group Total
Embedded value of the covered
business at the beginning of the
period 1,537 676 329 2,542
New business contribution (16) 31 10 25
Expected return on existing
business - return on VIF - 40 25 65
Expected return on existing
business - transfer to net worth 91 (64) (27) -
Experience variances 28 1 (2) 27
Operating assumption changes (12) 13 9 10
Expected return on adjusted net
worth 59 - - 59
Adjusted operating profit after
tax 150 21 15 186
Investment return variances on
in-force business 12 26 13 51
Investment return variances on
adjusted net worth 90 - - 90
Effect of economic assumption
changes - - - -
Effect of changes in and cost of
required capital - (4) 36 32
Profit after tax 252 43 64 359
Exchange rate movements (142) (64) (34) (240)
Amounts released from covered
business (119) - - (119)
Transfer from covered business
to other segments* (121) - - (121)
Embedded value of the covered
business at the end of the
period 1,407 655 359 2,421
GBPm
6 months to 30 June 2004
Adjusted Value of
net in-force business
Africa covered business worth Individual Group Total
Embedded value of the covered
business at the beginning of the
period 1,355 512 355 2,222
New business contribution (8) 26 8 26
Expected return on existing
business - return on VIF - 32 24 56
Expected return on existing
business - transfer to net worth 70 (49) (21) -
Experience variances 28 1 11 40
Operating assumption changes - 1 - 1
Expected return on adjusted net
worth 73 - - 73
Adjusted operating profit after
tax 163 11 22 196
Investment return variances on
in-force business 3 (8) (27) (32)
Investment return variances on
adjusted net worth (56) - - (56)
Effect of economic assumption
changes - (35) (22) (57)
Effect of changes in and cost of
required capital - - - -
Profit after tax 110 (32) (27) 51
Exchange rate movements 61 26 18 105
Amounts released from covered
business (30) - - (30)
Transfer from covered business
to other segments* (272) - - (272)
Embedded value of the covered
business at the end of the
period 1,224 506 346 2,076
GBPm
Year to 31 December 2004
Adjusted Value of
net In-force business
Africa covered business worth Individual Group Total
Embedded value of the covered
business at the beginning of the
period 1,355 512 355 2,222
New business contribution (16) 66 14 64
Expected return on existing
business - return on VIF - 68 50 118
Expected return on existing
business - transfer to net worth 147 (102) (45) -
Experience variances 75 9 (19) 65
Operating assumption changes 10 70 (1) 79
Expected return on adjusted net
worth 146 - - 146
Adjusted operating profit after
tax 362 111 (1) 472
Investment return variances on
in-force business 6 16 13 35
Investment return variances on
adjusted net worth 78 - - 78
Effect of economic assumption
changes - 41 10 51
Effect of changes in and cost of
required capital - (63) (80) (143)
Profit after tax 446 105 (58) 493
Exchange rate movements 140 59 32 231
Amounts released from covered
business (122) - - (122)
Transfer from covered business
to other segments* (282) - - (282)
Embedded value of the covered
business at the end of the
period 1,537 676 329 2,542
* The transfer from covered business to other segments includes the purchase of
additional shares in Nedbank Group Limited, as well as head office expenses.
The effect of changes in and cost of required capital for Africa reflects
changes in the amount of required capital and in the mix of assets backing the
capital.
European Embedded Value Supplementary Information
for the six months to 30 June 2005
7 ANALYSIS OF COVERED BUSINESS EMBEDDED VALUE RESULTS (after tax) continued
GBPm
6 months to 30 June 2005
Value of
Adjusted In-force
North America covered business net worth business Total
Embedded value of the covered
business at the beginning of the
period 515 444 959
New business contribution (38) 67 29
Expected return on existing
business - return on VIF - 23 23
Expected return on existing
business - transfer to net worth 9 (9) -
Experience variances (24) 23 (1)
Operating assumption changes (10) 8 (2)
Expected return on adjusted net
worth 10 - 10
Adjusted operating profit after
tax (53) 112 59
Investment return variances on
in-force business 7 (7) -
Investment return variances on
adjusted net worth (4) - (4)
Effect of economic assumption
changes 26 26
Profit after tax (50) 131 81
Exchange rate movements 34 38 72
Capital injected to covered
business 14 - 14
Transfer from covered business to
other segments* 1 - 1
Embedded value of the covered
business at the end of the period 514 613 1,127
GBPm
6 months to 30 June 2004
Value of
Adjusted In-force
North America covered business net worth business Total
Embedded value of the covered
business at the beginning of the
period 454 340 794
New business contribution (39) 60 21
Expected return on existing
business - return on VIF - 16 16
Expected return on existing
business - transfer to net worth 54 (54) -
Experience variances (1) - (1)
Operating assumption changes - (7) (7)
Expected return on adjusted net
worth 8 - 8
Adjusted operating profit after
tax 22 15 37
Investment return variances on
in-force business - 7 7
Investment return variances on
adjusted net worth (10) - (10)
Effect of economic assumption
changes - (4) (4)
Profit after tax 12 18 30
Exchange rate movements (8) (6) (14)
Capital injected to covered
business 9 - 9
Transfer from covered business to
other segments* 1 - 1
Embedded value of the covered
business at the end of the period 468 352 820
GBPm
Year to 31 December 2004
Value of
Adjusted In-force
North America covered business net worth business Total
Embedded value of the covered
business at the beginning of the
period 454 340 794
New business contribution (86) 131 45
Expected return on existing
business - return on VIF - 28 28
Expected return on existing
business - transfer to net worth 44 (44) -
Experience variances (58) 43 (15)
Operating assumption changes - (20) (20)
Expected return on adjusted net
worth 16 - 16
Adjusted operating profit after
tax (84) 138 54
Investment return variances on
in-force business 22 (4) 18
Investment return variances on
adjusted net worth (6) - (6)
Effect of economic assumption
changes - - -
Profit after tax (68) 134 66
Exchange rate movements (36) (30) (66)
Capital injected to covered
business 164 - 164
Transfer from covered business to
other segments* 1 - 1
Embedded value of the covered
business at the end of the
period 515 444 959
* The transfer from covered business to other segments is head office expenses.
The segmental results of North America include the operating profit generated
by Old Mutual Reassurance (Ireland) Limited (OMRe), which provides reinsurance
to the North American life companies, and in OMNIA Life (Bermuda) Limited.
European Embedded Value Supplementary Information
for the six months to 30 June 2005
7 ANALYSIS OF COVERED BUSINESS EMBEDDED VALUE RESULTS (after tax) continued
GBPm
6 months to 30 June 2005
United Kingdom & Rest of World Value of
Adjusted In-force
covered business net worth business Total
Embedded value of the covered
business at the beginning of the
period 29 25 54
New business contribution (1) 1 -
Expected return on existing
business - return on VIF - 1 1
Expected return on existing
business - transfer to net worth 1 (1) -
Experience variances - - -
Operating assumption changes - (1) (1)
Expected return on adjusted net
worth 1 - 1
Adjusted operating profit after
tax 1 - 1
Investment return variances on
in-force business - - -
Investment return variances on
adjusted net worth - - -
Profit after tax 1 - 1
Exchange rate movements - - -
Amounts released from covered
business - - -
Embedded value of the covered
business at the end of the period 30 25 55
GBPm
6 months to 30 June 2004
United Kingdom & Rest of World Value of
Adjusted In-force
covered business net worth business Total
Embedded value of the covered
business at the beginning of the
period 23 25 48
New business contribution - (1) (1)
Expected return on existing
business - return on VIF - 1 1
Expected return on existing
business - transfer to net worth 2 (2) -
Experience variances (2) 2 -
Operating assumption changes - - -
Expected return on adjusted net
worth - - -
Adjusted operating profit after
tax - - -
Investment return variances on
in-force business - - -
Investment return variances on
adjusted net worth - - -
Profit after tax - - -
Exchange rate movements - - -
Amounts released from covered
business - - -
Embedded value of the covered
business at the end of the period 23 25 48
GBPm
Year to 31 December 2004
United Kingdom & Rest of World Value of
Adjusted In-force
covered business net worth business Total
Embedded value of the covered
business at the beginning of the
period 23 25 48
New business contribution (1) - (1)
Expected return on existing
business - return on VIF - 2 2
Expected return on existing
business - transfer to net worth 3 (3) -
Experience variances (4) 2 (2)
Operating assumption changes 5 (1) 4
Expected return on adjusted net
worth 1 - 1
Adjusted operating profit after
tax 4 - 4
Investment return variances on
in-force business 2 - 2
Investment return variances on
adjusted net worth - - -
Profit after tax 6 - 6
Exchange rate movements - - -
Amounts released from covered
business - - -
Embedded value of the covered
business at the end of the
period 29 25 54
European Embedded Value Supplementary Information
for the six months to 30 June 2005
8 VALUE OF NEW BUSINESS (after tax)
The tables below set out a geographical analysis of the value of new business
(VNB) after tax for the six months to 30 June 2005, six months to 30 June 2004
and the year to 31 December 2004. Annual Premium Equivalent (APE) is calculated
as recurring premiums plus 10% of single premiums. New business profitability
is measured by both the ratio of the VNB to the APE as well as to the Present
Value of new business premiums (PVNBP), and shown under 'Margin' below. PVNBP
is defined as the present value of regular premiums plus single premiums for
any given period. It is calculated using the same assumptions as for the new
business contribution.
Individual Group
business business Africa
6 months to 30 June 2005
Recurring premiums 85 33 118
Single premiums 291 162 453
Annual premium equivalent 114 49 163
Present value of future new business
premiums 702 327 1,029
Value of new business after tax and cost
of required capital 15 10 25
APE Margin 13% 20% 15%
PVNBP Margin 2.1% 3.1% 2.4%
6 months to 30 June 2004
Recurring premiums 73 32 105
Single premiums 260 90 350
Annual premium equivalent 99 41 140
Present value of future new business
premiums 617 246 863
Value of new business after tax and cost
of required capital 17 9 26
APE Margin 17% 22% 19%
PVNBP Margin 2.8% 3.7% 3.0%
Year to 31 December 2004
Recurring premiums 164 58 222
Single premiums 556 214 770
Annual premium equivalent 220 79 299
Present value of future new business
premiums 1,384 526 1,910
Value of new business after tax and cost
of required capital 51 13 64
APE Margin 23% 16% 21%
PVNBP Margin 3.7% 2.5% 3.4%
GBPm
North UK & Recurring
America Rest of World premiums
6 months to 30 June 2005
Recurring premiums 39 0.2 157
Single premiums 1,081 78 1,612
Annual premium equivalent 147 8 318
Present value of future new
business premiums 1,269 79 2,377
Value of new business after tax and
cost of required capital 29 0.4 54
APE Margin 20% 5% 17%
PVNBP Margin 2.3% 0.5% 2.3%
6 months to 30 June 2004
Recurring premiums 25 1 131
Single premiums 1,127 53 1,530
Annual premium equivalent 138 6 284
Present value of future new
business premiums 1,249 55 2,167
Value of new business after tax and
cost of required capital 21 (1) 46
APE Margin 15% (16%) 16%
PVNBP Margin 1.7% (1.8%) 2.1%
Year to 31 December 2004
Recurring premiums 58 1 281
Single premiums 2,157 125 3,052
Annual premium equivalent 274 14 587
Present value of future new
business premiums 2,433 127 4,470
Value of new business after tax and
cost of required capital 45 (1) 108
APE Margin 16% (7%) 18%
PVNBP Margin 1.8% (0.8%) 2.4%
European Embedded Value Supplementary Information
for the six months to 30 June 2005
8 VALUE OF NEW BUSINESS (after tax) continued
The value of new individual unit trust and some group market-linked business
written by the life companies is excluded, as the profits on this business
arise in the asset management subsidiaries. The value of new business also
excludes premium increases arising from indexation arrangements in respect of
existing business, as these are already included in the value of in-force
business. The premiums shown for the United States exclude reinsurance ceded
externally.
A reconciliation of the new business premiums shown in the notes to the primary
financial information to those shown above, for the six months to 30 June 2005,
is set out below.
GBPm
Recurring Single
6 months to 30 June 2005 premiums premiums
New business premiums in the notes to the primary
financial information 112 1,098
Add:
Healthcare business 24 -
Other Investment contracts 21 728
Less:
North America reinsurance ceded externally - (4)
Group market-linked business not valued - (142)
Unit trust business not valued - (66)
OMART business not valued - (2)
New business premiums as per European Embedded Value
supplementary information 157 1,612
European Embedded Value Supplementary Information
for the six months to 30 June 2005
9 PRODUCT ANALYSIS OF NEW COVERED BUSINESS PREMIUMS
GBPm
6 months to 30 June 2005
Africa Recurring Single
Total business 118 453
Individual business 85 291
Saving 30 216
Protection 27 3
Annuity - 71
Group schemes 28 1
Group business 33 162
Saving 2 115
Protection 7 -
Annuity - 47
Healthcare 24 -
Total business* 118 453
Individual business 85 291
Insurance contracts 42 75
Investment contracts with discretionary
participating features 22 7
Other investment contracts 21 209
Group business 33 162
Insurance contracts 31 47
Investment contracts with discretionary
participating features 2 67
Other investment contracts - 48
GBPm
6 months to 30 June 2004
Africa Recurring Single
Total business 105 350
Individual business 73 260
Saving 25 192
Protection 22 4
Annuity - 64
Group schemes 26 -
Group business 32 90
Saving 2 77
Protection 7 -
Annuity - 13
Healthcare 23 -
Total business* 105 350
Individual business 73 260
Insurance contracts 40 62
Investment contracts with discretionary
participating features 21 11
Other investment contracts 12 187
Group business 32 90
Insurance contracts 29 13
Investment contracts with discretionary
participating features 3 52
Other investment contracts - 25
GBPm
Year to 31 December 2004
Africa Recurring Single
Total business 222 770
Individual business 164 556
Saving 53 406
Protection 57 7
Annuity - 142
Group schemes 54 1
Group business 58 214
Saving 5 181
Protection 12
Annuity - 33
Healthcare 41 -
Total business* 222 770
Individual business 164 556
Insurance contracts 89 145
Investment contracts with discretionary
participating features 48 22
Other investment contracts 27 389
Group business 58 214
Insurance contracts 52 31
Investment contracts with discretionary
participating features 6 105
Other investment contracts - 78
European Embedded Value Supplementary Information
for the six months to 30 June 2005
9 PRODUCT ANALYSIS OF NEW COVERED BUSINESS PREMIUMS continued
GBPm
6 months to 30 June 2005
North America Recurring Single
Total business 39 1,081
Fixed deferred annuity - -
Equity indexed annuity - 654
Variable annuity - 189
Life 39 -
Immediate annuity - 166
Other (corporate) - 72
Total business* 39 1,081
Insurance contracts 39 895
Investment contracts with discretionary
participating features - -
Other investment contracts - 186
GBPm
6 months to 30 June 2004
North America Recurring Single
Total business 25 1,127
Fixed deferred annuity - 120
Equity indexed annuity - 549
Variable annuity - 99
Life 25 -
Immediate annuity - 274
Other (corporate) - 85
Total business* 25 1,127
Insurance contracts 25 928
Investment contracts with discretionary
participating features - -
Other investment contracts - 199
GBPm
Year to 31 December 2004
North America Recurring Single
Total business 58 2,157
Fixed deferred annuity - 239
Equity indexed annuity - 1,157
Variable annuity - 213
Life 58 -
Immediate annuity - 442
Other (corporate) - 106
Total business* 58 2,157
Insurance contracts 58 1,808
Investment contracts with discretionary
participating features - -
Other investment contracts - 349
GBPm
6 months to 30 June 2005
United Kingdom & Rest of World Recurring Single
Total business 0.2 78
Saving 0.2 78
Protection - -
Total business* 0.2 78
Insurance contracts - -
Investment contracts with discretionary
participating features - -
Other investment contracts 0.2 78
GBPm
6 months to 30 June 2004
United Kingdom & Rest of World Recurring Single
Total business 1 53
Saving 1 53
Protection - -
Total business* 1 53
Insurance contracts - -
Investment contracts with discretionary
participating features - -
Other investment contracts 1 53
GBPm
Year to 31 December 2004
United Kingdom & Rest of World Recurring Single
Total business 1 125
Saving 1 125
Protection - -
Total business* 1 125
Insurance contracts - -
Investment contracts with discretionary
participating features - -
Other investment contracts 1 125
* The classification of insurance contracts, investment contracts with
discretionary participating features and other investment contracts is in
accordance with the IFRS definitions. All categories of business (i.e.
insurance and investment) are subject to EEV accounting.
European Embedded Value Supplementary Information
for the six months to 30 June 2005
10 ASSUMPTIONS
The principal assumptions used in the calculation of the value of in-force
business and the value of new business are set out below. The assumptions are
best estimate and actively reviewed.
• The pre-tax investment and economic assumptions used for the African and
North American businesses are set out below. We have used a bottom-up market
consistent methodology to calculate the risk discount rates in all other
territories.
At At At
30 June 31 December 30 June
2005 2004 2004
Africa
Risk-free rate (10 year Government bond) 8.3% 8.3% 10.4%
Cash return 6.3% 6.3% 8.4%
Equity return 11.8% 11.8% 13.9%
Property return 9.8% 9.8% 11.9%
Inflation 5.3% 5.3% 7.4%
Risk discount rate 10.6% 10.6% 12.7%
Risk margin 2.3% 2.3% 2.3%
North America
Risk free rate (10 year Treasury yield) 3.9% 4.3% 4.6%
Inflation 3.0% 3.0% 3.0%
New money yield assumed 4.9% 5.1% 6.4%
Net portfolio earned rate 5.7% 5.9% 6.2%
Risk discount rate 7.1% 7.5% 7.8%
Risk margin 3.2% 3.2% 3.2%
• The pre-tax investment and economic assumptions are updated every six months
to reflect the economic conditions prevailing on the valuation date. Risk-free
rates have a duration similar to that of the underlying liabilities. Equity and
property risk premiums incorporate both historical relationships and the
Directors' view of future projected returns in each geography.
• The risk margins have been calculated using a bottom-up market consistent
approach, and reflect the distinctive risks of the products in the respective
business units. The calibration of the risk margins was not redone for June
2005, and the same risk margins were used as for December 2004.
• Where applicable, rates of future bonuses or crediting rates have been set at
levels consistent with the investment return assumptions. Projected company
taxation is based on the current tax basis that applies in each country.
• For the South African business, full allowance has been made for Secondary
Tax on Companies (STC) that may be payable. Account has been taken of the
impact of CGT in South Africa. It has been assumed that 10% of the equity
portfolio (excluding group subsidiaries) will be traded each year. For North
America full allowance has been made for existing tax attributes of the
companies, including the use of existing carry-forwards and preferred tax
credit investments. For the purposes of the summary income statement the
adjusted operating profit for the covered business has been grossed up for tax.
The tax rates used were effective corporation tax rates of 35% for Africa and
30% for North America and 0% for the United Kingdom & Rest of World, except for
the investment return on African capital, for which the attributed tax was
derived from the primary financial statements.
• Both operating profit and new business are calculated on closing assumptions.
European Embedded Value Supplementary Information
for the six months to 30 June 2005
10 ASSUMPTIONS continued
• For the African business, the required capital is calculated independently in
each of the major business units. The non- investment items are based on a
multiple of the non-investment components of the local Statutory Capital
Adequacy Requirements set out in PGN104 issued by the Actuarial Society of
South Africa (ASSA). The investment item is based on internal models developed
for capital allocation and pricing purposes. The models project assets and
liabilities for the business forward for 10 years using stochastically
determined investment returns on a realistic basis.Bonus rates and adjustments
to non-vested bonuses are determined using a consistent formula based on a
weighted average of past returns and the level of the Bonus Smoothing Account
(BSA) at the time. To the extent that the BSA falls to lower than normally
allowable minimum levels, the shareholder is considered to be required to
provide support to the business, and the capital requirement is based on the
discounted value of the maximum shareholder support in the 99th worst
percentile case. The required capital is invested in local equities, local
cash and international cash. The asset allocation as at 30 June 2005 is
60%, 20% and 20% respectively.
• For the North American business, the required capital is based on the
multiple of the local Risk Based Capital (RBC) requirement that management
deems necessary to maintain the desired credit rating for the company in
question. The multiples vary by company from 200% to 300% and average 282% as
at 30 June 2005. The required capital for OMNIA (Bermuda) Limited and Old
Mutual Reassurance (Ireland) Limited in Ireland is based on the United Kingdom
Financial Services Authority statutory requirements to ensure that the Group
maintains adequate solvency capital in terms of the European Union Financial
Groups Directive. The required capital is invested in short-dated fixed
interest assets.
• The required capital of Old Mutual International, based in Guernsey, is set
at some 1% of funds under management, a level considered by the Directors to be
appropriate to manage the business. The required capital is invested in short-
dated fixed interest assets.
• The assumed future mortality, morbidity and voluntary discontinuance rates
have been based as far as possible on analyses of recent operating experience.
Allowance has been made where appropriate for the effect of expected
AIDS-related claims.
• The management expenses attributable to life assurance business have been
analysed between expenses relating to the acquisition of new business and the
maintenance of business in-force. The future expenses attributable to life
assurance business include 19% of the Group holding company expenses, with 14%
allocated to Africa and 5% allocated to North America. The allocation of these
expenses aligns to the proportion that the management expenses incurred by the
business bears to the total management expenses incurred in the Group.
• No allowance has been made for future productivity improvements in the
expense assumptions.
• No development expenses have been excluded from the calculations and no
material allowance has been made for future development expenses.
• Future investment expenses are based on the current scales of fees payable by
the life assurance companies to the asset management subsidiaries. To the
extent that these fees include profit margins for the asset management
subsidiaries, these margins have not been included in the value of in-force
business or the value of new business.
• The effect of increases in premiums over the period for policies in-force has
been included in the value of in-force business only where such increases are
associated with indexation arrangements. Other increases in premiums of
existing policies are included in the value of new business.
• New schemes written on which recurring single premiums are expected to be
received on a regular basis are treated as new business. The annualised premium
is recognised as recurring premium new business at inception of the scheme and
is determined by annualising the actual premiums received during the year in
question. Subsequent recurring single premiums received in future years are not
treated as new business, as these have already been provided for in calculating
the value of in-force business.
European Embedded Value Supplementary Information
for the six months to 30 June 2005
10 ASSUMPTIONS continued
• The value of new business has been accumulated to the period end.
• The sensitivity of the value of in-force and value of new business to
changes in the central risk discount rate are set out in section 11.
• The principal exchange rates used to translate the operating results of key
foreign business segments to Sterling are:
Rand
6 months to Year to 6 months to
30 June 31 December 30 June
2005 2004 2004
Profit and loss account
(average rate) 11.6325 11.7986 12.1544
Balance sheet (closing rate) 11.9624 10.8482 11.3037
Balance sheet (opening rate) 10.8482 11.9367 11.9367
US$
6 months to Year to 6 months to
30 June 31 December 30 June
2005 2004 2004
Profit and loss account
(average rate) 1.8731 1.8327 1.8222
Balance sheet (closing rate) 1.7918 1.9158 1.8144
Balance sheet (opening rate) 1.9158 1.7833 1.7833
• The nature of the financial options and guarantees for the African and
North American businesses was set out in the EEV press release dated 20
June 2005.
• The approaches and models used to determine the time value of the financial
options guarantees as at 30 June 2005 are consistent with the approaches as
at 31 December 2004 as set out in the EEV press release dated 20 June 2005.
European Embedded Value Supplementary Information
for the six months to 30 June 2005
11 ALTERNATIVE ASSUMPTIONS
The tables below for Africa and North America show the sensitivity of the
embedded value, value of in-force at 30 June 2005 and the value of new business
for the six months to 30 June 2005 to changes in the central risk discount
rate. In determining the values at different central discount rates, all other
assumptions have been left unchanged.
GBPm
Embedded Value of in-force Value of new
At 30 June 2005 value business business
Africa
Central assumptions 2,421 1,014 25
Value before cost of
required capital 1,244 30
Cost of required capital (230) (5)
Effect of :
Central discount rate +1% 2,268 861 20
Value before cost of
required capital 1,174 27
Cost of required capital (313) (7)
Central discount rate -1% 2,607 1,200 30
Value before cost of
required capital 1,326 33
Cost of required capital (126) (3)
North America
Central assumptions 1,127 613 29
Value before cost of
required capital 690 32
Cost of required capital (77) (3)
Effect of :
Central discount rate +1% 1,091 577 27
Value before cost of
required capital 667 31
Cost of required capital (90) (4)
Central discount rate -1% 1,165 651 31
Value before cost of
required capital 714 33
Cost of solvency capital (63) (2)
Summary Consolidated Income Statement
for the six months ended 30 June 2005
The following table summarises the Group's results in the consolidated income
statement on page 84. Adjusted operating profit represents the directors' view
of the underlying performance of the Group. This summary does not form part of
the statutory financial statements.
6 months to
30 June
Notes 2005
Africa
Long term business 3(iv) 2,471
Asset management 3(vii) 422
Banking 3(vi) 1,878
General insurance 3(v) 573
5,344
North America
Long term business 3(iv) 581
Asset management 3(vii) 588
1,169
United Kingdom & Rest of World
Long term business 3(iv) 31
Asset management 3(vii) 87
Banking 3(vi) 167
285
Debt service costs (216)
Other shareholders' income / (expenses) 3(viii) (137)
Adjusted operating profit* 6,445
Goodwill impairments 9 (19)
(Loss) / profit on disposal of investments in
subsidiaries (47)
Short term fluctuations in investment returns 4 1,554
Income from hedging activities that do not qualify
for hedge
accounting -
Investment return adjustment for Group equity and
debt
instruments held in life funds 3(iv) (329)
Fines and penalties
5 -
Profit before tax (net of income tax attributable
to policyholder
returns) 7,604
Total income tax expense 6 (2,102)
Less income tax attributable to policyholder returns 244
Income tax attributable to equity holders (1,858)
Profit for the financial period 5,746
Minority interests - ordinary shares 11(a) (910)
- preferred securities (327)
Profit for the financial period attributable to
equity holders 4,509
Rm
6 months to Year to
30 June 31 December
2004 2004
Africa
Long term business 2,771 5,510
Asset management 254 636
Banking 646 2,383
General insurance 639 1,190
4,310 9,719
North America
Long term business 486 1,144
Asset management 571 1,026
1,057 2,170
United Kingdom & Rest of World
Long term business - 71
Asset management 91 (57)
Banking 137 277
228 291
Debt service costs (292) (578)
Other shareholders' income / (expenses) (109) (348)
Adjusted operating profit* 5,194 11,254
Goodwill impairments (401) (401)
(Loss) / profit on disposal of investments in
subsidiaries 149 (311)
Short term fluctuations in investment returns (580) 2,323
Income from hedging activities that do not
qualify for hedge
accounting 61 366
Investment return adjustment for Group equity
and debt
instruments held in life funds (316) (1,168)
Fines and penalties (596) (596)
Profit before tax (net of income tax
attributable to policyholder
returns) 3,511 11,467
Total income tax expense (1,459) (4,059)
Less income tax attributable to policyholder
returns 280 732
Income tax attributable to equity holders (1,179) (3,327)
Profit for the financial period 2,332 8,140
Minority interests - ordinary shares (292) (873)
- preferred securities (328) (696)
Profit for the financial period attributable to
equity holders 1,712 6,571
* For life assurance and general insurance businesses, adjusted operating
profit is based on a long term investment return and includes investment
returns on life funds' investments in Group equity and debt instruments. For
all businesses, adjusted operating profit excludes goodwill impairments, fines
and penalties and profit/(loss) on disposal of investments in subsidiaries.
Adjusted operating profit excludes income from hedging activities that do not
qualify for hedge accounting.
Summary Consolidated Income Statement continued
for the six months ended 30 June 2005
The adjusted operating profit after tax attributable to equity holders is
determined as follows:
Rm
6 months to 6 months to Year to
30 June 30 June 31 December
Notes 2005 2004 2004
Adjusted operating
profit 6,445 5,194 11,254
Tax on adjusted
operating profit 6 (1,550) (1,325) (2,879)
4,895 3,869 8,375
Minority interests -
ordinary shares 11 (883) (438) (1,109)
- preferred securities (327) (328) (696)
Adjusted operating
profit after tax
attributable to
equity holders 3,685 3,103 6,570
The reconciliation of adjusted operating profit after tax attributable to
equity holders to profit for the financial period attributable to equity
holders is as follows:
Rm
6 months to 6 months to Year to
30 June 30 June 31 December
2005 2004 2004
Adjusted operating profit after
tax attributable to equity
holders 3,685 3,103 6,570
Goodwill impairments (17) (206) (200)
(Loss) / profit on disposal of
investments in subsidiaries (47) 76 (252)
Short term fluctuations in
investment returns 1,217 (507) 1,754
Income from hedging activities
that do not qualify for hedge
accounting - 61 366
Investment return adjustment
for Group equity and debt
instruments held in life funds (329) (316) (1,168)
Fines and penalties - (499) (499)
Profit for the financial period
attributable to equity holders 4,509 1,712 6,571
c
6 months to 6 months to Year to
30 June 30 June 31 December
Earnings per share
attributable to
equity holders Notes 2005 2004 2004
Adjusted operating
earnings per share* 7 98.2 83.1 175.6
Basic earnings per
share 7 130.2 50.1 192.0
Diluted earnings per
share 7 130.2 50.1 192.0
Adjusted weighted
average number of
shares - millions 3,753 3,735 3,738
Weighted average
number of shares -
millions 3,467 3,419 3,422
* Adjusted operating earnings per share is calculated on the same basis as
adjusted operating profit, but is stated after tax and minority interests, with
the calculation of the weighted average number of shares including own shares
held in policyholders' funds.
Consolidated Income Statement
for the six months ended 30 June 2005
6 months to
30 June
Notes 2005
Revenue
Gross earned premiums 24,991
Outward reinsurance (934)
Net earned premiums 24,057
Investment income (net of investment losses) 29,081
Banking interest and similar income 12,480
Fee and commission income, and income from
service activities 6,705
Other income 1,220
Total revenues 3(ii) 73,543
Expenses
Claims and benefits (including change in
insurance contract provisions) (38,788)
Reinsurance recoveries 1,021
Net claims incurred (37,767)
Change in provision for investment contract
liabilities (including amortisation) (5,206)
Losses on loans and advances (620)
Finance costs (including interest and similar
expenses) (164)
Banking interest expense (8,278)
Fees, commissions and other acquisition costs (1,903)
Other operating and administrative expenses (11,176)
Third party interest in consolidated funds (581)
Total expenses 3(ii) (65,695)
Share of associated undertakings' profit after tax 66
Goodwill impairments 9 (19)
(Loss) / profit on disposal of investment in
subsidiaries (47)
Profit before tax 7,848
Income tax expense 6 (2,102)
Profit for the financial period 5,746
Minority interests
Ordinary shares (910)
Preferred securities (327)
Total minority interests (1,237)
Profit for the financial period attributable to
equity holders 4,509
Rm
6 months to Year to
30 June 31 December
2004 2004
Revenue
Gross earned premiums 24,588 48,524
Outward reinsurance (899) (1,652)
Net earned premiums 23,689 46,872
Investment income (net of investment losses) 4,509 50,144
Banking interest and similar income 11,948 24,081
Fee and commission income, and income from
service activities 7,074 14,512
Other income 820 1,742
Total revenues 48,040 137,351
Expenses
Claims and benefits (including change in
insurance contract provisions) (21,112) (69,624)
Reinsurance recoveries 668 1,687
Net claims incurred (20,444) (67,937)
Change in provision for investment contract
liabilities (including amortisation) (401) (8,967)
Losses on loans and advances (401) (1,227)
Finance costs (including interest and similar
expenses) (255) (720)
Banking interest expense (8,557) (16,991)
Fees, commissions and other acquisition costs (2,030) (4,696)
Other operating and administrative expenses (11,933) (23,468)
Third party interest in consolidated funds (85) (648)
Total expenses (44,106) (124,654)
Share of associated undertakings' profit after
tax 109 214
Goodwill impairments (401) (401)
(Loss) / profit on disposal of investment in
subsidiaries 149 (311)
Profit before tax 3,791 12,199
Income tax expense (1,459) (4,059)
Profit for the financial period 2,332 8,140
Minority interests
Ordinary shares (292) (873)
Preferred securities (328) (696)
Total minority interests (620) (1,569)
Profit for the financial period attributable to
equity holders 1,712 6,571
c
6 months to 6 months to Year to
30 June 30 June 31 December
Earnings and dividend per
share 2005 2004 2004
Basic earnings per share 7 130.2 50.1 192.0
Diluted earnings per share7 130.2 50.1 192.0
Dividend per share 8 22.13 20.50 61.78
Weighted average number
of shares - millions 3,467 3,419 3,422
Consolidated Balance Sheet
at 30 June 2005
Rm
At At At
30 June 31 December 30 June
Notes 2005 2004 2004
Assets
Goodwill and other intangible
assets 9 15,573 14,059 15,791
Investments in associated
undertakings 1,659 1,616 2,102
Investment property 8,422 7,485 7,336
Property, plant and equipment 5,466 5,554 5,426
Deferred tax assets 5,962 4,773 4,069
Reinsurers' share of
insurance contract provisions 4,333 3,439 3,821
Deferred acquisition costs 9,747 7,106 7,076
Current tax receivable 335 217 181
Loans, receivables and
advances 204,174 186,405 177,536
Derivative financial
instruments - assets 23,824 29,171 22,641
Other financial assets 142,181 105,911 98,399
Financial assets fair valued
through income statement 306,937 303,044 262,054
Short term securities 38,268 33,228 33,662
Other assets 31,253 22,501 24,383
Cash and balances with the
central bank 17,755 11,260 17,442
Placements with other banks 3,608 4,252 475
Total assets 819,497 740,021 682,394
Liabilities
Insurance contract provisions 236,784 204,847 188,127
Investment contract
liabilities 158,386 144,205 133,022
Third party interests in
consolidation of funds 8,469 6,032 4,465
Borrowed funds 10 13,083 16,164 14,910
Provisions 5,431 5,533 4,906
Deferred revenue 1,474 1,508 1,458
Deferred tax liabilities 5,985 4,339 2,905
Current tax payable 1,846 1,855 1,096
Deposits from other banks 18,370 30,711 19,205
Amounts owed to other
depositors 193,696 198,891 192,694
Other money market deposits 39,489 16,956 11,123
Derivative financial
instruments - liabilities 22,897 28,194 20,053
Other liabilities 50,710 29,430 41,574
Total liabilities 756,620 688,665 635,538
Net assets 62,877 51,356 46,856
Shareholders' equity
Equity attributable to equity
holders of the parent 45,984 35,647 31,607
Minority interest
Ordinary shares 11 9,083 8,679 7,913
Preferred securities 7,810 7,030 7,336
Total minority interests 16,893 15,709 15,249
Total equity 62,877 51,356 46,856
Consolidated Cash Flow Statement
for the six months ended 30 June 2005
Rm
6 months to 6 months to Year to
30 June 30 June 31 December
2005 2004 2004
Cash flows from operating
activities
Profit before tax 7,848 3,791 12,199
Non-cash movements in profit
before tax (15,448) 6,966 (25,543)
Changes in working capital 6,945 (8,873) 43,891
Taxation paid (2,315) (1,920) (3,811)
Net cash from operating
activities (2,970) (36) 26,736
Cash flows from investing
activities
Net acquisition of financial
investments 12,296 (170) (28,151)
Acquisition of investment
properties (128) (49) 106
Net acquisition of other fixed
assets (326) (608) (1,062)
Acquisition of interests in
subsidiaries (1,233) (1,264) (1,864)
Disposal of interests in
subsidiaries, associates and
joint ventures (186) 413 991
Net cash outflow from investing
activities 10,423 (1,678) (29,980)
Cash flows from financing
activities
Dividends paid to:
Ordinary shareholders of the
Company (1,373) (1,288) (1,959)
Equity minority interests and
preferred security interests (547) (413) (932)
Net proceeds from issue of
ordinary shares (including by
subsidiaries to minority
interests) 35 2,479 2,737
Net proceeds on issue of
perpetual preferred callable
securities 4,036 - -
Net repayments of debt (3,967) (377) (1,133)
Net cash flows from financing
activities (1,816) 401 (1,287)
Net increase/(decrease) in cash
and cash equivalents 5,638 (1,313) (4,531)
Effects of exchange rate
changes on cash and cash
equivalents 553 155 (725)
Cash and cash equivalents at
beginning of the year 17,877 23,133 23,133
Cash and cash equivalents at
end of the year 24,068 21,975 17,877
Consisting of:
Placements with other banks 3,608 475 4,252
Cash and balances with the
central bank 17,755 17,442 11,260
Other cash equivalents 2,705 4,058 2,365
24,068 21,975 17,877
Cash flows presented in this statement include all cash flows relating to
policyholders' funds for the long term business.
Statement of Changes in Equity
for the six months ended 30 June 2005
Millions
Number of Attributable to
shares issued equity holders of
Six months ended 30 June 2005 and fully paid the parent
Equity shareholders' funds at 1
January 2005 3,854 35,647
Change in operating profit arising in
the period
Fair value gains / (losses):
Available-for-sale investments - 977
Fair value of equity settled share
options - 47
Shadow accounting - (128)
Currency translation differences /
exchange differences on translating
foreign operations - 2,675
Cash flow hedge amortisation - 23
Aggregate tax effect of items taken
directly to or transferred from equity - (186)
Movement in net investment hedge
reserve (523)
Redemption of bonds (209)
Net acquisition / disposal of minority
interests - -
Other - 535
Net income recognised directly in
equity - 3,211
Profit for the period - 4,509
Total recognised income and expense
for the period - 7,720
Dividend for the period - (1,373)
Purchases / sales of treasury shares - (81)
Issue of perpetual preferred callable
securities - 4,036
Exercise of share options 3 35
Equity attributable to equity holders
of the parent at 30 June 2005 3,857 45,984
Rm
Total minority Total
Six months ended 30 June 2005 interest equity
Equity shareholders' funds at 1 January 2005 15,709 51,356
Change in operating profit arising in the period
Fair value gains / (losses):
Available-for-sale investments - 977
Fair value of equity settled share options - 47
Shadow accounting - (128)
Currency translation differences / exchange
differences on translating
foreign operations 611 3,286
Cash flow hedge amortisation - 23
Aggregate tax effect of items taken directly to
or transferred from equity - (186)
Movement in net investment hedge reserve (523)
Redemption of bonds (209)
Net acquisition / disposal of minority interests 279 279
Other (396) 139
Net income recognised directly in equity 494 3,705
Profit for the period 1,237 5,746
Total recognised income and expense for the
period 1,731 9,451
Dividend for the period (547) (1,920)
Purchases / sales of treasury shares - (81)
Issue of perpetual preferred callable securities - 4,036
Exercise of share options - 35
Equity attributable to equity holders of the
parent at 30 June 2005 16,893 62,877
Statement of Changes in Equity continued
for the six months ended 30 June 2005
Share Share Other Translation
Six months ended capital Premium reserves reserve
30 June 2005
Attributable to equity
holders of the parent at
1 January 2005 4,187 6,509 4,762 1,324
Changes in equity arising
in the period:
Fair value gains / (losses):
Available-for-sale
investments - - 977 -
Fair value of equity
settled share options - - - -
Shadow accounting - - (128) -
Currency translation
differences / exchange
differences on translating
foreign operations 430 669 488 (1,061)
Cash flow hedge amortisation - - 23 -
Aggregate tax effect of
items taken directly to or
transferred from
equity - - (186) -
Movement in net investment
hedge reserve (523)
Redemption of bonds (209)
Other - - - -
Net income recognised
directly in equity 430 669 442 (1,061)
Profit for the period - - - -
Total recognised income and
expense for the period 430 669 442 (1,061)
Dividend for the period - - - -
Purchases / sales of
treasury shares - - - -
Issue of perpetual
preferred callable
securities - (35) - -
Exercise of share options - 35 - -
Attributable to equity
holders of the parent at
30 June 2005 4,617 7,178 5,204 263
Rm
Perpetual
preferred
Retained callable
Six months ended 30 June 2005 earnings securities Total
Attributable to equity holders of the
parent at 1 January 2005 18,865 - 35,647
Changes in equity arising in the
period:
Fair value gains / (losses):
Available-for-sale investments - - 977
Fair value of equity settled share
options 47 - 47
Shadow accounting - - (128)
Currency translation differences /
exchange differences on translating
foreign operations 2,033 116 2,675
Cash flow hedge amortisation - - 23
Aggregate tax effect of items taken
directly to or transferred from
equity - - (186)
Movement in net investment hedge
reserve (523)
Redemption of bonds (209)
Other 535 - 535
Net income recognised directly in
equity 2,615 116 3,211
Profit for the period 4,509 - 4,509
Total recognised income and expense
for the period 7,124 116 7,720
Dividend for the period (1,373) - (1,373)
Purchases / sales of treasury shares (81) - (81)
Issue of perpetual preferred callable
securities - 4,071 4,036
Exercise of share options - - 35
Attributable to equity holders of the
parent at 30 June 2005 24,535 4,187 45,984
Retained earnings have been reduced by R6,372 million as at 30 June 2005 in
respect of shares held in policyholder funds, ESOP trusts and related
undertakings.
On 24 March 2005, the Company issued GBP350 million of Perpetual Preferred
Callable Securities (R4,071 million). These are unsecured and subordinated to
the claims of senior creditors and the holders of any priority preference
shares. For an initial period to 24 March 2020 interest is payable at a fixed
rate of 6.4 per cent. per annum., annually in arrears. After 24 March 2020
interest is re-set semi-annually at 2.2 per cent. per annum. above the Sterling
inter-bank offer rate for six month Sterling deposits, and is payable
semi-annually in arrears. Coupon payments may be deferred. The Perpetual
Preferred Callable Securities are redeemable at the discretion of the Company,
at their principal amount from 24 March 2020.
Statement of Changes in Equity continued
for the six months ended 30 June 2005
Millions
Number of Attributable to
shares issued equity holders of
Six months ended 30 June 2004 and fully paid the parent
Equity shareholders' funds at
1 January 2004 3,837 31,872
Changes in equity arising in the period
Fair value gains / (losses):
Available-for-sale investments - (2,018)
Fair value of equity settled share
options - 12
Shadow accounting - 1,422
Currency translation differences/
exchange differences on translating
foreign operations - (290)
Cash flow hedge amortisation - (24)
Aggregate tax effect of items taken
directly to or transferred from equity - 170
Net acquisition / disposal of minority
interests - -
Other - -
Net income recognised directly in
equity - (728)
Profit for the period - 1,712
Total recognised income and expense
for the period - 984
Dividend for the period - (1,288)
Purchases / sales of treasury shares - (61)
Exercise of share options 12 100
Equity shareholders' funds at 30 June 2004 3,849 31,607
Rm
Total minority Total
Six months ended 30 June 2004 interest equity
Equity shareholders' funds at 1 January 2004 14,670 46,542
Changes in equity arising in the period
Fair value gains / (losses):
Available-for-sale investments - (2,018)
Fair value of equity settled share options - 12
Shadow accounting - 1,422
Currency translation differences/ exchange
differences on translating
foreign operations (347) (637)
Cash flow hedge amortisation - (24)
Aggregate tax effect of items taken directly to
or transferred from equity - 170
Net acquisition / disposal of minority interests 802 802
Other (146) (146)
Net income recognised directly in equity 309 (419)
Profit for the period 620 2,332
Total recognised income and expense for the
period 929 1,913
Dividend for the period (350) (1,638)
Purchases / sales of treasury shares - (61)
Exercise of share options - 100
Equity shareholders' funds at 30 June 2004 15,249 46,856
Statement of Changes in Equity continued
for the six months ended 30 June 2005
Share Share Other
Six months ended 30 June 2004 capital premium reserves
Attributable to equity holders of the
parent at 1 January 2004 4,584 7,007 4,381
Changes in equity arising in the period:
Fair value gains / (losses):
Available-for-sale investments - - (2,018)
Fair value of equity settled share options - - -
Shadow accounting 1,422
Currency translation differences /
exchange differences on translating
foreign operations (243) (381) (207)
Cash flow hedge amortisation - - (24)
Aggregate tax effect of items taken
directly to or transferred from equity - - 170
Other - - 97
Net income recognised directly in equity (243) (381) (560)
Profit for the period - - -
Total recognised income and expense for
the period (243) (381) (560)
Dividend for the period - - -
Purchases / sales of treasury shares - - -
Exercise of share options - 100 -
Attributable to equity holders of the
parent at 30 June 2004 4,341 6,726 3,821
Rm
Translation Retained
Six months ended 30 June 2004 reserve earnings Total
Attributable to equity holders of the
parent at 1 January 2004 - 15,900 31,872
Changes in equity arising in the
period:
Fair value gains / (losses):
Available-for-sale investments - - (2,018)
Fair value of equity settled share
options - 12 12
Shadow accounting - - 1,422
Currency translation differences /
exchange differences on translating
foreign operations 1,402 (861) (290)
Cash flow hedge amortisation - - (24)
Aggregate tax effect of items taken
directly to or transferred from equity - - 170
Other - (97) -
Net income recognised directly in
equity 1,402 (946) (728)
Profit for the period 1,712 1,712
Total recognised income and expense
for the period 1,402 766 984
Dividend for the period - (1,288) (1,288)
Purchases / sales of treasury shares - (61) (61)
Exercise of share options - - 100
Attributable to equity holders of the
parent at 30 June 2004 1,402 15,317 31,607
Retained earnings have been reduced by R6,285 million as at 30 June 2004 in
respect of shares held in policy holder funds, ESOP trusts and related
undertakings.
Statement of Changes in Equity continued
for the six months ended 30 June 2005
Millions
Number of Attributable to
shares issued equity holders of
Year ended 31 December 2004 and fully paid the parent
Equity shareholders' funds at
1 January 2004 3,837 31,872
Changes in equity arising in the year:
Fair value gains / (losses):
Gain on property revaluation - 106
Available-for-sale investments - 1,392
Fair value of equity settled share
options - 35
Shadow accounting - (413)
Currency translation differences/
exchange differences on translating
foreign operations - (2,029)
Cash flow hedge amortisation - (47)
Aggregate tax effect of items taken
directly to or transferred from equity (212)
Net acquisition / disposal of minority
interests -
Other - (141)
Net income recognised directly in
equity - (1,942)
Profit for the year - 6,571
Total recognised income and expense
for the year 5,262
Dividend for the year - (1,959)
Purchases / sales of treasury shares - 295
Issue of share capital - -
Exercise of share options 17 177
Equity shareholders' funds at
31 December 2004 3,854 35,647
Rm
Total minority Total
Year ended 31 December 2004 interest equity
Equity shareholders' funds at 1 January 2004 14,670 46,542
Changes in equity arising in the year:
Fair value gains / (losses):
Gain on property revaluation - 106
Available-for-sale investments - 1,392
Fair value of equity settled share options - 35
Shadow accounting - (413)
Currency translation differences/ exchange
differences on translating
foreign operations (670) (2,699)
Cash flow hedge amortisation - (47)
Aggregate tax effect of items taken directly to
or transferred from equity - (212)
Net acquisition / disposal of minority interests 779 779
Other 130 (11)
Net income recognised directly in equity 239 (1,703)
Profit for the year 1,569 8,140
Total recognised income and expense for the year 1,808 7,070
Dividend for the year (911) (2,870)
Purchases / sales of treasury shares - 295
Issue of share capital 59 59
Exercise of share options 83 260
Equity shareholders' funds at 31 December 2004 15,709 51,356
Statement of Changes in Equity continued
for the six months ended 30 June 2005
Share Share Other
Year ended 31 December 2004 capital premium reserves
Attributable to equity holders of the
parent at 1 January 2004 4,584 7,007 4,381
Changes in equity arising in the period:
Fair value gains / (losses):
Gain on property revaluation - - 106
Available-for-sale investments - - 1,392
Fair value of equity settled share options - - -
Shadow accounting - - (413)
Currency translation differences /
exchange differences on translating
foreign operations (421) (651) (469)
Cash flow hedge amortisation (47)
Aggregate tax effect of items taken
directly to or transferred from equity - - (212)
Other - - 24
Net income recognised directly in equity (421) (651) 381
Profit for the period - - -
Total recognised income and expense for
the period (421) (651) 381
Dividend paid in the year - - -
Purchases / sales of treasury shares - - -
Exercise of share options 24 153 -
Attributable to equity holders of the
parent at 31 December 2004 4,187 6,509 4,762
Rm
Translation Retained
Year ended 31 December 2004 reserve earnings Total
Attributable to equity holders of the
parent at 1 January 2004 - 15,900 31,872
Changes in equity arising in the
period:
Fair value gains / (losses):
Gain on property revaluation - - 106
Available-for-sale investments - - 1,392
Fair value of equity settled share
options - 35 35
Shadow accounting - - (413)
Currency translation differences /
exchange differences on translating
foreign operations 1,324 (1,812) (2,029)
Cash flow hedge amortisation (47)
Aggregate tax effect of items taken
directly to or transferred from
equity - - (212)
Other - (165) (141)
Net income recognised directly in
equity 1,324 (1,942) (1,309)
Profit for the period - 6,571 6,571
Total recognised income and expense
for the period 1,324 4,629 5,262
Dividend paid in the year - (1,959) (1,959)
Purchases / sales of treasury shares - 295 295
Exercise of share options - - 177
Attributable to equity holders of the
parent at 31 December 2004 1,324 18,865 35,647
Retained earnings have been reduced by R6,032 million as at 31 December 2004 in
respect of shares held in policyholder funds, ESOP trusts and related
undertakings.
This information is provided by RNS
The company news service from the London Stock Exchange
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