Preliminary results 2011 - Part 2 IFRS

RNS Number : 0193Z

Old Mutual PLC

09 March 2012

Index to the financial information

For the year ended 31 December 2011

Statement of directors' responsibilities in respect of the preliminary announcement of the Annual Report and the financial statements 42

Consolidated income statement 43

Consolidated statement of comprehensive income 44

Reconciliation of adjusted operating profit to profit after tax 45

Consolidated statement of financial position 46

Condensed consolidated statement of cash flows 47

Consolidated statement of changes in equity 48

A1: Accounting policies 50

A2: Significant corporate activity and business changes 50

B: Segment information 51

C: Other key performance information 62

D: Other income statement notes 68

E: Borrowed funds 70

F: Other statement of financial position notes 73

G: Other notes 76

H: Discontinued operations and held for sale operations 78

Statement of directors' responsibilities in respect of the preliminary

announcement of the Annual Report and the financial statements

We confirm that to the best of our knowledge:

· The financial statements, prepared in accordance with the applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit of the Group and the undertakings included in the consolidation taken as a whole;

· The Group Finance Director's review and the Business review include a fair view of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the important events, principal risks and uncertainties that they face.

Julian Roberts Philip Broadley
Group Chief Executive Group Finance Director

9 March 2012 9 March 2012

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2011

£m
	Notes	Year ended 31 December 2011	Year ended 31 December 2010*
Revenue
Gross earned premiums	B3	3,584	3,460
Outward reinsurance		(325)	(300)
Net earned premiums		3,259	3,160
Investment return (non-banking)		(567)	9,553
Banking interest and similar income		3,669	3,913
Banking trading, investment and similar income		217	199
Fee and commission income, and income from service activities		3,035	2,823
Other income		171	149
Total revenues		9,784	19,797
Expenses
Claims and benefits (including change in insurance contract provisions)		(3,331)	(4,956)
Reinsurance recoveries		123	222
Net claims and benefits incurred		(3,208)	(4,734)
Change in investment contract liabilities		1,889	(5,833)
Losses on loans and advances		(458)	(548)
Finance costs		(58)	(269)
Banking interest payable and similar expenses		(2,095)	(2,441)
Fee and commission expenses, and other acquisition costs		(1,007)	(917)
Other operating and administrative expenses		(3,852)	(3,643)
Goodwill impairment	C1(b)	(264)	(1)
Change in third-party interest in consolidated funds		2	(299)
Total expenses		(9,051)	(18,685)
Share of associated undertakings and joint ventures' profit after tax		10	5
Profit/(loss) on acquisition/disposal of subsidiaries, associated undertakings and strategic investments	C1(c)	251	(22)
Profit before tax		994	1,095
Income tax expense	D1(a)	(225)	(391)
Profit from continuing operations after tax		769	704
Discontinued operations
Profit/(loss) from discontinued operations after tax	H1(a)	198	(728)
Profit/(loss) after tax for the financial year		967	(24)
Attributable to
Equity holders of the parent		667	(282)
Non-controlling interests
Ordinary shares	F2(a)	238	196
Preferred securities	F2(a)	62	62
Profit/(loss) after tax for the financial year		967	(24)
Earnings per share
Basic earnings per share based on profit from continuing operations (pence)		8.9	8.5
Basic earnings per share based on profit/(loss) from discontinued operations (pence)		4.0	(15.0)
Basic earnings per ordinary share (pence)	C3(a)	12.9	(6.5)
Diluted earnings per share based on profit from continuing operations (pence)		8.0	7.7
Diluted earnings per share based on profit/(loss) from discontinued operations (pence)		3.7	(13.8)
Diluted earnings per ordinary share (pence)	C3(a)	11.7	(6.1)
Weighted average number of shares - millions	C3(a)	4,935	4,859

* The year ended 31 December 2010 has been restated to reflect Nordic as discontinued (see note A2).

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2011

			£m
	Notes	Year ended 31 December 2011	Year ended 31 December 2010*
Profit/(loss) after tax for the financial year		967	(24)
Other comprehensive income for the financial year
Fair value gain/(losses)
Property revaluation		39	26
Net investment hedge		28	(87)
Available-for-sale investments
Fair value (losses)/gains		(1)	37
Recycled to the income statement		(6)	-
Shadow accounting		(22)	(15)
Currency translation differences/exchange differences on translating foreign operations		(1,240)	882
Other movements		(49)	17
Income tax relating to components of other comprehensive income	D1(c)	12	13
Total other comprehensive income for the financial year from continuing operations		(1,239)	873
Total other comprehensive income for the financial year from discontinued operations	H1(b)	(161)	278
Total other comprehensive income for the financial year		(1,400)	1,151
Total comprehensive income for the financial year		(433)	1,127
Attributable to
Equity holders of the parent		(408)	594
Non-controlling interests
Ordinary shares		(87)	428
Preferred securities		62	105
Total comprehensive income for the financial year		(433)	1,127

* The year ended 31 December 2010 has been restated to reflect Nordic as discontinued (see note A2).

RECONCILIATION OF ADJUSTED OPERATING PROFIT TO PROFIT AFTER TAX

For the year ended 31 December 2011

£m
	Notes	Year ended 31 December 2011	Year ended 31 December 2010*
Core operations
Long-Term Savings	B2	793	787
Nedbank	B2	755	601
Mutual and Federal	B2	89	103
USAM	B2	67	72
		1,704	1,563
Finance costs		(128)	(128)
Long term investment return on excess assets		37	31
Net interest payable to non-core operations		(23)	(39)
Corporate costs		(57)	(60)
Other net (expenses)/income		(18)	4
Adjusted operating profit before tax		1,515	1,371
Adjusting items	C1(a)	(329)	(392)
Non-core operations	B2	(183)	15
Profit before tax (net of policyholder tax)		1,003	994
Income tax attributable to policyholder returns	B2	(9)	101
Profit before tax		994	1,095
Total tax expense	D1(a)	(225)	(391)
Profit from continuing operations after tax		769	704
Profit/(loss) from discontinued operations after tax	H1(a)	198	(728)
Profit/(loss) after tax for the financial year		967	(24)

Adjusted operating profit after tax attributable to ordinary equity holders of the parent

£m
	Notes	Year ended 31 December 2011	Year ended 31 December 2010*
Adjusted operating profit before tax		1,515	1,371
Tax on adjusted operating profit	D1(d)	(341)	(327)
Adjusted operating profit after tax		1,174	1,044
Non-controlling interests - ordinary shares	F2(a)	(257)	(217)
Non-controlling - preferred securities	F2(a)	(62)	(62)
Adjusted operating profit after tax attributable to ordinary equity holders of the parent		855	765
Adjusted weighted average number of shares (millions)	C3(a)	5,435	5,359
Adjusted operating earnings per share (pence)	C3(b)	15.7	14.3

* The year ended 31 December 2010 has been restated to reflect Nordic as discontinued and non-core (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 31 December 2011

£m
	Notes	At 31 December 2011	At 31 December 2010
Assets
Goodwill and other intangible assets		3,358	4,965
Mandatory reserve deposits with central banks		951	1,079
Property, plant and equipment		925	1,015
Investment property		2,064	2,040
Deferred tax assets		339	416
Investments in associated undertakings and joint ventures		111	162
Deferred acquisition costs		1,351	1,534
Reinsurers' share of policyholder liabilities		989	1,104
Loans and advances		39,764	51,778
Investments and securities		81,253	106,153
Current tax receivable		138	156
Client indebtedness for acceptances		237	190
Trade, other receivables and other assets		3,348	3,934
Derivative financial instruments - assets		1,795	2,503
Cash and cash equivalents		3,624	4,132
Non-current assets held for sale	H2	22,138	12,391
Total assets		162,385	193,552
Liabilities
Life assurance policyholder liabilities		76,350	98,631
General insurance liabilities		325	397
Third-party interests in consolidated funds		1,893	3,584
Borrowed funds	E1	3,656	4,204
Provisions	F1	269	260
Deferred revenue		701	730
Deferred tax liabilities		504	858
Current tax payable		199	238
Trade, other payables and other liabilities		4,243	5,661
Liabilities under acceptances		237	190
Amounts owed to bank depositors		40,978	53,236
Derivative financial instruments - liabilities		1,755	1,870
Non-current liabilities held for sale	H2	20,417	12,219
Total liabilities		151,527	182,078
Net assets		10,858	11,474
Shareholders' equity
Equity attributable to equity holders of the parent		8,488	8,951
Non-controlling interests
Ordinary shares	F2(b)	1,652	1,763
Preferred securities	F2(b)	718	760
Total non-controlling interests		2,370	2,523
Total equity		10,858	11,474

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2011

£m
		Year ended 31 December 2011		Year ended 31 December 2010*
Cash flows from operating activities - continuing operations
Profit before tax		994		1,095
Non-cash movements in profit before tax		1,372		(515)
Changes in working capital		(1,415)		3,195
Taxation paid		(402)		(356)
Net cash inflow from operating activities - continuing operations		549		3,419
Cash flows from investing activities
Net disposals/(acquisitions) of financial investments			43	(2,349)
Acquisition of investment properties			(57)	(162)
Proceeds from disposal of investment properties			6	272
Acquisition of property, plant and equipment			(184)	(145)
Proceeds from disposal of property, plant and equipment			43	-
Acquisition of intangible assets			(91)	(76)
Acquisition of interests in subsidiaries, associated undertakings and strategic investments			103	(75)
Disposal of interests in subsidiaries, associated undertakings and strategic investments			(329)	(16)
Net cash outflow from investing activities - continuing operations			(466)	(2,551)
Cash flows from financing activities
Dividends paid to
Ordinary equity holders of the Company			(97)	(102)
Non-controlling interests and preferred security interests			(206)	(196)
Interest paid (excluding banking interest paid)			(87)	(79)
Proceeds from issue of ordinary shares (including by subsidiaries to non-controlling interests)			10	5
Net acquisition of treasury shares			(17)	(25)
Issue of subordinated and other debt			890	492
Subordinated and other debt repaid			(905)	(104)
Net cash outflow from financing activities - continuing operations			(412)	(9)
Net (decrease)/increase in cash and cash equivalents - continuing operations	(329)			859
Net increase/(decrease) in cash and cash equivalents - discontinued operations	346			(364)
Effects of exchange rate changes on cash and cash equivalents	(594)			376
Cash and cash equivalents at beginning of the year	5,632			4,761
Cash and cash equivalents at end of the year	5,055			5,632
Consisting of
Cash and cash equivalents in the statement of financial position	3,624			4,132
Mandatory reserve deposits with central banks	951			1,079
Cash and cash equivalents included in assets held for sale	480			421
Total	5,055			5,632

* The year ended 31 December 2010 has been restated to reflect Nordic as discontinued (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 £951 million (2010: £1,079 million) and cash and cash equivalents subject to consolidation of funds of £756 million (2010: £689 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 £4,936 million (2010: £5,196 million), dividend income received of £371 million (2010: £360 million) and interest paid (including banking interest) of £2,143 million (2010: £2,198 million).

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2011

		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 for the year	C4	-	-	-	-	-
Other movements in share capital and payment reserve		7	-	10	-	-
Merger reserve realised in the year		-	-	-	(313)
Change in participation in subsidiaries	F2	-	-	-	-	-
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
		Millions				£m
Year ended 31 December 2010	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		5,518	552	771	2,716	82
Loss 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		-	-	-	-	562
Recycled to the income statement		-	-	-	-	(12)
Shadow accounting		-	-	-	-	(343)
Currency translation differences/exchange differences on translating foreign operations		-	-	-	-	-
Other movements		-	-	-	-	2
Income tax relating to components of other comprehensive income	D1(c)	-	-	-	-	(66)
Total comprehensive income for the financial year		-	-	-	-	143
Dividends for the year	C4	-	-	-	-	-
Other movements in share capital and payment reserve		6	1	7	-	-
Acquisition of non-controlling interest in Mutual & Federal	F2	147	15	-	129	-
Change in participation in other subsidiaries	F2	-	-	-	-	-
Shares issued in lieu of cash dividend		24	2	17	-	-
Transactions with shareholders		177	18	24	129	-
Shareholders' equity at end of the year		5,695	570	795	2,845	225

£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
								£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
87	191	11	469	2,897	688	8,464	2,247	10,711
-	-	-	-	(314)	32	(282)	258	(24)


21	-	-	-	-	-	21	5	26
-	-	-	(87)	-	-	(87)	-	(87)

-	-	-	-	-	-	562	-	562
-	-	-	-	-	-	(12)	-	(12)
(6)	-	-	-	-	-	(349)	-	(349)
-	-	-	794	-	-	794	274	1,068
(1)	20	(6)	-	(14)	-	1	(4)	(3)
-	-	-	-	-	12	(54)	-	(54)
14	20	(6)	707	(328)	44	594	533	1,127
			-	(131)	(44)	(175)	(152)	(327)
-	4	-	-	(25)	-	(13)	3	(10)
-	-	-	-	(93)	-	51	(51)	-
-	-	-	-	-	-	-	(57)	(57)
-	-	-	-	11	-	30	-	30
-	4	-	-	(238)	(44)	(107)	(257)	(364)
101	215	5	1,176	2,331	688	8,951	2,523	11,474

Retained earnings were reduced in respect of own shares held in policyholders' funds, ESOP trusts, Black Economic Empowerment trusts and other related undertakings at 31 December 2011 by £501 million (2010: £478 million).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2011

A1: Accounting policies

Basis of preparation

The consolidated financial information contained herein has been prepared in accordance with the recognition and measurement principles of International financial Reporting Standards adopted by the EU. The Group's results for the year ended 31 December 2011 and the position at that date have been prepared using accounting policies consistent with those applied in the preparation of the Group's 2010 Annual Report and Accounts.

The consolidated financial statements have been prepared on the going concern basis which the directors believe to be appropriate.

The financial information set out herein does not constitute the Company's statutory accounts for the years ended 31 December 2011 or 2010. Statutory accounts for 2010 have been delivered to the Registrar of Companies, and those for 2011 will be delivered in due course. The auditor has reported on those accounts; the reports were (i) unqualified, (ii) did not include references to any matters to which the auditor draws attention by way of emphasis without qualifying the reports, and (iii) did not contain statements under section 498(2) or (3) of the Companies Act 2006.

A2: Significant corporate activity and business changes

Disposal of US Life

As previously reported at 31 December 2010 the Group was in advanced stage negotiations for the disposal of its life assurance operations in the United States, which represented almost the entirety of the US Life operating segment. Following US regulatory approval the disposal of US Life was completed on 7 April 2011. The sale represented the Group's exit from the life assurance market in the United States and therefore met the criteria of a discontinued operation. For the purposes of adjusted operating profit US Life has been classified as a discontinued and non-core operation and consequently is not included.

Skandia Liv and the disposal of Nordic

In line with previous periods the consolidated financial statements do not include the company Livförsäkringsaktiebolaget Skandia (Skandia Liv) and its subsidiaries. Skandia Liv's business is a mutual life assurance company that is highly regulated within a strict legal framework for mutual life assurance companies in Sweden, particularly in relation to its relationship with its holding company. The Group does not have the power to control Skandia Liv in such a way as to access the benefits usually associated with share ownership due to the legal and regulatory restrictions. Those benefits accrue to the policyholders of Skandia Liv. Consequently, Skandia Liv is not consolidated. The shares in Skandia Liv are accounted for in accordance with the accounting policies for equity financial instruments.

As announced on 15 December 2011, the Group has agreed to sell the Nordic business unit comprising the life assurance, asset management and banking operations in Sweden, Denmark and Norway to Skandia Liv. As a result the assets and liabilities of the Nordic disposal group have been classified as held for sale in the statement of financial position for the current year in accordance with IFRS 5. This sale will result in the Group's exit from the life assurance, asset management and banking operations in the Nordic region and therefore meets the criteria of a discontinued operation. Consequently the comparative information in the income statement, statement of comprehensive income, statement of cash flows and the related notes have been restated where applicable to reflect this. For the purposes of adjusted operating profit, Nordic has been reclassified as a discontinued and non-core operation for the year ended 31 December 2011 with the comparative restated accordingly.

Disposal of the 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. As a result of this the assets and liabilities of the Finnish branch have been classified as held for sale in the statement of financial position for the current year.

Further details of the impact for discontinued operations and disposal groups are provided in notes H1 and H2. In addition, certain comparative information has been revised in accordance with changes to presentation made in the current year.

Consolidation of other African businesses

In preparing the consolidated financial statements for the year ended 31 December 2010 the Emerging Markets segment included its South African and Namibian businesses but excluded all other African businesses. This was consistent with prior periods. Nedbank and Mutual & Federal consolidated the results of all African businesses under their control.

Following a period of greater political and currency stability in Zimbabwe and an expectation that the Group will be able to extract benefits from its Zimbabwean business the Group re-evaluated its ability to control this business within the meaning of accounting standards. As a result the Group's Zimbabwean business has been consolidated for the first time together with operations in Kenya, Malawi, Swaziland and Nigeria (collectively the other African businesses), with this being effective from 1 January 2011.

The acquisition has been accounted for at the net asset value of the underlying businesses on 1 January 2011, being the fair value of the Group's investment in these operations for the assets and liabilities acquired. Deemed consideration for the acquisition is the fair value of the Group's investment immediately prior to control. The result was a gain for the Group in these businesses that is accounted for as a profit on acquisition in the year. This profit has been excluded from adjusted operating profit. On initial recognition the assets directly associated with other African businesses consisted of £290 million of investment property, £576 million of investments and securities and £115 million of other assets, with liabilities at this time being £624 million of policyholder liabilities and £108 million of other liabilities.

The trading results of the other African businesses for the year ending 31 December 2011 have been included in the Group's income statement and adjusted operating profit. 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 most likely expected indigenous shareholding to be provided. At 31 December 2011 the Group retained a 100% holding in the ordinary shares of Zimbabwe and consequently the operation has been consolidated as a wholly owned subsidiary for the purposes of IFRS reporting.

B: Segment information

B1: Basis of segmentation

The Group's results are analysed and reported on a basis consistent with the way that management and the Board of Directors considers information when making operating decisions and the basis on which resources are allocated and performance assessed by management and the Board of Directors, being in line with that reported in the previous financial year. This information is presented to the Board in local currency, however this note is presented in pounds sterling, the presentation currency of the Group. As detailed in note A2, Nordic has been reclassified as discontinued and as a result also non-core, with the comparative segment information restated accordingly, resulting in a reduction in adjusted operating profit before tax and non-controlling interests of £110 million for the year ended 31 December 2010.

There are four principal business activities from which the Group generates revenues. These are life assurance (premium income), asset management business (fee and commission income), banking (banking interest receivable) and general insurance (premium income). The revenues generated in each reported segment can be seen in the analysis of profits and losses in note B2.

The information reflects the measures of profit and loss, assets and liabilities for each operating segment as regularly provided to management and the Board of Directors. There are no differences between the measurement of the assets and liabilities reflected in the primary statements and that reported for the segments. A reconciliation between the segment revenues and expenses and the Group's revenues and expenses is shown in note B2.

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.

The types of products and services from which each operating segment derives its revenues are as follows:

Core operations

Long Term Savings

Emerging Markets - life assurance and asset management

Retail Europe - 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)

Income statement segmentation

For the IFRS income statement Nordic and US Life have been classified as discontinued operations. All other businesses including Bermuda are classified as continuing.

The profits of the Nordic, US Life and Bermuda businesses are excluded in determining adjusting operating profit in both periods, on the basis that they are either discontinued (Nordic and US Life) or non-core (Bermuda).

Statement of financial position segmentation

The segmental analysis of the statement of financial position at both 31 December 2011 and 31 December 2010 discloses Bermuda as non-core, consistent with the treatment of the business for AOP purposes.

Nordic is disclosed as discontinued in the statement of financial position consistent with the income statement classification. The agreement to dispose of Nordic announced on 15 December 2011 resulted in the assets and liabilities of the business being classified as held for sale at 31 December 2011. For the corresponding period Nordic has been reported on a line by line basis.

US Life is disclosed as discontinued at 31 December 2010, being classified as held for sale. The disposal of US Life was completed on 7 April 2011.

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 basis supplementary information.

In the analysis that follows, consolidation adjustments include the elimination of inter-segment revenues, expenses, assets and liabilities together with the impacts of the consolidation of the Group's interest in unit trusts, mutual funds and similar entities.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2011 continued

B: Segment information continued

B2: Adjusted operating profit statement - segment information year ended 31 December 2011


	Long-Term Savings
	Emerging Markets	Retail Europe	Wealth Management	Total Long-Term Savings
Revenue
Gross earned premiums	2,542	30	274	2,846
Outward reinsurance	(88)	(8)	(80)	(176)
Net earned premiums	2,454	22	194	2,670
Investment return (non-banking)	2,626	(214)	(2,664)	(252)
Banking interest and similar income	-	-	-	-
Banking trading, investment and similar income	-	-	-	-
Fee and commission income, and income from service activities	411	201	982	1,594
Other income	68	2	21	91
Inter-segment revenues	66	5	6	77
Total revenues	5,625	16	(1,461)	4,180
Expenses
Claims and benefits (including change in insurance contract provisions)	(2,854)	(20)	(82)	(2,956)
Reinsurance recoveries	73	3	6	82
Net claims and benefits incurred	(2,781)	(17)	(76)	(2,874)
Change in investment contract liabilities	(925)	226	2,588	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)	(84)	(580)	(887)
Other operating and administrative expenses	(1,076)	(93)	(311)	(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)	(3)	(43)	(53)
Total expenses	(5,065)	28	1,640	(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	44	179	793
Income tax expense	(120)	(11)	(15)	(146)
Non-controlling interests	(3)	-	-	(3)
Adjusted operating profit/(loss) after tax and non-controlling interests	447	33	164	644
Adjusting items net of tax and non-controlling interests	126	(30)	(57)	39
Profit/(loss) after tax from continuing operations	573	3	107	683
Profit from discontinued operations after tax	-	-	-	-
Profit/(loss) after tax attributable to equity holders of the parent	573	3	107	683

Of the total revenues, excluding intercompany revenues, (£1,492) million was generated in the UK (2010: £5,143 million), (£81) million in rest of Europe (2010: £1,160 million), £11,007 million in Southern Africa (2010: £12,575 million), £270 million in United States (2010: £829 million) and £80 million relates to other operating segments (2010: £90 million).

*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 as detailed in notes A2 and B1. Bermuda loss after tax for 2011 was £201 million. Further detail on the results of discontinued operations is provided in note H1.


								£m
Nedbank	M&F	USAM	Other	Consolidation adjustments	Adjusted operating profit	Adjusting items (note C1)	Discontinued and non-core operations*	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 year ended 31 December 2011 continued

B: Segment information continued

B2: Adjusted operating profit statement - segment information year ended 31 December 2010 (restated)


	Long-Term Savings
	Emerging Markets	Retail Europe	Wealth Management	Total Long-Term Savings
Revenue
Gross earned premiums	2,353	28	351	2,732
Outward reinsurance	(72)	(8)	(79)	(159)
Net earned premiums	2,281	20	272	2,573
Investment return (non-banking)	4,072	392	4,409	8,873
Banking interest and similar income	-	-	-	-
Banking trading, investment and similar income	-	-	-	-
Fee and commission income, and income from service activities	372	198	912	1,482
Other income	72	-	11	83
Inter-segment revenues	54	5	12	71
Total revenues	6,851	615	5,616	13,082
Expenses
Claims and benefits (including change in insurance contract provisions)	(3,943)	(25)	(303)	(4,271)
Reinsurance recoveries	83	5	75	163
Net claims and benefits incurred	(3,860)	(20)	(228)	(4,108)
Change in investment contract liabilities	(1,261)	(382)	(4,190)	(5,833)
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	(219)	(75)	(500)	(794)
Other operating and administrative expenses	(941)	(84)	(390)	(1,415)
Goodwill impairment	-	-	-	-
Change in third-party interest in consolidated funds	-	-	-	-
Income tax attributable to policyholder returns	(32)	-	(69)	(101)
Inter-segment expenses	(2)	(2)	(43)	(47)
Total expenses	(6,315)	(564)	(5,420)	(12,299)
Share of associated undertakings' and joint ventures' profit after tax	3	-	1	4
Loss on disposal of subsidiaries, associated undertakings and strategic investments	-	-	-	-
Adjusted operating profit/(loss) before tax and non-controlling interests	539	51	197	787
Income tax expense	(146)	(13)	(44)	(203)
Non-controlling interests	(1)	-	-	(1)
Adjusted operating profit/(loss) after tax and non-controlling interests	392	38	153	583
Adjusting items net of tax and non-controlling interests	(1)	(25)	(140)	(166)
Profit/(loss) after tax from continuing operations	391	13	13	417
Loss from discontinued operations after tax	-	-	-	-
Profit/(loss) after tax attributable to equity holders of the parent	391	13	13	417

*Non-core operations relates to Bermuda with the exception of £18 million and £21 million of inter-segment revenue and expenses and the loss from discontinued operations after tax, with these reflecting the results of Nordic and US Life both of which have been classified as discontinued operations as detailed in notes A2 and B1. Bermuda profit after tax for 2010 was £22 million. Further detail on the results of discontinued operations is provided in note H1.

								£m
Nedbank	M&F	USAM	Other	Consolidation adjustments	Adjusted operating profit	Adjusting items (note C1)	Discontinued and non-core operations*	IFRS Income statement

-	728	-	-	-	3,460	-	-	3,460
-	(140)	-	-	-	(299)	-	(1)	(300)
-	588	-	-	-	3,161	-	(1)	3,160
-	56	1	76	340	9,346	(92)	299	9,553
3,913	-	-	-	-	3,913	-	-	3,913
199	-	-	-	-	199	-	-	199
946	28	465	1	-	2,922	(99)	-	2,823
35	-	9	(1)	1	127	-	22	149
20	20	4	29	(207)	(63)	-	63	-
5,113	692	479	105	134	19,605	(191)	383	19,797

-	(436)	-	-	-	(4,707)	-	(249)	(4,956)
-	58	-	-	-	221	-	1	222
-	(378)	-	-	-	(4,486)	-	(248)	(4,734)
-	-	-	-	-	(5,833)	-	-	(5,833)
(548)	-	-	1	-	(548)	-	-	(548)
-	-	-	(128)	-	(128)	(141)	-	(269)
(2,422)	-	-	-	-	(2,422)	(19)	-	(2,441)
(3)	(109)	(23)	-	(29)	(958)	126	(85)	(917)
(1,485)	(83)	(384)	(93)	(13)	(3,473)	(144)	(26)	(3,643)
-	-	-	-	-	-	(1)	-	(1)
-	-	-		(299)	(299)	-	-	(299)
-	-	-	-	-	(101)	101	-	-
(54)	(20)	-	(77)	207	9	-	(9)	-
(4,512)	(590)	(407)	(297)	(134)	(18,239)	(78)	(368)	(18,685)
-	1	-	-	-	5	-	-	5
-	-	-	-	-	-	(22)	-	(22)
601	103	72	(192)	-	1,371	(291)	15	1,095
(128)	(24)	(13)	41	-	(327)	(68)	4	(391)
(232)	(5)	-	(41)	-	(279)	21	-	(258)
241	74	59	(192)	-	765	(338)	19	446
10	(11)	(20)	(151)	-	(338)	338	-	-
251	63	39	(343)	-	427	-	19	446
-	-	-	-	-	-	-	(728)	(728)
251	63	39	(343)	-	427	-	(709)	(282)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2011 continued

B: Segment information continued

B3: Gross earned premiums

Year ended 31 December 2011							£m
Year ended 31 December 2011	Emerging Markets	Retail Europe	Wealth Management	Long-Term Savings	M&F	Bermuda	Total
Life assurance - insurance contracts	1,567	30	274	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	30	274	2,846	736	2	3,584
Life assurance - other investment contracts recognised as deposits	2,088	666	5,740	8,494	-	-	8,494

							£m
Year ended 31 December 2010	Emerging Markets	Retail Europe	Wealth Management	Long-Term Savings	M&F	Bermuda	Total Restated
Life assurance - insurance contracts	1,498	28	351	1,877	-	-	1,877
Life assurance - investment contracts with discretionary participation features	855	-	-	855	-	-	855
General insurance	-	-	-	-	728	-	728
Gross earned premiums	2,353	28	351	2,732	728	-	3,460
Life assurance - other investment contracts recognised as deposits	1,829	656	6,287	8,772	-	-	8,772

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2011 continued

B: Segment information continued

B4: Statement of financial position - segment information year ended 31 December 2011

					£m
At 31 December 2011	Notes	Emerging Markets	Retail Europe	Wealth Management	Total Long-Term Savings
Assets
Goodwill and other intangible assets		104	474	1,282	1,860
Mandatory reserve deposits with central banks		-	-	-	-
Property, plant and equipment		374	3	13	390
Investment property		1,666	-	-	1,666
Deferred tax assets		81	22	43	146
Investments in associated undertakings and joint ventures		32	-	-	32
Deferred acquisition costs		113	334	830	1,277
Reinsurers' share of policyholder liabilities		31	8	836	875
Loans and advances		299	1	189	489
Investments and securities		30,064	4,188	37,320	71,572
Current tax receivable		10	9	61	80
Client indebtedness for acceptances		-	-	-	-
Trade, other receivables and other assets		711	56	254	1,021
Derivative financial instruments - assets		298	-	-	298
Cash and cash equivalents		339	108	408	855
Non-current assets held for sale	H2(a)	-	-	1,161	1,161
Inter-segment assets		1,025	52	86	1,163
Total assets		35,147	5,255	42,483	82,885
Liabilities
Life assurance policyholder liabilities		30,270	4,201	37,958	72,429
General insurance liabilities		-	-	-	-
Third-party interests in consolidated funds		-	-	-	-
Borrowed funds	E1	239	-	-	239
Provisions	F1	137	4	60	201
Deferred revenue		17	219	454	690
Deferred tax liabilities		185	102	87	374
Current tax payable		120	16	23	159
Trade, other payables and other liabilities		1,667	77	596	2,340
Liabilities under acceptances		-	-	-	-
Amounts owed to bank depositors		-	-	-	-
Derivative financial instruments - liabilities		230	-	-	230
Non-current liabilities held for sale	H2(a)	-	-	1,120	1,120
Inter-segment liabilities		141	1	461	603
Total liabilities		33,006	4,620	40,759	78,385
Net assets		2,141	635	1,724	4,500
Equity
Equity attributable to equity holders of the parent		2,144	635	1,724	4,503
Non-controlling interests		(3)	-	-	(3)
Ordinary shares	F2(b)	(3)	-	-	(3)
Preferred securities	F2(b)	-	-	-	-

Total equity		2,141	635	1,724	4,500

							£m
Nedbank	M&F	USAM	Other	Consolidation adjustments	Non-core operations - Bermuda	Discontinued operations*	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

* Discontinued operations relates to Nordic. Further detail is provided in note H2.

The net assets of Emerging Markets are stated after eliminating investments in Group equity and debt instruments of £368 million (2010: £399 million) held in policyholder funds. These include investments in the Company's ordinary shares and subordinated liabilities and preferred securities issued by the Group's banking subsidiary Nedbank Limited. All Emerging Markets debt relates to life assurance. All other debt relates to other shareholders' net assets.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2011 continued

B: Segment information continued

B4: Statement of financial position - segment information year ended 31 December 2010


At 31 December 2010	Notes	Emerging Markets	Retail Europe	Wealth Management	Total Long-Term Savings
Assets
Goodwill and other intangible assets		120	522	1,463	2,105
Mandatory reserve deposits with central banks		-	-	-	-
Property, plant and equipment		396	3	16	415
Investment property		1,679	-	-	1,679
Deferred tax assets		96	27	27	150
Investments in associated undertakings and joint ventures		26	-	1	27
Deferred acquisition costs		139	316	855	1,310
Reinsurers' share of policyholder liabilities		24	8	907	939
Loans and advances		343	1	185	529
Investments and securities		34,519	4,466	40,856	79,841
Current tax receivable		4	9	95	108
Client indebtedness for acceptances		-	-	-	-
Trade, other receivables and other assets		854	58	274	1,186
Derivative financial instruments - assets		557	-	-	557
Cash and cash equivalents		1,141	93	336	1,570
Non-current assets held for sale		-	-	6	6
Inter-segment assets		947	56	294	1,297
Total assets		40,845	5,559	45,315	91,719
Liabilities
Life assurance policyholder liabilities		35,676	4,460	41,468	81,604
General insurance liabilities		-	-	-	-
Third-party interests in consolidated funds		-	-	-	-
Borrowed funds	E1	291	-	1	292
Provisions	F1	158	4	50	212
Deferred revenue		22	197	498	717
Deferred tax liabilities		225	124	224	573
Current tax payable		123	4	65	192
Trade, other payables and other liabilities		2,246	94	544	2,884
Liabilities under acceptances		-	-	-	-
Amounts owed to bank depositors		-	-	-	-
Derivative financial instruments - liabilities		135	-	-	135
Non-current liabilities held for sale		-	-	-	-
Inter-segment liabilities		123	4	99	226
Total liabilities		38,999	4,887	42,949	86,835
Net assets		1,846	672	2,366	4,884
Equity
Equity attributable to equity holders of the parent		1,847	672	2,366	4,885
Non-controlling interests		(1)	-	-	(1)
Ordinary shares	F2(b)	(1)	-	-	(1)
Preferred securities	F2(b)	-	-	-	-

Total equity		1,846	672	2,366	4,884

							£m
Nedbank	M&F	USAM	Other	Consolidation adjustments	Non-core operations - Bermuda	Discontinued operations*	Total

637	33	1,181	14	-	-	995	4,965
1,079	-	-	-	-	-	-	1,079
546	25	16	1	-	-	12	1,015
19	-	-	1	341	-	-	2,040
28	12	156	(8)	-	-	78	416
96	2	8	25	-	-	4	162
1	19	14	-	-	124	66	1,534
31	122	-	-	-	-	12	1,104
46,032	1	-	-	-	-	5,216	51,778
6,886	553	42	285	2,587	2,567	13,392	106,153
47	-	-	-	-	-	1	156
190	-	-	-	-	-	-	190
943	84	138	62	292	1,038	191	3,934
1,350	-	-	109	476	1	10	2,503
841	131	171	458	689	74	198	4,132
1	-	-	-	-	-	12,384	12,391
202	23	4	975	(3,480)	874	105	-
58,929	1,005	1,730	1,922	905	4,678	32,664	193,552

846	-	-	-	-	3,933	12,248	98,631
-	397	-	-	-	-	-	397
-	-	-	-	3,584	-	-	3,584
2,456	-	11	1,443	-	-	2	4,204
(4)	40	3	47	-	-	(38)	260
1	11	-	-	-	-	1	730
158	13	-	16	-	-	98	858
12	1	7	13	-	1	12	238
1,717	114	210	120	350	7	259	5,661
190	-	-	-	-	-	-	190
47,279	-	-	-	-	-	5,957	53,236
1,172	-	-	102	451	-	10	1,870
-	-	-	-	-	-	12,219	12,219
431	2	646	2,017	(3,480)	-	158	-
54,258	578	877	3,758	905	3,941	30,926	182,078
4,671	427	853	(1,836)	-	737	1,738	11,474

2,643	409	821	(2,282)	-	737	1,738	8,951
2,028	18	32	446	-	-	-	2,523
1,714	18	32	-	-	-	-	1,763
314	-	-	446	-	-	-	760

4,671	427	853	(1,836)	-	737	1,738	11,474

* Discontinued operations relates to Nordic with the exception of non-current assets and liabilities held for sale which are in respect of US Life. Further detail is provided in note H2.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2011 continued

C: Other key performance information

C1: Operating profit adjusting items

(a) Summary of adjusting items

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

Year ended 31 December 2011	Notes	£m
Year ended 31 December 2011	Notes	Emerging Markets	Retail Europe	Wealth Management	Total Long-Term Savings
Income/(expense)
Goodwill impairment and impact of acquisition accounting	C1(b)	(2)	(40)	(87)	(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)	(1)	(13)	(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	(41)	(100)	(63)
Tax on adjusting items	D1(d)	43	11	43	97
Non-controlling interest in adjusting items	F2(a)(iii)	5	-	-	5
Total adjusting items after tax and non-controlling interests		126	(30)	(57)	39

Year ended 31 December 2010*	Notes	£m
Year ended 31 December 2010*	Notes	Emerging Markets	Retail Europe	Wealth Management	Total Long-Term Savings
Income/(expense)
Goodwill impairment and impact of acquisition accounting	C1(b)	(2)	(41)	(74)	(117)
Loss on disposal of subsidiaries, associated undertakings and strategic investments	C1(c)	-	-	-	-
Short-term fluctuations in investment return	C1(d)	1	1	(71)	(69)
Investment return adjustment for Group equity and debt instruments held in life funds	C1(e)	(10)	-	-	(10)
Dividends declared to holders of perpetual preferred callable securities	C1(f)	-	-	-	-
US Asset Management equity plans and non-controlling interests	C1(g)	-	-	-	-
Credit-related fair value losses on Group debt instruments	C1(h)	-	-	-	-
Total adjusting items		(11)	(40)	(145)	(196)
Tax on adjusting items	D1(d)	10	15	5	30
Non-controlling interest in adjusting items	F2(a)(iii)	-	-	-	-
Total adjusting items after tax and non-controlling interests		(1)	(25)	(140)	(166)

* The year ended 31 December 2010 has been restated to reflect Nordic as non-core and discontinued.

Year ended 31 December 2011	Notes	£m
Year ended 31 December 2011	Notes	Long-Term Savings	Nedbank	M&F	USAM	Other	Total
Income/(expense)
Goodwill impairment and impact of acquisition accounting	C1(b)	(129)	-	-	(272)	-	(401)
Profit on acquisition/disposal of subsidiaries, associated undertakings and strategic investments	C1(c)	249	-	-	2	-	251
Short-term fluctuations in investment return	C1(d)	(112)	-	(28)	-	(31)	(171)
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)	-	-	-	-	44	44
US Asset Management equity plans and non-controlling interests	C1(g)	-	-	-	(4)	-	(4)
Credit-related fair value gains/(losses) on Group debt instruments	C1(h)	-	(4)	-	-	27	23
Total adjusting items		(63)	(4)	(28)	(274)	40	(329)
Tax on adjusting items	D1(d)	97	1	3	20	(13)	108
Non-controlling interest in adjusting items	F2(a)(iii)	5	19	1	(6)	-	19
Total adjusting items after tax and non-controlling interests		39	16	(24)	(260)	27	(202)

Year ended 31 December 2010*	Notes	£m
Year ended 31 December 2010*	Notes	Long-Term Savings	Nedbank	M&F	USAM	Other	Total
Income/(expense)
Goodwill impairment and impact of acquisition accounting	C1(b)	(117)	(6)	-	(2)	-	(125)
Loss on disposal of subsidiaries, associated undertakings and strategic investments	C1(c)	-	(1)	-	(21)	-	(22)
Short-term fluctuations in investment return	C1(d)	(69)	-	(7)	-	(6)	(82)
Investment return adjustment for Group equity and debt instruments held in life funds	C1(e)	(10)	-	-	-	-	(10)
Dividends declared to holders of perpetual preferred callable securities	C1(f)	-	-	-	-	44	44
US Asset Management equity plans and non-controlling interests	C1(g)	-	-	-	6	-	6
Credit-related fair value losses on Group debt instruments	C1(h)	-	(20)	-	-	(183)	(203)
Total adjusting items		(196)	(27)	(7)	(17)	(145)	(392)
Tax on adjusting items	D1(d)	30	7	(4)	6	(6)	33
Non-controlling interest in adjusting items	F2(a)(iii)	-	30	-	(9)	-	21
Total adjusting items after tax and non-controlling interests		(166)	10	(11)	(20)	(151)	(338)

* The year ended 31 December 2010 has been restated to reflect Nordic as non-core and discontinued.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2011 continued

C: Other key performance information continued

C1: Operating profit adjusting items continued

(b) Goodwill impairment and impact of acquisition accounting

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

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

Year ended 31 December 2011	£m
	Emerging Markets		Retail Europe	Wealth Management	Nedbank	USAM		Total
Amortisation of acquired PVIF	-		(20)	(70)	-	-		(90)
Amortisation of acquired deferred costs and revenue	-		(7)	20	-	-		13
Amortisation of other acquired intangible assets	(2)		(13)	(37)	-	(8)		(60)
Change in acquisition date provisions	-		-	-	-	-		-
Goodwill impairment	-		-	-	-	(264)		(264)
	(2)		(40)	(87)	-	(272)		(401)
Year ended 31 December 2010*	£m
	Emerging Markets	Retail Europe		Wealth Management	Nedbank		USAM		Total
Amortisation of acquired PVIF	-	(21)		(77)	-		-		(98)
Amortisation of acquired deferred costs and revenue	-	(7)		34	-		-		27
Amortisation of other acquired intangible assets	(1)	(13)		(35)	(6)		(2)		(57)
Change in acquisition date provisions	-	-		4	-		-		4
Goodwill impairment	(1)	-		-	-		-		(1)
	(2)	(41)		(74)	(6)		(2)		(125)

* The year ended 31 December 2010 has been restated to reflect Nordic as discontinued and non-core.

Profit/(loss) on the acquisition/disposal of subsidiaries, associated undertakings and strategic investments is analysed below:

		£m
	Year ended 31 December 2011	Year ended 31 December 2010
Emerging Markets	249	-
Long-Term Savings	249	-
Nedbank	-	(1)
USAM	2	(21)
Profit/(loss) on acquisition/disposal of subsidiaries, associated undertakings and strategic investments	251	(22)

In preparing the consolidated financial statements for the year ended 31 December 2010 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 will be able to extract benefits from its Zimbabwean business it has been consolidated for the first time together with operations in Kenya, Malawi, Swaziland and Nigeria. Further detail has been provided in note A2.

On 30 December 2011 USAM disposed of Lincluden Management Ltd, a subsidiary, at a profit of £2 million. On 27 August 2010 USAM disposed of Thomson, Horstmann & Bryant, a subsidiary, for a loss of £21 million.

(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 Retail Europe and 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	Year ended 31 December 2011	Year ended 31 December 2010
Emerging Markets	9.0	9.4
Retail Europe	2.1	2.5
Wealth Management	2.0	2.0
M&F	9.0	9.4

Analysis of short-term fluctuations in investment return

							£m
Year ended 31 December 2011	Emerging Markets	Retail Europe	Wealth Management*	Total Long-Term Savings	M&F	Other	Total
Actual shareholder investment return	14	1	65	80	26	6	112
Less: Long-term investment return	112	2	78	192	54	37	283
Short-term fluctuations in investment return	(98)	(1)	(13)	(112)	(28)	(31)	(171)

	£m
Year ended 31 December 2010**	Emerging Markets	Retail Europe	Wealth Management*	Total Long-Term Savings	M&F	Other	Total
Actual shareholder investment return	109	2	61	172	49	25	246
Less: Long-term investment return	108	1	132	241	56	31	328
Short-term fluctuations in investment return	1	1	(71)	(69)	(7)	(6)	(82)

* Wealth Management long-term investment return includes £65 million (2010: £121 million) in respect of income tax attributable to policyholder returns.

** The year ended 31 December 2010 has been restated to reflect Nordic as discontinued and non-core.

(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 2011 the investment return adjustment increased adjusted operating profit by £71 million (2010: increase of £10 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 £44 million in the year ended 31 December 2011 (2010: £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 2011 was £6 million (2010: loss £9 million).

The Group has issued put options to senior employees as part of some of its US affiliate incentive schemes. The impact of revaluing these instruments is recognised in accordance with IFRS, but excluded from adjusted operating profit. At 31 December 2011 these instruments were revalued, the impact of which was a profit of £10 million (2010: profit £3 million).

(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 gains of £27 million (2010: losses due to narrowing of £183 million) on Other operating segments and losses of £4 million (2010: losses of £20 million) in Nedbank being recorded in the Group's income statement for those instruments that are recorded at fair value.

In the directors' view, such movements are not reflective of the underlying performance of the Group and will reverse over time. They have therefore been excluded from adjusted operating profit.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2011 continued

C: Other key performance information continued

C2: Foreign currencies

The principal exchange rates used to translate the operating results, assets and liabilities of key foreign business segments to pounds sterling are:

	Year ended 31 December 2011		Year ended 31 December 2010
	Income statement (average rate)	Statement of financial position (closing rate)	Income statement (average rate)	Statement of financial position (closing rate)
Rand	11.6445	12.5643	11.3095	10.2796
US dollars	1.6037	1.5553	1.5459	1.5530
Swedish kronor	10.4144	10.6801	11.1364	10.4227
Euro	1.1519	1.1970	1.1650	1.1614

C3: Earnings and earnings per share

(a) Basic and diluted earnings per share

Basic earnings per share is calculated by dividing the profit for the financial year attributable to ordinary equity shareholders by the weighted average number of ordinary shares in issue during the year excluding own shares held in policyholder funds, ESOP trusts, Black Economic Empowerment trusts and other related undertakings.

	£m
	Year ended 31 December 2011	Year ended 31 December 2010 Restated
Profit for the financial year attributable to equity holders of the parent from continuing operations	469	446
Profit/(loss) for the financial year attributable to equity holders of the parent from discontinued operations	198	(728)
Profit/(loss) for the financial year attributable to equity holders of the parent	667	(282)
Dividends declared to holders of perpetual preferred callable securities	(32)	(32)
Profit/(loss) attributable to ordinary equity holders	635	(314)

Total dividends declared to holders of perpetual preferred callable securities of £44 million in 2011 (2010: £44 million) are stated net of tax credits of £12 million (2010: £12 million).

Millions
	Year ended 31 December 2011	Year ended 31 December 2010
Weighted average number of ordinary shares in issue	5,502	5,422
Shares held in charitable foundations	(6)	(7)
Shares held in ESOP trusts	(61)	(56)
Adjusted weighted average number of ordinary shares	5,435	5,359
Shares held in life funds	(201)	(205)
Shares held in Black Economic Empowerment trusts	(299)	(295)
Weighted average number of ordinary shares	4,935	4,859
Basic earnings per ordinary share (pence)	12.9	(6.5)

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.

		Year ended 31 December 2011	Year ended 31 December 2010
Profit/(loss) attributable to ordinary equity holders (£m)		635	(314)
Dilution effect on profit/(loss) relating to share options issued by subsidiaries (£m)		(8)	(8)
Diluted profit/(loss) attributable to ordinary equity holders (£m)		627	(322)
Weighted average number of ordinary shares (millions)		4,935	4,859
Adjustments for share options held by ESOP trusts (millions)		133	137
Adjustments for shares held in Black Economic Empowerment trusts (millions)		299	295
	5,367		5,291
Diluted earnings per ordinary share (pence)		11.7	(6.1)

(b) Adjusted operating earnings per ordinary share

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

£m
	Year ended 31 December 2011	Year ended 31 December 2010 Restated
Profit/(loss) for the financial year attributable to equity holders of the parent	667	(282)
Adjusting items	329	392
Tax on adjusting items	(108)	(33)
Non-core operations	184	(19)
(Profit)/loss from discontinued operations	(198)	728
Non-controlling interest on adjusting items	(19)	(21)
Adjusted operating profit after tax attributable to ordinary equity holders	855	765
Adjusted weighted average number of ordinary shares (millions)	5,435	5,359
Adjusted operating earnings per ordinary share (pence)	15.7	14.3

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
	Year ended 31 December 2011		Year ended 31 December 2010
	Gross	Net	Gross	Net
Profit/(loss) for the financial year attributable to equity holders of the parent	667	667	(282)	(282)
Dividends declared to holders of perpetual preferred callable securities	(32)	(32)	(32)	(32)
Profit/(loss) attributable to ordinary equity holders	635	635	(314)	(314)
Adjustments:
Impairments of goodwill and intangible assets	264	264	20	20
Impairment of discontinued operations	-	-	827	827
(Profit)/loss on acquisition/disposal of subsidiaries, associated undertakings and strategic investments	(222)	(228)	22	17
Realised gains (including impairments) on available-for-sale financial assets	(144)	(144)	(12)	(12)
Headline earnings	533	527	543	538
Weighted average number of ordinary shares	4,935	4,935	4,859	4,859
Diluted weighted average number of ordinary shares	5,367	5,367	5,291	5,291
Headline earnings per share (pence)	10.8	10.7	11.2	11.1
Diluted headline earnings per share (pence)	9.8	9.7	10.1	10.0

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2011 continued

C: Other key performance information continued

C4: Dividends

Dividends paid were as follows:

		£m
	Year ended 31 December 2011	Year ended 31 December 2010
2009 Final dividend paid - 1.5p per 10p share	-	77
2010 Interim dividend paid - 1.1p per 10p share	-	54
2010 Final dividend paid - 2.9p per 10p share	145	-
2011 Interim dividend paid - 1.5p per 10p share	76	-
Dividends to ordinary equity holders	221	131
Dividends declared to holders of perpetual preferred callable securities	44	44
Dividend payments for the year	265	175

Dividends paid to ordinary equity holders, as above, are calculated using the number of shares in issue at the record date, less treasury shares held in ESOP trusts, life funds of Group companies, Black Economic Empowerment trusts and related undertakings.

As a consequence of the exchange control arrangements in place in certain African territories, dividends to ordinary equity holders on the branch registers of those countries (or, in the case of Namibia, the Namibian section of the principal register) are settled through Dividend Access Trusts established for that purpose.

In March and November 2011, £22 million and £22 million respectively were declared and paid to holders of perpetual preferred callable securities (March 2010: £22 million and November 2010: £22 million).

A final dividend of 3.5 pence per 10p share has been recommended by the directors. Subject to shareholders' approval, the dividend will be paid on 7 June 2012 to shareholders on the register at the close of business on 20 April 2012. The dividend will absorb an estimated £175 million of shareholders' funds. The Company is not planning to offer a scrip dividend alternative.

In addition the Company announced on 3 February 2012 that as part of the proposed sale of the Nordic business unit a special dividend of 18.0 pence per 10p share has been recommended by the directors. The special dividend will be paid on 7 June 2012 to shareholders on the register at the close of business on 20 April 2012 subject to both shareholder approval of the Nordic disposal and the related share consolidation and completion of the Nordic disposal. The special dividend will absorb an estimated £1.0 billion of shareholders' funds. Further details of the disposal of the Nordic business unit have been provided in notes A2, H1 and H2.

D: Other income statement notes

D1: Income tax expense

(a) Analysis of total income tax expense

	£m
	Year ended 31 December 2011	Year ended 31 December 2010 Restated
Current tax
United Kingdom tax	22	23
Overseas tax
South Africa	390	346
United States	(2)	(4)
Europe	20	10
Secondary Tax on Companies (STC)	14	4
Prior year adjustments	(7)	(1)
Total current tax	437	378
Deferred tax
Origination and reversal of temporary differences	(204)	10
Changes in tax rates/bases	(8)	(4)
Recognition of deferred tax assets	-	7
Total deferred tax	(212)	13
Total income tax expense	225	391

(b) Reconciliation of total income tax expense

		£m
	Year ended 31 December 2011	Year ended 31 December 2010 Restated
Profit before tax	994	1,095
Tax at standard rate of 26.5% (2010: 28%)	263	307
Different tax rate or basis on overseas operations	57	(19)
Untaxed and low taxed income	(166)	(146)
Disallowable expenses	93	90
Net movement on deferred tax assets not recognised	5	85
Effect on deferred tax of changes in tax rates	(8)	(7)
STC	19	(3)
Income tax attributable to policyholder returns	(28)	96
Other	(10)	(12)
Total income tax expense	225	391

	£m
	Year ended 31 December 2011	Year ended 31 December 2010 Restated
Preferred perpetual callable securities	(12)	(12)
Other	-	(1)
Income tax credit - continuing operations	(12)	(13)
Fair value gains	2	181
Shadow accounting	(4)	(114)
Income tax (credit)/expense - discontinued operations	(2)	67
Income tax (credit)/expense relating to components of other comprehensive income	(14)	54

(d) Income tax on adjusted operating profit

	£m
	Year ended 31 December 2011	Year ended 31 December 2010 Restated
Income tax expense	225	391
Tax on adjusting items
Impact of acquisition accounting	35	31
Profit on disposal of subsidiaries, associated undertakings and strategic investments	6	5
Short-term fluctuations in investment return	75	4
Income tax attributable to policyholders returns	9	(101)
Tax on dividends declared to holders of perpetual preferred callable securities recognised in equity	(12)	(12)
Fair value gains and losses on Group debt instruments	2	5
US Asset Management equity plans	2	-
Tax on non-core operations	(1)	4
Income tax on adjusted operating profit	341	327

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2011 continued

E: Financial assets and liabilities

E1: Borrowed funds

							£m
	Notes	Group excluding Nedbank	Nedbank	At 31 December 2011 Group	Group excluding Nedbank	Nedbank	At 31 December 2010 Group
Senior debt securities and term loans		507	1,355	1,862	550	1,186	1,736
Floating rate notes	E1(a)	-	844	844	32	720	752
Fixed rate notes	E1(b)	507	511	1,018	516	466	982
Revolving credit facility	E1(c)	-	-	-	-	-	-
Term loan and other loans		-	-	-	2	-	2
Mortgage backed securities	E1(d)	-	77	77	-	112	112
Subordinated debt securities (net of Group holdings)	E1(e)	876	841	1,717	1,198	1,158	2,356
Borrowed funds		1,383	2,273	3,656	1,748	2,456	4,204

Other issues treated as equity for accounting purposes
US$750 million cumulative preference securities	F2(b) (ii)	458			458
€500 million perpetual preferred callable securities		338			338
£350 million perpetual preferred callable securities		350			350

Total: Book value		2,529			2,894
Nominal value of the above		2,666			3,045

The table below is a maturity analysis of liability cash flows based on contractual maturity dates for borrowed funds. Maturity analysis is undiscounted and based on year end exchange rates.

						£m
	Group excluding Nedbank	Nedbank	At 31 December 2011 Group	Group excluding Nedbank	Nedbank	At 31 December 2010 Group
Less than 1 year	272	512	784	498	323	821
Greater than 1 year and less than 5 years	898	1,936	2,834	921	2,164	3,085
Greater than 5 years	998	556	1,554	880	722	1,602
Total	2,168	3,004	5,172	2,299	3,209	5,508

Senior notes

(a) Floating rate notes

			£m
	At 31 December 2011	At 31 December 2010	Maturity date
Nedbank
R1,690 million unsecured senior debt at 3 month JIBAR + 1.5%	119	166	September 2012
R1,044 million unsecured senior debt at 3 month JIBAR + 2.20%	84	102	September 2015
R1,750 million unsecured senior debt inflation linked (3.9% real yield)	158	180	March 2013
R98 million unsecured senior debt inflation linked (3.8% real yield)	9	10	March 2013
R1,552 million unsecured senior debt at 3 month JIBAR + 1.48%	125	153	April 2013
R1,027 million unsecured senior debt at 3 month JIBAR + 1.75%	83	101	April 2015
R80 million unsecured senior debt JIBAR + 2.15%	6	8	April 2020
R837 million unsecured senior debt at 3 month JIBAR + 1.05%	79	-	March 2014
R677 million unsecured senior debt at 3 month JIBAR + 1.25%	54	-	March 2016
R500 million unsecured senior debt at 3 month JIBAR + 1%	40	-	April 2014
R1,075 million unsecured senior debt at 3 month JIBAR + 0.94%	87	-	October 2014
	844	720
Group excluding Nedbank
US $50 million at 3 month LIBOR plus 0.50%	-	32	Repaid
	-	32
Total floating rate notes	844	752

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

(b) Fixed rate notes

			£m
	At 31 December 2011	At 31 December 2010	Maturity date
Nedbank
R130 million unsecured senior debt at zero coupon	14	16	October 2024
R3,244 million unsecured senior debt at 10.55%	265	326	September 2015
R762 million unsecured senior debt at 11.39%	63	77	September 2019
R478 million unsecured senior debt at R157 + 1.75%	39	47	April 2015
R450 million unsecured senior debt at R206 + 1.28%	37	-	March 2014
R1,137 million unsecured senior debt at R157 + 1.5%	93	-	March 2016
	511	466
Group excluding Nedbank
£500 million euro bond at 7.125%	496	496	October 2016
US $16.5 million secured senior debt at 5.23%	11	11	August 2014
R100 million floating rate note repayable February 2011 (3 months ZAR-JIBAR-SAFEX plus 4.5%)	-	9	Repaid
	507	516
Total fixed rate notes	1,018	982

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

In April 2011 the Group signed a new £1,200 million five-year multi-currency revolving credit facility, replacing the £1,232 million facility due to mature in September 2012.

At 31 December 2011 £160 million (2010: £499 million) of this facility was utilised, £nil (2010: £nil) in the form of drawn debt and £160 million (2010: £499 million) in the form of irrevocable letters of credit.

The Group had a SEK1,500 million revolving credit facility with a maturity date of 1 July 2011 which was subsequently extended on similar terms to 1 July 2012 and revised to SEK1,000 million. At 31 December 2011 this facility was undrawn (31 December 2010: undrawn). On 22 February 2012 the facility was terminated.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2011 continued

E: Financial assets and liabilities continued

E1: Borrowed funds continued

(d) Mortgage backed securities - Nedbank

				£m
	At 31 December 2011	At 31 December 2010	Tier	Maturity date
Nedbank
R291 million notes (class A1) at11.467%	-	4	Tier 2	Repaid
R1.4 billion notes (class A2A) at 11.817%	67	96	Tier 2	November 2039
R98 million notes (class B note) at 12.067%	6	7	Tier 2	November 2039
R76 million notes (class C note) at 13.317%	4	5	Tier 2	November 2039
Total mortgage backed securities	77	112

(e) Subordinated debt securities (net of Group holdings)

					£m
	At 31 December 2011	At 31 December 2010	Tier	First call date	Maturity date
Nedbank
R1.5 billion (7.85%)	-	148	Tier 2	-	Repaid
R1.8 billion (9.84%)	153	186	Tier 2	September 2013	September 2018
R650 million (9.03%)	54	67	Tier 2	February 2012	February 2017
R1.7 billion (8.9%)	144	171	Tier 2	February 2014	February 2019
R2.0 billion (3 month JIBAR plus 0.47%)	161	198	Tier 2	July 2017	July 2022
R500 million (3 month JIBAR plus 0.45%)	40	49	Tier 2	August 2012	August 2017
R1.0 billion (10.54%)	87	105	Tier 2	September 2015	September 2020
R500 million (3 month JIBAR plus 0.70%)	40	49	Tier 2	December 2012	December 2017
R120 million (10.38%)	10	12	Tier 2	December 2012	December 2017
R487 million (15.05%)	42	51	Tier 2	November 2018	November 2018
R1,265 million (JIBAR plus 4.75%)	102	125	Non-core Tier 1	November 2018	November 2018
R300 million (JIBAR + 2.5%)	12	15	Non-core Tier 1	December 2013	December 2013
US$100 million (3 month USD LIBOR)	65	65	Tier 2 Secondary	March 2017	March 2022
	910	1,241
Less: banking subordinated debt securities held by other Group companies	(69)	(83)
Banking subordinated debt securities (net of Group holdings)	841	1,158
Group excluding Nedbank
R3.0 billion (8.9% to October 2015, 3 month JIBAR plus 1.59% thereafter)	239	293	Lower Tier 2	October 2015	October 2020
£300 million (5.0%)	-	296	Lower Tier 2	January 2011	Repaid
€200 million (2010: €750 million) (4.5% to January 2012 and 6 month EURIBOR plus 0.96% thereafter)*	166	609	Lower Tier 2	January 2012	January 2017
£500 million 8.0%**	471	-	Lower Tier 2	-	June 2021
	876	1,198
Total subordinated debt securities	1,717	2,356

* The principal and coupon on the bond were swapped equally into Sterling and US Dollars with coupons of 6 month LIBOR plus 0.34% and 6 month US LIBOR plus 0.31% respectively. During the year a €550 million partial repayment, together with settlements of associated currency swaps, was made. On 18 January 2012 the remaining €200 million was repaid.

** The principal and coupon on the bonds was swapped into floating rate of quarterly STIBOR plus 5.46%. The currency swaps have a five year mandatory break clause.

F: Other statement of financial position notes

F1: Provisions

	£m
Year ended 31 December 2011	Client compensation	Liability for long service leave	Restructuring	Provision for donations	Other	Total
Balance at beginning of the year	39	57	34	89	92	311
Unused amounts reversed	-	(1)	-	-	(14)	(15)
Charge to income statement	-	33	11	-	14	58
Utilised during the year	(3)	(30)	(7)	-	(3)	(43)
Foreign exchange and other movements	7	(8)	(1)	(11)	(18)	(31)
Transfer to non-current assets held for sale	-	(4)	-	-	(9)	(13)
	43	47	37	78	62	267
Post employment benefits					2	2
Balance at end of the year	43	47	37	78	64	269

	£m
Year ended 31 December 2010	Client compensation	Liability for long service leave	Restructuring	Provision for donations	Other	Total
Balance at beginning of the year	30	49	42	84	90	295
Unused amounts reversed	-	-	(10)	-	(19)	(29)
Charge to income statement	7	28	9	-	25	69
Utilised during the year	(9)	(27)	(4)	-	(5)	(45)
Foreign exchange and other movements	11	7	(3)	5	1	21
	39	57	34	89	92	311
Post employment benefits					(51)	(51)
Balance at end of the year	39	57	34	89	41	260

Provisions in relation to client compensation were £43 million (2010: £39 million), primarily relating to possible mis-selling of guarantee contracts in Wealth Management. £1 million (2010: £1 million) is estimated to be payable after more than one year.

The liability for long service leave of £47 million (2010: £57 million) relates to provision for staff payments for long serving employees, all of which is estimated to be payable in less than one year.

Provisions in relation to restructuring were £37 million (2010: £34 million), primarily in respect of consolidation and related office relocation for elements of Wealth Management. £21 million (2010: £30 million) is estimated to be payable after more than one year.

The provision for donations is held by Long-Term Savings in respect of South African operations, relating to the payment of charitable donations in future periods to which the Group is committed to use these funds. The funds were made available on the closure of the Group's unclaimed shares trusts which were set up as part of the demutualisation in 1999 and closed in 2006, with £78 million (2010: £70 million) estimated to be payable after more than one year.

Other provisions include provisions for long-term staff benefits and legal fees.

Where material, provisions are discounted at discount rates specific to the risks inherent in the liability. The timing and final amounts of payments in respect of some of the provisions, particularly those in respect of litigation claims and similar actions against the Group, are uncertain and could result in adjustments to the amounts recorded. Of the total provisions recorded above, £129 million (2010: £163 million) is estimated to be payable after more than one year.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2011 continued

F: Other statement of financial position notes continued

F2: Non-controlling interests

(a) Income statement

(i) Ordinary shares

The non-controlling interests share of profit for the financial year has been calculated on the basis of the Group's effective ownership of the subsidiaries in which it does not own 100% of the ordinary equity. The principal subsidiaries where a non-controlling interest exists are the Group's banking business in South Africa and, prior to the acquisition of the non-controlling interest in Mutual & Federal in February 2010 (see F2(b)), the general insurance business in South Africa. For the year ended 31 December 2011 the non-controlling interests attributable to ordinary shares was £238 million (2010: £196 million).

(ii) Preferred securities

		£m
	Year ended 31 December 2011		Year ended 31 December 2010
R2,000 million non-cumulative preference shares		14	14
R773 million non-cumulative preference shares		5	5
R355 million non-cumulative preference shares		2	2
US$750 million cumulative preferred securities		37	38
R363 million non-cumulative preference shares		3	3
R92 million non-cumulative preference shares		1	-
Non-controlling interests - preferred securities		62	62

(iii) Non-controlling interests - adjusted operating profit

The following table reconciles non-controlling interests' share of profit for the financial year to non-controlling interests' share of adjusted operating profit:

	£m
Reconciliation of non-controlling interests' share of profit for the financial year	Year ended 31 December 2011	Year ended 31 December 2010
The non-controlling interests share is analysed as follows:
Non-controlling interests - ordinary shares	238	196
Goodwill impairment and impact of acquisition accounting	-	2
Short-term fluctuations in investment return	1	-
Income attributable to Black Economic Empowerment trusts of listed subsidiaries	22	22
Fair value gains on Group debt instruments	1	6
Income attributable to US Asset Management non-controlling interests	(5)	(9)
Non-controlling interests share of adjusted operating profit	257	217

The Group uses revised weighted average effective ownership interests when calculating the non-controllable interest applicable to the adjusted operating profit of its South Africa banking and, prior to the acquisition of the non-controlling interest in February 2010, general insurance businesses. This reflects the legal ownership of these businesses following the implementation for Black Economic Empowerment (BEE) schemes in 2005. In accordance with IFRS accounting rules the shares issued for BEE purposes are deemed to be, in substance, options. Therefore the effective ownership interest of the minorities reflected in arriving at profit after tax in the consolidated income statement is lower than that applied in arriving at adjusted operating profit after tax. In 2011 the increase in adjusted operating profit attributable to non-controlling interests as a result of this was £22 million (2010: £22 million).

F2: Non-controlling interests

(b) Statement of financial position

(i) Ordinary shares

Reconciliation of movements in non-controlling interests	£m
Reconciliation of movements in non-controlling interests	At 31 December 2011	At 31 December 2010
Balance at beginning of the year	1,763	1,537
Non-controlling interests' share of profit	238	196
Non-controlling interests' share of dividends paid	(100)	(88)
Net disposal/(acquisition) of interests	61	(116)
Foreign exchange and other movements	(310)	234
Balance at end of the year	1,652	1,763

Acquisition of non-controlling interest in Mutual & Federal

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

Other acquisitions

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

The purchase consideration was approximately £162 million (£155 million plus a Johannesburg Interbank Agreed Rate (JIBAR) factor applied up to 5 February 2010) which was settled in four instalments out of existing cash resources of Nedbank Limited. The total amount, which included interest at the three month JIBAR, amounted to £165 million.

(ii) Preferred securities

	£m
	At 31 December 2011	At 31 December 2010
R2,000 million non-cumulative preference shares¹	140	140
R773 million non-cumulative preference shares²	71	71
US$750 million cumulative preferred securities³	458	458
R355 million non-cumulative preference shares⁴	25	25
R363 million non-cumulative preference shares⁵	29	29
R92 million non-cumulative preference shares⁶	8	50
	731	773
Unamortised issue costs	(13)	(13)
Total in issue at 31 December	718	760

Preferred securities are held at historic value of consideration received less unamortised issue costs.

1. 200 million R10 preference shares issued by Nedbank Limited (Nedbank), the Group's banking subsidiary. These shares are non-redeemable and non-cumulative and pay a cash dividend equivalent to 75% of the prime overdraft interest rate of Nedbank. Preference shareholders are only entitled to vote during periods when a dividend or any part of it remains unpaid after the due date for payment or when resolutions are proposed that directly affect any rights attaching to the shares or the rights of the holders. Preference shareholders will be entitled to receive their dividends in priority to any payment of dividends made in respect of any other class of Nedbank's shares.

2. 77.3 million R10 preference shares issued at R10.68 per share by Nedbank on the same terms as the securities described in (1) above.

3. US$750 million guaranteed cumulative perpetual preference securities issued on 19 May 2003 by Old Mutual Capital Funding L.P., a subsidiary of the Group. Subject to certain limitations, holders of these securities are entitled to receive preferential cash distributions at a fixed rate of 8.0% per annum payable in arrears on a quarterly basis. The Group may defer payment of distributions at its sole discretion, but such an act may restrict Old Mutual plc from paying dividends on its ordinary shares for a period of 12 months. Arrears of distributions are payable quarterly cumulatively only on redemption of the securities or at the Group's option. The securities are perpetual, but may be redeemed at the discretion of the Group from 22 December 2008.

4. 35 million R10 preference shares issued in 16 April 2007 at R10.27 per share by Nedbank on the same terms as the securities described in (1) above.

5. 36.3 million R10 preference shares issued by Nedbank in seven instalments between September 2009 and December 2009 on the same terms as the securities described in (1) above.

6. 9.2 million R10 preference shares issued by Nedbank on 11 March 2010 on the same terms as the securities described in (1) above.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2011 continued

G: Other notes

G1: Contingent liabilities

£m
	At 31 December 2011	At 31 December 2010
Guarantees and assets pledged as collateral security	2,251	2,883
Irrevocable letters of credit	193	207
Secured lending	515	775
Other contingent liabilities	72	55

The Group has pledged debt securities amounting to £1,196 million (2010: £1,379 million) as collateral for deposits received under re-purchase agreements. These amounts represent assets that have been transferred but do not qualify for derecognition under IAS 39. These transactions are entered into under terms and conditions that are standard industry practice to securities borrowing and lending activities.

Contingent liabilities - tax

The Revenue authorities in the principle jurisdictions in which the Group operates (South Africa and the United Kingdom) are reviewing certain historic transactions undertaken and tax law interpretations made by the Group. More generally the Group is also experiencing increased review by fiscal authorities of routine matters. Whilst provisions are made for liabilities which might reasonably be expected to materialise, and whether or not legal proceedings will be required to resolve them, the outcome is uncertain at this stage.

Nedbank structured financing

Historically the Group's South African banking business entered into structured finance transactions with third parties using the tax base of these companies. Pursuant to the terms of the majority of these transactions, the underlying third-party has contractually agreed to accept the risk of any tax being imposed by the South African Revenue Service (SARS), although the obligation to pay in the first instance rests with the Group. It is only in limited cases where, for example, the credit quality of a client becomes doubtful, or where the client has specifically contracted out of the re-pricing of additional taxes, that the recovery from a client could be less than the liability that could arise on assessment, in which case provisions are made. SARS has examined the tax aspects of some of these types of structures and SARS could assess these structures in a manner different to that initially envisaged by the contracting parties. As a result the Group could be obliged to pay additional amounts to SARS and recover these from clients under the applicable contractual arrangements.

Nedbank litigation

There are a number of legal or potential claims against Nedbank and its subsidiary companies, the outcome of which cannot at present be foreseen. The largest of these potential actions is a claim in the High Court for R1.3 billion against Nedbank by certain shareholders in Pinnacle Point Group Limited, alleging that Nedbank had a legal duty of care to them arising from a share swap transaction.

During 2011 further actions were instituted against Nedbank by other stakeholders relating to this same issue. Nedbank and its legal advisers remain of the opinion that the claims are extremely ambitious and that the claimants will have great difficulty succeeding.

Nedbank Securitisations

The Group through Nedbank uses securitisation primarily as a funding diversification tool and to add flexibility in mitigating structural liquidity risk. Nedbank currently has two active traditional securitisation transactions:

n Synthesis Funding Limited (Synthesis), an asset- backed commercial paper (ABCP) programme launched in 2004; and

n GreenHouse Funding (Pty) Limited, Series 1 (GreenHouse), a residential mortgage-backed securitisation programme launched in December 2007.

During October 2011 Octane ABS 1(Pty) Limited (Octane), a securitisation of motor vehicle loans launched in 2007, exercised its clean up call option. The remaining portfolio of securitised motor vehicle loans were acquired by Nedbank at fair value and the proceeds used by Octane to fully redeem all outstanding notes.

Synthesis primarily invests in long-term rated bonds and offers capital market funding to South African corporates. These assets are funded through the issuance of short-dated investment-grade commercial paper to institutional investors. All the commercial paper issued by Synthesis is assigned the highest short-term RSA local-currency credit rating by Fitch, and is listed on JSE Limited.

Under GreenHouse Series 1, R2 billion of residential mortgages originated by Nedbank were securitised. The commercial paper issued by GreenHouse has been assigned credit ratings by both Fitch and Moody's and is listed on JSE Limited. Fitch placed the GreenHouse commercial paper on rating watch negative as a result of changes it is effecting to its rating criteria for South African residential mortgage backed securities transactions. This process is ongoing. As the GreenHouse transaction was undertaken for funding and liquidity purposes, only the senior notes were placed with third party investors and the junior notes and subordinated loans to the special purpose entity were retained by Nedbank. The assets transferred to the special purpose entity have continued to be recognised as financial assets. GreenHouse continues to direct all capital repayments it receives on the residential mortgage portfolio to noteholders as a result of the stop purchase activated by a breach of the arrear trigger in 2010. The GreenHouse commercial paper is scheduled to be redeemed in November 2012.

G1: Contingent liabilities continued

Nedbank Securitisations continued

The following table shows the carrying amount of securitised assets, stated at the amount of the Group's continuing involvement where appropriate, together with the associated liabilities, for each category of asset in the statement of financial position:*

				£m
	Carrying amount of assets		Associated liabilities
	At 31 December 2011	At 31 December 2010	At 31 December 2011	At 31 December 2010
Loans and advances to customers
Residential mortgage loans	116	165	132	171
Motor vehicle financing	-	59	-	78

Other financial assets
Corporate and bank paper	116	155	-	-
Other securities	199	327	-	-
Commercial paper	-	-	320	484
Total	431	706	452	733

This table presents the gross balances within the securitisation schemes and does not reflect any eliminations of intercompany and cash balances held by the various securitisation vehicles.

* The value of any derivative instruments taken out to hedge any financial asset or liability is adjusted against such instrument in this disclosure.

G2: Events after the reporting date

On 18 January 2012 the Group redeemed the remaining €200 million of the €750 million Lower Tier 2 Bond which had not been repaid during 2011. On 3 February 2012, the Group issued a circular in respect of the proposed disposal of the Nordic business unit. Additional details have been provided in notes A2, H1 and H2. On 7 February 2012 the Group announced that it had sold Dwight Asset Management subject to certain conditions. On 22 February 2012 the Group announced that a preliminary non-binding offer had been accepted by Ecobank Transnational Incorporated for the acquisition of Oceanic Life. In March 2012 Bermuda enhanced its hedging strategy by implementing an option based hedging arrangement. On 8 March 2012 final regulatory approval was received in respect of the disposal of the Nordic business unit.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2011 continued

H: Discontinued operations and held for sale operations

H1: 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. At 31 December 2011 the Group had entered into an agreement to dispose of the controlling interest in Nordic to Skandia Liv, which remains subject to shareholder approval for the sale. The disposal of US Life was completed on 7 April 2011 following regulatory approval, and has been reported up until that date.

Analysis of the results is given below.

(a) Income statement from discontinued operations

						£m
	Nordic		US Life		Total
For the year ended 31 December	2011	2010	2011	2010	2011	2010
Revenue	(421)	1,779	342	1,608	(79)	3,387
Expenses	541	(1,729)	(330)	(1,557)	211	(3,286)
Profit before tax from discontinued operations	120	50	12	51	132	101
Impairment on remeasurement to fair value less costs to sell	-	-	-	(827)	-	(827)
Loss on disposal	-	-	(29)	-	(29)	-
Realised available-for-sale investment gains and exchange differences on disposal	-	-	133	-	133	-
Profit/(loss) before tax	120	50	116	(776)	236	(726)
Income tax (charge)/credit	(52)	(65)	14	63	(38)	(2)
Profit/(loss) from discontinued operations after tax	68	(15)	130	(713)	198	(728)

(b) Statement of comprehensive income from discontinued operations

						£m
	Nordic		US Life		Total
For the year ended 31 December	2011	2010	2011	2010	2011	2010
Profit/(loss) after tax for the financial year	68	(15)	130	(713)	198	(728)
Other comprehensive income for the financial year
Fair value gains/(losses)
Available-for-sale investments
Fair value gains/(losses)	3	(5)	48	530	51	525
Recycled to the income statement	-	-	(5)	(12)	(5)	(12)
Realised on disposal	-	-	(157)	-	(157)	-
Exchange differences realised on disposal	-	-	24	-	24	-
Shadow accounting	-	-	(43)	(334)	(43)	(334)
Currency translation differences/exchange differences on translating foreign operations	(43)	157	-	29	(43)	186
Other movements	10	14	-	(34)	10	(20)
Aggregate tax on transfers from equity	(1)	-	3	(67)	2	(67)
Total other comprehensive (loss)/income for the financial year	(31)	166	(130)	112	(161)	278
Total comprehensive income/(loss) for the financial year	37	151	-	(601)	37	(450)
Attributable to
Equity holders of the parent	37	151	-	(601)	37	(450)

						£m
	Nordic		US Life		Total
For the year ended 31 December	2011	2010	2011	2010	2011	2010
Operating activities	1,609	144	2	(167)	1,611	(23)
Investing activities	(1,411)	(404)	146	63	(1,265)	(341)
Net cash flows from discontinuing operations	198	(260)	148	(104)	346	(364)

H2: Disposal groups held for sale

The assets and liabilities of the Group's Nordic business, Skandia Insurance Company Ltd (publ) (Nordic), comprising Old Mutual's long-term savings and banking operations in Sweden, Denmark and Norway operating under the Skandia brand, are shown as held for sale in these financial statements. The Group has entered into an agreement to dispose of the controlling interest in Nordic to Skandia Liv which remains subject to shareholder approval for the sale. On 8 March 2012 final regulatory approval was received. Further detail has been provided in note A2.

In addition to the above the Group has agreed to sell the Finnish branch of Skandia Life Assurance Company Ltd, a part of Wealth Management, to OP-Pohjola osk and as a result of this the assets and liabilities of the Finnish branch have been classified as held for sale.

(a) Statement of financial position

Assets directly associated with disposal groups held for sale

			£m
At 31 December 2011	Nordic	Finnish branch	Total
Assets
Goodwill and other intangible assets	901	72	973
Property, plant and equipment	10	-	10
Deferred tax assets	87	-	87
Investments in associated undertakings and joint ventures	5	-	5
Deferred acquisition costs	75	45	120
Reinsurers' share of life assurance policyholder liabilities	17	-	17
Loans and advances	5,194	-	5,194
Investments and securities	14,127	1,034	15,161
Current tax receivable	3	-	3
Trade, other receivables and other assets	240	1	241
Derivative financial instruments - assets	10	-	10
Cash and cash equivalents	291	4	295
Total assets	20,960	1,156	22,116
Liabilities
Life assurance policyholder liabilities	10,889	1,034	11,923
Third-party interests in consolidated funds	1,383	-	1,383
Borrowed funds	2	-	2
Provisions	(54)	-	(54)
Deferred revenue	1	55	56
Deferred tax liabilities	103	26	129
Current tax payable	9	-	9
Trade, other payables and other liabilities	388	4	392
Amounts owed to bank depositors	6,552	-	6,552
Derivative financial instruments - liabilities	16	-	16
Total liabilities	19,289	1,119	20,408

Of the financial assets and liabilities included within disposal groups held for sale, namely the Nordic business and the Finnish branch, all are level one or level two in respect of the fair value hierarchy. In addition to the disposal groups held for sale, the Group had additional non-current assets held for sale of £22 million (2010: £7 million) and non-current liabilities of £9 million (2010: £nil).

Included within investments and securities is £185 million of short term cash balances.

(b) Equity attributable to equity holders of the parent directly associated with disposal groups held for sale

			£m
At 31 December 2011	Nordic	Finnish branch	Total
Retained earnings	1,667	37	1,704
Available-for-sale investment reserve	2	-	2
Share-based payment reserve	2	-	2
	1,671	37	1,708

At 31 December 2010 the assets and liabilities of the Group's United States life business, US Life, were shown as held for sale in the financial statements, being £12,384 million and £12,219 million respectively. The disposal of US Life was completed on 7 April 2011 following US regulatory approval. At the time of disposal the assets directly associated with US Life consisted of £10,518 million of investments and securities and £1,412 million of other assets, with liabilities at this time being £11,494 million of long-term policyholder liabilities and £235 million of other liabilities. Included within investments and liabilities was £565 million of short term cash balances.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2011 continued

H: Discontinued operations and held for sale operations continued

H3: 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:

n Harbinger intends to establish certain internal reinsurance arrangements which are subject to regulatory approval. In the event that regulatory approval of the full amount of reinsurance is not forthcoming there is potential for a reduction in the purchase price, up to a maximum of US$50 million.

n 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 $255 million letter of credit to back these redundant reserves. In the event that this letter of credit is drawn upon Harbinger are obligated to fully reimburse Old Mutual plc.

This information is provided by RNS

The company news service from the London Stock Exchange

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