Interim 2013 Results - Part 2 IFRS

RNS Number : 1118L

Old Mutual PLC

07 August 2013

 



Index to the financial information For the six months ended 30 June 2013
Statement of directors' responsibilities in respect of the interim financial statements for the six months ended 30 June 2013		43
Interim review report to the members of Old Mutual plc for the six months ended 30 June 2013		44
Consolidated income statement		46
Consolidated statement of comprehensive income		47
Reconciliation of adjusted operating profit to profit after tax		48
Consolidated statement of financial position		50
Consolidated statement of cash flows		51
Consolidated statement of changes in equity		52
Notes to the consolidated financial statements
	A: Significant accounting policies	58
	B: Segment information	62
	C: Other key performance information	76
	D: Other income statement notes	81
	E: Financial assets and liabilities	83
	F: Other notes	91
	G: Discontinued operations and disposal groups held for sale	91
Adjusted Group MCEV by line of business		92
Adjusted operating group MCEV statement of earnings		93
Significant corporate activities and restatement of comparative information		94
Adjusted operating Group MCEV earnings per share		95
Group market consistent embedded value statement of earnings		96
Notes to the MCEV basis supplementary information		98
	A: MCEV policies	98
	B: Segment information	103
	C: Other key performance information	112
	D: Sensitivity tests	116

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

For the six months ended 30 June 2013

We confirm that to the best of our knowledge:

§  The Group interim financial statements contained herein are presented in accordance with the requirements of IAS 34 'Interim Financial Reporting' and are in compliance with International Financial Reporting Standards (IFRS) as adopted by the EU.

§  The MCEV supplementary information has been prepared in accordance with the Market Consistent Embedded Value Principles (Copyright © Stichting CFO Forum Foundation 2008) issued in June 2008 and updated in October 2009 by the CFO Forum ('the Principles') and the basis of preparation as set out on page 98.

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

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

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

Julian Roberts                                                                          Philip Broadley
Group Chief Executive                                                                Group Finance Director
7 August 2013                                                                            7 August 2013

Interim review report to the members of Old Mutual plc

For the six months ended 30 June 2013

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the interim financial report for the six months ended 30 June 2013 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows and the related notes, set out on pages 58 to 91, which include the Reconciliation of Adjusted Operating Profit to Profit after Tax.

We have also been engaged by the Company to review the Market Consistent Embedded Value (MCEV) basis supplementary information (the supplementary information), set out on pages 92 to 116, for the six months ended 30 June 2013.

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

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

Directors' responsibilities

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

As disclosed in note A, the Group interim financial statements contained herein are presented in accordance with the requirements of IAS 34 'Interim Financial Reporting' and are in compliance with IFRS as adopted by the EU.

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

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements and the supplementary information in the interim financial report, based on our review.

Scope of review

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

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim financial report for the six months ended 30 June 2013 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.

Based on our review, nothing has come to our attention that causes us to believe that the supplementary information for the six months ended 30 June 2013 is not prepared, in all material respects, in accordance with the MCEV principles, using the methodology and assumptions as detailed in the basis of preparation of the supplementary information.

Philip Smart (Senior Statutory Auditor)
for and on behalf of KPMG Audit Plc, Statutory Auditor
Chartered Accountants
15 Canada Square
London E14 5GL
7 August 2013

Consolidated income statement
For the six months ended 30 June 2013
				£m
	Notes	Six months ended 30 June 2013	Six months ended 30 June  2012 Restated¹	Year ended 31 December 2012 Restated¹
Revenue
Gross earned premiums	B2	1,995	1,774	3,725
Outward reinsurance		(162)	(155)	(322)
Net earned premiums		1,833	1,619	3,403
Investment return (non-banking)		4,489	3,479	9,880
Banking interest and similar income		1,573	1,780	3,431
Banking trading, investment and similar income		110	107	214
Fee and commission income, and income from service activities		1,576	1,482	3,039
Other income		60	70	125
Total revenue		9,641	8,537	20,092
Expenses
Claims and benefits (including change in insurance contract provisions)		(2,295)	(2,326)	(5,612)
Reinsurance recoveries		118	125	221
Net claims and benefits incurred		(2,177)	(2,201)	(5,391)
Change in investment contract liabilities		(3,000)	(1,840)	(5,361)
Losses on loans and advances		(234)	(216)	(400)
Finance costs		(23)	(90)	(214)
Banking interest payable and similar expenses		(832)	(997)	(1,887)
Fee and commission expenses, and other acquisition costs		(538)	(509)	(1,064)
Change in third-party interest in consolidated funds		(271)	(171)	(651)
Other operating and administrative expenses		(1,770)	(1,819)	(3,715)
Total expenses		(8,845)	(7,843)	(18,683)
Share of associated undertakings' and joint ventures' profit after tax		10	14	32
(Loss)/profit on disposal of subsidiaries, associated undertakings    and strategic investments	C1(c)	(1)	20	(56)
Profit before tax		805	728	1,385
Income tax expense	D1	(250)	(241)	(471)
Profit from continuing operations after tax		555	487	914
Discontinued operations
(Loss)/profit from discontinued operations after tax	G1	(8)	595	564
Profit after tax for the financial period		547	1,082	1,478
Attributable to
Equity holders of the parent		414	930	1,172
Non-controlling interests
Ordinary shares		124	122	256
Preferred securities		9	30	50
Profit after tax for the financial period		547	1,082	1,478
Earnings per share
Basic earnings per share based on profit from continuing operations (pence)		9.1	6.7	12.6
Basic earnings per share based on (loss)/profit from discontinued   operations (pence)		(0.2)	12.5	12.3
Basic earnings per ordinary share (pence)	C2(a)	8.9	19.2	24.9
Diluted earnings per share based on profit from continuing operations (pence)		8.5	6.2	11.6
Diluted earnings per share based on (loss)/profit from discontinued   operations (pence)		(0.2)	11.5	11.5
Diluted earnings per ordinary share (pence)	C2(a)	8.3	17.7	23.1
Weighted average number of ordinary shares (millions)	C2(a)	4,436	4,759	4,587

¹   Prior periods have been restated for the impact of changes in accounting policies. Refer to note A1 for further details.

Consolidated statement of comprehensive income
For the six months ended 30 June 2013
				£m
	Notes	Six months ended  30 June  2013	Six months ended 30 June  2012 Restated¹	Year ended  31 December  2012 Restated¹
Profit after tax for the financial period		547	1,082	1,478
Other comprehensive income for the financial period
Items that will not be reclassified subsequently to profit or loss
Fair value gains/(losses)
Property revaluation		(3)	(1)	20
Actuarial gains on defined benefit plans		2	4	8
Income tax on items that will not be reclassified subsequently     to profit or loss	D1(c)	4	3	6
		3	6	34
Items that may be reclassified subsequently to profit and loss
Fair value gains
Net investment hedge		9	123	160
Available-for-sale investments
Fair value (losses)/gains		(7)	10	30
Recycled to the income statement		(8)	(6)	(21)
Shadow accounting		-	1	6
Currency translation differences on translating foreign operations		(346)	(203)	(641)
Other movements		(8)	(1)	(46)
Income tax on items that may be reclassified subsequently   to profit and loss	D1(c)	1	-	(5)
		(359)	(76)	(517)
Total other comprehensive income for the financial period from    continuing operations		(356)	(70)	(483)
Total other comprehensive income for the financial period from    discontinued operations²		-	(348)	(348)
Total other comprehensive income for the financial period		(356)	(418)	(831)
Total comprehensive income for the financial period		191	664	647
Attributable to
Equity holders of the parent		192	543	471
Non-controlling interests
Ordinary shares		(10)	91	126
Preferred securities		9	30	50
Total comprehensive income for the financial period		191	664	647

¹   Prior periods have been restated for the impact of changes in accounting policies. Refer to note A1 for further details.

²   Total other comprehensive income for the financial period from discontinued operations for the six months ended 30 June 2012 and the year ended 31 December 2012 includes £350 million cumulative foreign exchange translation gains, previously included in foreign currency translation reserves, that were realised on the disposal of Nordic.

Reconciliation of adjusted operating profit to profit after tax
For the six months ended 30 June 2013
				£m
	Notes	Six months ended 30 June 2013	Six months ended  30 June  2012 Restated¹	Year ended 31 December 2012 Restated¹
Core operations
Emerging Markets	B3	290	292	611
Old Mutual Wealth	B3	108	95	195
Property & Casualty	B3	10	31	37
Nedbank	B3	387	405	825
USAM	B3	54	42	91
		849	865	1,759
Finance costs		(46)	(75)	(130)
Long-term investment return on excess assets		25	25	54
Net interest payable to non-core operations		(6)	(13)	(18)
Corporate costs		(21)	(25)	(53)
Other net expenses		-	13	-
Adjusted operating profit before tax		801	790	1,612
Adjusting items	C1(a)	(69)	(149)	(467)
Non-core operations	B3	2	53	165
Profit before tax (net of policyholder tax)		734	694	1,310
Income tax attributable to policyholder returns	B3	71	34	75
Profit before tax		805	728	1,385
Total tax expense	D1(a)	(250)	(241)	(471)
Profit from continuing operations after tax		555	487	914
(Loss)/profit from discontinued operations after tax	G1(a)	(8)	595	564
Profit after tax for the financial period		547	1,082	1,478
Adjusted operating profit after tax attributable to ordinary equity holders of the parent
				£m
	Notes	Six months ended 30 June 2013	Six months ended  30 June  2012 Restated¹	Year ended 31 December 2012 Restated¹
Adjusted operating profit before tax		801	790	1,612
Tax on adjusted operating profit	D1(d)	(207)	(210)	(440)
Adjusted operating profit after tax		594	580	1,172
Non-controlling interests - ordinary shares		(137)	(135)	(281)
Non-controlling interests - preferred securities		(9)	(30)	(50)
Adjusted operating profit after tax attributable to ordinary equity    holders of the parent		448	415	841
Adjusted weighted average number of shares (millions)	C2(b)	4,835	4,806	4,818
Adjusted operating earnings per share (pence)	C2(b)	9.3	8.6	17.5

¹   Prior periods have been restated for the impact of changes in accounting policies. Refer to note A1 for further details.

Basis of preparation of adjusted operating profit

Adjusted operating profit (AOP) reflects the directors' view of the underlying long-term performance of the Group. AOP is a measure of profitability which adjusts the standard IFRS profit measures for the specific items detailed in note C1 and, as such, it is a non-GAAP measure. This reconciliation explains the differences between adjusted operating profit and profit after tax as reported under IFRS.

For core life assurance and general insurance businesses, AOP 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 all core businesses, AOP 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. Old Mutual Bermuda and Nordic are treated as non-core operations in the AOP disclosure. Non-core operations are not included in AOP. Nordic is also disclosed as discontinued operations for IFRS reporting. Refer to note B1 for further information on the basis of segmentation.

Adjusted operating earnings per share is calculated on the same basis as AOP. It is stated after tax attributable to AOP 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.

For the six months ended 30 June 2012 and the year ended 31 December 2012, the weighted average number of shares used in the calculation of basic and diluted earnings per share was adjusted for the seven-for-eight share consolidation that was affected on 23 April 2012. For adjusted operating earnings per share, the adjustment of the weighted average number of shares has been made effective from 1 January 2012. This adjustment had the effect of presenting adjusted earnings per share on a more consistent basis, but resulted in a difference between the adjusted weighted average number of shares for IFRS and AOP for the comparative periods.

Consolidated statement of financial position
At 30 June 2013
				£m
	Notes	At 30 June 2013	At 30 June 2012 Restated¹	At 31 December 2012 Restated¹
Assets
Goodwill and other intangible assets		3,056	3,252	3,056
Mandatory reserve deposits with central banks		760	964	921
Property, plant and equipment		794	924	847
Investment property		1,911	2,049	1,947
Deferred tax assets		334	317	345
Investments in associated undertakings and joint ventures		130	142	152
Deferred acquisition costs		1,264	1,324	1,288
Reinsurers' share of policyholder liabilities		1,629	1,204	1,406
Loans and advances		37,240	40,624	38,495
Investments and securities		89,093	84,833	88,513
Current tax receivable		109	183	103
Trade, other receivables and other assets		2,955	3,552	2,930
Derivative financial instruments		1,417	2,210	1,780
Cash and cash equivalents		5,035	5,282	5,061
Non-current assets held for sale		5	1,178	42
Total assets		145,732	148,038	146,886
Liabilities
Long-term business policyholder liabilities		81,443	77,583	80,188
General insurance liabilities		350	343	346
Third-party interests in consolidated funds		5,479	5,390	6,116
Borrowed funds	E2	2,563	3,536	3,050
Provisions		252	294	281
Deferred revenue		664	694	689
Deferred tax liabilities		435	457	404
Current tax payable		250	226	287
Trade, other payables and other liabilities		5,031	4,496	4,848
Amounts owed to bank depositors		38,009	41,671	39,499
Derivative financial instruments		1,623	1,863	1,402
Non-current liabilities held for sale		-	1,132	3
Total liabilities		136,099	137,685	137,113
Net assets		9,633	10,353	9,773
Shareholders' equity
Equity attributable to equity holders of the parent		7,729	7,947	7,816
Non-controlling interests
Ordinary shares		1,632	1,688	1,684
Preferred securities		272	718	273
Total non-controlling interests		1,904	2,406	1,957
Total equity		9,633	10,353	9,773

¹   Prior periods have been restated for the impact of changes in accounting policies. Refer to note A1 for further details.

Consolidated statement of cash flows
For the six months ended 30 June 2013
				£m
		Six months ended 30 June 2013	Six months ended 30 June 2012 Restated¹	Year ended 31 December 2012 Restated¹
Cash flows from operating activities
Profit before tax		805	728	1,385
Non-cash movements in profit before tax		620	(271)	249
Changes in working capital		228	254	1,046
Taxation paid		(225)	(269)	(295)
Net cash inflow from operating activities		1,428	442	2,385
Cash flows from investing activities
Net acquisitions of financial investments		(590)	(574)	(1,449)
Acquisition of investment properties		(7)	(21)	(55)
Proceeds from disposal of investment properties		9	17	67
Acquisition of property, plant and equipment		(50)	(56)	(120)
Proceeds from disposal of property, plant and equipment		6	1	7
Acquisition of intangible assets		(31)	(27)	(72)
Acquisition of interests in subsidiaries, associated undertakings and strategic   investments		(31)	(4)	(23)
Disposal of interests in subsidiaries, associated undertakings and strategic   investments		12	1,772	1,883
Net cash (outflow)/inflow from investing activities		(682)	1,108	238
Cash flows from financing activities
Dividends paid to
Ordinary equity holders of the Company		(238)	(1,093)	(1,172)
Non-controlling interests and preferred security interests		(95)	(118)	(211)
Dividends received from associated undertakings		12	-	-
Interest paid (excluding banking interest paid)		(26)	(52)	(85)
Proceeds from issue of ordinary shares (including by subsidiaries to   non-controlling interests)		9	-	35
Net (acquisition)/disposal of treasury shares		(29)	(2)	19
Issue of subordinated and other debt		-	137	290
Subordinated and other debt repaid		(262)	(245)	(1,293)
Net cash outflow from financing activities		(629)	(1,373)	(2,417)
Net increase in cash and cash equivalents		117	177	206
Net decrease in cash and cash equivalents - discontinued operations		-	(129)	(129)
Effects of exchange rate changes on cash and cash equivalents		(304)	(86)	(380)
Cash and cash equivalents at beginning of the year		5,982	6,285	6,285
Cash and cash equivalents at end of the year		5,795	6,247	5,982
Consisting of
Cash and cash equivalents in the statement of financial position		5,035	5,282	5,061
Mandatory reserve deposits with central banks		760	964	921
Cash and cash equivalents included in assets held for sale		-	1	-
Total		5,795	6,247	5,982

¹   Prior periods have been restated for the impact of changes in accounting policies. Refer to note A1 for further details.

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 £760 million (30 June 2012: £964 million; 31 December 2012: £921 million) and cash and cash equivalents subject to consolidation of funds of £1,757 million (30 June 2012: £1,778 million; 31 December 2012: £1,893 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.

Consolidated statement of changes in equity
For the six months ended 30 June 2013
		Millions
Six months ended 30 June 2013	Notes	Number of shares issued and fully paid		Share capital	Share premium	Merger reserve	Available-for-sale reserve
Shareholders' equity at beginning of the period		4,892		559	835	1,717	65
Impact of changes in accounting policies (note A1)		-		-	-	-	-
Restated shareholders' equity at beginning of the    period		4,892		559	835	1,717	65
Profit after tax for the financial period		-		-	-	-	-
Other comprehensive income
Items that will not be reclassified subsequently to   profit or loss
Fair value gains/(losses)
Property revaluation		-		-	-	-	-
Actuarial gains on defined benefit plans		-		-	-	-	-
Income tax on items that will not be reclassified   subsequently to profit or loss		-		-	-	-	-
		-		-	-	-	-
Items that may be reclassified subsequently to profit   or loss
Fair value gains/(losses)
Net investment hedge		-		-	-	-	-
Available-for-sale investments
Fair value losses		-		-	-	-	(7)
Recycled to the income statement		-		-	-	-	(8)
Currency translation differences on translating foreign   operations		-		-	-	-	-
Other movements		-		-	-	-	-
Income tax on items that may be reclassified   subsequently to profit or loss	D1(c)	-		-	-	-	1
Total comprehensive income for the financial period		-		-	-	-	(14)
Dividends for the year	C3	-		-	-	-	-
Other movements in share capital and share-based    payment reserve		4		-	8	-	-
Change in participation in subsidiaries		-		-	-	-	-
Transactions with shareholders		4		-	8	-	-
Shareholders' equity at end of the period		4,896		559	843	1,717	51

								£m
Property revaluation reserve	Share-based payments reserve	Other reserves	Foreign currency translation reserve	Retained earnings	Perpetual preferred callable securities	Attributable to equity holders  of the parent	Total non-controlling interests	Total equity
144	268	33	(378)	3,908	682	7,833	1,965	9,798
-	-	-	-	(17)	-	(17)	(8)	(25)
144	268	33	(378)	3,891	682	7,816	1,957	9,773
-	-	-	-	397	17	414	133	547
(3)	-	-	-	-	-	(3)	-	(3)
-	-	-	-	2	-	2	-	2
-	-	-	-	(1)	5	4	-	4
(3)	-	-	-	1	5	3	-	3
-	-	-	9	-	-	9	-	9
-	-	-	-	-	-	(7)	-	(7)
-	-	-	-	-	-	(8)	-	(8)
-	-	-	(221)	-	-	(221)	(125)	(346)
-	(10)	1	-	10	-	1	(9)	(8)
-	-	-	-	-	-	1	-	1
(3)	(10)	1	(212)	408	22	192	(1)	191
-	-	-	-	(238)	(22)	(260)	(73)	(333)
-	2	-	-	(29)	-	(19)	(3)	(22)
-	-	-	-	-	-	-	24	24
-	2	-	-	(267)	(22)	(279)	(52)	(331)
141	260	34	(590)	4,032	682	7,729	1,904	9,633

Consolidated statement of changes in equity
For the six months ended 30 June 2013
		Millions
Six months ended 30 June 2012 Restated¹	Notes	Number of shares issued and fully paid		Share capital	Share premium	Merger reserve	Available-for-sale reserve
Shareholders' equity at beginning of the period		5,801		580	805	2,532	53
Impact of changes in accounting policies (note A1)		-		-	-	-	-
Restated shareholders' equity at beginning of the    period		5,801		580	805	2,532	53
Profit after tax for the financial period		-		-	-	-	-
Other comprehensive income
Items that will not be reclassified subsequently   to profit or loss
Fair value gains/(losses)
Property revaluation		-		-	-	-	-
Actuarial gains on defined benefit plans		-		-	-	-	-
Income tax on items that will not be reclassified   subsequently to profit or loss		-		-	-	-	-
		-		-	-	-	-
Items that may be reclassified subsequently   to profit or loss
Fair value gains/(losses)
Net investment hedge		-		-	-	-	-
Available-for-sale investments
Fair value gains		-		-	-	-	14
Recycled to the income statement		-		-	-	-	(6)
Exchange differences recycled to the income statement		-		-	-	-	-
Shadow accounting		-		-	-	-	1
Currency translation differences on translating foreign   operations		-		-	-	-	-
Other movements		-		-	-	-	-
Income tax on items that may be reclassified   subsequently to profit or loss	D1(c)	-		-	-	-	(1)
Total comprehensive income for the financial period		-		-	-	-	8
Dividends	C3	-		-	-	-	-
Other movements in share capital and payment reserve		22		2	23	-	-
Cancellation of treasury shares		(239)		(24)	-	-	-
Share consolidation		(697)		-	-	-	-
Merger reserve realised in the period		-		-	-	(815)	-
Change in participation in subsidiaries		-		-	-	-	-
Transactions with shareholders		(914)		(22)	23	(815)	-
Shareholders' equity at end of the period		4,887		558	828	1,717	61

¹   Prior periods have been restated for the impact of changes in accounting policies. Refer to note A1 for further details.

								£m
Property revaluation reserve	Share-based payments reserve	Other reserves	Foreign currency translation reserve	Retained earnings	Perpetual preferred callable securities	Attributable to equity holders  of the parent	Total non-controlling interests	Total equity
124	230	5	301	3,170	688	8,488	2,370	10,858
-	-	-	-	(20)	-	(20)	-	(20)
124	230	5	301	3,150	688	8,468	2,370	10,838
-	-	-	-	913	17	930	152	1,082
(1)	-	-	-	-	-	(1)	-	(1)
-	-	-	-	4	-	4	-	4
-	-	-	-	(2)	5	3	-	3
(1)	-	-	-	2	5	6	-	6
-	-	-	123	-	-	123	-	123
-	-	-	-	-	-	14	-	14
-	-	-	-	-	-	(6)	-	(6)
-	-	-	(350)	-	-	(350)	-	(350)
-	-	-	-	-	-	1	-	1
-	-	-	(165)	1	-	(164)	(36)	(200)
1	15	-	(8)	(13)	-	(5)	1	(4)
-	-	-	-	-	-	(1)	-	(1)
-	15	-	(400)	903	22	548	117	665
-	-	-	-	(1,093)	(22)	(1,115)	(96)	(1,211)
-	23	-	-	(2)	-	46	8	54
-	-	-	-	24	-	-	-	-
-	-	-	-	-	-	-	-	-
-	-	-	-	815	-	-	-	-
-	-	-	-	-	-	-	7	7
-	23	-	-	(256)	(22)	(1,069)	(81)	(1,150)
124	268	5	(99)	3,797	688	7,947	2,406	10,353

Consolidated statement of changes in equity
For the six months ended 30 June 2013
		Millions
Year ended 31 December 2012 Restated¹	Notes	Number of shares issued and fully paid		Share capital	Share premium	Merger reserve	Available-for-sale reserve
Shareholders' equity at beginning of the period		5,801		580	805	2,532	53
Impact of changes in accounting policies (note A1)		-		-	-	-	-
Restated shareholders' equity at beginning of the   period		5,801		580	805	2,532	53
Profit after tax for the financial year		-		-	-	-	-
Other comprehensive income
Items that will not be reclassified subsequently   to profit and loss
Fair value gains
Property revaluation		-		-	-	-	-
Actuarial gain on defined benefit plans		-		-	-	-	-
Income tax on items that will not be reclassified   subsequently to profit or loss		-		-	-	-	-
		-		-	-	-	-
Items that may be reclassified subsequently   to profit or loss
Fair value gains/(losses)
Net investment hedge		-		-	-	-	-
Available-for-sale investments
Fair value gains		-		-	-	-	33
Recycled to the income statement		-		-	-	-	(21)
Exchange differences recycled to the income statement		-		-	-	-	-
Shadow accounting		-		-	-	-	6
Currency translation differences on translating foreign     operations		-		-	-	-	-
Other movements		-		-	-	-	-
Income tax on items that may be reclassified     subsequently to profit or loss	D1(c)	-		-	-	-	(6)
Total comprehensive income for the financial year		-		-	-	-	12
Dividends for the year	C3	-		-	-	-	-
Other movements in share capital and share-based    payment reserve		27		3	30	-	-
Cancellation of treasury shares		(239)		(24)	-	-	-
Share consolidation		(697)		-	-	-	-
Preferred securities purchased		-		-	-	-	-
Merger reserve realised in the year		-		-	-	(815)	-
Change in participation in subsidiaries		-		-	-	-	-
Transactions with shareholders		(909)		(21)	30	(815)	-
Shareholders' equity at end of the year		4,892		559	835	1,717	65

¹   Prior periods have been restated for the impact of changes in accounting policies. Refer to note A1 for further details.

								£m
Property revaluation reserve	Share-based payments reserve	Other reserves	Foreign currency translation reserve	Retained earnings	Perpetual preferred callable securities	Attributable to equity holders  of the parent	Total non-controlling interests	Total equity
124	230	5	301	3,170	688	8,488	2,370	10,858
-	-	-	-	(20)	-	(20)	-	(20)
124	230	5	301	3,150	688	8,468	2,370	10,838
-	-	-	-	1,140	32	1,172	306	1,478
19	-	-	-	-	-	19	1	20
-	-	-	-	8	-	8	-	8
-	-	-	-	(4)	10	6	-	6
19	-	-	-	4	10	33	1	34
-	-	-	160	-	-	160	-	160
-	-	-	-	-	-	33	1	34
-	-	-	-	-	-	(21)	-	(21)
-	-	-	(350)	-	-	(350)	-	(350)
-	-	-	-	-	-	6	-	6
-	-	-	(489)	-	-	(489)	(150)	(639)
1	(24)	4	-	(40)	-	(59)	10	(49)
-	-	-	-	-	-	(6)	-	(6)
20	(24)	4	(679)	1,104	42	479	168	647
-	-	-	-	(1,172)	(42)	(1,214)	(169)	(1,383)
-	62	-	-	7	-	102	13	115
-	-	24	-	-	-	-	-	-
-	-	-	-	-	-	-	-	-
-	-	-	-	(13)	(6)	(19)	(445)	(464)
-	-	-	-	815	-	-	-	-
-	-	-	-	-	-	-	20	20
-	62	24	-	(363)	(48)	(1,131)	(581)	(1,712)
144	268	33	(378)	3,891	682	7,816	1,957	9,773

Notes to the consolidated financial statements

For the six months ended 30 June 2013

A: Significant accounting policies

A1: Basis of preparation

The Group interim financial statements contained herein are presented in accordance with the requirements of IAS 34 'Interim Financial Reporting' and are in compliance with International Financial Reporting Standards (IFRS) adopted by the EU. The Group's results for the six months ended 30 June 2013 and the financial position at that date have been prepared using accounting policies consistent with those applied in the preparation of the Group's 2012 Annual Report and Accounts, except for the adoption of new standards and interpretations effective for the period commencing 1 January 2013. The financial information has been restated where required.

The Group interim financial statements have been prepared on the going concern basis, which the directors believe appropriate. Part 2 of the Interim Review document includes more details on the financial performance of the business. It also sets out further details about risks and uncertainties and discloses how the Group actively manages these risks, the impact to the Group of regulatory changes and an overview of the Group's capital and liquidity position.

The comparative figures for the financial year ended 31 December 2012 represent the consolidated performance of the Group. They are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditor and delivered to the Registrar of Companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

Translation of foreign operations

The assets and liabilities of foreign operations are translated from their respective functional currencies into the Group's presentation currency using the period end exchange rates, and their income and expenses using the average exchange rates. Other than in respect of cumulative translation gains and losses up to 1 January 2004, cumulative unrealised gains or losses resulting from translation of functional currencies to the presentation currency are included as a separate component of shareholders' equity. To the extent that these gains and losses are effectively hedged, the cumulative effect of such gains and losses arising on the hedging instruments are also included in that component of shareholders' equity. Upon the disposal of subsidiaries the cumulative amount of exchange differences deferred in shareholders' equity, net of attributable amounts in relation to net investments, is recognised in the income statement.

The principal exchange rates used to translate the operating results, assets and liabilities of key foreign business segments to pounds sterling are:
	Six months ended 30 June 2013		Six months ended 30 June 2012		Year ended 31 December 2012
	Income Statement (average rate)	Statement of financial position (closing rate)	Income Statement (average rate)	Statement of financial position (closing rate)	Income statement (average rate)	Statement of financial position  (closing rate)
Rand	14.2269	15.0827	12.5247	12.8401	13.0123	13.7696
US dollars	1.5448	1.5185	1.5769	1.5682	1.5850	1.6242
Euro	1.1763	1.1676	1.2154	1.2396	1.2326	1.2307

New standards, interpretations and amendments adopted by the Group affecting the financial statements for the period ended 30 June 2013

Several new accounting standards are applicable to the Group for the year ending 31 December 2013, and where required those standards have been applied in preparing the financial statements for the six months ended 30 June 2013, with restatement of the comparative information for the six months ended 30 June 2012 and the year ended 31 December 2012 as required. The standards that were relevant in the six months ended 30 June 2013 and have required restatement include amendments to IAS 1 'Presentation of Financial Statements', IAS 19 (Revised 2011) 'Employee Benefits', IFRS 10 'Consolidated Financial Statements' and IFRS 11 'Joint Arrangements'.

Several other new standards and amendments apply for the first time in 2013. However, they do not impact the interim consolidated financial statements of the Group and they are also not expected to have a material impact on future reporting periods as they are disclosure standards. These include IFRS 7 'Financial Instruments: Disclosures (Amended 2011), IFRS 12 'Disclosure of Interest in Other Entities' and IFRS 13 'Fair Value Measurement'.

The following standards were adopted by the Group and had an impact on the interim financial statements:

Amendments to IAS 1 'Presentation of Items of Other Comprehensive Income'

The amendments to IAS 1 require that an entity present separately the items of other comprehensive income (OCI) that may be reclassified to profit or loss in the future, from those that will never be reclassified to profit or loss. The amendment affected presentation only and had no impact on the shareholders' equity or profit.

IAS 19 'Employee Benefits' (Revised 2011)

The Group has adopted IAS 19 'Employee Benefits' (Revised 2011) with a date of initial application of 1 January 2013.

The key amendments are:

n  The corridor method has been removed and all actuarial gains and losses are required to be recognised in OCI rather than in profit or loss Expected returns on plan assets are no longer recognised in profit or loss. Instead, interest is recognised on the net defined benefit liability or asset in profit or loss, calculated using the discount rate used to measure the defined benefit obligation.

n  Past service costs arising from plan amendments or curtailment are now recognised in profit or loss at the earlier of when the amendment occurs or when the related restructuring or termination cost are recognised. The option to amortise such cost over future years has also been eliminated.

n  Administration costs, other than costs of managing plan assets, are recognised in the profit and loss when the service is provided.

The change in accounting policy has been applied retrospectively and as a result, the comparative information for the six months ended 30 June 2012 and the year ended 31 December 2012 have been restated accordingly.

The major impact of the adoption of the standard was an increase in operating and administrative expenses and a net increase in other comprehensive income. The overall impact on the Group was a decrease in equity, an increase in the assets and an increase in the liabilities of the Group. The standard affects the accounting for certain defined pension schemes in Emerging Markets, Nedbank and Old Mutual plc.

The transitional adjustment, applied to the opening statement of financial position, as at 1 January 2013, had an effect of decreasing equity by £17 million, increasing total assets by £5 million and increasing total liabilities by £22 million.

IFRS 10 'Consolidated Financial Statements' and IAS 27 'Separate Financial Statements'

The Group has early adopted IFRS 10 'Consolidated Financial Statements' with a date of initial application of 1 January 2013.

IFRS 10 introduces a single control model that applies to all entities, including special purpose entities. IFRS 10 replaces the parts of IAS 27 'Consolidated and Separate Financial Statements' that dealt with consolidated financial statements and SIC-12 'Consolidation - Special Purpose Entities'. IFRS 10 changes the definition of control such that an investor controls an investee when it has power over the investee, when it is exposed, or has rights, to variable returns from its involvement with the investee and when it has the ability to use its power over the investee to affect those returns. To meet the definition of control in IFRS 10, all three of these criteria must be met.

The implementation of this standard did not have a significant financial impact on the Group's assessment of its interests in investment funds, but it did increase the number of investment funds consolidated. The principal effect was a gross up of the consolidated statement of financial position for the difference between the value of the newly consolidated assets and liabilities and the carrying value of the Group's interest, and the equal and opposite liability for the interests of external parties in these investment funds.

The transitional adjustment, applied to the opening statement of financial position, as at 1 January 2013 had an effect of decreasing non-controlling interest attributable to ordinary shareholders by £8 million, increasing total assets by £3,384 million and increasing total liabilities by £3,392 million.

The Group has only considered the consolidation suite of standards for interests that existed at 1 January 2013. The change in accounting policy has been applied retrospectively and as a result, the comparative information for the six months ended 30 June 2012 and the year ended 31 December 2012 have been restated accordingly.

The following standard was adopted by the Group but had no material impact on the interim financial statements:

IFRS 11 'Joint Arrangements' and IAS 28 'Investment in Associates and Joint Ventures'

The Group has early adopted IFRS 11 'Joint Arrangements' with a date of initial application of 1 January 2013.

IFRS 11 replaces IAS 31 'Interests in Joint Ventures' and SIC-13 'Jointly-controlled entities' and removes the option to account for joint arrangements using proportionate consolidation. Jointly-controlled entities that meet the definition of a joint arrangement under IFRS 11 must now be accounted for using the equity method.

Notes to the consolidated financial statements

For the six months ended 30 June 2013

A: Significant accounting policies continued

A1: Basis of preparation continued

Effect of the adoption of IAS 19 (Revised) and IFRS 10

The following tables summarise the impact of the restatements in the financial statements and the line items affected:

				£m
Six months ended 30 June 2012	As previously reported	Adjustments for adoption of IAS 19	Adjustments for adoption of IFRS 10	As restated
Consolidated income statement
Profit after tax from continuing operations	492	(1)	(4)	487
Profit after tax for the financial period	1,087	(1)	(4)	1,082
Non-controlling interests - ordinary shares	156	-	(4)	152
Consolidated statement of comprehensive income
Total other comprehensive income for the financial period	(420)	2	-	(418)
Total comprehensive income for the financial period	667	1	(4)	664
Reconciliation of adjusted operating profit to profit after tax
Adjusting items	(145)	-	(4)	(149)
Adjusted operating profit after tax attributable to equity holders of   the parent	416	(1)	-	415
Consolidated statement of financial position
Total Assets	145,156	4	2,878	148,038
Total Liabilities	134,781	22	2,882	137,685
Equity attributable to ordinary shareholders of the parent	7,965	(18)	-	7,947
Non-controlling interests - ordinary shares	2,410	-	(4)	2,406
Consolidated statement of cash flows
Cash and cash equivalents at beginning of the year	5,055	-	1,230	6,285
Cash and cash equivalents at end of the year	5,053	-	1,194	6,247
Cash and cash equivalents in the statement of financial position	4,088	-	1,194	5,282

				£m
Year ended 31 December 2012	As previously reported	Adjustments for adoption of IAS 19	Adjustments for adoption IFRS 10	As restated
Consolidated income statement
Profit after tax from continuing operations	923	(1)	(8)	914
Profit after tax for the financial year	1,487	(1)	(8)	1,478
Non-controlling interests - ordinary shares	314	-	(8)	306
Consolidated statement of comprehensive income
Total other comprehensive income for the financial period	(835)	4	-	(831)
Total comprehensive income for the financial period	652	3	(8)	647
Reconciliation of adjusted operating profit to profit after tax
Adjusting items	(459)	-	(8)	(467)
Adjusted operating profit after tax attributable to equity holders of   the parent	842	(1)	-	841
Consolidated statement of financial position
Total Assets	143,497	5	3,384	146,886
Total Liabilities	133,699	22	3,392	137,113
Equity attributable to ordinary shareholders of the parent	7,833	(17)	-	7,816
Non-controlling interests - ordinary shares	1,965	-	(8)	1,957
Consolidated statement of cash flows
Cash and cash equivalents at beginning of the year	5,055	-	1,230	6,285
Cash and cash equivalents at end of the year	4,784	-	1,198	5,982
Cash and cash equivalents in the statement of financial position	3,863	-	1,198	5,061
Refer to note C2 for the effect on basic and diluted earnings per share

New standards, interpretations and amendments adopted by the Group not affecting the financial statements for the period ended 30 June 2013

The following standards had no financial impact on the interim result of the Group due to the nature of the standards, and will be disclosed in the year end financial statements:

IFRS 7 'Financial Instruments: Disclosures' (effective 1 January 2013)

The amendment to IFRS 7 requires that an entity disclose additional information for financial instruments that are subject to master netting or other similar agreements. 

IFRS 12 'Disclosure of Interests in Other Entities'

IFRS 12 sets out the requirements for disclosures relating to an entity's interests in subsidiaries, joint arrangements, associates and structured entities. The standard disclosures include all of the disclosures that were previously part of IAS 27 'Consolidated and Separate Financial Statements', IAS 28 'Investment in Associates and Joint Ventures' and IAS 31 'Interests in Joint Ventures'.

IFRS 13 'Fair Value Measurement'

IFRS 13 replaces existing guidance on fair value measurement in different IFRS with a single definition of fair value, a framework for measuring fair values and disclosures about fair value measurements. The Group has applied fair value measurements on a consistent basis across all reporting periods and, as a result, the implementation of IFRS 13 did not materially impact the fair value measurements carried out by the Group.

All of the disclosure requirements will be included in the year end financial statements. Only the disclosures required by IAS 34 'Interim Financial Reporting' have been included in the interim financial statements.

The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

A detailed list of the Group's accounting policies can be found at www.oldmutual.com. The contents of the website are not subject to external audit.

A2: Significant corporate activity and business changes during the period

Acquisition of Oceanic's Nigerian general insurance business

On 22 February 2012, the Group announced that it has made an offer to acquire the majority stake in Oceanic Life, the life assurance operations of the former Oceanic Bank in Nigeria which was acquired by Ecobank Transitional Incorporated. The Group consolidated the financial results of Oceanic for the six months ended 30 June 2013 from 1 January 2013.

Acquisition of AIVA Business Platforms (AIVA)

On 19 November 2012, the Group announced that it has acquired the majority stake in AIVA, a business platform and distribution business based in Uruguay and spanning the Latin American region. All the relevant regulatory approvals where received and the Group consolidated the financial results of AIVA for the six months ended 30 June 2013 from 2 January 2013.

Acquisition of Provident Life Assurance Company Limited (Provident)

On 3 June 2013, the Group announced that it will expand its African presence through the acquisition of a majority stake in Provident, the fifth largest life company in Ghana. The transaction is conditional on relevant regulatory approvals and is expected to complete by the end of 2013.

Acquisition of Banco Unico

On 3 May 2013, the Group announced that Nedbank has entered into an agreement for a stepped acquisition of Banco Unico, located in Mozambique. The transaction is not yet effective as all the conditions precedent has not been met. It is expected to be complete by the end of 2013 and will be accounted for on completion.

Notes to the consolidated financial statements

For the year ended  30 June 2013

A: Significant accounting policies continued

A3: Critical accounting estimates and judgements

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

Critical accounting estimates and judgements are those which involve the most complex or subjective judgements or assessments. Where applicable, the Group applies estimation and assumption setting techniques that are aligned with relevant actuarial and accounting guidance based on knowledge of the current situation and require assumptions and predictions of future events and actions.

The only change to the critical accounting estimates and judgements that the Group applied during the six months ended 30 June 2013 has been in respect of consolidation of certain entities in accordance with the requirements of IFRS 10.

The Group acts as a fund manager to a number of investment funds. In determining whether the Group controls such a fund, it will focus on an assessment of the aggregate economic interests of the Group (comprising any carried interests and expected management fees) and the investor's rights to remove the fund manager. The Group assesses, on an annual basis, such interests to determine if the fund will be consolidated.

B: Segment information

B1: Basis of segmentation

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

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.

A reconciliation between the segment revenues and expenses and the Group's revenues and expenses is shown in note B3. Consistent with internal reporting, assets, liabilities, revenues and 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 revenues generated in each reported segment can be seen in the analysis of profits and losses in note B3. The segmental information in notes B3 and B4, reflects the adjusted and IFRS measures of profit and loss and the assets and liabilities for each operating segment as provided to management and the Board of directors. There are no differences between the measurement of the assets and liabilities reflected in the primary statements and that reported for the segments.

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

Core operations

Emerging Markets - life assurance and asset management

Old Mutual Wealth - life assurance and asset management

Property & Casualty - general insurance

Nedbank - banking and asset management

US Asset Management - asset management

Non-core operations

Old Mutual Bermuda - life assurance

Segment presentation

In the short-term insurance review section of the 2012 Annual Report and Accounts, it was announced that, in future, all of the Group's Property and Casualty activities would be reported as a single segment. Consequently, the M&F segment has been renamed as Property & Casualty. This will now include M&F, 100% of iWyze, previously reported as a 50% joint venture between Emerging Markets and M&F, and the general insurance businesses in Namibia and Botswana. The name change has been applied to all reporting periods. Comparative information for the six months ended 30 June 2012 and the year ended 31 December 2012 have been restated accordingly.  

In addition to the above, the Long-term Savings segment has been removed from the adjusted operating profit statement - segment information and the statement of financial position - segment information as previously reflected in notes B3 and B4. This segment was merely a sub total of the Emerging Markets and Old Mutual Wealth Segments. This presentational change has been applied to all reporting periods.

The reported segments are now Emerging Markets, Old Mutual Wealth, Property & Casualty, Nedbank and US Asset Management. The Other segment includes Group head office. Old Mutual Bermuda is the principal component of the non-core operations. For all reporting periods, Old Mutual Bermuda has been classified as a continuing operation in the IFRS income statement, but as non-core in determining the Group's adjusted operating profit.

The Group continues to incur costs related to the sale of its Nordic business in 2012. These costs relate to the transition of IT and other support services that were previously provided by the disposed business to the wider Group, back to the Group. These costs are included in the expenses related to the discontinued operations in the interim financial statements for the six months ended 30 June 2013. Further information on the results of discontinued operations is provided in note G1.

In the comparative periods, Nordic has been classified as a discontinued operation in the IFRS consolidated income statement and its results as non-core in determining the Group's adjusted operating profit.

All other businesses have been classified as continuing operations for all reporting periods.

B2: Gross earned premiums and deposits to investment contracts
				£m
Six months ended 30 June 2013	Emerging Markets	Old Mutual Wealth	Property & Casualty	Total
Life assurance - insurance contracts	967	175	-	1,142
Life assurance - investment contracts    with discretionary participation features	476	-	-	476
General insurance	-	-	377	377
Gross earned premiums	1,443	175	377	1,995
				£m
Six months ended 30 June 2012	Emerging Markets	Old Mutual Wealth	Property & Casualty	Total
Life assurance - insurance contracts	768	177	-	945
Life assurance - investment contracts    with discretionary participation features	470	-	-	470
General insurance	-	-	359	359
Gross earned premiums	1,238	177	359	1,774
				£m
Year ended 31 December 2012	Emerging Markets	Old Mutual Wealth	Property & Casualty	Total
Life assurance - insurance contracts	1,673	362	-	2,035
Life assurance - investment contracts    with discretionary participation features	970	-	-	970
General insurance	-	-	720	720
Gross earned premiums	2,643	362	720	3,725

Notes to the consolidated financial statements
For the six months ended 30 June 2013
B: Segment information continued
B3: Adjusted operating profit statement - segment information for the six months ended 30 June 2013
			Emerging Markets	Old Mutual Wealth	Property & Casualty
Revenue
Gross earned premiums	B2		1,443	175	377
Outward reinsurance			(41)	(43)	(78)
Net earned premiums			1,402	132	299
Investment return (non-banking)			1,974	2,195	17
Banking interest and similar income			-	-	-
Banking trading, investment and similar income			-	-	-
Fee and commission income, and income from service activities			262	608	14
Other income			23	13	-
Inter-segment revenues			30	-	8
Total revenues			3,691	2,948	338
Expenses
Claims and benefits (including change in insurance contract provisions)			(1,886)	(148)	(282)
Reinsurance recoveries			32	25	61
Net claims and benefits incurred			(1,854)	(123)	(221)
Change in investment contract liabilities			(888)	(2,112)	-
Losses on loans and advances			-	-	-
Finance costs (including interest and similar expenses)			-	-	-
Banking interest payable and similar expenses			-	-	-
Fee and commission expenses, and other acquisition costs			(117)	(340)	(59)
Other expenses			(524)	(205)	(39)
Change in third-party interest in consolidated funds			-	-	-
Income tax attributable to policyholder returns			(22)	(49)	-
Inter-segment expenses			(1)	(11)	(11)
Total expenses			(3,406)	(2,840)	(330)
Share of associated undertakings' and joint ventures' profit after tax			5	-	2
Loss on disposal of subsidiaries, associated undertakings   and strategic investments	C1(c)		-	-	-
Adjusted operating profit/(loss) before tax and non-controlling   interests			290	108	10
Income tax expense	D1		(76)	(20)	(2)
Non-controlling interests			(9)	-	(3)
Adjusted operating profit/(loss) after tax and non-controlling   interests			205	88	5
Adjusting items net of tax and non-controlling interests	C1(a)		-	(54)	(4)
Profit/(loss) after tax from continuing operations			205	34	1
Loss from discontinued operations after tax	G1		-	-	-
Profit/(loss) after tax attributable to equity holders of the parent			205	34	1

¹   Non-core operations relates to Old Mutual Bermuda. Old Mutual Bermuda profit after tax for the six months ended 30 June 2013 was £2 million. Non-core operations also includes £8 million of divestment cost which relates to the Nordic business sold in 2012. Further information on discontinued operations is provided in note G1.

							£m
Nedbank	USAM	Other	Consolidation adjustments	Adjusted operating profit	Adjusting items  (note C1)	Discontinued and non-core operations¹	IFRS Income statement
-	-	-	-	1,995	-	-	1,995
-	-	-	-	(162)	-	-	(162)
-	-	-	-	1,833	-	-	1,833
-	-	34	304	4,524	(17)	(18)	4,489
1,573	-	-	-	1,573	-	-	1,573
110	-	-	-	110	-	-	110
537	185	-	4	1,610	(34)	-	1,576
18	2	-	-	56	-	4	60
7	-	5	(56)	(6)	-	6	-
2,245	187	39	252	9,700	(51)	(8)	9,641
-	-	-	-	(2,316)	-	21	(2,295)
-	-	-	-	118	-	-	118
-	-	-	-	(2,198)	-	21	(2,177)
-	-	-	-	(3,000)	-	-	(3,000)
(234)	-	-	-	(234)	-	-	(234)
-	-	(46)	-	(46)	23	-	(23)
(832)	-	-	-	(832)	-	-	(832)
(25)	(2)	-	(32)	(575)	40	(3)	(538)
(740)	(134)	(35)	(5)	(1,682)	(80)	(8)	(1,770)
-	-	-	(271)	(271)	-	-	(271)
-	-	-	-	(71)	71	-	-
(27)	-	(6)	56	-	-	-	-
(1,858)	(136)	(87)	(252)	(8,909)	54	10	(8,845)
-	3	-	-	10	-	-	10
-	-	-	-	-	(1)	-	(1)
387	54	(48)	-	801	2	2	805
(100)	(13)	4	-	(207)	(43)	-	(250)
(134)	-	-	-	(146)	13	-	(133)
153	41	(44)	-	448	(28)	2	422
4	(9)	35	-	(28)	28	-	-
157	32	(9)	-	420	-	2	422
-	-	-	-	-	-	(8)	(8)
157	32	(9)	-	420	-	(6)	414

Notes to the consolidated financial statements
For the six months ended 30 June 2013
B: Segment information continued
B3: Adjusted operating profit statement - segment information for the six months ended 30 June 2012 Restated¹
			Emerging Markets	Old Mutual Wealth	Property & Casualty
Revenue
Gross earned premiums	B2		1,238	177	359
Outward reinsurance			(41)	(43)	(71)
Net earned premiums			1,197	134	288
Investment return (non-banking)			2,017	1,246	23
Banking interest and similar income			-	-	-
Banking trading, investment and similar income			-	-	-
Fee and commission income, and income from service activities			201	597	12
Other income			35	14	-
Inter-segment revenues			33	2	8
Total revenues			3,483	1,993	331
Expenses
Claims and benefits (including change in insurance contract provisions)			(1,958)	(174)	(235)
Reinsurance recoveries			49	34	42
Net claims and benefits incurred			(1,909)	(140)	(193)
Change in investment contract liabilities			(663)	(1,177)	-
Losses on loans and advances			-	-	-
Finance costs (including interest and similar expenses)			-	-	-
Banking interest payable and similar expenses			-	-	-
Fee and commission expenses, and other acquisition costs			(111)	(335)	(53)
Other expenses			(494)	(216)	(44)
Change in third-party interest in consolidated funds			-	-	-
Income tax attributable to policyholder returns			(23)	(11)	-
Inter-segment expenses			-	(19)	(10)
Total expenses			(3,200)	(1,898)	(300)
Share of associated undertakings' and joint ventures' profit after tax			9	-	-
Profit on disposal of subsidiaries, associated undertakings   and strategic investments	C1(c)		-	-	-
Adjusted operating profit/(loss) before tax and non-controlling interests			292	95	31
Income tax expense	D1		(70)	(13)	(9)
Non-controlling interests			(3)	-	(4)
Adjusted operating profit/(loss) after tax and non-controlling interests			219	82	18
Adjusting items net of tax and non-controlling interests	C1(a)		(72)	(54)	(6)
Profit/(loss) after tax from continuing operations			147	28	12
Profit from discontinued operations after tax	G1		-	-	-
Profit/(loss) after tax attributable to equity holders of the parent			147	28	12

¹   Prior periods have been restated for the impact of changes in accounting policies. Refer to note A1 for further details.

²   Non-core operations principally relates to Old Mutual Bermuda. Old Mutual Bermuda profit after tax for the year ended 31 December 2012 was £49 million. It also includes £4 million of inter-segment revenue, and the after tax results of the Group's discontinued operations. Further information on discontinued operations is provided in note G1.

							£m
Nedbank	USAM	Other	Consolidation adjustments	Adjusted operating profit	Adjusting items (note C1)	Discontinued and non-core operations²	IFRS Income statement
-	-	-	-	1,774	-	-	1,774
-	-	-	-	(155)	-	-	(155)
-	-	-	-	1,619	-	-	1,619
-	1	53	206	3,546	(86)	19	3,479
1,780	-	-	-	1,780	-	-	1,780
107	-	-	-	107	-	-	107
533	178	-	-	1,521	(39)	-	1,482
13	-	-	-	62	-	8	70
14	-	7	(81)	(17)	-	17	-
2,447	179	60	125	8,618	(125)	44	8,537
-	-	-	-	(2,367)	-	41	(2,326)
-	-	-	-	125	-	-	125
-	-	-	-	(2,242)	-	41	(2,201)
-	-	-	-	(1,840)	-	-	(1,840)
(216)	-	-	-	(216)	-	-	(216)
-	-	(75)	-	(75)	(15)	-	(90)
(997)	-	-	-	(997)	-	-	(997)
-	(2)	-	(30)	(531)	45	(23)	(509)
(801)	(140)	(36)	(5)	(1,736)	(74)	(9)	(1,819)
-	-	-	(171)	(171)	-	-	(171)
-	-	-	-	(34)	34	-	-
(28)	-	(24)	81	-	-	-	-
(2,042)	(142)	(135)	(125)	(7,842)	(10)	9	(7,843)
-	5	-	-	14	-	-	14
-	-	-	-	-	20	-	20
405	42	(75)	-	790	(115)	53	728
(113)	(6)	1	-	(210)	(31)	-	(241)
(139)	-	(19)	-	(165)	13	-	(152)
153	36	(93)	-	415	(133)	53	335
8	5	(14)	-	(133)	133	-	-
161	41	(107)	-	282	-	53	335
-	-	-	-	-	-	595	595
161	41	(107)	-	282	-	648	930

Notes to the consolidated financial statements
For the six months ended 30 June 2013
B: Segment information continued
B3: Adjusted operating profit statement - segment information for the year ended 31 December 2012 Restated¹
			Emerging Markets	Old Mutual Wealth	Property & Casualty
Revenue
Gross earned premiums	B2		2,643	362	720
Outward reinsurance			(82)	(87)	(153)
Net earned premiums			2,561	275	567
Investment return (non-banking)			5,288	3,806	44
Banking interest and similar income			-	-	-
Banking trading, investment and similar income			-	-	-
Fee and commission income, and income from service activities			440	1,199	26
Other income			61	26	1
Inter-segment revenues			83	3	18
Total revenues			8,433	5,309	656
Expenses
Claims and benefits (including change in insurance contract provisions)			(4,813)	(387)	(485)
Reinsurance recoveries			89	59	73
Net claims and benefits incurred			(4,724)	(328)	(412)
Change in investment contract liabilities			(1,756)	(3,605)	-
Losses on loans and advances			-	-	-
Finance costs (including interest and similar expenses)			-	-	-
Banking interest payable and similar expenses			-	-	-
Fee and commission expenses, and other acquisition costs			(227)	(677)	(113)
Other expenses			(1,066)	(446)	(82)
Change in third-party interest in consolidated funds			-	-	-
Income tax attributable to policyholder returns			(49)	(26)	-
Inter-segment expenses			(20)	(32)	(14)
Total expenses			(7,842)	(5,114)	(621)
Share of associated undertakings' and joint ventures' profit after tax			20	-	2
Loss on disposal of subsidiaries, associated undertakings   and strategic investments	C1(c)		-	-	-
Adjusted operating profit/(loss) before tax and non-controlling interests			611	195	37
Income tax expense	D1		(164)	(43)	(9)
Non-controlling interests			(9)	-	(8)
Adjusted operating profit/(loss) after tax and non-controlling interests			438	152	20
Adjusting items net of tax and non-controlling interests	C1(a)		(153)	(134)	(15)
Profit/(loss) after tax from continuing operations			285	18	5
Profit from discontinued operations after tax	G1		-	-	-
Profit/(loss) after tax attributable to equity holders of the parent			285	18	5

¹   Prior periods have been restated for the impact of changes in accounting policies. Refer to note A1 for further details.

²   Non-core operations principally relates to Old Mutual Bermuda. Old Mutual Bermuda profit after tax for the year ended 31 December 2012 was £161 million. It also includes £4 million of inter-segment revenue, and the after tax results of the Group's discontinued operations. Further information on discontinued operations is provided in note G1.

							£m
Nedbank	USAM	Other	Consolidation adjustments	Adjusted operating profit	Adjusting items (note C1)	Discontinued and non-core operations²	IFRS Income statement
-	-	-	-	3,725	-	-	3,725
-	-	-	-	(322)	-	-	(322)
-	-	-	-	3,403	-	-	3,403
-	1	75	722	9,936	(191)	135	9,880
3,431	-	-	-	3,431	-	-	3,431
214	-	-	-	214	-	-	214
1,084	360	-	6	3,115	(76)	-	3,039
23	1	-	(1)	111	-	14	125
21	-	7	(156)	(24)	-	24	-
4,773	362	82	571	20,186	(267)	173	20,092
-	-	-	-	(5,685)	-	73	(5,612)
-	-	-	-	221	-	-	221
-	-	-	-	(5,464)	-	73	(5,391)
-	-	-	-	(5,361)	-	-	(5,361)
(400)	-	-	-	(400)	-	-	(400)
-	-	(130)	-	(130)	(84)	-	(214)
(1,886)	-	-	-	(1,886)	(1)	-	(1,887)
-	(5)	-	(67)	(1,089)	88	(63)	(1,064)
(1,604)	(276)	(67)	(9)	(3,550)	(147)	(18)	(3,715)
-	-	-	(651)	(651)	-	-	(651)
-	-	-	-	(75)	75	-	-
(58)	-	(32)	156	-	-	-	-
(3,948)	(281)	(229)	(571)	(18,606)	(69)	(8)	(18,683)
-	10	-	-	32	-	-	32
-	-	-	-	-	(56)	-	(56)
825	91	(147)	-	1,612	(392)	165	1,385
(221)	(15)	12	-	(440)	(31)	-	(471)
(287)	-	(27)	-	(331)	25	-	(306)
317	76	(162)	-	841	(398)	165	608
16	(10)	(102)	-	(398)	398	-	-
333	66	(264)	-	443	-	165	608
-	-	-	-	-	-	564	564
333	66	(264)	-	443	-	729	1,172

Notes to the consolidated financial statements
For the six months ended 30 June 2013
B: Segment information continued
B4: Statement of financial position - segment information at 30 June 2013
	Notes		Emerging Markets	Old Mutual Wealth	Property & Casualty
Assets
Goodwill and other intangible assets			121	1,556	13
Mandatory reserve deposits with central banks			-	-	-
Property, plant and equipment			323	13	21
Investment property			1,555	-	-
Deferred tax assets			83	32	13
Investments in associated undertakings and joint ventures			63	-	2
Deferred acquisition costs			94	1,145	16
Reinsurers' share of policyholder liabilities			53	1,459	105
Loans and advances			240	188	-
Investments and securities			30,260	48,306	330
Current tax receivable			10	64	5
Trade, other receivables and other assets			687	480	107
Derivative financial instruments			358	-	-
Cash and cash equivalents			915	633	123
Non-current assets held for sale			-	4	-
Inter-segment assets			456	75	23
Total assets			35,218	53,955	758
Liabilities
Life assurance policyholder liabilities			29,826	49,520	-
General insurance liabilities			-	-	350
Third-party interests in consolidated funds			-	-	-
Borrowed funds	E2		199	-	-
Provisions			99	51	26
Deferred revenue			9	646	8
Deferred tax liabilities			135	234	22
Current tax payable			161	40	-
Trade, other payables and other liabilities			2,348	764	121
Amounts owed to bank depositors			83	-	-
Derivative financial instruments			401	-	-
Non-current liabilities held for sale			-	-	-
Inter-segment liabilities			244	631	-
Total liabilities			33,505	51,886	527
Net assets			1,713	2,069	231
Equity
Equity attributable to equity holders of the parent			1,683	2,069	209
Non-controlling interests			30	-	22
Ordinary shares			30	-	22
Preferred securities			-	-	-
Total equity			1,713	2,069	231

					£m
Nedbank	USAM	Other	Consolidation adjustments	Non-core operations	Total
494	872	-	-	-	3,056
760	-	-	-	-	760
424	12	1	-	-	794
14	-	-	342	-	1,911
21	181	2	-	2	334
35	13	17	-	-	130
-	9	-	-	-	1,264
12	-	-	-	-	1,629
36,812	-	-	-	-	37,240
5,839	36	426	3,323	573	89,093
30	-	-	-	-	109
623	103	37	501	417	2,955
862	-	56	133	8	1,417
1,113	104	259	1,757	131	5,035
1	-	-	-	-	5
142	22	1,390	(2,772)	664	-
47,182	1,352	2,188	3,284	1,795	145,732
906	-	-	-	1,191	81,443
-	-	-	-	-	350
-	-	-	5,479	-	5,479
1,726	11	627	-	-	2,563
39	3	34	-	-	252
1	-	-	-	-	664
28	-	16	-	-	435
8	2	39	-	-	250
1,016	203	71	472	36	5,031
37,926	-	-	-	-	38,009
1,112	-	4	105	1	1,623
-	-	-	-	-	-
451	548	898	(2,772)	-	-
43,213	767	1,689	3,284	1,228	136,099
3,969	585	499	-	567	9,633
2,140	562	499	-	567	7,729
1,829	23	-	-	-	1,904
1,557	23	-	-	-	1,632
272	-	-	-	-	272
3,969	585	499	-	567	9,633

Notes to the consolidated financial statements
For the six months ended 30 June 2013
B: Segment information continued
B4: Statement of financial position - segment information at 30 June 2012 Restated¹
	Notes		Emerging Markets	Old Mutual Wealth	Property & Casualty
Assets
Goodwill and other intangible assets			105	1,673	21
Mandatory reserve deposits with central banks			-	-	-
Property, plant and equipment			390	14	22
Investment property			1,599	-	-
Deferred tax assets			74	63	13
Investments in associated undertakings and joint ventures			48	-	1
Deferred acquisition costs			111	1,160	15
Reinsurers' share of policyholder liabilities			52	1,028	108
Loans and advances			401	194	1
Investments and securities			30,412	42,427	429
Current tax receivable			21	84	2
Trade, other receivables and other assets			751	332	82
Derivative financial instruments			443	-	-
Cash and cash equivalents			516	553	109
Non-current assets held for sale			-	1,176	-
Inter-segment assets			432	116	21
Total assets			35,355	48,820	824
Liabilities
Life assurance policyholder liabilities			30,747	43,310	-
General insurance liabilities			-	-	343
Third-party interests in consolidated funds			-	-	-
Borrowed funds	E2		234	-	-
Provisions			125	45	28
Deferred revenue			13	672	8
Deferred tax liabilities			163	195	15
Current tax payable			144	35	-
Trade, other payables and other liabilities			1,757	643	113
Amounts owed to bank depositors			93	-	-
Derivative financial instruments			306	(4)	-
Non-current liabilities held for sale			-	1,132	-
Inter-segment liabilities			73	460	2
Total liabilities			33,655	46,488	509
Net assets			1,700	2,332	315
Equity
Equity attributable to equity holders of the parent			1,700	2,332	294
Non-controlling interests			-	-	21
Ordinary shares			-	-	21
Preferred securities			-	-	-
Total equity			1,700	2,332	315

¹   Prior periods have been restated for the impact of changes in accounting policies. Refer to note A1 for further details.

					£m
Nedbank	USAM	Other	Consolidation adjustments	Non-core operations	Total
548	891	14	-	-	3,252
964	-	-	-	-	964
487	10	1	-	-	924
48	-	-	402	-	2,049
25	139	2	-	1	317
51	15	27	-	-	142
-	7	-	-	31	1,324
16	-	-	-	-	1,204
40,028	-	-	-	-	40,624
6,589	42	430	3,091	1,413	84,833
76	-	-	-	-	183
902	101	45	564	775	3,552
1,137	-	96	404	130	2,210
922	98	1,208	1,778	98	5,282
2	-	-	-	-	1,178
166	21	1,093	(2,379)	530	-
51,961	1,324	2,916	3,860	2,978	148,038
887	-	-	-	2,639	77,583
-	-	-	-	-	343
-	-	-	5,390	-	5,390
2,281	11	1,010	-	-	3,536
33	2	61	-	-	294
1	-	-	-	-	694
61	-	23	-	-	457
4	1	42	-	-	226
1,213	157	77	477	59	4,496
41,578	-	-	-	-	41,671
1,189	-	-	372	-	1,863
-	-	-	-	-	1,132
441	566	836	(2,379)	1	-
47,688	737	2,049	3,860	2,699	137,685
4,273	587	867	-	279	10,353
2,358	563	421	-	279	7,947
1,915	24	446	-	-	2,406
1,643	24	-	-	-	1,688
272	-	446	-	-	718
4,273	587	867	-	279	10,353

Notes to the consolidated financial statements
For the six months ended 30 June 2013
B: Segment information continued
B4: Statement of financial position - segment information at 31 December 2012 Restated¹
	Notes		Emerging Markets	Old Mutual Wealth	Property & Casualty
Assets
Goodwill and other intangible assets			98	1,594	14
Mandatory reserve deposits with central banks			-	-	-
Property, plant and equipment			336	13	20
Investment property			1,588	-	-
Deferred tax assets			82	44	20
Investments in associated undertakings and joint ventures			57	-	2
Deferred acquisition costs			103	1,159	18
Reinsurers' share of policyholder liabilities			55	1,236	100
Loans and advances			142	180	-
Investments and securities			31,157	45,402	397
Current tax receivable			16	64	5
Trade, other receivables and other assets			697	333	92
Derivative financial instruments			612	-	-
Cash and cash equivalents			816	576	109
Non-current assets held for sale			-	5	-
Inter-segment assets			562	101	43
Total assets			36,321	50,707	820
Liabilities
Life assurance policyholder liabilities			31,124	46,455	-
General insurance liabilities			-	-	346
Third-party interests in consolidated funds			-	-	-
Borrowed funds	E2		218	-	-
Provisions			120	54	30
Deferred revenue			11	667	10
Deferred tax liabilities			130	189	21
Current tax payable			198	39	-
Trade, other payables and other liabilities			2,221	669	127
Amounts owed to bank depositors			86	-	-
Derivative financial instruments			377	-	-
Non-current liabilities held for sale			-	-	-
Inter-segment liabilities			216	587	2
Total liabilities			34,701	48,660	536
Net assets			1,620	2,047	284
Equity
Equity attributable to equity holders of the parent			1,606	2,047	261
Non-controlling interests			14	-	23
Ordinary shares			14	-	23
Preferred securities			-	-	-
Total equity			1,620	2,047	284

¹   Prior periods have been restated for the impact of changes in accounting policies. Refer to note A1 for further details.

					£m
Nedbank	USAM	Other	Consolidation adjustments	Non-core operations	Total
534	816	-	-	-	3,056
921	-	-	-	-	921
465	12	1	-	-	847
15	-	-	344	-	1,947
34	162	2	-	1	345
49	18	26	-	-	152
-	8	-	-	-	1,288
15	-	-	-	-	1,406
38,173	-	-	-	-	38,495
6,303	37	368	3,897	952	88,513
18	-	-	-	-	103
674	105	62	372	595	2,930
1,003	-	97	50	18	1,780
1,049	115	379	1,892	125	5,061
37	-	-	-	-	42
111	21	1,366	(2,877)	673	-
49,401	1,294	2,301	3,678	2,364	146,886
907	-	-	-	1,702	80,188
-	-	-	-	-	346
-	-	-	6,116	-	6,116
2,163	10	659	-	-	3,050
36	1	40	-	-	281
1	-	-	-	-	689
40	-	24	-	-	404
9	6	34	-	1	287
1,076	193	70	400	92	4,848
39,413	-	-	-	-	39,499
977	-	8	39	1	1,402
3	-	-	-	-	3
596	554	922	(2,877)	-	-
45,221	764	1,757	3,678	1,796	137,113
4,180	530	544	-	568	9,773
2,283	507	544	-	568	7,816
1,897	23	-	-	-	1,957
1,624	23	-	-	-	1,684
273	-	-	-	-	273
4,180	530	544	-	568	9,773

Notes to the consolidated financial statements

For the six months ended 30 June 2013

C: Other key performance information 

C1: Operating profit adjusting items

(a) Summary of adjusting items for determination of AOP

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

		£m
	Notes	Six months ended 30 June 2013	Six months ended 30 June 2012	Year  ended 31 December 2012
Income/(expense)
Goodwill impairment and impact of acquisition accounting	C1(b)	(57)	(64)	(123)
(Loss)/profit on disposal of subsidiaries, associated undertakings    and strategic investments	C1(c)	(1)	20	(56)
Short-term fluctuations in investment return	C1(d)	16	(49)	(78)
Investment return adjustment for Group equity and debt instruments    held in life funds	C1(e)	(33)	(37)	(113)
Dividends declared to holders of perpetual preferred callable securities	C1(f)	22	22	42
US Asset Management equity plans	C1(g)	(17)	(4)	(13)
Credit-related fair value losses on Group debt instruments	C1(h)	1	(37)	(126)
Total adjusting items		(69)	(149)	(467)
Tax on adjusting items		28	3	44
Non-controlling interest in adjusting items		13	13	25
Total adjusting items after tax and non-controlling interests		(28)	(133)	(398)

(b) Goodwill impairment and impact of acquisition accounting

When applying acquisition accounting, deferred acquisition costs and deferred revenues existing at the point of acquisition are not recognised under IFRS. 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 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. The effect of these adjustments to determine adjusted operating profit are summarised below:

				£m
Six months ended 30 June 2013	Emerging Markets	Old Mutual Wealth	USAM	Total
Amortisation of acquired PVIF	-	(38)	-	(38)
Amortisation of acquired deferred costs and revenue	-	6	-	6
Amortisation of other acquired intangible assets	(1)	(23)	-	(24)
Goodwill impairment	(1)	-	-	(1)
	(2)	(55)	-	(57)
				£m
Six months ended 30 June 2012	Emerging Markets	Old Mutual Wealth	USAM	Total
Amortisation of acquired PVIF	-	(43)	-	(43)
Amortisation of acquired deferred costs and revenue	-	6	-	6
Amortisation of other acquired intangible assets	(1)	(25)	(1)	(27)
	(1)	(62)	(1)	(64)
				£m
Year ended 31 December 2012	Emerging Markets	Old Mutual Wealth	USAM	Total
Amortisation of acquired PVIF	-	(84)	-	(84)
Amortisation of acquired deferred costs and revenue	-	12	-	12
Amortisation of other acquired intangible assets	(2)	(48)	(1)	(51)
	(2)	(120)	(1)	(123)

(c) (Loss)/profit on disposal of subsidiaries, associated undertakings and strategic investments (Loss)/profit on disposal of subsidiaries, associated undertakings and strategic investments is analysed below:
			£m
	Six months ended 30 June 2013	Six months ended  30 June     2012	Year ended 31 December 2012
USAM	(1)	20	(16)
Emerging Markets	-	-	(15)
Old Mutual Wealth	-	-	(25)
(Loss)/profit on disposal of subsidiaries, associated undertakings and strategic investments	(1)	20	(56)

On 2 January 2013, USAM completed the previously announced transactions to sell five of its affiliates. For the six months ended 30 June 2013, a loss of £1 million was recognised in relation to these transactions.

On 13 April 2012, USAM disposed of Old Mutual Capital, Inc, a subsidiary, at a profit of £12 million. On 15 May 2012, USAM disposed of Dwight Asset Management Company LLC, a fixed income affiliate, at a profit of £7 million. On 11 October 2012, the Group announced that it had finalised agreements to sell five USAM affiliates at a loss of £32 million. A £3 million loss was also recognised during the year ended 31 December 2012 in relation to disposals of other USAM subsidiaries in previous periods.

On 20 November 2012, the Emerging Markets segment recognised a profit of £3 million on the acquisition of a strategic investment Curo Fund Services (Pty) Ltd.

During the year ended 31 December 2012, the Group incurred expenses of £18 million as initial costs regarding Zimbabwean Indigenisation and Economic Empowerment Schemes. These costs are directly related to the acquisition of the Zimbabwean business.

On 31 August 2012, Old Mutual Wealth completed the sale of its Finnish branch at a loss of £27 million. A profit of £2 million was recognised on the sale of Skandia Services AG (Switzerland) on 30 June 2012.

(d) Short-term fluctuations in investment return

Profit before tax, as disclosed in the consolidated IFRS income statement, 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 is referred to as the short-term fluctuation 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 underlying rates are principally derived with reference to 10-year government bond rates, cash and money market rates and an explicit equity risk premium for South African businesses. The rates set out below reflect the proposed weighting of investments in underlying cash, money market and equity assets. Long-term rates of return are reviewed frequently by the Board, usually annually, for appropriateness. The review of the long-term rates of return seeks to ensure that the 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 Old Mutual Wealth, the return is applied to average investible assets. For Property & Casualty, the return is an average value of investible assets supporting shareholders' funds and insurance liabilities, adjusted for net fund flows.

			%
Long-term investment rates	Six months ended 30 June 2013	Six months ended  30 June 2012	Year  ended 31 December 2012
Emerging Markets	8.0	9.0	9.0
Old Mutual Wealth	1.0	1.5	1.5
Property & Casualty	7.4	8.6	8.6

Notes to the consolidated financial statements

For the six months ended 30 June 2013

C: Other key performance information continued

C1: Operating profit adjusting items continued

(d) Short-term fluctuations in investment return continued
Analysis of short-term fluctuations in investment return
	£m
Six months ended 30 June 2013	Emerging Markets	Old Mutual Wealth1	Property & Casualty	Other	Total
Actual shareholder investment return	88	24	12	18	142
Less: Long-term investment return	55	29	17	25	126
Short-term fluctuations in investment return	33	(5)	(5)	(7)	16
	£m
Six months ended 30 June 2012	Emerging Markets	Old Mutual Wealth1	Property & Casualty	Other	Total
Actual shareholder investment return	19	19	18	25	81
Less: Long-term investment return	63	18	24	25	130
Short-term fluctuations in investment return	(44)	1	(6)	-	(49)
	£m
Year ended 31 December 2012	Emerging Markets	Old Mutual Wealth1	Property & Casualty	Other	Total
Actual shareholder investment return	81	65	34	34	214
Less: Long-term investment return	124	67	47	54	292
Short-term fluctuations in investment return	(43)	(2)	(13)	(20)	(78)

¹   Old Mutual Wealth long-term investment return includes £26 million (six months ended 30 June 2012: £14 million; year ended 31 December 2012: £59 million) in respect of income tax attributable to policyholder returns.

(e) Investment return adjustment for Group equity and debt instruments held in policyholder 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 issued by Nedbank. These investment returns are eliminated within the consolidated income statement in arriving at profit before tax in the IFRS income statement, but are included in adjusted operating profit. During the six months ended 30 June 2013, the investment return adjustment increased adjusted operating profit by £33 million (six months ended 30 June 2012: increase of £37 million; year ended 31 December 2012: increase of £113 million).

(f) Dividends declared to holders of perpetual preferred callable securities

Dividends declared to the holders of the Group's perpetual preferred callable securities were £22 million for the six months ended 30 June 2013 (six months ended 30 June 2012: £22 million; year ended 31 December 2012: £42 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 distribution is recognised directly in equity.

(g) US Asset Management equity plans

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

The Group has issued put options in equities in the affiliates to senior employees as part of its US affiliate incentive schemes. The impact of revaluing these instruments is recognised in accordance with IFRS, but excluded from adjusted operating profit. At 30 June 2013, these instruments were revalued, the impact of which was a profit of £17 million (six months ended 30 June 2012: profit of £4 million; year ended 31 December 2012: profit of £13 million).

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

The widening of credit spread for the Group debt instruments causes the market value of debt to decrease. This results in gains being recognised in the Group consolidated income statement, compared with losses if the credit spread narrows and the market value of debt instruments rises. This resulted in net gains of £1 million for the six months ended 30 June 2013 (£37 million loss for the six months ended 30 June 2012; £55 million loss for the year ended 31 December 2012).

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.

On 1 August 2012, the Group redeemed £388 million of the £500 million senior bond due in 2016 at a cash consideration of £459 million. The £71 million excess over the nominal value reflected the market value of the instrument prior to expiration. 

C2: Earnings and earnings per share

(a) Basic and diluted earnings per share

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

			£m
	Six months ended 30 June 2013	Six months ended 30 June 2012 Restated¹	Year ended 31 December 2012 Restated¹
Profit for the financial period attributable to equity holders of the parent from    continuing operations	422	335	608
(Loss)/profit for the financial period attributable to equity holders of the parent from    discontinued operations	(8)	595	564
Profit for the financial period attributable to equity holders of the parent	414	930	1,172
Dividends paid to holders of perpetual preferred callable securities	(17)	(17)	(32)
Profit attributable to ordinary equity holders	397	913	1,140

¹   Prior periods have been restated for the impact of changes in accounting policies. Refer to note A1 for further details.

Total dividends paid to holders of perpetual preferred callable securities of £17 million for the six months ended 30 June 2013 (six months ended 30 June 2012: £17 million; year ended 31 December 2012: £32 million) are stated net of tax credits of £5 million (six months ended 30 June 2012: £5 million; year ended 31 December 2012: £10 million).

			Millions
	Six months ended 30 June 2013	Six months ended  30 June 2012	Year ended 31 December 2012
Weighted average number of ordinary shares in issue	4,894	5,303	5,096
Shares held in charitable foundations	(6)	(6)	(6)
Shares held in ESOP trusts	(53)	(66)	(61)
Adjusted weighted average number of ordinary shares	4,835	5,231	5,029
Shares held in life funds	(160)	(193)	(181)
Shares held in Black Economic Empowerment trusts	(239)	(279)	(261)
Weighted average number of ordinary shares	4,436	4,759	4,587
Basic earnings per ordinary share (pence)¹	8.9	19.2	24.9

¹   Restatement for the impact of changes in policies did not result in changes to basic earnings per share for the six months ended 30 June 2012 and the year ended 31 December 2012.

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.

	Six months ended 30 June 2013	Six months ended 30 June 2012 Restated¹	Year ended 31 December 2012 Restated¹
Profit attributable to ordinary equity holders (£m)	397	913	1,140
Dilution effect on profit relating to share options issued by subsidiaries (£m)	(4)	(4)	(10)
Diluted profit attributable to ordinary equity holders (£m)	393	909	1,130
Weighted average number of ordinary shares (millions)	4,436	4,759	4,587
Adjustments for share options held by ESOP trusts (millions)	46	106	53
Adjustments for shares held in Black Economic Empowerment trusts (millions)	239	279	261
	4,721	5,144	4,901
Diluted earnings per ordinary share (pence)²	8.3	17.7	23.1

¹   Prior periods have been restated for the impact of changes in accounting policies. Refer to note A1 for further details.

²   Restatement for the impact of changes in policies did not result in changes to diluted earnings per share for the six months ended 30 June 2012 and the year ended 31 December 2012.

Notes to the consolidated financial statements

For the six months ended 30 June 2013

C: Other key performance information continued

C2: Earnings per share continued

(b) Adjusted operating earnings per ordinary share
The reconciliation of profit for the financial period to adjusted operating profit after tax attributable to ordinary equity holders is as follows:
			£m
	Six months ended 30 June 2013	Six months ended 30 June 2012 Restated¹	Year ended 31 December 2012 Restated¹
Profit for the financial period attributable to equity holders of the parent	414	930	1,172
Adjusting items	69	149	467
Tax on adjusting items	(28)	(3)	(44)
Non-core operations	(2)	(53)	(165)
Profit from discontinued operations	8	(595)	(564)
Non-controlling interest on adjusting items	(13)	(13)	(25)
Adjusted operating profit after tax attributable to ordinary equity holders	448	415	841
Adjusted weighted average number of ordinary shares (millions)²	4,835	4,806	4,818
Adjusted operating earnings per ordinary share (pence)	9.3	8.6	17.5

¹   Prior periods have been restated for the impact of changes in accounting policies. Refer to note A1 for further details.

²   For the six months ended 30 June 2012 and the year ended 31 December 2012, the weighted average number of shares used in the calculation of basic and diluted earnings per share was adjusted for the seven-for-eight share consolidation that was affected on 23 April 2012. For adjusted operating earnings per share, the adjustment of the weighted average number of shares has been made effective from 1 January 2012. This adjustment had the effect of presenting adjusted earnings per share on a more consistent basis, but resulted in a difference between the adjusted weighted average number of shares for IFRS and AOP for the comparative periods.

(c) Headline earnings per share

The Group is required to calculate a 'headline earnings per share' (HEPS) in accordance with the JSE Limited (JSE) Listing Requirements, 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, but it is a commonly used measure of earnings in South Africa.

						£m
	Six months ended 30 June 2013		Six months ended 30 June 2012 Restated¹		Year ended 31 December 2012 Restated¹
	Gross	Net	Gross	Net	Gross	Net
Profit for the financial period attributable to   equity holders of the parent	414	414	930	930	1,172	1,172
Dividends declared to holders of perpetual preferred   callable securities	(17)	(17)	(17)	(17)	(32)	(32)
Profit attributable to ordinary equity holders	397	397	913	913	1,140	1,140
Adjustments:
Impairments of goodwill and intangible assets	1	1	-	-	-	-
Loss/(profit) on disposal of subsidiaries,   associated undertakings and  strategic investments	1	(14)	(262)	(256)	(183)	(173)
Realised gains (net of impairments) on available-for-   sale financial assets	(8)	(8)	(6)	(6)	(21)	(21)
Exchange differences realised on disposal	-	-	(350)	(350)	(350)	(350)
Headline earnings	391	376	295	301	586	596
Weighted average number of ordinary shares	4,436	4,436	4,759	4,759	4,587	4,587
Diluted weighted average number of ordinary   shares	4,721	4,721	5,144	5,144	4,901	4,901
Headline earnings per share (pence)	8.8	8.5	6.2	6.3	12.8	13.0
Diluted headline earnings per share (pence)	8.3	8.0	5.7	5.9	12.0	12.2

¹   Prior periods have been restated for the impact of changes in accounting policies. Refer to note A1 for further details.

C3: Dividends
			£m
	Six months ended 30 June 2013	Six months ended 30 June 2012	Year ended 31 December 2012
2011 Final dividend paid - 3.5p per 10p share	-	178	178
Special dividend - 18.0p per 10p share	-	915	915
2012 Interim dividend paid - 1.75p per 11 3/7p share	-	-	79
2012 Final dividend paid - 5.25p per 11 3/7p share	238	-	-
Dividends to ordinary equity holders	238	1,093	1,172
Dividends declared to holders of perpetual preferred callable securities	22	22	42
Dividend payments for the period	260	1,115	1,214

Final and interim dividends paid to ordinary equity holders are calculated using the number of shares in issue at the record date less treasury shares held in ESOP trusts, life funds of Group entities, 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.

An interim dividend of 2.1 pence (or its equivalent in other applicable currencies) per ordinary share in the Company has been recommended by the directors. The interim dividend will be paid on 31 October 2013 to shareholders on the register at the close of business on 27 September 2013. The dividend will absorb an estimated £93 million of shareholders' funds. The Company is not planning to offer a scrip dividend alternative.

In March 2013, £22 million was declared and paid to holders of perpetual preferred callable securities (March 2012: £22 million; November 2012: £20 million).

D: Other income statement notes
D1: Income tax expense
(a) Analysis of total income tax expense
			£m
	Six months ended 30 June 2013	Six months ended 30 June 2012 Restated¹	Year ended 31 December 2012 Restated¹
Current tax
United Kingdom	9	6	18
Overseas tax
- Africa	198	208	512
- United States	-	-	4
- Europe	10	8	30
Secondary tax on companies (STC)	-	20	23
Adjustment to current tax in respect of prior years	(19)	2	5
Total current tax	198	244	592
Deferred tax
Origination and reversal of temporary differences	40	(3)	(121)
Changes in tax rates/bases	-	-	2
Recognition of deferred tax assets	-	-	(2)
Adjustments to deferred tax in respect of prior years	12	-	-
Total deferred tax	52	(3)	(121)
Total income tax expense	250	241	471

¹   Prior periods have been restated for the impact of changes in accounting policies. Refer to note A1 for further details.

Notes to the consolidated financial statements

For the six months ended 30 June 2013

D: Other income statement notes continued

D1: Income tax expense continued

(b) Reconciliation of total income tax expense
			£m
	Six months ended 30 June 2013	Six months ended 30 June 2012 Restated¹	Year ended 31 December 2012 Restated¹
Profit before tax	805	728	1,385
Tax at UK standard rate of 23.25% (2012: 24.5%)	187	178	339
Different tax rate or basis on overseas operations	33	27	19
Untaxed and low taxed income	(31)	(45)	(57)
Disallowable expenses	(4)	11	48
Net movement on deferred tax assets not recognised	13	22	48
Effect on deferred tax of changes in tax rates	-	2	2
STC	-	18	20
Income tax attributable to policyholder returns	49	28	59
Other	3	-	(7)
Total income tax expense	250	241	471

¹   Prior periods have been restated for the impact of changes in accounting policies. Refer to note A1 for further details.

(c) Income tax relating to components of other comprehensive income
			£m
	Six months ended 30 June 2013	Six months ended 30 June 2012 Restated¹	Year ended 31 December 2012 Restated¹
Preferred perpetual callable securities	(5)	(5)	(10)
Actuarial gains on defined benefit plans	1	2	4
Income tax on items that will not be reclassified subsequently to profit or loss	(4)	(3)	(6)
Income tax on items that may be reclassified subsequently to profit or loss	(1)	-	5
Income tax credit - continuing operations	(5)	(3)	(1)
Income tax expense on fair value movements - discontinued operations	-	1	1
Income tax credit relating to components of other comprehensive   income	(5)	(2)	-

¹   Prior periods have been restated for the impact of changes in accounting policies. Refer to note A1 for further details.

(d) Reconciliation of income tax expense in the IFRS income statement to income tax on adjusted operating profit
			£m
	Six months ended 30 June 2013	Six months ended 30 June 2012 Restated¹	Year ended 31 December 2012 Restated¹
Income tax expense	250	241	471
Goodwill impairment and impact of acquisition accounting	6	13	51
Profit on disposal of subsidiaries, associates and strategic investments	15	(8)	(10)
Short-term fluctuations in investment return	3	7	7
Income tax attributable to policyholders returns	(71)	(34)	(75)
Tax on dividends declared to holders of perpetual preferred callable securities recognised in equity	(5)	(5)	(10)
US Asset Management equity plans	9	(2)	6
Tax on dividends received in trusts	-	(2)	-
Income tax on adjusted operating profit	207	210	440

¹   Prior periods have been restated for the impact of changes in accounting policies. Refer to note A1 for further details.

E: Financial assets and liabilities

E1: Group statement of financial position

The Group is exposed to financial risk through its financial assets (investments and loans), financial liabilities (investment contracts, customer deposits and borrowings), reinsurance assets and insurance liabilities. The key focus of financial risk management for the Group is ensuring that the proceeds from its financial assets are sufficient to fund the obligations arising from its insurance and banking operations. The most important components of financial risk are credit risk, market risk (arising from changes in equity, and bond prices, interest and foreign exchange rates), and liquidity risk.

Categories of financial instruments

The analysis of assets and liabilities into their categories as defined in IAS 39 'Financial Instruments: Recognition and Measurement' is set out in the following table. Assets and liabilities of a non-financial nature, or financial assets and liabilities that are specifically excluded from the scope of IAS 39, are reflected in the non-financial assets and liabilities category.

								£m
		Fair value through income statement
At 30 June 2013	Total	Held-for-trading	Designated	Available-for-sale financial assets	Held-to-maturity investments	Loans and receivables	Financial liabilities amortised cost	Non-financial assets and liabilities
Assets
Mandatory reserve deposits with    central banks	760	-	-	-	-	760	-	-
Reinsurers' share of policyholder   liabilities	1,629	-	1,386	-	-	19	-	224
Loans and advances	37,240	2,467	3,778	2	-	30,993	-	-
Investments and securities	89,093	1,237	85,115	811	1,550	380	-	-
Trade, other receivables and    other assets	2,955	176	393	-	-	1,882	-	504
Derivative financial instruments	1,417	1,417	-	-	-	-	-	-
Cash and cash equivalents	5,035	-	-	-	-	5,035	-	-
Total financial assets	138,129	5,297	90,672	813	1,550	39,069	-	728
Total non-financial assets	7,603	-	-	-	-	-	-	7,603
Total assets	145,732	5,297	90,672	813	1,550	39,069	-	8,331
Liabilities
Life assurance policyholder    liabilities	81,443	-	61,876	-	-	209	-	19,358
Third-party interest in consolidation   of funds	5,479	-	5,479	-	-	-	-	-
Borrowed funds	2,563	-	880	-	-	-	1,683	-
Trade, other payables and    other liabilities	5,031	416	472	-	-	211	2,778	1,154
Amounts owed to bank depositors	38,009	3,661	5,032	-	-	-	29,316	-
Derivative financial instruments	1,623	1,623	-	-	-	-	-	-
Total financial liabilities	134,148	5,700	73,739	-	-	420	33,777	20,512
Total non-financial liabilities	1,951	-	-	-	-	-	-	1,951
Total liabilities	136,099	5,700	73,739	-	-	420	33,777	22,463

Notes to the consolidated financial statements

For the six months ended 30 June 2013

E: Financial assets and liabilities continued

E1: Group statement of financial position continued

Fair value hierarchy
The table below analyses the financial assets and liabilities according to fair value hierarchy:
				£m
At 30 June 2013	Total	Level 1	Level 2	Level 3
Financial assets measured at fair value
Held-for-trading (fair value through income statement)	5,297	474	4,811	12
Loans and advances	2,467	-	2,467	-
Investments and securities	1,237	294	936	7
Other financial assets	176	176	-	-
Derivative financial instruments - assets	1,417	4	1,408	5
Designated (fair value through income statement)	90,672	72,482	16,966	1,224
Reinsurers' share of policyholder liabilities	1,386	1,386	-	-
Loans and advances	3,778	2	3,772	4
Investments and securities	85,115	70,703	13,192	1,220
Other financial assets	393	391	2	-
Available-for-sale financial assets	813	371	439	3
Loans and advances	2	2	-	-
Investments and securities	811	369	439	3
Total assets measured at fair value	96,782	73,327	22,216	1,239
Financial liabilities measured at fair value
Held-for-trading (fair value through income statement)	5,700	412	5,288	-
Other liabilities	416	408	8	-
Amounts owed to bank depositors	3,661	-	3,661	-
Derivative financial instruments - liabilities	1,623	4	1,619	-
Designated (fair value through income statement)	73,739	44,675	28,529	535
Life assurance policyholder liabilities	61,876	43,806	17,535	535
Third-party interests in consolidated funds	5,479	-	5,479	-
Borrowed funds	880	865	15	-
Other liabilities	472	4	468	-
Amounts owed to bank depositors	5,032	-	5,032	-
Total liabilities measured at fair value	79,439	45,087	33,817	535
				£m
At 31 December 2012	Total	Level 1	Level 2	Level 3
Financial assets measured at fair value
Held-for-trading (fair value through income statement)	5,459	639	4,816	4
Designated (fair value through income statement)	87,813	68,059	18,694	1,060
Available-for-sale financial assets	902	335	565	2
Total assets measured at fair value	94,174	69,033	24,075	1,066
Financial liabilities measured at fair value
Held-for-trading (fair value through income statement)	5,925	462	5,463	-
Designated (fair value through income statement)	68,895	42,788	25,627	480
Total liabilities measured at fair value	74,820	43,250	31,090	480

The best evidence of fair value is a quoted price in an active market. In the event that the market for a financial asset or liability is not active, or quoted prices cannot be obtained without undue effort, another valuation technique is used.

The judgement as to whether a market is active may include, for example, consideration of factors such as the magnitude and frequency of trading activity, the availability of prices and the size of bid/offer spreads. In inactive markets, obtaining assurance that the transaction price provides evidence of fair value or determining the adjustments to transaction prices that are necessary to measure the fair value of the asset or liability requires additional work during the valuation process.

The majority of valuation techniques employ only observable data and so the reliability of the fair value measurement is high. However, certain financial assets and liabilities are valued on the basis of valuation techniques that feature one or more significant inputs that are unobservable and, for them, the derivation of fair value is more judgemental. A financial asset or liability in its entirety is classified as valued using significant unobservable inputs if a significant proportion of that asset or liability's carrying amount is driven by unobservable inputs. In this context, 'unobservable' means that there is little or no current market data available for which to determine the price at which an arm's length transaction would be likely to occur. It generally does not mean that there is no market data available at all upon which to base a determination of fair value. Furthermore, in some cases the majority of the fair value derived from a valuation technique with significant unobservable data may be attributable to observable inputs. Consequently, the effect of uncertainty in determining unobservable inputs will generally be restricted to uncertainty about the overall fair value of the asset or liability being measured. Details of the Group's valuation techniques can be found in Note E1(p) of the Annual Report. There have been no significant changes to the valuation techniques applied.

The transfers into Level 3 largely relate to instances where inputs to the valuation for certain financial assets and liabilities obtained from pricing service providers are no longer observable. There were no significant transfers between Level 1 and Level 2 during the year.

The table below shows the movement in Level 3 assets measured at fair value:
						£m
Six months ended 30 June 2013	Held-for-trading - Investments and securities	Held- for-trading -  Derivatives	Designated fair value through income statement  - Loans and advances	Designated fair value through income statement  - Investments and securities	Available-for- sale - Investments and securities	Total
Level 3 financial assets
At beginning of the year	4	-	9	1,051	2	1,066
Total net gains/(losses) recognised in   the income statement for the period	4	-	(5)	54	-	53
Total gains recognised in other   comprehensive income	-	-	-	1	-	1
Purchases and issues	-	5	-	24	-	29
Sales and settlements	(1)	-	-	(21)	-	(22)
Transfers in	-	-	-	151	1	152
Transfers out	-	-	-	-	-	-
Foreign exchange and other	-	-	-	(40)	-	(40)
Total level 3 financial assets	7	5	4	1,220	3	1,239
Gains relating to assets held   at 30 June 2013 recognised in:
- income statement	-	-	-	52	-	52
- other comprehensive income	-	-	-	-	-	-

Notes to the consolidated financial statements

For the six months ended 30 June 2013

E: Financial assets and liabilities continued

E1: Group statement of financial position continued

Fair value hierarchy continued

The table below shows the movement in Level 3 liabilities measured at fair value:
	£m
Six months ended 30 June 2013	Designated fair value through income statement - Life assurance policyholder liabilities (investment contracts)
Level 3 financial liabilities
At beginning of the year	480
Total net losses recognised in the income statement for the period	72
Purchases and issues	1
Sales and settlements	(104)
Transfers in	77
Foreign exchange and other	9
Total level 3 financial liabilities	535
Losses relating to liabilities held at 30 June 2013 recognised in:
- income statement	74
- other comprehensive income	-

Effect of changes in significant unobservable assumptions to reasonable possible alternatives

Favourable and unfavourable changes are determined on the basis of changes in the value of the financial asset or liability as a result of varying the levels of the unobservable parameter using statistical techniques. When parameters are not amenable to statistical analysis, quantification of uncertainty is judgemental.

When the fair value of a financial asset or liability is affected by more than one unobservable assumption, the figures shown reflect the most favourable or most unfavourable change from varying the assumptions individually.

In respect of private equity investments, the valuations are assessed on an asset-by-asset basis using a valuation methodology appropriate to the specific investment, in line with industry guidelines. In many of the methodologies, the principal assumption is the valuation multiple to be applied to the main financial indicators including, for example, multiples for comparable listed companies and discounts for marketability.

For asset-backed securities whose prices are unobservable, models are used to generate the expected value of the asset, incorporating benchmark information on factors such as prepayment patterns, default rates, loss severities and the historical performance of the underlying assets. The models used are calibrated by using securities for which external market information is available.

For structured notes and other derivatives, principal assumptions concern the future volatility of asset values and the future correlation between asset values. These principle assumptions include credit volatilities and correlations used in the valuation of the structured credit derivatives. For such unobservable assumptions, estimates are based on available market data, which may include the use of a proxy method to derive a volatility or correlation from comparable assets for which market data is more readily available, and examination of historical levels.

Alternative assumptions

Accounting standards require consideration of the effect of reasonable possible alternative assumptions on the fair value of Level 3 financial assets and liabilities.

Alternative assumptions are assessed in terms of possible favourable and unfavourable changes in the key market inputs for the major types of Level 3 financial assets and liabilities, ranging from, for example, a 10% change in the price earnings multiple for equity securities, to a 25% change in the discount rates applied to debt securities and volatility assumptions in derivative contracts. Changes in business risk inputs such as lapses and non-performance risk were also considered.

The table below shows the income statement effect of reasonable possible alternative assumptions on the fair value of Level 3 financial assets and liabilities:

		£m
	Reflected in income statement
Six months ended 30 June 2013	Favourable changes	Unfavourable changes
Level 3 financial assets
Designated (fair value through income statement)	123	120
Loans and advances	1	1
Investments and securities	122	119
Total Level 3 financial assets	123	120
Level 3 financial liabilities
Designated (fair value through income statement)	20	48
Life assurance policyholder liabilities (investment contracts)	20	48
Total Level 3 financial liabilities	20	48

The impact of reasonable possible alternative assumptions on other comprehensive income was £nil in all periods.

Notes to the consolidated financial statements

For the six months ended 30 June 2013

E: Financial assets and liabilities

E2: Borrowed funds

									£m
	Notes		Group excluding Nedbank	Nedbank	At 30 June 2013 Group		Group excluding Nedbank	Nedbank	At 30 June 2012 Group
Senior debt securities and term loans			123	994	1,117		507	1,427	1,934
Floating rate notes	E2(a)		-	525	525		-	926	926
Fixed rate notes	E2(b)		123	469	592		507	501	1,008
Mortgage-backed securities	E2(d)		-	114	114		-	70	70
Subordinated debt securities (net of        Group holdings)	E2(e)		714	618	1,332		747	785	1,532
Borrowed funds			837	1,726	2,563		1,254	2,282	3,536
Other Group instruments treated as    equity for accounting purposes
US$750 million cumulative    preference securities			-				458
€495 million perpetual preferred    callable securities			334				338
£348 million perpetual preferred    callable securities			348				350
Total: Book value			1,519				2,400
Nominal value of the above			1,594				2,476
									£m
							Group excluding Nedbank	Nedbank	At 31 December 2012 Group
Senior debt securities and term loans							122	1,363	1,485
Floating rate notes	E2(a)						-	849	849
Fixed rate notes	E2(b)						122	514	636
Mortgage-backed securities	E2(d)						-	131	131
Subordinated debt securities (net of        Group holdings)	E2(e)						765	669	1,434
Borrowed funds							887	2,163	3,050
Other Group instruments treated as    equity for accounting purposes
US$750 million cumulative    preference securities							-
€495 million perpetual preferred    callable securities							334
£348 million perpetual preferred    callable securities							348
Total: Book value							1,569
Nominal value of the above							1,590

Senior notes
(a) Floating rate notes
				£m
	Maturity date	At 30 June 2013	At 30 June 2012	At 31 December 2012
Nedbank - Floating rate unsecured senior debt
R98 million at inflation linked (3.80% real yield)	Repaid	-	9	8
R1,750 million at inflation linked (3.90% real yield)	Repaid	-	158	151
R1,690 million at JIBAR + 1.50%	Repaid	-	81	-
R1,552 million at JIBAR + 1.48%	Repaid	-	123	114
R988 million at JIBAR + 1.05%	March 2014	64	75	71
R500 million at JIBAR + 1.00%	April 2014	30	39	33
R1,075 million at JIBAR + 0.94%	October 2014	72	85	79
R1,297 million at JIBAR + 1.00%	February 2015	87	102	95
R1,027 million at JIBAR + 1.75%	April 2015	69	81	76
R250 million at JIBAR + 1.00%	August 2015	17	-	18
R1,044 million at JIBAR + 2.20%	September 2015	70	82	76
R677 million at JIBAR + 1.25%	March 2016	45	53	49
R405 million at JIBAR + 1.30%	February 2017	27	32	30
R786 million at JIBAR + 1.31%	August 2017	39	-	43
R80 million at JIBAR + 2.15%	April 2020	5	6	6
Total floating rate notes		525	926	849
All floating rate notes are non-qualifying for the purposes of regulatory tiers of capital.
(b) Fixed rate notes
				£m
	Maturity date	At 30 June 2013	At 30 June 2012	At 31 December 2012
Nedbank - Fixed rate unsecured senior debt
R450 million at 8.39%	March 2014	30	36	33
R478 million at 9.68%	April 2015	32	38	35
R3,244 million at 10.55%	September 2015	222	260	242
R1,137 million at 9.36%	March 2016	77	91	85
R1,273 million at 11.39%	September 2019	93	61	102
R660 million at zero coupon	October 2024	15	15	17
		469	501	514
Group excluding Nedbank
£112 million eurobond at 7.125%	October 2016	112	496	112
US$16 million secured senior debt at 5.23%	August 2014	11	11	10
		123	507	122
Total fixed rate notes		592	1,008	636
All fixed rate notes are non-qualifying for the purposes of regulatory tiers of capital.

(c) Revolving credit facilities and irrevocable letters of credit

The Group has access to a £1,200 million five-year multi-currency revolving credit facility (agreed in April 2011). At 30 June 2013, 30 June 2012 and 31 December 2012, none of this facility was drawn down and there were no irrevocable letters of credit in issue against this facility.

Notes to the consolidated financial statements

For the six months ended 30 June 2013

E: Financial assets and liabilities continued

E2: Borrowed funds continued

(d) Mortgage-backed securities - Nedbank
					£m
	Tier	Maturity date	At 30 June 2013	At 30 June 2012	At 31 December 2012
Nedbank
R1.4 billion (class A2A) at 11.817%	Tier 2	Repaid	-	60	-
R98 million (class B note) at 12.067%	Tier 2	Repaid	-	6	-
R76 million (class C note) at 13.317%	Tier 2	Repaid	-	4	-
R480 million (class A1) at JIBAR + 1.10%	Tier 2	25 October 2039	24	-	32
R336 million (class A2) at JIBAR + 1.25%	Tier 2	25 October 2039	23	-	25
R900 million (class A3) at JIBAR + 1.54%	Tier 2	25 October 2039	60	-	66
R110 million  (class B) at JIBAR + 1.90%	Tier 2	25 October 2039	7	-	8
Total mortgage-backed securities			114	70	131

(e) Subordinated debt securities (net of Group holdings)
						£m
	Tier	First call date	Maturity date	At 30 June 2013	At 30 June 2012	At 31 December 2012
Nedbank
R500 million at 3 month JIBAR + 0.45%	Tier 2	Repaid	Repaid	-	39	-
R500 million at 3 month JIBAR + 0.70%	Tier 2	Repaid	Repaid	-	39	-
R120 million at 10.38%	Tier 2	Repaid	Repaid	-	10	-
R300 million at 3 month JIBAR + 2.50%	Tier 2	December 2013	December 2013	10	12	11
R1.8 billion at 9.84%	Tier 2	September 2013	September 2018	124	150	137
R1,265 million at JIBAR + 4.75%	Non-core Tier 1	November 2018	November 2018	85	100	93
R487 million at 15.05%	Non-core Tier 1	November 2018	November 2018	37	43	43
R1.7 billion at 8.90%	Tier 2	February 2014	February 2019	118	143	132
R1.0 billion at 10.54%	Tier 2	September 2015	September 2020	72	86	81
R2.0 billion at JIBAR + 0.47%	Tier 2	July 2017	July 2022	134	157	146
US$100 million at 3 month USD LIBOR	Tier 2 Secondary	March 2017	March 2022	66	64	62
				646	843	705
Less: banking subordinated debt   securities held by other   Group companies				(28)	(58)	(36)
Banking subordinated securities (net of    Group holdings)				618	785	669
Group excluding Nedbank
R3.0 billion at 8.92% to October 2015,   3 month JIBAR + 1.59% thereafter)	Lower Tier 2	October 2015	October 2020	199	234	218
£500 million at 8.00%	Lower Tier 2	-	June 2021	515	513	547
				714	747	765
Total subordinated debt securities				1,332	1,532	1,434

F: Other Notes

F1: Events after the reporting date

Acquisition of Faulu Kenya DTM LTD (Faulu)

On 3 July 2013, the Group announced that it is to enter into a strategic partnership with Faulu through the acquisition of a controlling stake in the business. The transaction is conditional on the relevant regulatory approvals being obtained and is expected to complete by the end of 2013.

Acquisition of SELAH (Skandia Europe & Latin America Holdings) by Old Mutual South Africa (OMSA) from Old Mutual plc (parent company).

The Financial Services Board has provisionally given approval for the acquisition of SELAH by OMSA from Old Mutual plc and the transaction was completed on 12 July 2013. This resulted in increasing the cash holdings of the parent company by £120 million.

Repatriation of Old Mutual Bermuda capital

In July 2013, Old Mutual Bermuda received formal written approval from the Bermuda Monitory Authority (BMA) to repatriate $450 million via cancellation of OM Group (UK) Limited Loan Notes.

New debt issued by Nedbank

In July 2013, Nedbank successfully issued a total of R1.8 billion new-style, fully loss-absorbent, Basel lll compliant, tier 2 subordinated-debt capital to replace the £119 million debt that matures in September 2013. Furthermore, R3.2 billion of three-year senior unsecured debt was also issued.

G: Discontinued operations and disposal groups held for sale 

G1: Discontinued operations

Discontinued operations relate to the results of the Group's Swedish, Danish and Norwegian life businesses, collectively Nordic. The disposal of Nordic was completed on 21 March 2012 following shareholder and regulatory approval and was reported up until that date. The Group continues to incur costs that are directly related to the sale of Nordic. These costs relate to the transition of IT and other services, previously provided by Nordic to the wider Group, back to the Group. These costs are included in the expenses related to the discontinued operations.

(a) Income statement from discontinued operations (Nordic)
			£m
	Six months ended 30 June  2013	Six months ended 30 June 2012	Year ended 31 December 2012
Revenue	-	842	842
Expenses	(9)	(831)	(866)
(Loss)/profit before tax from discontinued operations	(9)	11	(24)
Profit on disposal	-	242	239
Realised available-for-sale investment gains and exchange   differences on disposal	-	350	350
(Loss)/profit before tax	(9)	603	565
Income tax credit/(charge)	1	(8)	(1)
(Loss)/profit from discontinued operations after tax	(8)	595	564

G2: Contingent liabilities in respect of the disposal of US Life

Following its disposal in April 2011 of US Life to the Harbinger group (Harbinger), the Group has retained certain residual commitments and contingent liabilities relating to that business. These arise from sale warranties and indemnities that are typical in transactions of this nature, including in respect of certain litigation (including class actions) and regulatory enforcement actions arising from events that occurred before completion of the sale.  The residual commitments are in effect for varying periods of time.

The sale agreement contemplated that Harbinger would establish certain internal reinsurance arrangements after completion, which were subject to regulatory approval. If such regulatory approval was not forthcoming, there was potential for a reduction in the purchase price of US Life of up to a maximum of US$50 million. In July 2012, Harbinger filed a lawsuit against the Group, claiming payment of a purchase price adjustment of US$50 million.  The Group has filed its defence and is vigorously defending this claim.  In view of the ongoing uncertainty and the Group's current assessment of this claim, the Group has not raised a provision against this exposure.

 

END

 

 

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