Interim Results 2015 - Part 2

RNS Number : 2480V

Old Mutual PLC

06 August 2015

 



Part 3 - Financial Information

Index to the financial information For the six months ended 30 June 2015
Statement of directors' responsibilities in respect of the interim financial statements for the six months ended 30 June 2015		46
Independent review report to Old Mutual plc for the six months ended 30 June 2015		47
Consolidated income statement		48
Consolidated statement of comprehensive income		49
Reconciliation of adjusted operating profit to profit after tax		50
Consolidated statement of financial position		52
Consolidated statement of cash flows		53
Consolidated statement of changes in equity		54
Notes to the consolidated financial statements
	A: Significant accounting policies	60
	B: Segment information	62
	C: Other key performance information	76
	D: Other income statement notes	83
	E: Financial assets and liabilities	85
	F: Other statement of financial position notes	103
	G: Other notes	104
	H: Discontinued operations and disposal groups held for sale	107

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

For the six months ended 30 June 2015

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' as adopted by the EU.

§  The interim management statement 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                                                                          Ingrid Johnson
Group Chief Executive                                                                Group Finance Director
6 August 2015                                                                            6 August 2015

Independent review report to Old Mutual plc

For the six months ended 30 June 2015

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2015 which comprises the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity and the related explanatory notes, which include the reconciliation of adjusted operating profit to profit after tax. 

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

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').  Our review 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.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA. 

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

Our responsibility

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

Scope of review

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

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2015 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.  

Philip Smart

for and on behalf of KPMG LLP

Chartered Accountants
15 Canada Square
London E14 5GL
6 August 2015

Consolidated income statement
For the six months ended 30 June 2015
				£m
	Notes	Six months ended 30 June 2015	Six months ended 30 June  2014	Year ended 31 December 2014
Revenue
Gross earned premiums	B2	1,589	1,618	3,209
Outward reinsurance		(151)	(154)	(308)
Net earned premiums		1,438	1,464	2,901
Investment return (non-banking)		3,186	3,529	6,304
Banking interest and similar income		1,691	1,415	3,057
Banking trading, investment and similar income		110	83	197
Fee and commission income, and income from service activities		1,537	1,413	2,894
Other income		70	54	125
Total revenue		8,032	7,958	15,478
Expenses
Claims and benefits (including change in insurance contract provisions)		(1,738)	(2,260)	(4,098)
Reinsurance recoveries		120	66	215
Net claims and benefits incurred		(1,618)	(2,194)	(3,883)
Change in investment contract liabilities		(2,035)	(1,845)	(3,544)
Impairment losses on loans and advances		(134)	(130)	(252)
Finance costs		(45)	(64)	(54)
Banking interest payable and similar expenses		(962)	(770)	(1,672)
Fee and commission expenses, and other acquisition costs		(459)	(437)	(863)
Change in third-party interest in consolidated funds		(207)	(194)	(322)
Other operating and administrative expenses		(1,928)	(1,760)	(3,548)
Total expenses		(7,388)	(7,394)	(14,138)
Share of associated undertakings' and joint ventures' profit after tax		37	10	26
Profit/(loss) on disposal of subsidiaries, associated undertakings and strategic    investments	C1(c)	2	(10)	(2)
Profit before tax		683	564	1,364
Income tax expense	D1	(243)	(218)	(462)
Profit from continuing operations after tax		440	346	902
Discontinued operations
Loss from discontinued operations after tax	H1	(21)	(10)	(50)
Profit after tax for the financial period		419	336	852
Attributable to
Equity holders of the parent		260	213	582
Non-controlling interests
Ordinary shares		149	114	252
Preferred securities		10	9	18
Profit after tax for the financial period		419	336	852
Earnings per share
Basic earnings per share based on profit from continuing    operations (pence)		5.9	4.7	13.5
Basic earnings per share based on profit from discontinued    operations (pence)		(0.5)	(0.2)	(1.1)
Basic earnings per ordinary share (pence)	C2(a)	5.4	4.5	12.4
Diluted basic earnings per share based on profit from continuing    operations (pence)		5.4	4.3	12.5
Diluted basic earnings per share based on profit from discontinued    operations (pence)		(0.4)	(0.2)	(1.0)
Diluted basic earnings per ordinary share (pence)	C2(b)	5.0	4.1	11.5
Weighted average number of ordinary shares (millions)	C2(a)	4,598	4,462	4,485
Consolidated statement of comprehensive income
For the six months ended 30 June 2015
				£m
		Six months ended  30 June 2015	Six months ended 30 June 2014	Year ended  31 December  2014
Profit after tax for the financial period		419	336	852
Other comprehensive income for the financial period
Items that will not be reclassified subsequently to profit or loss
Fair value movements
Property revaluation		(2)	6	22
Measurement movements on defined benefit plans		8	1	2
Income tax on items that will not be reclassified subsequently to profit or loss	D1(c)	-	-	(1)
		6	7	23
Items that may be reclassified subsequently to profit or loss
Fair value movements
Net investment hedge		6	14	(9)
Available-for-sale investments
Fair value (losses)/gains		(9)	15	21
Recycled to profit or loss		-	-	(20)
Exchange difference recycled to profit or loss on disposal of business		(30)	(1)	(85)
Shadow accounting		-	-	(5)
Currency translation differences on translating foreign operations		(442)	(269)	(68)
Other movements		(13)	2	(18)
Income tax on items that may be reclassified subsequently to profit or loss	D1(c)	-	(3)	(5)
		(488)	(242)	(189)
Total other comprehensive income for the financial period		(482)	(235)	(166)
Total comprehensive income for the financial period		(63)	101	686
Attributable to
Equity holders of the parent		(86)	36	434
Non-controlling interests
Ordinary shares		13	56	234
Preferred securities		10	9	18
Total comprehensive income for the financial period		(63)	101	686
Reconciliation of adjusted operating profit to profit after tax
For the six months ended 30 June 2015
				£m
	Notes	Six months ended 30 June 2015	Six months ended  30 June  2014	Year ended 31 December 2014
Core operations
Emerging Markets	B3	333	291	617
Nedbank	B3	404	361	770
Old Mutual Wealth	B3	151	120	227
Institutional Asset Management	B3	83	54	131
		971	826	1,745
Finance costs	B3	(42)	(41)	(78)
Long-term investment return on excess assets		11	13	24
Interest payable to non-core operations		(2)	(2)	(5)
Corporate costs		(24)	(25)	(55)
Other net shareholder expenses		(10)	(10)	(26)
Adjusted operating profit before tax	B3	904	761	1,605
Adjusting items	C1(a)	(260)	(255)	(301)
Non-core operations	B3	4	14	1
Profit before tax (net of policyholder tax)		648	520	1,305
Income tax attributable to policyholder returns	D1(d)	35	44	59
Profit before tax		683	564	1,364
Total tax expense	D1(a)	(243)	(218)	(462)
Profit from continuing operations after tax		440	346	902
Loss from discontinued operations after tax	H1	(21)	(10)	(50)
Profit after tax for the financial period		419	336	852
Adjusted operating profit after tax attributable to ordinary equity holders of the parent
				£m
	Notes	Six months ended 30 June 2015	Six months ended  30 June  2014	Year ended 31 December 2014
Adjusted operating profit before tax	B3	904	761	1,605
Tax on adjusted operating profit	D1(d)	(235)	(202)	(439)
Adjusted operating profit after tax		669	559	1,166
Non-controlling interests - ordinary shares		(157)	(126)	(280)
Non-controlling interests - preferred securities		(10)	(9)	(18)
Adjusted operating profit after tax attributable to ordinary equity    holders of the parent	B3	502	424	868
Adjusted weighted average number of shares (millions)	C2(c)	4,855	4,840	4,845
Adjusted operating earnings per share (pence)	C2(c)	10.3	8.8	17.9

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 IFRS profit measures for the specific items detailed in note C1 and, as such, it is a non-IFRS measure. The reconciliation set out above explains the differences between AOP and profit after tax as reported under IFRS.

For core life assurance and property & casualty businesses, AOP is based on a long-term investment return, including returns on investments held by life funds 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 accounting for intangibles acquired in a business combination and costs related to completed acquisitions, revaluations of put options related to long-term incentive schemes, profit/(loss) on acquisition/disposal of subsidiaries, associated undertakings and strategic investments, fair value profits/(losses) on certain Group debt instruments, cost of hedging equity instruments and costs related to the fundamental restructuring of continuing businesses. AOP includes dividends declared to holders of perpetual preferred callable securities. Old Mutual Bermuda is treated as a non-core operation in the AOP disclosure. As such they are not included in AOP. 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.

Consolidated statement of financial position
At 30 June 2015
							£m
	Notes		At 30 June 2015		At 30 June 2014		At 31 December 2014
Assets
Goodwill and other intangible assets	F1		3,344		2,500		2,763
Mandatory reserve deposits with central banks			808		767		829
Property, plant and equipment			726		730		765
Investment property			1,318		1,778		1,678
Deferred tax assets			247		247		283
Investments in associated undertakings and joint ventures			470		201		518
Deferred acquisition costs			804		909		862
Reinsurers' share of policyholder liabilities	E3		2,394		1,987		2,314
Loans and advances	E2		34,655		33,727		34,857
Investments and securities			87,033		86,198		87,547
Current tax receivable			95		101		92
Trade, other receivables and other assets			2,938		2,780		2,362
Derivative financial instruments			1,161		1,104		1,227
Cash and cash equivalents			5,034		4,289		4,944
Non-current assets held for sale	H2		1,114		4,473		1,475
Total assets			142,141		141,791		142,516
Liabilities
Long-term business insurance policyholder liabilities	E3		9,851		11,737		10,519
Investment contract liabilities	E3		68,786		66,355		68,841
Property & casualty liabilities	E3		394		319		319
Third-party interests in consolidated funds			5,678		6,456		5,986
Borrowed funds	E4		3,566		2,783		3,044
Provisions and accruals			228		198		284
Deferred revenue			291		367		330
Deferred tax liabilities			476		424		454
Current tax payable			169		205		189
Trade, other payables and other liabilities			5,173		4,068		4,276
Amounts owed to bank depositors			36,000		34,540		36,243
Derivative financial instruments			1,161		1,174		1,201
Non-current liabilities held for sale	H2		833		4,294		1,285
Total liabilities			132,606		132,920		132,971
Net assets			9,535		8,871		9,545
Shareholders' equity
Equity attributable to equity holders of the parent			7,188		7,062		7,406
Non-controlling interests
Ordinary shares			2,075		1,536		1,867
Preferred securities			272		273		272
Total non-controlling interests			2,347		1,809		2,139
Total equity			9,535		8,871		9,545
Consolidated statement of cash flows
For the six months ended 30 June 2015
								£m
				Six months ended 30 June 2015		Six months ended 30 June 2014		Year ended 31 December 2014
Cash flows from operating activities
Profit before tax				683		564		1,364
Non-cash movements in profit before tax				1,134		806		2,058
Net changes in working capital				866		(370)		739
Taxation paid				(252)		(175)		(402)
Net cash inflow from operating activities				2,431		825		3,759
Cash flows from investing activities
Net acquisitions of financial investments				(1,787)		(824)		(2,873)
Acquisition of investment properties				(37)		(31)		(48)
Proceeds from disposal of investment properties				4		39		115
Acquisition of property, plant and equipment				(35)		(65)		(154)
Proceeds from disposal of property, plant and equipment				3		5		14
Acquisition of intangible assets				(40)		(29)		(76)
Acquisition of interests in subsidiaries, associated undertakings    joint ventures and strategic investments				(625)		(58)		(429)
Proceeds from the disposal of interests in subsidiaries, associated    undertakings joint ventures and strategic investments				9		48		95
Net cash outflow from investing activities				(2,508)		(915)		(3,356)
Cash flows from financing activities
Dividends paid to
Ordinary equity holders of the Company				(296)		(279)		(394)
Non-controlling interests and preferred security interests				(108)		(90)		(177)
Dividends received from associated undertakings				3		4		5
Interest paid (excluding banking interest paid)				(24)		(24)		(48)
Proceeds from issue of ordinary shares (including by subsidiaries    to non-controlling interests)				2		9		12
Net acquisition of treasury shares				(12)		38		72
Disposal of a non-controlling interest in OM Asset Management plc				163		-		184
Sale of shares held by BEE trusts				172		-		-
Proceeds from issue of subordinated and other debt				880		357		584
Subordinated and other debt repaid				(349)		(196)		(290)
Net cash inflow/(outflow) from financing activities				431		(181)		(52)
Net increase/(decrease) in cash and cash equivalents				354		(271)		351
Effects of exchange rate changes on cash and cash equivalents				(270)		(234)		(193)
Cash and cash equivalents at beginning of the period				5,786		5,628		5,628
Cash and cash equivalents at end of the period				5,870		5,123		5,786
Consisting of
Cash and cash equivalents				5,034		4,289		4,944
Mandatory reserve deposits with central banks				808		767		829
Cash and cash equivalents included in assets held for sale				28		67		13
Total				5,870		5,123		5,786

Cash and cash equivalents in the cash flow statement above include mandatory reserve deposits, in line with market practice in South Africa. Except for mandatory reserve deposits with central banks of £808 million (30 June 2014: £767 million; 31 December 2014: £829 million) and cash and cash equivalents subject to consolidation of funds of £1,372 million (30 June 2014: £1,733 million; 31 December 2014: £1,639 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.

Consolidated statement of changes in equity
For the six months ended 30 June 2015
		Millions
Six months ended 30 June 2015	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		4,907		561	856	1,342	48
Profit after tax for the financial period		-		-	-	-	-
Other comprehensive income
Items that will not be reclassified subsequently to   profit or loss
Fair value gains
Property revaluation		-		-	-	-	-
Measurement gains on defined benefit plans		-		-	-	-	-
Income tax on items that will not be reclassified   subsequently to profit or loss	D1(c)	-		-	-	-	-
		-		-	-	-	-
Items that may be reclassified subsequently to profit   or loss
Fair value gains/(losses)
Net investment hedge		-		-	-	-	-
Available-for-sale investments
Fair value (losses)/gains1		-		-	-	-	-
Exchange differences recycled to profit or loss    on disposal of business2		-		-	-	-	-
Currency translation differences on translating foreign   operations1		-		-	-	-	-
Other movements		-		-	-	-	-
Income tax on items that may be reclassified   subsequently to profit or loss	D1(c)	-		-	-	-	-
Total comprehensive income for the financial period		-		-	-	-	-
Dividends for the period	C3	-		-	-	-	-
Tax relief on dividends paid		-		-	-	-	-
Equity share-based payment transactions		-		-	-	-	-
Other movements in share capital		2		-	2	-	-
Shares issued for the acquisition of Quilter Cheviot		19		2	40	-	-
Share of movement in associate reserves		-		-	-	-	-
Proceeds from BEE transactions	A2	-		-	141	-	-
Merger reserve released3		-		-	-	(68)	-
Disposal of a non-controlling interest in    OM Asset Management plc	A2	-		-	-	-	-
Non-controlling interests in subsidiaries acquired	G3(b)	-		-	-	-	-
Change in participation in subsidiaries		-		-	-	-	-
Transactions with shareholders		21		2	183	(68)	-
Shareholders' equity at end of the period		4,928		563	1,039	1,274	48

¹        Included in other reserves is a loss of £9 million relating to Economic Transactional Bank (ETI) available-for-sale reserve. Currency translation differences on translating foreign operations include £61 million relating to foreign exchange losses on translation of ETI.

²        Following the disposal of Old Mutual Wealth's European businesses foreign currency translation reserves of £30 million have been recycled to profit or loss. Foreign currency translation reserves of £35 million have been recycled directly to retained earnings following the OM Asset Management plc public offering. Refer to note A2 for further information.

³        On disposal of Old Mutual Wealth's European businesses, merger reserves of £68 million have been released directly to retained earnings.

															£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
178	337	37	(1,370)		4,891		526			7,406		2,139			9,545
-	-	-	-		246		14			260		159			419
(2)	-	-	-		-		-			(2)		-			(2)
-	-	-	-		6		-			6		2			8
-	-	-	-		-		-			-		-			-
(2)	-	-	-		6		-			4		2			6
-	-	-	6		-		-			6		-			6
-	-	(9)	-		4		-			(5)		(4)			(9)
-	-	-	(65)		35		-			(30)		-			(30)
-	-	-	(306)		-		-			(306)		(136)			(442)
-	-	-	-		(15)		-			(15)		2			(13)
-	-	-	-		-		-			-		-			-
(2)	-	(9)	(365)		276		14			(86)		23			(63)
-	-	-	-		(296)		(17)			(313)		(91)			(404)
-	-	-	-		-		3			3		-			3
-	(15)	-	-		(3)		-			(18)		(4)			(22)
-	-	-	-		(14)		-			(12)		-			(12)
-	-	-	-		(42)		-			-		-			-
-	-	10	-		-		-			10		-			10
-	-	-	-		31		-			172		-			172
-	-	-	-		68		-			-		-			-
-	-	-	-		48		-			48		114			162
-	-	-	-		-		-			-		98			98
-	-	-	-		(22)		-			(22)		68			46
-	(15)	10	-		(230)		(14)			(132)		185			53
176	322	38	(1,735)		4,937		526			7,188		2,347			9,535
Consolidated statement of changes in equity
For the six months ended 30 June 2015
						Millions
Six months ended 30 June 2014				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						4,897			560		845		1,717	52
Profit after tax for the financial period						-			-		-		-	-
Other comprehensive income
Items that will not be reclassified subsequently to   profit or loss
Fair value gains
Property revaluation						-			-		-		-	-
Measurement gains on defined benefit plans						-			-		-		-	-
Income tax on items that will not be reclassified   subsequently to profit or loss				D1(c)		-			-		-		-	-
						-			-		-		-	-
Items that may be reclassified subsequently to profit   or loss
Fair value gains/(losses)
Net investment hedge						-			-		-		-	-
Available-for-sale investments
Fair value losses						-			-		-		-	14
Exchange differences recycled to profit or loss						-			-		-		-	-
Currency translation differences on translating foreign   operations						-			-		-		-	-
Other movements						-			-		-		-	-
Income tax on items that may be reclassified   subsequently to profit or loss				D1(c)		-			-		-		-	(3)
Total comprehensive income for the financial period						-			-		-		-	11
Dividends for the period				C3		-			-		-		-	-
Tax relief on dividends paid						-			-		-		-	-
Equity share-based payment transactions						-			-		-		-	-
Other movements in share capital						8			1		8		-	-
Expiry of Skandia AB shareholder claims						-			-		-		-	-
Merger reserve realised in the period						-			-		-		(116)	-
Change in participation in subsidiaries						-			-		-		-	-
Transactions with shareholders						8			1		8		(116)	-
Shareholders' equity at end of the period						4,905			561		853		1,601	63

														£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
161	316	37	(1,234)		4,290		526			7,270		1,767		9,037
-	-	-	-		199		14			213		123		336
6	-	-	-		-		-			6		-		6
-	-	-	-		1		-			1		-		1
-	-	-	-		-		-			-		-		-
6	-	-	-		1		-			7		-		7
-	-	-	14		-		-			14		-		14
-	-	-	-		-		-			14		1		15
-	-	-	(1)		-		-			(1)		-		(1)
-	-	-	(211)		-		-			(211)		(58)		(269)
-	-	3	-		-		-			3		(1)		2
-	-	-	-		-		-			(3)		-		(3)
6	-	3	(198)		200		14			36		65		101
-	-	-	-		(279)		(17)			(296)		(73)		(369)
-	-	-	-		-		3			3		-		3
-	5	-	-		1		-			6		(3)		3
-	-	-	-		38		-			47		(1)		46
-	-	-	-		12		-			12		-		12
-	-	-	-		116		-			-		-		-
-	-	-	-		(16)		-			(16)		54		38
-	5	-	-		(128)		(14)			(244)		(23)		(267)
167	321	40	(1,432)		4,362		526			7,062		1,809		8,871
Consolidated statement of changes in equity
For the six months ended 30 June 2015
						Millions
Year ended 31 December 2014				Notes		Number of shares issued and fully paid			Share capital		Share premium		Merger reserve		Available-for-sale reserve
Shareholders' equity at beginning of the year						4,897			560		845		1,717		52
Profit after tax for the financial year						-			-		-		-		-
Other comprehensive income
Items that will not be reclassified subsequently to   profit or loss
Fair value gains
Property revaluation						-			-		-		-		-
Measurement gains on defined benefit plans						-			-		-		-		-
Income tax on items that will not be reclassified   subsequently to profit or loss				D1(c)		-			-		-		-		-
						-			-		-		-		-
Items that may be reclassified subsequently to profit   or loss
Fair value gains/(losses)
Net investment hedge						-			-		-		-		-
Available-for-sale investments
Fair value gains						-			-		-		-		21
Recycled to profit or loss						-			-		-		-		(20)
Exchange differences recycled to profit or loss    on disposal of business						-			-		-		-		-
Shadow accounting						-			-		-		-		-
Currency translation differences on translating foreign   operations						-			-		-		-		-
Other movements						-			-		-		-		-
Income tax on items that may be reclassified   subsequently to profit or loss				D1(c)		-			-		-		-		(5)
Total comprehensive income for the financial year						-			-		-		-		(4)
Dividends for the year				C3		-			-		-		-		-
Tax relief on dividends paid						-			-		-		-		-
Equity share-based payment transactions						-			-		-		-		-
Other movements in share capital						10			1		11		-		-
Expiry of Skandia AB shareholder claims						-			-		-		-		-
Merger reserve released						-			-		-		(375)		-
Disposal of a non-controlling interest in    OM Asset Management plc				A2		-			-		-		-		-
Non-controlling interests in subsidiaries acquired				A2		-			-		-		-		-
Change in participation in subsidiaries						-			-		-		-		-
Transactions with shareholders						10			1		11		(375)		-
Shareholders' equity at end of the year						4,907			561		856		1,342		48
														£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
161	316	37	(1,234)		4,290		526			7,270		1,767		9,037
-	-	-	-		557		25			582		270		852
22	-	-	-		(5)		-			17		5		22
-	-	-	-		2		-			2		-		2
-	-	-	-		(1)		-			(1)		-		(1)
22	-	-	-		(4)		-			18		5		23
-	-	-	(9)		-		-			(9)		-		(9)
-	-	-	-		-		-			21		-		21
-	-	-	-		-		-			(20)		-		(20)
-	-	-	(85)		-		-			(85)		-		(85)
(5)	-	-	-		-		-			(5)		-		(5)
-	-	-	(45)		-		-			(45)		(23)		(68)
-	-	-	3		(21)		-			(18)		-		(18)
-	-	-	-		-		-			(5)		-		(5)
17	-	-	(136)		532		25			434		252		686
-	-	-	-		(394)		(32)			(426)		(145)		(571)
-	-	-	-		-		7			7		-		7
-	21	-	-		(3)		-			18		4		22
-	-	-	-		72		-			84		1		85
-	-	-	-		11		-			11		-		11
-	-	-	-		375		-			-		-		-
-	-	-	-		52		-			52		163		215
-	-	-	-		-		-			-		53		53
-	-	-	-		(44)		-			(44)		44		-
-	21	-	-		69		(25)			(298)		120		(178)
178	337	37	(1,370)		4,891		526			7,406		2,139		9,545

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 IAS 34 as adopted by the EU. The Group's results for the six months ended 30 June 2015 and the financial position at that date have been prepared using accounting policies consistent with those applied in the preparation of the Group's 2014 Annual Report and Accounts.

The Group interim financial statements have been prepared on the going concern basis, which the directors believe is appropriate. Part 2 - Financial Performance of the Interim Management Statement provides further details on the performance of the Group and the principal risks and uncertainties.

The comparative figures for the financial year ended 31 December 2014 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 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 2015		Six months ended 30 June 2014		Year ended 31 December 2014
	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	18.1583	19.1081	17.8499	18.1755	17.8712	17.9976
US dollars	1.5240	1.5725	1.6690	1.7102	1.6474	1.5581
Euro	1.3640	1.4099	1.2174	1.2492	1.2399	1.2877

New standards, interpretations and amendments adopted by the Group affecting the financial statements for the six months ended 30 June 2015

During the period, there were no new standards implemented that had a material effect on the financial statements of the Group.

A2: Significant corporate activity and business changes during the period

Acquisitions completed during the period

Acquisition of Quilter Cheviot

On 25 February 2015, the Group completed the acquisition of 100% of Quilter Cheviot, a leading UK-based discretionary investment manager for a total consideration of £585 million, comprising of £543 million cash and £42 million of deferred consideration that was settled in Old Mutual plc shares.  An additional £23 million was paid to the seller to compensate for the increase in the net asset value of Quilter Cheviot between the date at which the acquisition was agreed and the completion of the transaction. The purchase consideration for the acquisition of Quilter Cheviot was the total cash paid of £566 million.

Goodwill of £292 million and intangible assets of £288 million (£273 million customer relationships and £15 million brand) have been recognised as a result of the transaction. Refer to note G3(a) for further information.

Acquisition of UAP Holdings Limited

On 24 June 2015 the Group obtained control of UAP Holdings Limited (UAP) through the acquisition, in two tranches, of a 60.7% ownership interest in UAP for £152 million. UAP is a Kenyan pan-African financial services group that mainly operates in East Africa.

An initial stake of 23.3% was acquired on 1 February 2015, while the remaining 37.3% stake was acquired on 24 June 2015. The results and movements in reserves were equity accounted from 1 February 2015 to the date that control was obtained. Subsequently, from 24 June 2015, the financial results and financial position were consolidated in the Group financial statements.

Due to the date of obtaining control being close to the date of the interim financial statements, the purchase price has been allocated based on a provisional estimate of the fair value of assets acquired and liabilities assumed at the date of acquisition. Goodwill and other intangible assets of £161 million have been recognised. The additional intangible assets identified, but not yet recognised, include brand, customer lists and present value of in-force business. Refer to note G3(b) for further information.

Disposals completed during the period

Disposal of Skandia Luxembourg and Skandia France

On 2 February 2015, the Group completed the sale of Skandia Luxembourg and Skandia France, part of Old Mutual Wealth. The Group has recognised a profit on disposal of £1 million. Merger reserves of £68 million relating to these businesses have been released directly to equity.

Disposals announced but not completed during the period

Disposal of Skandia Switzerland

On 29 May 2015, the Group announced that terms have been agreed to sell Skandia Leben AG, part of Old Mutual Wealth. The transaction is subject to regulatory approval and is expected to complete in the second half of 2015.

The net asset value of goodwill and intangible assets of the business has been written down to reflect the fair value of the business on expected proceeds from the sale, less costs associated with the sale. As a result, an impairment loss before tax of £94 million has been recognised in profit or loss. This comprises impairments of goodwill (£41 million), present value of acquired in-force business (£28 million) and net deferred acquisition costs and deferred revenue (£25 million).

Unwinding of Black Economic Empowerment (BEE) Schemes

The majority of the Group's South African BEE schemes, established in 2005, have unwound during 2015. The total value of cash that the Group businesses have received in relation to this is £172 million. The BEE schemes comprise business partner and community schemes in Nedbank and Emerging Markets (OMEM).

All the schemes involved the granting of shares to various BEE vehicles in 2005. In 2015, participants' access to these shares has become unrestricted following the settlement of funding provided to them by Group companies and the meeting of vesting criteria in the first six months of 2015. The notional funding associated with the OMEM schemes was settled with proceeds from the sale of shares by the trusts. The notional funding associated with the Nedbank schemes has been settled by calling back sufficient shares to settle the amount due to Nedbank.

Shares held by the BEE schemes were previously classified as treasury shares, but are now recognised as issued for Group financial reporting purposes.

OM Asset Management plc (OMAM) public share offering

On 22 June 2015 the Group disposed of 13.3 million OMAM shares for a consideration of $257 million (£163 million). A profit of £48 million was recognised directly in equity reflecting the excess of the consideration over the share of net assets disposed of. In addition foreign currency translation reserves of £35 million have been transferred to retained earnings. Additional non-controlling interests of £114 million have been recognised in the statement of financial position.

Financing activities during the period

Emerging Markets

On 19 March 2015, following the successful completion of a bond auction, which took place on 16 March 2015, OMLAC(SA) has issued R2,061 million (£106 million) of floating rate and fixed instruments, which have been classified as subordinated debt. These are SII/SAM compliant hybrid instruments and have maturity dates ranging from 2025 to 2030. The instruments were issued through the existing Zar Unsecured Subordinated Callable Note Programme.

Nedbank

Nedbank has issued and redeemed debt instruments in the normal course of the bank's funding program.

A3: Critical accounting estimates and judgements

In the preparation of these condensed 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 principal areas where estimates and judgement is typically required were set out in the 2014 Annual Report and Accounts on page 136 and were described in further detail in the Report of the Chairman of the Group Audit Committee on page 84. The Group has applied significant judgement in performing the purchase price allocation for acquisitions in the period. During the period, there have been no other significant changes to the areas of critical accounting estimates and judgements that the Group applied at 31 December 2014.

The Annual Report and Accounts is available in the Investor Relations section of the Group's website at www.oldmutual.com.

B: Segment information

B1: Basis of segmentation

Segment presentation

There have been no changes to the presentation of segment information for the six months ended 30 June 2015.

The Group's reported segments are Emerging Markets, Nedbank, Old Mutual Wealth and Institutional Asset Management.  The Other segment includes central activities. For all reporting periods, these businesses have been classified as continuing operations in the IFRS income statement and as core operations in determining the Group's adjusted operating profit (AOP).

For all reporting periods, Old Mutual Bermuda is classified as a continuing operation in the IFRS income statement, but as non-core in determining the Group's AOP.

For the six months ended 30 June 2015, discontinued operations relate to the sale of US Life in 2011. For the six months ended 30 June 2014, discontinued operations related to the disposal of Nordic in 2012. For the year ended 31 December 2014, discontinued operations related to the disposals of Nordic and US Life. Refer to note H1 for further information.

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

Adjusted operating profit (AOP) 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. As appropriate to the business line, the Board reviews additional measures to assess the performance of each of the segments. These typically include sales, net client cash flows, funds under management, gross earned premiums, underwriting results, net interest income and non-interest revenue and credit losses.

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 trading activities between 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 or 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 primary business activities from which the Group generates revenue. These are life assurance (premium income), asset management business (fee and commission income), banking (banking interest receivable and investment banking income) and property & casualty (premium income). Other revenue includes gains and losses on investment securities. An analysis of segment revenues and expenses and the Group's revenues and expenses is shown in note B3.

The principal lines of business from which each operating segment derives its revenues are as follows:

Core operations

Emerging Markets - life assurance, property & casualty, asset management and banking

Nedbank - banking, asset management and life assurance

Old Mutual Wealth - life assurance and asset management

Institutional Asset Management - asset management

Non-core operations

Old Mutual Bermuda - life assurance

B2: Gross earned premiums and deposits to investment contracts

			£m
Six months ended 30 June 2015	Emerging Markets	Old Mutual Wealth	Total
Life assurance - insurance contracts	634	71	705
Life assurance - investment contracts with discretionary    participation features	540	-	540
General insurance	344	-	344
Gross earned premiums	1,518	71	1,589
			£m
Six months ended 30 June 2014	Emerging Markets	Old Mutual Wealth	Total
Life assurance - insurance contracts	678	155	833
Life assurance - investment contracts with discretionary    participation features	454	-	454
General insurance	331	-	331
Gross earned premiums	1,463	155	1,618
			£m
Year ended 31 December 2014	Emerging Markets	Old Mutual Wealth	Total
Life assurance - insurance contracts	1,299	280	1,579
Life assurance - investment contracts with discretionary    participation features	961	-	961
General insurance	669	-	669
Gross earned premiums	2,929	280	3,209

B: Segment information continued

B3: Adjusted operating profit statement - segment information for the six months ended 30 June 2015

	Notes		Emerging Markets	Nedbank
Revenue
Gross earned premiums	B2		1,518	-
Outward reinsurance			(109)	-
Net earned premiums			1,409	-
Investment return (non-banking)			1,518	-
Banking interest and similar income			122	1,569
Banking trading, investment and similar income			5	105
Fee and commission income, and income from service activities			261	455
Other income			45	10
Inter-segment revenues			48	5
Total revenue			3,408	2,144
Expenses
Claims and benefits (including change in insurance contract provisions)			(1,688)	-
Reinsurance recoveries			82	-
Net claims and benefits incurred			(1,606)	-
Change in investment contract liabilities			(668)	-
Losses on loans and advances			(7)	(127)
Finance costs			(6)	-
Banking interest payable and similar expenses			(55)	(910)
Fee and commission expenses, and other acquisition costs			(162)	(4)
Change in third-party interest in consolidated funds			-	-
Other operating and administrative expenses			(560)	(697)
Income tax attributable to policyholder returns			(16)	-
Inter-segment expenses			(5)	(26)
Total expenses			(3,085)	(1,764)
Share of associated undertakings' and joint ventures' profit after tax			10	24
Profit on disposal of subsidiaries, associated undertakings   and strategic investments	C1(c)		-	-
Adjusted operating profit/(loss) before tax and non-controlling interests			333	404
Income tax expense	D1		(95)	(100)
Non-controlling interests			(12)	(143)
Adjusted operating profit/(loss) after tax and non-controlling interests			226	161
Adjusting items after tax and non-controlling interests	C1(a)		(49)	6
Profit/(loss) after tax from continuing operations			177	167
Loss from discontinued operations after tax	H1		-	-
Profit/(loss) after tax attributable to equity holders of the parent			177	167

¹   Non-core operations for the six months ended 30 June 2015 relate to Old Mutual Bermuda and US Life. Old Mutual Bermuda profit after tax for the six months ended 30 June 2015 was £4 million. Expenses of £21 million were incurred in relation to the disposal of US Life in 2011. Further information on discontinued operations is provided in note H1.

							£m
Old Mutual Wealth	Institutional Asset Management	Other	Consolidation adjustments	Adjusted operating profit	Adjusting items  (note C1)	Discontinued and non-core operations¹	IFRS Income statement
71	-	-	-	1,589	-	-	1,589
(42)	-	-	-	(151)	-	-	(151)
29	-	-	-	1,438	-	-	1,438
1,408	-	4	280	3,210	(41)	17	3,186
-	-	-	-	1,691	-	-	1,691
-	-	-	-	110	-	-	110
570	263	-	1	1,550	(13)	-	1,537
9	4	-	-	68	-	2	70
1	-	-	(56)	(2)	-	2	-
2,017	267	4	225	8,065	(54)	21	8,032
(41)	-	-	-	(1,729)	-	(9)	(1,738)
38	-	-	-	120	-	-	120
(3)	-	-	-	(1,609)	-	(9)	(1,618)
(1,367)	-	-	-	(2,035)	-	-	(2,035)
-	-	-	-	(134)	-	-	(134)
-	(1)	(42)	-	(49)	4	-	(45)
-	-	-	-	(965)	3	-	(962)
(269)	(3)	-	(63)	(501)	44	(2)	(459)
-	-	-	(207)	(207)	-	-	(207)
(187)	(182)	(26)	(11)	(1,663)	(259)	(6)	(1,928)
(19)	-	-	-	(35)	35	-	-
(21)	(1)	(3)	56	-	-	-	-
(1,866)	(187)	(71)	(225)	(7,198)	(173)	(17)	(7,388)
-	3	-	-	37	-	-	37
-	-	-	-	-	2	-	2
151	83	(67)	-	904	(225)	4	683
(19)	(25)	4	-	(235)	(8)	-	(243)
-	(12)	-	-	(167)	8	-	(159)
132	46	(63)	-	502	(225)	4	281
(174)	2	(10)	-	(225)	225	-	-
(42)	48	(73)	-	277	-	4	281
-	-	-	-	-	-	(21)	(21)
(42)	48	(73)	-	277	-	(17)	260

B: Segment information continued

B3: Adjusted operating profit statement - segment information for the six months ended 30 June 2014

	Notes		Emerging Markets	Nedbank
Revenue
Gross earned premiums	B2		1,463	-
Outward reinsurance			(111)	-
Net earned premiums			1,352	-
Investment return (non-banking)			2,101	-
Banking interest and similar income			-	1,415
Banking trading, investment and similar income			-	83
Fee and commission income, and income from service activities			243	438
Other income			41	6
Inter-segment revenues			41	5
Total revenue			3,778	1,947
Expenses
Claims and benefits (including change in insurance contract provisions)			(2,056)	-
Reinsurance recoveries			21	-
Net claims and benefits incurred			(2,035)	-
Change in investment contract liabilities			(766)	-
Losses on loans and advances			-	(130)
Finance costs			-	-
Banking interest payable and similar expenses			-	(770)
Fee and commission expenses, and other acquisition costs			(150)	(4)
Change in third-party interest in consolidated funds			-	-
Other operating and administrative expenses			(501)	(660)
Income tax attributable to policyholder returns			(38)	-
Inter-segment expenses			(4)	(23)
Total expenses			(3,494)	(1,587)
Share of associated undertakings' and joint ventures' profit after tax			7	1
Profit on disposal of subsidiaries, associated undertakings   and strategic investments	C1(c)		-	-
Adjusted operating profit/(loss) before tax and non-controlling interests			291	361
Income tax expense	D1		(83)	(92)
Non-controlling interests			(6)	(129)
Adjusted operating profit/(loss) after tax and non-controlling interests			202	140
Adjusting items after tax and non-controlling interests	C1(a)		2	8
Profit/(loss) after tax from continuing operations			204	148
Loss from discontinued operations after tax	H1		-	-
Profit/(loss) after tax attributable to equity holders of the parent			204	148

¹   Non-core operations for the six months ended 30 June 2014 related to Old Mutual Bermuda and Nordic. Old Mutual Bermuda profit after tax for the six months ended 30 June 2014 was £14 million. Divestment expenses of £10 million incurred in relation to the Nordic business sold in 2012 are also included. Further information on discontinued operations is provided in note H1.

							£m
Old Mutual Wealth	Institutional Asset Management	Other	Consolidation adjustments	Adjusted operating profit	Adjusting items (note C1)	Discontinued and non-core operations¹	IFRS Income statement
155	-	-	-	1,618	-	-	1,618
(43)	-	-	-	(154)	-	-	(154)
112	-	-	-	1,464	-	-	1,464
1,160	-	17	240	3,518	(13)	24	3,529
-	-	-	-	1,415	-	-	1,415
-	-	-	-	83	-	-	83
563	193	-	4	1,441	(28)	-	1,413
4	1	-	1	53	-	1	54
1	-	-	(49)	(2)	-	2	-
1,840	194	17	196	7,972	(41)	27	7,958
(198)	-	-	-	(2,254)	-	(6)	(2,260)
45	-	-	-	66	-	-	66
(153)	-	-	-	(2,188)	-	(6)	(2,194)
(1,079)	-	-	-	(1,845)	-	-	(1,845)
-	-	-	-	(130)	-	-	(130)
-	-	(41)	-	(41)	(23)	-	(64)
-	-	-	-	(770)	-	-	(770)
(270)	(2)	-	(42)	(468)	33	(2)	(437)
-	-	-	(194)	(194)	-	-	(194)
(192)	(140)	(39)	(9)	(1,541)	(214)	(5)	(1,760)
(6)	-	-	-	(44)	44	-	-
(20)	-	(2)	49	-	-	-	-
(1,720)	(142)	(82)	(196)	(7,221)	(160)	(13)	(7,394)
-	2	-	-	10	-	-	10
-	-	-	-	-	(10)	-	(10)
120	54	(65)	-	761	(211)	14	564
(19)	(12)	4	-	(202)	(16)	-	(218)
-	-	-	-	(135)	12	-	(123)
101	42	(61)	-	424	(215)	14	223
(182)	(7)	(36)	-	(215)	215	-	-
(81)	35	(97)	-	209	-	14	223
-	-	-	-	-	-	(10)	(10)
(81)	35	(97)	-	209	-	4	213

B: Segment information continued

B3: Adjusted operating profit statement - segment information for the year ended 31 December 2014

	Notes		Emerging Markets	Nedbank
Revenue
Gross earned premiums	B2		2,929	-
Outward reinsurance			(223)	-
Net earned premiums			2,706	-
Investment return (non-banking)			3,422	-
Banking interest and similar income			116	2,941
Banking trading, investment and similar income			7	190
Fee and commission income, and income from service activities			506	919
Other income			80	22
Inter-segment revenues			86	11
Total revenue			6,923	4,083
Expenses
Claims and benefits (including change in insurance contract provisions)			(3,707)	-
Reinsurance recoveries			79	-
Net claims and benefits incurred			(3,628)	-
Change in investment contract liabilities			(1,208)	-
Losses on loans and advances			-	(252)
Finance costs			-	-
Banking interest payable and similar expenses			(42)	(1,628)
Fee and commission expenses, and other acquisition costs			(318)	(8)
Change in third-party interest in consolidated funds			-	-
Other operating and administrative expenses			(1,074)	(1,387)
Income tax attributable to policyholder returns			(36)	-
Inter-segment expenses			(11)	(47)
Total expenses			(6,317)	(3,322)
Share of associated undertakings' and joint ventures' profit after tax			11	9
Loss on disposal of subsidiaries, associated undertakings   and strategic investments	C1(c)		-	-
Adjusted operating profit/(loss) before tax and non-controlling interests			617	770
Income tax expense	D1		(189)	(195)
Non-controlling interests			(18)	(274)
Adjusted operating profit/(loss) after tax and non-controlling interests			410	301
Adjusting items after tax and non-controlling interests	C1(a)		(15)	14
Profit/(loss) after tax from continuing operations			395	315
Profit from discontinued operations after tax	H1		-	-
Profit/(loss) after tax attributable to equity holders of the parent			395	315

¹   Non-core operations for the year ended 31 December 2014 related to the Old Mutual Bermuda, Nordic and US Life businesses. Old Mutual Bermuda profit after tax for the year ended 31 December 2014 was £1 million. Non-core operations also included £31 million cost relating to the disposal of Nordic in 2012 and £19 million relating to the disposal of US Life in 2011. Further information on discontinued operations is provided in note H1.

							£m
Old Mutual Wealth	Institutional Asset Management	Other	Consolidation adjustments	Adjusted operating profit	Adjusting items (note C1)	Discontinued and non-core operations¹	IFRS Income statement
280	-	-	-	3,209	-	-	3,209
(85)	-	-	-	(308)	-	-	(308)
195	-	-	-	2,901	-	-	2,901
2,493	-	28	438	6,381	(91)	14	6,304
-	-	-	-	3,057	-	-	3,057
-	-	-	-	197	-	-	197
1,085	422	-	9	2,941	(47)	-	2,894
8	11	-	1	122	-	3	125
2	-	2	(105)	(4)	-	4	-
3,783	433	30	343	15,595	(138)	21	15,478
(385)	-	-	-	(4,092)	-	(6)	(4,098)
136	-	-	-	215	-	-	215
(249)	-	-	-	(3,877)	-	(6)	(3,883)
(2,336)	-	-	-	(3,544)	-	-	(3,544)
-	-	-	-	(252)	-	-	(252)
-	-	(78)	-	(78)	24	-	(54)
-	-	-	-	(1,670)	(2)	-	(1,672)
(479)	(4)	-	(108)	(917)	58	(4)	(863)
-	-	-	(322)	(322)	-	-	(322)
(429)	(303)	(86)	(18)	(3,297)	(241)	(10)	(3,548)
(23)	-	-	-	(59)	59	-	-
(40)	(1)	(6)	105	-	-	-	-
(3,556)	(308)	(170)	(343)	(14,016)	(102)	(20)	(14,138)
-	6	-	-	26	-	-	26
-	-	-	-	-	(2)	-	(2)
227	131	(140)	-	1,605	(242)	1	1,364
(48)	(29)	22	-	(439)	(23)	-	(462)
-	(6)	-	-	(298)	28	-	(270)
179	96	(118)	-	868	(237)	1	632
(216)	(19)	(1)	-	(237)	237	-	-
(37)	77	(119)	-	631	-	1	632
-	-	-	-	-	-	(50)	(50)
(37)	77	(119)	-	631	-	(49)	582

B: Segment information continued

B4: Statement of financial position - segment information at 30 June 2015

	Notes		Emerging Markets	Nedbank
Assets
Goodwill and other intangible assets	F1		408	437
Mandatory reserve deposits with central banks			4	804
Property, plant and equipment			294	394
Investment property			1,302	16
Deferred tax assets			56	16
Investments in associated undertakings and joint ventures			64	373
Deferred acquisition costs			99	-
Reinsurers' share of policyholder liabilities	E3		163	5
Loans and advances	E2		909	33,572
Investments and securities			28,500	6,447
Current tax receivable			16	24
Trade, other receivables and other assets			724	440
Derivative financial instruments			247	750
Cash and cash equivalents			848	1,512
Non-current assets held for sale	H2		212	-
Inter-segment assets			679	405
Total assets			34,525	45,195
Liabilities
Long-term business insurance policyholder liabilities	E3		8,746	211
Investment contract liabilities	E3		19,159	638
Property & casualty liabilities	E3		394	-
Third-party interests in consolidated funds			-	-
Borrowed funds	E4		489	2,305
Provisions and accruals			167	1
Deferred revenue			19	1
Deferred tax liabilities			204	33
Current tax payable			91	13
Trade, other payables and other liabilities			1,906	1,223
Amounts owed to bank depositors			429	35,571
Derivative financial instruments			353	768
Non-current liabilities held for sale	H2		-	-
Inter-segment liabilities			493	647
Total liabilities			32,450	41,411
Net assets			2,075	3,784
Equity
Equity attributable to equity holders of the parent			1,866	1,942
Non-controlling interests			209	1,842
Ordinary shares			209	1,570
Preferred securities			-	272
Total equity			2,075	3,784

					£m
Old Mutual Wealth	Institutional Asset Management	Other	Consolidation adjustments	Non-core operations	Total
1,668	831	-	-	-	3,344
-	-	-	-	-	808
20	18	-	-	-	726
-	-	-	-	-	1,318
7	167	-	-	1	247
-	23	10	-	-	470
686	19	-	-	-	804
2,226	-	-	-	-	2,394
174	-	-	-	-	34,655
47,176	45	397	4,175	293	87,033
55	-	-	-	-	95
702	117	30	650	275	2,938
-	-	67	79	18	1,161
751	129	401	1,372	21	5,034
902	-	-	-	-	1,114
72	-	942	(2,265)	167	-
54,439	1,349	1,847	4,011	775	142,141
258	-	-	-	636	9,851
48,953	-	-	-	36	68,786
-	-	-	-	-	394
-	-	-	5,678	-	5,678
-	92	680	-	-	3,566
35	2	23	-	-	228
271	-	-	-	-	291
221	-	18	-	-	476
23	12	30	-	-	169
1,160	268	48	558	10	5,173
-	-	-	-	-	36,000
-	-	-	40	-	1,161
833	-	-	-	-	833
757	102	266	(2,265)	-	-
52,511	476	1,065	4,011	682	132,606
1,928	873	782	-	93	9,535
1,928	577	782	-	93	7,188
-	296	-	-	-	2,347
-	296	-	-	-	2,075
-	-	-	-	-	272
1,928	873	782	-	93	9,535

B: Segment information continued

B4: Statement of financial position - segment information at 30 June 2014

	Notes		Emerging Markets	Nedbank
Assets
Goodwill and other intangible assets			134	434
Mandatory reserve deposits with central banks			-	767
Property, plant and equipment			313	388
Investment property			1,409	7
Deferred tax assets			73	12
Investments in associated undertakings and joint ventures			92	79
Deferred acquisition costs			107	-
Reinsurers' share of policyholder liabilities	E3		128	11
Loans and advances	E2		339	33,212
Investments and securities			28,856	5,588
Current tax receivable			17	13
Trade, other receivables and other assets			729	709
Derivative financial instruments			266	719
Cash and cash equivalents			928	753
Non-current assets held for sale			-	1
Inter-segment assets			628	269
Total assets			34,019	42,962
Liabilities
Long-term business insurance policyholder liabilities	E3		9,303	212
Investment contract liabilities	E3		19,135	677
Property & casualty liabilities	E3		319	-
Third-party interests in consolidated funds			-	-
Borrowed funds	E4		196	1,899
Provisions			145	1
Deferred revenue			15	-
Deferred tax liabilities			184	35
Current tax payable			125	6
Trade, other payables and other liabilities			1,803	798
Amounts owed to bank depositors			310	34,230
Derivative financial instruments			338	798
Non-current liabilities held for sale			-	-
Inter-segment liabilities			347	613
Total liabilities			32,220	39,269
Net assets			1,799	3,693
Equity
Equity attributable to equity holders of the parent			1,747	1,934
Non-controlling interests			52	1,759
Ordinary shares			52	1,486
Preferred securities			-	273
Total equity			1,799	3,693

					£m
Old Mutual Wealth	Institutional Asset Management	Other	Consolidation adjustments	Non-core operations	Total
1,168	764	-	-	-	2,500
-	-	-	-	-	767
15	14	-	-	-	730
-	-	-	362	-	1,778
4	157	-	-	1	247
-	20	10	-	-	201
791	11	-	-	-	909
1,848	-	-	-	-	1,987
176	-	-	-	-	33,727
46,367	37	554	4,399	397	86,198
71	-	-	-	-	101
503	114	24	387	314	2,780
-	-	72	40	7	1,104
621	79	146	1,733	29	4,289
4,472	-	-	-	-	4,473
129	19	901	(2,212)	266	-
56,165	1,215	1,707	4,709	1,014	141,791
1,485	-	-	-	737	11,737
46,496	-	-	-	47	66,355
-	-	-	-	-	319
-	-	-	6,456	-	6,456
-	1	687	-	-	2,783
24	2	26	-	-	198
352	-	-	-	-	367
184	-	21	-	-	424
23	3	48	-	-	205
774	212	46	427	8	4,068
-	-	-	-	-	34,540
-	-	-	38	-	1,174
4,294	-	-	-	-	4,294
314	581	357	(2,212)	-	-
53,946	799	1,185	4,709	792	132,920
2,219	416	522	-	222	8,871
2,219	418	522	-	222	7,062
-	(2)	-	-	-	1,809
-	(2)	-	-	-	1,536
-	-	-	-	-	273
2,219	416	522	-	222	8,871

B: Segment information continued

B4: Statement of financial position - segment information at 31 December 2014

	Notes		Emerging Markets	Nedbank
Assets
Goodwill and other intangible assets	F1		275	452
Mandatory reserve deposits with central banks			-	829
Property, plant and equipment			304	432
Investment property			1,290	7
Deferred tax assets			87	17
Investments in associated undertakings and joint ventures			61	426
Deferred acquisition costs			100	-
Reinsurers' share of policyholder liabilities	E3		132	7
Loans and advances	E2		909	33,773
Investments and securities			29,584	6,359
Current tax receivable			11	16
Trade, other receivables and other assets			622	585
Derivative financial instruments			239	849
Cash and cash equivalents			1,024	741
Non-current assets held for sale			155	1
Inter-segment assets			644	305
Total assets			35,437	44,799
Liabilities
Long-term business insurance policyholder liabilities	E3		9,276	232
Investment contract liabilities	E3		19,956	653
Property & casualty liabilities	E3		319	-
Third-party interests in consolidated funds			-	-
Borrowed funds	E4		420	1,833
Provisions and accruals			198	1
Deferred revenue			22	-
Deferred tax liabilities			203	42
Current tax payable			107	7
Trade, other payables and other liabilities			1,845	790
Amounts owed to bank depositors			385	35,858
Derivative financial instruments			286	843
Non-current liabilities held for sale			-	-
Inter-segment liabilities			384	615
Total liabilities			33,401	40,874
Net assets			2,036	3,925
Equity
Equity attributable to equity holders of the parent			1,929	2,067
Non-controlling interests			107	1,858
Ordinary shares			107	1,586
Preferred securities			-	272
Total equity			2,036	3,925

					£m
Old Mutual Wealth	Institutional Asset Management	Other	Consolidation adjustments	Non-core operations	Total
1,197	839	-	-	-	2,763
-	-	-	-	-	829
13	16	-	-	-	765
-	-	-	381	-	1,678
6	172	-	-	1	283
-	21	10	-	-	518
746	16	-	-	-	862
2,175	-	-	-	-	2,314
175	-	-	-	-	34,857
46,631	40	554	4,038	341	87,547
64	1	-	-	-	92
385	134	36	302	298	2,362
-	-	71	60	8	1,227
689	130	696	1,639	25	4,944
1,319	-	-	-	-	1,475
154	-	321	(1,615)	191	-
53,554	1,369	1,688	4,805	864	142,516
291	-	-	-	720	10,519
48,188	-	-	-	44	68,841
-	-	-	-	-	319
-	-	-	5,986	-	5,986
-	114	677	-	-	3,044
40	3	42	-	-	284
308	-	-	-	-	330
190	-	19	-	-	454
35	3	37	-	-	189
913	278	76	364	10	4,276
-	-	-	-	-	36,243
-	-	1	70	1	1,201
1,285	-	-	-	-	1,285
179	144	293	(1,615)	-	-
51,429	542	1,145	4,805	775	132,971
2,125	827	543	-	89	9,545
2,125	653	543	-	89	7,406
-	174	-	-	-	2,139
-	174	-	-	-	1,867
-	-	-	-	-	272
2,125	827	543	-	89	9,545

C: Other key performance information 

C1: Operating profit adjusting items

(a) Summary of adjusting items for determination of adjusted operating profit (AOP)

In determining the AOP 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 AOP to profit before and after tax.

		£m
	Notes	Six months ended 30 June 2015	Six months ended 30 June 2014	Year ended 31 December 2014
(Expense)/income
Goodwill impairment and impact of acquisition accounting	C1(b)	(171)	(181)	(128)
Profit/(loss) on disposal of subsidiaries, associated undertakings and    strategic investments	C1(c)	2	(10)	(2)
Short-term fluctuations in investment return	C1(d)	(15)	(15)	(49)
Investment return adjustment for Group equity and debt instruments held in    life funds	C1(e)	(26)	2	(42)
Dividends declared to holders of perpetual preferred callable securities	C1(f)	15	16	32
Institutional Asset Management equity plans	C1(g)	(6)	(9)	(42)
Credit-related fair value losses on Group debt instruments	C1(h)	(19)	(39)	(10)
Restructuring costs	C1(i)	(40)	(19)	(60)
Total adjusting items		(260)	(255)	(301)
Tax on adjusting items		27	28	36
Non-controlling interest in adjusting items		8	12	28
Total adjusting items after tax and non-controlling interests		(225)	(215)	(237)

(b) Goodwill impairment and impact of acquisition accounting

When applying acquisition accounting, deferred acquisition costs and deferred revenue existing at the point of acquisition are not recognised under IFRS. These are reversed on acquisition in the 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 AOP, the Group recognises deferred revenue and acquisition costs and deferred revenue in relation to policies sold by acquired businesses pre-acquisition. The Group excludes the impairment of goodwill, the amortisation and impairment of acquired other intangibles and acquired PVIF as well as the movements in certain acquisition date provisions. Costs incurred on completed acquisitions are also excluded from AOP. If the intangible assets recognised as a result of a business combination are subsequently impaired, this is excluded from AOP. The effect of these adjustments to determine AOP are summarised below:

				£m
Six months ended 30 June 2015		Emerging Markets	Old Mutual Wealth	Total
Impairment of goodwill and other intangible assets		-	(94)	(94)
Amortisation of acquired PVIF		(5)	(27)	(32)
Amortisation of acquired deferred costs and revenue		-	7	7
Amortisation of other acquired intangible assets		(7)	(26)	(33)
Acquisition costs		(3)	(9)	(12)
Deferred consideration		-	(7)	(7)
		(15)	(156)	(171)
				£m
Six months ended 30 June 2014		Emerging Markets	Old Mutual Wealth	Total
Impairment of goodwill and other intangible assets		-	(125)	(125)
Amortisation of acquired PVIF		-	(37)	(37)
Amortisation of acquired deferred costs and revenue		-	5	5
Amortisation of other acquired intangible assets		(1)	(22)	(23)
Change in acquisition date provisions		-	(1)	(1)
		(1)	(180)	(181)
				£m
Year ended 31 December 2014		Emerging Markets	Old Mutual Wealth	Total
Impairment of goodwill and other intangible assets		-	(14)	(14)
Amortisation of acquired PVIF		(3)	(67)	(70)
Amortisation of acquired deferred costs and revenue		-	11	11
Amortisation of other acquired intangible assets		(7)	(47)	(54)
Change in acquisition date provisions		-	(1)	(1)
		(10)	(118)	(128)

(c) Profit/(loss) on disposal of subsidiaries, associated undertakings and strategic investments

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

			£m
	Six months ended 30 June 2015	Six months ended  30 June     2014	Year ended 31 December 2014
Emerging Markets	-	4	66
Old Mutual Wealth	1	(15)	(70)
Institutional Asset Management	1	1	2
Profit/(loss) on disposal of subsidiaries, associated undertakings    and strategic investments	2	(10)	(2)

Emerging Markets

Prior period transactions

On 30 April 2014, following the termination of the management agreement with SA Corporate Real Estate Fund, a JSE listed real estate trust, the Group agreed to sell and transfer the business to the new manager when the transaction became unconditional. A profit of £4 million was recognised in profit or loss for the period.

On 1 September 2014, the Group completed the acquisition of an additional 25% stake in Old Mutual Finance (Pty) Ltd. The accounting related to the step up in ownership from 50% to 75% effectively involved a simultaneous sale of 50% of the business, followed by an acquisition of the fair value of 75% of the business. Consequently a profit of £62 million was realised on the transaction, calculated as the difference between the fair value of the initial 50% and the carrying amount of the investment in Old Mutual Finance (Pty) Ltd at 1 September 2014.

Old Mutual Wealth

Current period transactions

On 2 February 2015, the Group completed the sale of Skandia Luxembourg and Skandia France, part of Old Mutual Wealth. The Group has recognised a profit on disposal of £1 million, which comprises a loss on disposing the net assets of the sold business of £29 million and a gain of £30 million recycled from foreign currency translation reserve.

Prior period transactions

On 30 May 2014, the Group completed the disposal of Skandia Poland, part of Old Mutual Wealth. For the year ended 31 December 2014, a loss on disposal of £21 million was recognised in profit or loss. For the six months ended 30 June 2014, a provisional loss of £15 million was recognised in profit or loss.

On 1 October 2014, the Group completed the disposal of Skandia Austria and Skandia Germany. A loss on disposal of £43 million was recognised in profit or loss.

On 6 November 2014, the Group completed the disposal of Skandia Liechtenstein. A loss on disposal of £6 million was recognised in profit or loss.

Institutional Asset Management

Current period transactions

During the six months ended 30 June 2015, the Group received additional earn-out income of £1 million (six months ended 30 June 2014: £nil; year ended 31 December 2014: £2 million) from earn-outs on affiliates disposed of in prior periods.

Prior period transactions

During the six months ended 30 June 2014, the Group released a £1 million accrual relating to the disposal of Echo Point which was effective during the year ended 31 December 2013.

C: Other key performance information continued

C1: Operating profit adjusting items continued

(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 property & casualty businesses. AOP 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 apportionment of underlying investments in cash deposits, money market instruments and equity assets. Long-term rates of return are reviewed annually by the Board for appropriateness. The review of the long-term rates of return seeks to ensure that the returns credited to AOP 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.

			%
Long-term investment rates	Six months ended 30 June 2015	Six months ended  30 June 2014	Year ended 31 December 2014
Emerging Markets
Mutual & Federal1	7.4	7.4	7.4
Old Mutual South Africa	8.0	8.0	8.0
Rest of Africa	8.5	8.0	8.0
Old Mutual Wealth	1.0	1.0	1.0

¹   The long-term investments rate of Mutual & Federal relates to the South African businesses only.

Analysis of short-term fluctuations in investment return

	£m
Six months ended 30 June 2015	Emerging Markets	Old Mutual Wealth	Other	Total
Actual shareholder investment return	57	(2)	8	63
Less: Long-term investment return	64	3	11	78
Short-term fluctuations in investment return	(7)	(5)	(3)	(15)
	£m
Six months ended 30 June 2014	Emerging Markets	Old Mutual Wealth	Other	Total
Actual shareholder investment return	44	8	10	62
Less: Long-term investment return	61	3	13	77
Short-term fluctuations in investment return	(17)	5	(3)	(15)
	£m
Year ended 31 December 2014	Emerging Markets	Old Mutual Wealth	Other	Total
Actual shareholder investment return	64	23	16	103
Less: Long-term investment return	123	5	24	152
Short-term fluctuations in investment return	(59)	18	(8)	(49)

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

AOP 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 shares issued by the Group. 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 AOP. This ensures consistency of treatment with the measures in the related policyholder liability. During the six months ended 30 June 2015, the investment return adjustment increased AOP by £26 million (six months ended 30 June 2014: decrease of £2 million; year ended 31 December 2014: increase of £42 million).

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

Dividends declared to the holders of the Group's perpetual preferred callable securities on an AOP basis were £15 million for the six months ended 30 June 2015 (six months ended 30 June 2014: £16 million; year ended 31 December 2014: £32 million). For the purpose of determining AOP, these are recognised in finance costs on an accrual basis. In accordance with IFRS, the total cash distribution is recognised directly in equity.

(g) Institutional Asset Management equity plans

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

As part of the incentive schemes in the Institutional Asset Management business, the Group has granted put options over the equity of certain affiliates to senior affiliate employees. The impact of revaluing these instruments is recognised in accordance with IFRS, but excluded from AOP. At 30 June 2015, these instruments were revalued, the impact of which was a loss of £6 million (six months ended 30 June 2014: loss of £9 million: year ended 31 December 2014: loss of £42 million).

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

The widening of the credit spread on the Group's debt instruments can cause the market value of these instruments to decrease, resulting in gains being recognised in profit or loss. Conversely, if the credit spread narrows the market value of debt instruments will increase causing losses to be recognised in the consolidated income statement. In the directors' view, such movements are not reflective of the underlying performance of the Group and will reverse over time. Therefore they have been excluded from AOP.  For the six months ended 30 June 2015, due to narrowing of credit spreads, a net loss of £19 million was recognised (six months ended 30 June 2014: net loss of £39 million; year ended 31 December 2014: net loss of £10 million).

(i) Old Mutual Wealth restructuring expenditure

The Old Mutual Wealth business embarked on a significant programme of operational change in 2013. This will fundamentally restructure the way in which its UK platform business operates. Over the next two years, it will migrate certain elements of service provision to International Financial Data Services (IFDS). Costs related to decommissioning of existing technology and service provision and the migration of service to IFDS are excluded from AOP. These costs comprise payments to IFDS and are directly attributable to internal project costs and totalled £40 million for the six months ended 30 June 2015 (six months ended 30 June 2014: £19 million; year ended 31 December 2014: £60 million).

C2: Earnings and earnings per share

The Group calculates earnings per share (EPS) on a number of different bases as appropriate to prevailing international, UK and South African practices and guidance. IFRS requires the calculation of basic and diluted EPS. Adjusted operating EPS reflects earnings per share that is consistent with the Group's alternative profit measure. JSE Limited (JSE) listing requirements also require the Group to calculate headline EPS. The Group's EPS on these different bases are summarised below:

					Pence
	Source of guidance	Notes	Six months ended 30 June 2015	Six months ended 30 June 2014	Year ended 31 December 2014
Basic earnings per share	IFRS	C2(a)	5.4	4.5	12.4
Diluted basic earnings per share	IFRS	C2(b)	5.0	4.1	11.5
Adjusted operating earnings per share	Group policy	C2(c)	10.3	8.8	17.9
Headline earnings per share (Gross of tax)	JSE Listing Requirements	C2(d)	7.4	7.5	12.3
Headline earnings per share (Net of tax)	JSE Listing Requirements	C2(d)	7.4	7.6	12.6
Diluted headline earnings per share (Gross of tax)	JSE Listing Requirements	C2(d)	6.9	6.9	11.4
Diluted headline earnings per share (Net of tax)	JSE Listing Requirements	C2(d)	6.9	7.0	11.6

C: Other key performance information continued

C2: Earnings per share continued

(a) Basic 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, Employee Share Ownership Plan Trusts (ESOP), Black Economic Empowerment trusts and other related undertakings.

The table below reconciles the profit attributable to equity holders of the parent to profit attributable to ordinary equity holders:

				£m
		Six months ended 30 June 2015	Six months ended 30 June 2014	Year ended 31 December 2014
Profit for the financial period attributable to equity holders of the parent    from continuing operations		281	223	632
Loss for the financial period attributable to equity holders of the parent    from discontinued operations		(21)	(10)	(50)
Profit for the financial period attributable to equity holders of the parent		260	213	582
Dividends paid to holders of perpetual preferred callable securities,    net of tax credits		(14)	(14)	(25)
Profit attributable to ordinary equity holders		246	199	557

Total dividends paid to holders of perpetual preferred callable securities of £14 million for the six months ended 30 June 2015 (six months ended 30 June 2014: £14 million; year ended 31 December 2014: £25 million) are stated net of tax credits of £3 million (six months ended 30 June 2014 £3 million; year ended 31 December 2014: £7 million).

The table below summarises the calculation of the weighted average number of ordinary shares for the purposes of calculating basic earnings per share:

				Millions
	Notes	Six months ended 30 June 2015	Six months ended  30 June 2014	Year ended 31 December 2014
Weighted average number of ordinary shares in issue		4,920	4,897	4,901
Shares held in charitable foundations		(6)	(6)	(6)
Shares held in ESOP trusts		(59)	(51)	(50)
Adjusted weighted average number of ordinary shares	C2(c)	4,855	4,840	4,845
Shares held in life funds		(80)	(141)	(127)
Shares held in Black Economic Empowerment trusts		(177)	(237)	(233)
Weighted average number of ordinary shares used to calculate basic    earnings per share		4,598	4,462	4,485
Basic earnings per ordinary share (pence)		5.4	4.5	12.4

(b) Diluted basic earnings per share

Diluted basic EPS recognises the dilutive impact of shares and options held in ESOP trusts and Black Economic Empowerment trusts, to the extent they have value, in the calculation of the weighted average number of shares, as if the relevant shares were in issue for the full period.

The table below reconciles the profit attributable to ordinary equity holders to diluted profit attributable to ordinary equity holders and summarises the calculation of weighted average number of shares for the purpose of calculating diluted basic earnings per share:

	Notes	Six months ended 30 June 2015	Six months ended 30 June 2014	Year ended 31 December 2014
Profit attributable to ordinary equity holders (£m)		246	199	557
Dilution effect on profit relating to share options issued by subsidiaries (£m)		(5)	(4)	(10)
Diluted profit attributable to ordinary equity holders (£m)		241	195	547
Weighted average number of ordinary shares (millions)	C2(a)	4,598	4,462	4,485
Adjustments for share options held by ESOP trusts (millions)		36	59	48
Adjustments for shares held in Black Economic Empowerment trusts (millions)		177	237	233
Weighted average number of ordinary shares used to calculate    diluted basic earnings per share (millions)		4,811	4,758	4,766
Diluted basic earnings per ordinary share (pence)		5.0	4.1	11.5

(c) Adjusted operating earnings per share

The following table presents a reconciliation of profit for the financial period to adjusted operating profit after tax attributable to ordinary equity holders and summarises the calculation of adjusted operating earnings per share:

	Notes	Six months ended 30 June 2015	Six months ended 30 June 2014	Year ended 31 December 2014
Profit for the financial period attributable to equity holders of the parent		260	213	582
Adjusting items	C1(a)	260	255	301
Tax on adjusting items		(27)	(28)	(36)
Non-core operations	B3	(4)	(14)	(1)
Loss from discontinued operations	H1	21	10	50
Non-controlling interest on adjusting items		(8)	(12)	(28)
Adjusted operating profit after tax attributable to ordinary equity    holders (£m)		502	424	868
Adjusted weighted average number of ordinary shares used to    calculate adjusted operating earnings per share (millions)	C2(a)	4,855	4,840	4,845
Adjusted operating earnings per share (pence)		10.3	8.8	17.9

C: Other key performance information continued

C2: Earnings per share continued

(d) Headline earnings per share

The Group is required to calculate 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 02/2013 (Revised) 'Headline Earnings'. The table below sets out a reconciliation of basic EPS 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. The table below reconciles the profit for the financial year attributable to equity holders of the parent to headline earnings and summarises the calculation of basic HEPS:

		Six months ended 30 June 2015		Six months ended 30 June 2014		Year ended 31 December 2014
	Notes	Gross	Net	Gross	Net	Gross	Net
Profit for the financial period attributable to equity holders of the parent		260	260	213	213	582	582
Dividends paid to holders of perpetual preferred callable securities		(14)	(14)	(14)	(14)	(25)	(25)
Profit attributable to ordinary equity holders		246	246	199	199	557	557
Adjustments:
Impairments of goodwill and other intangible assets		94	94	125	125	14	14
(Profit)/loss on disposal of subsidiaries, associated    undertakings and strategic investments		(2)	(2)	10	15	2	14
Realised gains (net of impairments) on available-for-sale    financial assets		-	-	-	-	(20)	(20)
Headline earnings		338	338	334	339	553	565
Dilution effect on earnings relating to share options    issued by subsidiaries		(5)	(5)	(4)	(4)	(10)	(10)
Diluted headline earnings  (£m)		333	333	330	335	543	555
Weighted average number of ordinary    shares (millions)	C2(a)	4,598	4,598	4,462	4,462	4,485	4,485
Diluted weighted average number of ordinary    shares (millions)	C2(b)	4,811	4,811	4,758	4,758	4,766	4,766
Headline earnings per share (pence)		7.4	7.4	7.5	7.6	12.3	12.6
Diluted headline earnings per share (pence)		6.9	6.9	6.9	7.0	11.4	11.6

C3: Dividends

			£m
	Six months ended 30 June 2015	Six months ended 30 June 2014	Year ended 31 December 2014
2013 Final dividend paid - 6.00p per 11 3/7p share	-	-	279
2014 Interim dividend paid - 2.45p per 11 3/7p share	-	279	115
2014 Final dividend paid - 6.25p per 11 3/7p share	296	-	-
Dividends to ordinary equity holders	296	279	394
Dividends paid to holders of perpetual preferred callable securities	17	17	32
Dividend payments for the period	313	296	426

Final and interim dividends paid to ordinary equity holders are calculated using the number of shares in issue at the record date less own 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 2.65 pence (or its equivalent in other applicable currencies) per ordinary share in the Company has been recommended by the directors in relation to the six months ended 30 June 2015. The interim dividend will be paid on 30 October 2015 to shareholders on the registers at the close of business on 25 September 2015. The Company is not offering a scrip dividend alternative.

In March 2015, £17 million was declared and paid to holders of perpetual preferred callable securities (March 2014: £17 million, November 2014: £15 million).

D: Other income statement notes

D1: Income tax expense

(a) Analysis of total income tax expense

			£m
	Six months ended 30 June  2015	Six months ended 30 June  2014	Year ended 31 December 2014
Current tax
United Kingdom	24	7	19
Overseas tax
- Africa	166	180	336
- Europe	9	4	32
- Rest of the world	18	-	5
Withholding taxes	5	4	16
Adjustments to current tax in respect of prior years	-	4	31
Total current tax	222	199	439
Deferred tax
Origination and reversal of temporary differences	21	17	43
Adjustments to deferred tax in respect of prior years	-	2	(20)
Total deferred tax	21	19	23
Total income tax expense	243	218	462

(b) Reconciliation of total income tax expense

			£m
	Six months ended 30 June 2015	Six months ended 30 June 2014	Year ended 31 December 2014
Profit before tax	683	564	1,364
Tax at UK standard rate of 20.25% (2014: 21.5%)	138	121	293
Different tax rate or basis on overseas operations	60	41	95
Untaxed and low taxed income	(30)	(29)	(56)
Disallowable expenses	42	38	67
Net movement on deferred tax assets not recognised	3	13	7
Withholding taxes	2	2	8
Income tax attributable to policyholder returns	28	35	46
Other	-	(3)	2
Total income tax expense	243	218	462

(c) Income tax relating to components of other comprehensive income

			£m
	Six months ended 30 June 2015	Six months ended 30 June 2014	Year ended 31 December 2014
Measurement gains on defined benefit plans	-	-	1
Income tax on items that will not be reclassified subsequently to profit or loss	-	-	1
Income tax on items that may be reclassified subsequently to profit or loss	-	3	5
Income tax expense relating to components of other comprehensive    income	-	3	6

D: Other income statement notes continued

D1: Income tax expense continued

(d) Reconciliation of income tax expense in the IFRS income statement to income tax on adjusted operating profit

			£m
	Six months ended 30 June 2015	Six months ended 30 June 2014	Year ended 31 December 2014
Income tax expense	243	218	462
Tax on adjusting items
Goodwill impairment and impact of acquisition accounting	17	26	15
(Profit)/loss on disposal of subsidiaries, associates and strategic investments	-	(5)	(11)
Short-term fluctuations in investment return	(2)	2	6
Tax on dividends declared to holders of perpetual preferred callable securities    recognised in equity	(3)	(3)	(7)
Institutional Asset Management equity plans	7	3	20
Restructuring costs	8	5	13
Total tax on adjusting items	27	28	36
Income tax attributable to policyholders returns	(35)	(44)	(59)
Income tax on adjusted operating profit	235	202	439

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), derivative financial instruments, 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. Note E1 in the 2014 Annual Report and Accounts contains more detail on financial instruments.

(a) 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.

At 30 June 2015								£m
Measurement basis		Fair value (note E1(b))			Amortised cost
	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	808	-	-	-	-	808	-	-
Investments in associated    undertakings and joint ventures1	470	-	54	-	-	-	-	416
Reinsurers' share of policyholder   liabilities	2,394	-	2,082	-	-	5	-	307
Loans and advances	34,655	2,017	3,425	2	-	29,211	-	-
Investments and securities	87,033	953	82,866	647	2,512	55	-	-
Trade, other receivables and    other assets	2,938	71	288	-	-	1,565	-	1,014
Derivative financial instruments	1,161	1,161	-	-	-	-	-	-
Cash and cash equivalents	5,034	-	-	-	-	5,034	-	-
Total assets that include financial    instruments	134,493	4,202	88,715	649	2,512	36,678	-	1,737
Total other non-financial assets	7,648	-	-	-	-	-	-	7,648
Total assets	142,141	4,202	88,715	649	2,512	36,678	-	9,385
Liabilities
Long-term business insurance    policyholder liabilities	9,851	-	-	-	-	-	-	9,851
Investment contract liabilities	68,786	-	60,905	-	-	-	-	7,881
Third-party interest in    consolidation of funds	5,678	-	5,678	-	-	-	-	-
Borrowed funds	3,566	-	802	-	-	-	2,764	-
Trade, other payables and    other liabilities	5,173	704	430	-	-	-	2,395	1,644
Amounts owed to bank depositors	36,000	4,565	2,585	-	-	-	28,850	-
Derivative financial instruments	1,161	1,161	-	-	-	-	-	-
Total liabilities that include    financial instruments	130,215	6,430	70,400	-	-	-	34,009	19,376
Total other non-financial liabilities	2,391	-	-	-	-	-	-	2,391
Total liabilities	132,606	6,430	70,400	-	-	-	34,009	21,767

¹        Investments in associated undertakings and joint ventures classified as non-financial assets and liabilities are equity accounted.

E: Financial assets and liabilities continued

E1: Group statement of financial position continued

(a) Categories of financial instruments continued

30 June 2014								£m
Measurement basis		Fair value (note E1(b))			Amortised cost
	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	767	-	-	-	-	767	-	-
Investments in associated    undertakings and joint ventures1	201	-	51	-	-	-	-	150
Reinsurers' share of policyholder   liabilities	1,987	-	1,765	-	-	17	-	205
Loans and advances	33,727	2,476	3,377	3	-	27,871	-	-
Investments and securities	86,198	996	83,318	678	1,116	90	-	-
Trade, other receivables and    other assets	2,780	129	325	-	-	1,753	-	573
Derivative financial instruments	1,104	1,104	-	-	-	-	-	-
Cash and cash equivalents	4,289	-	-	-	-	4,289	-	-
Total assets that include financial    instruments	131,053	4,705	88,836	681	1,116	34,787	-	928
Total other non-financial assets	10,738	-	-	-	-	-	-	10,738
Total assets	141,791	4,705	88,836	681	1,116	34,787	-	11,666
Liabilities
Long-term business insurance    policyholder liabilities	11,737	-	-	-	-	-	-	11,737
Investment contract liabilities	66,355	-	58,732	-	-	-	-	7,623
Third-party interest in    consolidation of funds	6,456	-	6,456	-	-	-	-	-
Borrowed funds	2,783	-	686	-	-	-	2,097	-
Trade, other payables and    other liabilities	4,068	199	272	-	-	-	2,535	1,062
Amounts owed to bank depositors	34,540	3,724	3,463	-	-	-	27,353	-
Derivative financial instruments	1,174	1,174	-	-	-	-	-	-
Total liabilities that include    financial instruments	127,113	5,097	69,609	-	-	-	31,985	20,422
Total other non-financial liabilities	5,807	-	-	-	-	-	-	5,807
Total liabilities	132,920	5,097	69,609	-	-	-	31,985	26,229

¹        Investments in associated undertakings and joint ventures classified as non-financial assets and liabilities are equity accounted.

At 31 December 2014								£m
Measurement basis		Fair value (note E1(b))			Amortised cost
	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	829	-	-	-	-	829	-	-
Investments in associated    undertakings and joint ventures1	518	-	50	-	-	-	-	468
Reinsurers' share of policyholder   liabilities	2,314	-	2,027	-	-	12	-	275
Loans and advances	34,857	1,497	3,523	2	-	29,835	-	-
Investments and securities	87,547	839	83,568	754	2,325	61	-	-
Trade, other receivables and    other assets	2,362	117	310	-	-	1,260	-	675
Derivative financial instruments	1,227	1,227	-	-	-	-	-	-
Cash and cash equivalents	4,944	-	-	-	-	4,944	-	-
Total assets that include financial    instruments	134,598	3,680	89,478	756	2,325	36,941	-	1,418
Total other non-financial assets	7,918	-	-	-	-	-	-	7,918
Total assets	142,516	3,680	89,478	756	2,325	36,941	-	9,336
Liabilities
Long-term business policyholder    liabilities	10,519	-	-	-	-	-	-	10,519
Investment contract liabilities	68,841	-	60,904	-	-	-	-	7,937
Third-party interest in    consolidation of funds	5,986	-	5,986	-	-	-	-	-
Borrowed funds	3,044	-	734	-	-	-	2,310	-
Trade, other payables and    other liabilities	4,276	251	341	-	-	-	2,217	1,467
Amounts owed to bank depositors	36,243	4,290	2,199	-	-	-	29,754	-
Derivative financial instruments	1,201	1,201	-	-	-	-	-	-
Total liabilities that include financial    instruments	130,110	5,742	70,164	-	-	-	34,281	19,923
Total other non-financial liabilities	2,861	-	-	-	-	-	-	2,861
Total liabilities	132,971	5,742	70,164	-	-	-	34,281	22,784

¹        Investments in associated undertakings and joint ventures classified as non-financial assets and liabilities are equity accounted.

E: Financial assets and liabilities continued

E1: Group statement of financial position continued

(b) Fair value hierarchy

The table below presents the Group's financial assets and liabilities that are measured at fair value in the consolidated statement of financial position according to their IAS 39 classification, as set out in note E1(a), and in terms of the fair value hierarchy as required by IFRS 7 'Financial Instruments: Disclosures'.

				£m
At 30 June 2015	Total	Level 1	Level 2	Level 3
Financial assets measured at fair value
Held-for-trading (fair value through profit or loss)	4,202	239	3,945	18
Loans and advances	2,017	-	2,017	-
Investments and securities	953	167	786	-
Other financial assets	71	71	-	-
Derivative financial instruments - assets	1,161	1	1,142	18
Designated (fair value through profit or loss)	88,715	77,806	9,524	1,385
Investments in associated undertakings and joint ventures	54	-	-	54
Reinsurers' share of policyholder liabilities	2,082	2,082	-	-
Loans and advances	3,425	175	3,248	2
Investments and securities	82,866	75,261	6,276	1,329
Other financial assets	288	288	-	-
Available-for-sale financial assets (fair value through equity)	649	127	522	-
Loans and advances	2	2	-	-
Investments and securities	647	125	522	-
Total assets measured at fair value	93,566	78,172	13,991	1,403
Financial liabilities measured at fair value
Held-for-trading (fair value through profit or loss)	6,430	690	5,739	1
Other liabilities	704	686	18	-
Amounts owed to bank depositors	4,565	-	4,565	-
Derivative financial instruments - liabilities	1,161	4	1,156	1
Designated (fair value through profit or loss)	70,400	46,277	23,522	601
Investment contract liabilities1	60,905	45,507	14,797	601
Third-party interests in consolidated funds	5,678	-	5,678	-
Borrowed funds	802	726	76	-
Other liabilities	430	44	386	-
Amounts owed to bank depositors	2,585	-	2,585	-
Total liabilities measured at fair value	76,830	46,967	29,261	602

¹   Investment contract liabilities amount excludes £7,881 million discretionary participating investment contracts. These contracts are classified as non-financial liabilities and are not analysed according to their fair value hierarchy as permitted by IFRS 7 'Financial Instruments: Disclosures'.

				£m
At 30 June 2014	Total	Level 1	Level 2	Level 3
Financial assets measured at fair value
Held-for-trading (fair value through profit or loss)	4,705	329	4,368	8
Loans and advances	2,476	-	2,476	-
Investments and securities	996	196	799	1
Other financial assets	129	129	-	-
Derivative financial instruments - assets	1,104	4	1,093	7
Designated (fair value through profit or loss)	88,836	74,992	12,174	1,670
Investments in associated undertakings and joint ventures	51	-	-	51
Reinsurers' share of policyholder liabilities	1,765	1,765	-	-
Loans and advances	3,377	1	3,374	2
Investments and securities	83,318	72,901	8,800	1,617
Other financial assets	325	325	-	-
Available-for-sale financial assets (fair value through equity)	681	195	485	1
Loans and advances	3	3	-	-
Investments and securities	678	192	485	1
Total assets measured at fair value	94,222	75,516	17,027	1,679
Financial liabilities measured at fair value
Held-for-trading (fair value through profit or loss)	5,097	196	4,901	-
Other liabilities	199	190	9	-
Amounts owed to bank depositors	3,724	-	3,724	-
Derivative financial instruments - liabilities	1,174	6	1,168	-
Designated (fair value through profit or loss)	69,609	45,265	23,540	804
Investment contract liabilities1	58,732	44,611	13,317	804
Third-party interests in consolidated funds	6,456	-	6,456	-
Borrowed funds	686	606	80	-
Other liabilities	272	48	224	-
Amounts owed to bank depositors	3,463	-	3,463	-
Total liabilities measured at fair value	74,706	45,461	28,441	804

¹   Investment contract liabilities amount excludes £7,623 million discretionary participating investment contracts. These contracts are classified as non-financial liabilities and are not analysed according to their fair value hierarchy as permitted by IFRS 7 'Financial Instruments: Disclosures'.

E: Financial assets and liabilities continued

E1: Group statement of financial position continued

(b) Fair value hierarchy continued

				£m
At 31 December 2014	Total	Level 1	Level 2	Level 3
Financial assets measured at fair value
Held-for-trading (fair value through profit or loss)	3,680	373	3,299	8
Loans and advances	1,497	-	1,497	-
Investments and securities	839	254	585	-
Other financial assets	117	117	-	-
Derivative financial instruments - assets	1,227	2	1,217	8
Designated (fair value through profit or loss)	89,478	73,554	14,320	1,604
Investments in associated undertakings and joint ventures	50	-	-	50
Reinsurers' share of policyholder liabilities	2,027	2,027	-	-
Loans and advances	3,523	177	3,344	2
Investments and securities	83,568	71,040	10,976	1,552
Other financial assets	310	310	-	-
Available-for-sale financial assets (fair value through equity)	756	137	618	1
Loans and advances	2	2	-	-
Investments and securities	754	135	618	1
Total assets measured at fair value	93,914	74,064	18,237	1,613
Financial liabilities measured at fair value
Held-for-trading (fair value through profit or loss)	5,742	245	5,497	-
Other liabilities	251	243	8	-
Amounts owed to bank depositors	4,290	-	4,290	-
Derivative financial instruments - liabilities	1,201	2	1,199	-
Designated (fair value through profit or loss)	70,164	44,274	25,136	754
Investment contract liabilities1	60,904	43,571	16,579	754
Third-party interests in consolidated funds	5,986	-	5,986	-
Borrowed funds	734	653	81	-
Other liabilities	341	50	291	-
Amounts owed to bank depositors	2,199	-	2,199	-
Total liabilities measured at fair value	75,906	44,519	30,633	754

¹   Investment contract liabilities amount excludes £7,937 million discretionary participating investment contracts. These contracts are classified as non-financial liabilities and are not analysed according to their fair value hierarchy as permitted by IFRS 7 'Financial Instruments: Disclosures'.

(c) Determination of fair value

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(q) (iii) of the 2014 Annual Report and Accounts. There have been no significant changes to the valuation techniques applied.

There have been no significant transfers between Level 1 and 2 financial instruments during the period.

Financial assets and liabilities carried at amortised cost have fair values that are similar to their carrying amounts. Such assets and liabilities primarily comprise variable-rate financial assets and liabilities that re-price as interest rates change, short-term deposits or current assets. Note E1(p)(i) in the 2014 Annual Report and Accounts provides further information.

The following is taken into account when evaluating the fair value of financial instruments:

§ Assessing whether instruments are trading with sufficient frequency and volume, that they can be considered liquid

§ The inclusion of a measure of the counterparties non-performance risk in the fair-value measurement of loans and advances, which involves the modelling of dynamic credit spreads

§ The inclusion of credit valuation adjustment (CVA) and debit valuation adjustment (DVA) in the fair-value measurement of derivative instruments, with particular emphasis on DVA and

§ The inclusion of own credit risk in the calculation of the fair value of financial liabilities.

(d) Movements in financial instruments measured at Level 3 in terms of the hierarchy

The fair values of Level 3 financial instruments are based on valuation techniques that rely largely on unobservable market inputs and require a significant level of judgement. As such, the fair values of Level 3 financial instruments are often less reliable than Level 1 and Level 2 financial instruments. Movements in the fair values of Level 3 instruments are generally due to movements in key assumptions and macroeconomic factors.

The tables below reconcile the opening balances of Level 3 financial assets and to closing balances at the end of the period:

						£m
	Held-for-trading	Designated fair value through profit or loss			Available-for-sale	Total
Six months ended 30 June 2015	Derivatives	Investments in associated undertakings and joint ventures	Loans and advances	Investments and securities	Investments and securities
Level 3 financial assets
At beginning of the period	8	50	2	1,552	1	1,613
Total net fair value gains recognised    in the profit or loss for the period	-	2	-	2	-	4
Purchases and issues	11	5	-	143	-	159
Sales and settlements	-	-	-	(309)	(1)	(310)
Transfers in	-	-	-	48	-	48
Transfers out	-	-	-	(59)	-	(59)
Foreign exchange and other	(1)	(3)	-	(48)	-	(52)
Total level 3 financial assets	18	54	2	1,329	-	1,403
Fair value gains/(losses) relating to    assets held at 30 June 2015    recognised in profit or loss	-	2	-	(14)	-	(12)

			£m
Six months ended 30 June 2015	Held-for-trading - Derivatives	Designated fair value through profit or loss - Investment contract liabilities	Total
Level 3 financial liabilities
At beginning of the period	-	754	754
Total net fair value gains recognised in profit or loss for the period	-	(38)	(38)
Purchases and issues	-	65	65
Sales and settlements	-	(228)	(228)
Transfers in	1	48	49
Total level 3 financial liabilities	1	601	602
Fair value gains relating to liabilities    held at 30 June 2015 recognised    in profit or loss	-	(38)	(38)

E: Financial assets and liabilities continued

E1: Group statement of financial position continued

(d) Movements in financial instruments measured at Level 3 in terms of the hierarchy continued

							£m
	Held-for-trading		Designated at fair value through profit or loss			Available- for-sale	Total
Six months ended 30 June 2014	Investments and securities	Derivatives	Investments in associated undertakings and joint ventures	Loans and advances	Investments and securities	Investments and securities
Level 3 financial assets
At beginning of the period	3	8	49	2	1,708	2	1,772
Total net fair value (losses)/gains    recognised in the profit or loss    for the period	(1)	(1)	-	-	20	-	18
Purchases and issues	-	-	-	-	73	-	73
Sales and settlements	-	-	-	-	(188)	(1)	(189)
Transfers in	-	-	-	-	57	-	57
Transfers out	-	-	-	-	(16)	-	(16)
Foreign exchange and other	(1)	-	2	-	(37)	-	(36)
Total level 3 financial assets	1	7	51	2	1,617	1	1,679
Fair value gains relating to assets    held at 30 June 2014 recognised    in profit or loss	-	-	-	-	9	-	9

							£m
Six months ended 30 June 2014							Investment contract liabilities
Level 3 financial liabilities (Designated fair value through profit or loss)
At beginning of the period							932
Total net fair value gains recognised in profit or loss for the period							(49)
Purchases and issues							1
Sales and settlements							(126)
Transfers in							50
Foreign exchange and other							(4)
Total level 3 financial liabilities							804
Fair value gains relating to assets held at    30 June 2014 recognised in    profit or loss							(49)
								£m
	Held-for-trading		Designated at fair value through profit or loss			Available- for-sale		Total
Year ended 31 December 2014	Investments and securities	Derivatives	Investments in associated undertakings and joint ventures	Loans and advances	Investments and securities	Investments and securities
Level 3 financial assets
At beginning of the period	3	8	49	2	1,708	2		1,772
Total net fair value (losses)/gains    recognised in the profit or loss    for the period	-	(1)	-	-	53	-		52
Purchases and issues	-	-	(1)	-	136	-		135
Sales and settlements	(3)	-	-	-	(319)	(1)		(323)
Transfers in	-	-	-	-	54	-		54
Transfers out	-	-	-	-	(36)	-		(36)
Foreign exchange and other	-	1	2	-	(44)	-		(41)
Total level 3 financial assets	-	8	50	2	1,552	1		1,613
Fair value (losses)/gains relating    to assets held at 31 December 2014    recognised in profit or loss	-	(1)	-	-	22	-		21

	£m
Year ended 31 December 2014	Investment contract liabilities
Level 3 financial liabilities (Designated fair value through profit or loss)
At beginning of the period	932
Total net gains recognised in profit or loss for the period	(47)
Purchases and issues	8
Sales and settlements	(137)
Foreign exchange and other	(2)
Total level 3 financial liabilities	754
Fair value gains relating to liabilities    held at  31 December 2014    recognised in profit or loss	(47)

E: Financial assets and liabilities continued

E1: Group statement of financial position continued

(e) 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 the impact 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 which are included as investment securities and investment in associated undertakings and joint ventures, the valuations are assessed on an asset-by-asset basis using a valuation methodology appropriate to the specific investment (both industry and type of 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.

(f) 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 summarises the significant inputs to value instruments categorised as Level 3 hierarchy and their sensitivity to changes in the inputs used. 

Types of financial instruments	Fair value At 30 June 2015 £m	Valuation techniques	Significant unobservable input	Range of estimates for unobservable inputs	Fair value measurement sensitivity to unobservable inputs At 30 June 2015 £m
Assets
Investments in associated undertakings and joint ventures	54 (June 2014: 51) (December 2014: 50)	Discounted cash flows (DCF) Price earnings ratios	Valuation multiples	-9% to +9%	Favourable: 4 (June 2014: 7) (December 2014: 7) Unfavourable: 5 (June 2014: 7) (December 2014: 7)
Investments and securities	1,329 (June 2014: 1,619) (December 2014: 1,553)	Discounted cash flows (DCF) EBITDA multiple Price earnings ratios Adjusted net asset values supplied by fund managers	Valuation multiples Correlations Volatilities Credit spreads Dividend growth rates Internal rates of return, cost of capital Inflation rates Market adjusted price (infrequently traded shares)	Nedbank:  -12% to +12% Emerging Markets: -10% to +10% OMAM: -10% to +10%	Favourable: 211 (June 2014: 203) (December 2014: 202) Unfavourable: 208 (June 2014: 199) (December 2014: 190)
Loans and advances	2 (June 2014: 2) (December 2014: 2)	Discounted cash flows (DCF)	Correlations Volatilities Credit spreads	-12% to 12%	Favourable: £nil (June 2014: £nil) (December 2014: £nil) Unfavourable: £nil (June 2014: £nil) (December 2014: £nil)
Derivatives	18 (June 2014: 7) (December 2014: 8)	Option pricing model	Interest rates Volatilities	-10% to 10%	Favourable: 6 (June 2014: 7) (December 2014: 6) Unfavourable: £nil (June 2014: £nil) (December 2014: £nil)
Liabilities
Investment contract liabilities	601 (June 2014: 804) (December 2014: 754)	Adjusted net asset values supplied by fund managers Option pricing model	Interest rates Volatilities	-10% to 10%	Favourable: 55 (June 2014: 70) (December 2014: 70) Unfavourable: 65 (June 2014: 84) (December 2014: 80)

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

E: Financial assets and liabilities continued

E2: Loans and advances

The table below provides detail of the categories of the Group's loans and advances. The Group extends advances to individuals, corporate, commercial and public sector. Advances made to individuals are mostly in the form of mortgages, instalment credit, overdrafts, personal loans and credit card borrowings. Further detail on loans and advances can be found in note E3 of the 2014 Annual Report and Accounts.

			£m
	At 30 June 2015	At 30 June 2014	At 31 December 2014
Home loans	7,461	7,476	7,909
Commercial mortgages	6,901	6,332	6,870
Term loans	6,231	5,398	6,436
Other loans to clients	5,625	6,013	4,856
Net finance leases and instalment debtors	5,053	4,857	5,236
Deposits placed under reverse purchase agreements	1,043	1,202	1,016
Overdrafts	891	848	929
Preference shares and debentures	889	994	1,006
Credit cards	741	685	745
Factoring accounts	267	255	277
Policyholder loans	243	232	248
Properties in possession	30	31	33
Remittances in transit	15	19	11
Trade, other bills and bankers' acceptances	-	17	16
Gross loans and advances	35,390	34,359	35,588
Provisions for impairment	(735)	(632)	(731)
Specific provisions	(505)	(409)	(494)
Portfolio provision	(230)	(223)	(237)
Total net loans and advances	34,655	33,727	34,857

E3: Insurance and investment contracts

The tables below provide a summary of the Group's long-term business insurance policyholder liabilities and investment contract liabilities. Details of insurance contract accounting for the Group can be found in note E8 of the 2014 Annual Report and Accounts.

						£m
	At 30 June 2015			At 30 June 2014
	Gross	Reinsurance	Net	Gross	Reinsurance	Net
Life assurance policyholder liabilities
Long-term business insurance policyholder    liabilities	9,851	(201)	9,650	11,737	(117)	11,620
Life assurance policyholder liabilities	9,730	(191)	9,539	11,593	(104)	11,489
Outstanding claims	121	(10)	111	144	(13)	131
Investment contract liabilities	68,786	(2,079)	66,707	66,355	(1,767)	64,588
Unit-linked investment contracts and similar contracts	60,186	(2,079)	58,107	57,954	(1,767)	56,187
Other investment contracts	719	-	719	778	-	778
Discretionary participating investment contracts	7,881	-	7,881	7,623	-	7,623
Total life assurance policyholder liabilities	78,637	(2,280)	76,357	78,092	(1,884)	76,208
Property & casualty liabilities
Claims incurred but not reported	62	(12)	50	45	(9)	36
Unearned premiums	120	(40)	80	88	(39)	49
Outstanding claims	212	(62)	150	186	(55)	131
Total property & casualty liabilities	394	(114)	280	319	(103)	216
Total policyholder liabilities	79,031	(2,394)	76,637	78,411	(1,987)	76,424
						£m
				At 31 December 2014
				Gross	Reinsurance	Net
Life assurance policyholder liabilities
Long-term business insurance policyholder    liabilities				10,519	(172)	10,347
Life assurance policyholder liabilities				10,369	(154)	10,215
Outstanding claims				150	(18)	132
Investment contract liabilities				68,841	(2,026)	66,815
Unit-linked investment contracts and similar contracts				60,158	(2,026)	58,132
Other investment contracts				746	-	746
Discretionary participating investment contracts				7,937	-	7,937
Total life assurance policyholder liabilities				79,360	(2,198)	77,162
Property & casualty liabilities
Claims incurred but not reported				47	(10)	37
Unearned premiums				96	(45)	51
Outstanding claims				176	(61)	115
Total property & casualty liabilities				319	(116)	203
Total policyholder liabilities				79,679	(2,314)	77,365

The reinsurers' share of policyholder liabilities relating to investment contracts is where the direct management of assets are ceded to a third party through a reinsurance arrangement. Due to the nature of the arrangement, there is no transfer of insurance risk.

E: Financial assets and liabilities continued

E4: Borrowed funds

The table below presents an analysis of the Group's borrowed funds net of any holdings that are principally held by policyholder funds.

									£m
	Notes		Non-banking	Banking1	At 30 June 2015		Non- banking	Banking1	At 30 June 2014
Senior debt securities and term loans			112	1,683	1,795		113	1,271	1,384
Floating rate notes	E4(a)(i)		-	722	722		-	708	708
Fixed rate notes	E4(a(ii)		112	838	950		113	532	645
Term loans	E4(a)(iii)		-	123	123		-	31	31
Revolving credit facilities	E4(b)		92	51	143		-	-	-
Mortgage-backed securities	E4(c)		-	119	119		-	57	57
Subordinated debt securities	E4(d)		883	626	1,509		740	602	1,342
Borrowed funds			1,087	2,479	3,566		853	1,930	2,783
Other instruments treated as  equity for accounting purposes
€374 million perpetual preferred    callable securities at 5.00%2			253				253
£273 million perpetual preferred    callable securities at 6.38%3			273				273
Total: Book value			1,613				1,379
Nominal value of the above			1,560				1,350
									£m
	Notes						Non- banking	Banking1	At 31 December 2014
Senior debt securities and term loans							112	1,264	1,376
Floating rate notes	E4(a)(i)						-	563	563
Fixed rate notes	E4(a(ii)						112	576	688
Term loans	E4(a)(iii)						-	125	125
Revolving credit facilities	E4(b)						114	72	186
Mortgage-backed securities	E4(c)						-	52	52
Subordinated debt securities	E4(d)						788	642	1,430
Borrowed funds							1,014	2,030	3,044
Other instruments treated as equity for accounting purposes
€374 million perpetual preferred    callable securities at 5.00%2							253
£273 million perpetual preferred    callable securities as 6.38%3							273
Total: Book value							1,540
Nominal value of the above							1,512

¹        Borrowed funds identified as Banking are those which are directly related to the lending businesses in Emerging Markets and Nedbank.

²        The €374 million perpetual preferred callable securities are redeemable at the discretion of the Group at their principal amount from 4 November 2015.

³        The £273 million perpetual preferred callable securities are redeemable at the discretion of the Group at their principal amount from 24 March 2020.

(a) Senior debt securities and term loans

(i) Floating rate notes (net of Group holdings)

				£m
	Maturity date	At 30 June 2015	At 30 June 2014	At 31 December 2014
Banking - Floating rate unsecured senior debt
R1,075 million at JIBAR + 0.94%	Repaid	-	60	-
R1,297 million at JIBAR + 1.00%	Repaid	-	73	72
R1,027 million at JIBAR + 1.75%	Repaid	-	57	57
R250 million at JIBAR + 1.00%	August 2015	13	14	14
R1,044 million at JIBAR + 2.20%	September 2015	55	58	59
R677 million at JIBAR + 1.25%	March 2016	35	37	38
R3,056 million at JIBAR + 0.8%	July 2016	161	170	169
R694 million at JIBAR + 0.75%	November 2016	37	38	39
R405 million at JIBAR + 1.30%	February 2017	21	22	23
R1,035 million at JIBAR + 0.85%	March 2017	54	57	58
R786 million at JIBAR + 1.30%	August 2017	37	38	39
R806 million at JIBAR + 0.9%	June 2017	42	44	45
R241 million at JIBAR + 1.12%	November 2017	13	-	14
R472 million at JIBAR + 1.25%	February 2018	25	-	-
R1,427 million at JIBAR + 1.30%	June 2018	75	-	-
R90 million at JIBAR + 1.45%	February 2020	5	-	-
R80 million at JIBAR + 2.15%	April 2020	4	4	5
R650 million at JIBAR + 1.30%	June 2021	34	36	36
R12 million at JIBAR + 1.55%	February 2022	1	-	-
R1,980 million at JIBAR + 2.00%	February 2025	105	-	-
R500 million at JIBAR + 2.10%	April 2026	27	-	-
		744	708	668
Less: floating rate notes held by other Group companies		(22)	-	(105)
Total floating rate notes		722	708	563

All floating rate unsecured senior debt are non-qualifying for the purposes of regulatory tiers of capital.

E: Financial assets and liabilities continued

E4: Borrowed funds continued

(ii) Fixed rate notes (net of Group holdings)

				£m
	Maturity date	At 30 June 2015	At 30 June 2014	At 31 December 2014
Banking - Fixed rate unsecured senior debt
R478 million at 9.68%	Repaid	-	27	27
R3,244 million at 10.55%	September 2015	175	184	186
R1,137 million at 9.36%	March 2016	61	64	65
R151 million at 6.91%	July 2016	8	9	9
R1,273 million at 11.39%	September 2019	72	77	77
R380 million at 9.26%	June 2020	20	-	-
R1,888 million at 8.92%	November 2020	100	105	106
R855 million at 9.38%	March 2021	46	48	49
R500 million at 9.29%	June 2021	26	28	28
R215 million at 8.79%	February 2022	12	-	-
R280 million at 9.64%	June 2022	15	-	-
R391 million at 9.73%	March 2024	21	22	22
R660 million at zero coupon	October 2024	14	13	15
R2607 million at 9.44%	February 2025	141	-	-
R800 million at 9.95%	April 2026	43	-	-
R1,739 million at 10.36%	June 2026	92	-	-
		846	577	584
Less: Fixed rate notes held by other Group companies		(8)	(45)	(8)
Banking fixed rate unsecured senior debt (net of Group holdings)		838	532	576
Non-banking
$2 million secured senior debt at 5.23%	Repaid	-	1	-
£112 million eurobond at 7.125%	October 2016	112	112	112
		112	113	112
Total fixed rate notes		950	645	688

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

(iii) Term loans

				£m
	Maturity date	At 30 June 2015	At 30 June 2014	At 31 December 2014
Banking - Floating rate loans
KES550 million at KBRR + 4.87%	October 2015	4	4	4
R1,500 million at JIBAR + 2.95%	August 2017	84	-	84
KES500 million at KBRR + 3.87%	March 2019	3	-	-
Banking - Fixed rate loans
$20 million at 9.50%	Repaid	-	3	-
KES466 million at 9.83%	Repaid	-	4	-
$6 million at 8.10%	August 2017	3	-	4
$19 million at 8.10%	September 2017	10	-	12
$10 million at 8.30%	May 2020	6	6	7
$5 million at 11.00%	September 2022	3	3	3
$10 million at 10.00%	December 2023	6	6	6
KES170 million at 14.00% to 14.75%	October 2015	1	1	1
KES175 million at 11.70%	October 2016	1	1	1
KES225 million at 11.70%	August 2017	1	2	2
KES200 million at 5.00%	July 2022	1	1	1
Total term loans and other loans		123	31	125

These term loans are used to fund the lending operations of the Emerging Markets banking businesses.

(b) Revolving credit facilities

				£m
	Maturity date	At 30 June 2015	At 30 June 2014	At 31 December 2014
Banking
R475 million (31 December 2014: R1,000 million) drawn of a    R1,200 million facility at 3 month JIBAR + 2.95%	August 2017	25	-	44
R500 million fully drawn at 3 month JIBAR + 3.10%	October 2019	26	-	28
		51	-	72
Non-banking
$145 million drawn of a $350 million facility at    USD LIBOR + 1.25%	October 2019	92	-	114
Total revolving credit facilities		143	-	186

The Group has access to a £800 million (June 2014: £800 million, December 2014: £800 million) five-year multi-currency revolving credit facility which matures in August 2019, with an optional  further one year extension at both the first and second year anniversary. At 30 June 2015, 31 December 2014 and 30 June 2014, none of this facility was drawn and there were no irrevocable letters of credit in issue against this facility.

In March 2015, the Group obtained access to a R5,250 million (£275 million) revolving credit facility which matures in March 2016. At 30 June 2015 none of this facility was drawn and there were no irrevocable letters of credit in issue against this facility.

(c) Mortgage-backed securities (net of Group holdings)

					£m
	Tier	Maturity date	At 30 June 2015	At 30 June 2014	At 31 December 2014
Banking
R480 million (class A1) at JIBAR + 1.10%	Tier 2	Repaid	-	7	2
R336 million (class A2) at JIBAR + 1.25%	Tier 2	October 2039	14	19	19
R900 million (class A3) at JIBAR + 1.54%	Tier 2	October 2039	48	50	51
R110 million (class B) at JIBAR + 1.90%	Tier 2	October 2039	6	6	6
R650 million at JIBAR +1.20%	Tier 2	February 2042	27	-	-
R400 million at JIBAR +1.45%	Tier 2	February 2042	5	-	-
R680 million at JIBAR +1.55%	Tier 2	February 2042	36	-	-
R80 million at JIBAR +2.20%	Tier 2	February 2042	4	-	-
R65 million at JIBAR + 3.00%	Tier 2	February 2042	3	-	-
			143	82	78
Less: Mortgage backed securities held by other Group companies			(24)	(25)	(26)
Total mortgage-backed securities			119	57	52

E: Financial assets and liabilities continued

E4: Borrowed funds continued

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

					£m
	Tier	Maturity date	At 30 June 2015	At 30 June 2014	At 31 December 2014
Banking
R1,265 million at JIBAR + 4.75%1	Tier 2	Repaid	-	70	74
R487 million at 15.05%1	Tier 2	Repaid	-	32	32
R1,000 million at 10.54%	Non-core Tier 1	September 2020	54	58	58
$100 million at 3 month USD LIBOR	Non-core Tier 1	March 2022	64	59	64
R2,000 million at JIBAR + 0.47%	Tier 2	July 2022	106	112	113
R1,800 million at JIBAR + 2.75%	Tier 2 Secondary	July 2023	96	101	102
R1,200 million at JIBAR + 2.55%	Tier 2	November 2023	63	67	67
R450 million at 10.49%	Tier 2	April 2024	24	25	26
R1,737 million at 3 month JIBAR + 2.55%	Tier 2	April 2024	93	97	98
R300 million at JIBAR + 2.75%	Tier 2	April 2024	16	-	17
R225 million at JIBAR +2.75%	Tier 2	January 2025	12	-	-
R1,624 million at JIBAR + 3.50%	Tier 2	July 2025	85	-	-
R407 million at 11.29%	Tier 2	July 2025	21	-	-
			634	621	651
Less: Banking subordinated debt securities held by other Group companies			(8)	(19)	(9)
Banking subordinated securities			626	602	642
Non-banking
R3,000 million at 8.92%	Lower Tier 2	October 2020	157	165	167
£500 million at 8.00%	Lower Tier 2	June 2021	568	575	565
R300 million at 9.26%	Lower Tier 2	November 2024	15	-	17
R700 million at 3 month JIBAR + 2.20%	Lower Tier 2	November 2024	37	-	39
R537 million at 3 Month JIBAR  + 2.30%2	Lower Tier 2	March 2025	28	-	-
R425 million at 9.76%2	Lower Tier 2	March 2025	22	-	-
R409 million at 10.32%2	Lower Tier 2	March 2027	21	-	-
R690 million at 10.96%2	Lower Tier 2	March 2030	35	-	-
			883	740	788
Total subordinated debt securities			1,509	1,342	1,430

¹        The first call date of the R1,265 million and R487 million subordinated debt securities is November 2018. All other callable subordinated debt securities have a first call date five years before the maturity date.

²        On 19 March 2015, OMLAC(SA) has issued a mixture of floating rate and fixed instruments with several maturities through its existing local SA programme. Accordingly, the JSE Limited has granted a listing to OMLAC(SA) on the South African Interest Rate Market with effect from 19 March 2015 under its Unsecured Subordinated Callable Note Programme dated 4 September 2014. Refer to note A2 for further information.

Nedbank has issued and redeemed debt instruments in the normal course of the bank's funding program.

F: Other statement of financial position notes

F1: Goodwill and other intangible assets

Analysis of goodwill and other intangible assets

This note shows the movements in cost, amortisation and impairment of goodwill and other intangible assets for the six months ended 30 June 2015 and year ended 31 December 2014.

										£m
	Goodwill		Present value of acquired in-force business development costs		Software development costs		Other intangible assets		Total
	2015	2014	2015	2014	2015	2014	2015	2014	2015	2014
Cost
Balance at beginning of the period	2,756	2,641	1,107	1,464	669	630	402	538	4,934	5,273
Acquisitions through business    combinations1	453	155	-	17	-	14	288	69	741	255
Purchase price adjustment2	7	-	-	-	-	-	-	-	7	-
Additions	-	-	-	-	38	72	2	4	40	76
Disposal of interests in subsidiaries	-	(86)	-	(335)	-	(22)	-	(192)	-	(635)
Disposals or retirements	-	-	-	-	(6)	(18)	-	-	(6)	(18)
Transfer to non-current assets    held for sale	-	-	(131)	(14)	(1)	(3)	-	-	(132)	(17)
Foreign exchange and other movements	(42)	46	5	(25)	(42)	(4)	-	(17)	(79)	-
Balance at beginning of the period	3,174	2,756	981	1,107	658	669	692	402	5,505	4,934
Amortisation and impairment losses
Balance at beginning of the period	(624)	(598)	(792)	(946)	(449)	(437)	(306)	(457)	(2,171)	(2,438)
Amortisation charge for the period	-	-	(32)	(70)	(25)	(46)	(33)	(54)	(90)	(170)
Impairment losses3	(41)	(14)	(28)	-	-	-	-	-	(69)	(14)
Disposal of interests in subsidiaries	-	-	-	198	-	20	-	192	-	410
Disposals or retirements	-	-	-	-	6	17	-	-	6	17
Transfer to non-current assets    held for sale	-	-	131	8	1	3	-	-	132	11
Foreign exchange and other movements	7	(12)	(1)	18	25	(6)	-	13	31	13
Accumulated amortisation and    impairment losses at end of    the period	(658)	(624)	(722)	(792)	(442)	(449)	(339)	(306)	(2,161)	(2,171)
Carrying amount
Balance at beginning of the period	2,132	2,043	315	518	220	193	96	81	2,763	2,835
Balance at end of the period	2,516	2,132	259	315	216	220	353	96	3,344	2,763

¹        Goodwill acquired through business combinations comprise £292 million in respect of the acquisition of Quilter Cheviot and £161 million in respect of the acquisition of UAP Holdings Limited. Refer to note G3 for further information.

²        The purchase price adjustment to goodwill of £7 million is the result of an increase in the value of liabilities identified by the Group in the 12 month period following the completion of the acquisition of Intrinsic Financial Services Limited on 1 July 2014.

³        The impairments of goodwill (£41 million) and present value of in-force business (£28 million) relates to the write-down in the value of Skandia Switzerland prior to its expected disposal in the second half of 2015. Refer to note H2 for further information.

G: Other notes

G1: Related parties

The nature of the related party transactions of the Group has not changed from those referred to in the 2014 Annual Report and Accounts.

There were no transactions with related parties during the six months ended 30 June 2015 that had a material effect on the results or the financial position of the Group.

G2: Contingent liabilities and commitments

Contingent liabilities - tax

The Revenue authorities in the principal jurisdictions in which the Group operates (South Africa, the United Kingdom and the United States) routinely review historic transactions undertaken and tax law interpretations made by the Group. The Group is committed to conducting its tax affairs in accordance with the tax legislation of the jurisdictions in which they operate. All interpretations made by management are made with reference to the specific facts and circumstances of the transaction and the relevant legislation.

There are occasions where the Group's interpretation of tax law may be challenged by the Revenue authorities. The financial statements include provisions that reflect the Group's assessment of liabilities which might reasonably be expected to materialise as part of their review. The Board is satisfied that adequate provisions have been made to cater for the resolution of tax uncertainties and that the resources required to fund such potential settlements are sufficient.

Due to the level of estimation required in determining tax provisions, amounts eventually payable may differ from the provision recognised.

South Africa

During the course of 2015, discussions have been ongoing with the South African Revenue Services (SARS) in relation to the tax treatment of investments supporting Fixed Bond products sold by OMLAC(SA) between 2004 and 2013. SARS has submitted an assessment for amounts due. OMLAC(SA) has appealed the assessments and discussions regarding the merits of the OMLAC(SA) treatment of these items are continuing with SARS.

Expected future transactions

As part of its corporate development, the Group may undertake acquisitions and disposals.  In certain transactions the Group may obtain options to acquire additional stakes at market value. The Group has previously entered into a combination of put and call options to acquire an additional 23% stake in its Indian life joint venture from the current holding of 26%, which would be settled at the fair value of the stake if and when exercised.

G3: Businesses acquired during the year

(a) Acquisition of Quilter Cheviot

On 25 February 2015, the Group acquired the Quilter Cheviot group of companies. The Quilter Cheviot group is based in the United Kingdom and is a discretionary investment manager specialising in the high net worth and affluent segment of the industry. The results from the business have been consolidated since the date of acquisition.

The table below sets out the consolidated assets and liabilities acquired as a result of the acquisition of Quilter Cheviot:

		£m
	Acquiree's carrying amount	Fair value
Assets
Intangible assets	-	288
Property, plant and equipment	8	8
Deferred tax asset	1	1
Current tax receivable	3	3
Cash and cash equivalents	69	69
Trade, other receivables and other assets	128	128
Total assets	209	497
Liabilities
Deferred tax liabilities	-	(58)
Provisions and accruals	(50)	(53)
Current tax payable	(5)	(5)
Trade, other payables and other liabilities	(107)	(107)
Total liabilities	(162)	(223)
Total net assets acquired	47	274
Total consideration paid		566
Goodwill recognised		292

The purchase price has been allocated based on a provisional estimate of the fair value of assets acquired and liabilities assumed at the date of acquisition determined in accordance to IFRS 3 'Business Combinations'. The provisional allocation required significant assumptions and the use of external expertise and it is possible that the preliminary estimates may change materially as the purchase price allocations are finalised. The accounting must be finalised within 12 months of the acquisition date.

The carrying value of assets and liabilities in Quilter Cheviot's consolidated statement of financial position on acquisition date approximates the fair value of these items determined by the Group, with the exception of identified intangible assets of £288 million, additional provisions of £3 million and an additional deferred tax liability of £58 million. The intangible assets recognised relate to customer distribution channels (£273 million) and to the Quilter Cheviot brand (£15 million). The value of the intangible assets was determined by applying cash flows to standard industry valuations models.  Goodwill is attributable to the delivery of significant cost and revenue synergies that cannot be linked to identifiable intangible assets. This goodwill is not expected to be deductible for tax purposes.

Of the acquired receivables, £121 million represent short dated receivables that arise from the normal course of business and represent the gross cash flows that are expected to be received over a period of three months. No contingent liability has been recognised on acquisition.

In addition to the £566 million cash consideration paid, 19.3 million Old Mutual plc ordinary shares of 11 3/7p with a value on issue of £42 million were placed into an employee benefit trust. 50% of these shares will be released to the participants after three years and the other 50% after four years, on the fulfilment of conditions relating to the maintenance of the level of funds under management. These expenses will be recognised in the profit or loss over the vesting periods of three and four years and will be excluded from the determination of AOP.

Transaction costs incurred of £9 million relating to the acquisition have been recognised within other operating expenses in the consolidated income statement, but not included within adjusted operating profit. The Group has included £5 million in net profit attributable to equity holders since the effective date of acquisition and £17 million in adjusted operating profit.

G: Other notes continued

G3: Businesses acquired during the year continued

(b) Acquisition of UAP Holdings Limited

On 24 June 2015, Old Mutual acquired an aggregate stake of 60.7% in UAP Holdings Limited ('UAP'), a Kenyan Pan-African financial services group for an aggregate consideration of £152 million. The reason for the acquisition was the expansion of the Group's footprint in East Africa. The transaction was financed by the Group through existing funds, without the issuance of any new debt or own shares.

An initial stake of 23.3% was acquired on 1 February 2015, while the remaining 37.3% stake was acquired on 24 June 2015. The results and movements in reserves were equity accounted from 1 February 2015 to the date that control was obtained. There was no amount recognised in the profit or loss as a result of the step up acquisition. A loss of £0.4m has been equity accounted in the consolidated income statement for the period from 1 February 2015 to 24 June 2015. Subsequently, from 24 June 2015, the financial results and financial position were consolidated in the Group financial statements.

The assets and liabilities acquired have been recorded at their fair values for purposes of the opening balance sheet and included in the consolidated accounts of the Group using the Group's accounting policies in accordance with IFRS.

The table below sets out the consolidated assets and liabilities acquired as a result of the acquisition of UAP Holdings Limited:

		£m
	Acquiree's carrying amount	Fair value
Assets
Investment property	103	103
Investments & securities	89	89
Cash and cash equivalents	24	24
Trade, other receivables and other assets	65	54
Total assets	281	270
Liabilities
Long-term business policyholder liabilities	(84)	(90)
Property & casualty liabilities	(37)	(37)
Provisions and accruals	(3)	(3)
Deferred tax liabilities	(3)	(3)
Current tax payable	-	(4)
Trade, other payables and other liabilities	(44)	(44)
Total liabilities	(171)	(181)
Total net assets acquired	110	89
Total value of the business		250
Consideration		152
Non-controlling interests recognised		98
Goodwill and other intangible assets recognised		161

The purchase price has been allocated based on a provisional estimate of the fair value of assets acquired and liabilities assumed at the date of acquisition determined in accordance to IFRS 3 'Business Combinations'.  The purchase price allocation required significant assumptions and the use of external expertise and it is possible that the preliminary estimates may change materially when this is finalised. The identification and measurement of intangible assets has commenced, however, due to the date of control being obtained being close to the date of the interim financial statements there has been no further allocation between goodwill and other intangible assets. The additional intangible assets identified, but not yet recognised, include brand, customer lists and present value of in-force business development cost.

The fair value of investment properties has been determined by independent valuers appointed by UAP on the basis of open market value using current prices. Investment and securities have been fair value based on the market value of the assets and/or an analysis of the contractual cash flows. Other assets and liabilities, including long-term policyholder liabilities and property & casualty liabilities, have been recorded at their estimated fair value.

The fair value of the non-controlling interests in UAP has been determined in accordance with the Group policy and is in proportion to the fair value paid by the Group.

The Group has measured the fair value of the separately recognisable identifiable assets acquired and the liabilities assumed as of the acquisition date. The value of UAP, £250 million, was greater than the provisional fair value of the net assets acquired and resulted in goodwill and other intangible assets of £161 million being recorded in the statement of financial position of the Group. The value of goodwill and other intangible assets will change as the work on the purchase price allocation is completed.

Acquisition related expenses of £3 million are included in other operating and administrative line in the consolidated income statement but has been reversed out of adjusted operating profit in line with Group policy.

G4: Events after the reporting date

On 6 August 2015, the Group announced that it acquired an additional 33.6% stake in Credit Guarantee Insurance Corporation of Africa Limited (CGIC), subject to regulatory approval.

The transaction will increase the Group's total holding in CGIC to 86.1%. The acquisition of the additional 33.6% is expected to be completed in the second half of 2015.

H: Discontinued operations and disposal groups held for sale

H1: Discontinued operations

Income statement from discontinued operations
			£m
	Six months ended 30 June  2015	Six months  ended 30 June 2014	Year ended 31 December 2014
Loss before tax from discontinued operations - trading activities (expenses)	-	(11)	(35)
Loss on disposal	(21)	-	(19)
Loss before tax from discontinued operations	(21)	(11)	(54)
Income tax credit	-	1	4
Loss after tax from discontinued operations	(21)	(10)	(50)

The loss on disposal for the six months ended 30 June 2015 and year ended 31 December 2014 related to the settlement of litigation arising on the disposal of US Life in 2011, following a court ruling in favour of the plaintiff on the main matter in dispute.

The loss before tax from discontinued operations for the six months ended 30 June 2014 and the year ended 31 December 2014 related to the disposal of Nordic in 2012. The Group continued to incur costs directly related to the sale of these businesses relating to the transition of IT and other services back to the Group. Nordic previously provided these services to the wider Group.

H2: Non-current assets and liabilities held for sale

Non-current assets held for sale of £1,114 million relate to Old Mutual Wealth (£902 million) and Emerging Markets (£212 million). Non-current liabilities held for sale of £833 million relate to Old Mutual Wealth.

Old Mutual Wealth

On 29 May 2015, the Group announced that terms have been agreed to dispose of Skandia Leben AG. At 30 June 2015, the total value of the assets and liabilities reclassified as held for sale in the statement of financial position were £898 million (including £851 million investments and securities) and £833 million (including £805 million long-term policyholder liabilities) respectively. Impairment losses after tax of £83 million have been recognised in the period as a result of the transaction. The transaction is subject to regulatory approval and is expected to complete in the second half of 2015. In addition to the above, Old Mutual Wealth has classified property, plant and equipment of £4 million as held for sale.

Emerging Markets

At 30 June 2015, Emerging Markets classified £212 million of investment properties as held for sale. These transactions are subject to regulatory approval and are expected to complete in the second half of 2015. The investment properties form part of the policyholder assets and therefore have no impact on profit or loss of the Group.

 

END

 

 

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