Annual Report and Accounts 2010

Financial history

          £m
Year ended 31 December 2010 20091 2008 2007 2006
Consolidated Income Statement          
Revenue          
Gross earned premiums 3,582 3,020 5,156 5,566 4,713
Outward reinsurance (305) (267) (335) (293) (267)
Net earned premiums 3,277 2,753 4,821 5,273 4,446
Investment return (non-banking) 10,791 11,112 (11,578) 6,318 10,439
Banking interest and similar income 4,082 3,989 4,059 3,190 2,441
Banking trading, investment and similar income2 204 168 162 170 -
Fee and commission income, and income from service activities 3,061 2,422 2,313 2,475 2,262
Other income 159 196 270 245 324
Total revenues 21,574 20,640 47 17,671 19,912
Expenses          
Claims and benefits (including change in insurance contract provisions) (5,039) (3,786) (3,610) (7,193) (7,999)
Reinsurance recoveries 227 200 262 236 245
Net claims and benefits incurred (4,812) (3,586) (3,348) (6,957) (7,754)
Change in investment contract liabilities (6,899) (8,345) 10,051 (2,618) (4,655)
Losses on loans and advances (552) (511) (319) (157) (123)
Finance costs (269) (322) 392 (50) (91)
Banking interest payable and similar expenses (2,519) (2,627) (2,853) (2,053) (1,461)
Fee and commission expenses, and other acquisition costs (963) (728) (937) (778) (714)
Other operating and administrative expenses (3,714) (3,072) (2,834) (2,813) (2,826)
Goodwill impairment (1) (266) (74) (3) (8)
Change in third party interest in consolidated funds (388) (470) 779 (156) (278)
Amortisation of PVIF and other acquired intangibles (297) (312) (361) (360) (379)
Total expenses (20,414) (20,239) 496 (15,945) (18,289)
Share of associated undertakings' and joint ventures' profit/(loss) after tax 7 2 (1) (1) 6
(Loss)/profit on disposal of subsidiaries, associated undertakings and strategic investments (22) (50) 53 25 85
Profit before tax 1,145 353 595 1,750 1,714
Income tax (expense)/credit (456) (400) 88 (504) (621)
Profit/(loss) from continuing operations after tax1 689 (47)      
Discontinued operations          
Loss from discontinued operations after tax1 (713) (71)      
(Loss)/profit after tax for the financial year (24) (118) 683 1,246 1,093
Attributable to          
Equity holders of the parent (282) (340) 441 972 836
Non-controlling interests          
Ordinary shares 196 158 188 224 207
Preferred securities 62 64 54 50 50
(Loss)/profit after tax for the financial year (24) (118) 683 1,246 1,093
Earnings per share          
Basic earnings per ordinary share on profit/(loss) from continuing operations (pence)1 8.2 (6.3)      
Basic earnings per ordinary share on profit/(loss) from discontinuing operations (pence)1 (14.7) (1.5)      
Basic earnings per ordinary share (pence) (6.5) (7.8) 8.6 19.2 17.0
Diluted earnings per ordinary share on profit/(loss) from continuing operations (pence)1 7.4 (6.3)      
Diluted earnings per ordinary share on profit/(loss) from discontinuing operations (pence)1 (13.5) (1.5)      
Diluted earnings per ordinary share (pence) (6.1) (7.8) 8.1 18.1 16.1
Weighted average number of shares - millions 4,859 4,758 4,755 4,894 4,705

1 2009 has been restated to reflect US Life as discontinued. No restatement has been made for 2008, 2007 or 2006.

2 2006 included in Banking interest and similar income.

 

          £m
Year ended 31 December 2010 20091 2008 2007 2006
Consolidated Statement of Comprehensive Income          
(Loss)/profit after tax for the financial year (24) (118) 683 1,246 1,093
Other comprehensive income          
Fair value gains/(losses)          
Property revaluation 26 (10) 16 96 28
Net investment hedge (87) (41) 281 (13) 75
Available-for-sale investments          
  Fair value gains/(losses) 32 112 (1,635) (197) (111)
  Recycled to the income statement - 13 414 36 17
Shadow accounting (15) 36 26 25 28
Currency translation differences/exchange differences on translating foreign operations 1,039 334 429 133 (1,060)
Other movements 31 21 68 (4) (4)
Income tax relating to components of other comprehensive income 13 13 366 34 14
Total other comprehensive income for the financial year from continuing operations1 1,039 478      
Total other comprehensive income for the financial year from discontinued operations1 112 750      
Total other comprehensive income for the financial year 1,151 1,228 (35) 110 (1,013)
Total comprehensive income for the financial year 1,127 1,110 648 1,356 80
Attributable to          
Equity holders of the parent 594 709 305 1,077 73
Non-controlling interests          
Ordinary shares 428 334 299 229 (43)
Preferred securities 105 67 44 50 50
Total comprehensive income 1,127 1,110 648 1,356 80
Year ended 31 December 2010 2009 2008 2007 2006
Adjusted Operating Profit 1,481 1,133 1,136 1,624 1,459
           
Adjusted Operating Profit Earnings per share          
Adjusted operating earnings per ordinary share (pence) - H1 8.3 4.9 8.7 8.2 8.5
Adjusted operating earnings per ordinary share (pence) - H22 7.7 6.7 6.2 8.7 6.6
Adjusted operating earnings per ordinary share (pence) 16.0 11.6 14.9 16.9 15.1
           
Adjusted weighted average number of shares - H1 5,342 5,232 5,245 5,407 5,063
Adjusted weighted average number of shares - H2 5,376 5,226 5,215 5,415 5,379
Adjusted weighted average number of shares 5,359 5,229 5,230 5,411 5,222

1 2009 has been restated to reflect US Life as discontinued. No restatement has been made for 2008, 2007 or 2006.

2 Calculated based on full year less 1st half year.

          £m
Year ended 31 December 2010 2009 2008 2007 2006
Consolidated Statement of Financial Position1          
Assets          
Goodwill and other intangible assets 4,965 5,159 5,882 5,459 5,367
Mandatory reserve deposits with central banks 1,079 882 734 615 665
Property, plant and equipment 1,015 828 682 608 499
Investment property 2,040 1,759 1,478 1,479 804
Deferred tax assets 416 570 1,590 683 511
Investments in associated undertakings and joint ventures 162 135 111 81 83
Deferred acquisition costs 1,534 3,138 3,199 2,253 1,578
Reinsurers' share of life assurance policyholder liabilities 982 1,296 1,148 1,394 763
Reinsurers' share of general insurance liabilities 122 120 115 - -
Deposits held with reinsurers 2 146 164 213 -
Loans and advances 51,778 42,393 35,745 30,687 22,804
Investments and securities 106,153 98,461 83,522 89,627 86,452
Current tax receivable 156 169 118 83 60
Client indebtedness for acceptances 190 170 220 165 -
Other assets 3,932 3,051 3,137 2,774 3,635
Derivative financial instruments - assets 2,503 2,546 3,228 1,527 1,238
Cash and cash equivalents 4,132 2,982 3,203 3,469 2,951
Non-current assets held for sale 12,391 1 7 1,623 1,165
Total assets 193,552 163,806 144,283 142,740 128,575
Liabilities          
Life assurance policyholder liabilities 98,631 93,876 81,269 84,251 80,081
General insurance liabilities 397 372 344 - -
Third party interests in consolidated funds 3,584 2,906 2,591 3,547 3,041
Borrowed funds 4,204 3,309 2,295 2,353 1,676
Provisions 260 263 477 499 542
Deferred revenue 730 654 598 462 311
Deferred tax liabilities 858 905 1,452 1,413 1,393
Current tax payable 238 210 219 320 283
Other liabilities 5,661 4,305 4,074 6,180 5,266
Liabilities under acceptances 190 170 220 165 -
Amounts owed to bank depositors 53,236 44,135 38,171 31,817 25,052
Derivative financial instruments - liabilities 1,870 1,990 2,990 1,716 1,060
Non-current liabilities held for sale 12,219 - 6 420 1,107
Total liabilities 182,078 153,095 134,706 133,143 119,812
Net assets 11,474 10,711 9,577 9,597 8,763
Shareholders' equity          
Equity attributable to equity holders of the parent 8,951 8,464 7,737 7,961 7,237
Non-controlling interests          
Ordinary shares 1,763 1,537 1,147 933 848
Preferred securities 760 710 693 703 678
Total non-controlling interests 2,523 2,247 1,840 1,636 1,526
Total equity 11,474 10,711 9,577 9,597 8,763

1 The Group adopted the provisions of IFRS 7 'Financial Instruments: Disclosures' in its 2007 annual report and accounts. As part of the implementation of that standard certain income statement and statement of financial position captions were restated. The 2006 information has been restated where possible to be consistent with later years, however certain balances are not fully comparable in circumstances where information is not readily available.

          £m
Year ended 31 December 2010 2009 2008 2007 2006
Additional Information          
Equity attributable to equity holders of the parent 8,951 8,464 7,737 7,961 7,237
Less: Perpetual preferred callable securities (688) (688) (688) (688) (688)
  8,263 7,776 7,049 7,273 6,549
Shares issued and fully paid 5,695 5,518 5,516 5,510 5,501
Less: Treasury shares in issue (239) (239) (239) (105) -
  5,456 5,279 5,277 5,405 5,501
IFRS Book value per Share (pence) 151 147 134 135 119
Funds under management 322,797 285,010 264,814 278,878 239,433
Earnings after tax attributable to ordinary equity holders          
Adjusted operating Group MCEV 830 562 575 922 -
Adjusted operating Group EEV - - - - 929
Adjusted operating Group MCEV earnings per share (pence) 15.5 10.7 11.0 17.0 -
Adjusted operating Group EEV earnings per share (pence) - - - - 17.8
           
Market consistent embedded value 9,901 7,629 5,262 7,359 -
European embedded value - - - - 7,117
MCEV per share (pence) 181.5 144.5 99.7 136.2 -
EEV per share (pence) - - - - 129.4

 

Rates used to translate the operating results, assets and liabilities of key foreign business segments to Sterling are:

Year ended 31 December 2010 2009 2008 2007 20061
Exchange Rates          
Income statement (average rate)          
Rand 11.3095 13.1746 15.2948 14.1109 12.4740
US Dollars 1.5459 1.5655 1.8524 2.0014 1.8429
Swedish Kronor 11.1364 11.9743 12.2209 13.5253 13.5918
Euro 1.1650 1.1227 1.2594 1.4602 1.4671
Statement of financial position (closing rate)          
Rand 10.2796 11.9172 13.7194 13.6043 13.6746
US Dollars 1.5530 1.6148 1.4575 1.9827 1.9569
Swedish Kronor 10.4227 11.5562 11.4494 12.832 13.3924
Euro 1.1614 1.1268 1.0446 1.3596 1.4837

1 The 2006 Income Statement rate applied in respect of Skandia is an eleven month average rate, reflecting the acquisition date of 1 February 2006.

 

Listings and shares in issue

The Company's shares are listed on the London, Malawi, Namibian and Zimbabwe Stock Exchanges and on the JSE Limited (JSE). The primary listing is on the London Stock Exchange and the other listings are all secondary listings. The Company's secondary listing on the Stockholm Stock Exchange ended on 7 September 2007, but the Company's shares may still be traded on the Xternal list of the Nordic Exchange in Stockholm. The ISIN number of the Company's shares is GB0007389926.

The high and low prices at which the Company's shares are recorded as having traded on the two main markets on which they were listed during 2010 and 2009 were as follows:

  High 2010 Low High 2009 Low
London Stock Exchange 145.2p 97.3p 121.3p 30.8p
JSE R15.84 R11.64 R14.86 R4.80

At 31 December 2010, the geographical analysis and shareholder profile of the Company's share register were as follows:

Register Total shares % of whole Number of holders
UK 2,601,210,517 45.68 11,144
South Africa 2,770,918,189 48.65 30,5931
Zimbabwe 62,918,550 1.11 31,3141
Namibia 15,482,874 0.27 5581
Malawi 5,259,308 0.09 4,7111
Treasury shares (UK) 239,434,888 4.20 1
Total 5,695,224,326 100 78,321

Source: Computershare Investor Services

Size of holding Total shares % of whole Number of holders
1-1,000 23,345,374 0.41 66,480
1,001-10,000 27,184,585 0.48 10,131
10,001-100,000 31,334,013 0.55 1,072
100,001-250,000 30,571,108 0.54 190
250,001+ 5,343,354,358 93.82 447
Treasury shares (UK) 239,434,888 4.20 1
Total 5,695,224,326 100 78,321

Source: Computershare Investor Services

Note

1. The registered shareholdings on the South African branch register included PLC Nominees (Pty) Limited, which held a total of 2,360,989,530 shares, including 366,659,261 shares held for the Company's sponsored nominee, Old Mutual (South Africa) Nominees (Pty) Limited, for the benefit of 437,510 underlying beneficial owners. The registered shareholdings on the Zimbabwe branch register included Old Mutual Zimbabwe Nominees (Pvt) Limited, which held a total of 786,516 shares as nominee for 3,509 underlying beneficial owners. The registered shareholdings on the Namibian section of the principal register included Old Mutual (Namibia) Nominees (Pty) Limited, which held a total of 7,905,389 shares as nominee for 7,105 underlying beneficial owners. The registered shareholdings on the Malawi branch register included Old Mutual (Blantyre) Nominees Limited, which held a total of 46,664 shares as nominee for 137 underlying beneficial owners.

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