TIDMPRU
RNS Number : 4775V
Prudential PLC
10 August 2022
IFRS disclosures
Prudential plc Half Year 2022 results
International Financial Reporting Standards (IFRS) financial
results
Condensed Consolidated Income Statement
2022 $m 2021 $m
--------- --------------------
Note Half year Half year Full year
---------------------------------------------------------------------------- --------- --------- ---------
Continuing operations:
Gross premiums earned 12,241 11,521 24,217
Outward reinsurance premiums (919) (898) (1,844)
------------------------------------------------------------------------ ----- --------- --------- ---------
Earned premiums, net of reinsurance B1.3 11,322 10,623 22,373
Investment return (24,570) 738 3,486
Other income 253 331 641
------------------------------------------------------------------------ ----- --------- --------- ---------
Total revenue, net of reinsurance B1.3 (12,995) 11,692 26,500
------------------------------------------------------------------------ ----- --------- --------- ---------
Benefits and claims and movement in unallocated surplus of with-profits
funds, net of reinsurance C3.2 14,826 (7,748) (18,911)
Acquisition costs and other expenditure B2 (1,632) (2,402) (4,560)
Finance costs: interest on core structural borrowings of
shareholder-financed businesses (103) (164) (328)
Gain (loss) attaching to corporate transactions D1.1 62 (56) (35)
------------------------------------------------------------------------ ----- --------- --------- ---------
Total charges, net of reinsurance 13,153 (10,370) (23,834)
------------------------------------------------------------------------ ----- --------- --------- ---------
Share of profit from joint ventures and associates, net of related tax 16 179 352
------------------------------------------------------------------------ ----- --------- --------- ---------
Profit before tax (being tax attributable to shareholders' and
policyholders' returns) note
(i) 174 1,501 3,018
Remove tax credit (charge) attributable to policyholders' returns 126 (238) (342)
------------------------------------------------------------------------ ----- --------- --------- ---------
Profit before tax attributable to shareholders' returns B1.1 300 1,263 2,676
--------- --------- ---------
Total tax charge attributable to shareholders' and policyholders'
returns B3.1 (68) (431) (804)
Remove tax (credit) charge attributable to policyholders' returns (126) 238 342
--------- --------- ---------
Tax charge attributable to shareholders' returns B3.1 (194) (193) (462)
------------------------------------------------------------------------ ----- --------- --------- ---------
Profit after tax from continuing operations B1.4 106 1,070 2,214
Loss after tax from discontinued US operations note (ii) D1.2 - (5,707) (5,027)
------------------------------------------------------------------------ ----- --------- --------- ---------
Profit (loss) for the period 106 (4,637) (2,813)
------------------------------------------------------------------------ ----- --------- --------- ---------
Attributable to:
Equity holders of the Company:
From continuing operations 104 1,063 2,192
From discontinued US operations - (5,073) (4,234)
----------------------------------------------------------------------- ----- --------- --------- ---------
104 (4,010) (2,042)
---------------------------------------------------------------------------- --------- --------- ---------
Non-controlling interests:
From continuing operations 2 7 22
From discontinued US operations - (634) (793)
----------------------------------------------------------------------- ----- --------- --------- ---------
2 (627) (771)
---------------------------------------------------------------------------- --------- --------- ---------
Profit (loss) for the period 106 (4,637) (2,813)
------------------------------------------------------------------------ ----- --------- --------- ---------
Earnings per share (in cents) 2022 2021
--------- --------------------
Note Half year Half year Full year
--------------------------------------------------------------------- --------- --------- ---------
Based on profit attributable to equity holders of the Company: B4
Basic
Based on profit from continuing operations 3.8c 40.9c 83.4c
Based on loss from discontinued US operations -c (195.1)c (161.1)c
---------------------------------------------------------------------- --------- --------- ---------
Total basic earnings per share 3.8c (154.2)c (77.7)c
---------------------------------------------------------------- ----- --------- --------- ---------
Diluted
Based on profit from continuing operations 3.8c 40.9c 83.4c
Based on loss from discontinued US operations -c (195.1)c (161.1)c
---------------------------------------------------------------------- --------- --------- ---------
Total diluted earnings per share 3.8c (154.2)c (77.7)c
---------------------------------------------------------------- ----- --------- --------- ---------
Dividends per share (in cents) 2022 2021
--------- --------------------
Note Half year Half year Full year
------------------------------------------------------ --------- --------- ---------
Dividends relating to reporting period: B5
First interim ordinary dividend 5.74c 5.37c 5.37c
Second interim ordinary dividend - - 11.86c
------------------------------------------------------- --------- --------- ---------
Total relating to reporting period 5.74c 5.37c 17.23c
------------------------------------------------- ----- --------- --------- ---------
Dividends paid in reporting period: B5
Current year first interim dividend - - 5.37c
Second interim ordinary dividend for prior year 11.86c 10.73c 10.73c
------------------------------------------------------- --------- --------- ---------
Total paid in reporting period 11.86c 10.73c 16.10c
------------------------------------------------- ----- --------- --------- ---------
Notes
(i) This measure is the formal profit before tax measure under
IFRS. It is not the result attributable to shareholders principally
because total corporate tax of the Group includes those taxes on
the income of consolidated with-profits and unit-linked funds that,
through adjustments to benefits, are borne by policyholders. These
amounts are required to be included in the tax charge of the
Company under IAS 12. Consequently, the IFRS profit before tax
measure is not representative of pre-tax profit attributable to
shareholders as it is determined after deducting the cost of
policyholder benefits and movements in the liability for
unallocated surplus of with-profits funds after adjusting for tax
borne by policyholders.
(ii) Discontinued operations for half year and full year 2021
related to the US operations (Jackson) that were demerged from the
Group in September 2021.
Condensed Consolidated Statement of Comprehensive Income
2022 $m 2021 $m
--------- --------------------
Note Half year Half year Full year
---------------------------------------------------------------------------- --------- --------- ---------
Continuing operations:
Profit for the period 106 1,070 2,214
Other comprehensive income (loss):
Exchange movements arising during the period (523) (163) (180)
Valuation movements on retained interest in Jackson classified as
available-for-sale securities (247) - 250
------------------------------------------------------------------------ ----- --------- --------- ---------
Total items that may be reclassified subsequently to profit or loss (770) (163) 70
------------------------------------------------------------------------ ----- --------- --------- ---------
Total comprehensive (loss) income from continuing operations (664) 907 2,284
------------------------------------------------------------------------ ----- --------- --------- ---------
Total comprehensive loss for the period from discontinued US operations D1.2 - (6,574) (7,068)
------------------------------------------------------------------------ ----- --------- --------- ---------
Total comprehensive loss for the period (664) (5,667) (4,784)
------------------------------------------------------------------------ ----- --------- --------- ---------
Attributable to:
Equity holders of the Company:
From continuing operations (656) 905 2,277
From discontinued US operations - (5,844) (6,283)
----------------------------------------------------------------------- ----- --------- --------- ---------
(656) (4,939) (4,006)
Non-controlling interests:
From continuing operations (8) 2 7
From discontinued US operations - (730) (785)
----------------------------------------------------------------------- ----- --------- --------- ---------
(8) (728) (778)
---------------------------------------------------------------------------- --------- --------- ---------
Total comprehensive loss for the period (664) (5,667) (4,784)
------------------------------------------------------------------------ ----- --------- --------- ---------
Condensed Consolidated Statement of Changes in Equity
Period ended 30 Jun 2022 $m
----------------------------------------------------------------------------------------
Available
-for-sale Non-
Share Share Retained Translation securities Shareholders' controlling Total
Note capital premium earnings reserve reserves equity interests equity
----------------- ----- ------- ------- -------- ----------- ---------- ------------- ----------- -------
Reserves
Profit for the
period - - 104 - - 104 2 106
Other
comprehensive
loss - - - (513) (247) (760) (10) (770)
----------------- ----- ------- ------- -------- ----------- ---------- ------------- ----------- -------
Total
comprehensive
income (loss)
for the period - - 104 (513) (247) (656) (8) (664)
Transactions with
owners of the
Company
Dividends B5 - - (320) - - (320) (5) (325)
Reserve movements
in respect of
share-based
payments - - 15 - - 15 - 15
Effect of
transactions
relating to
non-controlling
interests - - (14) - - (14) - (14)
Movement in own
shares in
respect of
share-based
payment plans - - (4) - - (4) - (4)
----------------- ----- ------- ------- -------- ----------- ---------- ------------- ----------- -------
Net decrease in
equity - - (219) (513) (247) (979) (13) (992)
Balance at
beginning of
period 182 5,010 10,216 1,430 250 17,088 176 17,264
----------------- ----- ------- ------- -------- ----------- ---------- ------------- ----------- -------
Balance at end of
period 182 5,010 9,997 917 3 16,109 163 16,272
----------------- ----- ------- ------- -------- ----------- ---------- ------------- ----------- -------
Period ended 30 Jun 2021 $m
----------------------------------------------------------------------------------------
Available
-for-sale Non-
Share Share Retained Translation securities Shareholders' controlling Total
Note capital premium earnings reserve reserves equity interests equity
----------------- ----- ------- ------- -------- ----------- ---------- ------------- ----------- -------
Reserves
Profit for the
period - - 1,063 - - 1,063 7 1,070
Other
comprehensive
loss - - - (158) - (158) (5) (163)
----------------- ----- ------- ------- -------- ----------- ---------- ------------- ----------- -------
Total
comprehensive
income (loss)
from continuing
operations - - 1,063 (158) - 905 2 907
Total
comprehensive
loss from
discontinued US
operations D1.2 - - (5,073) - (771) (5,844) (730) (6,574)
----------------- ----- ------- ------- -------- ----------- ---------- ------------- ----------- -------
Total
comprehensive
loss for the
period - - (4,010) (158) (771) (4,939) (728) (5,667)
Transactions with
owners of the
Company
Dividends B5 - - (283) - - (283) (3) (286)
Reserve movements
in respect of
share-based
payments - - 77 - - 77 - 77
Effect of
transactions
relating to
non-controlling
interests - - (10) - - (10) - (10)
New share capital
subscribed C8 - 8 - - - 8 - 8
Movement in own
shares in
respect of
share-based
payment plans - - (18) - - (18) - (18)
----------------- ----- ------- ------- -------- ----------- ---------- ------------- ----------- -------
Net increase
(decrease) in
equity - 8 (4,244) (158) (771) (5,165) (731) (5,896)
Balance at
beginning of
period 173 2,637 14,424 1,132 2,512 20,878 1,241 22,119
----------------- ----- ------- ------- -------- ----------- ---------- ------------- ----------- -------
Balance at end of
period 173 2,645 10,180 974 1,741 15,713 510 16,223
----------------- ----- ------- ------- -------- ----------- ---------- ------------- ----------- -------
Condensed Consolidated Statement of Changes in Equity
(continued)
Year ended 31 Dec 2021 $m
---------------- ----- -------- --------------------------------------------------------------------------------
Available
-for-sale Non-
Share Share Retained Translation securities Shareholders' controlling Total
Note capital premium earnings reserve reserves equity interests equity
----------------- ----- -------- -------- -------- ----------- ---------- ------------- ----------- -------
Reserves
Profit for the
year - - 2,192 - - 2,192 22 2,214
Other
comprehensive
(loss) income - - - (165) 250 85 (15) 70
----------------- ----- -------- -------- -------- ----------- ---------- ------------- ----------- -------
Total
comprehensive
income (loss)
from continuing
operations - - 2,192 (165) 250 2,277 7 2,284
Total
comprehensive
(loss) income
from
discontinued US
operations D1.2 - - (4,234) 463 (2,512) (6,283) (785) (7,068)
----------------- ----- -------- -------- -------- ----------- ---------- ------------- ----------- -------
Total
comprehensive
(loss) income
for the year - - (2,042) 298 (2,262) (4,006) (778) (4,784)
Transactions with
owners of the
Company
Demerger dividend
in specie of
Jackson B5 - - (1,735) - - (1,735) - (1,735)
Other dividends B5 - - (421) - - (421) (9) (430)
Reserve movements
in respect of
share-based
payments - - 46 - - 46 - 46
Effect of
transactions
relating to
non-controlling
interests* - - (32) - - (32) (278) (310)
New share capital
subscribed C8 9 2,373 - - - 2,382 - 2,382
Movement in own
shares in
respect of
share-based
payment plans - - (24) - - (24) - (24)
----------------- ----- -------- -------- -------- ----------- ---------- ------------- ----------- -------
Net increase
(decrease) in
equity 9 2,373 (4,208) 298 (2,262) (3,790) (1,065) (4,855)
Balance at
beginning of
year 173 2,637 14,424 1,132 2,512 20,878 1,241 22,119
----------------- ----- -------- -------- -------- ----------- ---------- ------------- ----------- -------
Balance at end of
year 182 5,010 10,216 1,430 250 17,088 176 17,264
----------------- ----- -------- -------- -------- ----------- ---------- ------------- ----------- -------
* The $(278) million in full year 2021 related to the
derecognition of Athene's non-controlling interest upon the
demerger of Jackson.
Condensed Consolidated Statement of Financial Position
2022 $m 2021 $m
------- ----------------
Note 30 Jun 30 Jun 31 Dec
---------------------------------------------------------------------------------- ------- ------- -------
Assets
Goodwill C4.1 871 926 907
Deferred acquisition costs and other intangible assets C4.2 6,750 6,525 6,858
Property, plant and equipment 405 525 478
Reinsurers' share of insurance contract liabilities 2,750 9,891 9,753
Deferred tax assets C7 378 298 266
Current tax recoverable 22 23 20
Accrued investment income 1,187 1,092 1,171
Other debtors 2,076 2,238 1,779
Investment properties 35 39 38
Investments in joint ventures and associates accounted for using the equity
method C1 2,010 2,056 2,183
Loans C1 2,429 2,440 2,562
Equity securities and holdings in collective investment schemesnote (i) C1 57,497 60,466 61,601
Debt securitiesnote (i) C1 79,119 92,728 99,094
Derivative assets 182 485 481
Deposits 4,762 3,344 4,741
Assets held for distributionnote (ii) - 335,750 -
Cash and cash equivalents 6,415 6,295 7,170
------------------------------------------------------------------------------ ----- ------- ------- -------
Total assets C1 166,888 525,121 199,102
------------------------------------------------------------------------------ ----- ------- ------- -------
Equity
Shareholders' equity 16,109 15,713 17,088
Non-controlling interests 163 510 176
------------------------------------------------------------------------------ ----- ------- ------- -------
Total equity C1 16,272 16,223 17,264
------------------------------------------------------------------------------ ----- ------- ------- -------
Liabilities
Contract liabilities (including amounts in respect of contracts classified as
investment contracts
under IFRS 4) C3.2 123,529 144,809 151,915
Unallocated surplus of with-profits funds C3.2 4,568 6,273 5,384
Core structural borrowings of shareholder-financed businesses C5.1 4,266 6,404 6,127
Operational borrowings C5.2 854 895 861
Obligations under funding, securities lending and sale and repurchase
agreements 799 396 223
Net asset value attributable to unit holders of consolidated investment funds 4,549 5,770 5,664
Deferred tax liabilities C7 2,699 2,735 2,862
Current tax liabilities 253 200 185
Accruals, deferred income and other liabilities 8,103 8,017 7,983
Provisions 225 227 372
Derivative liabilities 771 412 262
Liabilities held for distributionnote (ii) - 332,760 -
------------------------------------------------------------------------------ ----- ------- ------- -------
Total liabilities C1 150,616 508,898 181,838
------------------------------------------------------------------------------ ----- ------- ------- -------
Total equity and liabilities C1 166,888 525,121 199,102
------------------------------------------------------------------------------ ----- ------- ------- -------
Notes
(i) Included within equity securities and holdings in collective
investment schemes and debt securities as at 30 June 2022 are
$1,384 million of lent securities and assets subject to repurchase
agreements (30 June 2021: $1,006 million; 31 December 2021: $854
million).
(ii) Assets and liabilities held for distribution at 30 June
2021 related to the Group's US operations (Jackson) which were
classified as discontinued operations in half year 2021 and
demerged in September 2021.
Condensed Consolidated Statement of Cash Flows
2022 $m 2021 $m
--------- --------------------
Note Half year Half year Full year
---------------------------------------------------------------------------- --------- --------- ---------
Continuing operations:
Cash flows from operating activities
Profit before tax (being tax attributable to shareholders' and
policyholders' returns) 174 1,501 3,018
Adjustments to profit before tax for non-cash movements in operating
assets and liabilities:
Investments 21,017 (5,651) (14,553)
Other non-investment and non-cash assets 6,446 2,693 2,658
Policyholder liabilities (including unallocated surplus of with-profits
funds) (25,972) 2,424 9,095
Other liabilities (including operational borrowings) 74 105 16
Other itemsnote (i) (23) 156 44
------------------------------------------------------------------------ ----- --------- --------- ---------
Net cash flows from operating activitiesnote (ii) 1,716 1,228 278
------------------------------------------------------------------------ ----- --------- --------- ---------
Cash flows from investing activities
Net cash flows from purchases and disposals of property, plant and
equipment (14) (19) (36)
Net cash flows from other investing activitiesnote (iii) (50) (773) (690)
------------------------------------------------------------------------ ----- --------- --------- ---------
Net cash flows from investing activities (64) (792) (726)
------------------------------------------------------------------------ ----- --------- --------- ---------
Cash flows from financing activities
Structural borrowings of shareholder-financed operations:note (iv) C5.1
Issuance of debt, net of costs 346 - 995
Redemption of debt (2,075) - (1,250)
Interest paid (117) (163) (314)
Payment of principal portion of lease liabilities (56) (54) (118)
Equity capital:
Issues of ordinary share capital - 8 2,382
External dividends:
Dividends paid to the Company's shareholders B5 (320) (283) (421)
Dividends paid to non-controlling interests (5) (3) (9)
----------------------------------------------------------------------- ----- --------- --------- ---------
Net cash flows from financing activities (2,227) (495) 1,265
------------------------------------------------------------------------ ----- --------- --------- ---------
Net (decrease) increase in cash and cash equivalents from continuing
operations (575) (59) 817
Net decrease in cash and cash equivalents from discontinued US
operations D1.2 - (460) (1,621)
Cash and cash equivalents at beginning of period 7,170 8,018 8,018
Effect of exchange rate changes on cash and cash equivalents (180) (43) (44)
------------------------------------------------------------------------ ----- --------- --------- ---------
Cash and cash equivalents at end of period 6,415 7,456 7,170
------------------------------------------------------------------------ ----- --------- --------- ---------
Comprising:
Cash and cash equivalents from continuing operations 6,415 6,295 7,170
Cash and cash equivalents from discontinued US operations D1.2 - 1,161 -
----------------------------------------------------------------------- ----- --------- --------- ---------
Notes
(i) Other items include adjustments to profit before tax in
respect of non-cash items together with operational interest
receipts and payments, dividend receipts and tax paid.
(ii) Included in net cash flows from operating activities are
dividends from joint ventures and associates of $60 million (half
year 2021: $114 million; full year 2021: $175 million).
(iii) Net cash flows from other investing activities include
amounts paid for distribution rights and cash flows arising from
the sale of subsidiaries, joint ventures and associates and
investments that do not form part of the Group's operating
activities.
(iv) Structural borrowings of shareholder-financed businesses
exclude borrowings to support short-term fixed income securities
programmes, non-recourse borrowings of investment subsidiaries of
shareholder-financed businesses and other borrowings of
shareholder-financed businesses. Cash flows in respect of these
borrowings are included within cash flows from operating
activities. The changes in the carrying value of the structural
borrowings of shareholder-financed businesses for the Group are
analysed below:
Balance at Cash movements $m Non-cash movements $m Balance at
-------------------- -------------------------------------------------
beginning end of
of period Issuance Redemption Foreign exchange Other period
$m of debt of debt movement Demerger of Jackson movements $m
------------ ---------- -------- ---------- ---------------- ------------------- ---------- ----------
30 Jun 2022 6,127 346 (2,075) (137) - 5 4,266
30 Jun 2021 6,633 - - 14 (250) 7 6,404
31 Dec 2021 6,633 995 (1,250) (13) (250) 12 6,127
------------ ---------- -------- ---------- ---------------- ------------------- ---------- ----------
Notes to the financial statements
A Basis of preparation
A1 Basis of preparation and exchange rates
These condensed consolidated interim financial statements
('interim financial statements') for the six months ended 30 June
2022 have been prepared in accordance with both IAS 34 'Interim
Financial Reporting' as issued by the IASB and IAS 34 as adopted
for use in the UK. The Group's policy for preparing this interim
financial information is to use the accounting policies adopted by
the Group in its last consolidated financial statements, as updated
by any changes in accounting policies it intends to make in its
next consolidated financial statements as a result of new or
amended IFRS and other policy improvements. At 30 June 2022, there
were no unadopted standards effective for the period ended 30 June
2022 which impacted the interim financial statements of the Group,
and there were no differences between UK-adopted international
accounting standards and IFRS Standards as issued by the IASB in
terms of their application to the Group.
The accounting policies applied by the Group in determining the
IFRS financial results in this report are the same as those
previously applied in the Group's consolidated financial statements
for the year ended 31 December 2021, as disclosed in the 2021
annual report, aside from those discussed in note A2 below.
The IFRS financial results for half year 2022 and half year 2021
are unaudited. The 2021 full year IFRS financial results have been
derived from the 2021 statutory accounts. The auditors have
reported on the 2021 statutory accounts which have been delivered
to the Registrar of Companies. The auditors' report 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.
Going concern basis of accounting
The Directors have made an assessment of going concern covering
a period of at least 12 months from the date that these interim
financial statements are approved. In making this assessment, the
Directors have considered both the Group's current performance,
solvency and liquidity and the Group's business plan taking into
account the Group's principal risks, and the mitigations available
to it, as well as the results of the Group's stress and sensitivity
testing.
Based on the above, the Directors have a reasonable expectation
that the Company and the Group have adequate resources to continue
their operations for a period of at least 12 months from the date
that these interim financial statements are approved. No material
uncertainties that may cast significant doubt on the ability of the
Group to continue as a going concern have been identified. The
Directors therefore consider it appropriate to continue to adopt
the going concern basis of accounting in preparing these interim
financial statements for the period ended 30 June 2022.
Exchange rates
The exchange rates applied for balances and transactions in
currencies other than the presentation currency of the Group, US
dollars (USD) were:
USD : local currency Closing rate at period end Average rate for the period to date
------------------------------------- ----------------------------------------------
30 Jun 2022 30 Jun 2021 31 Dec 2021 Half year 2022 Half year 2021 Full year 2021
------------------------ ----------- ----------- ----------- -------------- -------------- --------------
Chinese yuan (CNY) 6.69 6.46 6.37 6.48 6.47 6.45
Hong Kong dollar (HKD) 7.85 7.77 7.80 7.83 7.76 7.77
Indian rupee (INR) 78.97 74.33 74.34 76.23 73.33 73.94
Indonesian rupiah (IDR) 14,897.50 14,500.00 14,252.50 14,453.52 14,273.32 14,294.88
Malaysian ringgit (MYR) 4.41 4.15 4.17 4.27 4.10 4.15
Singapore dollar (SGD) 1.39 1.34 1.35 1.37 1.33 1.34
Taiwan dollar (TWD) 29.73 27.86 27.67 28.73 28.02 27.93
Thai baht (THB) 35.35 32.06 33.19 33.73 30.83 32.01
UK pound sterling (GBP) 0.82 0.72 0.74 0.77 0.72 0.73
Vietnamese dong (VND) 23,265.00 23,016.00 22,790.00 22,925.22 23,044.83 22,934.86
------------------------ ----------- ----------- ----------- -------------- -------------- --------------
Certain notes to the financial statements present comparative
information at constant exchange rates (CER), in addition to the
reporting at actual exchange rates (AER) used throughout the
interim financial statements. AER are actual historical exchange
rates for the specific accounting period, being the average rates
over the period for the income statement and the closing rates at
the balance sheet date for the statement of financial position. CER
results are calculated by translating prior period results using
the current period foreign exchange rate, ie current period average
rates for the income statement and current period closing rates for
the statement of financial position.
A2 New accounting pronouncements
The IASB has issued the following new accounting pronouncements
to be effective from 1 January 2022, unless otherwise stated:
- Amendments to IAS 37 'Onerous contracts - Cost of Fulfilling a Contract' issued in May 2020;
- Annual Improvements to IFRS Standards 2018-2020 issued in May 2020;
- Amendments to IAS 16 'Property, Plant and Equipment - Proceeds
before Intended Use' issued in May 2020; and
- Reference to the Conceptual Framework - Amendments to IFRS 3
'Business combination' issued in May 2020.
The adoption of these pronouncements has had no significant
impact on the Group interim financial statements.
In addition, in 2023 IFRS 17 'Insurance Contracts' and IFRS 9
'Financial Instruments' will become effective. The Group has a
Group-wide implementation programme to implement IFRS 17 and IFRS
9. The programme is responsible for setting Group-wide accounting
policies and developing application methodologies, establishing
appropriate processes and controls, sourcing appropriate data and
implementing actuarial and finance system changes. During half year
2022 the Group has made significant progress with the testing of
new actuarial and finance systems in our preparations for IFRS 17
adoption in 2023. Elements of the detailed calculation methodology
remain subject to wider discussion and debate in the industry. It
is not currently practicable to provide reliable estimates of the
quantitative impact on the Group's results and financial position.
A further update on our IFRS 17 progress will be provided in our FY
22 financial statements.
B Earnings performance
B1 Analysis of performance by segment
B1.1 Segment results
2022 $m 2021 $m 2022 vs 2021 % 2021 $m
--------- -------------------- -------------------- ---------
Half year Half year Half year Half year Full year
Note Half year AER CER AER CER AER
note (i) note (i) note (i) note (i) note (i) note (i)
--------------------------------------- --------- --------- --------- --------- --------- ---------
Continuing operations:
CPL 149 139 139 7% 7% 343
Hong Kong 501 460 457 9% 10% 975
Indonesia 196 225 222 (13)% (12)% 446
Malaysia 190 184 175 3% 9% 350
Singapore 340 320 312 6% 9% 663
Growth markets and othernote (ii) 522 479 463 9% 13% 932
Eastspring 131 162 155 (19)% (15)% 314
----------------------------------- ----- --------- --------- --------- --------- --------- ---------
Total segment profit 2,029 1,969 1,923 3% 6% 4,023
----------------------------------- ----- --------- --------- --------- --------- --------- ---------
Other income (expenditure):
Investment return and other income 39 - - n/a n/a 21
Interest payable on core
structural borrowings (103) (164) (164) 37% 37% (328)
Corporate expenditurenote (iii) (150) (157) (151) 4% 1% (298)
---------------------------------- ----- --------- --------- --------- --------- --------- ---------
Total other income (expenditure) (214) (321) (315) 33% 32% (605)
----------------------------------- ----- --------- --------- --------- --------- --------- ---------
Restructuring and IFRS 17
implementation costsnote (iv) (154) (77) (77) (100)% (100)% (185)
----------------------------------- ----- --------- --------- --------- --------- --------- ---------
Adjusted operating profit B1.2 1,661 1,571 1,531 6% 8% 3,233
Short-term fluctuations in
investment returns on
shareholder-backed businessnote
(v) (1,383) (212) (234) (552)% (491)% (458)
Amortisation of acquisition
accounting adjustments (5) (2) (2) (150)% (150)% (5)
Gain (loss) attaching to corporate
transactions D1.1 27 (94) (94) n/a n/a (94)
----------------------------------- ----- --------- --------- --------- --------- --------- ---------
Profit before tax attributable to
shareholders 300 1,263 1,201 (76)% (75)% 2,676
Tax charge attributable to
shareholders' returns B3 (194) (193) (176) (1)% (10)% (462)
----------------------------------- ----- --------- --------- --------- --------- --------- ---------
Profit from continuing operations 106 1,070 1,025 (90)% (90)% 2,214
Loss from discontinued US
operations D1.2 - (5,707) (5,707) n/a n/a (5,027)
----------------------------------- ----- --------- --------- --------- --------- --------- ---------
Profit (loss) for the period 106 (4,637) (4,682) n/a n/a (2,813)
----------------------------------- ----- --------- --------- --------- --------- --------- ---------
Attributable to:
Equity holders of the Company:
From continuing operations 104 1,063 1,018 (90)% (90)% 2,192
From discontinued US operations - (5,073) (5,073) n/a n/a (4,234)
---------------------------------- ----- --------- --------- --------- --------- --------- ---------
104 (4,010) (4,055) n/a n/a (2,042)
Non-controlling interests:
From continuing operations 2 7 7 (71)% (71)% 22
From discontinued US operations - (634) (634) n/a n/a (793)
---------------------------------- ----- --------- --------- --------- --------- --------- ---------
2 (627) (627) n/a n/a (771)
--------------------------------------- --------- --------- --------- --------- --------- ---------
Profit (loss) for the period 106 (4,637) (4,682) n/a n/a (2,813)
----------------------------------- ----- --------- --------- --------- --------- --------- ---------
Basic earnings per share (in cents) 2022 2021 2022 vs 2021 % 2021
--------- -------------------- -------------------- ---------
Half year Half year Half year Half year Full year
Note Half year AER CER AER CER AER
B4 note (i) note (i) note (i) note (i) note (i) note (i)
--------------------------------------- --------- --------- --------- --------- --------- ---------
Based on adjusted operating profit,
net of tax and non-controlling
interest, from continuing
operations 49.2c 51.6c 50.5c (5)% (3)% 101.5c
Based on profit from continuing
operations, net of non-controlling
interest 3.8c 40.9c 39.2c (91)% (90)% 83.4c
Based on loss from discontinued US
operations, net of non-controlling
interest -c (195.1)c (195.1)c n/a n/a (161.1)c
----------------------------------- ----- --------- --------- --------- --------- --------- ---------
Notes
(i) Segment results are attributed to the shareholders of the
Group before deducting the amount attributable to the
non-controlling interests. This presentation is applied
consistently throughout the document. For definitions of AER and
CER refer to note A1.
(ii) Adjusted operating profit for growth markets and other
includes other items of $160 million (half year 2021: $167 million
on an AER basis and $161 million on a CER basis; full year 2021:
$217 million on an AER basis) which in the first half of 2022
comprised largely of the impact of the adoption of the Risk-Based
Capital regime in Hong Kong (as discussed further in note C3.2)
offset by corporate taxes for life joint ventures and associates
and provisions for sales and premium tax.
(iii) Corporate expenditure as shown above is for head office
functions in London and Hong Kong.
(iv) Restructuring and IFRS 17 implementation costs include
those incurred in insurance and asset management operations of
$(44) million (half year 2021: $(33) million; full year 2021:
$(101) million).
(v) In general, the short-term fluctuations reflect the value
movements on shareholders' assets and policyholder liabilities (net
of reinsurance) arising from market movements in the period. In
half year 2022, rising interest rates and widening credits spreads
across a number of the Group's life insurance markets led to
unrealised bond losses which more than offset the impact of higher
discount rates on policyholder liabilities under the local
reserving basis applied. The interest rates rises in the first half
of 2022 were more substantial than that seen in the first half
2021. Short-term fluctuations also reflect losses on equities
backing shareholder-backed business following market movements in
the period (compared with equity gains in the prior period) and the
impact of refinements to the reserving basis in Hong Kong following
the adoption of the Risk-Based Capital regime as discussed further
in note C3.2.
B1.2 Determining operating segments and performance measure of
operating segments
Operating segments
The Group's operating segments for financial reporting purposes
are defined and presented in accordance with IFRS 8 'Operating
Segments' on the basis of the management reporting structure and
its financial management information. Under the Group's management
and reporting structure, its chief operating decision maker is the
Group Executive Committee (GEC), chaired by the Group Chief
Executive. There have been no changes to the Group's operating
segments as reported in these interim financial statements from
those reported in the Group's consolidated financial statements for
the year ended 31 December 2021.
Performance measure
The performance measure of operating segments utilised by the
Group is IFRS operating profit based on longer-term investment
returns (adjusted operating profit) as described below. This
measurement basis distinguishes adjusted operating profit from
other constituents of total profit or loss for the period as
follows:
- Short-term fluctuations in investment returns on shareholder-backed business;
- Amortisation of acquisition accounting adjustments arising on the purchase of business; and
- Gain or loss on corporate transactions, as discussed in note D1.1.
The determination of adjusted operating profit for investment
and liability movements is as described in note B1.2 of the Group's
consolidated financial statements for the year ended 31 December
2021.
For debt securities at 30 June 2022, the level of unamortised
interest-related realised gains and losses related to previously
sold bonds was a net gain of $211 million (30 June 2021: $ 414
million; 31 December 2021: $515 million).
For equity-type securities, the longer-term rates of return are
estimates of the long-term trend investment returns for income and
capital having regard to past performance, current trends and
future expectations. Different rates apply to different categories
of equity-type securities.
For insurance operations, investments in equity securities held
for non-linked shareholder-backed business at 30 June 2022 amounted
to $5,756 million (30 June 2021: $5,447 million ; 31 December 2021:
$6,073 million ). The longer-term rates of return applied in half
year 2022 ranged from 4.6 per cent to 16.9 per cent (half year
2021: 5.5 per cent to 16.9 per cent ; full year 2021: 5.5 per cent
to 16.9 per cent) with the rates applied varying by business
unit.
B1.3 Additional segmental analysis of revenue
Half year 2022 $m
-------------------------------------------------------------------------------------------------------
Insurance operationsnote (i)
--------------------------------------------------
Growth Inter Un-
markets -segment allocated
Hong and elimi- Total to a
Kong Indonesia Malaysia Singapore other Eastspring nation segment segment Total
--------------- -------- --------- -------- --------- -------- ---------- -------- -------- --------- --------
Gross premiums
earned 4,672 809 934 3,616 2,210 - - 12,241 - 12,241
Outward
reinsurance
premiums (771) (18) (29) (70) (31) - - (919) - (919)
--------------- -------- --------- -------- --------- -------- ---------- -------- -------- --------- --------
Earned
premiums, net
of reinsurance 3,901 791 905 3,546 2,179 - - 11,322 - 11,322
Other
incomenote
(ii) 14 4 - 9 45 181 - 253 - 253
--------------- -------- --------- -------- --------- -------- ---------- -------- -------- --------- --------
Total external
revenue 3,915 795 905 3,555 2,224 181 - 11,575 - 11,575
Intra-group
revenue - - - - 1 106 (107) - - -
Interest income 510 39 115 395 317 1 - 1,377 3 1,380
Dividend and
other
investment
income 338 103 103 321 66 - - 931 19 950
Investment
(depreciation)
appreciation (17,752) (144) (557) (6,134) (2,324) (17) - (26,928) 28 (26,900)
--------------- -------- --------- -------- --------- -------- ---------- -------- -------- --------- --------
Total revenue,
net of
reinsurance (12,989) 793 566 (1,863) 284 271 (107) (13,045) 50 (12,995)
--------------- -------- --------- -------- --------- -------- ---------- -------- -------- --------- --------
Half year 2021 $m
-----------------------------------------------------------------------------------------------------
Insurance operationsnote (i)
-------------------------------------------------
Growth Inter Un-
markets -segment allocated
Hong and elimi- Total to a
Kong Indonesia Malaysia Singapore other Eastspring nation segment segment Total
--------------- ------- --------- -------- --------- -------- ---------- -------- -------- --------- -------
Gross premiums
earned 4,776 871 929 2,934 2,011 - - 11,521 - 11,521
Outward
reinsurance
premiums (767) (28) (22) (55) (26) - - (898) - (898)
--------------- ------- --------- -------- --------- -------- ---------- -------- -------- --------- -------
Earned
premiums, net
of reinsurance 4,009 843 907 2,879 1,985 - - 10,623 - 10,623
Other
incomenote
(ii) 24 5 1 10 57 234 - 331 - 331
--------------- ------- --------- -------- --------- -------- ---------- -------- -------- --------- -------
Total external
revenue 4,033 848 908 2,889 2,042 234 - 10,954 - 10,954
Intra-group
revenue - - - - - 106 (106) - - -
Interest income 528 46 117 462 303 1 - 1,457 - 1,457
Dividend and
other
investment
income 214 33 101 186 39 - - 573 - 573
Investment
(depreciation)
appreciation (1,444) (135) (280) 817 (259) 9 - (1,292) - (1,292)
--------------- ------- --------- -------- --------- -------- ---------- -------- -------- --------- -------
Total revenue,
net of
reinsurance 3,331 792 846 4,354 2,125 350 (106) 11,692 - 11,692
--------------- ------- --------- -------- --------- -------- ---------- -------- -------- --------- -------
Full year 2021 $m
-----------------------------------------------------------------------------------------------------
Insurance operationsnote (i)
-------------------------------------------------
Growth Inter Un-
markets -segment allocated
Hong and elimi- Total to a
Kong Indonesia Malaysia Singapore other Eastspring nation segment segment Total
--------------- ------- --------- -------- --------- -------- ---------- -------- -------- --------- -------
Gross premiums
earned 10,032 1,724 1,900 6,246 4,315 - - 24,217 - 24,217
Outward
reinsurance
premiums (1,557) (43) (47) (137) (60) - - (1,844) - (1,844)
--------------- ------- --------- -------- --------- -------- ---------- -------- -------- --------- -------
Earned
premiums, net
of reinsurance 8,475 1,681 1,853 6,109 4,255 - - 22,373 - 22,373
Other
incomenote
(ii) 52 12 - 22 117 437 - 640 1 641
--------------- ------- --------- -------- --------- -------- ---------- -------- -------- --------- -------
Total external
revenue 8,527 1,693 1,853 6,131 4,372 437 - 23,013 1 23,014
Intra-group
revenue - - - - 1 217 (218) - - -
Interest income 934 87 220 707 618 3 - 2,569 1 2,570
Dividend and
other
investment
income 679 74 160 506 86 - - 1,505 19 1,524
Investment
appreciation
(depreciation) 57 34 (300) (29) (361) 8 - (591) (17) (608)
--------------- ------- --------- -------- --------- -------- ---------- -------- -------- --------- -------
Total revenue,
net of
reinsurance 10,197 1,888 1,933 7,315 4,716 665 (218) 26,496 4 26,500
--------------- ------- --------- -------- --------- -------- ---------- -------- -------- --------- -------
Notes
(i) CPL, Prudential's life business in the Chinese Mainland , is
a 50/50 joint venture with CITIC and is accounted for using the
equity method under IFRS. The Group's share of its results is
presented in a single line within the Group's profit before tax on
a net of related tax basis and therefore not shown in the analysis
of revenue line items above. Revenue from external customers of CPL
(Prudential's share) in half year 2022 is $1,605 million (half year
2021: $1,307 million; full year 2021: $3,052 million).
(ii) Other income comprises income from external customers and
consists primarily of revenue from the Group's asset management
business of $181 million (half year 2021: $234 million; full year
2021: $437 million). The remaining other income consists primarily
of policy fee revenue from external customers and asset management
rebate revenue from external fund managers.
B1.4 Additional segmental analysis of profit after tax
2022 $m 2021 $m
--------- --------------------
Half year Half year Full year
------------------------------------------------------- --------- --------- ---------
CPL (28) 148 278
Hong Kong (613) 441 1,068
Indonesia 131 179 362
Malaysia 119 135 265
Singapore 63 141 394
Growth markets and othernote (i) 617 330 434
Eastspring 117 147 284
------------------------------------------------------- --------- --------- ---------
Total segment 406 1,521 3,085
Unallocated to a segment (central operations)note (ii) (300) (451) (871)
------------------------------------------------------- --------- --------- ---------
Total profit after tax from continuing operations 106 1,070 2,214
------------------------------------------------------- --------- --------- ---------
Notes
(i) The Growth markets and other segment comprises all other
Asia and Africa insurance businesses alongside other amounts that
are not included in the segment profit of an individual business
unit including tax on life joint ventures and associates and other
items that are not representative of the underlying segment trading
for the period, in line with the presentation used by management
when assessing the performance of the underlying segments
internally.
(ii) Comprising other income and expenditure of $(214) million
(half year 2021: $(321) million; full year 2021: $(605) million)
attributable to the head office functions in London and Hong Kong
and $(154) million (half year 2021: $(77) million; full year 2021:
$(185) million) of restructuring and IFRS 17 implementation costs
as shown in note B1.1, $7 million (half year 2021: $(4) million;
full year 2021: $(25) million) of short-term fluctuations on
investment returns, $62 million (half year 2021: $(56) million;
full year 2021: $(35) million) from corporate transactions as shown
in note D1.1 and related tax of $(1) million (half year 2021: $7
million; full year 2021: $(21) million).
B2 Acquisition costs and other expenditure
2022 $m 2021 $m
--------- --------------------
Half year Half year Full year
----------------------------------------------------------------------------------- --------- --------- ---------
Acquisition costs incurred for insurance policies (1,120) (1,026) (2,089)
Acquisition costs deferred 426 373 848
Amortisation of acquisition costs (249) (186) (343)
Administration costs and other expenditure (net of other reinsurance
commission)(note) (1,572) (1,542) (3,128)
Movements in amounts attributable to external unit holders
of consolidated investment funds 883 (21) 152
----------------------------------------------------------------------------------- --------- --------- ---------
Total acquisition costs and other expenditure from continuing operations (1,632) (2,402) (4,560)
----------------------------------------------------------------------------------- --------- --------- ---------
Note
Included in total administration costs and other expenditure is
depreciation of property, plant and equipment of $(71) million
(half year 2021: $(85) million; full year 2021: $(169) million), of
which $(53) million (half year 2021: $(62) million; full year 2021:
$(123) million) relates to the right-of-use assets recognised under
IFRS 16 and interest on the IFRS 16 lease liabilities of $(5)
million (half year 2021: $(6) million; full year 2021: $(13)
million).
B3 Tax charge
B3.1 Total tax charge by nature
The total tax charge from continuing operations in the income
statement is as follows:
2022 $m 2021 $m
--------- --------------------
Continuing operations: Half year Half year Full year
--------------------------------------------------- --------- --------- ---------
Attributable to shareholders:
Hong Kong (29) (16) (40)
Indonesia (38) (45) (74)
Malaysia (35) (28) (71)
Singapore (3) (23) (67)
Growth markets and other (74) (73) (159)
Eastspring (14) (15) (30)
-------------------------------------------------- --------- --------- ---------
Total segment (193) (200) (441)
Unallocated to a segment (central operations) (1) 7 (21)
--------------------------------------------------- --------- --------- ---------
Tax charge attributable to shareholders (194) (193) (462)
Attributable to policyholders:
Hong Kong (30) (40) (79)
Indonesia 5 (2) 4
Malaysia (4) (2) (2)
Singapore 155 (194) (261)
Growth markets and other - - (4)
-------------------------------------------------- --------- --------- ---------
Tax credit (charge) attributable to policyholders 126 (238) (342)
--------------------------------------------------- --------- --------- ---------
Total tax charge from continuing operations (68) (431) (804)
--------------------------------------------------- --------- --------- ---------
Analysed by:
Current tax (255) (189) (399)
Deferred tax 187 (242) (405)
--------------------------------------------------- --------- --------- ---------
Total tax charge from continuing operations (68) (431) (804)
--------------------------------------------------- --------- --------- ---------
Profit before tax includes Prudential's share of profit after
tax from the joint ventures and associates that are
equity-accounted for. Therefore, the actual tax charge in the
income statement does not include tax arising from the results of
joint ventures and associates including CPL.
The reconciliation of the expected to actual tax charge
attributable to shareholders is provided in B3.2 below. The tax
credit (charge) attributable to policyholders of $126 million (half
year 2021: $(238) million; full year 2021: $(342) million) above is
equal to the profit before tax attributable to policyholders. This
is the result of accounting for policyholder income after the
deduction of expenses and movement in unallocated surpluses on an
after-tax basis.
B3.2 Reconciliation of shareholder effective tax rate
In the reconciliation below, the expected tax rate reflects the
corporation tax rates that are expected to apply to the taxable
profit or loss of the continuing operations. It reflects the
corporation tax rates of each jurisdiction weighted by reference to
the amount of profit or loss contributing to the aggregate result
from continuing operations.
2022 2021
---------------------------- ---------------- ---------------------------- ----------
Half year Half year Full year
---------------------------- ---------------------------- ----------------------------
Tax Percentage Tax Percentage Tax Percentage
attributable to impact attributable to impact attributable to impact
shareholders on ETR shareholders on ETR shareholders on ETR
Continuing
operations $m % $m % $m %
-------------------- ---------------- ---------- ---------------- ---------- ---------------- ----------
Adjusted operating
profit 1,661 1,571 3,233
Non-operating
resultnote (i) (1,361) (308) (557)
-------------------- ---------------- ---------------- ----------------
Profit before tax 300 1,263 2,676
-------------------- ---------------- ---------------- ----------------
Tax charge at the
expected rate (65) 22% (259) 21% (539) 20%
Effects of recurring
tax reconciliation
items:
Income not taxable
or taxable at
concessionary
ratesnote (ii) 47 (16)% 33 (3)% 63 (2)%
Deductions not
allowable for tax
purposesnote (iii) (135) 45% (34) 3% (92) 3%
Items related to
taxation of life
insurance
businessesnote
(iv) 49 (16)% 71 (6)% 177 (7)%
Deferred tax
adjustments
including
unrecognised tax
lossesnote (v) (48) 16% (70) 5% (111) 4%
Effect of results
of joint ventures
and associatesnote
(vi) 2 (1)% 37 (3)% 80 (3)%
Irrecoverable
withholding
taxesnote (vii) (30) 10% (35) 3% (60) 2%
Other (12) 4% 2 0% (8) 1%
------------------- ---------------- ---------- ---------------- ---------- ---------------- ----------
Total (charge)
credit on
recurring items (127) 42% 4 (1)% 49 (2)%
Effects of
non-recurring tax
reconciliation
items:
Adjustments to tax
charge in relation
to prior years (1) 1% 6 0% (11) 0%
Movements in
provisions for
open tax
mattersnote (viii) (1) 0% 59 (5)% 47 (2)%
Impact of changes
in local statutory
tax rates - 0% 8 (1)% 6 0%
Adjustments in
relation to
business disposals
and corporate
transactions - 0% (11) 1% (14) 1%
------------------- ---------------- ---------- ---------------- ---------- ---------------- ----------
Total (charge)
credit on
non-recurring
items (2) 1% 62 (5)% 28 (1)%
------------------- ---------------- ---------- ---------------- ---------- ---------------- ----------
Total actual tax
charge (194) 65% (193) 15% (462) 17%
-------------------- ---------------- ---------- ---------------- ---------- ---------------- ----------
Analysed into:
---------------- ---------------- ---------- ---------------- ----------
Tax on adjusted
operating profit (314) (222) (548)
Tax on non-operating
resultnote (i) 120 29 86
---------------- ---------- ---------------- ----------
Actual tax rate on:
Adjusted operating
profit:
Including
non-recurring tax
reconciling
itemsnote (ix) 19% 14% 17%
Excluding
non-recurring tax
reconciling items 19% 19% 18%
Total profitnote
(ix) 65% 15% 17%
-------------------- ---------------- ---------------- ----------------
Notes
(i) 'Non-operating result' is used to refer to items excluded
from adjusted operating profit and includes short-term investment
fluctuations in investment returns on shareholder-backed business,
corporate transactions and amortisation of acquisition accounting
adjustments.
(ii) Income not taxable or taxable at concessionary rates
primarily relates to non-taxable investment income in Singapore and
Malaysia.
(iii) Deductions not allowable for tax purposes primarily
relates to non-deductible investment losses in Growth markets.
(iv) Items related to taxation of life insurance businesses
primarily relates to Hong Kong where the taxable profit is computed
as 5 per cent of net insurance premiums.
(v) The unrecognised tax losses reconciling amount reflects
losses arising where it is unlikely that relief for the losses will
be available in future periods.
(vi) Profit before tax includes Prudential's share of profit
after tax from the joint ventures and associates. Therefore, the
actual tax charge does not include tax arising from profit or loss
of joint ventures and associates and is reflected as a reconciling
item.
(vii) The Group incurs withholding tax on remittances received
from certain jurisdictions and on certain investment income. Where
these withholding taxes cannot be offset against corporate income
tax or otherwise recovered, they represent a cost to the Group.
Irrecoverable withholding tax on remittances is included in Other
operations and is not allocated to any segment. Irrecoverable
withholding tax on investment income is included in the relevant
segment where the investment income is reflected.
(viii) The statement of financial position contains the
following provisions in relation to open tax matters.
Half year 2022 $m
-------------------------------------------------------------------------------------------- -----------------
Balance at beginning of period 42
Movements in the current period included in tax charge attributable to shareholders 1
Provisions utilised in the period -
Other movements (including interest arising on open tax matters and amounts included in the
Group's share of profits from joint ventures and associates, net of related tax) -
-------------------------------------------------------------------------------------------- -----------------
Balance at end of period 43
--------------------------------------------------------------------------------------------- -----------------
(ix) The actual tax rates of the relevant business operations
are shown below:
Half year 2022 %
--------------------------------------------------------------------------------------------
Growth Total
Hong markets Other attributable to
Kong Indonesia Malaysia Singapore and other Eastspring operations shareholders
------------------ ----- --------- -------- --------- ---------- ---------- ----------- ----------------
Tax rate on
adjusted operating
profit 6% 22% 23% 14% 25% 11% 0% 19%
Tax rate on profit
before tax (5)% 22% 23% 5% 11% 11% 0% 65%
------------------- ----- --------- -------- --------- ---------- ---------- ----------- ----------------
Half year 2021 %
--------------------------------------------------------------------------------------------
Growth Total
Hong markets Other attributable to
Kong Indonesia Malaysia Singapore and other Eastspring operations shareholders
------------------ ----- --------- -------- --------- ---------- ---------- ----------- ----------------
Tax rate on
adjusted operating
profit 4% 20% 18% 16% 14% 9% 2% 14%
Tax rate on profit
before tax 4% 20% 17% 14% 18% 9% 2% 15%
------------------- ----- --------- -------- --------- ---------- ---------- ----------- ----------------
Full year 2021 %
--------------------------------------------------------------------------------------------
Growth Total
Hong markets Other attributable to
Kong Indonesia Malaysia Singapore and other Eastspring operations shareholders
------------------ ----- --------- -------- --------- ---------- ---------- ----------- ----------------
Tax rate on
adjusted operating
profit 5% 17% 21% 15% 22% 10% (3)% 17%
Tax rate on profit
before tax 4% 17% 21% 15% 27% 10% (2)% 17%
------------------- ----- --------- -------- --------- ---------- ---------- ----------- ----------------
B4 Earnings per share
Half year 2022
---------------------------------------------------------------------
Net of tax
and non- Basic Diluted
Before Non-controlling controlling earnings earnings
tax Tax interests interests per share per share
$m $m $m $m cents cents
----- ------------------------ ---- ------- ----- --------------- ------------ ---------- ----------
Based on adjusted operating
profit 1,661 (314) (4) 1,343 49.2c 49.2c
Short-term fluctuations in
investment returns on
shareholder-backed business (1,383) 118 2 (1,263) (46.2)c (46.2)c
Amortisation of acquisition
accounting adjustments (5) - - (5) (0.2)c (0.2)c
Gain attaching to corporate
transactions 27 2 - 29 1.0c 1.0c
------------------------------- ---- ------- ----- --------------- ------------ ---------- ----------
Based on profit for the period 300 (194) (2) 104 3.8c 3.8c
------------------------------- ---- ------- ----- --------------- ------------ ---------- ----------
Half year 2021
---------------------------------------------------------------------
Net of tax
Non- and non- Basic Diluted
Before controlling controlling earnings earnings
tax Tax interests interests per share per share
$m $m $m $m cents cents
----- ----------------------- ----- ------- ----- --------------- ------------ ---------- ----------
Based on adjusted operating
profit 1,571 (222) (7) 1,342 51.6c 51.6c
Short-term fluctuations in
investment returns on
shareholder-backed business (212) 26 - (186) (7.2)c (7.2)c
Amortisation of acquisition
accounting adjustments (2) - - (2) (0.1)c (0.1)c
Loss attaching to corporate
transactions (94) 3 - (91) (3.4)c (3.4)c
------------------------------ ----- ------- ----- --------------- ------------ ---------- ----------
Based on profit from
continuing operations 1,263 (193) (7) 1,063 40.9c 40.9c
------------------------------ ----- ------- ----- ---------------
Based on loss from
discontinued US operations (5,073) (195.1)c (195.1)c
------------ ---------- ----------
Based on loss for the period (4,010) (154.2)c (154.2)c
------------ ---------- ----------
Full year 2021
--------------------------------------------------------------------------------------
Net of tax Basic Diluted
Before Non-controlling and non- earnings earnings
tax Tax interests controlling interests per share per share
$m $m $m $m cents cents
------------------------ ------ ----- ----------------------- ---------------------- ---------- ----------
Based on adjusted
operating profit 3,233 (548) (17) 2,668 101.5c 101.5c
Short-term fluctuations
in investment returns on
shareholder-backed
business (458) 81 (5) (382) (14.5)c (14.5)c
Amortisation of
acquisition accounting
adjustments (5) - - (5) (0.2)c (0.2)c
Loss attaching to
corporate transactions (94) 5 - (89) (3.4)c (3.4)c
------------------------- ------ ----- ----------------------- ---------------------- ---------- ----------
Based on profit from
continuing operations 2,676 (462) (22) 2,192 83.4c 83.4c
------------------------- ------ ----- -----------------------
Based on loss from
discontinued US
operations (4,234) (161.1)c (161.1)c
---------------------- ---------- ----------
Based on loss for the
year (2,042) (77.7)c (77.7)c
---------------------- ---------- ----------
Basic earnings per share are calculated based on earnings
attributable to ordinary shareholders, after related tax and
non-controlling interests, divided by the weighted average number
of ordinary shares outstanding during the period, excluding those
held in employee share trusts, which are treated as cancelled. For
diluted earnings per share, the weighted average number of shares
in issue is adjusted to assume conversion of all dilutive potential
ordinary shares. The Group's only class of potentially dilutive
ordinary shares are those share options granted to employees where
the exercise price is less than the average market price of the
Company's ordinary shares during the period. No adjustment is made
if the impact is anti-dilutive overall.
The weighted average number of shares for calculating basic and
diluted earnings per share, which excludes those held in employee
share trusts, is set out as below:
2022 2021
--------- --------------------
Number of shares (in millions) Half year Half year Full year
--------------------------------------------------------------------------------- --------- --------- ---------
Weighted average number of shares for calculation of basic earnings per share 2,736 2,601 2,628
Shares under option at end of period - 2 2
Shares that would have been issued at fair value on assumed option price at end
of period - (2) (2)
--------------------------------------------------------------------------------- --------- --------- ---------
Weighted average number of shares for calculation of diluted earnings per share 2,736 2,601 2,628
--------------------------------------------------------------------------------- --------- --------- ---------
B5 Dividends
Half year 2022 Half year 2021 Full year 2021
-------------------- -------------------- --------------------
Cents per share $m Cents per share $m Cents per share $m
---------------------------------------------- --------------- --- --------------- --- --------------- ---
Dividends relating to reporting period:
First interim ordinary dividend 5.74c 158 5.37c 140 5.37c 140
Second interim ordinary dividend - - - - 11.86c 326
--------------------------------------------- --------------- --- --------------- --- --------------- ---
Total relating to reporting period 5.74c 158 5.37c 140 17.23c 466
---------------------------------------------- --------------- --- --------------- --- --------------- ---
Dividends paid in reporting period:
Current year first interim ordinary dividend - - - - 5.37c 138
Second interim ordinary dividend for prior
year 11.86c 320 10.73c 283 10.73c 283
--------------------------------------------- --------------- --- --------------- --- --------------- ---
Total paid in reporting period 11.86c 320 10.73c 283 16.10c 421
---------------------------------------------- --------------- --- --------------- --- --------------- ---
First and second interim dividends are recorded in the period in
which they are paid. In addition to the dividends shown in the
table above, on 13 September 2021, following approval by the
Group's shareholders, Prudential plc demerged its US operations
(Jackson) via a dividend in specie of $1,735 million.
Dividend per share
On 27 September 2022, Prudential will pay a first interim
ordinary dividend of 5.74 cents per ordinary share for the year
ending 31 December 2022. The first interim dividend will be paid to
shareholders included on the UK register at 6.00pm BST and to
shareholders on the HK register at 4.30pm Hong Kong time on 19
August 2022 (Record Date) and also to the Holders of US American
Depositary Receipts (ADRs) as at 19 August 2022. The first interim
dividend will be paid on or about 4 October 2022 to shareholders
with shares standing to the credit of their securities accounts
with The Central Depository (Pte) Limited (CDP) at 5.00pm Singapore
time on the Record Date. Shareholders holding shares on the UK or
Hong Kong share registers will continue to receive their dividend
payments in either GBP or HKD respectively, unless they elect
otherwise. Shareholders holding shares on the UK or Hong Kong
registers may elect to receive dividend payments in USD. Elections
must be made through the relevant UK or Hong Kong share registrar
on or before 5 September 2022 (UK) and 9 September 2022 (HK),
respectively. The corresponding amounts per share in GBP and HKD
are expected to be announced on or about 16 September 2022. The USD
to GBP and HKD conversion rates will be determined by the actual
rates achieved by Prudential buying those currencies prior to the
subsequent announcement. Holders of ADRs will continue to receive
their dividend payments in USD. Shareholders holding an interest in
Prudential shares through CDP in Singapore will continue to receive
their dividend payments in SGD at an exchange rate determined by
CDP.
Shareholders on the UK register are eligible to participate in a
Dividend Reinvestment Plan.
C Financial position
C1 Group assets and liabilities by business type
The analysis below is structured to show the investments and
other assets and liabilities of the Group by reference to the
differing degrees of policyholder and shareholder economic interest
of the different types of business.
Debt securities are analysed below according to the issuing
government for sovereign debt and to credit ratings for the rest of
the securities.
The Group uses the middle of the Standard & Poor's, Moody's
and Fitch ratings, where available. Where ratings are not available
from these rating agencies, local external rating agencies' ratings
and lastly internal ratings have been used. Securities with none of
the ratings listed above are classified as unrated and included
under the 'below BBB- and unrated' category. The total securities
(excluding sovereign debt) that were unrated at 30 June 2022 were
$1,056 million (30 June 2021: $986 million; 31 December 2021:
$1,130 million). Additionally, government debt is shown separately
from the rating breakdowns in order to provide a more focused view
of the credit portfolio.
In the table below, AAA is the highest possible rating.
Investment grade financial assets are classified within the range
of AAA to BBB- ratings. Financial assets which fall outside this
range are classified as below BBB-.
30 Jun 2022 $m
-----------------------------------------------------------------------------------------------
Asia and Africa
-----------------------------------------------------------
Insurance
----------------------------
Unallo- Elimination
cated of intra-group
With- Unit- Elimina- to a debtors and Group
profits linked Other Eastspring tions Total segment creditors total
note (i) note (i) note (i)
---------------- -------- -------- -------- ---------- -------- ------- -------- --------------- -------
Debt securities:
Sovereign debt
Indonesia 496 614 445 9 - 1,564 - - 1,564
Singapore 3,176 525 767 54 - 4,522 - - 4,522
Thailand - - 1,222 - - 1,222 - - 1,222
United Kingdom - 5 - - - 5 - - 5
United States 20,961 22 3,262 - - 24,245 - - 24,245
Vietnam - 13 2,813 - - 2,826 - - 2,826
Other
(predominantly
Asia) 1,940 709 3,334 27 - 6,010 - - 6,010
----------------- -------- -------- -------- ---------- -------- ------- -------- --------------- -------
Subtotal 26,573 1,888 11,843 90 - 40,394 - - 40,394
------------------ -------- -------- -------- ---------- -------- ------- -------- --------------- -------
Other government
bonds
AAA 1,361 77 131 - - 1,569 - - 1,569
AA+ to AA- 101 13 27 - - 141 - - 141
A+ to A- 757 125 257 - - 1,139 - - 1,139
BBB+ to BBB- 288 44 64 - - 396 - - 396
Below BBB- and
unrated 234 20 424 - - 678 - - 678
----------------- -------- -------- -------- ---------- -------- ------- -------- --------------- -------
Subtotalnote (vi) 2,741 279 903 - - 3,923 - - 3,923
------------------ -------- -------- -------- ---------- -------- ------- -------- --------------- -------
Corporate bonds
AAA 1,055 171 392 - - 1,618 - - 1,618
AA+ to AA- 1,890 363 1,594 - - 3,847 - - 3,847
A+ to A- 7,020 529 4,129 - - 11,678 - - 11,678
BBB+ to BBB- 7,657 1,419 3,948 1 - 13,025 - - 13,025
Below BBB- and
unrated 2,507 424 1,395 - - 4,326 - - 4,326
----------------- -------- -------- -------- ---------- -------- ------- -------- --------------- -------
Subtotalnote (vi) 20,129 2,906 11,458 1 - 34,494 - - 34,494
------------------ -------- -------- -------- ---------- -------- ------- -------- --------------- -------
Asset-backed
securities
AAA 135 5 95 - - 235 - - 235
AA+ to AA- 6 1 4 - - 11 - - 11
A+ to A- 22 - 14 - - 36 - - 36
BBB+ to BBB- 14 - 8 - - 22 - - 22
Below BBB- and
unrated 2 1 1 - - 4 - - 4
----------------- -------- -------- -------- ---------- -------- ------- -------- --------------- -------
Subtotalnote (vi) 179 7 122 - - 308 - - 308
------------------ -------- -------- -------- ---------- -------- ------- -------- --------------- -------
Total debt
securitiesnote
(ii) 49,622 5,080 24,326 91 - 79,119 - - 79,119
------------------ -------- -------- -------- ---------- -------- ------- -------- --------------- -------
Loans:
Mortgage loans - - 141 - - 141 - - 141
Policy loans 1,392 - 378 - - 1,770 - - 1,770
Other loans 509 - 9 - - 518 - - 518
----------------- -------- -------- -------- ---------- -------- ------- -------- --------------- -------
Total loans 1,901 - 528 - - 2,429 - - 2,429
------------------ -------- -------- -------- ---------- -------- ------- -------- --------------- -------
Equity securities
and holdings in
collective
investment
schemes:
Direct equities 11,344 11,305 2,088 60 - 24,797 325 - 25,122
Collective
investment
schemes 21,802 6,901 3,668 2 - 32,373 2 - 32,375
----------------- -------- -------- -------- ---------- -------- ------- -------- --------------- -------
Total equity
securities and
holdings in
collective
investment
schemes 33,146 18,206 5,756 62 - 57,170 327 - 57,497
------------------ -------- -------- -------- ---------- -------- ------- -------- --------------- -------
Other financial
investments note
(iii) 1,164 377 2,427 96 - 4,064 880 - 4,944
------------------ -------- -------- -------- ---------- -------- ------- -------- --------------- -------
Total financial
investments 85,833 23,663 33,037 249 - 142,782 1,207 - 143,989
------------------ -------- -------- -------- ---------- -------- ------- -------- --------------- -------
Investment
properties - - 35 - - 35 - - 35
Investments in
joint ventures
and associates
accounted for
using the equity
method - - 1,715 295 - 2,010 - - 2,010
Cash and cash
equivalents 785 768 1,977 149 - 3,679 2,736 - 6,415
Reinsurers' share
of insurance
contract
liabilities 2 - 2,748 - - 2,750 - - 2,750
Other assetsnote
(iv) 1,557 172 9,298 709 (56) 11,680 3,419 (3,410) 11,689
------------------ -------- -------- -------- ---------- -------- ------- -------- --------------- -------
Total assets 88,177 24,603 48,810 1,402 (56) 162,936 7,362 (3,410) 166,888
------------------ -------- -------- -------- ---------- -------- ------- -------- --------------- -------
Shareholders'
equity - - 13,308 1,043 - 14,351 1,758 - 16,109
Non-controlling
interests - - 42 121 - 163 - - 163
------------------ -------- -------- -------- ---------- -------- ------- -------- --------------- -------
Total equity - - 13,350 1,164 - 14,514 1,758 - 16,272
------------------ -------- -------- -------- ---------- -------- ------- -------- --------------- -------
Contract
liabilities and
unallocated
surplus of
with-profits
funds 78,981 23,037 26,079 - - 128,097 - - 128,097
Core structural
borrowings - - - - - - 4,266 - 4,266
Operational
borrowings 128 3 89 12 - 232 622 - 854
Other
liabilitiesnote
(v) 9,068 1,563 9,292 226 (56) 20,093 716 (3,410) 17,399
------------------ -------- -------- -------- ---------- -------- ------- -------- --------------- -------
Total liabilities 88,177 24,603 35,460 238 (56) 148,422 5,604 (3,410) 150,616
------------------ -------- -------- -------- ---------- -------- ------- -------- --------------- -------
Total equity and
liabilities 88,177 24,603 48,810 1,402 (56) 162,936 7,362 (3,410) 166,888
------------------ -------- -------- -------- ---------- -------- ------- -------- --------------- -------
30 Jun 2021 $m
--------------------------------------------------------------------------------------------------------------
Asia and Africa
--------------------------------------------------------------
Insurance
-------------------------------
Elimina-
tion of
intra-group
Unallocated debtors
With Elimina- US to a and Group
-profits Unit-linked Other Eastspring tions Total (discont'd) segment creditors total
note (i) note (i) note (i) note (vii)
------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
Debt securities:
Sovereign debt
Indonesia 362 589 568 1 - 1,520 - - - 1,520
Singapore 3,673 587 939 78 - 5,277 - - - 5,277
Thailand - - 1,847 16 - 1,863 - - - 1,863
United Kingdom - 7 - - - 7 - - - 7
United States 26,233 45 2,917 - - 29,195 - - - 29,195
Vietnam - 17 2,799 - - 2,816 - - - 2,816
Other (predominantly
Asia) 1,951 692 3,790 18 - 6,451 - - - 6,451
-------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
Subtotal 32,219 1,937 12,860 113 - 47,129 - - - 47,129
--------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
Other government
bonds
AAA 1,630 83 276 - - 1,989 - - - 1,989
AA+ to AA- 79 4 12 - - 95 - - - 95
A+ to A- 641 115 298 - - 1,054 - - - 1,054
BBB+ to BBB- 83 26 110 - - 219 - - - 219
Below BBB- and
unrated 85 13 369 - - 467 - - - 467
-------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
Subtotalnote(vi) 2,518 241 1,065 - - 3,824 - - - 3,824
--------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
Corporate bonds
AAA 935 227 449 - - 1,611 - - - 1,611
AA+ to AA- 1,950 393 1,777 - - 4,120 - - - 4,120
A+ to A- 7,909 645 4,976 - - 13,530 - - - 13,530
BBB+ to BBB- 9,324 1,281 4,938 - - 15,543 - - - 15,543
Below BBB- and
unrated 3,938 1,050 1,775 1 - 6,764 - - - 6,764
-------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
Subtotalnote(vi) 24,056 3,596 13,915 1 - 41,568 - - - 41,568
--------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
Asset-backed
securities
AAA 64 6 63 - - 133 - - - 133
AA+ to AA- 1 1 - - - 2 - - - 2
A+ to A- 19 - 17 - - 36 - - - 36
BBB+ to BBB- 16 - 10 - - 26 - - - 26
Below BBB- and
unrated 6 2 2 - - 10 - - - 10
-------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
Subtotalnote(vi) 106 9 92 - - 207 - - - 207
--------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
Total debt
securitiesnote(ii) 58,899 5,783 27,932 114 - 92,728 - - - 92,728
--------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
Loans:
Mortgage loans - - 154 - - 154 - - - 154
Policy loans 1,302 - 353 - - 1,655 - - - 1,655
Other loans 618 - 13 - - 631 - - - 631
-------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
Total loans 1,920 - 520 - - 2,440 - - - 2,440
--------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
Equity securities and
holdings in
collective investment
schemes:
Direct equities 10,506 13,007 2,541 85 - 26,139 - - - 26,139
Collective
investment schemes 23,936 7,476 2,907 6 - 34,325 - 2 - 34,327
-------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
Total equity
securities and
holdings in
collective
investment schemes 34,442 20,483 5,448 91 - 60,464 - 2 - 60,466
--------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
Other financial
investments note
(iii) 1,140 195 2,373 93 - 3,801 - 28 - 3,829
--------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
Total financial
investments 96,401 26,461 36,273 298 - 159,433 - 30 - 159,463
--------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
Investment properties - - 39 - - 39 - - - 39
Investments in joint
ventures and
associates accounted
for using the equity
method - - 1,771 285 - 2,056 - - - 2,056
Cash and cash
equivalents 945 1,000 1,406 177 - 3,528 - 2,767 - 6,295
Reinsurers' share of
insurance contract
liabilities 221 - 9,670 - - 9,891 - - - 9,891
Other assetsnote (iv) 1,663 284 8,643 795 (67) 11,318 - 3,598 (3,289) 11,627
Assets held for
distributionnote
(vii) - - - - - - 335,760 - (10) 335,750
--------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
Total assets 99,230 27,745 57,802 1,555 (67) 186,265 335,760 6,395 (3,299) 525,121
--------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
Shareholders' equity - - 13,287 1,079 - 14,366 2,667 (1,320) - 15,713
Non-controlling
interests - - 40 137 - 177 333 - - 510
--------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
Total equity - - 13,327 1,216 - 14,543 3,000 (1,320) - 16,223
--------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
Contract liabilities
and unallocated
surplus of
with-profits funds 89,243 25,615 36,224 - - 151,082 - - - 151,082
Core structural
borrowings - - - - - - - 6,404 - 6,404
Operational
borrowings 156 - 107 21 - 284 - 611 - 895
Other liabilitiesnote
(v) 9,831 2,130 8,144 318 (67) 20,356 - 700 (3,299) 17,757
Liabilities held for
distributionnote
(vii) - - - - - - 332,760 - - 332,760
--------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
Total liabilities 99,230 27,745 44,475 339 (67) 171,722 332,760 7,715 (3,299) 508,898
--------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
Total equity and
liabilities 99,230 27,745 57,802 1,555 (67) 186,265 335,760 6,395 (3,299) 525,121
--------------------- -------- ----------- -------- ---------- -------- ------- ----------- ----------- ----------- -------
31 Dec 2021 $m
--------------------------------------------------------------------------------------------------
Asia and Africa
---------------------------------------------------------------
Insurance
--------------------------------
Elimination
of
Unallocated intra-group
With Elimina- to a debtors and Group
-profits Unit-linked Other Eastspring tions Total segment creditors total
note (i) note (i) note (i)
----------------- --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Debt securities:
Sovereign debt
Indonesia 414 598 609 11 - 1,632 - - 1,632
Singapore 3,684 550 1,068 126 - 5,428 - - 5,428
Thailand - - 1,577 3 - 1,580 - - 1,580
United Kingdom - 7 - - - 7 226 - 233
United States 28,552 47 3,525 - - 32,124 - - 32,124
Vietnam - 20 3,022 - - 3,042 - - 3,042
Other
(predominantly
Asia) 2,030 720 4,001 21 - 6,772 - - 6,772
------------------ --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Subtotal 34,680 1,942 13,802 161 - 50,585 226 - 50,811
------------------- --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Other government
bonds
AAA 1,472 86 246 - - 1,804 - - 1,804
AA+ to AA- 45 2 12 - - 59 - - 59
A+ to A- 667 119 304 - - 1,090 - - 1,090
BBB+ to BBB- 121 16 116 - - 253 - - 253
Below BBB- and
unrated 204 15 450 - - 669 - - 669
------------------ --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Subtotalnote(vi) 2,509 238 1,128 - - 3,875 - - 3,875
------------------- --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Corporate bonds
AAA 1,222 236 411 - - 1,869 - - 1,869
AA+ to AA- 2,203 359 1,858 - - 4,420 - - 4,420
A+ to A- 9,046 675 5,294 - - 15,015 - - 15,015
BBB+ to BBB- 9,523 1,711 5,105 - - 16,339 - - 16,339
Below BBB- and
unrated 4,009 678 1,827 - - 6,514 - - 6,514
------------------ --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Subtotalnote(vi) 26,003 3,659 14,495 - - 44,157 - - 44,157
------------------- --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Asset-backed
securities
AAA 88 6 74 - - 168 - - 168
AA+ to AA- 6 1 4 - - 11 - - 11
A+ to A- 26 - 17 - - 43 - - 43
BBB+ to BBB- 15 - 9 - - 24 - - 24
Below BBB- and
unrated 2 2 1 - - 5 - - 5
------------------ --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Subtotalnote(vi) 137 9 105 - - 251 - - 251
------------------- --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Total debt
securitiesnote
(ii) 63,329 5,848 29,530 161 - 98,868 226 - 99,094
------------------- --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Loans:
Mortgage loans - - 150 - - 150 - - 150
Policy loans 1,365 - 368 - - 1,733 - - 1,733
Other loans 668 - 11 - - 679 - - 679
------------------ --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Total loans 2,033 - 529 - - 2,562 - - 2,562
------------------- --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Equity securities
and holdings in
collective
investment schemes:
Direct equities 10,290 12,812 2,286 84 - 25,472 683 - 26,155
Collective
investment
schemes 23,950 7,704 3,787 3 - 35,444 2 - 35,446
------------------ --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Total equity
securities and
holdings in
collective
investment schemes 34,240 20,516 6,073 87 - 60,916 685 - 61,601
------------------- --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Other financial
investments note
(iii) 1,561 149 2,318 106 - 4,134 1,088 - 5,222
------------------- --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Total financial
investments 101,163 26,513 38,450 354 - 166,480 1,999 - 168,479
------------------- --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Investment
properties - - 38 - - 38 - - 38
Investments in
joint ventures and
associates
accounted for
using the equity
method - - 1,878 305 - 2,183 - - 2,183
Cash and cash
equivalents 905 911 1,444 181 - 3,441 3,729 - 7,170
Reinsurers' share
of insurance
contract
liabilities 225 - 9,528 - - 9,753 - - 9,753
Other assetsnote
(iv) 1,184 166 9,191 759 (51) 11,249 3,608 (3,378) 11,479
------------------- --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Total assets 103,477 27,590 60,529 1,599 (51) 193,144 9,336 (3,378) 199,102
------------------- --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Shareholders'
equity - - 14,289 1,120 - 15,409 1,679 - 17,088
Non-controlling
interests - - 45 131 - 176 - - 176
------------------- --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Total equity - - 14,334 1,251 - 15,585 1,679 - 17,264
------------------- --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Contract
liabilities and
unallocated
surplus of
with-profits funds 94,002 25,651 37,646 - - 157,299 - - 157,299
Core structural
borrowings - - - - - - 6,127 - 6,127
Operational
borrowings 142 - 106 18 - 266 595 - 861
Other
liabilitiesnote
(v) 9,333 1,939 8,443 330 (51) 19,994 935 (3,378) 17,551
------------------- --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Total liabilities 103,477 27,590 46,195 348 (51) 177,559 7,657 (3,378) 181,838
------------------- --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Total equity and
liabilities 103,477 27,590 60,529 1,599 (51) 193,144 9,336 (3,378) 199,102
------------------- --------- ----------- -------- ---------- -------- ------- ----------- ----------- -------
Notes
(i) 'With-profits' comprises the with-profits assets and
liabilities of the Hong Kong, Malaysia and Singapore operations.
'Unit-linked' comprises the assets and liabilities held in the
unit-linked funds. 'Other' includes assets and liabilities of other
participating business and other non-linked shareholder-backed
business.
(ii) Of the Group's debt securities, the following amounts were
held by the consolidated investment funds:
2022 $m 2021 $m
------- --------------
Continuing operations: 30 Jun 30 Jun 31 Dec
------------------------------------------------------ ------- ------ ------
Debt securities held by consolidated investment funds 12,090 14,791 15,076
------------------------------------------------------ ------- ------ ------
(iii) Other financial investments comprise derivative assets and
deposits.
(iv) Of total 'Other assets' at 30 June 2022, there are:
- Property, plant and equipment (PPE) of $405 million (30 June
2021: $525 million; 31 December 2021: $478 million). During half
year 2022, the Group made additions of $26 million of PPE (half
year 2021: $24 million; full year 2021: $95 million), of which $12
million relates to right-of-use assets (half year 2021: $5 million;
full year 2021: $59 million).
- Premiums receivable of $718 million (30 June 2021: $758
million; 31 December 2021: $912 million), of which $688 million (30
June 2021: $715 million; 31 December 2021: $872 million) are due
within one year.
(v) Within 'Other liabilities' at 30 June 2022 are accruals,
deferred income and other liabilities of $8,103 million (30 June
2021: $8,017 million; 31 December 2021: $7,983 million), of which
$5,737 million (30 June 2021: $7,133 million; 31 December 2021:
$5,972 million) are due within one year.
(vi) The credit ratings, information or data contained in this
report which are attributed and specifically provided by Standard
& Poor's, Moody's and Fitch Solutions and their respective
affiliates and suppliers ('Content Providers') is referred to here
as the 'Content'. Reproduction of any Content in any form is
prohibited except with the prior written permission of the relevant
party. The Content Providers do not guarantee the accuracy,
adequacy, completeness, timeliness or availability of any Content
and are not responsible for any errors or omissions (negligent or
otherwise), regardless of the cause, or for the results obtained
from the use of such Content. The Content Providers expressly
disclaim liability for any damages, costs, expenses, legal fees, or
losses (including lost income or lost profit and opportunity costs)
in connection with any use of the Content. A reference to a
particular investment or security, a rating or any observation
concerning an investment that is part of the Content is not a
recommendation to buy, sell or hold any such investment or
security, nor does it address the suitability of an investment or
security and should not be relied on as investment advice.
(vii) Assets and liabilities held for distribution at 30 June
2021 related to the Group's US operations (Jackson) which were
classified as discontinued operations in half year 2021 and
demerged in September 2021, as discussed in note D1.2. The
condensed consolidated statement of financial position at 30 June
2021 has been presented after the elimination of all intragroup
balances between the continuing and discontinued US operations.
C2 Fair value measurement
C2.1 Determination of fair value
The fair values of the financial instruments for which fair
valuation is required under IFRS Standards are determined by the
use of current market bid prices for exchange-quoted investments,
or by using quotations from independent third parties, such as
brokers and pricing services or by using appropriate valuation
techniques.
The estimated fair value of derivative financial instruments
reflects the estimated amount the Group would receive or pay in an
arm's-length transaction. This amount is determined using quoted
prices if exchange listed, quotations from independent third
parties or valued internally using standard market practices.
Other than the loans which have been designated at fair value
through profit or loss, the carrying value of loans and receivables
is presented net of provisions for impairment. The fair value of
loans is estimated from discounted cash flows expected to be
received. The discount rate used is updated for the market rate of
interest where applicable.
The fair value of the subordinated and senior debt issued by the
parent company is determined using quoted prices from independent
third parties.
The fair value of financial liabilities (other than subordinated
debt, senior debt and derivative financial instruments) is
determined using discounted cash flows of the amounts expected to
be paid.
Valuation approach for level 2 fair valued assets and
liabilities
A significant proportion of the Group's level 2 assets are
corporate bonds, structured securities and other non-national
government debt securities. These assets, in line with market
practice, are generally valued using a designated independent
pricing service or quote from third-party brokers. These valuations
are subject to a number of monitoring controls, such as comparison
to multiple pricing sources where available, monthly price
variances, stale price reviews and variance analysis on prices
achieved on subsequent trades. For further detail on the valuation
approach for level 2 fair valued assets and liabilities, refer to
note C2.1 of the Group IFRS financial statements for the year ended
31 December 2021.
Valuation approach for level 3 fair valued assets and
liabilities
Investments valued using valuation techniques include financial
investments which by their nature do not have an externally quoted
price based on regular trades, and financial investments for which
markets are no longer active as a result of market conditions, eg
market illiquidity.
The Group's valuation policies, procedures and analyses for
instruments categorised as level 3 are overseen by Business Unit
committees as part of the Group's wider financial reporting
governance processes. The procedures undertaken include approval of
valuation methodologies, verification processes, and resolution of
significant or complex valuation issues. In addition, the Group has
minimum standards for independent price verification to ensure
valuation accuracy is regularly independently verified. Adherence
to this policy is monitored across the business units.
C2.2 Fair value measurement hierarchy of Group assets and
liabilities
(a) Assets and liabilities carried at fair value on the statement of financial position
The table below shows the assets and liabilities carried at fair
value analysed by level of the IFRS 13 'Fair Value Measurement'
defined fair value hierarchy. This hierarchy is based on the inputs
to the fair value measurement and reflects the lowest level input
that is significant to that measurement.
All assets and liabilities held at fair value are classified as
fair value through profit or loss at 30 June 2022, except for $325
million of financial assets classified as available-for-sale (30
June 2021: nil; 31 December 2021: $909 million). In the current
year all of this related to the Group's retained interest in
Jackson's equity securities (30 June 2021: nil; 31 December 2021:
$683 million). All assets and liabilities held at fair value are
measured on a recurring basis. As of 30 June 2022, the Group did
not have any financial instruments that are measured at fair value
on a non-recurring basis.
Financial instruments at fair value
30 Jun 2022 $m
-----------------------------------------------------------
Level 1 Level 2 Level 3
------------------ -------------- --------------
Valuation Valuation
based on based on
Quoted prices significant significant
(unadjusted) observable unobservable
in active markets market inputs market inputs Total
note (i) note (ii)
------------------------------------------------------- ------------------ -------------- -------------- -------
Loans - 471 4 475
Equity securities and holdings in collective investment
schemes 49,727 7,193 577 57,497
Debt securities 57,125 21,954 40 79,119
Derivative assets 48 134 - 182
Derivative liabilities (461) (310) - (771)
------------------------------------------------------- ------------------ -------------- -------------- -------
Total financial investments, net of derivative
liabilities 106,439 29,442 621 136,502
Investment contract liabilities without discretionary
participation features - (727) - (727)
Net asset value attributable to unit holders of
consolidated investment funds (4,546) (3) - (4,549)
------------------------------------------------------- ------------------ -------------- -------------- -------
Total financial instruments at fair value 101,893 28,712 621 131,226
Percentage of total (%) 78% 22% 0% 100%
------------------------------------------------------- ------------------ -------------- -------------- -------
Analysed by business type:
Financial investments, net of derivative liabilities at
fair value:
With-profits 66,775 15,612 503 82,890
Unit-linked 21,201 2,084 4 23,289
Non-linked shareholder-backed business 18,463 11,746 114 30,323
------------------------------------------------------ ------------------ -------------- -------------- -------
Total financial investments net of derivative
liabilities, at fair value 106,439 29,442 621 136,502
Percentage of total (%) 78% 22% 0% 100%
Total financial investments net of derivative
liabilities, at fair value 106,439 29,442 621 136,502
Other financial liabilities at fair value (4,546) (730) - (5,276)
------------------------------------------------------- ------------------ -------------- -------------- -------
Total financial instruments at fair value 101,893 28,712 621 131,226
------------------------------------------------------- ------------------ -------------- -------------- -------
30 Jun 2021 $m
-----------------------------------------------------------
Level 1 Level 2 Level 3
------------------ -------------- --------------
Valuation Valuation
based on based on
Quoted prices significant significant
(unadjusted) observable unobservable
in active markets market inputs market inputs Total
Continuing operations: note (i) note (ii)
------------------------------------------------------- ------------------ -------------- -------------- -------
Loans - 560 5 565
Equity securities and holdings in collective investment
schemes 52,299 7,695 472 60,466
Debt securities 75,221 17,475 32 92,728
Derivative assets 391 94 - 485
Derivative liabilities (192) (220) - (412)
------------------------------------------------------- ------------------ -------------- -------------- -------
Total financial investments, net of derivative
liabilities 127,719 25,604 509 153,832
Investment contract liabilities without discretionary
participation features - (825) - (825)
Net asset value attributable to unit holders of
consolidated investment funds (5,770) - - (5,770)
------------------------------------------------------- ------------------ -------------- -------------- -------
Total financial instruments at fair value 121,949 24,779 509 147,237
Percentage of total (%) 83% 17% 0% 100%
------------------------------------------------------- ------------------ -------------- -------------- -------
Analysed by business type:
Financial investments net of derivative liabilities, at
fair value
With-profits 80,526 12,874 415 93,815
Unit-linked 25,279 985 - 26,264
Non-linked shareholder-backed business 21,914 11,745 94 33,753
------------------------------------------------------ ------------------ -------------- -------------- -------
Total financial investments net of derivative
liabilities, at fair value 127,719 25,604 509 153,832
Percentage of total (%) 83% 17% 0% 100%
------------------------------------------------------- ------------------ -------------- -------------- -------
Total financial investments net of derivative
liabilities, at fair value 127,719 25,604 509 153,832
Other financial liabilities at fair value (5,770) (825) - (6,595)
------------------------------------------------------- ------------------ -------------- -------------- -------
Total financial instruments at fair value 121,949 24,779 509 147,237
------------------------------------------------------- ------------------ -------------- -------------- -------
31 Dec 2021 $m
-----------------------------------------------------------
Level 1 Level 2 Level 3
Valuation Valuation
based on based on
Quoted prices significant significant
(unadjusted) observable unobservable
in active markets market inputs market inputs Total
note (i) note (ii)
------------------------------------------------------- ------------------ -------------- -------------- -------
Loans - 616 5 621
Equity securities and holdings in collective investment
schemes 54,107 6,917 577 61,601
Debt securities 76,049 22,987 58 99,094
Derivative assets 359 122 - 481
Derivative liabilities (146) (116) - (262)
------------------------------------------------------- ------------------ -------------- -------------- -------
Total financial investments, net of derivative
liabilities 130,369 30,526 640 161,535
Investment contract liabilities without discretionary
participation features - (814) - (814)
Net asset value attributable to unit holders of
consolidated investment funds (5,618) (46) - (5,664)
------------------------------------------------------- ------------------ -------------- -------------- -------
Total financial instruments at fair value 124,751 29,666 640 155,057
Percentage of total (%) 81% 19% 0% 100%
------------------------------------------------------- ------------------ -------------- -------------- -------
Analysed by business type:
Financial investments net of derivative liabilities, at
fair value
With-profits 82,489 15,438 506 98,433
Unit-linked 24,024 2,343 5 26,372
Non-linked shareholder-backed business 23,856 12,745 129 36,730
------------------------------------------------------ ------------------ -------------- -------------- -------
Total financial investments net of derivative
liabilities, at fair value 130,369 30,526 640 161,535
Percentage of total (%) 81% 19% 0% 100%
Total financial investments net of derivative
liabilities, at fair value 130,369 30,526 640 161,535
Other financial liabilities at fair value (5,618) (860) - (6,478)
------------------------------------------------------- ------------------ -------------- -------------- -------
Total financial instruments at fair value 124,751 29,666 640 155,057
------------------------------------------------------- ------------------ -------------- -------------- -------
Notes
(i) Of the total level 2 debt securities of $21,954 million at
30 June 2022, (30 June 2021: $17,475 million; 31 December 2021:
$22,987 million), $33 million (30 June 2021: $163 million; 31
December 2021: $24 million) are valued internally.
(ii) At 30 June 2022, the Group held $621 million (30 June 2021:
$509 million; 31 December 2021: $640 million) of net financial
instruments at fair value within level 3. This represents less than
0.5 per cent of the total fair valued financial assets, net of
financial liabilities, for all periods and comprises the
following:
- Equity securities and holdings in collective investment
schemes of $577 million (30 June 2021: $472 million; 31 December
2021: $577 million) consisting primarily of property and
infrastructure funds held by the participating funds, which are
externally valued using the net asset value of the invested
entities. Equity securities of $1 million (30 June 2021: $4
million; 31 December 2021: $1 million) are internally valued,
representing less than 0.1 per cent for all periods of the total
fair valued financial assets net of financial liabilities. Internal
valuations are inherently more subjective than external valuations;
and
- Other sundry individual financial instruments of a net asset
of $44 million (30 June 2021: $37 million; 31 December 2021: $63
million).
Of the net financial instruments of $621 million at 30 June 2022
(30 June 2021: $509 million; 31 December 2021: $640 million)
referred to above:
- A net asset of $507 million (30 June 2021: $415 million; 31
December 2021: $511 million) is held by the Group's with-profits
and unit-linked funds and therefore shareholders' profit and equity
are not impacted by movements in the valuation of these financial
instruments; and
- A net asset of $114 million (30 June 2021: $94 million; 31
December 2021: $129 million) is held to support non-linked
shareholder-backed business, of which $112 million (30 June 2021:
$90 million; 31 December 2021: $112 million) are primarily private
equity investments and corporate bonds externally valued using the
net asset value of the invested entities and external prices
adjusted to reflect the specific known conditions relating the
these bonds (eg distressed securities) and are therefore inherently
less subjective than internal valuations. If the value of all these
level 3 financial instruments decreased by 10 per cent, the change
in valuation would be $(11) million (30 June 2021: $(9) million; 31
December 2021: $(26) million), which would reduce shareholders'
equity by this amount before tax. All of this amount would pass
through the income statement substantially as part of short-term
fluctuations in investment returns outside of adjusted operating
profit.
(b) Transfers into and transfers out of levels
The Group's policy is to recognise transfers into and out of
levels as of the end of each reporting period except for material
transfers which are recognised as of the date of the event or
change in circumstances that caused the transfer. Transfers are
deemed to have occurred when there is a material change in the
observed valuation inputs or a change in the level of trading
activities of the securities.
During the first half of 2022, the transfers between levels
within the portfolios were primarily transfers from level 1 to
level 2 of $3,867 million and transfers from level 2 to level 1 of
$1,603 million. These transfers primarily reflect the change in the
observed valuation inputs of equity securities and debt securities
and, in certain cases, the change in the level of trading
activities of the securities. There were transfers from level 3 to
level 2 of $15 million in the period.
Reconciliation of movements in level 3 assets and liabilities
measured at fair value
The following table reconciles the value of level 3 fair valued
assets and liabilities at the beginning of the period to that
presented at the end of the period.
Total investment return recorded in the income statement
represents interest and dividend income, realised gains and losses,
unrealised gains and losses on the assets classified at fair value
through profit and loss and foreign exchange movements on an
individual entity's overseas investments. Total gains and losses
recorded in other comprehensive income from continuing operations
comprises the translation of investments into the Group's
presentational currency of US dollars.
Half year 2022 $m
--------------------------------------------------
Equity securities
and holdings in
collective investment Debt Group
Loans schemes securities total
----------------------------------------------------- ----- ---------------------- ----------- ------
Balance at beginning of period 5 577 58 640
Total losses in income statement(note) (1) (47) (1) (49)
Total losses recorded in other comprehensive income - (14) (2) (16)
Purchases and other additions - 61 - 61
Transfers out of level 3 - - (15) (15)
----------------------------------------------------- ----- ---------------------- ----------- ------
Balance at end of period 4 577 40 621
----------------------------------------------------- ----- ---------------------- ----------- ------
Half year 2021 $m
-------------------------------------------------------
Equity securities
and holdings in
collective investment Debt
Continuing operations Loans schemes securities Group total
----------------------------------------------------- ----- ---------------------- ----------- -----------
Balance at beginning of period 6 445 33 484
Total (losses) gains in income statement(note) (1) 21 - 20
Total losses recorded in other comprehensive income - (5) (1) (6)
Purchases and other additions - 11 - 11
----------------------------------------------------- ----- ---------------------- ----------- -----------
Balance at end of period 5 472 32 509
----------------------------------------------------- ----- ---------------------- ----------- -----------
Full year 2021 $m
-------------------------------------------------------
Equity securities
and holdings in
collective investment Debt
Continuing operations Loans schemes securities Group total
----------------------------------------------------- ----- ---------------------- ----------- -----------
Balance at beginning of year 6 445 33 484
Total (losses) gains in income statement(note) (1) 6 (3) 2
Total losses recorded in other comprehensive income - (5) (2) (7)
Purchases and other additions - 143 - 143
Transfers (out of) into level 3 - (12) 30 18
----------------------------------------------------- ----- ---------------------- ----------- -----------
Balance at end of year 5 577 58 640
----------------------------------------------------- ----- ---------------------- ----------- -----------
Note
Of the total net (losses) gains in the income statement of $(49)
million at half year 2022 (half year 2021: $20 million; full year
2021: $2 million), $(26) million (half year 2021: $20 million; full
year 2021: $2 million) relates to net unrealised gains and losses
of financial instruments still held at the end of the period, which
can be analysed as follows:
2022 $m 2021 $m
--------- --------------------
Half year Half year Full year
---------------------------------------------------------------- --------- --------- ---------
Loans (1) (1) (1)
Equity securities and holdings in collective investment schemes (24) 21 6
Debt securities (1) - (3)
---------------------------------------------------------------- --------- --------- ---------
Total net (losses) gains (26) 20 2
---------------------------------------------------------------- --------- --------- ---------
(c) Assets and liabilities at amortised cost and their fair value
The table below shows the financial assets and liabilities
carried at amortised cost on the statement of financial position
and their fair value. Cash deposits, accrued income, other debtors,
accruals, deferred income and other liabilities are excluded from
the analysis below, as these are carried at amortised cost which
approximates fair value. The carrying value of investment contracts
with discretionary participation features is on an IFRS 4 basis,
which is also excluded from the analysis below, as it is
impractical to determine the fair value of these contracts due to
the lack of a reliable basis to measure participation features.
2022 $m 2021 $m
----------------- -------- ----------------- -------
30 Jun 30 Jun 31 Dec
----------------- ----------------- -----------------
Carrying Fair Carrying Fair Carrying Fair
value value value value value value
--------------------------------------------------------- -------- ------- -------- ------- -------- -------
Assets:
Loans 1,954 2,103 1,875 2,245 1,941 2,152
Liabilities:
Core structural borrowings of shareholder-financed
businesses (4,266) (4,073) (6,404) (7,029) (6,127) (6,565)
Operational borrowings (excluding lease liabilities) (568) (568) (500) (500) (514) (514)
Obligations under funding, securities lending and sale
and repurchase agreements (799) (799) (396) (396) (223) (223)
--------------------------------------------------------- -------- ------- -------- ------- -------- -------
Total net financial assets (liabilities) at amortised
cost (3,679) (3,337) (5,425) (5,680) (4,923) (5,150)
--------------------------------------------------------- -------- ------- -------- ------- -------- -------
C3 Policyholder liabilities and unallocated surplus
C3.1 Policyholder liabilities and unallocated surplus by business type
(a) Movement in policyholder liabilities and unallocated surplus of with-profits funds
The items below represent the amount attributable to changes in
policyholder liabilities and unallocated surplus of with-profits
funds as a result of each of the components listed for the
insurance operations of the Group. The policyholder liabilities
shown include investment contracts without discretionary
participation features (as defined in IFRS 4) and their full
movement in the period. The items are shown gross of external
reinsurance.
Half year 2022 $m
--------------------------------------------------
With- Shareholder-backed business Total
-----------------------------
profits Unit-linked Other
business liabilities business
--------------------------------------------------------------- --------- ---------------- ----------- --------
At beginning of period 94,002 34,756 48,496 177,254
Comprising:
---------------------------------------------------------------- --------- ---------------- ----------- --------
Policyholder liabilities on the balance sheet 88,618 25,651 37,646 151,915
Unallocated surplus of with-profits funds on the balance sheet
note (i) 5,384 - - 5,384
Group's share of policyholder liabilities relating to joint
ventures and associates note
(ii) - 9,105 10,850 19,955
--------------------------------------------------------------- --------- ---------------- ----------- --------
Premiums:note (iii)
New business 1,456 1,231 1,607 4,294
In-force 2,867 1,219 2,694 6,780
--------------------------------------------------------------- --------- ---------------- ----------- --------
4,323 2,450 4,301 11,074
Surrendersnotes (iii)(iv) (558) (1,426) (293) (2,277)
Maturities/deaths/other claim events (993) (127) (842) (1,962)
---------------------------------------------------------------- --------- ---------------- ----------- --------
Net flows 2,772 897 3,166 6,835
Shareholders' transfers post tax (74) - - (74)
Investment-related items and other movementsnote (v) (16,422) (2,396) (12,391) (31,209)
Foreign exchange translation differencesnote (vi) (1,297) (1,522) (1,563) (4,382)
---------------------------------------------------------------- --------- ---------------- ----------- --------
At end of period 78,981 31,735 37,708 148,424
---------------------------------------------------------------- --------- ---------------- ----------- --------
Comprising:
---------------------------------------------------------------- --------- ---------------- ----------- --------
Policyholder liabilities on the balance sheet 74,413 23,037 26,079 123,529
Unallocated surplus of with-profits funds on the balance sheet
note (i) 4,568 - - 4,568
Group's share of policyholder liabilities relating to joint
ventures and associates note
(ii) - 8,698 11,629 20,327
--------------------------------------------------------------- --------- ---------------- ----------- --------
Half year 2021 $m
--------------------------------------------------
With- Shareholder-backed business Total
-----------------------------
profits Unit-linked Other Asia and
Continuing operations: business liabilities business Africa
---------------------------------------------------------------- --------- ---------------- ----------- --------
At beginning of period 86,410 32,506 46,639 165,555
Comprising:
---------------------------------------------------------------- --------- ---------------- ----------- --------
Policyholder liabilities on the balance sheet 81,193 25,433 38,107 144,733
Unallocated surplus of with-profits funds on the balance sheet
note (i) 5,217 - - 5,217
Group's share of policyholder liabilities relating to joint
ventures and associates note
(ii) - 7,073 8,532 15,605
--------------------------------------------------------------- --------- ---------------- ----------- --------
Premiums:note (iii)
New business 900 1,237 942 3,079
In-force 3,617 1,211 2,469 7,297
--------------------------------------------------------------- --------- ---------------- ----------- --------
4,517 2,448 3,411 10,376
Surrendersnotes (iii)(iv) (393) (1,724) (410) (2,527)
Maturities/deaths/other claim events (852) (101) (505) (1,458)
---------------------------------------------------------------- --------- ---------------- ----------- --------
Net flows 3,272 623 2,496 6,391
Shareholders' transfers post-tax (62) - - (62)
Investment-related items and other movementsnote (v) 201 997 (2,994) (1,796)
Foreign exchange translation differencesnote (vi) (578) (532) (230) (1,340)
---------------------------------------------------------------- --------- ---------------- ----------- --------
At end of period 89,243 33,594 45,911 168,748
---------------------------------------------------------------- --------- ---------------- ----------- --------
Comprising:
---------------------------------------------------------------- --------- ---------------- ----------- --------
Policyholder liabilities on the balance sheet 82,970 25,615 36,224 144,809
Unallocated surplus of with-profits funds on the balance sheet
note (i) 6,273 - - 6,273
Group's share of policyholder liabilities relating to joint
ventures and associates note
(ii) - 7,979 9,687 17,666
--------------------------------------------------------------- --------- ---------------- ----------- --------
Average policyholder liability balancesnote (vii)
Half year 2022 81,516 33,245 43,102 157,863
Half year 2021 82,082 33,050 46,275 161,407
--------------------------------------------------------------- --------- ---------------- ----------- --------
Notes
(i) Unallocated surplus of with-profits funds represents the
excess of assets over policyholder liabilities, determined in
accordance with the Group's accounting policies, that have yet to
be appropriated between policyholders and shareholders for the
Group's with-profits funds in Hong Kong and Malaysia. In Hong Kong,
the unallocated surplus includes the shareholders' share of
expected future bonuses, with the expected policyholder share being
included in policyholder liabilities. Any excess of assets over
liabilities and amounts expected to be paid out by the fund on
future bonuses is also included in the unallocated surplus.
(ii) The Group's investments in joint ventures and associates
are accounted for on an equity method and the Group's share of the
policyholder liabilities as shown above relate to the life business
of CPL, India and the Takaful business in Malaysia.
(iii) The analysis includes the impact of premiums, claims and
investment movements on policyholders' liabilities. The impact does
not represent premiums, claims and investment movements as reported
in the income statement. For example, premiums shown above are
after any deductions for fees/charges; claims (surrenders,
maturities, deaths and other claim events) shown above represent
the policyholder liabilities provision released rather than the
claims amount paid to the policyholder. The analysis also includes
net flows of the Group's insurance joint ventures and
associate.
(iv) The rate of surrenders for shareholder-backed business
(expressed as a percentage of opening policyholder liabilities) was
2.1 per cent in half year 2022 (half year 2021: 2.7 per cent).
(v) Investment-related items and other movements in the first
half of 2022 primarily represents the effects of higher interest
rates on the discount rates applied in the measurement of the
policyholder liabilities, together with bond losses due to rising
interest rates and lower level of investment returns from equities
following the falls in equity markets. Other business also includes
the effect of the early adoption of the Risk-based Capital Regime
in Hong Kong as discussed in note C3.2 below.
(vi) Movements in the period have been translated at the average
exchange rates for the period ended 30 June 2022 and 2021. The
closing balance has been translated at the closing spot rates as at
30 June 2022 and 2021. Differences upon retranslation are included
in foreign exchange translation differences.
(vii) Average policyholder liabilities have been based on
opening and closing balances, adjusted for any acquisitions,
disposals and other corporate transactions arising in the period,
and exclude unallocated surplus of with-profits funds.
C3.2 Reconciliation of gross and reinsurers' share of
policyholder liabilities and unallocated surplus
Further analysis of the movement in the period of the Group's
gross contract liabilities, reinsurers' share of insurance contract
liabilities and unallocated surplus of with-profits funds
(excluding those held by joint ventures and associates) is provided
below:
Half year 2022 $m
--------------------------------------------------------
Reinsurers' share Unallocated
Contract of insurance surplus of
liabilities contract liabilities with-profits funds
----------------------------------------------------------- ------------ --------------------- -------------------
At beginning of period 151,915 (9,753) 5,384
(Income) expense included in the income statementnote (i) (25,193) 6,942 (779)
Other movementsnote (ii) 69 - -
Foreign exchange translation differences (3,262) 61 (37)
----------------------------------------------------------- ------------ --------------------- -------------------
At end of period 123,529 (2,750) 4,568
----------------------------------------------------------- ------------ --------------------- -------------------
Half year 2021 $m
--------------------------------------------------------
Reinsurers' share Unallocated
Contract of insurance surplus of
liabilities contract liabilities with-profits funds
----------------------------------------------------------- ------------ --------------------- -------------------
At beginning of period 441,246 (46,595) 5,217
Reclassification of US operations as held for distribution (296,513) 35,232 -
Expense included in the income statementnote (i) 1,354 1,450 1,070
Other movementsnote (ii) 25 - -
Foreign exchange translation differences (1,303) 22 (14)
----------------------------------------------------------- ------------ --------------------- -------------------
At end of period 144,809 (9,891) 6,273
----------------------------------------------------------- ------------ --------------------- -------------------
Notes
(i ) The total charge for benefit and claims in half year 2022
shown in the income statement comprises the amounts shown as
'(Income) expense included in the income statement' in the table
above together with claims paid of $(4,406) million in the period
(half year 2021: $( 4,143) million ) and claim amounts attributable
to reinsurers of $202 million (half year 2021: $ 269 million ).
(ii) Other movements include premiums received and claims paid
on investment contracts without discretionary participating
features, which are taken directly to the statement of financial
position in accordance with IAS 39.
The segmental analysis of the total charge for benefit and
claims and movement in unallocated surplus, net of reinsurance in
the income statement is shown below. The CPL segment is a joint
venture accounted for using the equity method under IFRS, with the
Group's share of its results net of related tax presented in a
single line within the Group's profit before tax, and therefore not
shown in the analysis of benefit and claims items below.
Half year 2022 $m
-------------------------------------------------------------
Growth
Hong markets Total
Kong Indonesia Malaysia Singapore and other segment
------------------------------------------------------- ------- --------- -------- --------- ---------- --------
Claims incurred, net of reinsurance (894) (609) (533) (1,345) (887) (4,268)
Decrease in policyholder liabilities, net of
reinsurance 13,090 187 157 2,865 2,016 18,315
Movement in unallocated surplus of with-profits funds 660 - 119 - - 779
------------------------------------------------------- ------- --------- -------- --------- ---------- --------
Benefits and claims and movement in unallocated
surplus,
net of reinsurance 12,856 (422) (257) 1,520 1,129 14,826
------------------------------------------------------- ------- --------- -------- --------- ---------- --------
Half year 2021 $m
-------------------------------------------------------------
Growth
Hong markets Total
Kong Indonesia Malaysia Singapore and other segment
------------------------------------------------------- ------- --------- -------- --------- ---------- --------
Claims incurred, net of reinsurance (818) (602) (482) (1,346) (755) (4,003)
(Increase) decrease in policyholder liabilities, net of
reinsurance (369) 266 (68) (2,197) (307) (2,675)
Movement in unallocated surplus of with-profits funds (1,121) - 51 - - (1,070)
------------------------------------------------------- ------- --------- -------- --------- ---------- --------
Benefits and claims and movement in unallocated
surplus,
net of reinsurance (2,308) (336) (499) (3,543) (1,062) (7,748)
------------------------------------------------------- ------- --------- -------- --------- ---------- --------
Hong Kong Risk-based Capital Regime
In April 2022, the Group's Hong Kong life business (PHKL)
received approval from the Hong Kong Insurance Authority to early
adopt the Hong Kong Risk-based Capital (HK RBC) regime with effect
from 1 January 2022. In light of this development and given that
the measurement technique set out within the local regulatory basis
has been applied by PHKL to calculate IFRS liabilities, the Group
has refined the reserving methodology of PHKL by reference to the
method applied under the new HK RBC regime. Under the basis
previously applied, liabilities of non-participating business were
generally determined on a net premium valuation basis to determine
the future policyholder benefit provisions, subject to minimum
floors. Using the principles underpinning the HK RBC regime, the
IFRS reserving basis has been refined at 30 June 2022 to one that
is based on a gross premium valuation basis (including an allowance
for the uncertainty of non-hedgeable risks), subject to minimum
floors. Depending on the product, the minimum floor is set at the
policyholder's asset share or guaranteed cash surrender value or at
a constraint that on day one no negative reserve exists at a
product level. This new measurement technique better estimates the
liability and brings the estimation basis for PHKL more in line
with that used by the Group's other insurance operations. This
change of estimate has reduced policyholder liabilities (net of
reinsurance) and increased profit before tax for the first half of
2022 by $945 million.
There has been no change to the reserving basis for with-profits
liabilities, which under the Group's accounting policy are valued
under the realistic basis in accordance with the requirements of
the "grandfathered" UK standard FRS 27 'Life Assurance'.
C4 Intangible assets
C4.1 Goodwill
Goodwill shown on the consolidated statement of financial
position at 30 June 2022 represents amounts allocated to businesses
in Asia and Africa in respect of both acquired asset management and
life businesses. There has been no impairment as at 30 June
2022.
2022 $m 2021 $m
------- --------------
30 Jun 30 Jun 31 Dec
-------------------------------------- ------- ------ ------
Carrying value at beginning of period 907 961 961
Exchange differences (36) (35) (54)
-------------------------------------- ------- ------ ------
Carrying value at end of period 871 926 907
-------------------------------------- ------- ------ ------
C4.2 Deferred acquisition costs and other intangible assets
2022 $m 2021 $m
------- --------------
30 Jun 30 Jun 31 Dec
------------------------------------------------------------------------------------------- ------- ------ ------
Shareholder-backed business:
DAC related to insurance contracts as classified under IFRS 4 2,845 2,468 2,776
DAC related to investment management contracts, including life assurance contracts
classified
as financial instruments and investment management contracts under IFRS 4 39 37 39
------------------------------------------------------------------------------------------- ------- ------ ------
DAC related to insurance and investment contracts 2,884 2,505 2,815
------------------------------------------------------------------------------------------- ------- ------ ------
Distribution rights 3,626 3,765 3,782
Present value of acquired in-force policies for insurance contracts as classified under
IFRS 4 22 31 28
Other intangibles 180 150 184
------------------------------------------------------------------------------------------- ------- ------ ------
Present value of acquired in-force and other intangibles 3,828 3,946 3,994
------------------------------------------------------------------------------------------- ------- ------ ------
Total of DAC and other intangible assets attributable to shareholdersnote (i) 6,712 6,451 6,809
Other intangible assets, including computer software, attributable to with-profits funds 38 74 49
------------------------------------------------------------------------------------------- ------- ------ ------
Total of deferred acquisition costs and other intangible assets 6,750 6,525 6,858
------------------------------------------------------------------------------------------- ------- ------ ------
Notes
(i) Movement in DAC and other intangible assets attributable to shareholders is shown below:
2022 $m 2021 $m
--------------------------------- --------- --------------------
Distribution Other Half year Half year Full year
DAC rights intangibles Total Total Total
note (ii) note (iii)
----------------------------------------- ----- ------------ ------------ --------- --------- ---------
Balance at beginning of period 2,815 3,782 212 6,809 20,275 20,275
Removal of discontinued US operations - - - - (13,881) (13,881)
Additions 426 44 27 497 475 1,185
Amortisation to the income statement (249) (143) (27) (419) (331) (651)
Disposals and transfers - - (3) (3) (3) (7)
Exchange differences and other movements (108) (57) (7) (172) (84) (112)
------------------------------------------- ----- ------------ ------------ --------- --------- ---------
Balance at end of period 2,884 3,626 202 6,712 6,451 6,809
------------------------------------------- ----- ------------ ------------ --------- --------- ---------
(ii) Distribution rights relate to amounts that have been paid
or have become unconditionally due for payment as a result of past
events in respect of the bancassurance partnership arrangements for
the bank distribution of Prudential's insurance products for a
fixed period of time . The distribution rights amounts are
amortised on a basis to reflect the pattern in which the future
economic benefits are expected to be consumed by reference to new
business production levels.
(iii) Other intangibles comprise present value of acquired
in-force (PVIF) related to insurance contracts and other intangible
assets such as software rights. Software rights include additions
of $17 million, amortisation of $(13) million, disposals of $(2)
million, foreign exchange of $(6) million and closing balance at 30
June 2022 of $110 million (30 June 2021: $81 million; 31 December
2021: $114 million).
C5 Borrowings
C5.1 Core structural borrowings of shareholder-financed
businesses
2022 $m 2021 $m
------- --------------
30 Jun 30 Jun 31 Dec
-------------------------------------------------------------------- ------- ------ ------
Subordinated debt:
US$250m 6.75% Notesnote (i) - 250 -
US$300m 6.5% Notesnote (i) - 300 -
US$700m 5.25% Notesnote (i) - 700 -
US$1,000m 5.25% Notesnote (i) - 1,000 1,000
US$725m 4.375% Notesnote (iii) - 725 725
US$750m 4.875% Notes 749 747 748
EUR20m Medium Term Notes 2023 21 24 23
GBP435m 6.125% Notes 2031 524 596 584
US$1,000m 2.95% Notes 2033note (ii) 995 - 995
Senior debt: note (iv)
GBP300m 6.875% Notes 2023 363 411 404
GBP250m 5.875% Notes 2029 282 317 313
$1,000m 3.125% Notes 2030 986 984 985
$350m 3.625% Notes 2032note (v) 346 - -
Bank loans:
$350m Loan 2024note (v) - 350 350
-------------------------------------------------------------------- ------- ------ ------
Total core structural borrowings of shareholder-financed businesses 4,266 6,404 6,127
--------------------------------------------------------------------- ------- ------ ------
Notes
(i) The US$250 million, US$300 million, US$700 million notes
were redeemed on 23 December 2021 and the US$1,000 million notes
were redeemed on 20 January 2022 using the proceeds from the
issuance of ordinary shares in October 2021.
(ii) In November 2021, the Company issued US$1,000 million 2.95
per cent subordinated debt maturing on 3 November 2033 with
proceeds, net of costs, of $995 million.
(iii) The US$725 million note was redeemed on 20 January 2022
using the proceeds from the US$1,000 million subordinated debt
issued in November 2021.
(iv) The senior debt ranks above subordinated debt in the event
of liquidation.
(v) In March 2022, the Company issued US$350 million 3.625 per
cent senior debt maturing on 24 March 2032 with proceeds, net of
costs, of $346 million, which was used to redeem the US$350 million
bank loan in May 2022.
C5.2 Operational borrowings
2022 $m 2021 $m
------- --------------
30 Jun 30 Jun 31 Dec
---------------------------------------------------------------------------------------- ------- ------ ------
Shareholder-financed business:
Borrowings in respect of short-term fixed income securities programmes (commercial paper) 544 500 500
Lease liabilities under IFRS 16 177 239 209
Other borrowings 5 - 10
----------------------------------------------------------------------------------------- ------- ------ ------
Operational borrowings attributable to shareholder-financed businesses 726 739 719
----------------------------------------------------------------------------------------- ------- ------ ------
With profits business:
Lease liabilities under IFRS 16 109 156 138
Other borrowings 19 - 4
----------------------------------------------------------------------------------------- ------- ------ ------
Operational borrowings attributable to with-profits businesses 128 156 142
----------------------------------------------------------------------------------------- ------- ------ ------
Total operational borrowings 854 895 861
----------------------------------------------------------------------------------------- ------- ------ ------
C6 Sensitivity analysis to key market risks
The Group's risk framework and the management of risks attaching
to the Group's financial statements including financial assets,
financial liabilities and insurance liabilities, together with the
inter-relationship with the management of capital, have been
included in the Risk review report. The following sections set out
the sensitivity of the Group's profit or loss and shareholders'
equity to instantaneous changes in interest rates and equity
levels, which are then assumed to remain unchanged for the long
term. Further information of the Group's sensitivity to key risks
was set out in the Group's financial statements for the year ended
31 December 2021.
C6.1 Insurance operations
The table below shows the sensitivity of shareholders' equity as
at 30 June 2022, 30 June 2021 and 31 December 2021 for insurance
operations to the following market risks:
- 1 per cent increase and 0.5 per cent decrease in interest
rates (based on local government bond yields at the valuation date)
in isolation and subject to a floor of zero; and
- Instantaneous 10 per cent rise and 20 per cent fall in the
market value of equity and property assets. The equity risk
sensitivity analysis assumes that all equity indices fall by the
same percentage.
The sensitivities below only allow for limited management
actions such as changes to policyholder bonuses, where applicable.
If the economic conditions set out in the sensitivities persisted,
the financial impacts may differ to the instantaneous impacts shown
below. Given the continuous risk management processes in place,
management could take additional actions to help mitigate the
impact of these stresses, including (but not limited to)
rebalancing investment portfolios, increased use of reinsurance,
repricing of in-force benefits, changes to new business pricing and
the mix of new business being sold.
Where liabilities are valued using historic average rates for a
short period (ie up to three years), the valuation interest rates
are adjusted to assume a parallel increase or decrease in the
interest rates used in the averaging approach to reflect the impact
that could be seen in the near term. These sensitivities do not
include credit risk sensitivities, such as movements in credit
spreads, and hence the valuation of debt securities and
policyholder liabilities. A one-letter credit downgrade in
isolation (ie ignoring any consequential change in valuation) would
not have a material impact on IFRS profit or shareholders'
equity.
Net effect on shareholders' equity from insurance operations 2022 $m 2021 $m
------- --------------
30 Jun 30 Jun 31 Dec
------------------------------------------------------------- ------- ------ ------
Shareholders' equity of insurance operations 13,308 13,287 14,289
Sensitivity to key market risks: (note)
Interest rates and consequential effects - 1% increase (680) (533) (796)
Interest rates and consequential effects - 0.5% decrease 121 (381) 137
Equity/property market values - 10% rise 305 387 372
Equity/property market values - 20% fall (750) (803) (787)
------------------------------------------------------------- ------- ------ ------
Note
The effect from the changes in interest rates or equity and
property prices above, if they arose, would impact profit after tax
for the insurance operations and would mostly be recorded within
short-term fluctuations in investment returns. The impact on profit
after tax would be the same as the net effect on shareholders'
equity. In the context of the Group, the results of the Africa
insurance operations are not materially impacted by interest rate
or equity rate changes.
The degree of sensitivity of the results of the non-linked
shareholder-backed business of the insurance operations to
movements in interest rates depends upon the degree to which the
liabilities under the 'grandfathered' IFRS 4 measurement basis
reflects market interest rates from period to period. This varies
by business unit.
For example:
- Certain businesses (Taiwan and India) apply US GAAP, for which
the results can be more sensitive as the effect of interest rate
movements on the backing investments may not be offset by liability
movements; and
- The level of options and guarantees in the products written in
a particular business unit will affect the degree of sensitivity to
interest rate movements.
The sensitivity of the insurance operations presented as a whole
at a given point in time will also be affected by a change in the
relative size of the individual businesses.
The 'increase of 1%' sensitivities reflects that, for many
operations the impact of interest rate movements on the value of
government and corporate bond investments dominates, namely bonds
are expected to decrease in value as interest rates increase to a
greater extent than the offsetting decrease in liabilities from a
corresponding change in discount rates. This arises because the
discount rate in some operations does not fluctuate in line with
interest rate movements.
Following a general increase in interest rates over 2021 and
first half of 2022, under a 0.5% decrease interest rate scenario
for most operations asset gains exceed the increases in liabilities
resulting in an overall small positive impact of an instantaneous
decrease of rates .
Movements in equities backing with-profits and unit-linked
business have been excluded from the equity and property
sensitivities as they are generally matched by an equal movement in
insurance liabilities (including unallocated surplus of
with-profits funds). The impact on changes to future profitability
as a result of changes to the asset values within unit-linked or
with-profits funds have not been included in the instantaneous
sensitivity above. The estimated sensitivities shown above include
equity and property investments held by the Group's joint venture
and associate businesses. Generally, changes in equity and property
investment values held outside unit-linked and with-profits funds
are not directly offset by movements in non-linked policyholder
liabilities. For Hong Kong's non-participating business,
liabilities largely reflect asset shares post the adoption of HK
RBC and therefore the consequential movements in equities are
offset by movements in policyholder liabilities.
C6.2 Eastspring and central operations
The profit for the period of Eastspring is sensitive to the
level of assets under management, as this significantly affects the
value of management fees earned by the business in the current and
future periods. Assets under management will rise and fall as
market conditions change, with a consequential impact on
profitability.
Eastspring holds a small amount of investments direct on its
balance sheet, including investments in respect of seeding capital
into retail funds it sells to third parties (see note C.1).
Eastspring's profit will therefore have some exposure to the market
movements of these investments.
At 30 June 2022, the Group's central operations held a 14.3 per
cent (31 December 2021: 18.4 per cent) economic interest in the
equity securities of Jackson. These equity securities are listed on
the New York Stock Exchange and classified as 'available-for-sale'
with a fair value of $325 million at 30 June 2022 (31 December
2021: $683 million). If the value of these securities decreased by
20 per cent, the change in valuation would be $(65) million (31
December 2021: $(137) million), which would reduce shareholders'
equity by this amount before tax, all of which would pass through
other comprehensive income outside of the profit or loss.
C7 Deferred tax assets and liabilities
The statement of financial position contains the following
deferred tax assets and liabilities in relation to:
Half year 2022 $m
----------------------- ----------------------- -----------------
Other
movements
including
Movement in foreign
Balance income exchange Balance
at beginning of period statement movements at end of period
------------------------ ----------------------- ----------------------- ----------- ---------- -----------------
Deferred tax assets
Unrealised losses or
gains on investments 3 173 (7) 169
Balances relating to
investment and
insurance contracts 34 1 (34) 1
Short-term temporary
differences 162 32 (10) 184
Unused tax losses 67 (41) (2) 24
------------------------ ----------------------- ----------------------- ----------- ---------- -----------------
Total deferred tax
assets 266 165 (53) 378
------------------------ ----------------------- ----------------------- ----------- ---------- -----------------
Deferred tax liabilities
Unrealised losses or
gains on investments (242) 99 6 (137)
Balances relating to
investment and
insurance contracts (2,125) (52) 113 (2,064)
Short-term temporary
differences (495) (25) 22 (498)
------------------------ ----------------------- ----------------------- ----------- ---------- -----------------
Total deferred tax
liabilities (2,862) 22 141 (2,699)
------------------------ ----------------------- ----------------------- ----------- ---------- -----------------
Half year 2021 $m
--------------------------------------------------------------------------------------------
Other
movements
including
Removal of Movement in foreign
Balance discontinued income exchange Balance
at beginning of period US operations statement movements at end of period
------------------------ ----------------------- ----------------------- ----------- ---------- -----------------
Deferred tax assets
Unrealised losses or
gains on investments - - 1 - 1
Balances relating to
investment and
insurance contracts 87 - (1) (37) 49
Short-term temporary
differences 4,662 (4,513) 5 (3) 151
Unused tax losses 109 (29) 16 1 97
------------------------ ----------------------- ----------------------- ----------- ---------- -----------------
Total deferred tax
assets 4,858 (4,542) 21 (39) 298
------------------------ ----------------------- ----------------------- ----------- ---------- -----------------
Deferred tax liabilities
Unrealised losses or
gains on investments (1,063) 691 73 2 (297)
Balances relating to
investment and
insurance contracts (1,765) - (322) 71 (2,016)
Short-term temporary
differences (3,247) 2,832 (14) 7 (422)
------------------------ ----------------------- ----------------------- ----------- ---------- -----------------
Total deferred tax
liabilities (6,075) 3,523 (263) 80 (2,735)
------------------------ ----------------------- ----------------------- ----------- ---------- -----------------
Full year 2021 $m
-------------------------------------------------------------------------------
Other
movements
including
Removal of Movement in foreign
Balance discontinued income exchange Balance
at beginning of year US operations statement movements at end of year
------------------------------------- --------------------- -------------- ----------- ---------- ---------------
Deferred tax assets
Unrealised losses or gains on
investments - - 3 - 3
Balances relating to investment and
insurance contracts 87 - (16) (37) 34
Short-term temporary differences 4,662 (4,513) 15 (2) 162
Unused tax losses 109 (29) (14) 1 67
------------------------------------- --------------------- -------------- ----------- ---------- ---------------
Total deferred tax assets 4,858 (4,542) (12) (38) 266
------------------------------------- --------------------- -------------- ----------- ---------- ---------------
Deferred tax liabilities
Unrealised losses or gains on
investments (1,063) 691 127 3 (242)
Balances relating to investment and
insurance contracts (1,765) - (433) 73 (2,125)
Short-term temporary differences (3,247) 2,832 (87) 7 (495)
------------------------------------- --------------------- -------------- ----------- ---------- ---------------
Total deferred tax liabilities (6,075) 3,523 (393) 83 (2,862)
------------------------------------- --------------------- -------------- ----------- ---------- ---------------
C8 Share capital, share premium and own shares
30 Jun 2022 30 Jun 2021 31 Dec 2021
------------------------------- ------------------------------- --------------------------------
Number of Number of Number of
Issued shares ordinary Share Share ordinary Share Share ordinary Share Share
of 5p each shares capital premium shares capital premium shares capital premium
fully paid: $m $m $m $m $m $m
-------------- ------------- ------- ------- ------------- ------- ------- ------------- ------- --------
Balance at
beginning of
period 2,746,412,265 182 5,010 2,609,489,702 173 2,637 2,609,489,702 173 2,637
Shares issued
under
share-based
schemes 2,902,591 - - 6,121,839 - 8 6,142,213 - 8
Shares issued
under Hong
Kong public
offer and
international
placing in
2021(note) - - - - - - 130,780,350 9 2,365
-------------- ------------- ------- ------- ------------- ------- ------- ------------- ------- --------
Balance at end
of period 2,749,314,856 182 5,010 2,615,611,541 173 2,645 2,746,412,265 182 5,010
-------------- ------------- ------- ------- ------------- ------- ------- ------------- ------- --------
Note
In October 2021, Prudential completed the issuance of new
ordinary shares on the Hong Kong Stock Exchange, resulting in net
proceeds and an increase in shareholders' equity of $2.4 billion.
The proceeds from this issuance were used to redeem high coupon
debt instruments of US$2.3 billion in total in December 2021 and
January 2022, with the remainder used to increase Prudential's
central stock of liquidity, as originally intended and disclosed in
Prudential's prospectus for the issuance. Further details are
provided in note C8 of the Group's consolidated financial
statements for the year ended 31 December 2021.
Options outstanding under save as you earn schemes to subscribe
for shares at each period end shown below are as follows:
Number of shares Share price range Exercisable
-------------------
to subscribe for from to by year
------------ ---------------- ------- ---------- -----------
30 Jun 2022 1,734,638 964p 1,455p 2027
30 Jun 2021 1,774,131 964p 1,455p 2026
31 Dec 2021 2,022,535 964p 1,455p 2027
------------ ---------------- ------- ---------- -----------
Transactions by Prudential plc and its subsidiaries in
Prudential plc shares
The Group buys and sells Prudential plc shares ('own shares') in
relation to its employee share schemes. The cost of own shares of
$271 million at 30 June 2022 (30 June 2021: $261 million; 31
December 2021: $267 million) is deducted from retained earnings.
The Company has established trusts to facilitate the delivery of
shares under employee incentive plans. At 30 June 2022, 12.7
million (30 June 2021: 11.4 million; 31 December 2021: 11.7
million) Prudential plc shares with a market value of $157 million
(30 June 2021: $217 million; 31 December 2021: $201 million) were
held in such trusts, all of which are for employee incentive plans.
The maximum number of shares held during the period was 12.7
million which was in June 2022.
Within the trusts, shares are notionally allocated by business
unit reflecting the employees to which the awards were made.
The trusts purchased the following number of shares in respect
of employee incentive plans:
Number of shares
purchased Cost
(in millions) $m
--------------- ---------------- ----
Half year 2022 5.2 69.9
Half year 2021 2.8 60.1
Full year 2021 3.8 81.2
--------------- ---------------- ----
The cost in USD shown has been calculated from the share prices
in pounds sterling using the monthly average exchange rate for the
month in which those shares were purchased.
A portion of the share purchases in respect of employee
incentive plans as shown in the table above were made on the Hong
Kong Stock Exchange with the remainder being made on the London
Stock Exchange.
D Other information
D1 C orporate transactions
D1.1 Gain (loss) attaching to corporate transactions
2022 $m 2021 $m
--------- --------------------
Half year Half year Full year
----------------------------------------------------------------------------------- --------- --------- ---------
Gain (loss) attaching to corporate transactions as shown separately on the
condensed consolidated
income statement(note) 62 (56) (35)
Loss arising on reinsurance transaction undertaken by the Hong Kong business (35) (38) (59)
----------------------------------------------------------------------------------- --------- --------- ---------
Total gain (loss) attaching to corporate transactions(note B1.1) 27 (94) (94)
----------------------------------------------------------------------------------- --------- --------- ---------
Note
The gain (loss) attaching to corporate transactions includes a
gain of $60 million (half year 2021: nil; full year 2021: $23
million) from the sale of shares relating to the Group's retained
interest in Jackson post the demerger. Corporate transactions in
2021 also included amounts incurred by Prudential plc (half year
2021: $(28) million; full year 2021: $(30) million) in connection
with the separation of Jackson and $(28) million of payment for the
termination of loss of office made to the former chief executive of
Jackson.
D1.2 Discontinued US operations
On 13 September 2021, the Group completed the separation of its
US operations (Jackson) through a demerger, whereby the Group
retained a 19.9 per cent non-controlling voting interest (19.7 per
cent economic interest). In accordance with IFRS 5 'Non-current
assets held for sale and discontinued operations', the US
operations were classified as discontinued. The 2021 income
statement included the results of Jackson up to 13 September 2021,
the date of demerger.
The retained interest in Jackson is reported within the
consolidated statement of financial position as a financial
investment at fair value and is included in 'Unallocated to a
segment (central operations)' for segmental analysis. This
investment has been classified as available-for-sale under IAS 39.
In December 2021, Jackson repurchased 2.2 million shares of its
Class A common stock from Prudential, reducing Prudential's
remaining economic interest in Jackson to 18.4 per cent as of 31
December 2021 (18.5 per cent voting interest). During the first six
months of 2022, further transactions have reduced the Group's
holding to 14.3 per cent economic interest (14.3 per cent voting
interest) at 30 June 2022, realising a gain of $60 million. The
fair value of the Group's holding at 30 June 2022 was $325
million.
The results for the discontinued US operations presented in the
consolidated financial statements for the period up to the demerger
in September 2021 are analysed below.
(a) Income statement
2021 $m
--------------------
Half year Full year
--------------------------------------------------------------------------------------------- --------- ---------
Total revenue, net of reinsurance 35,379 45,972
--------------------------------------------------------------------------------------------- --------- ---------
Total charge, net of reinsurance (33,209) (43,655)
--------------------------------------------------------------------------------------------- --------- ---------
Profit before tax 2,170 2,317
Tax charge (370) (363)
--------------------------------------------------------------------------------------------- --------- ---------
Profit after tax 1,800 1,954
Remeasurement to fair valuenote (i) (7,507) (8,259)
Cumulative valuation movements on available-for-sale debt securities, net of related tax and
change in DAC, and net investment hedges recycled from other comprehensive incomenote (ii) - 1,278
--------------------------------------------------------------------------------------------- --------- ---------
Loss for the period (5,707) (5,027)
--------------------------------------------------------------------------------------------- --------- ---------
Attributable to:
Equity holders of the Company (5,073) (4,234)
Non-controlling interests (634) (793)
--------------------------------------------------------------------------------------------- --------- ---------
Loss for the period (5,707) (5,027)
--------------------------------------------------------------------------------------------- --------- ---------
Notes
(i) The loss on remeasurement to fair value on demerger was
recognised in accordance with IFRIC 17, 'Distribution of non-cash
assets to owners' as described above.
(ii) In accordance with IFRS, as a result of the demerger of
Jackson, accumulated balances previously recognised through other
comprehensive income relating to financial instruments held by
Jackson classified as available-for-sale and historical net
investment hedges were recycled from other comprehensive income to
the results of discontinued operations in the consolidated income
statement. Total shareholders' equity is unchanged as a result of
this recycling.
(b) Total comprehensive income
2021 $m
--------------------
Half year Full year
--------------------------------------------------------------------------------------------- --------- ---------
Loss for the period (5,707) (5,027)
Other comprehensive loss:
Valuation movements on available-for-sale debt securities, net of related tax and change in
DAC (867) (763)
Cumulative valuation movements on available-for-sale debt securities, net of related tax and
change in DAC, and net investment hedges recycled through profit or loss at the point of
demerger - (1,278)
---------------------------------------------------------------------------------------------- --------- ---------
Other comprehensive loss for the period (867) (2,041)
Total comprehensive loss for the period (6,574) (7,068)
---------------------------------------------------------------------------------------------- --------- ---------
Attributable to:
Equity holders of the Company (5,844) (6,283)
Non-controlling interests (730) (785)
---------------------------------------------------------------------------------------------- --------- ---------
Total comprehensive loss for the period (6,574) (7,068)
---------------------------------------------------------------------------------------------- --------- ---------
(c) Cash flows
2021 $m
--------------------
Half year Full year
------------------------------------------------- --------- ---------
Net cash flows from operating activities (442) (423)
Net cash flows from financing activities(note) (18) 2,329
Cash divested upon demerger - (3,527)
------------------------------------------------- --------- ---------
Net decrease in cash and cash equivalents (460) (1,621)
Cash and cash equivalents at beginning of period 1,621 1,621
------------------------------------------------- --------- ---------
Cash and cash equivalents at end of period 1,161 -
------------------------------------------------- --------- ---------
Note
Financing activities in full year 2021 largely reflected the
issuance of debt of $2,350 million. No dividends were paid by
Jackson during 2021 prior to demerger.
D2 Contingencies and related obligations
The Group is involved in various litigation and regulatory
proceedings. While the outcome of such litigation and regulatory
issues cannot be predicted with certainty, the Group believes that
their ultimate outcome will not have a material adverse effect on
the Group's financial condition, results of operations, or cash
flows.
There have been no material changes to the Group's contingencies
and related obligations in the six months ended 30 June 2022.
D3 Post balance sheet events
First interim ordinary dividend
The 2022 first interim ordinary dividend approved by the Board
of Directors after 30 June 2022 is as described in note B5.
D4 Related party transactions
There were no transactions with related parties during the six
months ended 30 June 2022 which have had a material effect on the
results or financial position of the Group.
The nature of the related party transactions of the Group has
not changed from those described in note D4 to the Group's
consolidated financial statements for the year ended 31 December
2021.
Statement of Directors' Responsibilities
The Directors (who are listed below) are responsible for
preparing the Half Year Financial Report in accordance with
applicable law and regulations.
Accordingly, the Directors confirm that to the best of their
knowledge:
- the condensed consolidated financial statements have been
prepared in accordance with IAS 34, 'Interim Financial Reporting',
as adopted for use in the UK;
- the Half Year Financial Report includes a fair review of information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency
Rules, being an indication of important events that have occurred
during the six months ended 30 June 2022, and their impact on the
condensed consolidated 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 Guidance and Transparency
Rules, being related party transactions that have taken place
during the six months ended 30 June 2022 and that have materially
affected the financial position or performance of the Group during
that period; and any changes in the related party transactions
described in the Group's consolidated financial statements for the
year ended 31 December 2021 that could do so.
Prudential plc Board of Directors:
Chair Independent Non-executive Directors
Shriti Vadera Lord Remnant CBE FCA
Jeremy Anderson CBE
Executive Directors Chua Sock Koong
Mark FitzPatrick CA David Law ACA
James Turner FCA FCSI FRM Ming Lu
George Sartorel
Thomas Watjen
Jeanette Wong
Amy Yip
9 August 2022
Independent Review Report to Prudential plc
Conclusion
We have been engaged by Prudential plc ('the Company' or 'the
Group') to review the condensed set of consolidated financial
statements in the Half Year Financial Report for the six months
ended 30 June 2022 which comprises the Condensed Consolidated
Income Statement, the Condensed Consolidated Statement of
Comprehensive Income, the Condensed Consolidated Statement of
Changes in Equity, the Condensed Consolidated Statement of
Financial Position, the Condensed Consolidated Statement of Cash
Flows and the related explanatory notes (collectively the
'condensed set of financial statements').
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 Year Financial Report for the six months ended 30 June
2022 is not prepared, in all material respects, in accordance with
IAS 34 Interim Financial Reporting as adopted for use in the UK and
the Disclosure Guidance and Transparency Rules ('the DTR') of the
UK's Financial Conduct Authority ('the UK FCA').
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity ('ISRE (UK) 2410') issued 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. We
read the other information contained in the Half Year Financial
Report and consider whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed
set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) 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 relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention that causes us to believe that the Directors have
inappropriately adopted the going concern basis of accounting, or
that the Directors have identified material uncertainties relating
to going concern that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410. However, future events or
conditions may cause the Group to cease to continue as a going
concern, and the above conclusions are not a guarantee that the
Group will continue in operation.
Directors' responsibilities
The Half Year Financial Report is the responsibility of, and has
been approved by, the Directors. The Directors are responsible for
preparing the Half Year Financial Report in accordance with the DTR
of the UK FCA.
As disclosed in note A1, the annual financial statements of the
Group are prepared in accordance with UK-adopted international
accounting standards.
The Directors are responsible for preparing the condensed set of
financial statements included in the Half Year Financial Report in
accordance with IAS 34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the
Directors are responsible for assessing the Group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the
Group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the Half Year
Financial Report based on our review. Our conclusion, including our
conclusion relating to going concern, is based on procedures that
are less extensive than audit procedures, as described in the Basis
for conclusion section of this report.
The purpose of our review work and to whom we owe our
responsibilities
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 DTR of the UK FCA. Our review of the condensed
set of financial statements has been undertaken so that we might
state to the Company those matters we are required to state to it
in this report and for no other purpose. 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.
Stuart Crisp
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
9 August 2022
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