Company Announcements

Prudential plc – HY22 Results – IFRS

Source: RNS
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 operationsnote (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


3.8¢

 

40.9¢

83.4¢



Based on loss from discontinued US operations


 

(195.1)¢

(161.1)¢


Total basic earnings per share


3.8¢

 

(154.2)¢

(77.7)¢


Diluted


 






Based on profit from continuing operations


3.8¢

 

40.9¢

83.4¢



Based on loss from discontinued US operations


 

(195.1)¢

(161.1)¢


Total diluted earnings per share


3.8¢

 

(154.2)¢

(77.7)¢





 

 



 

Dividends per share (in cents)


2022


2021



Note

Half year

 

Half year

Full year

Dividends relating to reporting period:

B5

 



 


First interim ordinary dividend


5.74¢

 

5.37¢

5.37¢


Second interim ordinary dividend


-

 

-

11.86¢

Total relating to reporting period


5.74¢

 

5.37¢

17.23¢

Dividends paid in reporting period:

B5

 

 




Current year first interim dividend


-

 

-

5.37¢


Second interim ordinary dividend for prior year


11.86¢

 

10.73¢

10.73¢

Total paid in reporting period


11.86¢

 

10.73¢

16.10¢

 

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

 

Note

Share

capital

Share

premium

Retained

earnings

Translation

reserve

Available

-for-sale

securities

reserves

Shareholders'

equity

 

Non-

controlling

interests

 

Total

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

 

Note

Share

capital

Share

premium

Retained

earnings

Translation

reserve

Available

-for-sale

securities

reserves

Shareholders'

equity

 

Non-

controlling

interests

 

Total

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

 

Note

Share

capital

Share

premium

Retained

earnings

Translation

reserve

Available

-for-sale

securities

reserves

Shareholders'

equity

Non-

controlling

 interests

Total

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

of period

$m

Issuance

of debt

Redemption

of debt

 

Foreign exchange

movement

Demerger of Jackson

Other

 movements

end of

period

$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




Note

Half year

 

Half year

AER

Half year

CER

 

Half year

AER

Half year

CER

 

Full year

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




Note

Half year

 


Half year

AER

Half year

CER

 

Half year

AER

Half year

CER

 

Full year

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


49.2¢


51.6¢

50.5¢


(5)%

(3)%


101.5¢

Based on profit from continuing operations, net of non-controlling interest


3.8¢


40.9¢

39.2¢


(91)%

(90)%


83.4¢

Based on loss from discontinued US operations, net of non-controlling interest



(195.1)¢

(195.1)¢


n/a

n/a


(161.1)¢

 

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)







Hong

Kong

Indonesia

Malaysia

Singapore

Growth

markets

and

other

Eastspring

Inter

-segment

elimi-

nation

Total

segment

Un-

allocated

to a

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)

 

 

 

 

 

 

Hong

Kong

Indonesia

Malaysia

Singapore

Growth

markets

and

other

Eastspring

Inter

-segment

elimi-

nation

Total

segment

Un-

allocated

to a

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)






 

Hong

Kong

Indonesia

Malaysia

Singapore

Growth

markets

and

other

Eastspring

Inter

-segment

elimi-

nation

Total

segment

Un-

allocated

to a

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

attributable to

shareholders

Percentage

impact

on ETR

 

Tax

attributable to

shareholders

Percentage

impact

on ETR

 

Tax

attributable to

shareholders

Percentage

impact

on ETR

Continuing operations

$m

%

 

$m

%

 

$m

%

Adjusted operating profit

1,661

 

 



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%

 

21%


(539)

20%

Effects of recurring tax reconciliation items:

 

 

 






Income not taxable or taxable at concessionary ratesnote (ii)

47

(16)%

 

(3)%


63

(2)%


Deductions not allowable for tax purposesnote (iii)

(135)

45%

 

3%


(92)

3%


Items related to taxation of life insurance businessesnote (iv)

49

(16)%

 

(6)%


177

(7)%


Deferred tax adjustments including unrecognised tax lossesnote (v)

(48)

16%

 

5%


(111)

4%


Effect of results of joint ventures and associatesnote (vi)

2

(1)%

 

(3)%


80

(3)%


Irrecoverable withholding taxesnote (vii)

(30)

10%

 

3%


(60)

2%


Other

(12)

4%

 

2

0%


(8)

1%


Total (charge) credit on recurring items

(127)

42%

 

(1)%


49

(2)%

Effects of non-recurring tax reconciliation items:

 

 

 






Adjustments to tax charge in relation to prior years

(1)

1%

 

0%


(11)

0%


Movements in provisions for open tax mattersnote (viii)

(1)

0%

 

(5)%


47

(2)%


Impact of changes in local statutory tax rates

-

0%

 

(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)

 

 



(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 %




Hong

Kong

Indonesia

Malaysia

Singapore

Growth

markets

and other

Eastspring

Other

operations

Total

attributable to

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 %




Hong

Kong

Indonesia

Malaysia

Singapore

Growth

markets

and other

Eastspring

Other

operations

Total

attributable to

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 %




Hong

Kong

Indonesia

Malaysia

Singapore

Growth

markets

and other

Eastspring

Other

operations

Total

attributable to

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



 

Before

 tax

Tax

Non-controlling interests

Net of tax

and non-

controlling

interests

Basic

earnings

per share

Diluted

earnings

per share




$m

$m

$m

$m

cents

cents

Based on adjusted operating profit


1,661

(314)

(4)

1,343

49.2¢

49.2¢

Short-term fluctuations in investment returns on shareholder-backed business


(1,383)

118

2

(1,263)

(46.2)¢

(46.2)¢

Amortisation of acquisition accounting adjustments


(5)

-

-

(5)

(0.2)¢

(0.2)¢

Gain attaching to corporate transactions


27

2

-

29

1.0¢

1.0¢

Based on profit for the period


300

(194)

(2)

104

3.8¢

3.8¢













Half year 2021



 

Before

 tax

Tax

Non-

controlling

interests

Net of tax

and non-

controlling

interests

Basic

earnings

per share

Diluted

earnings

per share




$m

$m

$m

$m

cents

cents

Based on adjusted operating profit


1,571

(222)

(7)

1,342

51.6¢

51.6¢

Short-term fluctuations in investment returns on shareholder-backed business


(212)

26

-

(186)

(7.2)¢

(7.2)¢

Amortisation of acquisition accounting adjustments


(2)

-

-

(2)

(0.1)¢

(0.1)¢

Loss attaching to corporate transactions


(94)

3

-

(91)

(3.4)¢

(3.4)¢

Based on profit from continuing operations


1,263

(193)

(7)

1,063

40.9¢

40.9¢

Based on loss from discontinued US operations





(5,073)

(195.1)¢

(195.1)¢

Based on loss for the period





(4,010)

(154.2)¢

(154.2)¢

 




Full year 2021



 

Before

 tax

Tax    

Non-controlling interests

Net of tax

and non-

controlling interests

Basic

earnings

 per share 

Diluted

 earnings

 per share




$m 

$m 

$m 

$m 

cents

cents

Based on adjusted operating profit


3,233

(548)

(17)

2,668

101.5¢

101.5¢

Short-term fluctuations in investment returns on shareholder-backed business


(458)

81

(5)

(382)

(14.5)¢

(14.5)¢

Amortisation of acquisition accounting adjustments


(5)

-

-

(5)

(0.2)¢

(0.2)¢

Loss attaching to corporate transactions


(94)

5

-

(89)

(3.4)¢

(3.4)¢

Based on profit from continuing operations


2,676

(462)

(22)

2,192

83.4¢

83.4¢

Based on loss from discontinued US operations





(4,234)

(161.1)¢

(161.1)¢

Based on loss for the year





(2,042)

(77.7)¢

(77.7)¢

 

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

5.74¢

158

 

5.37¢

140


5.37¢

140


Second interim ordinary dividend

-

-

 

-

-


11.86¢

326

Total relating to reporting period

5.74¢

158

 

5.37¢

140


17.23¢

466

Dividends paid in reporting period:

 

 

 







Current year first interim ordinary dividend

-

-

 

-

-


5.37¢

138


Second interim ordinary dividend for prior year

11.86¢

320

 

10.73¢

283


10.73¢

283

Total paid in reporting period

11.86¢

320

 

10.73¢

283


16.10¢

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

 

 

 







With-

profits

Unit-

linked

Other

Eastspring

Elimina-

tions

Total

Unallo-

cated

to a

segment

Elimination

of intra-group

debtors and

creditors

Group

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 investmentsnote (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











With

-profits

Unit-linked

Other

Eastspring

Elimina-

tions

Total

US

(discont'd)

Unallocated

to a

segment

Elimina-

tion of

intra-group

debtors

and

creditors

Group

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 investmentsnote (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

 







With

-profits

Unit-linked

Other

Eastspring

Elimina-

tions

Total

Unallocated

to a

segment

Elimination

of intra-group

debtors and

creditors

Group

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 investmentsnote (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


 

Quoted prices

(unadjusted)

 in active markets

Valuation

based on

significant

observable

market inputs

Valuation

based on

significant

unobservable

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


 

Quoted prices

(unadjusted)

 in active markets

Valuation

based on

significant

observable

market inputs

Valuation

based on

significant

unobservable

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


 

Quoted prices

(unadjusted)

 in active markets

Valuation

based on

significant

observable

market inputs

Valuation

based on

significant

unobservable

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

 

Loans

Equity securities

and holdings in

collective investment

schemes

Debt

securities

Group

total

Balance at beginning of period

5

577

58

640

Total losses in income statementnote

(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

Continuing operations

Loans

Equity securities

and holdings in

collective investment

schemes

Debt

securities

Group total

Balance at beginning of period

6

445

33

484

Total (losses) gains in income statementnote

(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

Continuing operations

Loans

Equity securities

and holdings in

collective investment

schemes

Debt

securities

Group total