Basis of preparation
The results are prepared on two bases: International Financial Reporting Standards (IFRS) and European Embedded Value (EEV). The results prepared under IFRS form the basis of the Group’s statutory financial statements. The supplementary EEV basis results have been prepared in accordance with the amended EEV Principles issued by the European Insurance CFO Forum in 2016. The Group’s EEV basis results are stated on a post-tax basis and include the post-tax IFRS financial results of the Group’s asset management and other operations. Continuing operations represents the Asia, Africa and head office functions of the Group following the demerger of Jackson. Segment results are attributed to the shareholders of the Group before deducting the amount attributable to non-controlling interests, except where otherwise stated. Operating profit based on longer-term investment returns.
The Group provides supplementary analysis of profit before tax attributable to shareholders in order to distinguish operating profit based on longer-term investment returns from the other elements of total profit shown.
EEV and adjusted IFRS operating profit for continuing operations is based on longer-term investment returns and is stated after excluding the effect of short-term fluctuations in investment returns against long-term assumptions and other corporate transactions. Furthermore, for EEV basis results, operating profit based on longer-term investment returns excludes the effect of changes in economic assumptions and the mark-to-market value movement on core borrowings. Separately on the IFRS basis, adjusted operating profit also excludes amortisation of acquisition accounting adjustments.
Operating free surplus generation is the financial metric we use to measure the internal cash generation of our business operations and for our life operations is generally based on (with adjustments) the capital regimes that apply locally in the various jurisdictions in which the Group operates. It represents amounts emerging from the in-force business during the year, net of amounts reinvested in writing new business. For asset management businesses, it equates to post-tax adjusted operating profit for the year.
Exchange translation – Actual Exchange Rate (AER) and Constant Exchange Rate (CER)
The IFRS and EEV results are presented in US dollars. The comparative results have been prepared using previously reported exchange rates (AER basis).