Basis of preparation
The results are prepared on two bases: International Financial Reporting Standards (IFRS) and European Embedded Value (EEV). The EEV basis results have been prepared in accordance with the EEV Principles issued by the European Insurance CFO Forum in 2016. Where appropriate, the EEV basis results include the effects of adoption of EU-endorsed IFRS. Continuing operations relate to Asia, US and Central operations (including Africa). Discounted operations refers to our UK and Europe operations.
The directors are responsible for the preparation of the supplementary information in accordance with the EEV Principles. The auditors have reported on the 2019 EEV basis results supplement to the Company’s statutory accounts for 2019. Their report was (i) unmodified and (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report. The 2018 results have been derived from the EEV basis results supplement to the Company’s statutory accounts for 2018. The supplement included an unmodified audit report from the auditors.
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.
Operating profit is determined on the basis of including longer-term investment returns.
EEV and IFRS operating profit is stated after excluding the effect of short-term fluctuations in investment returns against long-term assumptions. 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, operating profit also excludes amortisation of accounting adjustments arising principally on the acquisition of REALIC completed in 2012.
Exchange translation – Actual Exchange Rate (AER) and Constant Exchange Rate (CER)
The comparative results have been prepared using previously reported exchange rates (AER basis) except where otherwise stated.