Notes to the Financial Statements

for the year ended 31 December 2004

5 Segmental Analysis

The 2004 segmental analysis has been prepared on a gross of inter-segment transactions basis. 2003 comparatives have been restated to be consistent with the current year presentation.

Annual premium equivalent is defined as one-tenth of single premiums plus recurring premiums.

Inter-segment (revenue)/expenses represents investment management fees paid to the Group’s asset management companies and administration fees (received from)/paid to Group life assurance companies.

(v) Other technical income
Other technical income of £84 million (R991 million) (2003: £94 million (R1,161 million)) principally consists of fees earned in respect of South African policyholders’ funds and fees earned for healthcare administration.

Adjusted operating profit includes £6 million (R73 million) (2003: nil) in relation to interest received on short-term funding provided to the Group’s banking subsidiary. The remainder of the inter-segment (revenue)/expenses represents, investment management fees (received from)/paid to the Group’s life assurance companies and other asset management companies.

Operating expenses include translation losses of £32 million (R372 million) (2003: £110 million (R1,356 million)). Adjusted operating profit includes£6 million (R73 million) in relation to inter-company interest payable for short term funding now repaid.

Restructuring and integration costs incurred in connection with the acquisition of BoE by Nedcor Limited have been excluded from adjusted operating profit.

During 2003, the Group’s banking subsidiary, Nedcor Limited, implemented a revised methodology for the calculation of credit provisions for loans and advances in accordance with changes to local reporting requirements (AC133: “Financial Instruments – Recognition and Measurement”). The revised methodology requiring the discounting of future cash flows on advances is acceptable under UK GAAP reporting and was therefore adopted in preparation of the Group’s financial statements, resulting in a one-off increase in opening specific provisions due to the discounting effect.

This adjustment has been taken to the profit and loss account in the Group’s financial statements, but excluded from adjusted operating profit.

In accordance with proposals announced by the Company on 23 February 2004, and approved by its shareholders on 14 May 2004, during the year the Company received £16 million (R190 million) from the Old Mutual (South Africa) Unclaimed Shares Trust. This amount represents accumulated dividends and interest accrued thereon in respect of shares of the Company unclaimed at 18 August 2004, being the expiry date for claims notified to the trustees of that trust following the fifth anniversary of the demutualisation of the South African Mutual Life Assurance Society. It is the firm intention of the Board that all of this money will eventually be contributed to public benefit and charitable organisations and, therefore, full provision has been made for the cost of making such contributions.

Net corporate expenses include £6 million (R71 million) (2003: £5 million (R62 million)) in connection with the International Financial Reporting Standards conversion and Group-wide Economic Capital Projects.

Preference shares issued by the Group’s banking subsidiary are included within banking net assets. US$750 million cumulative preferred securities have been separately identified and shown net of unamortised issue costs and undistributed profits due to minority interests.

During 2004, the operations of Peoples Bank were integrated within the operations of Nedbank.