Interim Results - Part 1
PRUDENTIAL CORPORATION PLC
29 July 1999
Part 1
1999 INTERIM RESULTS
* Record inflow of new funds of over £11 billion
* New business profits up 31% to £275 million
* Increased investment in egg: and launch of e-card and
unit trust supermarket
* Investment in egg: and restructuring of UK businesses
reduces statutory operating profit
* Underlying operating profit up 8%
* Dividend up 10% to 7.7 pence per share
Sir Peter Davis, chief executive of Prudential, said:
'We are pleased with the achievements made in the first half of the
year. It has been a very busy time across the Group and we have made
considerable progress towards our strategic objectives. Jackson has
performed strongly again and achieved record sales. In Asia we've
grown our business and also made real advances in establishing our
presence in key countries.
'In the UK we have seen growth in our IFA businesses, the addition to
the group of M&G, which gives us a very strong profile in the important
and growing unit trust market, and the outstanding success of egg:.
Together with the moves we have undertaken to restructure and re-
engineer our traditional Prudential businesses, these initiatives will
help us to maintain our leadership in the rapidly changing financial
services sector.
'In the past few years we have delivered superior investment returns to
our shareholders. However, we have done much more than that - we have
also restructured the Group significantly so that it is now much better
placed for the future. We set out to widen our product range and to
broaden our distribution reach. By a combination of acquisition and
organic developments we have built a powerful multi-brand model and we
are well positioned to deliver long-term out-performance.'
Enquiries:
Jeremy Reynolds/Kevin Russell Carys Walshe
Media Relations Investor Relations
Prudential Prudential
0171 548 3721/3723 0171 548 3823
1999 UNAUDITED INTERIM RESULTS
Half year
ended 30 June Full year
Results summary 1999£m 1998£m 1998£m
--------------------------------------------------------------------------
Operating profit before amortisation of goodwill
(including longer term investment returns)
Prudential Retail Financial Services 196 180 * 333
Retail IFA 44 39 92
Corporate Pensions 15 10 22
Prudential M&G Asset Management 27 25 28
egg: and Prudential Banking (69) (9) (77)
--------------------------------------------------------------------------
Total UK operations 213 245 * 398
Jackson National Life 219 197 411
Prudential Asia 7 4 13
Shareholders' other income (12) 6 * 38
Re-engineering costs (55) - -
--------------------------------------------------------------------------
Total continuing operations 372 452 * 860
Discontinued operations - 6 8
--------------------------------------------------------------------------
Operating profit before amortisation of
goodwill 372 458 * 868
Amortisation of goodwill (14) - -
Short-term fluctuations in investment returns 11 41 * 24
Profit on business disposals - - 249
--------------------------------------------------------------------------
Profit before tax
(including actual investment returns) 369 499 1,141
--------------------------------------------------------------------------
Earnings per share
Based on operating profit
after tax before amortisation of goodwill 14.0p 17.3p * 33.7p
Based on profit after tax - basic 14.0p 19.2p 45.3p
Based on profit after tax - diluted 13.9p 19.0p 45.0p
--------------------------------------------------------------------------
Dividend per share 7.7p 7.0p 21.0p
--------------------------------------------------------------------------
Achieved profits basis shareholders' funds £8.2bn £7.4bn £7.5bn
--------------------------------------------------------------------------
Insurance and investment
funds under management £157bn £130bn £128bn
Banking funds under management £7.4bn £1.0bn £2.2bn
--------------------------------------------------------------------------
*Restated for change in basis of recognition of investment returns, as
explained in note (j) on page 10
Profit before tax includes actual investment returns. The Company believes
that operating profit before amortisation of goodwill, which includes longer-
term investment returns, better reflects the Group's underlying performance.
An abridged statutory profit and loss account is set out on page 9.
Supplementary achieved profits results are shown on pages 11 to 14.
The dividend will be paid on 25 November 1999 to shareholders on the register
at the close of business on 24 September 1999. A scrip dividend alternative
will be offered to shareholders.
CHAIRMAN'S STATEMENT
In the first half of 1999, Prudential has made further substantial
progress towards delivering its strategic objectives. In the UK we have
strengthened our position in the retail savings and investment market
with the acquisition of M&G, we have built egg: into the leading e-
commerce financial brand, and we initiated a major re-structuring of our
UK operations. Overseas, we became the first UK insurance company to be
invited to apply for a life licence to trade in China, and we continue
to reap the benefits of our diversified product range and distribution
strategy in the US and elsewhere in Asia.
The health of our business is demonstrated by the new funds we received
in the first half of this year. During this period the group has taken
in over £11 billion of new funds. This is well in excess of any
previous six month total and includes £5.9 billion of insurance and
investment product sales and £5.2 billion of net banking deposits.
These are significant in-flows and demonstrate both the scale and scope
of Prudential.
Our results for the half-year reflect the investments we are making.
The modified statutory basis result shows operating profit before
amortisation of goodwill of £372 million compared with £458 million in
1998. The 1999 result however includes a £69 million investment in
egg:, and an exceptional item of £55 million of re-structuring costs
for our UK operations. Excluding these items, underlying profit growth
from our continuing operations was up 8 per cent. Investment funds
under management now stand at £157 billion with an additional £7 billion
of banking assets.
Given the strength of our underlying performance and our confidence in
the future prospects of the business, the Board has decided to increase
the interim dividend by 10 per cent to 7.7 pence per share.
With the market for financial products and services changing rapidly,
Prudential has acted decisively to keep the initiative and maintain its
strong position. Earlier this year we announced the Board's decision to
appoint Sir Peter Davis, currently group chief executive, to succeed me
as chairman when I retire next May. Jonathan Bloomer, currently group
finance director, was appointed deputy group chief executive in May and
will succeed Peter as chief executive next May. These appointments
will maintain our strategic direction and momentum. We have also
welcomed two new non-executive directors with very valuable relevant
experience to our Board: Bridget Macaskill, chief executive officer of
OppenheimerFunds Inc. in New York and Rob Rowley, finance director of
Reuters Group plc. They have much to contribute to our business and I
look forward to working with them.
The Board of Prudential Corporation plc proposes to change the corporate
name of the Company by dropping the word 'Corporation' to become
'Prudential plc'. This move will help to modernise the name in the UK
and simplify it in those countries where Prudential wishes to expand.
GROUP CHIEF EXECUTIVE'S REVIEW
INTRODUCTION
Our commitment to our shareholders is to maximise the value over time of
their investment. We do this by investing for the long term to produce
superior products and services, leading to superior financial returns.
The actions we are taking will increase the value generated by our
existing operations whilst the re-engineering of our businesses will
equip us to meet the changing demands of our customers and the financial
services marketplace. We are progressing both by organic initiatives
and through acquisitions.
The record level of new funds in the first six months of this year is a
clear indication of the current health of the group. Total sales of
insurance and investment products are up 40 per cent at £5.9 billion and
we have taken net retail deposits of £5.2 billion.
We have made good progress with the implementation of our value based
management programme which explicitly aligns how we manage, measure and
reward performance with our commitment to shareholders to maximise the
value of their investment. This programme is now firmly embedded in our
UK business units and we intend to roll it out to our overseas
operations later this year.
UK OPERATIONS
It is clear that changes in legislation, technology, customers'
behaviour and competitive pressures will result in significant change in
the UK retail financial services market. The Government's proposed
introduction of stakeholder pensions in 2001 will accelerate the trend
towards high volume, low margin products. The launch of ISAs and the
proposals for Pooled Pension Investment also echo the global trend
towards exposed investment products whilst the advance of the internet
will come to alter distribution channels radically - not just for retail
financial services, but for all products. With the actions we have taken
in the last two years, we are confident that we can compete in this
environment.
In 1998 we restructured our UK operations into discrete, customer-facing
businesses each with their own management teams focused on specific
markets or products. We also brought in some talented senior management
from outside the group. In June of this year, we announced a major re-
engineering of Prudential Retail Financial Services. As we stated at
the time, this will realise annualised savings of £200 million by 2002
of which £30 million will be attributable to shareholders. The cost will
be £150 million, of which £55 million will be borne by shareholders.
Our acquisition of M&G earlier this year has given us a powerful and
valuable brand in the fast-growing unit trust market and we have seen
heartening early results. This reflects our twin-track strategy of
developing both insurance and investment products.
In egg: we have succeeded in establishing the UK's leading financial
services e-commerce brand in only ten months and have the opportunity to
lead the sector into the internet world. The business has far surpassed
our original plans: in just nine months egg: has attracted deposits of
£6.7 billion, and almost 550,000 customers. egg: also has had a
catalytic effect on other Prudential businesses and is not the only
business in the group which will be internet based.
In egg: we have a tremendous opportunity to become the financial
services site of choice and have a first-mover advantage upon which we
intend to capitalise. We are currently working on five major
initiatives, including a significant internet credit card development
which we will be announcing in the autumn and, subject to regulatory
approval, a supermarket for unit trusts with on-line share dealing
facilities.
We are delighted and excited by the success of egg:. The business
gives us real potential to generate significant long-term shareholder
value.
PRUDENTIAL RETAIL FINANCIAL SERVICES
Profits from Prudential Retail Financial Services increased by 9 per
cent to £196 million in the first half of the year. Our long-term
business reported profits up £4 million to £164 million whilst profits
from general insurance increased by 60 per cent to £32 million. The
latter reflects favourable market conditions and the benefits of our UK
restructuring and our value based management programme.
Insurance and investment product sales through the direct salesforce
totalled £1.1 billion, up by 18 per cent on the previous year. Within
this total, there has been a shift towards single premium bond products
and away from regular premium pensions and other products. We have seen
this increase in sales despite a 32 per cent reduction in the size of
the direct sales force as productivity has grown significantly. Our
salesforce also continues to sell increased volumes of Prudential
branded mortgages. Total mortgages arranged during the first six months
of the year of £338 million compares with £224 million in 1998.
Sales of annuities, which are sold through the direct salesforce and
through IFAs, reached a record level of £744 million in the first half
of the year. As with our general insurance business, our annuity
operation has benefited from the increased management focus within our
new UK structure and from the greater emphasis on creating shareholder
value. The smaller, specialised and focused businesses enable us to
pursue commercial opportunities far more vigorously and effectively. For
our annuities business, these opportunities include the development of
with-profit annuities and entry into the bulk annuity market: in July we
secured two contracts representing total premiums in excess of £1
billion
RETAIL IFA BUSINESS
Our Retail IFA business continues to show strong growth, with sales up
32 per cent at £1.4 billion. The increase in sales is a result of the
continuing strength of Prudence Bond, which remains the most successful
product of its type in the UK. Total sales of insurance and investment
products through the IFA channel (including corporate pensions,
annuities and M&G) were up 44 per cent to £2.2 billion.
Product innovation has continued with the introduction of a new
investment proposition for pension products, giving investors access to
six of the UK's leading investment houses and the UK's largest with-
profits fund. The concept of fund management choice was carried through
into the launch in April of Scottish Amicable's ISA.
EGG AND PRUDENTIAL BANKING
Our investment in egg: and Prudential Banking totalled £69 million at
the half year. Of this amount, only £14 million relates to the cost of
the egg: interest rate guarantee and should be seen as an investment
in marketing and customer acquisition. The balance of the investment
represents net interest margin less operating expenses and development
spend of a further £15 million on additional technology and new
products.
Deposits for egg: and Prudential Banking now total £7.4 billion with
net in-flows for egg: in the first half of 1999 of £5.2 billion. As
expected, the move to internet-only applications in April has slowed the
rate of in-flows, but new money is still being received at a steady
rate, with almost £500 million received in June.
On the other side of the balance sheet, we are successfully building our
mortgage book and at 30 June had £1.1 billion of mortgages, of which 12
per cent were egg: branded. Mortgage sales through our direct
salesforce have been growing steadily and the monthly sales rate now
exceeds £100 million.
We now have over 600,000 banking customers, of whom almost 550,000 are
egg: customers. These are generally affluent and financially aware and
have an average balance of approximately £17,000.
The outstanding success of egg: means that we are scaling up our
investment as egg: is built at a faster rate than planned but, we
believe, with increased long-term value creation. We now forecast a
total investment in egg: and Prudential Banking in 1999 of between
£140-150 million. Despite the increased scale of egg: we still expect
to break even in 2001.
PRUDENTIAL M&G ASSET MANAGEMENT
The acquisition of M&G has added a new dimension to our fund management
activities. We have announced our intention to combine our retail and
institutional fund management activities into a single regulated body,
Prudential M&G Asset Management, with Michael McLintock as its chief
executive. Within this we will have two separate business streams: PPM,
which is responsible for our internal and institutional fund management,
and M&G, which is responsible for retail fund management.
With these two brands, we have unprecedented access to both
institutional and retail investment markets and the strengthened skill
base to maximise the benefits to our customers. We will achieve new
operational efficiencies, for example by bringing together finance,
compliance, back office, IT and central dealing functions.
We have also reorganised our overseas fund management operations. PPM
America now reports to Bob Saltzman, alongside Jackson National Life and
PPM Asia reports to Mark Tucker alongside Prudential Asia.
Profits from Prudential M&G Asset Management were £27 million. This
includes a strong first time contribution from M&G of £18 million for
the two months since acquisition. M&G's early performance has been
encouraging, with sales through IFA and direct channels of £162 million,
and strong investment performance.
PPM's result of £16 million is down £11 million on last year. This
result is impacted by PPM's underperformance against benchmark in the
second half of 1998 for our key with-profits fund.
The first half of 1999 has seen a much improved investment performance
from PPM. The with-profits life fund outperformed its peer group
benchmark while both pooled and segregated funds have delivered above
median performance.
JACKSON NATIONAL LIFE
Operating profits from Jackson National Life totalled US$354 million, an
increase of 9 per cent. This increase reflects a 10 per cent growth in
US GAAP operating income to US$330 million and unchanged average
investment gains of US$24 million. The increase in US GAAP operating
income results from increased assets and marginally wider spreads. With
total invested assets of over US$36 billion, Jackson is firmly
positioned as one of the top 20 US life insurers.
Sales of both retail and wholesale products continue their healthy
growth with total single premium sales up 33 per cent at US$3.3 billion.
This growth has been attained thanks to the diversity of our product
range and our determination to seek out new markets.
Total annuity sales are up 32 per cent at US$1.7 billion. Within this
total, sales of variable annuities have more than doubled to US$941
million, reflecting the strong equity market and successful sales
promotions. These strong variable annuity sales have more than offset
the 19 per cent decline in fixed annuity sales to US$508 million, due to
lower US interest rates. An increase in these rates would, however,
increase sales of these products.
The trend towards equity-orientated investment products in the US is
continuing and Jackson's impressive sales performance in the first half
of 1999 shows that we are now attracting a meaningful share of that
market. We remain interested in increasing our world-wide position in
investment products and mutual funds.
PRUDENTIAL ASIA
It has been an eventful and encouraging six months in Prudential Asia.
Performance has been strong with total premiums having grown four-fold
to £325 million and profits up £3 million at £7 million. The increase
in sales reflects a 75 per cent increase in insurance premiums to £100
million and mutual fund sales in India by our joint venture company,
Prudential ICICI, of £225 million
During the period, we have been laying foundations for future expansion
in China, Vietnam and Taiwan. These are markets with huge potential for
growth, combining a strong savings culture with large populations. A
highlight of the year so far has been the Chinese government's
invitation to apply for a life insurance licence. We are currently in
negotiations over the city to which the licence will apply and with
potential joint venture partners.
This year we have successfully launched our bancassurance channel with
Standard Chartered Bank in Singapore and Hong Kong. Development of this
initiative is progressing well.
We have also applied for a life licence in Vietnam and in Taiwan we are
investigating a wide range of options, ranging from acquisition to the
establishment of a new wholly-owned shareholder business.
SUPPLEMENTARY ACHIEVED PROFITS BASIS RESULTS
On the achieved profits basis of reporting, group operating profit
before amortisation of goodwill and tax was £572 million in the first
half of 1999. Of this amount, the contribution from long-term
businesses was £647 million, an increase of 34 per cent. Profit from
new business increased by 31 per cent to £275 million whilst profit from
business in force increased by 36 per cent to £372 million.
UK Operations
Profit from new business for the group's UK operations grew by 11 per
cent to £145 million. This primarily reflects the strong growth in
sales volumes partially offset by the reduction in the rate of expected
future investment returns which was implemented at the end of 1998.
Profit from business in force increased by 63 per cent to £210 million.
1998's in force result included an £84 million charge for the
shareholders' portion of last year's increase in the pension mis-selling
charge. The provision of £1.1 billion is unchanged in 1999.
Jackson National Life
At Jackson, profit from new business increased by 52 per cent to £96
million, primarily reflecting the 32 per cent increase in premiums and
the reduction in discount rate implemented at the end of 1998. The
growth was also assisted by an increased proportion of GIC sales from
higher value longer-term funding agreements. Profit from business in
force increased by 15 per cent to £152 million, largely due to good
spread margin experience.
Prudential Asia
Profit in Prudential Asia before regional development costs increased by
55 per cent to £51 million as profit from new business more than doubled
to £34 million. The strong contribution from new business principally
reflects a combination of higher sales, an increased focus on higher
value products and the increased stake in the group's Malaysian
operation. Profit from business in force was unaltered at £17 million.
SHAREHOLDERS' CAPITAL AND RESERVES
The acquisition of M&G has moved the group's balance sheet from a net
cash position to a more appropriate level of gearing. Total shareholder
funds on an achieved profits basis are over £8.2 billion at the half
year, with balance sheet gearing of 19 per cent.
Our discussions with the FSA on the unattributed assets within our life
fund continue and we remain committed to seeking resolution.
MILLENNIUM
The Millennium issue is the potential problem arising from computer
software developed to recognise only two digits instead of four and, if
not corrected, being unable to distinguish the year 2000 from 1900.
Since mid-1996 we have had eight programmes under way to deal with the
Millennium. M&G was included in our review process when it was
acquired. These programmes are monitored centrally through a dedicated
Millennium team reporting to our group executive committee.
The repair or replacement and testing of critical IT systems and
equipment was completed for four programmes by the end of June 1999 and
is expected to be complete for all others by the end of July 1999.
External consultants have been hired to verify independently that the
detailed and thorough testing procedures we have put in place have been
completed successfully and on schedule.
Although we do not anticipate any serious disruption to our operations,
we are developing contingency plans and transition plans. These are
currently in preparation and are due to be completed and tested by
September 1999. Our contingency plans are intended to minimise the risks
posed to us by third parties and through possible systems errors despite
the intensive testing completed as part of the systems assurance
process. We have identified the critical business processes, considered
how these processes may be disrupted and are preparing response plans
and options to address these potential disruptions.
It is difficult to separate discrete Millennium expenditure from the
group's general systems enhancements and development spend. However, it
is estimated the group's total incremental cost relating solely to
Millennium will be in the range of £150 to £175 million.
CONCLUSION
In the last few years we have delivered superior investment returns to
our shareholders. However, we have done much more than that: we have
also significantly restructured the business so that it is now much
better placed for the future. We set out to widen our product range and
to broaden our distribution reach. By a combination of acquisition and
organic developments we have built a powerful multi-brand model and we
are well positioned to deliver long-term out-performance. We could not
have done this without the enthusiastic response of the people
throughout Prudential who have grasped the need for change with energy
and commitment.
SEGMENTAL ANALYSIS
Half year ended 30 June
Operating profit
before
Gross amortisation of
New business premiums goodwill
premiums written (including longer
Single Regular term investment
gains)
Results Analysis
by Business Area 1999 1998 1999 1998 1999 1998 1999 1998
(£ Million)
-----------------------------------------------------------------------------
UK operations
Prudential Retail
Financial Services 1,271 979 81 108 1,856 1,729 196 180 *
Retail IFA 1,289 969 68 62 1,817 1,453 44 39
Corporate Pensions 442 305 28 21 688 647 15 10
Prudential M&G
Asset Management 158 - 4 - 176 - 27 25
egg: and Prudential
Banking - - - - - - (69) (9)
-----------------------------------------------------------------------------
Total
UK Operations 3,160 2,253 181 191 4,537 3,829 213 245 *
-----------------------------------------------------------------------------
Jackson National Life 2,049 1,507 12 14 2,217 1,687 219 197
-----------------------------------------------------------------------------
Prudential Asia
Long-term business
and investment
products 289 38 36 35 491 214 14 8
Development expenses - - - - - - (7) (4)
-----------------------------------------------------------------------------
Total
Prudential Asia 289 38 36 35 491 214 7 4
-----------------------------------------------------------------------------
Shareholders' other
income
Investment return
and other income - - - - - - 70 74 *
Interest payable - - - - - - (63) (49)
Corporate expenditure - - - - - - (19) (19)
-----------------------------------------------------------------------------
Total
Shareholder's other income- - - - - - (12) 6 *
-----------------------------------------------------------------------------
Re-engineering costs - - - - - - (55) -
-----------------------------------------------------------------------------
Total operating profit
before amortisation of
goodwill for continuing
operations 5,498 3,798 229 240 7,245 5,730 372 452 *
-----------------------------------------------------------------------------
Results Analysis by Activity
-----------------------------------------------------------------------------
Long-term business 5,085 3,693 220 231 6,655 5,457 455 410
Investment products 413 105 9 9 429 114 5 (2)
General business - - - - 161 159 32 20 *
Investment management - - - - - - 16 27
Banking - - - - - - (69) (9)
Shareholders' other
income - - - - - - (12) 6 *
Re-engineering costs - - - - - - (55) -
-----------------------------------------------------------------------------
Total operating profit
before amortisation of
goodwill for
continuing operations 5,498 3,798 229 240 7,245 5,730 372 452 *
* Restated for change in basis of recognition of investment returns,
as explained in note (j) on page 10.
HOLDING COMPANY FUNDS STATEMENT
Half year
Ended 30 June Full year
1999 £m 1998 £m 1998 £m
-----------------------------------------------------------------------------
Operating profit after tax before
amortisation of goodwill 272 336 * 654
Dividends (150) (136) (407)
Reinvested in businesses (159) (141) (260)
-----------------------------------------------------------------------------
Funds available to holding company (37) 59 * (13)
New investment in businesses (2,202) (177) (265)
Disposal of businesses - - 481
New share capital subscribed 20 7 15
Timing differences and other items (60) (50) * (175)
-----------------------------------------------------------------------------
Holding company net cash movement (2,279) (161) 43
-----------------------------------------------------------------------------
* Restated for change in basis of recognition of investment returns,
as explained in note (j) on page 10.
MOVEMENT IN NET CASH BALANCES
Half year
Ended 30 June Full year
1999 £m 1998 £m 1998 £m
-----------------------------------------------------------------------------
Holding company cash less shareholders'
borrowing at beginning of period 453 405 405
Holding company net cash movement (as above) (2,279) (161) 43
Exchange translation gains (losses) (40) 8 5
-----------------------------------------------------------------------------
Holding company cash less shareholders'
borrowings at end of period (1,866) 252 453
-----------------------------------------------------------------------------
Represented by:
Holding company cash and short-term
investments 135 1,622 1,826
Borrowings - Holding company (1,842) (1,220) (1,223)
- Jackson National Life (159) (150) (150)
-----------------------------------------------------------------------------
(1,866) 252 453
-----------------------------------------------------------------------------
MOVEMENT IN SHAREHOLDERS' CAPITAL AND RESERVES
Half year
Ended 30 June Full year
1999 £m 1998 £m 1998 £m
-----------------------------------------------------------------------------
Profit for the period 272 372 880
Exchange movements 89 (28) (50)
Goodwill on disposals
of subsidiaries - - 28
New share capital subscribed 20 7 15
Dividends (150) (136) (407)
-----------------------------------------------------------------------------
Net movement in shareholders'
capital and reserves 231 215 466
Shareholders' capital and reserves at the
beginning of period 3,249 2,783 2,783
-----------------------------------------------------------------------------
Shareholders' capital and reserves at end
of period 3,480 2,998 3,249
-----------------------------------------------------------------------------
ABRIDGED STATUTORY PROFIT AND LOSS ACCOUNT
Half year
Ended 30 June Full year
Results summary 1999£m 1998£m 1998£m
-----------------------------------------------------------------------------
General business
technical result 32 20 * 39
Long-term business technical result
Continuing operations 449 410 * 832
Acquisitions 6 - -
Discontinued operations - 6 8
Investment products
Continuing operations (7) (2) (15)
Acquisitions 12 - -
Banking (69) (9) (77)
Re-engineering costs (55) - -
Amortisation of goodwill (14) - -
Other non-technical results included
in operating profit 4 33 * 81
-----------------------------------------------------------------------------
Operating profit based on longer term
investment returns 358 458 * 868
Short-term fluctuations in investment returns 11 41 * 24
Profit on business disposals - - 249
-----------------------------------------------------------------------------
Profit on ordinary activities before tax
(including actual investment returns) 369 499 1,141
Tax (97) (127) (261)
-----------------------------------------------------------------------------
Profit for the period 272 372 880
Dividends (150) (136) (407)
-----------------------------------------------------------------------------
Retained profit for the period 122 236 473
Basic Earnings per share
Based on operating profit after tax before
amortisation of goodwill of £272m(336m* and £654m)14.0p 17.3p * 33.7p
Adjustment of amortisation of goodwill (0.7)p - -
Adjustment from post-tax longer-term investment
returns to post tax actual investment returns 0.7p 1.9p * 0.8p
Adjustment for profit on business disposals - - 10.8p
-----------------------------------------------------------------------------
Based on profit for the period
of £272m (£372m and £880m) 14.0p 19.2p 45.3p
-----------------------------------------------------------------------------
Average number of shares 1,949m 1,941m 1,942m
-----------------------------------------------------------------------------
Diluted earnings per share
-----------------------------------------------------------------------------
Based on profit for the period
of £272m (£372m and £880m) 13.9p 19.0p 45.0p
-----------------------------------------------------------------------------
Average number of shares 1,964m 1,954m 1,955m
-----------------------------------------------------------------------------
Dividend per share 7.7p 7.0p 21.0p
-----------------------------------------------------------------------------
* Restated for change in basis of recognition of investment returns, as
explained in note (j) on page 10.
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IR AILIIDTIAFAA
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