EEV basis results

Results analysis by business area

Download as excel file

  Note 2011 £m 2010 £m
note (vi)

Notes

  1. EEV basis operating profit based on longer-term investment returns excludes the recurrent items of short-term fluctuations in investment returns, the mark to market value movements on core borrowings, the shareholders’ share of actuarial and other gains and losses on defined benefit pension schemes, and the effect of changes in economic assumptions. In addition for 2010, operating profit excluded costs associated with the terminated AIA transaction and the gain arising upon the dilution of the Group’s holding in PruHealth. The amounts for these items are included in total EEV profit attributable to shareholders. The Company believes that operating profit, as adjusted for these items, better reflects underlying performance. Profit before tax and basic earnings per share include these items together with actual investment returns. This basis of presentation has been adopted consistently throughout this supplementary information.
  2. The value of future profits or losses from asset management and service companies that support the Group’s covered businesses are included in the profits for new business and the in-force value of the Group’s long-term business. The results of the Group’s asset management operations include the profits from the management of internal and external funds. For EEV basis reporting, Group shareholders’ other income is adjusted to deduct the unwind of the expected margin for the year arising from the management of the assets of the covered business (as defined in note 1(a)). The deduction is on a basis consistent with that used for projecting the results for covered business. Group operating profit accordingly includes the variance between actual and expected profit in respect of covered business.
  3. In 2011 the Group altered its inflation measure basis for future statutory increases to pension payments for certain tranches of its UK defined benefit pension schemes. This reflects the UK Government’s decision to replace the basis of indexation from RPI with CPI. This resulted in a credit to operating profit for 2011 on an IFRS basis of £42 million and an additional £3 million recognised on the EEV basis.
  4. Restructuring costs comprise the charge of £(16) million recognised on an IFRS basis and an additional £(3) million recognised on the EEV basis for the shareholders’ share of restructuring costs incurred by the PAC with-profits fund. Solvency II implementation costs comprise the charge of £(55) million recognised on an IFRS basis and an additional £(1) million recognised on the EEV basis.
  5. For 2010, new business profits for the Group’s Japanese insurance subsidiary, which ceased writing new business with effect from 15 February 2010, have been presented separately from those of the remainder of the Group.
  6. The comparative results have been prepared using previously reported average exchange rates for the year.
Asian operations      
New business:      
Excluding Japan 2 1,076 902
Japannote (v)   (1)
Total   1,076 901
Business in force 3 688 549
Long-term business   1,764 1,450
Eastspring Investments   80 72
Development expenses   (5) (4)
Total   1,839 1,518
US operations      
New business 2 815 761
Business in force 3 616 697
Long-term business   1,431 1,458
Broker-dealer and asset management   24 22
Total   1,455 1,480
UK operations      
New business 2 260 365
Business in force 3 593 571
Long-term business   853 936
General insurance commission   40 46
Total UK insurance operations   893 982
M&G   357 284
Total   1,250 1,266
Other income and expenditure      
Investment return and other income   22 30
Interest payable on core structural borrowings   (286) (257)
Corporate expenditure   (219) (223)
Unwind of expected asset management marginnote (ii)   (53) (44)
Total   (536) (494)
RPI to CPI inflation measure change on defined benefit pension schemesnote (iii)   45
Solvency II implementation costsnote (iv)   (56) (46)
Restructuring costsnote (iv)   (19) (28)
Operating profit based on longer-term investment returnsnote (i)   3,978 3,696
Analysed as profits (losses) from:      
New business:      
Excluding Japan 2 2,151 2,028
Japannote (v)   (1)
Total   2,151 2,027
Business in force 3 1,897 1,817
Long-term business   4,048 3,844
Asset management   461 378
Other results   (531) (526)
Total   3,978 3,696

Download as excel file

  Note 2011 £m 2010 £m
Operating profit based on longer-term investment returns      
Asian operations   1,839 1,518
US operations   1,455 1,480
UK operations:      
UK insurance operations   893 982
M&G   357 284
    1,250 1,266
Other income and expenditure   (536) (494)
RPI to CPI inflation measure change on defined benefit pension schemes   45
Solvency II implementation costs   (56) (46)
Restructuring costs   (19) (28)
Operating profit based on longer-term investment returns   3,978 3,696
Short-term fluctuations in investment returns 5 (907) (30)
Mark to market value movements on core borrowings 9 (14) (164)
Shareholders’ share of actuarial and other gains and losses on defined benefit pension schemes   23 (11)
Effect of changes in economic assumptions 6 (158) (10)
Costs of terminated AIA transaction 4 (377)
Gain on dilution of Group holdings 13 3
Profit before tax attributable to shareholders (including actual investment returns)   2,922 3,107
Tax attributable to shareholders’ profit 11 (776) (530)
Profit for the year   2,146 2,577
Attributable to:      
Equity holders of the Company   2,142 2,573
Non-controlling interests   4 4
Profit for the year   2,146 2,577

Download as excel file

  Note 2011 2010

* Operating earnings per share for 2010 has been determined after excluding an exceptional tax credit of £158 million which primarily related to the impact of a settlement agreed with the UK tax authorities – see note 11.

Based on operating profit based on longer-term investment returns, after related tax and non-controlling interests of £2,930 million (2010: £2,700 million*) 12 115.7p 106.9p
Based on profit after tax and non-controlling interests of £2,142 million (2010: £2,573 million) 12 84.6p 101.9p

Download as excel file

  2011 2010
Dividends relating to reporting year:    
Interim dividend 7.95p 6.61p
Final dividend 17.24p 17.24p
Total 25.19p 23.85p
Dividends declared and paid in reporting year:    
Current year interim dividend 7.95p 6.61p
Final/second interim dividend for prior year 17.24p 13.56p
Total 25.19p 20.17p

Download as excel file

  Note 2011 £m 2010 £m
Profit for the year attributable to equity shareholders   2,142 2,573
Items taken directly to equity:      
Exchange movements on foreign operations and net investment hedges:      
Exchange movements arising during the year   (90) 659
Related tax   (68) 34
Dividends   (642) (511)
New share capital subscribed (including shares issued in lieu of cash dividends)   17 75
Reserve movements in respect of share-based payments   44 37
Treasury shares:      
Movement in own shares in respect of share-based payment plans   (30) (4)
Movement in Prudential plc shares purchased by unit trusts consolidated under IFRS   (5) 3
Mark to market value movements on Jackson assets backing surplus and required capital:      
Mark to market value movements arising during the year   96 105
Related tax   (34) (37)
Net increase in shareholders’ equity 10 1,430 2,934
Shareholders’ equity at beginning of year (excluding non-controlling interests) 7,10 18,207 15,273
Shareholders’ equity at end of year (excluding non-controlling interests) 7,10 19,637 18,207

Download as excel file

  2011 £m 2010 £m
Comprising: Note Long-term
business
operations
Asset
management
and other
operations
Total Long-term
business
operations
Asset
management
and other
operations
Total
Asian operations:      
Net assets of operations   8,510 211 8,721 7,445 197 7,642
Acquired goodwill   235 61 296 236 61 297
  7 8,745 272 9,017 7,681 258 7,939
US operations:      
Net assets of operations   5,082 113 5,195 4,799 106 4,905
Acquired goodwill   16 16 16 16
  7 5,082 129 5,211 4,799 122 4,921
UK insurance operations:      
Net assets of operations 7 6,058 29 6,087 5,970 33 6,003
M&G:      
Net assets of operations   229 229 254 254
Acquired goodwill   1,153 1,153 1,153 1,153
  7 1,382 1,382 1,407 1,407
    6,058 1,411 7,469 5,970 1,440 7,410
Other operations:      
Holding company net
borrowings at market value
9 (2,188) (2,188) (2,212) (2,212)
Other net assets   128 128 149 149
  7 (2,060) (2,060) (2,063) (2,063)
Shareholders’ equity at end of year (excluding non-controlling interests) 7 19,885 (248) 19,637 18,450 (243) 18,207
Representing:      
Net assets   19,650 (1,478) 18,172 18,214 (1,473) 16,741
Acquired goodwill   235 1,230 1,465 236 1,230 1,466
    19,885 (248) 19,637 18,450 (243) 18,207

Download as excel file

  2011 2010

* Return on embedded value is based on EEV operating profit after related tax and non-controlling interests as a percentage of opening EEV basis shareholders’ equity. The 2010 return has been determined after excluding an exceptional tax credit of £158 million, which primarily related to the impact of a settlement agreed with the UK tax authorities.

Based on EEV basis shareholders’ equity of £19,637 million (2010: £18,207 million) 771p 715p
Number of issued shares at year end (millions) 2,548 2,546
Return on embedded value* 16% 18%

Download as excel file

  Note 2011 £m 2010 £m

* Including liabilities in respect of insurance products classified as investment contracts under IFRS 4.

Total assets less liabilities, before deduction for insurance funds   243,760 231,667
Less insurance funds:*      
Policyholder liabilities (net of reinsurers’ share) and unallocated
surplus of with-profits funds
  (234,643) (223,636)
Less shareholders’ accrued interest in the long-term business   10,520 10,176
    (224,123) (213,460)
Total net assets 7,10 19,637 18,207
Share capital   127 127
Share premium   1,873 1,856
IFRS basis shareholders’ reserves   7,117 6,048
Total IFRS basis shareholders’ equity 7 9,117 8,031
Additional EEV basis retained profit 7 10,520 10,176
Total EEV basis shareholders’ equity (excluding non-controlling interests) 7,10 19,637 18,207

The supplementary information was approved by the Board of directors on 12 March 2012 and signed on its behalf.

Signature - Harvey McGrath

Harvey McGrath
Chairman

Signature - Tidjane Thiam

Tidjane Thiam
Group Chief Executive

Signature - Nic Nicandrou

Nic Nicandrou
Chief Financial Officer

 
 

Reporting tools

Save pages of the report
to download, print or email


View your pages

Feedback

Your comments and ideas help us
to shape future reports to suit your
needs.

Tell us your views