Results summary

International Financial Reporting Standards (IFRS) Basis Results*

Statutory IFRS basis results

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  2012 2011
  Half year Half year† Full year†
Profit after tax attributable to equity holders of the Company £952m £829m £1,415m
Basic earnings per share 37.5p 32.7p 55.8p
Shareholders' equity, excluding non-controlling interests £9.3bn £8.0bn £8.6bn

Supplementary IFRS basis information

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  2012 £m 2011 £m
  Half year Half year† Full year†
Operating profit based on longer-term investment returns* 1,162 1,028 2,027
Short-term fluctuations in investment returns on shareholder-backed business (32) 93 (220)
Shareholders' share of actuarial and other gains and losses on defined benefit pension schemes 87 (7) 21
Gain on dilution of Group holdings 42
Profit before tax attributable to shareholders 1,259 1,114 1,828
Operating earnings per share* (reflecting operating profit based on longer-term investment returns after related tax and non-controlling interests) 34.5p 31.4p 62.8p

European Embedded Value (EEV) Basis Results*

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  2012 £m 2011 £m
  Half year Half year Full year

* See basis of preparation below.

† The Group has adopted altered US GAAP requirements for deferred acquisition costs as an improvement to its accounting policy under IFRS 4 for those operations of the Group which measure insurance assets and liabilities substantially by reference to US GAAP principles. Accordingly, the 2011 comparative results have been adjusted from those previously published for the retrospective application of the improvement as if the new accounting policy had always applied, as described in note B to the IFRS financial statements.

Asian operations 903 815 1,839
US operations 822 848 1,455
UK operations:      
UK insurance operations 507 558 893
M&G 199 199 357
Other income and expenditure (285) (281) (536)
RPI to CPI inflation measure change on defined benefit pension schemes 45 45
Restructuring and Solvency II implementation costs (37) (37) (75)
Operating profit based on longer-term investment returns* 2,109 2,147 3,978
Short-term fluctuations in investment returns 225 (111) (907)
Mark to market value movements on core borrowings (113) (74) (14)
Shareholders' share of actuarial and other gains and losses on defined benefit pension schemes 103 (8) 23
Effect of changes in economic assumptions (371) (111) (158)
Gain on dilution of Group holdings 42
Profit before tax (including actual investment returns) 1,995 1,843 2,922
Operating earnings per share* (reflecting operating profit based on longer-term investment returns after related tax and non-controlling interests) 60.7p 61.5p 115.7p
Shareholders' equity, excluding non-controlling interests £20.6bn £19.0bn £19.6bn

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  2012 2011
  Half year Half year Full year

* Basis of preparation

Results bases

The basis of preparation of the statutory IFRS basis results and supplementary IFRS basis information is consistent with that applied for the full year 2011 results and financial statements with the exception that the Group adopted altered US GAAP requirements for deferred acquisition costs as an improvement to its accounting policy under IFRS 4 for those operations of the Group which accounted for insurance assets and liabilities under the previous GAAP of the UK Modified Statutory Basis substantially by reference to US GAAP measurement principles. The full impact of this change is described in note B to the IFRS financial statements.

The EEV basis results have been prepared in accordance with the European Embedded Value principles issued by the CFO Forum of European Insurance Companies in May 2004. Life insurance products are, by their nature, long-term and the profit on this business is generated over a significant number of years. Accounting under IFRS alone does not, in Prudential’s opinion, fully reflect the value of future profit streams. Prudential considers that embedded value reporting provides investors with a measure of the future profit streams of the Group’s in-force long-term businesses and is a valuable supplement to statutory accounts. There has been no change to the basis of presentation of the EEV results from the full year 2011 results and financial statements.

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. In particular, results on a CER basis are shown for the analysis of IFRS and EEV operating profit based on longer-term investment returns.

Operating profit based on longer-term investment returns

Consistent with previous reporting practice, the Group provides supplementary analysis of IFRS profit before tax attributable to shareholders and analyses its EEV basis results, so as to distinguish operating profit based on longer-term investment returns from other elements of total profit. On both the IFRS and EEV bases, operating earnings per share are calculated using operating profits based on longer-term investment returns, after related tax and non-controlling interests.

These profits exclude short-term fluctuations in investment returns and the shareholders’ share of actuarial and other gains and losses on defined benefit pension schemes. The operating profit based on longer-term investment returns for 2012 half year excludes the gain arising upon the divestment of the Group’s holding in Prudential Portfolio Managers South Africa (Pty) Limited. The Group’s agreement to acquire REALIC is subject to regulatory approval, accordingly operating profit does not include any impact on earnings from this acquisition.

Under the EEV basis, where additional profit and loss effects arise, operating profit based on longer-term investment returns also excludes the mark to market value movements on core borrowings and the effect of changes in economic assumptions.

After adjusting for related tax and non-controlling interests, the amounts excluded from operating profit based on longer-term investment returns are included in the calculation of basic earnings per share based on total profit attributable to the company’s equity holders.

Insurance Groups Directive capital surplus (as adjusted)

The estimated surpluses shown for half year 2012 and half year 2011 are before allowing for the interim dividends for 2012 and 2011 respectively. The surplus for full year 2011 is before the 2011 final dividend.

Dividends per share declared and paid in reporting period 17.24p 17.24p 25.19p
Dividends per share relating to reporting period 8.4p 7.95p 25.19p
Funds under management £363bn £350bn £351bn
Insurance Groups Directive capital surplus (as adjusted)* £4.2bn £4.1bn £4.0bn
 
 

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