Financial Highlights

Results Summary

	2009 £m	2008 £m
Asian operations	1,154	1,239
US operations	1,237	593
UK operations:
UK insurance operations	921	1,081
M&G	238	286
Other income and expenditure	(433)	(302)
Restructuring costs	(27)	(32)
Operating profit based on longer-term investment returns*	3,090	2,865
Short-term fluctuations in investment returns	351	(4,967)
Mark to market value movements on core borrowings	(795)	656
Shareholders' share of actuarial and other gains and losses on defined benefit pension schemes	(84)	(14)
Effect of changes in economic assumptions and time value of cost of options and guarantees	(910)	(398)
Profit on sale and results of Taiwan agency business	91	(248)
Profit/ (loss) from continuing operations before tax (including actual investment returns)	1,743	(2,106)
Operating earnings per share* (reflecting operating profit based on longer-term investment returns after related tax and minority interests)	88.8p	85.1p
Shareholders' equity, excluding minority interests	£15.3bn	£15.0bn

Statutory IFRS basis results	2009	2008
Profit/(Loss) after tax attributable to equity holders of the Company	£676m	£(396)m
Basic earnings per share	27.0p	(16.0)p
Shareholders' equity, excluding minority interests	£6.3bn	£5.1bn
Supplementary IFRS basis information	2009 £m	2008* £m
Operating profit based on longer-term investment returns*	1,405	1,283
Short-term fluctuations in investment returns on shareholder-backed business	36	(1,721)
Shareholders’ share of actuarial and other gains and losses on defined benefit pension schemes	(74)	(13)
Profit/(loss) before loss on sale and results of Taiwan agency business	1,367	(451)
Loss on sale and results of Taiwan agency business	(621)	1
Profit/(loss) from continuing operations before tax attributable to shareholders	746	(450)
Operating earnings per share* (reflecting operating profit based on longer-term investment returns after related tax and minority interests)	43.4p	39.9p
	2009	2008
Dividends per share declared and paid in reporting period	19.20p	18.29p
Dividends per share relating to reporting period	19.85p	18.90p
Funds under management	£290bn	£249bn
Insurance Groups Directive capital surplus (as adjusted)*	£3.4bn	£1.5bn

* Basis of preparation

Results bases
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 and expanded by the Additional Guidance on European Embedded Value Disclosures issued in October 2005. With the exception of the presentation of the results for the Taiwan agency business, for which (as described below) the sale process was completed in June 2009, the basis of preparation of the statutory IFRS basis results and supplementary IFRS basis information is consistent with that applied for the 2008 results and financial statements.

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 long-term businesses and is a valuable supplement to statutory accounts.

Exchange translation
The comparative results have been prepared using previously reported exchange rates, except where otherwise stated.

Operating profit based on longer-term investment returns
Consistent with previous reporting practice, the Group analyses its EEV basis results and provides supplementary analysis of IFRS profit before tax attributable to shareholders, so as to distinguish operating profit based on longer-term investment returns from other elements of total profit. On both the EEV and IFRS bases, operating earnings per share are calculated using operating profits based on longer-term investment returns, after related tax and minority 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. 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 and changes in the time value of cost of options and guarantees arising from changes in economic factors.

In 2009, as a result of the exceptional dislocated market conditions, the Group incurred non-recurrent costs of £235 million for hedging its Insurance Group’s Directive (IGD) capital surplus. These costs have been shown separately from operating profit based on longer-term investment returns as part of short-term fluctuations in investment returns.

Also, in June 2009 the Group completed the previously announced sale of its Taiwan agency business. In order to facilitate comparisons of the Group’s businesses, the effect of disposal and the results of the Taiwan agency business are shown separately from operating profit based on longer-term investment returns. The presentation of the comparative results for 2008 has been adjusted accordingly. After adjusting for related tax and minority interests, the amounts excluded from operating profit based on longer-term investment returns are included in the calculation of basic earnings per share.

Insurance Groups Directive capital surplus (as adjusted)
The surpluses shown for 2009 and 2008 are before allowing for the final dividends for 2009 and 2008 respectively. The surplus at 31 December 2009 of £3.4 billion is estimated.

Status of 2009 results

All the 2009 results contained in this announcement are unaudited.