European Embedded Value (EEV) basis supplementary information
Year ended 31 December 2006
Operating profit from continuing operations based on longer-term investment returns*
Results analysis by business area
| Note | 2006 £m |
2005 £m |
|
|---|---|---|---|
| UK operations | |||
| New business | 5 | 266 | 243 |
| Business in force | 6 | 420 | 183 |
| Long-term business | 686 | 426 | |
| M&G | 204 | 163 | |
| Egg | (145) | 44 | |
| Total | 745 | 633 | |
| US operations | |||
| New business | 5 | 259 | 211 |
| Business in force | 6 | 449 | 530 |
| Long-term business | 708 | 741 | |
| Broker-dealer and fund management | 18 | 24 | |
| Curian | (8) | (10) | |
| Total | 718 | 755 | |
| Asian operations | |||
| New business | 5 | 514 | 413 |
| Business in force | 6 | 315 | 163 |
| Long-term business | 829 | 576 | |
| Fund management | 50 | 12 | |
| Development expenses | (15) | (20) | |
| Total | 864 | 568 | |
| Other income and expenditure | |||
| Investment return and other income | 7 | 8 | 42 |
| Interest payable on core structural borrowings | (177) | (175) | |
| Corporate expenditure: | |||
| Group Head Office | (83) | (70) | |
| Asia Regional Head Office | (36) | (30) | |
| Charge for share-based payments for Prudential schemes | (10) | (11) | |
| Total | (298) | (244) | |
| UK restructuring costs | 8 | (53) | – |
| Operating profit from continuing operations based on longer-term investment returns | 1,976 | 1,712 | |
| Analysed as profits (losses) from: | |||
| New business | 5 | 1,039 | 867 |
| Business in force | 6 | 1,184 | 876 |
| Long-term business | 2,223 | 1,743 | |
| Asia development expenses | (15) | (20) | |
| Other operating results | (179) | (11) | |
| UK restructuring costs | 8 | (53) | – |
| Total | 1,976 | 1,712 |
*EEV basis operating profit from continuing operations based on longer-term investment returns excludes goodwill impairment charges, 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, the effect of changes in economic assumptions and changes in the time value of cost of options and guarantees caused by economic factors. The amounts for these items are included in total EEV profit. The directors believe that operating profit, as adjusted for these items, better reflects underlying performance. Profit on ordinary activities 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.
The supplementary information on this page was approved by the Board of directors on 14 March 2007.