Notes on the IFRS basis results
D. Supplementary analysis of profit from continuing operations before tax attributable to shareholders
Results analysis by business area
| Half year 2007 £m |
Half year 2006 £m |
Full year 2006 £m |
|
|---|---|---|---|
| UK operations | |||
| UK insurance operations | 251 | 205 | 500 |
| M&G | 140 | 100 | 204 |
| Total | 391 | 305 | 704 |
| US operations | |||
| Jackson | 218 | 223 | 398 |
| Broker-dealer and fund management | 9 | 8 | 18 |
| Curian | (2) | (4) | (8) |
| Total | 225 | 227 | 408 |
| Asian operations | |||
| Long-term business | 76 | 88 | 189 |
| Fund management | 33 | 22 | 50 |
| Development expenses | (6) | (7) | (15) |
| Total | 103 | 103 | 224 |
| Other income and expenditure | |||
| Investment return and other income | 42 | 33 | 58 |
| Interest payable on core structural borrowings | (88) | (89) | (177) |
| Corporate expenditure: | |||
| Group Head Office | (50) | (46) | (83) |
| Asia Regional Head Office | (17) | (19) | (36) |
| Charge for share-based payments for Prudential schemes (note iii) | (5) | (5) | (10) |
| Total | (118) | (126) | (248) |
| UK restructuring costs | 0 | (11) | (38) |
| Operating profit from continuing operations based on longer-term investment returns (note iv) | 601 | 498 | 1,050 |
| Short-term fluctuations in investment returns on shareholder-backed business (note ii) | 24 | 39 | 155 |
| Shareholders’ share of actuarial gains and losses on defined benefit pension schemes (note ii) | 103 | 200 | 167 |
| Profit from continuing operations before tax attributable to shareholders (note iv) | 728 | 737 | 1,372 |
Notes
(i) Short-term fluctuations in investment returns on shareholder-backed business
| Half year 2007 £m |
Half year 2006 £m |
Full year 2006 £m |
|
|---|---|---|---|
| US operations: | |||
| Movement in market value of derivatives (other than equity-based) used for economic hedging purposes | 36 | 93 | 34 |
| Actual less longer-term investment returns for other items | 25 | 9 | 20 |
| Asian operations | (10) | (36) | 134 |
| Other operations | (27) | (27) | (33) |
| 24 | 39 | 155 |
(ii) Shareholders’ share of actuarial gains and losses on defined benefit pension schemes
| Half year 2007 £m |
Half year 2006 £m |
Full year 2006 £m |
|
|---|---|---|---|
| Actual less expected return on scheme assets* | (178) | (57) | 156 |
| Experience (losses) gains on liabilities | (8) | 0 | 18 |
| Gains on changes of assumptions for scheme liabilities** | 462 | 611 | 311 |
| 276 | 554 | 485 | |
| Less: amounts attributable to the PAC with-profits fund | (173) | (354) | (318) |
| 103 | 200 | 167 |
* The expected rate of return applied for half year 2007 was 5.9%. The shortfall of actual investment returns against expected returns in half year 2007 was due to the decrease in
the value of corporate and government bonds which more than offset the increase in the value of equity and property holdings of the schemes.
** The gains on changes of assumptions for scheme liabilities primarily reflect movements in yields on good quality corporate bonds. These yields are used to discount the
projected pension scheme benefit payments.
The discount rates applied for the Group’s UK defined benefit schemes, and reflected in the gains and losses shown above, are as follows:
30 June 2007: 5.8%; 31 December 2006: 5.2%; 30 June 2006: 5.5%; and 31 December 2005: 4.8%.
(iii) Share-based payments
The charge for share-based payments for Prudential schemes is for the SAYE and Group performance-related schemes.
(iv) Continuing operations – scope
The results for continuing operations shown above exclude those in respect of discontinued banking operations. On 1 May 2007, the Company sold Egg Banking plc. Accordingly, the presentation of the comparative results for half year and full year 2006 has been adjusted from those previously published. Note M shows the detailed
results for the discontinued operations.
