International Financial Reporting Standards (IFRS) basis results

Condensed consolidated income statement

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    2013 £m 2012* £m
  Note Half year Half year Full year

Notes

* The Group has adopted new accounting standards on consolidated financial statements and joint arrangements, and amendments to the employee benefits accounting standard, from 1 January 2013 as described in note B. Accordingly, the 2012 comparative results and related notes have been adjusted retrospectively from those previously published.

† This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders. This is principally because the corporate taxes of the Group include those on the income of consolidated with-profits and unit-linked funds that, through adjustments to benefits, are borne by policyholders. These amounts are required to be included in the tax charge of the Company under IAS 12. Consequently, the profit before all taxes measure (which is determined after deducting the cost of policyholder benefits and movements in the liability for unallocated surplus of the PAC with-profits fund after adjusting for taxes borne by policyholders) is not representative of pre-tax profits attributable to shareholders.

Earned premiums, net of reinsurance   14,763 13,703 28,622
Investment return   6,528 8,720 23,931
Other income   1,100 939 1,885
Total revenue, net of reinsurance   22,391 23,362 54,438
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance   (18,143) (19,343) (45,144)
Acquisition costs and other expenditure G (3,315) (2,745) (6,032)
Finance costs: interest on core structural borrowings of shareholder-financed operations   (152) (140) (280)
Remeasurement of carrying value of Japan Life business classified as held for sale AB (135)
Total charges, net of reinsurance   (21,745) (22,228) (51,456)
Share of profits from joint ventures and associates, net of related tax   74 62 135
Profit before tax (being tax attributable to shareholders’ and policyholders’ returns)   720 1,196 3,117
Less tax charge attributable to policyholders’ returns   (214) (30) (370)
Profit before tax attributable to shareholders C 506 1,166 2,747
Total tax charge attributable to policyholders and shareholders H (355) (309) (954)
Adjustment to remove tax charge attributable to policyholders’ returns   214 30 370
Tax charge attributable to shareholders’ returns H (141) (279) (584)
Profit for the period attributable to equity holders of the Company   365 887 2,163
         
Earnings per share (in pence)        
Based on profit attributable to the equity holders of the Company: I      
Basic   14.3p 35.0p 85.1p
Diluted   14.3p 34.9p 85.0p

Dividends per share (in pence)

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    2013 2012
  Note Half year Half year Full year
Dividends relating to reporting period: J      
Interim dividend (2013 and 2012)   9.73p 8.40p 8.40p
Final dividend (2012)   20.79p
Total   9.73p 8.40p 29.19p
Dividends declared and paid in reporting period: J      
Current year interim dividend   8.40p
Final dividend for prior year   20.79p 17.24p 17.24p
Total   20.79p 17.24p 25.64p

Condensed consolidated statement of comprehensive income

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    2013 £m 2012* £m
  Note Half year Half year Full year

Note

* The Group has adopted new accounting standards on consolidated financial statements and joint arrangements, and amendments to the employee benefits accounting standard, from 1 January 2013 as described in note B. Accordingly, the 2012 comparative results and related notes have been adjusted retrospectively from those previously published.

Profit for the period   365 887 2,163
         
Other comprehensive income:        
Items that may be reclassified subsequently to profit or loss        
Exchange movements on foreign operations and net investment hedges:        
Exchange movements arising during the period   227 (53) (214)
Related tax   5 (1) (2)
    232 (54) (216)
         
Net unrealised valuation movements on securities of US insurance operations classified as available-for-sale:        
Net unrealised holding (losses) gains arising during the period   (1,665) 470 930
Deduct net (gains) or add back net losses included in the income statement on disposal and impairment   (42) 12 (68)
Total R (1,707) 482 862
Related change in amortisation of deferred acquisition costs N 419 (181) (270)
Related tax   451 (105) (205)
    (837) 196 387
Total   (605) 142 171
         
Items that will not be reclassified to profit or loss        
Shareholders’ share of actuarial and other gains and losses on defined benefit pension schemes: U      
Actuarial and other (losses) and gains on defined benefit pension schemes   (67) 212 145
Related tax   10 (29) (17)
    (57) 183 128
Add (deduct) amount attributable to PAC with-profits fund transferred to unallocated surplus of with-profits funds, net of related tax   36 (118) (94)
    (21) 65 34
         
Other comprehensive (loss) income for the period, net of related tax   (626) 207 205
         
Total comprehensive (loss) income for the period attributable to the equity holders of the Company   (261) 1,094 2,368

Condensed consolidated statement of changes in equity

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  Period ended 30 June 2013 £m
Note Share
capital
Share
premium
Retained
earnings
Trans-
lation
reserve
Available-
for-sale
securities
reserve
Share-
holders’
equity
Non-
controlling
interests
Total
equity
Reserves                  
Profit for the period   365 365 365
Other comprehensive (loss) income   (21) 232 (837) (626) (626)
Total comprehensive income (loss) for the period   344 232 (837) (261) (261)
Dividends   (532) (532) (532)
Reserve movements in respect of share-based payments   31 31 31
Change in non-controlling interests arising principally from purchase and sale of property partnerships of PAC with-profits fund and other consolidated investment funds   1 1
                   
Share capital and share premium                  
New share capital subscribed W 1 1 1
                   
Treasury shares                  
Movement in own shares in respect of share-based payment plans   25 25 25
Movement in Prudential plc shares purchased by unit trusts consolidated under IFRS   2 2 2
Net increase (decrease) in equity   1 (130) 232 (837) (734) 1 (733)
At beginning of period   128 1,889 6,851 66 1,425 10,359 5 10,364
At end of period   128 1,890 6,721 298 588 9,625 6 9,631

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    Period ended 30 June 2012* £m
  Note Share
capital
Share
premium
Retained
earnings
Trans-
lation
reserve
Available-
for-sale
securities
reserve
Share-
holders’
equity
Non-
controlling
interests
Total
equity

Note

* The Group has adopted new accounting standards on consolidated financial statements and joint arrangements, and amendments to the employee benefits accounting standard, from 1 January 2013 as described in note B. Accordingly, the 2012 comparative results and related notes have been adjusted retrospectively from those previously published.

Reserves                  
Profit for the period   887 887 887
Other comprehensive income (loss)   65 (54) 196 207 207
Total comprehensive income (loss) for the period   952 (54) 196 1,094 1,094
Dividends   (440) (440) (440)
Reserve movements in respect of share-based payments   52 52 52
Change in non-controlling interests arising principally from purchase and sale of property partnerships of PAC with-profits fund and other consolidated investment funds   (9) (9)
                   
Share capital and share premium                  
New share capital subscribed W 14 14 14
                   
Treasury shares                  
Movement in own shares in respect of share-based payment plans   5 5 5
Movement in Prudential plc shares purchased by unit trusts consolidated under IFRS   3 3 3
Net increase (decrease) in equity   14 572 (54) 196 728 (9) 719
At beginning of period   127 1,873 5,244 282 1,038 8,564 43 8,607
At end of period   127 1,887 5,816 228 1,234 9,292 34 9,326

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    Year ended 31 December 2012* £m
  Note Share
capital
Share
premium
Retained
earnings
Trans-
lation
reserve
Available-
for-sale
securities
reserve
Share-
holders’
equity
Non-
controlling
interests
Total
equity

Note

* The Group has adopted new accounting standards on consolidated financial statements and joint arrangements, and amendments to the employee benefits accounting standard, from 1 January 2013 as described in note B. Accordingly, the 2012 comparative results and related notes have been adjusted retrospectively from those previously published.

Reserves                  
Profit for the year   2,163 2,163 2,163
Other comprehensive income (loss)   34 (216) 387 205 205
Total comprehensive income (loss) for the year   2,197 (216) 387 2,368 2,368
Dividends   (655) (655) (655)
Reserve movements in respect of share-based payments   42 42 42
Change in non-controlling interests arising principally from purchase and sale of property partnerships of the PAC with-profits fund and other consolidated investment funds   (38) (38)
                   
Share capital and share premium                  
New share capital subscribed W 1 16 17 17
                   
Treasury shares                  
Movement in own shares in respect of share-based payment plans   (13) (13) (13)
Movement in Prudential plc shares purchased by unit trusts consolidated under IFRS   36 36 36
Net increase (decrease) in equity   1 16 1,607 (216) 387 1,795 (38) 1,757
At beginning of year   127 1,873 5,244 282 1,038 8,564 43 8,607
At end of year   128 1,889 6,851 66 1,425 10,359 5 10,364

Condensed consolidated statement of financial position

Assets

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    2013 £m 2012* £m
  Note 30 Jun 30 Jun 31 Dec

Notes

* The Group has adopted new accounting standards on consolidated financial statements and joint arrangements, from 1 January 2013 as described in note B. Accordingly, the 2012 comparative results and related notes have been adjusted retrospectively from those previously published for the application of these standards.

† The increase of reinsurers' share of insurance contract liabilities and other liabilities from 30 June 2012 to 31 December 2012 and 30 June 2013 is attributed to amounts due to the reinsurance arrangements attaching to the purchase by Jackson of REALIC in September 2012.

‡ Included within financial investments are £5,076 million of lent securities as at 30 June 2013 (30 June 2012: £5,273 million; 31 December 2012: £3,015 million), and £2,206 million of loans and debt securities covering liabilities for funds withheld under reinsurance arrangements of the Group's US operations from the purchase of REALIC in the second half of 2012 (31 December 2012: £2,012 million).

§ The Group agreed in July 2013 to sell, subject to regulatory approval, its closed book life assurance business in Japan. As at 30 June 2013, the business was classified as held for sale.

Intangible assets attributable to shareholders:        
Goodwill M 1,474 1,467 1,469
Deferred acquisition costs and other intangible assets N 5,538 4,237 4,177
Total   7,012 5,704 5,646
         
Intangible assets attributable to with-profits funds:        
In respect of acquired subsidiaries for investment purposes   178 178 178
Deferred acquisition costs and other intangible assets   79 84 78
Total   257 262 256
Total intangible assets   7,269 5,966 5,902
         
Other non-investment and non-cash assets:        
Property, plant and equipment   868 787 754
Reinsurers’ share of insurance contract liabilities   7,204 1,698 6,854
Deferred tax assets H 2,637 2,169 2,306
Current tax recoverable   191 302 248
Accrued investment income   2,726 2,686 2,771
Other debtors   2,318 1,784 1,325
Total   15,944 9,426 14,258
         
Investments of long-term business and other operations:        
Investment properties   10,583 10,532 10,554
Investments in joint ventures and associates accounted for using the equity method   696 587 635
Financial investments:        
Loans P 13,230 10,800 12,743
Equity securities and portfolio holdings in unit trusts   112,258 89,098 98,626
Debt securities Q 138,256 127,349 138,907
Other investments   6,140 7,828 7,547
Deposits   13,542 11,951 12,248
Total   294,705 258,145 281,260
         
Assets held for sale§ AB 1,079 98
Cash and cash equivalents   6,840 6,335 6,126
Total assets K 325,837 279,872 307,644

Equity and liabilities

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    2013 £m 2012* £m
  Note 30 Jun 30 Jun 31 Dec

Notes

* The Group has adopted new accounting standards on consolidated financial statements and joint arrangements from 1 January 2013 as described in note B. Accordingly, the 2012 comparative results and related notes have been adjusted retrospectively from those previously published.

† The increase of reinsurers' share of insurance contract liabilities and other liabilities from 30 June 2012 to 31 December 2012 and 30 June 2013 is attributed to amounts due to the reinsurance arrangements attaching to the purchase by Jackson of REALIC in September 2012.

§ The Group agreed in July 2013 to sell, subject to regulatory approval, its closed book life assurance business in Japan. As at 30 June 2013, the business was classified as held for sale.

Equity        
Shareholders' equity   9,625 9,292 10,359
Non-controlling interests   6 34 5
Total equity   9,631 9,326 10,364
         
Liabilities        
Policyholder liabilities and unallocated surplus of with-profits funds:        
Contract liabilities (including amounts in respect of contracts classified as investment contracts under IFRS 4) V 272,728 233,507 257,674
Unallocated surplus of with-profits funds V 11,434 9,802 10,589
Total   284,162 243,309 268,263
         
Core structural borrowings of shareholder-financed operations:        
Subordinated debt   3,161 2,638 2,577
Other   988 958 977
Total S 4,149 3,596 3,554
         
Other borrowings:        
Operational borrowings attributable to shareholder-financed operations T 2,530 2,794 2,245
Borrowings attributable to with-profits operations T 924 895 968
         
Other non-insurance liabilities:        
Obligations under funding, securities lending and sale and repurchase agreements   2,889 2,563 2,381
Net asset value attributable to unit holders of consolidated unit trusts and similar funds   5,394 4,186 5,145
Deferred tax liabilities H 4,102 3,909 3,964
Current tax liabilities   325 625 443
Accruals and deferred income   538 544 751
Other creditors   3,743 2,955 2,701
Provisions   537 403 591
Derivative liabilities   2,226 3,453 2,832
Other liabilities   3,661 1,314 3,442
Total   23,415 19,952 22,250
Liabilities held for sale§ AB 1,026
Total liabilities   316,206 270,546 297,280
Total equity and liabilities K 325,837 279,872 307,644

Condensed consolidated statement of cash flows

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    2013 £m 2012* £m
  Note Half year Half year Full year

* The Group has adopted new accounting standards on consolidated financial statements and joint arrangements, and amendments to the employee benefits accounting standard, from 1 January 2013 as described in note B. Accordingly, the 2012 comparative results and related notes have been adjusted retrospectively from those previously published for the application of these standards.

Notes

  1. This measure is the formal profit before tax measure under IFRS but it is not the result attributable to shareholders.
  2. The adjusting items to profit before tax included within non-cash movements in operating assets and liabilities reflected in profit before tax are as follows:

      2013 £m 2012* £m
      Half year Half year Full year

    * The Group has adopted new accounting standards on consolidated financial statements and joint arrangements, and amendments to the employee benefits accounting standard, from 1 January 2013 as described in note B. Accordingly, the 2012 comparative results and related notes have been adjusted retrospectively from those previously published for the application of these standards.

    Other non-investment and non-cash assets (1,140) (1,223) (774)
    Investments (8,074) (9,228) (26,993)
    Policyholder liabilities (including unallocated surplus) 7,295 10,622 26,362
    Other liabilities (including operational borrowings) 2,452 (1,321) (511)
    Non-cash movements in operating assets and liabilities reflected in profit before tax 533 (1,150) (1,916)
  3. The adjusting items to profit before tax included within other items are adjustments in respect of non-cash items together with operational interest receipts and payments, dividend receipts and tax paid.
  4. The acquisition of Thanachart Life in the first half of 2013, resulted in a net cash outflow of £376 million. The acquisition of REALIC in the second half of 2012, resulted in a net cash outflow of £224 million. See note X for further details.
  5. Structural borrowings of shareholder-financed operations comprise core debt of the parent company, Prudential Capital bank loan and Jackson surplus notes. Core debt excludes borrowings to support short-term fixed income securities programmes, non-recourse borrowings of investment subsidiaries of shareholder-financed operations and other borrowings of shareholder-financed operations. Cash flows in respect of these borrowings are included within cash flows from operating activities.
  6. Interest paid on structural borrowings of with-profits operations relate solely to the £100 million 8.5 per cent undated subordinated guaranteed bonds which contribute to the solvency base of the Scottish Amicable Insurance Fund, a ring-fenced sub-fund of the PAC with-profits fund. Cash flows in respect of other borrowings of with-profits funds, which principally relate to consolidated investment funds, are included within cash flows from operating activities.
Cash flows from operating activities        
Profit before tax (being tax attributable to shareholders' and policyholders’ returns)note (i)   720 1,196 3,117
Non-cash movements in operating assets and liabilities reflected in profit before taxnote (ii)   533 (1,150) (1,916)
Other itemsnote (iii)   70 254 (496)
Net cash inflows from operating activities   1,323 300 705
Cash flows from investing activities        
Net cash outflows from purchases and disposals of property, plant and equipment   (140) (108) (125)
Acquisition of subsidiaries, net of cash balancenote (iv) X (376) (224)
Change to Group's holdings, net of cash balance   23 23
Net cash outflows from investing activities   (516) (85) (326)
Cash flows from financing activities        
Structural borrowings of the Group:        
Shareholder-financed operations:note (v) S      
Issue of subordinated debt, net of costs   429
Bank loan   25
Interest paid   (148) (139) (270)
With-profits operations:note (vi) T      
Interest paid   (4) (4) (9)
Equity capital:        
Issues of ordinary share capital W 1 14 17
Dividends paid   (532) (440) (655)
Net cash outflows from financing activities   (254) (569) (892)
Net increase (decrease) in cash and cash equivalents   553 (354) (513)
Cash and cash equivalents at beginning of period   6,126 6,741 6,741
Effect of exchange rate changes on cash and cash equivalents   161 (52) (102)
Cash and cash equivalents at end of period   6,840 6,335 6,126
 
 

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