Final Results - Part 3

Prudential PLC
22 February 2001

PART 3


                                                                              
                                                          Schedule 4          
  Statutory basis                                                             
  results                                                                     
  Investment gains -            2000       1999     1998         1997     1996
  analysis by business                                                        
  area                                                                        
  Jackson National Life                                                       
  Current year realised    US $(56)m    US $28m  US $46m      US $80m  US $18m
  gains (US$)                                                                 

  Five year average          US $23m    US $52m  US $42m      US $64m         
  credited to operating                                                       
  result (US$)                                                                

  (Shortfall)/excess of                                                       
  current year realised                                                       
  gains over five year                                                        
  average excluded                                                            

  from operating result    US $(79)m  US $(24)m   US $4m      US $16m         
  but included in                                                             
  profit before tax                                                           
  (US$)                                                                       

  Current year realised       £(36)m       £17m     £27m         £49m         
  gains (£)                                                                   

  Five year average             £16m       £32m     £25m         £39m         
  credited to operating                                                       
  result (£)                                                                  

  (Shortfall)/excess of                                                       
  current year realised                                                       
  gains over five year                                                        
  average excluded from                                                       
  operating result but       £ (52)m     £(15)m      £2m         £10m         
  included in profit                                                          
  before tax (£)                                                              

  General business and                                                        
  shareholders                                                                

  Current year realised         £22m       £76m     £43m         £89m         
  and unrealised gains                                                        

  Longer-term gains             £28m       £33m     £23m         £24m         
  credited to operating                                                       
  result                                                                      

  (Shortfall)/excess of                                                       
  current year gains                                                          
  over longer-term                                                            
  gains excluded from                                                         
  operating result but         £(6)m       £43m     £20m         £65m         
  included in profit                                                          
  before tax                                                                  
 

                                                                              
                                                        Schedule 5            
  Statutory basis results                                                     
  Taxation charge                                            2000 £m   1999 £m
  Tax charge on operating profit (based on                                    
  longer-term investment returns)                                             
  Long-term business (excluding tax on 1999                                   
  re-engineering costs borne                                                  
  directly by shareholder funds)                                              
                              UK Operations (note 5a)            125       137
                              Jackson National Life              132       130
                              (note 5b)                                       
                              Asia (note 5c)                       4         4
                              Europe (note 5c)                   (2)         0
                                                                 259       271
  General insurance and shareholders (including tax                           
  on all 1999 re-engineering                                                  
  costs borne directly by shareholders' funds)                  (24)      (62)

  Total tax on operating profit                                  235       209

  Tax on items not included in operating profit                               

  Tax on short-term fluctuations in investment returns           (8)      (16)

  Tax on profit on Egg flotation and business                     57        15
  disposals                                                                   

  Total tax on items not included in operating profit             49       (1)

  Tax on profit on ordinary activities                                        
  (including tax on actual investment returns)                   284       208

  Notes                                                                       
  5a.                         Excluding M&G long-term                         
                              business                                        
  5b.                         Excluding tax                                   
                              charge/relief on broker                         
                              dealer and fund                                 
                              management result                               
  5c.                         Including tax relief on                         
                              development costs                               
 

                                                                              
                                                                 Schedule 6     
                                                                      
  Achieved Profits basis results                                              

                                                             
  2000 Basic                                                                  
  Earnings Per                                             Post-tax             
  Share (note 6a)                                          and                  
                                                Minority   minority   Earnings  
                     Pre-tax   Tax   Post-tax    interests  interests per share 
                          £m    £m        £m            £m         £m   (pence) 
               
  Based on         1,029      (292)       737           12        749      38.2 
  operating profit                                                            
  after tax and                                                               
  minority                                                                    
  interests before                                                            
  amortisation of                                                             
  goodwill                         
                                                                             
  Adjustment for     (84)                 (84)                   (84)     (4.3)
  amortisation of                                                             
  goodwill                                                                    
 
 Adjustment from    (440)       110      (330)        13        (317)    (16.2)
  post-tax                                                                    
  longer-term                                                                 
  investment                                                                  
  returns to                                                                  
  post-tax actual                                                             
  investment                                                                  
  returns (after                                                              
  related minority                                                            
  interests) (note                                                            
  6b)                                                                         
 
 Adjustment for       223       (57)      166                    166       8.5
  profit on                                                                   
  flotation of Egg                                                            
  and business                                                                
  disposals                                                                   

  Based on profit     728      (239)      489        25          514      26.2
  for the                                                                     
  financial year                                                              
  after minority                                                              
  interests                                                                   
 

                                                                              
  Notes                                                                       
  6a.      Average number of shares for 2000 is 1,959m                        
  6b.      Minority interests in adjustment from post tax longer-term         
           investment returns to post tax actual returns:                     
           The adjustment from post-tax longer-term investment returns to     
           post-tax actual investment returns includes investment return      
           that is attributable to external equity investors in two           
           investment funds of the US fund management operation.              
           These two funds are consolidated as quasi-subsidiaries but have no 
           net impact on pre-tax or post-tax operating profit.                
           Total profit, before and after tax, incorporating the adjustment   
           from longer-term returns to actual investment returns,             
           includes losses of £13m attributable to these minority interests.  
 

                                                                              
                                                          Schedule 7          
  Achieved Profits basis results                                              
  Economic assumptions                                                        
  (A) Current economic assumptions                                            
  The following rates have been used in calculating the                       
  achieved profits basis results for 2000 and 1999:                           
  UK operations                                                               
  Pre-tax expected long-term nominal rates of                                 
  investment return                                                           
                      UK equities                                           8%
                      Overseas equities                                     8%
                      Property                                              8%
                      Gilts                                                 6%
                      Corporate bonds                                       7%
                      PAC with-profit fund assets                             
                      (applying the rates listed above                      8%
                      to the investments held by the                          
                      fund)                                                   
                      representing:                                           
                          Expected long-term real rate of return          5.5%  
                          Expected long-term rate of inflation            2.5%
                                                                    
  Post-tax expected long-term nominal rate of return                          
            Pension business (where no tax applies)                         8%
            Life business                                                 7.4%
  Risk discount rate                                                      8.5%
  US operations (Jackson National Life)                                       
  Expected long-term spread between earned rate and                       1.9%
  rate credited to policyholders                                              
  Risk discount rate                                                      8.5%
  Asia operations                                                             
  Risk discount rate (note 7a)                                           10.4%
 (B) Estimated sensitivity of Group Achieved Profits basis shareholders fund to
changes in risk discount rate
Published shareholder funds at 31 December 2000 (applying risk discount rates as
shown above                                                            £8.833m
Estimate of change in Group shareholders' funds to alteration of risk discount
rate for all operations:                                                        
                                               
                                                    1% decrease Add     £530m   
                                                  1% increase Minus   £(560)m 
                                                                              
  Note                                                                        
  7a.     The Asia risk discount rate has been determined by weighting each   
          country's risk discount rate                                        
          by reference to the Achieved Profits basis result for new business  
          written in 2000.                                                    
 

                                                                              
                                                            Schedule 8        
  Achieved Profits                                                            
  basis results                                                               
                                  2000                      1999              
                          Pre-ta  Tax    Post-tax  Pre-tax  Tax       Post-tax
                          x                                                   
  Operating profits           £m     £m        £m       £m        £m        £m
  from new long-term                                                          
  insurance business                                                          
  UK operations              230   (69)       161      308      (92)       216
  US operations              221  (101)       120      198      (88)       110
  (Jackson National                                                           
  Life) (note 8a)                                                             
  Prudential Asia            153   (44)       109       90      (24)        66
  Prudential Europe            9    (3)         6        7       (2)         5
                             613  (217)       396      603     (206)       397
  Note                                                                        
  8a.            Jackson National Life net of tax profits:                      
      
             Pre-capital                      155                          141
             charge                                                           
             Capital                         (35)                         (31)
             charge                                                           
             Post-capital                     120                          110
             charge                                                         
 

                                                                              
                                                                   Schedule 9 
  Achieved Profits                                                            
  basis results                                                               
                         UK                                                   
                         operations                                            
                                                                             
                         (note 9c)  Jackson  Prudentia1  Prudential       Total 
                                    National  Asia       Europe              
                                    Life                                    
                         2000 1999  2000 1999 2000 1999  2000 1999    2000 1999
                                                              
  Operating profits       £m   £m    £m   £m   £m   £m    £m   £m      £m   £m
  from business in                                                            
  force                                                                       
  Unwind of discount     429  384   218   201  58   43     8    6     713  634
                                                                       
  Return on JNL                      
  surplus assets (over                                                        
  target surplus)                    34  26                             34  26  
                                      
  Averaged realised                  19  37                             19  37
  gains (note 9a)                                                             
  Results of service         0 (1)                                       0 (1)
  companies                                                                 
  Experience variances:                                                       
         Spread                      39  32                             39  32
         Persistency         0  43 (24) (38)   (7)  (19)   0   0       (31)(14)
                                    
         JNL                       
         mortality/morb             (10)  11                           (10) 11  
   
         idity                                                                
         JNL expenses               (37) (8)                           (37)(8)
                                     
         Other              19 (7)   17  16      9   11    0   0       45  20
                                                                             
                           448 419  256 277     60   35    8   6      772 737
                                 
  Pension mis-selling          (92)                                       (92)
                                
  Change of                 30   - (258)  -                          (228)  -
  persistency and                       
  expense assumptions                                                        
  Development expenses                         (17) (12) (18)  0      (35)(12)
                                                    
  Total                    478 327   (2) 27     43   23  (10)  6      509 633
                                 
  Notes                                                                       

                                                                              
                          2000  1999                                            
                                                                            
  9a.    Jackson            £m  £m                                            
         National Life                                                        
         averaged                                                             
         realised gains                                                       
         Statutory          16  32                                            
         basis (per                                                           
         schedule 4)                                                          
         Add back:                                                            
         DAC                 3   5                                            
         adjustment                                                           
         (note 9b)                                                            
                            19  37                                            
 
9b.   The statutory basis gains subject to averaging include the amortisation of
      policy acquisition costs attributable to realised gains and losses arising
      in the years 1998 to 2000.
      On the Achieved Profits basis deferred acquisition costs do not feature as
      part of the methodology. Accordingly the realised gains included in the
      averaging process are
      exclusive of the amortisation of policy acquisition costs attributable to
      realised gains and losses.
9c.  Excluding M&G long-term business
                                         


                                                                              
                                                                  Schedule 10 
  Achieved Profits basis results                                              
                                                                   2000   1999
  Taxation charge                                                    £m     £m
  Tax charge on operating profit (based on longer-term                        
  investment returns)                                                         
  Long-term business (excluding tax on 1999                                   
  re-engineering costs borne                                                  
  directly by shareholder funds)                                              
                               UK Operations (note 10a)             212    187
                               Jackson National Life                 44    173
                               (note 10b)                                     
                               Asia (note 10c)                       57     29
                               Europe (note 10c)                      0      4
                                                                    313    393
  General insurance and shareholders (including tax on                        
  all re-engineering costs                                                    
  borne directly by shareholders' funds)                           (21)   (57)
  Total tax on operating profit                                     292    336
  Tax on items not included in operating profits                              
  Tax on short-term fluctuations in investment returns            (110)    168
  Tax on profit on Egg flotation and business disposals              57     15
  Total tax on items not included in operating profit              (53)    183
  Tax on profit on ordinary activities                                        
  (including tax on actual investment returns)                      239    519
  Notes                                                                       
  10a.                         Excluding M&G long-term                        
                               business                                       
  10b.                         Excluding tax                                  
                               charge/relief on broker                        
                               dealer and fund                                
                               management result                              
  10c.                         Including tax relief on                        
                               development costs                              
 

                                                                              
                                                                  Schedule 11 
  Achieved Profits basis results                                              
  Shareholders' funds summary                                2000 £m   1999 £m
  UK operations                                                               
                                   Long-term business          4,227     4,127
                                   operations                                 
                                   General business              206       261
                                   solvency capital                           
                                   (note 11a)                                 
                                   M&G                           336       312
                                   Egg                           417       463
                                                               5,186     5,163
  US operations (note 11c)                                                    
                                   Jackson National Life                      
                                   (net of surplus note                       
                                   borrowings                                 
                                   of £167m (£155m)                           
                                 Before capital charge        2,893     2,643
                                 Capital charge (note 11b)    (222)     (234)
                                 After capital charge         2,671     2,409
                                                                       
                                   Other US operations           85       124
                                   (note 11d)                                 
                                                               2,756     2,533
  Prudential Asia                                                793       593
  Prudential                                                      82        68
  Europe                                                                      
  Other                                                                       
  operations                                                                  
                                   Goodwill (note 11c)         1,546     1,582
                                   Holding company net       (1,530)   (1,682)
                                   borrowings                                 
                                   Other assets                    0        85
                                                                  16      (15)
  Total                                                        8,833     8,342
  Notes                                                                       
  11a.             The 1999 figure for general business                       
                   solvency capital has been restated to                      
                   £261m from the previously published                        
                   figure of £127m. The restatement has                       
                   been made to be consistent with a                          
                   change in allocation of capital and                        
                   related investments made in January                        
                   2000.                                                      
  11b.             In determining the cost of capital of                      
                   Jackson National Life it has been                          
                   assumed that an amount equal to 200                        
                   per cent of the risk based capital                         
                   required by the US Supervisory                             
                   authorities must be retained. The                          
                   impact of the related capital charge                       
                   is to reduce Jackson National Life's                       
                   shareholders' funds by £222m (£234m).                      
  11c.             Total goodwill at 31 December 2000             £m          
                   comprises:                                                 
                                   Held within US                 65          
                                   operations relating                        
                                   to purchase of broker                      
                                   dealer and banking                         
                                   businesses                                 
                                   Other operations            1,546          
                                   principally relating                       
                                   to M&G                                     
                                                               1,611          
  11d.             Relates to broker dealer, fund                             
                   management, intra-group funding                            
                   arrangements and certain tax balances.                     
 
                            
                                                                   Schedule 12

                                                                              
  Achieved Profits basis results                Long-term business operations

                                                     Jackson                    
                                                     National                 
                                             UK      Life       Asia   Europe 
  Reconciliation of movement in              £m      £m         £m     £m     
  shareholders funds                                                          
  Operating profit (including investment                                      
  return based on                                                             
  longer-term rate of returns)                                                
  Long-term business                                                          
                                  New        230     221        153    9      
                                  business                                    
                                  Business   478     (2)        60     8      
                                  in force                                    
  Asia and Europe development expenses                          (17)   (18)   
                                             708     219        196    (1)    
  Other operating profits                                                     
  Total operating profit before              708     219        196    (1)    
  amortisation of goodwill                                                    
  Amortisation of goodwill                           (1)                      
  Short-term fluctuations in investment      (218)   (171)      (46)   (3)    
  returns                                                                     
  Profit on sale and flotation of holding                                     
  in Egg                                                                      
  Share of exceptional gain of associate                                      
  company                                                                     
  Profits on sale of holding in associate                                     
  company                                                                     
  Profit on ordinary activities before tax                                    
  (including actual investment gains)                                         
                                             490     47         150    (4)    
  Tax on operating profit                   (212)   (44)        (57)    0      
  Tax on items not included in operating      65     48          7      0      
  profit                                                                      
  Total tax charge                           (147)    4         (50)   0      
  Minority interests                                                          
  Profit for the financial year              343     51         100    (4)    
  Exchange movements                                187          27            
  Development costs (net of tax) borne                           12     6      
  centrally                                                                   
  Intragroup dividends (including            (333)   24                       
  statutory transfer) (note 12a)                                              
  External dividends                                                          
  Investment in operations                    95                 61     7      
  Proceeds from issues of share capital by                                    
  parent company                                                              
  Goodwill credited to reserves on                                            
  disposal of holding in associate company                                    
  Adjustment for European new business       (5)                       5      
  sold by Prudential Intermediary Business                                    
  Net increase in shareholders' capital      100     262        200    14     
  and reserves                                                                
  Shareholders' capital and reserves at 1    4,127   2,409      593    68     
  January 2000                                                                
  Shareholders' capital and reserves at 31   4,227   2,671      793    82     
  December 2000                                                               
  Analysed as:                                                                
                  Statututory Basis          344     2,241      315    60     
                  shareholders' funds                                         
                  Additional shareholders'   3,883   430        478    22     
                  interest on Achieved                                        
                  Profits basis                                               
                  Achieved Profits basis     4,227   2,671      793    82     
                  shareholders' funds                                         
                                                                      
 
 
                                               Long-term  business operations  
                                                                              
  Achieved Profits basis results              Total                           
                                              Long-term                       
                                              business     Other        Group 
                                              operations   operations   total 
  Reconciliation of movement in               £m           £m           £m    
  shareholders funds                                                          
  Operating profit (including investment                                      
  return based on                                                             
  longer-term rate of returns)                                                
  Long-term business                                                          
                                   New        613                       613   
                                   business                                   
                                   Business   544                       544   
                                   in force                                   
  Asia and Europe development expenses        (35)                      (35)  
                                              1,122                     1,122 
  Other operating profits                                  (93)         (93)  
  Total operating profit before               1,122        (93)         1,029 
  amortisation of goodwill                                                    
  Amortisation of goodwill                    (1)          (83)         (84)  
  Short-term fluctuations in investment       (438)        (2)          (440) 
  returns                                                                     
  Profit on sale and flotation of holding                  119          119   
  in Egg                                                                      
  Share of exceptional gain of associate                   21           21    
  company                                                                     
  Profits on sale of holding in associate                  83           83    
  company                                                                     
  Profit on ordinary activities before tax                                    
  (including actual investment gains)                                         
                                              683          45           728   
  Tax on operating profit                     (313)        21           (292) 
  Tax on items not included in operating      120          (67)         53    
  profit                                                                      
  Total tax charge                            (193)        (46)         (239) 
  Minority interests                                       25           25    
  Profit for the financial year               490          24           514   
  Exchange movements                          214          (27)         187   
  Development costs (net of tax) borne        18           (18)           0     
  centrally                                                                   
  Intragroup dividends (including statutory   (309)        309            0     
  transfer) (note 12a)                                                          
  External dividends                                       (484)       (484) 
  Investment in operations                    163          (163)          0     
  Proceeds from issues of share capital by                 184          184   
  parent company                                                              
  Goodwill credited to reserves on disposal                90           90    
  of holding in associate company                                             
  Adjustment for European new business sold    0                         0     
  by Prudential Intermediary Business                                         
  Net increase in shareholders' capital and   576          (85)         491   
  reserves                                                                    
  Shareholders' capital and reserves at 1     7,197        1,145        8,342 
  January 2000                                                                
  Shareholders' capital and reserves at 31    7,773        1,060        8,833 
  December 2000                                                               
  Analysed as:                                                                
                   Statututory Basis          2,960        1,060        4,020 
                   shareholders' funds                                        
                   Additional shareholders'   4,813                     4,813 
                   interest on Achieved                                       
                   Profits basis                                              
                   Achieved Profits basis     7,773        1,060        8,833 
                   shareholders' funds                                        
Note                                                                        
12a. The intragroup dividend of £24m for Jackson National Life is determined
     after deduction of a waiver of intragroup debt payable
     to Jackson's intermediate holding company in respect of funding
     arrangements.
 

                                                                           
     Schedule 13                                                           
                                                             2000    1999  
     Funds under management - summary                        £bn     £bn   
     Business Area                                                         
     UK operations                                           104.7   105.3 
     US operations                                           27.8    24.5  
     Prudential Asia                                         3.4     2.7   
     Prudential Europe                                       0.6     0.5   
     Retained centrally                                      0.2     0.2   
     Total group investments under management (note 13a)     136.7   133.2 
     Retail funds                                            22.7    15.2  
     Institutional funds                                     5.9     21.6  
     Total insurance and investment funds under management   165.3   170.0 
     Note                                                                  
     13a. As included in the consolidated balance sheet                    
 

                                                                  
              Schedule 14                                         
              Funds under management - analysis by business area  
                                                                              
                                 Fixed Income        Land and                 
                                 Securities          Buildings                
               Equities                                                       
               2000       1999   2000         1999   2000        1999    
               £bn        £bn    £bn          £bn    £bn         £bn     
  UK           50.2       56.9   28.3         21.7   10.1        8.6     
  operations                                                                  
  US           0.2        0.3    18.9         17.2   0.1         0.0     
  operations                                                                  
  (note 14a)                                                                  
  Prudential   0.8        0.7    1.4          1.0    0.1         0.1     
  Asia                                                                        
  Prudential   0.0        0.0    0.0          0.0    0.0         0.0     
  Europe                                                                      
  Retained     0.0        0.0    0.0          0.0    0.0         0.0     
  centrally                                                                   
  Total        51.2       57.9   48.6         39.9   10.3        8.7     
  Note                                                                        
                                                                
                                                
                                                
                                                
                                                Investments held 
                                                to cover  
                                 Other          linked 
                                 Investments    liabilities   Total             
                                                                              
                                 2000   1999   2000   1999   2000    1999  
                                  £bn    £bn    £bn    £bn    £bn     £bn   
  UK operations                   2.8    3.4    13.3   14.7   104.7   105.3 
  US operations (note 14a)        4.9    4.2    3.7    2.8    27.8    24.5  
  Prudential Asia                 0.5    0.4    0.6    0.5    3.4     2.7   
  Prudential Europe               0.0    0.0    0.6    0.5    0.6     0.5   
  Retained centrally              0.2    0.2    0.0    0.0    0.2     0.2   
  Total                           8.4    8.2    18.2   18.5   136.7   133.2 
  Note                                                                        
                                           
14a. US fixed income securities are valued at amortised cost