Financial Statements
Consolidated underlying profit
For the year ended 31 December 2007
| Notes | 2007 £m |
2006 £m |
|
|---|---|---|---|
| (Loss)/profit before tax from continuing operations* | (113) | 491 | |
| Policyholder tax | 13 | (23) | (124) |
| Returns on Group-controlled funds attributable to third parties | 23 | (104) | |
| (Loss)/profit before tax excluding profit generated within policyholder funds | (113) | 263 | |
| Non-recurring items | 3 | (38) | 17 |
| Amortisation of Asset Management acquired intangible assets | 16 | 42 | 43 |
| Amortisation of acquired present value of in-force business | 16 | 26 | 25 |
| Amortisation of Life & Pensions acquired intangible assets | 16 | 11 | 7 |
| Impairment of Asset Management acquired intangible assets | 16 | - | 58 |
| Interest payable on Step-up Tier one Insurance Capital Securities (STICS) | 40 | (52) | (52) |
| Short-term fluctuations in investment return | 5 | 78 | 39 |
| Underlying (loss)/profit before tax* | (46) | 400 | |
| Tax on underlying (loss)/profit | 39 | 6 | |
| Minority interest in underlying (loss)/profit | (24) | (29) | |
| Underlying (loss)/profit after tax attributable to ordinary shareholders of the parent | (31) | 377 |
| Earnings per share | Notes | 2007 pence |
2006 pence |
|---|---|---|---|
| Underlying (loss)/earnings per share | 15 | (1.4) | 17.9 |
IFRS underlying (loss)/profit is based on longer-term investment return and excludes: (i) policyholder tax, (ii) returns attributable to minority interests in policyholder funds, (iii) non-recurring items, (iv) amortisation and impairment of acquired intangible assets and present value of acquired in-force business; and is stated after deducting interest payable on STICS. Management consider that underlying profit better reflects the performance of the Group and focus on this measure of profit in its internal monitoring of the Group's IFRS results.
* Included in (loss)/profit before tax from continuing operations, and underlying (loss)/profit before tax, are one-off items relating to basis changes and the adoption of FSA Policy Statement PS06/14 Prudential Changes for Insurers which have decreased profit by £135m in 2007 (2006: increase of £156m). Further details of these items are set out in note 2(i).