Setting new standards - Friends Life

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FINANCIAL STATEMENTS IFRS FINANCIAL STATEMENTS EEV SUPPLEMENTARY INFORMATION Notes to the EEV results continued 6. Reconciliation of movement in pro forma embedded value International Total Life & UK Life & Life & Pensions Pensions Pensions EEV Other Total EEV £m £m £m £m £m Pro forma embedded value at 31 December 2005 2,566 503 3,069 395 3,464 Contribution from new business 108 96 204 - 204 Profit from existing business - Expected return 173 34 207 - 207 - Experience variances 9 (2) 7 - 7 - Operating assumption changes 1 (10) (9) - (9) - Expected transfer to net assets - - - - - Development costs (26) - (26) - (26) Expected return on shareholders’ net assets 50 1 51 - 51 Other underlying items - - - 75 75 Underlying EEV profit before tax 315 119 434 75 509 Non-recurring items 2 - 2 (19) (17) Investment return variances (179) (7) (186) 12 (174) Effect of economic assumption changes 187 (7) 180 1 181 Other non-underlying items - - - (101) (101) EEV profit before tax 325 105 430 (32) 398 Tax (103) (18) (121) 20 (101) EEV profit after tax 222 87 309 (12) 297 Net movement recognised directly in the statement of recognised income and expense - - - (10) (10) Minority interest - - - 13 13 Dividends on ordinary shares (150) - (150) (14) (164) Share based payments - - - 25 25 Earn-out payments - - - (87) (87) Adjustment to the value of the listed Asset Management business to market value - - - 122 122 Total movement in EEV 72 87 159 37 196 Pro forma embedded value at 31 December 2006 2,638 590 3,228 432 3,660 Pro forma EEV comprises the EEV of the entire Group, incorporating the Group’s share of F&C at market value of £531m (2005: £441m). ‘Other’ consists predominantly of Asset Management business and corporate items. 178 Friends Provident Annual Report & Accounts 2006
PARENT COMPANY ACCOUNTS ABBREVIATIONS AND DEFINITIONS Notes to the EEV results continued 7. Reconciliation of net worth and value of in-force business for Life & Pensions Shareholders’ capital and reserves Total Value of UK Life & Free Required Total net in-force Pensions surplus capital worth business EEV £m £m £m £m £m At 1 January 2006 499 551 1,050 2,019 3,069 Contribution from new business (299) 65 (234) 388 154 Profit from existing business Expected return 37 (34) 3 145 148 Experience variances, operating assumption changes and development costs 138 69 207 (223) (16) Expected profit – transfer to net worth 240 - 240 (240) - Expected return on shareholders’ net assets 33 - 33 - 33 Investment return variances and economic assumption changes 47 1 48 (58) (10) Life & Pensions EEV profit after tax 196 101 297 12 309 Dividend (150) - (150) - (150) Shareholders’ capital and reserves At 31 December 2006 545 652 1,197 2,031 3,228 All items in the table above are shown net of tax. Friends Provident Annual Report & Accounts 2006 179
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Setting new standards Friends Provi
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ANNUAL REVIEW CORPORATE GOVERNANCE
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Group financial highlights Group
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INTERNATIONAL LIFE & PENSIONS ASSET
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DIRECTORS’ REPORT CORPORATE GOVER
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FINANCIAL STATEMENTS Independent Au
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PARENT COMPANY ACCOUNTS ABBREVIATIO
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Setting new standards - Friends Life

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