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Interim Management ReportFinancial CommentarycontinuedNotes:1. These figures are explained in the analysis of the post-tax cash result in Section 3.2. DIR: IFRS requires any initial profit which arises on new business (either through an initial charge or surrender penalty) to be deferred atthe outset and then amortised over the life of the associated product or the surrender penalty period. This required treatment gives rise totwo adjustments to arrive at the IFRS result.(a) The amortisation of the opening deferred income which increases profit for the period and was £40.7 million (2010: £34.7 million) inthe first six months. The release in a particular year will depend upon the value of DIR at the start of the year and the remaining life ofthe policies to which the DIR relates or the remaining surrender penalty period. The expected release for the full year is £82.9 million.(b) The deferral of the initial profit associated with new business sales in the period. In the first six months the deferred profit reduced theIFRS result by £69.5 million (2010: £57.1 million). The deferral of profit in any particular year will be dependent upon the level ofnew business.3. DAC: Specific new business acquisition expenses are required to be deferred in the year they arise and then amortised in future years overthe life of the policies to which the costs relate. This treatment of these acquisition expenses gives rise to two adjustments to arrive at theIFRS result.(a) The amortisation of the opening DAC, which reduces profit for the period, was £31.5 million (2010: £26.9 million) in the first sixmonths. The charge in a particular period will depend upon the value of the DAC at the start of the year and the remaining life of thepolicies to which the DAC relates. The expected amortisation charge for the full year is £64.3 million.(b) The deferral of the specific acquisition costs incurred in the current period. In the first six months this deferral increased IFRS profitsby £75.9 million (2010: £66.3 million). The deferral of expenses in any particular year will be dependent upon the level of theacquisition costs which themselves will be determined by the level of new business.4. The IFRS balance sheet includes an asset representing purchased value of in-force (“PVIF”). This asset is amortised over the remaining lifeof the policies associated with this asset. The amortisation charge for the first six months was £1.4 million (2010: £1.4 million). The chargefor the full year is expected to be £2.8 million.5. Share options: this figure is the notional cost that is associated with the various share option schemes.6. IFRS deferred tax: under IFRS a deferred tax asset is established for future benefits, not recognised in the cash result, that are expected tobe derived.7. Other IFRS: this reflects a number of other adjustments from the cash result. There will be a small impact, either positive or negative, infuture years.8. Corporation tax rate change: the above adjustments are all shown net of deferred tax rates prevailing at 30 June 2011. The budget on 23March 2011 implemented an immediate 1% reduction in the corporation tax rate to 26% for the 2011/2012 tax year and £3.8 million(2010: £nil) reflects the effect on the deferred tax of the change in the tax rate from 27% to 26%. The 2011 Finance Act was substantivelyenacted in early July and confirmed a further 1% reduction in tax rate to 25% for the 2012/2013 tax year, this reduction will be reflectedin the IFRS result in the second half of the year and would increase the post tax profit at 30 June 2011 by a further £3.5 million.Analysis of IFRS Assets and Net Assets per ShareThe table below provides a summarised breakdown of the IFRS position at the reporting dates:SixMonthsEnded30 June2011SixMonthsEnded30 June2010TwelveMonthsEnded31 December2010£ million £ million £ millionPurchased value of in-force* 35.7 37.6 36.7Deferred acquisition costs* 615.0 513.0 563.1Deferred income* (418.0) (349.7) (385.0)Other IFRS net assets 78.7 81.9 75.9Solvency net assets 314.5 281.2 295.6Total IFRS net assets 625.9 564.0 586.3* Net of deferred tax.SixMonthsEnded30 June2011SixMonthsEnded30 June2010TwelveMonthsEnded31 December2010Pence Pence PenceNet asset value per share 127.4 116.3 1201.612St. James’s Place plc Registered No. 3183415