Consolidated income statement

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Year ended 31 December Note 2012 £m 2011* £m
  • * The Group has adopted updated US GAAP requirements for deferred acquisition costs as an improvement to its accounting policy under IFRS 4 for those operations of the Group which measure insurance assets and liabilities substantially by reference to US GAAP principles. Accordingly, the 2011 comparative results and related notes have been adjusted from those previously published for the retrospective application of the change as if the new accounting policy had always applied, as described in note A5.
  • 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.
Gross premiums earned   29,910 25,706
Outward reinsurance premiums   (506) (429)
Earned premiums, net of reinsurance F2 29,404 25,277
Investment return F2 24,051 9,360
Other income F2 2,021 1,869
Total revenue, net of reinsurance F1,F2 55,476 36,506
Benefits and claims   (44,831) (31,060)
Outward reinsurers’ share of benefit and claims F1 259 746
Movement in unallocated surplus of with-profits funds H12 (1,381) 1,025
Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance   (45,953) (29,289)
Acquisition costs and other expenditure F3 (6,055) (5,120)
Finance costs: interest on core structural borrowings of shareholder-financed operations F4 (280) (286)
Total charges, net of reinsurance F1 (52,288) (34,695)
Profit before tax (being tax attributable to shareholders’ and policyholders’ returns)   3,188 1,811
(Less) add tax (charge) credit attributable to policyholders’ returns   (378) 17
Profit before tax attributable to shareholders B1 2,810 1,828
Total tax (charge) attributable to policyholders and shareholders F5 (991) (392)
Adjustment to remove tax credit (charge) attributable to policyholders’ returns   378 (17)
Tax charge attributable to shareholders’ returns F5 (613) (409)
Profit for the year   2,197 1,419
Attributable to:      
Equity holders of the Company   2,197 1,415
Non-controlling interests   4
Profit for the year   2,197 1,419
Earnings per share (in pence)      
Based on profit attributable to the equity holders of the Company:      
Basic B2 86.5p 55.8p
Diluted B2 86.4p 55.7p

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