Long-term thinking for life‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌

HK Stock Code: 2378

Delivering growth and cash

Prudential has delivered good progress on our key operating metrics.

The first‑half performance demonstrates the quality of our franchises, the effectiveness of our strategy and our ability to leverage our broad capabilities to deliver on the significant growth opportunities in our chosen markets. We are well placed to capitalise on the positive structural trends, and continue to deliver both growth and cash.

Contents

  1. Group overview

    01-06

  2. Performance measures

    04 Group Chief Executive's report

    02 Business performance

    07-28

    08 Chief Financial Officer's report on the 2016 first half financial performance

    21 Group Chief Risk Officer's report of the risks facing our business and how these are managed

  3. International Financial Reporting Standards (IFRS) basis results

    29-100

  4. European Embedded Value (EEV) basis results

    101-138

  5. Additional information

139-176

140 Additional financial information

161 Risk factors

167 Corporate governance

  1. Significant shareholdings

  2. Disclosure of interests of directors

173 Shareholder information

175 How to contact us

Prudential plc Annual Report 2015

Long-term thinking for life

HKStockCode:2378

www.prudential.co.uk

Front cover, clockwise from top left:

Prudential customers Shane from the Philippines; Mike from the UK; Fung Yee from Hong Kong and Wie from Indonesia.

01 Group overview 02 Business performance

Group overview

02 Performance measures

04 Group Chief Executive's report

www.prudential.co.uk

03 IFRS basis results 04 EEV basis results 05 Additional information 12016 Half Year Financial Report Prudential plc 01

Performance measures

To create sustainable economic value for our shareholders we focus on delivering growth and cash while maintaining appropriate capital.

Profit, cash and capital

Prudential takes a balanced approach to performance management across IFRS, EEV and cash. We aim to demonstrate how we generate profits under different accounting bases, reflecting the returns we generate on capital invested, and highlight the cash generation of

our business.

What we measure and why Performance1

IFRS operating profit 2 £m

IFRS operating profit is our primary measure of profitability. This measure of profitability provides an underlying operating result based on longer-term investment returns and excludes

non-operating items.

1,4151,521

1,881

CAGR

2,059

+16%

- Group IFRS operating profit in half year 2016 increased by 6 per cent on a

constant exchange rate basis (9 per cent on an actual exchange rate basis), equivalent to an annualised 24 per cent return on opening IFRS equity. This result was driven by continued double- digit growth in our Asia life operations.

1,157

HY2012 HY2013 HY2014 HY2015 HY2016

EEV new business profit 3,4, 5 £m

Life insurance products are, by their nature, long term and generate profit over a significant number of years. Embedded value reporting provides investors with a measure of the future profit streams of the Group. EEV new business profit reflects the value of future profit streams which are not fully captured in the period of sale under IFRS reporting.

HY2012

818

913

HY2013

1,009

HY2014

1,190

HY2015

CAGR

+11%

1,260

HY2016

- EEV new business profit in half year 2016 increased by 8 per cent on

a constant exchange rate basis

(13 per cent on an actual exchange rate basis) compared to half year 2015, driven by a combination of higher volumes and pricing and product actions to increase profitability.

EEV operating profit 3,4 £m

EEV operating profit is provided as an additional measure of profitability. This measure includes EEV new business profit, the change in the value of the Group's

1,541

long-term in-force business, and profit from our asset management and other businesses. As with IFRS, EEV operating profit reflects the underlying results based on longer-term investment returns.

1,8211,943

2,278

CAGR

2,263

+9%

- Group EEV operating profit in half year 2016 was lower by 4 per cent on a constant exchange rate basis (1 per cent on an actual exchange rate basis) compared to half year 2015, reflecting higher new business profits and adverse impact of lower interest rates on the expected return from the

in-force business.

HY2012 HY2013 HY2014 HY2015 HY2016

02 Prudential plc 2016 Half Year Financial Report www.prudential.co.uk

Prudential plc published this content on 08 September 2016 and is solely responsible for the information contained herein.
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