TIDMPRU

RNS Number : 4775V

Prudential PLC

10 August 2022

IFRS disclosures

Prudential plc Half Year 2022 results

International Financial Reporting Standards (IFRS) financial results

Condensed Consolidated Income Statement

 
                                                                                   2022 $m        2021 $m 
                                                                                 ---------  -------------------- 
                                                                           Note  Half year  Half year  Full year 
   ----------------------------------------------------------------------------  ---------  ---------  --------- 
Continuing operations: 
Gross premiums earned                                                               12,241     11,521     24,217 
Outward reinsurance premiums                                                         (919)      (898)    (1,844) 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
Earned premiums, net of reinsurance                                        B1.3     11,322     10,623     22,373 
Investment return                                                                 (24,570)        738      3,486 
Other income                                                                           253        331        641 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
Total revenue, net of reinsurance                                          B1.3   (12,995)     11,692     26,500 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
Benefits and claims and movement in unallocated surplus of with-profits 
 funds, net of reinsurance                                                 C3.2     14,826    (7,748)   (18,911) 
Acquisition costs and other expenditure                                      B2    (1,632)    (2,402)    (4,560) 
Finance costs: interest on core structural borrowings of 
 shareholder-financed businesses                                                     (103)      (164)      (328) 
Gain (loss) attaching to corporate transactions                            D1.1         62       (56)       (35) 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
Total charges, net of reinsurance                                                   13,153   (10,370)   (23,834) 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
Share of profit from joint ventures and associates, net of related tax                  16        179        352 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
Profit before tax (being tax attributable to shareholders' and 
 policyholders' returns) note 
 (i)                                                                                   174      1,501      3,018 
Remove tax credit (charge) attributable to policyholders' returns                      126      (238)      (342) 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
Profit before tax attributable to shareholders' returns                    B1.1        300      1,263      2,676 
                                                                                 ---------  ---------  --------- 
Total tax charge attributable to shareholders' and policyholders' 
 returns                                                                   B3.1       (68)      (431)      (804) 
Remove tax (credit) charge attributable to policyholders' returns                    (126)        238        342 
                                                                                 ---------  ---------  --------- 
Tax charge attributable to shareholders' returns                           B3.1      (194)      (193)      (462) 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
Profit after tax from continuing operations                                B1.4        106      1,070      2,214 
Loss after tax from discontinued US operations note (ii)                   D1.2          -    (5,707)    (5,027) 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
Profit (loss) for the period                                                           106    (4,637)    (2,813) 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
 
Attributable to: 
Equity holders of the Company: 
 From continuing operations                                                            104      1,063      2,192 
 From discontinued US operations                                                         -    (5,073)    (4,234) 
 -----------------------------------------------------------------------  -----  ---------  ---------  --------- 
                                                                                       104    (4,010)    (2,042) 
   ----------------------------------------------------------------------------  ---------  ---------  --------- 
Non-controlling interests: 
 From continuing operations                                                              2          7         22 
 From discontinued US operations                                                         -      (634)      (793) 
 -----------------------------------------------------------------------  -----  ---------  ---------  --------- 
                                                                                         2      (627)      (771) 
   ----------------------------------------------------------------------------  ---------  ---------  --------- 
Profit (loss) for the period                                                           106    (4,637)    (2,813) 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
 
 
Earnings per share (in cents)                                                  2022          2021 
                                                                          ---------  -------------------- 
                                                                    Note  Half year  Half year  Full year 
   ---------------------------------------------------------------------  ---------  ---------  --------- 
Based on profit attributable to equity holders of the Company:        B4 
 Basic 
  Based on profit from continuing operations                                   3.8c      40.9c      83.4c 
  Based on loss from discontinued US operations                                  -c   (195.1)c   (161.1)c 
  ----------------------------------------------------------------------  ---------  ---------  --------- 
 Total basic earnings per share                                                3.8c   (154.2)c    (77.7)c 
 ----------------------------------------------------------------  -----  ---------  ---------  --------- 
 Diluted 
  Based on profit from continuing operations                                   3.8c      40.9c      83.4c 
  Based on loss from discontinued US operations                                  -c   (195.1)c   (161.1)c 
  ----------------------------------------------------------------------  ---------  ---------  --------- 
 Total diluted earnings per share                                              3.8c   (154.2)c    (77.7)c 
 ----------------------------------------------------------------  -----  ---------  ---------  --------- 
 
 
 
Dividends per share (in cents)                                 2022          2021 
                                                          ---------  -------------------- 
                                                    Note  Half year  Half year  Full year 
  ------------------------------------------------------  ---------  ---------  --------- 
Dividends relating to reporting period:               B5 
 First interim ordinary dividend                              5.74c      5.37c      5.37c 
 Second interim ordinary dividend                                 -          -     11.86c 
 -------------------------------------------------------  ---------  ---------  --------- 
Total relating to reporting period                            5.74c      5.37c     17.23c 
-------------------------------------------------  -----  ---------  ---------  --------- 
Dividends paid in reporting period:                   B5 
 Current year first interim dividend                              -          -      5.37c 
 Second interim ordinary dividend for prior year             11.86c     10.73c     10.73c 
 -------------------------------------------------------  ---------  ---------  --------- 
Total paid in reporting period                               11.86c     10.73c     16.10c 
-------------------------------------------------  -----  ---------  ---------  --------- 
 

Notes

(i) This measure is the formal profit before tax measure under IFRS. It is not the result attributable to shareholders principally because total corporate tax of the Group includes those taxes 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 IFRS profit before tax measure is not representative of pre-tax profit attributable to shareholders as it is determined after deducting the cost of policyholder benefits and movements in the liability for unallocated surplus of with-profits funds after adjusting for tax borne by policyholders.

(ii) Discontinued operations for half year and full year 2021 related to the US operations (Jackson) that were demerged from the Group in September 2021.

Condensed Consolidated Statement of Comprehensive Income

 
                                                                                   2022 $m        2021 $m 
                                                                                 ---------  -------------------- 
                                                                           Note  Half year  Half year  Full year 
   ----------------------------------------------------------------------------  ---------  ---------  --------- 
Continuing operations: 
Profit for the period                                                                  106      1,070      2,214 
Other comprehensive income (loss): 
Exchange movements arising during the period                                         (523)      (163)      (180) 
Valuation movements on retained interest in Jackson classified as 
 available-for-sale securities                                                       (247)          -        250 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
Total items that may be reclassified subsequently to profit or loss                  (770)      (163)         70 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
Total comprehensive (loss) income from continuing operations                         (664)        907      2,284 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
Total comprehensive loss for the period from discontinued US operations    D1.2          -    (6,574)    (7,068) 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
Total comprehensive loss for the period                                              (664)    (5,667)    (4,784) 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
 
Attributable to: 
Equity holders of the Company: 
 From continuing operations                                                          (656)        905      2,277 
 From discontinued US operations                                                         -    (5,844)    (6,283) 
 -----------------------------------------------------------------------  -----  ---------  ---------  --------- 
                                                                                     (656)    (4,939)    (4,006) 
Non-controlling interests: 
 From continuing operations                                                            (8)          2          7 
 From discontinued US operations                                                         -      (730)      (785) 
 -----------------------------------------------------------------------  -----  ---------  ---------  --------- 
                                                                                       (8)      (728)      (778) 
   ----------------------------------------------------------------------------  ---------  ---------  --------- 
Total comprehensive loss for the period                                              (664)    (5,667)    (4,784) 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
 

Condensed Consolidated Statement of Changes in Equity

 
                                                         Period ended 30 Jun 2022 $m 
                          ---------------------------------------------------------------------------------------- 
                                                                    Available 
                                                                    -for-sale                        Non- 
                            Share    Share  Retained  Translation  securities  Shareholders'  controlling    Total 
                    Note  capital  premium  earnings      reserve    reserves         equity    interests   equity 
-----------------  -----  -------  -------  --------  -----------  ----------  -------------  -----------  ------- 
Reserves 
Profit for the 
 period                         -        -       104            -           -            104            2      106 
Other 
 comprehensive 
 loss                           -        -         -        (513)       (247)          (760)         (10)    (770) 
-----------------  -----  -------  -------  --------  -----------  ----------  -------------  -----------  ------- 
Total 
 comprehensive 
 income (loss) 
 for the period                 -        -       104        (513)       (247)          (656)          (8)    (664) 
Transactions with 
owners of the 
Company 
Dividends             B5        -        -     (320)            -           -          (320)          (5)    (325) 
Reserve movements 
 in respect of 
 share-based 
 payments                       -        -        15            -           -             15            -       15 
Effect of 
 transactions 
 relating to 
 non-controlling 
 interests                      -        -      (14)            -           -           (14)            -     (14) 
Movement in own 
 shares in 
 respect of 
 share-based 
 payment plans                  -        -       (4)            -           -            (4)            -      (4) 
-----------------  -----  -------  -------  --------  -----------  ----------  -------------  -----------  ------- 
Net decrease in 
 equity                         -        -     (219)        (513)       (247)          (979)         (13)    (992) 
Balance at 
 beginning of 
 period                       182    5,010    10,216        1,430         250         17,088          176   17,264 
-----------------  -----  -------  -------  --------  -----------  ----------  -------------  -----------  ------- 
Balance at end of 
 period                       182    5,010     9,997          917           3         16,109          163   16,272 
-----------------  -----  -------  -------  --------  -----------  ----------  -------------  -----------  ------- 
 
 
                                                         Period ended 30 Jun 2021 $m 
                          ---------------------------------------------------------------------------------------- 
                                                                    Available 
                                                                    -for-sale                        Non- 
                            Share    Share  Retained  Translation  securities  Shareholders'  controlling    Total 
                    Note  capital  premium  earnings      reserve    reserves         equity    interests   equity 
-----------------  -----  -------  -------  --------  -----------  ----------  -------------  -----------  ------- 
Reserves 
Profit for the 
 period                         -        -     1,063            -           -          1,063            7    1,070 
Other 
 comprehensive 
 loss                           -        -         -        (158)           -          (158)          (5)    (163) 
-----------------  -----  -------  -------  --------  -----------  ----------  -------------  -----------  ------- 
Total 
 comprehensive 
 income (loss) 
 from continuing 
 operations                     -        -     1,063        (158)           -            905            2      907 
Total 
 comprehensive 
 loss from 
 discontinued US 
 operations         D1.2        -        -   (5,073)            -       (771)        (5,844)        (730)  (6,574) 
-----------------  -----  -------  -------  --------  -----------  ----------  -------------  -----------  ------- 
Total 
 comprehensive 
 loss for the 
 period                         -        -   (4,010)        (158)       (771)        (4,939)        (728)  (5,667) 
Transactions with 
owners of the 
Company 
Dividends             B5        -        -     (283)            -           -          (283)          (3)    (286) 
Reserve movements 
 in respect of 
 share-based 
 payments                       -        -        77            -           -             77            -       77 
Effect of 
 transactions 
 relating to 
 non-controlling 
 interests                      -        -      (10)            -           -           (10)            -     (10) 
New share capital 
 subscribed           C8        -        8         -            -           -              8            -        8 
Movement in own 
 shares in 
 respect of 
 share-based 
 payment plans                  -        -      (18)            -           -           (18)            -     (18) 
-----------------  -----  -------  -------  --------  -----------  ----------  -------------  -----------  ------- 
Net increase 
 (decrease) in 
 equity                         -        8   (4,244)        (158)       (771)        (5,165)        (731)  (5,896) 
Balance at 
 beginning of 
 period                       173    2,637    14,424        1,132       2,512         20,878        1,241   22,119 
-----------------  -----  -------  -------  --------  -----------  ----------  -------------  -----------  ------- 
Balance at end of 
 period                       173    2,645    10,180          974       1,741         15,713          510   16,223 
-----------------  -----  -------  -------  --------  -----------  ----------  -------------  -----------  ------- 
 

Condensed Consolidated Statement of Changes in Equity (continued)

 
                                                                Year ended 31 Dec 2021 $m 
 ----------------  -----  --------  -------------------------------------------------------------------------------- 
                                                                      Available 
                                                                      -for-sale                        Non- 
                             Share     Share  Retained  Translation  securities  Shareholders'  controlling    Total 
                    Note   capital   premium  earnings      reserve    reserves         equity    interests   equity 
-----------------  -----  --------  --------  --------  -----------  ----------  -------------  -----------  ------- 
Reserves 
Profit for the 
 year                            -         -     2,192            -           -          2,192           22    2,214 
Other 
 comprehensive 
 (loss) income                   -         -         -        (165)         250             85         (15)       70 
-----------------  -----  --------  --------  --------  -----------  ----------  -------------  -----------  ------- 
Total 
 comprehensive 
 income (loss) 
 from continuing 
 operations                      -         -     2,192        (165)         250          2,277            7    2,284 
Total 
 comprehensive 
 (loss) income 
 from 
 discontinued US 
 operations         D1.2         -         -   (4,234)          463     (2,512)        (6,283)        (785)  (7,068) 
-----------------  -----  --------  --------  --------  -----------  ----------  -------------  -----------  ------- 
Total 
 comprehensive 
 (loss) income 
 for the year                    -         -   (2,042)          298     (2,262)        (4,006)        (778)  (4,784) 
Transactions with 
owners of the 
Company 
Demerger dividend 
 in specie of 
 Jackson              B5         -         -   (1,735)            -           -        (1,735)            -  (1,735) 
Other dividends       B5         -         -     (421)            -           -          (421)          (9)    (430) 
Reserve movements 
 in respect of 
 share-based 
 payments                        -         -        46            -           -             46            -       46 
Effect of 
 transactions 
 relating to 
 non-controlling 
 interests*                      -         -      (32)            -           -           (32)        (278)    (310) 
New share capital 
 subscribed           C8         9     2,373         -            -           -          2,382            -    2,382 
Movement in own 
 shares in 
 respect of 
 share-based 
 payment plans                   -         -      (24)            -           -           (24)            -     (24) 
-----------------  -----  --------  --------  --------  -----------  ----------  -------------  -----------  ------- 
Net increase 
 (decrease) in 
 equity                          9     2,373   (4,208)          298     (2,262)        (3,790)      (1,065)  (4,855) 
Balance at 
 beginning of 
 year                          173     2,637    14,424        1,132       2,512         20,878        1,241   22,119 
-----------------  -----  --------  --------  --------  -----------  ----------  -------------  -----------  ------- 
Balance at end of 
 year                          182     5,010    10,216        1,430         250         17,088          176   17,264 
-----------------  -----  --------  --------  --------  -----------  ----------  -------------  -----------  ------- 
 

* The $(278) million in full year 2021 related to the derecognition of Athene's non-controlling interest upon the demerger of Jackson.

Condensed Consolidated Statement of Financial Position

 
                                                                                       2022 $m      2021 $m 
                                                                                       -------  ---------------- 
                                                                                 Note   30 Jun   30 Jun   31 Dec 
   ----------------------------------------------------------------------------------  -------  -------  ------- 
Assets 
Goodwill                                                                         C4.1      871      926      907 
Deferred acquisition costs and other intangible assets                           C4.2    6,750    6,525    6,858 
Property, plant and equipment                                                              405      525      478 
Reinsurers' share of insurance contract liabilities                                      2,750    9,891    9,753 
Deferred tax assets                                                                C7      378      298      266 
Current tax recoverable                                                                     22       23       20 
Accrued investment income                                                                1,187    1,092    1,171 
Other debtors                                                                            2,076    2,238    1,779 
Investment properties                                                                       35       39       38 
Investments in joint ventures and associates accounted for using the equity 
 method                                                                            C1    2,010    2,056    2,183 
Loans                                                                              C1    2,429    2,440    2,562 
Equity securities and holdings in collective investment schemesnote (i)            C1   57,497   60,466   61,601 
Debt securitiesnote (i)                                                            C1   79,119   92,728   99,094 
Derivative assets                                                                          182      485      481 
Deposits                                                                                 4,762    3,344    4,741 
Assets held for distributionnote (ii)                                                        -  335,750        - 
Cash and cash equivalents                                                                6,415    6,295    7,170 
------------------------------------------------------------------------------  -----  -------  -------  ------- 
Total assets                                                                       C1  166,888  525,121  199,102 
------------------------------------------------------------------------------  -----  -------  -------  ------- 
 
Equity 
Shareholders' equity                                                                    16,109   15,713   17,088 
Non-controlling interests                                                                  163      510      176 
------------------------------------------------------------------------------  -----  -------  -------  ------- 
Total equity                                                                       C1   16,272   16,223   17,264 
------------------------------------------------------------------------------  -----  -------  -------  ------- 
 
Liabilities 
Contract liabilities (including amounts in respect of contracts classified as 
 investment contracts 
 under IFRS 4)                                                                   C3.2  123,529  144,809  151,915 
Unallocated surplus of with-profits funds                                        C3.2    4,568    6,273    5,384 
Core structural borrowings of shareholder-financed businesses                    C5.1    4,266    6,404    6,127 
Operational borrowings                                                           C5.2      854      895      861 
Obligations under funding, securities lending and sale and repurchase 
 agreements                                                                                799      396      223 
Net asset value attributable to unit holders of consolidated investment funds            4,549    5,770    5,664 
Deferred tax liabilities                                                           C7    2,699    2,735    2,862 
Current tax liabilities                                                                    253      200      185 
Accruals, deferred income and other liabilities                                          8,103    8,017    7,983 
Provisions                                                                                 225      227      372 
Derivative liabilities                                                                     771      412      262 
Liabilities held for distributionnote (ii)                                                   -  332,760        - 
------------------------------------------------------------------------------  -----  -------  -------  ------- 
Total liabilities                                                                  C1  150,616  508,898  181,838 
------------------------------------------------------------------------------  -----  -------  -------  ------- 
Total equity and liabilities                                                       C1  166,888  525,121  199,102 
------------------------------------------------------------------------------  -----  -------  -------  ------- 
 

Notes

(i) Included within equity securities and holdings in collective investment schemes and debt securities as at 30 June 2022 are $1,384 million of lent securities and assets subject to repurchase agreements (30 June 2021: $1,006 million; 31 December 2021: $854 million).

(ii) Assets and liabilities held for distribution at 30 June 2021 related to the Group's US operations (Jackson) which were classified as discontinued operations in half year 2021 and demerged in September 2021.

Condensed Consolidated Statement of Cash Flows

 
                                                                                   2022 $m        2021 $m 
                                                                                 ---------  -------------------- 
                                                                           Note  Half year  Half year  Full year 
   ----------------------------------------------------------------------------  ---------  ---------  --------- 
Continuing operations: 
Cash flows from operating activities 
Profit before tax (being tax attributable to shareholders' and 
 policyholders' returns)                                                               174      1,501      3,018 
Adjustments to profit before tax for non-cash movements in operating 
 assets and liabilities: 
 Investments                                                                        21,017    (5,651)   (14,553) 
 Other non-investment and non-cash assets                                            6,446      2,693      2,658 
 Policyholder liabilities (including unallocated surplus of with-profits 
  funds)                                                                          (25,972)      2,424      9,095 
 Other liabilities (including operational borrowings)                                   74        105         16 
Other itemsnote (i)                                                                   (23)        156         44 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
Net cash flows from operating activitiesnote (ii)                                    1,716      1,228        278 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
Cash flows from investing activities 
Net cash flows from purchases and disposals of property, plant and 
 equipment                                                                            (14)       (19)       (36) 
Net cash flows from other investing activitiesnote (iii)                              (50)      (773)      (690) 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
Net cash flows from investing activities                                              (64)      (792)      (726) 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
Cash flows from financing activities 
Structural borrowings of shareholder-financed operations:note (iv)         C5.1 
 Issuance of debt, net of costs                                                        346          -        995 
 Redemption of debt                                                                (2,075)          -    (1,250) 
 Interest paid                                                                       (117)      (163)      (314) 
Payment of principal portion of lease liabilities                                     (56)       (54)      (118) 
Equity capital: 
 Issues of ordinary share capital                                                        -          8      2,382 
External dividends: 
 Dividends paid to the Company's shareholders                                B5      (320)      (283)      (421) 
 Dividends paid to non-controlling interests                                           (5)        (3)        (9) 
 -----------------------------------------------------------------------  -----  ---------  ---------  --------- 
Net cash flows from financing activities                                           (2,227)      (495)      1,265 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
Net (decrease) increase in cash and cash equivalents from continuing 
 operations                                                                          (575)       (59)        817 
Net decrease in cash and cash equivalents from discontinued US 
 operations                                                                D1.2          -      (460)    (1,621) 
Cash and cash equivalents at beginning of period                                     7,170      8,018      8,018 
Effect of exchange rate changes on cash and cash equivalents                         (180)       (43)       (44) 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
Cash and cash equivalents at end of period                                           6,415      7,456      7,170 
------------------------------------------------------------------------  -----  ---------  ---------  --------- 
Comprising: 
 Cash and cash equivalents from continuing operations                                6,415      6,295      7,170 
 Cash and cash equivalents from discontinued US operations                 D1.2          -      1,161          - 
 -----------------------------------------------------------------------  -----  ---------  ---------  --------- 
 

Notes

(i) Other items include adjustments to profit before tax in respect of non-cash items together with operational interest receipts and payments, dividend receipts and tax paid.

(ii) Included in net cash flows from operating activities are dividends from joint ventures and associates of $60 million (half year 2021: $114 million; full year 2021: $175 million).

(iii) Net cash flows from other investing activities include amounts paid for distribution rights and cash flows arising from the sale of subsidiaries, joint ventures and associates and investments that do not form part of the Group's operating activities.

(iv) Structural borrowings of shareholder-financed businesses exclude borrowings to support short-term fixed income securities programmes, non-recourse borrowings of investment subsidiaries of shareholder-financed businesses and other borrowings of shareholder-financed businesses. Cash flows in respect of these borrowings are included within cash flows from operating activities. The changes in the carrying value of the structural borrowings of shareholder-financed businesses for the Group are analysed below:

 
               Balance at   Cash movements $m                  Non-cash movements $m                Balance at 
                           --------------------  ------------------------------------------------- 
                beginning                                                                               end of 
                of period  Issuance  Redemption  Foreign exchange                            Other      period 
                       $m   of debt     of debt          movement  Demerger of Jackson   movements          $m 
 ------------  ----------  --------  ----------  ----------------  -------------------  ----------  ---------- 
 30 Jun 2022        6,127       346     (2,075)             (137)                    -           5       4,266 
 30 Jun 2021        6,633         -           -                14                (250)           7       6,404 
 31 Dec 2021        6,633       995     (1,250)              (13)                (250)          12       6,127 
 ------------  ----------  --------  ----------  ----------------  -------------------  ----------  ---------- 
 

Notes to the financial statements

   A    Basis of preparation 

A1 Basis of preparation and exchange rates

These condensed consolidated interim financial statements ('interim financial statements') for the six months ended 30 June 2022 have been prepared in accordance with both IAS 34 'Interim Financial Reporting' as issued by the IASB and IAS 34 as adopted for use in the UK. The Group's policy for preparing this interim financial information is to use the accounting policies adopted by the Group in its last consolidated financial statements, as updated by any changes in accounting policies it intends to make in its next consolidated financial statements as a result of new or amended IFRS and other policy improvements. At 30 June 2022, there were no unadopted standards effective for the period ended 30 June 2022 which impacted the interim financial statements of the Group, and there were no differences between UK-adopted international accounting standards and IFRS Standards as issued by the IASB in terms of their application to the Group.

The accounting policies applied by the Group in determining the IFRS financial results in this report are the same as those previously applied in the Group's consolidated financial statements for the year ended 31 December 2021, as disclosed in the 2021 annual report, aside from those discussed in note A2 below.

The IFRS financial results for half year 2022 and half year 2021 are unaudited. The 2021 full year IFRS financial results have been derived from the 2021 statutory accounts. The auditors have reported on the 2021 statutory accounts which have been delivered to the Registrar of Companies. The auditors' report was: (i) unqualified; (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report; and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

Going concern basis of accounting

The Directors have made an assessment of going concern covering a period of at least 12 months from the date that these interim financial statements are approved. In making this assessment, the Directors have considered both the Group's current performance, solvency and liquidity and the Group's business plan taking into account the Group's principal risks, and the mitigations available to it, as well as the results of the Group's stress and sensitivity testing.

Based on the above, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue their operations for a period of at least 12 months from the date that these interim financial statements are approved. No material uncertainties that may cast significant doubt on the ability of the Group to continue as a going concern have been identified. The Directors therefore consider it appropriate to continue to adopt the going concern basis of accounting in preparing these interim financial statements for the period ended 30 June 2022.

Exchange rates

The exchange rates applied for balances and transactions in currencies other than the presentation currency of the Group, US dollars (USD) were:

 
USD : local currency           Closing rate at period end             Average rate for the period to date 
                          -------------------------------------  ---------------------------------------------- 
                          30 Jun 2022  30 Jun 2021  31 Dec 2021  Half year 2022  Half year 2021  Full year 2021 
------------------------  -----------  -----------  -----------  --------------  --------------  -------------- 
Chinese yuan (CNY)               6.69         6.46         6.37            6.48            6.47            6.45 
Hong Kong dollar (HKD)           7.85         7.77         7.80            7.83            7.76            7.77 
Indian rupee (INR)              78.97        74.33        74.34           76.23           73.33           73.94 
Indonesian rupiah (IDR)     14,897.50    14,500.00    14,252.50       14,453.52       14,273.32       14,294.88 
Malaysian ringgit (MYR)          4.41         4.15         4.17            4.27            4.10            4.15 
Singapore dollar (SGD)           1.39         1.34         1.35            1.37            1.33            1.34 
Taiwan dollar (TWD)             29.73        27.86        27.67           28.73           28.02           27.93 
Thai baht (THB)                 35.35        32.06        33.19           33.73           30.83           32.01 
UK pound sterling (GBP)          0.82         0.72         0.74            0.77            0.72            0.73 
Vietnamese dong (VND)       23,265.00    23,016.00    22,790.00       22,925.22       23,044.83       22,934.86 
------------------------  -----------  -----------  -----------  --------------  --------------  -------------- 
 

Certain notes to the financial statements present comparative information at constant exchange rates (CER), in addition to the reporting at actual exchange rates (AER) used throughout the interim financial statements. AER are actual historical exchange rates for the specific accounting period, being the average rates over the period for the income statement and the closing rates at the balance sheet date for the statement of financial position. CER results are calculated by translating prior period results using the current period foreign exchange rate, ie current period average rates for the income statement and current period closing rates for the statement of financial position.

A2 New accounting pronouncements

The IASB has issued the following new accounting pronouncements to be effective from 1 January 2022, unless otherwise stated:

   -      Amendments to IAS 37 'Onerous contracts - Cost of Fulfilling a Contract' issued in May 2020; 
   -      Annual Improvements to IFRS Standards 2018-2020 issued in May 2020; 

- Amendments to IAS 16 'Property, Plant and Equipment - Proceeds before Intended Use' issued in May 2020; and

- Reference to the Conceptual Framework - Amendments to IFRS 3 'Business combination' issued in May 2020.

The adoption of these pronouncements has had no significant impact on the Group interim financial statements.

In addition, in 2023 IFRS 17 'Insurance Contracts' and IFRS 9 'Financial Instruments' will become effective. The Group has a Group-wide implementation programme to implement IFRS 17 and IFRS 9. The programme is responsible for setting Group-wide accounting policies and developing application methodologies, establishing appropriate processes and controls, sourcing appropriate data and implementing actuarial and finance system changes. During half year 2022 the Group has made significant progress with the testing of new actuarial and finance systems in our preparations for IFRS 17 adoption in 2023. Elements of the detailed calculation methodology remain subject to wider discussion and debate in the industry. It is not currently practicable to provide reliable estimates of the quantitative impact on the Group's results and financial position. A further update on our IFRS 17 progress will be provided in our FY 22 financial statements.

   B    Earnings performance 

B1 Analysis of performance by segment

B1.1 Segment results

 
                                              2022 $m        2021 $m            2022 vs 2021 %       2021 $m 
                                            ---------  --------------------  --------------------  --------- 
                                                       Half year  Half year  Half year  Half year  Full year 
                                      Note  Half year        AER        CER        AER        CER        AER 
                                             note (i)   note (i)   note (i)   note (i)   note (i)   note (i) 
   ---------------------------------------  ---------  ---------  ---------  ---------  ---------  --------- 
Continuing operations: 
CPL                                               149        139        139         7%         7%        343 
Hong Kong                                         501        460        457         9%        10%        975 
Indonesia                                         196        225        222      (13)%      (12)%        446 
Malaysia                                          190        184        175         3%         9%        350 
Singapore                                         340        320        312         6%         9%        663 
Growth markets and othernote (ii)                 522        479        463         9%        13%        932 
Eastspring                                        131        162        155      (19)%      (15)%        314 
-----------------------------------  -----  ---------  ---------  ---------  ---------  ---------  --------- 
Total segment profit                            2,029      1,969      1,923         3%         6%      4,023 
-----------------------------------  -----  ---------  ---------  ---------  ---------  ---------  --------- 
Other income (expenditure): 
 Investment return and other income                39          -          -        n/a        n/a         21 
 Interest payable on core 
  structural borrowings                         (103)      (164)      (164)        37%        37%      (328) 
 Corporate expenditurenote (iii)                (150)      (157)      (151)         4%         1%      (298) 
 ----------------------------------  -----  ---------  ---------  ---------  ---------  ---------  --------- 
Total other income (expenditure)                (214)      (321)      (315)        33%        32%      (605) 
-----------------------------------  -----  ---------  ---------  ---------  ---------  ---------  --------- 
Restructuring and IFRS 17 
 implementation costsnote (iv)                  (154)       (77)       (77)     (100)%     (100)%      (185) 
-----------------------------------  -----  ---------  ---------  ---------  ---------  ---------  --------- 
Adjusted operating profit             B1.2      1,661      1,571      1,531         6%         8%      3,233 
Short-term fluctuations in 
 investment returns on 
 shareholder-backed businessnote 
 (v)                                          (1,383)      (212)      (234)     (552)%     (491)%      (458) 
Amortisation of acquisition 
 accounting adjustments                           (5)        (2)        (2)     (150)%     (150)%        (5) 
Gain (loss) attaching to corporate 
 transactions                         D1.1         27       (94)       (94)        n/a        n/a       (94) 
-----------------------------------  -----  ---------  ---------  ---------  ---------  ---------  --------- 
Profit before tax attributable to 
 shareholders                                     300      1,263      1,201      (76)%      (75)%      2,676 
Tax charge attributable to 
 shareholders' returns                  B3      (194)      (193)      (176)       (1)%      (10)%      (462) 
-----------------------------------  -----  ---------  ---------  ---------  ---------  ---------  --------- 
Profit from continuing operations                 106      1,070      1,025      (90)%      (90)%      2,214 
Loss from discontinued US 
 operations                           D1.2          -    (5,707)    (5,707)        n/a        n/a    (5,027) 
-----------------------------------  -----  ---------  ---------  ---------  ---------  ---------  --------- 
Profit (loss) for the period                      106    (4,637)    (4,682)        n/a        n/a    (2,813) 
-----------------------------------  -----  ---------  ---------  ---------  ---------  ---------  --------- 
 
Attributable to: 
Equity holders of the Company: 
 From continuing operations                       104      1,063      1,018      (90)%      (90)%      2,192 
 From discontinued US operations                    -    (5,073)    (5,073)        n/a        n/a    (4,234) 
 ----------------------------------  -----  ---------  ---------  ---------  ---------  ---------  --------- 
                                                  104    (4,010)    (4,055)        n/a        n/a    (2,042) 
Non-controlling interests: 
 From continuing operations                         2          7          7      (71)%      (71)%         22 
 From discontinued US operations                    -      (634)      (634)        n/a        n/a      (793) 
 ----------------------------------  -----  ---------  ---------  ---------  ---------  ---------  --------- 
                                                    2      (627)      (627)        n/a        n/a      (771) 
   ---------------------------------------  ---------  ---------  ---------  ---------  ---------  --------- 
Profit (loss) for the period                      106    (4,637)    (4,682)        n/a        n/a    (2,813) 
-----------------------------------  -----  ---------  ---------  ---------  ---------  ---------  --------- 
 
Basic earnings per share (in cents)              2022          2021             2022 vs 2021 %          2021 
                                            ---------  --------------------  --------------------  --------- 
                                                       Half year  Half year  Half year  Half year  Full year 
                                      Note  Half year        AER        CER        AER        CER        AER 
                                        B4   note (i)   note (i)   note (i)   note (i)   note (i)   note (i) 
   ---------------------------------------  ---------  ---------  ---------  ---------  ---------  --------- 
Based on adjusted operating profit, 
 net of tax and non-controlling 
 interest, from continuing 
 operations                                     49.2c      51.6c      50.5c       (5)%       (3)%     101.5c 
Based on profit from continuing 
 operations, net of non-controlling 
 interest                                        3.8c      40.9c      39.2c      (91)%      (90)%      83.4c 
Based on loss from discontinued US 
 operations, net of non-controlling 
 interest                                          -c   (195.1)c   (195.1)c        n/a        n/a   (161.1)c 
-----------------------------------  -----  ---------  ---------  ---------  ---------  ---------  --------- 
 

Notes

(i) Segment results are attributed to the shareholders of the Group before deducting the amount attributable to the non-controlling interests. This presentation is applied consistently throughout the document. For definitions of AER and CER refer to note A1.

(ii) Adjusted operating profit for growth markets and other includes other items of $160 million (half year 2021: $167 million on an AER basis and $161 million on a CER basis; full year 2021: $217 million on an AER basis) which in the first half of 2022 comprised largely of the impact of the adoption of the Risk-Based Capital regime in Hong Kong (as discussed further in note C3.2) offset by corporate taxes for life joint ventures and associates and provisions for sales and premium tax.

(iii) Corporate expenditure as shown above is for head office functions in London and Hong Kong.

(iv) Restructuring and IFRS 17 implementation costs include those incurred in insurance and asset management operations of $(44) million (half year 2021: $(33) million; full year 2021: $(101) million).

(v) In general, the short-term fluctuations reflect the value movements on shareholders' assets and policyholder liabilities (net of reinsurance) arising from market movements in the period. In half year 2022, rising interest rates and widening credits spreads across a number of the Group's life insurance markets led to unrealised bond losses which more than offset the impact of higher discount rates on policyholder liabilities under the local reserving basis applied. The interest rates rises in the first half of 2022 were more substantial than that seen in the first half 2021. Short-term fluctuations also reflect losses on equities backing shareholder-backed business following market movements in the period (compared with equity gains in the prior period) and the impact of refinements to the reserving basis in Hong Kong following the adoption of the Risk-Based Capital regime as discussed further in note C3.2.

B1.2 Determining operating segments and performance measure of operating segments

Operating segments

The Group's operating segments for financial reporting purposes are defined and presented in accordance with IFRS 8 'Operating Segments' on the basis of the management reporting structure and its financial management information. Under the Group's management and reporting structure, its chief operating decision maker is the Group Executive Committee (GEC), chaired by the Group Chief Executive. There have been no changes to the Group's operating segments as reported in these interim financial statements from those reported in the Group's consolidated financial statements for the year ended 31 December 2021.

Performance measure

The performance measure of operating segments utilised by the Group is IFRS operating profit based on longer-term investment returns (adjusted operating profit) as described below. This measurement basis distinguishes adjusted operating profit from other constituents of total profit or loss for the period as follows:

   -   Short-term fluctuations in investment returns on shareholder-backed business; 
   -   Amortisation of acquisition accounting adjustments arising on the purchase of business; and 
   -   Gain or loss on corporate transactions, as discussed in note D1.1. 

The determination of adjusted operating profit for investment and liability movements is as described in note B1.2 of the Group's consolidated financial statements for the year ended 31 December 2021.

For debt securities at 30 June 2022, the level of unamortised interest-related realised gains and losses related to previously sold bonds was a net gain of $211 million (30 June 2021: $ 414 million; 31 December 2021: $515 million).

For equity-type securities, the longer-term rates of return are estimates of the long-term trend investment returns for income and capital having regard to past performance, current trends and future expectations. Different rates apply to different categories of equity-type securities.

For insurance operations, investments in equity securities held for non-linked shareholder-backed business at 30 June 2022 amounted to $5,756 million (30 June 2021: $5,447 million ; 31 December 2021: $6,073 million ). The longer-term rates of return applied in half year 2022 ranged from 4.6 per cent to 16.9 per cent (half year 2021: 5.5 per cent to 16.9 per cent ; full year 2021: 5.5 per cent to 16.9 per cent) with the rates applied varying by business unit.

B1.3 Additional segmental analysis of revenue

 
                                                            Half year 2022 $m 
                 ------------------------------------------------------------------------------------------------------- 
                            Insurance operationsnote (i) 
                 -------------------------------------------------- 
                                                             Growth                 Inter                  Un- 
                                                            markets              -segment            allocated 
                     Hong                                       and                elimi-     Total       to a 
                     Kong  Indonesia  Malaysia  Singapore     other  Eastspring    nation   segment    segment     Total 
---------------  --------  ---------  --------  ---------  --------  ----------  --------  --------  ---------  -------- 
Gross premiums 
 earned             4,672        809       934      3,616     2,210           -         -    12,241          -    12,241 
Outward 
 reinsurance 
 premiums           (771)       (18)      (29)       (70)      (31)           -         -     (919)          -     (919) 
---------------  --------  ---------  --------  ---------  --------  ----------  --------  --------  ---------  -------- 
Earned 
 premiums, net 
 of reinsurance     3,901        791       905      3,546     2,179           -         -    11,322          -    11,322 
Other 
 incomenote 
 (ii)                  14          4         -          9        45         181         -       253          -       253 
---------------  --------  ---------  --------  ---------  --------  ----------  --------  --------  ---------  -------- 
Total external 
 revenue            3,915        795       905      3,555     2,224         181         -    11,575          -    11,575 
Intra-group 
 revenue                -          -         -          -         1         106     (107)         -          -         - 
Interest income       510         39       115        395       317           1         -     1,377          3     1,380 
Dividend and 
 other 
 investment 
 income               338        103       103        321        66           -         -       931         19       950 
Investment 
 (depreciation) 
 appreciation    (17,752)      (144)     (557)    (6,134)   (2,324)        (17)         -  (26,928)         28  (26,900) 
---------------  --------  ---------  --------  ---------  --------  ----------  --------  --------  ---------  -------- 
Total revenue, 
 net of 
 reinsurance     (12,989)        793       566    (1,863)       284         271     (107)  (13,045)         50  (12,995) 
---------------  --------  ---------  --------  ---------  --------  ----------  --------  --------  ---------  -------- 
 
 
                                                           Half year 2021 $m 
                 ----------------------------------------------------------------------------------------------------- 
                           Insurance operationsnote (i) 
                 ------------------------------------------------- 
                                                            Growth                 Inter                  Un- 
                                                           markets              -segment            allocated 
                    Hong                                       and                elimi-     Total       to a 
                    Kong  Indonesia  Malaysia  Singapore     other  Eastspring    nation   segment    segment    Total 
---------------  -------  ---------  --------  ---------  --------  ----------  --------  --------  ---------  ------- 
Gross premiums 
 earned            4,776        871       929      2,934     2,011           -         -    11,521          -   11,521 
Outward 
 reinsurance 
 premiums          (767)       (28)      (22)       (55)      (26)           -         -     (898)          -    (898) 
---------------  -------  ---------  --------  ---------  --------  ----------  --------  --------  ---------  ------- 
Earned 
 premiums, net 
 of reinsurance    4,009        843       907      2,879     1,985           -         -    10,623          -   10,623 
Other 
 incomenote 
 (ii)                 24          5         1         10        57         234         -       331          -      331 
---------------  -------  ---------  --------  ---------  --------  ----------  --------  --------  ---------  ------- 
Total external 
 revenue           4,033        848       908      2,889     2,042         234         -    10,954          -   10,954 
Intra-group 
 revenue               -          -         -          -         -         106     (106)         -          -        - 
Interest income      528         46       117        462       303           1         -     1,457          -    1,457 
Dividend and 
 other 
 investment 
 income              214         33       101        186        39           -         -       573          -      573 
Investment 
 (depreciation) 
 appreciation    (1,444)      (135)     (280)        817     (259)           9         -   (1,292)          -  (1,292) 
---------------  -------  ---------  --------  ---------  --------  ----------  --------  --------  ---------  ------- 
Total revenue, 
 net of 
 reinsurance       3,331        792       846      4,354     2,125         350     (106)    11,692          -   11,692 
---------------  -------  ---------  --------  ---------  --------  ----------  --------  --------  ---------  ------- 
 
 
                                                           Full year 2021 $m 
                 ----------------------------------------------------------------------------------------------------- 
                           Insurance operationsnote (i) 
                 ------------------------------------------------- 
                                                            Growth                 Inter                  Un- 
                                                           markets              -segment            allocated 
                    Hong                                       and                elimi-     Total       to a 
                    Kong  Indonesia  Malaysia  Singapore     other  Eastspring    nation   segment    segment    Total 
---------------  -------  ---------  --------  ---------  --------  ----------  --------  --------  ---------  ------- 
Gross premiums 
 earned           10,032      1,724     1,900      6,246     4,315           -         -    24,217          -   24,217 
Outward 
 reinsurance 
 premiums        (1,557)       (43)      (47)      (137)      (60)           -         -   (1,844)          -  (1,844) 
---------------  -------  ---------  --------  ---------  --------  ----------  --------  --------  ---------  ------- 
Earned 
 premiums, net 
 of reinsurance    8,475      1,681     1,853      6,109     4,255           -         -    22,373          -   22,373 
Other 
 incomenote 
 (ii)                 52         12         -         22       117         437         -       640          1      641 
---------------  -------  ---------  --------  ---------  --------  ----------  --------  --------  ---------  ------- 
Total external 
 revenue           8,527      1,693     1,853      6,131     4,372         437         -    23,013          1   23,014 
Intra-group 
 revenue               -          -         -          -         1         217     (218)         -          -        - 
Interest income      934         87       220        707       618           3         -     2,569          1    2,570 
Dividend and 
 other 
 investment 
 income              679         74       160        506        86           -         -     1,505         19    1,524 
Investment 
 appreciation 
 (depreciation)       57         34     (300)       (29)     (361)           8         -     (591)       (17)    (608) 
---------------  -------  ---------  --------  ---------  --------  ----------  --------  --------  ---------  ------- 
Total revenue, 
 net of 
 reinsurance      10,197      1,888     1,933      7,315     4,716         665     (218)    26,496          4   26,500 
---------------  -------  ---------  --------  ---------  --------  ----------  --------  --------  ---------  ------- 
 

Notes

(i) CPL, Prudential's life business in the Chinese Mainland , is a 50/50 joint venture with CITIC and is accounted for using the equity method under IFRS. The Group's share of its results is presented in a single line within the Group's profit before tax on a net of related tax basis and therefore not shown in the analysis of revenue line items above. Revenue from external customers of CPL (Prudential's share) in half year 2022 is $1,605 million (half year 2021: $1,307 million; full year 2021: $3,052 million).

(ii) Other income comprises income from external customers and consists primarily of revenue from the Group's asset management business of $181 million (half year 2021: $234 million; full year 2021: $437 million). The remaining other income consists primarily of policy fee revenue from external customers and asset management rebate revenue from external fund managers.

B1.4 Additional segmental analysis of profit after tax

 
                                                           2022 $m        2021 $m 
                                                         ---------  -------------------- 
                                                         Half year  Half year  Full year 
-------------------------------------------------------  ---------  ---------  --------- 
CPL                                                           (28)        148        278 
Hong Kong                                                    (613)        441      1,068 
Indonesia                                                      131        179        362 
Malaysia                                                       119        135        265 
Singapore                                                       63        141        394 
Growth markets and othernote (i)                               617        330        434 
Eastspring                                                     117        147        284 
-------------------------------------------------------  ---------  ---------  --------- 
Total segment                                                  406      1,521      3,085 
Unallocated to a segment (central operations)note (ii)       (300)      (451)      (871) 
-------------------------------------------------------  ---------  ---------  --------- 
Total profit after tax from continuing operations              106      1,070      2,214 
-------------------------------------------------------  ---------  ---------  --------- 
 

Notes

(i) The Growth markets and other segment comprises all other Asia and Africa insurance businesses alongside other amounts that are not included in the segment profit of an individual business unit including tax on life joint ventures and associates and other items that are not representative of the underlying segment trading for the period, in line with the presentation used by management when assessing the performance of the underlying segments internally.

(ii) Comprising other income and expenditure of $(214) million (half year 2021: $(321) million; full year 2021: $(605) million) attributable to the head office functions in London and Hong Kong and $(154) million (half year 2021: $(77) million; full year 2021: $(185) million) of restructuring and IFRS 17 implementation costs as shown in note B1.1, $7 million (half year 2021: $(4) million; full year 2021: $(25) million) of short-term fluctuations on investment returns, $62 million (half year 2021: $(56) million; full year 2021: $(35) million) from corporate transactions as shown in note D1.1 and related tax of $(1) million (half year 2021: $7 million; full year 2021: $(21) million).

B2 Acquisition costs and other expenditure

 
                                                                                       2022 $m        2021 $m 
                                                                                     ---------  -------------------- 
                                                                                     Half year  Half year  Full year 
-----------------------------------------------------------------------------------  ---------  ---------  --------- 
Acquisition costs incurred for insurance policies                                      (1,120)    (1,026)    (2,089) 
Acquisition costs deferred                                                                 426        373        848 
Amortisation of acquisition costs                                                        (249)      (186)      (343) 
Administration costs and other expenditure (net of other reinsurance 
 commission)(note)                                                                     (1,572)    (1,542)    (3,128) 
Movements in amounts attributable to external unit holders 
 of consolidated investment funds                                                          883       (21)        152 
-----------------------------------------------------------------------------------  ---------  ---------  --------- 
Total acquisition costs and other expenditure from continuing operations               (1,632)    (2,402)    (4,560) 
-----------------------------------------------------------------------------------  ---------  ---------  --------- 
 

Note

Included in total administration costs and other expenditure is depreciation of property, plant and equipment of $(71) million (half year 2021: $(85) million; full year 2021: $(169) million), of which $(53) million (half year 2021: $(62) million; full year 2021: $(123) million) relates to the right-of-use assets recognised under IFRS 16 and interest on the IFRS 16 lease liabilities of $(5) million (half year 2021: $(6) million; full year 2021: $(13) million).

B3 Tax charge

B3.1 Total tax charge by nature

The total tax charge from continuing operations in the income statement is as follows:

 
                                                       2022 $m        2021 $m 
                                                     ---------  -------------------- 
Continuing operations:                               Half year  Half year  Full year 
---------------------------------------------------  ---------  ---------  --------- 
Attributable to shareholders: 
 Hong Kong                                                (29)       (16)       (40) 
 Indonesia                                                (38)       (45)       (74) 
 Malaysia                                                 (35)       (28)       (71) 
 Singapore                                                 (3)       (23)       (67) 
 Growth markets and other                                 (74)       (73)      (159) 
 Eastspring                                               (14)       (15)       (30) 
 --------------------------------------------------  ---------  ---------  --------- 
Total segment                                            (193)      (200)      (441) 
Unallocated to a segment (central operations)              (1)          7       (21) 
---------------------------------------------------  ---------  ---------  --------- 
Tax charge attributable to shareholders                  (194)      (193)      (462) 
Attributable to policyholders: 
 Hong Kong                                                (30)       (40)       (79) 
 Indonesia                                                   5        (2)          4 
 Malaysia                                                  (4)        (2)        (2) 
 Singapore                                                 155      (194)      (261) 
 Growth markets and other                                    -          -        (4) 
 --------------------------------------------------  ---------  ---------  --------- 
Tax credit (charge) attributable to policyholders          126      (238)      (342) 
---------------------------------------------------  ---------  ---------  --------- 
Total tax charge from continuing operations               (68)      (431)      (804) 
---------------------------------------------------  ---------  ---------  --------- 
 
Analysed by: 
Current tax                                              (255)      (189)      (399) 
Deferred tax                                               187      (242)      (405) 
---------------------------------------------------  ---------  ---------  --------- 
Total tax charge from continuing operations               (68)      (431)      (804) 
---------------------------------------------------  ---------  ---------  --------- 
 

Profit before tax includes Prudential's share of profit after tax from the joint ventures and associates that are equity-accounted for. Therefore, the actual tax charge in the income statement does not include tax arising from the results of joint ventures and associates including CPL.

The reconciliation of the expected to actual tax charge attributable to shareholders is provided in B3.2 below. The tax credit (charge) attributable to policyholders of $126 million (half year 2021: $(238) million; full year 2021: $(342) million) above is equal to the profit before tax attributable to policyholders. This is the result of accounting for policyholder income after the deduction of expenses and movement in unallocated surpluses on an after-tax basis.

B3.2 Reconciliation of shareholder effective tax rate

In the reconciliation below, the expected tax rate reflects the corporation tax rates that are expected to apply to the taxable profit or loss of the continuing operations. It reflects the corporation tax rates of each jurisdiction weighted by reference to the amount of profit or loss contributing to the aggregate result from continuing operations.

 
                                  2022                                            2021 
                      ----------------------------  ----------------  ----------------------------  ---------- 
                               Half year                     Half year                     Full year 
                      ----------------------------  ----------------------------  ---------------------------- 
                                   Tax  Percentage               Tax  Percentage               Tax  Percentage 
                       attributable to      impact   attributable to      impact   attributable to      impact 
                          shareholders      on ETR      shareholders      on ETR      shareholders      on ETR 
Continuing 
 operations                         $m           %                $m           %                $m           % 
--------------------  ----------------  ----------  ----------------  ----------  ----------------  ---------- 
Adjusted operating 
 profit                          1,661                         1,571                         3,233 
Non-operating 
 resultnote (i)                (1,361)                         (308)                         (557) 
--------------------  ----------------              ----------------              ---------------- 
Profit before tax                  300                         1,263                         2,676 
--------------------  ----------------              ----------------              ---------------- 
Tax charge at the 
 expected rate                    (65)         22%             (259)         21%             (539)         20% 
Effects of recurring 
 tax reconciliation 
 items: 
 Income not taxable 
  or taxable at 
  concessionary 
  ratesnote (ii)                    47       (16)%                33        (3)%                63        (2)% 
 Deductions not 
  allowable for tax 
  purposesnote (iii)             (135)         45%              (34)          3%              (92)          3% 
 Items related to 
  taxation of life 
  insurance 
  businessesnote 
  (iv)                              49       (16)%                71        (6)%               177        (7)% 
 Deferred tax 
  adjustments 
  including 
  unrecognised tax 
  lossesnote (v)                  (48)         16%              (70)          5%             (111)          4% 
 Effect of results 
  of joint ventures 
  and associatesnote 
  (vi)                               2        (1)%                37        (3)%                80        (3)% 
 Irrecoverable 
  withholding 
  taxesnote (vii)                 (30)         10%              (35)          3%              (60)          2% 
 Other                            (12)          4%                 2          0%               (8)          1% 
 -------------------  ----------------  ----------  ----------------  ----------  ----------------  ---------- 
 Total (charge) 
  credit on 
  recurring items                (127)         42%                 4        (1)%                49        (2)% 
Effects of 
 non-recurring tax 
 reconciliation 
 items: 
 Adjustments to tax 
  charge in relation 
  to prior years                   (1)          1%                 6          0%              (11)          0% 
 Movements in 
  provisions for 
  open tax 
  mattersnote (viii)               (1)          0%                59        (5)%                47        (2)% 
 Impact of changes 
  in local statutory 
  tax rates                          -          0%                 8        (1)%                 6          0% 
 Adjustments in 
  relation to 
  business disposals 
  and corporate 
  transactions                       -          0%              (11)          1%              (14)          1% 
 -------------------  ----------------  ----------  ----------------  ----------  ----------------  ---------- 
 Total (charge) 
  credit on 
  non-recurring 
  items                            (2)          1%                62        (5)%                28        (1)% 
 -------------------  ----------------  ----------  ----------------  ----------  ----------------  ---------- 
Total actual tax 
 charge                          (194)         65%             (193)         15%             (462)         17% 
--------------------  ----------------  ----------  ----------------  ----------  ----------------  ---------- 
Analysed into: 
                      ----------------              ----------------  ----------  ----------------  ---------- 
Tax on adjusted 
 operating profit                (314)                         (222)                         (548) 
Tax on non-operating 
 resultnote (i)                    120                            29                            86 
                                                    ----------------  ----------  ----------------  ---------- 
Actual tax rate on: 
Adjusted operating 
 profit: 
 Including 
  non-recurring tax 
  reconciling 
  itemsnote (ix)                   19%                           14%                           17% 
 Excluding 
  non-recurring tax 
  reconciling items                19%                           19%                           18% 
Total profitnote 
 (ix)                              65%                           15%                           17% 
--------------------  ----------------              ----------------              ---------------- 
 

Notes

(i) 'Non-operating result' is used to refer to items excluded from adjusted operating profit and includes short-term investment fluctuations in investment returns on shareholder-backed business, corporate transactions and amortisation of acquisition accounting adjustments.

(ii) Income not taxable or taxable at concessionary rates primarily relates to non-taxable investment income in Singapore and Malaysia.

(iii) Deductions not allowable for tax purposes primarily relates to non-deductible investment losses in Growth markets.

(iv) Items related to taxation of life insurance businesses primarily relates to Hong Kong where the taxable profit is computed as 5 per cent of net insurance premiums.

(v) The unrecognised tax losses reconciling amount reflects losses arising where it is unlikely that relief for the losses will be available in future periods.

(vi) Profit before tax includes Prudential's share of profit after tax from the joint ventures and associates. Therefore, the actual tax charge does not include tax arising from profit or loss of joint ventures and associates and is reflected as a reconciling item.

(vii) The Group incurs withholding tax on remittances received from certain jurisdictions and on certain investment income. Where these withholding taxes cannot be offset against corporate income tax or otherwise recovered, they represent a cost to the Group. Irrecoverable withholding tax on remittances is included in Other operations and is not allocated to any segment. Irrecoverable withholding tax on investment income is included in the relevant segment where the investment income is reflected.

(viii) The statement of financial position contains the following provisions in relation to open tax matters.

 
                                                                                                Half year 2022 $m 
  --------------------------------------------------------------------------------------------  ----------------- 
 Balance at beginning of period                                                                                42 
  Movements in the current period included in tax charge attributable to shareholders                           1 
  Provisions utilised in the period                                                                             - 
  Other movements (including interest arising on open tax matters and amounts included in the 
   Group's share of profits from joint ventures and associates, net of related tax)                             - 
  --------------------------------------------------------------------------------------------  ----------------- 
 Balance at end of period                                                                                      43 
 ---------------------------------------------------------------------------------------------  ----------------- 
 

(ix) The actual tax rates of the relevant business operations are shown below:

 
                                                            Half year 2022 % 
                      -------------------------------------------------------------------------------------------- 
                                                                 Growth                                      Total 
                       Hong                                     markets                    Other   attributable to 
                       Kong  Indonesia  Malaysia  Singapore   and other  Eastspring   operations      shareholders 
  ------------------  -----  ---------  --------  ---------  ----------  ----------  -----------  ---------------- 
 Tax rate on 
  adjusted operating 
  profit                 6%        22%       23%        14%         25%         11%           0%               19% 
 Tax rate on profit 
  before tax           (5)%        22%       23%         5%         11%         11%           0%               65% 
 -------------------  -----  ---------  --------  ---------  ----------  ----------  -----------  ---------------- 
 
                                                            Half year 2021 % 
                      -------------------------------------------------------------------------------------------- 
                                                                 Growth                                      Total 
                       Hong                                     markets                    Other   attributable to 
                       Kong  Indonesia  Malaysia  Singapore   and other  Eastspring   operations      shareholders 
  ------------------  -----  ---------  --------  ---------  ----------  ----------  -----------  ---------------- 
 Tax rate on 
  adjusted operating 
  profit                 4%        20%       18%        16%         14%          9%           2%               14% 
 Tax rate on profit 
  before tax             4%        20%       17%        14%         18%          9%           2%               15% 
 -------------------  -----  ---------  --------  ---------  ----------  ----------  -----------  ---------------- 
 
 
                                                            Full year 2021 % 
                      -------------------------------------------------------------------------------------------- 
                                                                 Growth                                      Total 
                       Hong                                     markets                    Other   attributable to 
                       Kong  Indonesia  Malaysia  Singapore   and other  Eastspring   operations      shareholders 
  ------------------  -----  ---------  --------  ---------  ----------  ----------  -----------  ---------------- 
 Tax rate on 
  adjusted operating 
  profit                 5%        17%       21%        15%         22%         10%         (3)%               17% 
 Tax rate on profit 
  before tax             4%        17%       21%        15%         27%         10%         (2)%               17% 
 -------------------  -----  ---------  --------  ---------  ----------  ----------  -----------  ---------------- 
 

B4 Earnings per share

 
 
                                                                  Half year 2022 
                                       --------------------------------------------------------------------- 
                                                                          Net of tax 
                                                                            and non-       Basic     Diluted 
                                        Before         Non-controlling   controlling    earnings    earnings 
                                           tax    Tax        interests     interests   per share   per share 
                                            $m     $m               $m            $m       cents       cents 
-----  ------------------------  ----  -------  -----  ---------------  ------------  ----------  ---------- 
Based on adjusted operating 
 profit                                  1,661  (314)              (4)         1,343       49.2c       49.2c 
Short-term fluctuations in 
 investment returns on 
 shareholder-backed business           (1,383)    118                2       (1,263)     (46.2)c     (46.2)c 
Amortisation of acquisition 
 accounting adjustments                    (5)      -                -           (5)      (0.2)c      (0.2)c 
Gain attaching to corporate 
 transactions                               27      2                -            29        1.0c        1.0c 
-------------------------------  ----  -------  -----  ---------------  ------------  ----------  ---------- 
Based on profit for the period             300  (194)              (2)           104        3.8c        3.8c 
-------------------------------  ----  -------  -----  ---------------  ------------  ----------  ---------- 
 
                                                                  Half year 2021 
                                       --------------------------------------------------------------------- 
                                                                          Net of tax 
                                                                  Non-      and non-       Basic     Diluted 
                                        Before             controlling   controlling    earnings    earnings 
                                           tax    Tax        interests     interests   per share   per share 
                                            $m     $m               $m            $m       cents       cents 
-----  -----------------------  -----  -------  -----  ---------------  ------------  ----------  ---------- 
Based on adjusted operating 
 profit                                  1,571  (222)              (7)         1,342       51.6c       51.6c 
Short-term fluctuations in 
 investment returns on 
 shareholder-backed business             (212)     26                -         (186)      (7.2)c      (7.2)c 
Amortisation of acquisition 
 accounting adjustments                    (2)      -                -           (2)      (0.1)c      (0.1)c 
Loss attaching to corporate 
 transactions                             (94)      3                -          (91)      (3.4)c      (3.4)c 
------------------------------  -----  -------  -----  ---------------  ------------  ----------  ---------- 
Based on profit from 
 continuing operations                   1,263  (193)              (7)         1,063       40.9c       40.9c 
------------------------------  -----  -------  -----  --------------- 
Based on loss from 
 discontinued US operations                                                  (5,073)    (195.1)c    (195.1)c 
                                                                        ------------  ----------  ---------- 
Based on loss for the period                                                 (4,010)    (154.2)c    (154.2)c 
                                                                        ------------  ----------  ---------- 
 
 
 
                                                                Full year 2021 
                            -------------------------------------------------------------------------------------- 
                                                                                Net of tax       Basic     Diluted 
                            Before                 Non-controlling                and non-    earnings    earnings 
                               tax    Tax                interests   controlling interests   per share   per share 
                                $m     $m                       $m                      $m       cents       cents 
 ------------------------   ------  -----  -----------------------  ----------------------  ----------  ---------- 
Based on adjusted 
 operating profit            3,233  (548)                     (17)                   2,668      101.5c      101.5c 
Short-term fluctuations 
 in investment returns on 
 shareholder-backed 
 business                    (458)     81                      (5)                   (382)     (14.5)c     (14.5)c 
Amortisation of 
 acquisition accounting 
 adjustments                   (5)      -                        -                     (5)      (0.2)c      (0.2)c 
Loss attaching to 
 corporate transactions       (94)      5                        -                    (89)      (3.4)c      (3.4)c 
-------------------------   ------  -----  -----------------------  ----------------------  ----------  ---------- 
Based on profit from 
 continuing operations       2,676  (462)                     (22)                   2,192       83.4c       83.4c 
-------------------------   ------  -----  ----------------------- 
Based on loss from 
 discontinued US 
 operations                                                                        (4,234)    (161.1)c    (161.1)c 
                                                                    ----------------------  ----------  ---------- 
Based on loss for the 
 year                                                                              (2,042)     (77.7)c     (77.7)c 
                                                                    ----------------------  ----------  ---------- 
 

Basic earnings per share are calculated based on earnings attributable to ordinary shareholders, after related tax and non-controlling interests, divided by the weighted average number of ordinary shares outstanding during the period, excluding those held in employee share trusts, which are treated as cancelled. For diluted earnings per share, the weighted average number of shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group's only class of potentially dilutive ordinary shares are those share options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the period. No adjustment is made if the impact is anti-dilutive overall.

The weighted average number of shares for calculating basic and diluted earnings per share, which excludes those held in employee share trusts, is set out as below:

 
                                                                                        2022          2021 
                                                                                   ---------  -------------------- 
Number of shares (in millions)                                                     Half year  Half year  Full year 
---------------------------------------------------------------------------------  ---------  ---------  --------- 
Weighted average number of shares for calculation of basic earnings per share          2,736      2,601      2,628 
Shares under option at end of period                                                       -          2          2 
Shares that would have been issued at fair value on assumed option price at end 
 of period                                                                                 -        (2)        (2) 
---------------------------------------------------------------------------------  ---------  ---------  --------- 
Weighted average number of shares for calculation of diluted earnings per share        2,736      2,601      2,628 
---------------------------------------------------------------------------------  ---------  ---------  --------- 
 
   B5        Dividends 
 
 
                                                   Half year 2022        Half year 2021        Full year 2021 
                                                --------------------  --------------------  -------------------- 
                                                Cents per share   $m  Cents per share   $m  Cents per share   $m 
----------------------------------------------  ---------------  ---  ---------------  ---  ---------------  --- 
Dividends relating to reporting period: 
 First interim ordinary dividend                          5.74c  158            5.37c  140            5.37c  140 
 Second interim ordinary dividend                             -    -                -    -           11.86c  326 
 ---------------------------------------------  ---------------  ---  ---------------  ---  ---------------  --- 
Total relating to reporting period                        5.74c  158            5.37c  140           17.23c  466 
----------------------------------------------  ---------------  ---  ---------------  ---  ---------------  --- 
Dividends paid in reporting period: 
 Current year first interim ordinary dividend                 -    -                -    -            5.37c  138 
 Second interim ordinary dividend for prior 
  year                                                   11.86c  320           10.73c  283           10.73c  283 
 ---------------------------------------------  ---------------  ---  ---------------  ---  ---------------  --- 
Total paid in reporting period                           11.86c  320           10.73c  283           16.10c  421 
----------------------------------------------  ---------------  ---  ---------------  ---  ---------------  --- 
 

First and second interim dividends are recorded in the period in which they are paid. In addition to the dividends shown in the table above, on 13 September 2021, following approval by the Group's shareholders, Prudential plc demerged its US operations (Jackson) via a dividend in specie of $1,735 million.

Dividend per share

On 27 September 2022, Prudential will pay a first interim ordinary dividend of 5.74 cents per ordinary share for the year ending 31 December 2022. The first interim dividend will be paid to shareholders included on the UK register at 6.00pm BST and to shareholders on the HK register at 4.30pm Hong Kong time on 19 August 2022 (Record Date) and also to the Holders of US American Depositary Receipts (ADRs) as at 19 August 2022. The first interim dividend will be paid on or about 4 October 2022 to shareholders with shares standing to the credit of their securities accounts with The Central Depository (Pte) Limited (CDP) at 5.00pm Singapore time on the Record Date. Shareholders holding shares on the UK or Hong Kong share registers will continue to receive their dividend payments in either GBP or HKD respectively, unless they elect otherwise. Shareholders holding shares on the UK or Hong Kong registers may elect to receive dividend payments in USD. Elections must be made through the relevant UK or Hong Kong share registrar on or before 5 September 2022 (UK) and 9 September 2022 (HK), respectively. The corresponding amounts per share in GBP and HKD are expected to be announced on or about 16 September 2022. The USD to GBP and HKD conversion rates will be determined by the actual rates achieved by Prudential buying those currencies prior to the subsequent announcement. Holders of ADRs will continue to receive their dividend payments in USD. Shareholders holding an interest in Prudential shares through CDP in Singapore will continue to receive their dividend payments in SGD at an exchange rate determined by CDP.

Shareholders on the UK register are eligible to participate in a Dividend Reinvestment Plan.

   C    Financial position 

C1 Group assets and liabilities by business type

The analysis below is structured to show the investments and other assets and liabilities of the Group by reference to the differing degrees of policyholder and shareholder economic interest of the different types of business.

Debt securities are analysed below according to the issuing government for sovereign debt and to credit ratings for the rest of the securities.

The Group uses the middle of the Standard & Poor's, Moody's and Fitch ratings, where available. Where ratings are not available from these rating agencies, local external rating agencies' ratings and lastly internal ratings have been used. Securities with none of the ratings listed above are classified as unrated and included under the 'below BBB- and unrated' category. The total securities (excluding sovereign debt) that were unrated at 30 June 2022 were $1,056 million (30 June 2021: $986 million; 31 December 2021: $1,130 million). Additionally, government debt is shown separately from the rating breakdowns in order to provide a more focused view of the credit portfolio.

In the table below, AAA is the highest possible rating. Investment grade financial assets are classified within the range of AAA to BBB- ratings. Financial assets which fall outside this range are classified as below BBB-.

 
                                                            30 Jun 2022 $m 
                    ----------------------------------------------------------------------------------------------- 
                                          Asia and Africa 
                    ----------------------------------------------------------- 
                             Insurance 
                    ---------------------------- 
                                                                                  Unallo-      Elimination 
                                                                                    cated   of intra-group 
                       With-     Unit-                        Elimina-               to a      debtors and    Group 
                     profits    linked     Other  Eastspring     tions    Total   segment        creditors    total 
                    note (i)  note (i)  note (i) 
  ----------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
Debt securities: 
Sovereign debt 
 Indonesia               496       614       445           9         -    1,564         -                -    1,564 
 Singapore             3,176       525       767          54         -    4,522         -                -    4,522 
 Thailand                  -         -     1,222           -         -    1,222         -                -    1,222 
 United Kingdom            -         5         -           -         -        5         -                -        5 
 United States        20,961        22     3,262           -         -   24,245         -                -   24,245 
 Vietnam                   -        13     2,813           -         -    2,826         -                -    2,826 
 Other 
  (predominantly 
  Asia)                1,940       709     3,334          27         -    6,010         -                -    6,010 
 -----------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
Subtotal              26,573     1,888    11,843          90         -   40,394         -                -   40,394 
------------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
Other government 
bonds 
 AAA                   1,361        77       131           -         -    1,569         -                -    1,569 
 AA+ to AA-              101        13        27           -         -      141         -                -      141 
 A+ to A-                757       125       257           -         -    1,139         -                -    1,139 
 BBB+ to BBB-            288        44        64           -         -      396         -                -      396 
 Below BBB- and 
  unrated                234        20       424           -         -      678         -                -      678 
 -----------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
Subtotalnote (vi)      2,741       279       903           -         -    3,923         -                -    3,923 
------------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
Corporate bonds 
 AAA                   1,055       171       392           -         -    1,618         -                -    1,618 
 AA+ to AA-            1,890       363     1,594           -         -    3,847         -                -    3,847 
 A+ to A-              7,020       529     4,129           -         -   11,678         -                -   11,678 
 BBB+ to BBB-          7,657     1,419     3,948           1         -   13,025         -                -   13,025 
 Below BBB- and 
  unrated              2,507       424     1,395           -         -    4,326         -                -    4,326 
 -----------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
Subtotalnote (vi)     20,129     2,906    11,458           1         -   34,494         -                -   34,494 
------------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
Asset-backed 
securities 
 AAA                     135         5        95           -         -      235         -                -      235 
 AA+ to AA-                6         1         4           -         -       11         -                -       11 
 A+ to A-                 22         -        14           -         -       36         -                -       36 
 BBB+ to BBB-             14         -         8           -         -       22         -                -       22 
 Below BBB- and 
 unrated                   2         1         1           -         -        4         -                -        4 
 -----------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
Subtotalnote (vi)        179         7       122           -         -      308         -                -      308 
------------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
Total debt 
 securitiesnote 
 (ii)                 49,622     5,080    24,326          91         -   79,119         -                -   79,119 
------------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
Loans: 
 Mortgage loans            -         -       141           -         -      141         -                -      141 
 Policy loans          1,392         -       378           -         -    1,770         -                -    1,770 
 Other loans             509         -         9           -         -      518         -                -      518 
 -----------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
Total loans            1,901         -       528           -         -    2,429         -                -    2,429 
------------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
Equity securities 
and holdings in 
collective 
investment 
schemes: 
 Direct equities      11,344    11,305     2,088          60         -   24,797       325                -   25,122 
 Collective 
  investment 
  schemes             21,802     6,901     3,668           2         -   32,373         2                -   32,375 
 -----------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
Total equity 
 securities and 
 holdings in 
 collective 
 investment 
 schemes              33,146    18,206     5,756          62         -   57,170       327                -   57,497 
------------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
Other financial 
 investments note 
 (iii)                 1,164       377     2,427          96         -    4,064       880                -    4,944 
------------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
Total financial 
 investments          85,833    23,663    33,037         249         -  142,782     1,207                -  143,989 
------------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
Investment 
 properties                -         -        35           -         -       35         -                -       35 
Investments in 
 joint ventures 
 and associates 
 accounted for 
 using the equity 
 method                    -         -     1,715         295         -    2,010         -                -    2,010 
Cash and cash 
 equivalents             785       768     1,977         149         -    3,679     2,736                -    6,415 
Reinsurers' share 
 of insurance 
 contract 
 liabilities               2         -     2,748           -         -    2,750         -                -    2,750 
Other assetsnote 
 (iv)                  1,557       172     9,298         709      (56)   11,680     3,419          (3,410)   11,689 
------------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
Total assets          88,177    24,603    48,810       1,402      (56)  162,936     7,362          (3,410)  166,888 
------------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
 
Shareholders' 
 equity                    -         -    13,308       1,043         -   14,351     1,758                -   16,109 
Non-controlling 
 interests                 -         -        42         121         -      163         -                -      163 
------------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
Total equity               -         -    13,350       1,164         -   14,514     1,758                -   16,272 
------------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
 
Contract 
 liabilities and 
 unallocated 
 surplus of 
 with-profits 
 funds                78,981    23,037    26,079           -         -  128,097         -                -  128,097 
Core structural 
 borrowings                -         -         -           -         -        -     4,266                -    4,266 
Operational 
 borrowings              128         3        89          12         -      232       622                -      854 
Other 
 liabilitiesnote 
 (v)                   9,068     1,563     9,292         226      (56)   20,093       716          (3,410)   17,399 
------------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
Total liabilities     88,177    24,603    35,460         238      (56)  148,422     5,604          (3,410)  150,616 
------------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
Total equity and 
 liabilities          88,177    24,603    48,810       1,402      (56)  162,936     7,362          (3,410)  166,888 
------------------  --------  --------  --------  ----------  --------  -------  --------  ---------------  ------- 
 
 
                                                                       30 Jun 2021 $m 
                       -------------------------------------------------------------------------------------------------------------- 
                                              Asia and Africa 
                       -------------------------------------------------------------- 
                                  Insurance 
                       ------------------------------- 
                                                                                                                    Elimina- 
                                                                                                                     tion of 
                                                                                                                 intra-group 
                                                                                                    Unallocated      debtors 
                           With                                     Elimina-                    US         to a          and    Group 
                       -profits  Unit-linked     Other  Eastspring     tions    Total  (discont'd)      segment    creditors    total 
                       note (i)     note (i)  note (i)                                  note (vii) 
  -------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
Debt securities: 
Sovereign debt 
 Indonesia                  362          589       568           1         -    1,520            -            -            -    1,520 
 Singapore                3,673          587       939          78         -    5,277            -            -            -    5,277 
 Thailand                     -            -     1,847          16         -    1,863            -            -            -    1,863 
 United Kingdom               -            7         -           -         -        7            -            -            -        7 
 United States           26,233           45     2,917           -         -   29,195            -            -            -   29,195 
 Vietnam                      -           17     2,799           -         -    2,816            -            -            -    2,816 
 Other (predominantly 
  Asia)                   1,951          692     3,790          18         -    6,451            -            -            -    6,451 
 --------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
Subtotal                 32,219        1,937    12,860         113         -   47,129            -            -            -   47,129 
---------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
Other government 
bonds 
 AAA                      1,630           83       276           -         -    1,989            -            -            -    1,989 
 AA+ to AA-                  79            4        12           -         -       95            -            -            -       95 
 A+ to A-                   641          115       298           -         -    1,054            -            -            -    1,054 
 BBB+ to BBB-                83           26       110           -         -      219            -            -            -      219 
 Below BBB- and 
  unrated                    85           13       369           -         -      467            -            -            -      467 
 --------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
Subtotalnote(vi)          2,518          241     1,065           -         -    3,824            -            -            -    3,824 
---------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
Corporate bonds 
 AAA                        935          227       449           -         -    1,611            -            -            -    1,611 
 AA+ to AA-               1,950          393     1,777           -         -    4,120            -            -            -    4,120 
 A+ to A-                 7,909          645     4,976           -         -   13,530            -            -            -   13,530 
 BBB+ to BBB-             9,324        1,281     4,938           -         -   15,543            -            -            -   15,543 
 Below BBB- and 
  unrated                 3,938        1,050     1,775           1         -    6,764            -            -            -    6,764 
 --------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
Subtotalnote(vi)         24,056        3,596    13,915           1         -   41,568            -            -            -   41,568 
---------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
Asset-backed 
securities 
 AAA                         64            6        63           -         -      133            -            -            -      133 
 AA+ to AA-                   1            1         -           -         -        2            -            -            -        2 
 A+ to A-                    19            -        17           -         -       36            -            -            -       36 
 BBB+ to BBB-                16            -        10           -         -       26            -            -            -       26 
 Below BBB- and 
  unrated                     6            2         2           -         -       10            -            -            -       10 
 --------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
Subtotalnote(vi)            106            9        92           -         -      207            -            -            -      207 
---------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
Total debt 
 securitiesnote(ii)      58,899        5,783    27,932         114         -   92,728            -            -            -   92,728 
---------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
Loans: 
 Mortgage loans               -            -       154           -         -      154            -            -            -      154 
 Policy loans             1,302            -       353           -         -    1,655            -            -            -    1,655 
 Other loans                618            -        13           -         -      631            -            -            -      631 
 --------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
Total loans               1,920            -       520           -         -    2,440            -            -            -    2,440 
---------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
Equity securities and 
holdings in 
collective investment 
schemes: 
 Direct equities         10,506       13,007     2,541          85         -   26,139            -            -            -   26,139 
 Collective 
  investment schemes     23,936        7,476     2,907           6         -   34,325            -            2            -   34,327 
 --------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
Total equity 
 securities and 
 holdings in 
 collective 
 investment schemes      34,442       20,483     5,448          91         -   60,464            -            2            -   60,466 
---------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
Other financial 
 investments note 
 (iii)                    1,140          195     2,373          93         -    3,801            -           28            -    3,829 
---------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
Total financial 
 investments             96,401       26,461    36,273         298         -  159,433            -           30            -  159,463 
---------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
Investment properties         -            -        39           -         -       39            -            -            -       39 
Investments in joint 
 ventures and 
 associates accounted 
 for using the equity 
 method                       -            -     1,771         285         -    2,056            -            -            -    2,056 
Cash and cash 
 equivalents                945        1,000     1,406         177         -    3,528            -        2,767            -    6,295 
Reinsurers' share of 
 insurance contract 
 liabilities                221            -     9,670           -         -    9,891            -            -            -    9,891 
Other assetsnote (iv)     1,663          284     8,643         795      (67)   11,318            -        3,598      (3,289)   11,627 
Assets held for 
 distributionnote 
 (vii)                        -            -         -           -         -        -      335,760            -         (10)  335,750 
---------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
Total assets             99,230       27,745    57,802       1,555      (67)  186,265      335,760        6,395      (3,299)  525,121 
---------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
 
Shareholders' equity          -            -    13,287       1,079         -   14,366        2,667      (1,320)            -   15,713 
Non-controlling 
 interests                    -            -        40         137         -      177          333            -            -      510 
---------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
Total equity                  -            -    13,327       1,216         -   14,543        3,000      (1,320)            -   16,223 
---------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
 
Contract liabilities 
 and unallocated 
 surplus of 
 with-profits funds      89,243       25,615    36,224           -         -  151,082            -            -            -  151,082 
Core structural 
 borrowings                   -            -         -           -         -        -            -        6,404            -    6,404 
Operational 
 borrowings                 156            -       107          21         -      284            -          611            -      895 
Other liabilitiesnote 
 (v)                      9,831        2,130     8,144         318      (67)   20,356            -          700      (3,299)   17,757 
Liabilities held for 
 distributionnote 
 (vii)                        -            -         -           -         -        -      332,760            -            -  332,760 
---------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
Total liabilities        99,230       27,745    44,475         339      (67)  171,722      332,760        7,715      (3,299)  508,898 
---------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
Total equity and 
 liabilities             99,230       27,745    57,802       1,555      (67)  186,265      335,760        6,395      (3,299)  525,121 
---------------------  --------  -----------  --------  ----------  --------  -------  -----------  -----------  -----------  ------- 
 
 
                                                               31 Dec 2021 $m 
                     -------------------------------------------------------------------------------------------------- 
                                             Asia and Africa 
                     --------------------------------------------------------------- 
                                Insurance 
                     -------------------------------- 
                                                                                                   Elimination 
                                                                                                            of 
                                                                                      Unallocated  intra-group 
                          With                                     Elimina-                  to a  debtors and    Group 
                      -profits  Unit-linked     Other  Eastspring     tions    Total      segment    creditors    total 
                      note (i)     note (i)  note (i) 
  -----------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
Debt securities: 
Sovereign debt 
 Indonesia                 414          598       609          11         -    1,632            -            -    1,632 
 Singapore               3,684          550     1,068         126         -    5,428            -            -    5,428 
 Thailand                    -            -     1,577           3         -    1,580            -            -    1,580 
 United Kingdom              -            7         -           -         -        7          226            -      233 
 United States          28,552           47     3,525           -         -   32,124            -            -   32,124 
 Vietnam                     -           20     3,022           -         -    3,042            -            -    3,042 
 Other 
  (predominantly 
  Asia)                  2,030          720     4,001          21         -    6,772            -            -    6,772 
 ------------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
Subtotal                34,680        1,942    13,802         161         -   50,585          226            -   50,811 
-------------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
Other government 
bonds 
 AAA                     1,472           86       246           -         -    1,804            -            -    1,804 
 AA+ to AA-                 45            2        12           -         -       59            -            -       59 
 A+ to A-                  667          119       304           -         -    1,090            -            -    1,090 
 BBB+ to BBB-              121           16       116           -         -      253            -            -      253 
 Below BBB- and 
  unrated                  204           15       450           -         -      669            -            -      669 
 ------------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
Subtotalnote(vi)         2,509          238     1,128           -         -    3,875            -            -    3,875 
-------------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
Corporate bonds 
 AAA                     1,222          236       411           -         -    1,869            -            -    1,869 
 AA+ to AA-              2,203          359     1,858           -         -    4,420            -            -    4,420 
 A+ to A-                9,046          675     5,294           -         -   15,015            -            -   15,015 
 BBB+ to BBB-            9,523        1,711     5,105           -         -   16,339            -            -   16,339 
 Below BBB- and 
  unrated                4,009          678     1,827           -         -    6,514            -            -    6,514 
 ------------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
Subtotalnote(vi)        26,003        3,659    14,495           -         -   44,157            -            -   44,157 
-------------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
Asset-backed 
securities 
 AAA                        88            6        74           -         -      168            -            -      168 
 AA+ to AA-                  6            1         4           -         -       11            -            -       11 
 A+ to A-                   26            -        17           -         -       43            -            -       43 
 BBB+ to BBB-               15            -         9           -         -       24            -            -       24 
 Below BBB- and 
  unrated                    2            2         1           -         -        5            -            -        5 
 ------------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
Subtotalnote(vi)           137            9       105           -         -      251            -            -      251 
-------------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
Total debt 
 securitiesnote 
 (ii)                   63,329        5,848    29,530         161         -   98,868          226            -   99,094 
-------------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
Loans: 
 Mortgage loans              -            -       150           -         -      150            -            -      150 
 Policy loans            1,365            -       368           -         -    1,733            -            -    1,733 
 Other loans               668            -        11           -         -      679            -            -      679 
 ------------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
Total loans              2,033            -       529           -         -    2,562            -            -    2,562 
-------------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
Equity securities 
and holdings in 
collective 
investment schemes: 
 Direct equities        10,290       12,812     2,286          84         -   25,472          683            -   26,155 
 Collective 
  investment 
  schemes               23,950        7,704     3,787           3         -   35,444            2            -   35,446 
 ------------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
Total equity 
 securities and 
 holdings in 
 collective 
 investment schemes     34,240       20,516     6,073          87         -   60,916          685            -   61,601 
-------------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
Other financial 
 investments note 
 (iii)                   1,561          149     2,318         106         -    4,134        1,088            -    5,222 
-------------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
Total financial 
 investments           101,163       26,513    38,450         354         -  166,480        1,999            -  168,479 
-------------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
Investment 
 properties                  -            -        38           -         -       38            -            -       38 
Investments in 
 joint ventures and 
 associates 
 accounted for 
 using the equity 
 method                      -            -     1,878         305         -    2,183            -            -    2,183 
Cash and cash 
 equivalents               905          911     1,444         181         -    3,441        3,729            -    7,170 
Reinsurers' share 
 of insurance 
 contract 
 liabilities               225            -     9,528           -         -    9,753            -            -    9,753 
Other assetsnote 
 (iv)                    1,184          166     9,191         759      (51)   11,249        3,608      (3,378)   11,479 
-------------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
Total assets           103,477       27,590    60,529       1,599      (51)  193,144        9,336      (3,378)  199,102 
-------------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
 
Shareholders' 
 equity                      -            -    14,289       1,120         -   15,409        1,679            -   17,088 
Non-controlling 
 interests                   -            -        45         131         -      176            -            -      176 
-------------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
Total equity                 -            -    14,334       1,251         -   15,585        1,679            -   17,264 
-------------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
 
Contract 
 liabilities and 
 unallocated 
 surplus of 
 with-profits funds     94,002       25,651    37,646           -         -  157,299            -            -  157,299 
Core structural 
 borrowings                  -            -         -           -         -        -        6,127            -    6,127 
Operational 
 borrowings                142            -       106          18         -      266          595            -      861 
Other 
 liabilitiesnote 
 (v)                     9,333        1,939     8,443         330      (51)   19,994          935      (3,378)   17,551 
-------------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
Total liabilities      103,477       27,590    46,195         348      (51)  177,559        7,657      (3,378)  181,838 
-------------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
Total equity and 
 liabilities           103,477       27,590    60,529       1,599      (51)  193,144        9,336      (3,378)  199,102 
-------------------  ---------  -----------  --------  ----------  --------  -------  -----------  -----------  ------- 
 

Notes

(i) 'With-profits' comprises the with-profits assets and liabilities of the Hong Kong, Malaysia and Singapore operations. 'Unit-linked' comprises the assets and liabilities held in the unit-linked funds. 'Other' includes assets and liabilities of other participating business and other non-linked shareholder-backed business.

(ii) Of the Group's debt securities, the following amounts were held by the consolidated investment funds:

 
                                                         2022 $m     2021 $m 
                                                         -------  -------------- 
 Continuing operations:                                   30 Jun  30 Jun  31 Dec 
 ------------------------------------------------------  -------  ------  ------ 
 Debt securities held by consolidated investment funds    12,090  14,791  15,076 
 ------------------------------------------------------  -------  ------  ------ 
 

(iii) Other financial investments comprise derivative assets and deposits.

(iv) Of total 'Other assets' at 30 June 2022, there are:

- Property, plant and equipment (PPE) of $405 million (30 June 2021: $525 million; 31 December 2021: $478 million). During half year 2022, the Group made additions of $26 million of PPE (half year 2021: $24 million; full year 2021: $95 million), of which $12 million relates to right-of-use assets (half year 2021: $5 million; full year 2021: $59 million).

- Premiums receivable of $718 million (30 June 2021: $758 million; 31 December 2021: $912 million), of which $688 million (30 June 2021: $715 million; 31 December 2021: $872 million) are due within one year.

(v) Within 'Other liabilities' at 30 June 2022 are accruals, deferred income and other liabilities of $8,103 million (30 June 2021: $8,017 million; 31 December 2021: $7,983 million), of which $5,737 million (30 June 2021: $7,133 million; 31 December 2021: $5,972 million) are due within one year.

(vi) The credit ratings, information or data contained in this report which are attributed and specifically provided by Standard & Poor's, Moody's and Fitch Solutions and their respective affiliates and suppliers ('Content Providers') is referred to here as the 'Content'. Reproduction of any Content in any form is prohibited except with the prior written permission of the relevant party. The Content Providers do not guarantee the accuracy, adequacy, completeness, timeliness or availability of any Content and are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such Content. The Content Providers expressly disclaim liability for any damages, costs, expenses, legal fees, or losses (including lost income or lost profit and opportunity costs) in connection with any use of the Content. A reference to a particular investment or security, a rating or any observation concerning an investment that is part of the Content is not a recommendation to buy, sell or hold any such investment or security, nor does it address the suitability of an investment or security and should not be relied on as investment advice.

(vii) Assets and liabilities held for distribution at 30 June 2021 related to the Group's US operations (Jackson) which were classified as discontinued operations in half year 2021 and demerged in September 2021, as discussed in note D1.2. The condensed consolidated statement of financial position at 30 June 2021 has been presented after the elimination of all intragroup balances between the continuing and discontinued US operations.

   C2    Fair value measurement 

C2.1 Determination of fair value

The fair values of the financial instruments for which fair valuation is required under IFRS Standards are determined by the use of current market bid prices for exchange-quoted investments, or by using quotations from independent third parties, such as brokers and pricing services or by using appropriate valuation techniques.

The estimated fair value of derivative financial instruments reflects the estimated amount the Group would receive or pay in an arm's-length transaction. This amount is determined using quoted prices if exchange listed, quotations from independent third parties or valued internally using standard market practices.

Other than the loans which have been designated at fair value through profit or loss, the carrying value of loans and receivables is presented net of provisions for impairment. The fair value of loans is estimated from discounted cash flows expected to be received. The discount rate used is updated for the market rate of interest where applicable.

The fair value of the subordinated and senior debt issued by the parent company is determined using quoted prices from independent third parties.

The fair value of financial liabilities (other than subordinated debt, senior debt and derivative financial instruments) is determined using discounted cash flows of the amounts expected to be paid.

Valuation approach for level 2 fair valued assets and liabilities

A significant proportion of the Group's level 2 assets are corporate bonds, structured securities and other non-national government debt securities. These assets, in line with market practice, are generally valued using a designated independent pricing service or quote from third-party brokers. These valuations are subject to a number of monitoring controls, such as comparison to multiple pricing sources where available, monthly price variances, stale price reviews and variance analysis on prices achieved on subsequent trades. For further detail on the valuation approach for level 2 fair valued assets and liabilities, refer to note C2.1 of the Group IFRS financial statements for the year ended 31 December 2021.

Valuation approach for level 3 fair valued assets and liabilities

Investments valued using valuation techniques include financial investments which by their nature do not have an externally quoted price based on regular trades, and financial investments for which markets are no longer active as a result of market conditions, eg market illiquidity.

The Group's valuation policies, procedures and analyses for instruments categorised as level 3 are overseen by Business Unit committees as part of the Group's wider financial reporting governance processes. The procedures undertaken include approval of valuation methodologies, verification processes, and resolution of significant or complex valuation issues. In addition, the Group has minimum standards for independent price verification to ensure valuation accuracy is regularly independently verified. Adherence to this policy is monitored across the business units.

C2.2 Fair value measurement hierarchy of Group assets and liabilities

   (a)   Assets and liabilities carried at fair value on the statement of financial position 

The table below shows the assets and liabilities carried at fair value analysed by level of the IFRS 13 'Fair Value Measurement' defined fair value hierarchy. This hierarchy is based on the inputs to the fair value measurement and reflects the lowest level input that is significant to that measurement.

All assets and liabilities held at fair value are classified as fair value through profit or loss at 30 June 2022, except for $325 million of financial assets classified as available-for-sale (30 June 2021: nil; 31 December 2021: $909 million). In the current year all of this related to the Group's retained interest in Jackson's equity securities (30 June 2021: nil; 31 December 2021: $683 million). All assets and liabilities held at fair value are measured on a recurring basis. As of 30 June 2022, the Group did not have any financial instruments that are measured at fair value on a non-recurring basis.

Financial instruments at fair value

 
                                                                               30 Jun 2022 $m 
                                                         ----------------------------------------------------------- 
                                                                    Level 1         Level 2         Level 3 
                                                         ------------------  --------------  -------------- 
                                                                                  Valuation       Valuation 
                                                                                   based on        based on 
                                                              Quoted prices     significant     significant 
                                                               (unadjusted)      observable    unobservable 
                                                          in active markets   market inputs   market inputs    Total 
                                                                                   note (i)       note (ii) 
-------------------------------------------------------  ------------------  --------------  --------------  ------- 
Loans                                                                     -             471               4      475 
Equity securities and holdings in collective investment 
 schemes                                                             49,727           7,193             577   57,497 
Debt securities                                                      57,125          21,954              40   79,119 
Derivative assets                                                        48             134               -      182 
Derivative liabilities                                                (461)           (310)               -    (771) 
-------------------------------------------------------  ------------------  --------------  --------------  ------- 
Total financial investments, net of derivative 
 liabilities                                                        106,439          29,442             621  136,502 
Investment contract liabilities without discretionary 
 participation features                                                   -           (727)               -    (727) 
Net asset value attributable to unit holders of 
 consolidated investment funds                                      (4,546)             (3)               -  (4,549) 
-------------------------------------------------------  ------------------  --------------  --------------  ------- 
Total financial instruments at fair value                           101,893          28,712             621  131,226 
Percentage of total (%)                                                 78%             22%              0%     100% 
-------------------------------------------------------  ------------------  --------------  --------------  ------- 
 
Analysed by business type: 
Financial investments, net of derivative liabilities at 
fair value: 
 With-profits                                                        66,775          15,612             503   82,890 
 Unit-linked                                                         21,201           2,084               4   23,289 
 Non-linked shareholder-backed business                              18,463          11,746             114   30,323 
 ------------------------------------------------------  ------------------  --------------  --------------  ------- 
Total financial investments net of derivative 
 liabilities, at fair value                                         106,439          29,442             621  136,502 
Percentage of total (%)                                                 78%             22%              0%     100% 
 
Total financial investments net of derivative 
 liabilities, at fair value                                         106,439          29,442             621  136,502 
Other financial liabilities at fair value                           (4,546)           (730)               -  (5,276) 
-------------------------------------------------------  ------------------  --------------  --------------  ------- 
Total financial instruments at fair value                           101,893          28,712             621  131,226 
-------------------------------------------------------  ------------------  --------------  --------------  ------- 
 
 
                                                                               30 Jun 2021 $m 
                                                         ----------------------------------------------------------- 
                                                                    Level 1         Level 2         Level 3 
                                                         ------------------  --------------  -------------- 
                                                                                  Valuation       Valuation 
                                                                                   based on        based on 
                                                              Quoted prices     significant     significant 
                                                               (unadjusted)      observable    unobservable 
                                                          in active markets   market inputs   market inputs    Total 
Continuing operations:                                                             note (i)       note (ii) 
-------------------------------------------------------  ------------------  --------------  --------------  ------- 
Loans                                                                     -             560               5      565 
Equity securities and holdings in collective investment 
 schemes                                                             52,299           7,695             472   60,466 
Debt securities                                                      75,221          17,475              32   92,728 
Derivative assets                                                       391              94               -      485 
Derivative liabilities                                                (192)           (220)               -    (412) 
-------------------------------------------------------  ------------------  --------------  --------------  ------- 
Total financial investments, net of derivative 
 liabilities                                                        127,719          25,604             509  153,832 
Investment contract liabilities without discretionary 
 participation features                                                   -           (825)               -    (825) 
Net asset value attributable to unit holders of 
 consolidated investment funds                                      (5,770)               -               -  (5,770) 
-------------------------------------------------------  ------------------  --------------  --------------  ------- 
Total financial instruments at fair value                           121,949          24,779             509  147,237 
Percentage of total (%)                                                 83%             17%              0%     100% 
-------------------------------------------------------  ------------------  --------------  --------------  ------- 
 
Analysed by business type: 
Financial investments net of derivative liabilities, at 
fair value 
 With-profits                                                        80,526          12,874             415   93,815 
 Unit-linked                                                         25,279             985               -   26,264 
 Non-linked shareholder-backed business                              21,914          11,745              94   33,753 
 ------------------------------------------------------  ------------------  --------------  --------------  ------- 
Total financial investments net of derivative 
 liabilities, at fair value                                         127,719          25,604             509  153,832 
Percentage of total (%)                                                 83%             17%              0%     100% 
-------------------------------------------------------  ------------------  --------------  --------------  ------- 
 
Total financial investments net of derivative 
 liabilities, at fair value                                         127,719          25,604             509  153,832 
Other financial liabilities at fair value                           (5,770)           (825)               -  (6,595) 
-------------------------------------------------------  ------------------  --------------  --------------  ------- 
Total financial instruments at fair value                           121,949          24,779             509  147,237 
-------------------------------------------------------  ------------------  --------------  --------------  ------- 
 
 
                                                                               31 Dec 2021 $m 
                                                         ----------------------------------------------------------- 
                                                                    Level 1         Level 2         Level 3 
                                                                                  Valuation       Valuation 
                                                                                   based on        based on 
                                                              Quoted prices     significant     significant 
                                                               (unadjusted)      observable    unobservable 
                                                          in active markets   market inputs   market inputs    Total 
                                                                                   note (i)       note (ii) 
-------------------------------------------------------  ------------------  --------------  --------------  ------- 
Loans                                                                     -             616               5      621 
Equity securities and holdings in collective investment 
 schemes                                                             54,107           6,917             577   61,601 
Debt securities                                                      76,049          22,987              58   99,094 
Derivative assets                                                       359             122               -      481 
Derivative liabilities                                                (146)           (116)               -    (262) 
-------------------------------------------------------  ------------------  --------------  --------------  ------- 
Total financial investments, net of derivative 
 liabilities                                                        130,369          30,526             640  161,535 
Investment contract liabilities without discretionary 
 participation features                                                   -           (814)               -    (814) 
Net asset value attributable to unit holders of 
 consolidated investment funds                                      (5,618)            (46)               -  (5,664) 
-------------------------------------------------------  ------------------  --------------  --------------  ------- 
Total financial instruments at fair value                           124,751          29,666             640  155,057 
Percentage of total (%)                                                 81%             19%              0%     100% 
-------------------------------------------------------  ------------------  --------------  --------------  ------- 
 
Analysed by business type: 
Financial investments net of derivative liabilities, at 
fair value 
 With-profits                                                        82,489          15,438             506   98,433 
 Unit-linked                                                         24,024           2,343               5   26,372 
 Non-linked shareholder-backed business                              23,856          12,745             129   36,730 
 ------------------------------------------------------  ------------------  --------------  --------------  ------- 
Total financial investments net of derivative 
 liabilities, at fair value                                         130,369          30,526             640  161,535 
Percentage of total (%)                                                 81%             19%              0%     100% 
 
Total financial investments net of derivative 
 liabilities, at fair value                                         130,369          30,526             640  161,535 
Other financial liabilities at fair value                           (5,618)           (860)               -  (6,478) 
-------------------------------------------------------  ------------------  --------------  --------------  ------- 
Total financial instruments at fair value                           124,751          29,666             640  155,057 
-------------------------------------------------------  ------------------  --------------  --------------  ------- 
 

Notes

(i) Of the total level 2 debt securities of $21,954 million at 30 June 2022, (30 June 2021: $17,475 million; 31 December 2021: $22,987 million), $33 million (30 June 2021: $163 million; 31 December 2021: $24 million) are valued internally.

(ii) At 30 June 2022, the Group held $621 million (30 June 2021: $509 million; 31 December 2021: $640 million) of net financial instruments at fair value within level 3. This represents less than 0.5 per cent of the total fair valued financial assets, net of financial liabilities, for all periods and comprises the following:

- Equity securities and holdings in collective investment schemes of $577 million (30 June 2021: $472 million; 31 December 2021: $577 million) consisting primarily of property and infrastructure funds held by the participating funds, which are externally valued using the net asset value of the invested entities. Equity securities of $1 million (30 June 2021: $4 million; 31 December 2021: $1 million) are internally valued, representing less than 0.1 per cent for all periods of the total fair valued financial assets net of financial liabilities. Internal valuations are inherently more subjective than external valuations; and

- Other sundry individual financial instruments of a net asset of $44 million (30 June 2021: $37 million; 31 December 2021: $63 million).

Of the net financial instruments of $621 million at 30 June 2022 (30 June 2021: $509 million; 31 December 2021: $640 million) referred to above:

- A net asset of $507 million (30 June 2021: $415 million; 31 December 2021: $511 million) is held by the Group's with-profits and unit-linked funds and therefore shareholders' profit and equity are not impacted by movements in the valuation of these financial instruments; and

- A net asset of $114 million (30 June 2021: $94 million; 31 December 2021: $129 million) is held to support non-linked shareholder-backed business, of which $112 million (30 June 2021: $90 million; 31 December 2021: $112 million) are primarily private equity investments and corporate bonds externally valued using the net asset value of the invested entities and external prices adjusted to reflect the specific known conditions relating the these bonds (eg distressed securities) and are therefore inherently less subjective than internal valuations. If the value of all these level 3 financial instruments decreased by 10 per cent, the change in valuation would be $(11) million (30 June 2021: $(9) million; 31 December 2021: $(26) million), which would reduce shareholders' equity by this amount before tax. All of this amount would pass through the income statement substantially as part of short-term fluctuations in investment returns outside of adjusted operating profit.

   (b)   Transfers into and transfers out of levels 

The Group's policy is to recognise transfers into and out of levels as of the end of each reporting period except for material transfers which are recognised as of the date of the event or change in circumstances that caused the transfer. Transfers are deemed to have occurred when there is a material change in the observed valuation inputs or a change in the level of trading activities of the securities.

During the first half of 2022, the transfers between levels within the portfolios were primarily transfers from level 1 to level 2 of $3,867 million and transfers from level 2 to level 1 of $1,603 million. These transfers primarily reflect the change in the observed valuation inputs of equity securities and debt securities and, in certain cases, the change in the level of trading activities of the securities. There were transfers from level 3 to level 2 of $15 million in the period.

Reconciliation of movements in level 3 assets and liabilities measured at fair value

The following table reconciles the value of level 3 fair valued assets and liabilities at the beginning of the period to that presented at the end of the period.

Total investment return recorded in the income statement represents interest and dividend income, realised gains and losses, unrealised gains and losses on the assets classified at fair value through profit and loss and foreign exchange movements on an individual entity's overseas investments. Total gains and losses recorded in other comprehensive income from continuing operations comprises the translation of investments into the Group's presentational currency of US dollars.

 
                                                                       Half year 2022 $m 
                                                       -------------------------------------------------- 
                                                                   Equity securities 
                                                                     and holdings in 
                                                               collective investment         Debt   Group 
                                                       Loans                 schemes   securities   total 
-----------------------------------------------------  -----  ----------------------  -----------  ------ 
Balance at beginning of period                             5                     577           58     640 
Total losses in income statement(note)                   (1)                    (47)          (1)    (49) 
Total losses recorded in other comprehensive income        -                    (14)          (2)    (16) 
Purchases and other additions                              -                      61            -      61 
Transfers out of level 3                                   -                       -         (15)    (15) 
-----------------------------------------------------  -----  ----------------------  -----------  ------ 
Balance at end of period                                   4                     577           40     621 
-----------------------------------------------------  -----  ----------------------  -----------  ------ 
 
 
                                                                          Half year 2021 $m 
                                                       ------------------------------------------------------- 
                                                                   Equity securities 
                                                                     and holdings in 
                                                               collective investment         Debt 
Continuing operations                                  Loans                 schemes   securities  Group total 
-----------------------------------------------------  -----  ----------------------  -----------  ----------- 
Balance at beginning of period                             6                     445           33          484 
Total (losses) gains in income statement(note)           (1)                      21            -           20 
Total losses recorded in other comprehensive income        -                     (5)          (1)          (6) 
Purchases and other additions                              -                      11            -           11 
-----------------------------------------------------  -----  ----------------------  -----------  ----------- 
Balance at end of period                                   5                     472           32          509 
-----------------------------------------------------  -----  ----------------------  -----------  ----------- 
 
 
                                                                          Full year 2021 $m 
                                                       ------------------------------------------------------- 
                                                                   Equity securities 
                                                                     and holdings in 
                                                               collective investment         Debt 
Continuing operations                                  Loans                 schemes   securities  Group total 
-----------------------------------------------------  -----  ----------------------  -----------  ----------- 
Balance at beginning of year                               6                     445           33          484 
Total (losses) gains in income statement(note)           (1)                       6          (3)            2 
Total losses recorded in other comprehensive income        -                     (5)          (2)          (7) 
Purchases and other additions                              -                     143            -          143 
Transfers (out of) into level 3                            -                    (12)           30           18 
-----------------------------------------------------  -----  ----------------------  -----------  ----------- 
Balance at end of year                                     5                     577           58          640 
-----------------------------------------------------  -----  ----------------------  -----------  ----------- 
 

Note

Of the total net (losses) gains in the income statement of $(49) million at half year 2022 (half year 2021: $20 million; full year 2021: $2 million), $(26) million (half year 2021: $20 million; full year 2021: $2 million) relates to net unrealised gains and losses of financial instruments still held at the end of the period, which can be analysed as follows:

 
                                                                    2022 $m        2021 $m 
                                                                  ---------  -------------------- 
                                                                  Half year  Half year  Full year 
----------------------------------------------------------------  ---------  ---------  --------- 
Loans                                                                   (1)        (1)        (1) 
Equity securities and holdings in collective investment schemes        (24)         21          6 
Debt securities                                                         (1)          -        (3) 
----------------------------------------------------------------  ---------  ---------  --------- 
Total net (losses) gains                                               (26)         20          2 
----------------------------------------------------------------  ---------  ---------  --------- 
 
   (c)   Assets and liabilities at amortised cost and their fair value 

The table below shows the financial assets and liabilities carried at amortised cost on the statement of financial position and their fair value. Cash deposits, accrued income, other debtors, accruals, deferred income and other liabilities are excluded from the analysis below, as these are carried at amortised cost which approximates fair value. The carrying value of investment contracts with discretionary participation features is on an IFRS 4 basis, which is also excluded from the analysis below, as it is impractical to determine the fair value of these contracts due to the lack of a reliable basis to measure participation features.

 
                                                                2022 $m                      2021 $m 
                                                           -----------------  --------  -----------------  ------- 
                                                                30 Jun             30 Jun             31 Dec 
                                                           -----------------  -----------------  ----------------- 
                                                           Carrying     Fair  Carrying     Fair  Carrying     Fair 
                                                              value    value     value    value     value    value 
---------------------------------------------------------  --------  -------  --------  -------  --------  ------- 
Assets: 
Loans                                                         1,954    2,103     1,875    2,245     1,941    2,152 
Liabilities: 
Core structural borrowings of shareholder-financed 
 businesses                                                 (4,266)  (4,073)   (6,404)  (7,029)   (6,127)  (6,565) 
Operational borrowings (excluding lease liabilities)          (568)    (568)     (500)    (500)     (514)    (514) 
Obligations under funding, securities lending and sale 
 and repurchase agreements                                    (799)    (799)     (396)    (396)     (223)    (223) 
---------------------------------------------------------  --------  -------  --------  -------  --------  ------- 
Total net financial assets (liabilities) at amortised 
 cost                                                       (3,679)  (3,337)   (5,425)  (5,680)   (4,923)  (5,150) 
---------------------------------------------------------  --------  -------  --------  -------  --------  ------- 
 

C3 Policyholder liabilities and unallocated surplus

   C3.1   Policyholder liabilities and unallocated surplus by business type 
   (a)   Movement in policyholder liabilities and unallocated surplus of with-profits funds 

The items below represent the amount attributable to changes in policyholder liabilities and unallocated surplus of with-profits funds as a result of each of the components listed for the insurance operations of the Group. The policyholder liabilities shown include investment contracts without discretionary participation features (as defined in IFRS 4) and their full movement in the period. The items are shown gross of external reinsurance.

 
                                                                                  Half year 2022 $m 
                                                                  -------------------------------------------------- 
                                                                      With-   Shareholder-backed business      Total 
                                                                             ----------------------------- 
                                                                    profits       Unit-linked        Other 
                                                                   business       liabilities     business 
 ---------------------------------------------------------------  ---------  ----------------  -----------  -------- 
At beginning of period                                               94,002            34,756       48,496   177,254 
Comprising: 
----------------------------------------------------------------  ---------  ----------------  -----------  -------- 
 Policyholder liabilities on the balance sheet                       88,618            25,651       37,646   151,915 
 Unallocated surplus of with-profits funds on the balance sheet 
  note (i)                                                            5,384                 -            -     5,384 
 Group's share of policyholder liabilities relating to joint 
  ventures and associates note 
  (ii)                                                                    -             9,105       10,850    19,955 
 ---------------------------------------------------------------  ---------  ----------------  -----------  -------- 
Premiums:note (iii) 
 New business                                                         1,456             1,231        1,607     4,294 
 In-force                                                             2,867             1,219        2,694     6,780 
 ---------------------------------------------------------------  ---------  ----------------  -----------  -------- 
                                                                      4,323             2,450        4,301    11,074 
Surrendersnotes (iii)(iv)                                             (558)           (1,426)        (293)   (2,277) 
Maturities/deaths/other claim events                                  (993)             (127)        (842)   (1,962) 
----------------------------------------------------------------  ---------  ----------------  -----------  -------- 
Net flows                                                             2,772               897        3,166     6,835 
Shareholders' transfers post tax                                       (74)                 -            -      (74) 
Investment-related items and other movementsnote (v)               (16,422)           (2,396)     (12,391)  (31,209) 
Foreign exchange translation differencesnote (vi)                   (1,297)           (1,522)      (1,563)   (4,382) 
----------------------------------------------------------------  ---------  ----------------  -----------  -------- 
At end of period                                                     78,981            31,735       37,708   148,424 
----------------------------------------------------------------  ---------  ----------------  -----------  -------- 
Comprising: 
----------------------------------------------------------------  ---------  ----------------  -----------  -------- 
 Policyholder liabilities on the balance sheet                       74,413            23,037       26,079   123,529 
 Unallocated surplus of with-profits funds on the balance sheet 
  note (i)                                                            4,568                 -            -     4,568 
 Group's share of policyholder liabilities relating to joint 
  ventures and associates note 
  (ii)                                                                    -             8,698       11,629    20,327 
 ---------------------------------------------------------------  ---------  ----------------  -----------  -------- 
 
                                                                                  Half year 2021 $m 
                                                                  -------------------------------------------------- 
                                                                      With-   Shareholder-backed business      Total 
                                                                             ----------------------------- 
                                                                    profits       Unit-linked        Other  Asia and 
Continuing operations:                                             business       liabilities     business    Africa 
----------------------------------------------------------------  ---------  ----------------  -----------  -------- 
At beginning of period                                               86,410            32,506       46,639   165,555 
Comprising: 
----------------------------------------------------------------  ---------  ----------------  -----------  -------- 
 Policyholder liabilities on the balance sheet                       81,193            25,433       38,107   144,733 
 Unallocated surplus of with-profits funds on the balance sheet 
  note (i)                                                            5,217                 -            -     5,217 
 Group's share of policyholder liabilities relating to joint 
  ventures and associates note 
  (ii)                                                                    -             7,073        8,532    15,605 
 ---------------------------------------------------------------  ---------  ----------------  -----------  -------- 
Premiums:note (iii) 
 New business                                                           900             1,237          942     3,079 
 In-force                                                             3,617             1,211        2,469     7,297 
 ---------------------------------------------------------------  ---------  ----------------  -----------  -------- 
                                                                      4,517             2,448        3,411    10,376 
Surrendersnotes (iii)(iv)                                             (393)           (1,724)        (410)   (2,527) 
Maturities/deaths/other claim events                                  (852)             (101)        (505)   (1,458) 
----------------------------------------------------------------  ---------  ----------------  -----------  -------- 
Net flows                                                             3,272               623        2,496     6,391 
Shareholders' transfers post-tax                                       (62)                 -            -      (62) 
Investment-related items and other movementsnote (v)                    201               997      (2,994)   (1,796) 
Foreign exchange translation differencesnote (vi)                     (578)             (532)        (230)   (1,340) 
----------------------------------------------------------------  ---------  ----------------  -----------  -------- 
At end of period                                                     89,243            33,594       45,911   168,748 
----------------------------------------------------------------  ---------  ----------------  -----------  -------- 
Comprising: 
----------------------------------------------------------------  ---------  ----------------  -----------  -------- 
 Policyholder liabilities on the balance sheet                       82,970            25,615       36,224   144,809 
 Unallocated surplus of with-profits funds on the balance sheet 
  note (i)                                                            6,273                 -            -     6,273 
 Group's share of policyholder liabilities relating to joint 
  ventures and associates note 
  (ii)                                                                    -             7,979        9,687    17,666 
 ---------------------------------------------------------------  ---------  ----------------  -----------  -------- 
 
Average policyholder liability balancesnote (vii) 
 Half year 2022                                                      81,516            33,245       43,102   157,863 
 Half year 2021                                                      82,082            33,050       46,275   161,407 
 ---------------------------------------------------------------  ---------  ----------------  -----------  -------- 
 

Notes

(i) Unallocated surplus of with-profits funds represents the excess of assets over policyholder liabilities, determined in accordance with the Group's accounting policies, that have yet to be appropriated between policyholders and shareholders for the Group's with-profits funds in Hong Kong and Malaysia. In Hong Kong, the unallocated surplus includes the shareholders' share of expected future bonuses, with the expected policyholder share being included in policyholder liabilities. Any excess of assets over liabilities and amounts expected to be paid out by the fund on future bonuses is also included in the unallocated surplus.

(ii) The Group's investments in joint ventures and associates are accounted for on an equity method and the Group's share of the policyholder liabilities as shown above relate to the life business of CPL, India and the Takaful business in Malaysia.

(iii) The analysis includes the impact of premiums, claims and investment movements on policyholders' liabilities. The impact does not represent premiums, claims and investment movements as reported in the income statement. For example, premiums shown above are after any deductions for fees/charges; claims (surrenders, maturities, deaths and other claim events) shown above represent the policyholder liabilities provision released rather than the claims amount paid to the policyholder. The analysis also includes net flows of the Group's insurance joint ventures and associate.

(iv) The rate of surrenders for shareholder-backed business (expressed as a percentage of opening policyholder liabilities) was 2.1 per cent in half year 2022 (half year 2021: 2.7 per cent).

(v) Investment-related items and other movements in the first half of 2022 primarily represents the effects of higher interest rates on the discount rates applied in the measurement of the policyholder liabilities, together with bond losses due to rising interest rates and lower level of investment returns from equities following the falls in equity markets. Other business also includes the effect of the early adoption of the Risk-based Capital Regime in Hong Kong as discussed in note C3.2 below.

(vi) Movements in the period have been translated at the average exchange rates for the period ended 30 June 2022 and 2021. The closing balance has been translated at the closing spot rates as at 30 June 2022 and 2021. Differences upon retranslation are included in foreign exchange translation differences.

(vii) Average policyholder liabilities have been based on opening and closing balances, adjusted for any acquisitions, disposals and other corporate transactions arising in the period, and exclude unallocated surplus of with-profits funds.

C3.2 Reconciliation of gross and reinsurers' share of policyholder liabilities and unallocated surplus

Further analysis of the movement in the period of the Group's gross contract liabilities, reinsurers' share of insurance contract liabilities and unallocated surplus of with-profits funds (excluding those held by joint ventures and associates) is provided below:

 
                                                                                Half year 2022 $m 
                                                             -------------------------------------------------------- 
                                                                               Reinsurers' share          Unallocated 
                                                                 Contract           of insurance           surplus of 
                                                              liabilities   contract liabilities   with-profits funds 
-----------------------------------------------------------  ------------  ---------------------  ------------------- 
At beginning of period                                            151,915                (9,753)                5,384 
(Income) expense included in the income statementnote (i)        (25,193)                  6,942                (779) 
Other movementsnote (ii)                                               69                      -                    - 
Foreign exchange translation differences                          (3,262)                     61                 (37) 
-----------------------------------------------------------  ------------  ---------------------  ------------------- 
At end of period                                                  123,529                (2,750)                4,568 
-----------------------------------------------------------  ------------  ---------------------  ------------------- 
 
                                                                                Half year 2021 $m 
                                                             -------------------------------------------------------- 
                                                                               Reinsurers' share          Unallocated 
                                                                 Contract           of insurance           surplus of 
                                                              liabilities   contract liabilities   with-profits funds 
-----------------------------------------------------------  ------------  ---------------------  ------------------- 
At beginning of period                                            441,246               (46,595)                5,217 
Reclassification of US operations as held for distribution      (296,513)                 35,232                    - 
Expense included in the income statementnote (i)                    1,354                  1,450                1,070 
Other movementsnote (ii)                                               25                      -                    - 
Foreign exchange translation differences                          (1,303)                     22                 (14) 
-----------------------------------------------------------  ------------  ---------------------  ------------------- 
At end of period                                                  144,809                (9,891)                6,273 
-----------------------------------------------------------  ------------  ---------------------  ------------------- 
 

Notes

(i ) The total charge for benefit and claims in half year 2022 shown in the income statement comprises the amounts shown as '(Income) expense included in the income statement' in the table above together with claims paid of $(4,406) million in the period (half year 2021: $( 4,143) million ) and claim amounts attributable to reinsurers of $202 million (half year 2021: $ 269 million ).

(ii) Other movements include premiums received and claims paid on investment contracts without discretionary participating features, which are taken directly to the statement of financial position in accordance with IAS 39.

The segmental analysis of the total charge for benefit and claims and movement in unallocated surplus, net of reinsurance in the income statement is shown below. The CPL segment is a joint venture accounted for using the equity method under IFRS, with the Group's share of its results net of related tax presented in a single line within the Group's profit before tax, and therefore not shown in the analysis of benefit and claims items below.

 
                                                                               Half year 2022 $m 
                                                         ------------------------------------------------------------- 
                                                                                                      Growth 
                                                            Hong                                     markets     Total 
                                                            Kong  Indonesia  Malaysia  Singapore   and other   segment 
-------------------------------------------------------  -------  ---------  --------  ---------  ----------  -------- 
Claims incurred, net of reinsurance                        (894)      (609)     (533)    (1,345)       (887)   (4,268) 
Decrease in policyholder liabilities, net of 
 reinsurance                                              13,090        187       157      2,865       2,016    18,315 
Movement in unallocated surplus of with-profits funds        660          -       119          -           -       779 
-------------------------------------------------------  -------  ---------  --------  ---------  ----------  -------- 
Benefits and claims and movement in unallocated 
 surplus, 
 net of reinsurance                                       12,856      (422)     (257)      1,520       1,129    14,826 
-------------------------------------------------------  -------  ---------  --------  ---------  ----------  -------- 
 
                                                                               Half year 2021 $m 
                                                         ------------------------------------------------------------- 
                                                                                                      Growth 
                                                            Hong                                     markets     Total 
                                                            Kong  Indonesia  Malaysia  Singapore   and other   segment 
-------------------------------------------------------  -------  ---------  --------  ---------  ----------  -------- 
Claims incurred, net of reinsurance                        (818)      (602)     (482)    (1,346)       (755)   (4,003) 
(Increase) decrease in policyholder liabilities, net of 
 reinsurance                                               (369)        266      (68)    (2,197)       (307)   (2,675) 
Movement in unallocated surplus of with-profits funds    (1,121)          -        51          -           -   (1,070) 
-------------------------------------------------------  -------  ---------  --------  ---------  ----------  -------- 
Benefits and claims and movement in unallocated 
 surplus, 
 net of reinsurance                                      (2,308)      (336)     (499)    (3,543)     (1,062)   (7,748) 
-------------------------------------------------------  -------  ---------  --------  ---------  ----------  -------- 
 

Hong Kong Risk-based Capital Regime

In April 2022, the Group's Hong Kong life business (PHKL) received approval from the Hong Kong Insurance Authority to early adopt the Hong Kong Risk-based Capital (HK RBC) regime with effect from 1 January 2022. In light of this development and given that the measurement technique set out within the local regulatory basis has been applied by PHKL to calculate IFRS liabilities, the Group has refined the reserving methodology of PHKL by reference to the method applied under the new HK RBC regime. Under the basis previously applied, liabilities of non-participating business were generally determined on a net premium valuation basis to determine the future policyholder benefit provisions, subject to minimum floors. Using the principles underpinning the HK RBC regime, the IFRS reserving basis has been refined at 30 June 2022 to one that is based on a gross premium valuation basis (including an allowance for the uncertainty of non-hedgeable risks), subject to minimum floors. Depending on the product, the minimum floor is set at the policyholder's asset share or guaranteed cash surrender value or at a constraint that on day one no negative reserve exists at a product level. This new measurement technique better estimates the liability and brings the estimation basis for PHKL more in line with that used by the Group's other insurance operations. This change of estimate has reduced policyholder liabilities (net of reinsurance) and increased profit before tax for the first half of 2022 by $945 million.

There has been no change to the reserving basis for with-profits liabilities, which under the Group's accounting policy are valued under the realistic basis in accordance with the requirements of the "grandfathered" UK standard FRS 27 'Life Assurance'.

C4 Intangible assets

C4.1 Goodwill

Goodwill shown on the consolidated statement of financial position at 30 June 2022 represents amounts allocated to businesses in Asia and Africa in respect of both acquired asset management and life businesses. There has been no impairment as at 30 June 2022.

 
                                        2022 $m     2021 $m 
                                        -------  -------------- 
                                         30 Jun  30 Jun  31 Dec 
--------------------------------------  -------  ------  ------ 
Carrying value at beginning of period       907     961     961 
Exchange differences                       (36)    (35)    (54) 
--------------------------------------  -------  ------  ------ 
Carrying value at end of period             871     926     907 
--------------------------------------  -------  ------  ------ 
 

C4.2 Deferred acquisition costs and other intangible assets

 
                                                                                             2022 $m     2021 $m 
                                                                                             -------  -------------- 
                                                                                              30 Jun  30 Jun  31 Dec 
-------------------------------------------------------------------------------------------  -------  ------  ------ 
Shareholder-backed business: 
DAC related to insurance contracts as classified under IFRS 4                                  2,845   2,468   2,776 
DAC related to investment management contracts, including life assurance contracts 
 classified 
 as financial instruments and investment management contracts under IFRS 4                        39      37      39 
-------------------------------------------------------------------------------------------  -------  ------  ------ 
DAC related to insurance and investment contracts                                              2,884   2,505   2,815 
-------------------------------------------------------------------------------------------  -------  ------  ------ 
Distribution rights                                                                            3,626   3,765   3,782 
Present value of acquired in-force policies for insurance contracts as classified under 
 IFRS 4                                                                                           22      31      28 
Other intangibles                                                                                180     150     184 
-------------------------------------------------------------------------------------------  -------  ------  ------ 
Present value of acquired in-force and other intangibles                                       3,828   3,946   3,994 
-------------------------------------------------------------------------------------------  -------  ------  ------ 
Total of DAC and other intangible assets attributable to shareholdersnote (i)                  6,712   6,451   6,809 
Other intangible assets, including computer software, attributable to with-profits funds          38      74      49 
-------------------------------------------------------------------------------------------  -------  ------  ------ 
Total of deferred acquisition costs and other intangible assets                                6,750   6,525   6,858 
-------------------------------------------------------------------------------------------  -------  ------  ------ 
 

Notes

   (i)    Movement in DAC and other intangible assets attributable to shareholders is shown below: 
 
                                                          2022 $m                                2021 $m 
                                             ---------------------------------  ---------  -------------------- 
                                                    Distribution         Other  Half year  Half year  Full year 
                                               DAC        rights   intangibles      Total      Total      Total 
                                                       note (ii)    note (iii) 
  -----------------------------------------  -----  ------------  ------------  ---------  ---------  --------- 
Balance at beginning of period               2,815         3,782           212      6,809     20,275     20,275 
Removal of discontinued US operations            -             -             -          -   (13,881)   (13,881) 
Additions                                      426            44            27        497        475      1,185 
Amortisation to the income statement         (249)         (143)          (27)      (419)      (331)      (651) 
Disposals and transfers                          -             -           (3)        (3)        (3)        (7) 
Exchange differences and other movements     (108)          (57)           (7)      (172)       (84)      (112) 
-------------------------------------------  -----  ------------  ------------  ---------  ---------  --------- 
Balance at end of period                     2,884         3,626           202      6,712      6,451      6,809 
-------------------------------------------  -----  ------------  ------------  ---------  ---------  --------- 
 

(ii) Distribution rights relate to amounts that have been paid or have become unconditionally due for payment as a result of past events in respect of the bancassurance partnership arrangements for the bank distribution of Prudential's insurance products for a fixed period of time . The distribution rights amounts are amortised on a basis to reflect the pattern in which the future economic benefits are expected to be consumed by reference to new business production levels.

(iii) Other intangibles comprise present value of acquired in-force (PVIF) related to insurance contracts and other intangible assets such as software rights. Software rights include additions of $17 million, amortisation of $(13) million, disposals of $(2) million, foreign exchange of $(6) million and closing balance at 30 June 2022 of $110 million (30 June 2021: $81 million; 31 December 2021: $114 million).

C5 Borrowings

C5.1 Core structural borrowings of shareholder-financed businesses

 
                                                                       2022 $m     2021 $m 
                                                                       -------  -------------- 
                                                                        30 Jun  30 Jun  31 Dec 
 --------------------------------------------------------------------  -------  ------  ------ 
Subordinated debt: 
 US$250m 6.75% Notesnote (i)                                                 -     250       - 
 US$300m 6.5% Notesnote (i)                                                  -     300       - 
 US$700m 5.25% Notesnote (i)                                                 -     700       - 
 US$1,000m 5.25% Notesnote (i)                                               -   1,000   1,000 
 US$725m 4.375% Notesnote (iii)                                              -     725     725 
 US$750m 4.875% Notes                                                      749     747     748 
 EUR20m Medium Term Notes 2023                                              21      24      23 
 GBP435m 6.125% Notes 2031                                                 524     596     584 
 US$1,000m 2.95% Notes 2033note (ii)                                       995       -     995 
Senior debt: note (iv) 
 GBP300m 6.875% Notes 2023                                                 363     411     404 
 GBP250m 5.875% Notes 2029                                                 282     317     313 
 $1,000m 3.125% Notes 2030                                                 986     984     985 
 $350m 3.625% Notes 2032note (v)                                           346       -       - 
Bank loans: 
 $350m Loan 2024note (v)                                                     -     350     350 
 --------------------------------------------------------------------  -------  ------  ------ 
Total core structural borrowings of shareholder-financed businesses      4,266   6,404   6,127 
---------------------------------------------------------------------  -------  ------  ------ 
 

Notes

(i) The US$250 million, US$300 million, US$700 million notes were redeemed on 23 December 2021 and the US$1,000 million notes were redeemed on 20 January 2022 using the proceeds from the issuance of ordinary shares in October 2021.

(ii) In November 2021, the Company issued US$1,000 million 2.95 per cent subordinated debt maturing on 3 November 2033 with proceeds, net of costs, of $995 million.

(iii) The US$725 million note was redeemed on 20 January 2022 using the proceeds from the US$1,000 million subordinated debt issued in November 2021.

(iv) The senior debt ranks above subordinated debt in the event of liquidation.

(v) In March 2022, the Company issued US$350 million 3.625 per cent senior debt maturing on 24 March 2032 with proceeds, net of costs, of $346 million, which was used to redeem the US$350 million bank loan in May 2022.

C5.2 Operational borrowings

 
                                                                                           2022 $m     2021 $m 
                                                                                           -------  -------------- 
                                                                                            30 Jun  30 Jun  31 Dec 
 ----------------------------------------------------------------------------------------  -------  ------  ------ 
Shareholder-financed business: 
Borrowings in respect of short-term fixed income securities programmes (commercial paper)      544     500     500 
Lease liabilities under IFRS 16                                                                177     239     209 
Other borrowings                                                                                 5       -      10 
-----------------------------------------------------------------------------------------  -------  ------  ------ 
Operational borrowings attributable to shareholder-financed businesses                         726     739     719 
-----------------------------------------------------------------------------------------  -------  ------  ------ 
With profits business: 
Lease liabilities under IFRS 16                                                                109     156     138 
Other borrowings                                                                                19       -       4 
-----------------------------------------------------------------------------------------  -------  ------  ------ 
Operational borrowings attributable to with-profits businesses                                 128     156     142 
-----------------------------------------------------------------------------------------  -------  ------  ------ 
Total operational borrowings                                                                   854     895     861 
-----------------------------------------------------------------------------------------  -------  ------  ------ 
 

C6 Sensitivity analysis to key market risks

The Group's risk framework and the management of risks attaching to the Group's financial statements including financial assets, financial liabilities and insurance liabilities, together with the inter-relationship with the management of capital, have been included in the Risk review report. The following sections set out the sensitivity of the Group's profit or loss and shareholders' equity to instantaneous changes in interest rates and equity levels, which are then assumed to remain unchanged for the long term. Further information of the Group's sensitivity to key risks was set out in the Group's financial statements for the year ended 31 December 2021.

C6.1 Insurance operations

The table below shows the sensitivity of shareholders' equity as at 30 June 2022, 30 June 2021 and 31 December 2021 for insurance operations to the following market risks:

- 1 per cent increase and 0.5 per cent decrease in interest rates (based on local government bond yields at the valuation date) in isolation and subject to a floor of zero; and

- Instantaneous 10 per cent rise and 20 per cent fall in the market value of equity and property assets. The equity risk sensitivity analysis assumes that all equity indices fall by the same percentage.

The sensitivities below only allow for limited management actions such as changes to policyholder bonuses, where applicable. If the economic conditions set out in the sensitivities persisted, the financial impacts may differ to the instantaneous impacts shown below. Given the continuous risk management processes in place, management could take additional actions to help mitigate the impact of these stresses, including (but not limited to) rebalancing investment portfolios, increased use of reinsurance, repricing of in-force benefits, changes to new business pricing and the mix of new business being sold.

Where liabilities are valued using historic average rates for a short period (ie up to three years), the valuation interest rates are adjusted to assume a parallel increase or decrease in the interest rates used in the averaging approach to reflect the impact that could be seen in the near term. These sensitivities do not include credit risk sensitivities, such as movements in credit spreads, and hence the valuation of debt securities and policyholder liabilities. A one-letter credit downgrade in isolation (ie ignoring any consequential change in valuation) would not have a material impact on IFRS profit or shareholders' equity.

 
Net effect on shareholders' equity from insurance operations    2022 $m     2021 $m 
                                                                -------  -------------- 
                                                                 30 Jun  30 Jun  31 Dec 
 -------------------------------------------------------------  -------  ------  ------ 
Shareholders' equity of insurance operations                     13,308  13,287  14,289 
 
Sensitivity to key market risks: (note) 
 Interest rates and consequential effects - 1% increase           (680)   (533)   (796) 
 Interest rates and consequential effects - 0.5% decrease           121   (381)     137 
 Equity/property market values - 10% rise                           305     387     372 
 Equity/property market values - 20% fall                         (750)   (803)   (787) 
 -------------------------------------------------------------  -------  ------  ------ 
 

Note

The effect from the changes in interest rates or equity and property prices above, if they arose, would impact profit after tax for the insurance operations and would mostly be recorded within short-term fluctuations in investment returns. The impact on profit after tax would be the same as the net effect on shareholders' equity. In the context of the Group, the results of the Africa insurance operations are not materially impacted by interest rate or equity rate changes.

The degree of sensitivity of the results of the non-linked shareholder-backed business of the insurance operations to movements in interest rates depends upon the degree to which the liabilities under the 'grandfathered' IFRS 4 measurement basis reflects market interest rates from period to period. This varies by business unit.

For example:

- Certain businesses (Taiwan and India) apply US GAAP, for which the results can be more sensitive as the effect of interest rate movements on the backing investments may not be offset by liability movements; and

- The level of options and guarantees in the products written in a particular business unit will affect the degree of sensitivity to interest rate movements.

The sensitivity of the insurance operations presented as a whole at a given point in time will also be affected by a change in the relative size of the individual businesses.

The 'increase of 1%' sensitivities reflects that, for many operations the impact of interest rate movements on the value of government and corporate bond investments dominates, namely bonds are expected to decrease in value as interest rates increase to a greater extent than the offsetting decrease in liabilities from a corresponding change in discount rates. This arises because the discount rate in some operations does not fluctuate in line with interest rate movements.

Following a general increase in interest rates over 2021 and first half of 2022, under a 0.5% decrease interest rate scenario for most operations asset gains exceed the increases in liabilities resulting in an overall small positive impact of an instantaneous decrease of rates .

Movements in equities backing with-profits and unit-linked business have been excluded from the equity and property sensitivities as they are generally matched by an equal movement in insurance liabilities (including unallocated surplus of with-profits funds). The impact on changes to future profitability as a result of changes to the asset values within unit-linked or with-profits funds have not been included in the instantaneous sensitivity above. The estimated sensitivities shown above include equity and property investments held by the Group's joint venture and associate businesses. Generally, changes in equity and property investment values held outside unit-linked and with-profits funds are not directly offset by movements in non-linked policyholder liabilities. For Hong Kong's non-participating business, liabilities largely reflect asset shares post the adoption of HK RBC and therefore the consequential movements in equities are offset by movements in policyholder liabilities.

   C6.2     Eastspring and central operations 

The profit for the period of Eastspring is sensitive to the level of assets under management, as this significantly affects the value of management fees earned by the business in the current and future periods. Assets under management will rise and fall as market conditions change, with a consequential impact on profitability.

Eastspring holds a small amount of investments direct on its balance sheet, including investments in respect of seeding capital into retail funds it sells to third parties (see note C.1). Eastspring's profit will therefore have some exposure to the market movements of these investments.

At 30 June 2022, the Group's central operations held a 14.3 per cent (31 December 2021: 18.4 per cent) economic interest in the equity securities of Jackson. These equity securities are listed on the New York Stock Exchange and classified as 'available-for-sale' with a fair value of $325 million at 30 June 2022 (31 December 2021: $683 million). If the value of these securities decreased by 20 per cent, the change in valuation would be $(65) million (31 December 2021: $(137) million), which would reduce shareholders' equity by this amount before tax, all of which would pass through other comprehensive income outside of the profit or loss.

C7 Deferred tax assets and liabilities

The statement of financial position contains the following deferred tax assets and liabilities in relation to:

 
                                                                               Half year 2022 $m 
                                                   -----------------------  -----------------------  ----------------- 
                                                                                              Other 
                                                                                          movements 
                                                                                          including 
                                                                            Movement in     foreign 
                                                                   Balance       income    exchange            Balance 
                                                    at beginning of period    statement   movements   at end of period 
------------------------  -----------------------  -----------------------  -----------  ----------  ----------------- 
Deferred tax assets 
Unrealised losses or 
 gains on investments                                                    3          173         (7)                169 
Balances relating to 
 investment and 
 insurance contracts                                                    34            1        (34)                  1 
Short-term temporary 
 differences                                                           162           32        (10)                184 
Unused tax losses                                                       67         (41)         (2)                 24 
------------------------  -----------------------  -----------------------  -----------  ----------  ----------------- 
Total deferred tax 
 assets                                                                266          165        (53)                378 
------------------------  -----------------------  -----------------------  -----------  ----------  ----------------- 
 
Deferred tax liabilities 
Unrealised losses or 
 gains on investments                                                (242)           99           6              (137) 
Balances relating to 
 investment and 
 insurance contracts                                               (2,125)         (52)         113            (2,064) 
Short-term temporary 
 differences                                                         (495)         (25)          22              (498) 
------------------------  -----------------------  -----------------------  -----------  ----------  ----------------- 
Total deferred tax 
 liabilities                                                       (2,862)           22         141            (2,699) 
------------------------  -----------------------  -----------------------  -----------  ----------  ----------------- 
 
                                                               Half year 2021 $m 
                          -------------------------------------------------------------------------------------------- 
                                                                                              Other 
                                                                                          movements 
                                                                                          including 
                                                                Removal of  Movement in     foreign 
                                          Balance             discontinued       income    exchange            Balance 
                           at beginning of period            US operations    statement   movements   at end of period 
------------------------  -----------------------  -----------------------  -----------  ----------  ----------------- 
Deferred tax assets 
Unrealised losses or 
 gains on investments                           -                        -            1           -                  1 
Balances relating to 
 investment and 
 insurance contracts                           87                        -          (1)        (37)                 49 
Short-term temporary 
 differences                                4,662                  (4,513)            5         (3)                151 
Unused tax losses                             109                     (29)           16           1                 97 
------------------------  -----------------------  -----------------------  -----------  ----------  ----------------- 
Total deferred tax 
 assets                                     4,858                  (4,542)           21        (39)                298 
------------------------  -----------------------  -----------------------  -----------  ----------  ----------------- 
 
Deferred tax liabilities 
Unrealised losses or 
 gains on investments                     (1,063)                      691           73           2              (297) 
Balances relating to 
 investment and 
 insurance contracts                      (1,765)                        -        (322)          71            (2,016) 
Short-term temporary 
 differences                              (3,247)                    2,832         (14)           7              (422) 
------------------------  -----------------------  -----------------------  -----------  ----------  ----------------- 
Total deferred tax 
 liabilities                              (6,075)                    3,523        (263)          80            (2,735) 
------------------------  -----------------------  -----------------------  -----------  ----------  ----------------- 
 
 
                                                                      Full year 2021 $m 
                                       ------------------------------------------------------------------------------- 
                                                                                                Other 
                                                                                            movements 
                                                                                            including 
                                                                  Removal of  Movement in     foreign 
                                                     Balance    discontinued       income    exchange          Balance 
                                        at beginning of year   US operations    statement   movements   at end of year 
-------------------------------------  ---------------------  --------------  -----------  ----------  --------------- 
Deferred tax assets 
Unrealised losses or gains on 
 investments                                               -               -            3           -                3 
Balances relating to investment and 
 insurance contracts                                      87               -         (16)        (37)               34 
Short-term temporary differences                       4,662         (4,513)           15         (2)              162 
Unused tax losses                                        109            (29)         (14)           1               67 
-------------------------------------  ---------------------  --------------  -----------  ----------  --------------- 
Total deferred tax assets                              4,858         (4,542)         (12)        (38)              266 
-------------------------------------  ---------------------  --------------  -----------  ----------  --------------- 
 
Deferred tax liabilities 
Unrealised losses or gains on 
 investments                                         (1,063)             691          127           3            (242) 
Balances relating to investment and 
 insurance contracts                                 (1,765)               -        (433)          73          (2,125) 
Short-term temporary differences                     (3,247)           2,832         (87)           7            (495) 
-------------------------------------  ---------------------  --------------  -----------  ----------  --------------- 
Total deferred tax liabilities                       (6,075)           3,523        (393)          83          (2,862) 
-------------------------------------  ---------------------  --------------  -----------  ----------  --------------- 
 

C8 Share capital, share premium and own shares

 
                          30 Jun 2022                      30 Jun 2021                      31 Dec 2021 
                -------------------------------  -------------------------------  -------------------------------- 
                    Number of                        Number of                        Number of 
Issued shares        ordinary    Share    Share       ordinary    Share    Share       ordinary    Share     Share 
of 5p each             shares  capital  premium         shares  capital  premium         shares  capital   premium 
fully paid:                         $m       $m                      $m       $m                      $m        $m 
--------------  -------------  -------  -------  -------------  -------  -------  -------------  -------  -------- 
Balance at 
 beginning of 
 period         2,746,412,265      182    5,010  2,609,489,702      173    2,637  2,609,489,702      173     2,637 
Shares issued 
 under 
 share-based 
 schemes            2,902,591        -        -      6,121,839        -        8      6,142,213        -         8 
Shares issued 
 under Hong 
 Kong public 
 offer and 
 international 
 placing in 
 2021(note)                 -        -        -              -        -        -    130,780,350        9     2,365 
--------------  -------------  -------  -------  -------------  -------  -------  -------------  -------  -------- 
Balance at end 
 of period      2,749,314,856      182    5,010  2,615,611,541      173    2,645  2,746,412,265      182     5,010 
--------------  -------------  -------  -------  -------------  -------  -------  -------------  -------  -------- 
 

Note

In October 2021, Prudential completed the issuance of new ordinary shares on the Hong Kong Stock Exchange, resulting in net proceeds and an increase in shareholders' equity of $2.4 billion. The proceeds from this issuance were used to redeem high coupon debt instruments of US$2.3 billion in total in December 2021 and January 2022, with the remainder used to increase Prudential's central stock of liquidity, as originally intended and disclosed in Prudential's prospectus for the issuance. Further details are provided in note C8 of the Group's consolidated financial statements for the year ended 31 December 2021.

Options outstanding under save as you earn schemes to subscribe for shares at each period end shown below are as follows:

 
              Number of shares   Share price range   Exercisable 
                                ------------------- 
              to subscribe for   from        to          by year 
------------  ----------------  -------  ----------  ----------- 
30 Jun 2022          1,734,638   964p      1,455p           2027 
30 Jun 2021          1,774,131   964p      1,455p           2026 
31 Dec 2021          2,022,535   964p      1,455p           2027 
------------  ----------------  -------  ----------  ----------- 
 

Transactions by Prudential plc and its subsidiaries in Prudential plc shares

The Group buys and sells Prudential plc shares ('own shares') in relation to its employee share schemes. The cost of own shares of $271 million at 30 June 2022 (30 June 2021: $261 million; 31 December 2021: $267 million) is deducted from retained earnings. The Company has established trusts to facilitate the delivery of shares under employee incentive plans. At 30 June 2022, 12.7 million (30 June 2021: 11.4 million; 31 December 2021: 11.7 million) Prudential plc shares with a market value of $157 million (30 June 2021: $217 million; 31 December 2021: $201 million) were held in such trusts, all of which are for employee incentive plans. The maximum number of shares held during the period was 12.7 million which was in June 2022.

Within the trusts, shares are notionally allocated by business unit reflecting the employees to which the awards were made.

The trusts purchased the following number of shares in respect of employee incentive plans:

 
                 Number of shares 
                        purchased  Cost 
                    (in millions)    $m 
---------------  ----------------  ---- 
Half year 2022                5.2  69.9 
Half year 2021                2.8  60.1 
Full year 2021                3.8  81.2 
---------------  ----------------  ---- 
 

The cost in USD shown has been calculated from the share prices in pounds sterling using the monthly average exchange rate for the month in which those shares were purchased.

A portion of the share purchases in respect of employee incentive plans as shown in the table above were made on the Hong Kong Stock Exchange with the remainder being made on the London Stock Exchange.

   D    Other information 

D1 C orporate transactions

D1.1 Gain (loss) attaching to corporate transactions

 
                                                                                       2022 $m        2021 $m 
                                                                                     ---------  -------------------- 
                                                                                     Half year  Half year  Full year 
-----------------------------------------------------------------------------------  ---------  ---------  --------- 
Gain (loss) attaching to corporate transactions as shown separately on the 
 condensed consolidated 
 income statement(note)                                                                     62       (56)       (35) 
Loss arising on reinsurance transaction undertaken by the Hong Kong business              (35)       (38)       (59) 
-----------------------------------------------------------------------------------  ---------  ---------  --------- 
Total gain (loss) attaching to corporate transactions(note B1.1)                            27       (94)       (94) 
-----------------------------------------------------------------------------------  ---------  ---------  --------- 
 

Note

The gain (loss) attaching to corporate transactions includes a gain of $60 million (half year 2021: nil; full year 2021: $23 million) from the sale of shares relating to the Group's retained interest in Jackson post the demerger. Corporate transactions in 2021 also included amounts incurred by Prudential plc (half year 2021: $(28) million; full year 2021: $(30) million) in connection with the separation of Jackson and $(28) million of payment for the termination of loss of office made to the former chief executive of Jackson.

D1.2 Discontinued US operations

On 13 September 2021, the Group completed the separation of its US operations (Jackson) through a demerger, whereby the Group retained a 19.9 per cent non-controlling voting interest (19.7 per cent economic interest). In accordance with IFRS 5 'Non-current assets held for sale and discontinued operations', the US operations were classified as discontinued. The 2021 income statement included the results of Jackson up to 13 September 2021, the date of demerger.

The retained interest in Jackson is reported within the consolidated statement of financial position as a financial investment at fair value and is included in 'Unallocated to a segment (central operations)' for segmental analysis. This investment has been classified as available-for-sale under IAS 39. In December 2021, Jackson repurchased 2.2 million shares of its Class A common stock from Prudential, reducing Prudential's remaining economic interest in Jackson to 18.4 per cent as of 31 December 2021 (18.5 per cent voting interest). During the first six months of 2022, further transactions have reduced the Group's holding to 14.3 per cent economic interest (14.3 per cent voting interest) at 30 June 2022, realising a gain of $60 million. The fair value of the Group's holding at 30 June 2022 was $325 million.

The results for the discontinued US operations presented in the consolidated financial statements for the period up to the demerger in September 2021 are analysed below.

   (a)   Income statement 
 
                                                                                                     2021 $m 
                                                                                               -------------------- 
                                                                                               Half year  Full year 
---------------------------------------------------------------------------------------------  ---------  --------- 
Total revenue, net of reinsurance                                                                 35,379     45,972 
---------------------------------------------------------------------------------------------  ---------  --------- 
Total charge, net of reinsurance                                                                (33,209)   (43,655) 
---------------------------------------------------------------------------------------------  ---------  --------- 
Profit before tax                                                                                  2,170      2,317 
Tax charge                                                                                         (370)      (363) 
---------------------------------------------------------------------------------------------  ---------  --------- 
Profit after tax                                                                                   1,800      1,954 
Remeasurement to fair valuenote (i)                                                              (7,507)    (8,259) 
Cumulative valuation movements on available-for-sale debt securities, net of related tax and 
 change in DAC, and net investment hedges recycled from other comprehensive incomenote (ii)            -      1,278 
---------------------------------------------------------------------------------------------  ---------  --------- 
Loss for the period                                                                              (5,707)    (5,027) 
---------------------------------------------------------------------------------------------  ---------  --------- 
 
Attributable to: 
Equity holders of the Company                                                                    (5,073)    (4,234) 
Non-controlling interests                                                                          (634)      (793) 
---------------------------------------------------------------------------------------------  ---------  --------- 
Loss for the period                                                                              (5,707)    (5,027) 
---------------------------------------------------------------------------------------------  ---------  --------- 
 

Notes

(i) The loss on remeasurement to fair value on demerger was recognised in accordance with IFRIC 17, 'Distribution of non-cash assets to owners' as described above.

(ii) In accordance with IFRS, as a result of the demerger of Jackson, accumulated balances previously recognised through other comprehensive income relating to financial instruments held by Jackson classified as available-for-sale and historical net investment hedges were recycled from other comprehensive income to the results of discontinued operations in the consolidated income statement. Total shareholders' equity is unchanged as a result of this recycling.

   (b)   Total comprehensive income 
 
                                                                                                      2021 $m 
                                                                                                -------------------- 
                                                                                                Half year  Full year 
 ---------------------------------------------------------------------------------------------  ---------  --------- 
Loss for the period                                                                               (5,707)    (5,027) 
Other comprehensive loss: 
Valuation movements on available-for-sale debt securities, net of related tax and change in 
 DAC                                                                                                (867)      (763) 
Cumulative valuation movements on available-for-sale debt securities, net of related tax and 
 change in DAC, and net investment hedges recycled through profit or loss at the point of 
 demerger                                                                                               -    (1,278) 
----------------------------------------------------------------------------------------------  ---------  --------- 
Other comprehensive loss for the period                                                             (867)    (2,041) 
Total comprehensive loss for the period                                                           (6,574)    (7,068) 
----------------------------------------------------------------------------------------------  ---------  --------- 
 
Attributable to: 
Equity holders of the Company                                                                     (5,844)    (6,283) 
Non-controlling interests                                                                           (730)      (785) 
----------------------------------------------------------------------------------------------  ---------  --------- 
Total comprehensive loss for the period                                                           (6,574)    (7,068) 
----------------------------------------------------------------------------------------------  ---------  --------- 
 
   (c)   Cash flows 
 
                                                         2021 $m 
                                                   -------------------- 
                                                   Half year  Full year 
-------------------------------------------------  ---------  --------- 
Net cash flows from operating activities               (442)      (423) 
Net cash flows from financing activities(note)          (18)      2,329 
Cash divested upon demerger                                -    (3,527) 
-------------------------------------------------  ---------  --------- 
Net decrease in cash and cash equivalents              (460)    (1,621) 
Cash and cash equivalents at beginning of period       1,621      1,621 
-------------------------------------------------  ---------  --------- 
Cash and cash equivalents at end of period             1,161          - 
-------------------------------------------------  ---------  --------- 
 

Note

Financing activities in full year 2021 largely reflected the issuance of debt of $2,350 million. No dividends were paid by Jackson during 2021 prior to demerger.

D2 Contingencies and related obligations

The Group is involved in various litigation and regulatory proceedings. While the outcome of such litigation and regulatory issues cannot be predicted with certainty, the Group believes that their ultimate outcome will not have a material adverse effect on the Group's financial condition, results of operations, or cash flows.

There have been no material changes to the Group's contingencies and related obligations in the six months ended 30 June 2022.

D3 Post balance sheet events

First interim ordinary dividend

The 2022 first interim ordinary dividend approved by the Board of Directors after 30 June 2022 is as described in note B5.

D4 Related party transactions

There were no transactions with related parties during the six months ended 30 June 2022 which have had a material effect on the results or financial position of the Group.

The nature of the related party transactions of the Group has not changed from those described in note D4 to the Group's consolidated financial statements for the year ended 31 December 2021.

Statement of Directors' Responsibilities

The Directors (who are listed below) are responsible for preparing the Half Year Financial Report in accordance with applicable law and regulations.

Accordingly, the Directors confirm that to the best of their knowledge:

- the condensed consolidated financial statements have been prepared in accordance with IAS 34, 'Interim Financial Reporting', as adopted for use in the UK;

   -    the Half Year Financial Report includes a fair review of information required by: 

(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the six months ended 30 June 2022, and their impact on the condensed consolidated financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place during the six months ended 30 June 2022 and that have materially affected the financial position or performance of the Group during that period; and any changes in the related party transactions described in the Group's consolidated financial statements for the year ended 31 December 2021 that could do so.

Prudential plc Board of Directors:

 
 Chair                        Independent Non-executive Directors 
  Shriti Vadera                Lord Remnant CBE FCA 
                               Jeremy Anderson CBE 
  Executive Directors          Chua Sock Koong 
  Mark FitzPatrick CA          David Law ACA 
  James Turner FCA FCSI FRM    Ming Lu 
                               George Sartorel 
                               Thomas Watjen 
                               Jeanette Wong 
                               Amy Yip 
 

9 August 2022

Independent Review Report to Prudential plc

Conclusion

We have been engaged by Prudential plc ('the Company' or 'the Group') to review the condensed set of consolidated financial statements in the Half Year Financial Report for the six months ended 30 June 2022 which comprises the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Statement of Changes in Equity, the Condensed Consolidated Statement of Financial Position, the Condensed Consolidated Statement of Cash Flows and the related explanatory notes (collectively the 'condensed set of financial statements').

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the Half Year Financial Report for the six months ended 30 June 2022 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK and the Disclosure Guidance and Transparency Rules ('the DTR') of the UK's Financial Conduct Authority ('the UK FCA').

Basis for conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity ('ISRE (UK) 2410') issued for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the Half Year Financial Report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention that causes us to believe that the Directors have inappropriately adopted the going concern basis of accounting, or that the Directors have identified material uncertainties relating to going concern that have not been appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However, future events or conditions may cause the Group to cease to continue as a going concern, and the above conclusions are not a guarantee that the Group will continue in operation.

Directors' responsibilities

The Half Year Financial Report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Half Year Financial Report in accordance with the DTR of the UK FCA.

As disclosed in note A1, the annual financial statements of the Group are prepared in accordance with UK-adopted international accounting standards.

The Directors are responsible for preparing the condensed set of financial statements included in the Half Year Financial Report in accordance with IAS 34 as adopted for use in the UK.

In preparing the condensed set of financial statements, the Directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the Half Year Financial Report based on our review. Our conclusion, including our conclusion relating to going concern, is based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion section of this report.

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the DTR of the UK FCA. Our review of the condensed set of financial statements has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

Stuart Crisp

for and on behalf of KPMG LLP

Chartered Accountants

15 Canada Square

London

E14 5GL

9 August 2022

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