SOURCE: Prudential plc

July 27, 2005 02:05 ET

Prudential Plc 2005 Interim Results - Part 1

LONDON, UK -- (MARKET WIRE) -- July 27, 2005 --

Part 1

Embargo: 7.05am Wednesday 27th July 2005

                      PRUDENTIAL PLC 2005 INTERIM RESULTS

  *   New business APE of GBP1,129 million, up 34% on first half
      2004


  *   New business achieved profit of GBP413 million, up 37%,
      with Group margin of 37% (HY2004: 36%)


  *   Total achieved profit from continuing operations of GBP834
      million, up 31% on first half 2004


  *   Total statutory profit from continuing operations of GBP469
      million, up 25% on first half 2004


  *   Achieved profit shareholders' funds of GBP9.3 billion (end
      2004: GBP8.8 billion)


  *   Interim dividend of 5.3 pence per share (HY2004: 5.19 pence
      per share)

Commenting, Mark Tucker, Group Chief Executive said:

"These results demonstrate the Group is performing well. We have delivered
double-digit sales growth in all our markets, while maintaining margins at a
Group level. We are taking advantage of our strong presence across the diverse
markets in which we operate.

"My priority is to maintain our focus on delivery of superior performance,
enhancement of earnings and capital efficiency in order to make the most of
these opportunities.

"As you would expect, I am actively reviewing longer-term trends and
opportunities in order to anticipate the changing needs of our customers. This
attention to the longer-term will help ensure that the actions we take today lay
the foundations for an even stronger position for Prudential in the future. I
will talk more about our evolving thinking with our third quarter new business
figures in October.

"We face a number of challenges, but we remain confident of achieving the growth
and return targets we have set out across each of our businesses and we are
optimistic about prospects in the longer-term."

Operational highlights:
Prudential's UK and Europe insurance operations are making good progress with
sales of GBP541 million on an APE basis, 50% ahead of last year, including the
Phoenix Life & Pensions Limited transaction, which increased APE sales by GBP145
million in the period. Excluding this transaction, sales growth was 10% compared
to an estimated market growth of 2-3%; and the primary drivers of growth were
strong sales of unit-linked bonds (up 100%), individual annuities (up 12%) and
bulk annuities (up 67%). The internal rate of return on new business written in
the first half was 13%, moving towards our target of 14% by the end of 2007. New
business margin was 30%, although some reduction from the 2004 year-end level is
still expected for the full year 2005 due to changing product mix as Prudential
UK builds its shareholder-backed business.



In the US, sales increased by 18% on an APE basis with margins improving to 37%
(HY 2004:34%) as a result of improved profitability from both variable annuities
and Guaranteed Investment Contracts (GICs). The acquisition of Life of Georgia
was completed in May and the integration of that business remains on track to be
completed by the end of 2005. Jackson is a low-cost high quality operator that
has shown an ability to innovate in the US market and deliver cash back to the
Group.

In Asia, sales growth in the first half of the year was 26% on an APE basis,
with particularly strong growth in Korea, India, Indonesia, Malaysia and China.
The new business margin was lower at 49% (full year 2004: 54%) primarily due to
a combination of changes in country and product mix. In July we announced our
9th and 10th licences in China, further strengthening our presence in this
exciting market. Trading conditions in Japan remain tough and we have taken the
decision to impair goodwill in our life insurance business by GBP95 million in
these results.

M&G enjoyed a strong start to the year with net investment in-flows of GBP1.7
billion and growth in underlying profit of 15% to GBP68 million. Total profit
for the period was GBP83 million.

Egg's first half profit from the core UK business was GBP13 million after
charging GBP10 million for restructuring costs. We remain focused on optimising
the performance of the Egg business and the value of the Group's investment for
Prudential's shareholders.

We continue to look to improve capital efficiency and earlier in July we took
advantage of good market conditions in the US retail market to raise $300
million of perpetual subordinated capital securities, which will qualify as
Group regulatory capital. The primary use of the proceeds will be to re-finance
our outstanding non-qualifying GBP150 million bond maturing in 2007.

                                    - ENDS -

Enquiries:

Media                                 Investors / analysts
Jon Bunn                020 7548 3559 James Matthews       020 7548 3561
William Baldwin-Charles 020 7548 3719 Marina Novis         020 7548 3511
Joanne Davidson         020 7548 3708

Notes to Editors

1.    The comparative International Financial Reporting Standards results are
prepared on a "proforma" basis which reflects the estimated effect on the 2004
results as if IAS 32, IAS 39 and IFRS 4 had been applied from 1 January 2004 to
the Group's insurance operations together with the discretionary change for the
basis of determining longer-term investment returns, as disclosed on 2 June
2005.

Achieved profits basis results have been restated for the consequential impact
of the adoption of International Financial Reporting Standards at 1 January 2004
together with the discretionary change for the basis of determining longer-term
investment returns, as disclosed on 2 June 2005.

The 2004 interim dividend per share has been restated to reflect the bonus
element of the October 2004 rights issue.

Period on period percentage increases are stated on a constant exchange rate
basis.

2.    There will be a conference call today for wire services at 7.45am (BST)
hosted by Mark Tucker, Group Chief Executive and Philip Broadley, Group Finance
Director. Dial in telephone number: 0800 358 2705. Passcode: 155439#.

3.       A presentation to analysts will take place at 9.30am (BST) at
Governor's House, Laurence Pountney Hill, London, EC4R 0HH. An audio cast of the
presentation and the presentation slides will be available on the Group's
website, www.prudential.co.uk.

4.       There will be a conference call for investors and analysts at 2.30pm
(BST) hosted by Mark Tucker, Group Chief Executive and Philip Broadley, Group
Finance Director. Please call from the UK +44 (0)20 8609 0205 and from the US +1
866 793 4279. Pin number 487687#. A recording of this call will be available for
replay for one week by dialling: +44 (0)20 8609 0289 from the UK or +1 866 676
5865 from the US. The conference reference number is 129574.

5.       High resolution photographs are available to the media free of charge
at www.newscast.co.uk (+44 (0) 207 608 1000).

6.       An interview with Mark Tucker, Group Chief Executive, (in video/audio/
text) will be available on www.cantos.comand www.prudential.co.ukfrom 7.05am on
27th July 2005.

7.       Annual premium equivalent (APE) sales comprise regular premium sales
plus one-tenth of single premium insurance sales.

8.       New business achieved profits represent the present value of the future
cash flows we expect to receive from new business written in the year, less the
costs of acquiring that new business and the cost of holding the capital
required to back it.

9.       Total number of Prudential plc shares in issue as at 30th June 2005 was
2,383,761,711.

10.   Financial Calendar 2005:

Ex-dividend date               Wednesday 17 August 2005
Record date                    Friday 19 August 2005
Q3 new business figures        Wednesday 26 October 2005
Payment of interim dividend    Friday 28 October 2005

11.   In addition to the financial statements provided with this press release,
additional financial schedules are available on the Group's website at
www.prudential.co.uk

*Prudential plc, a company incorporated and with its principal place of business
in the United Kingdom, and its affiliated companies constitute one of the
world's leading financial services groups. It provides insurance and financial
services directly and through its subsidiaries and affiliates throughout the
world. It has been in existence for over 150 years and has GBP187 billion in
assets under management, (as at 31 December 2004). Prudential plc is not
affiliated in any manner with Prudential Financial, Inc, a company whose
principal place of business is in the United States of America.

Forward-Looking Statements
This statement may contain certain "forward-looking statements" with respect to
certain of Prudential's plans and its current goals and expectations relating to
its future financial condition, performance, results, strategy and objectives.
Statements containing the words "believes", "intends", "expects", "plans",
"seeks" and "anticipates", and words of similar meaning, are forward-looking. By
their nature, all forward-looking statements involve risk and uncertainty
because they relate to future events and circumstances which are beyond
Prudential's control including among other things, UK domestic and global
economic and business conditions, market related risks such as fluctuations in
interest rates and exchange rates, and the performance of financial markets
generally; the policies and actions of regulatory authorities, the impact of
competition, inflation, and deflation; experience in particular with regard to
mortality and morbidity trends, lapse rates and policy renewal rates; the
timing, impact and other uncertainties of future acquisitions or combinations
within relevant industries; and the impact of changes in capital, solvency or
accounting standards, and tax and other legislation and regulations in the
jurisdictions in which Prudential and its affiliates operate. This may for
example result in changes to assumptions used for determining results of
operations or re-estimations of reserves for future policy benefits. As a
result, Prudential's actual future financial condition, performance and results
may differ materially from the plans, goals, and expectations set forth in
Prudential's forward-looking statements. Prudential undertakes no obligation to
update the forward-looking statements contained in this statement or any other
forward-looking statements it may make.

BUSINESS REVIEW


GROUP


Results Highlights

                                  Half    Half           Half
                                  Year    Year Change    Year Change
                                           CER            RER
                                  2005    2004           2004
                                  GBPm    GBPm           GBPm

Annual premium equivalent        1,129     844    34%     849    33%
(APE) sales
Net Investment Flows             2,539     792   221%     777   227%
New Business Achieved Profit       413     302    37%     305    35%
(NBAP)
NBAP Margin                        37%     36%            36%

Total Achieved profits basis       834     638    31%     638    31%
operating profit * -
Total International Financial      469     374    25%     375    25%
Reporting Standards (IFRS)
operating profit * +
Achieved profits basis             9.3     7.2    29%     7.2    29%
shareholders funds (GBPbn) -
IFRS shareholders funds            5.0     3.4    47%     3.4    47%
(GBPbn) +

* Continuing operations - excluding Jackson Federal Bank (JFB) and Egg's France
and Funds Direct businesses.

+ The comparative IFRS results shown above are prepared on a 'proforma' basis
which reflects the estimated effect on the 2004 results as if IAS 32, IAS 39 and
IFRS4 had been applied from 1 January 2004 to the Group's insurance operations
together with the discretionary change for the basis of determining longer-term
investment returns, as disclosed on 2 June 2005.

- Achieved profits basis results have been restated for the consequential impact
of the adoption of IFRS at 1 January 2004 together with the discretionary change
for the basis of determining longer-term investment returns as disclosed on 2
June 2005.

In the Business Review and Financial Review, period-on-period comparisons of
financial performance are on a Constant Exchange Rate (CER) basis, unless
otherwise stated.

The Group has had a good first half as illustrated by growth in all the key
performance measures shown above. This is the result of strong contributions
across all regions.

Growth in APE sales and aggregate new business achieved profit (NBAP) margin of
37 per cent led the Group to achieve NBAP growth of 37 per cent. This, together
with growth from the fund management operations and the increase in profits from
the in-force insurance business, driven primarily by the US, led to an increase
of 31 per cent over the first half of 2004 in achieved profits basis operating
profits. The in-force achieved profit for the half year includes a GBP132
million charge in respect of a persistency assumption change in the UK and a
credit in the US of GBP141 million reflecting an operating assumption change
following price increases introduced on two blocks of in-force term life
business. In aggregate, net assumption changes were positive GBP16 million, with
net positive experience variances and other items of GBP39 million.

On an international financial reporting standards basis (IFRS), operating
profits were up 25 per cent on the same period of last year driven primarily by
the growth in profits from the UK and Asian insurance operations.

Basic earnings per share on the achieved profits basis for the half year after
minority interests were 21.7 pence for the half year of 2005, compared with a
restated figure of 19.8 pence for the prior year. Basic earnings per share,
based on total IFRS profit for the half year after minority interests, were 12.7
pence, down 1.5 pence from the restated 2004 half year figure on a proforma
basis of 14.2 pence primarily reflecting the impairment of purchased goodwill
associated with the Japanese life business.

Impact of Currency Movements

Prudential has a diverse international mix of businesses with a significant
proportion of its profit generated outside the UK. In preparing the Group's
consolidated accounts, results of overseas operations are converted at rates of
exchange based on the average of the year to date, whilst shareholders' funds
are converted at period-end rates of exchange.

Changes in exchange rates from year to year have an impact on the Group's
results when these are converted into pounds sterling for reporting purposes. In
some cases, these exchange rate fluctuations can mask underlying business
performance. For example, growth in the US total achieved profit basis operating
profit was 95 per cent at reported exchange rates (RER), compared to 101 per
cent at CER.

Consequently, the Board has for a number of years reviewed the Group's
international performance on a CER basis. This basis eliminates the impact from
conversion, the effects of which do not alter the long-term value of
shareholders' interests in the non-UK businesses.

In the Business Review and Financial Review, period-on-period comparisons of
financial performance are on a CER basis, unless otherwise stated.


INSURANCE


UNITED KINGDOM AND EUROPE

                                           Half          Half
                                           Year          Year Change
                                           2005          2004
                                           GBPm          GBPm

APE Sales                                   541           361    50%
NBAP                                        159            88    81%
NBAP Margin*                                30%           25%

Total Achieved profits basis                182           240  (24%)
operating profit
Total IFRS operating profit                 187           153    22%

* excluding APE sales in respect of SAIF DWP rebates

Prudential UK and Europe delivered an increase in APE sales of 50 per cent
relative to the same period in 2004. This includes APE sales of GBP145 million
from the acquisition of the portfolio of in-force pension annuities from Phoenix
Life & Pensions ("PLP"), a subsidiary of Resolution Life Ltd, in June 2005.
Excluding the PLP transaction, sales increased by 10 per cent. This compares
favourably with the total UK medium to long-term savings market growth of 2 per
cent in the first quarter (based on data from the Association of British
Insurers).

NBAP increased by 81 per cent, reflecting the growth in sales volumes and an
increase in the NBAP margin to 30 per cent from 25 per cent at the half year
2004 (full-year 2004: 27 per cent). Total achieved profits basis operating
profit decreased 24 per cent to GBP182 million primarily due to a GBP132 million
charge relating to an assumption change in respect of persistency. Increased
annuity sales contributed to the 22 per cent increase in IFRS operating profit
to GBP187 million.

The GBP132 million charge reflects a strengthening of persistency assumptions
across a number of products, primarily in respect of with-profit bonds. This
assumption change reflects Prudential's current experience and, post tax,
represents 3 per cent of the overall embedded value of the UK business.
Prudential continues actively to manage the conservation of the in-force book.

The primary drivers of growth for the UK business were strong sales of
unit-linked bonds, bulk annuities and individual annuities. APE sales of
unit-linked bonds doubled compared with the same period last year to GBP36
million, reflecting Prudential UK's progress in the IFA unit-linked bond market.
Bulk annuity sales increased by 67 per cent to GBP35 million, driven by 31 bulk
annuity scheme wins (excluding the PLP transaction). Individual annuity sales
were strong across all distribution channels with APE sales of GBP111 million up
12 per cent. In particular, with-profit annuities attracted increased levels of
interest, with APE sales doubling on half year 2004 levels to GBP7 million.

Corporate pension APE sales fell 14 per cent to GBP85 million, reflecting the
contraction seen in the corporate pensions market ahead of the change in
pensions legislation in April 2006 ('A-Day'). In response to the move away from
defined benefit schemes to defined contribution schemes in the market,
Prudential UK announced an agreement with AON in May to support the launch of
their new defined contribution (DC) pension solution for employers.

APE sales through Prudential's European operations increased 200 per cent to
GBP12 million, reflecting growing bond sales through new and existing
distributors.

In June, Prudential UK added a capital guarantee option to the PruFund
Investment Plan. This guarantee provides capital security combined with the
potential for growth which addresses a primary concern of advisers with low to
medium risk investor clients.

The demand for lifetime mortgages is projected to grow significantly over the
next few years and Prudential UK will launch shortly its own lifetime mortgage
product, the Prudential Property Value Release Plan. Unlike many other lifetime
mortgage products currently on the market, this innovative product will allow
customers much greater flexibility and control over when they draw down funds
and thereby reduce total interest charges over the lifetime of the loan.

Prudential UK has made good progress with the new multi-tie networks. Most
recently, it has been appointed as a provider for Sesame's new regulated
multi-tie proposition, Sesame Select. Sesame is one of the UK's leading
providers of support services to 8,150 financial advisers. As a result of this
and other previously announced appointments, Prudential UK is well positioned to
increase its market share in the depolarised marketplace as this develops over
the next couple of years.

Prudential UK was appointed to the Barclays multi-tie panel during the first
half of 2005 and this went live on 1 June. In addition, Prudential began to
write business in June through its distribution agreements with St James's Place
and National Australia Bank. These will augment growth already being achieved
under the existing agreements with Lloyds TSB, Alliance and Leicester, Pearl and
Zurich.

The With-Profits Fund benefited from a pre-tax investment return of 7.4 per cent
in the first half of 2005 compared with 3 per cent in the comparable period of
2004. Over the last five years (to 30 June 2005), the With-Profits Fund has
delivered a pre-tax return of 28.9 per cent compared with the return on the FTSE
All Share (Total Return) index over the same period of negative 1.5 per cent.
The fund remains strong with an inherited estate estimated to be around GBP7.3
billion as at 30 June 2005, on a deterministic valuation basis, compared with
approximately GBP6.5 billion at the end of 2004. The PAC long-term fund is
currently rated AA+ by Standard & Poor's, Aa1 by Moody's and AA+ by Fitch
Ratings.

There will be a number of significant changes in the retirement savings market
as a result of the Government pensions reforms due to come into force on 'A-Day'
in April 2006. These include a single tax regime for pensions, greater
investment flexibility for consumers (allowing, for example, residential
property to be held within a pension) and increased annual contribution limits.
When combined with the increase in charges to stakeholder products announced
last year and its success in winning positions on multi-ties, this creates an
opportunity for Prudential UK to increase its presence in retirement provision.
Prudential UK is developing a number of propositions that take advantage of the
increased flexibility and contribution limits created by the pensions reforms.
It will launch a series of products, the first of which will be a new personal
pension that will be available in advance of A-Day.

Market growth in the first half of 2005 is unlikely to be in excess of 5 per
cent and Prudential UK does not anticipate a significant improvement in the
second half of the year. Recent trading in certain segments of the UK market has
been difficult and, most notably, competition within the protection and
individual annuity markets intensified in the second quarter. However, we expect
to continue to outperform the market in the second half of the year. We remain
confident that we can achieve overall growth of 10 per cent in 2005.


UNITED STATES


                                  Half    Half           Half
                                  Year    Year Change    Year Change
                                  2005     CER            RER
                                  GBPm    2004           2004
                                          GBPm           GBPm

APE sales                          275     234    18%     240    15%
NBAP                               102      79    29%      82    24%
NBAP Margin                        37%     34%            34%

Total Achieved profits basis       429     213   101%     220    95%
operating profit*
Total IFRS operating profit*       169     151    12%     155     9%

* Continuing operations - excluding Jackson Federal Bank (JFB) which was sold in
October 2004

Period-on-period comparisons of financial performance are on a Constant Exchange
Rate (CER) basis, unless otherwise stated

Jackson National Life (JNL) continued to focus on the value of new product
sales, rather than top line growth. APE sales for the first half of 2005 were 18
per cent higher than prior year, new business achieved profits were up 29 per
cent and IFRS operating profits were up 12 per cent over the first half of 2004.

At the 2005 half year, JNL had over $65 billion in assets under management. Of
this, $15 billion related to variable annuity assets an increase of $1.6 billion
compared to 2004 year-end, further diversifying JNL's earnings towards fee-based
income.

On 18 May 2005 JNL completed the purchase of Life Insurance Company of Georgia
from ING at a purchase price of GBP142 million, subject to post-closing
adjustments. Following completion, JNL began to move Life Insurance Company of
Georgia policies onto its low cost and scaleable platform. Full integration of
the business remains on track to be completed by year-end 2005.

The 18 per cent growth in APE sales to GBP275 million during the first half of
2005 was driven by stronger variable annuity (VA), fixed index annuity (FIA) and
institutional sales, partially offset by decreased sales of fixed annuities.
Total APE retail sales for the first half of 2005 of GBP195 million were up 11
per cent on prior year.

New business achieved profit of GBP102 million was 29 per cent above the prior
year, reflecting both an 18 per cent increase in APE sales and an increase in
margin from 34 per cent to 37 per cent half year on half year. The increase in
margin primarily reflects increased profitability from the re-pricing in May
2004 of JNL's unbundled VA 'Perspective II' and increased GIC profitability due
to longer average maturities available on contracts sold in the first half of
2005. In addition, there has been an increase in the spread assumption for FIA.

JNL generated record VA APE sales of GBP118 million during the first half of the
year, up 21 per cent on the prior year, in a market that JNL believes was weaker
than last year. This reflects the company's innovative product offering and
distribution capabilities. In the three months to 31 March 2005, JNL ranked 2nd
in VA net flows and 13th in total VA new sales. JNL's 'Perspective II' product
ranked 1st overall in VA product net flows and 3rd in total VA new sales. JNL
was one of only five of the top 25 VA providers in the US to increase VA assets
from year-end 2004 to the end of the first quarter 2005. The rate of take up of
the fixed account option remained low, with 25 per cent of variable annuity
premium going into fixed accounts during the first half of 2005 compared with 26
per cent for the first half of 2004.

Fixed annuity APE sales of GBP41 million were down 27 per cent on prior year,
reflecting the flattened yield curve in the US which has made rates on short
term certificates of deposit more attractive to customers. As a result of the
fall in volumes, JNL ranked 11th in total individual fixed annuity sales at the
end of the first quarter of 2005, down from 4th during the same period in the
prior year.

Lower fixed annuity sales were partially offset by fixed index annuity APE sales
of GBP30 million, an increase of 100 per cent over the prior year, reflecting
customers' increasing preference when selecting fixed products to have the
potential for higher returns linked to equity index performance. JNL has
benefited from its approach to educating broker dealers about this complex
product, while at the same time offering lower commissions and investing the
savings into providing value to the policyholders through enhanced benefits.

Institutional APE sales for the first half of 2005 were GBP80 million, up 38 per
cent on prior year results. JNL took advantage of several attractive issuance
opportunities during the first half of 2005. APE sales of institutional products
in the second half of 2005 are anticipated to be in the region of GBP25 million.

Total achieved profits basis operating profit at the half year 2005 was GBP429
million compared to GBP213 million in the prior year. This primarily reflects
the increase in new business achieved profits, an operating assumption change
following price increases introduced on two older, less profitable books of term
life business and a favourable spread variance.

The growth in IFRS operating profit of 12 per cent from the prior year primarily
reflects an increase in spread and fee income over the first half of 2004,
together with an increase in profits from Prudential's US fund manager, PPMA.
The 2004 half year result benefited from two one-off items, a favourable legal
settlement of GBP28 million (GBP20 million after related change to amortisation
of deferred acquisition costs) and a positive GBP7 million adjustment arising
from the adoption of SOP 03-01 'Accounting and Reporting by Insurance
Enterprises for Certain Non-traditional Long Duration Contracts and for Separate
Accounts'.

JNL remains well positioned for the remainder of the year to deliver sales at
twice the expected US market growth rate of 4 per cent, since current market
conditions continue to favour those financial services companies that have a
range of variable and fixed annuity product offerings, a strong
relationship-based distribution model, low cost structure and the ability to
deliver high quality service.


ASIA


                                  Half    Half           Half
                                  Year    Year Change    Year Change
                                  2005     CER            RER
                                  GBPm    2004           2004
                                          GBPm           GBPm

APE sales                          313     249    26%     248    26%
NBAP                               152     135    13%     135    13%
NBAP Margin                        49%     54%            54%

Total Achieved profits basis       226     174    30%     169    34%
operating profit*
Total IFRS operating profit*       116      59    97%      58   100%

*excluding the fund management business, development and Asia regional head
office expenses

Period-on-period comparisons of financial performance are on a Constant Exchange
Rate (CER) basis, unless otherwise stated

Prudential's well diversified portfolio of life insurance businesses in Asia
have shown strong growth with first half year sales on an APE basis of GBP313
million, up 26 per cent on the same period in 2004 with 87 per cent of APE sales
generated by more profitable regular premium products. Sales in the first half
of 2005 primarily reflect the continued strong growth of its Korean and Indian
operations combined with solid performances from the more established operations
of Malaysia, Singapore and Hong Kong. The businesses in Indonesia and China also
showed very good sales growth.

Total NBAP increased by 13 per cent over the first half of 2004 to GBP152
million, reflecting the sales increase offset by NBAP margins that decreased
from 54 per cent for the full year 2004 to 49 per cent. This represents a change
in geographic mix (reduction of 2 percentage points) largely due to a higher
proportion of new business from the relatively lower margin markets of Korea and
India; a change of product mix (reduction of 1 percentage point) with an
increased proportion of lower margin products in Taiwan and Singapore; and a
change of assumptions (reduction of 2 percentage points), primarily driven by
low interest rates in Taiwan.

In-force operating profits in Asia of GBP74 million for the first half of 2005
represent an increase of 90 per cent over the same period for 2004 and IFRS
profits increased to GBP116 million from GBP59 million in 2004 including a
contribution of GBP44 million from exceptional items.

Prudential's Korean Life operation has rapidly become a material contributor to
APE sales with first half sales of GBP60 million, an increase of 82 per cent
over the same period in 2004. This increase clearly demonstrates the flexibility
of its multi-channel distribution model, with in-house financial consultants and
general agents currently the dominant distribution channels supported by
contributions from direct marketing and bancassurance. Since its launch in 2004,
the proportion of the higher margin variable universal life product sold has
increased steadily such that it now accounts for 80 per cent of Korea's APE
sales.

Prudential's Indian life insurance joint venture with ICICI remains firmly in
position as the number one private sector life insurance company as reported in
the Insurance Regulatory and Development Authority journal in India.
Prudential's 26 per cent share of the joint venture's half year APE sales was
GBP27 million, up 59 per cent over the first half of 2004. The business
continues to extend its geographic reach in India with 74 branches to date and
has grown its tied agency force by 16 per cent this year. Prudential intends to
increase its equity stake in this operation when regulations permit. However,
there is no clear indication when this will be.

The life insurance joint venture with CITIC in China is still relatively small
in terms of new business volumes but is growing rapidly with a 67 per cent
increase in APE sales to GBP10 million compared to the first half of 2004 of
GBP6 million. Progress continues to be made in establishing CITIC Prudential as
the leading foreign joint venture life insurer in terms of geographic coverage,
with 6 new city licences added during 2005 bringing the total to 10. In
addition, the operation also has a national licence for the sale of group life
insurance.

Despite some slowdown in the market for regular premium unit-linked products,
Prudential's Singapore life operation delivered APE sales growth of 17 per cent
over 2004, driven in part by the new partnership agreement with Maybank. Earlier
this year, the business also entered into a distribution agreement with
SingPost. In Hong Kong Prudential's long-term partnership with Standard
Chartered Bank helped drive good growth against a competitive market generating
GBP50 million of sales, up 11 per cent over the same period last year.

In Malaysia, Prudential's life business has market leading agent productivity
and a popular range of unit-linked products. APE sales of GBP29 million were up
38 per cent compared to the first half 2004.

The Indonesian operation posted record quarterly APE sales of GBP11 million,
exceeding their previous high achieved in the first quarter of 2004 by 22 per
cent, to generate GBP21 million in APE sales in the first half of 2005, 40 per
cent above the first half of 2004.

The Taiwanese life operation continues to face a challenging environment of
falling interest rates, which are now at historic lows. First half 2005 APE
sales of GBP62 million are in line with last year. Second quarter APE sales in
Taiwan increased 52 per cent over the first quarter following the launch of a
pensions orientated linked product with a higher investment content.

Total APE sales contribution from the remaining four markets of Japan, the
Philippines, Thailand and Vietnam are collectively down 5 per cent, primarily
due to a slow market in Vietnam. As reported previously, the development of the
Japanese life business has been slower than expected and to reflect this there
has been an impairment of GBP95 million of the purchased goodwill associated
with this business.

In March the first stage of Prudential's Asian regional operations centre was
launched. Located in Malaysia, Prudential Services will leverage Prudential's
increasing scale and presence in Asia to drive operating synergies and
efficiencies. The shared services operation and call centre will initially
service the Singapore and Malaysia life businesses.

Prudential's Asia strategy remains firmly in place and its focus continues to be
on long term, profitable and sustainable growth.


Fund Management


M&G

                                           Half          Half
                                           Year          Year Change
                                           2005          2004
                                           GBPm          GBPm

Gross investment flows                    3,579         2,177    64%
Net Investment flows                      1,680          (90)

Underlying profits before PRF                68            59    15%
Total IFRS operating profit                  83            79     5%

M&G delivered underlying profits (excluding performance related fees (PRFs)) of
GBP68 million in the first half of 2005, a 15 per cent increase compared to the
same period last year. Excluding the GBP7 million of one-off items in the 2004
result, underlying operating profits were 31 per cent higher than last year.
This reflects M&G's strengths in retail fund management, institutional fixed
income, pooled life and pension funds, property and private finance, allied with
a continued focus on cost control.

Total operating profit of GBP83 million was 5 per cent higher than 2004, with
growth at the underlying level being offset by lower PRFs. It should be noted
that although the GBP15 million of PRFs earned in the first half of 2005 is down
compared to GBP20 million in 2004, it still represents an unusually strong
result, driven as before primarily by private equity realisations by PPM
Capital. Income from PRFs is expected to be significantly lower in future years.

M&G delivered record gross retail fund inflows of GBP1.6 billion in the first
half of 2005, more than double the previous year. The core UK operation produced
gross fund inflows up 48 per cent on last year at GBP686 million as a result of
its retail brand presence, good fund performance and diversified product range
in equities, fixed income and property. Robust growth was also generated in the
international businesses, with gross inflows more than tripling on last year.
Total net retail fund inflows of GBP448 million were six times those of half
year 2004.

M&G's institutional businesses delivered gross fund inflows of GBP2.0 billion,
up 43 per cent on last year. This was boosted by a one-off contribution of
GBP967 million from Prudential Property Investment Managers (PruPIM), related to
the transfer of 50 per cent of Prudential's economic interests in three UK
shopping centres into new external vehicles which PruPIM continues to manage. M&
G's scale and strong market position in fixed income and private finance was
demonstrated by the successful launch to external investors of two
Collateralised Debt Obligations (CDOs) of EUR445 million collectively. This
brings the total number of CDOs launched since 2001 to eight. These strong gross
flows were also reflected in net institutional sales of GBP1.2 billion in the
first half of 2005, compared to a net outflow of GBP164 million in the first
half of 2004.


Asia Fund Management

                                  Half    Half           Half
                                  Year    Year Change    Year Change
                                  2005     CER            RER
                                  GBPm    2004           2004
                                          GBPm           GBPm

Net investment flows               698     697     0%     677     3%
Total IFRS operating profit*         2      10  (80%)      10  (80%)

* IFRS operating profit in 2005 was GBP12 million, offset by GBP10 million of
exceptional charges related to bond funds in Taiwan

Period-on-period comparisons of financial performance are on a Constant Exchange
Rate (CER) basis, unless otherwise stated

Funds under management in Asia at the half year increased by 33 per cent to
GBP9.7 billion over the year-end 2004 with net inflows of GBP698 million in line
with the first half of 2004. The fund management business continues to expand
its geographic presence with the launch of a new operation in Vietnam. Both
asset management businesses in Japan and Korea delivered strong results and in
May 2005 Morningstar ranked PCA Asset Management Japan as one of the five
fastest growing fund management businesses in Japan for the six months to 31
March 2005.

The Prudential ICICI Asset Management Company joint venture in India has
increased its funds under management to US$4 billion. Earlier this year
Prudential's joint venture partner agreed to purchase an additional 6 per cent
share of Prudential ICICI Asset Management Company. The transaction is expected
to complete later this year and will bring ICICI Group's share to 51 per cent
while Prudential will hold 49 per cent.

The Taiwanese business has experienced a substantial decline in funds under
management over the last year due to high levels of market redemptions in bond
funds, particularly foreign managed funds. Prudential Taiwan restructured its
bond portfolios to enhance liquidity during the first half of 2005 and this has
given rise to a one-off exceptional charge of GBP10 million to operating
profits.

BANKING


Egg


                                           Half          Half
                                           Year          Year Change
                                           2005       2004 **
                                           GBPm          GBPm

IFRS Operating Profit from
Continuing Operations *
UK banking business                          23            36  (36%)
Other                                      (10)           (3) (233%)
                                             13            33  (61%)


Net interest income *                       146           145     1%
Non-interest income *                       105            94    12%

* Continuing operations - excludes Egg France and Funds Direct.
** 2004 comparatives restated to IFRS basis, except for adjustments for IAS 32
and IAS 39 which have been adopted from 1 January 2005.

Egg's core UK banking operation delivered a profit of GBP23 million for the
first half of 2005, compared with GBP36 million for the same period in 2004.
Revenues from the UK business grew five per cent over the same period in 2004,
primarily reflecting the increased revenues earned from the credit card
business. The credit card business has performed well, with balance growth of
five per cent for the first half of 2005, compared with two per cent for the
industry.

The growth in revenue from the card business was partly offset by reduced
commission income from sales of associated insurances on loans. This reflects
that, as planned, personal loan disbursements have slowed down in the first half
of 2005 from the record level achieved in 2004 following Egg's decision to
tighten its lending criteria.

In comparison with the same period in 2004, the impairment charge on loans and
advances to customers also increased in the first half of 2005, driven by the
growth in unsecured lending balances and the stage of life cycle of the book.
Credit quality remains strong and the impairment charge for the second quarter
of 2005 reduced slightly from the previous quarter.

Egg's total profit from continuing operations for the first half of 2005 was
impacted by a GBP10 million restructuring charge. This process was completed in
the second quarter of 2005. The aim of the reorganisation was to align the cost
base with Egg's strategy to focus on its core UK business with estimated annual
savings of GBP12 million.

The exit process from France was completed in the first quarter this year. The
total costs incurred were lower than the provision established in July 2004 and
GBP5 million of this was released in the first quarter. During 2005, Egg closed
Funds Direct, its investment wrap platform business and provided for an exit
charge of GBP3 million.


FINANCIAL REVIEW


SALES AND FUNDS UNDER MANAGEMENT

Prudential delivered strong sales growth during the first half of 2005 with
total new insurance sales up 45 per cent to GBP8 billion at constant exchange
rates (CER). This resulted in insurance sales of GBP1.1 billion on the annual
premium equivalent (APE) basis, an increase of 34 per cent on 2004. At reported
exchange rates (RER), APE sales were up 33 per cent on the half year of 2004.

Total gross investment sales were GBP13.2 billion, up 8 per cent on 2004 at CER.
Net investment sales of GBP2.5 billion were over three times net investment
sales in 2004 at CER. Strong gross inflows across a number of markets were
offset by the high level of redemptions in Taiwan.

Total investment funds under management increased by 12 per cent at RER from
GBP37.1 billion at 31 December 2004, to GBP41.7 billion at 30 June 2005,
reflecting net investment flows of GBP2.5 billion and net market and other
movements of GBP2.1 billion.

At 30 June 2005, funds under management were GBP214 billion, an increase of 9
per cent from 2004 year end at RER, as a result of strong inflows and favourable
market movements.



ACHIEVED PROFITS BASIS OPERATING PROFIT

Total achieved basis operating profit from continuing operations of GBP834
million was up 31 per cent at both CER and RER reflecting strong growth from
Prudential's insurance and fund management businesses.

                                  Half    Half           Half
                                  Year    Year Change    Year Change
                                  2005     CER            RER
                                  GBPm   2004*          2004*
                                          GBPm           GBPm

NBAP                               413     302    37%     305    35%
Business in-force                  412     327    26%     326    26%
Long-term business                 825     629    31%     631    31%
Asia development expenses          (8)     (9)    11%    (10)    20%
Other operating results             17      18     6%      17    13%
Total                              834     638    31%     638    31%

*Achieved profits basis results have been restated for the consequential impact
of the adoption of International Financial Reporting Standards at 1 January 2004
together with the discretionary change for the basis of determining longer-term
investment returns as disclosed on 2 June 2005.

Group NBAP from long-term business of GBP413 million was up 37 per cent on the
prior year at CER, reflecting strong growth across all regions: up 81 per cent
in the UK, up 29 per cent in the US and up 13 per cent in Asia. The Group's
average new business margin increased from 36 per cent for the first half of
2004 to 37 per cent for the first half of 2005.

During the first half of 2004, 62 per cent of the Group's NBAP was generated
from its overseas operations.

Total in-force achieved profit of GBP412 million was up 26 per cent on 2004 at
both CER and RER. This resulted from strong growth in the US and Asian
operations offset by a fall in the UK.


UK and Europe Insurance Operations

Achieved profits basis operating profit of GBP182 million was down 24 per cent
on 2004.

New business achieved profit of GBP159 million was up 81 per cent on the first
half of 2004, reflecting both a 50 per cent increase in APE sales and an
increase in NBAP margin from 25 per cent in 2004 to 30 per cent in 2005.

The increase in margin primarily reflects a favourable sales mix and the
positive effect of economic assumptions offset by lower annuity yield margins.
The favourable sales mix reflects the increased annuity sales, including the
Phoenix Life and Pensions bulk annuity transaction and lower sales of less
profitable pensions offset by increased unit-linked bond sales. Notwithstanding
the current performance achieved in the first half of 2005, some reduction in
overall margin from the 2004 year end level is still expected for the full-year
2005 due to changing product mix as Prudential UK builds its shareholder-backed
business.

The weighted average post-tax Internal Rate of Return (IRR) on the capital
allocated to new business growth in the UK for the first half of 2005 was 13 per
cent. This remains in line with the target of 14 per cent for the 2007 financial
year.

In-force profit of GBP23 million was 85 per cent lower than the first half of
2004 reflecting a GBP132 million charge in relation to an assumption change.

The GBP132 million charge reflects a strengthening of persistency assumptions
across a number of products, primarily in respect of with-profits bonds. In the
case of PruBond, which accounts for a significant proportion of the assumption
change, Prudential expected surrenders to fall after the bonus declaration in
February 2005. In the event, following the bonus declaration, customers have
continued to surrender their policies leading to a strengthening of the
assumption by 40 per cent. The assumption changes reflect Prudential's current
experience and, post tax, represent 3 per cent of the overall embedded value of
the UK business. Prudential continues actively to manage the conservation of the
in-force book.

US Operations

In the US, achieved operating profit from long-term operations was GBP417
million, up 94 per cent at CER and up 88 per cent at RER from the prior year.

At CER, new business achieved profit increased by 29 per cent to GBP102 million,
reflecting an 18 per cent increase in APE sales and an increase in margin from
34 per cent to 37 per cent at the half year. At RER, NBAP was up 24 per cent.
The increase in margin reflects increased profitability from the re-pricing in
May 2004 of JNL's unbundled VA 'Perspective II', and increased GIC profitability
due to longer average maturities available on contracts sold in the first half
of 2005. In addition there has been an increase in spread assumption for Fixed
Index Annuities, from the long-term assumption of 175bps to 190bps reflecting
the spread being achieved.

For JNL, the average IRR on new business in the first half of 2005 was 13 per
cent.

At CER, the in-force profit for the half year increased significantly from
GBP136 million in the prior year to GBP315 million. At RER, in-force profit
increased from GBP140 million to GBP315 million. This increase is primarily due
to a favourable spread variance of GBP44 million and an operating assumption
change following price increases introduced on two older books of term life
business (GBP141 million).

As a discretionary change of accounting policy, implemented at the same time as
the adoption of IFRS, the Group has replaced the previous basis of five year
averaging of gains and losses on bonds with a method that more closely reflects
longer-term returns.

On the new basis, longer-term returns on fixed income securities comprise two
elements. The first element is a risk margin reserve (RMR) charge for long-term
default experience of GBP27 million for the half year 2005. The present value of
future RMR charges is reflected in the opening embedded value. The second
element is amortisation of GBP26 million of interest related realised gains and
losses. These gains and losses are amortised to operating profit over the bonds'
original maturities.

The excess or deficit of actual realised gains and losses for fixed income
securities for the period over these components of longer-term returns is
included in short-term fluctuations in investment returns as a separate
component of total profit for the period.

Following this change of policy for JNL's achieved profits basis operating
profit the component for longer-term returns for fixed income securities is
expected in the future to be a more stable feature than on the previous basis,
which was affected by the volatility of realised gains and losses over a five
year period. Total profit, including actual investment returns, is unaffected by
the change. Further details of the change of policy are explained in the notes
to the Achieved Profits and IFRS basis results. In the six months to 30 June
2005, JNL experienced a net realised gain of GBP1 million on its corporate bond
portfolio. This is reflected in total achieved basis profit before tax.

Asia Operations

Achieved profits basis operating profit from long-term operations (excluding
development and regional head office costs) was GBP226 million for the half
year, up 30 per cent at CER and 34 per cent at RER on half year 2004.

Total NBAP increased by 13 per cent over the first half of 2004 to GBP152
million, reflecting the sales increase offset by NBAP margins that decreased
from 54 per cent for the full year of 2004 to 49 per cent. This decrease is
driven by a change in geographic mix (reduction of 2 percentage points) largely
due to a higher proportion of new business from the relatively lower margin
markets of Korea and India, a change of product mix (reduction of 1 percentage
point) with an increased proportion of lower margin products in Taiwan and
Singapore, and a change of assumptions (reduction of 2 percentage points)
primarily driven by low interest rates in Taiwan.

We expect to be able to maintain the average NBAP margins in Asia at or around
current levels given our planned mix of business in 2005.

In-force operating profits in Asia of GBP74 million for the first half of 2005
represent an increase of 90 per cent over the same period for 2004 at CER, which
included changes of assumptions.

In Asia, IRRs on new business at a country level are targeted to be 10 per cent
over the country risk discount rate. Risk discount rates vary from 5 to 19 per
cent depending upon the maturity of the market. These target rates of return are
average rates and the marginal return on capital on a particular product could
be above or below the target.

Non-insurance Operations


M&G

M&G's underlying profit before performance related fees (PRFs) was GBP68
million, an increase of 15 per cent on the first half of 2004. However,
adjusting the 2004 result for the GBP7 million of one-off provision releases
that were disclosed last year, profits improved by GBP16 million or 31 per cent,
over the same period last year. Underlying profits continue to be driven forward
by revenue growth from existing and new business lines, including new business
flows, higher market levels in many of the segments in which M&G operates and
the ability to extend existing skills and relationships into new markets. This
is combined with a continuing emphasis on cost control.

Total operating profit, including PRF, of GBP83 million was 5 per cent higher
than in 2004, with strong growth at the underlying level being partly offset by
lower PRFs. In 2005, M&G earned GBP15 million in PRFs (first half 2004: GBP20
million), of which GBP12 million was contributed by PPM Capital (first half
2004: GBP19 million). It should be noted that both years are unusually high
reflecting the realisation of a series of profitable investments by PPM Capital.
Income from PRFs is expected to be significantly lower in future years.

US broker dealer and fund management businesses

The broker dealer and fund management operations reported a total profit of
GBP18 million, compared with GBP9 million in the first half of 2004. This
reflects an increase in profits from PPM America, arising primarily due to a
one-off GBP6 million revaluation of an investment vehicle managed by PPMA.

Curian

Curian provides innovative fee-based separately managed accounts. Curian
incurred a loss of GBP6 million compared to a loss GBP11 million in the prior
year, as the business continues to build scale.

Asian fund management business

Profit from the Asian fund management operations was GBP2 million for the half
year, down 80 per cent from 2004 on CER, primarily reflecting a one-off charge
of GBP10 million resulting from restructuring of the bond portfolios in Taiwan
during the first half of 2005. Excluding this, operating profit grew by 20 per
cent.

Egg

Egg's total continuing operating profit for the first half of 2005 was GBP13
million, compared with GBP33 million in the same period last year. Impairment
charges on loans and advances to customers increased in the first half of 2005,
driven by the growth in unsecured lending balances and reflecting the stage of
life cycle of the book. Despite the strong revenue from the credit card
business, the revenue generated from the associated insurances on loans were
lower than the same period in 2004, reflecting the planned reduction in personal
loan disbursements compared to the record level achieved in 2004 following Egg's
decision to tighten its lending criteria.

Egg's total profit was further impacted by a GBP10 million restructuring charge.
The aim of the restructuring was to align the cost base with Egg's strategy to
focus on its core UK business and the estimated annual savings from this
reorganisation are GBP12 million.

Other

Asia's development expenses (excluding the regional head office expenses) for
the half year decreased by 11 per cent at CER to GBP8 million, compared with
GBP9 million in 2004. These development expenses primarily relate to
repositioning the insurance operation in Japan.

Other net expenditure of GBP93 million compared to GBP102 million in 2004 at
CER. This reflected an increase in investment return and other income as a
result of the interest earned on the net proceeds from the 2004 rights issue
offset by higher interest payable and head office costs. Head office costs
(including Asia regional head office costs of GBP14 million) were GBP50 million,
up GBP10 million on 2004 at CER. The increase mainly reflects the substantial
work being undertaken for the implementation of IFRS, European Embedded Values,
Sarbanes Oxley and other regulatory costs.


Total Achieved Profits Basis - Result Before Tax for Continuing Operations

(Period-on-period comparisons below are based on RER)

Total Achieved Profit before tax and minority interests was GBP816 million up 26
per cent from GBP650 million in the first half of 2004. This reflects an
increase in operating profit from GBP638 million to GBP834 million together with
a favourable movement of GBP381 million in short-term fluctuations in investment
returns from negative GBP76 million to positive GBP305 million. This is offset
by a negative movement of GBP241 million due to changes in economic assumptions;
an adverse movement of GBP75 million in actuarial gains and losses on defined
benefit pension schemes from positive GBP67 million for the half year 2004 to
negative GBP8 million for the half year 2005; and a goodwill impairment charge
of GBP95 million.

The UK component of short-term fluctuations in investment returns of GBP275
million reflects the difference between an actual investment return delivered in
the first half of 2005 for the with-profits life fund of 7.4 per cent and the
long-term assumed return of 3.3 per cent for the half year.

The US short-term fluctuations in investment returns of GBP11 million include a
positive GBP42 million in respect of the difference between actual investment
returns and long-term returns included in operating profit. For the first half
of 2005, the primary factor was a return in excess of assumptions on limited
partnership investments. It also includes a negative GBP31 million in relation
to changed expectations of future profitability on variable annuity business
in-force due to the actual separate account return being lower than the
long-term return reported within operating profit.

In Asia, short-term investment fluctuations were positive GBP29 million,
compared with negative GBP38 million last year. These gains mainly reflect lower
bond yields in Taiwan and the resulting unrealised gains.

Negative economic assumption changes of GBP220 million in 2005 compared with
positive economic assumption changes of GBP21 million in 2004. Economic
assumption changes in 2005 comprised negative GBP11 million in the UK and
negative GBP230 million in Asia offset by positive GBP21 million in the US.

In the UK, economic assumption changes of negative GBP11 million reflect an
increase in the future investment return assumption and an increase in the risk
discount rate. An increase in the equity premium from 2.5 per cent to 3 per cent
was offset partly by a decrease in the 15 year gilt rate. This has resulted in
an overall movement in the risk discount rate from 7.2 per cent at 31 December
2004, to 7.3 per cent.

US economic assumption changes of GBP21 million primarily reflect the decrease
in the risk discount rate following a fall in the 10 year treasury bond rate,
offset by reductions in the projected fund earned and crediting rates.

Asia's negative economic assumption change of GBP230 million reflects the effect
of lower bond yields in Taiwan and other markets, which necessitated a reduction
in fund earning rate assumptions.

The negative charge of GBP8 million for actuarial gains and losses on the
Group's defined benefit pension schemes reflects the consequential impact of
accounting for these schemes on a basis consistent with that applied for IFRS
reporting. The actuarial gains and losses reported for Achieved Profits reflect
the amounts attributable to shareholders, including the 10 per cent interest of
the deficits attributable to the PAC with-profits funds. The movements primarily
reflect short-term volatility in the values of the scheme assets and changes in
market bond rates that are used for discounting projected future benefit cash
flows.


Total Achieved Profits Basis - Result After Tax for Continuing Operations

Profit after tax and minority interests was GBP511 million compared with GBP424
million in 2004. The tax charge of GBP300 million compares with a tax charge of
GBP215 million in the first half of 2004. Minority interests in the Group
results were negative GBP5 million.

The effective tax rate at an operating profit level was 29 per cent. This
compares with effective rates on the operating profits for the 2004 half year
and full year of 30 per cent and 28 per cent respectively. The effective tax
rate at the total achieved profit level of 37 per cent was higher than the 29
per cent effective rate on operating profit primarily due to the effect of
impairment of goodwill (which does not attract tax relief), and the impact of
short-term fluctuations in investment returns and changes in economic
assumptions not all of which are tax affected.

EUROPEAN EMBEDDED VALUE BASIS REPORTING

Prudential believes that embedded value reporting provides investors with a
truer measure of the underlying profitability of the Group's long-term
businesses and is a valuable supplement to statutory accounts.

As a signatory to the European CFO Forum's European Embedded Value (EEV)
Principles, Prudential will adopt EEV methodology for its 2005 year-end results.
This will replace the Achieved Profits basis, the current supplementary basis of
reporting. The effect of implementation of EEV was outlined in the announcement
on 2 June 2005.

The main impact on the results, compared to the Achieved Profits basis, arises
from the effect of changes to the assumed level of locked in capital allocated
to each business, the adoption of product-specific risk discount rates, and an
explicit valuation of the time value of options and guarantees. The EEV results
also include the value of future profits from service companies (including fund
management operations) that support the Group's long-term businesses.

STATUTORY BASIS RESULTS


Impact of IFRS basis reporting

Prudential is required to implement International Financial Reporting Standards
(IFRS) from a restated opening position as at 1 January 2004. Details of the
effects of the changes are included in the notes to the financial statements and
were announced on 2 June 2005. The three areas of change that are of particular
relevance to Prudential's results are:

- Altered profit recognition for UK and Europe unit-linked business,
- Altered valuation bases for JNL derivatives and fixed income
securities, and
- Recognition of the shareholders' share of deficits on defined benefit
pension schemes in shareholders' equity.

The Group has also applied a discretionary change of accounting treatment which
relates to the basis of determining longer-term returns for fixed interest
securities included in operating profits. Total profit before tax is unaffected
by this change.

Operating profits have not been significantly altered by the implementation of
IFRS. However, total profit before tax now includes value movements on
derivatives that JNL uses for economic hedging together with actuarial gains and
losses on the Group's defined benefit pension schemes, and are expected to be
more volatile as a result. In addition, IFRS basis shareholders' funds will be
more volatile from period to period for market value movements on fixed income
securities of JNL which are classified as available for sale.

Prudential does not expect the adoption of IFRS to have a significant impact on
its business or its underlying financial position.

Basis of presentation

IFRS has been implemented such that IAS 32 and IAS 39 (dealing with financial
instruments) apply from 1 January 2005 rather than the beginning of 2004. This
is the approach taken by most of the banking industry and reflects the Group's
ownership of Egg. IFRS 4, Insurance Contracts, has also been applied from 1
January 2005. The Group's statutory IFRS basis financial statements reflect this
basis of application.

Prudential's approach to IAS 39 adoption is however, important to the reporting
and understanding of the Group's insurance businesses, particularly for JNL.
Included within this report as supplementary information are 'Proforma' results
that reflect the effects of IFRS 4 and IAS 39 had these standards been applied
to Prudential's insurance operations in 2004.

INTERNATIONAL FINANCIAL REPORTING STANDARDS


IFRS Basis Operating Profits (based on longer term investment returns)

Total operating profit before tax, based on longer-term investment returns for
continuing operations on the IFRS basis was GBP469 million, GBP95 million up on
the proforma IFRS basis result for the first half of 2004 at CER. At RER,
operating profit was up GBP94 million.

                                          Pro-           Pro-
                                  Half  forma*         forma*
                                  Year    Half Change    Half Change
                                  2005    Year           Year
                                  GBPm     CER            RER
                                          2004           2004
                                          GBPm           GBPm

Insurance business

UK and Europe                      187     153    22%     153    22%
US                                 157     153     3%     157     0%
Asia                               116      59    97%      58   100%
Asia development expenses          (8)     (9)    11%    (10)    20%
                                   452     356    27%     358    26%

Fund management business

M&G                                 83      79     5%      79     5%
US broker dealer and fund           18       9   100%       9   100%
management
Curian                             (6)    (11)    45%    (11)    45%
Asia fund management                 2      10  (80%)      10  (80%)
                                    97      87    11%      87    11%

Banking

Egg (UK)                            13      33  (61%)      33  (61%)

Other income and expenditure      (93)   (102)     9%   (103)    10%
Operating profits from             469     374    25%     375    25%
continuing operations

* The comparative IFRS results shown above are prepared on a 'proforma' basis
which reflects the estimated effect on the 2004 results as if IAS 32, IAS 39 and
IFRS4 had been applied from 1 January 2004 to the Group's insurance operations
together with the discretionary change for the basis of determining longer-term
investment returns, as disclosed on 2 June 2005.

In UK and Europe, IFRS operating profit was GBP187 million in 2005, an increase
of 22 per cent on 2004. This reflected an GBP8 million increase in profit from
the with-profits fund, reflecting bonus rates announced in February 2005 and an
increase in annuity sales.

The US operations' result of GBP169 million, which is based on US GAAP, adjusted
where necessary to comply with IFRS and the Group's basis of presenting
operating profit based on longer-term investment returns, was up 12 per cent on
the proforma 2004 result at CER. At RER, operating profit based on longer-term
investment returns for continuing operations was 9 per cent higher than the
proforma basis 2004 result.

In determining the US results, longer-term returns for fixed income securities
reflect the altered basis which is to incorporate an RMR charge for longer-term
defaults and amortisation of interest related realised gains and losses.

The US result of GBP169 million, up 12 per cent on the proforma 2004 result at
CER, reflects increased spread and fee income offset by higher DAC amortisation,
together with increased profits from PPMA. The 2004 half year result benefited
from two one-off items, a favourable legal settlement of GBP28 million (GBP20
million after related change to amortisation of deferred acquisition costs) and
a positive GBP7 million adjustment arising from the adoption of SOP 03-01
'Accounting and Reporting by Insurance Enterprises for Certain Non-Traditional
Long Duration Contracts and for Separate Accounts'. In 2005 the increase in PPMA
profits arose primarily due to a one-off GBP6 million revaluation of an
investment vehicle managed by PPMA.

In Asia, IFRS profits increased to GBP118 million from GBP69 million at CER in
2004 (excluding development and regional head office costs). This includes a
contribution of GBP34 million from exceptional items, of which the largest is a
one-off reserve release due to the introduction of a risk based capital
regulatory framework in Singapore. This result also reflects the steady increase
in the operating profit from the established life insurance operations
(Singapore, Malaysia and Hong Kong) of GBP57 million for the half year as well
as the Indonesian and Vietnamese life businesses starting to make meaningful
contributions.

IFRS basis - total profit before tax for continuing operations

(Period-on-period comparisons below are based on RER)

Total IFRS basis profit before tax and minority interests for 2005 was GBP460
million. This compares with GBP488 million on the proforma basis for the half
year 2004. The decrease reflects: growth in operating profit of GBP94 million;
an improvement in short-term fluctuations in investment return, up GBP29 million
from the first half of 2004 to positive GBP94 million; offset by a goodwill
impairment charge of GBP95 million in relation to the Japanese Life business and
a GBP56 million negative movement from the prior year in actuarial gains and
losses attributable to shareholder-backed operations in respect of the Group's
defined benefit pension schemes.

The development of the Japanese life business has been slower than expected and
to reflect this there has been an impairment of the purchased goodwill
associated with this business by GBP95 million to GBP25 million.

A primary component of the GBP94 million of short-term fluctuations in
investment returns is for value movements in JNL's derivative book. Prudential
has chosen not to seek to attempt to hedge account under IAS 39 for these
derivatives. To do so would have required changes to the way JNL manage its
assets and liabilities which the Group believes would not be in the economic
interests of the business.

For 2005, value movements on JNL's derivatives contributed positive GBP36
million to the GBP94 million of total short-term fluctuations in investment
returns. This compares with positive GBP92 million of JNL derivative value
movement within proforma IFRS basis 2004 short-term fluctuations in investment
returns.

IFRS basis - total profit after tax for continuing operations

Profit after tax and minority interests was GBP299 million compared with GBP307
million in 2004. The effective rate of tax on operating profits, based on
longer-term investment returns, was 29 per cent. This compares with an effective
rate of 31 per cent for half year 2004 and 30 per cent for full year 2004 on the
proforma basis.

The effective rate of tax at the total IFRS profit level for 2005 was 34 per
cent. This compares with an effective rate of 35 per cent for half year 2004 and
29 per cent for full year 2004 on the proforma basis.

EARNINGS PER SHARE


Earnings per share based on achieved profit basis operating profit after tax and
related minority interests were 25.2 pence, compared with a restated figure of
21.1 pence for the 2004 half year. Earnings per share on an IFRS operating
profit basis after tax and related minority interests were 14.0 pence compared
with a restated figure of 12.2 pence for the 2004 half year on the proforma
basis.

Basic earnings per share, based on total achieved profit basis profit, were 21.7
pence compared with a restated figure of 19.8 pence for the 2004 half year.
Basic earning per share, based on total IFRS profit were 12.7 pence compared
with a restated figure of 14.2 pence for the 2004 half year on the proforma
basis.



DIVIDEND PER SHARE

The interim dividend per share of 5.3 pence represents a 2 per cent increase on
the 2004 interim dividend of 5.19 pence (as restated for the bonus element of
the October 2004 rights issue) and will be paid on 28 October 2005. We intend to
maintain our current dividend policy, with the level of dividend growth being
determined after considering the opportunities to invest in those areas of our
business offering attractive growth prospects, our financial flexibility and the
development of our statutory profits over the medium to long-term.

SHAREHOLDERS' FUNDS

On the achieved profits basis, which recognises the shareholders' interest in
long-term businesses, shareholders' funds at 30 June 2005 were GBP9.3 billion,
an increase of GBP0.5 billion from the 2004 year end level after restating for
relevant IFRS changes. This 6 per cent increase primarily reflects: total
achieved profits basis operating profit of GBP834 million; a GBP305 million
favourable movement in short-term fluctuations in investment returns; and the
positive impact of GBP242 million for foreign exchange movements. These were
offset by: a GBP220 million negative movement due to changes in economic
assumptions; a tax charge of GBP300 million; dividend payments of GBP213 million
made to shareholders (net of scrip dividend); and the impairment charge of GBP95
million in respect of purchased goodwill associated with the Japanese life
business.

Statutory IFRS basis shareholders' funds at 30 June 2005 were GBP5.0 billion.
This compares with GBP4.8 billion on the proforma IFRS basis, at 31 December
2004. The increase primarily reflects: profit after tax of GBP300 million and
positive foreign exchange movements of GBP183 million, offset by dividend
payments to shareholders (net of scrip dividend) of GBP213 million.


CASH FLOW

The table below shows the Group holding company cash flow. Prudential believes
that this format gives a clearer presentation of the use of the Group's
resources than the format of the statement required by IFRS.

                                                 Half          Half
                                                 Year          Year
                                                 2005          2004
                                                 GBPm          GBPm

Cash remitted by business units
UK life fund transfer*                            194           208
Asia                                               58            62
M&G                                                27            38
Total cash remitted to group                      279           308

Net interest paid                                (54)          (77)
Dividends paid                                  (252)         (214)
Scrip dividends and share options                  40            61
Cash remittances after interest and                13            78
dividends

Tax received                                       36             -
Corporate activities                             (36)          (30)
Cash flow before investment in                     13            48
businesses

Capital invested in business units

UK and Europe                                     (9)          (28)
Asia                                             (80)          (88)
Decrease in cash                                 (76)          (68)

* in respect of prior year's bonus declarations

The Group holding company received GBP279 million in cash remittances from
business units in the first half of 2005 (2004: GBP308 million) comprising the
shareholders statutory life fund transfer of GBP198 million relating to the 2004
bonus declarations, of which GBP194 million was remitted from the UK and GBP4
million from Asia, together with other remittances from subsidiaries of GBP81
million. Prudential expects the life fund transfer to continue broadly at this
level.

In the second half of 2005 a GBP100 million special dividend is due from the PAC
shareholders' funds in respect of profits arising from earlier business
disposals, and an estimated payment of $150 million is expected from JNL.

After net dividends and interest paid, there was a net cash inflow of GBP13
million (2004: GBP78 million). The Group holding company paid GBP36 million in
respect of corporate activities during the first half of 2005 and received GBP36
million in respect of tax.

The group invested GBP89 million (2004: GBP116 million) during the first half of
the year, including GBP9 million in its UK operations and GBP80 million in Asia.
Net investment in Asia was GBP91 million for the 2004 full year and is expected
to remain broadly the same in 2005. Prudential continues to expect that its
Asian operations will be a net capital provider to the Group in 2006. The
capital requirement for the UK business is expected to be up to GBP250 million
for 2005. The UK business has managed its capital efficiently in the first half
of 2005 but we expect it to draw significantly more capital in line with
expectations in the second half of the year.

In aggregate, the first six months of 2005 saw a decrease in cash of GBP76
million (2004: GBP68 million).



SHAREHOLDERS' BORROWINGS AND FINANCIAL FLEXIBILITY

Net core structural borrowings at 30 June 2005 were GBP1,364 million compared
with GBP1,236 million at 31 December 2004. This reflects the net cash outflow of
GBP76 million and exchange conversion losses of GBP52 million.

The Group also has access to GBP1,400 million committed bank facilities provided
by 14 major international banks and a GBP500 million committed securities
lending liquidity facility.

The Group is funded centrally, except for Egg, which is responsible for its own
financing. The Group's core debt is managed to be within a target level
consistent with its current debt ratings. At 30 June 2005, the gearing ratio, on
an achieved profits basis including hybrid debt (net of cash and short-term
investments) was 13 per cent compared with 12 per cent at 31 December 2004.

Prudential plc enjoys strong debt ratings from Moody's, Standard & Poor's and
Fitch Ratings. Prudential's long-term senior debt is rated A2 (stable outlook)
by Moody's, AA- (negative outlook) by Standard & Poor's and AA- (stable outlook)
by Fitch Ratings. Prudential's short-term debt is rated as P-1 by Moody's, A1+
by Standard & Poor's and F1+ by Fitch Ratings.

Based on the achieved profits basis operating profit from continuing operations
and interest payable on core structural borrowings, interest cover was 11 times
for the first half of 2005 compared with 10 times for the first half of 2004.

In July 2005, US$300 million of perpetual subordinated capital securities priced
at 6.5 per cent were raised via a US retail offer. The proceeds of this issue
qualify as Group regulatory capital for Financial Groups Directive purposes and
will be used to repay the non-qualifying GBP150 million senior debt maturing in
2007. This issuance of hybrid debt capital remains part of Prudential's
financing plan as set out in the 2004 annual report.

FUNDS UNDER MANAGEMENT

Funds under management across the Group at 30 June 2005 totalled GBP214 billion
compared with GBP197 billion at 31 December 2004. The total includes GBP177
billion of Group internal funds under management and GBP37 billion of external
funds under management.

UNALLOCATED SURPLUS OF WITH-PROFITS FUNDS

The accounting basis of recognition of surpluses in the PAC long-term fund has
altered for the main PAC with-profit funds. For 2004 reporting the unallocated
surplus, previously known as the Fund for Future Appropriations (FFA) reflected
the excess of assets over liabilities of the fund with technical provisions
being determined on a basis consistent with the Peak 1 regulatory approach and
with deferral of acquisition costs. The Peak 1 basis reflects bonuses declared
to date with no explicit valuation of guarantees and options. For 2005, as part
of the implementation of IFRS 4, the Group has effectively adopted the
provisions of the UK reporting standard FRS 27 (Life Assurance).

FRS 27 follows closely the requirements of the FSA's new realistic regime with
the following key features for the UK regulated with-profits funds:

- De-recognition of deferred acquisition costs
- Establishing realistic liabilities that reflect policyholder benefits
based on asset shares (i.e. including projected future bonuses), and
- Explicitly valuing product options and guarantees on a market
consistent basis.

Under FRS 27 the liabilities are adjusted to exclude the shareholders' share of
future cost of bonuses that is recognised for regulatory purposes, with a
corresponding increase to the unallocated surplus. After these adjustments and
IFRS measurement changes the unallocated surplus of the PAC with-profits fund at
the 1 January 2005 was GBP8.0 billion.

At 30 June 2005, the PAC unallocated surplus was GBP8.8 billion. The change of
GBP0.8 billion in the unallocated surplus of the PAC with-profit fund between 1
January 2005 and 30 June 2005 reflects the return on the assets representing the
surplus; and the reduced cost of the product guarantees.

FINANCIAL STRENGTH OF THE UK LONG-TERM FUND


United Kingdom

The fund is very strong with an inherited estate measured on an essentially
deterministic valuation basis estimated to be around GBP7.3 billion compared
with approximately GBP6.5 billion at the end of 2004. On a realistic basis, with
liabilities recorded on a market consistent basis, the free assets of the fund
are estimated to be valued at around GBP6.3 billion before a deduction for the
risk capital margin.

The size of the inherited estate fluctuates from year to year depending on the
investment return and the extent to which it has been required to meet smoothing
costs, guarantees and other events.

The Company believes that it would be beneficial if there were greater clarity
as to the status of the inherited estate and therefore it has discussed with the
Financial Services Authority (FSA) the principles that would apply to any
re-attribution of the inherited estate. No conclusions have been reached.
Furthermore, the Company expects that the entire inherited estate will need to
be retained within the long-term fund for the foreseeable future to provide
working capital and so it has not considered any distribution of the inherited
estate to policyholders and shareholders.

The PAC long-term fund is rated AA+ by Standard & Poor's, Aa1 by Moody's and AA+
by Fitch Ratings.

PRUDENTIAL PLC 2005 UNAUDITED INTERIM RESULTS

RESULTS SUMMARY

                                                 Restated  Restated
Achieved Profits Basis Results             Half      Half      Full
following implementation of                Year      Year      Year
International Financial Reporting          2005      2004      2004
Standards ("IFRS")                         GBPm      GBPm      GBPm

UK and Europe Insurance Operations          182       240       450
M&G                                          83        79       136
Egg                                          13        33        61
UK and Europe Operations                    278       352       647
US Operations                               429       220       413
Asian Operations                            228       179       391
Other Income and Expenditure              (101)     (113)     (212)
(including Asia development expenses)

Operating profit from continuing            834       638     1,239
operations based on longer-term
investment returns before exceptional
items
Goodwill impairment charge                 (95)         -         -
Short-term fluctuations in investment       305      (76)       587
returns
Shareholders' share of actuarial            (8)        67      (12)
gains and losses on defined benefit
pension schemes
Effect of changes in economic             (220)        21     (100)
assumptions

Profit on ordinary activities from          816       650     1,714
continuing operations before tax

Operating earnings per share from         25.2p     21.1p     41.5p
continuing operations after minority
interest
Basic earnings per share                  21.7p     19.8p     53.3p
Shareholders' funds, excluding         GBP9.3bn  GBP7.2bn  GBP8.8bn
minority interest

IFRS Basis Results

Statutory IFRS basis results               Half      Half      Full
                                           Year      Year      Year
                                           2005      2004      2004
                                           GBPm      GBPm      GBPm

Total profit after tax for the period       300       233       517
after minority interest
Basic earnings per share                  12.7p     11.2p     24.4p
Shareholders' funds, excluding         GBP5.0bn  GBP3.4bn  GBP4.5bn
minority interest

Supplementary IFRS basis information      Based     Based     Based
                                             on        on        on
                                         statu-  proforma      pro-
                                           tory      IFRS     forma
                                           IFRS   results      IFRS
                                        results      Half   results
                                           Half      Year      Full
                                           Year      2004      Year
                                           2005      GBPm      2004
                                           GBPm                GBPm

Operating profit from continuing            469       375       699
operations based on longer-term
investment returns before exceptional
items
Total profit after tax for the period       300       294       602
after minority interest
Operating earnings per share from         14.0p     12.2p     22.7p
continuing operations after minority
interest
Basic earnings per share                  12.7p     14.2p     28.4p
Shareholders' funds, excluding         GBP5.0bn  GBP3.4bn  GBP4.8bn
minority interest

                                           Half      Half      Full
                                           Year      Year      Year
                                           2005      2004      2004

Declared Dividends Per Share relating     5.30p     5.19p    15.84p
to reporting period

Funds under Management                 GBP214bn  GBP182bn  GBP197bn

To provide consistency the achieved profits basis results reflect the
application of the changes of policy the Group expects to apply in its full year
2005 IFRS basis financial statements, as described below, to the extent
applicable. The 2004 results have been restated accordingly.

The statutory basis financial statements included within this report are
referred to throughout as "Statutory IFRS basis" results.

These statutory IFRS basis results reflect the application of:

(i) Measurement changes arising from policies the Group expects to apply on the
adoption of all IFRS standards, other than IAS32 ("Financial Instruments:
Disclosure and Presentation"), IAS39 ("Financial Instruments: Recognition and
Measurement"), and IFRS4 ("Insurance Contracts"), from 1 January 2004. The half
year 2005 results include the expected effect of these three standards from 1
January 2005.

(ii) Changes to the format of the results and other presentational changes that
the Group expects to apply in its full year 2005 financial statements in so far
as they affect the summary results included in this interim report.

(iii) Compared to supplementary results and earnings per share basis information
previously provided under UK GAAP, a discretionary change of policy for the
basis of determining longer-term investment returns included in operating profit
based on longer-term investment returns.

The proforma IFRS basis results included in this report are included as
supplementary information and are not results that form part of the Group's
financial statements. The proforma IFRS results reflect the application of the
statutory IFRS changes noted above and the estimated effect on the Group's
results for 2004 if IAS32, IAS39 and IFRS4 had been applied from 1 January 2004
to the Group's insurance operations.

ACHIEVED PROFITS BASIS RESULTS

RESULTS SUMMARY

                                              Half Restated Restated
                                              Year     Half     Full
                                              2005     Year     Year
                                              GBPm     2004     2004
                                                       GBPm     GBPm

UK and Europe Insurance Operations             182      240      450
M&G                                             83       79      136
Egg                                             13       33       61

UK and Europe Operations                       278      352      647
US Operations                                  429      220      413
Asian Operations                               228      179      391
Other Income and Expenditure (including      (101)    (113)    (212)
Asia development expenses)

Operating profit from continuing               834      638    1,239
operations based on longer-term
investment returns before exceptional
items
Goodwill impairment charge                    (95)        -        -
Short-term fluctuations in investment          305     (76)      587
returns
Shareholders' share of actuarial gains         (8)       67     (12)
and losses on defined benefit pension
schemes
Effect of changes in economic assumptions    (220)       21    (100)

Profit from continuing operations before       816      650    1,714
tax (including actual investment returns)
Tax                                          (300)    (215)    (491)

Profit from continuing operations after        516      435    1,223
tax before minority interest
Discontinued operations (net of tax)             1     (17)     (94)

Total profit for the period                    517      418    1,129

Attributable to:
         Equity holders of the parent          512      411    1,130
         company
         Minority interest                       5        7      (1)
Total profit for the period                    517      418    1,129

Earnings Per Share

Continuing operations
From operating profit, based on              25.2p    21.1p    41.5p
longer-term investment returns, after tax
and related minority interest
Adjustment for goodwill impairment charge   (4.0)p        -        -
Adjustment from post-tax long-term            9.1p   (3.5)p    18.6p
investment returns to post-tax actual
investment returns (after related
minority interest)
Adjustment for post-tax shareholders'       (0.3)p     2.3p   (0.3)p
share of actuarial gains and losses on
defined benefit pension schemes
Adjustment for post-tax effect of changes   (8.3)p     0.5p   (3.4)p
in economic assumptions

Based on profit from continuing              21.7p    20.4p    56.4p
operations after minority interest

Discontinued operations
Based on profit (loss) from discontinued      0.0p   (0.6)p   (3.1)p
operations after minority interest

Total - based on total profit for the        21.7p    19.8p    53.3p
period after minority interest

Average number of shares (million)           2,361    2,075    2,121

Dividends Per Share

Dividends relating to reporting period
         Interim dividend (2005 and 2004)    5.30p    5.19p    5.19p
         Final dividend (2004)                   -        -   10.65p

Total                                        5.30p    5.19p   15.84p

Dividends declared and paid in reporting
period
         Current period interim dividend         -        -    5.19p
         Final dividend for prior period    10.65p   10.29p   10.29p
Total                                       10.65p   10.29p   15.48p


TOTAL INSURANCE AND INVESTMENT PRODUCTS NEW BUSINESS

INSURANCE PRODUCTS AND INVESTMENT PRODUCTS*

                       Insurance Products *
                        Half      Half      Full
                        Year      Year      Year
                        2005      2004      2004
                        GBPm      GBPm      GBPm
UK and Europe          4,600     2,709     6,538
Operations
US Operations          2,705     2,348     4,420
Asian Operations         674       521     1,172
Group Total            7,979     5,578    12,130

                       Investment Products *
                        Half      Half      Full
                        Year      Year      Year
                        2005      2004      2004
                        GBPm      GBPm      GBPm
UK and Europe          3,579     2,177     5,845
Operations
US Operations            217       200       418
Asian Operations       9,421     9,584    18,845
Group Total           13,217    11,961    25,108

                               Total
                        Half      Half      Full
                        Year      Year      Year
                        2005      2004      2004
                        GBPm      GBPm      GBPm
UK and Europe          8,179     4,886    12,383
Operations
US Operations          2,922     2,548     4,838
Asian Operations      10,095    10,105    20,017
Group Total           21,196    17,539    37,238


INSURANCE PRODUCTS - NEW BUSINESS PREMIUMS AND CONTRIBUTIONS*

                                    Single
                           Half Year     Half     Full
                                2005     Year     Year
                                GBPm     2004     2004
                                         GBPm     GBPm
UK and Europe Insurance
Operations
Direct to customer
Individual annuities             365      306      630
Individual pensions and           14       12       19
life
Department of Work and           234      252      265
Pensions rebate business
Total                            613      570      914
Business to Business
Corporate pensions               114       77      153
Individual annuities              98       94      229
Bulk annuities                   321      210      474
Total                            533      381      856
Intermediated
distribution
Life                             551      446    1,001
Individual annuities             557      545    1,180
Individual and corporate          62      150      189
pensions
Department of Work and            80       92       89
Pensions rebate business
Total                          1,250    1,233    2,459
Partnerships
Life                             426      341      790
Individual and bulk            1,569       48    1,249
annuities
                               1,995      389    2,039
Europe
Life                             119       36       89
Total UK and Europe            4,510    2,609    6,357
Insurance Operations
US Operations
Fixed annuities                  410      573    1,130
Fixed index annuities            296      158      429
Variable annuities             1,185    1,006    1,981
Life                               6        4       16
Guaranteed Investment            187       32      180
Contracts
GIC - Medium Term Notes          616      569      672
Total                          2,700    2,342    4,408
Asian Operations
China                              5        5        9
Hong Kong                        147      108      255
India (Group's 26%                 2        3        5
interest)
Indonesia                         27       21       38
Japan                             11        7       17
Korea                             10       27       36
Malaysia                           6        3        7
Singapore                        117       96      199
Taiwan                            72       30       88
Other                              4        4        8
Total                            401      304      662
Group Total                    7,611    5,255   11,427

                                    Regular
                                Half     Half     Full
                                Year     Year     Year
                                2005     2004     2004
                                GBPm     GBPm     GBPm
UK and Europe Insurance
Operations
Direct to customer
Individual annuities               -        -        -
Individual pensions and            5        6       10
life
Department of Work and             -        -        -
Pensions rebate business
Total                              5        6       10
Business to Business
Corporate pensions                67       75      137
Individual annuities               -        -        -
Bulk annuities                     -        -        -
Total                             67       75      137
Intermediated
distribution
Life                               3        2        5
Individual annuities               -        -        -
Individual and corporate          14       16       25
pensions
Department of Work and             -        -        -
Pensions rebate business
Total                             17       18       30
Partnerships
Life                               1        1        2
Individual and bulk                -        -        -
annuities
                                   1        1        2
Europe
Life                               -        -        2
Total UK and Europe               90      100      181
Insurance Operations
US Operations
Fixed annuities                    -        -        -
Fixed index annuities              -        -        -
Variable annuities                 -        -        -
Life                               5        6       12
Guaranteed Investment              -        -        -
Contracts
GIC - Medium Term Notes            -        -        -
Total                              5        6       12
Asian Operations
China                              9        6       16
Hong Kong                         35       35       78
India (Group's 26%                27       17       33
interest)
Indonesia                         18       14       28
Japan                              2        3        7
Korea                             59       27       60
Malaysia                          29       21       61
Singapore                         23       20       47
Taiwan                            55       57      143
Other                             16       17       37
Total                            273      217      510
Group Total                      368      323      703

                              Annual Premium and
                           Contribution Equivalents
                              Half     Half     Full
                              Year     Year     Year
                              2005     2004     2004
                              GBPm     GBPm     GBPm
UK and Europe Insurance
Operations
Direct to customer
Individual annuities            37       31       63
Individual pensions and          6        7       12
life
Department of Work and          23       25       27
Pensions rebate business
Total                           66       63      102
Business to Business
Corporate pensions              78       83      152
Individual annuities            10        9       23
Bulk annuities                  32       21       47
Total                          120      113      222
Intermediated
distribution
Life                            58       46      105
Individual annuities            56       55      118
Individual and corporate        20       31       44
pensions
Department of Work and           8        9        9
Pensions rebate business
Total                          142      141      276
Partnerships
Life                            44       35       81
Individual and bulk            157        5      125
annuities
                               201       40      206
Europe
Life                            12        4       11
Total UK and Europe            541      361      817
Insurance Operations
US Operations
Fixed annuities                 41       57      113
Fixed index annuities           30       16       43
Variable annuities             118      101      198
Life                             6        6       14
Guaranteed Investment           19        3       18
Contracts
GIC - Medium Term Notes         61       57       67
Total                          275      240      453
Asian Operations
China                           10        7       17
Hong Kong                       50       46      103
India (Group's 26%              27       17       33
interest)
Indonesia                       21       16       32
Japan                            3        4        9
Korea                           60       30       64
Malaysia                        29       21       62
Singapore                       35       30       67
Taiwan                          62       60      151
Other                           16       17       38
Total                          313      248      576
Group Total                  1,129      849    1,846

Annual premium and contribution equivalents are calculated as the aggregate of
regular new business amounts and one tenth of single new business amounts.

INVESTMENT PRODUCTS - FUNDS UNDER MANAGEMENT *

                        1 Jan    Gross Redemptions    Market 30 June
                         2005  Inflows                   and    2005
                                                       other
                                                   Movements
                         GBPm     GBPm        GBPm      GBPm    GBPm
UK and Europe          28,705    3,579     (1,899)       786  31,171
Operations
US Operations             550      217        (56)        43     754
Asian Operations        7,832    9,421     (8,723)     1,225   9,755
Group Total            37,087   13,217    (10,678)     2,054  41,680

* The format of the tables shown above is consistent with the distinction
between insurance and investment products as applied for previous financial
reporting periods. Products categorised as "insurance" refer to those classified
as contracts of long-term insurance business for regulatory reporting purposes,
i.e. falling within one of the classes of insurance specified in part II of
Schedule 1 to the Regulated Activities Order under FSA regulations.

The details shown above for insurance products include contributions for
contracts that are classified under IFRS 4 "Insurance Contracts" as not
containing significant insurance risk. These products are described as
investment contracts under IFRS4. Contracts included in this category are
primarily certain unit linked and similar contracts written in UK and Europe
Insurance Operations and Guaranteed Investment Contracts written in US
operations.

Investment products referred to in the tables above are unit trust, mutual funds
and similar types of fund management arrangements. These are unrelated to
insurance products that are classified as "investment contracts" under IFRS 4,
as described above, although similar IFRS recognition principles apply to the
acquisition costs and fees attaching to this type of business.


ACHIEVED PROFITS BASIS RESULTS

OPERATING PROFIT FROM CONTINUING OPERATIONS BASED ON LONGER-TERM INVESTMENT
RETURNS BEFORE EXCEPTIONAL ITEMS

Results Analysis by Business Area            Half Restated Restated
                                             Year     Half     Full
                                             2005     Year     Year
                                             GBPm     2004     2004
                                                      GBPm     GBPm
UK and Europe Operations
New business                                  159       88      220
Business in force                              23      152      230
Long-term business                            182      240      450
M&G                                            83       79      136
Egg                                            13       33       61
Total                                         278      352      647
US Operations
New business                                  102       82      156
Business in force                             315      140      271
Long-term business                            417      222      427
Broker dealer and fund management              18        9       15
Curian                                        (6)     (11)     (29)
Total                                         429      220      413
Asian Operations
New business                                  152      135      312
Business in force                              74       34       60
Long-term business                            226      169      372
Fund management                                 2       10       19
Development expenses                          (8)     (10)     (15)
Total                                         220      169      376
Other Income and Expenditure
Investment return and other income             45       16       44
Interest payable on core structural          (84)     (74)    (154)
borrowings
Corporate expenditure:
     Group Head Office                       (36)     (23)     (51)
     Asia Regional Head Office               (14)     (18)     (29)
Charge for share based payments for           (4)      (4)      (7)
Prudential schemes
Total                                        (93)    (103)    (197)
Operating profit from continuing              834      638    1,239
operations based on longer-term
investment returns before exceptional
items
Analysed as profits (losses) from:
     New business                             413      305      688
     Business in force                        412      326      561
Long-term business                            825      631    1,249
Asia development expenses                     (8)     (10)     (15)
Other operating results                        17       17        5
Total                                         834      638    1,239

ACHIEVED PROFITS BASIS RESULTS

SUMMARISED CONSOLIDATED BALANCE SHEET

                                             Half  Restated  Restated
                                             Year      Half      Full
                                             2005      Year      Year
                                             GBPm      2004      2004
                                                       GBPm      GBPm
Total assets less liabilities,            160,255   137,376   148,639
excluding insurance funds
Less insurance funds*:
  Technical provisions (net of          (155,266) (134,024) (144,149)
  reinsurers' share) and unallocated
  surplus of with-profits funds
  Less shareholders' accrued interest       4,317     3,884     4,272
  in the long-term business
                                        (150,949) (130,140) (139,877)

Total net assets                            9,306     7,236     8,762

Share capital                                 119       101       119
Share premium                               1,561       553     1,558
Other statutory basis shareholders'         3,309     2,698     2,813
funds (following adoption of IFRS)
Additional achieved profits basis           4,317     3,884     4,272
retained profit

Shareholders' capital and reserves          9,306     7,236     8,762
(excluding minority interest)

MOVEMENT IN SHAREHOLDERS' CAPITAL AND RESERVES (excluding minority interest)

                                               Half Restated Restated
                                               Year     Half     Full
                                               2005     Year     Year
                                               GBPm     2004     2004
                                                        GBPm     GBPm
Profit for the period (net of minority          512      411    1,130
interest)
Items taken directly to equity:
  Cumulative effect of changes in              (25)        -        -
  accounting principles on adoption of
  IAS32, IAS39 and IFRS4, net of applicable
  taxes, at 1 January 2005
  Unrealised valuation movements on               4        -        -
  securities classified as
  available-for-sale from 1 January 2005
  Movement on cashflow hedges                   (7)        -        -
  Exchange movements                            242     (53)    (240)
  Related tax                                    30        5       12
  Proceeds from rights issue, net of              -        -    1,021
  expenses
  Other new share capital subscribed             40       61      119
  Dividends                                   (253)    (214)    (323)
  Reserve movements in respect of share           6        3       10
  based payments
  Own shares:
     Own shares purchased in respect of           0        0      (4)
     share based payment plans
     Movement on Prudential plc shares          (5)        0       14
     purchased by unit trusts newly
     consolidated under IFRS
Net increase in shareholders' capital and       544      213    1,739
reserves
Shareholders' capital and reserves at
beginning of period (excluding minority
interest)
  As previously reported                      8,596    7,005    7,005
  Adjustments on implementation of              166       18       18
  statutory IFRS (excluding IAS32, IAS39
  and IFRS4)
  As restated                                 8,762    7,023    7,023

Shareholders' capital and reserves at end     9,306    7,236    8,762
of period (excluding minority interest)

Comprising
UK and Europe Operations:
  Long-term business                          4,433    3,580    4,051
  M&G:
       Net assets                               275      333      300
       Acquired goodwill                      1,153    1,153    1,153
  Egg                                           266      353      273
                                              6,127    5,419    5,777
US Operations                                 3,114    2,570    2,596
Asian Operations:
  Net assets                                  1,815    1,482    1,736
  Acquired goodwill                             197      292      292
Other operations:
  Holding company net borrowings            (1,224)  (2,055)  (1,106)
  Other net liabilities                       (723)    (472)    (533)
                                              9,306    7,236    8,762

* Including liabilities in respect of insurance products classified as
investment contracts under IFRS4.

ACHIEVED PROFITS BASIS RESULTS

BASIS OF PREPARATION OF RESULTS

The achieved profits basis results have been prepared in accordance with the
guidance issued by the Association of British Insurers in December 2001
"Supplementary Reporting for long-term insurance business (the achieved profits
method)".

Under this guidance, for most countries long-term expected rates of return on
investments and risk discount rates are set by reference to period end rates of
return on fixed income securities. This "active" basis of assumption setting has
been applied in preparing the results of the Group's UK, European and US
long-term business operations. For the Group's Asian operations, the active
basis is appropriate for business written in Japan and Korea and for US dollar
denominated business written in Hong Kong. An exception to this general rule is
that for countries where long-term fixed income securities markets are
underdeveloped, investment return assumptions and risk discount rates should be
based on an assessment of long-term economic conditions. Except for the
countries listed above, this alternative basis is appropriate for the Group's
Asian operations.

The key economic assumptions are set out below:

                                           Half     Half     Full
                                           Year     Year     Year
                                           2005     2004     2004
UK and Europe Insurance Operations
Pre-tax expected long-term nominal rates
of investment return:
  UK equities                              7.2%     7.6%     7.1%
  Overseas equities                      7.0% to  7.3% to  6.8% to
                                           7.9%     8.3%     7.8%
  Property                                 6.5%     6.8%     6.3%
  Gilts                                    4.2%     5.1%     4.6%
  Corporate bonds                          5.1%     6.1%     5.5%
  Assets of PAC with-profits fund          6.6%     7.1%     6.5%
  (applying the rates listed above to
  the investments held by the fund)
  Expected long-term rate of inflation     2.8%     3.1%     2.9%
Post-tax expected long-term nominal rate
of return:
  Pension business (where no tax           6.6%     7.1%     6.5%
  applies)
  Life business                            5.8%     6.2%     5.7%
Risk margin included within the risk       3.1%     2.6%     2.6%
discount rate
Risk discount rate                         7.3%     7.7%     7.2%

US Operations
Expected long-term spread between earned  1.75%    1.75%    1.75%
rate and rate credited to policyholders
US 10 year treasury bond rate at end of    4.0%     4.6%     4.3%
period
Risk margin included within the risk       3.1%     3.1%     3.1%
discount rate
Risk discount rate                         7.1%     7.7%     7.4%

Asian Operations
Weighted pre-tax expected long-term        7.0%     6.8%     6.6%
nominal rate of investment return
Weighted expected long-term rate of        3.2%     3.1%     3.0%
inflation
Weighted risk discount rate               10.0%     9.9%     9.6%

The risk margin for UK and Europe Insurance Operations has been increased to 3.1
per cent following re-assessment in the light of the intention to use the
European Embedded Value basis for 2005 year end reporting (see note (g))

The economic assumptions shown above for the Asian Operations have been
determined by weighting each country's assumptions by reference to the achieved
profits basis operating results for new business written in the relevant period.

NOTES ON THE UNAUDITED ACHIEVED PROFITS BASIS RESULTS

(a) The achieved profits basis results for the 2005 and 2004 Half Years are
unaudited. The results for the 2004 Full Year are also unaudited and have been
derived from the achieved profits basis supplement to the Company's statutory
accounts for that year and then adjusted for the application of IFRS where
appropriate as described in note (d). The supplement included an unqualified
audit report from the auditors.

(b) Under the achieved profits basis, the operating profit from new business
represents the profitability of new long-term insurance business written in the
period and the operating profit from business in force represents the
profitability of business on the books at the start of the period. These results
are combined with the statutory basis results of the Group's other operations
including banking and fund management business. The effects of short-term
fluctuations in investment returns and of changes in economic assumptions on
shareholders' funds at the start of the reporting period are excluded from
operating profit but included in total profit. In the directors' opinion, the
achieved profits basis results provide a more realistic reflection of the
performance of the Group's long-term business operations than results under the
statutory basis.

(c) The proportion of surplus allocated to shareholders from the UK with-profits
business has been based on the present level of 10 per cent. Future bonus rates
have been set at levels which would fully utilise the assets of the with-profits
fund over the lifetime of the business in force.

(d) The achieved profits basis results for the Group reflect the application of
the changes the Group expects to apply in its full year 2005 IFRS basis
financial statements to the extent applicable. The results of long-term business
operations are significantly altered only for the changed basis of determining
longer-term returns credited to operating results.

The significant changes of policy that affect the 2004 and 2005 results for
non-insurance operations principally relate to pension costs, goodwill, the
timing basis of recognition of external dividends, and altered measurement of
acquisition costs and front end fees of fund management business. The detail of
these policy changes is described in note B to the statutory basis financial
statements. The change in respect of pension costs is augmented under the
Achieved Profits basis to reflect the Group's 10 per cent interest in the share
of the deficits of the UK defined benefit pension schemes that are attributable
to the PAC with-profits fund.

The impact of adoption of IAS39 and IFRS4 from 1 January 2005 is restricted
under the Achieved Profits basis to non-insurance operations, as described in
the statutory financial statements. Results attributable to shareholders for
long-term businesses are not affected. In particular, the investment and
derivative value volatility reflected in the statutory basis results for JNL
does not feature due to the methodology of the achieved profits basis. The
methodology seeks to value the future emergence of surplus, which in the case of
JNL's type of business is unaffected by temporary valuation movements.

ACHIEVED PROFITS BASIS RESULTS

NOTES ON THE UNAUDITED ACHIEVED PROFITS BASIS RESULTS (CONTINUED)

(e) The impact of restating the Half Year and Full Year 2004 achieved profits
basis results for the changes of policy on adoption of IFRS and discretionary
changes to longer-term investment returns is as follows:

                                        Half Year 2004
                                          As  Change Restated
                                  previously
                                   published
                                        GBPm    GBPm     GBPm
     Operating profit from               587      51      638
     continuing operations based
     on longer-term investment
     returns (note (i))
     Amortisation of goodwill           (48)      48        0
     (note (ii))
     Short-term fluctuations in         (26)    (50)     (76)
     investment returns (note
     (iii))
     Shareholders' share of                -      67       67
     actuarial gains and losses
     on defined benefit pension
     schemes
     Effect of change in                  21       -       21
     economic assumptions
     Profit from continuing              534     116      650
     operations before tax
     attributable to
     shareholders (including
     actual investment returns)

     Shareholders' funds               7,222      14    7,236
     (excluding minority
     interest) (note (iv))

                                        Full Year 2004
                                          As  Change Restated
                                  previously
                                   published
                                        GBPm    GBPm     GBPm
     Operating profit from             1,144      95    1,239
     continuing operations based
     on longer-term investment
     returns (note (i))
     Amortisation of goodwill           (94)      94        0
     (note (ii))
     Short-term fluctuations in          679    (92)      587
     investment returns (note
     (iii))
     Shareholders' share of                -    (12)     (12)
     actuarial gains and losses
     on defined benefit pension
     schemes
     Effect of change in               (100)       -    (100)
     economic assumptions
     Profit from continuing            1,629      85    1,714
     operations before tax
     attributable to
     shareholders (including
     actual investment returns)

     Shareholders' funds               8,596     166    8,762
     (excluding minority
     interest) (note (iv))

(i) Operating profit from continuing operations, based on longer-term investment
returns

                                                 Half           Full
                                                 Year           Year
                                                 2004           2004
                                                 GBPm           GBPm
   Discretionary change to longer-term
   investment returns:
      US Operations                                56            110
      Asian Operations                            (6)            (9)
   IFRS changes                                     1            (6)
   Total changes                                   51             95
   Operating profit - as previously               587          1,144
   published
   Operating profit - as restated                 638          1,239

(ii) Amortisation of goodwill

Under IFRS3 ("Business Combinations") and IFRS1 ("First-time Adoption of
International Financial Reporting Standards") goodwill as previously reported at
the date of adoption of IFRS, which is 1 January 2004, is left unaltered subject
to annual impairment testing. Amortisation charges reported on the previous
basis are no longer permitted.

(iii) Short-term fluctuations in investment returns including investment return
attributable to minority interest in consolidated investment funds

                                                 Half           Full
                                                 Year           Year
                                                 2004           2004
                                                 GBPm           GBPm
   Discretionary change to longer-term
   investment returns (as above):
      US Operations                              (56)          (110)
      Asian Operations                              6              9
   IFRS changes                                     0              9
   Total changes                                 (50)           (92)
   Short-term fluctuations in                    (26)            679
   investment returns - as previously
   published
   Short-term fluctuations in                    (76)            587
   investment returns - as restated



(iv) Shareholders' funds (excluding minority interest)

                                                  Half           Full
                                                  Year           Year
                                                  2004           2004
                                                  GBPm           GBPm
   Changes consequent on adoption of
   IFRS:
      Timing difference on recognition             109            253
      of dividend declared after
      balance sheet date
      Shareholders' share of deficit on
      UK defined benefit pension
      schemes (net of deferred tax):
          Statutory IFRS basis                    (73)          (115)
          Additional change for                   (30)           (47)
          shareholders' 10% interest on
          the achieved profits basis in
          the deficit attributable to
          the PAC with-profits fund
          Goodwill                                  48             94
          Other items (net of related             (40)           (19)
          tax)
   Total changes                                    14            166
   Shareholders' funds, net of minority          7,222          8,596
   interest - as previously published
   Shareholders' funds, net of minority          7,236          8,762
   interest - as restated

(f) Consistent with prior periods for the Taiwan operation, the projections
include an assumption of phased progression from current rates to the long-term
expected rates over a remaining period of eight years. This takes into account
the effect on bond values of interest rate movements. The principal cause of the
GBP220m charge for the effect of changed economic assumptions is the reduction
in short-term earned rates in Taiwan. This reduction has the effect of delaying
the emergence of the expected long-term rates.

(g) In its Full Year 2005 financial statements, the Group intends to replace the
use of the Achieved Profits basis methodology by the European Embedded Value
(EEV) principles issued by the CFO forum of the major European Life Insurers in
May 2004. Details of the Group's application of the EEV principles are available
at the Group's web-site, www.prudential.co.uk.

IFRS BASIS RESULTS

STATUTORY BASIS RESULTS

SUMMARY INCOME STATEMENT

                                         Half      Half      Full
                                         Year      Year      Year
                                         2005      2004      2004
                                         GBPm      GBPm      GBPm
                                               (note C)  (note C)

Insurance contract revenues             8,159     7,397    16,099
Investment income (including            9,560     3,245    15,742
realised gains and losses, and
unrealised appreciation of
investments categorised under IAS39
as "fair value through profit and
loss")
Other income                              982       886     2,026
Total revenue (note D)                 18,701    11,528    33,867

Benefits and claims for insurance    (14,919)   (8,582)  (26,584)
contracts, and movement in
unallocated surplus of with-profits
funds determined after charging
taxes borne by policyholders and
unallocated surplus of with-profits
funds and unit linked policies

Acquisition costs and other           (3,036)   (2,208)   (5,526)
operating expenditure

Interest on structural borrowings       (104)      (94)     (196)
of shareholder financed operations
(including Egg) and with-profits
operations
Total charges (note D)               (18,059)  (10,884)  (32,306)

IFRS basis income before tax              642       644     1,561
(representing income net of
post-tax transfers to unallocated
surplus of with-profits funds,
before tax attributable to
policyholders and unallocated
surplus of with-profits funds, unit
linked policies and shareholders)
(notes B and D)

Income tax expense attributable to      (182)     (249)     (711)
policyholders and unallocated
surplus of with-profits funds and
unit linked policies

Profit from continuing operations         460       395       850
(including actual investment
returns) before tax attributable to
shareholders (notes B, D and E)

Income tax (expense) benefit
attributable to shareholders:
    Total income tax expense* (note     (338)     (387)     (951)
    M)
    Less: Income tax attributable         182       249       711
    to policyholders and
    unallocated surplus of
    with-profits funds and unit
    linked policies
Income tax expense attributable to      (156)     (138)     (240)
shareholders (note M)
Profit from continuing operations         304       257       610
after tax
Discontinued operations (net of             1      (17)      (94)
tax)
Profit for the period                     305       240       516

Attributable to:
    Equity holders of the parent          300       233       517
    company
    Minority interest                       5         7       (1)

Profit for the period                     305       240       516

Earnings Per Share

Basic (based on 2,361 million,
2,075 million and 2,121 million
shares respectively)
    Based on profit from continuing     12.7p     11.8p     27.5p
    operations after minority
    interest
    Based on profit (loss) from          0.0p    (0.6)p    (3.1)p
    discontinued operations after
    minority interest

                                        12.7p     11.2p     24.4p

Diluted (based on 2,364 million,
2,078 million and 2,124 million
shares respectively)
     Based on profit from               12.7p     11.8p     27.5p
     continuing operations after
     minority interest
     Based on profit (loss) from         0.0p    (0.6)p    (3.1)p
     discontinued operations after
     minority interest
                                        12.7p     11.2p     24.4p

Dividends Per Share
Dividends relating to reporting
period
     Interim dividend (2005 and         5.30p     5.19p     5.19p
     2004)
     Final dividend (2004)                  -         -    10.65p
Total                                   5.30p     5.19p    15.84p

Dividends declared and paid in
reporting period
     Current period interim                 -         -     5.19p
     dividend
     Final dividend for prior          10.65p    10.29p    10.29p
     period
Total                                  10.65p    10.29p    15.48p

* Total income tax expense comprises tax attributable to policyholders and
unallocated surplus of with profits funds, unit linked policies and
shareholders.

IFRS BASIS RESULTS

STATUTORY BASIS RESULTS

                                Half Year 2005
CHANGES IN EQUITY            Share-   Minority    Total
                           holders'   interest   equity
                             equity
                               GBPm       GBPm     GBPm
Statement of
Recognised Income and
Expense

Net income                      300          5      305

Items taken directly
to equity:
    Exchange movements          183                 183

    Movement on cash            (7)        (1)      (8)
    flow hedges

    Unrealised
    valuation
    movements on
    securities
    classified as
    available-for-sale
    from 1 January
    2005 (see note H)
        Gross change           (63)          1     (62)
        Related change           14                  14
        to
        amortisation
        of deferred
        acquisition
        costs
    Related tax                  48                  48

Total recognised                475          5      480
income for the period

Cumulative effect of            236        (3)      233
changes in accounting
policies on adoption
of IAS32, IAS39, and
IFRS4, net of
applicable taxes at 1
January 2005 (note G)

Total recognised                711          2      713
income and expense

                                Half Year 2004
CHANGES IN EQUITY            Share-   Minority    Total
                           holders'   interest   equity
                             equity
                               GBPm       GBPm     GBPm
Statement of
Recognised Income and
Expense

Net income                      233          7      240

Items taken directly
to equity:
    Exchange movements         (32)                (32)

    Movement on cash
    flow hedges

    Unrealised
    valuation
    movements on
    securities
    classified as
    available-for-sale
    from 1 January
    2005 (see note H)
        Gross change
        Related change
        to
        amortisation
        of deferred
        acquisition
        costs
    Related tax                   5                   5

Total recognised                206          7      213
income for the period

Cumulative effect of
changes in accounting
policies on adoption
of IAS32, IAS39, and
IFRS4, net of
applicable taxes at 1
January 2005 (note G)

Total recognised                206          7      213
income and expense

                                Full Year 2004
CHANGES IN EQUITY            Share-   Minority    Total
                           holders'   interest   equity
                             equity
                               GBPm       GBPm     GBPm
Statement of
Recognised Income and
Expense

Net income                      517        (1)      516

Items taken directly
to equity:
    Exchange movements        (172)               (172)

    Movement on cash
    flow hedges

    Unrealised
    valuation
    movements on
    securities
    classified as
    available-for-sale
    from 1 January
    2005 (see note H)
        Gross change
        Related change
        to
        amortisation
        of deferred
        acquisition
        costs
    Related tax                  12                  12

Total recognised                357        (1)      356
income for the period

Cumulative effect of
changes in accounting
policies on adoption
of IAS32, IAS39, and
IFRS4, net of
applicable taxes at 1
January 2005 (note G)

Total recognised                357        (1)      356
income and expense



                              Half Year 2005
                            Share-   Minority    Total
                          holders'   interest   equity
                            equity
                              GBPm       GBPm     GBPm
Reconciliation of
movement on equity

Share capital and
share premium

Proceeds from rights
issue, net of
expenses
Other new share                 40                  40
capital subscribed

Treasury shares

    Consideration                0                   0
    paid for own
    shares purchased
    in respect of
    share based
    payment plans
    Movement on                (5)                 (5)
    Prudential plc
    shares purchased
    by unit trusts
    newly
    consolidated
    under IFRS

Other reserves

Total recognised               711          2      713
income for the
period (as shown
above)
Dividends                    (253)               (253)
Reserve movements in             6                   6
respect of share
based payments
Change in minority                        (9)      (9)
interest arising
principally from
purchase and sale of
venture investment
companies and
property
partnerships of the
PAC with-profits
fund

Net increase in                499        (7)      492
equity

At beginning of
period:
    As previously            4,281         71    4,352
    reported under
    UK GAAP
    Changes arising            209         74      283
    from adoption of
    IFRS
As restated under            4,490        145    4,635
IFRS

At end of period             4,989        138    5,127

                              Half Year 2004
                            Share-   Minority    Total
                          holders'   interest   equity
                            equity
                              GBPm       GBPm     GBPm
Reconciliation of
movement on equity

Share capital and
share premium

Proceeds from rights
issue, net of
expenses
Other new share                 61                  61
capital subscribed

Treasury shares

    Consideration                0                   0
    paid for own
    shares purchased
    in respect of
    share based
    payment plans
    Movement on                  0                   0
    Prudential plc
    shares purchased
    by unit trusts
    newly
    consolidated
    under IFRS

Other reserves

Total recognised               206          7      213
income for the
period (as shown
above)
Dividends                    (214)               (214)
Reserve movements in             3                   3
respect of share
based payments
Change in minority                         27       27
interest arising
principally from
purchase and sale of
venture investment
companies and
property
partnerships of the
PAC with-profits
fund

Net increase in                 56         34       90
equity

At beginning of
period:
    As previously            3,240        107    3,347
    reported under
    UK GAAP
    Changes arising             56         30       86
    from adoption of
    IFRS
As restated under            3,296        137    3,433
IFRS

At end of period             3,352        171    3,523

                              Full Year 2004
                            Share-   Minority    Total
                          holders'   interest   equity
                            equity
                              GBPm       GBPm     GBPm
Reconciliation of
movement on equity

Share capital and
share premium

Proceeds from rights         1,021               1,021
issue, net of
expenses
Other new share                119                 119
capital subscribed

Treasury shares

    Consideration              (4)                 (4)
    paid for own
    shares purchased
    in respect of
    share based
    payment plans
    Movement on                 14                  14
    Prudential plc
    shares purchased
    by unit trusts
    newly
    consolidated
    under IFRS

Other reserves

Total recognised               357        (1)      356
income for the
period (as shown
above)
Dividends                    (323)               (323)
Reserve movements in            10                  10
respect of share
based payments
Change in minority                          9        9
interest arising
principally from
purchase and sale of
venture investment
companies and
property
partnerships of the
PAC with-profits
fund

Net increase in              1,194          8    1,202
equity

At beginning of
period:
    As previously            3,240        107    3,347
    reported under
    UK GAAP
    Changes arising             56         30       86
    from adoption of
    IFRS
As restated under            3,296        137    3,433
IFRS

At end of period             4,490        145    4,635


IFRS BASIS RESULTS

STATUTORY BASIS RESULTS

SUMMARY BALANCE SHEET                     30 June  30 June       31
                                             2005     2004 December
                                             GBPm     GBPm     2004
                                                  (note F)     GBPm
                                                           (note F)
Assets
Goodwill:
   Attributable to PAC with-profits fund      457      565      754
   (in respect of venture investment
   subsidiaries)
   Attributable to shareholders             1,366    1,504    1,461
   (principally in respect of the
   acquisitions of M&G and Asian
   businesses)
   Total                                    1,823    2,069    2,215

Deferred acquisition costs:
   PAC with-profits fund (note I)               -      875      798
   Other operations (note H)                1,858    2,088    2,122
   Total                                    1,858    2,963    2,920

Other non-investment and non-cash assets:
   Reinsurers' share of contract              648      775    1,018
   provisions
   Income tax recoverable                     193      235      159
   Deferred tax assets                      1,067      830      827
   Accrued investment income                1,726    1,760    1,731
   Other debtors                            3,388    2,163    1,179
   Other                                      768      500      952
   Total                                    7,790    6,263    5,866

Investments of long term business,
banking and other operations:
   Investment properties                   12,721   11,739   13,538
   Financial investments:
       Deposits                             6,784    3,134    5,173
       Equity securities and portfolio     61,560   49,977   54,466
       holdings in unit trusts
       Fixed income securities             79,442   76,448   76,301
       Loans and receivables               13,202   11,901   12,430
       Other                                3,530    1,950    2,564
   Total investments                      177,239  155,149  164,472

Cash and cash equivalents                   3,704    2,872    4,429

Total assets                              192,414  169,316  179,902

Equity and liabilities

Equity
Shareholders' equity (note K)               4,989    3,352    4,490
Minority interest                             138      171      145
Total equity                                5,127    3,523    4,635

Liabilities
Banking customer accounts                   6,451    6,699    6,607

Insurance liabilities:
   Contract liabilities (including
   amounts in respect of contracts
   classified as investment contracts     147,031  122,981  128,981
   under IFRS4 from 1 January 2005) -
   (note I)
   Unallocated surplus of with-profits
   funds (note I):
       Reflecting application of            8,883        -        -
       'realistic' basis provisions for
       UK regulated with-profits funds.
       Reflecting previous UK GAAP basis        -   11,818   16,186
       of provisioning

   Total insurance liabilities            155,914  134,799  145,167

Core structural borrowings of shareholder
financed operations other than Egg:
   Subordinated debt                        1,460    1,327    1,429
   Other                                    1,223    1,269    1,368
Total                                       2,683    2,596    2,797

Egg subordinated debt capital                 468      451      451
Operational borrowings attributable to      6,244    6,800    6,421
shareholder financed operations (note L)
Borrowings attributable to with-profits     1,665    1,849    2,077
funds (note L)
Other non-insurance liabilities:
   Obligations under funding, stock         3,774    4,469    3,504
   lending and sale and repurchase
   agreements
   Net asset value attributable to unit     1,073      719      808
   holders of consolidated unit trusts
   and similar funds
   Income tax liabilities                     958    1,038    1,054
   Deferred tax liabilities                 2,681    1,995    2,244
   Accruals and deferred income             1,514    1,354    1,700
   Other creditors                          2,690    1,962    1,502
   Provisions and other liabilities         1,172    1,062      935
   Total                                   13,862   12,599   11,747
Total liabilities                         187,287  165,793  175,267

Total equity and liabilities              192,414  169,316  179,902

IFRS BASIS RESULTS

STATUTORY BASIS RESULTS

SUMMARY CASH FLOW STATEMENT                            Half      Half
                                                       Year      Year
                                                       2005      2004
                                                       GBPm      GBPm
Net cash flows from operating activities (note
(i))

IFRS basis income, net of post-tax transfers to         642       644
unallocated surplus of with-profits funds,
before tax attributable to policyholders and
unallocated surplus of with-profits funds, unit
linked policies and shareholders (note D)
Changes in operating assets and liabilities           (693)     (151)
Other items                                            (52)     (160)
                                                      (103)       333
Net cash flows from investing activities
Net cash flows from purchases and disposals of         (52)      (35)
property and equipment
Acquisition of subsidiaries of business               (141)         -
operations (Life Insurance Company of Georgia)
(note (ii))
                                                      (193)      (35)
Net cash flows from financing activities
Structural borrowings of the Group:
    Shareholder financed operations (note (iii))
      (Redemption) Issue                              (171)        41
      Interest paid                                    (95)      (85)
    With-profits operations (note (iv))
      Interest paid                                     (9)       (9)
Equity capital:
    Issues of ordinary share capital                     40        61
    Dividends paid to shareholders                    (253)     (214)
                                                      (488)     (206)

Effect of exchange rate changes on cash and cash         59      (20)
equivalents
Net (decrease) increase in cash and cash              (725)        72
equivalents
Cash and cash equivalents at beginning of period      4,429     2,800
Cash and cash equivalents at end of period (note      3,704     2,872
(v))

Notes

(i) The adjusting items to IFRS basis income include changes in operating assets
and liabilities, and other items comprising adjustments in respect of non-cash
items, operational interest receipts and payments, dividend receipts, income tax
paid and cash flows in respect of assets categorised as available for sale
investments. The most significant elements of the adjusting items are the
changes in operating assets and liabilities made up as follows:

                                                    Half        Half
                                                    Year        Year
                                                    2005        2004
                                                    GBPm        GBPm
     Deferred acquisition costs (excluding          (35)        (34)
     changes taken directly to equity)
     Other non-investment and non-cash           (1,379)     (1,048)
     assets
     Investments                                 (7,870)     (2,613)
     Banking customer accounts                     (240)       (838)
     Insurance liabilities (including              8,534       1,694
     unallocated surplus)
     Other liabilities including                     297       2,688
     operational borrowings

   Changes in operating assets and                 (693)       (151)
   liabilities

(ii) Purchases and sales of subsidiaries shown above are those of business
operations. Purchases and sales of venture subsidiaries of the PAC with-profits
fund and cash flows of investment funds that are subject to changes in
consolidation status are accounted for in the same way as for cash flows in
respect of portfolio investments, that is within operating cash flows.

(iii) Structural borrowings of shareholder financed operations consists of the
core debt of the parent company and related finance subsidiaries, Jackson
National Life surplus notes and Egg debenture loans. Core debt excludes
borrowings to support short-term fixed income securities reinvestment programmes
and non-recourse borrowings of investment subsidiaries of shareholder financed
operations. Cash flows in respect of these borrowings are included within
operating cash flows.

(iv) Structural borrowings of with-profits operations relate solely to the
GBP100m 8.5% undated subordinated guaranteed bonds which contribute to the
solvency base of the Scottish Amicable Insurance Fund (SAIF) a ring fenced
sub-fund of the PAC with-profits fund. Cash flows on other borrowings of
with-profits funds, which principally relate to venture investment subsidiaries,
are categorised as operating activities in the presentation above.

(v) Previously, under UK GAAP, following the requirements of FRS1 ("Cash Flow
Statements"), the Group's statutory basis cash flow statement excluded the cash
flows of long-term business funds. Under IFRS the cash flow statement comprises
consolidated cash flows for the Group as a whole, including those of long-term
business funds. Of the cash and cash equivalents amounts of GBP3,704m and
GBP2,872m, GBP42m and GBP93m represent cash and cash equivalents of the parent
company and related finance subsidiaries.

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