Preliminary results - 12 months ended 31 December 2006 01 March 2007

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1. Basis of preparation – IFRS basis

1. From 2005, all European Union listed companies were required to prepare consolidated financial statements using International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and endorsed by the European Union. The results in this preliminary announcement have been prepared in accordance with IFRS applicable at 31 December 2006 and have been taken from the Group’s Annual Report and Accounts.
   The preliminary announcement for the year ended 31 December 2006 does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The results on an IFRS basis for the full years 2006 and 2005 have been audited by Ernst & Young LLP. The auditors have reported on the 2005 and 2006 accounts and their reports were unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. The Group’s 2005 Report and Accounts have been filed with the Registrar of Companies.
2. In August 2005, the IASB issued IFRS 7, Financial Instruments: Disclosures, and an amendment to IAS 1, Capital Disclosures. Although their requirements are applicable for accounting periods beginning on or after 1 January 2007, the Group has decided to adopt IFRS 7 early and reflect its impact in the financial statements. The amendment to IAS 1 brings the capital disclosures into line with those already required by FRS 27 and, although the Group is not adopting it early, this is not expected to result in any material additional disclosures.
3. Items included in the financial statements of each of the Group’s entities are measured in the currency of the primary economic environment in which that entity operates (the “functional currency”). The consolidated financial statements are stated in sterling, which is the Company’s functional and presentation currency. Unless otherwise noted, the amounts shown in the financial statements are in millions of pounds sterling (£m). As supplementary information, consolidated financial information is also presented in euros.
4. In accordance with Phase I IFRS 4, Insurance Contracts, the Group has applied existing accounting practices for insurance and participating investment contracts, modified as appropriate to comply with the IFRS framework and applicable standards.
5. The results of the Group’s fund management business in the Netherlands were previously reported within the results of our other operations but are now shown as part of our fund management operations. The result reclassified in the year ended 31 December 2006 is £37 million (2005: £32 million). The related assets and liabilities reclassified at 31 December 2006 are £63 million (31 December 2005: £54 million) and £18 million (31 December 2005: £15 million), respectively.