FY14 Part 1 of 5
"These results show tangible progress, with all key metrics moving in the right direction. Cash is up 65%, operating earnings per share is up 10%1, value of new business is up 15%2 and book value is 26% higher. Operating expenses are £571 million lower than our 2011 base-line, debt ratios are down and our full year combined ratio of 95.7% is the best in eight years.
"We have increased our final dividend by 30% to reflect the progress made during the year and our improved financial position. We have entered 2015 in a position of strength.
"Nevertheless, it would be wrong to assume that our turnaround is nearing completion as we have further to travel than the distance we have come."
Cash flow
· Holding company excess cash flow3 up 65% to £692 million (FY13: £420 million), vs. 2016 target of £800 million
· Cash remittances up 11% to £1,412 million (FY13: £1,269 million)
·
Final dividend up 30% to 12.25p. Total dividend 18.1p (FY13: 15.0p)
Profit
· Operating profit1 6% higher at £2,173 million (FY13: £2,049 million)
· Operating EPS1 up 10% to 47.0p (FY13: 42.6p)
· Life back book actions contributed £282 million to operating profit (FY13: £116 million)
· IFRS profit after tax1 up 91% to £1,680 million (FY13: £878 million)
Value of new business
· Value of new business (VNB) grew 15%2 to a record £1,009 million (FY13: £904 million)
· Growth markets of Poland, Turkey and Asia4 grew 25%2 and now make up 22% of VNB4
· UK Life VNB was constant at £473 million (FY13: £469 million) despite changes to annuity market
Expenses
· Operating expense ratio of 51.5% (FY13: 54.1%1), vs. target of <50% by the end of 2016
· £571 million of operating expense saves achieved against original target of £400 million
Combined operating ratio
· Combined operating ratio (COR) of 95.7% (FY13: 97.3%)
· UK COR of 94.8% (FY13: 97.0%)
· Canada COR of 96.1% (FY13: 94.6%)
Balance sheet
· IFRS net asset value per share increased 26% to 340p (FY13: 270p), benefitting from retained earnings and a gain in the pension surplus
· External leverage ratio 41% of tangible capital (FY13: 48%), 28% on an S&P basis (FY13: 31%)
· Intercompany loan balance of £2.8 billion at end of February 2015 (February 2014: £4.1 billion)
· Economic capital surplus5 £8.0 billion including £0.4 billion deduction from dividend proposed in December 2014 (FY13: £8.3 billion)