FINANCIAL HIGHLIGHTS - 31 december 2013

Operating companies’ cash generation £817 million (31 December 2012: £690 million)

Continued strong cash generation of £817 million by the Group's operating companies enabled the Group to exceed its 2013 target for cash generation of £650 million to £750 million. Management actions in themselves generated cash flows of £332 million, mainly relating to the annuity transaction with Guardian Assurance Limited ('Guardian') and other de-risking activities.

Group MCEV £2,378 million (31 December 2012: £2,122 million)

Group MCEV increased by £256 million at 31 December 2013, benefiting from the net proceeds of the equity raise of £232 million and value enhancing management actions which have delivered an incremental uplift to MCEV of £170 million.

Group IFRS operating profit £439 million (31 December 2012: £429 million)

Group IFRS operating profit has increased by £10 million to £439 million due to one-off benefits generated from ongoing system and modelling improvements of £98 million (2012: £117 million) and the positive impact of assumption changes compared to the prior year, partly offset by the natural life company run-off.

IGD surplus (estimated) £1.2 billion (31 December 2012: £1.4 billion)

The estimated IGD surplus has decreased to £1.2 billion following dividend payments, debt financing and repayments of £0.6 billion in the period net of proceeds from the equity raise, partly offset by £0.4 billion of capital items. The surplus of £1.2 billion represents headroom of £0.5 billion (2012: £0.6 billion) over the Group’s IGD capital policy.

Gearing ratio - new methodology
44% (31 December 2012: 55%)

Gearing reduced to 44% at 31 December 2013 reflecting the net proceeds of the equity raise of £232 million, enhancing management actions and debt repayments of £696 million during the year.

Interim dividend per share 53.4 pence per share (31 December 2012: 47.7 pence per share)

The Board has recommended a final dividend of 26.7p per share bringing the total dividend for the year to 53.4p per share. The final dividend is due to be paid on 2 May 2014, subject to compliance with the processes set out in the Group’s main loan facilities and shareholder approval at the Company’s AGM.

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