STRATEGIC REPORT
23
Retirement income SALES 1 – £2,145.3m Retirement Income sales include DB, GIfL and Care premiums written and are a key measure of the Group’s performance in these core product areas. Retirement Income sales are reconciled to IFRS gross premiums in note 6 to the consolidated financial statements.
ADJUSTED OPERATING PROFIT BEFORE TAX 1 – £239.3m
Adjusted operating profit before tax is the sum of the new business operating profit and in-force operating profit together with the impact of one-off assumption changes, experience variances, results of the other Group companies and financing costs. The Board believes that adjusted operating profit, which excludes effects of short-term economic and investment changes, provides a better view of the longer-term performance and development of the business and aligns with the longer-term nature of the products. Adjusted operating profit is reconciled to IFRS profit before tax on page 27.
2020
239.3
2020
2,145.3
1,918.1
218.6
2019
2019
2,173.5
210.3
2018
2018
0
500
1,000
1,500
2,000
2,500
0
50
100
150
200
250
Link to strategic objective
Link to strategic objective
2. 3. 4. 5. 1.
2. 3. 4. 5. 1.
NEW BUSINESS OPERATING PROFIT 1 – £199.2m New business operating profit represents the profit generated from new business written in the year after allowing for the establishment of prudent reserves for future expected annuity payments and maintenance expenses and for acquisition expenses. Acquisition expenses include the commission and trading costs, plus overhead costs, associated with writing new business. New business operating profit is reconciled to IFRS profit before tax in the Financial Review.
IFRS PROFIT BEFORE TAX – £236.7m IFRS profit before tax represents the profit before tax attributable to equity holders.
199.2
236.7
2020
2020
182.0
368.6
2019
2019
243.7
(85.5)
2018
2018
0
50
100
150
200
250
-100
0
100
200
300
400
Link to strategic objective
Link to strategic objective
2. 3. 4. 5. 1.
2. 3. 4. 5. 1.
MANAGEMENT EXPENSES 1 – £159.3m Management expenses are the business as usual costs incurred and include all operational overheads. They are calculated as other operating expenses excluding investment expenses and charges and reassurance management fees, which are largely driven by strategic decisions, and amortisation of acquired intangible assets as these relate to merger and acquisition activity. The use of this metric provides the Board with a better view of the Group’s cost base and how they support both development and transformation and business as usual activities, ensuring that they are able to be carefully monitored and controlled. Other operating expenses continue to be a useful measure alongside management expenses. Management expenses are reconciled to IFRS other operating expenses in note 5 on page 120.
IFRS NET ASSETS – £2,490.4M IFRS net assets represents the net assets attributable to equity holders.
2020
2,490.4
2020
159.3
2,321.0
2019
169.0
2019
1,663.8
2018
177.9
2018
0
50
100
150
200
0
500
1,000
1,500
2,000
2,500
Link to strategic objective
Link to strategic objective
2. 3. 4. 5. 1.
2. 3. 4. 5. 1.
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