Prudential has continued to make real progress in developing its retail financial services and fund management operations around the world. In particular, we have set about vigorously reshaping the structure of our UK operations in order to improve customer focus, management accountability and business performance. We are pleased with our progress to date and the new structure of individual business units and their management teams is now in place. Overseas, Jackson National Life continues to show strong profit growth and to demonstrate the benefits of its product and distribution channel diversification. In Asia we have taken advantage of opportunities to strengthen our position in the region.

Earlier this month, Prudential announced its total estimated costs for compensation in Phases I and II of the pensions review currently underway within the UK. As I mentioned in the 1997 Annual Report, this issue has been a setback for us and the effect on our reputation is a matter of great regret. I reiterate my statement that we are determined to seek final resolution of this issue and that customers of Prudential will not suffer from any loss as a result of mis-selling. The total estimated costs of £1.1 billion have been included within the Group’s reserves and have been provided from the capital of the long-term fund. Given the strength of the long-term fund, the directors are of the opinion that this will not have an adverse effect on the levels of bonus paid to policyholders or their reasonable expectations. In the unlikely event of this proving not to be the case, the directors’ intention would be to make an appropriate contribution to the long-term fund from shareholder funds.

Prudential’s strategy is to focus on developing its retail financial services and fund management activities in its chosen markets. The action we are taking around the Group and the restructuring we have initiated within the UK are important steps towards achieving this goal.