Dear Shareholders,
 

	Half year ended 30 June		Full year
Analysis by Business Area	1998 £m	1997 £m	1997 £m
Operating profit (including investment returns based on long-term rates of investment return for long- term business)
UK operations
Long-term business
New business	131	119	208
Business in force	127	166	362
Total long-term business	258	285	570
General business	23	37	51
Banking	(9)	(10)	(22)
Total UK operations	272	312	599
Jackson National Life
New business	63	70	140
Business in force	132	121	250
Total Jackson National Life	195	191	390
Prudential Asia
Long-term business
New business	16	30	62
Business in force	17	14	29
Total long-term business	33	44	91
Development expenses	(4)	(6)	(9)
Total Prudential Asia	29	38	82
Australia and New Zealand
New business	4	4	8
Business in force	4	10	23
Total Australia and New Zealand	8	14	31
Prudential Portfolio Managers	27	18	44
Other income
Shareholders' investment return	94	79	159
Interest payable	(49)	(33)	(75)
Corporate expenditure	(19)	(13)	(32)
Total other income	26	33	52
Total operating profit	557	606	1,198

	Half year ended 30 June		Full year
Results Summary	1998 £m	1997 £m	1997 £m
Operating profit (including investment returns based on long-term rates of investment return for long-term business)
Long-term business
New business	214	223	418
Business in force	276	305	655
Total long-term business	490	528	1,073
General business	23	37	51
Banking	(9)	(10)	(22)
Other activities	53	51	96
Total operating profit	557	606	1,198
Adjustment from long-term to actual investment gains	444	342	507
Loss from changes to UK projected long-term rate of investment return and risk discount rate	-	(184)	(184)
Reclassification of shareholder reserves of Australian operation	-	187	187
Profit on ordinary activities before tax (including actual investment gains)	1,001	951	1,708
Tax	(299)	(293)	(519)
Profit for the period	702	658	1,189
Dividends	(136)	(124)	(370)
Retained profit for the period	566	534	819
Earnings per Share
Operating profit after tax	£391m	£399m	£837m
Operating earnings per share	20.1p	20.7p	43.3p
Total profit after tax	£702m	£658m	£1,189m
Total earnings per share	36.2p	34.1p	61.5p
Average number of shares	1,941m	1,927m	1,932m
Movement in Shareholders' Capital and Reserves
Profit for the period	702	658	1,189
Exchange movements	(40)	19	(64)
Goodwill charged on acquisitions	-	(21)	(460)
New share capital subscribed	26	35	44
Dividends	(136)	(124)	(370)
Net increase in shareholders' capital and reserves	552	567	339
Shareholders' capital and reserves at beginning of period	6,912	6,573	6,573
Shareholders' capital and reserves at end of period	7,464	7,140	6,912

Other investments, which comprise mortgages and loans to policyholders, are stated after deduction of amounts due by Jackson National Life under sale and repurchase agreements.

Notes on the supplementary achieved profits basis results
(a) The results have been prepared in accordance with the draft “Guidance on accounting in Group Accounts for proprietary companies’ long-term insurance business” issued by the Association of British Insurers and are provided as a supplement to the statutory basis results contained in this report.

(b) The results for the 1998 and 1997 half years are unaudited. The results for the 1997 full year have been derived from the achieved profits basis results supplement to the Company’s statutory accounts. The supplement included an unqualified report from the auditors.