Las tipologías textuales

Tax services 0.4 0.6

Other services not covered above 1.5 1.4

Total remuneration 5.3 5.0

In addition to the above, fees payable to the Company’s auditor and its associates for audit services supplied to the Company’s associated pension schemes amounted to £nil (2007: £0.1m).

G ro u p F in a n c ia l S ta te m e n ts 8 Employee information 2008 2007

Average number of staff employed during the year:

UK 8,999 9,296 Europe 360 363 USA 418 408 Worldwide employees 9,777 10,067 2008 2007 Notes £m £m Salaries 330 330

Social security costs 39 43

Share-based incentive awards 23 18 Defined benefit pension costs 39 58 39 Defined contribution pension costs 39 25 21

475 451

9 Profit before income tax

2008 2007

Notes £m £m

The following items have been included in arriving at profit before income tax:

– Depreciation on plant and equipment 16 23 20 – Amortisation of purchased interest in long term businesses and other intangibles 21 30 3 – Operating lease rentals 24 25 – Reinsurance commissions (10) (14) – Direct operating expenses arising from investment properties which generate rental income 19 16 During the year, the Group entered into prospective reinsurance arrangements which resulted in a profit of £130m (2007: £145m). This profit has been reflected in the consolidated income statement for the year.

10 Foreign exchange and exchange rates

Loss for the year includes foreign exchange gains on financial instruments. The gain for the year also includes foreign exchange gains of £11m (2007: losses of £268m) arising on conversion of monetary assets and liabilities to functional currencies.

Principal rates of exchange used for translation are:

01.01.08- 01.01.07-

31.12.08 2008 31.12.07 2007

Average Year end Average Year end

United States Dollar 1.85 1.44 2.00 1.99

Euro 1.26 1.03 1.46 1.36

11 Income tax (credit)/expense

2008 2007

£m £m

Current tax

– Current tax for the year 103 261 – Adjustments in respect of prior years 1 2

Total current tax 104 263

Deferred tax

– Origination and reversal of temporary differences (1,127) (186)

Total income tax (credit)/expense (1,023) 77

Represented by:

Income tax credit attributable to policyholder returns (662) (88) Income tax (credit)/expense attributable to equity holders (361) 165

Notes to the Financial Statements (continued)

11 Income tax (credit)/expense (continued)

The Group uses estimates to apportion the income tax expense of Society between the elements attributable to policyholder returns and equity holders’ profits. The net equity holders’ profit from UK long term business has borne tax at the effective equity holder tax rate. For participating business and certain non profit business this is sufficiently close to the standard rate of UK corporation tax for that rate to be used in the financial statements. For the remaining non profit business, the effective equity holder tax rate is used. For equity holders’ funds within Society’s LTF, the equity holder income tax is the income tax attributed to the return on those funds. The balance of income taxes associated with UK long term business profits is then classified as income tax attributable to policyholders’ returns. There is no definitive method of calculating the effective equity holder tax rate. A number of alternative methods are consistently used, in order to assess the validity of using the standard rate of UK corporation tax.

For international long term business the equity holder income tax is the total income tax in respect of profits earned from that business. The tax assessed for the year is lower (2007: lower) than the standard corporation tax rate applicable to companies operating in the UK of 28.5% (2007: 30%). The differences are explained below:

2008 2007

£m £m

Income tax (credit)/expense calculated at standard UK corporation tax rate (614) 239

Effects of:

Income tax credit relating to policyholder returns (474) (62)

Disallowable expenditure 5 5

Non taxable income including UK dividends (15) (12) Adjustments in respect of prior years 1 1 Differences between taxable and accounting investment gains/losses 7 (15) Difference between taxable and accounting acquisition costs (6) –

Unrelieved tax losses 47 –

Overseas tax 6 (1)

No tax in respect of property losses attributable to minority interests 18 2 Higher tax on SRC investment return 2 22 Difference between tax relief and accounting expense for share releases and option exercises (1) 3 No tax in respect of merger of 1996 Sub-fund with SRC – (96) Reduction in UK corporate tax rate 3 (9)

Other (2) –

Total income tax (credit)/expense (1,023) 77

2008 2007

£m £m

Deferred tax recognised directly in equity

Relating to net gains or losses recognised directly in equity (19) 10

Exchange gains 77 –

Deferred tax recognised directly in equity 58 10 No deferred tax is provided at the incremental rate on the undeclared surplus of £527m (2007: £2,047m) in Society’s LTF represented by the Shareholder Retained Capital (SRC), on the grounds that, at the balance sheet date, no obligation to make a declaration of surplus actually exists and there is no expectation that such a declaration will occur. The maximum amount of incremental tax which would crystallise on such a declaration of surplus is estimated to be £nil (2007: £nil).

12 Dividends and other distributions

Per share Total Per share Total

2008 2008 2007 2007

p £m p £m

Ordinary share dividends paid in the year

– Prior year final dividend 4.10 248 3.81 248 – Current year interim dividend 2.01 119 1.87 121

6.11 367 5.68 369

Ordinary share dividend proposed1 _{2.05 120 4.10 247} 1. The proposed current year dividend has not been included as a liability in the balance sheet.

G ro u p F in a n c ia l S ta te m e n ts

13 Earnings per share

Earnings per share have been calculated using the weighted average number of ordinary shares in issue and the (losses)/profits for the financial year. Reconciliations of the earnings and weighted average numbers of shares used in the calculations are set out below:

Based on (loss)/profit attributable to equity holders

Loss Number Earnings Profit Number Earnings

after tax of shares1 _{per share after tax of shares}1 _{per share}

2008 2008 2008 2007 2007 2007

£m m p £m m p

(Loss)/profit attributable to equity holders of the Company (1,067) 5,968 (17.88) 724 6,444 11.24 Net shares under options allocable for no further consideration2 _{– 22 – – 34 (0.06)}

Diluted earnings per share (1,067) 5,990 (17.88) 724 6,478 11.18

The number of shares in issue at 31 December 2008 was 5,861,627,994 (2007: 6,296,321,160).

1. Weighted average number of shares.

2. Net shares under options allocable for no further consideration are anti-dilutive and have therefore been excluded from the diluted earnings per share calculation.

14 Share-based payments

The fair values of the share grants made during the year have been calculated using the following assumptions: