The Board's focus in 2010 was on restructuring the Group,
reducing debt and improving financial performance. I am pleased to
be able to report substantial progress towards our short-term
performance goals and a good start towards attainment of our
medium-term restructuring targets.
Patrick O'Sullivan
Chairman
In 2010 we started to deliver on our promises, and
we remain firmly focused on achieving our goals.
Overview of 2010
The Board's focus in 2010 was on restructuring the Group,
reducing debt and improving financial performance. I am pleased to
be able to report substantial progress towards our short-term
performance goals and a good start towards attainment of our
medium-term restructuring targets.
The Company achieved adjusted operating earnings per share on an
IFRS basis of 16.0p for the year, a very satisfactory 38% increase
over the 11.6p for 2009 (as restated). The results reflect
management's determination to improve underlying performance in our
various businesses while setting industry-leading risk management
standards in our operations.
The sale of our US Life business, expected to complete soon,
will improve the Group's overall risk profile significantly. We
have taken a write-down of £827m in the value of US Life, based on
the agreed sale transaction terms, leading to a loss from
discontinued operations of £713m and an overall Group basic IFRS
loss for the year of £24m.
Building on our leading presence in South African markets, we
are making progress in transforming our Long-Term Savings business
- not only in Emerging Markets, but also in those developed markets
of Europe where we have or can build sustainable competitive
advantage. Although we were disappointed that negotiations to sell
our controlling stake in Nedbank fell through during the year for
reasons beyond our control, we remain very satisfied with the
earnings stream from this investment and continue to see the bank
as a key contributor to the Group. The Group is committed to
achieving its target, announced in March 2010, of reducing debt by
an aggregate £1.5 billion by the end of 2012.
Board developments
At the start of my chairmanship, I committed to a gradual
restructuring of the Board. This process is well under way. Richard
Pym retired from the Board in August 2010 at the end of his first
three-year term because of the pressure of other commitments. He
was replaced by Roger Marshall, who joined as an independent
non-executive director and succeeded Richard as chairman of our
Group Audit Committee. Alan Gillespie joined as an independent
nonexecutive director in November 2010. He will succeed Rudi Bogni
as our Senior Independent Director when Rudi retires at the 2011
AGM. Nigel Andrews also retires at this year's AGM. We were
delighted to announce the appointment of our first female director
at plc level, Eva Castillo, in February 2011.
I would like to extend my thanks to Richard, Rudi, Nigel and the
other non-executive directors for their wisdom and contribution
during my first year in the chair and their willingness to commit
their knowledge and experience in helping reshape our strategy. In
formally welcoming Eva, Roger and Alan, I know we have a Board
which can face up to the challenges of strategy implementation and
future growth. We continue to look to renew and refresh the Board's
mix of skills and experience from a broad stakeholder point of
view.
On behalf of my Board colleagues, I would also like to express
our sincere appreciation for the continued dedication and efforts
of the Group's employees during 2010 - especially to our colleagues
at Nedbank, for their focus on delivering improved results during a
period of significant uncertainty.
Dividend
The Board is recommending an increased final dividend for the
year ended 31 December 2010 of 2.9p per share (or its equivalent in
other applicable currencies). It will be paid on 31 May 2011,
subject to approval by shareholders at this year's AGM. Together
with the interim dividend of 1.1p per share paid in November 2010,
this makes a total of 4.0p for the year. The Board has confirmed
its commitment to a progressive dividend policy for the future.
Following the successful launch of our scrip dividend scheme
last year, we are again offering eligible shareholders the
opportunity to increase their shareholdings in the Company by
receiving new shares instead of the cash dividend. Further details
of how to participate in the scheme are available on the Company's
website.
Annual General Meeting
This year's AGM will again be webcast from our offices in
London, where it will take place on Thursday 12 May 2011. There
will be an opportunity for shareholders to submit questions in
advance, if they wish, to be dealt with during the AGM. The AGM
circular enclosed with this report includes further details of the
webcast, the resolutions to be proposed and the procedure for
submitting questions ahead of the meeting.
Future
In 2010 we started to deliver on our promises, and we remain
firmly focused on achieving our remaining goals.
This Group has an illustrious past, which has been tarnished by
some poor strategic decisions during the past 11 years. We have
begun reshaping and improving our businesses and financial
structure so that the next decade will see us delivering real
shareholder value and playing our full part in the continued
development of the markets in which we operate, while recognising
the opportunities and commitments that come with our position in
South Africa.
Patrick O'Sullivan
Chairman
8 March 2011
