2018 2017 2016

Assets
Cash & cash equivalents 12125 10690 10065
Short-term investments - - -
Other investments 6512 5622
Net receivables 670 542 493
Inventories - - -
Prepaid expenses & other expenses - - -
Property, plant & equipment, net 1409 789 743
Identified intangible asset, net 11923 11011 10807
Goodwill 1857 1482 1628
Deferred income taxes & other assets 2595 2627 4315
Equity securities and portfolio holdings in unit 214733 223391 198552
trusts
Debt securities 175356 171374 170458
Total assets 508645 493941 470498
Liabilities & Stockholders’ Equity
Current liabilities:
Insurance contract liabilities 322666 328172 316436
Investment contract liabilities with discretionary 67413 62677 52837
participation features
Investment contract liabilities without 19222 20394 19723
discretionary participation features
Unallocated surplus of with-profits funds 15845 16951 14317
Accounts payable 2363 2296 2520
Accruals, deferred income and other liabilities 15248 14185 13825
Current tax liabilities 568 537 649

Non-current liabilities:
Long-term debt 12016 11251 9347
Deferred taxes liabilities 4022 4715 5370
Liabilities held for sale 10568 - 4293
Accruals, deferred income and other liabilities 15248 14185 13825
Total liabilities 491378 477847 455831
Stockholders’ Equity
Common Stock 130 129 129
Retained Earnings 14206 12326 10942
Accumulated other comprehensive income - - -
Total stockholders' equity 17249 16087 14666
Total liabilities & stockholders’ equity 508645 493941 470498

2018 2017 2016

Assets

Cash & cash equivalents 2.38% 2.16% 2.14%

Short-term investments - - -

Other investments 1.28% 1.14% 1.16%

Net receivables 0.13% 0.11% 0.10%

Inventories - - -
Prepaid expenses & other expenses - - -

Property, plant & equipment, net 0.28% 0.16% 0.16%

Identified intangible asset, net 2.34% 2.23% 2.30%

Goodwill 0.37% 0.30% 0.35%

Deferred income taxes & other assets 0.51% 0.53% 0.92%

Equity securities and portfolio holdings in unit 42.21% 45.23% 42.20%

trusts
Debt securities 34.47% 34.70% 36.23%
Total assets 100% 100% 100%

Liabilities & Stockholders’ Equity:

Current liabilities:

Insurance contract liabilities 63.47% 66.44% 67.26%

Investment contract liabilities with discretionary 13.25% 12.69% 11.23%
participation features
Investment contract liabilities without 3.78% 4.13% 4.19%
discretionary participation features
Unallocated surplus of with-profits funds 3.16% 3.43% 3.04%
Accounts payable 0.46% 0.46% 0.54%

Accruals, deferred income and other liabilities 3.00% 2.87% 2.94%

Current tax liabilities 0.12% 0.11% 0.14%

Non-current liabilities:
Long-term debt 2.36% 2.28% 1.99%

Deferred taxes liabilities 0.79% 0.96% 1.14%

Liabilities held for sale 2.08% - 0.91%

Accruals, deferred income and other liabilities 3.00% 2.87% 2.94%
Total liabilities 96.61% 96.74% 96.88%

Stockholders’ Equity:

Common Stock 0.26% 0.26% 0.27%

Retained Earnings 2.79% 2.50% 2.33%

Accumulated other comprehensive income - - -

Total stockholders' equity 3.39% 3.26% 3.12%

Total liabilities & stockholders’ equity 100% 100% 100%

 Asset:

Overall, the three periods of Prudential plc’s share the same patterns. On the asset
side, Cash & Cash equivalents remains at a low level and take up small amount in
the balance sheet (about 2%) and showed an upward trend (increased from 2.14%
in 2016 to 2.38% in 2018). Although this is not a significant change, this still
illustrates that the company’s liquidity is increasing. However, Prudential plc
should cut back more on short-term expense and pay off its liabilities to fasten the
process of increasing liquidity. Higher liquidity will keep the firm financially
healthy. Another component of the balance sheet that we should take into
consideration is the Equity securities and portfolio holdings in unit trust. As can be
seen from the figures, securities accounts for a large percentage in Prudential plc’s
balance sheet (about 40% for equity securities and 35% for debt securities). These
assets also have high liquidity and show that the company is utilizing its capital to
invest.

 Liabilities and Stockholders’ Equity:

On the liabilities and stockholders’ equity side, it can be interpreted that the
company is holding a huge amount of liabilities, the figures from 2016 to 2018
illustrate that about 65% of the company’s liabilities (63.47% in 2018, 66.44% in
2017 and 67.26%) come from insurance contract liabilities, which results into high
percentage of current liabilities and total liabilities. Another addition to the total
amount of liabilities is long-term debt, the figure slightly increased from 2.28% in
2017 to 2.36% in 2018. Stockholders’ equity accounts for a significantly small
amount compared to liabilities (3.39% in 2018). However a positive sign can be
foreseen when stockholders’ equity rose consecutively from 3.12% in 2016 to
3.26% in 2017 to 3.39% in 2018, which means that the company may be earning
some profit.

2018 2017 2016

Cash flows from operating activities
Profit before tax 3309 3970 3212
Adjustments to profit before tax for non-cash
movements in operating assets and liabilities:
Investments 15456 (49771) (37824)
Other non-investment and non-cash assets (3503) (968) (2490)
Policyholder liabilities (including unallocated (17392) 44877 31135
surplus)
Other liabilities 4344 3360 7861
Interest income and expense and dividend income (7861) (8994) (9749)
included in result before tax
Other non-cash items 582 549 834
Operating cash items:
Interest receipts and payments 5793 6900 7886
Dividend receipts 2361 2612 2286
Tax paid (652) (915) (950)
Net cash flows from operating activities 2464 1620 2201
Cash flows from investing activities
Purchases of property, plant and equipment (289) (134) (348)
Proceeds from disposal of property, plant and 4 - 102
equipment
Acquisition of businesses and intangibles (504) (351) (303)
Sale of businesses - 1301 -
Net cash flows from investing activities (789) 816 (549)
Cash flows from financing activities
Structural borrowings of the Group:
Shareholder-financed businesses:
Issue of subordinated debt, net of costs 1630 565 1227
Redemption of subordinated debt (434) (751) -
Fees paid to modify terms and conditions of senior (33) - -
debt
Interest paid (376) (369) (335)
With-profits businesses:
Redemption of subordinated debt (100) - -
Interest paid (4) (9) (9)
Equity capital:
Issues of ordinary share capital 17 21 13
Dividends paid (1244) (1159) (1267)
Net cash flows from financing activities (544) (1702) (371)
Net increase in cash and cash equivalents 1131 734 1281

2018 2017 2016

Cash flows from operating activities

Profit before tax 292.57% 540.87% 250.74%

Adjustments to profit before tax for non-

cash movements in operating assets and
liabilities:

Investments 1366.58% -6780.79% -2952.69%

Other non-investment and non-cash -309.73% -131.88% -194.38%

assets

Policyholder liabilities (including -1537.75% 6114.03% 2430.05%

unallocated surplus)

Other liabilities 384.08% 457.77% 613.66%

Interest income and expense and dividend -695.09% -1225.34% -761.05%

income included in result before tax

Other non-cash items 51.46% 74.80% 65.10%

Operating cash items:

Interest receipts and payments 512.20% 940.05% 615.61%

Dividend receipts 208.75% 355.86% 178.45%

Tax paid -57.65% -124.66% -74.16%

Net cash flows from operating 217.86% 220.71% 171.82%

activities

Cash flows from investing activities

Purchases of property, plant and -25.55% -18.26% -27.17%

equipment

Proceeds from disposal of property, plant 0.35% - 7.96%

and equipment

Acquisition of businesses and intangibles -44.56% -47.82% -23.65%

Sale of businesses - 177.25% -

Net cash flows from investing activities -69.76% 111.17% -42.86%

Cash flows from financing activities

Structural borrowings of the Group:

Shareholder-financed businesses:
Issue of subordinated debt, net of costs 144.12% 76.98% 95.78%

Redemption of subordinated debt -3.84% -102.32% -

Fees paid to modify terms and conditions -2.92% - -

of senior debt

Interest paid -33.24% -50.27% -26.15%

With-profits businesses:

Redemption of subordinated debt -8.84% - -

Interest paid -0.35% -1.23% -0.70%

Equity capital:

Issues of ordinary share capital 1.50% 2.86% 1.01%

Dividends paid -110.00% -157.90% -98.91%

Net cash flows from financing activities -48.10% -231.88% -28.96%

Net increase in cash and cash 100% 100% 100%

equivalents

 Operating activities:

As can be seen from the table, net cash flows from operating activities’ doubles
that of net increase in cash and cash equivalents. This means that the firm has
generated sufficient cash inflows for business’s operations and has the ability to
pay off debt. However, profit before tax in 2018 declined nearly half of that of
2017 (from 540.87% in 2017 to 292.57% in 2018) but this is understandable and
still considered stable because 2017’s net cash flows from operating activities is
half of that of 2018 (2017: $734 million and 2018: $1131 million). Furthermore,
Investments increased drastically, the figure goes from negative in 2016 and 2017
(respectively -2952.69% and -6780.79%) to positive in 2018 (1366.58%) and
accounts for large amount in operating cash inflows, meaning that its previous
investments have succeeded and brought the company profits.

 Investing activities:

The figures for Prudential plc’s investing activities show a downward trend. Net
cash flows from investing activities decreased drastically from 111.17% in 2017 to
-69.76% in 2018. Similar patterns can be seen in other figures such as Purchases of
property, plant and equipment (-25.55% in 2018, -18.26% in 2017 and -27.17% in
2016) and Acquisition of businesses and intangible (-44.56% in 2018, -47.82% in
2017 and -23.65% in 2016), showing that the company’s investment scale is
narrowing and Prudential plc does not focus on investing to expand its business.

 Financing activities: