3 (Loss)/profit from continuing operations after tax

1.

The expected return on in-force is based on the unwind of the discount rate on the opening, adjusted base value of in-force (VIF). The opening base [VIF] of the Risk and Savings business was £3,460m in 2008. This is adjusted for the effects of opening model changes (-£18m) to give an adjusted opening base VIF of £3,442m. This is then multiplied by the opening risk discount rate of 7.5% and the result grossed up at the notional attributed tax rate of 28% to give a return of £359m. This is added to the expected return on the in-force of businesses acquired in the year (£11m) to give a total UK expected return of £370m.

2.

The 2008 Group capital and financing contribution from shareholder net worth (SNW) of £256m reflects an average return on the average balance of invested assets. This is offset by pre-tax corporate expenses charged to shareholders’ funds of £12m, and an adjustment for opening tax and other modelling changes of £10m.

3.

Investment management operating profit excludes £35m (2007: £23m) of profits arising from the provision of investment management services at market referenced rates to the covered business. These are reported on a look through basis and as a consequence are included in the Risk, Savings and Group capital and financing covered business on an [EEV] basis.

4.

On an EEV basis Nationwide Life, Suffolk Life, operations in Ireland and business unit costs allocated to the Risk and Savings business are included in the covered business operating profit. These are included within Other Risk and Other Savings operating profit on an [IFRS] basis.

5.

In 2008 £0.9bn was transferred from Shareholder Retained Capital to shareholder capital held outside [Society]’s long term fund. This transfer did not give rise to any incremental tax and therefore resulted in an £81m benefit to embedded value.

1.

2007 Investment management operating profit excludes £23m of profits arising from the provision of investment management services at market referenced rates to the covered business. These are reported on a look through basis and as a consequence are included in the Risk, Savings and Group capital and financing covered business on an [EEV] basis.

2.

In 2007 £1.7bn was transferred from Shareholder Retained Capital to shareholder capital held outside the long term fund. This transfer did not give rise to any incremental tax and therefore resulted in a £206m benefit to embedded value.