2008 2007

Assets
Cash and balances at central banks — —
Loans and advances to banks 27031 7686
Loans and advances to customers — 307
Debt securities subject to repurchase agreements — —
Other debt securities — —
Debt securities — —
Equity shares — —
Investments in Group undertakings 42196 43542
Settlement balances — —
Derivatives 1168 173
Intangible assets — —
Property , plant and equipment — —
Deferred taxation 3 —
Prepayments, accrued income and other assets 489 127
Assets of disposal groups — —
Total assets 70887 51835

Liabilities
Deposits by banks 1802 5572
Customer accounts 26 —
Debt securities in issue 14179 13453
Settlement balances and short positions — —
Derivatives 361 179
Accruals, deferred income and other liabilities 47 8
Retirement benefit liabilities — —
Deferred taxation — 3
Insurance liabilities — —
Subordinated liabilities 10314 7743
Liabilities of disposal groups — —
Total liabilities 26729 26958

Minority interests — —
Equity owners 44158 24877
Total equity 44158 24877

Total liabilities and equity 70887 51835

 2005 2004
Assets
Cash and balances at central banks — —
Treasury bills and other eligible bills — —
Loans and advances to banks 9,122 4,106
Loans and advances to customers 567 305
Debt securities — —
Equity shares — —
Investments in Group undertakings 20,851 21,900
Intangible assets — —
Property,plant and equipment — —
Settlement balances — —
Derivatives at fair value 55 —
Prepayments,accrued income and other assets 147 318
Total assets 30,742 26,629
Liabilities
Deposits by banks 951 174
Customer accounts 55 —
Debt securities in issue 2,942 1,608
Settlement balances and short positions — —
Derivatives at fair value — —
Accruals,deferred income and other liabilities 14 301
Retirement benefit liabilities — —
Deferred taxation liabilities — —
Insurance liabilities — —
Subordinated liabilities 9,242 5,935
Total liabilities 13,204 8,018
Equity *
Minority interests — —
Shareholders’equity
Called up share capital 826 822
Reserves 16,712 17,789
Total equity 17,538 18,611
Total liabilities and equity 30,742 26,629
Consolidated
2003 2002
Assets
Cash and balances at central banks 3822 3481
Items in the course ofcollection from other banks 2501 2741
Treasury bills and other eligible bills 4846 11459
Loans and advances to banks 51891 44296
Loans and advances to customers 252531 223324
Debt securities 79949 67042
Equity shares 2300 1886
Interests in associated undertakings 106 94
Intangible fixed assets 13131 12697
Tangible fixed assets 13927 10485
Settlement balances 2857 4102
Other assets 18436 16929
Prepayments and accrued income 5421 4353
451718 402889
Long-term assurance assets attributable to policyholders 3557 9111
Total assets 455275 412000
Liabilities
Deposits by banks 67323 54720
Items in the course oftransmission to other banks 958 1258
Customer accounts 236963 219161
Debt securities in issue 41016 33938
Settlement balances and short positions 21369 19412
Other liabilities 20584 20754
Accruals and deferred income 13173 8626
Provisions for liabilities and charges
– deferred taxation 2266 1834
– other provisions 256 330
Subordinated liabilities
– dated loan capital 9312 7602
– undated loan capital including convertible debt 7686 6363
Minority interests
– equity (11) (11)
– non-equity 2724 1850
Called up share capital 769 754
Share premium account 8175 7608
Merger reserve 10881 11455
Other reserves 419 387
Revaluation reserve 7 80
Profit and loss account 7848 6768
Shareholders’funds
– equity 25176 23545
– non-equity 2923 3507
451718 402889
Long-term assurance liabilities attributable to policyholders 3557 9111
Total liabilities 455275 412000

Memorandum items
Contingent liabilities 14,864 15,588
Commitments (standby facilities,credit lines and other) 139,693 128,592
 2008 2007
Operating activities
Operating (loss)/profit before tax (10017) 2372
Operating profit before tax on discontinued activities — —

Adjustments for:
Depreciation and amortisation — —
Write-down of goodwill and other intangible assets — —
Write-down of investment in subsidiaries 14321 —
Interest on subordinated liabilities 499 470
Charge for defined benefit pension schemes — —
Cash contribution to defined benefit pension schemes — —
Elimination of non-cash items on discontinued activities — —
Elimination of foreign exchange differences 1778 (58)
Other non-cash items (478) 1
Net cash (outflow)/inflow from trading activities 6103 2785
Changes in operating assets and liabilities (22254) 15562
Net cash flows from operating activities before tax (16151) 18347
Income taxes (paid)/received 119 6
Net cash flows from operating activities (16032) 18353

Investing activities
Sale and maturity of securities — —
Purchase of securities — —
Investment in subsidiaries (10349) (18510)
Disposal of subsidiaries 700 6
Sale of property , plant and equipment — —
Purchase of property , plant and equipment — —
Proceeds on disposal of discontinued activities — —
Net investment in business interests and intangible assets — —
Loans to subsidiaries — —
Repayments from subsidiaries — 469
Net cash flows from investing activities (9649) (18035)

Financing activities
Issue of ordinary shares 49 77
Placing and open offer 19741 —
Rights issue 12000 —
Issue of other equity interests 3600
Issue of paid up equity — 1073
Issue of subordinated liabilities — —
Proceeds of minority interests issued — —
Redemption of minority interests — —
Repurchase of ordinary shares — —
Shares purchased by employee trusts — —
Shares issued under employee share schemes — —
Repayment of subordinated liabilities — (469)
Dividends paid (2908) (3290)
Interest on subordinated liabilities (466) (455)
Net cash flows from financing activities 28416 536
Effects of exchange rate changes on cash and cash equivalents 761 62

Net (decrease)/increase in cash and cash equivalents 3496 916

Cash and cash equivalents 1 January 1573 657
Cash and cash equivalents 31 December 5069 1573
 2006

3486
-

-
-
-
520
-
-
-
(22)
18
4002
(508)
3494
154
3648

-
-
(1097)
-
-
-
-
-
-
547
(550)

104
-
-
671
-
399
-
-
 (991)
-
7
(547)
(2661)
(497)
(3515)
(52)

(469)
1126
657
 2005 2004
Operating activities
Operating profit before tax 1932 2890
Adjustments for:
Depreciation and amortisation — —
Interest on subordinated liabilities 583 318
Charge for defined benefit pension schemes — —
Cash contribution to defined benefit pension schemes — —
Other non-cash items (16) 1
Net cash inflow from trading activities 2499 3209
Changes in operating assets and liabilities 2050 (148)
Net cash flows from operating activities before tax 4549 3061
Income taxes (paid)/received (18) 36
Net cash flows from operating activities 4531 3097
Investing activities
Sale and maturity ofsecurities — —
Purchase ofsecurities — —
Investment in subsidiaries (2961) (6342)
Sale ofproperty,plant and equipment — —
Purchase ofproperty,plant and equipment — —
Net investment in business interests and intangible assets — —
Loans to subsidiaries (337) (350)
Repayments to subsidiaries 1183 40
Net cash flows from investing activities (2115) (6652)
Financing activities
Issue ofordinary shares 163 2845
Issue ofequity preference shares 1649 1358
Issue ofsubordinated liabilities 337 1424
Proceeds ofminority interests acquired — —
Costs ofminority interests redeemed — —
Repayments ofsubordinated liabilities (1183) (40)
Dividends paid (1912) (1488)
Interest on subordinated liabilities (577) (318)
Net cash flows from financing activities (1523) 3781
Effects ofexchange rate changes on cash and cash equivalents (76) —
Net increase in cash and cash equivalents 817 226
Cash and cash equivalents 1 January 309 83
Cash and cash equivalents 31 December 1126 309
consolidated
2003 2002
Net cash inflow from operating activities 19708 13737
Dividends received from associated undertakings 9 1
Returns on investments and servicing offinance
Preference dividends paid (269) (317)
Additional Value Shares dividend paid (1463) (798)
Dividends paid to minority shareholders in subsidiary undertakings (130) (112)
Interest paid on subordinated liabilities (557) (674)
Net cash outflow from returns on investments and servicing offinance
(2419) (1901)
Taxation
UK tax paid (933) (833)
Overseas tax paid (521) (274)
Net cash outflow from taxation (1454) (1107)
Capital expenditure and financial investment
Purchase ofinvestment securities (44861) (32701)
Sale and maturity ofinvestment securities 41805 26072
Purchase oftangible fixed assets (5017) (3367)
Sale oftangible fixed assets 1108 811
Net cash outflow from capital expenditure and financial investment (6965) (9185)
Acquisitions and disposals
Purchase ofbusinesses and subsidiary undertakings (net ofcash acquired)
(1748) (308)
Investment in associated undertakings (2) (2)
Sale ofsubsidiary and associated undertakings (net ofcash sold) 179 29
Net cash outflow from acquisitions and disposals (1571) (281)
Ordinary equity dividends paid (772) (729)
Net cash inflow/(outflow) before financing 6536 535
Financing
Proceeds from issue ofordinary share capital 184 85
Proceeds from issue ofpreference share capital — —
Proceeds from issue oftrust preferred securities 883 1242
Redemption ofpreference share capital (364) (600)
Issue ofsubordinated liabilities 3817 2157
Repayment ofsubordinated liabilities (336) (202)
(Decrease)/increase in minority interests (56) 29
Net cash inflow from financing 4128 2711
Increase/(decrease) in cash 10664 3246
 2001
7287
1

(353)
(299)
(43)
(652)
(1447)

(790)
(419)
(1209)

(27537)
20578
(4245)
867
(10339)

(1614)
(47)
8
(1653)
(653)
(8011)

2131
281
-
-
2705
(693)
(13)
4411
(3600)