News Release

7 August 2008

Friends Provident plc - Interim management report and results for the half year ended 30 June 2008

Headlines

• Significant progress made towards implementing our new strategy
• Friends Provident International making very good progress with 57% growth in new business while delivering superior returns
• UK results reflect difficult trading conditions but are in line with management expectations
• Risk mitigation actions have provided around £250m of support to already strong financial position
• Dividend paying capacity confirmed at £90m to £100m with declared interim dividend cost of £30m
• IFRS underlying profit* before tax down to £13m (2007: £111m) including one-off charge of £70m due to prudent reserving for annuities driven by corporate bond market value movements

Sir Adrian Montague, chairman, said:

"The strong headway made in implementing our new strategy, coupled with other timely initiatives taken to reduce our exposure to financial markets, has enabled the company to weather the subsequent sharp economic downturn more favourably than otherwise would have been the case. Our business has no need to raise capital to fund growth, and our revised dividend policy remains sustainable. The strategy is not dependent on achieving asset sales but any proceeds from any asset sales that are completed will still be returned in full to shareholders. The financial results are a reflection of the actions to implement the strategy and the prevailing economic conditions. But this should not mask the fact that a stronger and more profitable business will emerge when the strategy is fully implemented. We are building firm foundations for future growth in the business and in dividends and I am delighted that Trevor Matthews has now joined us to take the business forward."

Strategy

Significant progress has been made towards implementation of our strategy to focus on less capital intensive market segments and to become self financing.

• New terms implemented for pensions and savings products to reduce capital strain of new business
• Management structure, sales and customer services operations reorganised to reflect changed market focus
• Annualised cost savings of £11m delivered against the £40m target for end of 2009, with around 350 of the expected 600 job losses notified by 30 June 2008

Non-Core Operations

• Continue to explore options for Lombard in challenging environment
• F&C process making satisfactory progress
• Implementation of strategy not dependent on sales of any assets

International Life & Pensions

Friends Provident International continues to make very good progress with new business up 57%. In line with strategy, this business has grown faster than the UK at superior profitability, hence improving aggregate returns.

UK Life & Pensions

As expected and announced at the time of the strategic review, short term reported financial results are adversely affected by execution of the planned withdrawal from certain market segments. This has been exacerbated by tough investment markets and by the slowdown in UK new business volumes. This context reinforces our aims to reduce costs and improve returns through implementation of the strategy.

Financial Strength

Despite the slowdown in UK new business and the falls in financial markets, the business remains well-capitalised, does not need to raise further capital and its annual dividend paying capacity is still £90m to £100m as indicated in the strategy announcement in January 2008

• Estimated £1.0 billion excess of group solvency capital resources over requirements
• Pro forma embedded value* per share 151p (31 December 2007: 160p) benefited from our actions in 2007 to reduce equity risk
• Switching shareholder funds and pension fund assets out of equities and reinsuring £1.6bn of annuities and £0.3bn from the Friends Provident Pension Scheme has avoided £250m of losses
• Declared interim dividend of £30m or 1.30p per share in line with previously announced policy

Financial Performance Indicators

* As defined within Appendix 4

# As at 31 December 2007

Full press release

- Ends -

Notes to editors

1. An interview with Sir Adrian Montague, chairman, Trevor Matthews, chief executive officer and Jim Smart, chief financial officer, will be available to view in video, audio and text formats at www.friendsprovident.com and www.cantos.com from 7.00am today.

2. An analyst presentation will take place at 9.00am today at the London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS.

3. The analyst presentation will be webcast live from 9.00am and will be available on demand from 2.00pm on the Friends Provident website: www.friendsprovident.com/results

4. The presentation slides will be available from 9.00am today on www.friendsprovident.com/presentations

5. For more information on Friends Provident including, photos, awards, fast facts, presentations, and media contacts please visit the media section at www.friendsprovident.com/media

6. Financial reporting dates

7. Certain statements contained in this announcement constitute 'forward-looking statements'. Such forward-looking statements involve risks, uncertainties and other factors, which may cause the actual results, performance or achievements, from time to time, of Friends Provident plc, its subsidiaries and subsidiary undertakings or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors include, among others, adverse changes to laws or regulations; risks in respect of taxation; unforeseen liabilities from product reviews; asset shortfalls against product liabilities; changes in the general economic environment; levels and trends in mortality, morbidity and persistency; restrictions on access to product distribution channels; increased competition; and the ability to attract and retain personnel. These forward-looking statements are made only as at the date of this announcement and, save where required in order to comply with the Listing Rules, there is no obligation on Friends Provident plc to update such forward-looking statements.