D & A F T
Guidelines for Allied Dunbar : July 1989
comral
1. The Guidelines for Allied Dunbar reflect the expectation that the Company
should be able to achieve sustained rapid rates of growth in turnover and
profits by building on the existing strengths of the Company.
2. In addition to pursuing growth in Its existing activities in the UK, Allied
Dunbar should also seek opportunities to extend the range of its activities
both in the UX and Continental Europe by establishing leadership positions
in new markets or market segments through greenfields expansion or, where
appropriate, acquisition or joint ventures.
3. Although the first &I= should be to seek investment opportunities which can
be funded from Allied Dunbar's own resources, B.A.T Industries will also be
willing to consider projects requiring additional funding.
4. Allied Dunbar should also contribute to the overall development of the
Group's activities in Pin- ci al Services through participation in the RAT
?iuancia-1 Services Board and Project Teams set up at the Centre, and by
co-operating vith other Group companies where appropriate.
5. A high priority should be given to ensuring that the management strength of
the Company in sufficient both to support the existing activities and to
develop and implement plans for expansion.
ri-plal Guidelines
6. loturns : The return target established for Allied Dunbar will be
reviewed during the year. In the meantime, Allied Dunbar should continue
to ain for the annual increase In the value of B.A.T Industries'
attributable share of the embedded value of the business together with not
dividends paid to B.A.T Industries, to be 25% of the opening value of the
attributable embedded value. B.A.T Industries' attributable share should
reflect the not liability in respect of outstanding shares and share
options.
7. Additionally, Allied Dunbar should seek to achieve at least the increases
in Financial Surplus indicated in the 1989-1993 PlAn.
S. Oroov Initial Commissions : Allied lk=barls ain should be to continue
to achieve growth of at least 102 p-&- in gross initial commissions after
eliminating the effects of Inflation.
9. In view of the changing aft of business, with an increasing proportion of
products with lower profitability, Allied Dunbar should establish with
B.A.T Industries an appropriate p-v-p- (present value of profits)
guideline for use in the 1990-19$4 Company Plan.
10. DIvIdends; : Dividends per share should increase In line with the growth
In earnings per abate, at a minimum of 10% V.&. La real terms. The uL-4--
not dividends expected from Allied Dunbar are therefore:-
f
, OgIllon 1999 1990 1"I 1992 1993 1994
Not Dividends 51.9 61.3 71.4 82.3 94.9 109.2
In addition, the benefit of Advanced Corporation Tax attaching to franked CD
investment Income should be passed up to the maximum extent possible.
-1-4
11. The rAddaUne dividend payments will be reviewed in to=@ of their % 10
comparability with the base and rate of divides& paid by major competitor -
Life offices. 0%
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BAT Industries document for Province of British Columbia 23 April 1999

12. Resource : Allied Dunbar should, %tare possible, land Its spars
financial resources to B.A.T Industries, on an arm's length basis. Work to
quantify the extent of such resources and to Identify their optimum
utilLsatlan should be completed by the and of 1989.
Spec.ific Priorities
13. The first priority should be to ensure that, through focussing on
increasing the sales of the Company's core products and by building an the
strengths of the direct salesforce, Allied Dunbar achieves at least the
turnover and profits projections outlined in the 1989-1993 Plan.
14. The rate of new business growth should be supported both by extending the
size of the salesforce and also through improvements in their productivity,
for example, by raising the quality of now recruit& and improving retention
rates, performance levels, training and management development. Allied
Dunbar should also continue to support interaction between Associates in
order to take full advantage of specialised skills within the Company.
15. Allied Dunbar should continue to develop and strengthen its other
distribution channels, including extending the number of Appointed
Representative lutroducers and supporting production from independents by
higher service standards.
16. Allied Dunbar should seek a sustained improvement in the control of
expenses such that, in terms of the expenses-to-production. ratio, the
Company continues to improve its competitive position.
17. At the saw time as improving expense control, Allied Dunbar should
continue to invest in maintaining industry-leading standards of service
through the Innovative and efficient use of technology both in order to
support existing activities and to promote now services. Plans should also
be developed regarding the most appropriate shape of, and location for,
Allied Dunbar'& operating contras in order to avoid constraining the
business' longer-tarm capacity expansion.
18. Allied Dunbar should maintain a comprehensive, innovative and competitive
product range, with an acceptable level of profitability being achieved on
each product.
19. Developments in the residential mortgage market should be monitored in
order to *inure that "ad Dunbar cm continue to achieve sustained, rapid
and profitable growth in this sector.
20. The proposed geographic development of the Financial Management Advisory
Department should be implemented.
21. Allied Dunbar should implement the plane for launching the Luvestaout in
Spain and Omura that the business is suitably positioned for rapid and
profitable growth.
22. Developments in other financial servIce markets Ln, Continental Europe
should continue to be waitared with a view to identifying further
opportunities for profitable investment, particularly in Germany, France
and Italy.
23. Allied Dunbar should ensure that the investment performance of the fun"
under its management compare favowably with that of major competitors, at
least meeting the performance objectives identified La -tba 1989-1"3 Plan.
M/Da
MU July 1989
job
BAT Industries document for Province of British Columbia 23 April 1999