Final Results - Year Ended 31 Dec 1999, Part 2

Legal & General Group PLC 29 February 2000 Part 2 Legal & General Group Plc Summary of audited results for the year ended 31 December 1999 CONTENTS P1 Consolidated profit and loss account P2 Consolidated balance sheet P3 New business from continuing operations P3 Half yearly analysis of operating profit P4 Half yearly analysis of new UK business P5 Life and pensions premiums and operating profit P6 UK general insurance P7 Investment return P7 Other income P8 Change in shareholders' retained capital (SRC) in the UK long term fund P8 Tax P9 Funds under management P10 Shareholders' funds P10 Segmental analysis of shareholders' funds P11 Borrowings P11 UK long term fund P12 Consolidated cash flow statement Legal & General Group Plc P1 Consolidated Profit and Loss Account Year ended 31 December 1999 ----------------------------------------------------------------------- Notes 1999 1998 Profit from continuing operations £m £m Life and pensions 1 321 292 Investment management 43 32 General insurance 3 20 14 Other income 5 29 30 -------- -------- 413 368 Profit from discontinued operations Australian business - 7 -------- -------- Operating profit 413 375 Variation from longer term general insurance investment return 4 3 10 Change in shareholders' retained capital (SRC) 6 260 (195) Profit on sale of Australian business 7 - 308 Premium on repurchase of Euroconvertible bonds - (92) -------- -------- Profit from ordinary activities before tax 676 406 Tax on profit on ordinary activities 8 (89) 1 -------- -------- Profit for the financial period 587 407 Dividends (212) (185) -------- -------- Retained profit 375 222 ======================================================================= Earnings per share p p Based on operating profit from continuing operations after tax 6.50 5.26 Based on profit for the financial period 11.50 8.03 Diluted earnings per share Based on operating profit from continuing operations after tax 6.47 5.22 Based on profit for the financial period 11.44 7.97 Dividend per share 4.13 3.62 ======================================================================= Statement of Total Recognised Gains and Losses £m £m Profit for the financial period 587 407 Exchange gains 3 0 -------- -------- Total recognised gains and losses 590 407 ======================================================================= The following financial statements, which constitute non-statutory accounts within the meaning of Section 240 of the Companies Act 1985, are extracted from the Company's financial statements for the year ended 31 December 1999. The financial statements include the auditors' unqualified report and do not contain a statement under either sections 237(2) or 237(3) of the Companies Act 1985. These financial statements were approved by the Board on 28 February 2000 and have been prepared using the modified statutory solvency basis for long term business. The 1999 Report and Accounts will be posted to shareholders on 13 March 2000 and delivered to the Registrar of Companies after the Annual General Meeting on 12 April 2000. Legal & General Group Plc P2 Consolidated Balance Sheet As at 31 December 1999 ----------------------------------------------------------------------- As at As at Notes 1999 1998 Assets £m £m Investments 9 34,143 31,526 Assets held to cover linked liabilities 65,928 45,253 Other assets 2,135 1,809 --------- --------- 102,206 78,588 ========= ========= Liabilities Shareholders' funds (i) 10 3,085 2,700 Fund for future appropriations (ii) 5,814 4,240 Technical provisions --------- --------- Technical provisions for linked liabilities : 65,742: : 45,196: Other long term business provisions : 24,538: : 23,319: General insurance provisions : 365: : 401: --------- --------- 90,645 68,916 Borrowings --------- --------- Borrowings for financing operations : 141: : 105: Mortgage related borrowings : 285: : 355: --------- --------- 12 426 460 Bank customer deposits 1,031 942 Other creditors 1,205 1,330 --------- --------- 102,206 78,588 ========= ========= (i) Shareholders' funds include profits retained as shareholders' retained capital in the UK long term fund. These amounts, net of allowance for tax, form part of the embedded value of the UK long term fund which is reported in the supplementary financial statements prepared on the Achieved Profits basis. (ii) The fund for future appropriations comprises funds which have not been allocated between policyholders and shareholders at the end of the financial period and consists primarily of unrealised investment appreciation within the with-profits part of the UK long term fund. ======================================================================= Legal & General Group Plc P3 New business from continuing operations Year ended 31 December 1999 ----------------------------------------------------------------------- Life and pensions 1999 1998 Annual Single Annual Single £m £m £m £m Life 150 634 112 447 Pensions 84 1,327 90 955 ------ ------ ------ ------ UK 234 1,961 202 1,402 USA 63 1 34 5 Netherlands 5 35 4 38 France 5 71 5 66 ------ ------ ------ ------ Insurance total 307 2,068 245 1,511 Retail investment business UK 23 877 19 755 France - 31 - 36 ------ ------ ------ ------ Total new business 330 2,976 264 2,302 ====== ====== ====== ====== Equivalent premium income (EPI) is calculated for total new business, including unit trusts, PEPs and ISAs (excluding cash ISAs), and comprises the new annual premiums together with 10% of single premiums. EPI from continuing insurance business has increased from £396m in 1998 to £514m in 1999. EPI from total new business in the same period has increased from £494m in 1998 to £628m in 1999. New overseas insurance premiums expressed at 31 December 1999 exchange rates 1999 1998 Annual Single Annual Single £m £m £m £m USA 63 1 35 5 Netherlands 5 35 4 33 France 5 71 5 59 ======================================================================= Half year analysis of Operating profit 1999 1998 Second First Second First half half half half £m £m £m £m Life and pensions 162 159 149 143 Investment management 30 13 22 10 General insurance 15 5 9 5 Other income 12 17 16 14 ------ ------ ------ ------ 219 194 196 172 Profit from discontinued Australian business - - - 7 ------ ------ ------ ------ 219 194 196 179 ======================================================================= Legal & General Group Plc P4 New UK business Year ended 31 December 1999 ----------------------------------------------------------------------- New UK annual premiums 1999 1998 Full Second First Full Second First year half half year half half £m £m £m £m £m £m Life: Mortgage related 107 62 45 71 41 30 Savings 2 1 1 2 1 1 Protection 17 9 8 19 10 9 Group risk 24 14 10 20 9 11 Pensions: Individual pensions 73 33 40 77 36 41 Group pensions 11 8 3 13 9 4 Investments: PEPs/ISAs (excluding cash ISAs) 23 19 4 19 9 10 ----- ------ ------ ------ ------ ------ Total New UK Annual Business 257 146 111 221 115 106 ====== ====== ====== ====== ====== ====== New UK single premiums Bonds: With-profits 448 215 233 274 142 132 Other 186 99 87 172 96 76 Pensions: Individual pensions 260 125 135 272 134 138 Annuities - individual 304 167 137 291 124 167 - bulk purchase 573 276 297 258 131 127 Other group business 70 40 30 90 37 53 DSS rebates 120 76 44 45 38 7 Investments: Unit trusts 276 152 124 154 74 80 PEPs/ISAs (excluding cash ISAs) 601 133 468 601 113 488 ------ ------ ------ ------ ------ ------ Total New UK Single Business 2,838 1,283 1,555 2,157 889 1,268 ====== ====== ====== ====== ====== ====== NEW UK EPI Total individual life & pensions EPI 331 174 157 274 141 133 Total investments EPI 111 48 63 94 27 67 ------ ------ ------ ------ ------ ------ Total individual EPI 442 222 220 368 168 200 Total group EPI 99 52 47 68 35 33 ------ ------ ------ ------ ------ ------ Total EPI 541 274 267 436 203 233 ====== ====== ====== ====== ====== ====== Pension fund management* 13,098 7,094 6,004 11,322 6,233 5,089 ====== ====== ====== ====== ====== ====== * Pension fund management new business comprises new monies from external clients for both pooled and segregated funds. ======================================================================= Legal & General Group Plc P5 Notes to Financial Statements Year ended 31 December 1999 ----------------------------------------------------------------------- 1. Life and pensions premiums and operating profit from continuing operations 1999 1998 Gross Operat- Gross Operat- premiums ing premiums ing profit profit £m £m £m £m With-profits business - Life 1,233 88 1,058 89 - Individual pensions 688 35 598 32 - Group pensions 56 8 69 5 ------- ------- ------- ------- 1,977 131 1,725 126 Non-profit business 1,242 154 898 135 ------- ------- ------- ------- UK 3,219 285 2,623 261 USA 181 30 146 24 Netherlands 72 5 75 4 France 102 1 98 3 ------- ------- ------- ------- 3,574 321 2,942 292 ======= ======= ======= ======= UK life and pensions profit is included in operating profit as the accrued statutory transfer, grossed up at the corporate tax rate. USA profits are included on the basis of US GAAP. Overseas life and pensions premium income and results expressed at 31 December 1999 exchange rates are: Gross Operat- Gross Operat- premiums ing premiums ing profit profit £m £m £m £m USA 181 30 151 25 Netherlands 72 5 66 4 France 102 1 86 2 ======================================================================= 2. Principal sterling exchange rates used 1999 1998 United States dollar 1.61 1.66 Euro 1.61 1.42 ======================================================================= Legal & General Group Plc P6 Notes to Financial Statements Year ended 31 December 1999 ----------------------------------------------------------------------- 3. UK general insurance Net Under- Equalis- Invest- Operat- premiums writing ation ment ing written result prov- return profit/ isions (loss) 1999 £m £m £m £m £m Household 168 (4) (5) 11 2 Healthcare 9 (3) - 0 (3) Motor and other 31 0 - 1 1 Mortgage indemnity 3 16 0 4 20 ------ ------ ------ ------ ------ Total 211 9 (5) 16 20 ====== ====== ====== ====== ====== 1998 Household 163 (6) (5) 15 4 Healthcare 3 (4) - 0 (4) Motor and other 30 (6) - 2 (4) Mortgage indemnity 4 11 0 7 18 ------ ------ ------ ------ ------ Total 200 (5) (5) 24 14 ====== ====== ====== ====== ====== Investment return is reported on a basis which reflects longer term rates of investment return. The rates used are consistent with those used for Achieved Profits reporting. Capital supporting the business to which the longer term rates are applied is based on the solvency margin appropriate for the business. For both 1999 and 1998, the investment return has been calculated by applying these longer term rates of return to the investment funds at the start of each quarter. The total investment return continues to be reported in Profit on ordinary activities before tax. The longer term rates of return applied in the allocation of investment return to general insurance operating profit are: 1999 1998 % % UK equities 7.1 p.a. 8.8 p.a. UK gilts 4.5 p.a. 6.4 p.a. For these purposes, UK dividend income no longer includes attributable tax credits, following the adoption of FRS16. ======================================================================= Legal & General Group Plc P7 Notes to Financial Statements Year ended 31 December 1999 ----------------------------------------------------------------------- 4. Investment return 1999 1998 £m £m Investment income 62 54 Interest expense and charges (7) (8) Realised investment (losses)/gains (1) 14 Unrealised investment appreciation 8 18 -------- -------- 62 78 ======== ======== reported as: Allocated to general insurance operating profit 18 25 Variation from longer term general insurance investment return (see note 3) 3 10 Shareholders' other income 41 43 The investment return shown represents the return on the shareholders' and worldwide GI funds excluding that in respect of SRC and non-insurance operations (primarily Legal & General Bank). ======================================================================= 5. Other income 1999 1998 £m £m Shareholders' other income Investment return on shareholders' funds (excluding SRC) 47 49 Interest expense on core debt (6) (6) --------- --------- 41 43 Other operations --------- --------- Banking : (3): : (2): Estate agency : 0 : : (8): Fairmount : 1 : : 2 : --------- --------- (2) (8) Unallocated corporate expenses --------- --------- Corporate fees : (3): : 0 : Other expenses : (7): : (5): --------- --------- (10) (5) --------- --------- 29 30 ======================================================================= Legal & General Group Plc P8 Notes to Financial Statements Year ended 31 December 1999 ----------------------------------------------------------------------- 6. Change in Shareholders' Retained Capital (SRC) in the UK Long Term Fund 1999 1998 £m £m Investment income 50 56 Interest expense and charges (1) (1) Realised investment gains 97 44 Unrealised investment appreciation 142 125 ------ ------ Investment return on SRC 288 224 Net capital released from/ (invested in) non-profit business 126 (284) Accrued transfer to shareholders in respect of non-profit business included in operating profit (154) (135) ------ ------ Change in SRC before tax 260 (195) ======================================================================= 7. Sale of Legal and General Australia Legal & General Australia was sold to Colonial Limited on 1 July 1998, resulting in an exceptional pre-tax profit of £308m (£293m after tax). Gross premiums written for the six months to 30.6.98 totalled £76m while the contribution to pre-tax operating profit was £7m. ======================================================================= 8. Tax 1999 1998 Profit Tax Profit Tax before (charge) before (charge) tax /credit tax /credit £m £m £m £m Profit from continuing operations Life and pensions 321 (79) 292 (87) Investment management 43 (12) 32 (11) General insurance 20 1 14 0 Other income 29 9 30 (3) ------ ------ ------ ------ 413 (81) 368 (101) Profit from discontinued Australian business - 7 (3) ------ ------ ------ ------ Operating profit 413 (81) 375 (104) Variation from longer term general insurance investment return 3 (1) 10 (3) Change in shareholders' retained capital (SRC) 260 (7) (195) 95 Profit on sale of Australian business - - 308 (15) Premium on repurchase of Euroconvertible bonds - - (92) 28 ------ ------ ------ ------ Tax (charge)/credit on ordinary activities 676 (89) 406 1 ====== ====== ====== ====== The bases adopted in determining tax include the following: (a) Tax on UK and Australia life and pensions business - by grossing up the statutory transfers at corporate tax rates. (b) Tax on the change in SRC, excluding investment return (see note 6) - by grossing up net of tax amounts by the UK corporate tax rate of 30.25% (1998: 31.0%). ======================================================================= Legal & General Group Plc P9 Notes to Financial Statements Year ended 31 December 1999 ----------------------------------------------------------------------- 9. Funds under management 1999 1998 Long Long term Other term Other business business business business £m £m £m £m Land and buildings 3,299 199 2,766 194 Shares, variable yield securities and unit trusts 14,337 1,448 12,243 1,555 Debt and other fixed income securities 12,055 1,019 12,066 560 Loans secured by mortgages 13 1,009 23 950 Other loans and investments 100 80 147 243 Deposits with credit institutions 339 245 192 587 ------ ------- ------- ------- Total investments 30,143 4,000 27,437 4,089 ====== ======= ======= ======= Held within the UK long term fund 2,718 2,759 Held outside the UK long term fund 1,282 1,330 ------- ------- 4,000 4,089 ======= ======= Total Total £m £m Total investments 34,143 31,526 Assets held to cover linked liabilities 65,928 45,253 ------- ------- Funds included in the consolidated balance sheet 100,071 76,779 Segregated pension funds 4,027 3,489 Unit trusts, PEPs and ISAs (excluding cash ISAs) 3,450 2,280 ------- ------- Total funds under management 107,548 82,548 ======= ======= representing: Managed in the UK - Active 35,414 31,927 - Index tracking 67,817 46,192 - for overseas subsidiaries 964 1,022 ------- ------- 104,195 79,141 Mortgages and other 1,636 1,609 ------- ------- 105,831 80,750 Managed overseas 1,717 1,798 ------- ------- 107,548 82,548 ======= ======= i) Assets managed for external pension fund clients totalled £61,320m (1998: £41,753m). ii) The reported asset mix shown above does not reflect the use of derivatives. The effect of outstanding futures contracts is to change the mix as if, for long term business, the value as reported for shares, variable yield securities and unit trusts decreased by £383m (1998: £371m); and there was no effect on debt and other fixed income securities (1998: £18m increase); and for shareholders' and general insurance funds, the value as reported for shares, variable yield securities and unit trusts decreased by £94m (1998: £101m). In both cases, cash and deposits would be changed by corresponding amounts. The effect of other derivatives was not considered significant enough to be separately reported. ======================================================================= Legal & General Group Plc P10 Notes to Financial Statements Year ended 31 December 1999 ----------------------------------------------------------------------- 10. Shareholders' funds 1999 1998 £m £m At 1 January 2,700 2,438 Total recognised gains and losses 590 407 Dividends (212) (185) Increase in share capital/premium -------- -------- - conversion of bonds : 1 : : 33 : - exercise of share options : 6 : : 7 : -------- -------- Increase in share capital 7 40 -------- -------- At end of period 3,085 2,700 ======== ======== Comprising: Share capital 128 128 Share premium 132 125 Profit and loss account -------- -------- -SRC : 1,981: : 1,697: -Other : 844: : 750: -------- -------- 2,825 2,447 -------- -------- 3,085 2,700 ======== ======== The number of fully paid ordinary shares of 2.5p in issue was 5,129 million (1998: 5,112 million), including 13 million (1998: 18 million) shares held within the Employee Share Ownership Trust. ======================================================================= 11. Segmental analysis of shareholders' funds 1999 1998 £m £m Life and Pensions - UK (Shareholders' retained capital (SRC))* 1,818 1,581 - USA 377 295 - Netherlands 15 18 - France 40 31 -------- -------- 2,250 1,925 Investment management 92 60 General insurance 69 67 Banking 96 87 Corporate funds 578 561 -------- -------- 3,085 2,700 ======== ======== * Excluding SRC funds of £163m (1998: £116m) in respect of the net assets of subsidiaries. ======================================================================= Legal & General Group Plc P11 Notes to Financial Statements Year ended 31 December 1999 ----------------------------------------------------------------------- 12. Borrowings 1999 1998 Long Long term Other term Other business business business business £m £m £m £m Core debt 31 110 28 77 Mortgage related borrowings 8 277 9 346 ------- ------- ------- ------- Total borrowings 39 387 37 423 ======= ======= ======= ======= 6.75% Euroconvertible subordinated bonds due 2008 At the year end £3.3m (1998: £4.4m) nominal of these bonds were outstanding. On 1 December 1999 the Group gave bondholders notice that the bonds outstanding would be redeemed at par on 31 January 2000, if not converted prior to that date. Under the terms of the Trust Deed, the trustee has ensured that all bonds which were outstanding on 31 January 2000 were converted. Conversion of the £3.3m outstanding bonds, resulted in the issue of 6 million shares based on the conversion price of 55 pence per share. ======================================================================= 13. UK Long Term Fund As at 31.12.99 As at 31.12.98 £bn £bn With-profits business 26.9 23.6 Non-profit business 8.6 7.8 ------- ------- Sub-fund * : 0.3: : 0.3: Shareholders' retained capital (SRC) : 2.0: : 1.7: ------- ------- 2.3 2.0 ------- ------- Market value of assets 37.8 33.4 ======= ======= * The sub-fund, together with the SRC, represents the amount of accumulated profits retained in the long term fund from non-profit business. Earnings on the sub-fund may, at the discretion of directors, be used to support with-profits business. ======================================================================= Legal & General Group Plc P12 Consolidated cash flow statement (excluding long term business and SRC) Year ended 31 December 1999 ----------------------------------------------------------------------- 1999 1998 £m £m Net cash inflow from operating activities 115 103 Interest paid on operational borrowings (6) (6) Tax received/(paid) 36 (20) Disposal of Australian business - 325 Dividends paid (193) (169) Financing -------- --------- - Issue of share capital : 7 : : 40 : - Increase/(decrease) in core debt : 30 : : (10): -------- --------- 37 30 -------- --------- (11) 263 ======== ========= Cash flows (not including long term business) were invested as follows: (Decrease)/increase in cash holdings 0 (8) -------- --------- Land and buildings : 0 : : (9): Shares, variable yield securities : : : : and unit trusts : 2 : : (7): Debt and other fixed income securities : 283 : : 69 : Deposits with credit institutions : (79): : 15 : Other loans and investments : (217): : 203 : -------- --------- Net portfolio investment (11) 271 -------- --------- Net investment (11) 263 ======== ========= Reconciliation of profit before tax to operating cash flow Profit on ordinary activities before tax 676 406 - Profits relating to long term business and SRC (617) (116) - Cash received from long term business 180 151 - Profit on sale of Australian business - (308) - Other items (124) (30) -------- --------- Net cash inflow from operating activities 115 103 ======================================================================= MORE TO FOLLOW FRCUWVNRRSRUUAR

Companies

Legal & General Group (LGEN)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today