L&G 2002 Final Results Pt3

Legal & General Group PLC 27 February 2003 Part 3 Legal & General Group Plc P1 Consolidated Profit and Loss Account Modified Statutory Solvency Basis Year ended 31 December 2002 ------------------------------------------------------------------------------------------------------------ Notes 2002 2001 Restated £m £m Profit on continuing operations Life and pensions 1 421 414 Institutional fund management 50 41 General insurance 46 37 Other operational income (24) 1 --------------- --------------- Operating profit from continuing operations 493 493 Profit on discontinued operations Other operational income - Banking 4 4 --------------- --------------- Operating profit 497 497 Variation from longer term investment return (63) (63) Change in equalisation provision (5) (6) Shareholder retained capital (SRC) contribution 2 (571) (550) Profit on sale of discontinued operations 36 8 --------------- --------------- Loss on ordinary activities before tax (106) (114) Tax charge on loss on ordinary activities (74) (30) --------------- --------------- Loss for the financial period (180) (144) Dividends (297) (261) --------------- --------------- Retained loss (477) (405) ============================================================================================================ Earnings per share p p Based on operating profit on continuing operations after tax 5.32 6.29 Based on loss for the financial period (2.77) (2.57) Diluted earnings per share Based on operating profit on continuing operations after tax 5.25 6.00 Based on loss for the financial period (2.77) (2.57) Dividend per share 4.78 4.67 ============================================================================================================ These financial statements were approved by the Board on 26 February 2003 and have been prepared for long term business using the Modified Statutory Solvency (MSS) basis. The Achieved Profits (AP) results are included in Part 2. The results for the year ended 2001 have been restated following the adoption of Financial Reporting Standard 19, (FRS19) Deferred tax (see note 4) and earnings per share and dividends per share have been restated to reflect the 2002 rights issue. The results constitute non statutory accounts within the meaning of Section 240 of the Companies Act 1985 and are extracted from the Company's financial statements for the year ended 31 December 2002. The financial statements include the auditor's unqualified report and do not contain a statement under either Sections 237(2) or 237(3) of the Companies Act 1985. ============================================================================================================ Legal & General Group Plc P2 Consolidated Balance Sheet - Modified Statutory Solvency Basis Year ended 31 December 2002 ------------------------------------------------------------------------------------------------------------ Notes At 31.12.02 At 31.12.01 Restated Assets £m £m Investments 32,442 34,464 Assets held to cover linked liabilities 69,723 70,982 Other assets 4,528 2,813 --------------- --------------- 106,693 108,259 =============== =============== Liabilities Shareholders' funds 3 3,184 2,877 Fund for future appropriations 516 1,845 Technical provisions 100,437 99,720 Borrowings and other creditors 2,556 3,817 --------------- --------------- 106,693 108,259 ============================================================================================================ Statement of Total Recognised Gains and Losses Notes At 31.12.02 At 31.12.01 Restated £m £m Loss for the financial period (180) (144) Exchange (losses)/gains (8) 2 --------------- --------------- Total recognised gains and losses (188) (142) ============================================================================================================ Legal & General Group Plc P3 Notes to Financial Statements - Modified Statutory Solvency Basis Year ended 31 December 2002 ------------------------------------------------------------------------------------------------------------ 1. Life and pensions operating profit 2002 2001 £m £m With-profits business 91 129 Non-profit business 275 224 --------------- --------------- UK 366 353 USA 52 50 Netherlands 8 12 France (5) (1) --------------- --------------- 421 414 =============== =============== UK life and pensions operating profit is the accrued distributable transfer, grossed up at the corporate tax rate, and for non-profit business is augmented by the distribution in respect of the intra-group subordinated debt capital included within the SRC. Profits for international life and pensions business are reported on bases consistent with MSS or US GAAP. ============================================================================================================ 2. Change in SRC 2002 2001 Restated £m £m Investment income 60 51 Interest expense and charges (2) (1) Realised investment (losses)/gains (23) 6 Unrealised investment depreciation (377) (203) --------------- --------------- Investment return on SRC (342) (147) Net capital released from/(invested in) 46 (179) non-profit business Distribution of operating profit from (275) (224) non-profit business --------------- --------------- SRC contribution before tax (571) (550) =============== =============== SRC at 1 January 2,631 2,293 ''''''''''''''' ''''''''''''''' SRC contribution before tax (571) (550) Tax 63 101 ''''''''''''''' ''''''''''''''' SRC contribution after tax (508) (449) Change in the net asset values of SRC subsidiaries 36 432 Movement in intra-group subordinated debt 100 355 --------------- --------------- SRC at end of period 2,259 2,631 =============== =============== On 24 December 2001 the investment management subsidiaries held within the SRC were transferred to new shareholder owned holding companies. SRC includes intra-group subordinated debt capital of £602m (2001: £502m). ============================================================================================================ Legal & General Group Plc P4 Notes to Financial Statements - Modified Statutory Solvency Basis Year ended 31 December 2002 ------------------------------------------------------------------------------------------------------------ 3. Shareholders' funds At 31.12.02 At 31.12.01 Restated £m £m At 1 January 2,877 3,255 Total recognised gains and losses (188) (142) Dividends (297) (261) Increase in share capital/premium 792 5 Goodwill written back on sale of Fairmount Group plc - 20 --------------- --------------- At end of period 3,184 2,877 =============== =============== Comprising: Share capital 163 129 Share premium 905 147 Profit and loss account 2,116 2,601 --------------- --------------- 3,184 2,877 =============== =============== The number of fully paid ordinary shares of 2.5p in issue at the period end was 6,502m (2001: 5,156m). ============================================================================================================ 4. Tax FRS19, Deferred tax, has been adopted and the 2001 comparatives restated accordingly. The principal impact is the recognition of deferred tax in respect of unrealised appreciation and depreciation of investments and future tax relief for acquisition expenses. It is estimated that profits after tax for 2002 reduced by £13m (2001: increased by £47m) and at 31.12.02 Shareholders' funds increased by £102m (2001: £115m) and the Fund for future appropriations reduced by £76m (2001: £405m). Deferred tax provisions have not been discounted. Although the SRC has been recognised as profit in these financial statements, there has been no corresponding recognition in the FSA regulatory returns, on which the taxation of life assurance business is currently based. As the payment of incremental tax on this profit depends upon a future event, the occurrence of which is under the company's control, no event giving rise to the need to provide deferred tax has occurred. Accordingly no additional deferred tax has been provided. The maximum amount of such deferred tax not provided was £655m (2001: £768m). ============================================================================================================ Legal & General Group Plc P5 Notes to Financial Statements - Modified Statutory Solvency Basis Year ended 31 December 2002 ------------------------------------------------------------------------------------------------------------ 5. Segmental analysis of shareholders' funds At 31.12.02 At 31.12.01 Restated £m £m Life and Pensions - UK (SRC)* 2,270 2,563 - USA 453 462 - Netherlands 24 19 - France 36 40 --------------- --------------- 2,783 3,084 Institutional fund management 161 148 General insurance 101 91 Banking - 93 Corporate funds** 139 (539) --------------- --------------- Shareholders' funds on the MSS basis 3,184 2,877 Less: Purchased interests in long term business included in above (39) (30) AP long term in-force business asset 1,916 2,147 --------------- --------------- Shareholders' funds on the AP basis 5,061 4,994 =============== =============== * Excluding net liabilities of £11m (2001: net assets of £68m) in respect of SRC subsidiaries, but including £602m (2001: £502m) of intra-group subordinated debt capital included in the SRC. ** Corporate funds include the convertible debt of £516m (2001: £515m), the senior debt of £602m (2001: £502m) which has been onlent to the UK LTF and the net proceeds of £788m from the 2002 rights issue. ============================================================================================================ 6. UK Long Term Fund At 31.12.02 At 31.12.01 Restated £bn £bn With-profits business 23.0 25.2 Non-profit business 11.6 10.5 ''''''''''''''' ''''''''''''''' Sub-fund 0.2 0.2 SRC 2.3 2.6 ''''''''''''''' ''''''''''''''' 2.5 2.8 --------------- --------------- Value of fund 37.1 38.5 ============================================================================================================ Legal & General Group Plc P6 Consolidated Cash Flow Statement (excluding long term business) Year ended 31 December 2002 ------------------------------------------------------------------------------------------------------------ 2002 2001 Restated £m £m Net cash inflow/(outflow) from operating activities 520 (79) Interest paid (52) (24) Tax received/(paid) 18 (20) Capital expenditure - net payments (1) 0 Disposal of banking subsidiaries 20 34 Acquisition of subsidiaries from the LTF (107) (570) Dividends paid (263) (250) ''''''''''''''' ''''''''''''''' Issue of share capital 792 5 Increase in total borrowing 249 808 (Decrease)/increase in mortgage related borrowing (31) 24 ''''''''''''''' ''''''''''''''' Financing 1,010 837 --------------- --------------- 1,145 (72) =============== =============== Cash flows (not including long term business) were invested/(divested) as follows: Increase/(decrease) in cash holdings 4 (6) Net purchase/(sale) of investments 1,141 (66) --------------- --------------- Net investment/(divestment) 1,145 (72) =============== =============== Reconciliation of profit before tax to operating cash flow Loss on ordinary activities before tax (106) (114) Profit relating to long term business 112 108 Cash received from/(paid to) long term business 133 (137) ''''''''''''''' ''''''''''''''' Increase in other operating creditors 199 50 Other items 182 14 ''''''''''''''' ''''''''''''''' 381 64 --------------- --------------- Net cash inflow/(outflow) from operating activities 520 (79) ============================================================================================================ This information is provided by RNS The company news service from the London Stock Exchange

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