L&G 2003 Final Results Pt 3

Legal & General Group PLC 26 February 2004 Part 3 Legal & General Group Plc P1 Consolidated Profit and Loss Account - Modified Statutory Solvency Basis Year ended 31 December 2003 -------------------------------------------------------------------------------- Notes 2003 2002 £m £m Profit on continuing operations Life and pensions 1 443 421 Institutional fund management 53 50 General insurance 41 46 Other operational income 18 (24) --------------- --------------- Operating profit on continuing operations 555 493 Profit on discontinued operations Other operational income - Banking - 4 --------------- --------------- Operating profit 555 497 Variation from longer term investment return 58 (63) Change in equalisation provision (7) (5) Shareholder retained capital (SRC) 2 (137) (571) contribution Profit on sale of banking operations - 36 --------------- --------------- Profit/(loss) on ordinary activities 469 (106) before tax *************** *************** Tax charge on operating profit : (160): : (148): Tax credit on other losses : 95 : : 74 : *************** *************** Tax charge on profit/(loss) on (65) (74) ordinary activities --------------- --------------- Profit/(loss) for the financial period 404 (180) Dividends (318) (297) --------------- --------------- Retained profit/(loss) 86 (477) ================================================================================ Earnings per share p p Based on operating profit after tax on 6.09 5.88 continuing operations Based on profit/(loss) for the 6.22 (3.07) financial period Diluted earnings per share Based on operating profit after tax on 5.99 5.78 continuing operations Based on profit/(loss) for the 6.12 (3.07) financial period Dividend per share 4.90 4.78 ================================================================================ These financial statements were approved by the Board on 25 February 2004 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 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 2003. 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 2003 -------------------------------------------------------------------------------- Notes At 31.12.03 At 31.12.02 Restated * Assets £m £m Investments 35,280 32,442 Assets held to cover linked liabilities 84,308 69,723 Other assets 5,349 4,528 --------------- --------------- 124,937 106,693 =============== =============== Liabilities Shareholders' funds 3 3,260 3,184 Fund for future appropriations 1,498 516 Technical provisions 117,341 98,858 Borrowings and other creditors 2,838 4,135 --------------- --------------- 124,937 106,693 =============== =============== * Prior year compative figures have been adjusted to reclassify Institutional pension fund temporary monies as Borrowings and other creditors rather than as Technical provisions. There is no adjustment to the reported results. ================================================================================ Statement of Total Recognised Gains and Losses At 31.12.03 At 31.12.02 £m £m Profit/(loss) for the financial period 404 (180) Exchange losses (11) (8) --------------- --------------- Total recognised gains and losses 393 (188) ================================================================================ Legal & General Group Plc P3 Notes to Financial Statements - Modified Statutory Solvency Basis Year ended 31 December 2003 -------------------------------------------------------------------------------- 1. Life and pensions operating profit 2003 2002 £m £m With-profits business 74 91 Non-profit business 295 275 --------------- --------------- UK 369 366 USA 57 52 Netherlands 17 8 France 0 (5) --------------- --------------- 443 421 =============== =============== 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 2003 2002 £m £m Investment income 73 60 Interest expense and charges (2) (2) Realised investment gains/(losses) 20 (23) Unrealised investment appreciation/(depreciation) 230 (377) --------------- --------------- Investment return on SRC 321 (342) Net capital (invested in)/released (163) 46 from non-profit business Distribution of operating profit from (295) (275) non-profit business --------------- --------------- SRC contribution before tax (137) (571) =============== =============== SRC at 1 January 2,259 2,631 *************** *************** SRC contribution before tax : (137): : (571): Tax credit : 90 : : 63 : *************** *************** SRC contribution after tax (47) (508) Change in the net asset values of SRC 0 36 subsidiaries Movement in intra-group subordinated 0 100 debt --------------- --------------- SRC at end of period 2,212 2,259 =============== =============== SRC includes intra-group subordinated debt capital of £602m (2002: £602m). ================================================================================ Legal & General Group Plc P4 Notes to Financial Statements - Modified Statutory Solvency Basis Year ended 31 December 2003 -------------------------------------------------------------------------------- 3. Shareholders' funds At 31.12.03 At 31.12.02 Restated £m £m At 1 January 3,184 2,877 Total recognised gains and losses 393 (188) Dividends (318) (297) Increase in share capital/premium 1 792 --------------- --------------- At 31 December 3,260 3,184 =============== =============== Comprising: Share capital 163 163 Share premium 906 905 Profit and loss account 2,191 2,116 --------------- --------------- 3,260 3,184 =============== =============== The number of fully paid ordinary shares of 2.5p in issue at the period end was 6,504m (2002: 6,502m). The weighted average number of shares used for calculating earnings per share was 6,490m (2002: 5,868m), diluted 6,790m (2002: 6,167m). ================================================================================ 4. Tax 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 £668m (2002: £655m). ================================================================================ Legal & General Group Plc P5 Notes to Financial Statements - Modified Statutory Solvency Basis Year ended 31 December 2003 -------------------------------------------------------------------------------- 5. Segmental analysis of shareholders' funds At 31.12.03 At 31.12.02 £m £m UK solvency capital *************** *************** SRC * : 2,212 : : 2,259 : General insurance : 120 : : 101 : Other ** : 1,905 : : 1,767 : *************** *************** UK solvency capital 4,237 4,127 International shareholders' funds *************** *************** - USA : 443 : : 453 : - Netherlands : 36 : : 24 : - France : 45 : : 36 : *************** *************** 524 513 Institutional fund management 176 161 Corporate funds *** (1,677) (1,617) --------------- --------------- Shareholders' funds on the MSS basis 3,260 3,184 Less: Purchased interests in long term (29) (39) business included in above AP long term in-force business asset 2,365 1,916 --------------- --------------- Shareholders' funds on the AP basis 5,596 5,061 =============== =============== * Including £602m (2002: £602m) of intra-group subordinated debt capital attributed to the SRC. ** Includes the net proceeds of £788m from the 2002 rights issue. *** Includes £518m (2002: £516m) of convertible debt and £602m (2002: £602m) of senior debt which has been onlent to the UK LTF. ================================================================================ 6. UK Long Term Fund At 31.12.03 At 31.12.02 £bn £bn With-profits business 25.3 23.0 Non-profit business 14.3 11.6 *************** *************** Sub-fund : 0.2 : : 0.2 : SRC : 2.2 : : 2.3 : *************** *************** 2.4 2.5 --------------- --------------- Value of fund 42.0 37.1 ================================================================================ Legal & General Group Plc P6 Consolidated Cash Flow Statement (excluding long term business) Year ended 31 December 2003 -------------------------------------------------------------------------------- 2003 2002 £m £m Net cash inflow from operating activities 407 520 Interest paid (58) (52) Tax (received)/paid (2) 18 Capital expenditure - net payments - (1) Net cash received on disposal of - 20 banking subsidiaries Acquisition of subsidiaries from the LTF - (107) Dividends paid (313) (263) *************** *************** Issue of share capital : 1 : : 792 : (Decrease)/increase in total borrowing : (76): : 249 : Decrease in mortgage related borrowing : 0 : : (31): *************** *************** Financing (75) 1,010 --------------- --------------- (41) 1,145 =============== =============== Cash flows (not including long term business) were invested/(divested) as follows: Increase in cash holdings 2 4 Net (sale)/purchase of investments (43) 1,141 --------------- --------------- Net (divestment)/investment (41) 1,145 =============== =============== Reconciliation of profit before tax to operating cash flow Profit/(loss) on ordinary activities before tax 469 (106) (Loss)/profit relating to life and pensions business (308) 113 Long term business profit included in (40) (34)* Institutional fund management Cash received from life and pensions business 275 132 Cash received from Institutional fund management 24 - Increase in other operating creditors 19 199 Other items (32) 216* --------------- --------------- Net cash inflow from operating activities 407 520 =============== =============== * Profits relating to Institutional fund management have been separately classified. ================================================================================ This information is provided by RNS The company news service from the London Stock Exchange

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