International Financial Reporting Standards |
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Page 31 |
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Supplementary operating profit information |
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For the six months ended 30 June 2011 |
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Full year |
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30.06.11 |
30.06.10 |
31.12.10 |
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Notes |
£m |
£m |
£m |
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From continuing operations |
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Risk |
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2.01(a) |
236 |
310 |
560 |
Savings |
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2.02(a) |
68 |
54 |
115 |
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Investment management |
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2.03 |
117 |
98 |
206 |
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International |
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2.04 |
66 |
61 |
102 |
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Group capital and financing |
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2.05 |
61 |
33 |
58 |
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Investment projects1 |
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(25) |
(14) |
(39) |
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Operating profit |
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523 |
542 |
1,002 |
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Variation from longer term investment return |
2.06 |
(49) |
(4) |
90 |
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Property losses attributable to non-controlling interests |
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(1) |
(1) |
- |
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Profit before tax |
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473 |
537 |
1,092 |
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Tax expense attributable to equity holders of the Company |
2.07 |
(115) |
(136) |
(272) |
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Profit for the period |
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358 |
401 |
820 |
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Attributable to: |
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Non-controlling interests |
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2.17 |
(1) |
(1) |
- |
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Equity holders of the Company |
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359 |
402 |
820 |
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p |
p |
p |
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Earnings per share |
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2.11 |
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Based on operating profit after tax attributable to equity holders |
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of the Company |
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6.69 |
6.73 |
12.89 |
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Based on profit attributable to equity holders of the Company |
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6.16 |
6.90 |
14.07 |
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Diluted earnings per share |
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2.11 |
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Based on operating profit after tax attributable to equity holders |
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of the Company |
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6.58 |
6.66 |
12.72 |
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Based on profit attributable to equity holders of the Company |
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6.06 |
6.83 |
13.88 |
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1. Investment projects relate to strategic investments including Solvency II. |
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This supplementary operating profit information (one of the Group's key performance indicators) provides further analysis of the results reported under IFRS and we believe gives shareholders a better understanding of the underlying performance of the business. |
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Operating profit for the Risk segment represents the profit from the annuities business (individual and bulk purchase annuities) and the profit from the housing and protection businesses (general insurance, and individual and group protection business). Operating profit reflects the investment returns that the business expects to make on the financial investments that back this business and on shareholder funds retained within our general insurance business. |
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Operating profit for the Savings segment represents the profit from the insured Savings businesses (non profit investment bonds and non profit pensions (including SIPPs)), the with-profits transfer and the profit of our Savings investments business. Operating profit reflects the investment returns that the business expects to make on the financial investments that back this business. |
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Operating profit for the Investment management and International segments includes a longer term expected investment return on the shareholders' funds within the Investment management and Netherlands' operations. |
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Investment return on Group capital incorporates a longer term expected investment return using longer term investment return assumptions applied to the average balance of Group invested assets (including interest bearing intra-group balances) calculated on a monthly basis. Profits or losses arising from actuarial movements on annuities held by the Group's defined benefit pension schemes are excluded from operating profit. Profits or losses arising on the elimination of own debt holdings are also excluded from operating profit. |
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International Financial Reporting Standards |
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Page 32 |
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Supplementary operating profit information |
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2.01 Risk |
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(a) Risk operating profit |
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Full year |
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30.06.11 |
30.06.10 |
31.12.10 |
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Notes |
£m |
£m |
£m |
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Annuities |
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145 |
194 |
364 |
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Protection |
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75 |
104 |
207 |
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General insurance |
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17 |
14 |
(8) |
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Other |
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(1) |
(2) |
(3) |
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Total Housing and Protection |
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91 |
116 |
196 |
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Total Risk operating profit1 |
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2.01(b) |
236 |
310 |
560 |
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1. Prior year comparatives include a one-off benefit of £72m resulting from inflation modelling enhancements (see Note 2.01(d)). |
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(b) Analysis of Risk operating profit |
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Housing |
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Housing |
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and |
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and |
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Annuities |
Protection |
Total |
Annuities |
Protection |
Total |
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30.06.11 |
30.06.11 |
30.06.11 |
30.06.10 |
30.06.10 |
30.06.10 |
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Notes |
£m |
£m |
£m |
£m |
£m |
£m |
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Risk business segment operating profit comprises: |
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Operational cash generation |
112 |
121 |
233 |
106 |
106 |
212 |
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New business strain1 |
1 |
(41) |
(40) |
35 |
(45) |
(10) |
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Net cash generation |
113 |
80 |
193 |
141 |
61 |
202 |
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Experience |
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variances |
2.01(c) |
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(7) |
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(3) |
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Changes to |
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valuation |
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assumptions |
2.01(d) |
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30 |
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98 |
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Movements in |
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non-cash items |
2.01(e) |
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(43) |
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(78) |
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Other |
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- |
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5 |
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173 |
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224 |
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Tax gross up |
2.07 |
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63 |
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86 |
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Total Risk operating profit |
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236 |
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310 |
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1. Annuities new business strain of £1m (H1 10: £35m; FY 10: £60m) reflects the continued normalisation of pricing conditions in the annuities market. |
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Housing |
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and |
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Annuities |
Protection |
Total |
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Full year |
Full year |
Full year |
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31.12.10 |
31.12.10 |
31.12.10 |
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Notes |
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£m |
£m |
£m |
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Risk business segment operating profit comprises: |
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Operational cash generation |
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229 |
210 |
439 |
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New business strain |
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60 |
(70) |
(10) |
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Net cash generation |
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289 |
140 |
429 |
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Experience |
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variances |
2.01(c) |
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67 |
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Changes to |
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valuation |
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assumptions |
2.01(d) |
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30 |
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Movements in |
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non-cash items |
2.01(e) |
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(122) |
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Other |
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(1) |
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403 |
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Tax gross up |
2.07 |
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157 |
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Total Risk operating profit |
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560 |
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The annuities and protection (non profit business) operational cash generation represents the expected surplus to be generated in the period from the in-force non profit business which is broadly equivalent to the expected release of profit from the non profit Risk business using best estimate assumptions. The experience variances are calculated with reference to embedded value assumptions, including the apportionment of investment return and tax in the EEV model. |
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Both new business strain and operational cash generation exclude required solvency margin from the liability calculation as is required by the ABI SORP. |
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International Financial Reporting Standards |
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Page 33 |
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Supplementary operating profit information |
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2.01 Risk (continued) |
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(c) Experience variances |
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An analysis of the experience variances, valuation assumption changes and non-cash items, all net of tax, is provided below: |
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Full year |
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30.06.11 |
30.06.10 |
31.12.10 |
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£m |
£m |
£m |
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Persistency |
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(3) |
(5) |
(3) |
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Mortality/morbidity1 |
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(32) |
2 |
(8) |
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Expenses |
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- |
1 |
(1) |
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Bulk purchase annuity data loading |
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19 |
- |
59 |
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Project and development costs |
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(5) |
(5) |
(9) |
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Tax2 |
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16 |
20 |
37 |
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Other |
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(2) |
(16) |
(8) |
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(7) |
(3) |
67 |
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1. The adverse mortality expense variance includes £27m relating to the Group Protection business, of which half is due to a small number of high value claims. |
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2. This principally relates to the utilisation of brought forward tax losses. |
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(d) Changes to valuation assumptions |
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Full year |
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30.06.11 |
30.06.10 |
31.12.10 |
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£m |
£m |
£m |
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Persistency |
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- |
- |
(5) |
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Mortality/morbidity1 |
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- |
35 |
(19) |
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Expenses2 |
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18 |
(14) |
(9) |
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Other3 |
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12 |
77 |
63 |
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30 |
98 |
30 |
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1. Mortality/morbidity includes the release of £nil (H1 10: £32m; FY 10: £43m) relating to reserving benefits within individual protection. FY 10 was offset by a £59m strengthening of mortality assumptions within the annuity business. |
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2. The positive expense assumption reflects the lower unit costs in individual protection. The prior year reflected the impact of a change in reserving basis for custodian fees. |
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3. Prior year Other reflects the benefit from inflation modelling enhancement on deferred annuity business. |
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(e) Movements in non-cash items |
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Full year |
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30.06.11 |
30.06.10 |
31.12.10 |
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£m |
£m |
£m |
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Deferred tax |
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(38) |
(80) |
(125) |
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Other |
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(5) |
2 |
3 |
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(43) |
(78) |
(122) |
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(f) General insurance operating profit/(loss) |
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Net |
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Net |
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cash |
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cash |
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gener- |
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Operating |
gener- |
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Operating |
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ation |
Tax |
profit |
ation |
Tax |
profit |
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30.06.11 |
30.06.11 |
30.06.11 |
30.06.10 |
30.06.10 |
30.06.10 |
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£m |
£m |
£m |
£m |
£m |
£m |
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Household |
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9 |
4 |
13 |
8 |
3 |
11 |
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Other business |
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|
3 |
1 |
4 |
2 |
1 |
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 |
5 |
17 |
10 |
4 |
14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net |
|
|
|
|
|
|
|
|
|
cash |
|
Operating |
|
|
|
|
|
|
|
gener- |
|
(loss)/ |
|
|
|
|
|
|
|
ation |
Tax |
profit |
|
|
|
|
|
|
|
Full year |
Full year |
Full year |
|
|
|
|
|
|
|
31.12.10 |
31.12.10 |
31.12.10 |
|
|
|
|
|
|
|
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Household |
|
|
|
|
|
(10) |
(4) |
(14) |
|
Other business |
|
|
|
|
|
4 |
2 |
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6) |
(2) |
(8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Financial Reporting Standards |
|
|
Page 34 |
||||||
Supplementary operating profit information |
|
|
|
||||||
2.01 Risk (continued) |
|
|
|
|
|
|
|
||
(g) General insurance underwriting result |
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
Full year |
|
|
|
|
|
|
|
30.06.11 |
30.06.10 |
31.12.10 |
|
|
|
|
|
|
|
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Household |
|
|
|
|
|
6 |
7 |
(27) |
|
Other business |
|
|
|
|
|
3 |
2 |
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9 |
9 |
(22) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(h) General insurance combined operating ratio |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
Full year |
|
|
|
|
|
|
|
30.06.11 |
30.06.10 |
31.12.10 |
|
|
|
|
|
|
|
% |
% |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Household |
|
|
|
|
|
92 |
91 |
109 |
|
Other business |
|
|
|
|
|
69 |
79 |
77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90 |
90 |
106 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.02 Savings |
|
|
|
|
|
|
|
|
|
(a) Savings operating profit |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
Full year |
|
|
|
|
|
|
|
30.06.11 |
30.06.10 |
31.12.10 |
|
|
|
|
|
|
Notes |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insured savings1 |
|
|
|
|
|
20 |
8 |
31 |
|
With-profits2 |
|
|
|
|
|
35 |
32 |
63 |
|
Savings investments3 |
|
|
|
13 |
14 |
21 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Savings operating profit |
|
2.02(b) |
68 |
54 |
115 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. Insured savings includes non profit investment bonds and pensions (including SIPPs), Nationwide Life Savings business and International (Ireland). |
|||||||||
2. With-profits business operating profit is the shareholders' share of total with-profits bonuses. |
|
|
|||||||
3. Savings investments operating profit includes retail and institutional unit trusts and Suffolk Life. |
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Analysis of Savings operating profit |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
Savings |
|
|
|
|
|
|
|
Insured |
With- |
invest- |
|
|
|
|
|
|
|
savings |
profits |
ments |
Total |
|
|
|
|
|
|
30.06.11 |
30.06.11 |
30.06.11 |
30.06.11 |
|
|
|
|
Notes |
|
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings business segment operating profit comprises: |
|
|
|
|
|
||||
|
Operational cash generation |
|
51 |
26 |
12 |
89 |
|||
|
New business strain |
|
(31) |
- |
- |
(31) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash generation1 |
|
20 |
26 |
12 |
58 |
|||
Insured savings |
|
|
|
|
|
|
|
|
|
|
Experience variances |
2.02(c) |
|
|
|
|
(3) |
||
|
Changes to valuation |
|
|
|
|
|
|
||
|
assumptions |
2.02(d) |
|
|
|
|
3 |
||
|
Movements in |
|
|
|
|
|
|
||
|
non-cash items |
2.02(e) |
|
|
|
|
(8) |
||
|
Other |
|
|
|
|
|
|
|
4 |
Savings investments |
|
|
|
|
|
|
|||
|
Movements in non-cash items and other |
|
|
|
|
(4) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50 |
|
Tax gross up |
2.07 |
|
|
|
|
18 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Savings operating profit |
|
|
|
|
68 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. Insured savings Net cash generation of £20m (H1 10: £3m; FY 10: £1m) reflects the benefit of higher fees on higher opening asset values coupled with continued expense and commission savings resulting in a lower new business strain. |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Financial Reporting Standards |
|
|
Page 35 |
||||||
Supplementary operating profit information |
|
|
|
||||||
2.02 Savings (continued) |
|
|
|
|
|
||||
(b) Analysis of Savings operating profit (continued) |
|
|
|
|
|||||
|
|
|
|
|
|
|
|
Savings |
|
|
|
|
|
|
|
Insured |
With- |
invest- |
|
|
|
|
|
|
|
savings |
profits |
ments |
Total |
|
|
|
|
|
|
30.06.10 |
30.06.10 |
30.06.10 |
30.06.10 |
|
|
|
|
Notes |
|
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings business segment operating profit comprises: |
|
|
|
|
|
||||
|
Operational cash generation |
|
36 |
23 |
13 |
72 |
|||
|
New business strain |
|
(34) |
- |
- |
(34) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash generation |
|
2 |
23 |
13 |
38 |
|||
Insured savings |
|
|
|
|
|
|
|
|
|
|
Experience variances |
2.02(c) |
|
|
|
|
9 |
||
|
Changes to valuation |
|
|
|
|
|
|
||
|
assumptions |
2.02(d) |
|
|
|
|
(6) |
||
|
Movements in |
|
|
|
|
|
|
||
|
non-cash items |
2.02(e) |
|
|
|
|
2 |
||
|
Other |
|
|
|
|
|
|
|
(1) |
Savings investments |
|
|
|
|
|
|
|
||
|
Movements in non-cash items and other |
|
|
|
(4) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38 |
|
Tax gross up |
2.07 |
|
|
|
|
16 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Savings operating profit |
|
|
|
|
|
|
54 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings |
|
|
|
|
|
|
|
Insured |
With- |
invest- |
|
|
|
|
|
|
|
savings |
profits |
ments |
Total |
|
|
|
|
|
|
Full year |
Full year |
Full year |
Full year |
|
|
|
|
|
|
31.12.10 |
31.12.10 |
31.12.10 |
31.12.10 |
|
|
|
|
Notes |
|
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings business segment operating profit comprises: |
|
|
|
|
|
||||
|
Operational cash generation |
|
71 |
46 |
21 |
138 |
|||
|
New business strain |
|
(70) |
- |
- |
(70) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash generation |
|
1 |
46 |
21 |
68 |
|||
Insured savings |
|
|
|
|
|
|
|
|
|
|
Experience variances |
2.02(c) |
|
|
|
|
10 |
||
|
Changes to valuation |
|
|
|
|
|
|
||
|
assumptions |
2.02(d) |
|
|
|
|
28 |
||
|
Movements in |
|
|
|
|
|
|
||
|
non-cash items |
2.02(e) |
|
|
|
|
(21) |
||
|
Other |
|
|
|
|
|
|
|
4 |
Savings investments |
|
|
|
|
|
|
|||
|
Movements in non-cash items and other |
|
|
|
(9) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80 |
|
Tax gross up |
2.07 |
|
|
|
|
35 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Savings operating profit |
|
|
|
|
|
|
115 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The insured savings operational cash generation represents the expected surplus generated in the period from the in-force investment bonds and pensions business (non profit Savings) which is broadly equivalent to the expected release of profit from non profit savings business using best estimate assumptions and the IFRS profit after tax of the Nationwide Life Savings business and International (Ireland). The experience variances are calculated with reference to embedded value assumptions, including the apportionment of investment return and tax in the EEV model. |
|||||||||
|
|
|
|
|
|
|
|
|
|
Both new business strain and operational cash generation exclude required solvency margin from the liability calculation as is required by the ABI SORP. |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Financial Reporting Standards |
|
|
Page 36 |
||||||
Supplementary operating profit information |
|
|
|
||||||
2.02 Savings (continued) |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
An analysis of the experience variances, valuation assumption changes and non-cash items, all net of tax, is provided below: |
|||||||||
|
|
|
|
|
|
|
|
|
|
(c) Experience variances |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
Full year |
|
|
|
|
|
|
|
30.06.11 |
30.06.10 |
31.12.10 |
|
|
|
|
|
|
|
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Persistency |
|
|
|
|
|
- |
- |
(3) |
|
Mortality/morbidity |
|
|
|
|
|
- |
- |
1 |
|
Expenses |
|
|
|
|
|
1 |
(1) |
3 |
|
Project and development costs |
|
|
(4) |
(1) |
(4) |
||||
Tax |
|
|
|
|
|
|
(1) |
8 |
14 |
Other |
|
|
|
|
|
1 |
3 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) |
9 |
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) Changes to valuation assumptions |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
Full year |
|
|
|
|
|
|
|
30.06.11 |
30.06.10 |
31.12.10 |
|
|
|
|
|
|
|
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortality/morbidity |
|
|
|
|
|
- |
- |
2 |
|
Expenses |
|
|
|
|
|
1 |
(1) |
3 |
|
Other |
|
|
|
|
|
2 |
(5) |
23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 |
(6) |
28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e) Movements in non-cash items |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
Full year |
|
|
|
|
|
|
|
30.06.11 |
30.06.10 |
31.12.10 |
|
|
|
|
|
|
Notes |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax |
|
|
|
|
|
(9) |
(17) |
(39) |
|
Deferred acquisition costs (DAC) |
|
2.02(f) |
(25) |
(5) |
(16) |
||||
Deferred income liabilities (DIL) |
|
|
28 |
18 |
33 |
||||
Other |
|
|
|
|
|
(2) |
6 |
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8) |
2 |
(21) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(f) Deferred acquisition cost movement, net of associated deferred tax |
|
|
|||||||
|
|
|
|
|
|
|
|
|
Full year |
|
|
|
|
|
|
|
30.06.11 |
30.06.10 |
31.12.10 |
|
|
|
|
|
|
|
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 1 January |
|
|
|
|
|
612 |
628 |
628 |
|
Amortisation through income1 |
|
|
(50) |
(32) |
(66) |
||||
Acquisition costs deferred |
|
|
25 |
27 |
50 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 30 June / 31 December |
|
587 |
623 |
612 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. Included in the amortisation of the DAC asset at H1 11 is £16m relating to changes to economic assumptions relating to the trail commission. This has been offset by a similar movement in the DIL liability. |
|||||||||
|
|
|
|
|
|
|
|
|
|
The Group's balance sheet deferred acquisition costs also includes amounts relating to the Group's overseas, general insurance, retail investments and with-profits businesses and is presented gross of associated deferred tax. |
|||||||||
|
|
|
|
|
|
|
|
|
|
Expected amortisation profile: |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
Full year |
|
|
|
|
|
|
|
30.06.11 |
30.06.10 |
31.12.10 |
|
|
|
|
|
|
|
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected to be amortised within one year |
66 |
72 |
69 |
||||||
Expected to be amortised between one year and five years |
273 |
288 |
276 |
||||||
Expected to be amortised in over five years |
248 |
263 |
267 |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
587 |
623 |
612 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Financial Reporting Standards |
|
|
Page 37 |
||||||
Supplementary operating profit information |
|
|
|
||||||
2.03 Investment management |
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
Full year |
|
|
|
|
|
|
|
30.06.11 |
30.06.10 |
31.12.10 |
|
|
|
|
|
|
|
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension funds (managed and segregated) |
|
87 |
70 |
148 |
|||||
Other non-pension1 |
|
12 |
11 |
20 |
|||||
Investment management services for internal funds |
|
18 |
17 |
38 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investment management operating profit |
117 |
98 |
206 |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. Other non-pension includes institutional segregated mandates, private equity and property (both in the UK and overseas). Interest income on shareholder funds of £5m (H1 10: £6m; FY 10: £11m) has been included within other non-pension operating profit. |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.04 International |
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full year |
|
|
|
|
|
|
|
30.06.11 |
30.06.10 |
31.12.10 |
|
|
|
|
|
|
|
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
USA |
|
|
|
|
|
50 |
44 |
85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Netherlands |
|
|
|
|
|
6 |
14 |
20 |
|
France |
|
|
|
|
|
12 |
7 |
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Europe operating profit |
|
18 |
21 |
26 |
|||||
Other1 |
|
|
|
|
|
(2) |
(4) |
(9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total International operating profit2 |
|
66 |
61 |
102 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. Other includes our joint venture operations in Egypt, the Gulf, India and business unit overhead costs of £2m (H1 10: £2m; FY 10: £5m). |
|||||||||
2. In H1 2011, the International division paid £35m (H1 10: £33m; FY 10: £44m) of dividends to the Group. |
|
||||||||
|
|
|
|
|
|
|
|
|
|
Exchange rates are provided in Note 2.18. |
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.05 Group capital and financing |
|
|
|
||||||
|
|
|
|
|
|
|
|
|
Full year |
|
|
|
|
|
|
|
30.06.11 |
30.06.10 |
31.12.10 |
|
|
|
|
|
|
|
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment return1 |
|
|
|
|
|
130 |
96 |
187 |
|
Interest expense2 |
|
|
|
|
|
(62) |
(59) |
(121) |
|
Investment expenses |
|
|
(2) |
(1) |
(3) |
||||
Unallocated corporate expenses |
|
(5) |
(3) |
(5) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Group capital and financing operating profit |
|
61 |
33 |
58 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. The longer term expected investment return of £130m (H1 10: £96m; FY 10: £187m) reflects an average return of 3.4% (H1 10: 3.0%; FY 10: 5.8%) on the average balance of invested assets of £3.8bn (H1 10: £3.2bn; FY 10: £3.2bn) held within Group capital and financing calculated on a monthly basis. The invested assets held within Group capital and financing amounted to £4.1bn at 30 June 2011 (30 June 2010: £3.1bn; 31 December 2010: £3.3bn). This excludes £0.3bn of derivative assets held to hedge interest rate and exchange rate exposure in relation to the Group's debt. |
|||||||||
2. Interest expense excludes interest on non recourse financing (see Note 2.16). |
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Financial Reporting Standards |
|
|
Page 38 |
||||||
Supplementary operating profit information |
|
|
|
||||||
2.06 Variation from longer term investment return |
|
|
|
||||||
|
|
|
|
|
|
|
|
|
Full year |
|
|
|
|
|
|
|
30.06.11 |
30.06.10 |
31.12.10 |
|
|
|
|
|
|
|
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk1 |
|
|
|
|
|
15 |
112 |
102 |
|
Savings2 |
|
|
|
|
|
(2) |
(16) |
(54) |
|
Investment management |
|
|
(3) |
(4) |
(8) |
||||
International3 |
|
|
|
|
|
4 |
25 |
35 |
|
Group capital and financing |
|
|
|
|
|
||||
|
Asset related4 |
|
|
|
(47) |
(82) |
52 |
||
|
Debt related5 |
|
|
|
(19) |
(65) |
(72) |
||
|
Defined benefit pension scheme6 |
|
3 |
26 |
35 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total variation from longer term investment return |
|
(49) |
(4) |
90 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. The annuities division has generated £10m of IFRS investment variance in the first half of 2011 which demonstrates the resilience of our asset portfolio and investment strategy in challenging economic conditions. |
|||||||||
2. Savings business investment variance includes the difference between IFRS deferred policyholder tax and the amount included within the unit linked life funds. |
|||||||||
3. At H1 10 the International investment variance included £28m investment gains on Dutch government bonds due to reductions in bond yields generating capital gains. At FY 10, the International investment variance included a £28m benefit from the US Capital restructuring programme, which involved replacing the Triple X financing solution with an internal reinsurance structure. The benefit was the result of purchasing the Potomac Trust Capital Class A Money Market Securities (used to fund the Triple X solution) at a discount. |
|||||||||
4. Group capital and financing operating profit incorporates an assumed long term investment return. The asset related investment variance reflects the difference between the assumed return and actual return on Society shareholder capital and the Group's treasury assets. |
|||||||||
5. The Group manages its exposure to interest rate movements on debt issued with a series of interest rate swaps to lock into a fixed funding cost. The Group does not hold an active trading position in such derivative contracts. For contracts which have not been designated within hedge accounting relationships there is resulting short term income statement volatility which in 2011, primarily as a result of a decrease in the relevant long term interest rates, amounted to £(29)m (H1 10: £(56)m; FY 10: £(62)m). In addition, the elimination of Legal & General debt owned by the Group is £4m (H1 10: £(4)m; FY 10: £(8)m) and other small items have an impact of £6m (H1 10: £(5)m; FY 10: £(2)m). |
|||||||||
6. The defined benefit pension scheme investment variance includes the actuarial gains and losses and valuation difference arising on annuity assets held by the defined benefit pension schemes that have been purchased from Legal & General Assurance Society Limited. |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.07 Analysis of tax |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/ |
|
Profit/ |
|
Profit/ |
|
|
|
|
|
(loss) |
Tax |
(loss) |
Tax |
(loss) |
Tax |
|
|
|
|
before |
(expense)/ |
before |
(expense)/ |
before |
(expense)/ |
|
|
|
|
tax |
credit |
tax |
credit |
tax |
credit |
|
|
|
|
|
|
|
|
Full |
Full |
|
|
|
|
|
|
|
|
year |
year |
|
|
|
|
30.06.11 |
30.06.11 |
30.06.10 |
30.06.10 |
31.12.10 |
31.12.10 |
|
|
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk |
|
|
|
236 |
(63) |
310 |
(86) |
560 |
(157) |
Savings |
|
|
68 |
(18) |
54 |
(16) |
115 |
(35) |
|
Investment management |
117 |
(26) |
98 |
(28) |
206 |
(44) |
|||
International |
|
|
66 |
(22) |
61 |
(21) |
102 |
(25) |
|
Group capital and financing |
61 |
(11) |
33 |
(3) |
58 |
(1) |
|||
Investment projects |
|
(25) |
7 |
(14) |
4 |
(39) |
11 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit/Tax expense |
523 |
(133) |
542 |
(150) |
1,002 |
(251) |
|||
Variation from longer term |
|
|
|
|
|
|
|||
investment return |
|
(49) |
22 |
(4) |
14 |
90 |
(16) |
||
Impact of change in UK tax rates |
- |
(4) |
- |
- |
- |
(5) |
|||
Property losses attributable to |
|
|
|
|
|
|
|||
non-controlling interests |
(1) |
- |
(1) |
- |
- |
- |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period/Tax expense |
|
|
|
|
|
|
|||
for the period |
|
|
473 |
(115) |
537 |
(136) |
1,092 |
(272) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The equity holders' effective tax rate for the period is 24.3% (H1 10: 25.3%; FY 10: 24.9%). The principal reasons for the decrease relates to a fall in the standard rate of corporation tax applicable for the period to 26.5% and the recognition of a previously unrecognised deferred tax asset of £12m. |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Financial Reporting Standards |
|
|
Page 39 |
||||||
Consolidated Income Statement |
|
|
|
|
|
||||
For the six months ended 30 June 2011 |
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
Full year |
|
|
|
|
|
|
|
30.06.11 |
30.06.10 |
31.12.10 |
|
|
|
|
|
|
Notes |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
Gross written premiums |
|
2.10 |
2,382 |
2,772 |
5,348 |
||||
Outward reinsurance premiums |
|
(291) |
(286) |
(590) |
|||||
Net change in provision for unearned premiums |
|
|
(13) |
(7) |
(14) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned |
|
|
2,078 |
2,479 |
4,744 |
||||
Fees from fund management and investment contracts |
|
|
463 |
452 |
900 |
||||
Investment return |
|
|
|
|
|
7,738 |
1,170 |
32,671 |
|
Operational income |
|
|
|
|
88 |
42 |
125 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
|
|
|
10,367 |
4,143 |
38,440 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
Claims and change in insurance liabilities |
|
|
|
2,607 |
3,748 |
7,567 |
|||
Reinsurance recoveries |
|
|
(275) |
(344) |
(621) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net claims and change in insurance liabilities |
2,332 |
3,404 |
6,946 |
||||||
Change in provisions for investment contract liabilities |
|
|
6,729 |
(587) |
28,154 |
||||
Acquisition costs |
|
|
|
|
|
393 |
377 |
770 |
|
Finance costs |
|
|
|
|
|
77 |
78 |
168 |
|
Other expenses |
|
|
|
|
|
462 |
381 |
905 |
|
Transfers (from)/to unallocated divisible surplus |
|
|
(137) |
(87) |
190 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
|
|
|
9,856 |
3,566 |
37,133 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before income tax |
|
|
|
|
511 |
577 |
1,307 |
||
Income tax expense attributable to policyholder returns |
|
|
(38) |
(40) |
(215) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before income tax attributable to equity holders of the Company |
473 |
537 |
1,092 |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax expense |
|
(153) |
(176) |
(487) |
|||||
Income tax expense attributable to policyholder returns |
|
38 |
40 |
215 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense attributable to equity holders |
2.07 |
(115) |
(136) |
(272) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period |
|
|
358 |
401 |
820 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
Non-controlling interests |
|
|
|
(1) |
(1) |
- |
|||
Equity holders of the Company |
|
|
359 |
402 |
820 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend distributions to equity holders of the Company |
|
|
|
|
|||||
during the period |
2.14 |
201 |
160 |
238 |
|||||
Dividend distributions to equity holders of the Company |
|
|
|
|
|||||
proposed after the period |
2.14 |
97 |
78 |
201 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
p |
p |
p |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|||
Based on profit attributable to equity holders of the Company |
2.11 |
6.16 |
6.90 |
14.07 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
|
|
|
|
|
|
||
Based on profit attributable to equity holders of the Company |
2.11 |
6.06 |
6.83 |
13.88 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This financial information was approved by the Board on 2 August 2011. |
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
The results for the six months to 30 June 2011 and 30 June 2010 are unaudited, but have been subject to a review by the Group's independent auditors and constitute non-statutory accounts within the meaning of Section 434 of the Companies Act 2006. They have been prepared on a basis which is consistent with the consolidated Group financial statements approved on 16 March 2011 which have been filed with the Registrar of Companies. The published full year 2010 consolidated Group financial statements prepared under IFRS included an independent auditors' report which was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and did not contain a statement under Chapter 3 of Part 16 of the Companies Act 2006. |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Financial Reporting Standards |
|
|
Page 40 |
||||||
Consolidated Statement of Comprehensive Income |
|
||||||||
For the six months ended 30 June 2011 |
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
Full year |
|
|
|
|
|
|
|
30.06.11 |
30.06.10 |
31.12.10 |
|
|
|
|
|
|
|
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period |
|
|
|
358 |
401 |
820 |
|||
|
|
|
|
|
|
|
|
|
|
Other comprehensive income after tax |
|
|
|
|
|||||
Exchange differences on translation of overseas operations |
|
(7) |
25 |
8 |
|||||
Actuarial (losses) on defined benefit pension schemes |
|
|
(3) |
(29) |
(9) |
||||
Actuarial losses on defined benefit pension schemes |
|
|
|
|
|
||||
transferred to unallocated divisible surplus |
|
|
|
1 |
12 |
4 |
|||
Net change in financial investments designated as available-for-sale |
9 |
21 |
27 |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the period |
|
|
358 |
430 |
850 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income/(expense) attributable to: |
|
|
|
|
|
||||
Non-controlling interests |
|
|
(1) |
(1) |
- |
||||
Equity holders of the Company |
|
|
359 |
431 |
850 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Financial Reporting Standards |
|
|
Page 41 |
||||||
Consolidated Balance Sheet |
|
|
|||||||
As at 30 June 2011 |
|
|
|
|
|
||||
|
|
|
|
|
|
|
At |
At |
At |
|
|
|
|
|
|
|
30.06.11 |
30.06.10 |
31.12.10 |
|
|
|
|
|
|
Notes |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
Purchased interest in long term businesses and other intangible assets |
145 |
132 |
157 |
||||||
Deferred acquisition costs |
|
|
1,983 |
2,030 |
2,000 |
||||
Investment in associates |
|
|
57 |
44 |
57 |
||||
Plant and equipment |
|
|
|
66 |
56 |
64 |
|||
Investment property |
|
|
4,758 |
4,303 |
4,571 |
||||
Financial investments |
|
|
2.13 |
302,303 |
272,690 |
299,570 |
|||
Reinsurers' share of contract liabilities |
|
|
|
2,359 |
2,241 |
2,336 |
|||
Deferred tax asset |
|
|
|
|
|
477 |
723 |
495 |
|
Income tax recoverable |
|
|
|
- |
1 |
- |
|||
Other assets |
|
|
|
|
|
2,655 |
1,966 |
1,587 |
|
Cash and cash equivalents |
|
|
|
12,358 |
11,261 |
13,036 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
|
|
327,161 |
295,447 |
323,873 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
Share capital |
|
|
|
|
|
147 |
147 |
147 |
|
Share premium |
|
|
|
|
|
940 |
938 |
938 |
|
Employee scheme treasury shares |
|
(45) |
(43) |
(41) |
|||||
Capital redemption and other reserves |
|
|
|
88 |
57 |
79 |
|||
Retained earnings |
|
|
|
|
|
3,857 |
3,368 |
3,704 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity |
|
|
4,987 |
4,467 |
4,827 |
||||
Non-controlling interests |
|
2.17 |
49 |
32 |
47 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
|
|
|
5,036 |
4,499 |
4,874 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
Subordinated borrowings |
|
2.16 |
1,915 |
1,875 |
1,897 |
||||
|
|
|
|
|
|
|
|
|
|
Participating insurance contracts |
|
|
9,131 |
9,279 |
9,383 |
||||
Participating investment contracts |
|
|
7,471 |
7,120 |
7,323 |
||||
Unallocated divisible surplus |
|
|
1,330 |
1,179 |
1,469 |
||||
Value of in-force non-participating contracts |
|
(345) |
(364) |
(377) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Participating contract liabilities |
|
17,587 |
17,214 |
17,798 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-participating insurance contracts |
|
|
|
31,897 |
30,011 |
31,325 |
|||
Non-participating investment contracts |
|
|
|
255,721 |
228,855 |
253,426 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-participating contract liabilities |
|
|
|
287,618 |
258,866 |
284,751 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior borrowings |
|
|
|
|
2.16 |
1,324 |
1,455 |
1,435 |
|
Provisions |
|
|
|
|
|
737 |
810 |
761 |
|
Deferred tax liabilities |
|
|
|
373 |
358 |
356 |
|||
Income tax liabilities |
|
|
|
|
78 |
96 |
111 |
||
Payables and other financial liabilities |
|
|
|
6,126 |
6,465 |
5,473 |
|||
Other liabilities |
|
|
|
|
|
830 |
899 |
954 |
|
Net asset value attributable to unit holders |
|
|
|
5,537 |
2,910 |
5,463 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
|
|
|
322,125 |
290,948 |
318,999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity and liabilities |
|
|
|
|
327,161 |
295,447 |
323,873 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Financial Reporting Standards |
|
|
Page 42 |
||||||
Condensed Consolidated Statement of Changes in Equity |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee |
Capital |
|
|
|
|
|
|
|
|
scheme |
redemption |
|
|
Non- |
|
For the six |
Share |
Share |
treasury |
and other |
Retained |
|
controlling |
Total |
|
months ended |
capital |
premium |
shares |
reserves |
earnings |
Total |
interests |
equity |
|
30 June 2011 |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 1 January |
147 |
938 |
(41) |
79 |
3,704 |
4,827 |
47 |
4,874 |
|
Total comprehensive |
|
|
|
|
|
|
|
||
income/(expense) |
|
|
|
|
|
|
|
|
|
for the period |
- |
- |
- |
2 |
357 |
359 |
(1) |
358 |
|
Options exercised |
|
|
|
|
|
|
|
|
|
under share |
|
|
|
|
|
|
|
|
|
option schemes |
- |
2 |
- |
- |
- |
2 |
- |
2 |
|
Net movement in |
|
|
|
|
|
|
|
|
|
employee scheme |
|
|
|
|
|
|
|
|
|
treasury shares |
- |
- |
(4) |
2 |
2 |
- |
- |
- |
|
Dividends |
- |
- |
- |
- |
(201) |
(201) |
- |
(201) |
|
Movement in third |
|
|
|
|
|
|
|
|
|
party interests |
- |
- |
- |
- |
- |
- |
3 |
3 |
|
Currency translation |
|
|
|
|
|
|
|
||
differences |
- |
- |
- |
5 |
(5) |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at |
|
|
|
|
|
|
|
|
|
30 June 2011 |
147 |
940 |
(45) |
88 |
3,857 |
4,987 |
49 |
5,036 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended 30 June 2010 |
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 1 January |
147 |
936 |
(38) |
41 |
3,110 |
4,196 |
2 |
4,198 |
|
Total comprehensive |
|
|
|
|
|
|
|
||
income/(expense) |
|
|
|
|
|
|
|
|
|
for the period |
- |
- |
- |
46 |
385 |
431 |
(1) |
430 |
|
Options exercised |
|
|
|
|
|
|
|
|
|
under share |
|
|
|
|
|
|
|
|
|
option schemes |
- |
2 |
- |
- |
- |
2 |
- |
2 |
|
Net movement in |
|
|
|
|
|
|
|
|
|
employee scheme |
|
|
|
|
|
|
|
|
|
treasury shares |
- |
- |
(5) |
(3) |
6 |
(2) |
- |
(2) |
|
Dividends |
- |
- |
- |
- |
(160) |
(160) |
- |
(160) |
|
Movement in third |
|
|
|
|
|
|
|
|
|
party interests |
- |
- |
- |
- |
- |
- |
31 |
31 |
|
Currency translation |
|
|
|
|
|
|
|
||
differences |
- |
- |
- |
(27) |
27 |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at |
|
|
|
|
|
|
|
|
|
30 June 2010 |
147 |
938 |
(43) |
57 |
3,368 |
4,467 |
32 |
4,499 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended 31 December 2010 |
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 1 January |
147 |
936 |
(38) |
41 |
3,110 |
4,196 |
2 |
4,198 |
|
Total comprehensive |
|
|
|
|
|
|
|
||
income for |
|
|
|
|
|
|
|
|
|
the year |
- |
- |
- |
35 |
815 |
850 |
- |
850 |
|
Options exercised |
|
|
|
|
|
|
|
|
|
under share |
|
|
|
|
|
|
|
|
|
option schemes |
- |
2 |
- |
- |
- |
2 |
- |
2 |
|
Net movement in |
|
|
|
|
|
|
|
|
|
employee scheme |
|
|
|
|
|
|
|
|
|
treasury shares |
- |
- |
(3) |
12 |
8 |
17 |
- |
17 |
|
Dividends |
- |
- |
- |
- |
(238) |
(238) |
- |
(238) |
|
Movement in third |
|
|
|
|
|
|
|
|
|
party interests |
- |
- |
- |
- |
- |
- |
45 |
45 |
|
Currency translation |
|
|
|
|
|
|
|
||
differences |
- |
- |
- |
(9) |
9 |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at |
|
|
|
|
|
|
|
|
|
31 December 2010 |
147 |
938 |
(41) |
79 |
3,704 |
4,827 |
47 |
4,874 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Financial Reporting Standards |
|
|
Page 43 |
||||||
Consolidated Cash Flow Statement |
|
|
|
|
|||||
For the six months ended 30 June 2011 |
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
Full year |
|
|
|
|
|
|
|
30.06.11 |
30.06.10 |
31.12.10 |
|
|
|
|
|
|
|
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|||||
Profit for the period |
|
|
|
358 |
401 |
820 |
|||
Adjustments for non cash movements in net profit for the period |
|
|
|
||||||
Realised and unrealised (gains)/losses on financial |
|
|
|
||||||
investments and investment properties |
(3,023) |
3,615 |
(23,673) |
||||||
Investment income |
|
|
|
|
|
(4,604) |
(4,695) |
(8,787) |
|
Interest expense |
|
|
|
|
|
77 |
78 |
168 |
|
Income tax expense |
|
|
|
153 |
176 |
487 |
|||
Other adjustments |
|
|
|
|
|
29 |
32 |
59 |
|
Net (increase)/decrease in operational assets |
|
|
|
||||||
Investments held for trading or designated as fair value through profit or loss |
(2,004) |
(500) |
(2,958) |
||||||
Investments designated as available-for-sale |
45 |
(25) |
(39) |
||||||
Other assets |
|
|
|
|
|
(679) |
(383) |
(479) |
|
Net increase/(decrease) in operational liabilities |
|
|
|
||||||
Insurance contracts |
|
|
|
245 |
1,339 |
2,746 |
|||
Transfer (from)/to unallocated divisible surplus |
(139) |
(99) |
186 |
||||||
Investment contracts |
|
|
|
4,269 |
(5,213) |
20,702 |
|||
Value of in-force non-participating contracts |
32 |
3 |
(10) |
||||||
Other liabilities |
|
|
|
|
|
672 |
1,434 |
4,968 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash used in operations |
|
|
|
|
(4,569) |
(3,837) |
(5,810) |
||
Interest paid |
|
|
|
|
|
(77) |
(79) |
(167) |
|
Interest received |
|
|
|
|
|
2,498 |
2,432 |
5,030 |
|
Income tax (paid)/received |
|
|
(140) |
106 |
(164) |
||||
Dividends received |
|
|
|
1,937 |
2,126 |
3,818 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from operating activities |
|
(351) |
748 |
2,707 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|||||
Net acquisition of plant and equipment |
|
(9) |
(3) |
(17) |
|||||
Acquisitions (net of cash acquired)1 |
|
- |
- |
(44) |
|||||
Capital injection into overseas joint ventures |
- |
- |
(8) |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from investing activities |
|
(9) |
(3) |
(69) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|||||
Dividend distributions to ordinary equity holders |
|
|
|
|
|||||
of the Company during the period |
|
(201) |
(160) |
(238) |
|||||
Proceeds from issue of ordinary share capital |
|
2 |
2 |
2 |
|||||
Purchase of employee scheme shares |
|
(9) |
(10) |
(11) |
|||||
Proceeds from borrowings |
|
713 |
292 |
750 |
|||||
Repayment of borrowings |
|
(819) |
(274) |
(758) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from financing activities |
|
(314) |
(150) |
(255) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents |
(674) |
595 |
2,383 |
||||||
Exchange (losses)/gains on cash and cash equivalents |
(4) |
16 |
3 |
||||||
Cash and cash equivalents at 1 January |
13,036 |
10,650 |
10,650 |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at 30 June/31 December |
12,358 |
11,261 |
13,036 |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. Net cash flows from acquisitions include total net identifiable assets acquired of £nil (H1 10: £nil; FY 10: £52m) less cash and cash equivalents acquired of £nil (H1 10: £nil; FY 10: £8m). |
|||||||||
|
|
|
|
|
|
|
|
|
|
The Group's consolidated cash flow statement includes all cash and cash equivalent flows, including those relating to the UK long term fund policyholders. |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Financial Reporting Standards |
|
|
Page 44 |
||||||
Notes to the Financial Statements |
|
|
|
|
|
||||
2.08 Basis of preparation |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
The Group's financial information for the period ended 30 June 2011 has been prepared in accordance with the Listing Rules of the Financial Services Authority. The 2011 Half-year report has also been prepared in accordance with IAS 34, 'Interim Financial Reporting'. The Group's financial information has been prepared in accordance with the accounting policies and methods of computation which the Group expects to adopt for the 2011 year end. These policies are consistent with the principal accounting policies which were set out in the Group's 2010 consolidated financial statements which were consistent with IFRSs issued by the International Accounting Standards Board as adopted by the European Commission for use in the European Union. |
|||||||||
|
|
|
|
|
|
|
|
|
|
The preparation of the Half-year report includes the use of estimates and assumptions which affect items reported in the consolidated balance sheet and income statement and the disclosure of contingent assets and liabilities at the date of the financial statements. The economic and non-economic actuarial assumptions used to establish the liabilities in relation to insurance and investment contracts are significant. For half-year financial reporting, economic assumptions have been updated to reflect market conditions. Non-economic assumptions are consistent with those used in the 31 December 2010 financial statements except for the changes outlined in sections 2.01(d) and 2.02(d). |
|||||||||
|
|
|
|
|
|
|
|
|
|
Estimates are based on management's best knowledge of current circumstances and future events and actions, however, actual results may differ from those estimates, possibly significantly. |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.09 Segmental analysis |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
Reportable segments |
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
The Group has five reporting segments comprising Risk, Savings, Investment management, International, and Group capital and financing. |
|||||||||
|
|
|
|
|
|
|
|
|
|
The Risk segment comprises individual and group protection, individual and bulk purchase annuities, and general insurance, together with estate agencies and the housing related business conducted through our regulated mortgage network. |
|||||||||
|
|
|
|
|
|
|
|
|
|
The Savings segment comprises non profit investment bonds, non profit pensions (including SIPPs), ISAs, retail unit trusts, and all with-profits products. 'Other' principally comprises the Group's interest in Cofunds. |
|||||||||
|
|
|
|
|
|
|
|
|
|
The Investment management segment comprises institutional fund management. |
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
The International segment comprises businesses in the United States, France, the Netherlands and emerging markets. |
|||||||||
|
|
|
|
|
|
|
|
|
|
Shareholders' equity supporting the non profit Risk and Savings businesses is held within Legal & General Assurance Society Limited and Legal & General Pensions Limited and is managed on a groupwide basis within Group capital and financing. This also includes capital within the Group's treasury function and unit trust funds and property partnerships, which are managed on behalf of clients but are required to be consolidated under IFRS, which do not constitute a separately reportable segment. |
|||||||||
|
|
|
|
|
|
|
|
|
|
Transactions between reportable segments are on normal commercial terms, and are included within the reported segments. |
|||||||||
|
|
|
|
|
|
|
|
|
|
The Group assesses performance and allocates resources on the basis of IFRS supplementary operating profit before tax. Segmental IFRS supplementary operating profit before tax is reconciled to the consolidated profit from continuing operations before tax attributable to equity holders and consolidated profit from ordinary activities after income tax. |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Financial Reporting Standards |
|
|
Page 45 |
||||||
Notes to the Financial Statements |
|
|
|
|
|||||
2.09 Segmental analysis (continued) |
|
|
|
|
|||||
(a) Profit/(loss) from ordinary activities after tax |
|
|
|
||||||
|
|
|
|
|
|
Invest- |
|
Group |
|
|
|
|
|
|
|
ment |
|
capital |
|
|
|
|
|
|
|
manage- |
Inter- |
and |
|
For the six months ended |
Risk |
Savings |
ment |
national |
financing1 |
Total |
|||
30 June 2011 |
£m |
£m |
£m |
£m |
£m |
£m |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
236 |
68 |
117 |
66 |
36 |
523 |
|
Variation from longer term |
|
|
|
|
|
|
|||
investment return2 |
15 |
(2) |
(3) |
4 |
(63) |
(49) |
|||
Property losses attributable to |
|
|
|
|
|
|
|||
non-controlling interests |
- |
- |
- |
- |
(1) |
(1) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) from continuing |
|
|
|
|
|
|
|||
operations before tax |
251 |
66 |
114 |
70 |
(28) |
473 |
|||
Tax (expense)/credit attributable to |
|
|
|
|
|
|
|||
equity holders of the Company |
(65) |
(16) |
(25) |
(24) |
15 |
(115) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) for the period |
186 |
50 |
89 |
46 |
(13) |
358 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. For segmental purposes, Investment projects of £25m (H1 10: £14m; FY 10: £39m ) have been included in Group capital and financing. |
|||||||||
2. Additional information concerning the Variation from longer term investment return is provided in Note 2.06. |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Invest- |
|
Group |
|
|
|
|
|
|
|
ment |
|
capital |
|
|
|
|
|
|
|
manage- |
Inter- |
and |
|
For the six months ended |
Risk |
Savings |
ment |
national |
financing1 |
Total |
|||
30 June 2010 |
£m |
£m |
£m |
£m |
£m |
£m |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
310 |
54 |
98 |
61 |
19 |
542 |
|
Variation from longer term |
112 |
(16) |
(4) |
25 |
(121) |
(4) |
|||
investment return |
|
|
|
|
|
|
|||
Property losses attributable to |
|
|
|
|
|
|
|||
non-controlling interests |
- |
- |
- |
- |
(1) |
(1) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) from continuing |
|
|
|
|
|
|
|||
operations before tax |
422 |
38 |
94 |
86 |
(103) |
537 |
|||
Tax (expense)/credit attributable to |
|
|
|
|
|
|
|||
equity holders of the Company |
(115) |
(10) |
(27) |
(28) |
44 |
(136) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) for the period |
307 |
28 |
67 |
58 |
(59) |
401 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Invest- |
|
Group |
|
|
|
|
|
|
|
ment |
|
capital |
|
|
|
|
|
|
|
manage- |
Inter- |
and |
|
For the year ended |
Risk |
Savings |
ment |
national |
financing1 |
Total |
|||
31 December 2010 |
£m |
£m |
£m |
£m |
£m |
£m |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
560 |
115 |
206 |
102 |
19 |
1,002 |
|
Variation from longer term |
|
|
|
|
|
|
|||
investment return |
102 |
(54) |
(8) |
35 |
15 |
90 |
|||
Property losses attributable to |
|
|
|
|
|
|
|||
non-controlling interests |
- |
- |
- |
- |
- |
- |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit from continuing |
|
|
|
|
|
|
|||
operations before tax |
662 |
61 |
198 |
137 |
34 |
1,092 |
|||
Tax (expense)/credit attributable to |
|
|
|
|
|
|
|||
equity holders of the Company |
(184) |
(18) |
(41) |
(37) |
8 |
(272) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year |
478 |
43 |
157 |
100 |
42 |
820 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Financial Reporting Standards |
|
|
Page 46 |
||||||
Notes to the Financial Statements |
|
|
|
|
|||||
2.09 Segmental analysis (continued) |
|
|
|
|
|
||||
(b) Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Invest- |
|
Group |
|
|
|
|
|
|
|
ment |
|
capital |
|
|
|
|
|
|
|
manage- |
Inter- |
and |
|
For the six months ended |
Risk |
Savings |
ment |
national |
financing |
Total |
|||
30 June 2011 |
£m |
£m |
£m |
£m |
£m |
£m |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internal revenue |
|
|
- |
21 |
70 |
9 |
(100) |
- |
|
External revenue |
|
|
1,864 |
1,616 |
6,195 |
596 |
96 |
10,367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
1,864 |
1,637 |
6,265 |
605 |
(4) |
10,367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended |
|
|
|
|
|
|
|||
30 June 2010 |
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internal revenue |
|
|
- |
24 |
59 |
- |
(83) |
- |
|
External revenue |
|
|
2,887 |
1,219 |
(664) |
726 |
(25) |
4,143 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
2,887 |
1,243 |
(605) |
726 |
(108) |
4,143 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended |
|
|
|
|
|
|
|||
31 December 2010 |
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internal revenue |
|
|
- |
46 |
128 |
- |
(174) |
- |
|
External revenue |
|
|
5,547 |
6,403 |
24,922 |
1,236 |
332 |
38,440 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
5,547 |
6,449 |
25,050 |
1,236 |
158 |
38,440 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue includes investment gains of £7,738m (H1 10: gains of £1,170m; FY 10: gains of £32,671m). |
|||||||||
|
|
|
|
|
|
|
|
|
|
(c) Consolidated balance sheet |
|
|
|
|
|
||||
|
|
|
|
|
|
Invest- |
|
Group |
|
|
|
|
|
|
|
ment |
|
capital |
|
|
|
|
|
|
|
manage- |
Inter- |
and |
|
|
|
|
|
Risk |
Savings |
ment |
national |
financing |
Total |
As at 30 June 2011 |
£m |
£m |
£m |
£m |
£m |
£m |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
Investments |
|
|
25,930 |
47,706 |
228,788 |
7,168 |
9,884 |
319,476 |
|
Other assets |
|
|
3,048 |
3,479 |
1,516 |
2,887 |
(3,245) |
7,685 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
28,978 |
51,185 |
230,304 |
10,055 |
6,639 |
327,161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity |
138 |
144 |
409 |
1,400 |
2,896 |
4,987 |
|||
Non-controlling interests |
- |
- |
- |
- |
49 |
49 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
138 |
144 |
409 |
1,400 |
2,945 |
5,036 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
Subordinated borrowings |
- |
- |
- |
- |
1,915 |
1,915 |
|||
Participating contract liabilities |
- |
14,968 |
- |
2,619 |
- |
17,587 |
|||
Non-participating contract liabilities |
25,444 |
33,399 |
225,717 |
3,710 |
(652) |
287,618 |
|||
Senior borrowings1 |
13 |
278 |
1 |
276 |
756 |
1,324 |
|||
Other liabilities |
3,383 |
2,396 |
4,177 |
2,050 |
1,675 |
13,681 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
28,840 |
51,041 |
229,895 |
8,655 |
3,694 |
322,125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity and liabilities |
|
28,978 |
51,185 |
230,304 |
10,055 |
6,639 |
327,161 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. Includes non recourse financing. |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Financial Reporting Standards |
|
|
Page 47 |
||||||
Notes to the Financial Statements |
|
|
|
|
|||||
2.09 Segmental analysis (continued) |
|
|
|
|
|
||||
(c) Consolidated balance sheet (continued) |
|
|
|
|
|
||||
|
|
|
|
|
|
Invest- |
|
Group |
|
|
|
|
|
|
|
ment |
|
capital |
|
|
|
|
|
|
|
manage- |
Inter- |
and |
|
|
|
|
|
Risk |
Savings |
ment |
national |
financing |
Total |
As at 30 June 2010 |
£m |
£m |
£m |
£m |
£m |
£m |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
Investments |
|
|
24,679 |
44,891 |
205,626 |
7,000 |
6,102 |
288,298 |
|
Other assets |
|
|
2,869 |
2,624 |
1,047 |
2,965 |
(2,356) |
7,149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
27,548 |
47,515 |
206,673 |
9,965 |
3,746 |
295,447 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity |
136 |
122 |
370 |
1,473 |
2,366 |
4,467 |
|||
Non-controlling interests |
- |
- |
- |
- |
32 |
32 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
136 |
122 |
370 |
1,473 |
2,398 |
4,499 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
Subordinated borrowings |
- |
- |
- |
- |
1,875 |
1,875 |
|||
Participating contract liabilities |
- |
14,896 |
- |
2,318 |
- |
17,214 |
|||
Non-participating contract liabilities |
23,585 |
29,854 |
202,489 |
3,567 |
(629) |
258,866 |
|||
Senior borrowings1 |
13 |
200 |
1 |
579 |
662 |
1,455 |
|||
Other liabilities |
3,814 |
2,443 |
3,813 |
2,028 |
(560) |
11,538 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
27,412 |
47,393 |
206,303 |
8,492 |
1,348 |
290,948 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity and liabilities |
|
27,548 |
47,515 |
206,673 |
9,965 |
3,746 |
295,447 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. Includes non recourse financing. |
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Invest- |
|
Group |
|
|
|
|
|
|
|
ment |
|
capital |
|
|
|
|
|
|
|
manage- |
Inter- |
and |
|
|
|
|
|
Risk |
Savings |
ment |
national |
financing |
Total |
As at 31 December 2010 |
£m |
£m |
£m |
£m |
£m |
£m |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
Investments |
|
|
25,587 |
47,933 |
227,088 |
7,248 |
9,378 |
317,234 |
|
Other assets |
|
|
2,687 |
2,932 |
821 |
3,157 |
(2,958) |
6,639 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
28,274 |
50,865 |
227,909 |
10,405 |
6,420 |
323,873 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity |
123 |
142 |
324 |
1,664 |
2,574 |
4,827 |
|||
Non-controlling interests |
- |
- |
- |
- |
47 |
47 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
123 |
142 |
324 |
1,664 |
2,621 |
4,874 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
Subordinated borrowings |
- |
- |
- |
- |
1,897 |
1,897 |
|||
Participating contract liabilities |
- |
15,351 |
- |
2,447 |
- |
17,798 |
|||
Non-participating contract liabilities |
24,868 |
32,963 |
223,940 |
3,625 |
(645) |
284,751 |
|||
Senior borrowings1 |
- |
248 |
1 |
344 |
842 |
1,435 |
|||
Other liabilities |
|
|
3,283 |
2,161 |
3,644 |
2,325 |
1,705 |
13,118 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
28,151 |
50,723 |
227,585 |
8,741 |
3,799 |
318,999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity and liabilities |
|
28,274 |
50,865 |
227,909 |
10,405 |
6,420 |
323,873 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. Includes non recourse financing. |
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Financial Reporting Standards |
|
|
Page 48 |
||||||
Notes to the Financial Statements |
|
|
|
|
|||||
2.10 Gross written premiums on insurance contracts |
|
|
|
||||||
|
|
|
|
|
|
|
|
|
Full year |
|
|
|
|
|
|
|
30.06.11 |
30.06.10 |
31.12.10 |
|
|
|
|
|
|
|
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From continuing operations |
|
|
|
|
|||||
Risk |
|
|
|
|
|
|
|
|
|
Non-participating Risk business |
|
|
1,404 |
1,737 |
3,309 |
||||
General insurance |
|
|
|
|
|
|
|
|
|
- Household |
|
|
|
|
|
135 |
123 |
259 |
|
- Other business |
|
|
|
|
|
11 |
11 |
22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Risk |
|
|
|
|
|
1,550 |
1,871 |
3,590 |
|
|
|
|
|
|
|
|
|
|
|
Savings |
|
|
|
|
|
|
|
|
|
Non-participating Savings business |
|
|
21 |
21 |
41 |
||||
Participating business |
|
|
|
241 |
298 |
609 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Savings |
|
|
|
|
|
262 |
319 |
650 |
|
|
|
|
|
|
|
|
|
|
|
International |
|
|
|
|
|
|
|
|
|
USA |
|
|
|
|
|
249 |
251 |
502 |
|
Netherlands |
|
|
|
|
|
116 |
131 |
227 |
|
France |
|
|
|
|
|
205 |
200 |
379 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total International |
|
|
|
570 |
582 |
1,108 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross written premiums |
|
2,382 |
2,772 |
5,348 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.11 Earnings per share |
|
|
|
|
|
||||
(a) Earnings per share |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
Profit |
|
Profit |
Earnings |
Profit |
|
Profit |
Earnings |
|
|
before |
Tax |
after |
per |
before |
Tax |
after |
per |
|
|
tax |
expense |
tax |
share |
tax |
expense |
tax |
share |
|
|
30.06.11 |
30.06.11 |
30.06.11 |
30.06.11 |
30.06.10 |
30.06.10 |
30.06.10 |
30.06.10 |
|
|
£m |
£m |
£m |
p |
£m |
£m |
£m |
p |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
523 |
(133) |
390 |
6.69 |
542 |
(150) |
392 |
6.73 |
|
Variation from longer term |
|
|
|
|
|
|
|
||
investment return |
(49) |
22 |
(27) |
(0.46) |
(4) |
14 |
10 |
0.17 |
|
Impact of change in |
|
|
|
|
|
|
|
||
UK tax rates |
- |
(4) |
(4) |
(0.07) |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share based |
|
|
|
|
|
|
|||
on profit attributable |
|
|
|
|
|
|
|||
to equity holders |
474 |
(115) |
359 |
6.16 |
538 |
(136) |
402 |
6.90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit |
|
Profit |
Earnings |
|
|
|
|
|
|
before |
Tax |
after |
per |
|
|
|
|
|
|
tax |
expense |
tax |
share |
|
|
|
|
|
|
Full year |
Full year |
Full year |
Full year |
|
|
|
|
|
|
31.12.10 |
31.12.10 |
31.12.10 |
31.12.10 |
|
|
|
|
|
|
£m |
£m |
£m |
p |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
|
|
1,002 |
(251) |
751 |
12.89 |
|
Variation from longer term |
|
|
|
|
|
|
|||
investment return |
|
|
90 |
(16) |
74 |
1.27 |
|||
Impact of change in |
|
|
|
|
|
|
|||
UK tax rates |
|
|
- |
(5) |
(5) |
(0.09) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share based |
|
|
|
|
|
||||
on profit attributable |
|
|
|
|
|
||||
to equity holders |
|
1,092 |
(272) |
820 |
14.07 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Financial Reporting Standards |
|
|
Page 49 |
||||||
Notes to the Financial Statements |
|
|
|
|
|||||
2.11 Earnings per share (continued) |
|
|
|
|
|
||||
(b) Diluted earnings per share |
|
|
|
|
|
||||
(i) Based on operating profit after tax |
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit |
Number |
Earnings |
Profit |
Number |
Earnings |
|
|
|
|
after |
of |
per |
after |
of |
per |
|
|
|
|
tax |
shares1 |
share |
tax |
shares1 |
share |
|
|
|
|
30.06.11 |
30.06.11 |
30.06.11 |
30.06.10 |
30.06.10 |
30.06.10 |
|
|
|
|
£m |
m |
p |
£m |
m |
p |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit after tax |
|
390 |
5,828 |
6.69 |
392 |
5,827 |
6.73 |
||
Net shares under options allocable |
|
|
|
|
|
|
|||
for no further consideration |
- |
97 |
(0.11) |
- |
63 |
(0.07) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
390 |
5,925 |
6.58 |
392 |
5,890 |
6.66 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit |
Number |
Earnings |
|
|
|
|
|
|
|
after |
of |
per |
|
|
|
|
|
|
|
tax |
shares1 |
share |
|
|
|
|
|
|
|
Full year |
Full year |
Full year |
|
|
|
|
|
|
|
31.12.10 |
31.12.10 |
31.12.10 |
|
|
|
|
|
|
|
£m |
m |
p |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit after tax |
|
|
|
|
751 |
5,827 |
12.89 |
||
Net shares under options allocable |
|
|
|
|
|
|
|||
for no further consideration |
|
|
|
- |
79 |
(0.17) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
|
|
|
751 |
5,906 |
12.72 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(ii) Based on profit attributable to equity holders |
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit |
Number |
Earnings |
Profit |
Number |
Earnings |
|
|
|
|
after |
of |
per |
after |
of |
per |
|
|
|
|
tax |
shares1 |
share |
tax |
shares1 |
share |
|
|
|
|
30.06.11 |
30.06.11 |
30.06.11 |
30.06.10 |
30.06.10 |
30.06.10 |
|
|
|
|
£m |
m |
p |
£m |
m |
p |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to equity holders |
|
|
|
|
|
|
|||
of the Company |
359 |
5,828 |
6.16 |
402 |
5,827 |
6.90 |
|||
Net shares under options allocable |
|
|
|
|
|
|
|||
for no further consideration |
- |
97 |
(0.10) |
- |
63 |
(0.07) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
359 |
5,925 |
6.06 |
402 |
5,890 |
6.83 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit |
Number |
Earnings |
|
|
|
|
|
|
|
after |
of |
per |
|
|
|
|
|
|
|
tax |
shares1 |
share |
|
|
|
|
|
|
|
Full year |
Full year |
Full year |
|
|
|
|
|
|
|
31.12.10 |
31.12.10 |
31.12.10 |
|
|
|
|
|
|
|
£m |
m |
p |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to equity holders |
|
|
|
|
|
|
|||
of the Company |
|
|
|
820 |
5,827 |
14.07 |
|||
Net shares under options allocable |
|
|
|
|
|
|
|||
for no further consideration |
|
|
|
- |
79 |
(0.19) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
|
|
|
820 |
5,906 |
13.88 |
||
|
|
|
|
|
|
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|
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|
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|
|
1. Weighted average number of shares. |
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
The number of shares in issue at 30 June 2011 was 5,870,748,796 (30 June 2010: 5,865,651,980; 31 December 2010: 5,866,669,323). |
|||||||||
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|
|
|
|
International Financial Reporting Standards |
|
|
Page 50 |
||||||
Notes to the Financial Statements |
|
|
|
|
|||||
2.12 Disclosure of tax effects relating to each component of other comprehensive income |
|||||||||
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|
|
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|
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|
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|
|
|
Tax |
|
|
Tax |
|
|
|
|
|
Before |
credit/ |
After |
Before |
credit/ |
After |
|
|
|
|
tax |
(expense) |
tax |
tax |
(expense) |
tax |
|
|
|
|
30.06.11 |
30.06.11 |
30.06.11 |
30.06.10 |
30.06.10 |
30.06.10 |
|
|
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange differences on translation |
|
|
|
|
|
|
|||
of overseas operations |
(7) |
- |
(7) |
25 |
- |
25 |
|||
Actuarial (losses) on defined |
|
|
|
|
|
|
|||
benefit pension schemes |
(5) |
2 |
(3) |
(40) |
11 |
(29) |
|||
Actuarial losses on defined benefit |
|
|
|
|
|
|
|||
pension schemes transferred to |
|
|
|
|
|
|
|||
unallocated divisible surplus |
2 |
(1) |
1 |
16 |
(4) |
12 |
|||
Net change in financial investments |
|
|
|
|
|
|
|||
designated as available-for-sale |
13 |
(4) |
9 |
32 |
(11) |
21 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
3 |
(3) |
- |
33 |
(4) |
29 |
|||
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|
Tax |
|
|
|
|
|
|
|
|
Before |
credit/ |
After |
|
|
|
|
|
|
|
tax |
(expense) |
tax |
|
|
|
|
|
|
|
Full year |
Full year |
Full year |
|
|
|
|
|
|
|
31.12.10 |
31.12.10 |
31.12.10 |
|
|
|
|
|
|
|
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange differences on translation |
|
|
|
|
|
|
|||
of overseas operations |
|
|
|
8 |
- |
8 |
|||
Actuarial (losses) on defined |
|
|
|
|
|
|
|||
benefit pension schemes |
|
|
|
(12) |
3 |
(9) |
|||
Actuarial losses on defined benefit |
|
|
|
|
|
|
|||
pension schemes transferred to |
|
|
|
|
|
|
|||
unallocated divisible surplus |
|
|
|
5 |
(1) |
4 |
|||
Net change in financial investments |
|
|
|
|
|
|
|||
designated as available-for-sale |
|
|
|
42 |
(15) |
27 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
43 |
(13) |
30 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.13 Financial investments |
|
|
|
|
|||||
|
|
|
|
|
|
|
At |
At |
At |
|
|
|
|
|
|
|
30.06.11 |
30.06.10 |
31.12.10 |
|
|
|
|
|
|
|
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equities |
|
|
|
|
|
146,711 |
125,099 |
149,056 |
|
Unit trusts |
|
|
|
|
|
7,782 |
7,443 |
7,550 |
|
Debt securities1 |
|
|
|
|
|
142,124 |
132,429 |
136,858 |
|
Accrued interest |
|
|
|
|
|
1,636 |
1,590 |
1,682 |
|
Derivative assets2 |
|
|
|
|
|
3,753 |
4,791 |
4,014 |
|
Loans and receivables |
|
|
297 |
1,338 |
410 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
302,303 |
272,690 |
299,570 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There have been no significant transfers between levels 1, 2 and 3 of the fair value hierarchy (as prescribed in IFRS 7 'Financial Instruments: Disclosures') for the six months ended 30 June 2011. Further details are provided in Note 4.07. |
|||||||||
|
|
|
|
|
|
|
|
|
|
1. Detailed analysis of debt securities which shareholders are directly exposed to are disclosed in Note 4.02. |
|
||||||||
2. Derivative exposures arise from efficient portfolio management, especially the use of interest rate swaps, inflation swaps, credit default swaps, foreign exchange forward contracts for asset and liability management and the matching of Guaranteed Equity Bonds within the Nationwide portfolio. Derivative assets are shown gross of derivative liabilities and include £2,112m (H1 10: £2,764m; FY 10: £2,217m) held on behalf of unit linked policyholders. |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.14 Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per |
|
Per |
|
Per |
|
|
|
|
|
share |
Total |
share |
Total |
share |
Total |
|
|
|
|
|
|
|
|
Full year |
Full year |
|
|
|
|
30.06.11 |
30.06.11 |
30.06.10 |
30.06.10 |
31.12.10 |
31.12.10 |
|
|
|
|
p |
£m |
p |
£m |
p |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary share dividends paid |
|
|
|
|
|
|
|||
in the period |
3.42 |
201 |
2.73 |
160 |
4.06 |
238 |
|||
Ordinary share dividend proposed¹ |
1.66 |
97 |
1.33 |
78 |
3.42 |
201 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. The dividend proposed has not been included as a liability in the balance sheet. |
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Financial Reporting Standards |
|
|
Page 51 |
||||||
Notes to the Financial Statements |
|
|
|
|
|||||
2.15 Ordinary shares |
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
Number |
|
Number |
|
|
|
|
|
of |
|
of |
|
of |
|
|
|
|
|
shares |
|
shares |
|
shares |
|
|
|
|
|
|
|
|
|
Full year |
|
|
|
|
|
30.06.11 |
|
30.06.10 |
|
31.12.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 1 January |
|
|
5,866,669,323 |
5,862,216,780 |
5,862,216,780 |
||||
Options exercised under share option schemes |
|
|
|
|
|
||||
- Executive share option scheme |
1,181,589 |
209,065 |
295,065 |
||||||
- Savings related share option scheme |
2,897,884 |
3,226,135 |
4,157,478 |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 30 June / 31 December |
5,870,748,796 |
5,865,651,980 |
5,866,669,323 |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There is one class of ordinary shares of 2.5p each. All shares issued carry equal voting rights. |
|||||||||
|
|
|
|
|
|
|
|
|
|
The holders of the Company's ordinary shares are entitled to receive dividends as declared and are entitled to one vote per share at shareholder meetings of the Company. |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.16 Analysis of borrowings |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
Full year |
|
|
|
|
|
|
|
30.06.11 |
30.06.10 |
31.12.10 |
|
|
|
|
|
|
|
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated borrowings |
|
|
|
|
|
|
|
||
6.385% Sterling perpetual capital securities (Tier 1) |
691 |
698 |
690 |
||||||
5.875% Sterling undated subordinated notes (Tier 2) |
422 |
424 |
423 |
||||||
4.0% Euro subordinated notes 2025 (Tier 2) |
508 |
455 |
488 |
||||||
10% Sterling subordinated notes 2041 (Tier 2) |
308 |
308 |
308 |
||||||
Client fund holdings of Group debt1 |
(14) |
(10) |
(12) |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total subordinated borrowings |
|
1,915 |
1,875 |
1,897 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior borrowings |
|
|
|
|
|
|
|||
Sterling medium term notes 2031-2041 |
|
602 |
602 |
608 |
|||||
Euro Commercial paper 2011 |
|
204 |
106 |
279 |
|||||
Bank loans/other |
|
|
|
|
|
72 |
28 |
9 |
|
Non recourse financing |
|
|
|
|
|
||||
- US Dollar Triple X securitisation 2025 |
|
|
- |
283 |
61 |
||||
- US Dollar Triple X securitisation 2037 |
|
276 |
296 |
283 |
|||||
- Suffolk Life unit linked borrowings |
|
136 |
147 |
154 |
|||||
- LGV 6 Private Equity Fund Limited Partnership |
|
85 |
39 |
86 |
|||||
Client fund holdings of Group debt1 |
|
(51) |
(46) |
(45) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total senior borrowings |
|
|
1,324 |
1,455 |
1,435 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total borrowings |
|
|
|
|
|
3,239 |
3,330 |
3,332 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total borrowings (excluding non recourse financing) |
2,742 |
2,565 |
2,748 |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. £65m (H1 10: £56m; FY 10: £57m) of the Group's subordinated and senior debt is currently held by Legal & General customers through unit linked products. These borrowings are shown as a deduction from total borrowings in the tables above. |
|||||||||
|
|
|
|
|
|
|
|
|
|
Subordinated borrowings |
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
6.385% Sterling perpetual capital securities |
|
|
|
|
|
|
|||
In 2007, Legal & General Group Plc issued £600m of 6.385% Sterling perpetual capital securities. Simultaneous with the issuance, the fixed coupon was swapped into six month LIBOR plus 0.94% pa. These securities are callable at par on 2 May 2017 and every three months thereafter. If not called, the coupon from 2 May 2017 will be reset to three month LIBOR plus 1.93% pa. For regulatory purposes these securities are treated as innovative tier 1 capital. These securities have been classified as liabilities as the interest payments become mandatory in certain circumstances. |
|||||||||
|
|
|
|
|
|
|
|
|
|
5.875% Sterling undated subordinated notes |
|
|
|
|
|
|
|||
In 2004, Legal & General Group Plc issued £400m of 5.875% Sterling undated subordinated notes. These notes are callable at par on 1 April 2019 and every five years thereafter. If not called, the coupon from 1 April 2019 will be reset to the prevailing five year benchmark gilt yield plus 2.33% pa. These notes are treated as upper tier 2 capital for regulatory purposes. These securities have been classified as liabilities as the interest payments become mandatory in certain circumstances. |
|||||||||
|
|
|
|
|
|
|
|
|
|
4.0% Euro subordinated notes 2025 |
|
|
|
|
|
|
|||
In 2005, Legal & General Group Plc issued €600m of 4.0% Euro dated subordinated notes. The proceeds were swapped into sterling. The notes are callable at par on 8 June 2015 and each year thereafter. If not called, the coupon from 8 June 2015 will reset to a floating rate of interest based on prevailing three month Euribor plus 1.7% pa. These notes mature on 8 June 2025 and are treated as lower tier 2 capital for regulatory purposes. |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Financial Reporting Standards |
|
|
Page 52 |
||||||
Notes to the Financial Statements |
|
|
|
|
|||||
2.16 Analysis of borrowings (continued) |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
10% Sterling subordinated notes 2041 |
|
|
|
|
|
|
|||
On 16 July 2009, Legal & General Group Plc issued £300m of 10% dated subordinated notes. The notes are callable at par on 23 July 2021 and every five years thereafter. If not called, the coupon from 23 July 2021 will be reset to the prevailing five year benchmark gilt yield plus 9.325% pa. These notes mature on 23 July 2041 and are treated as lower tier 2 capital for regulatory purposes. |
|||||||||
|
|
|
|
|
|
|
|
|
|
Non recourse financing |
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
US Dollar Triple X securitisation 2025 |
|
|
|
|
|
|
|||
In 2004, a subsidiary of Legal & General America Inc issued US$550m of non recourse debt in the US capital markets to meet the Triple X reserve requirements of part of the US term insurance written up to 2005. It is secured on the cash flows related to that tranche of business. As at 30 June 2011, all of the outstanding debt had been redeemed and cancelled. |
|||||||||
|
|
|
|
|
|
|
|
|
|
US Dollar Triple X securitisation 2037 |
|
|
|
|
|
|
|||
In 2006, a subsidiary of Legal & General America Inc issued US$450m of non recourse debt in the US capital markets to meet the Triple X reserve requirements of part of the US term insurance written after 2005 and 2006. It is secured on the cash flows related to that tranche of business. |
|||||||||
|
|
|
|
|
|
|
|
|
|
Suffolk Life unit linked borrowings |
|
|
|
|
|
||||
These borrowings relate solely to client investments. |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
LGV6 Private Equity Fund Limited Partnership |
|
|
|
|
|
||||
These borrowings are non recourse bank borrowings. |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
Syndicated credit facility |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
As at 30 June 2011, the Group had in place a £960m syndicated committed revolving credit facility provided by a number of its key relationship banks, maturing in December 2012. The Group also had in place a £60m bilateral committed revolving credit facility from one of its key relationship banks also maturing in December 2012. No drawings were made under these facilities in 2011 to date. |
|||||||||
|
|
|
|
|
|
|
|
|
|
Holding company short term assets |
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
Short term assets available at the holding company level exceeded the amount of non-unit linked short term borrowings of £276m (Euro Commercial Paper and Bank Loans). |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.17 Non-controlling interests |
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
Non-controlling interests represent third party interests in property investment vehicles which are consolidated in the Group's results. The increase in the non-controlling interests in 2011 arises from the dilution of the Group's share in the L&G UK Property Ungeared Fund Limited Partnership. |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.18 Foreign exchange rates |
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
Principal rates of exchange used for translation are: |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At |
At |
At |
Period end exchange rates |
|
|
|
30.06.11 |
30.06.10 |
31.12.10 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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United States Dollar |
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1.61 |
1.50 |
1.57 |
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Euro |
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1.11 |
1.22 |
1.17 |
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01.01.11- |
01.01.10- |
01.01.10- |
Average exchange rates |
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30.06.11 |
30.06.10 |
31.12.10 |
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United States Dollar |
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1.62 |
1.53 |
1.55 |
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Euro |
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1.15 |
1.15 |
1.17 |
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International Financial Reporting Standards |
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Page 53 |
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Notes to the Financial Statements |
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2.19 Related party transactions |
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There were no material transactions between key management and the Legal & General group of companies. All transactions between the Group and its key management are on commercial terms which are no more favourable than those available to employees in general. Contributions to the post-employment defined benefit plans were £14m (H1 10: £14m; FY 10: £60m). |
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At 30 June 2011, 30 June 2010 and 31 December 2010 there were no loans outstanding to officers of the Company. |
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Key management personnel compensation |
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The aggregate compensation for key management personnel, including executive and non-executive directors, is as follows: |
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Full year |
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30.06.11 |
30.06.10 |
31.12.10 |
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£m |
£m |
£m |
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Salaries |
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2 |
2 |
7 |
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Social security costs |
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1 |
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Post-employment benefits |
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1 |
1 |
1 |
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Share-based incentive awards |
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1 |
2 |
3 |
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Key management personnel compensation |
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4 |
5 |
12 |
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Number of key management personnel |
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17 |
17 |
18 |
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The UK defined benefit pension schemes have purchased annuity contracts issued by Society for consideration of £14m (H1 10: £36m; FY 10: £74m) during the period, priced on an arm's length basis. |
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The Group's investment portfolio includes investments in venture capital, property and financial investments which are held via collective investment vehicles. Net investments into associate investment vehicles totalled £1,161m during H1 11 (H1 10: £1,704m; FY 10: £1,266m). The Group has outstanding loans to these associates of £7m (H1 10: £11m; FY 10: £3m) and received investment management fees of £15m during the period (H1 10: £21m; FY 10: £36m). Distributions from these investment vehicles to the Group totalled £29m (H1 10: £65m; FY 10: £97m). |
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2.2 Pension cost |
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The Legal & General Group UK Pension and Assurance Fund and the Legal & General Group UK Senior Pension Scheme are defined benefit pension arrangements and account for all UK and the majority of worldwide assets of, and contributions to, such arrangements. At 30 June 2011, the combined after tax deficit arising from these arrangements (net of annuity obligations insured by Society) has been estimated at £153m (H1 10: £209m; FY 10: £169m). These amounts have been recognised in the financial statements with £91m charged against shareholder equity (H1 10: £124m; FY 10: £100m) and £62m against the unallocated divisible surplus (H1 10: £85m; FY 10: £69m). |
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2.21 Contingent liabilities, guarantees and indemnities |
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Provision for the liabilities arising under contracts with policyholders is based on certain assumptions. The variance between actual experience from that assumed may result in those liabilities differing from the provisions made for them. Liabilities may also arise in respect of claims relating to the interpretation of policyholder contracts, or the circumstances in which policyholders have entered into them. The extent of these liabilities is influenced by a number of factors including the actions and requirements of the FSA, ombudsman rulings, industry compensation schemes and court judgments. |
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Various Group companies receive claims and become involved in actual or threatened litigation and regulatory issues from time to time. The relevant members of the Group ensure that they make prudent provision as and when circumstances calling for such provision become clear, and that each has adequate capital and reserves to meet reasonably foreseeable eventualities. The provisions made are regularly reviewed. It is not possible to predict, with certainty, the extent and the timing of the financial impact of these claims, litigation or issues. |
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In 1975, Legal & General Assurance Society Limited (the Society) was required by the Institute of London Underwriters (ILU) to execute the ILU form of guarantee in respect of policies issued through the ILU's Policy Signing Office on behalf of NRG Victory Reinsurance Company Ltd (Victory), a company which was then a subsidiary of the Society. In 1990, Nederlandse Reassurantie Groep Holding NV (the assets and liabilities of which have since been assumed by Nederlandse Reassurantie Groep NV under a statutory merger in the Netherlands) acquired Victory and provided an indemnity to the Society against any liability the Society may have as a result of the ILU's requirement, and the ILU agreed that its requirement of the Society would not apply to policies written or renewed after the acquisition. Nederlandse Reassurantie Groep NV is now owned by Columbia Insurance Company, a subsidiary of Berkshire Hathaway Inc. Whether the Society has any liability as a result of the ILU's requirement and, if so, the amount of its potential liability is uncertain. The Society has made no payment or provision in respect of this matter. |
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Group companies have given indemnities and guarantees as a normal part of their business and operating activities or in relation to capital market transactions. Legal & General Group plc has provided indemnities and guarantees in respect of the liabilities of Group companies in support of their business activities including Pension Protection Fund compliant guarantees in respect of certain Group companies' liabilities under the Group pension fund and scheme. |
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International Financial Reporting Standards |
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Page 54 |
Independent review report to Legal & General Group Plc - IFRS
Introduction
We have been engaged by the company to review the consolidated interim financial information in the Half-year report for the six months ended 30 June 2011, which comprises the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows and related notes on pages 39 to 53. We have read the other information contained in the Half-year report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the consolidated interim financial information.
Directors' responsibilities
The Half-year report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Half-year report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. As disclosed in note 2.08, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The consolidated interim financial information included in this Half-year report has been prepared in accordance with International Accounting Standard 34, 'Interim financial reporting', as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the consolidated interim financial information in the Half-year report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the consolidated interim financial information in the Half-year report for the six months ended 30 June 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
London
2 August 2011
Notes:
(a) The consolidated interim financial information is published on the website of Legal & General Group Plc, legalandgeneralgroup.com. The maintenance and integrity of the Legal & General Group Plc web site is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the Half-year report since it was initially presented on the web site.
(b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.