L&G Half-year Results Part 4a

RNS Number : 6247A

Legal & General Group Plc

05 August 2008

 



International Financial Reporting Standards									Page 43
Operating profit income statement
Six months ended 30 June 2008
									Full year
							30.06.08	30.06.07	31.12.07
								Restated
					Notes		£m	£m	£m
From continuing operations
Life and pensions					4.01		347	383	643
Investment management					4.02		93	73	155
General insurance					4.03		(4)	(38)	(67)
Other operational income					4.04		(45)	(32)	(73)
Operating profit							391	386	658
Variation from longer term investment return					4.05		(422)	96	(90)
Property (expense)/income attributable to minority interests					4.15		(13)	17	(6)
Release of 1996 Sub-fund							-	-	321
(Loss)/profit from continuing operations before tax attributable to equity holders							(44)	499	883
Tax attributable to equity holders					4.06		17	(170)	(165)
(Loss)/profit from ordinary activities after tax							(27)	329	718
Loss/(profit) attributable to minority interests					4.15		13	(17)	6
(Loss)/profit attributable to equity holders							(14)	312	724
							p	p	p
Earnings per share					4.07
Based on operating profit from continuing operations after tax attributable to
equity holders							4.61	3.93	7.17
Based on (loss)/profit attributable to equity holders of the Company							(0.23)	4.80	11.24
Diluted earnings per share					4.07
Based on operating profit from continuing operations after tax attributable to
equity holders							4.59	3.91	7.13
Based on (loss)/profit attributable to equity holders of the Company							(0.23)	4.77	11.18
This supplementary operating profit information provides further analysis of the results reported under IFRS and we believe gives shareholders a better understanding of the underlying performance of the business. IFRS supplementary operating profit is one of the Group's key performance indicators and was restated in the 2007 Annual Report & Accounts to reflect changes in the Group's structure. Operating profit for UK life and pensions business on the IFRS basis is defined to include the net capital released from non profit business and a smoothed investment return on total Society shareholders' assets held both within and outside of Society's long term fund. The change in the definition of UK life and pensions operating profit since the 2007 interim financial statements had the effect of increasing H1 2007 reported operating profit by £44m. Profit before tax and shareholders' equity were unaffected by this change.  Investment return on non profit business is calculated on a smoothed basis using EEV assumptions applied to the average balance of Society shareholder capital invested assets (including interest bearing intra-group balances) calculated on a quarterly basis. Operating profit also includes a longer term investment return on the shareholders' funds in our General insurance, Investment management and Netherlands' operations.
International Financial Reporting Standards									Page 44
Consolidated income statement
Six months ended 30 June 2008
									Full year
							30.06.08	30.06.07	31.12.07
					Notes		£m	£m	£m
Revenue
Gross written premiums					4.08		3,301	2,289	4,793
Outward reinsurance premiums							(269)	(255)	(517)
Net change in provision for unearned premiums							(1)	(5)	7
Net premiums earned							3,031	2,029	4,283
Fees from fund management and investment contracts							358	313	640
Investment return							(17,196)	6,588	13,225
Operational income							22	28	54
Total revenue					4.10		(13,785)	8,958	18,202
Expenses
Claims and change in insurance liabilities							1,748	1,409	4,467
Reinsurance recoveries							(370)	(232)	(345)
Net claims and change in insurance liabilities							1,378	1,177	4,122
Change in provisions for investment contract liabilities							(15,434)	6,325	11,999
Acquisition costs							354	346	848
Finance costs							189	80	214
Other expenses							425	431	662
Transfers (from)/to unallocated divisible surplus1							(313)	74	(438)
Total expenses					4.10		(13,401)	8,433	17,407
(Loss)/profit before income tax							(384)	525	795
Income tax attributable to policyholder returns							340	(26)	88
(Loss)/profit from continuing operations before income tax attributable to equity holders							(44)	499	883
Total income tax credit/(expense)							357	(196)	(77)
Income tax attributable to policyholder returns							(340)	26	(88)
Income tax attributable to equity holders							17	(170)	(165)
(Loss)/profit from ordinary activities after income tax					4.10		(27)	329	718
Attributable to:
Minority interests							(13)	17	(6)
Equity holders of the Company							(14)	312	724
Dividend distributions to equity holders of the Company during the period							248	248	369
Dividend distributions to equity holders of the Company proposed after the period end							115	122	247
							p	p	p
Earnings per share					4.07
Based on (loss)/profit from continuing operations after income tax attributable to equity holders							(0.23)	4.80	11.24
Diluted earnings per share					4.07
Based on (loss)/profit from continuing operations after income tax attributable to equity holders							(0.23)	4.77	11.18
1. Includes £321m release of 1996 Sub-fund in full year 2007.
International Financial Reporting Standards									Page 45
Consolidated balance sheet
As at 30 June 2008
							At 30.06.08	At 30.06.07	At 31.12.07
					Notes		£m	£m	£m
Assets
Investment in associates							13	16	14
Plant and equipment							78	78	79
Investment property							5,595	6,992	5,969
Financial investments					4.11		251,247	221,860	261,718
Reinsurers' share of contract liabilities							1,981	1,642	1,530
Purchased interest in long term businesses							225	22	19
Deferred acquisition costs							1,795	1,587	1,696
Deferred tax asset							276	-	-
Income tax recoverable							5	-	4
Other assets							2,432	2,436	1,519
Cash and cash equivalents							10,819	6,435	8,737
Total assets					4.10		274,466	241,068	281,285
Equity
Share capital							149	163	157
Share premium account							934	926	927
Employee scheme shares							(46)	(42)	(42)
Other reserves1							(65)	44	59
Retained earnings							3,703	4,424	4,345
Capital and reserves attributable to equity holders of the Company					4.13		4,675	5,515	5,446
Minority interests					4.15		175	456	178
Total equity					4.16		4,850	5,971	5,624
Liabilities
Subordinated borrowings					4.14		1,444	1,371	1,461
Participating insurance contracts							10,386	12,251	11,663
Participating investment contracts							7,099	7,393	7,462
Unallocated divisible surplus							1,411	2,277	1,721
Value of in-force non-participating contracts							(255)	(413)	(276)
Participating contract liabilities							18,641	21,508	20,570
Non-participating insurance contracts							24,879	21,330	22,873
Non-participating investment contracts							216,405	184,441	224,906
Non-participating contract liabilities							241,284	205,771	247,779
Senior borrowings					4.14		1,742	1,332	1,327
Provisions							583	485	595
Deferred income liabilities							491	461	493
Deferred tax liabilities							197	595	296
Income tax liabilities							18	51	113
Other liabilities							4,292	2,652	2,115
Net asset value attributable to unit holders							924	871	912
Total liabilities					4.10		269,616	235,097	275,661
Total equity and liabilities							274,466	241,068	281,285
1. On 30 June 2008 Legal & General Group Plc entered into an irrevocable agreement to acquire up to £100m of ordinary shares during the closed period from 1 July 2008 to 4 August 2008. Accordingly, a liability of £100m has been recorded in the balance sheet with a corresponding amount in equity. This balance will be eliminated on expiry of the contract.
International Financial Reporting Standards									Page 46
Consolidated statement of recognised income and expense
Six months ended 30 June 2008
									Full year
							30.06.08	30.06.07	31.12.07
							£m	£m	£m
Exchange differences on translation of overseas operations							8	(1)	4
Actuarial gains/(losses) on defined benefit pension schemes							20	62	(40)
Actuarial (gains)/losses on defined benefit pension schemes transferred to unallocated divisible surplus							(8)	(25)	16
Net change in financial investments designated as available-for-sale							(19)	(4)	1
Income/(expense) recognised directly in equity, net of tax							1	32	(19)
(Loss)/profit from ordinary activities after income tax							(27)	329	718
Total recognised income and expense							(26)	361	699
Attributable to:
Minority interests							(13)	17	(6)
Equity holders of the Company							(13)	344	705
International Financial Reporting Standards									Page 47
Consolidated cash flow statement
For the six months ended 30 June 2008
									Full year
							30.06.08	30.06.07	31.12.07
					Notes		£m	£m	£m
Cash flows from operating activities
(Loss)/profit from ordinary activities after income tax							(27)	329	718
Adjustments for non cash movements in net loss/profit for the period
Realised and unrealised losses/(gains) on financial investments and
investment properties							22,801	(2,448)	(4,862)
Investment income							(5,304)	(3,939)	(7,797)
Interest expense							189	80	214
Income tax (receivable)/payable							(357)	196	77
Other adjustments							38	21	46
Net decrease/(increase) in operational assets
Investments designated as held for trading or fair value through profit or loss							167	(5,372)	(8,322)
Investments designated as available-for-sale							(44)	29	(98)
Other assets							(950)	(821)	(230)
Net (decrease)/increase in operational liabilities
Insurance contracts							(579)	(641)	152
Transfer to unallocated divisible surplus							(305)	99	(455)
Investment contracts							(20,186)	9,559	17,686
Value of in-force non-participating contracts							20	(22)	115
Other liabilities							1,292	926	(73)
Cash used in operating activities							(3,245)	(2,004)	(2,829)
Interest paid							(196)	(91)	(214)
Interest received							2,609	1,946	4,202
Income tax paid							(165)	(141)	(244)
Dividends received							2,463	1,756	3,312
Net cash flows from operating activities							1,466	1,466	4,227
Cash flows from investing activities
Net acquisition of plant and equipment							(10)	(43)	(58)
Acquisitions (net of cash acquired)					4.09		1,004	-	-
Net cash flows from investing activities							994	(43)	(58)
Cash flows from financing activities
Dividend distributions to equity holders of the Company during the year							(248)	(248)	(369)
Proceeds from issue of share capital							7	3	4
Purchase of employee scheme shares							(8)	(3)	(5)
Purchase of shares under share buyback programme							(408)	-	(320)
Proceeds from borrowings							983	1,627	1,948
Repayment of borrowings							(723)	(1,288)	(1,637)
Net cash flows from financing activities							(397)	91	(379)
Net increase in cash and cash equivalents							2,063	1,514	3,790
Exchange gains/(losses) on cash and cash equivalents							19	(9)	17
Cash and cash equivalents at 1 January							8,737	4,930	4,930
Cash and cash equivalents at 30 June / 31 December							10,819	6,435	8,737
The Group's consolidated cash flow statement includes all cash and cash equivalent flows, including those relating to the UK long term fund policyholders.

 

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