L&G Interim Results 2001-Pt.2
Legal & General Group PLC
25 July 2001
Part 2
Legal & General Group Plc P1
Consolidated Profit and Loss Account
Six months ended 30 June 2001
----------------------------------------------------------------------
Six Six
months months Full
to to year
30.6.01 30.6.00 2000
Notes £m £m £m
Profit from continuing operations
Life and pensions 1 208 180 364
Investment management 22 29 59
General insurance 2 16 9 20
Other operational income 4 (15) 15 34
------ ------ ------
231 233 477
Profit from discontinued operations
Other operational income - Fairmount Group 0 1 2
------ ------ ------
Operating profit 231 234 479
Variation from longer term general
insurance investment return 5 (14) (4) (5)
Change in equalisation provision (3) (3) (6)
Shareholder retained capital (SRC)
contribution 7 (165) 60 30
Profit on sale of Fairmount Group 6 8 - -
------ ------ ------
Profit from ordinary activities
before tax 57 287 498
Tax on profit on ordinary activities 8 (53) (102) (181)
------ ------ ------
Profit for the financial period 4 185 317
Dividends (83) (77) (243)
------ ------ ------
Retained profit (79) 108 74
======================================================================
Earnings per share p p p
Based on operating profit from continuing
operations after tax 3.02 3.20 6.61
Based on profit for the financial period 0.08 3.61 6.18
Diluted earnings per share
Based on operating profit from continuing
operations after tax 3.01 3.19 6.59
Based on profit for the financial period 0.08 3.59 6.16
Dividend per share 1.63 1.48 4.71
======================================================================
The results for the six months to 30 June 2001 and 30 June 2000 are
unaudited, but have been subject to a review by the auditors and
constitute non-statutory accounts within the meaning of Section 240 of
the Companies Act 1985. They have been prepared on a basis which is
consistent with the financial statements for the year ended
31 December 2000. The results for the year ended 2000 have been taken
from those financial statements which have been filed with the
Registrar of Companies. They include the auditors' unqualified report
and do not contain a statement under either sections 237(2) or 237(3)
of the Companies Act 1985.
These financial statements were approved by the Board on 24 July 2001
and have been prepared using the modified statutory solvency basis for
long term business.
Legal & General Group Plc P2
Consolidated Balance Sheet
As at 30 June 2001
----------------------------------------------------------------------
As at As at As at
30.6.01 30.6.0031.12.00
Notes £m £m £m
Assets
Investments 9 34,011 34,350 35,077
Assets held to cover linked liabilities 70,692 68,618 70,678
Other assets 2,996 2,321 2,539
------- ------- -------
107,699 105,289 108,294
======= ======= =======
Liabilities
Shareholders' funds 10 3,137 3,217 3,187
Fund for future appropriations 2,940 5,147 4,331
Technical provisions ------- ------- -------
- Technical provisions for linked : :: :: :
liabilities :70,592::68,529::70,566:
- Other long term business provisions :27,551::25,023::26,692:
- General insurance provisions : 329:: 333:: 350:
------- ------- -------
98,472 93,885 97,608
Borrowings 12 773 395 571
Bank customer deposits 1,186 1,245 1,307
Other creditors 1,191 1,400 1,290
------- ------- -------
107,699 105,289 108,294
======================================================================
Statement of Total Recognised Gains and Losses
Six Six
months months Full
to to year
30.6.01 30.6.00 2000
£m £m £m
Profit for the financial period 4 185 317
Exchange gains 6 16 17
------- ------- -------
Total recognised gains and losses 10 201 334
======================================================================
Legal & General Group Plc P3
New business
Six months ended 30 June 2001
----------------------------------------------------------------------
New Annual Premium Equivalent (APE)
Six Six
months months Full
to to year
30.6.01 30.6.00 2000
£m £m £m
Life and pensions
Life 133 110 235
Pensions 133 95 207
------ ------ ------
UK 266 205 442
------ ------ ------
USA : 26: : 40: : 62:
Netherlands : 10: : 5: : 12:
France : 10: : 8: : 16:
------ ------ ------
International 46 53 90
------ ------ ------
Total worldwide insurance business 312 258 532
Retail investment business
UK 59 55 94
France 2 2 4
------ ----- ------
Total worldwide new business 373 315 630
====== ===== ======
International insurance business
expressed at 30 June 2001 exchange rates
USA 26 42 66
Netherlands 10 5 11
France 10 8 15
------ ------ ------
46 55 92
====== ====== ======
Annual Premium Equivalent (APE) is calculated for total new business,
including unit trusts and ISAs (other than cash ISAs) but excluding
institutional fund management, and comprises the new annual premiums
together with 10% of single premiums.
Six Six
months months Full
to to year
30.6.01 30.6.00 2000
Institutional fund management £m £m £m
UK Managed Funds *
- Pooled funds 5,597 4,973 11,040
- Segregated funds 402 289 327
------- ------- -------
5,999 5,262 11,367
Other funds 13 607 1,310
------- ------- -------
6,012 5,869 12,677
======= ======= =======
* New monies from the pension fund clients of Legal & General Assurance
(Pensions Management) Ltd
======================================================================
Legal & General Group Plc P4
New business
Six months ended 30 June 2001
---------------------------------------------------------------------
2001 2000
6 3 3 6 3 3
months months months months months months
to to to to to to
30 June 30 June 31 Mar 30 June 30 June 31 Mar
£m £m £m £m £m £m
UK Annual Premium Equivalent
Total individual
life and pensions APE 202 109 93 175 91 84
Total retail
investments APE 59 29 30 55 26 29
by channel ------ ------ ------ ------ ------ ------
- Independent financial : : : : : : : : : : : :
advisers : 155: : 81: : 74: : 134: : 68: : 66:
- Business partnerships : 65: : 35: : 30: : 55: : 28: : 27:
- Direct : 41: : 22: : 19: : 41: : 21: : 20:
------ ------ ------ ------ ------ ------
Total UK individual APE 261 138 123 230 117 113
Total group APE 64 38 26 30 13 17
------ ------ ------ ------ ------ ------
Total UK APE 325 176 149 260 130 130
======================================================================
2001 2000
6 3 3 6 3 3
months months months months months months
to to to to to to
30 June 30 June 31 Mar 30 June 30 June 31 Mar
£m £m £m £m £m £m
New annual business
Insurance business
UK
Life
- Mortgage-related 51 28 23 57 30 27
- Protection 16 9 7 6 3 3
- Group risk 16 7 9 14 7 7
Pensions
- Individual pensions 50 28 22 42 22 20
- Group pensions 4 2 2 3 1 2
------ ------ ------ ------ ------ ------
137 74 63 122 63 59
International
USA 26 14 12 40 20 20
Netherlands 4 2 2 3 2 1
France 5 3 2 3 2 1
------ ------ ------ ------ ------ ------
172 93 79 168 87 81
Retail investment business
ISAs (other than
cash ISAs) 16 11 5 11 8 3
------ ------ ------ ------ ------ ------
Total new annual business 188 104 84 179 95 84
======================================================================
Legal & General Group Plc P5
New business
Six months ended 30 June 2001
----------------------------------------------------------------------
2001 2000
6 3 3 6 3 3
months months months months months months
to to to to to to
30 June 30 June 31 Mar 30 June 30 June 31 Mar
£m £m £m £m £m £m
New single business
Insurance business
UK
Bonds
- With-profits 459 280 179 267 159 108
- Other 39 22 17 60 28 32
Pensions
- Individual pensions 158 71 87 157 76 81
- Annuities
- individual 160 57 103 189 90 99
- bulk purchase 397 268 129 91 34 57
- Other group business 37 15 22 33 14 19
- DSS rebates 35 11 24 26 5 21
------ ------ ------ ------ ------ ------
1,285 724 561 823 406 417
International
Netherlands 62 15 47 22 11 11
France 55 26 29 56 35 21
------ ------ ------ ------ ------ ------
1,402 765 637 901 452 449
Retail investment business
ISAs (other than
cash ISAs) 310 140 170 296 113 183
Unit trusts
- UK 120 45 75 144 66 78
- France 22 8 14 20 11 9
------ ------ ------ ------ ------ ------
Total new single
business 1,854 958 896 1,361 642 719
======================================================================
Legal & General Group Plc P6
Notes to Financial Statements
Six months ended 30 June 2001
----------------------------------------------------------------------
1. Life and pensions premiums and operating profit
Six months to Six months to Full year
30.6.01 30.6.00 2000
Oper- Oper- Oper-
Gross ating Gross ating Gross ating
premiums profitpremiums profitpremiums profit
£m £m £m £m £m £m
With-profits business 1,133 69 1,001 68 2,173 135
Non-profit business 879 107 513 88 1,161 177
------ ------ ------ ------ ------ ------
UK 2,012 176 1,514 156 3,334 312
USA 130 25 121 19 256 42
Netherlands 82 6 41 4 98 7
France 73 1 73 1 140 3
------ ------ ------ ------ ------ ------
2,297 208 1,749 180 3,828 364
====== ====== ====== ====== ====== ======
UK life and pensions operating profit includes the accrued
distributable transfer, grossed up at the corporate tax rate. The
non-profit component of the transfer also includes the distribution in
respect of the intra-group subordinated debt capital held within the
SRC. Profits for international life and pensions business are reported
on bases consistent with MSS or US GAAP.
Overseas life and pensions premium income and results expressed at
30 June 2001 exchange rates are:
Oper- Oper- Oper-
Gross ating Gross ating Gross ating
premiums profitpremiums profitpremiums profit
£m £m £m £m £m £m
USA 130 25 130 20 270 44
Netherlands 82 6 39 4 94 7
France 73 1 69 1 134 3
======================================================================
2. General insurance result
Six months to Six months to Full year
30.6.01 30.6.00 2000
Oper- Oper-
Net Oper- Net ating Net ating
premiums atingpremiums profit/premiums profit/
written profit written (loss) written (loss)
£m £m £m £m £m £m
Household 90 6 75 6 181 5
Mortgage indemnity 1 6 1 10 2 21
Other business
(including overseas) 33 4 35 (7) 66 (6)
------ ------ ------ ------ ------ ------
124 16 111 9 249 20
======================================================================
3. Principal sterling exchange rates used
As at 30.6.01 As at 30.6.00 As at 31.12.00
United States dollar 1.41 1.51 1.49
Euro 1.66 1.58 1.59
======================================================================
Legal & General Group Plc P7
Notes to Financial Statements
Six months ended 30 June 2001
======================================================================
4. Other operational income
Six Six
months months Full
to to year
30.6.01 30.6.00 2000
£m £m £m
Shareholders' other income (excluding SRC)
- Investment return on shareholders' funds 8 21 46
- Interest expense (12) (3) (9)
------ ------ ------
(4) 18 37
- Other operations * (6) (1) 2
- Unallocated corporate and development expenses (5) (2) (5)
------ ------ ------
(15) 15 34
====== ====== ======
* Other operations includes the results of Legal & General (Unit Trust
Managers) Ltd and Legal & General (Portfolio Management Services) Ltd
previously reported within Investment management.
======================================================================
5. Investment return
Six Six
months months Full
to to year
30.6.01 30.6.00 2000
£m £m £m
Investment income 34 30 61
Interest expense and charges (12) (3) (10)
Realised investment (losses)/gains (2) 15 19
Unrealised investment depreciation (29) (18) (19)
------ ------ ------
(9) 24 51
====== ====== ======
reported as:
Allocated to general insurance operating profit 9 10 19
Variation from longer term general insurance
investment return (14) (4) (5)
Shareholders' other income (4) 18 37
The investment return shown represents the return on the general
insurance and shareholders' funds excluding that in respect of SRC and
non-insurance operations (primarily Legal & General Bank Ltd).
======================================================================
6. Sale of Fairmount Group
A wholly owned subsidiary, Fairmount Group plc, was sold to Brown
Shipley & Co Ltd on 22 June 2001, subject to regulatory approval. This
transaction resulted in an exceptional profit before tax of £8m (£8m
after tax). The results to the date of sale have been reported in
these financial statements as discontinued business. This transaction
generated net proceeds of £35m against which has been charged goodwill
of £20m, previously written off against reserves.
======================================================================
Legal & General Group Plc P8
Notes to Financial Statements
Six months ended 30 June 2001
======================================================================
7. Movement in Shareholder Retained Capital
(SRC) in the UK Long Term Fund Six Six
months months Full
to to year
30.6.01 30.6.00 2000
£m £m £m
Investment income 26 21 42
Interest expense and charges 0 0 (1)
Realised investment gains 32 63 106
Unrealised investment depreciation (125) (96) (171)
------ ------ ------
Investment return on SRC (67) (12) (24)
Net capital released from non-profit business 9 160 231
Distribution of operating profit from
non-profit business (107) (88) (177)
------ ------ ------
SRC contribution before tax (165) 60 30
====== ====== ======
SRC at 1 January 2,153 1,981 1,981
------ ------ ------
SRC contribution before tax :(165): : 60 : : 30 :
Tax : 19 : : (36): : (44):
------ ------ ------
SRC contribution after tax (146) 24 (14)
Change in the net asset values of SRC
subsidiaries 12 18 39
Movement in subordinated debt 50 - 147
------ ------ ------
SRC at end of period 2,069 2,023 2,153
======================================================================
The SRC balance at the end of the period includes £197m (30.6.00: £nil;
31.12.00: £147m) of intra-group subordinated debt capital previously
reported within Corporate funds.
Legal & General Group Plc P9
Notes to Financial Statements
Six months ended 30 June 2001
----------------------------------------------------------------------
8. Tax
Six months to Six months to Full year
30.6.01 30.6.00 2000
Profit/ Profit/ Profit/
(loss) Tax (loss) Tax (loss) Tax
before(charge) before(charge) before(charge)
tax /credit tax /credit tax /credit
£m £m £m £m £m £m
Profit from continuing
operations
Life and pensions 208 (63) 180 (47) 364 (97)
Investment management 22 (6) 29 (8) 59 (20)
General insurance 16 (5) 9 (3) 20 (6)
Other operational income (15) (3) 15 (10) 34 (16)
------ ------ ------ ------ ------ ------
231 (77) 233 (68) 477 (139)
Profit from discontinued
operations
Other operational income
- Fairmount Group 0 0 1 0 2 (1)
------ ------ ------ ------ ------ ------
Tax charge on
operating profit 231 (77) 234 (68) 479 (140)
Variation from longer
term general insurance
investment return (14) 4 (4) 1 (5) 1
Change in equalisation
provision (3) 1 (3) 1 (6) 2
SRC contribution (165) 19 60 (36) 30 (44)
Profit on sale of
Fairmount Group 8 - - - - -
------ ------ ------ ------ ------ ------
Tax charge on profit
from ordinary activities 57 (53) 287 (102) 498 (181)
======================================================================
Legal & General Group Plc P10
Notes to Financial Statements
Six months ended 30 June 2001
----------------------------------------------------------------------
9. Funds under management As at As at As at
30.6.01 30.6.0031.12.00
£m £m £m
Land and buildings 3,555 3,664 3,582
Shares, variable yield securities
and unit trusts 13,722 15,513 15,069
Debt and other fixed income securities 13,525 12,628 13,451
Loans secured by mortgages 1,308 1,130 1,289
Other loans and investments 550 464 384
Deposits with credit institutions 1,351 951 1,302
------- ------- -------
Total investments 34,011 34,350 35,077
Assets held to cover linked liabilities 70,692 68,618 70,678
------- ------- -------
Funds included in the consolidated
balance sheet 104,703 102,968 105,755
Segregated funds 4,677 4,753 4,565
Unit trusts, PEPs and ISAs
(excluding cash ISAs) 3,830 3,778 3,867
------- ------- -------
Total funds under management 113,210 111,499 114,187
representing: ======= ======= =======
Managed in the UK
- Active 32,499 34,523 34,751
- Index tracking 76,129 72,279 74,913
- for overseas subsidiaries 1,163 999 1,089
------- ------- -------
109,791 107,801 110,753
Mortgages and other 1,932 1,876 1,735
------- ------- -------
111,723 109,677 112,488
Managed overseas 1,487 1,822 1,699
------- ------- -------
113,210 111,499 114,187
======= ======= =======
Institutional fund management comprised
UK Managed funds
- Pooled funds 61,958 59,881 61,832
- Segregated funds 2,274 2,501 2,213
------- ------- -------
64,232 62,382 64,045
Other funds 2,403 2,252 2,434
------- ------- -------
66,635 64,634 66,479
======================================================================
Legal & General Group Plc P11
Notes to Financial Statements
Six months ended 30 June 2001
----------------------------------------------------------------------
10.Shareholders' funds As at As at As at
30.6.01 30.6.0031.12.00
£m £m £m
At 1 January 3,187 3,085 3,085
Total recognised gains and losses 10 201 334
Dividends (83) (77) (243)
Increase in share capital/premium 3 8 11
Fairmount Group plc goodwill
written back on sale 20 - -
------ ------ ------
At end of period 3,137 3,217 3,187
====== ====== ======
Comprising:
Share capital 129 129 129
Share premium 145 140 142
Profit and loss account 2,863 2,948 2,916
------ ------ ------
3,137 3,217 3,187
====== ====== ======
The number of fully paid ordinary shares of 2.5p in issue was 5,153m
(30.6.00: 5,145m; 31.12.00: 5,149m).
======================================================================
11.Segmental analysis of shareholders' funds As at As at As at
30.6.01 30.6.0031.12.00
£m £m £m
Life and Pensions
- UK (SRC)* 1,841 1,841 1,952
- USA 528 423 483
- Netherlands 18 18 15
- France 41 42 43
------ ------ ------
2,428 2,324 2,493
Investment management ** 133 98 117
General insurance 88 73 76
Banking 93 94 92
Corporate funds ** 395 628 409
------ ------ ------
3,137 3,217 3,187
====== ====== ======
* Excluding £228m (30.6.00: £182m; 31.12.00: £201m) in respect of the
net assets of SRC subsidiaries but including £197m (30.6.00: £nil;
31.12.00: £147m) of intra-group subordinated debt capital attributed
to the SRC previously reported within Corporate funds.
** Corporate funds includes Legal & General (Unit Trust Managers) Ltd
and Legal & General (Portfolio Management Services) Ltd previously
reported within Investment management.
======================================================================
Legal & General Group Plc P12
Notes to Financial Statements
Six months ended 30 June 2001
----------------------------------------------------------------------
12.Borrowings
As at As at As at
30.6.01 30.6.0031.12.00
£m £m £m
Mortgage-related 317 257 279
Attributed to the SRC 197 - 147
Other 259 138 145
------ ------ ------
773 395 571
======================================================================
13.UK Long Term Fund As at As at As at
30.6.01 30.6.0031.12.00
£bn £bn £bn
With-profits business 25.9 26.9 27.0
Non-profit business 9.5 8.9 9.4
------ ------ ------
Sub-fund : 0.3: : 0.3: : 0.3:
SRC : 2.1: : 2.0: : 2.2:
------ ------ ------
2.4 2.3 2.5
------ ------ ------
Value of fund 37.8 38.1 38.9
====== ====== ======
Assets of the fund are valued at market value.
======================================================================
Legal & General Group Plc P13
Consolidated cash flow statement (excluding long term business and SRC)
Six months ended 30 June 2001
----------------------------------------------------------------------
Six Six
months months Full
to to year
30.6.01 30.6.00 2000
£m £m £m
Net cash inflow from operating activities 177 245 55
Interest paid (12) (3) (9)
Tax paid (4) (2) (12)
Capital expenditure: net receipts/(payments) 2 - (3)
Dividends paid (166) (146) (223)
Financing ------- ------- -------
- Issue of share capital : 3 : : 8 : : 11 :
- (Decrease)/increase in debt : 174 : : (19): : 131 :
------- ------- -------
177 (11) 142
------- ------- -------
174 83 (50)
======= ======= =======
Cash flows (not including long term business)
were invested/(divested) as follows:
(Decrease)/increase in cash holdings (3) 8 3
------- ------- -------
Shares, variable yield securities : : : : : :
and unit trusts : 0 : : (11): : (1):
Debt and other fixed income securities : (29): :(282): :(302):
Deposits with credit institutions : 30 : : 71 : : 193 :
Other loans and investments : 176 : : 297 : : 57 :
------- ------- -------
Net portfolio investment/(divestment) 177 75 (53)
------- ------ ------
Net investment/(divestment) 174 83 (50)
======= ======= =======
Reconciliation of profit before tax
to operating cash flow
Profit on ordinary activities before tax 57 287 498
- Profits relating to long term business and SRC (59) (266) (454)
- Cash received from long term business 168 198 49
- Other items 11 26 (38)
------- ------ ------
Net cash inflow from operating activities 177 245 55
======================================================================
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