L&G Interim Results Part 3

Legal & General Group PLC 28 July 2005 Part 3 Legal & General Group Plc P1 Consolidated Income Statement - IFRS Basis Six months ended 30 June 2005 -------------------------------------------------------------------------------- Full year Notes 30.6.05 30.6.04 2004 Restated Restated £m £m £m Profit from continuing operations Life and pensions 1 241 210 488 Institutional fund management 44 32 69 General insurance 4 17 32 Other operational income 10 13 22 ------- ------- ------- Operating profit 299 272 611 Variation from longer term investment return 50 (26) 37 Shareholder retained capital (SRC) movement 2 116 (150) (20) Property income attributable to minority interests 11 8 32 ------- ------- ------- Profit from continuing operations before tax 476 104 660 Tax 3 (120) (30) (182) ------- ------- ------- Profit from continuing operations after tax 356 74 478 Profit from discontinued operations 4 13 2 5 ------- ------- ------- Profit on ordinary activities after tax 369 76 483 Profit attributable to minority interests (11) (8) (32) ------- ------- ------- Profit attributable to equity holders 358 68 451 -------------------------------------------------------------------------------- Earnings per share 5 p p p Based on operating profit from continuing operations after tax 3.18 3.01 6.71 Based on profit attributable to equity holders 5.53 1.05 6.96 Diluted earnings per share 5 Based on operating profit from continuing operations after tax 3.15 3.00 6.63 Based on profit attributable to equity holders 5.38 1.05 6.87 -------------------------------------------------------------------------------- This financial information was approved by the Board on 27 July 2005. The results for the six months to 30 June 2005 and 30 June 2004 are unaudited, but have been subject to a review by the independent 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 restated financial information from UK GAAP to IFRS for the year ended 31 December 2004 published on 24 May 2005. The published 31 December 2004 financial information includes an independent auditors' report which is unqualified. The original results for the year ended 2004 published on 24 February 2005 have been filed with the Registrar of Companies and include an independent auditors' report which is unqualified and does not contain a statement under either Sections 237(2) or 237 (3) of the Companies Act 1985. ================================================================================ Legal & General Group Plc P2 Consolidated Balance Sheet - IFRS Basis Six months ended 30 June 2005 -------------------------------------------------------------------------------- Notes At 30.6.05 At 30.6.04 At 31.12.04 Restated Restated Assets £m £m £m Investments 163,963 130,731 147,761 Other assets 6,104 6,337 5,112 Non-current assets held for sale - 649 733 --------- --------- --------- 170,067 137,717 153,606 ========= ========= ========= Equity and liabilities Shareholders' equity 6 3,793 3,398 3,671 Minority interests 215 167 214 Subordinated borrowings 801 394 394 Technical provisions 159,777 128,975 144,569 Senior borrowings 1,573 1,608 1,452 Other creditors and provisions 3,908 2,612 2,672 Non-current liabilities held for sale - 563 634 --------- --------- --------- 170,067 137,717 153,606 ========= ========= ========= ================================================================================ Legal & General Group Plc P3 Notes to Financial Information - IFRS Basis Six months ended 30 June 2005 -------------------------------------------------------------------------------- 1. Life and pensions operating profit Full year 30.6.05 30.6.04 2004 Restated Restated £m £m £m With-profits business 32 33 67 Non profit business 151 145 324 ------- ------- ------- UK 183 178 391 USA 27 25 58 Netherlands 31 6 39 France 0 1 0 ------- ------- ------- 241 210 488 ======= ======= ======= UK life and pensions operating profit is the accrued distributable transfer, grossed up at the corporate tax rate, and for non profit business is augmented by the distribution in respect of the intra-group subordinated debt capital held within the SRC. -------------------------------------------------------------------------------- 2. Movement in SRC Full year 30.6.05 30.6.04 2004 Restated Restated £m £m £m Investment income 36 34 60 Interest expense and charges (1) (1) (2) Realised investment gains 48 59 100 Unrealised investment gains/(losses) 46 (26) 51 ------- ------- ------- Investment return on SRC 129 66 209 Net capital released from/(invested in) non profit business 138 (71) 95 Distribution of operating profit from non profit business (151) (145) (324) ------- ------- ------- SRC movement before tax 116 (150) (20) ======= ======= ======= SRC at 1 January 2,196 2,214 2,214 SRC movement before tax 116 (150) (20) Tax (charge)/credit (18) 50 19 SRC movement included in total recognised income and expense for the period 7 (2) (17) ------- ------- ------- SRC at end of period 2,301 2,112 2,196 ======= ======= ======= SRC includes intra-group subordinated debt capital of £602m. ================================================================================ Legal & General Group Plc P4 Notes to Financial Information - IFRS Basis Six months ended 30 June 2005 -------------------------------------------------------------------------------- 3. Analysis of tax Full year Full year 30.6.05 30.6.05 30.6.04 30.6.04 2004 2004 Restated Restated Restated Restated Profit Tax Profit Tax Profit Tax before (charge)/ before (charge)/ before (charge)/ tax credit tax credit tax credit Profit from continuing £m £m £m £m £m £m operations UK life and pensions 183 (55) 178 (53) 391 (117) International life and pensions 58 (23) 32 (12) 97 (33) ------- ------- ------- ------- ------- ------- 241 (78) 210 (65) 488 (150) Institutional fund management 44 (13) 32 (9) 69 (21) General insurance 4 (1) 17 (5) 32 (9) Other operational income 10 (1) 13 2 22 4 ------- ------- ------- ------- ------- ------- Operating profit 299 (93) 272 (77) 611 (176) Variation from longer term investment return 50 (9) (26) (3) 37 (25) SRC movement 116 (18) (150) 50 (20) 19 Property income attributable to minorities 11 - 8 - 32 - ------- ------- ------- ------- ------- ------- Profit from continuing operations before tax / Tax 476 (120) 104 (30) 660 (182) ======= ======= ======= ======= ======= ======= In this IFRS information, only the element of total tax attributable to equity holders' profits is shown explicitly as tax, the balance being included within expenses. No deferred tax is provided at the incremental rate on the undeclared surplus in the UK long term fund represented by the SRC on the grounds that, at the balance sheet date, no obligation to make a declaration of surplus exists and there is no expectation that such a declaration will occur. The maximum amount of incremental tax which would crystallise on such a declaration of surplus at 30.6.05 was £644m (30.6.04: £638m; 31.12.04: £619m). -------------------------------------------------------------------------------- 4. Sale of Gresham Insurance Company Limited On 3 February 2005 the Group announced that it had agreed in principle to sell its 90% stake in its subsidiary Gresham to Barclays Bank PLC subject to FSA approval. The transaction completed on 31 March 2005 for a consideration of £85m of which £4m was paid in dividends by Gresham and the remaining in cash by Barclays. The transaction resulted in an exceptional profit before tax of £15m (£15m after tax). Full year 30.6.05 30.6.04 2004 Restated Restated £m £m £m Post tax results from discontinued operations Gresham profit to 31 March 2005 (2) 2 5 Profit on disposal of Gresham 15 - - ------- ------- ------- Profit from discontinued operations 13 2 5 ======= ======= ======= ================================================================================ Legal & General Group Plc P5 Notes to Financial Information - IFRS Basis Six months ended 30 June 2005 -------------------------------------------------------------------------------- 5. Earnings per share (EPS) Weighted Earnings average Profit/ per number (loss) share of shares £m p m Six months ended 30.6.05 Operating profit from continuing operations after tax 206 3.18 6,477 Variation from longer term investment return 41 0.64 Change in SRC 98 1.51 Profit from discontinued operations 13 0.20 ------- ------- ------- Profit attributable to equity holders/EPS 358 5.53 6,477 Net shares under options allocable for no further consideration - (0.03) 35 Convertible bonds outstanding 8 (0.12) 285 ------- ------- ------- Diluted profit attributable to equity holders/EPS 366 5.38 6,797 ======= ======= ======= Six months ended 30.6.04 (Restated) Operating profit from continuing operations after tax 195 3.01 6,478 Variation from longer term investment return (29) (0.45) Change in SRC (100) (1.54) Profit from discontinued operations 2 0.03 ------- ------- ------- Profit attributable to equity holders/EPS 68 1.05 6,478 Net shares under options allocable for no further consideration - 0.00 24 Convertible bonds outstanding * 12 - 285 ------- ------- ------- Diluted profit attributable to equity holders/EPS 80 1.05 6,787 ======= ======= ======= Full year ended 31.12.04 (Restated) Operating profit from continuing operations after tax 435 6.71 6,479 Variation from longer term investment return 12 0.19 Change in SRC (1) (0.02) Profit from discontinued operations 5 0.08 ------- ------- ------- Profit attributable to equity holders/EPS 451 6.96 6,479 Net shares under options allocable for no further consideration - (0.03) 33 Convertible bonds outstanding 16 (0.06) 285 ------- ------- ------- Diluted profit attributable to equity holders/EPS 467 6.87 6,797 ======= ======= ======= * The shares associated with the convertible bond were antidilutive as they would have increased the net earnings per share and were therefore ignored, along with their associated revenue impact, when calculating the diluted earnings per share. ================================================================================ Legal & General Group Plc P6 Notes to Financial Information - IFRS Basis Six months ended 30 June 2005 -------------------------------------------------------------------------------- 6. Shareholders' equity Full year 30.6.05 30.6.04 2004 £m £m £m Restated Restated At 1 January 3,671 3,567 3,567 Total recognised income and expense for the period 348 41 411 Dividends (224) (216) (321) Movement in share based payment reserve 7 4 9 Increase in share capital/premium 0 0 1 Net (purchase)/allocation of treasury shares (9) 2 4 ------- ------- ------- At end of period 3,793 3,398 3,671 ======= ======= ======= Comprising: Share capital 163 163 163 Share premium 907 906 907 Treasury reserve (36) (29) (27) Retained earnings and other reserves 2,759 2,358 2,628 ------- ------- ------- 3,793 3,398 3,671 ======= ======= ======= The number of fully paid ordinary shares of 2.5p in issue at the period end was 6,506m (1H04: 6,505m; FY04: 6,506m). ================================================================================ Legal & General Group Plc P7 Notes to Financial Information - IFRS Basis Six months ended 30 June 2005 -------------------------------------------------------------------------------- 7. Segmental analysis of shareholders' equity At 30.6.05 At 30.6.04 At 31.12.04 Restated Restated £m £m £m SRC* 2,301 2,112 2,196 Society shareholder capital** 2,049 1,877 1,973 ------- ------- ------- Society shareholders' equity 4,350 3,989 4,169 General insurance 161 227 247 Netherlands 102 57 84 France 60 61 64 ------- ------- ------- Total Society shareholders' equity 4,673 4,334 4,564 USA 537 460 488 Institutional fund management 230 196 199 Corporate funds*** (1,647) (1,592) (1,580) ------- ------- ------- Shareholders' equity 3,793 3,398 3,671 ======= ======= ======= * Includes £602m of intra-group subordinated debt capital attributed to the SRC. ** Represents surplus capital held outside the UK long term fund, including the rights issue proceeds. *** Includes the convertible debt of £501m (1H04: £486m; FY04: £493m) and £602m of senior debt which has been on lent to the UK long term fund. -------------------------------------------------------------------------------- 8. UK Long Term Fund At 30.6.05 At 30.6.04 At 31.12.04 Restated Restated £bn £bn £bn With-profits business 27.8 25.3 26.8 Non profit business 20.1 15.3 17.6 Sub-fund 0.3 0.2 0.2 SRC 2.3 2.1 2.2 ------- ------- ------- Value of fund 50.5 42.9 46.8 ------- ------- ------- ================================================================================ Legal & General Group Plc P8 Consolidated Cash Flow Statement - IFRS Basis Six months ended 30 June 2005 -------------------------------------------------------------------------------- Full year 30.6.05 30.6.04 2004 Restated Restated £m £m £m Profit on ordinary activities after tax 369 76 483 Non cash movements in net profit for the period (6,540) (314) (7,674) Net increase in operational assets (6,126) (10,463) (17,665) Net increase in operational liabilities 13,396 10,839 25,336 --------- --------- --------- Net cash flows from operating activities 1,099 138 480 Cash flows from investing activities Net acquisition of property, plant and equipment (9) (2) (11) Net proceeds from disposal of Gresham 73 - - --------- --------- --------- Net cash flows from investing activities 64 (2) (11) Cash flows from financing activities Dividends paid (224) (216) (321) Proceeds from issue of ordinary share capital 0 0 1 Purchase of treasury shares (11) (1) (1) Increase in borrowings 493 59 373 --------- --------- --------- Net cash flows from financing activities 258 (158) 52 Net increase/(decrease) in cash and cash equivalents 1,421 (22) 521 Exchange losses on cash and cash equivalents (3) (10) (2) Cash and cash equivalents at beginning of period 2,992 2,473 2,473 --------- --------- --------- Cash and cash equivalents at end of period 4,410 2,441 2,992 ========= ========= ========= Under IFRS, the Group's Consolidated Cash Flow Statement includes all cash and cash equivalent flows of the Group, including those relating to the UK long term fund. ================================================================================ This information is provided by RNS The company news service from the London Stock Exchange MORE TO FOLLOW IR LDLLLEDBEBBQ

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