REG - Legal & General Grp - L&G Half-year results 2015 Part 2 <Origin Href="QuoteRef">LGEN.L</Origin> - Part 3
05/08/2015 07:01
- Part 3: For the preceding part double click ID:nRSE1056Vb
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Earnings per share
Based on profit attributable to equity holders of the Company 2.10 9.11 8.51 16.70
Adjusted earnings per share 1
Based on profit attributable to equity holders of the Company 2.10 9.79 8.51 16.70
Diluted earnings per share
Based on profit attributable to equity holders of the Company 2.10 9.05 8.42 16.54
1. Adjusted earnings per share has been calculated excluding the impairment loss, £40m, resulting from the classification of disposal groups as held for sale.
IFRS and Cash
34
Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2015
Full year
30.06.15 30.06.14 31.12.14
£m £m £m
Profit for the period 547 507 992
Items that will not be reclassified subsequently to profit or loss
Actuarial gains/(losses) on defined benefit pension schemes 22 (10) (94)
Actuarial (losses)/gains on defined benefit pension schemes transferred to unallocated
divisible surplus (8) 4 38
Total items that will not be reclassified to profit or loss subsequently 14 (6) (56)
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of overseas operations (25) (28) 12
Net change in financial investments designated as available-for-sale (18) 20 26
Total items that may be reclassified to profit or loss subsequently (43) (8) 38
Other comprehensive expense after tax (29) (14) (18)
Total comprehensive income for the period 518 493 974
Total comprehensive income attributable to:
Non-controlling interests 8 6 7
Equity holders of the Company 510 487 967
IFRS and Cash
35
Consolidated Balance Sheet
As at 30 June 2015
30.06.15 30.06.14 31.12.14
Notes £m £m £m
Assets
Goodwill 82 73 79
Purchased interest in long term businesses and other intangible assets 328 341 342
Deferred acquisition costs 1,822 1,848 1,936
Investment in associates and joint ventures 207 138 149
Property, plant and equipment 86 136 146
Investment property 2.15 8,779 7,352 8,152
Financial investments 2.15 351,159 340,170 360,614
Reinsurers' share of contract liabilities 3,360 3,025 2,906
UK deferred tax asset 2.16 33 68 54
Current tax recoverable 185 303 217
Other assets 3,539 3,018 2,249
Assets of operations classified as held for sale 2.13 6,149 - -
Cash and cash equivalents 19,583 21,087 22,709
Total assets 395,312 377,559 399,553
Equity
Share capital 149 148 149
Share premium 973 966 969
Employee scheme treasury shares (31) (36) (37)
Capital redemption and other reserves 98 54 117
Retained earnings 4,843 4,579 4,830
Shareholders' equity 6,032 5,711 6,028
Non-controlling interests 2.22 281 271 275
Total equity 6,313 5,982 6,303
Liabilities
Participating insurance contracts 5,901 6,596 6,579
Participating investment contracts 5,093 7,452 7,667
Unallocated divisible surplus 798 1,253 983
Value of in-force non-participating contracts (223) (234) (208)
Participating contract liabilities 11,569 15,067 15,021
Non-participating insurance contracts 49,274 44,439 49,876
Non-participating investment contracts 280,472 279,084 288,558
Non-participating contract liabilities 329,746 323,523 338,434
Core borrowings 2.20 2,490 2,991 2,977
Operational borrowings 2.21 645 692 715
Provisions 1,189 1,143 1,247
UK deferred tax liabilities 2.16 277 96 180
Overseas deferred tax liabilities 2.16 414 402 434
Current tax liabilities 40 12 9
Payables and other financial liabilities 2.17 18,449 11,281 16,131
Other liabilities 671 923 963
Net asset value attributable to unit holders 17,513 15,447 17,139
Liabilities of operations classified as held for sale 2.13 5,996 - -
Total liabilities 388,999 371,577 393,250
Total equity and liabilities 395,312 377,559 399,553
IFRS and Cash
36
Condensed Consolidated Statement of Changes in Equity
Employee Capital
scheme redemption Non-
Share Share treasury and other Retained controlling Total
capital premium shares reserves earnings Total interests equity
For the six months ended 30 June 2015 £m £m £m £m £m £m £m £m
As at 1 January 2015 149 969 (37) 117 4,830 6,028 275 6,303
Total comprehensive income/(expense)
for the period - - - (43) 553 510 8 518
Options exercised under
share option schemes - 4 - - - 4 - 4
Net movement in employee scheme
treasury shares - - 6 (4) (16) (14) - (14)
Dividends - - - - (496) (496) - (496)
Movement in third party interests - - - - - - (2) (2)
Currency translation differences - - - 28 (28) - - -
As at 30 June 2015 149 973 (31) 98 4,843 6,032 281 6,313
Employee Capital
scheme redemption Non-
Share Share treasury and other Retained controlling Total
capital premium shares reserves earnings Total interests equity
For the six months ended 30 June 2014 £m £m £m £m £m £m £m £m
As at 1 January 2014 148 959 (39) 57 4,517 5,642 265 5,907
Total comprehensive income/(expense)
for the period - - - (8) 495 487 6 493
Options exercised under
share option schemes - 7 - - - 7 - 7
Net movement in employee scheme
treasury shares - - 3 (10) (10) (17) - (17)
Dividends - - - - (408) (408) - (408)
Movement in third party interests - - - - - - - -
Currency translation differences - - - 15 (15) - - -
As at 30 June 2014 148 966 (36) 54 4,579 5,711 271 5,982
Employee Capital
scheme redemption Non-
Share Share treasury and other Retained controlling Total
capital premium shares reserves earnings Total interests equity
For the year ended 31 December 2014 £m £m £m £m £m £m £m £m
As at 1 January 2014 148 959 (39) 57 4,517 5,642 265 5,907
Total comprehensive income
for the year - - - 38 929 967 7 974
Options exercised under
share option schemes 1 10 - - - 11 - 11
Net movement in employee scheme
treasury shares - - 2 3 (17) (12) - (12)
Dividends - - - - (580) (580) - (580)
Movement in third party interests - - - - - - 3 3
Currency translation differences - - - 19 (19) - - -
As at 31 December 2014 149 969 (37) 117 4,830 6,028 275 6,303
IFRS and Cash
37
Consolidated Cash Flow Statement
For the six months ended 30 June 2015
Full year
30.06.15 30.06.14 31.12.14
£m £m £m
Cash flows from operating activities
Profit for the period 547 507 992
Adjustments for non cash movements in net profit for the period
Realised and unrealised losses/(gains) on financial investments and investment properties 4,236 (8,705) (30,851)
Investment income (4,928) (4,853) (9,205)
Interest expense 91 90 183
Tax expense 282 233 421
Other adjustments (35) 46 87
Net (increase)/decrease in operational assets
Investments held for trading or designated as fair value through profit or loss (2,450) 2,036 5,931
Investments designated as available-for-sale 210 164 225
Other assets (1,518) (857) (151)
Net increase/(decrease) in operational liabilities
Insurance contracts (784) 3,923 9,228
Transfer to/(from) unallocated divisible surplus 68 39 (222)
Investment contracts (5,254) 387 10,156
Value of in-force non-participating contracts (15) 14 40
Other liabilities 3,249 6,182 9,811
Cash generated used in operations (6,301) (794) (3,355)
Interest paid (129) (103) (203)
Interest received 2,413 2,430 4,857
Tax paid1 (84) (97) (76)
Dividends received 2,282 2,169 4,264
Net cash flows (used in)/generated from operating activities (1,819) 3,605 5,487
Cash flows from investing activities
Net acquisition of plant, equipment and intangibles (11) (12) (80)
Acquisitions (net of cash acquired)2 (5) (18) (38)
Disposal of subsidiaries 34 50 56
Investment in joint ventures (65) (77) (77)
Net cash flows from investing activities (47) (57) (139)
Cash flows from financing activities
Dividend distributions to ordinary equity holders of the Company during the period (496) (408) (580)
Proceeds from issue of ordinary share capital 4 7 11
Purchase of employee scheme shares (7) (3) (2)
Proceeds from borrowings 194 592 674
Repayment of borrowings (649) (88) (181)
Net cash flows (used in)/generated from financing activities (954) 100 (78)
Net increase in cash and cash equivalents (2,820) 3,648 5,270
Exchange losses on cash and cash equivalents (65) (15) (15)
Cash and cash equivalents at 1 January 22,709 17,454 17,454
Cash and cash equivalents (before reallocation of held for sale cash) 19,824 21,087 22,709
Cash and cash equivalents classified as held for sale (241) - -
Cash and cash equivalents at 30 June/31 December 19,583 21,087 22,709
1. Tax comprises UK corporation tax paid of £8m (H1 14: £1m; FY 14: £29m), overseas corporate taxes of £18m (H1 14: £7m; FY 14: £24m) and withholding tax of £58m (H1 14: £89m; FY 14: £23m).
2. Net cash flows from acquisitions includes cash paid of £5m (H1 14: £18m; FY 14: £38m) less cash and cash equivalents acquired of £nil (H1 14: £nil; FY 14: £nil).
The Group's Consolidated Cash Flow Statement includes all cash and cash equivalent flows, including those relating to the UK long-term fund policyholders.
IFRS and Cash
38
2.08 Basis of preparation
The Group's financial information for the six months ended 30 June 2015 has been prepared in accordance with the Listing
Rules of the Financial Conduct Authority and with IAS 34, 'Interim Financial Reporting'. The Group's financial information
has also been prepared in line with the accounting policies and methods of computation which the Group expects to adopt for
the 2015 year end. These policies are consistent with the principal accounting policies which were set out in the Group's
2014 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 interim management 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
2014 financial statements except for the changes outlined in Note 2.02.
The results for the six months ended 30 June 2015 are unaudited but have been reviewed by PricewaterhouseCoopers LLP. The
interim results do not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The results from
the full year 2014 have been taken from the Group's 2014 Annual Report and Accounts. Therefore, these interim accounts
should be read in conjunction with the 2014 Annual Report and Accounts that have been prepared in accordance with
International Financial Reporting Standards as issued by the International Accounting Standards Board and adopted by the
European Commission for use in the European Union. PricewaterhouseCoopers LLP reported on the 2014 financial statements and
their report was unqualified and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The
Group's 2014 Annual Report and Accounts has been filed with the Registrar of Companies.
Key technical terms and definitions
The interim management report refers to various key performance indicators, accounting standards and other technical terms.
A comprehensive list of these definitions is contained within the glossary of the Group's 2014 Annual Report and Accounts.
2.09 Segmental analysis
Reportable segments
The Group has six reportable segments comprising Insurance, Savings, LGR, LGIM, LGA and LGC.
Following changes to the organisational structure, Insurance and Savings are now reported as separate segments. Previously,
Insurance and Savings had been reported together as the LGAS segment. In addition, the Workplace Savings business is now
included in the LGIM segment. Workplace Savings had previously been recognised in the Savings (LGAS) segment. Comparatives
have been amended accordingly in line with this reclassification. The impact of the Workplace Savings reclassification has
been to reduce LGIM H1 14 and FY 14 operating profit by £10m and £15m respectively, with an offsetting increase in the
Savings segment's operating profit.
Insurance represents business in retail protection, group protection, general insurance, networks, Legal & General France
(LGF) and Legal & General Netherlands (LGN).
Savings represents business in platforms, SIPPs, mature savings, with-profits and emerging markets.
LGR represents Annuities (both individual and bulk purchase), longevity insurance and lifetime mortgages.
The LGIM segment represents institutional and retail investment management, and Workplace Savings businesses.
The LGC segment includes shareholders' equity supporting the non profit LGR, Insurance and Savings businesses held within
Society and Legal & General Pensions Limited (LGPL) and capital held by the Group's treasury function. LGC and group
expenses also incorporates inter-segmental eliminations and consolidated unit trusts and property partnerships managed on
behalf of clients which do not constitute a separately reportable segment.
The LGA segment represents protection business written in the USA.
Transactions between reportable segments are on normal commercial terms, and are included within the reported segments.
IFRS and Cash
39
2.09 Segmental analysis (continued)
(a) Profit/(loss) for the period
Group
expenses
and debt
Insurance Savings LGR LGIM LGC LGA costs Total
For the six months ended 30 June 2015 £m £m £m £m £m £m £m £m
Operating profit/(loss) 192 50 280 176 115 40 (103) 750
Investment and other variances1 (48) (20) 11 (5) (4) 1 (21) (86)
Gains attributable to non-controlling
interests - - - - - - 8 8
Profit/(loss) before tax attributable to
equity holders 144 30 291 171 111 41 (116) 672
Tax (expense)/credit attributable to equity
holders of the Company (38) (6) (50) (38) (2) (22) 31 (125)
Profit/(loss) for the period 106 24 241 133 109 19 (85) 547
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