REG - Legal & General Grp - L&G Half Year Results 2016 Part 2 <Origin Href="QuoteRef">LGEN.L</Origin> - Part 7
09/08/2016 07:08
- Part 7: For the preceding part double click ID:nRSI5967Gf
36,756 6,041 9,968 174 20,573
Amortised
Total Level 1 Level 2 Level 3 cost
As at 30 June 2015 £m £m £m £m £m
Derivative liabilities 5,806 843 4,963 - -
Repurchase agreements 9,532 - - - 9,532
Other 3,111 260 14 184 2,653
Payables and other financial liabilities 18,449 1,103 4,977 184 12,185
Amortised
Total Level 1 Level 2 Level 3 cost
As at 31 December 2015 £m £m £m £m £m
Derivative liabilities 8,047 1,451 6,596 - -
Repurchase agreements 13,343 - - - 13,343
Other 1,319 5 12 175 1,127
Payables and other financial liabilities 22,709 1,456 6,608 175 14,470
Future commission costs are modelled using expected cash flows, incorporating expected future persistency. They have therefore been classified as level 3 liabilities. The entire movement in the balance has been reflected in the Consolidated Income Statement during the period. A reasonably possible alternative persistency assumption would have the effect of increasing/decreasing the liability by £4m (H1 15: £6m; FY 15: £6m).
Significant transfers between levels There have been no significant transfers between levels 1, 2 and 3 for the period ended 30 June 2016 (H1 15 and FY 15: No significant transfers between levels 1, 2 and 3).
IFRS and Operational Cash Generation
Page 56
2.16 Dividends
Per Per Per
Dividend share1 Dividend1 share1 Dividend share1
30.06.16 30.06.16 30.06.15 30.06.15 31.12.15 31.12.15
£m p £m p £m p
Ordinary share dividends paid in the period:
- Prior year final dividend 592 9.95 496 8.35 496 8.35
- Current year interim dividend - - - - 205 3.45
592 9.95 496 8.35 701 11.80
Ordinary share dividend proposed2 238 4.00 205 3.45 592 9.95
1. The dividend per share calculation is based on the number of equity shares registered on the ex-dividend date.
2. The dividend proposed is not included as a liability on the Consolidated Balance Sheet.
2.17 Share capital
Number of Number of Number of
shares shares shares
Full year
30.06.16 30.06.15 31.12.15
As at 1 January 5,948,788,480 5,942,070,229 5,942,070,229
Options exercised under share option schemes:
- Savings related share option scheme 3,465,839 3,704,493 6,718,251
As at 30 June / 31 December 5,952,254,319 5,945,774,722 5,948,788,480
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.
IFRS and Operational Cash Generation
Page 57
2.18 Core Borrowings
Carrying Fair Carrying Fair Carrying Fair
amount value amount value amount value
Full year Full year
30.06.16 30.06.16 30.06.15 30.06.15 31.12.15 31.12.15
£m £m £m £m £m £m
Subordinated borrowings
6.385% Sterling perpetual capital securities (Tier 1) 626 615 647 634 637 631
5.875% Sterling undated subordinated notes (Tier 2) 412 412 414 423 413 426
10% Sterling subordinated notes 2041 (Tier 2) 310 392 310 394 310 398
5.5% Sterling subordinated notes 2064 (Tier 2) 589 534 588 622 589 570
5.375% Sterling subordinated notes 2045 (Tier 2) 602 607 - - 602 611
Client fund holdings of group debt1 (33) (32) (28) (29) (26) (27)
Total subordinated borrowings 2,506 2,528 1,931 2,044 2,525 2,609
Senior borrowings
Sterling medium term notes 2031-2041 602 801 602 762 609 779
Client fund holdings of group debt1 (44) (58) (43) (55) (42) (54)
Total senior borrowings 558 743 559 707 567 725
Total core borrowings 3,064 3,271 2,490 2,751 3,092 3,334
1. £77m (H1 15: £71m; FY15: £68m) of the group's subordinated and senior borrowings are currently held by Legal & General customers through unit linked products. These borrowings are shown as a deduction from total core borrowings in the table above.
All of the group's core borrowings are measured using amortised cost. The presented fair values of the group's core borrowings reflect quoted prices in active markets and they are classified as level 1 in the fair value hierarchy.
Subordinated borrowings
6.385% Sterling perpetual capital securities
In 2007, Legal & General Group Plc issued £600m of 6.385% Sterling perpetual capital securities. 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 Solvency II purposes these securities are treated as tier 1 own funds.
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 tier 2 own funds for Solvency II
purposes.
10% Sterling subordinated notes 2041
In 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. They are treated as tier 2 own funds for Solvency
II purposes.
5.5% Sterling subordinated notes 2064
In 2014, Legal & General Group Plc issued £600m of 5.5% dated subordinated notes. The notes are callable at par on 27 June
2044 and every five years thereafter. If not called, the coupon from 27 June 2044 will be reset to the prevailing five year
benchmark gilt yield plus 3.17% pa. These notes mature on 27 June 2064. They are treated as tier 2 own funds for Solvency
II purposes.
5.375% Sterling subordinated notes 2045
On 27 October 2015, Legal & General Group Plc issued £600m of 5.375% dated subordinated notes. The notes are callable at
par on 27 October 2025 and every five years thereafter. If not called, the coupon from 27 October 2025 will be reset to the
prevailing five year benchmark gilt yield plus 4.58% pa. These notes mature on 27 October 2045. They are treated as tier 2
own funds for Solvency II purposes.
IFRS and Operational Cash Generation
Page 58
2.19 Operational borrowings
Carrying Fair Carrying Fair Carrying Fair
amount value amount value amount value
Full year Full year
30.06.16 30.06.16 30.06.15 30.06.15 31.12.2015 31.12.2015
£m £m £m £m £m £m
Short term operational borrowings
Euro Commercial paper 103 103 41 41 15 15
Bank loans and overdrafts 69 69 7 7 2 2
Total short term operational borrowings 172 172 48 48 17 17
Non recourse borrowings
US Dollar Triple X securitisation 2037 - - 283 239 302 258
Suffolk Life unit linked borrowings1 - - 99 99 - -
LGV 6/LGV 7 Private Equity Fund Limited Partnership 42 42 123 123 98 98
Consolidated Property Limited Partnerships 197 197 153 153 184 184
Total non recourse borrowings 239 239 658 614 584 540
Group holding of operational borrowings2 - - (61) (51) (65) (56)
Total operational borrowings 411 411 645 611 536 501
1. On 25 May 2016, the group sold Suffolk Life Group Limited to Curtis Banks Group. At FY 15, the Suffolk Life unit linked borrowings were transferred to held for sale, refer to Note 2.12.
2. Group investments in operational borrowings have been eliminated from the Consolidated Balance Sheet.
The presented fair values of the group's operational borrowings reflect observable market information and have been
classified as level 2 in the fair value hierarchy.
Short term operational borrowings
Short term assets available at the holding company level exceeded the amount of the short term Euro Commercial paper, bank
loans and overdrafts of £172m (H1 15: £48m; FY 15: £17m).
Non recourse borrowings
US Dollar Triple X securitisation 2037
In 2006, a subsidiary of LGA 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 in 2005 and 2006. It was secured on the cash flows related to that
tranche of business. On 15 June 2016, this securitisation was redeemed at par.
Suffolk Life unit linked borrowings
All of these non recourse borrowings were in relation to commercial properties held within SIPP plans and the borrowings
solely related to client investments. On 25 May 2016, the group sold Suffolk Life Group (SLG) to Curtis Banks Group plc.
LGV 6/LGV 7 Private Equity Fund Limited Partnerships
These borrowings are non recourse bank borrowings.
Consolidated Property Limited Partnerships
These borrowings are non recourse bank borrowings.
Syndicated credit facility
As at 30 June 2016, the group had in place a £1.00bn syndicated committed revolving credit facility provided by a number of
its key relationship banks, maturing in December 2020. No drawings were made under this facility year to date.
2.20 Non-controlling interests
Non-controlling interests represent third party interests in direct equity investments as well as investments in private
equity and property investment vehicles which are consolidated in the group's results. The majority of the non-controlling
interests in 2016 are in relation to investments in the Leisure Fund Unit Trust, the Legal & General UK Property Ungeared
Fund Limited Partnership and Thorpe Park Developments Limited.
IFRS and Operational Cash Generation
Page 59
2.21 Foreign exchange rates
Principal rates of exchange used for translation are:
Period end exchange rates At 30.06.16 At 30.06.15 At 31.12.15
United States Dollar 1.34 1.57 1.47
Euro 1.20 1.41 1.36
01.01.16 - 01.01.15 - 01.01.15 -
Average exchange rates 30.06.16 30.06.15 31.12.15
United States Dollar 1.43 1.52 1.53
Euro 1.28 1.37 1.38
2.22 Related party transactions
There were no material transactions between key
management and the Legal & General group of
companies during the period. 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 £34m (H1 15: £54m; FY 15: £93m)
for all employees.
At 30 June 2016, 30 June 2015 and 31 December 2015
there were no loans outstanding to officers of the
company.
Key management personnel compensation
The aggregate compensation for key management
personnel, including executive and non-executive
directors, is as follows:
30.06.16 30.06.15 31.12.15
£m £m £m
Salaries 2 3 10
Social security costs 1 2 2
Post-employment benefits - 1 1
Share-based incentive awards 2 2 5
Key management personnel compensation 5 8 18
Number of key management personnel 16 16 16
The group has the following related party
transactions:
- Annuity contracts issued by Society for
consideration of £4m (H1 15: £28m; FY 15: £105m)
purchased by the group's UK defined benefit pension
schemes during the period, priced on an arm's
length basis;- Investments in venture capital,
property and financial investments held via
collective investment vehicles. The net investments
into associate investment vehicles totalled £27m
during the period (H1 15: £7m; FY 15: £nil). The
group received investment management fees of £1m
during the period (H1 15: £1m; FY 15: £2m).
Distributions from these investment vehicles to the
group totalled £6m (H1 15: £7m; FY 15: £10m);-
Loans outstanding from CALA at 30 June 2016 total
£63m (H1 15: £57m; FY 15: £59m);- Further
conditional commitments of £4m (H1 15: £9m; FY 15:
£8m) in the equity stake in Pemberton of £12.0m (H1
15: £5.8m; FY 15: £7.0m). A commitment of £198m (H1
15: £177m; FY 15: £182m) was previously made to
Pemberton's first co-mingled funds, 75% of which
was drawn as at 30 June 2016;- A 50/50 joint
venture in MediaCity in the form of £61m (H1 15:
£61m; FY 15: £61m) equity and £55m (H1 15: £55m; FY
15: £55m) loan notes. The loans outstanding from
MediaCity total £55m as at 30 June 2016 (H1 15:
£55m; FY 15: £55m);- An 18% equity stake in NTR
Wind Management Limited, an asset management
company set up to manage wind farms entered into in
December 2015, of £2m. The equity stake was
increased to 25% and further investment of £1m was
made during the year, with a commitment of a
further £1.8m. The fund reached final close at its
hard cap of £195m (E246m) in February 2016 and L&G
Capital has committed 47.5% of the funds;- A 50/50
joint venture in Access Development Partnership
entered into in March 2016 for £23m equity for
build-to-rent developments in Walthamstow, Salford
and Bristol.
IFRS and Operational Cash Generation
Page 60
2.23 Pension costs
The Legal & General Group UK Pension and Assurance Fund and the Legal & General Group UK Senior
- More to follow, for following part double click ID:nRSI5967GhRecent news on Legal & General
See all newsREG - Legal & General Grp - Director/PDMR Shareholding
AnnouncementREG - Legal & General Grp - Director/PDMR Shareholding
AnnouncementREG - Legal & General Grp - Total Voting Rights
AnnouncementREG - Legal & General Grp - Director/PDMR Shareholding
AnnouncementREG - Legal & General Grp - Director/PDMR Shareholding
Announcement