Share buyback programme
In July 2007, the [Group] announced a £1bn return of capital to shareholders through an on-market share buyback programme. At 31 December 2008, 691,099,181 ordinary shares had been acquired under the buyback programme for cancellation for total consideration of £843m.
Conversion of Legal & General Pensions Limited (LGPL) to an Insurance Special Purpose Vehicle (ISPV)
On 1 November 2007, [LGPL] was converted to an [ISPV] and repaid subordinated debt of £400m to [Society]. There was no impact on the [IFRS] net assets or profit before tax as a result of the ISPV conversion.
Society’s long term fund restructure
In December 2007, the Group implemented a new capital structure for Society.
A key component was the removal of the transfer formula which limited the annual amount of distributions from [Society]’s long term fund since 1996. As part of the restructure, it was also announced that the 1996 Sub-fund (£321m) was merged into the Shareholder Retained Capital (SRC). This increased 2007 IFRS profit before tax by £321m, reflecting the transfer from unallocated divisible surplus to ordinary shareholders’ equity.
For 2007, £1.7bn was transferred from the [SRC] into the shareholder capital held outside Society’s [LTF]. There was no incremental tax in respect of this transfer. Deferred tax was provided at the incremental rate on the undeclared surplus in Society’s LTF represented by the SRC. For 2007, the incremental rate in respect of the undeclared surplus of £2,047m was zero.
Society’s Board of Directors undertook to initially maintain £500m of assets within Society to support the with-profits business. The amount of the commitment will reduce to £450m in 2009 and then gradually reduce to zero over a period not exceeding nine years.