GROUP RESULTS.

Nigel Wilson, Group Chief Financial Officer (photo)

“The Group has a strong balance sheet, and the Board deploys its capital strength across our businesses in accordance with our risk appetite. We believe these results position us well in the current macroeconomic climate to exploit opportunities to grow our diversified cash and profit generation in markets we understand and in which we can demonstrate expertise.”

NIGEL WILSON
GROUP CHIEF FINANCIAL OFFICER


HIGHLIGHTS

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IFRS1 basis

 

2011

2010

Profit before tax

£956m

£1,092m

Profit after tax

£723m

£820m

Ordinary shareholders’ equity

£5,200m

£4,827m

[Return on Equity (ROE)]

14.5%

18.2%

Dividend per share

6.40p

4.75p

Worldwide new business [APE]2

£1,907m

£1,781m

Worldwide [FUM]3

£379bn

£365bn

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EEV4 basis

 

2011

2010

1

[International Financial Reporting Standards].

2

Annual Premium Equivalent (APE) is total new annual premiums plus 10% of single premiums. Excludes institutional investments in unit trust funds which are disclosed under Investment management new business.

3

Funds Under Management.

4

[European Embedded Value].

Profit from continuing operations before tax

£1,334m

£1,677m

Profit after tax

£1,234m

£1,264m

Contribution from new business

£441m

£377m

Ordinary shareholders’ equity

£8,608m

£7,730m

[EEV per share]

147p

132p

FULL YEAR DIVIDEND

6.40p

(2010: 4.75p)

  • Full year dividend increased by 35% to 6.40p per share (2010: 4.75p) at a cost of £376m (2010: £279m).

  • Underlying strong cash generation at 2.25 times cover and the Board’s confidence in prospects for further growth.

  • Final dividend up 39% (2010: 3.42p) to 4.74p.

OPERATIONAL CASH GENERATION

£940m

(2010: £840m)

  • Operational cash generation up 12% to £940m (2010: £840m).

  • All business units increased on 2010 by between 10% and 26%.

  • Includes prudent short-term smoothing adjustment as a result of economic conditions.

NET CASH GENERATION

£846m

(2010: £760m)

  • Net cash generation up 11% to £846m (2010: £760m).

  • Demonstrable cash flow through to Group with Group Capital and Financing (GCF) assets up 19%.

  • Annuity new business surplus £35m in 2011 (2010: £60m).

OPERATING PROFIT

£1,056m

(2010: £1,002m)

  • Operating profit up 5% to £1,056m (2010: £1,002m).

  • LGIM, Savings and International now at 47% (2010: 42%) providing increased diversification.

EEV OPERATING PROFIT

£1,469m

(2010: £1,224m)

  • EEV operating profit up 20% at £1,469m (2010: £1,224m).

  • New Business value add up 17% at £441m (2010: £377m).

  • EEV per share up 11% at 147p (2010: 132p).

IFRS PROFIT BEFORE TAX

£956m

(2010: £1,092m)

  • Strong IFRS profit before tax despite volatile investment markets.

IGD SURPLUS

£3.8bn

(2010: £3.7bn)

  • IGD surplus remains robust despite volatile markets.

  • IGD at £3.8bn and coverage ratio of 220% (2010: £3.7bn and 226%).

RETURN ON EQUITY

14.5%

(2010: 18.2%)

  • Strong return on equity, anchored on growing operating profit.

  • Effective tax rate 24.4% (2010: 24.9%).

WORLDWIDE ANNUAL PREMIUM EQUIVALENT

£1,907m

(2010: £1,781m)

  • Worldwide APE up 7% in 2011.

  • Announced Legal & General’s largest Bulk Annuity transaction at £1.1bn.

  • £1bn Longevity Insurance announced broadening our de-risking product offering.

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