Directors’ report.

Directors’ report.

ARTICLES OF ASSOCIATION

The company’s Articles of Association may only be amended by a special resolution at a general meeting of shareholders. The Articles of Association are available on the company’s website.

CONFLICTS OF INTEREST

In accordance with the Companies Act 2006, the Board has adopted a policy and procedure for the disclosure and authorisation (if appropriate) of conflicts of interest, and these have been followed during 2013.

POWERS OF DIRECTORS

The directors may exercise all powers of the company subject to applicable legislation and regulation and the company’s Articles of Association.

SHARE CAPITAL

As at 31 December 2013, the company’s issued share capital comprised 5,917,066,636 ordinary shares each with a nominal value of 2.5p. Details of the ordinary share capital can be found in Note 38 to the Group Consolidated Financial Statements.

At the 2013 AGM, the company was granted authority by shareholders to purchase up to 591,358,534 ordinary shares, being 10% of the issued share capital of the company as at 27 March 2013. In the year to 31 December 2013, no shares were purchased by the company. This authority will expire at this year’s AGM. As such, a special resolution is proposed in the Notice of AGM seeking shareholder approval to renew this authority.

At the 2013 AGM, the directors were given the power to allot shares up to an amount of £49,279,878, being 33% of the issued share capital of the company as at 27 March 2013. This authority will also expire at this year’s AGM. As such, an ordinary resolution is proposed in the Notice of AGM seeking shareholder approval to renew this authority.

A further resolution is proposed, as set out in the Notice of AGM, that will, if approved by shareholders, authorise the directors to issue shares up to the equivalent of 5% of the company’s issued share capital as at 28 March 2014 for cash without offering the shares first to existing shareholders in proportion to their holdings.

Detailed explanatory notes to these resolutions are set out in the Notice of AGM.

Other than the above, the directors have no current intention of issuing further share capital and no issue will be made which would effectively alter control of the company without prior approval of shareholders in a general meeting.

INTERESTS IN VOTING RIGHTS

As at 28 February 2014, the company had been advised of the following significant direct and indirect interests in the issued share capital of the company:

(XLS:) Notes to the Company Financial Statements – Interests in voting rights

 

Number of Ordinary shares of 2.5p

% of capital*

Total interest in issued share capital

*

Using the voting rights figure announced to the London Stock Exchange on 3 March 2014 of 5,917,353,605.

Schroders Plc

295,651,535

5.0%

Indirect

Blackrock, Inc

300,077,786

5.1%

Indirect

AXA S.A. and its group of companies

252,247,724

4.3%

Direct and indirect

The Capital Group Companies, Inc

290,344,506

5.0%

Indirect

DIVIDEND

The company may, by ordinary resolution in a general meeting, declare dividends in accordance with the respective rights of the members, but no dividend can exceed the amount recommended by the Board. The directors propose a final dividend for the year ended 31 December 2013 of 6.90p per ordinary share which, together with the interim dividend of 2.40p per ordinary share paid to shareholders on 30 September 2013, will make a total dividend for the year of 9.30p (2012: 7.65p). Subject to shareholder approval at the AGM, the final dividend will be paid on 4 June 2014 to shareholders on the share register on 25 April 2014.

RELATED PARTY TRANSACTIONS

Details of related party transactions are set out in Note 41 to the Group Consolidated Financial Statements.

RIGHTS AND OBLIGATIONS ATTACHING TO SHARES

The rights and obligations relating to the company’s ordinary shares are set out in the Articles of Association. A copy of the Articles of Association can be requested from the company secretary at the company’s registered office.

Holders of ordinary shares are entitled to attend, speak and vote at general meetings. In a vote on a show of hands, every member present in person or every proxy present, who has been duly appointed by a member, will have one vote and on a poll every member present in person or by proxy shall have one vote for every ordinary share held. These rights are subject to any special terms as to voting upon which any shares may be issued or may at the relevant time be held and to any other provisions of the company’s Articles of Association. Under the Companies Act 2006 and the Articles of Association, directors have the power to suspend voting rights and, in certain circumstances, the right to receive dividends in respect of shares where the holder of those shares fails to comply with a notice issued under section 793 of the Companies Act 2006.

The Board can decline to register a transfer of any share which is not a fully paid share. In addition, registration of a transfer of an uncertificated share may be refused in the circumstances set out in the uncertificated securities rules and where the number of joint holders exceeds four. The Board may also refuse to register the transfer of a certificated share unless:

(a) the instrument of transfer is duly stamped and is left at the company’s registered office or such other place as the Board may from time to time determine accompanied by the certificate for the share to which it relates and such evidence as the Board may reasonably require to show the right of the transferor to make the transfer;

(b) the instrument of transfer is in respect of only one class of share; and

(c) the number of joint holders does not exceed four.

Subject to the provisions of the Companies Act 2006, all or any of the rights attaching to an existing class of shares may be varied from time to time either with the consent in writing of the holders of not less than three-fourths in nominal value of the issued shares of that class (excluding any treasury shares) or with the sanction of a special resolution passed at a separate general meeting of the holders of those shares.

Shares acquired through the employee share schemes rank equally with all other ordinary shares in issue. Barclays Private Bank & Trust (Isle of Man) Limited, as trustee of the Legal & General Employees’ Share Ownership Trust, holds 0.46% of the issued share capital of the company as at 28 February 2014 in trust for the benefit of the executive directors, senior executives and employees of the Group. This includes shares held as nominee on behalf of Legal & General Share Scheme Trustees Limited, as trustee of the Legal & General Employee Share Trust, which is in the process of being wound up. The voting rights in relation to these shares are exercised by the trustee. The trustee may vote or abstain from voting, or accept or reject any offer relating to shares, in any way it sees fit, without incurring any liability and without being required to give reasons for its decision.

Under the rules of the Legal & General Group Employee Share Plan (Plan), eligible employees are entitled to acquire shares in the company. Plan shares are held in trust for participants by Capita IRG Trustees Limited, which holds 0.43% of the issued share capital of the company as at 28 February 2014. Voting rights are exercised by the trustees on receipt of the participants’ instructions. If a participant does not submit an instruction to the trustees, no vote is registered. In addition, the trustees do not vote on any unawarded shares held under the plan as surplus assets.

The company is not aware of any agreements between shareholders which may result in restrictions on the transfer of securities and/or voting rights.

CHANGE OF CONTROL

There are no agreements between the company and its directors or employees for compensation providing for loss of office or employment (whether through resignation, purported redundancy or otherwise) in the event of a takeover bid, except for those relating to normal notice periods. The rules of the company’s share plans contain provisions under which options and awards to participants, including executive directors, may vest on a takeover or change of control of the company or transfer of undertakings.

The company has a committed £1 billion bank syndicated credit facility which is terminable if revised terms cannot be agreed with the syndicate of banks in a 30 day period following a change of control. As at 28 February 2014, the company has no borrowings under this facility.

There are no change of control conditions in the terms of any of the company’s outstanding debt securities. The terms of the company’s agreements with its banking counterparties, under which derivative transactions are undertaken, include the provision for termination of transactions upon takeover/merger if the resulting merged entity has a credit rating materially weaker than the company. There are no other committed banking arrangements either drawn or undrawn that incorporate any change of control conditions.

USE OF FINANCIAL INSTRUMENTS

Information on the Group’s risk management process is set out in the Strategic report. More details on risk management and the financial instruments used are set out in Notes 8 to 18 and note 28 of the Financial Statements.

INDEMNITIES

The company has agreed to indemnify, to the extent permitted by law, each of the directors against any liability incurred by a director in respect of acts or omissions arising in the course of their office. Qualifying pension scheme indemnities (as defined in section 235 of the Companies Act 2006) have been granted, to the extent permitted by law, to certain trustees of the company’s pension schemes. The indemnities were in force throughout 2013 and remain so. Copies of the deeds of indemnity are available for inspection at the company’s registered office and will also be available at the AGM.

POLITICAL DONATIONS

No political donations were made during 2013.

FORWARD-LOOKING STATEMENTS

The Directors’ report is prepared for the members of the company and should not be relied upon by any other party or for any other purpose. Where the Directors’ report includes forward-looking statements, these are made by the directors in good faith based on the information available to them at the time of their approval of this report. Such statements should be treated with caution due to the inherent uncertainties underlying such forward-looking statements.

INSURANCE

The company has arranged appropriate directors’ and officers’ liability insurance for directors. This is reviewed annually.

GREENHOUSE GAS DISCLOSURES

Global GHG Emissions Data for the period of January – December 2013:

(XLS:) Notes to the Company Financial Statements – Greenhouse gas disclosures

Emissions from

 

Please refer to our CSR report for further breakdown of emissions.

Scope 1 and 2 (electricity and gas) (based on Legal & General’s UK CRC Energy Efficiency Scheme disclosed emissions, Overseas property emissions)

12,979.11 tCO2

Scope 2 (electricity sourced from a renewable tariff)

20,813.68 tCO2

Scope 3 – Business travel (includes road, rail and air travel for LGAS, France, Netherlands and USA)

4,558.13 tCO2

Total CO2 (scope 1,2,3) (based on Legal & General’s UK CRC Energy Efficiency Scheme disclosed emissions, Overseas property emissions and reported travel emissions)

38,350.92 tCO2

Intensity ratio: Emissions per policy

3.78 kgCO2

Fugitive Emissions

571.24

Methodology

We have reported on the emission sources required under the Companies Act 2006 Strategic Report and Directors’ Report Regulations 2013.

We have used the GHG reporting protocol for calculating our GHG emissions for 2013 and applied the emission factors from UK Government’s GHG Conversion Factors for Company Reporting 2013.

The scope of the emissions included are those disclosed under the UK CRC Energy Efficiency Scheme, UK travel emissions and overseas property and travel emissions. Emissions outside of our responsibility and under the control of a third party have been excluded.

INDEPENDENT AUDITORS

The company’s auditors have expressed their willingness to continue in office and the Audit Committee has recommended their re-appointment to the Board. Resolutions to re-appoint PricewaterhouseCoopers LLP as auditors to the company and to authorise the directors to determine their remuneration are proposed for the forthcoming AGM.

DIRECTORS’ INTERESTS

The Directors’ Report on Remuneration provides details of the interests of each director, including details of current incentive schemes and long term incentive schemes, the interests of directors in the share capital of the company and details of their share interests, as at 28 February 2014.

GOING CONCERN STATEMENT

The group’s business activities, together with the factors likely to affect its future development, performance and position in the current economic climate are set out in the Strategic report. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Group results. Principal risks and uncertainties are detailed in the Risk management section. In addition, the financial statements include, amongst other things, notes on the Group’s objectives, policies and processes for managing its capital Note 29; its financial risk management objectives Note 8 to 18; details of its financial instruments and hedging activities Notes 12 and 13; and its exposures to credit risk and liquidity risk Note 8.

Whilst the economy has improved over the past year, the general climate remains, to a degree, uncertain. However, based on the available information on the future, the directors consider that the Group has the plans and resources to manage its business risks successfully as it has a diverse range of businesses and remains financially strong. After making enquiries, the directors have a reasonable expectation that the company, and the Group, have adequate resources to continue their operations for the foreseeable future. For that reason, they continue to adopt the going concern basis in preparing the financial statements.

ANNUAL GENERAL MEETING

The company’s annual general meeting will be held at 11.00am on Wednesday, 21 May 2014 at The Honourable Artillery Company, Armoury House, City Road, London EC1Y 2BQ.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

The directors are responsible for preparing the directors’ report and the annual report and accounts in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, and the parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

  • select suitable accounting policies and then apply them consistently;
  • make judgements and accounting estimates that are reasonable and prudent;
  • state whether IFRSs as adopted by the European Union and applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Group and parent company financial statements respectively;
  • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and the Group and enable them to ensure that the financial statements and the directors’ remuneration report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS regulation. They are also responsible for safeguarding the assets of the company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The directors consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the company’s performance, business model and strategy.

Each of the directors, whose names and functions are listed in the Board of directors section confirm that, to the best of their knowledge:

  • the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and
  • the strategic report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

In accordance with section 418 of the Companies Act 2006, each of the directors who held office at the date this report was approved confirms that:

(a) so far as the director is aware, there is no relevant audit information of which the company’s auditors are unaware; and

(b) he/she has taken all the steps that he/she ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company’s auditors are aware of that information.

The directors’ report and strategic report were approved by the Board, and signed on their behalf.

By order of the Board

Signature G J Timms, Company Secretary (handwriting)

G J Timms
Company secretary
4 March 2014

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