TIDMLGEN
RNS Number : 4590G
Legal & General Group Plc
04 March 2015
LEGAL & GENERAL GROUP PLC PRELIMINARY RESULTS 2014
Stock Exchange Release
04 March 2015
DIVIDENDS UP 21%, ROE UP TO 17%
Financial highlights:
-- NET CASH GENERATION UP 10% TO GBP1,104M (2013: GBP1,002M)
-- OPERATIONAL CASH GENERATION UP 6% TO GBP1,101M (2013: GBP1,042M)
-- OPERATING PROFIT UP 10% TO GBP1,275M (2013: GBP1,158M)
-- PROFIT AFTER TAX UP 9% TO GBP992M (2013: GBP906M)
-- EARNINGS PER SHARE UP 10% TO 16.70P (2013: 15.20P)
-- RETURN ON EQUITY 16.9% (2013: 16.1%)
-- FULL YEAR DIVIDEND UP 21% TO 11.25P PER SHARE (2013: 9.30p)
Business highlights:
-- ANNUITY ASSETS UP 28% TO GBP44.2BN (2013: GBP34.4BN)
-- LGIM TOTAL ASSETS UP 16% TO GBP708.5BN (2013: GBP611.6BN)
-- UK PROTECTION PREMIUM UP 6% TO GBP1,407M (2013: GBP1,326M)
-- SAVINGS ASSETS UP 10% TO GBP124.2BN (2013: GBP113.4BN)
-- DIRECT INVESTMENTS UP TO GBP5.7BN (2013: GBP2.9BN)
Nigel Wilson, Group Chief Executive, said:
"Legal & General delivers economically and socially useful
products. Our market leading growth businesses coupled with
continuous cost reductions have given us scale and efficiency in
our chosen markets. The five global macro trends driving our
strategy - ageing populations, globalisation of asset markets,
welfare reform, digital connectivity and bank retrenchment - create
long term growth opportunities, which we position our businesses to
capture. The rapid growth of LGIM's international business to over
GBP100bn, the GBP5bn of investment in physical assets in the UK,
and our entrance into the lifetime mortgage market are all examples
of the successful execution of our strategy.
Over the last five years we have increased dividend per share
from 3.84p to 11.25p - a nearly threefold increase. In 2014 we
produced another year of double digit growth across our key
financial metrics enabling us to reward shareholders with a 21%
rise in the dividend."
FINANCIAL SUMMARY
Growth
Financial highlights 2014 2013 %
GBPm
---------------------------------------- ------ ------ -------
Analysis of operating profit
---------------------------------------- ------ ------ -------
Legal & General Retirement 428 310 38
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Legal & General Investment Management 336 304 11
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Legal & General Assurance Society 460 444 4
---------------------------------------- ------ ------ -------
Legal & General Capital 203 179 13
---------------------------------------- ------ ------ -------
Legal & General America 56 92 (39)
---------------------------------------- ------ ------ -------
Operating profit from divisions 1,483 1,329 12
---------------------------------------- ------ ------ -------
Group debt costs (142) (127) (12)
---------------------------------------- ------ ------ -------
Group investment projects and expenses (66) (44) (50)
---------------------------------------- ------ ------ -------
Operating profit 1,275 1,158 10
---------------------------------------- ------ ------ -------
Investment and other variances (incl.
minority interests) (37) (14) (164)
---------------------------------------- ------ ------ -------
Profit before tax 1,238 1,144 8
---------------------------------------- ------ ------ -------
Operational cash generation 1,101 1,042 6
---------------------------------------- ------ ------ -------
New business surplus / (strain) 3 (40) n/a
---------------------------------------- ------ ------ -------
Net cash generation 1,104 1,002 10
---------------------------------------- ------ ------ -------
LEGAL & GENERAL RETIREMENT (LGR)
Growth
GBPbn 2014 2013 %
------------------------------------- ------ ----- -------
Annuity sales 6.6 4.1 61
------------------------------------- ------ ----- -------
Internal transfer from with-profits 1.9 - n/a
------------------------------------- ------ ----- -------
Total annuity transactions 8.5 4.1 109
------------------------------------- ------ ----- -------
Annuity net inflows 4.4 2.1 110
------------------------------------- ------ ----- -------
Annuity assets 44.2 34.4 28
------------------------------------- ------ ----- -------
LEGAL & GENERAL INVESTMENT MANAGEMENT (LGIM)
Growth
GBPbn 2014 2013 %
------------------------- ------ ------ -------
Revenue (GBPm) 645 594 9
------------------------- ------ ------ -------
Total net flows 7.6 20.3 (63)
------------------------- ------ ------ -------
International net flows 8.5 15.8 (46)
------------------------- ------ ------ -------
LGIM total assets(1) 708.5 611.6 16
------------------------- ------ ------ -------
LEGAL & GENERAL ASSURANCE SOCIETY (LGAS)
Growth
GBPm 2014 2013 %
----------------------------------- ------ ------ -------
UK Protection new business annual
premiums 230 218 6
----------------------------------- ------ ------ -------
UK Protection gross premiums 1,407 1,326 6
----------------------------------- ------ ------ -------
General Insurance gross premiums 377 375 1
----------------------------------- ------ ------ -------
Savings net flows (GBPbn) 5.6 6.8 (18)
----------------------------------- ------ ------ -------
Savings AUA (GBPbn) 124.2 113.4 10
----------------------------------- ------ ------ -------
LEGAL & GENERAL CAPITAL (LGC)
Growth
GBPbn 2014 2013 %
------------------------------- ----- ----- -------
Group-wide direct investments 5.7 2.9 98
------------------------------- ----- ----- -------
LGC assets 5.1 4.7 10
------------------------------- ----- ----- -------
LEGAL & GENERAL AMERICA (LGA)
Growth
$m 2014 2013 %
---------------------------------- ------ ------ -------
LGA new business annual premiums 150 155 (3)
---------------------------------- ------ ------ -------
LGA gross premiums 1,117 1,024 9
---------------------------------- ------ ------ -------
1. LGIM total assets includes GBP499bn (2013: GBP450bn) of AUM,
and GBP209bn (2013: GBP162bn) of derivative overlay and GIA
advisory assets.
2014 FINANCIAL HIGHLIGHTS
Legal & General delivered another year of strong growth in
operational and net cash generation, operating profit and earnings
per share. We continue to grow our business stock, which in turn
drives our cash and earnings progression. Annuity assets increased
28% to GBP44.2bn (2013: GBP34.4bn), Insurance premiums increased 8%
to GBP3.0bn (2013: GBP2.8bn) and Savings assets increased 10% to
GBP124.2bn (2013: GBP113.4bn). LGIM further increased its total
assets by 16% to GBP708.5bn (2013: GBP611.6bn) and revenue by 9% to
GBP645m (2013: GBP594m).
Net cash generation increased by 10% to GBP1,104m (2013:
GBP1,002m). Our new business surplus of GBP3m (2013: strain of
GBP(40)m) is as a result of a GBP18m improvement in Annuities new
business surplus, a GBP15m reduction in Savings new business strain
and a GBP10m reduction in Insurance new business strain.
Operational cash generation increased by 6% to GBP1,101m (2013:
GBP1,042m), driven by a 12% increase in LGR cash, up to GBP292m
(2013: GBP260m), reflecting the increasing stock of annuity assets,
and a 10% increase in LGIM cash, up to GBP262m (2013: GBP239m)
reflecting its growing stock of assets. Operational cash generation
included an additional GBP15m of debt costs following the issuance
of GBP600m of long dated subordinated Tier 2 debt in June 2014,
significantly extending the overall average maturity of the group's
borrowings.
Operating profit increased by 10% to GBP1,275m (2013:
GBP1,158m), reflecting the strong performance of our business. We
have changed our approach to the classification of restructuring
costs, reflecting the on-going nature of this type of expenditure.
Operating profit in 2014 is stated after GBP31m of restructuring
costs, included within Group investment projects and expenses. 2013
has not been restated and includes GBP17m in restructuring costs
within investment and other variances, below operating profit.
Profit before tax increased 8% to GBP1,238m (2013: GBP1,144m)
including investment and other variances of GBP(44)m (2013:
GBP(27)m). We have delivered earnings per share up 10% to 16.70
pence (2013: 15.20 pence) and a higher annualised return on equity
of 16.9% (2013: 16.1%).
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