2016 Half Year Results

09 August 2016

NET CASH GENERATION UP 16%, ROE1 OF 20%, SII SURPLUS OF £5.3BN

FINANCIAL HIGHLIGHTS2:

  • NET CASH GENERATION UP 16% TO £727M (H1 2015: £629M)
  • ADJUSTED OPERATING PROFIT3 UP 10% TO £822M (H1 2015: £750M)
  • PROFIT AFTER TAX UP 22% TO £667M (H1 2015: £547M)
  • EARNINGS PER SHARE UP 24% TO 11.27P (H1 2015: 9.11P)
  • ADJUSTED EARNINGS PER SHARE4 UP 14% TO 11.20P (H1 2015: 9.79P)
  • RETURN ON EQUITY1 20.4% (H1 2015: 19.1%)
  • SOLVENCY II SURPLUS OF £5.3BN (FY 2015: £5.5BN)
  • SOLVENCY II COVERAGE RATIO OF 158%, (163% ON A SHAREHOLDER BASIS)
  • NEW FORMULAIC APPROACH TO SETTING THE INTERIM DIVIDEND: 30% OF 2015 FULL YEAR DIVIDEND AT 4.00P PER SHARE

BUSINESS HIGHLIGHTS:

  • LGR ANNUITY ASSETS UP 18% AT £51.0BN (H1 2015: £43.4BN)
  • GROUP-WIDE DIRECT INVESTMENT UP 28% AT £8.0BN (H1 2015: £6.2BN)
  • LGIM AUM UP 18% AT £841.5BN (H1 2015: £714.6BN)

Nigel Wilson, Group Chief Executive, said:

“We have continued to execute our strategy well. Shareholders’ profit before tax grew 23% to £826m, adjusted EPS grew 14% to 11.2p, net cash generation grew by 16% to £727m and the Group delivered a 20% RoE. We have a strong balance sheet, which gives us the flexibility and capacity to invest in support of each of our businesses.

There are many different views of the outlook for economic growth, the state of financial markets and political uncertainty. We reflect this in our approach to risk management. While we cannot be immune to this uncertainty, we remain confident that we will continue to deliver attractive returns for shareholders, great value to customers and better outcomes for society. Our five long-term growth drivers, ageing populations, globalisation of asset markets, creating real assets, welfare reform and digital remain unaffected and will continue to provide many growth opportunities.”

  1. Return on equity is calculated by taking annualised profit after tax attributable to equity holders of the Company (twice the half-year number), as an average of shareholders’ equity during the period, excluding a £4m profit in relation to the disposal of Suffolk Life (H1 2015: £40m impairment loss in relation to the subsequent disposals of Legal & General France and Legal & General Gulf).
  2. The metrics within the Group’s financial highlights are defined in the glossary, on pages 99 to 102 to this report.
  3. Adjusted operating profit is calculated as operating profit of £777m (H1 2015: £750m) before the cost of the provision in respect of the closure of our Kingswood office of £45m (H1 2015: £nil).
  4. Adjusted earnings per share is calculated by dividing profit after tax, excluding the £4m profit (H1 2015: £40m loss) described in note 1, by the weighted average number of ordinary shares in issue during the period.

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