Legal & General Full Year Results 2016

08 March 2017

EPS1 UP 19% TO 22.2P, PROFIT BEFORE TAX2 UP 17% TO £1.6BN

FINANCIAL HIGHLIGHTS3:

  • NET RELEASE FROM OPERATIONS (NET CASH)4 UP 12% TO £1,411M (2015: £1,256M)
  • ADJUSTED OPERATING PROFIT5 UP 11% TO £1,628M (2015: £1,463M)
  • PROFIT AFTER TAX UP 16% TO £1,265M (2015: £1,094M)
  • EARNINGS PER SHARE UP 17% TO 21.22P (2015: 18.16P)
  • ADJUSTED EARNINGS PER SHARE1 UP 19% TO 22.20P (2015: 18.58P)
  • FULL YEAR DIVIDEND UP 7% TO 14.35P PER SHARE (2015: 13.40P)
  • ADJUSTED RETURN ON EQUITY6 19.6% (2015: 17.7%)
  • SOLVENCY II SURPLUS OF £5.7BN (2015: £5.5BN)
  • SOLVENCY II COVERAGE RATIO OF 171% (2015: 176%), SHAREHOLDER BASIS7

BUSINESS HIGHLIGHTS:

  • LGR NEW BUSINESS OF £8.5BN (2015: £2.9BN)
  • LGR ANNUITY ASSETS UP 25% AT £54.4BN (2015: £43.4BN)
  • GROUP-WIDE DIRECT INVESTMENT UP 39% AT £10.0BN (2015: £7.2BN)
  • LGIM AUM UP 20% AT £894.2BN (2015: £746.1BN)

Nigel Wilson, Group Chief Executive, said:

“Our long term approach to strategy and investment coupled with outstanding execution has again delivered terrific financial performance in 2016. Profit before tax up 17% to £1.6 billion, net release from operations up 12% to £1.4 billion, EPS up 19% at 22.2p and a return on equity of nearly 20%.

We believe the UK remains a great place for us to help fill the huge funding gaps and under-provision of key financial products. We are playing our part to regenerate the UK’s cities, delivering economic growth and jobs, capitalise on its world-leading universities and improve commercialisation of its scientific discoveries. Additionally, we are accelerating the evolution of our US businesses.

We look forward to the future with confidence as our core markets are growing, our market share is increasing, our balance sheet is strong and we have positive cash and earnings momentum. Through a combination of selective hiring and internal promotions we have significantly strengthened our management team and technology capability”.

Sir John Kingman, Chairman, said:

“Legal & General has a strong management team and formidable further potential. Against that backdrop, the Board has considered the best trajectory of dividend growth, taking into account sustainability across a wide range of economic scenarios and the Group’s anticipated financial performance. Accordingly, the Board has recommended an increase in the full year 2016 dividend of 7%”.

  1. Adjusted earnings per share is calculated by dividing profit after tax attributable to equity holders of the Company, by the weighted average number of ordinary shares in issue during the period. This excludes a £60m net loss on disposals being a £64m impairment loss in relation to the disposal of Cofunds and a £4m profit in relation to the disposal of Suffolk Life (2015: £25m net loss in relation to the disposals of Legal & General France, Legal & General Gulf, Legal & General Egypt and Legal & General International (Ireland)).
  2. Represents profit before tax attributable to equity holders.
  3. The metrics within the Group’s financial highlights are defined in the glossary, which includes Alternative Performance Measures, on pages 89 to 92 to this report.
  4. Net release from operations has replaced the term Net cash generation. There is no change in how it is determined.
  5. Adjusted operating profit is calculated as operating profit of £1,562m (2015: £1,455m) before taking account of the provision in respect of the closure of our Kingswood office of £66m (2015: £8m).
  6. Adjusted return on equity is calculated by taking profit after tax attributable to equity holders of the Company, excluding the £60m net loss on disposals (2015: £25m net loss) described in note 1, divided by the average shareholders’ equity during the period.
  7. Solvency II coverage ratio on a shareholder basis is adjusted for the Own Funds and SCR of the With-profits fund and the final salary pension schemes.

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