2 Chairman’s statement 4 Group Chief Executive’s review 8 Our role in the community 9 The businesses of Lloyds TSB
On 3 March 2000 the Group completed the acquisition of Scottish
(page 27), the impact of provisions for redress to past purchasers of pension policies (page 17) and a one-off charge relating to stakeholder pensions (page 17). In 1999 the sale and closure of businesses was also significant (page 58). To facilitate comparisons of the results, certain financial information and commentaries have been presented on a ‘business as usual operating profit’ basis, which excludes the effect of these items.
Profit before tax up 7 per cent to £3,886 million from £3,621 million.
Customer lending grew by 12 per cent to £114 billion and customer deposits increased by 8 per cent to £101 billion.
Our current heavy investment in e-commerce and restructuring is planned to produce substantial productivity gains, which will enable us further to enhance customer value and hence shareholder value. Price competition is increasing, but we expect margin erosion to be offset by volume growth.
This year we shall bid farewell to Paddy Linaker, a director since 1994. He leaves with our thanks and best wishes.
WE AIM TO LOOK AFTER OUR CUSTOMERS SO WELL THAT THEY WILL WANT US TO HANDLE MORE OF THEIR FINANCIAL AFFAIRS
Peter Ellwood 2000 was a watershed year for the financial services sector.
Goldman Sachs. Create forms a key part of Lloyds TSB’s revenue growth strategy and expects to have around 250,000 clients by the end of 2002. Lloyds TSB
Lloyds TSB is one of the most powerful financial services brands in the UK. We have a very comprehensive network of branches together with one of the largest telephone banking businesses in the UK with over 2.0 million customers and, with over 1.2 million registered online customers, LloydsTSB.com is now consistently one of the most visited financial websites in Europe. Our overall distribution capability will be further improved in the second half of the year as we complete our IT integration as planned, providing online real time technology for all our retail banking customers, a facility which will become increasingly important in the internet world.
The implementation of our strategies will ensure that, through profitable top line revenue growth and a strong grip on our day-to-day operating costs, the Group can continue to deliver a strong and sustainable return on equity, together with robust growth in equity and economic profit. The future for the financial services sector will undoubtedly be more challenging than it has been in the past, but we believe we are equipped with the strategy, the staff, the management and the determination to continue to succeed.
SCOTTISH WIDOWS IS THE GROUP’S PROVIDER OF LONG-TERM SAVINGS AND INVESTMENT PRODUCTS. IN THE SECOND HALF OF 2000, SALES FROM THE COMBINED LLOYDS TSB AND SCOTTISH WIDOWS LIFE, PENSIONS AND UNIT TRUST BUSINESSES INCREASED BY 19 PER CENT, COMPARED TO THE SECOND HALF OF 1999.
Strong communities form the building blocks of business success and, with the largest community programme in the UK,
We continue to support those charitable organisations that are the lifeblood of local communities through the Lloyds TSB
Foundations will have received more than £120 million to distribute to charities, placing the Lloyds TSB Foundations amongst the largest independent grantgiving trusts in the UK.
WE AIM TO SUPPORT THOSE COMMUNITIES THAT WE ALSO SERVE AS A BUSINESS
The main businesses and activities of the Group during 2000 are described below: UK Retail Financial Services encompasses three of the main businesses – UK Retail Banking, Mortgages, and Insurance and
Investments – and provides a full range of banking and financial services to 16 million customers. With more than 2,400 branches of Lloyds TSB Bank, Lloyds TSB Scotland and
• Card Services provides a range of card-based products and services, including credit and debit cards and card processing services for retailers. The Group is a member of both the VISA
Cheltenham & Gloucester is the Group’s specialist residential mortgage provider, selling its mortgages through branches of
C&G and Lloyds TSB Bank in England and Wales, as well as through the telephone, internet and postal service, C&G
• Asset finance provides leasing, hire purchase and loan products to the corporate and personal sectors through the
• The Americas. The Group has operated in The Americas for over 130 years and has offices in Argentina, Brazil, Colombia and 6 other countries. In addition there are private banking and investment operations in the United States and the Bahamas.
Accounting policies are set out on pages 55 to 57. During the year, the Group implemented the requirements of Financial
Reporting Standard 15, ‘Tangible Fixed Assets’; this has resulted in two changes. The Group’s freehold and long leasehold premises were previously included in the balance sheet at the last valuation on the basis of existing use value. Following the implementation of the new standard the Group’s premises will no longer be revalued, and a prior year adjustment has been made to restate the carrying value to historical cost. This has resulted in the carrying value of tangible fixed assets as at 1 January 1999 being reduced by £112 million and an equivalent adjustment being made against reserves. The effect of this change upon the Group’s profit and loss account is not significant.
Group’s insurance businesses have been separately analysed between an operating profit, which includes investment earnings calculated using longer-term rates of investment return, and a profit before tax, separately identifying the short-term fluctuations in investment returns (page 28).
Other items also had a significant impact on the Group’s 2000 results: changes in the economic assumptions applied to our long-term assurance business (page 29), exceptional restructuring costs (page 27), the impact of provisions for redress to past purchasers of pension policies (page 17) and a one-off charge relating to stakeholder pensions (page 17). In 1999, the sale and closure of businesses was also significant (page 58). To facilitate comparisons of the results, certain financial information and commentaries have been presented on a ‘business as usual operating profit’ basis, which excludes the effect of these items.
equity increased by 13 per cent and the post-tax return on average shareholders’ equity was 29.1 per cent.
Widows contributed £403 million since 3 March 2000, before taking into account funding costs of £258 million. This compares with normalised pre-tax profits of £349 million in 1999. As a result of the Scottish Widows acquisition, group fee income increased to 46 per cent of total income in 2000, compared with 40 per cent in 1999. In 2000 the contribution from Insurance and Investments rose to 34 per cent of group profit, with more than half of this from life, pensions and unit trusts.
The acquisition of Chartered Trust was completed on 1 September 2000. Its results have been consolidated in full with effect from that date and a restructuring provision of £21 million has been made to cover the costs of integrating Chartered Trust and Lloyds UDT. Excluding this restructuring provision and £9 million goodwill amortisation, the impact on group figures has been to increase net interest income by £31 million after funding costs of £12 million, increase other income by £53 million, increase operating expenses by £62 million, increase the provisions charge by £12 million and increase profit before tax by £10 million.
As previously anticipated, we incurred £188 million exceptional restructuring costs in 2000. E-commerce investment costs totalled approximately £150 million. Cost control will remain very important but a core element of our strategies is to continue to increase investment to underpin further our competitiveness and revenue growth opportunities. These strategies are aimed at increasing economic profit from many of the Group’s higher growth markets, particularly wealth management, long-term savings and investments, business banking and the further segmentation of our core retail franchise. Accordingly, the Group’s efficiency ratio is expected to improve further over time but we no longer believe that it is appropriate to be constrained by a separate efficiency ratio target.
We have continued to develop a number of alternative distribution channels in order to offer a broad range of access points for our customers thereby improving service and enhancing revenue growth. PhoneBank, our telephone banking operation, is one of the largest in Europe with 1.3 million customers. In addition, PhoneBank Express, our leading edge interactive voice recognition system, now has over 700,000 registered users. PhoneBank and PhoneBank Express handled 23.5 million calls during the year. Our supermarket banking operation, branded ‘easibank’, continues to expand and we now have 22 branches in ASDA stores or large shopping centres. We have extended our relationship with the Post Office to allow our personal customers to undertake banking transactions in post offices in Scotland, in addition to our existing arrangements in England and Wales.
We continue to make substantial progress with our e-commerce strategy. We exceeded our target of 1 million online customers of LloydsTSB.com by the end of 2000 and we now have over 1.2 million customers registered to use our online banking service. LloydsTSB.com is now consistently one of the most visited financial websites in Europe. We successfully launched our standalone internet bank, evolvebank.com, in Spain during November 2000.
We have also made substantial progress on a number of initiatives for business customers. The Group has launched success4business.com, an internet portal designed to help small business customers maximise opportunities in e-commerce, and LloydsTSBMarketplace, a trade facilitation web service, that allows suppliers and buyers access to a secure e-enabled environment to conduct business with a wide variety of companies within their specific marketplace.
Our new e-procurement system has recently been launched throughout the Group and over 8,000 staff can now make purchases from their desktop PCs, saving substantial time and money as all purchases are made using the Group’s preferred suppliers with whom discounts have been negotiated.
On 24 July 2000 the Group announced the launch of a £20 million joint venture with antfactory, a leading European e-commerce investment company. The new joint venture, called Valuefactory Ventures, aims to identify, invest in and develop global new economy businesses as standalone, value-creating companies. The focus will be on investment opportunities which can benefit from the resources and capabilities of Lloyds TSB and antfactory.
On 15 August 2000 the Group announced the creation of a new payments processing company – Intelligent Processing
Solutions Limited (iPSL) – in conjunction with Unisys and Barclays. iPSL, which is 24.5 per cent owned by Lloyds TSB, will handle all the Group’s cheque processing activities. With increased levels of electronic banking leading to a decline in the volume of cheques being processed, iPSL provides the economies of scale needed to offset the increasing unit cost of processing cheques.
TSB’s track record in bancassurance and regulatory experience. Centrica will bring the Goldfish brand, together with immediate access to 9 million Centrica customers.
PrimeAccess™. This service will provide clients with customised proprietary research from Goldman Sachs, international equity dealing and market making, custody and settlement, and access to selected equity capital market offerings managed by
Create forms a key part of Lloyds TSB’s revenue growth strategy and expects to have around 250,000 clients by the end of 2002. Lloyds TSB currently makes pre-tax profits of some £300 million annually from wealth management in the UK and overseas, and believes that this can be doubled within four years of Create’s full market launch this summer.
Intense competition in the mortgage market was evident throughout the year leading, as anticipated, to a lower net interest margin which resulted in pre-tax profit from Mortgages decreasing by £3 million to £865 million, from £868 million in 1999.
Profit before tax in the second half of 2000 was £436 million, £7 million, or 2 per cent, higher than in the first half of the year. The efficiency ratio of the Group’s total mortgage business was 23.9 per cent compared with 22.6 per cent in 1999.
Life and pensions: Scottish Widows 393 – Lloyds TSB bancassurance 259 234 Abbey Life 164 156 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
Total operating profit* 1,447 873afffffffffffffffffffffffffff afffffffffffffffffffffffffff Short-term fluctuations in investment returns (119) 28 Changes in economic assumptions 127 – Pension provisions (100) (102) Stakeholder pension related charge (80) –
The merger of Scottish Widows Investment Management and Hill Samuel Asset Management was completed on 30 June 2000, and the enlarged asset management operation was launched under a new brand, Scottish Widows Investment
Partnership. The creation of Scottish Widows Investment Partnership, with some £87 billion of funds under management, has enabled the Group to become a leading player in the asset management business. Pre-tax profit from investment management for the year was £40 million, up 82 per cent from £22 million in 1999, largely as a result of the inclusion, since 3 March 2000, of the Scottish Widows investment management business.
New business 281 134 Existing business 500 260 Investment earnings 212 38 Life and pensions distribution costs (225) (99)
Scottish Widows maintained its 5-star awards from independent financial advisers in both the Life and Pensions and Investment
Provider ratings. This is the fifth consecutive Life and Pensions Provider 5-star award and the fourth consecutive Investment
The assets are held in such a way that should a change in interest rates cause the liabilities to increase then the assets will also increase to reflect this.
Total new business premium income and unit trust sales: Regular premiums 158.1 129.4 Single premiums 3,501.4 1,875.7 Unit trusts 1,993.3 1,770.2 Weighted sales (regular + 1⁄10 single) 789.5 565.2
Weighted sales by distribution channel: Branch network 353.3 355.2 Independent financial advisers 253.0 92.8
Scottish Widows (including bancassurance): Regular premiums: Life – mortgage related 23.6 31.4
Total regular premiums 154.8 74.3afffffffffffffffffffffffffff afffffffffffffffffffffffffff Single premiums: Fund management 1,125.3 1,079.0 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
Total life funds under management 51,085 26,542 * The Group disposed of the new business capability of Abbey Life on 1 February 2000
aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff 399 390afffffffffffffffffffffffffff afffffffffffffffffffffffffff Commissions from insurance broking: aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff 398 327afffffffffffffffffffffffffff afffffffffffffffffffffffffff Operating profit* 591 461 * including ‘normalised’ investment returns based on long-term rates of investment return
Net interest income 900 930 Other income 622 444 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
On 1 September 2000, the Group announced that its subsidiary, Lloyds UDT, had acquired Chartered Trust Group Plc and
A restructuring provision of £21 million has been made to cover the costs of integrating Chartered Trust and Lloyds UDT.
(banking and financial services overseas in four main areas: The Americas, New Zealand, Europe and Offshore Banking; and Emerging Markets Debt)
Trading surplus 550 532 Provisions for bad and doubtful debts 49 88 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
Profits from New Zealand in local currency terms increased by 21 per cent. International private banking and the Group’s offshore banking operations both showed strong improvements over 1999 with an 18 per cent increase in pre-tax profit to £194 million, from £165 million in 1999.
Accrual for payment to Lloyds TSB Foundations (34) (31) Earnings on surplus capital, central costs and other unallocated items (99) 150 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
(2000: £31 million) to distribute to charities, making them in aggregate one of the largest general grant-giving organisations in the UK.
Excluding the £258 million funding cost of Scottish Widows, group net interest income increased by £62 million, or 1 per cent, to £4,845 million, notwithstanding a reduction of £200 million caused by a 17 basis point reduction in the underlying net interest margin. This £200 million reduction in net interest income was more than offset by higher volumes of both customer lending and deposits. Average interest-earning assets increased by 6 per cent to £131 billion. There was further growth in mortgages and other customer lending in the UK. The net interest margin decreased to 3.49 per cent, a reduction of 37 basis points. The impact of the funding cost of Scottish Widows represented 20 basis points of this 37 basis point reduction, with the residual 17 basis point decrease in the margin reflecting the increasingly competitive operating environment and a lower international net interest margin. Excluding the funding cost of Scottish Widows, the group net interest margin in the second half of 2000 was 3.67 per cent, compared with 3.70 per cent in the first half of the year.
Net interest income from international operations increased by £2 million to £631 million, representing 14 per cent of total group net interest income. Underlying growth on a local currency basis was largely offset by a £14 million reduction caused by exchange rate movements. Average interest-earning assets on a local currency basis increased by 7 per cent, helped by growth in our New Zealand mortgage portfolio, but this increase was partly offset by the effect of exchange rate movements.
The international net interest margin decreased by 16 basis points to 3.03 per cent. Whilst the interest spread held up well, the gross yield on interest-earning assets fell significantly as a result of lower interest rates in Latin America.
Scottish Widows. General insurance premium income on underwritten business increased by £9 million, or 2 per cent, against 1999.
Fees and commissions receivable: UK current account fees 629 663 Other UK fees and commissions 1,171 978 Insurance broking 398 327 Card services 304 279 International fees and commissions 266 250
Dealing profits (before expenses): Foreign exchange trading income 141 133 Securities and other gains 57 82
General insurance premium income 399 390 Other operating income 381 242 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
Premises and equipment: Rent and rates 247 250 Hire of equipment 26 33 Repairs and maintenance 115 107
In Insurance and Investments numbers of staff increased to reflect the acquisition of Scottish Widows, in Wholesale Markets staff numbers increased by 1,245, reflecting the acquisition of Chartered Trust, and in International Banking there were lower staff numbers in Brazil and New Zealand.
Total number of employees (full-time equivalent) 77,540 76,056afffffffffffffffffffffffffff afffffffffffffffffffffffffff * Although the costs of distributing mortgages and insurance through the Lloyds TSB network are allocated to the mortgage and insurance businesses, the number of employees involved in these activities in the network is included under UK Retail Banking.
Total charge 475 588afffffffffffffffffffffffffff afffffffffffffffffffffffffff Specific provisions 481 588 General provisions (6) –
Total charge 475 588afffffffffffffffffffffffffff afffffffffffffffffffffffffff Charge as % of average lending: % %
Risk-weighted assets increased to £93.5 billion and the post-tax return on average risk-weighted assets, a key measure of efficient use of capital, improved to 3.14 per cent from 3.02 per cent in 1999.
UK Retail Financial Services 44.2 39.8 Wholesale Markets 36.5 31.6 International Banking 11.9 11.6 Central group items 0.9 1.1 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
In 2000, we invested £499 million in premises and equipment, compared with £352 million in 1999. Expenditure on premises and equipment over the past 5 years has totalled £1,650 million. This investment has been mainly in support of UK operations, in the retail businesses and in new technology to enhance future profitability. It has been wholly financed by a combination of internally generated funds and disposals. At the end of 2000, there were further capital expenditure commitments of £5 million in respect of premises and equipment.
We continue to use economic profit as a measurement of performance, which is the best way to understand the true value being created for shareholders. Economic profit represents the profit attributable to shareholders less a notional charge for the equity invested in the business. In 2000 economic profit increased by 6 per cent to £1,882 million from £1,772 million in 1999. Our calculation of economic profit uses average equity for the year and was based on a cost of equity of 9 per cent in 2000 (1999: 9 per cent).
The longer-term rates of return for the period are consistent with those used by the Group in the calculation of the embedded value at the beginning of the period, which were 8.00 per cent for equities and 5.25 per cent for gilts. These are based upon a long-term view of economic activity and are therefore not adjusted for market movements which are considered to be short term. This approach is considered the most appropriate given the long-term nature of the portfolio of products and achieves consistency in reporting from one period to the next.
Trading activities are restricted to a few highly specialist authorised trading centres, the principal one being the Group’s
The board is responsible for determining the long-term strategy of the business, the markets in which the Group will operate and the level of risk acceptable to the Group in each area of its business.
The Director of Group Risk Management and Compliance implements the policies established by the board through four principal departments: Group Audit, Group Risk, Group Compliance, and Sanctioning and Sovereign Risk. Group Risk’s responsibilities include credit risk, market risk, operational risk, insurance risk and environmental risk; the department also sets risk policy, develops risk methodology and undertakes risk evaluation and reporting.
Credit risk arises from extending credit in all forms in the Group’s banking and trading activities, where there is a possibility that a counterparty may default. The Group has dedicated standards, policies and procedures to control and monitor all such risks.
• Provision of a group rating system. All business units are required to operate an authorised rating system that complies with the Group’s standard methodology. The Group uses a ‘Master Scale’ rating structure with nine ratings, each corresponding to a probability of future default.
• Control of bank exposures. In-house proprietary rating systems are used to approve bank facilities on a group basis.
Group Balance Sheet Management (GBSM) specifically focuses on the management of interest rate risk in the Group’s retail portfolios, including mortgages, and in the Group’s capital funds. GBSM reports to an Asset and Liability Committee under the chairmanship of the Group Finance Director; other members include the Director of Group Risk Management and
Where appropriate risk is mitigated by way of insurance with third parties.
Total income excluding special items 6,902 7,376 7,509 8,002 8,641aaddfff aaddfff aaddfff aaddfff aaddfff Operating expenses excluding special items 3,798 3,768 3,466 3,417 3,764aaddfff aaddfff aaddfff aaddfff aaddfff Operating profit excluding special items 2,652 3,039 3,354 3,821 4,246
Special items: Short-term fluctuations in investment returns 2 4 6 28 (119)
Changes in economic assumptions applied to long-term assurance business – – 123 – 127
Profit (loss) on sale and closure of businesses (35) 154 84 (126) – aaaaaaasfff aaaaaaasfff aaaaaaasfff aaaaaaasfff aaaaaaasfff
Statutory profit before tax 2,431 2,746 3,015 3,621 3,886aaddfff aaddfff aaddfff aaddfff aaddfff
Long-term assurance assets attributable to policyholders 18,139 20,046 23,692 26,542 51,085 aaaaaaasfff aaaaaaasfff aaaaaaasfff aaaaaaasfff aaaaaaasfff
Total assets 147,137 157,994 167,885 175,979 217,982aaddfff aaddfff aaddfff aaddfff aaddfff
Total liabilities 147,137 157,994 167,885 175,979 217,982aaddfff aaddfff aaddfff aaddfff aaddfff
Risk asset ratio : total capital 9.7% 10.7% 11.2% 15.0% 9.0%
Post-tax return on average shareholders’ equity 31.6% 34.9% 30.2% 30.5% 29.1%
Post-tax return on average risk-weighted assets* 2.06% 2.49% 2.67% 3.02% 3.14%
M Kent Atkinson Group Finance Director Joined Bank of London & South America in 1964, which became a Lloyds Bank subsidiary in 1971, and held a number of senior and general management appointments in the Group, including positions in Latin America and the Middle East, before being appointed to the board in 1997. A non-executive director of Coca-Cola HBC SA. Aged 55.
Dennis Holt Group Executive Director, Retail Distribution Joined Lloyds Bank in 1970 and held a number of senior and general management appointments in the Group before being appointed to the board in 2000. Aged 52.
David P Pritchard Group Executive Director, Wholesale and International Banking Joined TSB Group in 1995 as group treasurer. Seconded to the Securities and Investments Board as head of supervision & standards, markets & exchanges, from 1996 to 1998. Appointed to the board in 1998. Held senior and general management appointments with Citicorp from 1978 to 1986 and Royal Bank of Canada from 1986 to 1995. Aged 56.
A Clive ButIer‡§▲ A director of TSB Group since 1993. Joined Unilever in 1970 and following a number of senior and general management appointments was appointed an executive director of Unilever in 1992. Aged 54.
Thomas F W McKillop*† A director since 1999. Joined ICI in 1969 and held a number of senior and general management appointments there before the demerger in 1993, when Zeneca was created. Chief executive of Zeneca Pharmaceuticals from 1994 to 1999 and chief executive of AstraZeneca from 1999. Pro-chancellor of Leicester University. Aged 57.
An interim dividend of 9.3p per ordinary share was paid on 11 October 2000 and a final dividend of 21.3p per ordinary share will be paid on 2 May 2001. The dividends for 2000 will absorb £1,683 million.
The transfer of the business of Scottish Widows’ Fund and Life
Goodison, Mr Nicholson and Dame Bridget Ogilvie left the board at the annual general meeting in April 2000. Mr Linaker and Sir Brian Pitman will retire at the annual general meeting in 2001.
Opportunity, campaigns to improve opportunities for women and ethnic minorities in the work place. The Group is a member of the Employers’ Forum on Disability in support of employment of people with disabilities. This recognises the need for ensuring fair employment practices in recruitment and selection, and the retention and career development of disabled staff.
including £34,483,333 (1999: £31,336,667) under deeds of covenant to the four Lloyds TSB Foundations, which will be paid during 2001. No payments were made to political parties.
PricewaterhouseCoopers as auditors and authorising the directors to set their remuneration will be proposed at the annual general meeting.
Miss Forbes, Dr Gibson-Smith and Dr McKillop, makes recommendations to the board on the framework of executive directors’ remuneration and its cost, and determines, on the board’s behalf, specific remuneration packages for each of the chairman, the deputy chairmen and the executive directors.
Additionally, all the non-executive directors receive the minutes of remuneration committee meetings and have the opportunity to comment and have their views taken into account before the committee’s decisions are implemented.
remuneration arrangements, in line with the Group’s overall practice on pay and benefits, are competitive and designed to attract, retain and motivate executive directors of the highest calibre, who are expected to perform to the highest standards.
Each year, with the help of external management consultants, the total remuneration package is reviewed, and in 2000 Hay
In April 2000, shareholders approved the introduction of a medium-term incentive plan which gives executive directors
If by the end of 2002 the group’s efficiency ratio is between 37 per cent and 35 per cent or lower and the return on equity is between 28 per cent and 30 per cent or higher, the sum payable increases on a straight line sliding scale to the maximum award.
The Group is committed to the governing objective of maximising shareholder value over time. The board believes that executive share option schemes for senior executives provide an effective method of giving them the incentive to achieve that objective.
Mr Atkinson, Mr Ellwood, Mr Fairey, Mr Holt, Mr Kane and
service contracts and a departing director’s duty to mitigate loss. The committee reviewed the wording of the executive directors’ contracts and felt that as the notice period did not exceed one year, except in the case of Mr Ross as mentioned above, there was no need to provide explicitly for compensation payments on early termination.
Former directors who served during 2000: Dame Bridget Ogilvie 8 8 30
‘Other benefits’ include the use of a car, medical cover, relocation payment where relevant and in some cases † the annual cost of life insurance cover similar to that provided for employees by the Lloyds TSB Group pension scheme.
The total for the highest paid director (Mr Ellwood) was £856,000. (The total for the highest paid director in 1999 (Sir Brian Pitman), including the gain of £3,025,000 on the exercise of share options, mentioned in the table on page 44, was £3,465,000). The gains on the exercise of share options arise from increases in the share price since the options were granted. Shareholders who held shares for the same periods would have gained similarly from these increases.
Mr Pritchard is entitled to additional benefits from the defined contribution section of the separate fund for those who joined the Group after 1 June 1989. The Group pays an annual contribution to the fund in respect of Mr Pritchard of 27 per cent of salary in excess of the earnings cap, which for the year 2000 equates to £63,045 (1999: £54,041).
Additionally, the directors meet, informally, four or five times a year, to enable them to spend more time than would normally be available at board meetings in exploring aspects of the
The board has a chairman’s committee, comprising the chairman, the two deputy chairmen, the group chief executive and his deputy. The chairman’s committee meets to discuss current issues and strategy, examine and test proposals and prepare for board meetings. It also has power to deal with routine matters between board meetings.
The directors are satisfied that the Company and the Group have adequate resources to continue to operate for the foreseeable future and are financially sound. For this reason, they continue to adopt the going concern basis in preparing the accounts.
Note £ million £ million £ million £ million aaaffffffffffffffffffff aaaaaaffffffffffffffffffffffffff aaaaaaffffffffffffffffffffffffff aaaaaaffffffffffffffffffffffffff aaaaaaffffffffffffffffffffffffff
Intangible fixed assets 25 2,599 231 Tangible fixed assets 26 3,037 2,035
Called-up share capital 44 1,396 1,389 Share premium account 45 595 404
Memorandum items 47 Contingent liabilities: Acceptances and endorsements 357 459 Guarantees and assets pledged as collateral
Short-term borrowings 37 1 1 Amounts owed to group undertakings 1,811 1,918 Other creditors 62 60 Dividend payable 1,172 1,011
Statement of total recognised gains and losses for the year ended 31 December 2000 £ million £ million aaaaaaaaffffffffffffffffffffffffff aaaaaaaaffffffffffffffffffffffffff
Historical cost profits and losses for the year ended 31 December 2000
Reconciliation of movements in shareholders’ funds for the year ended 31 December 2000 £ million £ million aaaaaaaaffffffffffffffffffffffffff aaaaaaaaffffffffffffffffffffffffff
Net cash inflow from operating activities (note 50a) 7,558 1,261 Returns on investments and servicing of finance: Dividends paid to equity minority interests (12) (11) Payments made to non-equity minority interests (36) – Interest paid on subordinated liabilities (loan capital) (442) (270) Interest element of finance lease rental payments (1) –
e Provisions for bad and doubtful debts and interest in suspense
Provisions for bad and doubtful debts are based on the year-end appraisal of advances. The specific element relates to identified risk advances, whereas the general element relates to latent bad and doubtful debts which are present in any portfolio of bank advances but have not been specifically identified.
Advances are written down to estimated realisable value when the normal banking relationship with the customer has ceased; where it is doubtful that interest earned on loans and advances will be collectable, it is credited to an interest in suspense account and is only released to the profit and loss account when its collectability is no longer subject to significant doubt.
The value placed on the Group’s long-term assurance business attributable to shareholders represents a prudent valuation of future earnings of policies in force, together with the net worth of the business, being the net tangible assets and the surplus retained after allocation within the long-term assurance funds. This value is determined annually in consultation with independent actuaries and is included separately in the balance sheet.
The underwriting result of the general insurance business is determined annually and included in profit before tax after taking into account premiums, outstanding claims and deferred acquisition costs. Premiums are included net of refunds and a provision for the proportion of premiums written in the year which relate to cover provided for future periods. The provision for claims includes the estimated cost of claims notified but not settled and claims incurred but not reported at the balance sheet date.
2 Dealing profits (before expenses) 2000 1999 £m £m aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
The average number of persons on a headcount basis employed by the Group during the year was as follows: aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff 79,695 80,175afffffffffffffffffffffffffff afffffffffffffffffffffffffff The above staff numbers exclude 6,152 (1999: 4,938) staff employed in the long-term assurance business. Costs of £199 million (1999: £141 million) in relation to those staff are reflected in the valuation of the long-term assurance fund.
Details of directors’ emoluments, pensions and interests are given on pages
During the year PricewaterhouseCoopers earned the following fees: £m £m aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
It is the Group’s policy to employ PricewaterhouseCoopers on assignments additional to their statutory audit duties where their expertise and experience with the Group are important, principally tax advice and due diligence reporting on acquisitions, or where they are awarded assignments on a competitive basis.
There was a net credit in respect of pension costs for the Group in 2000 of £105 million (1999: credit of £108 million), which included a credit of £121 million (1999: credit of £121 million) relating to Lloyds TSB Group Pension Schemes No’s 1 and 2.
Full actuarial valuations of the Lloyds TSB Group Pension Schemes No’s 1 and 2 are carried out every three years with interim reviews in the intervening years. At 30 June 1999, the date of the latest full actuarial valuations, the principal actuarial assumptions adopted were that, over the long term, the annual real rate of return on new investments would be 3 per cent higher than the annual increase in pensionable remuneration, 4 per cent higher than the annual increase in present and future pensions in payment, and 3 per cent higher than the annual increase in dividends receivable. The market value of the assets of the schemes at this date was £11,748 million. The actuarial value of the assets represented 125 per cent of the accrued liabilities allowing for future increases in pensions and pensionable remuneration. For funding purposes, the surpluses in the two schemes are being eliminated by means of a contribution holiday.
Contribution rates to other schemes have been adjusted to take account of surpluses and deficiencies. The pensions prepayment of £768 million (1999: £647 million) for the Group is included in prepayments and accrued income.
Provision for closure of Lloyds TSB Securities Services (tax: nil) – (28) Provision for sale of Abbey Life new business capability (including £80 million in respect of goodwill previously written off to reserves) (tax: nil) – (98)
7 Profit on ordinary activities before tax 2000 1999 £m £m aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
Class of business: UK Retail Banking and Mortgages Profit before exceptional restructuring costs 1,682 1,657 Exceptional restructuring costs (99) –
General insurance 591 461 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff 1,447 873afffffffffffffffffffffffffff afffffffffffffffffffffffffff The operating profit for the life and pensions business shown above reconciles to the income from long-term assurance business shown in the profit and loss account as follows: £m £m aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
Net assets† Assets‡ aaaaaaaaaaaaafff aaaaaaaaaaaaafff £m £m £m £m aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
As the business of the Group is mainly that of banking and insurance, no segment analysis of turnover is given.
Foreign tax Current tax on profits for the year 137 114 Adjustments in respect of prior years (5) 8 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
The profit attributable to shareholders includes a profit of £1,699 million (1999: £1,344 million) dealt with in the accounts of the parent company, for which no profit and loss account is shown as permitted by Section 230 of the Companies Act 1985.
Provisions for bad and doubtful debts (56) (56) aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff 15,290 16,963afffffffffffffffffffffffffff afffffffffffffffffffffffffff
notes to the accounts 15 Loans and advances to customers 2000 1999 £m £m aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff 114,455 102,149afffffffffffffffffffffffffff afffffffffffffffffffffffffff Of which repayable on demand or at short notice 9,342 8,549afffffffffffffffffffffffffff afffffffffffffffffffffffffff The cost of assets acquired during the year for letting to customers under finance leases and hire purchase contracts amounted to £2,754 million (1999: £3,193 million).
As detailed in note 49b), the Group acquired Chartered Trust Group plc and ACL Autolease Holdings Limited on 1 September 2000. Prior to joining the Group, Chartered Trust plc, a subsidiary undertaking of Chartered Trust Group plc, had entered into transactions whereby it disposed of its interest in portfolios of motor vehicle and caravan instalment credit agreements for a total of £813 million to Cardiff Automobile Receivables Securitisation (UK) No 4 plc (CARS 4). The arrangement relating to these disposals of agreements contained an option to offer further amounts for sale up until 10 December 2000; a further £167 million of receivables were sold between 1 September 2000 and this date.
Exchange and other adjustments 111 (2) (4) (4) Adjustments on acquisition 45 4 – – Advances written off (748) – (744) – Recoveries of advances written off in previous years 165 – 130 – Charge (release) to profit and loss account: New and additional provisions 1,093 7 1,087 7 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
At 31 December 1,816 357 1,762 361afffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff 2,173 2,123afffffffffffffffffffffffffff afffffffffffffffffffffffffff
Non-performing lending comprises: Loans and advances – category 1 879 719 Loans and advances – category 2 404 369 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff 362 375afffffffffffffffffffffffffff afffffffffffffffffffffffffff Category 1: This comprises lending where the customer continues to operate the account, but where there is doubt about the payment of interest. Interest continues to be charged to the customer’s account, but it is not applied to income; it is placed on a suspense account and only taken into income if there ceases to be significant doubt about its being paid.
Loans and advances to customers Domestic: Agriculture, forestry and fishing 2,026 2,183
Total domestic 101,276 89,940 International: Latin America 3,016 2,558 New Zealand 7,368 7,659 Rest of the world 5,002 4,159
On operating lease assets where the residual value is expected to be recovered in: 1 year or less 134 37 2 years or less but over 1 year 108 31 5 years or less but over 2 years 367 45 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
Securities sold or matured (16,238) (23) – (16,261) Charge for the year – – 9 (9) Amortisation of premiums and discounts – 29 – 29 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
Included in the Group’s balance sheet are assets subject to sale and repurchase agreements as follows: £m £m aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
At 31 December 2000 11,152 759afffffffffffffffffffffffffff afffffffffffffffffffffffffff The Company’s shareholding in a group undertaking is comprised of an investment in an unlisted bank.
At 1 January 2000 and 31 December 2000 6,066 – 6,066afffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff
Chartered Trust plc England †100% Consumer credit, leasing and related services
The Group’s investment in iPSL, which comprises 24.5 per cent of the issued ordinary share capital of the company, is being accounted for as a joint venture. The carrying value of the investment at 31 December 2000 was £4 million, which has been included within other assets on the balance sheet.
In the year ended 31 December 2000 £4 million of fees payable to iPSL have been included in the Group’s administrative expenses. The Group has also prepaid £7 million of fees in respect of 2001 and this amount is included in prepayments and accrued income; in addition at 31 December 2000 iPSL owed £2 million to the Group, which is included in other assets.
Exchange and other adjustments (22) (8) (1) Adjustments on acquisition 11 13 351 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaafffffffffffffffffffffffff aaaaafffffffffffffffffffffffffff
Depreciation: Exchange and other adjustments (13) (1) (1) Charge for the year 58 204 102 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaafffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaafffffffffffffffffffffffff
Balance sheet amount at afffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff Balance sheet amount at afffffffffffffffffffffffffff affffffffffffffffffffffffff affffffffffffffffffffffffffff afffffffffffffffffffffffffff £m £m aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
Balance sheet amount of premises comprises: Leaseholds 50 years and over unexpired 22 23 Leaseholds less than 50 years unexpired 256 248 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff 768 771afffffffffffffffffffffffffff afffffffffffffffffffffffffff Land and buildings occupied for own activities 691 679
Annual commitments under non-cancellable operating leases were: Premises Equipment Premises Equipment £m £m £m £m aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
Interest receivable 875 916 Other debtors and prepayments 2,090 1,712 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff 2,965 2,628afffffffffffffffffffffffffff afffffffffffffffffffffffffff Included within other debtors and prepayments is £242 million (1999: £176 million) relating to the deferred element of the expenditure incurred under cash gift and discount mortgage schemes. If these incentives had been written off as incurred net interest income would have been £65 million lower in 2000 (1999: £11 million lower).
The income from long-term assurance business is: Value of long-term assurance business at 31 December 6,549 2,274 Value of long-term assurance business at 1 January 2,274 1,983 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
Income after tax from long-term assurance business 441 158afffffffffffffffffffffffffff afffffffffffffffffffffffffff Income before pension provisions 715 329 Pension provisions (100) (102)
The following is a summarised balance sheet for the long-term assurance funds: £m £m aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
Other liabilities 2,831 1,917 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff 6,980 5,526afffffffffffffffffffffffffff afffffffffffffffffffffffffff 39 Accruals and deferred income 2000 1999 £m £m aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
Provision has been made for the liability to tax on overseas earnings which are expected to be remitted to the UK. No provision has been made for the liability to tax which could arise if premises, to the extent that the tax base cost has been reduced by rollover relief, or group undertakings were disposed of at their balance sheet amounts or investments in associated undertakings and trade investments at their valuation. It is expected that the majority of these assets will be retained in the business and that, in view of the substantial number of assets involved and the law relating to rollover relief, the likelihood of any such material tax liability arising is remote; no useful purpose would be served by attempting to quantify it.
The Group operates a number of schemes which provide post-retirement health care benefits to certain employees, retired employees and their dependent relatives. The principal scheme relates to former Lloyds Bank staff and under this scheme the Group has undertaken to meet the cost of post-retirement health care for all eligible former employees (and their dependants) who retired prior to 1 January 1996. For retirements subsequent to this date, the Group will meet a reducing proportion of the cost until 31 December 2004, after which date the only obligation will be in respect of the pre 1 January 1996 retirements. The cost of providing all post-retirement health care benefits is charged to the profit and loss account on a systematic basis over employees’ working lives; the provision represents the unfunded obligation and is based on valuations of the Group’s liability by qualified actuaries.
■ 55⁄8% Undated Subordinated Step-up Notes callable 2009 (E1,250 million) 774 766 † Undated Step-up Floating Rate Notes callable 2009 (E150 million) 94 93 ¶ 65⁄8% Undated Subordinated Step-up Notes callable 2010 405 405 ✜ Subordinated 5.57% Step-up Coupon Notes callable 2015 (¥20 billion) 117 120 ¶ 61⁄2% Undated Subordinated Step-up Notes callable 2019 266 266 113⁄4% Perpetual Subordinated Bonds 100 100 † 8% Undated Subordinated Step-up Notes callable 2023 199 199 ¶ 61⁄2% Undated Subordinated Step-up Notes callable 2029 198 198 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff
‡¶ 105⁄8% Guaranteed Subordinated Loan Stock 2008 100 100 – –
aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff
These liabilities will, in the event of the winding-up of the issuer, be subordinated to the claims of depositors and all other creditors of the issuer. * In certain circumstances, these notes and bonds would acquire the characteristics of preference share capital. † These notes bear interest at rates fixed periodically in advance based on Interbank rates. ‡ Issued by a group undertaking under the Company’s subordinated guarantee and, in the case of the Eurocurrency Zero Coupon Bonds 2003, on-lent to the
Euro Step-up Non-Voting Non-Cumulative Preferred Securities (e430 million)* 267 – Sterling Step-up Non-Voting Non-Cumulative Preferred Securities† 248 –
†These securities constitute limited partnership interests in Lloyds TSB Capital 2 L.P., a Jersey limited partnership in which Lloyds TSB (General Partner) Limited, a wholly owned subsidiary of the Group, is the general partner. Non-cumulative income distributions accrue at a fixed rate of 7.834 per cent per annum up to 7 February 2015; thereafter they will accrue at a rate of 3.50 per cent above a rate based on the yield of specified UK government stock.
Both of the above issues were made under the limited subordinated guarantee of Lloyds TSB Bank plc. In certain circumstances these preferred securites will be mandatorily exchanged for preference shares in Lloyds TSB Group plc. Lloyds TSB Group plc has entered into an agreement whereby dividends may only be paid on its ordinary shares if sufficient distributable profits are available for distributions due in the financial year on these preferred securities.
Authorised: Sterling Ordinary shares of 25p each 1,728 1,728 Limited voting ordinary shares of 25p each 20 20 Limited voting preference shares of £1 each – 300 Preference shares of 25p each 44 –
Authorised: Japanese yen ¥m ¥m Preference shares of ¥25 each 1,250 –afffffffffffffffffffffffffff afffffffffffffffffffffffffff During the year the Company reorganised its authorised preference share capital to provide flexibility for the Company to be able to issue preference shares denominated in sterling, US dollars, euro and yen, principally (but not exclusively) in connection with arrangements for raising additional capital for the Group as and when appropriate.
At 31 December 2000 1,376 20 1,396afffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff The limited voting ordinary shares are held by the Lloyds TSB Foundations. These shares carry no rights to dividends but rank pari passu with the ordinary shares in respect of other distributions and in the event of winding up. These shares do not have any right to vote at general meetings other than on resolutions concerning acquisitions or disposals of such importance that they require shareholder consent, or for the winding up of the Company, or for a variation in the class rights of the limited voting ordinary shares.
At 31 December 2000 5,086afffffffffffffffffffffffffff Merger reserve: At 1 January 2000 and 31 December 2000 343 –afffffffffffffffffffffffffff afffffffffffffffffffffffffff Profit and loss account: At 1 January 2000 – as previously reported 6,763 2,769 Prior year adjustment (note 1) (318) –
At 31 December 2000 7,403 2,657afffffffffffffffffffffffffff afffffffffffffffffffffffffff 42 Subordinated liabilities (continued)
Loans and credit card transactions: Directors and connected persons 10 119 13 191
Other: Other items serving as direct credit substitutes 266 273 Performance bonds and other transaction-related contingencies 1,271 1,198 Other contingent liabilities 4 8 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff 5,147 4,423afffffffffffffffffffffffffff afffffffffffffffffffffffffff Commitments: Documentary credits and other short-term trade-related transactions 238 247 Forward asset purchases and forward forward deposits placed 779 986 Undrawn note issuing and revolving underwriting facilities 53 90 Undrawn formal standby facilities, credit lines and other commitments to lend: Less than 1 year maturity 33,815 21,314 1 year or over maturity 7,701 5,225
Trading The notional principal amounts and fair values (which, after netting, are the carrying values) of trading instruments entered into with third parties were as follows: Notional Fair values principal aasdaaaffffffffffffffffffffffffffaaaaaffffffffffffffffffffffffffds amount Assets Liabilities aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
Exchange rate contracts: Interest rate contracts: Equity contracts: Exchange rate contracts: Interest rate contracts: Equity contracts: The notional principal amount does not represent the Group’s real exposure to credit risk, which is limited to the current cost of replacing contracts at current market rates should the counterparties default.
OECD banks 2,244 2,449 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff 2,793 2,788afffffffffffffffffffffffffff afffffffffffffffffffffffffff 48 Derivatives and other financial instruments (continued) 48 Derivatives and other financial instruments (continued)
As at 31 December 2000 £m £m £m £m £m £m £m aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
Assets: Treasury bills and other eligible bills 896 108 134 60 – – 1,198 Loans and advances to banks 13,418 1,640 1,074 334 277 71 16,814 Loans and advances to customers 58,410 3,765 4,485 29,451 7,851 (1,864) 102,098 Debt securities and equity shares 3,056 725 675 524 1,041 54 6,075 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
Cumulative interest rate repricing gap (22,252) (19,145) (16,039) 10,974 15,896 – –afffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff The table above does not take into account the effect of interest rate options used by the Group to hedge its exposure; details of options are given on page 71 in note 48a).
As at 31 December 2000 Trading book Non-trading book aaaaaaaafaaaaffffffffffffffffffffffffff aaaaaaaafaaaaffffffffffffffffffffffffff
The disclosures in this note cover all on-balance sheet financial instruments held in the trading book together with those held in the banking book for which there is a readily obtainable market price.
Of the net losses of £257 million at 31 December 2000, £55 million of net losses are expected to be recognised in the year ending 31 December 2001 and £202 million of net losses in later years.
Earned premiums (net of reinsurance) 477 Other income and charges 10 Net investment returns (295) Claims paid (net of reinsurance) (419) Change in technical provisions (393) Operating expenses (57) Transfer from fund for future appropriations 653 Tax attributable to long-term business account (12)
b) On 1 September 2000 the Group’s subsidiary, Lloyds UDT Finance Limited, completed the acquisition of Chartered Trust Group plc and ACL Autolease Holdings Limited (together ‘Chartered Trust’), the UK consumer finance and contract hire subsidiaries of Standard Chartered Bank; the results of these businesses have been consolidated in full from that date. The premium on acquisition of £508 million has been capitalised and will be written off to the profit and loss account over its estimated useful life of 20 years.
A summarised profit and loss account for Chartered Trust for the period from 1 January 2000 to 31 August 2000 is set out below: £m aaaaaffffffffffffffffffffffffff
Profit after tax for the period to 31 August 2000 7afffffffffffffffffffffffffff Profit after tax for the year ended 31 December 1999 23afffffffffffffffffffffffffff All recognised gains and losses are included in the profit and loss account.
Loans and advances to banks 143 – 143 Loans and advances to customers 1,860 – 1,860 Tangible fixed assets 414 (39) 375 Other assets and prepayments 114 – 114 Deposits by banks (1,798) – (1,798) Customer accounts (336) – (336) Other liabilities and accruals (249) – (249) Minority interests – equity (3) – (3)
The consideration was settled in cash. The fair value adjustments principally reflect provision for anticipated losses in respect of residual values on certain operating lease assets.
Net increase in loans and advances (6,528) (6,253) Net (increase) decrease in investments other than investment securities (355) 461 Net decrease in other assets 20 1,737 Net (decrease) increase in deposits by banks (2,794) 827 Net increase in customer accounts 7,081 3,147 Net increase in debt securities in issue 4,738 551 Net increase (decrease) in other liabilities 569 (3,066) Net increase in items in course of collection/transmission (126) (60) Other non-cash movements 386 49 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
At 31 December 2,334 2,136afffffffffffffffffffffffffff afffffffffffffffffffffffffff d Analysis of changes in financing during Preferred securities issued by the year (continued) subsidiary undertakings £m £m aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
Cash consideration received 83 3afffffffffffffffffffffffffff afffffffffffffffffffffffffff 50 Consolidated cash flow statement (continued)
Share dealing facilities The Company provides a low cost, execution only, postal dealing service for the purchase and sale of Lloyds TSB shares through Lloyds TSB Registrars. The current rate of commission for purchases is 0.75%, minimum £10, and for sales is 0.75%, no minimum. For full details please contact Lloyds TSB Registrars. Telephone
American Depositary Receipts (ADRs) Lloyds TSB shares are traded in the USA through a sponsored ADR facility, with The Bank of New York as the depositary. The ADRs are traded on the over-the-counter market under the symbol LLDTY. The CUSIP number is 539439109 and the ratio of ADRs to ordinary shares is 1:4. For details please contact ADR Department, The Bank of New York, 101 Barclay Street, 22nd Floor West, New York, NY 10286. Telephone (1) 888 BNY ADRS (US toll free); outside the US
Lloyds TSB: the community and our business Information about the Group’s role in the community and copies of the Group’s code of business conduct and its environmental report may be obtained by writing to Public Affairs, Lloyds TSB Group plc, 71 Lombard Street, London EC3P 3BS. This information is also available on the Group’s website (see below).
• request for copies of the report and accounts in alternative formats for shareholders with disabilities.
16 February Results for 2000 announced 28 February Ex-dividend date for 2000 final dividend 2 March Record date for final dividend 4 April Final date for joining or leaving the dividend reinvestment plan for the final dividend 18 April Annual general meeting in Edinburgh 2 May Final dividend paid 27 July Results for half-year to 30 June 2001 announced 8 August Ex-dividend date for 2001 interim dividend 10 August Record date for interim dividend 12 September Final date for joining or leaving the dividend reinvestment plan for the interim dividend 10 October Interim dividend paid
Registered office Henry Duncan House 120 George Street Edinburgh EH2 4LH Registered in Scotland no 95000
Internet www.lloydstsb.com * Includes 833 million shares (15%) registered in the names of some 882,000 individuals. 190 million shares (3%) are held by over 63,000 staff and Group pensioners, or on their behalf by the trustee of the staff profit sharing schemes.