10 Financial review 40 Five year financial summary 42 The board 44 Directors’ report 46 Directors’ remuneration 52 Corporate governance 54 Independent auditors’ report 55 Consolidated profit and loss account 56 Consolidated balance sheet 58 Company balance sheet 59 Other statements 60 Consolidated cash flow statement 61 Notes to the accounts 85 Information for shareholders * restated for the effect of FRS 18 (page 61, note 1)
We are also seeking to grow the Group through acquisitions that complement our good organic strategies, and help provide new opportunities for profitable growth.
• Cash machines. The Group has one of the largest cash machine networks of any leading banking group in the UK
Operating expenses increased by £144 million, or 7 per cent, to £2,243 million during 2001, compared to £2,099 million in 2000. This partly reflected the £202 million of investment expenditure in the Group’s revenue growth businesses, information technology integration and e-commerce in 2001, compared to £192 million in 2000, and was partly due to increased costs as a result of the recruitment of additional service and sales staff into the branch network.
* New business income has been restated to include all income earned on new business during the year. This treatment is consistent with standard industry practice
Total charge 747 541afffffffffffffffffffffffffff afffffffffffffffffffffffffff Specific provisions 736 547 General provisions 11 (6)
UK Retail Financial Services 48.3 44.2 Wholesale Markets 45.4 36.5 International Banking 13.9 12.4 Central group items 1.2 0.9 aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
Management is also responsible for leading the work to assess the impact of the draft proposals for the introduction of the new Basel Capital Accord and to prepare the Group for the implementation scheduled for 1 January 2005.
Total income excluding special items 9,544 8,671 8,022 7,547 7,465aaddfff aaddfff aaddfff aaddfff aaddfff Operating expenses excluding special items 4,091 3,764 3,417 3,466 3,768aaddfff aaddfff aaddfff aaddfff aaddfff Operating profit excluding special items 4,462 4,195 3,826 3,379 3,061
Risk asset ratio : total capital 9.2% 9.4% 15.2% 11.4% 10.9%
Scottish Widows loan capital At the end of the year, Mr Ross had an interest in £43,194 of Scottish Widows Group Limited floating rate unsecured loan notes 2008 (2000: £57,394).
We have audited the financial statements which comprise the consolidated profit and loss account, the consolidated balance sheet, the company balance sheet, the consolidated cash flow statement, the statement of total recognised gains and losses and the related notes which have been prepared under the accounting policies set out on pages 61 to 63 and the directors’
The cost of providing pension benefits is charged to the profit and loss account so as to spread the expected cost of pensions, calculated in accordance with actuarial advice, on a systematic basis over employees’ working lives. The pension cost is assessed in accordance with the advice of qualified actuaries, using the projected unit method. Variations from the regular cost are allocated by equal annual instalments over the average remaining service lives of current employees.
LLOYDS TSB GROUP 63 notes to the accounts m Pensions and other post-retirement benefits (continued)
UK Retail Financial Services 9,456 8,743 87,393 80,729 Wholesale Markets and aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff 10,797 10,061 190,150 168,028afffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff 10,797 10,061 190,150 168,028afffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff afffffffffffffffffffffffffff *2000 figures have been restated to take account of the implementation of Financial Reporting Standard 18 “Accounting Policies” (note 1) and changes in internal transfer pricing.
The cost of assets acquired during the year for letting to customers under finance leases and hire purchase contracts amounted to £3,166 million (2000: £2,754 million).
Provisions for bad and doubtful debts** (1,466) (1,420) Interest held in suspense** (70) (90)
37 Accruals and deferred income 2001 2000* £m £m aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff
Potential tax for which no provision has been made relating to accelerated depreciation allowances on equipment leased to customers 72 72
aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff 105 46afffffffffffffffffffffffffff afffffffffffffffffffffffffff The Company held non-trading derivatives with a notional principal amount of £400 million (2000: £400 million).
c Analysis of changes in cash during the year 2001 2000 £m £m aaaaaffffffffffffffffffffffffff aaaaaffffffffffffffffffffffffff