Directors' report

Results and dividends

The Consolidated income statement shows a profit attributable to equity shareholders for the year ended 31 December 2007 of £3,289 million.

An interim dividend of 11.2p per ordinary share was paid on 3 October 2007 and a final dividend of 24.7p per ordinary share will be paid on 7 May 2008. These dividends will absorb £2,026 million.

Principal activities, business review, future developments and financial risk management objectives and policies

The Company is a holding company and its subsidiary undertakings provide a wide range of banking and financial services through branches and offices in the UK and overseas. A review of the development and performance of the business during the financial year and an indication of the likely future developments in the Overview and Business review. Information regarding the financial risk management objectives and policies of the Company and its subsidiary undertakings, in relation to the use of financial instruments, is given in the Key performance indicators and the Risk management section and in note 47.

Directors

Information on the biographical details of directors are shown in the board. Particulars of their emoluments and interests in shares in the Company are given in the Directors’ remuneration report.

Dr DeAnne S Julius and Mr G J N Gemmell left the board on 9 May 2007 and 30 September 2007, respectively.

Mr P N Green joined the board on 10 May 2007 and Sir David Manning has been appointed a director from 1 May 2008. In accordance with the articles of association, they offer themselves for election at the annual general meeting.

Mr M E Fairey, Sir Julian Horn-Smith and Mr G T Tate retire at the annual general meeting and offer themselves for re-election. Mr Ewan Brown, whom the board has asked to remain as a director for a further year, also seeks re-election as stated in the Corporate governance report.

Directors’ indemnities

The directors, including two former directors who left during the year, entered into individual contracts of indemnity with the Company which constituted ‘qualifying third party indemnity provisions’ for the purposes of the Companies Act 1985. These contracts were in force during the whole of the financial year or from the date of appointment in respect of the director who joined the board on 10 May 2007. Since the end of the year following the introduction of relevant sections of the Companies Act 2006, revised contracts of indemnity were entered into with the directors which constitute ‘qualifying third party indemnity provisions’ and ‘qualifying pension scheme indemnity provisions’ and these remain in force and are available for inspection at the Company’s registered office.

Share capital and control

Information about share capital and control is shown in note 39; in note 6 of the parent company accounts, included within this document; in the corporate governance report; and in the Directors’ remuneration report.

Employees

The Lloyds TSB Group is committed to providing employment practices and policies which recognise the diversity of our workforce and ensure equality for employees regardless of sex, race, disability, age, sexual orientation or religious belief.

In the UK, the Lloyds TSB Group belongs to the major employer groups campaigning for equality for the above groups of staff, including Employers’ Forum on Disability, Employers’ Forum on Age and Stonewall. The Group is also represented on the Board of Race for Opportunity and the Equal Opportunities Commission. Our involvement with these organisations enables us to identify and implement best practice for our staff.

Employees are kept closely involved in major changes affecting them through such measures as team meetings, briefings, internal communications and opinion surveys. There are well established procedures, including regular meetings with recognised unions, to ensure that the views of employees are taken into account in reaching decisions.

Schemes offering share options or the acquisition of shares are available for most staff, to encourage their financial involvement in the Lloyds TSB Group.

Donations

The income statement includes a charge for charitable donations totalling £37,463,000 (2006: £37,335,000), including £37,183,000 (2006: £37,133,000) which will be paid under deeds of covenant to the four Lloyds TSB Foundations during 2008.

Policy and practice on payment of creditors

The Company follows ‘The Better Payment Practice Code’ published by the Department of Business, Enterprise and Regulatory Reform (BERR), regarding the making of payments to suppliers. A copy of the code and information about it may be obtained from the BERR in the information for shareholders section.

The Company’s policy is to agree terms of payment with suppliers and these normally provide for settlement within 30 days after the date of the invoice, except where other arrangements have been negotiated. It is the policy of the Company to abide by the agreed terms of payment, provided the supplier performs according to the terms of the contract.

As the Company owed no amounts to trade creditors at 31 December 2007, the number of days required to be shown in this report, to comply with the provisions of the Companies Act 1985, is nil.

Auditors and audit information

Each person who is a director at the date of approval of this report confirms that, so far as the director is aware, there is no relevant audit information of which the Company’s auditors are unaware and each director has taken all the steps that he or she ought to have taken as a director to make himself or herself aware of any relevant audit information and to establish that the Company’s auditors are aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of section 234ZA of the Companies Act 1985.

Resolutions concerning the re-appointment of PricewaterhouseCoopers LLP as auditors and authorising the audit committee to set their remuneration will be proposed at the annual general meeting.

On behalf of the board

A J Michie
Company Secretary
21 February 2008