L&G 2003 Final Results Pt 4

Legal & General Group PLC
26 February 2004


Part 4
Legal & General Investment Management 
- supplementary information

Profits - MSS basis
-------------------

In another year of volatile markets overall profits grew 6% to £53m (2002:
£50m). Gross new business of £13.1bn (2002: £14.0bn) means the average new
business inflows have exceeded £1bn per month for the last 6 years.

Corporate Pensions operating profits increased 21% to £41m (2002: £34m). Fund
management revenue grew strongly, up 10%, benefiting from the upturn in the
market, new business growth, and a small increase in average pooled fund fee
rates. Maintenance of tight cost controls, despite a 9% increase in client
numbers to 2,425, enabled the growth in operational expenses to be contained to
only 1%. The new business sales mix reflected successful implementation of the
strategy to expand the actively-managed bonds and non-UK client base.

Legal & General Ventures, the private equity arm, saw profits reduce to £3m
(2002: £5m). Lower levels of corporate activity led to a fall in corporate
finance fees.

The Property fund management subsidiary continued to expand external funds under
management. They are now the operator, asset manager or property manager to 
seven external property partnerships with total funds under management of 
£1.1bn. Profits increased to £3m (2002: £2m).

Growth in transition management income and fund management revenue on retail and
institutional products led to profits rising to £3m (2002: £1m).

Other corporate income fell to £3m (2002: £8m), reflecting the impact of higher
long-term interest rates on the capital value of shareholders' funds.

Total funds under LGIM's management increased 18% to a record £135bn (2002:
£114bn).


Profits - Achieved profits basis
--------------------------------

Managed pension funds business is written as a long term contract and so the
results of the business are also presented on an Achieved Profits basis. The
embedded value assumptions are detailed in Part 2 of this announcement.

Operating profit from institutional fund management was £80m (2002: £92m).
Profit before tax increased to £96m (2002: £44m), benefiting from the impact of
stronger investment markets relative to embedded value assumptions. The new
business contribution from managed pension funds fell slightly on lower levels
of new business to £31m (2002: £32m). The contribution from in-force business
fell from £14m in 2002 to £5m, as fund outflows, which were low in 2002, moved
into line with long-term expectations.


Fund Performance
----------------

Legal & General Investment Management delivered good investment performance
across its range of actively managed funds in 2003. Almost two-thirds of our
actively managed unitised funds outperformed their peer group median or index
benchmark over the year. Performance was particularly strong in Fixed Interest
and Far East Equities. The flagship Linked Life Distribution Fund has now
delivered top quartile performance over 1,3 and 5 years.
================================================================================

Legal & General Investment Management                                      P1
Consolidated Profit and Loss Account - Modified Statutory Solvency basis
Year ended 31 December 2003
--------------------------------------------------------------------------------
                                                         2003            2002
                                                           £m              £m
Profit on continuing operations
Corporate pensions                                         41              34
Ventures                                                    3               5
Property                                                    3               2
Other external income                                       3               1
Other operational income                                    3               8
                                                --------------- ---------------
Profit on ordinary activities before tax                   53              50
Tax charge on profit on ordinary activities               (16)            (14)
                                                --------------- ---------------
Profit for the financial period                            37              36
                                                =============== ===============

These financial statements were approved by the Board on 25 February 2004 and
have been prepared for long term business using the Modified Statutory Solvency
basis. The Achieved Profits results are included on page 4. The results
constitute non statutory accounts within the meaning of Section 240 of the
Companies Act 1985 and are extracted from the Group's financial statements for
the year ended 31 December 2003. The Group's financial statements include the
auditor's unqualified report and do not contain a statement under either
Sections 237(2) or 237(3) of the Companies Act 1985.
================================================================================

Legal & General Investment Management                                       P2
Funds under management
Year ended 31 December 2003
--------------------------------------------------------------------------------
                                                   At 31.12.03     At 31.12.02
                                                            £m              £m
Total investments                                      135,337         113,992
                                                 =============== ===============
Represented by
Index tracking funds:
- UK equities                                           42,944          35,940
- Overseas equities                                     21,144          17,999
- Fixed interest                                        16,950          15,107
- Index linked                                          10,650           7,481
- Cash/deposits                                            359             328
                                                 --------------- ---------------
Total index tracking funds                              92,047          76,855
Actively managed funds                                  43,290          37,137
                                                 --------------- ---------------
                                                       135,337         113,992
                                                 =============== ===============
By fund management approach
Indexed equities                                        64,088          53,939
Active bonds (including index linked funds)             28,883          25,035
Indexed bonds (including index linked funds)            27,959          22,916
Active equities                                          7,905           6,526
Property                                                 6,022           5,137
Private equity (ventures)                                  480             439
                                                 --------------- ---------------
                                                       135,337         113,992
                                                 =============== ===============
By source of business
Institutional funds under management*:
- Managed pension funds pooled                          72,841          60,397
- Managed pension funds segregated                       8,522           6,308
- Other                                                  2,713           2,662
                                                 --------------- ---------------
Total institutional funds under management              84,076          69,367
UK Operations (unit trusts - excluding life fund         6,948           5,094
investment)
UK Operations (life and general insurance funds)        44,313          39,531
                                                 --------------- ---------------
                                                       135,337         113,992
                                                 =============== ===============

* Excludes institutional investments in unit trust funds
================================================================================

Legal & General Investment Management                                       P3
New business
Year ended 31 December 2003
--------------------------------------------------------------------------------
                                                          2003            2002
New business                                                £m              £m
Managed pension funds*
- Pooled funds                                          11,066          12,359
- Segregated funds                                       1,504           1,039
                                                 --------------- ---------------
                                                        12,570          13,398
Other funds**                                              482             569
                                                 --------------- ---------------
                                                        13,052          13,967
                                                 =============== ===============
By fund management approach
Active equities                                            0.0%            0.1%
Active bonds (including cash)                             11.8%            0.5%
Indexed equities                                          59.0%           73.0%
Indexed bonds (including cash)                            27.3%           25.0%
Property                                                   1.7%            1.1%
Private equity                                             0.2%            0.3%
                                                 --------------- ---------------
                                                         100.0%          100.0%
                                                 =============== ===============

* New monies from pension fund clients of Legal & General Assurance (Pensions
Management) Ltd.

Corporate pensions gross new business excludes £4.0bn (2002: £2.1bn) which was
held through the year on a temporary basis, generally as part of portfolio
reconstruction.

** Includes segregated property, property partnerships, ventures and
institutional clients excluding trusts.
================================================================================

Legal & General Investment Management                                       P4
Consolidated Profit and Loss Account - Achieved Profits basis
Year ended 31 December 2003
--------------------------------------------------------------------------------
                                                          2003            2002
Profit on continuing operations                             £m              £m
Managed pension funds:
Contribution from:
New business                                                31              32
In-force business
- expected return                                           13              15
- experience variances                                       5              14
- operating assumption changes                              20              16
Development costs                                           (1)             (1)
Shareholder net worth                                        3               7
                                                 --------------- ---------------
Total                                                       71              83
Ventures                                                     3               5
Property                                                     3               2
Other external income                                        3               1
Other operational income                                     -               1
                                                 --------------- ---------------
Operating profit from institutional fund                    80              92
management
Variation from longer term investment return*               16             (48)
                                                 --------------- ---------------
Profit on ordinary activities before tax                    96              44
Tax charge on profit on ordinary activities                (29)            (12)
                                                 --------------- ---------------
Profit for the financial period                             67              32
                                                 =============== ===============

*The variation from longer term investment return represents the effect of the
investment performance in respect of shareholder net worth and in-force
business, compared with embedded value assumptions at the beginning of the
period.

Managed pension funds embedded value
                                                       2003               2002
                                                         £m                 £m
At 1 January                                            262                252
Profit after tax                                         61                 25
Distributions and capital movements                     (18)               (15)
                                              ---------------    ---------------
At 31 December                                          305                262
                                              ===============    ===============
comprising:
Value of in-force business                              162                132
Shareholder net worth                                   143                130
                                              ---------------    ---------------
                                                        305                262
================================================================================









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