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Unaudited Interim Results for the Half Year Ended 30 September 2008

06 November 2008

Key points - Operating

  • Sales of $10.2 billion, 28% higher than the equivalent period last year, with 70% of sales to private investors and 30% to institutional investors
  • Redemptions of $6.0 billion, maintaining significantly lower levels than the industry average
  • Net inflows of $4.2 billion, up 17% compared to the first half last year
  • Funds under management of $67.6 billion at 30 September 2008, compared to the $70.3 billion estimated in the Pre-Close Trading Statement, due to extreme moves in markets and foreign exchange in the last week of September. Since 31 March 2008, funds under management are down 9%
  • In view of unprecedented market volatility, active risk management has reduced investment exposure in Man Global Strategies (MGS) products, one of Man's core investment managers. To reflect the impact of the reduced level of assets on future MGS fee income, amortisation of $107 million MGS upfront sales commissions has been accelerated

Key points - Financial

  • Net management fee income excluding the accelerated amortisation of MGS sales commissions up 2% to $549 million; net performance fee income down 44% to $159 million
  • Profit before tax of $622 million, down 24%, reflecting reduced performance fees and the accelerated amortisation of MGS sales commissions. Excluding the accelerated amortisation of MGS sales commissions, profit before tax down 14% to $708 million
  • Diluted earnings per share (EPS) down 16% to 28.8 cents. Excluding the accelerated amortisation of MGS sales commissions, EPS down 3% to 33.2 cents
  • Annualised return on shareholders' equity of 21.4%, down from 33.1% for the first half of the prior year, reflecting lower income and higher capital
  • Regulatory capital surplus of $1.5 billion, plus $2.4 billion of undrawn committed debt facilities
  • Interim dividend of 19.2 cents per share, maintained at the same level as the prior interim dividend, and payable at the rate of 11.89 pence per share, an increase of 30% in sterling terms

Peter Clarke, Group Chief Executive of Man Group, said:

"The period under review witnessed unprecedented levels of turmoil in financial markets, with turbulence moving globally through credit, equity, commodity and more recently currency markets.Against this challenging backdrop of extreme volatility, Man has delivered robust results overall, as a result of its broad geography of asset raising, wide product range and capital strength.

"While market conditions remain challenging, Man has adapted quickly and our continued sales momentum and financial strength are likely to reinforce Man's leading position in the industry."


Funds under management

Sales in the first half were $10.2 billion, with assets being raised both from institutional and private investors. Redemptions remained low in the period at $6.0 billion, to give net inflows of $4.2 billion. Overall however, our funds under management declined 9% in the period to $67.6 billion, due to markets affecting performance negatively ($5.9 billion) and the impact of a stronger dollar on the translation of those funds under management denominated in other currencies ($2.7 billion). In view of unprecedented market volatility, active risk management operated to reduce investment exposure in many Man Global Strategies (MGS) products, lowering investor risk and also reducing MGS funds under management by $2.6 billion in the period. The extreme moves in markets, including foreign exchange in the last week of September, account for the difference from funds under management as estimated in the Pre-Close Trading Statement issued on 29 September 2008.

The bulk of our assets performed well given market conditions, notably those managed by AHL and RMF, delivering returns in line with, or ahead of, relevant industry benchmarks. Glenwood performance was slightly below industry benchmark returns, but MGS was particularly affected by markets, reflecting its less diversified investment approach. MGS specialises in more concentrated portfolios, combining a mix of early stage and developing managers targeting higher returns and volatility.

Since 30 September, the MGS investment committee has implemented a further reduction in investment exposure to reduce risk given continued volatility in markets. This will lead to an additional decrease in funds under management on MGS products during the next two months of approximately $7.5 billion (of which $3.5 billion is included in the estimate of FUM as at the beginning of November, with a further $4 billion estimated to occur in the remainder of this calendar year). It is anticipated that most MGS products will be able to increase their investment exposure again as markets become less volatile. All MGS guaranteed products remain guaranteed under their product terms, so securing investor capital, and many of them already have locked-in guaranteed capital at maturity in excess of the original investment. In addition to trading capital referred to in stated funds under management, bonds and cash is held by custodians to secure investor guarantees. To reflect the impact of the reduced level of assets on future MGS fee income, we have accelerated the amortisation of $107 million of MGS upfront sales commissions, and this is recorded in the income statement for the first half. This represents just over half of the unamortised sales commissions on MGS products. There has been no acceleration of amortisation of sales commissions relating to any other Man product.

Revenues and Income

Gross revenue (plus income from affiliates) for the six months ended 30 September 2008 was $1,319 million, comprising a 13% increase on the comparable period in gross management fee income to $1,112 million and a reduction of 41% in gross performance fee income to $207 million.

Profit before tax for the period was $622 million, down 24% from the comparable period, primarily reflecting the reduction in performance fee income and the acceleration of the amortisation of MGS upfront sales commissions. Excluding the pre-tax effect of this accelerated amortisation, profit before tax was down 14% to $708 million, comprising of net management fee income of $549 million (up 2% on the prior first half) and net performance fee income of $159 million (down 44% on prior first half).

Diluted earnings per share (EPS) decreased 16% to 28.8 cents, primarily reflecting the lower performance fee contribution and the acceleration of the amortisation of MGS upfront sales commissions, partly offset by the impact of the share consolidation in November 2007. Excluding the after tax effect of this accelerated amortisation, EPS decreased 3% to 33.2 cents with the net management fee component increasing 12% to 26.2 cents.

Capital and Liquidity

At 30 September 2008 cash balances were $1.7 billion (31 March 2008: $1.9 billion) and surplus regulatory capital was around $1.5 billion. At the same date the Group had total debt facilities of $3.4 billion (31 March 2008: $3.2 billion) of which $2.4 billion (31 March 2008: $2.8 billion) was unused.

The Group's long-term senior debt ratings are A- from Fitch Ratings and Baa1 from Moody's Investors Service, both with stable outlooks. In addition, in August 2008 Standard and Poor's issued a long term senior debt rating of A- for the Group. Fitch and Moody's reaffirmed their ratings in May 2008.


The investment management industry continues to face the challenge of volatile markets, low levels of liquidity and consequent price dislocations. One of the very few investment styles to have produced positive returns for investors year-to-date whilst maintaining liquidity, has been managed futures. AHL is a leading managed futures business globally and forms a core part of much of Man's private investor product. This investment management strength, combined with our wide geography of asset raising provides us with an adaptable product range to address the continued uncertainty in markets.

Since 30 September, we have continued to see private investor sales momentum, including a successful launch in Asia raising $800 million of investor money, and are currently marketing a number of products globally and regionally. Private investor redemptions for October and November have increased somewhat, but principally for open-ended rather than guaranteed products. We have seen a reduced run-rate of institutional sales in October, although the pipeline for mandates remains encouraging. Most of our institutional investors have 90 day notice periods and redemptions levels for the quarter to December 2008 are currently broadly unchanged at around 5%.

Performance in October has been strongly positive for AHL, up 12%. RMF and Glenwood have seen slightly negative estimated performance for the month of around 3-4%, but ahead of industry benchmarks. As at the end of October AHL is, on weighted average FUM basis, only 2% away from net asset highs, although all our other managers are significantly below high watermarks. Performance fees in the second half are likely to be earned from any material upward move in AHL, although performance fees from our other managers in the period are very unlikely.

The continued de-gearing of MGS and adverse foreign exchange translation of around $3 billion have combined to reduce estimated funds under management to around $61 billion, as at the beginning of November.

Looking further ahead, the breadth of our sales network and adaptable product range allows us to access demand across a wide geography of investor. However, continued uncertainty in markets creates a difficult sales environment and challenges performance across the industry. Pressure on the capital base of many financial institutions will reduce their ability to allocate assets to the industry for investment in the near-term. The limited availability of leverage and more stringent terms for lending will continue to hamper the industry. While we are not immune to these industry-wide factors, our capital, scale and strong banking relationships continue to secure us favourable access to financing. Our ability to offer a full range of low leverage products, with guarantees for those who want capital protection, and open-ended investments for those who want frequent liquidity, will allow us to continue to meet investor demand as markets begin to stabilise and significant investment opportunities are likely to emerge.

An increased regulatory focus on financial businesses and markets is likely given recent turmoil. Man has long operated in highly regulated private investor markets, and we have the capital, resources and structure to address the evolving requirements.

It is clear that the industry will see a significant reduction in both the number of participants and the level of funds under management in the near term. In the medium term, the value of well resourced, institutional quality firms will become evident. Man is well positioned as a leader in a world of tighter regulation, scarce funding and higher barriers to entry.


Given overall performance for the first half of the year, strong market position and continued capital strength, we have declared an interim dividend of 19.2 cents per share, unchanged from the comparable period. This dividend will be paid at the rate of 11.89 pence per existing share, an increase of 30% in sterling terms from the prior year's interim dividend.

Dates for the 2009 Interim Dividend

Ex dividend date 26 November 2008
Record date 28 November 2008
DRIP final election date 5.00pm on 28 November 2008
Dividend paid/CREST accounts credited 18 December 2008
Share Certificates received/CREST accounts credited with DRIP purchases 24 December 2008

Video interviews & audio webcast

Video interviews with Peter Clarke, Group Chief Executive, and Kevin Hayes, Finance Director, in video, audio and text are available on and

There will be a live audio webcast of the results presentation at 8.45am on and which will also be available on demand from later in the day.

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