Final Results

Man Group PLC 31 May 2001 PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2001 FINANCIAL HIGHLIGHTS - Funds under management at 31 March 2001 up 43% to $6.7 billion - Underlying earnings per share up 31% to 30.4 pence - Recurring net management fee income up 27% to £70.7 million - Net performance fee income more than doubled to £76.0 million - Brokerage result up 22% to £30.2 million - Continuing earnings per share up 67% to 53.8 pence - Total earnings per share (including discontinued operations) increased to 48.1 pence - Dividends up 14% to 15.5 pence - Acquisition of Glenwood, a fund of funds manager, in October 2000. March March 2001 2000 Funds under management £ 4.7bn £ 2.9bn $ 6.7bn $ 4.7bn Profit before tax - continuing operations £ 174.0m £ 111.5m Asset Management net management fee income+ £ 70.7m £ 55.5m Asset Management net performance fee income+ £ 76.0m £ 30.2m Brokerage+ £ 30.2m £ 24.7m Diluted earnings per share * Underlying^ 30.4p 23.2p Continuing operations 53.8p 32.3p Total operations (including discontinued 48.1p (20.2p) operations) Dividends per share 15.5p 13.6p Post-tax return on equity - continuing operations (annualised) 35.9%** 22.5% Shareholders' funds £ 433.4m £250.3m + Before goodwill amortisation * A reconciliation of earnings per share is shown in note 7 ^ Underlying earnings per share represents earnings from continuing operations excluding net performance income from Asset Management, Sugar Australia and goodwill amortisation ** Assumes equity raised by the share placing in January was in place for the whole year Man Group plc is a world leader in the fast growing field of alternative investment products where it has a powerful market presence and a strategic position in the high-margin private client sector. The Group is also amongst the world's leading providers of brokerage services in futures and options for both institutional and private clients, and is also an intermediary in the world's metals, foreign exchange and equities markets. Stanley Fink, Chief Executive said: 'During the year, the Group has delivered outstanding returns to its fund clients, excellent financial results for shareholders and has consolidated its leading role in the fast growing Alternative Investment market.' Harvey McGrath, Chairman said: 'The Board views the Group's prospects with confidence. As an integrated business with real strengths in asset management, distribution and market access, a strong and effective management team pursuing a clear growth strategy, and ongoing high levels of demand for our products and services, we see substantial opportunity to continue to increase shareholder value.' Enquiries Man Group 020 7285 3000 Stanley Fink Peter Clarke Gavin Anderson 020 7457 2345 Lindsey Harrison Victoria Jackson OVERVIEW The Group has had an extremely successful year, with profits before tax from continuing operations up 56% to £174.0 million, diluted earnings per share on continuing operations up 67% to 53.8 pence, and significant progress made in achieving our strategic objectives. Diluted earnings per share on total operations (including discontinued operations) was 48.1 pence. In terms of financial performance we have seen strong growth in funds under management and in both underlying income and performance fee income. Funds under management were up 60% (in sterling terms) and 43% (in US dollar terms) in the year, to stand at £4.7 billion ($6.7 billion) at year-end. The net growth in assets has been achieved through acquisition, product sales and positive investment movement, each of broadly similar amounts. Net management fee income for the year was £70.7 million, up 27% on last year, driven by the higher levels of funds under management. Performance fee income for the year at £76.0 million was exceptionally high and more than double the level of the previous year, reflecting both very strong product performance and a higher asset base. Income from Brokerage was up 22% in the year to £30.2 million. One of the Group's key financial objectives is growth in underlying earnings per share which excludes the impact of volatility in performance fee income from Asset Management. Diluted underlying earnings per share, being net management fees and Brokerage earnings, before goodwill amortisation, has grown 31% to 30.4 pence. Compound annual growth in diluted underlying earnings per share for the last three years has been 45%. The Group is a leader in the structuring, management and distribution of specialist alternative investment products. The long-term track record of our principal product managers is strong. AHL Diversified Programme has a 10 year track record of 21.9% per annum and Glenwood's 14 year track record is 12.3% per annum net return to investors. Together these two managers account for around £4.0 billion, or 84%, of total Group funds under management. The vast majority of our funds are entitled to a performance fee on a proportion of any gain in the underlying investment portfolio. Performance fees are earned once a fund's value per share or bond exceeds its all time high point. As total Group funds under management rise, the potential amount of performance fees generated by those funds also increases. In the five year period from April 1996 to March 2001, Group performance fees have averaged 2% per annum of average funds under management. Adding post-tax performance fees to underlying earnings gives a diluted earnings per share figure, which has grown at 57% compound per annum over the last three years. GROUP STRATEGY AND OUTLOOK Our strategy for growing Asset Management is to grow funds under management through the broadening of the product offering, innovation in product structuring and accessing new markets. Progress has been made in all of these areas. In the second half of the year we acquired those parts of the Glenwood fund of hedge funds business we did not already own, including the on-shore US activities. Glenwood is a highly regarded Chicago based fund of hedge funds manager with a 14 year track record, whose product performance is not correlated to that of AHL. In addition to growing funds under management and providing a complementary product offering, the acquisition gave us capacity to market Glenwood globally. Building on Glenwood's existing US institutional business and our fund structuring skills, we intend to use Glenwood's product capacity to develop a strong presence in the US private client market. This will involve some increased investment in personnel and infrastructure in the year ending March 2002 to add further scale to our sales and distribution capabilities. In addition, we will continue to make selective investments in new managers whose product offering, distribution or client base is complementary to our own. During the second half of the year we announced the acquisition of Ord Minnett Strategic Investments ('OMSI') in a joint venture with its management. OMSI is based in Sydney and operates as a sponsor and distributor of alternative fund products in Australia. The Group has worked with OMSI for many years, launching a series of alternative investment vehicles for the Australasian region. During the year we made an investment in three new managers: Man-Drake, Man-Barnegat and Man-Quintet. These new managers use varying combinations of systematic and discretionary approaches in the equity market neutral, fixed income arbitrage and global macro investment styles, complementing our existing managers. Initiatives in product development during the year included the structuring of our first guaranteed fund of hedge funds product for the retail market and the launch in May of our first UK institutional offering in a listed investment trust format. Our strategic objectives for Brokerage focus on our established ability to offer a premium execution and advisory service across a broad range of financial markets, principally to an institutional client base. Increasingly, our strong international order flow and electronic trading capabilities put us at a competitive advantage as many of the world's financial markets adopt electronic trading. This focus has enabled Brokerage to maintain or even advance its leading positions on many exchanges and to grow profits whilst generating higher returns on capital. In April 2001, the Group acquired one of Australia's premier futures and margin foreign exchange brokers, Ord Minnett Jardine Fleming Futures, which has offices in Sydney and Brisbane. We are likely to continue to take advantage of opportunities arising from industry consolidation. Against the backdrop of volatile equity markets, investors have become more focused on the alternative investment market. During the year the Group has further developed its established presence as a leading participant in this fast growing market. We have expanded the product range, invested in distribution, and continued to innovate in product structuring. Combined with good recent product performance, and increased access to new markets, we have built the platform for strong sales in the current year and beyond. Since the year-end we have launched a Man-Glenwood retail fund which raised £158 million ($225 million), demonstrating the continued widespread appeal of our products. As at 31 May 2001, funds under management are estimated to be slightly ahead of the level at the year-end. The Group's objective is to double the level of funds under management within three years, part of which will come from institutional investment in Glenwood products, with a lower level of associated management fee. Together with the profit contribution from our leading Brokerage business we are confident of the Group's ability to deliver significant growth in underlying earnings per share and to continue to generate high levels of return to our shareholders. DIVIDENDS The Board proposes a final dividend of 10.9 pence per share, which together with the interim dividend of 4.6 pence per share, amounts to 15.5 pence, an increase of 14%. Subject to shareholders' approval at the Annual General Meeting, the final dividend will be paid on 19 July 2001 to shareholders' on the register at the close of business on 29 June 2001. The shares will be quoted ex-dividend from 27 June 2001. The Dividend Reinvestment Plan first introduced for the 2001 interim dividend will be available again in respect of the 2001 final dividend. OPERATING REVIEW Asset Management Asset Management had a very strong year with profits up 67% to £143.5 million. Net management fee income before goodwill amortisation grew 27% to £70.7 million, reflecting the strong growth in funds under management. Funds under management at the year-end were £4.7 billion. The acquisition of Glenwood in the second half contributed £0.7 billion of this increase at that date. Glenwood specialises in constructing and actively managing hedge fund portfolios using a risk averse, multi-strategy and multi-advisor approach. It has a database comprising 3,500 US and international investment managers and maintains updated information on over 700 such managers. Glenwood does not manage investors' funds directly, but allocates funds across a range of strategies and selects advisors expert in the utilisation of these strategies. Glenwood believes this maximises the potential for relatively stable, positive returns during all economic cycles. Product performance was exceptionally strong in the second half of the year, generating net performance fees of £75.0 million, mainly from the AHL product range. For the full year, the composite of all AHL funds recorded net returns to investors of 37.8%, and Glenwood performance was 9.5%. This compares favourably with the FTSE All Share and S&P 500 indices, which recorded performance of -10.2% and -21.7% respectively for the same period. We raised £804 million ($1,183 million) of new money during the year and the sales momentum has continued well into this year. We launched 15 new funds in the year, with an average launch size of £22 million. Our sales network continues to expand and we now have 805 intermediaries globally, which complement our regional sales offices. New money has been raised primarily in Europe (and in particular Switzerland), Asia Pacific and the Middle East. Sales in the year were split two-thirds retail product and one-third institutional product. Redemption levels in the year were slightly lower than last year. Brokerage Brokerage had a record year with profits, before goodwill amortisation, of £30.2 million, up 22% on last year. We enjoyed a broadly based contribution from our product lines during the year. Financial futures had an excellent year and there were also particularly strong contributions from energy and foreign exchange, along with our growing private client business. Growth has come in financial futures and its related new product areas. We have increased our execution volumes and have managed to enhance that element of our financial futures activities where we are able to add value through providing liquidity via our extensive and global client base. We have also continued to widen our product base with regard to equities, equity options, equity index and equity index options - all of which share similar liquidity pooling characteristics to our financial futures business. Despite the overall foreign exchange market contracting (largely as a consequence of the introduction of the Euro) our foreign exchange profit contribution has increased, principally as a result of an increase in referrals from our private client and general brokerage businesses. Profits growth in energy futures and options was achieved as a result of being able to take advantage of the opportunities arising from record volumes and daily moves in energy prices on the IPE and NYMEX. ADDITIONAL FINANCIAL INFORMATION Returns to shareholders Measured by the increase in share price and dividends added together, the last year has been very successful, with a return of 63%. Over the last three years the total return to shareholders has averaged 54% per annum. We have grown dividends by 14% over the last year and by almost 10% per annum over the last three years. This year's dividend is covered 3.5 times by continuing earnings, and 2.0 times by underlying earnings. Financial objectives We refocused our financial objectives after the sale of the Group's Agricultural Products business in March 2000 to make them more appropriate to our continuing financial services activities. The first objective is to deliver significant growth in underlying earnings per share whilst accepting some headline earnings volatility due to performance related income earned by Asset Management. Thus underlying earnings represent earnings from continuing operations excluding net performance income from Asset Management, Sugar Australia and goodwill amortisation. Underlying earnings per share has grown by 31% over the last year and by 45% compound per annum over the last three years. Our second financial objective is to remain committed to active management of the Group's capital base to improve the Group's high level of return on capital. The Group's post tax return on capital from continuing operations for the year was 35.9%, up from 22.5% last year (assuming the equity raised by the share placing in January 2001 was in place for the whole year). The Group's return on capital from total operations, excluding goodwill amortisation and exceptional items relating to the Agricultural Products business now disposed of, was 36.6%. Financial capacity The Group has both committed and uncommitted facilities from a group of major international banks. The largest of these is a $835 million committed revolving credit facility which matures in February 2002. The renewal of this facility is in progress and will be completed by 30 September 2001. In addition the Group has uncommitted facilities available to it of $313 million. The Group's net debt of £35.2 million at year end represented gross debt of £168.9 million offset by cash balances of £133.7 million. Total undrawn committed facilities at the year-end were £454.3 million. In January 2001, the Group announced a placing of ordinary shares for cash to raise up to £75 million. The placing was successfully completed (raising £75 million less issue costs of £1 million), being over-subscribed and at a premium to the then current share price. The proceeds of the placing were used to reduce borrowings and provide the Group with the resources to continue to develop its businesses and capitalise on the growing demand for alternative investment products. Summary of results Profits before tax from continuing operations increased in the year, up 56% to £174.0 million, with a significant improvement in underlying earnings. Asset Management exceeded the record profit level of last year with net management fee income increasing by 27% from £55.5 million to £70.7 million, and net performance fee income increasing by 152% from £30.2 million to £76.0 million. The second half of the year saw an exceptionally strong contribution from performance fees as a result of particularly strong product performance in that period. Brokerage also reported a record result with contributions broadly spread across its product lines. The profit from Sugar Australia is contained within continuing operations, with a positive contribution of £1.8 million (2000: £2.1 million) being made for the year. Pre-tax profits from continuing businesses in the second half of £126.5 million were significantly higher than the first half of £47.5 million, largely due to the high level of performance fees generated by the AHL product range. Performance fee income from Asset Management will typically exhibit volatility and during the last five years annual performance fees have ranged from 1.1% to 3.1% of funds under management. Viewed over shorter time scales, and within the Group's accounting periods the effect of this volatility can be pronounced. It is for this reason that the Group focuses on growth in the underlying earnings per share measure, which excludes performance fees. In order to reduce performance fee volatility at Group level we have continued to broaden the fund product range across managers and styles, such as Glenwood, with low correlation to AHL. Operating income is principally denominated in US dollars and is translated into sterling for reporting in the Group consolidated accounts. There has been a positive translation effect in the year from currency movements of £4.8 million on the pre-tax profit with an average rate for the year of $1.4712 (2000:$1.6114). Operating expenses have increased by £49.2 million. The largest elements of this increase are performance related compensation and currency translation effects. Goodwill amortisation, principally from the Glenwood acquisition, was £4.7 million, up from £1.0 million last year. In discontinued operations we show exceptional items relating to adjustments to the loss on sale of our Agricultural Products business in March 2000 and to restructuring costs relating to the disposal. These items amounted to £8.2 million in the second half, after incurring £6.8 million in the first half. The adjustments to the Agricultural Products loss on sale is the net effect of claims made under limited warranties given to the management buyout group. Bearing in mind the cover that the Group has available to it, the net impact of these liabilities, were they all to crystallise, would not be material. Taxation The tax charge for the year amounted to £34.8 million. The effective rate on continuing operations was 20.1%, compared with 22.0% last year. The reduction in rate is a consequence of a change in geographic split of the Group's worldwide profits, with the increase in performance fees in Asset Management being largely earned in Switzerland and the UK, which have lower tax rates than the US. Cash flow The group had operating profits of £170.0 million before charging depreciation of £9.9 million and goodwill amortisation of £4.7 million. The company paid dividends of £32.9 million, £10.1 million for net fixed asset expenditures, principally for technology and capital investments, and taxation of £8.2 million. Acquisitions, net of disposals, totalled £90.6 million which was largely covered by the share placing, which raised £74 million net of costs. Debtors net of creditors fell by £91.0 million. Short-term investments, which is principally treasury stocks, and reverse repos held by Brokerage increased by £169.4 million. Net debt decreased by £26.2 million to £35.2 million after taking into account an adverse currency translation adjustment of £6.3 million, reflecting the fact that most of the Group's borrowings are in US dollars. Gearing has fallen to 8% from 24% last year. Balance sheet The Group's consolidated balance sheet is similar to last year except for the following points. In fixed assets, intangibles have increased by £66.6 million, which is principally the result of the goodwill arising on the Glenwood acquisition. Also in fixed assets, investments in joint ventures has increased by £11.7 million, largely due to the goodwill arising on the acquisition of Ord Minnett Strategic Investments. The decrease in the level of debtors and creditors can be attributed principally to the reduction in our securities and stock loan businesses. The switch between borrowings greater than one year and less than one year is a function of our committed banking facilities maturing within one year of the balance sheet date. We are in the process of renewing our committed banking facilities. Shareholders' equity has increased by £183.1 million principally as a result of retained profits for the year of £84.7 million and the issue of shares, largely in relation to the share placing in January 2001, of £76.6 million. Acquisitions The principal transaction during the year was the Glenwood acquisition which was completed in October 2000. Cash consideration paid was £76 million of which £67 million was for goodwill. The goodwill is being amortised over 15 years, being the directors' estimate of its useful economic life. In November 2000 the Group acquired Ord Minnett Strategic Investments. This goodwill is being amortised over eight years. In Man Financial, we acquired the client accounts and certain other assets of First American Discount Corporation in October 2000. All these acquired companies have been earnings enhancing since their date of acquisition. In particular, the Glenwood on-shore US business has recorded a pre-tax profit of £5.0 million, before funding costs of £2.4 million and goodwill amortisation of £2.3 million, since the date of acquisition. Annual General Meeting The Annual General Meeting will be held at 11 am on 11 July 2001 at The Savoy, Strand, London WC2R 0EU GROUP PROFIT AND LOSS ACCOUNT for the year ended 31 March 2001 Restated 2001 2000 Contin- Discon- Conti- Discon- uing tinued nuing tinued opera- opera- opera- opera- tions tions Total tions tions Total £m £m £m £m £m £m Net operating income 347.1 - 347.1 241.4 107.6 349.0 Operating expense (187.0) - (187.0)(141.5) (109.6) (251.1) Goodwill amortisation and exceptional operating expense (4.7) - (4.7) (1.0) (3.0) (4.0) (191.7) - (191.7)(142.5) (112.6) (255.1) Group operating profit/(loss) 155.4 - 155.4 98.9 (5.0) 93.9 Share of operating profit/(loss) from joint ventures and associates 6.1 - 6.1 6.7 (0.7) 6.0 Total operating profit/(loss) profit/(loss): Group and share of joint ventures and associates 161.5 - 161.5 105.6 (5.7) 99.9 Exceptional items Loss on sale of Agricultural Products businesses - (13.1) (13.1) - (69.2) (69.2) Restructuring costs - (1.9) (1.9) - (44.3) (44.3) Net interest income/(expense) 12.5 - 12.5 5.9 (28.8) (22.9) Profit/(loss) on ordinary 174.0 (15.0) 159.0 111.5 (148.0) (36.5) activities before taxation Taxation (35.0) 0.2 (34.8)(24.5) 7.8 (16.7) Profit/(loss) on ordinary 139.0 (14.8) 124.2 87.0 (140.2) (53.2) activities after taxation Equity minority interests - - - - (1.1) (1.1) Profit/(loss) for the 139.0 (14.8) 124.2 87.0 (141.3) (54.3) financial year Ordinary dividends (39.5) (33.8) Dividend in specie - (60.2) Retained profit/(loss) 84.7 (148.3) Earnings per share on continuing operations Basic 55.7p 34.2p Diluted 53.8p 32.3p Underlying earnings per share Basic 31.4p 24.5p Diluted 30.4p 23.2p Earnings per share including exceptional items Basic 49.8p (21.3p) Diluted 48.1p (20.2p) Dividends per share Interim 4.6p 4.3p Final proposed 10.9p 9.3p Historical cost profits and losses are not materially different from those shown above. The comparative Group profit and loss account and relevant notes have been restated in two regards: (1) to transfer net interest income arising from trading activities in the normal course of business, from the net interest income line to the net operating income line; and (2) to transfer goodwill amortisation from the net operating income line to the goodwill amortisation and exceptional operating expenses line. GROUP BALANCE SHEET at 31 March 2001 2001 2000 £m £m Fixed assets Intangible assets - goodwill 73.1 6.5 Tangible assets 21.0 27.8 Investments Investments in joint ventures Share of gross assets and goodwill 25.0 12.1 Share of gross liabilities (3.9) (2.7) 21.1 9.4 Investments in associates 17.8 17.0 Other investments 21.1 13.3 154.1 74.0 Current assets Stocks - 3.0 Debtors 703.6 1,277.7 Securities purchased under agreements to resell 104.0 - Investments 155.1 75.0 Cash at bank and in hand 133.7 268.1 1,096.4 1,623.8 Creditors: amounts falling due within one year (791.3) (1,164.3) Net current assets 305.1 459.5 Total assets less current liabilities 459.2 533.5 Creditors: amounts falling due after more than (19.2) (275.7) one year Provisions for liabilities and charges (6.6) (7.5) Net assets 433.4 250.3 Capital and reserves Called up share capital 26.8 27.0 Share premium account 111.4 36.1 Capital reserve 1.6 0.1 Profit and loss account 293.6 187.1 Shareholders' funds (including non-equity 433.4 250.3 interests) GROUP CASH FLOW STATEMENT for the year ended 31 March 2001 Restated 2001 2000 £m £m Net cash inflow from operating activities 84.8 11.4 Dividends from joint ventures 2.7 - Dividends from associates 2.3 9.3 Returns on investments and servicing of finance 4.2 (29.7) Taxation paid (8.2) (13.9) Capital expenditure and financial investment (20.0) (17.1) Acquisitions and disposals (80.7) (17.3) Equity dividends paid (32.9) (28.8) Net cash outflow (47.8) (86.1) Management of liquid resources (20.2) (7.5) Financing (75.1) 200.7 (Decrease)/increase in cash (143.1) 107.1 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT for the year ended 31 March 2001 2001 2000 £m £m (Decrease)/increase in cash (143.1) 107.1 Cash outflow/(inflow) from movement in debt 151.7 (200.0) Cash outflow from movement in liquid resources 20.2 7.5 Change in net debt resulting from cash flows 28.8 (85.4) Net debt of businesses and subsidiaries aquired - (9.2) Debt disposed of with businesses and subsidiaries 3.7 582.2 Currency translation difference (6.3) (2.1) Movement in net debt 26.2 485.5 Opening net debt (61.4) (546.9) Closing net debt (35.2) (61.4) GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the year ended 31 March 2001 2001 2000 £m £m Profit/(loss)for the financial year 124.2 (54.3) Currency translation difference taken directly 22.6 (3.1) to reserves Tax on translation difference taken through reserves - (0.1) Total recognised gains/(losses) relating to the year 146.8 (57.5) RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS for the year ended 31 March 2001 2001 2000 £m £m Profit/(loss) for the financial year 124.2 (54.3) Ordinary dividends (39.5) (33.8) Dividend in specie - (60.2) Retained earnings/(loss) 84.7 (148.3) Other recognised gains and losses relating to 22.6 (3.2) the year Issue of ordinary share capital 76.6 0.7 Amount added back in respect of scrip dividends 1.4 4.0 Goodwill written off on acquisitions (2.2) - Goodwill written back on disposals - 22.1 Net increase/(decrease) in shareholders' funds 183.1 (124.7) Opening shareholders' funds 250.3 375.0 Closing shareholders' funds 433.4 250.3 1. Basis of Preparation The financial information contained herein has been prepared on the basis of the accounting policies set out in the Annual Report for the year to 31 March 2001. The financial information contained herein is abridged and does not constitute statutory accounts as defined by Section 240 of the Companies Act 1985. Statutory acounts for the year to 31 March 2001, upon which the auditors have indicated their intention to give an unqualified report, will shortly be delivered to the Registrar of Companies and will be posted to shareholders on 7 June 2001. The accounts for the year ended 31 March 2000 were unqualified and have been delivered to the Registrar of Companies. 2. Net operating income Restated 2001 2000 £m £m Continuing operations Fees and commissions receivable 504.7 391.7 Fees and commissions payable (230.4) (212.8) Net trading interest income 44.7 24.2 319.0 203.1 Other operating income 28.1 38.3 Total continuing operations 347.1 241.4 Discontinued operations - 107.6 Net operating income 347.1 349.0 3. Goodwill amortisation and exceptional operating expense Goodwill amortisation is £4.7 million (2000: £1.0 million). In addition, in 2000 in discontinued operations, there was a £3.0 million impairment charge against the assets of the US nut processing facilities to write them down to their recoverable amounts. 4. Non-operating exceptional items The loss on sale of the Agricultural Products businesses of £13.1 million (£12.9 million net of tax) represents an adjustment of £11.3 million (£11.3 million net of tax) to the loss on sale reported last year incurred in accordance with the management buyout disposal documentation, and £1.8 million (£1.6 million net of tax) in respect of the sale of the US Nuts activities which took place in the first half of the financial year. Further Agricultural Products restructuring costs of £1.9 million (£1.9 million net of tax) were also incurred, largely relating to termination payments. In 2000 the loss on sale of Agricultural Products businesses was £69.2 million. This comprised a loss on sale to the management buyout group of £61.7 million and a loss on sale of US nuts business of £7.5 million (£5.8 million net of tax). In addition there were restructuring costs of £44.3 million (£42.2 million net of tax) principally relating to the restructuring of the Sugar business prior to its disposal. 5. Segmental analysis of profit on ordinary activities before taxation 2001 2000 £m £m Business segment Continuing operations Asset Management - management fee income 70.7 55.5 Asset Management - performance fee income 76.0 30.2 Brokerage 30.2 24.7 Goodwill amortisation (4.7) (1.0) Financial Services 172.2 109.4 Sugar Australia 1.8 2.1 174.0 111.5 Discontinued operations (15.0) (148.0) 159.0 (36.5) Geographic area Europe 163.5 61.5 The Americas 3.3 12.2 Rest of the world 7.2 3.3 Exceptional items (15.0) (113.5) 159.0 (36.5) Goodwill amortisation is split between Asset Management and Brokerage £3.2 million (2000:nil) and £1.5 million (2000: £1.0 million) respectively. 6. Dividends 2001 2000 £m £m Ordinary shares Interim paid - 4.6 pence (2000: 4.3 pence) 11.5 11.0 Final proposed - 10.9 pence (2000: 9.3 pence) 28.0 22.8 39.5 33.8 Under the scrip dividend arrangements, £1.4 million (2000: £4.0 million) of the dividends paid during the year were paid in the form of shares and have therefore been added back to reserves. In addition, on 24 March 2000 a dividend in specie of £60.2 million was paid to holders of E D & F Man Group plc 'A' ordinary. 7. Earnings per share The calculation of basic earnings per ordinary share is based on a profit for the year of £124.2 million (2000: £54.3 million loss) and 249,329,463 (2000: 254,438,521) ordinary shares, being the weighted average number of ordinary shares in issue during the year after excluding the shares owned by the Man Group plc employee trusts. The diluted earnings per share is based on a profit for the year of £124.2 million (2000: £54.3 million loss) and on 258,168,532 (2000: 269,061,048) ordinary shares, calculated as follows: 2001 2000 Number Number Basic weighted average number of shares 249,329,463 254,438,521 Dilutive potential ordinary shares: Share awards under incentive schemes 8,109,220 13,713,935 Employee share options 729,849 908,592 258,168,532 269,061,048 The reconciliation of adjusted earnings per share is as follows: 2001 2000 Diluted Diluted Basic earnings Basic earning Earnings earnings per Earnings earnings per £m per share £m per share share pence share pence pence pence Earnings per share 124.2 49.8 48.1 (54.3) (21.3) (20.2) Loss on discontinued operations 14.8 5.9 5.7 141.3 55.5 52.5 Earnings per share -continuing operations 139.0 55.7 53.8 87.0 34.2 32.3 Performance related income (62.3) (25.0) (24.1) (23.6) (9.3) (8.8) Sugar Australia (1.1) (0.4) (0.4) (1.6) (0.6) (0.5) Goodwill amortisation 2.8 1.1 1.1 0.6 0.2 0.2 Underlying earnings per share 78.4 31.4 30.4 62.4 24.5 23.2 8. Operating activities Restated 2001 2000 £m £m Operating profit 155.4 93.9 Depreciation of tangible fixed assets 9.9 20.5 Amortisation of goodwill 4.7 1.0 (Profit)/loss on sale of tangible fixed assets (2.6) 0.1 Profit on sale of fixed asset investments (0.2) - Decrease in stocks 0.1 8.4 Decrease/(increase) in debtors 714.4 (565.3) Increase in securities purchased under agreements to resell (100.6) - (Increase)/decrease in short-term investments (68.8) 43.8 (Decrease)/increase in creditors (623.4) 413.5 Restructuring costs (4.1) (4.5) 84.8 11.4 9. Exchange rates The following rate of exchange has been used in preparing this financial information: Year-end rates Average rates 2001 2000 2001 2000 US dollar 1.42 1.60 1.47 1.61

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