Half Yearly Report

RNS Number : 5935V

Man Group plc

04 November 2010

4 November 2010

INTERIM RESULTS FOR THE HALF YEAR ENDED 30 SEPTEMBER 2010

Man Group ("Man") completed its acquisition of GLG Partners, Inc ("GLG") on 14 October 2010. As such, the interim results for Man reported below for the six month period to 30 September 2010 do not include funds under management, performance or any other contribution from GLG. Highlights of GLG's recent fund flows and investment performance (based on unaudited GLG management information) are set out in a separate section below for information purposes only and do not form part of these interim financial statements.

Man highlights for the six months to 30 September 2010

· Funds under management (FUM) at 30 September 2010 of $40.5 billion (30 June 2010: $38.5 billion), ahead of the 28 September pre-close estimate of $39.5 billion due to strong investment performance and favourable FX movements at the end of the reporting period

· AHL up 6.6% in the six months to 30 September and guaranteed product flagship IP220 up 13.1% in the same period. As at 30 September, AHL was 6.0% from high water marks on a weighted average basis

· Diluted earnings per share on continuing operations before adjusting items of 10.2 cents per share; 7.6 cents per share after adjusting items

· Integration of GLG well advanced, with marketing campaigns under way for focus GLG strategies in each region, and the first product to blend AHL and GLG scheduled for launch in Q1 2011

· The Board has declared an interim dividend of 9.5 cents per share and its intention remains to pay a total dividend for the year of at least 22 cents per share.

GLG funds under management update

· GLG funds continue to perform well across a wide range of styles, with the top performing styles in the calendar year to 30 September 2010 being European distressed (+36.52%); macro (+28.55%); market neutral (+28.38%) and emerging markets (+10.06%)

· At completion of the acquisition on 14 October, estimated funds under management at GLG were $25 billion (30 June 2010: $22.7 billion), of which $12 billion was in alternative strategies and $13 billion in long only strategies

· Since GLG last reported to the market on 30 June 2010, there have been net inflows of approximately $0.1 billion into alternative strategies and $0.3 billion into long only strategies, together with positive investment and FX movements.

Outlook

· Funds under management for the combined business at the end of October are estimated at $67 billion. With a wide range of investment styles now being marketed worldwide and unrelenting focus on investment performance, Man is well positioned for asset growth.

Man interim results for the six months to 30 September 2010 - key points

· Profit before tax from continuing operations and before adjusting items for the six months to 30 September 2010 of $227 million, 5.6% ahead the pre-close estimate due to strong investment performance and favourable FX movements at the end of the reporting period

· Diluted earnings per share on continuing operations before adjusting items of 10.2 cents per share; 7.6 cents per share after adjusting items

· Financial position remains strong. There was a regulatory capital surplus of over $1.5 billion and $5.2 billion in cash and undrawn committed facilities at 30 September 2010. Following the closing of the GLG acquisition, Man has a regulatory capital surplus of around $300 million and $4.2 billion of cash and undrawn committed facilities.

Summary financials

	Six months ended 30 Sept 2010 $	Six months ended 31 March 2010 $	Six months ended 30 Sept 2009 $
Funds under management (end of period)	40.5bn	39.4bn	44.0bn
Net management fee income	210m	218m	245m
Net performance fee income	17m	50m	47m
Profit before tax from continuing operations and before adjusting items	227m	268m	292m
Adjusting items*	(47m)	(29m)	10m
Discontinued operations**	(33m)	-	-
Total profit before tax	147m	239m	302m

*As flagged in the 28 September pre-close statement, there are two adjustments to continuing operations in the period - $25 million for GLG acquisition costs and $22 million for pre-acquisition rationalisation costs, including consultancy advice. **Discontinued operations reflect an arbitration settlement linked to claims made by MF Global regarding their closing balance sheet at the date of their IPO in July 2007.

Outlook statement

Against a backdrop of highly volatile equity market indices and low interest rates, there are compelling structural arguments in favour of the diversification and downside protection offered by hedge funds and other active management styles.

The addition of GLG's multi-style investment strategies expands both the scale and scope of Man's offering, addressing investor demand for liquid, transparent, risk-adjusted returns that complement AHL and Man Multi-Manager. Managed accounts continue to feature heavily, both for institutional investors and within private investor-oriented structures. Man's longstanding managed account capabilities coupled with industry-leading structuring expertise position us well to maximize the benefits of these tools for our investors. Strong local relationships, financial strength and deep experience in operating in highly regulated environments continue to provide confidence to our investors, intermediaries and counterparties in a world transitioning through policy change.

Funds under management for the combined business at the end of October are estimated at $67 billion. With a wide range of investment styles now being marketed worldwide and unrelenting focus on investment performance, Man is well positioned for asset growth.

Peter Clarke, Chief Executive, said:

"In the lead up to the acquisition of GLG, both Man and GLG delivered excellent investment performance - the key catalyst to flows. AHL returned 9% in the calendar year to end September, and GLG's range of alternative and long only strategies continued to perform strongly. We have made a fast start to GLG integration, and our fully integrated sales force has begun to introduce our wide range of uncorrelated return streams to investors worldwide.

"In the course of the first half we have made significant progress with all of the five strategic objectives we set for the year. Our acquisition of GLG is a significant milestone in our development as a global leader in alternative investment management. Cost synergies of $50 million will be delivered over the next twelve months as planned. We expect to deliver revenue synergies from marketing GLG strategies on a wider global scale, and from new, blended products, the first of which will be launched in the first quarter of 2011. AHL performance has benefitted from strongly trending bond and currency markets, but also from increased research capacity and our unique collaboration with Oxford University. Man Multi-Manager has seen excellent performance in guaranteed products, with IP220 up 18.5% in the calendar year to end September. Institutional demand remains strong, specifically for managed account based solutions. Man Multi-Manager has transitioned to a new leadership team, who are charged with optimising its capabilities and building profitability. We continue to deepen our regional relationships, and in November will launch the first onshore managed futures product to receive regulatory approval in Singapore. We remain focused on achieving the right balance between investment and efficiency, and will benefit from operating leverage as funds under management rebuild.

"Funds under management for the combined business at the end of October are estimated at $67 billion. With a wide range of investment styles now being marketed worldwide and unrelenting focus on investment performance, Man is well positioned for asset growth."

Dividend

The Board has declared an interim dividend of 9.5 cents per share, and its intention remains to pay a total dividend for the year of at least 22 cents per share. The interim dividend will be paid at the rate of 5.91 pence per share.

Dates for the 2011 Interim Dividend

Ex dividend date	24 November 2010
Record date	26 November 2010
Dividend paid	14 December 2010

Change in Financial Year End

Man has decided to move to a December year end to align its reporting cycle with that generally adopted in the asset management industry. The current financial year will conclude in March 2011 as planned, and will be followed by a nine month period to December 2011, which will include an interim report for the first six months of the shortened period.

Video interviews and audio webcast

Interviews with Peter Clarke, Chief Executive, and Kevin Hayes, Finance Director in video, audio and text are available on www.mangroupplc.com and www.cantos.com.

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

Live Conference Call Dial in Numbers:

Rest of World Toll Access Number + 44 (0)20 7906 8567

UK Toll Free 0808 238 7377

US Toll Free 1 866 978 9967

30 Day Replay Dial in Numbers:

Rest of World Toll Access Number +44 (0)20 3364 5943

UK Toll Free Access Number 0808 238 9699

US Toll Free Access Number 1 866 286 6997

Conference Reference 280390#

Enquiries

Miriam McKay

Head of Investor Relations and Financial Communications

+44 20 7144 3809

miriam.mckay@mangroupplc.com

David Waller

Head of Media Relations

+44 20 7144 2121

david.waller@mangroupplc.com

Maitland PR

George Trefgarne

+44 20 7379 5151

About Man

Man is a world-leading alternative investment management business. It has expertise in a wide range of liquid investment styles including managed futures, equity, credit and convertibles, emerging markets, global macro and multi-manager, combined with powerful product structuring, distribution and client service capabilities. Following the acquisition of GLG, Man manages around $67 billon.

The original business was founded in 1783. Today, Man Group plc is listed on the London Stock Exchange and is a member of the FTSE 100 Index with a market capitalisation of around £4.5 billion.

Man Group is a member of the Dow Jones Sustainability World Index and the FTSE4Good Index. Man also supports many awards, charities and initiatives around the world, including sponsorship of the Man Booker literary prizes. Further information can be found at www.mangroupplc.com.

Forward looking statements and other important information

This document contains forward-looking statements with respect to the financial condition, results and business of Man Group plc. By their nature, forward looking statements involve risk and uncertainty and there may be subsequent variations to estimates. Man Group plc's actual future results may differ materially from the results expressed or implied in these forward-looking statements.

The content of the websites referred to in this announcement is not incorporated into and does not form part of this announcement.

Nothing in this announcement should be construed as or is intended to be a solicitation for or an offer to provide investment advisory services.

CHIEF EXECUTIVE'S REVIEW

The last six months have seen further mixed macro signals across global economies and continued uncertainty in markets. The alternative asset management industry has experienced significant variations in performance between investment styles and between managers within each style. Man and GLG's investment strategies have generally performed well in volatile markets. While many investors have been reluctant to commit capital, strong risk-adjusted returns are the key to attracting them back into the market. We have made excellent progress in the course of this half year with our strategic priorities, including the acquisition of GLG, and are well positioned for asset growth.

Funds under management in the six months to 30 September: positive investment performance

Funds under management at 30 September 2010 were $40.5 billion, up from $39.4 billion at 31 March 2010. We generated $1.7 billion of investment performance for our investors, with our managed futures manager, AHL, up 6.6% in the period.

With many investors remaining on the sidelines, the six months to 30 September was characterised by a similar mix of muted sales ($2.1 billion) and low redemptions ($3.7 billion) to the previous six months. However, there was a slight pick-up in sales in Q2 ($1.4 billion compared to $0.7 billion in Q1). Although private investor flows remained slightly negative (at $0.7 billion), we saw the first quarter of positive institutional flows for over two years as previously announced institutional mandates continued to allocate and redemptions reduced. Institutional redemptions are expected to remain low in Q3, with $0.2 billion of quarterly institutional redemptions paid on 1 October 2010.

Fund performance in the six months to 30 September: outperforming our peers

Alternative investment styles delivered positive investment performance in the period, with the HFR Fund Weighted Composite Index up 2.2%. However, there were significant variations between investment styles and between managers within each style, particularly in the highly volatile market conditions experienced in May and August.

Man's investment strategies performed well in volatile markets. Managed futures was one of the outperforming styles in the six months to 30 September, with the CISDM Asset Weighted Index of managed futures up 3.3% compared to world stock indices down 3.7%. AHL outperformed its peers, up 6.6% in the period, by successfully exploiting trends in bonds, interest rates and currencies. Gains in these sectors more than offset losses in other sectors such as stocks and energy markets. Man Multi-Manager also performed well, with its managed futures and global macro fund of funds up 5.2% and 2.9% respectively in the period, helping multi-style portfolios such as Man Four Seasons Strategies to return 1.0% and Man Dynamic Selection return 2.1%, compared to the HFRI Fund of Funds Composite Index up 0.6%. This outperformance was driven by active investment management which, together with a strong appreciation in guarantee instruments, boosted the performance of Man's structured product range, with Man IP220 up 13.1% in the six months to 30 September.

Investment performance

	Total return			Annualised return
	3 months to 30 Sept 10	6 months to 30 Sept 10	Calendar year to 30 Sept 10		3 years to 30 Sept 10	5 years to 30 Sept 10
Fund of funds
Man Four Seasons Strategies¹	3.2%	1.0%	1.9%		-2.5%	2.1%
Man Dynamic Selection²	3.6%	2.1%	3.7%		1.7%	5.4%
Structured - principal protected
Man-IP 220³	9.3%	13.1%	18.5%		4.4%	7.0%
Single managers
Man AHL Diversified plc⁴	5.7%	6.6%	9.0%		9.5%	10.3%
Ore Hill⁵	3.6%	6.0%	24.6%		-0.7%	3.7%
World Stocks⁶	9.0%	-3.7%	0.3%		-10.4%	-1.6%
HFRI Fund Weighted Composite Index⁷	5.1%	2.2%	4.7%		0.9%	5.2%
HFRI Fund of Funds Composite Index⁷	3.3%	0.6%	2.1%		-3.0%	2.2%
Corporate bonds⁸	5.0%	13.8%	15.8%		9.8%	6.8%

Source: Man database and Bloomberg. There is no guarantee of trading performance and past or projected performance is not a reliable indicator of future performance. Returns may increase or decrease as a result of currency fluctuations.

1) Represented by Man Four Seasons Strategies - Class ISI4.

2) Represented by Man Dynamic Selection - Class ISI12.

3) Represented by Man-IP 220 Ltd from 18 December 1996 to 31 December 2005 and Man-IP 220 Ltd - USD class bonds from 1 January 2006.

4) Man AHL Diversified plc is valued weekly, but for comparative purposes the last weekly valuation of the month has been used. The October return to 25 October 2010 is 8.4% (from last final weekly September price).

5) Represented by Ore Hill International II Ltd.

6) Represented by MSCI World Index (price return hedged to USD).

7) HFRI index performance over the past 4 months is subject to change.

8) Represented by Citigroup High Grade Corporate Bond index (total return).

First half profits slightly ahead of pre-close expectations

Man generated profits before tax and adjusting items of $227 million for the first half of 2010 (H2 2009: $268 million; H1 2009: $292 million). As expected, the level of net management fee income reduced - to $210 million - reflecting largely stable average private investor funds under management and a decrease in average institutional funds under management. Net performance fee income was $17 million, ahead of the pre-close estimate following the annual lock-in of performance fees from an open-ended AHL product after a strong performance finish to the period.

Although average funds under management have fallen, operating margins remained healthy at 33.5%, reflecting the fact that a significant element of our cost base is variable, as well as active management of our fixed cost base. As funds under management begin to rebuild, operational gearing will work in our favour.

Update on strategic priorities

In our 2010 Annual Report, we set out five strategic priorities for the firm in the 2011 financial year.

· Harness new single manager content by executing on acquisitions / stakes

· Invest in AHL to ensure that we capture the programme's full potential

· Maximise Man Multi-Manager by rebuilding scale and profitability

· Deepen our distribution reach, specifically in onshore regulated markets and across institutions worldwide

· Maintain focus on efficiency by continually evaluating our cost base

We are pleased to report progress on all five of these priorities, and particularly on our acquisition of GLG, which closed on 14 October 2010.

GLG acquisition and update

Man's acquisition of GLG is a significant milestone in our development as a global leader in alternative asset management. The combined firm has expertise in a wide range of liquid investment styles including managed futures, equity, credit and convertibles, emerging markets, global macro and multi-manager. Our unrelenting focus on delivering investment performance, allied to powerful product structuring, distribution and client service capabilities, will enable us to deliver superior, uncorrelated returns to our investors from a wide range of investment strategies across market cycles. Our shareholders will benefit from the smoother earnings profile created by uncorrelated returns, as well as cost and revenue synergies.

Since the announcement of the transaction, GLG has recorded continued asset raising and strong investment performance.

Extensive progress on integration planning meant that we were ready to operate as one business immediately upon completion of the transaction. We have implemented a new management and governance structure, including a newly constituted Man Executive Committee chaired by me, which combines the expertise of Man and GLG and whose members are Luke Ellis (Man Multi-Manager); Kevin Hayes (Finance Director); Pierre Lagrange (GLG); Christoph Moeller (Sales); Michael Robinson (HR); Emmanuel Roman (COO); Stephen Ross (General Counsel) and Tim Wong (AHL). Sales teams have been fully integrated, and have begun the process of introducing the GLG investment strategies likely to prove most attractive to each regional market. We are encouraged by current demand throughout our distribution network for single managers, and are motivated by the prospect of being able to offer a wide range of GLG styles, supported by the Man brand, alongside strongly performing AHL and multi-manager offerings. Our first product blending AHL and GLG will be launched in calendar Q1 2011, and will enable us to test demand for structured product with attractive, diversifying return streams.

Consistent with the approach we currently take with AHL and Man Multi-Manager, we will preserve the unique investment culture and focus of the GLG investment management teams and support them with fully integrated product structuring, distribution and client service capabilities.

Performance of GLG flagship funds

	Three months to 30 Sept 2010 (%)	Calendar year to 30 Sept 2010 (%)
Alternative
Alpha Select¹	6.44	6.46
Atlas Macro²	2.63	28.55
Global Convertible³	3.83	2.57
Emerging Markets⁴	4.70	10.06
European Distressed⁵	8.12	36.52
European Long/Short⁶	7.12	3.77
European Opportunity⁷	2.09	4.11
Market Neutral⁸	10.07	28.38
Global Opportunity⁹	3.69	8.31
North American Opportunity¹⁰	1.71	7.80
UCITS III
UCITS III Euro Alpha Equity Alternatives¹¹	1.56	1.41
Long only
Japan Core Alpha¹²	-4.13	-7.25
Performance¹³	9.73	0.14

1) Alpha Select Class C 2) GLG Atlas Macro Class A 3) Global Convertible Class A 4) Emerging Markets Fund Class A Res to Unres (31/08/2007) 5) GLG European Distressed CL A 6) ELS Class D Res to Unres (29/06/2007) 7) GLG European Opportunities Fund Class D Res to Unres (31/08/2007) 8) Market Neutral Class Z Linked 9) Global Opportunity 10) North American Opportunity Class A Res to Unres (29/06/07) 11) Pure Alpha (UCITS III) Fund CL C 12) GLG Japan Core Alpha CL A 13) Performance Class A

The GLG funds included in the table above have been selected as being representative of the relevant investment style and do not constitute an exhaustive list of all the funds within the relevant style.

Capture the full potential of AHL

AHL is a world-leading managed futures manager, with $22.6 billion under management and over 20 years of trading experience. Its flagship fund, Man AHL Diversified plc, has delivered annualised returns of 16.7% since March 1996.

Man AHL Diversified plc returned 6.6% in the six months to 30 September 2010, driven by strongly trending bond, interest rate and currency markets. AHL's recent model enhancements have had a positive impact on performance over the period. These include an increase to the range of trading signals and improvements to portfolio construction methodology. Ongoing development of AHL's proprietary execution algorithms has also yielded positive results by helping to drive down transaction costs. Research headcount continued to expand and now stands at around 80 researchers. The unique and very successful collaboration with the University of Oxford has been extended for another three years. Since 2007 Man has committed some $30 million to the Oxford-Man Institute of Quantitative Finance (OMI) to support academic research. Through the co-location of its commercial research laboratory with the OMI, AHL continues to benefit from early exposure to leading academic research and significantly enhanced recruitment opportunities.

Maximise Man Multi-Manager

As at 30 September 2010, Man Multi-Manager managed $14.7 billion and had $7.8 billion under management in managed accounts.

The quarter to 30 September 2010 was Man's first quarter of institutional net inflows for over two years. While sales lead times have been longer than expected, the strength of the institutional sales pipeline reflects investor demand for liquid, diversifying assets with strong risk-adjusted returns, and for transparent, managed-account-based solutions across a variety of access formats. In the private investor space, Man Multi-Manager will test demand for a new product which blends AHL and GLG investment styles in the first calendar quarter of 2011.

In September 2010, Man Multi-Manager transitioned to new leadership with the recruitment of Luke Ellis as Chief Investment Officer. Luke built a substantial business at Financial Risk Management (FRM), and is charged at Man with optimising the scale of Man Multi-Manager and building profitability.

Deepen our Distribution reach

One of Man's key assets is our sales and distribution network, which, post the GLG acquisition, has over 300 people working in sales, marketing and client service in 16 offices worldwide. Local specialists with longstanding relationships with investors, intermediaries and regulators are responsible for identifying the strategies and formats most appropriate for sale in their local markets.

Man's locally-driven distribution approach is key to our success in building a global franchise in onshore regulated products, including in Europe, Hong Kong, Brazil, Canada and Australia. In UCITS formats, we now offer 15 alternative strategies (including GLG's) and have $1.7 billion under management in 27 countries within and outside the EU. In many of these countries we have gained early access because of our strong global brand and our experience with regulated onshore products. In September we were the first manager to gain approval from the Monetary Authority of Singapore to launch an onshore managed futures based UCITS product, which will be launched in November 2010.

A key initiative across our distribution network is to build relationships with the investment consultant community who advise the global pension industry. AHL is now approved by five major investment consultants, which has led to an increased sales interest from institutions globally, including in North America.

Maintain focus on efficiency

In response to declines in funds under management, we have actively managed our cost base to preserve net management fee margins, while continuing to invest appropriately in technology, infrastructure and expertise to allow us to benefit from positive operating leverage as funds under management rebuild. When we announced the acquisition of GLG, we were able to identify annual cost savings of $50 million, a third of which we expected to be achievable in FY 2011 and the balance in the first six months of FY 2012. The cost of these savings - some $25 million - will occur predominantly in the second half of FY 2011. Achievement of these savings is progressing as planned, with the major sources being technology, real estate, overlaps in central functions and the elimination of GLG's US listing.

The right business model and governance framework to support our growth aspirations

Investors, intermediaries and consultants are conducting ever more careful due diligence of how investment management businesses are managed and run, and industry data confirms that flows are increasingly concentrated with firms with size and scale. Man has always scored highly in terms of governance, oversight and regulation. Listed in and lead regulated from the UK with strong working relationships with relevant regulators across the globe, we have a long track record of operating in the more heavily regulated private investor markets across geographies.

Broader regulatory trends, while still in a state of some flux, have begun to take greater shape over the last six months. In Europe, final negotiations have been taking place on the Directive on Alternative Investment Fund Managers (AIFMD). The Dodd Frank Act has been enacted in the US, with new legislation covering, for example, adviser registration and constraints on US bank holding company investment in hedge funds and private equity funds. Reductions in proprietary trading activities by banks may provide additional opportunities for a number of hedge fund styles. The breadth of our business means we are well positioned to take advantage of these opportunities as they arise. Local regulators have been consulting on how to implement new rules on capital requirements and compensation frameworks and there has been continued debate at a number of levels about moving some over-the-counter markets to on-exchange trading. While the detail of many of these measures has been and in some cases continues to be subject to review and vigorous debate, the general trend is supportive of Man's long held belief, that there are advantages for investors, managers and markets in robust, proportionate and co-ordinated regulatory oversight. As a business already subject to high levels of regulation in multiple jurisdictions, which has invested in compliance and operational resources, and which has developed structuring capability in regulated markets around the world, Man continues to be well positioned to adapt and respond as new regulatory frameworks begin to firm up.

Our capital and liquidity strength, a more diverse investor base and a higher proportion of recurring revenue compared to industry peers contribute to the stability of Man's business model. These characteristics have enabled us to maintain our investment programme throughout the recent downturn and focus on areas of the business essential to future growth such as technology infrastructure and AHL research. Our strong capital and liquidity position also allowed us to take advantage of the market opportunity to purchase GLG, and continues to provide comfort to our intermediaries and investors.

KEY PERFORMANCE INDICATORS (KPIs)

Our financial and non-financial KPIs, as presented on page 5 of our 2010 Annual Report, illustrate and measure the direct relationship between the experience of our fund investors, our economic performance and delivery of shareholder value. The KPIs are set by the Board and are used on a regular basis to evaluate progress against our key objectives.

Excess fund product performance

The excess fund product performance KPI measures our ability to deliver superior long-term performance for both private investors and institutions. The investment performance, net of fees, of our flagship fund products are compared to industry benchmarks. While the products have regular redemptions dates, many monthly, the investors generally have a medium to long term investment horizon, particularly in the guaranteed products. The excess return is therefore measured over a three year horizon.

Private investor products had an excess return of 4.7% over the last three years compared to benchmark. This is based on returns for Man's flagship IP220 product compared to a benchmark represented by 100% Stark 300 Trader Index and 60% HFRI Fund of Funds Composite Index. Man IP220 is composed of allocations to the AHL Diversified Programme and other allocations managed by the Multi Manager Business. It has additional structural features, such as a capital guarantee and leverage, the intrinsic value of which is not reflected in this comparison.

Institutional products had an excess return of 1.5% over the last three years compared to benchmark. This is based on returns for RMF Four Seasons compared to the HFRI Fund of Funds Composite Index.

Growth in funds under management (FUM)

Growth in FUM measures our ability to create products and portfolio solutions which are constantly attractive to new and existing investors, worldwide. FUM increased to $40.5 billion as at 30 September 2010 from $38.5 billion at 30 June 2010 and from $39.4 billion at 31 March 2010. A review of funds under management is given in the next section.

Growth in gross revenue plus income from affiliates

Growth in gross revenue plus income from affiliates measures our ability to supply attractive products with margins and customer service levels that support our strong relationships with intermediaries and institutions. Gross revenue plus income from affiliates fell by 2% from H2 2010 and by 6% compared to H1 2010, primarily reflecting lower average funds under management in the period. Further analysis is given in Note 3 to the interim financial statements.

Growth in adjusted diluted earnings per share - continuing operations

This metric measures the overall efficiency and sustainability of our business model, for the benefit of shareholders. Adjusted diluted earnings per share on continuing operations declined by 16% to 10.2 cents compared to 12.2 cents for H2 2010. Although revenues are in line with H2 2010, adjusted profit after tax from continuing activities is $41 million lower as: net gains/losses on investments and other financial instruments are $39 million lower; share of profit from associates is $12 million lower; net finance expense is $20 million higher; partly offset by sales commission and operating costs being $32 million lower.

Post tax return on shareholders' equity (ROE)

ROE measures the efficiency with which we invest or return our capital. ROE has declined to 7.1% from 10.1% for the 2010 financial year, driven primarily by the reduction in net profits as a result of lower gross income, partly offset by a reduction in operating expenses. Average shareholders' equity decreased by $200 million, reflecting the final dividend payment to shareholders in relation to 2010 in excess of the earnings for the period.

FUNDS UNDER MANAGEMENT REVIEW

We have set out below a review of funds under management in the period to 30 September 2010, including margins. Consistent with how our last annual report was structured, we have presented other aspects of the financial review within the interim financial statements. We believe that this integrated approach is more relevant to the users of the financial information and complies with the objectives of the Companies Act.

Funds under management (FUM)

Man provides investment management services to third party investors and fund entities. The fund entities have independent boards of directors with independent governance and decision making powers, including the ability to remove the investment manager. The fund entities' investment performance, assets and liabilities are therefore separate from the Group and are not consolidated into the Group's financial statements.

Funds under management are a key driver of the Group's results and prospects, as FUM forms the basis on which the Group's revenue is generated. Our strategy is to grow funds under management while maintaining our revenue margin.

Movements in FUM during the period to 30 September 2010 are shown below:

	Private Investor			Institutional	Total
	Guaranteed	Open-ended	Total
	$bn	$bn	$bn	$bn	$bn
Opening FUM - 1 April 2010	14.0	12.8	26.8	12.6	39.4
Sales	0.2	0.3	0.5	0.2	0.7
Redemptions	(0.6)	(0.5)	(1.1)	(0.6)	(1.7)
Net sales	(0.4)	(0.2)	(0.6)	(0.4)	(1.0)
Investment movement	0.2	0.1	0.3	(0.1)	0.2
Foreign currency movement	(0.5)	(0.2)	(0.7)	(0.4)	(1.1)
Other	1.5	(0.2)	1.3	(0.3)	1.0
30 June 2010	14.8	12.3	27.1	11.4	38.5
Sales	0.1	0.5	0.6	0.8	1.4
Redemptions	(0.7)	(0.6)	(1.3)	(0.7)	(2.0)
Net sales	(0.6)	(0.1)	(0.7)	0.1	(0.6)
Investment movement	0.3	1.0	1.3	0.2	1.5
Foreign exchange movement	0.7	0.4	1.1	0.8	1.9
Other	(0.4)	(0.4)	(0.8)	-	(0.8)
Closing FUM - 30 September 2010	14.8	13.2	28.0	12.5	40.5
Growth in FUM in H1 2011	+6%	+3%	+4%	-1%	+3%

Private investor FUM increased by 4% during the period to 30 September 2010 primarily as a result of positive fund product performance partly offset by negative net sales. Institutional FUM reduced by 1% as a result of redemptions exceeding modest sales in the first quarter, although positive net sales were recorded in the second quarter.

Sales and redemptions

A further analysis of sales and redemptions is given below, together with redemption rates:

Private investor	Q2 2011	Q1 2011	H1 2011	H2 2010	H1 2010
Sales ($bn): · Guaranteed · Open-ended	0.1 0.5	0.2 0.3	0.3 0.8	0.1 1.6	1.3 3.7
	0.6	0.5	1.1	1.7	5.0
Redemptions ($bn): · Guaranteed · Open-ended	0.7 0.6	0.6 0.5	1.3 1.1	0.7 1.7	0.9 1.4
	1.3	1.1	2.4	2.4	2.3
Annualised redemptions/average FUM: · Guaranteed · Open-ended	18.9% 18.8%	16.7% 15.9%	18.1% 16.9%	9.5% 25.6%	11.4% 22.2%

Private investor sales were $1.1 billion for the first half. The majority of the flows came from open-ended AHL formats and from onshore regulated products.

Private investor redemptions for the first half, at $2.4 billion, were in line with recent semi-annual periods, with a decrease in open-ended redemptions being offset by an increase in guaranteed products. Annualised redemption rates for guaranteed products are running slightly higher than historical levels, whilst annualised redemption rates for open-ended products are running at slightly lower than historical levels.

Institutional - quarterly fund flows for 2010	Q2 2011	Q1 2011	H1 2011	H2 2010	H1 2010
Sales ($bn)	0.8	0.2	1.0	0.9	0.7
Redemptions ($bn)	0.7	0.6	1.3	2.8	5.3
Annualised redemptions/ average FUM	23.4%	20.0%	20.7%	41.0%	63.0%

Institutional sales have remained muted as institutional allocators, particularly in Europe, have remained out of the market, although an increase in sales was evidenced in the second quarter of the period as previously announced institutional mandates began to allocate. Redemptions have continued to show a significant decline, with the level of notified quarterly redemptions for 1 October 2010 at below $200 million.

Investment movement

The aggregate investment movement was a positive $1.7 billion for the first half, largely relating to private investor products and to AHL in particular. The investment performance of our investment managers is described in the Chief Executive's Review.

Foreign exchange impact of funds under management

Funds under management denominated in foreign currencies increased as a result of a weaker US dollar during the period. The foreign exchange composition of FUM is similar to that at the year-end.

Other movements

Other movements reflect the change in leverage as a result of the routine re-balancing of investment exposure in the guaranteed product range. Positive performance in AHL was the primary cause of the increase in private investor FUM as a result of this rebalancing. Removal of leverage in institutional products prior to redemptions resulted in a small reduction in FUM during the period.

Margins

Gross management and other fees represent management fees earned on funds under management, management fees from associates and joint ventures, interest on loans to funds and other fees. In the table below we have shown gross margins both including and excluding interest income earned on loans to funds, as the level of loans to funds can change based on the requirements of the product to re-balance. Gross margins are also shown to indicate the margin after deducting sales commission costs.

The gross management and other fees margin (before interest income) for private investors was 433 bp, compared to 424 bp for 2010. The reason for the small increase is a 6 bp increase in the contribution from associates and slightly higher redemption fee income, reflecting the higher redemptions in the period on guaranteed products. The impact of associates adds 20 bp to the overall private investor gross margin. The impact of higher redemption fee income is offset by a higher charge in H1 2011 in respect of upfront sales commission related to these redemptions.

The gross margin on guaranteed products is approximately 480 bp and approximately 350 bp on open-ended products. The margins net of sales commission costs are 353 bp and 260 bp for guaranteed and open-ended products respectively. The difference between the two margins primarily relates to a structuring fee earned on guaranteed products. The increase in the gross margin on guaranteed products compared to 2010 primarily results from higher redemption fee income received on guaranteed products in the period. Open-ended margins are consistent with previous periods.

H1 2011	Guaranteed	Open-ended	Associates	Private Investor Total
Average FUM ($bn)	14.4	12.8	-	27.2

Gross management and other fees ($m)	345	223	27	595
Sales commission costs ($m)	(91)	(57)	-	(148)

Gross management fee margin (%)	4.80	3.50	-	4.39
Net margin after sales commission costs (%)	3.53	2.60	-	3.30

The gross management and other fees margin for institutional investors was 100 bp, slightly up on the 93 bp for 2010. The primary reason for the increase relates to additional management fee income earned following the achievement of net asset value thresholds in certain credit funds.

During 2010 we merged the three fund of funds businesses, RMF (previously the institutional business) and Glenwood and MGS (previously part of the private investor business) into one Multi Manager business. As a result the investment management infrastructure was merged into one covering both private and institutional assets. While the FUM remains identifiable between private and institutional investors, it is not practicable to specifically allocate the investment management infrastructure costs across the two investor types. As at the prior year-end, we have therefore shown the aggregate net management fee margins at the Group level.

At the Group level, the net management and other fees margin is after deducting all costs but excludes net finance expense/income, and also the adjusting items, which are deemed to be non-recurring. The net management fee margin for the Group has increased to 121 bp from 112 bp for the prior year. This increase is as a result of a mix change between private investor and institutional FUM. Private investor FUM, which is higher margin, is a greater proportion of total FUM compared to the prior year.

	H1 2011	H2 2010	H1 2010	FY 2010	2009	2008
Average FUM in period ($bn)
Private investor	27.2	27.8	27.8	27.8	38.4	39.6
Institutional	11.7	14.2	15.4	14.8	26.7	29.7
	38.9	42.0	43.2	42.6	65.1	69.3
Private investor
Gross management and other fees† ($m)	595	601	593	1,194	1,662	1,771
Interest income earned from funds ($m)	8	8	8	16	50	74
Sales commission costs ($m)	(148)	(171)	(139)	(310)	(398)	(374)

Gross management fee margin (%)	4.39	4.32	4.27	4.30	4.33	4.47
Gross management fee margin before interest income from funds (%)	4.33	4.27	4.21	4.24	4.20	4.29
Net margin after sales commission (%)	3.30	3.10	3.27	3.18	3.29	3.53

Institutional
Gross management and other fees† ($m)	59	67	70	137	252	297
Sales commission costs ($m)	(8)	(8)	(7)	(15)	(12)	(18)

Gross management fee margin (%)	1.00	0.94	0.91	0.93	0.94	1.00
Net margin after sales commission (%)	0.87	0.83	0.82	0.83	0.90	0.94

Group Total
Net management fee margin after deducting all expenses* (%)	1.21			1.12	1.33	1.52

†Includes management and other fee income from associates
*Net management fee income is before net finance income and excludes adjusting items

Risk Management

One of Man's key objectives is to be a leader in risk management, governance and business sustainability. Risk management is an essential component of both the investment management process for investors in our fund products and in our approach to maintaining a high quality, sustainable business for our shareholders. Our reputation is fundamental to our business and maintaining our corporate integrity is the responsibility of everyone at Man. Our approach is to identify, monitor and evaluate risk throughout the Group and to manage these risks within our risk appetite. We maintain sufficient excess capital and substantial liquidity resource to give us flexibility both to continue to finance long term growth and to operate the business effectively under market stress situations.

The principal risks and uncertainties faced by Man are summarised in our 2010 Annual Report on pages 23-25. These risks and our response to them have not changed significantly from that described in our Annual Report, with the exception of the risks associated with the GLG acquisition and integration, which are described below.

On 14 October 2010 the GLG acquisition was closed for a purchase price aggregating $1.7 billion. This included cash of $692 million paid to the non affiliated shareholders and 162.7 million new Man Group shares with a value of $693 million issued to the founders, together with their related trusts and affiliates. In addition, we expect that all of the holders of the GLG convertible debt will exercise their right to convert their securities into an amount of cash based on the merger consideration at a total cost of approximately $300 million (which is included in the $1.7 billion purchase price).

The acquisition goodwill will be supported by Tier 1 capital comprising shareholders equity. The liquidity position continues to be strong. The capital in excess of the regulatory capital requirements for the enlarged group is approximately $300 million. The Board monitors this excess giving consideration to the current and future needs of the business and considers the amount appropriate.

Following the closing of the acquisition, $286 million of GLG bank loans were repaid. Man's cash and cash equivalents balance post-closing and after the settlement of these amounts will be approximately $1.8 billion. The $2.4 billion committed facility was drawn during the six months ended 30 September 2010 a total of 31 days at an average balance of $400 million. At 30 September 2010 the facility was undrawn and continued to be available.

Prior to the closing of the GLG acquisition Moody's, S&P and Fitch indicated that on completion they would reduce the long-term rating by one rating level and return the rating to a stable outlook. The post-completion credit ratings are Moody's: Baa2, S&P BBB and Fitch BBB. All credit ratings were placed on Stable outlook. None of Man's issued debt or committed facility has provisions requiring the maintenance of minimum credit rating levels. Likewise none of the fund product financing arrangements or settlement agreements are affected by Man's rating.

The integration of the GLG business into Man increases the risks outlined in the 2010 Annual Report relating to 'Risk management process in the investment manager', in particular the increased level of discretionary trading strategies, and 'Loss of key individuals', such as fund managers, over the next six months. Prior to closing the GLG acquisition, senior management from all areas of the business have been active in planning the integration, and identifying and mitigating integration risks. The Management Committee and the Risk Assurance Committee have reviewed the integration plans and implementation, and the new Man Executive Committee will continue to monitor progress post completion. The Audit and Risk Committee and the Board have been periodically updated on progress and given the opportunity to challenge the integration planning. Significant progress has been made in integrating the two businesses as described in the Chief Executive's Review.

There is currently a debate at the regulatory level regarding remuneration, in particular relating to the proportion and format of deferred compensation for individuals in certain roles. The outcome of these discussions could increase the risk of not being able to attract and retain key individuals. We are reviewing the various proposals so that we can respond and maintain our competitive position.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors confirm that this condensed set of financial statements in respect of Man Group plc for the period ended 30 September 2010 has been prepared in accordance with IAS 34 as adopted by the European Union, and that the half year review herein includes a fair view of the information required by the Financial Services Authority's Listing Rules, including the Disclosure and Transparency Rules 4.2.7 and 4.2.8, namely:

· an indication of important events that have occurred during the six months ended 30 September 2010 and their impact on the condensed interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

· material related party transactions in the six months ended 30 September 2010 and any material changes in the related party transactions described in the last annual report.

The Directors of Man Group plc are as listed in the Annual Report for 31 March 2010.

By order of the Board

Peter Clarke

Chief Executive

4 November 2010

Kevin Hayes

Finance Director

4 November 2010

INTERIM FINANCIAL STATEMENTS

Group Balance Sheet

		At 30 September 2010	At 31 March 2010	At 30 September 2009
	Note	$m	$m	$m
ASSETS
Cash and cash equivalents	12	2,802	3,229	2,139
Trade and other receivables		347	320	466
Investments in fund products	2	950	784	1,132
Other investments	2	40	72	55
Investments in associates and joint ventures		333	351	347
Property, plant and equipment		93	72	76
Pension asset		73	69	-
Other intangible assets	11	267	337	389
Goodwill	1	804	798	795
Total assets		5,709	6,032	5,399
LIABILITIES
Trade and other payables		401	376	436
Current tax liabilities		193	180	231
Borrowings	13	1,442	1,489	645
Total liabilities		2,036	2,045	1,312
NET ASSETS		3,673	3,987	4,087

EQUITY
Capital and reserves attributable to owners of the parent	14	3,673	3,987	4,087
Total equity		3,673	3,987	4,087

Group Income Statement

For the period ended	Note	Half year to 30 September 2010 $m		Half year to 31 March 2010 $m	Half year to 30 September 2009 $m

Revenue:
Performance fees	3	24		9	43
Management and other fees	3	627		644	649
		651		653	692
(Losses)/gains on investments and other financial instruments	4	(1)		38	1
Sales commissions		(156)		(179)	(146)
Compensation	6	(165)		(151)	(179)
Restructuring costs - compensation	5	(11)		(8)	(11)
Total compensation costs		(176)		(159)	(190)
Other costs Restructuring costs - other GLG acquisition costs	7 5 5	(105) (11) (25)		(128) (21) -	(104) (13) -
Total other costs		(141)		(149)	(117)
Share of after tax profit of associates and joint ventures		27		39	31
Gain arising from residual interest in brokerage assets	5	-		-	34
Finance income	8	15		16	13
Finance expense	8	(39)		(20)	(16)
Profit before tax from continuing operations		180		239	302
Taxation	9	(38)		(42)	(54)
Profit after tax from continuing operations		142		197	248
Discontinued operations - brokerage	5(b)	(33)		-	-
Profit for the period		109		197	248
Attributable to:
Owners of the parent		109		197	248
Earnings per share from continuing operations:	10
Basic (cents)		7.7		11.0	14.1
Diluted (cents)		7.6		10.9	13.8
Earnings per share from continuing and discontinued operations:	10
Basic (cents)		5.8		11.0	14.1
Diluted (cents)		5.7		10.9	13.8
*Reconciliation of adjusted profit before tax from continuing operations*
Profit before tax from continuing operations			180	239	302
Adjusting items:	5(a)
Restructuring costs - compensation			11	8	11
Restructuring costs - other GLG acquisition costs			11 25	21 -	13 -
Gain arising from residual interest in brokerage assets			-	-	(34)
			47	29	(10)
Adjusted profit before tax from continuing operations			227	268	292
Adjusted earnings per share from continuing operations:	10
Adjusted Basic (cents)			10.3	12.4	13.4
Adjusted Diluted (cents)			10.2	12.2	13.1

Group Statement of Comprehensive Income

	Half year to 30 September 2010 $m	Half year to 31 March 2010 $m	Half year to 30 September 2009 $m

Profit for the period	109	197	248
Other comprehensive income/(expense)
Available for sale investments:
Valuation (losses)/gains taken to equity	(8)	19	43
Transfer to income statement on sale or impairment	28	(1)	(65)
Foreign currency translation adjustments	32	(9)	109
Tax credited/(charged) through other comprehensive income	1	(2)	7
Other comprehensive income for the period, net of tax	53	7	94
Total comprehensive income for the period	162	204	342

Attributable to:
Owners of the parent	162	204	342

Group Statement of Changes in Equity

	Equity attributable to shareholders of the Company
Half year to 30 September 2010	Share capital and capital reserves	Revaluation reserves and retained earnings	Total
	$m	$m	$m
At 1 April 2010	2,626	1,361	3,987
Profit for the period	-	109	109
Other comprehensive income	-	53	53
Perpetual capital securities coupon	-	(12)	(12)
Share-based payments	2	(25)	(23)
Dividends	-	(441)	(441)
At 30 September 2010 (Note 14)	2,628	1,045	3,673

Half year to 31 March 2010
At 1 October 2009	2,623	1,464	4,087
Profit for the period	-	197	197
Other comprehensive income	-	7	7
Perpetual capital securities coupon	-	(12)	(12)
Share-based payments	3	26	29
Disposal of business	-	5	5
Dividends	-	(326)	(326)
At 31 March 2010	2,626	1,361	3,987

Half year to 30 September 2009
At 1 April 2009	2,608	1,584	4,192
Profit for the period		248	248
Other comprehensive income	-	94	94
Perpetual capital securities issued	-	(12)	(12)
Share-based payments	15	(31)	(16)
Dividends	-	(419)	(419)
At 30 September 2009	2,623	1,464	4,087

Group Cash Flow Statement

		Half year to 30 September 2010		Half year to 31 March 2010	Half year to 30 September 2009
	Note	$m		$m	$m
Cash flows from operating activities
Cash generated from operations	12	215		610	311
Interest paid		(11)		(12)	(14)
Income tax paid		(32)		(72)	(69)
Cash flows from operating activities - continuing operations		172		526	228
Cash flows from operating activities - discontinued operations			(32)	-	-
Cash flows from operating activities - total Group		140		526	228
Cash flows from investing activities
Purchase of property, plant and equipment		(27)		(20)	(24)
Purchase of intangible assets		(40)		(60)	(95)
Purchase of other investments		(6)		(2)	(41)
Proceeds from sale of other investments		9		100	153
Interest received		14		16	10
Dividends received from associates and other investments		54		22	26
Cash flows from investing activities - continuing operations		4		56	29
Cash flows from financing activities
Proceeds from issue of ordinary shares		2		3	15
Purchase of own shares by ESOP trust		(59)		(2)	(59)
Proceeds from borrowings net of issue costs		231		813	-
Repayment of borrowings		(232)		(17)	-
Dividends paid to Company shareholders		(441)		(326)	(419)
Dividend payments in respect of capital securities		(17)		(16)	(17)
Cash flows from financing activities - continuing operations		(516)		455	(480)
Net (decrease)/increase in cash and bank overdrafts		(372)		1,037	(223)
Cash and bank overdrafts at the beginning of the period		3,174		2,137	2,360
Cash and bank overdrafts at the end of the period		2,802		3,174	2,137

For the purposes of the cash flow statement, cash and cash equivalents are included net of overdrafts repayable on demand. These overdrafts are included in borrowings disclosed on the balance sheet. At 30 September 2010 overdrafts repayable on demand amounted to $nil (31 March 2010: $55 million; 30 September 2009: $2 million).

Basis of preparation

The interim financial statements for the half year to 30 September 2010 have been prepared in accordance with IAS 34 'Interim Financial Reporting' and the Disclosure and Transparency Rules of the Financial Services Authority.

The financial information contained herein is unaudited and does not constitute statutory accounts as defined by Section 434 of the Companies Act 2006. Statutory accounts for the year to 31 March 2010, which were prepared in accordance with International Financial Reporting Standards (IFRS) and relevant IFRIC interpretations issued by the International Accounting Standards Board (IASB) and IFRIC Committee respectively and adopted by the European Union (EU) and upon which the auditors have given an unqualified and unmodified report and which contained no statement under Section 498 of the Companies Act 2006, have been delivered to the Registrar of Companies and were posted to shareholders on 7 June 2010.

The accounting policies applied in these interim financial statements are consistent with those set out and applied in the Group's Annual Report for the year ended 31 March 2010, except for the adoption of new standards and amendments to existing standards, which have had no significant impact on the measurement of the result or financial position of the Group, except as noted below.

The most significant new standard or amendment to existing standards effective for the financial year ending 31 March 2011 is IFRS 3 'Business Combinations'. In relation to the acquisition of GLG, the implementation of IFRS 3 requires the costs relating to the business combination to be expensed in the income statement (where previously these costs were capitalised).

The income statement and cash flow statement presentation in these interim financial statements shows the first half of the current financial year (H1 2011) together with both the second half of the prior year (H2 2010) and the first half of the prior year (H1 2010). Funds under management (FUM) are the key driver of Man's economics and as FUM decreased between the first and second halves of the prior financial year, and given that our business is not seasonal, the second half of the prior year is considered to be a more relevant comparator for the first six months of the current financial year and hence the commentary and explanations for movements in the notes to the financial statements uses this period as the primary comparator.

Notes to the interim Group Financial Statements

1. Goodwill

	Goodwill
	$m
Net book value
At 1 April 2010	798
Currency translation difference	6
Net book value at 30 September 2010	804
Made up as follows:
AHL	78
Multi-Manager Business	726

Net book value at 31 March 2010	798
Net book value at 30 September 2009	795

The Group has two identified cash generating units for impairment review purposes: AHL and the Multi-Manager Business (MMB).

In respect of the MMB cash generating unit, FUM has remained stable compared to the year end, there have been positive signs of asset growth from recent mandate wins and the pipe line of structured products managed by the MMB is more positive. However the growth in FUM from mandate allocations and direct sales for the six months to 30 September 2010 has been lower than expected.

The value in use of the MMB goodwill was reassessed at 30 September 2010 by applying a discounted future cash flow modelto reflect lower sales revenue expectations and partially offsetting future reduced direct and allocated costs. The investment return assumptions have been reduced based on current experience.

The value in use analysis at 30 September 2010 implies that there is currently minimal headroom over the carrying value of the MMB goodwill. The time over which the MMB is expected to realise the full benefits from the new business platform is likely to extend beyond the current financial year, and therefore there is an increased risk that an impairment charge may be triggered in future periods prior to the full benefits being achieved. The sensitivities around the key assumptions applied in the discounted cash flow model highlight that the value in use calculation used to support the MMB goodwill continues to be dependent on the timing of sales being realised and the sales budget being achieved, together with the implementation of future expected cost savings, as below:

· If sales were 33% lower than budget for the financial year ended 31 March 2012, an impairment of around $290 million would arise; and

· If only 50% of the future direct and allocated cost reductions are implemented, an impairment of around $250 million would arise.

If such an accounting charge were made there would be no change in the cash resources or excess regulatory capital position of Man.

2. Investments in fund products and other investments

	At 30 September 2010	At 31 March 2010	At 30 September 2009
	$m	$m	$m
Investments in fund products comprise:
Amounts owed by fund products	515	373	372
Other investments in fund products	435	411	760
	950	784	1,132
Other investments comprise:
Investment in Ore Hill DI portfolio	36	67	49
Exchange shares	4	4	5
Other equity investments	-	1	1
	40	72	55

The Group uses fair values to measure its investments in fund products and other investments on the balance sheet. These fair values are derived from the reported Net Asset Values (NAVs) of each of the fund products, which in turn are based upon the value of the underlying assets held within each product, as determined by external valuation service providers (VSP). Whilst these valuations are performed independently of the Group, the Group has established oversight procedures to ensure that the NAVs reported by the VSP are reliable and appropriate. The Group makes adjustments to NAVs where events or circumstances indicate that the NAVs are not reflective of fair value.

There are certain other assets, for example the Ore Hill DI portfolio, where the Group establishes the fair value by using valuation techniques to calculate fair values, including comparisons with similar financial instruments for which observable prices exist and discounted cash flow analysis.

Given the uncertainty and subjective nature of valuing assets at fair value, it is possible that the outcomes within the next financial period could be different from the assumptions used and this could result in a significant adjustment to the carrying amount of assets and liabilities measured using fair values.

Other investments in fund products

	At 30 September 2010	At 31 March 2010	At 30 September 2009	Gain/(loss) in H1 2011
	$m	$m	$m	$m
MMB	228	224	457	3
AHL seeding	53	43	121	9
Other seeding	74	65	65	17
	355	332	643	29
Secondary market	13	10	57	1
Sales support	14	14	28	1
Other investments	53	55	32	2
	80	79	117	4
Total	435	411	760	33

Additions in the seeding portfolio broadly offset disposals in the period. The current level of investments in fund products continues to reflect the Board's strategy to manage the level of balance sheet exposure in the current volatile market conditions.

In addition, the Group makes available both committed and uncommitted short-term loans to fund products, with the intention of providing temporary funding until more permanent financing structures are put in place with external providers. Accordingly, the amounts owed by fund products will vary from one period to the next as a consequence of the net effect of the level of sales in the period, fund product performance and the quantum of the external re-financing initiative in the period. Amounts owed by fund products at 30 September 2010 were $515 million (31 March 2010: $373 million), reflecting additional rebalancing in the structured products based on positive performance from AHL. The average amount owed by fund products during the interim period ended 30 September 2010 was $591 million (H2 2010: $601 million; H1 2010: $517 million).

The Group owns an investment in Ore Hill's DI portfolio, which holds long-term interests of a less liquid nature in a number of underlying entities. The decrease in the Group's investment since 31 March 2010 relates to sales and to a reduction in the carrying value of some of the remaining underlying investments.

3. Revenue

Revenue for the six months to 30 September 2010 was $651 million, which is in line with $653 million in H2 2010.

Revenue from performance fees increased from $9 million in H2 2010 to $24 million in the half year, primarily as a result of stronger performance during the period from AHL compared to the preceding period.

Management fee revenue for the period was $627 million, compared to $644 million in the H2 2010. Gross management and other fees have decreased 3%. Average FUM for the period has declined, although the impact of this is partly offset by a higher proportion of higher margin private investor FUM in this period compared to H2 2010. An analysis of the movements in FUM in the period and margin analysis can be found in the 'Funds under management review' section above.

4. (Losses)/gains on investments and other financial instruments

Net (losses)/gains on investments and other financial instruments amounted to a net loss of $1 million. This includes net gains from fair value movements and disposals of $35 million offset by impairment charges on Other investments.

5. Income statement presentation

(a) The Group presents separately on the face of the income statement in accordance with IAS 1 (Revised) paragraph 97 those items which the directors consider material.

	Note	Half year to 30 September 2010 $m	Half year to 31 March 2010 $m	Half year to 30 September 2009 $m

Restructuring costs - compensation	(i)	(11)	(8)	(11)
Restructuring costs - other	(i)	(11)	(21)	(13)
GLG acquisition costs	(ii)	(25)	-	-
Gain arising from residual interest in brokerage assets	(iii)	-	-	34
		(47)	(29)	10

(i) Restructuring costs

During H1 2011, a charge of $22 million for restructuring costs has been taken, mostly associated with rationalisation of the existing Man business, including redundancy and consultancy fees as well as onerous contract provisions in respect of leasehold properties.

(ii) GLG acquisition costs

Costs of $25 million in relation to the GLG acquisition, which completed on 14 October 2010, have been recognised in the period. These costs primarily relate to legal fees, reporting accountants' fees and advisor fees.

(iii) Gain arising from residual interest in brokerage assets

In August 2009 the Group sold its remaining stake in MF Global resulting in a net gain of $34 million.

(b) Discontinued operations - brokerage

As previously disclosed in our 2009 Annual Report (Note 25): in April 2009, MF Global claimed $30 million relating to certain financial adjustments in relation to their closing IPO balance sheet at July 2007. At that time, Man Group and MF Global agreed a process for concluding a final and binding settlement of all financial adjustments relating to the IPO. That process was concluded in March 2008 and based on legal advice we considered that Man Group had no further liability. The matter was referred to arbitration in accordance with the IPO transactional documentation. In September 2010, the arbitrator found in favour of MF Global and made an award totalling $33 million. This has the consequence of reducing the gain on sale previously recorded by Man in July 2007.

6. Compensation

	Half year to 30 September 2010	Half year to 31 March 2010	Half year to 30 September 2009
	$m	$m	$m
Wages and salaries - fixed	73	70	75
Wages and salaries - variable	39	32	60
Share-based payment charge	29	27	23
Social security costs	9	17	9
Pension costs	15	5	12
	165	151	179

The Group continues to maintain tight controls and cost flexibility in the total expense base and in particular compensation expense. Management's aim is to pay competitive total compensation based on market levels, with the bonus element being a more significant component. The bonus component is directly linked to the overall performance of the business and is established by the Remuneration Committee of the Board.

The increase in pension costs from H2 2010 is due to the settlement of pension liabilities in the UK defined benefit plan through the offer of an enhanced transfer value to deferred members. This will have the effect of reducing the risk of increasing pension contributions in the future. The increase in variable wages and salaries from H2 2010 reflects a higher amortisation charge in relation to employee share awards.

In addition to the amounts shown above, $20 million (H2 2010: $24 million; H1 2010: $18 million) of sales commissions relating to employees are included in the Group income statement charge for upfront sales commissions (Note 11).

7. Other costs

	Half year to 30 September 2010 $m	Half year to 31 March 2010 $m	Half year to 30 September 2009 $m
Occupancy	23	19	21
Travel and entertainment	6	7	7
Technology	14	18	10
Communication	7	7	6
Consulting and professional services	14	21	15
Depreciation and amortisation	22	24	21
Charitable donations	1	1	2
Other	18	31	22
Total other costs	105	128	104

Total other costs have decreased to $105 million from $128 million in H2 2010, primarily due to lower marketing costs and a reduction in staff recruitment, relocation and travel costs. In H1 2011, occupancy costs include $3 million of rental costs relating to Riverbank House, the Company's new London headquarters, which is currently being fitted out with the intention that it will be occupied in May/June 2011.

8. Finance income and finance expense

	Half year to 30 September 2010 $m	Half year to 31 March 2010 $m	Half year to 30 September 2009 $m
Finance income:
Interest on cash deposits	14	13	9
Finance fees	-	(1)	1
Other	1	4	3
	15	16	13
Finance expense:
Interest payable on borrowings	(37)	(18)	(15)
Amortisation of issue costs on borrowings and other	(2)	(2)	(1)
	(39)	(20)	(16)
Net finance expense	(24)	(4)	(3)

Net finance expense includes interest expense on borrowings and other debt of $39 million (H2 2010: $20 million), reflecting increased borrowing following the issue of €600 million Fixed Rate Notes on 18 February 2010, which have a coupon of 6.0% per annum (Note 13).

9. Taxation

	Half year to 30 September 2010 $m	Half year to 31 March 2010 $m	Half year to 30 September 2009 $m
Taxation charge for the period
UK	22	19	36
Overseas	16	23	18
	38	42	54

The tax charge for the period amounts to $38 million. The effective tax rate on profits from continuing operations before adjusting items is 18.5% (2010 full year: 18.6%), reflecting the estimated rate for the full year. The effective tax rate on continuing operations including adjusting items is 21.1% (2010 full year: 17.7%), reflecting the tax effect of the restructuring costs and the GLG acquisition costs. The majority of the Group's profit continues to be earned in Switzerland and the UK, and the forecast full year effective tax rate is consistent with this profit mix.

10. Earnings per share (EPS)

The calculation of basic earnings per ordinary share and diluted earnings per ordinary share is based on a profit for the period of $130 million (H2 2010: profit of $185 million; H1 2010: profit of $236 million) for continuing operations and a profit for the period of $97 million (H2 2010: profit of $185 million; H1 2010: profit of $236 million) for continuing and discontinued operations.

The calculation of basic earnings per ordinary share is based on 1,680,811,576 (H2 2010: 1,678,713,219; H1 2010: 1,677,533,021) ordinary shares, being the weighted average number of ordinary shares in issue during the period after excluding the shares owned by the Man Group plc employee trusts.

For diluted EPS, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The calculation of diluted earnings per ordinary share is calculated as shown in the following table:

	Half year ended 30 September 2010 Number	Half year ended 31 March 2010 Number	Half year ended 30 September 2009 Number
	(millions)	(millions)	(millions)
Basic weighted average number of shares	1,680.8	1,678.7	1,677.5
Dilutive potential ordinary shares
Share awards under incentive schemes	19.4	21.9	29.7
Employee share options	0.1	-	0.5
Dilutive weighted average number of shares	1,700.3	1,700.6	1,707.7

The reconciliation of earnings per share to an adjusted EPS is given below:

	Half year ended 30 September 2010
	Basic post-tax earnings $m	Diluted post-tax earnings $m	Basic earnings per share cents	Diluted earnings per share cents
Earnings per share on continuing and discontinued operations*	97	97	5.8	5.7
Discontinued operations - brokerage	33	33	1.9	1.9
Earnings per share on continuing operations*	130	130	7.7	7.6
Items for which EPS has been adjusted (Note 5(a)(i) and 5(a)(ii))	47	47	2.8	2.8
Tax on the above items	(4)	(4)	(0.2)	(0.2)
Adjusted Earnings per share	173	173	10.3	10.2

	Half year ended 31 March 2010
	Basic post-tax earnings $m	Diluted post-tax earnings $m	Basic earnings per share cents	Diluted earnings per share cents
Earnings per share on continuing operations*	185	185	11.0	10.9
Items for which EPS has been adjusted (Note 5(a)(i))	29	29	1.8	1.7
Tax on the above items	(6)	(6)	(0.4)	(0.4)
Adjusted Earnings per share	208	208	12.4	12.2

	Half year ended 30 September 2009
	Basic post-tax earnings $m	Diluted post-tax earnings $m	Basic earnings per share cents	Diluted earnings per share cents
Earnings per share on continuing operations*	236	236	14.1	13.8
Items for which EPS has been adjusted (Note 5(a)(i) and 5(a)(iii))	(10)	(10)	(0.7)	(0.7)
Tax on the above items	(2)	(2)	-	-
Adjusted Earnings per share	224	224	13.4	13.1

* The difference between profit after tax and basic and diluted post-tax earnings is the adding back of the expense in the period of $12 million (post-tax) relating to the perpetual subordinated capital securities (see Note 14).

11. Other intangible assets

	Other intangible assets
	Upfront sales commissions	Other	Total
	$m	$m	$m
Net book value
At 1 April 2010	278	59	337
Additions	23	17	40
Redemptions/disposals	(24)	(5)	(29)
Reclassifications	-	(11)	(11)
Charge for the period	(60)	(10)	(70)
Net book value at 30 September 2010	217	50	267
Net book value at 31 March 2010	278	59	337
Net book value at 30 September 2009	337	52	389

Certain technology assets have been reclassified from intangible assets to property, plant and equipment in the period.

Sales commissions

Sales commissions expense during the period comprised the following:

	Half year to 30 September 2010	Half year to 31 March 2010	Half year to 30 September 2009
	$m	$m	$m
Upfront sales commissions	87	97	74
Trail commissions	69	82	72
	156	179	146

Included in sales commissions is $60 million relating to the amortisation of upfront commissions ("placement fees"), $24 million relating to redeemed products, and $3 million which was expensed immediately, compared to $97 million in total in H2 2010, and $69 million relating to trail commission ("servicing fees"), compared to $82 million in H2 2010. As disclosed in the 2010 Annual Report (Note 10), commission costs in the 2010 financial year included $30 million of non-recurring sales commission items, relating to both upfront and trail commissions, the majority of which were incurred in the second half.

12. Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and deposits held on call with banks as follows.

	At 30 September 2010			At 31 March 2010			At 30 September 2009
	Over night $m	2-90 days $m	Total $m	Over night $m	2-90 days $m	Total $m	Over night $m	2-90 days $m	Total $m
Cash at bank and in hand	136	21	157	178	36	214	158	34	192
Short-term deposits	-	2,645	2,645	2	3,013	3,015	-	1,947	1,947
	136	2,666	2,802	180	3,049	3,229	158	1,981	2,139

Cash balances decreased $427 million in the period to $2,802 million. Net of borrowings and issued debt the net cash position at 30 September 2010 was $1,360 million, down from $1,740 million at the end of the prior year. The movement in cash is analysed in the cash flow statement. The decrease of $380 million in the Group's net cash position during the period is primarily the result of: the payment of the final dividend in respect of the financial year ended 31 March 2010 of $441 million; the purchase of shares by the employee trust to fund employee share awards of $59 million; partly offset by cash flows generated from operating activities of $140 million.

Cash generated from continuing operations was as follows:

	Half year ended 30 September 2010	Half year ended 31 March 2010	Half year ended 30 September 2009
	$m	$m	$m
Profit for the period - continuing operations	142	197	248
Adjustments for:		-
Income tax	38	42	54
Loss on sale of subsidiary	2	6	-
Finance income	(15)	(16)	(13)
Finance expense	39	20	16
Share of results of associates and joint ventures	(27)	(39)	(31)
Depreciation of tangible fixed assets	13	23	11
Amortisation of intangible fixed assets	70	68	64
Share based payments expense	34	29	27
Fair value losses/(gains) on available for sale financial assets	28	-	(31)
Gain arising from residual interest in brokerage assets	-	-	(34)
Net gains on financial instruments	(1)	(6)	(17)
(Decrease)/increase in provisions	-	(6)	18
Other non-cash movements	32	59	14
	355	377	326
Changes in working capital:
(Increase)/decrease in receivables	(14)	85	30
(Increase)/decrease in other financial assets	(145)	208	(7)
Increase/(decrease) in payables	19	(60)	(38)
Cash generated from operations - continuing operations	215	610	311

13. Borrowings

	At 30 September 2010	At 31 March 2010	At 30 September 2009
	$m	$m	$m
Bank overdrafts	-	55	2
Fixed rate notes	1,043	1,034	244
Fixed rate notes - subordinated debt	231	-	-
Floating rate notes - subordinated debt	168	400	399
	1,442	1,489	645

On 9 August 2010, $231 million of the subordinated Floating Rate Notes were exchanged into a new seven year fixed rate lower tier two instrument with a fixed coupon of 5% (2017 Fixed Rate Notes). The Notes have a maturity date of 9 August 2017.

The subordinated Floating Rate Notes (FRN) consist of $168 million (H2 2010: $400 million) Eurobonds issued 21 September 2005 and due 22 September 2015. The Notes may be redeemed in whole at the option of the Group on any interest payment date falling on or after 22 September 2010, subject to FSA approval. The interest rate was 3-month US dollar LIBOR plus 1.15% until 22 September 2010 and thereafter is 3-month US dollar LIBOR plus 1.65%.

The maturities of borrowings at their contractual maturity dates are as follows:


	At 30 September 2010 $m	Less than 1 year $m	1-3 years $m	3-5 years $m	Over 5 years $m
Drawn
2013 Fixed Rate Notes 2015 Fixed Rate Notes 2017 Fixed Rate Notes	228 815 231	- - -	228 - -	- 815 -	- - 231
Subordinated FRN	168	-	-	168	-
	1,442	-	228	983	231

Undrawn

Committed syndicated loan facility	2,430	-	2,430	-	-
	3,872	-	2,658	983	231


	At 31 March 2010		Less than 1 year $m	1-3 years $m	3-5 years $m	Over 5 years $m
Drawn
Bank overdrafts		55	55	-	-	-
2013 Fixed Rate Notes 2015 Fixed Rate Notes		228 806	- -	228 -	- 806	- -
Subordinated FRN		400	-	-	-	400
	1,489		55	228	806	400

Undrawn

Committed syndicated loan facility	2,430	-	630	1,800	-
	3,919	55	858	2,606	400


	At 30 September 2009	Less than 1 year $m	1-3 years $m	3-5 years $m	Over 5 years $m
Drawn
Bank overdrafts	2	2	-	-	-
2013 Fixed Rate Notes	244	-	-	244	-
Subordinated FRN	399	-	-	-	399
	645	2	-	244	399

Undrawn

Committed syndicated loan facility	2,430	-	630	1,800	-
	3,075	2	630	2,044	399

14. Share capital and capital reserves

	At 30 September 2010	At 31 March 2010	At 30 September 2009
	$m	$m	$m
Share capital	59	59	59
Perpetual subordinated capital securities	300	300	300
Share premium account	977	975	972
Capital redemption reserve	1,292	1,292	1,292
Available for sale reserve	17	(3)	(19)
Retained earnings	1,028	1,364	1,483
	3,673	3,987	4,087

15. Contingent liabilities

On 28 February 2008, MF Global announced that it had incurred a significant credit loss. Following this disclosure a number of plaintiffs filed class action lawsuits in the US Federal Court against the Group, MF Global, certain of its officers and directors, and certain underwriters asserting various causes of action arising out of the US initial public offering. The consolidated class action complaint alleged claims under sections of the US Securities Act of 1933 and alleged, among other things, that the public disclosure documents for the offering contained false and misleading statements concerning risk management and trading risk controls at MF Global. The plaintiffs seek compensatory damages, rescission and attorneys' fees and expenses. On 16 July 2009, the US district court dismissed the case on the grounds that the plaintiffs had failed to identify any material misrepresentations or omissions in the disclosure documents. The plaintiffs appealed the ruling to the United States Court of Appeals.

On 14 September 2010, the Court of Appeals affirmed the district court's dismissal of certain of the plaintiffs' claims and vacated and remanded the ruling back to district court as to other claims for re-consideration based on a standard the Court of Appeals clarified. The claims subject to reconsideration by the district court include those questioning the accuracy of disclosures concerning MF Global's risk management system as it applied to trading in employee accounts.

In the district court, the Group, along with the other defendants, intend to move to dismiss plaintiffs' remaining claims on grounds not reached in the previous decisions. To the extent defendants' renewed motions to dismiss may be denied, further proceedings would ensue. The directors continue to believe that the Group complied with all applicable laws and regulations in connection with the initial public offering of MF Global.

16. Related party transactions

The related party transactions during the period are consistent with the categories disclosed in the Annual Report 2010.

Transactions with related parties included in the income statement during the financial year, in respect of associates and joint ventures were as follows:

	Half year to 30 September 2010	Half year to 30 September 2009
	$m	$m
Asset Management:
Performance fee income	3	5
Management and other fee income	100	220
	103	225

All transactions between related parties are carried out on an arm's length basis.

Receivable balances arising from transactions with related parties during the period, excluding key management compensation were as follows:

	At 30 September 2010	At 31 March 2010	At 30 September 2009
	$m	$m	$m
Asset Management:
Receivable from related entities	53	169	150

17. GLG Acquisition

On 17 May 2010, the Board announced that it had reached an agreement on the terms of the recommended acquisition of 100% of GLG Partners, Inc. (GLG) (the Acquisition). The Board believes that the Acquisition provides compelling strategic and commercial benefits including benefits arising from:

· The combination of two established investment management businesses with complementary investment strategies and the integration of sales, structuring and operations between the firms;

· A complementary geography of distribution franchises and investors, offering the opportunity to market products into new markets and to new investors; and

· The potential of the combined Group to add significant incremental funds under management through combining GLG's investment offering with Man's structuring and distribution expertise.

The Acquisition was structured as a cash merger transaction with respect to the GLG Public Stockholders and a share exchange transaction in respect of the GLG Exchange Shareholders (including the GLG Principals together with their related trusts and affiliates). The shareholders of Man approved the transaction on 1 September 2010 and the Acquisition was completed on 14 October 2010. A prospectus was filed on 8 October 2010 for the issuance of 162,732,446 new Man Group shares to the GLG Exchange Shareholders (including the GLG Principals together with their related trusts and affiliates). These shares were issued and allotted on 14 October 2010, and subject to the permitted sale of shares by Noam Gottesman and his related trusts to realise funds to satisfy tax liabilities incurred in connection with the Acquisition, will remain subject to the lock up agreements entered into by the GLG Principals and their related trusts.

The purchase consideration aggregated to $1.7 billion. This included cash of $0.7 billion paid to the non affiliated shareholders and 162.7 million new Man Group shares with a value of $0.7 billion were issued to the GLG Exchange Shareholders (including the GLG Principals together with their related trusts and affiliates). In addition, we expect that all the holders of the GLG convertible debt will exercise their right to convert their securities into an amount of cash based on the merger consideration at a total cost of approximately $300 million (which is included in the $1.7 billion purchase price).

The cash consideration payable was funded by existing cash resources and the Group continues to have a significant level of available liquidity. The consideration is likely to be almost entirely allocated to goodwill and other identifiable assets (for example, investment management contracts).

Independent review report to Man Group plc

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2010, which comprises the Group Income Statement, Group Statement of Comprehensive Income, Group Statement of Changes in Equity, Group Balance Sheet and Group Cash Flow Statement and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in the basis of preparation, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

The maintenance and integrity of the Man Group plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2010 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

PricewaterhouseCoopers LLP

Chartered Accountants

4 November 2010

London

This information is provided by RNS

The company news service from the London Stock Exchange

END

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