Final Results

RNS Number : 8497Y

Man Group plc

28 February 2013

Press Release

28 February 2013

RESULTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012

Key points

·	Funds under management (FUM) at 31 December 2012 of $57.0 billion (31 December 2011: $58.4 billion)
·	Sales of $12.8 billion, redemptions of $20.1 billion, FRM acquisition $8.3 billion, investment movement of $1.3 billion, FX translation effects of $(0.3) billion and other movements, principally guaranteed product de-gears, of $(3.4) billion
·	Adjusted profit before tax (PBT) of $278 million, comprising adjusted net management fee PBT of $223 million and net performance fee PBT of $55 million
·	Further impairment of GLG goodwill ($746 million) in addition to the impairment reported at 30 June 2012 of $233 million (GLG $91 million and Man Multi-Manager $142 million)
·	Statutory loss before tax for the year ended 31 December 2012 of $745 million, reflecting impairment of goodwill and other adjusting items
·	$95 million of operating cost savings announced in January 2012 have been delivered
·	Further annual cost savings of $100 million announced in July 2012 are on track for delivery by the end of 2013
·	Surplus regulatory capital of $795 million at 31 December 2012
·	Proposed final dividend of 12.5 cents per share; total dividend for the year expected to be 22 cents

Summary financials

	12 months to 31 Dec 2012 $	Nine months to 31 Dec 2011 $
Funds under management (end of period)	57.0bn	58.4bn

Gross management and other fees	1,209m	1,160m
Share of after tax profit of associates	10m	3m
Performance fees (including investment gains/losses)	113m	93m

Distribution costs	(248m)	(237m)
Asset services	(31m)	(24m)
Compensation	(427m)	(415m)
Other costs	(307m)	(262m)
Net finance expense	(41m)	(56m)
Adjusted profit before tax	278m	262m
Adjusting items	(1,023m)	(69m)
Statutory (loss)/profit before tax	(745m)	193m
Diluted statutory EPS	(45.6)c	7.6c
Adjusted diluted EPS	11.8c	10.7c

Post year-end developments

·	Funds under management (FUM) at 25 February estimated at $55.0 billion, reflecting net outflows and negative FX movements partially offset by positive investment performance and guaranteed product re-gears
·	Man AHL Diversified programme up +2.2% in the calendar year to 25 February 2013
·	At 25 February 2013, AHL was 13.1% below high water mark on a weighted average basis with AHL open ended products 10.3% below high water mark and the AHL element of guaranteed products 20.0% below high water mark
·	Calendar year to 22 February performance for key GLG UCITS strategies: European Equity Alternative +1.9%, North American Equity Alternative +3.0%, Alpha Select +3.7%, Global Convertibles +2.5%, Emerging Markets -1.3%, Atlas Macro +1.3%, Japan Core Alpha +15.1%, Global Equity +6.4%.
·	At 25 February 2013, 65% of GLG performance fee-eligible funds were above high water mark and 20% within 5% of performance fee highs
·	Guaranteed product re-gears of $750 million in total for January and February 2013 and a de-gear of $200 million for 1 March 2013

Manny Roman, Chief Executive Officer of Man, said:

"2012 was another tough year for Man. Trading conditions were highly challenging as markets continued to be dominated by political uncertainties in Europe and the US and macroeconomic risks. Investor appetite remained muted and as expected there was a further decline in Man's product margin mix and revenues.

Management's priority last year was to maintain the focus on delivering investment performance for our investors, while reducing our cost base to a level which reflects the economics of a reduced and different mix of asset flows. On both counts we made good progress.

As of mid-February 2013, most of our strategies were off to a good start and there is no doubt investor sentiment has improved somewhat. The number of requests for proposals and the pipeline of new mandates have increased to a degree. However, given the lead time required by institutional investors to invest, gross sales are likely to remain muted in the first half and we are yet to see a slow down in the rate of redemptions.

We have introduced changes to senior management to further enhance Man's focus on investment performance. We will maintain our efforts to make Man lean and efficient. We have identified areas where over the medium term we can build and enhance our investment platform and deliver profitable growth for our shareholders. This gives grounds for cautious optimism for the medium term, but there should be no doubt that business conditions remain very tough. We will continue to focus on delivering performance for our investors; from that, all else flows."

Dividend

The Board confirms that it will recommend a final dividend of 12.5 cents per share for the financial year to 31 December 2012, giving a total dividend of 22 cents per share for the year. This dividend will be paid at the rate of 8.26 pence per share.

As announced in March 2012, Man's dividend policy going forward is to pay at least 100% of adjusted management fee earnings per share in each financial year by way of ordinary dividend. In addition, the Group expects to generate significant surplus capital over time, primarily from net performance fee earnings. Available surpluses, after taking into account required capital, potential strategic opportunities and a prudent buffer, will be distributed to shareholders over time, by way of higher dividend payments and/or share repurchases. Whilst the Board continues to consider dividends as the primary method of returning capital to shareholders, it will continue to execute share repurchases when advantageous.

Dates for the 2012 final dividend

Ex-dividend date	24 April 2013
Record date	26 April 2013
Payment date	17 May 2013

Results presentation, audio webcast and dial in details
There will be a presentation by the management team at 10.15am (UK time) and there will be a live audio webcast available on https://www.man.com/GB/results and www.cantos.com which will also be available on demand from later in the day. The dial-in and replay telephone numbers are as follows:

Live dial-in
UK Toll Number: 020 3426 2845
UK Toll-Free Number: 0808 237 0033
US Toll Number: +1 347 329 1282
US Toll-Free Number: +1 866 928 6048

Replay
UK Playback Number: 020 3426 2807
UK Playback Toll Free Number: 0808 237 0026
US Playback Toll Free Number: +1 877 846 3918
Playback Pin Code: 636826#

Enquiries

Fiona Smart

Head of Investor Relations

+44 20 7144 2030

fiona.smart@man.com

David Waller

Head of Communications

+44 20 7144 2121

david.waller@man.com

RLM Finsbury

James Bradley

Ryan O'Keeffe

+44 20 7251 3801

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. As at 31 December 2012, Man managed $57.0 billion.

The original business was founded in 1783. Today, Man is listed on the London Stock Exchange and is a member of the FTSE 250 Index with a market capitalisation of around £1.9 billion.

Man is a signatory to the United Nations Principles for Responsible Investment (PRI). Man also supports many awards, charities and initiatives around the world, including sponsoring the Man Booker literary prizes and the Man Asian Literary Prize. Further information can be found at www.man.com.

Forward looking statements and other important information

This announcement is issued on behalf of both Man Group plc and Man Strategic Holdings plc. 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.

FUNDS UNDER MANAGEMENT ANALYSIS

Three months to 31 December 2012

	Guaranteed $bn	Open-ended		Institutional FoF and other $bn	Alternatives total $bn	Long only $bn	Total $bn
	Guaranteed $bn	Man $bn	GLG $bn	Institutional FoF and other $bn	Alternatives total $bn	Long only $bn	Total $bn
FUM at 30 Sept 2012	7.0	11.2	10.8	19.8	48.8	11.2	60.0
Sales	-	0.3	0.9	0.7	1.9	0.7	2.6
Redemptions	(0.4)	(1.1)	(1.1)	(1.2)	(3.8)	(1.5)	(5.3)
Net inflows/(outflows)	(0.4)	(0.8)	(0.2)	(0.5)	(1.9)	(0.8)	(2.7)
Investment movement	-	(0.3)	0.2	(0.1)	(0.2)	1.2	1.0
FX	-	-	0.1	(0.3)	(0.2)	(0.2)	(0.4)
Other	(0.9)	-	-	-	(0.9)	-	(0.9)
FUM at 31 Dec 2012	5.7	10.1	10.9	18.9	45.6	11.4	57.0

Twelve months to 31 December 2012

	Guaranteed $bn	Open-ended		Institutional FoF and other $bn	Alternatives total $bn	Long only $bn	Total $bn
	Guaranteed $bn	Man $bn	GLG $bn	Institutional FoF and other $bn	Alternatives total $bn	Long only $bn	Total $bn
FUM at 31 Dec 2011	10.0	14.5	11.0	12.2	47.7	10.7	58.4
Acquisitions (FRM)	-	-	-	8.3	8.3	-	8.3
Sales	0.3	1.4	4.7	2.6	9.0	3.8	12.8
Redemptions	(1.7)	(4.7)	(5.8)	(3.6)	(15.8)	(4.3)	(20.1)
Net inflows/(outflows)	(1.4)	(3.3)	(1.1)	(1.0)	(6.8)	(0.5)	(7.3)
Investment movement	(0.1)	(0.6)	0.7	-	-	1.3	1.3
FX	-	-	0.1	(0.3)	(0.2)	(0.1)	(0.3)
Other*	(2.8)	(0.5)	0.2	(0.3)	(3.4)	-	(3.4)
FUM at 31 Dec 2012	5.7	10.1	10.9	18.9	45.6	11.4	57.0

*Includes a $0.3 billion reclassification from Man open-ended to guaranteed products

FUM by manager

$bn	31 December 2012	30 June 2012	31 December 2011
AHL	14.4	16.7	21.0

GLG Alternatives	15.2	15.1	15.5
- Equity
- Europe	3.1	2.9	2.5
- North America	1.9	2.0	2.3
- UK	0.6	0.8	0.9
- Other equity alternatives	0.5	0.3	0.6
- Credit and Convertibles
- Convertibles	2.6	2.1	1.8
- Market Neutral	0.8	0.8	0.9
- Ore Hill	0.9	0.8	0.9
- Pemba	2.4	2.4	2.5
- Macro
- Emerging markets	1.4	1.8	2.3
- Macro	1.0	1.2	0.8

Long only	11.4	11.3	10.7
- Japan	5.7	6.0	5.6
- Other	5.7	5.3	5.1

FRM	16.0	9.6	11.2
Total	57.0	52.7	58.4

Investment performance

	Total return		Annualised return
	3 months to 31 Dec 2012	12 months to 31 Dec 2012	3 years to 31 Dec 2012	5 years to 31 Dec 2012
AHL
AHL Diversified¹	-1.0%	-1.3%	1.8%	3.2%
AHL Alpha²	-0.4%	-0.4%	2.6%	3.3%
Man AHL Diversity³	-0.1%	-1.6%	0.9%	n/a
Man AHL Trend⁴	-0.4%	-2.8%	0.4%	n/a

GLG ALTERNATIVES
Equity
Europe
GLG European Long Short Fund⁵	-0.2%	5.7%	7.0%	4.3%
GLG European Equity Alternative UCITS Fund⁶	0.0%	6.2%	n/a	n/a
GLG European Alpha Alternative UCITS Fund⁷	2.6%	3.7%	2.8%	n/a
North America
GLG North American Opportunity Fund⁸	0.1%	3.2%	2.6%	3.2%
GLG North American Equity Alternative UCITS fund⁹	-0.5%	-0.6%	n/a	n/a
UK
GLG Alpha Select Fund¹⁰	4.9%	0.8%	-1.3%	5.8%
GLG Alpha Select UCITS Fund¹¹	4.8%	0.5%	n/a	n/a
Other equity alternatives
GLG Global Opportunity Fund¹²	1.7%	3.8%	0.5%	-1.4%
Credit and convertibles
Convertibles
GLG Global Convertible Fund¹³	3.0%	11.4%	2.7%	2.2%
GLG Global Convertible UCITS Fund¹⁴	3.2%	13.3%	4.0%	n/a
Market Neutral
GLG Market Neutral Fund¹⁵	4.4%	18.4%	16.8%	6.5%
GLG European Distressed Fund¹⁶	3.9%	17.9%	16.3%	n/a
Ore Hill
GLG Ore Hill Fund¹⁷	3.1%	15.3%	13.2%	3.3%
Macro and special situations
GLG Emerging Markets Fund¹⁸	3.1%	9.4%	0.3%	-2.9%
GLG Emerging Markets UCITS Fund¹⁹	1.4%	5.8%	-2.1%	n/a
GLG Atlas Macro Fund²⁰	0.8%	-0.1%	7.7%	n/a
GLG Atlas Macro Alternative UCITS Fund²¹	0.6%	-0.5%	n/a	n/a

GLG LONG ONLY
GLG Japan Core Alpha Equity Fund²²	21.2%	17.1%	-1.3%	-5.3%
GLG Global Equity UCITS Fund²³	5.5%	15.0%	n/a	n/a

Investment performance (continued)

	Total return		Annualised return
	3 months to 31 Dec 2012	12 months to 31 Dec 2012	3 years to 31 Dec 2012	5 years to 31 Dec 2012
FRM
AA Diversified²⁴	0.7%	1.2%	1.5%	-2.3%
FRM Diversified II²⁵	0.6%	1.8%	2.5%	-1.7%
Man Dynamic Selection²⁶	0.4%	2.4%	0.9%	0.3%
Man GLG Multi-Strategy Fund²⁷	1.3%	3.8%	3.6%	-1.3%

MAN SYSTEMATIC STRATEGIES
TailProtect²⁸	-3.7%	-14.7%	n/a	n/a

Indices
World stocks²⁹	2.9%	15.8%	6.5%	-1.2%
World bonds³⁰	0.8%	4.5%	4.4%	4.7%
Corporate bonds³¹	0.5%	10.7%	13.6%	10.5%

Hedge fund indices
HFRI Fund Weighted Composite Index³²	1.3%	6.2%	3.5%	1.5%
HFRI Fund of Funds Composite Index³²	1.3%	4.8%	1.5%	-1.7%
HFRX Global Hedge Fund Index	0.8%	3.5%	-0.3%	-2.9%

Style indices
Barclay BTOP 50 Index³³	-1.7%	-1.9%	0.0%	1.6%
HFRI Equity Hedge (Total) Index³²	1.9%	7.6%	2.9%	-0.1%
HFRX Equity Hedge Index	1.4%	4.8%	-2.6%	-4.9%
HFRI Event Driven (Total) Index³²	2.6%	8.0%	5.3%	2.7%
HFRX Event Driven Index	1.0%	6.0%	0.9%	-1.4%
HFRI Macro (Total) Index³²	-1.2%	-0.3%	1.1%	2.5%
HFRX Macro/CTA Index	-0.1%	-1.0%	-2.6%	-2.3%
HFRI Relative Value (Total) Index³²	2.2%	10.3%	7.2%	4.9%
HFRX Relative Value Arbitrage Index	0.8%	3.6%	2.3%	-1.5%

Source: Man database, Bloomberg and MSCI. 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 AHL Diversified plc from 26 March 1996 to 29 October 2012, and by Man AHL Diversified (Guernsey) USD Shares - Class A from 30 October 2012 to date. The representative product was changed at the end of October 2012 due to legal and/or regulatory restrictions on Man AHL Diversified plc preventing the product from accessing the Programme's revised target allocations. Both funds are valued weekly; however, for comparative purposes, statistics have been calculated using the last weekly valuation for each month.

2) Represented by AHL Alpha plc from 17 October 1995 to 24 September 2012, and by AHL Strategies PCC Limited: Class Y AHL Alpha USD Shares from 25 September 2012 to date. The representative product was changed at the end of September 2012 due to the provisioning of fund liquidation costs in October 2012 for AHL Alpha plc, which resulted in tracking error compared with other Alpha Programme funds. Both funds are valued weekly; however, for comparative purposes, statistics have been calculated using the last weekly valuation for each month.

3) Represented by Man AHL Diversity GBP DB. Please note that Man AHL Diversity GBP DB was valued weekly until 2 May 2011. Prior to this date, the last weekly valuation of the month has been used.

4) Represented by Man AHL Trend EUR I. Please note that Man AHL Trend EUR I was valued weekly until 2 May 2011. Prior to this date, the last weekly valuation of the month has been used.

5) Represented by GLG European Long Short Fund - Class D Restricted to Unrestricted (29/06/2007) - EUR.

6) Represented by GLG European Equity Alternative IN EUR.

7) Represented by GLG European Alpha Alternative IN EUR.

8) Represented by GLG North American Opportunity Fund - Class A Restricted to Unrestricted (29/06/2007) - USD.

9) Represented by GLG North American Equity Alternative IN USD.

10) Represented by GLG Alpha Select Fund - Class C - EUR.

11) Represented by GLG Alpha Select Alternative IN H EUR.

12) Represented by GLG Global Opportunity Fund - Class Z - USD.

13) Represented by GLG Global Convertible Fund - Class A - USD.

14) Represented by GLG Global Convertible UCITS Funds Class IM USD.

15) Represented by GLG Market Neutral Fund - Class Z Restricted to Unrestricted (31/08/2007) - USD.

16) Represented by GLG European Distressed Fund - Class A - USD.

17) Represented by Ore Hill International Fund II Ltd.

18) Represented by GLG Emerging Markets Fund - Class A Restricted to Unrestricted (31/08/2007) - USD.

19) Represented by GLG EM Diversified Alternative IN H USD.

20) Represented by GLG Atlas Macro Fund - Class A - USD.

21) Represented by GLG Atlas Macro Alternative IN USD.

22) Represented by GLG Japan CoreAlpha Equity Fund - Class C to Class I JPY (28/01/2010).

23) Represented by GLG Global Equity Fund Class I USD.

24) Represented by Absolute Alpha Fund PCC Ltd Diversified - USD.

25) To highlight the performance and risks associated with FRM Diversified II Fund SPC - Class A USD ('the fund') prior to Jan 2004, FRM has created the FRM Diversified II pro forma using the following methodology: i) for the period Jan 1998 to Dec 2003, by using the returns of Absolute Alpha Fund PCC Limited - Diversified Series Share Cell ('AA Diversified - USD') adjusted for fees and/or currency, where applicable. For the period Jan 2004 to Feb 2004, the returns of the fund's master portfolio have been used, adjusted for fees and/or currency, where applicable. Post Feb 2004, the fund's actual performance has been used, which may differ from the calculated performance of the track record. There have been occasions where the 12-months' performance to date of FRM Diversified II has differed materially from that of AA Diversified. Strategy and holdings data relates to the composition of the master portfolio.

26) Represented by Man Dynamic Selection USD I.

27) Represented by Man GLG Multi-Strategy Fund - Class A - USD Shares.

28) Represented by TailProtect Limited Class B.

29) Represented by MSCI World Net Total Return Index hedged to USD.

30) Represented by Citigroup World Government Bond Index hedged to USD (total return).

31) Represented by Citigroup High Grade Corp Bond TR.

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

33) The historic Barclay BTOP 50 Index data is subject to change.

Please note that the dates in brackets represent the date of the join in the linked track records.

Operational and strategic review

2012 has been a difficult year for Man in terms of trading conditions, investor risk appetite and the accelerating transition in product mix and revenue in the business. We are dealing with this change by focusing on a number of initiatives aimed at positioning the firm for future growth, whilst reducing costs and maximising the efficiency of our balance sheet.

Despite the acquisition of FRM, our FUM decreased to $57.0 billion, mainly as a result of net outflows due to bearish investor sentiment, and further de-gearing in our guaranteed products. Adjusted diluted earnings per share for the 12 months to 31 December 2012 was 11.8 cents.

The challenging near term market conditions were the main factor leading to the impairment of GLG and Man Multi-Manager goodwill by $979 million in total. This was the main driver of the statutory loss of $745 million for the year.

Market overview

2012 proved to be another difficult year for financial markets. Political posturing and unconventional monetary policy measures remained the main drivers of most markets, as illustrated by the so-called 'fiscal cliff' averted in the US, or the European Central Bank's stance that it would do 'whatever is needed' to save the Euro. Fundamentals were overshadowed by sentiment and correlations between asset classes stayed high.

However, risk assets performed well overall: the TOPIX, MSCI Emerging Market (Local Currency), S&P 500 and FTSE 100 were up 20.9%, 13.9%, 16.0% and 10.0% respectively; the CBOE VIX also decreased 23.0%, from 23.4 at end December 2011 to 18 at the end of December 2012, having moved in a range between 13.5 and 26.7 over the period.

In this context, the overall performance of the liquid alternative investment management industry was muted. For 2012, the HFRX Global Hedge Fund Index was up 3.5%, the HFRX Equity Hedge Index was up 4.8% and the HFRX ED: Credit Arbitrage Index was up 10.7%.

2012 results

Against this backdrop we ended the year with FUM of $57.0 billion, down from $58.4 billion at the end of December 2011. Sales were $12.8 billion, around 70% of which came from GLG products. Redemptions totalled $20.1 billion, reflecting fragile investor sentiment and mixed levels of absolute investment performance across the product set. The majority of GLG's strategies performed well, both in absolute and relative terms. AHL had good relative performance in 2012. However, in absolute terms, it ended the year down slightly at 1.3%. The combined result was $1.3 billion of positive investment performance across our three investment managers. The acquisition of FRM in July boosted FUM by $8.3 billion and the de-gear of guaranteed products and the impact of FX movements reduced FUM by $3.7 billion.

Adjusted profit before tax for the year ended 31 December 2012 was $278 million compared to $262 million for the nine months ended 31 December 2011. The biggest impact on profitability came from the reduction in guaranteed product funds under management from $10 billion at the start of the year to $5.7 billion at the end, reducing the average margin for the group from 230bps for the 9 months ended 31 December 2011 to 209bps for the year ended 31 December 2012.

We recorded a statutory loss of $745 million driven by the impairment of GLG and Man Multi-Manager goodwill - GLG by $837 million and Man Multi-Manager by $142 million. These impairments are non-cash and do not impact our surplus regulatory capital position.

Man remains well capitalised and cash positive with surplus regulatory capital of $795 million and net cash of $1.1 billion at 31 December 2012.

Key priorities

Man continues to be well positioned to benefit from improved investor sentiment when risk appetite returns. We have identified five key priorities across our business which build on the three priorities of investment performance, meeting client needs and efficiency set out in our last report and accounts. These priorities are aimed at positioning the firm for future growth, whilst controlling costs and maximising the efficiency of our balance sheet.

We have started to make progress against each of these priorities during 2012 and will continue to focus closely on them in 2013.

Investment performance

Summary

· AHL back in the pack of leading peer group.

· AHL Evolution Programme up 23.6% in 2012.

· FRM performance improved in 2012 amid successful integration.

· GLG credit and convertibles strategies exhibited strong absolute and relative performance.

· MSS Europe Plus Fund up 22.6% in the year.

Performance is the raison d'être of our business. We aim to generate superior risk-adjusted returns for our fund investors through the quality of our research, the talent of our investment managers and the strength of our operations and risk infrastructures. In the midst of a difficult and volatile market environment, the overall performance of our strategies was positive in 2012.

Various enhancements to AHL's research process, combined with some key changes within the team (including the appointments of Douglas Greenig as AHL's Chief Risk Officer and Matthew Sargaison as Chief Investment Officer) led to good relative performance vs. peers. However, absolute performance for the CTA industry remained muted due to the alternating risk-on/risk-off environment. AHL Diversified Programme was down -1.3% for the year, ahead of peers such as Aspect (down -10.7%); AHL Alpha, the lower-volatility strategy, was down -0.4%, ahead of Winton (down -3.6%). Finally, the AHL Evolution Programme, which applies trend-following algorithms to less developed markets, was up 23.6% for the year. In 2013, we will continue the focus on AHL's core trend following expertise, whilst aiming to build a scalable, diversified quantitative business in both absolute return and long only strategies.

Performance improved at FRM in 2012: FRM's flagship commingled fund, was up 1.8%. The integration of FRM Holdings with Man's Multi-Manager Business (MMM) has been a clear success: we now have a best-in-class research and investment team drawing on both FRM's and MMM's staff, streamlined processes, a unique managed accounts infrastructure solution and a wide reach within the hedge fund industry - strengths on which we hope to capitalise in 2013.

Most of GLG's strategies had strong absolute and relative performance in 2012. Credit strategies had the strongest performance: the Market Neutral, European Distressed and Ore Hill strategies were up 18.4%, 17.9% and 15.3% respectively. On the Equity side, the European Long-Short strategy was up 5.7% whilst Alpha Select strategy finished the year up 0.8%. Our Macro strategy ended the year marginally negative (down -0.1%), whereas the Emerging Markets strategy was up 9.4%. Long only strategies performed well: MSS European active-strategy ETF, which uses high quality ideas from approximately 65 leading brokers to create a liquid, highly diversified, long only European equity portfolio, was up 22.6%, some 530bps ahead of its MSCI Daily Net Total Return Europe benchmark; the Japan CoreAlpha strategy ended up the year up 17.1%, although 380bps behind its TOPIX benchmark.

The focus for 2013 will be to continue selectively to upgrade investment talent at GLG, in order to deliver top quartile performance to our fund investors. Importantly, the strength of our brand and infrastructure means that we are able to continue to attract talented teams and individuals.

Growth opportunities

Summary

· GLG to develop Macro and Fixed Income offering.

· Marketing of GLG Asia Long-Short.

· FRM acquisition completed in July 2012 creating the largest non-US fund of hedge funds.

· Focus on marketing the AHL Evolution Programme.

· Build out of non-trend following quantitative business.

In a rapidly evolving environment which remains difficult for some of our core products, creating and developing options for growth is of great importance. For 2013, we have identified a clear set of initiatives on the investment management and product side.

At GLG, we announced in January 2013 a number of senior hires to create a combined Macro and Fixed Income platform co-headed by Jamil Baz and Sudi Mariappa, who previously ran PIMCO's $80 billion international fixed-income offering. We believe there are tremendous opportunities for investors in this space and look forward to building our business in this area. In August 2012, we launched David Mercurio's Asia Long-Short strategy and it currently has $150 million of funds under management; we intend to market the strategy actively by mid-2013, on the back of a promising track record. Finally, we will continue to enhance the European equities team in order to increase capacity; some of the equities sector specialists, such as Financials and Technology, have successfully branched out with independent strategies, increasing the team's overall global reach.

The acquisition of FRM Holdings completely revamped our fund of funds business, creating the largest non-US fund of hedge funds. This has generated momentum with clients globally and a strong sales pipeline, especially for our market-leading Managed Account platform. The objective for 2013 will be to capitalise on this momentum and reverse the trend of outflows we have experienced in recent years.

For AHL, a focus will be on marketing the AHL Evolution Programme which has $1 billion of capacity reserved for direct investors, helped by a great year in 2012. Beyond the continuous improvement of our trend following models, we also intend to build up our non-trend following quantitative business, as such strategies are increasingly gaining market share. With 'MSS', we are strongly positioned in this important area, as illustrated by the remarkable growth in FUM to $2.5 billion in the two years since its launch in January 2011. The team is now working on adapting its Europe Plus strategy for Asia: the back testing results are positive.

Our industry remains fragmented and there continues to be opportunities for incremental growth through acquisition in certain areas. A number of quality investment managers are realising they cannot cope with the operating costs required to maintain and grow assets; some of the early, and sometimes most successful, participants in our industry are reaching a stage in their business cycle when they need to transition; large financial institutions are disposing of non-core assets.

The recent acquisition of FRM Holdings is an example of seizing an opportunity to generate shareholder value through selective acquisition. Given our resources and size, we believe we are well positioned to benefit from further consolidation trends.

Distribution effectiveness

Summary

· New internal sales compensation scheme effective 1 January 2013.

· Deepen US reach with new North America Chairman.

· New team focusing on global consultant relationships.

· Develop position as leader in alternatives in China.

Ensuring our investor access remains effective, comprehensive and aligned with market opportunities is vital to our success. In 2012, we raised $12.8 billion of new assets globally, against a very difficult market backdrop. Going forward, we have identified a number of key priorities to enhance our distribution capabilities.

The US remains a key geographical focus for future growth. The team currently in place has made significant progress over the last 18 months, with sales of $1.1 billion in 2012; however, the potential in this huge market is very significant. We recently announced the hiring of John Rohal as Executive Chairman of Man North America. John's experience and expertise, most recently at Makena Capital Management, will enable us to both enhance our offering and deepen relationships in the US.

Globally, we are continuing the efforts to align our distribution capabilities with industry flows and investor interest, without losing optionality across our product range. A new internal sales compensation scheme which balances the need to both raise and retain assets, whilst aligning interests on costs, has been introduced. We are also focusing on global consultant relationships, for which a dedicated team has been created.

Our targeted approach to long-term opportunities in China is also beginning to bear fruit. We are involved in a number of initiatives which, without over committing the Group, over the medium-term should position us at the forefront of the alternatives industry in China as that market develops.

Finally, Christoph Moeller, Global Head of Sales and Marketing, has announced that he will be retiring in June 2013; a search is currently on-going to find a successor. Over a 32-year career at the Group, including 17 years as Head of Sales, Christoph built up a formidable sales capability and we are delighted that he will remain involved with Man as an advisor.

Cost reduction

Summary

· Positioning the cost base for reduced guaranteed products.

· First phase of $95 million of cost savings achieved.

· Second phase of $100 million of cost savings on track for delivery by the end of 2013.

The difficult environment for our industry and in particular the continuing run off of high margin guaranteed products has had a significant impact on the firm's profitability. As a result, we have continued to focus on reducing our cost base to a level which reflects the economics of our business flows.

Two cost reduction initiatives were announced late 2011/January 2012 and July 2012, of $95 million and $100 million respectively. The first phase has now been completed. The second phase is on track to be achieved by the end of 2013, for a full impact in 2014. Non-compensation expenses have been reduced materially and significant attention is being given to running the business as efficiently as possible. Headcount has been reduced from 1,876 as of June 2011 to 1,306 as of today. However, talent remains the greatest asset in our business, and we continue to invest in recruiting and developing key people.

Our remuneration arrangements are closely linked to performance with the result that variable compensation reduced by 35%, in line with earnings. Our compensation cost to revenue ratio for the period was 33% and we aim to keep this ratio within a range of 30-40% - well in line with industry averages.

Balance sheet efficiency

Summary

· Disposal of residual exposure to the Lehman estate completed.

· BlueCrest loan note disposal.

· Reduction in loans to funds and proprietary investments.

· Continued focus on managing balance sheet effectively.

The strength of our balance sheet is one of our key competitive advantages, enabling us to invest selectively in products and distribution globally. As at 31 December 2012, the Group had tangible net assets of $1.5 billion, $795 million in surplus regulatory capital, $3.5 billion in liquidity and $1.1 billion of net cash.

In 2012, some key steps were taken to ensure the most efficient and productive use of the Group's capital. These included the disposal of the residual exposure to the Lehman estates acquired in July 2011 (yielding total upfront proceeds of $456 million) and the disposal of the BlueCrest loan notes (creating a gain on disposal of $15 million).

In an environment which is likely to remain challenging, we will continue to focus on managing our balance sheet efficiently.

Outlook

As of mid-February 2013, most of our strategies were off to a good start on the back of the risk rally triggered by the US 'fiscal cliff' being averted, some positive key data points in the US and China, and a significant shift of investors from bonds to equities. As of 25 February 2013, AHL was 13.1% below high water mark on a weighted average basis, and as of 25 February 2013, 85% of GLG funds were above or within 5% of performance fee highs.

Accordingly, investor sentiment has improved somewhat over the last two months, and requests for proposals and the pipeline of new mandates have both increased. However, given the lead time required by institutional investors, gross sales are likely to remain muted in the first half whilst redemptions will generally remain a function of the overall market environment. We have seen this in January and February 2013 with funds under management estimated to be $55.0 billion at 25 February 2013, down $2.0 billion from year end with net outflows and negative FX movements being partly offset by positive investment performance and regears.

It is also worth noting that, over the last two years, there have been similar periods in which investor risk appetite has normalised, only to subsequently reverse in response to renewed macro-economic uncertainty. It would be premature, therefore, to suggest that the operating environment has improved on a sustainable basis.

We have made a number of enhancements to our Executive Committee over the last 12 months, with several new members promoted internally reflecting the deep bench of talent within the Group. We are grateful not only to the Executive Committee but to everyone at Man who has contributed to the progress we have made this year and we are confident that we have a very strong team in place to take the business forward.

Man Group Executive Committee

Manny Roman	CEO, Man Group
Jonathan Eliot	Chief Risk Officer
Luke Ellis	President, Man Group
Robyn Grew	Global Head, Compliance & Regulatory
Keith Haydon	CIO, FRM
Teun Johnston	Co-CEO, GLG
Mark Jones	Co-CEO, GLG
Pierre Lagrange	Chairman, Man Asia & Senior Managing Director, GLG
Michelle McCloskey	Senior Managing Director, FRM
Christoph Möller	Global Head, Sales & Marketing
Sandy Rattray	CEO, AHL & MSS
Michael Robinson	Global Head, Human Resources
Jasveer Singh	General Counsel
Jonathan Sorrell	Chief Financial Officer
Simon White	Global Head, Technology & Operations
Tim Wong	Chairman, AHL & MSS

Chief Financial Officer's review

In the light of the continued decline in the guaranteed product business, we have made significant progress on reducing costs and improving balance sheet efficiency.

Overview
2012 has clearly been another challenging year for the financial markets and for Man. Our funds under management (FUM) decreased from $58.4 billion at the beginning of the year to $57.0 billion at
31 December 2012, despite the acquisition of FRM which added $8.3 billion of FUM.

The significant impairment of the goodwill relating to the GLG business ($837 million) and the legacy Multi-Manager business ($142 million) was the main driver of the statutory loss of $745 million for the year.

Gross management fee margins for each product type remained stable but with the continued decline in the guaranteed product business the average gross management fee margin was down 21bps from the prior period, resulting in a decline in our revenue stream. We have taken actions to realign our cost base with the current revenue run rate, and have delivered the $95 million of cost savings announced in late 2011/January 2012 and are on track to deliver the additional $100 million of cost savings announced in July 2012 by the end of 2013, as planned. As a result of these drivers, our profit before adjusting items is $278 million (nine months to 31 December 2011: $262 million).

There continues to be a significant difference between our cash earnings and statutory earnings as a result of the number of non-cash items in the income statement. For Man, EBITDA before adjusting items is a good proxy for cash flows from operations and this was $516 million for the year (nine months to
31 December 2011: $499 million). The cash impact of the adjusting items is a net cash inflow of around $60 million.

As well as focusing on reducing our cost base, we have taken a number of actions to enhance Man's capital and liquidity position during 2012, including the realisation of the Lehman claim assets and the repayment of the BlueCrest loan note. In addition we have reduced the level of seeding investments. These realisations have resulted in gains in the income statement.

Key performance indicators (KPIs)
Our financial KPIs illustrate and measure the relationship between the investment experience of our fund investors, our financial performance and the creation of shareholder value over time.

We have reviewed our KPIs this year to ensure they are appropriate measures for our changing business. Since our previous KPIs were established, the Group's business and operating environment has changed significantly. As a result, the Board has changed all of our KPIs this year to four new metrics that more simply and accurately measure the performance of the business. Our four new KPIs comprise measures for investment performance, investor flows, EBITDA margin, and EPS growth, which are explained in more detail on the following page.

KPIs are used on a regular basis to evaluate progress against our five key priorities: investment performance; creating options for growth; distribution effectiveness; cost reduction; and balance sheet efficiency.

The results of our KPIs this year reflect the challenging market environment, as the risk on/risk off environment has made it difficult for AHL in particular to perform in line with its long-term average, resulting in further de-gearing of the guaranteed products, which combined with fragile investor sentiment, has had an adverse impact on net flows across many of our businesses. This has resulted in a decline in FUM and revenues, which has impacted our profitability and EPS growth.

Key performance indicators

The investment performance KPI measures the net investment performance for our three managers (AHL, GLG, and FRM), represented by key funds, against relevant benchmarks. The target for this KPI is to exceed the relevant benchmarks. The key funds and the relevant benchmarks are AHL Diversified plc vs. three key peer asset managers for AHL (the target being to beat two of the three peers), GLG Multi Strategy vs. HFRX for GLG and FRM Diversified II vs. HFRI Fund of Funds for FRM. The performance of the key funds compared to the benchmarks gives an indication of the competitiveness of our investment performance against similar alternative investment styles offered by other investment managers. This measures our ability to deliver superior long-term performance to investors. We achieved two out of the three performance targets. GLG met the target for 2012 as the performance of their key fund exceeded the relevant benchmark, whilst the performance of AHL's key fund exceeded two out of the three key peer asset managers. FRM, whilst recording positive performance, was below the benchmark in 2012, primarily as their portfolios generally carry less equity market beta than the broader indices.

The second KPI measures net FUM flows for the period as a percentage of opening FUM, with net flows defined as gross sales less gross redemptions. The target is 0%-10% net inflows each year. Net flows are the measure of our ability to attract and retain investor capital. FUM drives our financial performance in terms of our ability to earn management fees. Net flows were below target in 2012 with a net outflow of 11.1%, compared to a net outflow of 2.2% for the nine months to 31 December 2011, reflecting the difficult trading environment, in particular for AHL, and fragile investor sentiment.

The third KPI measures adjusted management fee EBITDA as a percentage of net revenues (gross management fee revenue and income from associates less external cash distribution costs). The target is 25%-40%. Our adjusted management fee EBITDA margin is a measure of our underlying profitability. The adjusted management fee EBITDA margin of 42.2% was above the target range for the year ended 31 December 2012. This margin is likely to decline with the rolling off of higher margin guaranteed product FUM.

The fourth KPI measures our adjusted management fee EPS growth, where adjusted management fee EPS is calculated using post-tax profits excluding net performance fees and including the cost of the dividend on the Perpetual Subordinated Capital Securities, divided by the diluted number of shares. The target is growth of 0%-20% +RPI each year. Adjusted management fee EPS growth measures the overall effectiveness of our business model, and drives both our dividend policy and the value generated for shareholders. The adjusted management fee EPS growth was below target for 2012 primarily as a result of the decline in management fee revenue and the overall gross margin, partly offset by reduced costs.

Funds under management (FUM)

FUM		Open-ended alternative		Institutional FoF
$bn	Guaranteed	Man	GLG	and other	Long only	Total
FUM at 31 December 2011	10.0	14.5	11.0	12.2	10.7	58.4
Acquisition	-	-	-	8.3	-	8.3
Sales	0.3	1.4	4.7	2.6	3.8	12.8
Redemptions	(1.7)	(4.7)	(5.8)	(3.6)	(4.3)	(20.1)
Net inflows/(outflows)	(1.4)	(3.3)	(1.1)	(1.0)	(0.5)	(7.3)
Investment movement	(0.1)	(0.6)	0.7	-	1.3	1.3
Foreign currency movement	-	-	0.1	(0.3)	(0.1)	(0.3)
De-gearing and other movements	(2.8)	(0.5)	0.2	(0.3)	-	(3.4)
FUM at 31 December 2012	5.7	10.1	10.9	18.9	11.4	57.0
Gross management fee margin 12 months to 31 Dec 2012	5.0%	3.3%	1.5%	1.0%	0.8%	2.1%
Gross management fee margin 9 months to 31 Dec 2011	4.7%	3.3%	1.5%	1.1%	0.8%	2.3%

FUM decreased by $1.4 billion during the year as a result of net outflows of $7.3 billion and FX and other movements of $3.7 billion (the majority of which related to guaranteed product de-gears) being offset by positive investment movement of $1.3 billion and the acquisition of FRM, which added $8.3 billion of assets.

Guaranteed products

Average guaranteed FUM, our highest margin product grouping, declined from $12.5 billion in the prior period to $8.0 billion in 2012, which had a significant negative impact on revenues. Sales remained subdued with limited launches and redemptions totalled $1.7 billion running at a steady rate of around $400 million per quarter. $94 million of guaranteed products matured during the year, and the weighted average life to maturity of the guaranteed product range is 6 years.

Investment performance for guaranteed products was negative during the year, resulting in a $100 million reduction in FUM. The other movements of $2.8 billion primarily related to guaranteed product de-gears with AHL performance in the rebalance period from mid November 2011 to mid November 2012 down 7.7%.

Open-ended alternative products

Open-ended alternative FUM decreased by 18% to $21.0 billion during the year to 31 December 2012, which primarily related to the decrease in AHL open-ended FUM.

Net outflows of $3.3 billion from AHL open-ended products included $1.2 billion of outflows from Nomura Global Trend, which offers daily liquidity. Negative investment movement was $600 million and other movements (primarily relating to product reclassifications) reduced FUM by $500 million.

GLG open-ended alternatives FUM was broadly flat during the year. Sales of $4.7 billion were mainly into European Long-Short, distressed and convertibles strategies. Redemptions of $5.8 billion were from a range of strategies. Performance across the GLG alternatives range was net positive during the year adding $700 million to FUM. FX and other movements increased FUM by $300 million.

Institutional products

Institutional FUM increased by 55% to $18.9 billion in 2012 driven by the acquisition of FRM in July.

The majority of the sales of $2.6 billion related to institutional managed account mandates. Redemptions of $3.6 billion include $1.9 billion of redemptions from European investors out of legacy Man Multi-Manager fund of hedge funds and $900 million from acquired FRM funds. Investment performance was flat for the year with no impact on FUM. Negative FX and other movements were $600 million.

Long only products

Long only FUM increased by $700 million during the year. Positive investment performance, mainly in the last quarter of the year, increased FUM by $1.3 billion, and this was partly offset by net outflows of $500 million.

Summary income statement

	12 months to	9 months to
	31 December	31 December
$m	2012	2011
Management and other fees	1,209	1,160
Performance fees (including investment gains/losses)	113	93
Share of after tax profit of associates	10	3
Total income	1,332	1,256
Distribution costs	(248)	(237)
Asset servicing	(31)	(24)
Compensation	(427)	(415)
Other costs	(307)	(262)
Total costs	(1,013)	(938)
Net finance expense	(41)	(56)
Adjusted profit before tax	278	262
Adjusting items	(1,023)	(69)
Statutory (loss)/profit before tax	(745)	193
Net management fees	223	225
Net performance fees	55	37
Diluted EPS (statutory)	(45.6)	7.6
Adjusted diluted EPS (excluding the adjusting items above)	11.8	10.7

Gross management fees and margins

Average FUM for the year was $57.7 billion compared to $67.6 billion for the prior nine month period. The average gross management fee margin was down 21 basis points from the prior nine month period, reflecting the continuing product mix shift primarily caused by the reduced proportion of guaranteed products compared to open-ended products. Gross management fees were $1,209 million for the year ended
31 December 2012 in comparison to the management fees for the previous nine month period of $1,160 million. The reduction in our highest margin guaranteed product FUM, as a result of net outflows and de-gearing, has caused a decline in revenue on an annualised basis of around $184 million. Gross management fee margins by product were stable compared to the previous nine month period, with the exception of guaranteed products where the margin increased due to the impact of a higher proportion of fees which are based on net asset value as opposed to FUM.

	12 months to	9 months to
	31 December	31 December
$m	2012	2011
Gross management and other fees:
Guaranteed	400	438
AHL open-ended alternative	386	391
GLG open-ended alternative	169	150
Institutional FoF and other	159	104
Long only	95	77
	1,209	1,160

The annualised run rate of gross management fees based on the composition of FUM at 31 December 2012 is $1,091 million.

Performance fees (including investment gains/losses)

Gross performance fees for the year were $90 million, $75 million from GLG, $14 million from AHL and
$1 million from FRM. Investment gains in the year were $23 million compared to a loss of $1 million in the nine months to 31 December 2011. This gain mainly relates to a profit on disposal of certain Ore Hill assets. At 31 December 2012, around 60% of eligible GLG assets were at high water marks and around a further 22% within 5% of earning performance fees, and AHL was approximately 24% for guaranteed products and 12% for open-ended products on a weighted average basis from the performance fee high water mark.

Distribution costs

Distribution costs comprised $82 million of placement fees and $166 million of investor servicing fees, reflecting $45 million of internal costs and $203 million of external costs.

Placement fees are paid for product launches or sales and are capitalised and amortised over 2-5 years, unless the FUM is redeemed or is deemed to be impaired as a result of negative investment performance and de-gearing. The capitalised placement fees at 31 December 2012 were $32 million with a weighted average remaining amortisation period of 2.9 years.

External capitalised placement fees of $50 million have been written off in 2012, classified as an adjusting item, primarily as a result of de-gearing and negative investment performance for guaranteed products. $38 million of placement fees capitalised in relation to the internal sales force have also been written off in 2012, and classified as an adjusting item. The introduction of a new servicing fee based compensation structure for the internal sales team effective from 1 January 2013 triggered the impairment. The new compensation structure will comprise servicing fees which are based on management fees, less certain expenses, incentivising employees to both sell and retain assets whilst maintaining expense disciplines.

Investor servicing fees are paid to intermediaries and employees for ongoing investor servicing and will be around 0.3% of average FUM after the implementation of the new internal sales compensation structure. This rate depends on the volume of sales, the mix between retail and institutional channels and the mix of open-ended and guaranteed products.

Asset servicing
Asset servicing costs (including custodial, valuation, fund accounting and registrar functions which are now across our total funds under management) were $31 million (nine months to 31 December 2011: $24 million), reflecting the reduction in FUM. Asset servicing costs are around 5 basis points on FUM and vary depending on transaction volumes, the number of funds, and fund NAVs.

Compensation costs
Compensation comprises fixed based salaries, benefits and variable bonus compensation (cash and amortisation of deferred compensation arrangements). Compensation costs in total, excluding adjusting items, were 33% of gross revenue, consistent with the previous nine month period.

Fixed compensation and benefits were $233 million for the year compared to $191 million for nine months to 31 December 2011. Going forward, the total compensation to revenue ratio is expected to be in the range of 30% to 40% of total revenues. This excludes internal commission costs. The impact of the cost savings initiatives is discussed below.

Other costs
Other costs, excluding adjusting items, were $307 million for the year compared to $262 million for the nine months to 31 December 2011. These comprise cash costs of $244 million (nine months to 31 December 2011: $220 million) and depreciation and amortisation of $63 million (nine months to 31 December 2011:
$42 million).

Cost savings
In total, since the GLG acquisition in October 2010, we have announced $323 million of cost savings, comprising $195 million of operating efficiencies, $95 million of acquisition synergies ($45 million and $50 million in relation to the FRM and GLG acquisitions respectively) and $33 million of interest savings.

In late 2011 and January 2012, we committed to saving a total of $95 million of costs by the end of 2012, comprising approximately $29 million of compensation costs and $66 million of other costs. These savings have been delivered. In July 2012, we committed to a second phase of reductions, saving a further $100 million of costs by the end of 2013, comprising approximately $50 million of compensation costs and $50 million of other costs. We are on track to deliver these reductions on schedule, with 50% to be realised in the run rate in 2013 and 100% in 2014. The restructuring charges associated with these cost reductions have been taken in 2012 and amount to $65 million, and have been classified as an adjusting item.

With regard to the compensation savings, we have divided our headcount reduction initiatives into four categories: (i) the rationalisation of group functions; (ii) the reduction in the scale of our infrastructure; (iii) the reorientation of the Sales and Marketing function; and (iv) the optimisation of our investment management capabilities. At 30 June 2011, headcount, including contractors and consultants, stood at 1,876 FTEs (Full Time Equivalents), and at 28 February 2013, the Group employed 1,306 FTEs. By the time the cost savings have been implemented, the ratio of central function employees to front office will be approximately 1 to 1, which we believe to be in line with industry best practice.

With regard to other cost savings, we have conducted a rigorous budget process to identify the measures that need to be taken over the coming year to meet our savings targets, and have applied a number of procedures to ensure the appropriate level of expense discipline is instilled in our business. The principal reductions will be seen in staff benefits, travel and entertainment, communications and technology.

Whilst these reductions are significant, we are confident that they will continue to be achieved without meaningfully reducing our optionality or eroding our income.

Net finance expense

Net finance expense was $41 million for the year, excluding adjusting items. This included a $21 million charge relating to the debt buyback during the first half of the year, which is partly offset by a gain of $15 million recognised on the repayment of loan notes issued by BlueCrest. The recurring elements of both finance expense and finance income are expected to decrease in 2013. Interest expense is expected to decrease to $47 million, primarily due to the interest expense on borrowings, which is expected to decrease from $50 million in 2012 to $41 million in 2013 as a result of the debt buybacks. Interest income is expected to decrease from $21 million in 2012 to around $4 million in 2013 as a result of interest no longer being earned on the BlueCrest loan note and Lehman claims, the move from deposits to treasuries and certain other items.

Adjusted profit before taxes

Adjusted profit before tax is $278 million compared to $262 million for the previous nine month period. The adjusting items in the year of $1,023 million, as shown in the table below and detailed in Note 2 of the financial statements, primarily relate to impairment of goodwill ($979 million), impairment of capitalised placement fees ($88 million), restructuring costs ($69 million), and amortisation of acquired intangible assets ($65 million), partly offset by the gain on the sale of the Lehman claim assets ($131 million).

	12 months to
	31 December
$m	2012
Impairment of GLG and Man Multi-Manager goodwill	(979)
Impairment of capitalised placement fees	(88)
Restructuring costs	(69)
Amortisation of acquired intangible assets	(65)
Gain on disposal of Lehman claims	131
Other adjusting items	47
Total adjusting items	(1,023)

Net management fees and net performance fees

Net management fees of $223 million reflect the decline in average FUM and the overall gross margin, partly offset by reduced costs driven by the cost saving initiatives. Net performance fees of $55 million for the year reflects the majority of products remaining below performance fee earning benchmarks.

	12 months to	9 months to
	31 December	31 December
$m	2012	2011
Gross management and other fees	1,209	1,160
Share of after tax profit of associates	10	3
Less:
Distribution costs	(248)	(237)
Asset services	(31)	(24)
Compensation	(369)	(360)
Other costs	(307)	(261)
Net finance expense	(41)	(56)
Net management fees	223	225
Performance fees	90	94
Gains/(losses) on investments and other financial instruments	23	(1)
Less:
Compensation
- variable	(45)	(40)
- deferral amortisation	(13)	(15)
Other costs - charitable donations	-	(1)
Net performance fees	55	37

Taxation

The average tax rate for the year of 14.4% before adjusting items, compared to the previous period's rate of 17.2%, has decreased as a result of prior year tax credits for settled tax returns, which outweigh the lesser impact of reduced relief on share-based compensation costs and losses for which no tax relief has been recognised.

Cash earnings (EBITDA)

As the Group has a number of non-cash items in the income statement it is important to focus on cash earnings to appreciate the true earnings potential of our business. The table below gives a reconciliation of adjusted profit before tax to adjusted EBITDA. The main differences are net finance expense, depreciation, amortisation of placement fees and the share-based amortisation charge in relation to compensation deferrals. Our EBITDA/net revenue margin was 44%, which can be analysed between EBITDA margin on management fees of 42% and performance fees of 60%.

Reconciliation of adjusted PBT to adjusted EBITDA

	12 months to	9 months to
	31 December	31 December
$m	2012	2011
Adjusted PBT	278	262
Add back:
Net finance expense	41	56
Depreciation	43	21
Amortisation of capitalised computer software	20	21
Placement fee amortisation	56	54
Accelerated amortisation related to early redemptions	10	19
Deferred compensation amortisation	68	66
Adjusted EBITDA	516	499

Balance sheet

The Group's balance sheet remains strong and liquid. At 31 December 2012, total shareholders' equity was $3.0 billion and net tangible assets were $1.46 billion. Cash and cash equivalents have increased during the year, primarily as a result of the sale of the Lehman claim assets in November for $456 million. The sale of the Lehman claim assets and the decrease in investments in fund products is part of a conscious effort to maximise balance sheet efficiency, increase the Group's regulatory capital surplus and enhance its net cash position.

The carrying value of goodwill and intangible assets was tested for impairment at both 30 June 2012 and at the year end, using a discounted cash flow valuation. To reflect the current challenging environment for investor asset flows, we have taken a more cautious outlook, in particular in relation to the net flows assumption. As a result, in total for the year we have impaired the goodwill for GLG by $837 million and the legacy Man Multi-Manager (MMM) business by $142 million, of which impairment of $91 million for GLG and $142 million for the MMM business was booked in the interim financial statements for the six months ended 30 June 2012. The valuation and assumptions are explained in more detail in Note 12 of the financial statements.

	31 December	31 December
$m	2012	2011
Cash and cash equivalents	2,000	1,639
Fee and other receivables	382	428
Total liquid assets	2,382	2,067
Payables	(751)	(793)
Net liquid assets	1,631	1,274
Investments in fund products	487	631
Other investments and pension asset	115	436
Investments in associates	38	41
Leasehold improvements and equipment	150	173
Total tangible assets	2,421	2,555
Borrowings	(859)	(1,066)
Deferred tax liability	(97)	(94)
Net tangible assets	1,465	1,395
Goodwill and other intangibles	1,529	2,665
Shareholders' equity	2,994	4,060

Liquidity

Operating cash flows were $408 million during the year with cash and cash equivalents of $2,000 million. Net of borrowings and issued debt, the net cash position was $1,141 million. Net cash increased as a result of the sale of the Lehman claim assets, the acquisition of FRM, and a reduction in loans to funds and investments in fund products, partly offset by the payment of dividends, as shown in the table below.

	12 months to
	31 December
$m	2012
Net cash at 31 December 2011	573
Operating cash inflows	408
Sale of Lehman claims	456
Payment of dividends	(299)
Perpetual capital securities coupon	(33)
Acquisition of FRM	40
Other movements	(4)
Net cash at 31 December 2012	1,141

During the year, €166 million ($219 million) of the €382 million ($492 million) senior 2015 fixed rate bonds were repurchased. The committed revolving credit facility of $1,525 million is available and undrawn, with $205 million maturing on 22 July 2016 and $1,320 million maturing on 22 July 2017. At 31 December 2012, all borrowings had a maturity greater than 1 year except for the $173 million senior 2013 fixed rate bonds due to mature in August. The management of liquidity and capital is explained in notes 14 and 21 respectively.

Regulatory capital

Man is fully compliant with the FSA's capital standards and has maintained significant surplus regulatory capital throughout the year. At 31 December 2012, surplus regulatory capital over the regulatory capital requirements was $795 million. The implementation of Basel III through CRD IV is likely to come into force on 1 January 2014. The FSA guidance has not been finalised and therefore it is not possible to quantify definitively the impact but it is likely that our available capital will reduce by approximately $200 million. The payment in May 2013 of an uncovered final dividend of $228 million in relation to 2012 together with other anticipated movements is likely to reduce the surplus regulatory capital to around $370 million in January 2014, the date on which the impact of CRD IV is assumed to become effective.

The increase in the surplus regulatory capital of $208 million during 2012 primarily relates to the improvement of balance sheet efficiency, including: the sale of the Lehman claims (impact $145 million); transferring cash deposits to US Treasury bills (impact $30 million); repayment of the BlueCrest loan notes (impact $20 million); realisation of proprietary investments (impact $20 million); and reduction in loans to funds (impact $10 million).

Group's regulatory capital position

	31 December	31 December
$m	2012	2011
Permitted share capital and reserves	2,541	3,696
Innovative Tier 1 Perpetual Subordinated Capital Securities	193	198
Less deductions (primarily goodwill and other intangibles)	(1,449)	(2,575)
Available Tier 1 Group Capital	1,285	1,319
Tier 2 capital - subordinated debt	309	358
Other Tier 2 capital	110	106
Material holdings deductions	(20)	(20)
Group financial resources	1,684	1,763
Less financial resources requirement including a capital buffer	(889)	(1,176)
Surplus capital	795	587

Financial statements

Group income statement

		12 months to	9 months to
		31 December	31 December
$m	Note	2012	2011
Revenue:
Gross management and other fees	3	1,209	1,160
Performance fees	3	90	94
		1,299	1,254
Gains/(losses) on investments and other financial instruments		32	(1)
Distribution costs	4	(336)	(237)
Asset services	5	(31)	(24)
Amortisation of acquired intangible assets	12	(65)	(47)
Compensation	6	(499)	(422)
Other costs	7	(316)	(277)
Share of after tax profit of associates	18	10	3
Gain on disposal of Lehman claims	2	131	-
Impairment of GLG and legacy Man Multi-Manager goodwill	2, 12	(979)	-
Release of tax indemnity provision	2	11	-
Recycling of FX revaluation on liquidation of subsidiaries	2	42	-
Finance expense	8	(80)	(83)
Finance income	8	36	27
(Loss)/profit before tax		(745)	193
Taxation	9	(39)	(34)
Statutory (loss)/profit for the period attributable to owners of the parent		(784)	159

Earnings per share:	10
Basic (cents)		(45.6)	7.7
Diluted (cents)		(45.6)	7.6
Adjusted profit before tax	2	278	262

Group statement of comprehensive income

	12 months to	9 months to
	31 December	31 December
$m	2012	2011
Statutory (loss)/profit for the period attributable to owners of the parent	(784)	159
Other comprehensive (expense)/income:
Available for sale investments:
Valuation gains taken to equity	18	-
Transfers from statement of comprehensive income upon sale or impairment	(19)	-
Cash flow hedges:
Valuation gains taken to equity	16	-
Transfer to income statement	(9)	-
Foreign currency translation	3	(9)
Recycling of FX revaluation on liquidation of subsidiaries	(42)	-
Tax charged	(1)	-
Total comprehensive (expense)/income for the period attributable to owners of the parent	(818)	150

Group balance sheet

		At	At
		31 December	31 December
$m	Note	2012	2011
ASSETS
Cash and cash equivalents	14	2,000	1,639
Fee and other receivables	16	382	428
Investments in fund products	15	487	631
Other investments and pension asset	15	115	436
Investments in associates	18	38	41
Leasehold improvements and equipment	19	150	173
Goodwill and acquired intangibles	12	1,484	2,478
Other intangibles	13	45	187
Total assets		4,701	6,013
LIABILITIES
Trade and other payables	17	653	675
Current tax liabilities		98	118
Borrowings	14	859	1,066
Deferred tax liabilities	9	97	94
Total liabilities		1,707	1,953
NET ASSETS		2,994	4,060
EQUITY
Capital and reserves attributable to the owners of the parent(1)	21	2,694	4,060
Non-controlling interest (perpetual subordinated capital securities)(1)	14	300	-
		2,994	4,060

(1) Refer to the Group statement of changes in equity for further details.

Group cash flow statement

	12 months to	9 months to
	31 December	31 December
$m	2012	2011
Cash flows from operating activities
(Loss)/profit for the period	(784)	159
Adjustments for:
Income tax	39	34
Net finance expense	44	56
Share of results of associates	(10)	(3)
Depreciation and impairment of leasehold improvements and equipment	43	21
Amortisation of other intangible fixed assets	141	122
Share-based payments expense	79	70
Impairment of goodwill and other intangibles	979	-
Net losses on financial instruments	1	2
Gain on disposal of Lehman claims	(131)	-
Impairment of capitalised placement fees	88	-
Recycling of FX revaluation on liquidation of subsidiaries	(42)	-
Increase in pension asset	(10)	(3)
Other non-cash movements	11	30
	448	488
Changes in working capital:
Decrease in receivables	88	59
Decrease in other financial assets	135	304
Decrease in payables	(127)	(46)
Cash generated from operations	544	805
Interest paid	(81)	(57)
Income tax paid	(55)	(71)
Cash flows from operating activities	408	677
Cash flows from investing activities
Purchase of leasehold improvements and equipment	(20)	(58)
Purchase of other intangible assets	(33)	(53)
Purchase of Lehman claims	-	(355)
Purchase of other investments	(17)	(25)
Proceeds from settlement and sale of Lehman claims	466	22
Net proceeds from sale of other investments	28	6
Acquisition of subsidiary, net of cash acquired	40	1
Interest received	35	26
Dividends received from associates and other investments	13	3
Cash flows from investing activities	512	(433)
Cash flows from financing activities
Proceeds from issue of ordinary shares	8	3
Purchase of own shares by ESOP trust	(9)	(56)
Repurchase of own shares	(7)	(143)
Repayment of borrowings	(219)	(349)
Dividends paid to Company shareholders	(299)	(394)
Dividend payments in respect of perpetual subordinated capital securities	(33)	(25)
Cash flows from financing activities	(559)	(964)
Net increase/(decrease) in cash	361	(720)
Cash at beginning of the period	1,639	2,359
Cash at period end	2,000	1,639

Group statement of changes in equity

	Equity attributable to shareholders of the Company
	12 months to 31 December 2012						9 months to 31 December 2011
	Share	Revaluation						Revaluation
	capital	reserves		Non-		Share capital		reserves		Non-
	and capital	and retained		controlling	Total	and capital		and retained		controlling	Total
$m	reserves	earnings	Total	interest	equity	reserves		earnings	Total	interest	equity
At beginning of the period	3,364	696	4,060	-	4,060	3,346		1,090	4,436	-	4,436
(Loss)/profit for the period	-	(784)	(784)	-	(784)	-		159	159	-	159
Other comprehensive expense	-	(34)	(34)	-	(34)	-		(9)	(9)	-	(9)
Total comprehensive (expense)/income for the period	-	(818)	(818)	-	(818)	-		150	150	-	150
Perpetual capital securities coupon	-	(25)	(25)	-	(25)	-		(18)	(18)		(18)
Transfer to non-controlling interest	(300)	-	(300)	300	-	-		-	-	-	-
Capital reduction	(1,885)	1,885	-	-	-	-		-	-	-	-
Acquisition of business	-	-	-	-	-	15		-	15	-	15
Share-based payments	8	65	73	-	73	3		21	24	-	24
Repurchase of own shares	-	(7)	(7)	-	(7)	-		(143)	(143)	-	(143)
Movement in close period buyback obligations	-	10	10	-	10	-		(10)	(10)	-	(10)
Dividends	-	(299)	(299)	-	(299)	-		(394)	(394)	-	(394)
At period end (Note 21)	1,187	1,507	2,694	300	2,994	3,364		696	4,060	-	4,060

Shareholders' equity decreased during the year as a result of dividend payments and a loss for the year. In the prior period, shareholders' equity decreased primarily as a result of dividend payments and the repurchase of own shares, partly offset by profits for the period.

The $300 million perpetual subordinated capital securities were reclassified as a non-controlling interest on the implementation of the new group holding company on 6 November 2012. See Note 14 for further information.

The capital reduction relates to the reduction of share capital in the new group holding company, following the scheme of arrangement, in order to create distributable reserves. See Note 21 for further information.

The close period buyback obligations relate to share buybacks contractually undertaken with third parties. These are included in payables and deducted from equity on the balance sheet for the value of the maximum number of shares that may be purchased under the contract with the third party. No contract existed at the balance sheet date (31 December 2011: $10 million).

The proposed final dividend will reduce shareholders' equity by $228 million (31 December 2011: $124 million).

Included in Note 21 are details of share capital and capital reserves, revaluation reserves and retained earnings and related movements.

Notes to the Group financial statements

1. Basis of preparation

In preparing the financial information in this statement the Group has applied policies which are in accordance with the International Financial Reporting Standards as adopted by the European Union at 31 December 2012. Details of the Group's accounting policies can be found in the Group's Report and Accounts for the nine months ended 31 December 2011. The financial information included in this statement does not constitute the Group's statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2012, upon which the auditors have issued an unqualified report, will shortly be delivered to the Registrar of Companies.

The annual report will be posted to shareholders on 15 March 2013. The Company's Annual General Meeting will be held on Friday 3 May 2013 at 10 am at Riverbank House, 2 Swan Lane, London EC4R 3AD.

Scheme of arrangement

On 6 November 2012, under a scheme of arrangement between Man Strategic Holdings plc (formally Man Group plc), the former holding company of the Group, and its shareholders under Part 26 of the Companies Act 2006, and as sanctioned by the High Court, all the issued ordinary shares in that company were cancelled and the same number of new ordinary shares were issued to Man Group plc (the new holding company) in consideration for the allotment to shareholders of one ordinary share in Man Group plc for each ordinary share they held in Man Strategic Holdings plc. The scheme of arrangement is treated as a capital reorganisation. The consequence is that the Man Group has not fundamentally changed in any way, and no fair value adjustments have been made and no goodwill has been recognised.

2. Adjusted profit before tax
Statutory (loss)/profit before tax is adjusted to give a fuller understanding of the underlying profitability of the business. These are explained in detail either below or in the relevant note.

		12 months to	9 months to
		31 December	31 December
$m	Note	2012	2011
Statutory (loss)/profit before tax		(745)	193
Adjusting items:
Gain on disposal of Lehman claims		(131)	-
Impairment of GLG and legacy Man Multi-Manager goodwill	12	979	-
Release of tax indemnity provision		(11)	-
Recycling of FX revaluation on liquidation of subsidiaries		(42)	-
Impairment of capitalised placement fees	4,13	88	-
Compensation - restructuring	6	65	7
Other costs - restructuring	7	4	15
FRM acquisition costs	6,7	12	-
Revaluation of contingent consideration		(9)	-
Unwind of contingent consideration discount	8	3	-
Amortisation of acquired intangible assets	12	65	47
Adjusted profit before tax		278	262
Tax		(40)	(45)
Adjusted net income		238	217

The Lehman claims were sold by Man in November 2012 for a total consideration of $456 million, resulting in a pre-tax gain of $131 million. The overall gain comprised a gain of $114 million on the carrying value at the date of disposal as well as $19 million of previous gains recognised recycled from Other comprehensive income, partly offset by $2 million of directly attributable transaction costs. More details can be found in Note 15.3.

Goodwill and other intangibles were tested for impairment at 30 June 2012 and 31 December 2012. As a result, GLG and the legacy Man Multi-Manager goodwill was impaired by $91 million and $142 million respectively at 30 June 2012, with a further $746 million impairment of GLG goodwill at 31 December 2012 (total impairment of $837 million for GLG goodwill for the year). Further details are provided in Note 12.

A tax indemnity provision raised on a business disposal has been released, as it is no longer required.

A number of the Group's foreign subsidiaries were liquidated during the year, which had a related foreign currency translation reserve of $42 million at the date of liquidation. The related foreign currency translation reserve was recycled to the income statement on liquidation of these subsidiaries as required by IAS 21.

Capitalised placement fees were impaired by $88 million during the year. As a result of de-gearing and negative investment performance in relation to guaranteed products, $50 million of external capitalised placement fees were written off. Internal capitalised placement fees of $38 million were written off in December 2012, as a result of the introduction of a new servicing fee based internal compensation structure that is effective from 1 January 2013, which triggered the impairment.

Compensation costs incurred as part of restructuring are accounted for in full at the time the obligation arises, following the communication of the formal plan, and include payments in lieu of notice and enhanced termination costs. These include accelerated share-based payment and fund product based charges.

Restructuring costs included within Other costs primarily relate to professional fees in connection with the scheme of arrangement. In the prior period, restructuring costs primarily relate to onerous lease contracts on property in New York.

FRM acquisition costs consist of redundancy costs associated with achieving the acquisition cost synergies included within Compensation ($7 million) as shown in Note 6, as well as legal fees and onerous lease charges included within Other costs ($5 million) as shown in Note 7.

The revaluation of contingent consideration is an adjustment to the fair value of expected earn out payments resulting primarily from movements in net management fee run rates since the acquisition of FRM and has been included within Gains/(losses) on investments and other financial instruments. The gain was partly offset by an unwind of the discount on the contingent consideration of $3 million, included within Finance expense (Note 8).

The amortisation of acquired intangible assets relates to the amortisation of the investment management contracts and brands recognised on the acquisition of FRM, GLG, and Ore Hill. Further details are provided in Note 12.

3. Revenue and margins
Management fees, which include all non-performance related fees and interest income from loans to fund products, are recognised in the period in which the services are rendered. Performance fees are only recognised when they can be measured reliably. Performance fees can only be measured reliably at the end of the performance period as the net asset value (NAV) of the fund products could move significantly, as a result of market movements, between Man's financial reporting period end and the end of the performance period.

The level of funds under management (FUM) drives the aggregate level of management fee revenue so in order to sustain a profitable business operating costs must be flexible with different levels of FUM.

4. Distribution costs

	12 months to	9 months to
	31 December	31 December
$m	2012	2011
External distribution costs	203	192
Internal distribution costs	45	45
Distribution costs - before adjusting items	248	237
Impairment of capitalised placement fees (Note 2)	88	-
Total distribution costs	336	237

Distribution costs paid to intermediaries and Man's sales executives are directly related to their marketing activity and the investors serviced by them. The distribution expense is therefore variable to sales, FUM, and the associated management fee income to sustain management fee margins.

Distribution costs, before adjusting items, of $248 million (nine months to 31 December 2011: $237 million) comprise product placement fees of $82 million (nine months to 31 December 2011: $83 million) and investor servicing fees of $166 million (nine months to 31 December 2011: $154 million). Placement fees are paid for product launches or sales and are capitalised and amortised over the expected investment hold period (refer Note 13). Investor servicing fees are paid to intermediaries and employees for ongoing investor servicing and are expensed as incurred.

Capitalised placement fees were impaired by $88 million during the year, and classified as an adjusting item. Refer to Note 2 for further details.

5. Asset services
Asset services include valuations, fund accounting, and registrar functions performed by third parties under contract to Man, on behalf of the funds. The cost of these services is based on activity or FUM, therefore variable with activity levels and FUM. Asset services costs for the year were $31 million (nine months to 31 December 2011: $24 million).

6. Compensation

	12 months to	9 months to
	31 December	31 December
$m	2012	2011
Salaries - fixed	198	166
Salaries - variable	111	124
Share-based payment charge	56	63
Fund product based payment charge	17	31
Social security costs	30	24
Pension costs	15	7
Compensation costs - before adjusting items	427	415
Restructuring	65	7
FRM acquisition costs	7	-
Total compensation costs	499	422

Compensation is our largest cost and an important component of our ability to retain and attract talent at Man. In the short-term, the variable component of compensation adjusts with revenues and profitability. In the medium term the active management of headcount can reduce fixed based compensation, if required.

Compensation costs in total were $427 million, before adjusting items, or 33% of revenue, in line with prior period levels.

Fixed compensation and benefits was $233 million compared to $191 million in the prior nine month period ended 31 December 2011. Fixed compensation comprises: salaries - fixed; pension costs; and a share of the social security costs. The current year includes fixed compensation from FRM from 17 July 2012, the date of the acquisition.

Variable compensation was $194 million compared to $224 million in the prior nine month period as a result of lower revenue, reflecting the variability of our cost base.

Salaries, both fixed and variable, are charged to the Income Statement in the period in which they are incurred. They include partner drawings.

The accounting for share-based and fund product based compensation arrangements is covered in Note 20. The unamortised deferred compensation at period end was $54 million (nine months to December 2011: $91 million) which had a weighted average remaining vesting period of 1.2 years (31 December 2011: 1.6 years). The decrease is due primarily to the share-based and fund product based amortisation charges (as in the above table), net of a small amount of new additions in the period.

7. Other Costs

	12 months to	9 months to
	31 December	31 December
$m	2012	2011
Occupancy	56	48
Travel and entertainment	15	17
Technology	21	18
Communication	25	19
Audit, accountancy, actuarial and tax fees	12	10
Legal fees	21	16
Temporary staff and recruitment	30	31
Other professional fees	2	4
Consultancy and managed services	12	9
Benefits	20	21
Insurance	13	11
Marketing and sponsorship	11	12
Other cash costs	6	4
Total other costs before depreciation and amortisation	244	220
Depreciation and amortisation	63	42
Other costs - before adjusting items	307	262
Restructuring (Note 2)	4	15
FRM acquisition costs (Note 2)	5	-
Total other costs	316	277

The level of expenses, including occupancy, communication, end user technology and travel and entertainment is linked to headcount. Within a range of FUM balances we can achieve scalability. As FUM decreases beyond that range we have to take action to rebase our expenses in order to maintain our management fee margins.

Other costs, before depreciation and adjusting items, were $244 million in the period, compared to $220 million in the prior nine month period, which reflects the impact of the various cost saving initiatives to reduce the cost base of the firm as previously announced.

8. Finance expense and finance income

	12 months to	9 months to
	31 December	31 December
$m	2012	2011
Finance income:
Interest on cash deposits	21	16
Other - gain recognised on the repayment of loan notes issued by BlueCrest	15	11
Total finance income	36	27
Finance expense:
Interest payable on borrowings	(50)	(78)
Premium paid on debt buyback and other	(27)	(5)
Total finance expense - before adjusting items	(77)	(83)
Unwind of contingent consideration discount (Note 2)	(3)	-
Total finance expense	(80)	(83)

Finance income included a gain of $15 million (nine months to 31 December 2011: $11 million) recognised on the repayment of loan notes issued by BlueCrest. Finance expense includes a $21 million charge relating to a debt buy back during the year (refer to Note 14).

9. Taxation

	12 months to	9 months to
	31 December	31 December
$m	2012	2011
Analysis of tax charge for the period:
Current tax:
UK corporation tax on profits of the period	44	13
Foreign tax	14	39
Adjustments to tax charge in respect of previous periods	(17)	(12)
Total current tax	41	40
Deferred tax:
Origination and reversal of temporary differences	(6)	(8)
Adjustments to tax charge in respect of previous periods	4	2
Total tax charge	39	34

Man is a global business and therefore operates across many different tax jurisdictions. Income and profits are allocated to these different jurisdictions based on transfer pricing methodologies set in accordance with the laws of the jurisdictions in which we operate. The effective tax rate results from the combination of taxes paid on earnings attributable to the tax jurisdictions in which they arise. The majority of the Group's profit was earned in Switzerland, Australia and the UK. The current effective tax rate of -5.2% (nine months to 31 December 2011: 17.6%) differs principally as a result of the impairment of goodwill on which no tax relief is received and otherwise is consistent with this earnings profile. The effective tax rate on adjusted profits (Note 2) is 14.4% (nine months to 31 December 2011: 17.2%). The lower rate is principally the result of the effect of prior year tax credits for settled tax returns, which outweigh the impact of reduced relief on share-based compensation costs and losses for which no tax relief has been recognised.

The tax on Man's total (loss)/profit before tax is higher (nine months to 31 December 2011: lower) than the amount that would arise using the theoretical effective UK tax rate applicable to profits of the consolidated companies, as follows:

	12 months to	9 months to
	31 December	31 December
$m	2012	2011
(Loss)/profit before tax	(745)	193
Theoretical tax (credit)/charge at UK rate - 24.5% (31 December 2011: 26%)	(183)	50
Effect of:
Overseas rates compared to UK	(32)	(32)
Adjustments to tax charge in respect of previous periods	(13)	(10)
Impairment of goodwill and other adjusting items	249	-
Share-based payments	8	15
Other	10	11
	222	(16)
Total tax charge	39	34

Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred tax is calculated at the rates expected to be applied when the asset or liability is realised. The deferred tax closing balance of $97 million (31 December 2011: $94 million) relates mostly to the tax arising on intangible assets of $114 million (31 December 2011: $120 million). The closing balance is also net of deferred tax assets primarily related to employee share schemes of $8 million (31 December 2011: $11 million), tax allowances over depreciation of $9 million (31 December 2011: $10 million) and other temporary differences of nil (31 December 2011: $5 million).

10. Earnings per ordinary share (EPS)
The calculation of basic EPS is based on: a basic post-tax net loss, after payments to holders of the perpetual subordinated capital securities ($25 million after tax, $18 million for the prior period), of $809 million compared to a net income of $141 million in the prior period; and ordinary shares of 1,772,828,571 (nine months to 31 December 2011: 1,826,586,175), being the weighted average number of ordinary shares in issue during the period after excluding the shares owned by the Man 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 diluted EPS is based on ordinary shares of 1,802,501,332 (nine months to 31 December 2011: 1,857,857,931).

The details of movements in the number of shares used in the basic and fully dilutive earnings per share calculation are provided below.

	12 months to 31 December 2012		9 months to 31 December 2011
		Weighted		Weighted
	Total number	average	Total number	average
	(millions)	(millions)	(millions)	(millions)
Number of shares at beginning of period	1,820.8	1,820.8	1,881.5	1,881.5
Issues of shares	4.3	2.5	1.7	0.5
Repurchase of own shares	(3.3)	(2.9)	(66.2)	(8.4)
Business combinations	-	-	3.8	3.3
Number of shares at period end	1,821.8	1,820.4	1,820.8	1,876.9
Shares owned by employee trusts	(40.8)	(47.6)	(55.5)	(50.3)
Basic number of shares	1,781.0	1,772.8	1,765.3	1,826.6
Share awards under incentive schemes		28.7		31.3
Employee share options		1.0		-
Dilutive number of shares		1,802.5		1,857.9

The reconciliation from EPS to an adjusted EPS is given below:

	12 months to 31 December 2012
			Basic		Diluted
	Basic post-	Diluted post-	earnings per		earnings per
	tax earnings	tax earnings	share cents		share cents
	$m	$m
Earnings per share¹	(809)	(809)	(45.6)		(45.6)
Effect of potential ordinary shares²	-	-	-		0.7
Items for which EPS has been adjusted (Note 2)	1,023	1,023	57.7		56.8
Tax on the above items	(1)	(1)	(0.1)		(0.1)
Adjusted Earnings per share	213	213	12.0		11.8

	9 months to 31 December 2011
	Basic post-tax	Diluted post-tax	Basic earnings	Diluted earnings
	earnings	earnings	per share cents	per share cents
	$m	$m
Earnings per share¹	141	141	7.7	7.6
Items for which EPS has been adjusted (Note 2)	69	69	3.8	3.7
Tax on the above items	(11)	(11)	(0.6)	(0.6)
Adjusted Earnings per share	199	199	10.9	10.7

1 The difference between (loss)/profit after tax and basic and diluted post-tax net (expense)/income is the adding back of the expense in the period relating to the fixed rate Perpetual Subordinated Capital Securities (Note 21), totalling $25 million post-tax at 24.5% (nine months to 31 December 2011: $18 million).

2 Potential ordinary shares have not been treated as dilutive and therefore have been excluded from the diluted statutory earnings per share calculation as their conversion would decrease the loss per share.

11. Dividends

	12 months to	9 months to
	31 December	31 December
$m	2012	2011
Ordinary shares
Final dividend paid for the nine months to 31 December 2011 - 7 cents (2011: 12.5 cents)	126	226
Interim dividend paid for the six months to 30 June 2012 - 9.5 cents (2011: 9.5 cents)	173	168
Proposed final dividend for the year to 31 December 2012 - 12.5 cents (2011: 7 cents)	228	124

Dividend distribution to the Company's shareholders is recognised directly in equity and as a liability in Man's financial statements in the period in which the dividend is paid or, if required, approved by the Company's shareholders.

12. Goodwill and acquired intangibles

	12 months to 31 December 2012			9 months to 31 December 2011
		IMCs and
		other			IMCs and
		acquired			other acquired
$m	Goodwill	intangibles⁽²⁾	Total	Goodwill	intangibles⁽²⁾	Total
Cost:
At beginning of the period	2,234	694	2,928	2,214	672	2,886
Acquisition of business⁽¹⁾	16	32	48	22	22	44
Currency translation	2	-	2	(2)	-	(2)
At period end	2,252	726	2,978	2,234	694	2,928
Aggregate amortisation and impairment:
At beginning of the period	(375)	(75)	(450)	(375)	(28)	(403)
Amortisation	-	(65)	(65)	-	(47)	(47)
Impairment⁽⁴⁾	(979)	-	(979)	-	-	-
At period end	(1,354)	(140)	(1,494)	(375)	(75)	(450)
Net book value at period end	898	586	1,484	1,859	619	2,478
Allocated to cash generating units as follows:
GLG⁽³⁾	262	555	817	1,099	619	1,718
FRM	227	31	258	353	-	353
AHL	409	-	409	407	-	407

(1) Acquisition of business relates to FRM in the current period and to Ore Hill in the prior period.

(2) Includes investment management contracts (IMCs), brand names and distribution channels.

(3) The Ore Hill CGU has been allocated to the GLG CGU in the current period.

(4) The impairment of $979 million relates to the impairment of the legacy Man Multi-Manager business at 30 June 2012 of $142 million, and the impairments of the GLG business recognised at 30 June 2012 and 31 December 2012 of $91 million and $746 million respectively (total of $837 million for GLG for the year ended 31 December 2012).

Goodwill

Goodwill represents the excess of the consideration transferred over the fair value of the net identifiable assets of the acquired business at the date of acquisition. The consideration transferred is the fair value of the assets given, equity instruments issued and liabilities incurred at the date of acquisition.

Goodwill is carried in the balance sheet at cost less accumulated impairment losses. Goodwill has an indefinite useful life, is not subject to amortisation and is tested for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

From a capital management perspective all goodwill and acquired intangibles, net of deferred taxes, are supported with shareholders' equity. This approach is consistent with our regulatory capital treatment. The acquisition of GLG was supported with existing excess shareholders' capital and the issuance of new Man shares to the principals and key employees.

Investment management contracts (IMCs)

IMCs are recognised at the present value of the expected future cash flows of the contracts and distribution channels acquired and are amortised on a straight-line basis over the expected useful lives which are between 9 to 12 years, and 10 years for the GLG and FRM brand names.

Allocation of goodwill to cash generating units

The Group has three identified cash-generating units for impairment review purposes: GLG, FRM, and AHL. The goodwill and other intangible assets acquired on the acquisition of FRM has been allocated to the FRM cash generating unit as the acquired FRM business has been fully integrated with the previous Man Multi-Manager business, which will benefit from all of the synergies from the acquisition.

In the prior period, the goodwill and other intangible assets acquired on the acquisition of GLG was allocated to the cash generating units (CGUs) expected to benefit from the synergies of the business combination. As at the date of acquisition, 77% of the acquired goodwill and all other intangible assets was allocated to the GLG CGU (goodwill: $1,077 million; other intangibles $672 million) with the remaining 23% of the goodwill allocated to the AHL CGU (goodwill: $326 million).

Ore Hill was previously reported as a separate cash-generating unit and is now part of the GLG cash-generating unit as it has been integrated into the GLG business. The $22 million of goodwill relating to the Ore Hill business has been reclassified to the GLG CGU in the comparative period at 31 December 2011 accordingly.

GLG cash generating unit (CGU)

The recoverable amount of the GLG CGU is assessed each year using a value in use calculation. A value in use calculation gives a higher valuation for the GLG CGU as a fair value approach would exclude some of the revenue synergies available to Man through its ability to distribute GLG products using its well established distribution channels, which is unlikely to be fully available to other market participants. At 31 December 2011, the value in use calculation suggested there was headroom of around $95 million over the carrying value of the GLG goodwill and other intangibles balance and no impairment was considered necessary.

At 30 June 2012, as a result of the challenging economic environment, the recoverable amount of the GLG CGU was again assessed on the same basis. A goodwill impairment charge of $91 million was deemed necessary and was recognised at 30 June 2012 in the interim financial statements. As disclosed in the interim financial statements at 30 June 2012, the model is sensitive to small changes in the assumptions. At 30 June 2012, applying various stressed scenarios to investment performance and net flow assumptions over the three year budget period suggested possible impairment in future periods of between $94 million to $1,605 million.

At both 31 December 2011 and 30 June 2012, Duff and Phelps, a specialist valuation firm, was appointed to provide an estimate of the recoverable amount of the GLG CGU. The valuations and the associated headroom or impairment in these periods were supported by their work as an independent valuation expert. At 31 December 2012, Duff and Phelps have not been re-appointed as it has been established that their valuation methodology and outcome is not significantly different from the internal valuation calculation that is currently being applied.

The recoverable amount of the GLG CGU has again been assessed at 31 December 2012 using a value in use calculation. The value in use calculation uses cash flow projections based on the approved budget for the year to 31 December 2013 and a further two years of projections (2014 and 2015) plus a terminal value. The following valuation analysis is based on best practice guidance whereby a terminal value is calculated at the end of a short discrete budget period and assumes no growth in asset flows after this three year budget period above the long-term growth rate.

The key assumptions used in the value in use calculation are represented by the compound average annualised growth in funds under management (FUM) over the three year budget period and the discount rates applied to the modelled cash flows. These are shown in the table below. The discount rates are the same as those used at 30 June 2012 and 31 December 2011.

Compound average annualised growth in FUM (over 3 years)	8.5%
Discount rate (post-tax)
- Net management fees	11%
- Net performance fees	17%

The pre-tax equivalent of the net management fee and net performance fee discount rates is 12.2% and 21.1% respectively.

The terminal value is calculated at the end of 2015. The terminal value is calculated based on the projected closing FUM at 31 December 2015 and applying a mid-point of a range of historical multiples, being 13 times for management fees and 5.5 times for performance fees. This is equivalent to an overall terminal growth rate of 1.3%.

GLG's FUM at 31 December 2012 and the budgeted FUM over the three year budget period are lower in comparison to the modelled FUM in the value in use calculation at 30 June 2012, reflecting the on-going challenging market conditions resulting in a more cautious outlook for growth in funds under management. The decrease in FUM, partly offset by a reduction in GLG's costs from the cost saving initiatives, has resulted in a decrease in the value in use calculation for the GLG CGU with a value of $867 million as at 31 December 2012. The total carrying value of the GLG CGU, including goodwill, is assessed to be $1,613 million, resulting in a goodwill impairment of $746 million. This impairment has been recognised accordingly at 31 December 2012, with a total impairment charge of $837 million for the year ended 31 December 2012 including the $91 million recognised at 30 June 2012.

A summary of the factors attributing to the change in the value of the GLG CGU from 31 December 2011, with the amount attributable to each change if these factors were changed in this order, is shown in the table below.

	$m
Value of GLG business at 31 December 2011	1,812
Decrease in funds under management growth	(803)
Changes in calculation of value attributable to management and performance fees	(142)
Value of GLG business at 31 December 2012*	867

* The difference between the value of the GLG business at 31 December 2012 of $867 million and the value of the goodwill and other acquired intangible assets allocated to the GLG business of $817 million relates to leasehold improvements and equipment of $45 million and capitalised computer software of $5 million that has been allocated to the GLG business.

The decline in the funds under management growth assumption reflects the on-going challenging market conditions, weighted more towards current experience rather than longer term historical averages, in particular reflecting.net outflows of $1,033 million in the second half of 2012. This contributed to a decrease of approximately $803 million in the value of the GLG CGU.

The value attributable to management and performance fees has decreased as a result of the terminal value being calculated by applying a mid-point of a range of historical multiples, equating to an overall terminal growth rate of 1.3%, which is lower than the overall terminal growth rate applied previously.

The table below shows two adverse scenarios, whereby the base case key assumptions are changed to stressed assumptions. These stressed assumptions are applied to decrease the compound average annualised growth in FUM (over three years) to 5% in the first sensitivity; and to 0% in the second sensitivity. The table below shows the effect of these scenarios and the associated increase in the modelled impairment charge that would result.

The results of these sensitivities make no allowance for actions that management would take if such market conditions persisted.

Stressed assumptions to change compound average annualised growth in FUM to:	5%	0%
Increase in modelled impairment ($m)	223	394

If the net management fee and net performance fee post-tax discount rates were increased by 1% to 12% and 18% respectively, it would result in increased modelled impairment of $17 million. If the discount rates were decreased by 1%, it would result in decreased modelled impairment of $18 million.

If the mid-point of the range of historical multiples for management and performance fees used to calculate the terminal value were increased by 1 to 14 times and 6.5 times respectively, it would result in decreased modelled impairment of around $90 million. If they were decreased by 1 to 12 times and 4.5 respectively, it would result in increased modelled impairment of around $90 million.

FRM cash generating unit

The FRM CGU includes the legacy Man Multi-Manager business and the acquired FRM business. At 30 June 2012 and 31 December 2011, the FRM CGU included the legacy Man Multi-Manager business only as the FRM business was acquired in July 2012.

The recoverable amount of the FRM CGU was reviewed at 31 December 2011 by assessing the fair value of the business based on market earnings multiples applied to the post-tax net earnings for calendar year 2011. It was concluded that no impairment charge was required.

At 30 June 2012, as a result of the challenging economic environment, the recoverable amount of the legacy Man Multi-Manager CGU was assessed using a value in use calculation. A goodwill impairment charge of $142 million was deemed necessary at 30 June 2012 and was recognised in the interim financial statements.

As with the GLG CGU, the recoverable amount of the FRM CGU has again been assessed at 31 December 2012 using a value in use calculation. The recoverable amount at 31 December 2012 includes the previous Man Multi-Manager and the acquired FRM business. The value in use calculation follows the same methodology as for the GLG CGU.

Compound average annualised growth in FUM (over 3 years)
- Guaranteed products	-22%
- Institutional FoF and open-ended products	5.2%
Discount rate (post-tax)
- Net management fees	11%
- Net performance fees	17%

In the above table for the model assumptions, the pre-tax equivalent of the net management fee and net performance fee discount rates is 12.7% and 19.0% respectively.

The terminal value is calculated at the end of 2015. The terminal value is calculated based on the projected closing funds under management at 31 December 2015 and applying historical market multiples. This is equivalent to an overall terminal growth rate of 1.6%.

As a result of the FRM acquisition during the year and the level of Man specific synergies from the acquisition, as well as the decrease in costs as a result of the cost saving initiatives, the value in use calculation suggests a value for the FRM CGU with significant headroom over the carrying value of the business.

In an adverse scenario, the compound average annualised growth in FUM (over three years) would have to decrease for guaranteed products and institutional FoF and open-ended products to -39% and -9.4% respectively as a result of a combination of declined net investment performance and net flows for any impairment to arise.

If the net management fee and net performance fee post-tax discount rates were increased by 1% to 11% and 18% respectively, it would result in decreased modelled headroom of $18 million. If the discount rates were decreased by 1%, it would result in increased modelled headroom of $19 million.

AHL cash generating unit

The recoverable amount of the AHL CGU was reviewed at 31 December 2011 by assessing the fair value of the business based on market earnings multiples applied to the post-tax net earnings for calendar year 2011. The fair value less costs to sell valuation indicated a significant amount of headroom over the carrying value of the AHL CGU at 31 December 2011, and there were no realistic scenarios which would result in impairment being necessary.

As with the GLG and FRM CGUs, the recoverable amount of the AHL CGU has been assessed at 31 December 2012 using a value in use calculation. The value in use calculation follows the same methodology as for the GLG and FRM CGUs.

Compound average annualised growth in FUM (over 3 years)
- Guaranteed products	-18%
- Open-ended products	3.1%
Discount rate (post-tax)
- Net management fees	11%
- Net performance fees	17%

In the above table for the model assumptions, the pre-tax equivalent of the net management fee and net performance fee discount rates is 12.8% and 20.0% respectively.

The value in use calculation for the AHL CGU again indicates a significant amount of headroom over the carrying value of the AHL CGU.

In an adverse scenario, the compound average annualised growth in FUM (over three years) for guaranteed products and open-ended products would have to decrease to -31% and -5.6% respectively as a result of a combination of declined net investment performance and net flows for any impairment to arise.

If the net management fee and net performance fee post-tax discount rates were increased by 1% to 11% and 18% respectively, it would result in decreased modelled headroom of $37 million. If the discount rates were decreased by 1%, it would result in increased modelled headroom of $38 million.

Acquisition of FRM business

On 17 July 2012, Man acquired the entire issued share capital of FRM Holdings Limited (Financial Risk Management, FRM), a global hedge fund research and investment specialist with funds under management at the date of acquisition of $8.3 billion.

The consideration to FRM shareholders comprised approximately $66 million in cash for the acquisition balance sheet and two earn out payments, payable in cash following the first and third anniversaries of closing, on a sliding scale dependent on levels of run rate net management fees as well as a 47.5% of net performance fees generated within three years of the acquisition date. Cash balances of $106 million were acquired as part of the acquisition balance sheet, which more than covered the $66 million of initial cash consideration, resulting in a net cash inflow of $40 million on acquisition.

In addition, Sumitomo Mitsui Trust Bank Limited (SMTB), a 5% shareholder in FRM, exchanged its shareholding for a holding of preference shares in RBH Holdings (Jersey) Limited, the Man subsidiary which acquired FRM. This shareholding entitles SMTB to a dividend corresponding to a 2.65% per annum share of the net management and performance fee revenues generated from the acquired FRM funds under management and new funds under management raised from SMTB sales.

Under IFRS 3 - 'Business combinations', Man is required to calculate the fair value of acquired assets. Provisional values for the acquired business, at the date of acquisition, are set out in the table below:

		Fair value	Provisional
$m (Provisional)	Book value	adjustments	value
Cash and cash equivalents	106	-	106
Fee and other receivables	45	(6)	39
Investments in fund products	3	-	3
Leasehold improvements and equipment	1	-	1
Intangible assets	-	32	32
Trade and other payables	(36)	(3)	(39)
Deferred tax arising on other intangible assets	-	(6)	(6)
Net assets acquired	119	17	136
Goodwill on acquisition			16
Net assets acquired including goodwill			152
Purchase consideration:
Cash consideration			66
Contingent cash consideration			86
Total consideration			152

The fair value adjustments relate primarily to the recognition of intangible assets comprising acquired investment management contracts (IMCs) and the FRM brand, which were valued at $31 million and $1 million respectively. These intangible assets are recognised at the present value of the expected future cash flows generated from the assets and are amortised on a straight-line basis over their expected life of 10 years. Deferred tax has been provided on the value of the intangible assets ($6 million) and this is a non-cash item as the liability arises due to the tax non-deductibility of the amortisation of IMCs.

Goodwill primarily represents the cost synergies to be generated from acquiring and integrating the FRM business with the legacy Man Multi Manager business. Goodwill is not expected to be deductible for tax purposes. Acquisition costs of $12 million, primarily relating to redundancy costs, legal fees and advisor fees, have been expensed and do not form part of goodwill (Note 2).The contingent cash consideration of $86 million is calculated as the present value of expected earn out payments and dividends on the perpetual preference shares issued to SMTB. The contingent consideration is deemed to be a financial liability measured initially at fair value and subsequently at fair value through profit or loss.

In addition to the assets and liabilities in the above table, an indemnification asset and corresponding liability, in relation to employee loans, arose on acquisition, which have subsequently been fully settled.

The post tax result for the period since the acquisition date for the legacy FRM business alone amounted to a $4 million profit, excluding pre-tax items in relation to the post-acquisition amortisation of purchased intangibles ($1 million) and acquisition costs ($12 million), partially offset by excluding the fair value gain of $6 million on the contingent consideration. If the acquisition had taken place at the beginning of the financial year, the post tax profit for FRM would have been $7 million, excluding amortisation of purchased intangibles ($3 million) and a charge of $33 million for acquisition and restructuring costs relating to the pre and post-acquisition period, partially offset by excluding a fair value gain of $3 million on contingent consideration. This result does not include any benefit from cost synergies. Revenue for the period since the acquisition date for the legacy FRM business amounted to $36 million, and if the acquisition had taken place at the beginning of the financial year, the revenue would have been $80 million.

13. Other intangibles

		12 months to 31 December 2012			9 months to 31 December 2011
			Capitalised			Capitalised
		Placement	computer		Placement	computer
$m	Note	fees	software	Total	fees	software	Total
Cost:
At beginning of the period		639	115	754	822	113	935
Acquisition of business				-	-	1	1
Additions		29	4	33	46	7	53
Redemptions/disposals		(587)	(11)	(598)	(229)	(6)	(235)
At period end		81	108	189	639	115	754
Aggregate amortisation and impairment:
At beginning of the period		(482)	(85)	(567)	(638)	(68)	(706)
Impairment	2	(88)	-	(88)	-	-	-
Redemptions/disposals		577	10	587	210	4	214
Amortisation		(56)	(20)	(76)	(54)	(21)	(75)
At period end		(49)	(95)	(144)	(482)	(85)	(567)
Net book value at period end		32	13	45	157	30	187

Placement fees

Placement fees are paid to distributors and employees for selling fund products. The majority of placement fees paid are capitalised as an intangible asset which represents the contractual right to benefit from future income from providing investment management services. The amortisation period is based on management's estimate of the weighted average period over which Man expects to earn economic benefit from the investor in each product, estimated to be between two to five years on a straight-line basis.

If an investor redeems their investment in a fund product, the corresponding unamortised placement fee is written off. The placement fees intangible is also subject to impairment testing each period to ensure that the future economic benefit arising from each fund product is in excess of the remaining unamortised balance. Amortisation expense, amounts written off, and any impairment losses, are included in distribution costs in the Income statement.

During the year, $88 million of external and internal capitalised placement fees were impaired. Refer to Note 2 for additional information.

The weighted average remaining amortisation period of the unamortised placement fees at 31 December 2012 is 2.9 years (31 December 2011: 2.2 years).

From a capital management perspective capital is held against the unamortised balance of placement fees based on an evaluation of the risk of an accelerated accounting charge relating to poor investment performance or early redemptions. From a regulatory capital perspective placement fees are an intangible asset and are required to be supported with Tier 1 regulatory capital.

Capitalised computer software

Costs that are directly associated with the procurement or development of identifiable and unique software products, which will generate economic benefits exceeding costs beyond one year, are recognised as capitalised computer software. Capitalised computer software is amortised on a straight-line basis over its estimated useful life (three years) and is subject to regular impairment reviews. Amortisation of capitalised computer software is included in Other costs in the Income statement.

14. Cash, liquidity and borrowings

Liquidity and borrowings

The business is cash generative at an operating level and has the ability to generate significant cash through performance fees.

Total liquidity resources aggregated to $3,525 million at 31 December 2012 (31 December 2011: $3,199 million) and comprised cash and cash equivalents of $2,000 million (31 December 2011: $1,639 million) and the undrawn committed revolving credit facility of $1,525 million (31 December 2011: $1,560 million). Cash and cash equivalents at period end comprises $268 million (31 December 2011: $193 million) of cash at bank on hand, $1,153 million of treasury bills (31 December 2011: nil), and $579 million (31 December 2011: $1,446 million) in short-term deposits, net of overdrafts of nil (31 December 2011: nil). Cash ring-fenced for regulated entities totalled $303 million (31 December 2011: $246 million).

Liquidity resources support on-going operations and potential liquidity requirements under stressed scenarios. The amount of potential liquidity requirements is modelled based on scenarios that assume stressed market and economic conditions. With the exception of committed purchase arrangements, the funding requirements for Man relating to the investment management process are discretionary. The liquidity profile of Man is monitored on a daily basis and the stressed scenarios are updated regularly. The Board reviews Man's funding resources at each Board meeting and on an annual basis as part of the strategic planning process. Man's available liquidity is considered sufficient to cover current requirements and potential requirements under stressed scenarios.

Cash is invested in accordance with strict limits consistent with the Board's risk appetite, which consider both the security and availability of the liquidity. Accordingly, cash is invested in short-dated US Treasury bills and is held in short-term bank deposits and demand deposit bank accounts. At 31 December 2012, $1,153 million was invested in short-dated US Treasury bills and $847 million was cash balances with 30 banks (31 December 2011: $1,639 million with 34 banks). The single largest counterparty bank exposure of $183 million was held with an A+ rated bank (31 December 2011: $305 million with an A- rated bank). Balances with banks in the AA ratings band aggregated to $134 million (31 December 2011: $145 million). Balances with banks in the A ratings band aggregated to $713 million (31 December 2011: $1,493 million).

The following tables summarise the maturity profile of outstanding borrowings, the perpetual subordinated capital securities and the committed revolving credit facility, and Man's available liquidity as at 31 December 2012 and 2011.

		Less than 1			Greater than 3
31 December 2012 ($m)	Total	year	2 years	3 years	years
Senior 2013 fixed rate bonds	173	173	-	-	-
Senior 2015 fixed rate € bonds	285	-	-	285	-
Tier 2 subordinated 2015 floating rate notes	170	-	-	170	-
Tier 2 subordinated 2017 fixed rate bonds	231	-	-	-	231
Borrowings	859	173	-	455	231

Tier 1 perpetual subordinated capital securities	300	-	-	-	300

Cash and cash equivalents	2,000
Undrawn committed revolving credit facility	1,525	-	-	-	1,525
Total liquidity	3,525

		Less than			Greater than 3
31 December 2011 ($m)	Total	1 year	2 years	3 years	years
Senior 2013 fixed rate bonds	172	-	172	-	-
Senior 2015 fixed rate € bonds	492	-	-	-	492
Tier 2 subordinated 2015 floating rate notes	171	-	-	-	171
Tier 2 subordinated 2017 fixed rate bonds	231	-	-	-	231
Borrowings	1,066	-	172	-	894

Tier 1 perpetual subordinated capital securities	300	-	-	-	300

Cash and cash equivalents	1,639
Undrawn committed revolving credit facility	1,560	-	-	-	1,560
Total liquidity	3,199

To maintain maximum flexibility, the revolving credit facility, the bonds and the capital securities do not include financial covenants. The mix of funded debt and committed bank facilities is a matter determined by the Board based on funding needs and availability in the capital and bank markets.

Borrowings are initially recorded at fair value net of transaction costs incurred, and are subsequently stated at amortised cost. The difference between the amount repayable at maturity on the borrowings and the carrying value is amortised over the period up to the expected maturity of the associated debt in accordance with the effective interest method. At 31 December 2012, the fair value of borrowings was $826 million.

Senior 2013 fixed rate bonds: the $173 million senior fixed rate bonds were issued in 2008, mature on 1 August 2013 and have a coupon of 6.5% per annum payable semi-annually in arrears up to and including the maturity date.

Senior 2015 fixed rate € bonds: the €216 million ($285 million) senior fixed rate bonds were issued in 2010, mature on 18 February 2015 and have a coupon of 6.0% per annum payable annually in arrears up to and including the maturity date. These bonds are hedged in to US dollars on an on-going basis. €166 million ($219 million) was repurchased during the year. The premium paid of $20 million, and an accelerated unwind of issue costs and fees of $1 million, have been included in finance expense for the year.

Tier 2 subordinated 2015 floating rate notes: the $170 million subordinated floating rate notes were issued in 2005, mature on 22 September 2015 and have a coupon of 3-month US dollar LIBOR plus 1.65%. The notes may be redeemed in whole at Man's option on any interest payment date falling on or after 22 September 2010, subject to FSA approval.

Tier 2 subordinated 2017 fixed rate bonds: the $231 million subordinated floating rate bonds were issued in August 2010, have a coupon of 5% and mature on 9 August 2017.

Tier 1 perpetual subordinated capital securities: the $300 million 11% perpetual subordinated capital securities were issued in 2008 and have a perpetual maturity date with optional par redemption at Man's discretion on 7 May 2013 and any quarterly coupon date thereafter, subject to FSA approval. On any coupon date the Group may exchange or vary the capital securities for qualifying non-innovative tier 1 securities (e.g. perpetual non-cumulative preference shares). The 11% per annum coupon is payable quarterly in arrears and is deferrable at the discretion of Man. The capital securities have been classified as equity on the basis that they are irredeemable except at the option of Man, and coupon payments and principal repayments can be deferred indefinitely. The coupon is therefore classified as dividends in the equity section. Following the introduction of the new group holding company, these securities have now been classified as a Non-controlling interest (refer to Note 21 for additional information).

Committed revolving credit facility: the committed revolving credit facility of $1,525 million was put in place in July 2011 as a 5-year facility and includes the option for Man to ask the banks to extend the maturity date by a year on each of the first and second anniversaries. The participant banks have the option to accept or decline our request. Before the first anniversary in July 2012 the banks were asked to extend the maturity date of the facility by a year. Banks with participations totalling $1,320 million accepted the request and as a result $205 million of the facility is currently scheduled to mature in July 2016 and $1,320 million in July 2017.

The expected payment profile of future interest payments, totalling $106 million (31 December 2011: $190 million), is as follows: $39 million is expected to be due within one year (31 December 2011: $56 million); $48 million within two and three years (31 December 2011: $97 million); and $19 million is expected to be due after three years (31 December 2011: $37 million).

Foreign exchange and interest rate risk

Man is subject to risk from changes in interest rates or foreign exchange rates on monetary assets and liabilities. A 10% strengthening/weakening of the US dollar against all other currencies, with all other variables held constant, would have resulted in a foreign exchange loss/gain of $8 million (31 December 2011: $5 million loss/gain), with a corresponding impact on equity. In respect of Man's monetary assets and liabilities which earn/incur interest indexed to floating rates, as at 31 December 2012, a 50bp increase/decrease in interest rates, with all other variables held constant, would have resulted in a $4 million increase or decrease (31 December 2011: $5 million increase or decrease) in net interest income.

15. Investments in fund products and other investments

	31 December 2012				31 December 2011
	Financial				Financial assets
	assets at fair	Available-for-			at fair value	Available- for-
	value through	sale financial	Loans and		through profit	sale financial	Loans and
$m	profit or loss	assets	receivables	Total	or loss	assets	receivables	Total
Investments in fund products
comprise:
Loans to fund products	-	-	274	274	-	-	334	334
Other investments in fund products	212	1	-	213	296	1	-	297
	212	1	274	487	296	1	334	631
Other investments comprise¹:
Lehman claims	-	-	-	-	-	333	-	333
Other	-	9	-	9	-	11	-	11
	-	9	-	9	-	344	-	344

1 This excludes the Pension Asset of $106 million (31 December 2011: $92 million).

15.1. Loans to fund products
Loans to fund products are short-term advances primarily to Man structured products. The loans are repayable on demand and are carried at amortised cost using the effective interest method. The average balance during the period was $332 million (nine months to 31 December 2011: $449 million). Loans to fund products have decreased compared to the prior period as the structured product FUM has decreased together with the associated leverage. The liquidity requirements of the structured products together with commitments to provide financial support, which give rise to loans to funds, are subject to our routine liquidity stress testing and any liquidity requirements are met by available cash resources, or the committed syndicated revolving loan facility.

Loans to fund products expose Man to credit risk and therefore the credit decision making process is subject to limits consistent with the Board's risk appetite. The carrying value represents Man's maximum exposure to credit risk. Loans are closely monitored against the assets held in the funds. The largest single loan to a fund product was $21 million (31 December 2011: $18 million). Fund entities are not externally rated, but our internal modelling indicates that fund products have a probability of default that is equivalent to a credit rating of AA or better.

15.2. Other investments in fund products
Man uses capital to invest in our fund products as part of our on-going business to build our product breadth and to trial investment research developments before we market the products to investors. These investments are generally held for less than one year. Other investments in fund products are classified primarily at fair value through profit or loss. Purchases and sales of investments are recognised on trade date.

Other investments in fund products are not actively traded and the valuation at the fund level cannot be determined by reference to other available prices. The fair values of investments in fund products 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 of the fund products and the timings of being able to redeem the fund product. The valuation of the underlying assets within each fund product is determined by external valuation service providers (VSPs) based on an agreed valuation policy and methodology.

Whilst these valuations are performed independently of Man, Man has established oversight procedures and due diligence processes to ensure that the net asset values reported by the VSPs are reliable and appropriate. Man makes adjustments to NAVs where the timing of being able to redeem the fund product or events or circumstances indicate that the NAVs are not reflective of fair value.

Other investments in fund products expose Man to market risk and therefore the commitment process is subject to limits consistent with the Board's risk appetite. The largest single investment in fund products was $46 million (31 December 2011: $36 million). The market risk from other investments in fund products and other investments is modelled using a value at risk (VaR) methodology using a 95% confidence interval and one month time horizon. The VaR is estimated to be $15 million at 31 December 2012 (31 December 2011: $16 million).

The total net gain on investments in fund products reported in the Income statement was $23 million (nine months to December 2011: net losses of $6 million).

Fund investment for deferred compensation arrangements

At year end, investment in fund products included $51 million (31 December 2011: $40 million) of Man and GLG fund products related to deferred compensation arrangements. Employees are subject to mandatory deferral arrangements and as part of these arrangements employees can elect deferral into a designated series of Man fund products. As the fund product plans are treated as variable plans for accounting purposes the compensation expense increases/decreases based on the value of the designated fund products. The fund product investments are held to offset this change in compensation during the vesting period and at vesting the fund investment is delivered to the employee. The fund product investments are recorded at fair value with any unrealised gain/loss during the vesting period charged to compensation expense in the Income Statement.

15.3. Other investments

Sale of Lehman claims

On 16 November 2012, the Group entered into a series of transactions with Hutchinson Investors LLC, managed by the Baupost Group, to sell the residual exposure to the Lehman estates (Lehman claims) that it acquired in July 2011 from certain GLG managed funds.

The total consideration for the transactions was $456 million, and resulted in a gain on sale of $131 million (Note 2). Man may receive up to a further $5 million if overall recoveries by the buyer exceed certain thresholds in the future.

The transaction allows Man to benefit from the payment of the total consideration, while providing guarantees of up to $75 million to the funds for prompt payment by the Baupost Group of amounts owed to the funds in the event of a successful claim. The proceeds increased Man's regulatory capital surplus and further enhanced its net cash position.

16. Fee and other receivables

	31 December	31 December
$m	2012	2011
Fee receivables	65	104
Prepayments and accrued income	179	132
Other receivables	138	192
	382	428

Fee and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Fee receivables and accrued income represent management and performance fees from fund products and are received in cash when the funds' NAV is determined. All fees are deducted from the NAV of the respective funds by the independent administrators and therefore the credit risk of fee receivables is minimal. No balances were overdue or delinquent at period end.

For the Open Ended Investment Collective (OEIC) Funds businesses, Man acts as the intermediary for the collection of subscriptions due from customers and payable to the funds, and for redemption requests receivable from funds and payable to customers. At 31 December 2012 the amount included in other receivables is $29 million (31 December 2011: $17 million). The unsettled fund payable is recorded in trade and other payables.

Other receivables have decreased during the year due to the repayment of the loan notes by BlueCrest. The loan notes were originally issued in 2011 as part of the consideration received upon disposal of Man's equity stake, with a par value of $100 million. The total gain on settlement of $15 million has been disclosed in Finance income (Note 8).

The value of derivative financial instruments, which consist primarily of foreign exchange contracts, as at 31 December 2012 included in other receivables was $14 million (31 December 2011: $8 million) and the notional value was $599 million (31 December 2011: $289 million). All derivatives mature within one year. During the year, there were $18 million net realised and unrealised gains arising from derivatives (nine months ended 31 December 2011: $61 million net losses). Derivatives are classified as Level 2 under Man's fair value hierarchy. Foreign exchange contracts are used to hedge the Group's foreign currency monetary assets and liabilities (e.g. the senior 2015 fixed rate € bonds) and sometimes to economically mitigate foreign currency cash flows. At the year end, $28 million (31 December 2011: $94 million) of fee and other receivables are expected to be settled after 12 months.

17. Trade and other payables

	31 December	31 December
$m	2012	2011
Accruals	345	376
Trade payables	48	38
Provisions	59	57
Contingent consideration	60	-
Other payables	141	204
	653	675

Accruals includes compensation accruals. Trade payables primarily relate to GLG's OEIC business. Provisions primarily relate to onerous property leases and potential legal claims. Contingent consideration relates to the amounts payable in respect of the FRM acquisition (Note 12). Other payables include servicing fees payable to distributors and redemption proceeds due to investors.

Payables are recorded initially at fair value and subsequently measured at amortised cost. Included in trade and other payables at 31 December 2012 are balances of $93 million (31 December 2011: $99 million) that are expected to be settled after more than 12 months. Man's policy is to meet its contractual commitments and pay suppliers according to agreed terms.

The value of derivatives, comprising foreign exchange contracts, included in other payables as at 31 December 2012 was $2 million (31 December 2011: $15 million) and the notional value was $267 million (31 December 2011: $653 million). All derivative contracts mature within one year.

18. Investments in associates

	12 months to	9 months to
	31 December	31 December
$m	2012	2011
At beginning of the period	41	68
Share of post-tax profit	10	3
Dividends received	(13)	(3)
Acquisition of controlling interest in Ore Hill	-	(27)
At period end	38	41

At 31 December 2012, the carrying value of investments in associates relates to a 25% interest in Nephila Capital Limited, an alternative investment manager specialising in the management in funds which underwrite natural catastrophe reinsurance and invest in insurance-linked securities and weather derivatives.

In the prior period, Man acquired the remaining 50% equity interest in Ore Hill for predominantly share based consideration, with it becoming a subsidiary undertaking at that date.

Associates are entities in which Man holds an interest and over which it has significant influence but not control. Investments in associates are recorded by the equity method of accounting and at cost plus (or minus) our share of cumulative post-acquisition movements in undistributed profits (or losses). Gains and losses on transactions between the Group and its associates are eliminated to the extent of the Group's interest in the entities.

Where Man has investments in certain fund entities over which it is able to exert significant influence but not control, these are classified as associates. Man has applied the scope exclusion within IAS 28 'Investments in Associates' for mutual funds, unit trusts and similar entities and has classified such holdings as investments and measured them at fair value through profit or loss.

19. Leasehold improvements and equipment

	31 December 2012			31 December 2011
	Leasehold			Leasehold
$m	improvements	Equipment	Total	improvements	Equipment	Total
Cost
At beginning of the period	149	105	254	126	128	254
Acquisition of business	-	1	1	-	-	-
Additions	19	1	20	58	2	60
Disposals	(9)	(26)	(35)	(3)	(58)	(61)
Reclassifications	(35)	35	-	(32)	33	1
At period end	124	116	240	149	105	254
Aggregate depreciation:
At beginning of the period	(25)	(56)	(81)	(25)	(91)	(116)
Charge for period	(14)	(29)	(43)	(6)	(15)	(21)
Disposals	8	26	34	1	55	56
Reclassifications	-	-	-	5	(5)	-
At period end	(31)	(59)	(90)	(25)	(56)	(81)
Net book value at period end	93	57	150	124	49	173

All leasehold improvements and equipment are shown at cost, less subsequent depreciation and impairment. Depreciation is calculated using the straight-line method over the asset's estimated useful life as follows: leasehold improvements over the shorter of the life of the lease and the improvement; and equipment over 3-10 years. Assets in the course of construction, included within leasehold improvements, were nil at year end (31 December 2011: $35 million). The additions during the year primarily relate to the fit out of the New York office. Reclassifications relate to the completion and capitalisation of Man's new data centre facility during the year.

From a capital perspective, leasehold improvements and equipment are supported by a combination of shareholders' equity and subordinated debt for both economic and regulatory capital purposes.

20. Deferred compensation arrangements
Man operates cash and equity settled share-based schemes as well as fund product based compensation arrangements.

During the year, $101 million (nine months to 31 December 2011: $94 million) was included in compensation and distribution costs for share-based payment and deferred fund product plans, split between equity settled share-based payments of $74 million (nine months to 31 December 2011: $56 million), cash-settled share-based payments totalling $4 million (nine months to 31 December 2011: $7 million), and deferred fund product plans of $23 million (nine months to 31 December 2011: $31 million).

21. Capital management
Investor confidence is an important element in the sustainability of our business. That confidence comes, in part, from the strength of our capital base. Man has maintained significant surplus capital and available liquidity throughout the recent periods of financial crisis. This capital has given Man flexibility to support our investors, intermediaries and financial partners and to allow them to make informed decisions regarding their investment exposures. This confidence gives our business credibility and sustainability.

We have a conservative capital and liquidity framework which allows us to invest in the growth of the business. We utilise capital to support the operation of the investment management process and the launch of new fund products. We view this as a competitive advantage which allows us to align directly our interests with those of investors and intermediaries.

Man monitors its capital requirements through continuous review of its regulatory capital and economic capital, including monthly reporting to Finance Committee and the Board.

Share capital and capital reserves

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Own shares held through an ESOP trust are recorded at cost, including any directly attributable incremental costs (net of income taxes), and are deducted from equity attributable to the Company's equity holders until the shares are transferred to employees or sold. Where such shares are subsequently sold, any consideration received, net of any directly attributable incremental transaction costs and the related tax effects, is included in equity attributable to the Company's equity holders.

New Group holding company

A new holding company was incorporated on 8 August 2012 and became the new listed holding company of the Man Group on 6 November 2012 via a Court approved scheme of arrangement under Part 26 of the Companies Act 2006. The former holding company was renamed Man Strategic Holdings plc and the new holding company assumed the name Man Group plc.

Under the scheme of arrangement, shares in the former holding company of the Group were cancelled. The same number of new ordinary shares were issued to the new holding company in consideration for the allotment to shareholders of one ordinary share of $1.07 in that new holding company for each ordinary share of 3³/₇ US cents they had held in the former holding company.

On 8 November 2012, Man Group plc effected a reduction of its share capital to create distributable reserves, as sanctioned by the High Court. This capital reduction reduced the nominal value of ordinary shares in the new holding company from $1.07 to 3³/₇ US cents.

Ordinary shares

Ordinary shares have a par value of 3³/₇ US cents per share (31 December 2011: 3³/₇ US cents per share) and represent 99.9% of issued share capital. All issued shares are fully paid. The shares have attached to them full voting, dividend and capital distribution (including on wind up) rights. They do not confer any rights of redemption. Ordinary shareholders have the right to receive notice of, attend, vote and speak at general meetings.

A holder of ordinary shares is entitled to one vote per ordinary share held when a vote is taken on a poll and one vote only when a vote is taken on a show of hands.

There are restrictions in place on the transfer of some ordinary shares. During the year to 31 December 2012, the former holding company repurchased 3,332,756 (nine months to 31 December 2011: 66,176,820) ordinary shares, equivalent to 0.18% of the issued share capital for a total consideration of $7 million. All of the shares repurchased to date have been cancelled.

As at 28 February 2013, the new holding company had an unexpired authority from the 2012 Annual General Meeting (AGM), to purchase further shares up to a maximum amount of 182,056,038 ordinary shares. A resolution to allow the purchase of 182,179,028 ordinary shares, representing 10% of the issued share capital will be proposed at the forthcoming AGM.

Deferred sterling shares

Unlisted deferred sterling shares, representing 0.1% of the Company's issued share capital with a par value of £1 per share were issued due to the redenomination of the ordinary share capital into US dollars. These shares are necessary for the Company to continue to comply with Section 763 of the Companies Act 2006. The deferred sterling shares are freely transferable and have no rights to participate in the profits of the Company, to attend, speak or vote at any general meeting and no right to participate in any distribution in a winding up except for a return of the nominal value in certain limited circumstances. The A share is held by Man Group plc and was issued to facilitate the allotment of shares in the former holding company to the new holding company without the requirement for an independent valuation report.

Issued and fully paid share capital

	12 months to 31 December 2012
		Unlisted
		deferred
	Ordinary	sterling	A shares	Nominal
	shares	shares	of £1	value
	Number	Number	Number	$m
Man Strategic Holdings plc (former holding company)
At 1 January 2012	1,820,814,143	50,000	-	63
Issue of ordinary shares:
Employee share awards/options	165,512	-	-	-
GLG Partnership Plans	3,012,545	-	-	-
Purchase and cancellation of own shares	(3,332,756)	-	-	-
At 6 November 2012	1,820,659,444	50,000	-	63
Man Group plc (new holding company)
Relating to the formation of new holding company	2	50,000	-	-
Scheme of arrangement - issue of ordinary shares of $1.07 each	1,820,659,444	-	1	1,948
Capital reduction to ordinary shares of 3³/7 cents each	-	-	-	(1,885)
GLG Partnership Plans	1,130,833	-	-	-
At 31 December 2012	1,821,790,279	50,000	1	63

	9 months to 31 December 2011
		Unlisted
		deferred
	Ordinary	sterling	A shares	Nominal
	shares	shares	of £1	value
	Number	Number	Number	$m
At 1 April 2011	1,881,460,689	50,000	-	65
Issue of ordinary shares:
Employee share awards/options	390,201	-	-	-
GLG Partnership Plans	1,369,888	-	-	-
Shares issued in business combinations	3,770,185	-	-	-
Purchase and cancellation of own shares	(66,176,820)	-	-	(2)
At 31 December 2011	1,820,814,143	50,000	-	63

Share capital and reserves

		Perpetual subordinated	Share	Capital
		capital	premium	redemption	Merger	Reorganisation
$m	Share capital	Securities	account	reserve	reserve	reserve	Total
At 1 January 2012	63	300	1,707	1,294	-	-	3,364
Employee share awards/options	-	-	8	-	-	-	8
Scheme of arrangement:
- Cancellation of shares in former holding company	(63)	-	(1,714)	(1,294)	-	-	(3,071)
- Issue of shares in new holding company	1,948	-	-	-	491	632	3,071
Capital reduction	(1,885)	-	-	-	-	-	(1,885)
Transfer to Non-controlling interest	-	(300)	-	-	-	-	(300)
At 31 December 2012	63	-	1	-	491	632	1,187
At 1 April 2011	65	300	1,689	1,292	-	-	3,346
Ordinary shares issued in business combinations	-	-	15	-	-	-	15
Employee share awards/options	-	-	3	-	-	-	3
Repurchase of own shares	(2)	-	-	2	-	-	-
At 31 December 2011	63	300	1,707	1,294	-	-	3,364

Revaluation reserves and retained earnings

$m	Available-for-sale reserve	Cash flow hedge reserve	Own shares held by ESOP trust	Cumulative translation adjustment	Profit and loss account	Total
At 1 January 2012	4	-	(221)	43	870	696
Currency translation difference	-	-	(10)	13	-	3
Movement in close period buyback obligations	-	-	-	-	10	10
Repurchase of own shares	-	-	-	-	(7)	(7)
Share-based payments charge for the period	-	-	-	-	66	66
Purchase of own shares by ESOP trusts	-	-	-	-	(1)	(1)
Disposal of own shares by ESOP trusts	-	-	61	-	(61)	-
Fair value gains taken to equity	18	16	-	-	-	34
Corporation tax debited to reserves	-	(1)	-	-	-	(1)
Transfer to income statement on sale or impairment	(19)	(9)	-	(42)	-	(70)
Scheme of arrangement - capital reduction	-	-	-	-	1,885	1,885
Dividends	-	-	-	-	(299)	(299)
Dividends with respect to Perpetual Subordinated Capital Securities	-	-	-	-	(33)	(33)
Taxation with respect to Perpetual Subordinated Capital Securities	-	-	-	-	8	8
Loss for the period	-	-	-	-	(784)	(784)
At 31 December 2012	3	6	(170)	14	1,654	1,507

$m	Available-for- sale reserve	Cash flow hedge reserve	Own shares held by ESOP trust	Cumulative translation adjustment	Profit and loss account	Total
At 1 April 2011	4	-	(234)	59	1,261	1,090
Currency translation difference	-	-	7	(16)	-	(9)
Movement in close period buyback obligations	-	-	-	-	(10)	(10)
Repurchase of own shares	-	-	-	-	(143)	(143)
Share-based payments charge for the period	-	-	-	-	63	63
Purchase of own shares by ESOP trusts	-	-	(56)	-	(3)	(59)
Disposal of own shares by ESOP trusts	-	-	62	-	(45)	17
Dividends	-	-	-	-	(394)	(394)
Dividends with respect to Perpetual Subordinated Capital Securities	-	-	-	-	(25)	(25)
Taxation with respect to Perpetual Subordinated Capital Securities	-	-	-	-	7	7
Profit for the period	-	-	-	-	159	159
At 31 December 2011	4	-	(221)	43	870	696

ENDS

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