Man Regulatory News (EMG)

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2012

Key points

·; Funds under management (FUM) at 30 June 2012 of $52.7 billion (31 December 2011:$58.4 billion), reflecting sales of $7.2 billion, redemptions of $9.6 billion, investment movement of -$0.3 billion, FX translation effects of -$0.5 billion and other movements, principally guaranteed product degears, of -$2.5 billion

·; Adjusted profit before tax (PBT) of $121 million, comprising adjusted net management fee PBT of $108 million and net performance fee PBT of $13 million

·; Statutory loss before tax on continuing operations for the six months ended 30 June 2012 of $164 million, reflecting impairment of goodwill associated with GLG ($91 million) and Man Multi-Manager ($142 million)

·; On track to deliver $95 million of operating cost savings announced in March 2012

·; Further annual cost savings of $100 million over the next 18 months announced today

·; Surplus regulatory capital of $704 million at 30 June 2012, net cash of $564 million and total liquidity resources of $3.0 billion

·; Interim dividend of 9.5 cents per share; total dividend for the year expected to be 22 cents.

Peter Clarke, Chief Executive of Man, said: 

"Against a turbulent market and economic background, Man's funds under management have declined in the period principally as a result of continued net outflows and the deleveraging of our guaranteed products. The result is a marked decline in underlying profitability which, after goodwill impairments, produced a statutory loss.

"We have made progress in the last six months to address costs across our business and we continue to expand our investment management capabilities both organically and through acquisition. At AHL we have continued to refine our trading models, invested in senior hires and seen signs of improvement in performance versus leading peers. GLG generated over two thirds of our $7.2 billion sales in the period, delivered strong performance in credit strategies, market neutral and European long short styles and launched complex thematic products such as TailProtect. The FRM acquisition closed on 17 July, ahead of schedule, and creates the largest independent non-US based fund of hedge funds in an industry where economies of scale are a critical success factor. Across the board, we are on track to achieve our previously announced cost saving programmes.

"Our focus is on delivering attractive levels of profitability from our liquid, open-ended investment strategies and so reducing reliance on high margin guaranteed product which is seeing subdued demand. To align our infrastructure appropriately to this dynamic in the business, we have today announced further cost savings of $100 million, to be achieved over the next 18 months.

"Man remains financially robust and enjoys a strong position in the market for liquid alternatives. We are confident that the changes we have announced today, together with the progress we have already made, position us well to protect and rebuild shareholder value."

* Includes profit on disposal this period of the BlueCrest loan note of $15 million and a charge of $21 million relating to the recent debt buy back. Annualised interest expense following the buy back will reduce by $13 million.

Regulatory capital position and dividend

The Group had $704 million of surplus regulatory capital at 30 June 2012, net cash of $564 million and total liquidity resources of $3.0 billion.

As previously announced, the Board has declared an interim dividend for the year to 31 December 2012 of 9.5 cents per share. The interim dividend will be paid at the rate of 6.12 pence per share.

The Board expects to propose a final dividend for year to 31 December 2012 of 12.5 cents per share, to give a total dividend of 22 cents per share.

As announced in March 2012, Man's dividend policy 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 interim dividend

Regulatory capital

Man is compliant with the FSA's capital standards and has maintained significant excess regulatory capital during the year. At 30 June 2012 excess capital over the regulatory requirement was $704 million.

Basel III and CRD IV come into force on 1 January 2013. The FSA guidance has not been finalised and therefore it is not possible to definitively quantify the impact but it is likely that our available capital will reduce by a maximum of $200 million.

Proposed arrangement for the creation of a new holding company

Man Group plc is proposing to revise its corporate structure to access distributable reserves, which will provide it with ongoing flexibility to continue its previously stated dividend payment policy. The proposals will create a new listed non-trading group holding company, ("New Holdco"), which will be incorporated under the laws of England and Wales and have a premium listing on the London Stock Exchange's main market for listed securities. The new holding company structure will be implemented by means of a Court approved scheme of arrangement (the "Scheme") under Part 26 of the Companies Act 2006 followed by a Court approved reduction of capital of New Holdco. Under the terms of the Scheme, shareholders will exchange their existing ordinary shares in Man Group plc for shares in New Holdco on a one-for-one basis. Approval will be sought from shareholders for these proposals at a separately convened general meeting which is expected to be held towards the end of 2012. In addition, typical approvals will be sought from regulators including the FSA. Further details of the Scheme will be provided in due course.

Video and audio webcast

There will be a live video and audio webcast of the results presentation at 8.30am on www.mangroupplc.com and www.cantos.com which will also be available on demand from later in the day.

Live Conference Call Dial in Numbers:

UK Toll Number: 020 3140 0820

UK Toll-Free Number: 0800 368 1984

US Toll Number: 1718 705 7514

US Toll-Free Number: 1855 402 7760

30 Day Replay Dial in Numbers:

UK Toll: 020 3140 0698

UK Toll Free Number: 0800 368 1890

US Toll Free Number: +1 877 846 3918

Playback Pin Code: 385932#

Enquiries

Miriam McKay

Head of Investor Relations and Financial Communications

+44 20 7144 3809

miriam.mckay@man.com

David Waller

Head of Media Relations

+44 20 7144 2121

david.waller@man.com

Maitland PR

George Trefgarne

+44 20 7379 5151

About Man

Man is a world-leading alternative investment management business. It has expertise in a wide range of liquid investment styles including managed futures, equity, credit and convertibles, emerging markets, global macro and multi-manager, combined with powerful product structuring, distribution and client service capabilities. As at 30 June 2012, Man managed $52.7 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 £1.3 billion.

Man is a signatory to the United Nations Principles for Responsible Investment (PRI) and a member of the Dow Jones Sustainability World Index and the FTSE4Good Index. Man also supports many awards, charities and initiatives around the world, including 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 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 (FUM), FLOWS AND GROSS MANAGEMENT FEE MARGINS

In the six months to 30 June 2012, funds under management declined from $58.4 billion to $52.7 billion. The most significant effect on profitability from this decline is the continued de-gear of guaranteed products.

Blended gross management fee margins declined from 2.32% in the nine months to 31 December 2011 to 2.20% in the six month period. Margins were generally stable on a product-by-product level, but the reduced proportion of guaranteed products continued to drive a mix shift.

Six months to 30 June 2012

1Includes a $0.3 billion reclassification from AHL open-ended to guaranteed products.

Gross management fee margins

Guaranteed products

Guaranteed product funds under management reduced by 29% in the period, from $10.0 billion to $7.1 billion. The main driver of this reduction was a $2.2 billion systematic de-gear, as trading capital reduced as a result of redemptions and negative investment performance.

Sales of guaranteed products remained subdued, with $0.2 billion raised from the launch of an AHL-based product. Redemptions were $0.9 billion in the six month period. The weighted average life to maturity of the guaranteed product range is 7 years.

Gross management margins for guaranteed products held steady at 4.82%, with new business being sold at comparable margins to the current inventory.

Open ended alternatives

Funds under management in open ended alternative strategies reduced by 12% in the period to $22.5 billion.

The 19% reduction in open ended AHL was driven by a combination of negative investment movement, muted sales and redemptions. The Nomura Global Trend fund, which offers daily liquidity, was a significant driver of redemptions in both quarters, although the absolute level of redemptions from this fund fell in Q2. Man AHL Diversified plc was broadly flat in the period. As at 20 July 2012, AHL was 11.0% below peak on a weighted average basis.

Funds under management in GLG alternatives fell by 2% in the period to $10.8 billion, having risen in the first quarter. Investment performance across the GLG alternatives range was net positive in Q1 before partly reversing in Q2 and 34% of GLG performance fee eligible funds were at peak at 30 June 2012. Sales held up relatively well, with positive flows into the European long short style in particular, as it continued its strong run of performance. There was also demand for the macro, Euro distressed and global convertibles strategies.   

Gross management fee margins held steady in AHL and GLG open ended alternatives.

Institutional fund of funds and other

Funds under management in this category reduced to $11.8 billion. Sales continued to be driven by funding of previously agreed mandates, and the level of redemptions remains steady. Notified quarterly redemptions for 1 July are $0.6 billion.

Gross revenue margins declined slightly in the period, and are expected to trend downwards because of a mix shift in favour of infrastructure and managed accounts sales as opposed to traditional fund of funds.

Long only

Long only funds under management rose 6% to $11.3 billion, driven by strong sales of Japan Core Alpha. Gross revenue margins rose slightly in the period.

Three months to 31 March 2012

Three months to 30 June 2012

FUM by manager

The table below provides further granularity on GLG FUM to help with the modelling of performance and flows.

Investment performance

Investment performance continued

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. This is not a complete list of investment products. Funds have been chosen to give a representative view across product range and strategy.

1) Man AHL Diversified plc is valued weekly, but for comparative purposes the last weekly valuation of the month has been used.

2) AHL Alpha plc is valued weekly, but for comparative purposes the last weekly valuation of the month has been used.

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 European Opportunity Fund - Class D Restricted to Unrestricted (31/08/2007) - EUR.

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

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

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

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

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

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

15) Represented by GLG Global Convertible UCITS Funds Class IL T USD.

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

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

18) Represented by Ore Hill International Fund II Ltd.

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

20) Represented by GLG EM Diversified Alternative IN EUR.

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

22) Represented by GLG Atlas Macro Alternative IN H GBP.

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

24) Represented by GLG Global Equity Fund Class I T USD.

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

26) Represented by Man Absolute Return Strategies USD I.

27) Represented by Man Dynamic Selection USD I.

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

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.

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

*Estimated.

KEY PERFORMANCE INDICATORS (KPIs)

Our financial and non-financial KPIs, as presented on pages 22 and 23 of our Report and accounts for the nine months ended 31 December 2011, illustrate and measure the direct relationship between the experience ofour fund investors, our financial performance and creation of shareholder value. The KPIs are set by the Board and are used on a regular basis to evaluate progress against our key objectives.

Fund outperformance vs benchmark

The weighted average investment performance measures the investment return to investors, net of fees. The outperformance compared to the benchmark gives an indication of the competitiveness of our investment performance against similar alternative investment styles offered byother investment managers. This measures our ability to deliver superior long term performance to investors.

Man's products had an underperformance of 0.2% for the sixmonths to 30 June 2012 compared to benchmark (nine months to 31 December 2011: underperformance of 0.7%).

Growth in funds under management (FUM)

Growth in FUM is an important measure of our ability to retain and attract investor capital. FUM drives our financial performance in terms of management fees and our capacity to earn performance fees. FUM decreased by 10% to $52.7 billion at 30 June 2012 from $58.4 billion at 31 December 2011 due to continued challenging market conditions. The $5.7 billion decrease comprised: net outflows of $2.4 billion; $0.5 billion of negative FX movements; $0.3 billion of negative investment performance; and $2.5 billion of other negative movements primarily relating to de-gearing of the structured products following redemptions and negative investment performance in AHL.

Growth in gross revenue

The growth in gross management and performance fee revenue measures both the ability to grow FUM at stable margins and to generate investment performance for investors on which we earn performance fees. Gross revenue for the six months to 30 June 2012 comprised $629 million of management fees and $28 million of performance fees. Gross management fees have decreased by 25% compared to the six months to 30 June 2011 primarily due to lower guaranteed product FUM, which had the impact of reducing the aggregate gross management fee margin to 220 bps from 236 bps in the comparative period. Gross performance fees have decreased by 43% compared to the comparative six months to 30 June 2011 due to negative investment performance, particularly in AHL, which meant that many products remained below performance fee high watermarks.

Growth in net management fee income

Net management fee income is a measure of our scale and efficiency. Net management fee income of $130 million has decreased by 42% compared to the six months to 30 June 2011 due to a reduction in lower average FUM for the highest margin guaranteed products and the sale of our equity holding in BlueCrest in March 2011, which contributed $31 million to net management fee income for the six months to 30 June 2011. Compensation costs were 32% of revenue, compared to 39% in the six months to 30 June 2011.

Growth in adjusted diluted earnings per share - continuing operations

Growth in adjusted earnings pershare measures the overall efficiency and sustainability of our business model, for the benefit of our shareholders. Adjusted diluted earnings per share on continuing operations was 4.8 cents compared to 9.8 cents in H1 2011. The decline primarily relates to the reduction in management and performance fee income, partly offset a reduction in the weighted average diluted number of shares to 1,789.4 million shares primarily as a result of repurchasing 66 million shares in late 2011.

Post tax return on shareholders' equity (ROE)

ROE measures the efficiency with which we invest or return our capital. ROE has declined to -10% from

4.6% for the nine months ended 31 December 2011, driven primarily by the impairment of GLG and Man Multi-Manager and lower management and performance fees.

CHIEF EXECUTIVE'S REVIEW

The six months to 30 June 2012 have been challenging, in terms of trading conditions, investor appetite and the accelerating transition in product mix and revenue in our own business. These challenges are reflected in our disappointing performance versus the key performance indicators for the business set out on page 12. Furthermore, we recorded a statutory loss of $164 million after impairing our GLG and Multi-Manager goodwill - GLG by $91million and Multi-Manager by $142 million. More detail on goodwill can be found in Note 12 on page 26.

We are responding vigorously to these challenges with a range of management actions executed in the first half and a refreshed executive management team stepping up the level of change going forward.

Market backdrop

The six months to 30 June 2012 broadly divided into two distinct investment phases. First, we saw a "risk-on" rally emerging in the first two months of the year, with a significant sell-off in bonds on the back of encouraging US employment data, re-assuring results from US bank stress tests and fading fears around the Eurozone marking the high point of positive market sentiment in mid March.

This reversed sharply and then settled into general "risk off" positioning for the remainder of the period, albeit punctuated by sporadic relief rallies off the back of policy interventions. Renewed Eurozone fears broadened beyond Greece and the periphery to core states, with Spain the most in focus. Markets became and remain jittery, characterised by elevated levels of correlation and thin liquidity with policy-driven intervention, in particular in Europe, centre stage. The period transitioned to one of stronger trends building around the deterioration in global growth prospects, as data on the US recovery and Chinese growth broadly disappointed and we saw a sell off in industrial metals, although these trends abruptly reversed at the end of June, with a sharp rally in risk assets. The keynote remains uncertainty, albeit with increasing support for negative macro trends longer term.

Investment Management

AHL: AHL came into 2012 bearishly positioned from the 2011 close. These positions were reversed as markets started the year strongly, and long stock index futures positions in particular contributed positively to performance as the rally gathered pace in February. Risk exposures were reduced in March as a number of market reversals triggered losses, mainly in bonds and currencies. As the sell-off continued into the second quarter the portfolio once again established a bearish stance, which helped AHL Diversified plc recover in May and June, finishing the 6 month reporting period to 25 June up by 30bps. As with other trend followers however, AHL was subsequently impacted by a sharp recovery in risk assets on June 29, when the programme suffered a loss of 3.6%. Performance has recovered in early July as negative momentum themes have come to the fore again. AHL's performance this year has been in line with the group of leading CTA peers.

Over the period, AHL continued to refine and adapt its trading programmes to enhance returns and manage risk for investors. Refinements included new seasonality predictors, optimal contract selection, carry model developments and portfolio re-allocations to maximise diversification. AHL's continued focus on incorporating non-traditional markets through its Evolution programme was rewarded with this subset of the main programme closing the period up 8% as trends in less developed markets proved more persistent. On the people side, we have strengthened the AHL bench further with new senior hires - Doug Greenig, a former Fortress PM, RBS Greenwich Capital desk head and Goldman trader with over 20 years of industry experience, as Chief Risk Officer and Ravi Chari, ex FX head of IKOS, as co-head of FX trading at AHL.

GLG: Discretionary hedge fund styles exploited a range of techniques across these changing markets to create and defend value for investors. After a strong first quarter where discretionary styles generated the vast majority of Man's $2.0 billion positive investment performance, some of these gains were given back as markets reversed, albeit with a strong finish to June for many styles as markets rallied. Over the six months as a whole, compelling returns included European distressed (+11.5%), market neutral (+9.6%), Ore Hill (+5.9%) and European long short (+5.4%), with the multi-strategy fund which allocates dynamically across a range of internal styles finishing the period up around 2.7%. We also saw significant relative outperformance. TailProtect, for example, the volatility trading strategy run by Man Systematic Strategies, closed the half 18% ahead of its S&P 500 VIX Mid Term Futures Index benchmark, having posted a 26% absolute gain in 2011.

GLG also continues to serve as an effective platform for developing and building out investment talent. Pierre Lagrange and David Mercurio have assembled a leading Asia long short team based in Hong Kong to take advantage of deepening markets across the region, employing the same stock picking and risk management principles which have worked successfully in Europe. Asian long short offerings are being readied for the market later in the year.

Man Multi-Manager: Having successfully navigated the equity market sell-off through April and May, Man Multi-Manager's institutional fund of funds did not progress beyond their first quarter positive performance levels after the sharp June month-end rally squeezed hedge funds with short exposure to risk assets and the euro into quarter end. Overall its equity hedged, event driven and relative value styles remain positive year-to-date, but global macro and managed futures strategies felt the brunt of sharp, highly correlated reversals in bonds, currencies, commodities and equities with some trend following managers incurring significant losses. Actively managed flagship commingled funds with exposure across styles, such as Man GLG Multi-Strategy and Man Dynamic Selection remain positive year-to-date, at +2.7% and +1.0% respectively.

The acquisition of Financial Risk Management (FRM), an institutionally focussed multi-manager business managing $7.6 billion for clients globally, was announced on 21 May and completed ahead of schedule on 17 July. The combination of the two businesses under the FRM brand has created one of the most significant hedge fund research and risk management teams in the industry, able to harness the benefits of scale to deliver better returns to investors net of costs, through superior operating efficiency and increased bargaining power with an enhanced range of underlying managers and service providers.

Meeting investor needs

In the face of considerable market uncertainty and fragility in investor appetite we maintained a steady level of gross sales, closing the half with gross sales of $7.2 billion. This is testament to the breadth of our offering and the relevance to investors of the different strategies at varying points in the cycle. Sales in the period were strongest in the GLG hedge fund suite.

We demonstrated our ability to deliver strong sales of outperforming strategies, for example European long short, which was up 5.4% calendar year to end June after a 7% performance in 2011. In less than a year the UCITS format of this strategy reached its $1 billion soft close, but there is additional capacity for this style in other formats. There were also strong allocations in macro, distressed, and global convertibles.

The half also re-emphasised our strength in executing and capitalising on complex thematic products. TailProtect, the volatility trading strategy run by Man Systematic Strategies, draws on research from the Oxford Man Institute on implied volatility and has been designed to mitigate the portfolio risks associated with extremely volatile markets. TailProtect is now managing or has firm commitments of around $1 billion from some of the world's most sophisticated institutional investors and won industry awards in the period for Most Innovative Hedge Fund and separately Best Convertible Arbitrage / Volatility Hedge Fund.

We also recorded $200 million of sales in the period for an AHL guaranteed product, with interest strongest in the Middle East. There is no doubt however that appetite for guaranteed product is muted and this is likely to continue, as the dominant format for investor appetite will remain non-guaranteed.

Private investors remain extremely cautious, with anecdotal evidence of high allocations to cash. We continue to make inroads in terms of representation on the key private banking platforms which account for a substantial share of the flows. Man product is on all nine of the most significant private banking platforms and has won around 20 new platform approvals since completion of the GLG acquisition with a similar number of additional pending approvals.

With institutional allocations predicted to constitute a significant proportion of allocations, we continue to work hard on our consultant relationships. Since January 2012 we have received an additional two strong buy ratings and positive momentum on seven additional strategies. Consultant coverage of Man has increased from 35 products in January 2010 to 79 today and we have maintained 33 existing ratings.

During the period we launched Clarus, an online portal for investors in managed accounts, which allows clients to visualise their exposure to underlying risk factors in both their managed accounts and aggregated as part of their wider portfolio. Man's Multi-Manager business currently manages around $8.0 billion of assets within managed accounts and MACs are at the heart of the Man/FRM combination.

Redemptions were higher in the second quarter ($5.5 billion) than in the first quarter ($4.1 billion), but remain below the peak level experience in the quarter to September 2011 ($7.3 billion).The net effect has been around a cumulative outflow for the half of $2.4 billion. Retaining client assets as well as winning new business remains a key focus.

Efficiency

I noted in our Report and accounts for the nine month period ended 31 December 2011 that we had stepped up our focus on efficiency to reflect changes in our product and margin mix - notably reduced funds under management in our highest margin guaranteed products. At our results in March 2012, we announced that we would reduce operating costs by $95 million, with $70 million of these savings to be delivered by the end of 2012. We are on track to achieve these savings, with the key drivers being headcount reductions linked to outsourcing of asset servicing and consolidation of support functions, together with lower property, technology and marketing costs.

The performance of our business in the first half of this year has convinced us that we need to up the level of change we are making. Our inventory of guaranteed product FUM has declined further as a result of negative AHL performance. More liquid, open-ended and onshore formats at profit margins which remain attractive, if lower than guaranteed, constitute an increasing majority of our sales. Having looked in depth at the optimal configuration of the business, we are moving more decisively to align our costs to flows rather than inventory and build around a core business much less reliant on high margin guaranteed product. We have announced an additional $100 million savings to be achieved over the next 18 months. These savings will be realised from corporate streamlining, simplifying our product line and expense discipline.

Outlook

We enter the second half of the year with a clear sighted programme of action to refocus our business around our core value drivers and tailor our infrastructure accordingly. Markets remain uncertain and we are cautious about the prospects for short term improvement, which means that we will be implementing significant change in a very challenging operating environment.

Strategically, we remain well positioned. We are a leading player in a growth sector and continue to be excited about the long-term growth prospects for the alternatives industry. We have a broad range of strategies and products, proven to be relevant cross cycle. We have a strong long term performance track record and continue to enhance our investment capabilities. And we have powerful global distribution, with the ability to construct and deliver products that our clients need, globally.

At the core of our business is a very valuable alternative asset management operation, with the potential to deliver substantial upside to our shareholders.

RISK MANAGEMENT

It is a keyobjective of Man to remain a leader in risk management, governance and business sustainability. As such, risk management is an essential component of our approach, both to the management of investment funds on behalf of investors, and themanagement of Man's business on behalf of shareholders. Ourreputation is fundamental to our business, and maintaining our corporate integrity is the responsibility of everyone at Man. Our approach is to identify, quantify and manage risk throughout the Group, in accordance with the Board's risk appetite. We continue to maintain a strong emphasis on having an adequate quantity of excess capital and liquidity to give us strategic and tactical flexibility, both in terms of corporate and fund management.

The principal risks faced by Man are set out on pages 24 to 29 of our last Report and accounts. These remain our principal risks for the second half of the financial year- below we set out some highlights and specific activities that have taken place since 31December 2011.

A principal risk to Man shareholders is the risk of the underperformance ofthe funds. Persistent underperformance would likely result in net redemptions and reduced levels of funds under management and consequently lower management fees, as well as reduced performance fees. In mitigation of this risk, we maintain the high quality, diversified range of investment styles and products, principally across quantitative (AHL), discretionary (GLG) and fund offunds (Man Multi-Manager) strategies. This diversity gives us protection against concentrated underperformance from any one sector. Our largest exposure to this risk remains with respect to the managed futures style and the AHL family of funds, given that this forms a significant part of our revenue base. AHL performance and the consequent effect on the available risk capital within structured products is a significant driver of profitability for the firm, since the level of gearing and related fee income is a direct function of this variable. In H1, this effect led to lower profitability for this product range, and we remain at risk to this issue going forward.

During theJanuary to June period, we have seen 2 distinct periods of market behaviour. In the early part of the year, the European LTRO led to bullish sentiment, and rises in equity prices. However, this sentiment gave way to the continued uncertainty about the strength of Eurozone economies and the future of the Euro itself.  This uncertainty has persisted through Q2 2012 and the lack of many clear trends has led to broadly flat returns for the AHL funds. The GLG funds performed very strongly early in the year, but have seen greater volatility in the latter period, and the uncertainty associated with repeated political intervention has been a frequent feature in markets. Bearish strategies are performing well and attracting inflows, while generally lower leverage levels are likely to persist until there is greater stability in the Eurozone and a credible plan. We remain focused on the specific risks that arise from the Eurozone crisis, in terms of both direct and indirect market risk, primary and secondary counterparty risk and related legal risks.

Man is exposed to credit risk on its cash deposits. Cash isinvested in short term bank deposits. At the period end, cash balances were placed with 34 individual banks. The single largest exposure of$300 million was held with an A+ rated bank. In addition, the funds are exposed to credit risk of their financial counterparties. Our focus has been to minimise funds exposure to counterparties that we believe could be adversely affected by the current market volatility, while maintaining trading functionality across ourrange of hedge fund strategies.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors confirm that this condensed set of financial statements in respect of Man Group plc for the period ended 30 June 2012 has been prepared in accordance with IAS 34 as adopted bythe European Union, and that the sixmonth review herein includes a fair view of the information required by the Financial Services Authority's Listing Rules, including the Disclosure and Transparency Rules 4.2.7 and 4.2.8, namely:

• an indication of important events that have occurred during the six months ended 30 June

2012 and their impact on the condensed interim financial statements, and a description of the principal risks and uncertainties forthe remaining six months ofthe year ending 31

December 2012; and

• material related party transactions in the six months ended 30 June 2012 and any material changes in the related party transactions described in the last annual report.

The Directors of Man Group plcare as listed in the Report and accounts for the nine months ended 31 December 2011, subject to the following changes:

·; Kevin Hayes resigned as Finance Director on 18 June 2012; and

·; Jonathan Sorrell was appointed as Chief Financial Officer on 18 June 2012.

By order of the Board

Peter Clarke

Chief Executive

24 July 2012

Jonathan Sorrell

Chief Financial Officer

24 July 2012

INTERIM FINANCIAL STATEMENTS

1.  Basis of preparation

The interim financial statements forthe six months to 30 June 2012 have been prepared on a going concern basis andin accordance with IAS 34 'Interim Financial Reporting' and the Disclosure and Transparency Rules of the Financial Services Authority.

The financial information contained herein is unaudited and does not constitute statutory accounts as defined by Section 434 of the Companies Act 2006. Statutory accounts for the nine months to 31 December 2011, which were prepared in accordance with International Financial Reporting Standards (IFRS) and relevant IFRIC interpretations issued by the International Accounting Standards Board (IASB) and IFRIC Committee respectively and adopted by the European Union (EU) and upon which the auditors have given an unqualified and unmodified report and which contained no statement under Section 498 of the Companies Act 2006, have been delivered to the Registrar of Companies and were posted to shareholders on 14 March 2012.

The accounting policies applied in these interim financial statements are consistent with those set out and applied in Man's Report and accounts for the nine months ended 31 December 2011. The impact of improvements to existing international accounting and financial reporting standards during the period has not been significant.

The areas of significant judgement continue to be: the evaluation ofgoodwill and intangible assets; and the determination offair values for investments (including the Lehman claims), deferred compensation awards andpension obligations.

The income statement and cashflow statement presentation in these interim financial statements shows the six months ended 30 June 2012 together with the six months ended 30 June 2011 (H1 2011). The balance sheet is presented as at 30 June 2012 together with comparatives as at 31 December 2011.

Group income statement

2. Adjusted profit before tax - continuing operations

Statutory profit before tax from continuing operations is adjusted for material items to give a fuller understanding ofthe underlying profitability of the business.

3. Net management and performance fee income