Man Group Annual Report 2014

FY2014 Annual Report · Man Group

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entrepreneurial
asset manaGement

institutional
framework

Man Group plc
Annual report
for the year ended 31 December 2014

Welcome

Man Group
Annual Report
2014

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Man Group is one of the world’s largest
independent alternative investment managers
and a leader in high-alpha1, liquid investment
strategies. With our clients’ needs at our core,
we offer a comprehensive suite of absolute
return and long-only products through our
performance-driven investment engines.

We believe that the key to extracting repeatable
alpha from capital markets is to provide an
institutional framework for our entrepreneurial
asset managers to operate in, allowing them to
focus solely on alpha generation and research.

1 Alpha is widely considered to be a measure of the

‘value added’ by an investment manager. It is, therefore
regarded as a proxy for manager or strategy skill.
Alpha is sometimes described as outperformance of a
benchmark or the return generated by an investment
independent of the market – what an investment would
hypothetically achieve if the market return was zero.

Contents

Strategic report
Our business model
Investment case
Man Group overview
2014 highlights
Chairman’s statement
Strategic framework
Progress against strategy
CEO’s performance review
– AHL
– FRM
– GLG
– Numeric
CFO’s financial review
Risk management
Principal risks and mitigants
People and corporate responsibility

01
02
03
04
06
08
09
10
11
12
14
22
24
26

Corporate governance
Board of directors
Corporate governance report
Audit and Risk Committee report
Nomination Committee report
Directors’ remuneration report
Directors’ report

30
32
38
42
44
65

68
69
73

Financial statements
Directors’ responsibility statement
Independent auditors’ report
Group income statement
Group statement of comprehensive
73
income
74
Group balance sheet
75
Group cash flow statement
Group statement of changes in equity
76
Notes to the Group financial statements 77
114
Five year record
Parent Company financial information
115
Notes to the Parent Company
financial statements

116

Other information
Shareholder information
Man’s literary sponsorships
Charitable trust

118
120
121

STRATEGIC REPORT

Our business model

The success of our business model begins
and ends with investment performance:
our investment managers must deliver
strong, risk adjusted long-term returns for
our investors.

Performance
Man Group’s investment managers have expertise in a diverse range
of strategies which offer investment returns matched to investor
appetite for risk and reward.

Distribution
Man Group is able to offer a wide range of liquid investment
strategies and formats across geographies to meet the needs of the
investor. These include quantitative and discretionary, long only and
long short, single and multi-manager. We distribute our products and
solutions directly to institutions and to private investors via a unique
global network of intermediaries.

Growth
We have a diverse business with many options for long-term growth.
In addition to growing assets through performance and sales we look
to grow the business by attracting talent, adding investment teams
and taking advantage of acquisition opportunities where we can
generate an attractive return on capital.

Operating efficiency and capital discipline
At the core of our investment management and distribution
is strong operational infrastructure, risk management, people
management and governance, which ensures the sustainability
of our business model and enables us to take advantage of new
business opportunities. We strive to maintain our operating discipline
and manage our balance sheet efficiency.

Revenue Generation
Investment performance and fund flows drive the
economics of our business. Management fees are
typically charged for providing investment management
services at a percentage of each fund entity’s gross
investment exposure or NAV. Performance fees are
typically charged as a percentage of investment
performance above a benchmark return or previous
higher valuation ‘high water mark’.

Costs
Man is fundamentally a people business and the
majority of our costs comprise payments to individuals
whether they are third-party intermediaries or internal
sales staff who distribute our products, our investment
managers who manage investor assets or the teams
that manage our operations and infrastructure.

V
E
R

P E R F O RMANCE
F R M | GLG | NUM

RIC

L |

OPERATING EFFICIENCY
AND CAPITAL DISCIPLINE

L
A
B
O
L
G

AIL
T
E

N
O
I
T
TIO N AL | R
U
RIB
DIST

T I T

I N

Investment case

Our objective is to be a leading provider of
high-alpha, liquid investment strategies
across a diversified range of investing
styles and geographies.

P E R FO R M A nC E

Net performance fee earnings

Our priority is to produce superior risk
adjusted returns for our clients

D I S T R Ib u T I On

We have the distribution capability to grow
funds particularly where we generate strong performance

2012

2013

2014

$55m

$122m

$283m

Gross sales

2012

2013

2014

$12.8bn

$16.1bn

$21.9bn

TA l E n T

Man employees by function

By offering an entrepreneurial fund management culture
within an institutional framework, we are able to attract
high quality talent to provide further options for growth

1. Investment management
2. Sales and marketing
3. Operations and technology
4. Central functions

%
31
17
33
19

M & A

Growth may be supplemented through M&A, taking
advantage of acquisition and consolidation opportunities
where we can generate an attractive return on capital

Acquisitions announced in 2014

numeric ($15.2bn US Quant manager)
Silvermine ($3.8bn US CLO manager)
Pine Grove ($1.0bn US Credit FoHF manager)
bAMl FoHF portfolio ($1.2bn US FoHF
portfolio)

D I v E R S I F I CAT I O n

FUM by asset class $bn

We have a diverse business with many options for
long-term growth and a set of options over a range
of uncorrelated performance fee streams

2010

2012

2014

21.2

18.2

14.4

16.0

26.6

14.4

11.3

30.5

28%

16.7

n AHL n FRM n GLG n Numeric

E F F I C I E n Cy

We will remain disciplined on costs, enabling
us to benefit from operating leverage as funds under
management (FUM) grows

Fixed costs

2011

2013

2014

$565m

$379m

$305m

CA P I TAl M AnAG E M E n T

Capital management

We pay out management fee profits to shareholders
and if surplus capital cannot be employed for organic or
inorganic growth within a reasonable timeframe, use
performance fees for share buybacks

2012

2013

2014

22.0c

7.9c

10.1c1

6.3c2

28%

10.0c2

n Dividends

n Share repurchase

1 subject to shareholder approval.
2 share repurchase amount based on number of shares at year end.

Man Group overview

Man Group was listed on the London Stock Exchange in 1994 and following the demerger of its
agricultural commodities business in 2000 and its brokerage business in 2007, is now focused on
investment management. Based in London and a constituent of the FTSE 250 index, Man has offices
in every major financial region, is regulated in 16 jurisdictions and has 1,078 employees worldwide.
Man Group has a developed distribution network and manages assets of $72.9 billion through its
four investment managers:

Man AHL (hereafter AHL) is a
quantitative investment manager
with an extensive history of
performance and innovation
and funds under management
of $14.4 billion.

Acquired by Man Group in 2012,
Man FRM (hereafter FRM) is a
hedge fund investment specialist
with $11.3 billion of funds under
management and a predominantly
institutional client base.

A pioneer in the application of
systematic trading, AHL has
been serving institutional and
private clients since 1987 and
has a range of momentum and
non‑momentum strategies.

AHL’s 100 investment
professionals are based in
London, Oxford, Hong Kong
and Pfäffikon.

FRM has an open architecture,
full service hedge fund platform
including commingled fund of
hedge funds, customised and
advisory solutions and outsourced
research and consulting, all which
can be enhanced by FRM’s
managed account platform.

FRM’s 58 research and investment
staff are based in London,
New York, Tokyo, Guernsey
and Pfäffikon.

Founded in 1985 and acquired
by Man Group in 2010, Man GLG
(hereafter GLG) is a discretionary
fund manager with funds under
management of $30.5 billion that
delivers alternative and long only
investment strategies across asset
classes, sectors and geographies.

Established in 1989 and acquired
by Man Group in 2014, Man
Numeric (hereafter Numeric) is a
Boston‑based, quantitative equity
manager with $16.7 billion of funds
under management invested
across almost every equity market
in the world through long only
and long short strategies.

The majority of GLG’s 120
investment professionals are
based in London but it also has
investment teams in New York,
Hong Kong and Pfäffikon.

GLG has a range of institutional
and private clients from across
the globe.

Numeric’s 28 investment
professionals manage
assets for institutional clients
globally, including corporate
and public pension plans,
foundations, endowments,
and sovereign funds.

➔ for more detail see page 9

➔ for more detail see page 10

➔ for more detail see page 11

➔ for more detail see page 12

FUM breakdowns

by manager

by product

by geography

by client

1. AHL
2. FRM
3. GLG
4. Numeric

US$bn
14.4
11.3
30.5
16.7

%
20
15
42
23

1. Alternative
2. Long Only
3. Guaranteed

US$bn
38.2
32.7
2.0

%
52
45
3

1. Asia
2. EMEA
3. Americas

US$bn
13.0
47.8
12.1

%
18
65
17

1. Institutional
2. Retail

US$bn
56.4
16.5

%
77
23

STRATEGIC REPORT MAN GROUP PLC / ANNUAL REPORT 2014

2014
Highlights

– 35% growth in FUM driven by acquisitions and net inflows

– Increase in profitability with significantly higher performance fees and
cost savings being partially offset by a decrease in management fees
linked to a decline in the blended management fee margin due to
a change in product and business mix

– Mixed investment performance in the year: AHL Diversified Programme
+33.8%; GLG Multi-Strategy -0.9%; FRM Diversified II strategy +2.7%;
Japan CoreAlpha strategy +7.7%

– Acquisition of Numeric (a US based quant manager) and Pine Grove
(a US based fund of fund credit manager) completed during the year
adding $16.2 billion to FUM

– Acquisition of Silvermine (CLO manager) completed in January 2015

and acquisition of Bank of America Merrill Lynch fund of funds portfolio
due to complete in early 2015

– Cost savings programme completed ahead of schedule

– $150 million of Tier 2 capital issued during the year to fund the

expansion of our seeding programme up to $500 million

– Proposed dividend for the year equating to adjusted management fee
earnings per share of 10.1 cents per share. Proposed final dividend
of 6.1 cents per share. Payable at a rate of 3.95 pence per share

– Share repurchase of $175 million to be completed during 2015

Funds under management (FUM)

Sales

$72.9bn

Up 35% from $54.1bn at 31 December 2013.

$21.9bn

Up 36% from $16.1bn for the year ended
31 December 2013.

Net flows

$3.3bn

Compared to net outflows of $3.6bn in the year ended
31 December 2013.

Revenue

Adjusted profit before tax

Statutory profit before tax

$1,150m

Gross revenue comprised $810m of management
fees and $340m of performance fees. Revenue was
$1,160m for the prior period.

$481m

Adjusted profit before tax for year ended
31 December 2013 was $297m.

$384m

A full reconciliation between the statutory profit and
adjusted profit for the year is given in Note 2 of the
financial statements. The statutory profit before tax
for the year ended 31 December 2013 was $56m.

Adjusted management fee
earnings per share

Adjusted diluted earnings per share

Statutory earnings per share

10.1 cents

Adjusted management fee earnings per share for the
year ended 31 December 2013 were 7.9 cents.

24.4 cents

Up 73% compared to the year ended
31 December 2013.

20.5 cents

A reconciliation between statutory and adjusted
diluted earnings per share is given in Note 10 to the
financial statements. Diluted earnings per share for
the year ended 31 December 2013 were 2.9 cents.

MAN GROUP PLC / ANNUAL REPORT 2014 STRATEGIC REPORTChairman’s
statement

Jon Aisbitt, Chairman

Overview of the year
2014 marked a year of significant progress for the Group with strong
performance at AHL, a full year of net inflows, the completion of the
restructuring of the business and several key acquisitions that have
materially enhanced our North American business. This was against
the backdrop of a volatile year for markets and a difficult year for hedge
funds, albeit there was a wide range of returns across strategies. The
performance of Man Group’s funds was mixed: our quantitative strategies
and AHL in particular performed very well due to the re‑emergence
of trends and lower correlation between asset classes; our GLG long
only and FRM strategies performed well on an absolute basis; however
our discretionary alternative strategies suffered in line with the rest of
the industry.

The strong AHL performance resulted in us recording over double the
level of performance fees earned in 2013 which, combined with the
impact of cost savings, partially offset by a decline in net management
fees, resulted in a 62% increase in adjusted profits for the year. The Board
focuses on adjusted profit as this reflects the recurring revenue and
costs that drive our future cash flows. Statutory profit was $384 million
compared to $56 million in 2013. While the Board is encouraged by the
increase in profitability and the progress that has been made in 2014,
it remains focused on monitoring achievement against the Group’s key
strategic priorities as well as reviewing the performance of the businesses
that have been acquired.

Acquisitions
The Board spent a significant amount of time during 2014 evaluating,
reviewing and assessing the strategic case for the acquisitions of
Numeric, Pine Grove, Silvermine and the Merrill Lynch fund of funds
business (BAML).

The Numeric acquisition furthers two core strategic objectives for the
Group: first, to build a diversified quantitative fund management business
with significant assets in non‑momentum strategies and second, to
develop further its presence in the North American market. In addition,
Numeric has a long‑term investment track record of strong relative and
absolute performance. From a financial perspective, the transaction
provides the opportunity to achieve an attractive risk‑adjusted return
on capital and was earnings accretive from completion. In structuring
the acquisition, we have endeavoured to align the interests of Numeric
management with those of Man Group’s shareholders.

Having agreed the strategic case for the acquisition, the Board oversaw
the due diligence process and gave approval to proceed. Owing to its
size the acquisition required shareholder approval which was received
in September 2014 with 99% votes in favour. The feedback from key

investors was that the acquisition had been well structured and created
sensible diversification.

The acquisitions of Pine Grove, Merrill Lynch’s fund of fund business and
Silvermine were smaller but received an appropriate level of review and
challenge from the Board to ensure that they provided the right structure
and cultural fit for the Group. All three of these acquisitions further
enhance Man Group’s presence in the US. Pine Grove and BAML further
build out FRM’s existing business. The acquisition of Silvermine will
transform our existing credit business at GLG and position us to benefit
from strong demand for US CLOs and other credit strategies.

Progress against strategic objectives
At our annual strategy review we revisited all our core strategic objectives
on performance, growth, distribution and efficiency, and received in
depth presentations from management teams on the performance of
our individual investment managers and our progress in global sales
and marketing. These are themes to which we return at every Board
meeting, with particular focus on areas of underperformance such as
the GLG alternative strategies and the challenges of penetrating the key
US market.

In November the CEO of Numeric gave us an overview of this new
business covering the investment process, progress on the integration
and planned sales and product launch activity. We will continue our
keen focus on the progress of all recent acquisitions and management’s
delivery of value against plan over the course of 2015. The Board has also
spent considerable time during the year discussing people and cultural
issues, encouraging management in its promotion of gender diversity at
senior management level and contributing to the development of a set
of core business values.

The Board continues to monitor progress on management’s
implementation of the cost reduction programme. We are pleased that
the proposed savings have been achieved in full and ahead of schedule
and our focus is now shifting more towards sustaining our efficiency
and ensuring that our cost base enables us to address the risks and
opportunities in our business appropriately. From a capital perspective
the Board approved the issue of $150 million of Tier 2 debt in September
2014 as a low cost and efficient source of funding to finance the
expansion of our seeding programme.

Dividend
In line with our previously stated policy, the Board has announced a
recommended final dividend of 6.1 cents per share, subject to approval
by shareholders at the 2015 AGM. In addition, it is our intention to launch
a $175 million share repurchase programme to return surplus capital to
shareholders, which will be conducted over the remainder of the year.

Board changes
Fred Jolly, who had served on the Board since 2009 retired at the
2014 AGM. After a wide‑ranging search, John Cryan was appointed
to the Board and as a member of the Remuneration Committee and
Nomination Committee in January 2015. John has extensive experience
of international financial markets having held a number of senior roles
at UBS in a career spanning more than 25 years and brings excellent
knowledge of the regulatory environment in which Man Group operates.
We wish Fred all the very best for the future and extend a warm welcome
to John.

Outlook
The Board remains confident in the strength and energy of its executive
team and is proud of what they have achieved in creating a more
diversified business with multiple options for growth, improving Man
Group’s capital efficiency and completing the cost reduction programme
ahead of schedule. In 2015 we will continue to work together to drive
investment performance, diversify Man Group’s product offering
and grow the business in pursuit of improved long‑term returns for
our shareholders.

Jon Aisbitt
Chairman

MAN GROUP PLC / ANNUAL REPORT 2014STRATEGIC REPORT
04

Strategic
framework

Markets remain volatile, creating a challenging and uncertain environment
in which to operate. Against this backdrop, we continue to focus on the areas
we can control and on creating a diversified business with multiple options for
growth, leaving us better positioned to deal with different market conditions.

Strategic priorities

Risks

➔ See pages 6 and 7 for how we have performed against our
strategic priorities

➔ See pages 22 to 25 for our full risk profile

1 Performance
Generating superior risk adjusted
returns for our clients

2 Growth
Developing options for growth across
our investment businesses

3 Distribution
Ensuring distribution effectiveness

4 Operating efficiency and
capital discipline
Operating as efficiently as possible,
both from a cost and a balance
sheet perspective

Man Group identifies its principal risks across the firm and
assesses their likely impact. We measure and monitor the
size of our risks, and implement controls and transactions
to reduce and hedge exposures in order to ensure that
they stay within our risk appetite framework.

Related strategic
priority

Investment underperformance risks
This is the key risk Man Group has to accept if it
is to undertake its business.

Regulatory risks
Man Group is licensed in 16 jurisdictions, which
results in it being subject to a matrix of regulations.

1 2 3 4

Discretionary trading risks
The risk that investment managers either
intentionally or unintentionally fail to execute
and/or book trades correctly, or fail to adhere
to investment mandates or regulatory rules.

Operational risks
Resulting from inadequate or failed internal
processes, people, systems or from external events.

1 2 3 4

Seeding book risk
Man Group uses capital to seed new funds as
part of the ongoing business to build our fund
offering and expand product distribution

Credit/counterparty risks
A counterparty with which the funds or
Man Group have financial transactions fails to
deliver back investor or shareholder assets.

Legal risk
The global nature of Man Group’s business, with
corporate and fund entities located in multiple
jurisdictions and a diverse investor base make it
subject to a wide range of laws and regulations.

Reputational risks
The risk that an incident or negative publicity
undermines our reputation as a leading alternative
investment manager.

1 2 3 4

Key staff retention
The risk that a key person to the business leaves
or is unable to perform their role.

1 2 3 4

MAN GROUP PLC / ANNUAL REPORT 2014 STRATEGIC REPORT
05

Key performance indicators

Remuneration

➔ See pages 14 and 15 for our full key performance indicators

➔ See pages 44 to 64 for the full remuneration report

Our four financial KPIs as listed below illustrate and
measure the relationship between the investment
experience of our fund investors, our financial performance
and the creation of shareholder value over time.

Executive director remuneration is directly linked to strategy
and performance, with particular emphasis on matching
rewards to results over the long-term.

Investment performance of
key funds against relevant
benchmarks

Net FUM flows for the period
as a percentage of opening
FUM (Target 0%–10%)

AHL – met
FRM – not met
GLG – not met

6.1%

Related strategic priority

1 2 3

Adjusted management fee
EBITDA margin
(Target 25%–40%)

Adjusted management
fee EPS growth
(Target 0%–20% plus RPI)

30.3%

27.8%

Related strategic priority

1 2 3 4

Linked to strategy
A substantial portion of executive director
remuneration is linked to success in
implementing the Company’s strategy.

➔ See pages 50 to
53 of the Directors’
remuneration
report for more
information

Progress against the Group’s strategic priorities
and Group key performance indicators (KPIs)
provide key metrics for determining the
short-term annual cash bonus and the
long-term deferred bonus.

Performance related
The variable components of total remuneration
are linked to performance, and the long-term
deferred bonus is awarded in shares further
aligning interests with shareholders.

➔ See pages 50 to
53 of the Directors’
remuneration
report for more
information

High pay requires high performance. Achieving
the maximum pay requires sustained high
performance over several years.

Long-term shareholder alignment
The structure of pay is designed to reflect the
long-term nature of Man Group’s business. The
long-term deferred bonus is awarded in shares
with the vesting period set at three to five years
after each three year performance period,
creating a six to eight year period in total during
which executive reward is fully aligned with
shareholder interests.

Shareholder engagement
The Remuneration Committee actively seeks
to understand shareholder preferences and be
transparent in explaining its policy and practice.
During 2014 the Remuneration Committee
Chairman met personally with a number of
major shareholders and certain shareholder
voting bodies to obtain feedback on the
Remuneration policy and to respond
to any areas of interest or concern.

➔ See pages
44, 52 and 53 of
the Directors’
remuneration
report for more
information

➔ See pages 44 and
49 of the Directors’
remuneration
report for more
information

MAN GROUP PLC / ANNUAL REPORT 2014STRATEGIC REPORT

Progress against
strategy

During the year we have made progress against the strategic priorities set out
in last year’s annual report aimed at generating superior risk adjusted returns
for our clients and positioning the firm for future growth, whilst controlling
costs and maximising the efficiency of our balance sheet.

Strategic priorities

Objectives we set in 2014

How we performed against those objectives

Objectives for 2015

Generating superior risk adjusted
returns for our clients

– Continued focus on research at AHL to build new markets

– Broadened AHL’s UCITS range adding directional equity,

– Continued focus on research at AHL to build new markets and

and asset classes

volatility, multi-strategy and risk parity funds to existing

asset classes

– Focus on building assets in GLG products launched in 2013

offering. Launched a dedicated product for the onshore China

– Collaboration between AHL and Numeric to further enhance

and on developing long only offering

– Revamp managed accounts platform within FRM and look
to offer the resources of FRM as a service to investors who
need help with either building or maintaining open architecture
alternative investment programmes

market which trades momentum on a number of Chinese

research efforts in both managers

futures markets

– Focus on improving areas of underperformance in GLG

– $600 million raised into the GLG Global Long Short strategy

alternatives strategies in 2014

launched in October 2013, developed long only offering by

adding new products and raised $2 billion into the GLG Strategic

Bond strategy

– FRM’s managed account platform increasingly recognised in the

market place with new mandates won in 2014

Developing options for growth
across our investment businesses

– Build out quantitative platform to provide a wider range of trend

– Numeric acquisition creates a leading global quantitative

– Continue to develop additional momentum and non-momentum

and non-trend following products

– Continue to look for high-calibre investment talent at GLG to

support the growth of our existing products as well as to support
the expansion of our product offering

– Continue to look at other possible bolt-on acquisitions ensuring
that we remain disciplined on price, structure and cultural fit

investment management business with over $30 billion of assets

products at AHL

managed across a range of alternative and long only strategies

– Continue to look for high-calibre investment talent at GLG to

– Hired new teams at GLG including Rory Powe in European

support the growth of our existing products as well as to support

equities, Pierre-Henri Flamand in the event driven space and

the expansion of our alternatives and long only product offering

several new hires into our Equity long short strategy

– Continue to look at other possible bolt-on acquisitions ensuring

– Acquisition of Silvermine adds significant leveraged loan

that we remain disciplined on price, structure and cultural fit

Ensuring distribution effectiveness

– Start marketing the AHL Dimension strategy and market an

additional $750 million of the AHL Evolution strategy

– Focus on making the sales team leaner and increasingly focused
on institutional clients without losing optionality from a retail
perspective

– Develop further consultant relationships and expand the number

of funds represented on private banking platforms

– Improve coverage and traction in the US by selectively adding

quality to the institutional sales team

Efficiency

– Ensure cost reduction programmes remain on track
– Completion of outsourcing programme
– Maintain focus on cost and balance sheet efficiency

capability to GLG

– Enhanced FRM’s business with credit fund of fund capabilities

through the acquisition of Pine Grove and an important new

distribution relationship with Bank of America Merrill Lynch

through the anticipated acquisition of its fund of hedge

fund offering

– $1.5 billion of AHL Evolution sales and $500 million of AHL

– Market AHL’s momentum strategies off the back of strong

Dimension sales in 2014

performance in 2014

– Reorientation of our businesses in Asia Pacific more towards

– Develop and launch UCITS products at Numeric to build track

institutional clients, with a significant institutional AHL mandate

records and market to investors over time

won in Q3 2014. Sale of our retail sales offices in Canada and

– Leverage Man Group’s global distribution capability to grow

the Netherlands to management in those regions

assets in acquired businesses

– Key acquisitions made during the year materially enhance

– Continue to improve coverage and asset raising in the US

our North American business. The Numeric acquisition helps

to develop our consultant relationships and the anticipated

acquisition will help us to develop the number of funds

represented on private banking platforms

– Completion of cost savings programmes ahead of schedule

– Focus on sustaining our efficiency and ensuring that our cost

– Completed outsourcing programme

base enables us to address the risks and opportunities in our

– Compensation ratio of 36% for the year demonstrating the

business appropriately

operating leverage within the business

– Completion of $115 million share repurchase

– Integrate the operational functions of our acquired businesses

– Maintain focus on balance sheet efficiency including ensuring

– Issue of $150 million of capital efficient Tier 2 debt in September

our seeding portfolio is managed effectively

2014 to fund expansion of seeding programme

MAN GROUP PLC / ANNUAL REPORT 2014 STRATEGIC REPORT07

Strategic priorities

Objectives we set in 2014

How we performed against those objectives

Objectives for 2015

Generating superior risk adjusted

returns for our clients

– Continued focus on research at AHL to build new markets

and asset classes

– Focus on building assets in GLG products launched in 2013

and on developing long only offering

– Revamp managed accounts platform within FRM and look

to offer the resources of FRM as a service to investors who

need help with either building or maintaining open architecture

alternative investment programmes

– Broadened AHL’s UCITS range adding directional equity,
volatility, multi-strategy and risk parity funds to existing
offering. Launched a dedicated product for the onshore China
market which trades momentum on a number of Chinese
futures markets

– $600 million raised into the GLG Global Long Short strategy
launched in October 2013, developed long only offering by
adding new products and raised $2 billion into the GLG Strategic
Bond strategy

– FRM’s managed account platform increasingly recognised in the

market place with new mandates won in 2014

– Continued focus on research at AHL to build new markets and

asset classes

– Collaboration between AHL and Numeric to further enhance

research efforts in both managers

– Focus on improving areas of underperformance in GLG

alternatives strategies in 2014

– Build out quantitative platform to provide a wider range of trend

– Numeric acquisition creates a leading global quantitative

– Continue to develop additional momentum and non-momentum

investment management business with over $30 billion of assets
managed across a range of alternative and long only strategies

– Hired new teams at GLG including Rory Powe in European

equities, Pierre-Henri Flamand in the event driven space and
several new hires into our Equity long short strategy
– Acquisition of Silvermine adds significant leveraged loan

capability to GLG

– Enhanced FRM’s business with credit fund of fund capabilities
through the acquisition of Pine Grove and an important new
distribution relationship with Bank of America Merrill Lynch
through the anticipated acquisition of its fund of hedge
fund offering

products at AHL

– Continue to look for high-calibre investment talent at GLG to

support the growth of our existing products as well as to support
the expansion of our alternatives and long only product offering
– Continue to look at other possible bolt-on acquisitions ensuring
that we remain disciplined on price, structure and cultural fit

– $1.5 billion of AHL Evolution sales and $500 million of AHL

– Market AHL’s momentum strategies off the back of strong

Dimension sales in 2014

performance in 2014

– Reorientation of our businesses in Asia Pacific more towards

– Develop and launch UCITS products at Numeric to build track

institutional clients, with a significant institutional AHL mandate
won in Q3 2014. Sale of our retail sales offices in Canada and
the Netherlands to management in those regions

records and market to investors over time

– Leverage Man Group’s global distribution capability to grow

assets in acquired businesses

– Key acquisitions made during the year materially enhance

– Continue to improve coverage and asset raising in the US

our North American business. The Numeric acquisition helps
to develop our consultant relationships and the anticipated
acquisition will help us to develop the number of funds
represented on private banking platforms

– Completion of cost savings programmes ahead of schedule
– Completed outsourcing programme
– Compensation ratio of 36% for the year demonstrating the

operating leverage within the business

– Completion of $115 million share repurchase
– Issue of $150 million of capital efficient Tier 2 debt in September

2014 to fund expansion of seeding programme

– Focus on sustaining our efficiency and ensuring that our cost
base enables us to address the risks and opportunities in our
business appropriately

– Integrate the operational functions of our acquired businesses
– Maintain focus on balance sheet efficiency including ensuring

our seeding portfolio is managed effectively

Developing options for growth

across our investment businesses

and non-trend following products

– Continue to look for high-calibre investment talent at GLG to

support the growth of our existing products as well as to support

the expansion of our product offering

– Continue to look at other possible bolt-on acquisitions ensuring

that we remain disciplined on price, structure and cultural fit

Ensuring distribution effectiveness

– Start marketing the AHL Dimension strategy and market an

additional $750 million of the AHL Evolution strategy

– Focus on making the sales team leaner and increasingly focused

on institutional clients without losing optionality from a retail

perspective

– Develop further consultant relationships and expand the number

of funds represented on private banking platforms

– Improve coverage and traction in the US by selectively adding

quality to the institutional sales team

Efficiency

– Ensure cost reduction programmes remain on track

– Completion of outsourcing programme

– Maintain focus on cost and balance sheet efficiency

MAN GROUP PLC / ANNUAL REPORT 2014STRATEGIC REPORT
08

CEO’s performance
review

Pacific more towards institutional clients, whilst retaining optionality in
retail channels. We are making progress in these markets, but meaningful
results will take a number of years. That said, through organic growth
and acquisitions, our North American business is now a significant part
of the Group, with $18.5 billion of assets (25%) run from teams based in
North America, and $12.1 billion of assets (17%) run on behalf of clients
based there.

From an efficiency perspective, we continued our progress with respect
to our cost base and balance sheet. We completed our $270 million cost
saving programme, with original targets set for 2015 achieved ahead of
schedule in the course of 2014. We also further enhanced the efficiency
of our balance sheet, returning $115 million of capital through a share
repurchase and expanding our seed capital programme financed by
a new issue of $150 million of lower Tier 2 capital.

Market overview
2014 was characterised by volatile market conditions and a breakdown
in correlations between asset classes. As a result, returns across markets
were varied with the S&P 500 up 11.4%, bringing US equities close to
all‑time highs, the TOPIX up 10.3% and at a seven year high, and world
bonds and corporate bonds up 8.4% and 17.3% respectively. By contrast
European, emerging markets and energy markets suffered with the FTSE
100 down 2.7%, the MSCI emerging markets index down 2.2% and oil
prices starting a downward trend in the second half of the year reaching
five year lows at the end of the year.

The hedge fund industry overall had a negative 2014 with the HFRX
Global Hedge Fund Index ending the year down 58bps. There were a
range of returns across strategies and the top performing strategy was
Managed Futures, due to strong trends across asset classes in the
second half of the year. Credit long short managers started the year well,
but the second half of the year was more challenging. Concerns over the
eventual timing of rate hikes in the US weighed on sentiment, and alpha
generation dried up with few single name credit moves working well.
Equity managers had a challenging year. In Europe, frequent mid‑month
risk reversals meant managers’ risk management policies contributed
to underperformance, while in the US there were at least two bouts
of sector rotation that weighed on returns.

2014 results
In this context performance in 2014 was mixed amongst Man Group’s
range of strategies. AHL’s momentum‑based strategies benefited from
trends in fixed income markets and delivered very strong returns, whilst
by contrast GLG’s equity long short strategies had a difficult second
quarter impacted by the move from growth to value in technology stocks,
ending the year with negative performance. Flows were positive in the
year, with particularly robust sales in the first and second quarters,
linked primarily to the strong performance at GLG in 2013. The solid
flows during the year and the acquisitions of Numeric and Pine Grove
drove a 35% increase in funds under management to $72.9 billion at 31
December 2014. Adjusted profit before tax increased by 62% with strong
performance fees from AHL, cost savings and lower interest costs being
partially offset by a decline in net management fee revenues largely as
a result of the roll‑off of our legacy guaranteed products and a mix shift
from retail to institutional FUM in our quantitative alternatives business.

Progress against strategic priorities
Performance and growth
During 2014 we have made significant progress in creating a more
diversified group with multiple options for growth as set out in the
following pages which describe each of our investment management
businesses and their investment performance and growth in 2014.

Emmanuel Roman, Chief Executive Officer

2014 was a year in which AHL delivered
strong performance, we completed our
restructuring programme and created
a more diversified business through
the Numeric acquisition.
Overview
During the year we made significant progress in respect of our key
strategic objectives: (i) generating superior risk adjusted returns for
our clients; (ii) developing options for growth across our investment
businesses; (iii) ensuring distribution effectiveness; and, (iv) operating as
efficiently as possible, both from a cost and a balance sheet perspective.

Performance was very strong on both an absolute and relative basis in
our quantitative strategies at AHL and Numeric, whilst being more mixed
in our discretionary businesses. Investment performance continues to be
the single most important determinant of success in our business and
achieving superior risk adjusted returns for our clients remains our most
important priority.

We have made good progress in creating a more diversified business
and developing options for growth across our investment businesses.
With the acquisition of Numeric, we have created a leading global
quantitative investment management business with over $30 billion
of assets managed across a full range of alternative and long only
strategies. At GLG, we hired a number of new teams for our discretionary
alternative and long only business, including Rory Powe in European
long only equities, Pierre Henri Flamand in the Event‑driven space and
several new hires into our Equity Long Short strategy. Furthermore,
through the acquisition of Silvermine we added a significant leveraged
loan capability to GLG. At FRM, we have made strides in building our
Managed Accounts business with a substantial new mandate from a
large institution which will fund in the course of 2015. In addition, we
have enhanced FRM’s business with credit fund of fund capabilities
through the acquisition of Pine Grove and an important new distribution
relationship with Bank of America Merrill Lynch (BAML) through the
acquisition of its fund of hedge fund business.

From a distribution perspective there were $3.3 billion of net inflows in the
course of the year. Gross sales increased 36% year on year, with strong
performance in particular in the EMEA region. We continue to develop
our capability in North America, and reorientate our businesses in Asia

MAN GROUP PLC / ANNUAL REPORT 2014 STRATEGIC REPORT
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Ov E R v I E w

Established in 1987, AHL is a leading quantitative investment
manager with assets under management of $14.4 billion
employing over 100 investment professionals at its base
in London and additional offices in Oxford, Hong Kong
and Pfäffikon.

AHL offers a range of alternative and long only investment strategies
ranging from multi‑asset momentum and multi‑strategy programmes
to specialist sector based strategies. AHL Alpha ($3.1 billion) and
AHL Diversified ($4.7 billion) are AHL’s most diversified trend following
programmes trading a broad range of liquid instruments. AHL Evolution
($2.8 billion) applies AHL’s established momentum strategies to markets

2 0 14 P E R FO R M A N C E & G R O w T H

2014 has been an exciting year at AHL yielding excellent performance,
which drove a 21% increase in FUM, interesting research and new
fund launches.

Whilst AHL’s traditional momentum programmes (AHL Alpha and AHL
Diversified) have suffered in recent years at the hands of unprecedented
levels of central bank intervention and increased correlation across
markets, 2014 saw this change. The re‑emergence of trends across
AHL’s core markets and correlation lower than it has been at any time
post the Global Financial Crisis created a near perfect environment for
trend‑followers. As a result, the AHL Alpha strategy returned 22.8% and
the higher volatility AHL Diversified strategy was up 33.8%. Long fixed
income exposure led the way as yields continued to fall, with further
gains coming as a strengthening US economy benefited the strategies’
long USD exposure. News in the final months of 2014 was dominated
by the continued decline in oil prices, a trend that paid off well for the
funds’ short position.

AHL

1. Diversiﬁed (including guaranteed)
2. Alpha
3. Evolution
4. Dimension
5. MSS Europe
6. Other specialist styles
Total

US$bn
4.7
3.1
2.8
1.8
1.9
0.1
14.4

not traditionally accessed by CTAs, such as Interest Rate Swaps, Credit
Default Swaps, power and options. In total, the flagship momentum
strategies account for 74% of FUM.

Of the non‑momentum programmes, AHL Dimension ($1.8 billion)
is a multi‑strategy quantitative programme which allocates to a blend
of technical, systematic, fundamental and momentum strategies.
With assets totalling $2.0 billion, AHL’s specialist strategies include
Equity index plus, a systematic alpha capture strategy that analyses
brokers’ based trade ideas, and Tail Protect, a systematic long only
tail risk strategy that trades volatility instruments.

Once again, AHL Evolution had a strong year returning 20.3% and,
following another year of significant inflows, it was soft closed in
September 2014, with assets standing at $2.8 billion. AHL’s multi‑
strategy programme, AHL Dimension, generated 16.7% in 2014 taking
advantage of both trending markets, but also the diversification brought
from the programme’s fundamental and technical strategies. Assets
doubled over the year with a mix of inflows from new and existing
investors. Performance of the specialist strategies was mixed over the
year. Despite the Alpha Capture funds generally performing well, they
were below benchmark for the year. However, the Tail Protect strategy
outperformed its benchmark and the AHL Currency strategy was up
58.0% for the year.

The AHL business continues to win institutional mandates and there has
been a significant shift from retail to institutional investors over the last few
years. We broadened our UCITS range in 2014, adding directional equity,
volatility, multi‑strategy and risk parity funds to our existing multi‑asset
momentum offering. 2014 was also an exciting year for partnerships with
the launch of two new funds in two very different jurisdictions. First off
was a 40‑Act product (a retail alternatives product sold to US investors)
launched in partnership with American Beacon in the US, providing
access to the multi‑billion dollar mutual fund market. Later in the year
came a dedicated product for the onshore China market which trades
momentum on a number of Chinese futures markets.

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CEO’s performance review
continued

Ov E R v I E w

Established in 1991 and with research and investment staff
based in London, New York, Tokyo, Guernsey and Pfäffikon, FRM
is a fund of hedge fund manager with assets under management
of $11.3 billion.

FRM has 58 research and investment staff who provide a full range of
hedge fund investment services and capabilities to help clients invest
in and maximise the benefits they receive from hedge funds. FRM’s
managed account platform, refined over 16 years and with $7.7 billion in
assets under management is a core component of the product offering,
providing access, transparency and risk control in 63 hedge
fund managers.

FRM manages $5.5 billion in commingled funds where we offer a range
of portfolios to cater for different risk return profiles including multi‑
strategy portfolios and a range of thematic solutions across relative value,
equity long short, Global macro and alternative beta strategies. We have
a long history of developing client bespoke mandates and manage $3.3
billion in these segregated accounts. FRM’s direct access capabilities
enable clients to invest directly in single managers or build customised
portfolios from a selection of managers and we have $0.7 billion of assets
in this category. Finally we have $1.8 billion of infrastructure mandates
where clients have access to FRM’s risk, operational and administrative
services for custom managed account solutions.

P E R FO R M A N C E & G R O w T H

FRM’s assets decreased by 6% during the year with net outflows being
partially offset by the inclusion of Pine Grove’s assets.

From a performance perspective FRM’s quantitative strategies
outperformed their discretionary strategies in 2014, with both managed
futures and statistical arbitrage managers ending the year with strong
returns. The performance in FRM’s diversified portfolios was positive,
but marginally below target with the FRM diversified II strategy up 2.7%.
Portfolios investing via managed accounts with higher concentration
performed better and client specific portfolios performed broadly in line
with commingled portfolios. Thematic portfolio performance was strong,
with the managed futures portfolio having its strongest annual
performance since 2008 (the FRM Sigma strategy was up 22.2%)
and the Statistical Arbitrage portfolio enjoying another mid‑single
digit positive year (the FRM Equity Alpha strategy was up 6.4%).

FRM

1. Infrastructure managed account
2. Direct access managed account
3. Segregated
4. Diversiﬁed FoHFs (including guaranteed)
5. Thematic FoHFs
Total

US$bn
1.8
0.7
3.3
4.0
1.5
11.3

2014 has seen a number of positive developments at FRM. Firstly in early
June we announced the acquisition of Pine Grove, a US‑based fund of
hedge fund manager specialising in the management of credit‑focused
hedge fund portfolios with approximately $1.0 billion of assets under
management. Pine Grove will further enhance our presence in the US
and add to FRM’s fund of hedge funds business, reinforcing our efforts
to offer clients a wide variety of investment opportunities including
SEC‑registered US 40 Act funds and complementary fund of hedge fund
products. Secondly, following on from its launch in late 2013, the second
phase of our risk and transparency reporting software for managed
accounts has continued to extend the service we can offer to managed
account platform investors. This is now increasingly recognised by
the market place and new mandates are being won in a highly
competitive market.

Finally, in December 2014 we announced that Merrill Lynch had selected
FRM as the steward of its $1.2 billion portfolio of multi‑strategy and
strategy‑focused funds, supported by a proven distribution platform.
We look forward to continuing to deliver high quality products and
services to Merrill Lynch’s clients, while expanding the investor base
globally as investors increasingly seek exposure to alternative
investments through managers like Man Group.

MAN GROUP PLC / ANNUAL REPORT 2014 STRATEGIC REPORT

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Ov E R v I E w

Established in 1995, based in London and with investment teams
in New York, Hong Kong and Pfäffikon, GLG is a discretionary
fund manager with assets under management of $30.5 billion
and around 120 investment professionals.

GLG manages a diverse range of alternative and traditional investment
strategies that focus on equities and credit as well as multi‑asset
investment strategies.

Equities: GLG’s equities business comprises a range of alternative and
long only strategies with investment expertise covering each of the major
regions and specialist sectors. A wide range of investment approaches
and styles are pursued by the various investment teams.

P E R FO R M A N C E & G R O w T H

GLG’s assets increased slightly during the year with strong inflows,
particularly in the first half of the year, being offset by currency movements.

Performance across GLG’s range of strategies was mixed in 2014.
In equities, GLG’s equity long short strategies had a weak year in 2014
with performance ranging from +4.2% to ‑6.3%. In particular the largest
long short strategy had a difficult second quarter, with the factor rotation
in technology stocks being a key driver in the underperformance. GLG’s
equity long only strategies performed well in 2014. The Japan CoreAlpha
strategy was up 7.7%, slightly below its benchmark, whilst the European
and UK equity strategies were well ahead of their respective
benchmarks. The Undervalued Asset strategy was up 3.7% compared
to the FTSE All Share Index which was up 1.2%, whilst the European
Equity long only strategy was up 7.8% compared to the MSCI Europe
Index which was up 4.5%.

The majority of GLG’s credit strategies started the year well but
experienced a difficult third quarter and were not able to regain ground
in the remainder of the year resulting in Euro Distressed being down
4.6% and Market Neutral being down 7.4%. The Cross Asset Value
strategy (CRAVE) had a better year ending up 4.7%. The Strategic Bond
strategy was up 4.5% well ahead of its LIBOR benchmark.

Credit: GLG’s alternative and long only credit strategies span the
credit spectrum and capital structure. Our alternative credit strategy
incorporates a diverse range of approaches and asset classes including
relative value, distressed debt, event driven, capital structure arbitrage
and convertible bond arbitrage strategies. Our long only credit strategies
include investing in corporate bond, convertible bond and asset‑backed
securities with a range of approaches applied to each.

Multi‑asset: GLG’s Multi‑asset strategies consist of alternative and long
only strategies. Our multi‑asset strategies comprise a variety of
investment approaches and styles.

Throughout the year we continued to look for talent to broaden out
the alternatives and long only product offering. On the alternatives side,
Pierre‑Henri Flamand joined at the beginning of June and is focused
on a global catalyst‑driven strategy across the capital structure and we
added several new hires into our Equity long short strategy. In our long
only business, Rory Powe joined the European equity team managing
a focused European equity long only strategy.

In January 2015 we completed the acquisition of Silvermine, a
Connecticut‑based leveraged loan manager with $3.8 billion of funds
under management across nine active collateralised loan obligation
(CLO) structures. The acquisition of Silvermine will further expand our
existing credit business and position us to benefit from strong demand
for US CLOs and other credit strategies. As part of Man Group,
Silvermine will benefit from our infrastructure, distribution and access
to capital and the acquisition will bring meaningful advantages to our
investors by further diversifying our offering.

GLG

1. Equity alternative
2. Credit alternative
3. Multi-asset alternative
4. Japan long only equity
5. Global equity long only
6. Europe equity long only
7. UK equity long only
8. Fixed income long only
Total

US$bn
7.1
6.5
0.9
10.2
1.3
1.1
0.6
2.8
30.5

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CEO’s performance review
continued

Ov E R v I E w

In September 2014 we completed the acquisition of Numeric,
a Boston-based quantitative equity manager with $16.7 billion of
funds under management across a range of long only and long
short, fundamentally based strategies. Numeric has an excellent
track record of performance across these strategies and has
seen substantial growth over the past two years.

Numeric manages four main categories of equity strategies across
long only and alternatives as set out in the chart below. Numeric’s
fundamentally‑driven systematic investment process seeks to
outperform the market by buying inexpensive stocks with improving
fundamentals and catalysts for growth. The firm generates alpha by
outperforming regional and global benchmarks in the US, Europe,
Japan and Emerging Markets, and by delivering returns from its long
short market neutral strategies. Numeric manage assets for institutional
clients globally, including corporate and public pension plans,
foundations, endowments, and sovereign funds.

One of Man Group’s core strategic objectives is to build a broader‑based
quantitative platform across alternatives and long only, momentum,
technical and fundamental strategies. The acquisition advances this
objective by creating a diversified, global quantitative investment

P E R FO R M A N C E & G R O w T H

From the point of acquisition in September 2014 to the end of the year
Numeric’s assets grew by 10% driven by strong sales into their long only
and alternatives strategies.

From a performance point of view, Numeric had a very good 2014.
Since Numeric manages a variety of strategies that encompass many
markets it is hard to make sweeping generalisations, but Numeric’s
average client portfolio out‑performed its benchmark by 3% before fees.
The stronger performing strategies for 2014 were the active extension
(130/30) strategies that outpaced their respective benchmarks by
double‑digit percentages, before fees. This out‑performance adds to a
strong long‑term performance track record for Numeric’s strategies and
based on annualised returns, over 90% of Numeric’s current quantitative
strategies have historically outperformed their selected benchmark over
one, three and five years1.

management platform comprising AHL and Numeric with over $30 billion
of funds under management with a balance between value, momentum
and technical based strategies. Another of our core strategic objectives is
to expand our presence in the US. The addition of the Numeric business
helps us to establish a credible investment footprint in North America,
through a recognised brand, a presence in an important investment
centre and relationships with over 25 US‑based institutional clients.

In addition, Numeric’s strong investment track record of relative and
absolute performance and the scalability of their wide range of long only
and market neutral strategies provide the opportunity to leverage Man
Group’s global distribution capability to grow Numeric’s asset base over
time. The firm has a highly experienced and well regarded team and
there is a strong cultural fit with Man Group. The Numeric management
team is led by Mike Even who is the Chief Executive Officer, Robert
Furdak who is Co‑CIO and Director of Portfolio management and Shanta
Puchtler who is Co‑CIO and Director of Research. Together these
individuals are responsible for the ongoing management of the Numeric
business within the enlarged group and Mike and Shanta have been
appointed to Man Group’s Executive Committee.

No change has been made to Numeric’s investment committee or
investment process as a result of the acquisition however work has
already begun to take advantage of various Man Group capabilities.
Current efforts include integration of infrastructure, globalisation of
compliance efforts, research collaboration with the Group’s other
investment businesses and leveraging some of its technology
and distribution capabilities.

1. Global long only
2. Emerging markets long only
3. US long only
4. Long short
Total

US$bn
9.1
1.9
4.3
1.4
16.7

Numeric

1 Not all current strategies have performance track records for the full three and five year periods, but they have outperformed their selected benchmark for the periods during which

they existed.

MAN GROUP PLC / ANNUAL REPORT 2014 STRATEGIC REPORT

Progress against strategic objectives (continued)
Distribution effectiveness
The flow picture improved from 2013 with net inflows of $3.3 billion in
the year. Gross sales were $21.9 billion, an increase of 36% compared
to 2013 with the increase coming from flows into GLG alternatives and
long only strategies linked to strong performance in 2013, as well as
sales of Numeric products post acquisition. The majority of the demand
continues to come from institutions with institutional sales constituting
63% of total sales. As a result our flows are becoming much more
lumpy in nature and one or two mandates can skew the quarterly
numbers significantly. The large institutional sales during 2014 included
$1.0 billion into the GLG European Long Short strategy, $1.0 billion
into a bespoke AHL mandate, $0.8 billion into the GLG Strategic Bond
strategy, $0.7 billion into an FRM managed account and $0.5 billion into
AHL Dimension. Redemptions were $18.6 billion in the year, down from
$19.7 billion in 2013 but reflecting mixed levels of absolute investment
performance across the product range.

Efficiency
The cost saving programme announced in 2012 and 2013 was
completed during the year. 2014 total fixed costs were $297 million
(excluding one quarter’s costs for Pine Grove and Numeric), versus the
$305 million like-for-like target set for 2015. 2014 fixed compensation
costs (excluding Numeric and Pine Grove) were $151 million, versus the
$161 million target for 2014. 2014 other cash costs (excluding Numeric
and Pine Grove) were $146 million, versus the $169 million target for 2014.
Underlying cost saving targets for 2015 remain unchanged, despite being
ahead of schedule versus the targets for 2014. The inclusion of the fixed
costs related to the acquisitions of Numeric, Pine Grove, the BAML fund
of funds and Silvermine and the effect of Sterling weakness against the
US Dollar, give a pro-forma cost base of $370 million for 2015. We feel we
are running the business as efficiently as is appropriate given the range of
opportunities we are pursuing and going forward, we do not expect any
further reductions in our fixed cost base unless there is a material change
in our operating performance or business environment.

At AHL the marketing of the Evolution strategy continued to progress
well with sales of $1.5 billion during the year and we started marketing
the Dimension strategy raising $500 million from an institutional client in
the first half of the year. Despite the strong performance across the AHL
product range in 2014 we do not expect to see a meaningful pick-up in
retail demand for our traditional momentum products until later in 2015,
providing performance holds. Currently early stage interest is coming
from institutions and the AHL business has seen a significant shift from
retail to institutional investors over the past few years.

We saw significant growth in GLG assets in the first half of 2014 off the
back of good performance in 2013 with continued flows into strategies
that sold well in 2013 including European Long Short, Japan CoreAlpha
and Euro Distressed. In addition, following strong performance since
launch in November 2011 $2.0 billion was raised into the Strategic and
Flexible Bond strategies during the year, $600 million was raised into the
Global Long Short strategy which launched in October 2013, $300 million
into the Undervalued Asset strategy and $200 million into CRAVE which
has reached its target level of asset raising following strong performance
in 2013.

At FRM we have made progress in the managed accounts business with
$1.5 billion of sales in 2014 and we have a substantial new mandate from
a large institution which will fund in the course of 2015. In Japan, where
the client interest is for direct co-investment into our existing platform,
we raised $700 million into FRM Diversified strategies. Redemptions
from the legacy multi manager business which totalled $1.7 billion in the
year continue to be a drag on the business and other redemptions of
$2.6 billion resulted in a net outflow at FRM in the year.

Asset raising at Numeric continues to progress well and since acquisition
$2.1 billion of assets have been sold into their various strategies. We are
developing a number of UCITS strategies for sale to high net worth and
institutional clients around Europe.

The US remains a key focus for us from a distribution perspective
and, as outlined earlier, the Numeric, Pine Grove, Silvermine and BAML
acquisitions will help us with this effort, with Numeric in particular adding
presence in an important investment centre and relationships with
a range of institutional clients.

We continue to restructure our retail distribution infrastructure and during
the year our retail sales offices in Canada and the Netherlands were
sold to the management teams in those regions. We maintain a strong
ongoing relationship with these teams enabling us to continue to sell
Man Group products through these channels.

Our balance sheet remains strong and liquid with net tangible assets
of $0.8 billion or 48 cents per share at 31 December 2014. Gross cash
was $0.7 billion compared to $1.0 billion at the end of 2013 and the
committed revolving credit facility of $1,525 million is available and
undrawn. In September 2014 we issued $150 million of Tier 2 debt
to fund the expansion of our seeding programme. We completed
the $115 million share repurchase announced in February 2014 at an
average price of 99.7 pence, buying back 68.8 million shares. Surplus
capital at 31 December 2014 was $419 million with the majority of the
decrease from the December 2013 position of $760 million being due to
the acquisitions of Numeric and Pine Grove which utilised $345 million
of surplus capital.

I would like to thank the management team and everyone at Man for
the commitment, expertise and hard work they have contributed this year
enabling the firm to make substantial progress on each of our strategic
objectives. Our people are the basis for our success and the foundations
of our future. In 2014 we delivered a set of business principles which were
designed to distil and define the firm’s key priorities, focus and culture.
The principles are being formally launched across the firm in the first
quarter of 2015 and will be displayed in our offices internationally to
promote a common understanding of the firm’s values.

Outlook
We continue to operate in a challenging and uncertain environment.
However after the significant progress made against our strategic
objectives in 2014, we are better positioned as a group to grow our
business profitably over time. We have a more diversified offering to
clients and a range of attractive options for growth. If we are able to
deliver superior risk adjusted returns for our clients, as we were able
to in particular in our quantitative businesses last year, we will be able
to grow assets steadily by leveraging our global distribution. As we
continue to manage our business and balance sheet efficiently, we can
in turn provide attractive returns for our shareholders. In the meantime,
we remain cautious in our outlook, given the ongoing volatility of the
markets in which we operate.

The Strategic report is set out on the inside front cover and on
pages 1 to 29.

By order of the Board

Emmanuel Roman
Chief Executive Officer

MAN GROUP PLC / ANNUAL REPORT 2014STRATEGIC REPORT
14

CFO’s financial
review

Jonathan Sorrell, Chief Financial Officer

In 2014 we have seen the benefits of the
progress on the delivery of our strategy
with improved profitability, a full year
of net inflows and growth in FUM.

Total costs were down 17%, and within this total fixed costs were down
20% due to the continued implementation of the Group’s cost savings
programme. As a result of these revenue and cost drivers, our adjusted
profit before tax was $481 million, up 62% from the prior year, and adjusted
diluted earnings per share were 24.4 cents (2013: 14.1 cents). Our statutory
profit before tax was $384 million (2013: $56 million), reflecting adjusting
items of $97 million, which primarily relate to amortisation of purchased
intangible assets and acquisition related costs.

Strategically, we are focused on operating our business as efficiently as
possible and managing our balance sheet effectively, whilst maintaining
its strength and liquidity. We have made significant progress in respect
of these two objectives during 2014.

We have completed the execution of our cost savings programme ahead
of schedule, delivering our 2015 target fixed cost base during the second
half of 2014. Total fixed costs in H2 2014, excluding Numeric and Pine
Grove, were $143 million, or $286 million on an annualised basis, versus a
target for 2015 of $305 million. We believe we are operating our business
as efficiently as is appropriate for the set of business opportunities we
are pursuing and no additional reductions are expected unless there are
changes in operating performance or the business environment.

Our balance sheet continues to be strong and liquid, with a regulatory
capital surplus of $419 million at 31 December 2014 and a net cash
position of $589 million. During the year we continued to enhance the
efficiency of our capital and funding. In the first half, we executed a
$115 million share repurchase, acquiring 4% of our issued share capital,
whilst in the second half, we financed the expansion of our seed capital
activity with the issuance of $150 million of lower Tier 2 capital.

Overview
Our financial results in 2014 reflect the strong run of absolute
performance from AHL’s traditional momentum strategies, which
more than compensated for mixed performance in GLG’s discretionary
alternative strategies, together with the acquisitions of Numeric and
Pine Grove in the second half of the year.

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. Our KPIs are used
on a regular basis to evaluate progress against our four key priorities:
performance, growth, distribution, and efficiency.

Funds under management (FUM) increased by 35% from $54.1 billion at
the beginning of the year to $72.9 billion at 31 December 2014. We added
$16.2 billion of FUM through the acquisitions of Numeric and Pine Grove,
and the remainder of the increase in FUM reflects net inflows in every
quarter of the year ($3.3 billion) and positive investment performance
($3.6 billion), partly offset by significantly adverse foreign currency
movements ($4.3 billion).

Net management fee revenues decreased by 14% from $822 million in
prior year to $706 million in 2014, and performance fee revenues have
increased by 76% from $193 million to $340 million, 80% of which were
generated by AHL. As expected, management fee margins for our quant
alternative products declined during the year given a mix shift toward
lower margin institutional assets and, coupled with the continuing mix
shift away from the high margin guaranteed products, this resulted in
the average net management fee margin decreasing by 36 basis points
from the prior year.

The results of our KPIs this year again reflect a volatile operating
environment, with stronger investment performance for AHL and
weaker performance for GLG, but an improvement in net flows off
the back of strong GLG performance in 2013. The general product
mix shift from higher margin retail assets to lower margin institutional
assets has continued to have an adverse impact on management fee
margins and revenue, but the continued reduction in our cost base
has reduced the impact on our profitability and EPS growth.

MAN GROUP PLC / ANNUAL REPORT 2014 STRATEGIC REPORT15

Key performance indicators

Investment performance %

Target: key fund vs benchmark

Net ﬂows %

Target: 0%–10% net inﬂows

Year ended
31 December 2013

-11.5

-3.1

-4.4

Year ended
31 December 2014

Year ended
31 December 2012

Year ended
31 December 2013

Year ended
31 December 2014

9.4

5.6

6.7
6.0

7.7

12.7
13.9

33.8
32.0

-5.9

-0.6

2.7
3.1

-11.1%

-6.3%

6.1%

n AHL n Benchmark

n GLG n Benchmark

n FRM n Benchmark

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 vs. three key peer asset managers
for AHL (the target being to beat two of the three peers), the GLG
Alternative Strategies Dollar‑Weighted Composite vs. HFRX for GLG and
FRM Diversified II vs. HFRI Fund of Funds Conservative Index 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 one out of the three performance
targets. AHL met the target for 2014 as the performance of its key fund
exceeded all three of the relevant peer benchmarks. FRM and GLG were
both below the benchmark in 2014. Further investment performance
information is provided on pages 9 to 12.

This KPI measures net FUM flows for the period as a percentage
of opening FUM, with net flows defined as gross sales less gross
redemptions. 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 within the target range
in 2014 with a net inflow of 6.1%, compared to a net outflow of 6.3% for
the year to 31 December 2013. The improvement in flows in 2014 reflects
strong asset raising in GLG products in the first half of the year off the
back of strong performance in 2013, as well as inflows into Numeric
and AHL products in the second half of the year.

Adjusted management fee EBITDA margin %

Target: 25%–40%

Adjusted management fee EPS growth %

Target: 0%–20% + RPI

Year ended
31 December 2012

Year ended
31 December 2013

Year ended
31 December 2014

41.9%

36.0%

30.3%

Year ended
31 December 2012

Year ended
31 December 2013

Year ended
31 December 2014

-25%

-14%

28%

This 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). Our adjusted
management fee EBITDA margin is a measure of our underlying
profitability. The adjusted management fee EBITDA margin of 30.3%
was within the target range for the year ended 31 December 2014.
This margin has been declining as a result of the roll off of higher
margin guaranteed product FUM and the general product mix shift
from higher margin retail assets to lower margin institutional assets.

This KPI measures our adjusted management fee EPS growth, where
adjusted management fee EPS is calculated using post‑tax profits
excluding net performance fees, divided by the weighted average diluted
number of shares. 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 of 28% was above the target range for
2014 (target of 0% – 20% plus RPI of 1.6%), compared to ‑14% in 2013,
which has increased primarily as a result of the significant reduction
in costs, including lower finance expense, and to a lesser extent the
acquisitions of Numeric and Pine Grove and the share repurchase
programme undertaken in the first half of the year.

MAN GROUP PLC / ANNUAL REPORT 2014STRATEGIC REPORT
16

CFO’s financial review continued

Funds Under Management (FUM)

$bn

FUM at 31 December 2013
Sales
Redemptions

Net inflows/(outflows)
Investment movement
Foreign currency movement
De‑gearing and other movements
Acquisition of Numeric and Pine

Grove

FUM at 31 December 2014

Gross management fee margin
for year ended 31 December
2014

Gross management fee margin for
year ended 31 December 2013

Net management fee margin for
year ended 31 December 2014

Net management fee margin for
year ended 31 December 2013

Alternative

Long only

Quant
(AHL/
Numeric

Discretionary
(GLG)

Fund of funds
(FRM)

Quant
(AHL/
Numeric)

Discretionary
(GLG)

Total excluding
Guaranteed

Guaranteed

8.9
3.6
(2.8)

0.8
2.3
(0.4)
0.2

1.1

12.9

16.3
7.2
(5.9)

1.3
(0.5)
(1.3)
(1.3)

–

14.5

11.3
2.3
(4.3)

(2.0)
0.7
(0.5)
0.3

1.0

10.8

1.5
2.3
(0.5)

1.8
–
(0.7)
–

14.1

16.7

13.8
6.5
(4.4)

2.1
0.8
(1.2)
0.5

–

16.0

51.8
21.9
(17.9)

4.0
3.3
(4.1)
(0.3)

16.2

70.9

2.3
–
(0.7)

(0.7)
0.3
(0.2)
0.3

–

2.0

Total

54.1
21.9
(18.6)

3.3
3.6
(4.3)
–

16.2

72.9

2.2%

1.4%

0.9%

0.3%

0.9%

1.2%

5.2%

1.3%

2.8%

1.4%

1.0%

0.3%

1.0%

1.5%

5.2%

1.8%

1.9%

1.2%

0.9%

0.3%

0.7%

1.1%

4.1%

1.1%

2.3%

1.2%

0.9%

0.3%

0.7%

1.2%

4.4%

1.5%

Total FUM increased by $18.8 billion during the year, with the acquisition of Numeric and Pine Grove adding $16.2 billion of assets in Q3 2014.
The remaining increase of $2.6 billion is a result of positive investment performance of $3.6 billion and net inflows of $3.3 billion, partly offset by
negative foreign exchange movements of $4.3 billion (due to the fact that 46% of the Group’s closing FUM is in non‑US Dollar currencies).

Quant alternative products (AHL/Numeric)
Quant alternative FUM increased by 45% to $12.9 billion during the
year to 31 December 2014, primarily as a result of positive investment
performance of $2.3 billion and the acquisition of Numeric, which
added $1.1 billion. Sales were $3.6 billion, which included a significant
investment by a large institutional Asia Pacific investor into a bespoke
AHL mandate, $1.5 billion into AHL Evolution, $500 million into AHL
Dimension and $300 million into various of Numeric’s alternative
strategies. The majority of the redemptions of $2.8 billion were from retail
investors in AHL Diversified and AHL Alpha. AHL’s main programmes
were up between 16.7% and 33.8% in the year, which resulted in
positive investment performance of $2.3 billion. At 31 December 2014,
75% of quant alternative FUM was denominated in US Dollars and 11%
was in Australian Dollars.

Discretionary alternative products (GLG)
Discretionary alternatives FUM decreased by $1.8 billion during the year.
Net inflows of $1.3 billion were mainly into fixed income and equity long
short strategies in the first half of the year linked to strong performance
in 2013. Negative foreign exchange movements of $1.3 billion related
primarily to the strengthening of the US Dollar against the Euro and
Sterling. At 31 December 2014, 45% of Discretionary alternative FUM
was denominated in US Dollars, 49% was in Euro and 3% was in Sterling.
The negative investment performance of $500 million was primarily in
relation to equity long short strategies. The negative other movements of
$1.3 billion relate to $900 million of Pemba and Ore Hill maturities during
the year and a $400 million reclassification to Discretionary long only.

Fund of funds products (FRM)
Fund of funds FUM has remained broadly flat this year. Sales of
$2.3 billion included $700 million from one client into a separate managed
account and $500 million into infrastructure mandates. Redemptions of
$4.3 billion included $1.7 billion from legacy Man Multi‑Manager products
and $1.0 billion from two institutional clients in other FRM products.
The negative foreign exchange movements of $500 million related
primarily to the strengthening of the US Dollar against the Japanese
Yen and Euro. At 31 December 2014, 45% of alternative fund of fund
FUM was denominated in US Dollars, 36% in Yen and 14% was in
Euro. Positive investment performance across FRM’s strategies added
$700 million to FUM during the year, of which the largest contributor
was FRM Diversified II, which was up 2.7% for the year. The acquisition
of Pine Grove in August 2014 added $1.0 billion of FUM and there were
positive other movements of $300 million in the year.

Quant long only products (AHL/Numeric)
Quant long only FUM increased by $15.2 billion during the year
to $16.7 billion, primarily as a result of the acquisition of Numeric in
September 2014, which added $14.1 billion of assets at acquisition.
Net inflows were $1.8 billion for the year, of which $1.6 billion related to
Numeric. Negative foreign exchange movements decreased FUM by
$700 million primarily due to the strengthening of the US Dollar against
the Euro. At 31 December 2014, 97% of quant long only FUM was
denominated in US Dollars and 3% was in Euro.

MAN GROUP PLC / ANNUAL REPORT 2014 STRATEGIC REPORT17

Discretionary long only (GLG)
Discretionary long only FUM increased 16% to $16.0 billion during the
year, driven by net inflows of $2.1 billion. Sales were $6.5 billion and
included $3.8 billion into Japan CoreAlpha and $2.7 billion into other
long only strategies, including $2.0 billion into the Strategic and Flexible
Bond strategies. Redemptions were $4.4 billion, the majority of which
were from the Japan CoreAlpha strategy. The positive investment
performance of $800 million was primarily as a result of strong investment
performance from Japan CoreAlpha. Positive other movements of
$500 million primarily related to a reclassification from Discretionary
alternatives. Negative foreign exchange movements of $1.2 billion related
to the strengthening of the US Dollar against the Sterling and Japanese
Yen. At 31 December 2014, 55% of discretionary long only FUM was
denominated in Sterling, 29% was in Yen and 10% was in US Dollars.

Guaranteed products
Guaranteed product FUM, our highest margin product grouping, declined
from $2.3 billion at 31 December 2013 to $2.0 billion in 2014. Average
FUM in this category was $1.8 billion in 2014 compared to $4.6 billion
in 2013, which continued to have a negative impact on revenues. There
were no sales during the year and redemptions totalled $700 million.
The weighted average life to maturity of the guaranteed product range
is 4.5 years, with $400 million scheduled to mature in 2015 and $400
million in 2016. Investment performance for guaranteed products was
positive during the year, resulting in a $300 million increase in FUM. The
other movements of $300 million primarily related to guaranteed product
re‑gears as a result of positive investment performance. Negative foreign
exchange movements reduced FUM by $200 million.

Gross management fees and margins
Gross management fees were $810 million for the year ended
31 December 2014 compared to $967 million for the previous year. While
average assets went up year on year, in aggregate the total gross margin
decreased from 177 basis points for the year ended 31 December 2013
to 131 basis points for the year ended 31 December 2014, which was
the main driver of the reduction in gross management fees. The total
net management fee margin (defined as gross management fees less
external distribution costs) has decreased from 150 basis points to 114
basis points over the same period. These reductions are due to reduced
higher margin guaranteed product FUM, a mix shift towards institutional
assets, particularly in the alternatives quant category, as well as the
inclusion of Numeric’s assets which have a blended margin of around
38 basis points. The reduction in margin is less at the net level as there
are higher distribution costs associated with retail FUM than institutional
FUM. This product mix shift and consequent reduction in overall margin
is likely to continue as we sell more open ended alternative product,
particularly to institutions, and there are no sales of guaranteed products.

The alternatives quant net management fee margin reduced by 39 basis
points compared to the year ended 31 December 2013. This is due to
the fact that over 85% of the redemptions were from investors in AHL
Diversified and AHL Alpha, where the gross margin was 2% to 4%,
whereas the majority of the sales were to institutional investors into AHL
Evolution, AHL Dimension and AHL Alpha where the margin is 1% to 2%.
In addition, the inclusion of the Numeric quant alternatives assets, which
have a lower margin, has reduced the margin by around 6 basis points.
Looking forward, we expect this mix shift towards institutional assets to
continue and hence the margin to decline further.

Summary income statement

Management and other fees
Performance fees (including investment

income/gains)

Share of after tax profit of associates
Distribution costs

Net revenue

Asset servicing
Compensation
Other costs

Total costs

Net finance expense

Adjusted profit before tax

Adjusting items

Statutory profit before tax

Net management fees
Net performance fees
Diluted EPS (statutory)

Year ended
31 December
2014

Year ended
31 December
2013

Net management fee revenue

810

367
9
(104)

967

223
12
(145)

Quant alternatives
Discretionary alternatives
Fund of fund alternatives
Quant long only
Discretionary long only
Guaranteed
Other income1

Net management fee revenues

Year ended
31 December
2014

Year ended
31 December
2013

188
207
96
20
109
73
13

706

226
181
119
5
79
202
10

822

1 Other income primarily relates to distribution income from externally

managed products.

1,082

1,057

(27)
(391)
(174)

(592)

(9)

481

(97)

384

(32)
(445)
(238)

(715)

(45)

297

(241)

198
283
20.5 cents

175
122
2.9 cents

Adjusted net management fee EPS

10.1 cents

7.9 cents

Adjusted diluted EPS

24.4 cents

14.1 cents

MAN GROUP PLC / ANNUAL REPORT 2014STRATEGIC REPORT
18

CFO’s financial review continued

Net management fee margins in the alternative discretionary and fund
of funds categories remained consistent compared to 2013. Looking
forward we would expect the alternatives fund of fund margin to trend
down as we see a greater proportion of sales into managed account
mandates where the margin is 30 to 50 basis points.

The long only quant net management fee margin has remained
consistent with the prior year at 33 basis points as the Numeric assets
acquired in September 2014 have a similar margin to the existing long
only quant FUM.

The long only discretionary net management fee margin also remained
consistent with 2013.

The guaranteed product net management fee margin has decreased
by 31 basis points compared to the year ended 31 December 2013
as a result of accelerated amortisation of placement fees related to
redemptions and the net de‑gear in the first half of the year. Excluding
the impact of the accelerated amortisaton, the net margin would be
456 basis points versus 446 in 2013.

Performance fees (including investment income/gains)
Gross performance fees for the year were $340 million, $272 million from
AHL (including $25 million relating to guaranteed products), $37 million
from GLG, $23 million from Numeric and $8 million from FRM. Numeric
performance fees included $9 million of performance fees that were
accrued but uncrystallised at the point of completion of the acquisition.
At 31 December 2014, around 97% of AHL open ended products
($11.2 billion) were above performance fee high water mark and of
the $6.2 billion performance fee eligible Numeric products, 98% were
outperforming the relevant benchmark at 31 December 2014. Around
11% of eligible GLG assets ($1.5 billion) were above high water mark and
around a further 48% ($6.4 billion) within 5% of earning performance
fees, and FRM performance fee eligible products were on average
approximately 3% below high water mark.

Man Group benefits from a portfolio of performance fee streams across
a variety of strategies that are charged on a regular basis at different
points in the year. 90% of AHL FUM is performance fee eligible, of
which 64% have performance fees that crystallise annually, 22% daily
or weekly, and 14% monthly. The majority of GLG’s performance fees
crystallise semi‑annually in June or December. Around 50% of Numeric
performance fee eligible FUM crystallises annually in November, with
the remainder crystallising at various points during the year.

Investment gains of $27 million primarily relate to gains on
seed investments.

Distribution costs
Distribution costs comprised $89 million of investor servicing fees and
$15 million of placement fees.

Investor servicing fees are paid to intermediaries for ongoing investor
servicing. Servicing fees have decreased from $130 million in 2013
to $89 million in 2014 primarily as a result of the roll‑off of guaranteed
product FUM and a mix shift towards institutional assets, particularly
in the alternatives quant category.

Placement fees are paid for product launches or sales and are capitalised
and amortised over two to five years, unless the FUM is redeemed or
the placement fee is deemed to be impaired as a result of negative
investment performance and de‑gearing. Capitalised placement fees at
31 December 2014 were $5 million, down from $20 million in the prior
year, with a weighted average remaining amortisation period of 1.9 years.
The reduction in capitalised placement fees is due to the amortisation
charge recognised for the period, early redemptions of guaranteed
products and limited new payments.

Asset servicing
Asset servicing costs (including custodial, valuation, fund accounting and
registrar functions) were $27 million (2013: $32 million). Asset servicing
costs equate to around 4 basis points on FUM and vary depending on
transaction volumes, the number of funds, and fund NAVs. The reduction
in asset servicing costs, despite an increase in average FUM, is primarily
a result of contract renegotiations in the latter half of 2014.

Compensation costs
Compensation costs comprise fixed base salaries, benefits, variable
bonus compensation (cash and amortisation of deferred compensation
arrangements) and associated social security costs. Compensation costs
in total, excluding adjusting items, were 36% of net revenue, down from
42% in the previous year due to a lower proportion of GLG revenues,
in particular in relation to performance fees.

Fixed compensation and benefits were $155 million for the year
compared to $188 million for the year to 31 December 2013, a reduction
of 18%. The $33 million decrease in fixed compensation is a result of the
Group’s cost savings initiatives, partially offset by the inclusion of Numeric
and Pine Grove salaries costs since acquisition of $4 million. Variable
compensation costs were $236 million for the year, compared to $257
million for the previous year. The decrease in variable compensation costs
of $21 million is a result of lower performance fee related compensation,
and the impact of a change in application of the deferred compensation
accounting policy which has a $17 million impact (for further details
see Note 6 to the financial statements). This has been partially offset
by the inclusion of Numeric and Pine Grove bonus costs of $17 million
since acquisition.

Other costs
Other costs, excluding adjusting items, were $174 million for the year
compared to $238 million for the year to 31 December 2013, a reduction
of 27%. These comprise cash costs of $150 million (2013: $191 million)
and depreciation and amortisation of $24 million (2013: $47 million).
The $41 million, or 21%, decrease in cash costs reflects reduced
costs as a result of the Group’s cost savings initiatives (see Note 7 to
the financial statements), and the $23 million decrease in depreciation
and amortisation is due to lower capital expenditure in recent years
largely as a result of the integration of business operating platforms, as
well as the acceleration of leasehold improvements and equipment in
2013 due to the subletting of office space in Riverbank House. There
were additional Other costs in relation to the Numeric and Pine Grove
businesses of $4 million during the year, excluding adjusting items
that were deal‑related.

MAN GROUP PLC / ANNUAL REPORT 2014 STRATEGIC REPORTNet finance expense
Net finance expense, excluding adjusting items, was $9 million for
the year (2013: $45 million). The decrease is largely due to a $28 million
charge relating to debt buybacks made in 2013 and interest expense on
the related debt of $22 million during that year. This decrease has been
partially offset by lower interest income, due to lower cash balances in
2014, and $3 million of interest payable on borrowings in relation to the
ten‑year fixed rate reset callable guaranteed subordinated notes (Tier 2
capital) issued in September 2014. Finance expense includes an annual
$4 million charge relating to the undrawn revolving credit facility.

Adjusted profit before taxes
Adjusted profit before tax is $481 million compared to $297 million for
the previous year. The adjusting items in the year of $97 million (pre‑tax)
are summarised in the table below and detailed in Note 2 to the financial
statements. The directors consider that the Group’s profit is most
meaningful when considered on a basis which excludes restructuring
costs, impairment of assets, acquisition and disposal related items
(including non‑cash items such as amortisation of purchased intangible
assets and deferred tax movements relating to the recognition of tax
losses in the US) and certain non‑recurring gains or losses, which
therefore reflect the recurring revenues and costs that drive the
Group’s cash flows.

Adjusting items $m

Acquisition related restructuring, professional fees and

integration costs

Litigation claims
Revaluation of FRM contingent consideration
Amortisation of acquired intangible assets
Other adjusting items

Total adjusting items (excluding tax)

Recognition of deferred tax asset (see opposite)

(12)
(24)
17
(72)
(6)

(97)

The acquisition costs relate to legal and other advisory fees largely
relating to the Numeric and Pine Grove transactions, as well as the costs
of staff termination and integration of our operating platforms. Litigation
claims include $4 million of legal fees.

The revaluation of the FRM contingent consideration is an adjustment to
the fair value of expected earn‑out payments, while the amortisation of
acquired intangibles primarily relates to GLG, with charges of $7 million
relating to the newly acquired Numeric and Pine Grove intangibles.

Net management fees and net performance fees
Net management fees of $198 million, compared to $175 million in 2013,
reflect reduced expenses driven by the cost savings programme, partly
offset by lower management fees related to the reduction in overall gross
margin. Net performance fees of $283 million (2013: $122 million) for the
year reflect the strong performance of AHL quant alternative products,
partially offset by lower performance fees from GLG.

Gross management and other fees
Share of after tax profit of associates
Less:
Distribution costs
Asset services
Compensation
Other costs
Net finance expense

Net management fees

Performance fees
Gains on investments and other financial

Year ended
31 December
2014

instruments

Less:
Compensation
Finance expense

Net performance fees

Year ended
31 December
2014

Year ended
31 December
2013

810
9

(104)
(27)
(310)
(174)
(6)

198

340

(81)
(3)

283

967
12

(145)
(32)
(344)
(238)
(45)

175

193

(101)
–

122

Taxation
In the current year we recognised a tax credit of $30 million in respect
of previous periods, which primarily relates to the reassessment of tax
exposures associated with our Asia Pacific operations. The effective
tax rate on adjusted profit for the year of 10% has increased from
the previous year’s rate of 7% primarily due to these adjustments
representing a lower proportion of adjusted profit before tax than the
$34 million tax credit recognised for 2013, which principally related to
the settlement of tax returns across a number of countries. The tax rate
before adjusting for prior year credits and other reconciling items was
17% (2013: 18%).

We have $191 million of realised US tax losses which we can offset
against the tax on future profits from US entities. In addition, we have
$362 million of goodwill and intangibles, predominantly relating to the
Numeric acquisition, which will be amortised for tax purposes in the US
over 15 years and which will reduce US taxable profits in future periods.
Accordingly, we do not expect to pay federal tax in the US for a number
of years.

Previously the US business as a whole was loss making and therefore
Man did not recognise any of its accumulated $191 million US tax assets.
Man has recognised a deferred tax asset of $8 million in 2014, a credit
to the tax expense, as a result of acquiring Numeric which means that
it is likely that the US business will earn taxable profits in the future. The
proportion recognised relates only to the next three years, consistent
with the Group’s business planning horizon. As Man does not expect to
pay federal tax for the foreseeable future, any movements through the
income statement relating to accounting for this deferred tax are treated
as adjusting items.

MAN GROUP PLC / ANNUAL REPORT 2014STRATEGIC REPORT
20

CFO’s financial review continued

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 measure the true earnings
generation 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, and amortisation of placement fees
and deferred compensation charges relating to share and fund product
awards. Our adjusted EBITDA/net revenue margin was 44.8% (2013:
37.5%), which can be divided between margin on management fees
of 30.3% (2013: 36.0%) and performance fees of 73.8% (2013: 41.7%).
The EBITDA management fee margin has decreased from 2013 due to
the general product mix shift from higher margin retail assets to lower
margin institutional assets, and the EBITDA performance fee margin
has increased due to the majority of net performance fees earned in
2014 relating to AHL which attract a lower compensation ratio than
GLG performance fees.

Reconciliation of adjusted PBT to adjusted EBITDA

Adjusted PBT
Add back:
Net finance expense
Depreciation
Amortisation of capitalised computer

software

Placement fee amortisation
Current year amortisation of deferred

compensation

Less: Deferred compensation awards
relating to the current year

Adjusted EBITDA

9
21

3
15

(79)

492

45
39

8
15

(64)

402

Note:
1 Adjusted EBITDA has been restated for 2013 to reflect the cash cost in relation to

deferred compensation awards.

Balance sheet
The Group’s balance sheet continues to be strong and liquid. At
31 December 2014, total shareholders’ equity was $2.4 billion and
net tangible assets were $0.8 billion. Cash and cash equivalents have
decreased during the year largely as a result of the purchase of Numeric
and Pine Grove ($227 million), dividends on ordinary shares ($163
million), share repurchase and associated costs ($116 million) and an
increase in seeding investments ($223 million), partially offset by seeding
redemptions ($89 million), the issuance of the Tier 2 notes ($149 million
including costs) and other cash inflows from operating activities
($263 million). Goodwill and other intangibles have increased in 2014
due to the acquisition of Numeric and Pine Grove, partially offset by
amortisation of $72 million.

The issuance of the Tier 2 subordinated notes of $150 million in
September 2014 is expected to result in an annualised pre‑tax interest
expense of $9 million from 2015, and has increased the Group’s surplus
capital by around $149 million. Associated issuance costs of $1 million
have been capitalised.

Balance sheet $m

Cash and cash equivalents
Fee and other receivables

Total liquid assets
Payables

Net liquid assets
Investments in fund products and other

investments
Pension asset
Investments in associates
Leasehold improvements and equipment

31 December
2014

31 December
2013

738
396

1,134
(697)

437

460
45
30
52

1,024
(149)
(36)

839
1,595

2,434

992
388

1,380
(762)

618

323
71
31
68

1,111
–
(58)

1,053
1,354

2,407

Liquidity
Operating cash flows were $129 million during the year, with cash and
cash equivalents balances of $738 million at year end. The working
capital movements principally relate to an increase in seeding investments
of $134 million and an increase in fee receivables at the year end of
$72 million, with the remainder relating primarily to lower compensation
accruals and lower redemption proceeds payable to investors.

Cash at 31 December 2013
Operating cash flows before working capital movements
Working capital movements (including seeding)
Payment of dividends
Acquisition of subsidiaries, net of cash acquired
Share repurchase (including costs)
Issuance of Tier 2 notes (including costs)
Other movements

Cash at 31 December 2014

Year ended
31 December
2014

992
463
(334)
(163)
(227)
(116)
149
(26)

738

The committed revolving credit facility of $1,525 million is available
and undrawn, with $70 million maturing on 22 July 2016, $120 million
maturing on 22 July 2017, and the remainder ($1,335 million) maturing
on 22 July 2018. The management of liquidity and capital are explained
in Note 14 and Note 22 to the financial statements, respectively.

Year ended
31 December
2014

Year ended 31
December
20131

481

297

Total tangible assets
Borrowings
Deferred tax liability

Net tangible assets
Goodwill and other intangibles

Shareholders’ equity

MAN GROUP PLC / ANNUAL REPORT 2014 STRATEGIC REPORT21

Going concern
The directors have concluded that there is a reasonable expectation
that Man has adequate resources to continue in operational
existence for the foreseeable future, and have accordingly prepared
the financial statements on a going concern basis. Refer to Note 1
to the financial statements.

Regulatory capital
Man is compliant with the FCA’s capital standards and has maintained
significant surplus regulatory capital throughout the year. At 31 December
2014, surplus regulatory capital over the regulatory capital requirements
was $419 million.

The decrease in the Group financial resources of $335 million during
2014 primarily relates to:

(1) The acquisitions of Numeric and Pine Grove, which has increased the

intangibles deduction from Tier 1 capital by $345 million;

(2) The final 2013 dividend payment of $95 million;
(3) The share repurchase programme undertaken in the first half of the

year of $116 million (including costs); partly offset by

(4) H1 2014 post‑tax net performance fee income of $55 million (H2 2014
performance fees will be added once audited in February 2015); and

(5) The issuance of Tier 2 debt of $150 million, less capitalised costs

of $1 million.

The increase in the Group financial resources requirement of $6 million
primarily relates to a net increase of $34 million driven by seeding
investments in fund products, partly offset by the impact of a lower
capital requirement on various receivables balances.

Group’s regulatory capital position

Permitted share capital and reserves
Less deductions (primarily goodwill and

other intangibles)

Available Tier 1 Group capital
Lower Tier 2 capital – subordinated debt1
Other Tier 2 capital

Group financial resources
Less financial resources requirement

Surplus capital

31 December
2014

31 December
2013

2,101

2,311

(1,564)

(1,273)

537
149
20

706
(287)

419

1,038
–
3

1,041
(281)

760

1 Lower Tier 2 capital is not permitted to exceed one third of Group financial resources.

Jonathan Sorrell
Chief Financial Officer

MAN GROUP PLC / ANNUAL REPORT 2014STRATEGIC REPORT
22

Risk management

It is a key objective of Man Group
to be a leader in risk management
and governance.

In September we announced plans to increase our seeding programme.
Significant progress has been made since with the launch of several
new AHL and GLG funds. Whilst the Group is exposed to a decline in
value of these investments, supporting the development of new products
increases and diversifies revenues further.

Our operating model is reliant on technology therefore the heightened
threat from cyber‑crime is an area of increasing focus for the Group.

The principal risks faced by Man Group are set out on pages 24 to 25.
Seeding Book Risk and the threat from cyber‑crime (within ‘Operational
Risk’) are now included in our principal risks.

Man Group is currently regulated by 18 regulators in 16 jurisdictions;
the Group continues to focus on keeping our operational and risk
management frameworks effective for our evolving global business.
In the ‘Principal risks and mitigants’ section on page 24 we have noted
a number of regulatory developments. Regulation continues to evolve
at different paces across jurisdictions.

Our balance sheet remains strong and we continue to seek the most
efficient ways to fund our regulatory capital and liquidity requirements.
In September, we further improved our liquidity position by taking
advantage of favourable market conditions to issue $150m of lower
Tier 2 debt.

Our counterparty risk exposures at both corporate and fund level are
closely monitored. Credit spreads have been tight during 2014 and the
implied risk to the Group’s balance sheet from counterparty defaults
remains low. We are conscious, however, of the continued risk of
individual events, or a downturn in market sentiment and we continue
to take a conservative approach to counterparty selection.

An integrated approach to risk management
Risk management is an essential component of our approach, both to
the management of investment funds on behalf of investors, and the
management of Man Group’s business on behalf of shareholders.

Ultimate responsibility for risk management rests with Man Group’s
Board, however, accountability is embedded throughout all layers of the
business. Our risk management framework requires that the business
operates within acceptable risk tolerances, as defined by the Board’s risk
appetite. Our governance structure provides a foundation for ongoing
oversight in a dynamic environment. Independent fund boards are
responsible for keeping the interests of fund investors protected.

Developments in 2014
Our risk profile has not changed significantly during the year; investment
underperformance continues to be the biggest risk facing the Group.
A diverse product range gives Man shareholders protection against
concentrated underperformance from any one sector and the Group
has continued to add to our wide range of investment styles and
products via a number of acquisitions (see page 8), expanding our
presence in North America.

Acquisitions into the Group introduce short‑term integration risks.
Man Group’s executive team is experienced in managing integrations
and risk mitigation plans are in place. Man Group’s risk and compliance
teams independently review the assessment of integration risks and the
appropriateness of risk mitigation plans.

R I S K M A N AG E M E N T CAT E G O R I E S

The risk of reduced funds under
management due to:

– poor fund performance
– fund underperformance relative to

a benchmark or peer group

Double click the
clipping mask with
black arrow to edit
data for pie chart

Note:
This is a risk Man Group must adopt as part of its
business model.

The risk of a loss
to Man Group owing to:

– adverse market movements
– counterparty failure to deliver investor

or shareholder assets when due

– insufficient liquidity resources available

for Man to meet its obligations

EST M

V
IN

CIAL

L
A
N

A TIO

O P

The risk that Man Group will:

– make inappropriate strategic choices
– be unable to successfully implement

selected strategies

– be subject to changes which invalidate
strategies and undermine the existing
business model

The risk resulting from:

– inadequate or failed internal processes,

people or systems

– external events

Note:
This includes legal and regulatory risks.

MAN GROUP PLC / ANNUAL REPORT 2014 STRATEGIC REPORT23

Man’s risk appetite statements
The risk appetite statements are set by the Board and cover all significant
risk categories. They apply to both the investment management functions
and Man Group itself. The statements express the Board’s appetite for
risk, promote a risk aware culture and set out objectives and boundaries
for Man Group’s business.

The primary goal of risk management is to support the achievement of
company objectives by encouraging an appropriate balance between
risk‑seeking and risk‑averse activities, in a controlled and regulatory
compliant context.

The governance framework and control environment within the Group
have been designed to manage risks in accordance with risk appetite.
The Board and ARCom receive regular reporting on the Group’s risk
profile and adherence with risk appetite. In the event that breaches
to risk appetite occur, these will be resolved in line with the firm’s
procedures and processes. The statements are reviewed at least
annually by the Board, and were most recently updated and approved
in November 2014.

A summary of the new risk appetite statements is available at
www.man.com.

M A N GRO U P ’ S G O vE R N A N C E

The below committees have been given a mandate by the Board
and the CEO to oversee the risk management framework. These
committees provide assurance to the Board that risk has been
managed according to the risk appetite statements:

PLC BOARD

CEO

Audit and Risk Committee

The Audit and Risk Committee
(ARCom) is a committee of the
Board which has oversight of the
Assurance functions (see page 38
for further detail).

Executive Committee

The Executive Committee is
accountable for all risks assumed
in the business and is responsible
for the execution of appropriate
risk management discipline.

Risk & Finance Committee

The Risk & Finance Committee (RAF) oversees the operational, regulatory
and reputational risks faced by the Group and the internal control
environment. It also approves actual and contingent use of the Group
Balance Sheet and monitors the adequacy of economic capital and
liquidity buffers. The RAF is chaired by the Chief Risk Officer (CRO).

T H R E E LI N E S O F D E FE N C E

The overall risk management framework at Man Group is based on the
three lines of defence, and is overseen by the Audit and Risk Committee
as delegated by the Board:

The framework instils the principles of direct responsibility for risk
management in each business unit. Embedding accountability
at the business level is the ‘first line of defence’.

1ST

2ND

3RD

Compliance

Risk

Business
Management

‘In Business’
Risk
Management

Operational
Management

t
i
d
u
A

a
n
r
e
t
n

The business units are monitored by a number of risk control functions
(i.e. Risk, Compliance), which form the ‘second line of defence’.

The independent review and oversight provided by Internal Audit is
the ‘third line of defence’, which independently evaluates the adequacy
and effectiveness of the Group’s risk management, control and
governance processes.

Although Man Group and the investors in its products are susceptible to
losses, we believe our risk management framework supports long‑term
value through the process of risk‑aware decision making.

t
i
d
u
A

a
n
r
e
t
x
E

MAN GROUP PLC / ANNUAL REPORT 2014STRATEGIC REPORT

Principal risks and mitigants

R I S K

M I T I G A N T

1. Investment underperformance risk
Fund underperformance on an absolute basis, relative
to a benchmark or relative to peer groups would reduce
funds under management (FUM) and may result in
lower subscriptions and higher redemptions. This may
also result in dissatisfied clients, negative press and
reputational damage.

Lower FUM results in lower management fee revenue and
underperformance results in lower performance fees, if any.

The breakdown of Man Group’s FUM and revenue margins
by product line is shown on page 16.

Adverse market moves and high volatility may sharply
increase the demands on the liquid resources in Man
Group’s funds. Market stress and increased redemptions
could result in the deterioration of fund liquidity and in the
severest cases this could lead to the gating of funds.

2. Regulatory risk
Man Group offers an increasingly wide range of investment
products covering multiple strategies from a global network
of offices. It is licensed in 16 jurisdictions, which results in
Man Group being subject to a matrix of regulations.

Man Group is regulated by 18 regulators and lead regulated
by the UK Financial Conduct Authority.

Notable regulatory developments include the recent
implementation of the EU Alternative Investment Fund
Managers Directive, the upcoming implementation of
UCITS V, MiFID II/MiFIR and the Markets Abuse Directive 2.

3. Discretionary trading risk
The risk that investment managers either intentionally or
unintentionally fail to execute and/or book trades correctly,
or fail to adhere to investment mandates or regulatory
rules. This includes insider dealing and market abuse,
misrepresenting trading positions/trades and misallocation
between funds. Man Group may need to compensate for
any losses arising from such trades, as well as face the
possibility of fines, lawsuits and reputational damage.

4. Operational risk
Operational risk is defined as the risk resulting from
inadequate or failed internal processes, people, systems
or from external events.

Man Group continues to outsource a number of functions
that were previously performed internally. The risks are
that the outsourced service providers do not perform as
required, resulting in knock‑on implications for our business
as a whole.

Technology and information security are central to Man
Group’s business. Information security risk is defined as the
risk of loss resulting from cyber‑crime, malicious disruption
to our networks or from the theft, misplacing, interception,
corruption or deletion of information.

This is the key risk Man Group has to accept if it is to undertake its business. Man
Group’s investment businesses each have clearly defined investment processes
designed to target and deliver on the investment mandate of each product.

Fund and manager performance is closely monitored, and we focus on hiring and
retaining highly skilled professionals who are incentivised to perform within the
parameters of their mandate.

Man Group’s diversified range of products and strategies across the alternatives
marketplace mitigates the risk to the business from underperformance of any
particular strategy.

Man Group conducts regular liquidity tests on its funds and endeavours to manage
resources in such a way as to meet all demands for fund redemptions according
to contractual terms.

Man Group supports proportionate and thoughtful global regulation and initiatives
that develop the regulatory environment.

Man Group continuously assesses whether the products it markets comply
with new regulations as they emerge and change. In this respect, the company
conducts an independent review process for all products.

Man Group continues to liaise directly and indirectly with competent authorities
e.g. FCA, IOSCO, ESMA, HMT, NFA, DFSA and CSRC through its Compliance
department which consists of approximately 32 specialists covering Corporate,
Investment Management, Sales and Marketing and Financial Crime. Compliance
is located across eight jurisdictions.

Front office systems provide automated checks and controls at portfolio and trade
level. Each investment management business has dedicated risk management
personnel who monitor portfolio profiles and provide independent challenge.

In addition all fund managers are required to undertake regular mandatory training
so that they are aware of due processes and their responsibilities related to the
placing of trades.

Risk and Control Self‑Assessment (RCSA) is at the core of our assessment
of operational risks. Key risk indicators and operational risk events are regularly
reviewed so that our assessment of operational risks correctly reflects the Group’s
operational risk profile. These assessments are subject to independent review by
Group Risk and Internal Audit, who also provide assurance over the adequacy
of the Group’s control processes.

Man Group’s operations team have implemented a methodology (including KPI
monitoring) to confirm that outsourced service providers are delivering as required.
This process is monitored by the Risk & Finance Committee and ARCom.

Cyber‑crime attacks continue to grow in terms of scale and complexity. We have
deployed a number of preventative and detective controls to defend our IT systems
against cyber‑attack. These include penetration tests, specialist security company
monitoring of our networks and regular access reviews. However, the fast pace
of innovation by cyber‑criminals makes it particularly challenging to assess the
effectiveness of our defences and deliver protection against this increasing threat.

STRATEGIC REPORTMAN GROUP PLC / ANNUAL REPORT 201425

R I S K

M I T I G A N T

5. Seeding book risk
Man Group uses capital to seed new funds as part of the
ongoing business to build our fund offering and expand
product distribution. Man Group is exposed to any decline
in value of these investments.

Requests for seeding capital are assessed on their strategic rationale for the
business. Approvals are granted by the Seed Investment Committee (SIC),
which comprises of several members of senior management, Risk and Treasury.
Investments are subject to risk limits and an appropriate exit strategy. While Man
Group holds these positions, they are monitored regularly by Group Risk and
reviewed monthly by the SIC.

6. Credit/counterparty risk
The risk that a counterparty with which the funds or Man
Group have financial transactions fails to deliver back
investor or shareholder assets.

Shareholders and investors in Man funds and products are
exposed to credit risk of prime brokers, clearing houses,
depository banks and guarantee providers.

Man Group diversifies its deposits across a number of the strongest financial
counterparties, each of which is approved by the Counterparty Monitoring
Committee, a sub‑committee of the Risk and Finance Committee. Each
counterparty is reviewed on a regular basis and assessed for creditworthiness. In
addition, it is responsible for the review and escalation of any proposals for new
counterparties. The Group Risk function monitors the credit spreads and ratings of
the approved counterparties on a daily basis.

Man Group also provides loans to guaranteed products, and
so is subject to counterparty risk to certain investor funds.

Guaranteed products are closely monitored, and leverage is actively adjusted such
that the risk of default related to balance sheet loans to funds is small.

7. Legal risk
The global nature of Man Group’s business, with corporate
and fund entities located in multiple jurisdictions and
a diverse investor base makes it subject to a wide
range of laws. Failure to comply with these laws and
regulations may put Man Group at risk of fines, lawsuits
or reputational damage.

In response to the financial crisis, an unprecedented
number of new laws have arisen which are applicable to
Man Group. While the legislative response has been global,
implementation is local which leads to variations of approach
between key jurisdictions. Failure to stay abreast of, analyse
and respond to these new and varied laws may expose
Man Group to the risks outlined above.

8. Reputational risk
The risk that an incident or negative publicity undermines
our reputation as a leading alternative investment
manager. Reputational damage could result in significant
redemptions from our funds, and could lead to issues with
external financing, credit ratings and relations with our
outsourcing providers.

9. Key staff retention risk
The risk that a key person to the business leaves or is unable
to perform their role.

Man Group operates a global legal framework which underpins all aspects of its
business and is resourced by experienced legal teams.

These teams are physically located in Man Group’s key jurisdictions helping them
to understand the context and impact of any legal requirements.

Emphasis is placed on proactively analysing new legal developments to assess
likely impacts and mitigate risks.

Our reputation is dependent on both our operational and fund performance.
Integrity is fundamental to ensuring Man Group is able to attract investment
in funds. Our governance and control structure helps mitigate operational
concerns, and our attention to people and investment processes aim to establish
that we comply with accepted standards of investment management practice.
The Board regularly reviews evidence of whether the right tone from the top is
being maintained.

Man Group has been able to attract and retain an array of talented individuals
across the Group. Business and investment processes are designed with a view to
continue this trend and minimise the impact of losing any key individuals. However,
the nature of Man’s business means that this is a risk that Man Group must accept.

STRATEGIC REPORT MAN GROUP PLC / ANNUAL REPORT 2014
26

People and corporate responsibility

People
In Investment Management our people
are our assets and losing them is one of
our biggest risks. We focus on delivering
superior performance and client service
by attracting and retaining the highest
calibre individuals. By coaching and
developing our people to be the best,
we retain them as they become leaders
in their field.

In 2013, we hired apprentices for the first time in the UK through
participation in the Ladder for London initiative – a scheme launched
by the Evening Standard to help tackle youth unemployment in London.
Our apprentices were offered a 12 month full-time position, and attended
college for one day per week during their first six months. To ensure
the apprentices got maximum benefit from their work placements,
they were supported by supervisors, assigned buddies and HR. They
were also given regular exposure to management through discussion
sessions at which they provided progress updates to members of the
senior leadership team. The programme gave the apprentices wide-
ranging and valuable experience which will help them build their careers.
One apprentice was successful in receiving an offer for a full-time
permanent position following completion of the apprenticeship. We are
keen to support this initiative again so will be taking on another cohort
of apprentices in 2015.

To achieve superior performance for our clients and shareholders
we need to have the right people in the right roles, fully motivated
and competitively paid. We are very conscious of the need to provide
appropriate development for our highly talented and increasingly
international workforce. Encouraging effective collaboration and
teamwork across the Company, within the bounds of regulation
and good governance, is a key part of our strategy.

Talent
It remains vitally important to maintain a strong pipeline of talented
individuals for the future of the business. To increase our talent pipeline
we launched an investment management graduate programme and a
structured summer internship programme, both of which started in 2014.
Four high calibre graduates joined us in 2014 and another four (two of
whom were 2014 summer interns) will start in 2015. Each graduate
undertakes a two year programme, rotating through placements in AHL,
FRM, GLG and Sales which will equip them with a broad knowledge of
our products and overall business. Following the success of the 2014
summer intern programme, we have hired another five interns who will
spend ten weeks with us in the summer of 2015, working on key projects
with a view to successful interns being offered a place on the following
year’s graduate programme.

We focus on retention through our annual performance evaluation
and succession planning processes. This annual review is a valuable
opportunity for managers to give individuals feedback on their
performance and how their careers can progress with the Company,
particularly during difficult times. Our continuous succession planning
process is designed to mitigate continuity risks by identifying key
individuals for retention and further development. We were pleased
to see minimal voluntary turnover of key individuals during 2014.

During 2014, the acquisitions of both Numeric Investors and Pine Grove
Asset Management LLC resulted in the arrival of a new pool of talent at
the firm. We welcomed 96 new members of staff in total with 80 joining
from Numeric, and 16 from Pine Grove.

We also made a number of key hires throughout the year including
Pierre-Henri Flamand who joined Man GLG in May as Senior Portfolio
Manager, focusing on a global catalyst-driven strategy across the capital
structure. Rory Powe also joined Man GLG in September to take over the
GLG Continental Europe Fund.

Headcount
Headcount savings achieved during 2013 and 2014 mean that Group
headcount including contractors and consultants has reduced from 1,876
in June 2011 to 1,078 at 31 December 2014. The ratio of support function
employees to front office is approximately one to one, which we believe
to be in line with industry best practice.

People by function %

Investment management
Sales and marketing
Product and Client operations

and Technology

Central management and

support

December

2014

December
2013

31
17

30
18

June
2011

21
19

Note:
Job function based on Business Unit, not individual role.

Man Group treats those impacted by redundancy fairly and respectfully
whilst protecting the Company from potential litigation. We provide
outplacement assistance to individuals who are made redundant which
includes career advice, interview preparation and guidance on developing
their networks to help them transition to a new role.

MAN GROUP PLC / ANNUAL REPORT 2014 STRATEGIC REPORTRemuneration
Our remuneration policies and practices are designed to enable us
to remain competitive in the increasingly global markets in which we
operate. More information on how we set compensation packages is
given in the Directors’ remuneration report on pages 44 to 64.

Equality and diversity
Man Group’s culture is based on mutual respect for others and
discrimination by any individual on the grounds of age, disability, gender,
race, religion, sexual orientation or educational background is not
acceptable. We offer tangible support through our employee assistance
programmes, which are designed to assist individuals with aspects of
their lives outside the workplace which may affect their ability to perform.

Full and fair consideration is given by Man to applications for employment
made by disabled persons, having regard to their aptitudes and abilities.
Man Group’s Global Inclusion Policy outlines our commitment to ensuring
a diverse workforce and our opposition to discrimination of any form,
including on the basis of disability. The company ensures that disabled
persons are fairly treated in respect of training and career development.
For those who become disabled during their employment, reasonable
adjustments are made and ongoing support is provided as required to
enable the individual to continue working.

Breakdown of staff by gender %

Total
workforce

Senior
managers

Board of
Directors

70%

86%

87%

n Male

n Female

30%

14%

13%

Achieving a better balance between male and female employees,
particularly at a senior level, is a challenge many financial services
organisations face and is a key priority for Man Group. We remain
committed to promoting gender diversity at senior management
Executive Committee level, and we currently have two women in
senior roles who sit on that committee (as shown in the table overleaf).
Our recruitment policy has the objective of securing 50% female
representation on long lists of candidates (internal and external) for senior
roles and we engage executive search firms who have signed up to
the Voluntary Code of Conduct on gender diversity and best practice.
Agency partners have been asked to read and acknowledge our
Global Inclusion Policy.

We also currently have several initiatives in place to support and
encourage our female talent. Man Group continues to develop Drive
as an internal support network, with a programme of regular events
to inform and support women within the firm, as well as providing
networking opportunities both internally and externally. Alongside this
initiative, Man Group is also working to develop a mentoring programme
aimed to help and retain female talent.

Man Group is committed to increasing female participation in its graduate
programme, targeting relevant university courses and clubs within
Mathematics, Economics and Physics that will help inform our targeted
recruitment. Furthermore, we have started to sponsor the European Girls’
Mathematical Olympiad as part of our effort to support and encourage
female talent in the potential pipeline for financial services careers.

Man Group strongly believes in the benefits of a diverse and multi‑cultural
workforce and is confident that the current multifaceted approach will
enable the firm to meet its diversity objectives in the near‑term.

MAN GROUP PLC / ANNUAL REPORT 2014STRATEGIC REPORT
28

People and corporate responsibility continued

Man Group Executive Committee

Manny Roman

CEO, Man Group

Jonathan Eliot

Chief Risk Officer

Luke Ellis

Mike Even

President, Man Group

President & CEO, Numeric

Geoff Galbraith

Global Head, Operations & Technology

Robyn Grew

Global Head, Compliance & Regulatory

Keith Haydon

CIO, FRM

Rene Herren

Deputy Head, Sales & Marketing

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

Shanta Puchtler

CIO, Numeric

Tim Rainsford

Global Head, Sales & Marketing

Sandy Rattray

CEO, AHL & MSS

Jasveer Singh

General Counsel

Jonathan Sorrell

Chief Financial Officer

Simon White

Global Head, Operations & Technology (retired

at 31 December 2014)

Tim Wong

Chairman, AHL & MSS

Development, Engagement and Support
In order to maximise the potential of our employees, we work with all areas
of the business to support training and development needs. This covers a
wide range of initiatives including technical courses, team development and
individual executive coaching and will be enhanced in 2015. In addition, we
run a number of in-house educational events such as Business Education
sessions and ExCo hosted informal breakfast discussions.

Employees receive regular updates and presentations on Company
results and major decisions which affect them through face to face
meetings or, if necessary, via video link. The Man intranet is used to
provide supplementary updates from senior management on all aspects
of our business and is a crucial part of the dissemination of knowledge
and information.

Our Global Mobility Programme enables us to meet specific business
needs within given markets or business areas. Assigning people overseas
assists us in attracting, retaining and developing our people in order to
meet our business goals and strengthen our geographic footprint. This
creates a diverse talent pool with varied perspectives and enhanced
sharing of our knowledge base.

Employee welfare is an important consideration and so during 2014
we conducted a full review of our benefits offerings, resulting in an
improved benefits package to be introduced in 2015. Changes include an
improvement to global paternity leave and access to a global employee
discount service. In the UK we were also able to introduce new benefits
such as free health assessments, Cycle to Work schemes and a
restaurant/leisure discount card.

During 2014 we were also able to offer our UK-based employees
increased levels of participation in the Man Group Sharesave Scheme.

Business principles
In 2014, Man Group developed a set of
business principles which were designed
to distil and define the firm’s key priorities,
focus and culture. The principles are being
formally launched across the firm and will
be displayed in Man Group’s offices
internationally to promote a common
understanding of the firm’s values:

Performance
First, foremost
and always, we focus
on delivering superior
risk adjusted
performance.

Excellence
Good is not enough,
we strive to be
excellent in all we do.

Clients
Our clients are at the
heart of everything
we do.

Responsibility
We always do the right
thing and conduct our
business with the
highest standards
of integrity.

Differentiation
We seek to be
differentiated and
original in our thinking.

Meritocracy
We succeed through
talent, commitment,
diligence and
teamwork.

At Man Group, we are committed to conducting our business in accordance
with these principles, which we believe will enable us to be the best we can be.
We strive to deliver outstanding results for our clients, whose interests always
come first and are the focus of our firm. We aim for excellence and expect the
highest standard of quality of work from everyone across the firm. We always
do the right thing, conducting our business with the highest standards of
behaviour, honesty and integrity. We continue to invest in talent, technology
and research to ensure we provide a differentiated offering, underpinned by
leading experience, expertise and innovation. We provide an inclusive work
environment, where reward and progression are based solely on merit.

MAN GROUP PLC / ANNUAL REPORT 2014 STRATEGIC REPORT29

Corporate responsibility
Our corporate responsibility strategy is
to pursue and evidence where possible
the high standards of behaviour, both
corporate and individual, which underpin
our reputation and maintain the trust
and loyalty of our key stakeholders.
We focus on five key areas of
corporate responsibility:

World class governance and risk management
Man strives to deliver the highest standards of governance and risk
management. We have long recognised the importance of corporate
governance practices that help to ensure effective oversight and strong
accountability. With our scale, we are well-positioned to implement and
manage these practices effectively across our platform, as we strive to
deliver industry leading governance and risk management.

Contributing to our communities
Man Group is actively involved in charitable initiatives and volunteering
opportunities local to the firm’s offices through its ManKind Programme.
Furthermore, we have a worldwide commitment to promoting literacy
in children, underscored through our sponsorship of the Man Booker
Prize. We are very conscious of the impact of our organisation on our
community and have taken steps to ensure we are contributing positively
to those around us.

Responsibilities to our market place
Man is committed to the highest standards of ethical conduct
and actively supports collaboration of the alternative asset
management industry in developing and committing to standards
of responsible investment.

The Hedge Fund Standards were drawn up in 2007 to address key issues
relating to the hedge fund industry and best practice, covering the areas of
disclosure, valuation, risk management, fund governance and shareholder
conduct. Man is a founding signatory of the Hedge Fund Standards Board
(HFSB) which was fully established in 2008 as a guardian to the Standards
with the goal of creating a framework for promoting integrity, transparency
and good governance in the industry.

Managing our people
Man aims to create an environment which enables our staff to reach
their full potential. We encourage our teams to work together to help
each other develop and succeed professionally and personally by
providing a workplace which is healthy, safe, and offers guarantees
of fairness and equal opportunities. As a responsible business, we
constantly review our procedures which support the development and
retention of talent including performance management programmes,
flexible working policies, health and well being initiatives, and our
comprehensive benefits scheme.

Protecting the environment
Whilst our environmental impact is relatively limited, we strive to deliver
clear and transparent reporting that makes sense of the measurable
elements within our control and respond to external risk and
expectations. We look to take all practicable and economic measures
to conserve and reduce energy consumption at our offices around the
world. We monitor our impacts using Credit 360, a system that measures
relevant data and generates reports which provide practical guidance in
identifying our impacts and managing their reduction.

MAN GROUP PLC / ANNUAL REPORT 2014STRATEGIC REPORT
30

Board of directors

Jon Aisbitt
Chairman of the Board and
Chairman of the Nomination
Committee

Phillip Colebatch
Senior Independent Director and
Chairman of the Remuneration
Committee

John Cryan
Independent non-executive
director

Andrew Horton
Independent non-executive
director

Matthew Lester

Independent non-executive

director and Chairman of the

Audit and Risk Committee

Emmanuel Roman

Chief Executive Officer

Dev Sanyal

director

Nina Shapiro

director

Independent non-executive

Jonathan Sorrell

Chief Financial Officer

Date of appointment

Background and career

Jon was appointed to the Board
as a non-executive director in
August 2003 and was appointed
non-executive Chairman in
September 2007.

Prior to joining the Board, Jon
was a Partner and Managing
Director in the Investment
Banking Division of Goldman
Sachs based in New York,
London and Sydney.

Phillip was appointed to the
Board as a non-executive
director in September 2007. He
was appointed as Chairman of
the Remuneration Committee in
2008 and Senior Independent
Director in August 2013.

Before joining the Board, Phillip
was a member of the Executive
Boards of Credit Suisse
Group and Swiss Reinsurance
Company.

John was appointed to the
Board as a non-executive
director in January 2015.

Andrew was appointed to
the Board as a non-executive
director in August 2013.

Matthew was appointed to

Emmanuel (Manny) was

the Board as a non-executive

appointed to the Board in

Dev was appointed to the

Board as a non-executive

director in May 2011.

May 2011. He was appointed

director in December 2013.

Nina was appointed to the

Board as a non-executive

director in October 2011.

Jonathan was appointed to the

Board as Chief Financial Officer

in June 2012.

John held a number of senior
roles at UBS AG over a career
spanning more than 25 years
with the banking group.
Following his time at UBS, John
served as President of Temasek
International’s European
Operations.

Andrew has served on the Board
of Beazley plc since 2003, first
as Group Finance Director
and then, since 2008, as Chief
Executive Officer. Prior to his
time at Beazley, Andrew held
a number of financial positions
within ING, NatWest and
Lloyds bank.

Areas of expertise and
contribution

Jon has over 20 years’
experience in international
corporate finance. He has
significant technical knowledge
of capital markets and the
complex regulatory backdrop in
which they operate. Since being
appointed as Chairman of Man
Group, Jon has navigated the
Company and the Board through
significant change and has
encouraged the development
of the Group’s strategy through
the introduction of new and
diversified investment styles.

Phillip has substantial financial,
operational and markets
experience gained through
a number of senior positions
in investment banking and
insurance. His focus on investor
engagement through his role as
Senior Independent Director and
Chairman of the Remuneration
Committee has provided context
to Board decisions, specifically
in relation to remuneration policy
and practice.

John has extensive knowledge
of international financial markets
gained from experience
at leading global financial
institutions. He brings significant
knowledge of the regulatory
environment in which Man
Group operates.

Current external roles

Jon is Deputy Chairman of New
Forests Company Holdings
Limited (African sustainable
forestry and timber processing)
and an Advisory Board
Director of Celtic Pharma III
(biotechnology).

Phillip is a non-executive director
of Lend Lease Corporation and
is on the Boards of Trustees
of the LGT Group Foundation
and the Prince of Lichtenstein
Foundation.

John is currently a member
of the Supervisory Board of
Deutsche Bank AG, Chairman
of its Audit Committee and a
member of its Risk Committee.
He is also Chairman of ST
Asset Management Pte Ltd (a
specialised structured credit
investment manager), a member
of the Board of Tana Africa
Capital Limited and an advisory
senior director for Temasek
Europe.

Andrew has over 25 years
of broad financial services
experience with significant
exposure to operating at Board
level. Given Andrew’s banking,
financial markets and insurance
background, he is a valuable
contributor to Man Group’s
strategic development, risk
management and financial
reporting. Andrew’s international
experience has also
allowed him to provide valuable
input to Man Group’s increased
international presence.

Andrew is Chief Executive
Officer of Beazley plc.

Committee membership

Jon is Chairman of the
Nomination Committee and a
member of the Remuneration
Committee. He attends Audit
and Risk Committee meetings
by invitation.

Phillip is Chairman of the
Remuneration Committee and
a member of the Audit and Risk
Committee and the Nomination
Committee.

John is a member of the
Remuneration Committee and
the Nomination Committee.

Andrew is a member of the Audit
and Risk Committee and the
Nomination Committee.

Matthew is Chairman of the

Manny regularly attends

Audit and Risk Committee and

Audit and Risk Committee,

Dev is a member of the Audit

and Risk Committee and the

Nina is a member of the

Jonathan regularly attends

Remuneration Committee and

Audit and Risk Committee

a member of the Nomination

Remuneration Committee

Nomination Committee.

the Nomination Committee.

Committee.

and Nomination Committee

meetings by invitation. He is

Chairman of the Executive

Committee.

meetings by invitation and

also attends Remuneration

Committee meetings for certain

items of business. He is also

a member of the Executive

Committee.

President of Man Group

in August 2012 and Chief

Executive Officer in

February 2013.

Matthew is Chief Finance

Manny joined Man Group

Dev has held a number of

Officer of Royal Mail plc. He

as Chief Operating Officer in

senior financial and line

Nina has held several senior

management and operating

Jonathan joined Man Group

in August 2011 as Head

was Group Finance Director of

October 2010 following the

management positions with

roles at the World Bank and has

of Strategy and Corporate

ICAP from 2006 to 2010 and

acquisition of GLG. He joined

BP in a global career spanning

led numerous investments in

Finance. Prior to this, he

prior to that held a range of

GLG in 2005 as Co-Chief

25 years. Positions included

emerging markets. From 2000–

spent 13 years at Goldman

senior finance roles at Diageo,

Executive Officer after 18 years

Group Treasurer, Executive

2011, Nina was a member of the

Sachs, where he worked in

including Group Financial

with Goldman Sachs where he

Vice President and Chairman

Management Group and was

the Investment Management,

Controller and Group Treasurer.

was Co-Head of Worldwide

of BP Investment Management,

Vice President, Finance, and

Global Securities and Co-Head

Business Chief Executive,

Treasurer of the International

Securities and Investment

Banking Divisions, latterly

of the European Securities

Executive Vice President

Finance Corporation (the World

leading investments in a broad

Division.

and member of BP’s Group

Bank’s private sector arm). In

range of hedge fund firms.

Executive Committee.

that role she managed liquid

asset investment and capital

market fundraising.

Matthew has substantial

financial management and

regulatory expertise. He

also has significant listed plc

experience acquired through

his role at ICAP and through

Manny has a strong and varied

Dev has extensive knowledge

With extensive experience in

Jonathan’s experience of

investment management

background and extensive

trading, operational and

business management

experience. Since his

of capital markets, asset and

international financial markets

financial markets, particularly

risk management, trading and

and in depth knowledge

foreign exchange gained from

of investment in emerging

his extensive knowledge of

the hedge fund industry and

his role as BP Group Treasurer

markets, Nina has particular

strong background in strategy

and Chairman of BP Investment

insight into financial policy and

and execution, has assisted

the flotation of Royal Mail plc on

appointment as CEO, Manny

Management Ltd. He also has

market development. This

in developing Man Group’s

the London Stock Exchange.

has led the Company in

broad international experience

perspective helps to support

strategy, including recent M&A

Matthew’s experience, coupled

diversifying its product range

and wide ranging operational

Man Group in its international

activity that has expanded its

with his role as Chairman of

Man Group’s Audit and Risk

Committee, allows him to

and increasing its international

expertise in senior executive

expansion.

presence through disciplined

roles and is, therefore, able to

provide substantial insight in

overseen the restructure of

relation to the Group’s financial

the Company’s cost base.

acquisitions. He also has

contribute to the development

and execution of Man Group’s

business strategy and global

reporting and risk management

Further details of Manny’s

relationships.

processes.

achievements in 2014 can be

found on page 50.

Matthew is Chief Finance

Manny is a trustee of the Hedge

Dev is currently Executive Vice

Officer of Royal Mail plc. He is

Fund Standards Board Limited

President, Strategy & Regions

also on the main Committee of

and a non-executive director of

at BP with responsibility for

the Hundred Group of Finance

Grupo Prisa (education, media

Europe, Asia, Group Strategy

Nina is a director of African

Minerals Limited and holds

a number of Senior Advisor

and Advisory Board roles in

Directors where he chairs the

and entertainment).

and Planning, Risk Management

several sectors.

Investor Relations and Markets

Committee.

and Group Integration. He is

also a member of the Accenture

Global Energy Board and

the Board of Advisors for

the Fletcher School of Law

and Diplomacy.

footprint in the US. He has also

brought clear focus on costs

and financial efficiency through

the delivery of challenging

cost savings initiatives and the

restructuring of Man Group’s

balance sheet. Further details

of Jonathan’s achievements in

2014 can be found on page 51.

Jonathan is a director of

Nephila Holdings Limited.

MAN GROUP PLC / ANNUAL REPORT 2014 CORPORATE GOVERNANCE31

Emmanuel Roman
Chief Executive Officer

Dev Sanyal
Independent non-executive
director

Nina Shapiro
Independent non-executive
director

Jonathan Sorrell
Chief Financial Officer

Jon Aisbitt

Chairman of the Board and

Chairman of the Nomination

Committee

Phillip Colebatch

John Cryan

Andrew Horton

Senior Independent Director and

Independent non-executive

Chairman of the Remuneration

director

Date of appointment

Jon was appointed to the Board

Phillip was appointed to the

as a non-executive director in

Board as a non-executive

John was appointed to the

Board as a non-executive

Andrew was appointed to

the Board as a non-executive

August 2003 and was appointed

director in September 2007. He

director in January 2015.

director in August 2013.

non-executive Chairman in

September 2007.

was appointed as Chairman of

the Remuneration Committee in

2008 and Senior Independent

Director in August 2013.

Background and career

Prior to joining the Board, Jon

Before joining the Board, Phillip

John held a number of senior

Andrew has served on the Board

was a Partner and Managing

was a member of the Executive

roles at UBS AG over a career

of Beazley plc since 2003, first

Director in the Investment

Boards of Credit Suisse

spanning more than 25 years

as Group Finance Director

Banking Division of Goldman

Group and Swiss Reinsurance

with the banking group.

and then, since 2008, as Chief

Sachs based in New York,

Company.

London and Sydney.

Following his time at UBS, John

Executive Officer. Prior to his

served as President of Temasek

time at Beazley, Andrew held

International’s European

a number of financial positions

Operations.

within ING, NatWest and

Lloyds bank.

Matthew Lester
Independent non-executive
director and Chairman of the
Audit and Risk Committee

Matthew was appointed to
the Board as a non-executive
director in May 2011.

Matthew is Chief Finance
Officer of Royal Mail plc. He
was Group Finance Director of
ICAP from 2006 to 2010 and
prior to that held a range of
senior finance roles at Diageo,
including Group Financial
Controller and Group Treasurer.

Emmanuel (Manny) was
appointed to the Board in
May 2011. He was appointed
President of Man Group
in August 2012 and Chief
Executive Officer in
February 2013.

Manny joined Man Group
as Chief Operating Officer in
October 2010 following the
acquisition of GLG. He joined
GLG in 2005 as Co-Chief
Executive Officer after 18 years
with Goldman Sachs where he
was Co-Head of Worldwide
Global Securities and Co-Head
of the European Securities
Division.

Areas of expertise and

Jon has over 20 years’

Phillip has substantial financial,

John has extensive knowledge

Andrew has over 25 years

contribution

experience in international

corporate finance. He has

operational and markets

experience gained through

significant technical knowledge

a number of senior positions

of international financial markets

of broad financial services

gained from experience

at leading global financial

experience with significant

exposure to operating at Board

of capital markets and the

in investment banking and

institutions. He brings significant

level. Given Andrew’s banking,

complex regulatory backdrop in

insurance. His focus on investor

knowledge of the regulatory

financial markets and insurance

which they operate. Since being

engagement through his role as

environment in which Man

background, he is a valuable

appointed as Chairman of Man

Senior Independent Director and

Group operates.

Group, Jon has navigated the

Chairman of the Remuneration

Company and the Board through

Committee has provided context

significant change and has

to Board decisions, specifically

encouraged the development

in relation to remuneration policy

of the Group’s strategy through

and practice.

the introduction of new and

diversified investment styles.

contributor to Man Group’s

strategic development, risk

management and financial

reporting. Andrew’s international

experience has also

allowed him to provide valuable

input to Man Group’s increased

international presence.

Current external roles

Jon is Deputy Chairman of New

Phillip is a non-executive director

John is currently a member

Andrew is Chief Executive

Forests Company Holdings

Limited (African sustainable

of Lend Lease Corporation and

of the Supervisory Board of

Officer of Beazley plc.

is on the Boards of Trustees

Deutsche Bank AG, Chairman

forestry and timber processing)

of the LGT Group Foundation

of its Audit Committee and a

and an Advisory Board

and the Prince of Lichtenstein

member of its Risk Committee.

Director of Celtic Pharma III

Foundation.

(biotechnology).

He is also Chairman of ST

Asset Management Pte Ltd (a

specialised structured credit

investment manager), a member

of the Board of Tana Africa

Capital Limited and an advisory

senior director for Temasek

Europe.

Matthew has substantial
financial management and
regulatory expertise. He
also has significant listed plc
experience acquired through
his role at ICAP and through
the flotation of Royal Mail plc on
the London Stock Exchange.
Matthew’s experience, coupled
with his role as Chairman of
Man Group’s Audit and Risk
Committee, allows him to
provide substantial insight in
relation to the Group’s financial
reporting and risk management
processes.

Manny has a strong and varied
investment management
background and extensive
trading, operational and
business management
experience. Since his
appointment as CEO, Manny
has led the Company in
diversifying its product range
and increasing its international
presence through disciplined
acquisitions. He also has
overseen the restructure of
the Company’s cost base.
Further details of Manny’s
achievements in 2014 can be
found on page 50.

Matthew is Chief Finance
Officer of Royal Mail plc. He is
also on the main Committee of
the Hundred Group of Finance
Directors where he chairs the
Investor Relations and Markets
Committee.

Manny is a trustee of the Hedge
Fund Standards Board Limited
and a non-executive director of
Grupo Prisa (education, media
and entertainment).

Dev was appointed to the
Board as a non-executive
director in December 2013.

Nina was appointed to the
Board as a non-executive
director in October 2011.

Jonathan was appointed to the
Board as Chief Financial Officer
in June 2012.

Nina has held several senior
management and operating
roles at the World Bank and has
led numerous investments in
emerging markets. From 2000–
2011, Nina was a member of the
Management Group and was
Vice President, Finance, and
Treasurer of the International
Finance Corporation (the World
Bank’s private sector arm). In
that role she managed liquid
asset investment and capital
market fundraising.

With extensive experience in
international financial markets
and in depth knowledge
of investment in emerging
markets, Nina has particular
insight into financial policy and
market development. This
perspective helps to support
Man Group in its international
expansion.

Nina is a director of African
Minerals Limited and holds
a number of Senior Advisor
and Advisory Board roles in
several sectors.

Jonathan joined Man Group
in August 2011 as Head
of Strategy and Corporate
Finance. Prior to this, he
spent 13 years at Goldman
Sachs, where he worked in
the Investment Management,
Securities and Investment
Banking Divisions, latterly
leading investments in a broad
range of hedge fund firms.

Jonathan’s experience of
financial markets, particularly
his extensive knowledge of
the hedge fund industry and
strong background in strategy
and execution, has assisted
in developing Man Group’s
strategy, including recent M&A
activity that has expanded its
footprint in the US. He has also
brought clear focus on costs
and financial efficiency through
the delivery of challenging
cost savings initiatives and the
restructuring of Man Group’s
balance sheet. Further details
of Jonathan’s achievements in
2014 can be found on page 51.

Jonathan is a director of
Nephila Holdings Limited.

Dev has held a number of
senior financial and line
management positions with
BP in a global career spanning
25 years. Positions included
Group Treasurer, Executive
Vice President and Chairman
of BP Investment Management,
Business Chief Executive,
Executive Vice President
and member of BP’s Group
Executive Committee.

Dev has extensive knowledge
of capital markets, asset and
risk management, trading and
foreign exchange gained from
his role as BP Group Treasurer
and Chairman of BP Investment
Management Ltd. He also has
broad international experience
and wide ranging operational
expertise in senior executive
roles and is, therefore, able to
contribute to the development
and execution of Man Group’s
business strategy and global
relationships.

Dev is currently Executive Vice
President, Strategy & Regions
at BP with responsibility for
Europe, Asia, Group Strategy
and Planning, Risk Management
and Group Integration. He is
also a member of the Accenture
Global Energy Board and
the Board of Advisors for
the Fletcher School of Law
and Diplomacy.

Committee membership

Jon is Chairman of the

Phillip is Chairman of the

John is a member of the

Andrew is a member of the Audit

Nomination Committee and a

member of the Remuneration

Committee. He attends Audit

and Risk Committee meetings

Committee.

by invitation.

Committee and the Nomination

Remuneration Committee and

and Risk Committee and the

a member of the Audit and Risk

the Nomination Committee.

Nomination Committee.

Matthew is Chairman of the
Audit and Risk Committee and
a member of the Nomination
Committee.

Manny regularly attends
Audit and Risk Committee,
Remuneration Committee
and Nomination Committee
meetings by invitation. He is
Chairman of the Executive
Committee.

Dev is a member of the Audit
and Risk Committee and the
Nomination Committee.

Nina is a member of the
Remuneration Committee and
the Nomination Committee.

Jonathan regularly attends
Audit and Risk Committee
meetings by invitation and
also attends Remuneration
Committee meetings for certain
items of business. He is also
a member of the Executive
Committee.

MAN GROUP PLC / ANNUAL REPORT 2014CORPORATE GOVERNANCE
32

Corporate governance report

Board leadership

Board composition
My primary job as Chairman of the Board is to ensure that collectively
its members have the right set of skills, capability and experience to
understand the context and drivers of the business, to contribute to
the development of strategy, to monitor performance and to provide an
appropriate balance of support and challenge for the executive team.
I believe that with the conclusion of our non-executive search at the end
of last year, we are now well placed to meet these demands. We benefit
from a good balance of non-executive directors with various lengths of
tenure on our Board. Andrew Horton and Dev Sanyal were appointed
in 2013 and have now completed a full financial year with us. Matthew
Lester and Nina Shapiro are in their second three year term. Phillip
Colebatch, our Senior Independent Director, is the most experienced of
the non-executive team and is in his third term. Biographical details of our
six independent non-executive directors, three of whom bring valuable
experience from their executive roles in other listed companies, are given
on pages 30 and 31, together with an indication of the key areas of their
contribution. These pages also provide previous career details of the
executive directors. Further details of our Board succession planning and
search activity are given in my Nomination Committee report on page 42.

Key Board relationships
Of key importance to the effective operation of the Board is my
relationship with Manny Roman, our CEO, and Phillip Colebatch, our
Senior Independent Director. My role is to run the Board while Manny’s
is to run the business. Phillip is available to act as an intermediary with
other non-executive directors or with our shareholders as and when
required. Full details of our three complementary roles are given on our
website (www.man.com/board-governance). Manny keeps me closely
updated on progress and developments in the business and, together
with Jonathan Sorrell, our CFO, and our Company Secretary, we
discuss the management of the forward agenda and Board information
needs. I regularly test with Phillip my thinking on Board development
and relationships.

Directors’ attendance at main Board meetings in 2014

Jon Aisbitt, Chairman
Phillip Colebatch1
Andrew Horton1
Fred Jolly2
Matthew Lester
Emmanuel Roman
Dev Sanyal1
Nina Shapiro
Jonathan Sorrell

Attendance record

10/10
9/10
9/10
3/3
10/10
10/10
9/10
10/10
10/10

Notes:
1 Owing to conflicting business commitments, Phillip Colebatch, Andrew Horton and
Dev Sanyal were unable to attend certain meetings which were convened at short
notice. However, they each received and reviewed the papers to be considered,
raised related questions with the executive team and indicated to the Chairman,
in advance of the meeting, their support for the proposals put forward.

2 Fred Jolly retired from the Board at the 2014 AGM in May.

Jon Aisbitt, Chairman

Overview
As discussed in my Chairman’s statement, 2014 was a year of
significant progress for the Group. Building on the work done
the previous year to reduce the cost base and downsize the
business to align with future asset flows, the Board’s focus
was on creating the potential for future growth. Acquisition
opportunities featured on every Board agenda, with three
meetings being dedicated solely to the review, challenge and
approval process. At the same time, the Board continued its
focus on the Company’s other strategic priorities with ongoing
review of investment manager performance, progress on global
sales and distribution and the maintenance of cost discipline.

The Board has supported the executive team in the development of
management talent and the culture of excellence and accountability
which are the life blood of the business and critical to the achievement
of all our objectives. The Board discussed with management the
development of a set of principles to capture the business values and
behaviours which the Company stands for and which should be adopted
by all staff Group wide in their dealings with clients and colleagues. We
have pursued the talent agenda through regular discussion with our CEO
on key hires and internal succession. We have analysed and discussed
the extent of gender diversity within the business and encouraged the
executive team to identify those areas of the firm where women can add
most value and to set long-term goals for increasing their number.

Following the retirement of Fred Jolly at the 2014 AGM, the Nomination
Committee conducted a search for a new non-executive director with
broad industry experience and the capability and skills to serve as a
member of the Remuneration Committee. After a prolonged search for
the right candidate, we were delighted to announce the appointment
of John Cryan, former CFO of UBS AG and currently a member of the
Supervisory Board of Deutsche Bank and Chairman of the Bank’s
Audit Committee. The Chairman of our Remuneration Committee has
continued our engagement with our top shareholders with a series of
further meetings to explain and discuss our directors’ remuneration
policy and practice. The Audit and Risk Committee provided specific
support for the Board’s review of the risk issues and financial disclosures
relating to the Numeric acquisition and ongoing support for the Board’s
responsibility to publish financial statements which are fair, balanced
and understandable.

MAN GROUP PLC / ANNUAL REPORT 2014 CORPORATE GOVERNANCE33

Regular Board business
In 2014 the Board held seven regular main meetings, inclusive of a full
day strategy review, and three additional meetings dedicated to the
review and approval of proposed acquisitions. At every regular meeting
we review and discuss investment performance and fund flows, senior
management changes, progress against budget and the delivery of
the cost plan, forecast profit for the year and investor sentiment and
feedback. We receive management reports on our capital and liquidity
position and changes in the Group’s risk profile. The Chairmen of the
three principal Board Committees (Audit and Risk, Remuneration and
Nomination) present a summary of issues raised, decisions made and
recommendations proposed at recent Committee meetings which
are noted and discussed further by the Board as required.

To support the Board’s role of providing direction for the business,
agreeing strategy, determining its risk appetite and maintaining an
appropriate control framework, it has adopted a schedule of matters
which are reserved for Board decision rather than being delegated to
the CEO and his management team. These include the approval of
major acquisitions and disposals, changes in capital structure, Group
budgets and borrowing, and financial reporting and communications.
The full list of matters reserved is available on our website (www.man.
com/board-governance) together with the terms of reference of the
three principal Committees to which the Board has delegated specific
oversight responsibilities.

Key areas of Board focus and decision in 2014

Investment performance
– In depth analysis at the annual strategy review of the performance

of individual investment managers and strategies. Regular
follow-up reporting at every Board meeting including face to face
discussion with investment management teams.

– Ongoing monitoring of performance against peers and challenge
of areas of underperformance. Discussed management plans for
changes in portfolio strategy and teams to address any shortfall.

– Presentations on and discussion of investment research,

including research into Momentum and the work of the Oxford-
Man Institute.

Talent and culture
– Received an update from the CEO at every meeting on

proposed key role changes and new hire search. Discussed
areas of vulnerability in terms of motivation and retention and
action proposed.

– Requested an analysis of gender diversity within Man Group.
Noted the low level of female representation in investment
management and technology roles and the comparison with the
equivalent data for other listed asset manager peers. Discussed
the gender diversity and inclusion initiatives currently being
pursued internally and with external partners.

– Encouraged the executive management team to establish a clear
view of the value of diversity to the business, to focus their effort
on areas of maximum impact and to articulate long-term goals.
– Challenged and supported the executive management team on
the development of six business principles for roll-out Group
wide to promote common values and behaviours both internally
and externally.

Specific areas of focus
In addition to covering the regular business discussed above, Board
meeting agendas develop organically in line with the Company’s strategic
priorities and the impact on the business of changes in financial markets,
regulatory trends and other external factors. Our Board strategy review
in June commenced with a presentation by the Chief Risk Officer on the
emerging risks likely to impact the business in the short-medium-term.
This was followed by discussion with a leading industry figure on their
external view of Man Group and its positioning in the market. Together
these viewpoints provided a backdrop to the Board’s detailed review of
each of the Company’s investment engines, progress on global sales and
marketing, acquisition opportunities and the challenge of penetrating the
US market. These discussions allowed the Board to identify those issues
which it wished to explore further with management later in the year.

The table below and on the following page gives a comprehensive
picture of areas of Board focus and decision making during 2014. These
advanced the Company’s strategic priorities, challenged and supported
the executive agenda and provided appropriate governance of the
business and its resources. The table is followed by an explanation of
the work done by the Board in respect of its specific responsibility for the
oversight of risk management and financial reporting.

Distribution
– In-depth discussion at the annual strategy review of the global
sales and marketing strategy and progress to date. Particular
focus on Asia Pacific, EMEA and the key US market.

– Analysis and discussion with Sales team of flows and income,

drivers of redemption, new client relationships and sales strategy
for each investment manager. Fund flows and future prospects
discussed with the CEO at every meeting.

– Reviewed sales plan for the introduction of Numeric quant
strategies to core European clients and the development of
UCITS formats for Numeric products.

– Challenged institutional sales strategy and team resource and

development. Discussed consultant relationships.

M&A/growth
– Extensive and in-depth work on the review and approval of all the
acquisitions proposed and completed during the year involving
scrutiny of the business case, challenge of due diligence findings
and approval of shareholder documentation and disclosure.
– Review of the evolving shape and management of Man Group’s

US footprint and the adequacy of executive bandwidth for
oversight of the enlarged Group.

– Ongoing focus on the integration of businesses acquired and the
achievement against plan. Scrutiny of performance against KPIs
and progress on integration.

– Specific review and analysis of the FRM acquisition in terms of

FUM, profits and management talent.

– Face to face meeting with the Numeric CEO to explore the

Numeric investment process, the existing client base, product
development and marketing plans across Man Group’s
distribution network.

– Ongoing challenge of the executive team in their use of regulatory

capital to support Man Group’s strategy.

MAN GROUP PLC / ANNUAL REPORT 2014CORPORATE GOVERNANCE
34

Corporate governance report continued

Key areas of Board focus and decision in 2014 continued

Business performance
– Approved the 2015 Budget and the 2015/17 Medium-Term

Plan. Reviewed an analysis of the forecast contribution to net
management and performance fee revenues by investment
manager and the respective margins for each.

– Requested and reviewed an analysis of incremental management

and performance fee profitability by product type.

– Reviewed the impact on the Group’s KPIs of acquisitions made
during the year and approved the adoption of a fourth specific
investment performance metric for Numeric to blend with the
existing benchmarks for AHL, GLG and FRM.

Cost efficiency and capital management
– Reviewed progress against the achievement of Phase II cost
savings at every meeting. Discussed the risks to the long-
term sustainability of the current cost base and the scope for
expansion of the business without material cost increase.

– Regularly reviewed the Company’s current and future forecast
regulatory capital and liquidity positions, including downside
scenarios. Set regulatory capital movement limits which would
require Board notification and discussion.

– Annual review and agreement on an appropriate cost of capital
for the Group against which to measure returns from proposed
new investment.

– Approved the issue of $150m lower Tier 2 debt to fund the
expansion of the Group’s seeding programme and facilitate
organic growth. Discussed the governance of the programme
and requested regular updates on seeding decisions and
investment returns.

– Recommended and approved dividends and share buybacks

in line with the Company’s previously disclosed distribution policy.

Risk appetite and review
– Reviewed and adopted updated risk appetite statements which
quantify Man Group’s risk appetite across the various categories
of risk. Discussed the implications of this quantification for the
Group’s ongoing activity.

– Annual Board risk review focused on potential external risks,

their likelihood and possible mitigants. Reviewed the Group Risk
Dashboard covering internal risks at every meeting.

– Reviewed and approved an updated risk governance framework
for the Group which identified committees and individuals with
risk governance responsibility and oversight.

– Received reports from the Audit and Risk Committee on the

outcomes of specific business unit risk presentations.

– Carried out a full year end review of the effectiveness of the
Group’s risk management and internal control processes.

Regulation and FCA engagement
– Noted and considered the feedback from the FCA’s supervisory
visit and ‘deep dive’ review of the GLG Total Return Fund and
concluded that the Company’s response to the points raised was
fully satisfactory. Sought management update on any material
procedural changes introduced in relation to the FCA findings.

– Discussed points raised by the FCA in their meeting with the
Chairman including commission sharing arrangements, the
potential for the creation of systemic risk through the use of
leverage and derivative strategies in fund products, and the
impact on trading prices of dark pools.

– Received an update from the Head of Global Compliance and
Regulatory on the current proposals relating to commission
sharing and the Company’s engagement with regulatory
authorities on this issue.

Board accountability

Board responsibility for risk management and internal controls
The Board is required to maintain sound risk management and internal
control systems, to review their effectiveness and to report on this review
to shareholders. Information on Man Group’s risk management and
internal control systems, which have been in place throughout the year
and up to the date of this report, can be found in the Risk management
section on pages 22 to 25. Details of Man Group’s specific risk
management and internal control systems in relation to the financial
reporting process are given below.

Financial reporting controls
Man Group operates a financial controls framework which is designed
to provide assurance that proper accounting records are adequately
maintained and that financial information used within the business and
for external publication is reliable and free from material misstatement,
thereby safeguarding the Company’s assets.

This framework is managed through a process whereby control owners
certify that key preventative and detective controls have been performed
and are operating effectively. These include balance sheet reconciliations
and financial statement preparation processes. A sample of these control
certifications is independently spot checked to provide assurance that
they have been correctly certified.

During the year formal monitoring of the results of the certification
process is carried out by senior management. Any material points of
note are escalated to the Audit and Risk Committee (ARCom).

Board review of risk management and internal control systems
The Company’s systems of internal control aim to safeguard assets,
maintain proper accounting records and provide assurance that the
financial information used in the business and published externally is
robust and reliable. The systems are designed to manage key risks,
rather than eliminate the risk of failure to achieve business objectives,
and can only provide reasonable and not absolute assurance against
material misstatement or loss. The systems comply with the guidance
given in ‘Internal Control: Revised Guidance for Directors’ (the 2005
Turnbull guidance).

MAN GROUP PLC / ANNUAL REPORT 2014 CORPORATE GOVERNANCE35

The Board has delegated oversight of risk management and systems
of internal control to the ARCom. This oversight includes the regular
review of:

– summary dashboards for each of risk, internal controls, the financial

controls framework and compliance;

– reports from the Risk and Finance Committee (which replaced the

separate Risk Assurance and Finance Committees from September
2014) which considers the effectiveness of risk mitigation through
regular review of Risk and Control Self-Assessments carried out by
management as the first line of defence, scenario analysis, key risk
indicators and operational risk event reports; and

– reports from Internal Audit regarding the operation and effectiveness of
internal controls. The audit programme is designed to provide objective
assurance on the business areas, key controls and processes that are
most significant in terms of the Group’s risk profile.

The report from the Chairman of the ARCom on pages 38 to 41 provides
further information on how the ARCom has discharged its risk oversight
responsibilities during the year.

As part of its risk oversight responsibilities, a number of operational and
regulatory matters which had occurred during the year were reported to
the ARCom in the normal course of business. Whilst Man Group sought
to improve its processes as a result, these matters were not considered
sufficiently material in number or nature either to require separate
disclosure in the financial statements or to indicate that the control
environment had not been working effectively.

The Board receives regular reports from the Chairman of ARCom,
business management and Group Risk on the risks to the achievement of
the Group’s operational and financial objectives, together with assurance
that the level of risk sustained is consistent with and being managed in
accordance with the Board’s risk appetite. These reports include current
and forward looking assessments of capital and liquidity adequacy and
a summary risk dashboard.

Year end review of risk management and internal controls
In addition to its ongoing monitoring of risk controls, the Board has
conducted a specific year end review of the effectiveness of the Group’s
risk management and internal control systems during the 12 months and
for the period up to the date of this Annual report. This review covered
all material risks and included a review of all significant operational
risk events and Internal Audit findings raised during the period. The
Board also considered the potential impact of certain risks identified
by the business, the outcome of the firm-wide Risk and Control Self-
Assessment process performed by business management and the
quality of the controls in place to mitigate these risks.

Following this review, the Board concluded that the Group’s risk
management processes were effective and that there were no significant
weaknesses or failings in the system of internal controls.

Financial reporting
Fair, balanced and understandable
The Board has enhanced its processes for the review of the Company’s
half-year and full-year financial statements to support its responsibility
for presenting a fair, balanced and understandable assessment of the
Company’s position and prospects and providing in the Annual report
the information necessary for shareholders to assess the Company’s
performance, business model and strategy. Key elements of these
processes are:

– all contributors to the Company’s financial statements and Annual report
are made aware of the fair, balanced and understandable requirement;

– early drafts of the half-year and Annual report are circulated to the

Board with a briefing note which (a) highlights any issues of fairness or
balance which management have considered in their preparation and
(b) discusses those areas of the Annual report which are considered
most relevant for shareholders’ understanding of the Company’s
strategy, business model and performance;

– the ARCom, at the request of the Board, carries out a page by page
review of the half-year and Annual report, with particular focus on the
consistency between the narrative and the financial statements;

– the Board reviews early drafts of the reports, together with the

ARCom’s conclusions and recommendations, at a dedicated meeting
well in advance of the final review and sign-off date. This provides
ample time for debate and evaluation of any issues arising;

– there is extensive review and verification by Executive Committee
members and the heads of relevant business units to support the
accuracy of the disclosures; and

– careful attention is given throughout the review process to the balance
between reporting on positive and negative performance and to the
tone of the language used, particularly in respect of future prospects
and outlook.

Board effectiveness

Non-executive director contribution
Our non-executive directors bring a valuable external viewpoint and
scrutiny to proposals debated by the Board. Through their roles outside
Man Group they have wide ranging knowledge of the global macro-
economic trends which may impact our business. Their broad business
experience enables them to bring substantial challenge to the appraisal
of potential acquisitions. They question budgets, the accuracy of our
forecasting and the sustainability of our cost base. They offer insights into
the development and promotion of company values and gender diversity
from their involvement in other firms.

I seek to maximise non-executive directors’ contribution to Board
affairs in a number of ways. On the rare occasions when a conflicting
business commitment means that a non-executive director is unable to
attend a meeting, I ensure that their views are obtained and any queries
answered by the executive team in advance of the meeting. Informal
non-executive director dinners give me the opportunity to find out more
about their thinking on the business and supplement formal Nomination
Committee discussions on executive team development. Non-executives
are requested to seek my advice before accepting any new business
appointments in order that I can make a judgement on any negative
impact on their time commitment to Man Group and any potential conflict
with our business. In line with our internal governance requirements,
details of any changes in directors’ external business appointments and
interests are reported to the Board for approval on a continuing basis with
a full schedule being circulated for endorsement at the end of each year.

MAN GROUP PLC / ANNUAL REPORT 2014CORPORATE GOVERNANCE
36

Corporate governance report continued

Board induction
To help new non-executive directors get up to speed with our business
as quickly as possible, we offer a comprehensive induction programme
which involves one to one meetings with our Executive Committee
members, the Company Secretary and the Heads of Group functions.
Relevant briefing materials are circulated in advance and follow up
meetings arranged as appropriate. Board Committee members are
introduced to the operation of those Committees by the Committee
Secretary and supporting material is provided by the Company’s
specialist advisers. New Board members are invited to provide
feedback on the programme they receive to help keep it refreshed
and well targeted. They are also encouraged to seek updates on
any topics which arise in the course of subsequent Board meetings
on which they would like further information. Details of our induction
programme for non-executive directors are given on our website
(www.man.com/board-governance).

Continuing education
Board members regularly identify in the course of Board discussions
business areas about which they would like a better understanding
and time is made available in scheduled Board meetings or pre-Board
sessions for this purpose. In 2014 there was a focus on AHL with
presentations on the operation of Momentum strategies and other
areas of research being pursued by the Oxford-Man Institute. Further
education on our quant businesses was provided by the CEO of Numeric
who talked to the Board about the Numeric investment process and
the opportunities for marketing their product across the Company’s
core distribution network. In 2015 attention is expected to turn to the
evolution of FRM and the development of our CLO business.

To help keep non-executives updated on regulatory and governance
issues impacting their Board Committee responsibilities, the Company
Secretary circulates details of relevant development programmes run by
external firms. These supplement reports and discussion on changes
in regulatory requirements by our auditors, advisers and the Company
Secretary in the course of Board meetings. The Board has been
made aware in this context of the changes introduced by the 2014 UK
Corporate Governance Code which will apply to the Company for the
2015 reporting year and it will be considering its response to the new
requirements in the course of the year.

2014 Board evaluation
The Board decided, in view of the ongoing recruitment of a new non-
executive director, to conduct an internal Board evaluation in 2014 and to
carry out the next external evaluation in 2015 when the Board would be
complete. It was also recognised that fresh perspectives and challenge
on the Board’s operation during 2014 would be provided by Deloitte LLP
as the Company’s new auditors who took up their appointment in the
course of the year.

The 2014 evaluation, which was facilitated by the Company Secretary,
asked Board members to give their assessment of a number of areas of
the Board’s effectiveness. Suggestions for improvement were requested
in each case. The assessment included areas which had been identified
for attention in the previous year’s evaluation, current issues such as the
Board’s consideration of business values, and ongoing key aspects of
the Board’s remit. The findings of the evaluation were presented to and
discussed by the Board and priority areas of focus for 2015 agreed.

Evaluation findings and 2015 priorities
The general view emerging from the 2014 evaluation was that the Board
was increasingly focused and effective. Following the non-executive
appointments made in 2013, it now benefited from a broader range
of skills and experience and its newer members were making a full
and valued contribution. The culture of openness and transparency
espoused by the executive directors resulted in a fully engaged Board
which encouraged challenge and the expression of opposing views
while remaining collegiate and supportive of management. Business
information and analyses provided by management were of a high
quality and Board requests for further detail or review were always
positively received.

With the Board’s broad knowledge and experience base and strong
culture of open and constructive engagement, there was a feeling
that it should be able to do even better. A number of development
areas were proposed and agreed for focus in 2015 as detailed below.
Certain of these, such as the pursuit of competitor intelligence and the
consolidation of Board knowledge of the business and management
talent, are ongoing essentials for Board effectiveness and will continue
the progress made in these areas in previous years.

– Close scrutiny of the performance of acquisitions against plan.
– More granular review of progress on specific strategic priorities,

including Institutional Sales and the US market.

– Continue building and updating Board members’ knowledge of
competitor strategy and activities, including external insights.
– Continue building Board members’ knowledge of Man Group’s

individual investment managers.

– Continue creating opportunities for engagement with Executive
Committee members and senior management in the tier below.
– Advance and monitor the embedding of the Company’s business

principles across the Group.

Individual director evaluation
As in previous years, I had one to one meetings with individual directors
to discuss their personal contributions to the Board and to explore any
development needs. The Senior Independent Director led a review of
my own contribution as Chairman, taking account of the views of all the
directors, and discussed their feedback with me.

Shareholder engagement
The Company actively engages with investors and investor representative
bodies and welcomes the opportunity to discuss their views on
relevant issues. Details of the Board’s exposure to and consideration
of shareholder views and market sentiment are given below.

Institutional investors
Our Head of Investor Relations and our executive directors maintain
a continuous dialogue with institutional shareholders on performance,
plans and objectives through a programme of regular meetings. Our
executive directors held in excess of 100 such meetings during 2014
and are in regular contact with analysts and other market commentators.
As Chairman, I attend results presentations to analysts and investors
and at the end of each year I meet with key institutional investors to
supplement their contact with the executive team. This provides investors
with the opportunity to discuss any particular areas of focus and raise
any concerns which I can then report back to my Board colleagues.
Topics discussed at my meetings this year included the Board’s
strategic focus for 2015, our progress in the US market and executive
director succession.

MAN GROUP PLC / ANNUAL REPORT 2014 CORPORATE GOVERNANCE37

The Board receives and discusses regular updates from our Head of
Investor Relations regarding changes in the top shareholders on our
share register, feedback from institutional investors and key commentary
from the sell-side analyst community. There is a particular focus on
shareholder and market reaction to our full and half-year results and
interim management statements. In July the Board received detailed and
positive feedback from investors on the proposed acquisition of Numeric.

The Board regularly receives brokers’ notes and sell-side views and
discusses underlying performance assumptions. It also reviews and
discusses with the executive team draft presentations to analysts and
investors in relation to the Company’s half-year and final results.

Engagement on remuneration issues
As part of our continuing engagement on directors’ remuneration,
the Remuneration Committee Chairman and Company Secretary held
a series of meetings with some of our top investors and with certain
shareholder representative bodies in the course of the year and early
in 2015 to respond to issues raised by shareholders on the Company’s
remuneration resolutions at the 2014 AGM. Details of the issues
raised and discussed at these meetings are included in the Directors’
remuneration report on page 44. The Remuneration Committee intends
to continue this open engagement on our remuneration policy and
practice in 2015 and welcomes feedback from shareholders on these
matters at any time.

Private investors
We encourage our private investors to use our website to access the
Company’s interim and annual reports and our half-year and final
results presentations to analysts. The website provides a wealth of other
information about the business and of interest to shareholders such as
historic dividend payments. Shareholders can use the site to access our
Registrars’ Shareview website (www.shareview.co.uk) to enable them to
manage their shareholding account online. We are always keen to hear
the views of private investors and offer a dedicated shareholder mailbox
(shareholder@man.com) for their enquiries.

Shareholder meetings
At our 2014 AGM last May, Manny Roman gave shareholders an
overview of the progress of the business and our future plans and
outlook. This was followed by the opportunity for shareholders to
ask questions about the resolutions before the meeting and about
the business more generally. In September we were pleased to invite
shareholders to the general meeting convened to approve the Numeric
acquisition. This provided an opportunity for us to explain how the
acquisition was aligned with our strategic objectives and to answer
related shareholder questions.

We look forward to providing a further business update at our 2015 AGM
in May this year.

Jon Aisbitt
Chairman

Statement of compliance
The Company has, throughout the year ended 31 December 2014,
applied the principles of and complied with the provisions of the UK
Corporate Governance Code dated September 2012 (the Code)
except in the following respects:

Assessment of effectiveness of audit process
Provision C.3.8 of the Code requires that the report from the Audit and
Risk Committee should include an explanation of how the Committee
has assessed the effectiveness of the external audit process.
Following the appointment of Deloitte LLP as Man Group’s auditors
for the year ended 31 December 2014, the Committee believes that it
will be better placed to assess the effectiveness of the audit process
following the completion of Deloitte’s first audit cycle. As reported
in the Audit and Risk Committee report on page 41, the Committee
intends to undertake an assessment of the effectiveness of the audit
process in 2015 and will report the outcome of its review in the Audit
and Risk Committee report for the year ended 31 December 2015.
No issues have been identified during the year in relation to Deloitte’s
performance and effectiveness as external auditors.

Remuneration Committee membership
Provision D.2.1 of the Code requires the Remuneration Committee
to consist of at least three independent directors. Following the
retirement of Fred Jolly at the AGM on 9 May 2014, our Remuneration
Committee comprised only two independent directors, Phillip
Colebatch and Nina Shapiro, in addition to our Chairman, for the
remainder of the year. John Cryan was appointed as an independent
non-executive director and as a member of the Remuneration
Committee on 15 January 2015, bringing the total number of
independent Remuneration Committee members to three.

Setting executive directors’ and Chairman’s remuneration
Provision D.2.2 of the Code requires that the Remuneration
Committee should have delegated responsibility for setting the
remuneration of all the executive directors and the Chairman.
The terms of reference of Man Group’s Remuneration Committee
provide that the Committee only has authority to recommend, for
approval by the Board, executive directors’ remuneration and the
remuneration of the Chairman1. The Board believes that, given the
importance for the business of motivating the executive team to
deliver the Company’s strategy, it is appropriate for all non-executive
Board members, rather than just those who sit on the Remuneration
Committee, to determine the executive directors’ compensation.
It also believes that, in order to provide transparency and allow the
views of all the directors, executive and non-executive, to be taken
into account, it is appropriate for all Board members to determine the
Chairman’s remuneration.

1 This authority is given subject to the proviso that no Board member should
participate in the recommendation or approval of his or her compensation.

Other information
Certain additional information in relation to the Company’s share capital,
the powers of the directors and amendments to the articles of association
that is required to be disclosed in the Corporate governance report
pursuant to DTR 7.2.6 may be found in the Directors’ report on pages 65
to 66.

MAN GROUP PLC / ANNUAL REPORT 2014CORPORATE GOVERNANCE
38

Audit and Risk Committee report

The Board Chairman, Chief Executive Officer, Chief Financial Officer,
Chief Risk Officer, Head of Global Compliance and Regulatory, Group
Financial Controller, Head of Internal Audit and representatives from
the external auditors are invited to attend Committee meetings. At the
end of each formal meeting, the Committee meets with the Head of
Internal Audit and representatives from the external auditors without
management being present. Following each Committee meeting,
I communicate the key discussion points and make recommendations
to the Board as appropriate.

I also attend agenda setting meetings in advance of each Committee
meeting along with representatives from the senior management team
in order to identify key issues impacting the business that require
consideration by the Committee. I meet privately with the Head of
Internal Audit following each of these meetings.

Matthew Lester, Chairman, Audit and Risk Committee

Committee roles and responsibilities:

During the year, the Audit and Risk Committee (the ‘Committee’)
continued to focus its attention on the integrity of the Group’s
financial reporting and the effectiveness of its risk management
processes and internal controls.

Following the Committee’s recommendation to appoint Deloitte
as the Group’s external auditors for the year ended 31 December
2014, I am pleased to report that audit services have successfully
transitioned from PwC to Deloitte during the year.

We have made a number of changes to the Committee’s forward
agenda during the year which have enabled us to further our
understanding of the significant risk issues facing some of the
Group’s key business areas and the processes and controls
that have been implemented to mitigate such risks.

Composition and attendance
As reported in last year’s Audit and Risk Committee Report, a number
of changes were made to the composition of the Committee in 2013 to
strengthen its breadth of skills and experience. These changes have been
embedded during 2014.

All members of the Committee are independent non-executive directors
and Andrew Horton, Dev Sanyal and I are the members considered
to have relevant and recent financial experience as required by the UK
Corporate Governance Code. Further details of the experience of all
Committee members can be found in their biographies on pages 30
and 31. Committee members are encouraged to remain up-to-date with
accounting and regulatory changes to support their role on the Committee
through the normal course of their work and through externally facilitated
seminars, details of which are made available to all Committee members.

F Financial reporting

– Monitor the integrity of the financial information contained in the
interim and annual financial statements with particular focus on:
– key accounting policies and judgements; and
– going concern requirements.

– Review:

– statements contained in the annual report relating to the Committee
and the Company’s internal controls and risk management; and
– the effectiveness of the financial controls framework (please refer

to page 34 for further details).

– Advise the Board on whether the Committee believes the annual and
interim report and accounts to be fair, balanced and understandable.

R Risk management, internal controls and compliance

– Review the effectiveness of:

– the Group’s Risk Framework and policies and processes for the

identification, assessment and management of risk;

– the Group’s internal controls in line with Turnbull guidance

(please refer to pages 34–35 for further details of the Committee’s
review of the Group’s internal controls);

– the Group’s regulatory reporting activities and Compliance

function; and

– the Group’s arrangements for its staff to raise concerns, in confidence,

about possible wrongdoing in financial reporting or other matters.
– Report to the Remuneration Committee any findings in relation

to risk matters which may impact their decision on discretionary
remuneration payments.

IA Internal audit

– Approve the annual Internal Audit Plan and Charter and Internal

Audit activities.

– Review the remit and effectiveness of the Internal Audit function.
– Review all significant Internal Audit recommendations and oversee

the progress in addressing these.

During the year, we met on seven occasions and our attendance at these
meetings is set out in the table below:

EA External audit

Matthew Lester (Chair)
Phillip Colebatch
Andrew Horton1
Dev Sanyal

Attendance record

7/7
7/7
6/7
7/7

1 Owing to conflicting business commitments, Andrew Horton was not able to attend

one meeting during the year. However, he received and reviewed the papers to be
considered in advance of the meeting and directed questions to the Chairman which
were addressed in the meeting.

– Recommend the appointment, and determine the remuneration,
of the external auditors, including reviewing their effectiveness
and independence.

– Review and approve the Audit Plan and the external auditors’

control procedures.

– Review the findings of the audit and the external auditors’

management letter and oversee management action to address
findings where necessary.

– Approve and monitor the policies relating to the provision of non-

audit services by the external auditors and the hiring of personnel
from the external auditors.

– Arrange for the external audit to be put out to tender as often as is
required by applicable law, rules, regulations and best practice.

MAN GROUP PLC / ANNUAL REPORT 2014 CORPORATE GOVERNANCE39

Roles, responsibilities and processes
The Committee is integral to Man Group’s governance framework and
its primary role is to support the Board by assessing the integrity of the
Group’s financial reporting, monitoring the effectiveness of the Group’s
risk management and internal controls, and overseeing the activities
of the Group’s Internal Audit function and its external auditors.

respond to any queries raised by the Committee in respect of these
papers. At each meeting, the Committee reviews dashboards on the key
risks impacting the business, compliance matters, the financial controls
framework and internal controls. The purpose of these dashboards is
to highlight any significant matters or developments which may require
further consideration by the Committee.

The Committee’s roles and responsibilities, derived from its full terms of
reference (available at www.man.com/audit-and-risk committee), which
are reviewed by the Committee on an annual basis, are summarised
on the opposite page.

The Committee has an annual forward agenda in place with agenda
items scheduled to coincide with key events in the annual financial
reporting cycle, specific risk matters that the Committee has identified,
and standing items that the Committee is required to consider in
accordance with its terms of reference.

Management submit reports and presentations to the Committee on
key financial reporting, risk, compliance and audit matters and attend
meetings (as previously described) to highlight salient issues and to

Key items considered during the year
Financial reporting and accounting matters F EA
Accounting judgements
During the year, the Committee considered the key accounting
judgements and policies adopted by management in respect of the
full-year and interim financial statements and confirmed that these
were appropriate. The significant areas of judgement identified by the
Committee, in conjunction with management and the external auditors,
related to the acquisition of Numeric and Pine Grove, goodwill impairment
testing, taxation, investment in funds and adjusting items. Details of their
consideration and conclusions are set out below.

Note in
financial
statements Role of Committee

Area of judgement

Acquisition accounting
During 2014, the Group acquired Numeric
and Pine Grove resulting in the application of complex
accounting judgements in order to establish the fair
value of the acquired businesses.

Goodwill impairment
Goodwill for each of the Group’s business units is
tested for impairment through the application of a
‘value in use’ model. This is judgemental in nature as
it requires estimates concerning future cash flows,
growth rates and associated discount rates to be
taken into account.

Taxation
The Group has historically made a number of
provisions for taxation across several jurisdictions.
Due to a change of circumstances in 2014, it has
been proposed that a proportion of these provisions
be released.

Following the acquisition of Numeric and Pine Grove,
it was proposed that a deferred tax asset in respect
of historic tax losses be recognised.

Investments in funds
The Group holds investments in a number of funds
which it manages. Judgement is required to be
exercised in terms of assessing whether these
investments are controlled by the Group. The
accounting treatment will vary depending on the
outcome of this assessment.

The Committee reviewed a paper prepared by
management outlining the key assumptions
underpinning the valuation of Numeric and
Pine Grove. The key areas of focus were the
fair value of the deferred consideration and the
total purchase price attributed to the assets
and liabilities in the acquired businesses.

The Committee considered a report from
management outlining the methodology for
the impairment assessment and challenged
the assumptions underpinning the goodwill
valuation model including discount rates, cash
flow projections, terminal value exit multiples
and headroom availability.

Conclusion

The Committee confirmed
that it was satisfied with the
judgements presented by
management.

The Committee concluded
that no impairment
expense was required to
be recorded for the year
ended 31 December 2014.

The Committee considered management’s
proposal to release a tax provision in respect
of one of Man Group’s legacy operations on
the basis that this no longer represented a
significant tax exposure.

The Committee agreed
to release the tax
provision in accordance
with management’s
recommendation.

The Committee reassessed the recognition
of deferred tax in respect of previously
unrecognised deferred tax assets, particularly
in the Group’s US operations, following the
acquisition of Numeric.

It was agreed that a
proportion of the Group’s
deferred tax assets would
be recognised in the year
ended 31 December 2014.

The Committee reviewed management’s
assessment of the investments which the Group
is deemed to control in line with IFRS 10. This
involved understanding the structure of certain
investments in order to establish whether the nature
of the Group’s control fell within the definition of
control under the accounting standards.

The Committee concluded
that it was satisfied
with management’s
assessment of which
entities are deemed to
be controlled by Man
Group and the associated
accounting treatment.

Adjusting items
The directors focus on profit before adjusting items
(adjusted profit) as this reflects the underlying trends in
the business and the recurring revenue and costs that
drive the Group’s future cash flows. Adjusting items
relate to non-recurring items or those resulting from
acquisition and disposal related transactions.

The Committee reviewed and challenged the
adjusting items contained in the consolidated
financial statements and considered whether
there was consistency of approach from period
to period and the maintenance of an appropriate
symmetry between losses and gains and the
reversal of any accruals previously classified as
adjusting items.

The Committee concluded
that the adjusting items
were appropriate and
provided a fair assessment
of the underlying profitability
of the business.

MAN GROUP PLC / ANNUAL REPORT 2014CORPORATE GOVERNANCE
40

Audit and Risk Committee report continued

Fair, balanced and understandable assessment
At the request of the Board, the Committee considered whether the
interim and annual reports were fair, balanced and understandable and
provided the information necessary for shareholders to assess Man
Group’s performance, business model and strategy. At its meeting in
February 2015, the Committee reviewed the financial statements in
conjunction with the narrative sections of the annual report to ensure
that there was consistency in terms of the information reported.
The Committee concluded that, taken as a whole, the annual report
is fair, balanced and understandable.

Acquisition of Numeric F R EA
As reported elsewhere, the Group completed the acquisition of Numeric
in September 2014. An ad hoc meeting of the Committee was convened
in Q2 2014 to consider the financial and risk implications of the proposed
acquisition. As the acquisition was categorised as a Class 1 transaction
in accordance with the UKLA Listing Rules, the Company was required
to issue a circular to its shareholders for approval. The Committee
carefully reviewed and challenged certain financial information contained
in the circular which included a working capital assessment, financial
statements of Numeric and a pro-forma net asset statement and
recommended their approval to the Board.

Following the completion of the acquisition, the Committee has reviewed
an integration heat map to identify the key integration risks associated
with the acquisition and the potential impact of such risks materialising
over the integration period.

Oversight of risk and control environment R IA F
Review of key business areas
During the year, a number of changes were made to the structure of
the Committee’s forward agenda which were intended to increase the
Committee members’ understanding of the risks and controls in key
business areas. Representatives from AHL, GLG and FRM were invited to
present to the Committee on the strategy and the risk and control profile
of their respective business areas. The purpose of these presentations
was to enable the Committee to assess, in context, the significant risks
perceived by each business area and the controls in place to mitigate
these risks to the extent desired.

As part of this assessment, each business unit provided an overview of its
business structure and identified key risk areas using a SWOT (Strengths,
Weaknesses, Opportunities and Threats) analysis. The Committee was
advised how these risks are mitigated through certain controls including
the Risk and Control Self-Assessment process and the operation of
Systems and Controls Committees (SYSC). The presentations also
included input from Group Risk, Compliance and Internal Audit to enable
each governance function to highlight any key areas from their perspective
that should be brought to the Committee’s attention. The intention is that
a similar exercise will be conducted in 2015 for the Group’s Sales function
and the recently acquired Numeric business.

Review of key functional areas
Representatives from Man Group’s Technology and Operations team and
Business Operational Risk team were invited to attend several Committee
meetings during the year to provide updates on outsourcing initiatives,
cyber-security and changes to the processes around systems access for
joiners, leavers and internal transfers.

The teams were also requested to present to the Committee on
improvements that had been made during the year to the controls
around the Group’s rebates and commissions. It is anticipated that the
introduction of an integrated technology platform to automate the rebates
and commissions process will strengthen these controls further; however,
this is an area that the Committee intends to keep under review in 2015.

Compliance R
Compliance continued to be a key area of focus for the Committee during
the year, particularly given Man Group’s increased regulatory exposure
in the US following the acquisition of Numeric and Pine Grove and the
registration of two of the Group’s investment management entities with
US regulatory bodies.

During the year, the 2014 Compliance Plan was presented to the
Committee which outlined the key objectives for the Compliance team in
2014. Progress that had been achieved in meeting these objectives was
reported during the year. Towards the end of 2014, I met with the Head of
Global Compliance and Regulatory to discuss the 2015 Compliance Plan
which will be presented to the Committee in the course of H1 2015.

Internal audit IA
The Group’s Internal Audit function was outsourced to KPMG in 2013.
During the year, the Committee reviewed and approved the 2015 Internal
Audit Plan which provided an overview of the internal audits to be
performed in 2015 together with an estimate of days and costs required
to deliver the Plan.

The Committee considered comprehensive progress reports presented
by Internal Audit to each meeting and challenged timescales and
ratings allocated to various reports where appropriate. No significant
weaknesses were identified in any of the Internal Audit reports although
certain improvements to processes and procedures were made as a
result of the reviews.

Last year’s Audit and Risk Committee Report indicated that the
Committee intended to review the effectiveness of the Internal Audit
function in 2014 in order to assess whether the function was meeting key
stakeholder objectives. This review, which involved interviews with key
stakeholders, was conducted in the second half of 2014. The outcome of
these interviews indicated that the engagement with KPMG was viewed
positively and that members of the management team would value
increased interaction with the Internal Audit function.

External audit EA
Following the audit tender process led by the Committee in 2013,
Deloitte LLP were formally appointed as the Group’s external auditors by
shareholders at the Annual General Meeting on 9 May 2014. In October
2014, I met with representatives from Deloitte to discuss the 2014 Audit
Plan in considerable detail, particularly the key judgemental accounting
areas. The main discussion points were subsequently reported to my
fellow Committee members.

MAN GROUP PLC / ANNUAL REPORT 2014 CORPORATE GOVERNANCE41

Review of non-audit services policy
The Group has in place a policy for the provision of non-audit services
by the external auditors, the purpose of which is to safeguard the
independence and objectivity of the external auditors by prohibiting
them from providing certain services.

During the year, the Committee reviewed the non-audit services
policy and approved a number of changes that had been proposed
which included:

– the introduction of a cap on non-audit fees as a percentage
of the statutory audit fee in accordance with forthcoming EU
independence legislation;

– the requirement to pre-approve non-audit services provided by the

external auditors to Man Group’s funds; and

– the addition of a reference to the intention to avoid engaging the

external auditors to provide tax services to corporate entities within
the Group.

Any potential services to be provided by the external auditors, which
are not excluded under the non-audit services policy but which have an
expected value of $75,000 or more, must be approved by the Committee
in advance. The Committee’s approval is also required where the
pre-approved fees in any financial year exceed $2 million in aggregate.

Effectiveness of external audit process
Given the extensive review that was undertaken in respect of Deloitte
as part of the audit tender process reported in last year’s Audit and
Risk Committee Report, the Committee believes that, at this stage, it is
premature to assess comprehensively and report meaningfully on the
effectiveness of the audit process for the year ended 31 December 2014.
Instead, the Committee intends to evaluate the external audit process
following the completion of the first audit. The results of the evaluation will
be reported in the Committee’s report for the year ending 31 December
2015. No issues have been highlighted during the year in relation to
Deloitte’s performance and effectiveness.

Re-appointment of external auditors
The Committee has recommended the re-appointment of Deloitte as the
Group’s external auditors to the Board for approval by shareholders at the
2015 Annual General Meeting.

Committee evaluation
Outlined in the table below are the two key areas that were identified in
the Committee’s 2013 evaluation as requiring further consideration and
development during 2014, together with progress that has been achieved
in 2014.

2013 evaluation

2014 progress

The table below shows the remuneration paid to the external auditors for the
year ended 31 December 2014 (Deloitte) and 31 December 2013 (PwC).

Develop the Committee’s
understanding and consideration
of the Group’s strategic risks.

Fees paid to Deloitte
for the year ended
31 December 2014
$’000

Fees paid to PwC
for the year ended
31 December 2013
$’000

450

736

Develop Committee members’
understanding of AHL’s
operational risk and control
environment.

Strategic risks have been
considered by the Committee
in detail through the review and
challenge of a paper presented
by management on the Group’s
emerging risks.

Representatives from AHL,
GLG and FRM have provided
comprehensive presentations
to the Committee on the risk
and control environment of
each business area.

During the year the Committee conducted a further evaluation of
its effectiveness which was facilitated internally. Questionnaires were
circulated to all Committee members and regular attendees, the results
of which indicated that, overall, the Committee was operating effectively.

An area that was identified as requiring further development in 2015
related to leveraging process improvements made during 2014 to enable
the Committee to spend the maximum time available on key risk and
financial reporting matters. The Committee intends to keep this under
review throughout 2015.

Matthew Lester
Chairman, Audit and Risk Committee

Fees payable to the Company’s
auditors for the audit of the Parent
Company and the consolidated
financial statements.

Other services:
The audit of the Company’s
subsidiaries pursuant to legislation

Audit-related assurance services

Tax compliance services

Tax advisory services

Other assurance services

All other services

1,435

1,795

265

–

208

453

369

1,056

452

–

167

Total auditors’ remuneration

2,893

4,575

As reported in the above table, Deloitte has been engaged to provide
a number of non-audit services during the year. Perhaps of most
significance, is their appointment as Reporting Accountant for the
Numeric acquisition and the issuance of $150m lower Tier 2 capital
during the year (please see note 14 to the financial statements for further
information), which are categorised as ‘Other assurance services’ in
the table above. These transactions required assurance to be given on
the financial content of the shareholder circular published in connection
with Numeric and the prospectus published in connection with the bond
issuance. Given Deloitte’s existing knowledge of the business and the
resulting efficiencies that this created, it was deemed appropriate to
appoint them to undertake this work.

Following an assessment of the external auditor’s independence and
objectivity at its meeting in February 2015, the Committee concluded
that Deloitte remained independent and objective.

MAN GROUP PLC / ANNUAL REPORT 2014CORPORATE GOVERNANCE
42

Nomination Committee report

Non-executive director succession planning
Early in the year, as part of our long-term Board succession planning,
we discussed and recommended to the Board the renewal of each of
Matthew Lester’s and Nina Shapiro’s appointments as non-executive
directors for a second three year term, subject to their annual retirement
and reappointment by shareholders at the AGM. We then turned our
attention to the search, as agreed in our 2013 Committee evaluation,
for an additional non-executive director who, as well as being able
to make a broad contribution to the business of the Board, had
the particular expertise and experience necessary to serve on the
Remuneration Committee.

Non-executive director search process
As the initial step in the search process, the Committee discussed the
specific capabilities the candidate required for the remuneration aspect
of the role. It was agreed that the individual should have prior direct
experience of dealing with remuneration issues at senior level and within
a performance driven culture where compensation levels were high.
They should also have an international outlook and an appreciation of
the global market and competition for talent within Man Group’s sector.

Having used Egon Zehnder for a number of recent non-executive
searches, we decided to select a different search firm for the current
search and appointed Korn Ferry, who have no other connection with the
Company, for the assignment. As regards the review of candidate lists
and the interview process, it was agreed that Phillip Colebatch, as Senior
Independent Director and Chairman of the Remuneration Committee,
and I should review the long list and conduct the first round of interviews
with other Committee members being brought into the interview and
selection process at the second stage.

In response to the Committee’s request, to the extent available under
the broad specification for the role, for significant female representation
on the long list of candidates, some 25% of the names put forward were
women. Certain of these candidates withdrew from the process at an
early stage because of the constraints of other commitments or their
wish to pursue an appointment outside our industry. Those remaining
were then considered for the shortlist against the competencies
required together with the rest of the candidates.

Selection and appointment of John Cryan
After a full interview process for the shortlisted candidates, which was
extended to include interviews with Matthew Lester as Chairman of the
Audit and Risk Committee and with our CEO and CFO, John Cryan
emerged as the favoured candidate. John had previously held a number
of senior roles in the Financial Institutions Group of UBS AG before being
appointed to the role of Group CFO in 2008 in order to help restructure
the Bank and manage its relationship with the Regulator at the time
of the financial crisis. After leaving UBS he served as President of
Temasek’s UK operations between 2012 and 2014 and was appointed
to the Supervisory Board of Deutsche Bank and as Chairman of the
Bank’s Audit Committee in 2013. It was believed that John’s extensive
technical knowledge of and insights into international markets, including
the regulatory backdrop, would enhance and strengthen the Board.
As an experienced leader in the sector who had worked at the top of
the industry at one of the most challenging periods in recent history,
he was also viewed as a highly valued adviser to the executive team.

The Committee recommended John Cryan’s nomination to the Board
and, after the receipt of positive references and the securing of FCA
approval, he was appointed as a non-executive director and as a member
of the Remuneration and Nomination Committees in January 2015.

Jon Aisbitt, Nomination Committee Chairman

In 2014 the Nomination Committee (the ‘Committee’) continued
its work on non-executive succession planning with our principal
focus being on the search for a new non-executive director
with the expertise and experience necessary to be a member
of the Remuneration Committee. We were also kept abreast
of key management appointment and development plans
and challenged and discussed with the executive directors
their ongoing initiatives to promote gender diversity in senior
management roles.

Membership and meetings
All our non-executive directors are members of the Committee and our
meetings are normally attended by Manny Roman. We held three formal
meetings during 2014 as shown in the table below. In addition, we debate
Committee matters informally at non-executive director dinners and take
the opportunity to discuss key management appointments and gender
diversity within Board meetings as these issues arise.

My report below discusses the specific areas of focus and decision for
the Committee during the year. The Committee’s full terms of reference
are available on our website (www.man.com/nomination-committee).
No Committee member took part in discussions or decision making
relating to them personally.

Non-executive directors’ attendance at Committee meetings

Jon Aisbitt, Chairman
Phillip Colebatch
Andrew Horton
Fred Jolly1
Matthew Lester
Dev Sanyal
Nina Shapiro

Attendance
record

3/3
3/3
3/3
1/1
3/3
3/3
3/3

Notes:
1 Fred Jolly retired from the Board at the 2014 AGM in May and attended one meeting

held prior to his departure.

MAN GROUP PLC / ANNUAL REPORT 2014 CORPORATE GOVERNANCE43

Committee evaluation and 2015 priorities
At the end of 2014 the Committee reviewed its actions and achievements
during the year against the priorities agreed in the 2013 evaluation.
It was considered that the search for a new non-executive director
and Remuneration Committee member had been full and thorough
with regular updates made to the Board throughout the process. The
Committee had moved the senior management diversity agenda forward
with the executive team, was kept regularly updated on key hires and
senior management changes and benefited from the opportunities
offered by non-executive dinners for private discussion of management
development and succession matters.

The Committee recognises that the acquisition and development of
management talent continue to be a business imperative. The same
applies to the review and refreshing of the Board’s skill and experience
base in the light of changing business needs and individuals’ personal
career plans. The priorities agreed by the Committee for 2015, which
are set out below, reflect this ongoing agenda:

– continue the evaluation of senior management resourcing,

development and succession, including the identification of needs by
business area and any constraints on securing the optimum talent;
– continue the review and promotion of gender diversity initiatives across
the senior management talent pool and monitor their achievement; and

– continue work on Board development and succession planning.

Jon Aisbitt
Chairman

Board diversity
The Board’s policy on diversity, which is available on our website
(www.man.com/board-of-directors), remains unchanged from previous
years. While our firm principle is to make Board appointments based on
merit and overall suitability for the role and having regard to the overall
balance of the team, we recognise the benefits that diversity, including
diversity of gender, ethnicity, professional competence and business
experience, can bring to our business. Our objective is to achieve a value
adding and impactful percentage of women on our Board in line with
the spirit of the Davies Report and we pursue this opportunity with our
search consultants whenever a new appointment is being considered.
However, our experience to date, reinforced by our most recent search
reported above, has shown that it is not appropriate or realistic for us to
target the achievement of a specific percentage of women on our Board
by a specific date. We will, however, continue to focus on increasing the
number of women on our Board when appropriate opportunities arise.

Senior management diversity
As non-executive directors we continue to challenge our executive
colleagues on the development of gender diversity within the senior
management talent pool from which future women leaders, internal
and external, may be drawn. Following our review of an analysis of
management talent and comparative data from asset manager peers,
we have identified those roles where current female representation in
the business is weak. We have encouraged management to establish
a clear view of the value of diversity to the business, to focus their
efforts on areas of maximum impact and to articulate long-term goals.
Management’s ongoing diversity initiatives are discussed and progress
updates received.

Management development and succession planning
Committee members seek regular updates from Manny Roman
on progress in hiring new managers to key roles and his plans for
developing and redeploying existing talent across the firm. As part of
our responsibility for the oversight of management development and
succession planning, we create opportunities to increase our exposure
to executives below Board level and to assess the strength and breadth
of the management resource available to the business. Executive
Committee members and investment management heads are invited
to update the Board on the areas of the business for which they are
responsible. They also discuss business risk and controls with the
Audit and Risk Committee. The Heads of Group functions are regular
presenters to both forums.

MAN GROUP PLC / ANNUAL REPORT 2014CORPORATE GOVERNANCE
44

Directors’ remuneration report
1. Chairman’s annual statement

quantifiable metrics applied are the same KPIs as are used to evaluate
progress against our key business priorities as set out on page 15 of
the Annual report. The 20% qualitative element allows the Committee
to reflect its assessment of the business culture and behaviours which
underlie and support the directors’ financial achievement.

The DEIP objectives are set at year 0 and, for awards made in respect
of 2015 and future years, at the end of year 3 the Committee reviews the
level of achievement according to the scorecard and applies that to the
potential level of award to determine the maximum possible award value.
As a final step, the Committee considers whether that value is justified
by overall company performance over the period. If, as was the case in
respect of the 2013 award, the Committee considers that the calculated
value is not supported by the level of performance, it will exercise
discretion to make an appropriate reduction. I would stress, however,
that the Committee cannot apply any upward discretion as this would be
outside the rules of the DEIP and the policy approved by shareholders.

A further point to be emphasised is that since the targets are set in
advance and the level of achievement against these targets is assessed
at the end of the performance period, the proportion of the award
made is determined, within the limits established by the remuneration
policy, in much the same way as the proportion of awards vesting is
determined under more traditional LTIP plans. However, the final step,
i.e. the assessment of the level of award in the light of overall company
performance and consideration of whether any reduction is warranted,
is generally not available under those more traditional plans.

Long-term shareholder alignment
Deferred shares awarded under the DEIP are subject to a further
three to five year vesting period which is conditional only on continuing
service. Taking into account the three year performance period, the
DEIP has a total time horizon of six to eight years and builds up over
this period a substantial proportion of executive reward aligned with
shareholder experience and value. Notwithstanding this alignment these
deferred awards, which after the performance period has passed are
subject only to a further period of service, are not taken into account
in the calculation of the level of directors’ shareholdings measured
against our shareholding guidelines which require the holding of totally
unrestricted and disposable shares.

Business performance in 2014
The Committee believes that overall the executive team has made great
progress in pursuit of the Company’s strategic objectives during the year.
In particular, the directors have created a firm basis for future growth
through the acquisition of Numeric and Silvermine Capital Management
which further diversify and strengthen Man Group’s product range and
extend our footprint in the key US market. Within the existing business,
the development of new models and the addition of new markets for AHL
have contributed to very strong relative and absolute performance in its
traditional momentum and related strategies. This improved performance
and the broadening of the product range has helped attract assets and
resulted in a significant new AHL institutional mandate. GLG has grown
its long only and credit strategies and assets and has benefited from a
number of high profile industry hires. FRM has broadened its portfolio
through the acquisition of the Pine Grove and Merrill Lynch assets and
has secured further substantial commitment to its managed account
infrastructure. Our 2014 cost reduction targets have been achieved and
rigorous financial discipline has been maintained. A cost efficient bond
issue has raised additional capital for the seeding of new funds.

Phillip Colebatch, Remuneration Committee Chairman

Dear Shareholder

I am pleased to present our Directors’ remuneration report for
2014 which we will be submitting to shareholders for approval
at our 2015 Annual General Meeting.

The report sets out the work done by the Remuneration Committee
(the ‘Committee’) during the year and gives details of the compensation
paid to our directors for their stewardship and management of the
business. The remuneration we have awarded is in accordance with
the directors’ remuneration policy approved by shareholders at the 2014
Annual General Meeting. No changes have been made to the policy
since that time and a summary is included at the end of the report for
easy reference. Our policy incentivises executive achievement against
transparent and stretching targets linked to the strategy and performance
of the business and is designed to drive and reward the creation of
long‑term shareholder value.

Shareholder engagement
Following the 2014 AGM I sought meetings with a number of our major
shareholders and certain shareholder voting bodies to obtain further
feedback on our remuneration policy and report and to respond to
any areas of interest or concern. In these meetings we discussed the
market positioning of our fixed and variable executive remuneration, our
approach to objective setting and the alignment of incentives with the
Company’s strategic priorities. As part of this, a number of shareholders
sought further clarification of the structure of our executive incentives
which I am pleased to provide below.

Short-term objectives for annual bonus
Directors’ short‑term objectives are focused on specific actions
and issues which need to be addressed in the current year to help
build longer‑term business performance and growth. While the
objectives for both our executive directors will support key strategic,
performance, financial health and reputational imperatives, the CEO’s
objectives are likely to be more descriptive and qualitative in nature,
covering organisational, structural and cultural issues, while the CFO’s
objectives may contain more quantifiable deliverables.

Long-term objectives for deferred share awards
Our Deferred Executive Incentive Plan (DEIP) is based on a balanced
scorecard of long‑term targets which are designed to incentivise
the creation of long‑term sustainable shareholder value. 80% of
the scorecard is composed of quantifiable metrics – investment
performance, growth in assets under management, EBITDA margin
and earnings per share – and 20% relates to talent and culture. The

MAN GROUP PLC / ANNUAL REPORT 2014 CORPORATE GOVERNANCE45

The significant increase in profits and earnings per share resulting from
progress in all the above areas is shown in the ‘Highlights’ section on
page 2. The remuneration we have awarded in respect of 2014 reflects
the breadth of this achievement. We are aware, nonetheless, of areas
where further work and renewed effort are required and which will be
recognised and targeted in executive directors’ objectives for 2015.
These will include addressing the underperformance of GLG’s equity
and macro strategies, with their negative impact on redemptions and
flows, and developing further traction in the key US market.

Executive reward in respect of 2014
Tables R3 to R5 on pages 50 to 53 set out the reward decisions
which the Committee has made on directors’ achievement against their
individual annual objectives during 2014 and the balanced scorecard of
quantitative metrics and qualitative judgement under the DEIP. Below
I have provided additional commentary on individual and company
performance to provide further context.

Board review
Executive compensation is a key element of Man Group’s business
model and, as such, final judgement is exercised at a meeting of the
full Board. In applying its judgement, the Board considers all aspects
of the proposed compensation of the executive directors and all
members of the senior management team. This includes an overall view
on Man Group’s business performance and positioning for the future,
the environment in which that performance was achieved, internal
relativities, retention issues and, with the help of Kepler Associates,
consideration of compensation at selected peers and competitors.
Our external comparators are restricted to publicly quoted UK fund
management groups and selected other financial institutions for which
investment management is a material business line. The comparability
of these companies varies depending on differences, some of them
material, in size, business mix and geographic footprint and their
relevance varies in the extent to which they are actually competitors
for talent. We compete for talent with, among others, privately held
investments and hedge funds for which there is limited public disclosure
on remuneration. The comparison with the public peer group has shown
that the total compensation of our executive directors is at the low end of
both CEO and CFO remuneration. We will, therefore, be consulting with
shareholders on possible changes to the incentive opportunity available
to our CEO and CFO following the release of our 2014 results.

Annual short-term cash bonus
Manny Roman
In his first year as CEO, Manny Roman’s objectives were focused on
reducing the cost base, reshaping the business to align with future
asset flows and creating a new top management structure. In 2014, his
objectives turned to raising performance, growing FUM and management
fee income and creating the potential for further value creation through
selective, disciplined acquisitions. He was also required to continue
his development of senior management talent, maintain a first rate
compliance and control culture and remain fully engaged with the
expectations of external stakeholders.

A summary of Manny’s achievements against these objectives is
given in Table R3 on page 50. While his achievement against financial
objectives can be evidenced in quantitative terms, actions relating to
people, culture and control issues are more sensitive and outputs less
quantifiable. The Committee has, nonetheless, exercised rigorous
judgement in its assessment of these areas. Our overall conclusion is
that 2014 represented a great step forward for Man Group, building on
the restructuring of 2013 and delivering on the growth strategy agreed
with shareholders. We believe that Manny deserves full credit for his
strategic focus, commitment and leadership and have awarded him
100% of the maximum award (being 250% of salary) as his short-term
cash bonus for the year.

Jonathan Sorrell
Jonathan Sorrell’s 2014 objectives were built around continuing the
rationalisation and efficiency drive started the previous year. These
included concluding the agreement with the FCA on revised regulatory
capital requirements, enhancing the balance sheet and maintaining
a relentless focus on cost discipline. Also essential were initiatives to
ensure, with a reduced headcount, improved internal management
reporting, a robust external reporting function, effective finance
team development and succession planning, and refocusing of the
shareholder engagement programme.

More quantitative disclosure of achievements is possible in respect of
Jonathan’s objectives (see Table R4 on page 51) although certain areas
remain subject to Remuneration Committee judgement. Our overall
conclusion is that Jonathan has had another excellent year as CFO,
a view which is supported by shareholder feedback, and we have,
therefore, awarded him 100% of the maximum award (being 250%
of salary) as his short-term cash bonus for the year.

Salary increase
Jonathan was appointed as CFO in June 2012, at which time he had
no previous experience in such a role. His base salary was set at that
time to reflect this. Since then, Jonathan has grown to be a seasoned
CFO, his performance has been outstanding and his role has expanded
to include Operations and Technology, Human Resources, Facilities
and Communications. In recognition of this growth, the Committee
recommended to the Board that Jonathan’s base salary be increased
from $625,000 p.a. to $750,000 p.a with effect from 1 April 2015.

Long-term deferred bonus under the DEIP
Table R5 on pages 52 and 53 sets out: (a) the arithmetic calculation of
directors’ achievement against the quantifiable KPIs which account for
80% of their potential deferred bonus award; and (b) the Committee’s
assessment of their achievement against the remaining 20% attributable
to culture and talent issues. It should be noted that the structure of the
DEIP means that the awards made in respect of 2014 take account of
performance in both 2013 and 2014, with the metrics for each year in
each category being averaged to calculate the outcome for the two year
period. 2014 is the final year of transition under the DEIP so that from the
end of 2015 and going forward, awards will be based on performance
averaged over the preceding three year period.

An outcome of 20.0% of the potential award has been achieved against
the KPIs, with the gains made in 2014 being offset by the already
reported weaker performance in 2013. The Committee has similarly
taken account of performance in both years in making its judgement
on the directors’ achievement against the culture and talent element
of the DEIP. It believes that Manny and Jonathan have worked together
over a demanding two year period to tackle the people management as
well as the financial issues confronting the Company. They have taken
the necessary steps to reduce and redeploy headcount, rightsize the
business, bring in new talent and motivate and maximize the value of the
new management team. They continue to pursue initiatives to promote
gender diversity and its benefits within senior roles and have led the
development of a clear statement of business principles to be embraced
and embodied in staff behaviours Group wide. In recognition of this
achievement, the Committee has awarded each of them 100% of the
maximum 20% of the award which is attributable to the culture and talent
element of the DEIP. This brings their total achievement under the DEIP
to 40.0% of the maximum award (the maximum being 350% of salary).

MAN GROUP PLC / ANNUAL REPORT 2014CORPORATE GOVERNANCE
46

Directors’ remuneration report continued

As in the previous year, the Committee considered whether the
percentage level of award derived from the balanced scorecard was
justified in the light of the underlying performance of the business.
It concluded that, taking account of the progress outlined in this report
and the financial outturn for the year, no discretionary downward
adjustment to the award was appropriate in 2014. The Committee’s view
in this respect is supported by the TSR experience of our shareholders
during 2014 (one of the highest in the FTSE 250), the growth in our
market capitalisation and the increase in both adjusted management
fee and total EPS.

Directors’ remuneration report contents

1. Chairman’s annual statement

2. Directors’ remuneration report 2014

Remuneration Committee

2.1 Membership and attendance

2.2

Independent advisers

2.3 Meeting schedule

Agenda for 2015
For 2015, we have expanded the suite of funds over which the
performance metric of the DEIP is measured to include a specific
Numeric performance metric as highlighted in note (b) to Table R19
on page 59.

We are aware of the new provision introduced by the 2014 UK Corporate
Governance Code for the implementation of malus and clawback in
respect of directors’ awards. I have already highlighted the fact that
our DEIP operates in such a way as to create a very substantial level of
deferred remuneration which is subject to malus. This has the potential,
assuming an annual DEIP award level of 50% on average, to increase
to a value of up to seven times salary at any given time. Consideration
will be given during the year to our position on the clawback of awards
already paid.

We will continue to evolve our thinking on remuneration policy during
2015. A key element of this process is to assess our policy in the light of
the Company’s business development and priorities and the consequent
requirement to attract and retain key staff. We also take account of the
competitive landscape and the level of compensation paid within industry
peers, both listed and private. We will, as previously mentioned, consult
with major shareholders on their views on the operation of our policy in
practice and on any other matters discussed in this report which may
be of interest or concern.

Phillip Colebatch
Chairman of the Remuneration Committee

Man Group’s Statement of Remuneration Principles and our Directors’
Remuneration Policy (as approved by shareholders at the 2014 AGM)
are available on our website www.man.com/remuneration-committee.

2.4

Committee activities during 2014 and the early
part of 2015

2.5 2014 Committee evaluation

2.6 Shareholder voting and engagement

2.7

2.8

2.9

Remuneration outcomes in 2014

Single total figure of remuneration for
executive directors

Short-term annual bonus in respect of
2014 performance

Long-term deferred bonus in respect of
2014 performance under the Deferred Executive
Incentive Plan

2.10 Single total figure of remuneration for

non-executive directors

2.11 Percentage change in CEO remuneration

2.12 Relative importance of spend on pay

2.13 Review of past performance

2.14 Payments to past directors (audited)

2.15 Directors’ interests

2.16 Retirement benefits

Implementation of directors’ remuneration policy
for 2015

2.17 Base salary

2.18 Short-term annual cash bonus for 2015

2.19 Long-term deferred bonus for 2015 under the Deferred Executive

Incentive Plan

2.20 Non-executive director remuneration policy for 2015

Summary of directors’ remuneration policy

3.1. Summary of executive directors’ remuneration policy

3.2 Non-executive directors’ remuneration policy

3.3 Service contracts and exit payment policy

MAN GROUP PLC / ANNUAL REPORT 2014 CORPORATE GOVERNANCE

2. Directors’ remuneration report 2014

Remuneration Committee

The Committee’s role is to determine and agree with the Board the Company’s remuneration philosophy and the principles of its remuneration policy
which are aligned with the business strategy, objectives and values, comply with all regulatory requirements and promote long-term shareholder
interests. The Committee agrees with the Board the specific remuneration policy for the executive directors, as presented to shareholders for their
approval, and oversees its implementation. It then determines and recommends to the Board for approval the total compensation packages for
individual executive directors, based on their achievement against objectives set by the Committee and Board at the start of the year and within the
shareholder approved remuneration policy. It also reviews and recommends to the Board for approval the remuneration of the Chairman. Full terms
of reference for the Committee, which are reviewed on an annual basis, are available on the Company’s website.

2.1 Membership and attendance
The Committee members at the date of this report are Phillip Colebatch (Chairman), Jon Aisbitt, John Cryan and Nina Shapiro. Fred Jolly was a
member of the Committee during 2014 until his retirement from the Board at the 2014 AGM. John Cryan was appointed a director and a member of
the Committee on 15 January 2015 after a full search and selection process as detailed in the Nomination Committee report on page 42. The other
members of the Committee served throughout the year.

Meetings are regularly attended by Manny Roman, CEO, and Jonathan Sorrell, CFO. The Committee is supported by members of the Reward,
Compliance and Regulatory and Executive Incentive Plans teams who attend meetings when required to provide information and advice on
remuneration, regulatory and incentive plan matters. The Company Secretary acts as Secretary to the Committee and supports the Committee
Chairman’s engagement with shareholders.

Time is scheduled at the end of each meeting for private discussion between Committee members without the presence of advisors, executive
directors or management. No Committee member or attendee is present when matters relating to his or her own remuneration are being discussed.

2.2 Independent advisers
Kepler Associates (‘Kepler’) provide the Committee with advice on specific remuneration issues such as the benchmarking of directors’ compensation
in the asset management sector and trends in market practice and regulatory disclosures. Kepler provide no other services to the Company and have
confirmed that they have no other business relationship with the Company or its management. The Committee is satisfied on this basis that the advice
it receives is objective and independent. The total fees paid to Kepler in 2014 were £36,625.

2.3 Meeting schedule
The Committee met six times during 2014 with attendance by members as indicated below. In addition, certain share incentive plan decisions
requiring approval between scheduled meetings were agreed by email exchange or written resolution.

Phillip Colebatch

Jon Aisbitt

John Cryan(a)

Fred Jolly(b)

Nina Shapiro

Meetings attended

Notes:
(a) John Cryan was not appointed as a non-executive director and a member of the Committee until 15 January 2015. He was not, therefore, eligible to attend any meetings

during 2014.

(b) Fred Jolly retired from the Board at the 2014 AGM after attending all three Committee meetings held prior to that date.

MAN GROUP PLC / ANNUAL REPORT 2014CORPORATE GOVERNANCE
48

Directors’ remuneration report continued

2.4 Committee activities during 2014 and the early part of 2015
The table below shows the main areas of Committee activity and decision making during the above period, evidencing its direction and governance
of Man Group’s senior management and executive director reward. The Committee Chairman summarises for the Board the main matters addressed
at each Committee meeting. He also provides input into and challenge, from a remuneration perspective, of Board discussions on budgets, business
unit contribution and the compensation structures of proposed acquisitions.

Remuneration Committee activities
Reward Decisions

Executive directors and Chairman

Senior Management

Governance

Financial Regulation

Shareholder Engagement

Approved lists of AIFMD
and BIPRU Remuneration
Code staff.

Approved management’s
application of the AIFMD
proportionality rules to
the payout of deferred
compensation to
investment managers.

Approved delegations
for the operation of the
Company’s Deferred Share
and Fund Product Plans
including the rules on the
vesting of awards for good
leavers and the grant of
buyout awards.

Provided oversight of the
adoption of new Deferred
Share and Fund Product
Plans by investment
management partnerships.

Discussed and agreed
the Company’s response
to shareholder feedback
on the consultation on the
directors’ remuneration
policy.

Reviewed shareholder
feedback on the 2013
Directors’ remuneration
report and voting on the
2014 AGM resolutions.
Agreed shareholder
engagement programme
in response.

Discussed and evaluated
the Committee Chairman’s
feedback from shareholder
engagement meetings.

Reviewed the new UK
Corporate Governance
Code provisions and noted
the need to consider Man
Group’s position on malus
and clawback.

Reviewed and
recommended to the Board
the senior management
bonus pool and the policy
on the level of deferral for
bonus awards.

Reviewed and approved
Executive Committee
salaries and bonuses
proposed by the CEO.

Approved salaries and
bonuses for BIPRU and
AIFMD Remuneration Code
staff. Provided oversight of
salaries and bonuses for
senior control roles and
top earners.

As part of the year end
compensation review,
considered salary, bonus
and total compensation
benchmarks for other listed
asset managers and FTSE
250 companies.

Assessed executive
directors’ performance
against short-term
objectives and long-term
metrics under the DEIP and
recommended cash bonus
and deferred share awards
to the Board for approval.

Reviewed and agreed
executive directors’
objectives for the following
year prior to Board
approval.

Approved minor changes
to the fund performance
metrics for deferred share
awards under the DEIP.

Reviewed and
recommended
Chairman’s remuneration
to the Board for approval.

Reviewed and agreed the
Directors’ remuneration
report prior to Board
approval.

As part of the year end
compensation review:

(a) considered the

accounting judgements
made in the year end
accounts and any
impact on the reported
profit and the bonus
pool; and

(b) assessed any risk and
compliance issues
which needed to be
taken into account
in the determination
of individual senior
management bonuses.

Reviewed and approved
the vestings outcomes
of awards made under
legacy incentive plans for
former directors.

Reviewed and
recommended to the
Board for approval
updated Committee terms
of reference.

Reviewed the outcomes of
the annual Remuneration
Committee evaluation and
agreed priorities for the
following year.

MAN GROUP PLC / ANNUAL REPORT 2014 CORPORATE GOVERNANCE49

2.5 2014 Committee evaluation
The Committee decided, following Fred Jolly’s departure and pending the appointment of a new Committee member, to conduct an internal
evaluation for 2014. A number of areas of the Committee’s effectiveness were tested by means of a written self-assessment completed by members
and executive director attendees and suggestions for improvement were invited in each case. A summary of the findings of the evaluation was
presented to the Committee in January and priority areas for 2015 were discussed.

The overall view emerging was that the Committee provided an effective forum for open debate and constructive challenge on executive reward,
with members’ candid discussions and the responsiveness and engagement of executive director attendees being seen as an area of strength. The
Committee commended the executive directors’ clear differentiation between individual senior managers in their compensation recommendations
and believed that due regard was taken of risk and compliance issues in reward decisions. There was appreciation of the sustained and ongoing
shareholder engagement programme and the Chairman’s regular feedback on his dialogue with key investors and shareholder representative bodies.

The following priorities were agreed for 2015:

– providing a comprehensive induction for John Cryan as a new Committee member to enable him to play a full part in Committee decision making

as quickly as possible;

– spending sufficient time on in depth discussion of incentive and reward, including the assessment of the current directors’ remuneration policy

in the context of the Company’s development, the competitive landscape and internal relativities;

– consideration of management’s adherence to the Company’s recently published business principles to be built into reward decisions; and
– continuing the development and update of Committee members’ knowhow.

2.6 Shareholder voting and engagement
At last year’s AGM, as shown in the table below, some 96% of the votes cast were in favour of our remuneration policy and report and some 97% were
in favour of our DEIP. There was, however, a sizeable level of abstention in respect of the remuneration report. The Committee sought to understand
and address the reasons for the abstention through meetings between the Chairman, key shareholders and shareholder voting bodies in the course
of the year. The Chairman’s annual statement explains some of the queries relating to our directors’ remuneration structure raised by shareholders
in those meetings and we hope that this will help address any uncertainties which may have led to their abstention last year.

At the AGM held on 9 May 2014, votes cast by proxy and at the meeting in respect of directors’ remuneration were as follows:

Resolution

Votes for

% for

Votes against

% against

Total votes cast

Table R1

Votes withheld
(abstentions)

Approve the directors’ remuneration policy

968,686,157

96.46%

35,530,721

3.54% 1,004,216,878

46,303,204

Approve the annual report on remuneration

698,611,562

96.53%

25,124,839

3.47%

723,736,401

326,783,681

Approve the adoption of the Man Group 2013

979,737,878

97.69%

23,139,224

2.31% 1,002,877,102

47,642,980

Deferred Executive Incentive Plan (DEIP)

Remuneration outcomes in 2014

2.7 Single total figure of remuneration for executive directors
The table below sets out a single figure for the total remuneration received by each director for the year ended 31 December 2014 and the prior year.

Single total figure of remuneration for executive directors (audited)

Table R2

All figures in USD

Salary

Taxable benefits

Short-term variable

Long-term variable(b)

Pension benefits

Other(c)

Total

Executive directors

Emmanuel Roman(a)

Jonathan Sorrell

2014

2013

2014

2013

1,000,000

625,000

56,122

49,804

2,776

3,059

2,500,000

1,750,000

1,562,500

1,400,000

595,583

875,000

372,240

109,813

–

86,695

1,857

1,776

1,857

85,059

1,636

5,067,792

3,397,163

3,153,828

2,649,494

Notes:
(a) Emmanuel Roman is a non-executive director of Grupo Prisa SA; he retains fees of €124,500 (€30,000 was awarded as shares) in respect of this directorship.
(b) Long-term variable remuneration is subject to deferral under the Deferred Executive Incentive Plan. Please refer to Tables R5 and R6 for further information.
(c) ‘Other’ refers to non-taxable benefits (including life insurance and Group income protection).

MAN GROUP PLC / ANNUAL REPORT 2014CORPORATE GOVERNANCE
50

Directors’ remuneration report continued

2.8 Short-term annual bonus in respect of 2014 performance
The short-term annual cash bonus is based on the Remuneration Committee’s assessment of executive directors’ performance against objectives
agreed by the Board at the beginning of the year. Tables R3 and R4 show the results of this assessment for 2014.

Chief Executive Officer (audited)

Table R3

Assessment category

Objectives

Achievements

Strategy, structure and people

– Deliver one or two strategic acquisitions in

– The Numeric and Silvermine Capital

the US.

– Develop first rate asset management

culture.

acquisitions have diversified Man Group’s
product offering, extended the US footprint
and been positively received by the market.
– Man Group’s brand, staff morale and price/
earnings ratio strengthened and increased
(p/e ratio up from 13.3 to 16.0 over the year).

– Mentor Executive Committee members.

– Key continuing area of focus with frequent

reporting to the Board.

– Retain and attract key people.

– Ongoing recruitment programme involved

personal meetings with 87 potential
candidates and resulted in a number of
impactful high profile industry hires. A total of
31 one to one career development meetings
held with staff.

Performance and sales

– Improve investment performance.

– Outstanding performance in AHL with

– Grow assets under management and

achieve 10% year on year growth target.

Financial health

– Manage and control costs.

the four main strategies generating 15%+
returns. Performance mixed and in parts
disappointing in GLG and FRM.

– Six quarters of net inflows achieved by end of
2014. Sales in 2014 exceeded expectations
but the level of redemptions, particularly in
FRM, meant that year on year inflow growth
target was not achieved.

– The cost discipline introduced in 2013 has
been actively maintained and target cost
reductions have been exceeded. Bonus
recommendations and decisions have
been measured and awards differentiated.
The operating leverage created by the
restructuring has contributed to healthy
shareholder returns (adjusted management
fee EPS and total EPS up 22% and 65%
respectively). Improved market sentiment led
to an 89% share price increase over the year.

Risk, compliance and reputation

– Maintain best of breed legal and compliance

– The compliance and control culture is

control.

reflected in the lack of any serious problem
arising during the year.

External stakeholder engagement

– Maintain high quality engagement with

– Programme of 23 shareholder meetings,

external stakeholders.

with additional calls to follow up results and
acquisition announcements, reportedly well
received by investors. Strong engagement at
senior level with the FCA.

Total resulting level of award as a percentage of maximum opportunity of up to
250% of salary

Award as a percentage of salary

Quantum of award

100%

250%

$2,500,000

MAN GROUP PLC / ANNUAL REPORT 2014 CORPORATE GOVERNANCE51

Chief Financial Officer (audited)

Table R4

Assessment category

Objectives

Achievements

Strategy, structure and people

– Conclude capital requirements discussions

– Regulatory capital discussions effectively

with the FCA.

concluded.

– Devise and execute appropriate capital and
funding plan; seek balance sheet funding
efficiencies.

– Used $115m of performance fee profit
to execute share buyback programme.
Opportunistic issuance of $150m lower
Tier 2 capital to fund the expansion of the
seed portfolio.

– Execute legal entity rationalisation and

reduction programme.

– Achieved rationalisation target with 21 entities
put into liquidation/dissolved during 2014.

– Develop Finance team talent to facilitate

– Responsibilities of four key managers

effective succession planning.

P&L and financial health

– Deliver Phase II cost savings programme

and 2014 cost budget.

broadened. Tax team restructured. Finance
team 360° feedback exercise undertaken
for personal development. Individual career
development discussions held with all
team members resulting in a number of
internal moves.

– Phase II cost savings ahead of schedule
with 2014 H2 annualised fixed costs of
$285m vs $305m on a like for like basis.
2014 non-compensation costs and fixed
compensation costs ahead of target on a like
for like basis ($146m vs $169m and $151m
vs $161m respectively).

– Deliver accurate financial forecasting on

– P&L, balance sheet and cashflow re-forecast

a timely basis.

monthly. Improved monthly reporting to
the Board including more detail on fund
performance, performance fees and the
impact of acquisitions.

– Rationalise internal reporting framework and
improve information provided; complete new
AUM reporting process and assurance

– New internal AUM reporting process with

assurance from Deloitte implemented during
the year.

– Verify execution of agreed hedging strategy.

– Quarterly hedging of Sterling and Swiss

francs achieved in line with agreed policy.

Risk, compliance and reputation

– Maintain effective and robust external

– No significant financial reporting or

reporting function.

– Achieve a smooth transition to the
engagement of Deloitte as auditors.

accounting issues/errors identified by
auditors/regulators during the year.

– Smooth transition to new audit firm with Man
Group and Deloitte staff working effectively
together. No significant issues raised by
auditors to date.

– Maintain effective financial control

– RCSA recommendations implemented and

environment, particularly in the context
of headcount reduction and fulfil RCSA
recommendations.

periodic review process embedded.

External stakeholder engagement

– Communicate effectively with buyside and

sellside communities.

– Re-focus Investor Relations effort to target

investors more effectively.

Total resulting level of award as a percentage of maximum opportunity of up to
250% of salary

Award as a percentage of salary

Quantum of award

– One to one meetings held with 19 sellside
analysts to promote their understanding of
Man Group’s equity proposition. Further
assistance to buyside and sellside to improve
their financial modelling. Proactive follow
up calls with top shareholders following
acquisitions.

– Focused post results roadshows on major
shareholders/genuine interest investors to
ensure the effective use of management time.

100%

250%

$1,562,500

MAN GROUP PLC / ANNUAL REPORT 2014CORPORATE GOVERNANCE
52

Directors’ remuneration report continued

2.9 Long-term deferred bonus in respect of 2014 performance under the Deferred Executive Incentive Plan
The long-term deferred bonus plan awards are determined by an assessment against a balanced scorecard of performance criteria for each executive
director, with 80% determined by financial criteria and 20% non-financial criteria. Table R5 shows the result of this assessment for 2014. Performance
is measured for each of the two preceding reporting years (2013 and 2014) and then averaged. Additional information on Man’s KPIs is set out on
page 15.

Long-term deferred bonus – 2014 outcome of balanced scorecard of financial and non-financial metrics (audited)

Table R5

Financial KPI

Weight

Target

Achievement

Percentage
of target
achieved
over 2 year
performance
period
(2013/14)

Percentage
of weighting
achieved
over 2 year
performance
period
(2013/14)

Investment performance

25%

– Net performance ≤ benchmark
performance, criteria is not met.
– Net performance > benchmark
performance, criteria is met.

2013: Achieved one out of the three
performance targets.

2014: Achieved one out of the
three performance targets. AHL’s
performance was strong and the
target was met. FRM’s performance
was positive although the stretch
target was not met. GLG also did
not meet the target.

Average: In both years, one out
of the three performance targets
was met.

33.3%

8.3%

Net flows

25%

– Net flows ≤ 0%, criteria is not met.
– Net flows ≥ 10%, criteria is met

2013: Net flows were below target with
a net outflow of 6.3%.

in full.

– 0% < Net flows < 10%, criteria is

met proportionally.

Adjusted management
fee EBITDA margin

15%

– Adjusted management fee EBITDA
margin ≤ 25%, criteria is not met.
– Adjusted management fee EBITDA
margin ≥ 40%, criteria is met in full.
– 25% < adjusted management fee
EBITDA margin < 40%, criteria is
met proportionally.

2014: Net inflows were 6.1%, a marked
improvement on 2013. Inflows were
recorded in quant and discretionary
alternatives and in long-only products.

Average: There was an
aggregated net outflow over the
two year period, with an average
net outflow of 0.1%.

2013: The adjusted management fee
EBITDA margin of 36.0% was within
the target range for the year.

2014: The adjusted management
fee EBITDA margin of 30.3% was
within the target range for the year,
but lower than in 2013, reflecting the
general product mix shift from higher
margin retail assets to lower margin
institutional assets.

Average: The average adjusted
management fee EBITDA margin
for the two year period was
33.2%.

54.7%

8.2%

MAN GROUP PLC / ANNUAL REPORT 2014 CORPORATE GOVERNANCE53

Long-term deferred bonus – 2014 outcome of balanced scorecard of financial and non-financial metrics (audited)

Table R5

Financial KPI

Weight

Target

Achievement

Adjusted management fee
EPS growth

15%

– Adjusted management fee EPS
growth ≤ 0% plus RPI, criteria
is not met.

– Adjusted management fee EPS
growth ≥ 20% plus RPI, criteria
is met in full.

– 0% plus RPI, < adjusted

management fee EPS growth
< 20% plus RPI, criteria is
met proportionally.

2013: The adjusted management
fee EPS growth in excess of RPI was
below target (-16.8%) primarily as a
result of the decline in management
fee revenue and the overall gross
margin, partly offset by reduced costs.

2014: The adjusted management fee
EPS growth in excess of RPI (26.2%)
was above the top end of the range,
primarily as a result of significantly
reduced costs and lower finance
expense, partly offset by a decline
in management fee revenue.

Average: The average adjusted
management fee EPS growth
over the two year period is 4.7%,
which is within the target range.

Non-financial metrics

Culture and talent

20%

– Judgement made by the

Remuneration Committee
and Board.

Outcome over 2 years
(2013 and 2014):

Percentage
of target
achieved
over 2 year
performance
period
(2013/14)

Percentage
of weighting
achieved
over 2 year
performance
period
(2013/14)

23.5%

3.5%

Renewed sense of accountability
and achievability in leadership
team. Restructured the Executive
Committee, the Investment
Management and Sales organisations
and Group functions.

Substantial changes in senior roles
and people over the period have
effectively changed the whole of
the top management team.

Engaged the Executive Committee
in the creation and Group wide
communication of a clear set of
business principles to be embraced
by all staff and adopted in all external
communications.

Pursued and supported initiatives
to promote gender diversity at
senior management level including
graduate research, recruitment
practices and internal mentoring
and support networks.

The CEO and CFO worked
together on these achievements
over the two year period and
both have been awarded the
same rating.

100%

20%

Total resulting outcome as a percentage of maximum opportunity of up to 350% of salary.

40.0%

MAN GROUP PLC / ANNUAL REPORT 2014CORPORATE GOVERNANCE
54

Directors’ remuneration report continued

Scheme interests to be awarded under the Deferred Executive Incentive Plan in relation to 2014 (audited)

Table R6

Executive director

Emmanuel Roman

Jonathan Sorrell

Award (% of
maximum)

Award value(a)

(USD)

End of holding
period date

40.0% 1,400,000

40.0%

875,000

Mar-20

Notes:
(a) Awards in respect of the financial year ended 31 December 2014 are calculated according to performance against a balanced scorecard, as shown in table R5. These will be

converted into a number of shares using the USD/GBP rates and mid-market share price quoted on the award date which is expected to be in mid-March 2015. Awards are due
to be granted as conditional awards of shares and will vest three to five years after grant, subject to the Plan rules. Details of awards made under the Deferred Executive Incentive
Plan in relation to performance in 2013 can be found in Table R14.

2.10 Single total figure of remuneration for non-executive directors
The table below sets out a single figure for the total remuneration received by each non-executive director for the year ended 31 December 2014 and
the prior year.

Single total figure of remuneration for non-executive directors (audited)

Table R7

All figures in GBP

Jon Aisbitt

Phillip Colebatch(a)

Andrew Horton(b)

Fred Jolly(c)

Matthew Lester

Dev Sanyal(d)

Nina Shapiro(e)

Total fees

2014

2013

450,000

115,000

100,224

80,000

27,019

95,000

80,000

75,000

32,821

75,000

95,000

6,667

77,955

Notes:
(a) Phillip Colebatch was appointed Senior Independent Director and a member of the Audit and Risk Committee on 3 August 2013.
(b) Andrew Horton was appointed to the Board and as a member of the Audit and Risk Committee on 3 August 2013.
(c) Fred Jolly stepped down from the Board on 9 May 2014.
(d) Dev Sanyal was appointed to the Board and as a member of the Audit and Risk Committee on 1 December 2013.
(e) Nina Shapiro ceased to be a member of the Audit and Risk Committee and was appointed to the Remuneration Committee on 3 August 2013.

2.11 Percentage change in CEO remuneration
The table below sets out the percentage change in remuneration for the CEO and staff.

Percentage change in CEO remuneration

Salary

Taxable benefits

Short-term variable

2014

CEO(a)

2013

Table R8

All Staff

All figures in $’000s

% change

% change(b)

1,000

2,500

1,000

1,750

12%

43%

-3%(c)

Notes:
(a) Emmanuel (Manny) Roman joined Man Group as part of the GLG acquisition. As part of this, he acquired a significant shareholding in Man Group and contractually committed to

retain those shares for a period. Along with selected other senior GLG management, he committed to work for the effective integration of GLG into Man Group, to receive only a
fixed salary (of $1 million) and agreed not to be eligible to participate in any bonus plan. During this period he became a key member of the Man Group senior management team.
These acquisition arrangements subsequently expired and, in recognition of his broad contribution, he was appointed CEO in February 2013. The Board determined at that time
that it would be inappropriate to reduce his salary upon appointment to CEO and that his incentive compensation should transition over a short period to an approach consistent
with the arms’ length market for this role. Calendar year 2014 was the first year of that transition. A summary of Manny’s achievements against his 2014 objectives is given in Table
R3 on page 50. The Committee concluded that he deserved full credit for his strategic focus, commitment and leadership during 2014 and, therefore, awarded him 100% of the
maximum award as his short-term cash bonus for the year.

(b) Figures are calculated on a per capita basis.
(c) Excluding joiners and leavers, salaries on a per capita basis increased by 5% from 2013 to 2014.

MAN GROUP PLC / ANNUAL REPORT 2014 CORPORATE GOVERNANCE55

2.12 Relative importance of spend on pay
The table below shows the year on year change in total employee expenditure compared to the change in shareholder distributions.

Relative importance of spend on pay

Total employee expenditure(a)

Shareholder distributions(b)

2014
$m

391

278

2013
$m

445

277

Table R9

%
change

-12%

Notes:
(a) Remuneration paid to or receivable by all employees (i.e. accounting cost). Refer to Note 6 to the financial statements for further details.
(b) Distributions to shareholders (dividends paid of $163m and repurchase of shares of $115m in the year).

2.13 Review of past performance
The performance graph below compares the Company’s total shareholder return performance against the FTSE 350 Financial Services Index. Man
Group operates in the alternative investment management sector and is listed on the FTSE 250 Index on the London Stock Exchange. The FTSE 350
Financial Services Index has been chosen as it is the most appropriate comparator to cover a period when Man has been in both the FTSE 100 and
FTSE 250. The majority of Man Group’s direct competitors are unlisted and information is not available.

236

3
1
c
e
D

Table R10

263

125

4
1
c
e
D

Source: Datastream

Table R11

300

250

200

150

100

9
0
r
a
M

151

121

0
1
r
a
M

178

136

1
1
r
a
M

150

1
1
c
e
D

180

2
1
c
e
D

Man Group TSR
FTSE 350 Financial Services TSR

Historical CEO remuneration

Accounting period ended

CEO single figure ($’000s)

Short-term variable award (as a percentage of

maximum opportunity)(c)

Long-term variable award (as a percentage of

maximum opportunity)(c)

31 March
2010

31 March
2011(a)

31 December
2011(b)

31 December
2012

31 December
2013(d)

31 December
2014

P Clarke

6,299

P Clarke

8,173

P Clarke

6,437

P Clarke

1,048

P Clarke

E Roman

978

3,397

5,068

n/a

70%

100%

17%

40%

Notes:
(a) Salary and benefits are for 12 months and bonus for 9 months.
(b) Salary and benefits are for 9 months and bonus for 12 months.
(c) For the accounting periods ended up to and including 31 December 2012, as there was no cap on the overall maximum bonus awards, the percentage of maximum opportunity

is not shown.

(d) Peter Clarke stepped down as CEO with effect from 28 February 2013 and was on garden leave until his retirement on 10 December 2013. Emmanuel Roman became CEO

on 28 February 2013.

MAN GROUP PLC / ANNUAL REPORT 2014CORPORATE GOVERNANCE

Directors’ remuneration report continued

2.14 Payments to past directors (audited)
There were no remuneration payments made to former executive directors during the year.

In the annual report on remuneration for the financial year ended 31 December 2013, awards granted under the Performance Share Plan (PSP) and
Man Group Executive Share Option Schemes (ESOS) to former directors Peter Clarke and Kevin Hayes were reported under Table R21 and R22
respectively. These outstanding awards lapsed during the financial year ended 31 December 2014.

Share option awards that were granted under the Deferred Bonus Share and Option Plan (DBSOP) in June 2010 to former director Kevin Hayes
lapsed during the year. All the other DBSOP share options and conditional shares awards granted to former directors Peter Clarke and Kevin Hayes,
as reported under Table R19 in the annual report on remuneration for the financial year ended 31 December 2013, remain outstanding.

2.15 Directors’ interests

Directors’ interests in shares of Man Group plc (audited)

Executive directors

Emmanuel Roman(c)

Jonathan Sorrell

Non-executive directors

Jon Aisbitt

Phillip Colebatch

Andrew Horton

Fred Jolly

Matthew Lester

Dev Sanyal

Nina Shapiro

Table R12

Number of
ordinary

shares(a)

31 December
2014(b)

Number of
ordinary
shares(a)
31 December
2013

18,745,969(d) 19,629,418

544,361

425,791

1,681,251

10,000

50,000

10,000

50,000

9,705(e)

9,705

22,692

64,287

28,258

22,692

60,947

28,258

Notes:
(a) All of the above interests are beneficial.
(b) There has been no change in the directors’ interests in the ordinary shares of Man Group plc from 31 December 2014 up to 24 February 2015, being the latest practicable date

prior to the publication of this report.

(c) Emmanuel Roman also holds 50,000 Deferred Sterling shares of £1 each. These shares are held to satisfy a requirement of the Companies Act 2006 and carry no voting rights

or rights to distributions.

(d) On 19 December 2014, Emmanuel Roman transferred 668,449 ordinary shares in Man Group plc to Tate Americas Foundation and 215,000 ordinary shares in Man Group plc

to the University of Chicago, both transfers being gifts for nil consideration.

(e) Interest as at 9 May 2014, the date on which Fred Jolly stepped down from the Board.

The market price of the Company’s shares at the end of 31 December 2014 was 160.5 pence. The highest and lowest daily closing share prices
during the 12 month financial period were 160.5 pence and 81.05 pence respectively.

Executive directors’ shareholdings measured against their respective shareholding requirement as at
31 December 2014

Table R13

Executive directors

Emmanuel Roman

Jonathan Sorrell

Shares owned

shareholding(b)

outright(a)

(USD)

Value of

Salary
(USD)

Shareholding
requirement as
a % of salary

Current
shareholding as
a % of salary

Requirement
met?

18,745,969 46,869,965

1,000,000

544,361

1,361,049

625,000

200%

100%

4,687%

218%

Yes

Notes:
(a) Details of unvested share awards can be found under Tables R14 to R17.
(b) Shareholdings valued at 31 December 2014 share price of £1.6050 and an exchange rate of £1=$1.5578.

MAN GROUP PLC / ANNUAL REPORT 2014 CORPORATE GOVERNANCE
57

2.15 Directors’ interests continued
Directors’ interests in shares and options under Man Group long-term incentives

Conditional share awards under the Deferred Executive Incentive Plan (DEIP)(a) – subject to service
conditions (audited)

Table R14

Executive director

Emmanuel Roman

Jonathan Sorrell

Date of
grant

1 January

Granted during

2014

year(b)

Dividends

accruing(c)

31 December

2014

Transfer date

Mar-14

–

116,749

116,751

72,968

72,970

6,481

4,050

123,230

123,232

77,018

77,020

Mar-17

Mar-18

Mar-19

Mar-17

Mar-18

Mar-19

Notes:
(a) The Company’s obligations for the conditional awards granted under the DEIP are hedged by the Employee Trust.
(b) The award values included in Table R16 in the annual report on remuneration for the financial year ended 31 December 2013 were converted into the number of shares

shown above using the USD/GBP rate of 0.6022 and a share price of £1.024, being the mid-market share price on 12 March 2014. These awards attracted dividend accruals.
Further details of the Deferred Executive Incentive Plan can be found in section 2.9 of this report.

(c) On 16 May 2014 dividend accruals of 12,411 and 7,755 shares were added to Emmanuel Roman and Jonathan Sorrell’s awards respectively based on a Sterling dividend

of 3.19 pence. On 3 September 2014, dividend accruals of 7,032 and 4,395 shares were added to Emmanuel Roman and Jonathan Sorrell’s awards respectively based
on a Sterling dividend of 2.37 pence.

Conditional share award under the Deferred Bonus Share and Option Plan (DBSOP)(a) – subject to service
conditions (audited)

Table R15

Executive director

Jonathan Sorrell

Date of
grant

1 January
2014

Dividends
accruing(b)

31 December
2014

Transfer

date

Mar-13

1,099,635

61,055

1,160,690

Mar-16

Notes:
(a) The Company’s obligations for conditional awards granted under the DBSOP are hedged by the Employee Trust. These awards attract dividend accruals.
(b) On 16 May 2014, dividend accruals of 38,970 shares were added to Jonathan Sorrell’s award based on a Sterling dividend of 3.19 pence. On 3 September 2014 dividend accruals

of 22,085 shares were added based on a Sterling dividend of 2.37 pence.

Options granted under the Man Group Deferred Share and Fund Product Plans – subject to service conditions (audited) Table R16

Executive director

Jonathan Sorrell(a)

Deferred Share Plan (DSP)

Fund Product Plan (FPP)(c)

Date of
grant

1 January

2014

Dividends
accruing(b)

Exercised
during period

Aug-11

Mar-12

96,720

92,598

1,063(b)

3,427

100,147

–

92,598

31 December

Earliest exercise

2014

–

date

n/a

Latest
exercise

date

n/a

5,140

–

97,738

Mar-15

Mar-22

–

1,063(b)

–

n/a

–

1,063(b)

Mar-15

Mar-16

Notes:
(a) Jonathan Sorrell was granted nil-cost options under the above Plans prior to his appointment as a director.
(b) On 16 May 2014, dividend accruals of 6,708 shares were added to Jonathan Sorrell’s award based on a sterling dividend of 3.19 pence. On 3 September 2014, dividend accruals

of 1,859 shares were added based on a sterling dividend of 2.37 pence.

Options granted under the Man Group Sharesave Scheme (audited)

Table R17

Executive director

Jonathan Sorrell

Number of options

Date of
grant

1 January

2014

Granted during
year

31 December
2014

Option price

Earliest exercise
date

Latest exercise
date

Aug-12

Sept-14

23,076

–

16,833

23,076

16,833

65.0p

90.0p

Oct-17

Oct-19

Mar-18

Mar-20

2.16 Retirement benefits
Emmanuel Roman and Jonathan Sorrell are not eligible for any defined benefits under the Man Group plc Pension Plan.

MAN GROUP PLC / ANNUAL REPORT 2014CORPORATE GOVERNANCE
58

Directors’ remuneration report continued

Implementation of directors’ remuneration policy for 2015

2.17 Base salary
Salaries are reviewed annually following the year end taking into account market benchmarks for executives of comparable status, responsibility
and skill.

Jonathan Sorrell was appointed CFO in June 2012, at which time he had no previous experience in such a role. His base salary was set at that time
to reflect this. Since then, Jonathan has grown to be a seasoned CFO, his performance has been outstanding and his role has expanded to include
Operations and Technology, Human Resources, Facilities and Communications. In recognition of this growth, the Committee recommended and the
Board has agreed that Jonathan’s base salary be increased from $625,000 p.a. to $750,000 p.a. with effect from 1 April 2015.

No increase in salary has been agreed for Emmanuel Roman whose base salary has remained at $1,000,000 since joining the Company as part of the
GLG acquisition in 2010. (See also footnote (a) to Table R8).

Base salary of executive directors

Base salary at

1 January 2014

1 January 2015

Table R18

Jonathan
Sorrell

Emmanuel
Roman

$625,000 $1,000,000

$625,000(a) $1,000,000

(a) As noted above, the Committee has recommended and the Board has agreed that Jonathan Sorrell’s base salary be increased from $625,000 p.a. to $750,000 p.a. with effect

from 1 April 2015.

2.18 Short-term annual cash bonus for 2015
The objectives for the 2015 bonus have been set by the Committee around:
i. Strategy, structure and people
ii. P&L performance and sales
iii. Financial health
iv. Risk, compliance and reputation
v. External stakeholder engagement

The Remuneration Committee considers that the disclosure of more detailed or quantified objectives would provide an unfair advantage to
Man Group’s competitors, most of whom are not listed and are not required to disclose this information.

CORPORATE GOVERNANCEMAN GROUP PLC / ANNUAL REPORT 201459

2.19 Long-term deferred bonus for 2015 performance under the Deferred Executive Incentive Plan
The KPIs and thresholds that will be used to measure performance are set out below.

Balanced scorecard of financial and non-financial metrics(a)

Table R19

Financial KPIs

Definition

Target

Investment performance
(25%)

– Measure net performance of four managers
(represented by key funds) vs. respective
benchmarks.

– Key funds/benchmark:

– Man AHL Diversified/two of three competitors.
– Numeric asset-weighted net return /composite

benchmark(b).

– Relevant period: performance is measured over the
reporting year (first to last trading days of the year).

– Criteria type: binary outcome.
– Criteria for each fund over the relevant period:

– If Net Performance ≤ Benchmark Performance,

criteria is not met.

– If Net Performance > Benchmark Performance,

– GLG Alternative Strategies Dollar Weighted

criteria is met.

Composite/HFRX.

– Weighting: each fund is ascribed a 1/4 weighting.

Net flows (25%)

– FRM Diversified II/HFRI FoF: Conservative Index.

– Measure net FUM flows annually.
– Net Flows are defined as, over a reporting year:
– (Gross Sales – Redemptions)/Start of Year

FUM, expressed in %.

– Relevant period: net flows are measured over the

reporting year.

– Criteria type: sliding scale.
– Criteria for the relevant period:

– If Net Flows ≤ 0%, criteria is not met.
– If Net Flows ≥ 10%, criteria is met in full.
– If 0% < Net Flows < 10%, criteria is met

proportionally.

Adjusted(c) management
fee EBITDA margin (15%)

– Measure management fee EBITDA margin.
– Adjusted management fee EBITDA margin defined
as, over a reporting year, adjusted management
fee EBITDA/Net Revenues.

– Relevant period: Adjusted management fee EBITDA

margin is measured over the reporting year.

– Criteria type: sliding scale.
– Criteria for the relevant period:

– If adjusted management fee EBITDA margin

≤ 25%, criteria is not met.

– If adjusted management fee EBITDA margin

≥ 40%, criteria is met in full.

– If 25% < adjusted management fee EBITDA
margin < 40%, criteria is met proportionally.

Adjusted(c) management
fee EPS growth (15%)

– Measure adjusted management fee EPS growth, i.e.

– Relevant period: Adjusted management fee EPS

growth in minimum ordinary dividend per share.
– Adjusted management fee EPS growth defined as:
– (Current Year Adjusted Management Fee EPS/
Previous Year Adjusted Management Fee EPS)
-1, expressed in %.

growth is measured over the reporting year.

– Criteria type: sliding scale.
– Criteria for the relevant period:

– If adjusted management fee EPS growth ≤ 0%

plus RPI, criteria is not met.

– If adjusted management fee EPS growth ≥ 20%

plus RPI, criteria is met in full.

– If 0% plus RPI, < adjusted management fee
EPS growth < 20% plus RPI, criteria is met
proportionally.

Non-financial metrics

Culture and talent (20%)

– Fostering a culture of effective dealings with all stakeholders.
– Building and retaining a collaborative, motivated and aligned senior management team.
– Having an appropriate succession plan in place for senior management.
– Attracting and retaining high quality staff motivated by appropriate, balanced incentives.

The Remuneration Committee will review the balanced scorecard of metrics prior to the start of each financial year and may amend them so that
they remain appropriately challenging.

Notes:
(a) The performance period for 2015 awards will be the three-year performance period 2013–2015 and will be assessed at the end of the 2015 financial year. Performance will be

measured for each of the years and then averaged.

(b) The Board has introduced a fourth specific investment performance metric for Numeric from 2015 following the acquisition of Numeric in September 2014. This metric monitors

the outperformance or underperformance of each Numeric strategy based on a predetermined benchmark for each strategy.

(c) Adjusting items are material items which are excluded by virtue of their size or nature in order to aid comparability from period to period and to show the underlying profitability of

the business.

CORPORATE GOVERNANCE MAN GROUP PLC / ANNUAL REPORT 2014
60

Directors’ remuneration report continued

2.20 Non-executive director remuneration policy for 2015
There has been no increase in fees for the Chairman since his appointment in 2007 or for non-executive directors since 2009.

Non-executive directors’ fees for 2015

All figures in GBP
Position

Chairman of the Board

Board fee(a)

Senior Independent Director

Audit and Risk Committee chair

Other Audit and Risk Committee members

Remuneration Committee chair

Other Remuneration Committee members

2015

2014

450,000

65,000

10,000

30,000

15,000

25,000

10,000

65,000

10,000

30,000

15,000

25,000

10,000

Table R20

%
increase

Note:
(a) Includes Nomination Committee membership (all non-executive directors are members of the Nomination Committee).

For and on behalf of the Board.

Phillip Colebatch
Remuneration Committee Chairman
25 February 2015

CORPORATE GOVERNANCEMAN GROUP PLC / ANNUAL REPORT 20143. Summary of directors’ remuneration policy

3.1. Summary of the executive directors’ remuneration policy
Please refer to our website www.man.com/GB/remuneration-committee or pages 42 to 47 of the Man Group 2013 Annual Report for the full directors’
remuneration policy which was approved at and has been in effect since the 9 May 2014 AGM.

Summary of approved executive directors’ remuneration policy

Table R21

Function

Operation

Opportunity

Performance metrics

Base salary
Based on experience and
individual contribution to
leadership and Company strategy

Salaries are reviewed annually
following the year end taking
into account market ranges
for executives of comparable
status, responsibility and skill
in companies of similar size
and complexity to Man with
consideration also given to
sector relevance.

There is no set maximum
salary for executive directors.
In reviewing salaries the
Remuneration Committee
takes into account company
performance, salary increases
below Board level, time since
the last increase and market
practice and total compensation
opportunity.

Continued good performance.

Pension
To provide an opportunity for
executives to build up income
on retirement

Benefits
To provide non-cash benefits
which are competitive in the
market in which the executive
is employed

Sharesave
To encourage UK-
based employees to own
Man Group shares

Executive Incentive Plan
Short-term annual cash bonus

To incentivise and reward strong
performance against annual
financial and non-financial targets

Group Personal Pension (GPP),
or a similar contribution to
an alternative arrangement is
provided. For those exceeding
HM Revenue & Customs pension
allowances, cash allowances are
provided at no additional cost
to Man.

Benefits include family private
medical insurance, life assurance
and permanent health insurance.

Flexible benefits can be purchased
from base salary.

Other ad-hoc benefits such
as relocation can be offered,
depending on personal
circumstances.

The Man Group Sharesave
Scheme is an all-employee plan.
The executive directors who
participate in the Sharesave
Scheme are granted options over
Man shares and make monthly
savings from their post-tax salary.
Options are granted at a 20%
discount to market price on the
date of grant.

Objectives are set at the start of
the year. At the end of the year,
the Remuneration Committee
considers the extent to which
these have been achieved and
sets the award level. Awards are
normally paid in cash.

The maximum employer
contribution is 20% of pensionable
base salary.

None.

It is not anticipated that the total
taxable benefits for any executive
director will normally exceed 10%
of salary.

None.

Savings capped at HM Revenue
& Customs limits.

In accordance with HM Revenue
& Customs requirements.

The maximum award is 250%
of salary.

The bonus is based on the
Remuneration Committee’s
assessment of executive directors’
performance over a financial year
against objectives, which cover:

1. Strategy, structure and people
2. P&L performance and sales
3. Financial health
4. Risk, compliance and reputation

MAN GROUP PLC / ANNUAL REPORT 2014CORPORATE GOVERNANCE
62

Directors’ remuneration report continued

3.1. Summary of the executive directors’ remuneration policy continued

Summary of approved executive directors’ remuneration policy continued

Table R21

Function

Operation

Opportunity

Performance metrics

The EIP deferred awards are
determined in relation to the
performance as described in
the performance metric column
and take account of observed
pay-for-performance market
practice in comparable alternative
investment funds.

The maximum award is 350%
of salary.

Based on a balanced scorecard
of performance criteria for each
executive director.

80% of the award is based on
financial criteria, comprising:

– Investment performance 25%
– Net fund flows 25%
– Adjusted management fee

EBITDA margin 15%

– Adjusted management fee EPS

growth 15%

The remaining 20% of an award
is based on non-financial criteria,
such as culture and talent.

The Remuneration Committee
may adjust the weighting of these
criteria from time to time, to reflect
changes in strategic priorities.

n/a

Executive Incentive Plan
Long-term deferred bonus

To engage and motivate senior
management to deliver on KPIs
and support implementation of the
Company’s strategy.

Shareholding guidelines
To further align the interests
of executive directors with our
shareholders.

Awards are made subject to
assessment based on the three
prior years’ performance against
a balanced scorecard of financial
and non-financial measures.

As part of transitional
arrangements for the new
plan, the performance period
progressively increases to a three-
year performance period. Initially,
performance was assessed over
a one-year period (2013 only).
The performance period for 2014
awards is two years (2013 and
2014) and has been assessed
at the end of the 2014 financial
year. Starting at the end of the
2015 financial year, future awards
will be based on a three-year
performance period.

The above transitional arrangement
will also apply for any executive
director on joining the Board.

The vesting period is set at a
further three to five years after
each performance period, the
resulting combined performance
and vesting periods therefore
being six to eight years from the
start of each performance period.

The number of shares subject
to an award shall be increased
by reference to dividends paid
between the grant and vesting
date of an award, and such shares
shall vest only when the shares
subject to an award vest.

Malus provisions would apply
for misstatement or gross
misconduct.

The Chief Executive Officer
is required to maintain a
shareholding of 200% of base
salary. Other executive directors
are required to maintain a
shareholding of 100% of base
salary. Executive directors
are required to build up this
shareholding on joining the Board
and after a reduction in share
price. Incumbents will build up to
the prescribed shareholdings with
(post-tax) vested shares where not
already at or above this level.

MAN GROUP PLC / ANNUAL REPORT 2014 CORPORATE GOVERNANCE63

3.2 Non-executive directors’ remuneration policy
Non-executive directors have formal letters of appointment. These do not contain any notice provisions or provision for compensation in the event of
early termination. The Chairman has a contract with the Company which provides that his appointment as Chairman is terminable on three months’
notice; there are no notice provisions relating to his appointment as a director. The Board’s policy is to appoint non-executive directors for an initial
three-year term, subject to retirement and reappointment by shareholders annually at the AGM, which may be followed by a further three years by
mutual agreement. Any further extension will be subject to rigorous review. Non-executive directors are also encouraged to build a shareholding
in the Company.

Details of the policy on fees paid to our non-executive directors are set out in the table below.

Non-executive directors’ remuneration policy

Table R22

Function

Operation

Opportunity

Performance metrics

Fees
To attract and retain non-executive
directors of the highest calibre and
experience relevant to Man.

Fees are reviewed annually by
the Board at the year end taking
into account market benchmarks
for non-executives of companies
of similar size and complexity
to Man with consideration of
sector relevance.

Any fee increases for non-
executive directors will not
normally exceed the average
increase in the market. A fee
increase may be above this level
if there is a significant change
in time commitment required or
scope of the role.

None.

The Chairman’s remuneration
is recommended by the
Remuneration Committee and
approved by the Board. Neither
the Chairman nor the non-
executive directors take part
in discussions or vote on their
own remuneration.

Non-executive directors receive
a base fee for Board service
and additional fees for Board
Committee membership and
other responsibilities. They do
not participate in any share
option or share incentive plans.

MAN GROUP PLC / ANNUAL REPORT 2014CORPORATE GOVERNANCE
64

Directors’ remuneration report continued

3.3 Service contracts and exit payment policy

Service contracts

Element

Contract dates

Condition

Jonathan Sorrell: 28 September 2012

Emmanuel Roman: 7 February 2013

Current appointment

No fixed term

Notice period (by either Company
or director)

Emmanuel Roman: 12 months

Jonathan Sorrell: 6 months

Table R23

Contractual entitlement to fixed bonus
or share-based incentive

None

The Company’s policy is that notice periods will not exceed 12 months

Provisions for contract termination

Under both contracts the Company can opt to terminate immediately by making a payment in lieu of
the notice period or part of it. Emmanuel Roman’s contract requires payment of base salary only in lieu.
Jonathan Sorrell’s contract requires payment of base salary plus the value of pension contributions
(or alternative cash allowance) and certain other insured benefits in lieu.

Payments in lieu are to be made in monthly instalments unless the Company and the executive
agree otherwise.

Unless the Company decides otherwise both executives have a duty to mitigate their losses arising from
termination of their employment; any replacement earnings earned in what would otherwise have been
the notice period will reduce the obligation on the Company to make payments in lieu.

The service contracts do not oblige the Company to pay any cash bonus to executive directors and
bonuses are awarded at the Board’s discretion following a recommendation from the Remuneration
Committee. Payment of any cash bonus is conditional upon the executive being in employment
and not under notice at the payment date.

Treatment of deferred bonuses and long-term incentives is governed by the relevant Plan rules.

Short-term annual cash bonus

Long-term deferred bonus
and incentives

To protect the Group’s business interests the executive directors’ service contracts contain covenants which restrict the executives’ ability to solicit or
deal with clients and their ability to solicit senior employees. Emmanuel Roman has also entered into a broader non-compete covenant for an agreed
period post termination.

The Board also has the right at its discretion to require Jonathan Sorrell to comply with a broader non-compete covenant for up to six months post
termination to provide additional protection for the Group. If the Board exercises this right, the Company will pay an additional amount up to six
months’ base salary and the value of pension contributions (or alternative cash allowance) and certain other insured benefits so that he is not left
without income during the time when the Board wishes the non-compete to operate. This amount is paid in two equal instalments and is reduced
by any payments made in lieu of notice.

MAN GROUP PLC / ANNUAL REPORT 2014 CORPORATE GOVERNANCEDirectors’ report

The directors submit their report,
together with the audited consolidated
financial statements, for the year ended
31 December 2014 (the ‘year’).

Shares
Share capital
Details of the movements in the issued share capital, together with the
rights and obligations attaching to the Company’s shares, are set out in
Note 22 to the financial statements. This Note also provides information
on the Company’s unexpired authority to purchase its own shares and
details of the shares purchased by the Company during the year.

Man Group plc is incorporated as a public limited company and
is registered in England with the registered number 08172396.
The Company’s registered office is Riverbank House, 2 Swan Lane,
London EC4R 3AD.

Directors
Details of the current directors, together with their biographies, can be
found on pages 30 and 31. All of the directors shown served during the
year with the exception of John Cryan who was appointed to the Board
as a non-executive director on 15 January 2015. Fred Jolly also served
as a director during the year until his retirement on 9 May 2014.

Details of directors’ interests in the Company’s shares are given on
page 56 of the Annual Report.

Powers of directors
The Board is responsible for the management of the business of the
Company and may exercise all the powers of the Company subject to the
provisions of relevant statutes and the Company’s Articles of Association
(the ‘Articles’). A copy of the Articles is available on the Company’s
website (www.man.com) and by request from the registered office of
the Company. The Articles may be amended by special resolution of
the shareholders.

Appointment, retirement and replacement of directors
The appointment, retirement and replacement of directors are governed
by the Company’s Articles, the UK Corporate Governance Code
and the Companies Act 2006. Under the Articles, the Board has the
power to appoint further directors during the year, but any director so
appointed must stand for reappointment at the next Annual General
Meeting. In accordance with the Articles, one-third of the Board must
retire by rotation at each Annual General Meeting and may stand for
reappointment. In practice, and in accordance with the UK Corporate
Governance Code, all Board members retire and offer themselves
for reappointment at each annual general meeting.

The Articles give the power to a director to appoint any person to be his
alternate, subject to the appointment of such person who is not another
director being approved by the Board.

Directors’ indemnities and insurance cover
The Company has maintained qualifying third party indemnity provision
for the benefit of its directors during the year and this remains in force
at the date of this report. The indemnity is granted by the Company to
new directors on their appointment and covers, to the extent permitted
by law, any third party liabilities which they may incur as a result of their
service on the Board. The Company arranges directors’ and officers’
liability insurance to cover certain liabilities and defence costs which
the Company indemnity does not meet. Neither the indemnity nor the
insurance provides any protection in the event of a director being found
to have acted fraudulently or dishonestly in respect of the Company.

Substantial voting interests
As at 24 February 2015 the following voting interests in the ordinary share
capital of the Company disclosable under the FCA’s Disclosure and
Transparency Rules (‘DTR’) have been notified to the Company.

Shareholder

Société Générale SA, Société Générale Option Europe,

and Société Générale Acceptance(1)

Odey Asset Management LLP
TIAA-CREF Investment Management LLC and Teachers

Advisors, Inc.(2)

9.16
5.91
4.97

Notes:
(1) As at 17 February 2015, Société Générale SA, Société Générale Option Europe,
and Société Générale Acceptance (together, ‘Société Générale’) held a 9.16%
notifiable interest in Man Group’s issued share capital. The majority of this (9.07%)
related to cash-settled derivatives with no voting rights which are however required
to be notified to us under DTR 5.3.1R(1)(b), being financial instruments with a similar
economic effect to qualifying financial instruments. (This generally means that the
holder has a long position on the economic performance of the underlying shares.)
The remaining 0.09% of Société Générale’s interest as at 17 February 2015 consisted
of direct and indirect interests in voting rights attached to shares in the Company.
(2) As at 21 October 2014, TIAA-CREF Investment Management LLC held a 2.27%
interest in the Company’s issued share capital and Teachers Advisors, Inc. held
a 2.70% interest in the Company’s issued share capital. Teachers Advisors Inc.
is affiliated with TIAA-CREF Investment Management LLC.

Restriction on voting rights
Where shares are held in employee benefit trusts for the satisfaction
of awards made under the Company’s share schemes, under the trust
deeds the trustees have discretion to vote or abstain from voting.

Share transfer restrictions
The Board may decline to register a transfer of any share which is not
a fully paid share. In addition, registration of a transfer of an uncertificated
share may be refused in the circumstances set out in the Uncertificated
Securities Regulations and where the number of joint holders
exceeds four.

Change of control
The Company’s employee share incentive schemes contain provisions
whereby, upon a change of control of the Company, outstanding
options and awards would vest and become exercisable, subject
to any pro-rating that may be applicable.

Independent auditors
Following shareholder approval at the AGM on 9 May 2014, Deloitte
LLP were formally appointed as auditors of the Company and Group
for the year ended 31 December 2014. Deloitte LLP have indicated
their willingness to continue in office and a resolution proposing their
reappointment for the financial year ending 31 December 2015 will
be proposed at the 2015 AGM.

Carbon emissions reporting
The information below details our mandatory reporting of greenhouse
gas emissions for the year pursuant to the Companies Act 2006
(Strategic Report and Directors’ Report) Regulations 2013.

MAN GROUP PLC / ANNUAL REPORT 2014CORPORATE GOVERNANCE
66

Directors’ report continued

Around 82% (2013: 91%) of our overall emissions relate to purchased
electricity and gas usage across our various geographical locations,
with the remaining 18% (2013: 9%) relating to air travel. All emissions
are reported in tonnes of carbon dioxide equivalents (CO2e).

Man Group’s emissions by scope

Scope

Scope 1
Scope 2
Scope 3

Total

Source

Natural gas
Electricity
Air travel

Tonnes of CO2e emissions
Year ended
31 December
2014

Year ended
31 December
2013

326
7,411
1,753

9,490

469
8,026*
857

9,352

* The 2013 reported figure for Scope 2 emissions has been restated to include the UK

disaster recovery site.

The emissions we are reporting have been calculated using an intensity
metric which will enable us to monitor emissions independent of activity.
As Man Group is a people-related business, we expect that any changes
to headcount will impact the property space we occupy and the amount
of business travel we use. Therefore, emissions per employee are the
most appropriate metric for our business, as shown in the table below.
The average number of employees in 2014 was 1,001 (2013: 1,163).

Emissions per employee

Scope

Scope 1
Scope 2
Scope 3

Emissions per employee

Tonnes of CO2e emissions
Year ended
31 December
2014

Year ended
31 December
2013

0.3
7.4
1.8

9.5

0.4
6.9*
0.7

8.0

The 2013 reported figure for Scope 2 emissions has been restated to include the UK
disaster recovery site.

Reductions in Scope 1 and 2 emissions as a whole relate to the net
impact of a reduction in floor space occupied in our main UK premises
(Riverbank House), a reduction in the UK disaster recovery site premises,
the closing of two small offices during 2014, and inclusion of emissions
for the continuing Numeric premises since the date of acquisition.
Air travel emissions (Scope 3) have increased primarily due to higher
levels of acquisition-related activity during 2014.

Methodology
For practical reasons, emissions data was gathered for the first nine
months of each year and, as appropriate, extrapolated in order to
calculate the full year emissions. Based on the nature of our emissions
and the consistency month on month, we believe this is an appropriate
representation of the annual emissions.

In order to compile the reportable emissions data from our offices,
electricity and gas meter readings have been obtained from our energy
suppliers. For some of our smaller offices we are not charged for energy
usage separately as these costs are incorporated into the service fees for
our premises. These emissions have not been included in the reported
total above, due to the data being unavailable, and relate to offices for
the use of 9 employees (2013: 6 employees).

Where Man Group is the landlord of a property, and electricity costs
are incurred on behalf of sub-tenants, these costs are on-charged to the
sub-tenants as the users of the electricity. Accordingly, no emissions data
for energy usage incurred on behalf of sub-tenants is included in Man
Group’s reportable emissions above.

Disclosures of emissions related to business travel are restricted to flight
costs as a result of the CO2e emission convertible data relating to other
means of transport (i.e. taxis) not being available. During 2014, Man had
one lease vehicle used for business purposes. Due to a lack of available
data, the emissions from this vehicle have not been included in the
reported figures. The lease for this vehicle ended in the first six months
of 2014.

Further disclosures
Information fulfilling the further disclosure requirements contained in
the Companies Act 2006, Schedule 7 of the Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations 2008 and
the FCA’s Listing Rules and Disclosure and Transparency Rules, where
applicable to the Company, can be found in the following sections of
the Annual Report for the year ended 31 December 2014 which are
incorporated into the Directors’ report by reference:

Future developments in the business
Research and development activities
Dividend
Dividend waiver
Employment policy and employee involvement
Financial risk management and financial instruments

Page

8–13
9–12
85, 118–119
99
26–29
92–93,
109–111

Corporate governance report including internal control

and risk management statements

Post balance sheet events
Directors’ responsibility statements including disclosure

of information to the auditors

32–37
112

By order of the Board

Rachel Rowson
Company Secretary
25 February 2015

MAN GROUP PLC / ANNUAL REPORT 2014 CORPORATE GOVERNANCEFinancial statements

Note

Audited information
Group income statement
Group statement of comprehensive income
Group balance sheet
Group cash flow statement
Group statement of changes in equity
Parent Company financial information

1
Basis of preparation
1
Significant accounting policies schedule
2
Adjusted profit before tax
3
Revenue
4
Distribution costs
5
Asset services
6
Compensation
7
Other costs
8
Finance expense and finance income
9
Taxation
10
Earnings per ordinary share
11
Dividends
12
Goodwill and acquired intangibles
13
Other intangibles
Cash, liquidity and borrowings
14
Investment in fund products and other investments 15
16
Fee and other receivables
17
Trade and other payables
18
Provisions
19
Investments in associates
20
Leasehold improvements and equipment
21
Deferred compensation arrangements
22
Capital management
23
Pension benefits
24
Segmental analysis
25
Geographical disclosure
26
Foreign currencies
27
Fair value of financial assets/liabilities
28
Related party transactions
29
Financial guarantees and commitments
30
Post balance sheet events
31
Other matters
32
Principal Group investments
Independent auditors’ report

Unaudited information
Directors’ responsibility statement
Five year record

Page
73
73
74
75
76
115

77
78
78
80
80
80
80
81
82
82
84
85
85
91
92
93
96
96
97
97
98
99
101
104
108
108
108
109
111
112
112
112
113
69

68
114

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014

Directors’ responsibility statement

Having taken advice from the Audit and Risk Committee, the directors
consider that the Annual Report, taken as a whole, is fair, balanced and
understandable and provides the information necessary for shareholders
to assess the Company’s performance, business model and strategy.

The directors are responsible for the maintenance and integrity of the
Company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.

Each of the directors, whose names and functions are on pages 30 to 31,
confirm that, to the best of each person’s knowledge and belief:

– the Group financial statements, which have been prepared in

accordance with IFRSs as adopted by the EU, give a true and fair
view of the assets, liabilities, financial position and results of the Group;

– the strategic and other reports contained on the inside front cover
and pages 1 to 29 include a fair review of the development and
performance of the business and the position of the Group, together
with a description of the principal risks and uncertainties that it
faces; and

– there is no relevant audit information of which the Group’s auditors

are unaware, and that they have taken all steps that they ought to have
taken as a director in order to make themselves aware of any relevant
audit information and to establish that Man’s auditors are aware of
that information.

The directors are responsible for preparing the Annual Report,
the Directors’ remuneration report and the financial statements
in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements
for each financial year. Under that law the directors have prepared the
Group financial statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union (EU),
and the Parent Company financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law). Under company
law the directors must not approve the financial statements unless they
are satisfied that they give a true and fair view of the state of affairs
of the Group and the Company and of the profit or loss of the Group
for that period. In preparing these financial statements, the directors
are required to:

– select suitable accounting policies and then apply them consistently;
– make judgements and accounting estimates that are reasonable

and prudent;

– state whether applicable IFRSs as adopted by the European Union

and applicable UK Accounting Standards have been followed, subject
to any material departures disclosed and explained in the Group and
Parent Company financial statements respectively; and

– prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.

The directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Company’s transactions and
disclose with reasonable accuracy at any time the financial position
of the Company and the Group and enable them to ensure that the
financial statements and the Directors’ remuneration report comply
with the Companies Act 2006 and, as regards the Group financial
statements, Article 4 of the IAS Regulation. They are also responsible
for safeguarding the assets of the Company and the Group and hence
for taking reasonable steps for the prevention and detection of fraud
and other irregularities.

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 201469

Independent auditor’s report to the
members of Man Group plc

Opinion on financial statements of Man Group plc
In our opinion:

– the financial statements give a true and fair view of the

state of the Group’s and of the Parent Company’s affairs as
at 31 December 2014 and of the Group’s profit for the year
then ended;

framework that has been applied in the preparation of the Group financial
statements is applicable law and IFRSs as adopted by the European
Union. The financial reporting framework that has been applied in the
preparation of the parent company financial statements is applicable law
and United Kingdom Accounting Standards (United Kingdom Generally
Accepted Accounting Practice).

– the Group financial statements have been properly prepared in
accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union;

– the Parent Company’s financial statements have been properly

Going concern
As required by the Listing Rules we have reviewed the directors’
statement contained on page 77 that the Group is a going concern.
We confirm that:

prepared in accordance with United Kingdom Generally
Accepted Accounting Practice; and

– the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006 and, as regards
the Group’s financial statements, Article 4 of the IAS Regulation.

The financial statements comprise the Group Income Statement, the
Group Statement of Comprehensive Income, the Group and Parent
Company Balance Sheets, the Group Cash Flow Statement, the Group
Statement of Changes in Equity and the related Notes 1 to 32 for the
Group and 1 to 7 for the Parent Company. The financial reporting

– we have concluded that the directors’ use of the going concern
basis of accounting in the preparation of the financial statements
is appropriate; and

– we have not identified any material uncertainties that may cast

significant doubt on the Group’s ability to continue as a going concern.

However, because not all future events or conditions can be predicted,
this statement is not a guarantee as to the Group’s ability to continue
as a going concern.

Our assessment of risks of material misstatement
The assessed risks of material misstatement described below are those that had the greatest effect on our audit strategy, the allocation of resources
in the audit and directing the efforts of the engagement team:

Risk

How the scope of our audit responded to the risk

Acquisition accounting
In the current year the group acquired Numeric and Pine Grove.
Numeric was aquired for approximately $238m in cash plus two earn-out
agreements, for a total consideration currently valued at $344m. Pine
Grove was acquired for approximately $6 million in cash plus a deferred
amount, for a total consideration currently valued at $17m.

The accounting treatment in respect of the various elements of the
consideration paid requires the consideration of multiple factors and is
therefore judgmental in nature – particularly in relation to the allocation
of the various elements between consideration and remuneration.

The valuation of the contingent consideration (of $117m) and the allocation
of consideration to identifiable intangible assets (including the allocation
between goodwill and intangible assets: $137m and $198m respectively)
are both dependent on estimates concerning the estimated future cash
flows, growth rates based upon management’s view of future business
prospects and the associated discount rates.

See Note 12 to the financial statements which gives further detail in relation
to the acquisitions.

Goodwill impairment
The Group’s assessment of whether there is an impairment of goodwill
within each of the three identified cash generating units (or investment
engines) is a judgemental process. This requires estimates concerning
the estimated future cash flows, growth rates based upon management’s
view of future business prospects and the associated discount rates.

As at 31 December 2014 total goodwill on the balance sheet amounted to
$936m (2013: $808m) which equates to 28% (2013: 25%) of total assets.

See Note 12 to the financial statements which gives further detail in relation
to the Goodwill balance.

We performed a detailed review of the purchase agreements to assess
whether all elements of the consideration had been accounted for
appropriately and recalculated the various elements.

We used internal valuation specialists to challenge management’s
assumptions relating to the growth and performance factors used to
calculate the fair value of the contingent consideration and the valuation
of the intangible assets through comparison with historic performance
and those applied by industry comparators.

We used internal valuation specialists to challenge the key assumptions
including the estimated future cash flows, growth rates and the discount
rates applied to the separate cash generating units by comparing these
against industry benchmarks on similar assets, comparison against the
prevailing Group cost of capital at the year end, our understanding of the
future prospects of the business and the accuracy of historical forecasts.

We tested the principles and integrity of the goodwill model and
recalculated management’s reconciliation of the valuation of the
Cash Generating Units to the market value of the Group.

We performed an independent sensitivity analysis to assess the risk
of impairment to changes in assumptions and cash-flow forecasts.

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014
70

Independent auditors’ report to the members continued

Risk

How the scope of our audit responded to the risk

Taxation
The Group has a number of open tax matters against which provisions
have been made across multiple jurisdictions, the movement in which can
significantly impact the group tax charge.

We have examined the analysis undertaken by management in
determining the level of tax provisions held based on available supporting
evidence and in the light of our experience and the changing tax
environment, raising challenges as appropriate.

The acquisition of Numeric has resulted in a need to reassess the
recognition of deferred tax in respect of previously unrecognised deferred
tax assets in the Group’s US operations.

See Note 9 to the financial statements which gives further detail in relation
to taxation.

In respect of deferred tax we have assessed the appropriateness of
management’s assumptions and forecasts of the existence of future
taxable profits (and their consistency with the assumptions underlying
the valuation model) as required to support the recognition of deferred
tax assets.

Investments in funds
The Group holds investments in a number of funds which it manages.
The accounting for the investments requires extensive judgement in
determining whether control exists and hence whether investments are
held on the balance sheet at fair value within investments or consolidated.

We independently assessed whether a sample of funds held at year end
should be consolidated. This included 100% testing of the funds included
in the listing maintained in London of those funds considered to be most
“at risk” of potential error: the “Watchlist”.

Further, this is the first year that the Group has adopted IFRS 12 Disclosure
of Interests in Other Entities which requires additional information to be
disclosed in respect of funds managed by the Group but not consolidated.

We assessed each fund by considering the size of the holding as well as
the contractual arrangements. In particular we focused on investments
in structured products where control is not necessarily dictated by
percentage ownership of equity shares.

See Note 15 to the financial statements which gives further detail in relation
to Investments in Funds.

We reviewed the disclosures required under IFRS 12 for compliance with
the standard and performed specific procedures on the additional tables
included in Note 15 by agreeing a sample of balances to third party
statements and fund financial statements.

Fraud risk in relation to revenue recognition
There is an inherent risk of fraud associated with revenue, specifically
accrued revenue which is driven from estimates and hence is open
to manipulation. Because of this there is a risk that revenue is not
recognised in line with the accounting policy explained in Note 3 to
the financial statements.

In addition, net revenues derived from new, amended or terminated
agreements with clients or intermediaries require effective communication
between multiple parties and for systems to be updated promptly
and accurately.

For year end accrued revenue we performed detailed substantive testing
by obtaining, where applicable, third party service organisations’ fee files
post year end and agreeing that the amount was accurately estimated.
Where the calculation is not performed by a third party, management’s
calculations were obtained and it was agreed that the amount had been
accurately estimated.

Further, for a sample of new, amended or terminated agreements,
we performed a review of key controls in these three identified areas
and agreed the fee base and rate to supporting documentation and
recalculated the fee.

The description of risks above should be read in conjunction with the
significant issues considered by the Audit and Risk Committee discussed
on page 39.

Our audit procedures relating to these matters were designed in
the context of our audit of the financial statements as a whole, and not
to express an opinion on individual accounts or disclosures. Our opinion
on the financial statements is not modified with respect to any of the
risks described above, and we do not express an opinion on these
individual matters.

New risks identified in the current year which were not included in
the prior year audit report include acquisition accounting, taxation and
investments in funds. These risks pertain to transactions during the year
ended 31 December 2014, and/or to changes in accounting standards
implemented during the year ended 31 December 2014.

In the prior year, the previous auditors also identified management
override of controls as a risk in their audit report. We have also identified
this risk as part of our audit strategy, however, we do not consider it
to have had the greatest effect on our audit strategy, the allocation of
resources in the audit and directing the efforts of the engagement team
and hence it does not need to be discussed in our audit report.

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 201471

Our application of materiality
We define materiality as the magnitude of misstatement in the financial
statements that makes it probable that the economic decisions of a
reasonably knowledgeable person would be changed or influenced.
We use materiality both in planning the scope of our audit work and in
evaluating the results of our work.

We determined materiality for the financial statements as a whole
to be $19.5m (2013: $8.3m was used by the previous auditors). As
performance fees are variable and can fluctuate significantly year on year,
we have taken an average of the current year and prior year adjusted
profit before tax (in order to create a more stable basis) and applied
5%. The adjusted profit before tax number is explained in Note 2 to the
financial statements, and the calculated materiality is below 1% of equity.
Adjusted pre-tax profit is a relevant benchmark as it is a key figure used
by analysts in assessing the performance of the business.

In addition we have determined that it is appropriate to use a lower
materiality for management fees as they are also a key benchmark used
by analysts in assessing the performance of the Group and are the
core driver for dividend payments as per the dividend policy. Hence it
is considered likely that an error lower than $19.5m could influence the
economic decisions of the users of the accounts. For this reason we
have set materiality for management fees at $13.4m which equates to
less than 2% of total management fees earned during the year.

We agreed with the Audit and Risk Committee that we would report to
the Committee all unrecorded audit differences in excess of $400,000
(2013: the previous auditors also reported on all matters above
$400,000), as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds. We also report to the Audit
and Risk Committee on disclosure matters that we identified when
assessing the overall presentation of the financial statements.

An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the
Group and its environment, including group-wide controls, and assessing
the risks of material misstatement at the Group level. Based on that
assessment, we focused our Group audit scope primarily on the audit
work at nine geographical locations. Six of these locations included
entities which were subject to a full audit (17 subsidiaries in total across
the UK, Switzerland, Australia, Ireland, Cayman Islands and Guernsey),
whilst the remaining three locations (United States, Jersey and Japan)
and the UK included 24 subsidiaries which were subject to an audit of
specified account balances, where the extent of our testing was based
on our assessment of the risks of material misstatement and of the
materiality of the Group’s operations at those locations. Numeric for
example (in the USA) was selected for an audit of specified account
balances in light of it being a new acquisition in the year.

These nine locations represent the principal business units and account
for 98% of the Group’s total assets, 97% of the Group’s revenue and
96% of the Group’s profit before tax. They were also selected to provide
an appropriate basis for undertaking audit work to address the risks
of material misstatement identified above. Our audit work at the 41
subsidiaries was executed at levels of materiality applicable to each
individual entity which in all instances were lower than Group materiality
and range from $250,000 to $19m.

At the parent entity level we also tested the consolidation process and
carried out analytical procedures to confirm our conclusion that there
were no significant risks of material misstatement of the aggregated
financial information of the remaining components not subject to audit
or audit of specified account balances.

The Group audit team has designed a programme of planned visits
to ensure that the Senior Statutory Auditor or a senior member of the
audit team visits each of the locations where the Group audit scope was
focused at least once a year, with selected visits to other locations where
specified account balances were selected as part of the scoping on a
risk based approach. During the current year visits were made by the
Senior Statutory Auditor to the United States (following the acquisitions
of Numeric and Pine Grove), Switzerland (as a principal business unit),
Australia (as a principal business unit) and Hong Kong (as the central
finance hub for the Asia business). We included the audit teams for
our significant components in our team briefing, discussed their risk
assessment, and reviewed the documentation of the findings from
their work.

Opinion on other matters prescribed by the Companies Act 2006
In our opinion:

– the part of the Directors’ Remuneration Report to be audited has been
properly prepared in accordance with the Companies Act 2006; and
– the information given in the Strategic Report and the Directors’ Report
for the financial year for which the financial statements are prepared is
consistent with the financial statements.

Matters on which we are required to report by exception
Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if,
in our opinion:

– we have not received all the information and explanations we require

for our audit; or

– adequate accounting records have not been kept by the parent

company, or returns adequate for our audit have not been received
from branches not visited by us; or

– the parent company financial statements are not in agreement with the

accounting records and returns.

We have nothing to report in respect of these matters.

Directors’ remuneration
– Under the Companies Act 2006 we are also required to report if in our
opinion certain disclosures of directors’ remuneration have not been
made or the part of the Directors’ Remuneration Report to be audited
is not in agreement with the accounting records and returns. We have
nothing to report arising from these matters.

Corporate Governance Statement
– Under the Listing Rules we are also required to review the part of
the Corporate Governance Statement relating to the company’s
compliance with ten provisions of the UK Corporate Governance
Code. We have nothing to report arising from our review.

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures
in the financial statements sufficient to give reasonable assurance that the
financial statements are free from material misstatement, whether caused
by fraud or error. This includes an assessment of: whether the accounting
policies are appropriate to the Group’s and the Parent Company’s
circumstances and have been consistently applied and adequately
disclosed; the reasonableness of significant accounting estimates made
by the directors; and the overall presentation of the financial statements.
In addition, we read all the financial and non-financial information in the
annual report to identify material inconsistencies with the audited financial
statements and to identify any information that is apparently materially
incorrect based on, or materially inconsistent with, the knowledge
acquired by us in the course of performing the audit. If we become aware
of any apparent material misstatements or inconsistencies we consider
the implications for our report.

Mark FitzPatrick (Senior statutory auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
London
25 February 2015

Independent auditors’ report to the members continued

Our duty to read other information in the Annual Report
Under International Standards on Auditing (UK and Ireland), we are
required to report to you if, in our opinion, information in the annual
report is:

– materially inconsistent with the information in the audited financial

statements; or

– apparently materially incorrect based on, or materially inconsistent

with, our knowledge of the Group acquired in the course of performing
our audit; or

– otherwise misleading.

In particular, we are required to consider whether we have identified
any inconsistencies between our knowledge acquired during the
audit and the directors’ statement that they consider the annual
report is fair, balanced and understandable and whether the annual
report appropriately discloses those matters that we communicated
to the Audit and Risk Committee which we consider should have
been disclosed. We confirm that we have not identified any such
inconsistencies or misleading statements.

Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities Statement,
the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial
statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards require us
to comply with the Auditing Practices Board’s Ethical Standards for
Auditors. We also comply with International Standard on Quality Control 1
(UK and Ireland). Our audit methodology and tools aim to ensure that
our quality control procedures are effective, understood and applied.
Our quality controls and systems include our dedicated professional
standards review team and independent partner reviews.

This report is made solely to the company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the company’s
members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company and the company’s members as a body, for our audit work,
for this report, or for the opinions we have formed.

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 2014Group income statement

Revenue:
Gross management and other fees
Performance fees

Income or gains on investments and other financial instruments
Distribution costs
Asset services
Amortisation of acquired intangible assets
Compensation
Other costs
Share of after tax profit of associates
Gain on disposal of Lehman claims
(Loss)/gain on disposal of subsidiaries and other interests
Impairment of goodwill
Recycling of FX revaluation on liquidation of subsidiaries
Finance expense
Finance income

Profit before tax
Taxation (expense)/credit

Statutory profit for the year attributable to owners of the Parent

Earnings per share:
Basic (cents)
Diluted (cents)

Note

3
3

4
5
12
6
7
19
2
2
2,12
2
8
8

Year ended
31 December
2014

Year ended
31 December
2013

810
340

967
193

1,150

1,160

44
(104)
(27)
(72)
(394)
(202)
9
–
(4)
–
–
(19)
3

384
(19)

365

20.8
20.5

33
(145)
(32)
(66)
(481)
(323)
12
5
11
(69)
(1)
(61)
13

56
16

3.0
2.9

Adjusted profit before tax

481

297

Group statement of comprehensive income

Statutory profit for the year attributable to owners of the Parent
Other comprehensive (expense)/income:
Remeasurements of post-employment benefit obligations
Corporation tax credited on pension revaluation
Deferred tax credited/(debited) on pension revaluation

Items that will not be reclassified to profit or loss

Available for sale investments:
Valuation gains/(losses) taken to equity
Transfers from Group statement of comprehensive income upon sale or impairment
Cash flow hedges:
Valuation (losses)/gains taken to equity
Transfer to Group income statement
Corporation tax credited/(debited) on cash flow hedge movements
Net investment hedge
Foreign currency translation
Recycling of FX revaluation on liquidation of subsidiaries

Items that may be subsequently reclassified to profit or loss

Other comprehensive (expense)/income for the year (net of tax)

Total comprehensive income for the year attributable to owners of the Parent

Year ended
31 December
2014

Year ended
31 December
2013

365

(21)
4
–

(17)

–
–

(16)
(17)
3
13
(24)
–

(41)

(58)

307

16
6
(11)

(1)
1

12
(1)
(3)
20
(35)
1

(6)

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014

Group balance sheet

Assets
Cash and cash equivalents
Fee and other receivables
Investments in fund products and other investments
Pension asset
Investments in associates
Leasehold improvements and equipment
Goodwill and acquired intangibles
Other intangibles

Non-current assets held for sale

Total assets

Liabilities
Trade and other payables
Provisions
Current tax liabilities
Borrowings
Deferred tax liabilities

Non-current liabilities held for sale

Total liabilities

Net Assets

Equity

At
31 December
2014

At
31 December
2013

Note

14
16
15
23
19
20
12
13

17
18

14
9

738
396
307
45
30
52
1,582
13

3,163

186

3,349

581
65
51
149
36

882

915

992
388
273
71
31
68
1,328
26

3,177

3,233

633
92
37
–
58

820

826

2,434

2,407

Capital and reserves attributable to the owners of the Parent

2,434

2,407

The financial statements were approved by the Board of Directors on 25 February 2015 and signed on its behalf by:

Emmanuel Roman
Chief Executive Officer

Jonathan Sorrell
Chief Financial Officer

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 2014Group cash flow statement

Cash flows from operating activities
Profit for the period
Adjustments for:
Income tax
Net finance expense
Share of profits of associates
Loss/(gain) on disposal of subsidiaries and other interests
Reassessment of the litigation provision
Depreciation and impairment of leasehold improvements and equipment
Amortisation of acquired intangible assets
Amortisation of other intangible assets
Share-based payment expense
Revaluation of FRM contingent consideration
Impairment of goodwill
Gain on disposal of Lehman claims
Recycling of FX revaluation on liquidation of subsidiaries
Defined benefit pension plans (including repayments/(contributions))
Other non-cash movements

Changes in working capital:
Decrease/(increase) in receivables
(Increase)/decrease in other financial assets (seeding investments and loans to fund products)
(Decrease)/increase in payables

Cash generated from operations
Interest paid
Income tax paid

Cash flows from operating activities

Cash flows from investing activities
Purchase of leasehold improvements and equipment
Purchase of other intangible assets
Purchase of investments in fund products for deferred compensation awards and other investments
Proceeds from sale of leasehold improvements and equipment
Proceeds from settlement and sale of Lehman claims
Net proceeds from sale of investments in fund products for deferred compensation awards and other

investments

Acquisition of subsidiaries, net of cash acquired
Interest received
Payment of contingent consideration in relation to acquisition of FRM
Dividends received from associates
Proceeds from sale of interest in Nephila and other interests

Cash flows from investing activities

Cash flows from financing activities
Proceeds from issue of ordinary shares
Proceeds from borrowings (net of costs)
Purchase of own shares by the Employee Trusts
Repurchase of own shares (including costs)
Repayment of borrowings
Dividends paid to Company shareholders
Dividend payments in respect of perpetual subordinated capital securities

Cash flows from financing activities

Net (decrease) in cash
Cash at beginning of the year

Cash at year end

Year ended
31 December
2014

Year ended
31 December
2013

Note

365

19
16
(9)
4
(6)
21
72
16
11
(17)
–
–
–
3
(16)

(16)
48
(12)
(11)
–
82
66
18
36
(3)
69
(5)
1
(24)
38

479

359

12
(134)
(212)

145
(3)
(13)

129

(3)
(9)
(45)
–
–

40
(227)
3
(8)
10
–

(239)

2
149
(16)
(116)
–
(163)
–

(144)

(254)
992

738

(9)
155
80

585
(73)
(64)

448

(2)
(3)
(51)
1
5

40
–
13
(12)
11
21

4
–
(22)
–
(1,159)
(277)
(25)

(1,479)

(1,008)
2,000

992

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014

Group statement of changes in equity

Equity attributable to owners of the parent
Year ended 31 December 2014

Equity attributable to owners of the parent
Year ended 31 December 2013

At beginning of the year
Profit for the year
Other comprehensive (expense)/

income

Total comprehensive income

for the year

Perpetual capital securities coupon
Buyback of perpetual capital

securities

Share-based payments
Purchase of own shares by the

Employee Trusts

Repurchase of own shares
Dividends

Share capital
and capital
reserves

Revaluation
reserves
and retained
earnings

Total equity

Share capital
and capital
reserves

1,191
–

1,216
365

2,407
365

1,187
–

Revaluation
reserves
and retained
earnings

1,423
72

–

–
2

–
–
–

(58)

307

–

–
11

(14)
(116)
(163)

307

–

–
13

(14)
(116)
(163)

–

–
4

–
–
–

(19)

–
30

(18)
–
(277)

Total

2,610
72

(19)

–
34

(18)
–
(277)

At year end (Note 22)

1,193

1,241

2,434

1,191

1,216

2,407

Non-controlling
interest

300
–

–

(300)
–

–
–
–

–

Total equity

2,910
72

(19)

(300)
34

(18)
–
(277)

2,407

Shareholders’ equity remained largely in line with prior year largely as a result of the statutory profit for the year being offset by the 2013 final dividend
payment and share repurchase. In the prior year, shareholders’ equity decreased primarily as a result of dividend payments which were not covered
by the statutory profit for the year, and the repurchase of the perpetual subordinated capital securities.

The proposed final dividend would reduce shareholders’ equity by $106 million (2013: $95 million) subsequent to the balance sheet date.

Details of share capital and capital reserves, revaluation reserves and retained earnings and related movements are included in Note 22.

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 2014Notes to the Group financial statements

1. Basis of preparation

Accounting policies
The audited consolidated financial information has been prepared in accordance with International Financial Reporting Standards (IFRS) and
interpretations (IFRICs) as adopted by the EU and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. Man’s
principal accounting policies have been consistently applied across the Group in the preparation of the financial statements. Accounting policies are
included in the relevant sections, and significant policies are provided below. The impact of new accounting standards and amendments applicable
to the year ended 31 December 2014 and accounting standards that are not yet effective are outlined below.

Consolidated group and presentation currency
The consolidated group is Man Group plc (the Company) and its subsidiaries (together the Group or Man). The stand-alone Parent Company financial
statements of Man Group plc have been included as separate financial statements, starting on page 115. The majority of revenues, assets, liabilities
and funding are denominated in United States Dollars (USD) and therefore Man’s presentation currency is USD.

The consolidated financial information contained within these financial statements incorporates the results, cash flows and financial position of the
Company and its subsidiaries for the year to 31 December 2014. Subsidiaries are entities (including structured entities) controlled by Man and are
consolidated from the date on which control is transferred to Man until the date that control ceases. Control exists when Man has the power to direct
the relevant activities, exposure to significant variable returns and the ability to utilise power to affect those returns. All intercompany transactions,
balances, income and expenses between Group entities are eliminated on consolidation.

Business combinations (acquisitions) are accounted for using the acquisition method. The cost of an acquisition is measured as the fair value at
the acquisition date of assets transferred, liabilities incurred, and equity instruments issued by the Group. The fair value of an acquisition is calculated
at the acquisition date by recognising the acquiree’s identifiable assets and liabilities at their fair values at that date. Costs relating to acquisitions are
recognised in the Group income statement as incurred. The acquisition date is the date on which Man effectively obtains control of the acquiree. Any
contingent consideration will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration
will be recognised in the Group income statement and classified as an adjusting item.

Man’s relationship with independent fund entities
Man acts as the investment manager/advisor to fund entities. Man assesses such relationships on an ongoing basis to determine whether each fund
entity is controlled and therefore consolidated into the Group’s results. Having considered all significant aspects of Man’s relationships with fund
entities, the directors are of the opinion that, although Man manages the assets of certain fund entities, where Man does not hold an investment in
the fund entity the characteristics of control are not met, and that for most fund entities: the existence of independent boards of directors at the fund
entities; rights which allow for the removal of the investment manager/advisor; the influence of investors; limited exposure to variable returns; and the
arm’s length nature of Man’s contracts with the fund entities, indicate that Man does not control the fund entities and their associated assets, liabilities
and results should not be consolidated into the Group financial statements. Assessment of the control characteristics for all relationships with fund
entities led to the consolidation of five fund entities for the year ended 31 December 2014 (2013: one), as detailed in Note 15. An understanding of the
aggregate funds under management (FUM) and the fees earned from the fund entities is relevant to an understanding of Man’s results and earnings
sustainability and this information is provided in the Chief Financial Officer’s review on page 16.

Judgemental areas and accounting estimates
The determination of fair values for contingent consideration in relation to the Numeric, Pine Grove and FRM acquisitions (Note 12) and the valuation
of goodwill and intangibles (Note 12), whether the Group controls certain funds through its investments in fund products and is required to consolidate
them (Note 15.3), recognition of deferred tax assets (Note 9) and taxation liabilities (Note 9) are the most significant areas of judgement and have been
an area of focus for the Group Board, and in particular the Audit and Risk Committee, during the year. The report of the Chairman of the Audit and
Risk Committee discusses the involvement of the Committee in this evaluation on page 39.

Going concern
Man’s business activity is discussed on pages 1 to 29, together with the significant risk factors (pages 22 to 25). Man’s liquidity and capital positions
are set out in Note 14 and 22 respectively. The directors monitor Man’s capital and liquidity positions and forecasts throughout the year, and in
addition they have approved a budget, medium-term financial plan, and a capital and liquidity plan, which cover the foreseeable future and include
rigorous analysis of stressed capital and liquidity scenarios. The directors have concluded that there is a reasonable expectation that Man has
adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Group and Parent financial statements have been
prepared on a going concern basis using the historical cost convention, except for the measurement at fair value of certain financial instruments that
are available-for-sale or held at fair value through profit or loss.

Financial reporting controls
The Group’s systems of internal control aim to safeguard assets, ensure that proper accounting records are maintained, and ensure that the financial
information used in the business and published externally is robust and reliable. The financial reporting controls comply with the guidance given in
‘Internal Control: Revised Guidance for Directors on the Combined Code’. The Corporate governance report is provided on pages 32 to 37.

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014
78

Notes to the Group financial statements continued

1. Basis of preparation continued

Significant accounting policies schedule

Policy

Goodwill and acquired intangibles
Taxation
Investments in fund products
Revenue
Deferred compensation arrangements
Pension benefits

Note

12
9
15
3
21
23

Page

86
84
93–95
80
99
104

Impact of new accounting standards
A number of amendments to existing standards and interpretations have been issued, some of which are mandatory for the year beginning
1 January 2014, with the remaining becoming effective in future periods.

IFRS 10 ‘Consolidated financial statements’ is the revised consolidation accounting standard, which became effective from 1 January 2014.
The adoption of this standard has resulted in the consolidation of one fund at 31 December 2013 and five funds at 31 December 2014. These funds
are classified on the balance sheet as non-current assets/liabilities held for sale (Note 15). The impact of consolidating these funds is an increase
in the gross assets and liabilities on the Group balance sheet of around $33 million. There is no impact on the Group income statement.

In considering the principles of IFRS 10, Man has redefined ‘associates’ to exclude fund entities where Man is acting as Agent and therefore we do
not have significant influence. Accordingly, these fund entities are no longer considered related parties as defined in International Accounting Standard
24 ‘Related Parties’. This change has resulted in amended disclosures in Note 28. There is no impact on the Group income statement or Group
balance sheet.

IFRS 12 ‘Disclosures of interests in other entities’ became effective from 1 January 2014. As a result of the adoption of this standard, additional
information about the risk exposure from structured entities, which we have defined as fund entities for which Man is the investment manager,
is provided in Note 15.

Other relevant new standards adopted by Man in the current year, which have not had a significant impact, are:

– IFRS 11 – ‘Joint arrangements’
– IAS 27 (revised 2011) – ‘Separate financial statements’
– IAS 28 (revised 2011) – ‘Investments in associates and joint ventures’
– Amendments to IAS 36 – ‘Impairment of assets’

There are no new or revised standards and interpretations issued but not yet effective (as endorsed by the EU) which are expected to have
a significant impact on the Group financial statements of Man.

Changes in presentation
A change in presentation of the balance sheet has been made in the period to separate ‘provisions’ from ‘trade and other payables’, and to provide
a summary of movements in provisions for the year (Note 18).

2. Adjusted profit before tax

Statutory profit before tax is adjusted to give a fuller understanding of the underlying profitability of the business. The directors consider that the
Group’s profit is most meaningful when considered on a basis which excludes restructuring costs, impairment of assets, acquisition and disposal
related Items (including non-cash items such as amortisation of purchased intangible assets and deferred tax movements relating to the recognition
of tax losses in the US) and certain non-recurring gains or losses, which therefore reflect the recurring revenues and costs that drive the Group’s
cash flow. The directors are consistent in their approach to the classification of adjusting items period to period, maintaining an appropriate symmetry
between losses and gains and the reversal of any accruals previously classified as adjusting items. These are explained in detail either below or
in the relevant note.

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 20142. Adjusted profit before tax continued

Statutory profit before tax
Adjusting items:
Reassessment of the litigation provision
Litigation, regulatory and other settlements
Acquisition and disposal related:
Compensation – restructuring
Other costs – professional fees and integration costs
Revaluation of FRM contingent consideration
Unwind of contingent consideration discount
Amortisation of acquired intangible assets
Loss/(gain) on disposal of subsidiaries and other interests
Recycling of FX revaluation on liquidation of subsidiaries
Impairment of goodwill
Compensation – restructuring
Other costs – restructuring
Other costs – accelerated depreciation
Gain on disposal of Lehman claims

Adjusted profit before tax
Tax on adjusted profit1

Adjusted profit after tax

Year ended
31 December
2014

Year ended
31 December
2013

Note

6
7
12, 27
8
12

12
6
7
7

384

(6)
24

3
9
(17)
7
72
4
–
–
–
1
–
–

481
(46)

435

–
14

–
–
(3)
3
66
(11)
1
69
36
28
43
(5)

297
(21)

276

Note:
1 The difference of $27 million (2013: $37 million) between tax on statutory profit and tax on adjusted profit is made up of a tax credit of $19 million (2013: $37 million expense)

on adjusting items and a tax credit of $8 million (2013: nil) relating to the recognition of a deferred tax asset which is classified as an adjusting item (Note 9).

The 2014 credit of $6 million relates to reassessment of potential legal claims (Note 18). In 2014 litigation, regulatory and other settlements relates
to legal claims, including associated costs. In 2013 the $14 million primarily relates to the settlement of a regulatory enquiry in the US and directly
associated legal costs.

The acquisition related compensation and other costs relate to staff termination, legal and other advisory fees relating to the Numeric and Pine Grove
transactions, as well as the costs of integrating our operating platforms (Note 12 and Note 18). Compensation costs incurred as part of restructuring
are accounted for in full at the time the obligation arises, following communication of the formal plan, and include payments in lieu of notice, enhanced
termination costs, and accelerated share-based payment and fund product based charges.

The revaluation of the FRM contingent consideration is an adjustment to the fair value of expected FRM earn-out payments, resulting primarily from
movements in net management fee run rates since the acquisition of FRM, and has been included within income or gains on investments and other
financial instruments. The unwind of the discount on contingent consideration in 2014 relates to FRM ($3 million), Numeric ($3 million) and Pine Grove
($1 million) contingent consideration since the respective acquisition dates (Note 12), and is included within finance expense (Note 8).

Amortisation of acquired intangibles primarily relates to investment management contracts and brands recognised on the acquisition of GLG and
FRM, with amortisation charges of $7 million in 2014 relating to the newly acquired Numeric and Pine Grove intangibles (Note 12).

The $4 million loss on disposal of subsidiaries and other interests in 2014 is the result of the Group selling two of its subsidiaries to local management
in May 2014. The prior period $11 million gain on disposal relates primarily to the disposal of a 6.25% stake in Nephila in January 2013, reducing our
stake to 18.75%. In 2013, some of the Group’s foreign subsidiaries were liquidated, which had accumulated foreign currency translation reserves of
$1 million at the date of liquidation. Upon liquidation of these subsidiaries the related foreign currency translation was recycled to the Group income
statement. In the prior year the FRM goodwill was impaired by $69 million, primarily relating to our legacy Man Multi-Manager Business (Note 12).

In 2014, the $1 million of restructuring costs relates to an onerous lease on our New York property. The $36 million of compensation restructuring
costs recognised in 2013 relate to the further phase of cost saving initiatives announced on 2 August 2013. Other costs relating to restructuring in
2013 primarily relate to onerous property lease provisions, largely in relation to Riverbank House (our main London office and headquarters). The prior
year accelerated depreciation included within Other costs primarily relates to leasehold improvements and equipment as a result of the sub-letting of
office space in Riverbank House. During 2013, $5 million of additional proceeds were received relating to the disposal of the Lehman claims in 2012.

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014

Notes to the Group financial statements continued

3. Revenue

Fee income is Man’s primary source of revenue, which is derived from the investment management agreements that we have in place with the fund
entities. Fees are generally based on an agreed percentage of the valuation of FUM and are typically charged in arrears. Management fees net of
rebates, which include all non-performance related fees and interest income from loans to fund products, are recognised in the year in which the
services are provided.

Performance fees net of rebates relate to the performance of the funds managed during the year and are recognised when the quantum of the
fee can be estimated reliably and has crystallised. This is generally at the end of the performance period or upon early redemption by a fund investor.
Until the performance period ends market movements could significantly move the net asset value (NAV) of the fund products. Man will typically only
earn performance fee income on any positive investment returns in excess of the high water mark, meaning we will not be able to earn performance
fee income with respect to positive investment performance in any year following negative performance until that loss is recouped, at which point
a fund investor’s investment surpasses the high water mark.

4. Distribution costs

Distribution costs

Year ended
31 December
2014

Year ended
31 December
2013

104

145

Distribution costs paid to external intermediaries are directly related to their marketing activity and the investors serviced by them. The distribution
expense is therefore variable with FUM and the associated management fee income.

Distribution costs, before adjusting items, of $104 million (2013: $145 million) comprise product placement fees of $15 million (2013: $15 million)
and investor servicing fees of $89 million (2013: $130 million). Servicing fees have decreased primarily as a result of the roll-off of guaranteed product
FUM and a mix shift towards institutional assets, particularly in the quant alternatives category.

Placement fees are paid for product launches or sales and are capitalised and amortised over the expected investment holding period (Note 13).
Investor servicing fees are paid to intermediaries for ongoing investor servicing and are expensed as incurred.

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 the number of transactions or FUM, and is therefore variable with activity levels and FUM. Asset services costs
for the year are $27 million compared to $32 million in 2013. The decrease in asset services costs is primarily a result of contract renegotiations in the
latter half of 2014.

6. Compensation

Salaries
Variable cash compensation
Share-based payment charge
Fund product based payment charge
Social security costs
Pension costs

Compensation costs – before adjusting items
Acquisition related costs
Restructuring

Total compensation costs

Year ended
31 December
2014

Year ended
31 December
2013

136
174
12
30
33
6

391
3
–

394

163
186
30
32
24
10

445
–
36

481

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
compensation, if required.

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 201481

6. Compensation continued

Compensation costs in total are $391 million, before adjusting items, or 36% of net revenue (2013: 42%). Net revenue is defined as gross management
and other fees, performance fees, income or gains on investments and other financial instruments, share of after tax profit of associates, less external
distribution costs. Salaries and variable cash compensation are charged to the Group income statement in the year in which they are incurred, and
include partner drawings.

Fixed compensation and benefits are $155 million compared to $188 million in the prior year. Fixed compensation comprises salaries, pension
costs and a portion of the social security costs. The current year includes Numeric and Pine Grove fixed compensation from 5 September 2014
and 4 August 2014 respectively, the dates of acquisition.

Variable compensation is $236 million compared to $257 million in the prior year, primarily reflecting lower performance fee related compensation
and the change in application of the policy for deferred awards, as discussed in the next paragraph.

The directors have determined that going forward all share-based and fund product-based awards relate entirely to future services, which is
consistent with the approach currently adopted for GLG awards, and hence the amortisation charge relating to all future awards will be spread
over the vesting period from the date of grant. The revised application of the deferred compensation policy results in a lower charge to the income
statement of around $17 million in 2014, compared to the approach applied previously.

The accounting for share-based and fund product based compensation arrangements is covered in Note 21. The unamortised deferred
compensation at year end is $22 million (2013: $24 million) which has a weighted average remaining vesting period of 1.3 years (2013: 1.4 years).

Pension costs relate to Man’s defined contribution and defined benefit plans (Note 23).

7. Other costs

Occupancy
Technology and communication
Temporary staff, recruitment, consultancy and managed services
Legal fees and other professional fees
Benefits
Insurance
Travel and entertainment
Audit, accountancy, actuarial and tax fees
Marketing and sponsorship
Other cash costs

Total other costs before depreciation and amortisation and adjusting items

Depreciation and amortisation

Other costs – before adjusting items
Reassessment of litigation provision (Note 2)
Litigation, regulatory and other settlements (Note 2)
Acquisition related other costs (Note 2)
Restructuring (Note 2)
Accelerated depreciation (Note 2)

Total other costs

Year ended
31 December
2014

Year ended
31 December
2013

33
32
25
13
12
7
9
8
6
5

150

174
(6)
24
9
1
–

202

50
34
32
18
15
11
10
7
6
8

191

238
–
14
–
28
43

323

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014
82

Notes to the Group financial statements continued

7. Other costs continued

The level of expenses, including occupancy, communication, technology and travel and entertainment, is linked to headcount.

Other costs, before depreciation and amortisation and adjusting items, are $150 million in the year, compared to $191 million in the prior year, which
reflects the impact of the previously announced cost savings programme.

Auditors’ remuneration, including advisory and professional services, is disclosed in more detail in the Corporate governance section on page 41.

8. Finance expense and finance income

Finance income:
Interest on cash deposits and US Treasury bills

Total finance income

Finance expense:
Interest payable on borrowings
Revolving credit facility costs, premium paid on debt buybacks and other (Note 14)

Total finance expense – before adjusting items
Unwind of contingent consideration discount (Note 2)

Total finance expense

9. Taxation

Analysis of tax charge/(credit) for the period:
Current tax:
UK corporation tax on profits of the period
Foreign tax
Adjustments to tax charge in respect of previous periods

Total current tax

Deferred tax:
Origination and reversal of temporary differences
Adjustments to tax charge in respect of previous periods

Initial recognition of US deferred tax asset

Total deferred tax

Total tax charge/(credit)

Year ended
31 December
2014

Year ended
31 December
2013

(3)
(9)

(12)
(7)

(19)

(22)
(36)

(58)
(3)

(61)

Year ended
31 December
2014

Year ended
31 December
2013

54
17
(30)

(14)
–
(8)

(22)

29
16
(34)

(28)
1
–

(27)

(16)

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 the UK
and Switzerland. The current effective tax rate of 5% (2013: -29%) differs from the underlying rate principally as a result of the release of a tax liability
of $25 million and recognition of a US deferred tax asset of $8 million, which are detailed below. The effective tax rate is otherwise consistent with this
earnings profile. The effective tax rate on adjusted profits (Note 2) is 10% (2013: 7%). The higher rate is principally the result of the effect of credits to
the tax charge in respect of previous periods of a similar value to 2013 having a smaller impact on the higher profits in 2014.

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 2014

9. Taxation continued

The tax on Man’s total profit before tax is lower than the amount that would arise using the theoretical effective tax rate applicable to profits/(losses)
of the consolidated companies as follows:

Profit before tax
Theoretical tax charge at UK rate: 21.50% (2013: 23.25%)
Effect of:

Overseas rates compared to UK
Adjustments to tax charge in respect of previous periods
Impairment of goodwill and other adjusting items
Share-based payments
Initial recognition of US deferred tax asset
Other

Total tax charge/(credit)

Year ended
31 December
2014

Year ended
31 December
2013

384
83

(20)
(30)
(1)
(3)
(8)
(2)

56
13

(14)
(33)
19
10
–
(11)

(16)

In the current year the adjustments to the tax charge in respect of previous periods largely relates to the release of $25 million due to reassessment of
tax exposures associated with our Asia Pacific operations.

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 deferred tax asset or liability is realised.

Movements in deferred tax are as follows:

Deferred tax liability
At 1 January
Credit to the income statement

Deferred tax liability at 31 December

Deferred tax asset
At 1 January
Credit to the income statement
Credit/(charge) directly to equity
Other currency differences

Deferred tax asset at 31 December

Year ended
31 December
2014

Year ended
31 December
2013

(97)
14

(83)

39
8
2
(2)

(114)
17

(97)

43
10
(10)
(4)

The deferred tax liability of $83 million (2013: $97 million) relates to deferred tax arising on acquired intangible assets.

The deferred tax asset of $47 million (2013: $39 million) principally relates to US tax losses and intangible assets of $8 million (2013: nil), defined
benefit pension schemes of $8 million (2013: $9 million), employee share schemes of $17 million (2013: $7 million), and tax allowances over depreciation
of $14 million (2013: $18 million). The deferred tax asset income statement credit of $8 million (2013: $10 million) relates to initial recognition of the
deferred tax asset in respect of US losses of $8 million (2013: nil), an increase in the deferred tax asset on employee share schemes of $7 million
(2013: nil), a decrease in the deferred tax asset arising on tax allowances over depreciation of $4 million (2013: $9 million decrease) and a decrease
in the deferred tax liability on other temporary differences of $3 million (2013: $1 million increase). The credit to other revenue reserves of $2 million
(2013: charge of $10 million) relates to movements in the pension accrual and employee share schemes in the year.

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014
84

Notes to the Group financial statements continued

9. Taxation continued

The Group has accumulated deferred tax assets in the US of $191 million. These assets principally comprise accumulated operating losses from
existing operations and future amortisation of goodwill and intangibles assets generated from acquisitions that will be available to offset future taxable
profits in the US. These assets have not been recognised on the balance sheet in the past because the US business as a whole was loss making,
and therefore there was no clear evidence that the business would be able to benefit from these tax assets. As at 31 December 2014, a proportion
($8 million) of these previously unrecognised deferred tax assets has been recognised, triggered by the acquisition of Numeric, which gives rise to
a higher degree of certainty that the US business will earn taxable profits in future periods. The $8 million deferred tax asset recognised in 2014
represents amounts which can be offset against probable future taxable profits, which are considered to be forecast profits for the next three years
only (consistent with the Group’s business planning horizon). As a result of the recognised deferred tax asset and the remaining unrecognised
available US deferred tax assets of $183 million (2013: $188 million), Man does not expect to pay federal tax on any taxable profits it may earn in
the US for the foreseeable future. Accordingly, any movements in this US tax asset are classified as an adjusting item in Note 2 (such as the credit
to tax expense of $8 million recognised in 2014).

10. Earnings per ordinary share (EPS)

The calculation of basic EPS is based on post-tax profit (and for 2013, after payments to holders of the perpetual subordinated capital securities
of $19 million after tax) of $365 million compared to a profit of $53 million in the prior year, and ordinary shares of 1,754,177,715 (2013: 1,787,851,123),
being the weighted average number of ordinary shares on 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,
being ordinary shares of 1,778,702,369 (2013: 1,818,402,923).

The details of movements in the number of shares used in the basic and dilutive EPS calculation are provided below.

Number of shares at beginning of year
Issues of shares
Repurchase of own shares

Number of shares at period end
Shares owned by Employee Trusts

Basic number of shares
Share awards under incentive schemes
Employee share options

Diluted number of shares

The reconciliation from EPS to adjusted EPS is given below:

Earnings per share
Items for which EPS has been adjusted (Note 2)
Tax adjusting items (Note 2)

Adjusted earnings per share

Net performance fees (post-tax)

Adjusted management fee earnings per share

Year ended 31 December 2014

Year ended 31 December 2013

Total
number
(million)

1,823.7
1.4
(68.8)

1,756.3
(21.1)

1,735.2

Total
number
(million)

1,821.8
1.9
–

1,823.7
(29.7)

1,794.0

Weighted
average
(million)

1,823.7
1.1
(45.9)

1,778.9
(24.8)

1,754.1
21.2
3.4

1,778.7

Weighted
average
(million)

1,821.8
1.4
–

1,823.2
(35.3)

1,787.9
27.7
2.8

1,818.4

Year ended 31 December 2014

Basic and
diluted post-
tax earnings
$m

Basic
earnings per
share
cents

Diluted
earnings per
share
cents

365
97
(27)

435

(256)

179

20.8
5.5
(1.5)

24.8

(14.5)

10.3

20.5
5.4
(1.5)

24.4

(14.3)

10.1

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 2014

10. Earnings per ordinary share (EPS) continued

Earnings per share1
Items for which EPS has been adjusted (Note 2)
Tax on adjusting items (Note 2)

Adjusted earnings per share

Net performance fees (post-tax)

Adjusted management fee earnings per share

Year ended 31 December 2013

Basic and
diluted post-tax
earnings

Basic earnings
per share

Diluted earnings
per share

53
241
(37)

257

(114)

143

cents

3.0
13.5
(2.1)

14.4

(6.4)

8.0

cents

2.9
13.3
(2.1)

14.1

(6.2)

7.9

Note:
1 The difference between post-tax profit and basic and diluted post-tax profit in 2013 is the adding back of the expense relating to the perpetual subordinated capital securities

which were redeemed during 2013 (Note 22), totalling $19 million post-tax.

11. Dividends

Ordinary shares
Final dividend paid for the year to 31 December 2013 – 5.3 cents (2012: 12.5 cents)
Interim dividend paid for the six months to 30 June 2014 – 4.0 cents (2013: 2.6 cents)

Dividends paid during the year

Proposed final dividend for the year to 31 December 2014 – 6.1 cents (2013: 5.3 cents)

Year ended
31 December
2014

Year ended
31 December
2013

95
68

163

106

230
47

277

Dividend distribution to the Company’s shareholders is recognised directly in equity 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

Cost:
At beginning of the year
Acquisition of business1
Currency translation
Other adjustment3

At year end

Amortisation and impairment:
At beginning of the year
Amortisation
Impairment4

At year end

Net book value at year end

Allocated to cash generating units as follows:
GLG
AHL
FRM
Numeric

Year ended 31 December 2014

Year ended 31 December 2013

IMCs and
other acquired
intangibles2

Goodwill

Total

Goodwill

IMCs and
other acquired
intangibles2

2,231
137
(8)
(1)

2,359

(1,423)

–
–

(1,423)

936

201
461
140
134

726
198
–
–

924

(206)
(72)
–

(278)

646

431
–
36
179

2,957
335
(8)
(1)

3,283

(1,629)
(72)
–

(1,701)

1,582

632
461
176
313

2,252
–
(16)
(5)

2,231

(1,354)
–
(69)

(1,423)

808

201
468
139
–

726
–
–
–

726

(140)
(66)
–

(206)

520

493
–
27
–

Total

2,978
–
(16)
(5)

2,957

(1,494)
(66)
(69)

(1,629)

1,328

694
468
166
–

Notes:
1 Acquisition of business relates to Numeric and Pine Grove.
2
3 The 2014 other adjustment of $1 million relates to the disposal of goodwill resulting from the sale of a subsidiary to local management during the year. The prior year other

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

adjustment of $5 million to goodwill relates to an adjustment to the calculation for the FRM contingent consideration at the date of acquisition (July 2012), reducing the goodwill
and contingent consideration creditor.

4 The 2013 impairment of $69 million relates to FRM.

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014

Notes to the Group financial statements continued

12. Goodwill and acquired intangibles continued

Goodwill
Goodwill represents the excess of the consideration transferred over the fair value of the identifiable net assets of the acquired business at the date
of acquisition.

Goodwill is carried on the Group balance sheet at cost less accumulated impairment. 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. An impairment loss is recognised for the amount by which the asset’s carrying value exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the
lowest levels for which there are separately identifiable cash flows (cash generating units).

Investment management contracts, distribution channels and brand names
Investment management contracts (IMCs), distribution channels and brand names are recognised at the present value of the expected future cash
flows and are amortised on a straight-line basis over the expected useful lives, which are between 5 and 13 years.

Allocation of goodwill to cash generating units
For statutory accounting impairment review purposes, the Group has identified four cash generating units (CGUs): GLG, AHL, FRM and Numeric.
The goodwill and other intangible assets acquired as part of the Pine Grove acquisition have been allocated to the FRM CGU as the acquired Pine
Grove business has been fully integrated with the FRM business. The Numeric acquisition is detailed below.

The Man Systematic Strategies business (MSS) was integrated into the AHL business on 1 January 2013, and associated goodwill of $71 million was
transferred from the GLG and FRM CGUs to the AHL CGU at that date.

Calculation of recoverable amounts for cash generating units
The recoverable amounts of the Group’s CGUs are assessed each year using a value in use calculation. The value in use calculation gives a higher
valuation compared to a fair value less cost to sell approach, as this would exclude some of the revenue synergies available to Man through its ability
to distribute products using its well established distribution channels, which may not be fully available to other market participants.

The value in use calculations at 31 December 2014 use cash flow projections based on the Board approved financial plan for the year to 31 December
2015 and a further two years of projections (2016 and 2017) plus a terminal value. The 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, after this three year budget period, no growth in asset flows
above the long-term growth rate.

The key assumptions used in the value in use calculations are represented by the compound average annualised growth in FUM over the three
year budget period and the discount rates applied to the modelled cash flows. The value in use calculations are sensitive to small changes in the
key assumptions, in particular in relation to the compound average annualised growth in FUM over the three year forecast period. Sensitivity analysis
of this assumption is given in each of the GLG, AHL and FRM sections below. The terminal value is calculated based on the projected closing
FUM at 31 December 2017 and applying a mid-point of a range of historical multiples to the forecast cash flows associated with management and
performance fees. A bifurcated discount rate has been applied to the modelled cash flows to reflect the different risk profile of net management fee
income and net performance fee income. The discount rates are based on the Group’s weighted average cost of capital using a risk free interest rate,
together with an equity risk premium and an appropriate beta derived from consideration of Man’s beta, similar alternative asset managers’, and the
asset management sector as a whole. The post-tax discount rates applied are the same as those used in 2013.

The specific assumptions applied to the value in use calculations for each of the CGUs are explained in the sections below.

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 201487

12. Goodwill and acquired intangibles continued

GLG cash generating unit
For the year ended 31 December 2013 there was no impairment charge. The recoverable amount of the GLG CGU has again been assessed at
31 December 2014. The key assumptions used in the value in use calculation are shown in the table below.

Compound average annualised growth in FUM (over three years)

Discount rate (post-tax)1
– Net management fees
– Net performance fees

Terminal value (mid-point of range of historical multiples, post-tax)2
– Management fees
– Performance fees

11%
17%

13x
5.5x

Notes:
1 The pre-tax equivalent of the net management fee and net performance fee discount rates are 14% and 21% respectively.
2 The terminal value is equivalent to an overall terminal growth rate of 3% for management fees and 0% for performance fees.

The GLG value in use calculation at 31 December 2014 indicates a value of $800 million, with around $150 million of headroom over the carrying
value of the GLG business. Therefore, no impairment charge is deemed necessary at 31 December 2014. The valuation at 31 December 2014
is around $500 million lower than the value in use calculation at 31 December 2013, primarily as a result of lower than anticipated investment
performance and net inflows in 2014, particularly for discretionary alternatives, and decreased growth in FUM anticipated over the next three
years as result of the 2014 performance.

The table below shows scenarios whereby the base case key assumptions are changed to stressed assumptions, indicating the modelled headroom
or impairment that would result. Each assumption, or set of assumptions, is stressed in isolation. The results of these sensitivities make no allowance
for actions that management would take if such market conditions persisted.

Stressed to:

Modelled headroom/(impairment) ($m)

Notes:
1 An increase/decrease of $16 million.
2 An increase/decrease of $66 million.

Compound average annualised
growth in FUM

Discount rates (post-tax)

Multiples (post-tax)

Management fee/
Performance fee

4% 10%/16% 12%/18%

14x/6.5x

12x/4.5x

(20)

1681

1361

2172

852

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014
88

Notes to the Group financial statements continued

12. Goodwill and acquired intangibles continued

AHL cash generating unit
For the year ended 31 December 2013 there was no impairment charge. The recoverable amount of the AHL CGU has been assessed at
31 December 2014 using a value in use calculation. The key assumptions used in the value in use calculation are shown in the table below.

Compound average annualised growth in FUM (over three years)

Discount rate (post-tax)1
– Net management fees
– Net performance fees

Terminal value (mid-point of range of historical multiples, post-tax)2
– Management fees
– Performance fees

17%

11%
17%

13x
5.5x

Notes:
1 The pre-tax equivalent of the net management fee and net performance fee discount rates are 13% and 21% respectively.
2 The terminal value is equivalent to an overall terminal growth rate of 3% for management fees and 0% for performance fees.

The AHL value in use calculation at 31 December 2014 indicates a value of $3.0 billion, with around $2.5 billion of headroom over the carrying
value of the AHL business. Therefore, no impairment charge is deemed necessary at 31 December 2014. The valuation at 31 December 2014
is around $1.7 billion higher than the value in use calculation at 31 December 2013, primarily as a result of strong investment performance in 2014,
particularly for quant alternatives, better than anticipated net inflows, and higher growth in FUM anticipated over the next three years as a result
of this strong performance.

Stressed to:

Modelled headroom/(impairment) ($m)

Notes:
1 An increase/decrease of $60 million.
2 An increase/decrease of $274 million.

Compound average annualised
growth in FUM

Discount rates (post-tax)

Multiples (post-tax)

Management fee/
Performance fee

1,103

-2% 10%/16% 12%/18%

14x/6.5x

12x/4.5x

260

2,5801

2,4601

2,7942

2,2462

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 201489

12. Goodwill and acquired intangibles continued

FRM cash generating unit
The FRM CGU includes the legacy Man Multi-Manager business, the acquired FRM business and goodwill relating to the acquisition of Pine Grove
during 2014.

For the year ended 31 December 2013 an impairment charge of $69 million was recognised as a result of guaranteed product FUM decreasing faster
than expected and lower than anticipated FUM and flows, in particular due to redemptions in our legacy Multi-Manager Business. The recoverable
amount of the FRM CGU has again been assessed at 31 December 2014. The key assumptions used in the value in use calculation are shown
in the table below.

Compound average annualised growth in FUM (over three years)

Discount rate (post-tax)1
– Net management fees
– Net performance fees

Terminal value (mid-point of range of historical multiples, post-tax)2
– Management fees
– Performance fees

11%
17%

12x
5x

Notes:
1 The pre-tax equivalent of the net management fee and net performance fee discount rates are 13% and 20% respectively.
2 The terminal value is equivalent to an overall terminal growth rate of 2% for management fees and 0% for performance fees.

The FRM value in use calculation at 31 December 2014 indicates a value of $230 million, with around $40 million of headroom over the carrying value
of the FRM business. Therefore, no impairment charge is deemed necessary at 31 December 2014. The valuation at 31 December 2014 is slightly
higher than the value in use calculation at 31 December 2013, primarily as a result of better than anticipated net inflows for fund of fund products in
2014, in particular for managed account mandates, and higher growth in FUM anticipated over the next three years, which have been partially offset
by a decline in management fee margins. Despite an increase in the FRM CGU value in use, the valuation of the FRM contingent consideration has
decreased by $17 million during 2014 (Note 2). This is the result of a decrease in the management fee run rate revenue of the legacy FRM business
versus expectations, and does not take into account the impact of the significant cost base reduction of this business since acquisition.

Stressed to:

Modelled headroom/(impairment) ($m)

Notes:
1 An increase/decrease of $5 million.
2 An increase/decrease of $19 million.

Compound average annualised
growth in FUM

Discount rates (post-tax)

Multiples (post-tax)

Management fee/
Performance fee

7% 10%/16% 12%/18%

13x/5x

11x/3x

(19)

461

361

602

222

Acquisition of Numeric
On 5 September 2014 Man acquired Numeric Holdings LLC (‘Numeric’), a Boston-based quantitative equity manager with funds under management
at the date of acquisition of $15.2 billion.

The consideration to Numeric owners is comprised of $219 million up-front and $19 million of balance sheet consideration paid in cash at completion,
plus two earn-out style contingent consideration arrangements (the ‘Option Consideration’) payable post-acquisition. Numeric Management are rolling
over the majority of their consideration in return for an ongoing 18.3% equity interest in the business (the ‘Management Interests’) and have also been
granted profits interests in the business that entitle them to share in 16.5% of the increase in the value of the Numeric business over the period prior to
the exercise date for the put and call arrangement described below (the ‘Profit Interests’). At the end of five years following completion, Man will have
an opportunity to acquire the Management Interests and the Profit Interests pursuant to a put and call option arrangement. The maximum aggregate
amount payable by Man in respect of the Option Consideration is capped at $275 million. The call and put options structure means that it is virtually
certain that Man will elect to, or be obliged to, purchase the interests held by Numeric management at five (call option) or five and a half (put option)
years post-closing. Therefore this element of the consideration is equivalent to an earn-out and is deemed to be a financial liability measured initially
at fair value and any subsequent fair value movements recognised through the Group income statement (Note 27).

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014
90

Notes to the Group financial statements continued

12. Goodwill and acquired intangibles continued

Provisional values for the acquired business at the date of acquisition are set out below.

Cash and cash equivalents
Fees and other receivables
Leasehold improvements and equipment
Intangible assets
Trade and other payables

Net assets acquired
Goodwill on acquisition

Net assets acquired including goodwill

Purchase consideration:
Cash consideration
Contingent consideration

Total consideration

Book value

Fair value
adjustments

Provisional
value

12
26
3
–
(15)

–
–
–
185
(1)

184

12
26
3
185
(16)

210
134

344

238
106

344

The fair value adjustments relate to the recognition of intangible assets comprising acquired investment management contracts ($181 million) and the
Numeric brand ($4 million). 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 and 13 years respectively. No deferred tax liability has been recognised on
acquisition as these intangibles are tax-deductible in the US.

Goodwill primarily represents future synergies from combining Man’s global distribution capabilities with the existing Numeric business, Numeric’s
skilled workforce, and the market share and positioning within the US quantitative domain. Numeric’s strong performance track record underpins
the implied goodwill within the acquired business. Goodwill is expected to be deductible for tax purposes. The newly acquired Numeric business
is considered a separate CGU for future statutory accounting impairment review purposes.

Acquisition costs relating to staff termination, legal and other advisory fees, as well as the costs of integrating our operating platforms, have been incurred
as a result of the Numeric transaction. These have been expensed and do not form part of goodwill, and are classified as adjusting items (Note 2).

The pre-tax profit for the Numeric business since acquisition date is $19 million. If Numeric had been acquired at the beginning of the financial year,
the pre-tax profit for Numeric would have been $43 million, based on the post-acquisition expense structure and excluding any deal related costs.
Numeric revenue for the period since the acquisition date is $42 million (including performance fee revenue of $23 million), and if the acquisition
had taken place at the beginning of the financial year, the revenue would have been $94 million (including performance fee revenue of $39 million).

Acquisition of Pine Grove
On 4 August 2014, Man acquired the entire issued share capital of Pine Grove Asset Management LLC (‘Pine Grove’), a US based fund of hedge
fund manager specialising in the management of credit-focused hedge fund portfolios with funds under management at the date of acquisition
of $1.0 billion.

The consideration to Pine Grove owners comprises $1 million in cash up-front and $5 million in August 2015, and contingent amounts based
on management fees earned, paid annually for five years post acquisition (valued at $11 million). The deferred consideration payable is equivalent to
an earn-out and deemed to be a financial liability measured initially at fair value and any subsequent fair value movements recognised through the
Group income statement (Note 27).

Provisional values for the acquired business at the date of acquisition are set out below.

Fees and other receivables
Intangible assets

Net assets acquired
Goodwill on acquisition

Net assets acquired including goodwill

Purchase consideration:
Cash consideration
Contingent consideration

Total consideration

Book value

Fair value
adjustments

Provisional
value

1
–

–
13

1
13

14
3

6
11

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 2014

12. Goodwill and acquired intangibles continued

The fair value adjustments relate primarily to the recognition of investment management contracts of $13 million. 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 nine years. No deferred tax liability has been recognised on acquisition as these intangibles are tax-deductible in the US.

Goodwill primarily represents the future incremental synergies from cost savings, Pine Grove’s skilled workforce and increased access to the
US market.

Acquisition costs relating to staff termination, legal and other advisory fees, as well as the costs of integrating our operating platforms, have been
incurred as a result of the Pine Grove transaction. These have been expensed and do not form part of goodwill, and are classified as adjusting
items (Note 2).

The pre-tax profit for the Pine Grove business since acquisition date is $2 million. If Pine Grove had been acquired at the beginning of the financial
year, the pre-tax profit for Pine Grove would have been $4 million, excluding any deal related costs. Pine Grove revenue for the period since the
acquisition date is $4 million, and if the acquisition had taken place at the beginning of the financial year, the revenue would have been $11 million.

13. Other intangibles

Cost:
At beginning of the year
Additions
Redemptions/disposals

At year end

Aggregate amortisation and impairment:
At beginning of the year
Redemptions/disposals
Amortisation

At year end

Net book value at year end

Year ended 31 December 2014

Year ended 31 December 2013

Placement
fees

Capitalised
computer
software

74
–
(8)

(54)
6
(13)

(61)

69
9
(20)

(63)
16
(3)

(50)

Placement

fees

Capitalised
computer
software

81
3
(10)

(49)
5
(10)

(54)

108
–
(39)

(95)
40
(8)

(63)

Total

143
9
(28)

124

(117)
22
(16)

(111)

Total

189
3
(49)

143

(144)
45
(18)

(117)

Placement fees
Placement fees are paid to distributors for fund product launches or sales. The majority of placement fees paid up-front are capitalised as intangible
assets which represent 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 benefits from the investor in each
product, estimated to be 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 (accelerated amortisation).
The placement fees intangible is also subject to a valuation assessment semi-annually to ensure that the future economic benefit arising from each
fund product is in excess of the remaining unamortised balance. Amortisation expense, including any accelerated charges, is included in distribution
costs in the Group income statement.

The weighted average remaining period of the unamortised placement fees at 31 December 2014 is 1.9 years (31 December 2013: 1.5 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 amortisation 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 by 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 Group income statement.

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014

Notes to the Group financial statements continued

14. Cash, liquidity and borrowings

Liquidity and borrowings
Total liquidity resources aggregate to $2,263 million at 31 December 2014 (2013: $2,517 million) and comprise cash and cash equivalents of
$738 million (2013: $992 million) and the undrawn committed revolving credit facility of $1,525 million (2013: $1,525 million). Cash and cash equivalents
at year end comprises $291 million (2013: $291 million) of cash at bank on hand, and $447 million (2013: $701 million) in short-term deposits,
net of overdrafts of nil (2013: nil). Cash ring-fenced for regulated entities totalled $24 million (2013: $16 million).

Liquidity resources support ongoing 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 (Note 29.1), 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 liquidity.
Accordingly, cash is held in short-term bank deposits and on-demand deposit bank accounts. At 31 December 2014 the $738 million cash balance
is held with 22 banks (2013: $992 million with 24 banks). The single largest counterparty bank exposure of $100 million is held with an AA- rated
bank (2013: $136 million with an AA- rated bank). At 31 December 2014, balances with banks in the AA ratings band aggregate to $284 million
(2013: $472 million) and balances with banks in the A ratings band aggregate to $453 million (2013: $520 million).

During 2013 Man repaid all of its previously outstanding borrowings and the perpetual subordinated capital securities.

On 16 September 2014 Man issued $150 million ten year fixed rate reset callable guaranteed subordinated notes (Tier 2 notes), with associated
issuance costs of $1 million. The Tier 2 notes were issued with a fixed coupon of 5.875% until 15 September 2019. The notes may be redeemed in
whole at Man’s option on 16 September 2019 at their principal amount, subject to FCA approval. If the notes are not redeemed at this time then the
coupon will reset to the five year mid-swap rate plus 4.076% and the notes will be redeemed on 16 September 2024 at their principal amount.

31 December 2014 ($m)

Borrowings
2024 fixed rate reset callable guaranteed subordinated notes

Cash and cash equivalents
Undrawn committed revolving credit facility

Total liquidity

31 December 2013 ($m)

Cash and cash equivalents
Undrawn committed revolving credit facility

Total liquidity

Total

149

738
1,525

2,263

Total

992
1,525

2,517

Less than

1 year

2 years

3 years

Greater than

3 years

–

738
–

738

Less than

1 year

992
–

992

–

–
70

–

149

–
120

120

–
1,335

1,335

2 years

3 years

–
–

–

–
70

Greater than

3 years

–
1,455

1,455

Borrowings are initially recorded at fair value net of transaction costs incurred, and are subsequently measured 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 rate method. At 31 December 2014, the fair value of borrowings is $154 million (2013: nil).

In 2013 the senior fixed rate bonds and floating rate notes of $859 million were repurchased at a total premium of $26 million. This premium, along with
an accelerated unwind of issue costs and fees of $2 million, was included in finance expense in 2013.

The committed revolving credit facility of $1,525 million was put in place during July 2011 as a five year facility and included 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 had the option to accept
or decline Man’s request. Before the second anniversary in July 2013 the banks were asked to extend the maturity date of the facility by a further
year. Banks with participations totalling $1,335 million accepted the request and as a result $70 million of the facility is currently scheduled to mature
in July 2016, $120 million in July 2017, and $1,335 million in July 2018. To maintain maximum flexibility, the revolving credit facility does not include
financial covenants.

Disclosures in relation to financial guarantees and commitments are included in Note 29.

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 201493

14. Cash, liquidity and borrowings continued

Foreign exchange and interest rate risk
Man is subject to risk from changes in interest rates and 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 $6 million
(2013: $2 million loss/gain), with a corresponding impact on equity. This exposure is based on USD balances held by non-USD functional currency
entities and non-USD balances held by USD functional currency entities within the Group. In respect of Man’s monetary assets and liabilities which
earn/incur interest indexed to floating rates, as at 31 December 2014, a 50bp increase/decrease in interest rates, with all other variables held constant,
would have resulted in a $2 million increase or a $1 million decrease (2013: $3 million increase or $1 million decrease) in net interest income.

15. Investments in fund products and other investments

Investments in fund products comprise:
Loans to fund products
Other investments in fund products
Other investments

31 December 2014

Financial
assets at fair
value through
profit or loss

Available-for-
sale financial
assets

Loans and
receivables

Total
investments in
fund products
and other
investments

Net
non-current
assets held
for sale

Total
investments

–
207
–

207

–
2
4

94
–
–

94
209
4

307

31 December 2013

–
153
–

153

94
362
4

460

Financial assets
at fair value
through profit
or loss

Available-for-
sale financial
assets

Loans and
receivables

Total
investments in
fund products
and other
investments

Net
non-current
assets held

for sale

Total
investments

–
167
–

167

–
1
6

99
–
–

99
168
6

273

–
50
–

99
218
6

323

15.1. Loans to fund products
Loans to fund products are short-term advances primarily to Man guaranteed products, which are made to assist with the financing of the leverage
associated with the structured products. The loans are repayable on demand and are carried at amortised cost using the effective interest rate
method. The average balance during the year is $80 million (2013: $238 million). Loans to fund products have decreased compared to the prior year
as guaranteed product FUM has decreased together with the associated leveraging. The liquidity requirements of guaranteed products together with
commitments to provide financial support (Note 29) 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 revolving credit 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 this credit risk. Loans are closely monitored against the assets held in the funds.
The largest single loan to a fund product at 31 December 2014 is $14 million (2013: $12 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 A.

15.2. Other investments in fund products
Man uses capital to invest in our fund products as part of our ongoing business to build our product breadth and to trial investment research
developments before we market the products to investors. These seeding investments are generally held for less than one year. Where Man
is deemed not to control the fund, these are classified as other investments in fund products. Other investments in fund products are classified
primarily at fair value through profit or loss, with movements in fair value being recognised through income or gains on investments and other
financial instruments. 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 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 anticipated redemption horizon of the fund product.
The valuation of the underlying assets within each fund product is determined by external valuation service providers based on an agreed valuation
policy and methodology.

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014
94

Notes to the Group financial statements continued

15. Investments in fund products and other investments continued

Whilst these valuations are performed independently of Man, Man has established oversight procedures and due diligence processes to ensure
that the NAVs reported by the external valuation service providers are reliable and appropriate. Man makes adjustments to these NAVs where the
anticipated redemption horizon or events or circumstances indicate that the NAVs are not reflective of fair value. The fair value hierarchy of financial
assets is disclosed in Note 27.

Other investments in fund products expose Man to market risk and therefore this process is subject to limits consistent with the Board’s risk appetite.
The largest single investment in fund products is $51 million (2013: $50 million). The market risk from seeding investments is modelled using a value
at risk methodology using a 95% confidence interval and one year time horizon. The value at risk is estimated to be $26 million at 31 December 2014
(2013: $19 million).

Fund investment for deferred compensation arrangements
At 31 December 2014 investments in fund products included $68 million (2013: $61 million) of fund products related to deferred compensation
arrangements. Employees are subject to mandatory deferral arrangements and as part of these arrangements employees can elect to have their
deferral in a designated series of Man fund products. The changes in the fair value of the fund product awards are recognised over the relevant vesting
period, which means the compensation expense changes 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 value of the fund investment is delivered to the employee.
The fund product investments are recorded at fair value with any gains or losses during the vesting period recognised as income or gains on
investments and other financial instruments in the Group income statement.

15.3. Non-current assets held for sale
Seed capital invested into funds may at times be significant, and therefore the fund may be deemed to be controlled by the Group. Where the Group
acquired the controlling stake exclusively with a view to subsequent disposal through sale or dilution and it is considered highly probable that it will
relinquish control within a year, the investment in the controlled fund is classified as held for sale. The seeded fund is recognised in the Group balance
sheet as non-current assets and liabilities held for sale, with the interests of any other parties included within non-current liabilities held for sale.
Amounts recognised are measured at the lower of the carrying amount and fair value less costs to sell.

The non-current assets and liabilities held for sale are as follows:

Non-current assets held for sale
Non-current liabilities held for sale

Investments in fund products held for sale

31 December
2014

31 December
2013

186
(33)

153

56
(6)

Investments cease to be classified as held for sale when the fund is no longer controlled by the Group, at which time they are classified as financial
assets at fair value through profit or loss (Note 15.2). Loss of control may eventuate through sale of the investment or a dilution in the Group’s holding.
If a held for sale fund remains under the control of the Group for more than one year, and it is unlikely that the Group will reduce or no longer control
its investment in the short-term, it will cease to be classified as held for sale and will be consolidated on a line-by-line basis.

15.4. Structured entities
A structured entity is an entity designed so that its activities are not governed by way of voting rights, for example where contractual arrangements
are the dominant factor in affecting an investor’s returns. Man has evaluated all exposures and concluded that where Man holds an investment, loan,
fees receivable, guarantee or commitment with an investment fund or a collateralised loan obligation, this represents an interest in a structured entity.
The activities of these entities are governed by investment management agreements or, in the case of a collateralised loan obligation, the indenture.

In determining whether Man controls a structured entity the directors focus on the purpose and design of the entity, the decision making rights as
investment manager or advisor, the substantive rights to remove the fund manager or advisor and Man’s aggregate economic interests in the form of
interest held and exposure to variable returns. Where Man does not hold an investment in the structured entity, Man considers that the characteristics
of control are not met. Furthermore, for managed accounts where we do not act as investment manager or advisor, and for illiquid investments
purchased by Man where these are no longer actively traded or managed, Man’s role in directing investment activities is diminished and therefore
these are not considered to be structured entities.

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 201495

15. Investments in fund products and other investments continued

In most instances Man’s decision making authority in its capacity as investment manager or advisor to these entities is well defined and discretion
is exercised regarding the relevant activities. These agreements include only terms, conditions or amounts that are customarily present in similar
arrangements negotiated on an arm’s length basis, including management and performance fee arrangements. Where the right to remove Man
as investment manager without cause also exists, Man is acting as agent on behalf of the investors and therefore these entities are not consolidated
into Man’s results.

Man is considered to be acting as principal where Man is the investment manager or advisor and is able to make the investment decisions on behalf
of the investors, has substantial exposure to variable returns through investments held and fee arrangements, and there are no substantive rights that
would remove Man as investment manager or advisor. Consolidated structured entities are detailed in Note 15.3 and Note 32.

Man’s interest in and exposure to unconsolidated structured entities is as follows:

Less Managed
Accounts and
Consolidated
fund entities
($bn)

Total FUM
Unconsolidated
Structured
entities
($bn)

Total FUM
($bn)

Gross
management
fee margin
(%)1

No. of funds

Fair value of
investment
held ($m)

Fees
receivable
($m)

Loans to
funds
($m)

Maximum
exposure to
loss
($m)2

Alternative

Quant (AHL/Numeric)
Discretionary (GLG)
Fund of funds (FRM)
Long only
Quant (AHL/Numeric)
Discretionary (GLG)
Guaranteed

Total

12.9
14.5
10.8

16.7
16.0
2.0

72.9

–
0.1
1.8

–
–
–

1.9

12.9
14.4
9.0

16.7
16.0
2.0

71.0

87
439
141

10
112
48

837

2.2
1.4
0.9

0.3
0.9
5.2

40
114
6

2
4
–

85
7
12

3
9
18

166

134

1
93
–

–
–
–

126
214
18

5
13
18

394

Notes:
1 Gross management fee margins are the categorical weighted average. Performance fees can only be earned after a high water mark is achieved. For performance fee eligible

funds, performance fees are within the range of 10% to 20%.

2 Man’s maximum exposure to loss from unconsolidated structured entities at 31 December 2014 is the sum total of any investment held, fees receivable and loans to the

fund entities.

Included within fund of funds is a $19 million interest representing approximately 46% in the most subordinated debt tranche of a collateralised
loan obligation. Man is also the Collateral Manager. Man has limited decision making power and therefore ability to affect returns due to restrictive
parameters within the indenture, which also provides substantive removal rights on which Man cannot vote, in particular in relation to the key-man
clause, meaning in practice that either the holder of the remaining majority subordinated debt tranche or the majority controlling class shareholder
can remove Man as Collateral Manager. Furthermore, the majority controlling class shareholder has demonstrated its power to make changes to the
indenture. Accordingly, having considered all factors and in particular the restrictive indenture and the practical ability of the other parties to remove
Man as Collateral Manager, Man considers that it does not control this investment. As a holder of the most subordinated debt tranche, Man has
a greater exposure to the risk of borrower default than most other investors, however this risk is limited to the value of the investment held.

Support provided to unconsolidated structured entities is detailed in Note 15.1, and is included within the maximum exposure to loss above.
Furthermore, on occasion Man agrees to purchase illiquid investments from the funds at market rates in order to facilitate investor withdrawals.
Man has not provided any other non-contractual support to unconsolidated structured entities. Further information about risks relating to investment
funds can be found in Principal risks and mitigants on page 25.

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014
96

Notes to the Group financial statements continued

16. Fee and other receivables

Fee receivables
Prepayments and accrued income
Derivative financial instruments
Other receivables

31 December
2014

31 December
2013

134
204
3
55

396

62
200
20
106

388

Fee and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method.
Fee receivables and accrued income represent management and performance fees from fund products and are received in cash when the funds’ net
asset values are 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 are overdue or delinquent at year end. At 31 December 2014, $8 million (2013: $18 million) of fee and
other receivables are expected to be settled after 12 months.

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 redemptions receivable from funds and payable to customers. At 31 December 2014 the amount
included in other receivables is $19 million (2013: $27 million). The unsettled fund payable is recorded in trade and other payables.

In limited circumstances, the Group uses derivative financial instruments to hedge its risk associated with foreign exchange movements. Where fixed
foreign currency denominated costs are hedged, the associated derivatives may be designated as cash flow hedges. Effective unrealised gains
or losses on these instruments are recognised within the cash flow hedge reserve in equity, and when realised these are reclassified to the Group
income statement in the same line as the hedged item. Other derivative financial instruments, which consist primarily of foreign exchange contracts,
are measured at fair value through profit or loss. The notional value of derivative financial assets is $280 million (2013: $265 million). All derivatives
are held with external banks with ratings of A or higher and mature within one year. During the year, there were $3 million net realised and unrealised
losses arising from derivatives (2013: $18 million net gains). Derivatives are classified as Level 2 under Man’s fair value hierarchy (Note 27).

17. Trade and other payables

Accruals1
Trade payables
Deferred consideration
Derivative financial instruments
Other payables

31 December
2014

31 December
2013

289
35
150
15
92

581

3361
54
44
1
198

633

Note:
1 $19 million relating to restructuring has been reclassified from accruals, as presented in prior year, to provisions (Note 18).

Accruals primarily relate to compensation accruals. Trade payables include payables of $20 million at 31 December 2014 (2013: $27 million) relating to
the OEIC funds business. Deferred consideration in 2014 relates to the amounts payable in respect of the Numeric, Pine Grove and FRM acquisitions
(2013: FRM) (Note 27). Other payables include servicing fees payable to distributors and redemption proceeds due to investors.

Payables are initially recorded at fair value and subsequently measured at amortised cost. Included in trade and other payables at 31 December 2014
are balances of $109 million (2013: $22 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.

Derivative financial instruments, which consist primarily of foreign exchange contracts, are measured at fair value through profit or loss. The notional
value of derivative financial liabilities at 31 December 2014 is $358 million (2013: $412 million). All derivative contracts mature within one year.

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 201418. Provisions

As 1 January 2014
Charged/(credited) to the income statement:
Charge in the year
Provisions related to acquisitions during year
Unused amounts reversed
Unwinding of discount
Exchange differences
Used during the year/settlements

At 31 December 2014

Onerous
property lease
contracts

Litigation

Restructuring

2
–
(1)
1
(2)
(9)

–
–
(6)
–
–
–

–
3
–
–
–
(15)

Total

2
3
(7)
1
(2)
(24)

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will
be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

Provisions for onerous property lease contracts represent the present value of the future lease payments that the Group is presently obliged to make
under non-cancellable onerous operating lease contracts, less the future benefit expected to be generated from these, including sub-lease revenue
where applicable. The unexpired terms of the onerous leases range from one to 21 years.

Provisions for restructuring are recognised when the obligation arises, following communication of the formal plan. Movements in the restructuring
provision relate to the settlement of prior year provisions and termination costs associated with acquisitions during the year.

The $6 million reduction in the litigation provision is the result of reassessment of the litigation provision required.

The opening provision balances for 2013 were $29 million for onerous property lease contracts, $30 million in relation to litigation and nil for restructuring.

19. Investments in associates

Associates are entities in which Man holds an interest and over which it has significant influence but not control, and are accounted for using the
equity method. In assessing significant influence Man considers the investment held and its power to participate in the financial and operating policy
decisions of the investee through its voting or other rights.

Under the equity method associates are carried 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 interests in these
entities. An impairment assessment of the carrying value of associates is performed annually or whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable, and any impairment is expensed in the Group income statement.

Man’s investments in associates are as follows:

Year ended 31 December 2014

Year ended 31 December 2013

% ownership

At beginning of the year
Additions
Shares of post-tax profit
Dividends received
Disposals

At year end

Nephila
Capital Ltd

18.75%1

28
–
9
(9)
–

20%

3
–
–
(1)
–

Nephila Capital
Ltd

18.75%1

OFI MGA

20%

31
–
9
(10)
–

38
–
11
(11)
(10)

–
2
1
–
–

Total

38
2
12
(11)
(10)

OFI MGA

Total

Note:
1 18.75% represents Man’s ownership of class B common shares. Man’s participation in the profits of Nephila is governed by the share class rights and therefore does not relate

proportionately to the ownership interest held. In 2013 Man reduced its interest in Nephila from 25% to 18.75%, realising a gain on disposal of $10 million which is classified as an
adjusting item (Note 2). Man considers that this equity interest, Man’s ability to veto Nephila’s annual business plan, and the presence of a Man member on the Nephila board of
directors provides Man with the power to participate in the financial and operating policy decisions, and equates to significant influence.

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014
98

Notes to the Group financial statements continued

19. Investments in associates continued

Nephila Capital Limited is an alternative investment manager based in Bermuda specialising in the management of funds which underwrite natural
catastrophe reinsurance and invest in insurance-linked securities and weather derivatives. OFI MGA is a French asset manager which was acquired
during 2013. Both Nephila Capital Ltd and OFI MGA have a 31 December year end. Man has not provided any financial support to associates during
the year to 31 December 2014 (2013: nil).

20. Leasehold improvements and equipment

Cost
At beginning of the year
Acquisition of business
Additions
Disposals
Reclassifications

At year end

Accumulated depreciation:
At beginning of the year
Charge for year
Accelerated depreciation
Disposals

At year end

Net book value at year end

Year ended 31 December 2014

Year ended 31 December 2013

Leasehold
improvements

Equipment

Total

Leasehold
improvements

Equipment

Total

119
2
1
(8)
–

114
–
2
(13)
–

233
2
3
(21)
–

114

103

217

(78)
(6)
–
8

(76)

(87)
(15)
–
13

(89)

(165)
(21)
–
21

(165)

124
–
1
(2)
(4)

119

(31)
(11)
(38)
2

(78)

116
–
1
(7)
4

114

(59)
(28)
(5)
5

(87)

240
–
2
(9)
–

233

(90)
(39)
(43)
7

(165)

All leasehold improvements and equipment are shown at cost, less depreciation and impairment. Cost includes the original purchase price of the
asset and costs directly attributable to bringing the asset to its working condition for its intended use. Depreciation is calculated using the straight-line
method over the asset’s estimated useful life, which for leasehold improvements is over the shorter of the life of the lease and the improvement and for
equipment is between three and 10 years.

In 2013 the accelerated depreciation of $43 million relates to the assets no longer being used following the sub-letting of space in Riverbank House
(our main London headquarters).

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 2014

21. Deferred compensation arrangements

Man operates cash and equity-settled share-based payment schemes as well as fund product based compensation arrangements. Details of these
schemes can be found in the Directors’ remuneration report on pages 44 to 64.

For compensation plans whereby deferred compensation is invested in fund products managed by Man, the fair value of the employee services
received in exchange for the fund units is recognised as an expense over the vesting period, with a corresponding liability. The total amount to be
expensed is determined by reference to the fair value of the awards, which is re-measured at each reporting date, and equates to the fair value of
the underlying fund products at settlement date.

During the year, $42 million (2013: $70 million) is included in compensation costs relating to share-based payment and deferred fund product
plans, consisting of equity-settled share-based payments of $10 million (2013: $35 million), cash-settled share-based payments totalling $1 million
(2013: $1 million), and deferred fund product plans of $31 million (2013: $34 million).

21.1 Employee Trusts
The Employee Trusts have the obligation to deliver shares, options and fund product based payments which have been granted to employees.
Man contributed funds, in order for the Trusts to meet their current period obligations in the year, of $21 million (2013: $27 million).

The Employee Trusts are fully consolidated into Man and shares held are treated as treasury shares for EPS purposes (Note 10). The shares held
by the Employee Trusts are deducted from Tier 1 Capital. The Employee Trusts are controlled by independent trustees and their assets are held
separately from those of Man. At 31 December 2014 the net assets of the Employee Trusts amounted to $35 million (2013: $36 million). These assets
include 21,113,109 (2013: 29,681,372) ordinary shares in the Company, $32 million notional value options over Man shares (2013: $31 million), and
$33 million fund units (2013: $36 million) to deliver against the future obligations. The shares are recorded at cost and shown as a deduction from
shareholders’ funds. During the year the trustees of one of the Employee Trusts waived all of the interim dividend for the year ended 31 December
2014 on each of the 21,217,345 ordinary shares registered in its name at the relevant date for eligibility for the interim dividend (2013 interim dividend:
waived on all 30,526,357 shares) and all of the final dividend for the year ended 31 December 2013 on each of 26,925,242 of the ordinary shares
registered in its name at the relevant date for eligibility for the final dividend (2012 final dividend: waived on all 37,404,793 shares).

21.2 Share-based payments
In respect of equity-settled share-based payment schemes, the fair value of the employee services received in exchange for the share awards
and options granted is recognised as an expense, with the corresponding credit being recognised in equity. The total amount to be expensed over
the vesting period is determined by reference to the fair value of the share awards and options at grant date. The fair value of the share awards and
options granted in exchange for employee services is calculated using the Black-Scholes valuation model that takes into account the effect of both
financial and demographic assumptions. Forfeiture and early vesting are based on historical observable data. Changes to the original estimates,
if any, are included in the Group income statement, with a corresponding adjustment to equity.

Share options
The fair values of share options granted during the year and the assumptions used in the calculations are as follows:

Grant dates
Weighted average share price at grant date ($) (£1.2)
Weighted average exercise price at grant date ($) (£0.9)
Share options granted in the period
Vesting period (years)
Expected share price volatility (%)
Dividend yield (%)
Risk-free rate (%)
Expected option life (years)
Number of options assumed to vest
Average fair value per option granted ($)

Sharesave
share option
schemes

12/09/2014
1.9
1.5
2,302,961
3–5
45
6
1.3
3.2
1,754,558
0.6

The expected share price volatility is based on historical volatility over the past 10 years. The expected option life is the average expected period
to exercise. The risk-free rate of return is the yield on zero-coupon US and UK (where appropriate) government bonds of a term consistent with the
assumed option life.

There were no share options granted for the key executive option plan, executive share option scheme or deferred bonus share option scheme during
the year ended 31 December 2014.

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014
100

Notes to the Group financial statements continued

21. Deferred compensation arrangements continued

Movements in the number of share options outstanding are as follows:

Share options outstanding at beginning of the year
Granted
Forfeited
Exercised

Share options outstanding at year end

Share options exercisable at year end

Year ended 31 December 2014

Year ended 31 December 2013

Weighted
average
exercise price
($ per share)

Number

4.3 57,786,826
622,317
1.5
(5,060,748)
3.7
(208,172)
1.0

4.2 53,140,223

4.7 14,147,305

4.2
1.2
3.5
1.0

4.3

4.7

Number

53,140,223
2,302,961
(4,225,115)
(244,150)

50,973,919

43,271,313

The share options outstanding at the end of the year have a weighted average exercise price and expected remaining life as follows:

Range of exercise prices ($ per share)

1.01–5.00
5.01–7.00

31 December 2014

31 December 2013

Weighted
average
exercise price
($ per share)

Weighted
average
expected
remaining life

Number of
share options

Weighted
average
exercise price
($ per share)

Weighted
average
expected
remaining life

3.7
5.1

3.5 27,166,824
4.3 25,973,399
53,140,223

3.8
5.1

5.5
6.2

Number of
share options

26,604,713
24,369,206
50,973,919

Share awards
The fair values of share awards granted during the year and the assumptions used in the calculations are as follows:

Grant dates

Weighted average share price at grant date ($)
Share awards granted in the period
Vesting period (years)
Average fair value per share award granted ($)

Movements in the number of share awards outstanding are as follows:

Share awards outstanding at beginning of the year
Granted
Forfeited
Exercised

Share awards outstanding at year end

Share awards exercisable at year end

Deferred share
plan

13/3/2014–
29/09/2014
1.7
12,035,895
1–5
1.7

Year ended
31 December
2014

Number

Year ended
31 December
2013

Number

25,682,204 36,620,848
12,035,895 11,731,744
(3,792,637)
(1,738,473)
(13,760,822) (18,877,751)

22,218,804 25,682,204

2,030,681

1,660,353

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 2014

101

22. 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 market volatility. 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 our 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 directly align our interests with those of investors and intermediaries.

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

Man’s dividend policy is that we will pay out at least 100% of adjusted net management fee earnings per share in each financial year by way of ordinary
dividend. In addition, Man expects to generate significant surplus capital over time, primarily from net performance fee earnings. Available surpluses,
after taking into account our required capital (including accruals for future earn-out payments), 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 considers dividends
as the primary method of returning capital to shareholders, it will continue to execute share repurchases when advantageous.

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 the Employee Trusts are recorded at cost, including any directly attributable incremental costs (net of tax), 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.

Ordinary shares
Ordinary shares have a par value of 33/7 US cents per share (2013: 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.

During the year ended 31 December 2014, $115 million shares were repurchased at an average price of 99.7p, buying back 68.8 million shares
(2013: no shares), which had an accretive impact on EPS of approximately 3%. $1 million of costs were incurred relating to the repurchase, largely
relating to stamp duty. As at 24 February 2015, Man Group had an unexpired authority to repurchase up to 153,455,914 of its ordinary shares.
A special resolution will be proposed at the forthcoming Annual General Meeting, pursuant to which the Company will seek authority to repurchase
up to 263,267,978 of its ordinary shares, representing 14.99% of the issued share capital at 24 February 2015.

Deferred sterling shares
50,000 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.

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014
102

Notes to the Group financial statements continued

22. Capital management continued

Issued and fully paid share capital

At 1 January 2014
Issue of ordinary shares:
– Purchase and cancellation of own shares
– Partnership Plans

At 31 December 2014

At 1 January 2013
Issue of ordinary shares:
– Partnership Plans

At 31 December 2013

Share capital and reserves

At 1 January 2014
Purchase and cancellation of own shares
Share awards/options

At 31 December 2014

At 1 January 2013
Share awards/options

At 31 December 2013

Year ended 31 December 2014

Ordinary
shares

Number

Unlisted
deferred
sterling
shares
Number

Nominal value
$m

1,823,733,081

50,000

(68,835,247)
1,392,880

–
–

1,756,290,714

50,000

(2)
–

Year ended 31 December 2013

Ordinary
shares

Number

Unlisted
deferred
sterling
shares
Number

Nominal value
$m

1,821,790,279

50,000

1,942,802

–

1,823,733,081

50,000

–

Share
capital

Share
premium
account

Capital
redemption
reserve

Merger
reserve

Reorganisation
reserve

63
(2)
–

63
–

5
–
2

1
4

–
2
–

–
–

–

491
–
–

491

491
–

491

632
–
–

632

632
–

632

Total

1,191
–
2

1,193

1,187
4

1,191

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 2014

103

Total

1,216
(11)
9
2
(14)
–
3
(16)
(21)
4
(17)
(116)
(163)
365

1,241

Total

1,423
(15)
30
(18)
–
(3)
11
16
6
(11)
1
(277)

(25)

6
72

Available-for-
sale reserve

Cash flow
hedge reserve

Own shares
held by
Employee
Trusts

Cumulative
translation
adjustment

Profit and loss
account

3
–
–
–
–
–
–
–
–
–
–
–
–
–

14
–
–
–
–
–
3
(16)
–
–
(17)
–
–
–

(16)

(110)
7
–
–
(14)
55
–
–
–
–
–
–
–
–

(62)

4
(18)
–
–
–
–
–
–
–
–
–
–
–
–

(14)

1,305
–
9
2
–
(55)
–
–
(21)
4
–
(116)
(163)
365

1,330

Available-for-
sale reserve

Cash flow
hedge reserve

Own shares
held by
Employee
Trusts

Cumulative
translation
adjustment

Profit and loss
account

3
–
–
–
–
–
(1)
–
–
–
1
–

–

–
–

6
–
–
–
–
(3)
12
–
–
–
(1)
–

–

–
–

(170)
(4)
–
(18)
82
–
–
–
–
–
–
–

–

–
–

(110)

14
(11)
–
–
–
–
–
–
–
–
1
–

–

–
–

1,570
–
30
––
(82)
–
–
16
6
(11)
–
(277)

(25)

6
72

1,305

1,216

22. Capital management continued

Revaluation reserves and retained earnings

At 1 January 2014
Currency translation difference
Share-based payments charge for the period
Deferred tax credited to reserves – share-based payments
Purchase of own shares by the Employee Trusts
Disposal of own shares by the Employee Trusts
Corporation tax credited on cash flow hedge movements
Fair value (losses)/gains taken to equity
Revaluation of defined benefit pension scheme
Corporation tax credited to reserves – pension scheme
Transfer to Group income statement
Share repurchases
Dividends
Profit for the year

At 31 December 2014

At 1 January 2013
Currency translation difference
Share-based payments charge for the period
Purchase of own shares by the Employee Trusts
Disposal of own shares by the Employee Trusts
Corporation tax debited on cash flow hedge movements
Fair value (losses)/gains taken to equity
Revaluation of defined benefit pension scheme
Corporation tax credited to reserves – pension scheme
Deferred tax debited to reserves – pension scheme
Transfer to Group income statement
Dividends
Dividends with respect to perpetual subordinated capital

securities

Taxation with respect to perpetual subordinated capital

securities

Profit for the year

At 31 December 2013

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014
104

Notes to the Group financial statements continued

23. Pension benefits

Man operates 12 (2013: 12) defined contribution plans and two (2013: two) funded defined benefit plans.

Defined contribution plans
Man pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. Man has no
further payment obligation once the contributions have been paid. Defined contribution pension costs totalled $8 million for the year to 31 December
2014 (2013: $8 million). The contributions are recognised as pension costs when they are due.

Defined benefit plans
A defined benefit plan creates a financial obligation to provide funding to the pension plan to provide a retired employee with pension benefits usually
dependent on one or more factors such as age, years of service and compensation. As with the vast majority of similar arrangements, Man ultimately
underwrites the risks related to the defined benefit plans. These risks include investment risks and demographic risks, such as members living longer
than expected.

The two defined benefit plans operated are the Man Group plc Pension Fund in the UK (the UK Plan) and the Man Group Pension Plan in Switzerland
(the Swiss Plan). At 31 December 2014, the UK plan comprised 91% (31 December 2013: 89%) of the Group’s total defined benefit pension obligations.

The UK Plan is approved by HMRC for tax purposes, and is operated separately from Man and managed by an independent set of trustees.
The trustees are responsible for payment of the benefits and management of the UK Plan’s assets. Under UK regulations, Man and the trustees
of the UK Plan are required to agree a funding strategy and contribution schedule for the UK Plan.

In order to maintain flexibility with regards to the funding of the UK Plan, Man set up the Man Group Reservoir Trust (the Reservoir Trust) in 2010. Man
contributed $76 million (£50 million) of assets to the Reservoir Trust on 31 March 2010 and has committed to ensure the Reservoir Trust value remains
at least £69 million from 1 April 2013 or at the level of the funding deficit in the UK Plan, if lower. The Reservoir Trust gives the pension trustees comfort
that Man can fund a deficit at 31 December 2017 and in the event that the UK Plan is fully funded, allows Man to recover the assets so that the UK
Plan is not over funded.

The latest funding valuation of the UK Plan was carried out by independent qualified actuaries as at 31 December 2011 and indicated a deficit of
£45 million, after including £49 million of assets in the Reservoir Trust. During 2015 a funding valuation of the UK plan as at 31 December 2014 will be
carrried out. To remove the funding deficit, Man agreed to make three cash payments of £11.8 million at 31 March 2013, 2014 and 2016, with a further
lump sum to be contributed from the Reservoir Trust in March 2018 of up to £69.0 million to cover any remaining funding deficit. Cash contributions
of £11.8 million were made to the UK Plan in the year to 31 December 2014. The Group disinvested £16.1m from the Reservoir Trust during 2014
because of the improvement in the funding position at 31 December 2013. If the contributions currently agreed are insufficient to pay the benefits
due, Man will need to make further contributions.

The Group has concluded that it has no requirement to adjust the balance sheet to recognise either a current surplus or a minimum funding
requirement on the basis that the Group has an unconditional right to a refund of a current or projected future surplus at some point in the future
for the UK Plan, and that the Employer Contribution Reserve is greater than the measured surplus in the Swiss Plan.

The UK plan was closed to new members in May 1999, and to future accrual in May 2011. Employed members of the UK plan retain enhanced
benefits, including a link to salary, on their accrued benefits in the UK plan. Future benefits are provided via a defined contribution plan.

In Switzerland, the Group operates a retirement foundation with assets which are held separately from the Group. This foundation covers the majority
of employees in Switzerland and provides benefits on a cash balance basis. From 1 January 2014 the financing vehicle was changed, and from this
date the assets and liabilities were transferred to a multi-employer vehicle called Vita Invest, with the assets and liabilities segregated from those of
the other employers. A number of other changes were made to the structure of benefits, resulting in a past service credit recognised in 2013.

Each employee has a retirement account to which the employee and the Group make contributions at rates set out in the plan rules based on a
percentage of salary. Every year the pension fund commission (composed of employer and employee representatives) decides the level of interest,
if any, to apply to retirement accounts based on their agreed policy. At retirement an employee can take their retirement account as a lump sum
or have this paid as a pension.

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 201423. Pension benefits continued

The amounts recognised in the Group balance sheet are determined as follows:

Present value of funded obligations
Fair value of plan assets

Net pension asset/(liability) in the Group balance sheet at year end

Our economic capital model includes capital in respect of a possible deficit in the pension plans.

Pensions: actuarial information
Changes in the present value of the defined benefit obligations are as follows:

Present value of funded obligations at beginning of the year
Currency translation difference
Current service cost (employer portion)
Interest cost
Employee contributions
Remeasurements due to:
– changes in financial assumptions
– changes in demographic assumptions
– experience adjustments
Actual benefit payments
Past service costs
Curtailments and settlements

Present value of funded obligations at year end

Changes in the fair value of plan assets are as follows:

Fair value of plan assets at beginning of the year
Currency translation difference
Interest income on plan assets
Actual return on plan assets less interest on plan assets
Employer (repayments)/contributions
Employee contributions
Benefits paid
Assets distributed on curtailments and settlements

Fair value of plan assets at year end

105

31 December
2014

31 December
2013

(438)
483

(413)
484

Year ended
31 December
2014

Year ended
31 December
2013

413
(29)
2
17
1

61
–
(2)
(14)
–
(11)

438

417
6
3
16
2

1
(3)
(3)
(10)
(1)
(15)

413

Year ended
31 December
2014

Year ended
31 December
2013

484
(32)
21
38
(7)
1
(14)
(8)

483

413
10
18
11
53
2
(10)
(13)

484

The plan assets primarily relate to investments in equities, bonds and hedge funds. The equity and bond assets have prices quoted in active markets
and the hedge funds are primarily unquoted. At 31 December 2014, around 70% of the plan assets relate to those with quoted prices and 30% with
unquoted prices (2013: around 75% quoted and 25% unquoted). The actual return on plan assets for the year to 31 December 2014 is $59 million
(2013: $29 million).

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014
106

Notes to the Group financial statements continued

23. Pension benefits continued

The change in the net asset/(liability) recognised in the Group balance sheet is as follows:

Net pension asset/(liability) at start of the year
Total pension credit/(charge)
Amount recognised outside profit and loss
Employer (repayments)/contributions
Currency translation difference

Net pension asset at end of the year

The amounts recognised in the Group income statement are as follows:

Current service cost (employer portion)
Interest on net pension asset
Past service cost
Gains on settlement/curtailment

Total credit

The contributions expected to be paid during the year ending 31 December 2015 are nil.

The most significant actuarial assumptions used in the valuations of the two plans are:

Discount rate
Price inflation
Future salary increases
Interest crediting rate
Social security increases
Pension in payment increases
Deferred pensions increases

Year ended
31 December
2014

Year ended
31 December
2013

71
5
(21)
(7)
(3)

(4)
2
16
53
4

Year ended
31 December
2014

Year ended
31 December
2013

2
(4)
–
(3)

(5)

3
(2)
(1)
(2)

(2)

UK plan

Swiss plan

31 December
2014
% pa

31 December
2013
% pa

31 December
2014
% pa

31 December
2013
% pa

3.6
3.0
3.0
–
–
3.6
5.0

4.5
3.4
3.4
–
–
3.7
5.0

1.1
1.4
1.4
1.1
1.0
0.0
–

2.4
1.4
1.4
2.4
1.0
–
–

At 31 December 2014, mortality rates in the UK plan are assumed to be in line with 100% of the S1NA tables (2013: 100% of the S1NA tables)
projected by year of birth with allowance for future improvements in mortality rates in line with the 2014 CMI projections with a long-term rate of
improvement of 1.25% pa for males and 1.00% pa for females (2013: in line with the 2011 CMI projections with a long-term rate of improvement
of 1.25% pa for males and 1.00% pa for females).

At both 31 December 2013 and 31 December 2014 mortality rates in the Swiss plan are assumed to be in line with the Swiss BVG 2010
generational tables.

UK plan

Swiss plan

Life expectancy of male aged 60 at accounting date
Life expectancy of male aged 60 in 20 years

31 December
2014

31 December
2013

31 December
2014

31 December
2013

27.0
29.0

26.9
29.0

26.3
28.1

26.1
28.0

The table below illustrates the impact on the assessed value of the benefit obligations from changing the actuarial assumptions. The calculations
to produce the below figures have been carried out using the same method and data as Man’s pension figures. Each assumption has been varied
individually and a combination of changes in assumptions could produce a different result.

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 2014107

UK Plan

Swiss Plan

Increase in
obligation

7
2
13

23. Pension benefits continued

As at 31 December 2014:

Discount rate decreased by 0.1% pa
Inflation rate increased by 0.1% pa
One year increase in assumed life expectancy

The duration of a pension plan is the average term over which the plan’s benefits are expected to fall due, weighted by the present value of each
expected benefit payment. The duration of the UK plan is approximately 17 years, and the duration of the Swiss plan is approximately 22 years.

The assets held by the two plans as at 31 December 2014 are as follows:

UK plan

Swiss plan

UK equities
Non-UK equities
Swiss equities
Non-Swiss equities
Index linked government bonds
Corporate bonds
Swiss bonds
Non-Swiss bonds
Property
Hedge funds
LDI
Diversified growth funds
Cash
Other
Reservoir Trust holdings:
– Convertible bond type hedge funds
– Growth type hedge funds
– Cash

Total assets

19
19
–
–
38
77
–
–
–
–
56
101
37
–

35
57
–

439

4
4
–
–
9
18
–
–
–
–
13
23
8
–

8
13
–

100

–
–
6
7
–
–
8
11
6
2
–
–
2
2

–
–
–

The plans do not invest directly in property occupied by Man or in Man’s own transferable financial securities.

The UK Plan’s investment strategy is broadly split into ‘growth’ and ‘matching’ portfolios. The matching portfolio is invested primarily in government
and corporate bonds, and liability driven investment (LDI) funds. These were intended to partially match the movement in the UK Plan’s funding
liabilities, and therefore remove some interest and inflation rate risk.

As the Swiss Plan is essentially a defined contribution plan with guarantees, the assets held aim to be at least as much as the total of the member
account balances at any point in time. Member account balances cannot reduce, but interest is only applied to the account balances when sufficient
surplus assets are available. As such there is no specific asset/liability matching strategy in place, but if the liabilities (i.e. the sum of the member
account balances) ever exceed the value of the assets, the Company will consider how to remove a deficit as quickly as possible.

1
–
1

–
–
13
16
–
–
18
25
14
5
–
–
4
5

–
–
–

100

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014
108

Notes to the Group financial statements continued

24. Segmental analysis

The criteria for identifying an operating segment is that it is a component of Man whose results are regularly reviewed by the Board and the Executive
Committee to make decisions about resources to be allocated to the segment and to assess its performance. Management information regarding
revenues, gross management fee margins, investment performance and distribution costs relevant to the operation of the investment managers,
products and the investor base are reviewed by the Board and the Executive Committee. A centralised shared infrastructure for operations, product
structuring, distribution and support functions means that operating costs are not allocated to constituent parts of the investment management
businesses. As a result, performance is assessed, resources are allocated and other strategic and financial management decisions are determined
by the Board and the Executive Committee on the basis of the investment management business of Man as a whole. Accordingly we operate
and report as a single segment investment management business, together with relevant information regarding FUM flows, gross margins,
and distribution costs to allow for the analysis of the direct contribution of products and the respective investor base.

25. Geographical disclosure

Bermuda
Cayman Islands
Cook Islands
Ireland
Switzerland
United Kingdom and the Channel Islands
United States of America
Other countries

Year ended 31 December 2014

Year ended 31 December 2013

Non-current
assets

Revenues by
fund location

Non-current
assets

Revenues by
fund location

32
–
–
–
43
76
1,433
93

1,677

86
425
63
234
2
208
34
98

32
–
–
–
58
94
1,167
102

159
355
95
223
2
197
24
105

1,150

1,453

1,160

Disclosure of revenue by geographic location is based on the registered domicile of the fund entity paying Man fees. Revenue from any single fund
during the year did not exceed 10% of total revenues. Non-current assets above are allocated based on where the assets are located, and include
investments in associates, leasehold improvements and equipment, and goodwill and other intangible assets.

Average number of directors, employees and partners
The table below provides average headcount by location for the current and prior year.

United Kingdom and the Channel Islands
Switzerland
USA
Other countries

Average number of directors, employees and partners

26. Foreign currencies

Year ended
31 December
2014

Year ended
31 December
2013

640
150
105
106

723
210
96
134

1,001

1,163

The majority of revenues, assets, liabilities and funding are denominated in US Dollars (USD) and therefore Man’s presentation currency is USD.

For consolidated entities that have a functional currency other than USD, the assets and liabilities are translated into USD at the balance sheet date
rate. Income and expenses are translated at the average rate for the period in which the transactions occur. Resulting exchange differences are
recorded in other comprehensive income.

For consolidated entities with a USD functional currency, monetary assets and liabilities denominated in foreign currencies are translated at each
balance sheet date rate. Transactions denominated in foreign currencies are converted at the spot rate at the date of the transaction or if appropriate
the average rate for the month in which the transaction occurs. Resulting exchange differences are recognised in the Group income statement.

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 2014109

27. Fair value of financial assets/liabilities

Man discloses the fair value measurement of financial assets and liabilities using three levels, as follows:

– Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities.
– Level 2. Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly

(i.e. derived from prices).

– Level 3. Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The fair value of financial assets and liabilities can be analysed as follows:

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

31 December 2014

31 December 2013

Financial assets held at fair value:
Investments in fund products and

other investments (Note 15)
Derivative financial instruments

(Note 16)

Financial liabilities held at fair value:
Derivative financial instruments

(Note 17)

Contingent consideration (Note 17)

–

–
–

–

167

170

15
–

–

–
145

145

213

216

15
145

160

–

–
–

–

102

122

1
–

–

–
44

174

194

1
44

During the year, there were no significant changes in the business or economic circumstances that affected the fair value of Man’s financial assets
and no significant transfers of financial assets or liabilities held at fair value between categories. For investments in fund products, Level 2 investments
comprise holdings primarily in unlisted, open-ended, active and liquid funds, such as seeding investments, which have weekly or daily pricing derived
from third party information.

A transfer into Level 3 would be deemed to occur where the level of prolonged activity, as evidenced by subscriptions and redemptions, is deemed
insufficient to support a Level 2 classification. This, as well as other factors such as a deterioration of liquidity in the underlying investments, would
result in a Level 3 classification. The material holdings within this category are priced on a recurring basis based on information supplied by third
parties without adjustment. Liquidity premium adjustments of $2 million (2013: $6 million) have been applied to gated, suspended, side-pocketed
or otherwise illiquid Level 3 investments. The range of liquidity premium adjustments is from 12% to 33% based on the expected timeframe for exit.
A larger liquidity adjustment is applied where the exit is further in the future. Reasonable changes in the liquidity premium assumptions would not
have a significant impact on the fair value.

The fair value of non-current assets and liabilities held for sale (Note 15.3) are equal to the carrying values of $186 million (2013: $56 million)
and $33 million respectively (2013: $6 million), and would be classified within Level 2.

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014
110

Notes to the Group financial statements continued

27. Fair value of financial assets/liabilities continued

The basis of measuring the fair value of Level 3 investments is outlined in Note 15.2. The movements in Level 3 financial assets and financial liabilities
measured at fair value are as follows:

Year ended 31 December 2014

Year ended 31 December 2013

Level 3 financial assets held at fair value
At beginning of the year
Purchases
Total gains in the Group statement of comprehensive income

Included in profit for the year
Included in other comprehensive income

Sales or settlements
Transfers into Level 3
Transfers out of Level 3

At year end

Total gains/(losses) for the period included in the

Group statement of comprehensive income for assets
held at year end

Financial
assets at fair
value through
profit or loss

Available-for-
sale financial
assets

66
2
5

5
–

(14)
–
(17)

1
–
–

–
–

(1)
–
–

–

Level 3 financial liabilities held at fair value
At beginning of the year
Purchases
Total (gains)/losses in the Group statement of comprehensive income

Included in profit for the year

Included in other comprehensive income

Settlements
Other adjustments

At year end

Financial
assets at fair
value through
profit or loss

Available-for-
sale financial
assets

117
24
16

16
–

(82)
–
(9)

5
–
2

2
–

(6)
–
–

Total

67
2
5

5
–

(15)
–
(17)

Total

122
24
18

18
–

(88)
–
(9)

(1)

Year ended
31 December
2014

Year ended
31 December
2013

44
118
(7)

(7)
–

(10)
–

145

(7)

60
–
2

2
–

(13)
(5)

Total (gains)/losses for the year included in the Group statement of comprehensive income for liabilities held at

year end

The financial liabilities in Level 3 relate to the contingent consideration payable at 31 December 2014 to the former owners of Numeric ($110 million),
Pine Grove ($11 million) and FRM Holdings Limited ($24 million). Details of the Numeric and Pine Grove arrangements are detailed in Note 12. For FRM
Holdings Limited the contingent consideration is based on the expected run rate management fees for the legacy FRM business (relating to legacy
FRM FUM only) up to three years after the original acquisition date of July 2012.

The fair values are based on discounted cash flow calculations, which represent the expected future profits of each business as per the earn-out
arrangements. The fair values are determined using a combination of inputs, such as weighted average cost of capital, high water mark levels,
net management fee margins, performance, operating margins and the growth in FUM, as applicable. The discount rates applied are 11% for
management fees and 17% for performance fees.

The most significant inputs into the valuations are as follows:

Weighted average net management fee margin
Compound growth in average FUM

Year ended 31 December 2014

Numeric

Pine Grove

0.4%
11%

1.0%
0%

FRM

0.8%
6%

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 2014

27. Fair value of financial assets/liabilities continued

Changes in inputs would result in the following decrease/(increase) of the contingent consideration creditor:

Weighted average net management fee margin:
0.1% increase
0.1% decrease

Compound growth in average FUM:
1% increase
1% decrease

111

Year ended 31 December 2014

Numeric

Pine Grove

FRM

27
(27)

9
(9)

1
(1)

–
–

7
(7)

1
(1)

Increases/(decreases) in the fair value of the contingent consideration creditor would have a corresponding (expense)/gain in the Group income
statement.

28. Related party transactions

The definition of related parties has been reassessed during 2014, as outlined in Note 1. Related parties comprise key management personnel
and associates. All transactions with related parties were carried out on an arm’s length basis. Refer to Note 19 for details of income earned
from associates.

The Executive Committee, together with the non-executive directors, are considered to be the Company’s key management, being those
directors, partners and employees having authority and responsibility for planning, directing and controlling the activities at Man. Key management
compensation is reported in the table below.

Key management compensation

Salaries and other short-term employee benefits1
Post-employment benefits2
Share-based payments3
Other long-term benefits3
Termination benefits

Total

Year ended
31 December
2014
$’000

Year ended
31 December
2013
$’000

27,895
426
4,522
6,426
765

40,034

23,191
347
10,270
8,362
1,281

43,451

Notes:
1 Salary, benefits (including cash pension allowance) and cash bonus.
2 Money purchase pension.
3 Other long-term benefits relate to fund product deferrals. Refer to Note 21 for further explanation of share-based and fund product-based deferred compensation arrangements.

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014
112

Notes to the Group financial statements continued

29. Financial guarantees and commitments

29.1 Committed purchase agreements (CPAs)
For certain structured products, Man has previously made commitments to buy underlying investments in specific fund products at a discount to
net asset value, if requested by the fund board directors, to create liquidity. Man has the option to defer a purchase, if so called, for three months.
The commitment at 31 December 2014 covers investments in existing fund products totalling $34 million (2013: $37 million).

Given the risk and liquidity management at the portfolio level by the investment manager the residual liquidity and market risk to Man from CPAs is not
significant. The stressed liquidity and risk modelling performed across all structured products includes the CPAs and is provided for in our liquidity and
risk management framework.

29.2 Guarantee to funds in respect of Lehman claims
As a result of the disposal of the Lehman claims to Hutchinson Investors LLC, Man has provided a continuing guarantee to certain GLG funds for
the obligations of Hutchinson Investors LLC in respect of amounts it would owe to funds, up to a maximum of $75 million. The fair value of this
commitment has been determined to be nil (2013: nil).

29.3 Daylight settlement facilities
Man from time to time provides a guarantee over certain bank accounts of structured product entities to secure daylight settlement facilities which
allow for the efficient movement of cash during the trading day. In aggregate these guarantees had a notional amount of $50 million (2013: $50 million).
Ordinarily no net exposure exists at the end of any given day and the fair value of these commitments has been determined to be nil (2013: nil).

29.4 Intra-day and overnight credit facilities
Man guarantees the obligations under a $500 million intra-day (2013: $500 million) and $25 million overnight credit facilities (2013: $25 million), used
to settle the majority of the Group’s banking arrangements. As at 31 December 2014, the exposure under the intra-day facility is nil (2013: nil) and the
overnight facility exposure is nil (2013: nil). The fair value of these commitments has been determined to be nil (2013: nil).

29.5 Operating lease commitments
Operating lease commitments due within one year totalled $35 million (2013: $39 million), $93 million from one to five years (2013: $107 million) and
$289 million due after five years (2013: $315 million). The commitments include non-cancellable offsetting sublease arrangements, totalling $82 million
(2013: $81 million) for commitments less than five years and $73 million (2013: $97 million) for commitments over five years.

The operating lease commitments primarily include the agreements for lease contracts for the headquarters at Riverbank House, London (expiring
in 2035) and the UK Data Centres (Woking expiring in 2019 and Redhill expiring in 2025), which aggregate to $330 million (2013: $368 million).

Rent and associated expenses for all leases are recognised on a straight-line basis over the life of the respective lease.

30. Post balance sheet events

On 20 January 2014 the Board completed the acquisition of Silvermine Capital Management LLC (‘Silvermine’), with an estimated acquisition fair
value of approximately $45 million. Silvermine is a Connecticut-based leveraged loan manager with $3.8 billion of funds under management across
nine active collateralised loan obligation structures. The estimated acquisition fair value primarily relates to acquired intangible assets which attract tax
deductions in the US. The acquisition consideration is structured to align Silvermine’s interests with those of Man, and comprises an upfront payment
of $23.5 million and two earn-out payments. The earn-out payments are payable following the first (up to $16.5 million) and fifth (up to $30 million)
anniversary of closing on a sliding scale dependent on levels of run rate management fees.

31. Other matters

Man Group is subject to various other claims, assessments, regulatory enquiries and investigations in the normal course of its business. The directors
do not expect these enquiries to have a material adverse effect on the financial position of the Group.

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 2014113

32. Principal Group investments

The names of the principal subsidiaries of Man Group plc, together with the Group’s interests, are given below. The country of operation is the same
as the country of incorporation and the period end is 31 December unless otherwise stated.

In accordance with the Companies Act 2006 the information below is provided solely in relation to principal operating subsidiaries. Details of all
subsidiaries and associates will be annexed to the Company’s Annual Return.

Principal operating subsidiaries

Asset management
Man Investments Limited
AHL Partners LLP
Man Investments AG
Man Investments Inc
Man Investments (CH) AG
GLG Partners LP
Numeric Investors LLC1

Group services company
E D & F Man Limited

Group treasury and holding company
Man Investments Finance Limited

Country of
incorporation

Effective group
interest

UK
UK
Switzerland
US
Switzerland
UK
US

100
100
100
100
100
100
100

100

Note:
1 Numeric Management hold an 18.3% equity interest in the business as part of the acquisition consideration, which, as detailed in Note 12 within the Acquisition of Numeric

section, is deemed to be a financial liability.

Consolidated structured entities
The following investment funds, which the Group is deemed to control, have been consolidated:

Strategy

GLG Global Rates fund1
AHL Multi Strategy Alternative1
Man Systematic Directional Equities Alternative1
Man AHL Target Risk1
Man Systematic Volatility Alternative1

Note:
1 Classified as non-current assets and liabilities held for sale (Note 15.3).

Country of
incorporation/
principal place
of operation

Cayman
Ireland
Ireland
Ireland
Ireland

% of net assets
value held

99.7%
76.9%
100.0%
100.0%
57.7%

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014
114

Five year record

Income statement – continuing operations
Profit before adjusting items
Adjusting items1

Pre-tax profit/(loss)
Taxation

Profit/(loss) for the period on continuing operations

Income statement – discontinued operations

Pre-tax loss

Taxation

Loss for the period on discontinued operations

12 months to
31 December
2014

12 months to
31 December
2013

12 months to
31 December
2012
(Restated)3

9 months to
31 December
2011

12 months to
31 March

2011

481
(97)

384
(19)

365

–

297
(241)

56
16

–

275
(1,023)

(748)
(39)

(787)

–

262
(69)

193
(34)

159

–

599
(275)

324
(51)

273

(62)

–

(62)

Total profit/(loss) for the period

365

(787)

159

211

Earnings per share (diluted)
Continuing operations (cents)
Continuing and discontinued operations (cents)

Balance sheet ($m)
Net cash
Net assets

Other statistics
Post-tax return on equity – continuing operations (%)

Ordinary dividends per share (cents)

Funds under management ($bn)

20.5
20.5

589
2,434

15.8

10.1

72.9

2.9
2.9

992
2,407

2.1

7.9

54.1

(45.8)
(45.8)

1,141
2,910

(23.2)

22.0

57.0

7.6
7.6

573
4,060

4.6

16.5

58.4

14.0
10.5

881
4,436

6.5

22.0

69.1

Average headcount – continuing operations2

1,001

1,163

1,458

1,596

1,562

Sterling/US Dollar exchange rates
Average
Period end

0.6072
0.6419

0.6388
0.6040

0.6307
0.6158

0.6233
0.6435

0.6427
0.6235

Notes:
1 Statutory profit/(loss) before tax is adjusted to give a fuller understanding of the underlying profitability of the business. See Note 2.
2 The average headcount includes partners.
3 Restated for the impact of the adoption of IAS 19 (Revised) in 2013.

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 2014

Parent Company financial information

115

Balance sheet

Fixed assets
Investments

Current assets
Debtors
Creditors – amounts falling due within one year
Other creditors and accruals

Net current liabilities

Borrowings

Total assets less current liabilities

Capital and reserves
Called up share capital
Share premium
Merger reserve
Capital Reserve
Profit and loss account

Total shareholders’ funds

At 31
December
2014

At 31
December

2013

Note

2,439

(176)

(171)

(149)

(28)

(22)

–

2,119

2,417

61
7
491
2
1,558

2,119

63
5
491
–
1,858

2,417

The financial statements were approved by the Board of directors on 25 February 2015 and were signed on its behalf by:

Emmanuel Roman
Chief Executive Officer

Jonathan Sorrell
Chief Financial Officer

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014
116

Notes to the Company financial statements

1. Basis of preparation

The financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards in the
United Kingdom issued by the Accounting Standards Board and with the requirements of the Companies Act 2006 (the Act).

The Company reviews and updates its accounting policies on a regular basis in accordance with FRS 18. These policies have been applied
consistently throughout the period. The Company has adopted FRS 29 and has taken advantage of the exemption from providing further financial
risk disclosures.

In the prior year the grant by the Company of share awards over its equity instruments to the employees of subsidiary undertakings was treated as a
capital contribution. In the current year this has been restated to reflect that employee share awards are pre-funded by the subsidiary employing entity
through hedging arrangements with the Group Employee Trusts, and that therefore there is no contribution recognised by the Company as parent of
the Group. This change has resulted in a decrease to Shares in Group undertakings of $15 million in 2013, with a corresponding decrease in reserves.
The impact on the opening 2013 balance sheet is to reduce Shares in Group undertakings by $6 million, with a corresponding decrease in reserves.

The Company’s financial statements are prepared on a going concern basis. For further details, refer to Note 1 to the Group financial statements.

Result for the period
The loss after tax for the year was $21 million (2013: $256 million profit). In accordance with Section 408 of the Act, a separate profit and loss account
has not been presented for the Company.

There are no recognised gains and losses other than the result for the period and hence no statement of recognised gains and losses for the
Company has been presented.

Foreign currency transactions
Foreign currency transactions are translated into the functional currency using the spot rate at the date of the transaction or, if appropriate an average
rate for the month in which the transaction occurs. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in other operating income
and losses in the profit and loss account.

Dividends
Dividend distributions to the Company’s shareholders are recognised directly in equity in the period in which the dividend is paid or approved by
the Company’s shareholders, if required. Dividends received from subsidiary undertakings are recognised in the period in which they are received.
Refer to Note 11 in the consolidated financial statements for more information on dividends paid during the year.

2. Investments

Shares in Group undertakings
At 1 January
Additions

At 31 December

1 Restated. See Note 1.

31 December
2014

31 December
20131

2,439
–

2,439

2,439
–

2,439

The Company’s shares in subsidiary undertakings are stated in the balance sheet of the Company at cost less provision for any impairment incurred.
Details of the principal Group subsidiaries are given on page 113.

3. Debtors – amounts falling due within one year

Current tax assets

31 December
2014

31 December
2013

FINANCIAL STATEMENTSMAN GROUP PLC / ANNUAL REPORT 20144. Creditors – amounts falling due within one year

Amounts owed to Group undertakings
Other creditors

5. Reconciliation of movements in shareholders’ funds

At 1 January 2013
Issue of ordinary share capital
Profit for the financial period
Dividend
At 31 December 2013
Issue of ordinary share capital
Repurchase of shares
Loss for the financial year
Dividends

At 31 December 2014

Called up
share
capital

Share
premium
account

Capital
reserve

Merger
reserve

63
–
–
–
63
–
(2)
–
–

–
5
–
–
5
2
–
–
–

–
–
–
–
–
–
2
–
–

491
–
–
–
491
–
–
–
–

117

31 December
2014

31 December
2013

173
3

176

28
–

Profit
and loss
account

1,879
–
256
(277)
1,858
–
(116)
(21)
(163)

Total

2,433
5
256
(277)
2,417
2
(116)
(21)
(163)

491

1,558

2,119

The allotted and fully paid share capital of the Company is detailed in Note 22 of the Group financial statements.

6. Directors’ remuneration

Details of the individual directors’ emoluments, options and interests are disclosed in the Directors’ remuneration report on pages 44 to 64.

7. Statutory and other information

There are no employees of the Company. The directors of the Company were paid by another Group company in the period.

Shares in the Company are awarded/granted to directors and employees through the Group’s share schemes. Details relating to these share
awards/grants are provided in the Directors’ remuneration report on pages 44 to 64.

The Company provides financial instruments disclosures in accordance with IFRS 7 in the Group financial statements on pages 109 to 111.
Consequently the Company has taken advantage of the FRS 29 exemption from providing further financial instruments disclosures.

The Company provides related party disclosures in Note 28 to the Group financial statements. Consequently the Company has taken advantage
of the exemption not to disclose related party transactions with other members of Man Group plc.

FINANCIAL STATEMENTS MAN GROUP PLC / ANNUAL REPORT 2014
118

Shareholder
information

In this section we have provided
some key information to assist you in
managing your shareholding in Man
Group. If you have a question that is not
answered below, you can contact us
by email: shareholder@man.com

Useful websites
References are made throughout this section to two websites which
you will find useful for managing your shareholding in Man Group and
for finding out more about the Company:

Man Group (www.man.com)
The Man Group corporate website contains a wealth of information about
the Company including details of the industry in which we operate, our
strategy and business performance, recent news from Man Group and
corporate responsibility initiatives. The Investor Relations section is a
key tool for shareholders with information on share price and financial
results, reports and presentations. This section of the website also gives
access to the Shareholder Information pages which contain dividend and
shareholder meeting details and useful Frequently Asked Questions.

Equiniti Shareview (www.shareview.co.uk/shareholders)
Man Group’s register of shareholders is maintained by Equiniti, the
Company’s Registrars. Many aspects of managing your shares such as
checking your current shareholding, managing dividend payments, and
updating your contact details can be carried out by registering on the
Equiniti Shareview website. To do this you will need your shareholder
reference number which can be found on your share certificate or
dividend tax voucher.

Dividends
Final dividend for the year ended 31 December 2014

3.95 pence per share

The directors have recommended a final dividend of 3.95 pence per
share in respect of the year ended 31 December 2014. Payment of this
dividend is subject to approval at the 2015 Annual General Meeting
(AGM). Key dates relating to this dividend are given below:

Ex-dividend date

Record date

DRIP election date

AGM (to approve final dividend)

Payment date

CREST accounts credited with DRIP shares

DRIP share certificates received

23 April 2015

24 April 2015

8 May 2015

15 May 2015

20 May 2015

21 May 2015

Dividend policy
Man Group’s dividend policy is to pay out 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 our required capital
(including accruals for future earn-out payments), potential strategic
opportunities and a prudent buffer, will be distributed to shareholders
over time, by way of higher dividend payments and/or share repurchases.
During 2014 the Company undertook a share repurchase programme
pursuant to which $115 million of surplus capital was returned to
shareholders. As announced at the time of our 2014 year end results,
the Board intends to launch a $175 million share repurchase programme
which will be conducted over the remainder of the year.

Dividend payment methods
You can choose to receive your dividend in a number of ways. Dividends
will automatically be paid to you by cheque and sent to your registered
address unless you have chosen one of the options below:

1. Direct payment to your bank: We recommend that you apply

for cash dividends to be paid directly into your UK bank or building
society account to speed up the payment process and to avoid the
risk of cheques becoming lost or delayed in the post. The associated
tax voucher will still be sent direct to your registered address.
To switch to this method of payment simply download a dividend
mandate form from the Dividends section of our corporate website.
Alternatively, dividend mandate forms are available from the Equiniti
Shareview website. If you have any queries you may telephone
Equiniti on 0871 384 21121, who will be able to assist.

2. Overseas payment service2: If you live overseas, Equiniti

offers an overseas payment service which is available in certain
countries. This may make it possible to receive dividends direct into
your bank account in your local currency. Further information can be
found on the Equiniti Shareview website or via the Equiniti helpline
0871 384 21121.

3. Dividend Reinvestment Plan (DRIP): The Company is pleased to
offer a DRIP which gives shareholders the opportunity to build their
shareholding in Man Group plc in a convenient and cost-effective way.
Instead of receiving your dividend in cash, you receive as many whole
shares as can be bought with your dividend, taking into account
related purchase costs; any residual cash is then carried forward and
added to your next dividend. If you wish to join the DRIP, you can
download copies of the DRIP terms and conditions and the DRIP
mandate form from the Dividends section of the Man Group website.
Simply complete the DRIP mandate form and return it to Equiniti.
Should you have any questions regarding the DRIP, or to request
a paper mandate form, please contact Equiniti on 0871 384 22681.
Please note that if you wish to join the DRIP in time for the payment of
the forthcoming final dividend for the year ended 31 December 2014,
Equiniti must have received your instruction by 5.00pm on 24 April
2015. Instructions received after this date will be applied to the next
dividend payment.

Notes:
1 Lines are open from 8.30am to 5.30pm, each business day. Calls to this number

are charged at 8 pence per minute plus network extras.

2 Please note that a payment charge will be deducted from each individual payment

before conversion to your local currency.

OTHER INFORMATIONMAN GROUP PLC / ANNUAL REPORT 2014
119

Dividends paid in the 2014/15 tax year

Interim dividend for the year ended 31 Dec 2014

Final dividend for the year ended 31 Dec 2013

Dividend
no

Payment
date

Amount per
share (p)

Ex-dividend
date

Record
date

DRIP share
price (p)

DRIP purchase
date

O/15

O/14

03/09/14

16/05/14

2.37

3.19

13/08/14

15/08/14

122.70

03/09/14

23/04/14

25/04/14

90.25

19/05/14

Dividend history
To help shareholders with their tax affairs, details of dividends paid
in the 2014/15 tax year can be found above. Please note that the
dividend amounts are declared in US Dollars but paid in Sterling.
For ease of reference the Sterling dividend amounts have been
detailed in the table. For details of historical payments, please refer
to the Dividends section of our corporate website which can be
found under Shareholder Information.

Shareholder communications
Annual and Interim Reports
Man Group publishes an Annual and Interim Report every year. The
Annual Report is sent to shareholders in March through the post unless
the shareholder has chosen to receive shareholder communications
electronically (see ‘E-communications’ below). The Interim Report is
published on the website in early August and printed copies are available
on request from the Company Secretary.

E-communications
You can help Man Group to reduce its printing and postage costs as
well as its carbon footprint by signing up to receive communications
electronically rather than receiving printed documents such as
annual reports and notices of AGMs in the post. To sign up for
e-communications, simply register on the Equiniti Shareview website.
Once registered, you will need to change your mailing preference to
e-communications and provide your email address. You will then receive
an email each time a shareholder communication or document becomes
available on the Man Group website.

Managing your shareholding
Online, by post, or by phone
Many aspects of your shareholding can be managed by registering on
the Equiniti Shareview website. For enquiries about your shareholding
you can also contact Equiniti in writing at Equiniti, Aspect House,
Spencer Road, Lancing, West Sussex BN99 6DA, or by telephone
on 0871 384 21121 or Text tel 0871 384 22551, quoting Ref No 874.
Callers from outside the UK should telephone +44 121 415 7592.

The Financial Conduct Authority (FCA) provides helpful information about
such scams on its website, including practical tips on how to protect your
savings and how to report a suspected investment scam. Man Group
encourages its shareholders to read the information on the site which
can be accessed at www.fca.org.uk/consumers/scams.

How your details are protected from cybercrime
Man Group takes the protection of its shareholders’ personal data from
the ever-increasing threat of cybercrime very seriously. Shareholder
details are maintained by Equiniti, our Registrars, who safeguard this
information to the highest standards, based on the 20 core critical
controls recommended by the Centre for the Protection of National
Infrastructure (CPNI). These can be viewed at www.cpni.gov.uk/advice/
cyber/Critical-controls. Equiniti’s security measures include multiple levels
of firewall, no wireless access to the corporate network, and regular
external vulnerability scans and system penetration tests.

Company contact details
Registered office
Man Group plc
Riverbank House
2 Swan Lane
London
EC4R 3AD

Telephone: 020 7144 1000
Fax: 020 7144 1923
Web: www.man.com

Registered in England and Wales with registered no: 08172396

Investor Relations
investor@man.com
Head of Investor Relations – Fiona Smart

Company Secretariat
shareholder@man.com
Company Secretary – Rachel Rowson

Share dealing service
Equiniti provides a share dealing facility through which you can buy or
sell Man Group plc shares in the UK. The service is provided by Equiniti
Financial Services Limited and can be accessed via the dealing section
of the Equiniti Shareview website (www.shareview.co.uk/dealing). To use
Equiniti’s telephone dealing service, please call 08456 037 037 between
8.00am and 4.30pm Monday to Friday. You can also buy and sell shares
through any authorised stockbroker or bank that offers a share dealing
service in the UK, or in your country of residence if outside the UK.

Company advisers
Independent auditor
Deloitte LLP

Corporate brokers
Bank of America Merrill Lynch
Credit Suisse
Goldman Sachs

Don’t fall victim to share fraud!
Even seasoned investors have been caught out by sophisticated share
or investment scams where smooth-talking fraudsters cold call from
‘boiler rooms’ to offer them worthless, overpriced or even non-existent
shares, or to buy shares they currently hold at a price higher than the
market value. All shareholders are advised to be extremely wary of any
unsolicited advice, offers to buy shares at a discount, or offers of free
reports about the Company. It is estimated that £200 million is lost in this
way in the UK each year, with an average loss of £20,000 per investor.

Public relations
RLM Finsbury

Registrars
Equiniti

Note:
1 Lines are open from 8.30am to 5.30pm, each business day. Calls to this number are

charged at 8 pence per minute plus network extras.

OTHER INFORMATION MAN GROUP PLC / ANNUAL REPORT 2014
120

Man’s literary
sponsorships

Man sponsors two major literary prizes
– the annual Man Booker Prize for
Fiction and the biennial Man Booker
International Prize

Man has sponsored the Man Booker Prize since 2002. Launched in
1969, the prize receives worldwide recognition and aims to promote
excellence in fiction by awarding the best full-length novel published in
the English language that year. 2014 saw the introduction of new rules,
expanding the prize to include entries from writers of all nationalities,
writing originally in English and published in the UK.

Winning the Man Booker Prize is considered the ultimate accolade
by many writers. As former prize-winner Graham Swift commented:

“ Prizes don’t make writers and writers don’t
write to win prizes, but in the near-glut of literary
awards now on offer… it’s the one which,
if we’re completely honest, we most covet.”

Tasmanian born writer Richard Flanagan won the 2014 Man Booker Prize
for Fiction with his novel The Narrow Road to the Deep North. Named
after the famous Japanese book by the haiku poet Basho, Flanagan’s
novel is described by the 2014 judges as “a harrowing account of the
cost of war to all who are caught up in it.” Flanagan was presented with
the prize by the Duchess of Cornwall and Man’s Chief Executive Officer,
Emmanuel Roman, on 14 October 2014, at Guildhall.

The Man Booker International Prize is awarded every two years to a living
author who has published fiction either originally in English or whose work
is generally available in translation in English. It differs from the annual
Man Booker Prize in that it highlights one writer’s overall contribution to
fiction on the world stage, rather than a single work. The 2013 prize went
to US author Lydia Davis.

Sponsorship of the prizes underscores Man Group’s charitable focus
on literacy and education as well as the firm’s commitment to excellence
and entrepreneurship. Together with the wider charitable activities of
the Booker Prize Foundation, the prizes play a very important role in
promoting literary excellence on a global scale that the firm is honoured
to support.

OTHER INFORMATIONMAN GROUP PLC / ANNUAL REPORT 2014Charitable trust

Despite the economic recovery, the
voluntary sector remains in a state
of change and reorganisation, facing
a continuing increase in demand for
its services. Smaller charities and
community groups in some of the most
deprived areas of the UK have been
among the worst hit by the recession,
and public spending cuts have had
a major impact on individuals and
communities, making those with low
levels of basic skills more vulnerable
to economic hardship.

In 2014, the Trust concentrated its grant-making activity on charities
working with children, adults and schools to improve their literacy and
numeracy skills and raise educational attainment. Literacy and numeracy
skills are essential to the happiness, health and economic wellbeing
of individuals and society. It is well documented that low levels of
these skills lead to a large number of poor outcomes and are linked to
unemployment or dependence on state benefits, low wages and poor
health. A 2013 Skills Survey conducted by the Organisation for Economic
Co-operation and Development, showed that the literacy and numeracy
skills of young people in England are among the lowest in the developed
world, with a talent pool of highly skilled adults likely to shrink relative
to other countries. It is vital that these findings are addressed to ensure
that the UK does not suffer a severe skills shortage and has a literate
and numerate workforce to be able to compete in the global economy
in future years.

The Trust continued to utilise its reserves in 2014, spending $787,000
on charitable donations and employee engagement programmes in the
period and enabling the charities we support to leverage approximately
$1 million from other funding sources. In the UK our supported
projects benefited thousands of vulnerable children, young people and
adults living in disadvantaged neighbourhoods, providing them with
the essential skills they need to succeed in life and make a positive
contribution to society.

Our supported charities also gained from the time and effort given
by Man employees through our ManKind community volunteering
programme. The positive social benefits that stem from employees’
skills, experience and knowledge can make a real difference to local
communities. Volunteering also provides a highly cost-effective and
valuable method of achieving positive learning and development benefits
for our employees and we are delighted that 23% volunteered their time,
enthusiasm and skills during the past year.

121

Man volunteers provided over 1,000 hours of support to those in need in
the local community, undertaking a range of activities including running
financial literacy programmes and weekly reading sessions for primary
school children, transforming outdoor spaces and sorting and packaging
food at a local foodbank. Volunteers also planted poppies at the Tower of
London as part of the major art installation marking the centenary of the
First World War, raising funds for six service charities.

Employees additionally took part in a number of volunteering and
fundraising activities for our Annual Charity, the Children’s Cancer
Recovery Project, supporting their work with children and families
coping with a child’s cancer diagnosis. Employees ran, jumped out
of aeroplanes, baked cakes and donated hundreds of toys to sick
children in hospitals and hospices across the UK.

We would like to express our thanks to all the Man employees who
supported our charitable programmes during the year and to those who
donated via their Give as You Earn accounts. In 2015, the Trust intends
to continue to provide support to charities that are able to evidence their
ability to improve literacy and numeracy outcomes.

Lisa Clarke
Trust Manager

OTHER INFORMATION MAN GROUP PLC / ANNUAL REPORT 2014
122

Featured grants

Registered charity no: 275386

B E A N S TA L K

N AT I O N A L NU M E R ACY

Beanstalk is a national charity that recruits, trains and supports
volunteers to work in primary schools in the most deprived areas
of England with children who have fallen behind with their reading.

Beanstalk’s trained reading helpers work with children aged 6–11 on
a one to one basis, giving them consistent support to improve reading
levels, increase overall confidence and help them gain the vital literacy
skills they need to succeed in education, training and employment.
Last year Beanstalk helped over 8,400 children across England and
74% of the children they worked with progressed by at least two
reading sub-levels.

The Trust’s donation supported Beanstalk’s growth in London.

National Numeracy is a charity set up to tackle low levels of numeracy
among adults and children throughout the UK and to change negative
attitudes to maths. It works to influence politicians, business and
education and highlight the importance of good numeracy in the
media. It also helps to put research into practice by scaling up effective
approaches for those who need most support with numeracy. Last year
the charity worked with over 150 schools to improve the teaching and
learning of maths.

The Trust’s donation supported the National Numeracy Challenge,
a nationwide drive designed to tackle the major issue of low adult
numeracy in the UK and improve every day skills in over 1m adults
over the next five years.

S P R I N G B OA R D FO R C H I L D R E N

N AT I O N A L L I T E R ACY TR U S T

Springboard works to improve the life opportunities of disadvantaged
children who are at risk of being left behind in the education system
because they struggle to read and write.

Through skilled tutors, trained volunteers and secondary school peers,
Springboard works to improve literacy in challenged schools and
communities, primarily in socially and economically disadvantaged
areas of the UK.

The Trust’s donation supported Springboard’s Expert Programme for
children with complex learning needs who have a level of literacy at least
2 years behind their peers. Children who graduated from the programme
during 2013/14 narrowed the gap between their reading age and their
chronological age, on average, from 22 months to just 8 months.

The National Literacy Trust is a national charity dedicated to raising
literacy levels in the UK. The charity works to improve the reading,
writing, speaking and listening skills in the UK’s most disadvantaged
communities where up to 40% of people have literacy problems. They
focus their work on families, young people and children – establishing
literacy projects in the poorest areas, inspiring and supporting children
and families to improve their skills. In 2013/14 the charity supported over
61,000 children with their literacy skills and trained and supported 4,700
teachers to improve literacy outcomes in schools across the UK.

The Trust’s donation supported the National Literacy Trust’s ‘Literacy
through Culture’ programmes in London

OTHER INFORMATIONMAN GROUP PLC / ANNUAL REPORT 2014M

man.com

man Group plc
riverbank House
2 swan lane
london
ec4r 3ad

+44 (0)20 7144 1000