Investor confidence across our industry has been shaken by negative returns, heightened levels of volatility, constrained liquidity and some high profile investment scandals, including Madoff. Man's business has not been immune to these stresses. Profit before tax and adjusting items fell by 40% to $1.2 billion. Our funds under management fell by around a third over the year as redemptions increased and we took action to reduce investors' risk in light of volatile markets. We have therefore entered the current financial year with a materially reduced asset base compared to prior years and are focused on efficiencies as we ensure that our cost base is correctly proportioned. The impacts of recent markets have also been felt in our corporate holdings, principally an impairment charge of $299 million against Ore Hill investments and goodwill to reflect the deterioration of conditions in the credit markets and an impairment charge of $126 million against our residual investment in MF Global.

The turmoil has also served to highlight many of Man's strengths. Investors in our products saw favourable returns and capital preservation against a backdrop of extreme negative industry and world equities performance. Liquidity was maintained across the private investor product range throughout the entire financial year, a significant competitive differentiator which gives us substantial ongoing credibility with distributors. The benefits of portfolio diversification, an adaptable product range and the attraction of guaranteed product offerings meant that we saw record levels of demand from the private investor. Our strong balance sheet, significant surplus regulatory capital and access to liquidity provided confidence and allowed us to continue investing in our business.

In this testing environment, the professionalism and commitment of our people at all levels has been the key factor which has allowed us to address successfully the challenges we have faced. The pace of change in our business has been demanding of everybody in the firm. Their commitment, ambition and energy have enabled us to position Man for the future in a rapidly evolving world. I would like to take this opportunity to thank them all sincerely.

Performing in difficult markets

The year to 31 March 2009 saw negative performance across a wide range of asset classes. In our industry, many funds also recorded negative returns for investors with very few positive performing styles over the period - the principal exception being managed futures. Over the course of the period, we benefitted from our long-standing emphasis on allocations to managed futures, primarily through AHL, but also through third parties. This had a positive effect on performance and provided diversification, both for our private investor products and our institutional investor portfolios, ranging from the positive return over the period of 7.7% for investors in our flagship AHL product to a significant contribution to RMF's 200 basis points outperformance of the HFRI Fund of Funds Composite Index - RMF down 15.5% over the period versus the index at negative 17.5%, with a backdrop of world equities returning negative 38.4% over the same period.

The real life stress test of markets through the recent turmoil has identified issues for managers and investors alike. Evaporation of risk capital weighed heavily on performance across many strategies as markets became illiquid, with a number ceasing to function effectively for significant periods. Selling pressure increased, driven largely by banks realising assets to raise capital and de-lever their balance sheets. The listed derivatives markets favoured by managed futures and global macro managers provided one of the few areas where liquidity was preserved and where counterparty risk could be mitigated through centralised clearing houses. In the last quarter of the financial year, the liquidity position across markets eased, a position which continues, although sentiment remains fragile and contradictory.

It is unlikely that the seizure of markets on the scale which we saw last year will repeat, but the stability of the listed derivative markets has been noted by international regulators. Moves to bring 'on-exchange' elements of the huge over-the-counter derivatives markets have the potential to create significant and enduring new listed markets in a range of instruments, and so an expanded opportunity set for managers such as AHL.