Man Group plc - Interim Report 2007

The Group is a growth company in a growth sector. Capital and the access to capital is a source of competitive advantage to the Group. Capital in the form of debt and equity supports the current business and provides support for continued access to additional capital through the capital markets. As a regulated entity, the equity capital and subordinated debt base of the Group supports the regulatory capital required to maintain our status and support our investor base.

In considering the distribution policy for the Group going forward, the Board has considered a number of factors.

The sustainability of earnings
The ordinary dividend is a strong signal to shareholders of the recurring nature of a portion of net income. The growth of the dividend is a strong indication of the Board’s confidence in the profitable growth prospects for the Group. The Board has previously stated that ordinary dividends would be covered at least two times by post-tax net management fees and that the post-tax net performance fees are used to repurchase shares for cancellation.

Man’s performance fee income is based on a diversified portfolio of Core Investment Managers and therefore the level of performance fee income, taken in aggregate, is more stable and cross cycle a minimum amount is more predictable than would be the case for an individual fund manager. Therefore, the Board believes it is appropriate to consider a portion of performance fees as having the same characteristics as management fee income and thereby set the dividend policy to take account of net income in aggregate.

Investment opportunities
The Group uses its capital resources to support the organic growth of the business. Our internal risk management processes enable us to assess where capital is deployed, so that satisfactory returns are achieved and this review process forms part of the regular management reporting regime in the business. In addition, capital may be deployed to fund other investments including acquisition opportunities. The source of this capital can be internally generated or externally funded. In establishing the distribution policy the Board will take into account the current and potential future capital needs of the business and in setting the level of the ordinary dividend will routinely consider investment opportunities.

Ordinary dividend policy
The Board has therefore adopted a policy to grow the dividend per share, in dollar terms, progressively and in line with the growth of earnings. In pursuing this policy the Board will set the level of ordinary dividends having taken into account: the results for the past years; the outlook for the current year; investment opportunities; free cash flow; and the maintenance of prudent capital against contingencies. The Board will target a dividend coverage ratio of at least 1.8 times profit after tax. It is anticipated that this ratio will be achieved within the next two years, as a result of increasing the ordinary dividend.

The economic currency of the Group is US dollars and therefore the dividend will continue to be determined in dollars.

Share repurchase programme
Share repurchases will be used in a systematic manner to reduce available capital surpluses.

In accordance with the new distribution policy adopted by the Board and given the Group’s strong performance in the first half of the year and our strong capital position, we have declared an interim dividend of 16.8 cents per existing share (assuming shareholders approve the ordinary share capital consolidation on a 7 for 8 basis at an EGM to be held on 23 November 2007, the dividend will be 19.2 cents per consolidated share). This dividend will be paid at the rate of 8.03 pence per existing share (9.18 pence per consolidated share, assuming the share consolidation is approved). Dates for the interim dividend are given in the timetable in Shareholder Information.

Outlook
The second half of our financial year has started strongly. Since the turbulent markets of the summer, our investors have seen a continuation of September's good performance carry through into October. With almost all of our assets standing at or close to their high watermarks as at the end of September, the strong performance during October has already generated significant performance fee income for the second half.

This product performance has driven further growth in assets under management since 30 September, which are currently estimated to be over $70 billion.

Our scale and strong capital position provide a stable platform for innovation in our product range and investment in our business. Our investment products are designed to perform across a range of differing market conditions, and the current environment creates additional opportunities for investment.

The long track record of our products and our established distribution franchise mean that we are well placed for continued asset growth. With recent positive performance the outlook for sales remains good.

---