Man Group plc - Annual Report 2007

Investments in associates (Polaris Man Financial Futures Co. Ltd) of $12 million attributable to Brokerage operations have been reclassified as discontinued operations (Note 8) in the year ended 31 March 2007.

(a) Investments in associates
The Group has one principal investment in an associate, BlueCrest Capital Management Limited. The Directors consider that to give full particulars of all associate and joint venture undertakings would result in a statement of excessive length. Further details are given in Principal Group Investments .

The investment in BlueCrest includes goodwill of $198 million (2006: $174 million). The increase in the year relates to currency movements. This is tested for impairment by comparing the carrying value of the goodwill with the asset's recoverable amount on an annual basis at the balance sheet date. A value in use basis is used to calculate the recoverable amount by estimating the future cash flows for net management fee income and net performance fee income and discounting them at an appropriate risk-adjusted pre-tax discount rate. The discount rate applied is 10% and net management fee income is assumed to grow at 5% per annum and net performance fee income is assumed to remain constant (no growth). As a result of these calculations, no impairment was identified.

BlueCrest Capital Management Ltd has a statutory accounting reference date of 30 November. In respect of the year ended 31 March 2007, this company has been included based on financial statements drawn up to 30 November 2006, taking into account any changes in the subsequent period from 1 December 2006 to 31 March 2007 that would materially affect the results.

As stated in the Principal Accounting Policies there are some instances where the Group has investments in certain fund entities over which it is able to exert significant influence but not control. These are classified as associates. The Group has applied the scope exclusion within IAS 28 'Investments in Associates' for mutual funds, unit trusts and similar entities and has classified such holdings as short term investments and measured them at fair value through the income statement in accordance with IAS 39. In accordance with IAS 28, summarised financial information relating to these investments is included in the table below together with associates where equity accounting is applied. The investments in these fund entities are either ‘liquidity’ investments, to aid investors wishing to buy and sell investments in the fund entities, or ‘seeding’ investments. These investments are not held for the long-term and there are frequent changes in the level of the Group's ownership of investments.