Man Group reported a sharp fall in profit before tax to $541 million for the year to March 31, 2010 down from $743 million in the previous year.

The hedge fund operator is to recommend a final dividend of 24.8 cents per share for the year giving a total dividend of 44 cents per share for the year. For fiscal 2011, Man is to rebase the total dividend at 22 cents per share.

Total revenue plunged by more than half to $560 million from $1.24 billion as net performance fee income fell to $97 from $358 million. Net management fee income, hit by a fall in average assets under management over the period to $42.6 billion from $65.1 billion, nearly halved to $463 million from $885 million.

Man said its proposed $1.6 billion acquisition of GLG Partners “will further strengthen the company’s competitive positioning and Man will continue to build upon these foundations, with a strong expectation over the coming years that it will grow assets and market share.” The firm also noted that the current financial climate offers “a period of significant opportunity” for the alternative investment industry.

Man Group CEO Peter Clarke observed: “The last two years have seen significant change in the hedge fund industry, with continued investor focus on transparency and liquidity of investment strategies and on the stability and governance of investment managers. Man has long been focussed through AHL and the Multi-Manager business on providing liquid investment strategies offering diversifying returns for investors. During the year we have taken decisive action to address the changes in our industry, as well as the impacts on our own business of redemptions from institutions seeking liquidity within their portfolios and a period of negative performance at AHL. We have restructured our Multi-Manager business around the transparency and security offered by managed accounts; reduced our run-rate cost base materially during the year; grown our global business in onshore regulated offerings to reflect increasing demand for these products; and continued our investment in AHL to generate a strong research pipeline and enhanced trading benefits.”

“Against this backdrop we have seen a fall in both assets under management and profits in the year. We start the current year at this lower level of assets under management and with AHL still some distance away from performance fee high water marks. However, recent AHL performance has been positive despite the volatility and uncertainty of markets, and we have won new institutional mandates in our Multi-Manager business of $1.5 billion, which will be funded over the coming months and are not yet reflected in our assets.”

“On 17 May, we announced the proposed acquisition of GLG. This transaction comprehensively addresses our stated ambition of acquiring high quality discretionary investment strategies which are liquid, transparent and have a low correlation to AHL performance. The two firms are very complementary in terms of the location and type of their investors, and the transaction will combine the strength of Man's distribution franchise with GLG's wide range of liquid strategies, either in stand-alone format or in conjunction with Man's existing investment capabilities. The combination will create one of the largest investment managers in liquid alternative strategies and offer access to a comprehensive set of investment opportunities across a global investor base."

The flagship managed futures fund AHL ended the financial year down 7.7%, with around three quarters of that loss the result of extreme moves in currencies, bonds and interest rates in the month of December. Trading conditions for managed futures improved notably in the run up to the end of the financial year, with AHL up around 3.5% in the calendar year to 17 May 2010.