MAGELLAN FINANCIAL GROUP LIMITED — Interim / Quarterly Report 2012

Feb 23, 2012

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24 February 2012

ASX Market Announcements Australian Securities Exchange Limited Exchange Centre 20 Bridge Street Sydney NSW 2000

CONDENSED FINANCIAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2011

Magellan Financial Group Limited hereby lodges:

1. Appendix 4D for the period ended 31 December 2011; and

2. Condensed Financial Report for the period ended 31 December 2011.

Yours faithfully,

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Leo Quintana Legal Counsel & Company Secretary

Appendix 4D Magellan Financial Group Limited Half Year Report Ended 31 December 2011

Details of reporting periods

Current: 1 July 2011 to 31 December 2011 Comparative: 1 July 2010 to 31 December 2010

Results for announcement to the market
	Percentage change	Dec
	from the	2011
	Comparative Period	$’000
Total revenue
(“revenue from ordinaryactivities”)	107%	15,492
Net operating profit
(“profit (loss) from ordinary activities after tax attributable to	178%	5,225
members”)
Net operating profit
(“netprofit(loss)for theperiod attributable to members”)	178%	5,225

Commentary on results

Please refer to the attached Condensed Financial Report and Financial Statements.

Dividends

Dividends Amount per share Franked amount per share at 30% tax Interim dividend per share 1.5 cents 1.5 cents Previous comparative period 0 cents 0 cents Interim Dividend Dates Ex-dividend Date 13 March 2012 Record Date 19 March 2012 Payment Date 18 April 2012 The Dividend Reinvestment Plan will not operate in respect of the interim dividend.	Dividends Amount per share Franked amount per share at 30% tax Interim dividend per share 1.5 cents 1.5 cents Previous comparative period 0 cents 0 cents Interim Dividend Dates Ex-dividend Date 13 March 2012 Record Date 19 March 2012 Payment Date 18 April 2012 The Dividend Reinvestment Plan will not operate in respect of the interim dividend.	Dividends Amount per share Franked amount per share at 30% tax Interim dividend per share 1.5 cents 1.5 cents Previous comparative period 0 cents 0 cents Interim Dividend Dates Ex-dividend Date 13 March 2012 Record Date 19 March 2012 Payment Date 18 April 2012 The Dividend Reinvestment Plan will not operate in respect of the interim dividend.
		Amount per share Franked amount per share at 30% tax
		Interim dividend per share 1.5 cents 1.5 cents
		Previous comparative period 0 cents 0 cents Interim Dividend Dates Ex-dividend Date 13 March 2012 Record Date 19 March 2012 Payment Date 18 April 2012 The Dividend Reinvestment Plan will not operate in respect of the interim dividend.

Net tangible assets per share (diluted for the conversion of the MFG Class B shares) 31/12/2011 $0.81 31/12/2010 $0.75

Financial Report

The Company's independent auditor, Ernst & Young, has reviewed the Condensed Financial Report on which this Appendix 4D is based and has provided an unqualified Review Report. A copy of the Group's Condensed Financial Report, inclusive of the Auditor’s Review Report, is attached.

MAGELLAN FINANCIAL GROUP LIMITED

ABN 59 108 437 592

CONDENSED FINANCIAL REPORT

FOR THE HALF YEAR ENDED 31 DECEMBER 2011

MAGELLAN FINANCIAL GROUP LIMITED

FINANCIAL REPORT

FOR THE HALF YEAR ENDED 31 DECEMBER 2011

Contents	Page
Directors’ Report	1
Auditor’s Independence Declaration	5
Statement of Comprehensive Income	6
Statement of Financial Position	8
Statement of Changes in Equity	9
Statement of Cash Flows	10
Notes to the Financial Statements	11
Directors’ Declaration	20
Independent Review Report	21
Corporate Information	23

MAGELLAN FINANCIAL GROUP LIMITED

DIRECTORS’ REPORT

FOR THE HALF YEAR ENDED 31 DECEMBER 2011

Directors

The following persons were Directors of Magellan Financial Group Limited during the half year ended 31 December 2011 and up to the date of this report.

Brett Cairns Hamish Douglass Paul Lewis Chris Mackay Naomi Milgrom AO

Principal Activities

The principal activity of Magellan Financial Group Limited and its controlled entities (‘the Group’) during the six months ended 31 December 2011 was funds management, primarily focussed on international investment funds. The Group seeks to achieve superior risk adjusted returns for investors in its funds over the medium term. The Group’s objectives and its principal activity are not expected to change within the foreseeable future.

Review and Results of Operations

The net operating profit after tax of the Group for the six months ended 31 December 2011 was $5.2 million. This compares with a net operating profit after tax of $1.9 million for the previous corresponding period.

During the half year period, management fees increased by approximately 153% to $14.1 million against the previous corresponding period. Following the outperformance of the Magellan Global Fund / Colonial First State Magellan Global Option, the Group’s management fees for the six month period ended 31 December 2011 include net performance fees of approximately $4.7 million. This compares with net performance fees of approximately $7,000 for the comparative six month period ended 31 December 2010. Performance fees earned (if any) may fluctuate significantly from period to period.

In the six months to 31 December 2011 the Group’s total operating expenses increased by 63% against the comparative period to 31 December 2010 to $7.8 million. Employee benefits expense (the Group’s largest expense) rose by approximately 65% against the comparative period. The increase in employee benefits expense reflects a 32% increase in employees since 31 December 2010 (from 27 to 35 people) and an increase in compensation. Since 31 December 2011 we have hired 4 additional people taking the total employees to 39. The increase in employees reflects the investment to grow the business in Australia and internationally.

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MAGELLAN FINANCIAL GROUP LIMITED

DIRECTORS’ REPORT

FOR THE HALF YEAR ENDED 31 DECEMBER 2011

The Group has continued to make steady progress in developing its Australian business. As at 31 December 2011, the Group had funds under management of approximately $2.93 billion (30 June 2011: $2.76 billion and 31 December 2010: $2.17 billion).

Magellan’s retail funds under management comprised:

agellan’s retail funds under management comprised:
Global Equities Infrastructure Equities		$ million 1,216 190
		1,406

The Magellan Global Fund / Colonial First State Magellan Global Option (“the Global Fund”) had a value of $931 million and the Magellan Infrastructure Fund $190 million as at 31 December 2011, compared with values as at 30 June 2011 of $650 million and $165 million respectively.

The Global Fund has retained strong investment ratings from the major retail asset consultants and we continue to attract new dealer groups and wealth management firms as clients. Net inflows into the Global Fund were $221 million for the 6 months from 1 July 2011 to 31 December 2011.

As at 31 December 2011 wholesale funds under management were $1,527 million of which 88% were beta style mandates and funds. Wholesale mandates have materially lower fees than the fees of other Magellan products.

At 22 February 2012, funds under management were $3,056 million, split 50% retail and 50% wholesale. From 1 February to 22 February 2012, Magellan experienced net inflows of $56 million, which included net inflows of $51 million into the Global fund.

At the end of December we established two institutional mutual funds in the United States in conjunction with Frontier Partners, for our global equities and infrastructure capabilities. We are also in the process of establishing institutional funds for European investors. To date there have not been any meaningful additions to funds under management from our activities in North America or Europe, but we are pleased with the early progress in establishing client and asset consultant relationships.

The Group has maintained its strong financial position, with net assets of approximately $131 million, no debt, and total liabilities of $5.2 million. As at 31 December 2011, the Group’s net assets per share (diluted for the conversion of the Class B shares) was approximately $0.81, compared with net assets per share at 30 June 2011 of approximately $0.78.

Investments in Magellan’s Funds and Principal Investments

We have previously reported that in early 2009 we decided to increase our investment in equities and have done so by progressively increasing our investment in the funds we manage. As at 31 December 2011, Magellan’s investment assets comprised $74.2 million in these three funds ($70.8 million at 30 June 2011), and an investment portfolio of $7.8 million in other listed securities ($7.4 million at 30 June 2011).

We consider the Group’s investments in our funds as “look through” investments in the underlying companies which comprise the portfolios. We are delighted with the quality of the investments in

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MAGELLAN FINANCIAL GROUP LIMITED

DIRECTORS’ REPORT

FOR THE HALF YEAR ENDED 31 DECEMBER 2011

our funds and believe that Magellan has acquired interests in high quality companies on terms that we regard as attractive. The following table aggregates these “look through” investments with the

Group’s direct portfolio investments to show the largest aggregated “look through” equity investments as at 31 December 2011 (with values above $2 million).

American Express Yum! Brands eBay Google Wells Fargo Nestlé Coca-Cola Visa McDonald's US Bancorp Procter & Gamble China Mobile Lowe's Co MasterCard Wal-Mart	$ million 11.8 9.5 8.0 7.7 6.5 5.6 4.9 4.0 3.6 3.5 3.2 3.1 2.9 2.4 2.2

As at 31 December 2011, the Group had cash, fixed term deposits and fixed rate debt investments of approximately $33.5 million. This conservative Balance Sheet strategy has benefitted the Company, particularly during the early stages of the funds and asset management business in the extreme markets of recent years. We continue to believe that Balance Sheet strength will be a significant future benefit and we remain cautious about overall macro economic risks.

Dividends

On 24 February 2012, the Directors declared a fully franked interim dividend of 1.5 cents per share (2010: $nil). The amount of the dividend expected to be paid on 18 April 2012, but not recognised as a liability at 31 December 2011, is $2.3 million (2010: $nil).

The Company paid a fully franked final dividend of 1.5 cents per share, representing $2.3 million, in respect of the 2010/2011 year.

Events Subsequent to the End of the Half Year

Since the end of the half year, the Group has invested approximately $7 million in two institutional mutual funds in the United States which were established at the end of December with Frontier Partners.

The Directors are not aware of any matter or circumstance not otherwise dealt with in this report or the financial statements that has significantly or may significantly affect the operations of the Group, the result of those operations, or the state of affairs of the Group in subsequent financial periods.

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MAGELLAN FINANCIAL GROUP LIMITED

DIRECTORS’ REPORT

FOR THE HALF YEAR ENDED 31 DECEMBER 2011

Rounding Off of Amounts

The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (unless otherwise stated) under the option available to the Company under ASIC Class Order 98/0100. The Company is an entity to which this Class Order applies.

Auditors’ Independence Declaration

A copy of the Auditors’ Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on page 5.

This report is made in accordance with a resolution of the Directors.

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Chris Mackay Chairman

Sydney

24 February 2012

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MAGELLAN FINANCIAL GROUP LIMITED

AUDITOR’S INDEPENDENCE DECLARATION

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MAGELLAN FINANCIAL GROUP LIMITED

STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 31 DECEMBER 2011

Note Revenue Management fee revenue 5 Consulting fee revenue Interest income Dividend income Net changes in fair value of held for trading financial assets (Loss) / gain on sale of available for sale financial assets Foreign exchange gain / (loss) Other revenue Total revenue Expenses Employee benefits expense Occupancy expense Audit fees Legal and professional fees Fund administration Marketing and distribution Travel and entertainment expense Depreciation and amortisation Other operating expenses Total expenses Operating profit before income tax Income tax expense 4 a) Net operating profit	Consolidated 31 December 2011 31December 2010 $ ’000 $ ’000 14,084 5,572 618 667 713 845 45 58 34 119 (7) 216 1 (18) 4 14
	15,492 7,473
	5,625 3,413 231 207 61 68 149 27 343 210 446 266 388 232 67 61 511 306
	7,821 4,790
	7,671 2,683 (2,446) (802)
	5,225 1,881

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MAGELLAN FINANCIAL GROUP LIMITED

STATEMENT OF COMPREHENSIVE INCOME (CONTINUED) FOR THE HALF YEAR ENDED 31 DECEMBER 2011

Other comprehensive income Net loss / (gain) on sale of available for sale financial assets Revaluation of available for sale financial assets Income tax expense on items of other comprehensive income 4 a) Other comprehensive income for the period, net of tax Total comprehensive income for the period Earnings per share for the period Earnings attributable to shares Basic earnings per share Diluted earnings per share	Consolidated 31 December 2011 31 December 2010 $ ’000 $ ’000 7 (216) 2,632 6,286 (795) (1,820)
	1,844 4,250
	7,069 6,131
	3.4 cents 1.3 cents 3.2 cents 1.2 cents

The Statement of Comprehensive Income is to be read in conjunction with the accompanying notes to the Financial Statements.

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MAGELLAN FINANCIAL GROUP LIMITED

STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2011

Note Assets Current assets Cash and cash equivalents Financial assets 7 a) Trade and other receivables Loans - share purchase plan (SPP) Prepayments Total current assets Non-current assets Financial assets 7 b) Deferred tax assets 4 b) Loans - SPP Property, plant and equipment Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Income tax payable Total current liabilities Total liabilities Net assets Equity Contributed equity Available for sale reserve Retained profits Total attributable to members of the Group Total Equity	Consolidated 31 December 2011 30 June 2011 $ ’000 $ ’000 6,570 1,625 26,933 27,879 8,506 8,441 405 186 245 138
	42,659 38,269
	83,957 79,980 3,889 4,637 5,737 6,135 217 245
	93,800 90,997
	136,459 129,266
	2,822 2,095 2,331 1,336
	5,153 3,431
	5,153 3,431
	131,306 125,835
	115,209 114,529 7,407 5,563 8,690 5,743
	131,306 125,835
	131,306 125,835

The Statement of Financial Position is to be read in conjunction with the accompanying notes to the Financial Statements.

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MAGELLAN FINANCIAL GROUP LIMITED

STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 31 DECEMBER 2011

Attributable to Equity Holders of the Group

Equity - 1 July 2011 Net profit for the period Other comprehensive income Total comprehensive income for the period Issue of securities: - under employee share purchase plan (SPP) Dividend paid during the period 6 SPP expense for the period Total transactions with equity holders in their capacity as equity owners Equity - 31 December 2011 Equity - 1 July 2010 Net profit for the period Other comprehensive income Total comprehensive income for the year Issue of securities: - under employee share purchase plan (SPP) SPP expense for the period Total transactions with equity holders in their capacity as equity owners Equity - 31 December 2010	Contributed Equity Retained Profits Available for Sale Reserve Total $’000 $’000 $’000 $’000 114,529 5,743 5,563 125,835 - 5,225 - 5,225 - - 1,844 1,844
	- 5,225 1,844 7,069
	578 - - 578 - (2,278) - (2,278) 102 - - 102
	680 (2,278) - (1,598)
	115,209 8,690 7,407 131,306
	Attributable to Equity Holders of the Group
	Contributed Equity Retained Profits / (Accumulated Losses) Available for Sale Reserve Total $’000 $’000 $’000 $’000 108,630 (49) 2,552 111,133 - 1,881 - 1,881 - - 4,250 4,250
	- 1,881 4,250 6,131
	840 - - 840 140 - - 140
	980 - - 980
	109,610 1,832 6,802 118,244

The Statement of Changes in Equity is to be read in conjunction with the accompanying notes to the Financial Statements.

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MAGELLAN FINANCIAL GROUP LIMITED

STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 31 DECEMBER 2011

Cash flows from operating activities Receipt of fee income Interest received Proceeds from sale of held for trading financial assets Other revenue received Dividends and distributions received Tax paid Payments to suppliers and employees Net cash inflows from operating activities Cash flows from investing activities Proceeds from sale of available for sale financial assets Maturities of held to maturity financial assets Purchases of available for sale financial assets Net cash flows from foreign exchange transactions Purchase of plant and equipment Net cash inflows / (outflows) from investing activities Cash flows from financing activities Proceeds from issue of securities Proceeds from repayment of employee share purchase plan loan Dividends paid Net cash inflows from financing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period	Consolidated 31 December 2011 31 December 2010 $ ’000 $ ’000 9,068 5,391 1,226 893 209 1,029 581 406 45 25 (1,491) (174) (7,038) (4,653)
	2,600 2,917
	34 4,712 570 1,546 (477) (9,847) 1 (18) (39) (43)
	89 (3,650)
	4,138 - 282 377 (2,164) -
	2,256 377
	4,945 (356) 1,625 2,243
	6,570 1,887

The Statement of Cash Flows is to be read in conjunction with the accompanying notes to the Financial Statements.

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MAGELLAN FINANCIAL GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2011

1. Corporate Information

Magellan Financial Group Limited (the “Company”) is a company limited by shares and incorporated in Australia. The shares of the Company are publicly traded on the Australian Securities Exchange (ASX) (ASX code: MFG). The Company and its controlled entities comprise the Group.

2. Summary of Significant Accounting Policies

a) Basis of Preparation of Half Year Financial Report

This general purpose condensed consolidated financial report for the half year ended 31 December 2011 has been prepared in accordance with Accounting Standard AASB 134: Interim Financial Reporting, the Corporations Act 2001 and other authoritative pronouncements of the Australian Accounting Standards Board. This half year financial report does not include all the notes normally included in an annual financial report and it is recommended that it be read in conjunction with the Company’s and the Group’s annual report for the year ended 30 June 2011 and with public announcements made by the Company during the half year ended 31 December 2011 in accordance with the continuous disclosure requirements of the Corporations Act 2001 and the ASX.

b) New Accounting Standards and Interpretations

The accounting policies applied by the Group in these interim financial statements are the same as those applied by the Group for the year ended 30 June 2011.

c) Basis of Consolidation

The financial report of the Group comprises the consolidated financial statements of the Company and its controlled entities. Controlled entities included within the consolidated financial statements are:

	% Ownership
	31 December	30 June
	2011	2011
Magellan Asset Management Limited	100.0	100.0
Magellan Capital Partners Pty Limited	100.0	100.0

All inter-entity balances and transactions between entities in the consolidated group, including unrealised profits or losses, have been eliminated on consolidation. Policies of the controlled entities have been changed where necessary to ensure consistency with those policies adopted by the parent entity.

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MAGELLAN FINANCIAL GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2011

3. Operating Segment Information

The Group’s business activities are organised into the following reportable operating segments for internal management purposes:

Funds Management

Funds management activities are undertaken by the controlled entity, Magellan Asset Management Limited (MAM). MAM acts as Investment Manager for the Magellan Flagship Fund Limited (the Flagship Fund), a listed investment company (ASX code: MFF), and other wholesale client mandates. It acts as Trustee and Responsible Entity for the Magellan Global Fund and Magellan Infrastructure Fund (Unlisted Funds) which are managed investment schemes offered to Australian and New Zealand investors. MAM acts as Trustee and Investment Manager for the Magellan Core Infrastructure Fund which is an unregistered managed investment scheme offered to Australian wholesale investors.

Principal Investments

The principal investment portfolio is comprised of investments in the Flagship Fund, the Unlisted Funds, and in a select portfolio of Australian and international listed companies, cash and fixed interest securities and other investments.

Unallocated - Corporate

Interest income on Non-executive Directors’ Share Purchase Plan (SPP) loans, and costs associated with the Board, ASX listing, audit and regulatory compliance activities of the Group.

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MAGELLAN FINANCIAL GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2011

3. Operating Segment Information (continued)

The operating results of the Group’s operating segments are as follows:

31 December 2011 Revenue Management fees Consulting fees Dividend income Interest income Changes in fair value of financial assets Net losses on disposal of financial assets Foreign exchange gains Other revenue Expense Employee benefits expense Employee benefits expense - SPP Other expenses Operating profit before income tax 31 December 2010 Revenue Management fees Consulting fees Interest income Dividend income Changes in fair value of financial assets Net gains on disposal of financial assets Foreign exchange losses Other revenue Expense Employee benefits expense Employee benefits expense - SPP Other expenses Operating profit before income tax	Funds Management Principal Investments Unallocated - Corporate Consolidated $ ’000 $ ’000 $ ’000 $ ’000 14,084 - - 14,084 618 - - 618 - 45 - 45 409 615 (311) 713 - 34 - 34 - (7) - (7) - 1 - 1 4 - - 4
	15,115 688 (311) 15,492
	5,498 - 25 5,523 88 - 14 102 2,066 - 130 2,196
	7,652 - 169 7,821
	7,463 688 (480) 7,671
	Funds Management Principal Investments Unallocated - Corporate Consolidated $ ’000 $ ’000 $ ’000 $ ’000 5,572 - - 5,572 667 - - 667 159 498 188 845 - 58 - 58 - 119 - 119 - 216 - 216 - (18) - (18) 14 - - 14
	6,412 873 188 7,473
	3,247 - 26 3,273 68 - 72 140 1,255 - 122 1,377
	4,570 - 220 4,790
	1,842 873 (32) 2,683

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MAGELLAN FINANCIAL GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2011

3. Operating Segment Information (continued)

The assets and liabilities of the Group’s operating segments are as follows:

31 December 2011 Cash and cash equivalents Financial assets Loans – SPP Other assets Total assets Other liabilities Total liabilities Net assets 30 June 2011 Cash and cash equivalents Financial assets Loans – SPP Other assets Total assets Other liabilities Total liabilities Net assets	Funds Management Principal Investments Unallocated - Corporate Eliminations Consolidated $ ’000 $ ’000 $ ’000 $ ’000 $ ’000* 1,717 4,854 - - 6,571 11,698 99,192 - - 110,890 - - 6,142 - 6,142 9,445 4,995 1,150 (2,734) 12,856
	22,860 109,041 7,292 (2,734) 136,459
	5,513 43 2,331 (2,734) 5,153
	5,513 43 2,331 (2,734) 5,153
	17,347 108,998 4,961 - 131,306
	Funds Management Principal Investments Unallocated - Corporate Eliminations Consolidated $ ’000 $ ’000 $ ’000 $ ’000 $ ’000* 891 734 - - 1,625 10,508 97,351 - - 107,859 - - 6,321 - 6,321 4,173 9,590 1,150 (1,452) 13,461
	15,572 107,675 7,471 (1,452) 129,266
	3,506 41 1,336 (1,452) 3,431
	3,506 41 1,336 (1,452) 3,431
	12,066 107,634 6,135 - 125,835

*Eliminations include adjustments / eliminations for inter-segment transactions and netting of items on the Statement of Financial Position

The Group’s net investment into its funds management business activities as at 31 December 2011 is:

Capital invested in controlled entity Subordinated loan to controlled entity Cash and fixed term deposits held by funds management Cash held for regulatory and operating requirements Net investment in funds management business	31 December 2011 30 June 2011 $ ’000 $ ’000 12,500 12,500 1,150 1,150
	13,650 13,650 (13,175) (11,159) 5,000 5,000
	5,475 7,491

The Group’s business activities are conducted in Australia.

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MAGELLAN FINANCIAL GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2011

4. Income Tax

a) Total income tax expense recognised in the period comprises: Income tax expense attributable to operating profit Total income tax expense recognised in profit or loss Income tax expense recognised in other comprehensive income: - Arising from the revaluation of financial assets - Arising from the disposal of financial assets Total income tax expense recognised directly in other comprehensive income b) Deferred tax balance relates to the following: Tax losses carried forward Net capital losses carried forward Costs associated with the issue of securities, deductible in future years Revaluation of financial assets Other temporary differences 5. Management fees Management fees Performance fees 6. Dividends Declared and paid during the period Fully franked final dividend for the year ended 30 June 2011: 1.5 cents per ordinary share (2010: nil)	Consolidated 31 December 2011 31 December 2010 $’000 $’000 (2,446) (802)
	(2,446) (802)
	(793) (1,886) (2) 66
	(795) (1,820)
	- 99 1,354 1,379 - 52 1,979 2,774 556 333
	3,889 4,637
	Consolidated 31 December 2011 31 December 2010 $’000 $’000 9,366 5,565 4,718 7
	14,084 5,572
	Consolidated 31 December 2011 31 December 2010 $’000 $’000 2,278 -
	2,278 -

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MAGELLAN FINANCIAL GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2011

6. Dividends (continued)

On 24 February 2012, the Directors declared a fully franked interim dividend of 1.5 cents per share (31 December 2010: nil cents per share). The amount of the dividend expected to be paid on 18 April 2012 is $2.3 million (31 December 2010: $ nil). In accordance with accounting standards, the dividend has not been provided for in the 31 December 2011 financial statements.

Franking credit balance Balance at 1 July based on tax paid and franking credits attached to dividends received Franking debits arising from payment of dividend Franking credits arising from income tax paid and payable 7. Financial Assets a) Current Held for trading - Listed shares – Australia Held to maturity - Fixed and floating rate securities Loans and receivables - Fixed term deposits	Consolidated 31 December 2011 31 December 2010 $’000 $’000 2,412 830 (976) - 2,486 172
	3,922 1,002
	Consolidated 31 December 2011 30 June 2011 $’000 $’000 - 175 352 352 26,581 27,352
	26,933 27,879

The movement in the fair value of current financial assets of the Company and its operating subsidiaries can be analysed as follows:

Balance at 1 July Disposals Maturities of fixed and floating rate securities Maturities of fixed term deposits Cash placed on fixed term deposit Changes in fair value Balance at 31 December	Consolidated 31 December 2011 31 December 2010 $’000 $’000 27,879 27,057 (209) (1,029) - (9,390) (27,110) (16,363) 26,339 22,272 34 (113)
	26,933 22,434

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MAGELLAN FINANCIAL GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2011

7. Financial Assets (continued)

b) Non-current Available for sale financial assets (by domicile of primary stock exchange) - Listed shares – Australia - Magellan Flagship Fund Limited - Listed shares – United States - Listed shares – Switzerland - Listed shares – Europe - Listed shares – Hong Kong - Unlisted funds - Magellan Global Fund - Magellan Infrastructure Fund - Other - Unlisted shares - Other	31 December 2011 30 June 2011 $’000 $’000 33,235 32,746 6,182 5,776 1,383 1,437 136 125 55 51 38,147 35,262 2,815 2,777 1,829 1,806 175 -
	83,957 79,980

The movement in the fair value of non-current financial assets of the Group is as follows:

Balance at 1 July Acquisitions Disposals Changes in fair value Balance at 31 December	31 December 2011 31 December 2010 $’000 $’000 79,980 67,595 1,380 10,797 (34) (2,771) 2,631 6,286
	83,957 81,907

8. Financial Risk Management

The Group has previously disclosed in its Annual Report the International Prime Brokerage Agreements (IPBA) entered into with Merrill Lynch International (MLI), a wholly owned subsidiary of Bank of America. This arrangement remained in place during the half year ended 31 December 2011.

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MAGELLAN FINANCIAL GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2011

9. Contributed Equity

Contributed equity	Consolidated 31 December 2011 31 December 2010 $ ’000 $ ’000 115,209 114,529
	115,209 114,529

The movements during the half year of Group securities on issue were as follows:

Balance at 1 July 2011 Issue of shares under share purchase plan (SPP) Balance at 31 December 2011 Balance at 1 July 2010 Issue of shares under SPP Balance at 31 December 2010	Shares MFG 2011 Options MFG 2016 Options Class B Shares ‘000 ‘000 ‘000 ‘000 151,893 - 7,882 10,200 665 - - -
	152,558 - 7,882 10,200
	Shares MFG 2011 Options MFG 2016 Options Class B Shares ‘000 ‘000 ‘000 ‘000 147,198 6,034 7,882 10,200 1,019 - - -
	148,217 6,034 7,882 10,200

MFG 2011 Options expired on 30 June 2011. Proceeds from the exercise of MFG 2011 options totalled $4,583,684. $495,420 was received prior to 30 June 2011 and the balance of $4,088,264 was held in trust and received by the Company in July 2011.

Balance at 1 July Issue of shares under SPP Recognition of SPP expense for the half year Balance at 31 December	Value
	2011 2010 $’000 $’000 114,529 108,630 578 840 102 140
	115,209 109,610

10. Contingent Liabilities and Commitments for Expenditure

Capital Commitments

The Directors are not aware of any capital commitments as at the date of this report.

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MAGELLAN FINANCIAL GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2011

10. Contingent Liabilities and Commitments for Expenditure (continued)

Lease Commitments

Commitments for minimum lease payments in relation to non-cancellable operating leases in respect of office premises and equipment are as follows:

Within one year Later than one year but not later than five years	Consolidated 31 December 2011 30 June 2011 $’000 $’000 431 305 1,700 86
	2,131 391

Since the end of the half year, Magellan Asset Management Limited has entered into an agreement to extend the lease for its current office premises in Sydney for a further 5 years from 1 April 2012.

Contingent Liabilities

The Group has a contingent liability for uncalled amounts of $0.3 million (30 June 2011: $0.4 million) on units in unlisted unit trusts that are held for investment.

The Directors are not aware of any other contingent liabilities at balance date.

Guarantees

Magellan Financial Group Limited (Company) has issued a letter of comfort to a client of its controlled entity, MAM, whereby the Company undertakes to provide support and assistance as required to ensure MAM complies with the financial conditions of its Australian Financial Services Licence.

11. Events Subsequent to Reporting Date

Since the end of the half year, the Group has invested approximately $7 million in two institutional mutual funds in the United States which were established at the end of December with Frontier Partners.

There have been no other matters or circumstances not otherwise dealt within this report or the financial statements that have significantly or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in subsequent financial periods.

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MAGELLAN FINANCIAL GROUP LIMITED

DIRECTORS’ DECLARATION

In accordance with a resolution of the Directors of Magellan Financial Group Limited, I state that:

In the opinion of the Directors:

• (a) the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including:

• (ii) giving a true and fair view of the financial position as at 31 December 2011 and the performance for the half year ended on that date for the consolidated entity; and

• (ii) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

• (b) there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable.

On behalf of the Board,

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Chris Mackay Chairman

Sydney 24 February 2012

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MAGELLAN FINANCIAL GROUP LIMITED

INDEPENDENT REVIEW REPORT

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MAGELLAN FINANCIAL GROUP LIMITED

INDEPENDENT REVIEW REPORT

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MAGELLAN FINANCIAL GROUP LIMITED MAGELLAN FINANCIAL GROUP LIMITED CORPORATE INFORMATION INDEPENDENT REVIEW REPORT

Directors

Chris Mackay – Chairman Hamish Douglass – Managing Director and Chief Executive Officer Naomi Milgrom AO Paul Lewis Brett Cairns

Company Secretaries

Nerida Campbell Leo Quintana

Registered Office

Magellan Financial Group Limited Level 7, 1 Castlereagh Street Sydney NSW 2000 Telephone: +61 2 8114 1888 Email: info@magellangroup.com.au Fax: +61 2 8114 1800

Auditors

Ernst & Young 680 George Street Sydney NSW 2000

Share Registrar

Boardroom Pty Limited Level 7, 207 Kent Street Sydney NSW 2000 Telephone: +61 2 9290 9600 Fax: +61 2 9279 0664 Email: enquiries@boardroomlimited.com.au

Securities Exchange Listing

Australian Securities Exchange ASX code: MFG

Website

http://www.magellangroup.com.au

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