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Ares Management Limited Niederlassung Deutschland

Frankfurt am Main

Report and Financial Statements For the year ended 31 December 2013

Ares Management Limited, London

Registered no. 5837428

Directors

Michael Weiner

Daniel Nguyen

Kevin Early

Secretary

TMF Corporate Secretarial Services Limited

6 St Andrew Street

5th Floor

London

EC4A 3AE

Auditor

Ernst & Young LLP

1 More London Place

London SEI 2AF

Bankers

Barclays PLC

I Churchill Place, Level 11

London, E14 5HP

City National Bank

15260 Ventura Boulevard

Sherman Oaks, CA 91403, USA

Solicitors

Latham & Watkins LLC

355 South Grand Avenue

Los Angeles, CA 90071

Registered Office

6 St Andrew Street

5th Floor

London

EC4A 3AE

Directors' report

The directors present their report and financial statements of Ares Management Limited (the "Company") for the year ended 31 December 2013.

Principal activity

The principal activity of the Company during the year ended 31 December 2013 was to provide advisory and investment management services. The Company was incorporated on 5 June 2006 and is a wholly owned subsidiary of Ares Management LLC ("Ares Management"). The Company is authorised by the Financial Conduct Authority to perform investment management activity that is subject to licensing requirements in the United Kingdom.

On 1 March 2013 Ares Capital Europe Limited ("ACE"), a previously internally managed fund, became an externally managed fund. As a result, the Company assumed the operating assets and liabilities of managing the portfolio, as well as expenses for personnel, office space, business services, etc for the following European locations: Stockholm, Sweden; Paris, France and Frankfurt, Germany.

Directors

Directors who served during the year and up to the date of this report were:

Michael Weiner

Daniel Nguyen

Kevin Early

Going concern

The Company's activities, together with the factors likely to affect its future development, its financial position and the financial risks are described in the strategic report.

The Company has sufficient financial resources together with its Investment Management Agreements, and as a consequence, the directors believe that the Company is well placed to manage its business risks successfully.

After making enquiries, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. The Company will continue to receive financial support from its parent. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

Pillar 3 disclosures

Pillar 3 disclosures are appended to the financial statements.

Disclosure of information to the auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information, being information needed by the auditor in connection with preparing its report, of which the auditor is unaware. Having made enquiries of fellow directors and the Company's auditor, each director has taken all the steps that he is obliged to take as a director in order to make himself aware of any relevant audit information and to establish that the auditor is aware of that information.

Reappointment of Auditors

The auditors, Ernst & Young, LLP, have indicated their willingness to continue in office. A resolution concerning their reappointment will be put to the members at the annual general meeting.

By the order of the Board

Kevin Early, Director

Strategic report

Results and dividends

The profit for the year ended 31 December 2013 is £4,523,614 (2012: £5,219,000 loss). The directors do not recommend a dividend be paid for the year (2012: nil).

Review of the business

Ares Capital Europe Limited ("ACE") was previously an internally managed fund, where all costs of managing the fund were borne by the fund. Effective March 1, 2013, ACE became an externally managed fund. As a result, the Company assumed the operating assets and liabilities of managing the portfolio, as well as expenses for personnel, office space, business services, etc. In connection with this restructure, the Company will retain management fees as compensation for its services. The sub-advisory and administrative services agreements between ACE and the Company were also terminated.

The key financial and other performance indicators during the year were as follows:

	2013	2012
	£000	£000
Turnover	45,426	13,945
Profit/(loss) alter tax	4,524	(5,219)
Shareholders' funds	54,504	25,850
Current assets as % of current Habil ities	248%	120%
Number of employees	76	25

At 31 December 2013, the Company is acting as investment manager of the following funds.

• Ares Euro CLO I B.V.

• Ares European CLO II B.V.

• Ares European CLO III B.V.

• Ares European CLO VI B.V.

• Global Loan Opportunity Fund B.V. II

• Queen Street CLO I B.V.

• Queen Street CLO II B.V.

• Ares Institutional Loan Fund B.V.

• Ares Capital Europe (Luxembourg) S.a.r.l

• Ares Capital Europe L.P.

• Ares Enhanced Loan Investment Strategy VIII

• Ares Institutional Credit Fund II, INKA GL1

• Bond Opportunities Fund Sub 2

• BayVK R2 Fonds Ares II

• European Senior Secured Loan Programme S.a.r.l

• Ares CSF III Luxembourg S.a.r.l

• Ares Capital Europe 11(E), L.P.

• Ares Capital Europe II (D), L.P.

• Ares Capital Europe II Holdings S.a.r.l

• Ares Capital Europe II Investments S.a.r.1

• Ares UK Credit Strategies, L.P. (Her Majesty's Treasury)

• Ares CSF Holdings S.a.r.l

• Ares MCSF V (H) S.a.r.l

• Ares European Credit Strategies Fund (C), L.P.

• Ares European Credit Strategies Fund (G), L.P.

• Ares European Loan Opportunities Fund, L.P.

Review of the business

Ares Strategic Investment Partners Europe B.V. and Global Loan Opportunities Fund were liquidated prior to December 31, 2013.

Principal risks and uncertainties

The Company has established an investment committee focused on managing the risks, growth and strategy of the Company. The principal risks and uncertainties facing the Company are broadly grouped as competitive, legislative and financial instrument risk.

Competitive Risks

The Company is reliant on underwriters being able to raise capital and place tranches of the funds for which the Company acts as investment manager. Sale of these tranches is uncertain and based on financial market conditions and certain performance criteria.

Legislative Risks

In the UK and Europe, investment management companies are subject to certain standards. These standards are subject to continuous revision and any new directive may have a material impact on the ability of the Company to provide investment management services at a profit. In addition compliance imposes costs and failure to comply with the standards could materially affect the Company's ability to operate.

Financial Instrument Risks

The Company has established a financial management framework whose primary objectives are to protect the Company from events that hinder the achievement of the Company's performance objectives.

The objectives aim to ensure sufficient working capital exists and monitor the management of risk at the funds level.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company aims to mitigate liquidity risk by managing cash generation from operations. The Company also manages liquidity risk via possible additional equity investments from the parent company.

Future Developments

The Directors do not expect any change in the principal activity of the Company in the foreseeable future.

Events since the balance sheet date

No significant events had occurred since December 31, 2013.

By the orde of the Board

Kevin Early, Director

Statement of directors' responsibilities

The directors are responsible for preparing the Directors' Report, the Strategic Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing those financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Independent auditor's report to the member of Ares Management Limited

We have audited the financial statements of Ares Management Limited (the "Company") for the year ended 31 December 2013 which comprise the Profit and Loss Account, the Statement of Total Recognised Gains and Losses, the Balance Sheet, the Cashflow Statement, the Reconciliation of Movement in Shareholders' Funds and the related notes 1 to 20. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

This report is made solely to the company's member, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's member those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's member as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Statement of Directors' Responsibilities, set out on page 6 the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Report and Financial Statements to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

• give a true and fair view of the state of the company's affairs as at 31 December 2013 and of its profit for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors' Report, the Strategic Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

• the financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors' remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

London 25. April 2014

for and on behalf of Ernst & Young LLP, Statutory Auditor

Jeremy Young (Senior statutory auditor)

Profit and loss account for the year ended 31 December 2013

		2013	2012
	Notes	£000	£000
Turnover	2	45,426	13,945
Administrative Expenses		(40,914)	(19,510)
Operating profit/loss)	3	4,512	(5,565)
Interest receivable and similar charges		46	346
Profit/(loss) on ordinary activities before taxatlon		4,558	(5,219)
Tax on profit/(loss) on ordinary activities	7	(34)
Profit/(loss) for the financial year attributable to members		4,524	(5,219)

All amounts are in respect of continuing activities.

Statement of total recognised gains and losses

There are no other gains and losses other than the loss for the year shown above and therefore no other separate statement of total recognized gains and losses has been presented.

The notes on pages 12 to 23 form part of these financial statements.

Balance sheet at 31 December 2013

		2013	2012
	Notes	£000	£000
Fixed assets
Intangible assets	8	16,291	22,185
Tangible assets	9	1,952	794
Investments	10	12,970	189
Total fixed assets		31,213	23,168
Current assets
Debtors	11	33,620	10,755
Cash at bank and in hand		5,912	6,217
Total current assets		39,532	16,972
Creditors: amounts falling due within one year	12	(15,958)	(14,123)
Net current assets		23,574	2,849
Total assets less current liabilities		54,787	26,017
Creditors: amounts falling due after more than one year	13	(283)	(167)
Net assets		54,504	25,850
Capital and reserves
Called up share capital	14	68,000	45,000
Profit and Loss account	15	(13,496)	(19,150)
Shareholders' funds		54,504	25,850

The financial statements on pages 9 to 23 were approved and authorised for issue by the directors on

25 April 2014

Kevin Early, Director

Cash flow statement for the year ended 31 December 2013

		2013	2012
	Note	£000	£000
Net cash outflow from operating activities	16(a)	(8,921)	(5,109)
Returns an Investments and servicing of finance
lnterest received		399	3
Capital expenditure and financial Investment
Additions to tangible fixed assets		(1,913)	(93)
Investment contributions and purchases		(12,870)
Acquisition and disposals	16(b)	-	2,862
Financing
Issue of ordinary Share capital		23,000	5,000
(Decrease)/increase in cash	16(c)	(305)	2,663

Reconciliation of net cash flow movement in net funds

		2013	2012
		£000	€000
(Decrease)/increase in cash	16(c)	(305)	2,663
Change in net funds resulting from cash flows		(305)	2,663
Movement In net funds
Net funds at 1 January		6,217	3,554
Net funds at 31 December		5,912	6,217

The notes on pages 12 to 23 form part of these financial statements.

Notes to the financial statements at 31 December 2013

1. Accounting Policies

Organisation and business

The accompanying financial statements include the accounts of Ares Management Limited (the "Company"). The Company commenced operations on 5 June 2006 and is a wholly owned subsidiary of Ares Management LLC ("Ares Management"), a United States based company. Ares Management is the parent company to various operating subsidiaries which include the Company. The operating subsidiaries are generally general partners and/or investment managers of various investment funds (the "Ares Funds"). The subsidiaries provide investment management services to the Ares Funds in exchange for investment management fees.

Basis of preparation

The financial statements are prepared on the going concern basis, under the historical cost convention and are prepared in accordance with applicable UK accounting standards.

Intangible assets

Intangible assets are stated at cost less accumulated amortisation. Amortisation is provided on a straight line basis over the expected useful life of the assets as follows:

Management contracts acquired

- over the term of the contract or ten years

The carrying value of the intangible asset is reviewed for impairment at least annually.

Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation. Such costs include those costs directly attributable to making the asset capable of operating as intended.

Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost, less estimated residual value based on prices prevailing at the date of acquisition of each asset evenly over its expected useful life as follows:

Leasehold buildings	- over the shorter of the lease term or 20 years
Furniture and computer equipment	- over 5 to 7 years

Investments

Investments are stated at cost less any provision for impairment.

Revenue

Revenue is recognised to the extent that the Company obtains the right to consideration in exchange for its performance of services. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, Value Added Tax ("VAT") and other taxes or duty. The following criteria must also be met before revenue is recognized:

Rendering of services

Revenue from base investment management fees are based on a defined percentage of collateral value for the collateralized loan obligations and on a stated percentage of net asset values for the other funds. Non-incentive fees are recognized as revenue in the period that the management services are rendered. Investment management fees are recognised as revenue when collection of such fees is certain following a fund's determination date.

Incentive Income

Incentive fees are based on certain specific hurdle rates as defined in the applicable investment management agreements or governing documents. Substantially all incentive fees are earned from affiliated funds of the Company. Incentive fees are recognized when collection is fixed and determinable following a fund's determination date and usually coincides with the period in which the Company collects cash or the period immediately preceding cash collection.

Interest income

Interest income is recognised on an accrual basis on cash balances and deferred fees from managed funds.

Special fees

Revenue may also include special fees such as administration fees paid to the Company in connection with the operations of the Company. The nature of these fees is specific to the administrative services provided by the Company. Such fees would be included in turnover in the group profit and loss account and are recognised as revenue when earned.

Provisions for liabilities

A provision is recognised when the Company has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation.

Provisions for the expected costs of maintenance under guarantees are charged against profits when services have been invoiced. The effect of the time value of money is not material; therefore the provisions are not discounted.

Leasing commitments

Rentals payable under the operating leases are charged in the profit and loss account on a straight line basis over the lease term. Lease incentives are recognised over the lease term.

Pension costs

The Company operates a defined contribution scheme. Contributions to the defined contribution scheme are recognised in the profit and loss account in the period in which they become payable.

Foreign currencies

Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are revalued at the rate of exchange ruling at the balance sheet date.

All differences are taken to the profit and loss account.

Share-based payments (equity-settled)

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which they are granted and is recognised as an expense over the vesting period, which ends on the date on which the relevant employees become fully entitled to the award. Fair value is determined using an appropriate pricing model. In valuing equity-settled transactions, no account is taken of any vesting conditions, other than performance conditions linked to the price of the shares of the Company (market conditions).

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market vesting condition or non-vesting condition is satisfied, provided that all other performance conditions are satisfied.

At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management's best estimate of the achievement or otherwise of non-market vesting conditions and of the number of equity instruments that will ultimately vest or, in the case of an instrument subject to a market condition or a non-vesting condition, be treated as vesting as described above. The movement in cumulative expense since the previous balance sheet date is recognised in the profit and loss account, with a corresponding entry in equity.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any cost not yet recognised in the profit and loss account for the award is expensed immediately. Any compensation paid up to the fair value of the award at the cancellation or settlement date is deducted from equity, with any excess over fair value being treated as an expense in the profit and loss account.

2. Turnover

Turnover principally represents the amounts derived from the provision of investment management services, stated net of Value Added Tax, and arising from continuing activities in Europe.

For the year ended 31 December 2013, base investment management fees earned were £38,465,476 (2012: £11,333,000). Total incentive management fees earned for the period were £6,355,969 (2012: £1,521,000). Other revenue, which is primarily comprised of administrative services, per the period was £605,052 (2012: £1,091,265).

3. Operating profit/(loss)

Operating profit/(loss) is stated after charging:

	2013	2012
	£000	£000
Amortization of intangible assets (see note 8)	5,894	1,047
Depreciation of owned assets (see note 9)	755	260
Operating lease rentals
- Land and buildings	887	867
- Equipment	25	9
Auditor remuneration (see note 4)		72

4. Auditors' Remuneration

The remuneration of the auditors is further analysed as follows:

	2013	2012
	£000	£000
Audit of the financial statements	29	26
Other fees to auditors - taxation services	55	20
	84	46

5. Directors' emoluments

None of the directors received any compensation for services rendered as directors of the Company (2012: nil).

6. Staff costs

	2013	2012
	£000	£000
Wages and salaries	19,189	5,213
Social security costs	2,229	694
Other pension costs	501	149
Total stall costs	21,919	6,056

The average number of employees at 31 December 2013 and at 31 December 2012, respectively, was as follows:

	2013 No.	2012 No.
Fund management	50	18
Marketing	4	2
Administrative	22	5
Total stall	76	25

7. Tax on profit on ordinary activities

(a) Analysis of charge for the year

	2013	2012
	£000	£000
UK Corporation tax on profit for the year	-	-
Overseas taxation	34	-
Total current tax for the year	34	-

(b) Factors affecting the charge for the year

The tax assessed on the loss profit (loss) on ordinary activities for the year is higher than the standard rate of corporation tax in the UK of 23.5% for 2013 (2012: 24.5%). The differences are reconciled below:

	2013	2012
	£000	£000
Profit/(loss) on ordinary activities before taxation	4,558	(5,219)
Corporation tax at 23.5% (2012: 24.5%)	1,071	(1,279)
Depreciation in excess of capital allowances	178	64
Disallowed expenses	315
Unrelieved tax losses		1,215
Utilised tax losses	(1,564)
Overseas taxation	34	-
Current tax Charge for the year	34

The directors consider it prudent that the deferred tax asset amount of £2,278,978 (2012: £4,047,000) in respect of losses not utilised has not been recognised.

8. Intangible assets

	Total
	£000
Cost:
At 1 January 2013	23,622
Impairment	(2,787)
At 31 December 2013	20,835
Amortization:
At 1 January 2013	(1,437)
Charge for the year	(3,107)
At 31 December 2013	(4,544)
Net book value at 31 December 2013	16,291
Net book value at 31 December 2012	22,185

On April 19, 2011, the Company acquired a collateral management contract from a London-based

CLO asset manager ("CLO Manager B") for 68.0 at the purchase date. The Company had also recorded acquisition related costs of 6440,672. The purchase price and acquisition costs were recorded as intangible assets and are being amortized over the life of the management fee contract. In connection with management's review of impairment, it was determined that the average useful life of this contract should be reduced from 160 months to 64 months. The change in estimate resulted in an impairment charge of £2,787,478 being recorded in 2013.

9. Tangible fixed assets

	Furniture and computer equipment	Leasehold improvements	Total
	£000	£000	£000
Cost:
At 1 January 2013	649	1,863	2,512
Additions	435	1,478	1,913
At 31 December 2013	1,084	3,341	4,425
Depreciation:
At 1 January 2013	404	1,314	1,718
Charge for the year	140	615	755
At 31 December 2013	544	1,929	2,473
Net book value at 31 December 2013	540	1,412	1,952
Net book value at 31 December 2012	245	549	794

10. Investments

	Total
	£000
At 1 January 2013	201
Additions (Euro VI)	12,870
At 31 December 2013	13,071
Valuations:
At 1 January 2013	12
Impairment	89
At 31 December 2013	101
Net book value at 31 December 2013	12,970
Net book value at 31 December 2012	189

In September 2013, the Company purchased the subordinated notes of Ares European CLO VI S.V. ("Euro VI") for £15.5 million.

For the year ended 31 December 2013, £20,184 (£16,759) of payment in kind ("PIK") interest is included in the balance sheet value of the investment. In September 2013, due to a negative price adjustment, there was a reduction in AML's holdings from £256,677 to £229,102. In addition, as of balance sheet date, 50% Dinosol Loan impairment €122,569 (£101,757) was recognized.

Subsidiaries

The Company held 100% of the shares in Ares Management UK (GP) Limited which in turn owned 100% of Ares UK CSF Limited, a limited partner in Ares UK CSF GP, LP. The issued share capital in both cases is 2 ordinary shares of £1 each which were unpaid. Ares Management UK (GP) Limited is the general partner of a Scottish limited partnership called Ares UK CSF GP, L.P. (the "Partnership"). For the year ended 31 December 2013 Ares UK CSF Limited was dormant. These subsidiaries have not been consolidated on grounds of immateriality.

11. Debtors

	2013	2012
	£000	£000
Management fee receivable	7,310	9,605
Amounts due from affiliated parties	25,249	287
Prepayments	703	198
Other debtors	13	361
VAT receivable	345	304
	33,620	10,755

12. Creditors: amounts falling due within one period

	2013	2012
	£000	£000
Amounts due to affiliated parties	3,748	12,006
Other taxes and social security costs	1,621	217
Trade creditors	504	319
Taxation	34	-
Accruals	10,051	1,581
	15,958	14,123

13. Creditors: amounts falling due after more than one year

	2013	2012
	£000	£000
Accruals	283	167
	283	167

14. Share capital

	2013	2012
	£000	£000
Allotted, called up and fully paid
Ordinary shares £1 each	68,000	45,000

On 25 June 2013, the Company issued 5,000,000 £ I ordinary shares for a consideration of £5,000,000 to provide working capital. On 3 September 2013, the Company issued 13,500,000 £ 1 ordinary shares for a consideration of £13,500,000 to provide working capital. On 27 December, 2013, the Company issued 4,500,000 £1 ordinary shares for a consideration of £4,500,000.

15. Reconciliation of movement in equity shareholders' funds

	Share capital	Profit and Loss account	Total Shareholders' funds
	£'000	£'000	£'000
At 1 January 2013	45,000	( 19,150)	25,850
Issue of share capital	23,000	-	23,000
Profit for the year		4,524	4,524
Share based compensation	-	1,130	1,130
At 31 December 2013	68,000	(13,496)	54,504

16. Notes to the statement of cash flows

(a) Reconciliation of operating profit/(loss) to net cash outflow from operating activities:

	2013	2012
	£000	£000
Operating profit	4,512	(5,565)
Depreciation of tangible fixed assets	755	260
Amortization of intangible assets	5,983	1,047
Share based payments	1,130
Impairment of loan	-	12
Increase in debtors	(23,218)	(5,470)
Decrease in creditors	1,917	4,607
Net cash outflow from operating activities	(8,921)	(5,109)
(b) Acquisitions and disposals
Net cash acquired with assets and liabilities purchased from
IALLP	-	2,862

	At 1 January 2013	Cash flows	31 December 2013
	£'000	£'000	£'000
Cash at bank	6,217	(305)	5,912

17. Related party transactions

For the year ended 31 December 20I3, the Company entered into certain related party transactions with Ares Management and other affiliates of the Company. As of 31 December 2013, the Company had a net due from affiliated parties in the amount of £21,501,000 (2012: £11,719,000) (see notes 1 I and 12) relating to these transactions. Summary of these transactions is as follows:

Affiliated Party	Relationship	Transaction Type	Amount $000
Fund Related Transactions	General Partner ("GP") to Funds	Cost Recharge	(2,215)
Parent Related Transactions	Common Ownership	Cost Recharge	23,699

The Company and Ares Capital Europe (Luxembourg) S.A.R.L. ("ACE LUX"), for which the Company serves as the GP, are party to an investment management agreement whereby the Company provides investment management services to ACE LUX. As of 31 December 2013, the Company earned £3,086,295 (2012: £3,457,000) related to this agreement, where there is no outstanding receivable balance at 31 December 2013 (2012: null).

In addition, the Company and Ares Capital Europe Limited ("ACE"), for which the Company serves as the GP, are party to a Sub-Advisory Agreement. Under the terms of these agreements, ACE provide services to the Company necessary for the Company to satisfy its obligations under the Investment Management Agreement entered into between the Company and ACE. The fees relating to the Sub-Advisory agreement total £524,017 (2012: £3,457,000) as of 31 December 2013, and there is no outstanding payable to ACE at 31 December 2013(2012: null).

The Company receives an arrangement fee from various European funds, for which the Company serves as the GP, each time it originates a new deal, which will be used to reduce future management fees that they receives. As of 31 December 2013, £2,556,752 is included as an outstanding payable to various funds (2012: £810,000).

Related party transactions within the Company's control group, which is defined as any company that is 100% directly or indirectly owned by the Company's ultimate parent, Ares Partners Management Company LLC have not been disclosed.

18. Financial commitments

At 31 December 2013, the Company had annual commitments under operating leases as set out below:

	2013	2012
	£'000	£'000
Land and Buildings
On leases expiring:
-between two and three years from the balance sheet date	1,124	438
Equipment
On leases expiring:
- within one year from the balance sheet date	-
Purchase Obligations
On agreements expiring:
-within one year from the balance sheet date	308	249
-between one and two years from the balance sheet date	1	206

19. Share based payments

Equity settled

In July 2013, certain employees of the Company were granted equity ownership of 1.2% in Ares Holdings LLC, the parent of Ares Management, and in Ares Investments LLC, an affiliate of the Company. This ownership entitles recipients to equal rights to privileges as other equity holders. These membership units vests over a period of two years. The grant date fair value of these awards was £4.7 million was determined using a recent market transaction in an arms-length transaction with an independent third party. The annual forfeiture rate of the awards is assumed to be 5% annually. There were no forfeitures during the year ended 31 December 2013. The current year's charge to the profit and loss account for these awards was £1,130,311. The unrecorded compensation expense associated with these awards was £3.6 million as of 31 December 2013.

20. Ultimate parent undertaking

The Company is immediately controlled by Ares Management LLC and ultimately controlled by Ares Partners Management Company LLC. Copies of the financial statements are available from Ares Management LLC, 2000 Avenue of the Stars, 12's Floor, Los Angeles, California, 90067, US

Appendix l (Unaudited)

Ares Management Limited

Pillar 3 Disclosure

Introduction

Since 1 January 2014, Ares Management Limited ("the Firm" or "AML") has been subject to the EU Capital Requirements Directive IV ("CRDIV") and the related Capital Requirements Regulations ("CRR"). Accordingly it has been treated by the Financial Conduct Authority ("FCA") as a €125k limited licence investment firm subject to the Prudential sourcebook for Investment Firms ("IFPRU").

However for the year ended 31 December 2013 the Firm was subject to the EU Capital Requirements Directive 2006 ("CRD") and the FCA's General Prudential Sourcebook ("GENPRU") and the Prudential Sourcebook for Banks, Building Societies and Investment Firms ("BIPRU"). As AML makes Pillar 3 disclosures annually at its accounting reference date (3151 December) as an appendix to its annual audited financial statements, this Pillar 3 disclosure is being made in accordance with the CRD and the relevant FCA rules which applied in 2013 rather than the CRD IV and CRR.

The CRD established a regulatory capital framework across Europe governing the amount and nature of capital credit institutions and investments firms must maintain. The CRD represented the European Union's application of the Basel Capital Accord and in the United Kingdom CRD was originally implemented by the Financial Services Authority ("FSA") through the GENPRU and BIPRU. As of 1 April 2013 the FSA was disbanded and replaced by two regulatory bodies: the Financial Conduct Authority ("FCA") and the Prudential Regulatory Authority ("PRA"). AML has been since 1 April 2013 regulated by the FCA which has adopted the FSA handbook.

The CRD framework comprised three 'Pillars':

• Pillar 1 sets out the minimum capital amount that meets the firm's credit, market and operational risk;

• Pillar 2 requires the firm at least annually to assess and document whether its Pillar 1 capital is adequate to meet its risks, which can be subject to review by the FCA;

• Pillar 3 requires disclosure of specified information about the underlying risk management controls and capital position.

The rules in BIPRU 11 set out the provision for Pillar 3 disclosure. This document is designed to meet the Pillar 3 obligations of the Firm as they applied in 2013.

The information contained in this document has not been audited by the Firm's independent appointed auditors and does not constitute any form of financial statement and must not be relied upon in making any judgement on the Firm.

We are permitted to omit required disclosures if we believe that the information is immaterial such that omission would be unlikely to change or influence the decision of a reader relying on that information.

In addition, we may omit required disclosures where we believe that the information is regarded as proprietary or confidential. In our view, proprietary information is that which, if it were shared, would undermine our competitive position. Information is considered to be confidential where there are obligations binding us to confidentiality with our customers, suppliers and counterparties.

We have made no omissions on the grounds that it is immaterial, proprietary or confidential other than where noted in this document.

Scope and Application of the Requirements

Ares Management Limited is incorporated in England and Wales. It is subject to minimum regulatory capital requirements set by the FCA. In 2013 the Firm was categorised as a "BIPRU 0501( Limited Licence" investment firm by the FCA for capital purposes and as such had no trading book exposures. The Firm is not a member of an EEA group and so is not required to prepare consolidated reporting for prudential purposes.

The Firm is wholly owned by Ares Management LLC (the "Parent"), a US-based investment management company. It was authorised to carry on investment management activity by the FSA on 27 November 2006, and its principal business activity is the provision of advisory and investment management services to cash flow loan funds registered outside the United Kingdom.

Governance Framework and Risk Management

The Firm has in place a Board of Directors ("the Board") which is responsible for determining its business strategy and risk appetite, together with designing and implementing a risk management framework that recognises the risks that the business faces, determines how those risks may be mitigated, and assesses the ongoing management of those risks. The Board meets at least annually, and more often as required, to discuss current projections for profitability and capital management, business planning, and risk management. The Board manages the Firm's risks through a framework of policies and procedures having regard to relevant laws, standards, principles and rules (including FCA principles and rules) with the aim to operate a defined and transparent risk management framework. These policies and procedures are updated as required. The Firm manages only cash flow loan funds and similar loan fund products and considers the robust, effective structure of systems and controls it has in place appropriate to the size, nature and complexity of its business.

The board and senior management team has accepted collective responsibility for compliance. On 2 April 2014 the Firm appointed a new UK based compliance officer with responsibility for the UK and Europe. This individual along with the Parent's Chief Compliance Officer and his team in Los Angeles is responsible for compliance oversight. In addition, the Firm also utilises the services of external consultants, who provide advice and assistance on a range of regulatory matters and also undertake regular monitoring and produce reports summarizing work performed and recommendations for improvements.

The Board has identified market, credit, business and operational risks as the main areas of risk to which the Firm is exposed. The adequacy of the Firm's regulatory capital in relation to these and other less significant risks is assessed through its Internal Capital Adequacy Assessment Process ("ICAAP"). The Board reviews and approves the ICAAP on an annual basis and uses it as an important part of the Firm's business planning and capital management.

Regulatory Capital

The Firm is a private limited company and its capital arrangements are established in its Articles of Association. All of its capital is tier 1 with deductions against it for intangible assets and a securitisation position.

Capital summary as at 31 December 2013:	£
Ordinary share capital	68,000,000
Retained loss net of other reserves	(13.496,000)
Total tier 1 capital before deductions	54,504,000
Deduct securitisation position	(12,870,000)
Deduct intangible assets	(16,291,000)
Total capital resources	25,343,000

The Firm is small with a simple operational infrastructure. Its market risk is limited to foreign exchange risk on its cash, accounts receivable in foreign currency and a 5% retention in Ares Euro 6 (securitisation position), and credit risk from management and performance fees receivable from the funds under its management. The Firm deducts 100% of its 5% retention in Ares Euro VI as permitted by the FCA Rules rather than include it in the Credit Risk Requirement Calculation. The Firm follows the standardised approach to market risk. It has adopted the Simplified standard and not the Internals Ratings Based approach to credit risk. The Firm is subject to the Fixed Overhead Requirement and is not required to calculate an operational risk capital charge though it considers this as part of its process to identify the level of risk based capital required.

As noted previously the Firm in 2013 was classified as a limited licence firm and as such its Pillar 1 capital requirement was the greater of:

• Its base capital requirement of €50,000; or

• The sum of its market and credit risk requirements; or

• its Fixed Overhead Requirement.

Under the new CRDiV, CRR and IFPRU rules the Firm has an initial requirement of €125,000 and has to maintain a Common Equity Tier 1 capital ratio of 4.5%, a Tier 1 Capital ratio of 6% and a Total Capital Ratio of 8%. These ratios are calculated by expressing the Firm's Own Funds (Tier 1 and Tier 2 Capital) as percentage of the total risk exposure amount. In AML's case the total risk exposure for Pillar 1 is the higher of the Fixed Overhead Requirement and the sum of the credit and foreign exchange exposure amounts. In essence this is the same as under the GENPRU and BIPRU rules.

It is the Firm's experience that the Fixed Overhead Requirement has historically established its capital requirement and only occasionally has this been determined by the sum of the market and credit risk requirements when higher. As at 31 December 2013 the Fixed Overhead Requirement was £3,892,000.

The Firm's ICAAP assesses the amount of capital required to mitigate the risks to which it is exposed over a three year time horizon. The 2013 ICAAP considers the impact of future business plans as well as potential adverse scenarios (such as market downturns or significant operational errors) on the capital resources of the Firm, to ensure regulatory capital requirements are met at all times.

In addition, the Firm has considered the effect of a significant drop in management and performance fee income caused by poor investment performance or other reputational damage / loss and has assessed whether additional capital is required to withstand a 1 in 25 year type adverse scenario. The Firm also calculates realistic wind-up costs and is comfortable that regulatory capital held would allow it to wind up in an orderly fashion.

Based on the risk assessment and stress testing described above the Firm's management concluded that additional Pillar 2 capital was not required for 2013. All of the significant risks identified in the Pillar 2 review were more than adequately covered by the Pillar 1 regulatory capital requirement. The ICAAP also showed that the Firm was compliant with the FCA's 'overall financial adequacy rule' and the 'overall pillar 2 rule' contained in GENPRU and BIPRU.

Remuneration Code

The Firm has assessed its remuneration structure in line with the FCA Remuneration Code (the "Code") and has adopted policies and procedures designed to ensure that risk is monitored and mitigated in line with the Code. Under FCA guidance, the Firm has determined that it is a "Proportionality Level 3" firm and has taken a proportionate approach as permitted by the rules. The Firm believes that given its business, it is already structured in compliance with the Principles of the Code. The Board, in accordance with Ares Management LLC's firmwide compensation guidelines determines the Firm's remuneration policy on at least an annual basis. AML's annual review of bonuses and performance related remuneration assesses the overall profits of the Firm and the business division along with the individual's financial and non-financial performance.

Remuneration Code Staff Remuneration by Business Area (BIPRU 11.5.18(6))

Business Area	Total Remuneration y/e 31/12/13
Investment Management Services	£13,782,647

Aggregate Quantitative Remuneration by Senior Management and other Remuneration Code Staff (BIPRU 11.5.18(7))

Type of Remuneration Code Staff	Total Remuneration
Senior Management (SIF)	£13,782,647
Other Remuneration Code Staff	nil
Totals	£13,782,647

2d:T26726,

Ares Management Limited Niederlassung Deutschland

Frankfurt am Main

Befreiender Jahresabschluss zum Geschäftsjahr vom 01.01.2022 bis zum 31.12.2022

ARES MANAGEMENT LIMITED

London/UK

Report and Financial Statements For the year ended 31 December 2022

Registered no. 05837428

Directors

John Atherton	(appointed 14 December 2022)
Kevin Early
William Stephen Benjamin
Blair Jacobson
Miriam Krieger
Naseem Sagati Aghili	(resigned 14 December 2022)

Secretary

TMF Corporate Administration Services Limited

8th floor

20 Farringdon Street

London

EC4A 4AB

Auditor

Ernst & Young LLP

25 Churchill Place

London E14 5EY

Bankers

Barclays PLC

1 Churchill Place, Level 11

London, E14 5HP

City National Bank 15260 Ventura Boulevard

Sherman Oaks, CA 91403, USA

Solicitors

Latham & Watkins LLC

355 South Grand Avenue

Los Angeles, CA 90071

Registered Office

8th floor

20 Farringdon Street

London

EC4A 4AB

Directors' report

The Directors present their report and financial statements of Ares Management Limited (the "Company") for the year ended 31 December 2022.

Principal activity

The principal activity of the Company during the year ended 31 December 2022 was to provide advisory and investment management services. The Company was incorporated on 5 June 2006 and is a wholly owned subsidiary of Ares Management LLC ("Ares Management"). The Company is authorised by the Financial Conduct Authority to perform investment management activity that is subject to licensing requirements in the United Kingdom.

On 22 July 2014 the investment management of all the Alternative Investment Funds previously managed by the Company were transferred to Ares Management UK Limited ("AMUKL"), an affiliate of the Company.

Directors

Directors who served during the year and up to the date of this report were:

John Atherton	(appointed 14 December 2022)
Kevin Early
William Stephen Benjamin
Blair Jacobson
Miriam Krieger
Naseem Sagati Aghili	(resigned 14 December 2022)

Going concern

The Company's activities, together with the factors likely to affect its future development, its financial position and the financial risks are described in the strategic report.

After making enquiries, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. The Company will continue to have financial support from its parent if required. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

As the Company has sufficient financial resources and fee generating Investment Management Agreements, the Directors believe that the Company is well placed to manage its business risks successfully.

Statement under Section 172 of the Companies Act 2006

The Directors consider, both individually and together, that they have acted in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in s172(l)(a-f) of the Act) in the decisions taken during the year ended 31 December 2022.

Streamlined Energy and Carbon Reporting

The below table covers the Streamlined Energy and Carbon Reporting disclosure for the year ended 31 December 2022 for the Company's operations in the UK.

Energy Use

	2022	2021
Total energy use (Kilowatt hours - KWh)	601,244	311,282
Total Floor Area (m ² )	5,797	2,928
Energy Intensity (kWh/m ² )	104	106

Energy use breakdown

	2022 KWh	2021 KWh
Electricity	422,793	213,800
Gas	178,451	97,483

Energy use has been calculated from-metering and billing data provided for the Company's leased property in the UK. Energy use excludes indirect energy use such as that for business travel by public transport or flights.

Greenhouse Gas Emissions

	2022 tCO ₂ e	2021 tCO ₂ e
Scope 1 - Consumption of gas	32,121	17,855
Scope 2 - Consumption of purchased electricity	81,760	45,396
Total	113,881	63,251

The greenhouse gas emission factors used in the calculations were the 2022 UK Government conversion factors for company reporting of greenhouse gas emissions.

Greenhouse Gas Emissions

Ares Management is committed to managing energy use responsibly and will implement energy efficiency practices throughout our organisation, wherever it is feasible and cost-effective. Ares Management recognizes that climate change is one of the most serious environmental challenges currently faced by the global community and understand that we must play our role in reducing greenhouse gas emissions. As a tenant of a serviced office, we have no responsibility for the operation of major plants such as boilers, chillers and ventilation air-handling units. The energy we possess control over is small power and lighting. As such we have already implemented high specification pro-logic LED lighting with presence detection within our organisation to minimise energy consumption.

Pillar 3 disclosures

The unaudited Pillar 3 disclosures are appended to the financial statements.

Disclosure of information to the auditor

So far as each person who was a Director at the date of approving this report is aware, there is no relevant audit information, being information needed by the auditor in connection with preparing its report, of which the auditor is unaware. Having made enquiries of fellow Directors and the Company's auditor, each Director has taken all the steps that they are obliged to take as a Director in order to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.

Statement of Directors' responsibilities

The Directors are responsible for preparing the Directors' Report, the Strategic Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Ireland'. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing those financial statements, the Directors are required to:

•	select suitable accounting policies and then apply them consistently;
•	make judgements and estimates that are reasonable and prudent;
•	state whether applicable United Kingdom Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
•	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Reappointment of Auditors

The auditors, Ernst & Young, LLP, have indicated their willingness to continue in office. A resolution concerning their reappointment will be put to the members at the annual general meeting.

By the order of the Board

Kevin Early, Director

Strategic report

The Directors present their strategic report together with the financial statements of the Company for the year ended 31 December 2022.

Results and dividends

The profit for the year ended 31 December 2022 is £11,101,550 (2021: £6,650,531). During the year the Directors approved the payment of a dividend amounting to £5,500,000 (2021: £9,000,000).

Review of the business

The key financial and other performance indicators during the year were as follows:

	2022	2021
	£000	£000
Turnover	111,766	86,618
Profit after tax	11,102	6,650
Shareholders' funds	143,205	114,911
Current assets as % of current liabilities	635	487
Average number of employees	277	235

Principal risks and uncertainties

Competitive Risks

Legislative Risks

Financial Instrument Risks

The Company has established a financial management framework the primary objectives of which are to protect the Company from events that hinder the achievement of the Company's performance objectives.

The objectives aim to ensure sufficient working capital exists and monitor the management of risk at the funds level.

Liquidity risk

Future Developments

The Directors do not expect any change in the principal activity of the Company in the foreseeable future.

Impact of invasion of Ukraine by the Russian Federation

Following the invasion of Ukraine by the Russian Federation in February 2022, a number of jurisdictions (including the US, UK and EU) imposed sanctions against Russia, and certain entities and individuals connected to the Russian state. Growing geopolitical tensions since the commencement of the war have resulted in a significant increase in volatility on the securities and currency markets, as well as a significant depreciation of the ruble against the Sterling, US dollar and the Euro.

Although neither the Company's performance and going concern nor operations, at the date of this report, have been significantly impacted by these events, the directors continue to monitor the evolving situation and its impact on the financial position and results of the Company.

By the order of the Board

Kevin Early, Director

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ARES MANAGEMENT LIMITED

Opinion

We have audited the financial statements of Ares Management Limited (the "Company") for the year ended 31 December 2022 which comprise the Profit and loss account, the Statement of changes in equity, the Balance sheet, the Cash flow statement and the related notes 1 to 25, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

•	give a true and fair view of the Company's affairs as at 31 December 2022 and of its profit for the year then ended;
•	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
•	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the members' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for the period to 25 April 2024.

Our responsibilities and the responsibilities of the members with respect to going concern are described in the relevant sections of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Company's ability to continue as a going concern.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The members are responsible for the other information contained within the annual report.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

•	the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
•	the strategic report and directors' report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

•	adequate accounting records have not been kept or returns adequate for our audit have not been received from branches not visited by us; or
•	the financial statements are not in agreement with the accounting records and returns; or
•	certain disclosures of directors' remuneration specified by law are not made; or
•	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the statement of directors' responsibilities set out on page 4, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

•	Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management. We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined that the most significant are those that relate to the reporting framework United Kingdom Generally Accepted Accounting Practice, the Companies Act 2006 and the relevant direct and indirect tax compliance regulation in the United Kingdom. In addition, the Company is required to comply with relevant Financial Conduct Authority's (FCA) rules and regulations relating to its operations.
•	We understood how the Company is complying with those frameworks by making enquiries of management and by seeking representation from those charged with governance. We corroborated our understanding by reviewing board meeting minutes and relevant policy and procedures manuals. We also reviewed correspondence with relevant authorities.
•	We assessed the susceptibility of the Company's financial statements to material misstatement, including how fraud might occur by considering the risk of management override and by designating revenue recognition as a fraud risk. We performed journal entry testing by specific risk criteria, with a focus on manual journals and journals indicating large or unusual transactions based on our understanding of the business. We recalculated the revenue based on the transfer pricing arrangement applied by management and tested a sample of inputs in the calculation back to source documentation. We also used our internal transfer pricing specialists to review the appropriateness of the transfer pricing arrangement.
•	Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures involved enquiries of management and those charged with governance, review of legal and professional expenses, review of breaches and complaints register, and review of board meeting minutes.
•	The Company is a regulated investment manager under the supervision of the FCA. As such, the Senior statutory auditor reviewed the experience and expertise of the engagement team to ensure that the team had the appropriate competence and capabilities, which included the use of specialists where appropriate.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

• This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

London 26 April 2023

Ashley Coups, Senior Statutory Auditor

for and on behalf of Ernst & Young LLP, Statutory Auditor

Profit and loss account for the year ended 31 December 2021

		2022	2021
	Notes	£000	£000
Turnover	4	111,766	86,618
Administrative expenses		(101,593)	(78,683)
Gross Profit		10,173	7,935
Gain on transfer of branches	21	1,536	-
Operating Profit	5	11,709	7,935
Other operating income and similar charges		(12)	(61)
Profit on ordinary activities before taxation		11,697	7,874
Tax on ordinary activities	9	(595)	(1,224)
Profit on ordinary activities after taxation		11,102	6,650

All items dealt with in arriving at the profit for the year ended 31 December 2022 related to continuing operations.

Statement of comprehensive income for the year ended 31 December 2022

There are no gains and losses for the year other than those shown above and therefore no separate statement of comprehensive income has been presented.

The notes on pages 14 to 30 form an integral part of these financial statements.

Statement of changes in equity for the year ended 31 December 2022

	Share capital	Profit and loss account	Total Shareholders' funds
	£000	£000	£000
At 1 January 2021	28,000	74,590	102,590
Profit for the year	-	6,650	6,650
Share based compensation	-	14,671	14,671
Dividend		(9,000)	(9,000)
At 31 December 2021	28,000	86,911	114,911
Profit for the year	-	11,102	11,102
Share based compensation	-	22,692	22,692
Dividend	-	(5,500)	(5,500)
At 31 December 2022	28,000	115,205	143,205

The notes on pages 14 to 30 form an integral part of these financial statements.

Balance sheet at 31 December 2022

		2022	2021
	Notes	£000	£000
Fixed assets
Intangible assets
Goodwill	10	68	135
Other intangible assets	11	-	330
Tangible assets
Property, plant and equipment	12	2,336	2,509
Investment	13	420	624
Total fixed assets		2,824	3,598
Current assets
Debtors	14	121,280	102,447
Deferred tax	15	11,930	7,891
Cash and cash equivalents	20	34,359	31,560
Total current assets		167,569	141,898
Creditors: amounts falling due within one year	16	(26,374)	(29,110)
Total assets less current liabilities		144,019	116,386
Creditors: amounts falling due after more than one year	17	(814)	(1,475)
Net assets		143,205	114,911
Capital and reserves
Called up share capital	18	28,000	28,000
Profit and loss account		115,205	86,991
Shareholders' funds		143,205	114,911

The notes on pages 14 to 30 form an integral part of these financial statements.

The financial statements on pages 10 to 30 were approved and authorised on 25 April 2023 for issue on behalf of the Directors.

Kevin Early, Director

Cash flow statement for the year ended 31 December 2022

		2022	2021
	Note	£000	£000
Cash generated from operating activities	20 (a)	9,999	11,992
Tax paid		(1,139)	(4,094)
Interest paid		(29)	(64)
Net cash inflow from operating activities		8,831	7,834
Investing activities
Interest received		17	3
Payments to acquire tangible fixed assets		(777)	(879)
Purchase of Goodwill		24	(168)
Proceeds from sale of investment		204	-
Purchase of investment		-	(175)
Net cash outflow from investing activities		(532)	(1,219)
Financing activities
Payment of Dividend		(5,500)	(9,000)
Net cash outflow from financing activities		(5,500)	(9,000)
Increase/(Decrease) in cash and cash equivalents		2,799	(2,385)
Cash and cash equivalents at 1 January		31,560	33,945
Cash and cash equivalents at 31 December	20 (b)	34,359	31,560

The notes on pages 14 to 30 form an integral part of these financial statements.

Notes to the financial statements at 31 December 2022

1. Accounting policies

Organisation and business

The Company commenced operations on 5 June 2006 and is a wholly owned subsidiary of Ares Management LLC ("Ares Management"), a United States based company. Ares Management is the parent company of various operating subsidiaries which include the Company. The operating subsidiaries are generally either investment managers and/or general partners of various investment funds (the "Ares Funds"). These subsidiaries provide investment management services to the Ares Funds in exchange for investment management fees.

Basis of preparation

The financial statements are prepared in compliance with FRS 102 on a going concern basis, under the historical cost convention and are prepared in accordance with the Companies Act 2006. The accounting practices have been applied consistently by the Company. The financial statements have been prepared in the British pound sterling (£) which is also the functional currency.

The preparation of financial statements in conformity with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the accounting policies selected for use by the Company. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 2. Use of available information and application of judgement are inherent in the formation of estimates. Actual outcomes in the future could differ from such estimates.

Goodwill

Goodwill arising on acquisitions represents the excess of the fair value of consideration transferred over the Company's interest in the fair value of the identifiable assets, liabilities and contingent liabilities at the date of acquisition. Goodwill is recognised as an asset as it represents synergies the Company expects to receive from the acquisition. Goodwill is subsequently amortised over its estimated useful life which is deemed to be three years from acquisition. If the recoverable amount of the cash generating unit is less than the carrying amount of the investment, the impairment to the related goodwill is recognised in profit or loss.

Other intangible assets

Intangible assets acquired separately from a business are recorded at cost. Subsequent to initial recognition, intangible assets are stated at cost less accumulated amortisation and any accumulated impairment losses. Amortisation is provided on a straight line basis over the expected useful life of the assets as follows:

Management contracts acquired

- over the term of the contract

The carrying value of the intangible asset is reviewed for impairment at least annually.

Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation and any accumulated impairment losses, if any. Such costs include those costs directly attributable to making the asset capable of operating as intended.

Leasehold improvements	over the lease term
Furniture and computer equipment -	over 5 to 7 years.

Investments

In the Company's Balance sheet, investments in subsidiaries are stated at cost less any provision for impairment.

Short-term debtors and creditors

Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at transaction price, as that is the consideration expected to be received or paid. Any losses arising from impairment are recognised in the profit and loss account in administrative expenses.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short term deposits with an original maturity date of three months or less.

Cash and cash equivalents are measured at fair value, based on the relevant exchange rates at the reporting date.

Dividends

Dividends paid to the Company's parent are recognised in the Statement of changes in equity in the period in which the dividends are approved.

Turnover

Turnover is recognised to the extent that the Company obtains the right to consideration in exchange for its performance of services. Turnover is measured at the fair value of the consideration received, excluding discounts, rebates, Value Added Tax ("VAT") and other taxes or duty. The following criteria must also be met before turnover is recognised:

Rendering of services

Turnover from investment management fees are generally based on a defined percentage of fair value of assets, total commitments, invested capital, net asset value ("NAV"), net investment income, total assets or par value of the investment portfolios managed by the Company. Agency fees are recognised as turnover in the period that the management services are rendered. Investment management fees are recognised as turnover when collection of such fees is certain following a fund's determination date.

Incentive income

Incentive fees are based on certain specific hurdle rates as defined in the applicable investment management agreements or governing documents. Incentive fees are recognised when collection is fixed and ascertainable following a fund's determination date and usually coincides with the period in which the Company collects cash or the period immediately preceding cash collection.

Interest income

Interest income is recognised on an accrual basis on cash balances.

Special fees

Turnover may also include special fees such as administration fees paid to the Company in connection with the operations of the Company. The nature of these fees is specific to the administrative services provided by the Company. Such fees would be included in turnover in the profit and loss account and are recognised as turnover when earned.

Provisions for liabilities

Operating lease commitments

Rentals payable less any incentives are charged in the profit and loss account on a straight line basis over the lease term.

Pension costs

The Company operates a defined contribution scheme. Contributions to the defined contribution scheme are recognised in the profit and loss account in the period in which they become payable.

Foreign currencies

Transactions in currencies other than sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Gains and losses arising on exchange are included in profit or loss.

Share-based payments (equity-settled)

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which they are granted and is recognised as an expense on a straight-line basis over the vesting period, which ends on the date on which the relevant employees become fully entitled to the award. Fair value is determined using an appropriate pricing model. In valuing equity-settled transactions, no account is taken of any vesting conditions, other than performance conditions linked to the price of the shares of the Company (market conditions).

At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management's best estimate of the achievement or otherwise of non-market vesting conditions and of the number of equity instruments that will ultimately vest or, in the case of an instrument subject to a market condition or a non-vesting condition, be treated as vesting as described above. Management's estimate of the number of equity instruments which ultimately vest is based on forfeiture rates since inception. Where awards are made to a small pool of senior leaders, a zero forfeiture rate is estimated.

The movement in cumulative expense since the previous balance sheet date is recognised in the profit and loss account, with a corresponding entry in equity.

Taxation

Income tax expense represents the sum of the current tax and deferred tax.

The charge for current tax is based on the result for the year adjusted for items which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Current and deferred tax is recognised in the same component of the profit and loss account, other comprehensive income or equity as the transaction or event that resulted in the tax expenses or income.

Unrelieved tax losses and other deferred tax assets are recognised to the extent that they are regarded as recoverable which are to the extent that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

2. Critical accounting estimates and judgements

In preparing the financial statements, management is required to make estimates and assumptions which affect reported income, expenses, assets, liabilities and disclosure of contingent assets and liabilities. Use of available information and application of judgement are inherent in the formation of estimates, together with past performance and expectations of future events that are believed to be reasonable under the circumstances. Actual results in the future could differ from such estimates.

Share-based payments (equity-settled)

The fair value of equity-settled transactions is determined by using an appropriate pricing model. Management uses its judgement to select an appropriate pricing model and estimates the key inputs using a variety of assumptions that are mainly based on market conditions existing at the date on which they are granted.

Estimated impairment of intangible assets

The entity annually reviews whether the intangible assets have suffered any impairment, in accordance with the accounting policy stated in note 1. Management uses its judgement to consider if the expected useful life of the assets has decreased.

3. Financial risk management

The Company has exposure to the following risks from its use of financial instruments:

Foreign exchange risk

The Company is exposed to foreign exchange risk through the movement in the value of its foreign currency denominated assets and liabilities. The Company mitigates this risk at a Group level.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company aims to mitigate liquidity risk by managing cash generation from operations. The Company also manages liquidity risk via additional equity investments from the parent company.

Credit risk

The Company has credit risk exposure arising from current fees due but not received from the funds it manages and from its cash balances held at highly rated banks. Fees are invoiced to these funds in accordance with the terms of the investment management agreements. By their nature, the funds hold significant cash balances and the fund trustee/administrator is responsible for making the payment of the management and performance fees.

4. Turnover

Turnover principally represents the amounts derived from the provision of investment management services, stated net of VAT, and arising from continuing activities in Europe.

For the year ended 31 December 2022, base investment management fees earned were £54,673,164, (2021: £35,865,540). Total incentive management fees earned for the year were £50,468,901 (2021: £45,192,514).

Turnover also includes Agency fees of £3,719,810 (2021: £3,407,637) and other income of £2,904,613 (2021: £2,152,592).

5. Operating profit

Operating profit is stated after charging:

	2022	2021
	£000	£000
Amortisation and impairment of goodwill (see note 10)	43	33
Amortisation and impairment of other intangible assets (see note 11)	330	493
Depreciation of owned assets (see note 12)	950	867
Operating lease rentals
- Land and buildings	3,662	3,126
- Equipment	43	44
Foreign exchange loss	3,911	239
Auditors' remuneration (see note 6)	103	113

6. Auditors' remuneration

The remuneration of the auditors is further analysed as follows:

	2022	2021
	£000	£000
Audit of the financial statements	40	38
Other fees to auditors - taxation services	63	75
	103	113

7. Directors' emoluments

None of the Directors received any compensation for services rendered as Directors of the Company (2021: nil).

8. Staff costs

	2022	2021
	£000	£000
Wages and salaries	114,644	98,263
Social security costs	19,695	16,588
Pension costs	2,825	1,996
Total staff costs	137,164	116,847

The average numbers of employees during the year were as follows:

	2022	2021
Fund management	156	136
Marketing	36	27
Administrative	85	72
Average number of total staff	277	235

9. Tax on profit on ordinary activities

Current tax for the year:

	2022	2021
	£000	£000
UK Corporation tax on profit for the year	4,370	1,433
Foreign tax relief/other relief	(292)	(187)
Adjustment for prior periods	(47)	(224)
	4,031	1,022
Foreign tax suffered	602	280
Foreign tax adjustment in respect of prior periods	(-)	(17)
Total current tax	4,633	1,285
Deferred tax:
Origination and reversal of timing differences	(2,254)	791
Effect of changes in tax rates	(1,744)	(865)
Adjustment in respect of previous periods	(40)	13
Total deferred tax	(4,038)	(61)
Total tax charge per income statement	595	1.224

The charge for the year can be reconciled to the profit per the income statement as follows:

	2022	2021
	£000	£000
Profit on ordinary activities before taxation	11,697	7,874
Corporation tax at 19% (2021: 19%)	2,222	1,497
Adjustment from previous periods	(86)	(228)
Expenses not deductible	261	159
Effect of overseas tax rates	310	93
Tax rate changes	(1,744)	(865)
Share options	(367)	569
Income not taxable	(1)	(1)
Total tax charge for the year	595	1,224

10. Goodwill

	Total
	£000
Cost:
At 1 January 2022	168
^* Changes made during the year	(24)
At 31 December 2022	144
Amortisation:
At 1 January 2022	(33)
Amortisation charge for the year	(43)
At 31 December 2022	(76)
Net realisable value at 31 December 2022	68
Net realisable value at 31 December 2021	135

On 6 February 2021, the Company acquired the assets, liabilities, and contingent liabilities of Landmark Partners (Europe) Limited. The total cost of the goodwill was recorded and is amortized over three years.

^* Changes made during the year relates to writing off the opening balance of tax from Landmark.

11. Intangible assets

	Total
	£000
Cost:
At 1 January 2022	4,924
Disposal:	(4,924)
At 31 December 2022	-
Amortisation:
At 1 January 2022	(4,594)
Amortisation charge for the year	(330)
Disposal:	4,924
At 31 December 2022	-
Net realisable value at 31 December 2022	-
Net realisable value at 31 December 2021	330

On 7 September July 2012 the Company acquired the investment management contracts of several alternative investment funds from Indicus Advisors LLP (IALLP). The total purchase price was recorded as an intangible asset and is amortised over ten years which is the length of the contracts. The contracts have expired and the balance is fully amortised and hence written off.

12. Tangible fixed assets

	Furniture and computer equipment	Leasehold improvements	Total
	£000	£000	£000
Cost:
At 1 January 2022	2,105	4,607	6,712
Additions	832	107	939
Disposals	(452)	-	(452)
At 31 December 2022	2,485	4,714	7,199
Depreciation:
At 1 January 2022	844	3,358	4,202
Charge for the year	406	544	950
Disposals	(289)	(-)	(289)
At 31 December 2022	961	3,902	4,863
Net realisable value at 31 December 2022	1,524	812	2,336
Net realisable value at 31 December 2021	1,260	1,249	2,509

13. Investments

13. Investments	2022	2021
	£000	£000
At 1 January	624	449
Additions	-	175
Disposal	(204)	-
At 31 December	420	624

The Company's Investment relates solely to its holding in SDL Management GP L.P. The Company holds a majority interest in SDL Management GP L.P. and has control over its financial and operational policies. The Company has utilised its exemption to prepare group accounts on the grounds that it is itself a wholly-owned subsidiary of Ares Management Corporation. Both the Company and SDL Management GP L.P. are consolidated into the accounts of Ares Management Corporation.

In line with the Company's accounting policy, the investment is held at cost less impairment.

14. Debtors

	2022	2021
	£000	£000
Management fee receivable	29,332	25,216
Performance fee receivable	72,391	44,312
Amounts due from affiliated parties	15,823	27,280
Prepayments	2,926	2,306
Other debtors	731	866
Corporation tax	-	2,467
VAT	77	-
	121,280	102,447

15. Deferred tax

	2022	2021
	£000	£000
Provision at start of year	7,891	7,830
Deferred tax charge to income statement for the year	3,998	74
Adjustment in respect of prior years	41	(13)
Provision at end of year	11,930	7,891

The deferred tax asset at the end of the year arises on the following timing differences, tax losses or tax credits:

	2022	2021
	£000	£000
Fixed asset timing differences	(111)	(28)
Short term timing differences - trading	12,041	7,919
Provision at end of year	11,930	7,891

In the Spring Budget 2021, the government announced that from 1 April 2023 the headline corporation tax rate will increase to 25%. The proposal to increase the rate to 25% has been substantively enacted at the Company's balance sheet date, therefore its effects have been included in these financial statements.

16. Creditors: amounts falling due within one period

	2022	2021
	£000	£000
Trade creditors	464	171
Corporation tax	1,028	-
Accruals	24,882	28,896
VAT	-	43
	26,374	29,110

17. Creditors: amounts falling due after more than one year

	2022	2021
	£000	£000
Accruals	814	1,474
	814	1,474

18. Called up share capital

	2022	2021
	£000	£000
Authorised
68,000,00 Ordinary shares £1 each	68,000	68,000
Allocated, called up and paid	28,000	28,000
1 ordinary share for £1

19. Dividends

On 29 June 2022 an interim dividend of £5,500,000 (2021: £9,000,000) was approved and paid by the directors to Ares Management LLC, the Company's sole shareholder.

20. Notes to the statement of cash flows

(a) Reconciliation of operating profit to net cash outflow from operating activities:

	2022	2021
	£000	£000
Operating Profit	11,709	7,935
Depreciation of tangible fixed assets	950	867
Amortisation of intangible assets	330	493
Amortisation of goodwill	43	33
Share based payments	22,692	14,672
Increase in debtors	(21,300)	(27,003)
(Decrease)/Increase in creditors	(4,425)	14,995
Cash generated from operating activities	9.999	11,992

(b) Cash and cash equivalents

Cash and cash equivalents are fully comprised of current accounts.

21. Related party transactions

During the year ended 31 December 2022, the Company entered into certain related party transactions with Ares Management UK Limited, Ares Management LLC, Ares Management Luxembourg and Ares European Operations Sarl. The summary of these transactions is disclosed as follows:

Affiliated Party	Relationship	Transaction Type	Amount
			£000
Ares Management UK Limited	Affiliate	Cost Recharge	82,747
Ares Management LLC	Parent	Transfer Pricing	37,607
Ares Management Luxembourg	Affiliate	Services	29,500
Ares European Operations Sarl	Affiliate	Services	42

The cost recharge to Ares Management UK Limited relates to the recovery of administrative expenses incurred by the Company. Total administrative expenses between Ares Management Limited and Ares Management UK Limited are allocated in proportion to their revenues.

The Company engages Ares Management Luxembourg to search and communicate investment opportunities in Spain and France.

The Company engages Ares European Operations Sarl for domiciliation and business office services.

As a consequence of the United Kingdom's decision to exit the European Union (Brexit), AML may lose the benefits of the passporting rights granted by the Alternative Investment Fund Managers Directive and would no longer be able to carry its regulated business in European Union member states and more specifically, Sweden and Germany. On 1 November 2022 the Company sold the assets, rights and liabilities totalling £128,345 of the Swedish Branch to Ares Management Luxembourg for a consideration of £702,382 resulting in a gain on sale of £574,037. On 1 December 2022 the Company sold the assets, rights and liabilities totalling £110,586 of the Frankfurt Branch to Ares Management Luxembourg for a consideration of £1,072,408 resulting in a gain on sale of £961,823. The consideration for the sales were set using a fair market value calculated using an income approach discounted cash flow method. The Company then engaged Ares Management Luxembourg to perform services on its behalf. These services include searching and communicating investment opportunities for the Company.

As at 31 December 2022, the Company was owed £15,823,262 (2021: £27,279,125) from its affiliates and £101,723,307 (2021: £69,527,734) from the funds it manages.

22. Obligations under leases

At 31 December 2022, the Company had future minimum payments due under operating leases as set out below:

	2022	2021
	£000	£000
Land and Buildings
On leases expiring:
-within one year from the balance sheet date	3,959	3,627
-within two and five years from the balance sheet date	1,724	4,535
-over five years from the balance sheet date	-	49
Equipment
On leases expiring:
-within one year from the balance sheet date	33	148
-within two and five years from the balance sheet date	5	80
	5,721	8,439

The operating lease payables for Land and Buildings are in respect of office buildings in London, Luxembourg, and Amsterdam.

23. Share-based payments

Equity-settled

Ares Employee Participation LLC Interests and AREA Membership Interest

Prior to the Initial Public Offering ("IPO") on 1 May 2014 of Ares Management Corporation (formerly Ares Management LP), various profit interests and membership interests were issued historically to pools of certain professionals that provided for the participation in the profits and/or proceeds of certain capital events, including also professionals of the Company. Unless otherwise stated, the grant date fair value of each award or respective membership interest was determined by an independent third party valuation firm. These awards are referred to as Ares Employee Participation ("AEP") plans and are described below.

In July 2013, certain employees of the Company were granted equity ownership of 1.2% ("AREA Membership Interest") in Ares Holdings LLC, the parent of Ares Management, and in Ares Investments LLC, an affiliate of the Company. This ownership entitles recipients to equal rights to privileges as other equity holders. The fair value of these awards was determined using a recent market transaction at the time of determination. These membership units vest over a period of two years. As a result of the initial public offering of Ares Management Corporation on 1 May 2014, £3,867,451 of the total of £7,505,837 equity-settled share-based compensation in 2014 related to London Real Estate for the acceleration of this award granted in July 2013. There was no change in the fair value of these converted interests as a result of the acceleration in vesting. They were not subject to satisfaction of any conditions or market related performance. In addition, the Company recorded one time acceleration expenses on the following awards vesting only as a result of a capital event:

―	Ares Employee Participation IV £230,660;
―	Ares Employee Participation VIII £988,136.

The key inputs used in the Black Scholes Model are as follows:

	Equity Value	Ares Holdings LLC Equity	Ares Investments LLC Equity	Term	Risk Free Rate	Management Fee Volatility	Incentive Fee Volatility
AEP IV	$1,650	$1,089	$561	2 years	0.27%	34%	44%
AEP VIII	$3,374	$2,227	$1,147	2 years	0.34%	29%	39%

Ares Management, L.P. 2014 Equity Incentive Plan

In connection with the IPO of Ares Management Corporation on 1 May 2014, the Board of Directors of the General Partner of Ares Management Corporation adopted the Equity Incentive Plan. Under the Equity Incentive Plan, the Company granted options to acquire common units £3,579,932 (2021: £3,579,932), restricted units to be settled in common units £3,607,635 (2021: £3,607,635) and phantom common units to be settled in cash £19,166 (2021: £19,166), less a deduction of a dividend equivalent of £305,627 (2021: £305,627). Equity based compensation expense is determined based on the fair value of the respective equity award on the grant date and is recognised on a straight line basis over the requisite service period, with a corresponding increase in shareholders' equity.

Restricted Units

The table below shows the history of units granted since the IPO of Ares Management Corporation.

Date granted	Number of units	Price of grant $	Discount on Fair value %	Assumed forfeiture rate per annum %	Years vested over
01 May 2014	951,708	19	5	1.3	5
09 January 2015	3,947	17.56	5	1.3	5
20 January 2016	317,147	11.21	0	1.3	4
15 August 2016	521,875	17.34	0	1.3	2
01 January 2017	100,001	19.20	0	Nil	2
20 January 2017	218,484	19.90	0	1.3	4
31 January 2017	755,000	19.45	0	Nil	5
20 January 2018	205,296	23.20	0	1.3	4
31 January 2018	560,000	24.15	0	1.3	5
20 January 2019	323,769	20.05	0	1.3	3
31 January 2019	297,500	20.78	0	1.3	5
20 January 2020	198,661	37.28	0	1.1	3
31 January 2020	378,000	36.55	0	1.1	5
06 February 2020	70,000	36.55	0	1.1	5
15 May 2020	25,000	36.55	0	1.1	5
01 October 2020	5,032	40.42	0	1.1	5
20 January 2021	152,488	45.67	0	1.1	3
31 January 2021	912.000	45.16	0	1.1	8
1 May 2021	12,500	52.52	0	0.9	5
2 June 2021	9,412	55.29	0	0.9	5
1 July 2021	800	63.59	0	0.9	5
15 September 2021	1,743	78.22	0	0.9	5
18 October 2021	1147	78.22	0	0.9	5
15 November 2021	1,189	78.22	0	0.9	5
07 January 2022	15,085	73.94	0	2.2	5
20 January 2022	136,795	74.81	0	1.2	3
31 January 2022	342,000	74.16	0	2.2	5
10 February 2022	26,974	81.27	0	2.2	5
05 September 2022	35,000	72.75	0	2.2	5
10 October 2022	1,853	65.19	0	2.2	5
01 November 2022	11,045	65.19	0	2.2	5
02 November 2022	21,940	65.19	0	2.2	5

For the year ended 31 December 2022, 3,389 restricted units were forfeited (2021: 69,431).

Each restricted unit represents an unfunded, unsecured right of the holder to receive a common unit on the vesting date. Fair value of the restricted units and phantom units was determined to be the most recent closing price of common units. Certain restricted units are subject to a lock up provision that expires on the fifth anniversary of the IPO. The Company used Finnerty's average strike price put option model to estimate the discount associated with this lack of marketability. Compensation expense associated with restricted units is being recognised on a straight line basis over the service period of the respective grant. A cumulative expense of £103,171,629 (2021: £76,791,037) relating to these awards has been recognised in the profit and loss account in equity.

For the year ended 31 December 2022: 435,122 restricted units vested (2021: 1,092,626).

Options

On 1 May 2014, 3,873,238 units were issued at $4.02 with 3.5% forfeiture rate vested over 5 years; and 10,568 units issued on 31 May 2014 at $3.83 with 3.5% forfeiture rate vested over 5 years. An additional 525,000 units were issued on 9 January 2016 at $3.47 with 3.5% annual forfeiture rate vested over 4 years.

A cumulative expense of £11,025,834 (2021: £11,025,834) relating to these awards has been recognised in the profit and loss account in equity.

For the year ended 31 December 2022, nil options were forfeited (2021: nil).

The fair value of each option granted during the period from 1 May 2014 to 31 December 2022 is measured on the date of grant using the Black Scholes option pricing model and the following weighted average assumptions:

Input	1 May 2014 Grant	30 May 2014 Grant	9 January 2015 Grant	Source
Stock Price	$19	$19	$17.72	Traded Price
Exercise Price	$19	$19	$19	Management
Expected Term	7 years	6.92 years	7.49 years	See above
Volatility	35%	34%	36%	See AEP Table above
Risk Free Rate	2.21%	2.06%	1.80%	Interpolated from US Govt Band Rate
Assumed Dividend Yield	5%	5%	5%	Management
Estimated Per-Share Value	$4.02	$3.83	$3.47

24. Ultimate parent undertaking

The Company is immediately controlled by Ares Management LLC, a company incorporated in the United States of America, and ultimately controlled by Ares Management Corporation (formerly Ares Management LP). Copies of the financial statements are available from Ares Management LLC, 2000 Avenue of the Stars, 12th Floor, Los Angeles, California, 90067, USA.

25. Events after the end of the reporting period

The Directors have evaluated the possibility of events after the balance sheet date existing in the Company's financial statements through to 25 April 2023 and to its knowledge, there have been no material post balance sheet events that occurred during the period that would require disclosure in the Company's financial statements for the year ended 31 December 2022.

2e:T2aaa7,

Ares Management Limited Niederlassung Deutschland

Frankfurt am Main

Befreiender Jahresabschluss zum Geschäftsjahr vom 01.01.2021 bis zum 31.12.2021

ARES MANAGEMENT LIMITED

London/UK

Registered no. 05837428

Directors
Michael Daniel Weiner	(resigned 8 January 2021)
Kevin Early
William Stephen Benjamin
Blair Jacobson
Miriam Krieger
Naseem Sagati Aghili	(appointed 8 January 2021)

Secretary

TMF Corporate Administration Services Limited 8th floor

20 Farringdon Street

London

EC4A 4AB

Auditor

Ernst & Young LLP 25 Churchill Place London E14 5EY

Bankers

Barclays PLC

1 Churchill Place, Level 11

London, E14 5HP

City National Bank 15260 Ventura Boulevard

Sherman Oaks, CA 91403, USA

Solicitors

Latham & Watkins LLC 355 South Grand Avenue Los Angeles, CA 90071

Registered Office

8th floor

20 Farringdon Street

London

EC4A 4AB

Directors' report

The Directors present their report and financial statements of Ares Management Limited (the "Company") for the year ended 31 December 2021.

Principal activity

The principal activity of the Company during the year ended 31 December 2021 was to provide advisory and investment management services. The Company was incorporated on 5 June 2006 and is a wholly owned subsidiary of Ares Management LLC ("Ares Management"). The Company is authorised by the Financial Conduct Authority to perform investment management activity that is subject to licensing requirements in the United Kingdom.

On 22 July 2014 the investment management of all the Alternative Investment Funds previously managed by the Company were transferred to Ares Management UK Limited ("AMUKL") an affiliate of the Company.

Directors

Directors who served during the year and up to the date of this report were:

	Michael Daniel Weiner (resigned 8 January 2021)
	Kevin Early
	William Stephen Benjamin
	Blair Jacobson
	Miriam Krieger
	Naseem Sagati Aghili (appointed 8 January 2021)

Going concern

The Company's activities, together with the factors likely to affect its future development, its financial position and the financial risks are described in the strategic report.

As the Company has sufficient financial resources and fee generating Investment Management Agreements, the Directors believe that the Company is well placed to manage its business risks successfully.

Statement under Section 172 of the Companies Act 2006

The directors consider, both individually and together, that they have acted in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in sl72(l)(a-f) of the Act) in the decisions taken during the year ended 31 December 2021.

Streamlined Energy and Carbon Reporting

The below table covers the Streamlined Energy and Carbon Reporting disclosure for the year ended 31 December 2021 for the Company's operations in the UK.

Energy Use

	2021	2020
Total energy use (Kilowatt hours - KWh)	311,282	219,627
Total Floor Area (m ² )	2,928	2,928
Energy Intensity (kWh/m ² )	106	75

Energy use breakdown

	2021 KWh	2020 KWh
Electricity	213,800	212,074
Gas	97,483	7,553

Greenhouse Gas Emissions

	2021 tCO ₂ e	2020 tCO ₂ e
Scope 1 - Consumption of gas	17,855	1,389
Scope 2 - Consumption of purchased electricity	45,396	49,443
Total	63,251	50,832

The greenhouse gas emission factors used in the calculations were the 2021 UK Government conversion factors for company reporting of greenhouse gas emissions.

Greenhouse Gas Emissions

Pillar 3 disclosures

The unaudited Pillar 3 disclosures are appended to the financial statements.

Disclosure of information to the auditor

Statement of Directors' responsibilities

The Directors are responsible for preparing the Directors' Report, the Strategic Report and the financial statements in accordance with applicable law and regulations.

•	select suitable accounting policies and then apply them consistently;
•	make judgements and estimates that are reasonable and prudent;
•	state whether applicable United Kingdom Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
•	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

Reappointment of Auditors

The auditors, Ernst & Young, LLP, have indicated their willingness to continue in office. A resolution concerning their reappointment will be put to the members at the annual general meeting.

By the order of the Board

Kevin Early, Director

Strategic report

The Directors present their strategic report together with the financial statements of the Company for the year ended 31 December 2021.

Results and dividends

The profit for the year ended 31 December 2021 is £6,650,531 (2020: £8,350,073). During the year the Directors approved the payment of a dividend amounting to £9,000,000 (2020: 15,000,000).

Review of the business

The key financial and other performance indicators during the year were as follows:

	2021	2020
	£000	£000
Turnover	86,618	61,725
Profit after tax	6,650	8,350
Shareholders' funds	114,911	102,590
Current assets as % of current liabilities	487	830
Average number of employees	235	198

Principal risks and uncertainties

Competitive Risks

Legislative Risks

Financial Instrument Risks

The objectives aim to ensure sufficient working capital exists and monitor the management of risk at the funds level.

Future Developments

The Directors do not expect any change in the principal activity of the Company in the foreseeable future.

Going Concern

The global impact of the coronavirus ("COVID-19") pandemic is ongoing. Many geographies continue to have preventative measures in place to contain or mitigate its spread, causing reductions in business activity and financial transactions, supply chain interruptions, and overall economic and financial market instability. Throughout 2021 a number of tested and approved vaccines were rolled out around the globe. As percentages of populations being vaccinated increased and infection rates decreased, individual countries and regions started to relax the measures put in place to combat the virus, leading to recoveries in economic and leisure activity. However, the uneven roll out of vaccines across the world, and the periodic emergence of more infectious and transmissible COVID-19 variants, among other things, mean that the negative effects of the pandemic are likely to continue for some time to come, which in turn could adversely affect the company's financial condition and results of operations.

The full extent to which the COVID-19 pandemic may impact Company's results, operations or liquidity is uncertain. Management continues to monitor the impact that the COVID-19 pandemic has on the Company, the asset management industry and the economies in which the Company operates. Management has performed a COVID -19 impact analysis as part of their going concern assessment using information available to the date of issue of these financial statements. The analysis has modelled a number of adverse scenarios to assess the potential impact that COVID-19 may have on Company's operations, liquidity, solvency and regulatory capital position as well as a reverse stress test to assess the stresses the balance sheet has to endure before there is a breach of the relevant regulatory capital requirement and including an assessment of any relevant mitigations management have within their control to implement.

The most likely expected financial impact is in respect of the Company's future (i) management fee income as this is linked to assets under management; and (ii) incentive fees as these are based on certain specific hurdle rates as defined in the applicable investment management agreements or governing documents. It is not possible to quantify the overall impact of COVID-19 as financial markets continue to react to developments and management have a number of actions that they are able to take to protect profitability and solvency.

Having performed this analysis management believes regulatory capital requirements continue to be met and the Company has sufficient liquidity to meet its liabilities for at least the next 12 months to 30 April 2023 and that the preparation of the financial statements on a going concern basis remains appropriate as the Company expects to be able to meet its obligations as and when they fall due for the foreseeable future.

By the order of the Board

Kevin Early, Director

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ARES MANAGEMENT LIMITED

Opinion

We have audited the financial statements of Ares Management Limited (the "Company") for the year ended 31 December 2021 which comprise the Profit and loss account, the Statement of changes in equity, the Balance sheet, the Cash flow statement and the related notes 1 to 25, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

•	give a true and fair view of the Company's affairs as at 31 December 2021 and of its profit for the year then ended;
•	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
•	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the members' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Other information

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

•	the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
•	the strategic report and directors' report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

•	adequate accounting records have not been kept or returns adequate for our audit have not been received from branches not visited by us; or
•	the financial statements are not in agreement with the accounting records and returns; or
•	certain disclosures of directors' remuneration specified by law are not made; or
•	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

Auditor's responsibilities for the audit of the financial statements

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

•	Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management. We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined that the most significant are those that relate to the reporting framework United Kingdom Generally Accepted Accounting Practice, the Companies Act 2006 and the relevant direct and indirect tax compliance regulation in the United Kingdom. In addition, the Company is required to comply with relevant Financial Conduct Authority's (FCA) rules and regulations relating to its operations.
•	We understood how the Company is complying with those frameworks by making enquiries of management and by seeking representation from those charged with governance. We corroborated our understanding by reviewing board meeting minutes and relevant policy and procedures manuals. We also reviewed correspondence with relevant authorities.
•	We assessed the susceptibility of the Company's financial statements to material misstatement, including how fraud might occur by considering the risk of management override and by designating revenue recognition as a fraud risk. We performed journal entry testing by specific risk criteria, with a focus on manual journals and journals indicating large or unusual transactions based on our understanding of the business. We recalculated the revenue based on the transfer pricing arrangement applied by management and tested a sample of inputs in the calculation back to source documentation. We also used our internal transfer pricing specialists to review the appropriateness of the transfer pricing arrangement.
•	Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures involved enquiries of management and those charged with governance, review of legal and professional expenses, review of breaches and complaints register, and review of board meeting minutes.
•	The Company is a regulated investment manager under the supervision of the FCA. As such, the Senior statutory auditor reviewed the experience and expertise of the engagement team to ensure that the team had the appropriate competence and capabilities. which included the use of specialists where appropriate.

Use of our report

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

London 22 April 2022

Ashley Coups, Senior statutory auditor

for and on behalf of Ernst & Young LLP, Statutory Auditor

Profit and loss account for the year ended 31 December 2021

		2021	2020
	Notes	£000	£000
Turnover	4	86,618	61,725
Administrative expenses		(78,683)	(56,171)
Gross Profit		7,935	5,554
Gain on transfer of branches		-	4,992
Operating Profit	5	7,935	10,546
Other operating income and similar charges		(61)	(44)
Profit on ordinary activities before taxation		7,874	10,502
Tax on ordinary activities	9	(1,224)	(2,152)
Profit on ordinary activities after taxation		6,650	8,350

All items dealt with in arriving at the profit for the year ended 31 December 2021 related to continuing operations.

Statement of comprehensive income for the year ended 31 December 2021

There are no gains and losses for the year other than those shown above and therefore no separate statement of comprehensive income has been presented.

The notes on pages 14 to 31 form an integral part of these financial statements.

Statement of changes in equity for the year ended 31 December 2021

	Share capital	Profit and loss account	Total Shareholders' funds
	£000	£000	£000
At 1 January 2020	28,000	68,306	96,306
Profit for the year	-	8,350	8,350
Share based compensation	-	12,934	12,934
Dividend		(15,000)	(15,000)
At 31 December 2020	28,000	74,590	102,590
Profit for the year	-	6,650	6,650
Share based compensation	-	14,671	14,671
Dividend	-	(9,000)	(9,000)
At 31 December 2021	28,000	86,991	114,911

Balance sheet at 31 December 2021

		2021	2020
	Notes	£000	£000
Fixed assets
Intangible assets
Goodwill	10	135	-
Other intangible assets	11	330	823
Tangible assets
Property, plant and equipment	12	2,509	2,497
Investment	13	624	449
Total fixed assets		3,598	3,769
Current assets
Debtors	14	102,447	72,978
Deferred tax	15	7,891	7,830
Cash and cash equivalents	20	31,560	33,945
Total current assets		141,898	114,753
Creditors: amounts falling due within one year	16	(29,110)	(13,829)
Total assets less current liabilities		116,386	104,693
Creditors: amounts falling due after more than one year	17	(1,475)	(2,103)
Net assets		114,911	102,590
Capital and reserves
Called up share capital	18	28,000	28,000
Profit and loss account		86,991	74,590
Shareholders' funds		114,911	102,590

The financial statements on pages 10 to 31 were approved and authorised on 20 April 2022 for issue on behalf of the Directors.

Kevin Early, Director

Cash flow statement for the year ended 31 December 2021

		2021	2020
	Note	£000	£000
Cash generated from operating activities	20 (a)	11,992	35,699
Tax paid		(4,094)	(3,970)
Interest paid		(64)	(49)
Net cash inflow from operating activities		7,834	31,680
Investing activities Interest received		3	6
Payments to acquire tangible fixed assets		(879)	(455)
Purchase of Goodwill		(168)	-
Purchase of investment		(175)	(201)
Net cash outflow from investing activities		(1,219)	(650)
Financing activities
Payment of Dividend		(9,000)	(15,000)
Net cash outflow from financing activities		(9,000)	(15,000)
(Decrease)/ Increase in cash and cash equivalents		(2,385)	16,030
Cash and cash equivalents at 1 January		33,945	17,915
Cash and cash equivalents at 31 December	20 (b)	31,560	33,945

Notes to the financial statements

at 31 December 2021

1. Accounting policies

Organisation and business

Basis of preparation

The outbreak of a highly contagious form of a novel coronavirus ("COVID-19") in early 2020, for which the World Health Organization declared a global pandemic, led to significant and continued volatility in the public and private markets throughout the rest of the year. Many countries issued orders requiring the closure of, or certain restrictions on the operation of, non-essential businesses and/or requiring residents to stay at home. The COVID-19 pandemic and restrictive measures taken to contain or mitigate its spread have caused, and are continuing to cause, business shutdowns, or the re-introduction of business shutdowns, cancellations of events and restrictions on travel, significant reductions in demand for certain goods and services, reductions in business activity and financial transactions, supply chain interruptions and overall economic and financial market instability globally. Such effects will likely continue for the duration of the pandemic, which is uncertain, and for some period thereafter. While several countries have begun to relax the early public restrictions with a view to partially or fully reopening their economies, many have since experienced a surge in the reported number of cases, hospitalizations and related deaths. This increase in cases has led to the re- introduction of restrictions and business shutdowns in these countries and could lead to the re-introduction of such restrictions elsewhere.

From December 2020 onwards, COVID-19 vaccines began to be approved in the UK, Europe, and the rest of the world. However, it remains unclear how quickly the public will be inoculated and therefore the restrictions that were imposed to slow the spread of the virus will be lifted entirely. Any further delays in distributing the vaccines could lead people to continue to self-isolate and not participate in the economy at pre-pandemic levels for a prolonged period of time.

Goodwill

Goodwill arising on acquisitions represent the excess of the fair value of consideration transferred over the Company's interest in the fair value of the identifiable assets, liabilities and contingent liabilities at the date of acquisition. Goodwill is recognised as an asset as it represents synergies the Company expects to receive from the acquisition. Goodwill is subsequently amortised over its estimated useful life which is deemed to be three years from acquisition. If the recoverable amount of the cash generating unit is less than the carrying amount of the investment, the impairment to the related goodwill is recognised in profit or loss.

Other intangible assets

Management contracts acquired - over the term of the contract

The carrying value of the intangible asset is reviewed for impairment at least annually.

Tangible fixed assets

Leasehold improvements - over the lease term

Furniture and computer equipment - over 5 to 7 years.

Investments

In the Company's Balance sheet, investments in subsidiaries are stated at cost less any provision for impairment.

Short-term debtors and creditors

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short term deposits with an original maturity date of three months or less.

Cash and cash equivalents are measured at fair value, based on the relevant exchange rates at the reporting date.

Dividends

Dividends paid to the Company's parent are recognised in the Statement of changes in equity in the period in which the dividends are approved.

Turnover

Rendering of services

Incentive income

Interest income

Interest income is recognised on an accrual basis on cash balances.

Special fees

Provisions for liabilities

Operating lease commitments

Rentals payable less any incentives are charged in the profit and loss account on a straight line basis over the lease term.

Pension costs

The Company operates a defined contribution scheme. Contributions to the defined contribution scheme are recognised in the profit and loss account in the period in which they become payable.

Foreign currencies

Share-based payments (equity-settled)

At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management's best estimate of the achievement or otherwise of non-market vesting conditions and of the number of equity instruments that will ultimately vest or, in the case of an instrument subject to a market condition or a non-vesting condition, be treated as vesting as described above. Management's estimate of the number of equity instruments which ultimately vest is based on forfeiture rates since inception. Where awards are made to a small pool of senior leaders, a zero forfeiture rate is estimated.

The movement in cumulative expense since the previous balance sheet date is recognised in the profit and loss account, with a corresponding entry in equity.

Taxation

Income tax expense represents the sum of the current tax and deferred tax.

2. Critical accounting estimates and judgements

Share-based payments (equity-settled)

Estimated impairment of intangible assets

3. Financial risk management

The Company has exposure to the following risks from its use of financial instruments:

Foreign exchange risk

The Company is exposed to foreign exchange risk through the movement in the value of its foreign currency denominated assets and liabilities. The Company mitigates this risk at a Group level.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company aims to mitigate liquidity risk by managing cash generation from operations. The Company also manages liquidity risk via additional equity investments from the parent company.

Credit risk

4. Turnover

Turnover principally represents the amounts derived from the provision of investment management services, stated net of VAT, and arising from continuing activities in Europe.

For the year ended 31 December 2021, base investment management fees earned were £35,865,540, (2020: £44,258,631). Total incentive management fees earned for the year were £45,192,514 (2020: £12,904,673).

Turnover also includes Agency fees of £3,407,637 (2020: £2,683,916) and other income of £2,152,592 (2020: £1,878,123).

5. Operating profit

Operating profit is stated after charging:

	2021	2020
	£000	£000
Amortisation and impairment of goodwill (see note 10)	33	-
Amortisation and impairment of other intangible assets (see note 11)	493	1,100
Depreciation of owned assets (see note 12)	867	879
Operating lease rentals
- Land and buildings	3,126	3,042
- Equipment	44	35
Foreign exchange loss/ (gain)	239	(2,087)
Auditors' remuneration (see note 6)	113	61

6. Auditors' remuneration

The remuneration of the auditors is further analysed as follows:

	2021	2020
	£000	£000
Audit of the financial statements	38	37
Other fees to auditors - taxation services	75	24
	113	61

7. Directors' emoluments

None of the Directors received any compensation for services rendered as Directors of the Company (2020: nil).

8. Staff costs

	2021	2020
	£000	£000
Wages and salaries	98,263	83,854
Social security costs	16,588	11,585
Pension costs	1,996	1,817
Total staff costs	116,847	97,256

The average numbers of employees during the year were as follows:

	2021	2020
Fund management	136	116
Marketing	27	21
Administrative	72	61
Average number of total staff	235	198

9. Tax on profit on ordinary activities

Current tax for the year:

	2021	2020
	£000	£000
UK Corporation tax on profit for the year	1,433	2,960
Foreign tax relief/other relief	(187)	(1,285)
Adjustment for prior periods	(224)	(98)
	1,022	1,577
Foreign tax suffered	280	1,938
Foreign tax adjustment in respect of prior periods	(17)
Total current tax	1,285	3,515
Deferred tax:
Origination and reversal of timing differences	791	(658)
Effect of changes in tax rates	(865)	(755)
Adjustment in respect of previous periods	13	50
Total deferred tax	(61)	(1,363)
Total tax charge per income statement	1.224	2,152

The charge for the year can be reconciled to the profit per the income statement as follows:

	2021	2020
	£000	£000
Profit on ordinary activities before taxation	7,874	10,502
Corporation tax at 19% (2020: 19%)	1,497	1,995
Adjustment from previous periods	(228)	(47)
Expenses not deductible	159	146
Effect of overseas tax rates	93	653
Tax rate changes	(865)	(755)
Share options	569	160
Income not taxable	(1)	-
Total tax charge for the year	1,224	2,152

10. Goodwill

	Total
	£000
Cost:
At 1 January 2021	-
At 31 December 2021	168
Amortisation:
At 1 January 2021	(-)
Amortisation charge for the year	(33)
At 31 December 2021	(33)
Net realisable value at 31 December 2021	135
Net realisable value at 31 December 2020	-

11. Intangible assets

	Total
	£000
Cost:
At 1 January 2021	4,924
At 31 December 2021	4,924
Amortisation:
At 1 January 2021	(4,101)
Amortisation charge for the year	(493)
At 31 December 2021	(4,594)
Net realisable value at 31 December 2021	330
Net realisable value at 31 December 2020	823

12. Tangible fixed assets

	Furniture and computer equipment	Leasehold improvements	Total
	£000	£000	£000
Cost:
At 1 January 2021	2,228	4,403	6,631
Additions	675	204	879
Disposals	(799)	-	(799)
At 31 December 2021	2,104	4,607	6,711
Depreciation:
At 1 January 2021	1,280	2,854	4,134
Charge for the year	363	504	867
Disposals	(799)	(-)	(799)
At 31 December 2021	844	3,358	4,202
Net realisable value at 31 December 2021	1,260	1,249	2,509
Net realisable value at 31 December 2020	948	1,549	2,497

13. Investments

13. Investments	2021	2020
	£000	£000
At 1 January	449	248
Additions	175	208
Foreign exchange gain	-	(7)
At 31 December	624	449
	-	-

In line with the Company's accounting policy, the investment is held at cost less impairment.

14. Debtors

	2021	2020
	£000	£000
Management fee receivable	25,216	22,501
Performance fee receivable	44,312	13,843
Amounts due from affiliated parties	27,280	33,879
Prepayments	2,306	2,319
Other debtors	866	436
Corporation tax	2,467	-
	102,447	72,978

15. Deferred tax

	2021	2020
	£000	£000
Provision at start of year	7,830	6,467
Deferred tax charge to income statement for the year	74	1,413
Adjustment in respect of prior years	(13)	(50)
Provision at end of year	7,891	7,830

The deferred tax asset at the end of the year arises on the following timing differences, tax losses or tax credits:

	2021	2020
	£000	£000
Fixed asset timing differences	(28)	112
Short term timing differences - trading	7,919	7,718
Provision at end of year	7,891	7,830

In the Spring Budget 2021, the government announced that from 1 April 2023 the headline corporation tax rate will increase to 25%. The proposal to increase the rate to 25% has been substantively enacted at the company's balance sheet date, therefore its effects have been included in these financial statements.

16. Creditors: amounts falling due within one period

	2021	2020
	£000	£000
Trade creditors	171	251
Corporation tax	-	342
Accruals	28,896	12,875
Deferred revenue	-	103
VAT	43	257
	29,110	13,829

17. Creditors: amounts falling due after more than one year

	2021	2020
	£000	£000
Accruals	1,474	2,103
	1,474	2,103

18. Called up share capital

	2021	2020
	£000	£000
Authorised
68,000,00 Ordinary shares £1 each	68,000	68,000
Allocated, called up and paid	28,000	28,000
1 ordinary share for £1

19. Dividends

On 24 June 2021 an interim dividend of £9,000,000 (2020: £15,000,000) was approved and paid by the directors to Ares Management LLC, the Company's sole shareholder.

20. Notes to the statement of cash flows

(a) Reconciliation of operating profit to net cash outflow from operating activities:

	2021	2020
	£000	£000
Operating Profit	7,935	10,546
Depreciation of tangible fixed assets	867	879
Amortisation of intangible assets	493	1,100
Amortisation of goodwill	33	-
Share based payments	14,672	12,934
(Increase)/ decrease in debtors	(27,003)	9,985
Increase in creditors	14,995	255
Cash generated from operating activities	11,992	35,699

(b) Cash and cash equivalents

Cash and cash equivalents are fully comprised of current accounts.

21. Related party transactions

During the year ended 31 December 2021, the Company entered into certain related party transactions with Ares Management UK Limited, Ares Management LLC, Ares Management Luxembourg and Ares European Operations Sarl. The summary of these transactions is disclosed as follows:

Affiliated Party	Relationship	Transaction Type	Amount
			£000
Ares Management UK Limited	Affiliate	Cost Recharge	71,909
Ares Management LLC	Parent	Transfer Pricing	45,883
Ares Management Luxembourg	Affiliate	Services	17,652
Ares European Operations Sarl	Affiliate	Services	299

The Company engages Ares Management Luxembourg to search and communicate investment opportunities in Spain and France.

The Company engages Ares European Operations Sari for domiciliation and business office services.

As at 31 December 2021, the Company was owed £27,279,125 (2020: £33,878,829) from its affiliates and £69,527,734 (2020: £36,344,262) from the funds it manages.

22. Obligations under leases

At 31 December 2021, the Company had future minimum payments due under operating leases as set out below:

	2021	2020
	£000	£000
Land and Buildings
On leases expiring:
-within one year from the balance sheet date	3,627	3,287
-within two and five years from the balance sheet date	4,535	6,346
-over five years from the balance sheet date	49	6
Equipment
On leases expiring:
-within one year from the balance sheet date	148	123
-within two and five years from the balance sheet date	80	5
	8,439	9,767

The operating lease payables for Land and Buildings are in respect of office buildings in London, Luxembourg, Frankfurt, Stockholm and Amsterdam.

23. Share-based payments

Equity-settled

Ares Employee Participation LLC Interests and AREA Membership Interest

―	Ares Employee Participation IV £230,660;
―	Ares Employee Participation VIII £988,136.

The key inputs used in the Black Scholes Model are as follows:

	Equity Value	Ares Holdings LLC Equity	Ares Investments LLC Equity
AEP IV	$1,650	$1,089	$561
AEP VIII	$3,374	$2,227	$1,147

	Term	Risk Free Rate	Management Fee Volatility	Incentive Fee Volatility
AEP IV	2 years	0.27%	34%	44%
AEP VIII	2 years	0.34%	29%	39%

Ares Management, L.P. 2014 Equity Incentive Plan

In connection with the IPO of Ares Management Corporation on 1 May 2014, the Board of Directors of the General Partner of Ares Management Corporation adopted the Equity Incentive Plan. Under the Equity Incentive Plan, the Company granted options to acquire common units £3,579,932 (2020: £3,579,932), restricted units to be settled in common units £3,607,635 (2020: £3,607,635) and phantom common units to be settled in cash £19,166 (2020: £19,166), less a deduction of a dividend equivalent of £305,627 (2020: £305,627). Equity based compensation expense is determined based on the fair value of the respective equity award on the grant date and is recognised on a straight line basis over the requisite service period, with a corresponding increase in shareholders' equity.

Restricted Units

The table below shows the history of units granted since the IPO of Ares Management Corporation.

Date granted	Number of units	Price of grant $	Discount on Fair value %	Assumed forfeiture rate per annum %	Years vested over
01 May 2014	951,708	19	5	1.3	5
09 January 2015	3,947	17.56	5	1.3	5
20 January 2016	317,147	11.21	0	1.3	4
15 August 2016	521,875	17.34	0	1.3	2
01 January 2017	100,001	19.20	0	Nil	2
20 January 2017	218,484	19.90	0	1.3	4
31 January 2017	755,000	19.45	0	Nil	5
20 January 2018	205,296	23.20	0	1.3	4
31 January 2018	560,000	24.15	0	1.3	5
20 January 2019	323,769	20.05	0	1.3	3
31 January 2019	297,500	20.78	0	1.3	5
20 January 2020	198,661	37.28	0	1.1	3
31 January 2020	378,000	36.55	0	1.1	5
06 February 2020	70,000	36.55	0	1.1	5
15 May 2020	25,000	36.55	0	1.1	5
01 October 2020	5,032	40.42	0	1.1	5
20 January 2021	152,488	45.67	0	1.1	3
31 January 2021	912.000	45.16	0	1.1	8
1 May 2021	12,500	52.52	0	0.9	5
2 June 2021	9,412	55.29	0	0.9	5
1 July 2021	800	63.59	0	0.9	5
15 September 2021	1,743	78.22	0	0.9	5
18 October 2021	1147	78.22	0	0.9	5
15 November 2021	1,189	78.22	0	0.9	5

For the year ended 31 December 2021, 69,431 restricted units were forfeited (2020: 41,544).

Each restricted unit represents an unfunded, unsecured right of the holder to receive a common unit on the vesting date. Fair value of the restricted units and phantom units was determined to be the most recent closing price of common units. Certain restricted units are subject to a lock up provision that expires on the fifth anniversary of the IPO. The Company used Finnerty's average strike price put option model to estimate the discount associated with this lack of marketability. Compensation expense associated with restricted units is being recognised on a straight line basis over the service period of the respective grant. A cumulative expense of £76,791,037 (2020: £59,311,958) relating to these awards has been recognised in the profit and loss account in equity.

For the year ended 31 December 2021: 1,092,626, restricted units vested (2020: 565,446).

Options

A cumulative expense of £11,025,834 (2020: £11,025,834) relating to these awards has been recognised in the profit and loss account in equity.

For the year ended 31 December 2021, nil options were forfeited (2020: nil).

The fair value of each option granted during the period from 1 May 2014 to 31 December 2020 is measured on the date of grant using the Black Scholes option pricing model and the following weighted average assumptions:

Input	1 May 2014 Grant	30 May 2014 Grant	9 January 2015 Grant	Source
Stock Price	$19	$19	$17.72	Traded Price
Exercise Price	$19	$19	$19	Management
Expected Term	7 years	6.92 years	7.49 years	See above
Volatility	35%	34%	36%	See AEP Table above
Risk Free Rate	2.21%	2.06%	1.80%	Interpolated from US Govt Band Rate
Assumed Dividend Yield	5%	5%	5%	Management
Estimated Per-Share Value	$4.02	$3.83	$3.47

24. Ultimate parent undertaking

25. Events after the end of the reporting period

The Directors have evaluated the possibility of events after the balance sheet date existing in the Company's financial statements through to 20 April 2022 and to its knowledge, there have been no material post balance sheet events that occurred during the period that would require disclosure in the Company's financial statements for the year ended 31 December 2021.

Introduction

Since 1 January 2014, Ares Management Limited (the Firm, AML, we, or our) has been subject to the EU Capital Requirements Directive IV (CRDIV)1 and the related Capital Requirements Regulations (CRR). Accordingly, it has been treated by the Financial Conduct Authority (FCA) as a €125k limited licence investment firm subject to the Prudential sourcebook for Investment Firms (IFPRU).

CRDIV establishes a regulatory capital framework across Europe governing the amount and nature of capital credit institutions and investments firms must maintain. CRDIV represents the European Union's current application of the Basel Capital Accord. As of 1 April 2013, the FSA was disbanded and replaced by two regulatory bodies: the FCA and the Prudential Regulatory Authority (PRA). AML has been regulated by the FCA since 1 April 2013.

The CRDIV framework comprises three 'Pillars':

•	Pillar 1 sets out the minimum capital amount that meets the firm's credit, market and operational risk requirement;
•	Pillar 2 requires the firm to assess whether its capital reserves, processes, strategies and systems are adequate to meet Pillar 1 requirements and further determine whether it should apply additional capital, processes, strategies or systems to cover any other risks that it may be exposed to;
•	Pillar 3 requires disclosure of specified information about the underlying risk management controls and capital position to encourage market discipline.

The CRR sets out the provisions for Pillar 3 disclosure. This document is designed to meet the Pillar 3 obligations of the Firm under Part Eight of the CRR (Articles 431 to 455).

The Pillar 3 disclosure document has been prepared by AML and is verified by the Firm's Board of Directors (the Board). Unless otherwise stated, all figures are as at the 31 December financial year end.

Pillar 3 disclosures will be issued on an annual basis after the year-end and published as soon as practical with the Firm's financial statements.

The Firm is permitted to omit required disclosures if the Board believes that the information is immaterial, such that omission would be unlikely to change or influence the decision of a reader relying on that information for the purpose of making economic decisions about the Firm.

¹ References to European Union (EU) legislation are to EU legislation as onshored into United Kingdom (UK) law by virtue of the European Union (Withdrawal) Act 2018.

In addition, we may omit required disclosures where we believe that the information is regarded as proprietary or confidential. Proprietary information is that which, if it were shared, would in our view undermine our competitive position. Information is considered to be confidential where there are obligations binding us to confidentiality with our customers, suppliers and counterparties.

We have made no omissions on the grounds that information has been deemed by us to be immaterial, proprietary or confidential, other than where noted in this document.

Scope and Application of the Requirements

AML is incorporated in England and Wales. As such, AML is subject to minimum regulatory capital requirements set by the FCA. The Firm is categorised as a €125k limited licence investment firm subject to the IFPRU. The Firm has no trading book exposures. The Firm is not a member of an EEA group and so is not required to prepare consolidated reporting for prudential purposes.

The Firm is wholly owned by Ares Management LLC (the Parent), a U.S.-based investment management company. AML was authorised to carry on investment management activity by the FSA on 27 November 2006; the Firm's principal business activity is the provision of advisory and investment management services to cash flow loan funds registered outside the United Kingdom and similar loan fund products, and the Firm provides portfolio management services to a number of segregated account clients.

Governance Framework and Risk Management

The Firm's Board is responsible for determining AML's business strategy and risk appetite, together with designing and implementing a risk management framework that recognises the risks that the business faces, determines how those risks may be mitigated, and assesses the ongoing management of those risks. The Board meets at least annually, and more often as required, to discuss current projections for profitability and capital management, business planning, and risk management. The meetings serve to demonstrate how the Board oversees and is accountable for the implementation of governance arrangements and ensures the effective and prudent management of the Firm, with due consideration to the appropriate and proportionate segregation of duties and the prevention of conflicts of interest.

The Board manages the Firm's risks through a framework of policies and procedures having regard to relevant laws, standards, principles and rules (including FCA principles and rules) with the aim to operate a defined and transparent risk management framework. These policies and procedures are updated as required. The Firm considers the robust, effective structure of systems and controls it has in place are appropriate to the size, nature and complexity of AML's business.

The Board and senior management team has accepted collective responsibility for compliance. The Firm's Compliance Officer and the Parent's Chief Compliance Officer and her team in Los Angeles are responsible for compliance oversight. In addition, the Firm utilises the services of external consultants, who provide advice and assistance on a range of regulatory matters and also undertake regular monitoring and produce reports summarising work performed and recommendations for improvements.

The Board has identified foreign exchange (market), credit, business and operational risks as the main areas of risk to which the Firm is exposed. The adequacy of the Firm's regulatory capital in relation to these and other less significant risks is assessed through an Internal Capital Adequacy Assessment Process (ICAAP). The Board reviews and approves the ICAAP (following appropriate challenge) on an annual basis using the ICAAP as an important part of the Firm's business planning and capital management.

All members of the Board have disclosed any outside business interests, and each is an experienced professional in their industry. In the appointment of new Board members, due consideration will always be given to the reputation, fitness and experience of the candidate, as well as the long-term strategic goals targets of the Firm's business.

Regulatory Capital

The Firm is a private limited company and its capital arrangements are established in its Articles of Association. All of AML's capital is tier 1 with deductions against it for intangible assets.

Capital summary as at 31 December 2021:	£000
Ordinary share capital	28,000
Retained profit	6,968
Total tier 1 capital before deductions	34,968
Deduct
Deferred tax	(4,308)
intangible assets	(559)
Total capital resources	31,101

The Firm is small with a simple operational infrastructure. AML's market risk is limited to foreign exchange risk on cash held at bank and on accounts receivables in foreign currency. The Firm's credit risk arises from portfolio management and performance fees receivable and other assets. The Firm follows the IFPRU standardised approach to market risk, and the simplified standard approach to credit risk (as opposed to the Internal Ratings Based approach). The Firm is subject to a fixed overhead requirement (FOR) and, as such, is not required to calculate an operational risk capital charge; although this is considered as a component of the completion of the ICAAP as it relates to the level of risk-based capital required.

As noted previously the Firm is classified as a limited licence firm and as such the Pillar 1 capital requirement is the greater of:

•	The sum of AML's risk weighted exposures relating to market and credit risk: or
•	12.5 x FOR.

The FOR is calculated, in accordance with the EBA regulatory technical standards, based on the Firm's previous years audited expenditure. Given the Firm's adoption of the standardised approach to credit and market risk (noted above) the below figures have been produced on that basis. The Firm is not subject to an operational risk requirement.

Under the CRDIV, CRR and IFPRU rules the Firm has an initial capital requirement of €125,000 and is required to maintain a Common Equity Tier 1 capital ratio of 4.5%, a Tier 1 Capital ratio of 6% and a Total Capital Ratio of 8%. These ratios are calculated by expressing the Firm's Own Funds (Tier 1 and Tier 2 Capital) as a percentage of the total risk exposure amount. In AML's case the total risk exposure for Pillar 1 is the higher of the FOR and the sum of the credit and foreign exchange exposure amounts. In essence this is the same as under the GENPRU and BIPRU rules.

It is the Firm's experience that the FOR has historically established AML's capital requirement and only occasionally has this been determined by the sum of the market and credit risk requirements when higher. Based on the firm's 2021 budgeted information and reviewing the 31 December 2021 actuals the FOR will be £16,031k.

The Firm's ICAAP assesses the amount of capital required to mitigate the risks to which it is exposed over a three-year time horizon. The 2021 ICAAP considers the impact of future business plans as well as potential adverse scenarios (such as market downturns or significant operational errors) on the capital resources of the Firm, to ensure regulatory capital requirements are met at all times.

In addition, the Firm has considered the effect of a significant drop in management and performance fee income caused by poor investment performance or other reputational damage/loss and has assessed whether additional capital is required to withstand a 1 in 25 year-type adverse scenario. The Firm also calculates realistic wind-up costs and is comfortable that regulatory capital held would provide for an orderly wind-up.

Based on the risk assessment and stress testing and wind down costs described above the Firm's management concluded that Pillar 2 capital of £17,745k was required for 2021.

Remuneration Code

The Firm has assessed its remuneration structure in line with the IFPRU Remuneration Code (the Code) and has adopted policies and procedures designed to ensure that risk is monitored and mitigated in line with the Code. Under FCA guidance, the Firm has determined that it is a "Proportionality Level 3" firm and has taken a proportionate approach as permitted by Code rules. The Firm believes that AML complies with the Code principles in a manner that is proportionate to the size, nature, and complexity of the Firm's business. The Board, in accordance with the Parent's compensation guidelines that are applied to staff globally, determines the Firm's remuneration policy on at least an annual basis. When considering an award of discretionary bonus, including that relating to individual performance, the Board assesses the overall profits of the Firm and the relevant business.

Remuneration Code Staff Remuneration by Business Area

Business Area	Total Remuneration y/e 31/12/21
Investment Management Services	£60,873,576

Aggregate Quantitative Remuneration by Senior Management and other Remuneration Code Staff

Type of Remuneration Code Staff	Total (aggregate) Remuneration
Senior Management	£12,019,706
Other Remuneration Code Staff	£48,853,871
Totals	£60,873,576

2f:T2959a,

Ares Management Limited Niederlassung Deutschland

Frankfurt am Main

Befreiender Jahresabschluss gem. §325 a HGB
zum Geschäftsjahr vom 01.01.2020 bis zum 31.12.2020

ARES MANAGEMENT LIMITED

London/UK

Report and Financial Statements For the year ended 31 December 2020

Registered no. 05837428

Directors
Michael Daniel Weiner	(resigned 8 January 2021)
Kevin Early
William Stephen Beniamin
Blair Jacobson
Miriam Krieger
Naseem Sagati Aghili	(appointed 8 January 2021)
Secretary
TMF Corporate Administration Services Limited
8 ^th floor
20 Farringdon Street
London
EC4A 4AB
Auditor
Ernst & Young LLP
25 Churchill Place
London E14 5EY
Bankers
Barclays PLC
1 Churchill Place, Level 11
London, E14 5HP
City National Bank
15260 Ventura Boulevard
Sherman Oaks, CA 91403, USA
Solicitors
Latham & Watkins LLC
355 South Grand Avenue
Los Angeles, CA 90071
Registered Office
8 ^th floor
20 Farringdon Street
London
EC4A 4AB

Directors' report

The Directors present their report and financial statements of Ares Management Limited (the "Company") for the year ended 31 December 2020.

Principal activity

The principal activity of the Company during the year ended 31 December 2020 was to provide advisory and investment management services. The Company was incorporated on 5 June 2006 and is a wholly owned subsidiary of Ares Management LLC ("Ares Management"). The Company is authorised by the Financial Conduct Authority to perform investment management activity that is subject to licensing requirements in the United Kingdom.

Directors

Directors who served during the year and up to the date of this report were:

Michael Daniel Weiner	(resigned 8 January 2021)
Kevin Early
William Stephen Benjamin
Blair Jacobson
Miriam Krieger
Naseem Sagati Aghili	(appointed 8 January 2021)

Going concern

The Company's activities, together with the factors likely to affect its future development, its financial position and the financial risks are described in the strategic report.

As the Company has sufficient financial resources and fee generating Investment Management Agreements, the Directors believe that the Company is well placed to manage its business risks successfully.

Statement under Section 172 of the Companies Act 2006

The directors consider, both individually and together, that they have acted in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in s172(1)(a-f) of the Act) in the decisions taken during the year ended 31 December 2020.

Streamlined Energy and Carbon Reporting

The below table covers the Streamlined Energy and Carbon Reporting disclosure for the year ended 31 December 2020 for the Company's operations in the UK.

Energy Use

	2020
Total energy use (Kilowatt hours - KWh)	219,627
Total Floor Area (m2)	2,928
Energy Intensity (kWh/m2)	75

Energy use breakdown

	2020
	KWh
Electricity	212,074
Gas	7,553

Greenhouse Gas Emissions

	2020
	tCO2e
Scope 1 - Emission generated through consumption of gas	1,389
Scope 2 - Emissions generated through use of purchased electricity	49,443
Total	50,832

The greenhouse gas emission factors used in the calculations were the 2020 UK Government conversion factors for company reporting of greenhouse gas emissions.

Greenhouse Gas Emissions

Pillar 3 disclosures

The unaudited Pillar 3 disclosures are appended to the financial statements.

Disclosure of information to the auditor

Statement of Directors' responsibilities

The Directors are responsible for preparing the Directors' Report, the Strategic Report and the financial statements in accordance with applicable law and regulations.

•	select suitable accounting policies and then apply them consistently;
•	make judgements and estimates that are reasonable and prudent;
•	state whether applicable United Kingdom Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
•	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

Reappointment of Auditors

The auditors, Ernst & Young, LLP, have indicated their willingness to continue in office. A resolution concerning their reappointment will be put to the members at the annual general meeting.

By the order of the Board

Kevin Early, Director

Strategic report

The Directors present their strategic report together with the financial statements of the Company for the year ended 31 December 2020.

Results and dividends

The profit for the year ended 31 December 2020 is £8,350,073 (2019: £6,985,739). During the year the Directors approved the payment of a dividend amounting to £15,000,000 (2019: nil).

Review of the business

The key financial and other performance indicators during the year were as follows:

	2020	2019
	£000	£000
Turnover	61,725	70,527
Profit after tax	8,350	6,986
Shareholders' funds	102,590	96,306
Current assets as % of current liabilities	830	805
Average number of employees	198	179

Principal risks and uncertainties

Competitive Risks

Legislative Risks

Financial Instrument Risks

The objectives aim to ensure sufficient working capital exists and monitor the management of risk at the funds level.

Future Developments

The Directors do not expect any change in the principal activity of the Company in the foreseeable future.

Going Concern

The outbreak of a highly contagious form of a novel coronavirus ("COVID-19") in early 2020, for which the World Health Organization declared a global pandemic, led to significant and continued volatility in the public and private markets throughout the rest of the year. Many countries issued orders requiring the closure of, or certain restrictions on the operation of, non-essential businesses and/or requiring residents to stay at home. The COVID-19 pandemic and restrictive measures taken to contain or mitigate its spread have caused, and are continuing to cause, business shutdowns, or the re-introduction of business shutdowns, cancellations of events and restrictions on travel, significant reductions in demand for certain goods and services, reductions in business activity and financial transactions, supply chain interruptions and overall economic and financial market instability globally. Such effects will likely continue for the duration of the pandemic, which is uncertain, and for some period thereafter. While several countries have begun to relax the early public restrictions with a view to partially or fully reopening their economies, many have since experienced a surge in the reported number of cases, hospitalizations and related deaths. This increase in cases has led to the re-introduction of restrictions and business shutdowns in these countries and could lead to the re-introduction of such restrictions elsewhere.

Having performed this analysis management believes regulatory capital requirements continue to be met and the Company has sufficient liquidity to meet its liabilities for at least the next 12 months to 30 April 2022 and that the preparation of the financial statements on a going concern basis remains appropriate as the Company expects to be able to meet its obligations as and when they fall due for the foreseeable future.

By the order of the Board

Kevin Early, Director

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ARES MANAGEMENT LIMITED

Opinion

We have audited the financial statements of Ares Management Limited (the "Company") for the year ended 31 December 2020 which comprise the Profit and loss account, the Statement of changes in equity the Balance sheet, the Cash flow statement and the related notes 1 to 22, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

•	give a true and fair view of the Company's affairs as at 31 December 2020 and of its profit for the year then ended;
•	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
•	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the members' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Other information

Our opinion on the financial statements does not cover the other information and, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

•	the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
•	the strategic report and directors' report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

•	adequate accounting records have not been kept or returns adequate for our audit have not been received from branches not visited by us; or
•	the financial statements are not in agreement with the accounting records and returns; or
•	certain disclosures of directors' remuneration specified by law are not made; or
•	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

Auditor's responsibilities for the audit of the financial statements

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.

Our approach was as follows:

•	We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined that the most significant are those that relate to the reporting framework United Kingdom Generally Accepted Accounting Practice, the Companies Act 2006 and the relevant direct and indirect tax compliance regulation in the United Kingdom. In addition, the Company is required to comply with relevant Financial Conduct Authority's (FCA) rules and regulations relating to its operations.
•	We understood how the Company is complying with those frameworks by making enquiries of management and by seeking representation from those charged with governance. We corroborated our understanding by reviewing board meeting minutes and relevant policy and procedures manuals. We also reviewed correspondence with relevant authorities.
•	We assessed the susceptibility of the Company's financial statements to material misstatement, including how fraud might occur by considering the risk of management override and by designating revenue recognition as a fraud risk. We performed journal entry testing by specific risk criteria, with a focus on manual journals and journals indicating large or unusual transactions based on our understanding of the business. We recalculated the revenue based on the transfer pricing arrangement applied by management and tested a sample of inputs in the calculation back to source documentation. We also used our internal transfer pricing specialists to review the appropriateness of the transfer pricing arrangement.
•	Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures involved enquiries of management and those charged with governance, review of legal and professional expenses, review of breaches and complaints register, and review of board meeting minutes.
•	The Company is a regulated investment manager under the supervision of the FCA. As such, the Senior statutory auditor reviewed the experience and expertise of the engagement team to ensure that the team had the appropriate competence and capabilities, which included the use of specialists where appropriate.

Use of our report

London 26 April 2021

Ashley Coups, Senior statutory auditor

for and on behalf of Ernst & Young LLP, Statutory Auditor

Profit and loss account for the year ended 31 December 2020

		2020	2019
	Notes	£000	£000
Turnover	4	61,725	70,527
Administrative expenses		(56,171)	(64,078)
Gross Profit		5,554	6,449
Gain on transfer of branches	19	4,992	-
Operating Profit	5	10,546	6,449
Other operating income and similar charges		(44)	(30)
Profit on ordinary activities before taxation		10,502	6,419
Tax on ordinary activities	9	(2,152)	567
Profit on ordinary activities after taxation		8,350	6,986

All items dealt with in arriving at the profit for the year ended 31 December 2020 related to continuing operations.

Statement of comprehensive income for the year ended 31 December 2020

There are no gains and losses for the year other than those shown above and therefore no separate statement of comprehensive income has been presented.

The notes on pages 15 to 31 form an integral part of these financial statements.

Statement of changes in equity for the year ended 31 December 2020

	Share capital	Profit and loss account	Total Shareholders' funds
	£000	£000	£000
At 1 January 2019	28,000	49,576	77,576
Profit for the year	-	6,986	6,986
Share based compensation	-	11,744	11,744
At 31 December 2019	28,000	68,306	96,306
Profit for the year	-	8,350	8,350
Share based compensation	-	12,934	12,934
Dividend	-	(15,000)	(15,000)
At 31 December 2020	28,000	74,590	102,590

Balance sheet at 31 December 2020

		2020	2019
	Notes	£000	£000
Fixed assets
Intangible assets	10	823	1,923
Tangible assets	11	2,497	2,921
Investment	12	449	248
Total fixed assets		3,769	5,092
Current assets
Debtors	13	72,978	82,962
Deferred tax	14	7,830	6,467
Cash and cash equivalents	18	33,945	17,915
Total current assets		114,753	107,344
Creditors: amounts falling due within one year	15	(13,829)	(13,333)
Total assets less current liabilities		104,693	99,103
Creditors: amounts falling due after more than one year	16	(2,103)	(2,797)
Net assets		102,590	96,306
Capital and reserves
Called up share capital	17	28,000	28,000
Profit and loss account		74,590	68,306
Shareholders' funds		102,590	96,306

The notes on pages 15 to 31 form an integral part of these financial statements.

The financial statements on pages 11 to 31 were approved and authorised on 22 April 2021 for issue on behalf of the Directors.

Kevin Early, Director

Cash flow statement for the year ended 31 December 2020

		2020	2019
	Note	£000	£000
Cash generated from operating activities	18 (a)	35,699	14,615
Tax paid		(3,970)	(3,735)
Interest paid		(49)	(44)
Net cash inflow from operating activities		31,680	10,836
Investing activities
Interest received		6	6
Payments to acquire tangible fixed assets		(455)	(487)
Purchase of investment		(201)	(241)
Net cash outflow from investing activities		(650)	(722)
Financing activities
Payment of Dividend		(15,000)	-
Net cash outflow from financing activities		(15,000)	(722)
Increase in cash and cash equivalents		16,030	10,114
Cash and cash equivalents at 1 January		17,915	7,801
Cash and cash equivalents at 31 December	18(b)	33,945	17,915

Notes to the financial statements at 31 December 2020

1. Accounting policies

Organisation and business

Basis of preparation

Having performed this analysis management believes regulatory capital requirements continue to be met and the Company has sufficient liquidity to meet its liabilities for at least the next 12 months to 30 April 2022 and that the preparation of the financial statements on a going concern basis remains appropriate as the Company expects to be able to meet its obligations as and when they fall due for the foreseeable future.

Intangible assets

Management contracts acquired

over the term of the contract

The carrying value of the intangible asset is reviewed for impairment at least annually.

Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation. Such costs include those costs directly attributable to making the asset capable of operating as intended.

Leasehold improvements	over the lease term
Furniture and computer equipment	over 5 to 7 years.

Investments

In the Company's Balance sheet, investments in subsidiaries are stated at cost less any provision for impairment.

Short-term debtors and creditors

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short term deposits with an original maturity date of three months or less.

Cash and cash equivalents are measured at fair value, based on the relevant exchange rates at the reporting date.

Dividends

Dividends paid to the Company's parent are recognised in the Statement of changes in equity in the period in which the dividends are approved.

Turnover

Rendering of services

Incentive income

Interest income

Interest income is recognised on an accrual basis on cash balances.

Special fees

Provisions for liabilities

Operating lease commitments

Rentals payable less any incentives are charged in the profit and loss account on a straight line basis over the lease term.

Pension costs

The Company operates a defined contribution scheme. Contributions to the defined contribution scheme are recognised in the profit and loss account in the period in which they become payable.

Foreign currencies

Share-based payments (equity-settled)

At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and managements best estimate of the achievement or otherwise of nonmarket vesting conditions and of the number of equity instruments that will ultimately vest or, in the case of an instrument subject to a market condition or a non-vesting condition, be treated as vesting as described above. Management's estimate of the number of equity instruments which ultimately vest is based on forfeiture rates since inception. Where awards are made to a small pool of senior leaders, a zero forfeiture rate is estimated.

The movement in cumulative expense since the previous balance sheet date is recognised in the profit and loss account, with a corresponding entry in equity.

Taxation

Income tax expense represents the sum of the current tax and deferred tax.

2. Critical accounting estimates and judgements

Share-based payments (equity-settled)

Estimated impairment of intangible assets

3. Financial risk management

The Company has exposure to the following risks from its use of financial instruments:

Foreign exchange risk

The Company is exposed to foreign exchange risk through the movement in the value of its foreign currency denominated assets and liabilities. The Company mitigates this risk at a Group level.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company aims to mitigate liquidity risk by managing cash generation from operations. The Company also manages liquidity risk via additional equity investments from the parent company.

Credit risk

4. Turnover

Turnover principally represents the amounts derived from the provision of investment management services, stated net of Value Added Tax, and arising from continuing activities in Europe.

For the year ended 31 December 2020, base investment management fees earned were £44,258,631, (2019: £43,976,087). Total incentive management fees earned for the year were £12,904,673 (2019: £22,615,871).

Turnover also includes Agency fees of £2,683,916 (2019: £2,605,935) and other income of £1,878,123 (2019: £1,329,586).

5. Operating profit

Operating profit is stated after charging:

	2020	2019
	£000	£000
Amortisation and impairment of intangible assets (see note 10)	1,100	721
Depreciation of owned assets (see note 11)	879	822
Operating lease rentals
- Land and buildings	3,042	3,170
- Equipment	35	100
Foreign exchange (gain)/ loss	(2,087)	5,155
Auditors' remuneration (see note 6)	61	153

6. Auditors' remuneration

The remuneration of the auditors is further analysed as follows:

	2020	2019
	£000	£000
Audit of the financial statements	37	32
Other fees to auditors - taxation services	24	121
	61	153

7. Directors' emoluments

None of the Directors received any compensation for services rendered as Directors of the Company (2019: nil).

8. Staff costs

	2020	2019
	£000	£000
Wages and salaries	83,854	64,156
Social security costs	11,585	9,661
Pension costs	1,817	1,454
Total staff costs	97,256	75,271

The average numbers of employees during the year were as follows:

	2020	2019
Fund management	116	108
Marketing	21	18
Administrative	61	53
Average number of total staff	198	179

9. Tax on profit on ordinary activities

Current tax for the year:

	2020	2019
	£000	£000
UK Corporation tax on profit for the year	2,960	2,591
Foreign tax relief/other relief	(1,285)	(117)
Adjustment for prior periods	(98)	172
	1,577	2,646
Foreign tax suffered	1,938	117
Total current tax	3,515	2,763
Deferred tax:
Origination and reversal of timing differences	(658)	(3,738)
Effect of changes in tax rates	(755)	393
Adjustment in respect of previous periods	50	15
Total deferred tax	(1,363)	(3,330)
Total tax charge/(credit) per income statement	2,152	(567)

The charge for the year can be reconciled to the profit per the income statement as follows:

	2020	2019
	£000	£000
Profit on ordinary activities before taxation	10,502	6,419
Corporation tax at 19% (2019: 19%)	1,995	1,220
Adjustment from previous periods	(47)	188
Expenses not deductible	146	265
Effect of overseas tax rates	653	-
Tax rate changes	(755)	393
Share options	160	(2,633)
Total tax charge/(credit) for the year	2,152	(567)

10. Intangible assets

	Total
	£000
Cost:
At 1 January 2020	7,189
Less: Impairment	(2,265)
At 31 December 2020	4,924
Amortisation:
At 1 January 2020	(5,266)
Amortisation charge for the year	(1,100)
Less: Previously amortised balances	2,265
At 31 December 2020	(4,101)
Net realisable value at 31 December 2020	823
Net realisable value at 31 December 2019	1,923

11. Tangible fixed assets

	Furniture and computer equipment	Leasehold improvements	Total
	£000	£000	£000
Cost:
At 1 January 2020	2,473	4,354	6,827
Additions	456	71	527
Disposals	(701)	(22)	(723)
At 31 December 2020	2,228	4,403	6,631
Depreciation:
At 1 January 2020	1,526	2,380	3,906
Charge for the year	392	487	879
Disposals	(638)	(13)	(651)
At 31 December 2020	1,280	2,854	4,134
Net realisable value at 31 December 2020	948	1,549	2,497
Net realisable value at 31 December 2019	948	1,973	2,921

12. Investments	2020	2019
	£000	£000
At 1 January	248	-
Additions	208	241
Foreign exchange gain	(7)	7
At 31 December	449	248

In line with the Company's accounting policy, the investment is held at cost less impairment.

13. Debtors

	2020	2019
	£000	£000
Management fee receivable	22,501	14,333
Performance fee receivable	13,843	13,860
Amounts due from affiliated parties	33,879	52,141
Prepayments	2,319	1,894
Other debtors	436	654
VAT	-	80
	72,978	82,862

14. Deferred tax

	2020	2019
	£000	£000
Provision at start of year	6,467	3,138
Deferred tax credit / (charge) to income statement for the year	1,413	3,346
Adjustment in respect of prior years	(50)	(17)
Provision at end of year	7,830	6,467

The deferred tax asset at the end of the year arises on the following timing differences, tax losses or tax credits:

	2020	2019
	£000	£000
Fixed asset timing differences	112	199
Short term timing differences - trading	7,718	6,268
Provision at end of year	7,830	6,467

In the Spring Budget 2021, the Government announced that from 1 April 2023 the corporation tax rate will increase to 25%. Since the proposal to increase the rate to 25% had not been substantively enacted at the balance sheet date, its effects are not included in these financial statements. However, it is likely that the overall effect of the change, had it been substantively enacted by the balance sheet date, would be to reduce the tax expense for the period by £2,472,731 to increase the deferred tax asset to £10,303,045.

15. Creditors: amounts falling due within one period

	2020	2019
	£000	£000
Trade creditors	251	530
Corporation tax	342	797
Accruals	12,875	10,168
Deferred revenue	103	1,838
VAT	257	-
	13,829	13,333

16. Creditors: amounts falling due after more than one year

	2020	2019
	£000	£000
Accruals	2,103	2,797
	2,103	2,797

17. Called up share capital

	2020	2019
	£000	£000
Allotted, called up and fully paid
Ordinary shares £1 each	28,000	28,000

18. Notes to the statement of cash flows

(a) Reconciliation of operating profit to net cash outflow from operating activities:

	2020	2019
	£000	£000
Operating Profit	10,546	6,449
Depreciation of tangible fixed assets	879	822
Amortisation of intangible assets	1,100	721
Share based payments	12,934	11,744
Decrease/ (increase) in debtors	9,985	(11,868)
Increase in creditors	255	6,747
Cash generated from operating activities	35,699	14,615

(b) Cash and cash equivalents

Cash and cash equivalents are fully comprised of current accounts.

19. Related party transactions

During the year ended 31 December 2020, the Company entered into certain related party transactions with Ares Management UK Limited, Ares Management LLC, SDL Management GP L.P. and Ares Management Luxembourg. The summary of these transactions is disclosed as follows:

Affiliated Party	Relationship	Transaction Type	Amount
			£000
Ares Management UK Limited	Affiliate	Cost Recharge	72,242
Ares Management LLC	Parent	Transfer Pricing	25,601
SDL Management GP L.P	Subsidiary	Investment	208
Ares Management Luxembourg	Affiliate	Gain on sale of branches	4,992
Ares Management Luxembourg	Affiliate	Services	1,026

As a consequence of the United Kingdom's decision to exit the European Union (Brexit), AML may lose the benefits of the passporting rights granted by the Alternative Investment Fund Managers Directive and would no longer be able to carry its regulated business in European Union member states and more specifically, Spain and France. On 1 August 2020 the Company sold the assets, rights and liabilities totalling £22,654 of the Spanish Branch to Ares Management Luxembourg for a consideration of £669,182 resulting in a gain on sale of £646,528. On 8 December 2020 the Company sold the assets, rights and liabilities totalling £102,374 of the French Branch to Ares Management Luxembourg for a consideration of £4,475,575 resulting in a gain on sale of £4,345,201. The consideration for the sales were set using a fair market value calculated using anincome approach discounted cash flow method. The Company then engaged Ares Management Luxembourg to perform services on its behalf. These services include searching and communicating investment opportunities for the Company.

As at 31 December 2020, the Company was owed £33,878,829 (2019: £49,726,055) from its affiliates and £36,344,262 (2019: £30,606,961) from the funds it manages.

20. Obligations under leases

At 31 December 2020, the Company had future minimum payments due under operating leases as set out below:

	2020	2019
	£000	£000
Land and Buildings
On leases expiring:
-within one year from the balance sheet date	3,287	3,696
-within two and five years from the balance sheet date	6,346	11,118
-over five years from the balance sheet date	6	617
Equipment
On leases expiring:
-within one year from the balance sheet date	123	144
-within two and five years from the balance sheet date	5	42
	9,767	15,617

The operating lease payables for Land and Buildings are in respect of office buildings in London, Luxembourg, Frankfurt, Stockholm and Amsterdam.

21. Share-based payments

Equity-settled

Ares Employee Participation LLC Interests and AREA Membership Interest

―	Ares Employee Participation IV £230,660;
―	Ares Employee Participation VIII £988,136.

The key inputs used in the Black Scholes Model are as follows:

	Equity Value	Ares Holdings LLC Equity	Ares Investments LLC Equity	Term	Risk Free Rate	Management Fee Volatility	Incentive Fee Volatility
AEP IV	$1,650	$1,089	$561	2 years	0.27%	34%	44%
AEP VIII	$3,374	$2,227	$1,147	2 years	0.34%	29%	39%

Ares Management, L.P. 2014 Equity Incentive Plan

In connection with the IPO of Ares Management Corporation on 1 May 2014, the Board of Directors of the General Partner of Ares Management Corporation adopted the Equity Incentive Plan. Under the Equity Incentive Plan, the Company granted options to acquire common units £3,579,932 (2019: £3,579,932), restricted units to be settled in common units £3,607,635 (2018: £3,607,635) and phantom common units to be settled in cash £19,166 (2019: £19,166), less a deduction of a dividend equivalent of £305,627 (2019: £305,627). Equity based compensation expense is determined based on the fair value of the respective equity award on the grant date and is recognised on a straight line basis over the requisite service period, with a corresponding increase in shareholders' equity.

Restricted Units

The table below shows the history of units granted since the IPO of Ares Management Corporation.

Date granted	Number of units	Price of grant $	Discount on Fair value %	Assumed forfeiture rate per annum %	Years vested over
01 May 2014	951,708	19	5	1.3	5
09 January 2015	3,947	17.56	5	1.3	5
20 January 2016	317,147	11.21	0	1.3	4
15 August 2016	521,875	17.34	0	1.3	2
01 January 2017	100,001	19.20	0	Nil	2
20 January 2017	218,484	19.90	0	1.3	4
31 January 2017	755,000	19.45	0	Nil	5
20 January 2018	205,296	23.20	0	1.3	4
31 January 2018	560,000	24.15	0	1.3	5
20 January 2019	323,769	20.05	0	1.3	3
31 January 2019	297,500	20.78	0	1.3	5
20 January 2020	198,661	37.28	0	1.1	3
31 January 2020	378,000	36.55	0	1.1	5
06 February 2020	70,000	36.55	0	1.1	5
15 May 2020	25,000	36.55	0	1.1	5
01 October 2020	5,032	40.42	0	1.1	5

For the year ended 31 December 2020, 41,544 restricted units were forfeited (2019: 101,066).

Each restricted unit represents an unfunded, unsecured right of the holder to receive a common unit on the vesting date. Fair value of the restricted units and phantom units was determined to be the most recent closing price of common units. Certain restricted units are subject to a lock up provision that expires on the fifth anniversary of the IPO. The Company used Finnerty's average strike price put option model to estimate the discount associated with this lack of marketability. Compensation expense associated with restricted units is being recognised on a straight line basis over the service period of the respective grant. A cumulative expense of £59,311,956 (2019: £43,309,454) relating to these awards has been recognised in the profit and loss account in equity.

For the year ended 31 December 2020: 565,446 restricted units vested (2019: 621,611).

Options

A cumulative expense of £11,025,834 (2019: £11,025,834) relating to these awards has been recognised in the profit and loss account in equity.

For the year ended 31 December 2020, nil options were forfeited (2019: 183,188).

Input	1 May 2014 Grant	30 May 2014 Grant	9 January 2015 Grant	Source
Stock Price	$19	$19	$17.72	Traded Price
Exercise Price	$19	$19	$19	Management
Expected Term	7 years	6.92 years	7.49 years	See above
Volatility	35%	34%	36%	See AEP Table above
Risk Free Rate	2.21%	2.06%	1.80%	Interpolated from US Govt Band Rate
Assumed Dividend Yield	5%	5%	5%	Management
Estimated Per-Share Value	$4.02	$3.83	$3.47

22. Ultimate parent undertaking

Appendix I

(Unaudited)

Ares Management Limited

Pillar 3 Disclosure

Introduction

Since 1 January 2014, Ares Management Limited (the Firm, AML, we, or our) has been subject to the EU Capital Requirements Directive IV (CRDIV) and the related Capital Requirements Regulations (CRR). Accordingly, it has been treated by the Financial Conduct Authority (FCA) as a €125k limited licence investment firm subject to the Prudential sourcebook for Investment Firms (IFPRU).

The CRDIV framework comprises three 'Pillars':

•	Pillar 1 sets out the minimum capital amount that meets the firm's credit, market and operational risk requirement;
•	Pillar 2 requires the firm to assess whether its capital reserves, processes, strategies and systems are adequate to meet Pillar 1 requirements and further determine whether it should apply additional capital, processes, strategies or systems to cover any other risks that it may be exposed to;
•	Pillar 3 requires disclosure of specified information about the underlying risk management controls and capital position to encourage market discipline.

The CRR sets out the provisions for Pillar 3 disclosure. This document is designed to meet the Pillar 3 obligations of the Firm under Part Eight of the CRR (Articles 431 to 455).

Pillar 3 disclosures will be issued on an annual basis after the year-end and published as soon as practical with the Firm's financial statements.

We have made no omissions on the grounds that information has been deemed by us to be immaterial, proprietary or confidential, other than where noted in this document.

Scope and Application of the Requirements

Governance Framework and Risk Management

The Board has identified foreign exchange (market), credit, business and operational risks as the main areas of risk to which the Firm is exposed. The adequacy of the Firm's regulatory capital in relation to these and other less significant risks is assessed through an InternalCapital Adequacy Assessment Process (ICAAP). The Board reviews and approves the ICAAP (following appropriate challenge) on an annual basis using the ICAAP as an important part of the Firm's business planning and capital management.

Regulatory Capital

The Firm is a private limited company and its capital arrangements are established in its Articles of Association. All of AML's capital is tier 1 with deductions against it for intangible assets.

Capital summary as at 31 December 2020:	£000
Ordinary share capital	28,000
Retained profit	9,318
Total tier 1 capital before deductions	37,318
Deduct
Deferred tax	(4,964)
intangible assets	(823)
Total capital resources	31,531

As noted previously the Firm is classified as a limited licence firm and as such the Pillar 1 capital requirement is the greater of:

•	The sum of AML's risk weighted exposures relating to market and credit risk; or
•	12.5 x FOR.

The Firm's ICAAP assesses the amount of capital required to mitigate the risks to which it is exposed over a three-year time horizon. The 2020 ICAAP considers the impact of future business plans as well as potential adverse scenarios (such as market downturns or significant operational errors) on the capital resources of the Firm, to ensure regulatory capital requirements are met at all times.

In addition, the Firm has considered the effect of a significant drop in management and performance fee income caused by poor investment performance or other reputational damage/loss and has assessed whether additional capital is required to withstand a 1 in 25 year-type adverse scenario. The Firm also calculates realistic wind-up costs and is comfortable that regulatory capital held would provide for an orderly wind-up.

Based on the risk assessment and stress testing and wind down costs described above the Firm's management concluded that Pillar 2 capital of £13,184k was required for 2020.

Remuneration Code

Remuneration Code Staff Remuneration by Business Area

Business Area	Total Remuneration y/e 31/12/20
Investment Management Services	£31,005,312

Aggregate Quantitative Remuneration by Senior Management and other Remuneration Code Staff

Type of Remuneration Code Staff	Total (aggregate) Remuneration
Senior Management	£4,666,179
Other Remuneration Code Staff	£26,339,133
Totals	£31,005,312

30:T1b8df,

Ares Management Limited Niederlassung Deutschland

Frankfurt am Main

Jahresabschluss zum Geschäftsjahr vom 01.01.2018 bis zum 31.12.2018

Registered no. 05837428

Directors

Michael Daniel Weiner

Kevin Early

William Stephen Benjamin

Blair Jacobson

Secretary

TMF Corporate Administration Services Limited
6 St Andrew Street
5th Floor
London
EC4A 3AE

Auditor

Ernst & Young LLP
25 Churchill Place
London E14 5EY

Bankers

Barclays PLC
1 Churchill Place, Level 11
London, E14 5HP

City National Bank
15260 Ventura Boulevard
Sherman Oaks, CA 91403, USA

Solicitors

Latham & Watkins LLC
355 South Grand Avenue
Los Angeles, CA 90071

Registered Office

6 St Andrew Street
5th Floor
London
EC4A 3AE

Directors' report

The directors present their report and financial statements of Ares Management Limited (the "Company") for the year ended 31 December 2018.

Principal activity

The principal activity of the Company during the year ended 31 December 2018 was to provide advisory and investment management services. The Company was incorporated an 5 June 2006 and is a wholly owned subsidiary of Ares Management LLC ("Ares Management"). The Company is authorised by the Financial Conduct Authority to perform investment management activity that is subject to licensing requirements in the United Kingdom.

Directors

Directors who served during the year and up to the date of this report were:

	Michael Daniel Weiner
	Kevin Early
	William Stephen Benjamin
	Blair Jacobson

Going concern

The Company' s activities, together with the factors likely to affect its future development, its financial position and the financial risks are described in the strategic report.

After making enquiries, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. The Company will continue to have financial support from its parent if required. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

As the Company has sufficient financial resources and fee generating Investment Management Agreements, the directors believe that the Company is well placed to manage its business risks successfully.

Pillar 3 disclosures

The unaudited Pillar 3 disclosures are appended to the financial statements.

Disclosure of information to the auditor

Statement of directors' responsibilities

The directors are responsible for preparing the Directors' Report, the Strategic Report and the financial statements in accordance with applicable law and regulations.

•	select suitable accounting policies and then apply them consistently;
•	make judgements and estimates that are reasonable and prudent;
•	state whether applicable United Kingdom Generally Accepted Accounting Practices (United Kingdom Accounting Standards and applicable law) have been followed, subject to any material departures disclosed and explained in the financial statements; and
•	prepare the financial statements an the going concern basis unless it is inappropriate to presume that the Company will continue in business.

Reappointment of Auditors

The auditors, Ernst & Young, LLP, have indicated their willingness to continue in office. A resolution concerning their reappointment will be put to the members at the annual general meeting.

By the order of the Board

Kevin Early, Director

Strategic report

The directors present their strategic report together with the financial statements of the Company for the year ended 31 December 2018.

Results and dividends

The profit for the year ended 31 December 2018 is £7,548,820 (2017: £4,350,240). The directors do not recommend that a dividend be paid for the year (2017: nil).

Review of the business

The key financial and other performance indicators during the year were as follows:

	2018	2017
	£000	£000
Turnover	62,005	66,697
Profit alter tax	7,548	4,350
Shareholders' funds	77,576	62,092
Current assets as % of current liabilities	1,189	902
Average number of employees	143	128

Principal risks and uncertaintles

Competitive Risks

Legislative Risks

Financial Instrument Risks

The objectives aim to ensure sufficient working capital exists and monitor the management of risk at the funds level.

Future Developments

The Directors do not expect any change in the principal activity of the Company in the foreseeable future.

Events since the balance sheet date

No significant events have occurred since 31 December 2018.

By the order of the Board

Kevin Early, Director

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ARES MANAGEMENT LIMITED

Opinion

We have audited the financial statements of Ares Management Limited for the year ended 31 December 2018 which comprise the Profit and loss account, the Statement of changes in equity, the Balance sheet, the Cash flow statement and the related notes 1 to 21, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

•	give a true and fair view of the company's affairs as at 31 December 2018 and of its profit for the year then ended;
•	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
•	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report below. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

•	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
•	the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

•	the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
•	the strategic report and directors' report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

•	adequate accounting records have not been kept or returns adequate for our audit have not been received from branches not visited by us; or
•	the financial statements are not in agreement with the accounting records and returns; or
•	certain disclosures of directors' remuneration specified by law are not made; or
•	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the directors' responsibilities statement set out on page 3, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

London, 25 April 2019

Ernst & Young LLP, Statutory Auditor

Ashley Coups, Senior statutory auditor

Profit and loss account

for the year ended 31 December 2018

		2018	2017
	Notes	£000	£000
Turnover	4	62,005	66,683
Administrative expenses		(50,884)	(62,713)
Operating Profit	5	11,121	3,970
Other-operating income		22	2,121
Profit on ordinary activities before taxation		11,143	6,091
Tax on ordinary activities	9	(3,595)	(1,741)
Profit on ordinary activities after taxation		7,548	4,350

All items dealt with in arriving at the profit for the year ended 31 December 2018 related to continuing operations.

Statement of comprehensive income for the year ended 31 December 2018

There are no gains and losses for the year other than those shown above and therefore no separate statement of comprehensive income has been presented.

The notes on pages 12 to 25 form an integral part of these financial statements.

Statement of changes in equity

for the year ended 31 December 2018

	Share capital	Profit and loss account	Total Shareholders' funds
	£000	£000	£000
At 1 January 2017	68,000	18,934	86,934
Profit for the year	-	4,350	4,350
Share based compensation	-	10,808	10,808
Capital reduction	(40,000)	-	(40,000)
At 31 December 2017	28,000	34,092	62,092
Profit for the year	-	7,548	7,548
Share based compensation	-	7,936	7,936
At 31 December 2018	28,000	49,576	77,576

The notes an pages 12 to 25 form an integral part of these financial statements.

Balance sheet

at 31 December 2018

		2018	2017
	Notes	£000	£000
Fixed assets
Intangible assets	10	2,644	3,365
Tangible assets	11	3,256	3,963
Total fixed assets		5,900	7,328
Current assets
Debtors	12	71,094	43,026
Deferred tax	13	3,138	3,274
Cash and cash equivalents		7,801	19,913
Total current assets		82,033	66,213
Creditors: amounts falling due within one year	14	(6,899)	(7,344)
Total assets less current liabilities		81,034	66,197
Creditors: amounts falling due alter more than one year	15	(3,458)	(4,105)
Net assets		77,576	62,092
Capital and reserves
Called up share capital	16	28,000	28,000
Profit and loss account		49,576	34,092
Shareholders' Funds		77,576	62,092

The notes on pages 12 to 25 form an integral part of these financial statements.

The financial statements on pages 8 to 25 were approved and authorised on

24 April 2019

Kevin Early, Director

Cash flow statement

for the year ended 31 December 2018

		2018	2017
	Note	£000	£000
Cash generated from operating activities	17 (a)	(7,906)	18,390
Tax paid		(4,126)	(6,473)
Interest paid		-	(63)
Net cash (outflow) / inflow from operating activities		(12,032)	11,854
Investing activities
Interest received		22	1,417
Payments to acquire tangible fixed assets		(102)	(269)
Receipts from sale of investments		-	26,893
Net cash (outflow) / inflow from investing activities		(80)	28,041
Financing activities
Repayment of share capital		-	(40,000)
Net cash outflow from financing activities		-	(40,000)
Decrease in cash and cash equivalents		(12,112)	(105)
Cash and cash equivalents at 1 January		19,913	20,018
Cash and cash equivalents at 31 December	17 (b)	7,801	19,913

The notes an pages 12 to 25 form an integral part of these financial statements.

Notes to the financial statements

at 31 December 2018

1. ACCOUNTING POLICIES

Organisation and business

The Company commenced operations on 5 June 2006 and is a wholly owned subsidiary of Ares Management LLC ("Ares Management") a United States based company. Ares Management is the parent company of various operating subsidiaries which include the Company. The operating subsidiaries are generally either investment managers and/or general partners of various investment funds (the "Ares Funds"). These subsidiaries provide investment management services to the Ares Funds in exchange for investment management fees.

Basis of preparation

Intangible assets

Management contracts acquired -

over the term of the contract

The carrying value of the intangible asset is reviewed for impairment at least annually.

Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation. Such costs include those costs directly attributable to making the asset capable of operating as intended.

Leasehold improvements -	over the lease term
Furniture and computer equipment -	over 5 to 7 years

Short-term debtors and creditors

Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the income statement in administrative expenses.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short term deposits with an original maturity date of three months or less.

Cash and cash equivalents are measured at fair value, based on the relevant exchange rates at the reporting date.

Turnover

Turnover is recognised to the extent that the Company obtains the right to consideration in exchange for its performance of services. Turnover is measured at the fair value of the consideration received, excluding discounts, rebates, Value Added Tax (-VAT ) and other taxes or duty. The following criteria must also be met before turnover is recognised:

Rendering of services

Turnover from base investment management fees are calculated as a defined percentage of collateral value for the collateralised loan obligations and a stated percentage of net asset values for the other funds. Agency fees are recognised as turnover in the period that the management services are rendered. Investment management fees are recognised as turnover when collection of such fees is certain following a fund's determination date.

Incentive income

Interest income

Interest income is recognised on an accrual basis on cash balances, on deferred fees from managed funds and on CLO tranches including from the sub-ordinated or "equity tranche".

Special fees

Provisions for liabilities

Operating lease commitments

Rentals payable less any incentives are charged in the profit and loss account on a straight line basis over the lease term.

Pension costs

The Company operates a defined contribution scheme. Contributions to the defined contribution scheme are recognised in the profit and loss account in the period in which they become payable.

Foreign currencies

Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are revalued at the rate of exchange ruling at the balance sheet date.

All differences are taken to the profit and loss account.

Share-based payments (equity-settled)

At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management s best estimate of the achievement or otherwise of non-market vesting conditions and of the number of equity instruments that will ultimately vest or, in the case of an instrument subject to a market condition or a non-vesting condition, be treated as vesting as described above. Management's estimate of the number of equity instruments which ultimately vest is based on forfeiture rates since inception. Where awards are made to a small Pool of senior leaders, a zero forfeiture rate is estimated.

The movement in cumulative expense since the previous balance sheet date is recognised in the profit and loss account, with a corresponding entry in equity.

Taxation

Income tax expense represents the sum of the current tax and deferred tax.

2. Critical accounting estimates and judgements

In preparing the financial statements, management is required to make estimates and assumptions which affect reported income, expenses, assets, liabilities and disclosure of contingent assets and liabilities. Use of available information and application of judgement are inherent in the formation of estimates, together with past performance and expectations of feure events that are believed to be reasonable under the circumstances. Actual results in the future could differ from such estimates.

Share-based payments (equity-settled)

3. Financial risk management

The Company has exposure to the following risks from its use of financial instruments:

Foreign exchange risk

The Company is exposed to foreign exchange risk through the movement in the value of its foreign currency denominated assets and liabilities. The Company mitigates this risk at a Group level.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company aims to mitigate liquidity risk by managing cash generation from operations. The Company also manages liquidity risk via additional equity investments from the parent company.

Credit risk

The Company has credit risk exposure arising from current fees due but not received from the funds it manages and from its cash balances held at highly rated banks. Fees are invoiced to these funds in accordance with the terms of the Investment management agreements. By their nature, the funds hold significant cash balances and the fund trustee/administrator is responsible for making the payment of the management and performance fees.

4. Turnover

Turnover principally represents the amounts derived from the provision of investment management services, stated net of Value Added Tax, and arising from continuing activities in Europe.

For the year ended 31 December 2018, base investment management fees earned were £59,111,377 (2017: £62,802,638). Total incentive management fees earned for the year were £22,829 (2017: £1,734,620).

Turnover also includes Agency fees of £1,923,272 (2017: £1,046,975) and other income of £947,125 (2017: £254,037).

5. Operating profit

Operating profit is stated after charging:

	2018	2017
	£000	£000
Amortisation and impairment of intangible assets (see note 10)	721	721
Depreciation of owned assets (see note 11)	808	769
Operating lease rentals
- Land and buildings	2,997	2,965
- Equipment	210	60
Foreign exchange gain/(loss)	4,952	(5,743)
Auditors' remuneration (see note 6)	70	85

6. Auditors' remuneration

The remuneration of the auditors is further analysed as follows:

	2018	2017
	£000	£000
Audit of the financial statements	27	26
Other fees to auditors - taxation services	43	59
	70	85

7. Directors' emoluments

None of the directors received any compensation for services rendered as directors of the Company (2017: nil).

8. Staff costs

	2018	2017
	£000	£000
Wages and salaries	44,330	39,623
Social security costs	8,650	6,159
Pension costs	1,263	1,109
Total staff costs	54,243	46,891

The average numbers of employees during the year were as follows:

	2018	2017
Fund management	86	81
Marketing	15	12
Administrative	42	35
Average number of total staff	143	128

9. Tax on profit on ordinary activities

Current tax for the year:

	2018	2017
	£000	£000
UK Corporation tax on profit for the year	3,353	2,694
Foreign tax relief/other relief	(139)	(257)
Adjustment for prior periods	(64)	85
	3,150	2,522
Foreign tax suffered	309	523
Total current tax	3,459	3,045
Deferred tax:
Origination and reversal of timing differences	(111)	(1,316)
Effect of changes in tax rates	369	16
Adjustment in respect of previous periods	(122)	(4)
Total deferred tax	136	1,304
Total tax per income statement	3,595	1,741

The charge for the year can be reconciled to the profit per the income statement as follows:

	2018	2017
	£000	£000
Profit on ordinary activities before taxation	11,143	6,091
Corporation tax at 19.00% (2017: 19.25%)	2,117	1,172
Adjustment from previous periods	(185)	81
Expenses not deductible	125	122
Effect of overseas tax rates	169	-
Tax rate changes	369	282
Share options	900	3
Non-qualifying depreciation	100	81
Total tax charge for the year	3,595	1,741

10. Intangible assets

	Total
	£000
Cost:
At 1 January 2018	7,189
At 31 December 2018	7,189
Amortisation:
At 1 January 2018	(3,824)
Amortisation Charge for the year	(721)
At 31 December 2018	(4,545)
Net realisable value at 31 December 2018	2,644
Net realisable value at 31 December 2017	3,365

11. Tangible fixed assets

	Furniture and computer equipment	Leasehold improvements	Total
	£000	£000	£000
Cost:
At 1 January 2018	2,055	4,332	6,387
Additions	102	-	102
Disposals	(47)	-	(47)
At 31 December 2018	2,110	4,332	6,442
Depreciation:
At 1 January 2018	977	1,447	2,424
Charge for the year	343	465	808
Disposals	(46)	-	(46)
At 31 December 2018	1,274	1,912	3,186
Net realisable value at 31 December 2018	836	2,420	3,256
Net realisable value at 31 December 2017	1,078	2,885	3,963

12. Debtors

	2018	2017
	£000	£000
Management fee receivable	10,753	8,247
Amounts due from affiliated parties	58,041	31,265
Prepayments	2,126	2,352
Other debtors	174	678
VAT receivable	-	484
	71,094	43,026

13. Deferred tax

	2018	2017
	£000	£000
Provision at start of year	3,274	1,970
Deferred tax (charge) / credit to income statement for the year	(258)	1,300
Adjustment in respect of prior years	122	4
Provision at end of year	3,138	3,274

The deferred tax asset at the end of the year arises an the following timing differences, tax losses or tax credits:

	2018	2017
	£000	£000
Fixed asset timing differences	230	166
Short term timing differences - trading	2,908	3,108
Provision at end of year	3,138	3,274

14. Creditors: amounts falling due within one period

	2018	2017
	£0	£0
Other taxes and social security costs	84	53
Trade creditors	183	15
Corporation tax	1,769	2,437
Accruals	2,870	4,839
Deferred revenue	1,746	-
VAT	247	-
	6,899	7,344

15. Creditors: amounts falling due alter more than one year

	2018	2017
	£000	£000
Accruals	3,458	4,105
	3,458	4,105

16. Called up share capital

	2018	2017
	£000	£000
Allotted, called up and fully paid
Ordinary shares £1 each	28,000	28,000

17. Notes to the statement of cash flows

(a) Reconciliation of operating profit to net cash outflow from operating activities:

	2018	2017
	£000	£000
Operating Profit	11,121	3,970
Foreign exchange realised gain an investments	-	(840)
Depreciation of tangible fixed assets	808	769
Amortisation of intangible assets	721	721
Share based payments	7,936	10,808
Increase in debtors	(28,068)	16,333
Decrease in creditors	(424)	(13,371)
Cash generated from operating activities	(7,906)	18,390

(b) Cash and cash equivalents

Cash and cash equivalents are fully comprised of current accounts.

18. Related party transactions

During the year ended 31 December 2018, the Company entered into certain related party transactions with Ares Management UK Limited and Ares Management LLC. The summary of these transactions is disclosed as follows:

Affiliated Party	Relationship	Transaction Type	Amount
			£000
Ares Management UK Limited	Affiliate	Cost Recharge	26,965
Ares Management LLC	Parent	Transfer Pricing	20,124

As at 31 December 2018, the Company was owed £56,887,196 (2017: £31,265,178) from its affiliates and £12,318,858 (2017: £8,246,347) from the funds it manages.

19. Obligations under leases

At 31 December 2018. the Company had future minimum payments due under operating leases as set out below:

	2018	2017
	£000	£000
Land and Buildings
On leases expiring:
- within one year from the balance sheet date	3,792	3,639
- within two and five years from the balance sheet date	14,542	13,907
- over five years from the balance sheet date	1,202	4,299
Equipment
On leases expiring:
- within one year from the balance sheet date	24	43
- within two and five years from the balance sheet date	14	22
	19,574	21,910

The operating lease payables for Land and Buildings are in respect of office buildings in London, Paris, Luxembourg, Frankfurt and Stockholm.

20. Share-based payments

Equity-settled

Ares Employee Participation LLC Interests and AREA Membership Interest

Prior to the Initial Public Offering ("IPO" ) on 1 May 2014 of Ares Management Corporation (formerly Ares Management LP), various profit interests and membership interests were issued historically to pools of certain professionals that provided for the participation in the profits and/or proceeds of certain capital events, including also professionals of the Company. Unless otherwise stated, the grant date fair value of each award or respective membership interest was determined by an independent third party valuation firm. These awards are referred to as Ares Employee Participation ("AEP") plan and are described below.

―	Ares Employee Participation IV £230,660;
―	Ares Employee Participation VIII £988.136.

The key inputs used in the Black Scholes Model are as follows:

	Equity Value	Ares Holdings LLC Equity	Ares Investments LLC Equity	Term
AEP IV	$1,650	$1,089	$561	2 years
AEP VIII	$3,374	$2,227	$1,147	2 years

	Risk Free Rate	Management Fee Volatility	Incentive Fee Volatility
AEP IV	0.27%	34%	44%
AEP VIII	0.34%	29%	39%

Ares Management, L.P. 2014 Equity Incentive Plan

In connection with the IPO of Ares Management Corporation on 1 May 2014, the Board of Directors of the General Partner of Ares Management Corporation adopted the Equity Incentive Plan. Under the Equity Incentive Plan, the Company granted options to acquire common units £3,579,932 (2017: £3,579,932), restricted units to be settled in common units £3,607,635 (2017: £3,607,635) and phantom common units to be settled in cash £19,166 (2017: £19,166), less a deduction of a dividend equivalent of £305,627 (2017: £305,627). Equity based compensation expense is determined based on the fair value of the respective equity award on the grant date and is recognised on a straight line basis over the requisite service period, with a corresponding increase in shareholders' equity.

Restricted Units

The table below shows the history of units granted since the IPO of Ares Management Corporation.

Date granted	Number of units	Price of grant $	Discount on Fair value %	Assumed forfeiture rate per annum %	Years vested over
01 May 2014	951,708	19	5	1.3	5
09 January 2015	3,947	17.56	5	1.3	5
20 January 2016	317,147	11.21	0	1.3	4
15 August 2016	521,875	17.34	0	1.3	2
01 January 2017	100,001	19.20	0	Nil	2
20 January 2017	218,484	19.90	0	1.3	4
31 January 2017	755,000	19.45	0	Nil	5
20 January 2018	205,296	23.20	0	1.3	4
31 January 2018	560,000	24.15	0	1.3	5

For the year ended 31 December 2018, 77,181 restricted units were forfeited (2017: 44,670).

A cumulative expense of £29,185,793 relating to these awards has been recognised in the profit and loss account in equity.

For the year ended 31 December 2018, 412,491 restricted units vested (2017: 387,263).

Options

A cumulative expense of £10.961,252 relating to these awards has been recognised in the profit and loss account in equity.

For the year ended 31 December 2018, 91,589 options were forfeited (2017: 27,786).

The fair value of each option granted during the period from 1 May to 31 December 2018 is measured on the date of grant using the Black Scholes option pricing model and the following weighted average assumptions:

Input	1 May 2014 Grant	30 May 2014 Grant	9 January 2015 Grant	Source
Stock Price	$19	$19	$17.72	Traded Price
Exercise Price	$19	$19	$19	Management
Expected Term	7 years	6.92 years	7.49 years	See above
Volatility	35%	34%	36%	See AEP Table above
Risk Free Rate	2.21%	2.06%	1.80%	Interpolated from US Govt Band Rate
Assumed Dividend Yield	5%	5%	5%	Management
Estimated Per-Share Value	$4.02	$3.83	$3.47

21. Ultimate parent undertaking

Appendix 1 (Unaudited)

Ares Management Limited

2018 Pillar 3 Disclosure

Introduction

The CRDIV establishes a regulatory capital framework across Europe governing the amount and nature of capital credit institutions and investments firms must maintain. As of 1 April 2013 the FSA was disbanded and replaced by two regulatory bodies: the Financial Conduct Authority ("FCA") and the Prudential Regulatory Authority ("PRA"). AML has been since 1 April 2013 regulated by the FCA which has adopted the FSA handbook.

The CRDIV framework comprises three 'Pillars':

•	Pillar 1 sets out the minimum capital amount that meets the Firm's credit, market and operational risk requirement;
•	Pillar 2 requires the firm to assess whether its capital reserves, processes, strategies and systems are adequate to meet Pillar 1 requirements and further determine whether it should apply additional capital, processes, strategies or systems to cover any other risks that it may be exposed to;
•	Pillar 3 requires disclosure of specified information about the underlying risk management controls and capital position to encourage market discipline.

The CRR sets out the provision for Pillar 3 disclosure. This document is designed to meet the Pillar 3 obligations of the Firm under Part Eight of the CRR (Articles 431-455).

The Pillar 3 disclosure document has been prepared by AML and is approved by the Board. Unless otherwise stated, all figures are as at the 31 December financial year end.

Pillar 3 disclosures will be issued on an annual basis after the year end and published as soon as practical with the annual accounts.

AML is permitted to omit required disclosures if it believes that the information is immaterial such that omission would be unlikely to change or influence the decision of a reader relying on that information for the purpose of making economic decisions about the Firm.

We have made no omissions on the grounds that it is immaterial, proprietary or confidential other than where noted in this document.

Scope and Application of the Requirements

Ares Management Limited is incorporated in England and Wales. It is subject to minimum regulatory capital requirements set by the FCA. The Firm is categorised as a €125k limited licence investment firm subject to IFPRU. The Firm has no trading book exposures. The Firm is not a member of an EEA group and so is not required to prepare consolidated reporting for prudential purposes.

Governance Framework and Risk Management

The Firm has in place a Board of Directors ("the Board") which is responsible for determining its business strategy and risk appetite, together with designing and implementing a risk management framework that recognises the risks that the business faces, determines how those risks may be mitigated, and assesses the ongoing management of those risks. The Board meets at least annually, and more often as required, to discuss current projections for profitability and capital management, business planning, and risk management. The meetings demonstrate how the Board oversees and is accountable for the implementation of governance arrangements and ensures the effective and prudent management of the Firm, with due consideration to the appropriate and proportionate segregation of duties and the prevention of conflicts of interest. Furthermore the Board manages the Firm's risks through a framework of policies and procedures having regard to relevant laws, standards, principles and rules (including FCA principles and rules) with the aim to operate a defined and transparent risk management framework. These policies and procedures are updated as required. The Firm manages only cash flow loan funds and similar loan fund products and considers the robust, effective structure of systems and controls it has in place appropriate to the size, nature and complexity of its business.

The Board and senior management team has accepted collective responsibility for compliance. The Firm's Compliance Officer and the Parent's Chief Compliance Officer and her team in Los Angeles are responsible for compliance oversight. In addition, the Firm also utilises the services of external consultants, who provide advice and assistance on a range of regulatory matters and also undertake regular monitoring and produce reports summarising work performed and recommendations for improvements.

The Board has identified foreign exchange (market), credit, business and operational risks as the main areas of risk to which the Firm is exposed. The adequacy of the Firm's regulatory capital in relation to these and other less significant risks is assessed through its Internal Capital Adequacy Assessment Process ("ICAAP"). The Board reviews and approves the ICAAP on an annual basis and uses it as an important part of the Firm's business planning and capital management.

All members of the Board have disclosed any outside business interests. They are all experienced industry professionals. In the appointment of new members, due consideration will always be given to the reputation, fitness and experience of the candidate, as well as the long-term strategic goals of the business.

Regulatory Capital

The Firm is a private limited company and its capital arrangements are established in its Articles of Association. All of its capital is tier 1 with deductions against it for intangible assets.

Capital summary as at 31 December 2018:	£000
Ordinary share capital	28,000
Retained profit	8,981
Total tier 1 capital	36,981
Deduct intangible assets	(2,644)
Total capital resources	34,337

The Firm's market risk is limited to foreign exchange risk on its cash and on accounts receivables in foreign currency. The Firm's credit risk arises from management and performance fees receivable and other assets. AML follows the standardised approach to market risk. It has adopted the Simplified standard and not the Internals Ratings Based approach to credit risk. The Firm is subject to the Fixed Overhead Requirement and is not required to calculate an operational risk capital charge though it considers this as part of its process to identify the level of risk-based capital required.

As noted previously the Firm is classified as a limited licence firm subject to a base capital requirement of €125,000 and as such its Pillar 1 capital requirement is the greater of:

•	The sum of its risk weighted exposures to market and credit risk; or
•	12.5 multiplied by Its Fixed Overhead Requirement ("FOR").

The FOR is calculated, in accordance with the EBA regulatory technical standards, based on the Firm's previous year's audited expenditure. The Firm has adopted the standardised approach to credit and market risk and the above figures have been produced on that basis. The Firm is not subject to an operational risk requirement.

Under the CRDIV, CRR and IFPRU rules the Firm has an initial requirement of €125,000 and has to maintain a Common Equity Tier 1 capital ratio of 4.5%, a Tier 1 Capital ratio of 6% and a Total Capital Ratio of 8%. These ratios are calculated by expressing the Firm's Own Funds (Tier 1 and Tier 2 Capital) as percentage of the total risk exposure amount. In AML's case the total risk exposure for Pillar 1 is the higher of the Fixed Overhead Requirement and the sum of the credit and foreign exchange exposure amounts. In essence this is the same as under the GENPRU and BIPRU rules.

It is the Firm's experience that the Fixed Overhead Requirement has historically established its Pillar 1 capital requirement and only occasionally has this been determined by the sum of the market and credit risk requirements when higher. Based on the audited financials as at 31 December 2017 the 2018 Fixed Overhead Requirement was £10,484k.

The Firm's ICAAP assesses the amount of capital required to mitigate the risks to which it is exposed over a three-year time horizon. The 2018 ICAAP considers the impact of future business plans as well as potential adverse scenarios (such as market downturns or significant operational errors) on the capital resources of the Firm, to ensure regulatory capital requirements are met at all times.

Based on the risk assessment and stress testing and wind down costs described above the Firm's management concluded that Pillar 2 capital of £14,230k was required for 2018. The ICAAP also showed that the Firm was compliant with the FCA's 'overall financial adequacy rule' and the 'overall pillar 2 rule' contained in GENPRU and BIPRU.

Remuneration Code

The Firm has assessed its remuneration structure in line with the FCA Remuneration Code (the "Code") and has adopted policies and procedures designed to ensure that risk is monitored and mitigated in line with the Code. Under FCA guidance, the Firm has determined that it is a "Proportionality Level 3" firm and has taken a proportionate approach as permitted by the rules. The Firm believes that given its business, it is already structured in compliance with the Principles of the Code. The Board, in accordance with Ares Management LLC's firm wide compensation guidelines determines the Firm's remuneration policy on at least an annual basis. AML's annual review of bonuses and performance related remuneration assesses the overall profits of the Firm and the business division along with the individual's financial and non-financial performance.

Remuneration Code Staff Remuneration by Business Area

Business Area	Total Remuneration y/e 31/12/18
Investment Management Services	£23,853,707

Aggregate Quantitative Remuneration by Senior Management and other Remuneration Code Staff

Type of Remuneration Code Staff	Total Remuneration y/e 31/12/18
Senior Management (SIF)	£4,474,613
Other Remuneration Code Staff	£19,379,094
Totals	£23,853,707

31:T1d1d7,

Ares Management Limited Niederlassung Deutschland

Frankfurt am Main

Jahresabschluss zum Geschäftsjahr vom 01.01.2017 bis zum 31.12.2017

Ares Management Limited

Report and Financial Statements
For the year ended 31 December 2017

Registered no. 05837428

Directors

Michael Daniel Weiner
Kevin Early
William Stephen Benjamin
Blair Jacobson
Ujjaval Yogesh Desai	(resigned 30 September 2017)
Gregory Alan Margolies	(resigned 30 September 2017)
Robert Kipp DeVeer III	(resigned 30 September 2017)
Secretary
TMF Corporate Administration Services Limited
6 St Andrew Street
5th Floor
London
EC4A 3AE
Auditor
Ernst & Young LLP
25 Churchill Place
London E14 5EY
Bankers
Barclays PLC
1 Churchill Place, Level 11
London, E14 5HP
City National Bank
15260 Ventura Boulevard
Sherman Oaks, CA 91403, USA
Solicitors
Latham & Watkins LLC
355 South Grand Avenue
Los Angeles, CA 90071
Registered Office
6 St Andrew Street
5th Floor
London
EC4A 3AE

Directors' report

The directors present their report and financial statements of Ares Management Limited (the "Company-) for the year ended 31 December 2017.

Principal activity

The principal activity of the Company during the year ended 31 December 2017 was to provide advisory and investment management services. The Company was incorporated an 5 June 2006 and is a wholly owned subsidiary of Ares Management LLC ("Ares Management"). The Company is authorised by the Financial Conduct Authority to perform investment management activity that is subject to licensing requirements in the United Kingdom.

Directors

Directors who served during the year and up to the date of this report were:

Michael Daniel Weiner
Kevin Early
William Stephen Benjamin
Blair Jacobson
Ujjaval Yogesh Desai	(resigned 30 September 2017)
Gregory Alan Margolies	(resigned 30 September 2017)
Robert Kipp DeVeer III	(resigned 30 September 2017)

Going concern

The Company's activities, together with the factors likely to affect its future development, its financial position and the financial risks are described in the strategic report.

After making enquiries, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existente for the foreseeable future. The Company will continue to have financial support from its parent if required. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

As the Company has sufficient financial resources and fee generating Investment Management Agreements, the directors believe that the Company is well placed to manage its business risks successfully.

Pillar 3 disclosures

The unaudited Pillar 3 disclosures are appended to the financial statements.

Disclosure of information to the auditor

Statement of directors' responsibilities

The directors are responsible for preparing the Directors' Report, the Strategie Report and the financial statements in accordance with applicable law and regulations.

•	select suitable accounting policies and then apply them consistently;
•	make judgements and estimates that are reasonable and prudent;
•	state whether applicable United Kingdom Generally Accepted Accounting Practices (United Kingdom Accounting Standards and applicable law) have been followed, subject to any material departures disclosed and explained in the financial statements; and
•	prepare the financial statements an the going concern basis unless it is inappropriate to presume that the Company will continue in business.

Reappointment of Auditors

The auditors, Ernst & Young, LLP, have indicated their willingness to continue in office. A resolution concerning their reappointment will be put to the members at the annual general meeting.

By the order of the Board

Kevin Early, Director

Strategic report

The directors present their strategic report together with the financial statements of the Company for the year ended 31 December 2017.

Results and dividends

The profit for the year ended 31 December 2017 is £4,350,240 (2016: £18,661,777). The directors do not recommend that a dividend be paid for the year (2016: nil).

Review of the business

The key financial and other performance indicators during the year were as follows:

	2017	2016
	£000	£000
Turnover	66,697	64,112
Profit after tax	4,350	18,662
Shareholders' funds	62,092	86,934
Current assets as % of current liabilities	902%	350%
Average number of employees	128	119

As at 31 December 2017, acts as investment manager of the following funds. New funds are indicated by an asterisk.

• Ares European CLO III B.V.

• Ares Capital Europe (Luxembourg) S.a.r.l

• Bond Opportunities Fund Sub 2

• BayVK R2 Fonds Ares II

• European Senior Secured Loan Programme S.a.r.l

• Ares ELOF GP LP

• Ares CSF III Luxembourg S.a.r.l

• Ares Capital Europe II Holdings S.a.r.l

• Ares Capital Europe II Investments S.a.r.l

• Ares Capital Europe II Assets S.a.r.l

• Ares UK Credit Strategies, L.P. (Her Majesty's Treasury)

• Ares CSF Holdings S.a.r.l

• Ares MSCF V (H) S.a.r.l

• Ares European Credit Strategies Fund (C), L.P.

• Ares European Credit Strategies Fund (G), L.P.

• Ares European Credit Strategies Fund II North (Hennes BTPS)

• Ares European Credit Strategies Fund II South ( Hennes BTPS)

• Ares European Credit Strategies Fund II (B) LP

• Ares European Credit Strategies Fund III (A), L.P. (APG)

• Ares ECSF III (A) Holdings S.a r.l

• Ares European Credit Strategies Fund IV (M), L.P. (Mercer)

• Ares ECSF IV (M) Holdings S.a.r.l

• Ares European Credit Strategies Fund V (G) L.P

• Ares ECSF V (G) Holdings S.a.r.l

• Ares European Credit Strategies Fund VI (B) L.P*

• Ares ECSF VI (B) Holdings S.a.r.l*

• Ares European Credit Strategies Fund VII (Palo Verde) L.P*

• Ares ECSF VII (P) Holdings S.a.r.l*

• Ares Customized Credit Fund L.P. EU

• MPS Investments S.a.r.l (Coal Pension)

• BCSSS Investments S.a.r.l (Coal Pension)

• GIM UK Loans SA (Generali)

• Ares Institutional Credit Fund II (Aviva Staff Pension Plan)

• Ares Institutional Credit Fund VI (Lloyds Bank Pension Scheme 1)

• Ares Institutional Credit Fund VII (Lloyds Bank Pension Scheme 2)

In addition under the terins of the Management Services Agreement with Ares European Loan Management LLP (-AELMLLP-) dated 29 June 2016. the Company acts as investment manager for :

• Ares European CLO VI B.V.

• Ares European CLO VII B.V

• Ares European CLO VIII B.V

Principal risks and uncertainties

Competitive Risks

Legislative Risks

Financial Instrument Risks

The objectives aim to ensure sufficient working capital exists and monitor the management of risk at the funds level.

Future Developments

The Directors do not expect any change in the principal activity of the Company in the foreseeable future.

Events since the balance sheet date

No significant events have occurred since 31 December 2017.

By the order of the Board

Kevin Early, Director

Independent auditor's report to the member of Ares Management Limited

Opinion

We have audited the financial statements of Ares Management Limited for the year ended 31 December 2017 which comprise Profit and Loss Account, the Balance Sheet, Statement of Changes in Equity, Statement of cash flows, and the related notes 1 to 22, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

• give a true and fair view of the company's affairs as at 31 December 2017 and of its profit for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report below. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Use of our report

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

• the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the directors have not disclosed in the financial statements any identified material uncertainties that may rast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and directors' report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept or returns adequate for our audit have not been received from branches not visited by us; or

• the financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors' remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the directors' responsibilities statement [set out on page...], the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's responsibilities for the audit of the financial statements

Ashley Coups (Senior statutory auditor)

for and on behalf of Ernst & Young LLP, Statutory Auditor
London
25 April 2018

Profit and loss account for the year ended 31 December 2017

		2017	2016
	Notes	£000	£000
Turnover	4	66,683	64,112
Administrative expenses		(62,713)	(47,707)
Operating Profit	5	3,970	16,405
Other-operating income		2,121	6,459
Profit on ordinary activities before taxation		6,091	22,864
Tax on ordinary activities	9	(1,741)	(4,202)
Profit on ordinary activities after taxation		4,350	18,662

All items dealt with in arriving at the profit for the year ended 31 December 2017 related to continuing operations.

Statement of comprehensive income for the year ended 31 December 2017

There are no gains and losses for the year other than those shown above and therefore no separate statement of comprehensive income has been presented.

The notes on pages 13 to 27 form an integral part of these financial statements.

Statement of changes in equity for the year ended 31 December 2017

	Share capital	Profit and loss account	Total Shareholders' fonds
	£000	£000	£000
At 1 January 2016	68,000	(8,481)	59,519
Profit for the year		18,662	18,662
Share based compensation	-	8,753	8,753
At 31 December 2016	68,000	18,934	86,934
Profit for the year	-	4,350	4,350
Share based compensation	-	10,808	10,808
Capital reduction	(40,000)	-	(40,000)
At 31 December 2017	28,000	34,092	62,092

The notes an pages 13 to 27 form an integral part of these financial statements.

Balance sheet at 31 December 2017

		2017	2016
	Notes	£000	£000
Fixed assets
Intangible assets	10	3,365	4,086
Tangible assets	11	3,963	4,463
Investments	12		25,289
Total fixed assets		7,328	33,838
Current assets
Debtors	13	43,026	59,359
Deferred tax	14	3,274	1,970
Cash and cash equivalents		19,913	20,018
Total current assets		66,213	81,347
Creditors: amounts falling due within one year	15	(7,344)	(23,272)
Total assets less current liabilities		66,197	91,913
Creditors: amounts falling due after more than one year	16	(4,105)	(4,979)
Net assets		62,092	86,934
Capital and reserves
Called up share capital	17	28,000	68,000
Profit and loss account		34,092	18,934
Shareholders' funds		62,092	86,934

The notes on pages 13 to 27 form an integral part of these financial statements.

The financial statements on pages 9 to 27 were approved and authorised on 24 April 2018 for issue on behalf of the directors

Kevin Early, Director

Cash flow statement for the year ended 31 December 2017

		2017	2016
	Note	£000	£000
Cash generated from operating activities	18 (a)	18,390	11,477
Tax paid		(6,473)	(356)
Interest paid		(63)	-
Net cash inflow from operating activities		11,854	11,121
Investing activities
Interest received		1,420	2,471
Payrnents to acquire tangible fixed assets		(269)	(662)
Receipts from sale of investments		26,893	-
Net cash inflow from investing activities		28,044	1,809
Financing activities
Repayment of share capital		(40,000)	-
Net cash outflow from financing activities		(40,000)	-
(Decrease)/Increase in cash and cash equivalents		(102)	12,930
Effect of exchange rates an cash and cash equivalents		(3)	-
Cash and cash equivalents at 1 January		20,018	7,088
Cash and cash equivalents at 31 December	18 (b)	19,913	20,018

The notes on pages 13 to 27 form an integral part of these financial statements.

Notes to the financial statements at 31 December 2017

1. Accounting policies

Organisation and business

Basis of preparation

Intangible assets

Management contracts acquired - over the term of the contract

The carrying value of the intangible asset is reviewed for impairment at least annually.

Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation. Such costs include those costs directly attributable to making the asset capable of operating as intended.

Leasehold improvements	- over the lease term
Furniture and computer equipment	- over 5 to 7 years.

Investments

In accordance with Article 405 of the Capital Requirement Regulations and to align interests with investors, the entity holds investments in collateralised loan obligation ("CLOs") for which Company acts as the investment manager.

Investments in the subordinated (equity) tranches of collateralised loan obligation ("CLOs-) are financial instruments initially recorded at the transaction price. Subsequently, they are held at fair value with gains and losses being recorded in the profit and loss account.

Investments in the un-subordinated tranches of CLOs are financial instruments initially recorded at the transaction price. Subsequently, they held at amortised cost in relation to the prorated accretion of any purchase discount as at balance sheet date.

Short-term debtors and creditors

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short term deposits with an original maturity date of three months or less.

Cash and cash equivalents are measured at fair value, based on the relevant exchange rates at the reporting date.

Turnover

Turnover is recognised to the extent that the Company obtains the right to consideration in exchange for its performance of services. Turnover is measured at the fair value of the consideration received, excluding discounts, rebates, Value Added Tax (-VAT") and other taxes or duty. The following criteria must also be met before turnover is recognised:

Rendering of services

Incentive income

Interest income

Interest income is recognised on an accrual basis on cash balances, on deferred fees from managed funds and on CLO tranches including from the sub-ordinated or "equity tranche".

Special fees

Provisions for liabilities

Operating lease commitments

Rentals payable less any incentives are charged in the profit and loss account on a straight line basis over the lease term.

Pension costs

The Company operates a defined contribution scheme. Contributions to the defined contribution scheme are recognised in the profit and loss account in the period in which they become payable.

Foreign currencies

Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are revalued at the rate of exchange ruling at the balance sheet date.

All differences are taken to the profit and loss account.

Share-based payments (equity-settled)

Taxation

Income tax expense represents the sum of the current tax and deferred tax.

The Charge for current tax is based on the result for the year adjusted for items which are non-assessable or disallowed. lt is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

2. Critical accounting estimates and judgements

In preparing the financial statements, management is required to make estimates and assumptions which affect reported income, expenses, assets, liabilities and disclosure of contingent assets and liabilities. Use of available information and application of judgement are inherent in the formation of estimates, together with past performance and expectations of future events that are believed tobe reasonable under the circumstances. Actual results in the future could differ from such estimates.

Fair value of investments

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. Management uses its judgement to select a variety of methods, and make assumptions that are mainly based on market conditions existing at the end of each reporting period.

Share-based payments (equity-settled)

3. Financial risk management

The Company has exposure to the following risks from its use of financial instruments:

Foreign exchange risk

The CLO Investments previously held by the Company and disposed of during the financial year were issued in Euros. At 31 December 2017, if British pounds had weakened or strengthened against the Euro by a reasonable percentage variance of 10%, the profit for the financial year would have increased by £nil (2016: profit increased/decreased by £2,528,931).

Market risk

The Company is exposed to market risk through the movement in the value of its proprietary investments that are inherent in the performance of the underlying financial markets. Sensitivity analysis has not been prepared due to the largely market neutral nature of the investments involved.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company aims to mitigate liquidity risk by managing cash generation from operations. The Company also manages liquidity risk via additional equity investments from the parent company

Credit risk

The Company has credit risk exposure arising from current fees due but not received from the funds it manages and from its cash balances held at highly rated banks. Fees are invoiced to these funds in accordance with the tenns of the investment management agreements. By their nature, the funds hold significant cash balances and the fund trustee/administrator is responsible for making the payment of the management and performance fees.

4. Turnover

Turnover principally represents the amounts derived from the provision of investment management services, stated net of Value Added Tax, and arising from continuing activities in Europe.

For the year ended 31 December 2017, base investment management fees earned were £62,802,638 (2016: £54,813,285). Total incentive management fees earned for the year were £1,734,620 (2016: £272,337). Turnover also includes a transaction gain of £839,918 (2016: £7,979,218) and other income from Agency fees of £1.318,855 (2016: £1.046,975).

5. Operating profit

Operating profit is stated after charging:

	2017	2016
	£000	£000
Amortisation and impainnent of intangible assets (see note 10)	721	1,220
Depreciation of owned assets (see note 11)	769	743
Operating lease rentals
- Land and buildings	2,965	2,976
- Equipment	60	53
Foreign exchange (loss)/gain	(5,743)	11,244
Auditors' remuneration (see note 6)	85	94

6. Auditors' remuneration

The remuneration of the auditors is further analysed as follows:

	2017	2016
	£000	£000
Audit of the financial statements	26	34
Other fees to auditors - taxation services	59	60
	85	94

7. Directors' emoluments

None of the directors received any compensation for services rendered as directors of the Company (2016: nil).

8. Staff costs

	2017	2016
	£000	£000
Wages and salaries	39,623	33,505
Social security costs	6,159	5,259
Pension costs	1,109	991
Total staff costs	46,891	39,755

The average numbers of employees during the year were as follows:

	2017	2016
Fund management	81	79
Marketing	12	10
Administrative	35	30
Average number of total staff	128	119

9. Tax on profit on ordinary activities

Current tax for the year:

	2017	2016
	£000	£000
UK Corporation tax on profit for the year	2,694	6,172
Foreign tax relief/other relief	(257)	(307)
Adjustment for prior periods	85	-
	2,522	5,865
Foreign tax suffered	523	307
Total current tax	3,045	6,172
Deferred tax:
Origination and reversal of timing differences	(1,316)	(2,074)
Effect of changes in tax rates	16	104
Adjustment in respect of previous periods	(4)	-
Total deferred tax	1,304	1,970
Total tax per income statement	1,741	4,202

The charge for the year can be reconciled to the profit per the income statement as follows:

	2017	2016
	£000	£000
Profit on ordinary activities before taxation	6,091	22,864
Corporation tax at 19.25% (2016: 20.25%)	1,172	4,573
Adjustment from previous periods	81	-
Expenses not deductible	122	143
Tax rate changes	282	103
Deferred tax not provided	-	(2,900)
Utilisation of tax losses	-	(204)
Share options	3	2,487
Non-qualifying depreciation	81	-
Total tax charge for the year	1,741	4,202

10. Intangible assets

	Total
	£000
Cost:
At 1 January 2017	20,835
Disposals	(13,646)
At 31 December 2017	7,189
Amortisation and impairment losses:
At 1 January 2017	(16,749)
Amortisation charge for the year	(721)
Disposals	13,646
At 31 December 2017	3,824
Net realisable value at 31 December 2017	3,365
Net realisable value at 31 December 2016	4,086

11. Tangible fixed assets

	Furniture and computer equipment	Leasehold improvements	Total
	£000	£000	£000
Cost:
At 1 January 2017	2,332	5,615	7,947
Additions	260	9	269
Disposals	(537)	(1,292)	(1,829)
At 31 December 2017	2,055	4,332	6,387
Depreciation:
At 1 January 2017	1,208	2,276	3,484
Charge for the year	306	463	769
Disposals	(537)	(1,292)	(1,829)
At 31 December 2017	977	1,447	2,424
Net realisable value at 31 December 2017	1,078	2,885	3,963
Net realisable value at 31 December 2016	1,124	3,339	4,463

12. Investments

	2017	2016
	£000	£000
At 1 January	25,289	21,301
Accretion (Euro VII)		9
Realised gain	764
Disposals	(26,893)	-
Unrealised gain		714
Foreign exchange gain	840	3,265
At 31 December	-	25,289
	2017	2016
	£0	£0
Euro VI (subordinated)	-	10,612
Euro VII (subordinated)	-	1,266
Euro VII (unsubordinated)	-	13,411
At 31 December	-	25,289

All investment held by the Company were redeemed during the year.

In line with the Company's accounting policy the subordinated investments in the CLOs are held at fair value. The fair values of the CLOs are estimated based on various valuation models of third-party pricing services as well as internal models. The valuation models generally utilise discounted cash flows and take into consideration prepayment and loss assumptions, based on historical experience and projected performance, economic factors, the characteristics and condition of the underlying collateral, comparable yields for similar securities and recent trading activity.

13. Debtors

	2017	2016
	£000	£000
Management fee receivable	8,247	8,707
Amounts due from affiliated parties	31,265	48,213
Prepayments	2,352	1,929
Other debtors	678	258
VAT receivable	484	252
	43,026	59,359

14. Deferred tax

	2017	2016
	£000	£000
Provision at start of year	1,970	-
Deferred tax credit to income statement for the year	1,300	1,970
Adjustment in respect of prior years	4
Provision at end of year	3,274	1,970

The deferred tax asset at the end of the year arises an the following timing differences, tax losses or tax credits:

	2017	2016
	£000	£000
Fixed asset timing differences	166	181
Short term timing differences - trading	3,108	1,789
Provision at end of year	3,274	1,970

15. Creditors: amounts falling due within one period

	2017	2016
	£000	£000
Other taxes and social security costs	53	2,001
Trade creditors	15	195
Corporation tax	2,437	5,865
Accruals	4,839	15,211
	7,344	23,272

16. Creditors: amounts falling due after more than one year

	2017	2016
	£000	£000
Accruals	4,105	4,979
	4,105	4,979

17. Called up share capital

	2017	2016
	£000	£000
Allotted, called up and fully paid
Ordinary shares £1 each	28,000	68,000

18. Notes to the statement of cash flows

(a) Reconciliation of operating profit/(loss) to net cash outflow from operating activities:

	2017	2016
	£000	£000
Operating Profit	3,970	16,405
Foreign exchange realised gain an investments	(840)	-
Depreciation of tangible fixed assets	769	743
Amortisation of intangible assets	721	1,220
Share based payments	10,808	8,753
Increase / (decrease) in debtors	16,333	(19,406)
(Decrease) / increase in creditors	(13,371)	3,762
Cash generated from operating activities	18,390	11,477

(b) Cash and cash equivalents

Cash and cash equivalents are fully comprised of current accounts.

19. Related party transactions

During the year ended 31 December 2017, the Company entered into certain related party transactions with Ares Management UK Limited and Ares Management LLC. The summary of these transactions is disclosed as follows:

Affiliated Party	Relationship	Transaction Type	Amount
			£000
Ares Management UK Limited	Affiliate	Cost Recharge	22,373
Ares Management LLC	Parent	Transfer Pricing	28,764
Ares Management LLC	Parent	Repayment of share capital	40,000

As at 31 December 2017, the Company was owed £31,265,178 (2016: £48,212,570) from its affiliates and £8,246,347 (2016: £8,707,076) from the funds it manages.

20. Obligations under leases

At 31 December 2017, the Company had future minimum payments due under operating leases as set out below:

	2017	2016
	£000	£000
Land and Buildings
On leases expiring:
- within one year from the balance sheet date	3,639	3,472
- within two and five years from the balance sheet date	13,907	13,319
- over five years from the balance sheet date	4,299	7,567
Equipment
On leases expiring:
- within one year from the balance sheet date	43	43
- within two and five years from the balance sheet date	22	22
	21,910	24,423

The operating lease payables for Land and Buildings are in respect of office buildings in London, Paris, Luxembourg, Frankfurt and Stockholm.

21. Share-based payments

Equity-settled

Ares Employee Participation LLC Interests and AREA Membership Interest

Prior to the Initial Public Offering ("IPO") on 1 May 2014 of Ares Management LP, various profit interests and membership interests were issued historically to pools of certain professionals that provided for the participation in the profits and/or proceeds of certain capital events, including also professionals of the Company. Unless otherwise stated, the grant date fair value of each award or respective membership interest was determined by an independent third party valuation firm. These awards are referred to as Ares Employee Participation ("AEP") plans and are described below.

In July 2013, certain employees of the Company were granted equity ownership of 1.2% ("AREA Membership Interest") in Ares Holdings LLC, the parent of Ares Management, and in Ares Investments LLC, an affiliate of the Company. This ownership entitles recipients to equal rights to privileges as other equity holders. The fair value of these awards was determined using a recent market transaction at the time of detennination. These membership units vest over a period of two years. As a result of the initial public offering of Ares Management LP on 1 May 2014, £3,867,451 of the total of £7,505,837 equity-settled share-based compensation in 2014 related to London Real Estate for the acceleration of this award granted in July 2013. There was no change in the fair value of these converted interests as a result of the acceleration in vesting. They were not subject to satisfaction of any conditions or market related performance. In addition, the Company recorded one time acceleration expenses on the following awards vesting only as a result of a capital event:

- Ares Employee Participation IV £230,660;

- Ares Employee Participation VIII £988,136.

The key in uts used in the Black Scholes Model are as follows:

	Equity Value	Ares Holdings LLC Equity	Ares Investments LLC Equity	Term	Risk Free Rate	Management Fee Volatility	Incentive Fee Volatility
AEP IV	$1,650	$1,089	$561	2 years	0,27%	34%	44%
AEP VIII	$3,374	$2,227	$1,147	2 Years	0,34%	29%	39%

Ares Management, L.P. 2014 Equity Incentive Plan

In connection with the IPO of Ares Management LP on 1 May 2014, the Board of Directors of the General Partner of Ares Management, L.P. adopted the Equity Incentive Plan. Under the Equity Incentive Plan, the Company granted options to acquire common units £3.579,932 (2016: £3.579.932), restricted units to be settled in common units £3,607.635 (2016: £3,607,635) and phantom common units to be settled in cash £19,166 (2016: £19.166), less a deduction of a dividend equivalent of £305.627 (2016: £305,627). Equity based compensation expense is determined based on the fair value of the respective equity award on the grant date and is recognised on a straight line basis over the requisite service period, with a corresponding increase in shareholders' equity.

Restricted Units

The table below shows the history of units granted since the IPO of Ares Management LP.

Date granted	Number of units	Price of grant $	Discount on Fair value %	Assumed forfeiture rate per annum %	Years vested over
01. Mai 14	951,708	19	5	1,9	5
09 January 2015	3,947	17,56	5	1,9	5
20 January 2016	317,147	11,21	0	1,9	4
15 August 2016	521,875	17,34	0	1,9	2
01 January 2017	100,001	19,20	0	Nil	2
20 January 2017	218,484	19,90	0	1,9	4
31 January 2017	755,000	19,45	0	Nil	5

For the year ended 31 December 2017, 44,670 restricted units were forfeited (2016: 86,424).

For the year ended 31 December 2017, 387,263 restricted units vested (2016: 9,263).

Options

3,873,238 units were issued at $4.02 with 3.5% forfeiture rate vested over 5 years; and 10,568 units issued on 31 May 2014 at $3.83 with 3.5% forfeiture rate vested over 5 years. An additional 525,000 units were issued on 9 January 2016 at $3.47 with 3.5% annual forfeiture rate vested over 4 years.

For the year ended 31 December 2017, 438,068 options were forfeited (2016: Nil).

The fair value of each option granted during the period from 1 May to 31 December 2017 is measured on the date of grant using the Black Scholes option pricing model and the following weighted average assumptions:

Input	1 May 2014 Grant	30 May 2014 Grant	9 January 2015 Grant	Source
Stock Price	$19	$19	$17,72	Traded Price
Exercise Price	$19	$19	$19	Management
Expected Tenn	7 years	6.92 years	7.49 years	See above
Volatility	35%	34%	36%	See AEP Table above
Risk Free Rate	2,21%	2,06%	1,80%	Interpolated from US Govt Band Rate
Assumed Dividend Yield	5%	5%	5%	Management
Estimated Per-Share Value	$4.02	$3.83	$3.47

22. Ultimate parent undertaking

The Company is immediately controlled by Ares Management LLC, a company incorporated in the United States of America, and ultimately controlled by Ares Management LP. Copies of the financial statements are available from Ares Management LLC, 2000 Avenue of the Stars, 12' Floor, Los Angeles, California, 90067, USA.

Appendix 1
(Unaudited)

Ares Management Limited

Pillar 3 Disclosure

Introduction

The CRDIV establishes a regulatory capital framework across Europe governing the amount and nature of capital credit institutions and investments firms must maintain. The CRDIV represents the European Union's current application of the Basel Capital Accord. As of 1 April 2013 the FSA was disbanded and replaced by two regulatory bodies: the Financial Conduct Authority ("FCA") and the Prudential Regulatory Authority ("PRA"). AML has been since 1 April 2013 regulated by the FCA which has adopted the FSA handbook.

The CRDIV framework comprised three 'Pillars':

• Pillar 1 sets out the minimum capital amount that meets the firm's credit, market and operational risk;

• Pillar 2 requires the firm at least annually to assess and document whether its Pillar 1 capital is adequate to meet its risks, which can be subject to review by the FCA;

• Pillar 3 requires disclosure of specified information about the underlying risk management controls and capital position.

The rules in BIPRU 11 set out the provision for Pillar 3 disclosure. This document is designed to meet the Pillar 3 obligations of the Firm as they applied in 2016.

We have made no omissions on the grounds that it is immaterial, proprietary or confidential other than where noted in this document.

Scope and Application of the Requirements

Ares Management Limited is incorporated in England and Wales. lt is subject to minimum regulatory capital requirements set by the FCA. The Firm is categorised as a €125k limited licence investment firm subject to the Prudential sourcebook for Investment Firms ("IFPRU"). The Firm has no trading book exposures. The Firm is not a member of an EEA group and so is not required to prepare consolidated reporting for prudential purposes.

The Firm is wholly owned by Ares Management LLC (the "Parent"), a US-based investment management company. lt was authorised to carry on investment management activity by the FSA on 27 November 2006, and its principal business activity is the provision of advisory and investment management services to cash flow loan funds registered outside the United Kingdom.

Governance Framework and Risk Management

The board and senior management team has accepted collective responsibility for compliance. The Firm's Compliance Officer and the Parent's Chief Compliance Officer and his team in Los Angeles are responsible for compliance oversight. In addition, the Firm also utilises the services of external consultants, who provide advice and assistance on a range of regulatory matters and also undertake regular monitoring and produce reports summarizing work performed and recommendations for improvements.

The Board has identified foreign exchange (market), credit, business and operational risks as the main areas of risk to which the Firm is exposed. The adequacy of the Firm's regulatory capital in relation to these and other less significant risks is assessed through its Internal Capital Adequacy Assessment Process ("ICAAP"). The Board reviews and approves the ICAAP on an annual basis and uses it as an important part of the Firm's business planning and capital management.

Regulatory Capital

The Firm is a private limited company and its capital arrangements are established in its Articles of Association. All of its capital is tier 1 with deductions against it for intangible assets.

Capital summary as at 31 December 2017:

Capital summary as at 31 December 2017:	£000
Ordinary share capital	28,000
Retained profit	1,433
Total tier 1 capital before deductions	29,433
Deduct intangible assets	(3,365)
Total capital resources	26,068

The Firm is small with a simple operational infrastructure. Its market risk is limited to foreign exchange risk on its cash and on accounts receivables in foreign currency. The Firm; credit risk arises from management and performance fees receivable and other assets. The Firm follows the standardised approach to market risk. lt has adopted the Simplified standard and not the Internals Ratings Based approach to credit risk. The Firm is subject to the Fixed Overhead Requirement and is not required to calculate an operational risk capital charge though it considers this as part of its process to identify the level of risk based capital required.

As noted previously the Firm is classified as a limited licence firm and as such its Pillar 1 capital requirement is the greater of:

• Its base capital requirement of €125,000; or

• The sum of its market and credit risk requirements; or

• Its Fixed Overhead Requirement.

It is the Firm's experience that the Fixed Overhead Requirement has historically established its capital requirement and only occasionally has this been determined by the sum of the market and credit risk requirements when higher. Based on the audited financials as at 31 December 2016 the 2017 Fixed Overhead Requirement was £7,887k.

The Firm's ICAAP assesses the amount of capital required to mitigate the risks to which it is exposed over a three year time horizon. The 2017 ICAAP considers the impact of future business plans as well as potential adverse scenarios (such as market downturns or significant operational errors) on the capital resources of the Firm, to ensure regulatory capital requirements are met at all times.

Based on the risk assessment and stress testing and wind down costs described above the Firm's management concluded that Pillar 2 capital of £13,581k was required for 2017. The ICAAP also showed that the Firm was compliant with the FCA's 'overall financial adequacy rule' and the 'overall pillar 2 rule' contained in GENPRU and BIPRU.

Remuneration Code

The Firm has assessed its remuneration structure in line with the FCA Remuneration Code (the "Code") and has adopted policies and procedures designed to ensure that risk is monitored and mitigated in line with the Code. Under FCA guidance, the Firm has determined that it is a "Proportionality Level 3" firm and has taken a proportionate approach as permitted by the rules. The Firm believes that given its business, it is already structured in compliance with the Principles of the Code. The Board, in accordance with Ares Management LLC's firm wide compensation guidelines determines the Firm's remuneration policy on at least an annual basis. AML's annual review of bonuses and performance related remuneration assesses the overall profits of the Firm and the business division along with the individual's financial and non-financial performance.

Remuneration Code Staff Remuneration by Business Area (BIPRU 11.5.18(6))

Business Area	Total Remuneration y/e 31/12/17
Investment Management Services	£30,027,482

Aggregate Quantitative Remuneration by Senior Management and other Remuneration Code Staff (BIPRU 11.5.18(7))

Type of Remuneration Code Staff	Total Remuneration
Senior Management (SIF)	£4,317,774
Other Remuneration Code Staff	£25,709,708
Totals	£30,027,482

32:T1af33,

Ares Management Limited Niederlassung Deutschland

Frankfurt am Main

Jahresabschluss zum Geschäftsjahr vom 01.01.2015 bis zum 31.12.2015

ARES MANAGEMENT LIMITED, London/UK

Registered no. 5837428

Directors

Michael Daniel Weiner

Kevin Early

William Stephen Benjamin

Blair Jacobson

Ujjaval Yogesh Desai

Gregoty Alan Margolies

Robert Kipp DeVeer III

Secretary

TMF Corporate Secretarial Services Limited

6 St Andrew Street

5th Floor

London

EC4A 3AE

Auditor

Ernst & Young LL,P

25 Churchill Place

London E14 5EY

Bankers

Barclays PLC

1 Churchill Place, Level 11

London, E14 511'

City National Bank

15260 Ventura Boulevard

Sherman Oaks, CA 91403, USA

Solicitors

Latham & Watkins LLC

355 South Grand Avenue

Los Angeles, CA 90071

Registered Office

6 St Andrew Street

5th Floor

London

EC4A 3AE

Directors' report

The directors present their report and financial statements of Ares Management Limited (the "Company") for the year ended 31 December 2015.

Principal activity

The principal activity of the Company during the year ended 31 December 2015 was to provide advisory and investment management services. The Company was incorporated an 5 June 2006 and is a wholly owned subsidiary of Ares Management LLC ("Ares Management"). The Company is authorised by the Financial Conduct Authority to perform investment management activity that is subject to licensing requirements in the United Kingdom.

Directors

Directors who served during the year and up to the date of this report were:

Michael Daniel Weiner

Kevin Early

William Stephen Benjamin

Blair Jacobson

Ujjaval Yogesh Desai

Gregory Alan Margolies

Robert Kipp DeVeer III

Going concern

The Company's activities, together with the factors likely to affect its future development, its financial position and the financial risks are described in the strategic report.

As the Company has sufficient financial resources and fee generating Investment Management Agreements, the directors believe that the Company is well placed to manage its business risks successfully.

Pillar 3 disclosures

The unaudited Pillar 3 disclosures are appended to the financial statements.

Disclosure of information to the auditor

Statement of directors' responsibilities

The directors are responsible for preparing the Directors' Report, the Strategie Report and the financial statements in accordance with applicable law and regulations.

•	select suitable accounting policies and then apply them consistently;
•	make judgements and estimates that are reasonable and prudent;
•	state whether applicable United Kingdom Generally Accepted Accounting Practices (United Kingdom Accounting Standards and applicable law) have been followed, subject to any material departures disclosed and explained in the financial statements; and
•	prepare the financial statements an the going concern basis unless it is inappropriate to presume that the Company will continue in business.

Reappointment of Auditors

The auditors, Ernst & Young, 11P, have indicated their willingness to continue in office. A resolution concerning their reappointment will be put to the members at the annual general meeting.

By the order of the Board

Kevin Early

Director

Strategic report

The directors present their strategic report together with the financial statements of the Company for the year ended 31 December 2015.

Results and dividends

The profit for the year ended 31 December 2015 is £2,973,197 (2014: £9,933,862 loss). The directors do not recommend that a dividend be paid for the year (2014: nil).

Review of the business

The key financial and other performance indicators during the year were as follows:

	2015	2014
	£000	£000
Turnover	48,642	43,738
Profit/(Loss) after tax	2,974	(9,933)
Shareholders' funds	59,511	52,076
Current assets as % of current liabilities	334%	215%
Average number of employees	103	109

As at 31 December 2015, acts as investment manager of the following funds. New funds are indicated by an asterisk.

•	Ares Euro CLO I B.V.
•	Ares European CLO II B.V.
•	Ares European CLO III B.V.
•	Ares European CLO VI B.V.
•	Ares European CLO VII B.V.
•	Queen Street CLO I B.V.
•	Queen Street CLO II B.V.
•	Ares Capital Europe (Luxembourg) S.a.r.l
•	Ares Enhanced Loan Investment Strategy VIII
•	Ares Enhanced Loan Investment Strategy XII
•	Ares Institutional Credit Fund II, INKA GLI
•	Bond Opportunities Fund Sub 2
•	BayVK R2 Fonds Ares II
•	European Senior Secured Loan Programme S.a.r.1
•	Ares EWF GP LP
•	Ares CSF III Luxembourg S.a.r.l
•	Ares CSF III Luxembourg S.a.r.l II
•	Ares Capital Europe II Holdings S.a.r.l
•	Ares Capital Europe II Investments S.a.r.l
•	Ares Capital Europe II Assets S.a.r.l ^*
•	Ares UK Credit Strategies, L.P. (Her Majesty's Treasury)
•	Ares CSF Holdings S.a.r.l
•	Ares MCSF V (H) S.a.r.l
•	Ares European Credit Strategies Fund (C), LP.
•	Ares European Credit Strategies Fund (G), LP.
•	Ares European Credit Strategies Fund II North (Heuries BTPS)
•	Ares European Credit Strategies Fund II South ( Hernes BTPS)
•	Ares European Credit Strategies Fund II (B) LP
•	Ares European Credit Strategies Fund HI (A), LP. (APG) ^*
•	Ares European Credit Strategies Fund N (M), LP. (Mercer) ^*
•	Ares Customized Credit Fund LP. EU ^*
•	MPS Investments Sarl (Goal Pension) ^*
•	BCSSS Investments Sarl (Coal Pension) ^*
•	GIM UK Loans SA (Generali) ^*
•	Institutional Credit Fund 11 (Aviva Staff Pension Plan)
•	Institutional Credit Fund VI (Lloyds Bank Pension Scheme 1)
•	Institutional Credit Fund VII (Lloyds Bank Pension Scheme 2)

Principal risks and uncertainties

Competitive Risks

Legislative Risks

Financial Instrument Risks

The Company has established a financial management framework the prima!), objectives of which are to protect the Company from events that hinder the achievement of the Company's performance objectives.

The objectives aim to ensure sufficient working capital exists and monitor the management of risk at the funds level.

Future Developments

The Directors do not expect any change in the principal activity of the Company in the foreseeable future.

Events since the balance sheet date

No significant events have occurred since 31 December 2015.

By the order of the Board

Kevin Early

Director

Independent auditor's report to the member of Ares Management Limited

We have audited the financial statements of Ares Management Limited for the year ended 31 December 2015 which comprise the Profit and loss Account, Statement of comprehensive income, Statement of changes in equity, Balance Sheet, Cash flow statement and the related Notes 1 to 22. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including FRS 102 the Financial Reporting Standard applicable to the UK and Republic of Ireland.

Respective responsibilities of directors and auditor

As explained more fully in the Directors' Responsibilities Statement set out on page 3, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Report and Financial Statements to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

•	give a true and fair view of the state of the Company's affairs as at 31 December 2015 and of its profit for the year then ended;
•	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including FRS 102 the Financial Reporting Standard applicable to the UK and Republic of Ireland; and
•	have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

•	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
•	the financial statements are not in agreement with the accounting records and returns; or
•	certain disclosures of directors' remuneration specified by law are not made; or
•	we have not received all the information and explanations we require for our audit.

Ashley Coups (Senior statutory auditor)

for and on behalf of Ernst & Young LLP, Statutory Auditor

London

25 April 2016

Profit and loss account for the year ended 31 December 2015

		2015	2014
	Notes	£000	£000
Turnover	4	48,642	43,738
Administrative Expenses		(45,299)	(54,513)
Operating Profit/(Loss)	5	3,343	(10,775)
Non-operating income		159	1,543
Profit/(Loss) on ordinary activities before taxation		3,502	(9,232)
Tax on ordinary activities	9	(528)	(701)
Profit/(Loss) for the financial year attributable to members		2,974	(9,933)

All items dealt with in arriving at the loss for the year ended 31 December 2015 related to continuing operations.

Statement of comprehensive income for the year ended 31 December 2015

There are no other gains and losses other than the gain for the year shown above and therefore no other separate statement of comprehensive income has been presented.

The notes on pages 13 to 26 form an integral part of these financial statements.

Statement of changes in Equity for the year ended 31 December 2015

	Share capital	Profit and loss account	Total Shareholders' funds
	£000	£000	£000
At 1 January 2014	68,000	(13,496)	54,504
Loss for the year	-	(9,933)	(9,933)
Share based compensation	-	7,505	7,505
At 31 December 2014	68,000	(15,924)	52,076
Profit for the year	-	2,974	2,974
Share based compensation	-	4,461	4,461
At 31 December 2015	68,000	(8,489)	59,511

The notes an pages 13 to 26 form an integral part of these financial statements.

Balance sheet at 31 December 2015

		2015	2014
	Notes	£000	£000
Fixed assets
Intangible assets	10	5,306	8,530
Tangible assets	11	4,542	5,047
Investments	12	21,301	25,008
Total fixed assets		31,149	38,585
Current assets
Debtors	13	39,945	27,125
Cash and cash equivalents		7,088	3,694
Total current assets		47,033	30,819
Creditors: amounts falling due within one year	14	(14,069)	(14,302)
Net current assets		32,964	16,517
Total assets less current liabilities		64,113	55,102
Creditors: amounts falling due after more than one year	15	(4,602)	(3,026)
Net assets		59,511	52,076
Capital and reserves
Called up share capital	16	68,000	68,000
Profit and loss account		(8,489)	(15,924)
Shareholders' funds		59,511	52,076

The notes on pages 13 to 26 form an integral part of these financial statements.

The financial statements on pages 9 to 26 were approved and authorised on 21 April 2016 for issue on behalf of the directors

Kevin Early

Director

Cash flow statement for the year ended 31 December 2015

		2015	2014
	Note	£000	£000
Cash generated from operating activities	17 (a)	1,805	12,126
Tax paid		(528)	(701)
Net cash inflow from operating activities		1,277	11,425
Investing activities
Interest received		2,225	2,206
Payments to acquire intangible fixed assets		(248)	(5,048)
Payments to acquire investments		-	(12,039)
Receipts from sale of investments		130	1,225
Net cash inflow/(outflow) from investing activities		2,107	(13,656)
Increase/(decrease) in cash and cash equivalents		3,384	(2,231)
Effect of exchange rates on cash and cash equivalents		10	13
Cash and cash equivalents at 1 January		3,694	5,912
Cash and cash equivalents at 31 December	17 (b)	7,088	3,694

The notes on pages 13 to 26 form an integral part of these financial statements.

Notes to the financial statements at 31 December 2015

1 Accounting policies

Organisation and business

Basis of preparation

The company transitioned from previously extant UK GAAP to FRS 102 as at 1 January 2015. An explanation of how the transition to FRS 102 has affected the balance sheet and profit and loss is given in note 22

The preparation of financial statements in conformity with FRS 102 requires the use of certain critical accounting estimates. lt also requires management to exercise its judgement in the process of applying the accounting policies selected for use by the Company. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 2. Use of available information and application of judgement are inherent in the formation of estimates. Actual outcomes in the future could differ from such estimates.

Intangible assets

Intangible assets acquired separately from a business are capitalised at cost. Subsequent to initial recognition, intangible assets are stated at cost less accumulated amortisation. Amortisation is provided on a straight line basis over the expected useful life of the assets as follows:

Management contracts acquired

- over the term of the contract

The carrying value of the intangible asset is reviewed for impairment at least annually.

Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation. Such costs include those costs directly attributable to making the asset capable of operating as intended.

Leasehold Improvements	- over the lease term
Furniture and computer equipment	- over 5 to 7 years.

Investments

Investments in the subordinated (equity) tranches of collateralised loan obligation ("CLOs") are financial instruments initially recorded at the transaction price. Subsequently, they are held at fair value with gains and losses being recorded in the profit and loss account.

Short-term debtors and creditors

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short term deposits with an original maturity date of three months or less.

Cash and cash equivalents are measured at fair value, based on the relevant exchange rates at the reporting date.

Turnover

Rendering of services

Turnover from base investment management fees are based on a defined percentage of collateral value for the collateralised loan obligations and on a stated percentage of net asset values for the other funds. Non-incentive fees are recognised as turnover in the period that the management services are rendered. Investment management fees are recognised as turnover when collection of such fees is certain following a fund's determination date.

Incentive Income

Interest income

Interest income is recognised on an accrual basis on cash balances, on deferred fees from managed funds and on CLO tranches including from the subordinated or "equity tranche".

Special fees

Turnover may also include special fees such as administration fees paid to the Company in connection with the operations of the Company. The nature of these fees is specific to the administrative services provided by the Company. Such fees would be included in tumover in the profit and loss account and are recognised as turnover when earned.

Provisions for liabilities

Operating Lease Commitments

Rentals payable less any incentives are charged in the profit and loss account on a straight line basis over the lease term.

Pension costs

The Company operates a defined contribution scheme. Contributions to the defined contribution scheme are recognised in the profit and loss account in the period in which they become payable.

Foreign currencies

Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are revalued at the rate of exchange ruling at the balance sheet date.

All differences are taken to the profit and loss account.

Share-based payments (equity-settled)

Taxation

Income tax expense represents the sum of the current tax and deferred tax.

Current and deferred tax is recognised in the same component of the profit and loss account, other

comprehensive income or equity as the transaction or event that resulted in the tax expenses or income.

Deferred tax assets are recognised to the extent that they are regarded as recoverable which is to the extent that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.

2. Critical accounting estimates and judgements

Fair value of Investments

Share-based payments (equity-settled)

The fair value of equity-settled transactions is detennined by using an appropriate pricing model. Management uses its judgement to select an appropriate pricing model and estimates the key inputs using a variety of assumptions that are mainly based on market conditions existing at the date on which they are granted.

3. Financial risk management

The Company has exposure to the following risks from its use of financial instruments:

Foreign exchange risk

The CLO Investments held by the Company are issued in Euros. At 31 December 2015, if British pounds had weakened or strengthened against the Euro by a reasonable percentage variance of 10%, the profit for the financial year would have been either increased or decreased by £2,130,114 (2014: loss increased/decreased by £2,500,828).

Market risk

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company aims to mitigate liquidity risk by managing cash generation from operations. The Company also manages liquidity risk via additional equity investments from the parent company

Interest rate risk

The CLO Investments held by the Company are leveraged and as such sensitive to movements in interest rates. Sensitivity analysis has not been prepared due to the largely market neutral nature of the investments involved.

Credit risk

4. Turnover

Turnover principally represents the amounts derived from the provision of investment management services, stated net of Value Added Tax, and arising from continuing activities in Europe.

For the year ended 31 December 2015, base investment management fees earned were £48,955,030 (2014: £42,209,910). Total incentive management fees earned for the period were £ 1,034,992 (2014: £2,532,584).

Turnover also includes a transaction loss of £1,348,363 (2014: £1,000,754).

5. Operating profit/(loss)

Operating profit/(loss) is stated alter charging:

	2015	2014
	£000	£000
Amortisation and impairment of intangible assets (see note 10)	3,224	7,761
Depreciation of owned assets (see note 11)	742	886
Operating lease rentals
- Land and buildings	3,022	2,680
- Equipment	134	82
Auditors' remuneration (see note 6)	190	134

6. Auditors' Remuneration

The remuneration of the auditors is further analysed as follows:

	2015	2014
	£000	£000
Audit of the financial statements	29	25
Other fees to auditors -taxation services	161	109
	190	134

7. Directors' emoluments

None of the directors received any compensation for services rendered as directors of the Company (2014: nil).

8. Staff costs

	2015	2014
	£000	£000
Wages and salaries	29,166	29,656
Social security costs	4,368	4,447
Pension costs	817	756
Total staff costs	34,351	34,859

The average numbers of employees during the year were as follows:

	2015	2014
Fund management	68	69
Marketing	8	7
Administrative	27	33
Average number of total staff	103	109

9. Tax on profit on ordinary activities

(a) Analysis of charge for the year

	2015	2014
	£000	£000
UK Corporation tax on profit for the year	-	-
Overseas taxation	528	701
Total current tax for the year	528	701

(b) Factors affecting the charge for the year

The tax assessed on the loss on ordinary activities for the year is higher than the standard rate of corporation tax in the UK of 20.25% for 2015 (2014: 21.49%). The differences are reconciled below:

	2015	2014
	£000	£000
Profit/(Loss) on ordinary activities before taxation	3,502	(9,466)
Corporation tax at 20.25% (2014: 21.49%)	709	(2,035)
Adjustment for prior periods	(94)	-
Expenses not deductible	33	1,933
Depreciation on ineligible assets	-	145
Depreciation on non-qualifying assets	85	-
Deferred tax not provided	780	(139)
Utilisation of tax losses	(1,513)	96
European Branch related tax	528	701
Total tax charge for the year	528	701

The directors consider it prudent that a deferred tax asset amount of £2,893,083 (2014: £3,242,325) has not been recognised.

10. Intangible assets

	Total
	£000
Cost:
At 1 January 2015	20,835
At 31 December 2 01 5	20,835
Amortisation and impairment losses:
At 1 January 2015	(12,305)
Amortisation charge for the year	(3,224)
At 31 December 2015	(15,529)
Net realisable value at 31 December 2015	5,306
Net realisable value at 31 December 2014	8,530

11. Tangible fixed assets

	Furniture and computer equipment	Leasehold improve- meats	Total
	£000	£000	£000
Cost:
At 1 January 2015	1,855	5,158	7,013
Additions	218	29	247
Disposals	(10)	(14)	(24)
At 31 December 2015	2,063	5,173	7,236
Depreciation:
At I January 2015	644	1,322	1,966
Charge for the year	265	477	742
FX movement on Euro assets	(5)	(9)	(14)
At 31 December 2 01 5	904	1,790	2,694
Net realisable value at 31 December 2015	1,159	3,383	4,542
Net realisable value at 31 December 2014	1,211	3,836	5,047

12. Investments

	Total
	£000
At 1 January 2015	25,008
Accretion (Euro VII)	8
Gain on disposal	38
Disposals	(130)
Unrealised loss	(2,112)
Foreign exchange loss	(1,511)
At 31 December 2015	21,301

	Total
	£000
Euro VI (subordinated)	8,655
Euro VII (subordinated)	1,089
Euro VII (unsubordinated)	11,557
At 31 December 2 01 5	21,301

In line with the Company's accounting policy the subordinated investments in the CLOs are held at fair value. The fair values of the CLOs are estimated based on various valuation models of third-party pricing services as well as intemal models. The valuation models generally utilise discounted cash flows and take into consideration prepayment and loss assumptions, based on historical experience and projected performance, economic factors, the characteristics and condition of the underlying collateral, comparable yields for similar securities and recent trading activity.

All subordinated CLO investments are classified as Level III.

In July 2015, the Company sold its interest in the Dinosol Loan for £129,792 (€184,837). This realised a gain of £37,699 (€53.688) on the investment.

13. Debtors

	2015	2014
	£000	£000
Management fee receivable	7,263	8,187
Amounts due from affiliated parties	31,437	16,418
Prepayments	1,028	944
Other debtors	217	418
VAT receivable	-	1,158
	39,945	27,125

14. Creditors: amounts falling due within one period

	2015	2014
	£000	£000
Other taxes and social security costs	1,723	1,707
Trade creditors	662	355
Taxation	-	I
Accruals	11,362	12,239
VAT payable	322	-
	14,069	14,302

15. Creditors: amounts falling due after more than one year

	2015	2014
	£000	£000
Accruals	4,602	3,026
	4,602	3,026

16. Called up share capital

	2015	2014
	£000	£000
Allotted, called up and fully paid Ordinary shares £1 each	68,000	68,000

17. Notes to the statement of cash fiows

(a) Reconciliation of operating profit/(loss) to net cash outflow from operating activities:

	2015	2014
	£000	£000
Operating Profit/(Loss)	3,343	(10,775)
Foreign exchange loss on investments	1,511	(834)
Depreciation of tangible fixed assets	742	886
Arnortisation of intangible assets	3,224	7,761
Share based payments	4,462	7,505
(Increase)/Decrease in debtors	(12,820)	6,495
Increase in creditors	1,343	1,088
Cash generated from operating activities	1,805	12,126

(b) Cash and cash equivalents

Cash and cash equivalents are fully comprised of current accounts.

18. Related party transactions

During the year ended 31 December 2015, the company recharged expenses to the Ares Management UK Limited of £12,144,291 (2014: £9,544,557). As at 31 December 2015, the company owed £11,874,554 (2014: £12,327,044). The entities are related as they share the same ultimate controlling party.

During the year ended 31 December 2015, Ares Management LLC, allocated investment management fees of £23,448,395 to the company (2014: deducted investment management fees of £1,614,554). As at 31 December 2015, the company was owed £30,733,050 (2014: £7,601,881). The entities are related as they share the same ultimate controlling party.

19. Obligations under leases

At 31 December 2015, the Company had future minimum payments due under operating leases as set out below:

	2015	2014
	£000	£000
Land and Buildings
On leases expiring:
-within one year from the balance sheet date	2,468	409
-within two and five years from the balance sheet date	13,317	8,650
-over five years from the balance sheet date	10,745	16,268
	26,530	25,327

The operating lease payables are in respect of office buildings in London, Paris, Luxembourg, Frankfurt and Stockholm.

20. Share-based payments

Equity-settled

Ares Employee Participation LLC Interests and AREA Membership Interest

In July 2013, certain employees of the Company were granted equity ownership of 1.2% (-AREA Membership Interest") in Ares Holdings LLC, the parent of Ares Management, and in Ares Investments LLC, an affiliate of the Company. This ownership entitles recipients to equal rights to privileges as other equity holders. The fair value of these awards was determined using a recent market transaction at the time of determination. These membership units vest over a period of two years. As a result of the initialpublic offering of Ares Management LP on 1 May 2014, £3,867,451 of the total of £7,505,837 equity-settled share-based compensation in 2014 related to London Real Estate for the acceleration of this award granted in July 2013. There was no change in the fair value of these converted interests as a result of the acceleration in vesting. They were not subject to satisfaction of any conditions or market related perfomiance. In addition, the Company recorded one time acceleration expenses on the following awards vesting only as a result of a capital event:

―	Ares Employee Participation IV £230,660;
―	Ares Employee Participation VIII £988,136.

The key inputs used in the Black Scholes Model are as follows:

	Equity Value	Ares Holdings LLC Equity	Ares Investments LLC Equity	Term	Risk Free Rate	Management Fee Volatility	Incentive Fee Volatility
AEP IV	$1,650	$1,089	$561	2 years	0.27%	34%	41°0
AEP VIII	$3,374	$2,227	$1,147	2 Years	0.34%	29%	39%

Ares Management, LP. 2014 Equity Incentive Plan

In connection with the IPO of Ares Management LP on 1 May 2014, the Board of Directors of the General Partner of Ares Management, L.P. adopted the Equity Incentive Plan. Under the Equity Incentive Plan, the Company has granted options to acquire common un its £3,579,932 (2014: £1,240,294), restricted units to be settled in common units £3,607,635 (2014: £1,372,202) and phantom common units to be settled in cash £19,166 (2014 £109,562), less a deduction of a dividend equivalent of £305,627 (2014: £192,906). Equity based compensation expense is determined based on the fair value of the respective equity award on the grant date and is recognized on a straight line basis over the requisite service period, with a corresponding increase in partners' capital.

Restricted Units

956,974 units were granted on 1 May 2014 at $19.0 with a 5% discount and assumed forfeiture rate of 7% vested over 5 years. An additional 3,947 units were issued on 9 January 2015 at $17.56 with a 5% discount and assumed annual forfeiture rate of 6.8% vested over 5 years. No additional units were forfeited in 2015 (2014: 37,895 actual units were forfeited). Each restricted unit represents an unfunded, unsecured right of the holder to receive a common unit on the vesting date. Fair value of the restricted units and phantom units was determined to be the most recent closing price of common units. Certain restricted units are subject to a lock up provision that expires on the fifth anniversary of the IPO. The Company used Finnerty's average strike price put option model to estimate the discount associated with this lack of marketability. Compensation expense associated with restricted units is being recognized on a straight line basis over the service period of the respective grant. For the year ended 31 December 2015, 1,158 restricted units vested (2014: nil).

Options

3,883,806 units were issued at $4.02 with 6% forfeiture rate vested over 5 years; and 10,568 units issued on 31 May 2014 at $3.83 with 6% forfeiture rate vested over 5 years. An additional 525,000 units were issued on 9 January 2015 at $3.47 with 6% annual forfeiture rate vested over 4 years. No options were forefeited in 2015 (2014: 26,420 units of the 1 May 2014 award)). The fair value of each option granted during the period from 1 May to 31 December 2014 is measured on the date of grant using the Black Scholes option pricing model and the following weighted average assumptions:

Input	1 May 2014 Grant	30 May 2014 Grant	9 January 2015 Grant	Source
Stock Price	$19	$19	$17.72	Traded Price
Exercise Price	$19	$19	$19	Management
Expected Term	7 years	6.92 years	7.49 years	See above
Volatility	35%	34%	36%	See AEP Table above
Risk Free Rate	2.21%	2.06%	1.80%	Interpolated from US Govt Band Rate
Assumed Dividend Yield	5%	5%	5%	Management
Estimated Per-Share Value	$4.02	$3.83	$3.53

21. Ultimate parent undertaking

22. Transition to FRS 102

These financial statements for the year ended 31 December 2015 are the company's first financial statements that comply with FRS 102. The company's date of transition to FRS 102 is January 2014. The company's last financial statements prepared in accordance with previous UK GAAP were for the year ended 31 December 2014.

The transition to FRS 102 has resulted in a change in the entity's accounting policy relating to the London office lease incentive. In accordance with previous UK GAAP, the lease incentive was recognised over the period to the next rent review. In accordance with FRS 102 the lease incentive is recognised over the lease term. Consequently, in its opening balance sheet at 1 January 2014 the entity increased its deferred rent accrual for the London office by £467,493. The charge was recognised within administrative expenses in profit or loss.

In the reconciliation below equity and profit and loss determined in accordance with FRS 102 is reconciled to equity determined in accordance with previous UK GAAP at both 1 January 2014 (the date of transition to FRS 102) and 31 December 2015.

(a) Reconciliation of equity:

	At I January 2014	At 31 December 2014
	£000	£000
Capital and reserves (as previously stated)	54,504	52,543
Lease incentive adjustment	-	(467)
Capital and reserves (as restated)	54,504	52,076

(a) Reconciliation of profit and loss:

	Year ended 31 December 2014
	£000
(Loss) for the year (as previously stated)	(9,466)
Lease incentive adjustment	(467)
Profit for the year (as restated)	(9,933)

Appendix I
(Unaudited)
Ares Management Limited
Pillar 3 Disclosure

Introduction

The CRDIV establishes a regulatory capital framework across Europe governing the amount and nature of capital credit institutions and Investments firms must maintain. The CRDIV represents the European Union's current application of the Basel Capital Accord. As of 1 April 2013 the FSA was disbanded and replaced by two regulatory bodies: the Financial Conduct Authority ("FCA") and the Prudential Regulatory Authority ("PRA"). AML has been since 1 April 2013 regulated by the FCA which has adopted the FSA handbook.

The CRDIV framework comprised three 'Pillars':

•	Pillar 1 sets out the minimum capital amount that meets the firm's credit, market and operational risk;
•	Pillar 2 requires the firm at least annually to assess and document whether its Pillar 1 capital is adequate to meet its risks, which can be subject to review by the FCA;
•	Pillar 3 requires disclosure of specified information about the underlying risk management controls and capital position.

The rules in BIPRU 11 set out the provision for Pillar 3 disclosure. This document is designed to meet the Pillar 3 obligations of the Firm as they applied in 2015.

We have made no omissions on the grounds that it is immaterial, proprietary or confidential other than where noted in this document.

Scope and Application of the Requirements

Governance Framework and Risk Management

The Board has identified foreign exchange (market), credit, business and operational risks as the main areas of risk to which the Firm is exposed. The adequacy of the Firm's regulatory capital in relation to these and other less significant risks is assessed through its Internal Capital Adequacy Assessment Process ("ICAAP"). The Board reviews and approves the ICAAP on an annual basis and uses it as an important part of the Firm's business planning and capital management.

Regulatory Capital

Capital summary as at 31 December 2015:	£000
Ordinary share capital	68,000
Retained loss net of other reserves	(8,489)
Total tier 1 capital before deductions	59,511
Deduct securitisation position	(9,744)
Deduct intangible assets	(5,306)
Total capital resources	44,461

The Firm is small with a simple operational infrastructure. Its market risk is limited to foreign exchange risk an its cash, accounts receivable in foreign currency and a 5% retention in Ares Euro 6 and Euro 7 (securitisation position), and credit risk from management and performance fees receivable from the funds under its management. The Firm deducts 100% of its 5% retention in Ares Euro VI and Classes E and F notes in Ares Euro VII as permitted by the FCA Rules rather than include it in the Credit Risk Requirement Calculation. The Firm follows the standardised approach to market risk. lt has adopted the Simplified standard and not the Internats Ratings Based approach to credit risk. The Firm is subject to the Fixed Overhead Requirement and is not required to calculate an operational risk capital charge though it considers this as part of its process to identify the level of risk based capital required.

As noted previously the Firm is classified as a limited licence firm and as such its Pillar 1 capital requirement is the greater of:

•	Its base capital requirement of €125,000; or
•	The sum of its market and credit risk requirements; or
•	Its Fixed Overhead Requirement.

lt is the Firm's experience that the Fixed Overhead Requirement has historically established its capital requirement and only occasionally has this been determined by the sum of the market and credit risk requirements when higher. As at 31 December 2015 the Fixed Overhead Requirement was £6,941k.

The Firm's ICAAP assesses the amount of capital required to mitigate the risks to which it is exposed over a three year time horizon. The 2015 ICAAP considers the impact of future business plans as well as potential adverse scenarios (such as market downturns or significant operational errors) on the capital resources of the Firm, to ensure regulatory capital requirements are met at all times.

Based on the risk assessment and stress testing and wind down costs described above the Firm's management concluded that additional Pillar 2 capital of £8,854k was required for 2015. The ICAAP also showed that the Firm was compliant with the FCA's 'overall financial adequacy rule' and the `overall pillar 2 rule' contained in GENPRU and BIPRU.

Remuneration Code

The Firm has assessed its remuneration structure in line with the FCA Remuneration Code (the "Code") and has adopted policies and procedures designed to ensure that risk is monitored and mitigated in line with the Code. Under FCA guidance, the Firm has determined that it is a "Proportionality Level 3" firm and has taken a proportionate approach as permitted by the rules. The Firm believes that given its business, it is already structured in compliance with the Principles of the Code. The Board, in accordance with Ares Management LLC's firm wide compensation guidelines determines the Firm's remuneration policy on at least an annual basis. AML's annual review of bonuses and performance related remuneration assesses the overall profits of the Firm and the business division along with the individual's financial and non-financial performance.

Remuneration Code Staff Remuneration by Business Area (BIPRU 11.5.18(6))

Business Area	Total Remuneration y/e 31/12/15
Investment Management Services	£21,539,598

Aggregate Quantitative Remuneration by Senior Management and other Remuneration Code Staff (BIPRU 11.5.18(7))

Type of Remuneration Code Staff	Total Remuneration
Senior Management (SIF)	£5,387,017
Other Remuneration Code Staff	£16,152,581
Totals	£21,539,598

33:T19f25,

Ares Management Limited Niederlassung Deutschland

Frankfurt am Main

Jahresabschluss zum Geschäftsjahr vom 01.01.2014 bis zum 31.12.2014

ARES MANAGEMENT LIMITED, London / UK

Report and Financial Statements
For the year ended 31 December 2014

Registered no. 5837428

Directors

Michael Daniel Weiner

Daniel Fenno Nguyen (resigned 29 April 2014)

Kevin Early

William Stephen Benjamin (appointed 22 May 2014)

Blair Jacobson (appointed 22 May 2014)

Ujjaval Yogesh Desai (appointed 23 May 2014)

Gregory Alan Margolies (appointed 28 May 2014)

Robert Kipp DeVeer III (appointed 17 June 2014)

Secretary

TMF Corporate Secretarial Services Limited

6 St Andrew Street

5th Floor

London

EC4A 3AE

Auditor

Ernst & Young LLP

1 More London Place

London SE1 2AF

Bankers

Barclays PLC

1 Churchill Place, Level 11

London, E14 5HP

City National Bank

15260 Ventura Boulevard

Sherman Oaks, CA 91403, USA

Solicitors

Latham & Watkins LLC

355 South Grand Avenue

Los Angeles, CA 90071

Registered Office

6 St Andrew Street

5th Floor

London

EC4A 3AE

Directors' report

The directors present their report and financial statements of Ares Management Limited (the "Company") for the year ended 31 December 2014.

Principal activity

The principal activity of the Company during the year ended 31 December 2014 was to provide advisory and investment management services. The Company was incorporated an 5 June 2006 and is a wholly owned subsidiary of Ares Management LLC ("Ares Management"). The Company is authorised by the Financial Conduct Authority to perform investment management activity that is subject to licensing requirements in the United Kingdom.

On 22 July 2014 the investment management of the following Alternative Investment Funds ("AIFS") were transferred to Ares Management UK Limited ("AMUKL") an affiliate of the Company:

Ares Capital Europe, L.P.

Ares Capital Europe II (E), L.P.

Ares Capital Europe II (D), L.P.

ACE II Master Fund, L.P.

ACE ESSLP Holdco Cayman, L.P.

Ares Institutional Offshore Loan Fund BV

Ares Institutional Loan Fund BV

ELOF Master Fund, L.P.

Ares European Loan Opportunities Fund, L.P.

Ares European Loan Opportunities Fund (E), L.P.

Directors

Directors who served during the year and up to the date of this report were:

Michael Daniel Weiner

Daniel Fenno Nguyen (resigned 29 April 2014)

Kevin Early

William Stephen Benjamin (appointed 22 May 2014)

Blair Jacobson (appointed 22 May 2014)

Ujjaval Yogesh Desai (appointed 23 May 2014)

Gregory Alan Margolies (appointed 28 May 2014)

Robert Kipp DeVeer III (appointed 17 June 2014)

Going concern

The Company's activities, together with the factors likely to affect its future development, its financial position and the financial risks are described in the strategic report.

As the Company has sufficient financial resources and fee generating Investment Management Agreements, the directors believe that the Company is well placed to manage its business risks successfully.

Pillar 3 disclosures

Pillar 3 disclosures are appended to the financial statements.

Disclosure of information to the auditor

Reappointment of Auditors

The auditors, Ernst & Young, LLP, have indicated their willingness to continue in office. A resolution concerning their reappointment will be put to the members at the annual general meeting.

By the order of the Board

Kevin Early, Director

Strategic report

The directors present their strategic report together with the financial statements of the Company for the year ended 31 December 2014.

Results and dividends

The loss for the year ended 31 December 2014 is £9,466,369 (2013: £4,523,614 profit). The directors do not recommend that a dividend be paid for the year (2013: nil).

Review of the business

The key financial and other performance indicators during the year were as follows:

	2014	2013
	£000	£000
Turnover	43,738	45,426
(Loss)/Profit alter tax	(9,466)	4,524
Shareholders' funds	52,543	54,504
Current assets as % of current liabilities	188%	248%
Average number of employees	109	76

Following the transfer to AMUKL of the AIFS listed in the Directors' Report an 22 July 2014, the Company as at 31 December 2014, acts as investment manager of the following funds. New funds are indicated by an asterisk.

	Ares Euro CLO I B.V.
	Ares European CLO II B.V.
	Ares European CLO III B.V.
	Ares European CLO VI B.V.
	Ares European CLO VII B.V.*
	Queen Street CLO I B.V.
	Queen Street CLO II B.V.
	Ares Capital Europe (Luxembourg) S.a.r.l
	Ares Capital Europe Limited
	Ares Enhanced Loan Investment Strategy VIII
	Ares Enhanced Loan Investment Strategy XII*
	Ares Institutional Credit Fund II, INKA GL1
	Bond Opportunities Fund Sub 2
	BayVK R2 Fonds Ares II
	European Senior Secured Loan Programme S.a.r.l
	Ares ELOF GP LP
	Ares CSF III Luxembourg S.a.r.l
	Ares Capital Europe II Holdings S.a.r.l*
	Ares Capital Europe II Investments S.a.r.l*
	Ares UK Credit Strategies, L.P. (Her Majesty's Treasury)
	Ares CSF Holdings S.a.r.l
	Ares MCSF V (H) S.a.r.l
	Ares European Credit Strategies Fund (C), L.P.
	Ares European Credit Strategies Fund (G), L.P.
	Ares European Credit Strategies Fund II North (Hermes BTPS)*
	Ares European Credit Strategies Fund II South ( Hermes BTPS)*
	Ares European Credit Strategies Fund II (B) LP*
	Institutional Credit Fund II (Aviva Staff Pension Plan)
	Institutional Credit Fund VI (Lloyds Bank Pension Scheme 1)*
	Institutional Credit Fund VII (Lloyds Bank Pension Scheme 2)*

Principal risks and uncertainties

Competitive Risks

Legislative Risks

Financial Instrument Risks

The objectives aim to ensure sufficient working capital exists and monitor the management of risk at the funds level.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company aims to mitigate liquidity risk by managing cash generation from operations. The Company also manages liquidity risk via additional equity investments from the parent company.

Future Developments

The Directors do not expect any change in the principal activity of the Company in the foreseeable future.

Events since the balance sheet date

No significant events have occurred since December 31, 2014.

By the order of the Board

Kevin Early

Director

Statement of directors' responsibilities

The directors are responsible for preparing the Directors' Report, the Strategic Report and the financial statements in accordance with applicable law and regulations.

	select suitable accounting policies and then apply them consistently;
	make judgements and estimates that are reasonable and prudent;
	specify which generally accepted accounting principles have been adopted in their preparation;
	prepare the financial statements an the going concern basis unless it is inappropriate to presume that the Company will continue in business.

Independent auditor's report to the member of Ares Management Limited

We have audited the financial statements of Ares Management Limited (the "Company") for the year ended 31 December 2014 which comprise the Profit and Loss Account, the Statement of Total Recognised Gains and Losses, the Balance Sheet, the Cashflow Statement, the Reconciliation of Movement in Shareholders' Funds and the related notes 1 to 20. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

This report is made solely to the company' s member, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's member those matters we are required to state to them in an auditor's report and for no other purpose. To the fallest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's member as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Report and Financial Statements to identify material inconsistencies with the audited financial statements and to identify any information that is materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

	give a true and fair view of the state of the company's affairs as at 31 December 2014 and of its loss for the year then ended;
	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
	have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors' Report, the Strategic Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

	adequate accounting records have not been kept, or returns adequate for our audit have not been
	received from branches not visited by us; or
	the financial statements are not in agreement with the accounting records and returns; or
	certain disclosures of directors' remuneration specified by law are not made; or
	we have not received all the information and explanations we require for our audit.

Ashley Coups (Senior statutory auditor)

for and on behalf of Ernst & Young LLP, Statutory Auditor

London 24, April 2015

Profit and loss account
for the year ended 31 December 2014

		2014	2013
	Notes	£000	£000
Turnover	2	43,738	45,426
Administrative Expenses		(54,046)	(40,914)
Operating Profit/(Loss)	3	(10,308)	4,512
Non-operating income		1,543	46
Profit/(Loss) on ordinary activities before taxation		(8,765)	4,558
Tax on profit/(loss) on ordinary activities	7	(701)	(34)
Profit /(Loss) for the financial year attributable to members		(9,466)	4,524

All items dealt with in arriving at the loss for the year ended 31 December 2014 related to continuing operations.

Statement of total recognised gains and losses for the year ended 31 December 2014

There are no other gains and losses other than the loss for the year shown above and therefore no other separate statement of total recognized gains and losses has been presented.

The notes on pages 12 to 25 form part of these financial statements.

Balance sheet
at 31 December 2014

		2014	2013
	Notes	£000	£000
Fixed assets
Intangible assets	8	8,530	16,291
Tangible assets	9	5,047	1,952
Investments	10	25,008	12,970
Total fixed assets		38,585	31,213
Current assets
Debtors	11	27,125	33,620
Cash at bank and in hand		3,694	5,912
Total current assets		30,819	39,532
Creditors: amounts falling due within one year	12	(14,303)	(15,958)
Net current assets		16,516	22,574
Total assets less current liabilities		55,101	54,787
Creditors: amounts falling due alter more than one year	13	(2,558)	(283)
Net assets		52,543	54,504
Capital and reserves
Called up share capital	14	68,000	68,000
Profit and loss account	15	(15,457)	(13,496)
Shareholders' funds		52,543	54,504

The financial statements on pages 9 to 25 were approved and authorised on 23 April 2015 for issue on behalf of the directors

Kevin Early

Director

Cash flow statement
for the year ended 31 December 2014

		2014	2013
	Note	£000	£000
Net cash inflow/(outflow) from operating activities	16(a)	12,272	(8,921)
Returns on investments and servicing of finance
Interest received		2,206	399
Unrealised loss on investment		(834)	-
Gain on sale of investments		1,225	-
Net cash inflow from returns and servicing of finance	16(b)	2,597	399
Capital expenditure and financial investment
Additions to tangible fixed assets		(5,048)	(1,913)
Investment purchases		(12,039)	(12,870)
Net cash utilised for capital expenditure	16(b)	(17,087)	(14,783)
Financing
Issue of ordinary share capital		-	23,000
Decrease in cash	16(b)	(2,218)	(305)

Reconciliation of net cash flow movement in net funds

		2014	2013
		£000	£000
Decrease in cash	16(b)	(2,218)	(305)
Change in net funds resulting from cash flows		(2,218)	(305)
Movement in net funds
Net funds at 1 January 2014		5,912	6,217
Net funds at 31 December 2014		3,694	5,912

The notes on pages 12 to 25 form part of these financial statements.

Notes to the financial statements
at 31 December 2014

1. Accounting Policies

Organisation and business

The Company commenced operations on 5 June 2006 and is a wholly owned subsidiary of Ares Management LLC ("Ares Management"), a United States based company. Ares Management is the parent company of various operating subsidiaries which include the Company. The operating subsidiaries are generally either investment managers and /or general partners of various investment funds (the "Ares Funds"). These subsidiaries provide investment management services to the Ares Funds in exchange for investment management fees.

Basis of preparation

The financial statements are prepared on a going concem basis, under the historical cost convention and are prepared in accordance with applicable UK Generally Accepted Accounting Practices and the Companies Act 2006. The accounting practices have been applied consistently by the Company. The financial statements have been prepared in the British pound sterling (£) which is also the functional currency.

Intangible assets

Intangible assets are stated at cost less accumulated amortisation. Amortisation is provided on a straight line basis over the expected useful life of the assets as follows:

Management contracts acquired - over the term of the contract or ten years

The carrying value of the intangible asset is reviewed for impairment at least annually.

Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation. Such costs include those costs directly attributable to making the asset capable of operating as intended.

Leasehold Improvements - over the period to the next rent review on 7 April 2019.

Furniture and computer equipment - over 5 to 7 years.

Investments

Investments in loans are stated at cost less any provision for impairment. Investments in the subordinated (equity) tranches of CLOs are held at fair value. Investments in the un-subordinated tranches of CLOs are held at cost plus the prorated accretion of any purchase discount as at balance sheet date.

Turnover

Rendering of services

Turnover from base investment management fees are based on a defined percentage of collateral value for the collateralized loan obligations and on a stated percentage of net asset values for the other funds. Non-incentive fees are recognized as turnover in the period that the management services are rendered. Investment management fees are recognised as turnover when collection of such fees is certain following a fund's determination date.

Incentive Income

Incentive fees are based on certain specific hurdle rates as defined in the applicable investment management agreements or governing documents. Substantially all incentive fees are earned from affiliated funds of the Company. Incentive fees are recognized when collection is fixed and ascertainable following a fund's determination date and usually coincides with the period in which the Company collects cash or the period immediately preceding cash collection.

Interest income

Interest income is recognised on an accrual basis on cash balances, on deferred fees from managed funds and on CLO tranches including from the sub-ordinated or "equity tranche".

Special fees

Turnover may also include special fees such as administration fees paid to the Company in connection with the operations of the Company. The nature of these fees is specific to the administrative services provided by the Company. Such fees would be included in turnover in the group profit and loss account and are recognised as turnover when earned.

Provisions for liabilities

Operating Lease Commitments

Rentals payable under the operating leases are charged in the profit and loss account on a straight line basis over the lease term although lease incentives are recognised over the period to the next rent review.

Pension costs

The Company operates a defined contribution scheme. Contributions to the defined contribution scheme are recognised in the profit and loss account in the period in which they become payable.

Foreign currencies

Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are revalued at the rate of exchange ruling at the balance sheet date.

All differences are taken to the profit and loss account.

Share-based payments (equity-settled)

In accordance with FRS 20 "Share-based payments" the cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which they are granted and is recognised as an expense on a straight-line basis over the vesting period, which ends on the date on which the relevant employees become fully entitled to the award. Fair value is determined using an appropriate pricing model. In valuing equity-settled transactions, no account is taken of any vesting conditions, other than performance conditions linked to the price of the shares of the Company (market conditions).

At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management's best estimate of the achievement or otherwise of non-market vesting conditions and of the number of equity instruments that will ultimately vest or, in the case of an instrument subject to a market condition or a non-vesting condition, be treated as vesting as described above. The movement in cumulative expense since die previous balance sheet date is recognised in the profit and loss account, with a corresponding entry in equity.

Where an equity-settled award is cancelled, it is treated as if it had vested an the date of cancellation, and any cost not yet recognised in the profit and loss account for the award is expensed immediately. Any compensation paid up to the fair value of the award at the cancellation or settlement date is deducted from equity, with any excess over fair value being treated as an expense in the profit and loss account (see Note 19).

Deferred Tax

2. Turnover

Turnover principally represents the amounts derived from the provision of investment management services, stated net of Value Added Tax, and arising from continuing activities in Europe.

For the year ended 31 December 2014, base investment management fees earned were £42,209,910 (2013: £38,465,476). Total incentive management fees earned for the period were £2,532,584 (2013: £6,355,969). Turnover also includes a transaction loss of £1,000,754. The comparative figure for 2013 was a transaction gain of £317,428.

3. Operating profit/(loss)

Operating profit/(loss) is stated after charging:

	2014	2013
	£000	£000
Amortization and impairment of intangible assets (see note 8)	7,761	5,894
Depreciation of owned assets (see note 9)	886	755
Operating lease rentals
- Land and buildings	2,213	887
- Equipment	82	25
Auditors' remuneration (see note 4)	134	84

4. Auditors' Remuneration

The remuneration of the auditors is further analysed as follows:

	2014	2013
	£000	£000
Audit of the financial statements	25	29
Other fees to auditors - taxation services	109	55
	134	84

5. Directors' emoluments

None of the directors received any compensation for services rendered as directors of the Company (2013: nil).

6. Staff costs

	2014	2013
	£000	£000
Wages and salaries	29,656	19,189
Social security costs	4,447	2,229
Pension costs	756	501
Total staff costs	34,859	21,919

The average numbers of employees for the years ended 31 December 2014 and 31 December 2013, respectively, were as follows:

	2014	2013.
Fund management	69	50
Marketing	7	4
Administrative	33	22
Average number of total staff	109	76

7. Tax on profit on ordinary activities

(a) Analysis of charge for the year

	2014	2013
	£000	£000
UK Corporation tax on profit for the year	-	-
Overseas taxation	701	34
Total current tax for the year	701	34

(b) Factors affecting the charge for the year

The tax assessed on the loss on ordinary activities for the year is higher than the standard rate of corporation tax in the UK of 21.0% for 2014 (2013: 21.5%). The differences are reconciled below:

	2014	2013
	£000	£000
Profit/(Loss) on ordinary activities before taxation	(9,466)	4,558
Corporation tax at 21.5% (2013: 23.5%)	(2,035)	1,071
Depreciation in excess of capital allowances	(139)	178
Disallowed expenses	1,933	315
Depreciation on ineligible assets	145	-
Gains/(Losses) incurred in the year	96	(1,564)
Overseas taxation	701	34
Current tax charge for the year	701	34

The directors consider it prudent that a deferred tax asset amount of £3,148,826 (2013: £2,684,789) has not been recognised in respect of losses not utilised, equity based payment/pension provisions and depreciation in excess of capital allowances.

8. Intangible assets

	Total
	£000
Cost:
At 1 January 2014	20,835
Impairment	(3,590)
At 31 December 2014	17,245
Amortization:
At 1 January 2014	(4,544)
Charge for the year	(4,171)
At 31 December 2014	(8,715)
Net book value at 31 December 2014	8,530
Net book value at 31 December 2013	16,291

On 7 September 2012 the Company acquired several managed account and CLO contracts from Indicus Advisors LLP, then an affiliate but subsequently liquidated. The purchase price and acquisition costs were recorded as intangible assets and are being amortized over the life of the contracts. On 28 February 2014 two of the single managed account contracts were terminated by the client reducing their remaining useful life to zero. Accordingly £3,590,351 was recorded as an impairment charge in 2014.

9. Tangible fixed assets

	Furniture and computer equipment	Leasehold improvements	Total
	£000	£000	£000
Cost:
At 1 January 2014	1,084	3,341	4,425
Additions	1,160	3,888	5,048
Disposals	(389)	(2,071)	(2,460)
At 31 December 2014	1,855	5,158	7,013
Depreciation:
At 1 January 2014	544	1,929	2,473
Disposals	(128)	(1,254)	(1,382)
Charge for the year	233	653	886
FX movement an Euro assets	(5)	(6)	(11)
At 31 December 2014	644	1,322	1,966
Net book value at 31 December 2014	1,211	3,836	5,047
Net book value at 31 December 2013	540	1,412	1,952

10. Investments

	Total
	£000
At 1 January 2014	13,071
FX Revaluation	(737)
Additions (Euro VII)	13,609
Accretion (Euro VII)	2
At 31 December 2014	25,945
Valuations:
At 1 January 2014	101
Impairment	836
At 31 December 2014	937
Net book value at 31 December 2014	25,008
Net book value at 31 December 2013	12,970

In September 2014, the Company purchased at a cost of £13,608,877 (€17,391,536) 5% of each tranche of the notes issued by Ares European CLO VII B.V. ("Euro VII") with a par value of £13,799,388 (€17,635,000). The initial cost has been augmented by £2,780 (€3,553) of accretion income.

For the year ended 31 December 2014, £37,763 (€41,870) of payment in kind ("PIK") interest is included in the balance sheet value of the investment. In addition, as of balance sheet date, a 50% impairment of the Dinosol Loan of £102,624 (€131,149) was recognized.

Subsidiaries

On the 17 June 2014, the Company transferred at a consideration of £2 to AMLLC its holding of 100% of the shares in Ares Management UK (GP) Limited.

11. Debtors

	2014	2013
	£000	£000
Management fee receivable	8,187	7,310
Amounts due from affiliated parties	16,418	25,249
Prepayments	944	703
Other debtors	418	13
VAT receivable	1,158	345
	27,125	33,620

12. Creditors: amounts falling due within one period

	2014	2013
	£000	£000
Amounts due to affiliated parties	-	3,748
Other taxes and social security costs	1,707	1,621
Trade creditors	355	504
Taxation	2	34
Accruals	12,239	10,051
	14,303	15,958

13. Creditors: amounts falling due alter more than one year

	2014	2013
	£000	£000
Accruals	2,558	283
	2,558	283

14. Issued share capital

	2014	2013
	£000	£000
Allotted, called up and fully paid
Ordinary shares £1 each	68,000	68,000

15. Reconciliation of movement in equity shareholders' funds

	Share capital	Profit and loss account	Total Shareholders' funds
	£'000	£'000	£'000
At 1 January 2014	68,000	(13,496)	54,504
Loss for the year	-	(9,466)	(9,466)
Share based compensation	-	7,505	7,505
At 31 December 2014	68,000	(15,457)	52,543
	Share capital	Profit and loss account	Total Shareholders' funds
	£'000	£'000	£'000
At 1 January 2013	45,000	(19,150)	25,850
Issue of share capital	23,000	-	23,000
Profit for the year	-	4,254	4,524
Share based compensation	-	1,130	1,130
At 31 December 2013	68,000	(13,496)	54,504

16. Notes to the statement of cash flows

(a) Reconciliation of operating profit/(loss) to net cash outflow from operating activities:

	2014	2013
	£000	£000
Operating (Loss)/Profit	(10,308)	4,512
Tax on ordinary activities	(701)	-
Depreciation of tangible fixed assets	886	755
Amortization of intangible assets	7,761	5,983
Share based payments	7,505	1,130
Decrease/(increase) in debtors	6,495	(23,218)
Increase in creditors	620	1,917
Exchange rate effect on cash and equivalents	14	-
Net cash inflow/(outflow) from operating activities	12,272	(8,921)

(b) Analysis of changes in net funds:

	At 1 January 2014	Cash flows	At 31 December 2014
	£'000	£'000	£'000
Cash at bank	5,912	(2,218)	3,694

17. Related party transactions

For the year ended 31 December 2014, the Company entered into certain related party transactions with AMUKL and other affiliates of the Company. As of 31 December 2014, the Company was owed by affiliated parties £16,417,802 (2013: £21,501,000). The summary of these transactions is as follows:

Affiliated Party	Relationship	Transaction Type	Amount £000
AMUKL	Affiliate	Cost Recharge	9,544
AMUKL	Affiliate	Sale of AIFS	1,225
Ares Management	Parent	Transfer Pricing, and other	7,602
ACE II	Affiliated Fund	Arrangement fees/rebates	(3,314)
ACE	Affiliated Fund	Rechargeable expenses	(379)
CMG Co Invest II	Affiliated Fund	Fee rebates	(10)
Other Funds	Affiliated	Rechargeable expenses	1,750

Related party transactions within the Company's control group, which is defined as any company that is 100% directly or indirectly owned by the Company' s ultimate parent, Ares Management LP have not been disclosed.

The Company receives an arrangement fee each time it originates a new deal, which will be used to reduce future management fees. As of 31 December 2014, £3,314,560 is included as an outstanding payable. (2013: £2,556,752).

18. Financial commitments

At 31 December 2014, the Company had annual commitments under operating leases as set out below:

	2014	2013
	£'000	£'000
Land and Buildings
On leases expiring:
-within one year from the balance sheet date	-	-
-within two and five years from the balance sheet date	-	1,124
-over five years from the balance sheet date	24,513	-
	24,513	1,124

The Company entered into a new ten year lease starting from 7 April 2014. No rent is payable within one year as payments commence 30 April 2016.

Purchase Obligations

On agreements expiring:
-within one year from the balance sheet date	-	308
-within two and five years from the balance sheet date	-	1
-over five years from the balance sheet date	-	-

19. Share-based payments

Equity-settled

Ares Employee Participation LLC Interests and AREA Membership Interest

Prior to the Initial Public Offering ("IPO") on 1 May 2014 of Ares Management LP, various profit interests and membership interests were issued historically to pools of certain professionals that provided for the participation in the profits and/or proceeds of certain capital events, including also professionals of the Company. Unless otherwise stated, the graut date fair value of each award or respective membership interest was determined by an independent third party valuation firm. These awards are referred to as Ares Employee Participation ("AEP") plans and are described below.

In July 2013, certain employees of the Company were granted equity ownership of 1.2% ("AREA Membership Interest") in Ares Holdings LLC, the parent of Ares Management, and in Ares Investments LLC, an affiliate of the Company. This ownership entitles recipients to equal rights to privileges as other equity holders. The fair value of these awards was determined using a recent market transaction at the time of determination. These membership units vest over a period of two years. As a result of the initial public offering of Ares Management LP on 1 May 2014, £3,867,451 of the total of £7,505,837 equity-settled share-based compensation in 2014 related to London Real Estate for the acceleration of this award granted in July 2013. There was no change in the fair value of these converted interests as a result of the acceleration in vesting. They were not subject to satisfaction of any conditions or market related performance. In addition, the Company recorded one time acceleration expenses on the following awards vesting only as a result of a capital event:

―	Ares Employee Participation IV £230,660;
―	Ares Employee Participation VIII £988,136.

The key inputs used in the Black Scholes Model are as follows:

	Equity Value	Ares Holdings LLC Equity	Ares Investments LLC Equity	Term	Risk Free Rate	Management Fee Volatility	Incentive Fee Volatility
AEP IV	$1,650	$1,089	$561	2 years	0.27%	34%	44%
AEP VIII	$3,374	$2,227	$1,147	2 Years	0.34%	29%	39%

Ares Management, L.P. 2014 Equity Incentive Plan

In connection with the IPO of Ares Management LP on 1 May 2014, the Board of Directors of the General Partner of Ares Management, L.P. adopted the Equity Incentive Plan. Under the Equity Incentive Plan, the Company granted options to acquire common units (£1,240,294), restricted units to be settled in common units (£1,372,202) and phantom common units to be settled in cash (£109,562), less a deduction of a dividend equivalent of £192,906. Equity based compensation expense is determined based on the fair value of the respective equity award on the grant date and is recognized on a straight line basis over the requisite service period, with a corresponding increase in partners' capital.

Restricted Units

956,974 units were granted on 1 May 2014 at $19.0 with a 5% discount and assumed forfeiture rate of 7% vested over 5 years. 37,895 actual units were forfeited as of 31 December 2014. Each restricted unit represents an unfunded, unsecured right of the holder to receive a common unit on the vesting date. Fair value of the restricted units and phantom units was determined to be the most recent closing price of common units. Certain restricted units are subject to a lock up provision that expires on the fifth anniversary of the IPO. The Company used Finnerty's average strike price put option model to estimate the discount associated with this lack of marketability. Compensation expense associated with restricted units is being recognized on a straight line basis over the service period of the respective grant. No restricted units were vested during the period from 1 May 2014 through 31 December 2014.

Options

3,883,806 units were issued at $4.02 with 7% forfeiture rate vested over 5 years; and 10,568 units issued on 31 May 2014 at $3.83 with 7% forfeiture rate vested over 5 years. 26,420 units of the 1 May 2014 award were forfeited as of 31 December 2014. The fair value of each option granted during the period from 1 May to 31 December 2014 is measured on the date of grant using the Black Scholes option pricing model and the following weighted average assumptions:

Input	1 May 2014 Grant	30 May 2014 Grant	Source
Stock Price	$19	$19	Traded Price
Exercise Price	$19	$19	Management
Expected Term	7 years	6.92 years	See above
Volatility	35%	34%	See AEP Table above
Risk Free Rate	2.21%	2.06%	Interpolated from US Govt Band Rate
Assumed Dividend Yield	5%	5%	Management
Estimated Per-Share Value	$4.02	$3.83

20. Ultimate parent undertaking

Appendix I
(Unaudited)
Ares Management Limited
Pillar 3 Disclosure

Introduction

Since 1 January 2014, Ares Management Limited ("the Firm" or "AML") has been subject to the EU Capital Requirements Directive IV ("CRDIV") and the related Capital Requirements Regulations ("CRR"). Accordingly it has been treated by the Financial Conduct Authority ("FCA") as a €125k Iimited licence investment firm subject to the Prudential sourcebook for Investment Firms ("IFPRU").

The CRDIV framework comprised three `Pillars':

	Pillar 1 sets out the minimum capital amount that meets the firm's credit, market and operational risk;
	Pillar 2 requires the firm at least annually to assess and document whether its Pillar 1 capital is adequate to meet its risks, which can be subject to review by the FCA; Pillar 3 requires disclosure of specified information about the underlying risk management controls and capital position.

The rules in BIPRU 11 set out the provision for Pillar 3 disclosure. This document is designed to meet the Pillar 3 obligations of the Firm as they applied in 2014.

We are permitted to omit required disclosures if we believe that the information is immaterial such that omission would be unlikely to change or infiuence the decision of a reader relying on that information.

We have made no omissions on the grounds that it is immaterial, proprietary or confidential other than where noted in this document.

Scope and Application of the Requirements

Ares Management Limited is incorporated in England and Wales. lt is subject to minimum regulatory capital requirements set by the FCA. The Firm is categorised as a €125k Iimited licence investment firm subject to the Prudential sourcebook for Investment Firms ("IFPRU"). The Firm has no trading book exposures. The Firm is not a member of an EEA group and so is not required to prepare consolidated reporting for prudential purposes.

Governance Framework and Risk Management

The Board has identified foreign exchange (market), credit, business and operational risks as the main areas of risk to which the Firm is exposed. The adequacy of the Firm's regulatory capital in relation to these and other less significant risks is assessed through its lnternal Capital Adequacy Assessment Process ("ICAAP"). The Board reviews and approves the ICAAP on an annual basis and uses it as an important part of the Firm's business planning and capital management.

Regulatory Capital

Capital summary as at 31 December 2014: f000 Ordinary share capital 68,000 Retained loss net of other reserves (15,457) Total tier 1 capital before deductions 52,543 Deduct securitisation position.

Capital summary as at 31 December 2014:	£'000
Ordinary share capital	68,000
Retained loss net of other reserves	(15,457)
Total tier 1 capital before deductions	52,543
Deduct securitisation position	(13,051)
Deduct intangible assets	(8,530)
Total capital resources	30,962

The Firm is small with a simple operational infrastructure. Its market risk is limited to foreign exchange risk an its cash, accounts receivable in foreign currency and a 5% retention in Ares Euro 6 and Euro 7 (securitisation position), and credit risk from management and performance fees receivable from the funds under its management. The Firm deducts 100% of its 5% retention in Ares Euro VI and Classes E and F notes in Ares Euro VII as permitted by the FCA Rules rather than include it in the Credit Risk Requirement Calculation. The Firm follows the standardised approach to market risk. lt has adopted the Simplified standard and not the Internals Ratings Based approach to credit risk. The Firm is subject to the Fixed Overhead Requirement and is not required to calculate an operational risk capital charge though it considers this as part of its process to identify the level of risk based capital required.

As noted previously the Firm is classified as a limited licence firm and as such its Pillar 1 capital requirement is the greater of:

	Its bare capital requirement of €125,000; or
	The sum of its market and credit risk requirements; or
	Its Fixed Overhead Requirement.

Under the CRDIV, CRR and IFPRU rules the Firm has an initial requirement of €125,000 and has to maintain a Common Equity Tier 1 capital ratio of 4.5%, a Tier 1 Capital ratio of 6% and a Total Capital Ratio of 8%. These ratlos are calculated by expressing the Firm's Own Funds (Tier 1 and Tier 2 Capital) as percentage of the total risk exposure amount. In AML's case the total risk exposure for Pillar 1 is the higher of the Fixed Overhead Requirement and the sum of the credit and foreign exchange exposure amounts. In essence this is the same as under the GENPRU and BIPRU rules.

The Firm's ICAAP assesses the amount of capital required to mitigate the risks to which it is exposed over a three year time horizon. The 2014 ICAAP considers the impact of future business plans as well as potential adverse scenarios (such as market downturns or significant operational errors) on the capital resources of the Firm, to ensure regulatory capital requirements are met at all times.

Based on the risk assessment and stress testing and wind down costs described above the Firm's management concluded that additional Pillar 2 capital of £10,829k was required for 2014. The ICAAP also showed that the Firm was compliant with the FCA's 'overall financial adequacy rule' and the 'overall pillar 2 rule' contained in GENPRU and BIPRU.

Remuneration Code

The Firm has assessed its remuneration structure in line with the FCA Remuneration Code (the "Code") and has adopted policies and procedures designed to ensure that risk is monitored and mitigated in line with the Code. Under FCA guidance, the Firm has determined that it is a "Proportionality Level 3" firm and has taken a proportionate approach as permitted by the rules. The Firm believes that given its business, it is already structured in compliance with the Principles of the Code. The Board, in accordance with Ares Management LLC's firm wide compensation guidelines determines the Firm's remuneration policy on at least an annual basis. AML's annual review of bonuses and performance related remuneration assesses the overall profits of the Firm and the business division along with the individual's financial and non-financial performance.

Remuneration Code Staff Remuneration by Business Area (BIPRU 11.5.18(6))

Business Area	Total Remuneration y/e 31/12/14
Investment Management Services	£18,448,138

Aggregate Quantitative Remuneration by Senior Management and other Remuneration Code Staff (BIPRU 11.5.18(7))

Type of Remuneration Code Staff	Total Remuneration
Senior Management (SIF)	£4,822,100
Other Remuneration Code Staff	£3,626,038l
Totals	£18,448,138

34:T1e255,

Ares Management Limited Niederlassung Deutschland

Frankfurt am Main

Befreiender Jahresabschluss gem. §325 a HGB
zum Geschäftsjahr vom 01.01.2016 bis zum 31.12.2016

ARES MANAGEMENT LIMITED

London/UK

Report and Financial Statements For the year ended 31 December 2016

Registered no. 05837428

Directors

	Michael Daniel Weiner
	Kevin Early
	William Stephen Benjamin
	Blair Jacobson
	Ujjaval Yogesh Desai
	Gregory Alan Margolies
	Robert Kipp DeVeer III

Secretary

TMF Corporate Administration Services Limited

6 St Andrew Street

5th Floor

London

EC4A 3AE

Auditor

Ernst & Young LLP

25 Churchill Place

London E14 5EY

Bankers

Barclays PLC

1 Churchill Place, Level 11

London, E14 5HP

City National Bank

15260 Ventura Boulevard

Sherman Oaks, CA 91403, USA

Solicitors

Latham & Watkins LLC

355 South Grand Avenue

Los Angeles, CA 90071

Registered Office

6 St Andrew Street

5th Floor

London

EC4A 3AE

Directors' report

The directors present their report and financial statements of Ares Management Limited (the -Company-) for the year ended 31 December 2016.

Principal activity

The principal activity of the Company during the year ended 31 December 2016 was to provide advisory and investment management services. The Company was incorporated an 5 June 2006 and is a wholly owned subsidiary of Ares Management LLC ("Ares Management"). The Company is authorised by the Financial Conduct Authority to perform investment management activity that is subject to licensing requirements in the United Kingdom.

On 22 July 2014 the investment management of all the Alternative Investment Funds previously managed by the Company were transferred to Ares Management UK Limited ("AMUKL-) an affiliate of the Company.

Directors

Directors who served during the year and up to the date of this report were:

	Michael Daniel Weiner
	Kevin Early
	William Stephen Benjamin
	Blair Jacobson
	Ujjaval Yogesh Desai
	Gregory Alan Margolies
	Robert Kipp DeVeer III

Going concern

The Company's activities, together with the factors likely to affect its future development, its financial position and the financial risks are described in the strategic report.

After making enquiries, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future, The Company will continue to have financial support from its parent if required. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

As the Company has sufficient financial resources and fee generating Investment Management Agreements, the directors believe that the Company is well placed to manage its business risks successfully.

Pillar 3 disclosures

The unaudited Pillar 3 disclosures are appended to the financial statements.

Disclosure of information to the auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information, being information needed by the auditor in connection with preparing its report, of which the auditor is unaware. hlaving made enquiries of Fellow directors and the Company% auditor, each director has taken all the steps that he is obliged to take as a director in order to make himself aware of any relevant audit information and to establish that the auditor is aware of that information.

Statement of directors' responsibilities

The directors are responsible for preparing the Directors' Report, the Strategie Report and the financial statements in accordance with applicable law and regulations.

•	select suitable accounting policies and then apply them consistently;
•	make judgements and estimates that are reasonable and prudent;
•	state whether applicable United Kingdom Generally Accepted Accounting Practices (United Kingdom Accounting Standards and applicable law) have been followed, subject to any material departures disclosed and explained in the financial statements; and
•	prepare the financial statements an the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company% transactions and disclose with reasonable accuracy at any time the financial Position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Reappointment of Auditors

The auditors, Ernst & Young, LLP, have indicated their willingness to continue in office. A resolution concerning their reappointment will be put to the members at the annual general meeting.

By the order of the Board

Kevin Early, Director

Strategic report

The directors present their strategic report together with the financial statements of the Company for the year ended 31 December 2016.

Results and dividends

The profit for the year ended 31 December 2016 is £18,661,777 (2015: £2,973,197). The directors do not recommend that a dividend be paid for the year (2015: nil).

Review of the business

The key financial and other performance indicators during the year were as follows:

	2016	2015
	£000	£000
Turnover	64,112	48,642
Profit alter tax	18,662	2,974
Shareholders' funds	86,926	59,511
Current assets as % of current liabilities	350%	334%
Average number of employees	119	103

As at 31 December 2016, acts as investment manager of the following funds. New funds are indicated by an asterisk.

•	Ares Euro CLO I B.V.
•	Ares European CLO II B.V.
•	Ares European CLO III B.V.
•	Ares European CLO VI B.V.
•	Ares European CLO VII B.V.
•	Queen Street CLO I B.V.
•	Queen Street CLO II B.V.
•	Ares Capital Europe (Luxembourg) S.a.r.l
•	Bond Opportunities Fund Sub 2
•	BayVK R2 Fonds Ares II
•	European Senior Secured Loan Programme S.a.r.l
•	Ares ELOF GP LP
•	Ares CSF III Luxembourg S.a.r.l
•	Ares Capital Europe II Holdings S.a.r.l
•	Ares Capital Europe II Investments S.a.r.l
•	Ares Capital Europe II Assets S.a.r.l
•	Ares UK Credit Strategies, L.P. (Her Majesty's Treasury)
•	Ares CSF Holdings S.a.r.l
•	Ares MSCF V (H) S.a.r.l
•	Ares European Credit Strategies Fund (C), L.P.
•	Ares European Credit Strategies Fund (G), L.P.
•	Ares European Credit Strategies Fund II North (Hermes BTPS)
•	Ares European Credit Strategies Fund II South ( Hermes BTPS)
•	Ares European Credit Strategies Fund II (B) LP
•	Ares European Credit Strategies Fund III (A), L.P. (APG)
•	Ares ECSF III (A) Holdings S.a r.l
•	Ares European Credit Strategies Fund IV (M), L.P. (Mercer)
•	Ares ECSF IV (M) Holdings S.a.r.l
•	Ares European Credit Strategies Fund V (G) L.P*
•	Ares ECSF V (0) Holdings S.a.r.l*
•	Ares Customized Credit Fund L.P. EU
•	MPS Investments S.a.r.l (Coal Pension)
•	BCSSS Investments S.a.r.l (Coal Pension)
•	GIM UK Loans SA (Generali)
•	Ares Institutional Credit Fund II (Aviva Staff Pension Plan)
•	Ares Institutional Credit Fund VI (Lloyds Bank Pension Scheme 1)
•	Ares Institutional Credit Fund VII (Lloyds Bank Pension Scheme 2)

Principal risks and uncertainties

Competitive Risks

Legislative Risks

In the UK and Europe, investment management companies are subject to certain standards. These standards are subject to continuous revision and any new directive rnay have a material impact on the ability of the Company to provide investment management services at a profit. In addition compliance imposes costs and failure to cornply with the standards could materially affect the Company's ability to operate.

Financial Instrument Risks

The objectives aim to ensure sufficient working capital exists and monitor the management of risk at the funds level.

Future Developments

The Directors do not expect any change in the principal activity of the Company in the foreseeable future.

Events since the balance sheet date

No significant events have occurred since 31 December 2016.

By the order of the Board

Kevin Early, Director

Independent auditor's report to the member of Ares Management Limited

We have audited the financial statements of Ares Management Limited for the year ended 31 December 2016, which comprise the Profit and Loss Account, Statement of Changes in Equity, Balance Sheet, Cash Flow Statement and the related notes 1 to 22. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including FRS 102 'The Financial Reporting standard applicable in the UK and Republic of Ireland'.

Respective responsibilities of directors and auditor

As explained more fully in the statement of directors' responsibilities set out on page 3, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Report and Financial Statements to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

•	give a true and fair view of the state of the Company's affairs as at 31 December 2016 and of its profit for the year then ended;
•	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including FRS 102 'The Financial Reporting standard applicable in the UK and Republic of Ireland'; and
•	have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

•	the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.
•	the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have identified no material misstatements in the Strategic Report or Directors' Report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

•	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
•	the financial statements are not in agreement with the accounting records and returns; or
•	certain disclosures of directors' remuneration specified by law are not made; or
•	we have not received all the information and explanations we require for our audit.

London, 24 April 2017

Ashley Coups, Senior statutory auditor for and on behalf of Ernst & Young LLP, Statutory Auditor

Profit and loss account for the year ended 31 December 2016

		2016	2015
	Notes	£000	£000
Turnover	4	64,112	48,642
Administrative expenses		(47,707)	(45,299)
Operating Profit	5	16,405	3,343
Other-operating income		6,459	159
Profit on ordinary activities before taxation		22,864	3,502
Tax on ordinary activities	9	(4,202)	(528)
Profit on ordinary activities after taxation		18,662	2,974

All items dealt with in arriving at the profit for the year ended 31 December 2016 related to continuing operations.

Statement of comprehensive income for the year ended 31 December 2016

There are no gains and losses for the year other than those shown above and therefore no separate statement of comprehensive income has been presented.

The notes on pages 13 to 27 form an integral part of these financial staternents.

Statement of changes in equity for the year ended 31 December 2016

	Share capital	Profit and lass account	Total Shareholders' funds
	£000	£000	£000
At 1 January 2015	68,000	(15,924)	52,076
Profit for the year	-	2,974	2,974
Share based compensation	-	4,461	4,461
At 31 December 2015	68,000	(8,489)	59,511
Profit for the year	-	18,662	18,662
Share based compensation	-	8,753	8,753
At 31 December 2016	68,000	18,926	86,926

Balance sheet at 31 December 2016

		2016	2015
	Notes	£000	£000
Fixed assets
Intangible assets	10	4,086	5,306
Tangible assets	11	4,463	4,542
Investments	12	25,289	21,301
Total fixed assets		33,838	31,149
Current assets
Debtors	13	59,351	39,945
Deferred tax	14	1,970
Cash and cash equivalents		20,018	7,088
Total current assets		81,339	47,033
Creditors: amounts falling due within one year	15	(23,272)	(14,069)
Total assets less current liabilities		91,905	64,113
Creditors: amounts falling due after more than one year	16	(4,979)	(4,602)
Net assets		86,926	59,511
Capital and reserves
Called up share capital	17	68,000	68,000
Profit and loss account		18,926	(8,489)
Shareholders' funds		86,926	59,511

The financial statements on pages 9 to 27 were approved and authorised on 24 April 2017 for issue on behalf of the directors

Kevin Early, Director

Cash flow statement for the year ended 31 December 2016

		2016	2015
	Note	£000	£000
Cash generated from operating activities	18 (a)	11,477	1,805
Tax paid		(356)	(528)
Net cash inflow from operating activities		11,121	1,277
Investing activities
Interest received		2,471	2,225
Payments to acquire tangible fixed assets		(662)	(248)
Receipts from sale of investments			130
Net cash inflow from investing activities		1,809	2,107
Increase in cash and cash equivalents		12,930	3,384
Effect of exchange rates an cash and cash equivalents			10
Cash and cash equivalents at 1 January		7,088	3,694
Cash and cash equivalents at 31 December	18 (b)	20,018	7,088

Notes to the financial statements at 31 December 2016

1. ACCOUNTING POLICIES

Organisation and business

The Company commenced operations on 5 June 2006 and is a wholly owned subsidiary of Ares Management LLC ("Ares Management"), a United States based company. Ares Management is the parent company of various operating subsidiaries which include the Company. The operating subsidiaries are generally either investment managers and/or general partners of various investment -Funds (the "Ares Funds-). These subsidiaries provide investment management services to the Ares Funds in exchange for investment management fees.

Basis of preparation

Intangible assets

Intangible assets acquired separately from a business are recorded at cost. Subsequent to initial recognition, intangible assets are stated at cost less accumulated amortisation and any accumulated impairment losses. Amortisation is provided on a straight live basis over the expected useful life of the assets as follows:

Management contracts acquired

- over the term of the contract

The carrying value of the intangible asset is reviewed for impairment at least annually.

Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation. Such costs include those costs directly attributable to making the asset capable of operating as intended.

Leasehold improvements	- over the lease term
Furniture and computer equipment	- over 5 to 7 years.

Investments

Investments in the subordinated (equity) tranches of collateralised loan obligation (-CLOs") are financial instruments initially recorded at the transaction price. Subsequently, they are held at fair value with gains and losses being recorded in the profit and loss account.

Short-term debtors and creditors

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short term deposits with an original maturity date of three months or less.

Cash and cash equivalents are measured at fair value, based on the relevant exchange rates at the reporting date.

Turnover

Rendering of services

Incentive income

Incentive fees are based on certain specific hurdle rates as defined in the applicable investment management agreements or goveming documents. Incentive fees are recognised when collection is fixed and ascertainable following a fund's determination date and usually coincides with the period in which the Company collects cash or the period immediately preceding cash collection.

Interest income

Interest income is recognised on an accrual basis on cash balances, on deferred fees from managed funds and on CLO tranches including from the sub-ordinated or "equity tranche".

Special fees

Tumover may also include special fees such as administration fees paid to the Company in connection with the operations of the Company. The nature of these fees is specific to the administrative services provided by the Company. Such fees would be included in turnover in the profit and loss account and are recognised as turnover when earned.

Provisions for liabilities

Operating lease commitments

Rentals payable less any incentives are charged in the profit and loss account on a straight line basis over the lease term.

Pension costs

The Company operates a defined contribution scheme. Contributions to the defined contribution scheme are recognised in the profit and loss account in the period in which they become payable.

Foreign currencies

Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are revalued at the rate of exchange ruling at the balance sheet date.

All differences are taken to the profit and loss account.

Share-based payments (equity-settled)

Taxation

Income tax expense represents the sum of the current tax and deferred tax.

2. Critical accounting estimates and judgements

Fair value of investments

Share-based payments (equity-settled)

The fair value of equity-settled transactions is determined by using an appropriate pricing mode]. Management uses its judgement to select an appropriate pricing model and estimates the key inputs using a variety of assumptions that are mainly based on market conditions existing at the date on which they are granted.

3. Financial risk management

The Company has exposure to the following risks from its use of financial instruments:

Foreign exchange risk

The CLO Investments held by the Company are issued in Euros. At 31 December 2016, if British pounds had weakened or strengthened against the Euro by a reasonable percentage variance of 10%, the profit for the financial year would have been either increased or decreased by £2,528,931 (2015: loss increased/decreased by £2,130,114).

Market risk

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company aims to mitigate liquidity risk by managing cash generation from operations. The Company also manages liquidity risk via additional equity investments from the parent company

Credit risk

The Company has credit risk exposure arising from current fees due hut not received from the funds it manages and from its cash balances held at highly rated banks. Fees are invoiced to these funds in accordance with the terms of the Investment management agreements. By their nature, the funds hold significant cash balances and the fund trustee/administrator is responsible for making the payment of the management and performance fees.

4. Turnover

Turnover principally represents the amounts derived from the provision of investment management services, stated net of Value Added Tax, and arising from continuing activities in Europe.

For the year ended 31 December 2016, base investment management fees earned were £54,813,285 (2015: £48,955,030). Total incentive management fees earned for the year were £272,337 (2015: £1,034,992). Turnover also includes a transaction gain of £7,979,218 (2015: £1,348,363 loss) and other income from Agency fees of £1,046,975 (2015: nil).

5. Operating profit

Operating profit is stated after charging:

	2016	2015
	£000	£000
Amortisation and impairment of intangible assets (see note 10)	1,220	3,224
Depreciation of owned assets (see note 11)	743	742
Operating lease rentals
- Land and buildings	2,976	3,022
- Equipment	53	134
- Foreign exchange gain /(loss)	11,244	(2,860)
Auditors' remuneration (see note 6)	94	190

6. Auditors' remuneration

The remuneration of the auditors is further analysed as follows:

	2016	2015
	£000	£000
Audit of the financial statements	34	29
Other fees to auditors - taxation services	60	161
	94	190

7. Directors' emoluments

None of the directors received any compensation for services rendered as directors of the Company (2015: nil).

8. Staff costs

	2016	2015
	£000	£000
Wages and salaries	33,505	29,166
Social security costs	5,259	4,368
Pension costs	991	817
Total staff costs	39,755	34,351

The average numbers of employees during the year were as follows:

	2016	2015
Fund management	79	68
Marketing	10	8
Administrative	30	27
Average number of total staff	119	103

9. Tax on profit on ordinary activities

(a) Current tax for the year:

	2016	2015
	£0	£0
UK Corporation tax on profit for the year	6,172	-
Foreign tax relief/other relief	(307)	-
	5,865	-
Foreign tax suffered	307	528
Total current tax	6,172	528
Deferred tax:
Origination and reversal of timing differences	(2,074)	-
Effect of changes in tax rates	104	-
Total deferred tax	1,970	-
Total tax per income statement	4,202	528

(b) Factors affecting the charge for the year

The tax assessed on the loss on ordinary activities for the year is higher than the standard rate of corporation tax in the UK of 20.00% for 2016 (2015: 20.25%) The differences are reconciled below:

	2016	2015
	£000	£000
Profit on ordinary activities before taxation	22,864	3,502
Corporation tax at 20.00% (2015: 20.25%)	4,573	709
Adjustment for prior periods		(94)
Expenses not deductible	143	33
Tax rate changes	103	-
Deferred tax not provided	(2,900)	865
Utilisation of tax losses	(204)	(1,442)
European Branch related tax	-	528
Share options	2,487	-
Total tax Charge for the year	4,202	528

10. Intangible assets

	Total
	£000
Cost:
At 1 January 2016	20,835
At 31 December 2016	20,835
Amortisation and impairment losses:
At 1 January 2016	(15,529)
Amortisation charge for the year	(1,220)
At 31 December 2016	16,749
Net realisable value at 31 December 2016	4,086
Net realisable value at 31 December 2015	5,306

11. Tangible fixed assets

	Furniture and computer equipment	Leasehold improvements	Total
	£000	C00	£000£000
Cost:
At 1 January 2016	2,063	5,173	7,236
Additions	258	404	662
At 31 December 2016	2,321	5,577	7,898
Depreciation:
At 1 January 2016	904	1,790	2,694
Charge for the year	296	447	743
FX movement an Euro assets		(2)	(2)
At 31 December 2016	1,200	2,235	3,435
Net realisable value at 31 December 2016	1,121	3,342	4,463
Net realisable value at 31 December 2015	1,159	3,383	4,542

12. INVESTMENTS

	2016	2015
	£000	£000
At 1 January	21,301	25,008
Accretion (Euro VII)	9	8
Realised gain	-	38
Disposals	-	(130)
Unrealised gain / (loss)	714	(2,112)
Foreign exchange gain / (loss)	3,265	(1,511)
At 31 December	25,289	21,301
	2016	2015
	£000	£000
Euro VI (subordinated)	10,612	8,655
Euro VII (subordinated)	1,266	1,089
Euro VII (unsubordinated)	13,411	11,557
At 31 December	25,289	21,301

In line with the Company% accounting policy the subordinated investments in the CLOs are held at fair value. The fair values of the CLOs are estimated based on various valuation models of third-party pricing services as well as intemal models. The valuation models generally utilise discounted cash flows and take into consideration prepayment and loss assumptions, based on historical experience and projected performance, economic factors, the characteristics and condition of the underlying collateral, comparable yields for similar securities and recent trading activity.

13. Debtors

	2016	2015
	£000	£000
Management fee receivable	8,707	7,263
Amounts due from affiliated Parties	48,213	31,437
Prepayments	1,921	1,028
Other debtors	258	217
VAT receivable	252	-
	59,351	39,945

14. Deferred tax

	2016	2015
	£000	£000
Deferred tax credit to income statement for the year	1,970	-
Provision at end of year	1,970	-

The deferred tax asset at the end of the year arises an the following timing differences, tax losses or tax credits:

	2016	2015
	£000	£000
Fixed asset timing differences	181	-
Short term timing differences - trading	1,789	-
Provision at end of year	1,970	-

15. Creditors: amounts falling due within one period

	2016	2015
	£000	£000
Other taxes and social security costs	2,001	1,723
Trade creditors	195	662
Corporation tax	5,865	-
Accruals	15,211	11,362
VAT payable	-	322
	23,272	14,069

16. Creditors: amounts falling due after more than one

	2016	2015
	£000	£000
Accruals	4,979	4,602
	4,979	4,602

17. Called up share capital

	2016	2015
	£000	£000
Allotted, called up andfidly paid
Ordinary shares £1 each	68,000	68,000

18. Notes to the statement of cash flows

(a) Reconciliation of operating profit/(loss) to net cash outflow from operating activities:

	2016	2015
	£000	£000
Operating Profit	16,405	3,343
Foreign exchange loss an investments	-	1,511
Depreciation of tangible fixed assets	743	742
Amortisation of intangible assets	1,220	3,224
Share based payments	8,753	4,462
Increase in debtors	(19,406)	(12,820)
Increase in creditors	3,762	1,343
Cash generated from operating activities	11,477	1,805

(b) Cash and cash equivalents

Cash and cash equivalents are fully cornprised of current accounts.

19. Related party transactions

During the year ended 31 December 2016, the Company entered into certain related party transactions with Ares Management UK Limited and Ares Management LLC. The summary of these transactions is disclosed as follows:

Affiliated Party	Relationship	Transaction Type	Amount
			£000
Ares Management UK Limited	Affiliate	Cost Recharge	17,744
Ares Management LLC	Parent	Transfer Pricing	25,447

As at 31 December 2016, the Company was owed £48,212,570 (2015: £31,436,557) from its affiliates and £8,707,076 (2015: £7,263,204) from the funds it manages.

20. Obligations under leases

At 31 December 2016, the Company had Future minimum payments due under operating leases as set out below:

	2016	2015
	£000	£000
Land and Buildings
On leases expiring:
-within one year from the balance sheet date	3,472	2,468
-within two and five years from the balance sheet date	13,319	13,317
-over five years from the balance sheet date	7,567	10,745
Equipment
On leases expiring:
-within one year from the balance sheet date	43	53
-within two and five years from the balance sheet date	22	65
	24,423	26,648

The operating lease payables for Land and Buildings are in respect of office buildings in London, Paris, Luxembourg, Frankfurt and Stockholm.

21. Share-based payments

Equity-settled

Ares Employee Participation LLC baerests and AREA Membership Interest

In July 2013, certain employees of the Company were granted equity ownership of 1.2% ("AREA Membership Interest') in Ares Holdings LLC, the parent of Ares Management, and in Ares Investments LLC, an affiliate of the Company. This ownership entitles recipients to equal rights to privileges as other equity holders. The fair value of these awards was determined using a recent market transaction at the time of determination. These membership units vest over a period of two years. As a result of the initial public offering of Ares Management LP on 1 May 2014, £3,867,451 of the total of £7,505,837 equity-settled share-based compensation in 2014 related to London Real Estate for the acceleration of this award granted in July 2013. There was no change in the fair value of these converted interests as a result of the acceleration in vesting. They were not subject to satisfaction of any conditions or market related performance. In addition, the Company recorded one time acceleration expenses on the following awards vesting only as a result of a capital event:

―	Ares Employee Participation IV £230,660;
―	Ares Employee Participation VIII £988,136.

The key inputs used in the Black Scholes Model are as follows:

	Equity Value	Ares Holdings LLC Equity	Ares Investments LLC Equity	Term	Risk Free Rate	Management Fee Volatility	Incentive Fee Volatility
AEP IV	$1,650	$1,089	$561	2 years	0.27%	34%	44%
AEP VIII	$3,374	$2,227	$1,147	2 Years	0.34%	29%	39%

Ares Management, L.P. 2014 Equity Incentive Plan

In connection with the IPO of Ares Management LP on 1 May 2014, the Board of Directors of the General Partner of Ares Management, L.P. adopted the Equity Incentive Plan. Under the Equity Incentive Plan, the Company granted options to acquire common units £3,579,932 (2015: £3,579,932), restricted units to be settled in common units £3,607,635 (2015: £3,607,635) and phantom common units to be settled in cash £19,166 (2015: £19,166), less a deduction of a dividend equivalent of £305,627 (2015: £305,627). Equity based compensation expense is determined based on the fair value of the respective equity award on the grant date and is recognised on a straight line basis over the requisite service period, with a corresponding increase in shareholders' equity.

Restricted Units

The table below shows the history of units granted since the IPO of Ares Management LP.

Date granted	Number of units	Price of grant $	Discount an Fair value %	Assumed forfeiture rate %	Years vested over
01 May 14	956,974	19	5	7	5
09 January 2015	3,947	17.56	5	6.8	5
20 January 2016	316,877	11.21	0	6.8	4
20 January 2016	7,758	11.21	0	6.8	2
15 August 2016	521,875	17.34	0	6.8	5

For the year ended 31 December 2016, 86,424 restricted units were forfeited (2015: nil).

Each restricted unit represents an unfunded, unsecured right of the holder to receive a common unit on the vesting date. Fair value of the restricted units and phantom units was determined tobe the most recent closing price of common units. Certain restricted units are subject to a lock up provision that expires on the fifth anniversary of the 1PO. The Company used Finnerty's average strike price put option model to estimate the discount associated with this lack of marketability. Compensation expense associated with restricted units is being recognised on a straight line basis over the service period of the respective grant.

For the year ended 31 December 2016, 9,263 restricted units vested (2015: 1,158).

Options

No options were forfeited in 2016 (2015: Nil).

The fair value of each option granted during the period from 1 May to 31 December 2014 is measured on the date of grant using the Black Scholes option pricing model and the following weighted average assumptions:

Input	1 May 2014 Grant	30 May 2014 Grant	9 January 2015 Grant	Source
Stock Price	$19	$19	$17.72	Traded Price
Exercise Price	$19	$19	$19	Management
Expected Term	7 years	6.92 years	7.49 years	See above
Volatility	35%	34%	36%	See AEP Table above
Risk Free Rate	2.21%	2.06%	1.80%	Interpolated from US Govt Band Rate
Assumed Dividend Yield	5%	5%	5%	Management
Estimated Per-Share Value	$4.02	$3.83	$3.53

22. Ultimate parent undertaking

Appendix 1 (Unaudited)

Ares Management Limited

Pillar 3 Disclosure

Introduction

The CRDIV framework comprised three 'Pillars':

•	Pillar 1 sets out the minimum capital amount that meets the firm's credit, market and operational risk;
•	Pillar 2 requires the firm at least annually to assess and document whether its Pillar 1 capital is adequate to meet its risks, which can be subject to review by the FCA;
•	Pillar 3 requires disclosure of specified information about the underlying risk management controls and capital position.

The rules in BIPRU 11 set out the provision for Pillar 3 disclosure. This document is designed to meet the Pillar 3 obligations of the Firm as they applied in 2016.

We are permitted to omit required disclosures if we believe that the information is innmaterial such that omission would be unlikely to change or influence the decision of a reader relying on that information.

We have made no omissions on the grounds that it is immaterial, proprietary or confidential other than where noted in this document.

Scope and Application of the Requirements

Governance Framework and Risk Management

The Board has identified foreign exchange (market), credit, business and operational risks as the main areas of risk to which the Firm is exposed. The adequacy of the Firm's regulatory capital in relation to these and other less significant risks is assessed through its Internal Capital Adequacy Assessment Process ("ICAAP"). The Board reviews and approves the ICAAP on an annual basis and uses it as an important part of the Firm's business planning and capital management.

Regulatory Capital

Capital summary as at 31 December 2016:	£000
Ordinary share capital	68,000
Retained profit	18,926
Total tier 1 capital before deductions	86,926
Deduct securitisation position	(12,325)
Deduct intangible assets	(4,086)
Total capital resources	70,515

The Firm is small with a simple operational infrastructure. Its market risk is limited to foreign exchange risk on its cash, accounts receivable in foreign currency and a 5% retention in Ares Euro 6 and Euro 7 (securitisation position), and credit risk from management and performance fees receivable from the funds under its management. The Firm deducts 100% of its 5% retention in Ares Euro VI and Classes E and F notes in Ares Euro VII as permitted by the FCA Rules rather than include it in the Credit Risk Requirement Calculation. The Firm follows the standardised approach to market risk. lt has adopted the Simplified standard and not the Internats Ratings Based approach to credit risk. The Firm is subject to the Fixed Overhead Requirement and is not required to calculate an operational risk capital charge though it considers this as part of its process to identify the level of risk based capital required.

As noted previously the Firm is classified as a limited licence firm and as such its Pillar 1 capital requirement is the greater of:

•	Its base capital requirement of €125,000; or
•	The sum of its market and credit risk requirements; or
•	Its Fixed Overhead Requirement.

lt is the Firm's experience that the Fixed Overhead Requirement has historically established its capital requirement and only occasionally has this been determined by the sum of the market and credit risk requirements when higher. Based on the audited financials as at 31 December 2016 the 2017 Fixed Overhead Requirement is f7,877k.

The Firm's ICAAP assesses the amount of capital required to mitigate the risks to which it is exposed over a three year time horizon. The 2016 ICAAP considers the impact of future business plans as well as potential adverse scenarios (such as market downturns or significant operational errors) on the capital resources of the Firm, to ensure regulatory capital requirements are met at all times.

Based on the risk assessment and stress testing and wind down costs described above the Firm's management concluded that additional Pillar 2 capital of £12,184k was required for 2016. The ICAAP also showed that the Firm was compliant with the FCA's `overall financial adequacy rule' and the 'overall pillar 2 rule' contained in GENPRU and BIPRU.

Remuneration Code

The Firm has assessed its remuneration structure in line with the FCA Remuneration Code (the "Code") and has adopted policies and procedures designed to ensure that risk is monitored and mitigated in line with the Code. Under FCA guidance, the Firm has determined that it is a "Proportionality Level 3" firm and has taken a proportionate approach as permitted by the rules. The Firm believes that given its business, it is already structured in compliance with the Principles of the Code. The Board, in accordance with Ares Management LLC's firm wide compensation guidelines determines the Firm's remuneration policy on at least an annual basis. AML's annual review of bonuses and performance related remuneration assesses the overall profits of the Firm and the business division along with the individual's financial and non-financial performance.

Remuneration Code Staff Remuneration by Business Area (BIPRU 11.5.18(6))

Business Area	Total Remuneration y/e 31/12/16
Investment Management Services	£20,044,608

Aggregate Quantitative Remuneration by Senior Management and other Remuneration Code Staff (BIPRU 11.5.18(7))

Type of Remuneration Code Staff	Total Remuneration
Senior Management (SIF)	£4,367,284
Other Remuneration Code Staff	£15,677,325
Totals	£20,044,608

Going Concern and Liquidity Risk Assessment

Background

Ares Management Limited, ("AML" or "the Firm") is authorised to carry on investment management activity by the Financial Conduct Authority , and for regulatory capital purposes it is classified as an IFPRU €125k limited licence firm. AML's principal business activity is the provision of discretionary investment management to collateralized loan obligation funds registered in the Netherlands, structured credit managed accounts, cash flow loan funds and other mid-market European loan opportunities, from which it earns fees.

AML is a wholly owned, direct subsidiary of Ares Management LLC, a US based, SEC registered investment management company ("Ares"), and a majority owned indirect subsidiary of Ares Management LP. As a US-registered investment adviser, Ares is subject to supervision and regulation by the Securities and Exchange Commission.

The Firm's current focus is to grow its fund management business both organically and through acquisition, should suitable opportunities be identified.

Its main expenditure items include staff costs, occupancy costs, legal and professional fees, data services, and travel and subsistence.

AML's board comprises seven experienced directors who are responsible for (i) the business strategy and risk appetite of the Firm, (ii) designing and implementing a risk management framework that identifies the risks faced by the business, (iii) determining how those risks may be mitigated, and (iv) assessing the on-going management of those risks. The directors meet as needed, but not less than annually, to discuss financial results, projections, capital requirements, business planning, and risk management. The Firm considers that it has in place a robust, effective structure of systems and controls. AML hires only experienced investment professionals, all of whom are subject to independent pre-employment screening processes.

The strategic purpose of AML is to provide advisory and investment management services to the variety of funds and separate accounts that it may manage. At the saure time it creates a presence in the European region for the Ares platform as a whole. The AML business model is considered to be highly scalable - the business is largely based upon a small fixed overhead consisting primarily of base salaries along with bonuses, which are dependent upon business performance. The funds managed by the Firm have a very large capacity, many multiples of the current assets under management, and this capacity can be managed with little if any addition to the current infrastructure.

As a regulated entity, AML is required to perform an internal capital adequacy assessment process (ICAAP) at least once a year. The ICAAP is reviewed and approved by the board of directors on an annual basis.

Going Concern

Under the base case financial projections presented above, it is expected that AML's financial results will continue to generate profits in each of the next three fiscal years, generating increases in shareholders' funds in 2017 through 2019. These numbers are contained in the ICAAP. To date and for the foreseeable future AML operates on the basis that it will remain a going concern. This is appropriate given the forecast profits and, if required, its parent is willing and able to provide it with additional financial support should the need arise. The Firm's directors regard this as a realistic assumption to make based on the fact that the parent has shown its willingness to provide additional capital in the past and, as a highly profitable business in the United States, the parent has the resources available to enable it to inject such funds. Also, AML is seen not as a standalone business but as a means of creating a European presence for the Ares platform and promoting its business across the region. AML forms part of the wider strategy for the Ares group as a whole, and as such, Ares senior management is committed to maintaining this business through continued support.

Based on the above, the directors of AML believe that the Firm will continue to be a going concern for the foreseeable future.

Liquidity Risk

Liquidity risk is defined as the current or prospective risk to earnings and capital arising from an institution's inability to meet its liabilities as they fall due. The directors of AML do not regard liquidity risk as a significant risk for the Firm. Liquidity requirements of AML relate mainly to the payment of its operating expenses. Cash flow projections are updated by Los Angeles Treasury Operations on a daily basis; therefore, any potential liquidity shortfall can be identified and addressed well in advance of it occurring. The Firm has in place a liquidity policy statement which sets out its exposure to liquidity risk, how this risk is managed and the responsibilities of the board of directors in this respect.

Conclusion

Based on the above, the directors of AML believe that the Firm will continue to be a going concern for the foreseeable future.

35:T231ad,

Ares Management Limited Niederlassung Deutschland

Frankfurt am Main

Jahresabschluss zum Geschäftsjahr vom 01.01.2019 bis zum 31.12.2019

Report and Financial Statements For the year ended 31 December 2019

Registered no. 05837428

Directors

Michael Daniel Weiner

Kevin Early

William Stephen Benjamin

Blair Jacobson

Miriam Krieger (appointed 20 December 2019)

Secretary

TMF Corporate Administration Services Limited

8 ^th floor

20 Farringdon Street

London

EC4A 4AB

Auditor

Ernst & Young LLP

25 Churchill Place

London E14 5EY

Bankers

Barclays PLC

1 Churchill Place, Level 11

London, E14 5HP

City National Bank

15260 Ventura Boulevard

Sherman Oaks, CA 91403, USA

Solicitors

Latham & Watkins LLC

355 South Grand Avenue

Los Angeles, CA 90071

Registered Office

8 ^th floor

20 Farringdon Street

London

EC4A 4AB

Directors' report

The Directors present their report and financial statements of Ares Management Limited (the "Company") for the year ended 31 December 2019.

Principal activity

The principal activity of the Company during the year ended 31 December 2019 was to provide advisory and investment management services. The Company was incorporated on 5 June 2006 and is a wholly owned subsidiary of Ares Management LLC ("Ares Management"). The Company is authorised by the Financial Conduct Authority to perform investment management activity that is subject to licensing requirements in the United Kingdom.

Directors

Directors who served during the year and up to the date of this report were:

Michael Daniel Weiner

Kevin Early

William Stephen Benjamin

Blair Jacobson

Miriam Krieger (appointed 20 December 2019)

Going concern

The Company's activities, together with the factors likely to affect its future development, its financial position and the financial risks are described in the strategic report.

As the Company has sufficient financial resources and fee generating Investment Management Agreements, the Directors believe that the Company is well placed to manage its business risks successfully.

Statement under Section 172 of the Companies Act 2006

The directors consider, both individually and together, that they have acted in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in s172(l)(a-f) of the Act) in the decisions taken during the year ended 31 December 2019.

Pillar 3 disclosures

The unaudited Pillar 3 disclosures are appended to the financial statements.

Disclosure of information to the auditor

Statement of Directors' responsibilities

The Directors are responsible for preparing the Directors' Report, the Strategic Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing those financial statements, the Directors are required to:

•	select suitable accounting policies and then apply them consistently;
•	make judgements and estimates that are reasonable and prudent;
•	state whether applicable United Kingdom Generally Accepted Accounting Practices (United Kingdom Accounting Standards and applicable law) have been followed, subject to any material departures disclosed and explained in the financial statements; and
•	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

Reappointment of Auditors

The auditors, Ernst & Young, LLP, have indicated their willingness to continue in office. A resolution concerning their reappointment will be put to the members at the annual general meeting.

By the order of the Board

Kevin Early, Director

Strategic report

The Directors present their strategic report together with the financial statements of the Company for the year ended 31 December 2019.

Results and dividends

The profit for the year ended 31 December 2019 is £6,985,739 (2018: £7,548,820). The Directors do not recommend that a dividend be paid for the year (2018: nil).

Review of the business

The key financial and other performance indicators during the year were as follows:

	2019	2018
	£000	£000
Turnover	70,527	62,005
Profit after tax	6,986	7,548
Shareholders' funds	96,306	77,576
Current assets as % of current liabilities	805	1,189
Average number of employees	179	143

Principal risks and uncertainties

Competitive Risks

Legislative Risks

Financial Instrument Risks

The objectives aim to ensure sufficient working capital exists and monitor the management of risk at the funds level.

Future Developments

The Directors do not expect any change in the principal activity of the Company in the foreseeable future.

Events since the balance sheet date

On January 30, 2020, the World Health Organization declared the outbreak of coronavirus ("COVID-19") to be a public health emergency of international concern. This coronavirus outbreak has severely restricted the level of economic activity around the world. In response to this coronavirus outbreak, the governments of many countries, states, cities and other geographic regions have taken preventative or protective actions, such as imposing restrictions on travel and business operations and advising or requiring individuals to limit or forego their time outside of their homes.

The full extent to which the COVID-19 pandemic may impact company's results, operations or liquidity is uncertain. Management continues to monitor the impact that the COVID-19 pandemic has on the company, the asset management industry and the economies in which the company operates. Management has performed a COVID -19 impact analysis as part of their going concern assessment using information available to the date of issue of these financial statements. The analysis has modelled a number of adverse scenarios to assess the potential impact that COVID-19 may have on company's operations, liquidity, solvency and regulatory capital position as well as a reverse stress test to assess the stresses the balance sheet has to endure before there is a breach of the relevant regulatory capital requirement and including an assessment of any relevant mitigations management have within their control to implement.

The most likely expected financial impact is in respect of the company's future (i) management fee income as this is linked to assets under management; and (ii) incentive fees as these are based on certain specific hurdle rates as defined in the applicable investment management agreements or governing documents. It is not possible to quantify the overall impact of Covid-19 as financial markets continue to react to developments and management have a number of actions that there are able to take to protect profitability and solvency.

Having performed this analysis management believes regulatory capital requirements continue to be met and have sufficient liquidity to meet its liabilities for the for the next 12 months and that the preparation of the financial statements on a going concern basis remains appropriate as the company expects to be able to meet its obligations as and when they fall due for the foreseeable future.

By the order of the Board

Kevin Early, Director

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ARES MANAGEMENT LIMITED

Opinion

We have audited the financial statements of Ares Management Limited for the year ended 31 December 2019 which comprise the Profit and loss account, the Statement of changes in equity, the Balance sheet, the Cash flow statement and the related notes 1 to 23, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

•	give a true and fair view of the company's affairs as at 31 December 2019 and of its profit for the year then ended;
•	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
•	have been prepared in accordance with the requirements of the Companies Act 2006.

Emphasis of Matter

We draw attention to Note 1 and Note 23 of the financial statements, which describes the economic disruption the company is facing as a result of COVID-19, which is impacting financial markets and personnel available for work and or being able to access offices. Our opinion is not modified in respect of this matter.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report below. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

•	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
•	the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

•	the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
•	the strategic report and directors' report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

•	adequate accounting records have not been kept or returns adequate for our audit have not been received from branches not visited by us; or
•	the financial statements are not in agreement with the accounting records and returns; or
•	certain disclosures of directors' remuneration specified by law are not made; or
•	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered materia! if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Use of our report

Ashley Coups, Senior statutory auditor

for and on behalf of Ernst & Young LLP, Statutory Auditor

London

24 April 2020

Profit and loss account for the year ended 31 December 2019

		2019	2018
	Notes	£000	£000
Turnover	4	70,527	62,005
Administrative expenses		(64,078)	(50,884)
Operating Profit	5	6,449	11,121
Other operating income and similar charges		(30)	22
Profit on ordinary activities before taxation		6,419	11,143
Tax on ordinary activities	9	567	(3,595)
Profit on ordinary activities after taxation		6,986	7,548

All items dealt with in arriving at the profit for the year ended 31 December 2019 related to continuing operations.

Statement of comprehensive income for the year ended 31 December 2019

There are no gains and losses for the year other than those shown above and therefore no separate statement of comprehensive income has been presented.

The notes on pages 12 to 26 form an integral part of these financial statements.

Statement of changes in equity for the year ended 31 December 2019

	Share capital	Profit and loss account	Total Shareholders' funds
	£000	£000	£000
At 1 January 2018	28,000	34,092	62,092
Profit for the year	-	7,548	7,548
Share based compensation	-	7,936	7,936
At 31 December 2018	28,000	49,576	77,576
Profit for the year	-	6,986	6,986
Share based compensation	-	11,744	11,744
At 31 December 2019	28,000	68,306	96,306

The notes on pages 12 to 26 form an integral part of these financial statements.

Balance sheet at 31 December 2019

		2019	2018
	Notes	£000	£000
Fixed assets
Intangible assets	10	1,923	2,644
Tangible assets	11	2,921	3,256
Investment	12	248	-
Total fixed assets		5,092	5,900
Current assets
Debtors	13	82,962	71,094
Deferred tax	14	6,467	3,138
Cash and cash equivalents	18	17,915	7,801
Total current assets		107,344	82,033
Creditors: amounts falling due within one year	15	(13,333)	(6,899)
Total assets less current liabilities		99,103	81,034
Creditors: amounts falling due after more than one year	16	(2,797)	(3,458)
Net assets		96,306	77,576
Capital and reserves
Called up share capital	17	28,000	28,000
Profit and loss account		68,306	49,576
Shareholders' funds		96,306	77,576

The notes on pages 12 to 26 form an integral part of these financial statements.

The financial statements on pages 8 to 26 were approved and authorised on 22 April 2020 for issue on behalf of the Directors

Kevin Early, Director

Cash flow statement for the year ended 31 December 2019

		2019	2018
	Note	£000	£000
Cash generated from operating activities	18 (a)	14,615	(7,906)
Tax paid		(3,735)	(4,126)
Interest paid		(44)	-
Net cash inflow / (outflow) from operating activities		10,836	(12,032)
Investing activities
Interest received		6	22
Payments to acquire tangible fixed assets		(487)	(102)
Purchase of investment		(241)	-
Net cash outflow from investing activities		(722)	(80)
Increase/(Decrease) in cash and cash equivalents		10,114	(12,112)
Cash and cash equivalents at 1 January		7,801	19,913
Cash and cash equivalents at 31 December	18 (b)	17,915	7,801

The notes on pages 12 to 26 form an integral part of these financial statements.

Notes to the financial statements at 31 December 2019

1. Accounting policies

Organisation and business

Basis of preparation

Intangible assets

Management contracts acquired

- over the term of the contract

The carrying value of the intangible asset is reviewed for impairment at least annually.

Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation. Such costs include those costs directly attributable to making the asset capable of operating as intended.

Leasehold improvements	- over the lease term
Furniture and computer equipment	-over 5 to 7 years.

Investments

In the Company's Balance sheet, investments in subsidiaries are stated at cost less any provision for impairment.

Short-term debtors and creditors

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short term deposits with an original maturity date of three months or less.

Cash and cash equivalents are measured at fair value, based on the relevant exchange rates at the reporting date.

Turnover

Rendering of services

Incentive income

Interest income

Interest income is recognised on an accrual basis on cash balances.

Special fees

Provisions for liabilities

Operating lease commitments

Rentals payable less any incentives are charged in the profit and loss account on a straight line basis over the lease term.

Pension costs

The Company operates a defined contribution scheme. Contributions to the defined contribution scheme are recognised in the profit and loss account in the period in which they become payable.

Foreign currencies

Share-based payments (equity-settled)

At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management's best estimate of the achievement or otherwise of nonmarket vesting conditions and of the number of equity instruments that will ultimately vest or, in the case of an instrument subject to a market condition or a non-vesting condition, be treated as vesting as described above. Management's estimate of the number of equity instruments which ultimately vest is based on forfeiture rates since inception. Where awards are made to a small pool of senior leaders, a zero forfeiture rate is estimated.

The movement in cumulative expense since the previous balance sheet date is recognised in the profit and loss account, with a corresponding entry in equity.

Taxation

Income tax expense represents the sum of the current tax and deferred tax.

2. Critical accounting estimates and judgements

Share-based payments (equity-settled)

3. Financial risk management

The Company has exposure to the following risks from its use of financial instruments:

Foreign exchange risk

The Company is exposed to foreign exchange risk through the movement in the value of its foreign currency denominated assets and liabilities. The Company mitigates this risk at a Group level.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company aims to mitigate liquidity risk by managing cash generation from operations. The Company also manages liquidity risk via additional equity investments from the parent company.

Credit risk

4. Turnover

Turnover principally represents the amounts derived from the provision of investment management services, stated net of Value Added Tax, and arising from continuing activities in Europe.

For the year ended 31 December 2019, base investment management fees earned were £43,976,087, (2018: £59,111,377). Total incentive management fees earned for the year were £22,615,871, (2018: £22,829).

Turnover also includes Agency fees of £2,605,935 (2018: £1,923,272) and other income of £1,329,586 (2018: £947,125).

5. Operating profit

Operating profit is stated after charging:

	2019	2018
	£000	£000
Amortisation and impairment of intangible assets (see note 10)	721	721
Depreciation of owned assets (see note 11)	822	808
Operating lease rentals
- Land and buildings	3,170	2,997
- Equipment	100	210
Foreign exchange gain	5,155	4,952
Auditors' remuneration (see note 6)	153	70

6. Auditors' remuneration

The remuneration of the auditors is further analysed as follows:

	2019	2019
	£000	£000
Audit of the financial statements	32	27
Other fees to auditors - taxation services	121	43
	153	70

7. Directors' emoluments

None of the Directors received any compensation for services rendered as Directors of the Company (2018: nil).

8. Staff costs

	2019	2018
	£000	£000
Wages and salaries	64,156	44,330
Social security costs	9,661	8,650
Pension costs	1,454	1,263
Total staff costs	75,271	54,243

The average numbers of employees during the year were as follows:

	2019	2018
Fund management	108	86
Marketing	18	15
Administrative	53	42
Average number of total staff	179	143

9. Tax on profit on ordinary activities

Current tax for the year:

	2019	2018
	£000	£000
UK Corporation tax on profit for the year	2,591	3,353
Foreign tax relief/other relief	(117)	(139)
Adjustment for prior periods	172	(64)
	2,646	3,150
Foreign tax suffered	117	309
Total current tax	2,763	3,459
Deferred tax:
Origination and reversal of timing differences	(3,738)	(111)
Effect of changes in tax rates	393	369
Adjustment in respect of previous periods	15	(122)
Total deferred tax	(3,330)	136
Total tax (credit)/charge per income statement	(567)	3,595

The charge for the year can be reconciled to the profit per the income statement as follows:

	2019	2018
	£000	£000
Profit on ordinary activities before taxation	6,419	11,143
Corporation tax at 19.00% (2018: 19%)	1,220	2,117
Adjustment from previous periods	188	(185)
Expenses not deductible	265	125
Effect of overseas tax rates	-	169
Tax rate changes	393	369
Share options	(2,633)	900
Non-qualifying depreciation	-	100
Total tax (credit)/charge for the year	(567)	3,595

10. Intangible assets

	Total
	£000
Cost:
At 1 January 2019	7,189
At 31 December 2019	7,189
Amortisation:
At 1 January 2019	(4,545)
Amortisation charge for the year	(721)
At 31 December 2019	(5,266)
Net realisable value at 31 December 2019	1,923
Net realisable value at 31 December 2018	2,644

11. Tangible fixed assets

	Furniture and computer equipment	Leasehold improvements	Total
	£000	£000	£000
Cost:
At 1 January 2019	2,110	4,332	6,442
Additions	465	22	487
Disposals	(102)	-	(102)
At 31 December 2019	2,473	4,354	6,827
Depreciation:
At 1 January 2019	1,274	1,912	3,186
Charge for the year	354	468	822
Disposals	(102)	-	(102)
At 31 December 2019	1,526	2,380	3,906
Net realisable value at 31 December 2019	948	1,973	2,921
Net realisable value at 31 December 2018	836	2,420	3,256

12. Investments

	2019	2018
	£000	£000
At 1 January	-	-
Additions	241	-
Foreign exchange gain	7	-
At 31 December	248	-

In line with the Company's accounting policy, the investment is held at cost less impairment,

13. Debtors

	2019	2018
	£000	£000
Management fee receivable	14,333	10,753
Performance fee receivable	13,860	-
Amounts due from affiliated parties	52,141	58,041
Prepayments	1,894	2,126
Other debtors	654	174
VAT	80	-
	82,962	71,094

14. Deferred tax

	2019	2018
	£000	£000
Provision at start of year	3,138	3,274
Deferred tax credit / (charge) to income statement for the year	3,346	(258)
Adjustment in respect of prior years	(17)	122
Provision at end of year	6,467	3,138

The deferred tax asset at the end of the year arises on the following timing differences, tax losses or tax credits:

	2019	2018
	£000	£000
Fixed asset timing differences	199	230
Short term timing differences - trading	6,268	2,908
Provision at end of year	6,467	3,138

In the Spring Budget 2020, the Government announced that from 1 April 2020 the corporation tax rate would remain at 19% (rather than reducing to 17%, as previously enacted). This new law was substantively enacted on 17 March 2020. As the proposal to keep the rate at 19% had not been substantively enacted at the balance sheet date, its effects are not included in these financial statements. However, it is likely that the overall effect of the change, had it been substantively enacted by the balance sheet date, would be to increase the tax credit for the period by £760,917, to increase the deferred tax asset to £7,228,723.

15. Creditors: amounts falling due within one period

	2019	2018
	£000	£000
Other taxes and social security costs	-	84
Trade creditors	530	183
Corporation tax	797	1,769
Accruals	10,168	2,870
Deferred revenue	1,838	1,746
VAT	-	247
	13,333	6,899

16. Creditors: amounts falling due after more than one year

	2019	2018
	£000	£000
Accruals	2,797	3,458
	2,797	3,458

17. Called up share capital

	2019	2018
	£000	£000
Allotted, called up and fully paid Ordinary shares £1 each	28,000	28,000

18. Notes to the statement of cash flows

(a) Reconciliation of operating profit to net cash outflow from operating activities:

	2019	2018
	£000	£000
Operating Profit	6,449	11,121
Depreciation of tangible fixed assets	822	808
Amortisation of intangible assets	721	721
Share based payments	11,744	7,936
Increase in debtors	(11,868)	(28,068)
Increase/(decrease) in creditors	6,747	(424)
Cash generated from operating activities	14,615	(7,906)

(b) Cash and cash equivalents

Cash and cash equivalents are fully comprised of current accounts.

19. Related party transactions

During the year ended 31 December 2019, the Company entered into certain related party transactions with Ares Management UK Limited, Ares Management LLC and SDL Management GP L.P.. The summary of these transactions is disclosed as follows:

Affiliated Party	Relationship	Transaction Type	Amount
			£000
Ares Management UK Limited	Affiliate	Cost Recharge	49,314
Ares Management LLC	Parent	Transfer Pricing	(5,588)
SDL Management GP L.P	Subsidiary	Investment	248

As at 31 December 2019, the Company was owed £49,726,055 (2018: £56,887,196) from its affiliates and £30,606,961 (2018: £12,318,858) from the funds it manages.

20. Obligations under leases

At 31 December 2019, the Company had future minimum payments due under operating leases as set out below:

	2019	2018
	£000	£000
Land and Buildings
On leases expiring:
-within one year from the balance sheet date	3,696	3,792
-within two and five years from the balance sheet date	11,118	14,542
-over five years from the balance sheet date	617	1,202
Equipment
On leases expiring:
-within one year from the balance sheet date	144	24
-within two and five years from the balance sheet date	42	14
	15,617	19,574

The operating lease payables for Land and Buildings are in respect of office buildings in London, Paris, Luxembourg, Frankfurt, Stockholm and Amsterdam.

21. Share-based payments

Equity-settled

Ares Employee Participation LLC Interests and AREA Membership Interest

―	Ares Employee Participation IV £230,660;
―	Ares Employee Participation VIII £988,136.

The key inputs used in the Black Scholes Model are as follows:

	Equity Value	Ares Holdings LLC Equity	Ares Investments LLC Equity	Term	Risk Free Rate	Management Fee Volatility	Incentive Fee Volatility
AEP IV	$1,650	$1,089	$561	2 years	0.27%	34%	44%
AEP VIII	$3,374	$2,227	$1,147	2 years	0.34%	29%	39%

Ares Management, L.P. 2014 Equity Incentive Plan

In connection with the IPO of Ares Management Corporation on 1 May 2014, the Board of Directors of the General Partner of Ares Management Corporation adopted the Equity Incentive Plan. Under the Equity Incentive Plan, the Company granted options to acquire common units £3,579,932 (2018: £3,579,932), restricted units to be settled in common units £3,607,635 (2018: £3,607,635) and phantom common units to be settled in cash £19,166 (2018: £19,166), less a deduction of a dividend equivalent of £305,627 (2018: £305,627). Equity based compensation expense is determined based on the fair value of the respective equity award on the grant date and is recognised on a straight line basis over the requisite service period, with a corresponding increase in shareholders' equity.

Restricted Units

The table below shows the history of units granted since the IPO of Ares Management Corporation.

Date granted	Number of units	Price of grant $	Discount on Fair value %	Assumed forfeiture rate per annum %	Years vested over
01 May 2014	951,708	19	5	1.3	5
09 January 2015	3,947	17.56	5	1.3	5
20 January 2016	317,147	11.21	0	1.3	4
15 August 2016	521,875	17.34	0	1.3	2
01 January 2017	100,001	19.20	0	Nil	2
20 January 2017	218,484	19.90	0	1.3	4
31 January 2017	755,000	19.45	0	Nil	5
20 January 2018	205,296	23.20	0	1.3	4
31 January 2018	560,000	24.15	0	1.3	5
20 January 2019	323,769	20.05	0	1.3	3
31 January 2019	297,500	20.78	0	1.3	5

For the year ended 31 December 2019, 101,066 restricted units were forfeited (2018: 77,181).

Each restricted unit represents an unfunded, unsecured right of the holder to receive a common unit on the vesting date. Fair value of the restricted units and phantom units was determined to be the most recent closing price of common units. Certain restricted units are subject to a lock up provision that expires on the fifth anniversary of the IPO. The Company used Finnerty's average strike price put option model to estimate the discount associated with this lack of marketability. Compensation expense associated with restricted units is being recognised on a straight line basis over the service period of the respective grant. A cumulative expense of £43,309,454 relating to these awards has been recognised in the profit and loss account in equity.

For the year ended 31 December 2019: 621,611 restricted units vested (2018: 412,491).

Options

A cumulative expense of £11,025,834 relating to these awards has been recognised in the profit and loss account in equity.

For the year ended 31 December 2019, 183,188 options were forfeited (2018: 91,589).

The fair value of each option granted during the period from 1 May to 31 December 2019 is measured on the date of grant using the Black Scholes option pricing model and the following weighted average assumptions:

Input	1 May 2014	30 May 2014	9 January 2015	Source
	Grant	Grant	Grant
Stock Price	$19	$19	$17.72	Traded Price
Exercise Price	$19	$19	$19	Management
Expected Term	7 years	6.92 years	7.49 years	See above
Volatility	35%	34%	36%	See AEP Table above
Risk Free Rate	2.21%	2.06%	1.80%	Interpolated from US Govt Band Rate
Assumed Dividend Yield	5%	5%	5%	Management
Estimated Per-Share Value	$4.02	$3.83	$3.47

22. Ultimate parent undertaking

23. Events after the end of the reporting period

COVID-19 is considered to be a non-adjusting post balance sheet event and as such no adjustments have been made to the valuation of assets and liabilities as at 31 December 2019. For further discussion concerning the management assessment of COVID 19 impact on the Company refer to note 1.

Appendix I

(Unaudited)

Ares Management Limited

Pillar 3 Disclosure

Introduction

The CRDIV framework comprises three 'Pillars':

•	Pillar 1 sets out the minimum capital amount that meets the firm's credit, market and operational risk requirement;
•	Pillar 2 requires the firm to assess whether its capital reserves, processes, strategies and systems are adequate to meet Pillar 1 requirements and further determine whether it should apply additional capital, processes, strategies or systems to cover any other risks that it may be exposed to;
•	Pillar 3 requires disclosure of specified information about the underlying risk management controls and capital position to encourage market discipline.

The CRR sets out the provisions for Pillar 3 disclosure. This document is designed to meet the Pillar 3 obligations of the Firm under Part Eight of the CRR (Articles 431 to 455).

Pillar 3 disclosures will be issued on an annual basis after the year-end and published as soon as practical with the Firm's financial statements.

We have made no omissions on the grounds that information has been deemed by us to be immaterial, proprietary or confidential, other than where noted in this document.

Scope and Application of the Requirements

Governance Framework and Risk Management

Regulatory Capital

The Firm is a private limited company and its capital arrangements are established in its Articles of Association. All of AML's capital is tier 1 with deductions against it for intangible assets.

Capital summary as at 31 December 2019:	£000
Ordinary share capital	28,000
Retained profit	15,968
Total tier 1 capital before deductions	43,968
Deduct
Deferred tax	(2,961)
intangible assets	(1,923)
Total capital resources	39,084

As noted previously the Firm is classified as a limited licence firm and as such the Pillar 1 capital requirement is the greater of:

•	The sum of AML's risk weighted exposures relating to market and credit risk; or
•	12.5 x FOR.

It is the Firm's experience that the FOR has historically established AML's capital requirement and only occasionally has this been determined by the sum of the market and credit risk requirements when higher. Based on the firm's 2020 budgeted information and reviewing the 31 December 2019 actuals the FOR will be £10,755k.

The Firm's ICAAP assesses the amount of capital required to mitigate the risks to which it is exposed over a three-year time horizon. The 2019 ICAAP considers the impact of future business plans as well as potential adverse scenarios (such as market downturns or significant operational errors) on the capital resources of the Firm, to ensure regulatory capital requirements are met at all times.

In addition, the Firm has considered the effect of a significant drop in management and performance fee income caused by poor investment performance or other reputational damage/loss and has assessed whether additional capital is required to withstand a 1 in 25 year-type adverse scenario. The Firm also calculates realistic wind-up costs and is comfortable that regulatory capital held would provide for an orderly wind-up.

Based on the risk assessment and stress testing and wind down costs described above the Firm's management concluded that Pillar 2 capital of £13,079k was required for 2019.

Remuneration Code

Remuneration Code Staff Remuneration by Business Area

Business Area	Total Remuneration y/e 31/12/19
Investment Management Services	£26,141,219

Aggregate Quantitative Remuneration by Senior Management and other Remuneration Code Staff

Type of Remuneration Code Staff	Total (aggregate) Remuneration
Senior Management	£5,492,558
Other Remuneration Code Staff	£20,648,661
Totals	£26,141,219

36:T15d8e,

Ares Management Limited Niederlassung Deutschland

Frankfurt am Main

: Ares Management Limited, London

Directors' Report and Financial Statements For the year ended 31 December 2012

Ares Management Limited

Registered no. 5837428

Directors

	Michael Weiner
	Daniel Nguyen
	Kevin Early (appointed 7 February 2013)

Secretary

TMF Corporate Secretarial Services Limited
6 St Andrew Street
5th Floor
London
EC4A 3AE

Auditor

Ernst & Young LLP
1 More London Place
London SE1 2AF

Bankers

Barclays PLC
1 Churchill Place, Level 11
London, E14 5HP

City National Bank
15260 Ventura Boulevard
Sherman Oaks, CA 91403, USA

Solicitors

Latham & Watkins LLC
355 South Grand Avenue
Los Angeles, CA 90071

Registered Office

6 St Andrew Street
5th Floor
London
EC4A 3AE

Directors' report

The directors present their report and financial statements of Ares Management Limited (the "Company") for the year ended 31 December 2012.

Results and dividends

The loss for the year ended 31 December 2012 is £5,219,000 (2011: £3,767,000). The directors do not recommend a dividend be paid for the year (2011: nil).

Principal activity and review of the business

The principal activity of the Company during the year ended 31 December 2012 was to provide advisory and investment management services. The Company was incorporated on 5 June 2006 and is a wholly owned subsidiary of Ares Management LLC ("Ares Management"). The Company is authorised by the Financial Conduct Authority to perform investment management activity that is subject to licensing requirements in the United Kingdom.

The key financial and other performance indicators during the year were as follows:

	2012	2011
	£'000	£'000
Turnover	13,945	9,125
Loss alter tax	(5,219)	(3,767)
Shareholders' funds	25,850	9,169
Current assets as % of current liabilities	120%	129%
Number of employees	25	11

At 31 December 2012, the Company is acting as investment manager of Ares Euro CLO I B.V., Ares European CLO II B.V., Ares European CLO III B.V., Queen Street CLO I B.V., Queen Street CLO II B.V., Global Loan Opportunities Fund, Ares Institutional Loan Fund B.V., Ares Strategic Investment Partners Europe B.V., Ares Capital Europe (Luxembourg) S.a.r.l, Ares Enhanced Loan Investment Strategy VIII, Ares Institutional Credit Fund II, INKA GL I, Bond Opportunities Fund Sub 2, BayVK R2 Fonds Ares II, European Senior Secured Loan Programme S.a.r.l and Ares Credit Strategies Fund III Luxembourg S.a.r.l. On 7 September 2012, as part of the restructuring of Indicus Advisors LLP ("IALLP"), which was one of the entities that was acquired by the Ares group in November 2011, the assets and liabilities of IALLP, including five management contracts, were acquired by the Company. Under the terms of the acquisition, the Company will receive 100% of the investment management fees. In addition Indicus Services Limited employees were transferred to the Company.

Principal risks and uncertainties

Competitive Risks

Legislative Risks

Financial Instrument Risks

The Company has established a financial management framework whose primary objectives are to protect the Company from events that hinder the achievement of the Company's performance objectives.

The objectives aim to ensure sufficient working capital exists and monitor the management of risk at the funds level.

Liquidity risk

Future Developments

The Directors do not expect any change in the principal activity of the Company in the foreseeable future.

Events since the balance sheet date

In the first quarter of 2013, Global Loan Opportunities Fund Series I is going through the redemption process, whereby underlying portfolio securities are sold and invested capital is returned.

Going concern

The Company's activities, together with the factors likely to affect its future development, its financial position and the financial risks are described above.

Pillar 3 disclosures

Pillar 3 disclosures are appended to the financial statements.

Directors

Directors who served during the year and up to the date of this report were:

	Michael Weiner
	Daniel Nguyen
	Kevin Early (appointed 7 February 2013)

Disclosure of information to the auditor

Reappointment of Auditors

The auditors, Ernst & Young, LLP, have indicated their willingness to continue in office. A resolution concerning their reappointment will be put to the members at the annual general meeting.

By the order of the Board

Daniel Nguyen, Director

Statement of directors' responsibilities

The directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.

•	select suitable accounting policies and then apply them consistently;
•	make judgements and estimates that are reasonable and prudent; and
•	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

Independent auditor's report to the member of Ares Management Limited

We have audited the financial statements of Ares Management Limited (the "Company") for the year ended 31 December 2012 which comprise the Profit and Loss Account, the Statement of Total Recognised Gains and Losses, the Balance Sheet, the Cashflow Statement and the related notes 1 to 19. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Respective responsibilities of directors and auditor

As explained more fully in the Statement of Directors' Responsibilities, set out on page 5, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Directors' Report and Financial Statements to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

•	give a true and fair view of the state of the company's affairs as at 31 December 2012 and of its loss for the year then ended;
•	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
•	have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Independent auditor's report to the member of Ares Management Limited Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

•	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
•	the financial statements are not in agreement with the accounting records and returns; or
•	certain disclosures of directors' remuneration specified by law are not made; or
•	we have not received all the information and explanations we require for our audit.

25. April 2013

for and on behalf of Ernst & Young LLP, Statutory Auditor, London

Jeremy Young (Senior statutory auditor)

Profit and loss account for the year ended 31 December 2012

		2012	2011
	Notes	£000	£000
Turnover	2	13,945	9,125
Administrative Expenses		(19,510)	(12,895)
Operating loss	3	(5,565)	(3,770)
Interest receivable and similar charges		346	3
Loss on ordinary activities before taxation		(5,219)	(3,767)
Tax on loss on ordinary activities	7	-	-
Loss for the financial year attributable to members		(5,219)	(3,767)

All amounts are in respect of continuing activities.

Statement of total recognised gains and losses

There are no other gains and losses other than the loss for the year shown above and therefore no other separate statement of total recognized gains and losses has been presented.

The notes on pages 11 to 22 form part of these financial statements.

Balance sheet at 31 December 2012

		2012	2011
	Notes	£000	£000
Fixed assets
Intangible assets	8	22,185	6,954
Tangible assets	9	794	961
Investments	10	189
Total fixed assets		23,168	7,915
Current assets
Debtors	11	10,755	3,159
Cash at bank and in hand		6,217	3,554
Total current assets		16,972	6,713
Creditors: amounts falling due within one year	12	(14,123)	(5,199)
Net current assets		2,849	1,514
Total assets less current liabilities		26,017	9,429
Creditors: amounts falling due atter more than one year	13	(167)	(260)
Net assets		25,850	9,169
Capital and reserves
Called up Share capital	14	45,000	23,100
Profit and Loss account	15	(19,150)	(13,931)
Shareholders' funds		25,850	9,169

The financial statements on pages 8 to 22 were approved and authorised for issue by the directors on 24 April 2013

Daniel Nguyen, Director

Cash flow statement for the year ended 31 December 2012

		2012	2011
	Note	£000	£000
Net cash outflow from operating activities	16(a)	(5,109)	(1,677)
Returns an Investments and servicing of finance
Interest received		3	3
Capital expenditure and financial Investment
Additions to intangible assets		-	(7,344)
Additions to tangible fixed assets		(93)	(1,032)
Acquisition and disposals	16(b)	2,862
Financing
lssue of ordinary share capital		5,000	11,000
Increase/ (decrease) in cash	16(c)	2,663	950

Reconciliation of net cash flow movement in net funds

		2012	2011
		£000	£000
Increase in cash	16(c)	2,663	950
Change in net funds resulting from cash flows		2,663	950
Movement in net funds
Net funds at 31 December		3,554	2,604
Net funds at 31 December		6,217	3,554

The notes on pages I 1 to 22 form part of these financial statements.

Notes to the financial statements at 31 December 2012

1. Accounting Policies

Organisation and business

Basis of preparation

The financial statements are prepared on the going concern basis, under the historical cost convention and are prepared in accordance with applicable UK accounting standards.

Intangible assets

Intangible assets are stated at cost less accumulated amortisation. Amortisation is provided on a straight line basis over the expected useful life of the assets as follows:

Management contracts acquired - over the term of the contract or ten years

The carrying value of the intangible asset is reviewed for impairment on an annual basis.

Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation. Such costs include those costs directly attributable to making the asset capable of operating as intended.

Leasehold buildings	- over the shorter of the lease term or 20 years
Furniture and computer equipment	- over 5 to 7 years

Investments

Investments are stated at cost less any provision for impairment.

Revenue

Rendering of services

Interest income

Interest income is recognised on an accrual basis on cash balances and deferred fees from managed funds.

Special fees

Provisions for liabilities

Leasing commitments

Rentals payable under the operating leases are charged in the profit and loss account on a straight line basis over the lease term. Lease incentives are recognised over the lease term.

Pension costs

The Company operates a defined contribution scheme. Contributions to the defined contribution scheme are recognised in the profit and loss account in the period in which they become payable.

Foreign currencies

Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are revalued at the rate of exchange ruling at the balance sheet date.

All differences are taken to the profit and loss account.

2. Turnover

Turnover principally represents the amounts derived from the provision of investment management services, stated net of Value Added Tax, and arising from continuing activities in Europe.

For the year ended 31 December 2012, base investment management fees earned were £11,333,000 (2011: £7,255,000). Total incentive management fees earned for the period were £1,521,000 (2011: £1,281,000).

3. Operating loss

	2012	2011
	£000	£000
Amortization of intangible assets (see note 8)	1,047	390
Depreciation of owned assets (see note 9)	260	318
Operating lease rentals
- Land and buildings	867	427
- Equipment	9	7
Auditor remuneration (see note 4)	72	46

4. Auditors' Remuneration

The remuneration of the auditors is further analysed as follows:

	2012	2011
	£000	£000
Audit of the financial statements	27	26
Other fees to auditors - taxation services	45	20
	72	46

5. Directors' emoluments

None of the directors received any compensation for services rendered as directors of the Company (2011: nil).

6. Staff costs

	2012	2011
	£000	£000
Wages and salaries	5,213	3,067
Social security costs	694	334
Other pension costs	149	41
Total staff costs	6,056	3,442

The average number of employees at 31 December 2012 and at 31 December 2011, respectively, was as follows:

	No.	No.
Fund management	18	6
Marketing	2	1
Administrative	5	4
Total staff	25	11

7. Tax on profit on ordinary activities

(a) Analysis of charge for the year

	2012	2011
	£000	£000
Corporation tax on profit for the year	-	-
Total current tax for the year	-	-

(b) Factors affecting the charge for the year

The tax assessed on the loss on ordinary activities for the year is higher than the standard rate of corporation tax in the UK of 24.5% for 2012 (2011: 26.5%). The differences are reconciled below:

	2012	2011
	£000	£000
Loss on ordinary activities before taxation	(5,219)	(3,767)
Corporation tax at 24.5% (2011: 26.5%)	(1,279)	(998)
Depreciation in excess of capital allowances	64	84
Unrelieved tax losses	1,215	914
Current tax charge for the year	-	-

The directors consider it prudent that the deferred tax asset amount of £4,047,000 (2011: £3,165,000) in respect of losses not utilised has not been recognised.

8. Intangible assets Total

	Total
	£000
Cost:
At 31 December 2011	7,344
Acquisition	16,278
At 31 December 2012	23,622
Amortization:
At 31 December 2011	(390)
Charge for the year	(1,047)
At 31 December 2012	(1,437)
Net book value at 31 December 2012	22,185
Net book value at 31 December 2011	6,954

Fair Value

On 7 September 2012, the Company acquired the assets and liabilities, including five investment management contracts, from lndicus Advisors LLP for a consideration of £16,900,000. the assets and liabilities acquired were as follows:

	Book value	Fair value adjustment	Total
	£000	£000	£000
Investment management contracts	-	16,278	16,278
Investments	165	-	165
Management fee receivable	1,751	-	1,751
Amounts due from affiliated parties	51	-	51
Trade debtors	12	-	12
VAT receivable	5	-	5
Cash	2,862	-	2,862
Trade creditors	(51)	-	(51)
Amounts due to affiliated parties	(4,173)	-	(4,173)
	622	16,278	16,900
Satisfied by
Issue of Share capital			16,900

9. Tangible fixed assets

	Furniture and computer equipment	Leasehold improve- ments	Total
	£000	£000	£000
Cost:
At 31 December 2011	616	1,803	2,419
Additions	33	60	93
At 31 December 2012	649	1,863	2,512
Depreciation:
At 31 December 2011	332	1,126	1,458
Charge for the year	72	188	260
At 31 December 2012	404	1,314	1,718
Net book value at 31 December 2012	245	549	794
Net book value at 31 December 2011	284	677	961

10. Investments

	Total
	£000
At 31 December 2011	-
Additions (see note 8)	165
Additions (PIK)	36
At 31 December 2012	201
Valuations:
At 31 December 2011	-
Impairment	(12)
At 31 December 2012	189
Net book value at 31 December 2012	189
Net book value at 31 December 2011	-

In April 2011, IALLP invested €193,675 (£171,561) in the Dinosol Bridge A facility. The debt was restructured in August 2011 such that the facility was converted into the New Money TL Facility A loan. €25,373 (£20,113) of payment in kind ("PIK") interest is included in the balance sheet value of the investment. In October 2012, the debt was again restructured to a 7% PIK note facility with PIK interest capitalized on an annual basis. Interest shall accrue as follows: (i) 7% per annum for years 1, 2 and 3; (ii) 8% per annum for year 4; (iii) 10% per annum for year 5; and (iv) 12% per annum for year 6.

11. Debtors

	2012	2011
	£000	£000
Management fee receivable	9,605	1,754
Amounts due from affiliated parties	287	1,064
Prepayments	198	240
Trade debtors	361	-
VAT receivable	304	101
	10,755	3,159

12. Creditors: amounts falling due within one period

	2012	2011
	£000	£000
Amounts due to affiliated parties	12,006	3,179
Other taxes and social security costs	217	112
Trade creditors	319	251
Accruals	1,581	1,657
	14,123	5,199

13. Creditors: amounts falling due after more than one year

	2012	2011
	£000	£000
Accruals	167	260
	167	260

14. Share capital

	2012	2011
	£000	£000
Allotted, called up and fully paid
Ordinary shares £1 each	45,000	23,100

On 11 May 2012, the Company issued 2,000,000 £ 1 ordinary shares for a consideration of £2,000,000 to provide working capital. On 27 June 2012, the Company issued 3,000,000 £ 1 ordinary shares for a consideration of £3,000,000 to provide working capital. On 7 September, 2012, the Company issued 16,900,000 £1 preference shares to acquire IALLP's operating assets and liabilities, including its management contracts. These preference shares were reclassified and converted into £ 1 ordinary shares on 19 November 2012.

15. Reconciliation of movement in equity shareholders' funds

	Share capital	Profit and loss account	Total Shareholders' funds
	£'000	£'000	£'000
At 31 December 2011	23,100	(13,931)	9,169
Issue of share capital	21,900	-	21,900
Loss for the year	-	(5,219)	(5,219)
At 31 December 2012	45,000	(19,150)	25,850

16. Notes to the statement of cash flows

(a) Reconciliation of operating loss to net cash outflow from operating activities:

	2012	2011
	£000	£000
Operating loss	(5,565)	(3,770)
Depreciation of tangible fixed assets	260	318
Amortization of intangible assets	1,047	390
Impairment of loan	12	-
Increase in debtors	(5,470)	(2,120)
Decrease in creditors	4,607	3,505
Net cash outflow from operating activities	(5,109)	(1,677)
(b) Acquisitions and disposals
Net cash acquired with assets and liabilities purchased from
IALLP (see note 8)	2,862	-

	At 31 December 2011	Cash flows	31 December 2012
	£'000	£'000	£'000
Cash at bank	3,554	2,663	6,217

The Company's acquisition of IALLP in exchange for share capital represents a non-cash transaction, except for the cash received in exchange for £2,862,000 shares. As a consequence, the remaining increase in share capital of £14,038,000, assets of £18,262,000 and the assumption of liabilities of £4,224,000 have been excluded from the statement of cash flows.

17. Related party transactions

For the year ended 31 December 2012, the Company entered into certain related party transactions with Ares Management and other affiliates of the Company. As of 31 December 2012, the Company had a net due to affiliated parties in the amount of £11,719,000 (2011: £2,115,000) (see notes 11 and 12) relating to these transactions.

The Company and Ares Capital Europe (Luxembourg) S.A.R.L. ("ACE LUX"), are party to an investment management agreement whereby the Company provides investment management services to ACE LUX. As of 31 December 2012, the Company earned £3,457,000 (2011: £3,843,000) related to this agreement, where there is no outstanding receivable balance at 31 December 2012 (2011: £1,060,000).

In addition, the Company and Ares Capital Europe Limited ("ACE") are party to a Sub-Advisory Agreement. Under the terms of these agreements, ACE provide services to the Company necessary for the Company to satisfy its obligations under the Investment Management Agreement entered into between the Company and ACE. The fees relating to the Sub-Advisory agreement total £3,457,000 (2011: £3,843,000) as of 31 December 2012, and there is no outstanding payable to ACE at 31 December 2012 (2011: £1,060,000).

Additionally, the Company and ACE are party to a Secondment Agreement. The additional services provided by ACE employees under the Secondment Agreement total £97,000 (2011: £58,000) as of 31 December 2012 of which £2,000 (2011: £35,000) is included as an outstanding receivable from ACE at 31 December 2012.

The Company receives an arrangement fee from European Senior Secured Loan Programme S.a.r.l each time it originates a new unitranche loan, which will be used to reduce future ACE management fee that it receives. As of 31 December 2012, £810,000 is included as an outstanding payable to ACE at 31 December 2012 (2011: nil).

18. Financial commitments

At 31 December 2012, the Company had annual commitments under operating leases as set out below:

	2012	2011
	£'000	£'000
Land and Buildings
On leases expiring:
-between two and three years from the balance sheet date	438	-
Equipment
On leases expiring:
- within one year from the balance sheet date		10
Purchase Obligations
On agreements expiring:
-within one year from the balance sheet date	249	283
-between one and two years from the balance sheet date	206	87

19. Ultimate parent undertaking

The Company is immediately controlled by Ares Management LLC and ultimately controlled by Ares Partners Management Company LLC.

Appendix I

(Unaudited)

Ares Management Limited

Pillar 3 Disclosure

Introduction

The Capital Requirements Directive ("CRD") of the European Union establishes a revised regulatory capital framework across Europe governing the amount and nature of capital credit institutions and investments firms must maintain. CRD represents the European Union's application of the Basel Capital Accord and in the United Kingdom CRD was originally implemented by the Financial Services Authority ("FSA") through the General Prudential Sourcebook ("GENPRU") and the Prudential Sourcebook for Banks, Building Societies and Investment Firms ("BIPRU"). As of 1 April 2013 the FSA was disbanded and replaced by two regulatory bodies: the Financial Conduct Authority ("FCA") and the Prudential Regulatory Authority ("PRA"). Ares Management Ltd ("the Firm" or "AML") is now regulated by the FCA which has adopted the FSA handbook.

The FCA framework consists of three 'Pillars':

•	Pillar 1 sets out the minimum capital amount that meets the firm's credit, market and operational risk;
•	Pillar 2 requires the firm at least annually to assess and document whether its Pillar 1 capital is adequate to meet its risks, which can be subject to review by the FCA;
•	Pillar 3 requires disclosure of specified information about the underlying risk management controls and capital position.

The rules in BIPRU 11 set out the provision for Pillar 3 disclosure. This document is designed to meet the Pillar 3 obligations of the Firm.

The Firm will make Pillar 3 disclosures annually as at its accounting reference date (315` December). These disclosures will be published as an appendix to its annual audited financial statements.

We have made no omissions on the grounds that it is immaterial, proprietary or confidential other than where noted in this document.

Scope and Application of the Requirements

Ares Management Limited is incorporated in England and Wales. It is subject to minimum regulatory capital requirements set by the FCA. The Firm is categorised as a "BIPRU €50K Limited Licence" investment firm by the FCA for capital purposes and as such has no trading book exposures. The Firm is not a member of an EEA group and so is not required to prepare consolidated reporting for prudential purposes.

Governance Framework and Risk Management

The board and senior management team has accepted collective responsibility for compliance. In February 2012 the Firm appointed one of its senior employees as its new UK based compliance officer. This individual along with the Parent's Chief Compliance Officer and his team in Los Angeles is responsible for compliance oversight. In addition, the Firm also utilises the services of external consultants, who provide advice and assistance on a range of regulatory matters and also undertake regular monitoring and produce reports summarizing work performed and recommendations for improvements.

Regulatory Capital

The Firm is a private limited company and its capital arrangements are established in its Articles of Association. All of its capital is tier 1 with a deduction against it for intangible assets.

Capital summary as at 31 December 2012:

Ordinary Share capital	£ 45,000,000
Retained loss	£ (19,150,000)
Total tier 1 capital	£ 25,850,000
Deductions: intangible assets	£ (22,185,000)
Total capital resources	£ 3,665,000

The Firm is small with a simple operational infrastructure. Its market risk is limited to foreign exchange risk on its cash and accounts receivable in foreign currency, and credit risk from management and performance fees receivable from the funds under its management. The Firm follows the standardised approach to market risk. It has adopted the Simplified standard and not the Internals Ratings Based approach to credit risk. The Firm is subject to the Fixed Overhead Requirement and is not required to calculate an operational risk capital charge though it considers this as part of its process to identify the level of risk based capital required.

As noted previously the Firm is a limited licence firm and as such its Pillar 1 capital requirement is the greater of:

•	Its base capital requirement of €50,000; or
•	The sum of its market and credit risk requirements; or
•	Its Fixed Overhead Requirement.

The Firm's ICAAP assesses the amount of capital required to mitigate the risks to which it is exposed over a three year time horizon. The ICAAP considers the impact of future business plans as well as potential adverse scenarios (such as market downturns or significant operational errors) on the capital resources of the Firm, to ensure regulatory capital requirements are met at all times.

In addition, the Firm has considered the effect of significant drop in management and performance fee income caused by poor investment performance or other reputational damage / loss and has assessed whether additional capital is required to withstand a 1 in 25 year type adverse scenario. The Firm also calculates realistic wind-up costs and is comfortable that regulatory capital held would allow it to wind up in an orderly fashion.

Based on the risk assessment and stress testing described above the Firm's management has concluded that additional Pillar 2 capital is not required. All of the significant risks identified in the Pillar 2 review are more than adequately covered by the Pillar 1 regulatory capital requirement. The ICAAP also shows that the Firm is compliant with the FCA's 'overall financial adequacy rule' and the 'overall pillar 2 rule' contained in GENPRU and BIPRU.

Remuneration Code

The Firm has assessed its remuneration structure in line with the FCA Remuneration Code (the "Code") and has adopted policies and procedures designed to ensure that risk is monitored and mitigated in line with the Code. Under FCA guidance, the Firm has determined that it is a "Proportionality Level 3" firm and has applied the rules appropriate to this level. The Firm believes that given its business, it is already structured in compliance with the Principles of the Code. The Board, in accordance with Ares Management LLC's firmwide compensation guidelines determines the Firm's remuneration policy on at least an annual basis. AML's annual review of bonuses and performance related remuneration assesses the overall profits of the Firm and the business division along with the individual's financial and non-financial performance.

Remuneration Code Staff Remuneration by Business Area (BIPRU 11.5.18(6))

Business Area	Total Remuneration y/e 31/12/12
Investment Management Services	£1,066,194

Aggregate Quantitative Remuneration by Senior Management and other Remuneration Code Staff (BIPRU 11.5.18(7))

Type of Remuneration Code Staff	Total Remuneration
Senior Management (SIF)	£1,066,194
Other Remuneration Code Staff	nil
Totals	£1,066,194

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Ares Management Limited Niederlassung Deutschland

Frankfurt am Main

Report and Financial Statements For the year ended 31 December 2013

Ares Management Limited, London

Directors' report

Strategic report

Statement of directors' responsibilities

Profit and loss account for the year ended 31 December 2013

Balance sheet at 31 December 2013

Cash flow statement for the year ended 31 December 2013

Notes to the financial statements at 31 December 2013

Appendix l (Unaudited)

Ares Management Limited

Pillar 3 Disclosure

Ares Management Limited Niederlassung Deutschland

Frankfurt am Main

Befreiender Jahresabschluss zum Geschäftsjahr vom 01.01.2022 bis zum 31.12.2022

ARES MANAGEMENT LIMITED

London/UK

Ares Management Limited Niederlassung Deutschland

Frankfurt am Main

Befreiender Jahresabschluss zum Geschäftsjahr vom 01.01.2021 bis zum 31.12.2021

ARES MANAGEMENT LIMITED

London/UK

Ares Management Limited Niederlassung Deutschland

Frankfurt am Main

Befreiender Jahresabschluss gem. §325 a HGB zum Geschäftsjahr vom 01.01.2020 bis zum 31.12.2020

ARES MANAGEMENT LIMITED

London/UK

Appendix I

(Unaudited)

Ares Management Limited

Pillar 3 Disclosure

Ares Management Limited Niederlassung Deutschland

Frankfurt am Main

Jahresabschluss zum Geschäftsjahr vom 01.01.2018 bis zum 31.12.2018

Registered no. 05837428

Directors' report

Strategic report

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ARES MANAGEMENT LIMITED

Profit and loss account

for the year ended 31 December 2018

Statement of changes in equity

for the year ended 31 December 2018

Balance sheet

at 31 December 2018

Cash flow statement

for the year ended 31 December 2018

Notes to the financial statements

at 31 December 2018

Appendix 1 (Unaudited)

Ares Management Limited

2018 Pillar 3 Disclosure

Ares Management Limited Niederlassung Deutschland

Frankfurt am Main

Jahresabschluss zum Geschäftsjahr vom 01.01.2017 bis zum 31.12.2017

Ares Management Limited

Report and Financial Statements For the year ended 31 December 2017

Registered no. 05837428

Independent auditor's report to the member of Ares Management Limited

Profit and loss account for the year ended 31 December 2017

Statement of changes in equity for the year ended 31 December 2017

Balance sheet at 31 December 2017

Cash flow statement for the year ended 31 December 2017

Notes to the financial statements at 31 December 2017

Appendix 1 (Unaudited)

Ares Management Limited

Pillar 3 Disclosure

Ares Management Limited Niederlassung Deutschland

Frankfurt am Main

Jahresabschluss zum Geschäftsjahr vom 01.01.2015 bis zum 31.12.2015

ARES MANAGEMENT LIMITED, London/UK

Directors' report

Strategic report

Independent auditor's report to the member of Ares Management Limited

Profit and loss account for the year ended 31 December 2015

Balance sheet at 31 December 2015

Cash flow statement for the year ended 31 December 2015

Notes to the financial statements at 31 December 2015

Appendix I (Unaudited) Ares Management Limited Pillar 3 Disclosure

Befreiender Jahresabschluss gem. §325 a HGB
zum Geschäftsjahr vom 01.01.2020 bis zum 31.12.2020

Report and Financial Statements
For the year ended 31 December 2017

Appendix 1
(Unaudited)

Appendix I
(Unaudited)
Ares Management Limited
Pillar 3 Disclosure

Report and Financial Statements
For the year ended 31 December 2014

Profit and loss account
for the year ended 31 December 2014

Balance sheet
at 31 December 2014

Cash flow statement
for the year ended 31 December 2014

Notes to the financial statements
at 31 December 2014

Appendix I
(Unaudited)
Ares Management Limited
Pillar 3 Disclosure

Befreiender Jahresabschluss gem. §325 a HGB
zum Geschäftsjahr vom 01.01.2016 bis zum 31.12.2016