REG - Man Group plc - Half-year Report
02/08/2022 07:00
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RNS Number : 5288U Man Group plc 02 August 2022
Press Release
02 August 2022
Half year results for the six months ended 30 June 2022
Differentiated business model drives strong results
Key points
· Assets under management (AUM) of $142.3 billion (31 December
2021: $148.6 billion)
o Net inflows of $3.2 billion
o Positive investment performance of $2.1 billion from alternative
strategies
o Despite generating strong alpha, market beta resulted in negative
investment performance of $7.0 billion from long-only strategies
o Negative FX and other movements of $4.6 billion
· Core earnings per share (EPS) increased by 28% to 24.0¢ (H1
2021: 18.7¢)
o Core management fee EPS increased by 23% to 9.1¢ (H1 2021: 7.4¢)
o Core performance fee EPS increased by 32% to 14.9¢ (H1 2021: 11.3¢)
· Statutory EPS (diluted) increased by 44% to 22.7¢ (H1 2021:
15.8¢)
· Run rate net management fee revenue of $937 million as at 30
June 2022 (31 December 2021: $939 million)
· Balance sheet strength and liquidity position support long-term
growth
· Recommended interim dividend of 5.6¢ per share, as per
guidance (H1 2021: 5.6¢ per share)
· At 29 July 2022 we had completed $39 million of the $125
million share buyback announced in June 2022
Luke Ellis, Chief Executive Officer of Man Group, said:
"The first half of 2022 was yet another strong period for Man Group. Amidst a
volatile market environment, we delivered for our clients and shareholders
alike, demonstrating the value that active, uncorrelated investment strategies
and solutions can bring to portfolios.
"Strong performance from our absolute return strategies, positive alpha from
our long-only strategies, net inflows 2.7% ahead of the industry, and a 28%
increase in core earnings per share reflect the quality of our people, the
benefit of our technology, and the attractiveness of our differentiated
business model.
"We enter the second half with high performance fee potential and a good level
of client engagement. While we expect some volatility in flows in the near
term, as clients access liquidity and rebalance their portfolios due to market
movements, we remain focused on the long term. We are confident that our
diversified range of investment strategies and continued focus on alpha
generation position us well for future growth."
'Core' measures are alternative performance measures. For a detailed
description of our alternative performance measures, including non-core items,
please refer to pages 28-33.
Summary financials
Six months ended Year Six months ended
ended
30 Jun 2022
30 Jun 2021
31 Dec 2021
Assets under management (end of period), $ billions 142.3 148.6 135.3
$ millions
Core net management fee revenue 469 877 417
Core performance fees 404 569 284
Core (losses)/gains on investments (21) 27 17
Core sub-lease rental and lease surrender income 3 13 10
Core net revenue 855 1,486 728
Asset servicing costs (30) (58) (29)
Compensation costs (343) (596) (293)
Core other costs (81) (161) (77)
Core net finance expense (6) (13) (6)
Core profit before tax 395 658 323
Non-core items (15) (68) (43)
Statutory profit before tax 380 590 280
¢
Statutory EPS (diluted) 22.7 33.8 15.8
Core EPS 24.0 38.7 18.7
Core management fee EPS 9.1 15.7 7.4
Dividend per share 5.6 14.0 5.6
Financial key performance indicators(1)
Relative investment performance 0.3% 1.9% 1.3%
Relative net flows 2.7% 9.8% 0.8%
Core EPS 24.0¢ 38.7¢ 18.7¢
Core management fee EPS growth(2) 23% 52% 51%
Dividend and share repurchase
Man Group's ordinary dividend policy is progressive, taking into account the
growth in the firm's overall earnings. The firm first takes into account
required capital and potential strategic opportunities, and maintains a
prudent balance sheet. Our policy is to then distribute available capital to
shareholders over time by way of higher dividend payments and/or share
repurchases. While the Board considers dividends as the primary method of
returning capital to shareholders, it will continue to execute share
repurchases when advantageous.
In line with this policy, the Board announced a share buyback of $125 million
on 30 June and has declared an interim dividend of 5.6¢ per share (30 June
2021: 5.6¢). The interim dividend of 5.6¢ per share is in line with the
guidance communicated at our full year results that we intend to keep our
interim dividend flat until such time as the ratio of interim to final
dividend gets closer to 1:2, in line with the broader UK market. We will fix
and announce the US dollar to sterling dividend currency conversion rate on 25
August 2022, in advance of payment.
Dates for the 2022 interim dividend
Ex-dividend date 11 August 2022
Record date 12 August 2022
Sterling conversion date 25 August 2022
Payment date 09 September 2022
1. For details of key performance indicators refer to the 2021 Annual
Report.
2. Growth measured against comparative prior period.
Conference call and presentation for investors and analysts
A conference call with management including an opportunity to ask questions
will commence at 09.30am (London) on 02 August 2022. A copy of the
presentation will be available on the investor relations section of
www.man.com from 09.25am.
The conference call can be accessed at:
https://mangroup.webex.com/mangroup/j.php?MTID=mc46d3c24a62eb799094b6f602922659a
(https://mangroup.webex.com/mangroup/j.php?MTID=mc46d3c24a62eb799094b6f602922659a)
Webinar number:
2367 571 7229
Webinar password:
NevWCK24wK6 (63892524 from phones)
Join by phone:
+44-203-478-5289 United Kingdom toll
Access code: 2367 571 7229
Please note:
· We recommend connecting to the meeting 5-10 minutes prior to
the start time
· To ask a question during the Q&A session you will need to
access the meeting via the link above
Enquiries
Karan Shirgaokar
Head of Investor Relations
+44 20 7144 1434 investor.relations@man.com
(mailto:investor.relations@man.com)
Georgiana Brunner
Head of Communications
+44 20 7144 1000
media@man.com (mailto:media@man.com)
Neil Doyle
FTI Consulting
+44 77 7197 8220
man@fticonsulting.com (mailto:man@fticonsulting.com)
About Man Group
Man Group is a global, technology-empowered active investment management firm
focused on delivering alpha and portfolio solutions for clients. Headquartered
in London, we manage $142.3 billion(1) and operate across multiple offices
globally.
We invest across a diverse range of strategies and asset classes, with a mix
of long-only and alternative strategies run on a discretionary and
quantitative basis, across liquid and private markets. Our investment teams
work within Man Group's single operating platform, enabling them to invest
with a high degree of empowerment while benefiting from the collaboration,
strength and resources of the entire firm. Our platform is underpinned by
advanced technology, supporting our investment teams at every stage of their
process, including alpha generation, portfolio management, trade execution and
risk management.
Our clients and the millions of retirees and savers they represent are at the
heart of everything we do. We form deep and long-lasting relationships and
create tailored solutions to help meet their unique needs. We recognise that
responsible investing is intrinsically linked to our fiduciary duty to our
clients, and we integrate this approach broadly across the firm.
We are committed to creating a diverse and inclusive workplace where
difference is celebrated and everyone has an equal opportunity to thrive, as
well as giving back and contributing positively to our communities. For more
information about Man Group's global charitable efforts, and our diversity and
inclusion initiatives, please visit:
https://www.man.com/corporate-responsibility
(https://www.man.com/corporate-responsibility)
Forward looking statements and other important information
This document contains forward-looking statements with respect to the
financial condition, results, and business of Man Group plc. By their nature,
forward-looking statements involve risk and uncertainty and there may be
subsequent variations to estimates. Man Group plc's actual future results may
differ materially from the results expressed or implied in these
forward-looking statements.
The content of the websites referred to in this announcement is not
incorporated into and does not form part of this announcement. Nothing in this
announcement should be construed as or is intended to be a solicitation for or
an offer to provide investment advisory services or to invest in any
investment products mentioned herein.
1. As at 30 June 2022. All investment management and advisory services
are offered through the investment engines of Man AHL, Man Numeric, Man GLG,
Man FRM and Man Global Private Markets (GPM).
Assets under management
AUM movements for the six months ended 30 June 2022
$bn AUM at Net flows Investment performance FX & other AUM at
31 Dec 2021
30 Jun 2022
Absolute return 41.2 4.0 3.4 0.7 49.3
Total return 35.4 0.5 (2.1) (2.6) 31.2
Multi-manager solutions 15.0 0.3 0.8 0.2 16.3
Alternative 91.6 4.8 2.1 (1.7) 96.8
Systematic long-only 36.1 (1.4) (5.4) (1.1) 28.2
Discretionary long-only 20.9 (0.2) (1.6) (1.8) 17.3
Long-only 57.0 (1.6) (7.0) (2.9) 45.5
Total 148.6 3.2 (4.9) (4.6) 142.3
AUM movements for the three months ended 30 June 2022
$bn AUM at Net flows Investment performance FX & other AUM at
31 Mar 2022
30 Jun 2022
Absolute return 46.0 2.2 1.6 (0.5) 49.3
Total return 35.0 (0.3) (1.5) (2.0) 31.2
Multi-manager solutions 15.9 (0.1) 0.4 0.1 16.3
Alternative 96.9 1.8 0.5 (2.4) 96.8
Systematic long-only 34.3 (1.2) (4.0) (0.9) 28.2
Discretionary long-only 20.2 (0.5) (1.1) (1.3) 17.3
Long-only 54.5 (1.7) (5.1) (2.2) 45.5
Total 151.4 0.1 (4.6) (4.6) 142.3
AUM by product category
$bn 30 Jun 2021 30 Sep 2021 31 Dec 2021 31 Mar 2022 30 Jun 2022
Absolute return 38.3 39.9 41.2 46.0 49.3
AHL Alpha 8.3 7.9 8.6 11.4 13.0
Man Institutional Solutions(1) 9.5 11.1 11.0 11.9 12.7
AHL Dimension 5.5 5.4 5.5 5.7 5.9
AHL Evolution 4.6 4.5 4.7 4.9 5.3
GLG equity 4.9 5.1 5.5 5.3 4.8
AHL Diversified 1.4 1.4 1.3 1.4 1.5
Other(2) 4.1 4.5 4.6 5.4 6.1
Total return 32.5 34.6 35.4 35.0 31.2
AHL TargetRisk 14.3 16.6 18.7 17.8 15.1
Alternative Risk Premia 9.1 8.8 8.9 9.1 8.2
CLOs and other 4.7 4.8 3.7 3.8 3.9
Global Private Markets 2.7 2.8 3.0 3.3 3.1
Emerging markets fixed income 1.7 1.6 1.1 1.0 0.9
Multi-manager solutions 13.4 14.1 15.0 15.9 16.3
Infrastructure & direct access 7.5 8.1 9.1 9.5 9.6
Segregated 5.3 5.4 5.4 5.9 6.1
Diversified and thematic FoHF 0.6 0.6 0.5 0.5 0.6
Systematic long-only 30.7 30.0 36.1 34.3 28.2
Global equity 13.4 13.3 18.9 17.7 13.8
International equity 7.5 7.6 8.0 8.0 6.9
Emerging markets equity 8.0 7.4 7.4 7.0 6.1
US equity 1.8 1.7 1.8 1.6 1.4
Discretionary long-only 20.4 20.9 20.9 20.2 17.3
Credit and convertibles 4.1 5.0 5.5 5.4 4.8
UK equity 4.6 4.7 4.7 4.5 4.0
Japan equity 4.2 4.2 3.7 4.3 4.0
Europe ex-UK equity 3.5 3.0 3.2 2.5 1.7
Emerging markets fixed income 1.9 1.9 1.9 1.8 1.5
Other(3) 2.1 2.1 1.9 1.7 1.3
Total 135.3 139.5 148.6 151.4 142.3
1. Man Institutional Solutions includes AHL Institutional Solutions,
which invests into a range of AHL strategies including AHL Alpha, AHL
Dimension and AHL Evolution.
2. Includes AHL other, Numeric absolute return and GLG credit absolute
return strategies.
3. Includes equity and multi-asset strategies.
Investment performance
Return (net of fees) Annualised return (net of fees)
3 months to 6 months to 3 years to 5 years to Inception to 30 Jun 2022
30 Jun 2022
30 Jun 2022
30 Jun 2022
30 Jun 2022
Absolute return
AHL Alpha 1 4.0% 11.3% 8.7% 7.7% 10.7%
AHL Dimension 2 4.5% 6.1% 2.3% 3.8% 4.8%
AHL Evolution 3 6.7% 10.9% 11.9% 11.1% 13.1%
AHL Diversified 4 4.8% 17.2% 10.9% 9.0% 11.1%
GLG Alpha Select Alternative 5 1.0% 3.8% 6.8% 7.3% 4.7%
GLG Event Driven Alternative 6 -1.6% -1.2% - - 6.6%
GLG Global Credit Multi Strategy 7 -1.1%* -0.1%* 4.7%* 4.9%* 11.2%*
Total return
AHL TargetRisk 8 -10.1% -14.8% 3.3% 7.5% 7.6%
Alternative Risk Premia 9 1.7% 5.0% 1.8% 3.4% 3.7%
GLG Global Emerging Markets Debt Total Return 10 4.8% 4.4% 2.2% 0.9% 2.2%
Multi-manager solutions
FRM Diversified II 11 -0.1% 0.7% 5.3% 3.8% 4.1%
Systematic long-only
Numeric Global Core 12 -16.5% -19.8% 6.5% 5.8% 8.9%
Relative return -0.3% 0.7% -0.4% -1.8% 0.5%
Numeric Europe Core 13 -10.2% -15.3% 4.6% 4.3% 8.2%
Relative return -1.2% -1.4% 0.4% 0.3% 2.2%
Numeric Emerging Markets Core 14 -14.7% -15.0% 12.9% 7.2% 7.7%
Relative return 1.7% 5.0% 7.1% 3.7% 5.0%
Discretionary long-only
GLG Continental European Growth 15 -14.6% -27.3% 2.0% 4.1% 8.5%
Relative return -5.9% -12.3% -1.5% -0.1% 3.0%
GLG Japan CoreAlpha Equity 16 3.6% 14.5% 10.0% 4.9% 4.5%
Relative return 7.3% 19.3% 1.0% -0.5% 1.9%
GLG Undervalued Assets 17 -5.9% -6.3% -0.4% 1.7% 5.5%
Relative return -0.9% -1.7% -2.9% -1.6% 0.6%
GLG High Yield Opportunities 18 -9.0% -11.4% 4.8% - 6.3%
Relative return 1.7% 4.4% 7.4% - 7.0%
Indices
HFRX Global Hedge Fund Index 19 -3.7% -5.0% 3.1% 1.9%
HFRI Fund of Funds Conservative Index 19 -1.7% -1.5% 4.6% 4.0%
HFRI Equity Hedge (Total) Index 19 -8.0% -12.0% 6.5% 5.5%
HFRX EH: Equity Market Neutral Index 19 -2.5% -2.4% -2.1% -1.9%
Barclay BTOP 50 Index 20 6.8% 16.5% 10.9% 7.4%
*Estimated
Past or projected performance is no indication of future results. Financial
indices are used for illustrative purposes only and are provided for the
purpose of making a comparison to general market data as a point of reference
and should not be construed as a true comparison to the strategy.
The information herein is being provided solely in connection with this press
release and is not intended to be, nor should it be construed or used as,
investment, tax or legal advice, any recommendation or opinion regarding the
appropriateness or suitability of any investment or strategy, or an offer to
sell, or a solicitation of an offer to buy, an interest in any security,
including an interest in any fund or pool described herein.
1. Represented by AHL Alpha plc from 17 October 1995 to 30 September
2012, and by AHL Strategies PCC Limited: Class Y AHL Alpha USD Shares from 1
October 2012 to 30 September 2013. The representative product was changed at
the end of September 2012 due to the provisioning of fund liquidation costs in
October 2012 for AHL Alpha plc, which resulted in tracking error compared with
other Alpha Programme funds. Both funds are valued weekly; however, for
comparative purposes, statistics have been calculated using the best quality
price that is available at each calendar month end, using estimates where a
final price is unavailable. Where a price, either estimate or final is
unavailable on a calendar month end, the price on the closest date prior to
the calendar month end has been used. Both of the track records have been
adjusted to reflect the fee structure of AHL Alpha (Cayman) Limited - USD
Shares. From 30 September 2013, the actual performance of AHL Alpha (Cayman)
Limited - USD Shares is displayed.
2. Represented by AHL Strategies PCC Limited: Class B AHL Dimension
USD Shares from 3 July 2006 to 31 May 2014, and by AHL Dimension (Cayman) Ltd
- F USD Shares Class from 1 June 2014 until 28 February 2015 when AHL
Dimension (Cayman) Ltd - A USD Shares Class is used. Representative fees of
1.5% Management Fee and 20% Performance Fee have been applied.
3. Represented by AHL Evolution Limited adjusted for the fee structure
(2% p.a. management fee and 20% performance fee) from September 2005 to 31
October 2006; and by AHL Strategies PCC: Class G AHL Evolution USD from 1
November 2006 to 30 November 2011; and by the performance track record of AHL
Investment Strategies SPC: Class E AHL Evolution USD Notes from 1 December
2011 to 30 November 2012. From 1 December 2012, the track record of AHL
(Cayman) SPC: Class A1 Evolution USD Shares has been shown. All returns shown
are net of fees.
4. Represented by Man AHL Diversified plc from 26 March 1996 to 29
October 2012, and by Man AHL Diversified (Guernsey) USD Shares - Class A from
30 October 2012 to date. The representative product was changed at the end of
October 2012 due to legal and/or regulatory restrictions on Man AHL
Diversified plc preventing the product from accessing the Programme's revised
target allocations. Both funds are valued weekly; however, for comparative
purposes, statistics have been calculated using the best quality price that is
available at each calendar month end, using estimates where a final price is
unavailable. Where a price, either estimate or final is unavailable on a
calendar month end, the price on the closest date prior to the calendar month
end has been used.
5. Represented by Man GLG Alpha Select Alternative IL GBP; AUM
included within GLG equity under the absolute return product category.
6. Represented by Man GLG Event Driven Alternative IN USD; AUM
included within GLG equity under the absolute return product category.
7. Represented by GLG Market Neutral Fund - Class Z Restricted - USD
until 31 August 2007. From 1 September 2007, Man GLG Global Credit Multi
Strategy CL IL XX USD unrestricted; AUM included within Other under the
absolute return product category.
8. Represented by Man AHL TargetRisk class I USD.
9. Represented by Man Alternative Risk Premia Class A USD.
10. Represented by Man GLG Global Emerging Markets Debt Total Return
Class I USD; AUM included within Emerging markets fixed income under the total
return product category.
11. Represented by FRM Diversified II Fund SPC - Class A USD ('the
fund') until April 2018 then Class A JPY hedged to USD thereafter. However,
prior to Jan 2004, FRM has created the FRM Diversified II pro forma using the
following methodology: i) for the period Jan 1998 to Dec 2003, by using the
returns of Absolute Alpha Fund PCC Limited - Diversified Series Share Cell
('AA Diversified - USD') adjusted for fees and/or currency, where applicable.
For the period Jan 2004 to Feb 2004, the returns of the fund's master
portfolio have been used, adjusted for fees and/or currency, where applicable.
Post Feb 2004, the fund's actual performance has been used, which may differ
from the calculated performance of the track record. There have been occasions
where the 12-months' performance to date of FRM Diversified II has differed
materially from that of AA Diversified. Strategy and holdings data relates to
the composition of the master portfolio; AUM included within Diversified and
thematic fund of hedge funds (FoHF) under the multi-manager product category.
12. Performance relative to the MSCI World. This reference index is
intended to best represent the strategy's universe. Investors may choose to
compare returns for their accounts to different reference indices, resulting
in differences in relative return information. Comparison to an index is for
informational purposes only, as the holdings of an account managed by Numeric
will differ from the securities which comprise the index and may have greater
volatility than the holdings of an index.
13. Performance relative to the MSCI Europe (EUR). This reference index
is intended to best represent the strategy's universe. Investors may choose to
compare returns for their accounts to different reference indices, resulting
in differences in relative return information. Comparison to an index is for
informational purposes only, as the holdings of an account managed by Numeric
will differ from the securities which comprise the index and may have greater
volatility than the holdings of an index; AUM included within International
equity under the systematic long-only product category.
14. Performance relative to MSCI Emerging Markets. This reference index
is intended to best represent the strategy's universe. Investors may choose to
compare returns for their accounts to different reference indices, resulting
in differences in relative return information. Comparison to an index is for
informational purposes only, as the holdings of an account managed by Numeric
will differ from the securities which comprise the index and may have greater
volatility than the holdings of an index.
15. Represented by Man GLG Continental European Growth Fund Class C
Accumulation Shares. Relative return shown vs FTSE World Europe Ex UK (GBP,
GDTR); AUM included within Europe ex-UK equity under the discretionary
long-only product category.
16. Represented by Man GLG Japan CoreAlpha Fund - Class C converted to
JPY until 28 January 2010. From 1 February 2010 Man GLG Japan CoreAlpha Equity
Fund - Class I JPY is displayed. Relative return shown vs TOPIX (JPY, GDTR);
AUM included within Japan equity under the discretionary long-only product
category.
17. Represented by Man GLG Undervalued Assets Fund - C Accumulation
Shares. Relative return shown vs FTSE All Share (GBP, NDTR); AUM included
within UK equity under the discretionary long-only product category.
18. Represented by Man GLG High Yield Opportunities I EUR. Relative
return is shown vs against ICE BofA Global High Yield Index (EUR, TR) Hedged
benchmark. AUM included within Credit and convertibles under the discretionary
long-only product category.
19. HFRI and HFRX index performance over the past 4 months is subject to
change.
20. The historical Barclay BTOP 50 Index data is subject to change.
Chief Executive Officer's review
Overview
I am delighted to deliver a very strong set of financial results for the first
half of 2022. These results reflect the value of investing in liquid
alternatives, the demand for the broad range of investment strategies we offer
and the strengths of the diversified firm we have built. Our ability to
deliver positive outcomes for our clients and shareholders during volatile
periods, and continued focus on investing in talent and technology, positions
us well for growth in the future.
Most major asset classes ended the first half of 2022 in negative territory,
with the combination of Russia's invasion of Ukraine, rising inflation,
anticipated monetary policy changes and fears of an economic slowdown towards
the end of the period weighing significantly on financial markets. Bond
markets recorded their worst six-month period since records began in 1900,
while the S&P500 recorded its worst first half since 1970, resulting in
the toughest six-month period for a traditional 60-40 portfolio since 1932.
One of our key strengths as an active asset manager is the breadth of
investment capabilities we offer, many of which aim to deliver uncorrelated
returns across a range of market environments. Despite the large sell-off in
markets, our absolute return strategies were able to make significant gains
for our clients. Investment performance of +8.8% was driven by strong returns
across flagship AHL strategies, with particularly notable performance from AHL
Alpha (+11.3%) and AHL Evolution (+10.9%), demonstrating the value liquid
alternatives can add to client portfolios.
Our total return and long-only strategies were impacted significantly by
market beta, with overall investment performance of -6.9% and -12.5%,
respectively. AHL TargetRisk performance (-14.8%) reflected its long-only
exposure to fixed income and equity markets. Investment performance in our
systematic long-only strategies was negatively impacted by broad exposure to
global equities and while performance in our discretionary long-only
strategies was more mixed overall, GLG Continental Europe (-27.3%) suffered in
particular as a result of its growth-bias.
On an asset-weighted basis, relative investment performance across the firm
was positive in the first half. Our long-only strategies outperformed by 2.9%,
with notably strong outperformance from GLG High Yield Opportunities (+4.4%)
and Numeric Emerging Markets (+5.0%). GLG Japan CoreAlpha continued its run of
strong performance, delivering returns for clients on an absolute (+14.5%) and
relative (+19.3%) basis during the first half.
After two record quarters for net flows during 2021, we made further progress
building long-term relationships with global asset allocators and distributors
while helping our existing clients navigate the market volatility during the
first half of 2022. We recorded net inflows of $3.2 billion during the first
six months, or 2.7% above the industry on an asset-weighted basis,
highlighting the continued confidence clients have in our ability to manage,
protect and grow their assets during difficult periods for markets. While
subscriptions continued at their normal pace, we saw a pickup in redemptions
from May onwards as clients realised gains to manage other issues in their
portfolios.
Assets under management as at 30 June 2022 were $142.3 billion. This was 4%
lower than at 31 December 2021 as net inflows during the period were offset by
negative investment performance of $4.9 billion from market beta, and negative
FX and other movements of $4.6 billion owing to a stronger US dollar. We grew
core net management fees by 12% compared with the first half of 2021, and
generated core performance fees of $404 million from strong gains in our
absolute return strategies.
Growth in core management fee and performance fee profits, together with 82
million shares repurchased during the first half of the year, resulted in core
EPS growth of 28% versus the first half of 2021. Statutory EPS on a diluted
basis also increased to 22.7¢ (H1 2021: 15.8¢). On 30 June 2022, we
announced a new $125 million share buyback, which was 31% complete as at 29
July 2022. In line with our previous guidance, the Board has declared an
interim dividend of 5.6¢ per share (H1 2021: 5.6¢).
Business development
Since I was appointed CEO in 2016, we have made it a key priority for the firm
to adopt an intensely client-centric mindset; to build long-term partnerships
with institutions and distributors through a single point of contact, to
understand their needs and offer solutions to meet their risk and return
objectives. I am pleased that we continued to make strong progress on this
strategic objective. This year, our clients have continued to invest in more
strategies across the firm, with 80% of AUM as at 30 June 2022 from clients
invested in two or more products, compared with 78% as at 31 December 2021.
Our top 50 clients invest in an average of six products with us.
Man Institutional Solutions is a great example of how we have responded to
evolving client needs. These are customised mandates that combine our
investment capabilities based on clients' unique requirements, delivered via
our efficient, technology-enabled operating platform. Our solutions business
has grown to $12.7 billion as at 30 June 2022, recording $0.4 billion of net
inflows during the first half. The ability to provide a bespoke solution is
differentiating in asset management; it allows us to appeal to a wide range of
clients, remain relevant during market cycles and build long-term
partnerships.
We remain focused on innovation to steadily grow the range of products we
offer and diversify our business for the future. Innovation strengthens our
business by diversifying our revenue streams, providing development
opportunities for our people and, most importantly, maintaining and extending
our relevance with clients. Our seed capital programme continues to be a key
way for us to support product launches and during the first half of the year
we seeded 12 new strategies across our business, leaving our seeding book at
$628 million as at 30 June 2022, following investments into new products that
are extensions of AHL TargetRisk, and inflation-aware strategies, to name a
few.
Over the past few years, we have strengthened our credit and fixed income
capabilities, and the hires we have made continue to deliver excellent
results. GLG High Yield Opportunities has grown to $2.5 billion of AUM, ranks
first among peers for its performance since inception, and continues to see
good traction from clients.
At Man Group, we believe in the absolute necessity of addressing the climate
crisis and view the climate transition not only as a risk, but also as an
important driver of growth and opportunity for our business. In February, we
announced a joint venture with Bouwinvest to build around 1,000 net zero
energy build-to-rent properties across various US metropolitan areas over the
next several years. As at 30 June 2022, $45.5 billion of our total AUM was
invested in strategies that integrate ESG into the investment process. We draw
upon the diverse expertise and specialist knowledge across the firm to create
innovative, data-driven investment solutions for our clients and look forward
to adding to our climate-focused offerings in the future.
Financial review
Higher core net management fee and core performance fee revenue in the period
drove an increase in core profit before tax to $395 million from the $323
million achieved in the six months ended 30 June 2021. Statutory profit before
tax increased from $280 million to $380 million. Core earnings per share were
24.0¢ for the six months ended 30 June 2022 compared with 18.7¢ for the
comparative period, with statutory earnings per share up from 15.8¢ in H1
2021 to 22.7¢. Core management fee profit before tax increased to $149
million (H1 2021: $126 million) and core management fee earnings per share
increased 23% to 9.1¢.
Core net revenue of $855 million was comprised primarily of $469 million of
core net management fee revenue and $383 million of core performance fees net
of core losses on investments. Core net management fee revenue was 12% higher
than the comparative period due to continued net inflows, despite lower
average AUM from market beta and FX headwinds owing to a stronger US dollar.
Core performance fees of $404 million were $120 million higher than in the
same period last year, including $187 million from AHL Evolution and $217
million from other strategies, most notably Man Institutional Solutions
mandates. Core losses on investments of $21 million, compared with gains of
$17 million in the first half of 2021, primarily related to mark-to-market
losses on our CLO positions.
The run rate net management fee margin at 30 June 2022 increased by three
basis points to 66 basis points, from 63 basis points at 31 December 2021, as
a result of AUM mix shift between categories. In the period, within the
categories, the average absolute return net management fee margin decreased by
six basis points to 113 basis points as new inflows were directed at lower
margin strategies. The average net management fee margin of long-only
strategies continued its gradual decline due to continued margin pressure and
mix effects, decreasing to 37 basis points overall compared with 40 basis
points for the year ended 31 December 2021. Average net management fee margins
in the other categories were broadly in line with those for the year ended 31
December 2021.
Run rate net management fee margins and net management fee revenue(1)
$m Run rate Run rate Run rate Run rate
net mgmt. fees margin net mgmt. fees margin
30 Jun 2022 30 Jun 2022 31 Dec 2021 31 Dec 2021
($m) (bps) ($m) (bps)
Absolute return 539 109 474 115
Total return 192 62 220 62
Multi-manager solutions 35 21 36 24
Systematic long-only 71 25 89 25
Discretionary long-only 100 58 121 58
Core net management fee revenue 937 66 939 63
Compensation costs were $343 million (H1 2021: $293 million), comprising $110
million of fixed compensation costs (H1 2021: $104 million) and $233 million
of variable compensation costs (H1 2021: $189 million). The increase in fixed
compensation was largely due to an increase in headcount to support business
growth, with the impact on costs partially mitigated by the more favourable
sterling to US dollar exchange rates. Variable compensation costs increased
due to stronger management and performance fees generated in the period. This
performance is reflected in our compensation ratio of 40%, in line with H1
2021, at the bottom end of our guided range.
Core other costs, including asset servicing and depreciation, were $111
million compared with $106 million for H1 2021, with the increase driven by
the removal of COVID-19 travel restrictions, an increase in depreciation and
amortisation following the fitout of our London office and continued
investment in technology, partially offset by the stronger US dollar versus
sterling. Net finance expense of $6 million was consistent with the
comparative period (H1 2021: $6 million).
Operating net cash inflows were $146 million for H1 2022 (H1 2021: $53
million), with the comparative increase reflecting the increase in profit in
the period. We had operating net cash inflows before working capital, interest
and tax of $479 million for the period (H1 2021: $386 million), reflecting our
strongly cash-generative business model.
Capital management
Our robust balance sheet and liquidity positions allow us to weather crises
whilst continuing to invest in the business to support our long-term growth
prospects, and maximising shareholder value by returning capital to
shareholders that we consider to be in excess of our medium-term requirements.
In H1 2022, we completed the $250 million share repurchase announced in
December 2021 and on 30 June 2022 announced our intention to repurchase a
further $125 million of shares. The interim dividend of 5.6¢ per share is in
line with the guidance communicated at our full year results. We intend to
keep our interim dividend flat until such time as the ratio of interim to
final dividend gets closer to 1:2, in line with the broader UK market. Our
business is highly cash-generative, and these cash flows support a growing
dividend over time. As at 30 June 2022, we had $582 million of core net
financial assets (31 December 2021: $907 million) including $132 million of
cash (31 December 2021: $323 million), partly offset by the $120 million drawn
on our revolving credit facility (31 December 2021: undrawn). We will continue
to manage our liquidity dynamically going forward, within our existing
parameters, and deploy capital to invest in new products to assist in the
growth of the business. These seed investments will be redeemed as practicable
as funds are marketed to clients. Seeding investments decreased slightly to
$628 million at 30 June 2022 (31 December 2021: $648 million), primarily as a
result of the decrease in the valuation of our CLOs, with the additional $138
million of total return swap exposure up from $108 million at 31 December
2021.
Outlook
We enter the second half with high performance fee potential and a good level
of client engagement. While we expect some volatility in flows in the near
term, as clients access liquidity and rebalance their portfolios due to market
movements, we remain focused on delivering superior risk-adjusted performance
and offering a breadth of investment capabilities that perform in various
market environments. We are a global leader in liquid alternatives and have
built a diversified business that is well-placed to withstand difficult
periods. I remain confident in our ability to thrive over time, with our
talent and technology driving our competitive advantage.
1. Run rate net management fee margin is calculated as core net
management fee revenue divided by average AUM on a fund-by-fund basis for the
period specified. Run rate revenue applies the run rate margin to closing AUM.
It is for illustrative purposes and not a forecast.
'Core' measures are alternative performance measures. For a detailed
description of our alternative performance measures, including non-core items,
please refer to pages 28-33.
Past performance is not an indication of future performance. All returns shown
are net of fees.
Risk management
Risk management is an essential component of our approach, both to the
management of investment funds on behalf of investors, and the management of
Man Group's business on behalf of shareholders. Our reputation is fundamental
to our business, and maintaining our corporate integrity is the responsibility
of everyone at Man Group. Our approach is to identify, quantify and manage
risk throughout the firm, in accordance with the Board's risk appetite. We
maintain capital and liquidity to give us strategic and tactical flexibility,
both in terms of corporate and fund management.
The principal and emerging risks faced by Man Group are set out on pages 34 to
37 of our 2021 Annual Report and include: investment underperformance risk;
key person risk; credit/counterparty risk; liquidity risk; investment book
risk; pension risk; risk of internal or external process failure; information
security and cybercrime security risk; information technology and business
continuity risk; legal and regulatory risk; reputational risk; and climate
change risk. These will continue to be our principal risks for the second half
of the financial year.
Our risk framework operated effectively in the six months to 30 June 2022,
with systems and controls functioning as designed. We have not identified any
new operational risks, but have recognised some heightened underlying risk
drivers associated with the remote/agile working framework adopted in 2021 and
an increased dependence on technology.
Statement of directors' responsibilities
The directors confirm that, to the best of their knowledge, this condensed set
of financial statements in respect of Man Group plc for the six-month period
ended 30 June 2022 has been prepared in accordance with IAS 34 'Interim
Financial Reporting' as adopted by the United Kingdom, and that this interim
report includes a fair review of the information required by the Financial
Conduct Authority's Disclosure Guidance and Transparency Rules 4.2.7 and
4.2.8, namely:
· an indication of important events that have occurred during the
six months ended 30 June 2022 and their impact on the condensed interim
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the year ending 31 December
2022; and
· material related party transactions in the six months ended 30
June 2022 and any material changes in the related party transactions described
in the last Annual Report.
The directors of Man Group plc are:
John Cryan - Board Chair
Luke Ellis - Chief Executive Officer
Antoine Forterre - Chief Financial Officer
Richard Berliand - Senior Independent Director
Dame Katharine Barker - Independent Non-executive Director
Lucinda Bell - Independent Non-executive Director
Jacqueline Hunt - Independent Non-executive Director
Ceci Kurzman - Independent Non-executive Director
Anne Wade - Independent Non-executive Director
By order of the board
Luke Ellis
Chief Executive Officer
01 August 2022
Antoine Forterre
Chief Financial Officer
01 August 2022
Independent review report to Man Group Plc
Conclusion
We have been engaged by the Company to review the condensed set of financial
statements in the half year results announcement for the six months ended 30
June 2022 which comprises the Group income statement, the Group statement of
comprehensive income, the Group balance sheet, the Group statement of changes
in equity, the Group cash flow statement and related condensed notes 1 to 14.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2022 is not prepared, in all
material respects, in accordance with United Kingdom adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom. A review of interim financial
information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and consequently does
not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with United Kingdom adopted international accounting
standards. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with United
Kingdom adopted International Accounting Standard 34, 'Interim Financial
Reporting'.
Conclusion relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE (UK), however future events or conditions may cause the entity to
cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the group'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 review of the financial information
In reviewing the half-yearly financial report, we are responsible for
expressing to the group a conclusion on the condensed set of financial
statements in the half-yearly financial report. Our Conclusion, including our
Conclusion relating to going concern, is based on procedures that are less
extensive than audit procedures, as described in the Basis for conclusion
paragraph of this report.
Use of our report
This report is made solely to the Company in accordance with International
Standard on Review Engagements (UK) 2410 'Review of Interim Financial
Information Performed by the Independent Auditor of the Entity' issued by the
Financial Reporting Council. Our work has been undertaken so that we might
state to the Company those matters we are required to state to it in an
independent review 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, for our review work, for this report, or for the conclusions
we have formed.
Deloitte LLP
Statutory Auditor
London, UK
01 August 2022
Interim financial statements
Group income statement
Six months Six months
to 30 June to 30 June
$m Note 2022 2021
Management and other fees 483 434
Performance fees 404 284
Revenue 887 718
Income or (losses)/gains on investments and other financial instruments 8 (19) 21
Third-party share of losses/(gains) relating to interests in consolidated 8 19 (4)
funds
Sub-lease rental income 3 3
Distribution costs (16) (19)
Net revenue 874 719
Asset servicing costs (30) (29)
Compensation costs 2 (343) (293)
Other costs 3 (83) (78)
Finance income 4 1 1
Finance expense 4 (7) (7)
Impairment of right-of-use lease assets - investment property - (3)
Amortisation of acquired intangible assets (30) (30)
Share of post-tax loss of associate (2) -
Statutory profit before tax 380 280
Tax expense 5 (72) (52)
Statutory profit for the period attributable to owners of the Company 308 228
Statutory earnings per share: 12
Basic 23.3¢ 16.1¢
Diluted 22.7¢ 15.8¢
Group statement of comprehensive income
Six months Six months
to 30 June to 30 June
$m 2022 2021
Statutory profit for the period attributable to owners of the Company 308 228
Other comprehensive income/(expense):
Remeasurements of post-employment benefit obligations - 12
Current tax credited on pension plans - 2
Deferred tax debited on pension plans (1) (5)
Items that will not be reclassified to profit or loss (1) 9
Cash flow hedges:
Valuation (losses)/gains taken to equity (1) 5
Realised gains transferred to Group income statement (1) (4)
Net investment hedge 3 1
Foreign currency translation (3) (2)
Items that may be reclassified to profit or loss (2) -
Other comprehensive (expense)/income for the period (net of tax) (3) 9
Total comprehensive income for the period attributable to owners of the 305 237
Company
Group balance sheet
Note At 30 June At 31 December
$m 2022 2021
Assets
Cash and cash equivalents 6 228 387
Fee and other receivables 674 485
Investments in fund products and other investments 8 1,024 974
Investment in associate 16 18
Leasehold improvements and equipment 47 43
Leasehold property - right-of-use lease assets 92 61
Investment property - right-of-use lease assets 73 77
Goodwill and acquired intangibles 648 678
Other intangibles 45 45
Deferred tax assets 121 128
Pension asset 24 27
Total assets 2,992 2,923
Liabilities
Borrowings 6 120 -
Trade and other payables 674 702
Provisions 11 13 14
Current tax liabilities 24 15
Third-party interest in consolidated funds 8 324 254
Lease liability 10 253 250
Deferred tax liabilities 17 37
Total liabilities 1,425 1,272
Net assets 1,567 1,651
Equity
Capital and reserves attributable to owners of the Company 1,567 1,651
Group cash flow statement
Six months Six months
to 30 June to 30 June
$m Note 2022 2021
Cash flows from operating activities
Cash generated from operations 7 223 104
Interest paid (2) (1)
Finance charges paid on lease liability 10 (5) (6)
Income tax paid (70) (44)
Cash flows from operating activities 146 53
Cash flows from investing activities
Interest received 1 1
Purchase of leasehold improvements and equipment: leasehold property (10) (16)
Purchase of other intangible assets (11) (9)
Purchase of interest in associate - (19)
Cash flows used in investing activities (20) (43)
Cash flows from financing activities
Repayments of lease liability principal 10 (10) (11)
Purchase of own shares (47) (19)
Proceeds from sale of Treasury shares - 1
Share repurchase programmes (including costs) (234) (39)
Ordinary dividends paid to Company shareholders(1) (110) (81)
Drawdown of revolving credit facility 6 120 -
Cash flows used in financing activities (281) (149)
Net decrease in cash and cash equivalents (155) (139)
Cash and cash equivalents at beginning of the period 387 351
Effect of foreign exchange movements (4) (2)
Cash and cash equivalents at end of the period(2) 6 228 210
Notes:
1. Relates to the final dividend for the year to 31 December 2021 (H1
2021: final dividend for the year to 31 December 2020).
2. Includes $96 million (H1 2021: $93 million) of restricted cash
relating to consolidated fund entities (Note 8).
Group statement of changes in equity
$m Share capital Reorg- Profit and loss account Own shares held by Employee Trust Treasury shares Cumulative translation adjustment Other reserves Total
anisation reserve
At 1 January 2021 53 (1,688) 3,292 (60) (148) 44 4 1,497
Statutory profit - - 228 - - - - 228
Other comprehensive income/ (expense) - - 9 - - (1) 1 9
Total comprehensive income attributable to owners of the Company - - 237 - - (1) 1 237
Share-based payment charge - - 14 - - - - 14
Deferred tax credited on share-based payments - - 2 - - - - 2
Purchase of own shares by Employee Trust - - - (19) - - - (19)
Disposal of own shares by Employee Trust - - (17) 18 - - - 1
Transfer to Treasury shares - - 39 - (39) - - -
Transfer from Treasury shares - - (6) - 4 - 2 -
Disposal of Treasury shares for Sharesave - - - - 1 - - 1
Dividends paid - - (81) - - - - (81)
At 30 June 2021 53 (1,688) 3,480 (61) (182) 43 7 1,652
At 1 January 2022 51 (1,688) 3,477 (61) (178) 41 9 1,651
Statutory profit - - 308 - - - - 308
Other comprehensive expense - - (1) - - - (2) (3)
Total comprehensive income attributable to owners of the Company - - 307 - - - (2) 305
Share-based payment charge - - 14 - - - - 14
Current tax credited on share-based payments - - 4 - - - - 4
Purchase of own shares by Employee Trust - - - (47) - - - (47)
Disposal of own shares by Employee Trust - - (28) 28 - - - -
Share repurchases - - (250) - - - - (250)
Cancellation of Treasury shares (2) - (143) - 143 - 2 -
Transfer to Treasury shares - - 234 - (234) - - -
Transfer from Treasury shares - - (24) - 22 - 2 -
Dividends paid - - (110) - - - - (110)
At 30 June 2022 49 (1,688) 3,481 (80) (247) 41 11 1,567
1. Basis of preparation
These condensed consolidated interim financial statements for the six months
ended 30 June 2022 have been prepared in accordance with United
Kingdom-adopted International Accounting Standard 34 'Interim Financial
Reporting', the Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority and Article 106 of the Companies (Jersey) Law 1991. The
consolidated group is Man Group plc (the Company) and its subsidiaries
(together Man Group).
The Group income statement, Group cash flow statement and Group statement of
changes in equity in these interim financial statements present the six months
ended 30 June 2022 (H1 2022) together with the comparative period for the six
months ended 30 June 2021 (H1 2021). The balance sheet is presented as at 30
June 2022 together with comparatives as at 31 December 2021.
The financial information contained herein is unaudited and does not
constitute accounts within the meaning of Article 105 of the Companies
(Jersey) Law 1991. Statutory accounts for the year ended 31 December 2021,
which were prepared in accordance with International Financial Reporting
Standards (IFRS) and relevant IFRIC interpretations issued by the
International Accounting Standards Board (IASB) and adopted by the United
Kingdom and upon which the auditor has given an unqualified and unmodified
report, have been delivered to the Jersey Registrar of Companies and were
posted to shareholders on 11 March 2022.
The accounting policies applied in these interim financial statements are
consistent with those applied in Man Group's Annual Report for the year ended
31 December 2021 (the '2021 Annual Report').
Going concern
We continue to deliver strong results and operate effectively despite the
ongoing volatility in financial markets driven by geopolitical tensions, the
war in Ukraine, inflationary pressures and monetary and fiscal policy changes.
Growth in management fee profitability in 2021 has continued into the first
half of 2022, and performance fee earnings for the half are strong. The
directors consider that we are well placed to manage business and financial
risks in the current economic environment and have concluded that there is a
reasonable expectation that we have sufficient resources to continue in
operation for the foreseeable future. Accordingly, these interim financial
statements have been prepared on a going concern basis.
Judgemental areas and accounting estimates
Man Group acts as the investment manager/advisor to fund entities. The most
significant area of judgement relates to whether we control certain of those
fund entities to which we are exposed via either direct investment holdings,
total return swaps or sale and repurchase arrangements. We assess such
relationships on an ongoing basis to determine whether we control each fund
entity and therefore consolidate them into our results (Note 8).
The directors have considered the estimates and assumptions used in the
preparation of the interim financial statements, which include estimates and
assumptions used in the assessment for impairment of right-of-use lease
assets, pension and deferred tax assets, and in the valuation of certain tax
liabilities and provisions. The directors have also considered the possible
impact of climate change on such estimates and assumptions with no material
adjustments required. Other than the estimated amount of accrued discretionary
variable compensation and the valuation of the net pension asset (as further
described in Note 24 of the 2021 Annual Report), the directors have concluded
that there are no key assumptions concerning the future or other sources of
estimation uncertainty at the reporting date that may have a significant risk
of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year. The determination of discretionary
variable compensation is an annual process undertaken at the calendar year
end, therefore the accrual at 30 June 2022 is an estimated amount based on the
financial performance and absolute levels of our performance fees in the year
to date.
Impact of new accounting standards
There were no new or amendments to existing accounting standards issued by the
International Accounting Standards Board (IASB) that have had a significant
impact on these interim financial statements.
No standards or interpretations issued and not yet effective are expected to
have a material impact on the Group financial statements.
2. Compensation costs
Six months Six months
$m to 30 June to 30 June
2022 2021
Salaries 91 85
Variable cash compensation 168 133
Deferred compensation: share-based payment charge 14 14
Deferred compensation: fund product-based payment charge 33 28
Social security costs 29 25
Pension costs 8 8
Total compensation costs 343 293
Comprised of:
Fixed compensation: salaries and associated social security costs, and pension 110 104
costs
Variable compensation: variable cash compensation, deferred compensation and 233 189
associated social security costs
The unamortised deferred compensation at 30 June 2022 is $144 million (30 June
2021: $103 million) and has a weighted average remaining vesting period of 2.1
years (30 June 2021: 2.0 years).
3. Other costs
$m Six months Six months
to 30 June to 30 June
2022 2021
Technology and communications 11 11
Audit, tax, legal and other professional fees 10 12
Occupancy 8 8
Staff benefits 7 7
Temporary staff, recruitment, consultancy and managed services 8 6
Insurance 3 3
Marketing and sponsorship 2 1
Travel and entertainment 3 -
Other cash costs, including irrecoverable VAT 6 7
Total other costs before depreciation and amortisation 58 55
Depreciation of leasehold improvements and equipment, and amortisation of 16 14
other intangibles
Depreciation of right-of-use lease assets 9 9
Total other costs 83 78
4. Finance expense and finance income
$m Six months Six months
to 30 June to 30 June
2022 2021
Finance expense:
Unwind of lease liability discount (Note 10) (5) (6)
Other finance expense (2) (1)
Total finance expense (7) (7)
Finance income:
Interest on cash deposits 1 1
Total finance income 1 1
Net finance expense (6) (6)
5. Tax
The tax expense for the period of $72 million (H1 2021: $52 million) results
in a statutory effective tax rate of 19% (H1 2021: 19%). The majority of our
profit is earned in the UK, Switzerland and the US. The forecast full year
effective tax rate is consistent with this profit mix.
We have recognised net accumulated deferred tax assets in the US of $71
million (31 December 2021: $74 million) which comprise accumulated operating
losses from existing operations, future amortisation of goodwill and
intangible assets generated from acquisitions and other timing differences
that will be available to offset future taxable profits in the US. These US
deferred tax assets include $13 million (31 December 2021: $14 million) in
relation to state and city tax losses.
We do not currently expect to pay federal tax on any profits we may earn in
the US until 2024. Accordingly, any movements in the deferred tax asset in the
Group income statement are classified as a non-core item (page 32).
6. Cash and liquidity
$m At 30 June At 31 December 2021
2022
Cash held by banks 66 189
Short-term deposits 34 24
Money market funds 32 110
Cash held by consolidated fund entities (Note 8) 96 64
Cash and cash equivalents 228 387
Less: cash held by consolidated fund entities (Note 8) (96) (64)
Available cash and cash equivalents 132 323
Undrawn committed revolving credit facility 380 500
Total liquidity 512 823
Our $500 million committed revolving credit facility (RCF) incorporates an ESG
target-linked interest rate component. It does not include any financial
covenants to maintain maximum operational flexibility. $120 million was drawn
down at 30 June 2022 and we have no other borrowings (31 December 2021:
undrawn). The RCF is scheduled to mature in December 2026.
7. Reconciliation of statutory profits to cash generated from operations
$m Six months Six months
to 30 June to 30 June
2022 2021
Statutory profit 308 228
Adjustments for:
Share-based payment charge 14 14
Fund product-based payment charge 33 28
Net finance expense 6 6
Tax expense 72 52
Depreciation of leasehold improvements and equipment 6 6
Depreciation of right-of-use lease assets 9 9
Impairment of right-of-use lease assets - investment property - 3
Amortisation of acquired intangible assets 30 30
Amortisation of other intangibles 10 8
Share of post-tax loss of associate 2 -
Foreign exchange movements (12) 9
Realised gains on cash flow hedges recycled from equity (1) (4)
Other non-cash movements 2 (3)
479 386
Changes in working capital(1):
Increase in fee and other receivables (176) (227)
Increase in other financial assets(2) (4) (64)
(Decrease)/increase in trade and other payables (76) 9
Cash generated from operations 223 104
Notes:
1. Changes in working capital differ from the movements in these balance
sheet items due to non-cash movements which either relate to the gross-up of
the third-party share of consolidated fund entities or are adjusted elsewhere
in the Group cash flow statement, such as movements relating to the fund
product-based payment charge (within cash flows from operating activities) and
the share repurchase liability (within financing activities).
2. Includes $32 million of restricted net cash inflows (H1 2021: $31
million) relating to consolidated fund entities (Note 8).
8. Investments in fund products and other investments
$m At 30 June At 31 December
2022
2021
Investments in fund products 375 422
Investment in consolidated funds: transferrable securities 649 549
Other investments - 3
Investments in fund products and other investments 1,024 974
Less:
Fund investments held for deferred compensation arrangements (152) (119)
Investments in consolidated funds: exclude gross-up of net investment (244) (204)
Other investments - (3)
Seeding investments portfolio 628 648
8. Investments in fund products and other investments continued
Income or gains/losses on investments and other financial instruments
comprises the following:
$m Six months Six months
to 30 June to 30 June
2022 2021
Net (losses)/gains on seeding investments portfolio (19) 13
Consolidated fund entities: gross-up of net (losses)/gains on investments (15) 7
Foreign exchange movements 17 (2)
Net (losses)/gains on fund investments held for deferred compensation (2) 3
arrangements and other investments
Income or (losses)/gains on investments and other financial instruments (19) 21
Consolidation of investments in funds
In H1 2022, 33 (31 December 2021: 26) funds in which we have an investment met
the control criteria and have therefore been consolidated on a line-by-line
basis.
The investments relating to consolidated funds are included within the Group
balance sheet and income statement as follows:
$m At 30 June At 31 December
2022 2021
Balance sheet
Cash and cash equivalents 96 64
Transferrable securities(1) 649 549
Fees and other receivables 20 5
Trade and other payables (36) (19)
Net assets of consolidated fund entities 729 599
Third-party interest in consolidated funds (324) (254)
Net investment held by Man Group 405 345
$m Six months Six months
to 30 June to 30 June
2022 2021
Income statement
Net (losses)/gains on investments(2) (53) 18
Management fee expenses(3) (2) (2)
Other costs (2) (1)
Net (losses)/gains of consolidated fund entities (57) 15
Third-party share of losses/(gains) relating to interests in consolidated 19 (4)
funds
(Losses)/gains attributable to net investment held by Man Group (38) 11
Notes:
1. Included within investments in fund products and other investments.
2. Included within income or (losses)/gains on investments and other
financial instruments.
3. Relate to management fees paid by the funds to Man Group during the
period, which are eliminated within management and other fees in the Group
income statement.
9. Fair value of financial assets/liabilities
The fair value of our financial assets and liabilities which are held at fair
value through profit and loss can be analysed as follows:
At 30 June 2022
$m Level 1 Level 2 Level 3 Total
Financial assets held at fair value:
Investments in fund products and other investments (Note 8) - 214 161 375
Investments in consolidated funds (Note 8) - 614 35 649
Derivative financial instruments - 16 - 16
- 844 196 1,040
Financial liabilities held at fair value:
Derivative financial instruments - 4 - 4
- 4 - 4
At 31 December 2021
$m Level 1 Level 2 Level 3 Total
Financial assets held at fair value:
Investments in fund products and other investments (Note 8) 3 243 179 425
Investments in consolidated funds (Note 8) - 538 11 549
Derivative financial instruments - 5 - 5
3 786 190 979
Financial liabilities held at fair value:
Derivative financial instruments - 5 - 5
- 5 - 5
Level 1, 2 and 3 financial assets and liabilities are defined in Note 15 of
the 2021 Annual Report. During the period, there were no significant changes
in the business or economic circumstances that affected the fair value of our
financial assets and no significant transfers of financial assets or
liabilities held at fair value between categories.
The movements in Level 3 financial assets and financial liabilities measured
at fair value are as follows:
At 30 June 2022 At 31 December 2021
$m Assets Liabilities Assets Liabilities
At beginning of the period 190 - 179 (2)
Transfers into Level 3 - - 9 -
Purchases 15 - 17 -
Charge to Group income statement (27) - (7) 2
Sales or settlements (6) - (2) -
Change in consolidated fund entities held 24 - (6) -
At end of the period 196 - 190 -
10. Leases
Our lease arrangements relate to business premises property leases.
Right-of-use (ROU) lease assets relating to the portion of our leased business
premises which we then sub-let under operating leases are classified as
investment property, with other ROU lease assets classified as leasehold
property.
Movements in our lease liability during the period are as follows:
$m At 30 June At 31 December
2022 2021
At beginning of the period 250 272
Additions 36 4
Disposals - (1)
Cash payments (15) (33)
Unwind of lease liability discount (Note 4) 5 12
Remeasurement - (2)
Unrealised foreign exchange gain (23) (2)
At end of the period 253 250
11. Provisions
$m At 30 June At 31 December
2022 2021
At beginning of the period 14 9
Charged to the income statement - 6
Utilised during the period - (1)
Currency translation (1) -
At end of the period 13 14
Provisions relate to ongoing claims as well as leasehold property
dilapidations.
12. Earnings per share (EPS)
Six months Six months
to 30 June to 30 June
2022 2021
(million) (million)
Basic weighted average number of shares 1,322 1,420
Dilutive impact of:
Employee share awards 28 24
Employee share options 3 1
Dilutive weighted average number of shares 1,353 1,445
Six months Six months
to 30 June to 30 June
2022 2021
Statutory profit ($m) 308 228
Basic EPS 23.3¢ 16.1¢
Diluted EPS 22.7¢ 15.8¢
13. Related party transactions
The related party transactions during the period are consistent with the
categories disclosed in the 2021 Annual Report. Related parties comprise key
management personnel, associates and fund entities which we are deemed to
control (Note 8). All transactions with related parties were carried out on an
arm's length basis.
14. Other matters
In July 2019, the Public Institution for Social Security in Kuwait (PIFSS)
served a claim against a number of parties, including certain Man Group
companies, a former Man Group employee and a former third-party intermediary.
The subject matter of these allegations dates back over a period of 20 years.
PIFSS is seeking compensation of $156 million (plus compound interest) and
certain other remedies which are unquantified in the claim. Man Group disputes
the allegations and considers there is no merit to the claim (in respect of
liability and quantum). We will therefore vigorously and robustly defend the
proceedings.
We are subject to various other claims, assessments, regulatory enquiries and
investigations in the normal course of business. The directors do not expect
such matters to have a material adverse effect on our financial position.
Alternative performance measures
We assess our performance using a variety of alternative performance measures
(APMs). We discuss our results on a statutory as well as a 'core' basis. Core
metrics, which are each APMs, exclude acquisition and disposal-related items,
significant non-recurring items and volatile or uncontrollable items, as well
as profits or losses generated outside of our investment management business.
Accordingly, these core metrics reflect the way in which performance is
monitored by the directors and present the profits or losses which drive our
cash flows and inform the way in which our variable compensation is assessed.
Details of the non-core items in the period are set out below.
Our APMs also reclassify all income and expenses relating to our consolidated
fund entities (Note 8), which are required by IFRS to be split across multiple
lines in the Group income statement, to core gains/losses on investments in
order to reflect their performance as part of our seed book programme. Tax on
non-core items and movements in deferred tax relating to the utilisation or
recognition of tax assets in the US are similarly excluded from core profit,
with tax on core profit considered a proxy for cash taxes paid.
In the period, the definition of non-core items has been revised to treat all
foreign exchange gains and losses arising on non-functional currency balances
consistently, rather than only adjusting for those which relate to specific
balance sheet items which are realised over longer timeframes. The directors
consider this revised classification to be both simpler and more consistent in
its application. Comparative amounts have not been restated as the impact is
immaterial. The approach to the classification of non-core items maintains
symmetry between losses and gains and the reversal of any amounts previously
classified as non-core. Note that our APMs may not be directly comparable with
similarly titled measures used by other companies.
Core measures: reconciliation to statutory equivalents
The core income statement measures can be reconciled to the equivalent
statutory line items within the Group income statement as follows:
Six months to 30 June 2022 Core Reclassification of amounts relating to consolidated fund entities Non-core items Per Group income statement
$m
measure
Management and other fees( APM ) 485 (2) - 483
Distribution costs (16) - - (16)
Net management fee revenue( APM ) 469 (2) - 467
Performance fees( APM ) 404 - - 404
Income or losses on investments and other financial instruments( APM ) (21) (15) 17 (19)
Third-party share of losses relating to interests in consolidated funds - 19 - 19
Sub-lease rental income( APM ) 3 - - 3
Net revenue( APM ) 855 2 17 874
Asset servicing costs (30) - - (30)
Compensation costs (343) - - (343)
Other costs( APM ) (81) (2) - (83)
Net finance expense( APM ) (6) - - (6)
Amortisation of acquired intangible assets - - (30) (30)
Share of post-tax loss of associate - - (2) (2)
Profit before tax( APM ) 395 - (15) 380
Tax expense( APM ) (70) - (2) (72)
Profit( APM ) 325 - (17) 308
Core EPS(1) 24.0¢
Note:
1. Calculated using the dilutive weighted average number of shares (Note
12).
APM The core equivalents of these statutory measures are defined as
Alternative Performance Measures.
Core measures: reconciliation to statutory equivalents continued
Six months to 30 June 2021 Core Reclassification of amounts relating to consolidated fund entities Non-core items Per Group income statement
$m
measure
Management and other fees( APM ) 436 (2) - 434
Distribution costs (19) - - (19)
Net management fee revenue( APM ) 417 (2) - 415
Performance fees( APM ) 284 - - 284
Income or gains on investments and other financial instruments( APM ) 17 7 (3) 21
Third-party share of gains relating to interests in consolidated funds - (4) - (4)
Sub-lease rental and lease surrender income( APM ) 10 - (7) 3
Net revenue( APM ) 728 1 (10) 719
Asset servicing costs (29) - - (29)
Compensation costs (293) - - (293)
Other costs( APM ) (77) (1) - (78)
Net finance expense( APM ) (6) - - (6)
Impairment of right-of-use lease asset - investment property - - (3) (3)
Amortisation of acquired intangible assets - - (30) (30)
Profit before tax( APM ) 323 - (43) 280
Tax expense( APM ) (52) - - (52)
Profit( APM ) 271 - (43) 228
Core EPS(1) 18.7¢
Note:
1. Calculated using the dilutive weighted average number of shares (Note
12).
APM The core equivalents of these statutory measures are defined as
Alternative Performance Measures.
Core costs comprise asset servicing costs, compensation costs and core other
costs.
Non-core items in profit before tax comprise the following:
Six months Six months
to 30 June to 30 June
$m 2022 2021
Amortisation of acquired intangible assets (30) (30)
Share of post-tax loss of associate (2) -
Impairment of right-of-use lease assets - investment property - (3)
Lease surrender income relating to future periods - (7)
Foreign exchange movements 17 (3)
Non-core items (15) (43)
Core measures: reconciliation to statutory equivalents continued
The core balance sheet measures can be reconciled to the equivalent statutory
line items within the Group balance sheet as follows:
At 30 June 2022 Core Reclassification of amounts relating to consolidated fund entities Per Group balance sheet
$m
measure
Assets
Cash and cash equivalents( APM ) 132 96 228
Fee and other receivables( APM ) 654 20 674
Investments in fund products and other investments( APM ) 780 244 1,024
Investment in associate 16 - 16
Leasehold improvements and equipment 47 - 47
Leasehold property - right-of-use lease assets 92 - 92
Investment property - right-of-use lease assets 73 - 73
Goodwill and acquired intangibles 648 - 648
Other intangibles 45 - 45
Deferred tax assets 121 - 121
Pension asset 24 - 24
Total assets 2,632 360 2,992
Liabilities
Borrowings 120 - 120
Trade and other payables( APM ) 638 36 674
Provisions 13 - 13
Current tax liabilities 24 - 24
Third-party interest in consolidated funds - 324 324
Lease liability 253 - 253
Deferred tax liabilities 17 - 17
Total liabilities 1,065 360 1,425
Net assets 1,567 - 1,567
At 31 December 2021 Core Reclassification of amounts relating to consolidated fund entities Per Group
$m
measure
balance sheet
Assets
Cash and cash equivalents( APM ) 323 64 387
Fee and other receivables( APM ) 480 5 485
Investments in fund products and other investments( APM ) 770 204 974
Investment in associate 18 - 18
Leasehold improvements and equipment 43 - 43
Leasehold property - right-of-use lease assets 61 - 61
Investment property - right-of-use lease assets 77 - 77
Goodwill and acquired intangibles 678 - 678
Other intangibles 45 - 45
Deferred tax assets 128 - 128
Pension asset 27 - 27
Total assets 2,650 273 2,923
Liabilities
Trade and other payables( APM ) 683 19 702
Provisions 14 - 14
Current tax liabilities 15 - 15
Third-party interest in consolidated funds - 254 254
Lease liability 250 - 250
Deferred tax liabilities 37 - 37
Total liabilities 999 273 1,272
Net assets 1,651 - 1,651
APM The core equivalents of these statutory measures are defined as
Alternative Performance Measures.
Core management fee and core performance fee profit
Core profit comprises core management fee profit, a steadier earnings stream,
and core performance fee profit, the more variable earnings stream. This split
of core profit facilitates analysis of our profitability drivers.
Six months to 30 June 2022 Core Reclassification of amounts relating Non-core items Per Group
$m
measure
to consolidated fund entities
income statement
Net management fee revenue 469 (2) - 467
Sub-lease rental income 3 - - 3
Asset servicing costs (30) - - (30)
Compensation costs (management fee) (207) - - (207)
Other costs (81) (2) - (83)
Net finance expense (management fee) (5) - - (5)
Management fee profit before tax 149 (4) - 145
Tax expense (26)
Management fee profit 123
Core management fee EPS(1) 9.1¢
Performance fees 404 - - 404
Income or losses on investments and other financial instruments (21) (15) 17 (19)
Compensation costs (performance fee) (136) - - (136)
Net finance expense (performance fee) (1) - - (1)
Performance fee profit before tax 246 (15) 17 248
Tax expense (44)
Performance fee profit 202
Core performance fee EPS(1) 14.9¢
Six months to 30 June 2021 Core Reclassification of amounts relating Non-core items Per Group
$m
measure
to consolidated fund entities
income statement
Net management fee revenue 417 (2) - 415
Sub-lease rental and lease surrender income 10 - (7) 3
Asset servicing costs (29) - - (29)
Compensation costs (management fee) (189) - - (189)
Other costs (77) (1) - (78)
Net finance expense (management fee) (6) - - (6)
Management fee profit before tax 126 (3) (7) 116
Tax expense (19)
Management fee profit 107
Core management fee EPS(1) 7.4¢
Performance fees 284 - - 284
Income or gains on investments and other financial instruments 17 7 (3) 21
Compensation costs (performance fee) (104) - - (104)
Performance fee profit before tax 197 7 (3) 201
Tax expense (33)
Performance fee profit 164
Core performance fee EPS(1) 11.3¢
Note:
1. Calculated using the dilutive weighted average number of shares (Note
12).
Core gains/losses on investments
We use the measure core gains/losses on investments to represent the net
return we receive on our seeding investments portfolio on a consistent basis,
combining both consolidated and unconsolidated fund entities. We therefore
exclude from this measure gains or losses on investments which do not relate
to the performance of the seed book and adjust the amounts relating to
consolidated funds to be included in this line on a consistent basis. Core
gains/losses on investments can be reconciled to the statutory Group income
statement as follows:
Note Six months Six months
to 30 June to 30 June
$m 2022 2021
Net (losses)/gains on seeding investments portfolio 8 (19) 13
Net (losses)/gains on fund investments held for deferred compensation and 8 (2) 4
other
Core (losses)/gains on investments (21) 17
Non-core items:
Consolidated fund entities: gross-up of net (losses)/gains on investments 8 (15) 7
Foreign exchange movements 17 (3)
Income or (losses)/gains on investments and other financial instruments (19) 21
Core tax rate
The core tax rate is the effective tax rate on core profit before tax and is
equal to the tax expense on core profit divided by core profit before tax. The
tax expense on core profit before tax is calculated by excluding the tax
benefit/expense related to non-core items from the statutory tax expense,
together with amounts relating to the utilisation or recognition of available
US deferred tax assets (Note 5). Therefore, tax on core profit is a proxy for
our cash taxes payable.
The impact of non-core items on our tax expense is outlined below:
$m Six months Six months
to 30 June to 30 June
2022 2021
Statutory tax expense 72 52
Tax on non-core items:
Amortisation of acquired intangible assets 4 3
Foreign exchange movements (4) 1
Non-core tax item on US deferred tax assets (2) (4)
Core tax expense 70 52
Comprised of:
Tax expense on core management fee profit before tax 26 19
Tax expense on core performance fee profit before tax 44 33
The core tax rate is 18% for H1 2022 compared with 16% in H1 2021. The core
rate in 2022 is higher largely due to the mix of where profits are earned by
jurisdiction and non-recurring items that reduced the tax rate in 2021, most
significantly the movement in deferred tax assets due to the increase in the
UK tax rate.
Core cash flows from operations excluding working capital movements
Core cash flows from operations excluding working capital movements can be
reconciled to cash flows from operating activities as reported in the Group
cash flow statement as follows:
$m Six months Six months
to 30 June to 30 June
2022 2021
Cash flows from operating activities 146 53
Plus: changes in working capital
Increase in fee and other receivables 176 227
Increase in other financial assets 4 64
Decrease/(increase) in trade and other payables 76 (9)
Core cash flows from operations excluding working capital movements 402 335
Core net financial assets
Core net financial assets is considered a proxy for Group capital, and is
equal to our cash and seed book less borrowings, contingent consideration
payable and payables under repo arrangements, as follows:
$m Note At 30 June At 31 December 2021
2022
Seeding investments portfolio 8 628 648
Available cash and cash equivalents 6 132 323
Payables under repo arrangements (58) (64)
Borrowings 6 (120) -
Core net financial assets 582 907
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