REG - Man Group plc - Half year results for the period ended 30 June 23
01/08/2023 07:00
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RNS Number : 8097H Man Group plc 01 August 2023
Press Release
01 August 2023
Half year results for the six months ended 30 June 2023
Key points
Net inflows reflect continued demand for our range of investment strategies
and solutions
o Record assets under management (AUM) of $151.7 billion (31 December 2022:
$143.3 billion)
o Net inflows of $2.6 billion for the six months ended 30 June 2023, 2.5%
ahead of the industry( KPI )
o Positive investment performance of $5.1 billion, 0.6% ahead of
peers( KPI )
Resilient core management fee EPS (diluted) of 8.7¢ demonstrates the benefit
of our diversified model
o Run-rate net management fee revenue of $946 million as at 30 June 2023 (31
December 2022: $917 million)
o $32 million of core performance fees reflect a difficult first quarter for
trend-following absolute return strategies
o Core EPS (diluted) of 8.9¢( KPI ) (H1 2022: 24.0¢) and statutory EPS
(diluted) of 6.8¢ (H1 2022: 22.7¢)
Strategic acquisition to support our long-term growth prospects and consistent
shareholder returns
o Announced the acquisition of Varagon Capital Partners, a leading US
middle-market private credit manager
o Completed the $125 million share buyback announced in March 2023
o Recommended interim dividend of 5.6¢, in line with guidance (H1 2022:
5.6¢ per share)
Robyn Grew to take over from Luke Ellis as Chief Executive Officer on 1
September 2023
Luke Ellis, Chief Executive Officer of Man Group, said:
"The first half of 2023 was a period of sustained organic growth for Man Group
and I'm delighted to report record assets under management of $151.7 billion,
and net inflows of $2.6 billion. These flows were 2.5% ahead of the industry,
highlighting the broad-based demand we are seeing for the range of
differentiated investment strategies and solutions that we offer, as well as
the quality of our longstanding relationships with allocators around the
world.
"It has been a great privilege leading Man Group during a period of major
evolution and progression; through our unwavering focus on investment
performance and client service, alongside investing strategically in our
technology, the business has grown and diversified significantly since my
appointment. I have no doubt that the firm will continue to go from strength
to strength under Robyn's leadership, building on our position at the
forefront of the industry."
Robyn Grew, Incoming Chief Executive Officer of Man Group, said:
"I want to say again how honoured I feel to be the next CEO of Man Group. I
have huge confidence in the talented group of people here and our ability to
continue to deliver for clients and shareholders. We have built a tremendous
business with a fantastically collegiate culture over the past few years, one
that is truly a global leader in active investment management.
"Diversifying our client offering has been a priority for the firm and last
month we were pleased to announce the acquisition of Varagon Capital Partners.
As the private credit market continues to grow in relevance for the world's
largest institutions, this transaction adds a US-focused direct lending
strategy designed to provide consistent risk-adjusted outperformance at scale
and in a highly customisable format. Varagon has a strong track record of
underwriting discipline, risk management and generating differentiated returns
for investors; this gives us confidence in our ability to support their
continued growth as a part of Man Group."
'Core' measures are alternative performance measures. For a detailed
description of our alternative performance measures, including non-core items,
please refer to pages 27-32.
KPI For details of key performance indicators refer to the 2022 Annual
Report.
Summary financials
$ millions, unless otherwise stated Six months to Six months to
30 Jun 2023 30 Jun 2022
AUM, end of period $151.7bn $142.3bn
Core net management fee revenue 460 469
Core performance fees 32 404
Core net revenue 513 855
Core profit before tax 137 395
Statutory profit after tax 83 308
¢
Core management fee EPS (diluted) 8.7 9.1
Statutory EPS (diluted) 6.8 22.7
Interim dividend per share 5.6 5.6
Financial key performance indicators( KPI )
Relative investment performance 0.6% 0.3%
Relative net flows 2.5% 2.7%
Core EPS (diluted) 8.9¢ 24.0¢
Core management fee EPS growth(1) (4)% 23%
Dividend
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 has declared an interim dividend of 5.6
cents per share (30 June 2022: 5.6 cents). The interim dividend of 5.6 cents
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 01 September 2023, in advance of payment.
Dates for the 2023 interim dividend
Ex-dividend date 10 August 2023
Record date 11 August 2023
Sterling conversion date 01 September 2023
Payment date 22 September 2023
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.
KPI For details of key performance indicators refer to the 2022 Annual
Report.
1. 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 10.00am (London) on 01 August 2023. A copy of the
presentation will be available on the investor relations section of
www.man.com from 09.55am. Please note: We recommend connecting to the meeting
5-10 minutes prior to the start time and to ask a question during the Q&A
session you will need to access the meeting via the link below.
The conference call can be accessed at:
https://mangroup.webex.com/mangroup/j.php?MTID=m92a4e1ca582e6f08767b6cedcd14bbd6
(https://mangroup.webex.com/mangroup/j.php?MTID=m92a4e1ca582e6f08767b6cedcd14bbd6)
Webinar number:
2367 905 6020
Webinar password:
ManH12023Results (62641202 from phones and video systems)
Join by phone:
+44 20 3478 5289 United Kingdom toll
+1 631 267 4890 USA/Canada toll
Access code: 236 790 56020
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@ (mailto:mangroupUK@finsbury.com) 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 $151.7 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)
1. As at 30 June 2023. 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 2023
$bn AUM at Net flows Investment performance FX & other(1) AUM at
31 Dec 2022
30 Jun 2023
Absolute return 46.0 1.0 0.1 0.2 47.3
Total return 28.8 0.3 0.7 (0.4) 29.4
Multi-manager solutions 20.2 0.0 0.1 0.0 20.3
Alternative 95.0 1.3 0.9 (0.2) 97.0
Systematic long-only 31.6 0.7 3.1 0.3 35.7
Discretionary long-only 16.7 0.6 1.1 0.6 19.0
Long-only 48.3 1.3 4.2 0.9 54.7
Total 143.3 2.6 5.1 0.7 151.7
AUM movements for the three months ended 30 June 2023
$bn AUM at Net flows Investment performance FX & other(1) AUM at
31 Mar 2023
30 Jun 2023
Absolute return 44.7 (0.3) 1.9 1.0 47.3
Total return 29.4 (0.1) 0.3 (0.2) 29.4
Multi-manager solutions 20.0 0.1 0.2 0.0 20.3
Alternative 94.1 (0.3) 2.4 0.8 97.0
Systematic long-only 33.0 1.2 1.4 0.1 35.7
Discretionary long-only 17.6 0.6 0.6 0.2 19.0
Long-only 50.6 1.8 2.0 0.3 54.7
Total 144.7 1.5 4.4 1.1 151.7
1. Other movements principally relate to maturities and leverage
movements.
AUM by product category
$bn 30 Jun 2022 30 Sep 2022 31 Dec 2022 31 Mar 2023 30 Jun 2023
Absolute return 49.3 49.0 46.0 44.7 47.3
Man Institutional Solutions(1) 12.7 12.5 14.4 13.4 14.7
AHL Alpha 13.0 11.6 7.7 8.2 9.0
AHL Dimension 5.9 6.1 5.9 5.4 6.0
AHL Evolution 5.3 5.5 5.4 5.1 5.3
GLG equity 4.8 4.7 4.9 4.9 4.7
AHL Diversified 1.5 1.6 1.5 1.3 1.4
Other(2) 6.1 7.0 6.2 6.4 6.2
Total return 31.2 29.0 28.8 29.4 29.4
AHL TargetRisk 15.1 13.9 13.4 13.7 13.2
Alternative Risk Premia 8.2 7.6 7.8 8.3 8.9
CLOs and other 3.9 3.7 3.9 3.6 3.5
Global Private Markets 3.1 3.0 3.0 3.2 3.2
Emerging markets fixed income 0.9 0.8 0.7 0.6 0.6
Multi-manager solutions 16.3 19.8 20.2 20.0 20.3
Infrastructure & direct access 9.6 12.9 12.7 12.5 12.7
Segregated 6.1 6.2 6.9 6.9 7.0
Diversified and thematic FoHF 0.6 0.7 0.6 0.6 0.6
Systematic long-only 28.2 25.8 31.6 33.0 35.7
Global equity 13.8 12.8 16.9 17.5 19.2
Emerging markets equity 6.1 5.8 6.4 6.7 7.7
International equity 6.9 6.2 7.1 7.5 7.5
US equity 1.4 1.0 1.2 1.3 1.3
Discretionary long-only 17.3 14.8 16.7 17.6 19.0
Credit and convertibles 4.8 4.3 5.2 5.7 6.6
Japan equity 4.0 3.6 4.1 4.3 4.8
UK equity 4.0 3.3 3.8 3.9 3.9
Europe ex-UK equity 1.7 1.2 1.3 1.3 1.3
Emerging markets fixed income 1.5 1.2 0.9 1.0 1.0
Other(3) 1.3 1.2 1.4 1.4 1.4
Total 142.3 138.4 143.3 144.7 151.7
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 2023
30 Jun 2023
30 Jun 2023
30 Jun 2023
30 Jun 2023
Absolute return
AHL Alpha 1 5.9% 2.0% 8.0% 7.3% 10.3%
AHL Dimension 2 7.8% 3.6% 6.4% 4.7% 4.9%
AHL Evolution 3 5.9% -1.5% 8.9% 8.1% 11.9%
AHL Diversified 4 8.4% 1.0% 9.1% 8.0% 10.6%
GLG Alpha Select Alternative 5 2.7% 5.3% 7.1% 6.4% 4.8%
GLG Event Driven Alternative 6 -0.4% 1.3% 6.9% - 6.1%
GLG Global Credit Multi Strategy 7 -0.5% 0.3% 3.8% 3.7% 10.9%
Man Strategies 1783 8 2.9% 1.5% 7.2% - 5.2%
Total return
AHL TargetRisk 9 2.3% 7.3% 3.2% 5.8% 7.3%
Alternative Risk Premia 10 2.8% 1.8% 7.6% 3.1% 4.3%
GLG Global Emerging Markets Debt Total Return 11 -2.0% -3.7% -2.3% -0.5% 1.1%
Multi-manager solutions
FRM Diversified II 12 1.3% 1.0% 8.0% 3.5% 4.0%
Systematic long-only
Numeric Global Core 13 6.8% 13.0% 12.1% 7.4% 9.8%
Relative return -0.1% -2.1% -0.1% -1.7% 0.5%
Numeric Europe Core 14 3.9% 12.0% 12.0% 6.1% 8.6%
Relative return 1.6% 0.8% 0.3% -0.5% 2.2%
Numeric Emerging Markets Core 15 1.9% 7.4% 5.6% 2.0% 4.6%
Relative return 1.0% 2.6% 3.3% 1.1% 2.4%
Discretionary long-only
GLG Continental European Growth 16 4.6% 13.7% 5.0% 6.6% 9.2%
Relative return 4.0% 4.4% -4.8% -0.9% 3.2%
GLG Japan CoreAlpha Equity 17 16.0% 23.4% 27.8% 9.3% 5.7%
Relative return 1.5% 0.7% 11.4% 0.9% 1.9%
GLG Undervalued Assets 18 1.4% 3.5% 12.1% 1.3% 6.3%
Relative return 1.9% 0.9% 2.1% -1.8% 1.1%
GLG High Yield Opportunities 19 1.1% 3.7% 7.1% - 5.9%
Relative return 0.2% 0.1% 6.9% - 5.1%
Indices
HFRX Global Hedge Fund Index 20 0.6% 0.6% 2.5% 1.7%
HFRI Fund of Funds Conservative Index 20 0.9% 1.8% 6.0% 3.9%
HFRI Equity Hedge (Total) Index 20 2.9% 5.5% 8.9% 5.4%
HFRX EH: Equity Market Neutral Index 20 1.2% 0.9% 1.0% -1.5%
Barclay BTOP 50 Index 21 3.7% -0.2% 10.9% 7.0%
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 a 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% 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 Strategies 1783 Class F1 USD until 31st December
2021. From 1 January 2022 Man Strategies 1783 Class A USD; AUM included within
the corresponding product category.
9. Represented by Man AHL TargetRisk class I USD.
10. Represented by Man Alternative Risk Premia Class A USD.
11. 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.
12. 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 FoHF under the multi-manager product category.
13. 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.
14. 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.
15. 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.
16. 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.
17. 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.
18. 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.
19. Represented by Man GLG High Yield Opportunities I EUR. Relative
return is shown vs ICE BofA Global High Yield Index (EUR, TR) Hedged
benchmark. AUM included within Credit and convertibles under the discretionary
long-only product category.
20. HFRI and HFRX index performance over the past 4 months is subject to
change.
21. The historical Barclay BTOP 50 Index data is subject to change.
Chief Executive Officer's review
Overview
With higher and increasing interest rates implemented by monetary policymakers
in their fight against inflation, turmoil in the banking sector, the US
government debt ceiling stand-off, and continued geopolitical uncertainty,
global equity markets powered past a series of challenges to deliver positive
returns in the first half of 2023. The S&P 500 was up 15% in the period,
with the technology giants putting wind in the sails of the rally as investors
flocked to companies that they expect will benefit from the growth of
artificial intelligence, resulting in the Nasdaq Composite recording its best
first half of the year (+32%) since 1983.
The client-led growth in our business remained strong over the period, with
total net inflows of $2.6 billion during the first half of the year.
Pleasingly, we recorded net inflows across alternative and long-only
strategies, which highlights the broad-based demand for the range of
differentiated investment strategies and solutions that we offer at Man Group.
On a relative basis, total net inflows were 2.5% ahead of the industry,
reflecting the merits of our client-centric distribution model and the quality
of our longstanding relationships with allocators around the world, and I am
delighted that we continued to grow our market share in the first six months
of 2023.
We ended the first half of the year with positive investment performance of
$5.1 billion, across all product categories.
March proved to be a challenging month for trend-following absolute return
strategies as the collapse of the regional lenders in the US led to a rapid
flight to safety, with the yield on the 2-year US Treasury note registering
its biggest fall since the 1980s. This was a significant reversal of the
market trends that began in November 2022, and negatively affected investment
performance in our flagship AHL strategies. Investment performance has
rebounded since, with AHL Alpha (+2.0%) and AHL Dimension (+3.6%) ending the
period in positive territory. Overall investment performance for our absolute
return strategies was +0.3%, with particularly strong returns from our
discretionary strategy GLG Alpha Select (+5.3%).
Our total return and long-only strategies performed well over the period,
helped by positive momentum in equity markets, delivering overall investment
performance of +3.8% and +9.1%, respectively. On an asset-weighted basis,
relative investment performance across the firm was positive in the first half
of the year. Our judicious approach to risk management and powerful central
platform meant we were able to reduce positions quickly during the market
volatility in March, driving outperformance of 0.4% from our alternative
strategies. Our long-only strategies also outperformed by 1.0%, with notably
strong relative returns from GLG Continental European Growth (+4.4%) and
Numeric Emerging Markets Core (+2.6%).
Net inflows of $2.6 billion and positive investment performance of $5.1
billion, together with FX and other impacts of $0.7 billion, increased total
assets under management to $151.7 billion as at 30 June 2023. This was 6%
higher compared with 31 December 2022, reflecting another good period of
organic growth and a new record for the firm. Core net management fees of $460
million were 2% lower compared with the first six months of 2022, primarily
driven by the mix of assets under management during the period. Core
performance fees of $32 million during the first half of the year reflect a
more difficult first quarter for our trend-following absolute return
strategies.
Core management fee earnings per share (diluted) of 8.7 cents (H1 2022: 9.1
cents) reflects higher fixed cost guidance considering planned investment to
support growth. Core earnings per share (diluted) of 8.9 cents (H1 2022: 24.0
cents) and statutory earnings per share (diluted) of 6.8 cents (H1 2022: 22.7
cents) reflect lower revenue from performance fees in the first half of the
year, as well as the accounting charge for deferred variable compensation
awards made in prior periods. In line with our previous guidance, the Board
has declared an interim dividend of 5.6 cents per share (H1 2022: 5.6 cents).
Business development
We remain focused on innovation to add to the range of investment strategies
we offer, diversify our revenue streams further and create multiple dimensions
for future growth. Our seed capital programme continues to be a key way for us
to support the launch of new investment strategies and during the first half
of the year we seeded six new strategies across our business, leaving our
seeding book at $634 million as at 30 June 2023.
We have said before that M&A is a core part of our strategy and last
month, we were delighted to announce the acquisition of Varagon Capital
Partners, a US-based private credit manager with $11.8 billion of assets under
management as at 31 December 2022. Varagon has established itself as a leading
provider of differentiated capital solutions in the core middle-market since
its inception in 2014 and shares our vision to deliver alpha at scale for
clients. The acquisition reflects our long-term strategy to diversify our
client offering and to grow our presence in the US. Our extensive distribution
network and operational expertise, together with Varagon's scalable suite of
strategies, will support its continued growth. Over the past few years, we
have strengthened our liquid credit capabilities with team hires in the high
yield and investment grade space and as client demand for credit strategies is
increasing, we see a significant growth opportunity in direct lending. We
expect the acquisition to complete in Q3 2023.
We also announced a strategic partnership with Fideuram - Intesa Sanpaolo
Private Banking (F-ISPB). F-ISPB is the leading private bank in Italy with a
pan-European reach and one of Man Group's key clients in the country. The new
venture will focus on building a diverse range of technology-enabled
alternative and long-only investment strategies and solutions, combining our
own capabilities with F-ISPB's private banking expertise, financial adviser
network and client base in Europe. We have grown successfully in the
intermediated retail channel through partnerships in the US and Japan, and we
hope this venture will help to grow our presence in the Italian market.
Financial review
Statutory profit before tax decreased to $114 million from the $380 million
achieved in the six months ended 30 June 2022 due to significantly lower
performance fee revenue in H1 2023, primarily as the result of the sharp
reversal in markets around the March banking crisis. Similarly, core profit
before tax decreased from $395 million to $137 million. Statutory earnings per
share on a diluted basis were 6.8 cents for the six months ended 30 June 2023
compared with 22.7 cents in H1 2022, with core earnings per share (diluted)
down from 24.0 cents in H1 2022 to 8.9 cents. Core management fee profit
before tax decreased to $133 million (H1 2022: $149 million) and core
management fee earnings per share (diluted) decreased 4% to 8.7 cents, with
run rate core net management fees of $946 million at 30 June 2023 (31 December
2022: $917 million).
Core net revenue of $513 million (H1 2022: $855 million) primarily comprised
$460 million of core net management fee revenue (H1 2022: $469 million) and
$51 million (H1 2022: $383 million) of core performance fee revenue, including
core gains on investments of $19 million (H1 2022: losses of $21 million).
Core net management fee revenue was 2% lower than the comparative period due
to a relative decrease in total return AUM. Core performance fees of $32
million comprised $30 million from alternative strategies and $2 million from
long-only strategies.
Average net management fee margins across absolute return, total return and
systematic long-only categories were broadly in line with those for the year
ended 31 December 2022. The average net management fee margin of multi-manager
solutions decreased by three basis points to 17 basis points in the period, as
a result of the ongoing shift towards infrastructure solutions from
traditional fund of fund strategies. The average discretionary long-only net
management fee margin increased to 60 basis points compared with 57 basis
points for the year ended 31 December 2022 due to underlying product mix.
The overall run rate net management fee margin at 30 June 2023 decreased by
two basis points to 62 basis points, down from 64 basis points at 31 December
2022, as a result of AUM mix shift between categories, in particular a
relative increase in the AUM of lower margin long-only strategies.
Net management fees and margins
Average net management fee margin (bps) Run rate core net management fees ($m) (1) Run rate net management fee margin (bps) (1)
Six months to 12 months to 31 Dec 2022 At 30 Jun 2023 At 31 Dec 2022 At 30 Jun 2023 At 31 Dec 2022
30 Jun 2023
Absolute return 114 112 535 526 113 114
Total return 61 63 178 177 61 61
Multi-manager solutions 17 20 37 38 18 19
Systematic long-only 24 25 83 77 23 24
Discretionary long-only 60 57 113 99 59 59
Total 63 65 946 917 62 64
We signed two sub-leases for a substantial portion of the vacant space in our
London office in the period. The derecognition of the associated portion of
our right-of-use lease asset resulted in a gain on disposal of $8 million,
classified as a non-core item.
Compensation costs in the period were $257 million (H1 2022: $343 million),
comprising $118 million of fixed compensation costs (H1 2022: $110 million)
and $139 million of variable compensation costs (H1 2022: $233 million). The
increase in fixed compensation was largely due to a previously planned
increase in headcount to support business growth. Variable compensation costs
decreased due to lower performance fees generated in the period with the
compensation ratio increasing to 50% from 40% in the comparative period, at
the top end of our guided range.
Core other costs, including asset servicing and depreciation, were $113
million compared with $111 million for H1 2022, with the increase driven by an
increase in utility costs and property rates. While most currencies,
particularly sterling, have strengthened against the USD in the first half of
2023, they have remained weaker on average than in the first half of 2022
(1.23 USD:GBP in H1 2023 compared with 1.30 USD:GBP in H1 2022), resulting in
a reduction in fixed compensation and core other costs which partially offsets
the underlying increases noted above. Net finance expense of $6 million was
consistent with the comparative period.
Operating net cash inflows of $102 million for H1 2023 (H1 2022: inflows of
$146 million) decreased from the comparative period due to the decrease in
profit in the period. Even with a decline in profits in the period, we were
still able to generate operating net cash inflows before working capital,
interest and tax of $206 million (H1 2022: $479 million).
Capital management
Our robust balance sheet and liquidity positions allow us to invest in the
business, support our long-term growth prospects and maximise shareholder
value. They also enable us to withstand periods of stress. In H1 2023, we
completed both $125 million share repurchases announced in each of December
2022 and March 2023, and signed an agreement to purchase a 51% interest in the
Swiss asset manager Asteria (as part of the strategic partnership with
F-ISPB). On 6 July 2023, we signed an agreement to acquire a controlling
interest in Varagon Capital Partners, a leading US middle-market private
credit manager with $11.8 billion of assets under management and $15.4 billion
of total client commitments as at 31 December 2022. The consideration payable
on completion of these transactions will be funded using existing internal
resources. Total acquisition-related costs incurred in the period of $10
million are classified as a non-core item.
The interim dividend of 5.6 cents per share is in line with the guidance
communicated previously. 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 2023, we
had $618 million of net financial assets (31 December 2022: $983 million)
including $101 million of cash (31 December 2022: $349 million), partly offset
by the $65 million drawn on our revolving credit facility (31 December 2022:
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 when practicable as funds are marketed to clients. Seeding
investments decreased to $634 million at 30 June 2023 (31 December 2022: $688
million) as a result of net redemptions, partially offset by mark to market
gains in the period, with the additional $191 million of total return swap
exposure up from $138 million at 31 December 2022.
1. Run rate net management fee margin is calculated as core net
management fees divided by average AUM on a fund-by-fund basis for the period
specified. Run rate core net management fees applies the run rate margin to
closing AUM. This is for illustrative purposes and not a forecast.
Outlook
We continue to believe that the current environment presents a significant
opportunity for active investment managers, particularly those with the
ability to offer alpha irrespective of prevailing market conditions and in
liquid and customisable format. We have built a diversified and resilient
business, with a compelling range of investment strategies and solutions,
underpinned by high-performing talent and cutting-edge technology.
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 30 to
34 of our 2022 Annual Report and include: investment performance risk; key
person risk; counterparty risk; liquidity risk; investment book risk; pension
risk; risk of internal or external process failure; model and data integrity
risk; information and cybercrime security risk; information technology and
business continuity risk; legal, compliance 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 2023,
with systems and controls functioning as designed.
'Core' measures are alternative performance measures. For a detailed
description of our alternative performance measures, including non-core items,
please refer to pages 27-32.
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 2023 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 2023 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
2023; and
· material related party transactions in the six months ended 30
June 2023 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
Lucinda Bell - Independent Non-executive Director
Ceci Kurzman - Independent Non-executive Director
Alberto Musalem - Independent Non-executive Director
Anne Wade - Independent Non-executive Director
By order of the board
Luke Ellis
Chief Executive Officer
31 July 2023
Antoine Forterre
Chief Financial Officer
31 July 2023
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-yearly financial report for the six months ended 30
June 2023 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 notes 1 to 15.
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 2023 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 (ISRE (UK) 2410). 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 Man 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
ISRE (UK) 2410; 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 Man 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 Company 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 ISRE (UK) 2410.
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
31 July 2023
Interim financial statements
Group income statement
$m Note Six months to 30 June 2023 Six months to
30 June 2022
Management and other fees 474 483
Performance fees 32 404
Revenue 506 887
Net income or gains/(losses) on investments and other financial instruments 8 30 (19)
Third-party share of (gains)/losses relating to interests in consolidated 8 (12) 19
funds
Sub-lease rental income 2 3
Distribution costs (16) (16)
Net revenue 510 874
Asset servicing costs (27) (30)
Compensation costs 2 (257) (343)
Other costs 3 (101) (83)
Finance expense 4 (14) (7)
Finance income 4 8 1
Gain on disposal of investment property - right-of-use lease assets 10 8 -
Amortisation of acquired intangible assets (11) (30)
Share of post-tax loss of associates (2) (2)
Statutory profit before tax 114 380
Tax expense 5 (31) (72)
Statutory profit for the period attributable to owners of the Company 83 308
Statutory earnings per share: 12
Basic 6.9¢ 23.3¢
Diluted 6.8¢ 22.7¢
Group statement of comprehensive income
$m Six months to 30 June 2023 Six months to
30 June 2022
Statutory profit for the period attributable to owners of the Company 83 308
Other comprehensive income/(loss):
Remeasurements of post-employment benefit obligations (4) -
Deferred tax on pension plans 1 (1)
Items that will not be reclassified to profit or loss (3) (1)
Cash flow hedges:
Valuation gains/(losses) taken to equity 8 (1)
Realised gains transferred to Group income statement (6) (1)
Net investment hedges 2 3
Foreign currency translation 1 (3)
Items that may be reclassified to profit or loss 5 (2)
Other comprehensive income/(loss) for the period 2 (3)
Total comprehensive income for the period attributable to owners of the 85 305
Company
Group balance sheet
Note At 30 June At 31 December
$m 2023 2022
Assets
Cash and cash equivalents 6 212 457
Fee and other receivables 383 570
Investments in fund products and other investments 8 1,724 1,209
Investments in associates 12 14
Current tax assets 3 -
Finance lease receivable 10 36 -
Leasehold improvements and equipment 54 53
Leasehold property - right-of-use lease assets 88 92
Investment property - right-of-use lease assets 41 71
Investment property - consolidated fund entities 8 33 34
Other intangibles 52 50
Deferred tax assets 104 105
Pension asset 19 22
Goodwill and acquired intangibles 616 627
Total assets 3,377 3,304
Liabilities
Borrowings 6 65 -
Trade and other payables 598 942
Provisions 11 14 14
Current tax liabilities - 37
CLO liabilities - consolidated fund entities 8 479 -
Third-party interest in consolidated funds 8 455 359
Lease liability 256 253
Total liabilities 1,867 1,605
Net assets 1,510 1,699
Equity
Capital and reserves attributable to owners of the Company 1,510 1,699
Group cash flow statement
$m Note Six months to 30 June 2023 Six months to 30 June 2022
Operating activities
Cash generated from operations 7 179 223
Interest paid (9) (2)
Payment of lease interest (5) (5)
Tax paid (63) (70)
Cash flows from operating activities 102 146
Investing activities
Interest received 8 1
Purchase of leasehold improvements and equipment (8) (10)
Purchase of other intangible assets (10) (11)
Cash flows used in investing activities (10) (20)
Financing activities
Repayments of lease liability principal (7) (10)
Purchase of Man Group plc shares by the Employee Trust (56) (47)
Share repurchase programmes (including costs) (223) (234)
Ordinary dividends paid to Company shareholders (118) (110)
Drawdown of revolving credit facility 6 65 120
Cash flows used in financing activities (339) (281)
Net decrease in cash and cash equivalents (247) (155)
Cash and cash equivalents at beginning of the period 457 387
Effect of foreign exchange movements 2 (4)
Cash and cash equivalents at end of the period 6 212 228
Less: restricted cash held by consolidated fund entities 8 (111) (96)
Available cash and cash equivalents at the end of the period 101 132
Group statement of changes in equity
$m Share capital Reorg- Profit and loss account Man Group plc shares held by Employee Trust Treasury shares Cumulative translation adjustment Other reserves Total
anisation reserve
At 1 January 2022 51 (1,688) 3,477 (61) (178) 41 9 1,651
Statutory profit for the period - - 308 - - - - 308
Other comprehensive loss - - (1) - - - (2) (3)
Total comprehensive income - - 307 - - - (2) 305
Share-based payment charge - - 14 - - - - 14
Current tax on share-based payments - - 4 - - - - 4
Purchase of Man Group plc shares by the Employee Trust - - - (47) - - - (47)
Disposal of Man Group plc shares by the Employee Trust - - (28) 28 - - - -
Share repurchases - - (250) - - - - (250)
Transfer to Treasury shares - - 234 - (234) - - -
Transfer from Treasury shares - - (24) - 22 - 2 -
Cancellation of Treasury shares (2) - (143) - 143 - 2 -
Dividends paid - - (110) - - - - (110)
At 30 June 2022 49 (1,688) 3,481 (80) (247) 41 11 1,567
At 1 January 2023 46 (1,688) 3,590 (80) (225) 41 15 1,699
Statutory profit for the period - - 83 - - - - 83
Other comprehensive income - - (3) - - 3 2 2
Total comprehensive income - - 80 - - 3 2 85
Share-based payment charge - - 20 - - - - 20
Current tax on share-based payments - - 5 - - - - 5
Purchase of Man Group plc shares by the Employee Trust - - - (56) - - - (56)
Disposal of Man Group plc shares by the Employee Trust - - (30) 30 - - - -
Share repurchases - - (125) - - - - (125)
Transfer to Treasury shares - - 223 - (223) - - -
Transfer from Treasury shares - - (18) - 15 - 3 -
Cancellation of Treasury shares (1) - (103) - 103 - 1 -
Dividends paid - - (118) - - - - (118)
At 30 June 2023 45 (1,688) 3,524 (106) (330) 44 21 1,510
1. Basis of preparation
These condensed consolidated interim financial statements for the six months
ended 30 June 2023 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 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 2022,
which were prepared in accordance with International Financial Reporting
Standards (IFRS) and relevant IFRIC interpretations issued by the
International Accounting Standards Board (IASB) adopted by the United Kingdom,
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 14 March 2023.
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 2022 (the '2022 Annual Report').
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 interim financial statements.
Going concern
The Board has determined that there is a reasonable expectation that Man Group
has sufficient resources to continue in operation for a period of at least
twelve months from the date of approval of these interim financial statements.
Accordingly, the 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 is 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.
Man Group's key sources of estimation uncertainty are the valuation of the net
pension asset (as further described in Note 22 of the 2022 Annual Report) and
the estimated amount of accrued discretionary variable compensation. The
determination of discretionary variable compensation is an annual process
undertaken at the calendar year end, therefore the accrual at 30 June 2023 is
an estimated amount based on the financial performance, including absolute
levels of performance fees, in the year to date. The Board has also considered
the assumptions used in the assessments for impairment of right-of-use lease
assets and the recoverability of deferred tax assets. They have concluded that
these assumptions do not have a significant risk of causing a material
adjustment to the carrying amounts of our assets or liabilities at the balance
sheet date.
The Board has also considered the impact of climate change on the interim
financial statements, in particular in relation to the going concern
assessment, the cash flow forecasts used in the impairment assessments of
non-current assets and the assumptions around future life expectancies used in
the valuation of the net pension asset. The impact of climate change on the
interim financial statements is not currently expected to be material.
2. Compensation costs
Six months to 30 June 2023 Six months to
$m 30 June 2022
Salaries 98 91
Variable cash compensation 67 168
Deferred compensation: share-based payment charge 20 14
Deferred compensation: fund product-based payment charge 40 33
Social security costs 23 29
Pension costs 9 8
Total compensation costs 257 343
Comprising:
Fixed compensation: salaries and associated social security costs, and pension 118 110
costs
Variable compensation: variable cash compensation, deferred compensation and 139 233
associated social security costs
The unamortised deferred compensation at 30 June 2023 is $184 million (30 June
2022: $144 million) and has a weighted average remaining vesting period of 2.3
years (30 June 2022: 2.1 years).
3. Other costs
$m Six months to 30 June 2023 Six months to
30 June 2022
Technology and communications 12 11
Audit, tax, legal and other professional fees 11 10
Occupancy 11 8
Staff benefits 8 7
Temporary staff, recruitment, consultancy and managed services 6 8
Travel and entertainment 5 3
Insurance 2 3
Marketing and sponsorship 2 2
Other cash costs, including irrecoverable VAT 10 6
Acquisition related costs 10 -
Total other costs before depreciation and amortisation 77 58
Depreciation of leasehold improvements and equipment, and amortisation of 17 16
other intangibles
Depreciation of right-of-use lease assets 7 9
Total other costs 101 83
4. Finance expense and finance income
$m Six months to 30 June 2023 Six months to
30 June 2022
Finance expense:
Unwind of lease liability discount (5) (5)
Other finance expense (9) (2)
Total finance expense (14) (7)
Finance income:
Interest on cash deposits 8 1
Total finance income 8 1
Net finance expense (6) (6)
5. Tax
The tax expense for the period of $31 million (H1 2022: $72 million) results
in a statutory effective tax rate of 27% (H1 2022: 19%). The increase in rate
is primarily due to the increase in the UK corporation tax rate from 19% to
25% on 1 April 2023 together with the impact of non-deductible expenses and
the derecognition of a portion of the available deferred tax assets in
relation to US state and city tax losses. 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 $59
million (31 December 2022: $64 million) that will be available to offset
future taxable profits. At 30 June 2023, $20 million of the available deferred
tax assets (31 December 2022: $18 million) in relation to US state and city
tax losses are unrecognised as we do not expect to realise sufficient future
taxable profits against which these losses can be offset before they expire.
The OECD has published an Inclusive 'Pillar 2' Framework (the Framework) to
support the introduction of a global minimum tax rate of 15%. The UK has
enacted its legislation in Finance (No. 2) Act 2023, effective from 2024, with
legislation and regulations in most other jurisdictions also expected to take
effect from 2024. Pending final conclusions as to potential outcomes, it is
not currently practicable to assess fully the impact of the Framework on our
future tax charges. We expect to be subject to the global minimum top-up tax
in certain jurisdictions in which we operate, however the impact is not
expected to be significant.
6. Cash, liquidity and borrowings
$m At 30 June At 31 December 2022
2023
Cash held with banks 37 124
Short-term deposits 24 95
Money market funds 40 130
Cash held by consolidated fund entities (Note 8) 111 108
Cash and cash equivalents 212 457
Less: cash held by consolidated fund entities (Note 8) (111) (108)
Available cash and cash equivalents 101 349
Undrawn committed revolving credit facility 435 500
Total liquidity 536 849
Borrowings
Our $500 million committed revolving credit facility (RCF) is immediately
accessible and incorporates an environmental, social and governance (ESG)
target-linked interest rate component. It does not include any financial
covenants to maintain maximum operational flexibility. $65 million was drawn
down at 30 June 2023 and we have no other borrowings (31 December 2022:
undrawn). The RCF is scheduled to mature in December 2026.
7. Reconciliation of statutory profits to cash generated from operations
$m Six months to 30 June 2023 Six months to
30 June 2022
Statutory profit for the period 83 308
Adjustments for:
Share-based payment charge 20 14
Fund product-based payment charge 40 33
Net finance expense 6 6
Tax expense 31 72
Depreciation of leasehold improvements and equipment 6 6
Depreciation of right-of-use lease assets 7 9
Gain on disposal of investment property - right-of-use lease assets (8) -
Amortisation of acquired intangible assets 11 30
Amortisation of other intangibles 11 10
Share of post-tax loss of associates 2 2
Foreign exchange movements 5 (12)
Realised gains on cash flow hedges (6) (1)
Other non-cash movements (2) 2
206 479
Changes in working capital(1):
Decrease/(increase) in fee and other receivables 208 (176)
Decrease/(increase) in other financial assets including consolidated fund 32 (4)
entities(2)
Decrease in trade and other payables (267) (76)
Cash generated from operations 179 223
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 (Note 8) 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 $3 million of restricted net cash inflows (H1 2022: $32
million) relating to consolidated fund entities (Note 8).
8. Investments in fund products and other investments
$m At 30 June At 31 December
2023
2022
Investments in fund products 314 304
Investments in consolidated funds: transferrable securities 1,410 905
Investments in fund products and other investments 1,724 1,209
Less:
Fund investments held for deferred compensation arrangements (193) (153)
Investments in consolidated funds: exclude gross-up of net investment (897) (368)
Seeding investments portfolio 634 688
8. Investments in fund products and other investments continued
Net income or gains/(losses) on investments and other financial instruments
comprises the following:
$m Six months to 30 June 2023 Six months to
30 June 2022
Net gains/(losses) on seeding investments portfolio 18 (19)
Consolidated fund entities: gross-up of net gains/(losses) on investments 19 (15)
Foreign exchange movements (8) 17
Net gains/(losses) on fund investments held for deferred compensation 1 (2)
arrangements and other investments
Net income or gains/(losses) on investments and other financial instruments 30 (19)
Consolidation of investments in funds
In H1 2023, our interests in 39 (31 December 2022: 43) funds met the
definition of control and therefore have been consolidated on a line-by-line
basis. Certain of our collateralised loan obligations (CLOs) have been
consolidated for the first time in the period following the purchase of the
majority holding in the subordinated tranches.
Consolidated fund entities are included within the Group balance sheet and
income statement as follows:
$m At 30 June At 31 December
2023 2022
Balance sheet
Cash and cash equivalents 111 108
Transferrable securities(1,2) 1,410 905
Fees and other receivables 48 29
Investment property 33 34
Trade and other payables (155) (180)
CLO liabilities (479) -
Net assets of consolidated fund entities 968 896
Third-party interest in consolidated funds (455) (359)
Net investment held by Man Group 513 537
$m Six months to 30 June 2023 Six months to
30 June 2022
Income statement
Net gains/(losses) on investments(3) 47 (53)
Management fee expenses(4) (2) (2)
Other costs(5) (5) (2)
Net gains/(losses) of consolidated fund entities 40 (57)
Third-party share of (gains)/losses relating to interests in consolidated (12) 19
funds
Gains/(losses) attributable to net investment held by Man Group 28 (38)
Notes:
1. Includes assets held by consolidated CLOs.
2. Included within investments in fund products and other investments.
3. Included within net income or gains/(losses) on investments and
other financial instruments.
4. 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.
5. Includes depreciation and impairment of investment property held by
consolidated fund entities.
Trade and other payables and CLO liabilities relating to consolidated fund
entities can be analysed according to their contractual maturity date as
follows:
At 30 June 2023 At 31 December 2022
$m Trade and other payables CLO liabilities Trade and CLO liabilities
other payables
Within one year 155 6 142 -
Between one and five years - 154 38 -
More than five years - 319 - -
155 479 180 -
9. Fair value of financial assets/liabilities
The fair values of our financial assets and liabilities held at fair value
through profit and loss can be analysed as follows:
At 30 June 2023
$m Level 1 Level 2 Level 3 Total
Financial assets held at fair value
Investments in fund products (Note 8) - 302 12 314
Investments in consolidated funds: transferrable securities (Note 8) - 1,410 - 1,410
Derivatives - 2 - 2
- 1,714 12 1,726
Financial liabilities held at fair value
Derivatives - 6 - 6
CLO liabilities - consolidated fund entities (Note 8) - 479 - 479
- 485 - 485
At 31 December 2022
$m Level 1 Level 2 Level 3 Total
Financial assets held at fair value
Investments in fund products and other investments (Note 8) - 284 20 304
Investments in consolidated funds (Note 8) - 905 - 905
Derivatives - 9 - 9
- 1,198 20 1,218
Financial liabilities held at fair value
Derivatives - (6) - (6)
- (6) - (6)
Level 1, 2 and 3 financial assets and liabilities are defined in Note 13 of
the 2022 Annual Report. The assets held by the CLOs we control and therefore
consolidate are priced using independent pricing sources and are classified as
Level 2. Other than subordinated notes, the debt liabilities of consolidated
CLOs are valued at par plus accrued interest, which is considered to be
equivalent to fair value, and are therefore also classified as Level 2. The
subordinated notes of these CLOs are priced using an intrinsic valuation
approach, excluding any potential future value. As the valuation is equal to
the net of the other assets and liabilities in the structure, these notes are
also classified as Level 2.
The movements in Level 3 financial assets measured at fair value are as
follows:
$m At 30 June At 31 December
2023 2022
At beginning of the period 20 190
Transfers out of Level 3 (11) (154)
Purchases 2 1
Credit/(charge) to Group income statement (1,2) 1 (5)
Sales or settlements - (1)
Change in consolidated fund entities held - (11)
At end of the period 12 20
Notes:
1. Included within net income or gains/(losses) on investments and
other financial instruments.
2. Includes net unrealised gains of $1m (2022: losses of $5m).
10. Leases
In the period we signed and commenced sub-leases with two new tenants for a
substantial portion of the vacant space in our London office. These sub-leases
meet the definition of a finance lease under IFRS 16 'Leases', and therefore
on lease commencement we recognised a disposal of the associated portion of
our investment property right-of-use (ROU) lease asset of $28 million and
recognised a finance lease receivable of $36 million (31 December 2022: nil).
The excess of the value of the finance lease receivable over that of the
derecognised ROU lease asset of $8 million (30 June 2022: nil) has been
recognised as a gain on disposal of the ROU lease asset in the Group income
statement.
11. Provisions
$m At 30 June At 31 December
2023 2022
At beginning of the period 14 14
Charge to Group income statement - 1
Foreign currency translation - (1)
At end of the period 14 14
Provisions relate to ongoing claims and leasehold property dilapidations.
12. Earnings per share (EPS)
Six months to 30 June 2023 Six months to
30 June 2022
(million) (million)
Basic weighted average number of shares 1,190 1,322
Dilutive impact of:
Employee share awards 25 28
Employee share options 2 3
Dilutive weighted average number of shares 1,217 1,353
Six months to 30 June 2023 Six months to
30 June 2022
Statutory profit for the period ($m) 83 308
Basic EPS 6.9¢ 23.3¢
Diluted EPS 6.8¢ 22.7¢
13. Related party transactions
The related party transactions during the period are consistent with the
categories disclosed in the 2022 Annual Report. Related parties comprise key
management personnel, associates and fund entities which we control. All
transactions with related parties were carried out on an arm's length basis.
14. Acquisitions
On 29 June 2023, we signed an agreement to purchase 51% of the issued share
capital of Asteria Obviam SA (Asteria), an ESG-oriented Swiss asset management
company, and its existing fund range.
On 6 July 2023, we signed an agreement to acquire a controlling interest in
Varagon Capital Partners, L.P. (Varagon), a leading US middle-market private
credit manager with $11.8 billion of assets under management and $15.4 billion
of total client commitments at 31 December 2022. At completion, we will pay
$183 million in cash consideration for the acquisition of our interest in
Varagon, subject to closing adjustments, funded from existing internal
resources.
Both transactions are subject to customary regulatory approvals and are
expected to be completed by the end of 2023.
15. 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 employee of Man Group 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. We
dispute the allegations and consider there is no merit to the claim (in
respect of liability and quantum) and 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 Board does 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 Board 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, 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 to be a proxy for cash taxes paid.
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.
Non-core items in profit before tax comprise the following:
$m Six months to Six months to
30 June 2023 30 June 2022
Acquisition and disposal related:
Amortisation of acquired intangible assets (11) (30)
Acquisition related costs (10) -
Share of post-tax loss of associates (2) (2)
Gain on disposal of investment property - right-of-use lease assets 8 -
Foreign exchange movements (8) 17
Non-core items (23) (15)
Core measures: reconciliation to statutory equivalents
The statutory line items within the Group income statement can be reconciled
to their core equivalents as follows:
Six months to 30 June 2023 Core measure Reclassification of amounts relating to consolidated fund entities Non-core items Per Group income statement
$m
Management and other fees( APM ) 476 (2) - 474
Performance fees( APM ) 32 - - 32
Revenue( APM ) 508 (2) - 506
Net income or gains/(losses) on investments and other financial 19 19 (8) 30
instruments( APM )
Third-party share of gains relating to interests in consolidated funds - (12) - (12)
Sub-lease rental income 2 - - 2
Distribution costs (16) - - (16)
Net revenue( APM ) 513 5 (8) 510
Asset servicing costs (27) - - (27)
Compensation costs (257) - - (257)
Other costs( APM ) (86) (5) (10) (101)
Net finance expense (6) - - (6)
Gain on disposal of investment property - right-of-use lease assets - - 8 8
Amortisation of acquired intangible assets - - (11) (11)
Share of post-tax loss of associates - - (2) (2)
Profit before tax( APM ) 137 - (23) 114
Tax expense( APM ) (29) - (2) (31)
Profit( APM ) 108 - (25) 83
Core basic EPS 9.1¢
Core diluted EPS 8.9¢
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
Performance fees( APM ) 404 - - 404
Net management fee revenue( APM ) 889 (2) - 887
Net income or (losses)/gains on investments and other financial (21) (15) 17 (19)
instruments( APM )
Third-party share of losses relating to interests in consolidated funds - 19 - 19
Sub-lease rental income 3 - - 3
Distribution costs (16) - - (16)
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 (6) - - (6)
Amortisation of acquired intangible assets - - (30) (30)
Share of post-tax loss of associates - - (2) (2)
Profit before tax( APM ) 395 - (15) 380
Tax expense( APM ) (70) - (2) (72)
Profit( APM ) 325 - (17) 308
Core basic EPS 24.6¢
Core diluted EPS 24.0¢
APM The core equivalents of these statutory measures are defined as
Alternative Performance Measures.
Core measures: reconciliation to statutory equivalents continued
The statutory line items within the Group balance sheet can be reconciled to
their core equivalents as follows:
At 30 June 2023 Core Reclassification of amounts relating to consolidated fund entities Per Group balance sheet
$m
measure
Assets
Cash and cash equivalents( APM ) 101 111 212
Fee and other receivables( APM ) 335 48 383
Investments in fund products and other investments( APM ) 827 897 1,724
Investment in associates 12 - 12
Current tax assets 3 - 3
Finance lease receivable 36 - 36
Leasehold improvements and equipment 54 - 54
Leasehold property - right-of-use lease assets 88 - 88
Investment property - right-of-use lease assets 41 - 41
Investment property - consolidated fund entities - 33 33
Other intangibles 52 - 52
Deferred tax assets 104 - 104
Pension asset 19 - 19
Goodwill and acquired intangibles 616 - 616
Total assets 2,288 1,089 3,377
Liabilities
Borrowings 65 - 65
Trade and other payables( APM ) 443 155 598
Provisions 14 - 14
CLO liabilities - consolidated fund entities - 479 479
Third-party interest in consolidated funds - 455 455
Lease liability 256 - 256
Total liabilities 778 1,089 1,867
Net assets 1,510 - 1,510
At 31 December 2022 Core Reclassification of amounts relating to consolidated fund entities Per Group
$m
measure
balance sheet
Assets
Cash and cash equivalents( APM ) 349 108 457
Fee and other receivables( APM ) 541 29 570
Investments in fund products and other investments( APM ) 841 368 1,209
Investment in associates 14 - 14
Leasehold improvements and equipment 53 - 53
Leasehold property - right-of-use lease assets 92 - 92
Investment property - right-of-use lease assets 71 - 71
Investment property - consolidated fund entities - 34 34
Other intangibles 50 - 50
Deferred tax assets 105 - 105
Pension asset 22 - 22
Goodwill and acquired intangibles 627 - 627
Total assets 2,765 539 3,304
Liabilities
Trade and other payables( APM ) 762 180 942
Provisions 14 - 14
Current tax liabilities 37 - 37
Third-party interest in consolidated funds - 359 359
Lease liability 253 - 253
Total liabilities 1,066 539 1,605
Net assets 1,699 - 1,699
Core management fee and core performance fee profit
Core profit comprises core management fee profit, a steadier earnings stream,
and core performance fee profit, a more variable earnings stream. This split
facilitates analysis of our profitability drivers.
Six months to 30 June 2023 Core Reclassification of amounts relating Non-core items Per Group
$m
measure
to consolidated fund entities
income statement
Management and other fees 476 (2) - 474
Distribution costs (16) - - (16)
Net management fee revenue 460 (2) - 458
Sub-lease rental income 2 - - 2
Asset servicing costs (27) - - (27)
Compensation costs (management fee) (215) - - (215)
Other costs (86) (5) (10) (101)
Net finance expense (management fee) (1) - - (1)
Management fee profit before tax 133 (7) (10) 116
Tax expense (28)
Management fee profit 105
Core basic management fee EPS 8.9¢
Core diluted management fee EPS 8.7¢
Performance fees 32 - - 32
Net income or gains/(losses) on investments and other financial instruments 19 19 (8) 30
Performance fee revenue 51 19 (8) 62
Compensation costs (performance fee) (42) - - (42)
Net finance expense (performance fee) (5) - - (5)
Performance fee profit before tax 4 19 (8) 15
Tax expense (1)
Performance fee profit 3
Core basic performance fee EPS 0.2¢
Core diluted performance fee EPS 0.2¢
Six months to 30 June 2022 Core Reclassification of amounts relating Non-core items Per Group
$m
measure
to consolidated fund entities
income statement
Management and other fees 485 (2) - 483
Distribution costs (16) - - (16)
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 basic management fee EPS 9.3¢
Core diluted management fee EPS 9.1¢
Performance fees 404 - - 404
Net income or gains/(losses) on investments and other financial instruments (21) (15) 17 (19)
Performance fee revenue 383 (15) 17 385
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 basic performance fee EPS 15.3¢
Core diluted performance fee EPS 14.9¢
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, combining both
consolidated and unconsolidated fund entities on a consistent basis. 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 Group income statement as
follows:
$m Note Six months to Six months to
30 June 2023 30 June 2022
Net gains/(losses) on seeding investments portfolio 8 18 (19)
Net gains/(losses) on fund investments held for deferred compensation and 8 1 (2)
other investments
Core gains/(losses) on investments 19 (21)
Non-core items:
Consolidated fund entities: gross-up of net gains/(losses) on investments 8 19 (15)
Foreign exchange movements 8 (8) 17
Net income or gains/(losses) on investments and other financial instruments 30 (19)
Core tax rate
The core tax rate is the effective tax rate on core profit before tax and is
equal to the tax 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. Therefore, tax on core profit is considered a proxy
for our cash taxes payable.
The impact of non-core items on our tax expense is outlined below:
$m Six months to 30 June 2023 Six months to
30 June 2022
Statutory tax expense 31 72
Tax on non-core items:
Amortisation of acquired intangible assets 1 4
Gain on disposal of investment property - right-of-use lease assets (2) -
Foreign exchange movements 3 (4)
Non-core tax item on US deferred tax assets (4) (2)
Core tax expense 29 70
Comprising:
Tax expense on core management fee profit before tax 28 26
Tax expense on core performance fee profit before tax 1 44
The core tax rate is 21% for H1 2023 (H1 2022: 18%). The increase in the core
tax rate is largely due to the increase in the statutory UK tax rate in the
period.
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 to 30 June 2023 Six months to
30 June 2022
Cash flows from operating activities 102 146
Plus changes in working capital (Note 7):
(Decrease)/increase in fee and other receivables (208) 176
(Decrease)/increase in other financial assets (32) 4
Decrease in trade and other payables 267 76
Core cash flows from operations excluding working capital movements 129 402
Net financial assets
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 2022
2023
Seeding investments portfolio 8 634 688
Available cash and cash equivalents 6 101 349
Borrowings 6 (65) -
Payables under repo arrangements (52) (54)
Net financial assets 618 983
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