REG - Man Group plc - INTERIM RESULTS FOR SIX MONTHS ENDED 30 JUNE 2016 <Origin Href="QuoteRef">EMG.L</Origin> - Part 2
26/07/2016 07:06
- Part 2: For the preceding part double click ID:nRSZ1851Fa
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. 2) 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. 3) Represented 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 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. 5)
Represented by GLG European Long Short
Fund - Class D Unrestricted - EUR. 6)
Represented by Man GLG European Equity
Alternative IN EUR. 7) Represented by Man
GLG European Alpha Alternative IN EUR. 8)
Represented by Man GLG European Mid-Cap
Equity Alternative IN H USD. 9)
Represented by Man GLG Alpha Select
Alternative IN H EUR. 10) Represented by
Man GLG Cred-Eq Alternative Class IN EUR.
11) Represented by Man GLG Value
Opportunity Class B USD Unrestricted. 12)
Represented by GLG Global Convertible Fund
- Class A - USD. 13) Represented by Man
GLG Global Convertible UCITS Fund - Class
IM USD. 14) Represented by GLG Market
Neutral Fund - Class Z Unrestricted - USD.
15) Represented by Man GLG European
Distressed Fund - Class A - USD. 16)
Represented by the gross return of Man GLG
Multi-Strategy Fund - Class A - USD Shares
until 31 December 2012. From 1 January
2013 the performance of Man Multi-Strategy
Fund - Class G - USD Shares is displayed.
17) Represented by the official
performance of Man GLG Europe Plus Source
ETF net of a 0.75% p.a. management fee and
no performance fee. Provided by Source.
18) Represented by Man GLG Japan CoreAlpha
Equity Fund - Class I JPY. 19) Represented
by Man GLG Global Equity Fund - Class I T
USD to Class I USD (13/05/2011). 20)
Represented by Man GLG Strategic Bond Fund
Class C. 21) Represented by Man GLG
Undervalued Assets Fund - C Accumulation
Shares. 22) Represented by Man GLG
European Equity Class I EUR. 23)
Represented by Man GLG UK Select Fund
Class C. Accumulation Shares. 24)
Represented by Man GLG Continental
European Growth Fund Class C Accumulation
Shares. 25) Represented by FRM Diversified
II USD A. 26) Represented by MSCI World
Net Total Return Index hedged to USD. 27)
Represented by Citigroup World Government
Bond Index hedged to USD (total return).
28) Represented by Citigroup High Grade
Corp Bond TR. 29) HFRI and HFRX index
performance over the past 4 months is
subject to change. 30) The historic
Barclay BTOP 50 Index data is subject to
change.
Please note that the dates in brackets
represent the date of the join in the
linked track records.
*Estimated.
#The reference index listed by Numeric is
intended to best represent the strategy's
universe. Comparison to an index is for
informational purposes only.
* Returns are based on the performance of
only unrestricted accounts within each
strategy. Performance is net-of-fees.
Returns of accounts with client
restrictions may differ.
Past or projected performance is no
indication of future results. Returns may
increase or decrease as a result of
currency fluctuations. Please see the Net
-of-Fee Return Information section of this
presentation for a full listing of the
fees and expenses deducted for each
strategy identified.
Relative Return
-2.5%
-3.6%
-1.6%
0.6%
Numeric Large Cap Core
1.2%
0.8%
12.8%
13.7%
S&P 500®#
2.5%
3.8%
11.7%
12.1%
Relative Return
-1.2%
-3.1%
1.1%
1.6%
Numeric Value
3.1%
2.8%
11.5%
13.0%
Russell 1000 Value®#
4.6%
6.3%
9.9%
11.4%
Relative Return
-1.5%
-3.5%
1.6%
1.7%
Numeric Amplified Core (130/30)
0.2%
-0.7%
15.8%
16.6%
S&P 500®#
2.5%
3.8%
11.7%
12.1%
Relative Return
-2.2%
-4.6%
4.1%
4.5%
U.S. Small Cap Equity
Numeric Small Cap Core
0.9%
-1.2%
6.3%
9.8%
Russell 2000®#
3.8%
2.2%
7.1%
8.4%
Relative Return
-2.9%
-3.4%
-0.8%
1.5%
Numeric Small Cap Growth
-0.7%
-5.2%
5.9%
9.6%
Russell 2000 Growth®#
3.2%
-1.6%
7.7%
8.5%
Relative Return
-3.9%
-3.6%
-1.8%
1.1%
Numeric Small Cap Value
2.5%
2.7%
7.3%
10.3%
Russell 2000 Value®#
4.3%
6.1%
6.4%
8.1%
Relative Return
-1.8%
-3.3%
0.9%
2.2%
Numeric SMID Growth
-0.3%
-2.9%
8.2%
10.0%
Russell 2500 Growth®#
2.7%
0.0%
9.1%
9.3%
Relative Return
-3.0%
-2.9%
-0.9%
0.8%
Global / Non-U.S. Equity
Numeric Global Core
-0.7%
-2.3%
9.5%
n/a
MSCI World®#
1.0%
0.7%
6.9%
n/a
Relative Return
-1.8%
-2.9%
2.5%
n/a
Numeric Global Small Cap
-0.4%
-0.6%
n/a
n/a
MSCI World Small Cap®#
1.6%
2.3%
n/a
n/a
Relative Return
-2.0%
-2.9%
n/a
n/a
Numeric Global Core ex US
-1.5%
-1.8%
n/a
n/a
MSCI World ex US®#
-1.1%
-3.0%
n/a
n/a
Relative Return
-0.4%
1.2%
n/a
n/a
Numeric EAFE Core
-1.8%
-3.1%
n/a
n/a
MSCI EAFE®#
-1.5%
-4.4%
n/a
n/a
Relative Return
-0.4%
1.4%
n/a
n/a
Numeric International Small Cap
-1.4%
-1.7%
9.5%
8.5%
MSCI World ex U.S. Small Cap®#
-1.3%
-0.7%
6.3%
4.3%
Relative Return
-0.1%
-1.0%
3.2%
4.2%
Numeric Europe Core (EUR)
-0.1%
-6.5%
11.0%
10.5%
MSCI Europe®# (EUR)
-0.2%
-7.2%
7.4%
6.5%
Relative Return
0.0%
0.8%
3.6%
3.9%
Numeric Japan Core (YEN)
-8.5%
-20.2%
5.0%
11.2%
MSCI Japan®# (YEN)
-7.8%
-19.5%
3.8%
9.3%
Relative Return
-0.7%
-0.7%
1.1%
1.9%
Numeric Asia Pacific ex Japan
1.4%
3.1%
n/a
n/a
Russell Asia Pacific ex Japan®#
-0.6%
-1.0%
n/a
n/a
Relative Return
2.0%
4.1%
n/a
n/a
Emerging Markets
Numeric Emerging Markets Alpha
2.0%
7.1%
4.5%
2.6%
MSCI Emerging Markets®#
0.7%
6.4%
-1.6%
-3.8%
Relative Return
1.3%
0.7%
6.0%
6.4%
Numeric Emerging Markets Core
2.6%
7.2%
1.8%
n/a
MSCI Emerging Markets®#
0.7%
6.4%
-1.6%
n/a
Relative Return
1.9%
0.8%
3.4%
n/a
Numeric Emerging Markets Small Cap
2.4%
4.5%
n/a
n/a
MSCI Emerging Markets Small Cap®#
0.4%
1.4%
n/a
n/a
Relative Return
2.0%
3.1%
n/a
n/a
3 months to 30 Jun 2016 6 months to 30 Jun 2016 3 years to 30 Jun 2016 5 years to 30 Jun 2016
Numeric Asia Pacific ex-Japan 2.1% 2.8% 6.4% n/a
Russell Asia Pacific ex-Japan 0.5% 1.9% 2.0% n/a
Relative Return 1.6% 1.0% 4.4% n/a
NUMERIC LONG/SHORT
Numeric US Market Neutral -4.1% -4.9% 1.6% 2.8%
Numeric World Market Neutral -1.1% -4.4% 2.8% 3.7%
Numeric Alternative Market Neutral -3.5% -3.6% 2.7% 4.2%
Numeric Socially Aware Multi-Strategy -3.1% -3.1% 2.4% n/a
Numeric Absolute Return -2.8% -0.4% 2.9% 3.6%
Numeric Integrated Alpha -1.9% -2.6% n/a n/a
ML 91-Day T-Bill® 0.1% 0.1% 0.1% 0.1%
Investment performance is being provided solely in connection with Man Group plc's interim results and for its
shareholders. Nothing herein 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.
Source: Man database, Bloomberg, MSCI and Source. There is no guarantee of trading performance and
past or projected performance is not a reliable indicator of future performance. Returns may increase
or decrease as a result of currency fluctuations.
1) 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.
2) 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.
3) Represented 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 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.
5) Represented by GLG European Long Short Fund - Class D Unrestricted - EUR.
6) Represented by Man GLG European Equity Alternative IN EUR.
7) Represented by Man GLG European Alpha Alternative IN EUR.
8) Represented by Man GLG European Mid-Cap Equity Alternative IN H USD.
9) Represented by Man GLG Alpha Select Alternative IN H EUR.
10) Represented by Man GLG Cred-Eq Alternative Class IN EUR.
11) Represented by Man GLG Value Opportunity Class B USD Unrestricted.
12) Represented by GLG Global Convertible Fund - Class A - USD.
13) Represented by Man GLG Global Convertible UCITS Fund - Class IM USD.
14) Represented by GLG Market Neutral Fund - Class Z Unrestricted - USD.
15) Represented by Man GLG European Distressed Fund - Class A - USD.
16) Represented by the gross return of Man GLG Multi-Strategy Fund - Class A - USD Shares until 31
December 2012. From 1 January 2013 the performance of Man Multi-Strategy Fund - Class G - USD Shares
is displayed.
17) Represented by the official performance of Man GLG Europe Plus Source ETF net of a 0.75% p.a.
management fee and no performance fee. Provided by Source.
18) Represented by Man GLG Japan CoreAlpha Equity Fund - Class I JPY.
19) Represented by Man GLG Global Equity Fund - Class I T USD to Class I USD (13/05/2011).
20) Represented by Man GLG Strategic Bond Fund Class C.
21) Represented by Man GLG Undervalued Assets Fund - C Accumulation Shares.
22) Represented by Man GLG European Equity Class I EUR.
23) Represented by Man GLG UK Select Fund Class C. Accumulation Shares.
24) Represented by Man GLG Continental European Growth Fund Class C Accumulation Shares.
25) Represented by FRM Diversified II USD A.
26) Represented by MSCI World Net Total Return Index hedged to USD.
27) Represented by Citigroup World Government Bond Index hedged to USD (total return).
28) Represented by Citigroup High Grade Corp Bond TR.
29) HFRI and HFRX index performance over the past 4 months is subject to change.
30) The historic Barclay BTOP 50 Index data is subject to change.
Please note that the dates in brackets represent the date of the join in the linked track records.
*Estimated.
#The reference index listed by Numeric is intended to best represent the strategy's universe. Comparison to an index is for
informational purposes only.
* Returns are based on the performance of only unrestricted accounts within each strategy. Performance is net-of-fees.
Returns of accounts with client restrictions may differ.
Past or projected performance is no indication of future results. Returns may increase or decrease as a result of currency
fluctuations. Please see the Net-of-Fee Return Information section of this presentation for a full listing of the fees and
expenses deducted for each strategy identified.
RISK MANAGEMENT
It is a key objective of Man to remain a leader in risk management and governance. As such, 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'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. Our approach is to identify, quantify and manage risk throughout the Group, in
accordance with the Board's risk appetite. We maintain surplus capital and liquidity to give us strategic and tactical
flexibility, both in terms of corporate and fund management.
The principal risks faced by Man are set out on pages 36 to 37 of our 2015 Annual Report. These remain our principal risks
for the second half of the financial year being: investment underperformance risk; regulatory risk; balance sheet market
risk; operational risk; information security risk; discretionary trading risk; credit/counterparty risk; legal risk;
reputational risk; and key staff retention risk. We note the increased market volatility and regulatory uncertainty
resulting from the UK Brexit vote at the end of H1 2016, but consider the associated risks to be already contained within
our principal risk disclosures as described. Our risk framework operated as expected in the six months to 30 June 2016,
with systems and controls functioning as designed despite volatile markets.
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 2016has been prepared in accordance with IAS 34 'Interim Financial
Reporting' as adopted by the European Union, and that this interim reportincludes a fair review of the information required
by the Financial ConductAuthority's Disclosure 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 2016 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 2016; and
· material related party transactions in the six months ended 30 June 2016and any material changes in the related party
transactions described in the last annual report.
The Directors of Man Group plc are as listed in the Annual Report for the year ended 31 December 2015, with the exception
of Jon Aisbitt, who retired from the Board on 6 May 2016. He was succeeded as Chairman by Lord Livingston of Parkhead.
By order of the board
Manny Roman
Chief Executive Officer
26 July 2016
Jonathan Sorrell
Co-President & CFO
26 July 2016
INTERIM FINANCIAL STATEMENTS
Group income statement
Six months to 30 June Six months to 30 June
$m Note 2016 2015
Revenue:
Gross management and other fees 3 381 425
Performance fees 3 40 200
421 625
Income or gains/(losses) on investments and other financial instruments 5 (3) 31
Third party share of losses relating to interests in consolidated funds 15 5 -
Revaluation of contingent consideration 2 14 (22)
Distribution costs 6 (34) (35)
Asset servicing 7 (17) (16)
Amortisation of acquired intangible assets 13 (47) (45)
Compensation 8 (186) (231)
Other costs 9 (84) (90)
Impairment of FRM goodwill 2 - (41)
Share of after tax profit of associates - 3
Finance expense 10 (15) (18)
Finance income 10 1 2
Profit before tax 55 163
Taxation expense 11 (6) (33)
Statutory profit for the period attributable to owners of the Parent Company 49 130
Earnings per share: 12
Basic (cents) 2.9 7.6
Diluted (cents) 2.9 7.5
Adjusted profit before tax 98 280
Group statement of comprehensive income
Six months to 30 June Six months to 30 June
$m 2016 2015
Statutory profit for the period attributable to owners of the Parent Company 49 130
Other comprehensive (expense)/income:
Remeasurements of post-employment benefit obligations 12 (4)
Deferred tax (debited)/credited on pension revaluation (3) 1
Items that will not be reclassified to profit or loss 9 (3)
Cash flow hedges:
Valuation (losses)/gains taken to equity (20) 6
Transfer to Group income statement 5 8
Deferred tax credited on cash flow hedge movements 3 -
Net investment hedge - 6
Foreign currency translation 1 (9)
Recycling of FX revaluation on liquidation of subsidiaries 1 -
Items that may be subsequently reclassified to profit or loss (10) 11
Other comprehensive (expense)/income for the period (net of tax) (1) 8
Total comprehensive income for the period attributable to owners of the Parent Company 48 138
Group balance sheet
$m Note At 30 June 2016 At 31 December 2015
Assets
Cash and cash equivalents 14 477 607
Fee and other receivables 326 303
Investments in fund products and other investments 15 667 598
Pension asset 59 48
Investments in associates 29 30
Leasehold improvements and equipment 44 44
Goodwill and acquired intangibles 13 1,452 1,497
Other intangibles 16 14
Deferred tax assets 51 59
3,121 3,200
Non-current assets held for sale 15 213 188
Total assets 3,334 3,388
Liabilities
Trade and other payables 560 660
Provisions 16 52 58
Current tax liabilities 9 32
Third party interest in consolidated funds 15 221 136
Borrowings 14 149 149
Deferred tax liabilities 60 69
1,051 1,104
Non-current liabilities held for sale 15 106 69
Total liabilities 1,157 1,173
Net assets 2,177 2,215
Equity
Share capital and reserves attributable to the owners of the Parent Company 17 2,177 2,215
Group cash flow statement
Six months to 30 June Six months to 30 June
$m Note 2016 2015
Cash flows from operating activities
Profit for the period 49 130
Adjustments for:
Income tax 6 33
Net finance expense 14 16
Share of after tax profits of associates - (3)
Revaluation of contingent consideration (14) 22
Depreciation and impairment of leasehold improvements and equipment 6 8
Amortisation of acquired intangible assets 47 45
Amortisation of other intangible assets 2 2
Share-based payment charge 12 8
Fund product based payment charge 1 17 17
Impairment of FRMgoodwill - 41
Defined benefit pension plans (3) (3)
Other non-cash movements 8 (2)
144 314
Changes in working capital:
(Increase)/decrease in receivables (14) 68
Decrease in other financial assets 2 25 20
Decrease in payables 1,3 (126) (84)
Cash generated from operations 29 318
Interest paid (5) (9)
Income tax paid (28) (28)
Cash flows from operating activities (4) 281
Cash flows from investing activities
Purchase of leasehold improvements and equipment (6) (1)
Purchase of other intangible assets (4) (3)
Acquisition of subsidiaries and other intangibles, net of cash acquired - (38)
Payment of contingent consideration in relation to acquisitions 3 (21) (3)
Interest received 1 2
Dividends received from associates 1 2
Cash flows from investing activities 2 (29) (41)
Cash flows from financing activities
Proceeds from issue of ordinary shares 5 5
Purchase of own shares by the Employee Trusts and Partnerships (19) (35)
Share repurchase programme (including costs) - (176)
Dividends paid to Company shareholders (83) (104)
Cash flows from financing activities (97) (310)
Net decrease in cash (130) (70)
Cash at beginning of the period 607 738
Cash at period end 4 14 477 668
Notes:
1 The fund product based payment charge has been separately identified as a non-cash charge, which reflects a change in
presentation within operating cash flows in the year ended 31 December 2015 compared to prior periods when this was
included within changes in working capital. The directors consider that this better reflects the nature of these
movements.
2 The net cash inflow from third party interests in consolidated funds was presented within investing activities in the
comparative period and has been reclassified to changes in working capital within operating activities, consistent with the
presentation for the year ended 31 December 2015. The directors consider that this better reflects the nature of these cash
flows and matches these with the related underlying transactions.
3 The payment of contingent consideration in relation to acquisitions has been reclassified to investing activities from
changes in working capital within operating activities, consistent with the presentation for the year ended 31 December
2015. The directors consider that this better reflects the nature of these cash flows and matches these with the related
underlying transactions.
4 Cash balances at 30 June 2016 include $43 million of restricted cash relating to consolidated fund entities (30 June
2015: $233 million), as outlined in Note 15.
Group statement of changes in equity
Six months to 30 June 2016 Equity attributable to owners of the Parent Company
$m Note Share capital and capital reserves Revaluation reserves and retained earnings Total
As at 1 January 2016 1,200 1,015 2,215
Profit for the period - 49 49
Other comprehensive expense - (1) (1)
Total comprehensive income for the period - 48 48
Share-based payments 5 7 12
Deferred tax debited to reserves - share-based payments - (1) (1)
Purchase of own shares by Employee Trusts - (14) (14)
Dividends 1 - (83) (83)
At 30 June 2016 17 1,205 972 2,177
Six months to 30 June 2015 Equity attributable to owners of the Parent Company
$m Share capital and capital reserves Revaluation reserves and retained earnings Total
As at 1 January 2015 1,193 1,241 2,434
Profit for the period - 130 130
Other comprehensive income - 8 8
Total comprehensive income for the period - 138 138
Share-based payments 5 5 10
Purchase of own shares by Employee Trusts - (32) (32)
Share repurchase programme (including costs) - (176) (176)
Dividends 1 - (104) (104)
At 30 June 2015 1,198 1,072 2,270
Note:
1 Relates to the final dividend paid for the year ended 31 December 2015 of 4.8 cents per share (six months to 30 June
2015: final dividend paid for year ended 31 December 2014 of 6.1 cents).
1. Basis of preparation
The interim financial statements for the six months ended 30 June 2016have been prepared in accordance with IAS 34 'Interim
Financial Reporting' and the Disclosure and Transparency Rules of the Financial ConductAuthority.
The Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a
period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis
in preparing the interim financial statements.
The financial information contained herein is unaudited and does not constitute statutory accounts as defined by Section
434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2015, which were prepared in accordance
with International Financial Reporting Standards (IFRS) and relevant IFRIC interpretations issued by the International
Accounting Standards Board (IASB) and IFRIC Committee respectively and adopted by the European Union (EU) and upon which
the auditor hasgiven an unqualified and unmodified report and which contained no statement under Section 498 of the
Companies Act 2006, have been delivered to the Registrar of Companies and were posted to shareholders on 9 March 2016.
The accounting policies applied in these interim financial statements are consistent with those set out and applied in
Man's Annual Report for the year ended 31 December 2015. There has been no significant impact due to new and amended
international financial reporting standards during the period.
Man acts as the investment manager/advisor to fund entities. Man assesses such relationships on an ongoing basis to
determine whether each fund entity is controlled and therefore consolidated into the Group's results. Assessment of the
control characteristics for all relationships with fund entities led to the consolidation of twelve fund entities for the
six months ended 30 June 2016 (31 December 2015: nine), which are either classified as held for sale or consolidated on a
line by line basis. Based on their nature, the interests of third parties in funds that are consolidated are classified as
liabilities, as further detailed in Note 15.
The areas of significant judgement are: the determination of fair values for contingent consideration in relation to recent
acquisitions and the valuation of goodwill and acquired intangibles (Note 13), whether the Group controls certain funds
through its investments in fund products and is required to consolidate them (Note 15), and classifications of adjusting
items (Note 2).
The income statement and cash flow statement presentation in these interim financial statements shows the six months ended
30 June 2016 (H1 2016) together with the six months ended 30 June 2015 (H1 2015). The balance sheet is presented as at 30
June 2016 together with comparatives as at 31 December 2015.
The standalone parent entity financial statements of Man Group plc will be prepared under Financial Reporting Standard 101
for the year ending 31 December 2016, consistent with the year ended 31 December 2015.
2. Adjusted profit before tax
Statutory profit before tax is adjusted to give a better understanding of the underlying profitability of the business. The
directors consider that the Group's profit is most meaningful when considered on a basis which excludes acquisition and
disposal related items (including non-cash items such as amortisation of purchased intangible assets and deferred tax
movements relating to the recognition of tax losses in the US), impairment of assets, restructuring costs, and certain
non-recurring gains or losses, which therefore reflect the recurring revenues and costs that drive the Group's cash flow.
The directors are consistent in their approach to the classification of adjusting items period to period, maintaining an
appropriate symmetry between losses and gains and the reversal of any accruals previously classified as adjusting items.
Six months to 30 June 2016 Six months to 30 June
$m Note 2016 2015
Statutory profit before tax 55 163
Adjusting items:
Acquisition and disposal related:
Amortisation of acquired intangible assets 13 47 45
Revaluation of contingent consideration (14) 22
Unwind of contingent consideration discount 10 9 8
Recycling of FX revaluation on liquidation of subsidiaries 1 -
Impairment of FRM goodwill - 41
Other costs - professional fees and integration costs - 5
Litigation, regulatory and other settlements - (4)
Adjusted profit before tax 98 280
Tax on adjusted profit (15) (39)
Adjusted profit after tax 83 241
Amortisation of acquired intangibles primarily relates to investment management contracts and brands recognised on the
acquisition of GLG, Numeric and FRM.
The revaluation of contingent consideration credit of $14 million during the period largely relates to a $12 million
decrease in the Numeric earn-out payment (Note 19) as a result of slightly lower flows and performance compared to that
forecast at 31 December 2015, which partially offsets the $61 million increase in the Numeric earn-out which was recognised
for the year to 31 December 2015 ($17 million of this relating to the six months to 30 June 2015).
3. Adjusted net management and performance fee profit before tax
$m Six months to Six months to
30 June 2016 30 June 2015
Gross management and other fees 381 425
Share of after tax profit of associates - 3
Less:
Distribution costs (34) (35)
Asset servicing (17) (16)
Compensation (156) (176)
Other costs (83) (89)
Net finance expense (1) (4)
Adjusted net management fee profit before tax 90 108
Performance fees 40 200
Income or gains/(losses) on investments and other financial instruments1 2 31
Less Compensation (30) (55)
Finance expense (Note 10) (4) (4)
Adjusted net performance fee profit before tax 8 172
Adjusting items (Note 2) (43) (117)
Statutory profit before tax 55 163
Note:
1 Includes the adding back of third party share of losses relating to interests in consolidated funds (Note 15).
The decrease in adjusted net management fee profit before tax compared to the comparative period primarily relates to a
decrease in net management fees partially offset by a reduction in variable compensation.
Adjusted net performance fee profit before tax has largely decreased as a result of weaker investment performance in H1
2016.
4. Revenue
Revenue for the six months to 30 June 2016 was $421 million, which is 33% lower than the $625 million in H1 2015.
Gross management and other fees for the period were $381 million, compared to $425 million in H1 2015, as a result of a
decrease in average FUM as well as a decrease in net management fee margins due to the continued mix shift towards
institutional money, particularly in the alternatives quant category, and reduced guaranteed product FUM.
Revenue from performance fees has decreased from $200 million in H1 2015 to $40 million in the six months to 30 June 2016,
as a result of weaker investment performance achieved across each of our four investment managers over the period.
5. Income or gains/(losses) on investments and other financial instruments
Income or gains/(losses) on investments and other financial instruments of $3 million primarily relate to losses on seeding
investments (H1 2015: $31 million gains).
6. Distribution costs
Distribution costs were $34 million for the period (H1 2015: $35 million), comprising investor servicing fees of $32
million (H1 2015: $33 million) and product placement fees of $2 million (H1 2015: $2 million).
7. Asset servicing
Asset servicing includes custodial, valuation, fund accounting and registrar functions performed by third parties under
contract to Man, on behalf of the funds. Asset servicing costs for the period were $17 million (H1 2015: $16 million).
8. Compensation
$m Six months Six months
to 30 June 2016 to 30 June 2015
Salaries 78 78
Variable cash compensation 61 109
Share-based payment charge 12 8
Fund product based payment charge 17 17
Social security costs 13 17
Pension costs 5 2
Total compensation costs 186 231
Salaries have remained flat in H1 2016 compared to H1 2015 due to an increase in headcount to grow the business being
offset by the more favourable Pound Sterling to US Dollar fixed costs hedged exchange rate in H1 2016 (1.51) compared to
the rate secured in H1 2015 (1.66). Variable compensation and social security costs have decreased as a result of lower
management and performance fee related bonus accruals in the period.
The unamortised deferred compensation at 30 June 2016 was $76 million (31 December 2015: $49 million), which has a weighted
average remaining vesting period of 2.0 years (31 December 2015: 2.1 years).
Pension costs for H1 2015 include a one-off credit of $3 million relating to a change in the contribution structure of the
Swiss plan.
9. Other costs
Six months to 30 June Six months to 30 June
$m 2016 2015
Occupancy 17 16
Technology and communication 14 16
Temporary staff, recruitment, consultancy and managed services 10 10
Legal fees and other professional fees 8 8
Benefits 7 8
Travel and entertainment 5 5
Audit, accountancy, actuarial and tax fees 4 4
Insurance 3 4
Marketing and sponsorship 3 3
Other cash costs, including irrecoverable VAT 5 5
Total other costs before depreciation, amortisation and adjusting items 76 79
Depreciation and amortisation 7 10
Other costs - before adjusting items 83 89
Acquisition and disposal related (Note 2) - 5
Recycling of FX revaluation on liquidation of subsidiaries (Note 2) 1 -
Litigation, regulatory and other settlements (Note 2) - (4)
Total other costs 84 90
Other costs before depreciation, amortisation and adjusting items were $76 million, compared to $79 million in H1 2015 and
$82 million for H2 2015. The decrease of $3 million largely reflects the impact of the more favourable fixed costs Pound
Sterling to US Dollar hedged exchange rate in H1 2016 (1.51) compared to the rate secured in 2015 (1.66).
10. Finance expense and finance income
Six months Six months
to 30 June to 30 June
$m 2016 2015
Finance expense:
Interest payable on borrowings (4) (4)
Revolving credit facility costs and other (2) (6)
Total finance expense - before adjusting items (6) (10)
Unwind of contingent consideration discount (Note 2) (9) (8)
Total finance expense (15) (18)
Finance income:
Interest on cash deposits and US treasury bills 1 2
Total finance income 1 2
In the current and prior period the interest payable on borrowings of $4 million relates to the fixed rate reset callable
guaranteed subordinated notes issued in September 2014 (Note 14). The $4 million reduction in the revolving credit facility
and other costs compared to the prior period reflects the reduction and renegotiation of the revolving credit facility in
June 2015.
11. Taxation
The tax charge for the period is $6 million (H1 2015: $33 million). The effective tax rate on profits before adjusting
items of 15% (H1 2015: 14%) reflects the estimated rate for the year ending 31 December 2016. The majority of the Group's
profit is earned in the UK, Switzerland and the US. The forecast full year effective tax rate is consistent withthis profit
mix.
As a result of available deferred tax assets in the US, Man does not expect to pay federal tax on any taxable profits it
may earn in the US for a number of years. Based on the Group's three year forecast US taxable profits, a deferred tax asset
of $19 million is recognised on the balance sheet at 30 June 2016 (31 December 2015: $19 million).
12. Earnings per share (EPS)
The calculation of basic earnings per ordinary share is based on: a basic post-tax profit for the period of $49 million (H1
2015: post-tax profit of $130 million); and ordinary shares of 1,680,269,040 (H1 2015: 1,710,748,723),
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