TIDMEMG
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 c
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 c([KPI]) (H1 2022: 24.0c) and
statutory EPS (diluted) of 6.8 c (H1 2022: 22.7c)
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 5.6c, in line with guidance
(H1 2022: 5.6c 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 prof it before tax 137 395
-------------------------------------- ------------------- -------------------
Statutory prof it after tax 83 308
-------------------------------------- ------------------- -------------------
c
-------------------------------------- ------------------- -------------------
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 c 24.0 c
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
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
Georgiana Brunner
Head of Communications
+44 20 7144 1000
media@man.com
Neil Doyle
FTI Consulting
+44 77 7197 8220
man@ fticonsulting.com
About Man Group
Man Group is a global, technology-empowered active investment
management firm focused on delivering alpha and portfolio solutions
for clients. Headquartered in London, we manage $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
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
AUM at AUM at
31 Dec Investment 30 Jun
$bn 2022 Net flows performance FX & other(1) 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
AUM at AUM at
31 Mar Investment 30 Jun
$bn 2023 Net flows performance FX & other(1) 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 30 Sep 31 Dec 31 Mar 30 Jun
2022 2022 2022 2023 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
30 Jun 2023 30 Jun 2023 30 Jun 2023 30 Jun 2023 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 $2 million from long-only strategies.
Average net management fee margins across absolute return, total
return and systematic long-only categories were broadly in line
with those for the year ended 31 December 2022. The average net
management fee margin of multi-manager solutions decreased by three
basis points to 17 basis points in the period, as a result of the
ongoing shift towards infrastructure solutions from traditional
fund of fund strategies. The average discretionary long-only net
management fee margin increased to 60 basis points compared with 57
basis points for the year ended 31 December 2022 due to underlying
product mix.
The overall run rate net management fee margin at 30 June 2023
decreased by two basis points to 62 basis points, down from 64
basis points at 31 December 2022, as a result of AUM mix shift
between categories, in particular a relative increase in the AUM of
lower margin long-only strategies.
Net management fees and margins
Average net management Run rate core net Run rate net management
fee margin (bps) management fees ($m) fee margin (bps)
(1) (1)
------------------------ ------------------------ ----------------------- -------------------------
Six months 12 months At 30 Jun At 31 Dec At 30 Jun At 31 Dec
to to 31 Dec 2023 2022 2023 2022
30 Jun 2022
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
C h i e f E xecut i ve 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
Gr o u p i nco me stat e m e nt
Six months Six months
to 30 June to
$m Note 2023 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 funds 8 (12) 19
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 c 23.3 c
Diluted 6.8 c 22.7 c
---------------------------------------------- ----- ------------ --------------
Group statement of comprehensive income
Six months Six months
to 30 June to
$m 2023 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 Company 85 305
-------------------------------------------------------- ------------ --------------
Gr o u p balance sheet
At 30 June At 31 December
$m Note 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
---------------------------------------------------- ----- ----------- ---------------
Gr o u p cash fl ow s tat e ment
Six months Six months
to 30 June to 30 June
$m Note 2023 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
Man
Group
plc shares
Reorg- Profit held Cumulative
Share anisation and loss by Employee Treasury translation Other
$m capital reserve account Trust shares adjustment reserves Total
--------------------------- -------- ---------- --------- ------------ -------- ------------ --------- -----
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 - - (3) - - 3 2 2
income
--------------------------- -------- ---------- --------- ------------ -------- ------------ --------- -----
Total comprehensive
income - - 80 - - 3 2 85
--------------------------- -------- ---------- --------- ------------ -------- ------------ --------- -----
Share-based payment
charge - - 20 - - - - 20
Current tax on share-based - - 5 - - - - 5
payments
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 p r e parati on
These condensed consolidated int e rim f i nanci al stat e m
ents for the six months ended 30 June 2023 have been prepa r ed in
acco rdance w i th United Kingdom-adopted International Accounting
Standard 34 ' Inter im F i nanc i al R epor t i ng', the D isc
losure Guidance and T rans par ency R u les of the Fi nanc i al
Conduct Aut ho r i t y 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 fi nanc i al i n for m a t i on cont a i ned he r e in is
unaudi ted and does not const i tute accounts within the meaning of
Article 105 of the C o m pan i es (Jersey) Law 1991. S tatut o ry
accounts for the year ended 31 December 2022, w h ich w e re prepa
r ed in accor dance w i th Internati onal F inanc ial Repor t i ng
S t a ndar ds (I F RS) and r e levant I FR IC int e rpretat ions
issued by the Internati onal A ccount i ng S t andards Board (I A
SB) adopt ed by the United Kingdom, upon w h ich the a udi tor has
g i ven an unq ual if ied and un mod if i ed r eport, have been del
i vered to t he Jersey R eg istrar of C o mpa n ies and were post
ed to sha reho lders on 14 March 2023.
T he account i ng po li c ies app lied in these inter im fi n
anci al stat e m ents a re cons istent w i th those app li ed 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. C o m p e n sa ti on costs
Six months to
$m Six months to 30 June 2023 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 costs 118 110
Variable compensation: variable cash compensation, deferred
compensation and associated social
security costs 139 233
------------------------------------------------------------------------- --------------------------- --------------
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. Ot her costs
Six months to
$m Six months to 30 June 2023 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 other intangibles 17 16
Depreciation of right-of-use lease assets 7 9
------------------------------------------------------------------------- --------------------------- --------------
Total other costs 101 83
------------------------------------------------------------------------- --------------------------- --------------
4. F i n a nce expen se and f inan ce i n co me
Six months to
$m Six months to 30 June 2023 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
T he tax expense for t he 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 p r o fit m ix.
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. Cas h, liquidity and borrowings
At 30 June
$m 2023 At 31 December 2022
-------------------------------------------------------- ----------- --------------------
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
Six months Six months
to 30 June to
$m 2023 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 (8) -
lease assets
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 entities(2) 32 (4)
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
At 30 June At 31 December
$m 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:
Six months to
$m Six months to 30 June 2023 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
arrangements and other
investments 1 (2)
------------------------------------------------------------------------- --------------------------- --------------
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. C ertain 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:
At 30 June At 31 December
$m 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
-------------------------------------------- ----------- ---------------
Six months to
$m Six months to 30 June 2023 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 funds (12) 19
------------------------------------------------------------------------- --------------------------- --------------
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
------------------------------------------- ----------------------------------
Trade and
$m Trade and other payables CLO liabilities other payables CLO liabilities
---------------------------- ------------------------- ---------------- ---------------- ----------------
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 Level Level
1 2 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:
At 30 June At 31 December
$m 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
At 30 June At 31 December
$m 2023 2022
---------------------------------- ----------- ---------------
At beginning of the period 14 14
Charge to Group income statement - 1
Foreign currency translation - (1)
---------------------------------- ----------- ---------------
At end of the period 14 14
---------------------------------- ----------- ---------------
Provisions relate to ongoing claims and leasehold property
dilapidations.
12. E ar n i n gs per s hare ( E P S)
Six months to
Six months to 30 June 2023 30 June 2022
(million) (million)
-------------------------------------------- --------------------------- --------------
Basic weighted average number of shares 1,190 1,322
Dilutive impact of:
Employee share awards 25 28
Employee share options 2 3
-------------------------------------------- --------------------------- --------------
Dilutive weighted average number of shares 1,217 1,353
-------------------------------------------- --------------------------- --------------
Six months to
Six months to 30 June 2023 30 June 2022
-------------------------------------- --------------------------- --------------
Statutory profit for the period ($m) 83 308
Basic EPS 6.9 c 23.3 c
Diluted EPS 6.8 c 22.7 c
-------------------------------------- --------------------------- --------------
13. Relat ed p a rty transact i o ns
T he r e l a ted pa rty transactions dur ing t he per i od are
cons istent w i th t he cat eg o r ies d isc losed in the 2022
Annual R eport. 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:
Six months Six months
to to
$m 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 8 -
lease assets
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
Reclassification
of amounts
relating
to consolidated Non-core Per Group
$m Core measure fund entities items income statement
---------------------------------- -------------- ------------------ ---------- ------------------
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 instruments([APM]) 19 19 (8) 30
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 9.1c
---------------------------------- -------------- ------------------ ---------- ------------------
Core diluted EPS 8.9c
---------------------------------- -------------- ------------------ ---------- ------------------
Six months to 30 June 2022 Core
Reclassification
of amounts
relating
to consolidated Non-core Per Group
$m measure fund entities items income statement
----------------------------------- --------- ----------------- --------- ------------------
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 instruments([APM]) (21) (15) 17 (19)
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 24.6c
----------------------------------- --------- ----------------- --------- ------------------
Core diluted EPS 24.0c
----------------------------------- --------- ----------------- --------- ------------------
[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 Per Group
$m measure fund entities balance sheet
------------------------------------------ ---------- ------------------ ---------------
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 Per Group
Reclassification
of amounts
relating
to consolidated balance
$m measure fund entities 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.
Reclassification
of amounts
Six months to 30 June 2023 Core relating Per Group
to consolidated Non-core
$m measure fund entities items 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 8.9c
------------------------------------- ---------- ------------------ ---------- -------------------
Core diluted management fee
EPS 8.7c
------------------------------------- ---------- ------------------ ---------- -------------------
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 0.2c
------------------------------------- ---------- ------------------ ---------- -------------------
Core diluted performance
fee EPS 0.2c
------------------------------------- ---------- ------------------ ---------- -------------------
Reclassification
of amounts
Six months to 30 June 2022 Core relating Per Group
to consolidated Non-core
$m measure fund entities items 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 9.3c
------------------------------------- ---------- ------------------ --------- -------------------
Core diluted management fee
EPS 9.1c
------------------------------------- ---------- ------------------ --------- -------------------
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 15.3c
------------------------------------- ---------- ------------------ --------- -------------------
Core diluted performance
fee EPS 14.9c
------------------------------------- ---------- ------------------ --------- -------------------
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:
Six months Six months
to to
$m Note 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 other investments 8 1 (2)
-------------------------------------------------- ----- -------------- --------------
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:
Six months Six months
to 30 June to
$m 2023 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 (2) -
lease assets
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:
Six months to
$m Six months to 30 June 2023 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:
At 30 June
$m Note 2023 At 31 December 2022
------------------------------------- ----- ----------- --------------------
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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END
IR NKDBBOBKDCON
(END) Dow Jones Newswires
August 01, 2023 02:00 ET (06:00 GMT)
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