Investment performance by strategy
|
|
Return (net of
fees)
|
|
Annualised return (net of
fees)
|
|
|
3
months to
31 Dec 2023
|
12
months to
31 Dec 2023
|
|
3 years
to
31 Dec 2023
|
5 years
to
31 Dec 2023
|
Inception to 31 Dec 2023
|
Absolute
return
|
|
|
|
|
|
|
|
AHL Alpha
|
1
|
-2.0%
|
1.0%
|
|
5.5%
|
6.4%
|
10.1%
|
AHL Dimension
|
2
|
1.4%
|
4.1%
|
|
7.0%
|
3.8%
|
4.8%
|
AHL Evolution
|
3
|
1.0%
|
3.7%
|
|
8.3%
|
8.8%
|
11.9%
|
AHL Diversified
|
4
|
-5.1%
|
-3.8%
|
|
3.9%
|
6.5%
|
10.2%
|
GLG Alpha Select Alternative
|
5
|
3.0%
|
10.2%
|
|
7.9%
|
7.2%
|
5.0%
|
GLG Event Driven Alternative
|
6
|
1.2%
|
5.9%
|
|
4.7%
|
-
|
6.5%
|
GLG Global Credit Multi Strategy
|
7
|
1.6%
|
3.0%
|
|
3.2%
|
4.7%
|
10.8%
|
Man Strategies 1783
|
8
|
1.5%
|
3.4%
|
|
8.1%
|
-
|
5.0%
|
Total
return
|
|
|
|
|
|
|
|
AHL TargetRisk
|
9
|
7.7%
|
14.1%
|
|
2.8%
|
8.1%
|
7.6%
|
Alternative Risk Premia
|
10
|
2.3%
|
5.3%
|
|
9.9%
|
4.3%
|
4.5%
|
GLG Global Emerging Markets Debt Total
Return
|
11
|
-3.8%
|
-7.7%
|
|
-1.9%
|
-1.0%
|
0.4%
|
Multi-manager
solutions
|
|
|
|
|
|
|
|
FRM Diversified II
|
12
|
2.5%
|
4.8%
|
|
5.9%
|
4.9%
|
4.1%
|
Systematic
long-only
|
|
|
|
|
|
|
|
Numeric Global Core
|
13
|
7.5%
|
11.1%
|
|
-2.6%
|
5.4%
|
4.7%
|
Relative
return
|
|
-0.4%
|
1.3%
|
|
2.5%
|
1.7%
|
2.1%
|
Numeric Europe Core
|
14
|
7.9%
|
18.5%
|
|
10.7%
|
10.4%
|
8.7%
|
Relative
return
|
|
1.4%
|
2.6%
|
|
1.3%
|
0.6%
|
2.2%
|
Numeric Emerging Markets Core
|
15
|
7.5%
|
11.1%
|
|
-2.6%
|
5.4%
|
4.7%
|
Relative
return
|
|
-0.4%
|
1.3%
|
|
2.5%
|
1.7%
|
2.1%
|
Discretionary
long-only
|
|
|
|
|
|
|
|
GLG Continental European Growth
|
16
|
13.2%
|
20.0%
|
|
2.7%
|
12.0%
|
9.3%
|
Relative
return
|
|
5.6%
|
4.3%
|
|
-5.4%
|
1.5%
|
3.1%
|
GLG Japan CoreAlpha Equity
|
17
|
-2.2%
|
30.4%
|
|
25.7%
|
12.8%
|
5.9%
|
Relative
return
|
|
-4.2%
|
2.2%
|
|
13.6%
|
0.5%
|
1.9%
|
GLG Undervalued Assets
|
18
|
6.1%
|
16.2%
|
|
11.4%
|
6.8%
|
7.2%
|
Relative
return
|
|
2.9%
|
8.3%
|
|
2.8%
|
0.1%
|
1.7%
|
GLG High Yield Opportunities
|
19
|
4.7%
|
10.9%
|
|
3.2%
|
-
|
6.7%
|
Relative
return
|
|
-1.4%
|
0.5%
|
|
4.1%
|
-
|
4.7%
|
GLG Sterling Corporate Bond
|
20
|
10.8%
|
24.3%
|
|
-
|
-
|
4.5%
|
Relative
return
|
|
2.4%
|
14.6%
|
|
-
|
-
|
10.6%
|
Indices
|
|
|
|
|
|
|
|
HFRX Global Hedge Fund Index
|
21
|
1.7%
|
3.1%
|
|
0.7%
|
3.5%
|
|
HFRI Fund of Funds Conservative
Index
|
21
|
1.8%
|
5.3%
|
|
4.3%
|
5.1%
|
|
HFRI Equity Hedge (Total) Index
|
21
|
6.4%
|
11.4%
|
|
3.8%
|
8.4%
|
|
HFRX EH: Equity Market Neutral
Index
|
21
|
2.3%
|
4.2%
|
|
1.7%
|
-0.2%
|
|
Barclay BTOP 50 Index
|
22
|
-4.0%
|
-1.6%
|
|
7.5%
|
6.8%
|
|
Past or projected performance is no indication of future results.
Financial indices are used for illustrative purposes only and are
provided for the purpose of making a comparison to general market
data as a point of reference and should not be construed as a true
comparison to the strategy.
The information herein is being
provided solely in connection with this press release and is not
intended to be, nor should it be construed or used as, investment,
tax or legal advice, any recommendation or opinion regarding the
appropriateness or suitability of any investment or strategy, or an
offer to sell, or a solicitation of an offer to buy, an interest in
any security, including an interest in any fund or pool described
herein.
1.
Represented by AHL Alpha plc from 17 October 1995 to 30 September
2012, and by AHL Strategies PCC Limited: Class Y AHL Alpha USD
Shares from 1 October 2012 to 30 September 2013. The representative
product was changed at the end of September 2012 due to the
provisioning of fund liquidation costs in October 2012 for AHL
Alpha plc, which resulted in tracking error compared with other
Alpha Programme funds. Both funds are valued weekly; however, for
comparative purposes, statistics have been calculated using the
best quality price that is available at each calendar month end,
using estimates where a final price is unavailable. Where a price,
either estimate or final is unavailable on a calendar month end,
the price on the closest date prior to the calendar month end has
been used. Both of the track records have been adjusted to reflect
the fee structure of AHL Alpha (Cayman) Limited - USD Shares. From
30 September 2013, the actual performance of AHL Alpha (Cayman)
Limited - USD Shares is displayed.
2.
Represented by AHL Strategies PCC Limited: Class B AHL Dimension
USD Shares from 3 July 2006 to 31 May 2014, and by AHL Dimension
(Cayman) Ltd - F USD Shares Class from 1 June 2014 until 28
February 2015 when AHL Dimension (Cayman) Ltd - A USD Shares Class
is used. Representative fees of 1.5% Management Fee and 20%
Performance Fee have been applied.
3.
Represented by AHL Evolution Limited adjusted for the fee structure
(2% p.a. management fee and 20% performance fee) from September
2005 to 31 October 2006; and by AHL Strategies PCC: Class G AHL
Evolution USD from 1 November 2006 to 30 November 2011; and by the
performance track record of AHL Investment Strategies SPC: Class E
AHL Evolution USD Notes from 1 December 2011 to 30 November 2012.
From 1 December 2012, the track record of AHL (Cayman) SPC: Class
A1 Evolution USD Shares has been shown. All returns shown are net
of fees.
4.
Represented by Man AHL Diversified plc from 26 March 1996 to 29
October 2012, and by Man AHL Diversified (Guernsey) USD Shares -
Class A from 30 October 2012 to date. The representative product
was changed at the end of October 2012 due to legal and/or
regulatory restrictions on Man AHL Diversified plc preventing the
product from accessing the Programme's revised target allocations.
Both funds are valued weekly; however, for comparative purposes,
statistics have been calculated using the best quality price that
is available at each calendar month end, using estimates where a
final price is unavailable. Where a price, either estimate or final
is unavailable on a calendar month end, the price on the closest
date prior to the calendar month end has been used.
5.
Represented by Man GLG Alpha Select Alternative IL GBP; AUM
included within GLG equity under the absolute return product
category.
6.
Represented by Man GLG Event Driven Alternative IN USD; AUM
included within GLG equity under the absolute return product
category.
7.
Represented by GLG Market Neutral Fund - Class Z Restricted - USD
until 31 August 2007. From 1 September 2007, Man GLG Global Credit
Multi Strategy CL IL XX USD unrestricted; AUM included within Other
under the absolute return product category.
8.
Represented by Man Strategies 1783 Class F1 USD until 31st December
2021. From the 1st 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. Represented
by Man GLG Sterling Corporate Bond Fund Class C Accumulation
Shares. Relative return is shown vs ICE BofA Sterling Corporate
& Collateralized Index (GBR, TR); AUM included within Credit
and convertibles under the discretionary long-only product
category.
21. HFRI and
HFRX index performance over the past 4 months is subject to
change.
22. The
historical Barclay BTOP 50 Index data is subject to
change.
Chief Executive Officer's review
Overview of the year
2023 was quite a year; one that I
will remember for many reasons. Not only did I have the
honour of taking over from Luke Ellis as CEO of Man Group
in September, but the year defied expectations on multiple
occasions as the world grappled with several macroeconomic and
geopolitical pressures. Measures of inflation may have retreated in
the year, but the level and future path of interest rates were
firmly on investors' minds. A shockwave rippled through financial
markets in March with the collapse of Silicon Valley Bank (SVB),
triggered by the sudden rate rises from central banks to combat
inflation. This effect was short-lived, however, and despite
tensions in the Middle East, concerns over China's economic
recovery, a US credit downgrade and debt-ceiling debate, risk
assets powered ahead with growing confidence that US policymakers
would achieve an economic soft landing in 2024; this was evidenced
by the S&P 500 index gaining 24% during the year, with the
'Magnificent Seven' technology darlings leading the
charge.
Against that backdrop, and in my
first financial update as CEO after taking over from Luke, I am
pleased to be able to report a solid set of results for 2023.
They highlight the continued demand for our strategies and
solutions, the breadth and depth of our client relationships, the
benefits of a diversified product offering, and the scale and
quality of the business we have built.
As a diversified, active investor
we ended the year with positive investment performance of $9.7
billion. Overall investment performance for our absolute return
strategies was 0.9%, with particularly strong returns from our
discretionary strategy GLG Alpha Select (+10.2%). Our total return
and long-only strategies performed well over the period, helped by
positive momentum in equity markets, delivering overall investment
performance of 7.6% and 16.8%, respectively. AHL TargetRisk gained
14.1%, once again proving its ability to navigate hard-to-forecast
macro changes and adapt quickly to evolving market
conditions.
There were nevertheless some
strategies that were less suited to generating returns in this
environment. Notably, 2023 proved to be a testing year for
trend-following absolute return strategies and this was for
two reasons. First, March's SVB crisis was an idiosyncratic event
that reversed prevailing trends. Second, the market narrative
centred around when central banks would end their hiking cycle and
whether cuts would be imminent, which changed abruptly in November.
In that context, performance in our flagship trend-following
strategies has been reasonable, with AHL Alpha (+1.0%) and AHL
Evolution (+3.7%), ending the period in positive
territory.
On an asset-weighted basis,
relative investment performance across the firm was positive during
the year. Our sophisticated approach to risk management and
technology-empowered platform meant we were able to navigate
periods of market volatility effectively, driving outperformance of
0.8% from our alternative strategies. Our long-only strategies also
outperformed by 2.8%, which is a real testament to the skill of our
investment teams.
I am delighted that we continued
to attract capital and grow our market share during the year. In
what was a difficult period for most of the sector, the client-led
growth in our business remained strong. We recorded $3.0 billion of
net inflows, across both alternative and long-only strategies,
which highlights the continuing 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 4.9% 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.
Strong investment performance, net
inflows and positive impacts from foreign exchange (FX) and other
movements, resulted in our AUM increasing to $167.5 billion as
of 31 December 2023. This marks a new high for Man Group
and a 17% increase compared with 31 December 2022.
Despite these many positive
elements, core profit before tax decreased by 56% compared
with 2022 to $340 million, largely driven by a decline from the
exceptionally strong performance fee outcome recorded in the
previous year. Statutory profit before tax was $279 million,
compared with $745 million in 2022.
Strategy update
Following my appointment, I have
spent a significant amount of time with the Board and my new
Executive Committee, who are all highly talented experts in
their fields and represent core functions from across the firm. We
have worked together to define our strategy and outline areas
of focus to deliver the next chapter of growth for Man Group.
In doing so, I have been conscious not to overlook our strengths
today. We have built a high-quality, resilient business that
has delivered exceptional growth. Our investment capabilities,
powered by our advanced technology platform, are already helping to
solve our clients' most complex problems; continuing to invest in
these strengths will remain a key priority in the
future.
I am proud of the progress we have
made diversifying our business, however, we cannot rest on our
laurels. To maintain our relevance with clients, and to continue to
deliver for our shareholders, there are several areas that we will
be focusing on.
One of these is adding to our
investment capabilities, which is critical to our success. We see
the largest opportunities in quantitative equities, across
mid-frequency and long-only, and in credit, across liquid and
private markets. We are also prioritising building out our
solutions offering, acknowledging that customisation and
transparency are of ever-increasing importance to sophisticated
allocators across the globe.
Our global distribution network is
one of our key differentiators and we will continue to prioritise
investment in this area. Extending
our presence in markets where we are underweight relative to the
size of the opportunity will be an important driver of future
growth. We have identified the North American region, the
intermediated wealth channel and the insurance client base as key
priorities.
2023 brought a great deal of
enthusiasm about the potential for technology, and in particular AI
via the arrival of ChatGPT, to catalyse productivity in each and
every sector. We have been using AI for many years already and
believe this new technology has huge potential for use across our
business to help our people perform their roles even more
effectively (more on this below). Our early and significant
investment in technology has given us a lasting competitive
advantage that is not easy to replicate. We will focus on
maintaining this lead and continue to invest in the development of
our platform, leveraging the benefits of our scale to drive
nimble and efficient execution of our strategic objectives. We will
also ensure that we align our resources with our strategic goals
and the new structure of our discretionary offering reflects a
first step towards that commitment.
It is vital that we continue to
evolve to meet the needs of investors around the world and the
millions of pensioners and savers they represent. I have every
confidence in the talent of the people here at Man Group and our
ability to build a business that is run for long-term success and a
market leader in active management.
Progress against strategic
priorities
Strong client
relationships
I have spent a great deal of time
with clients in recent months and it is evident that their
challenges are becoming more complex, requiring specific
customisation and partnership. Our breadth of investment
strategies, quality of institutional resources and commitment to
partnering with clients to build solutions at scale are key
differentiators and have helped us to add a significant number of
new relationships with strategically important allocators during
the year. As at 31 December 2023, over 65% of our AUM is from
mandates that are customised to some degree.
As previously mentioned, we saw
strong engagement with existing and new clients across the globe in
2023, reflected by net inflows for the year of 2.1%; this is
notably strong relative to the industry, which saw average outflows
of roughly 3% across comparable strategies in the year and is one
of the best signs of the strength of our business today. Our
clients have confidence in our ability to manage and grow their
assets, and to help them to navigate a range of market
conditions.
The trend of clients investing
across the firm continues, with a number of existing clients
investing in new products in 2023. At the end of December, 73% of
our AUM is from clients investing in two products or more and 46%
from clients investing in four products or more. Our 50
largest clients are invested in an average of four of our
strategies. This illustrates the strength of our offering and the
value we bring in deeply understanding the evolving needs of our
clients.
Earlier this year, we also
announced a strategic partnership with Fideuram - Intesa Sanpaolo
Private Banking (F-ISPB), one of our key clients in Italy. The new
venture is focused on building a diverse range of 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
likewise help to grow our presence in the Italian
market.
Innovative investment
strategies
We consider innovation as key to
generating alpha, cementing our competitive advantage and creating
multiple dimensions for future growth. It strengthens our business
by further diversifying our revenue streams, providing development
opportunities for our people and, most importantly, maintaining our
relevance with clients. We invest a huge amount of time and energy
in research and delivery, recognising that we need to keep
innovating to meet their unique and evolving
requirements.
M&A has been a core part of
our strategy for several years and we have adopted
a consciously disciplined approach to evaluating acquisition
opportunities. We seek to assess the repeatability and track record
of the investment process, the saleability and scalability of
the product offering, the cultural fit and ethos of the team, and
the value creation opportunity a transaction could represent for
our shareholders. Varagon was the first opportunity we have
reviewed in a long time that met our criteria, and we were
delighted to announce that acquisition in 2023. 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, in a highly customisable format, to our
growing credit offering. The M&A environment around us
is changing and we will continue to maintain the same level of
rigour and discipline when it comes to assessing
opportunities, as we have done in the past.
Our seed capital programme
continues to play a key role in supporting product launches,
and our pipeline of new ideas remains very strong. During the year
we seeded 14 new strategies across our business, leaving our
seeding book at $595 million as at 31 December 2023, following
investments into new products developed across the business. Over
the last few years, we have committed resources to mid-frequency
equities, a large segment of the quant hedge fund market with
significant alpha and diversification potential. I am excited to
see that our investments in data, execution and infrastructure,
together with 35+ years of expertise and credibility in the quant
space, are continuing to bear fruit. We intend to accelerate
investments in that space going forward.
Our quantitative heritage and
data-driven culture continues to be core to everything we do
and last year we were pleased to announce a partnership with the
Columbia Center on Sustainable Investment (CCSI) to conduct
research addressing how climate impact is defined and measured in
fixed income and equity portfolios. Our joint research with the
academic experts at CCSI will aim to produce a more refined
decarbonisation framework, which will bring greater standardisation
when calculating the climate impact of public market
securities.
This is a great example of the
academic rigour we apply at Man Group, and how we work
collaboratively to understand complex topics in order to add value
for our clients.
Efficient and effective
operations
We are a global leader in
quantitative investing, and yet the use of technology in our
business goes well beyond that. Technologists and quants make up
nearly half of our workforce - from data science and trading to
risk management and operations. It really is core to how we run our
firm and enables us to respond quickly as financial markets and
our clients' needs do. Our single operating platform means we
can generate alpha at scale and deliver portfolio solutions
efficiently to the world's largest institutional investors. It
affords us the ability to execute larger volumes, trade a huge
number of markets and trade at all times of the day, and it
also offers the ability to onboard new teams and businesses
efficiently. We believe our technology is a commercial
differentiator and in 2023, we invested roughly $120 million
into our investment and core technology to maintain our
lead.
As I mentioned earlier, advances
in AI seized the spotlight in 2023. AI enables us not only to
automate, but also to innovate, and gives us the power to grow
revenue more productively. We first used machine learning
techniques roughly ten years ago and today we employ AI as
part of our investment process in data, research, portfolio
construction, and trading. During the year, our dedicated AI team,
engineers and domain experts launched an in-house GenAI portal,
ManGPT, which has led to significant usage of GenAI as a
productivity aid across the firm in a safe and scalable manner. We
see technology more broadly, and AI specifically, as a core
competence with major potential to increase productivity and
deliver significant operating leverage for our
shareholders.
In 2023, we were proud to sign a
multi-year open-source technology development and product
integration agreement for our database product, ArcticDB. This was
a strong external endorsement of the quality of our technology and
we are excited to leverage our technology expertise to help advance
the asset management industry's operational
architecture.
People and culture
Talent is, and will always be, key
to the ongoing success of our business. To best serve our clients
and shareholders, one of our top priorities is to attract and
retain the best people, creating an environment in which they can
achieve their full potential. Man Group is a collegiate and
collaborative firm with a real sense of community, and I am proud
of the culture that we have built, particularly over the last
decade. We place great importance on being an employer of choice,
and we are pleased to report that our 2023 staff survey recorded a
strong engagement score of 81% when it was conducted in the
autumn.
I believe diversity is a
commercial differentiator in that diversity of thought makes us
better. We encourage, embrace, and seek out difference in all
areas. There is no particular 'type' of person that joins Man
Group, and we put real effort behind attracting diverse candidates
and creating an inclusive culture to deliver the best possible
outcomes for our clients. Our people foster and uphold that
standard and it is part of the DNA of our organisation. We continue
to work hard to expand what we do to improve diversity, equity and
inclusion, both at Man Group and across the industry. During 2023,
we have made a concerted effort to take our programmes into new
avenues and introduce tangible initiatives across more
fronts.
To be at the forefront of the
industry for years to come, we - and our peers - need
to reconfigure the pieces that make up our teams, not
just add individuals who fit an existing mould. Fostering
a working environment and culture where all our employees feel that
they belong takes time and effort every single day. While there is
a huge amount of work still to be done to make our firm truly
representative of the populations we serve, we stand for an
absolute and unequivocal commitment to inclusiveness.
Conclusion and outlook
It would be remiss of me not to
mention Luke's significant contribution to the results that we have
recorded for 2023. He has handed over a business that is in great
shape and which will allow us to continue on our exciting growth
trajectory.
Man Group has existed for well
over 200 years and has achieved this by innovating and evolving to
best serve the needs of its clients. Today, we are a diversified,
active asset manager with significant skill in liquid alternatives,
systematic and long-only investing, and private credit, all
underpinned by our technology.
Economic trends, geopolitical
dynamics, inflation and their interplay on the global stage persist
in their unpredictability, continuing to create challenges in both
public and private markets. In this environment it is crucial
for managers to be forward thinking and adaptable. Investors
have never needed diversifying sources of risk-adjusted returns and
long-term strategic partners as much as they do now. The
ability to build such partnerships and deliver scalable alpha
through customised solutions is one of the most exciting
challenges ahead for our industry. That's where we see the
opportunity for Man Group over the next five years.
We intend to support our clients
for many generations to come as we have one single role, which is
to help our clients provide greater financial security to millions
of people around the world. My vision is for Man Group to be
indispensable in our clients' quest to achieve this. This means
that we are always striving to be the best we can be, and I have
great confidence in our ability to deliver on this to the benefit
of both our clients and our shareholders.
Robyn Grew
Chief Executive Officer
Key performance indicators
Financial
KPIs
Our financial KPIs illustrate and
measure the relationship between the investment experience of
our clients, our financial performance and the creation of
shareholder value over time.
Relative investment performance
Why it matters
The asset-weighted performance of Man Group's
strategies in comparison with peers gives an indication of the
competitiveness of our investment performance compared with similar
strategies offered by other investment managers.
How we performed
Asset-weighted relative investment
outperformance of 1.6% in 2023 was driven by our long-only
strategies. For further information on investment performance, see
page 8.
Relative net flows
Why it matters
Relative net flows are a measure of our ability
to attract and retain investor capital in comparison with our
industry peers. Growth in the assets we manage for clients drives
our financial performance via our ability to earn management and
performance fees.
How we performed
Relative net flows in 2023 were 4.9%, reflecting
the quality of our longstanding relationships with allocators
around the world and the relevance of our investment strategies and
solutions.
Core management fee EPS (diluted)
growth1
Why it matters
Core management fee EPS (diluted) growth in the
year measures the overall effectiveness of our business model
and reflects the value generation for shareholders from our
earnings, excluding performance fees.
How we performed
Core management fee EPS (diluted) of 18.4¢ was
in line with 2022, as higher core net management fee revenue
was offset by an increase in fixed cash costs to support future
growth.
Core EPS (diluted)1
Why it matters
Core EPS (diluted) is a measure of the earnings
that drive our cash flows. This metric includes core performance
fee profits, which are generated through outperformance for our
clients and a significant component of value creation for
shareholders over time.
How we performed
Core EPS (diluted) has decreased by 54% to
22.4¢, reflecting a reduction in performance fee profits following
the exceptionally strong outcome in 2022.
1. Details
of the calculation of our alternative performance measures are
provided on pages 58 to 63.
Non-financial
KPIs
Our non-financial KPIs reflect our
core values and demonstrate our commitment to our people, our
communities and the environment.
Carbon footprint (tCO2e)
Why it matters
In order to monitor our carbon footprint, we
measure total market-based greenhouse gas emissions
(tCO2e) using the GHG Protocol guidance for the Scope 1,
Scope 2, Scope 3 travel and Scope 3 upstream leased asset
categories.
How we performed
Total carbon emissions increased by 51% in 2023,
owing to an increase in business travel (including more long-haul
travel) which reflected our acquisitions and growth and indicated a
partial return to pre-COVID travel levels. We are focused on
reducing emissions and continue to source offsets so we retain our
carbon neutral stance.
Employee engagement
Why it matters
Each year, we conduct a staff survey to help us
monitor and understand employee engagement and identify any areas
for action. Alongside our engagement survey, we continue to provide
various mechanisms for staff to provide feedback.
How we performed
Our 2023 staff survey recorded an engagement
score of 81%, with a response rate of 85% (a 9% increase
compared with 2022).
Women in senior management
roles
Why it matters
As part of our efforts to encourage greater
diversity across the investment management industry, we measure the
number of women in senior management positions at the firm. This is
defined as those who are, or report directly to, members of our
Executive Committee.
How we performed
In 2023, the number of women in senior
management roles increased to 31%, exceeding our 2024 target of
30%.
ESG-integrated AUM ($bn)
Why it matters
Our goal is to meet the responsible investment
needs of our clients and this can be measured by the amount of our
AUM that is invested sustainably. We calculate ESG-integrated
AUM in line with the Global Sustainable Investment Alliance
definition, which has emerged as the global standard of
classification.
How we performed
ESG-integrated AUM has increased to $59.3
billion in 2023, as we have continued to respond to client demand
and expand our range of ESG-oriented strategies. Market beta and
currency moves have also contributed positively to the
increase.
Chief Financial Officer's review
Overview
Man Group ended the year with record AUM of
$167.5 billion, driven by continuing positive net flows, strong
investment performance in our long-only strategies and the
acquisition of Varagon. Statutory profit decreased to $234
million from $608 million in 2022, primarily due to a decrease in
performance fees following exceptional performance fee generation
in 2022. The heightened volatility following the US bank turmoil in
March and continued political, economic and monetary uncertainty
led to muted performance for our systematic macro strategies, the
key drivers of our performance fees. We continued to grow our core
net management fee revenue, largely through the Varagon
acquisition, standing at $963 million for the year compared
with $927 million in 2022. Core diluted management fee
EPS of 18.4¢ was in line with 2022 due to an increase in fixed
compensation and core other costs offsetting the increase in core
net management fee revenue. The decrease in profit in the year led
to statutory EPS on a diluted basis decreasing to 19.4¢ from 45.8¢
in 2022, with core diluted EPS decreasing from 48.7¢ to
22.4¢.
Closing AUM of $167.5 billion at 31 December
2023, up from $143.3 billion at the end of 2022, was driven by
net inflows of $3.0 billion in the year, positive absolute
investment performance of $9.7 billion and FX and other movements
of $11.5 billion, including $10.8 billion contributed by Varagon.
Performance was positive across all categories, and we saw net
inflows of $4.9 billion across absolute return, total return and
discretionary long-only, partially offset by net outflows of $1.0
billion and $0.9 billion in multi-manager solutions and systematic
long-only respectively.
We completed the acquisition of
controlling interests in Varagon and Asteria in the
second half of the year. Varagon's private credit capabilities
diversify our offering to investors, representing the potential for
significant value creation. The growth in our strategic partnership
with Fideuram through the acquisition of Asteria enables us to
increase our offering across Europe in the intermediated wealth
channel. Additionally, we have continued to grow our CLO business
and securitised new vehicles in Europe and the US in the
year.
Management and other fees on a statutory basis
increased by 4% to $990 million for the year as a result
of higher average AUM, with Varagon contributing $29 million
post-acquisition. The average net management fee margin of 63 basis
points for the year was 2 basis points lower than in 2022 due to
AUM mix shift towards long-only lower margin strategies,
partially offset by the acquisition of Varagon.
The run rate net management fee margin at 31
December 2023 stood at 65 basis points compared with 64 basis
points at the end of 2022, with inflows into higher margin
strategies weighted towards the end of the year. Run rate core
net management fee revenue was $1,087 million at the end of the
year, up from $917 million at the end of 2022, largely as a result
of the revenue earned on Varagon AUM.
Performance fee generation was lower, with
$178 million earned in the year on a statutory basis following the
record $778 million earned in 2022. Our asset-weighted
relative investment outperformance was 1.6% across all categories
compared with 1.4% in 2022. All our investment engines
generated performance fees in the year. Core gains on investments
of $48 million, compared with losses of $15 million in 2022, were
generated by mark-to-market gains across our seed book. Core costs
were $834 million, down from $906 million in 2022, driven
by lower performance fee-related variable compensation
partially offset by higher fixed compensation costs due to
increased headcount following the acquisition of Varagon and
continued investment in the business. The impact of the
strengthening of sterling against the US dollar in the year also
contributed to an increase in other costs.
Our core rental income in 2023 was in line
with 2022. In 2023, we signed sub-leases with two new tenants for a
substantial portion of the vacant space in Riverbank House and our
existing sub-tenant signed agreements to extend their current
leases until the end of the head lease. In early 2024, we also
signed Heads of Terms with one of our sub-tenants for additional
space in the building.
Non-core items (excluding tax) increased from
a net expense of $34 million in 2022 to $61 million in 2023,
primarily due to FX losses of $11 million compared with gains
of $22 million in 2022. Gains on disposal of right-of-use
lease assets and a decrease in the amortisation of our acquired
intangible assets, due to some becoming fully amortised in 2022,
were partially offset by costs relating to the acquisitions of
Varagon and Asteria. Non-core items also include adjustments to the
statutory income statement charge relating to amounts payable to
the Varagon sellers who remain members of senior management
post-acquisition in order to adjust the expense recognised
in the year to reflect the corresponding profits
generated. Together with acquisition-related costs, these items
added $30 million to our non-core expense.
'Core' measures are alternative
performance measures. For a detailed description of our alternative
performance measures, including non-core items, please refer to
pages 58 to 63. For
details of key performance indicators ([KPI]), refer to page
11.
$m
|
Year ended 31 December 2023
|
Year ended 31 December
2022
|
Core net management fee
revenue
|
963
|
927
|
Core performance fees
|
180
|
779
|
Core gains/(losses) on
investments
|
48
|
(15)
|
Core rental income
|
5
|
5
|
Core net revenue
|
1,196
|
1,696
|
Asset servicing costs
|
(58)
|
(58)
|
Compensation costs
|
(595)
|
(678)
|
Core other costs
|
(179)
|
(170)
|
Net finance expense
|
(21)
|
(11)
|
Rollover share of post-tax
profit
|
(2)
|
-
|
Third-party share of post-tax
profits
|
(1)
|
-
|
Core profit before tax
|
340
|
779
|
|
|
|
Core management fee profit before
tax
|
280
|
290
|
Core performance fee profit before
tax
|
60
|
489
|
Core profit
|
271
|
647
|
Non-core items (before
tax)
|
(61)
|
(34)
|
Statutory profit
|
234
|
608
|
|
|
|
Statutory EPS (diluted)
|
19.4¢
|
45.8¢
|
Core EPS (diluted)
|
22.4¢
|
48.7¢
|
Core management fee EPS
(diluted)
|
18.4¢
|
18.4¢
|
Proposed dividend per
share
|
16.3¢
|
15.7¢
|
We continue to deliver strong cash conversion
of our profits and continued our returns to shareholders in 2023
through completion of the two share repurchases, each of $125
million, announced in December 2022 and March 2023 respectively.
Our total proposed dividend for the year of 16.3¢ per share
represents an increase of 4% from 15.7¢ in 2022, in line with
our progressive dividend policy. The total announced returns to
shareholders for 2023 is over $0.3 billion, and $1.8 billion
over the last five years.
Our balance sheet remains strong and liquid
and allows us to navigate periods of stress while continuing to
invest in the business to support our long-term growth prospects.
Alongside the deployment of our capital to fund acquisitions and
strategic partnerships, we continue to return excess capital
to shareholders, allocate capital to seed investments and heavily
invest in technology to ensure we remain leaders in active
investment management. We had net tangible assets of $782 million
at 31 December 2023 and net financial assets of $555 million,
including $180 million of cash (excluding amounts held by
consolidated fund entities) and net of $35 million of
acquisition-related liabilities which begin to crystallise in 2028.
We continue to be strongly cash-generative, with core cash
flows from operations excluding working capital movements of $362
million in the year.
Impact of foreign exchange rates
The portion of our AUM which is denominated in
currencies other than the US dollar was positively impacted by
the weakening of the US dollar against most currencies over the
course of the year. This increased our reported AUM by $1.4 billion
and had a positive impact on our core net management fee revenue.
However, the strengthening of sterling against the US dollar also
contributed to a partially offsetting increase in core costs of
around $2 million compared with 2022.
Assets under management
|
|
|
|
|
|
|
Change
|
$bn
|
|
31 December 2022
|
Net inflows/
(outflows)
|
Investment performance
|
FX and other
|
31
December 2023
|
$bn
|
%
|
Alternative
|
Absolute return
|
46.0
|
2.3
|
0.2
|
(0.8)
|
47.7
|
1.7
|
4%
|
|
Total return
|
28.8
|
1.1
|
1.1
|
11.5
|
42.5
|
13.7
|
48%
|
|
Multi-manager solutions
|
20.2
|
(1.0)
|
0.5
|
(0.3)
|
19.4
|
(0.8)
|
(4)%
|
|
Total
|
95.0
|
2.4
|
1.8
|
10.4
|
109.6
|
14.6
|
15%
|
Long-only
|
Systematic
|
31.6
|
(0.9)
|
5.4
|
0.4
|
36.5
|
4.9
|
16%
|
|
Discretionary
|
16.7
|
1.5
|
2.5
|
0.7
|
21.4
|
4.7
|
28%
|
|
Total
|
48.3
|
0.6
|
7.9
|
1.1
|
57.9
|
9.6
|
20%
|
Total
|
|
143.3
|
3.0
|
9.7
|
11.5
|
167.5
|
24.2
|
17%
|
Absolute return
The increase in absolute return AUM was driven
by net inflows of $2.3 billion, primarily into Man Institutional
Solutions and AHL Alpha, partially offset by outflows from GLG
Event Driven. Positive absolute performance of $0.2 billion was
driven by a number of strategies in the product category, in
particular AHL Evolution and GLG UK Select, partially offset by
negative performance in American Beacon AHL Managed
Futures.
Total return
Total return AUM increased by
$13.7 billion, driven by the Varagon acquisition which added $10.8
billion to the category. Net inflows of $1.1 billion were primarily
into Alternative Risk Premia and the launch of new CLOs. Positive
absolute performance of $1.1 billion was primarily due to gains in
AHL TargetRisk, reflecting its long-only exposure to fixed income
and equity markets.
Multi-manager solutions
The decrease in multi-manager
solutions AUM was primarily driven by net outflows of $1.0
billion, partially offset by positive absolute performance of $0.5
billion, largely from infrastructure mandates.
Systematic long-only
Systematic long-only AUM increased
by $4.9 billion, driven by positive absolute performance of $5.4
billion across all strategies in the product category.
Discretionary long-only
Discretionary long-only AUM
increased by $4.7 billion. Net inflows of $1.5 billion were
primarily into our credit strategies GLG Sterling Corporate Bond,
GLG High Yield and GLG Global Investment Grade Opportunities.
Positive performance of $2.5 billion was driven by a number of
strategies, reflecting exposure to a broad range of
markets.
Revenue
Growth in management fee revenue
was offset by lower performance fee generation, leading to a
decrease in statutory net revenue from $1,727 million in 2022
to $1,194 million in 2023. Core net revenue similarly decreased
from $1,696 million to $1,196 million.
|
Core net
management fees
($m)
|
Net management fee
margin
(bps)
|
Run rate
core net management fees
($m)
|
Run rate
net management fee margin
(bps)
|
|
Year ended 31 December 2023
|
Year ended 31 December
2022
|
Year ended 31 December 2023
|
Year ended 31 December
2022
|
Year ended 31 December 2023
|
Year ended 31 December
2022
|
Year ended 31 December 2023
|
Year ended 31 December
2022
|
Absolute return
|
526
|
515
|
112
|
112
|
544
|
526
|
114
|
114
|
Total return
|
208
|
201
|
64
|
63
|
294
|
177
|
69
|
61
|
Multi-manager solutions
|
34
|
34
|
17
|
20
|
33
|
38
|
17
|
19
|
Systematic long-only
|
81
|
75
|
24
|
25
|
91
|
77
|
25
|
24
|
Discretionary long-only
|
110
|
102
|
59
|
57
|
125
|
99
|
58
|
59
|
Other service
income1
|
4
|
-
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
Total
|
963
|
927
|
63
|
65
|
1,087
|
917
|
65
|
64
|
1 Other service income
included in core net management fees is earned on an absolute basis
rather than as a margin on AUM.
Management fees
Core net management fee revenue
increased by 4% to $963 million in 2023 (2022: $927 million),
driven by higher average AUM and the acquisition of Varagon. Net
management fee margin decreased from 65 basis points in 2022 to 63
basis points in 2023, driven by higher average AUM in low margin
multi-manager solutions and systematic long-only strategies
following strong net inflows in the second half of 2022. This was
partially offset by the addition of Varagon, which attracts a
higher margin, and an increase in average AUM from positive
investment performance in absolute return strategies.
The absolute return net management
fee margin remained at 112 basis points, as the mix shift towards
higher margin Man Institutional Solutions mandates was offset by a
decrease in average AUM in higher margin AHL Diversified. The total
return net management fee margin increased by 1 basis point to 64
basis points, as the addition of higher margin Varagon AUM was
partially offset by higher average AUM in lower margin AHL
TargetRisk. The multi-manager solutions net management fee margin
decreased to 17 basis points in 2023 from 20 basis points in 2022
as a result of the ongoing shift towards infrastructure solutions
from traditional fund of funds. The net management fee margin
of systematic long-only strategies decreased from 25 basis points
to 24 basis points due to margin pressure and mix effects at the
product level in recent years. Discretionary long-only margins
increased from 57 basis points in 2022 to 59 basis points
in 2023 due to strong performance in higher margin GLG
Japan CoreAlpha.
Run rate core net management fee
revenue was $1,087 million at 31 December 2023 (2022: $917
million). The increase in the year was largely as a result of the
acquisition of Varagon and the increase in AUM in absolute return,
total return and long-only strategies.
The run rate net management fee
margin at 31 December 2023 was 65 basis points compared with
64 basis points at 31 December 2022, largely as a result of the
acquisition of Varagon in the second half of the year positively
contributing to the run rate margin at 31 December 2023 when
compared with the margin in the year. Other movements in the
run rate margin for individual strategies were broadly driven by
the same factors as those impacting actual margins in the
year.
Performance fees and investment
gains and losses
Core performance fees for the year
were $180 million (2022: $779 million), including $163 million
from alternative strategies (2022: $761 million) and $17
million from long-only strategies (2022: $18 million). We have
strong performance fee optionality and diversity, with a broad
range of strategies having contributed to our performance fee
earnings in recent years. More than 50 of our strategies are
performance fee-eligible.
Core gains on investments of $48
million (2022: losses of $15 million) were generated by
mark-to-market gains across our seed book, including $17 million
from our CLO holdings.
Rental income
Core rental income was broadly
flat year-on-year. The sub-leases we signed in 2023 for a
substantial portion of the vacant space in our London office
and the extension of leases with one of our existing sub-tenants
reduce future rental income, depreciation and occupancy costs.
Following the derecognition of the associated portion of
our right-of-use lease assets we recognised a gain on disposal
of $12 million, classified as a non-core item.
Costs
Asset servicing
Asset servicing costs vary,
predominantly depending on transaction volumes, the number and mix
of funds, and fund NAVs. Asset servicing costs were $58 million
(2022: $58 million), which equated to around 5 (2022: 5) basis
points of average AUM1.
Compensation costs
Core compensation costs were $595
million for the year, down by 12% from $678 million in 2022
due to lower performance fees decreasing the associated variable
compensation. Our compensation ratio is between 40% and 50% of core
net revenue, depending on the mix and level of revenue.
We expect to be at the higher end of the range in
years when performance fees are low or driven predominantly by
discretionary strategies. Conversely, we expect to be at the lower
end of the range when performance fees are high or driven by
systematic strategies. The overall compensation ratio increased to
50% in 2023 from 40% in 2022, reflecting the decrease in
performance fee revenue generated in the year.
Other costs
Core other costs, which exclude
acquisition-related costs and amounts incurred by consolidated fund
entities, increased to $179 million in 2023 from $170 million
in 2022, primarily as a result of an increase in staff benefit
costs. The strengthening of sterling against the US dollar also
contributed to the increase as the majority of our cost base is
denominated in sterling.
Tax
The majority of our profits are
earned in the UK, with significant profits also arising in the US,
where our cash tax rate is effectively nil as a result of available
deferred tax assets, and in Switzerland, which currently has a
lower rate than the UK. Tax on statutory profit for the year
was $45 million (2022: $137 million). The recognition of a
significant portion of our accumulated US losses as deferred tax
assets as a result of the Varagon acquisition drove a decrease in
the statutory effective tax rate from 18% in 2022 to 16% in 2023.
This was partially offset by the increase in the UK statutory tax
rate from 19% to 25% on 1 April 2023. This increase in the UK tax
rate led to an increase in the core tax rate from 17% in 2022
to 20% in 2023.
In the US, we have accumulated tax
losses and tax-deductible goodwill and intangibles of $89 million
(2022: $82 million) which can be offset against future US profits,
thereby reducing taxable profits. We have recognised $86 million of
the available $89 million US deferred tax assets at 31 December
2023 (2022: $64 million and $82 million respectively) as the
portion of state and city tax losses expected to expire before
utilisation has reduced following the Varagon acquisition. The US
core tax rate will remain at nil until cash taxes are payable in
the US, with movements in the deferred tax asset classified as a
non-core item. We do not currently expect to pay federal tax on any
profits we may earn in the US until 2026.
The principal factors influencing
our future underlying tax rate are the mix of profits by tax
jurisdiction, the rate of consumption of US deferred tax assets and
changes to applicable statutory tax rates. The global minimum
tax rate due to come into effect in 2024 is not expected to result
in significant top-up taxes becoming due.
Profit
Statutory profit decreased from
$608 million in 2022 to $234 million in 2023, with core profit
decreasing from $647 million to $271 million over the same period.
The decrease in profitability led to a decrease in statutory EPS
(diluted) from 45.8¢ in 2022 to 19.4¢ in 2023 (48.7¢ and 22.4¢
respectively on a core basis), with the reduction partially offset
by a decrease in share count as a result of the $223 million of
shares repurchased during the year.
Cash earnings
Due to our strong conversion of
profits into cash, we believe that core profit is a good measure of
our cash flow generation, although the timing of cash conversion is
impacted by the cyclical movements in our working capital position
and the size of our seed book. Core cash flows from operations
excluding working capital movements were $362 million for the
year.
As at 31 December 2023, our cash
balance, excluding amounts held by consolidated fund entities, was
$180 million.
$m
|
Year ended 31 December 2023
|
Year ended 31 December
2022
|
Opening available cash and cash
equivalents
|
349
|
323
|
Core cash flows from operations
excluding working capital movements
|
362
|
810
|
Working capital movements
(excluding seeding)
|
(132)
|
(65)
|
Working capital movements -
seeding
|
119
|
(52)
|
Acquisition of subsidiaries, net of
cash acquired
|
(170)
|
-
|
Dividends paid
|
(181)
|
(179)
|
Share repurchases (including
costs)
|
(223)
|
(386)
|
Drawdown of revolving credit
facility
|
140
|
-
|
Other movements
|
(84)
|
(102)
|
Closing available cash and cash equivalents
|
180
|
349
|
1. Excludes systematic long-only and private markets
strategies.
Balance sheet
We have a strong and liquid
balance sheet. The acquisitions of Varagon and Asteria in the year,
together with the decrease in performance fee revenues net of
variable compensation costs, resulted in a decrease in available
cash and cash equivalents net of borrowings.
$m
|
31
December 2023
|
31 December 2022
|
Available cash and cash
equivalents
|
180
|
349
|
Seeding investments
portfolio
|
595
|
688
|
Borrowings
|
(140)
|
-
|
Contingent consideration
payable
|
(3)
|
-
|
Put option over non-controlling
interests
|
(9)
|
-
|
Put option over rollover
interests
|
(23)
|
-
|
Payables under repo
arrangements
|
(45)
|
(54)
|
Net financial assets
|
555
|
983
|
Other tangible assets and
liabilities
|
227
|
39
|
Net tangible assets
|
782
|
1,022
|
Goodwill and intangibles
|
830
|
677
|
Shareholders' equity
|
1,612
|
1,699
|
Seed investments
We use our balance sheet to invest
in new products, aiming to redeem as client AUM in the funds grows.
At 31 December 2023, our seed investments were $595 million, a
decrease from $688 million at 31 December 2022. $45 million were
financed via repos (2022: $54 million). In addition, we held
$230 million of total return swap exposure at 31 December 2023
(2022: $138 million), allowing us to maintain our seed portfolio
exposure without tying up large portions of our cash
balances.
The statutory consolidation of a
number of our CLOs results in a significant gross-up of assets and
liabilities in the Group balance sheet. Our maximum exposure to
loss associated with interests in our CLOs is limited to the
investment in these CLOs, as reflected in the seeding investments
portfolio balance, which excludes the impact of this
gross-up.
Capital management and shareholder
returns
Our balance sheet and liquidity
position remains robust, allowing us to invest in the
business, support our long-term growth prospects and maximise
shareholder value. It also enables us to withstand periods of
stress. We actively manage our capital to maximise value
to shareholders by either investing that capital to improve
shareholder returns in the future or by returning it through higher
dividends or share repurchases. In 2023, we completed the two $125
million share repurchases announced in December 2022 and March
2023.
The Board is proposing a final
dividend for 2023 of 10.7¢ per share, which together with the
interim dividend of 5.6¢ per share equates to a total dividend
for the year of 16.3¢ per share, representing an increase of 4% on
2022. The proposed final dividend of around $125 million is
adequately covered by our available liquidity and capital
resources. Key dates relating to the proposed final dividend are
provided on page 2.
Our business is highly
cash-generative, and these cash flows support our progressive
dividend policy, under which dividends are expected to grow over
time. We ensure we maintain a prudent balance sheet at all times by
taking into account liquidity requirements before investing
capital, considering potential strategic opportunities or returning
it to shareholders. Over the past five years, we have returned $0.9
billion to shareholders through dividends and announced $0.9
billion of share buybacks. As a result, our weighted average share
count has decreased by 22% to 1,178 million over that same
period.
Our revolving credit facility was
renewed in December 2023 and extended to $800 million. It matures
in 2028, providing additional liquidity. We have maintained prudent
capital and available liquidity throughout the year, deploying our
capital to acquire a controlling interest in Varagon and Asteria
and to support investment management operations and new investment
products, utilising the revolving credit facility when
appropriate. We monitor our capital requirements through
continuous review of our regulatory and economic capital,
including regular reporting to the Risk and Finance Committee and
the Board.
Planning for the impacts of
climate change
Whilst climate change has not
significantly impacted our financial performance and position to
date, consideration of the potential future impacts of climate
change on our business is embedded in our financial planning
and reporting processes. As part of our ongoing commitment to
reduce our carbon footprint and to reach net zero by 2030, we
seek to minimise the carbon emissions of our office premises, be
thoughtful around inter-office travel or use lower-carbon modes of
transport where possible, and proactively plan for our ambitions in
the future. Under our strategy, we continue to embed targets to
reduce our Scope 3 carbon emissions from business travel into our
annual budgeting process.
The directors do not expect
potential climate-related impacts to be material on the Group
financial statements in the short to medium term. In particular, in
performing their assessment the directors have considered the
impact of climate change on our going concern and viability, the
cash flow forecasts used in the impairment assessments of our
non-current assets, and the assumptions relating to future life
expectancies used in the valuation of the net pension asset. We
continue to monitor the potential longer-term impacts of climate
change risks on the judgements and estimates used in the
preparation of the Group financial statements.
Antoine Forterre
Chief Financial Officer
Risk management - principal and emerging
risks
|
|
|
|
|
|
|
|
|
Risk
|
|
Mitigants
|
|
Status and trend
|
|
Movement
|
Business risks
|
|
|
|
|
|
Investment performance and net
redemptions
|
|
Fund underperformance, on an absolute basis,
relative to a benchmark or relative to peer groups, could reduce
AUM and may result in lower subscriptions and higher redemptions.
This risk is heightened at times of disrupted and volatile markets,
which could be triggered by geopolitical or climate factors.
This may also result in dissatisfied clients, negative press and
reputational damage.
Lower AUM results in lower management fees and
underperformance results in lower performance fees.
|
|
Man Group's investment businesses each have
clearly defined investment processes with integrated risk
management, designed to target and deliver on the investment
mandate of each product. We focus on hiring and retaining
highly skilled professionals who are incentivised to
deliver alpha within the parameters of
their mandate.
Man Group's diversified range of
products and strategies, which now includes Varagon, limits
the risk to the business from underperformance of any particular
strategy or market.
|
|
Overall performance in 2023 has been mixed
given the fragile and volatile markets and the geopolitical
backdrop: trend-following strategies were marginally positive;
credit and equity alternatives strategies were mixed but generally
positive; long-only equity strategies carried a beta to rising
markets and generally outperformed their benchmarks; and our
TargetRisk product range saw a recovery of 2022 losses. In
addition, the Varagon acquisition brought a material AUM boost and
FX moves led to an increase in AUM for non-USD funds or share
classes.
Our largely institutional client base has shown
continued interest in our product offerings which led to net
inflows. A discussion of Man Group's investment performance is
included on page 8.
|
|
Unchanged
|
Key person risk
|
|
A key person to the business leaves or is unable
to perform their role.
Retention risk may increase in years of poor
performance and the expectation of reduced compensation.
|
|
Business and investment processes are designed
to minimise the impact of losing any key individuals.
Diversification of strategies and the emphasis on technology and
systematic strategies reduce the overall risk to Man
Group.
Succession plans and deferred compensation
schemes are in place to support the retention of senior investment
professionals and key management.
|
|
Man Group has continued to be able to attract
and retain an array of talented individuals across the
firm.
We did not see any investor concerns or material
outflows as a result of announced departures or changes in
management structure in 2023, including the leave of absence of our
deputy CEO, the retirements of our CEO and Chair of the Board, the
transition to their in-house replacements and a subsequent ExCo
reorganisation.
|
|
Unchanged
|
Credit risks
|
|
|
|
|
|
Counterparty
|
|
A counterparty with which the funds or
Man Group have financial transactions, directly or indirectly,
becomes distressed or defaults.
Shareholders and investors in Man Group funds
and products are exposed to credit risk of exchanges, prime
brokers, custodians, sub-custodians, clearing houses and depository
banks.
|
|
Man Group and its funds diversify exposures
across a number of the strongest available financial
counterparties, each of which is approved and regularly reviewed
and challenged for creditworthiness by a firm-wide counterparty
committee.
The risk teams monitor credit metrics on
the approved counterparties daily. This includes credit
default swap spreads and credit ratings.
|
|
The March banking crisis highlights the benefit
of our conservative approach to counterparty selection and
appropriate diversification in line with the Board's appetite. We
had no exposure to the US regional/specialised banks and our net
exposure to Credit Suisse at the start of the crisis was small
but nevertheless closed out.
|
|
Unchanged
|
|
Liquidity risks
|
|
|
|
|
|
Corporate and fund
|
|
Volatile markets and reduced market liquidity
can place additional, often short-term, demands on the balance
sheet. Man Group is exposed to having insufficient liquidity
resources to meet its obligations.
Adverse market moves and volatility may sharply
increase the demands on the liquid resources in Man Group's funds.
Market stress and increased redemptions could result in the
deterioration of fund liquidity and in the severest cases this
could lead to the gating of funds.
|
|
An $800 million revolving credit facility,
maturing December 2028 with two one-year extension options,
provides Man Group with a robust liquidity backstop. Liquidity
forecasting for Man Group and the UK/EEA sub-group, including
downside cases, facilitates planning and informs
decision-making.
The Investment Risk team conducts regular
liquidity tests on Man Group's funds. We endeavour to manage
resources in such a way as to meet all plausible demands
for fund redemptions according to contractual
terms.
|
|
The acquisitions of Varagon and Asteria,
the balance sheet seeding programme and completion of two
$125 million share buybacks in 2023 were planned and managed
without issues. The revolving credit facility was extended and
increased by $300 million, to $800 million, to cater
for future growth opportunities and provide capacity for
Varagon balance sheet loan origination, in place of their legacy
facilities.
The asset liquidity distribution across funds
remained broadly unchanged. Our in-house liquidity analysis and
reporting toolkit continued to evolve and now includes reverse
stress testing.
The banking crisis and geopolitical events later
in the year led to a need to cut material positions in our
trend-following funds - despite the large market participation,
these were achieved without issues, albeit at a wider bid-offer
spread.
|
|
Unchanged
|
Market risks
|
|
|
|
|
|
Investment book
performance
|
|
Man Group uses capital to seed new funds to
build our fund offering, expand product distribution and generate
returns for shareholders. Man Group also holds CLO risk retention
positions until the product maturity, and is currently
participating in a US CLO Warehouse to facilitate a product
launch.
Varagon loan origination is a new balance sheet
risk with similarities to CLO risks but much shorter
term.
The firm is therefore exposed to a decline in
value of the investment book.
|
|
A disciplined framework ensures that each
request for seed capital is assessed based on its risk versus
return and its commercial opportunity to Man Group.
Approvals are granted by a Seed Investment
Committee (SIC), which is comprised of senior management, Group
Risk and Treasury. Investments are subject to risk limits, an exit
strategy and are hedged to a benchmark where appropriate. The
positions and hedges are monitored regularly by Group Risk and
reviewed by the SIC.
|
|
The investment book size was stable over
2023 with 14 new seed positions offset by recycling of existing
investments. However, the overall risk has increased with the
addition of two equity CLOs. The pure seeding book returns were
positive, with the benchmark hedges performing as intended in the
volatile markets. Additional gains came from reversal of prior year
losses on our CLO risk retention positions.
We extended the use of repo and
swap financing on some of the CLO and seed positions by
bringing on a new counterparty. Although external financing is more
costly in higher rate environments, this released balance sheet
liquidity.
|
|
Increased
|
DB pension performance
|
|
Man Group underwrites the risks related to the
UK defined benefit pension plan which closed to new members in 1999
and future accrual in 2011. The plan is healthy but is exposed to
changes in net asset versus liability values. This could come from
underperformance of return seeking assets or changes in
expected member longevity assumptions.
|
|
The UK pension plan has a low net exposure to
UK interest rates and RPI inflation though the use of
Liability-Driven Investment (LDI) funds. The return-seeking assets
are low volatility and have a low correlation to directional equity
markets. Longevity is the largest risk but is uncorrelated to Man
Group's other risks.
The plan is operated separately from Man Group
and managed by independent trustees, including investment
decisions.
|
|
The scheme remains in surplus on both
an accounting and actuarial basis with no further challenges
arising from the use of LDI funds with UK rate movements. Whilst
the cost of an insurance buyout of the scheme remains in excess of
our appetite, the LDI hedges have been calibrated to position the
portfolio towards a future buyout if the trustees deem
appropriate.
A triennial valuation will update the actuarial
assumptions as of 2023 year-end.
|
|
Unchanged
|
Operational risks
|
|
|
|
|
|
Internal process failure
|
|
Risk of losses or harm resulting from inadequate
or failed corporate or fund processes within Man Group, including
employee-related issues.
|
|
Man Group's risk management framework and
internal control systems are based on a three lines of defence
model and have continued to operate during the year.
Risks and controls are reassessed on an ongoing
basis and in the event of material change, to determine the
adequacy of the control environment.
|
|
Man Group remains focused on enhancing its
systems and control processes where required and ensuring internal
process failures are kept to a minimum.
Man Group has not observed an increase in
material internal risk events in 2023.
|
|
Unchanged
|
External
(third-party) process failures
|
|
Man Group continues to outsource several
functions as well as managing outsourcing arrangements on behalf of
its funds. Risks arise through the supplier life cycle from
sourcing and selection, to contracting and onboarding, to
service delivery and monitoring and finally, to exit and
offboarding. The most material risk is that the outsourced service
providers do not perform as required, including bankruptcy,
resulting in knock-on implications for our business and
processes.
|
|
Man Group's Operations team has implemented a
robust methodology (including ongoing third-party due
diligence and KPI monitoring) to confirm that outsourced
service providers are delivering as required.
|
|
The firm's key outsourcing providers
remain intentionally concentrated with a small group of
carefully selected and proven names with which it has well
established and embedded working relationships. There has been no
notable increase or decrease in the number of material issues
caused by, or experienced by, our outsource providers during
2023 and there have been no material losses
or other impacts.
|
|
Unchanged
|
Model and data
integrity
|
|
Man Group is a technology-empowered active
investment management firm which continues to make use of
advanced quantitative trading strategies that necessitate a
robust approach to data acquisition and consumption, model
implementation and execution. Key risks include model/algorithm
failures or issues with data upon which decisions are
made.
|
|
Man Group has embedded systems, controls and
operational change control processes for models and data. Change
management controls are applied to new models, model changes and
calibrations.
Controls are both preventative and detective to
minimise the potential consequences from such an event
arising.
|
|
Man Group continues to source and provision new
investment data sources and data analytics, but has not observed an
increase in material internal risk events in 2023.
|
|
Unchanged
|
Information and
cybercrime security
|
|
Risk of losses or harm resulting from the loss
of information in electronic or hard copy form held by Man Group
and arising as a result of sabotage, hacking, virus attack
or other malicious disruption causing system
failure.
|
|
Man Group has an established information
security and cyber security programme with relevant policies and
procedures, that are aligned with industry expectations and
best practices. Man Group's Chief Information Security Officer,
together with the Information Security Steering Committee,
ensures that our control environment is continuously reviewed
and adjusted to keep pace with the evolving regulatory,
legislative and cyber threat landscapes.
|
|
Man Group continues to improve its defence using
state-of-the-art technologies, enabling us to detect and prevent
malicious activities and complex cyber-attacks. Although we have
not experienced any material issues in 2023, the increasing cyber
risk assessment is fuelled by a multitude of factors including the
rise of AI-driven phishing attacks via models like ChatGPT; the
increasing risk of vulnerabilities in the supply chain; and the
increasing impact and cost of cyber breaches.
|
|
Increased
|
Information
technology and business continuity
|
|
Risk of losses or harm incurred by IT software
and hardware failures resulting in system downtime, severely
degraded performance or limited system functionality.
Business continuity risks may arise from
incidents such as a denial of access to a key site or a data centre
outage, which could lead to business disruption.
|
|
Technology plays a fundamental role
in delivering our objectives. The single Technology team of
500+ professionals aligns with each business unit to ensure work is
correctly prioritised and financed. The prioritisation process
considers the life cycle of both hardware and software
to ensure both are adequately supported and sized. The
firm's operational processes include mature risk, incident and
problem management procedures to minimise the likelihood and impact
of technology failures.
Business continuity risk mitigation includes
detailed planning and testing of remote access and
contingency/recovery operations, and ongoing risk and threat
assessments.
|
|
Man Group has an ongoing focus on improving
our technology offering, capability and security. Particular
focus and investment have been on the enrichment of the
trading and operations platform, including the centralisation of
order management.
Annual combined disaster recovery exercises have
been conducted across key trading applications which were switched
to run from our back-up data centre.
|
|
Unchanged
|
Criminal
activities
|
|
Risk of losses or harm through wrongful,
unauthorised activities or criminal deception intended to result in
financial or personal gain; or incurred through failure to comply
with (or have adequate procedures to ensure compliance with)
laws and regulations relating to anti-money laundering,
counter-terrorist financing, anti-bribery and corruption, breach of
economic sanctions, insider trading and market abuse.
|
|
Man Group operates a framework consisting of
policies, procedures and regular training to staff to support
compliance with applicable laws and regulations.
Internal policies, processes and controls are
subject to regular review and consultation internally and with
external advisers to ensure we remain well placed to
manage evolving requirements. Support, independent oversight
and challenge is also being provided by Man Group's
Compliance and Financial Crime teams.
|
|
Man Group continues to strengthen and adapt its
control environment to monitor and meet the challenges of an
evolving regulatory environment with heightened sanctions and
enforcement actions.
No material incidents were seen in 2023, and the
firm complies with all sanctions, including those relating to the
Russian invasion of Ukraine.
|
|
Unchanged
|
Legal,
compliance and regulatory
|
|
The breadth and complexity of the regulations
and legislative requirements that Man Group and its funds are,
or were historically subject to, across multiple jurisdictions,
represent significant operational risks, should the firm fail to
comply with them. Man Group supports proportionate and thoughtful
regulation and initiatives that develop the regulatory
environment. However, change can also result in increased
operational complexity and costs to Man Group or the sectors or
markets in which it operates.
Failure to comply with laws and regulations may
put Man Group at risk of fines, lawsuits or reputational
damage.
|
|
Man Group operates a global legal and compliance
framework which underpins all aspects of its business and is
resourced by experienced teams. These teams are physically
located in Man Group's key jurisdictions, helping them to
understand the context and impact of any requirements.
Emphasis is placed on proactively analysing new
legal and regulatory developments and communications to assess
likely impacts and mitigate risks. The governance framework
includes ongoing proactive reporting and management of potential
and actual legal and litigation risks.
Man Group continues to liaise directly and
indirectly with competent authorities e.g. FCA, SEC, FINMA,
CBI.
|
|
Man Group continues to experience
new regulatory requirements. In 2023 this included further
embedding of requirements of the FCA's IFPR in relation to
regulatory capital and liquidity (including the ICARA), governance
and remuneration regime and to the (UK Funds) Assessment of Value.
The SEC Private Fund Advisor Rules will be a focus area
for 2024.
Man Group maintained an open dialogue with
regulators throughout 2023 and work continues on a number of
regulatory initiatives.
|
|
Unchanged
|
Reputational risks
|
|
|
|
|
|
Negative
publicity
|
|
The risk that an incident or negative publicity
undermines our reputation as a leading investment manager and
place to work. Reputational damage could result in significant
redemptions from our funds, and could lead to difficulties
with external financing, credit ratings and relations
with core counterparties and
outsourcing providers.
|
|
Our reputation is dependent on our operational
and fund performance and the conduct of our employees. Our
governance and control structure mitigates operational concerns,
and our attention to people and investment processes are designed
to comply with accepted standards of investment management
practice. We encourage a culture of openness, inclusion and
diversity.
|
|
Man Group enjoys a good reputation and work
continues to build Man Group's profile and protect its reputation
across stakeholder groups.
|
|
Unchanged
|
Emerging risks
|
|
|
|
|
|
Potential
future threats
|
|
Emerging risks are complementary to the current
principal risks and represent potential future threats to Man
Group's performance, development or viability. By definition, these
entail greater uncertainty about if or when the risk or an event
may manifest.
The emerging risk categories include natural
disasters, pandemics, disruption to financial markets and
business infrastructure, geopolitical risk and changes in the
competitive landscape.
|
|
The Board, Executive Committee and risk teams
monitor emerging risks, trends and changes in the likelihood or
impact following discussions with subject matter experts. This
assessment informs the universe of principal risks managed and
mitigated by the firm.
|
|
Emerging risks are now reviewed and discussed by
the Board on a six-month cycle. The key themes this year were
heightened geopolitical tensions (Russia, Israel/Gaza, China, the
US and the UK), the continued fragile state of financial markets
(volatility, liquidity, interest rates) and the potential impact of
AI models and their misuse. No changes were made to
Man Group's headline principal risks.
|
|
Increased
|
Climate change risks
|
|
Physical
risks
|
|
Physical risks, and specific event
uncertainties, of business disruption, property damage or to
employee well-being due to a severe weather event.
|
|
Man Group has a small number of employees,
a relatively limited physical footprint and can operate
completely remotely.
|
|
The firm will continue to monitor and manage its
risks through business-as-usual reporting and management processes
for the relevant principal risk (see below).
|
|
Unchanged
|
Transition risks
|
|
Transition risks, and timing uncertainties,
as the world moves towards a low-carbon economy can be legal,
regulatory, technological, market or reputational. This may
impact the appetite for and performance of some investment
products.
|
|
Man Group has an agile business model, so is
well equipped to adjust to medium-term transition risks and also
capture any opportunities. With a strong track record for
innovation, the firm continues to focus on providing investors with
products that incorporate ESG analytics.
|
|
Man Group met its 2023 emissions
targets and work continues in line with our pathway to net
zero by 2030. This includes a 'Building Performance Optimisation
review' of our London headquarters and work to become ISO 14001
accredited by the end of 2024.
We saw a significant reduction, compared to our
2019 baseline, in the weighted average carbon intensity (WACI) for
our AUM subject to Net Zero Asset Managers initiative (NZAMI)
interim targets. We monitor progress against our NZAMI target and
report annually via the UN-backed Principles for Responsible
Investment.
|
|
Unchanged
|
Link to our
other principal risks
|
|
Investment performance is exposed to market
disruption or volatility triggered by severe weather events.
Performance could also be impacted by fundamental moves in
underlying asset prices or liquidity as the world transitions to a
low-carbon economy.
Business continuity risk manifests as damage or
disruption to Man Group's offices and data centres and the
transportation and supply systems that support them. In particular
our London headquarters may be exposed to flooding of the River
Thames.
Legal and reputation risk currently comes from
any suggestion of greenwashing if the ESG credentials of
a fund or our corporate behaviour does not meet client or
regulatory expectations. This could lead to redemptions and
regulatory fines as well as damaging relations with core clients,
employees and the wider public.
|
|
Man Group's diversified range of products and
strategies limits the risk to any particular strategy or market.
While the integrated portfolio and risk management processes help
managers understand their risk profiles.
Agile working is well established, and employees
can work remotely if offices are inaccessible. We conduct
detailed planning for emerging scenarios along with testing of
remote access and contingency/recovery operations.
Man Group has specific policies and greenwashing
controls which continue to evolve and are subject to robust review.
We take a relatively low key and considered approach in our
external communications with a focus on education and data as well
as highlighting the challenges inherent in this area.
|
|
In 2023 we continued to expand our ESG analytics
toolkit including a Man Group proprietary carbon dataset,
integrating Paris alignment data and the inclusion of green bond
funding. We now have 39 Article 8 and 9 products.
Our operations and ability to work effectively
was not materially impacted by the summer heatwaves across the US
and Central and Southern Europe, with the majority of
employees working remotely.
|
|
Unchanged
|
Directors' responsibility statement
The directors are responsible for
preparing the Annual Report and the Group financial statements
in accordance with applicable law and regulations. The Annual
Report will be published on the Company's website in mid-March and
an announcement will be released to the market confirming when it
is available.
The Companies (Jersey) Law 1991 requires the
directors to prepare financial statements for each financial
year. Under that law the directors have elected to prepare the
financial statements in accordance with applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the United Kingdom. The financial statements are required by law to
give a true and fair view of the state of affairs of the Company
and of the profit or loss of the Company for that
period.
In preparing the Group financial statements,
International Accounting Standard 1 requires that
directors:
· properly select
and apply accounting policies;
· present
information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
· provide
additional disclosures when compliance with the specific
requirements in IFRSs are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance; and
· make an
assessment of the Company's ability to continue as a going
concern.
The directors are responsible for keeping proper
accounting records that disclose with reasonable accuracy at any
time the financial position of the Company and enable them to
ensure that the financial statements comply with the Companies
(Jersey) Law 1991. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other
irregularities.
The directors are responsible for the
maintenance and integrity of the corporate and financial
information included on the Company's website. Legislation in
Jersey, Channel Islands governing the preparation and dissemination
of financial statements may differ from legislation in other
jurisdictions.
Each of the directors as at 31 December 2023,
confirm that, to the best of each person's knowledge and
belief:
· the financial
statements, prepared in accordance with the relevant financial
reporting framework, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company
and the undertakings included in the consolidation taken as a
whole;
· the Strategic
report includes a fair review of the development and performance of
the business and the position of the Company and the undertakings
included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they
face;
· the Annual Report
and financial statements, taken as a whole, are fair, balanced
and understandable and provide the information necessary for
shareholders to assess the Company's and Group's position,
performance, business model and strategy; and
· there is no
relevant audit information of which the Group's auditor
is unaware, and that they have taken all steps that they ought
to have taken as a director in order to make themselves aware of
any relevant audit information and to establish that Man Group's
auditor is aware of that information.
Group income statement
For the year to 31
December
|
Note
|
2023
$m
|
2022
$m
|
Management and other
fees
|
4
|
990
|
954
|
Performance fees
|
4
|
178
|
778
|
Revenue
|
|
1,168
|
1,732
|
Net income or gains on investments
and other financial instruments
|
12.1
|
76
|
7
|
Third-party share of (gains)/losses
relating to interests in consolidated funds
|
12.2
|
(24)
|
14
|
Rental income
|
12.1,16.2
|
6
|
5
|
Distribution costs
|
5
|
(32)
|
(31)
|
Net revenue
|
|
1,194
|
1,727
|
Asset servicing costs
|
5
|
(58)
|
(58)
|
Compensation costs
|
5.1
|
(595)
|
(678)
|
Other employment-related
expenses
|
5.1
|
(23)
|
-
|
Other costs
|
5.2
|
(198)
|
(179)
|
Finance expense
|
6
|
(34)
|
(16)
|
Finance income
|
6
|
13
|
5
|
Gain on disposal of investment
property - right-of-use lease assets
|
16.2
|
12
|
-
|
Amortisation and impairment of
acquired intangibles
|
18
|
(28)
|
(51)
|
Share of post-tax loss of
associates
|
22
|
(3)
|
(5)
|
Third-party share of post-tax
profits
|
17
|
(1)
|
-
|
Statutory profit before tax
|
|
279
|
745
|
Tax expense
|
7
|
(45)
|
(137)
|
Statutory profit attributable to owners of the
Company
|
|
234
|
608
|
|
|
|
|
Statutory earnings per share
|
25
|
|
|
Basic
|
|
19.9¢
|
47.2¢
|
Diluted
|
|
19.4¢
|
45.8¢
|
Group statement of comprehensive
income
For the year to 31
December
|
Note
|
2023
$m
|
2022
$m
|
Statutory profit attributable to owners of the
Company
|
|
234
|
608
|
|
|
|
|
Other comprehensive (loss)/income:
|
|
|
|
Remeasurements of defined benefit
pension plans
|
23
|
(10)
|
(2)
|
Deferred tax on pension
plans
|
|
2
|
(1)
|
Items that will not be reclassified to profit or
loss
|
|
(8)
|
(3)
|
Cash flow hedges:
|
|
|
|
Valuation gains taken to
equity
|
|
14
|
6
|
Realised gains transferred to Group
income statement
|
|
(12)
|
(7)
|
Net investment hedges
|
|
1
|
4
|
Foreign currency
translation
|
|
3
|
(4)
|
Items that may be reclassified to profit or
loss
|
|
6
|
(1)
|
Other comprehensive loss
|
|
(2)
|
(4)
|
|
|
|
|
Total comprehensive income attributable to owners of the
Company
|
|
232
|
604
|
Group balance sheet
At 31 December
|
|
|
|
|
Note
|
2023
$m
|
2022
$m
|
Assets
|
|
|
|
Cash and cash
equivalents
|
8
|
276
|
457
|
Fee and other
receivables
|
10
|
551
|
570
|
Investments in fund products and
other investments
|
12
|
2,279
|
1,209
|
Investments in
associates
|
22
|
11
|
14
|
Current tax assets
|
7
|
15
|
-
|
Finance lease receivable
|
16.2
|
67
|
-
|
Leasehold improvements and
equipment
|
15
|
53
|
53
|
Leasehold property - right-of-use
lease assets
|
16.1
|
112
|
92
|
Investment property - right-of-use
lease assets
|
16.1
|
17
|
71
|
Investment property - consolidated
fund entities
|
12.2
|
30
|
34
|
Other intangibles
|
19
|
54
|
50
|
Deferred tax assets
|
20
|
128
|
105
|
Pension asset
|
23
|
12
|
22
|
Goodwill and acquired
intangibles
|
18
|
776
|
627
|
Total assets
|
|
4,381
|
3,304
|
|
|
|
|
Liabilities
|
|
|
|
Borrowings
|
8
|
140
|
-
|
Trade and other payables
|
11
|
736
|
942
|
Provisions
|
21
|
16
|
14
|
Current tax liabilities
|
7
|
3
|
37
|
CLO liabilities - consolidated
funds
|
12.2
|
1,036
|
-
|
Third-party interest in
consolidated funds
|
12.2
|
554
|
359
|
Third-party interest in other
subsidiaries
|
17
|
1
|
-
|
Lease liability
|
16.1
|
283
|
253
|
Total liabilities
|
|
2,769
|
1,605
|
|
|
|
|
Net assets
|
|
1,612
|
1,699
|
|
|
|
|
Equity
|
|
|
|
Capital and reserves attributable
to owners of the Company
|
|
1,612
|
1,699
|
The financial statements were
approved by the Board of Directors on 28 February 2024 and signed
on its behalf by:
Robyn
Grew
Antoine Forterre
Chief Executive
Officer
Chief Financial Officer
Group cash flow statement
For the year to 31
December
|
Note
|
2023
$m
|
2022
$m
|
Operating activities
|
|
|
|
Cash generated from
operations
|
9
|
470
|
878
|
Interest paid
|
|
(23)
|
(6)
|
Payment of lease
interest
|
16.1
|
(10)
|
(10)
|
Tax paid
|
7
|
(100)
|
(125)
|
Cash flows from operating activities
|
|
337
|
737
|
|
|
|
|
Investing activities
|
|
|
|
Interest received
|
|
12
|
5
|
Purchase of leasehold improvements
and equipment
|
15
|
(12)
|
(21)
|
Purchase of investment property -
right-of-use lease assets
|
|
-
|
(2)
|
Purchase of other
intangibles
|
|
(21)
|
(22)
|
Acquisition of subsidiaries, net of
cash acquired
|
|
(170)
|
-
|
Cash flows used in investing activities
|
|
(191)
|
(40)
|
|
|
|
|
Financing activities
|
|
|
|
Repayments of lease liability
principal
|
16.1
|
(10)
|
(13)
|
Purchase of Man Group plc shares by
the Employee Trust
|
|
(56)
|
(47)
|
Proceeds from sale of Treasury
shares in respect of Sharesave
|
|
4
|
2
|
Share repurchase programmes
(including costs)
|
25
|
(223)
|
(386)
|
Ordinary dividends paid to Company
shareholders
|
26
|
(181)
|
(179)
|
Payment of upfront costs of
revolving credit facility
|
|
(3)
|
-
|
Drawdown of borrowings
|
8
|
140
|
-
|
Cash flows used in financing activities
|
|
(329)
|
(623)
|
|
|
|
|
Net (decrease)/increase in cash and cash
equivalents
|
|
(183)
|
74
|
Cash and cash equivalents at
beginning of the year
|
|
457
|
387
|
Effect of foreign exchange
movements
|
|
2
|
(4)
|
Cash and cash equivalents at end of the
year
|
8
|
276
|
457
|
Less: restricted cash held by
consolidated fund entities
|
8
|
(96)
|
(108)
|
Available cash and cash equivalents at end of the
year
|
8
|
180
|
349
|
Group statement of changes in
equity
$m
|
Note
|
Share capital
|
Reorganisation reserve
|
Profit
and loss account
|
Man
Group plc shares held by
Employee
Trust
|
Treasury shares
|
Cumulative translation adjustment
|
Other
reserves
|
Total
|
At 1 January 2022
|
|
51
|
(1,688)
|
3,477
|
(61)
|
(178)
|
41
|
9
|
1,651
|
Statutory profit
|
|
-
|
-
|
608
|
-
|
-
|
-
|
-
|
608
|
Other comprehensive loss
|
|
-
|
-
|
(3)
|
-
|
-
|
-
|
(1)
|
(4)
|
Total comprehensive income
|
|
-
|
-
|
605
|
-
|
-
|
-
|
(1)
|
604
|
Share-based payment
charge
|
5.1
|
-
|
-
|
45
|
-
|
-
|
-
|
-
|
45
|
Current tax on share-based
payments
|
7
|
-
|
-
|
4
|
-
|
-
|
-
|
-
|
4
|
Deferred tax on share-based
payments
|
|
-
|
-
|
(6)
|
-
|
-
|
-
|
-
|
(6)
|
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
|
|
-
|
-
|
(375)
|
-
|
-
|
-
|
-
|
(375)
|
Transfer to Treasury
shares
|
|
-
|
-
|
386
|
-
|
(386)
|
-
|
-
|
-
|
Transfer from Treasury
shares
|
|
-
|
-
|
(24)
|
-
|
22
|
-
|
2
|
-
|
Disposal of Treasury shares
for Sharesave
|
|
-
|
-
|
-
|
-
|
2
|
-
|
-
|
2
|
Cancellation of Treasury
shares
|
25
|
(5)
|
-
|
(315)
|
-
|
315
|
-
|
5
|
-
|
Dividends paid
|
26
|
-
|
-
|
(179)
|
-
|
-
|
-
|
-
|
(179)
|
At
31 December 2022
|
|
46
|
(1,688)
|
3,590
|
(80)
|
(225)
|
41
|
15
|
1,699
|
Statutory profit
|
|
-
|
-
|
234
|
-
|
-
|
-
|
-
|
234
|
Other comprehensive
(loss)/income
|
|
-
|
-
|
(8)
|
-
|
-
|
4
|
2
|
(2)
|
Total comprehensive income
|
|
-
|
-
|
226
|
-
|
-
|
4
|
2
|
232
|
Share-based payment
charge
|
5.1
|
-
|
-
|
40
|
-
|
-
|
-
|
-
|
40
|
Current tax on share-based
payments
|
7
|
-
|
-
|
5
|
-
|
-
|
-
|
-
|
5
|
Deferred tax on share-based
payments
|
|
-
|
-
|
1
|
-
|
-
|
-
|
-
|
1
|
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
|
25
|
-
|
-
|
(125)
|
-
|
-
|
-
|
-
|
(125)
|
Transfer to Treasury
shares
|
|
-
|
-
|
223
|
-
|
(223)
|
-
|
-
|
-
|
Transfer from Treasury
shares
|
|
-
|
-
|
(18)
|
-
|
15
|
-
|
3
|
-
|
Disposal of Treasury shares
for Sharesave
|
|
-
|
-
|
-
|
-
|
4
|
-
|
-
|
4
|
Cancellation of Treasury
shares
|
25
|
(1)
|
-
|
(103)
|
-
|
103
|
-
|
1
|
-
|
Dividends paid
|
26
|
-
|
-
|
(181)
|
-
|
-
|
-
|
-
|
(181)
|
Put option over non-controlling
interests in subsidiaries
|
|
-
|
-
|
(7)
|
-
|
-
|
-
|
-
|
(7)
|
At
31 December 2023
|
|
45
|
(1,688)
|
3,621
|
(106)
|
(326)
|
45
|
21
|
1,612
|
Under the Companies (Jersey) Law
1991, a company may make a distribution from any source other than
the nominal capital account and capital redemption reserve,
included within other reserves. The Company has reserves available
for distribution of $2.9 billion as at 31 December 2023 (2022: $1.8
billion).
Notes to the Group financial
statements
1. Basis of preparation
Accounting
The audited consolidated financial
information has been prepared in accordance with International
Financial Reporting Standards (IFRSs) and interpretations (IFRICs)
as adopted by the United Kingdom. The consolidated financial
statements are prepared on a going concern basis using the
historical cost convention, except for certain financial
instruments that are measured at fair value and defined benefit
pension plans. Our significant accounting policies, which have been
consistently applied in the current and prior years, are included
in the relevant notes, except for those below which relate to the
consolidated financial statements as a whole.
Man Group plc (the Company) has
taken advantage of the exemption provided in Article 105 (11) of
the Companies (Jersey) Law 1991 and therefore does not present its
individual financial statements and related notes.
Consolidation
The consolidated group is the
Company and its subsidiaries (together Man Group). The consolidated
financial statements are presented in United States dollars (USD),
the Company's functional currency, as the majority of our revenues,
assets, liabilities and financing are denominated in
USD.
Monetary assets and liabilities
denominated in foreign currencies are translated at the spot rate
on each balance sheet date. Non-monetary items carried at fair
value that are denominated in foreign currencies are translated at
the rates prevailing at the date when the fair value was
determined. Non-monetary items that are measured at historical cost
in a foreign currency are not retranslated. Transactions
denominated in foreign currencies are converted at the spot rate at
the date of the transaction or, if appropriate, the average rate
for the month in which the transaction occurs. The resulting
exchange differences are recognised in the Group income
statement.
For consolidated entities that have
a functional currency other than USD, the assets and liabilities
are translated into USD at the spot rate on balance sheet date.
Income and expenses are translated at the average rate for the
period in which the transactions occur. The resulting exchange
differences between these rates are recorded in other comprehensive
income.
The consolidated financial
information contained within these financial statements
incorporates our results, cash flows and financial position for the
year to 31 December 2023 and includes our share of the results of
any associates and joint ventures using the equity method of
accounting. Subsidiaries are entities we control (including certain
structured entities, as defined by IFRS 12 'Disclosure of Interests
in Other Entities') and are consolidated from the date on which
control is transferred to us until the date that control ceases.
Control exists when we have the power to direct the relevant
activities, exposure to significant variable returns and the
ability to utilise power to affect those returns. All intercompany
transactions and balances are eliminated on consolidation. Although
the Employee Trust has independent trustees and its assets are held
separately, it is consolidated into the Group financial statements
given its nature as a structured entity which has the obligation to
deliver deferred compensation awards to our employees.
Business combinations
Man Group uses the acquisition
method to recognise acquired businesses from the date on which we
obtain control of the acquiree. The consideration transferred in an
acquisition is measured at the fair value of the assets
transferred, including any contingent consideration, the
liabilities incurred, and any equity instruments issued. The fair
value of the business acquired is measured at the fair value of the
acquiree's identifiable assets and liabilities at that date.
Goodwill is measured as the excess of the sum of the consideration
transferred and the amount of any non-controlling interests in the
acquiree over the net of the amounts of the identifiable assets
acquired and liabilities assumed at the acquisition date.
Acquisition-related costs are recognised in the Group income
statement as incurred. Any contingent consideration is recognised
at fair value at the acquisition date, with subsequent changes in
fair value recognised in the Group income statement.
Non-controlling interests in subsidiaries are measured either at
fair value or at the non-controlling interest's proportionate share
of the acquiree's identifiable net assets on a case-by-case basis.
Put options over non-controlling interests are classified as a
financial liability as there is no unavoidable right to defer
settlement of the obligation.
Operating segments
As a result of the change in Chief
Executive Officer and subsequent reorganisation of the Senior
Executive Committee and Executive Committee in the year, we have
revisited the definition of the Chief Operating Decision Maker
(CODM) which has been identified as the Man Group Board (the Board)
as Man Group's key decision-making body.
Management information regarding
revenues, net management fee margins and investment performance
relevant to the operation of the investment managers, products and
the investor base are reviewed by the Board. A centralised shared
infrastructure for operations, product structuring, distribution
and support functions for our investment management business means
that operating costs are not allocated to its constituent parts. As
a result, performance is assessed, resources are allocated, and
other strategic and financial management decisions are determined
by the Board, considering our investment management business as a
whole. Accordingly, we operate and report the investment management
business as a single segment, together with relevant information
regarding AUM, flows and net management fee margins, to allow for
analysis of the direct contribution of products and the respective
investor base.
Impact of new accounting
standards
There were no new or amendments to
existing accounting standards issued by the International
Accounting Standards Board (IASB) effective for the first time in
the year to 31 December 2023 that have had a significant impact on
these Group financial statements.
We have applied the temporary
exception issued by the IASB in May 2023 from the accounting
requirements for deferred taxes in IAS 12 'Income Taxes'.
Accordingly, Man Group neither recognises nor discloses information
about deferred tax assets and liabilities related to Pillar 2
income taxes.
In November 2023, the IASB issued an
exposure draft (ED) on Financial Instruments with Characteristics
of Equity, which impacts the accounting for non-controlling
interests over which there is a put option. The ED requires
non-controlling interests to be recognised and measured based on
current rights associated with an instrument, as well as the
recognition of a put option over an entity's own shares at the
present value of the gross settlement value. While the proposals
have not had a material impact on the Group financial statements in
the year, the impact could become more material in the future as
the value of the non-controlling interests in the businesses
acquired in the year increase.
No other standards or
interpretations issued and not yet effective are expected to have a
material impact on the Group financial statements.
2. Going concern
The preparation of the Group
financial statements on a going concern basis is supported by the
forecast financial performance and capital and liquidity analysis
of Man Group, as approved by the Board. This analysis considers our
net financial assets and liquidity resources and requirements and
utilises the Man Group budget, medium-term plan and the capital and
liquidity plan. These plans include rigorous downside testing,
including analyses of stressed capital and liquidity scenarios, and
incorporate Man Group's principal and emerging risks, which are
outlined on pages 18 to 23 and monitored by the Board on an ongoing
basis.
3. Judgemental areas and accounting
estimates
The preparation of financial
statements in conformity with IFRS requires the use of accounting
estimates and assumptions. We continually evaluate our estimates
and judgements based on historical experience and expectations of
future events that are considered reasonable in the circumstances.
These judgements and estimates are an area of focus for the Board
and, in particular, the Audit and Risk Committee.
Critical judgements
Consolidation of fund entities
Man Group acts as the investment
manager or adviser to fund entities. A 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.
Further details of the control assessment are set out in Note
12.
Acquisition of Varagon
Significant judgement was applied in
determining the appropriate accounting treatment of the acquisition
of Varagon Capital Partners, L.P. (Varagon). In determining the
classification of amounts payable to certain sellers as
post-acquisition remuneration rather than consideration for the
acquisition, we considered the rights and obligations of those
sellers under the terms of the transaction, balancing the economic
substance of the transaction against the potential forfeiture of
future profit distributions and the right to sell their economic
interest to Man Group in the future, and changes to the price at
which the economic interest may be sold. We have determined that
payments to sellers who are also employees should be accounted for
as employment-related costs.
Further judgement was applied when
determining the appropriate accounting policies to apply to these
arrangements, since the terms differ significantly from more common
forms of compensation. In particular, we have applied judgement
when selecting the appropriate vesting period for the put options
accounted for as cash-settled share-based payments. Since the
maximum settlement value of the options varies over time, different
vesting periods have been selected for the period over which each
alternate value can be earned. Changes in the fair value of these
cash-settled share-based payments will be recognised in the Group
income statement up until the final settlement date.
The determination of the treatment
of future amounts payable to the selling shareholders who are also
key customers also involved significant judgement when determining
whether to treat them as payments in their capacity as customers or
as sellers. We have determined that these payments should be
treated as part of the customer relationship as they are outlined
in the investment management agreements and are in substance
reductions in future fees charged for services rendered by Man
Group.
Acquisition of Asteria
Judgement was applied in determining
the appropriate accounting treatment of the acquisition of Asteria
Investment Managers SA (Asteria), in particular the accounting for
the non-controlling interest and the associated put option,
including the decision to not separately disclose the immaterial
non-controlling interest. As the transaction is not material, this
is not considered a significant judgement.
Further information in relation to
the acquisitions of Varagon and Asteria is set out in Note
17.
Critical accounting
estimates
Acquisition of Varagon
Man Group's acquisition of Varagon
in the year has introduced new sources of estimation uncertainty.
The measurement of provisional values of the identifiable assets
acquired, liabilities assumed and goodwill arising on the
acquisition required the use of multiple uncertain inputs (Note
17). An increase or decrease in the fair value of the assets
acquired and liabilities assumed would result in an equal and
offsetting decrease or increase in goodwill. The value of
employment-related expenses arising from business combinations is a
further source of significant estimation uncertainty as the
expenses are determined with reference to the expected future value
and performance of the Varagon business (Note 5).
Pension
The estimation uncertainty arising
on the valuation of the pension asset remains a critical accounting
estimate (Note 23).
Other considerations
The Board has also considered the
assumptions used in the assessments for impairment of goodwill and
right-of-use lease assets, the recoverability of deferred tax
assets and the valuation of contingent consideration and the put
option over non-controlling interests relating to the acquisition
of Asteria. 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 Group 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 Group financial statements is not currently expected
to be material.
4. Revenue
Accounting policy
Fee income is our primary source of
revenue, which is derived from the investment management agreements
that we have in place with the fund entities or the accounts that
we manage.
Management and other fees (net of
rebates), which include all non-performance related fees, are
recognised in the period in which the services are provided and do
not include any other performance obligations. Fees are generally
based on an agreed percentage of NAV or AUM and are typically
charged in arrears and receivable within one month.
Performance fees (net of rebates)
relate to the performance of the funds or managed accounts managed
during the year and are recognised when the performance obligation
has been met, whereby the fee has crystallised and can be reliably
estimated. This is generally at the end of the performance period
or upon early redemption by an investor. Until the performance
period ends, market movements could significantly move the NAV of
the fund products and therefore the value of any performance fees
receivable. For alternative strategies, we will typically only earn
performance fees on any positive investment returns in excess of
the high-water mark, meaning we will not be able to earn
performance fees with respect to positive investment performance in
any year following negative performance until that loss is
recouped. For long-only strategies, performance fees are usually
earned only when performance is in excess of a predetermined
strategy benchmark (positive alpha). Once crystallised, performance
fees typically cannot be clawed back. There are no other
performance obligations or services provided which suggest these
have been earned either before or after the crystallisation
date.
Rebates, which relate to repayments
of management and performance fees charged, typically to
institutional investors, are recognised in the same period as the
associated fees. As rebates constitute a reduction in the fees
charged for services provided, they are presented net within
management and other fees and performance fees in the Group income
statement.
5. Costs
Accounting policy
Distribution costs
Distribution costs, which are paid
to external intermediaries for marketing and investor servicing,
largely in relation to retail investors, are typically variable
with AUM and the associated management fee revenue. Distribution
costs are expensed over the period in which the service is
provided.
Asset servicing costs
Asset servicing includes custodial,
valuation, fund accounting, registrar, research and administration
functions performed by third parties as well as market data
acquired under contract to Man Group, on behalf of the funds or
managed accounts. Asset servicing costs are recognised in the
period in which the services are provided. The costs of these
services vary based on transaction volumes, the number of funds or
managed accounts and their NAVs, and the mix of client
strategies.
Compensation costs
Salaries, variable cash compensation
and social security costs are charged to the Group income statement
in the period in which the service is provided and include partner
drawings. In the short term, the variable component of compensation
adjusts with revenues and profitability.
Compensation can be deferred by way
of equity-settled share-based payment schemes and fund
product-based compensation arrangements. Where deferred
compensation relates to our fund products, the fair value of the
employee services received in exchange for the fund investments is
recognised as a straight-line expense of the mark-to-market value
of the awards over the relevant vesting period, with a
corresponding liability recognised in the Group balance sheet. We
generally elect to separately purchase the equivalent fund
investments at grant date to offset any associated change in the
value of deferred compensation due, and on vesting the value of the
fund investment is delivered to the employee (subject to the terms
of the plan rules, which include malus provisions). If a fund
product-based award is forfeited, the cumulative charge recognised
in the Group income statement is reversed in full.
Other employment-related expenses
Other employment-related expenses
relate to amounts payable to sellers of businesses acquired in
exchange for post-acquisition services and are recognised in profit
and loss over the sellers' relevant service periods.
5.1. Compensation costs and other
employment-related expenses
|
|
|
|
2023
$m
|
2022
$m
|
Salaries
|
201
|
174
|
Variable cash
compensation
|
205
|
321
|
Deferred compensation: share-based
payment charge
|
40
|
45
|
Deferred compensation: fund
product-based payment charge
|
83
|
72
|
Social security costs
|
50
|
52
|
Pension costs (Note 23)
|
16
|
14
|
Compensation costs
|
595
|
678
|
Other employment-related expenses
(Note 24)
|
23
|
-
|
Total employment-related expenses recognised in the Group
income statement
|
618
|
678
|
|
|
|
Comprising:
|
|
|
Fixed compensation: salaries and
associated social security costs, and pension costs
|
239
|
209
|
Variable compensation: variable
cash compensation, deferred compensation and associated social
security costs
|
356
|
469
|
Other employment-related
expenses
|
23
|
-
|
The unamortised deferred
compensation at 31 December 2023 is $120 million (2022: $76
million) and has a weighted average remaining vesting period of 2.2
years (2022: 1.5 years). $2 million of the $23 million other
employment-related expenses relates to the portion of profits
earned in the year ended 31 December 2023 which are payable to
Varagon selling shareholders.
Sensitivity analysis
The value recognised for other
employment-related expenses is an area of significant estimation
uncertainty as the fair value has been determined with reference to
the expected future value and performance of the Varagon business.
The estimates will be updated in each reporting period until the
associated liabilities are settled. The table below illustrates the
impact of changing the most significant assumptions used in the
expected future value calculation on the expense recognised in the
Group income statement.
$m
|
Increase/(decrease) in 2023 employment-related
expense
|
Discount rate decreased/(increased)
by 5% p.a.
|
8
|
(6)
|
Forecast future cash flows
increased /(decreased) by 50% p.a.
|
3
|
(20)
|
5.2. Other costs
|
2023
$m
|
2022
$m
|
Audit, tax, legal and other
professional fees
|
24
|
24
|
Technology and
communications
|
24
|
22
|
Occupancy
|
20
|
18
|
Temporary staff, recruitment,
consultancy and managed services
|
13
|
17
|
Staff benefits
|
19
|
14
|
Insurance
|
5
|
7
|
Travel and entertainment
|
11
|
7
|
Marketing and
sponsorship
|
5
|
5
|
Claims
|
1
|
-
|
Other costs, including
irrecoverable VAT
|
10
|
9
|
Other costs - consolidated fund
entities
|
9
|
9
|
Acquisition-related costs (Note
17)
|
9
|
-
|
Other costs before depreciation and
amortisation
|
150
|
132
|
Depreciation of leasehold
improvements and equipment (Note 15)
|
12
|
12
|
Depreciation of right-of-use lease
assets (Note 16.1)
|
14
|
17
|
Amortisation of other intangibles
(Note 19)
|
22
|
18
|
Total other costs
|
198
|
179
|
Average headcount
The table below details average
headcount by function, including directors, employees, partners and
contractors.
|
2023
|
2022
|
Investment management
|
469
|
427
|
Sales and marketing
|
251
|
238
|
Technology and
infrastructure1
|
996
|
930
|
Average headcount
|
1,716
|
1,595
|
Headcount at 31 December
|
1,790
|
1,655
|
Note:
1 Includes all staff
performing technology-based roles, including those supporting the
investment management side of our business.
6. Finance expense and finance
income
|
2023
$m
|
2022
$m
|
Finance expense
|
|
|
Unwind of lease liability discount
(Note 16.1)
|
(10)
|
(10)
|
Interest expense on total return
swaps and sale and repurchase agreements
|
(12)
|
(3)
|
Other finance expense
|
(12)
|
(3)
|
Total finance expense
|
(34)
|
(16)
|
|
|
|
Finance income
|
|
|
Interest on cash
deposits
|
12
|
5
|
Unwind of finance lease discount
(Note 16.2)
|
1
|
-
|
Total finance income
|
13
|
5
|
|
|
|
Net finance expense
|
(21)
|
(11)
|
7. Current tax and tax
expense
Accounting policy
Current tax is based on our taxable
profit for the year. Taxable profit differs from net profit as
reported in the Group income statement because it excludes items of
income or expense that are taxable or deductible in other years, in
addition to items that are never taxable or deductible. Accounting
for tax involves a level of estimation uncertainty given the
application of tax law requires a degree of judgement, which tax
authorities may dispute. Tax liabilities are recognised based on
the best estimates of probable outcomes, with regard to external
advice where appropriate.
We are a global business and
therefore operate across many different tax jurisdictions. Income
and expenses are allocated to these different jurisdictions based
on transfer pricing methodologies set in accordance with the laws
of the jurisdictions in which we operate, and international
guidelines as laid out by the Organisation for Economic
Co-operation and Development (OECD). The effective tax rate results
from the combination of taxes paid on earnings attributable to the
tax jurisdictions in which they arise.
The movements in our net current tax
assets/liabilities are as follows:
|
2023
$m
|
2022
$m
|
Net current tax liability at
beginning of the year
|
37
|
15
|
Charge to the Group income
statement
|
65
|
159
|
Credit to equity
|
(5)
|
(4)
|
Tax paid
|
(100)
|
(125)
|
Other balance sheet
movements
|
(6)
|
(5)
|
Foreign currency
translation
|
(3)
|
(3)
|
Net current tax (asset)/liability at end of the
year
|
(12)
|
37
|
|
|
|
|
2023
$m
|
2022
$m
|
Current tax
|
|
|
UK corporation tax on
profits
|
56
|
140
|
Foreign tax
|
14
|
19
|
Adjustments to tax charge in
respect of previous years
|
(5)
|
-
|
Current tax expense
|
65
|
159
|
|
|
|
Deferred tax
|
|
|
Origination and reversal of
temporary differences
|
(23)
|
(13)
|
Adjustments to tax charge in
respect of previous years
|
3
|
(9)
|
Deferred tax credit (Note
20)
|
(20)
|
(22)
|
|
|
|
Total tax expense
|
45
|
137
|
Factors affecting the tax expense
for the year
The majority of our profits in the
period were earned in the UK, Switzerland and the US. On 1
April 2023, the UK corporation tax rate increased to 25% from 19%.
Our tax expense is lower (2022: lower) than the amount that would
arise using the theoretical tax rate applicable to our profits
as follows:
|
2023
$m
|
2022
$m
|
|
Profit before tax
|
279
|
745
|
|
Theoretical tax expense at UK
rate: 23.5% (2022: 19%)
|
66
|
142
|
|
Effect of:
|
|
|
|
Overseas tax rates different to
UK
|
(4)
|
(2)
|
|
Adjustments to tax charge in
respect of previous years
|
(2)
|
(9)
|
|
(Recognition)/derecognition of US
deferred tax assets (Note 20)
|
(19)
|
7
|
|
Other
|
4
|
(1)
|
|
|
|
|
|
Tax expense
|
45
|
137
|
|
The effective tax rate in the year
was 16% (2022: 18%).
Factors affecting our future tax
charges
The principal factors which may
influence our future tax rate are changes in tax legislation in the
territories in which we operate, the mix of income and expenses
earned and incurred by jurisdiction, and the consumption of
available deferred tax assets.
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. We
anticipate being subject to the global minimum top-up tax in
certain jurisdictions in which we operate, notably Ireland and
Switzerland. However, based on historical and anticipated profit
profiles, the impact on our effective tax rate is not expected to
be greater than 1%. We are continuing to assess the impact of
Pillar 2 legislation on our future financial results.
8. Cash, liquidity and
borrowings
Accounting policy
Cash and cash equivalents
Cash and cash equivalents comprise
cash and short-term investments in money market funds or bank
deposits with an original maturity of three months or less. Cash
and cash equivalents are measured at amortised cost, which is
approximately equal to fair value. Available cash and cash
equivalents are invested in accordance with strict limits
consistent with the Board's risk appetite, which consider both the
security and availability of liquidity. Accordingly, cash is held
in on-demand and short-term bank deposits and money market funds,
and at times invested in short-term US Treasury bills (which meet
the definition of cash equivalents). Cash and cash equivalents
include restricted balances held by consolidated fund entities to
which we do not have access, and which are subject to legal or
contractual restrictions as to their use.
Borrowings
Borrowings comprise amounts drawn
under committed revolving credit facilities. Borrowings are
initially recorded at fair value and subsequently measured at
amortised cost. Drawdowns under revolving credit facilities are
typically for maturities of one month or less and are therefore
presented net of repayments in the Group cash flow
statement.
|
2023
$m
|
2022
$m
|
Cash held with banks
|
92
|
124
|
Short-term deposits
|
46
|
95
|
Money market funds
|
42
|
130
|
Cash held by consolidated fund
entities (Note 12.2)
|
96
|
108
|
Cash and cash equivalents
|
276
|
457
|
Less: cash held by consolidated
fund entities (Note 12.2)
|
(96)
|
(108)
|
Available cash and cash
equivalents
|
180
|
349
|
Undrawn committed revolving credit
facility1
|
660
|
500
|
Total liquidity
|
840
|
849
|
Note:
1 Excludes the $300 million
facility acquired with Varagon in the year. This facility was
undrawn at 31 December 2023 and subsequently cancelled in January
2024.
Cash and cash
equivalents
At 31 December 2023, the $180
million available cash and cash equivalents balance was held with
19 banks (2022: $349 million with 14 banks).
Credit ratings of banks
|
2023
$m
|
2022
$m
|
AAA
|
31
|
103
|
AA
|
67
|
103
|
A
|
82
|
143
|
Total
|
180
|
349
|
The single largest counterparty bank
exposure of $50 million is held with an A- rated bank (2022: $101
million held with an A- rated bank).
Liquidity risk
management
Liquidity resources support ongoing
operations and potential liquidity requirements under scenarios
that assume stressed market and economic conditions. Our funding
requirements relating to the investment management process are
discretionary. Our liquidity profile is monitored on a daily basis
and the stressed scenarios are updated regularly. The Board reviews
our funding resources at each Board meeting and on an annual basis,
as part of the strategic planning process. Our available liquidity
is considered sufficient to cover current requirements and
potential requirements under stressed scenarios.
Our maximum exposure to loss
associated with interests in our consolidated CLOs is limited to
the net investment in these CLOs (Note 12.2). Therefore, the CLO
liabilities on the Group balance sheet of $1,036 million (2022:
nil) do not present a liquidity risk to Man Group as we have no
obligation to repay the noteholders at maturity should the CLO
assets be insufficient to meet the obligations.
Further information relating to Man
Group's exposure to liquidity risk is set out on page
19.
Borrowings
Our $800 million committed revolving
credit facility (RCF) is immediately accessible. It does not
include financial covenants to maintain maximum flexibility. The
RCF was put in place in December 2023, replacing the previous $500
million facility, as a five-year facility with two one-year
extension options and is currently scheduled to mature in December
2028. $140 million was drawn down at 31 December 2023 (2022:
undrawn).
9. Reconciliation of statutory
profit to cash generated from operations
Accounting policy
Cash flows arising from the purchase
and sale of investments in fund products and other investments, and
from transactions with third-party investors in consolidated fund
entities, are included in cash flows from operating activities in
the Group cash flow statement. This classification reflects the
fact that these investments are to build product breadth and to
trial investment research before marketing the products broadly to
investors as part of Man Group's ordinary operations or are
otherwise held in connection with settling employee remuneration
and are not intended to be held as long-term
investments.
|
Note
|
2023
$m
|
2022
$m
|
Cash flows from operating activities
|
|
|
|
Statutory profit
|
|
234
|
608
|
Adjustments for:
|
|
|
|
Share-based payment
charge
|
5.1
|
40
|
45
|
Fund product-based payment
charge
|
5.1
|
83
|
72
|
Other employment-related
expenses
|
5.1
|
23
|
-
|
Net finance expense
|
6
|
21
|
11
|
Tax expense
|
7
|
45
|
137
|
Depreciation of leasehold
improvements and equipment
|
15
|
12
|
12
|
Depreciation of right-of-use lease
assets
|
16.1
|
14
|
17
|
Gain on disposal of investment
property - right-of-use lease assets
|
16.2
|
(12)
|
-
|
Amortisation and impairment of
acquired intangibles
|
18
|
28
|
51
|
Amortisation of other
intangibles
|
19
|
22
|
18
|
Share of post-tax loss of
associates
|
22
|
3
|
5
|
Realised gains on cash flow
hedges
|
|
(12)
|
(7)
|
Foreign exchange
movements
|
|
3
|
(13)
|
Other non-cash movements
|
|
(9)
|
(5)
|
|
|
495
|
951
|
Changes in working
capital1:
|
|
|
|
Decrease/(increase) in fee and other
receivables
|
|
104
|
(68)
|
Decrease/(increase) in other financial assets
including consolidated fund entities2
|
|
71
|
(45)
|
(Decrease)/increase in trade and other
payables
|
|
(200)
|
40
|
Cash generated from operations
|
|
470
|
878
|
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 12.2) or are
adjusted elsewhere in the Group cash flow statement, such as
movements relating to the fund product-based payment charge and
other employment-related expenses (within operating activities) and
the share repurchase liability (within financing
activities).
2 Includes $12 million of
restricted net cash outflows (2022: $44 million cash inflows)
relating to consolidated fund entities (Note 12.2).
10. Fee and other
receivables
Accounting policy
Fee and other receivables are
initially recorded at fair value and subsequently measured at
amortised cost using the effective interest rate method, except for
derivatives (measured at fair value through profit and loss) and
prepayments. Fee receivables and accrued income relate to
management and performance fees and are received in cash following
finalisation of the NAVs of the underlying funds or managed
accounts.
|
2023
$m
|
2022
$m
|
Fee receivables
|
25
|
35
|
Accrued income
|
274
|
359
|
Collateral posted with derivative
counterparties
|
48
|
39
|
Receivables from Open Ended
Investment Company (OEIC) funds
|
39
|
20
|
Other fund receivables
|
29
|
36
|
Prepayments
|
23
|
17
|
Derivatives
|
5
|
9
|
Other receivables
|
20
|
26
|
Receivables relating to
consolidated fund entities (Note 12.2)
|
88
|
29
|
Fee and other receivables
|
551
|
570
|
|
|
|
Comprising:
|
|
|
Financial assets at amortised
cost
|
523
|
544
|
Financial assets at fair value
through profit or loss
|
5
|
9
|
Non-financial assets
|
23
|
17
|
Credit risk management
The majority of fees are deducted
from the NAVs of the respective funds by the independent
administrators and therefore the credit risk of fee receivables is
minimal. No balances are overdue and, under the expected credit
loss model of IFRS 9 'Financial Instruments', no impairment has
been recognised at 31 December 2023 (2022: nil). Included in
fee and other receivables at 31 December 2023 are balances of $2
million (2022: $1 million) which are expected to be settled after
more than 12 months.
11. Trade and other
payables
Accounting policy
Trade and other payables are
initially recorded at fair value, which is usually the invoiced
amount, and subsequently measured at amortised cost using the
effective interest rate method, except for derivatives, contingent
consideration payable and put options over non-controlling
interests in subsidiaries, which are measured at fair value through
profit and loss.
|
2023
$m
|
2022
$m
|
Trade payables
|
7
|
4
|
Compensation accruals
|
365
|
453
|
Other accruals
|
79
|
86
|
Share repurchase
liability
|
-
|
98
|
Payables under repo
arrangements
|
45
|
54
|
Payables to OEIC funds
|
39
|
18
|
Tax and social security
|
31
|
30
|
Derivatives
|
12
|
6
|
Contingent consideration (Note
17)
|
3
|
-
|
Put option over non-controlling
interests in subsidiaries (Note 24)
|
9
|
-
|
Employment-related payables to
sellers of businesses acquired (Note 5)
|
23
|
-
|
Other payables
|
7
|
13
|
Payables relating to consolidated
fund entities (Note 12.2)
|
116
|
180
|
Trade and other payables
|
736
|
942
|
|
|
|
Comprising:
|
|
|
Financial liabilities at amortised
cost
|
712
|
936
|
Financial liabilities at fair value
through profit or loss
|
24
|
6
|
Trade and other payables can be
analysed according to their contractual maturity dates as
follows:
|
2023
$m
|
2022
$m
|
Within one year
|
658
|
871
|
Between one and three
years
|
49
|
71
|
After three years
|
29
|
-
|
|
736
|
942
|
12. Investments in fund products
and other investments
Accounting policy
Investments in fund products are
classified at fair value through profit or loss, with net gains due
to movements in fair value recognised through net income or gains
on investments and other financial instruments.
The fair values of investments in
fund products other than CLOs are typically derived from their
reported NAVs, which in turn are based upon the value of the
underlying assets. The valuation of the underlying assets within
each fund product is determined by external valuation service
providers based on an agreed valuation policy and methodology.
While these valuations are performed independently of Man Group, we
have established oversight procedures and due diligence processes
to ensure that the NAVs reported by the external valuation service
providers are reliable and appropriate. Purchases and sales of
investments are recognised on trade date.
Our holdings in unconsolidated CLO
risk retention assets are priced using a bottom-up valuation
method. We use third-party valuations to price the securities
within the underlying portfolios and then apply the percentage of
the CLO notes we hold to these valuations.
Seeding investments portfolio
We use capital to invest in fund
products as part of our ongoing business, to build product breadth
and to trial investment research developments before marketing the
products broadly to investors. Seed capital is invested via direct
holdings in fund products or sale and repurchase (repo)
arrangements, which allow us to finance seed investments without
consuming high levels of cash. Alternatively, we may obtain
exposure to seed investments via total return swap (TRS)
arrangements. Under a repo arrangement we are committed to
repurchase the underlying seed investments at maturity and pay an
interest charge over the period, with the obligation to repurchase
the assets on maturity recorded as a liability within trade and
other payables. Under a TRS arrangement, we are under no form of
repayment obligation and have no ownership interest (or voting
rights) in the underlying investment. In exchange for the returns
on the underlying seed investments, we pay a floating rate of
interest.
Other than our holdings in CLOs and
co-investments, our seed investments are generally liquid in nature
and may be liquidated at short notice. It is not practicable to
allocate our seeding investments portfolio between amounts expected
to be recovered or settled within or after 12 months after the end
of the reporting period as the sale or liquidation of seed
investments is subject to client asset raising and the ongoing
requirements of the business. The majority of our CLO holdings are
likely to be settled more than 12 months after the end of the
reporting period.
Consolidation
The control considerations under
IFRS 10 'Consolidated Financial Statements' apply to fund product
investments, including those underlying our repo and TRS
instruments. Fund entities deemed to be controlled are consolidated
on a line-by-line basis from the date control commences until it
ceases. In the control assessment, we consider our exposure to
variable returns and the existence of substantive kick-out rights.
Other factors considered include the nature of relevant fee
arrangements, the decision-making powers we hold as investment
manager or adviser and whether the shares we hold include voting
rights. Where we are not deemed to control the fund, our investment
is classified within investments in fund products.
We only have limited exposure to the
variable returns of the fund entities we manage unless we either
hold an investment in the fund entity or receive the returns of the
fund entity via a TRS or repo arrangement. For most fund entities:
the existence of independent boards of directors; rights which
allow for the removal of the investment manager or adviser; the
influence of external investors; limited exposure to variable
returns; and the arm's length nature of our contracts with those
fund entities, indicate that we do not control them. As a result,
the associated assets, liabilities, and results of these funds are
not consolidated into the Group financial statements.
The assets held by the CLOs we
consolidate are priced using independent pricing sources. Other
than subordinated notes, the debt liabilities of consolidated CLOs
are valued at par plus accrued interest, which is considered
equivalent to fair value. The subordinated notes of these CLOs are
priced using an intrinsic valuation approach, excluding any
potential future value.
Investment property held by
consolidated fund entities comprises land and buildings held to
earn rent or for capital appreciation, or both, and is measured at
cost less depreciation and impairment. Other than land, which is
not depreciated, depreciation is calculated on a straight-line
basis over the asset's estimated useful life (between three and 30
years).
Third-party interests in
consolidated fund entities are measured at amortised
cost.
Fund product investments held for deferred compensation
arrangements
We hold fund product investments
related to deferred compensation arrangements to offset any change
in the associated compensation cost over the vesting period. At
vesting, the value of the fund investment is delivered to the
employee. These fund product investments are measured at fair value
and include balances held by the Employee Trust.
The seeding investments portfolio
reflects our exposure to holdings in investments in fund products,
as follows:
|
|
2023
$m
|
2022
$m
|
Investments in fund
products
|
|
289
|
304
|
Investments in consolidated funds:
transferable securities (Note 12.2)
|
|
1,987
|
905
|
Other investments
|
|
3
|
-
|
Investments in fund products and other
investments
|
|
2,279
|
1,209
|
|
|
|
|
Less:
|
|
|
|
Fund investments held for deferred
compensation arrangements
|
|
(189)
|
(153)
|
Investments in consolidated funds:
exclude consolidation gross-up of net investment
|
|
(1,492)
|
(368)
|
Other investments
|
|
(3)
|
-
|
Seeding investments portfolio
|
|
595
|
688
|
Included in fund investments held
for deferred compensation arrangements at 31 December 2023 are
balances of $101 million (2022: $80 million) which are expected to
be settled after more than 12 months.
12.1. Investments in fund
products
At 31 December 2023, exposure to
fund products via repo arrangements (included within investments in
fund products, with an offsetting repayment obligation included
within trade and other payables) was $45 million (2022: $54
million). Additional exposure via TRS was $230 million (2022: $138
million). The largest single investment in fund products at 31
December 2023 was $88 million (2022: $61 million).
Income or gains on investments and
other financial instruments comprises the following:
|
2023
$m
|
2022
$m
|
Net gains/(losses) on seeding
investments portfolio
|
47
|
(12)
|
Consolidated fund entities:
gross-up of net gains on investments
|
39
|
-
|
Foreign exchange
movements
|
(11)
|
22
|
Net gains/(losses) on fund
investments held for deferred compensation arrangements and other
investments
|
1
|
(3)
|
Net income or gains on investments and other financial
instruments
|
76
|
7
|
12.2. Consolidation of investments
in funds
At 31 December 2023, our interests in
35 (2022: 43) funds met the definition of control and have
therefore been consolidated on a line-by-line basis. Certain of our
CLOs have been consolidated for the first time in the year
following the purchase of majority holdings in the subordinated
tranches.
Consolidated fund entities are
included within the Group balance sheet and income statement as
follows:
|
2023
$m
|
2022
$m
|
Balance sheet
|
|
|
Cash and cash equivalents (Note
8)
|
96
|
108
|
Transferable
securities1
|
1,987
|
905
|
Fees and other
receivables
|
88
|
29
|
Investment property
|
30
|
34
|
Trade and other payables
|
(116)
|
(180)
|
CLO liabilities
|
(1,036)
|
-
|
Net assets of consolidated fund entities
|
1,049
|
896
|
Third-party interest in
consolidated funds
|
(554)
|
(359)
|
Net investment held by Man Group
|
495
|
537
|
|
|
|
Income statement
|
|
|
Net gains/(losses) on
investments2
|
90
|
(31)
|
Rental
income3
|
1
|
-
|
Management fee
expenses4
|
(5)
|
(4)
|
Performance fee
expenses4
|
(2)
|
(1)
|
Other costs5
|
(9)
|
(9)
|
Net gains/(losses) of consolidated
fund entities
|
75
|
(45)
|
Third-party share of (gains)/losses
relating to interests in consolidated funds
|
(24)
|
14
|
Net gains/(losses) attributable to net investment held by Man
Group
|
51
|
(31)
|
Notes:
1 Included within investments
in fund products and other investments. Includes assets held by
consolidated CLOs of $1,103 million.
2 Included within net income
or gains on investments and other financial instruments.
3 Relates to rental income
generated from investment property held by consolidated fund
entities.
4 Relates to management and
performance fees paid by the funds to Man Group during the year,
which are eliminated within management and other fees and
performance fees respectively in the Group income
statement.
5 Includes depreciation and
impairment of investment property held by consolidated fund
entities.
Movements in the carrying value of
investment property held by consolidated fund entities can be
analysed as follows:
|
|
2023
$m
|
2022
$m
|
Cost at beginning of the
year
|
|
38
|
-
|
Additions
|
|
-
|
38
|
Disposals
|
|
(4)
|
-
|
Cost at end of the year
|
|
34
|
38
|
|
|
|
|
Accumulated depreciation and
impairment at beginning of the year
|
|
(4)
|
-
|
Depreciation
|
|
(1)
|
(1)
|
Reversal of
impairment/(impairment)
|
|
1
|
(3)
|
Accumulated depreciation and impairment at end of the
year
|
|
(4)
|
(4)
|
|
|
|
|
Net book value at beginning of the
year
|
|
34
|
-
|
Net book value at end of the year
|
|
30
|
34
|
The fair value of investment
property held by consolidated fund entities of $30 million at 31
December 2023 (2022: $34 million) is based on valuations provided
by independent property experts.
13. Fair value of financial assets
and liabilities
Accounting policy
We disclose the fair value
measurement of financial assets and liabilities using three levels,
as follows:
· Level
1: quoted prices (unadjusted) in active markets for identical
assets or liabilities.
· Level
2: inputs, other than quoted prices included within Level 1, that
are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices).
· Level
3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The majority of our investments in
fund products fall within Level 2 due to the levels of subscription
and redemption activity and the liquidity of the underlying
investments. Level 2 investments in fund products primarily
comprise holdings in unlisted, open-ended, active and liquid funds,
which are priced using daily or weekly observable market
information derived from third-party sources. A transfer into Level
3 would be deemed to occur where the level of activity, as
evidenced by subscriptions and redemptions, is deemed insufficient
to support a Level 2 classification. Other factors, such as a
deterioration of liquidity in the underlying investments, would
also result in a Level 3 classification.
The assets held by our consolidated
CLOs comprise a portfolio of bonds and loan securities. Loans are
valued using broker quotes sourced from an independent pricing
service, with bonds priced using latest prices executed for similar
assets. We do not make any adjustments to the quotes obtained.
Where the quotes are obtained from multiple pricing sources within
a narrow range, the assets are classified as Level 2 in the fair
value hierarchy. Where prices are derived from a small number of
quotes, or where there is a wide bid-ask spread between quotes, we
classify these assets as Level 3.
Transferable securities held by our
other consolidated funds which are classified as Level 3 have
significant unobservable inputs, as they trade infrequently or not
at all. When observable prices are not available for these
securities, we use valuation techniques for which sufficient and
reliable data is available. Level 3 investments may also be
adjusted to reflect illiquidity and/or
non-transferability.
The fair values of our financial
assets and liabilities held at fair value through profit and loss
can be analysed as follows:
|
2023
|
|
2022
|
$m
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
Level 11
|
Level 21
|
Level 3
|
Total
|
Financial assets held at fair value:
|
|
|
|
|
|
|
|
|
|
Investments in fund products and
other
investments (Note 12)
|
-
|
280
|
12
|
292
|
|
-
|
284
|
20
|
304
|
Investments in consolidated funds:
transferable securities (Note 12.2)
|
274
|
1,567
|
146
|
1,987
|
|
401
|
504
|
-
|
905
|
Derivatives (Note 10)
|
-
|
5
|
-
|
5
|
|
-
|
9
|
-
|
9
|
|
274
|
1,852
|
158
|
2,284
|
|
401
|
797
|
20
|
1,218
|
Financial liabilities held at fair value:
|
|
|
|
|
|
|
|
|
|
Derivatives (Note 11)
|
-
|
(12)
|
-
|
(12)
|
|
-
|
(6)
|
-
|
(6)
|
Contingent consideration (Note
17)
|
-
|
-
|
(3)
|
(3)
|
|
-
|
-
|
-
|
-
|
Put option over non-controlling
interests in subsidiaries (Note 17)
|
-
|
-
|
(9)
|
(9)
|
|
-
|
-
|
-
|
-
|
CLO liabilities - consolidated fund
entities (Note 12.2)
|
-
|
(1,036)
|
-
|
(1,036)
|
|
-
|
-
|
-
|
-
|
|
-
|
(1,048)
|
(12)
|
(1,060)
|
|
-
|
(6)
|
-
|
(6)
|
Note:
1 $401 million of investments
in consolidated funds: transferable securities previously reported
as Level 2 are now reported as Level 1 to reflect the nature of the
underlying securities within the consolidated funds. Previously,
the inputs to the overall pricing of the investments in
consolidated funds were considered when determining the appropriate
classification in the fair value hierarchy.
The movements in Level 3 financial
assets and liabilities held at fair value are as
follows:
|
2023
|
|
2022
|
$m
|
Assets
|
Liabilities
|
|
Assets
|
Liabilities
|
At beginning of the year
|
20
|
-
|
|
190
|
-
|
Transfers out of Level 3
|
(11)
|
-
|
|
(154)
|
-
|
Purchases
|
2
|
(12)
|
|
1
|
-
|
Credit/(charge) to Group income
statement1,2
|
1
|
-
|
|
(5)
|
-
|
Sales or settlements
|
-
|
-
|
|
(1)
|
-
|
Change in consolidated fund
entities held
|
146
|
-
|
|
(11)
|
-
|
At
end of the year
|
158
|
(12)
|
|
20
|
-
|
Notes:
1 Included within net income
or gains on investments and other financial instruments.
2 Includes net unrealised gains of
$1 million (2022: losses of $5 million).
Purchases of Level 3 financial
liabilities relate to the fair value of contingent consideration
and the put option over the non-controlling interest arising on the
acquisition of Asteria (Note 17).
The Level 3 financial assets in the
portfolios of our consolidated fund entities other than CLOs
primarily comprise bonds, equities and credit-linked notes. The
techniques used the valuations of those assets primarily include
discounted cash flows, estimated recovery and single broker quotes.
The unobservable inputs in those valuations comprise future cash
flows, discount rates and yields.
Sensitivity analysis
A 5% increase/decrease in the
valuations of Level 3 financial assets would result in a $8 million
increase/decrease in their fair value. Changes in the unobservable
inputs to the valuation of Level 3 financial liabilities would not
be expected to result in a significant change in the carrying value
of these assets and liabilities, and hence a sensitivity analysis
has not been presented.
14. Market risks and
derivatives
Accounting policy
Derivatives
We use derivative financial
instruments to manage market risk in certain circumstances. These
consist primarily of market risk hedges on some of our seeding
positions and foreign exchange contracts. The carrying value of
these derivatives are included in fee and other receivables and
trade and other payables.
Hedge accounting
We apply cash flow hedge accounting
to fund investments related to deferred fund product awards,
whereby the offsetting gains or losses on these fund products are
matched against the corresponding fund product-based payment
compensation charge in the Group income statement pro rata over the
vesting period. Gains or losses are recognised through other
comprehensive income and held within the cash flow hedge reserve in
equity until they are recycled over the vesting period into the
Group income statement.
We apply net investment hedge
accounting to the net assets of material subsidiaries that have a
functional currency other than USD. Gains or losses on derivatives
are recycled from the Group income statement through other
comprehensive income in the foreign currency translation reserve in
equity to offset the impact of any currency translation of the net
assets of these subsidiaries. The accumulated gains or losses are
recycled to the Group income statement on disposal of the related
subsidiary.
As in 2022, all derivatives are held
with counterparties with ratings of A or higher and mature within
one year.
Management of market risk arising
from investments in funds
Investments in fund products expose
us to market risk and are therefore managed within limits
consistent with the Board's risk appetite. In certain
circumstances, we use derivative financial instruments,
specifically equity or credit default swaps, to hedge the risk
associated with mark-to-market movements.
The market risk from seeding
investments, including those financed via repo and TRS
arrangements, is modelled using a value at risk methodology with a
95% confidence interval and one-year time horizon. The value at
risk is estimated to be $61 million at 31 December 2023 (2022: $43
million).
We generally hold an investment in
the associated fund products to hedge the mark-to-market movement
in fund product-based compensation over the vesting
period.
Our maximum exposure to loss
associated with interests in our consolidated CLOs is limited to
the net investment in these CLOs (Note 12.2). Therefore, the CLO
liabilities on the Group balance sheet of $1,036 million (2022:
nil) do not present a market risk to Man Group as we have no
obligation to repay the noteholders at maturity should the CLO
assets be insufficient to meet the obligations.
Further information relating to Man
Group's exposure to market risk is set out on pages 19 and
20.
Market risk hedges
|
2023
$m
|
2022
$m
|
Notional value of derivatives at 31
December
|
|
|
Assets
|
-
|
149
|
Liabilities
|
(175)
|
(71)
|
Net (liabilities)/assets
|
(175)
|
78
|
|
|
|
For the year ended 31 December
|
|
|
(Loss)/gain recognised in the Group
income statement
|
(17)
|
39
|
Management of foreign exchange rate
risk
We are subject to risk from changes
in foreign exchange rates on monetary assets and liabilities. In
certain circumstances, we use derivative financial instruments,
specifically forward foreign exchange contracts with a one-month
duration, to hedge the risk associated with foreign exchange
movements.
During the year, there were $11
million of net realised and unrealised foreign exchange losses
(2022: $22 million gains) recognised in the Group income statement
through net income or gains on investments and other financial
instruments, including the effects of hedging. This primarily
comprises a $10 million unrealised loss (2022: $25 million gain)
relating to the revaluation of our $209 million (2022: $200
million) unhedged sterling lease liability.
Foreign exchange hedges
|
2023
$m
|
2022
$m
|
Notional value of derivatives at 31
December
|
|
|
Assets
|
124
|
82
|
Liabilities
|
(343)
|
(235)
|
Net liabilities
|
(219)
|
(153)
|
|
|
|
For the year ended 31 December
|
|
|
(Loss)/gain before the impact of
hedging
|
(4)
|
5
|
(Loss)/gain on hedging
instruments
|
(7)
|
17
|
(Loss)/gain recognised in the Group
income statement after the impact of hedging
|
(11)
|
22
|
The table below reflects the
currency profile of our net foreign currency (non-USD) monetary
assets and liabilities after the impact of hedging:
|
2023
$m
|
2022
$m
|
Sterling
|
(138)
|
(155)
|
Australian dollar
|
14
|
41
|
Japanese yen
|
7
|
19
|
Other
|
10
|
10
|
Total
|
(107)
|
(85)
|
A 10% strengthening/weakening of
the USD against all other currencies, with all other variables held
constant, would have resulted in a foreign exchange loss/gain of
$11 million (2022: $9 million), with a corresponding impact on
equity. This pre-tax exposure is based on non-USD balances held by
USD functional currency entities at 31 December.
Management of interest rate
risk
We are subject to risk from changes
in interest rates on monetary assets and liabilities, principally
cash deposits and financing costs. In respect of our monetary
assets and liabilities which earn/incur interest indexed to
floating rates, as at 31 December 2023 a 100 basis point
increase/decrease in these rates, with all other variables held
constant, would have resulted in a $1 million (2022: $1 million)
increase/decrease in net interest expense.
15. Leasehold improvements and
equipment
Accounting policy
All leasehold improvements and
equipment are recorded at cost less depreciation and impairment.
Cost includes the original purchase price of the asset and costs
directly attributable to bringing the asset to its working
condition for its intended use. Depreciation is calculated using
the straight-line method over the asset's estimated useful life,
which for leasehold improvements is the shorter of the life of the
lease and that of the improvement (up to 24 years) and for
equipment is between three and ten years.
|
2023
|
|
2022
|
$m
|
Leasehold improvements
|
Equipment
|
Total
|
|
Leasehold improvements
|
Equipment
|
Total
|
Cost at beginning of the
year
|
70
|
61
|
131
|
|
70
|
64
|
134
|
Acquired through business
combinations (Note 17)
|
-
|
1
|
1
|
|
-
|
-
|
-
|
Additions
|
4
|
8
|
12
|
|
11
|
10
|
21
|
Disposals
|
(1)
|
(3)
|
(4)
|
|
(13)
|
(13)
|
(26)
|
Transfer to leasehold improvements
from
investment property (Note 16.1)
|
-
|
-
|
-
|
|
2
|
-
|
2
|
Cost at end of the year
|
73
|
67
|
140
|
|
70
|
61
|
131
|
|
|
|
|
|
|
|
|
Accumulated depreciation and
impairment at beginning
of the year
|
(36)
|
(42)
|
(78)
|
|
(45)
|
(46)
|
(91)
|
Disposals
|
-
|
3
|
3
|
|
13
|
13
|
26
|
Transfer to leasehold improvements
from
investment property (Note 16.1)
|
-
|
-
|
-
|
|
(1)
|
-
|
(1)
|
Depreciation
|
(3)
|
(9)
|
(12)
|
|
(3)
|
(9)
|
(12)
|
Accumulated depreciation and impairment at end
of the year
|
(39)
|
(48)
|
(87)
|
|
(36)
|
(42)
|
(78)
|
|
|
|
|
|
|
|
|
Net book value at beginning of the
year
|
34
|
19
|
53
|
|
25
|
18
|
43
|
Net book value at end of the year
|
34
|
19
|
53
|
|
34
|
19
|
53
|
16. Leases
16.1. Man Group as
lessee
Accounting policy
Our lease arrangements primarily
relate to business premises property leases. We assess whether a
contract is or contains a lease at the inception of the contract.
For arrangements where we are the lessee, a right-of-use (ROU)
lease asset and a related lease liability are recognised on the
Group balance sheet at the date from which we have the right to use
the asset, usually the lease commencement date. For short-term
leases (defined as leases with a term of one year or less) and
leases of low-value assets, we recognise the lease payments on a
straight-line basis over the lease term within other costs in the
Group income statement. The lease term is determined as the
non-cancellable period of a lease, together with periods covered by
an option to extend the lease if we consider that exercise of the
extension option is reasonably certain. Lease extension options and
break clauses inherent in our leases do not have a significant
impact on our ROU lease assets and lease liabilities.
ROU lease assets relating to the
portion of our leased business premises which we then sub-let under
operating leases are classified as investment property, with other
ROU lease assets classified as leasehold property. Transfers from
investment property to leasehold property occur when we commence
development of a previously sub-let portion of our leased business
premises with a view to occupying that space. Similarly, transfers
from leasehold property to investment property occur when we cease
to occupy a portion of the leased business premises with the
intention of sub-letting that space under an operating
lease.
All of our ROU lease assets,
including those classified as investment property, are measured at
cost less depreciation and impairment. Cost includes the amount of
the initial measurement of the associated lease liability, lease
payments made at or before the lease commencement date, lease
incentives received, associated leasehold improvements classified
as investment property and estimated costs to be incurred in
restoring the property to the condition required under the terms of
the lease. Depreciation is calculated on a straight-line basis over
the asset's estimated useful life, which for leasehold improvements
classified as investment property is the shorter of the lease term
and the life of the improvement (up to 24 years) and for all other
assets is the lease term and is included within other costs. We
assess ROU lease assets for impairment whenever events or
circumstances indicate that the carrying amount may not be
recoverable.
All lease liabilities are measured
at the present value of lease payments due over the lease term,
discounted using our incremental cost of borrowing (being the rate
we would have to pay to finance a similar asset) at the lease
commencement date or the modification date. The lease liability is
adjusted for lease payments and unwind of lease liability discount
as well as the impact of any subsequent lease modifications. The
unwind of lease liability discount is included within finance
expense.
Cash payments in relation to leases,
which reduce the lease liability recognised on the Group balance
sheet, are presented as payment of lease interest (within operating
activities) and repayments of principal lease liability (within
financing activities) in the Group cash flow statement. Payments in
relation to short-term leases and leases of low-value assets are
included within cash flows from operating activities.
Right-of-use lease
assets
|
2023
|
|
2022
|
$m
|
Leasehold property
|
Investment property
|
Total
|
|
Leasehold property
|
Investment property
|
Total
|
Cost at beginning of the
year
|
169
|
242
|
411
|
|
146
|
256
|
402
|
Acquired through business
combinations (Note 17)
|
22
|
-
|
22
|
|
-
|
-
|
-
|
Additions
|
3
|
-
|
3
|
|
41
|
2
|
43
|
Disposals
|
-
|
(141)
|
(141)
|
|
(22)
|
(10)
|
(32)
|
Remeasurement of lease
liability
|
5
|
-
|
5
|
|
-
|
-
|
-
|
Transfer between leasehold property
and investment property
|
-
|
-
|
-
|
|
4
|
(4)
|
-
|
Transfer from investment property
to leasehold improvements (Note 15)
|
-
|
-
|
-
|
|
-
|
(2)
|
(2)
|
Cost at end of the year
|
199
|
101
|
300
|
|
169
|
242
|
411
|
|
|
|
|
|
|
|
|
Accumulated depreciation and
impairment at beginning
of the year
|
(77)
|
(171)
|
(248)
|
|
(85)
|
(179)
|
(264)
|
Disposals
|
-
|
91
|
91
|
|
22
|
10
|
32
|
Transfer between leasehold property
and investment property
|
-
|
-
|
-
|
|
(4)
|
4
|
-
|
Transfer from investment property
to leasehold improvements (Note 15)
|
-
|
-
|
-
|
|
-
|
1
|
1
|
Depreciation (Note 5.2)
|
(10)
|
(4)
|
(14)
|
|
(10)
|
(7)
|
(17)
|
Accumulated depreciation and impairment at end
of the year
|
(87)
|
(84)
|
(171)
|
|
(77)
|
(171)
|
(248)
|
|
|
|
|
|
|
|
|
Net book value at beginning of the
year
|
92
|
71
|
163
|
|
61
|
77
|
138
|
Net book value at end of the year
|
112
|
17
|
129
|
|
92
|
71
|
163
|
Lease liability
The maturity of our contractual
undiscounted cash flows for the lease liability is as
follows:
|
2023
$m
|
2022
$m
|
Within one year
|
32
|
25
|
Between one and five
years
|
114
|
97
|
Between five and ten
years
|
142
|
125
|
Between ten and 15 years
|
54
|
74
|
Undiscounted lease liability at end of the
year
|
342
|
321
|
Discounted lease liability at end of the
year
|
283
|
253
|
Of the total discounted lease
liability at 31 December 2023 of $283 million (2022: $253 million),
$21 million (2022: $20 million) is expected to be settled within 12
months.
Movements in the lease liability are
as follows:
|
2023
$m
|
2022
$m
|
At beginning of the year
|
253
|
250
|
Acquired through business
combinations (Note 17)
|
22
|
-
|
Additions
|
3
|
41
|
Cash payments
|
(20)
|
(23)
|
Unwind of lease liability discount
(Note 6)
|
10
|
10
|
Remeasurement
|
5
|
-
|
Foreign exchange
movements
|
10
|
(25)
|
At
end of the year
|
283
|
253
|
16.2. Man Group as
lessor
Accounting policy
Finance leases
Whenever the terms of the sub-lease
transfer substantially all risks and rewards of ownership of the
underlying ROU lease asset to the lessee, we classify the contract
as a finance lease. This is typically when the end of the sub-lease
term aligns with the end of our head lease, with no break option.
Amounts due from lessees under finance leases are recognised as
receivables at the amount of the net investment in the lease. The
net investment in the lease is measured at the present value of the
lease payments due over the lease term, discounted using our
incremental cost of borrowing under the head lease. The net
investment in the lease is adjusted for lease payments and finance
lease interest as well as the impact of any subsequent lease
modifications. Finance lease interest is included within finance
income.
Operating leases
Man Group acts as lessor in respect
of certain ROU lease assets which are in turn sub-let under
operating leases (investment property ROU lease assets). Sub-leases
which do not meet the definition of a finance lease are classified
as operating leases. Sub-lease rental income is recognised on a
straight-line basis over the lease term in the Group income
statement.
An impairment expense is recognised
for the amount by which the related ROU lease asset's carrying
value exceeds its recoverable amount, being its value in use. For
the purposes of assessing impairment, investment property ROU lease
assets are grouped at the lowest levels for which there are
separately identifiable cash flows, being the individual sub-lease
contract level.
Sub-lease rental income from
operating leases was $5 million in 2023 (2022: $5
million).
Operating expenses of $5 million
(2022: $5 million) arising from investment property that did not
generate rental income during the period are included within other
costs.
Fair value of investment
property
|
2023
$m
|
2022
$m
|
Value in use
|
23
|
82
|
Less:
|
|
|
Carrying value
|
(17)
|
(71)
|
Headroom
|
6
|
11
|
In 2023, we signed new sub-leases
for a substantial portion of the vacant space in our main premises
in London. As the sub-leases extend to close to the end of the head
lease with no break option, they are classified as finance leases.
On lease commencement, we recognised finance lease receivables of
$65 million. The derecognition of the associated ROU lease assets
with a total carrying value of $53 million resulted in a gain on
disposal of $12 million, recognised in the Group income
statement.
At 31 December 2023, the contractual
undiscounted lease payments receivable under operating and finance
leases were as follows:
|
2023
|
|
2022
|
$m
|
Operating leases
|
Finance
leases
|
|
Operating
leases
|
Finance
leases
|
Within one year
|
2
|
-
|
|
5
|
-
|
Between one and two
years
|
1
|
3
|
|
5
|
-
|
Between two and three
years
|
-
|
5
|
|
5
|
-
|
Between three and four
years
|
-
|
9
|
|
-
|
-
|
Between four and five
years
|
-
|
10
|
|
-
|
-
|
Between five and ten
years
|
-
|
47
|
|
-
|
-
|
Between ten and 15 years
|
-
|
17
|
|
-
|
-
|
|
3
|
91
|
|
15
|
-
|
At 31 December 2023, the
contractual undiscounted minimum finance lease payments receivable
can be reconciled to the net investment in finance lease as
follows:
|
|
|
|
2023
$m
|
2022
$m
|
Undiscounted lease
payments
|
91
|
-
|
Less: unearned finance
income
|
(24)
|
-
|
Net investment in finance lease
|
67
|
-
|
Movements in the net investment in
finance lease are as follows:
|
|
|
|
2023
$m
|
2022
$m
|
At beginning of the year
|
-
|
-
|
Additions
|
65
|
-
|
Unwind of finance lease discount
(Note 6)
|
1
|
-
|
Foreign exchange
movements
|
1
|
-
|
At
end of the year
|
67
|
-
|
17. Business
combinations
Accounting policy
Business combinations are accounted
for using the acquisition method. The consideration for the
acquisition of a subsidiary is the acquisition-date fair values of
the assets transferred, the liabilities incurred, and any equity
interests issued in exchange for control of the acquiree. Amounts
payable to the sellers of a business, including those contingent on
the exercise of a put option, that can be forfeited in the absence
of post-acquisition services provided by those sellers are
accounted for as post-acquisition remuneration and excluded from
the consideration for the acquisition of the business. The
associated employment-related expenses are spread over the relevant
service periods.
When the consideration transferred
in a business combination includes a contingent consideration
arrangement, the contingent consideration is measured at its
acquisition-date fair value. Contingent consideration classified as
a liability is remeasured to fair value at each reporting date with
changes in fair value recognised in profit or loss.
At the acquisition date, the
identifiable assets acquired and the liabilities assumed are
recognised at fair value. Acquisition-related costs are recognised
in profit or loss as incurred.
Put options held by non-controlling
shareholders, which are not linked to post-acquisition employment,
give rise to a financial liability, recorded within trade and other
payables at the present value of the expected redemption amount.
The corresponding debit is recorded in retained earnings. The
liability is remeasured at each reporting date based on the latest
assessment of the expected redemption amount, with remeasurements
recognised in profit or loss.
17.1. Acquisition of
Varagon
Varagon Capital Partners, L.P.
(Varagon) is a leading US middle-market private credit manager with
a strong and experienced management team and high-quality,
sophisticated client base, with a particular emphasis on the
insurance channel. Varagon brings significant institutional
credibility to support Man Group's growth in US private
credit.
On 6 September 2023, Man Group
acquired 100% of the voting rights in Varagon, the entirety of the
interest classified as equity for accounting purposes, for upfront
cash consideration of $179 million. This represents a 73% economic
interest. The remaining 27% economic interest in Varagon is held by
those sellers who remain in employment for a specified period
post-acquisition. The acquisition agreement includes options which,
if exercised, provide the opportunity for the rollover sellers to
sell, and Man Group to buy, this remaining interest in years eight,
nine or ten post-acquisition at up to fair market
value.
Payments to the rollover sellers
holding the residual 27% economic interest in Varagon may be
forfeited should those sellers become 'bad leavers' during
specified periods subsequent to the completion of the
transaction. Payments in relation to the acquisition
of the sellers' interest on exercise of the put options, and the
distributions of their proportionate share of Varagon's
post-acquisition profits, are therefore recorded as
employment-related expenses. These expenses are spread, and a
corresponding liability accreted, over the relevant service periods
(Note 5 and Note 24).
Third-party interests in a
subsidiary of Varagon, which are classified as a liability in the
Group balance sheet, generated profits of $1 million for the period
post-acquisition to 31 December 2023 and are presented as
third-party share of post-tax profits in the Group income
statement.
The provisional values recognised at
the date of acquisition were as follows:
$m
|
Book value
|
Fair value adjustments
|
Fair value
|
Cash and cash
equivalents
|
12
|
-
|
12
|
Fee and other
receivables
|
20
|
-
|
20
|
Investments in fund products and
other investments
|
6
|
-
|
6
|
Leasehold improvements and
equipment (Note 15)
|
1
|
-
|
1
|
Leasehold property - right-of-use
lease assets (Note 16.1)
|
22
|
-
|
22
|
Other intangibles (Note
19)
|
1
|
-
|
1
|
Acquired intangibles (Note
18)
|
-
|
147
|
147
|
Trade and other payables
|
(29)
|
-
|
(29)
|
Lease liability (Note
16.1)
|
(22)
|
-
|
(22)
|
Third-party share of post-tax
profits payable
|
(1)
|
-
|
(1)
|
Net assets acquired
|
10
|
147
|
157
|
Goodwill on acquisition (Note
18)
|
|
|
22
|
Total consideration
|
|
|
179
|
|
|
|
|
Comprising:
|
|
|
|
Cash consideration
|
|
|
179
|
The acquisition-date values
presented have been determined on a provisional basis due to the
proximity of the acquisition date to the reporting date.
Fair value adjustments relate to the recognition of
intangible assets comprising investment management agreements and
related client relationships ($140 million) and the Varagon brand
($7 million). These intangible assets are recognised at the present
value of the future cash flows expected to be generated and are
amortised on a straight-line basis over their expected useful lives
of between seven and 15 years. No deferred tax liability has been
recognised on acquisition as the amortisation of intangible assets
is tax-deductible in the US.
The goodwill arising from the
acquisition represents the enhancement of our investment
capabilities and the ability to deploy these capabilities
at scale in a customisable format to the world's largest
institutional investors. The goodwill is expected to be fully
tax-deductible. Acquisition costs of $8 million, primarily relating
to professional fees, are included within other costs and do not
form part of goodwill.
Revenues and pre-tax profit for the
Varagon business from acquisition to 31 December 2023 were $31
million and $9 million respectively. If Varagon had been acquired
at the beginning of the year, Man Group's total revenue and pre-tax
profit for the year would have been $1,231 million and
$307 million respectively, before the deduction of
employment-related expenses payable to the sellers who remain in
employment post-acquisition.
17.2. Acquisition of
Asteria
On 31 October 2023, Man Group
acquired a controlling 51% interest in Asteria Investment Managers
SA (Asteria), an ESG-oriented Swiss asset management company, for
consideration of $11 million comprising cash and contingent
consideration of $8 million and $3 million respectively. The
acquisition of Asteria is part of a new strategic partnership with
Fideuram-Intesa Sanpaolo Private Banking, which increases our
presence in the European intermediated retail channel. The
agreement also includes options which, if exercised, provide the
opportunity for Asteria's non-controlling shareholder to sell, and
Man Group to buy, the remaining 49% interest in Asteria. The
present value of the expected redemption amount of the options,
which can be exercised four years post-acquisition at fair market
value, is $9 million at 31 December 2023, included within trade and
other payables in the Group balance sheet.
The contingent consideration payable
for the acquisition of Asteria is based on future levels of
management fees. The maximum amount payable by Man Group is capped
at $53 million.
The non-controlling interest in
Asteria is measured at the proportionate share of Asteria's
identifiable net assets. As the non-controlling interest is
immaterial, the proportionate share of Asteria's profits has been
deducted from statutory profit before tax within other costs.
Similarly, the non-controlling shareholder's share of equity has
not been separately presented within the Group statement of changes
in equity at 31 December 2023 and has instead been offset against
the profit and loss reserve. The non-controlling interest will be
separately presented in the Group financial statements should it
become material in the future.
Goodwill arising on acquisition of
$8 million (Note 18) represents synergies from combining Man
Group's expertise in bespoke portfolio solutions with
access to a broader financial adviser network and client base.
Acquisition costs of $1 million, primarily relating to professional
fees, are included within other costs.
18. Goodwill and acquired
intangibles
Accounting policy
Goodwill
Goodwill is measured as the excess
of the sum of the consideration transferred and the amount of any
non-controlling interest over the fair value of the identifiable
net assets of the acquired business at the date of acquisition.
Goodwill is carried on the Group balance sheet at cost less
accumulated impairment, has an indefinite useful life, is not
subject to amortisation and is tested for impairment annually, or
whenever events or circumstances indicate that the carrying amount
may not be recoverable. An impairment expense is recognised for the
amount by which the asset's carrying value exceeds its recoverable
amount. The recoverable amount of our group of cash-generating
units (CGUs) is assessed each year using a value in use
calculation.
Goodwill does not generate cash
flows independently of other groups of assets and thus is assigned
to a group of CGUs for the purposes of impairment testing. Our CGUs
are aggregated into a single group for impairment testing purposes,
reflecting the lowest level at which goodwill is monitored by
management and which now incorporates our
private market asset managers alongside our liquid asset
managers.
The value in use calculation at 31
December 2023 uses cash flow projections based on the
Board-approved financial plan for the three-year period ending on
31 December 2026, plus a terminal value. The valuation
analysis is based on best practice guidance whereby a terminal
value is calculated at the end of a discrete budget period and
assumes, after this three-year budget period, no growth in asset
flows above the long-term growth rate.
The assumptions applied in the value
in use calculation are derived from past experience and assessment
of current market inputs. We have applied a bifurcated discount
rate to the modelled cash flows to reflect the different risk
profile of management fee profits and performance fee profits. The
discount rates are based on our weighted average cost of capital
using a risk-free interest rate, together with an equity market
risk premium and an appropriate market beta derived from
consideration of our own beta, similar alternative asset managers,
and the asset management sector as a whole. The terminal value is
calculated based on the projected closing AUM at 31 December 2026
and applying the mid-point of a range of historical multiples to
the forecast cash flows associated with management and performance
fee profits.
The value in use calculation is
presented on a post-tax basis, consistent with the prior year,
given most comparable market data is available on a post-tax
basis. This is not significantly different to its pre-tax
equivalent.
Acquired intangibles
Intangible assets acquired in a
business combination and recognised separately from goodwill are
initially measured at their fair value at the acquisition date.
Following initial recognition, acquired intangibles are held at
cost less accumulated amortisation and impairment. Acquired
intangibles comprise investment management agreements and related
client relationships (IMAs), distribution channels and brand names
and are initially recognised at fair value based on the present
value of the expected future cash flows and are amortised on a
straight-line basis over their expected useful lives, which are
between seven and 15 years (IMAs and brands), and eight and 12
years (distribution channels). Acquired intangibles are reviewed
for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. Disposals of
acquired intangibles are recognised in the year the related cash
inflows are transferred.
|
2023
|
|
2022
|
$m
|
Goodwill
|
IMAs
|
Distribution channels
|
Brand
names
|
Total
|
|
Goodwill
|
IMAs
|
Distribution channels
|
Brand
names
|
Total
|
Cost at beginning of the
year
|
2,425
|
834
|
56
|
40
|
3,355
|
|
2,425
|
838
|
56
|
40
|
3,359
|
Acquired through business
combinations (Note 17)
|
30
|
140
|
-
|
7
|
177
|
|
-
|
-
|
-
|
-
|
-
|
Disposals
|
-
|
-
|
-
|
-
|
-
|
|
-
|
(4)
|
-
|
-
|
(4)
|
Cost at end of the year
|
2,455
|
974
|
56
|
47
|
3,532
|
|
2,425
|
834
|
56
|
40
|
3,355
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortisation
and impairment at beginning of the year
|
(1,836)
|
(801)
|
(52)
|
(39)
|
(2,728)
|
|
(1,836)
|
(758)
|
(49)
|
(38)
|
(2,681)
|
Amortisation
|
-
|
(22)
|
(2)
|
(1)
|
(25)
|
|
-
|
(47)
|
(3)
|
(1)
|
(51)
|
Impairment
|
-
|
(1)
|
(2)
|
-
|
(3)
|
|
-
|
-
|
-
|
-
|
-
|
Disposals
|
-
|
-
|
-
|
-
|
-
|
|
-
|
4
|
-
|
-
|
4
|
Accumulated amortisation and impairment at end of the
year
|
(1,836)
|
(824)
|
(56)
|
(40)
|
(2,756)
|
|
(1,836)
|
(801)
|
(52)
|
(39)
|
(2,728)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value at beginning
of the year
|
589
|
33
|
4
|
1
|
627
|
|
589
|
80
|
7
|
2
|
678
|
Net book value at end of
the year
|
619
|
150
|
-
|
7
|
776
|
|
589
|
33
|
4
|
1
|
627
|
Goodwill impairment assumptions
Key assumptions at 31 December 2023 and 31 December
2022
|
Pre-tax equivalent
|
Assumptions
adopted1
|
Compound average annualised growth
in AUM (over three years)
|
|
6%
|
Discount rate
|
|
|
- Management fee
earnings
|
14%
|
11%
|
- Performance fee
earnings
|
22%
|
17%
|
Terminal value (mid-point of range
of historical multiples)
|
|
|
- Management fee
earnings
|
|
13.0x
|
- Performance fee
earnings
|
|
5.5x
|
- Implied terminal growth
rate
|
|
3%
|
Goodwill impairment and sensitivity
analyses
Details of the valuations are
provided below, including sensitivity tables which show scenarios
whereby the key assumptions are changed to stressed assumptions,
indicating the modelled headroom or impairment that would result.
We have considered reasonably foreseeable changes in the compound
average annualised growth in AUM forecast assumption, stressing
this by 2% and 10% or to the point at which impairment would arise.
Each assumption, or set of assumptions, is stressed in isolation.
The results of these sensitivities make no allowance for mitigating
actions that management would take if such market conditions
persisted.
|
2023
$m
|
2022
$m
|
Value in use
|
5,560
|
4,950
|
Less:
|
|
|
Carrying value of CGUs
|
(880)
|
(720)
|
Headroom
|
4,680
|
4,230
|
|
|
|
|
Discount rates
(post-tax)
|
|
Multiples
(post-tax)
|
Sensitivity analysis at 31 December 2023
|
Compound average
annualised growth in AUM
|
Management fee/
performance fee
|
|
Management fee/
performance fee
|
Key assumption stressed
to:
|
6%
|
4%
|
(4)%2
|
10%/16%
|
12%/18%
|
|
14.0x/6.5x
|
12.0x/4.5x
|
Modelled headroom ($m)
|
4,680
|
4,150
|
2,190
|
4,810
|
4,550
|
|
5,140
|
4,220
|
Increase/(reduction) in value in
use ($m)
|
|
(530)
|
(2,490)
|
130
|
(130)
|
|
460
|
(460)
|
|
|
|
|
Discount
rates (post-tax)
|
|
Multiples (post-tax)
|
Sensitivity analysis at 31 December
2022
|
Compound average
annualised growth in AUM
|
Management fee/
performance fee
|
|
Management fee/
performance fee
|
Key assumption stressed
to:
|
6%
|
4%
|
(4)%2
|
10%/16%
|
12%/18%
|
|
14.0x/6.5x
|
12.0x/4.5x
|
Modelled headroom ($m)
|
4,230
|
3,790
|
2,140
|
4,350
|
4,110
|
|
4,630
|
3,830
|
Increase/(reduction) in value in
use ($m)
|
|
(440)
|
(2,090)
|
120
|
(120)
|
|
400
|
(400)
|
Notes:
1 Earnings discount rate
assumptions are presented post-tax. Earnings multiples apply to the
forward year.
2 Stressed by 10%, as opposed
to the point of impairment, given an impairment scenario is not
reasonably foreseeable.
Impairment of acquired intangibles
During the year, acquired
intangibles with a carrying value of $3 million were fully impaired
following the termination of the IMAs to which they
relate.
19. Other intangibles
Accounting policy
Other intangibles relate to
capitalised computer software. Following initial recognition, other
intangibles are held at cost less accumulated amortisation and
impairment. Cost includes costs that are directly associated with
the procurement or development of identifiable and unique software
products which will generate economic benefits exceeding costs
beyond one year. Capitalised computer software is amortised on a
straight-line basis over its estimated useful life (three years),
with amortisation expense included within other costs in the Group
income statement. Capitalised computer software is reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. Additions
primarily relate to the continued investment in our operating
platforms.
|
2023
$m
|
2022
$m
|
Cost at beginning of the
year
|
148
|
130
|
Acquired through business
combinations (Note 17)
|
1
|
-
|
Additions
|
25
|
27
|
Disposals
|
(2)
|
(9)
|
Cost at end of the year
|
172
|
148
|
|
|
|
Accumulated amortisation at
beginning of the year
|
(98)
|
(85)
|
Amortisation
|
(22)
|
(18)
|
Disposals
|
2
|
5
|
Accumulated amortisation at end of the year
|
(118)
|
(98)
|
|
|
|
Net book value at beginning of the
year
|
50
|
45
|
Net book value at end of the year
|
54
|
50
|
20. Deferred tax
Accounting policy
Deferred tax is recognised using the
balance sheet liability method in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for tax
purposes.
Deferred tax is calculated at the
tax rates that are expected to apply in the period when the
liability is settled, or the asset is realised, based on tax
laws and rates that have been enacted or substantively enacted at
the reporting date.
The carrying amount of deferred tax
assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profits will
be available to allow all or part of the asset to be
recovered.
Deferred tax assets and liabilities
are offset when there is a legally enforceable right to offset
current tax assets against current tax liabilities when they
relate to income taxes levied by the same taxation authority and we
intend to settle those current tax assets and liabilities on a
net basis.
The movements in our net deferred
tax assets and liabilities by category are as follows:
$m
|
Deferred compensation
|
Tax
allowances over depreciation
|
Intangibles
|
Accumulated operating losses
|
Partnerships
|
Other
|
Total
|
At 1 January 2022
|
49
|
18
|
6
|
29
|
(22)
|
11
|
91
|
Credit/(charge) to Group income
statement (Note 7)
|
8
|
(8)
|
6
|
(5)
|
22
|
(1)
|
22
|
Charge to other comprehensive
income and equity
|
(6)
|
-
|
-
|
(1)
|
-
|
-
|
(7)
|
Foreign currency
translation
|
-
|
-
|
-
|
-
|
-
|
(1)
|
(1)
|
At 31 December 2022
|
51
|
10
|
12
|
23
|
-
|
9
|
105
|
Credit/(charge) to Group income
statement (Note 7)
|
3
|
(8)
|
1
|
23
|
-
|
1
|
20
|
Credit to other comprehensive
income and equity
|
3
|
-
|
-
|
-
|
-
|
-
|
3
|
At
31 December 2023
|
57
|
2
|
13
|
46
|
-
|
10
|
128
|
The gross amounts for which
deferred tax assets have not been recognised are as
follows:
|
2023
$m
|
2022
$m
|
United States
|
43
|
258
|
Switzerland
|
64
|
12
|
United Kingdom
|
12
|
25
|
Hong Kong
|
4
|
4
|
China
|
1
|
1
|
Total
|
124
|
300
|
Of the total $124 million
unrecognised available gross deferred tax assets, $45 million will
expire in 2024, $19 million will expire between 2027 and 2029, $43
million will expire in 2035 and $17 million have no
expiry.
US deferred tax assets
We have recognised accumulated
deferred tax assets in the US of $86 million (2022: $64 million)
that will be available to offset future taxable profits. As a
result of an increase in forecast future taxable profits in the US
following the acquisition of Varagon, we recognised an additional
$19 million of the available deferred tax assets in relation to
state and city tax losses in 2023 (2022: derecognised $7 million).
At 31 December 2023, $3 million of the available US deferred tax
assets (2022: $18 million) relating to state and city tax losses
remain unrecognised. We do not expect to realise sufficient future
taxable profits against which these losses can be offset
before the remainder expire in 2034. We do not currently expect to
pay federal tax on any profits we may earn in the US until
2026.
US
net deferred tax assets
|
2023
$m
|
2022
$m
|
Recognised
|
|
|
At beginning of the year
|
64
|
74
|
Credit/(charge) to Group income
statement:
|
|
|
Recognition/(derecognition) of
available tax assets (Note 7)
|
19
|
(7)
|
Other movements
|
3
|
-
|
Charge to equity
|
-
|
(3)
|
At
end of the year
|
86
|
64
|
|
|
|
Unrecognised
|
|
|
At beginning of the year
|
18
|
11
|
(Recognition)/derecognition of
available tax assets (Note 7)
|
(19)
|
7
|
Other movements
|
4
|
-
|
At
end of the year
|
3
|
18
|
21. Provisions
Accounting policy
Provisions are recognised when Man
Group has a present obligation (legal or constructive) as a result
of a past event, it is probable that we will be required to settle
the obligation, and a reliable estimate can be made of the amount
of the obligation. All provisions are current given we do not have
the unconditional right to defer settlement.
|
2023
$m
|
2022
$m
|
At beginning of the year
|
14
|
14
|
Charge to Group income
statement
|
-
|
1
|
Additions
|
1
|
-
|
Foreign currency
translation
|
1
|
(1)
|
At
end of the year
|
16
|
14
|
Provisions relate to ongoing claims
and leasehold property dilapidations.
22. Investments in
associates
Accounting policy
Associates are entities in which Man
Group holds an interest and over which we have significant
influence but not control. In assessing significant influence, we
consider our power to participate in the financial and operating
policy decisions of the investee through its voting or other
rights.
Associates are accounted for using
the equity method. Under the equity method, associates are carried
at cost plus our share of cumulative post-acquisition movements in
undistributed profits/losses. Gains and losses on transactions
between Man Group and our associates are eliminated to the extent
of our interests in these entities. An impairment assessment of the
carrying value of associates is performed annually or whenever
events or changes in circumstances indicate that the carrying
amount may not be recoverable, with any impairment recognised in
the Group income statement.
|
2023
$m
|
2022
$m
|
At beginning of the year
|
14
|
18
|
Acquisitions/contributions
|
-
|
1
|
Share of post-tax loss
|
(3)
|
(5)
|
At
end of the year
|
11
|
14
|
In 2021, we acquired a 23% interest
in Hub Technology Partners Ltd (HUB) for cash of $19 million and $1
million in contribution of other assets. We do not consider
HUB's ongoing losses to be an indicator of impairment as its
business remains in the development phase and is broadly
progressing in accordance with its original business
plan.
23. Pension
Accounting policy
We operate 12 (2022: 13) defined
contribution plans and two (2022: two) material funded defined
benefit plans.
Defined contribution
plans
We pay contributions to publicly or
privately administered pension plans on a mandatory, contractual or
voluntary basis. We have no further payment obligation once the
contributions have been paid. Defined contribution costs are
recognised as pension costs within compensation in the Group income
statement when they are due.
Defined benefit plans
A defined benefit plan creates a
financial obligation to provide funding to the pension plan to
provide a retired employee with pension benefits usually dependent
on one or more factors such as age, years of service and
compensation. As with the vast majority of similar arrangements, we
ultimately underwrite the risks related to the defined benefit
plans. The risks to which this exposes us include:
· Uncertainty in benefit payments: the value of our liabilities
for post-retirement benefits will ultimately depend on the amount
of benefits paid out. This in turn will depend on the level of
inflation (for those benefits that are subject to some form of
inflation protection) and how long individuals live.
· Volatility in asset values: we are exposed to future
movements in the values of assets held in the plans to meet future
benefit payments.
· Uncertainty in cash funding: movements in the values of the
obligations or assets may result in us being required to provide
higher levels of cash.
The two material defined benefit
plans operated are the Man Group plc Pension Fund in the UK (the UK
Plan) and the Man Group Pension Plan in Switzerland (the Swiss
Plan).
- UK Plan
The UK Plan is operated separately
from Man Group and managed by independent trustees. The trustees
are responsible for payment of the benefits and management of the
UK Plan's assets. Under UK regulations, Man Group and the trustees
of the UK Plan are required to agree a funding strategy and
contribution schedule for the UK Plan. We have concluded that we
have no requirement to adjust the balance sheet to recognise either
a current surplus or a minimum funding requirement on the basis
that we have an unconditional right to a refund of a current
or projected future surplus at some point in the
future.
The UK Plan was closed to new
members in May 1999, to future accrual in May 2011 and has no
active members.
- Swiss Plan
In Switzerland, we operate a
retirement foundation whose assets are held separately from Man
Group. This foundation covers the majority of employees in
Switzerland and provides benefits on a cash balance basis. Each
employee has a retirement account to which the employee and Man
Group make contributions at rates set out in the plan rules based
on a percentage of salary. Every year the pension fund commission
(composed of employer and employee representatives) decides the
level of interest, if any, to apply to retirement accounts based on
their agreed policy. At retirement, an employee can take their
retirement account as a lump sum or have this paid as a
pension.
As the Swiss Plan is essentially a
defined contribution plan with guarantees, the assets held aim to
be at least as much as the total of the member account balances at
any point in time. Member account balances cannot reduce, but
interest is only applied to the account balances when sufficient
surplus assets are available. As such, there is no specific
asset/liability matching strategy in place, but if the liabilities
(the sum of the member account balances) ever exceed the value of
the assets, we will consider how to remove a deficit as quickly as
possible. The Swiss Plan surplus is restricted by the value of the
employer contribution reserve, which provides the asset ceiling on
amounts available to Man Group.
Defined contribution
plans
Defined contribution plan costs
totalled $14 million for the year to 31 December 2023 (2022: $13
million).
Defined benefit plans
At 31 December 2023, the UK Plan
comprised 89% (31 December 2022: 90%) of our total defined benefit
pension obligations.
|
2023
$m
|
2022
$m
|
Present value of funded
obligations
|
(292)
|
(272)
|
Fair value of plan
assets
|
304
|
294
|
Net pension asset
|
12
|
22
|
Impact on the Group financial
statements
Changes in the present value of the
defined benefit obligations and the fair value of the plan assets
are as follows:
$m
|
2023
|
|
2022
|
Assets
|
Liabilities
|
Net
pension asset/(liability)
|
|
Assets
|
Liabilities
|
Asset ceiling adjustment
|
Net pension
asset/(liability)
|
At beginning of the year
|
294
|
(272)
|
22
|
|
473
|
(444)
|
(2)
|
27
|
Amounts recognised in profit and
loss:
|
|
|
|
|
|
|
|
|
Current service cost to
employer
|
-
|
(1)
|
(1)
|
|
-
|
(1)
|
-
|
(1)
|
Interest income/(cost)
|
13
|
(12)
|
1
|
|
8
|
(8)
|
-
|
-
|
Past service cost
|
-
|
(1)
|
(1)
|
|
-
|
-
|
-
|
-
|
Running costs
|
(1)
|
-
|
(1)
|
|
-
|
-
|
-
|
-
|
Foreign exchange
movements
|
-
|
-
|
-
|
|
(49)
|
46
|
-
|
(3)
|
Amounts recognised in other
comprehensive income:
|
|
|
|
|
|
|
|
|
Remeasurements due to:
|
|
|
|
|
|
|
|
|
- changes in financial
assumptions
|
-
|
(9)
|
(9)
|
|
-
|
124
|
-
|
124
|
- changes in demographic
assumptions
|
-
|
4
|
4
|
|
-
|
3
|
-
|
3
|
- experience adjustments
|
-
|
(2)
|
(2)
|
|
-
|
(3)
|
-
|
(3)
|
- actual return on plan assets less
interest
on plan assets
|
(3)
|
-
|
(3)
|
|
(128)
|
-
|
-
|
(128)
|
- adjustment due to change in asset
ceiling
|
-
|
-
|
-
|
|
-
|
-
|
2
|
2
|
Employer contributions (including
plan funding)
|
1
|
-
|
1
|
|
1
|
-
|
-
|
1
|
Employee contributions
|
1
|
(1)
|
-
|
|
1
|
(1)
|
-
|
-
|
Foreign currency
translation
|
17
|
(16)
|
1
|
|
-
|
-
|
-
|
-
|
Benefit payments
|
(18)
|
18
|
-
|
|
(12)
|
12
|
-
|
-
|
At
end of the year
|
304
|
(292)
|
12
|
|
294
|
(272)
|
-
|
22
|
The allowance for the estimated
cost of removing Guaranteed Minimum Pension inequalities in the UK
Plan of $1 million at 31 December 2023 is unchanged from 31
December 2022.
No contributions were paid to the UK
Plan in 2023 (2022: none).
Actuarial assumptions
used
The most significant actuarial
assumptions used in the valuations of the two plans are as
follows:
|
UK Plan
|
|
Swiss Plan
|
|
2023
% p.a.
|
2022
% p.a.
|
|
2023
% p.a.
|
2022
% p.a.
|
Discount rate
|
4.5
|
4.8
|
|
1.5
|
2.2
|
Price inflation
|
3.1
|
3.3
|
|
1.2
|
1.2
|
Future salary increases
|
-
|
-
|
|
1.2
|
1.2
|
Pension payment
increases
|
3.7
|
3.7
|
|
-
|
-
|
Deferred pensions
increases
|
5.0
|
5.0
|
|
-
|
-
|
Interest crediting rate
|
-
|
-
|
|
1.5
|
2.2
|
Social security
increases
|
-
|
-
|
|
1.0
|
1.0
|
Illustrative life expectancy
assumptions are set out in the table below.
|
UK Plan
|
|
Swiss Plan
|
Years
|
2023
|
2022
|
|
2023
|
2022
|
Life expectancy of male aged 60 at
year-end
|
26.5
|
26.9
|
|
27.8
|
27.7
|
Life expectancy of male aged 60 in
20 years
|
28.0
|
28.4
|
|
30.2
|
30.1
|
Life expectancy of female aged 60
at year-end
|
29.3
|
29.7
|
|
29.7
|
29.6
|
Life expectancy of female aged 60
in 20 years
|
30.7
|
31.1
|
|
31.7
|
31.6
|
The duration of a pension plan is
the average term over which the plan's benefits are expected to
fall due, weighted by the present value of each expected benefit
payment. The duration of the UK Plan is approximately 12 years, and
the duration of the Swiss Plan is approximately 15
years.
Sensitivity analysis
The table below illustrates the
impact on the assessed value of the benefit obligations from
changing the most sensitive actuarial assumptions in isolation. The
calculations have been carried out using the same method and data
as our pension figures. A combination of changes in assumptions
could produce a different result.
|
Increase in obligation at
31 December 2023
|
$m
|
UK
Plan
|
Swiss Plan
|
Discount rate decreased by 0.5%
p.a.
|
16
|
3
|
Inflation rate increased by 0.5%
p.a.
|
5
|
-
|
One-year increase in assumed life
expectancy
|
10
|
-
|
Pension asset
investments
The assets held by the two plans at
31 December 2023 are as follows:
|
UK Plan
|
|
Swiss Plan
|
$m
|
2023
|
2022
|
|
2023
|
2022
|
Fund investments
|
82
|
90
|
|
3
|
2
|
Liability-driven investments
(LDI)
|
83
|
77
|
|
-
|
-
|
Bonds
|
52
|
66
|
|
13
|
12
|
Index-linked government
bonds
|
33
|
21
|
|
-
|
-
|
Equities
|
-
|
-
|
|
11
|
9
|
Property
|
-
|
-
|
|
2
|
2
|
Cash
|
23
|
12
|
|
1
|
2
|
Other
|
-
|
-
|
|
1
|
1
|
Total assets
|
273
|
266
|
|
31
|
28
|
The UK Plan investment strategy is
set by the trustees. The current strategy is broadly split into
growth and matching portfolios. The growth portfolio is invested in
diversified growth funds and Man Diversified Risk Premia. The
matching portfolio is invested primarily in government and
corporate bonds (the latter through absolute return bonds
holdings), and LDI funds. The UK Plan investment strategy hedges
around 100% of the movement in the 'technical provisions' funding
measure (as opposed to the accounting measure under IAS 19
'Employee Benefits') for both interest rate and inflation
expectation changes.
Part of the investment objective of
the UK Plan is to minimise fluctuations in the UK Plan's funding
levels due to changes in the value of the liabilities. This is
primarily achieved using the LDI funds, which aim to hedge
movements in the pension liability due to changes in interest rate
and inflation expectations. LDI primarily involves the use of
government bonds (including repurchase agreements) and derivatives
such as interest rate and inflation swaps. There are no annuities
or longevity swaps. These instruments are typically priced and
collateralised daily by the UK Plan's LDI manager and/or central
clearing houses. Given that the purpose of LDI is to hedge
corresponding liability exposures, the main risk is that the
investments held move differently to the liability exposures. This
risk is managed by the trustees, their advisers and the UK Plan's
LDI manager, who regularly assess the position.
A relatively volatile backdrop for
interest rates and inflation over the year to December 2023 saw
some significant movements of the UK Plan's hedging assets during
the year. There was a limited impact on the UK Plan other than a
fall in fund values due to the high level of hedging in early 2023.
The UK Plan's investments were rebalanced regularly, and the target
hedging level of 100% of interest rates and inflation was preserved
throughout the period, with the funding level volatility relatively
muted as a result. At 31 December 2023, the UK Plan's hedging
assets continued to hedge around 100% of interest rates and
inflation on the technical provisions basis. The level of leverage
utilised was in line with regulatory requirements. The UK Plan
maintains a collateral waterfall and has additional sources of
short-term cash from the trustee bank account, and access to
daily-dealing funds should further collateral calls be
made.
The government bond assets and
diversified growth funds have prices quoted in active markets and
the absolute return bonds, LDI and Man Diversified Risk Premia are
primarily unquoted. At 31 December 2023, around 28% of the UK Plan
assets relate to those with quoted prices and 72% with unquoted
prices (2022: around 33% quoted and 67% unquoted). The UK Plan does
not invest directly in property occupied by Man Group or our
shares.
24. Share-based payment
schemes
Accounting policy
Man Group operates equity-settled
share-based payment schemes which are remuneration payments to
selected employees that take the form of an award of shares in the
Company. These typically vest over three to five years, although
conditions vary between different types of award. The fair value of
the employee services received in exchange for the share
awards/options granted is recognised as an expense, with the
corresponding credit recognised in equity, and is determined by
reference to the fair value of the share awards/options at grant
date.
We calculate the fair value of share
options using the Black-Scholes valuation model, which takes into
account the effect of both financial and demographic assumptions.
Forfeiture and early vesting assumptions are based on historical
observable data. Changes to the original estimates, if any, are
included in the Group income statement, with a corresponding
adjustment to equity.
Put options on the interests in
subsidiaries held by employees which can be forfeited should they
become 'bad leavers' are accounted for as cash-settled share-based
payments. Cash-settled share-based payments are measured at fair
value on grant date and recognised as an employment-related expense
in the Group income statement over the relevant service period.
They are remeasured to fair value at each reporting date, with the
change in fair value recognised as other employment-related
expenses in the Group income statement. The credit entry is
recognised as a liability in the Group balance sheet within trade
and other payables.
Share awards
The fair values of equity-settled
share awards granted in the year and the assumptions used in the
calculations are as follows:
|
Deferred share
plan
|
|
Executive directors'
long-term incentive plan
|
Grant dates
|
28/02/2023 - 02/08/2023
|
11/03/2022 - 02/08/2022
|
|
10/03/2023 - 04/09/2023
|
11/03/2022
|
Share awards granted in the
year
|
19,200,689
|
21,255,153
|
|
2,784,001
|
2,028,460
|
Weighted average fair value per
share award granted ($)
|
3.4
|
2.6
|
|
3.1
|
2.6
|
Movements in the number of
equity-settled share awards outstanding are as follows:
|
2023
|
2022
|
Share awards outstanding at
beginning of the year
|
41,252,837
|
42,602,119
|
Granted
|
21,984,690
|
23,283,613
|
Forfeited
|
(2,214,057)
|
(2,363,058)
|
Exercised
|
(18,705,570)
|
(22,269,837)
|
Share awards outstanding at end of
the year
|
42,317,900
|
41,252,837
|
Share awards exercisable at end of
the year
|
137,769
|
25,518
|
Share options
The fair values of share options
granted in the year under the Sharesave employee share option
scheme, and the assumptions used in the calculations, are as
follows:
|
2023
|
2022
|
Grant date
|
11/09/2023
|
06/09/2022
|
Weighted average share price at
grant date ($)1
|
2.6
|
2.9
|
Weighted average exercise price at
grant date ($)2
|
2.1
|
2.3
|
Share options granted in the
period
|
2,843,261
|
1,440,991
|
Vesting period (years)
|
3-5
|
3-5
|
Expected share price volatility
(%)
|
30
|
30
|
Dividend yield (%)
|
5
|
5
|
Risk-free rate (%)
|
4.7
|
0.2
|
Expected option life
(years)
|
3.4
|
3.5
|
Number of options assumed to
vest
|
2,172,378
|
1,095,521
|
Average fair value per option
granted ($)
|
0.6
|
0.7
|
Notes:
1 Sterling share price at
grant date each year of £2.06 and £2.48 respectively.
2 Sterling exercise price
each year of £1.69 and £2.01 respectively.
The expected share price volatility
is based on historical volatility over the past five years. The
expected option life is the average expected period to exercise.
The risk-free rate of return is the yield on zero-coupon UK
government bonds of a term consistent with the assumed option
life.
Movements in the number of share
options outstanding are as follows:
|
2023
|
|
2022
|
|
Number
|
Weighted average
exercise price1
($
per share)
|
|
Number
|
Weighted average
exercise
price1
($ per share)
|
Share options outstanding at
beginning of the year
|
5,976,777
|
1.7
|
|
6,221,056
|
1.6
|
Granted
|
2,843,261
|
2.2
|
|
1,440,991
|
2.4
|
Forfeited
|
(691,948)
|
2.3
|
|
(682,302)
|
1.6
|
Exercised2
|
(2,988,952)
|
1.4
|
|
(1,002,968)
|
1.5
|
Share options outstanding at end of
the year
|
5,139,138
|
2.1
|
|
5,976,777
|
1.7
|
Share options exercisable at end of
the year
|
361,340
|
1.5
|
|
251,882
|
1.6
|
Notes:
1 Calculated at 31 December
exchange rates each year.
2 The sterling weighted
average share price of options exercised was £2.24 (2022: £2.23)
(USD-equivalent $2.73 and $2.59 respectively).
The share options outstanding at
year-end had expected remaining lives as follows:
Range of exercise prices ($ per share)
|
2023
|
|
2022
|
Number of share options
|
Weighted average expected remaining life
(years)
|
|
Number of share options
|
Weighted average expected remaining
life (years)
|
0.00-3.00
|
5,139,138
|
2.7
|
|
5,976,777
|
2.0
|
Cash-settled share-based
payments
The carrying value of the
cash-settled share-based payment liability at 31 December 2023 was
$23 million (2022: nil). Details of the charge in the year and a
sensitivity analysis to key assumptions is set out in Note
5.
25. Share capital, Employee Trust,
Treasury share reserve and earnings per share (EPS)
Accounting policy
Incremental costs directly
attributable to the issue of new ordinary shares are shown in
equity as a deduction from the proceeds, net of tax.
Share repurchases are recognised at
the point we become committed to completing them. A liability is
recognised for the full amount of the commitment, including
directly attributable costs, with a corresponding debit to equity.
Where repurchased shares are held in Treasury, a transfer from the
profit and loss reserve to the Treasury share reserve is recognised
for the full amount of the consideration paid. Where shares are
repurchased and subsequently cancelled, the equivalent par value by
which the Company's share capital is reduced is transferred to the
capital redemption reserve.
The Employee Trust, which is
consolidated into Man Group, has the obligation to deliver deferred
share-based and fund product-based compensation granted to
employees, and accordingly holds shares and fund investments to
deliver against these future obligations. Man Group plc shares held
by the Employee Trust and shares held in Treasury are recorded at
cost, including any directly attributable incremental costs (net of
tax), and are deducted from equity (within the respective reserves)
until the shares are sold, cancelled or transferred to employees.
Where such shares are subsequently sold, any consideration
received, net of any directly attributable incremental transaction
costs and the related tax effects, is included in
equity.
The authorised share capital of Man
Group plc comprises $100 million divided into 2,916,666,666
ordinary shares with a par value of 33/7¢ each. Ordinary
shares represent 100% of issued share capital and all issued shares
are fully paid. The shares have attached to them full voting,
dividend and capital distribution (including on wind up) rights.
They do not confer any rights of redemption. Shareholders have the
right to receive notice of, attend, vote and speak at general
meetings. When a vote is taken on a poll, shareholders are entitled
to one vote per ordinary share. When a vote is taken by a show of
hands, shareholders present in person or by proxy have one
vote.
Treasury shares are ordinary shares
previously repurchased by the Company but not cancelled, and are
therefore deducted from equity and included within the Treasury
share reserve. As they are no longer outstanding, they are excluded
for earnings per share and voting rights purposes.
Movements in the number of ordinary
shares in issue and the shares used to calculate basic and diluted
EPS are provided below.
|
2023
|
|
2022
|
|
Total
number
|
Weighted
average
|
Nominal
value
$m
|
|
Total
number
|
Weighted
average
|
Nominal
value
$m
|
Number of shares at beginning of
year
|
1,350,556,782
|
1,350,556,782
|
46
|
|
1,473,107,813
|
1,473,107,813
|
51
|
Cancellation of own shares held in
Treasury
|
(37,206,823)
|
(30,339,448)
|
(1)
|
|
(122,551,031)
|
(52,130,209)
|
(5)
|
Number of shares at end of the
year
|
1,313,349,959
|
1,320,217,334
|
45
|
|
1,350,556,782
|
1,420,977,604
|
46
|
Shares held in Treasury share
reserve
|
(110,774,081)
|
(107,401,080)
|
|
|
(80,604,707)
|
(99,038,830)
|
|
Man Group plc shares held by
Employee Trust
|
(35,289,202)
|
(35,073,864)
|
|
|
(33,745,908)
|
(33,453,409)
|
|
Basic number of shares
|
1,167,286,676
|
1,177,742,390
|
|
|
1,236,206,167
|
1,288,485,365
|
|
Dilutive impact of:
|
|
|
|
|
|
|
|
Employee share awards
|
|
27,671,674
|
|
|
|
36,356,550
|
|
Employee share options
|
|
1,641,378
|
|
|
|
2,467,128
|
|
Dilutive number of shares
|
|
1,207,055,442
|
|
|
|
1,327,309,043
|
|
|
|
2023
|
|
|
|
2022
|
|
Statutory profit ($m)
|
|
234
|
|
|
|
608
|
|
Basic EPS
|
|
19.9¢
|
|
|
|
47.2¢
|
|
Diluted EPS
|
|
19.4¢
|
|
|
|
45.8¢
|
|
Share buybacks
|
2023
|
2022
|
Shares repurchased during the year
(including costs) ($m)
|
223
|
386
|
Average purchase price
(pence)
|
241.2
|
227.7
|
Shares repurchased
(million)
|
76
|
135
|
Accretive impact on diluted
earnings per share (%)
|
5.2
|
6.0
|
Man Group actively manages its
capital to maximise value to shareholders by either investing that
capital to improve shareholder returns in the future or by
returning it through higher dividends or share
repurchases.
The $223 million of shares
repurchased in the year comprise the completion of the remaining
$98 million of the share repurchase programme announced in December
2022, and the completion of the $125 million programme announced in
March 2023. The purpose of the share repurchases was to deliver
returns to shareholders. All repurchased shares were held in
Treasury.
Shares repurchased during the year
represent 6.3% of issued share capital (excluding Treasury shares)
as at 31 December 2023 and shares held in Treasury which were
cancelled during the year represent 3.1% of issued share capital
(excluding Treasury shares). At 28 February 2024, we had an
unexpired authority to repurchase up to 116,279,809 of our ordinary
shares. A special resolution will be proposed at the forthcoming
Annual General Meeting, pursuant to which the Company will seek
authority to repurchase up to 120,265,662 ordinary shares,
representing 10% of the issued share capital (excluding Treasury
shares) at 28 February 2024.
In 2023, we funded $99 million via
contribution or loan (2022: $91 million) to enable the Employee
Trust to meet its current period obligations.
At 31 December 2023, the net assets of the Employee Trust
amounted to $196 million (2022: $146 million). These assets include
35,289,202 (2022: 33,745,908) ordinary shares in the Company,
and $88 million of fund product investments (2022: $65 million)
which are included within investments in fund products.
The Employee Trust waived all
dividend entitlements of the shares held in the current and prior
years.
26. Dividends
Accounting policy
Dividend distributions to the
Company's shareholders are recognised directly within equity in the
period in which the dividend is paid or, for final dividends,
approved by the Company's shareholders. Dividends are payable on
the Company's ordinary shares.
|
¢/share
|
2023
$m
|
¢/share
|
2022
$m
|
Final dividend paid for the
previous financial year to 31 December
|
10.1
|
118
|
8.4
|
110
|
Interim dividend paid for the six
months to 30 June
|
5.6
|
63
|
5.6
|
69
|
Dividends paid
|
|
181
|
|
179
|
Proposed final dividend for the
current financial year to 31 December
|
10.7
|
125
|
10.1
|
125
|
27. Geographical
information
Accounting policy
Disclosure of revenue by geographic
location is based on the registered domicile of the fund entity or
managed account paying our fees.
Non-current assets are allocated
based on where the assets are located and include goodwill and
acquired intangibles, other intangibles, leasehold improvements and
equipment, and right-of-use lease assets. For goodwill and other
acquired intangibles, we consider that the location of the
intangibles is best reflected by the location of the individuals
managing those assets.
$m
|
2023
|
|
2022
|
Revenue
|
Non-current assets
|
|
Revenue
|
Non-current assets
|
Cayman Islands
|
555
|
-
|
|
956
|
-
|
Ireland
|
198
|
-
|
|
197
|
-
|
United Kingdom and the Channel
Islands
|
108
|
606
|
|
217
|
657
|
United States of America
|
193
|
391
|
|
235
|
228
|
Other countries
|
114
|
15
|
|
127
|
8
|
|
1,168
|
1,012
|
|
1,732
|
893
|
Revenue from no single fund
exceeded 10% of total annual revenue in 2023. In 2022, revenue from
one fund of $213 million exceeded 10% of total annual revenue
driven by high levels of performance fees crystallising during the
year. Excluding performance fees, revenue from no single fund
exceeded 10% of revenue in 2022.
28. Related party
transactions
Accounting policy
Related parties comprise key
management personnel, associates and fund entities which we are
deemed to control. All transactions with related parties were
carried out on an arm's-length basis.
The Executive Committee, together
with the Company's non-executive directors, are considered to be
our key management personnel, being those directors, partners and
employees having authority and responsibility for planning,
directing and controlling our activities.
Key management compensation
|
2023
$m
|
2022
$m
|
Salaries and other short-term
employee benefits1
|
31
|
80
|
Share-based payment
charge
|
19
|
24
|
Fund product-based payment
charge
|
22
|
21
|
Pension costs (defined
contribution)
|
1
|
1
|
Total
|
73
|
126
|
Note:
1 Includes salary, benefits
and cash bonus.
29. 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 $156 million (plus compound
interest) and certain other remedies which are unquantified in the
claim. We dispute the allegations and consider there is no merit to
the claim (in respect of liability and quantum) and will therefore
vigorously and robustly defend the proceedings.
We are subject to various other
claims, assessments, regulatory enquiries and investigations in the
normal course of business. The Board does not expect such matters
to have a material adverse effect on our financial
position.
30. Unconsolidated structured
entities
Accounting policy
We have evaluated all exposures and
concluded that where we hold an investment, fee receivable, accrued
income, or commitment with an investment fund or a CLO, this
represents an interest in a structured entity as defined by IFRS 12
'Disclosure of Interests in Other Entities'.
Investment funds are designed so
that their activities are not governed by way of voting rights, and
contractual arrangements are the dominant factor in affecting an
investor's returns. The activities of these entities are governed
by investment management agreements or, in the case of CLOs,
indentures.
Our maximum exposure to loss from
unconsolidated structured entities is the sum total of any
investment held, fee receivables and
accrued income.
Our interest in and exposure to
unconsolidated structured entities is as follows:
2023
|
Total
AUM
($bn)
|
Less infrastructure mandates and
consolidated
fund entities1
($bn)
|
Total AUM unconsolidated structured
entities
($bn)
|
Number
of funds
|
Net
management
fee margin2
(bps)
|
Fair value of investment held
($m)
|
Fee
receivables and accrued income
($m)
|
Maximum exposure
to loss
($m)
|
Alternative
|
|
|
|
|
|
|
|
|
Absolute return
|
47.7
|
(0.3)
|
47.4
|
123
|
112
|
130
|
158
|
288
|
Total return
|
42.5
|
(1.3)
|
41.2
|
88
|
64
|
137
|
60
|
197
|
Multi-manager solutions
|
19.4
|
(12.8)
|
6.6
|
51
|
17
|
3
|
14
|
17
|
Long-only
|
|
|
|
|
|
|
|
|
Systematic
|
36.5
|
-
|
36.5
|
84
|
24
|
4
|
36
|
40
|
Discretionary
|
21.4
|
(0.2)
|
21.2
|
56
|
59
|
15
|
22
|
37
|
Total
|
167.5
|
(14.6)
|
152.9
|
402
|
|
289
|
290
|
579
|
2022
|
Total
AUM
($bn)
|
Less infrastructure mandates and
consolidated
fund
entities1
($bn)
|
Total AUM unconsolidated
structured
entities
($bn)
|
Number
of funds
|
Net
management
fee
margin2
(bps)
|
Fair value of investment
held
($m)
|
Fee
receivables
and accrued income
($m)
|
Maximum exposure
to loss
($m)
|
Alternative
|
|
|
|
|
|
|
|
|
Absolute return
|
46.0
|
(0.3)
|
45.7
|
107
|
112
|
108
|
284
|
392
|
Total return
|
28.8
|
(0.2)
|
28.6
|
80
|
63
|
168
|
40
|
208
|
Multi-manager solutions
|
20.2
|
(12.5)
|
7.7
|
54
|
20
|
3
|
14
|
17
|
Long-only
|
|
|
|
|
|
|
|
|
Systematic
|
31.6
|
(0.2)
|
31.4
|
73
|
25
|
5
|
31
|
36
|
Discretionary
|
16.7
|
(0.2)
|
16.5
|
61
|
57
|
19
|
21
|
40
|
Total
|
143.3
|
(13.4)
|
129.9
|
375
|
|
303
|
390
|
693
|
Notes:
1 For infrastructure mandates where
we do not act as investment manager or adviser, our role in
directing investment activities is diminished and therefore these
are not considered structured entities.
2 Net management fee margins are
the categorical weighted average. Performance fees can only be
earned after a high-water mark is achieved.
Five-year record
|
2023
|
2022
|
2021
|
2020
|
2019
|
Income statement ($m)
|
|
|
|
|
|
Core net management fee
revenue
|
963
|
927
|
877
|
730
|
751
|
Core performance fees
|
180
|
779
|
569
|
179
|
325
|
|
|
|
|
|
|
Core profit before tax
|
340
|
779
|
658
|
284
|
384
|
Core management fee profit before
tax
|
280
|
290
|
266
|
180
|
170
|
Core performance fee profit before
tax
|
60
|
489
|
392
|
104
|
214
|
Core profit
|
271
|
647
|
557
|
240
|
325
|
|
|
|
|
|
|
Statutory profit before
tax
|
279
|
745
|
590
|
179
|
307
|
Statutory profit
|
234
|
608
|
487
|
138
|
285
|
|
|
|
|
|
|
Statutory EPS (diluted)
|
19.4¢
|
45.8¢
|
33.8¢
|
9.3¢
|
18.4¢
|
Core EPS (diluted)
|
22.4¢
|
48.7¢
|
38.7¢
|
16.2¢
|
21.0¢
|
Core management fee EPS
(diluted)
|
18.4¢
|
18.4¢
|
15.7¢
|
10.3¢
|
9.7¢
|
|
|
|
|
|
|
Balance sheet ($m)
|
|
|
|
|
|
Net cash and cash
equivalents
|
136
|
457
|
387
|
351
|
281
|
Net assets
|
1,612
|
1,699
|
1,651
|
1,497
|
1,624
|
Net financial assets
|
555
|
983
|
907
|
716
|
674
|
|
|
|
|
|
|
Other metrics
|
|
|
|
|
|
Core cash flows from operating
activities before working capital movements ($m)
|
362
|
810
|
700
|
341
|
385
|
Ordinary dividends per share
(¢)
|
16.3
|
15.7¢
|
14.0¢
|
10.6¢
|
9.8¢
|
AUM ($bn)
|
167.5
|
143.3
|
148.6
|
123.6
|
117.7
|
Average headcount
|
1,716
|
1,595
|
1,453
|
1,456
|
1,413
|
USD/sterling exchange
rates:
|
|
|
|
|
|
Average
|
0.8042
|
0.8081
|
0.7267
|
0.7789
|
0.7830
|
Year-end
|
0.7855
|
0.8276
|
0.7390
|
0.7315
|
0.7544
|
'Core' measures are alternative
performance measures. Further details of our alternative
performance measures, including non-core items, are set out on
pages 58 to 63.
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 year 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 a
proxy for cash taxes paid.
In the year, accounting for the
acquisition of Varagon in accordance with the requirements of IFRS
has resulted in the recognition of all future payments to selling
shareholders remain in employment post-acquisition as
employment-related expenses. This arises because each of these
payments can be forfeited should those employees become 'bad
leavers' during specified periods following the acquisition.
Economically, the payments are transactions with the individuals in
their capacity as owners. Recognising that these owners also hold
significant roles in the organisation, the 'bad leaver' clauses
were protective in nature and not to compensate the individuals for
employment services.
As these transactions are related to
an acquisition, we consider it appropriate to adjust the expense
recognised in the year to reflect the proportion of the profits
which have been generated in the same period and are attributable
to these employees through an adjustment to core profit. This more
closely aligns the charges with the associated cash
flows.
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:
|
Note to the Group financial
statements
|
2023
$m
|
2022
$m
|
Acquisition and disposal
related:
|
|
|
|
Amortisation and impairment of
acquired intangibles
|
18
|
(28)
|
(51)
|
Acquisition-related
costs
|
17
|
(9)
|
-
|
Other employment-related
expenses1
|
5.1
|
(21)
|
-
|
Share of post-tax loss of
associates
|
22
|
(3)
|
(5)
|
Gain on disposal of investment
property - right-of-use lease assets
|
16.2
|
12
|
-
|
Other costs - claims
|
5.2
|
(1)
|
-
|
Foreign exchange
movements
|
12.1
|
(11)
|
22
|
Non-core items
|
|
(61)
|
(34)
|
Note:
1 Adjustment to align
acquisition-related employment-related expenses with proportionate
share of earnings in the year.
Core measures: reconciliation to
statutory equivalents
The statutory line items within the
Group income statement can be reconciled to their core equivalents
as follows:
2023
$m
|
Core measure
|
Reclassification
of amounts relating to consolidated
fund entities
|
Non-core items
|
Per
Group income statement
|
Management and other
fees[APM]
|
995
|
(5)
|
-
|
990
|
Performance
fees[APM]
|
180
|
(2)
|
-
|
178
|
Revenue[APM]
|
1,175
|
(7)
|
-
|
1,168
|
Net income or gains on investments
and other financial instruments[APM]
|
48
|
39
|
(11)
|
76
|
Third-party share of gains relating
to interests in consolidated funds
|
-
|
(24)
|
-
|
(24)
|
Rental income
|
5
|
1
|
-
|
6
|
Distribution costs
|
(32)
|
-
|
-
|
(32)
|
Net revenue[APM]
|
1,196
|
9
|
(11)
|
1,194
|
Asset servicing costs
|
(58)
|
-
|
-
|
(58)
|
Compensation costs
|
(595)
|
-
|
-
|
(595)
|
Other employment-related
expenses[APM]
|
(2)
|
-
|
(21)
|
(23)
|
Other
costs[APM]
|
(179)
|
(9)
|
(10)
|
(198)
|
Net finance expense
|
(21)
|
-
|
-
|
(21)
|
Gain on disposal of investment
property - right-of-use lease assets
|
-
|
-
|
12
|
12
|
Amortisation and impairment of
acquired intangibles
|
-
|
-
|
(28)
|
(28)
|
Share of post-tax loss of
associate
|
-
|
-
|
(3)
|
(3)
|
Third-party share of post-tax
profits
|
(1)
|
-
|
-
|
(1)
|
Profit before tax[APM]
|
340
|
-
|
(61)
|
279
|
Tax
expense[APM]
|
(69)
|
|
24
|
(45)
|
Profit[APM]
|
271
|
|
(37)
|
234
|
|
|
|
|
|
Core basic EPS
|
23.0¢
|
|
|
|
Core diluted EPS
|
22.4¢
|
|
|
|
2022
$m
|
Core measure
|
Reclassification
of amounts relating
to consolidated
fund entities
|
Non-core items
|
Per Group income
statement
|
Management and other
fees[APM]
|
958
|
(4)
|
-
|
954
|
Performance
fees[APM]
|
779
|
(1)
|
-
|
778
|
Revenue[APM]
|
1,737
|
(5)
|
-
|
1,732
|
Net income or gains on investments
and other financial instruments[APM]
|
(15)
|
-
|
22
|
7
|
Third-party share of losses
relating to interests in consolidated funds
|
-
|
14
|
-
|
14
|
Rental income
|
5
|
-
|
-
|
5
|
Distribution costs
|
(31)
|
-
|
-
|
(31)
|
Net revenue[APM]
|
1,696
|
9
|
22
|
1,727
|
Asset servicing costs
|
(58)
|
-
|
-
|
(58)
|
Compensation costs
|
(678)
|
-
|
-
|
(678)
|
Other
costs[APM]
|
(170)
|
(9)
|
-
|
(179)
|
Net finance expense
|
(11)
|
-
|
-
|
(11)
|
Amortisation of acquired
intangibles
|
-
|
-
|
(51)
|
(51)
|
Share of post-tax loss of
associate
|
-
|
-
|
(5)
|
(5)
|
Profit before tax[APM]
|
779
|
-
|
(34)
|
745
|
Tax
expense[APM]
|
(132)
|
-
|
(5)
|
(137)
|
Profit[APM]
|
647
|
-
|
(39)
|
608
|
|
|
|
|
|
Core basic EPS
|
50.2¢
|
|
|
|
Core diluted EPS
|
48.7¢
|
|
|
|
[APM] The core equivalents of these
statutory measures are defined as alternative performance
measures.
Core costs comprise asset servicing,
compensation costs, core other employment-related expenses, core
other costs and third-party share of post-tax profits.
The statutory line items within the
Group balance sheet can be reconciled to their core equivalents as
follows:
|
|
|
|
2023
$m
|
Core measure
|
Reclassification of
amounts relating to consolidated
fund entities
|
Per
Group
balance sheet
|
Assets
|
|
|
|
Cash and cash
equivalents[APM]
|
180
|
96
|
276
|
Fee and other
receivables[APM]
|
463
|
88
|
551
|
Investments in fund products and
other investments[APM]
|
787
|
1,492
|
2,279
|
Investments in
associates
|
11
|
-
|
11
|
Current tax asset
|
15
|
-
|
15
|
Finance lease receivable
|
67
|
-
|
67
|
Leasehold improvements and
equipment
|
53
|
-
|
53
|
Leasehold property - right-of-use
lease assets
|
112
|
-
|
112
|
Investment property - right-of-use
lease assets
|
17
|
-
|
17
|
Investment property - consolidated
fund entities
|
-
|
30
|
30
|
Other intangibles
|
54
|
-
|
54
|
Deferred tax assets
|
128
|
-
|
128
|
Pension asset
|
12
|
-
|
12
|
Goodwill and acquired
intangibles
|
776
|
-
|
776
|
Total assets
|
2,675
|
1,706
|
4,381
|
|
|
|
|
Liabilities
|
|
|
|
Borrowings
|
140
|
-
|
140
|
Trade and other
payables[APM]
|
620
|
116
|
736
|
Provisions
|
16
|
-
|
16
|
Current tax liabilities
|
3
|
-
|
3
|
CLO liabilities - consolidated fund
entities
|
-
|
1,036
|
1,036
|
Third-party interest in
consolidated funds
|
-
|
554
|
554
|
Third-party interest in other
subsidiaries
|
1
|
-
|
1
|
Lease liability
|
283
|
-
|
283
|
Total liabilities
|
1,063
|
1,706
|
2,769
|
|
|
|
|
Net assets
|
1,612
|
-
|
1,612
|
2022
$m
|
Core measure
|
Reclassification of amounts
relating
to consolidated
fund entities
|
Per Group
balance sheet
|
Assets
|
|
|
|
Cash and cash
equivalents[APM]
|
349
|
108
|
457
|
Fee and other
receivables[APM]
|
541
|
29
|
570
|
Investments in fund products and
other investments[APM]
|
841
|
368
|
1,209
|
Investments 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
|
[APM] The core equivalents of these
statutory measures are defined as alternative performance
measures.
Core management fee profit 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.
2023
$m
|
Core measure
|
Reclassification of amounts relating to consolidated
fund entities
|
Non-core items
|
Per
Group
income statement
|
Management and other
fees
|
995
|
(5)
|
-
|
990
|
Distribution costs
|
(32)
|
-
|
-
|
(32)
|
Net management fee revenue
|
963
|
(5)
|
-
|
958
|
Rental income
|
5
|
1
|
-
|
6
|
Asset servicing costs
|
(58)
|
-
|
-
|
(58)
|
Compensation costs (management
fee)
|
(439)
|
-
|
-
|
(439)
|
Other employment-related
expenses
|
(2)
|
-
|
(21)
|
(23)
|
Other costs
|
(179)
|
(9)
|
(10)
|
(198)
|
Net finance expense (management
fee)
|
(9)
|
-
|
-
|
(9)
|
Third-party share of post-tax
profits
|
(1)
|
-
|
-
|
(1)
|
Management fee profit before tax
|
280
|
(13)
|
(31)
|
236
|
Tax expense
|
(58)
|
|
|
|
Management fee profit
|
222
|
|
|
|
|
|
|
|
|
Core basic management fee EPS
|
18.8¢
|
|
|
|
Core diluted management fee EPS
|
18.4¢
|
|
|
|
|
|
|
|
|
Performance fees
|
180
|
(2)
|
-
|
178
|
Net income or gains on investments
and other financial instruments
|
48
|
39
|
(11)
|
76
|
Compensation costs (performance
fee)
|
(156)
|
-
|
-
|
(156)
|
Net finance expense (performance
fee)
|
(12)
|
-
|
-
|
(12)
|
Performance fee profit before tax
|
60
|
37
|
(11)
|
86
|
Tax expense
|
(11)
|
|
|
|
Performance fee profit
|
49
|
|
|
|
|
|
|
|
|
Core basic performance fee EPS
|
4.2¢
|
|
|
|
Core diluted performance fee EPS
|
4.0¢
|
|
|
|
2022
$m
|
Core measure
|
Reclassification of amounts relating
to consolidated
fund entities
|
Non-core items
|
Per Group
income statement
|
Management and other
fees
|
958
|
(4)
|
-
|
954
|
Distribution costs
|
(31)
|
-
|
-
|
(31)
|
Net management fee revenue
|
927
|
(4)
|
-
|
923
|
Rental income
|
5
|
-
|
-
|
5
|
Asset servicing costs
|
(58)
|
-
|
-
|
(58)
|
Compensation costs (management
fee)
|
(406)
|
-
|
-
|
(406)
|
Other costs
|
(170)
|
(9)
|
-
|
(179)
|
Net finance expense (management
fee)
|
(8)
|
-
|
-
|
(8)
|
Management fee profit before tax
|
290
|
(13)
|
-
|
277
|
Tax expense
|
(46)
|
|
|
|
Management fee profit
|
244
|
|
|
|
|
|
|
|
|
Core basic management fee EPS
|
19.0¢
|
|
|
|
Core diluted management fee EPS
|
18.4¢
|
|
|
|
|
|
|
|
|
Performance fees
|
779
|
(1)
|
-
|
778
|
Net income or gains on investments
and other financial instruments
|
(15)
|
-
|
22
|
7
|
Compensation costs (performance
fee)
|
(272)
|
-
|
-
|
(272)
|
Net finance expense (performance
fee)
|
(3)
|
-
|
-
|
(3)
|
Performance fee profit before tax
|
489
|
(1)
|
22
|
510
|
Tax expense
|
(86)
|
|
|
|
Performance fee profit
|
403
|
|
|
|
|
|
|
|
|
Core basic performance fee EPS
|
31.2¢
|
|
|
|
Core diluted performance fee EPS
|
30.3¢
|
|
|
|
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:
|
Note to the Group financial
statements
|
2023
$m
|
2022
$m
|
Net gains/(losses) on seeding
investments portfolio
|
12.1
|
47
|
(12)
|
Net gains/(losses) on fund
investments held for deferred compensation arrangements and other
investments
|
12.1
|
1
|
(3)
|
Core gains/(losses) on investments
|
|
48
|
(15)
|
Non-core items:
|
|
|
|
Consolidated fund entities:
gross-up of net gains on investments
|
12.1
|
39
|
-
|
Foreign exchange
movements
|
12.1
|
(11)
|
22
|
Net income or gains on investments and other financial
instruments
|
|
76
|
7
|
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:
|
|
2023
$m
|
2022
$m
|
Statutory tax expense
|
|
45
|
137
|
Tax on non-core items:
|
|
|
|
Amortisation and impairment of
acquired intangibles
|
|
2
|
6
|
Gain on disposal of investment
property - right-of-use lease assets
|
|
(3)
|
-
|
Foreign exchange
movements
|
|
3
|
(4)
|
Non-core tax item on US deferred
tax assets
|
|
22
|
(7)
|
Core tax expense
|
|
69
|
132
|
Comprising:
|
|
|
|
Tax expense on core management fee
profit before tax
|
|
58
|
46
|
Tax expense on core performance fee
profit before tax
|
|
11
|
86
|
The core tax rate is 20% for 2023
(2022: 17%). The increase in the rate is largely due to the
increase in the UK corporation tax rate on 1 April 2023 to 25% from
19%.
Core cash flows from operations
excluding working capital movements
Cash flows from operating activities
excluding working capital movements can be reconciled to cash flows
from operating activities as reported in the Group cash flow
statement as follows:
|
Note to the Group financial
statements
|
2023
$m
|
2022
$m
|
Cash flows from operating
activities
|
|
337
|
737
|
Plus changes in working
capital:
|
9
|
|
|
(Decrease)/increase in fee and
other receivables
|
|
(104)
|
68
|
(Decrease)/increase in other
financial assets
|
|
(71)
|
45
|
Decrease/(increase) in trade and
other payables
|
|
200
|
(40)
|
Core cash flows from operations excluding working capital
movements
|
|
362
|
810
|
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, liabilities for
put options over non-controlling and employee interests and
payables under repo arrangements, as follows:
|
Note to the Group financial
statements
|
2023
$m
|
2022
$m
|
Seeding investments
portfolio
|
12
|
595
|
688
|
Available cash and cash
equivalents
|
8
|
180
|
349
|
Borrowings
|
8
|
(140)
|
-
|
Contingent consideration
payable
|
11
|
(3)
|
-
|
Put option over non-controlling
interests in subsidiaries
|
11
|
(9)
|
-
|
Put option over employee interests
in subsidiaries
|
24
|
(23)
|
-
|
Payables under repo
arrangements
|
11
|
(45)
|
(54)
|
Net financial assets
|
|
555
|
983
|