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| Chairman’s Statement |
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Harvey McGrath
Chairman
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This has been another very significant
year for the Group. With two important acquisitions made during the year, RMF
Investment Group (RMF) and GNI Holdings Limited (GNI), we have materially strengthened
our market presence in Asset Management and Brokerage respectively. We have also
enjoyed strong overall business performance, with funds under management of $26.1
billion at year end, up from $10.7 billion at 31 March 2002, reflecting good product
performance, record asset raising and the acquisition of RMF in May with assets
of $8.7 billion. Net management fee income was up 54%, and in combination with
a strong year for Brokerage, diluted underlying earnings per share, a measure
which excludes performance related fee income, Sugar Australia, goodwill amortisation
and exceptional items, was up 33% at 60.7 pence. Performance fee earnings added
29.3 pence per share. Diluted earnings per share on total operations was 75.8
pence and the Group recorded a 26.9% post-tax return on equity, a very creditable
achievement given the near doubling of the Group’s capital base during the
year. These results have enabled us to achieve all three of our financial targets,
being the delivery of significant growth in underlying earnings, the maintenance
of a high return on equity and the doubling of funds under management from the
level of $6.7 billion at 31 March 2001 within three years. |
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Man has continued to deliver significant growth
in profits and in funds under management. |
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Given the Group’s performance in the year
and our strong financial condition, the Board proposes a final dividend of 14.1
pence per share which, together with the interim dividend of 9.1 pence per share,
amounts to 23.2 pence per share for the year, an increase of 25%.
In Asset Management, the year saw the acquisition of RMF for a consideration of
£572 million, its successful integration, and strong organic growth in assets
and profitability in the business as a whole. Given the size of the acquired business
and the challenges in the markets this was a tremendous accomplishment. I wrote
last year about the logic for the RMF acquisition. In the fast growing market
for alternative investment products we have positioned the business to be the
leading provider of products and solutions to both private and institutional investors.
RMF has broadened our range of investment management content, strengthened our
structuring capabilities and enhanced our presence in the institutional market.
The acquired business has both met our financial expectations and, perhaps more
importantly, acted as a catalyst to further develop our distinctive business model
which integrates investment management skills, product structuring expertise and
proven distribution capabilities in a scaleable format. To mark the completion
of this integration effort we have rebranded the division Man Investments.
As noted, despite the focus on integration the division also saw strong underlying
business performance. Sales for the year were $6.7 billion, reflecting good performance
from our range of products and the attractiveness of our structured product solutions
even at a time of continued global uncertainty. In terms of investment performance,
trend following strategies performed particularly well, with AHL benchmark funds
generating returns of 31% for the year to March 2003, and a correspondingly positive
effect on the many composite products with an allocation to these strategies.
RMF also performed well, producing the premium to risk free returns with low volatility
profile sought after by institutional clients. Man-Glenwood, our Chicago based
fund of funds manager returned a small negative performance for the year reflecting
a poor first half in equity related strategies. All of these results significantly
outperformed global equity markets. Of the $6.7 billion of funds raised during
the year, $4.3 billion was from private clients, the balance institutional, including
$2.1 billion raised by RMF post-acquisition. In terms of geography, Europe contributed
53% of funds raised, reflecting the RMF institutional sales, with Asia Pacific,
the Americas and the Middle East contributing 26%, 12%, and 9% respectively.
As a result of higher asset levels, net management fee income rose 54% to £181.1
million. This represents 1.3% of average funds under management during the year,
down from 1.9% in the prior year, reflecting the higher proportion of institutional
assets managed, rather than any reduction in the profitability of our core private
client business. Good product returns drove net performance income up 108% to
£115.0 million, resulting in a total profit before tax and goodwill amortisation
for Man Investments of £296.1 million, up 71% from the previous year. |
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Looking forward, we expect to see continued growth
in the level of assets allocated to alternative investment strategies that provide
diversification opportunities for institutional and private investors. We intend
that Man Investments consolidates and enhances its position as the leading provider
of these products and services.
The year has also been significant for our Brokerage division, which as a leading
futures and options broker provides agency and matched principal brokerage and
related services to an institutional and private client base internationally.
The acquisition of GNI in November 2002 has materially enhanced this market position,
creating the largest independent futures broker worldwide, and providing the division
with critical mass in equity derivatives. Integration of GNI was well advanced
by year-end, with the acquired business contributing £4.6 million of the
division’s £48.3 million pre-tax profits for the year before goodwill
amortisation and exceptional costs. With retention of revenue streams and cost
reductions running at or above expectation we would expect a significantly higher
contribution from the GNI platform in the current financial year. The balance
of the division produced a creditable result for the year with strong performances
from our financial futures, foreign exchange, energy and metals franchises in
particular, together with ongoing focus on cost, offsetting the negative effect
of further interest rate reductions on the retail segment. Overall, we expect
the futures broking industry to continue to consolidate and anticipate that we
will continue to grow through the acquisition of both producer teams and businesses.
We also see incremental opportunities in North America as more business moves
to screens.
I would like to offer my congratulations and thanks to Stanley Fink, his executive
team and all of our staff whose efforts have contributed to the Group’s
success in a challenging year. Our rate of growth continues to provide substantial
opportunities for many in the Group, and we are committed to recruiting, developing
and rewarding talented people across our businesses.
In conclusion, I am pleased to report that the positive momentum in the business
has continued into the new financial year. Man Multi-Strategy Series 5 closed
for subscription in April having raised the equivalent of $725 million, a record
amount for any Man global product offering. Together with other joint venture
and institutional sales and positive fund performance overall, funds under management
are currently estimated to be $28 billion, with a full pipeline of regional and
global offerings going forward. The Brokerage business has also had a good start
to the year.
Harvey McGrath
Chairman |
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