Man Group plc announces the following Trading Update and Funds Under Management Statement ahead of its close period for the six months ending 30 September 2009.
- Funds under management at 30 September 2009 estimated at $43.8 billion (30 June 2009: $43.3 billion)
- Sales for the period of an estimated $5.7 billion, including $2.0 billion in the second quarter from across the distribution network
- Significant improvement in redemption rates: $0.8 billion from private investors and $1.7 billion from institutions in the second quarter
- Investment performance added an estimated $0.6 billion to funds under management in the second quarter, driven by positive performance in the multi-manager business and an improvement in managed futures
- Profit before tax of an estimated $280 million
- Diluted earnings per share on total operations of around 12.5 cents
- Financial position remains very strong, with the regulatory capital surplus in excess of $1.5 billion at 30 September 2009
Key financials
| Estimates for six months ending 30-Sept-09 $ | Six months ended 31-March-09 $ | Six months ended 30-Sept-08 $ | |
|---|---|---|---|
| Funds under management (end of period) | 43.8bn | 46.8bn | 67.6bn |
| Net management fee income | 240m | 316m | 569m |
| Net performance fee income | 30m | 198m | 160m |
| Profit before tax and exceptional items | 270m | 514m | 729m |
| Exceptional items* | 10m | (393m) | (107m) |
| 280m | 121m | 622m |
* For the six months to 30 September 2009, exceptional items include a net gain of $34 million on sale of the residual holding in MF Global, partly offset by redundancy and other restructuring costs.
A conference call for investors and analysts will be held at 08:00 UK time this morning. Access numbers are included at the end of this release. Man Group will announce its interim results on 5 November 2009.
Peter Clarke, Chief Executive of Man, said:
"Our assets under management have increased in the second quarter of the financial year and private investor inflows have remained strong across the first half. Redemption rates have also continued to improve, substantially so amongst institutional investors.
“These developments are consistent with our expectations for the period and reflect the wide geographic spread of our investors and Man’s differentiation through its scale and resources. Investors are increasingly selective as they assess their portfolio needs and reassess investment management providers. They continue to focus on transparency, liquidity and, increasingly, onshore product offerings for accessing hedge fund returns. Man's established presence in these markets, our capital strength and long-standing relationships with global regulators continue to create substantial advantage in this changed environment.
“There has been significant progress across our business over the summer. We have launched new products and entered new markets to meet increasing investor demand for onshore regulated products. Two new AHL UCITS funds are launching in Europe; we have had new regulated product approvals in our existing European and Asia Pacific markets; and we have launched the first onshore product in Taiwan. We have completed the establishment of our new multi-manager business, continued to expand our managed account platform to enhance investor transparency and control, and are seeing strong levels of institutional investor interest.
“Investor sentiment is continuing to improve across the industry, the performance outlook is healthy and the prospects for sustained industry inflows are very promising. With significant momentum across the business, new products and new market opportunities, Man is strongly positioned for growth.”
FUNDS UNDER MANAGEMENT
Private investor asset flows
Private investor sales are estimated to be $5.0 billion for the six months to 30 September 2009, with sales of an estimated $1.6 billion in the second quarter driven from a wide range of regional sources as opposed to a large global launch. Demand for Man products is strong throughout our distribution network, with good flows from Japan, Hong Kong, the Middle East, Europe and Latin America. Redemption levels were materially lower in the second quarter, leading to an estimated private investor net inflow of $2.7 billion for the six months to 30 September 2009.
Taking into account investment movement, FX and other effects, private investor FUM increased to an estimated $29.1 billion at 30 September 2009 (30 June 2009: $27.3 billion)
Institutional investor asset flows
Institutional sales remained muted through the second quarter, but redemptions declined markedly and are expected to total $1.7 billion for the second quarter compared to $3.6 billion in the first quarter. This slowing of redemptions is set to continue, with quarterly redemptions to be paid on
1 October of $0.7 billion.
In total, institutional investor FUM at 30 September 2009 is expected to be $14.7 billion (30 June 2009: $16.0 billion).
Investment performance
Man’s multi-manager business saw positive performance in the six months to 30 September 2009, and AHL was stronger in the second quarter. As a result, institutional assets are expected to see a positive investment movement of $0.7 billion in the first half. While the private investor investment movement was positive in the second quarter, reflecting improved performance at AHL, it was an estimated $1.3 billion negative for the first half overall.
FX and other movements
The weakening US dollar drove a positive FX movement of an estimated $2.1 billion for the six months to 30 September 2009, split almost equally between the first and second quarters. After $2.1 billion of other movements in the first quarter, the only significant other movement in the second quarter is expected to be $0.6 billion from the removal of leverage in RMF products associated with investor redemptions.
FINANCIAL SUMMARY
Income statement
Pre-tax profit on total operations* for the six months to 30 September is expected to be around $280 million (H2 2009: $121 million; H1 2009: $622 million). Gross management fee income** for the six months to 30 September 2009 is estimated to be around $650 million. Net management fee income is estimated to be around $240 million, reflecting the reduced level of funds under management. Net performance fee income is estimated to be around $30 million. Diluted earnings per share on total operations is expected to be around 12.5 cents and underlying EPS, which excludes performance fee income and exceptional items, is expected to be around 10.5 cents.
* This includes a net exceptional gain of $10 million for the six months ended 30 September 2009 related to a net gain of $33 million on sale of the residual holding in MF Global, partly offset by redundancy and other restructuring costs.
** Includes management fee income from associates
Financial position
Man’s financial position remains very strong, with a regulatory capital surplus in excess of $1.5 billion at 30 September 2009.
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