Man Group Releases Full Year Results

March, 2017

Man Group released its full year 2016 results today. Here are the key points:

·          Fund under Management (FUM) up 3% to $80.9 billion (31 December 2015: $78.7 billion)

o   Net inflows of $1.9 billion (2015: net inflows $0.3 billion)

o   Quant alternative FUM increased by 20% due to strong net inflows

o   Positive investment movement of $3.2 billion (2015: $2.4 billion)

o   FX translation effects and other movements of -$2.9 billion (2015: -$3.0 billion)

·          Statutory loss before tax for the year ended 31 December 2016 of $272 million (2015: profit before tax of $184 million), driven by the impairment of GLG and FRM goodwill and intangibles of $281 million and $98 million respectively

·          Adjusted profit before tax (PBT) of $205 million in 2016 (2015: $400 million), comprising adjusted net management fee PBT of $178 million (2015: $194 million) and adjusted net performance fee PBT of $27 million (2015: $206 million)

·          Recommended final dividend of 4.5 cents per share bringing total dividend for the year to 9.0 cents (2015: 10.2 cents). The final dividend is equal to 3.62 pence per share (2015: 3.40 pence), and the total dividend for the year is equal to 7.05 pence per share (2015: 6.87 pence)

·          Surplus regulatory capital of $392 million at 31 December 2016 (2015: $453m); $325 million after the impact of the Aalto acquisition which completed on 1 January 2017

Summary financials

Page

ref.

Year ended
31 Dec 2016

Year ended
31 Dec 2015

 

 

$

$

Funds under management (end of period) 1

4

80.9bn

78.7bn

Net management fee revenue2

17,18,32

691m

759m

Performance fees3

19,32

112m

326m

Net revenues

 

803m

1,085m

Compensation

19,33

(388m)

(462m)

Other costs (including asset servicing)

19,33

(199m)

(209m)

Net finance expense

20,34

(11m)

(14m)

Adjusted profit before tax1

20,31

205m

400m

     Adjusted net management fee profit before tax1

21

178m

194m

    Adjusted net performance fee profit before tax1

21

27m

206m

Adjusting items4

20,31,32

(477m)

(216m)

Statutory (loss)/profit before tax

17,25

(272)m

184m

Diluted statutory EPS5

36,37

(15.8)c

10.0c

Adjusted diluted EPS1,5

36,37

10.4c

21.1c

Adjusted diluted management fee EPS1,5

36,37

9.0c

10.2c

Dividend per share

 

7.05p

6.87p

1 For definitions and explanations of our alternative performance measures, please refer to page 55. 2 Includes gross management and other fees, distribution costs, and share of post-tax profit of associates. 3 Includes income or gains on investments and other instruments and third party share of gains/losses relating to interests in consolidated funds. 4 The adjusting items in the year which are detailed in Note 2 to the financial statements on page 31, relate to certain non-recurring items or those resulting from acquisition or disposal related activities.5 The reconciliation of diluted statutory EPS to the adjusted EPS measures is included in Note 9 to the financial statements (page 37). 

Luke Ellis, Chief Executive Officer of Man Group, said:

“2016 was a challenging year for the investment management industry and, despite respectable relative performance from our strategies, this is reflected in our results.

Against this backdrop, we have made real progress in positioning the firm for the future. We delivered positive net flows in a year when our industry saw outflows. We had positive alpha across our long only strategies during a year in which many questioned the benefits of active management. We put in place a revised management structure and continued to control our cost base, and the majority of our performance fee eligible funds ended the year at, or close to, high water mark.

Looking forward to 2017, we have started the year with a good pipeline of interest from clients and encouraging performance across most of our strategies as the new global political environment has created many alpha opportunities, but it remains early days in an uncertain market.

Our focus for 2017 is to build on the hard work of last year and on what makes this business special: the commitment and creativity that drives performance, building deep and meaningful client relationships, investing in our talent and technology, and being disciplined on costs and capital allocation. Although our industry faces some challenges, I believe we are well positioned for the years ahead.”

Dividend and share repurchase

The Board confirms that it will recommend a final dividend of 4.5 cents per share for the financial year to 31 December 2016, giving a total dividend of 9.0 cents per share for the year. The final dividend will be paid at the rate of 3.62 pence per share.

Man’s dividend policy is to pay out at least 100% of adjusted net management fee earnings per share (EPS) in each financial year by way of ordinary dividend. In addition, the Group expects to generate significant surplus capital over time, primarily from net performance fee earnings. Man's policy is to distribute available capital surpluses to shareholders over time, by way of higher dividend payments and/or share repurchases, while maintaining a prudent balance sheet, after taking into account required capital (including liabilities for future earn-out payments) and potential strategic opportunities. Whilst the Board continues to consider dividends as the primary method of returning capital to shareholders, it will continue to execute share repurchases when advantageous.

In October 2016, the Board decided to carry out a share repurchase programme for up to $100 million to return surplus capital to shareholders. Currently, around $60 million worth of shares have been repurchased and we expect to complete the programme in the coming months.

Dates for the 2016 final dividend

Ex-dividend date

20 April 2017

Record date

21 April 2017

Payment date

12 May 2017