Man Group expects strong first-half results despite turbulence

Date: Thursday, September 27, 2007
Author: Hedgeweek.com

Man Group, one of the world's largest alternative asset managers, says it expects to announce an increase of more than 15 per cent in net management fee income for the six months to the end of September when it announces its interim results on November 8.

The group says it has weathered the financial market that affected many hedge fund strategies in late July and early August, and that it has seen no spike in redemption requests from investors.

Man also expects net performance fee income to be ahead of the level achieved in the first half of the previous financial year, while diluted earnings per share on continuing operations are forecast to have grown by more than 10 per cent.

Sales for the first half of the financial year are estimated to be USD7.8bn, of which guaranteed products accounted for USD3.2bn, open-ended private investor sales for USD1bn, and institutional sales for USD3.6bn. Private investor redemptions were USD2.1bn, and institutional redemptions were USD2.2bn.

Funds under management have risen to USD68bn, up from USD61.7bn at the end of March. The split of funds under management is USD41bn from private investors, up from USD36.6bn in March, and USD27bn from institutions, up from USD25.1bn.

'These results demonstrate the resilience of Man's business,' says chief executive Peter Clarke. 'Strong demand for our products generated sales in the period of USD7.8bn. The diversification of our investment styles, despite recent turbulence in financial markets, has generated USD2.4bn of positive performance for our investors in the first half.

'Today the majority of our assets are within 5 per cent of performance fee high water marks. Redemption rates are virtually unchanged on the previous year. Accordingly, assets under management have advanced to USD68bn. The first half net management fee income will be up by more than 15 per cent and net performance fee income will be ahead of the level achieved last year.

'Our conservative approach to portfolio construction and product leverage meant that none of our structured products has had to de-gear in the period. We believe that the group's capital strength will remain a key competitive advantage through the coming period. Furthermore, current markets create opportunities for investment. Man remains very well placed for further growth.

'Since the financial year-end, we have returned USD770m to our shareholders through a combination of the final dividend (USD250m), and share repurchases (USD520m). Earnings per share for the six months to the end of September is 29 cents per share, restated for the separation of MF Global.

The group says it remains committed to returning to shareholders the net proceeds of the IPO of MF Global, the group's former brokerage arm, of approximately USD2.8bn, implying a cash distribution of about 140 cents per share. This is planned through a B and C share arrangement that allows shareholders to elect for a capital or income receipt, or a combination of both. The arrangement is subject to shareholder approval and the distribution is expected to take place before the end of 2007.

Man Group is a leading global provider of alternative investment products and solutions, employing 1,600 people in 13 countries with key investment centres in London and Pfaeffikon in Switzerland, and offices in Chicago, Dubai, Hong Kong, Montevideo, Nassau, New York, Singapore, Sydney, Tokyo and Toronto.