Man Group has announced that its total funds under management are currently estimated to be USD47.7bn as at 31 March 2009, down from USD74.6bn in March 2008 and USD53.3bn at 31 December
Man Group has announced that its total funds under management are currently estimated to be USD47.7bn as at 31 March 2009, down from USD74.6bn in March 2008 and USD53.3bn at 31 December 2008.
The split of funds under management is estimated to be private investor USD28.4bn and institutional USD19.3bn.
Net outflows for the year, arising entirely from institutional investors, represented a small movement in overall FUM at USD2.2bn.
Man Group says the single largest cause of the decline in FUM in the year was the reduction in investment exposure in the MGS product range and associated portfolio rebalancing (USD12.1bn), previously announced and now completed.
Investment movement is estimated to be negative USD6.1bn. FX and other movements of a negative USD6.5bn include the translation impact of foreign exchange movements on non-dollar denominated products, maturities and the reduction of leverage in RMF products.
Pre-tax profit for the year before exceptional items is expected to be around USD1.2bn (2008: USD2.08bn).
Gross management fee income is estimated to be down eight per cent for the year at around USD1.9bn. Net management fee income is estimated to be around USD850m, principally reflecting the reduced level of funds under management as well as a lower level of net finance income. Net performance fee income is estimated to be around USD340m, generated by the strong performance of AHL in the year net of losses on seed investments, but well below the prior year when AHL saw even stronger performance.
Diluted earnings per share on total operations before exceptional items are expected to be around 54 cents and underlying EPS, which excludes performance fee income and exceptional items, is expected to be around 39 cents.
Impairment provisions and other non-recurring charges of about USD500m are being taken in the year ending 31 March 2009. This includes USD107m recognised in the first half with regard to the accelerated amortisation of sales commissions on the MGS product range. Second half charges total around USD390m, of which USD350m relate to the carrying value of the residual MF Global holding and Man’s Ore Hill investments. These impairment charges have no impact on cash or regulatory capital balances in the second half.
Reflecting the current lower level of FUM, Man has implemented a plan to reduce the cost base of the business. This will result in a USD60m reduction in the run-rate of fixed costs with effect from 1 April, which includes a 15 per cent reduction in permanent employee headcount. The one-off costs associated with this restructuring are around USD40m, and are included in the current year numbers as part of the exceptional items.
Based on the group’s earnings generation and business performance in the year and the strength of its balance sheet, the board intends to declare a maintained final dividend of 24.8 cents per share, giving an unchanged total dividend for the year of 44 cents per share.
It says the outlook for investment returns is positive, as many markets have seen liquidity re-established and greater confidence in asset valuations reflected in increased transactional activity.
Peter Clarke, chief executive of Man Group (pictured), says: "This has been a very difficult year for global markets, and our business has not been immune. We have responded by focussing on preserving our strong investment management franchise, whilst also maintaining and building the firm’s financial strength, both key differentiators in these markets. Our strong financial position is reflected in the intention to declare a maintained final dividend for the year.
‘During the year we continued to see private investor demand for conservatively structured products offering transparency and liquidity, and which have demonstrated a track record of performance through these markets. Our long standing leadership in the managed futures style has provided both performance and liquidity, whilst the flexibility of our product range and wide geography of investor base have remained a key strength. In this way we have been able to maintain a pipeline of global and regional products, which is continuing over the coming months. However, we have seen a reduction in funds under management and many investors, particularly institutions, have sought liquidity regardless of performance and reduced their exposure to all asset classes."
