Man Group (EMG)’s half-year results beat analyst expectations, sending the shares up 9 per cent in morning trading. But that’s because expectations were pitched very low, not because Man is performing well. Funds under management, on which management fees are based, shrank 9 per cent to $52bn (£34.4bn) over the six months as redemptions of $11.5bn exceeded sales of $6.5bn.
The redemptions seem likely to continue. That’s because the quantitative AHL strategy fund that underpins about three-quarters of Man’s profits had another weak half, finishing down 3.2 per cent. Performance was reasonably strong until the Federal Reserve’s comments about ‘tapering’ in mid-May, but then the fund gave up its profits as market sentiment deteriorated. It needs clear, reasonably stable market trends to work.
The company’s actively managed funds, which are marketed under the GLG brand, performed better. The key GLG Multi-Strategy fund returned 5.1 per cent, beating the benchmark return of 3.2 per cent. That triggered $59m of performance fees, somewhat compensating for the year-on-year decline in recurring management fees.
Cost-cutting offset the lost income, so that adjusted pre-tax profits rose from $122m to $134m. This strategy is likely to continue - new chief executive Manny Roman has identified $75m of further "efficiencies", on top of the $195m announced last year. Prior to likely upgrades, brokerage Numis expected pre-tax profits of $145m for the full year, giving EPS of 5.8¢ (2012: $278m and 11.7¢).
MAN GROUP (EMG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 91p | MARKET VALUE: | £1.66bn | |
| TOUCH: | 90.9-91p | 12-MONTH HIGH: | 136p | 71p |
| DIVIDEND YIELD: | 11.0% | PE RATIO: | na | |
| NET ASSET VALUE: | 135¢* | NET CASH: | $944m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 657 | -163 | -10.7 | 9.5 |
| 2013 | 619 | 122 | 5.4 | 2.6 |
| % change | -6 | - | - | -73 |
Ex-div: 14 Aug Payment: 4 Sep *Including intangibles of $1.46bn or 80¢ per share £1:$1.51 | ||||
