Statement of directors' responsibilities

The directors confirm that, to the best of their knowledge, this condensed set of financial statements in respect of Man Group plc for the six-month period ended 30 June 2023 has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the United Kingdom, and that this interim report includes a fair review of the information required by the Financial Conduct Authority's Disclosure Guidance and Transparency Rules 4.2.7 and 4.2.8, namely:

·      an indication of important events that have occurred during the six months ended 30 June 2023 and their impact on the condensed interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year ending 31 December 2023; and

·      material related party transactions in the six months ended 30 June 2023 and any material changes in the related party transactions described in the last Annual Report.

The directors of Man Group plc are:

John Cryan - Board Chair

Luke Ellis - Chief Executive Officer

Antoine Forterre - Chief Financial Officer

Richard Berliand - Senior Independent Director

Lucinda Bell - Independent Non-executive Director

Ceci Kurzman - Independent Non-executive Director

Alberto Musalem - Independent Non-executive Director

Anne Wade - Independent Non-executive Director

 

By order of the board

 

 

Luke Ellis
Chief Executive Officer
31 July 2023

 

 

Antoine Forterre
Chief Financial Officer
31 July 2023

 

Independent review report to Man Group Plc

Conclusion

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2023 which comprises the Group income statement, the Group statement of comprehensive income, the Group balance sheet, the Group statement of changes in equity, the Group cash flow statement and related notes 1 to 15.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2023 is not prepared, in all material respects, in accordance with United Kingdom adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

Basis for Conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Financial Reporting Council for use in the United Kingdom (ISRE (UK) 2410). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

As disclosed in note 1, the annual financial statements of Man Group are prepared in accordance with United Kingdom adopted international accounting standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with United Kingdom adopted International Accounting Standard 34, 'Interim Financial Reporting'.

 

Conclusion Relating to Going Concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for Conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.

This Conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410; however future events or conditions may cause the entity to cease to continue as a going concern.

 

Responsibilities of the directors

The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

In preparing the half-yearly financial report, the directors are responsible for assessing Man Group's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

 

 

Auditor's Responsibilities for the review of the financial information

In reviewing the half-yearly financial report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report. Our Conclusion, including our Conclusion Relating to Going Concern, is based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

 

Use of our report

This report is made solely to the Company in accordance with ISRE (UK) 2410. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

 

 

 

Deloitte LLP

Statutory Auditor

London, UK

31 July 2023

 

Interim financial statements

Group income statement

$m	Note	Six months to 30 June 2023	Six months to 30 June 2022
Management and other fees		474	483
Performance fees		32	404
Revenue		506	887
Net income or gains/(losses) on investments and other financial instruments	8	30	(19)
Third-party share of (gains)/losses relating to interests in consolidated funds	8	(12)	19
Sub-lease rental income		2	3
Distribution costs		(16)	(16)
Net revenue		510	874
Asset servicing costs		(27)	(30)
Compensation costs	2	(257)	(343)
Other costs	3	(101)	(83)
Finance expense	4	(14)	(7)
Finance income	4	8	1
Gain on disposal of investment property - right-of-use lease assets	10	8	-
Amortisation of acquired intangible assets		(11)	(30)
Share of post-tax loss of associates		(2)	(2)
Statutory profit before tax		114	380
Tax expense	5	(31)	(72)
Statutory profit for the period attributable to owners of the Company		83	308
Statutory earnings per share:	12
Basic		6.9¢	23.3¢
Diluted		6.8¢	22.7¢

 

Group statement of comprehensive income

$m	Six months to 30 June 2023	Six months to 30 June 2022
Statutory profit for the period attributable to owners of the Company	83	308
Other comprehensive income/(loss):
Remeasurements of post-employment benefit obligations	(4)	-
Deferred tax on pension plans	1	(1)
Items that will not be reclassified to profit or loss	(3)	(1)
Cash flow hedges:
Valuation gains/(losses) taken to equity	8	(1)
Realised gains transferred to Group income statement	(6)	(1)
Net investment hedges	2	3
Foreign currency translation	1	(3)
Items that may be reclassified to profit or loss	5	(2)
Other comprehensive income/(loss) for the period	2	(3)
Total comprehensive income for the period attributable to owners of the Company	85	305

 

 

Group balance sheet

$m	Note	At 30 June 2023	At 31 December 2022
Assets
Cash and cash equivalents	6	212	457
Fee and other receivables		383	570
Investments in fund products and other investments	8	1,724	1,209
Investments in associates		12	14
Current tax assets		3	-
Finance lease receivable	10	36	-
Leasehold improvements and equipment		54	53
Leasehold property - right-of-use lease assets		88	92
Investment property - right-of-use lease assets		41	71
Investment property - consolidated fund entities	8	33	34
Other intangibles		52	50
Deferred tax assets		104	105
Pension asset		19	22
Goodwill and acquired intangibles		616	627
Total assets		3,377	3,304
Liabilities
Borrowings	6	65	-
Trade and other payables		598	942
Provisions	11	14	14
Current tax liabilities		-	37
CLO liabilities - consolidated fund entities	8	479	-
Third-party interest in consolidated funds	8	455	359
Lease liability		256	253
Total liabilities		1,867	1,605
Net assets		1,510	1,699
Equity
Capital and reserves attributable to owners of the Company		1,510	1,699

 

 

Group cash flow statement

$m	Note	Six months to 30 June 2023	Six months to 30 June 2022
Operating activities
Cash generated from operations	7	179	223
Interest paid		(9)	(2)
Payment of lease interest		(5)	(5)
Tax paid		(63)	(70)
Cash flows from operating activities		102	146
Investing activities
Interest received		8	1
Purchase of leasehold improvements and equipment		(8)	(10)
Purchase of other intangible assets		(10)	(11)
Cash flows used in investing activities		(10)	(20)
Financing activities
Repayments of lease liability principal		(7)	(10)
Purchase of Man Group plc shares by the Employee Trust		(56)	(47)
Share repurchase programmes (including costs)		(223)	(234)
Ordinary dividends paid to Company shareholders		(118)	(110)
Drawdown of revolving credit facility	6	65	120
Cash flows used in financing activities		(339)	(281)
Net decrease in cash and cash equivalents		(247)	(155)
Cash and cash equivalents at beginning of the period		457	387
Effect of foreign exchange movements		2	(4)
Cash and cash equivalents at end of the period	6	212	228
Less: restricted cash held by consolidated fund entities	8	(111)	(96)
Available cash and cash equivalents at the end of the period		101	132

 

 

 

 

Group statement of changes in equity

$m	Share capital	Reorg- anisation reserve	Profit and loss account	Man Group plc shares held by Employee Trust	Treasury shares	Cumulative translation adjustment	Other reserves	Total
At 1 January 2022	51	(1,688)	3,477	(61)	(178)	41	9	1,651
Statutory profit for the period	-	-	308	-	-	-	-	308
Other comprehensive loss	-	-	(1)	-	-	-	(2)	(3)
Total comprehensive income	-	-	307	-	-	-	(2)	305
Share-based payment charge	-	-	14	-	-	-	-	14
Current tax on share-based payments	-	-	4	-	-	-	-	4
Purchase of Man Group plc shares by the Employee Trust	-	-	-	(47)	-	-	-	(47)
Disposal of Man Group plc shares by the Employee Trust	-	-	(28)	28	-	-	-	-
Share repurchases	-	-	(250)	-	-	-	-	(250)
Transfer to Treasury shares	-	-	234	-	(234)	-	-	-
Transfer from Treasury shares	-	-	(24)	-	22	-	2	-
Cancellation of Treasury shares	(2)	-	(143)	-	143	-	2	-
Dividends paid	-	-	(110)	-	-	-	-	(110)
At 30 June 2022	49	(1,688)	3,481	(80)	(247)	41	11	1,567
At 1 January 2023	46	(1,688)	3,590	(80)	(225)	41	15	1,699
Statutory profit for the period	-	-	83	-	-	-	-	83
Other comprehensive income	-	-	(3)	-	-	3	2	2
Total comprehensive income	-	-	80	-	-	3	2	85
Share-based payment charge	-	-	20	-	-	-	-	20
Current tax on share-based payments	-	-	5	-	-	-	-	5
Purchase of Man Group plc shares by the Employee Trust	-	-	-	(56)	-	-	-	(56)
Disposal of Man Group plc shares by the Employee Trust	-	-	(30)	30	-	-	-	-
Share repurchases	-	-	(125)	-	-	-	-	(125)
Transfer to Treasury shares	-	-	223	-	(223)	-	-	-
Transfer from Treasury shares	-	-	(18)	-	15	-	3	-
Cancellation of Treasury shares	(1)	-	(103)	-	103	-	1	-
Dividends paid	-	-	(118)	-	-	-	-	(118)
At 30 June 2023	45	(1,688)	3,524	(106)	(330)	44	21	1,510

 

 

1.   Basis of preparation

These condensed consolidated interim financial statements for the six months ended 30 June 2023 have been prepared in accordance with United Kingdom-adopted International Accounting Standard 34 'Interim Financial Reporting', the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority and Article 106 of the Companies (Jersey) Law 1991. The consolidated group is Man Group plc (the Company) and its subsidiaries (together Man Group).

The financial information contained herein is unaudited and does not constitute accounts within the meaning of Article 105 of the Companies (Jersey) Law 1991. Statutory accounts for the year ended 31 December 2022, which were prepared in accordance with International Financial Reporting Standards (IFRS) and relevant IFRIC interpretations issued by the International Accounting Standards Board (IASB) adopted by the United Kingdom, upon which the auditor has given an unqualified and unmodified report, have been delivered to the Jersey Registrar of Companies and were posted to shareholders on 14 March 2023.

 

The accounting policies applied in these interim financial statements are consistent with those applied in Man Group's Annual Report for the year ended 31 December 2022 (the '2022 Annual Report').

 

Impact of new accounting standards

 

There were no new or amendments to existing accounting standards issued by the International Accounting Standards Board (IASB) that have had a significant impact on these interim financial statements.

 

No standards or interpretations issued and not yet effective are expected to have a material impact on the interim financial statements.

 

Going concern

 

The Board has determined that there is a reasonable expectation that Man Group has sufficient resources to continue in operation for a period of at least twelve months from the date of approval of these interim financial statements. Accordingly, the financial statements have been prepared on a going concern basis.

Judgemental areas and accounting estimates

 

Man Group acts as the investment manager/advisor to fund entities. The most significant area of judgement is whether we control certain of those fund entities to which we are exposed via either direct investment holdings, total return swaps or sale and repurchase arrangements. We assess such relationships on an ongoing basis to determine whether we control each fund entity and therefore consolidate them into our results.

 

Man Group's key sources of estimation uncertainty are the valuation of the net pension asset (as further described in Note 22 of the 2022 Annual Report) and the estimated amount of accrued discretionary variable compensation. The determination of discretionary variable compensation is an annual process undertaken at the calendar year end, therefore the accrual at 30 June 2023 is an estimated amount based on the financial performance, including absolute levels of performance fees, in the year to date. The Board has also considered the assumptions used in the assessments for impairment of right-of-use lease assets and the recoverability of deferred tax assets. They have concluded that these assumptions do not have a significant risk of causing a material adjustment to the carrying amounts of our assets or liabilities at the balance sheet date. 

 

The Board has also considered the impact of climate change on the interim financial statements, in particular in relation to the going concern assessment, the cash flow forecasts used in the impairment assessments of non-current assets and the assumptions around future life expectancies used in the valuation of the net pension asset. The impact of climate change on the interim financial statements is not currently expected to be material.

 

 

2.   Compensation costs

$m	Six months to 30 June 2023	Six months to 30 June 2022
Salaries	98	91
Variable cash compensation	67	168
Deferred compensation: share-based payment charge	20	14
Deferred compensation: fund product-based payment charge	40	33
Social security costs	23	29
Pension costs	9	8
Total compensation costs	257	343
Comprising:
Fixed compensation: salaries and associated social security costs, and pension costs	118	110
Variable compensation: variable cash compensation, deferred compensation and associated social security costs	139	233

 

The unamortised deferred compensation at 30 June 2023 is $184 million (30 June 2022: $144 million) and has a weighted average remaining vesting period of 2.3 years (30 June 2022: 2.1 years).

 

 

3.   Other costs

$m	Six months to 30 June 2023	Six months to 30 June 2022
Technology and communications	12	11
Audit, tax, legal and other professional fees	11	10
Occupancy	11	8
Staff benefits	8	7
Temporary staff, recruitment, consultancy and managed services	6	8
Travel and entertainment	5	3
Insurance	2	3
Marketing and sponsorship	2	2
Other cash costs, including irrecoverable VAT	10	6
Acquisition related costs	10	-
Total other costs before depreciation and amortisation	77	58
Depreciation of leasehold improvements and equipment, and amortisation of other intangibles	17	16
Depreciation of right-of-use lease assets	7	9
Total other costs	101	83

 

 

4.   Finance expense and finance income

$m	Six months to 30 June 2023	Six months to 30 June 2022
Finance expense:
Unwind of lease liability discount	(5)	(5)
Other finance expense	(9)	(2)
Total finance expense	(14)	(7)
Finance income:
Interest on cash deposits	8	1
Total finance income	8	1
Net finance expense	(6)	(6)

 

 

 

5.   Tax

The tax expense for the period of $31 million (H1 2022: $72 million) results in a statutory effective tax rate of 27% (H1 2022: 19%). The increase in rate is primarily due to the increase in the UK corporation tax rate from 19% to 25% on 1 April 2023 together with the impact of non-deductible expenses and the derecognition of a portion of the available deferred tax assets in relation to US state and city tax losses. The majority of our profit is earned in the UK, Switzerland and the US. The forecast full year effective tax rate is consistent with this profit mix.

 

We have recognised net accumulated deferred tax assets in the US of $59 million (31 December 2022: $64 million) that will be available to offset future taxable profits. At 30 June 2023, $20 million of the available deferred tax assets (31 December 2022: $18 million) in relation to US state and city tax losses are unrecognised as we do not expect to realise sufficient future taxable profits against which these losses can be offset before they expire.

 

The OECD has published an Inclusive 'Pillar 2' Framework (the Framework) to support the introduction of a global minimum tax rate of 15%. The UK has enacted its legislation in Finance (No. 2) Act 2023, effective from 2024, with legislation and regulations in most other jurisdictions also expected to take effect from 2024. Pending final conclusions as to potential outcomes, it is not currently practicable to assess fully the impact of the Framework on our future tax charges. We expect to be subject to the global minimum top-up tax in certain jurisdictions in which we operate, however the impact is not expected to be significant.

 

6.   Cash, liquidity and borrowings

 

$m	At 30 June  2023	At 31 December 2022
Cash held with banks	37	124
Short-term deposits	24	95
Money market funds	40	130
Cash held by consolidated fund entities (Note 8)	111	108
Cash and cash equivalents	212	457
Less: cash held by consolidated fund entities (Note 8)	(111)	(108)
Available cash and cash equivalents	101	349
Undrawn committed revolving credit facility	435	500
Total liquidity	536	849

 

 

Borrowings

 

Our $500 million committed revolving credit facility (RCF) is immediately accessible and incorporates an environmental, social and governance (ESG) target-linked interest rate component. It does not include any financial covenants to maintain maximum operational flexibility. $65 million was drawn down at 30 June 2023 and we have no other borrowings (31 December 2022: undrawn). The RCF is scheduled to mature in December 2026.

 

 

 

7.   Reconciliation of statutory profits to cash generated from operations

 

$m	Six months to 30 June 2023	Six months to 30 June 2022
Statutory profit for the period	83	308
Adjustments for:
Share-based payment charge	20	14
Fund product-based payment charge	40	33
Net finance expense	6	6
Tax expense	31	72
Depreciation of leasehold improvements and equipment	6	6
Depreciation of right-of-use lease assets	7	9
Gain on disposal of investment property - right-of-use lease assets	(8)	-
Amortisation of acquired intangible assets	11	30
Amortisation of other intangibles	11	10
Share of post-tax loss of associates	2	2
Foreign exchange movements	5	(12)
Realised gains on cash flow hedges	(6)	(1)
Other non-cash movements	(2)	2
	206	479
Changes in working capital1:
Decrease/(increase) in fee and other receivables	208	(176)
Decrease/(increase) in other financial assets including consolidated fund entities2	32	(4)
Decrease in trade and other payables	(267)	(76)
Cash generated from operations	179	223

 

Notes:

1.     Changes in working capital differ from the movements in these balance sheet items due to non-cash movements which either relate to the gross-up of the third-party share of consolidated fund entities (Note 8) or are adjusted elsewhere in the Group cash flow statement, such as movements relating to the fund product-based payment charge (within cash flows from operating activities) and the share repurchase liability (within financing activities).

2.     Includes $3 million of restricted net cash inflows (H1 2022: $32 million) relating to consolidated fund entities (Note 8).

 

 

8.   Investments in fund products and other investments

$m	At 30 June 2023	At 31 December 2022
Investments in fund products	314	304
Investments in consolidated funds: transferrable securities	1,410	905
Investments in fund products and other investments	1,724	1,209
Less:
Fund investments held for deferred compensation arrangements	(193)	(153)
Investments in consolidated funds: exclude gross-up of net investment	(897)	(368)
Seeding investments portfolio	634	688

 

 

8.   Investments in fund products and other investments continued

Net income or gains/(losses) on investments and other financial instruments comprises the following:

 

$m	Six months to 30 June 2023	Six months to 30 June 2022
Net gains/(losses) on seeding investments portfolio	18	(19)
Consolidated fund entities: gross-up of net gains/(losses) on investments	19	(15)
Foreign exchange movements	(8)	17
Net gains/(losses) on fund investments held for deferred compensation arrangements and other investments	1	(2)
Net income or gains/(losses) on investments and other financial instruments	30	(19)

 

Consolidation of investments in funds

 

In H1 2023, our interests in 39 (31 December 2022: 43) funds met the definition of control and therefore have been consolidated on a line-by-line basis. Certain of our collateralised loan obligations (CLOs) have been consolidated for the first time in the period following the purchase of the majority holding in the subordinated tranches.

 

Consolidated fund entities are included within the Group balance sheet and income statement as follows:

 

$m	At 30 June  2023	At 31 December  2022
Balance sheet
Cash and cash equivalents	111	108
Transferrable securities1,2	1,410	905
Fees and other receivables	48	29
Investment property	33	34
Trade and other payables	(155)	(180)
CLO liabilities	(479)	-
Net assets of consolidated fund entities	968	896
Third-party interest in consolidated funds	(455)	(359)
Net investment held by Man Group	513	537

 

 

$m	Six months to 30 June 2023	Six months to 30 June 2022
Income statement
Net gains/(losses) on investments3	47	(53)
Management fee expenses4	(2)	(2)
Other costs5	(5)	(2)
Net gains/(losses) of consolidated fund entities	40	(57)
Third-party share of (gains)/losses relating to interests in consolidated funds	(12)	19
Gains/(losses) attributable to net investment held by Man Group	28	(38)

 

Notes:

1.     Includes assets held by consolidated CLOs.

2.     Included within investments in fund products and other investments.

3.     Included within net income or gains/(losses) on investments and other financial instruments.

4.     Relate to management fees paid by the funds to Man Group during the period, which are eliminated within management and other fees in the Group income statement.

5.     Includes depreciation and impairment of investment property held by consolidated fund entities.

 

Trade and other payables and CLO liabilities relating to consolidated fund entities can be analysed according to their contractual maturity date as follows:

 

	At 30 June 2023		At 31 December 2022
$m	Trade and other payables	CLO liabilities	Trade and  other payables	CLO liabilities
Within one year	155	6	142	-
Between one and five years	-	154	38	-
More than five years	-	319	-	-
	155	479	180	-

9.   Fair value of financial assets/liabilities

The fair values of our financial assets and liabilities held at fair value through profit and loss can be analysed as follows:

 

	At 30 June 2023
$m	Level 1	Level 2	Level 3	Total
Financial assets held at fair value
Investments in fund products (Note 8)	-	302	12	314
Investments in consolidated funds: transferrable securities (Note 8)	-	1,410	-	1,410
Derivatives	-	2	-	2
	-	1,714	12	1,726
Financial liabilities held at fair value
Derivatives	-	6	-	6
CLO liabilities - consolidated fund entities (Note 8)	-	479	-	479
	-	485	-	485

 

	At 31 December 2022
$m	Level 1	Level 2	Level 3	Total
Financial assets held at fair value
Investments in fund products and other investments (Note 8)	-	284	20	304
Investments in consolidated funds (Note 8)	-	905	-	905
Derivatives	-	9	-	9
	-	1,198	20	1,218
Financial liabilities held at fair value
Derivatives	-	(6)	-	(6)
	-	(6)	-	(6)

 

Level 1, 2 and 3 financial assets and liabilities are defined in Note 13 of the 2022 Annual Report. The assets held by the CLOs we control and therefore consolidate are priced using independent pricing sources and are classified as Level 2. Other than subordinated notes, the debt liabilities of consolidated CLOs are valued at par plus accrued interest, which is considered to be equivalent to fair value, and are therefore also classified as Level 2. The subordinated notes of these CLOs are priced using an intrinsic valuation approach, excluding any potential future value. As the valuation is equal to the net of the other assets and liabilities in the structure, these notes are also classified as Level 2.

 

The movements in Level 3 financial assets measured at fair value are as follows:

 

$m	At 30 June  2023	At 31 December  2022
At beginning of the period	20	190
Transfers out of Level 3	(11)	(154)
Purchases	2	1
Credit/(charge) to Group income statement 1,2	1	(5)
Sales or settlements	-	(1)
Change in consolidated fund entities held	-	(11)
At end of the period	12	20

 

Notes:

1.     Included within net income or gains/(losses) on investments and other financial instruments.

2.     Includes net unrealised gains of $1m (2022: losses of $5m).

 

10.   Leases

In the period we signed and commenced sub-leases with two new tenants for a substantial portion of the vacant space in our London office. These sub-leases meet the definition of a finance lease under IFRS 16 'Leases', and therefore on lease commencement we recognised a disposal of the associated portion of our investment property right-of-use (ROU) lease asset of $28 million and recognised a finance lease receivable of $36 million (31 December 2022: nil). The excess of the value of the finance lease receivable over that of the derecognised ROU lease asset of $8 million (30 June 2022: nil) has been recognised as a gain on disposal of the ROU lease asset in the Group income statement.

 

 

11.   Provisions

$m	At 30 June  2023	At 31 December  2022
At beginning of the period	14	14
Charge to Group income statement	-	1
Foreign currency translation	-	(1)
At end of the period	14	14

 

Provisions relate to ongoing claims and leasehold property dilapidations.

 

 

12.   Earnings per share (EPS)

	Six months to 30 June 2023	Six months to 30 June 2022
	(million)	(million)
Basic weighted average number of shares	1,190	1,322
Dilutive impact of:
Employee share awards	25	28
Employee share options	2	3
Dilutive weighted average number of shares	1,217	1,353

 

	Six months to 30 June 2023	Six months to 30 June 2022
Statutory profit for the period ($m)	83	308
Basic EPS	6.9¢	23.3¢
Diluted EPS	6.8¢	22.7¢

 

 

 

13.   Related party transactions

 

The related party transactions during the period are consistent with the categories disclosed in the 2022 Annual Report. Related parties comprise key management personnel, associates and fund entities which we control. All transactions with related parties were carried out on an arm's length basis.

 

14. Acquisitions

 

On 29 June 2023, we signed an agreement to purchase 51% of the issued share capital of Asteria Obviam SA (Asteria), an ESG-oriented Swiss asset management company, and its existing fund range.

 

On 6 July 2023, we signed an agreement to acquire a controlling interest in Varagon Capital Partners, L.P. (Varagon), a leading US middle-market private credit manager with $11.8 billion of assets under management and $15.4 billion of total client commitments at 31 December 2022. At completion, we will pay $183 million in cash consideration for the acquisition of our interest in Varagon, subject to closing adjustments, funded from existing internal resources.

 

Both transactions are subject to customary regulatory approvals and are expected to be completed by the end of 2023.

 

15.   Other matters

 

In July 2019, the Public Institution for Social Security in Kuwait (PIFSS) served a claim against a number of parties, including certain Man Group companies, a former employee of Man Group and a former third-party intermediary. The subject matter of these allegations dates back over a period of 20 years. PIFSS is seeking compensation of $156 million (plus compound interest) and certain other remedies which are unquantified in the claim. We dispute the allegations and consider there is no merit to the claim (in respect of liability and quantum) and will therefore vigorously and robustly defend the proceedings.

 

We are subject to various other claims, assessments, regulatory enquiries and investigations in the normal course of business. The Board does not expect such matters to have a material adverse effect on our financial position.

ALTERNATIVE PERFORMANCE MEASURES

 

We assess our performance using a variety of alternative performance measures (APMs). We discuss our results on a statutory as well as a 'core' basis. Core metrics, which are each APMs, exclude acquisition and disposal-related items, significant non-recurring items and volatile or uncontrollable items, as well as profits or losses generated outside of our investment management business. Accordingly, these core metrics reflect the way in which performance is monitored by the Board and present the profits or losses which drive our cash flows and inform the way in which our variable compensation is assessed. Details of the non-core items in the period are set out below.

 

Our APMs also reclassify all income and expenses relating to our consolidated fund entities, which are required by IFRS to be split across multiple lines in the Group income statement, to core gains/losses on investments in order to reflect their performance as part of our seed book programme. Tax on non-core items and movements in deferred tax relating to the utilisation or recognition of tax assets in the US are similarly excluded from core profit, with tax on core profit considered to be a proxy for cash taxes paid.

 

The approach to the classification of non-core items maintains symmetry between losses and gains and the reversal of any amounts previously classified as non-core. Note that our APMs may not be directly comparable with similarly titled measures used by other companies.

 

Non-core items in profit before tax comprise the following:

 

$m	Six months to 30 June 2023	Six months to  30 June 2022
Acquisition and disposal related:
Amortisation of acquired intangible assets	(11)	(30)
Acquisition related costs	(10)	-
Share of post-tax loss of associates	(2)	(2)
Gain on disposal of investment property - right-of-use lease assets	8	-
Foreign exchange movements	(8)	17
Non-core items	(23)	(15)

 

 

 

 

 

 

Core measures: reconciliation to statutory equivalents

 

The statutory line items within the Group income statement can be reconciled to their core equivalents as follows:

Six months to 30 June 2023 $m	Core                   measure	Reclassification of amounts relating to consolidated fund entities	Non-core items	Per Group income statement
Management and other fees[APM]	476	(2)	-	474
Performance fees[APM]	32	-	-	32
Revenue[APM]	508	(2)	-	506
Net income or gains/(losses) on investments and other financial instruments[APM]	19	19	(8)	30
Third-party share of gains relating to interests in consolidated funds	-	(12)	-	(12)
Sub-lease rental income	2	-	-	2
Distribution costs	(16)	-	-	(16)
Net revenue[APM]	513	5	(8)	510
Asset servicing costs	(27)	-	-	(27)
Compensation costs	(257)	-	-	(257)
Other costs[APM]	(86)	(5)	(10)	(101)
Net finance expense	(6)	-	-	(6)
Gain on disposal of investment property - right-of-use lease assets	-	-	8	8
Amortisation of acquired intangible assets	-	-	(11)	(11)
Share of post-tax loss of associates	-	-	(2)	(2)
Profit before tax[APM]	137	-	(23)	114
Tax expense[APM]	(29)	-	(2)	(31)
Profit[APM]	108	-	(25)	83
Core basic EPS	9.1¢
Core diluted EPS	8.9¢

 

Six months to 30 June 2022 $m	Core measure	Reclassification of amounts relating to consolidated fund entities	Non-core items	Per Group income statement
Management and other fees[APM]	485	(2)	-	483
Performance fees[APM]	404	-	-	404
Net management fee revenue[APM]	889	(2)	-	887
Net income or (losses)/gains on investments and other financial instruments[APM]	(21)	(15)	17	(19)
Third-party share of losses relating to interests in consolidated funds	-	19	-	19
Sub-lease rental income	3	-	-	3
Distribution costs	(16)	-	-	(16)
Net revenue[APM]	855	2	17	874
Asset servicing costs	(30)	-	-	(30)
Compensation costs	(343)	-	-	(343)
Other costs[APM]	(81)	(2)	-	(83)
Net finance expense	(6)	-	-	(6)
Amortisation of acquired intangible assets	-	-	(30)	(30)
Share of post-tax loss of associates	-	-	(2)	(2)
Profit before tax[APM]	395	-	(15)	380
Tax expense[APM]	(70)	-	(2)	(72)
Profit[APM]	325	-	(17)	308
Core basic EPS	24.6¢
Core diluted EPS	24.0¢

 

[APM] The core equivalents of these statutory measures are defined as Alternative Performance Measures.

 

Core measures: reconciliation to statutory equivalents continued

 

The statutory line items within the Group balance sheet can be reconciled to their core equivalents as follows:

At 30 June 2023 $m	Core measure	Reclassification of amounts relating to consolidated fund entities	Per Group balance sheet
Assets
Cash and cash equivalents[APM]	101	111	212
Fee and other receivables[APM]	335	48	383
Investments in fund products and other investments[APM]	827	897	1,724
Investment in associates	12	-	12
Current tax assets	3	-	3
Finance lease receivable	36	-	36
Leasehold improvements and equipment	54	-	54
Leasehold property - right-of-use lease assets	88	-	88
Investment property - right-of-use lease assets	41	-	41
Investment property - consolidated fund entities	-	33	33
Other intangibles	52	-	52
Deferred tax assets	104	-	104
Pension asset	19	-	19
Goodwill and acquired intangibles	616	-	616
Total assets	2,288	1,089	3,377
Liabilities
Borrowings	65	-	65
Trade and other payables[APM]	443	155	598
Provisions	14	-	14
CLO liabilities - consolidated fund entities	-	479	479
Third-party interest in consolidated funds	-	455	455
Lease liability	256	-	256
Total liabilities	778	1,089	1,867
Net assets	1,510	-	1,510

 

At 31 December 2022 $m	Core measure	Reclassification of amounts relating to consolidated fund entities	Per Group balance sheet
Assets
Cash and cash equivalents[APM]	349	108	457
Fee and other receivables[APM]	541	29	570
Investments in fund products and other investments[APM]	841	368	1,209
Investment in associates	14	-	14
Leasehold improvements and equipment	53	-	53
Leasehold property - right-of-use lease assets	92	-	92
Investment property - right-of-use lease assets	71	-	71
Investment property - consolidated fund entities	-	34	34
Other intangibles	50	-	50
Deferred tax assets	105	-	105
Pension asset	22	-	22
Goodwill and acquired intangibles	627	-	627
Total assets	2,765	539	3,304
Liabilities
Trade and other payables[APM]	762	180	942
Provisions	14	-	14
Current tax liabilities	37	-	37
Third-party interest in consolidated funds	-	359	359
Lease liability	253	-	253
Total liabilities	1,066	539	1,605
Net assets	1,699	-	1,699

Core management fee and core performance fee profit

 

Core profit comprises core management fee profit, a steadier earnings stream, and core performance fee profit, a more variable earnings stream. This split facilitates analysis of our profitability drivers.

Six months to 30 June 2023 $m	Core measure	Reclassification of amounts relating to consolidated fund entities	Non-core items	Per Group income statement
Management and other fees	476	(2)	-	474
Distribution costs	(16)	-	-	(16)
Net management fee revenue	460	(2)	-	458
Sub-lease rental income	2	-	-	2
Asset servicing costs	(27)	-	-	(27)
Compensation costs (management fee)	(215)	-	-	(215)
Other costs	(86)	(5)	(10)	(101)
Net finance expense (management fee)	(1)	-	-	(1)
Management fee profit before tax	133	(7)	(10)	116
Tax expense	(28)
Management fee profit	105
Core basic management fee EPS	8.9¢
Core diluted management fee EPS	8.7¢
Performance fees	32	-	-	32
Net income or gains/(losses) on investments and other financial instruments	19	19	(8)	30
Performance fee revenue	51	19	(8)	62
Compensation costs (performance fee)	(42)	-	-	(42)
Net finance expense (performance fee)	(5)	-	-	(5)
Performance fee profit before tax	4	19	(8)	15
Tax expense	(1)
Performance fee profit	3
Core basic performance fee EPS	0.2¢
Core diluted performance fee EPS	0.2¢

 

Six months to 30 June 2022 $m	Core measure	Reclassification of amounts relating to consolidated fund entities	Non-core items	Per Group income statement
Management and other fees	485	(2)	-	483
Distribution costs	(16)	-	-	(16)
Net management fee revenue	469	(2)	-	467
Sub-lease rental income	3	-	-	3
Asset servicing costs	(30)	-	-	(30)
Compensation costs (management fee)	(207)	-	-	(207)
Other costs	(81)	(2)	-	(83)
Net finance expense (management fee)	(5)	-	-	(5)
Management fee profit before tax	149	(4)	-	145
Tax expense	(26)
Management fee profit	123
Core basic management fee EPS	9.3¢
Core diluted management fee EPS	9.1¢
Performance fees	404	-	-	404
Net income or gains/(losses) on investments and other financial instruments	(21)	(15)	17	(19)
Performance fee revenue	383	(15)	17	385
Compensation costs (performance fee)	(136)	-	-	(136)
Net finance expense (performance fee)	(1)	-	-	(1)
Performance fee profit before tax	246	(15)	17	248
Tax expense	(44)
Performance fee profit	202
Core basic performance fee EPS	15.3¢
Core diluted performance fee EPS	14.9¢

Core gains/losses on investments

 

We use the measure core gains/losses on investments to represent the net return we receive on our seeding investments portfolio, combining both consolidated and unconsolidated fund entities on a consistent basis. We therefore exclude from this measure gains or losses on investments which do not relate to the performance of the seed book and adjust the amounts relating to consolidated funds to be included in this line on a consistent basis. Core gains/losses on investments can be reconciled to the Group income statement as follows:

 

$m	Note	Six months to 30 June 2023	Six months to 30 June 2022
Net gains/(losses) on seeding investments portfolio	8	18	(19)
Net gains/(losses) on fund investments held for deferred compensation and other investments	8	1	(2)
Core gains/(losses) on investments		19	(21)
Non-core items:
Consolidated fund entities: gross-up of net gains/(losses) on investments	8	19	(15)
Foreign exchange movements	8	(8)	17
Net income or gains/(losses) on investments and other financial instruments		30	(19)

 

Core tax rate

 

The core tax rate is the effective tax rate on core profit before tax and is equal to the tax on core profit divided by core profit before tax. The tax expense on core profit before tax is calculated by excluding the tax benefit/expense related to non-core items from the statutory tax expense, together with amounts relating to the utilisation or recognition of available US deferred tax assets. Therefore, tax on core profit is considered a proxy for our cash taxes payable.

 

The impact of non-core items on our tax expense is outlined below:

 

$m	Six months to 30 June 2023	Six months to 30 June 2022
Statutory tax expense	31	72
Tax on non-core items:
Amortisation of acquired intangible assets	1	4
Gain on disposal of investment property - right-of-use lease assets	(2)	-
Foreign exchange movements	3	(4)
Non-core tax item on US deferred tax assets	(4)	(2)
Core tax expense	29	70
Comprising:
Tax expense on core management fee profit before tax	28	26
Tax expense on core performance fee profit before tax	1	44

 

The core tax rate is 21% for H1 2023 (H1 2022: 18%). The increase in the core tax rate is largely due to the increase in the statutory UK tax rate in the period.

 

 

Core cash flows from operations excluding working capital movements

 

Core cash flows from operations excluding working capital movements can be reconciled to cash flows from operating activities as reported in the Group cash flow statement as follows:

 

$m	Six months to 30 June 2023	Six months to 30 June 2022
Cash flows from operating activities	102	146
Plus changes in working capital (Note 7):
(Decrease)/increase in fee and other receivables	(208)	176
(Decrease)/increase in other financial assets	(32)	4
Decrease in trade and other payables	267	76
Core cash flows from operations excluding working capital movements	129	402

 

Net financial assets

 

Net financial assets is considered a proxy for Group capital, and is equal to our cash and seed book less borrowings, contingent consideration payable and payables under repo arrangements, as follows:

 

$m	Note	At 30 June 2023	At 31 December 2022
Seeding investments portfolio	8	634	688
Available cash and cash equivalents	6	101	349
Borrowings	6	(65)	-
Payables under repo arrangements		(52)	(54)
Net financial assets		618	983