TIDMEMG
RNS Number : 2119R
Man Group plc
28 February 2023
Press Release
28 February 2023
RESULTS FOR THE YEARED 31 DECEMBER 2022
Significant alpha and net inflows reflect quality of investment
offering across alternative and long-only
o Asset weighted investment outperformance versus peers across
our strategies of 1.4%([KPI])
o Net inflows of $3.1 billion for the year ended 31 December
2022, 5.3% ahead of the industry([KPI])
o Assets under management (AUM ) of $143.3 billion, up from
$138.4 billion as at 30 September 2022
26% core EPS (diluted) growth, demonstrating the strength of our
business model
o Core net management fee revenue growth of 6% despite clear
sector headwinds
o $779 million of core performance fees; a very strong outcome
for a second consecutive year
o Statutory EPS (diluted) of 45.8c and core EPS (diluted) of
48.7c([KPI]) , the highest in over a decade
Consistent shareholder returns and capital discipline support
long-term growth prospects
o 12% increase in the total dividend per share, in line with our
progressive dividend policy
o Net financial assets of $983 million as at 31 December 2022
(2021: $907 million)
o Intention to repurchase a further $125 million of shares after
the share buyback programme announced in December 2022 is complete
($114 million of shares had been repurchased as at 24 February
2023)
$ millions, unless otherwise 31 Dec 2022 31 Dec 2021 Change
stated
----------------------------------- ----------------- ----------------- ------------
AUM, end of period $143.3bn $148.6bn (4%)
----------------------------------- ----------------- ----------------- ------------
Core net management fee revenue 927 877 6%
Core performance fees 779 569 37%
----------------------------------- ----------------- ----------------- ------------
Core net revenue 1,696 1,486 14%
Core prof it before tax 779 658 18%
----------------------------------- ----------------- ----------------- ------------
Statutory prof it after
tax 608 487 25%
----------------------------------- ----------------- ----------------- ------------
c
----------------------------------- ----------------- ----------------- ------------
Core management fee EPS (diluted) 18.4 15.7 17%
Core EPS (diluted) 48.7 38.7 26%
Statutory EPS (diluted) 45.8 33.8 36%
Dividend per share 15.7 14.0 12 %
----------------------------------- ----------------- ----------------- ------------
Luke Ellis, Chief Executive Officer of Man Group, said:
"2022 was another strong period of growth for Man Group,
demonstrating the ability of our talent and technology to deliver
for our clients, and the merits of the resilient and diversified
business model we have built.
"Our unwavering focus on building strong client relationships
globally, together with the range of innovative investment
strategies and solutions we offer, resulted in net inflows of $3.1
billion during the year. This was despite clear headwinds elsewhere
in the asset management industry. Our investment strategies
delivered valuable alpha for our clients, generating 1.4% of
relative outperformance overall; our absolute return strategies
performed particularly strongly, resulting in a 4% increase in our
assets under management from alternatives. Growth in management fee
and performance fee revenues, which were very strong for a second
consecutive year, and the operating leverage inherent in our
business model, resulted in core earnings per share growth of
26%.
"In 2022, allocators rediscovered the value that liquid
alternatives can bring, providing uncorrelated returns to investors
in a difficult year and delivering much needed liquidity within
their portfolio. Looking ahead, there is a significant opportunity
for active investment managers, particularly those with the ability
to offer alpha irrespective of the direction of prevailing market
trends and in a liquid, highly customisable format. This gives us
great confidence in our ability to continue to grow in 2023 and
beyond, delivering positive outcomes for clients and shareholders
alike."
'Core' measures are alternative performance measures. For a
detailed description of our alternative performance measures,
including non-core items, please refer to pages 49 - 53. For
details of key performance indicators ([KPI]), refer to page
11.
Dividend and share buyback
Man Group's ordinary dividend policy is progressive, taking into
account the growth in the firm's overall earnings. The firm first
takes into account required capital and potential strategic
opportunities and maintains a prudent balance sheet. Our policy is
to then distribute available capital to shareholders over time by
way of higher dividend payments and/or share repurchases. While the
Board considers dividends as the primary method of returning
capital to shareholders, it will continue to execute share buybacks
when advantageous.
In line with this policy, the Board confirms it will recommend a
final dividend of 10.1 c per share for the financial year ended 31
December 2022, resulting in a total dividend of 15.7 c per share
for the year. This is in addition to $250 million of share buyback
programmes announced in 2022. We will fix and announce the US
dollar to sterling dividend currency conversion rate on 05 May
2023, in advance of payment.
Dates for the 2022 final dividend
Ex-dividend date 06 April 2023
Record date 11 April 2023
--------------
Sterling conversion date 05 May 2023
--------------
Payment date 19 May 2023
--------------
Conference call and presentation for investors and analysts
There will be a presentation by the management team at 08.00am
(UK time) on 28 February 2023 at
Riverbank House, 2 Swan Lane, London, EC4R 3AD, along with a
live webcast, which will also be available on demand later in the
day.
A copy of the presentation will be available on the investor
relations section of www.man.com from 07.55am.
The conference call can be accessed at:
https://mangroup.webex.com/mangroup/j.php?MTID=m26f8830d8cb58fc6e08733416a6d4c0f
Webinar number:
2360 128 6130
Webinar password:
Man2022Results (62620228 from phones)
Join by phone:
+44 203 478 5289 United Kingdom toll
+1 631 267 4890 USA/Canada toll
Access code: 236 012 86130
Please note: to ask a question during the Q&A session you
will need to attend the presentation in person.
Enquiries
Karan Shirgaokar
Head of Investor Relations
+44 20 7144 1434
investor.relations@man.com
Georgiana Brunner
Head of Communications
+44 20 7144 1000
media@man.com
Neil Doyle
FTI Consulting
+44 77 7197 8220
man@ fticonsulting.com
About Man Group
Man Group is a global, technology-empowered active investment
management firm focused on delivering alpha and portfolio solutions
for clients. Headquartered in London, we manage $ 143.3 billion(1)
and operate across multiple offices globally.
We invest across a diverse range of strategies and asset
classes, with a mix of long-only and alternative strategies run on
a discretionary and quantitative basis, across liquid and private
markets. Our investment teams work within Man Group's single
operating platform, enabling them to invest with a high degree of
empowerment while benefiting from the collaboration, strength and
resources of the entire firm. Our platform is underpinned by
advanced technology, supporting our investment teams at every stage
of their process, including alpha generation, portfolio management,
trade execution and risk management.
Our clients and the millions of retirees and savers they
represent are at the heart of everything we do. We form deep and
long-lasting relationships and create tailored solutions to help
meet their unique needs. We recognise that responsible investing is
intrinsically linked to our fiduciary duty to our clients, and we
integrate this approach broadly across the firm.
We are committed to creating a diverse and inclusive workplace
where difference is celebrated and everyone has an equal
opportunity to thrive, as well as giving back and contributing
positively to our communities. For more information about Man
Group's global charitable efforts, and our diversity and inclusion
initiatives, please visit:
https://www.man.com/corporate-responsibility
Man Group plc is listed on the London Stock Exchange under the
ticker EMG and is a constituent of the FTSE 250 Index. Further
information can be found at www.man.com
Forward-looking statements and other important information
This document contains forward-looking statements with respect
to the financial condition, results, and business of Man Group plc.
By their nature, forward-looking statements involve risk and
uncertainty and there may be subsequent variations to estimates.
Man Group plc's actual future results may differ materially from
the results expressed or implied in these forward-looking
statements.
The content of the websites referred to in this announcement is
not incorporated into and does not form part of this announcement.
Nothing in this announcement should be construed as or is intended
to be a solicitation for or an offer to provide investment advisory
services or to invest in any investment products mentioned
herein.
This announcement contains inside information.
The person responsible at the Company for the release of this
announcement for the purposes of UK MAR is Antoine Forterre, CFO
& COO.
1. As at 31 December 2022. All investment management and
advisory services are offered through the investment engines of Man
AHL, Man Numeric, Man GLG, Man FRM and Man Global Private
Markets.
Assets under management
AUM movements for the year ended 31 December 2022
$bn AUM at Net flows Investment FX & other AUM at
31 Dec performance 31 Dec
2021 2022
---------------------- -------- ---------- ------------- ----------- --------
Absolute return 41.2 1.4 2.8 0.6 46.0
Total return 35.4 (1.8) (2.4) (2.4) 28.8
Multi-manager
solutions 15.0 3.8 0.8 0.6 20.2
---------------------- --------
Alternative 91.6 3.4 1.2 (1.2) 95.0
---------------------- -------- ---------- ------------- ----------- --------
Systematic long-only 36.1 1.2 (4.6) (1.1) 31.6
Discretionary
long-only 20.9 (1.5) (0.9) (1.8) 16.7
---------------------- --------
Long-only 57.0 (0.3) (5.5) (2.9) 48.3
---------------------- -------- ---------- ------------- ----------- --------
Total 148.6 3.1 (4.3) (4.1) 143.3
---------------------- -------- ---------- ------------- ----------- --------
AUM movements for the three months ended 31 December 2022
$bn AUM at Net flows Investment FX & other AUM at
30 Sep performance 31 Dec
2022 2022
---------------------- -------- ---------- ------------- ----------- --------
Absolute return 49.0 (1.1) (2.2) 0.3 46.0
Total return 29.0 (1.3) (0.1) 1.2 28.8
Multi-manager
solutions 19.8 0.1 (0.1) 0.4 20.2
---------------------- --------
Alternative 97.8 (2.3) (2.4) 1.9 95.0
---------------------- -------- ---------- ------------- ----------- --------
Systematic long-only 25.8 3.0 2.0 0.8 31.6
Discretionary
long-only 14.8 (0.3) 1.2 1.0 16.7
---------------------- --------
Long-only 40.6 2.7 3.2 1.8 48.3
---------------------- -------- ---------- ------------- ----------- --------
Total 138.4 0.4 0.8 3.7 143.3
---------------------- -------- ---------- ------------- ----------- --------
AUM by product category
$bn 31-Dec-21 31-Mar-22 30-Jun-22 30-Sep-22 31-Dec-22
---------------------------------- --------- --------- --------- --------- ---------
Absolute return 41.2 46.0 49.3 49.0 46.0
---------------------------------- --------- --------- --------- --------- ---------
Man Institutional Solutions(1) 11.0 11.9 12.7 12.5 14.4
AHL Alpha 8.6 11.4 13.0 11.6 7.7
AHL Dimension 5.5 5.7 5.9 6.1 5.9
AHL Evolution 4.7 4.9 5.3 5.5 5.4
GLG equity 5.5 5.3 4.8 4.7 4.9
AHL Diversified 1.3 1.4 1.5 1.6 1.5
Other(2) 4.6 5.4 6.1 7.0 6.2
---------------------------------- --------- --------- --------- --------- ---------
Total return 35.4 35.0 31.2 29.0 28.8
---------------------------------- --------- --------- --------- --------- ---------
AHL TargetRisk 18.7 17.8 15.1 13.9 13.4
Alternative Risk Premia 8.9 9.1 8.2 7.6 7.8
CLOs and other 3.7 3.8 3.9 3.7 3.9
Global Private Markets 3.0 3.3 3.1 3.0 3.0
Emerging markets fixed
income 1.1 1.0 0.9 0.8 0.7
---------------------------------- --------- --------- --------- --------- ---------
Multi-manager solutions 15.0 15.9 16.3 19.8 20.2
---------------------------------- --------- --------- --------- --------- ---------
Infrastructure & direct
access 9.1 9.5 9.6 12.9 12.7
Segregated 5.4 5.9 6.1 6.2 6.9
Diversified and thematic
FoHF 0.5 0.5 0.6 0.7 0.6
---------------------------------- --------- --------- --------- --------- ---------
Systematic long-only 36.1 34.3 28.2 25.8 31.6
---------------------------------- --------- --------- --------- --------- ---------
Global equity 18.9 17.7 13.8 12.8 16.9
International equity 8.0 8.0 6.9 6.2 7.1
Emerging markets equity 7.4 7.0 6.1 5.8 6.4
US equity 1.8 1.6 1.4 1.0 1.2
---------------------------------- --------- --------- --------- --------- ---------
Discretionary long-only 20.9 20.2 17.3 14.8 16.7
---------------------------------- --------- --------- --------- --------- ---------
Credit and convertibles 5.5 5.4 4.8 4.3 5.2
Japan equity 3.7 4.3 4.0 3.6 4.1
UK equity 4.7 4.5 4.0 3.3 3.8
Europe ex-UK equity 3.2 2.5 1.7 1.2 1.3
Emerging markets fixed
income 1.9 1.8 1.5 1.2 0.9
Other(3) 1.9 1.7 1.3 1.2 1.4
---------------------------------- --------- --------- --------- --------- ---------
Total 148.6 151.4 142.3 138.4 143.3
---------------------------------- --------- --------- --------- --------- ---------
1. Man Institutional Solutions includes AHL Institutional
Solutions, which invests into a range of AHL strategies including
AHL Alpha, AHL Dimension and AHL Evolution.
2. Includes AHL other, Numeric absolute return and GLG credit absolute return strategies.
3. Includes equity and multi-asset strategies.
Investment performance
Return (net of fees) Annualised return (net of fees)
---------------------------- ------------------------------------------------------
3 months to 12 months to 3 years to 5 years to Inception to 31 Dec
31 Dec 2022 31 Dec 2022 31 Dec 2022 31 Dec 2022 2022
------------------------- --- ------------- ------------- ------------- ------------- ------------------------
Absolute return
------------------------- --- ------------- ------------- ------------- ------------- ------------------------
AHL Alpha 1 -3.8% 11.0% 7.8% 6.4% 10.5%
AHL Dimension 2 -3.5% 8.8% 2.5% 3.5% 4.8%
AHL Evolution 3 -3.6% 4.8% 8.4% 7.8% 12.4%
AHL Diversified 4 -8.2% 13.1% 9.0% 6.6% 10.7%
GLG Alpha Select
Alternative 5 -1.7% 4.8% 6.3% 6.3% 4.6%
GLG Event Driven
Alternative 6 1.1% 2.1% 6.6% - 6.7%
GLG Global Credit Multi
Strategy 7 4.6% 3.6% 4.8% 4.5% 11.1%
Man Strategies 1783 8 0.4% 12.3% - - 5.6%
------------------------- --- ------------- ------------- ------------- ------------- ------------------------
Total return
------------------------- --- ------------- ------------- ------------- ------------- ------------------------
AHL TargetRisk 9 1.2% -16.7% 0.3% 4.9% 6.8%
Alternative Risk Premia 10 0.0% 11.9% 4.1% 2.5% 4.4%
GLG Global Emerging
Markets Debt Total
Return 11 -2.4% 2.3% 1.9% 0.7% 1.7%
------------------------- --- ------------- ------------- ------------- ------------- ------------------------
Multi-manager solutions
------------------------- --- ------------- ------------- ------------- ------------- ------------------------
FRM Diversified II 12 0.4% 2.2% 5.3% 3.2% 4.1%
------------------------- --- ------------- ------------- ------------- ------------- ------------------------
Systematic long-only
------------------------- --- ------------- ------------- ------------- ------------- ------------------------
Numeric Global Core 13 9.7% -15.6% 5.9% 4.3% 9.0%
Relative return 0.0% 2.6% 0.9% -1.8% 0.7%
Numeric Europe Core 14 10.2% -11.5% 4.1% 4.1% 8.2%
Relative return 0.7% -2.0% 1.1% -0.2% 2.2%
Numeric Emerging Markets
Core 15 9.8% -19.3% 0.1% -0.8% 4.1%
Relative return 0.1% 0.8% 2.8% 0.6% 2.2%
------------------------- --- ------------- ------------- ------------- ------------- ------------------------
Discretionary long-only
------------------------- --- ------------- ------------- ------------- ------------- ------------------------
GLG Continental European
Growth 16 11.7% -18.7% 4.0% 5.5% 8.8%
Relative return -0.3% -11.8% -1.8% 0.2% 3.1%
GLG Japan CoreAlpha
Equity 17 7.7% 18.9% 8.6% 3.1% 4.6%
Relative return 4.4% 21.3% 2.9% -0.2% 1.9%
GLG Undervalued Assets 18 14.3% 2.8% 0.0% 1.1% 6.2%
Relative return 5.4% 2.5% -2.3% -1.8% 1.1%
GLG High Yield
Opportunities 19 5.4% -10.6% 3.4% - 5.7%
Relative return 1.0% 3.0% 6.0% - 5.7%
------------------------- --- ------------- ------------- ------------- ------------- ------------------------
Indices
------------------------- --- ------------- ------------- ------------- ------------- ------------------------
HFRX Global Hedge Fund
Index 20 0.2% -4.4% 1.9% 1.4%
HFRI Fund of Funds
Conservative Index 20 1.8% 0.5% 4.8% 3.9%
HFRI Equity Hedge
(Total) Index 20 4.3% -10.1% 5.8% 4.6%
HFRX EH: Equity Market
Neutral Index 20 1.3% 0.1% -1.0% -1.6%
Barclay BTOP 50 Index 21 -4.4% 13.8% 9.5% 6.0%
------------------------- --- ------------- ------------- ------------- ------------- ------------------------
Past or projected performance is no indication of future
results. Financial indices are used for illustrative purposes only
and are provided for the purpose of making a comparison to general
market data as a point of reference and should not be construed as
a true comparison to the strategy.
The information herein is being provided solely in connection
with this press release and is not intended to be, nor should it be
construed or used as, investment, tax or legal advice, any
recommendation or opinion regarding the appropriateness or
suitability of any investment or strategy, or an offer to sell, or
a solicitation of an offer to buy, an interest in any security,
including an interest in any fund or pool described herein.
1. Represented by AHL Alpha plc from 17 October 1995 to 30
September 2012, and by AHL Strategies PCC Limited: Class Y AHL
Alpha USD Shares from 1 October 2012 to 30 September 2013. The
representative product was changed at the end of September 2012 due
to the provisioning of fund liquidation costs in October 2012 for
AHL Alpha plc, which resulted in tracking error compared with other
Alpha Programme funds. Both funds are valued weekly; however, for
comparative purposes, statistics have been calculated using the
best quality price that is available at each calendar month end,
using estimates where a final price is unavailable. Where a price,
either estimate or final is unavailable on a calendar month end,
the price on the closest date prior to the calendar month end has
been used. Both of the track records have been adjusted to reflect
the fee structure of AHL Alpha (Cayman) Limited - USD Shares. From
30 September 2013, the actual performance of AHL Alpha (Cayman)
Limited - USD Shares is displayed.
2. Represented by AHL Strategies PCC Limited: Class B AHL
Dimension USD Shares from 3 July 2006 to 31 May 2014, and by AHL
Dimension (Cayman) Ltd - F USD Shares Class from 1 June 2014 until
28 February 2015 when AHL Dimension (Cayman) Ltd - A USD Shares
Class is used. Representative fees of 1.5% Management Fee and 20%
Performance Fee have been applied.
3. Represented by AHL Evolution Limited adjusted for the fee
structure (2% p.a. management fee and 20% performance fee) from
September 2005 to 31 October 2006; and by AHL Strategies PCC: Class
G AHL Evolution USD from 1 November 2006 to 30 November 2011; and
by the performance track record of AHL Investment Strategies SPC:
Class E AHL Evolution USD Notes from 1 December 2011 to 30 November
2012. From 1 December 2012, the track record of AHL (Cayman) SPC:
Class A1 Evolution USD Shares has been shown. All returns shown are
net of fees.
4. Represented by Man AHL Diversified plc from 26 March 1996 to
29 October 2012, and by Man AHL Diversified (Guernsey) USD Shares -
Class A from 30 October 2012 to date. The representative product
was changed at the end of October 2012 due to legal and/or
regulatory restrictions on Man AHL Diversified plc preventing the
product from accessing the Programme's revised target allocations.
Both funds are valued weekly; however, for comparative purposes,
statistics have been calculated using the best quality price that
is available at each calendar month end, using estimates where a
final price is unavailable. Where a price, either estimate or final
is unavailable on a calendar month end, the price on the closest
date prior to the calendar month end has been used.
5. Represented by Man GLG Alpha Select Alternative IL GBP; AUM
included within GLG equity under the absolute return product
category.
6. Represented by Man GLG Event Driven Alternative IN USD; AUM
included within GLG equity under the absolute return product
category.
7. Represented by GLG Market Neutral Fund - Class Z Restricted -
USD until 31 August 2007. From 1 September 2007, Man GLG Global
Credit Multi Strategy CL IL XX USD unrestricted; AUM included
within Other under the absolute return product category.
8. Represented by Man Strategies 1783 Class F1 USD until 31st
December 2021. From the 1st January 2022 Man Strategies 1783 Class
A USD. AUM included within the corresponding product category.
9. Represented by Man AHL TargetRisk class I USD.
10. Represented by Man Alternative Risk Premia Class A USD.
11. Represented by Man GLG Global Emerging Markets Debt Total
Return Class I USD; AUM included within Emerging markets fixed
income under the total return product category.
12. Represented by FRM Diversified II Fund SPC - Class A USD
('the fund') until April 2018 then Class A JPY hedged to USD
thereafter. However, prior to Jan 2004, FRM has created the FRM
Diversified II pro forma using the following methodology: i) for
the period Jan 1998 to Dec 2003, by using the returns of Absolute
Alpha Fund PCC Limited - Diversified Series Share Cell ('AA
Diversified - USD') adjusted for fees and/or currency, where
applicable. For the period Jan 2004 to Feb 2004, the returns of the
fund's master portfolio have been used, adjusted for fees and/or
currency, where applicable. Post Feb 2004, the fund's actual
performance has been used, which may differ from the calculated
performance of the track record. There have been occasions where
the 12-months' performance to date of FRM Diversified II has
differed materially from that of AA Diversified. Strategy and
holdings data relates to the composition of the master portfolio;
AUM included within Diversified and thematic FoHF under the
multi-manager product category.
13. Performance relative to the MSCI World. This reference index
is intended to best represent the strategy's universe. Investors
may choose to compare returns for their accounts to different
reference indices, resulting in differences in relative return
information. Comparison to an index is for informational purposes
only, as the holdings of an account managed by Numeric will differ
from the securities which comprise the index and may have greater
volatility than the holdings of an index.
14. Performance relative to the MSCI Europe (EUR). This
reference index is intended to best represent the strategy's
universe. Investors may choose to compare returns for their
accounts to different reference indices, resulting in differences
in relative return information. Comparison to an index is for
informational purposes only, as the holdings of an account managed
by Numeric will differ from the securities which comprise the index
and may have greater volatility than the holdings of an index; AUM
included within International equity under the systematic long-only
product category.
15. Performance relative to MSCI Emerging Markets. This
reference index is intended to best represent the strategy's
universe. Investors may choose to compare returns for their
accounts to different reference indices, resulting in differences
in relative return information. Comparison to an index is for
informational purposes only, as the holdings of an account managed
by Numeric will differ from the securities which comprise the index
and may have greater volatility than the holdings of an index.
16. Represented by Man GLG Continental European Growth Fund
Class C Accumulation Shares. Relative return shown vs FTSE World
Europe Ex UK (GBP, GDTR); AUM included within Europe ex-UK equity
under the discretionary long-only product category.
17. Represented by Man GLG Japan CoreAlpha Fund - Class C
converted to JPY until 28 January 2010. From 1 February 2010 Man
GLG Japan CoreAlpha Equity Fund - Class I JPY is displayed.
Relative return shown vs TOPIX (JPY, GDTR); AUM included within
Japan equity under the discretionary long-only product
category.
18. Represented by Man GLG Undervalued Assets Fund - C
Accumulation Shares. Relative return shown vs FTSE All Share (GBP,
NDTR); AUM included within UK equity under the discretionary
long-only product category.
19. Represented by Man GLG High Yield Opportunities I EUR.
Relative return is shown vs ICE BofA Global High Yield Index (EUR,
TR) Hedged benchmark. AUM included within Credit and convertibles
under the discretionary long-only product category.
20. HFRI and HFRX index performance over the past 4 months is subject to change.
21. The historical Barclay BTOP 50 Index data is subject to change.
Chief Executive Officer's review
Overview(1)
One clear, dominant force drove financial markets in 2022:
inflation. Following the aftershocks of the pandemic and Russia's
invasion of Ukraine in February, inflation prints reached record
highs across the world, prompting aggressive monetary policy
tightening from central banks and heightened concerns about
economic recession. This weighed significantly on financial markets
throughout the year; the S&P 500 snapped a three-year winning
streak, registering its worst year since the global financial
crisis, with the technology sector darlings of the past decade its
greatest casualty. Bond markets also endured heavy selling: by the
end of the year, the US 10-year government bond yield increased to
3.9% from 1.6%, the largest annual increase in records dating back
to the 1960s. Together, this resulted in 2022 becoming one of the
worst years on record for a 60/40 portfolio.
This environment is the real test for active investment
management. I am very proud and delighted by the exceptionally
strong set of results we delivered for 2022. One of our key
strengths as an active asset manager is the breadth of investment
capabilities we offer, many of which aim to deliver uncorrelated
returns across a range of market environments. Despite the large
sell-off in markets, our strategies were able to deliver $2.9
billion of alpha for our clients and liquidity when they needed it
most, clearly demonstrating the value liquid alternatives can add
to investment portfolios.
While our technology-empowered active investment processes
delivered significant alpha for our clients, market beta still left
its mark and resulted in negative absolute investment performance
of $4.3 billion overall.
Absolute investment performance across our product categories
was -1.5%. Our absolute return strategies were up 8.7%, driven by
positive performance from AHL Alpha (+11.0%) and AHL Dimension
(+8.8%). Our total return and long-only strategies were naturally
impacted significantly by the big sell-off in market beta, with
overall investment performance of -8.4% and -7.6%, respectively.
AHL TargetRisk performance (-16.7%) was an example of this,
reflecting its exposure to fixed income and equity markets, which
delivered negative returns in tandem during the year for the first
time since the 1990s. AHL TargetRisk's proprietary risk overlays
were active throughout most of the year and helped mitigate
drawdowns during the sharpest sell-offs, significantly reducing
exposure when inflation worries were at their peak, contributing
c.6% to returns.
Investment performance in our systematic long-only strategies
was also negatively impacted by broad exposure to global equities
while performance in our discretionary long-only strategies was
more mixed, with GLG Japan CoreAlpha Equity performing strongly
(+18.9%), while GLG Continental European Growth suffered
(-18.7%).
On an asset-weighted basis, relative investment performance
across the firm was again strong at +1.4% during the year. Our
total return strategies also outperformed by 1.4%, with notably
strong outperformance from GLG EM Debt (+20.6%) and Man Alternative
Risk Premia (+7.1%), while our long-only strategies delivered
strong alpha for clients (+3.9%), with notable outperformance from
GLG Japan Core Alpha (+21.3%), GLG High Yield Opportunities
(+3.0%), and Numeric Global Core (+2.6%).
We also made further progress on the client front, building
long-term relationships with global asset allocators and
distributors while helping our existing clients navigate market
volatility, recording $3.1 billion of net inflows during the year.
This was offset by $8.4 billion of combined negative impacts from
investment performance and FX and other movements owing to a
stronger US dollar. Our assets under management (AUM) were $143.3
billion as at 31 December 2022, a 4% decrease versus 31 December
2021.
Core profit before tax increased to $779 million, compared with
$658 million in 2021, reaching a 14-year high, driven by growth in
management fee earnings and a strong performance fee outcome for a
second consecutive year. Consistent growth in our performance fee
eligible AUM has increased the performance fee potential of our
business; even when we deliver investment performance in line with
previous years, significantly higher performance fee eligible AUM
means we have the ability to generate meaningful performance fees
more regularly. Core management fee profit before tax was also up
9%, reflecting continued net management fee growth and cost
discipline. Statutory profit before tax was $745 million, compared
with $590 million in 2021.
Our results highlight the continued demand for our products, the
benefit of the scale and diversification of the performance fee
earning strategies we offer, and the quality of the business we
have built. During the year, we also made significant progress on
our key strategic objectives, which are core to cementing our
competitive advantage and driving the long-term growth of our
business.
Progress against strategic priorities
Strong client relationships
Client engagement was strong throughout the year, with $41.1
billion of subscriptions, our second-best year on record. This was
despite a pick-up in redemption requests during the year as clients
responded to macroeconomic conditions or other issues in their
investment portfolios, all of which were honoured in full and on
time. Net inflows of $3.1 billion during the year were 5.3% ahead
of the industry, highlighting the continued demand for the
differentiated range of strategies and solutions we offer, our
judicious approach to risk management and the quality of the
long-term partnerships we have built with investors across the
globe.
Our clients have confidence in our ability to manage and grow
their assets, and to provide access to liquidity when they need it
the most. At the end of December, 82% of our AUM is from clients
investing in two products or more and 52% from clients investing in
four products or more, which has grown from 71% and 48%
respectively five years ago. Our 50 largest clients are invested in
an average of four of our strategies.
1. Past performance is not indicative of future results. Returns
may increase or decrease as a result of currency fluctuations.
Performance figures are shown net of representative management and
performance fees.
This ability to provide bespoke solutions flexibly and at scale
also enabled us to add a significant number of new relationships
with strategically important allocators during the year, often via
a dedicated investment solution. These customised mandates leverage
our broad investment capabilities to meet each client's unique risk
and return requirements and are delivered via our highly effective,
technology-enabled operating platform. While representing only a
part of the overall customised mandates we offer, our Institutional
Solutions business has grown to $14.4 billion as at 31 December
2022, recording $2.6 billion of net inflows during the year.
The much-discussed UK LDI episode was a perfect manifestation of
the role that liquid alternative strategies can play in portfolios.
Approximately $3 billion or roughly 50% of our assets from UK
defined benefit pension scheme clients were redeemed between 23
September and 31 December, primarily from absolute return and total
return strategies. After several years of benign market
environments, institutions rediscovered the value of liquidity in
their portfolios and our ability to return much-needed capital at
very short notice strengthened our longstanding relationships with
these clients. Importantly, the weighted average investment
performance of the assets redeemed was c.12%. This was a key driver
of c.95% of these clients requesting to redeem partially, leaving
them the option to reinvest with us easily in the future. As
schemes revisit their asset allocations, we are seeing encouraging
demand from our clients looking to reallocate to liquid
alternatives.
Innovative investment strategies
We consider innovation as key to generating alpha, cementing our
competitive advantage and creating multiple dimensions for future
growth. It strengthens our business by further diversifying our
revenue streams, providing development opportunities for our people
and, most importantly, maintaining our relevance with clients.
Our culture of collaboration across the firm allows us to bring
the best out of our talent working together. A good example of this
is the work we have done on Man 1783, our multi-strategy offering,
which gives clients access to all of the systematic and
discretionary alpha content at Man Group. We have invested a huge
amount of time and energy into product development this year; we
take a scientific approach and apply the same level of rigour
across all our investment areas, whether it is quantitative
analysis, investing in affordable housing, or vetting managers in
our multi-manager business.
We also continued to grow our discretionary offerings for
clients in the year, launching a series of new funds including
European High Yield Opportunities, Sustainable Credit Opportunities
and Dynamic Income. We hired a Global Head of Capital Markets in
September, taking the opportunity of the lull in new issue activity
to build a strong team that we feel can add significant value to a
range of investment strategies by maximising our footprint in the
IPO and secondaries market as they come back.
At Man Group, we believe the asset management industry has a
role to play in fighting climate change; it is an important driver
of growth and an opportunity for our business. Innovation in this
area has also been a key focus for us and in February 2022, we
announced our first (of what we think will be many) joint venture
to build around 1,000 net zero energy build-to-rent properties
across various US metropolitan areas over the next several
years.
In November, we were delighted to launch one of the first
systematic multi-asset Article 9 strategies, which is a truly
innovative product for clients. We developed AHL TargetClimate
because we saw a real opportunity to bring our risk management and
quantitative expertise to a space that has traditionally been the
domain of discretionary investors. Identifying securities that are
climate-aligned is a complex and nuanced exercise. There is a lot
of noise that requires a data-driven approach to clean, analyse and
gain insights from the multiple data sources available, something
we have been specialising in at Man Group for over 35 years.
Our seed capital programme continues to be a key way for us to
support product launches and our pipeline of new ideas remains very
strong. During the year we seeded new strategies across our
business, leaving our seeding book at $688 million as at 31
December 2022, following investments into new products developed
across the business.
A great further example of our commitment to research and
innovation is our partnership with Oxford University, the
Oxford-Man Institute (OMI), and this year, we extended our funding
for a further five years, which will take it to at least 20 years.
The work undertaken at the OMI has had an extensive impact on a
range of Man Group's client investment programmes, including active
risk overlays for systematic investment management, intelligent
algorithms for trade execution and order-routing and sophisticated
methods for monitoring transaction costs and market impact.
Efficient and effective operations
Due to our early and significant investment in technology, we
believe we have a huge competitive advantage in an industry which,
like most others, is becoming ever more technology-driven. Our
technology capabilities enable us to evolve and adapt as markets
and clients' needs do.
We're a global leader in quantitative investing and we also use
technology to support discretionary investment teams. With 600+
quants and technologists across the firm, our advanced investment
technology platform supports our investment teams at every stage of
their process, from alpha generation and portfolio management to
trade execution and risk management.
However, technology isn't just about making better investment
decisions for us; it powers everything we do and is the foundation
on which the firm operates. For our clients, it enables us to
customise our offering flexibly, efficiently and at scale, and in
2022 alone, our teams successfully executed and processed nearly 20
million trades.
Over the last 10 years we have grown our assets by more than 2.5
times but our headcount in operations is actually lower; this is
real operational leverage and is only possible with an
industry-leading technology platform. For our staff across all
departments, we offer data science and Python training via our
<develop> programme, equipping them with the skills to
innovate and make processes less time consuming. Most importantly,
for our shareholders, it delivers significant operating
leverage.
In 2022, we continued to invest heavily in our technology
capabilities. One of the highlights of the year was reaching a
major milestone on the four-year rewrite of ArcticDB, the bedrock
of our data science platform. Rewritten in C++, ArcticDB sits
across the bulk of our front-to-back-office systems, and is
designed to process large 'industrial sized' volumes of data,
accessible by any user across the business. We have a competitive
advantage that we believe is difficult to replicate because of the
complexity of the research, the difficulty in execution and the
power of the platform.
Our platform also offers the ability to onboard new teams and
businesses efficiently and M&A continues to be a key part of
our strategy. We reviewed a large number of acquisition
opportunities during the year. While none met our full criteria in
2022, with price and culture often being the main reason why we
walk away, we think this capability will prove valuable to
shareholders in the longer term, as it has in the past.
People and culture
We are fundamentally a people business. To best serve our
clients and shareholders, one of our top priorities is to attract
and retain the best people, creating an environment in which they
can achieve their potential. We place great importance on being an
employer of choice and an organisation where all our employees can
bring their authentic selves to work to learn, develop and achieve
excellence. We are pleased to report that our 2022 staff survey
recorded an engagement score of 82%, up from the previous year. We
have continued our investment in talent development to maintain our
competitive edge and our dedicated Talent function provides career
development and performance support to staff at all levels.
When I read summaries of the work that is carried out within Man
Group around diversity, equity and inclusion (DE&I) I feel an
immense sense of pride in the team I am fortunate to lead. The
financial services industry has not traditionally been renowned for
its focus on DE&I, but at Man Group it is an integral part of
our culture and is an important part of what I believe makes us
stand out.
Paving the Way is our dedicated campaign to help address the
'pipeline' issue, encouraging a more diverse range of talent to
apply for positions at Man Group and the industry. We are big
believers in the benefits of combining industry work and academia,
as well as the transformative power of technology in finance. We
are partnering with the University of Warwick to deliver a new
Masters degree apprenticeship programme, providing recent STEM
graduates with the opportunity to continue their further education
while transitioning into full-time employment in a
technology-oriented role. This programme is a great opportunity to
attract a more diverse range of talent into our firm, and we are
excited to increase access to tech careers for talented graduates
from a broader range of academic backgrounds.
We have signed the Social Mobility Pledge alongside roughly 700
organisations globally, pledging to promote a level playing field
for people from disadvantaged backgrounds. Due to the initiatives
led by our Social Mobility workstream, we were ranked in the top 75
of the Social Mobility Index in 2022 (up from 99 out of 203 in
2021) and were also very pleased to be Highly Commended for
'Championing Social Mobility' at the FT Adviser Diversity Awards.
We have also become a founding partner of Progress Together, the
City of London initiative to improve social mobility.
Fostering a working environment and culture where all our
employees feel that they belong takes time. While there is a huge
amount of work still to be done to make our firm, and the wider
industry, truly representative of the populations we serve, I want
everyone to know that we stand for an absolute and unequivocal
commitment to inclusiveness.
Delivering growth
2022 was another strong year of growth for Man Group. Our
intensely client-centric approach coupled with excellent risk
management and our technology leadership has allowed us to grow
significantly during a challenging period for our industry. This,
however, isn't a one-year phenomenon. Since the beginning of 2018,
we have seen $28.1 billion of net inflows from clients, increased
our core management fee profitability by 63% to $290 million, grown
our core management fee EPS (diluted) by 96%, and increased our
performance fee eligible assets under management by 28%. This has
allowed us to return $1.9 billion or 57% of our current market
capitalisation to shareholders over the last five years, an average
of 11% of our market capitalisation in dividends and share buybacks
every year during that period. Over the past few years, we have
built a business that is fundamentally resilient and run for
long-term growth and success. It is during difficult market
environments that the merit of having such a resilient business
model shines through.
Outlook
The difficulties faced by traditional asset management markets
during 2022 make a strong case for investing in alternatives, where
we are a market leader with over 35 years of experience. There are
few alternative asset managers with the range of compelling
solutions we offer, a longstanding track record of investment
performance across a range of market environments, excellent risk
management skills and a flexible operating platform underpinned by
cutting-edge technology. I have great confidence in our ability to
continue to generate alpha at scale for clients, irrespective of
the direction of prevailing market trends. This presents a
significant runway for growth in the future.
Luke Ellis
Chief Executive Officer
Key performance indicators
Financial KPIs
Our financial KPIs illustrate and measure the relationship
between the investment experience of our clients, our financial
performance and the creation of shareholder value over time.
Relative investment performance
What we measure
The asset weighted performance of Man Group's strategies
compared to peers gives an indication of the competitiveness of our
investment performance against similar strategies offered by other
investment managers.
How we performed
We had asset-weighted relative investment outperformance of 1.4%
in 2022, with outperformance across multi-manager, total return
and
long-only strategies. For further discussion on investment
performance see page 8.
Relative net flows
What we measure
Relative net flows are a measure of our ability to attract and
retain investor capital in comparison to our industry peers. Growth
in the
assets we manage for clients drives our financial performance
via our ability to earn management and performance fees.
How we performed
Relative net flows in 2022 were 5.3%, remaining positive despite
market volatility, indicating the strength of our global client
relationships and diverse product offering.
Core management fee EPS (diluted) growth1
Why it matters
Core management fee EPS (diluted) growth in the year measures
the overall effectiveness of our business model and reflects the
value generation for shareholders from our earnings, excluding
performance fees.
How we performed
Core management fee EPS (diluted) increased by 17% to 18.4c.
Increased management fee profitability was supplemented by $386
million of capital returned through our share repurchases in the
year, which reduced total share count.
Core EPS (diluted)1
Why it matters
Core EPS (diluted) is a measure of the earnings that drive our
cash flows. This metric includes core performance fee profits,
which are profits generated through outperformance for our clients
and are a key earnings stream for the business, as well as a
significant component of value creation for shareholders over
time.
How we performed
Core EPS (diluted) of 48.7c for 2022 is an increase of 26%
compared with 2021, and a 10-year high, reflecting another period
of very strong performance fee generation and the operating
leverage inherent in our business model.
Non-financial KPIs
Our non-financial KPIs reflect our core values and demonstrate
our commitment to our people, wider society and the
environment.
Carbon footprint (tCO2e)
Why it matters
In order to monitor and decrease our carbon footprint, we
measure total market-based greenhouse gas emissions (tCO2e) using
the GHG-Protocol guidance for the Scope 1, Scope 2, Scope 3 travel
and Scope 3 upstream leased asset categories.
How we performed
In 2022, total carbon emissions increased in comparison to 2021,
owing to a significant increase in business travel post-pandemic.
However, our 2022 total emissions were 18% below our baseline year
of 2019.
Employee engagement
Why it matters
Each year, we conduct a staff survey to help us monitor and
understand employee engagement and identify any areas for action.
Alongside our engagement survey, we continue to provide various
mechanisms for staff to provide feedback.
How we performed
Our 2022 staff survey recorded an engagement score of 82%, with
a response rate of 76% (a 2% decrease compared to 2021).
Women in senior management roles
Why it matters
As part of our efforts to encourage greater diversity across the
investment management industry, we measure the number of women in
senior management positions at the firm. This is defined as those
who are, or report directly to, members of our Executive
Committee.
How we performed
In 2022, the number of women in senior management roles
decreased slightly to 26%, from 27%. We are committed to working,
both internally and externally with the industry, to increase the
number of women in senior management and we are confident that we
are on the right longer-term trajectory.
ESG-integrated AUM ($bn)
Our goal is to meet the RI needs of our clients and this can be
measured by the amount of our AUM that is invested responsibly.
We calculate ESG-integrated AUM in line with the Global
Sustainable Investment Alliance definitions, which have emerged as
the global standard of classification.
ESG-integrated assets under management have decreased to $50.0
billion in 2022, largely because of market beta and currency
translation movements. In 2023, we will continue to aim to launch
new sustainable funds and strategies to support the diverse
investment objectives of our clients.
1. Details of the calculation of our alternative performance
measures are provided on pages 49 to 53.
Chief Financial Officer's review
Overview
It has been another year of excellent results for Man Group,
with statutory profit increasing to $608 million from $487 million
in 2021. Our net management fee revenue continued to grow, and we
generated our strongest performance fees since 2008, leading to
core profit exceeding the previous 10-year peak achieved in 2021.
We have continued to take a disciplined approach to cost management
while investing in the areas which will drive our future success.
This cost discipline, along with the reduction in the number of
shares in issue as a result of our share buyback programmes in the
year, has resulted in core diluted EPS growing by 26% to reach a
recent high of 48.7c in 2022. Statutory EPS on a diluted basis
increased from 33.8c to 45.8c. In spite of net inflows of $3.1
billion in the year, negative absolute investment performance and
adverse FX and other movements decreased closing AUM from a record
high of $148.6 billion at the end of 2021 to $143.3 billion at 31
December 2022, although average AUM across the year remained higher
than during 2021. Net flows and investment performance were mixed
across the various product categories, with a decrease in long-only
AUM of $8.7 billion in the year partially offset by an increase in
alternative AUM of $3.4 billion.
Management and other fees increased by 4% to $954 million for
the year due to the higher average AUM, which also drove the 6%
increase in core net management fee revenue to $927 million. The
average net management fee margin of 65 basis points for the year
was one basis point lower than in 2021 due to higher net inflows
into lower margin strategies. The run rate net management fee
margin at 31 December 2022 stood at 64 basis points compared with
63 basis points at the end of 2021. Run rate core net management
fee revenue was $917 million at the end of the year, down from $939
million at the end of 2021 as a result of the decrease in closing
AUM, movements in foreign exchange rates and the impact of changes
in product mix.
Core performance fee generation was strong, with $779 million
earned in the year compared with $569 million in 2021. Our
asset-weighted relative investment outperformance was 1.4% across
all categories, in comparison with 1.9% in 2021. We outperformed
our peers across multi-manager, total return and long-only
strategies. Although the majority of performance fees were earned
from systematic macro strategies, all our investment engines
contributed positively. Core losses on investments of $15 million,
compared with gains of $27 million in 2021, were predominantly due
to mark-to-market losses on our CLO risk retention assets.
Core costs were $906 million, up from $815 million in 2021,
driven by higher performance fee-related variable compensation and
a return to more normalised levels of expenditure on travel and
entertainment as COVID-19 restrictions eased.
Our sub-lease rental income in 2022 was broadly in line with
2021 on a statutory basis, as we continued to market the remaining
vacant space in our London office for sub-let. In early 2023, we
signed a sub-lease with a new tenant for a substantial portion of
the vacant space. This will reduce future depreciation, following
the derecognition of the associated portion of our right-of-use
lease asset, and occupancy costs which are met by Man Group in the
absence of sub-tenants. In 2022, we also signed a lease for new
office premises in New York, with the newly refitted space now
fully operational.
Non-core items (excluding tax) decreased from a net expense of
$68 million in 2021 to $34 million in 2022, primarily due to FX
gains of $22 million and some of our acquired intangible assets
becoming fully amortised during the year.
We continue to deliver strong cash conversion of our profits and
have again increased our returns to shareholders in 2022. Our total
proposed dividend for the year of 15.7c per share represents an
increase of 12% from 14.0c in 2021, reflecting the ongoing growth
in the business and our progressive dividend policy. After
completing the $250 million share buyback announced in December
2021, we announced a further $250 million of share buybacks during
2022, of which $152 million had been completed at 31 December 2022.
Together with an estimated $194 million of dividends in relation to
2022, the total announced returns to shareholders for 2022 is over
$0.4 billion, and $1.9 billion over the last five years.
Our balance sheet remains strong and liquid and allows us to
navigate periods of stress while continuing to invest in the
business to support our long-term growth prospects. Alongside the
ongoing return of capital to shareholders, we continue to allocate
capital to seed investments and invest heavily in technology to
ensure we remain leaders in active investment management. We had
net tangible assets of $1,022 million at 31 December 2022 and net
financial assets of $983 million, including $349 million of cash
(excluding amounts held by consolidated fund entities). We continue
to be strongly cash-generative, with core cash flows from
operations excluding working capital movements of $810 million in
the year.
Impact of foreign exchange rates
The portion of our AUM which is denominated in currencies other
than the US dollar was adversely impacted by the strengthening of
the US dollar against most currencies over the course of the year.
This reduced our reported AUM by $6.6 billion and had a knock-on
impact on our management fee revenue.
However, the weakening of sterling against the US dollar in 2022
also contributed to a partially offsetting decrease in core costs
of around $26 million compared with 2021.
'Core' measures are alternative performance measures. For a
detailed description of our alternative performance measures,
including non-core items, please refer to pages 49 - 53.
Year
ended Year ended
31 December 31 December
$m 2022 2021
------------------------------------------------- ------------ ------------
Core net management fee revenue 927 877
Core performance fees 779 569
Core (losses)/gains on investments (15) 27
Core sub-lease rental and lease surrender income 5 13
------------------------------------------------- ------------ ------------
Core net revenue 1,696 1,486
------------------------------------------------- ------------ ------------
Asset servicing costs (58) (58)
Compensation costs (678) (596)
Core other costs (170) (161)
Net finance expense (11) (13)
------------------------------------------------- ------------ ------------
Core profit before tax 779 658
------------------------------------------------- ------------ ------------
Core management fee profit before tax 290 266
------------------------------------------------- ------------ ------------
Core performance fee profit before tax 489 392
------------------------------------------------- ------------ ------------
Core profit 647 557
------------------------------------------------- ------------ ------------
Non-core items (before tax) (34) (68)
------------------------------------------------- ------------ ------------
Statutory profit 608 487
------------------------------------------------- ------------ ------------
Statutory EPS (diluted) 45.8c 33.8c
------------------------------------------------- ------------ ------------
Core EPS (diluted) 48.7c 38.7c
------------------------------------------------- ------------ ------------
Core management fee EPS (diluted) 18.4c 15.7c
------------------------------------------------- ------------ ------------
Proposed dividend per share 15.7c 14.0c
------------------------------------------------- ------------ ------------
Assets under management (AUM)
Change
------------
31 December Net inflows/ Investment FX and 31 December
$bn 2021 (outflows) performance other 2022 $bn %
------------ ---------------- ----------- ------------ ------------ ------ ----------- ----- -----
Alternative Absolute return 41.2 1.4 2.8 0.6 46.0 4.8 12%
Total return 35.4 (1.8) (2.4) (2.4) 28.8 (6.6) (19)%
Multi-manager
solutions 15.0 3.8 0.8 0.6 20.2 5.2 35%
----------------------------- ----------- ------------ ------------ ------ ----------- ----- -----
Total 91.6 3.4 1.2 (1.2) 95.0 3.4 4%
----------------------------- ----------- ------------ ------------ ------ ----------- ----- -----
Long-only Systematic 36.1 1.2 (4.6) (1.1) 31.6 (4.5) (12)%
Discretionary 20.9 (1.5) (0.9) (1.8) 16.7 (4.2) (20)%
----------------------------- ----------- ------------ ------------ ------ ----------- ----- -----
Total 57.0 (0.3) (5.5) (2.9) 48.3 (8.7) (15)%
----------------------------- ----------- ------------ ------------ ------ ----------- ----- -----
Total 148.6 3.1 (4.3) (4.1) 143.3 (5.3) (4)%
------------------------------ ----------- ------------ ------------ ------ ----------- ----- -----
Absolute return
The increase in absolute return AUM was driven by net inflows of
$1.4 billion, primarily into Man Institutional Solutions and
American Beacon AHL Managed Futures, partially offset by outflows
from AHL Alpha. Positive absolute performance of $2.8 billion was
driven by a number of strategies in the product category, in
particular systematic macro strategies.
Total return
Total return AUM decreased by $6.6 billion. Net outflows of $1.8
billion were primarily from Alternative Risk Premia and AHL
TargetRisk. Negative absolute performance of $2.4 billion was
primarily due to losses in AHL TargetRisk reflecting its long-only
exposure to fixed income and equity markets. Negative FX and other
movements resulted in a further reduction of $2.4 billion.
Multi-manager solutions
The increase in multi-manager solutions AUM was primarily driven
by net inflows of $3.8 billion. Positive absolute performance of
$0.8 billion was driven by a number of strategies.
Systematic long-only
Net inflows of $1.2 billion and negative FX and other movements
of $1.1 billion were primarily from Numeric Global. Negative
absolute performance of $4.6 billion was driven by multiple
strategies in the product category, reflecting broad exposure to
global equities.
Discretionary long-only
Discretionary long-only AUM decreased by $4.2 billion. Net
outflows of $1.5 billion were primarily from GLG Emerging Markets
Debt and GLG Continental Europe, partially offset by inflows into
GLG High Yield. Negative performance of $0.9 billion was driven by
market beta across multiple strategies and weaker performance in
strategies with a growth focus e.g. GLG Continental Europe. This
was partially offset by strong absolute performance in GLG Japan
CoreAlpha.
Revenue
As a result of higher average AUM and strong performance fee
generation, statutory net revenue increased by $241 million from
$1,486 million in 2021 to $1,727 million in 2022, whilst core net
revenue increased from $1,486 million to $1,696 million for the
same reasons.
Run rate core
Core net Net management net Run rate net
management fee margin management management fee
fees ($m) (bps) fees ($m) margin (bps)
Year ended Year ended Year ended Year ended Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
2022 2021 2022 2021 2022 2021 2022 2021
-------------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Absolute
return 515 451 112 119 526 474 114 115
Total return 201 198 63 62 177 220 61 62
Multi-manager
solutions 34 30 20 22 38 36 19 24
Systematic
long-only 75 82 25 27 77 89 24 25
Discretionary
long-only 102 116 57 58 99 121 59 58
-------------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total 927 877 65 66 917 939 64 63
-------------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Management fees
Core net management fee revenue increased by 6% to $927 million
in 2022 (2021: $877 million), driven by higher average AUM. Net
management fee margin decreased from 66 basis points in 2021 to 65
basis points in 2022, driven by net inflows into lower margin
systematic long-only and multi-manager solutions categories. This
was partially offset by net inflows into Man Institutional
Solutions, which are typically higher margin, and an increase in
average AUM from positive investment performance in absolute return
strategies.
The absolute return net management fee margin decreased by 7
basis points to 112 basis points, as a result of mix shift towards
lower margin Man Institutional Solutions mandates within the
product category. The total return net management fee margin
increased by one basis point to 63 basis points, driven by the
increase in AHL TargetRisk average AUM. The multi-manager net
management fee margin decreased to 20 basis points in 2022 from 22
basis points in 2021 as a result of the ongoing shift towards
infrastructure solutions from traditional fund of funds. The net
management fee margin of long-only strategies declined due to
margin pressure and mix effects in recent years, with systematic
long-only margins decreasing from 27 basis points to 25 basis
points and discretionary long-only margins decreasing from 58 basis
points in 2021 to 57 basis points in 2022.
Run rate core net management fee revenue was $917 million at 31
December 2022 (2021: $939 million). The decrease in the year was
largely as a result of the decrease in AUM in total return and
long-only strategies, which were negatively affected by market beta
and FX.
The run rate net management fee margin at 31 December 2022 was
64 basis points (2021: 63 basis points) as a result of the growth
in higher margin Man Institutional Solutions mandates towards the
end of the year, with movements in the run rate net management fee
margin for individual strategies broadly driven by the same factors
as those impacting the actual margins in the year.
Performance fees
Core performance fees for the year were $779 million (2021: $569
million), including $761 million from alternative strategies (2021:
$533 million) and $18 million from long-only strategies (2021: $36
million). We have strong performance fee optionality and diversity,
with $57.9 billion of performance-fee-eligible AUM at 31 December
2022, a substantial portion being at high-water mark, and a broad
range of strategies having contributed to our performance fee
earnings in recent years. More than 50 of our strategies are
performance fee-eligible.
Investment gains and losses
Core losses on investments of $15 million (2021: gains of $27
million) primarily relate to losses on our CLO risk retention
assets. The seed book totalled $688 million at 31 December 2022, up
from $648 million in 2021, as we continue to deploy our capital to
support new strategies, grow the business, and increase returns to
shareholders. We had $138 million of additional seed investment
exposure via total return swaps at year end (2021: $108
million).
Sub-lease rental income
Sub-lease rental income was broadly flat year-on-year on a
statutory basis. Core sub-lease rental income decreased from $13
million in 2021 to $5 million in 2022 as the residual portion of
the lease surrender gain arising on the early termination of the
lease of our principal sub-tenant in 2020 was recognised through
non-core items in 2021. The sub-lease we signed in early 2023 for a
substantial portion of the vacant space in our London office will
reduce future depreciation and occupancy costs, following the
derecognition of the associated portion of our right-of-use lease
asset.
Costs
Asset servicing
Asset servicing costs vary depending on transaction volumes, the
number and mix of funds, and fund NAVs. Asset servicing costs were
$58 million (2021: $58 million), which equates to around 5 (2021:
6) basis points of average AUM excluding systematic long-only and
Man GPM strategies.
Compensation costs
Total compensation costs were $678 million for the year, up by
14% from $596 million in 2021, as a result of higher revenues
increasing the associated variable compensation, partially offset
by the impact of the strengthening of the US dollar against
sterling. Our compensation ratio is generally between 40% and 50%
of core net revenue, depending on the mix and level of revenue. We
expect to be at the higher end of the range in years when
performance fees are low or driven predominantly by discretionary
strategies. Conversely, we expect to be at the lower end of the
range when performance fees are high or driven by systematic
strategies. The overall compensation ratio of 40% remained in line
with 2021, reflecting the strong performance fee revenue earned in
2022, primarily from systematic macro strategies.
Other costs
Core other costs increased to $170 million in 2022 from $161
million in 2021, partly as a result of the return to more
normalised levels of expenditure on travel and entertainment as
COVID-19 restrictions lifted. This was partially offset by sterling
weakening against the US dollar, as the majority of our cost base
is denominated in sterling.
Tax
The majority of our profits are earned in the UK, with
significant profits also arising in the US, where our cash tax rate
is effectively nil as a result of available deferred tax assets,
and in Switzerland, which has a lower rate than the UK. A higher
weighting of profits in the UK, where the applicable statutory tax
rate is 19%, drove an increase in the statutory effective tax rate
from 17% in 2021 to 18% in 2022. Tax on statutory profit for the
year was $137 million (2021: $103 million).
This increase in the UK profits weighting also led to an
increase in the core tax rate from 15% in 2021 to 17% in 2022.
In the US, we have accumulated tax losses and tax deductible
goodwill and intangibles of $82 million (2021: $85 million) which
can be offset against future US profits, thereby reducing taxable
profits. We have recognised $64 million of the available $82
million US deferred tax assets at 31 December 2022 (2021: $74
million and $85 million respectively) as some state and city tax
losses are expected to expire before utilisation. The US core tax
rate will remain at nil until cash taxes are payable in the US,
with movements in the deferred tax asset classified as a non-core
item. We currently expect these assets to be fully consumed by
2024.
The principal factors influencing our future underlying tax rate
are the mix of profits by tax jurisdiction, the rate of consumption
of US deferred tax assets and changes to applicable statutory tax
rates, in particular an increase in the UK rate from April 2023.
The global minimum tax rate anticipated to come into effect in 2024
is not expected to have a significant impact on our future tax
charges.
Profit
Statutory profit increased from $487 million in 2021 to $608
million in 2022, with core profit increasing from $557 million to
$647 million over the same period. This increase in profitability,
together with a decrease in share count as a result of the $386
million of shares repurchased during the year, led to an increase
in statutory EPS (diluted) from 33.8c in 2021 to 45.8c in 2022
(38.7c and 48.7c respectively on a core basis).
Cash earnings
Due to our strong conversion of profits into cash, we believe
that core profit is a good measure of our cash flow generation,
although the timing of cash conversion is impacted by the cyclical
movements in our working capital position and the size of our seed
book. Core cash flows from operations excluding working capital
movements were $810 million for the year.
As at 31 December 2022, our cash balance, excluding amounts held
by consolidated fund entities, was $349 million. The $500 million
committed revolving credit facility, which matures in 2026, was
undrawn.
Year ended Year ended
31 December 31 December
$m 2022 2021
---------------------------------------------------------- ------------ ------------
Opening available cash and cash equivalents 323 289
Core cash flows from operations excluding working capital
movements 810 700
Working capital movements (excluding seeding) (65) (45)
Working capital movements - seeding (52) (173)
Dividends paid (179) (160)
Share repurchases (including costs) (386) (180)
Investment in associate (HUB) - (19)
Other movements (102) (89)
---------------------------------------------------------- ------------ ------------
Closing available cash and cash equivalents 349 323
---------------------------------------------------------- ------------ ------------
Balance sheet
We have a strong and liquid balance sheet. Fees and other
receivables have increased largely as a result of the higher level
of performance fees earned in December compared with the prior
year. Payables have similarly increased due to an increase in
related compensation accruals. The increase in investments in funds
is driven by an increase in our seed portfolio, as outlined
below.
31 December 31 December
$m 2022 2021
-------------------------------------- ----------- -----------
Available cash and cash equivalents 349 323
Seeding investments portfolio 688 648
Payables under repo arrangements (54) (64)
-------------------------------------- ----------- -----------
Net financial assets 983 907
-------------------------------------- ----------- -----------
Other tangible assets and liabilities 39 21
-------------------------------------- ----------- -----------
Net tangible assets 1,022 928
-------------------------------------- ----------- -----------
Goodwill and intangibles 677 723
-------------------------------------- ----------- -----------
Shareholders' equity 1,699 1,651
-------------------------------------- ----------- -----------
Seed investments
We use our balance sheet to invest in new products, aiming to
redeem as client AUM grows in the funds. At 31 December 2022, our
seed investments were $688 million, an increase from $648 million
at 31 December 2021. This is due to targeted deployment of capital
to invest in new strategies and grow the business to ultimately
generate future returns to shareholders. In addition, we held $138
million of total return swap exposure at 31 December 2022 (2021:
$108 million), allowing us to increase our seed portfolio without
utilising large portions of our cash balances.
Capital management and shareholder returns
Our balance sheet and liquidity position remains robust,
allowing us to invest in the business, support our long-term growth
prospects and maximise shareholder value. It also enables us to
withstand periods of stress. We continue to return capital that we
consider to be in excess of our medium-term requirements to our
shareholders. In 2022, we completed the $250 million share
repurchase announced in December 2021 and the subsequent $125
million repurchase announced in June 2022. In December 2022, we
announced our intention to repurchase a further $125 million of
shares of which $27 million had been repurchased at 31 December
2022.
Our 2022 proposed total dividend of 15.7 c per share represents
an increase of 12 % on 2021. Our business is highly
cash-generative, and these cash flows support our progressive
dividend policy, under which dividends are expected to grow over
time. We actively manage our capital to maximise value to
shareholders by either investing that capital to improve
shareholder returns in the future or by returning it through higher
dividends or share buybacks. We ensure we maintain a prudent
balance sheet at all times by taking into account capital
requirements before investing capital, considering potential
strategic opportunities or returning it to shareholders. Over the
past five years, we have returned $ 0.9 billion to shareholders
through dividends and announced $ 1.0 billion of share buybacks.
Our weighted average share count has decreased by 18% to 1,288
million over that period.
Our $500 million revolving credit facility, which matures in
2026, provides additional liquidity and was undrawn at 31 December
2022. We have maintained prudent capital and available liquidity
throughout the year and have deployed our capital to support
investment management operations and new investment products,
utilising the revolving credit facility when appropriate. We
monitor our capital requirements through continuous review of our
regulatory and economic capital, including regular reporting to the
Risk and Finance Committee and the Board.
The Board is proposing a final dividend for 2022 of 10.1 c per
share, which together with the interim dividend of 5.6c per share
equates to a total dividend for the year of 15.7 c per share. The
proposed final dividend of around $ 125 million is adequately
covered by our available liquidity and capital resources. Key dates
relating to the proposed final dividend are provided on page 2.
Planning for the impacts of climate change
Whilst climate change has not significantly impacted our
financial performance and position to date, consideration of the
potential future impacts of climate change on our business is
embedded in our financial planning and reporting processes. Under
our strategy, we seek to minimise the carbon emissions of our
office premises, reduce inter-office travel or use lower-carbon
modes of transport where possible, and proactively plan for our
ambitions in the future. As part of our ongoing commitment to
reduce our carbon footprint and to reach net zero by 2030, we
introduced carbon emissions targets into our directors' long-term
incentive plans from 2022. We have also embedded targets to reduce
our Scope 3 carbon emissions from business travel into our annual
budgeting process for 2023.
The directors have also considered potential climate-related
impacts on the Group financial statements, and do not expect them
to be material in the short to medium term. In particular, in
performing their assessment the directors have considered the
impact of climate change on our going concern and viability, the
cash flow forecasts used in the impairment assessments of our
non-current assets, and the assumptions relating to future life
expectancies used in the valuation of the net pension asset. We
continue to monitor the potential longer-term impacts of climate
change risks on the judgements and estimates used in the
preparation of the Group financial statements.
Antoine Forterre
Chief Financial Officer
Risk management - principal and emerging risks
Business risks
----------------------------------------- -------------------------------- -----------------------------------------
Risk Mitigants Status and trend Change
------------ --------------------------- -------------------------------- ----------------------------- ----------
Investment Fund underperformance, Man Group's investment Overall performance Increased
performance on an absolute basis, businesses each in 2022 has been
relative to a benchmark have clearly defined strong given the
or relative to peer investment processes challenging markets
groups, could reduce with integrated and the geopolitical
AUM and may result risk management, backdrop in 2022:
in lower subscriptions designed to target trend-following
and higher redemptions. and deliver on the strategies performed
This risk is heightened investment mandate well on an absolute
at times of disrupted of each product. basis; long-only
and volatile markets, We focus on hiring strategies carried
which could be triggered and retaining highly-skilled a beta to falling
by geopolitical or professionals who markets, but generally
climate factors. are incentivised outperformed their
This may also result to deliver alpha benchmarks; and
in dissatisfied clients, within the parameters equity and bond
negative press and of their mandate. market falls led
reputational damage. Man Group's diversified to poor absolute
Lower AUM results range of products performance for
in lower management and strategies limits our TargetRisk product
fees and underperformance the risk to the range. In addition,
results in lower business from underperformance USD strengthening
performance fees. of any particular led to a fall in
strategy or market. AUM for non-USD
funds or share classes.
Although we had
net inflows, the
LDI crisis is an
example of an unanticipated
redemption headwind
faced in 2022. A
discussion of Man
Group's investment
performance is included
on page 8.
------------ --------------------------- -------------------------------- ----------------------------- ----------
Key person A key person to the Business and investment Man Group has continued Unchanged
risk business leaves processes are designed to be able to attract
or is unable to to minimise the and retain an array
perform their role. impact of losing of talented individuals
Retention risk may any key individuals. across the firm.
increase in years Diversification We did not see any
of poor performance of strategies and investor concerns
and the expectation the emphasis on or material outflows
of reduced compensation. technology and systematic as a result of announced
strategies reduce departures or changes
the overall risk in management structure
to Man Group. in 2022, including
Succession plans the retirement of
and deferred compensation the Man Group President
schemes are in place and subsequent Senior
to support the retention ExCo reorganisation.
of senior investment
professionals and
key management.
------------ --------------------------- -------------------------------- ----------------------------- ----------
Credit risks
----------------------------------------- -------------------------------- -----------------------------------------
Risk Mitigants Status and trend Change
------------ --------------------------- -------------------------------- ----------------------------- ----------
Counterparty A counterparty with Man Group and its There were no concerns Unchanged
which the funds or funds diversify arising in relation
Man Group have financial exposures across to our key counterparties
transactions, directly a number of the in 2022.
or indirectly, becomes strongest available We finalised our
distressed or defaults. financial counterparties, migration away from
Shareholders and each of which is a key prime broker
investors in Man approved and regularly linked to the collapse
Group funds and products reviewed and challenged of Archegos in 2021.
are exposed to credit for creditworthiness Our counterparty
risk of exchanges, by a firm-wide counterparty diversification
prime brokers, custodians, committee. model functioned
sub-custodians, clearing The risk teams monitor as intended and
houses and depository credit metrics on we succeeded in
banks. the approved counterparties moving material
daily. This includes exposures to other
Credit Default Swap key-relationship
spreads and credit counterparties in
ratings. a controlled manner.
------------ --------------------------- -------------------------------- ----------------------------- ----------
Liquidity risks
--------------------------------------- ------------------------------- --------------------------------------------
Risk Mitigants Status and trend Change
---------- --------------------------- ------------------------------- -------------------------------- ----------
Corporate Volatile markets A $500 million revolving The balance sheet Unchanged
and fund and reduced market credit facility seeding programme
liquidity can place provides Man Group and three share
additional, often with a robust liquidity buybacks in 2022
short-term, demands backstop. Liquidity were managed using
on the balance sheet. forecasting for the corporate liquidity
Man Group is exposed Man Group and the forecast tool.
to having insufficient UK/EEA sub-group, The asset liquidity
liquidity resources including downside distribution across
to meet its obligations. cases, facilitates funds remained broadly
Adverse market moves planning and informs unchanged. Our in-house
and volatility decision-making. liquidity analysis
may sharply increase The investment risk and reporting toolkit
the demands on the team conducts regular continued to evolve.
liquid resources liquidity tests The LME/Nickel short
in Man Group's funds. on Man Group's funds. squeeze effectively
Market stress and We endeavour to closed the market
increased redemptions manage resources for much of March
could result in the in such a way as but the impact on
deterioration of to meet all plausible our funds was minimal.
fund liquidity and demands for fund The Gilt/LDI crisis
in the severest cases redemptions according led to material
this could lead to to contractual terms. redemption requests
the gating of funds. from our UK defined
benefit pension
clients - these
were managed without
any issues.
---------- --------------------------- ------------------------------- -------------------------------- ----------
Market risks
--------------------------------------- ------------------------------- --------------------------------------------
Risk Mitigants Status and trend Change
---------- --------------------------- ------------------------------- -------------------------------- ----------
Investment Man Group uses capital A disciplined framework The investment book Unchanged
book to seed new funds ensures that each grew over 2022 with
to build our fund request for seed 23 new seed positions.
offering, expand capital is assessed The pure seeding
product distribution based on its risk book returns were
and generate returns and return on capital. positive, with the
for shareholders. Approvals are granted benchmark hedges
Man Group also holds by a Seed Investment performing as intended
Collateralised Loan Committee (SIC), in the volatile
Obligation (CLO) which is comprised markets. However,
risk retention positions of senior management, these gains were
until the product Group Risk and Treasury. offset by losses
maturity, and is Investments are on the CLO and private
currently participating subject to risk markets positions.
in a US CLO Warehouse limits, an exit Repo and swap financing,
to facilitate a product strategy and are used for some of
launch. hedged to a benchmark the CLO and seed
The firm is therefore where appropriate. positions to release
exposed to a decline The positions and liquidity, became
in value of the investment hedges are monitored more costly with
book. regularly by Group the rate rises.
Risk and reviewed However, there were
by the SIC. no problems encountered
sourcing and rolling
financing.
---------- --------------------------- ------------------------------- -------------------------------- ----------
Pension Man Group underwrites The UK pension plan In 2022 the scheme Decreased
the risks related has a low net exposure has increased its
to the UK defined to UK interest rates surplus on both
benefit pension plan and RPI inflation an accounting and
which closed to new though the use of actuarial basis.
members in 1999 and LDI funds. The return-seeking The scheme managed
future accrual in assets are low volatility the UK Gilts and
2011. The plan is and have a low correlation LDI crisis in September/October
healthy but is exposed to directional equity without serious
to changes in net markets. Longevity mishap. However,
asset versus liability is the largest remaining it
values. risk but is uncorrelated was necessary to
to Man Group's other rapidly sell return-seeking
risks. assets to fund the
LDI margin requirements.
---------- --------------------------- ------------------------------- -------------------------------- ----------
Operational risks
--------------------------------------------- ---------------------------- -----------------------------------------
Risk Mitigants Status and trend Change
--------------- ---------------------------- ---------------------------- ----------------------------- ----------
Internal Risk of losses or Man Group's risk Man Group remains Unchanged
process harm resulting from management framework focused on enhancing
failure inadequate or failed and internal control its systems and
corporate or fund systems are based control processes
processes within on a three lines where required and
Man Group. of defence model. ensuring internal
Risks and controls process failures
are reassessed on are kept to a minimum.
an ongoing basis Man Group has not
and in the event observed an increase
of material change, in material internal
in order to determine risk events in 2022.
the adequacy of
the control environment.
--------------- ---------------------------- ---------------------------- ----------------------------- ----------
External Man Group continues Man Group's operations The firm's outsourcing Unchanged
process to outsource several team has implemented remains intentionally
failure functions as well a robust methodology concentrated with
as managing outsourcing (including ongoing a small group of
arrangements on behalf third-party due carefully selected
of its funds. Risks diligence and KPI and proven outsource
arise through the monitoring) to confirm providers with which
supplier life cycle that outsourced it has well established
from sourcing and service providers and embedded working
selection, to contracting are delivering as relationships. There
and onboarding, to required. has been no notable
service delivery increase or decrease
and monitoring and in the number of
finally, to exit issues caused by,
and offboarding. or experienced by,
The most material our outsource providers
risk is that the during 2022 and
outsourced service there have been
providers do not no material losses
perform as required, or other impacts.
resulting in knock-on
implications for
our business and
processes.
--------------- ---------------------------- ---------------------------- ----------------------------- ----------
Model Man Group is a Man Group has embedded Man Group continues Unchanged
and Data technology-empowered systems, controls to source and provision
Integrity active investment and operational new investment data
management firm which change control processes sources and data
continues to make for models and data. analytics, but has
use of advanced quantitative Controls are both not observed an
trading strategies preventative and increase in material
that necessitate detective to minimise internal risk events
a robust approach the potential consequences in 2022.
to data acquisition from such an event
and consumption, arising.
model implementation
and execution. Key
risks include
model/algorithm
failures or issues
with data upon which
decisions are made.
--------------- ---------------------------- ---------------------------- ----------------------------- ----------
Information Risk of losses or Man Group has an Man Group continues Increased
and cybercrime harm resulting from established information to improve its defence
security the loss of information security and cyber using state-of-the-art
in electronic or security programme technologies, enabling
hard copy form held with relevant policies us to detect and
by Man and arising and procedures, prevent malicious
as a result of sabotage, that are aligned activities and complex
hacking, virus attack with industry expectations cyber-attacks. We
or other malicious and best practices. have not observed
disruption causing Man Group's Chief any increase in
system failure. Information Security material issues
Officer, together following the escalation
with the Information of regional conflicts
Security Steering and tensions seen
Committee, ensures in 2022, but our
that our control assessment is that
environment is continuously activity is likely
reviewed and adjusted to increase in 2023.
to keep pace with
the regulatory,
legislative and
cyber threat landscapes.
--------------- ---------------------------- ---------------------------- ----------------------------- ----------
Information Risk of losses or Technology plays Man Group has an Unchanged
technology harm incurred by a fundamental role ongoing focus on
and business IT software and hardware in delivering our improving our technology
continuity failures resulting objectives, so the offering, capability
in system downtime, IT functions work and security. Particular
severely degraded closely with each focus and investment
performance or limited business unit to have been on hardware
system functionality. ensure work is correctly and software enhancements
Business continuity prioritised and to core technology
risks may arise from financed. The and data centres,
incidents such as prioritisation and the enrichment
a denial of access process considers of the trading and
to a key site or the life cycle of operations platform.
a data centre outage, both hardware and Progress in centralisation
which could lead software to ensure of order management
to business disruption. both are adequately technology for the
supported and sized. firm also continues
The firm's operational apace.
processes include Remote and agile
mature risk, incident working has continued
and problem management to operate reliably
procedures to minimise and securely enabling
the likelihood efficient flexible
and impact of technology working arrangements
failures. for most staff,
Business continuity without any notable
risk mitigation change in the volume
includes detailed or materiality
planning and testing of issues arising
of remote access through 2022.
and contingency/recovery
operations, and
ongoing risk and
threat assessments.
--------------- ---------------------------- ---------------------------- ----------------------------- ----------
Criminal Risk of losses or Man Group operates Man Group has enhanced Unchanged
activities harm through wrongful, policies and procedures several surveillance
unauthorised activities that comply with tools to strengthen
or criminal deception applicable laws the control environment
intended to result and regulations, and has adapted
in financial or personal and provides periodic to the changes in
gain, or incurred training to staff. the regulatory environment
through failure to Internal policies, around aspects of
comply (or have adequate processes and controls financial crime
procedures to comply are subject to internal which are constantly
with) laws and regulations review in order evolving with heightened
relating to: anti-money to ensure we remain sanctions and enforcement
laundering, well placed to manage actions. No material
counter-terrorist evolving requirements, incidents were seen
financing, anti-bribery with support, independent in 2022, including
and corruption, breach oversight and challenge complying with all
of economic sanctions, also being provided sanctions relating
insider trading and by Man Group's Compliance to the Russian invasion
market abuse. and Financial Crime of Ukraine.
Teams.
--------------- ---------------------------- ---------------------------- ----------------------------- ----------
Legal, The breadth and complexity Man Group operates Man Group continues Increased
compliance of the regulations a global legal and to experience new
and regulatory that Man Group and compliance framework regulatory requirements.
its which underpins In 2022 this included
funds are subject all aspects of its implementation of
to across multiple business and is requirements of
jurisdictions represent resourced by experienced the FCA's IFPR in
significant operational teams. These teams relation to regulatory
risks should the are physically located capital and liquidity
firm fail to comply in Man Group's key (including the ICARA),
with them. Man Group jurisdictions, helping governance and remuneration
supports proportionate them to understand regime and to the
and thoughtful regulation the context and (UK Funds) Assessment
and initiatives that impact of any requirements. of Value.
develop the regulatory Emphasis is placed Man Group maintained
environment. However, on proactively analysing an open dialogue
regulatory change new legal and regulatory with regulators
can also result in developments and throughout 2022
increased operational communications to and work continues
complexity and costs assess likely impacts on a number of regulatory
to Man Group or the and mitigate risks. initiatives including
sectors or markets Man Group continues the FCA's Consumer
in which it operates. to liaise directly Duty requirements.
Failure to comply and indirectly with
with these laws and competent authorities
regulations may put e.g. FCA, SEC, FINMA,
Man Group at risk CBI.
of fines, lawsuits
or reputational damage.
--------------- ---------------------------- ---------------------------- ----------------------------- ----------
Reputational risks
----------------------------------------- --------------------------- ---------------------------------------
Risk Mitigants Status and trend Change
---------- ----------------------------- --------------------------- --------------------------- ----------
Negative The risk that an Our reputation is Man Group enjoys Unchanged
publicity incident or negative dependent on our a good reputation
publicity undermines operational and and work continues
our reputation as fund performance to build Man Group's
a leading investment and the conduct profile and protect
manager and place of our employees. its reputation across
to work. Reputational Our governance and stakeholder groups.
damage could result control structure
in significant redemptions mitigates operational
from our funds, and concerns, and our
could lead to difficulties attention to people
with external financing, and investment processes
credit ratings and are designed to
relations with core comply with accepted
counterparties and standards of investment
outsourcing providers. management practice.
We encourage a culture
of openness, inclusion
and diversity.
---------- ----------------------------- --------------------------- --------------------------- ----------
Emerging risks
----------------------------------------- --------------------------- ---------------------------------------
Risk Mitigants Status and trend Change
---------- ----------------------------- --------------------------- --------------------------- ----------
Potential Emerging risks are The Board, Executive The principal and Increased
future complementary to Committees and Group emerging risks were
threats the current principal Risk monitor emerging reviewed and discussed
risks and represent risks, trends and by the Board in
potential future changes in the likelihood late 2022. The key
threats to Man Group's or impact following themes were geopolitics
performance, development discussions with (Russia, China,
or viability. subject matter experts. the US and the UK)
The emerging risk This assessment and the fragile
categories include informs the universe state of financial
natural disasters, of principal risks markets (volatility,
pandemics, disruption managed and mitigated leverage and insufficient
to financial markets by the firm. margin). No changes
and business infrastructure, were made to Man
geopolitical risk Group's headline
and changes in the principal risks.
competitive landscape.
---------- ----------------------------- --------------------------- --------------------------- ----------
Climate change risks
------------------------------------ ----------------------------------- ----------------------------------------
Risk Mitigants Status and trend Change
----------- ------------------------------- --------------------------- ---------------------------- ----------
Physical Physical risks of Man Group has a The firm will continue Unchanged
risks business disruption, small number of to monitor and manage
property damage employees, a relatively its risks through
or to employee well-being limited physical business-as-usual
due to a severe footprint and can reporting and management
weather event. operate completely processes for the
remotely. relevant principal
risk (see below).
----------- ------------------------------- --------------------------- ---------------------------- ----------
Transition Transition risks Man Group has an Work continues on Increased
risks as the world moves agile business Man Group's commitment
towards a low-carbon model, so is well to being a net zero
economy can be legal, equipped to adjust carbon workplace
regulatory, technological, to medium-term transition by 2030, including
market risks and also capture setting emissions
or reputational. any opportunities. targets, carbon
This may impact With a strong track budgeting and enhanced
the appetite for record for innovation, emissions disclosures.
and performance the firm continues We are a signatory
of some investment to focus on providing of the Net Zero
products. investors with products Asset Managers initiative,
that incorporate with a commitment
ESG analytics. to having net zero
carbon investment
portfolios by 2050.
In 2022 we set interim
targets for our
management of assets.
----------- ------------------------------- --------------------------- ---------------------------- ----------
Link to Investment performance Man Group's diversified In 2022 we expanded Increased
our other is exposed to market range of products our proprietary
principal disruption or volatility and strategies limits ESG analytics toolkit
risks triggered by severe the risk to any and launches included
weather events. particular strategy AHL TargetClimate,
Performance could or market. While with a multi-asset
also be impacted the integrated portfolio focus on the transition
by fundamental moves and risk management to a low-carbon
in underlying asset processes help managers economy, and a real
prices or liquidity understand their estate strategy
as the world transitions risk profiles. building net zero
to Agile working is energy single-family
a low-carbon economy. well established, rental homes. We
Business continuity and employees can now have 32 Article
risk manifests as work remotely if 8 and 9 products
damage or disruption offices are inaccessible. representing 3.4%
to Man Group's offices We conduct detailed of AUM, an increase
and data centres planning for emerging from 2.6% in 2021.
and the transportation scenarios along Our operations and
and supply systems with testing of ability to work
that support them. remote access and effectively was
In particular our contingency/recovery not materially impacted
London headquarters operations. by the summer heatwaves
may be exposed to Man Group has specific across Europe, with
flooding of the policies and greenwashing the majority of
River Thames. controls which continue employees working
Legal and reputation to evolve and are remotely.
risk currently comes subject to robust Investigations and
from any suggestion review. We take fines announced
of greenwashing a relatively low against other financial
if the ESG credentials key and considered services companies
of a fund or our approach in our in 2022 highlight
corporate behaviour external communications the increasing focus
does not meet client with a focus on by global regulators
or regulatory expectations. education and data and the media on
This could lead as well as highlighting overstated ESG claims.
to redemptions and the challenges inherent
regulatory fines in this area.
as well as damaging
relations with core
clients, employees
and the wider public.
----------- ------------------------------- --------------------------- ---------------------------- ----------
Directors' responsibility statement
The directors are responsible for preparing the Annual Report
and the Group financial statements in accordance with applicable
law and regulations. The Annual Report will be published on the
Company's website in mid-March and an announcement will be released
to the market confirming when it is available.
The Companies (Jersey) Law 1991 requires the directors to
prepare financial statements for each financial year. Under that
law the directors have elected to prepare the financial statements
in accordance with applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the United Kingdom. The
financial statements are required by law to give a true and fair
view of the state of affairs of the Company and of the profit or
loss of the Company for that period.
In preparing Man Group's financial statements, International
Accounting Standard 1 requires that directors:
-- properly select and apply accounting policies;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- provide additional disclosures when compliance with the
specific requirements in IFRSs are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance; and
-- make an assessment of the Company's ability to continue as a
going concern.
The directors are responsible for keeping proper accounting
records that disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies (Jersey) Law
1991. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in Jersey, Channel Islands governing
the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Each of the directors confirm that, to the best of each person's
knowledge and belief:
-- the financial statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole;
-- the Strategic report includes a fair review of the
development and performance of the business and the position of the
Company and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face;
-- the Annual Report and financial statements, taken as a whole,
are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company's and Man Group's
position, performance, business model and strategy; and
-- there is no relevant audit information of which the Group's
auditor is unaware, and that they have taken all steps that they
ought to have taken as a director in order to make themselves aware
of any relevant audit information and to establish that Man Group's
auditor is aware of that information.
Group financial statements
Group income statement
For the year to 31 December
2022 2021
Note $m $m
---------------------------------------------------------- ---- ----- -----
Management and other fees 4 954 914
Performance fees 4 778 567
---------------------------------------------------------- ---- ----- -----
Revenue 1,732 1,481
Net income or gains on investments and other financial
instruments 12 7 42
Third-party share of losses/(gains) relating to interests
in consolidated funds 12 14 (3)
Sub-lease rental income 16 5 6
Distribution costs 5 (31) (40)
---------------------------------------------------------- ---- ----- -----
Net revenue 1,727 1,486
Asset servicing costs 5 (58) (58)
Compensation costs 5 (678) (596)
Other costs 5 (179) (165)
Finance expense 6 (16) (14)
Finance income 6 5 1
Revaluation of contingent consideration 13 - 2
Impairment of right-of-use lease assets - investment
property 16 - (3)
Amortisation of acquired intangible assets 17 (51) (61)
Share of post-tax loss of associates 21 (5) (2)
---------------------------------------------------------- ---- ----- -----
Statutory profit before tax 745 590
Tax expense 7 (137) (103)
---------------------------------------------------------- ---- ----- -----
Statutory profit attributable to owners of the Company 608 487
---------------------------------------------------------- ---- ----- -----
Statutory earnings per share 23
Basic 47.2c 34.7c
Diluted 45.8c 33.8c
---------------------------------------------------------- ---- ----- -----
Group statement of comprehensive income
For the year to 31 December
2022 2021
Note $m $m
------------------------------------------------------- ---- ---- ----
Statutory profit attributable to owners of the Company 608 487
Other comprehensive (loss)/income:
Remeasurements of defined benefit pension plans (2) 22
Current tax on pension plans - 4
Deferred tax on pension plans (1) (7)
------------------------------------------------------- ---- ---- ----
Items that will not be reclassified to profit or loss (3) 19
Cash flow hedges: 14
Valuation gains taken to equity 6 9
Realised gains transferred to Group income statement (7) (8)
Net investment hedges 14 4 3
Foreign currency translation (4) (6)
------------------------------------------------------- ---- ---- ----
Items that may be reclassified to profit or loss (1) (2)
------------------------------------------------------- ---- ---- ----
Other comprehensive (loss)/income (4) 17
------------------------------------------------------- ---- ---- ----
Total comprehensive income attributable to owners
of the Company 604 504
------------------------------------------------------- ---- ---- ----
Group balance sheet
At 31 December
2022 2021
Note $m $m
--------------------------------------------------- ---- ----- -----
Assets
Cash and cash equivalents 8 457 387
Fee and other receivables 10 570 485
Investments in fund products and other investments 12 1,209 974
Investments in associates 21 14 18
Leasehold improvements and equipment 15 53 43
Leasehold property - right-of-use lease assets 16 92 61
Investment property - right-of-use lease assets 16 71 77
Investment property - consolidated fund entities 12 34 -
Goodwill and acquired intangibles 17 627 678
Other intangibles 18 50 45
Deferred tax assets 19 105 128
Pension asset 22 27
--------------------------------------------------- ---- ----- -----
Total assets 3,304 2,923
--------------------------------------------------- ---- ----- -----
Liabilities
Trade and other payables 11 942 702
Provisions 20 14 14
Current tax liabilities 7 37 15
Third-party interest in consolidated funds 12 359 254
Lease liability 16 253 250
Deferred tax liabilities 19 - 37
--------------------------------------------------- ---- ----- -----
Total liabilities 1,605 1,272
--------------------------------------------------- ---- ----- -----
Net assets 1,699 1,651
--------------------------------------------------- ---- ----- -----
Equity
--------------------------------------------------- ---- ----- -----
Capital and reserves attributable to owners of the
Company 1,699 1,651
--------------------------------------------------- ---- ----- -----
The financial statements were approved by the Board of Directors
on 27 February 2023 and signed on its behalf by:
Luke Ellis Antoine Forterre
Chief Executive Officer Chief Financial Officer
Group cash flow statement
For the year to 31 December
2022 2021
Note $m $m
-------------------------------------------------------------- ---- ----- -----
Cash flows from operating activities
Cash generated from operations 9 878 581
Interest paid (6) (2)
Payment of lease interest 16 (10) (12)
Tax paid 7 (125) (83)
-------------------------------------------------------------- ---- ----- -----
Cash flows from operating activities 737 484
-------------------------------------------------------------- ---- ----- -----
Cash flows from investing activities
Interest received 5 1
Purchase of leasehold improvements and equipment 15 (21) (26)
Purchase of investment property - right-of-use lease assets 16 (2) (5)
Purchase of other intangible assets (22) (18)
Purchase of interest in associate 21 - (19)
-------------------------------------------------------------- ---- ----- -----
Cash flows used in investing activities (40) (67)
-------------------------------------------------------------- ---- ----- -----
Cash flows from financing activities
Repayments of principal lease liability 16 (13) (21)
Purchase of Man Group plc shares by the Employee Trust (47) (18)
Proceeds from sale of Treasury shares in respect of Sharesave 2 2
Share repurchase programmes (including costs) 23 (386) (180)
Ordinary dividends paid to Company shareholders 24 (179) (160)
-------------------------------------------------------------- ---- ----- -----
Cash flows used in financing activities (623) (377)
-------------------------------------------------------------- ---- ----- -----
Net increase in cash and cash equivalents 74 40
Cash and cash equivalents at beginning of the year 387 351
Effect of foreign exchange movements (4) (4)
-------------------------------------------------------------- ---- ----- -----
Cash and cash equivalents at end of the year 8 457 387
-------------------------------------------------------------- ---- ----- -----
Less: restricted cash held by consolidated fund entities 8 (108) (64)
-------------------------------------------------------------- ---- ----- -----
Available cash and cash equivalents at end of the year 8 349 323
-------------------------------------------------------------- ---- ----- -----
Group statement of changes in equity
For the year to 31 December
Man Group
plc shares
Profit held by Cumulative
Share Reorganisation and loss Employee Treasury translation Other
$m capital reserve account Trust shares adjustment reserves Total
-------------------------- -------- -------------- --------- ----------- -------- ------------ --------- -----
At 1 January 2021 53 (1,688) 3,292 (60) (148) 44 4 1,497
Statutory profit - - 487 - - - - 487
Other comprehensive
income/(loss) - - 19 - - (3) 1 17
-------------------------- -------- -------------- --------- ----------- -------- ------------ --------- -----
Total comprehensive
income - - 506 - - (3) 1 504
-------------------------- -------- -------------- --------- ----------- -------- ------------ --------- -----
Share-based payment
charge - - 39 - - - - 39
Current tax on share-based
payments - - 1 - - - - 1
Deferred tax on
share-based
payments - - 10 - - - - 10
Purchase of Man Group
plc shares by the
Employee Trust - - - (18) - - - (18)
Disposal of Man Group
plc shares by the
Employee Trust - - (17) 17 - - - -
Share repurchases - - (225) - - - - (225)
Transfer to Treasury
shares - - 180 - (180) - - -
Transfer from Treasury
shares - - (6) - 5 - 1 -
Disposal of Treasury
shares for Sharesave - - - - 2 - 1 3
Cancellation of Treasury
shares (2) - (143) - 143 - 2 -
Dividends paid - - (160) - - - - (160)
-------------------------- -------- -------------- --------- ----------- -------- ------------ --------- -----
At 31 December 2021 51 (1,688) 3,477 (61) (178) 41 9 1,651
-------------------------- -------- -------------- --------- ----------- -------- ------------ --------- -----
Statutory profit - - 608 - - - - 608
Other comprehensive loss - - (3) - - - (1) (4)
-------------------------- -------- -------------- --------- ----------- -------- ------------ --------- -----
Total comprehensive income - - 605 - - - (1) 604
-------------------------- -------- -------------- --------- ----------- -------- ------------ --------- -----
Share-based payment charge - - 45 - - - - 45
Current tax on share-based
payments - - 4 - - - - 4
Deferred tax on
share-based payments - - (6) - - - - (6)
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 - - (375) - - - - (375)
Transfer to Treasury
shares - - 386 - (386) - - -
Transfer from Treasury
shares - - (24) - 22 - 2 -
Disposal of Treasury
shares for Sharesave - - - - 2 - - 2
Cancellation of Treasury
shares (5) - (315) - 315 - 5 -
Dividends paid - - (179) - - - - (179)
-------------------------- -------- -------------- --------- ----------- -------- ------------ --------- -----
At 31 December 2022 46 (1,688) 3,590 (80) (225) 41 15 1,699
-------------------------- -------- -------------- --------- ----------- -------- ------------ --------- -----
Under the Companies (Jersey) Law 1991, a company may make a
distribution from any source other than the nominal capital account
and capital redemption reserve. The Company has reserves available
for distribution of $1.8 billion as at 31 December 2022 (2021: $2.4
billion).
Notes to the Group financial statements
1. Basis of preparation
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards (IFRSs) as adopted by the United Kingdom, this
announcement does not itself contain sufficient information to
comply with IFRSs. Details of our accounting policies can be found
in Man Group's Annual Report for the year ended 31 December 2021.
The financial information included in this statement does not
constitute statutory accounts within the meaning of Article 105 of
Companies (Jersey) Law 1991. Statutory accounts for the year ended
31 December 2022, upon which the auditors have issued an
unqualified report, will shortly be delivered to the Jersey
Registrar of Companies. The Annual Report and the Notice of the
Company's 2023 Annual General Meeting (AGM) will be posted to
shareholders and will be available to download from the Company's
website on 14 March 2023. The Annual General Meeting will be held
on 5 May 2023 at 10am at Riverbank House, 2 Swan Lane, London EC4R
3AD. For further details please refer to the Notice of our 2023
Annual General Meeting when available.
Consolidation
The consolidated group is the Company and its subsidiaries
(together Man Group). The consolidated financial statements are
presented in United States dollars (USD), the Company's functional
currency, as the majority of our revenues, assets, liabilities and
financing are denominated in USD.
Monetary assets and liabilities denominated in foreign
currencies are translated at the spot rate on each balance sheet
date. Non-monetary items carried at fair value that are denominated
in foreign currencies are translated at the rates prevailing at the
date when the fair value was determined. Non-monetary items that
are measured at historical cost in a foreign currency are not
retranslated. Transactions denominated in foreign currencies are
converted at the spot rate at the date of the transaction or, if
appropriate, the average rate for the month in which the
transaction occurs. The resulting exchange differences are
recognised in the Group income statement.
For consolidated entities that have a functional currency other
than USD, the assets and liabilities are translated into USD at the
spot rate on balance sheet date. Income and expenses are translated
at the average rate for the period in which the transactions occur.
The resulting exchange differences between these rates are recorded
in other comprehensive income.
The consolidated financial information contained within these
financial statements incorporates our results, cash flows and
financial position for the year to 31 December 2022 and includes
our share of the results of any associates and joint ventures using
the equity method of accounting. Subsidiaries are entities we
control (including certain structured entities, as defined by IFRS
12 'Disclosure of Interests in Other Entities') and are
consolidated from the date on which control is transferred to us
until the date that control ceases. Control exists when we have the
power to direct the relevant activities, exposure to significant
variable returns and the ability to utilise power to affect those
returns. All intercompany transactions and balances are eliminated
on consolidation. Although the Employee Trust has independent
trustees and its assets are held separately, it is consolidated
into the Group financial statements given its nature as a
structured entity which has the obligation to deliver deferred
compensation awards to our employees.
Business combinations are accounted for using the acquisition
method from the date on which we obtain control of the acquiree.
The cost of an acquisition is measured as the fair value on the
acquisition date of assets transferred, liabilities incurred and
equity instruments issued by the Company. The fair value of an
acquisition is calculated at the acquisition date by recognising
the acquiree's identifiable assets and liabilities at their fair
values at that date. Costs relating to acquisitions are recognised
in the Group income statement as incurred. Any contingent
consideration is recognised at fair value at the acquisition date,
with any subsequent changes to the fair value recognised in the
Group income statement.
Management information regarding revenues, net management fee
margins and investment performance relevant to the operation of the
investment managers, products and the investor base are reviewed by
the Board and Senior Executive Committee. A centralised shared
infrastructure for operations, product structuring, distribution
and support functions for our investment management business means
that operating costs are not allocated to constituent parts of the
investment management business. As a result, performance is
assessed, resources are allocated, and other strategic and
financial management decisions are determined by the Board and
Senior Executive Committee on the basis of our investment
management business as a whole. Accordingly, we operate and report
the investment management business as a single segment, together
with relevant information regarding AUM flows and net margins, to
allow for analysis of the direct contribution of products and the
respective investor base.
Impact of new accounting standards
There were no new or amendments to existing accounting standards
issued by the International Accounting Standards Board (IASB)
effective for the first time in the year to 31 December 2022 that
have had a significant impact on these Group financial
statements.
No other standards or interpretations issued and not yet
effective are expected to have a material impact on the Group
financial statements.
2. Going concern
The preparation of the Group financial statements on a going
concern basis is supported by the forecast financial performance
and capital and liquidity analysis of Man Group, as approved by the
Board. This analysis considers our net financial assets and
liquidity resources and requirements and utilises the Man Group
budget, medium-term plan and the capital and liquidity plan. These
plans include rigorous downside testing, including analyses of
stressed capital and liquidity scenarios, and incorporate Man
Group's principal and emerging risks, which are outlined on pages
18 to 23 and monitored by the Board on an ongoing basis.
3. Judgemental areas and accounting estimates
The preparation of financial statements in conformity with IFRS
requires the use of accounting estimates and assumptions. We
continually evaluate our estimates and judgements based on
historical experience and expectations of future events that are
considered reasonable in the circumstances. These judgements and
estimates are an area of focus for the Board and, in particular,
the Audit and Risk Committee.
Critical judgements
Man Group acts as the investment manager or adviser 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.
Critical accounting estimates
Man Group's only key source of estimation uncertainty is the
valuation of the net pension asset. The Board has also considered
the assumptions used in the assessments for impairment of goodwill
and 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 Group 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 Group financial
statements is not currently expected to be material.
4. Revenue
Accounting policy
Fee income is our primary source of revenue, which is derived
from the investment management agreements that we have in place
with the fund entities or the accounts that we manage.
Management and other fees (net of rebates), which include all
non-performance related fees, are recognised in the period in which
contractual investment management services are provided and do not
include any other performance obligations. Fees are generally based
on an agreed percentage of NAV or AUM and are typically charged in
arrears and receivable within one month.
Performance fees (net of rebates) relate to the performance of
the funds or managed accounts managed during the year and are
recognised when the performance obligation has been met, whereby
the fee has crystallised and can be reliably estimated. This is
generally at the end of the performance period or upon early
redemption by an investor. Until the performance period ends,
market movements could significantly move the NAV of the fund
products and therefore the value of any performance fees
receivable. For alternative strategies, we will typically only earn
performance fees on any positive investment returns in excess of
the high-water mark, meaning we will not be able to earn
performance fees with respect to positive investment performance in
any year following negative performance until that loss is
recouped. For long-only strategies, performance fees are usually
earned only when performance is in excess of a predetermined
strategy benchmark (positive alpha). Once crystallised, performance
fees typically cannot be clawed back. There are no other
performance obligations or services provided which suggest these
have been earned either before or after the crystallisation
date.
Rebates, which relate to repayments of management and
performance fees charged, typically to institutional investors, are
recognised in the same period as the associated fees for services
are provided. Rebates are presented net within management and other
fees and performance fees in the Group income statement.
5. Costs
Accounting policy
Distribution costs
Distribution costs, which are paid to external intermediaries
for marketing and investor servicing, largely in relation to retail
investors, are typically variable with AUM and the associated
management fee revenue. Distribution costs are expensed over the
period in which the service is provided.
Asset servicing costs
Asset servicing includes custodial, valuation, fund accounting,
registrar, research and administration functions performed by third
parties as well as market data acquired under contract to Man
Group, on behalf of the funds or managed accounts. Asset servicing
costs are recognised in the period in which the services are
provided. The costs of these services vary based on transaction
volumes, the number of funds or managed accounts and their NAVs,
and the mix of client strategies.
Compensation costs
Salaries, variable cash compensation and social security costs
are charged to the Group income statement in the period in which
the service is provided and include partner drawings. In the short
term, the variable component of compensation adjusts with revenues
and profitability.
Compensation can be deferred by way of equity-settled
share-based payment schemes and fund product-based compensation
arrangements. Where deferred compensation relates to our fund
products, the fair value of the employee services received in
exchange for the fund investments is recognised as a straight-line
expense of the mark-to-market value of the awards over the relevant
vesting period, with a corresponding liability recognised in the
Group balance sheet. We generally elect to separately purchase the
equivalent fund investments at grant date to offset any associated
change in the value of deferred compensation due, and on vesting
the value of the fund investment is delivered to the employee
(subject to the terms of the plan rules, which include malus
provisions). If a fund product-based award is forfeited, the
cumulative charge recognised in the Group income statement is
reversed in full.
5.1. Compensation costs
2022 2021
$m $m
------------------------------------------------------------------------------------------------- ---- ----
Salaries 174 169
Variable cash compensation 321 266
Deferred compensation: share-based payment charge 45 39
Deferred compensation: fund product-based payment charge 72 54
Social security costs 52 54
Pension costs 14 14
------------------------------------------------------------------------------------------------- ---- ----
Total compensation costs 678 596
------------------------------------------------------------------------------------------------- ---- ----
Comprising:
Fixed compensation: salaries and associated social security costs, and pension costs 209 208
Variable compensation: variable cash compensation, deferred compensation and associated social
security costs 469 388
------------------------------------------------------------------------------------------------- ---- ----
The unamortised deferred compensation at 31 December 2022 is $76
million (2021: $52 million) and has a weighted average remaining
vesting period of 1.5 years (2021: 1.4 years).
5.2. Other costs
2022 2021
$m $m
--------------------------------------------------------------- ---- ----
Audit, tax, legal and other professional fees 24 21
Technology and communications 22 22
Occupancy 18 18
Temporary staff, recruitment, consultancy and managed services 17 13
Staff benefits 14 14
Insurance 7 7
Travel and entertainment 7 2
Marketing and sponsorship 5 4
Other cash costs, including irrecoverable VAT 18 18
--------------------------------------------------------------- ---- ----
Total other costs before depreciation and amortisation 132 119
--------------------------------------------------------------- ---- ----
Depreciation of leasehold improvements and equipment, and
amortisation of other intangibles 30 29
Depreciation of right-of-use lease assets (Note 16) 17 17
--------------------------------------------------------------- ---- ----
Total other costs 179 165
--------------------------------------------------------------- ---- ----
Average headcount
The table below details average headcount by function, including
directors, employees, partners and contractors.
2022 2021
------------------------------- ----- -----
Investment management 427 388
Sales and marketing 238 218
Technology and infrastructure1 930 847
------------------------------- ----- -----
Average headcount 1,595 1,453
------------------------------- ----- -----
Headcount at 31 December 1,655 1,498
------------------------------- ----- -----
Note:
1 Includes all staff performing technology-based roles,
including those supporting the investment management side of our
business.
6. Finance expense and finance income
2022 2021
$m $m
--------------------------------------------- ---- ----
Finance expense:
Unwind of lease liability discount (Note 16) (10) (12)
Other finance expense (6) (2)
--------------------------------------------- ---- ----
Total finance expense (16) (14)
--------------------------------------------- ---- ----
Finance income:
Interest on cash deposits 5 1
--------------------------------------------- ---- ----
Total finance income 5 1
--------------------------------------------- ---- ----
Net finance expense (11) (13)
--------------------------------------------- ---- ----
7. Current tax and tax expense
Accounting policy
Current tax is based on our taxable profit for the year. Taxable
profit differs from net profit as reported in the Group income
statement because it excludes items of income or expense that are
taxable or deductible in other years, in addition to items that are
never taxable or deductible. Accounting for tax involves a level of
estimation uncertainty given the application of tax law requires a
degree of judgement, which tax authorities may dispute. Tax
liabilities are recognised based on the best estimates of probable
outcomes, with regard to external advice where appropriate.
We are a global business and therefore operate across many
different tax jurisdictions. Income and expenses are allocated to
these different jurisdictions based on transfer pricing
methodologies set in accordance with the laws of the jurisdictions
in which we operate and international guidelines as laid out by the
Organisation for Economic Co-operation and Development (OECD). The
effective tax rate results from the combination of taxes paid on
earnings attributable to the tax jurisdictions in which they
arise.
The movements in our current tax liabilities are as follows:
2022 2021
$m $m
------------------------------------------------ ----- ----
At beginning of the year 15 12
Charge to the Group income statement 159 99
Credit to other comprehensive income and equity (4) (5)
Tax paid (125) (83)
Other balance sheet movements (5) (8)
Foreign currency translation (3) -
------------------------------------------------ ----- ----
At end of the year 37 15
------------------------------------------------ ----- ----
2022 2021
$m $m
------------------------------------------------------- ---- ----
Current tax
UK corporation tax on profits 140 86
Foreign tax 19 14
Adjustments to tax charge in respect of previous years - (1)
------------------------------------------------------- ---- ----
Current tax expense 159 99
------------------------------------------------------- ---- ----
Deferred tax
Origination and reversal of temporary differences (13) 5
Adjustments to tax charge in respect of previous years (9) (1)
------------------------------------------------------- ---- ----
Deferred tax (credit)/expense (Note 19) (22) 4
------------------------------------------------------- ---- ----
Total tax expense 137 103
------------------------------------------------------- ---- ----
Factors affecting the tax expense for the year
The majority of our profits in the period were earned in the UK,
Switzerland and the US. Our tax expense is lower (2021: lower) than
the amount that would arise using the theoretical tax rate
applicable to our profits as follows:
2022 2021
$m $m
------------------------------------------------------------ ---- ----
Profit before tax 745 590
Theoretical tax expense at UK rate: 19% (2021: 19%) 142 112
Effect of:
---- ----
Overseas tax rates different to UK (2) 1
Adjustments to tax charge in respect of previous years (9) (2)
Derecognition/(recognition) of US deferred tax assets (Note
19) 7 (2)
Impact of change in UK tax rate - (4)
Other (1) (2)
---- ----
Tax expense 137 103
------------------------------------------------------------ ---- ----
The current effective tax rate is 18% (2021: 17%).
Factors affecting our future tax charges
The principal factors which may influence our future tax rate
are changes in tax regulation in the territories in which we
operate, the mix of income and expenses earned and incurred by
jurisdiction, and the consumption of available deferred tax assets.
In particular, as the majority of our profits are earned in the UK,
the increase of the UK corporation tax rate to 25% on 1 April 2023
will have an impact on our overall tax rate in future periods.
The OECD has published a draft Inclusive 'Pillar 2' Framework
(the Framework) to support the introduction of a global minimum tax
rate of 15%. Governments are still consulting on how to implement
the Framework with the expectation that legislation and regulations
in most jurisdictions will take effect from 2024. Pending final
conclusions on the potential outcomes of the consultation, it is
not currently practicable to assess fully the impact of the
Framework on our future tax charges but we do not anticipate it
will be significant. Although not currently in force, it is
expected that the IASB will treat any impact as a permanent
in-the-year difference for 2024 and onwards.
8. Cash, liquidity and borrowings
Accounting policy
Cash and cash equivalents comprise cash and short-term
investments in money market funds or bank deposits with an original
maturity of three months or less. Cash and cash equivalents are
measured at amortised cost, which is approximately equal to fair
value. Available cash and cash equivalents is invested in
accordance with strict limits consistent with the Board's risk
appetite, which consider both the security and availability of
liquidity. Accordingly, cash is held in on-demand and short-term
bank deposits and money market funds, and at times invested in
short-term US Treasury bills (which meet the definition of cash
equivalents). Cash and cash equivalents include restricted balances
held by consolidated fund entities to which we do not have access
and which are subject to legal or contractual restrictions as to
their use.
2022 2021
$m $m
---------------------------------------------------------- ----- ----
Cash held with banks 124 189
Short-term deposits 95 24
Money market funds 130 110
Cash held by consolidated fund entities (Note 12.2) 108 64
---------------------------------------------------------- ----- ----
Cash and cash equivalents 457 387
Less: cash held by consolidated fund entities (Note 12.2) (108) (64)
---------------------------------------------------------- ----- ----
Available cash and cash equivalents 349 323
Undrawn committed revolving credit facility 500 500
---------------------------------------------------------- ----- ----
Total liquidity 849 823
---------------------------------------------------------- ----- ----
Cash and cash equivalents
At 31 December 2022, the $349 million available cash and cash
equivalents balance is held with 14 banks (2021: $323 million with
14 banks).
2022 2021
Credit ratings of banks $m $m
AAA 103 51
AA 103 154
A 143 118
------------------------ ---- ----
Total 349 323
------------------------ ---- ----
The single largest counterparty bank exposure of $101 million is
held with an A- rated bank (2021: $85 million held with an AA-
rated bank).
Liquidity risk management
Liquidity resources support ongoing operations and potential
liquidity requirements under scenarios that assume stressed market
and economic conditions. Our funding requirements relating to the
investment management process are discretionary. Our liquidity
profile is monitored on a daily basis and the stressed scenarios
are updated regularly. The Board reviews our funding resources at
each Board meeting and on an annual basis, as part of the strategic
planning process. Our available liquidity is considered sufficient
to cover current requirements and potential requirements under
stressed scenarios.
Borrowings
Our $500 million committed revolving credit facility (RCF) is
immediately accessible, incorporates an ESG target-linked interest
rate component and does not include financial covenants in order to
maintain maximum flexibility. The RCF was put in place in December
2019 as a five-year facility but has since been extended and, due
to the exercise of the final one-year extension option in 2021, is
now scheduled to mature in December 2026. The RCF was drawn at
several points during the year in order to fund working capital
requirements but was undrawn at 31 December 2022 (2021: undrawn).
Drawdowns under the RCF are typically for maturities of one month
or less and are therefore presented net of repayments in the Group
cash flow statement.
9. Reconciliation of statutory profit to cash generated from
operations
Accounting policy
Cash flows arising from the purchase and sale of investments in
fund products and other investments, and from transactions with
third-party investors in consolidated fund entities, are included
in cash flows from operating activities in the Group cash flow
statement. This classification reflects the fact that these
investments are to build product breadth and to trial investment
research before marketing the products broadly to investors as part
of Man Group's ordinary operations, or are otherwise held in
connection with settling employee remuneration, and are not
intended to be held as long-term investments.
2022 2021
Note $m $m
------------------------------------------------------------ ---- ---- -----
Cash flows from operating activities
Statutory profit 608 487
Adjustments for:
Share-based payment charge 5 45 39
Fund product-based payment charge 5 72 54
Net finance expense 6 11 13
Tax expense 7 137 103
Revaluation of contingent consideration 13 - (2)
Depreciation of leasehold improvements and equipment 15 12 13
Depreciation of right-of-use lease assets 16 17 17
Impairment of right-of-use lease assets - investment
property 16 - 3
Amortisation of acquired intangible assets 17 51 61
Amortisation of other intangibles 18 18 16
Share of post-tax loss of associates 21 5 2
Foreign exchange movements (13) 9
Realised gains on cash flow hedges (7) (8)
Funding of defined benefit pension plan - (3)
Other non-cash movements (5) (7)
------------------------------------------------------------ ---- ---- -----
951 797
------------------------------------------------------------ ---- ---- -----
Changes in working capital(1) :
Increase in fee and other receivables (68) (102)
Increase in other financial assets including consolidated
fund entities(2) (45) (163)
Increase in trade and other payables 40 49
------------------------------------------------------------ ---- ---- -----
Cash generated from operations 878 581
------------------------------------------------------------ ---- ---- -----
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 12.2) or are adjusted elsewhere in the Group cash
flow statement, such as movements relating to the fund
product-based payment charge (within operating activities) and the
share repurchase liability (within financing activities).
2 Includes $44 million (2021: $2 million) of restricted net cash
inflows relating to consolidated fund entities (Note 12.2).
10. Fee and other receivables
Accounting policy
Fee and other receivables are initially recorded at fair value
and subsequently measured at amortised cost using the effective
interest rate method, except for derivatives (measured at fair
value through profit and loss) and prepayments. Fee receivables and
accrued income relate to management and performance fees and are
received in cash following finalisation of the NAVs of the
underlying funds or managed accounts. The majority of fees are
deducted from the NAVs of the respective funds by the independent
administrators and therefore the credit risk of fee receivables is
minimal.
2022 2021
$m $m
--------------------------------------------------------- ---- ----
Fee receivables 35 18
Accrued income 359 355
Collateral posted with derivative counterparties 39 29
Receivables from Open Ended Investment Collective (OEIC)
funds 20 25
Other fund receivables 36 11
Prepayments 17 16
Derivatives (Note 13) 9 5
Sub-lease rental income receivable 1 2
Other receivables 25 19
Receivables relating to consolidated fund entities (Note
12.2) 29 5
--------------------------------------------------------- ---- ----
570 485
--------------------------------------------------------- ---- ----
No balances are overdue and, under the expected credit loss
model of IFRS 9 'Financial Instruments', no impairment has been
recognised at 31 December 2022 (2021: nil). Included in fee and
other receivables at 31 December 2022 are balances of $1 million
(2021: $3 million) which are expected to be settled after more than
12 months.
11. Trade and other payables
Accounting policy
Trade and other payables are initially recorded at fair value,
which is usually the invoiced amount, and subsequently measured at
amortised cost using the effective interest rate method, except for
derivatives which are measured at fair value through profit and
loss.
2022 2021
$m $m
------------------------------------------------------------ ---- ----
Trade payables 4 5
Compensation accruals 453 373
Other accruals 86 80
Share repurchase liability 98 109
Payables under repo arrangements 54 64
Payables to OEIC funds 18 25
Tax and social security 30 5
Derivatives (Note 13) 6 5
Other payables 13 17
Payables relating to consolidated fund entities (Note 12.2) 180 19
------------------------------------------------------------ ---- ----
942 702
------------------------------------------------------------ ---- ----
Payables under repo arrangements relate to obligations to
repurchase seed investments.
Trade and other payables can be analysed according to their
contractual maturity date as follows:
2022 2021
$m $m
---------------------------- ---- ----
Within one year 871 674
Between one and three years 71 28
942 702
---------------------------- ---- ----
12. Investments in fund products and other investments
Accounting policy
Investments in fund products are classified at fair value
through profit or loss, with net gains due to movements in fair
value recognised through income or gains on investments and other
financial instruments. The fair values of investments in fund
products are typically derived from their reported NAVs, which in
turn are based upon the value of the underlying assets. The
valuation of the underlying assets within each fund product is
determined by external valuation service providers based on an
agreed valuation policy and methodology. While these valuations are
performed independently of Man Group, we have established oversight
procedures and due diligence processes to ensure that the NAVs
reported by the external valuation service providers are reliable
and appropriate. Purchases and sales of investments are recognised
on trade date.
Our holdings in collateralised loan obligation (CLO) risk
retention assets are priced using a bottom-up valuation method. We
use third-party valuations to price the securities within the
underlying portfolios and then apply the percentage of the CLO
notes we hold to these valuations. Holdings in subordinated
tranches of CLOs are valued using an average of third-party
valuations.
Seeding investments portfolio
We use capital to invest in fund products as part of our ongoing
business, to build product breadth and to trial investment research
developments before marketing the products broadly to investors.
Seed capital is invested via direct holdings in fund products or
sale and repurchase (repo) arrangements, which allow us to finance
seed investments without consuming high levels of cash.
Alternatively, we may obtain exposure to seed investments via total
return swap (TRS) arrangements. Under a repo arrangement we are
committed to repurchase the underlying seed investments at maturity
and pay an interest charge over the period, with the obligation to
repurchase the assets on maturity recorded as a liability within
trade and other payables. Under a TRS arrangement, we are under no
form of repayment obligation and have no ownership interest (or
voting rights) in the underlying investment. In exchange for the
returns on the underlying seed investments, we pay a floating rate
of interest.
Consolidation
The control considerations under IFRS 10 'Consolidated Financial
Statements' apply to fund product investments, including those
underlying our repo and TRS instruments. Fund entities deemed to be
controlled are consolidated on a line-by-line basis from the date
control commences until it ceases. Where we are not deemed to
control the fund, our investment is classified within investments
in fund products.
We only have limited exposure to the variable returns of the
fund entities we manage unless we either hold an investment in the
fund entity or receive the returns of the fund entity via a TRS or
repo arrangement. For most fund entities: the existence of
independent boards of directors; rights which allow for the removal
of the investment manager or adviser; the influence of external
investors; limited exposure to variable returns; and the arm's
length nature of our contracts with those fund entities, indicate
that we do not control them. As a result, the associated assets,
liabilities and results of these funds are not consolidated into
the Group financial statements.
Investment property held by consolidated fund entities comprises
land and buildings held to earn rent or for capital appreciation,
and is measured at cost less depreciation and impairment. Other
than land, which is not depreciated, depreciation is calculated on
a straight-line basis over the asset's estimated useful life
(between three and 30 years).
Fund investments held for deferred compensation arrangements
We hold fund product investments related to deferred
compensation arrangements to offset any change in the associated
compensation cost over the vesting period. At vesting, the value of
the fund investment is delivered to the employee. These fund
product investments are measured at fair value and include balances
held by the Employee Trust.
2022 2021
Financial assets at fair value through profit or loss $m $m
--------------------------------------------------------------- ----- -----
Investments in fund products 304 422
Investments in consolidated funds: transferrable securities
(Note 12.2) 905 549
Other investments - 3
------------------------------------------------------------------- ----- -----
Investments in fund products and other investments 1,209 974
------------------------------------------------------------------- ----- -----
Less:
Fund investments held for deferred compensation arrangements (153) (119)
Investments in consolidated funds: exclude consolidation
gross-up of net investment (368) (204)
Other investments - (3)
------------------------------------------------------------------- ----- -----
Seeding investments portfolio 688 648
------------------------------------------------------------------- ----- -----
12.1. Investments in fund products
At 31 December 2022, exposure to fund products via repo
arrangements (included within investments in fund products, with an
offsetting repayment obligation included within trade and other
payables) was $54 million (2021: $64 million). Additional exposure
via TRS was $138 million (2021: $108 million). The largest single
investment in fund products at 31 December 2022 was $61 million
(2021: $45 million).
Income or gains on investments and other financial instruments
comprises the following:
2022 2021
$m $m
--------------------------------------------------------------------------------------------- --- ---- ----
Net (losses)/gains on seeding investments portfolio (12) 24
Consolidated fund entities: gross-up of net gains on investments - 12
Foreign exchange movements 22 3
Net (losses)/gains on fund investments held for deferred compensation arrangements and other
investments (3) 3
-------------------------------------------------------------------------------------------------- ---- ----
Net income or gains on investments and other financial instruments 7 42
-------------------------------------------------------------------------------------------------- ---- ----
12.2. Consolidation of investments in funds
In 2022, our interests in 43 (2021: 26) funds met the definition
of control and have therefore been consolidated on a line-by-line
basis.
Consolidated fund entities are included within the Group balance
sheet and income statement as follows:
2022 2021
$m $m
-------------------------------------------------------------------------------- ----- -----
Balance sheet
Cash and cash equivalents 108 64
Transferable securities1 905 549
Investment property 34 -
Fees and other receivables 29 5
Trade and other payables (180) (19)
-------------------------------------------------------------------------------- ----- -----
Net assets of consolidated fund entities 896 599
Third-party interest in consolidated funds (359) (254)
-------------------------------------------------------------------------------- ----- -----
Net investment held by Man Group 537 345
-------------------------------------------------------------------------------- ----- -----
Income statement
Net (losses)/gains on investments2 (31) 32
Management fee expenses3 (4) (3)
Performance fee expenses3 (1) (2)
Other costs4 (9) (4)
-------------------------------------------------------------------------------- ----- -----
Net (losses)/gains of consolidated fund entities (45) 23
Third-party share of losses/(gains) relating to interests in consolidated funds 14 (3)
-------------------------------------------------------------------------------- ----- -----
Net (losses)/gains attributable to net investment held by Man Group (31) 20
-------------------------------------------------------------------------------- ----- -----
Notes:
1 Included within investments in fund products and other investments.
2 Included within income or gains on investments and other financial instruments.
3 Relate to management and performance fees paid by the funds to
Man Group during the year, which are eliminated within management
and other fees and performance fees respectively in the Group
income statement.
4 Includes depreciation and impairment of investment property
held by consolidated fund entities.
Movements in the carrying value of investment property held by
consolidated fund entities can be analysed as follows:
2022 2021
$m $m
-------------------------------------------------------- ---- ----
Cost at beginning of the year - -
Additions 38 -
------------------------------------------------------------ ---- ----
Cost at end of the year 38 -
------------------------------------------------------------ ---- ----
Accumulated depreciation and impairment at beginning
of the year - -
Depreciation (1) -
Impairment (3) -
------------------------------------------------------------ ---- ----
Accumulated depreciation and impairment at end of
the year (4) -
------------------------------------------------------------ ---- ----
Net book value at beginning of the year - -
-------------------------------------------------------- ---- ----
Net book value at end of the year 34 -
------------------------------------------------------------ ---- ----
The fair value of investment property held by consolidated fund
entities of $34 million at 31 December 2022 (2021: nil) is based on
independent third-party valuations. The carrying value has been
impaired to its fair value during the year, resulting in an
impairment charge of $3 million (2021: nil) being recognised in the
Group income statement within other costs.
13. Fair value of financial assets and liabilities
Accounting policy
We disclose the fair value measurement of financial assets and
liabilities using three levels, as follows:
-- Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities.
-- Level 2: inputs, other than quoted prices included within
Level 1, that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from
prices).
-- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
The majority of our investments in fund products fall within
Level 2 due to the levels of subscription and redemption activity
and the liquidity of the underlying investments. Level 2
investments in fund products primarily comprise holdings in
unlisted, open-ended, active and liquid funds, which are priced
using daily or weekly observable market information derived from
third-party sources.
A transfer into Level 3 would be deemed to occur where the level
of activity, as evidenced by subscriptions and redemptions, is
deemed insufficient to support a Level 2 classification. Other
factors, such as a deterioration of liquidity in the underlying
investments, would also result in a Level 3 classification.
We assess the observability of the inputs used in the valuations
of our financial assets and liabilities on an annual basis.
The fair values of our financial assets and liabilities held at
fair value through profit and loss can be analysed as follows:
2022 2021
-------------------------- --------------------------
Level Level Level Level Level Level
$m 1 2 3 Total 1 2 3 Total
----------------------------- ----- ----- ----- ----- ----- ----- ----- -----
Financial assets held
at fair value:
Investments in fund products
and other investments (Note
12) - 284 20 304 3 243 179 425
Investments in consolidated
funds (Note 12) - 905 - 905 - 538 11 549
Derivatives (Note 10) - 9 - 9 - 5 - 5
----------------------------- ----- ----- ----- ----- ----- ----- ----- -----
- 1,198 20 1,218 3 786 190 979
----------------------------- ----- ----- ----- ----- ----- ----- ----- -----
Financial liabilities
held at fair value:
Derivatives (Note 11) - (6) - (6) - (5) - (5)
----------------------------- ----- ----- ----- ----- ----- ----- ----- -----
- (6) - (6) - (5) - (5)
----------------------------- ----- ----- ----- ----- ----- ----- ----- -----
During the year, CLO risk retention assets of $154 million which
were previously classified within the Level 3 category were
transferred to Level 2 following a change in valuation methodology
as all inputs used in the valuation of those assets are now
observable. The change in valuation methodology does not have a
material impact on the fair value of the assets year-on-year.
The movements in Level 3 financial assets and liabilities held
at fair value are as follows:
2022 2021
------------------- -------------------
$m Assets Liabilities Assets Liabilities
------------------------------------------ ------ ----------- ------ -----------
At beginning of the year 190 - 179 (2)
Transfers (out of)/into Level 3 (154) - 9 -
Purchases 1 - 17 -
(Charge)/credit to Group income statement (5) - (7) 2
Sales or settlements (1) - (2) -
Change in consolidated fund entities held (11) - (6) -
------------------------------------------ ------ ----------- ------ -----------
At end of the year 20 - 190 -
------------------------------------------ ------ ----------- ------ -----------
The $2 million credit to the Group income statement in 2021
relates to the revaluation of contingent consideration, being an
adjustment to the fair value of acquisition earn-out payments.
14. Market risks and derivatives
Accounting policy
Derivatives
We use derivative financial instruments to manage market risk in
certain circumstances. These consist primarily of market risk
hedges on some of our seeding positions and foreign exchange
contracts. The carrying value of these derivatives are included in
fee and other receivables and trade and other payables.
Hedge accounting
We have elected to apply cash flow hedge accounting to fund
investments related to deferred fund product awards granted from 1
January 2020, whereby the offsetting gains or losses on these fund
products are matched against the corresponding fund product-based
payment compensation charge in the Group income statement pro rata
over the vesting period. Gains or losses are recognised through
other comprehensive income and held within the cash flow hedge
reserve in equity until they are recycled over the vesting period
into the Group income statement.
We apply net investment hedge accounting to the net assets of
material subsidiaries that have a functional currency other than
USD. Gains or losses on derivatives are recycled from the Group
income statement through other comprehensive income in the foreign
currency translation reserve in equity to offset the impact of any
currency translation of the net assets of these subsidiaries. The
accumulated gains or losses are recycled to the Group income
statement on disposal of the related subsidiary.
As in 2021, all derivatives are held with counterparties with
ratings of A or higher and mature within one year.
Management of market risk arising from investments in funds
Investments in fund products expose us to market risk and are
therefore managed within limits consistent with the Board's risk
appetite. In certain circumstances, we use derivative financial
instruments, specifically equity or credit default swaps, to hedge
the risk associated with mark-to-market movements.
The market risk from seeding investments, including those
financed via repo and TRS arrangements, is modelled using a value
at risk methodology with a 95% confidence interval and one-year
time horizon. The value at risk is estimated to be $43 million at
31 December 2022 (2021: $42 million).
2022 2021
Market risk hedges $m $m
----------------------------------------------------- ---- -----
Notional value of derivatives at 31 December
Assets 149 148
Liabilities (71) (112)
----------------------------------------------------- ---- -----
Net assets 78 36
----------------------------------------------------- ---- -----
For the year ended 31 December
Gain/(loss) recognised in the Group income statement 39 (9)
----------------------------------------------------- ---- -----
We generally hold an investment in the associated fund products
to hedge the mark-to-market movement in deferred fund product-based
compensation over the vesting period.
Management of foreign exchange rate risk
We are subject to risk from changes in foreign exchange rates on
monetary assets and liabilities. In certain circumstances, we use
derivative financial instruments, specifically forward foreign
exchange contracts, to hedge the risk associated with foreign
exchange movements.
During the year, there were $22 million (2021: $3 million) of
net realised and unrealised foreign exchange gains recognised in
the Group income statement through income or gains on investments
and other financial instruments, including the effects of hedging.
This primarily comprises a $25 million (2021: $2 million)
unrealised gain relating to the revaluation of our $200 million
(2021: $238 million) unhedged GBP lease liability.
2022 2021
Foreign exchange hedges $m $m
-------------------------------------------------------------------------- ----- -----
Notional value of derivatives at 31 December
Assets 82 123
Liabilities (235) (364)
-------------------------------------------------------------------------- ----- -----
Net liabilities (153) (241)
-------------------------------------------------------------------------- ----- -----
For the year ended 31 December
Gain/(loss) before the impact of hedging 5 (10)
Total gain on hedging instruments 17 13
-------------------------------------------------------------------------- ----- -----
Gain recognised in the Group income statement after the impact of hedging 22 3
-------------------------------------------------------------------------- ----- -----
The table below reflects the currency profile of our net foreign
currency (non-USD) monetary assets and liabilities after the impact
of hedging:
2022 2021
$m $m
------------------ ----- -----
Sterling (155) (208)
Australian dollar 41 -
Japanese yen 19 -
Other 10 -
------------------ ----- -----
Total (85) (208)
------------------ ----- -----
A 10% strengthening/weakening of the USD against all other
currencies, with all other variables held constant, would have
resulted in a foreign exchange loss/gain of $9 million (2021: $21
million), with a corresponding impact on equity. This pre-tax
exposure is based on non-USD balances held by USD functional
currency entities at 31 December.
Management of interest rate risk
We are subject to risk from changes in interest rates on
monetary assets and liabilities, principally cash deposits and
financing costs. In respect of our monetary assets and liabilities
which earn/incur interest indexed to floating rates, as at 31
December 2022 a 100 basis point (2021: 50 basis point)
increase/decrease in these rates, with all other variables held
constant, would have resulted in a $1 million (2021: $1 million)
increase/decrease in net interest income.
15. Leasehold improvements and equipment
Accounting policy
All leasehold improvements and equipment are recorded at cost
less depreciation and impairment. Cost includes the original
purchase price of the asset and costs directly attributable to
bringing the asset to its working condition for its intended use.
Depreciation is calculated using the straight-line method over the
asset's estimated useful life, which for leasehold improvements is
the shorter of the life of the lease and that of the improvement
(up to 24 years) and for equipment is between three and ten
years.
2022 2021
----------------------------------- ------------------------------- -------------------------------
Leasehold Leasehold
$m improvements Equipment Total improvements Equipment Total
----------------------------------- ------------- --------- ----- ------------- --------- -----
Cost at beginning of the year 70 64 134 58 59 117
Additions 11 10 21 14 12 26
Disposals (13) (13) (26) - (7) (7)
Transfer to/(from) leasehold
improvements from/(to) investment
property (Note 16) 2 - 2 (2) - (2)
----------------------------------- ------------- --------- ----- ------------- --------- -----
Cost at end of the year 70 61 131 70 64 134
----------------------------------- ------------- --------- ----- ------------- --------- -----
Accumulated depreciation and
impairment at beginning of the
year (45) (46) (91) (44) (43) (87)
Disposals 13 13 26 - 7 7
Transfer (to)/from leasehold
improvements (from)/to investment
property (Note 16) (1) - (1) 2 - 2
Depreciation (3) (9) (12) (3) (10) (13)
----------------------------------- ------------- --------- ----- ------------- --------- -----
Accumulated depreciation and
impairment at end of the year (36) (42) (78) (45) (46) (91)
----------------------------------- ------------- --------- ----- ------------- --------- -----
Net book value at beginning of
the year 25 18 43 14 16 30
----------------------------------- ------------- --------- ----- ------------- --------- -----
Net book value at end of the
year 34 19 53 25 18 43
----------------------------------- ------------- --------- ----- ------------- --------- -----
16. Leases
16.1. Man Group as lessee
Accounting policy
Our lease arrangements primarily relate to business premises
property leases.
We assess whether a contract is or contains a lease at the
inception of the contract. For arrangements where we are the
lessee, a right-of-use (ROU) lease asset and a related lease
liability are recognised on the Group balance sheet at the date
from which we have the right to use the asset, usually the lease
commencement date. For short-term leases (defined as leases with a
term of one year or less) and leases of low-value assets, we
recognise the lease payments on a straight-line basis over the
lease term within other costs in the Group income statement. The
lease term is determined as the non-cancellable period of a lease,
together with periods covered by an option to extend the lease if
we consider that exercise of the extension option is reasonably
certain. Lease extension options and break clauses inherent in our
leases do not have a significant impact on our ROU lease assets and
lease liabilities.
ROU lease assets relating to the portion of our leased business
premises which we then sub-let under operating leases are
classified as investment property, with other ROU lease assets
classified as leasehold property. Transfers from investment
property to leasehold property occur when we commence development
of a previously sub-let portion of our leased business premises
with a view to occupying that space. Similarly, transfers from
leasehold property to investment property occur when we cease to
occupy a portion of the leased business premises with the intention
of sub-letting that space under an operating lease.
All of our ROU lease assets, including those classified as
investment property, are measured at cost less depreciation and
impairment. Cost includes the amount of the initial measurement of
the associated lease liability, lease payments made at or before
the lease commencement date, lease incentives received, associated
leasehold improvements classified as investment property and
estimated costs to be incurred in restoring the property to the
condition required under the terms of the lease. Depreciation is
calculated on a straight-line basis over the asset's estimated
useful life, which for leasehold improvements classified as
investment property is the shorter of the lease term and the life
of the improvement (up to 24 years) and for all other assets is the
lease term, and is included within other costs. We assess ROU lease
assets for impairment whenever events or circumstances indicate
that the carrying amount may not be recoverable.
All lease liabilities are measured at the present value of lease
payments due over the lease term, discounted using our incremental
cost of borrowing (being the rate we would have to pay to finance a
similar asset) at the lease commencement date or the modification
date. The lease liability is adjusted for lease payments and unwind
of lease liability discount as well as the impact of any subsequent
lease modifications. The unwind of lease liability discount is
included within finance expense.
Cash payments in relation to leases, which reduce the lease
liability recognised on the Group balance sheet, are presented as
payment of lease interest (within operating activities) and
repayments of principal lease liability (within financing
activities) in the Group cash flow statement. Payments in relation
to short-term leases and leases of low-value assets are included
within cash flows from operating activities.
Right-of-use lease assets
2022 2021
---------------------------------------- ---------------------------- ----------------------------
Leasehold Investment Leasehold Investment
$m property property Total property property Total
---------------------------------------- --------- ---------- ----- --------- ---------- -----
Cost at beginning of the year 146 256 402 168 240 408
Additions 41 2 43 4 5 9
Disposals (22) (10) (32) (15) - (15)
Transfer between leasehold property
and investment property 4 (4) - (9) 9 -
Transfer (from)/to investment property
(to)/from leasehold improvements
(Note 15) - (2) (2) - 2 2
Remeasurement of lease liability - - - (2) - (2)
---------------------------------------- --------- ---------- ----- --------- ---------- -----
Cost at end of the year 169 242 411 146 256 402
---------------------------------------- --------- ---------- ----- --------- ---------- -----
Accumulated depreciation and impairment
at beginning of the year (85) (179) (264) (94) (162) (256)
Disposals 22 10 32 14 - 14
Transfer between leasehold property
and investment property (4) 4 - 4 (4) -
Transfer from/(to) investment property
to/(from) leasehold improvements
(Note 15) - 1 1 - (2) (2)
Impairment - - - - (3) (3)
Depreciation (Note 5) (10) (7) (17) (9) (8) (17)
---------------------------------------- --------- ---------- ----- --------- ---------- -----
Accumulated depreciation and impairment
at end of the year (77) (171) (248) (85) (179) (264)
---------------------------------------- --------- ---------- ----- --------- ---------- -----
Net book value at beginning of
the year 61 77 138 74 78 152
---------------------------------------- --------- ---------- ----- --------- ---------- -----
Net book value at end of the year 92 71 163 61 77 138
---------------------------------------- --------- ---------- ----- --------- ---------- -----
Lease liability
The maturity of our contractual undiscounted cash flows for the
lease liability is as follows:
2022 2021
$m $m
------------------------------------------------ ---- ----
Within one year 25 25
Between one and five years 97 103
Between five and ten years 125 138
Between ten and 15 years 74 105
After 15 years - 5
------------------------------------------------ ---- ----
Undiscounted lease liability at end of the year 321 376
------------------------------------------------ ---- ----
Discounted lease liability at end of the year 253 250
------------------------------------------------ ---- ----
At 31 December 2022, $200 million (2021: $236 million) of the
total discounted lease liability relates to our main premises in
London (expiring in 2035) and is denominated in GBP.
Movements in the lease liability are as follows:
2022 2021
$m $m
-------------------------------------------- ---- ----
At beginning of the year 250 272
Additions 41 4
Disposals - (1)
Cash payments (23) (33)
Unwind of lease liability discount (Note 6) 10 12
Remeasurement - (2)
Foreign exchange movements (25) (2)
-------------------------------------------- ---- ----
At end of the year 253 250
-------------------------------------------- ---- ----
16.2. Man Group as lessor
Accounting policy
Operating leases
Man Group acts as lessor in respect of certain ROU lease assets
which are in turn sub-let under operating leases (investment
property ROU lease assets). Sub-lease rental income is recognised
on a straight-line basis over the lease term in the Group income
statement.
An impairment expense is recognised for the amount by which the
related ROU lease asset's carrying value exceeds its recoverable
amount, being its value in use. For the purposes of assessing
impairment, investment property ROU lease assets are grouped at the
lowest levels for which there are separately identifiable cash
flows, being the individual sub-lease contract level.
Finance leases
Amounts due from lessees under finance leases are recognised as
receivables at the amount of the net investment in the lease. The
net investment in the lease is measured at the present value of the
lease payments due over the lease term, discounted using our
incremental cost of borrowing under the head lease. The net
investment in the lease is adjusted for lease payments and finance
lease interest as well as the impact of any subsequent lease
modifications. Finance lease interest is included within finance
income.
Operating expenses of $5 million (2021: $6 million) arising from
investment property that did not generate rental income during the
period are included within other costs.
At 31 December 2022, the contractual undiscounted minimum
operating lease payments receivable are as follows:
2022 2021
$m $m
---- ----
Within one year 5 6
Between one and two years 5 6
Between two and three years 5 6
Between three and four years - 5
----------------------------- ---- ----
15 23
----------------------------- ---- ----
Fair value of investment property
2022 2021
$m $m
--------------- ---- ----
Value in use 82 94
Less:
Carrying value (71) (77)
--------------- ---- ----
Headroom 11 17
--------------- ---- ----
17. Goodwill and acquired intangibles
Accounting policy
Goodwill
Goodwill represents the excess of consideration transferred over
the fair value of identifiable net assets of the acquired business
at the date of acquisition. Goodwill is carried on the Group
balance sheet at cost less accumulated impairment, has an
indefinite useful life, is not subject to amortisation and is
tested for impairment annually, or whenever events or circumstances
indicate that the carrying amount may not be recoverable. An
impairment expense is recognised for the amount by which the
asset's carrying value exceeds its recoverable amount. The
recoverable amounts of our cash-generating units (CGUs) or groups
of CGUs are assessed each year using a value in use
calculation.
Goodwill does not generate cash flows independently of other
groups of assets and thus is assigned to a CGU or group of CGUs for
the purposes of impairment testing. The groups of CGUs are based
upon how management monitors the business and represent the lowest
level to which goodwill can be allocated on a reasonable basis. For
impairment review purposes, we have identified one group of CGUs,
comprising our liquid asset managers.
The value in use calculation at 31 December 2022 uses cash flow
projections based on the Board-approved financial plan for the year
to 31 December 2023 and a further two years of projections (2024
and 2025), plus a terminal value. The valuation analysis is based
on best practice guidance whereby a terminal value is calculated at
the end of a discrete budget period and assumes, after this
three-year budget period, no growth in asset flows above the
long-term growth rate.
The assumptions applied in the value in use calculation are
derived from past experience and assessment of current market
inputs. We have applied a bifurcated discount rate to the modelled
cash flows to reflect the different risk profile of management fee
profits and performance fee profits. The discount rates are based
on our weighted average cost of capital using a risk-free interest
rate, together with an equity market risk premium and an
appropriate market beta derived from consideration of our own beta,
similar alternative asset managers, and the asset management sector
as a whole. The terminal value is calculated based on the projected
closing AUM at 31 December 2025 and applying the mid-point of a
range of historical multiples to the forecast cash flows associated
with management and performance fee profits.
The value in use calculation is presented on a post-tax basis,
consistent with the prior year, given most comparable market data
is available on a post-tax basis. This is not significantly
different to its pre-tax equivalent.
Acquired intangibles
Following initial recognition, acquired intangibles are held at
cost less accumulated amortisation and impairment. Acquired
intangibles comprise investment management agreements and related
client relationships (IMAs), distribution channels and brand names
acquired in a business combination, and are initially recognised at
fair value based on the present value of the expected future cash
flows and are amortised on a straight-line basis over their
expected useful lives, which are between three and 13 years (IMAs
and brands), and eight and 12 years (distribution channels).
Acquired intangibles are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not
be recoverable. Disposals of acquired intangibles are recognised in
the year the related cash inflows are transferred.
2022 2021
---------------------------------------------- ----------------------------------------------
Distribution Brand Distribution Brand
$m Goodwill IMAs channels names Total Goodwill IMAs channels names Total
-------------------- -------- ----- ------------ ------ ------- -------- ----- ------------ ------ -------
Cost at beginning
of the year 2,425 838 56 40 3,359 2,429 857 58 41 3,385
Disposals - (4) - - (4) - (19) (2) (1) (22)
Foreign currency
translation - - - - - (4) - - - (4)
-------------------- -------- ----- ------------ ------ ------- -------- ----- ------------ ------ -------
Cost at end of the
year 2,425 834 56 40 3,355 2,425 838 56 40 3,359
-------------------- -------- ----- ------------ ------ ------- -------- ----- ------------ ------ -------
Accumulated
amortisation
and impairment at
beginning of the
year (1,836) (758) (49) (38) (2,681) (1,837) (721) (47) (38) (2,643)
Amortisation - (47) (3) (1) (51) - (56) (4) (1) (61)
Disposals - 4 - - 4 - 19 2 1 22
Foreign currency
translation - - - - - 1 - - - 1
-------------------- -------- ----- ------------ ------ ------- -------- ----- ------------ ------ -------
Accumulated
amortisation
and impairment at
end of the year (1,836) (801) (52) (39) (2,728) (1,836) (758) (49) (38) (2,681)
-------------------- -------- ----- ------------ ------ ------- -------- ----- ------------ ------ -------
Net book value at
beginning
of the year 589 80 7 2 678 592 136 11 3 742
-------------------- -------- ----- ------------ ------ ------- -------- ----- ------------ ------ -------
Net book value at
end of the year 589 33 4 1 627 589 80 7 2 678
-------------------- -------- ----- ------------ ------ ------- -------- ----- ------------ ------ -------
Goodwill impairment assumptions
Pre-tax Assumptions
Key assumptions at 31 December 2022 equivalent adopted(1)
------------------------------------------------------------ ----------- -----------
Compound average annualised growth in AUM (over three
years) 6%
Discount rate
* Management fee earnings 14% 11%
* Performance fee earnings 22% 17%
------------------------------------------------------------ ----------- -----------
Terminal value (mid-point of range of historical multiples)
* Management fee earnings 13.0x
* Performance fee earnings 5.5x
* Implied terminal growth rate 4%
------------------------------------------------------------ ----------- -----------
Assumptions
Pre-tax adopted
Key assumptions at 31 December 2021 equivalent (1)
------------------------------------------------------------ ----------- -----------
Compound average annualised growth in AUM (over three
years) 6%
Discount rate
* Management fee earnings 14% 11%
* Performance fee earnings 21% 17%
------------------------------------------------------------ ----------- -----------
Terminal value (mid-point of range of historical multiples)
* Management fee earnings 13.0x
* Performance fee earnings 5.5x
* Implied terminal growth rate 4%
------------------------------------------------------------ ----------- -----------
Goodwill impairment and sensitivity analyses
Details of the valuations are provided below, including
sensitivity tables which show scenarios whereby the key assumptions
are changed to stressed assumptions, indicating the modelled
headroom or impairment that would result. We have considered
reasonably foreseeable changes in the compound average annualised
growth in AUM forecast assumption, stressing this by 2% and 10% or
to the point at which impairment would arise. Each assumption, or
set of assumptions, is stressed in isolation. The results of these
sensitivities make no allowance for mitigating actions that
management would take if such market conditions persisted.
2022 2021
$m $m
----------------------- ----- -----
Value in use 4,950 4,140
Less:
Carrying value of CGUs (720) (760)
----------------------- ----- -----
Headroom 4,230 3,380
----------------------- ----- -----
Discount rates
(post-tax) Multiples (post-tax)
---------------- ----------------------
Management Management
Compound average fee/ fee/
Sensitivity analysis at 31 December annualised performance performance
2022 growth in AUM fee fee
------------------------------------ --------------------- ---------------- ----------------------
Key assumption stressed to: 6% 4% (4)%(2) 10%/16% 12%/18% 14.0x/6.5x 12.0x/4.5x
Modelled headroom ($m) 4,230 3,790 2,140 4,350 4,110 4,630 3,830
Increase/(reduction) in value
in use ($m) 120 (120) 400 (400)
------------------------------------ ----- ----- ------- ------- ------- ---------- ----------
Discount rates
(post-tax) Multiples (post-tax)
----------------- ----------------------
Compound average Management fee/ Management fee/
Sensitivity analysis at 31 December annualised performance performance
2021 growth in AUM fee fee
------------------------------------ --------------------- ----------------- ----------------------
Key assumption stressed to: 6% 4% (4)%(2) 10%/16% 12%/18% 14.0x/6.5x 12.0x/4.5x
Modelled headroom ($m) 3,380 2,940 1,340 3,480 3,280 3,690 3,070
Increase/(reduction) in value
in use ($m) 100 (100) 310 (310)
------------------------------------ ----- ----- ------- -------- ------- ---------- ----------
Notes:
1 Earnings discount rate assumptions are presented post-tax.
Earnings multiples apply to the forward year.
2 Stressed by 10%, as opposed to the point of impairment, given
an impairment scenario is not reasonably foreseeable.
18. Other intangibles
Accounting policy
Other intangibles relate to capitalised computer software.
Following initial recognition, other intangibles are held at cost,
which includes costs that are directly associated with the
procurement or development of identifiable and unique software
products which will generate economic benefits exceeding costs
beyond one year, less accumulated amortisation and impairment.
Capitalised computer software is amortised on a straight-line basis
over its estimated useful life (three years), with amortisation
expense included within other costs in the Group income statement.
Capitalised computer software is reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount may not be recoverable. Additions primarily relate to the
continued investment in our operating platforms.
2022 2021
$m $m
-------------------------------------------------- ---- ----
Cost at beginning of the year 130 112
Additions 27 22
Disposals (9) (4)
-------------------------------------------------- ---- ----
Cost at end of the year 148 130
-------------------------------------------------- ---- ----
Accumulated amortisation at beginning of the year (85) (73)
Amortisation (18) (16)
Disposals 5 4
-------------------------------------------------- ---- ----
Accumulated amortisation at end of the year (98) (85)
-------------------------------------------------- ---- ----
Net book value at beginning of the year 45 39
-------------------------------------------------- ---- ----
Net book value at end of the year 50 45
-------------------------------------------------- ---- ----
19. Deferred tax
Accounting policy
Deferred tax is recognised using the balance sheet liability
method in respect of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes
and the amounts used for tax purposes.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled, or the asset is
realised, based on tax laws and rates that have been enacted or
substantively enacted at the reporting date.
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against
current tax liabilities when they relate to income taxes levied by
the same taxation authority and the Group intends to settle those
current tax assets and liabilities on a net basis.
The movements in our net deferred tax assets and liabilities by
category are as follows:
Deferred Tax allowances Accumulated
$m compensation over depreciation Intangibles operating losses Partnerships Other Total
------------------ ------------------ ----------------- ----------- ------------------ ------------ ----- -----
1 January 2021 29 15 11 41 (14) 12 94
Credit/(charge) to
Group income
statement (Note
7) 17 3 (5) (12) (8) 1 (4)
Credit to other
comprehensive
income and equity 3 - - - - - 3
Other balance
sheet movements - - - - - (1) (1)
Foreign currency
translation - - - - - (1) (1)
------------------ ------------------ ----------------- ----------- ------------------ ------------ ----- -----
31 December 2021 49 18 6 29 (22) 11 91
------------------ ------------------ ----------------- ----------- ------------------ ------------ ----- -----
Credit/(charge) to
Group income
statement (Note
7) 8 (8) 6 (5) 22 (1) 22
Charge to other
comprehensive
income and equity (6) - - (1) - - (7)
Foreign currency
translation - - - - - (1) (1)
------------------ ------------------ ----------------- ----------- ------------------ ------------ ----- -----
At 31 December
2022 51 10 12 23 - 9 105
------------------ ------------------ ----------------- ----------- ------------------ ------------ ----- -----
Deferred tax balances after offset, as presented in the Group
balance sheet, are as follows:
2022 2021
$m $m
------------------------- ---- ----
Deferred tax assets 105 128
Deferred tax liabilities - (37)
------------------------- ---- ----
105 91
------------------------- ---- ----
Deferred tax assets arise in relation to current year deferred
compensation charges which are not deductible for tax purposes
until future periods. Tax allowances over depreciation relate to
deferred tax on depreciation charged on qualifying leasehold
improvements and equipment and ROU lease assets.
The gross amount of UK non-trading losses for which a deferred
tax asset has not been recognised is $25 million (2021: $25
million). These losses are not subject to an expiration period. The
gross amount of other future taxable income deductions for which a
deferred tax asset has not been recognised is $12 million (2021:
$62 million). These deductions expire in 2024.
US deferred tax assets
We have recognised accumulated deferred tax assets in the US of
$64 million (2021: $74 million) that will be available to offset
future taxable profits. As the result of a decrease in forecast
future taxable profits in the US, we derecognised $7 million of the
available deferred tax assets in relation to state and city tax
losses in 2022 (2021: recognised $2 million). At 31 December 2022,
$18 million of the available US deferred tax assets (2021: $11
million) relating to state and city tax losses remain unrecognised.
We do not expect to realise sufficient future taxable profits
against which these losses can be offset before the majority expire
in 2035. We do not currently expect to pay federal tax on any
profits we may earn in the US until 2024.
2022 2021
US net deferred tax assets $m $m
--------------------------------------------------------------- ---- ----
Recognised
At beginning of the year 74 81
(Charge)/credit to Group income statement:
(Derecognition)/recognition of available tax assets (Note 7) (7) 2
Other movements: consumption - (12)
(Charge)/credit to equity (3) 5
Other balance sheet movements - (2)
--------------------------------------------------------------- ---- ----
At end of the year 64 74
--------------------------------------------------------------- ---- ----
Unrecognised
At beginning of the year 11 14
Charge/(credit) to Group income statement:
Derecognition/(recognition) of available tax assets (Note 7) 7 (2)
Other movements - (1)
--------------------------------------------------------------- ---- ----
At end of the year 18 11
--------------------------------------------------------------- ---- ----
The gross amount of US losses for which a deferred tax asset has
not been recognised is $258 million (2021: $158 million).
20. Provisions
Accounting policy
Provisions are recognised when Man Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that we will be required to settle the obligation, and
a reliable estimate can be made of the amount of the obligation.
All provisions are current given we do not have the unconditional
right to defer settlement.
2022 2021
$m $m
--------------------------------- ---- ----
At beginning of the year 14 9
Charge to Group income statement 1 6
Utilised - (1)
Foreign currency translation (1) -
--------------------------------- ---- ----
At end of the year 14 14
--------------------------------- ---- ----
Provisions relate to ongoing claims and leasehold property
dilapidations.
21. Investments in associates
Accounting policy
Associates are entities in which Man Group holds an interest and
over which we have significant influence but not control. In
assessing significant influence, we consider our power to
participate in the financial and operating policy decisions of the
investee through its voting or other rights.
Associates are accounted for using the equity method. Under the
equity method, associates are carried at cost plus our share of
cumulative post-acquisition movements in undistributed
profits/losses. Gains and losses on transactions between Man Group
and our associates are eliminated to the extent of our interests in
these entities. An impairment assessment of the carrying value of
associates is performed annually or whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable, with any impairment recognised in the Group income
statement.
2022 2021
$m $m
--------------------------- ---- ----
At beginning of the year 18 -
Acquisitions/contributions 1 20
Share of post-tax loss (5) (2)
--------------------------- ---- ----
At end of the year 14 18
--------------------------- ---- ----
In 2021, we acquired a 23% interest in Hub Technology Partners
Ltd (HUB) for cash of $19 million and $1 million in contribution of
other assets. We do not consider HUB's ongoing losses to be an
indicator of impairment as its business remains in the development
phase.
22. Share-based payment schemes
Accounting policy
Man Group operates equity-settled share-based payment schemes
which are remuneration payments to selected employees that take the
form of an award of shares in the Company. These typically vest
over three to five years, although conditions vary between
different types of award. The fair value of the employee services
received in exchange for the share awards/options granted is
recognised as an expense, with the corresponding credit recognised
in equity, and is determined by reference to the fair value of the
share awards/options at grant date.
We calculate the fair value of share options using the
Black-Scholes valuation model, which takes into account the effect
of both financial and demographic assumptions. Forfeiture and early
vesting assumptions are based on historical observable data.
Changes to the original estimates, if any, are included in the
Group income statement, with a corresponding adjustment to
equity.
23. Share capital, Employee Trust, Treasury share reserve and
earnings per share (EPS)
Accounting policy
Incremental costs directly attributable to the issue of new
ordinary shares are shown in equity as a deduction from the
proceeds, net of tax.
Share repurchases are recognised at the point we become
committed to completing them. A liability is recognised for the
full amount of the commitment, including directly attributable
costs, with a corresponding debit to equity. Where repurchased
shares are held in Treasury, a transfer from the profit and loss
reserve to the Treasury share reserve is recognised for the full
amount of the consideration paid. Where shares are repurchased and
subsequently cancelled, the equivalent par value by which the
Company's share capital is reduced is transferred to the capital
redemption reserve.
The Employee Trust, which is consolidated into Man Group, has
the obligation to deliver deferred share-based and fund
product-based compensation granted to employees, and accordingly
holds shares and fund investments to deliver against these future
obligations. Man Group plc shares held by the Employee Trust and
shares held in Treasury are recorded at cost, including any
directly attributable incremental costs (net of tax), and are
deducted from equity (within the respective reserves) until the
shares are sold, cancelled or transferred to employees. Where such
shares are subsequently sold, any consideration received, net of
any directly attributable incremental transaction costs and the
related tax effects, is included in equity.
The authorised share capital of Man Group plc comprises
US$100,000,000 divided into 2,916,666,666 ordinary shares with a
par value of 3 (3) /(7) c each. Ordinary shares represent 100% of
issued share capital and all issued shares are fully paid. The
shares have attached to them full voting, dividend and capital
distribution (including on wind up) rights. They do not confer any
rights of redemption. Shareholders have the right to receive notice
of, attend, vote and speak at general meetings. When a vote is
taken on a poll, shareholders are entitled to one vote per ordinary
share. When a vote is taken by a show of hands, shareholders
present in person or by proxy have one vote.
Treasury shares are ordinary shares previously repurchased by
the Company but not cancelled (and therefore deducted from equity
and included within the Treasury share reserve) and, as they are no
longer outstanding, they are excluded for earnings per share and
voting rights purposes.
Movements in the number of ordinary shares in issue and the
shares used to calculate basic and diluted EPS are provided
below.
2022 2021
------------------------------------- -------------------------------------
Nominal Nominal
Total Weighted value Total Weighted value
number average $m number average $m
------------------------------ ------------- ------------- ------- ------------- ------------- -------
Number of shares at beginning
of year 1,473,107,813 1,473,107,813 51 1,541,794,770 1,541,794,770 53
Cancellation of own shares
held in Treasury (122,551,031) (52,130,209) (5) (68,686,957) (9,611,929) (2)
------------------------------ ------------- ------------- ------- ------------- ------------- -------
Number of shares at end of
the year 1,350,556,782 1,420,977,604 46 1,473,107,813 1,532,182,841 51
Shares held in Treasury share
reserve (80,604,707) (99,038,830) (79,040,317) (98,674,820)
Man Group plc shares held
by Employee Trust (33,745,908) (33,453,409) (30,611,905) (31,044,822)
------------------------------ ------------- ------------- ------- ------------- ------------- -------
Basic number of shares 1,236,206,167 1,288,485,365 1,363,455,591 1,402,463,199
Dilutive impact of employee
share awards 36,356,550 35,415,800
Dilutive impact of Sharesave
share options 2,467,128 2,165,726
------------------------------ ------------- ------------- ------- ------------- ------------- -------
Dilutive number of shares 1,327,309,043 1,440,044,725
------------------------------ ------------- ------------- ------- ------------- ------------- -------
2022 2021
------------------------------ ------------- ------------- ------- ------------- ------------- -------
Statutory profit ($m) 608 487
Basic EPS 47.2c 34.7c
Diluted EPS 45.8c 33.8c
------------------------------ ------------- ------------- ------- ------------- ------------- -------
Share buybacks 2022 2021
------------------------------------------- ----- -----
Shares repurchased during the year ($m) 386 180
Average purchase price (pence) 227.7 199.9
Shares repurchased (million) 135 66
Accretive impact on earnings per share (%) 6.0 1.7
------------------------------------------- ----- -----
The $386 million of shares repurchased in the year comprise the
completion of the remaining $234 million of the share repurchase
programme announced in December 2021, the completion of the $125
million share repurchase announced in June 2022 and $27 million of
the $125 million share repurchase announced in December 2022. The
purpose of the share repurchases was to deliver returns to
shareholders. All repurchased shares were held in Treasury.
Shares repurchased during the year represent 10.6% of issued
share capital (excluding Treasury shares) as at 31 December 2022
and shares held in Treasury which were cancelled during the year
represent 9.7% of issued share capital (excluding Treasury shares).
At 24 February 2023, we had an unexpired authority to repurchase up
to 38,049,057 of our ordinary shares. A special resolution will be
proposed at the forthcoming Annual General Meeting, pursuant to
which the Company will seek authority to repurchase up to
124,190,442 ordinary shares, representing 10% of the issued share
capital (excluding Treasury shares) at 24 February 2023.
In 2022, we funded $91 million via contribution or loan (2021:
$33 million) to enable the Employee Trust to meet its current
period obligations. At 31 December 2022, the net assets of the
Employee Trust amounted to $146 million (2021: $103 million). These
assets include 33,745,908 (2021: 30,611,905) ordinary shares in the
Company, and $65 million of fund product investments (2021: $41
million) which are included within investments in fund
products.
The Employee Trust waived all dividend entitlements of the
shares held in the current and prior years.
24. Dividends
Accounting policy
Dividend distributions to the Company's shareholders are
recognised directly within equity in the period in which the
dividend is paid or, for final dividends, approved by the Company's
shareholders.
2022 2021
c/share $m c/share $m
-------------------------------------------------- ------- ---- ------- ----
Ordinary shares
Final dividend paid for the previous financial
year to 31 December 8.4 110 5.7 81
Interim dividend paid for the six months to
30 June 5.6 69 5.6 79
-------------------------------------------------- ------- ---- ------- ----
Dividends paid 179 160
-------------------------------------------------- ------- ---- ------- ----
Proposed final dividend for the current financial
year to 31 December 10.1 125 8.4 115
-------------------------------------------------- ------- ---- ------- ----
25. Related party transactions
Accounting policy
Related parties comprise key management personnel, associates
and fund entities which we are deemed to control. All transactions
with related parties were carried out on an arm's-length basis.
The Executive Committee, together with the Company's
non-executive directors, are considered to be our key management
personnel, being those directors, partners and employees having
authority and responsibility for planning, directing and
controlling our activities.
2022 2021
Key management compensation $m $m
------------------------------------------------- ---- ----
Salaries and other short-term employee benefits1 80 64
Share-based payment charge 24 25
Fund product-based payment charge 21 15
Pension costs (defined contribution) 1 1
------------------------------------------------- ---- ----
Total 126 105
------------------------------------------------- ---- ----
Note:
1 Includes salary, benefits and cash bonus.
We paid GBP35,000 to the Standards Board for Alternative
Investments Limited during the year, which is considered a related
party.
26. 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.
27. Subsequent events
In February 2023, we signed a sub-lease with a new tenant for a
substantial portion of the vacant space in our London office. The
sub-lease meets the definition of a finance lease under IFRS 16
'Leases' and therefore on lease commencement we derecognised the
associated portion of our ROU lease asset of $17 million and
recognised a finance lease receivable of $20 million. The excess of
the finance lease receivable over the derecognised ROU lease asset
of $3 million has been recognised as a gain on disposal of the ROU
lease asset in 2023.
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 year 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 a proxy for cash
taxes paid.
In the year, the definition of non-core items has been revised
to treat all foreign exchange gains and losses arising on
non-functional currency balances consistently, rather than only
adjusting for those which relate to specific balance sheet items
which are realised over longer timeframes. The Board considers this
revised classification to be both simpler and more consistent in
its application. Comparative amounts have not been restated as the
impact is immaterial. 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
2022 2021
Note to
the Group
financial
statements $m $m
----------------------------------------------------- ----------- ---- ----
Acquisition and disposal related:
Revaluation of contingent consideration 13 - (2)
Amortisation of acquired intangible assets 17 51 61
Share of post-tax loss of associates 21 5 2
Impairment of right-of-use lease assets - investment
property 16 - 3
Lease surrender income - 7
Foreign exchange movements 12.1 (22) (3)
----------------------------------------------------- ----------- ---- ----
Non-core items (net expense) 34 68
----------------------------------------------------- ----------- ---- ----
Core measures: reconciliation to statutory equivalents
The statutory line items within the Group income statement can
be reconciled to their core equivalents as follows:
2022
Reclassification
of amounts
relating
to consolidated Non-core Per Group
$m Core measure fund entities items income statement
------------------------------------------- ------------ ---------------- -------- -----------------
Management and other fees ([APM]) 958 (4) - 954
Distribution costs (31) - - (31)
------------------------------------------- ------------ ---------------- -------- -----------------
Net management fee revenue ([APM]) 927 (4) - 923
Performance fees([APM]) 779 (1) - 778
Net income or gains on investments
and other financial instruments([APM]) (15) - 22 7
Third-party share of losses relating
to interests in consolidated funds - 14 - 14
Sub-lease rental income 5 - - 5
------------------------------------------- ------------ ---------------- -------- -----------------
Net revenue ([APM]) 1,696 9 22 1,727
Asset servicing costs (58) - - (58)
Compensation costs (678) - - (678)
Other costs([APM]) (170) (9) - (179)
Net finance expense (11) - - (11)
Amortisation of acquired intangible
assets - - (51) (51)
Share of post-tax loss of associate - - (5) (5)
------------------------------------------- ------------ ---------------- -------- -----------------
Profit before tax ([APM]) 779 - (34) 745
------------------------------------------- ------------ ---------------- -------- -----------------
Tax expense([APM]) (132) - (5) (137)
------------------------------------------- ------------ ---------------- -------- -----------------
Profit ([APM]) 647 - (39) 608
------------------------------------------- ------------ ---------------- -------- -----------------
Core basic EPS 50.2c
------------------------------------------- ------------ ---------------- -------- -----------------
Core diluted EPS 48.7c
------------------------------------------- ------------ ---------------- -------- -----------------
2021
Reclassification
of amounts
relating
to consolidated Non-core Per Group
$m Core measure fund entities items income statement
------------------------------------------- ------------ ---------------- -------- -----------------
Management and other fees([APM]) 917 (3) - 914
Distribution costs (40) - - (40)
------------------------------------------- ------------ ---------------- -------- -----------------
Net management fee revenue ([APM]) 877 (3) - 874
Performance fees([APM]) 569 (2) - 567
Net income or gains on investments
and other financial instruments([APM]) 27 12 3 42
Third-party share of gains relating
to interests in consolidated funds - (3) - (3)
Sub-lease rental and lease surrender
income([APM]) 13 - (7) 6
------------------------------------------- ------------ ---------------- -------- -----------------
Net revenue ([APM]) 1,486 4 (4) 1,486
Asset servicing costs (58) - - (58)
Compensation costs (596) - - (596)
Other costs([APM]) (161) (4) - (165)
Net finance expense (13) - - (13)
Revaluation of contingent consideration - - 2 2
Impairment of right-of-use lease assets
- investment property - - (3) (3)
Amortisation of acquired intangible
assets - - (61) (61)
Share of post-tax loss of associate - - (2) (2)
------------------------------------------- ------------ ---------------- -------- -----------------
Profit before tax ([APM]) 658 - (68) 590
------------------------------------------- ------------ ---------------- -------- -----------------
Tax expense([APM]) (101) - (2) (103)
------------------------------------------- ------------ ---------------- -------- -----------------
Profit ([APM]) 557 - (70) 487
------------------------------------------- ------------ ---------------- -------- -----------------
Core basic EPS 39.7c
------------------------------------------- ------------ ---------------- -------- -----------------
Core diluted EPS 38.7c
------------------------------------------- ------------ ---------------- -------- -----------------
[APM] The core equivalents of these statutory measures are
defined as Alternative Performance Measures.
Core costs comprise asset servicing, compensation costs and core
other costs.
The statutory line items within the Group balance sheet can be
reconciled to their core equivalents as follows:
2022 Per Group
Reclassification
of amounts
relating
to consolidated balance
$m Core measure fund entities 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
Investments 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
Goodwill and acquired intangibles 627 - 627
Other intangibles 50 - 50
Deferred tax assets 105 - 105
Pension asset 22 - 22
------------------------------------------------------------- ------------ ---------------- ---------
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
------------------------------------------------------------- ------------ ---------------- ---------
2021 Per Group
Reclassification
of amounts
relating
to consolidated balance
$m Core measure fund entities sheet
------------------------------------------------------------- ------------ ---------------- ---------
Assets
Cash and cash equivalents([APM]) 323 64 387
Fee and other receivables([APM]) 480 5 485
Investments in fund products and other investments([APM]) 770 204 974
Investments in associates 18 - 18
Leasehold improvements and equipment 43 - 43
Leasehold property - right-of-use lease assets 61 - 61
Investment property - right-of-use lease assets 77 - 77
Goodwill and acquired intangibles 678 - 678
Other intangibles 45 - 45
Deferred tax assets 128 - 128
Pension asset 27 - 27
------------------------------------------------------------- ------------ ---------------- ---------
Total assets 2,650 273 2,923
------------------------------------------------------------- ------------ ---------------- ---------
Liabilities
Trade and other payables([APM]) 683 19 702
Provisions 14 - 14
Current tax liabilities 15 - 15
Third-party interest in consolidated funds - 254 254
Lease liability 250 - 250
Deferred tax liabilities 37 - 37
------------------------------------------------------------- ------------ ---------------- ---------
Total liabilities 999 273 1,272
------------------------------------------------------------- ------------ ---------------- ---------
Net assets 1,651 - 1,651
------------------------------------------------------------- ------------ ---------------- ---------
[APM] The core equivalents of these statutory measures are
defined as Alternative Performance Measures.
Core management fee profit 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.
2022 Per Group
Reclassification
of amounts
relating
to consolidated Non-core income
$m Core measure fund entities items statement
--------------------------------------------------------------- ------------ ---------------- -------- -----------
Net management fee revenue 927 (4) - 923
Sub-lease rental income 5 - - 5
Asset servicing costs (58) - - (58)
Compensation costs (management fee) (406) - - (406)
Other costs (170) (9) - (179)
Net finance expense (management fee) (8) - - (8)
--------------------------------------------------------------- ------------ ---------------- -------- -----------
Management fee profit before tax 290 (13) - 277
--------------------------------------------------------------- ------------ ---------------- -------- -----------
Tax expense (46)
--------------------------------------------------------------- ------------ ---------------- -------- -----------
Management fee profit 244
--------------------------------------------------------------- ------------ ---------------- -------- -----------
Core basic management fee EPS 19.0c
--------------------------------------------------------------- ------------ ---------------- -------- -----------
Core diluted management fee EPS 18.4c
--------------------------------------------------------------- ------------ ---------------- -------- -----------
Performance fees 779 (1) - 778
Net income or gains on investments and other financial
instruments (15) - 22 7
Compensation costs (performance fee) (272) - - (272)
Net finance expense (performance fee) (3) - - (3)
--------------------------------------------------------------- ------------ ---------------- -------- -----------
Performance fee profit before tax 489 (1) 22 510
--------------------------------------------------------------- ------------ ---------------- -------- -----------
Tax expense (86)
--------------------------------------------------------------- ------------ ---------------- -------- -----------
Performance fee profit 403
--------------------------------------------------------------- ------------ ---------------- -------- -----------
Core basic performance fee EPS 31.2c
--------------------------------------------------------------- ------------ ---------------- -------- -----------
Core diluted performance fee EPS 30.3c
--------------------------------------------------------------- ------------ ---------------- -------- -----------
2021 Per Group
Reclassification
of amounts
relating
to consolidated Non-core income
$m Core measure fund entities items statement
----------------------------------------- ------------ ---------------- -------- -----------
Net management fee revenue 877 (3) - 874
Sub-lease rental and lease surrender
income 13 - (7) 6
Asset servicing costs (58) - - (58)
Compensation costs (management fee) (393) - - (393)
Other costs (161) (4) - (165)
Net finance expense (management fee) (12) - - (12)
----------------------------------------- ------------ ---------------- -------- -----------
Management fee profit before tax 266 (7) (7) 252
----------------------------------------- ------------ ---------------- -------- -----------
Tax expense (39)
----------------------------------------- ------------ ---------------- -------- -----------
Management fee profit 227
----------------------------------------- ------------ ---------------- -------- -----------
Core basic management fee EPS 16.1c
----------------------------------------- ------------ ---------------- -------- -----------
Core diluted management fee EPS 15.7c
----------------------------------------- ------------ ---------------- -------- -----------
Performance fees 569 (2) - 567
Net income or gains on investments
and other financial instruments 27 12 3 42
Compensation costs (performance fee) (203) - - (203)
Net finance expense (performance fee) (1) - - (1)
----------------------------------------- ------------ ---------------- -------- -----------
Performance fee profit before tax 392 10 3 405
----------------------------------------- ------------ ---------------- -------- -----------
Tax expense (62)
----------------------------------------- ------------ ---------------- -------- -----------
Performance fee profit 330
----------------------------------------- ------------ ---------------- -------- -----------
Core basic performance fee EPS 23.6c
----------------------------------------- ------------ ---------------- -------- -----------
Core diluted performance fee EPS 23.0c
----------------------------------------- ------------ ---------------- -------- -----------
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:
2022 2021
$m $m
--------------------------------------------------------------------------------------------- ---- ----
Net (losses)/gains on seeding investments portfolio (Note 12.1) (12) 24
Net (losses)/gains on fund investments held for deferred compensation arrangements and other
investments (Note 12.1) (3) 3
--------------------------------------------------------------------------------------------- ---- ----
Core (losses)/gains on investments (15) 27
Non-core items:
Consolidated fund entities: gross-up of net gains on investments (Note 12.2) - 12
Foreign exchange movements (Note 12.1) 22 3
--------------------------------------------------------------------------------------------- ---- ----
Net income or gains on investments and other financial instruments 7 42
--------------------------------------------------------------------------------------------- ---- ----
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:
2022 2021
$m $m
---------------------------------------------------------------- ---- ----
Statutory tax expense 137 103
Tax on non-core items:
Amortisation of acquired intangible assets 6 7
Impairment of right-of-use lease assets - investment property - 1
Foreign exchange movements (4) -
Non-core tax item on US deferred tax assets (Note 19) (7) (10)
-------------------------------------------------------------------- ---- ----
Non-core tax items (5) (2)
-------------------------------------------------------------------- ---- ----
Core tax expense 132 101
-------------------------------------------------------------------- ---- ----
Comprised of:
Tax expense on core management fee profit before tax 46 39
Tax expense on core performance fee profit before tax 86 62
-------------------------------------------------------------------- ---- ----
The core tax rate is 17% for 2022 (2021: 15%), which has
increased largely due to a higher weighting of profits in the UK
where the applicable statutory tax rate is 19%. The increase in the
UK corporation tax rate to 25% on 1 April 2023 will result in an
increase in our core tax rate in future periods.
Core cash flows from operations excluding working capital
movements
Cash flows from operating activities excluding working capital
movements can be reconciled to cash flows from operating activities
as reported in the Group cash flow statement as follows:
2022 2021
$m $m
-------------------------------------------------------------------------- ---- ----
Cash flows from operating activities 737 484
Add back changes in working capital (Note 9):
Increase in fee and other receivables 68 102
Increase in other financial assets including consolidated fund entities 45 163
Increase in trade and other payables (40) (49)
-------------------------------------------------------------------------- ---- ----
Core cash flows from operations excluding working capital movements 810 700
-------------------------------------------------------------------------- ---- ----
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:
2022 2021
Note to
the Group
financial
statements $m $m
------------------------------------ ----------- ---- ----
Seeding investments portfolio 12 688 648
Available cash and cash equivalents 8 349 323
Payables under repo arrangements 11 (54) (64)
------------------------------------ ----------- ---- ----
Net financial assets 983 907
------------------------------------ ----------- ---- ----
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END
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