Interim results

RNS Number : 3158I
Man Group plc
24 July 2012
 



INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2012

 

Key points

 

·     Funds under management (FUM) at 30 June 2012 of $52.7 billion (31 December 2011:
$58.4 billion), reflecting sales of $7.2 billion, redemptions of $9.6 billion, investment movement of -$0.3 billion, FX translation effects of -$0.5 billion and other movements, principally guaranteed product degears, of -$2.5 billion

·     Adjusted profit before tax (PBT) of $121 million, comprising adjusted net management fee PBT of $108 million and net performance fee PBT of $13 million  

·     Statutory loss before tax on continuing operations for the six months ended 30 June 2012 of $164 million, reflecting impairment of goodwill associated with GLG ($91 million) and Man Multi-Manager ($142 million)

·     On track to deliver $95 million of operating cost savings announced in March 2012

·     Further annual cost savings of $100 million over the next 18 months announced today

·     Surplus regulatory capital of $704 million at 30 June 2012, net cash of $564 million and total liquidity resources of $3.0 billion

·     Interim dividend of 9.5 cents per share; total dividend for the year expected to be 22 cents.

 

Peter Clarke, Chief Executive of Man, said: 

 

"Against a turbulent market and economic background, Man's funds under management have declined in the period principally as a result of continued net outflows and the deleveraging of our guaranteed products. The result is a marked decline in underlying profitability which, after goodwill impairments, produced a statutory loss.

 

"We have made progress in the last six months to address costs across our business and we continue to expand our investment management capabilities both organically and through acquisition. At AHL we have continued to refine our trading models, invested in senior hires and seen signs of improvement in performance versus leading peers. GLG generated over two thirds of our $7.2 billion sales in the period, delivered strong performance in credit strategies, market neutral and European long short styles and launched complex thematic products such as TailProtect. The FRM acquisition closed on 17 July, ahead of schedule, and creates the largest independent non-US based fund of hedge funds in an industry where economies of scale are a critical success factor. Across the board, we are on track to achieve our previously announced cost saving programmes.

 

"Our focus is on delivering attractive levels of profitability from our liquid, open-ended investment strategies and so reducing reliance on high margin guaranteed product which is seeing subdued demand. To align our infrastructure appropriately to this dynamic in the business, we have today announced further cost savings of $100 million, to be achieved over the next 18 months.

 

"Man remains financially robust and enjoys a strong position in the market for liquid alternatives. We are confident that the changes we have announced today, together with the progress we have already made, position us well to protect and rebuild shareholder value."

 

Summary financials

Page

ref.

Six months ended
30 June

2012

Nine months ended
31 December 2011

Six months ended

30 June 2011



$

$

$






Funds under management (end of period)

5

52.7bn

58.4bn

71.0bn






Gross management and other fees

21

629m

1,160m

841m

Share of after tax profit of associates and jvs


5m

3m

28m

Performance fees  


28m

94m

49m

Gains/(losses) on investments and other financial instruments


4m

(1m)

17m






Distribution costs

21

(138m)m

(237m)

(162m)

Compensation

22

(211m)

(415m)

(349m)

Other costs (including asset servicing)

22

(174m)

(286m)

(175m)

Net finance expense*

23

(22m)

(56m)

(18m)






Adjusted profit before tax from continuing operations operations

20

121m

262m

231m

Adjusting items

20

(285m)m)

(69m)

(167m)

Discontinued operations


-

-

6m

Statutory (loss)/profit before tax


(164m)

193m

70m

Diluted statutory EPS on continuing operations

24

(10.6c)

7.6c

2.3c

Adjusted diluted EPS from continuing operations

24

4.8c

10.7c

9.8c

Adjusted diluted management fee EPS from continuing operations

24

4.3c

9.1c

8.7c

 

* Includes profit on disposal this period of the BlueCrest loan note of $15 million and a charge of $21 million relating to the recent debt buy back. Annualised interest expense following the buy back will reduce by $13 million.

 

Regulatory capital position and dividend

 

The Group had $704 million of surplus regulatory capital at 30 June 2012, net cash of $564 million and total liquidity resources of $3.0 billion.

 

As previously announced, the Board has declared an interim dividend for the year to 31 December 2012 of 9.5 cents per share. The interim dividend will be paid at the rate of 6.12 pence per share.

 

The Board expects to propose a final dividend for year to 31 December 2012 of 12.5 cents per share, to give a total dividend of 22 cents per share.

 

As announced in March 2012, Man's dividend policy is to pay at least 100% of adjusted management fee earnings per share in each financial year by way of ordinary dividend.  In addition, the Group expects to generate significant surplus capital over time, primarily from net performance fee earnings. Available surpluses, after taking into account required capital, potential strategic opportunities and a prudent buffer, will be distributed to shareholders over time, by way of higher dividend payments and/or share repurchases.  Whilst the Board continues to consider dividends as the primary method of returning capital to shareholders, it will continue to execute share repurchases when advantageous.

 

Dates for the 2012 interim dividend

 

Ex dividend date

15 August 2012

Record date

17 August 2012

Dividend paid

4 September 2012

 

Regulatory capital

 

Man is compliant with the FSA's capital standards and has maintained significant excess regulatory capital during the year. At 30 June 2012 excess capital over the regulatory requirement was $704 million.

 

$m

30 June 2012

31 December 2011

Permitted share capital and reserves

 3,419

 3,696

Innovative Tier 1 Perpetual Subordinated Capital Securities

 201

 198

Less franchise value and other intangibles:



- Goodwill

(1,506)

(1,733)

- Investments in associates/JVs

(35)

(36)

- Placement fees

(137)

(157)

- Other intangibles

(603)

(649)

Available Tier 1 Group capital

 1,339

 1,319

Tier 2 capital - subordinated debt

 341

 358

Other Tier 2 capital

 116

 106

Material holdings deductions

(20)

(20)

Group financial resources

 1,776

 1,763

Less financial resources requirement

(1,072)

(1,176)

Excess capital

 704

 587

 

Basel III and CRD IV come into force on 1 January 2013.  The FSA guidance has not been finalised and therefore it is not possible to definitively quantify the impact but it is likely that our available capital will reduce by a maximum of $200 million.

 

Proposed arrangement for the creation of a new holding company

 

Man Group plc is proposing to revise its corporate structure to access distributable reserves, which will provide it with ongoing flexibility to continue its previously stated dividend payment policy. The proposals will create a new listed non-trading group holding company, ("New Holdco"), which will be incorporated under the laws of England and Wales and have a premium listing on the London Stock Exchange's main market for listed securities. The new holding company structure will be implemented by means of a Court approved scheme of arrangement (the "Scheme") under Part 26 of the Companies Act 2006 followed by a Court approved reduction of capital of New Holdco. Under the terms of the Scheme, shareholders will exchange their existing ordinary shares in Man Group plc for shares in New Holdco on a one-for-one basis. Approval will be sought from shareholders for these proposals at a separately convened general meeting which is expected to be held towards the end of 2012. In addition, typical approvals will be sought from regulators including the FSA.  Further details of the Scheme will be provided in due course.

Video and audio webcast

There will be a live video and audio webcast of the results presentation at 8.30am on www.mangroupplc.com and www.cantos.com which will also be available on demand from later in the day.

 

Live Conference Call Dial in Numbers:

UK Toll Number:                       020 3140 0820

UK Toll-Free Number:              0800 368 1984

US Toll Number:                       1718 705 7514

US Toll-Free Number:              1855 402 7760

 

30 Day Replay Dial in Numbers:

UK Toll:                                    020 3140 0698

UK Toll Free Number:              0800 368 1890

US Toll Free Number:              +1 877 846 3918

Playback Pin Code:                 385932#

 

Enquiries

 

Miriam McKay

Head of Investor Relations and Financial Communications

+44 20 7144 3809

miriam.mckay@man.com

 

David Waller

Head of Media Relations

+44 20 7144 2121

david.waller@man.com

 

Maitland PR

George Trefgarne

+44 20 7379 5151

 

About Man

Man is a world-leading alternative investment management business. It has expertise in a wide range of liquid investment styles including managed futures, equity, credit and convertibles, emerging markets, global macro and multi-manager, combined with powerful product structuring, distribution and client service capabilities. As at 30 June 2012, Man managed $52.7 billion.

 

The original business was founded in 1783. Today, Man is listed on the London Stock Exchange and is a member of the FTSE 250 Index with a market capitalisation of around £1.3 billion.

 

Man is a signatory to the United Nations Principles for Responsible Investment (PRI) and a member of the Dow Jones Sustainability World Index and the FTSE4Good Index. Man also supports many awards, charities and initiatives around the world, including sponsoring the Man Booker literary prizes and the Man Asian Literary Prize. 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.

 

FUNDS UNDER MANAGEMENT (FUM), FLOWS AND GROSS MANAGEMENT FEE MARGINS

 

In the six months to 30 June 2012, funds under management declined from $58.4 billion to $52.7 billion. The most significant effect on profitability from this decline is the continued de-gear of guaranteed products.

 

Blended gross management fee margins declined from 2.32% in the nine months to 31 December 2011 to 2.20% in the six month period. Margins were generally stable on a product-by-product level, but the reduced proportion of guaranteed products continued to drive a mix shift. 

 

Six months to 30 June 2012

 



Open ended






Guaranteed

AHL

GLG

Institutional FoF
and other

Alternatives total

Long only

Total

FUM at 31 Dec 2011

10.0

14.5

11.0

12.2

47.7

10.7

58.4

Sales

0.2

0.9

2.7

1.1

4.9

2.3

7.2

Redemptions

(0.9)

(2.7)

(3.2)

(1.1)

(7.9)

(1.7)

(9.6)

Net inflows /

(outflows)

(0.7)

(1.8)

(0.5)

-

(3.0)

0.6

(2.4)

Investment movement

(0.3)

(0.5)

0.3

0.1

(0.4)

0.1

(0.3)

FX

-

(0.1)

(0.1)

(0.2)

(0.4)

(0.1)

(0.5)

Other1

(1.9)

(0.4)

0.1

(0.3)

(2.5)

-

(2.5)

Closing FUM

7.1

11.7

10.8

11.8

41.4

11.3

52.7

 

1Includes a $0.3 billion reclassification from AHL open-ended to guaranteed products.

 

Gross management fee margins

 


Guaranteed

Open ended alternative

Institutional fund of funds and other

Long only

  Total

AHL

GLG

Six months to 30 June 2012

Nine months to 31 December 2011

4.82%

4.67%

3.34%

3.31%

1.49%

1.51%

1.02%

1.10%

0.85%

0.82%

2.20%

2.32%

 

Guaranteed products

 

Guaranteed product funds under management reduced by 29% in the period, from $10.0 billion to $7.1 billion. The main driver of this reduction was a $2.2 billion systematic de-gear, as trading capital reduced as a result of redemptions and negative investment performance.

 


De-gear / re-gear

AHL performance 

April 1 2012

$(0.4) bn

-1.8%

May 1 2012

$(0.6) bn

-2.0%

June 1 2012

$(0.8) bn

-2.8%

July 1 2012

$0.3 bn

+3.2%

 

Sales of guaranteed products remained subdued, with $0.2 billion raised from the launch of an AHL-based product. Redemptions were $0.9 billion in the six month period. The weighted average life to maturity of the guaranteed product range is 7 years.

 

Gross management margins for guaranteed products held steady at 4.82%, with new business being sold at comparable margins to the current inventory.   

 

Open ended alternatives

 

Funds under management in open ended alternative strategies reduced by 12% in the period to $22.5 billion.

 

The 19% reduction in open ended AHL was driven by a combination of negative investment movement, muted sales and redemptions. The Nomura Global Trend fund, which offers daily liquidity, was a significant driver of redemptions in both quarters, although the absolute level of redemptions from this fund fell in Q2. Man AHL Diversified plc was broadly flat in the period. As at 20 July 2012, AHL was 11.0% below peak on a weighted average basis.

 

Funds under management in GLG alternatives fell by 2% in the period to $10.8 billion, having risen in the first quarter. Investment performance across the GLG alternatives range was net positive in Q1 before partly reversing in Q2 and 34% of GLG performance fee eligible funds were at peak  at 30 June 2012. Sales held up relatively well, with positive flows into the European long short style in particular, as it continued its strong run of performance. There was also demand for the macro, Euro distressed and global convertibles strategies.   

 

Gross management fee margins held steady in AHL and GLG open ended alternatives.    

 

Institutional fund of funds and other

 

Funds under management in this category reduced to $11.8 billion. Sales continued to be driven by funding of previously agreed mandates, and the level of redemptions remains steady. Notified quarterly redemptions for 1 July are $0.6 billion.

 

Gross revenue margins declined slightly in the period, and are expected to trend downwards because of a mix shift in favour of infrastructure and managed accounts sales as opposed to traditional fund of funds.

 

Long only

 

Long only funds under management rose 6% to $11.3 billion, driven by strong sales of Japan Core Alpha. Gross revenue margins rose slightly in the period.

 

Three months to 31 March 2012



Open ended






Guaranteed

AHL

GLG

Institutional FoF
and other

Alternatives total

Long only

Total

FUM at 31 December 2011

10.0

14.5

11.0

12.2

47.7

10.7

58.4

Sales

-

0.5

1.2

0.5

2.2

0.9

3.1

Redemptions

(0.4)

(1.2)

(1.4)

(0.6)

(3.6)

(0.5)

(4.1)

Net inflows/(outflows)

(0.4)

(0.7)

(0.2)

(0.1)

(1.4)

0.4

(1.0)

Investment movement

(0.2)

(0.2)

0.6

0.3

0.5

1.5

2.0

FX

0.1

-

0.1

0.2

0.4

(0.1)

0.3

Other

(0.4)

(0.1)

-

(0.2)

(0.7)

-

(0.7)

Closing FUM

9.1

13.5

11.5

12.4

46.5

12.5

59.0

 

Three months to 30 June 2012

 



Open ended






Guaranteed

AHL

GLG

Institutional FoF
and other

Alternatives total

Long only

Total

FUM at 31 March 2012

9.1

13.5

11.5

12.4

46.5

12.5

59.0

Sales

0.2

0.4

1.5

0.6

2.7

1.4

4.1

Redemptions

(0.5)

(1.5)

(1.8)

(0.5)

(4.3)

(1.2)

(5.5)

Net inflows /

(outflows)

(0.3)

(1.1)

(0.3)

0.1

(1.6)

0.2

(1.4)

Investment movement

(0.1)

(0.3)

(0.3)

(0.2)

(0.9)

(1.4)

(2.3)

FX

(0.1)

(0.1)

(0.2)

(0.4)

(0.8)

-

(0.8)

Other

(1.5)

(0.3)

0.1

(0.1)

(1.8)

-

(1.8)

Closing FUM

7.1

11.7

10.8

11.8

41.4

11.3

52.7

 

FUM by manager

 

The table below provides further granularity on GLG FUM to help with the modelling of performance and flows.

 

$bn

30 June 2012

31 March 2012

31 December 2011

AHL

16.7

19.5

21.0





GLG Alternatives

15.1

16.1

15.5

- Equity




-     Europe

2.9

3.1

2.5

-     North America

2.0

2.2

2.3

-     UK

0.8

1.0

0.9

-     Other equity alternatives

0.3

0.6

0.6

- Credit and Convertibles




-     Convertibles

2.1

2.0

1.8

-     Market Neutral

0.8

0.8

0.9

-     Ore Hill

0.8

0.9

0.9

-     Pemba

2.4

2.6

2.5

- Emerging markets

1.8

2.1

2.3

- Macro

1.2

0.8

0.8





Long only

11.3

12.5

10.7

-     Japan

6.0

6.8

5.6

-     Other

5.3

5.7

5.1





Man Multi-Manager

9.6

10.9

11.2

Total

52.7

59.0

58.4

 

Investment performance

 


Total return

Annualised return


3 months

to 30 June 2012

6 months to 30 June 2012

3 years to
30 June 2012

5 years to
30 June 2012

AHL





Man AHL Diversified plc1

-0.5%

0.3%

1.4%

4.9%

AHL Alpha plc2

-0.4%

0.3%

2.3%

4.2%

Man AHL Diversity3

-1.8%

-3.4%

n/a

n/a

Man AHL Trend4

-2.6%

-4.8%

n/a

n/a






GLG ALTERNATIVES





Equity





Europe





GLG European Long Short Fund5

-2.4%

5.4%

7.9%

4.6%

GLG European Equity Alternative UCITS Fund6

-2.3%

5.4%

n/a

n/a

GLG European Alpha Alternative UCITS Fund7

-2.0%

-1.5%

3.0%

n/a

GLG European Opportunity Fund8

-3.2%

-2.6%

-4.4%

1.3%

North America





GLG North American Opportunity Fund9

-3.7%

2.3%

5.0%

0.4%

GLG North American Equity Alternative UCITS fund10

-5.6%

-0.2%

n/a

n/a

UK





GLG Alpha Select Fund11

-7.8%

-3.2%

0.7%

5.8%

GLG Alpha Select UCITS Fund12

-7.6%

-3.1%

n/a

n/a

Other equity alternatives





GLG Global Opportunity Fund13

-3.3%*

1.8%*

2.8%*

-1.0%*

Credit and convertibles





Convertibles





GLG Global Convertible Fund14

-3.6%

4.6%

6.8%

0.6%

GLG Global Convertible UCITS Fund15

-3.5%

6.4%

7.4%

0.2%

Market Neutral





GLG Market Neutral Fund16

-0.3%

9.6%

32.7%

5.2%

GLG European Distressed Fund17

1.4%

11.5%

n/a

n/a

Ore Hill





GLG Ore Hill Fund18

2.2%

5.9%

17.3%

-0.4%

Emerging markets 





GLG Emerging Markets Fund19

-4.2%

2.0%

4.8%

1.3%

GLG Emerging Markets UCITS Fund20

-3.1%

2.3%

n/a

n/a

Macro and special situations





GLG Atlas Macro Fund21

-0.2%

0.1%

10.6%

n/a

GLG Atlas Macro Alternative UCITS Fund22

-0.2%

0.9%

n/a

n/a






GLG LONG ONLY





GLG Japan Core Alpha Equity Fund23

-15.3%

2.9%

-7.0%

-10.4%

GLG Global Equity Fund24

-8.4%

4.4%

6.2%

-5.9%






 

Investment performance continued


Total return

Annualised return


3 months

to 30 June 2012

6 months to 30 June 2012

3 years to
30 June 2012

5 years to
30 June 2012

MAN MULTI-MANAGER





Man-IP 22025

-0.6%

-3.6%

2.7%

0.7%

Man Absolute Return Strategies26

-2.1%

-0.9%

1.6%

-0.7%

Man Dynamic Selection27

-1.2%

1.1%

0.8%

0.9%

GLG Multi-Strategy Fund28

-2.5%*

2.7%*

7.1%*

-1.9%*






MAN SYSTEMATIC STRATEGIES





TailProtect Limited Class B

-2.5%

-8.0%

n/a

n/a






Indices





World stocks29

-4.1%

6.6%

10.1%

-3.4%

World bonds30

1.6%

2.2%

4.3%

5.3%

Corporate bonds31

6.7%

6.1%

15.2%

10.5%






Hedge fund indices





HFRI Fund Weighted Composite Index32

-2.7%

1.9%

5.2%

1.1%

HFRI Fund of Funds Composite Index32

-2.2%

1.1%

2.2%

-2.0%

HFRX Global Hedge Fund Index

-1.9%

1.2%

1.4%

-3.7%






Style indices





Barclay BTOP 50 Index

-0.2%*

-0.6%*

0.2%*

2.3%*

HFRI Equity Hedge (Total) Index32

-4.4%

2.1%

4.7%

-0.7%

HFRX Equity Hedge Index

-2.6%

1.2%

-1.6%

-6.2%

HFRI Event-Driven (Total) Index32

-2.3%

2.5%

8.0%

1.3%

HFRX Event Driven Index

-2.7%

3.0%

2.2%

-2.7%

HFRI Macro (Total) Index32

-1.2%

-0.5%

2.0%

3.5%

HFRX Macro/CTA Index

-0.5%

-1.8%

-3.8%

-2.5%

HFRI Relative Value (Total) Index32

0.0%

4.2%

9.1%

4.2%

HFRX Relative Value Arbitrage Index

-1.4%

2.1%

7.9%

-1.6%

 

Source: Man database, Bloomberg and MSCI. There is no guarantee of trading performance and past or projected performance is not a reliable indicator of future performance. Returns may increase or decrease as a result of currency fluctuations. This is not a complete list of investment products. Funds have been chosen to give a representative view across product range and strategy.

 

1) Man AHL Diversified plc is valued weekly, but for comparative purposes the last weekly valuation of the month has been used.

2) AHL Alpha plc is valued weekly, but for comparative purposes the last weekly valuation of the month has been used.

3) Represented by Man AHL Diversity GBP DB. Please note that Man AHL Diversity GBP DB was valued weekly until 2 May 2011. Prior to this date, the last weekly valuation of the month has been used.                                      

4) Represented by Man AHL Trend EUR I. Please note that Man AHL Trend EUR I was valued weekly until 2 May 2011. Prior to this date, the last weekly valuation of the month has been used.

5) Represented by GLG European Long Short Fund - Class D Restricted to Unrestricted (29/06/2007) - EUR.

6) Represented by GLG European Equity Alternative IN EUR.

7) Represented by GLG European Alpha Alternative IN EUR.

8) Represented by GLG European Opportunity Fund - Class D Restricted to Unrestricted (31/08/2007) - EUR.

9) Represented by GLG North American Opportunity Fund - Class A Restricted to Unrestricted (29/06/2007) - USD.

10) Represented by GLG North American Equity Alternative IN USD.

11) Represented by GLG Alpha Select Fund - Class C - EUR.

12) Represented by GLG Alpha Select Alternative IN H EUR.

13) Represented by GLG Global Opportunity Fund - Class Z - USD.

14) Represented by GLG Global Convertible Fund - Class A - USD.

15) Represented by GLG Global Convertible UCITS Funds Class IL T USD.

16) Represented by GLG Market Neutral Fund - Class Z Restricted to Unrestricted (31/08/2007) - USD.          

17) Represented by GLG European Distressed Fund - Class A - USD.               

18) Represented by Ore Hill International Fund II Ltd.

19) Represented by GLG Emerging Markets Fund - Class A Restricted to Unrestricted (31/08/2007) - USD.     

20) Represented by GLG EM Diversified Alternative IN EUR.

21) Represented by GLG Atlas Macro Fund - Class A - USD.                                              

22) Represented by GLG Atlas Macro Alternative IN H GBP.                                                 

23) Represented by GLG Japan CoreAlpha Equity Fund - Class C to Class I JPY (28/01/2010) - JPY.               

24) Represented by GLG Global Equity Fund Class I T USD.                                 

25) Represented by Man-IP 220 Ltd from 18 December 1996 to 31 December 2005 and Man-IP 220 Ltd - USD class bonds from 1 January 2006.

26) Represented by Man Absolute Return Strategies USD I.                                  

27) Represented by Man Dynamic Selection USD I.                                               

28) Represented by GLG Multi-Strategy Fund - Class A - USD Shares.

29) Represented by MSCI World Net Total Return Index hedged to USD.                                                              

30) Represented by Citigroup World Government Bond Index hedged to USD (total return).                                

31) Represented by Citigroup High Grade Corp Bond TR.                                                      

32) HFRI index performance over the past 4 months is subject to change.

 

Please note that the dates in brackets represent the date of the join in the linked track records.

 

*Estimated.

 

KEY PERFORMANCE INDICATORS (KPIs)

 

Our financial and non-financial KPIs, as presented on pages 22 and 23 of our Report and accounts for the nine months ended 31 December 2011, illustrate and measure the direct relationship between the experience ofour fund investors, our financial performance and creation of shareholder value. The KPIs are set by the Board and are used on a regular basis to evaluate progress against our key objectives.

 

Fund outperformance vs benchmark

 

The weighted average investment performance measures the investment return to investors, net of fees. The outperformance compared to the benchmark gives an indication of the competitiveness of our investment performance against similar alternative investment styles offered byother investment managers. This measures our ability to deliver superior long term performance to investors.

 

Man's products had an underperformance of 0.2% for the sixmonths to 30 June 2012 compared to benchmark (nine months to 31 December 2011: underperformance of 0.7%).

 

Growth in funds under management (FUM)

 

Growth in FUM is an important measure of our ability to retain and attract investor capital. FUM drives our financial performance in terms of management fees and our capacity to earn performance fees. FUM decreased by 10% to $52.7 billion at 30 June 2012 from $58.4 billion at 31 December 2011 due to continued challenging market conditions.  The $5.7 billion decrease comprised: net outflows of $2.4 billion; $0.5 billion of negative FX movements; $0.3 billion of negative investment performance; and $2.5 billion of other negative movements primarily relating to de-gearing of the structured products following redemptions and negative investment performance in AHL.

 

Growth in gross revenue

 

The growth in gross management and performance fee revenue measures both the ability to grow FUM at stable margins and to generate investment performance for investors on which we earn performance fees.  Gross revenue for the six months to 30 June 2012 comprised $629 million of management fees and $28 million of performance fees.  Gross management fees have decreased by 25% compared to the six months to 30 June 2011 primarily due to lower guaranteed product FUM, which had the impact of reducing the aggregate gross management fee margin to 220 bps from 236 bps in the comparative period.  Gross performance fees have decreased by 43% compared to the comparative six months to 30 June 2011 due to negative investment performance, particularly in AHL, which meant that many products remained below performance fee high watermarks.

 

Growth in net management fee income

 

Net management fee income is a measure of our scale and efficiency. Net management fee income of $130 million has decreased by 42% compared to the six months to 30 June 2011 due to a reduction in lower average FUM for the highest margin guaranteed products and the sale of our equity holding in BlueCrest in March 2011, which contributed $31 million to net management fee income for the six months to 30 June 2011.  Compensation costs were 32% of revenue, compared to 39% in the six months to 30 June 2011. 

 

Growth in adjusted diluted earnings per share - continuing operations

 

Growth in adjusted earnings pershare measures the overall efficiency and sustainability of our business model, for the benefit of our shareholders. Adjusted diluted earnings per share on continuing operations was 4.8 cents compared to 9.8 cents in H1 2011. The decline primarily relates to the reduction in management and performance fee income, partly offset a reduction in the weighted average diluted number of shares to 1,789.4 million shares primarily as a result of repurchasing 66 million shares in late 2011.

 

Post tax return on shareholders' equity (ROE)

 

ROE measures the efficiency with which we invest or return our capital. ROE has declined to -10% from

4.6% for the nine months ended 31 December 2011, driven primarily by the impairment of GLG and Man Multi-Manager and lower management and performance fees.

 

CHIEF EXECUTIVE'S REVIEW

The six months to 30 June 2012 have been challenging, in terms of trading conditions, investor appetite and the accelerating transition in product mix and revenue in our own business. These challenges are reflected in our disappointing performance versus the key performance indicators for the business set out on page 12. Furthermore, we recorded a statutory loss of $164 million after impairing our GLG and Multi-Manager goodwill - GLG by $91million and Multi-Manager by $142 million. More detail on goodwill can be found in Note 12 on page 26.

We are responding vigorously to these challenges with a range of management actions executed in the first half and a refreshed executive management team stepping up the level of change going forward.

Market backdrop

The six months to 30 June 2012 broadly divided into two distinct investment phases. First, we saw a "risk-on" rally emerging in the first two months of the year, with a significant sell-off in bonds on the back of encouraging US employment data, re-assuring results from US bank stress tests and fading fears around the Eurozone marking the high point of positive market sentiment in mid March. 

This reversed sharply and then settled into general "risk off" positioning for the remainder of the period, albeit punctuated by sporadic relief rallies off the back of policy interventions. Renewed Eurozone fears broadened beyond Greece and the periphery to core states, with Spain the most in focus. Markets became and remain jittery, characterised by elevated levels of correlation and thin liquidity with policy-driven intervention, in particular in Europe, centre stage. The period transitioned to one of stronger trends building around the deterioration in global growth prospects, as data on the US recovery and Chinese growth broadly disappointed and we saw a sell off in industrial metals, although these trends abruptly reversed at the end of June, with a sharp rally in risk assets.  The keynote remains uncertainty, albeit with increasing support for negative macro trends longer term.

Investment Management

AHL: AHL came into 2012 bearishly positioned from the 2011 close. These positions were reversed as markets started the year strongly, and long stock index futures positions in particular contributed positively to performance as the rally gathered pace in February. Risk exposures were reduced in March as a number of market reversals triggered losses, mainly in bonds and currencies. As the sell-off continued into the second quarter the portfolio once again established a bearish stance, which helped AHL Diversified plc recover in May and June, finishing the 6 month reporting period to 25 June up by 30bps. As with other trend followers however, AHL was subsequently impacted by a sharp recovery in risk assets on June 29, when the programme suffered a loss of 3.6%. Performance has recovered in early July as negative momentum themes have come to the fore again. AHL's performance this year has been in line with the group of leading CTA peers.

Over the period, AHL continued to refine and adapt its trading programmes to enhance returns and manage risk for investors. Refinements included new seasonality predictors, optimal contract selection, carry model developments and portfolio re-allocations to maximise diversification. AHL's continued focus on incorporating non-traditional markets through its Evolution programme was rewarded with this subset of the main programme closing the period up 8% as trends in less developed markets proved more persistent. On the people side, we have strengthened the AHL bench further with new senior hires - Doug Greenig, a former Fortress PM, RBS Greenwich Capital desk head and Goldman trader with over 20 years of industry experience, as Chief Risk Officer and Ravi Chari, ex FX head of IKOS, as co-head of FX trading at AHL.

GLG: Discretionary hedge fund styles exploited a range of techniques across these changing markets to create and defend value for investors. After a strong first quarter where discretionary styles generated the vast majority of Man's $2.0 billion positive investment performance, some of these gains were given back as markets reversed, albeit with a strong finish to June for many styles as markets rallied.  Over the six months as a whole, compelling returns included European distressed (+11.5%), market neutral (+9.6%), Ore Hill (+5.9%) and European long short (+5.4%), with the multi-strategy fund which allocates dynamically across a range of internal styles finishing the period up around 2.7%. We also saw significant relative outperformance. TailProtect, for example, the volatility trading strategy run by Man Systematic Strategies, closed the half 18% ahead of its S&P 500 VIX Mid Term Futures Index benchmark, having posted a 26% absolute gain in 2011.

GLG also continues to serve as an effective platform for developing and building out investment talent. Pierre Lagrange and David Mercurio have assembled a leading Asia long short team based in Hong Kong to take advantage of deepening markets across the region, employing the same stock picking and risk management principles which have worked successfully in Europe. Asian long short offerings are being readied for the market later in the year.

Man Multi-Manager:  Having successfully navigated the equity market sell-off through April and May, Man Multi-Manager's institutional fund of funds did not progress beyond their first quarter positive performance levels after the sharp June month-end rally squeezed hedge funds with short exposure to risk assets and the euro into quarter end. Overall its equity hedged, event driven and relative value styles remain positive year-to-date, but global macro and managed futures strategies felt the brunt of sharp, highly correlated reversals in bonds, currencies, commodities and equities with some trend following managers incurring significant losses. Actively managed flagship commingled funds with exposure across styles, such as Man GLG Multi-Strategy and Man Dynamic Selection remain positive year-to-date, at +2.7% and +1.0% respectively.

The acquisition of Financial Risk Management (FRM), an institutionally focussed multi-manager business managing $7.6 billion for clients globally, was announced on 21 May and completed ahead of schedule on 17 July.  The combination of the two businesses under the FRM brand has created one of the most significant hedge fund research and risk management teams in the industry, able to harness the benefits of scale to deliver better returns to investors net of costs, through superior operating efficiency and increased bargaining power with an enhanced range of underlying managers and service providers.

Meeting investor needs

In the face of considerable market uncertainty and fragility in investor appetite we maintained a steady level of gross sales, closing the half with gross sales of $7.2 billion.  This is testament to the breadth of our offering and the relevance to investors of the different strategies at varying points in the cycle. Sales in the period were strongest in the GLG hedge fund suite.

We demonstrated our ability to deliver strong sales of outperforming strategies, for example European long short, which was up 5.4% calendar year to end June after a 7% performance in 2011. In less than a year the UCITS format of this strategy reached its $1 billion soft close, but there is additional capacity for this style in other formats. There were also strong allocations in macro, distressed, and global convertibles.

The half also re-emphasised our strength in executing and capitalising on complex thematic products. TailProtect, the volatility trading strategy run by Man Systematic Strategies, draws on research from the Oxford Man Institute on implied volatility and has been designed to mitigate the portfolio risks associated with extremely volatile markets. TailProtect is now managing or has firm commitments of around $1 billion from some of the world's most sophisticated institutional investors and won industry awards in the period for Most Innovative Hedge Fund and separately Best Convertible Arbitrage / Volatility Hedge Fund.

We also recorded $200 million of sales in the period for an AHL guaranteed product, with interest strongest in the Middle East. There is no doubt however that appetite for guaranteed product is muted and this is likely to continue, as the dominant format for investor appetite will remain non-guaranteed.

Private investors remain extremely cautious, with anecdotal evidence of high allocations to cash. We continue to make inroads in terms of representation on the key private banking platforms which account for a substantial share of the flows. Man product is on all nine of the most significant private banking platforms and has won around 20 new platform approvals since completion of the GLG acquisition with a similar number of additional pending approvals.

With institutional allocations predicted to constitute a significant proportion of allocations, we continue to work hard on our consultant relationships. Since January 2012 we have received an additional two strong buy ratings and positive momentum on seven additional strategies. Consultant coverage of Man has increased from 35 products in January 2010 to 79 today and we have maintained 33 existing ratings.

During the period we launched Clarus, an online portal for investors in managed accounts, which allows clients to visualise their exposure to underlying risk factors in both their managed accounts and aggregated as part of their wider portfolio. Man's Multi-Manager business currently manages around $8.0 billion of assets within managed accounts and MACs are at the heart of the Man/FRM combination.

Redemptions were higher in the second quarter ($5.5 billion) than in the first quarter ($4.1 billion), but remain below the peak level experience in the quarter to September 2011 ($7.3 billion).The net effect has been around a cumulative outflow for the half of $2.4 billion. Retaining client assets as well as winning new business remains a key focus. 

Efficiency

I noted in our Report and accounts for the nine month period ended 31 December 2011 that we had stepped up our focus on efficiency to reflect changes in our product and margin mix - notably reduced funds under management in our highest margin guaranteed products. At our results in March 2012, we announced that we would reduce operating costs by $95 million, with $70 million of these savings to be delivered by the end of 2012. We are on track to achieve these savings, with the key drivers being headcount reductions linked to outsourcing of asset servicing and consolidation of support functions, together with lower property, technology and marketing costs.

The performance of our business in the first half of this year has convinced us that we need to up the level of change we are making. Our inventory of guaranteed product FUM has declined further as a result of negative AHL performance. More liquid, open-ended and onshore formats at profit margins which remain attractive, if lower than guaranteed, constitute an increasing majority of our sales. Having looked in depth at the optimal configuration of the business, we are moving more decisively to align our costs to flows rather than inventory and build around a core business much less reliant on high margin guaranteed product. We have announced an additional $100 million savings to be achieved over the next 18 months. These savings will be realised from corporate streamlining, simplifying our product line and expense discipline.

Outlook

 

We enter the second half of the year with a clear sighted programme of action to refocus our business around our core value drivers and tailor our infrastructure accordingly. Markets remain uncertain and we are cautious about the prospects for short term improvement, which means that we will be implementing significant change in a very challenging operating environment.

Strategically, we remain well positioned. We are a leading player in a growth sector and continue to be excited about the long-term growth prospects for the alternatives industry. We have a broad range of strategies and products, proven to be relevant cross cycle. We have a strong long term performance track record and continue to enhance our investment capabilities. And we have powerful global distribution, with the ability to construct and deliver products that our clients need, globally.

At the core of our business is a very valuable alternative asset management operation, with the potential to deliver substantial upside to our shareholders. 

 

RISK MANAGEMENT

 

It is a keyobjective of Man to remain a leader in risk management, governance and business sustainability. As such, risk management is an essential component of our approach, both to the management of investment funds on behalf of investors, and themanagement of Man's business on behalf of shareholders. Ourreputation is fundamental to our business, and maintaining our corporate integrity is the responsibility of everyone at Man. Our approach is to identify, quantify and manage risk throughout the Group, in accordance with the Board's risk appetite. We continue to maintain a strong emphasis on having an adequate quantity of excess capital and liquidity to give us strategic and tactical flexibility, both in terms of corporate and fund management.

 

The principal risks faced by Man are set out on pages 24 to 29 of our last Report and accounts. These remain our principal risks for the second half of the financial year- below we set out some highlights and specific activities that have taken place since 31December 2011.

 

A principal risk to Man shareholders is the risk of the underperformance ofthe funds. Persistent underperformance would likely result in net redemptions and reduced levels of funds under management and consequently lower management fees, as well as reduced performance fees. In mitigation of this risk, we maintain the high quality, diversified range of investment styles and products, principally across quantitative (AHL), discretionary (GLG) and fund offunds (Man Multi-Manager) strategies. This diversity gives us protection against concentrated underperformance from any one sector. Our largest exposure to this risk remains with respect to the managed futures style and the AHL family of funds, given that this forms a significant part of our revenue base.  AHL performance and the consequent effect on the available risk capital within structured products is a significant driver of profitability for the firm, since the level of gearing and related fee income is a direct function of this variable.  In H1, this effect led to lower profitability for this product range, and we remain at risk to this issue going forward.

 

During theJanuary to June period, we have seen 2 distinct periods of market behaviour.  In the early part of the year, the European LTRO led to bullish sentiment, and rises in equity prices.  However, this sentiment gave way to the continued uncertainty about the strength of Eurozone economies and the future of the Euro itself.   This uncertainty has persisted through Q2 2012 and the lack of many clear trends has led to broadly flat returns for the AHL funds.  The GLG funds performed very strongly early in the year, but have seen greater volatility in the latter period, and the uncertainty associated with repeated political intervention has been a frequent feature in markets.  Bearish strategies are performing well and attracting inflows, while generally lower leverage levels are likely to persist until there is greater stability in the Eurozone and a credible plan.  We remain focused on the specific risks that arise from the Eurozone crisis, in terms of both direct and indirect market risk, primary and secondary counterparty risk and related legal risks. 

 

Man is exposed to credit risk on its cash deposits. Cash isinvested in short term bank deposits. At the period end, cash balances were placed with 34 individual banks. The single largest exposure of$300 million was held with an A+ rated bank. In addition, the funds are exposed to credit risk of their financial counterparties. Our focus has been to minimise funds exposure to counterparties that we believe could be adversely affected by the current market volatility, while maintaining trading functionality across ourrange of hedge fund strategies.

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

 

The Directors confirm that this condensed set of financial statements in respect of Man Group plc for the period ended 30 June 2012 has been prepared in accordance with IAS 34 as adopted bythe European Union, and that the sixmonth review herein includes a fair view of the information required by the Financial Services Authority's Listing Rules, including the Disclosure and Transparency Rules 4.2.7 and 4.2.8, namely:

 

          an indication of important events that have occurred during the six months ended 30 June

2012 and their impact on the condensed interim financial statements, and a description of the principal risks and uncertainties forthe remaining six months ofthe year ending 31

December 2012; and

 

           material related party transactions in the six months ended 30 June 2012 and any material changes in the related party transactions described in the last annual report.

 

The Directors of Man Group plcare as listed in the Report and accounts for the nine months ended 31 December 2011, subject to the following changes:

·     Kevin Hayes resigned as Finance Director on 18 June 2012; and

·     Jonathan Sorrell was appointed as Chief Financial Officer on 18 June 2012.

 

By order of the Board

 

Peter Clarke

Chief Executive

24 July 2012

 

Jonathan Sorrell

Chief Financial Officer

24 July 2012

 

INTERIM FINANCIAL STATEMENTS

 

1.   Basis of preparation

 

The interim financial statements forthe six months to 30 June 2012 have been prepared on a going concern basis andin accordance with IAS 34 'Interim Financial Reporting' and the Disclosure and Transparency Rules of the Financial Services Authority.

 

The financial information contained herein is unaudited and does not constitute statutory accounts as defined by Section 434 of the Companies Act 2006. Statutory accounts for the nine months to 31 December 2011, which were prepared in accordance with International Financial Reporting Standards (IFRS) and relevant IFRIC interpretations issued by the International Accounting Standards Board (IASB) and IFRIC Committee respectively and adopted by the European Union (EU) and upon which the auditors have given an unqualified and unmodified report and which contained no statement under Section 498 of the Companies Act 2006, have been delivered to the Registrar of Companies and were posted to shareholders on 14 March 2012.

 

The accounting policies applied in these interim financial statements are consistent with those set out and applied in Man's Report and accounts for the nine months ended 31 December 2011. The impact of improvements to existing international accounting and financial reporting standards during the period has not been significant.

 

The areas of significant judgement continue to be: the evaluation ofgoodwill and intangible assets; and the determination offair values for investments (including the Lehman claims), deferred compensation awards andpension obligations.

 

The income statement and cashflow statement presentation in these interim financial statements shows the six months ended 30 June 2012 together with the six months ended 30 June 2011 (H1 2011).  The balance sheet is presented as at 30 June 2012 together with comparatives as at 31 December 2011.

 

Group income statement




Six months
to 30
June

Six months
to 30
June

$m

Note


 2012

 2011






Revenue:





  Gross management and other fees

4


 629

 841

  Performance fees

4


 28

 49




 657

 890

Gains on investments and other financial instruments



 4

 17

Distribution costs

5


(138)

(162)

Asset services

6


(14)

(15)

Amortisation of acquired intangible assets

12


(32)

(27)

Compensation

7


(227)

(365)

Other costs

8


(164)

(166)

Share of after tax profit of associates and joint ventures



 5

 28

Gain on disposal of BlueCrest

2


 - 

 257

Impairment of GLG and Man Multi-Manager

2


(233)

(375)

Finance expense

9


(51)

(45)

Finance income

9


 29

 27

(Loss)/profit before tax from continuing operations



(164)

 64

Taxation

10


(12)

(10)

(Loss)/profit after tax from continuing operations



(176)

 54

Discontinued operations - brokerage



 - 

 6

Statutory (loss)/profit for the period attributable to owners of the parent


(176)

 60






Earnings per share from continuing operations:

11




Basic (cents)



(10.7)

 2.3

Diluted (cents)



(10.6)

 2.3

Earnings per share from continuing and discontinued operations:





11




Basic (cents)



(10.7)

 2.6

Diluted (cents)



(10.6)

 2.6

Adjusted profit before tax - continuing operations

2


 121

 231

         

Group statement of comprehensive income


Six months
to 30
June

Six months
to 30
June

$m


 2012

 2011

Statutory (loss)/profit for the period attributable to owners of the parent

(176)

 60

Other comprehensive income/(expense):




Available for sale investments:




  Valuation gains taken to equity


 16

 3

  Transfer to income statement on sale or impairment


 - 

(10)

Cash flow hedge:




  Valuation gains taken to equity


 8

 -

  Transfer to income statement


(5)

 -

Foreign currency translation adjustments


 1

 32

Tax charged

(4)

 - 

Total comprehensive (expense)/income for the period attributable to owners of the parent

(160)

 85

         

2.         Adjusted profit before tax - continuing operations

 

Statutory profit before tax from continuing operations is adjusted for material items to give a fuller understanding ofthe underlying profitability of the business.

$m



Six months
to 30
June

Six months
to 30
June

Note


2012

2011






Statutory (loss)/profit before tax from continuing operations



 (164) 

64

Adjusting items:





Gain on disposal of interest in BlueCrest



 - 

(257)

Impairment of GLG and Man Multi-Manager

12


 233 

 375

Compensation - restructuring

7


 16

 6

Other costs - restructuring

8


 1

 6

FRM acquisition costs

8


 3

 -

GLG acquisition costs

7


 -

 10

Amortisation of acquired other intangible assets

12


 32

 27

Adjusted profit before tax from continuing operations



 121

 231

Tax



(22)  

(36)

Adjusted net income - continuing operations



 99

 195

 

3.         Net management and performance fee income

 


Six months to 30
June

Six months to 30
June

$m

 2012

 2011




Gross management and other fees

 629

 841

Share of after tax profit of associates and joint ventures

 5

 28

Less:



Distribution costs

(138)

(162)

Asset services

(14)

(15)

Compensation

(193)

(308)

Other costs

(159)

(160)

Net management fees

 130

 224

Net finance expense

(22)

(18)

Adjusted net management fees

 108

 206




Performance fees

 28

 49

Gains on investments and other financial instruments

 4

 17

Less:



Compensation - variable

(12)

(30)

- deferral amortisation

(6)

(11)

Other costs - charitable donations

(1)

 - 

Net performance fees

 13

 25




Adjusting items (see Note 2)

(285)

(167)

Statutory (loss)/profit before tax - continuing operations

(164)

 64

 

Net management fees

Net management fees for the six months to 30 June 2012 were $130million (H1 2011: $224 million), calculated as gross management fees plus the share of any management fees from associates less distribution costs, fixed compensation and discretionary bonus compensation and all other costs. The decrease in net management fees compared to the comparative period primarily relates to: a fall in gross management fees of $212 million; and the sale of our equity stake in BlueCrest in March 2011, which contributed $31 million to net management fee income in H1 2011, offset by a reduction in distribution and compensation costs of $139 million.

 

Net performance fees

Net performance fees forthe six months to 30 June 2012 were $13 million (H1 2011: $25 million), calculated as gross performance fees plus gains on investments at fair value less related performance based compensation. The decrease in net performance fees compared to H1 2011 is due to lower investment performance from performance fee eligible funds.

 

4.         Revenue

 

Revenue for the six months to 30 June 2012 was $657 million, which is 26% lower than the $890 million in H1 2011.

 

Management fee revenue forthe period was $629million, compared to $841 million in H12011. Average funds under management in the period are lower than the comparative six month period and there has been a decrease in the overall average gross margins, caused by a product mix shift away from the high margin guaranteed products, resulting in a 25% fall in gross management and other fees.

 

Revenue from performance fees decreased 43% from $49 million in H1 2011 to $28 million in the six months to 30 June 2012, as a result of lower investment performance from performance fee eligible funds.

 

5.         Distribution costs

 

Distribution costs, comprising placement and servicing fees, were $138 million for the period (H1 2011: $162 million).

 

Placement fees include $31 million relating to the amortisation ofprior placement fees, $11 million relating to redeemed products and $9 million relating to the share based and fund product based deferral costs, compared to $60 million in H12011. The capitalised placement fees at 30 June 2012 were $137 million (31 December 2011: $157 million) with a weighted average remaining amortisation period of 2.5 years (31 December 2011: 2.2 years). Servicing feeexpense for the period was $87 million, compared to $102 million in H12011.

 

Distribution costs include $20 million (H1 2011: $15 million) and $4 million (H1 2011: $6 million) relating to employee placement and servicing fees respectively.

 

6.         Asset services

 

Asset servicing costs (including custodial, valuation, fund accounting and registrar functions which are now across our total funds under management) for the period were $14 million (H1 2011: $15 million). 

 

 

7.         Compensation



Six months
to 30
June

Six months
to 30
June

$m


 2012

 2011

Salaries - fixed


99

107

Salaries - variable


51

133

Share-based payment charge


37

55

Fund product based payment charge


5

18

Social security costs


12

28

Pension costs


7

8

Compensation costs - before adjusting items


211

349

Restructuring


16

6

GLG acquisition costs


 - 

10

Total compensation costs


227

365

 

Compensation costs were $227 million (H1 2011: $365 million). The movement in variable compensation reflects declines in bonus related accruals and compensation linked to management and performance fees in the six month period to 30 June 2012. Excluding adjusting items of$16 million (H1 2011: $16 million), our compensation ratios are currently 32% compared to 39% in H1 2011 and 33% for the nine months ended 31 December 2011.  The decline in the compensation ratio since H1 2011 relates to a decrease in the discretionary bonus related compensation ratio and as a result of the run off of some deferred share-based and fund product based awards.

 

The decrease in social security costs to $12 million from $28 million in H1 2011 includes the impact of share based employee awards, the costof which is based on Man's share price, which has declined since 30 June 2011.

 

The unamortised deferred compensation at30 June 2012 was $87 million (31 December 2011: $91 million) which has a weighted average remaining vesting period of 1.5 years (31 December 2011: 1.6 years).

 

Restructuring costs relate mostly to redundancy costs, associated with our cost saving initiatives.

 

8.         Other costs

 

$m

Six months
to 30
June

Six months
to 30
June

 2012

 2011

Occupancy

29

32

Travel and entertainment

9

10

Technology

18

24

Communication

12

12

Consulting and professional services

32

28

Depreciation and amortisation

37

29

Other

23

25

Other costs - before adjusting items

 160

 160

Restructuring

1

6

FRM acquisition costs

3

 - 

Total other costs

 164

 166

 

Other costs before adjusting items were $160 million, the same level as H1 2011, although lower than $183 million for H2 2011. Higher depreciation costs in relation to Riverbank House were partly offset by a decrease in technology costs.

 

Restructuring costs and FRM acquisition costs primarily related to professional fees and are treated as adjusting items to statutory profit (Note 2).

 

9.         Finance expense and finance income

 

Finance expense includes interest expense on borrowings and fees of $51 million (H1 2011: $45 million). The increase in finance expense from the prior period is primarily due to a $21 million charge relating to the recent debt buy back (refer to Note 15). 

 

Finance income was $29million (H1 2011: $27 million). Finance income included a gain of $15 million (H1 2011: $11 million) recognised on the repayment of loan notes issued by BlueCrest.

 

10.       Taxation

 

The tax charge for the period is $12 million with an effective tax rate on profits from continuing operations before adjusting items of 18% (H1 2011: 16%), reflecting the estimated rate for the year ending 31 December 2012. The higher rate principally reflects the product mix shift caused by the reduced proportion of guaranteed products (lower tax rate) compared to open-ended products (higher tax rate) and reduced relief on share based compensation costs which outweigh the effect of prior year tax credits.  The majority of the Group's profit continues to be earned in Switzerland, Australia, and the UK. The forecast full yeareffective tax rate is consistent with this profit mix. 

 

11.       Earnings pershare (EPS)

 

The calculation of basic earnings perordinary share and diluted earnings per ordinary share is based on a loss for the period of $188 million (H1 2011: profit of $42 million) for continuing operations.

 

The calculation of basic earnings perordinary share is based on 1,767,485,231 (H1 2011: 1,835,732,130) ordinary shares, being the weighted average number of ordinary shares in issue during the period after excluding the shares owned bythe Man Group plc employee trusts.  The decrease in the number of shares primarily relates to the repurchase of 66 million shares in late 2011. For diluted EPS, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares.

 

The calculation of diluted earnings perordinary share is calculated as shown in the following tables:

 



Six months
to 30
June
2012

Six months
to 30
June
2011



(millions)

(millions)

Basic weighted average number of shares


1,767.5

1,835.7

Dilutive potential ordinary shares




Employee share options


0.1

0.5

Share awards under incentive schemes


21.8

29.9

Dilutive weighted average number of shares


1,789.4

1,866.1

 

The reconciliation of earnings per share to an adjusted EPS is given below:

 


Six months to 30 June 2012


Basic
post-tax
earnings

Diluted
post-tax
earnings

Basic
earnings
per share

Diluted
earnings
per share

$m

$m

cents

cents

Earnings per share on continuing operations*

(188)

(188)

(10.7)

(10.6)

Items for which EPS has been adjusted (Note 2)

 285

 285

 16.1

 15.9

Tax on the above items

(10)

(10)

(0.5)

 (0.5)

Adjusted earnings per share

 87

 87

 4.9

 4.8

Net performance fee income (Note 3)

(13)

(13)

(0.7)

(0.7)

Tax on the above item

 3

 3

 0.2

 0.2

Adjusted management fee earnings per share on continuing operations

 77

 77

 4.4

 4.3







Six months to 30 June 2011


Basic
post-tax
earnings

Diluted
post-tax
earnings

Basic
earnings
per share

Diluted
earnings
per share

$m

$m

cents

cents

Earnings per share on continuing and discontinued operations*

 48

 48

 2.6

 2.6

Discontinued operations - brokerage

(6)

(6)

 (0.3)

 (0.3)

Earnings per share on continuing operations*

 42

 42

 2.3

 2.3

Items for which EPS has been adjusted (Note 2)

 167

 167

 9.1

 8.9

Tax on the above items

(26)

(26)

(1.4)

(1.4)

Adjusted earnings per share

 183

 183

 10.0

 9.8

Net performance fee income (Note 3)

(25)

(25)

(1.4)

(1.4)

Tax on the above item

 5

 5

 0.3

 0.3

Adjusted management fee earnings per share on continuing operations

 163

 163

 8.9

 8.7

* The difference between profit after tax and basic and diluted post-tax earnings is the adding back of the

expense in the period of $12 million (post-tax) each period relating to the perpetual subordinated capital securities.

 

Group statement of financial position

 




At 30
June

At 31 December

$m

Note


2012

2011

ASSETS





Cash and cash equivalents

15


1,411

1,639

Fee and other receivables



348

428

Investments in fund products

14


538

631

Other investments and pension asset

14


459

436

Investments in associates and joint ventures



40

41

Leasehold improvements and equipment



165

173

Goodwill and acquired intangibles

12


 2,213

2,478

Other intangibles

13


153

187

Total assets



5,327

6,013

LIABILITIES





Trade and other payables



485

675

Current tax liabilities



93

118

Borrowings

15


847

1,066

Deferred tax liabilities



93

94

Total liabilities



1,518

1,953

NET ASSETS



3,809

4,060






EQUITY





Capital and reserves attributable to owners of the parent

16


3,809

4,060

 

12.       Goodwill and other acquired intangibles

The area of most significant judgement in the interim financial statements is the evaluation of goodwill and other acquired intangibles.  Duff & Phelps, a specialist valuation firm, was appointed to make an independent estimate of the recoverable amounts of the GLG and Man Multi-Manager cash generating units as at 30 June 2012.  In light of the uncertainty of the current economic environment, the valuation is primarily based on a prediction that investment performance and net flows will trend towards historical averages over the next two years.


Goodwill

Investment management
contracts and
other acquired intangibles

Total

Net book value at 1 January 2012

1,859

619

2,478

Amortisation

 - 

(32)

(32)

Impairment

(233)

 - 

(233)

Net book value at 30 June 2012

1,626

587

2,213

Made up as follows:




GLG

986

569

1,555

Man Multi-Manager

211

 - 

211

AHL


407

 - 

407

Ore Hill

18

40

 

GLG cash generating unit (CGU)

 

The recoverable amount of the GLG CGU was assessed at 31 December 2011 using a value in use calculation.  A value in use calculation gives a higher valuation for the GLG CGU as a fair value approach would exclude some of the revenue synergies available to Man through its ability to distribute GLG products using its well established distribution channels, which is unlikely to be fully available to other market participants.  A fair value approach also takes a relatively short-term view of growth in future management fees and future performance fees. At 31 December 2011, the value in use calculation suggested there was headroom of around $95 million over the carrying value of the GLG goodwill and other intangibles balance and no impairment was considered necessary.

 

The recoverable amount of the GLG CGU has been assessed again in the first half of 2012, on the same basis.

 

The value in use calculation uses cash flow projections based on appropriate assumptions as determined by the independent advisor.  The following valuation analysis is based on best practice guidance whereby a terminal value is calculated at the end of a short discrete budget period (in this case 2.5 years), and assumes no growth in asset flows after this budget period.

 

The key assumptions used in the value in use calculation relate to investment performance and net flows (sales less redemptions) as shown in the table below.  The assumptions for investment performance and the bifurcated discount rate are consistent with those used at 31 December 2011.

 

Net inflows (sales less redemptions)


-       July to December 2012

$0.1bn

-       2013

$3.5bn

-       2014

$3.0bn

Investment performance (gross return applied to years 2012 to 2014)


-       Alternatives

12%

-       Long only

6%

Discount rate (post-tax)


-       Net management fees

11%

-       Net performance fees

17%

 

In the above table for the model assumptions, the net performance return equivalent is approximately 8% for alternatives and 5% for long only, and the pre-tax equivalent of the management fee and performance fee discount rates is 12.2% and 21.2% respectively.

 

The terminal value is calculated at the end of 2014.  This is based on the closing funds under management as at 31 December 2014 and assumes nil net flows (sales less redemptions) in all future years.  It is assumed that a constant amount of performance fee income is earned post 2014 (nil growth).  The overall terminal growth rate is 2.0%.

 

GLG's net flows for the six months to 30 June 2012 have been weaker in comparison to the modelled 2012 assumptions at 31 December 2011, with net flows $1.3 billion lower for the six months 30 June 2012.  As a result, the value in use calculation for the GLG CGU suggests a value of $1,605 million as at 30 June 2012. The total carrying value of the GLG CGU, including goodwill, is assessed to be $1,696 million, resulting in a goodwill impairment of $91 million.  This impairment has been recognised accordingly at 30 June 2012.

 

The table below shows three increasingly adverse scenarios, whereby the base case key assumptions are changed to stressed assumptions.  These stressed assumptions are applied to gross investment performance in 2012 only in the first sensitivity; gross investment performance in 2012 and 2013, and redemptions in 2013, in the second sensitivity; and gross investment performance in 2012, 2013 and 2014, and redemptions in 2013 and 2014, in the third sensitivity.  The stressed assumptions are: sales remain as per the base case; redemption rate of 50% for alternatives and long only; and nil gross investment performance for alternatives and long only.  The table below shows the effect of these scenarios and the associated modelled impairment charge that would result.

 

Stressed assumptions applied in:

2012 only

2012-2013

2012-2014

Modelled impairment ($m)

(94)

(499)

(1,605)

 

If the net management fee and net performance post-tax discount rates were increased by 1% to 12% and 18% respectively, it would result in increased modelled impairment of around $161 million.  If the discount rates were decreased by 1%, it would result in modelled headroom of $198 million.

 

Man Multi-Manager (MMM) cash generating unit

 

The recoverable amount of the MMM CGU was reviewed at 31 December 2011 by assessing the fair value of the business based on market earnings multiples applied to the post-tax net earnings for calendar year 2011.  It was concluded that no impairment charge was required.

 

The value of the MMM CGU has again been assessed in the first half of 2012.

 

As with the GLG CGU valuation explained above, a value in use calculation has been used to calculate the recoverable amount of the MMM business, with independent advisors engaged for the first time to assist with the valuation. The value in use calculation follows the same methodology as for the GLG CGU.

 

The key assumptions used in the value in use calculation relate to investment performance and net flows (sales less redemptions), as shown in the table below.  A bifurcated discount rate has been applied to net management fees and net performance fees to reflect the different risk profiles.

 

Net inflows/(outflows) (sales less redemptions)


-       July to December 2012

($380)m

-       2013

$440m

-       2014

 

$980m

 

Investment performance (gross return applied to years 2012 to 2014)

6% 



Discount rate (post-tax)

 


-       Net management fees

10%

-       Net performance fees

17%



 

In the above table for the model assumptions, the pre-tax equivalent of the net management fee and net performance fee discount rates is 10.8% and 19.5% respectively.

 

The terminal value is calculated at the end of 2014.  This is based on the closing funds under management as at 31 December 2014 and assumes nil net flows (sales less redemptions) in all future years.  The overall terminal growth rate for total net cash flows is 4.0%.

 

The value in use calculation suggests a value of approximately $272 million for the MMM business. The total carrying value of the MMM CGU, including goodwill, is assessed to be $414 million, resulting in a goodwill impairment of $142 million. This impairment has been recognised accordingly at 30 June 2012. Prior impairment reviews had assumed an investment performance gross return of 8%.  The decrease in this assumption to a gross return of 6% is the primary cause of the impairment.

 

The table below shows three increasingly adverse scenarios, whereby the base case key assumptions are changed to stressed assumptions.  These stressed assumptions are applied to 2012 only in the first sensitivity; 2012 and 2013 in the second sensitivity; and 2012, 2013 and 2014 in the third sensitivity.  The stressed assumptions are: sales remain as per the base case; redemption rate of 50% for institutional and guaranteed products; and nil gross investment performance for all products.  The table below shows the effect of these scenarios and the associated modelled impairment charge that would result.

 

Stressed assumptions applied in:

2012 only

2012-2013

2012-2014

Modelled impairment ($m)

(97)

(241)

(272)

 

If the net management fee and net performance fee post-tax discount rates were increased by 1% to 11% and 18% respectively, it would result in increased modelled impairment of around $34 million.  If the discount rates were decreased by 1%, it would result in modelled headroom of $43 million.

 

AHL cash generating unit

 

The recoverable amount of the AHL CGU was assessed at 31 December 2011 using a fair value less costs to sell approach, based on market earnings multiples applied to post-tax net earnings for the calendar 2011 year.  The fair value less costs to sell valuation indicated a significant amount of headroom over the carrying value of AHL goodwill at 31 December 2011, and there were no realistic scenarios which would result in impairment being necessary.

 

The challenging market conditions and the significant decline in the Group's share price during the six months to 30 June 2012 could be deemed to be indicators of impairment.  The recoverable amount of the AHL CGU was assessed in the first half of 2012, but no realistic scenario would result in impairment.

 

Ore Hill cash generating unit

 

The recoverable amount of the Ore Hill CGU was assessed at 30 April 2012 as an impairment review was required by the first anniversary of the acquisition on 3 May 2012. 

 

The recoverable amount of the Ore Hill CGU was calculated using a value in use approach, which indicated a value of approximately $44 million for the Ore Hill business, resulting in headroom of approximately $3 million. The key assumptions use in the valuation were a gross investment performance assumption of 10%, and post-tax discount rate assumptions of 11% for net management fees and 17% for net performance fees respectively.  As a result, no impairment is deemed necessary for the six months to 30 June 2012.

 

If the net management fee and net performance fee post-tax discount rates were increased by 1% to 12% and 18% respectively, it would result in nil headroom.  If the discount rates were decreased by 1%, it would result in modelled headroom of around $7 million.

 

13.     Other intangibles



Other intangible assets



Placement fees

Capitalised




Computer


$m


Software

Total

Net book value at 1 January 2012


 157

 30

 187

Amortisation


(31)

(16)

(47)

Additions


 22

 2

 24

Redemptions/disposals


(11)

 - 

(11)

Net book value at 30 June 2012


 137

 16

 153

 

14.     Investments in fund products and other investments


At 30
June

At 31 December


$m

2012

2011

Investments in fund products comprise:



Loans to fund products

224

334

Other investments in fund products

314

297


538

631





At 30
June

At 31 December



2012

2011

Other investments comprise:



Lehman claims

346

333

Pension asset

104

92

Other

9

11


459

436

 

Loans to fund products at 30 June 2012 were $224 million (31 December 2011: $334 million) driven by a lower margin requirement from AHL as a result of reduced gearing levels.

 

Other investments in fund products relates to our on-going business to build our product breadth and to trial investment research developments before we market the products to investors.  This includes $48 million (31 December 2011: $40 million) of fund products which are held against outstanding deferred compensation arrangements. 

 

Other investments primarily relate to Man's acquisition, at current net asset value, of all the residual

exposure to the Lehman estates from funds (Lehman claims) managed by its wholly owned subsidiary GLG Partners LP.  The exposure mainly relates to GLG's European Long Short and North American Opportunity strategies.

 

Man is entitled to benefit from, or bearthe risk of, any change to the net asset value of the Lehman claims, with the funds sharing 50% of the upside in excess of a threshold where potential client money recoveries are significantly higher than currently expected. Man is also entitled to the proceeds of each claim as and when it is distributed by the relevant Lehman estate, although the precise timing of receipts is difficult to determine given the complexity of the Lehman insolvencies.  During the six months to 30 June 2012, a further $5 million of claims were realised at their carrying value and the valuation of the claims has increased by $18 million as a result of a net positive impact from legal proceedings in the period.  The $18 million increase in fair value has been recognised in other comprehensive income.

 

15.       Cash, liquidity and borrowings

 

Cash and cash equivalents at period end comprise $201 million (31 December 2011: $193 million) of cash at bankavailable on demand, and $1,210 million (31 December 2011: $1,446 million) in short term deposits.  Cash balances decreased $228 million in the period from $1,639 million to $1,411 million. 

 

Net of borrowings and issued debtthe net cash position at 30 June 2012 was $564million, broadly in line with $573 million at the end of the prior year.  The movement in cash is analysed in the cash flow statement.  The decrease of $9 million in Man's net cash position during theperiod is primarily the result of: dividends on ordinary shares and capital securities of $143 million, offset by cash flows from operations.

 

During the period, €166 million ($219 million) of the €382 million ($492 million) 2015 Senior Fixed Rate Notes were re-purchased at a premium of $20 million.  This premium, along with an accelerated unwind of issue costs and fees of $1 million have been included in finance expense for the period.

 

The following table summarises Man's available liquidity at the end of the period. 

$m


At 30
June

At 31 December


2012

2011

2013 Senior Fixed Rate Notes


172

172

2015 Senior Fixed Rate Notes


273

492

2015 Subordinated Floating Rate Notes


171

171

2017 Subordinated Fixed Rate Notes


231

231

Funded debt


847

1,066

Perpetual Subordinated Capital Securities


300

300

Undrawn committed revolving loan facility


1,560

1,560

Total funding


2,707

2,926

Cash and cash equivalents


1,411

1,639

Total available liquidity (cash plus undrawn committed facilities)


2,971

3,199

 

Group statement of changes in equity



Equity attributable to shareholders of the Company

Six months to 30 June 2012
$m

Note

Share capital and capital reserves

Revaluation reserves and retained earnings

Total

At 1 January 2012


 3,364

 696

 4,060

Loss for the period


 - 

(176)

(176)

Other comprehensive income


 - 

 16

 16

Total comprehensive income for the period


 - 

(160)

(160)

Perpetual capital securities coupon


 - 

(12)

(12)

Share-based payments


 6

 38

 44

Movement in close period buy back obligations


 -

 3

 3

Dividends*


 - 

(126)

(126)

At 30 June 2012

16

 3,370

 439

 3,809






Six months to 30 June 2011
$m

At 1 January 2011


 3,335

 1,080

 4,415

Profit for the period


 - 

 60

 60

Other comprehensive income


 - 

 25

 25

Total comprehensive income for the period


 - 

 85

 85

Perpetual capital securities coupon


 - 

(12)

(12)

Acquisition of business


 15

 - 

 15

Share-based payments


 12

 11

 23

Disposal of business


 - 

 22

 22

At 30 June 2011


 3,362

 1,186

 4,548

*Relates to the final dividend paid for the nine months to 31 December 2011 of 7.0 cents per share.

 


16.       Share capital and reserves

$m


At 30 June

At 31 December


2012

2011

Share capital


62

63

Perpetual subordinated capital securities


300

300

Share premium account


1,713

1,707

Capital redemption reserve


1,295

1,294

Revaluation reserves and retained earnings


439

696



3,809

4,060

 

17.       Related party transactions

 

The related party transactions during the period areconsistent with the categories disclosed in the 

Report and accounts for the nine months ended 31 December 2011. Total revenue from fund entities deemed to be associates was $117 million (H1 2011: $142 million).

 

18.       Post balance sheet events

 

On 17 July 2012, Man acquired the entire issued share capital of FRM Holdings Limited (Financial Risk Management "FRM"), a global hedge fund research and investment specialist with funds under management of approximately $7.6 billion (the "Acquisition"). Man will integrate FRM with its multi-manager business and, through combined resources and scale, will aim to offer clients deeper and more diverse capabilities, increasingly compelling products and services and better investment performance.

 

Man will pay an estimated $72 million in cash for an anticipated $103 million of net assets, principally cash, representing a discount to book value of approximately $31 million, subject to completion balance sheet adjustments.

 

In addition, the following contingent consideration will be paid and measured at fair value as part of the acquisition cost:

·        Two earn out payments, payable in cash following the first and third anniversaries of closing, on a sliding scale dependent on levels of run rate net management fees

·     After one year, up to $47.5 million

·     After three years, up to $66.5 million

·        47.5% of net performance fees generated from FRM's existing assets in the three years after closing, capped at $60.8 million.

·        Sumitomo Mitsui Trust Bank Limited ("SMTB"), a 5% shareholder in FRM, will exchange its current shareholding for a holding of preference shares in RBH Holdings (Jersey) Limited, the Man subsidiary which will acquire FRM. This shareholding will entitle SMTB to a dividend corresponding to a 2.65% per annum share of the net management and performance fee revenues generated from the acquired FRM funds under management.

 

Under IFRS 3 - 'Business combinations', Man will need to calculate the fair value of acquired assets. The most material adjustment will relate to the valuation of the investment management contracts in place and the fair value of contingent consideration on completion.

 

Group Cash Flow Statement

 




Six months
to 30
June

Six months
to 30
June

$m



2012

2011

Cash flows from operating activities




(Loss)/profit for the period - continuing operations



 (176)

 54

Adjustments for:





Income tax



 12

 10

Net finance expense



 22

 18

Share of results of associates and joint ventures



(5)

(28)

Gain on disposal of BlueCrest



 - 

(257)

Depreciation of leasehold improvements and equipment



 21

 13

Amortisation of other intangible fixed assets



 90

 102

Share-based payments expense



 48

 58

Impairment of goodwill and other investments



 233 

 375

Difference between pension contributions and pension cost charged


(11)

(14)

Other non-cash movements



 (9)

 4




 225

 335

Changes in working capital:





Decrease in receivables



 78

 158

Decrease/(increase) in other financial assets



 103

(227)

(Decrease)/increase in payables



(158)

41

Cash generated from operations - continuing operations


 248

307

Interest paid



(61)

(63)

Income tax paid



(38)

(68)

Cash flows from operating activities - continuing operations


 149

176

Cash flows from investing activities




Purchase of leasehold improvements and equipment



(13)

(60)

Purchase of other intangible assets



(24)

(38)

Purchase of other investments



(16)

(3)

Net proceeds from sale of other investments



 11

 20

Acquisition of subsidiary, net of cash acquired



 - 

 1

Interest received



 29

 15

Dividends received from associates and other investments



 6

 52

Proceeds from sale of associate



 - 

 443

Cash flows from investing activities - continuing operations


(7)

430

Cash flows from financing activities




Proceeds from issue of ordinary shares



 6

 12

Purchase of own shares by ESOP trust



(7)

(70)

Repurchase of own shares



(7)

 - 

Repayment of borrowings



(219)

 - 

Dividends paid to Company shareholders



(126)

 - 

Dividend payments in respect of perpetual subordinated capital securities

(17)

(17)

Cash flows from financing activities - continuing operations


(370)

(75)

Net (decrease)/increase in cash and bank overdrafts



(228)

 531

Cash and bank overdrafts at the beginning of the period



 1,639

 1,950

Cash and bank overdrafts at the end of the period



 1,411

 2,481

 

Independent review report to Man Group plc

 

  Introduction

We have been engaged by the company to review the Interim Financial Statements in the Interim Results for the six months ended 30 June 2012, which comprises the Group Income Statement, the Group Statement of Comprehensive Income, the Group Statement of Financial Position, the Group Statement of Changes in Equity and the Group Cash Flow Statement and related notes. We have read the other information contained in the Interim Results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the Interim Financial Statements.

 

Directors' responsibilities

The Interim Results are the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Results in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

 

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The Interim Financial Statements included in these Interim Results have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

 

Our responsibility

Our responsibility is to express to the company a conclusion on the Interim Financial Statements in the Interim Results based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

 

Scope of review

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

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the Interim Financial Statements in the Interim Results for the six months ended 30 June 2012 are not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

 

PricewaterhouseCoopers LLP

Chartered Accountants

24 July 2012

London

 

The maintenance and integrity of the Man Group plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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