Kevin Hayes FD of the Man Group discusses how the planned separation of its MF global arm after its IPO will affect the fund managing heavyweight in terms of its balance sheet and its regulatory position
Could you talk us through the key numbers for the Group?
Again, a very, very strong performance this year. Just to point out, in the
numbers MF Global will be considered a discontinued operation, so let me talk
through the results of the asset management business.
Funds under management grew by about 24% to $61.7bn (£34.6bn). We had strong
sales ($15.9bn) and very low redemptions again, just under 10%. So, very strong
funds under management growth. Net management fees were $943m; that’s up about
35%.
Net performance fees were $358m; that’s down 20%. Last year was a strong year
from AHL, this year saw a very strong performance out of the other core
managers; around $150m of performance fees out of those platforms.
Pre-tax profit, for the overall Group, was around $1.5bn. Of that, the asset
management business was $1.3bn and $260m for MF Global, which is the
discontinued operations component. In earnings per share, again, we had a very
strong year. Total earnings per share were 63.9 cents per share, which is up
about 25%. From the continuing asset management business, earnings per share
were 55.4 cents; that’s up 15%. And then underlying earnings per share, which is
just the management fee component excluding the performance fee component, were
42 cents per share, which is up 37%, a very strong year.
The capital position of the firm is very strong. Equity grew to $4.5bn, and
that’s after paying dividends and executing a share buyback programme, where we
bought back around about 44 million shares.
Fund management is much less capital intensive than brokerage, so what will
the balance sheet look like post the IPO of MF Global?
Post the IPO, the balance sheet will really consist of the assets that we use
to support the Asset Management business. That will be the acquisition goodwill,
the intangible assets related to the sales commissions and the various balances
we have to support the funds’ day-to-day funding activities. So our balance
sheet will be a lot smaller in footings, but well supported by the equity base
and the debt base.
So what might you do with your surplus capital?
After the MF Global IPO, we will revisit our capital requirements and our
distribution policy.
And what changes are you seeing on the regulatory front?
From a group perspective, the separation of MF Global does allow us to
revisit our regulatory regime and we see some opportunities, so we’ll be working
with our primary regulator, the FSA, and the other regulators around the world
that we deal with, to work out what the optimal regulatory position will be
going forward.
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