Man Group Profits To Beat Expectations

by Phillip Morton, Investors Offshore.com

27 March 2008

Man Group, the world's largest listed hedge fund firm, announced on Wednesday that its profit before tax for the year ending March 31st 2008, will be ahead of consensus market expectations, driven by performance fees for its funds.

Man stated in its Trading Update and Funds Under Management Statement that net performance fee income will be up strongly over last year, reflecting good performance across a range of its products in the year, and from its flagship AHL fund in particular.

The consensus market expectations of group profit before tax, based on forecasts provided to Man Group by thirteen UK equity analysts, is USD1.82 billion.

The group expects that net management fee income will be up by over 15% on the prior year, driven by the growth in funds under management. Diluted earnings per share are expected to be up by over 50%.

Sales for the year are estimated to be USD15.8 billion, split 49% private investor product, and 51% institutional product. Redemptions for the year were USD10.6 billion, of which private investor were USD5.1 billion.

Funds under management have risen and are currently estimated to be around USD75 billion, up from USD61.7 billion at March 31st 2007 (USD71.7 billion at December 31st 2007).

The split of funds under management is private investor USD43.6 billion (March 31st 2007: USD36.6 billion) and institutional USD31.4 billion (March 31st 2007: USD25.1 billion).

Sales for the three months to March 31st 2008 are estimated to be USD3.5 billion, of which guaranteed products accounted for USD0.9 billion; open-ended private investor sales for USD1.0 billion; and institutional sales for USD1.6 billion.

Redemptions for the three months to March 31st 2008 were USD2.6 billion, of which private investors constituted USD1.2 billion. In the three months to March 31st 2008, performance is estimated to have added USD0.8 billion and currency translation impacts and other adjustments a further USD0.6 billion.

Man's most recent fund launch in the Far East, which closed in March, raised USD1 billion, and has been included in FUM of USD75 billion for the year to March 31st 2008, but has not included in the sales figures, as this fund is not due to start trading until April 1st.

Man Group will announce its preliminary results for the financial year on May 29th, 2008.

Commenting on the results, Peter Clarke, CEO of Man Group, observed that:

"This is a very strong set of results, achieved through a period of significant market turmoil. Funds under management have risen to around USD75 billion. Strong sales momentum has been maintained with sales of USD15.8 billion in the year, reflecting the attraction of our diversified product range, established track record, and the broad geography of our investors."

"Good performance has added USD5.3 billion to investor assets during a period when global markets were exceptionally volatile. Redemption rates have fallen back towards recent low levels in the final quarter."

He continued: "Pre tax profits have risen substantially for the year, and will be ahead of current market expectations. In addition, our shareholders have seen substantial cash returns during the year, both from our enhanced distribution policy and the December 2007 capital return. Our balance sheet remains very strong and we have significant cash reserves."

"Our financial strength, strategic focus and strong performance mean that Man is extremely well placed to see continued strong growth."

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