Hedge fund manager Man Group saw funds under management slump in the first half 0f 2012 as nervous customers withdrew funds, resulting in a concomitant dive in profits.
Funds under management (|FuM) at the end of June stood at $52.7bn, down from $58.4bn at the end of 2011. Although the group achieved a $7.2bn inflow of new funds during the reporting period, $9.6bn of funds were withdrawn, while the deleveraging of the group's high-margin guaranteed products accounted for another $2.5bn of the decline in FuM.
Guaranteed product funds under management reduced by 29% in the period, from $10.0b to $7.1bn. The main driver of this reduction was a $2.2bn systematic de-gearing, as trading capital reduced as a result of redemptions and negative investment performance.
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Adjusted profit before tax dived to $121m from $231m at the interim stage in 2011. Once a $285m exceptional debit is taken into account - primarily relating to a $91m impairment of good will associated with GLG and a $142m goodwill write-down associated with Man Multi-Manager - the group made a statutory loss of $164m. Last year the group made a statutory profit before tax of $70m, after taking a $167m exceptional charge and booking $6m of profits from discontinued operations.
"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," said Peter Clarke, Chief Executive of Man.
"GLG generated over two thirds of our $7.2bn 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," Clarke added, focusing on what was the brightest spot in Man's set of results.
With markets so volatile Man's management is focusing hard on cost cutting and is on track to deliver the $95m of operating cost savings flagged in March of this year, while another set of measures, designed to generate a further $100m of annual cost savings over the next 18 months, has been announced. The savings will be realised from corporate streamlining, simplification of the product line and good old-fashioned watching the pennies.
"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," the group said.
Surplus regulatory capital at the end of June stood at $704m, up from $587m at the end of 2011. Net cash eased to $564m from $573m at the year-end.
An interim dividend of 8.5 cents (6.12p) per share has been declared, and the group has indicated that the full year pay-out will be 22 cents.
JH
