Man Regulatory News (EMG)

Press Release

01 August 2023

Half year results for the six months ended 30 June 2023

Key points

Net inflows reflect continued demand for our range of investment strategies and solutions

o  Record assets under management (AUM) of $151.7 billion (31 December 2022: $143.3 billion)

o  Net inflows of $2.6 billion for the six months ended 30 June 2023, 2.5% ahead of the industry[KPI]

o  Positive investment performance of $5.1 billion, 0.6% ahead of peers[KPI]

Resilient core management fee EPS (diluted) of 8.7¢ demonstrates the benefit of our diversified model

o  Run-rate net management fee revenue of $946 million as at 30 June 2023 (31 December 2022: $917 million)

o  $32 million of core performance fees reflect a difficult first quarter for trend-following absolute return strategies

o  Core EPS (diluted) of 8.9¢[KPI] (H1 2022: 24.0¢) and statutory EPS (diluted) of 6.8¢ (H1 2022: 22.7¢)

Strategic acquisition to support our long-term growth prospects and consistent shareholder returns

o  Announced the acquisition of Varagon Capital Partners, a leading US middle-market private credit manager

o  Completed the $125 million share buyback announced in March 2023

o  Recommended interim dividend of 5.6¢, in line with guidance (H1 2022: 5.6¢ per share)

Robyn Grew to take over from Luke Ellis as Chief Executive Officer on 1 September 2023

Luke Ellis, Chief Executive Officer of Man Group, said:

"The first half of 2023 was a period of sustained organic growth for Man Group and I'm delighted to report record assets under management of $151.7 billion, and net inflows of $2.6 billion. These flows were 2.5% ahead of the industry, highlighting the broad-based demand we are seeing for the range of differentiated investment strategies and solutions that we offer, as well as the quality of our longstanding relationships with allocators around the world.

"It has been a great privilege leading Man Group during a period of major evolution and progression; through our unwavering focus on investment performance and client service, alongside investing strategically in our technology, the business has grown and diversified significantly since my appointment. I have no doubt that the firm will continue to go from strength to strength under Robyn's leadership, building on our position at the forefront of the industry."

Robyn Grew, Incoming Chief Executive Officer of Man Group, said:

"I want to say again how honoured I feel to be the next CEO of Man Group. I have huge confidence in the talented group of people here and our ability to continue to deliver for clients and shareholders. We have built a tremendous business with a fantastically collegiate culture over the past few years, one that is truly a global leader in active investment management.

"Diversifying our client offering has been a priority for the firm and last month we were pleased to announce the acquisition of Varagon Capital Partners. As the private credit market continues to grow in relevance for the world's largest institutions, this transaction adds a US-focused direct lending strategy designed to provide consistent risk-adjusted outperformance at scale and in a highly customisable format. Varagon has a strong track record of underwriting discipline, risk management and generating differentiated returns for investors; this gives us confidence in our ability to support their continued growth as a part of Man Group."

'Core' measures are alternative performance measures. For a detailed description of our alternative performance measures, including non-core items, please refer to pages 27-32.

[KPI] For details of key performance indicators refer to the 2022 Annual Report.

Summary financials

Dividend

Man Group's ordinary dividend policy is progressive, taking into account the growth in the firm's overall earnings. The firm first takes into account required capital and potential strategic opportunities and maintains a prudent balance sheet. Our policy is to then distribute available capital to shareholders over time by way of higher dividend payments and/or share repurchases. While the Board considers dividends as the primary method of returning capital to shareholders, it will continue to execute share repurchases when advantageous.

In line with this policy, the Board has declared an interim dividend of 5.6 cents per share (30 June 2022: 5.6 cents). The interim dividend of 5.6 cents per share is in line with the guidance communicated at our full year results that we intend to keep our interim dividend flat until such time as the ratio of interim to final dividend gets closer to 1:2, in line with the broader UK market. We will fix and announce the US dollar to sterling dividend currency conversion rate on 01 September 2023, in advance of payment.

Dates for the 2023 interim dividend

Forward-looking statements and other important information

This document contains forward-looking statements with respect to the financial condition, results, and business of Man Group plc. By their nature, forward-looking statements involve risk and uncertainty and there may be subsequent variations to estimates. Man Group plc's actual future results may differ materially from the results expressed or implied in these forward-looking statements.

The content of the websites referred to in this announcement is not incorporated into and does not form part of this announcement. Nothing in this announcement should be construed as or is intended to be a solicitation for or an offer to provide investment advisory services or to invest in any investment products mentioned herein.

[KPI] For details of key performance indicators refer to the 2022 Annual Report.

1. Growth measured against comparative prior period.

Conference call and presentation for investors and analysts

A conference call with management including an opportunity to ask questions will commence at 10.00am (London) on 01 August 2023. A copy of the presentation will be available on the investor relations section of www.man.com from 09.55am. Please note: We recommend connecting to the meeting 5-10 minutes prior to the start time and to ask a question during the Q&A session you will need to access the meeting via the link below.

The conference call can be accessed at:

https://mangroup.webex.com/mangroup/j.php?MTID=m92a4e1ca582e6f08767b6cedcd14bbd6

Webinar number:

2367 905 6020

Webinar password:

ManH12023Results (62641202 from phones and video systems)

Join by phone:

+44 20 3478 5289 United Kingdom toll

+1 631 267 4890 USA/Canada toll

Access code: 236 790 56020

Enquiries

Karan Shirgaokar

Head of Investor Relations

+44 20 7144 1434

investor.relations@man.com

Georgiana Brunner

Head of Communications

+44 20 7144 1000

media@man.com

Neil Doyle

FTI Consulting

+44 77 7197 8220

man@fticonsulting.com

About Man Group

Man Group is a global, technology-empowered active investment management firm focused on delivering alpha and portfolio solutions for clients. Headquartered in London, we manage $151.7 billion1 and operate across multiple offices globally. We invest across a diverse range of strategies and asset classes, with a mix of long-only and alternative strategies run on a discretionary and quantitative basis, across liquid and private markets. Our investment teams work within Man Group's single operating platform, enabling them to invest with a high degree of empowerment while benefiting from the collaboration, strength and resources of the entire firm. Our platform is underpinned by advanced technology, supporting our investment teams at every stage of their process, including alpha generation, portfolio management, trade execution and risk management.

Our clients and the millions of retirees and savers they represent are at the heart of everything we do. We form deep and long-lasting relationships and create tailored solutions to help meet their unique needs. We recognise that responsible investing is intrinsically linked to our fiduciary duty to our clients, and we integrate this approach broadly across the firm.

We are committed to creating a diverse and inclusive workplace where difference is celebrated and everyone has an equal opportunity to thrive, as well as giving back and contributing positively to our communities. For more information about Man Group's global charitable efforts, and our diversity and inclusion initiatives, please visit: https://www.man.com/corporate-responsibility

1. As at 30 June 2023. All investment management and advisory services are offered through the investment engines of Man AHL, Man Numeric, Man GLG, Man FRM and Man Global Private Markets (GPM).

Assets under management

AUM movements for the six months ended 30 June 2023

AUM movements for the three months ended 30 June 2023

1. Other movements principally relate to maturities and leverage movements. 

AUM by product category

1. Man Institutional Solutions includes AHL Institutional Solutions, which invests into a range of AHL strategies including AHL Alpha, AHL Dimension and AHL Evolution.

2. Includes AHL other, Numeric absolute return and GLG credit absolute return strategies.

3. Includes equity and multi-asset strategies.

Investment performance

Past or projected performance is no indication of future results. Financial indices are used for illustrative purposes only and are provided for the purpose of making a comparison to general market data as a point of reference and should not be construed as a true comparison to the strategy.

The information herein is being provided solely in connection with this press release and is not intended to be, nor should it be construed or used as, investment, tax or legal advice, any recommendation or opinion regarding the appropriateness or suitability of any investment or strategy, or an offer to sell, or a solicitation of an offer to buy, an interest in any security, including an interest in any fund or pool described herein.

1. Represented by AHL Alpha plc from 17 October 1995 to 30 September 2012, and by AHL Strategies PCC Limited: Class Y AHL Alpha USD Shares from 1 October 2012 to 30 September 2013. The representative product was changed at the end of September 2012 due to the provisioning of fund liquidation costs in October 2012 for AHL Alpha plc, which resulted in a tracking error compared with other Alpha Programme funds. Both funds are valued weekly; however, for comparative purposes, statistics have been calculated using the best quality price that is available at each calendar month end, using estimates where a final price is unavailable. Where a price, either estimate or final is unavailable on a calendar month end, the price on the closest date prior to the calendar month end has been used. Both of the track records have been adjusted to reflect the fee structure of AHL Alpha (Cayman) Limited - USD Shares. From 30 September 2013, the actual performance of AHL Alpha (Cayman) Limited - USD Shares is displayed.

2. Represented by AHL Strategies PCC Limited: Class B AHL Dimension USD Shares from 3 July 2006 to 31 May 2014, and by AHL Dimension (Cayman) Ltd - F USD Shares Class from 1 June 2014 until 28 February 2015 when AHL Dimension (Cayman) Ltd - A USD Shares Class is used. Representative fees of 1.5% management fee and 20% performance fee have been applied.

3. Represented by AHL Evolution Limited adjusted for the fee structure (2% management fee and 20% performance fee) from September 2005 to 31 October 2006; and by AHL Strategies PCC: Class G AHL Evolution USD from 1 November 2006 to 30 November 2011; and by the performance track record of AHL Investment Strategies SPC: Class E AHL Evolution USD Notes from 1 December 2011 to 30 November 2012. From 1 December 2012, the track record of AHL (Cayman) SPC: Class A1 Evolution USD Shares has been shown. All returns shown are net of fees.

4. Represented by Man AHL Diversified plc from 26 March 1996 to 29 October 2012, and by Man AHL Diversified (Guernsey) USD Shares - Class A from 30 October 2012 to date. The representative product was changed at the end of October 2012 due to legal and/or regulatory restrictions on Man AHL Diversified plc preventing the product from accessing the Programme's revised target allocations. Both funds are valued weekly; however, for comparative purposes, statistics have been calculated using the best quality price that is available at each calendar month end, using estimates where a final price is unavailable. Where a price, either estimate or final is unavailable on a calendar month end, the price on the closest date prior to the calendar month end has been used.

5. Represented by Man GLG Alpha Select Alternative IL GBP; AUM included within GLG equity under the absolute return product category.

6. Represented by Man GLG Event Driven Alternative IN USD; AUM included within GLG equity under the absolute return product category.

7. Represented by GLG Market Neutral Fund - Class Z Restricted - USD until 31 August 2007. From 1 September 2007, Man GLG Global Credit Multi Strategy CL IL XX USD unrestricted; AUM included within Other under the absolute return product category.

8. Represented by Man Strategies 1783 Class F1 USD until 31st December 2021. From 1 January 2022 Man Strategies 1783 Class A USD; AUM included within the corresponding product category.

9. Represented by Man AHL TargetRisk class I USD.

10. Represented by Man Alternative Risk Premia Class A USD.

11. Represented by Man GLG Global Emerging Markets Debt Total Return Class I USD; AUM included within Emerging markets fixed income under the total return product category.

12. Represented by FRM Diversified II Fund SPC - Class A USD ('the fund') until April 2018 then Class A JPY hedged to USD thereafter. However, prior to Jan 2004, FRM has created the FRM Diversified II pro forma using the following methodology: i) for the period Jan 1998 to Dec 2003, by using the returns of Absolute Alpha Fund PCC Limited - Diversified Series Share Cell ('AA Diversified - USD') adjusted for fees and/or currency, where applicable. For the period Jan 2004 to Feb 2004, the returns of the fund's master portfolio have been used, adjusted for fees and/or currency, where applicable. Post Feb 2004, the fund's actual performance has been used, which may differ from the calculated performance of the track record. There have been occasions where the 12-months' performance to date of FRM Diversified II has differed materially from that of AA Diversified. Strategy and holdings data relates to the composition of the master portfolio; AUM included within Diversified and thematic FoHF under the multi-manager product category.

13. Performance relative to the MSCI World. This reference index is intended to best represent the strategy's universe. Investors may choose to compare returns for their accounts to different reference indices, resulting in differences in relative return information. Comparison to an index is for informational purposes only, as the holdings of an account managed by Numeric will differ from the securities which comprise the index and may have greater volatility than the holdings of an index.

14. Performance relative to the MSCI Europe (EUR). This reference index is intended to best represent the strategy's universe. Investors may choose to compare returns for their accounts to different reference indices, resulting in differences in relative return information. Comparison to an index is for informational purposes only, as the holdings of an account managed by Numeric will differ from the securities which comprise the index and may have greater volatility than the holdings of an index; AUM included within International equity under the systematic long-only product category.

15. Performance relative to MSCI Emerging Markets. This reference index is intended to best represent the strategy's universe. Investors may choose to compare returns for their accounts to different reference indices, resulting in differences in relative return information. Comparison to an index is for informational purposes only, as the holdings of an account managed by Numeric will differ from the securities which comprise the index and may have greater volatility than the holdings of an index.

16. Represented by Man GLG Continental European Growth Fund Class C Accumulation Shares. Relative return shown vs FTSE World Europe Ex UK (GBP, GDTR); AUM included within Europe ex-UK equity under the discretionary long-only product category.

17. Represented by Man GLG Japan CoreAlpha Fund - Class C converted to JPY until 28 January 2010. From 1 February 2010 Man GLG Japan CoreAlpha Equity Fund - Class I JPY is displayed. Relative return shown vs TOPIX (JPY, GDTR); AUM included within Japan equity under the discretionary long-only product category.

18. Represented by Man GLG Undervalued Assets Fund - C Accumulation Shares. Relative return shown vs FTSE All Share (GBP, NDTR); AUM included within UK equity under the discretionary long-only product category.

19. Represented by Man GLG High Yield Opportunities I EUR. Relative return is shown vs ICE BofA Global High Yield Index (EUR, TR) Hedged benchmark. AUM included within Credit and convertibles under the discretionary long-only product category.

20. HFRI and HFRX index performance over the past 4 months is subject to change.

21. The historical Barclay BTOP 50 Index data is subject to change.

Chief Executive Officer's review

Overview

With higher and increasing interest rates implemented by monetary policymakers in their fight against inflation, turmoil in the banking sector, the US government debt ceiling stand-off, and continued geopolitical uncertainty, global equity markets powered past a series of challenges to deliver positive returns in the first half of 2023. The S&P 500 was up 15% in the period, with the technology giants putting wind in the sails of the rally as investors flocked to companies that they expect will benefit from the growth of artificial intelligence, resulting in the Nasdaq Composite recording its best first half of the year (+32%) since 1983.

The client-led growth in our business remained strong over the period, with total net inflows of $2.6 billion during the first half of the year. Pleasingly, we recorded net inflows across alternative and long-only strategies, which highlights the broad-based demand for the range of differentiated investment strategies and solutions that we offer at Man Group. On a relative basis, total net inflows were 2.5% ahead of the industry, reflecting the merits of our client-centric distribution model and the quality of our longstanding relationships with allocators around the world, and I am delighted that we continued to grow our market share in the first six months of 2023. 

We ended the first half of the year with positive investment performance of $5.1 billion, across all product categories.

March proved to be a challenging month for trend-following absolute return strategies as the collapse of the regional lenders in the US led to a rapid flight to safety, with the yield on the 2-year US Treasury note registering its biggest fall since the 1980s. This was a significant reversal of the market trends that began in November 2022, and negatively affected investment performance in our flagship AHL strategies. Investment performance has rebounded since, with AHL Alpha (+2.0%) and AHL Dimension (+3.6%) ending the period in positive territory. Overall investment performance for our absolute return strategies was +0.3%, with particularly strong returns from our discretionary strategy GLG Alpha Select (+5.3%).

Our total return and long-only strategies performed well over the period, helped by positive momentum in equity markets, delivering overall investment performance of +3.8% and +9.1%, respectively. On an asset-weighted basis, relative investment performance across the firm was positive in the first half of the year. Our judicious approach to risk management and powerful central platform meant we were able to reduce positions quickly during the market volatility in March, driving outperformance of 0.4% from our alternative strategies. Our long-only strategies also outperformed by 1.0%, with notably strong relative returns from GLG Continental European Growth (+4.4%) and Numeric Emerging Markets Core (+2.6%).

Net inflows of $2.6 billion and positive investment performance of $5.1 billion, together with FX and other impacts of $0.7 billion, increased total assets under management to $151.7 billion as at 30 June 2023. This was 6% higher compared with 31 December 2022, reflecting another good period of organic growth and a new record for the firm. Core net management fees of $460 million were 2% lower compared with the first six months of 2022, primarily driven by the mix of assets under management during the period. Core performance fees of $32 million during the first half of the year reflect a more difficult first quarter for our trend-following absolute return strategies.

Core management fee earnings per share (diluted) of 8.7 cents (H1 2022: 9.1 cents) reflects higher fixed cost guidance considering planned investment to support growth. Core earnings per share (diluted) of 8.9 cents (H1 2022: 24.0 cents) and statutory earnings per share (diluted) of 6.8 cents (H1 2022: 22.7 cents) reflect lower revenue from performance fees in the first half of the year, as well as the accounting charge for deferred variable compensation awards made in prior periods. In line with our previous guidance, the Board has declared an interim dividend of 5.6 cents per share (H1 2022: 5.6 cents).

Business development

We remain focused on innovation to add to the range of investment strategies we offer, diversify our revenue streams further and create multiple dimensions for future growth. Our seed capital programme continues to be a key way for us to support the launch of new investment strategies and during the first half of the year we seeded six new strategies across our business, leaving our seeding book at $634 million as at 30 June 2023.

We have said before that M&A is a core part of our strategy and last month, we were delighted to announce the acquisition of Varagon Capital Partners, a US-based private credit manager with $11.8 billion of assets under management as at 31 December 2022. Varagon has established itself as a leading provider of differentiated capital solutions in the core middle-market since its inception in 2014 and shares our vision to deliver alpha at scale for clients. The acquisition reflects our long-term strategy to diversify our client offering and to grow our presence in the US. Our extensive distribution network and operational expertise, together with Varagon's scalable suite of strategies, will support its continued growth. Over the past few years, we have strengthened our liquid credit capabilities with team hires in the high yield and investment grade space and as client demand for credit strategies is increasing, we see a significant growth opportunity in direct lending. We expect the acquisition to complete in Q3 2023.

We also announced a strategic partnership with Fideuram - Intesa Sanpaolo Private Banking (F-ISPB). F-ISPB is the leading private bank in Italy with a pan-European reach and one of Man Group's key clients in the country. The new venture will focus on building a diverse range of technology-enabled alternative and long-only investment strategies and solutions, combining our own capabilities with F-ISPB's private banking expertise, financial adviser network and client base in Europe. We have grown successfully in the intermediated retail channel through partnerships in the US and Japan, and we hope this venture will help to grow our presence in the Italian market.

Financial review

Statutory profit before tax decreased to $114 million from the $380 million achieved in the six months ended 30 June 2022 due to significantly lower performance fee revenue in H1 2023, primarily as the result of the sharp reversal in markets around the March banking crisis. Similarly, core profit before tax decreased from $395 million to $137 million. Statutory earnings per share on a diluted basis were 6.8 cents for the six months ended 30 June 2023 compared with 22.7 cents in H1 2022, with core earnings per share (diluted) down from 24.0 cents in H1 2022 to 8.9 cents. Core management fee profit before tax decreased to $133 million (H1 2022: $149 million) and core management fee earnings per share (diluted) decreased 4% to 8.7 cents, with run rate core net management fees of $946 million at 30 June 2023 (31 December 2022: $917 million). 

Core net revenue of $513 million (H1 2022: $855 million) primarily comprised $460 million of core net management fee revenue (H1 2022: $469 million) and $51 million (H1 2022: $383 million) of core performance fee revenue, including core gains on investments of $19 million (H1 2022: losses of $21 million). Core net management fee revenue was 2% lower than the comparative period due to a relative decrease in total return AUM. Core performance fees of $32 million comprised $30 million from alternative strategies and $2 million from long-only strategies.

Average net management fee margins across absolute return, total return and systematic long-only categories were broadly in line with those for the year ended 31 December 2022. The average net management fee margin of multi-manager solutions decreased by three basis points to 17 basis points in the period, as a result of the ongoing shift towards infrastructure solutions from traditional fund of fund strategies. The average discretionary long-only net management fee margin increased to 60 basis points compared with 57 basis points for the year ended 31 December 2022 due to underlying product mix.

The overall run rate net management fee margin at 30 June 2023 decreased by two basis points to 62 basis points, down from 64 basis points at 31 December 2022, as a result of AUM mix shift between categories, in particular a relative increase in the AUM of lower margin long-only strategies.

Net management fees and margins

We signed two sub-leases for a substantial portion of the vacant space in our London office in the period. The derecognition of the associated portion of our right-of-use lease asset resulted in a gain on disposal of $8 million, classified as a non-core item.

Compensation costs in the period were $257 million (H1 2022: $343 million), comprising $118 million of fixed compensation costs (H1 2022: $110 million) and $139 million of variable compensation costs (H1 2022: $233 million). The increase in fixed compensation was largely due to a previously planned increase in headcount to support business growth. Variable compensation costs decreased due to lower performance fees generated in the period with the compensation ratio increasing to 50% from 40% in the comparative period, at the top end of our guided range.

Core other costs, including asset servicing and depreciation, were $113 million compared with $111 million for H1 2022, with the increase driven by an increase in utility costs and property rates. While most currencies, particularly sterling, have strengthened against the USD in the first half of 2023, they have remained weaker on average than in the first half of 2022 (1.23 USD:GBP in H1 2023 compared with 1.30 USD:GBP in H1 2022), resulting in a reduction in fixed compensation and core other costs which partially offsets the underlying increases noted above. Net finance expense of $6 million was consistent with the comparative period.

Operating net cash inflows of $102 million for H1 2023 (H1 2022: inflows of $146 million) decreased from the comparative period due to the decrease in profit in the period. Even with a decline in profits in the period, we were still able to generate operating net cash inflows before working capital, interest and tax of $206 million (H1 2022: $479 million).

Capital management

Our robust balance sheet and liquidity positions allow us to invest in the business, support our long-term growth prospects and maximise shareholder value. They also enable us to withstand periods of stress. In H1 2023, we completed both $125 million share repurchases announced in each of December 2022 and March 2023, and signed an agreement to purchase a 51% interest in the Swiss asset manager Asteria (as part of the strategic partnership with F-ISPB). On 6 July 2023, we signed an agreement to acquire a controlling interest in Varagon Capital Partners, a leading US middle-market private credit manager with $11.8 billion of assets under management and $15.4 billion of total client commitments as at 31 December 2022. The consideration payable on completion of these transactions will be funded using existing internal resources. Total acquisition-related costs incurred in the period of $10 million are classified as a non-core item.

The interim dividend of 5.6 cents per share is in line with the guidance communicated previously. We intend to keep our interim dividend flat until such time as the ratio of interim to final dividend gets closer to 1:2, in line with the broader UK market. Our business is highly cash-generative, and these cash flows support a growing dividend over time. As at 30 June 2023, we had $618 million of net financial assets (31 December 2022: $983 million) including $101 million of cash (31 December 2022: $349 million), partly offset by the $65 million drawn on our revolving credit facility (31 December 2022: undrawn). We will continue to manage our liquidity dynamically going forward, within our existing parameters, and deploy capital to invest in new products to assist in the growth of the business. These seed investments will be redeemed when practicable as funds are marketed to clients. Seeding investments decreased to $634 million at 30 June 2023 (31 December 2022: $688 million) as a result of net redemptions, partially offset by mark to market gains in the period, with the additional $191 million of total return swap exposure up from $138 million at 31 December 2022.

1. Run rate net management fee margin is calculated as core net management fees divided by average AUM on a fund-by-fund basis for the period specified. Run rate core net management fees applies the run rate margin to closing AUM. This is for illustrative purposes and not a forecast.

Outlook

We continue to believe that the current environment presents a significant opportunity for active investment managers, particularly those with the ability to offer alpha irrespective of prevailing market conditions and in liquid and customisable format. We have built a diversified and resilient business, with a compelling range of investment strategies and solutions, underpinned by high-performing talent and cutting-edge technology.

Risk management

Risk management is an essential component of our approach, both to the management of investment funds on behalf of investors, and the management of Man Group's business on behalf of shareholders. Our reputation is fundamental to our business, and maintaining our corporate integrity is the responsibility of everyone at Man Group. Our approach is to identify, quantify and manage risk throughout the firm, in accordance with the Board's risk appetite. We maintain capital and liquidity to give us strategic and tactical flexibility, both in terms of corporate and fund management.

The principal and emerging risks faced by Man Group are set out on pages 30 to 34 of our 2022 Annual Report and include: investment performance risk; key person risk; counterparty risk; liquidity risk; investment book risk; pension risk; risk of internal or external process failure; model and data integrity risk; information and cybercrime security risk; information technology and business continuity risk; legal, compliance and regulatory risk; reputational risk; and climate change risk. These will continue to be our principal risks for the second half of the financial year. 

Our risk framework operated effectively in the six months to 30 June 2023, with systems and controls functioning as designed. 

'Core' measures are alternative performance measures. For a detailed description of our alternative performance measures, including non-core items, please refer to pages 27-32.

Statement of directors' responsibilities

The directors confirm that, to the best of their knowledge, this condensed set of financial statements in respect of Man Group plc for the six-month period ended 30 June 2023 has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the United Kingdom, and that this interim report includes a fair review of the information required by the Financial Conduct Authority's Disclosure Guidance 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 2023 and their impact on the condensed interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year ending 31 December 2023; and

· material related party transactions in the six months ended 30 June 2023 and any material changes in the related party transactions described in the last Annual Report.

The directors of Man Group plc are:

John Cryan - Board Chair

Luke Ellis - Chief Executive Officer

Antoine Forterre - Chief Financial Officer

Richard Berliand - Senior Independent Director

Lucinda Bell - Independent Non-executive Director

Ceci Kurzman - Independent Non-executive Director

Alberto Musalem - Independent Non-executive Director

Anne Wade - Independent Non-executive Director

By order of the board

Luke EllisChief Executive Officer31 July 2023

Antoine ForterreChief Financial Officer31 July 2023

Independent review report to Man Group Plc

Conclusion

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2023 which comprises the Group income statement, the Group statement of comprehensive income, the Group balance sheet, the Group statement of changes in equity, the Group cash flow statement and related notes 1 to 15.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2023 is not prepared, in all material respects, in accordance with United Kingdom adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Basis for Conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Financial Reporting Council for use in the United Kingdom (ISRE (UK) 2410). A review of interim financial information consists of making inquiries, 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 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.

As disclosed in note 1, the annual financial statements of Man Group are prepared in accordance with United Kingdom adopted international accounting standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with United Kingdom adopted International Accounting Standard 34, 'Interim Financial Reporting'.

Conclusion Relating to Going Concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for Conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.

This Conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410; however future events or conditions may cause the entity to cease to continue as a going concern.

Responsibilities of the directors

The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

In preparing the half-yearly financial report, the directors are responsible for assessing Man Group's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor's Responsibilities for the review of the financial information

In reviewing the half-yearly financial report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report. Our Conclusion, including our Conclusion Relating to Going Concern, is based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

Use of our report

This report is made solely to the Company in accordance with ISRE (UK) 2410. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Deloitte LLP

Statutory Auditor

London, UK

31 July 2023

Interim financial statements

Group income statement

Group statement of comprehensive income

Group balance sheet

Group cash flow statement

Group statement of changes in equity

1.  Basis of preparationThese condensed consolidated interim financial statements for the six months ended 30 June 2023 have been prepared in accordance with United Kingdom-adopted International Accounting Standard 34 'Interim Financial Reporting', the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority and Article 106 of the Companies (Jersey) Law 1991. The consolidated group is Man Group plc (the Company) and its subsidiaries (together Man Group).The financial information contained herein is unaudited and does not constitute accounts within the meaning of Article 105 of the Companies (Jersey) Law 1991. Statutory accounts for the year ended 31 December 2022, which were prepared in accordance with International Financial Reporting Standards (IFRS) and relevant IFRIC interpretations issued by the International Accounting Standards Board (IASB) adopted by the United Kingdom, upon which the auditor has given an unqualified and unmodified report, have been delivered to the Jersey Registrar of Companies and were posted to shareholders on 14 March 2023.

The accounting policies applied in these interim financial statements are consistent with those applied in Man Group's Annual Report for the year ended 31 December 2022 (the '2022 Annual Report').

Impact of new accounting standards

There were no new or amendments to existing accounting standards issued by the International Accounting Standards Board (IASB) that have had a significant impact on these interim financial statements.

No standards or interpretations issued and not yet effective are expected to have a material impact on the interim financial statements.

Going concern

The Board has determined that there is a reasonable expectation that Man Group has sufficient resources to continue in operation for a period of at least twelve months from the date of approval of these interim financial statements. Accordingly, the financial statements have been prepared on a going concern basis.

Judgemental areas and accounting estimates

Man Group acts as the investment manager/advisor to fund entities. The most significant area of judgement is whether we control certain of those fund entities to which we are exposed via either direct investment holdings, total return swaps or sale and repurchase arrangements. We assess such relationships on an ongoing basis to determine whether we control each fund entity and therefore consolidate them into our results.

Man Group's key sources of estimation uncertainty are the valuation of the net pension asset (as further described in Note 22 of the 2022 Annual Report) and the estimated amount of accrued discretionary variable compensation. The determination of discretionary variable compensation is an annual process undertaken at the calendar year end, therefore the accrual at 30 June 2023 is an estimated amount based on the financial performance, including absolute levels of performance fees, in the year to date. The Board has also considered the assumptions used in the assessments for impairment of right-of-use lease assets and the recoverability of deferred tax assets. They have concluded that these assumptions do not have a significant risk of causing a material adjustment to the carrying amounts of our assets or liabilities at the balance sheet date. 

The Board has also considered the impact of climate change on the interim financial statements, in particular in relation to the going concern assessment, the cash flow forecasts used in the impairment assessments of non-current assets and the assumptions around future life expectancies used in the valuation of the net pension asset. The impact of climate change on the interim financial statements is not currently expected to be material.

2. Compensation costs

The unamortised deferred compensation at 30 June 2023 is $184 million (30 June 2022: $144 million) and has a weighted average remaining vesting period of 2.3 years (30 June 2022: 2.1 years).

3. Other costs

4. Finance expense and finance income

5. Tax

The tax expense for the period of $31 million (H1 2022: $72 million) results in a statutory effective tax rate of 27% (H1 2022: 19%). The increase in rate is primarily due to the increase in the UK corporation tax rate from 19% to 25% on 1 April 2023 together with the impact of non-deductible expenses and the derecognition of a portion of the available deferred tax assets in relation to US state and city tax losses. The majority of our profit is earned in the UK, Switzerland and the US. The forecast full year effective tax rate is consistent with this profit mix.

We have recognised net accumulated deferred tax assets in the US of $59 million (31 December 2022: $64 million) that will be available to offset future taxable profits. At 30 June 2023, $20 million of the available deferred tax assets (31 December 2022: $18 million) in relation to US state and city tax losses are unrecognised as we do not expect to realise sufficient future taxable profits against which these losses can be offset before they expire.

The OECD has published an Inclusive 'Pillar 2' Framework (the Framework) to support the introduction of a global minimum tax rate of 15%. The UK has enacted its legislation in Finance (No. 2) Act 2023, effective from 2024, with legislation and regulations in most other jurisdictions also expected to take effect from 2024. Pending final conclusions as to potential outcomes, it is not currently practicable to assess fully the impact of the Framework on our future tax charges. We expect to be subject to the global minimum top-up tax in certain jurisdictions in which we operate, however the impact is not expected to be significant.

6. Cash, liquidity and borrowings

Borrowings

Our $500 million committed revolving credit facility (RCF) is immediately accessible and incorporates an environmental, social and governance (ESG) target-linked interest rate component. It does not include any financial covenants to maintain maximum operational flexibility. $65 million was drawn down at 30 June 2023 and we have no other borrowings (31 December 2022: undrawn). The RCF is scheduled to mature in December 2026.

7. Reconciliation of statutory profits to cash generated from operations

Notes:

1. Changes in working capital differ from the movements in these balance sheet items due to non-cash movements which either relate to the gross-up of the third-party share of consolidated fund entities (Note 8) or are adjusted elsewhere in the Group cash flow statement, such as movements relating to the fund product-based payment charge (within cash flows from operating activities) and the share repurchase liability (within financing activities).

2. Includes $3 million of restricted net cash inflows (H1 2022: $32 million) relating to consolidated fund entities (Note 8).

8. Investments in fund products and other investments

8. Investments in fund products and other investments continued

Net income or gains/(losses) on investments and other financial instruments comprises the following:

Consolidation of investments in funds

In H1 2023, our interests in 39 (31 December 2022: 43) funds met the definition of control and therefore have been consolidated on a line-by-line basis. Certain of our collateralised loan obligations (CLOs) have been consolidated for the first time in the period following the purchase of the majority holding in the subordinated tranches.

Consolidated fund entities are included within the Group balance sheet and income statement as follows:

Notes:

1. Includes assets held by consolidated CLOs.

2. Included within investments in fund products and other investments.

3. Included within net income or gains/(losses) on investments and other financial instruments.

4. Relate to management fees paid by the funds to Man Group during the period, which are eliminated within management and other fees in the Group income statement.

5. Includes depreciation and impairment of investment property held by consolidated fund entities.

Trade and other payables and CLO liabilities relating to consolidated fund entities can be analysed according to their contractual maturity date as follows:

9. Fair value of financial assets/liabilities

The fair values of our financial assets and liabilities held at fair value through profit and loss can be analysed as follows: