Man Group comments – Remains a Conviction Buy

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We first made Man Group a Conviction Buy last summer and the results today, with another dividend collection of a very useful 8p to come (management still maintaning the payout as we speculated previously), have effectively (ungeared) doubled our money on the stock now. We think, like Crispin Odey, that there is still more to come here and the stock is a prime takeover target. Happy to remain long of this stock and continue collecting the dividends and as the chart shows below, it is now in a nice uptrend.

Key points

Funds under management (FUM) at 31 December 2012 of $57.0 billion (31 December 2011: $58.4 billion) 

 Sales of $12.8 billion, redemptions of $20.1 billion, FRM acquisition $8.3 billion, investment movement of $1.3 billion, FX translation effects of $(0.3) billion and other movements, principally guaranteed product de-gears, of $(3.4) billion 

 Adjusted profit before tax (PBT) of $278 million, comprising adjusted net management fee PBT of $223 million and net performance fee PBT of $55 million 

Further impairment of GLG goodwill ($746 million) in addition to the impairment reported at 30 June 2012 of $233 million (GLG $91 million and Man Multi-Manager $142 million) 

Statutory loss before tax for the year ended 31 December 2012 of $745 million, reflecting impairment of goodwill and  other adjusting items

$95 million of operating cost savings announced in January 2012 have been delivered 

Further annual cost savings of $100 million announced in July 2012 are on track for delivery by the end of 2013 

Surplus regulatory capital of $795 million at 31 December 2012 

Proposed final dividend of 12.5 cents per share; total dividend for the year expected to be 22 cents 

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