24th Feb 2016 11:48
LONDON (Alliance News) - Man Group PLC on Wednesday reported lower annual profit and said it will retain surplus capital rather than return it to shareholders through further share buybacks, as the hedge fund manager goes on the prowl for acquisitions.
An inability to find deals on "sensible" terms caused the FTSE 250 group to rule out several acquisition opportunities in 2015. But there could be better value out there after the tough start to the new year for equities markets, Man Group said.
"The board believes that, given evolving market dynamics, there is sufficient probability of finding attractive acquisitions to execute this year that we have decided to retain all of our surplus capital. Conditions may of course change, and we will review the decision in the course of this year and retain the ability to execute buybacks if advantageous to do so," the company added.
Pretax profit fell by 52% to USD184.0 million in 2015. Man attributing the drop to USD216.0 million of adjusting items relating to amortisation of purchased intangible assets and increases in the fair value of the contingent payment due for the acquisition of Boston-based hedge fund Numeric in September 2014, as a result of better than expected flows and margins at Numeric.
Funds under management rose to USD78.7 billion from USD72.9 billion over the course of the year, largely as a result of the acquisitions of Silvermine, NewSmith and the Bank of America Merrill Lynch fund-of-hedge-funds portfolio. Net inflows fell to USD300.0 million from USD3.3 billion.
Net revenue was broadly flat at USD1.08 billion, reflecting higher fees on funds under management and lower performance fees.
Man said it will pay a final dividend of 4.8 cents per share, taking its total dividend to 10.2 cents, slightly up on the 10.1 cents it paid a year earlier.
"Looking forward, the on-going volatility in the markets in which we operate remains very challenging and, accordingly, the risk appetite of our clients might impact flows. However, we now have a more diversified offering and a range of attractive options for growth, which have strengthened the firm and enhanced our resilience as a business," said Manny Roman, Man Group's chief executive.
Shares in Man Group were down 7.6% at 149.20 pence on Wednesday.
By Samuel Agini; [email protected]; @samuelagini
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