AGM 2021

May 7, 2021

Slides

Think we're live. Good morning, ladies and gentlemen. It's my pleasure to welcome you to the Annual General Meeting of Mann Group for 2021. Because of travel restrictions, I have not been able to attend the meeting in person today. As you may know from last year, we are legally required to appoint a chair as the formal part of the meeting, and that chair has to be in actual physical attendance at the meeting. I've therefore asked Luke Ellis, our CEO, to chair the formal part of the meeting in due course. We will be answering questions from shareholders later in the proceedings. If you wish to raise a question, please type it into the Q and A function that you'll find on the right hand side of your screen. And please ensure that the question is sent to all panelists. Otherwise, we may not see it and it may be missed. Also, when posing your questions, please remember to type in your full name before the question. As with our usual AGM protocol, only shareholders, proxy holders and corporate representatives are permitted to raise questions. As previously advised, we invited shareholders to vote by proxy in advance of this AGM. And when we reach the formal part of the meeting, Luke will advise you of the proxy votes we've already received. And as usual, we will release a stock exchange announcement confirming the final votes shortly after the end of the meeting. Few events in the past 75 years have had as profound an impact on our communities, our economies and our markets as the COVID-nineteen pandemic. Looking back on 2020, I'm really proud of how we at Mann Group have responded. Despite all the market volatility, the public health emergency and more than 99% of the firm's staff working remotely for most of the year, our team has not missed a beat. It's continued to deliver for our clients and for our shareholders throughout. Above and beyond their professionalism and commitment, I'm impressed at how the whole firm has come together to support and look after each other in these difficult and testing times. Now before handing over to Luke, who will give you an overview of how the business is doing, I'd like to step back for a moment and reflect on what I believe to be a fundamental strength of Mangroup compared with the wider industry. We have been and will always be a technology driven investment manager, a global leader in applying technology to the process of investment management. The tremendous wealth of knowledge, Skills and experience of our people across varied and broad fields of technology is what gives us the edge. It enables us to harness vast sources of data to drive investment decision making. Technology enables us to succeed in generating investment outperformance for our clients, to achieve the highest levels of efficiency in trading and execution and to manage risks across all of our operations. Technology doesn't just work in isolation. We are, of course, at heart of people business. Our outstanding people make our technology, And in turn, technology enables our people to be much more effective in everything they do. That combination of talent and tech gives us a sustainable competitive advantage and allows us to deliver for our clients, which drive success and growth in the business. Luc will now give you an update on how the business is performing. Luc, over to you. Thank you, John, and thank you to everybody who's joined the meeting today. We appreciate your support. And hopefully, this time next year, we'll be able to meet in person. This morning, I plan to provide a recap on both Q1 2021 and the full year of 2020, followed by a focus on the developments in the business and some of our key achievements in the last 5 years since I became CEO. For Q1 2020, I was pleased to report another quarter of growth With funds under management adding GBP 3,400,000,000 to reach a new record of GBP 127,000,000,000 Our growth reflects both positive investment performance for our clients and continuing net inflows and thereby underscores the strength of our business model. Client engagement has been strong so far this year. And as a result, we expect to see increased inflows in the coming quarters. Longer term, it's our state of the art technology, as John talked about, our extraordinary people And the strength of those client relationships that will give that give me great confidence for the future of the firm. 2020 was a year with significant and at times unprecedented volatility in financial markets. In March, markets had one of their steepest and fastest falls on record, followed in April by the steepest of rallies. Crucially, we were able to respond at the speed, circumstances required and to demonstrate the benefits of our proactive risk management and super efficient trading capabilities. And this enabled us to rapidly adjust positioning To the changing markets and thereby deliver for our clients in the time of real need. The dramatic improvement in sentiment Towards the end of the year, after the first vaccines were approved, particularly benefited our long only strategies, But also very importantly, our momentum strategies. Against this background, we grew our Funds under management to €123,600,000,000 at the end of 2020, €5,900,000,000 more than at the start of the year. We saw net inflows of $1,800,000,000 for the year, with inflows in the second half coming in at an annualized 6%. The AHL target risk family of products continues to be an important contributor. It passed the €10,000,000,000 funds under management mark during the year. And at the end of March 2021, it has actually reached €11,800,000,000 and it continues to have great traction with clients. Despite ending the year at Record Fund, because of the market events of March, the average funds under management for 2020 was actually less And the 2019 average, resulting in a reduction in our management fee revenue in the year to £730,000,000 It's really important to note though that the strong momentum we saw coming into year end in both our performance, Which, of course, compounds our funds under management and also inflows, resulted in run rate net management fees Of €815,000,000 at the 1st January, so well ahead of the year's average. Meanwhile, overall management Fee profit grew in 2020 by 6%, supported by our strong cost discipline in the difficult year. Performance fees were reasonable, helped by what feels like a regular December performance spurt, But down from the very strong year in 2019, and this led to total earnings per share falling year on year as a result. As you know, our robust business model and its strong cash flow generation allowed us to return about $250,000,000 to you, our shareholders, in 2020. The full year dividend was set at €0.106 per share And marks the baseline for the new progressive dividend policy. This has resulted in a final dividend of $0.057 per share, Equating to 4.1p per share. It's hard on a single slide To give you a feel of how ingrained technology is in our culture and in everything we do, but it sits at the heart of the firm. The depths of our experience and cumulative volume of our know how is exceptional. I don't want to sound arrogant here, but really there is no doubt we are orders of magnitude ahead of most asset managers and we're focused on competing with the top 3 or 4 players globally. The investment we've made and the culture we built around it gives us a huge and persistent competitive edge. We are focusing on managing the firm responsibly. Culture is critical to any organization. We've put a lot of time and energy into making sure that we're an organization where great people feel they belong and can be proud to work And an organization that truly reflects our values. While culture is intangible and, of course, hard to measure, You build it with very tangible steps and actions, and the impact of a good strong culture is very meaningful to all of our stakeholders And especially shareholders. Here, as you could see, are a range of these actions and commitments, Both for us as a PLC and also for us as an investor, we have a clear, consistent and credible approach at a firm wide level It's a responsible investment. At the end of 2020, we had $43,000,000,000 of ESG integrated funds Across the business. We're committed to reducing our absolute carbon footprint And again, making consistent, clearly disclosed progress. From 2020, we've offset 100% of any remaining emissions by supporting certified offset projects. But we're pleased to report that we're on track to meet our emissions reductions target set to 2022, And we have a commitment to achieving net zero carbon emissions in our global workplaces by 2,030. Our charitable funding efforts are primarily focused on promoting education in the markets in which we operate And I'm mostly run through the MAN Charitable Trust in the UK and the MAN US Charitable Foundation. Our people also Importantly, volunteer significant time to help those charities where we donate and beyond, and we give them time off to do this. And this year, we invested £10,000,000 into our U. K. Community housing strategy to accelerate the provision of affordable Housing, which is particularly needed for many of the key workers we've all come to rely on this year that support the communities in which we live. Since I became CEO, we've made it a big priority of the firm to adopt an outward mindset To listen and to respond to our clients. They want a diversified range of product and new innovative solutions to help them meet their Ever changing goals. The breadth and quality of what we do is compelling for our clients. It allows us to be broadly relevant to a wide range of clients across the world and importantly, to remain relevant to those clients throughout the market cycle. What you see from these charts is recognition from some of the world's largest and most sophisticated investors That we've built the products they need and want. Since the end of 2015, we've seen $26,000,000,000 of net inflows from clients. And importantly, the number of clients for whom we manage more than €1,000,000,000 has grown from 12 to 22. When clients invest in one product with us, they often make a second or third or fourth investment too, which creates a real partnership with the client And creates real value for our shareholders. You can see here about €88,000,000,000 of our assets are from clients invested in 2 or more strategies. When you deliver for your clients, they reward you with a new business that drives growth for shareholders. MANGRUB's business has been through a transformation. Many of you have been our partners along the way. And this has meant at times in the past 5 years, the runoff of our legacy structured products business with its high but outdated fee model Required us to run at double time in the rest of the business just to stand still. That transformation is now complete, And we've reached an exciting inflection point. This is the 1st year with no guaranteed product revenues to shrink away anymore. And therefore, the growth in our core business will feed fully into our overall profitability. Our focus on building client relationships And delivering these innovative products really works. Compared to 5 years ago, our core net management fees, so stripping out Structured products and other things that are no longer part of the firm has grown 23% to that €815,000,000 I mentioned earlier. Importantly, in that time, we've grown our core management fee earnings per share By 98%. We didn't quite get a double, but we got pretty close. We've also grown our performance fee optionality, Broadly in line with our assets growth, as I've said it before, and I'll say it again and I will keep repeating, Performance fees are a very valuable earnings stream for shareholders. We've earned $1,100,000,000 in performance fees over the last 5 years. They are a valuable part of our cash flows over time. And if the stock market prices those earnings cheaply, We've been very happy to use these performance fees to buy our own shares and thereby drive earnings per share growth and value for shareholders that way. And that brings me neatly to the next slide. At our full year results, we announced a change to our dividend policy while maintaining our disciplined approach to overall capital allocation. Our new progressive dividend policy Reflects our confidence in our strategy and our confidence in our future growth and the resilience of our overall business model as demonstrated in 2020. We recognize the importance of dividends to shareholders, and we're confident that this revised dividend policy We'll deliver sustained dividend growth over the years ahead. Our overall capital allocation policy beyond dividends Remains unchanged. We expect to generate material excess capital above the dividend. Any excess capital will be used to augment growth either via selected acquisitions should we find sensibly priced opportunities Or return to shareholders via share buybacks or special dividends as appropriate. 2020 will forever be remembered as the year in which the world became first gripped by a pandemic. The entire Board has been hugely impressed with how the firm pulled together to support each other and our clients in these difficult times. The fact we ended 2020 with record funds under management is a testament to our great people And our strong relationships. The combination of these relationships, our investment in that talent and particularly in the technology And the overall demand for alternatives in alpha sets us apart from our competition and will continue to drive our growth in the future. With that, we've now come to the formal part of the meeting. And as John said earlier, As he's stuck in the U. S, I will be chairing this part of the meeting today. Now, before moving on to the Q and A session, I'd just like to introduce the formal resolutions to be considered at the meeting. After the question period, we will display the proxy votes And then close the meeting. Full details and an explanation of all the resolutions are set out in the notice of meeting you should have received. And with the consent of the meeting, I will take that notice as read. Thank you. I take that as read. If you have any questions, please type them into the Q and A function on the right hand side of your screen now. Please ensure you send these to all panelists. Otherwise, we might not be able to see them. When typing your questions, Please remember to state your full name before your question. I'd like to remind you that only shareholders, proxy holders And corporate representatives are permitted to ask questions at this meeting. Please also note that only questions relating to the company's business activities Or to the resolutions before the meeting should be asked. And finally, in order to give all shareholders an opportunity to ask questions, Please restrict yourself to a maximum of 2 per shareholder in the first instance. And if time allows, as it looks like it might do, I'd be happy to come back for any further questions later on. So with that, let's get to the first question, which was sent in advance. I will read this out. And this question relates to the management of physical risks To businesses arising from climate change. And the question goes, while it's encouraging to read in the annual report that the company is aware of and take Steps to manage physical risks, including business or markets disruption following severe weather, many companies are not yet Able to display this level of awareness. Most businesses now explain how they're taking steps to reduce emissions or manage transition risks, But fewer display appropriate plans for the management of physical risks to their own business. And so the question goes, What do we do to work with our investee companies to make sure that they have appropriate risk management and climate adaptation plans in place? Look, I think this is a very important area. And we make a significant effort To engage with the companies that we invest with, to understand what they're doing, and particularly around ESG questions, It really is about active stewardship. It's about engaging with CEOs and CFOs As well as being part of a number of industry wide initiatives to try to get standardization around reporting. So whether that be Climate Action 100, where we're a member, Sustainable Accounting Standards Board, FRAG, which I think stands for European Financial Reporting Advisory Group Steering Committee and so on. There's a lot of different groups in ESG. One of the things we found though is some companies don't really understand themselves about these risks, and so we're having to explain things. And in fact, our most recent hire is somebody who's an academic in the climate sort of field From a leading university in the U. S. Who can come in and help us with our modeling of actual climate effects. And then we can share that with our investee companies and try to make sure that they're looking at things. Hopefully, that helped answer that question. Now we've either been very lucky and that my explanation has been brilliant or we're having trouble with the Q and A. But as of now, we don't have any other questions. I will give people a few seconds to see if anybody else wants to type 1 in. And maybe one of my colleagues could type in a question just to make sure that the system is working. Yes, system seems to be working. So it looks like Everybody is feeling quiet about questions today. And so I guess So at that point, we will close the question and answer session. Thank you very much. So now we'll move on to the formal voting part of the meeting. The resolutions which are set out in the notice of the meeting will now be subject to a poll vote. This voting method allows all shareholders, not just those present, to exercise their votes. Shareholders were invited to vote by proxy In advance of the meeting, and I have discretion to vote a number of shares as Chair of the meeting. On the next couple of slides, you'll see the proxy votes received in advance of the meeting. Based on the proxy votes and the votes in my hand today, All resolutions have been passed with the exception of Resolution 20, which relates to the disapplication of preemption rights authority In connection with an acquisition or specific capital investment. The resolution is in line with the Investment Share management guidelines and their pre emption group statement of principles. However, as a special resolution, It requires a 75% majority. It didn't receive sufficient support to be passed. We understand that certain shareholders may have concerns in this area. And as such, we will continue our dialogue with these shareholders And take their views into account when considering our future plans. This concludes the formal business of the 2021 Annual General Meeting. I think a rapid record for speed. The final votes will now be collated, and the results will be announced to the market and posted on our website later on today. Thank you for joining our AGM virtually this year, and we look forward to seeing you hopefully in person Or virtually again next year. Keep safe out there and thank you very much.