<<
- Net income of $309 million; Adjusted net income of $125 million, up
106% from Q2 2006
- Net assets under management of $18.6 billion, up 38% from Q2 2006
- Total inflows of $1.7 billion during Q2 2007, including managed account
inflows and gross fund-based inflows
>>
LONDON, Aug. 3 - -- GLG Partners (GLG), a leading alternative asset
manager, today reported net income of $309 million for the quarter ended June
30, 2007 and $329 million for the first half of 2007. Adjusted net income
(net income less limited partner profit share) was $125 million, up 106%
year-over-year, for the quarter ended June 30, 2007 and $139 million, up 89%
year-over-year, for the first half of 2007.
GLG's net assets under management as of June 30, 2007 reached $18.6
billion (net of assets invested from other GLG managed funds), up 16% from
March 31, 2007 and 38% from June 30, 2006. GLG's gross assets under
management (including assets invested from other GLG managed funds) were $21.5
billion at June 30, 2007, up 15% from March 31, 2007 and 38% from June 30,
2006. A combination of strong performance across the GLG managed funds and
healthy inflows drove the growth in assets under management (AUM) as set forth
below in Table 1.
"The second quarter saw strong performance across the funds we manage, as
well as continued growth in inflows", said Noam Gottesman, Founder, Managing
Director and Co-CEO of GLG. "This strong performance, together with the
recently announced transaction with Freedom Acquisition Holdings and strategic
investments by Istithmar and Sal. Oppenheim, position us well for the future
expansion and growth of our business."
<<
Table 1: Assets Under Management
(USD in millions)
>>
<<
As of June 30,
2007 2006
>>
<<
Gross Fund-Based AUM $ 19,485 $ 14,351
Managed Accounts AUM 1,843 937
Cash and Other Securities 194 339
Gross AUM $ 21,522 $ 15,627
YoY % Change 38 %
Net AUM $ 18,585 $ 13,467
YoY % Change 38 %
>>
<<
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
>>
<<
Opening Gross Fund-Based
AUM $ 17,060 $ 12,934 $ 16,053 $ 11,484
Fund-based inflows (net
of redemptions) 1,393 1,407 1,552 1,613
Fund-based net performance
(gains net of losses) 1,032 10 1,880 1,254
Closing Gross Fund-
Based AUM $ 19,485 $ 14,351 $ 19,485 $ 14,351
>>
<<
% of Opening Gross Fund-
Based AUM
Gross Fund-based inflows
(net of redemptions) 8.2 % 10.9 % 9.7% 14.0 %
Gross Fund-based net
performance (gains net
of losses) 6.0 % 0.1 % 11.7% 10.9 %
>>
<<
Opening Managed Accounts
AUM $ 1,398 $ 505 $ 1,233 $ 335
Inflows (net of
redemptions) 351 536 419 670
Net performance (gains
net of losses) 94 (104) 191 (68)
Closing Managed
Accounts AUM $ 1,843 $ 937 $ 1,843 $ 937
>>
<<
% of Opening Managed
Accounts AUM
Inflows (net of
redemptions) 25.1 % 106.1 % 34.0% 200.0 %
Net Performance (gains
net of losses) 6.7 % (20.6%) 15.5% (20.3%)
>>
<<
Note: Net performance is based on both opening AUM and inflows during the
period and can be influenced by heavy inflows.
Financial Summary
>>
For Q2 2007, net revenues and other income was up 84% to $418 million
compared to $227 million in the same quarter last year, primarily due to
increased management and performance fees as a result of strong inflows and
solid performance across the GLG managed funds. First half 2007 net revenues
and other income increased 77% over the first half of 2006 to $491 million.
Performance fees rose 97% year-over-year in Q2 2007 to $341 million on a
37% rise in average net AUM from the same quarter last year. It is our
practice to recognize performance fees when they crystallize, generally on
June 30 and December 31 of each year. Accordingly, Q2's performance fees
largely reflect first half performance.
Management and administration fees totaled $77 million, or 1.8% of
average net AUM for Q2 2007, increases of 42% and 6 basis points (bps),
respectively, from Q2 2006. For the first half of 2007, management and
administration fees totaled $147 million, or 1.8% of average net AUM,
increases of 49% and 10 bps, respectively, over the first half of 2006.
The total level of comprehensive limited partner profit share,
compensation and benefits ("PSCB") rose by 72% for Q2 2007 to $241 million,
although this represented a reduction of 420 bps to 58% when expressed as a
percentage of revenues for the same period last year. PSCB is a financial
measure not prepared under U.S. generally accepted accounting principles, or
GAAP, and includes limited partner profit share as described below under "Non-
GAAP Financial Measures." Employee compensation and benefits for Q2 2007 fell
by 36% to $57 million compared to $88 million in the same quarter last year,
as certain key employees ceased to be employees when GLG established its
limited partner profit share arrangement at the end of Q2 2006.
Please note that compensation expense and limited partner profit share
tied to fund performance is only recognized when the related performance fees
crystallize, generally on June 30 and December 31 of each year. Consequently,
the portion of Q2's compensation expense and limited partner profit share tied
to performance largely reflects first half performance.
PSCB for the first half of 2007 rose by 64% to $272 million but fell by
roughly 455 bps to 55% when expressed as a percentage of revenues when
compared with the same period a year ago. Employee compensation and benefits
for the first half of 2007 fell by 29% year-over-year to $82 million as a
result of certain key personnel ceasing to be employees when GLG established
its limited partner profit share arrangement at the end of June 2006.
General, administrative, and other expenses for Q2 2007 increased 78%
year-over-year to $28 million but fell slightly as a percentage of revenues to
6.7%. For the first half of 2007, these expenses rose 97% year-over-year to
$54 million, or by 110 bps to 11% when expressed as a percentage of revenues,
reflecting increases in operating costs due to significant growth in the
business as well as certain one-time costs.
"We extended our record of strong performance across the funds we manage
while continuing to build the scale of our operations to accommodate growth",
said Emmanuel Roman, Co-CEO and Managing Director of GLG.
<<
Investor/Analyst Conference Call and Webcast
>>
GLG will be hosting a conference call for investors and analysts today at
11:00 AM EDT (New York City) / 4:00 PM BST (Guernsey/London). The dial-in
number for the live conference call is +1 334 323 6203 in the US or +44 (0)20
7162 0125 in the UK. To access a webcast of the conference call, please
register via GLG's website www.glgpartners.com.
The conference call replay can be accessed by dialing +1 954 334 0342 in
the US or +44 (0)20 7031 4064 in the UK and entering access code No.760644.
The webcast replay of the conference call will also be available on the
Company's website at www.glgpartners.com. Both the dial-in and webcast replay
of the call will be available beginning on August 3, 2007 at 2pm EDT or 7pm
BST until August 13th.
<<
About GLG
>>
GLG, the largest independent alternative asset manager in Europe and one
of the largest in the world, offers its base of long-standing prestigious
clients a diverse range of investment products and account management
services. GLG's focus is on preserving client's capital and achieving
consistent, superior absolute returns with low volatility and low correlations
to both the equity and fixed income markets. Since its inception in 1995, GLG
has built on the roots of its founders in the private wealth management
industry to develop into one of the world's largest and most recognized
alternative investment managers, while maintaining its tradition of client-
focused product development and customer service. As of June 30, 2007, GLG
managed gross AUM of over $21 billion.
<<
Forward-looking Statements
>>
This press release contains statements relating to future results that
are "forward-looking statements" as defined in the Private Securities
Litigation Reform Act of 1995. Actual results may differ materially from those
projected as a result of certain risks and uncertainties. These risks and
uncertainties include, but are not limited to: market conditions for GLG
managed investment funds; performance of GLG managed investment funds, the
related performance fees and the associated impacts on revenues, net income,
cash flows and fund inflows/outflows; the cost of retaining GLG's key
investment and other personnel or the loss of such key personnel; risks
associated with the expansion of GLG's business in size and geographically;
operational risk; litigation and regulatory enforcement risks, including the
diversion of management time and attention and the additional costs and
demands on GLG's resources; risks related to the use of leverage, the use of
derivatives, interest rates and currency fluctuations; costs related to the
proposed acquisition; failure to obtain the required approvals of stockholders
of Freedom Acquisition Holdings, Inc. for the proposed acquisition
transaction; and risks that the closing of the transaction is substantially
delayed or that the transaction does not close, as well as other risks and
uncertainties, including those set forth in the preliminary proxy statement
filed by Freedom with the Securities and Exchange Commission on July 12, 2007.
These forward- looking statements are made only as of the date hereof, and
GLG undertakes no obligation to update or revise the forward-looking
statements, whether as a result of new information, future events or
otherwise.
<<
GLG
Unaudited Combined Statement of Operations
(USD in thousands)
>>
<<
Three Months Ended
June 30,
2007 2006 %Change
>>
Net revenues and other income
<<
Management fees $62,991 $45,679 38%
Performance fees 340,512 172,695 97%
Administration fees 14,036 8,500 65%
Other 471 (271) NM
>>
Total net revenues and other income 418,010 226,603 84%
Expenses
<<
Employee compensation and benefits (56,518) (88,404) (36%)
General, administrative and other (27,979) (15,696) 78%
(84,497) (104,100) (19%)
>>
<<
Income from operations 333,513 122,503 172%
Interest income, net 171 939 (82%)
Income before income taxes 333,684 123,442 170%
Income taxes (25,031) (11,499) 118%
>>
GAAP Net income $308,653 $111,943 176%
<<
Six Months Ended
June 30,
2007 2006 %Change
>>
Net revenues and other income
<<
Management fees $120,334 $82,971 45%
Performance fees 343,032 175,946 95%
Administration fees 26,680 15,921 68%
Other 970 2,023 NM
>>
Total net revenues and other income 491,016 276,861 77%
Expenses
<<
Employee compensation and benefits (81,566) (114,459) (29%)
General, administrative and other (53,743) (27,285) 97%
(135,309) (141,744) (5%)
>>
<<
Income from operations 355,707 135,117 163%
Interest income, net 1,647 2,574 (36%)
Income before income taxes 357,354 137,691 160%
Income taxes (28,286) (13,000) 118%
>>
GAAP Net income $329,068 $124,691 164%
<<
GLG
Unaudited Combined Balance Sheet
(USD in thousands)
>>
<<
As of As of
June 30, December 31,
2007 2006
>>
Assets
<<
Cash and cash equivalents $130,268 $273,148
Investments 154 201
Fees receivable 380,157 251,963
Prepaid expenses and other assets 27,418 25,944
Property and equipment (net of
accumulated depreciation and
amortization of $10,972 and $10,117
respectively) 8,980 6,121
Total Assets $546,977 $557,377
>>
Liabilities and Members' Equity
<<
Current Liabilities
Rebates and sub-administration
fees payable $26,147 $19,146
Accrued compensation and benefits 47,702 102,507
Income taxes payable 29,130 25,094
Distributions payable 70,694 9,310
Accounts payable and other
accruals 16,388 19,716
Other liabilities 3,653 5,100
Total Current Liabilities 193,714 180,873
>>
<<
Non-Current Liabilities
Loan payable 13,000 13,000
Minority Interest 1,958 1,552
Total Non-Current Liabilities 14,958 14,552
>>
<<
Commitments and Contingencies
Total Liabilities 208,672 195,425
>>
<<
Members' Equity
Members' equity 6,354 6,356
Retained Earnings 328,240 352,690
Accumulated other comprehensive
income 3,711 2,906
Total Members' Equity 338,305 361,952
Total Liabilities and Members' Equity $546,977 $557,377
>>
<<
GLG
Non-GAAP Adjusted Net Income for Three and Six Months Ended June
30, 2007 and June 30, 2006
(USD in thousands)
>>
<<
Three Months Ended Six Months Ended
June 30, June 30,
>>
2007 2006 %Change 2007 2006 %Change
<<
Derivation of non-GAAP
adjusted net income
>>
GAAP Net income $308,653 $111,943 176% $329,068 $124,691 164%
<<
Deduct: limited
partner profit share (184,047) (51,530) 257% (190,500) (51,530) 270%
>>
<<
Non-GAAP adjusted net
income $124,606 $60,413 106% $138,568 $73,161 89%
>>
<<
GLG
Non-GAAP Expenses for Three and Six Months Ended June 30, 2007
and June 30, 2006
(USD in thousands)
>>
<<
Three Months Ended
June 30,
2007 2006 %Change
>>
Non-GAAP expenses
<<
GAAP employee compensation and
benefits $(56,518) $(88,404) (36%)
>>
Limited partner profit share (184,047) (51,530) 257%
<<
Non-GAAP Comprehensive limited
partner profit share, compensation
and benefits $(240,565) $(139,934) 72%
>>
<<
GAAP General, administrative and
other (27,979) (15,696) 78%
>>
Non-GAAP total expenses $(268,544) $(155,630) 73%
<<
GLG
Non-GAAP Expenses for Three and Six Months Ended June 30, 2007
and June 30, 2006
(USD in thousands)
>>
<<
Six Months Ended
June 30,
2007 2006 %Change
>>
Non-GAAP expenses
<<
GAAP employee compensation and
benefits $(81,566) $(114,459) (29%)
>>
Limited partner profit share (190,500) (51,530) 270%
<<
Non-GAAP Comprehensive limited
partner profit share, compensation
and benefits $(272,066) $(165,989) 64%
>>
<<
GAAP General, administrative and
other (53,743) (27,285) 97%
>>
Non-GAAP total expenses $(325,809) $(193,274) 69%
<<
Non-GAAP Financial Measures
GLG presents certain financial measures that are not prepared in
accordance with U.S. generally accepted accounting principals, or GAAP, in
addition to financial results prepared in accordance with GAAP.
>>
<<
Comprehensive Limited Partner Profit Share, Compensation and Benefits
("PSCB"): GLG's management assesses its personnel-related expenses based
on the measure "non-GAAP comprehensive limited partner profit share,
compensation and benefits", or non-GAAP PSCB. This non-GAAP financial
measure reflects GAAP employee compensation and benefits, adjusted to
include the limited partner profit shares.
>>
<<
Beginning in mid-2006, GLG entered into partnerships with a number of its
key personnel who ceased to be employees and instead became holders of
direct or indirect limited partnership interests in certain GLG entities.
These individuals continue to provide services to GLG, either directly or
through two limited liability partnerships. Through their partnership
interests, these key individuals are entitled to profit shares in the
form of priority distributions paid as partnership draws. In addition
they may be entitled to an additional discretionary limited partner
profit share. The key personnel that are participants in the limited
partner profit share arrangement described above do not receive salaries
or discretionary bonuses from GLG.
>>
<<
Under GAAP, limited partner profit share cannot be presented as employee
compensation expense. However, management believes that it is more
appropriate to treat limited partner profit share as expense when
considering business performance because it reflects the cost of the
services provided to GLG by these participants in the limited partner
profit share arrangement. As a result, GLG presents the measure non-GAAP
PSCB to show the total cost of the services provided to GLG by both
participants in the limited partner profit share arrangement and
employees. For purposes of this non-GAAP financial measure, GLG
recognizes the limited partner profit share in the period in which the
revenues related to the limited partner profit share are recognized,
rather than the period in which the limited partner profit share
distributions are made.
>>
<<
Non-GAAP PSCB is not a measure of financial performance under GAAP and
should not be considered as an alternative to GAAP employee compensation
and benefits.
>>
<<
Adjusted Net Income: GLG's management assesses the underlying performance
of its business based on the measure ''adjusted net income'', which
adjusts for the difference between GAAP employee compensation and
benefits and non-GAAP PSCB as discussed above. Adjusted net income is not
a measure of financial performance under GAAP and should not be
considered as an alternative to GAAP net income as an indicator of GLG's
operating performance or any other measures of performance derived in
accordance with GAAP.
>>
<<
GLG is providing these non-GAAP financial measures to enable investors,
securities analysts and other interested parties to perform additional
financial analysis of GLG's personnel-related costs and its earnings from
operations and because it believes that they will be helpful to investors
in understanding all components of the personnel-related costs of GLG's
business. GLG's management believes that the non-GAAP financial measures
also enhance comparisons of GLG's core results of operations with
historical periods. In particular, GLG believes that the non-GAAP
adjusted net income measure better represents profits available for
distribution to stockholders than does GAAP net income.
>>
<<
Investors should consider these non-GAAP financial measures in addition
to, and not as a substitute for, or superior to, measures of financial
performance prepared in accordance with GAAP. The non-GAAP financial
measures presented by GLG may be different from non-GAAP financial
measures used by other companies.
>>
<<
GLG
Financial Supplement
>>
<<
(USD in millions)
1Q 2007 2Q 2007 1H 2007 LTM(1)
>>
Gross AUM 18,655 21,522 21,522 21,522
Net AUM 16,085 18,585 18,585 18,585
Average net AUM 15,620 17,335 16,608 15,402
(USD in thousands)
Management fees 57,343 62,991 120,334 223,636
Performance fees 2,521 340,512 343,032 561,827
Administration fees 12,645 14,036 26,680 45,573
Other 498 472 970 3,985
<<
Total net revenues and other
income 73,007 418,010 491,016 835,021
>>
<<
Employee compensation
and benefits (25,048) (56,518) (81,566) (135,493)
>>
<<
General, administrative
and other (25,764) (27,979) (53,743) (94,862)
>>
Net interest income 1,475 171 1,647 3,730
Income tax expense (3,255) (25,031) (28,286) (44,510)
GAAP net income 20,414 308,654 329,068 563,886
<<
Deduct: Limited partner
profit share (6,453) (184,047) (190,500) (340,420)
>>
Non-GAAP adjusted net income (2) 13,962 124,607 138,568 223,466
<<
Management fees and Administration
fees/ Avg. net AUM(3) 1.8% 1.8% 1.8% 1.7%
Total net revenues and other
income /Avg. net AUM(3) 1.9% 9.6% 5.9% 5.4%
Employee compensation and benefits
and Limited partner profit share/
Total net revenues and other
income 43% 58% 55% 57%
General, administrative and other
expenses/ Total net revenues and
other income 35% 7% 11% 11%
Non-GAAP adjusted net income/Total
net revenues and other income 19% 30% 28% 27%
Effective income tax rate 19% 17% 17% 17%
>>
(1) LTM period is July 1, 2006 to June 30, 2007.
(2) See "Non-GAAP Financial Measures" for further detail.
(3) Ratios annualized for 1Q, 2Q and 1H 2007.
<<
GLG
Composition of Assets Under Management Supplement
($ millions)
>>
<<
As of March 31, As of June 30,
2007 2006 2007 2006
>>
<<
Alternative strategy $11,200 $7,883 $12,826 $9,059
Long-only 3,882 3,667 4,432 3,730
Internal FoHF 1,404 937 1,627 1,086
External FoHF 575 447 599 477
Gross Fund-Based AUM 17,060 12,934 19,485 14,351
Managed accounts 1,398 505 1,843 937
Cash 197 395 194 339
Total Gross AUM 18,655 13,834 21,522 15,627
Less: internal FoHF investments in
GLG funds (1,372) (940) (1,642) (1,020)
Less: external FoHF investments in
GLG funds (53) - (56) (13)
Less: alternatives fund-in-fund
investments (1,145) (1,082) (1,239) (1,127)
Net AUM $16,085 $11,811 $18,585 $13,467
>>
<<
As of March 31, As of June 30,
2007 2006 2007 2006
>>
<<
Gross AUM $18,655 $13,834 $21,522 $15,627
YoY % Change 35% 38%
Net AUM 16,085 11,811 18,585 13,467
YoY % Change 36% 38%
>>
<<
Three Months Three Months Six Months
Ended Ended Ended
March 31, June 30, June 30,
2007 2006 2007 2006 2007 2006
>>
<<
Opening Gross Fund-
Based AUM $16,053 $11,484 $17,060 $12,934 $16,053 $11,484
Fund-based inflows
(net of
redemptions) 160 206 1,393 1,407 1,552 1,613
Fund-based net
performance (gains
net of losses) 848 1,244 1,032 10 1,880 1,254
Closing Gross Fund-
Based AUM $17,060 $12,934 $19,485 $14,351 $19,485 $14,351
>>
<<
% of Opening Gross
Fund-Based AUM
Gross Fund-based
inflows (net of
redemptions) 1.0% 1.8% 8.2% 10.9% 9.7% 14.0%
Gross Fund-based net
performance (gains
net of losses) 5.3% 10.8% 6.0% 0.1% 11.7% 10.9%
>>
<<
Opening Managed
Accounts AUM $1,233 $335 $1,398 $505 $1,233 $335
Inflows (net of
redemptions) 68 134 351 536 419 670
Net performance
(gains net of
losses) 97 36 94 (104) 191 (68)
Closing Managed
Accounts AUM $1,398 $505 $1,843 $937 $1,843 $937
>>
<<
% of Opening Managed
Accounts AUM
Inflows (net of
redemptions) 5.5% 40.0% 25.1% 106.1% 34.0% 200.0%
Net Performance
(gains net of
losses) 7.9% 10.7% 6.7% (20.6%) 15.5% (20.3%)
>>
<<
Note: Net performance is based on both opening AUM and inflows during the
period and can be influenced by heavy inflows.
>>
