2007'11.23.Fri
GLG Partners Reports Third Quarter 2007 Earnings
October 25, 2007
- Net Income of USD46 Million; Adjusted Net Income of
USD29 Million, Up
160% From Q3 2006
- Net Assets Under Management of USD20.5 Billion, Up
49% From Q3 2006
- Total Inflows of USD1.8 Billion During Q3 2007,
Including Managed
Account Inflows and Gross Fund-Based Inflows
LONDON, Oct. 24 /Xinhua-PRNewswire/ -- GLG Partners
(GLG), (Bloomberg: 493048Z LN) a leading alternative asset
manager, today reported net income of USD46 million for the
quarter ended September 30, 2007 and USD375 million for the
first nine months of 2007. Adjusted net income (net income
less limited partner profit share) was USD29 million, up
160% year-over-year, for the quarter ended September 30,
2007 and USD168 million, up 99% year-over-year, for the
first nine months of 2007.
GLG's net assets under management as of September 30,
2007 reached USD20.5 billion (net of assets invested from
other GLG managed funds), up 10% from June 30, 2007 and 49%
from September 30, 2006. GLG's gross assets under management
(including assets invested from other GLG managed funds)
were USD23.6 billion at September 30, 2007, up 10% from
June 30, 2007 and 48% from September 30, 2006. A
combination of performance and healthy inflows drove the
growth in assets under management (AUM) as set forth below
in Table 1.
"Our diversified model continued to work in the
volatile markets of the summer, showing particular strength
in Emerging Markets, led by Greg Coffey, and in the European
strategies, led by GLG Co-Founder, Pierre Lagrange, as well
as substantial net inflows broadly in our alternative
strategies," said Noam Gottesman, Co-Founder, Managing
Director and Co-CEO of GLG. "We are looking forward to
the upcoming completion of the reverse acquisition
transaction with Freedom Acquisition Holdings (Amex: FRH)
(Amex: FRH.U)
(Amex: FRH.WS) (Bloomberg: FRH/U US) ("Freedom")
in the coming weeks and remain excited about the prospects
for the future expansion and growth of our business."
Table 1: Assets Under Management
(USD in millions)
As of September
30,
2007
2006
Gross Fund-Based AUM USD 21,524 USD
14,519
Managed Accounts AUM 1,905
1,042
Cash and Other Securities 164
372
Gross AUM USD 23,593 USD
15,932
YoY % Change 48%
Net AUM USD 20,466 USD
13,718
YoY % Change 49%
Three Months Ended
Nine Months Ended
September 30,
September 30,
2007 2006
2007 2006
Opening Gross
Fund-Based AUM: USD 19,485 USD 14,351 USD
16,053 USD 11,484
Fund-based inflows
(net of redemptions): 1,798 (72)
3,350 1,541
Fund-based net
performance (gains
net of losses): 241 240
2,121 1,494
Closing Gross
Fund-Based AUM: USD 21,524 USD 14,519 USD
21,524 USD 14,519
% of Opening Gross Fund-Based AUM
Gross Fund-based
inflows (net
of redemptions): 9.2% (0.5%)
20.9% 13.4%
Gross Fund-based net
performance (gains
net of losses): 1.2% 1.7%
13.2% 13.0%
Opening Managed
Accounts AUM: USD 1,843 USD 937 USD
1,233 USD 335
Inflows (net
of redemptions): 38 96
457 766
Net performance
(gains net of losses): 24 8
215 (60)
Closing Managed
Accounts AUM: USD 1,905 USD 1,042 USD
1,905 USD 1,042
% of Opening Managed Accounts AUM
Inflows
(net of redemptions): 2.1% 10.3%
37.1% 228.8%
Net Performance
(gains net of losses): 1.3% 0.9%
17.5% (17.9%)
Note: Net performance is based on both opening AUM and
inflows during the period and can be influenced by heavy
inflows and fluctuations in currencies.
Financial Summary
For Q3 2007, total net revenues and other income was up
79% to USD103 million compared to USD57 million in the same
quarter last year, primarily due to increased management
fees as a result of performance and strong inflows across
the GLG managed funds. For the first nine months of 2007,
total net revenues and other income increased 78% over the
first nine months of 2006 to USD594 million.
Performance fees were immaterial in Q3 2007 as it is
our practice to recognize performance fees when they
crystallize, generally on June 30 and December 31 of each
year. Accordingly, when Q4's performance fees are reported
they will reflect crystallized second half performance.
Management and administration fees totalled USD95
million or 1.9% of average net AUM for Q3 2007, increases
of 69% and 29 basis points (bps), respectively, from the
same quarter in 2006. For the first nine months of 2007,
management and administration fees totalled USD242 million,
or 1.8% of average net AUM, increases of 56% and 16 bps,
respectively, over the first nine months of 2006. Other
income of USD7 million reflects primarily currency related
gains on cash held on our balance sheet during Q3 2007.
The total level of comprehensive limited partner profit
share, compensation and benefits ("PSCB") rose by
60% for Q3 to USD46 million. This is down by 539 bps to 45%
when expressed as a percentage of revenues, versus 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 Q3
2007 increased USD25 million over the same quarter last
year to USD29 million primarily due to the reversal in Q3
2006 of selected employee compensation and benefits
accruals as certain key personnel ceased to be employees
and became participants in the limited partner profit share
arrangement.
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. When Q4
is ultimately reported, the portion of compensation expense
and limited partner profit share tied to performance will
reflect crystallized second half performance as well as any
adjustments to amounts accrued in the first half.
PSCB for the first nine months of 2007 increased by 63%
to USD318 million but fell by roughly 471 bps to 54% when
expressed as a percentage of revenues when compared with
the same period a year ago. Employee compensation and
benefits for the first nine months of 2007 fell by 6%
year-over-year to USD111 million as a result of certain key
personnel ceasing to be employees when GLG established its
limited partner profit share arrangement in 2006.
General, administrative, and other expenses for Q3 2007
increased 56% to USD26 million year-over-year, but fell 372
bps as a percentage of revenues to 25%. For the first nine
months of 2007, these expenses rose 82% year-over-year to
USD80 million or by 29 bps to 13% 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 recognized in the first half of
2007.
"Our risk management and controls infrastructure
performed well in what proved to be a turbulent period for
capital markets globally", said Emmanuel Roman, Co-CEO
and Managing Director of GLG. "Furthermore, our
operations continue to scale and we are encouraged by the
initial momentum with our new strategic partners, Istithmar
and Sal. Oppenheim."
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 +1-866-238-1665 in the US or
+44(0)207-15-32-010 in the UK. To access a webcast of the
conference call, please register via GLG's website
http://www.glgpartners.com.
The conference call replay can be accessed by dialling
+1-888-266-2081 in the US or +1-703-925-2533 in the UK and
entering access code #1156360. The webcast replay of the
conference call will also be available on the Company's
website at http://www.glgpartners.com. Both the dial-in and
webcast replay of the call will be available beginning on
October 24, 2007 at 2pm EST or 7pm BST until November 7,
2007.
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 September 30, 2007,
GLG managed gross AUM of over USD23 billion.
Forward-looking Statements
This press release contains statements relating to
future results that are forward-looking statements. 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 definitive proxy statement filed by
Freedom with the Securities and Exchange Commission on
October 11, 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
September
30,
2007
2006 % Change
Net revenues and other
income
Management fees $ 78,558 $
47,010 67%
Performance fees 803
1,102 NM
Administration fees 16,306
9,128 79%
Other 6,905
- NM
Total net revenues and other
income 102,572
57,240 79%
Expenses
Employee compensation and
benefits (28,959)
(3,735) NM
General, administrative and
other (25,891)
(16,576) 56%
(54,850)
(20,311) 170%
Income from operations 47,722
36,929 29%
Interest income, net 3,048
1,029 196%
Income before income taxes 50,770
37,958 34%
Income taxes (4,735)
(1,803) 163%
GAAP Net income $ 46,035 $
36,155 27%
Nine Months
Ended
September
30,
2007
2006 % Change
Net revenues and other
income
Management fees $ 198,892 $
129,981 53%
Performance fees 343,835
177,047 94%
Administration fees 42,986
25,050 72%
Other 7,875
1,883 318%
Total net revenues and other
income 593,588
333,961 78%
Expenses
Employee compensation and
benefits (110,526)
(118,194) NM
General, administrative and
other (79,634)
(43,721) 82%
(190,160)
(161,915) NM
Income from operations 403,428
172,046 134%
Interest income, net 4,694
3,603 30%
Income before income taxes 408,122
175,649 132%
Income taxes (33,020)
(14,803) 123%
GAAP Net income $ 375,102 $
160,846 133%
GLG
Combined Balance Sheet
(USD in thousands)
As of
As of
September December
30,
31,
2007
2006
(unaudited)
Assets
Cash and cash equivalents $
391,732 $ 273,148
Investments
163 201
Fees receivable
40,687 251,963
Prepaid expenses and other assets
32,647 25,944
Property and equipment (net of accumulated
depreciation and amortization of $11,669
and $10,117 respectively)
8,966 6,121
Total Assets $
474,195 $ 557,377
Liabilities and Members' Equity
Current Liabilities
Rebates and sub-administration
fees payable $
19,473 $ 19,146
Accrued compensation and benefits
63,199 102,507
Income taxes payable
19,038 25,094
Distributions payable
71,311 9,310
Accounts payable and other accruals
14,753 19,716
Other liabilities
3,654 5,100
Total Current Liabilities
191,428 180,873
Non-Current Liabilities
Loan payable
13,000 13,000
Minority Interest
2,031 1,552
Total Non-Current Liabilities
15,031 14,552
Commitments and Contingencies
- -
Total Liabilities
206,459 195,425
Members' Equity
Members' equity
6,843 6,356
Retained Earnings
257,238 352,690
Accumulated other comprehensive income
3,655 2,906
Total Members' Equity
267,736 361,952
Total Liabilities and Members' Equity $
474,195 $ 557,377
GLG
Non-GAAP Adjusted Net Income for the Three and Nine Months
Ended September 30, 2007 and September 30, 2006
(USD in thousands)
Three Months Ended Nine
Months Ended
September 30, %
September 30, %
2007 2006 Change 2007
2006 Change
Derivation of
non-GAAP
adjusted net
income
GAAP Net income $ 46,035 $ 36,155 27% $ 375,102
$ 160,846 133%
Deduct: limited
partner profit
share (17,000) (25,000) (32%)
(207,500) (76,530) 171%
Non-GAAP
adjusted net
income $ 29,035 $ 11,155 160% $ 167,602
$ 84,316 99%
GLG
Non-GAAP Expenses for the Three and Nine Months Ended
September 30, 2007 and September 30, 2006
(USD in thousands)
Three Months Ended Nine
Months Ended
September 30, %
September 30, %
2007 2006 Change 2007
2006 Change
Non-GAAP
expenses
GAAP employee
compensation
and benefits $ (28,959) $ (3,735) $
(110,526) $ (118,194)
Limited
partner
profit share (17,000) (25,000)
(207,500) (76,530)
Non-GAAP
Comprehensive
limited
partner
profit share,
compensation
and benefits $ (45,959) $ (28,735) 60% $
(318,026) $ (194,724) 63%
GAAP General,
administrative and
other (25,891) (16,576) 56%
(79,634) (43,721) 82%
Non-GAAP
total
expenses $ (71,850) $ (45,311) 59% $
(397,660) $ (238,445) 67%
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) Q3 2007 Q2 2007 Q3 2006
LTM(1) YTD(2)
Gross AUM 23,593 21,522 15,932
23,593 23,593
Net AUM 20,466 18,585 13,718
20,466 20,466
Average
net AUM 19,533 17,343 13,592
16,805 17,576
(USD in thousands)
Management
fees 78,558 62,991 47,010
255,184 198,892
Performance
fees(3) 803 340,512 1,102
561,527 343,835
Administration
fees 16,306 14,036 9,128
52,751 42,986
Other 6,905 472 -
10,891 7,875
Total net revenues
and other income 102,572 418,010 57,240
880,353 593,588
Employee
compensation and
benefits (28,959) (56,518) (3,735)
(160,717) (110,526)
General,
administrative
and other (25,891) (27,979) (16,576)
(104,177) (79,634)
Net interest
income 3,048 171 1,029
5,749 4,694
GAAP net income
before taxes 50,770 333,685 37,958
621,208 408,122
Income tax
expense (4,735) (25,031) (1,803)
(47,443) (33,020)
GAAP net income
after taxes 46,035 308,654 36,155
573,765 375,102
Limited
partner profit
share (17,000) (184,047) (25,000)
(332,420) (207,500)
Non-GAAP adjusted
net income (4) 29,035 124,607 11,155
241,345 167,602
Management fees and
Administration fees/
Avg. net AUM(5) 1.9% 1.8% 1.7%
1.8% 1.8%
Total net revenues
and other income
/Avg. net AUM(5) 2.1% 9.6% 1.7%
5.2% 4.5%
Employee compensation
and benefits and
limited partner profit
share/ Total net
revenues and other
income 45% 58% 50%
56% 54%
General, administrative
and other expenses/
Total net revenues and
other income 25% 7% 29%
12% 13%
Non-GAAP adjusted net
income/Total net
revenues and other
income 28% 30% 19%
27% 28%
Effective income tax
rate 14% 17% 14%
16% 16%
(1) LTM period is Oct 1, 2006 to Sept 30, 2007.
(2) YTD period is Jan 1, 2007 to Sept 30, 2007.
(3) Performance fees are recognised when they
crystallize, generally on
June 30 and December 31 each year. As a result, the
performance fee
revenues do not reflect revenues from
uncrystallised performance fees
during Q1 and Q3.
(4) See "Non-GAAP Financial Measures" for
further detail.
(5) Ratios annualized for Q3 2006 as well as Q2 and Q3
2007.
Composition of Assets Under Management Supplement
(USD in millions)
As of YOY As of
YOY Qtr on Qtr
June 30, % September 30,
% % Change
2007 2006 Change 2007 2006
Change Q3 Q3
2007 2006
Alternative
strategy $ 12,826 $ 9,059 42% $ 14,713 $
9,184 60% 15% 1%
Long-only 4,432 3,730 19% 4,561
3,735 22% 3% 0%
Internal
FoHF 1,627 1,086 50% 1,651
1,089 52% 1% 0%
External
FoHF 599 477 26% 598
511 17% 0% 7%
Gross
Fund-Based
AUM 19,485 14,351 36% 21,524
14,519 48% 10% 1%
Managed
accounts 1,843 937 97% 1,905
1,042 83% 3% 11%
Cash 194 339 (43%) 164
372 (56%) (16%) 10%
Total Gross
AUM 21,522 15,627 38% 23,593
15,932 48% 10% 2%
Less:
internal
FoHF
investments
in GLG
funds (1,642) (1,020) 61% (1,653)
(1,091) 52% 1% 7%
Less:
external
FoHF
investments
in GLG
funds (56) (13) 343% (55)
(48) 15% (1%) 281%
Less:
alternatives
fund-in-fund
investments (1,239) (1,127) 10% (1,419)
(1,075) 32% 14% (5%)
Net AUM $ 18,585 $ 13,467 38% $ 20,466 $
13,718 49% 10% 2%
Three Months Ended Three Months Ended
Nine Months
June 30, September 30,
Ended September 30,
2007 2006 2007 2006
2007 2006
Opening
Gross
Fund-Based
AUM $ 17,060 $ 12,934 $ 19,485 $ 14,351
$ 16,053 $ 11,484
Fund-based
inflows (net
of
redemptions) 1,393 1,407 1,798 (72)
3,350 1,541
Fund-based
net
performance
(gains net
of losses) 1,032 10 241 240
2,121 1,494
Closing
Gross
Fund-Based
AUM $ 19,485 $ 14,351 $ 21,524 $ 14,519
$ 21,524 $ 14,519
% of Opening
Gross
Fund-Based
AUM
Gross
Fund-based
inflows (net
of
redemptions) 8.2% 10.9% 9.2% (0.5%)
20.9% 13.4%
Gross
Fund-based
net performance
(gains net of
losses) 6.0% 0.1% 1.2% 1.7%
13.2% 13.0%
Opening
Managed
Accounts
AUM $ 1,398 $ 505 $ 1,843 $ 937
$ 1,233 $ 335
Inflows
(net of
redemptions) 351 536 38 96
457 766
Net
performance
(gains net
of losses) 94 (104) 24 8
215 (60)
Closing
Managed
Accounts
AUM $ 1,843 $ 937 $ 1,905 $ 1,042
$ 1,905 $ 1,042
% of Opening
Managed
Accounts AUM
Inflows
(net of
redemptions) 25.1% 106.1% 2.1% 10.3%
37.1% 228.8%
Net
Performance
(gains net
of losses) 6.7% (20.6%) 1.3% 0.9%
17.5% (17.9%)
Note: Net performance is based on both opening AUM and
inflows during the period and can be influenced by heavy
inflows and fluctuations in currencies.
For more information, please contact:
Investors/analysts:
GLG: Simon White
Chief Financial Officer
Phone: +44(0)20-7016-7000
Email: simon.white@glgpartners.com
Michael Hodes
Acting Director of Investor Relations
Phone: +1-212-224-7223
Email: michael.hodes@glgpartners.com.
Media:
Finsbury: Rupert Younger/Amanda Lee
Phone: +44(0)20-7251-3801,
Email: rupert.younger@finsbury.com /
amanda.lee@finsbury.com;
Andy Merrill
Phone: +1-212-303-7600
Email: andy.merrill@finsbury.com
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