Ashmore Group plc · LSE:ASHM
Ashmore — FY2016 Earnings Presentation
32 slides from Ashmore's earnings presentation, Sep 6, 2016
Slide 1: Ashmore Group plc Results for year ending 30 June 2016
Ashmore Group plc Results for year ending 30 June 2016 6 September 2016 www.ashmoregroup.com
Slide 2: Overview
Overview • Weaker and more volatile markets in H1, strong recovery in H2 • Consistent investment processes delivering: significant improvement in performance after buying into value opportunities 69% AuM outperforming over 1 year, 63% over 3 years, 73% over 5 years • Business model performing thro
Slide 3: Markets overview
Markets overview • Headwinds in H1… Strong Emerging Markets rally in H2 (index returns) Strong US dollar, Fed rate increase % 6m to 6m to 12m to 31 December 2015 30 June 2016 30 June 2016 Renminbi devaluation Oil price decline External debt -0.5 +10.3 +9.8 Rising US high yield defaults Local
Slide 4: Assets under management: AuM recovery in H2
Assets under management • Gross subscriptions US$7.6 billion, 13% of opening AuM development (US$bn) AuM (FY2014/15: 12%) Increase in alternatives AuM through new capital +3.4 (9.1) raising • Gross redemptions US$15.1 billion, 26% of opening AuM (FY2014/15: 25%) Influenced by large segregated ac
Slide 5: AuM development: improving demand as markets and sentiment recover
AuM development • Subscriptions increased steadily through the Net flows and performance by quarter (US$bn) period Investment performance Q4 was strongest quarter since Q1 2014/15 3.0 (3.8) 0.0 +3.0 +2.0 2.0 • Redemptions influenced by oil-related 1.0 government activity in Q1 0.0 (0.7) Q4 was l
Slide 6: Products and distribution
Products and distribution AuM by client type • Broad-based institutional demand for mainstream Emerging Markets fixed income Central banks 10% 2% 18% Sovereign wealth funds • Retail asset gathering on track in difficult market conditions 2% Governments Net inflows from private banks/wealth manager
Slide 7: Financial results: Revenues
Financial results Revenues Year ended Year ended 30 June 2016 30 June 2015 Variance £m £m % Management fees 197.1 250.2 (21) Distribution costs (1.2) (2.9) (59) Net management fees 195.9 247.3 (21) Performance fees 10.4 13.3 (22) Other revenue 4.1 4.6 (11) Foreign exchange 22.1 18.1 22 Net revenue 2
Slide 8: Management fee margins
Financial results Management fee margins Underlying average net management fee margins (bps) 180 165 • Headline YoY margin development influenced 160 141 by non-recurring factors 140 FY15 FY16 Prior year period benefited from 0.5bp 120 104 104 96 94 distribution accrual release 100 Client rebate
Slide 9: Expenses
Financial results Expenses Year ended Year ended 30 June 2016 30 June 2015 Variance £m £m % Personnel expenses (24.1) (24.8) 3 Other operating expenses (27.5) (27.0) (2) (51.6) (51.8) - Depreciation (1.2) (1.3) 8 Amortisation (3.9) (4.0) 3 Total operating expenses before VC (56.7) (57.1) 1 Variable
Slide 10: Other P&L items
Financial results Other P&L items Year ended Year ended 30 June 2016 30 June 2015 Variance £m £m % Net finance income 31.3 1.9 n/m Comprising: - interest income 2.0 1.7 18 - seed capital: investment return & FX 24.6 (5.1) n/m - seed capital: consolidated funds income 4.7 5.3 (11) Associates & joint
Slide 11: Adjusted profits
Financial results Adjusted profits Statutory Seed capital- Adjusted Adjusted FY2015/16 related items FX translation FY2015/16 FY2014/15 £m £m £m £m £m % Net revenue 232.5 - (21.0) 211.5 264.8 (20) Investment securities & third-party interests (2.3) 2.3 - - - - Operating expenses1 (87.2) 2.4 4.2 (80.
Slide 12: Earnings
Financial results Earnings Year ended Year ended 30 June 2016 30 June 2015 Variance £m £m % Profit before tax 167.5 181.3 (8) Tax (38.8) (41.3) 6 Profit after tax 128.7 140.0 (8) Profit attributable to non-controlling interests (0.9) (3.5) - Profit attributable to equity holders of the parent 127.8
Slide 13: Seed capital
Financial results Seed capital • Market value £238.5 million (30 June 2015: £207.0 Diversified across themes (% of market value) million) 69% in liquid funds 9% 3% External debt 12% Local currency • Profit before tax contribution of £24.6 million is largely 6% marked-to-market Corporate Debt 26% B
Slide 14: Foreign exchange
Financial results Foreign exchange • Translation effect on non-Sterling balance sheet items: £21.0 Currency exposure of cash(1) million gain versus £20.1 million gain in prior year 30 June 2016 % 30 June 2015 % Over the period, GBP/USD moved from 1.57 to 1.32 £m £m US dollar 119.1 33 137.4 38 Re
Slide 15: Cash flow
Financial results Cash flow • Operations generated cash flow of Cash flow (£m) (1) £127.4 million (1) 97% of adjusted EBITDA (FY2014/15: 107%) 26.7 127.4 120.3 • Uses of cash: 365.1 18.4 358.4 22.2 Tax payment 14.6 2.1 EBT purchases to offset dilution, now fully covered prior to 2016 awards
Slide 16: Balance sheet
Financial results Balance sheet • Strong, well-capitalised, liquid balance sheet with no debt • Excess regulatory capital of £490.9 million Financial resources = £590.8 million (2) Liquid balance sheet structure (4) Solvency ratio of 491% • 89% of balance sheet is liquid Majority of seed capital
Slide 17: Investment performance: active investment processes delivering
Investment performance AuM outperforming versus benchmark, AuM outperforming versus benchmark, AuM outperforming versus benchmark, gross 1 year annualised gross 3 years annualised gross 5 years annualised 100% 100% 100% 80% 80% 80% 60% 60% 60% 40% 40% 40% 73% 69% 63% 20% 20% 20% 0% 0% 0% Outperformi
Slide 18: Consistent investment approach
Consistent investment approach Group AuM outperforming benchmarks (gross) 100% Value-based investment processes 80% • Opportunities over past three years to buy oversold assets 60% • Economic and political reality restores sentiment and prices 40% • Diversity and inefficiency of EM requires an activ
Slide 19: Attractions of Emerging Markets versus Developed Markets
Attractions of Emerging Markets versus Developed Markets Substantial value available in Emerging Markets • EM GDP growth premium is expanding, first time since 2011 110 GBI-EM GD index (Dec 2012=100) Cyclical upswing in EM after significant macro adjustment 105 100 DM has structural growth imped
Slide 20: Summary
Summary • Market conditions improving • Consistent investment processes delivering outperformance • Business model and strong balance sheet deal with market cycles Cost discipline, high profitability and strong cash generation • Emerging Markets attractiveness and value opportunities are clear W
Slide 21: Appendices
Ashmore Appendices eee
Slide 22: Net management and performance fees by theme
Appendix 1 Net management and performance fees by theme FY2015/16 FY2014/15 FY2015/16 FY2014/15 £m £m US$m US$m External debt 37.0 45.8 54.5 72.0 Local currency 40.5 46.6 59.4 73.3 Corporate debt 21.9 30.9 32.1 48.7 Blended debt 52.3 63.6 76.6 100.2 Equities 22.3 32.2 32.7 50.5 Alternatives 10.9 12.
Slide 23: Assets under management
Appendix 2a Assets under management AuM by theme (US$bn) AuM as invested (US$bn) 1.2 External debt 1.5 3.1 1.73.2 11.7 Local currency 3.5 External debt 3.1 Local currency Corporate debt 20.4 Blended debt 7.6 Corporate debt 13.7 Equities Equities 13.3 Alternatives Alternatives Overlay/liquidity 5.0 M
Slide 24: Investment themes
Appendix 2b Investment themes Overlay/ External Debt Local Currency Corporate Debt Equities Alternatives Liquidity (US$11.7bn) (US$13.3bn) (US$5.0bn) (US$3.1bn) (US$1.5bn) (US$3.1bn) Global Emerging • Broad • Bonds • Broad • Global EM Value • Private Equity • Overlay Markets • Sovereign • Bonds (Bro
Slide 25: Historical valuations relative to Developed Markets
Appendix 2c Historical valuations relative to Developed Markets External debt Local currency 1000 12.0% 7.00% 900 10.0% 6.00% 800 700 5.00% 600 8.0% Yield (%) 500 4.00% 6.0% 400 3.00% 300 4.0% 200 2.00% 100 2.0% 1.00% 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0.0% 0.00% 2003 2005 2007
Slide 26: Quarterly net flows
Appendix 2d Quarterly net flows +8.0 +6.0 +4.0 +2.0 US$ billion +0.0 -2.0 -4.0 -6.0 -8.0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 26
Slide 27: AuM movements by theme and fund classification
Appendix 3 AuM movements by theme and fund classification AuM Gross Gross AuM US$bn 30 June 2015 Performance subscriptions redemptions Net flows Other* 30 June 2016 External debt 12.0 0.9 1.0 (2.7) (1.7) 0.5 11.7 Local currency 15.2 0.2 2.0 (4.1) (2.1) - 13.3 Corporate debt 7.2 (0.1) 1.1 (2.5) (1.4)
Slide 28: Cash flows and consolidated funds
Appendix 4 Cash flows and consolidated funds £millions As reported Consolidated funds Group ex funds Cash from operations 125.2 (2.2) 127.4 Taxation (26.7) - (26.7) Interest received 6.8 4.7 2.1 Seeding activities 1.1 (13.5) 14.6 Dividends paid (120.3) - (120.3) Treasury/own shares (22.2) - (22.2) F
Slide 29: Adjusted profits
Appendix 5 Adjusted profits Statutory Seed capital-related Adjusted FY2015/16 items FX translation FY2015/16 £m £m £m £m Net revenue 232.5 - (21.0) 211.5 Investment securities & third-party interests (2.3) 2.3 - - Operating expenses1 (87.2) 2.4 4.2 (80.6) EBITDA 143.0 4.7 (16.8) 130.9 EBITDA margin
Slide 30: Foreign exchange
Appendix 6 Foreign exchange Closing rates 30 June 2016 30 June 2015 GBP:USD 1.3234 1.5712 Average rates FY2015/16 FY2014/15 GBP:USD 1.4759 1.5822 30
Slide 31: Investment performance
Appendix 7 Investment performance Source: Ashmore (un-audited), JP Morgan, Morgan Stanley 1yr 3yr 5yr - Returns gross of fees, dividends reinvested. 30 June 2016 Ashmore Benchmark Ashmore Benchmark Ashmore Benchmark - Annualised performance shown for periods greater than one year. - All relevant Ash
Slide 32: Disclaimer
Disclaimer IMPORTANT INFORMATION This document does not constitute an offer to sell or an invitation to buy shares in Ashmore Group plc or any other invitation or inducement to engage in investment activities. Certain statements, beliefs and opinions in this document are forward-looking, which refle