Ashmore Group Plc · LSE:ASHM
Ashmore — H1 2018/19 Earnings Presentation
29 slides from Ashmore's earnings presentation, Feb 14, 2019
Slide 1: Results for six months ending 31 December 2018
Ashmore Group plc Results for six months ending 31 December 2018 14 February 2019 www.ashmoregroup.com
Slide 2: Overview
Overview • Business model continues to deliver ˗ Strong investment performance ˗ 97% AuM outperforming over three years ˗ Active management delivering outperformance in 2019 ˗ Resilient client flows ˗ AuM +10% YoY. Net inflow of +US$2.4bn in H1 and +US$11.4bn for calendar 2018 ˗ +18% growth in net m
Slide 3: Financial performance overview
Financial performance overview • AuM +10% YoY, average AuM +17% YoY H1 2018/19 H1 2017/18 £m £m YoY % Net flows +US$2.4 billion in H1 AuM (US$bn) 76.7 69.5 10 • Adjusted net revenue +8% Adjusted net revenue 148.2 136.7 8 Net management fees +18% to £142.3 million driven by diversified AuM growth
Slide 4: Distinctive business model delivering value through the cycle
Business model • Ashmore’s business model delivers through market cycles ˗ High-quality revenues driven by recurring net management fees ˗ Cost discipline including flexible remuneration policy High-quality revenues delivering 67% adjusted EBITDA margin supports adjusted EBITDA margin 100% 70% ˗ Con
Slide 5: Broad based growth in AuM
Assets under management • Gross subscriptions of US$8.5 billion, 12% of AuM development (US$bn) opening AuM (H1 2017/18: US$15.0 billion, 26%) 8.5 (6.1) Bias towards existing clients 0.1 0.3 New mandates focused on local currency, blended debt and equities Retail momentum continues, 21% of net
Slide 6: AuM growth driving strong increase in management fee income
Financial results Revenues • Net management fees +18% with +17% average AuM Strong growth (+18%) in net management fee income growth 3% YoY benefit from lower average GBP:USD rate 22.9 11.1 3.3 142.3 2.2 4.4 • Net management fee margin 49bps 1bp increase HoH, due to retail growth and Ashmore Ave
Slide 7: Maintaining cost discipline through the cycle
Financial results Operating costs • Like-for-like fixed cost growth of £0.5 million, of Operating cost development (£m) which £0.3 million is due to weaker GBP:USD rate 0.3 28.1 0.5 0.2 1.2 • Other increase of £1.7 million attributable to: 25.9 ˗ Ashmore Avenida (mostly staff costs) ˗ MiFID II and p
Slide 8: Financial results: Seed capital
Financial results Seed capital • Realised gain of £1.0 million and total mark-to-market H1 2018/19 H1 2017/18 seed capital loss of £9.7 million £m £m Gains/(losses) on investment securities (18.6) 9.4 • Consolidated funds: Change in third-party interests in consolidated 7.8 (4.9) funds Line-by-lin
Slide 9: Dividend maintained, focus on rebuilding cover
Financial results Statutory earnings H1 2018/19 H1 2017/18 YoY £m £m % Profit before tax 93.0 99.0 (6) Tax (19.0) (17.8) (7) Profit after tax 74.0 81.2 (9) Profit attributable to non-controlling interests (1.6) (1.0) (60) Profit attributable to equity holders of the parent 72.4 80.2 (10) Earnings pe
Slide 10: Consistent profit conversion and uses of cash
Financial results Cash flow • Operations generated cash flow of Cash flow (£m) (1) £84.9 million (1) 86% of adjusted EBITDA (H1 2017/18: 81%) 84.9 13.8 86.5 426.8 4.9 3.5 11.8 • H1 bias to cash payments, relating to 21.9 16.2 416.1 prior year Final dividend Cash component of variable remunerat
Slide 11: Seed capital investments supporting strategic growth initiatives
Financial results Seed capital Seed capital movement (£m) • Total seed capital programme of £238.3 million 30.7 42.0 Market value £213.4 million (30 June 2018: £228.3 million) 228.3 3.6 Undrawn commitments of £24.9 million 213.4 • Realised gain of £1.0 million offset by marking-to-market losses,
Slide 12: Well-capitalised, liquid balance sheet with no debt
Financial results Balance sheet • Excess regulatory capital of £523.7 million Consistent balance sheet structure Financial resources of £643.2 million (2) 700 600 Pillar 2 regulatory capital requirement of 500 £119.5 million 400 Excess capital equivalent to 73p/share 300 200 • Balance sheet is
Slide 13: Investment performance
Investment performance AuM outperforming versus benchmark, AuM outperforming versus benchmark, AuM outperforming versus benchmark, gross one year annualised gross three years annualised gross five years annualised 100% 100% 100% 97% 92% 80% 80% 80% 60% 60% 60% 40% 40% 40% 30% 20% 20% 20% 0% 0% 0% Lo
Slide 14: Emerging Markets 2019 outlook
Emerging Markets 2019 outlook • 2018 market weakness due to temporary factors EM price weakness in 2018 inconsistent with economic backdrop 6.0 +3.9 -5.7 -14.9 +9.9 +15.2 -6.2 • EM GDP growth is high, accelerating vs DM (ytd) GBI-EM GD returns (%) 5.0 • Low inflation, well-controlled by central bank
Slide 15: Summary
Summary • Business model continues to deliver ˗ Continued strong investment performance ˗ AuM growth and resilient client flows ˗ +8% adjusted EBITDA growth ˗ Strong cash generation • Outlook Emerging Markets are in good health Continuing EM capital inflows US dollar weakening Elections offe
Slide 16: Appendices
Ashmore Appendices eee
Slide 17: Adjusted profits reconciliation
Appendix 1 Adjusted profits reconciliation Adjusted Adjusted H1 2018/19 H1 2017/18 £m £m YoY % Net revenue 152.1 134.4 13 FX translation (3.9) 2.3 nm Adjusted net revenue 148.2 136.7 8 Operating costs ex consolidated funds (50.2) (45.0) (12) VC on FX translation 0.8 (0.5) nm Adjusted operating costs
Slide 18: Net management and performance fees by theme
Appendix 2a Net management and performance fees by theme H1 2018/19 H1 2017/18 H1 2018/19 H1 2017/18 £m £m US$m US$m External debt 27.2 24.4 34.9 32.3 Local currency 26.0 21.4 33.6 28.6 Corporate debt 23.5 16.3 30.4 21.6 Blended debt 39.2 34.1 50.5 45.7 Equities 12.7 10.8 16.3 14.3 Alternatives 7.5
Slide 19: Management fee margins
Appendix 2b Management fee margins 137 H1 2017/18 H2 2017/18 H1 2018/19 131 125 83 79 80 76 72 70 60 58 58 53 50 48 49 50 45 47 46 43 41 45 39 19 15 16 Group External debt Local currency Corporate debt Blended debt Equities Alternatives Multi-asset Overlay Fixed income: 47bps (H1 2017/18: 49bps) (H2
Slide 20: Assets under management
Appendix 3a Assets under management AuM by theme (US$bn) AuM as invested (US$bn) 0.4 External debt 1.6 6.1 6.5 15.5 Local currency 1.8 External debt 4.4 4.6 Corporate debt Local currency 28.7 Blended debt Corporate debt 12.1 Equities Equities 20.4 17.5 Alternatives Alternatives Multi-asset Overlay/l
Slide 21: Investment themes
Appendix 3b Investment themes Overlay/ External Debt Local Currency Corporate Debt Equities Alternatives Liquidity (US$15.5bn) (US$17.5bn) (US$10.8bn) (US$4.4bn) (US$1.6bn) (US$6.1bn) Global Emerging • Broad • Bonds • Broad • Global EM Equity • Private Equity • Overlay Markets • Sovereign • Bonds (B
Slide 22: Quarterly net flows
Appendix 3c Quarterly net flows +8.0 +6.0 +4.0 +2.0 US$ billion +0.0 -2.0 -4.0 -6.0 -8.0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 22
Slide 23: AuM movements by theme and fund classification
Appendix 4 AuM movements by theme and fund classification AuM Gross Gross Reclassification AuM US$bn 30 June 2018 Performance subscriptions redemptions Net flows & other 31 December 2018 External debt 14.5 0.1 1.3 (0.7) 0.6 0.3 15.5 Local currency 17.0 0.1 1.4 (1.0) 0.4 - 17.5 Corporate debt 9.8 0.1
Slide 24: Foreign exchange
Appendix 5 Foreign exchange • Sterling weakened against the US dollar over the six month Currency exposure of cash(1) period 31 December 2018 % 30 June 2018 % Period-end rate moved from 1.3200 to 1.2736 £m £m US dollar 220.5 53 317.0 74 Average rate 1.2948 vs 1.3259 in H1 2017/18 Sterling 175.9
Slide 25: Cash flows and consolidated funds H1 2018/19
Appendix 6 Cash flows and consolidated funds H1 2018/19 £m As reported Consolidated funds Group ex funds Cash from operations 83.3 (1.6) 84.9 Taxation (13.8) - (13.8) Interest received 8.6 5.1 3.5 Seeding activities 15.5 (0.7) 16.2 Acquisition (4.9) - (4.9) Dividends paid (86.5) - (86.5) Treasury/ow
Slide 26: Investment performance
Appendix 7 Investment performance 1yr 3yr 5yr 31st December 2018 Ashmore Benchmark Ashmore Benchmark Ashmore Benchmark External debt Broad -5.0% -4.3% 8.3% 5.2% 5.5% 4.8% Sovereign -4.6% -4.3% 6.2% 5.2% 5.4% 4.8% Sovereign IG -2.0% -2.4% 5.4% 4.5% 4.6% 4.3% Local currency Bonds -6.3% -6.2% 7.8% 5.9%
Slide 27: Historical valuations relative to Developed Markets
Appendix 8 Historical valuations relative to Developed Markets External debt Local currency Index: 67 countries, 154 issuers, 679 bonds Index: 19 countries, 19 issuers, 219 bonds 1000 12.0% 7.00% 10.0% 6.00% 800 5.00% 8.0% Yield (%) 600 4.00% 6.0% 400 3.00% 4.0% 2.00% 200 2.0% 1.00% 0 0.0% 0.00% 200
Slide 28: Disclosures
Appendix 9 Disclosures Page 13: - Gross performance is shown, weighted by fund AuM, to provide a representative view to analysts and shareholders of Ashmore’s investment performance over relevant time periods - Only funds at 31 December 2018 and with a performance benchmark are included, which speci
Slide 29: 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