Ashmore Group plc · LSE:ASHM
Ashmore — FY2023 Earnings Presentation
32 slides from Ashmore's earnings presentation, Sep 6, 2023
Slide 1: Results for year ended 30 June 2023
Ashmore Group plc Results for year ended 30 June 2023 6 September 2023 www.ashmoregroup.com
Slide 2: Overview
Overview • Emerging Markets performed well over past 12 months ˗ Index returns of +2% (equities) to +11% (local currency bonds) ˗ Widening GDP growth premium vs Developed Markets ˗ China fiscal & monetary stimulus, relaxation of COVID restrictions, but consumer confidence/demand headwinds ˗ Effectiv
Slide 3: A stronger year in Emerging Markets
A stronger year in Emerging Markets • After a challenging period, evidence of Emerging Markets cycle turning Asset class returns H1 H2 FY2022/23 • Positive market returns for the year Emerging Markets − Tighter spreads & strong returns in fixed income markets External debt (EMBI GD) +3.2% +4.1% +7.4
Slide 4: Investment processes outperforming as markets recover
Investment performance One year: 67% outperforming Three years: 69% outperforming Five years: 49% outperforming 100% 100% 100% 90% 90% 90% 80% 80% 80% 70% 70% 70% 60% 60% 60% 50% 50% 50% 40% 40% 40% 30% 30% 30% 20% 20% 20% 10% 10% 10% 0% 0% 0% Jun’22: 45% Jun’22: 28% Jun’22: 48% Outperforming Underp
Slide 5: Capitalising on the Emerging Markets opportunity
Capitalising on the Emerging Markets opportunity Emerging Markets offer superior growth, supported by reforms and diversification • Superior GDP growth vs DM • Diversification with more than 70 emerging countries • Dominant share: FX reserves (72%) & population (84%) versus global index weights of 1
Slide 6: Financial performance overview
Financial performance overview • AuM -13%, positive performance offset by net outflows FY2023 FY2022 £m £m YoY % • Adjusted net revenue -24% AuM (US$bn) 55.9 64.0 (13) − Net management fees -25% Adjusted net revenue 195.4 257.2 (24) • Continued focus on operating costs Adjusted operating costs (92.4
Slide 7: Assets under management
Assets under management • Markets recovering but institutional de-risking impacted flows AuM development (US$bn) & diversified client base ‒ Performance +US$3.4 billion (FY2022: -US$16.6 billion) 7.6 ‒ Net outflows of -US$11.5 billion (FY2022: -US$13.5 billion) ‒ Momentum improved H2 vs H1 3.9 2.6 0
Slide 8: Local asset management platforms
Local asset management platforms • Stable AuM illustrates diversification benefits Increasing contribution from local offices 8.0 14% ‒ Collectively manage US$7.0 billion AuM, 13% of Group, for domestic and international institutions, and intermediary retail 7.0 12% investors 6.0 10% 5.0 • Ashmore C
Slide 9: Revenues impacted by opening AuM
Financial results Revenues • Adjusted net revenue 24% lower Adjusted net revenue (£m) − Average AuM -30% YoY 257.2 60.3 • Net management fees -25% 0.6 195.4 − Opening AuM -23% vs FY2022 average 2.1 − 1bp decline in net management fee margin − Lower average GBP:USD rate (+7% impact) • Margin 38bps, -
Slide 10: Reduced operating costs
Financial results Operating costs • Adjusted operating costs reduced by 4% Adjusted operating costs (£m) 6.4 10.0 ˗ Lower average GBP:USD accounts for approximately 96.0 92.4 half the increase in non-VC costs ˗ Staff costs increased to reflect impact of wage inflation and slightly higher headcount i
Slide 11: Seed capital investments support strategic growth initiatives
Financial results Seed capital • Total seed capital investments & commitments of ~£300 million Diversified across themes (% of market value) ‒ Market value £291.5 million (30 June 2022: £272.0 million) ‒ Undrawn commitments £8.9 million 9% 29% 10% External debt • Unrealised mark-to-market loss in P&
Slide 12: Dividend maintained
Financial results Statutory earnings FY2023 FY2022 YoY £m £m % Profit before tax 111.8 118.4 (6) Tax (25.3) (26.5) 5 Profit after tax 86.5 91.9 (6) Profit attributable to non-controlling interests (3.2) (3.4) 6 Profit attributable to equity holders of the parent 83.3 88.5 (6) Earnings per share: dil
Slide 13: Cash flow
Financial results Cash flow • Cash generation supports returns to shareholders Cash flow (£m) (1) and allows investment for future growth − Operating cash flows of £111.7 million 111.7 7.1 121.7 represent 105% of adjusted EBITDA 542.0 − Paid total dividends of £121.7 million 15.6 51.3 469.9 11.9 1.6
Slide 14: Balance sheet appropriate for market cycles
Financial results Balance sheet • Consistent strong & liquid balance sheet structure Substantial, liquid financial resources(1) (£m) • Well-capitalised with total resources of £704.8 million ˗ Group capital requirement of £80.6 million (IFPR basis) ˗ Excess capital of £624.2 million, equivalent to 8
Slide 15: Emerging Markets outlook
Emerging Markets outlook • Consistent themes support long-term EM growth, not reflected in Attractive valuations available in Emerging Markets current valuations or underweight allocations 30 June 2023 EMBI GD yield 8.4% • Geopolitical risks have dampened risk appetite for some DM investors EMBI GD
Slide 16: Summary
Summary • Emerging Markets performed well over past 12 months • Ashmore delivering outperformance for clients − Investment outperformance leads financials • Consistent approach to capitalise on the Emerging markets opportunity • Structural long-term growth and cyclical upswing 16
Slide 17: Q&A
Ashmore Q&A
Slide 18: Appendices
Ashmore Appendices eee
Slide 19: Adjusted profits reconciliation
Appendix 1a Adjusted profits reconciliation Adjusted Adjusted FY2023 FY2022 £m £m YoY % Net revenue 196.4 262.5 (25) FX translation (1.0) (5.3) 81 Adjusted net revenue 195.4 257.2 (24) Operating costs ex consolidated funds (89.5) (94.0) 5 VC on FX translation 0.3 1.1 (73) Adjusted operating costs (8
Slide 20: Seed capital
Appendix 1b Seed capital • Consolidated funds: FY2023 FY2022 £m £m − Line-by-line consolidation in financial statements Gains/(losses) on investment securities (44.3) (61.3) − FX taken to reserves Change in third-party interests in consolidated funds 19.3 16.5 − PBT contribution of -£15.3 million Op
Slide 21: Net management and performance fees by theme
Appendix 2a Net management and performance fees by theme FY2023 FY2022 FY2023 FY2022 £m £m US$m US$m External debt 32.5 46.7 39.1 62.0 Local currency 43.0 54.9 51.8 72.9 Corporate debt 16.2 26.0 19.5 34.6 Blended debt 46.8 69.3 56.3 92.2 Equities 29.5 33.1 35.6 43.9 Alternatives 15.2 13.5 18.3 17.8
Slide 22: Net management fee margins
Appendix 2b Net management fee margins 144 138 FY2022 FY2023 58 58 46 44 39 38 37 35 31 30 27 28 Group External debt Local currency Corporate debt Blended debt Equities Alternatives Fixed income: 33bps (FY2021/22: 35bps) 22
Slide 23: Assets under management
Appendix 3a Assets under management AuM by theme (US$bn) AuM as invested (US$bn) 1.5 1.6 6.2 11.0 6.2 External debt 17.6 External debt Local currency Local currency Corporate debt 8.3 11.9 Corporate debt Blended debt Equities Equities Alternatives 18.8 Alternatives 6.5 22.2 AuM by client type AuM by
Slide 24: Investment themes
Appendix 3b Investment themes FIXED INCOME ALTERNATIVES (US$48.2bn) (US$1.5bn) EQUITIES (US$6.2bn) Local Corporate External Debt Blended Debt THEME Currency Debt (US$11.0bn) (US$11.9bn) (US$18.8bn) (US$6.5bn) GLOBAL • Broad • Bonds • Broad • Blended • Active • EM Equity (All • Frontier • Private equ
Slide 25: Quarterly net flows
Appendix 3c Quarterly net flows +8.0 +6.0 +4.0 +2.0 USD billion +0.0 -2.0 -4.0 -6.0 -8.0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 25
Slide 26: AuM movements by investment theme
Appendix 4 AuM movements by investment theme AuM Gross Gross AuM US$bn 30 June 2022 Performance subscriptions redemptions Net flows 30 June 2023 External debt 14.4 0.6 1.7 (5.7) (4.0) 11.0 Local currency 20.6 1.5 2.7 (6.0) (3.3) 18.8 Corporate debt 6.8 0.1 0.2 (0.6) (0.4) 6.5 Blended debt 14.4 0.8 0
Slide 27: Foreign exchange
Appendix 5 Foreign exchange • GBP:USD rate Currency exposure of cash(1) − Period-end rate moved from 1.2145 to 1.2714 30 June 2023 % 30 June 2022 % £m £m − Average rate 1.2079 vs 1.3289 in FY2022 US dollar 62.7 13 238.5 44 Sterling 374.0 80 273.1 50 • P&L FX effects in FY2023: Other 31.6 7 30.4 6 −
Slide 28: Cash flows and consolidated funds FY2023
Appendix 6 Cash flows and consolidated funds FY2023 £m As reported Consolidated funds Group ex funds Cash from operations 111.6 (0.1) 111.7 Taxation (7.1) - (7.1) Interest 30.9 16.0 14.9 Seeding activities (66.5) (15.2) (51.3) Dividends paid (121.7) - (121.7) EBT purchases (15.6) - (15.6) Other (3.0
Slide 29: Investment performance
Appendix 7 Investment performance 1yr 3yr 5yr 30th June 2023 Ashmore Benchmark Ashmore Benchmark Ashmore Benchmark External debt Broad 6.6% 7.4% -4.6% -3.1% -1.9% 0.6% Sovereign 8.9% 7.4% -3.0% -3.1% -0.6% 0.6% Sovereign IG 4.9% 3.4% -3.7% -4.9% 1.9% 0.9% Local currency Bonds 15.4% 11.4% 1.9% -1.4%
Slide 30: Historical valuations relative to Developed Markets
Appendix 8 Historical valuations relative to Developed Markets External debt Local currency Index: 69 countries, 157 issuers, 943 bonds Index: 20 countries, 20 issuers, 334 bonds 800 8.00 EMBI GD spread over UST, bps GBI-EM GD yield (%) Difference: GBI-EM vs GBI global (%) 700 7.00 600 6.00 500 5.00
Slide 31: Disclosures
Appendix 9 Disclosures Page 5: − 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 30 June 2023 and with a performance benchmark are included, which specifical
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