Ashmore Group plc · LSE:ASHM
Ashmore — H1 2021/22 Earnings Presentation
30 slides from Ashmore's earnings presentation, Feb 10, 2022
Slide 1: Results for six months ending 31 December 2021
Ashmore Group plc Results for six months ending 31 December 2021 10 February 2022 www.ashmoregroup.com
Slide 2: Overview
Overview • Financial performance impacted by market environment ˗ AuM US$87.3bn, -8% over the period ˗ Cost discipline reduced operating costs by 7% YoY ˗ Adjusted EBITDA -14% YoY, maintained margin at high level of 67% ˗ Delivered seed capital profit of £25m ˗ Adjusted diluted EPS 10.4p, maintained
Slide 3: Significant opportunities for EM performance in 2022
Assessing the Emerging Markets cycle • Effective policy responses to pandemic Positive outlook as 2021 headwinds fade ˗ EM required less fiscal stimulus and consolidating deficits Macro topic 2021 2022 outlook faster than DM US rates Uncertainty, misguided fear Expected rate increases will ˗ EM long
Slide 4: Added risk to capture recovery from weaker markets in 2021
Investment performance One year: 39% outperforming Three years: 44% outperforming Five years: 54% 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’21: 96% Jun’21: 57% Jun’21: 79% Outperforming Underp
Slide 5: Progress made across range of initiatives
Strategic initiatives 1. Raising underweight investor allocations ˗ Institutional top-ups across all fixed income and equities themes ˗ New mandates focused on external debt, blended debt and equities ˗ Gross subscriptions at a similar level to the prior year period 2. Diversifying Ashmore as asset
Slide 6: Financial performance overview
Financial performance overview • AuM -8% over six months H1 2021/22 H1 2020/21 £m £m YoY % Net flows -US$3.2 billion AuM (US$bn) 87.3 93.0 (6) Negative investment performance -US$3.9 billion Adjusted net revenue 138.2 156.8 (12) • Adjusted net revenue -12% Adjusted operating costs (47.8) (51.2)
Slide 7: Activity levels increased during the period
Assets under management AuM development (US$bn) • Gross subscriptions of US$7.8 billion, 8% of opening AuM (H1 2020/21: US$7.5 billion, 9%) (3.9) Broad-based demand across themes (2.2) (1.0) New mandates in external debt, blended debt & equities Flows into sovereign IG and Asia-focused corpora
Slide 8: Revenues driven by diversified management fees
Financial results Revenues • Adjusted net revenue -12% YoY Adjusted net revenue (£m) 156.8 (7.9) • Net management fees -6% (4.6) (6.1) Average AuM +4% YoY offset by higher average GDP:USD 138.2 • Net management fee margin 39bps (-3bps YoY / -1bp HoH) Movement primarily due to retail & mutual fun
Slide 9: Costs managed effectively
Financial results Operating costs • Adjusted operating costs reduced by 7% YoY Adjusted operating costs (£m) 51.2 0.3 (3.7) 47.8 • Non-VC operating costs increased by 1% ˗ Disciplined control of all operating costs ˗ Average headcount stable YoY ˗ Limited travel and remote working, but restrictions
Slide 10: Diversified seed capital underpins AuM growth
Financial results Seed capital Seed capital movement (£m) • Total value of seed capital programme ~£345 million 336.8 40.1 6.1 32.0 334.8 ˗ Market value of £334.8 million (30 June 2021: £336.8 million) ˗ Undrawn commitments of £8.5 million • P&L gain of £25.2 million (H1 2020/21: £49.3 million), pre
Slide 11: Interim dividend maintained
Financial results Statutory earnings H1 2021/22 H1 2020/21 YoY £m £m % Profit before tax 116.0 150.6 (23) Tax (20.6) (22.1) 7 Profit after tax 95.4 128.5 (26) Profit attributable to non-controlling interests (1.7) (0.8) (113) Profit attributable to equity holders of the parent 93.7 127.7 (27) Earnin
Slide 12: Consistent cash generation
Financial results Cash flow • Operations generated cash flow of Cash flow (£m) (1) £84.8 million (1) 92% of adjusted EBITDA 13.0 84.8 (H1 2020/21: 83%) 86.8 1.2 6.7 445.7 25.8 34.0 437.7 444.4 • Consistent uses of operating cash flow: ˗ Corporation tax ˗ Ordinary dividends to shareholders ˗ Share
Slide 13: Maintained balance sheet strength
Financial results Balance sheet • Capital resources of £823.3 million (1) Consistent balance sheet structure ˗ Excess regulatory capital of £667.4 million, 900 800 equivalent to 94p/share 700 ˗ No debt 600 500 400 • Balance sheet remains highly liquid (76%) 300 £444.4 million cash & cash equivalen
Slide 14: Summary
Summary • Financial performance impacted by market environment • Continued progress made across range of strategic initiatives • Established active investment processes deliver through market cycles • Improving macro environment & attractive valuations 14
Slide 15: Q&A
Ashmore Q&A
Slide 16: Appendices
Ashmore Appendices eee
Slide 17: Appendix 1a Adjusted profits reconciliation
Appendix 1a Adjusted profits reconciliation Adjusted Adjusted H1 2021/22 H1 2020/21 £m £m YoY % Net revenue 138.5 150.7 (8) FX translation (0.3) 6.1 nm Adjusted net revenue 138.2 156.8 (12) Operating costs ex consolidated funds (46.3) (48.4) 4 VC on FX translation 0.1 (1.2) nm Adjusted operating cos
Slide 18: Appendix 1b Seed capital
Appendix 1b Seed capital • Consolidated funds: H1 2021/22 H1 2020/21 £m £m Line-by-line consolidation in financial statements Gains/(losses) on investment securities 51.0 55.9 FX taken to reserves Change in third-party interests in consolidated funds (23.0) (25.7) PBT contribution of +£30.0 mi
Slide 19: Appendix 2a Net management and performance fees by theme
Appendix 2a Net management and performance fees by theme H1 2021/22 H1 2020/21 H1 2021/22 H1 2020/21 £m £m US$m US$m External debt 25.2 27.1 34.3 35.9 Local currency 29.5 30.9 40.2 40.8 Corporate debt 14.7 18.1 20.0 23.9 Blended debt 38.7 42.6 52.7 56.3 Equities 16.8 13.3 22.8 17.6 Alternatives 6.1
Slide 20: Appendix 2b Management fee margins
Appendix 2b Management fee margins 141 H1 2020/21 H2 2020/21 H1 2021/22 134 123 63 61 59 47 47 47 42 40 43 39 39 37 39 38 36 30 28 27 Group External debt Local currency Corporate debt Blended debt Equities Alternatives Fixed income: 36bps (H1 2020/21: 39bps) (H2 2019/20: 37bps) 20
Slide 21: Appendix 3a Assets under management
Appendix 3a Assets under management AuM by theme (US$bn) AuM as invested (US$bn) 1.5 8.0 8.0 1.5 18.9 External debt External debt Local currency 29.7 15.2 Local currency 20.8 Corporate debt Corporate debt Blended debt Equities Equities Alternatives 9.5 28.6 Alternatives 32.9 AuM by client type AuM b
Slide 22: Appendix 3b Investment themes
Appendix 3b Investment themes FIXED INCOME ALTERNATIVES (USD 77.8bn) (USD 1.5bn) EQUITIES (USD 8.0bn) Local Corporate External Debt Blended Debt THEME Currency Debt (USD 18.9bn) (USD 20.8bn) (USD 28.6bn) (USD 9.5bn) GLOBAL • Broad • Bonds • Broad • Blended • Active • EM Equity (All • Frontier • Priv
Slide 23: Appendix 3c Quarterly net flows
Appendix 3c Quarterly net flows +8.0 +6.0 +4.0 +2.0 US$ billion +0.0 -2.0 -4.0 -6.0 -8.0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 23
Slide 24: Appendix 4 AuM movements by theme and fund classification
Appendix 4 AuM movements by theme and fund classification AuM Gross Gross AuM US$bn 30 June 2021 Performance subscriptions redemptions Net flows Reclassifications 31 December 2021 External debt 18.7 (0.6) 2.8 (2.0) 0.8 - 18.9 Local currency 31.9 (1.0) 1.8 (3.6) (1.8) (0.5) 28.6 Corporate debt 11.3 (
Slide 25: Appendix 5 Foreign exchange
Appendix 5 Foreign exchange • Sterling weakened against the US dollar over the period, but Currency exposure of cash(1) average rate was stronger YoY 31 December 2021 % 30 June 2021 % Period-end rate moved from 1.3815 to 1.3545 £m £m US dollar 284.7 64 341.3 77 Average rate 1.3636 vs 1.3107 in H
Slide 26: Appendix 6 Cash flows and consolidated funds H1 2021/22
Appendix 6 Cash flows and consolidated funds H1 2021/22 £m As reported Consolidated funds Group ex funds Cash from operations 82.8 (2.0) 84.8 Taxation (13.0) - (13.0) Interest received 4.1 3.9 0.2 Seeding activities 30.4 (3.6) 34.0 Dividends paid (86.8) - (86.8) EBT purchases (25.8) - (25.8) FX and
Slide 27: Appendix 7 Investment performance
Appendix 7 Investment performance 1yr 3yr 5yr 31st December 2021 Ashmore Benchmark Ashmore Benchmark Ashmore Benchmark External debt Broad -4.7% -1.8% 3.6% 5.9% 3.3% 4.7% Sovereign -3.3% -1.8% 4.2% 5.9% 3.5% 4.7% Sovereign IG -1.8% -1.9% 8.1% 7.6% 6.3% 5.8% Local currency Bonds -8.6% -8.8% 2.3% 2.1%
Slide 28: Appendix 8 Historical valuations relative to Developed Markets
Appendix 8 Historical valuations relative to Developed Markets External debt Local currency Index: 72 countries, 172 issuers, 961 bonds Index: 20 countries, 20 issuers, 293 bonds 800 8.00 EMBI GD spread over UST, bps GBI-EM GD yield (%) Difference: GBI-EM vs GBI global (%) 7.50 700 7.00 6.50 600 6.0
Slide 29: Appendix 9 Disclosures
Appendix 9 Disclosures Page 4: - 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 2021 and with a performance benchmark are included, which specif
Slide 30: 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