Ashmore Group plc · LSE:ASHM
Ashmore — H1 2022/23 Earnings Presentation
31 slides from Ashmore's earnings presentation, Feb 8, 2023
Slide 1: Ashmore Group plc Results for six months ending 31 December 2022
Ashmore Group plc Results for six months ending 31 December 2022 8 February 2023 www.ashmoregroup.com
Slide 2: Overview
Overview • Complex global macro environment & subdued investor risk appetite during 2022 ˗ High inflation, rate increases, war, China reopening ˗ High asset price volatility during the period ˗ EM beginning to recover from oversold levels ˗ As is typical at this stage, Ashmore is delivering signific
Slide 3: Complex environment, valuations remain highly attractive
Volatile market conditions • Complex global macro environment Asset class returns ‒ High inflation Q1 (Sep) Q2 (Dec) 6m Emerging Markets ‒ Aggressive policy tightening by Fed / DM central banks External debt (EMBI GD) -4.6% +8.1% +3.2% ‒ Ukraine war Local currency (GBI-EM GD) -4.7% +8.5% +3.3% ‒ Chi
Slide 4: Delivering outperformance
Investment performance One year: 45% outperforming Three years: 40% outperforming Five years: 43% 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: Financial performance overview
Financial performance overview • AuM -11% over the six months, -34% YoY H1 2022/23 H1 2021/22 £m £m YoY % − Average AuM declined by 35% YoY AuM (US$bn) 57.2 87.3 (34) • Adjusted net revenue -22% Adjusted net revenue 107.7 138.2 (22) − Net management fees -25%, higher FX income Adjusted operating cos
Slide 6: Improving performance and flows patterns
Assets under management • Institutional de-risking and significant asset price fluctuations AuM development (US$bn) 7.0 ‒ Net outflows of US$7.6 billion include US$1.2 billion reduction in overlay ‒ Performance +US$0.8 billion; Q1 -US$3.0 billion & Q2 0.6 3.0 3.8 +US$3.8 billion 64.0 57.2 • Subscrip
Slide 7: Weaker GBP mitigates impact of lower AuM
Financial results Revenues • Adjusted net revenue 22% lower Adjusted net revenue (£m) 138.2 33.0 • Net management fees -25% 1.9 107.7 − Average AuM -35% 0.6 − 1bp increase in net management fee margin − Lower average GBP:USD rate (+10% impact) • Margin 40bps − Net impact of large institutional accou
Slide 8: Continued focus on operating costs
Financial results Operating costs • Adjusted operating costs reduced by 3% Adjusted operating costs (£m) ˗ Lower variable compensation, consistent with lower 3.2 4.8 revenues 47.8 46.2 ˗ Staff costs reflect increased headcount and impact of wage inflation ˗ Return to pre-pandemic operating environme
Slide 9: Investing to deliver AuM growth
Financial results Seed capital • Total seed capital investments & commitments of ~£272 million Diversified across themes (% of market value) ‒ Market value £260.8 million (30 June 2022: £272.0 million) 5% External debt ‒ Undrawn commitments £11.3 million 14% 34% Local currency Corporate debt • Unrea
Slide 10: Interim dividend maintained
Financial results Statutory earnings H1 2022/23 H1 2021/22 YoY £m £m % Profit before tax 53.8 116.0 (54) Tax (9.5) (20.6) 54 Profit after tax 44.3 95.4 (54) Profit attributable to non-controlling interests (1.6) (1.7) 6 Profit attributable to equity holders of the parent 42.7 93.7 (54) Earnings per
Slide 11: Consistent uses of cash flow
Financial results Cash flow • Business model generates strong cash Cash flow (£m) (1) flows through the cycle 46.2 11.3 86.9 • Operating cash flows of £46.2 million 542.0 represent 73% of adjusted EBITDA 15.6 2.4 2.9 474.9 5.9 480.8 • Significant H1 payments relate to prior year, e.g. final dividend
Slide 12: Maintained well-capitalised & liquid balance sheet
Financial results Balance sheet • Well-capitalised & liquid balance sheet Consistent balance sheet structure (£m) maintained 900 800 700 • Capital resources of £704.1 million 600 500 ˗ Board has determined Group capital 400 requirement of £84.5 million 300 ˗ Excess capital of £619.6 million, equival
Slide 13: Diversification, increasing contribution and long-term growth potential
Local asset management update • Continued resilient performance & diversification benefit Increasing contribution from local offices 7.0 16% ‒ Collectively manage US$6.6 billion AuM, -5% over the six months 6.0 14% 12% 5.0 10% • Ashmore Colombia (US$1.2 billion) 4.0 8% ‒ Successful private equity re
Slide 14: Positive outlook for further outperformance
Emerging Markets outperforming • 2022 macro headwinds receding, several factors point to continued Attractive valuations available in Emerging Markets EM outperformance ‒ China policy stimulus will have broader positive impact 31 Dec 2022 ‒ EM inflation moderating following effective rate hikes EMBI
Slide 15: Summary
Summary • Complex global macro environment & subdued investor risk appetite during 2022 • Financial performance reflects lower AuM levels, point in the cycle & strength of business model • Emerging Markets set for further outperformance 15
Slide 16: Q&A
Ashmore Q&A
Slide 17: Appendices
Ashmore Appendices eee
Slide 18: Adjusted profits reconciliation
Appendix 1a Adjusted profits reconciliation Adjusted Adjusted H1 2022/23 H1 2021/22 £m £m YoY % Net revenue 110.3 138.5 (20) FX translation (2.6) (0.3) nm Adjusted net revenue 107.7 138.2 (22) Operating costs ex consolidated funds (45.1) (46.3) 3 VC on FX translation 0.6 0.1 nm Adjusted operating co
Slide 19: Seed capital
Appendix 1b Seed capital • Consolidated funds: H1 2022/23 H1 2021/22 £m £m − Line-by-line consolidation in financial statements Gains/(losses) on investment securities (40.8) 51.0 − FX taken to reserves Change in third-party interests in consolidated funds 16.6 (23.0) − PBT contribution of -£17.2 mi
Slide 20: Net management and performance fees by theme
Appendix 2a Net management and performance fees by theme H1 2022/23 H1 2021/22 H1 2022/23 H1 2021/22 £m £m US$m US$m External debt 18.0 25.2 21.0 34.3 Local currency 22.1 29.5 26.0 40.2 Corporate debt 9.3 14.7 10.9 20.0 Blended debt 24.9 38.7 29.3 52.7 Equities 15.6 16.8 18.2 22.8 Alternatives 8.1 6
Slide 21: Management fee margins
Appendix 2b Management fee margins 148 142 134 H1 2021/22 H2 2021/22 H1 2022/23 59 57 60 47 45 44 39 39 40 38 36 36 34 34 32 27 27 28 Group External debt Local currency Corporate debt Blended debt Equities Alternatives Fixed income: 34bps (H1 2021/22: 36bps) (H2 2021/22: 35bps) 21
Slide 22: Assets under management
Appendix 3a Assets under management AuM by theme (US$bn) AuM as invested (US$bn) 1.3 1.5 6.0 6.0 12.4 External debt External debt Local currency 19.0 8.6 Local currency Corporate debt 12.6 Corporate debt Blended debt Equities Equities Alternatives 18.3 Alternatives 6.6 22.1 AuM by client type AuM by
Slide 23: Investment themes
Appendix 3b Investment themes FIXED INCOME ALTERNATIVES (US$49.9bn) (US$1.3bn) EQUITIES (US$6.0bn) Local Corporate External Debt Blended Debt THEME Currency Debt (US$12.4bn) (US$12.6bn) (US$18.3bn) (US$6.6bn) GLOBAL • Broad • Bonds • Broad • Blended • Active • EM Equity (All • Frontier • Private equ
Slide 24: Quarterly net flows
Appendix 3c Quarterly net flows +8.0 +6.0 +4.0 +2.0 USD billion +0.0 -2.0 -4.0 -6.0 -8.0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 24
Slide 25: AuM movements by theme and fund classification
Appendix 4 AuM movements by theme and fund classification AuM Gross Gross AuM US$bn 30 June 2022 Performance subscriptions redemptions Net flows 31 December 2022 External debt 14.4 0.3 1.3 (3.6) (2.3) 12.4 Local currency 20.6 0.5 1.2 (4.0) (2.8) 18.3 Corporate debt 6.8 0.1 0.1 (0.4) (0.3) 6.6 Blende
Slide 26: Foreign exchange
Appendix 5 Foreign exchange • US dollar strengthened against Sterling over the period Currency exposure of cash(1) − Period-end rate moved from 1.2145 to 1.2029 31 December 2022 % 30 June 2022 % £m £m − Average rate 1.1795 vs 1.3636 in H1 2021/22 US dollar 99.8 21 238.5 44 Sterling 355.6 74 273.1 50
Slide 27: Cash flows and consolidated funds H1 2022/23
Appendix 6 Cash flows and consolidated funds H1 2022/23 £m As reported Consolidated funds Group ex funds Cash from operations 45.7 (0.5) 46.2 Taxation (11.3) - (11.3) Interest 14.5 11.4 3.1 Seeding activities (15.2) (12.8) (2.4) Dividends paid (86.9) - (86.9) EBT purchases (15.6) - (15.6) Other (0.2
Slide 28: Investment performance
Appendix 7 Investment performance 6m 1yr 3yr 5yr 31st December 2022 Ashmore Benchmark Ashmore Benchmark Ashmore Benchmark Ashmore Benchmark External debt Broad 3.3% 3.2% -21.8% -17.8% -8.7% -5.3% -3.8% -1.3% Sovereign 3.0% 3.2% -19.6% -17.8% -7.8% -5.3% -2.8% -1.3% Sovereign IG 1.0% -0.1% -17.8% -19
Slide 29: Historical valuations relative to Developed Markets
Appendix 8 Historical valuations relative to Developed Markets External debt Local currency Index: 70 countries, 160 issuers, 929 bonds Index: 20 countries, 20 issuers, 308 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 30: 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 2022 and with a performance benchmark are included, which specif
Slide 31: 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