Ashmore Group plc · LSE:ASHM
Ashmore — FY2015 Earnings Presentation
32 slides from Ashmore's earnings presentation, Sep 8, 2015
Slide 1: Results for 12 months ending 30 June 2015
Ashmore Group plc Results for 12 months ending 30 June 2015 8 September 2015 www.ashmoregroup.com
Slide 2: Overview
Overview • Challenging year: volatile markets and investor sentiment • AuM of US$58.9 billion at 30 June 2015 vs US$75.0 billion a year ago • Established investment processes delivered improved performance in H2 92% AuM outperforming over 6m to 30 June 2015 60% and 81% AuM outperforming over 3 a
Slide 3: The year in context
The year in context Recent market cycles • Average AuM -12% Global 80 financial 900 crisis 70 800 • Operating costs -1% with non-VC costs -3% 700 60 Global Eurozone 600 50 growth crisis QE concerns 500 • Adjusted EBITDA decline limited to 9% 40 taper 400 30 300 20 200 • Profitability maintained at a
Slide 4: Assets under management
Assets under management • Gross subscriptions US$9.2 billion, 12% of opening AuM development (US$bn) AuM (FY2013/14: 22%) Broad-based demand for fixed income and 75.0 specialist equities Mix of new clients and existing mandates 58.9 75.0 • Gross redemptions US$18.7 billion, 28% of average AuM (F
Slide 5: Distribution
Distribution AuM by client type • Balanced, consistent and diverse client profile Central banks Sovereign wealth funds • Global distribution team in place to cover clients 9%2% 21% 1% Governments 18% Pension plans • Diversity of client location reflected in investment patterns 10% Corporates/Financi
Slide 6: Financial results: Revenues
Financial results Revenues Year ended Year ended 30 June 2015 30 June 2014 Variance £m £m £m % Management fees 250.2 283.1 (32.9) (12) Distribution costs (2.9) (4.6) 1.7 37 Net management fees 247.3 278.5 (31.2) (11) Performance fees 13.3 3.1 10.2 - Other revenue 4.6 7.9 (3.3) - Foreign exchange 18.
Slide 7: Management fee margins
Financial results Management fee margins Year-on-year average net management fee margins (bps) 250 • Average group margin reduced by 1bp YoY 202 200 FY'14 FY'15 165 150 • Mix effects e.g. themes, investment grade 123 105 95 100 76 70 65 60 59 60 56 56 54 • Non-recurring impact from agreement of 50 4
Slide 8: Expenses
Financial results Expenses Year ended Year ended 30 June 2015 30 June 2014 Variance £m £m £m % Personnel expenses (24.8) (24.6) (0.2) (1) Other operating expenses (27.0) (29.3) 2.3 8 (51.8) (53.9) 2.1 4 Depreciation (1.3) (1.2) (0.1) - Amortisation (4.0) (3.8) (0.2) - Total operating expenses before
Slide 9: Adjusted EBITDA
Financial results Adjusted EBITDA Statutory Seed capital- Adjusted FY Adjusted FY FY 2014/15 related items FX translation 2014/15 2013/14 £m £m £m £m £m % Net revenue 283.3 - (18.5) 264.8 293.0 (10) Investment securities & third-party interests (2.8) 2.8 - - - Operating expenses1 (94.2) 2.7 3.4 (88.
Slide 10: Other P&L items
Financial results Other P&L items Year ended Year ended 30 June 2015 30 June 2014 Variance £m £m £m Net finance income 1.9 2.2 (0.3) - Interest income 1.7 0.9 0.8 - Seed capital: investment return & FX (5.1) (3.0) (2.1) - Seed capital: interest income in consolidated funds 5.3 3.8 1.5 - Acquisition-
Slide 11: Earnings
Financial results Earnings Year ended Year ended 30 June 2015 30 June 2014 Variance £m £m £m % Profit before tax 181.3 171.6 9.7 6 Tax (41.3) (36.9) (4.4) (12) Profit after tax 140.0 134.7 5.3 4 Profit attributable to non-controlling interests (3.5) (2.6) (0.9) (35) Profit attributable to equity hol
Slide 12: Foreign exchange
Financial results Foreign exchange • Translation effect on non-Sterling balance sheet items: £18.5 Currency exposure of cash(1) million gain versus £30.1 million loss in prior year 30 June 2015 % 30 June 2014 % Over the two years, GBP/USD moved from 1.52 to 1.71, £m £m then to 1.57 US dollar 137.4
Slide 13: Cash flow
Financial results Cash flow • Continued high conversion rate Cash flow (£m) (1) Operations generated cash flow of £188.4 million (1) 188.4 44.7 107% of adjusted EBITDA 120.1 11.4 • Cash generation supports: 364.3 29.5 17.5 365.1 0.6 Seeding activity Investment EBT purchases Progressive d
Slide 14: Seed capital
Financial results Seed capital Diversified across themes and platforms • Actively-managed programme Theme % total Principal funds £91.0 million invested in funds and £68.4 million investment realised in FY2014/15 External debt 5 Mutual funds, local platforms Local currency 10 Mutual funds, local p
Slide 15: Balance sheet
Financial results Balance sheet Capital resources = £579.8 million (2) Liquid balance sheet structure • Strong, well-capitalised balance sheet with no debt • Increase in regulatory capital (£72.9 million to Cash and cash £94.4 million) primarily due to higher seed Excess 365.1 equivalents (1) capita
Slide 16: Strategy update
Strategy update • Phase 1: establish Emerging Markets asset class Global network investing across Emerging Markets Communicate diversity and range of returns available across Emerging Markets • Phase 2: diversify developed world capital sources and themes At the forefront of accessing markets fo
Slide 17: Investment performance cycle
Investment performance cycle • Market weakness in late 2014 % AuM outperforming benchmarks (gross) Some underperformance as expected Opportunity to add risk based on 100% fundamental credit analysis 81% 80% • Rally in 2015 delivered substantial alpha 60% e.g. >250bps in external debt in 6m to
Slide 18: Investment performance
Investment performance Funds outperforming versus Funds outperforming versus Funds outperforming versus benchmark, gross 1 year benchmark, gross 3 years benchmark, gross 5 years 100% 100% 100% 80% 80% 80% 60% 60% 60% 40% 40% 40% 20% 20% 20% 0% 0% 0% External Local Corporate Blended Equities Total Ex
Slide 19: Investment theme drivers
Investment theme drivers • Highly diversified, 63 countries in benchmark External debt • Recovery in oversold bonds, wide range of country returns (-37% to +16%) (12m benchmark return: +0.5%) • Attractive valuation: ~6% yield, 400bps spread over USTs • USD strength influenced index returns: hedged i
Slide 20: Current themes
Current themes Recent China sell-off and volatility centred on equities 160 • China 150 Expect lower GDP growth, still a premium to DM 140 Reforms create volatility but US$3.7trn reserves mitigate systemic risks 130 Managed currency devaluation consistent with SDR inclusion 120 Opening up ac
Slide 21: Summary
Summary • Macro uncertainty unhelpful for investor sentiment • Proven business model delivering in challenging markets • Improved investment performance • Good cash generation facilitates investment and provides income • Diverse Emerging Markets fundamentals intact • Recent volatility creates opport
Slide 22: Appendices
Ashmore Appendices eee
Slide 23: Net management and performance fees by theme
Appendix 1 Net management and performance fees by theme FY2014/15 FY2013/14 FY2014/15 FY2013/14 £m £m US$m US$m External debt 45.8 51.4 72.0 83.9 Local currency 46.6 51.2 73.3 83.6 Corporate debt 30.9 29.4 48.7 48.1 Blended debt 63.6 65.8 100.2 107.6 Equities 32.2 25.9 50.5 42.4 Alternatives 12.6 24
Slide 24: Assets under management
Appendix 2a Assets under management AuM by theme (US$bn) AuM as invested (US$bn) 1.6 External debt 0.8 2.6 1.2 2.6 3.8 12.0 Local currency 4.3 External debt Corporate debt 21.1 Local currency Blended debt 11.8 Corporate debt 15.7 Equities Equities 15.2 Alternatives Alternatives 7.2 Multi-strategy 17
Slide 25: Investment themes
Appendix 2b Investment themes Overlay/ External Debt Local Currency Corporate Debt Equities Alternatives Liquidity (USD 12.0bn) (USD 15.2bn) (USD 7.2bn) (USD 3.8bn) (USD 0.8bn) (USD 2.6bn) Global • Broad • Bonds • Broad • Global • Special Situations • Overlay Emerging • Sovereign • Bonds (Broad) • H
Slide 26: Quarterly net flows
Appendix 2c Quarterly net flows +8.0 +6.0 +4.0 +2.0 US$ billion +0.0 -2.0 -4.0 -6.0 -8.0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 Net flow Cumulative average per quarter 26
Slide 27: AuM movements by theme and fund classification
Appendix 3a AuM movements by theme and fund classification AuM Gross Gross AuM US$bn 30 June 2014 Performance subscriptions redemptions Net flows Other 30 June 2015 External debt 14.0 (0.6) 1.0 (2.5) (1.5) 0.1 12.0 Local currency 17.3 (2.9) 2.2 (1.9) 0.3 0.5 15.2 Corporate debt 8.2 (0.7) 1.3 (1.6) (
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 190.4 2.0 188.4 Taxation (44.7) - (44.7) Interest & dividends 5.9 5.3 0.6 Seeding (28.3) 1.2 (29.5) Dividends paid (120.1) - (120.1) Treasury/own shares (11.4) - (11.4) FX and ot
Slide 29: Adjusted profits
Appendix 5 Adjusted profits Statutory Seed capital-related Adjusted FY2014/15 items FX translation FY 2014/15 £m £m £m £m Net revenue 283.3 - (18.5) 264.8 Investment securities & third-party interests (2.8) 2.8 - - Operating expenses1 (94.2) 2.7 3.4 (88.1) EBITDA 186.3 5.5 (15.1) 177.1 EBITDA margin
Slide 30: Foreign exchange
Appendix 6 Foreign exchange Closing rates 30 June 2015 31 December 2014 30 June 2014 GBP:USD 1.5712 1.5577 1.7106 Average rates FY2014/15 H1 2014/15 FY2013/14 GBP:USD 1.5822 1.6289 1.6281 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 2015 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