Ashmore Group plc · LSE:ASHM
Ashmore — H1 2019/20 Earnings Presentation
29 slides from Ashmore's earnings presentation, Feb 6, 2020
Slide 1: Ashmore Group plc Results for six months ending 31 December 2019
Ashmore Group plc Results for six months ending 31 December 2019 6 February 2020 www.ashmoregroup.com
Slide 2: Overview
Overview • Strong operating and financial performance ˗ AuM +28% YoY and +7% over six months, driven by net inflows of US$5.7 billion ˗ Adjusted net revenue +20%, adjusted EBITDA +24%, adjusted EBITDA margin 69% ˗ Diluted EPS +56%, benefiting from strong seed capital returns and lower tax rate ˗ Int
Slide 3: Financial performance overview
Financial performance overview • AuM +28% YoY, average AuM +24% YoY H1 2019/20 H1 2018/19 £m £m YoY % Net flows +US$5.7 billion and positive investment performance +US$0.9 billion AuM (US$bn) 98.4 76.7 28 Adjusted net revenue 177.3 148.2 20 • Adjusted net revenue +20% Net management fees +18%, r
Slide 4: Strategy focused on higher growth opportunities in Emerging Markets
Local Emerging Markets businesses offer significant growth and value opportunity • Strategy seeks to mobilise Emerging Markets capital Local platforms: contribution to Group Investable capital pools growing 3x faster than Developed Markets Group Local vs Group Opportunity for independent manager
Slide 5: Strong AuM growth driven by net flows from diversified client base
Assets under management • Gross subscriptions of US$14.9 billion, 16% of AuM development (US$bn) opening AuM (H1 2018/19: US$8.5 billion, 12%) 14.9 (9.2) Institutional clients continue to increase 0.9 allocations across all fixed income and equity themes New clients active in blended debt, corpo
Slide 6: Revenue growth driven by net management fees
Financial results Revenues • Net management fees +18% Strong growth (+18%) in net management fee income Strong growth in average AuM 30.7 2.8 5.7 3.8 168.3 Lower average GBPUSD rate • Net management fee margin 46bps 142.3 -1bp HoH, split equally between size and other effects -3bps YoY, due
Slide 7: Continued disciplined control of operating costs
Financial results Operating costs • Non-VC operating costs fell by 6% Operating cost development (£m) ˗ Modest (+2%) increase in like-for-like other 28.0 2.2 operating costs, of which half due to FX 0.3 26.3 0.3 ˗ Lower amortisation 0.1 • Average headcount increased 5% YoY ˗ Fixed staff costs +3% Yo
Slide 8: Active seed capital programme to support diversified AuM growth
Financial results Seed capital Seed capital movement (£m) • Total seed capital programme of £274 million 15.2 34.6 277.8 Market value £255.3 million (30 June 2019: £277.8 million) 3.1 255.3 Undrawn commitments of £18.8 million • Active management delivered realised gain of £1.5 million and total
Slide 9: Strong earnings growth and increased dividend
Financial results Statutory earnings H1 2019/20 H1 2018/19 YoY £m £m % Profit before tax 132.4 93.0 42 Tax (18.2) (19.0) 4 Profit after tax 114.2 74.0 54 Profit attributable to non-controlling interests (1.3) (1.6) 19 Profit attributable to equity holders of the parent 112.9 72.4 56 Earnings per sha
Slide 10: Cash flow
Financial results Cash flow • Operations generated cash flow of Cash flow (£m) (1) £115.4 million (1) 94% of adjusted EBITDA 115.4 37.9 (H1 2018/19: 86%) 87.8 463.1 41.1 3.8 19.0 0.5 17.8 • H1 cash flows include payment of 417.2 final dividend and cash component of variable remuneration • Shares p
Slide 11: Maintained conservative balance sheet
Financial results Balance sheet • Excess regulatory capital of £579.7 million Consistent balance sheet structure Capital resources of £700.7 million (2) 800 700 Pillar 2 regulatory capital requirement of 600 £121.0 million 500 Excess capital equivalent to 81p/share 400 300 • Balance sheet is h
Slide 12: Investment performance
Investment performance One year Three years Five years 100% 100% 100% 98% 80% 80% 80% 75% 60% 60% 60% 40% 40% 40% 20% 20% 20% 24% 0% 0% 0% Local Blended Equities Local Blended Equities Local Blended Equities Multi-asset Multi-asset Multi-asset External Group External Group External Group Corporate C
Slide 13: Positive outlook for Emerging Markets
Emerging Markets outlook Continued incentives to allocate to Emerging Markets Emerging Markets growth premium 6.0 • Rising growth premium: positive for currencies and equities 5.0 • Attractive real rates, benign inflation and monetary policies: local currency bonds 4.0 • Dovish DM central banks: sup
Slide 14: Summary
Summary • Strong operating and financial performance ˗ Broad-based net inflows of US$5.7 billion ˗ Adjusted EBITDA +24% • Progress against Ashmore’s growth strategy ˗ Higher allocations, increased diversification, Ashmore Indonesia listed • Positive outlook for Emerging Markets Decent ongoing leve
Slide 15: Appendices
Ashmore Appendices eee
Slide 16: Appendix 1a Adjusted profits reconciliation
Appendix 1a Adjusted profits reconciliation Adjusted Adjusted H1 2019/20 H1 2018/19 £m £m YoY % Net revenue 176.8 152.1 16 FX translation 0.5 (3.9) nm Adjusted net revenue 177.3 148.2 20 Operating costs ex consolidated funds (54.7) (50.2) (9) VC on FX translation (0.1) 0.8 nm Adjusted operating cost
Slide 17: Appendix 1b Seed capital
Appendix 1b Seed capital • Consolidated funds: H1 2019/20 H1 2018/19 £m £m Line-by-line consolidation in financial statements Gains/(losses) on investment securities 4.2 (18.6) FX taken to reserves Change in third-party interests in consolidated funds (0.5) 7.8 PBT contribution of £4.6 million
Slide 18: Appendix 2a Net management and performance fees by theme
Appendix 2a Net management and performance fees by theme H1 2019/20 H1 2018/19 H1 2019/20 H1 2018/19 £m £m US$m US$m External debt 31.8 27.2 40.2 34.9 Local currency 31.6 26.0 40.0 33.6 Corporate debt 29.9 23.5 37.7 30.4 Blended debt 49.1 39.2 61.8 50.5 Equities 12.4 12.7 15.7 16.3 Alternatives 7.6
Slide 19: Appendix 2b Management fee margins
Appendix 2b Management fee margins 134 H1 2018/19 H2 2018/19 H1 2019/20 131 127 98 84 80 72 70 68 58 54 52 49 47 50 48 49 46 46 42 41 39 39 39 16 16 16 Group External debt Local currency Corporate debt Blended debt Equities Alternatives Multi-asset Overlay Fixed income: 45bps (H1 2018/19: 47bps) (H2
Slide 20: Appendix 3a Assets under management
Appendix 3a Assets under management AuM by theme (US$bn) AuM as invested (US$bn) 0.4 External debt 1.6 7.8 7.9 19.7 1.7 External debt 5.1 Local currency 5.3 Corporate debt Local currency 38.0 Blended debt 15.9 Corporate debt Equities Equities 26.7 22.9 Alternatives Alternatives Multi-asset Overlay/l
Slide 21: Appendix 3b Investment themes
Appendix 3b Investment themes Overlay/ External Debt Local Currency Corporate Debt Equities Alternatives Liquidity (USD 19.7bn) (USD 22.9bn) (USD 14.2bn) (USD 5.1bn) (USD 1.6bn) (USD 7.8bn) Global Emerging • Broad • Bonds • Broad • Global EM Equity • Private Equity • Overlay Markets • Sovereign • Bo
Slide 22: Appendix 3c Quarterly net flows
Appendix 3c Quarterly net flows +8.0 +6.0 +4.0 +2.0 US$ billion +0.0 -2.0 -4.0 -6.0 -8.0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 22
Slide 23: Appendix 4 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 2019 Performance subscriptions redemptions Net flows & other 31 December 2019 External debt 19.1 0.3 1.4 (1.1) 0.3 - 19.7 Local currency 19.7 0.6 4.5 (1.9) 2.6 - 22.9 Corporate debt 15.5 (0.3
Slide 24: Appendix 5 Foreign exchange
Appendix 5 Foreign exchange • Sterling strengthened against the US dollar over the period Currency exposure of cash(1) Period-end rate moved from 1.2727 to 1.3248 31 December 2019 % 30 June 2019 % £m £m Average rate 1.2657 vs 1.2948 in H1 2018/19 US dollar 308.6 74 255.6 55 Sterling 77.1 18 157.
Slide 25: Appendix 6 Cash flows and consolidated funds H1 2019/20
Appendix 6 Cash flows and consolidated funds H1 2019/20 £m As reported Consolidated funds Group ex funds Cash from operations 113.5 (1.9) 115.4 Taxation (37.9) - (37.9) Interest received 5.3 1.5 3.8 Seeding activities 15.9 (3.1) 19.0 Acquisitions/disposals 0.5 - 0.5 Dividends paid (87.8) - (87.8) Tr
Slide 26: Appendix 7 Investment performance
Appendix 7 Investment performance 1yr 3yr 5yr 31st December 2019 Ashmore Benchmark Ashmore Benchmark Ashmore Benchmark External debt Broad 14.0% 15.0% 6.4% 6.7% 8.1% 6.2% Sovereign 15.7% 15.0% 6.7% 6.7% 7.6% 6.2% Sovereign IG 15.1% 16.6% 7.7% 7.5% 6.0% 5.6% Local currency Bonds 12.8% 13.5% 7.5% 7.0%
Slide 27: Appendix 8 Historical valuations relative to Developed Markets
Appendix 8 Historical valuations relative to Developed Markets External debt Local currency Index: 73 countries, 170 issuers, 780 bonds Index: 18 countries, 18 issuers, 220 bonds 550 8.0% 6.00% 500 7.0% 5.50% 450 6.0% 5.00% 400 5.0% Yield (%) 4.0% 4.50% 350 3.0% 300 4.00% 2.0% 250 3.50% 1.0% 200 0.0
Slide 28: Appendix 9 Disclosures
Appendix 9 Disclosures Page 12: - 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 2019 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