Ashmore Group plc · LSE:ASHM
Ashmore — H1 2020/21 Earnings Presentation
32 slides from Ashmore's earnings presentation, Feb 10, 2021
Slide 1: Ashmore Group plc Results for six months ending 31 December 2020
Ashmore Group plc Results for six months ending 31 December 2020 10 February 2021 www.ashmoregroup.com
Slide 2: Overview
Overview • Financial performance reflects early stages of a typical recovery cycle ˗ AuM +11% over the six months to US$93.0bn, driven by investment performance ˗ Lower average AuM YoY (-6%) reflecting stage in the recovery cycle ˗ Adjusted EBITDA -12% YoY in line with revenue, margin maintained at
Slide 3: Continued strategic focus
Continued strategic focus • Operating model performing well Global Emerging Markets equity strategies ˗ Investment processes delivering alpha Three years Active All Cap Small Cap ˗ Robust and flexible business model has adapted to environment Benchmark (%) +6.2% +6.2% +2.7% Alpha (%) +2.4% +7.1% +7.
Slide 4: Significant improvement in performance
Investment performance One year: 50% outperforming Three years: 39% outperforming Five years: 91% 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’20: 9% Jun’20: 17% Jun’20: 74% Outperforming Underpe
Slide 5: Outperformance through market recovery cycles
Outperformance through market recovery cycles • Relative performance lags during market drawdown Blended debt: extended period of outperformance after market drawdowns ˗ active management underpins future returns 30% 25% • Initial recovery phase: Blended debt excess returns (alpha) ˗ high market bet
Slide 6: Profit growth driven by strong investment performance
Financial performance overview • AuM +11% over six months H1 2020/21 H1 2019/20 £m £m YoY % Net flows -US$1.4 billion and positive investment performance +US$10.8 billion AuM (US$bn) 93.0 98.4 (5) Adjusted net revenue 156.8 177.3 (12) • Adjusted net revenue -12% Average AuM -6% YoY Adjusted oper
Slide 7: Investment performance drives AuM growth during initial recovery phase
Assets under management AuM development (US$bn) • Strong investment performance +US$10.8 billion 10.8 0.6 (2.0) • Gross subscriptions of US$7.5 billion, 9% of opening AuM (H1 2019/20: US$14.9 billion, 16%) Effective distribution model: higher allocations by existing institutional clients & new man
Slide 8: Local platforms growing rapidly and achieving scale
Local Emerging Markets businesses delivering strong growth • Ashmore’s strategy seeks to mobilise Emerging Markets capital, Local platforms: contribution to Group providing a significant growth opportunity as: Group Local vs Group economies and capital markets grow AuM (US$bn) 93.0 6.9 7% indepe
Slide 9: Revenues reflect strong performance and lower average AuM
Financial results Revenues • Net management fees -17% Adjusted net revenue (£m) Average AuM -6% YoY, reflecting decline in early 2020 177.3 (29.4) Higher average GBP:USD rate (-3%) 4.6 156.8 4.3 • Net management fee margin 42bps -4bps YoY, primarily due to mutual fund flows (-1.5bps), investme
Slide 10: Tight control of operating costs
Financial results Operating costs • Adjusted operating costs reduced by 9% YoY Adjusted operating costs (£m) 56.5 1.5 3.8 51.2 • Non-VC operating costs fell by 6% 0.1 (0.1) ˗ Continued disciplined control of all operating costs ˗ Average headcount stable YoY ˗ Ongoing restrictions mean no travel and
Slide 11: Strong performance and successful recycling
Financial results Seed capital Seed capital movement (£m) • Active programme delivered strong investment performance and 68.0 79.9 successful realisations ˗ P&L gain of £49.3 million (H1 2019/20: £8.4 million gain) 238.4 28.1 254.6 ˗ predominantly in equities and alternatives themes • New investment
Slide 12: Dividend maintained
Financial results Statutory earnings H1 2020/21 H1 2019/20 YoY £m £m % Profit before tax 150.6 132.4 14 Tax (22.1) (18.2) (21) Profit after tax 128.5 114.2 13 Profit attributable to non-controlling interests (0.8) (1.3) 38 Profit attributable to equity holders of the parent 127.7 112.9 13 Earnings p
Slide 13: Consistent cash generation, maintaining liquid balance sheet
Financial results Cash flow • Operations generated cash flow of Cash flow (£m) (1) £89.2 million (1) 83% of adjusted EBITDA (H1 2019/20: 94%) 89.2 24.0 86.6 490.1 23.3 35.9 40.3 • Consistent uses of operating cash flow: 441.0 ˗ Corporation tax ˗ Ordinary dividends to shareholders ˗ Share purchases
Slide 14: Robust balance sheet structure
Financial results Balance sheet • Capital resources of £727.3 million (1) Consistent balance sheet structure 800 ˗ Excess regulatory capital of £580.0 million, 700 equivalent to 81p/share 600 ˗ No debt 500 400 • Balance sheet remains highly liquid (85%) 300 200 £441.0 million cash & cash equivalen
Slide 15: Structural growth premium and valuations favour Emerging Markets
Emerging Markets outlook • COVID vaccination programmes critical to further worldwide GDP growth outlook consistently favours EM over DM (%) economic & social progress in 2021 8.0 6.0 • Extraordinary stimulus by DM governments/central banks 4.0 ˗ underpinned by US election result 2.0 ˗ supportive fo
Slide 16: Summary
Summary • Financial performance reflects early stage of recovery in markets • Significant investment outperformance over the period • Strategy continues to deliver diversification • Investors seeking higher growth and returns will favour EM over DM 16
Slide 17: Q&A
Ashmore Q&A
Slide 18: Appendices
Ashmore Appendices eee
Slide 19: Appendix 1a Adjusted profits reconciliation
Appendix 1a Adjusted profits reconciliation Adjusted Adjusted H1 2020/21 H1 2019/20 £m £m YoY % Net revenue 150.7 176.8 (15) FX translation 6.1 0.5 nm Adjusted net revenue 156.8 177.3 (12) Operating costs ex consolidated funds (48.4) (54.7) 12 VC on FX translation (1.2) (0.1) nm Adjusted operating c
Slide 20: Appendix 1b Seed capital
Appendix 1b Seed capital • Consolidated funds: H1 2020/21 H1 2019/20 £m £m Line-by-line consolidation in financial statements Gains/(losses) on investment securities 55.9 4.2 FX taken to reserves Change in third-party interests in consolidated funds (25.7) (0.5) PBT contribution of +£30.9 mill
Slide 21: Appendix 2a Net management and performance fees by theme
Appendix 2a Net management and performance fees by theme H1 2020/21 H1 2019/20 H1 2020/21 H1 2019/20 £m £m US$m US$m External debt 27.1 31.8 35.8 40.2 Local currency 26.5 31.6 35.0 40.0 Corporate debt 18.1 29.9 23.9 37.7 Blended debt 42.6 49.1 56.3 61.8 Equities 12.1 12.4 16.0 15.7 Alternatives 6.9
Slide 22: Appendix 2b Management fee margins
Appendix 2b Management fee margins 144 141 H1 2019/20 H2 2019/20 H1 2020/21 134 113 102 98 68 64 60 52 48 49 49 47 46 44 42 41 41 39 43 39 37 36 16 14 15 Group External debt Local currency Corporate debt Blended debt Equities Alternatives Multi-asset Overlay Fixed income: 41bps (H1 2019/20: 45bps) (
Slide 23: Appendix 3a Assets under management
Appendix 3a Assets under management AuM by theme (US$bn) AuM as invested (US$bn) 0.3 External debt 8.9 1.3 8.7 19.3 Local currency 1.4 External debt 6.5 6.5 Corporate debt 31.9 Local currency Blended debt Corporate debt Equities 17.6 Equities 24.7 20.6 Alternatives Alternatives Multi-asset Overlay/l
Slide 24: Appendix 3b Investment themes
Appendix 3b Investment themes Overlay/ External Debt Local Currency Corporate Debt Equities Alternatives Liquidity (USD 19.3bn) (USD 20.6bn) (USD 11.6bn) (USD 6.5bn) (USD 1.3bn) (USD 8.7bn) Global Emerging • Broad • Bonds • Broad • EM Active • Private Equity • Overlay Markets • Sovereign • Bonds (Br
Slide 25: 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 25
Slide 26: 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 2020 Performance subscriptions redemptions Net flows 31 December 2020 External debt 17.1 1.9 1.3 (1.0) 0.3 19.3 Local currency 18.7 2.6 1.5 (2.2) (0.7) 20.6 Corporate debt 10.6 1.8 1.0 (1.8) (0.8) 11.6 Blende
Slide 27: 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 1.2356 to 1.3670 31 December 2020 % 30 June 2020 % £m £m Average rate 1.3107 vs 1.2657 in H1 2019/20 US dollar 326.2 74 380.5 78 Sterling 73.8 17 66.0
Slide 28: Appendix 6 Cash flows and consolidated funds H1 2020/21
Appendix 6 Cash flows and consolidated funds H1 2020/21 £m As reported Consolidated funds Group ex funds Cash from operations 88.9 (0.3) 89.2 Taxation (24.0) - (24.0) Interest received 1.4 1.2 0.2 Seeding activities 32.6 (3.3) 35.9 Dividends paid (86.6) - (86.6) EBT purchases (23.3) - (23.3) FX and
Slide 29: Appendix 7 Investment performance
Appendix 7 Investment performance 9m 1yr 3yr 5yr 31st December 2020 Ashmore Benchmark Ashmore Benchmark Ashmore Benchmark Ashmore Benchmark External debt Broad 30.6% 21.5% 2.2% 5.3% 3.4% 5.1% 8.2% 7.1% Sovereign 24.9% 21.5% 1.0% 5.3% 3.7% 5.1% 7.0% 7.1% Sovereign IG 17.3% 15.2% 9.6% 8.9% 8.1% 7.4% 8
Slide 30: Appendix 8 Historical valuations relative to Developed Markets
Appendix 8 Historical valuations relative to Developed Markets External debt Local currency Index: 74 countries, 168 issuers, 861 bonds Index: 19 countries, 19 issuers, 251 bonds 800 8.0% 6.00% 7.0% 700 5.50% 6.0% 600 5.00% 5.0% Yield (%) 500 4.0% 4.50% 3.0% 400 4.00% 2.0% 300 3.50% 1.0% 200 0.0% 3.
Slide 31: 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 2020 and with a performance benchmark are included, which specif
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