Ashmore Group plc · LSE:ASHM
Ashmore — FY2011 Earnings Presentation
37 slides from Ashmore's earnings presentation, Sep 13, 2011
Slide 1: Ashmore Group plc Final Results
Ashmore Group plc Final Results 12 months to 30 June 2011 13 September 2011
Slide 2: Contents
Contents Highlights Emerging Markets Backdrop AuM, Update on Themes, Distribution Financial Results Strategy and Outlook Appendices 1
Slide 3: Highlights
Highlights Final assets under management (“AuM”) of US$65.8 billion at 30 June 2011, an increase of US$30.5 billion (86%) from US$35.3 billion at 30 June 2010 – Completion of acquisition of AshmoreEMM Total net revenue of £333.8 million, an increase of 17% from FY2009/10 (£286.2 million) − Net manag
Slide 4: Emerging Markets Backdrop: Growth story
Emerging Markets Backdrop Growth story 1) Driver of global growth Superior Economic Growth Outlook Around 50% of global economy in terms of GDP (PPP basis) 7% 2011E forecasted GDP growth of 6.4% for Emerging Markets 6% vs 2.2% for developed world (IMF) Real GDP Growth 5% 4% 2) Favourable demographic
Slide 5: Emerging Markets Backdrop: Misconception of risk
Emerging Markets Backdrop Misconception of risk 1) Strong financial position Converging Credit Ratings Lower debt to GDP at consumer, corporate and government June 2006 Latest Change levels Developed Markets EM banks have fared much better in the credit crisis (not as dependent on leverage) UK AAA A
Slide 6: Emerging Markets Backdrop: Ashmore Advantage
Emerging Markets Backdrop “Ashmore Advantage” Dedicated to Emerging Focused exclusively on Emerging Markets Markets Longstanding presence and dedication to Emerging Markets since 1980’s 86 investment professionals within Ashmore globally Depth, Breadth & Breadth of investment themes enables countrie
Slide 7: Assets under Management Overview
Assets under Management Overview Key Highlights Assets under Management (US$bn) AuM increased by US$30.5bn to US$65.8bn, an 86% increase 65.8 Strong gross subscriptions of US$23.0bn (FY2009/10: US$11.3bn) Redemption rate in line with growth in scale and type of AuM 37.5 35.3 US$9.9bn AuM increase ac
Slide 8: Assets under Management: Subscriptions and redemptions
Assets under Management Subscriptions and redemptions FY2010/11 AuM Development (US$bn) Redemptions as a % Average AuM by Year 5.1 65.8 9.9 41% 23.0 US$11.3bn (7.5) 16% 20% US$7.5bn 35.3 US$7.1bn 12% US$3.7bn 8% US$2.2bn AuM at June Subscriptions Redemptions Acquisition Performance AuM at June Jun-0
Slide 9: Assets under Management: Investment performance
Assets under Management Investment performance Funds Outperforming vs Benchmark – Gross 1 Year1,2 “Ashmore owned” through period Including acquired track record through period 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% Ext ernal Local Corporate Blended Equity Total Ext ernal Local Corporate Ble
Slide 10: Assets under Management: Investment performance
Assets under Management Investment performance Ashmore EM External Debt (Broad) Composite Ashmore Local Currency (Broad) Composite Ashmore Local Currency (Bonds) Composite AshmoreEMM Global Equity Composite Ashmore composite performance Lower quartile Benchmark index Upper quartile 95th percentile 5
Slide 11: Update on Themes: Reclassification and look-through
Update on Themes Reclassification and look-through AuM as Classified by Mandate AuM as Classified by Mandate AuM as Invested in Underlying – Historic (%) – Revised (%) Asset Class (%) Theme Multi-strategy reclassification & crossover Special Other Multi- situations 1% 7% External debt Multi-strategy
Slide 12: Update on Themes: Revised Reporting Basis
Update on Themes Revised Reporting Basis External Local Corporate Equities Alternatives Overlay / Debt Currency Debt Liquidity US$14.3bn US$9.4bn US$1.3bn US$10.1bn US$2.8bn US$8.6bn — Special Situations: — Broad — Broad — Broad — Broad Global Active — Overlay Distressed debt — Sovereign — FX — High
Slide 13: Distribution Overview Update
Distribution Overview Update Enhancing distribution platform – Business Development – primary sales function – Account Management – ongoing client management London – Intermediary Distribution – relationship with key distributors New York / Istanbul Beijing Washington Tokyo – Marketing Services – de
Slide 14: Distribution Overview: New funds and accounts
Distribution Overview New funds and accounts Ashmore sponsored funds launched: − A series of 6 US 40 Act funds across local currency, external debt, corporate debt, blended debt and equities − A further 5 sub funds of the Ashmore SICAV within local currency, corporate debt, blended debt and overlay/
Slide 15: Financial Results: Income statement
Financial Results Income statement Year ended Year ended Variance 30 June 2011 30 June 2010 As reported £m £m £m % Net revenue 333.8 286.2 47.6 17 Total operating expenses (94.4) (76.9) (17.5) (23) Operating profit 239.4 209.3 30.1 14 Finance income 6.5 7.9 (1.4) (18) Profit before tax 245.9 217.2 2
Slide 16: Financial Results: Net revenue
Financial Results Net revenue Year ended Year ended Variance 30 June 2011 30 June 2010 As reported £m £m £m % Management fees 250.9 192.1 58.8 31 Less: distribution costs (1.6) (2.2) 0.6 27 Net management fees 249.3 189.9 59.4 31 Performance fees 85.4 82.9 2.5 3 Other revenue 6.5 6.4 0.1 2 Foreign e
Slide 17: Financial Results: Revenue margins
Financial Results Revenue margins Total Net Revenue Margin (bps) Net Management Fee Margins (bps) FY2010/11: 86bps 137bps 75 115bps 90 42 169 29 47 FY 2010/11 102 217 95 86 129 17 FY 2009/10 FY 2010/11 FY2009/10: 95bps 82 98 Net management fee Performance fee 172 49 FY 2009/10 171 Principal componen
Slide 18: Financial Results: Performance fees
Financial Results Performance fees Year Year Performance Fees by Theme (%) ended 30 ended 30 June 2011 June 2010 Multi- Overlay / strategy liquidity £m £m Alternatives 0% 6% 12% External debt 60.2 43.0 Equities Local currency 1.8 10.3 3% Corporate debt 4.9 9.8 Blended debt 1% Blended debt 1.0 3.3 Co
Slide 19: Financial Results: AshmoreEMM acquisition
Financial Results AshmoreEMM acquisition Transaction completed on 31 May 2011 Accounting Considerations AuM as at 30 June 2011 was US$9.9 billion Consideration paid at completion revised in line Quantum Comments with price adjustment mechanism, further (US$m) adjustment at 30-Sep-11 Integration proc
Slide 20: Financial Results: Expenses
Financial Results Expenses Year ended 30 Year ended 30 June 2011 June 2010 Variance £m £m £m % Personnel expenses 15.3 12.8 2.5 20 Variable compensation 56.2 46.0 10.2 22 Other operating expenses 22.9 18.1 4.8 27 Total operating expenses 94.4 76.9 17.5 23 Operating profit margin 71.7% 73.0% …leading
Slide 21: Financial Results: Expenses
Financial Results Expenses Year End Headcount Headcount growth as planned, reflecting: Jun-11 207 39 − Distribution platform development − Acquisition of AshmoreEMM Jun-10 120 45 Employee cost increases for year to 30 June 2011: Jun-09 106 36 − Fixed personnel costs increased by £2.5 million to £15.
Slide 22: Financial Results: Earnings
Financial Results Earnings Year ended 30 Year ended 30 June 2011 June 2010 £m £m Profit before tax 245.9 217.2 Tax (55.7) (56.6) Profit after tax 190.2 160.6 Net other comprehensive income 6.7 1.2 Total comprehensive income 196.9 161.8 Attributable: Equity holders of the parent 195.3 161.2 Minority
Slide 23: Financial Results: Cash flow & balance sheet
Financial Results Cash flow & balance sheet Year Year Year Year ended 30 ended 30 ended 30 ended 30 June 2011 June 2010 June 2011 June 2010 £m £m £m £m Cash from operations 253.4 250.9 Total assets 675.6 505.1 Acquisition of (41.2) - Net liabilities 160.7 131.4 AshmoreEMM Net assets/total equity 514
Slide 24: Financial Results: Summary
Financial Results Summary Strong growth in AuM − AuM up by 86% to US$65.8bn − Strong subscriptions Completion of AEMM as announced earlier in the year Theme reclassification in line with marketing approach Fund launches to satisfy investor demand for Emerging Markets assets Financial strength − Reco
Slide 25: Strategy Update: Our strategy
Strategy Update Our strategy …three phase strategy to position Ashmore at the heart of capital flows into and between EM 24
Slide 26: Phase 1: Establish Emerging Markets asset class
Strategy Update Phase 1: Establish Emerging Markets asset class Dedicated EM Equity Fund Flows Record inflows into Emerging Markets funds during 2010 120 95.8 – Global AuM estimated to be c. US$55 trillion (EM c. US$5 100 trillion); even a 1% increase in allocations to Emerging Markets Dedicated EM
Slide 27: Phase 2: Diversify developed world capital sources and themes
Strategy Update Phase 2: Diversify developed world capital sources and themes AuM by Investor AuM by 2011 Highlights Geography Theme June 2006 Acquisition of majority stake in AshmoreEMM increases (39 funds/accounts) Special Sits Equities 3% Middle equity offering Americas East and Local currency 7%
Slide 28: Phase 3: Mobilise Emerging Markets capital
Strategy Update Phase 3: Mobilise Emerging Markets capital Fastest Growing AuM Markets are in EM Local Asset Management Subsidiaries Ashmore Brasil Ashmore Colombia Ashmore India Europe Ashmore Turkey 7% North America Local Asset Management Joint Ventures 8% 2% Rest of Asia Japan and Everbright Ashm
Slide 29: Outlook
Outlook Theme Positioning External debt Now relatively safer than it was compared to US treasuries; anticipate spreads over Treasuries will tighten significantly Local currency Set to rise against the US dollar in the next six months as we expect central banks to steadily use currency appreciation t
Slide 30: Appendices
Appendices
Slide 31: Appendix 1 – GBP / USD Revenues FY11 / FY11 half-on-half
Appendix 1 – GBP / USD Revenues FY11 / FY11 half-on-half US$ millions H1 11 H2 11 FY11 H110 H210 FY10 Net management fees less distribution costs External debt 49.3 50.1 99.4 47.7 48.6 96.3 Local currency 28.7 32.8 61.5 21.9 26.2 48.1 Corporate debt 9.0 11.0 20.0 5.5 7.0 12.5 Blended debt 21.1 23.6
Slide 32: Appendix 1a – Management and performance fees by theme (GBP)
Appendix 1a – GBP / USD revenues Management and performance fees by theme (GBP) Year ended Year ended Year ended Year ended Year ended £ millions 30 Jun 2007 30 Jun 2008 30 Jun 2009 30 Jun 2010 30 Jun 2011 Net management fees less distribution costs External debt 71.9 85.1 74.5 79.4 External debt 62
Slide 33: Appendix 1b – Management and performance fees by theme (USD)
Appendix 1b – GBP / USD revenues Management and performance fees by theme (USD) Year ended Year ended Year ended Year ended Year ended US$ millions 30 Jun 2007 30 Jun 2008 30 Jun 2009 30 Jun 2010 30 Jun 2011 Net management fees less distribution costs External debt 140.2 171.1 120.9 124.3 External d
Slide 34: Appendix 2 – AuM / product information
Appendix 2 – AuM / product information AuM by theme and fund account/classification US$bn 30-Jun-2007 30-Jun-2008 30-Jun-2009 30-Jun-2010 30-Jun-2010 30-Jun-2011 Investment theme External debt 20.5 20.9 14.7 19.4 External debt 12.3 14.3 Local currency 4.0 7.2 4.2 7.0 Local currency 6.0 9.4 Special s
Slide 35: Appendix 3 – Investment performance - public funds
Appendix 3 – Assets under Management Investment performance - public funds Source: Ashmore (un-audited), JP Morgan, Annualised Morgan Stanley. Data as at 30th June Performance(1) 3 Year 2011. Returns gross of fees, dividends Launch AuM Since Standard reinvested. Theme Fund Date US$M Launch 6m 1 Year
Slide 36: 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
Slide 37: Ashmore
Ashmore