Ashmore Group plc · LSE:ASHM
Ashmore — H1 2016/17 Earnings Presentation
29 slides from Ashmore's earnings presentation, Feb 9, 2017
Slide 1: Ashmore Group plc Results for six months ending 31 December 2016
Ashmore Group plc Results for six months ending 31 December 2016 9 February 2017 www.ashmoregroup.com
Slide 2: Overview
Overview • Emerging Markets outperforming Blended debt benchmark -1.5% over 6m to 31 Dec 2016, 10yr US Treasury -7.5% Momentum briefly interrupted by US election, but quickly recovered Investor sentiment continues to improve • Strong investment performance > 90% AuM outperforming over 1 year
Slide 3: Financial performance overview
Financial performance overview Six months ended Six months ended • Net revenues +24% 31 December 2016 31 December 2015 £m £m Growth in management and performance fees AuM (US$bn) 52.2 49.4 Benefits of stronger US dollar vs Sterling Net revenue 144.1 116.4 • Adjusted EBITDA margin increased from
Slide 4: Momentum recovered following US election result
Assets under management • Gross subscriptions US$5.5 billion, 10% of opening AuM development (US$bn) AuM (H1 2015/16: US$3.4 billion, 6%) 5.5 (6.2) • Gross redemptions US$6.2 billion, 12% of opening 0.6 (0.3) AuM (H1 2015/16: US$9.1 billion, 15%) • Net outflow US$0.7 billion (H1 2015/16: US$5.7 bill
Slide 5: Growth potential across diverse clients and geographies
Clients and products AuM by client type • Allocations are underweight Typical institutional target is mid-single digits (5-7%), some are as Central banks low as 1-2% 10% 2% 18% Sovereign wealth funds Retail investors in a similar position (e.g. 2-5% allocation) 3% Governments Short pause in fl
Slide 6: Revenues benefit from currency and performance
Financial results Revenues Six months ended Six months ended 31 December 2016 31 December 2015 Variance £m £m % Management fees 116.8 99.3 18 Distribution costs (1.9) (0.6) n/m Net management fees 114.9 98.7 16 Performance fees 21.6 8.6 151 Other revenue 2.2 2.1 5 Foreign exchange 5.4 7.0 (23) Net r
Slide 7: Product mix and mandate size continue to influence margin
Financial results Management fee margins Underlying average net management fee margins (bps) 165 • Effects of mix and mandate size continue to H1'16 H2'16 H1'17 be the dominant factors driving theme and 135 141 Group margins 106102 96 98 90 • Margin declined by 1bp over the six months 82 Large seg
Slide 8: Continued cost discipline delivering operating efficiency
Financial results Expenses Six months ended Six months ended 31 December 2016 31 December 2015 Variance £m £m % Personnel expenses (12.9) (12.1) (7) Other operating expenses (12.9) (14.2) 9 (25.8) (26.3) 2 Depreciation (0.5) (0.6) 17 Amortisation (2.2) (1.9) (16) Total operating expenses before VC (
Slide 9: Strong seed capital returns
Financial results Other P&L items Six months ended Six months ended 31 December 2016 31 December 2015 Variance £m £m % Net finance income 26.1 6.1 n/m Comprising: - interest income 1.2 1.0 20 - seed capital: investment return & FX 20.9 (5.3) n/m - seed capital: consolidated funds income 4.0 10.4 (62
Slide 10: Business model delivers higher operating margin
Financial results Adjusted profits Statutory Seed capital- Adjusted Adjusted H1 2016/17 related items FX translation H1 2016/17 H1 2015/16 £m £m £m £m £m % Net revenue 144.1 - (8.4) 135.7 108.4 25 Investment securities & third-party interests 2.3 (2.3) - - - Operating expenses1 (49.1) 1.4 1.7 (46.0)
Slide 11: Dividend in line with prior year
Financial results Earnings Six months ended Six months ended 31 December 2016 31 December 2015 Variance £m £m % Profit before tax 121.5 62.7 94 Tax (22.7) (15.6) (46) Profit after tax 98.8 47.1 110 Profit attributable to non-controlling interests (0.4) (0.7) 43 Profit attributable to equity holders
Slide 12: Actively-managed programme delivering AuM scale and profits
Financial results Seed capital • Market value £233.4 million (30 June 2016: £238.5 million) Diversified across themes (% of market value) Seeded funds’ AuM growth enabled recycling of £69.7 million, e.g. from short duration and local Indonesia funds 10% 5% 6% External debt 60% in liquid funds 8%
Slide 13: Benefits from weaker Sterling
Financial results Foreign exchange • Over the period, GBP:USD moved from 1.32 to 1.23 Currency exposure of cash(1) Average rate 1.28 (H1 2015/16: 1.53) 31 December 2016 % 30 June 2016 % £m £m US dollar 178.9 49 119.1 33 • P&L FX effects in H1 2016/17: Sterling 163.9 44 212.6 59 Translation of ne
Slide 14: Operating model and seed capital programme generate good cash flow
Financial results Cash flow • Cash increased in the period Cash flow (£m) (1) 26.2 98.0 • Operations generated cash flow of 86.6 £98.0 million (1) 1.1 6.1 358.4 4.8 368.2 11.8 24.4 109% of adjusted EBITDA (H1 2015/16: 87%) • H1 has seasonal effects Prior year final dividend Prior year bonuses
Slide 15: Strong, liquid balance sheet
Financial results Balance sheet • Strong, well-capitalised, liquid balance sheet with no debt Financial resources = £609.2 million (2) Liquid balance sheet structure • Excess regulatory capital of £509.3 million • 83% of balance sheet is liquid Cash and cash Majority of seed capital is in funds wi
Slide 16: Investment processes delivering strong outperformance
Investment performance AuM outperforming versus benchmark, AuM outperforming versus benchmark, AuM outperforming versus benchmark, gross 1 year annualised gross 3 years annualised gross 5 years annualised 91% 86% 81% 73% 69% 63% 64% 55% 14% Blended Blended Blended Local Equities Local Equities Local
Slide 17: Positive Emerging Markets outlook for 2017
2017 outlook Emerging Markets environment Asset classes • EM GDP growth accelerating after macro adjustments External debt • Potential to continue to outperform as US rates rise, with spread of >300bps over UST • Institutions are underweight • Despite recent performance, still attractive valuations
Slide 18: Summary
Summary • Markets performing well, yet institutional allocations are underweight • Investment performance continues to be strong, both absolute and relative to benchmarks and peers • Good operational and financial performance in H1 2016/17 • Operating margin increased, good cash generation and maint
Slide 19: Appendices
Ashmore Appendices eee
Slide 20: Net management and performance fees by theme
Appendix 1 Net management and performance fees by theme H1 2016/17 H1 2015/16 H1 2016/17 H1 2015/16 £m £m US$m US$m External debt 23.6 19.9 30.0 30.2 Local currency 22.7 19.8 28.9 30.2 Corporate debt 12.7 11.3 16.2 17.2 Blended debt 30.8 25.6 39.2 39.1 Equities 11.4 11.5 14.5 17.5 Alternatives 7.9 5
Slide 21: Assets under management
Appendix 2a Assets under management AuM by theme (US$bn) AuM as invested (US$bn) External debt 1.1 3.8 1.5 3.6 11.4 Local currency 1.7 External debt 2.9 Corporate debt 3.3 Local currency 20.4 Blended debt Corporate debt 7.2 Equities Equities 14.1 Alternatives 12.4 Alternatives Multi-asset Overlay/li
Slide 22: Investment themes
Appendix 2b Investment themes Overlay/ External Debt Local Currency Corporate Debt Equities Alternatives Liquidity (US$11.4bn) (US$12.4bn) (US$5.2bn) (US$2.9bn) (US$1.5bn) (US$3.6bn) Global Emerging • Broad • Bonds • Broad • Global EM Value • Private Equity • Overlay Markets • Sovereign • Bonds (Bro
Slide 23: Historical valuations relative to Developed Markets
Appendix 2c Historical valuations relative to Developed Markets External debt Local currency 12.0% 7.00% 1000 900 10.0% 6.00% 800 5.00% 700 8.0% Yield (%) 600 4.00% 500 6.0% 3.00% 400 4.0% 300 2.00% 200 2.0% 1.00% 100 0 0.0% 0.00% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2003 2005 2007
Slide 24: Quarterly net flows
Appendix 2d Quarterly net flows +8.0 +6.0 +4.0 +2.0 US$ billion +0.0 -2.0 -4.0 -6.0 -8.0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 24
Slide 25: AuM movements by theme and fund classification
Appendix 3 AuM movements by theme and fund classification AuM Gross Gross AuM US$bn 30 June 2016 Performance subscriptions redemptions Net flows 31 December 2016 External debt 11.7 0.2 1.1 (1.6) (0.5) 11.4 Local currency 13.3 (0.3) 0.6 (1.2) (0.6) 12.4 Corporate debt 5.0 0.1 0.9 (0.8) 0.1 5.2 Blende
Slide 26: Cash flows and consolidated funds H1 2016/17
Appendix 4 Cash flows and consolidated funds H1 2016/17 £m As reported Consolidated funds Group ex funds Cash from operations 96.6 (1.4) 98.0 Taxation (26.2) - (26.2) Interest received 5.1 4.0 1.1 Acquisitions/disposals 4.8 - 4.8 Seeding activities 25.4 1.0 24.4 Dividends paid (86.6) - (86.6) Treasu
Slide 27: Foreign exchange
Appendix 5 Foreign exchange Closing rates 31 December 2016 30 June 2016 31 December 2015 GBP:USD 1.2340 1.3234 1.4736 Average rates H1 2016/17 H1 2015/16 GBP:USD 1.2809 1.5291 27
Slide 28: Investment performance
Appendix 6 Investment performance Source: Ashmore (un-audited), JP Morgan, Morgan Stanley 1yr 3yr 5yr - Returns gross of fees, dividends reinvested. 31 December 2016 Ashmore Benchmark Ashmore Benchmark Ashmore Benchmark - Annualised performance shown for periods greater than one year. External debt
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