Ashmore Group plc · LSE:ASHM
Ashmore — H1 2014/15 Earnings Presentation
32 slides from Ashmore's earnings presentation, Feb 24, 2015
Slide 1: Interim results for six months ending 31 December 2014
Ashmore Group plc Interim results for six months ending 31 December 2014 24 February 2015 www.ashmoregroup.com
Slide 2: Overview
Overview • AuM of US$63.7 billion at 31 December 2014 (-15% against 30 June 2014: US$75.0 billion) • Net revenues +22% to £164.0 million through higher performance fees and benefits of US dollar strength, offsetting lower management fees • Business model continues to deliver high adjusted EBITDA mar
Slide 3: Assets under management
Assets under management • Gross subscriptions US$5.3 billion, 7% of AuM development (US$bn) opening AuM (H1 2013/14: 9%) 82 5.3 (9.8) Good demand for local currency, corporate 80 debt, blended debt and specialist equities 78 76 74 • Gross redemptions US$9.8 billion, 14% of 72 (6.2) 70 average AuM
Slide 4: Distribution
Distribution • Balanced and diversified client base AuM by client type Scalable worldwide distribution team of 48 people Central banks 32% of AuM from Emerging Markets-domiciled clients 9% 2% Sovereign wealth funds 1% 22% Governments • At the forefront of accessing Emerging Markets 17% Pension p
Slide 5: Financial results: Revenues
Financial results Revenues Six months ended Six months ended 31 December 2014 31 December 2013 Variance £m £m £m % Management fees 134.8 152.0 (17.2) (11) Distribution costs (1.8) (2.2) 0.4 18 Net management fees 133.0 149.8 (16.8) (11) Performance fees 7.0 0.7 6.3 - Other revenue 2.6 2.6 - - Foreig
Slide 6: Management fee margins
Financial results Management fee margins • Group margin was stable during the period Average net management fee margins (bps) 250 229 • Theme mix effects added 1bp vs H2’14 200 H1'14 H2'14 H1'15 175 Overlay / liquidity 166 Alternatives & Multi-strategy 150 124122 107 98 100 74 66 75 77 • Non-rec
Slide 7: Expenses
Financial results Expenses Six months ended Six months ended 31 December 2014 31 December 2013 Variance £m £m £m % Personnel expenses 12.4 12.5 0.1 (1) Other operating expenses 12.9 13.8 0.9 (7) 25.3 26.3 1.0 (4) Depreciation 0.6 0.5 (0.1) - Amortisation 1.7 2.0 0.3 - Total operating expenses before
Slide 8: Other P&L items
Financial results Other P&L items Six months ended 31 Six months ended 31 December 2014 December 2013 Variance £m £m £m % - Net interest income 0.8 0.3 0.5 - - MTM seed capital investment return (1.0) (0.6) (0.4) - - Realised seed capital investment return 2.7 3.6 (0.9) - - Seed capital FX translati
Slide 9: Adjusted EBITDA
Financial results Adjusted EBITDA Statutory Seed capital- Adjusted H1 Adjusted H1 H1 2014/15 related items FX translation 2014/15 2013/14 £m £m £m £m £m % Net revenue 164.0 - (20.1) 143.9 155.1 (7) Investment securities & third-party interests (3.5) 3.5 - - - Operating expenses1 (52.8) 1.2 4.0 (47.6
Slide 10: Adjusted EBITDA margin
Financial results Adjusted EBITDA margin Revenue quality and adjusted EBITDA margin (ex FX translation) • High quality revenues 100% 75% 95% of fee income from net management fees 90% 80% • Disciplined cost control Adjusted EBITDA margin 70% 70% Mix of fee income 60% • High profitability maintaine
Slide 11: Earnings
Financial results Earnings Six months ended Six months ended 31 December 2014 31 December 2013 Variance £m £m £m % Profit before tax 110.7 80.8 29.9 37 Tax (27.4) (15.4) (12.0) 78 Profit after tax 83.3 65.4 17.9 27 Profit attributable to non-controlling interests (2.3) (1.3) (1.0) 77 Profit attribut
Slide 12: Foreign exchange
Financial results Foreign exchange • Three elements impacted PBT by £22.3 million Currency exposure of cash(1) and seed capital Translation effect on non-Sterling balance sheet £m Cash Seed Total Total items (+£21.8 million) capital 31 December 2014 30 June 2014 Average rate effect on P&L transl
Slide 13: Cash flow
Financial results Cash flow • Continued high conversion rate of profits Cash flow (£m) (1) to cash 22.6 Operations generated cash flow of 95.1 85.3 £95.1 million (1) Equivalent to 86% of operating profit 364.3 11.9 11.2 0.4 22.7 373.9 FX gains of £21.4 million in operating profit • Peak demand
Slide 14: Seed capital
Financial results Seed capital • Actively-managed programme Diversified across themes and platforms £11.5 million invested in funds and Theme Number of % total Principal funds £22.7 million realised in H1 2014/15 investments investment Realised profit of £2.7 million on exited External debt 3 4
Slide 15: Balance sheet
Financial results Balance sheet • Tangible shareholders’ equity £544.0 Excess capital invested in liquid assets (£m) million (30 June 2014: £543.6 million) Total capital resources: £545m (2) • Cash and cash equivalents (1) £373.9 million (30 June 2014: £364.3 million) No debt Cash and cash 374 equ
Slide 16: Review of asset class performance
Review of asset class performance • Resilient index performance (-1% 6m to Dec’14) but significant dispersion across 62 countries • Impact from higher yield/longer duration and high conviction positions in countries where External debt sentiment has deteriorated • Highly attractive near-term returns
Slide 17: 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 18: Emerging Markets outlook
Emerging Markets outlook • Long-term Emerging Markets investment thesis unchanged Substantial value in Emerging Market assets Lower and more sustainable debt levels than developed 500 countries (56% of GDP, only 12% of debt) 450 Low net external debt owing to large stock of FX reserves (>4x fore
Slide 19: Summary
Summary • Classic value opportunities at this point in the cycle • Business model continues to deliver high adjusted EBITDA margin of 67% • Good cash generation provides income: interim dividend +2% to 4.55p • Strong and liquid balance sheet supports investment • Strategy aligned with long-term Emer
Slide 20: Appendices
Ashmore Appendices eee
Slide 21: Net management and performance fees by theme
Appendix 1 Net management and performance fees by theme H1 2014/15 H1 2013/14 H1 2014/15 H1 2013/14 £m £m US$m US$m External debt 23.6 26.9 38.1 42.6 Local currency 24.5 27.3 39.6 43.5 Corporate debt 15.9 15.2 25.7 24.2 Blended debt 35.0 34.3 56.5 53.9 Equities 16.6 13.1 26.6 20.9 Alternatives 7.9 1
Slide 22: Assets under management
Appendix 2a Assets under management AuM by theme (US$bn) AuM as invested (US$bn) 2.6 External debt 1.3 2.0 External debt 2.0 12.4 Local currency 2.7 4.3 5.0 Corporate debt Local currency 22.7 Blended debt Corporate debt 11.8 18.0 Equities Equities 15.7 Alternatives Alternatives 7.4 Multi-strategy 19
Slide 23: Investment themes
Appendix 2b Investment themes Overlay/ External Debt Local Currency Corporate Debt Equities Alternatives Liquidity (USD 12.4bn) (USD 15.7bn) (USD 7.4bn) (USD 4.3bn) (USD 1.3bn) (USD 2.6bn) Global • Broad • Bonds • Broad • Special Situations • Overlay • Broad Global Emerging • Sovereign • Bonds (Broa
Slide 24: Quarterly net flows
Appendix 2c Quarterly net flows +8.0 +6.0 +4.0 +2.0 US$ 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 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 2014 Performance subscriptions redemptions Net flows Disposal 31 December 2014 External debt 14.0 (0.8) 0.4 (1.2) (0.8) - 12.4 Local currency 17.3 (2.2) 1.8 (1.2) 0.6 - 15.7 Corporate debt 8.2 (0.9) 0.7 (0.6)
Slide 26: Cash flows and consolidated funds
Appendix 4 Cash flows and consolidated funds £millions As reported Consolidated funds Group ex funds Cash from operations 92.2 (2.9) 95.1 Taxation (22.6) - (22.6) Interest & dividends 2.7 2.3 0.4 Seeding 15.6 4.4 11.2 Dividends paid (85.3) - (85.3) Treasury/own shares (11.9) - (11.9) FX and other 23
Slide 27: Adjusted profits
Appendix 5a Adjusted profits Statutory Seed capital-related Adjusted H1 H1 2014/15 items FX translation 2014/15 £m £m £m £m Net revenue 164.0 - (20.1) 143.9 Investment securities & third-party interests (3.5) 3.5 - - Operating expenses1 (52.8) 1.2 4.0 (47.6) EBITDA 107.7 4.7 (16.1) 96.3 EBITDA margi
Slide 28: Adjusted profits restated for IFRS 10 (H1 2013/14)
Appendix 5b Adjusted profits restated for IFRS 10 (H1 2013/14) Statutory Seed capital- Acquisition- Adjusted H1 H1 2013/14 related items FX translation related items 2013/14 £m £m £m £m £m Net revenue 134.6 - 20.5 - 155.1 Investment securities & third-party interests 6.8 (6.8) - - - Operating expens
Slide 29: Adjusted profits restated for IFRS 10 (FY 2013/14)
Appendix 5c Adjusted profits restated for IFRS 10 (FY 2013/14) Statutory Seed capital- Acquisition- Adjusted FY2013/14 related items FX translation related items FY2013/14 £m £m £m £m £m Net revenue 262.9 - 30.1 - 293.0 Investment securities & third-party interests 8.8 (8.8) - - - Operating expenses
Slide 30: Foreign exchange
Appendix 6 Foreign exchange Closing rates 31 December 2014 30 June 2014 31 December 2013 GBP:USD 1.5577 1.7106 1.6557 Average rates H1 2014/15 H1 2013/14 FY2013/14 GBP:USD 1.6289 1.5868 1.6281 30
Slide 31: Investment performance
Appendix 7 Investment performance Performance (1) Ann. 3 Year Standard Source: Ashmore (un-audited), JP Morgan, Morgan Stanley, Bank Launch AuM Since of America-Merrill Lynch. Data as at 31 December 2014. Returns Theme Fund/Strategy Date USDm Launch 1 Year 3 Year 5 Year 10 Year Deviation gross of fe
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