Ashmore Group plc · LSE:ASHM
Ashmore — FY2020 Earnings Presentation
33 slides from Ashmore's earnings presentation, Sep 11, 2020
Slide 1: Ashmore Group plc Results for year ending 30 June 2020
Ashmore Group plc Results for year ending 30 June 2020 11 September 2020 www.ashmoregroup.com
Slide 2: Overview
Overview • Solid operating and financial performance ˗ Business model demonstrating resilience ˗ AuM -9% YoY, driven by negative market performance in Q3 ˗ Adjusted net revenue +5%, adjusted EBITDA +10%, adjusted EBITDA margin increased to 68% ˗ Diluted EPS +3% ˗ Final dividend 12.10p, to give 16.90
Slide 3: Summary of COVID-19 impact
Summary of COVID-19 impact • Strength of operating model demonstrated in adverse conditions ˗ Single consistent global operating platform ˗ Resilience provided by strong team-based culture, balance sheet strength and cost flexibility ˗ Swift, effective transition to remote working for all offices in
Slide 4: Global market environment
Global market environment Broad-based dislocation in global capital markets External debt index spread (bps) in 2020 800 • Several factors combined to produce a sharp and severe fall in markets in Q3 700 ˗ Rapid spread of COVID-19 pandemic 600 ˗ Oil price shock 500 ˗ Country-specific economic challe
Slide 5: Investment performance (1)
Investment performance (1) Ashmore’s active investment processes are designed to Blended debt performance profile in H2 manage market dislocations 10% • Continual focus on liquidity 5% • Managed elevated redemptions and protected portfolio shapes 0% • Added risk to capture upside -5% ˗ Varied opport
Slide 6: Investment performance (2)
Investment performance (2) One year Three years Five years 100% 100% 100% 90% 90% 90% 80% 80% 80% 70% 70% 70% 74% 60% 60% 60% 50% 50% 50% 40% 40% 40% 30% 30% 30% 20% 20% 20% 10% 10% 17% 10% 9% 0% 0% 0% Outperforming Underperforming • Severe and broad-based market dislocation in Q3 affected not only
Slide 7: Positive momentum in equities
Positive momentum in equities • Delivering strong relative performance, resilient during Q3 Building a successful long-term investment track record volatility One year Three years Five years ˗ >80% of global equity AuM outperforming over three and five years EM All Cap +23.6 +8.4 +16.3 Alpha +9.1 +5
Slide 8: Financial performance overview
Financial performance overview • AuM -9% YoY, average AuM +11% YoY FY2019/20 FY2018/19 £m £m YoY % Net flows -US$0.1 billion and negative investment performance -US$8.1 billion AuM (US$bn) 83.6 91.8 (9) Adjusted net revenue 325.0 308.1 5 • Adjusted net revenue +5% Net management fees +7% reflect
Slide 9: Assets under management
Assets under management AuM development (US$bn) • Gross subscriptions of US$24.3 billion, 26% of opening AuM (FY2018/19: US$23.7 billion, 32%) 24.3 (24.4) Good demand for local currency, corporate debt, blended debt and equities (8.1) Majority of institutional flows from existing clients increas
Slide 10: Financial results: Revenues
Financial results Revenues • Adjusted net revenue +5% Good growth (+7%) in net management fee income (£m) +11% -3% -2% -1% +2% 315.5 • Net management fees +7% 294.3 Strong H1 underpinned +11% YoY higher average AuM Lower average GBP:USD rate • Net management fee margin 45bps -3bps YoY, due to
Slide 11: Financial results: Operating costs
Financial results Operating costs • Non-VC operating costs fell by 5% Adjusted operating costs development (£m) -3.5% ˗ Lower intangibles amortisation 111.1 -0.5% +0.5% +0.5% -2.0% 105.9 ˗ Reduced costs in H2 due to restrictions (travel, remote working) ˗ Active management of discretionary costs • A
Slide 12: Financial results: Seed capital
Financial results Seed capital Seed capital movement (£m) • Total seed capital programme of ~£260 million 51.4 84.0 Market value £238.4 million (30 June 2019: £277.8 million) 277.8 Undrawn commitments of £20.0 million 6.8 238.4 • Net P&L loss of £7.6 million (FY2018/19: £10.7 million gain) ˗ Unr
Slide 13: Financial results: Statutory earnings
Financial results Statutory earnings FY2019/20 FY2018/19 YoY £m £m % Profit before tax 221.5 219.9 1 Tax (36.8) (38.4) 4 Profit after tax 184.7 181.5 2 Profit attributable to non-controlling interests (2.6) (2.9) 10 Profit attributable to equity holders of the parent 182.1 178.6 2 Earnings per share
Slide 14: Financial results: Cash flow
Financial results Cash flow • Operations generated cash flow of Cash flow (£m) (1) £257.9 million (1) 116% of adjusted EBITDA (FY2018/19: 106%) 257.9 52.1 122.7 89.5 • Consistent uses of operating cash flow: 6.8 5.8 11.3 9.5 490.1 463.1 ˗ Corporation tax ˗ Ordinary dividends to shareholders ˗ Shar
Slide 15: Financial results: Balance sheet
Financial results Balance sheet • Capital resources of £702.5 million (1) Consistent balance sheet structure 800 ˗ Excess regulatory capital of £555.2 million, equivalent to 78p/share 700 600 500 • Pillar 2 regulatory capital requirement of 400 £147.3 million 300 ˗ Increased due to higher market exp
Slide 16: Emerging Markets outlook
Emerging Markets outlook • EM fundamentals contrast with DM challenges Superior GDP growth sustained (%) ˗ EM has attractive demographics, superior GDP growth, lower debt, policy flexibility, ongoing reforms 8 ˗ DM has more debt, low growth, high equity valuations and persistently low/negative rates
Slide 17: Summary
Summary • Solid financial performance • Operational resilience in adverse conditions • Fixed income themes generating strong alpha since April • Continuing to deliver strong relative performance in equities • Medium-term impact of COVID-19 uncertain, but has created investment opportunities • Emergi
Slide 18: Q&A
Ashmore Q&A
Slide 19: Appendices
Ashmore Appendices eee
Slide 20: Adjusted profits reconciliation
Appendix 1a Adjusted profits reconciliation Adjusted Adjusted FY2019/20 FY2018/19 £m £m YoY % Net revenue 330.5 314.3 5 FX translation (5.5) (6.2) 11 Adjusted net revenue 325.0 308.1 5 Operating costs ex consolidated funds (103.6) (107.7) 4 VC on FX translation 1.1 1.4 (21) Adjusted operating costs
Slide 21: Seed capital
Appendix 1b Seed capital • Consolidated funds: FY2019/20 FY2018/19 £m £m Line-by-line consolidation in financial statements Gains/(losses) on investment securities (19.1) 0.5 FX taken to reserves Change in third-party interests in consolidated funds 7.5 3.8 PBT contribution of -£9.0 million Op
Slide 22: Net management and performance fees by theme
Appendix 2a Net management and performance fees by theme FY2019/20 FY2018/19 FY2019/20 FY2018/19 £m £m US$m US$m External debt 59.4 55.1 75.1 71.1 Local currency 60.2 54.2 76.1 70.2 Corporate debt 51.3 51.9 64.8 67.3 Blended debt 94.6 81.2 119.4 105.0 Equities 23.0 25.1 29.1 32.5 Alternatives 15.4 1
Slide 23: Management fee margins
Appendix 2b Management fee margins 139 FY2018/19 FY2019/20 129 100 76 77 66 56 48 50 49 49 45 44 41 39 38 16 15 Group External debt Local Corporate Blended debt Equities Alternatives Multi-asset Overlay currency debt Fixed income: 44bps (FY2018/19: 46bps) 23
Slide 24: Assets under management
Appendix 3a Assets under management AuM by theme (US$bn) AuM as invested (US$bn) 0.3 External debt 7.8 1.4 7.6 17.1 Local currency 1.5 External debt 4.6 4.7 Corporate debt Local currency 32.1 Blended debt Corporate debt 13.9 Equities Equities 23.3 18.7 Alternatives Alternatives Multi-asset Overlay/l
Slide 25: Investment themes
Appendix 3b Investment themes Overlay/ External Debt Local Currency Corporate Debt Equities Alternatives Liquidity (USD 17.1bn) (USD 18.7bn) (USD 10.6bn) (USD 4.6bn) (USD 1.4bn) (USD 7.6bn) Global Emerging • Broad • Bonds • Broad • EM Active • Private Equity • Overlay Markets • Sovereign • Bonds (Br
Slide 26: Quarterly net flows
Appendix 3c Quarterly net flows +8.0 +6.0 +4.0 +2.0 US$ billion +0.0 -2.0 -4.0 -6.0 -8.0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 26
Slide 27: 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 30 June 2020 External debt 19.1 (1.1) 2.3 (3.2) (0.9) - 17.1 Local currency 19.7 (1.7) 5.8 (5.1) 0.7 - 18.7 Corporate debt 15.5 (1
Slide 28: 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 1.2356 20 June 2020 % 30 June 2019 % £m £m Average rate 1.2637 vs 1.2958 in FY2018/19 US dollar 380.5 78 255.6 55 Sterling 66.0 13 157.8 34
Slide 29: Cash flows and consolidated funds FY2019/20
Appendix 6 Cash flows and consolidated funds FY2019/20 £m As reported Consolidated funds Group ex funds Cash from operations 254.9 (3.0) 257.9 Taxation (52.1) - (52.1) Interest received 14.2 8.4 5.8 Seeding activities (2.2) (9.0) 6.8 Ashmore Indonesia IPO 11.3 - 11.3 Dividends paid (122.7) - (122.7)
Slide 30: Investment performance
Appendix 7 Investment performance 1yr 3yr 5yr 30th June 2020 Ashmore Benchmark Ashmore Benchmark Ashmore Benchmark External debt Broad -8.9% 0.5% 0.7% 3.6% 5.1% 5.3% Sovereign -6.8% 0.5% 1.4% 3.6% 5.0% 5.3% Sovereign IG 2.7% 8.3% 5.3% 6.6% 5.5% 6.1% Local currency Bonds -5.1% -2.8% 0.9% 1.1% 2.8% 2.
Slide 31: Historical valuations relative to Developed Markets
Appendix 8 Historical valuations relative to Developed Markets External debt Local currency Index: 74 countries, 167 issuers, 821 bonds Index: 19 countries, 19 issuers, 237 bonds 800 8.0% 6.00% 700 7.0% 5.50% 6.0% 600 5.00% 5.0% Yield (%) 500 4.0% 4.50% 400 3.0% 4.00% 2.0% 300 3.50% 1.0% 200 0.0% 3.
Slide 32: Disclosures
Appendix 9 Disclosures Page 6: - 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 30 June 2020 and with a performance benchmark are included, which specifical
Slide 33: 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