Ashmore Group plc · LSE:ASHM
Ashmore — FY2012 Earnings Presentation
41 slides from Ashmore's earnings presentation, Sep 11, 2012
Slide 1: Ashmore Group plc Final Results 12 months to 30 June 2012
Ashmore Group plc Final Results 12 months to 30 June 2012 11 September 2012
Slide 2: Presentation team
Presentation team Mark Coombs, Chief Executive Officer Graeme Dell, Group Finance Director Tom Shippey, Head of Corporate Development 1
Slide 3: Contents
Contents Highlights Emerging Markets Backdrop Assets under Management Progress Update Financial Results Strategy Update and Outlook Appendices 2
Slide 4: Highlights
Highlights Final assets under management (“AuM”) of US$63.7 billion at 30 June 2012, a decrease of US$2.1 billion (3%) from US$65.8 billion at 30 June 2011 Total net revenue of £333.3 million, in line with FY2010/11 (£333.8 million) − Net management fees(1) up by 20% to £298.9 million − Performa
Slide 5: Emerging Markets Backdrop: Testing markets in 2011/12
Emerging Markets Backdrop Testing markets in 2011/12 Fixed income: mixed fortunes1 Continued volatility in 2011/12 120 — Dollar strength contributing to negative local 110 +10% currency and positive hard currency +6% Index value performance 100 — MSCI EM Index down c.16% -7% 90 Developed world m
Slide 6: EM Fixed Income
Emerging Markets Backdrop EM Fixed Income High issuance levels, particularly corporate EM debt now well established allocation 250 210 — No longer just a “risk-on” trade 200 188 153 137 US$ Billions Investable universe continues to grow 150 121 93 88 100 83 80 76 84 74 — EM debt stock now c.US$8
Slide 7: EM Equities
Emerging Markets Backdrop EM Equities Price to 12 months forward earnings Global headwinds have impacted expected 5% Relative Valuation MSCI EM Index growth 0% vs. MSCI World Index -5% Valuations attractive vs. historic levels -10% — EM p/e at significant discount -15% EM discount to DM at -20%
Slide 8: EM Outlook
Emerging Markets Backdrop EM Outlook Emerging Markets to continue to be the driver of global EM GDP growth rates exceed DM GDP growth GDP Growth (PPP-weighted) % 7 Combined EM GDP exceeds 50% on a PPP basis 6 5 4 Transition from export led to domestic consumption 3 — Infrastructure spending to
Slide 9: Assets under Management Overview
Assets under Management Overview Key Highlights Assets under Management (US$bn) AuM decreased by US$2.1bn to US$63.7bn, 70 65.8 63.7 down 3% 60 Good levels of gross subscriptions of US$13.0bn (FY2010/11: US$23.0bn) 50 Positive net flows of US$1.3bn 40 37.5 35.3 31.6 US$(3.4)bn of negative pe
Slide 10: Subscriptions and redemptions
Assets under Management Subscriptions and redemptions FY2011/12 AuM Development (US$bn) Redemptions as a % Average AuM by Year 90 41% 80 13.0 (11.7) US$11.3bn 70 (3.4) 60 50 US$ bn 20% 40 18% US$7.1bn 16% 65.8 63.7 US$11.7bn 30 12% US$7.5bn US$3.7bn 20 10 0 AuM at June Subscriptions Redemptions Perf
Slide 11: Subscriptions and redemptions (half-year)
Assets under Management Subscriptions and redemptions H1 2011/12 AuM Development (US$bn) H2 2011/12 AuM Development (US$bn) 74 74 72 72 70 70 US$ bn US$ bn 68 68 66 66 64 64 62 62 60 65.8 60 63.7 60.4 60.4 58 58 AuM at June Subscriptions Redemptions Positive Negative AuM at Dec AuM at Dec Subscripti
Slide 12: Investment Performance
Assets under Management Investment Performance Funds Outperforming vs Funds Outperforming vs Funds Outperforming vs Benchmark – Gross 1 Year1 Benchmark – Gross 3 Years1 Benchmark – Gross 5 Year1 100% 100% 100% 80% 80% 80% 60% 60% 60% 40% 40% 40% 20% 20% 20% 0% 0% 0% External Local Corporate Blended
Slide 13: Investment Performance by composite
Assets under Management Investment Performance Ashmore External Debt (Broad) Composite Ashmore Local Currency (Broad) Composite 20 12 8 15 4 Return (%) 10 Return (%) 0 5 -4 0 -8 -5 -12 1 yr (%) 3 yrs (% pa) 5 yrs (% pa) 10 yrs (% pa) 1 yr (%) 3 yrs (% pa) 5 yrs (% pa) 7 yrs (% pa) Ashmore Corporate
Slide 14: Progress Update: AshmoreEMM
Progress Update AshmoreEMM MSCI EM Index fell c.16% during the period to 30 June Investment team focused on delivering BGA 2012 500 performance 460 440.8 — Specialist vehicles performing well Index value 420 Marketing functions combined 380 372.1 — Distribution team engaged — SICAV and 40-Act pr
Slide 15: Progress Update: Clients
Progress Update Clients AuM by Investor type Institutional client base further developed and Government diversified 1% 1% Private pension plan — 12 new accounts added 2% 11% Public pension plan Third party intermediary business initiative well 3% Bank underway 4% 37% Fund/ sub-advisor — SICAV /
Slide 16: Global distribution platform
Progress Update Global distribution platform Locations Functions Responsibilities Role Headcount Business development Primary sales function 12 London New York / Account management On-going client 7 Istanbul Beijing Washington Tokyo management Intermediary distribution Relationship with key 6 Singap
Slide 17: Headcount development
Progress Update Headcount development 91 employees 41 employees 125 employees Investment Distribution Support/ Operations Institutional Operations & Business Performance Development Institutional Account Compliance Management Product Finance Specialists Marketing Corporate Services Development Inter
Slide 18: Income statement
Financial Results Income statement Year ended Year ended Variance 30 June 2012 30 June 2011 As reported £m £m £m % Net revenue 333.3 333.8 (0.5) - Total operating expenses* (108.2) (94.4) (13.8) (15) Operating profit 225.1 239.4 (14.3) (6) Finance income 18.1 6.5 11.6 178 Profit before tax 243.2 245
Slide 19: Net revenue
Financial Results Net revenue Year ended Year ended Variance 30 June 2012 30 June 2011 As reported £m £m £m % Management fees 302.6 250.9 51.7 21 Less: distribution costs (3.7) (1.6) (2.1) (131) Net management fees 298.9 249.3 49.6 20 Performance fees 25.4 85.4 (60.0) (70) Other revenue 6.2 6.5 (0.3
Slide 20: Revenue margins
Financial Results Revenue margins AuM by product type (%) Net Management Fee Margins (bps) 10% FY2011/12: 74bps 13% 70 1% 75 1% 108 FY 51 2011/12 67 239 127 41% 16 57% H1 2011/12: 76bps 71 77 116 H1 51 2011/12 70 45% 240 127 32% 17 FY2010/11: 86bps FY 2010/11 FY 2011/12 75 90 169 Ashmore sponsored f
Slide 21: Performance fees
Financial Results Performance fees Year Year Performance Fees by Theme (%) ended 30 ended 30 June 2012 June 2011 Alternatives, Other, 1% 9% £m £m Equities, 2% Blended debt, External debt 16.8 60.2 7% Local currency 3.8 1.8 Corporate debt 0.1 4.9 Blended debt 1.8 1.0 Local Equities 0.5 2.4 currency,
Slide 22: Expenses
Financial Results Expenses Year ended 30 Year ended 30 June 2012 June 2011 Variance £m £m £m % Personnel expenses 23.6 15.3 8.4 55 Variable compensation 49.4 56.2 (6.8) (12) Other expenses 24.2 19.0 5.2 27 Depreciation 1.6 1.3 0.3 23 Amortisation 9.4 2.6 6.8 262 Total operating expenses 108.2 94.4 1
Slide 23: Expenses: headcount and employee costs
Financial Results Expenses Headcount grown as planned, reflecting: Year End Headcount − strategic initiatives surrounding Jun- 217 40 distribution and key support functions 12 − synergies gained within the integration Jun- 207 39 11 of AEMM Jun- Employee cost increases for year to 30 June 10 120
Slide 24: Earnings
Financial Results Earnings Year ended 30 Year ended 30 June 2012 June 2011 £m £m Operating Profit 225.1 239.4 Finance income 18.1 6.5 Profit before tax 243.2 245.9 Tax (57.5) (55.7) Profit after tax 185.7 190.2 Net other comprehensive income (4.0) 6.7 Total comprehensive income 181.7 196.9 Attributa
Slide 25: Cash flow & balance sheet
Financial Results Cash flow & balance sheet Year Year Year Year ended 30 ended 30 ended 30 ended 30 June 2012 June 2011 June 2012 June 2011 £m £m £m £m Cash from operations 238.8 253.4 Total assets 707.0 675.6 Acquisition of - (41.2) AshmoreEMM Total liabilities 148.9 160.7 Investment in associate -
Slide 26: Cash generation and Group investment
Financial Results Cash generation and Group investment Year ended Year ended Year ended Year ended Year ended 30/6/2008 30/6/2009 30/6/2010 30/6/2011 30/6/2012 £m £m £m £m £m Operating Profit 181.2 150.6 217.2 239.4 225.1 Cash flow 195.5 150.9 250.9 253.4 238.8 Cash % 108% 100% 116% 106% 106% Uses:
Slide 27: Revenue quality and EBITDA margin
Financial Results Revenue quality and EBITDA margin Management fee composition and EBITDA margin 500 80% 450 70% 400 Net management fees (US$m) 60% 350 EBITDA margin (%) 50% 300 250 40% 200 30% 150 20% 100 10% 50 0 0% 2008 2009 2010 2011 2012 Performance fees as a % 18% 21% 29% 25% 8% of total reven
Slide 28: Strategy Update: Phase 1
Strategy Update Phase 1: Establish Emerging Markets asset class Developments Steps Taken Investor allocations to Emerging Markets continue to Dedicated training programmes increase ̶ Ashmore Cass Business School training ̶ >US$400bn of AuM managed globally vs EM debt programme indices Client c
Slide 29: Strategy Update: Phase 2
Strategy Update Phase 2: Diversify developed world capital sources and themes Developments Steps Taken Investment universe growing On-going development of 40-Act funds and SICAV platforms Dedicated AuM as % of index market capitalisation (EM debt) ̶ Investment track record 60% 50% ̶ Additional f
Slide 30: Strategy Update: Phase 3
Strategy Update Phase 3: Mobilise Emerging Markets capital Developments Steps Taken Global wealth shifting to Emerging Markets On-going success raising capital from within EM ̶ Financial wealth of investors in EM expected to rise to ̶ AuM from Emerging Markets now represents nearly 40% of global
Slide 31: Outlook
Outlook Diversified, recurring revenue streams delivering high margin profits Strong balance sheet and significant cash generation Ongoing investment delivering growth and diversity − Platform built to cope with greater complexity − Distribution team needs to deliver EM investment thesis fur
Slide 32: Appendices
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Slide 33: Appendix 1 – GBP / USD Revenues
Appendix 1 – GBP / USD Revenues FY12 / FY11 half-on-half US$ millions H1 12 H2 12 FY12 H1 11 H2 11 FY11 Net management fees less distribution costs External debt 50.4 52.7 103.1 49.3 50.2 99.5 Local currency 36.2 35.9 72.1 28.7 32.8 61.5 Corporate debt 9.3 11.4 20.7 9.0 11.0 20.0 Blended debt 28.6 3
Slide 34: 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 2008 30 Jun 2009 30 Jun 2010 30 Jun 2011 30 Jun 2012 Net management fees less distribution costs External debt 85.1 74.5 79.4 External debt 62.5 64
Slide 35: 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 2008 30 Jun 2009 30 Jun 2010 30 Jun 2011 30 Jun 2012 Net management fees less distribution costs External debt 171.1 120.9 124.3 External debt 99
Slide 36: Appendix 2a – AuM by theme and fund classification
Appendix 2a – AuM / product information AuM by theme and fund account/classification US$bn 30-Jun-2008 30-Jun-2009 30-Jun-2010 30-Jun-2010 30-Jun-2011 30-Jun-2012 Investment theme External debt 20.9 14.7 19.4 External debt 12.3 14.3 15.9 Local currency 7.2 4.2 7.0 Local currency 6.0 9.4 10.0 Special
Slide 37: Appendix 2b – AuM by Theme and Asset Class
Appendix 2b – AuM / product information AuM by Theme and Asset Class AuM as Classified by Mandate (%) AuM as Invested in Underlying Asset Class (%) Multi-strategy & crossover Overlay/ liquidity Overlay / 13% Liquidity, 13% External debt, 25% Alternatives External debt Multi Strat, 7% 33% 9% Alternat
Slide 38: Appendix 2c – AuM movements by investment theme
Appendix 2c – AuM / product information AuM movements by investment theme YTD to June 2012 Net AuM Gross Gross AuM Management 30-Jun-11 Performance Redemptions subscriptions Net flows 30-Jun-12 fee margins Theme (US$bn) (US$bn) (US$bn) (US$bn) (US$bn) (US$bn) (bps) External debt 14.3 0.6 (3.2) 4.2 1
Slide 39: Appendix 3 – Investment performance - public funds
Appendix 3 – Assets under Management Investment performance - public funds Source: Ashmore (un-audited), JP Morgan, Morgan Stanley. Data as at 30th June 2012. Returns gross of fees, dividends reinvested. (1) Annualised performance shown for periods greater than one year; (2) Composite benchmark: 50%
Slide 40: 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 41: Ashmore
Ashmore