Ashmore Group plc · LSE:ASHM
Ashmore — FY2017 Earnings Presentation
29 slides from Ashmore's earnings presentation, Sep 7, 2017
Slide 1: Ashmore Group plc Results for year ending 30 June 2017
Ashmore Group plc Results for year ending 30 June 2017 7 September 2017 www.ashmoregroup.com
Slide 2: Overview
Overview • Emerging Markets delivering strong returns GDP growth is accelerating Improvement in cycle continues, recovery has further to go Investors are structurally underweight EM • Strong investment performance; value still available Investment processes delivering (91% outperforming over
Slide 3: Financial performance overview
Financial performance overview Year ended Year ended • AuM +12% 30 June 2017 30 June 2016 Variance £m £m % Investment performance +US$4.2 billion AuM (US$bn) 58.7 52.6 12 Net flows +US$1.9bn Net revenue 257.6 232.5 11 • Net revenue +11% Adjusted EBITDA 161.1 130.9 23 Growth in management (+13%
Slide 4: Assets under management
Assets under management • Gross subscriptions doubled to US$14.8 billion, 28% of AuM development (US$bn) opening AuM (FY2015/16: US$7.6 billion, 13%) +14.8 (12.9) Client demand broad-based by theme, across both retail and institutional, and diversified by geography +4.2 • Gross redemptions fell to
Slide 5: High-quality diversified client base
Clients AuM by client type • Client base is diverse by type and geography Global distribution network has maintained consistent client mix Central banks through the cycle 2% Sovereign wealth funds 12% 17% Broad-based demand 3% Governments 9% Pension plans 15% • Institutional investors are struct
Slide 6: Successful active management driving revenues
Financial results Revenues Year ended Year ended 30 June 2017 30 June 2016 Variance £m £m % Management fees 226.2 197.1 15 Distribution costs (4.6) (1.2) n/m Net management fees 221.6 195.9 13 Performance fees 28.3 10.4 172 Other revenue 2.7 4.1 (34) Foreign exchange 5.0 22.1 (63) Net revenue 257.6
Slide 7: Management fee margins
Financial results Management fee margins Underlying average net management fee margins (bps) • Theme mix and mandate size continue to be the dominant margin drivers 160 141 140 FY2015/16 FY2016/17 132 • Investment theme mix (-1.5bps) 120 Higher average AuM in overlay 104 100 94 90 Lower average
Slide 8: Successful realisation of seed capital investments
Financial results Financial effects of seed capital • Significant seed capital contribution of £41.0 Year ended Year ended million, of which £20.8 million realised 30 June 2017 30 June 2016 £m £m Gains/(losses) on investment securities 22.4 (5.7) • Consolidated funds: Change in third-party interests
Slide 9: Continued cost discipline
Financial results Expenses Year ended Year ended 30 June 2017 30 June 2016 Variance £m £m % Personnel expenses (24.8) (24.1) (3) Other operating expenses (22.5) (25.1) 10 (47.3) (49.2) 4 Depreciation (1.0) (1.2) 17 Amortisation (4.5) (3.9) (15) Total operating expenses before VC (52.8) (54.3) 3 Vari
Slide 10: Strong seed capital returns
Financial results Other P&L items Year ended Year ended 30 June 2017 30 June 2016 Variance £m £m % Net finance income 38.6 31.3 23 Comprising: - interest income 2.6 2.0 30 - seed capital: investment return & FX 28.2 24.6 15 - seed capital: consolidated funds income 7.8 4.7 66 Associates & joint vent
Slide 11: Efficient business model continues to deliver high profitability
Financial results Adjusted profits Adjusted Adjusted FY2016/17 FY2015/16 £m £m % Net revenue 257.6 232.5 11 FX translation (7.8) (21.0) 63 Adjusted net revenue 249.8 211.5 18 Operating costs ex consolidated funds (90.3) (84.8) (5) VC on FX translation 1.6 4.2 (62) Adjusted operating costs (88.7) (80
Slide 12: Increased earnings build dividend cover
Financial results Earnings Year ended Year ended 30 June 2017 30 June 2016 Variance £m £m % Profit before tax 206.2 167.5 23 Tax (36.7) (38.8) 5 Profit after tax 169.5 128.7 32 Profit attributable to non-controlling interests (1.9) (0.9) n/m Profit attributable to equity holders of the parent 167.6
Slide 13: Active programme delivering strategic and financial benefits
Financial results Seed capital Seed capital movement (£m) • Market value £210.2 million (30 June 2016: £238.5 million) 57.0 54% in funds with at least monthly dealing frequency 117.4 238.5 • Profit contribution of £41.0 million 32.1 210.2 Approximately half realised in the period On average, o
Slide 14: Consistent cash generation
Financial results Cash flow • Operations generated cash flow of Cash flow (£m) (1) £174.8 million (1) 109% of adjusted EBITDA 174.8 47.5 (FY2015/16: 97%) 118.9 4.8 2.8 7.0 64.5 420.1 • Distributed to shareholders through 358.4 11.8 ordinary dividends • Significant cash generation from successful s
Slide 15: Strong, liquid balance sheet
Financial results Balance sheet • Strong, well-capitalised, liquid balance sheet Across cycles, stable cash balance & invested for growth with seed capital with no debt 700 600 500 • Excess regulatory capital of £448.3 million 400 Financial resources of £559.4 million (2) 300 Pillar 2 regulatory
Slide 16: Strong investment performance
Investment performance AuM outperforming versus benchmark, AuM outperforming versus benchmark, AuM outperforming versus benchmark, gross one year annualised gross three years annualised gross five years annualised 100% 100% 100% 91% 80% 80% 86% 80% 87% 60% 60% 60% 40% 40% 40% 20% 20% 20% 0% 0% 0% Bl
Slide 17: Positive outlook for Emerging Markets
Market environment Real exchange rates are very competitive • Emerging Markets cycle has further to go 125 e.g. 10% p.a. potential returns in local currency from carry (6% 120 yield) and FX recovery 115 Huge diversity across asset cycles and countries, active 110 management can mitigate country
Slide 18: Summary
Summary • Strong investment performance with significant absolute & relative value available • Improving investor sentiment continuing to drive flow momentum • Business model delivering good operational and financial performance • Emerging Markets specialism means Ashmore is well-positioned 18
Slide 19: Appendices
Ashmore Appendices eee
Slide 20: Net management and performance fees by theme
Appendix 1 Net management and performance fees by theme FY2016/17 FY2015/16 FY2016/17 FY2015/16 £m £m US$m US$m External debt 48.9 37.0 61.4 54.5 Local currency 42.8 40.5 54.7 59.4 Corporate debt 25.9 21.9 33.0 32.1 Blended debt 57.8 52.3 74.0 76.6 Equities 21.5 22.3 27.4 32.7 Alternatives 12.8 10.9
Slide 21: Assets under management
Appendix 2a Assets under management AuM by theme (US$bn) AuM as invested (US$bn) External debt 1.1 1.5 4.8 Local currency 4.9 External debt 13.3 1.8 3.4 Corporate debt 3.9 Local currency Blended debt 22.5 Corporate debt Equities 7.8 Equities 14.6 Alternatives Alternatives 13.7 Multi-asset Overlay/li
Slide 22: Investment themes
Appendix 2b Investment themes Overlay/ External Debt Local Currency Corporate Debt Equities Alternatives Liquidity (US$13.3bn) (US$13.7bn) (US$6.3bn) (US$3.4bn) (US$1.5bn) (US$4.8bn) Global Emerging • Broad • Bonds • Broad • Global EM Value • Private Equity • Overlay Markets • Sovereign • Bonds (Bro
Slide 23: Quarterly net flows
Appendix 2c Quarterly net flows +8.0 +6.0 +4.0 +2.0 US$ billion +0.0 -2.0 -4.0 -6.0 -8.0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 23
Slide 24: 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 Reclassification 30 June 2017 External debt 11.7 1.0 2.2 (2.5) (0.3) 0.9 13.3 Local currency 13.3 1.0 2.1 (2.7) (0.6) - 13.7 Corporate debt 5.0 0.7 2.6 (2.
Slide 25: Foreign exchange
Appendix 4 Foreign exchange • Over the period, GBP:USD moved in wide range from 1.19 to Currency exposure of cash(1) 1.35 30 June 2017 % 30 June 2016 % Year-end rate moved from 1.3234 to 1.2946 £m £m US dollar 241.6 57 119.1 33 Average rate 1.2766 vs 1.4759 in FY2015/16 Sterling 149.7 36 212.6 5
Slide 26: Cash flows and consolidated funds FY2016/17
Appendix 5 Cash flows and consolidated funds FY2016/17 £m As reported Consolidated funds Group ex funds Cash from operations 171.3 (3.5) 174.8 Taxation (47.5) - (47.5) Interest received 9.2 6.4 2.8 Acquisitions/disposals 4.8 - 4.8 Seeding activities 68.1 3.6 64.5 Dividends paid (118.9) - (118.9) Tre
Slide 27: Investment performance
Appendix 6 Investment performance 1yr 3yr 5yr 30 June 2017 Ashmore Benchmark Ashmore Benchmark Ashmore Benchmark External debt Broad 11.1% 6.0% 6.8% 5.4% 7.1% 5.7% Sovereign 8.8% 6.0% 6.4% 5.4% 6.6% 5.7% Sovereign IG 3.5% 2.6% 4.3% 4.3% 4.3% 4.1% Local currency Bonds 8.9% 6.4% -1.7% -2.8% 0.4% -0.7%
Slide 28: Disclosures
Appendix 7 Disclosures Page 16: - 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 2017 and with a performance benchmark are included, which specifica
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