Ashmore Group plc · LSE:ASHM
Ashmore — H1 2015/16 Earnings Presentation
31 slides from Ashmore's earnings presentation, Feb 11, 2016
Slide 1: Results for six months ending 31 December 2015
Ashmore Group plc Results for six months ending 31 December 2015 11 February 2016 www.ashmoregroup.com
Slide 2: Overview
Overview • Weak markets and negative sentiment continue • AuM of US$49.4 billion at 31 December 2015 vs US$58.9 billion in June 2015 • Net revenues –29% to £116.4 million Net management fees of £98.7 million, -26% in line with decline in average AuM (-25%) Performance fees of £8.6 million Lowe
Slide 3: Markets overview
Markets overview • Wide range of returns across fixed income and Index returns over six months to 31 December 2015 equities, Emerging and Developed Markets 5% Fixed income Equities • Sentiment affected by: Return profile 6m to 31Dec2015 0% Stronger US dollar, clarity over US monetary policy -5%
Slide 4: EM fundamentals are robust
EM fundamentals are robust Emerging Markets growth premium 8.0 • Emerging Markets have endured substantial headwinds over EM 7.0 DM past three years Growth premium 6.0 Strong US dollar GDP growth (%) 5.0 Significant commodity price declines 4.0 Significant capital outflows 3.0 2.0 Significan
Slide 5: Assets under management
Assets under management • Gross subscriptions US$3.4 billion, 6% of opening AuM development (US$bn) AuM (H1 2014/15: 7%) Broad-based demand, by investment theme, new and existing clients, and client location Increase in alternatives AuM through new capital raising 58.9 • Gross redemptions US$9.1
Slide 6: Products and clients
Products and clients AuM by client type • Broad demand for differentiated products with strong performance, e.g.: Central banks Short duration debt was best performing EMD fund in 2015 9%2% Sovereign wealth funds 1% 20% (+7.5%) in the Morningstar EAA universe Governments Middle East (#1, +16.1%)
Slide 7: Financial results: Revenues
Financial results Revenues Six months ended Six months ended 31 December 2015 31 December 2014 Variance £m £m % Management fees 99.3 134.8 (26) Distribution costs (0.6) (1.8) (67) Net management fees 98.7 133.0 (26) Performance fees 8.6 7.0 23 Other revenue 2.1 2.6 (19) Foreign exchange 7.0 21.4 (67
Slide 8: Management fee margins
Financial results Management fee margins Average net management fee margins (bps) • Average group margin reduced by 3bps YoY and 1bp versus H2 2015 166 164165 H1'15 H2'15 H1'16 Prior year period benefited from 1bp non- recurring benefit from distribution accrual release 112 106 106 102 98 98 • Alt
Slide 9: Expenses
Financial results Expenses Six months ended Six months ended 31 December 2015 31 December 2014 Variance £m £m % Personnel expenses 12.1 12.4 (2) Other operating expenses 14.2 12.9 10 26.3 25.3 4 Depreciation 0.6 0.6 - Amortisation 1.9 1.7 12 Total operating expenses before VC 28.8 27.6 4 Variable co
Slide 10: Other P&L items
Financial results Other P&L items Six months ended Six months ended 31 December 2015 31 December 2014 Variance £m £m % Net finance income 6.1 6.5 (6) Comprising: - interest income 1.0 0.8 - - seed capital: investment return & FX (5.3) 3.4 - - seed capital: consolidated funds income 10.4 2.3 - Associ
Slide 11: Adjusted profits
Financial results Adjusted profits Statutory Seed capital- Adjusted Adjusted H1 2015/16 related items FX translation H1 2015/16 H1 2014/15 £m £m £m £m £m % Net revenue 116.4 - (8.0) 108.4 143.9 (25) Investment securities & third-party interests (12.5) 12.5 - - - - Operating expenses1 (43.8) 1.8 1.6
Slide 12: Earnings
Financial results Earnings Six months ended Six months ended 31 December 2015 31 December 2014 Variance £m £m % Profit before tax 62.7 110.7 (43) Tax (15.6) (27.4) (43) Profit after tax 47.1 83.3 (43) Profit attributable to non-controlling interests (0.7) (2.3) Profit attributable to equity holders
Slide 13: Cash flow
Financial results Cash flow • Operations generated cash flow of Cash flow (£m) (1) £59.1 million (1) 59.1 14.2 87% of adjusted EBITDA 87.0 (FY2014/15: 86%) 365.1 8.7 329.7 14.7 11.2 1.5 • Seasonal cash flows in H1 Cash variable remuneration Tax payment Prior year final dividend • Additionall
Slide 14: Seed capital
Financial results Seed capital • Actively-managed programme Diversified across themes and platforms (% of market value) £14.7 million invested in funds and £27.1 million realised in H1 2015/16 External debt New, mostly undrawn, commitments of ~£20 million in 11% 3% 12% Local currency the period
Slide 15: Foreign exchange
Financial results Foreign exchange • Translation effect on non-Sterling balance sheet items: £8.0 Currency exposure of cash(1) million gain versus £20.1 million gain in prior year 31 December 2015 % 30 June 2015 % Over the period, GBP/USD moved from 1.57 to 1.47 £m £m US dollar 136.6 41 137.4 38 S
Slide 16: Balance sheet
Financial results Balance sheet • Strong, well-capitalised balance sheet with no debt Financial resources = £549.3 million (2) Liquid balance sheet structure • Excess regulatory capital of £454.9 million Held in cash or liquid seed capital investments (with at least monthly dealing frequency) Cash
Slide 17: Investment performance
Investment performance Funds outperforming versus Funds outperforming versus Funds outperforming versus benchmark, gross 1 year annualised benchmark, gross 3 years annualised benchmark, gross 5 years annualised 100% 100% 100% 80% 80% 80% 60% 60% 60% 40% 40% 40% 64% 55% 20% 20% 20% 14% 0% 0% 0% Local
Slide 18: 2016 macro outlook
2016 macro outlook Widespread improvement in current account balances 25 • US rates expected to rise gradually 20 Change vs worst point since QE began Current account balance (Q3'15) Historically this has provided a good environment for EM debt 15 to perform well % of GDP 10 5 • QE-themed trades (
Slide 19: Summary
Summary • Continued to face difficult market conditions in the six months • Robust business model Profit margin maintained at a high level through cost flexibility Cash generation continues to support seeding, EBT share purchases and dividend Strong balance sheet • Emerging Markets fundamental
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 2015/16 H1 2014/15 H1 2015/16 H1 2014/15 £m £m US$m US$m External debt 19.9 23.6 30.2 38.1 Local currency 19.8 24.5 30.2 39.6 Corporate debt 11.3 15.9 17.2 25.7 Blended debt 25.6 35.0 39.1 56.5 Equities 11.5 16.6 17.5 26.6 Alternatives 5.0 7
Slide 22: Assets under management
Appendix 2a Assets under management AuM by theme (US$bn) AuM as invested (US$bn) 1.2 External debt 1.4 2.7 3.4 10.8 1.7 3.2 Local currency External debt 3.5 Corporate debt 18.2 Local currency Blended debt Corporate debt 8.6 13.3 Equities Equities 12.0 Alternatives Alternatives 4.8 Multi-asset Overla
Slide 23: Investment themes
Appendix 2b Investment themes Overlay/ External Debt Local Currency Corporate Debt Equities Alternatives Liquidity (USD 10.8bn) (USD 12.0bn) (USD 4.8bn) (USD 3.2bn) (USD 1.4bn) (USD 2.7bn) Global • Broad • Bonds • Broad • Global • Private equity • Overlay Emerging • Sovereign • Bonds (Broad) • High
Slide 24: Historical valuations relative to Developed Markets
Appendix 2c Historical valuations relative to Developed Markets External debt Local currency 1000 12.0% 7.00% 900 10.0% 6.00% 800 700 5.00% 600 8.0% Yield (%) 500 4.00% 6.0% 400 3.00% 300 4.0% 200 2.00% 100 2.0% 1.00% 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0.0% 0.00% 2003 2005 2007 2009
Slide 25: Quarterly net flows
Appendix 2d Quarterly net flows +8.0 +6.0 +4.0 +2.0 US$ billion +0.0 -2.0 -4.0 -6.0 -8.0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 25
Slide 26: AuM movements by theme and fund classification
Appendix 3 AuM movements by theme and fund classification AuM Gross Gross AuM US$bn 30 June 2015 Performance subscriptions redemptions Net flows Other* 31 December 2015 External debt 12.0 (0.2) 0.5 (1.5) (1.0) - 10.8 Local currency 15.2 (1.3) 0.6 (2.5) (1.9) - 12.0 Corporate debt 7.2 (0.5) 0.4 (1.6)
Slide 27: Cash flows and consolidated funds
Appendix 4 Cash flows and consolidated funds £millions As reported Consolidated funds Group ex funds Cash from operations 56.9 (2.2) 59.1 Taxation (14.2) - (14.2) Interest received 3.4 1.9 1.5 Seeding activities 6.3 (4.9) 11.2 Dividends paid (87.0) - (87.0) Treasury/own shares (14.7) - (14.7) FX and
Slide 28: Adjusted profits
Appendix 5 Adjusted profits Statutory Seed capital-related Adjusted H1 2015/16 items FX translation H1 2015/16 £m £m £m £m Net revenue 116.4 - (8.0) 108.4 Investment securities & third-party interests (12.5) 12.5 - - Operating expenses1 (43.8) 1.8 1.6 (40.4) EBITDA 60.1 14.3 (6.4) 68.0 EBITDA margin
Slide 29: Foreign exchange
Appendix 6 Foreign exchange Closing rates 31 December 2015 30 June 2015 31 December 2014 GBP:USD 1.4736 1.5712 1.5577 Average rates H1 2015/16 H1 2014/15 FY2014/15 GBP:USD 1.5291 1.6289 1.5822 29
Slide 30: Investment performance
Appendix 7 Investment performance Source: Ashmore (un-audited), JP Morgan, Morgan Stanley 1yr 3yr 5yr - Returns gross of fees, dividends reinvested. 31 December 2015 Ashmore Benchmark Ashmore Benchmark Ashmore Benchmark - Annualised performance shown for periods greater than one year. - All relevant
Slide 31: 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