Ashmore Group plc · LSE:ASHM
Ashmore — FY2022 Earnings Presentation
31 slides from Ashmore's earnings presentation, Sep 2, 2022
Slide 1: Results for year ended 30 June 2022
Ashmore Group plc Results for year ended 30 June 2022 2 September 2022 www.ashmoregroup.com
Slide 2: Overview
Overview • Challenging global markets in H2 ˗ Widespread risk aversion due to Ukraine war, inflation and higher rates globally ˗ Opportunity to acquire risk at oversold prices, particularly in HY markets ˗ Investment performance reflects active management to underpin future outperformance • Focus on
Slide 3: Investing in a challenging market environment
Investing in a challenging market environment • Past few years have seen multiple market cycles in quick succession Multiple market cycles in quick succession ‒ US/China tariffs, growth concerns (2018-19) 800 COVID-19 ‒ COVID-19 (2020) 700 Inflation / EMBI GD spread (bps) rates ‒ Re-opening inflatio
Slide 4: Added risk to deliver future broader-based outperformance
Investment performance One year: 45% outperforming Three years: 28% outperforming Five years: 48% outperforming 100% 100% 100% 75% 75% 75% 50% 50% 50% 25% 25% 25% 0% 0% 0% Jun’21: 96% Jun’21: 57% Jun’21: 79% Outperforming Underperforming • Overall performance picture reflects impact of recent weak &
Slide 5: Financial performance overview
Financial performance overview • AuM -32% YoY FY2021/22 FY2020/21 £m £m YoY % − Negative investment performance and net outflows, particularly H2 after Ukraine invasion AuM (US$bn) 64.0 94.4 (32) Adjusted net revenue 257.2 296.6 (13) • Adjusted net revenue -13% − Net management fees -10% and lower p
Slide 6: Significant impact from H2 market conditions
Assets under management • Significant impact from global markets sell off in H2: AuM development (US$bn) ‒ Performance H1/H2: –US$3.9 billion / -US$12.7 billion ‒ Net flows H1/H2: -US$3.2 billion / -US$10.3 billion • Subscriptions US$13.1 billion, 14% of opening AuM (FY2020/21: US$17.6 billion) 94.4
Slide 7: Resilient performance, supporting strategic objectives
Local asset management operations continue to develop positively Established network of six local offices • Resilient performance and diversification benefit ‒ Collectively manage US$6.9 billion AuM, -3% YoY • Ashmore Colombia ‒ Raised third private equity fund, continues to target growth in real as
Slide 8: Revenues reflect lower AuM
Financial results Revenues • Adjusted net revenue fell by 13% Adjusted net revenue (£m) 296.6 • Net management fees -10% − Average AuM -7% 257.2 − 2bps decline in net management fee margin − Lower average GBP:USD rate (+1% impact) • Margin 39bps, stable during the period − No net impact from theme m
Slide 9: Effective cost management
Financial results Operating costs • Adjusted operating costs reduced by 7% Adjusted operating costs (£m) ˗ Lower variable compensation 103.7 2.5 (10.2) 96.0 ˗ Higher fixed staff costs: higher headcount and impact of industry-wide wage inflation ˗ Other operating costs reflect return to pre-pandemic
Slide 10: Delivers strong cash flows and supports growth
Financial results Seed capital Seed capital impacted by H2 market weakness 10% • Total seed capital investments & commitments of ~£285 million 5% ‒ Market value £272.0 million (30 June 2021: £336.8 million) 0% ‒ Undrawn commitments £12.4 million -5% -10% • Actively managed seed capital programme gen
Slide 11: Dividend maintained
Financial results Statutory earnings FY2021/22 FY2020/21 YoY £m £m % Profit before tax 118.4 282.5 (58) Tax (26.5) (40.7) 35 Profit after tax 91.9 241.8 (62) Profit attributable to non-controlling interests (3.4) (1.7) (100) Profit attributable to equity holders of the parent 88.5 240.1 (63) Earning
Slide 12: Cash flow
Financial results Cash flow • Business model generates strong cash Cash flow (£m) (1) flows through the cycle 700.0 184.9 24.7 • Operating cash flows (£184.9 million) 600.0 121.5 represent 113% of adjusted EBITDA 40.1 542.0 54.7 2.7 501.9 500.0 34.5 445.7 • Dividends (-£121.5 million) 400.0 300.0 •
Slide 13: Consistent balance sheet strength
Financial results Balance sheet • IFPR regulatory capital framework Consistent balance sheet structure (£m) 900 ‒ ICARA replacing ICAAP 800 ‒ No change to Ashmore’s robust, well- 700 capitalised & liquid balance sheet 600 500 400 • Capital resources of £788.7 million (1) 300 ˗ Group capital requirem
Slide 14: Highly attractive valuations underpin positive outlook
Emerging Markets outlook • Potential for improving macroeconomic conditions GDP growth premium & real yields ‒ EM growth premium maintained, central banks moved earlier 8.0% to address inflation 7.0% 6.0% ‒ Inflation pressures should normalise (base effects, 5.0% destocking & other deflationary fact
Slide 15: Summary
Summary • Challenging global markets in H2 • Focus on consistent strategy & strength of business model • Outlook underpinned by exceptional valuations across Emerging Markets 15
Slide 16: Q&A
Ashmore Q&A
Slide 17: Appendices
Ashmore Appendices eee
Slide 18: Adjusted profits reconciliation
Appendix 1a Adjusted profits reconciliation Adjusted Adjusted FY2021/22 FY2020/21 £m £m YoY % Net revenue 262.5 291.7 (10) FX translation (5.3) 4.9 nm Adjusted net revenue 257.2 296.6 (13) Operating costs ex consolidated funds (94.0) (99.8) 6 VC on FX translation 1.1 (1.1) nm Adjusted operating cost
Slide 19: Seed capital
Appendix 1b Seed capital • Consolidated funds: FY2021/22 FY2020/21 £m £m − Line-by-line consolidation in financial statements Gains/(losses) on investment securities (61.3) 123.5 − FX taken to reserves Change in third-party interests in consolidated funds 16.5 (52.6) − PBT contribution of -£40.5 mil
Slide 20: Net management and performance fees by theme
Appendix 2a Net management and performance fees by theme FY2021/22 FY2020/21 FY2021/22 FY2020/21 £m £m US$m US$m External debt 46.7 52.0 62.0 70.6 Local currency 54.9 60.4 72.9 81.8 Corporate debt 26.0 34.6 34.6 46.8 Blended debt 69.3 82.7 92.2 112.0 Equities 33.1 28.9 43.9 39.2 Alternatives 13.5 12
Slide 21: Management fee margins
Appendix 2b Management fee margins 138 FY2020/21 FY2021/22 132 62 58 47 46 41 39 41 38 37 35 29 27 Group External debt Local currency Corporate debt Blended debt Equities Alternatives Fixed income: 35bps (FY2020/21: 38bps) 21
Slide 22: Assets under management
Appendix 3a Assets under management AuM by theme AuM as invested External debt External debt 10% 2% 10% 2% 21% Local currency Local currency 33% Corporate debt 17% 24% Corporate debt Blended debt 32% Equities 11% Equities 38% Alternatives Alternatives AuM by client type AuM by client location Centra
Slide 23: Investment themes
Appendix 3b Investment themes FIXED INCOME ALTERNATIVES (US$56.2bn) (US$1.5bn) EQUITIES (US$6.3bn) Local Corporate External Debt Blended Debt THEME Currency Debt (US$14.4bn) (US$14.4bn) (US$20.6bn) (US$6.8bn) GLOBAL • Broad • Bonds • Broad • Blended • Active • EM Equity (All • Frontier • Private equ
Slide 24: Quarterly net flows
Appendix 3c Quarterly net flows +8.0 +6.0 +4.0 +2.0 US$ billion +0.0 -2.0 -4.0 -6.0 -8.0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 24
Slide 25: AuM movements by theme and fund classification
Appendix 4 AuM movements by theme and fund classification AuM Gross Gross Reclassifications AuM US$bn 30 June 2021 Performance subscriptions redemptions Net flows / other 30 June 2022 External debt 18.7 (4.2) 3.6 (3.7) (0.1) - 14.4 Local currency 31.9 (3.2) 3.5 (10.8) (7.3) (0.8) 20.6 Corporate debt
Slide 26: 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 1.3815 to 1.2145 30 June 2022 % 30 June 2021 % £m £m − Average rate 1.3289 vs 1.3472 in FY2020/21 US dollar 238.5 44 341.3 77 Sterling 273.1 50 76.0 17
Slide 27: Cash flows and consolidated funds FY2021/22
Appendix 6 Cash flows and consolidated funds FY2021/22 £m As reported Consolidated funds Group ex funds Cash from operations 182.1 (2.8) 184.9 Taxation (24.7) - (24.7) Interest 7.7 7.4 0.3 Seeding activities 48.3 (6.4) 54.7 Dividends paid (121.5) - (121.5) EBT purchases (34.5) - (34.5) Other (3.0) -
Slide 28: Investment performance
Appendix 7 Investment performance 1yr 3yr 5yr 30th June 2022 Ashmore Benchmark Ashmore Benchmark Ashmore Benchmark External debt Broad -28.5% -21.2% -9.5% -5.2% -3.6% -1.2% Sovereign -24.0% -21.2% -7.9% -5.2% -2.7% -1.2% Sovereign IG -17.8% -19.3% -2.5% -3.4% 1.0% 0.2% Local currency Bonds -16.1% -1
Slide 29: Historical valuations relative to Developed Markets
Appendix 8 Historical valuations relative to Developed Markets External debt Local currency Index: 70 countries; 160 issuers; 943 bonds Index: 20 countries; 20 issuers; 300 bonds 800 8.00 EMBI GD spread over UST, bps GBI-EM GD yield (%) Difference: GBI-EM vs GBI global (%) 7.50 700 7.00 6.50 600 6.0
Slide 30: Disclosures
Appendix 9 Disclosures Page 4: - 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 2022 and with a performance benchmark are included, which specifical
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