Ashmore Group plc Results for six months ending 31 December 2018 14 February 2019 www.ashmoregroup.com
Overview • Business model continues to deliver ˗ Strong investment performance ˗ 97% AuM outperforming over three years ˗ Active management delivering outperformance in 2019 ˗ Resilient client flows ˗ AuM +10% YoY. Net inflow of +US$2.4bn in H1 and +US$11.4bn for calendar 2018 ˗ +18% growth in net management fee income ˗ +8% adjusted EBITDA growth despite lower performance fees ˗ Dividend maintained at 4.55p • Positive outlook: significant value available and good momentum in EM capital flows Emerging Markets are in good health with high GDP growth and low inflation Capital inflows to EM continuing US dollar weakening, temporary support fading (tax cut, Fed rhetoric, protectionism) Elections in 2019 offer opportunities 2019 has started well 2
Financial performance overview • AuM +10% YoY, average AuM +17% YoY H1 2018/19 H1 2017/18 £m £m YoY % Net flows +US$2.4 billion in H1 AuM (US$bn) 76.7 69.5 10 • Adjusted net revenue +8% Adjusted net revenue 148.2 136.7 8 Net management fees +18% to £142.3 million driven by Adjusted operating costs (52.0) (48.1) (8) diversified AuM growth Lower performance fees Adjusted EBITDA 98.8 91.2 8 - margin 67% 67% • Ongoing cost discipline ˗ Like-for-like cost growth only 2% Seed capital (9.7) 10.5 nm Profit before tax 93.0 99.0 (6) • Adjusted EBITDA +8% ˗ High profit margin maintained at 67% Diluted EPS (p) 10.1 11.3 (10) DPS (p) 4.55 4.55 - • Strong cash generation Operating cash flow of £84.9 million (86% of adjusted EBITDA) • Profit before tax -6% Negative mark-to-market seed capital impact Figures stated on an adjusted basis exclude FX translation and seed capital-related items; see Appendix 1 3
Business model • Ashmore’s business model delivers through market cycles ˗ High-quality revenues driven by recurring net management fees High-quality revenues delivering 67% adjusted EBITDA margin ˗ Cost discipline including flexible remuneration policy supports adjusted EBITDA margin 100% 70% ˗ 90% Consistent teams and strong alignment of interests between clients, shareholders and employees 80% 65% Fees as % total fees 70% ˗ Cash conversion consistently high 60% ˗ Well-capitalised balance sheet confers advantages 50% 60% 40% 30% • Profitability remained high in 2013-2016 period despite 37% 55% 20% peak/trough fall in AuM 10% 0% 50% 2015 2016 2017 2018 H1 2018/19 • In the cyclical recovery since December 2015 1 : Net management fees (lhs) Performance fees (lhs) Adj EBITDA margin (rhs) ˗ AuM has increased 55% ˗ Net management fees have increased by 44% ˗ Adjusted EBITDA has increased by 45% and margin has expanded from 62% to 67% ˗ Operating cash flows of £435 million have funded dividends of £353 million Distinctive business model delivering value through the cycle 1. Compared with H1 2015/16 4
Assets under management • AuM development (US$bn) Gross subscriptions of US$8.5 billion, 12% of opening AuM (H1 2017/18: US$15.0 billion, 26%) (6.1) 8.5 Bias towards existing clients 0.3 0.1 New mandates focused on local currency, blended debt and equities Retail momentum continues, 21% of net flows 76.7 73.9 • Gross redemptions of US$6.1 billion, 8% of opening AuM (H1 2017/18: US$7.1 billion, 12%) AuM at 30 Jun Subscriptions Redemptions Performance Ashmore Avenida AuM at 31 Dec • Net inflows of +US$2.4 billion 2018 acquisition 2018 External Local Corporate Blended Equities Alternatives Multi-asset Overlay/liquidity • Investment performance +US$0.1 billion Balanced and diversified client base Central banks Sovereign wealth funds 14%1% Americas 15% Governments 22% 25% 4% Europe ex UK 8% Pension plans UK 14% Corporates/financial 15% institutions 19% Middle East & Africa Fund/sub-advisers 25% Asia Pacific 9% 29% Third-party intermediaries Foundations/endowments Broad based growth in AuM 5
Financial results Revenues • Net management fees +18% with +17% average AuM Strong growth (+18%) in net management fee income growth 3% YoY benefit from lower average GBP:USD rate 22.9 11.1 3.3 142.3 2.2 4.4 • Net management fee margin 49bps 1bp increase HoH, due to retail growth and Ashmore Avenida acquisition 120.5 1bp reduction YoY, due to large mandates partially offset by retail growth and other effects • Lower performance fees given broader market weakness H1 2017/18 AuM growth Large Retail Other FX H1 2018/19 mandates H1 2018/19 H1 2017/18 YoY £m £m % Net management fees 142.3 120.5 18 Performance fees 1.2 14.8 (92) Other revenue 2.0 1.1 82 FX: hedges 2.7 0.3 nm Adjusted net revenue 148.2 136.7 8 Figures stated on an adjusted basis, excluding FX translation and seed capital-related items; see Appendix 1 AuM growth driving strong increase in management fee income 6
Financial results Operating costs • Like-for-like fixed cost growth of £0.5 million, of Operating cost development (£m) which £0.3 million is due to weaker GBP:USD rate 0.3 28.1 0.2 0.5 1.2 • Other increase of £1.7 million attributable to: 25.9 ˗ Ashmore Avenida (mostly staff costs) ˗ MiFID II and preparation for Brexit (mostly other operating costs) • Average headcount increased 15% YoY ˗ Ashmore Avenida added 42 employees H1 2017/18 Ashmore MiFID II, Brexit Other FX H1 2018/19 Avenida ˗ Group headcount increased by five, in local platforms (Indonesia, Saudi Arabia) and Ireland H1 2018/19 H1 2017/18 £m £m YoY % Fixed staff costs (13.3) (12.3) (8) • Variable compensation accrued at 20% of EBVCIT Other operating costs (12.2) (11.0) (11) Depreciation & amortisation (2.6) (2.6) - Operating costs before VC (28.1) (25.9) (8) Variable compensation (20%) (24.7) (21.7) (14) - adjustment for FX translation 0.8 (0.5) nm Adjusted operating costs (52.0) (48.1) (8) Figures stated on an adjusted basis, excluding FX translation and seed Maintaining cost discipline through the cycle capital-related items; see Appendix 1 7
Financial results Seed capital • Realised gain of £1.0 million and total mark-to-market H1 2018/19 H1 2017/18 seed capital loss of £9.7 million £m £m Gains/(losses) on investment securities (18.6) 9.4 • Consolidated funds: Change in third-party interests in consolidated 7.8 (4.9) funds Line-by-line consolidation in financial statements Operating costs (1.4) (1.1) FX taken to reserves Interest and dividend income 5.8 2.7 PBT contribution of -£6.4 million Sub-total: consolidated funds (6.4) 6.1 • Unconsolidated funds: Finance income Market returns including FX recognised in Finance - market return (2.9) 7.4 income - foreign exchange (0.4) (3.0) PBT contribution of -£3.3 million with negative Sub-total: unconsolidated funds (3.3) 4.4 investment return of £2.9 million and mark-to- market FX loss of £0.4 million Total profit/(loss) (9.7) 10.5 - realised 1.0 - - unrealised (10.7) 10.5 Seed capital included in Finance income 2.5 7.1 Interest income 3.8 2.0 Reported Finance income 6.3 9.1 8
Financial results Statutory earnings H1 2018/19 H1 2017/18 YoY £m £m % Profit before tax 93.0 99.0 (6) Tax (19.0) (17.8) (7) Profit after tax 74.0 81.2 (9) Profit attributable to non-controlling interests (1.6) (1.0) (60) Profit attributable to equity holders of the parent 72.4 80.2 (10) Earnings per share: basic (p) 10.8 12.0 (10) Earnings per share: diluted (p) 10.1 11.3 (10) Dividends per share (p) 4.55 4.55 - • Effective tax rate 20.4% vs 19.0% statutory UK rate • Disallowable mark-to-market seed-capital losses • Effect of non-operating items on diluted EPS: FX translation +0.3p (H1 2017/18: -0.2p), seed capital -1.1p (H1 2017/18: +1.2p) Dividend maintained, focus on rebuilding cover 9
Financial results Cash flow • Operations generated cash flow of Cash flow (£m) (1) £84.9 million (1) 86% of adjusted EBITDA (H1 2017/18: 81%) 84.9 13.8 86.5 426.8 4.9 11.8 3.5 416.1 • 21.9 H1 bias to cash payments, relating to 16.2 prior year Final dividend Cash component of variable remuneration • Shares purchased to satisfy employee equity awards (£21.9 million) Opening cash Operations Taxation Dividends EBT purchases Net seeding Acquisition Interest FX and other Closing cash • Seed capital realisations generated net cash flow of £16.2 million (1) Excludes consolidated funds. See Appendix for reconciliation to statutory consolidated cash flow statement Consistent profit conversion and uses of cash 10
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