Ashmore Group plc Results for year ending 30 June 2018 7 September 2018 www.ashmoregroup.com
Overview • Strong operating and financial performance ˗ Active investment continues to produce outperformance (94% of AuM outperforming over three years) ˗ AuM growth (+26% YoY to US$73.9 billion) driven by record gross and net flows Broad-based client demand and strategic initiatives generating strong AuM growth: retail +47% YoY, local platforms +26% YoY Maintained focus on cost control, delivering adjusted EBITDA +14% YoY and adjusted EBITDA margin increased to 66% Good cash generation • Outlook Recent market weakness due to developed world events and small number of Emerging Markets countries Strong and improving fundamentals across vast majority of Emerging Markets This provides attractive investment opportunities for a specialist active manager 2
Financial performance overview • AuM +26% over the year FY2017/18 FY2016/17 £m £m YoY % Record net flows +US$16.9 billion, investment AuM (US$bn) 73.9 58.7 26 performance -US$1.4 billion Operating revenues 278.3 249.8 11 • Operating revenues +11% to £278.3 million Adjusted operating costs (99.7) (94.2) 6 Net management fees +13% to £250.5 million driven by diversified AuM growth Adjusted EBITDA 183.6 161.1 14 Performance fees of £21.9 million generated across a range of investment themes - margin 66% 65% - EBITDA 181.5 172.3 5 • Maintained focus on cost efficiency Seed capital gains 10.1 41.0 (75) • Adjusted EBITDA +14%, margin increased to 66% Profit before tax 191.3 206.2 (7) • Strong cash generation Diluted EPS (p) 21.3 23.7 (10) Operating cash flow of £210.1 million, equivalent to DPS (p) 16.65 16.65 - 114% of adjusted EBITDA • Profit before tax -7% Impacted by lower contribution from seed capital and FX translation Figures stated on an adjusted basis exclude FX translation and seed capital-related items; see Appendix 1 • Proposed final dividend 16.65p 3
Assets under management • AuM development (US$bn) Gross subscriptions of US$30.0 billion, 51% of opening AuM (FY2016/17: US$14.8 billion, 28%) 30.0 (13.1) Record demand, subscriptions doubled YoY Broadly spread across investment themes (1.4) (0.3) • Gross redemptions of US$13.1 billion, 22% of opening AuM (FY2016/17: US$12.9 billion, 25%) 73.9 Some institutional profit taking in Q2 Lower redemptions in H2 (US$6.0 billion vs 58.7 US$7.1 billion in H1) AuM at 30 Jun Subscriptions Redemptions Performance Other AuM at 30 Jun 2017 2018 • External Local Corporate Blended Equities Alternatives Multi-asset Overlay/liquidity Record net inflows of US$16.9 billion Established global distribution capabilities Net flows (US$bn) delivering 6.4 Increased sales momentum as investors address underweight positions 4.3 3.6 2.6 • Investment performance -US$1.4 billion Strong market returns in first nine months (+US$3.8 billion), final quarter was weaker Q1 Q2 Q3 Q4 (-US$5.2 billion) Record flows deliver strong AuM growth 4
Client flows and products Increasingly broad client demand • Strong investment performance and consistent Increasing institutional allocations to Emerging Markets (%) (1) highlighting of value available across Emerging 7.5 Markets 6.4 5.4 4.2 • Greater understanding and adoption of Emerging 3.8 3.6 Markets asset classes 2.0 ˗ Allocations rising, but still underweight vs 15%-20% global benchmarks n/a 2005 2010 2015 2017 • ‘Early adopters’ responded in FY2017 to the Equity Fixed income recovery in markets Broadening net flows • Broad demand in FY2018, from both institutional 20.0 and retail clients 15.0 Net flows (US$bn) 10.0 5.0 0.0 (5.0) (10.0) 2016 2017 2018 Seg accounts Other funds Expanding range of client activity delivering higher net inflows (1) Source: Ashmore, annual reports of representative European and US pension funds collectively responsible for more than US$750 billion of assets 5
Client flows and products • Net flows (US$bn) Global distribution team delivering flows diversified by investment theme, client type and client geography 17.0 Foundations Fund/sub-advisers Overlay/liquidity Middle East & Africa 15.0 Equities Central banks • Strategic initiatives delivering strong AuM growth Europe (ex UK) Sovereign wealth funds 13.0 Blended debt Corporates/financial institutions 11.0 UK Third-party Retail 9.0 Corporate debt intermediaries Intermediary relationships established and strengthened Americas 7.0 Governments Net inflows of US$3.7 billion with demand for short 5.0 Local currency duration, blended debt and specialist equities, driven 3.0 Asia Pacific principally by Europe and Asia Pension plans 1.0 External debt Multi-asset AuM +47% YoY, and now 14% of Group -1.0 Growth in retail AuM Local platforms 12.0 16% AuM +26% YoY to US$4.9 billion, 7% of Group 14% 10.0 Significant diversification benefits, through domestic 12% % of Group AuM 8.0 US$ billion 10% client base and differentiated asset classes 6.0 8% 6% 4.0 Alternatives 4% 2.0 Acquired majority stake in Colombian real estate 2% 0.0 0% manager in July 2018, with ~US$300 million AuM 2015 2016 2017 Jun 2018 Retail AuM (lhs) Retail AuM as % Group (rhs) Strategic initiatives delivering growth 6
Financial results Revenues • Net management fees +13%, driven by AuM growth Higher net management fee income 6% headwind from higher average GBP:USD rate 60.3 17.7 3.0 3.0 13.7 250.5 • Net management fee margin 49bps 3 bps lower YoY attributable to growth in large 221.6 segregated accounts Retail AuM growth (+0.5bps) offset other effects including competition • Performance fees delivered across investment themes ˗ Estimated performance fees from August year-end funds are not significant (August 2017: £1.4 million] FY2016/17 AuM growth Large Retail Other FX FY2017/18 mandates FY2017/18 FY2016/17 YoY £m £m % Net management fees 250.5 221.6 13 Performance fees 21.9 28.3 (23) Other revenue 4.1 2.7 52 FX: hedges 1.8 (2.8) nm Operating revenues 278.3 249.8 11 Figures stated on an adjusted basis, excluding FX translation and seed capital-related items; see Appendix 1 Strong revenue growth 7
Financial results Operating costs • Consistent operating model Non-VC operating costs reduced by 4% 0.6 ˗ 52.8 1.5 Ongoing focus on fixed operating costs 50.7 ˗ Variable compensation provides strong alignment of client/shareholder/employee interests through the cycle • Stable Group headcount ˗ Local employees increased 16% YoY, now 29% of Group FY2016/17 Fixed staff costs Other operating costs FY2017/18 • VC at 21.5% of EBVCIT (FY2016/17: 21%) FY2017/18 FY2016/17 £m £m YoY % Fixed staff costs (24.2) (24.8) 2 Other operating costs (21.5) (22.5) 4 Depreciation & amortisation (5.0) (5.5) 9 Operating costs before VC (50.7) (52.8) 4 Variable compensation (48.6) (43.0) (13) - adjustment for FX translation (0.4) 1.6 nm Adjusted operating costs (99.7) (94.2) (6) Figures stated on an adjusted basis, excluding FX translation and seed capital-related items; see Appendix 1 Continued focus on cost control 8
Financial results Business model delivers through market cycles • Net management fees contribute >90% of fee income High-quality revenues, increase in adjusted EBITDA margin 100% 70% 90% • +14% growth in adjusted EBITDA 80% 65% Fees as % total fees ˗ Fee income growth generated +11% increase in 70% operating revenues 60% 50% 60% ˗ Maintaining focus on efficient business model, pre- 40% VC operating costs -4% 30% 55% 20% 10% • Adjusted EBITDA margin increased to 66% 0% 50% 2014 2015 2016 2017 2018 Net management fees (lhs) Performance fees (lhs) Adj EBITDA margin (rhs) FY2017/18 FY2016/17 YoY £m £m % Operating revenues 278.3 249.8 11 Operating costs (50.7) (52.8) 4 Adjusted VC (49.0) (41.4) (18) Adjusted EBITDA 183.6 161.1 14 Margin 66% 65% Figures stated on an adjusted basis, excluding FX translation and seed capital-related items; see Appendix 1 Positive operating leverage 9
Financial results Seed capital Seed capital movement (£m) • Market value £228.3 million (30 June 2017: £210.2 million) 65.0 55.8 Undrawn commitments of £32.5 million 8.9 228.3 210.2 • Profit contribution of £10.1 million, of which £5.0 million realised Investment return of £14.0 million Mark-to-market FX loss of £3.9 million as Sterling strengthened • New investments of £65.0 million, with investments made in alternatives and global equity products to support growth initiatives 30 June 2017 Investments Realisations Market movement 30 June 2018 Diversified across themes (% of market value) • Successful realisations of £55.8 million, from reaching product scale in frontier equity strategies (SICAV and 40-Act) and local mutual funds in Indonesia External debt 3% 8% 4% 4% Local currency ˗ Frontier AuM US$0.2 billion (+33% YoY) Corporate debt 19% ˗ Indonesia AUM US$1.6 billion (+52% YoY) 32% Blended debt Equities Alternatives 30% Multi-asset Seed capital programme supports future AuM growth 10
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