REG - Ashmore Group Plc - Half-year Report
10/02/2022 07:00
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RNS Number : 2196B Ashmore Group PLC 10 February 2022
Ashmore Group plc
10 February 2022
RESULTS FOR THE SIX MONTHS ENDING 31 DECEMBER 2021
Ashmore Group plc (Ashmore, the Group), the specialist Emerging Markets asset
manager, today announces its unaudited results for the six months ending 31
December 2021.
- Financial performance impacted by market environment
- Assets under management (AuM) of US$87.3 billion, net outflows of US$3.2
billion and negative investment performance of US$3.9 billion
- Adjusted net revenue of £138.2 million, 12% lower YoY, and primarily
comprising net management fees of £131.0 million with performance fees of
£3.1 million
- Cost discipline reduced adjusted operating costs by 7%, delivering
adjusted EBITDA of £92.0 million, 14% lower YoY, and margin of 67%
- Seed capital investments generated gain of £25.2 million compared with
£49.3 million in prior year period
- Profit before tax of £116.0 million, 23% lower than in prior year period
- Adjusted diluted EPS 19% lower at 10.4 pence and interim DPS maintained at
4.80 pence
- Consistent balance sheet strength with more than £800 million of capital
resources including c.£450 million of cash
- Continued progress made across range of strategic initiatives
- Equities investment outperformance delivering net inflows, AuM increased
from 8% to 9% of Group AuM
- Local platform AuM increased to US$8.0 billion, and from 8% to 9% of Group
AuM, including record AuM in Ashmore Indonesia
- Ashmore Colombia raised a further private equity fund to focus on domestic
and regional infrastructure projects
- Seed capital supporting development of investment track records in
dedicated ESG funds, and joined NZAMI in July 2021
- Established active investment processes deliver through market cycles
- 2021 was a more challenging year for Emerging Markets (EM) performance
than 2020
- 39% of AuM outperforming benchmarks over one year, 44% over three years
and 54% over five years
- Strong relative performance in local currency and equities, and fixed
income investment grade strategies
- Added risk to capture significant recovery value in oversold asset prices
- Improving macro environment and attractive valuations
- EM central banks ahead of the Fed, highly attractive real rates
- EM set to outperform in rising US rate environment
- 2021 headwinds are fading and valuations do not reflect supportive macro
outlook
Commenting on the Group's results, Mark Coombs, Chief Executive Officer,
Ashmore Group said:
"These financial results reflect the negative sentiment towards Emerging
Markets assets at this point in the cycle. Consistent with the approach to
previous periods of volatility, Ashmore's active investment processes have
exploited market weakness to underpin future performance, and the Group has
made continued progress towards its strategic objectives.
"Many of the factors that presented headwinds in 2021 are fading, so the macro
environment is expected to be supportive. Emerging Markets typically
outperform in a period of rising US interest rates, so a Fed rate move should
be a significant catalyst. Importantly, valuations across equity and fixed
income markets do not yet reflect this, with equity markets trading close to
relative lows compared with developed markets, and bond yields and spreads are
highly attractive relative to history and developed world bonds. Therefore the
backdrop supports outperformance of Emerging Markets assets and this should
cause investors to increase their underweight allocations."
Analysts briefing
There will be a presentation for analysts at 9.30am on 10 February 2022 at
UBS, 5 Broadgate, London, EC2M 2QS. A copy of the presentation will be made
available on the Group's website at www.ashmoregroup.com.
Contacts
For further information please contact:
Ashmore Group plc
Tom Shippey, Group Finance Director +44 (0)20 3077 6191
Paul Measday, Investor Relations +44 (0)20 3077 6278
FTI Consulting
Neil Doyle +44 (0) 7771 978 220
Kit Dunford +44 (0) 7717 417 038
Chief Executive Officer's report
Emerging fixed income and equity markets were lower over the past six months,
as weaker investor sentiment reflected concerns over inflation and the pace of
US monetary policy tightening, slower growth in China, and new COVID-19
variants. Against this market backdrop, Ashmore's assets under management
declined by 8% over the period to US$87.3 billion and adjusted EBITDA was 14%
lower.
As some of the headwinds faced in 2021 are expected to abate or reverse in
2022 and are more than discounted in current valuations across the fixed
income and equity asset classes, the outlook for performance of Emerging
Markets assets is favourable. Therefore in addition to the potential for
longer term outperformance, the recent correction has presented attractive
investment opportunities and, consistent with previous cycles and its
value-based approach, Ashmore's investment processes have focused on oversold
assets to add risk and to position portfolios to capture the recovery returns
available.
Ashmore made progress in the period across a broad range of strategic
initiatives, supported by its effective business model with substantial
capital resources and a flexible cost base that enables continued investment
through market cycles. The Group's diversified seed capital investments
support future AuM growth and the portfolio delivered a meaningful gain,
albeit lower than in the prior year period. Reflecting the above factors,
while diluted EPS of 13.3p declined by 27%, the Board has maintained the
interim dividend at 4.80 pence per share.
Summary non-GAAP financial performance
The table below reclassifies items relating to seed capital and the
translation of non-Sterling balance sheet positions to aid comprehension of
the Group's operating performance on a consistent basis with prior periods.
For the purposes of presenting 'Adjusted' profits, personnel expenses have
been adjusted for the variable compensation on foreign exchange translation
gains and losses.
Non-GAAP alternative performance measures (APMs) are defined and reconciled at
the end of this document.
Reclassification of
£m H1 2021/22 Reported Seed capital- Foreign H1 2021/22 Adjusted H1 2020/21 Adjusted
related items
exchange
translation
Net management fees 131.0 - - 131.0 138.9
Performance fees 3.1 - - 3.1 7.7
Other revenue 1.4 - - 1.4 1.5
Foreign exchange 3.0 - (0.3) 2.7 8.7
Net revenue 138.5 - (0.3) 138.2 156.8
Gains on investment securities 51.0 (51.0) - - -
Change in third-party interests in consolidated funds (23.0) 23.0 - - -
Personnel expenses (36.5) - 0.1 (36.4) (40.0)
Other expenses excluding depreciation and amortisation (10.5) 0.7 - (9.8) (9.6)
EBITDA 119.5 (27.3) (0.2) 92.0 107.2
EBITDA margin 86% - - 67% 68%
Depreciation and amortisation (1.6) - - (1.6) (1.6)
Operating profit 117.9 (27.3) (0.2) 90.4 105.6
Net finance income/(expense) (1.9) 2.1 - 0.2 0.5
Associates and joint ventures - - - - 0.1
Profit before tax 116.0 (25.2) (0.2) 90.6 106.2
Foreign exchange translation - - 0.2 0.2 (4.9)
Seed capital-related items - 25.2 - 25.2 49.3
Profit before tax 116.0 - - 116.0 150.6
Diluted EPS (p) 13.3 (2.9) - 10.4 12.8
Investment themes
External debt Local currency Corporate debt
Invests in debt instruments issued by sovereigns and quasi-sovereigns and Invests in local currencies and local currency-denominated debt instruments Invests in debt instruments
denominated in foreign currencies. issued by sovereigns, quasi-sovereigns and companies.
issued by public and private
sector companies.
Equities Alternatives Blended debt
Invests in equity and equity-related instruments including global, regional, Invests in private equity, healthcare, infrastructure, special situations, Asset allocation across the external debt, local currency and corporate debt
country, small cap, frontier and multi-asset opportunities. distressed debt and real estate opportunities. investment themes, measured against tailor-made blended indices.
Ashmore's six headline investment themes described above provide access to the
broad range of investable and scalable investment opportunities available
across the diverse Emerging Markets universe. Three factors will drive
longer-term growth in the Group's AuM. First, the Emerging Markets will
continue to develop and evolve, with broader, deeper and more accessible
capital markets contributing to the range and scale of investment
opportunities; second, investor allocations to Emerging Markets are expected
to increase from very underweight levels currently; and third, Ashmore will
continue to innovate in order to provide access to new Emerging Markets
investment strategies.
Market review
Investor sentiment and prices fluctuated over the period in response to
persistently high inflation across the world, a sharp rise in energy-related
commodity prices, the ongoing impact of COVID-19 including new variants,
regulatory developments in China and geopolitical tension between Russia and
Ukraine. Consequently, the main Emerging Markets indices declined by 0.5% to
5.5% in fixed income and equity markets were 10.5% lower over the six months.
This market performance is at odds with the underlying economic data, which in
many respects continues to be robust, particularly where vaccination
programmes are permitting an increase in social and economic activity. This
adds to the pressure for the Federal Reserve and other central banks to start
or to accelerate monetary policy tightening.
Importantly, central banks in emerging countries have already started raising
interest rates in response to high inflation prints, which provides a highly
attractive real yield environment that underpins expectations of currency
appreciation. In the period, central banks in Brazil, Chile, Mexico, Colombia,
Peru, Hungary, Czech Republic, Poland and Russia raised policy rates, meaning
that approximately half of the GBI-EM global index constituents are tightening
monetary policy and thereby emphasising their independence and
inflation-fighting credentials.
Although the main Emerging Markets indices fell over the six months, there was
significant variation in the returns between hard currency asset classes
(external and corporate debt) and local currency markets (equities and local
currency bonds), with the latter underperforming as a consequence of US
dollar strength.
External debt
The external debt asset class represents bonds worth US$1.5 trillion and the
benchmark EMBI GD index includes approximately 90% of these bonds. In contrast
to its high yield (HY) and concentrated origins nearly 30 years ago, the index
is highly diversified, with issuers in 72 countries, and 51% of the bonds are
rated investment grade (IG).
The asset class exhibits several positive long-term trends, such as increasing
diversification as some countries and quasi-sovereigns issue hard currency
debt for the first time; continued improvement in credit ratings; and,
reflecting these factors, lower spreads over the reference US Treasury bond
curve (albeit with cyclical fluctuations around the long-term trend).
Over the six months to 31 December 2021, the index returned -1.1% with the
rally in the US Treasury curve mostly offsetting the impact of the index
spread widening from 340bps to 370bps. Investment grade bonds outperformed
high yield bonds with returns of 0.5% and -2.8%, respectively, over
the period.
Ashmore's investment grade strategy outperformed over the period with a return
of 0.6% and its broad external debt composite, with more of a bias to high
yield assets, underperformed with a return of -5.5%. Over three years, on a
gross annualised basis, the broad strategy has returned 3.6% compared with
5.9% for the benchmark, and the IG composite has outperformed with a return of
8.1% versus 7.6% for its benchmark.
The current external debt spread of close to 400bps over US Treasuries
represents highly attractive value in the context of the index's history, with
the historical tight being below 200bps and a spread below 300bps prevailing
prior to the COVID-19 crisis. Furthermore, it is arguable that the market's
expectation of five US rate hikes in 2022 is more than priced into current
external debt valuations. Indeed, the asset class tends to perform extremely
well in a period of rising US interest rates; for example, from December 2015
(the first rate hike in the most recent cycle) the index spread reduced from
c.500bps to c.260bps over two years and delivered a total return of more than
22%.
Therefore the outlook for potential returns from external debt strategies is
positive, for IG and HY investors.
Local currency
The local currency sovereign bond market is approximately 10 times the size of
the external debt market, with US$14.5 trillion of securities in issue.
Together with local currency-denominated corporate bonds, the local currency
markets represent more than 80% of total Emerging Markets debt issuance.
Growth in this market is supported by the ongoing transition of countries from
external funding to domestic sources, and the continued broadening and
deepening of local capital markets.
Despite the size of the market, the index representation lags the structural
developments, with only 20 issuers and US$2.8 billion of bonds (19% of total
outstanding) in the benchmark GBI-EM GD index. This gap can narrow over time,
particularly as countries open up their domestic markets to foreign investors
and remove the 'replication' barrier to index inclusion. China recently took
this step and achieved the maximum 10% weighting in the index, and India is
expected to follow suit in the near future. This is a potentially significant
development as China's local currency government bonds typically perform well
in periods of market stress, and therefore represent a credible alternative to
the traditional 'safe haven' of US Treasuries. This means that allocations can
stay invested in Emerging Markets through cycles rather than accept lower
returns in the developed world bond markets.
Over the past six months, the GBI-EM GD index fell by 5.6%, with a roughly
even contribution from foreign exchange and higher rates. This performance
resulted from the policy tightening across a wide range of emerging countries,
and a period of US dollar strength as the Fed became more hawkish and started
to taper its quantitative easing. Ultimately, both these factors are positive
for Emerging Markets since higher real yields on local bonds provide an
attractive investment opportunity and support currencies, and the ending of QE
will remove one of the imbalances in global capital markets over the past
decade whereby lower yield asset classes in the developed world have been
supported by central banks, impeding allocations to higher yielding asset
classes.
Ashmore's local currency bonds composite outperformed over the six months with
a return of -5.3%. The composite has also outperformed over the past three
years with a gross annualised return of 2.3% compared with a benchmark return
of 2.1%.
Three factors underpin the attractive returns available in this asset class:
- high real rates relative to similar duration developed world government
bonds. For example, the GBI-EM GD index provides a pickup of more than 500bps
compared with five-year US Treasury bonds;
- emerging countries are successfully unwinding the fiscal and monetary
stimulus deployed to combat the COVID-19 economic shock, whereas the
structural challenges facing the US economy mean the US dollar should continue
to weaken, therefore benefiting local currency returns in bonds and equities;
and
- the structural shift for countries to issue debt in their own currency
rather than US dollars or another foreign currency, thereby increasing their
resilience to external shocks.
Corporate debt
The benchmark CEMBI BD index fell over the six months, but was the best
performing of the Emerging Markets fixed income and equities asset classes
with a return of -0.4%. Echoing the external debt performance, investment
grade bonds outperformed high yield with returns of 0.2% and -1.1%,
respectively.
Ashmore's broad corporate debt composite underperformed over the period with a
return of -5.4%, with high yield assets, particularly in certain sectors such
as real estate in China, underperforming. Active management means the
portfolios are positioned to benefit from the recovery returns available from
oversold asset prices.
The investment grade strategy performed in line with the index with a return
of 0.1%. Over three years, on a gross annualised basis, the broad strategy has
returned 5.4% compared with 6.9% for the benchmark, and the IG composite has
outperformed with a return of 8.6% versus 6.6% for its benchmark.
The overall default rate in HY corporate debt fell meaningfully over the
six-month period, from 3.6% to 2.6%, and continues to compare favourably with
the long-run default rate of 4% and the default experience on US HY bonds.
This partly reflects the significant diversity available in the index, which
represents 44% of the investment universe, and comprises 836 issuers in 60
countries. The CEMBI BD index also has 56% of issuance rated investment grade,
providing substantial opportunities for crossover investors to gain exposure
to Emerging Markets corporate debt.
In such a diverse asset class, the factors behind investment performance will
inevitably centre on specific issuers, but several themes underpin a positive
outlook for returns:
- higher commodity prices support the earnings and creditworthiness of
certain companies and quasi-sovereign issuers;
- for every turn of leverage, Emerging Markets issuers typically offer a
50bps-100bps yield pick-up over US issuers with equivalent credit ratings,
presenting a highly favourable relative return; and
- global growth should continue to recover as vaccinations provide
increasing protection against COVID-19, and social and economic activity can
trend back towards pre-pandemic levels, which supports corporate earnings and
default rates.
Blended debt
Consistent with the returns in the constituent asset classes, the standard
blended debt benchmark (50% EMBI GD, 25% GBI-EM GD and 25% ELMI+ indices) fell
2.6% over the six-month period.
Reflecting Ashmore's relative performance in the constituent asset classes,
the blended debt composite underperformed over the six-month period with a
return of -8.3% compared with -2.6% for the standard benchmark. The IG
strategy slightly underperformed with a return of -1.2% compared with -0.9%
for the IG benchmark.
Over the past three years, on a gross annualised basis, the broad strategy has
underperformed with a return of +1.5% compared with +3.8% for the standard
benchmark, and the IG composite has outperformed with a return of 5.7%
compared with +5.3% for its benchmark.
The merits of an allocation to Emerging Markets blended debt are myriad and
include the ability to exploit the significant difference in the annual
returns across the fixed income asset classes (at least 450bps, and up to
1,000bps); to serve as an introduction to the wide array of investment
opportunities in Emerging Markets; and to enable investors to define bespoke
investment objectives and benchmarks encompassing external and local currency
assets.
Equities
Concerns over global economic growth, the impact of regulatory changes in
China, and weaker currencies combined to deliver a decline in the MSCI EM
index of -10.4% over the period. Significantly, many of these factors are now
stabilising or reversing and there is the potential for a more supportive
macro economic backdrop for equities in 2022 compared with the past six
months.
Ashmore delivered outperformance in the majority of its global equity
strategies over the period, with alpha of 2.7% in the All cap strategy, 0.4%
in Frontier markets and 0.3% in Active equity.
There is a similar picture of outperformance over the past three years, with
gross annualised performance of 22.8% in All cap and 12.3% in Active equity
compared with a benchmark return of 10.9%. Frontier markets and Global small
cap strategies have also outperformed with returns of 12.5% and 24.7%,
respectively, compared with benchmark returns of 10.7% and 16.5%.
It is notable that corporate earnings have proven resilient across many
emerging economies and sectors, but these profits have been de-rated by the
market and so in forward PER terms the MSCI EM index now trades at a 15-year
low against the MSCI World index. As some of the recent macro headwinds fade
and possibly become tailwinds in 2022, there is the real prospect for
significant outperformance by Emerging Markets equities.
This applies not only to the large cap universe, but also to small cap and
frontier markets investment opportunities where the drivers of profit growth
and valuations tend to be domestic in nature, and new products, services and
technologies can often develop faster given the low penetration compared with
larger economies.
Active management remains of paramount importance in a highly diverse equities
investment universe and one that is subject to swings in investor sentiment
that drive market volatility. With improving economic fundamentals, supportive
commodity prices, continued profit growth and highly attractive valuations,
such volatility can be exploited to deliver longer-term outperformance.
Market outlook
Although the past six months were challenging for the performance of Emerging
Markets indices, reflecting disappointing growth in China, geopolitical
tension between Russia and Ukraine, and investors' fear of higher US interest
rates, the outlook for the global macro environment in 2022 provides a highly
attractive backdrop for Emerging Markets to outperform.
The performance of the Chinese economy is important for both global economic
conditions as well as sentiment towards Emerging Markets more broadly. In this
context, it is encouraging that China's counter-cyclical policy tightening in
2021 provides scope for targeted fiscal and monetary easing, leading to a
recovery in GDP growth this year. More broadly across Asia, industrial
production is accelerating and leading to higher levels of capital investment
in the region.
The fundamental impact of higher US rates is nuanced and varies by country,
but every Fed rate cycle delivers a clear pattern of investor sentiment
towards Emerging Markets. The initial fear of higher rates, no matter from
what level nor how rapidly policy may be tightened, causes risk aversion and
Emerging Markets assets underperform; this was seen in the second half of
2021. When the Fed does start to tighten policy, the yields and spreads
available in fixed income assets, together with the supportive growth
environment for equities, means that Emerging Markets outperform. All the
signs are that history will repeat itself again and Emerging Markets will
outperform in 2022 even as the Fed steadily tightens monetary policy.
Of course, the pace of policy tightening depends in part on the inflation
picture. In 2021, inflation was initially influenced by higher commodity
prices and base effects after the initial impact of COVID-19 on the world
economy. However, it has now broadened out and so the important factor is how
central banks have reacted or are likely to respond. In Developed Markets,
central banks continue to operate loose policies, and even if the Fed delivers
five rate increases in 2022, as expected by markets, then real interest rates
will remain stubbornly negative.
In contrast, central banks in many Emerging Markets tightened monetary policy
in 2021 with the result that such banks are ahead of the curve with policy
rates above inflation expectations. This not only reinforces the central
banks' credibility but also provides attractive real yields that will attract
capital to local markets and in turn support the performance of currencies.
One of the factors behind higher inflation - commodity prices - is likely to
remain supportive for terms of trade and provide a tailwind to commodity
exporters, particularly in Latin America, the Middle East and Africa. This
means that countries' external accounts are in a strong position with
surpluses the norm, even for those that typically run a current account
deficit.
Finally, 2022 is an important election year in many emerging countries and
this can provide investment opportunities as market volatility rises with
uncertainty. In the longer term, countries that undertake reforms and
consistently demonstrate high quality policy making are likely to outperform.
These positive fundamental trends need to be seen in the context of highly
attractive valuations across both fixed income and equity markets, with index
yields and spreads at elevated levels compared with history and equivalent
valuations in Developed Markets, and equities trading close to a record
price/earnings discount compared with world equity valuations. This provides a
very supportive backdrop against which Emerging Markets assets can outperform.
Business and strategic developments
Ashmore has made continued progress across a broad range of strategic
initiatives over the six-month period, supported by the Group's consistent and
highly effective business model.
Strategy phase one: increasing allocations
The first phase of Ashmore's three-phase strategy focuses on delivering AuM
growth through increasing investors' allocations to the Emerging Markets, from
typically substantially underweight positions currently. While the market
backdrop was challenging during this period, and some clients reduced their
risk appetite accordingly, gross subscriptions were at a similar level to the
prior year period and progress continued to be made with new client mandates,
particularly in the external debt, blended debt and equities themes, and
incremental allocations from existing clients across all fixed income and
equity asset classes, during the six months.
Strategy phase two: diversification
The increasing diversification of the investment opportunities across Emerging
Markets supports higher allocations, providing investors with access to a
broad range of risk and return profiles. Consistent with developments in its
target markets, Ashmore continues to diversify under phase two of its
strategy, with a focus on investment themes, products, client types and client
locations.
Notable in this period are the continued net flows into equity products,
particularly the highly scalable all cap strategies, and ongoing demand for
investment grade strategies in the external debt and corporate debt themes.
The objective remains to increase the proportion of retail AuM sourced through
intermediaries, which currently stands at 6% versus 15% before the COVID-19
pandemic. As risk appetite returns to the retail market the Group has
maintained the appropriate distribution resources, intermediary relationships
and mutual fund products to achieve this ambition.
The Group's institutional client base is diversified but also continues to
evolve. For example, there is ongoing demand from clients such as financial
institutions and pension funds for corporate and sovereign investment grade
mandates and lower volatility strategies, meaning that Emerging Markets are
increasingly attractive to a broader range of investors with varied investment
objectives. The Group also continues to develop investment track records in
dedicated ESG strategies and joined the Net Zero Asset Managers Initiative in
July 2021.
The achievement of the Group's strategic growth initiatives will mean that
revenues, while still subject to broad Emerging Markets cycles, will
increasingly comprise diverse fees from a wide range of asset classes,
investment strategies, fund structures and client types.
Strategy phase three: mobilising Emerging Markets capital
The third phase of Ashmore's strategy recognises the increasing importance of
rapidly growing capital pools in the emerging world, and seeks to access these
through global distribution relationships with larger institutions such as
central banks, and a network of local platforms to access and manage
domestically focused capital. Overall, the Group has maintained the share of
AuM from clients domiciled in Emerging Markets at 26%.
The local platforms continue to grow strongly with a 12% increase in AuM over
the six months and 15% year-on-year to US$8.0 billion, and representing 9% of
the Group compared with 7% a year ago. Of particular note, Ashmore Indonesia
reported record AuM at the end of the period and Ashmore Saudi Arabia
continued its strong momentum with 49% YoY growth in AuM. Ashmore Colombia
achieved the first close of its third private equity fund, raising US$0.2
billion, and continues to diversify by achieving scale in its listed equities
capabilities.
Seed capital investments
Ashmore's strategy is focused primarily on organic growth, and the Group's
well-capitalised, liquid balance sheet, with more than £800 million of
capital resources, provides it with the ability to invest seed capital in
funds in pursuit of its strategic objectives and growth in third-party assets
under management.
In this period, the seed capital programme made new investments to support
growth in the local asset management businesses and, through a combination of
profitable realisations and the aggregate mark-to-market of ongoing exposures,
it delivered a profit before tax of £25.2 million. In a period when liquid
fixed income and equity markets were lower, this profit illustrates the
benefit of diversification and the ability to deliver returns from different
asset classes and strategies at different points in the cycle. In the prior
year period, the gains were primarily in the equities and fixed income
strategies, whereas in the current period the negative mark-to-market impact
in liquid markets was more than offset by gains from private equity assets
held in alternatives funds. As importantly, over time, the Group has made seed
capital investments in funds that today represent 10%, or US$9 billion, of the
Group's total AuM.
Consistent business model supports growth strategy
Ashmore's business model is designed to operate effectively through market
cycles, and to deliver long-term value and benefits for the Group's clients,
shareholders, employees and other stakeholders. The conservative financial
model, with its emphasis on financial strength and operating cost flexibility,
ensures stability in the operating platform as illustrated by resilient profit
margins, high levels of employee retention and continued investment in the
business to support strategic growth objectives.
The discovery of another COVID-19 variant towards the end of the period caused
many governments around the world to reinstate remote working guidance.
Consequently, after a period in which employees were able to enjoy the social
and efficiency benefits of working in the Group's offices, the majority of
Ashmore's employees returned to working remotely.
The experience of the past two years is that Ashmore's operating model can
perform effectively in this state, but that the culture of the firm is one
that thrives best with teams spending the majority of their time working
collaboratively in offices. It is therefore encouraging that, at the time of
writing, employees have been able to return to the London office in accordance
with government guidance, and it is hoped that the firm's other offices around
the world can follow suit when local guidance permits.
AuM development
As at 31 December 2021, assets under management were US$87.3 billion, a
decline of 8%, or US$7.1 billion, compared with 30 June 2021. The movement was
attributable to negative investment performance of US$3.9 billion and net
outflows of US$3.2 billion.
Average AuM of US$91.2 billion was 4% higher than in the same period in the
prior year (H1 2020/21: US$87.7 billion).
Gross subscriptions of US$7.8 billion represent 8% of opening AuM and were at
a similar level to the prior year period (H1 2020/21: US$7.5 billion, 9% of
opening AuM), although with a notable pick-up in the second quarter following
more subdued activity levels following the summer months.
Client demand was relatively subdued at the start of the period, reflecting
ongoing COVID-19 related working practices and some risk aversion as a
consequence of the macro economic uncertainties described in the Market
review. However, activity levels increased through the six months and were
broad-based across themes.
New client mandates represented approximately one third of institutional
subscriptions, with notable client wins in the external debt, blended debt and
equities themes. Ashmore Colombia achieved a first close of its third private
equity fund, raising US$0.2 billion to focus on investments in domestic and
regional infrastructure projects. There was also continued demand for
investment grade strategies, particularly in the sovereign market, and strong
flows in Asia-focused corporate debt funds.
Gross redemptions of US$11.0 billion, or 12% of opening AuM, were higher than
in the prior year period (H1 2020/21: US$8.9 billion, 11% of opening AuM) and
include US$1.9 billion of overlay redemptions (H1 2020/21: US$0.4 billion).
Institutional redemptions were influenced by asset allocation decisions in
blended debt and local currency, with fully funded pension funds switching to
lower return asset classes and some investors taking tactical views on rates
markets. Certain strategies that have underperformed in external debt and
blended debt experienced outflows. In the local currency theme there were
reductions in overlay mandates during the period. Intermediary retail capital
typically has a shorter investment horizon than institutional assets, and
consequently retail redemptions reflected 20% of the gross redemptions in the
period. There was notably lower risk appetite in blended debt and local
currency bonds, and redemptions from short duration funds following
underperformance.
The total net outflow for the period of US$3.2 billion (H1 2020/21: US$1.4
billion) comprises a net outflow from retail clients of US$1.0 billion (14% of
opening intermediary retail AuM) and net redemptions from institutional
clients of US$2.2 billion (3% of opening institutional AuM).
The profile of the Group's client base remains consistent. The clients are
predominantly a diversified set of institutions, representing 94% of AuM, with
the remainder sourced through intermediary retail channels. Segregated
accounts represent 79% of AuM (30 June 2021: 79%) and, in line with the third
phase of the Group's strategy, 26% of the Group's AuM has been sourced from
clients domiciled in Emerging Markets (30 June 2021: 26%).
Ashmore's principal mutual fund platforms are in Europe and the US, which in
total represent AuM of US$10.8 billion in 42 funds. The European SICAV range
comprises 30 funds with AuM of US$8.9 billion (30 June 2021: US$10.1 billion
in 29 funds) and the US 40-Act range has 12 funds with AuM of US$1.9 billion
(30 June 2021: US$2.3 billion in 12 funds).
The Group's investments are geographically diverse and broadly consistent with
recent periods, with 37% of AuM invested in Latin America, 25% in Asia
Pacific, 20% in Eastern Europe and 18% in the Middle East and Africa.
Investment performance
As at 31 December 2021, 39% of AuM is outperforming over one year, 44% over
three years and 54% over five years (30 June 2021: 96%, 57% and
79%, respectively).
In fixed income, as would be expected at this point in a market cycle, the
short-term (one-year) relative performance is weaker at the end of the period.
This reflects the headwinds faced by Emerging Markets in 2021 compared with
the strong recovery returns delivered for most of 2020, combined with
underperformance in some high yield strategies. Local currency and external
debt strategies delivered decent relative performance over the year, with the
underperformance more prominent in corporate debt and blended debt funds.
Ashmore's global Emerging Markets equity funds generally continued to
outperform, notably in the All cap and Frontier markets strategies.
While there is a lower proportion of Group AuM outperforming over three years
compared with 30 June 2021, there are no significant changes in the relative
performance by theme over three years. Over five years, the lower figures
compared with June 2021 primarily reflect the weaker 2021 performance year
replacing the strong 2016 year, which was the first of several recovery years
following the 2013 to 2015 bear market.
Ashmore continues to deliver strong relative performance in its local currency
and equities themes, and in investment grade strategies across external debt,
corporate debt and blended debt. There is also good performance over the
longer term in broad corporate debt funds. Strategies with a bias towards HY
credit in external debt have underperformed over the medium to longer term,
with a consequent impact on some blended debt strategies as a result of the
allocation to the underlying theme.
AuM movements by investment theme as classified by mandate
The development during the period of AuM by theme as classified by mandate is
shown in the following table. The local currency investment theme includes
US$11.0 billion of overlay/liquidity funds (30 June 2021: US$12.3 billion).
During the period, assets totalling US$0.5 billion were reclassified from the
local currency theme to the blended debt theme as a result of changes to
benchmarks and/or investment guidelines.
Investment theme AuM Gross Gross Net flows Reclassifications Performance AuM
30 June 2021
subscriptions
redemptions
US$bn
US$bn
US$bn
31 December
US$bn
US$bn
US$bn
2021
US$bn
External debt 18.7 2.8 (2.0) 0.8 - (0.6) 18.9
Local currency 31.9 1.8 (3.6) (1.8) (0.5) (1.0) 28.6
Corporate debt 11.3 0.4 (1.3) (0.9) - (0.9) 9.5
Blended debt 23.4 1.6 (3.2) (1.6) 0.5 (1.5) 20.8
Equities 7.7 1.1 (0.9) 0.2 - 0.1 8.0
Alternatives 1.4 0.1 - 0.1 - - 1.5
Total 94.4 7.8 (11.0) (3.2) - (3.9) 87.3
Financial review
Revenues
Net revenue declined by 8% to £138.5 million as a result of lower net
management and performance fees compared with the prior year period. On an
adjusted basis, excluding foreign exchange translation effects, net revenue
fell by 12% to £138.2 million.
Net revenue
H1 2021/22 H1 2020/21
£m
£m
Net management fees 131.0 138.9
Performance fees 3.1 7.7
Other revenues 1.4 1.5
FX: hedges 2.7 8.7
Adjusted net revenue 138.2 156.8
FX: balance sheet translation 0.3 (6.1)
Net revenue 138.5 150.7
Management fee income, net of distribution costs, declined by 6% to £131.0
million. This reflects a lower net management fee margin of 39bps (H1 2020/21:
42bps), the impact of a higher average GBP:USD rate in this period, and 4%
growth in average assets under management compared with the prior year period.
At constant H1 2020/21 exchange rates, net management fee income reduced by
2%.
The net management fee margin declined by three basis points compared with the
prior year period and one basis point compared with the preceding half year,
to 39bps. The primary factors behind the year-on-year movement were the
reduction in intermediary retail AuM and net outflows from higher margin
mutual funds, which together account for two-thirds of the movement. The
remainder was equally split between the impact of flows relating to large
institutional mandates, and other factors such as competition and product mix.
There was no overall impact from investment theme mix, with growth in equities
offset by an increase in the lower margin local currency theme and lower
average AuM in the external debt and blended debt themes.
The one basis point movement compared with the preceding half year period is
explained by the same factors, namely lower levels of intermediary retail AuM,
mutual fund outflows, and other factors including competition.
The movements in individual theme margins are consistent with the overall
Group picture, with lower intermediary retail AuM influencing local currency
and corporate debt, and large mandate flows primarily having an impact in the
external debt, local currency and equities themes.
Fee income and net management fee margin by investment theme
The table below summarises the net management fee income after distribution
costs, performance fee income, and average net management fee margin by
investment theme, determined by reference to weighted average assets under
management excluding non-fee earning AuM and AuM for which the income is
recognised elsewhere in the financial statements, for example associates and
joint ventures.
Net management fees Performance fees Net management fee margin
Investment theme H1 2021/22 H1 2020/21 H1 2021/22 H1 2020/21 H1 2021/22 H1 2020/21
£m
£m
£m
£m
bps
bps
External debt 25.2 27.1 1.5 - 36 39
Local currency 29.5 30.9 0.2 - 27 30
Corporate debt 14.7 18.1 - 4.2 38 43
Blended debt 38.7 42.6 1.4 0.2 47 47
Equities 16.8 13.3 - - 59 63
Alternatives 6.1 6.9 - 3.3 134 141
Total 131.0 138.9 3.1 7.7 39 42
Performance fees of £3.1 million (H1 2020/21: £7.7 million) were realised in
the six months, and delivered by a range of funds in the external debt, local
currency and blended debt investment themes. The proportion of the Group's AuM
that is eligible to earn performance fees was unchanged at 31 December 2021 at
13%. The Group continues to expect its diverse sources of net management fee
income to generate the substantial majority of its net revenues.
Translation of the Group's non-Sterling assets and liabilities, excluding seed
capital, resulted in an unrealised foreign exchange gain of £0.3 million (H1
2020/21: £6.1 million loss) reflecting a lower GBP:USD dollar rate at the
period end. The Group's effective hedging programme and the active management
of foreign currency exposures during the period meant that realised and
unrealised hedging gains of £2.7 million were generated (H1 2020/21: £8.7
million gain). Therefore, a total foreign exchange gain of £3.0 million was
recognised in revenues, similar to the level in the prior year period (H1
2020/21: £2.6 million gain).
Other revenue of £1.4 million was comparable to the prior year period (H1
2020/21: £1.5 million).
Operating costs
Total operating costs of £48.6 million (H1 2020/21: £50.8 million) include
£0.7 million of expenses incurred by seeded funds that are required to be
consolidated (H1 2020/21: £0.8 million), as disclosed in note 15. On an
adjusted basis, taking into account the impact of seed capital and the
variable compensation accrual on foreign exchange translation losses,
operating costs were reduced by 7% compared with the prior year period.
Adjusted operating costs fell by 6% at constant H1 2020/21 exchange rates.
Operating costs
H1 2021/22 H1 2020/21
£m
£m
Staff costs (13.7) (13.6)
Other operating costs (9.8) (9.6)
Depreciation and amortisation (1.6) (1.6)
Operating costs before VC (25.1) (24.8)
Variable compensation (VC) (22.8) (25.2)
VC accrual on FX gains/losses 0.1 (1.2)
Adjusted operating costs (47.8) (51.2)
Consolidated funds costs (0.7) (0.8)
Add back VC on FX gains/losses (0.1) 1.2
Total operating costs (48.6) (50.8)
Staff costs of £13.7 million were comparable to the prior year period,
reflecting little change in either the Group's headcount over the six-month
period (306 compared with 310 at 30 June 2021) or the average headcount
compared with the same period a year ago (309 versus 308).
Other operating costs, excluding consolidated fund expenses and depreciation
and amortisation, increased by 2% to £9.8 million. For much of the period,
many of the Group's offices continued to operate under government advice to
work remotely, resulting in temporary cost savings. These were offset by an
accrual for charitable donations of £0.5 million, as explained in the 2021
Annual Report.
Variable compensation has been accrued at 20% of earnings before variable
compensation, interest and tax, resulting in a charge of £22.8 million (H1
2020/21: £25.2 million).
The combined depreciation and amortisation charges for the period were the
same as in the prior year period at £1.6 million.
Adjusted EBITDA
Adjusted EBITDA fell by 14% from £107.2 million to £92.0 million, broadly
consistent with the 12% decline in adjusted net revenue and resulting in an
adjusted EBITDA margin of 67%.
Finance income
Net finance expense of £1.9 million (H1 2020/21: £20.4 million income)
includes profits relating to seed capital investments, which are described in
more detail below. Excluding such profits, net interest income for the period
of £0.2 million was at a similar level to the prior year period (H1 2020/21:
£0.5 million).
Profit before tax
Statutory profit before tax was 23% lower at £116.0 million (H1 2020/21:
£150.6 million) as a consequence of the decline in adjusted EBITDA and lower
mark-to-market gains on the Group's seed capital investments.
Taxation
The majority of the Group's profit is subject to UK taxation. Of the total
current tax charge for the six-month period of £20.0 million (H1 2020/21:
£18.7 million), £12.6 million relates to UK corporation tax (H1 2020/21:
£7.9 million).
The impact of the Group's share price on the allowable value of share-based
remuneration provided to employees, non-deductible unrealised seed capital
losses and the geographic mix of the Group's profits in the period mean that
the effective tax rate of 17.8% (H1 2020/21: 14.7%) is lower than the
prevailing UK corporation tax rate of 19.0% (H1 2020/21: 19.0%). Note 9 to the
interim condensed financial statements provides a full reconciliation of this
difference compared with the UK corporation tax rate.
The Group's ongoing effective tax rate, based on its current geographic mix of
profits and prevailing tax rates, is expected to be approximately 17%.
Earnings per share
Basic earnings per share for the period fell by 27% to 14.2 pence (H1 2020/21:
19.4 pence) and diluted earnings per share also declined by 27% from 18.2
pence to 13.3 pence.
On an adjusted basis, excluding the effects of foreign exchange translation,
seed capital-related items and relevant tax, diluted earnings per share were
19% lower at 10.4 pence (H1 2020/21: 12.8 pence).
Balance sheet
Ashmore's consistent approach is to maintain a strong and liquid balance sheet
through market cycles, enabling it to support the commercial demands of
current and prospective investors, and to take advantage of strategic
development opportunities across the business.
As at 31 December 2021, total equity attributable to shareholders of the
parent was £919.1 million (31 December 2020: £824.8 million; 30 June 2021:
£911.6 million). Capital resources available to the Group totalled £823.3
million as at 31 December 2021, equivalent to 94 pence per share,
and significantly exceeded the Group's Pillar II regulatory capital
requirement of £155.9 million, equivalent to 22 pence per share. The Group
has no debt.
Cash
Ashmore's business model continues to deliver a high conversion rate of
operating profits to cash. Based on operating profit of £117.9 million for
the period (H1 2020/21: £130.1 million), the Group generated £82.8 million
of cash from operations (H1 2020/21: £88.9 million). The operating cash
flows after excluding consolidated funds represent 92% of the adjusted EBITDA
for the period of £92.0 million (H1 2020/21: 83%).
Cash and cash equivalents by currency
31 December 30 June
2021
2021
£m
£m
Sterling 138.0 76.0
US dollar 293.4 351.5
Other 21.9 28.6
Total 453.3 456.1
Excluding cash held in consolidated funds, the Group's cash and cash
equivalents were broadly flat compared with the prior year end at £444.4
million (30 June 2021: £445.7 million).
Seed capital investments
The Group's seed capital programme has delivered growth in third-party AuM
with approximately US$9 billion of AuM in funds that have been seeded,
representing 10% of total Group AuM.
During the six-month period, the Group made new investments of £6.1 million
and realised £40.1 million from previous investments. The consequent net
recycling of £34.0 million was matched by the strong investment return on the
portfolio of £32.0 million, meaning that the market value of the Group's
seed capital investments was broadly unchanged at £334.8 million at 31
December 2021 (30 June 2021: £336.8 million).
New subscriptions in the period were focused on developing the fund ranges in
the Group's local asset management platforms. Approximately half of the
redeemed capital was to match client flows into equity funds, reflecting the
strategies' strong relative performance and increasing market access. The
remainder primarily relates to distributions made by funds in the alternatives
theme following successful investment realisations.
There was a negative mark-to-market impact from movements in liquid fixed
income and equity markets, which was more than offset by upward revaluations
of private equity assets held by alternatives funds, demonstrating the
benefits of a diversified range of seed capital investments.
Ashmore has also made seed capital commitments to funds of £8.5 million that
were undrawn at the period end, giving a total value for the Group's seed
capital programme of approximately £345 million.
As at 31 December 2021, the original cost of the Group's current seed capital
investments was £238.0 million, representing 28% of Group net tangible
equity. Approximately 60% of the Group's seed capital is held in funds with
better than one-month dealing frequency, such as SICAV or US 40-Act mutual
funds.
Seed capital market value by currency
31 December 30 June
2021
2021
£m
£m
US dollar 291.2 297.6
Colombian peso 15.6 16.2
Other 28.0 23.0
Total market value 334.8 336.8
The table below summarises the principal IFRS line items to assist in the
understanding of the financial impact of the Group's seed capital programme.
The seed capital investments generated a total gain of £25.2 million (H1
2020/21: £49.3 million gain). This comprises a £30.0 million gain in
respect of consolidated funds, including £2.7 million of finance income, and
a £4.8 million loss in respect of unconsolidated funds that is reported in
finance income.
Successful redemptions resulted in realised gains of £2.2 million in the
period. Over the life of these seed capital investments, the Group has
delivered cumulative realised gains of £17.0 million.
Foreign exchange
The majority of the Group's fee income is received in US dollars and it is the
Group's policy to hedge up to two-thirds of the notional value of budgeted
foreign currency-denominated net management fees. Foreign currency assets and
liabilities, including cash, are marked to market at the period end exchange
rate with movements reported in either revenues or other comprehensive income
(OCI).
Movements in the GBP:USD and other exchange rates over the period reduced net
management fees by 4%, reduced adjusted operating costs by 1%, and resulted in
translation gains in net revenue of £0.3 million on the Group's foreign
currency assets and liabilities and a £0.9 million mark-to-market loss on the
Group's unconsolidated seed capital investments.
Included in OCI is a foreign exchange gain of £12.8 million (H1 2020/21:
£68.2 million loss) reflecting a gain of £6.8 million relating to the
Group's consolidated seed capital investments, and a gain of £6.0 million
reflecting the translation of other non-Sterling assets and liabilities.
Financial impact of seed capital investments
H1 2021/22 H1 2020/21
£m
£m
Consolidated funds (note 15):
Gains/(losses) on investment securities 51.0 55.9
Change in third-party interests in consolidated funds (23.0) (25.7)
Operating costs (0.7) (0.8)
Finance income 2.7 1.5
Sub-total: consolidated funds 30.0 30.9
Unconsolidated funds (note 7):
Market return (3.9) 20.8
Foreign exchange (0.9) (2.4)
Sub-total: unconsolidated funds (4.8) 18.4
Total seed capital profit/(loss) 25.2 49.3
- realised 2.2 3.3
- unrealised 23.0 46.0
Goodwill and intangible assets
At 31 December 2021, goodwill and intangible assets on the Group's balance
sheet totalled £82.0 million (30 June 2021: £80.5 million). The movement in
the period is the result of a foreign exchange revaluation gain in reserves
of £1.5 million (H1 2020/21: £8.2 million loss).
Shares held by Employee Benefit Trust (EBT)
The Group's EBT purchases and holds shares in anticipation of the vesting of
share awards. At 31 December 2021, the EBT owned 52,749,597 ordinary shares
(30 June 2021: 52,345,869 ordinary shares), representing 7.4% of the Group's
issued share capital (30 June 2021: 7.3%).
Dividend
The Board intends to pay a progressive ordinary dividend over time, taking
into consideration factors such as the prospects for the Group's earnings,
demands on the Group's financial resources, and the markets in which the Group
operates.
Accordingly, and notwithstanding the lower statutory profits reported in this
period, the Board has declared an interim dividend of 4.80 pence per share (H1
2020/21: 4.80 pence per share), which will be paid on 30 March 2022 to all
shareholders on the register on 4 March 2022.
Mark Coombs
Chief Executive Officer
9 February 2022
Risk management
A detailed description of the Group's risk management function and internal
control framework, which provides an ongoing process for identifying,
evaluating and managing the Group's emerging and principal risks, was included
in the 2021 Annual Report and Accounts, together with a list of principal
risks and examples of associated controls and mitigants. This disclosure
covered strategy and business, client, treasury, investment and operational
risks. There have been no material changes to the principal risks and
associated controls and mitigants during the six-month period.
Interim condensed consolidated statement of comprehensive income
For the six months ended 31 December 2021
Notes Unaudited Unaudited Audited
6 months to
6 months to
12 months to
31 December
31 December
30 June
2021
2020
2021
£m
£m
£m
Management fees 133.0 142.0 276.4
Performance fees 3.1 7.7 11.9
Other revenue 1.4 1.5 4.6
Total revenue 5 137.5 151.2 292.9
Distribution costs (2.0) (3.1) (5.5)
Foreign exchange 6 3.0 2.6 4.3
Net revenue 138.5 150.7 291.7
Gains on investment securities 15 51.0 55.9 123.5
Change in third-party interests in consolidated funds 15 (23.0) (25.7) (52.6)
Personnel expenses (36.5) (38.8) (80.3)
Other expenses (12.1) (12.0) (24.0)
Operating profit 117.9 130.1 258.3
Finance income/(expense) 7 (1.9) 20.4 23.9
Share of profit/(loss) from associates - 0.1 0.3
Profit before tax 116.0 150.6 282.5
Tax expense 9 (20.6) (22.1) (40.7)
Profit for the period 95.4 128.5 241.8
Other comprehensive income/(loss), net of related tax effect
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences arising on foreign operations 12.8 (68.2) (74.9)
Cash flow hedge intrinsic value gains/(losses) (1.0) 1.7 1.2
Other comprehensive income/(loss), net of related tax effect 11.8 (66.5) (73.7)
Total comprehensive income for the period 107.2 62.0 168.1
Profit attributable to:
Equity holders of the parent 93.7 127.7 240.1
Non-controlling interests 1.7 0.8 1.7
Profit for the period 95.4 128.5 241.8
Total comprehensive income attributable to:
Equity holders of the parent 105.3 61.9 167.5
Non-controlling interests 1.9 0.1 0.6
Total comprehensive income for the period 107.2 62.0 168.1
Earnings per share
Basic 10 14.17p 19.40p 36.40p
Diluted 10 13.31p 18.22p 34.23p
Interim condensed consolidated balance sheet
As at 31 December 2021
Notes Unaudited Unaudited Audited
31 December
31 December
30 June
2021
2020
2021
£m
£m
£m
Assets
Non-current assets
Goodwill and intangible assets 12 82.0 81.4 80.5
Property, plant and equipment 13 10.1 11.1 11.2
Investment in associates 0.8 3.2 0.9
Non-current financial assets measured at fair value 15 33.5 29.0 34.0
Deferred acquisition costs 0.5 0.6 0.5
Deferred tax assets 31.7 29.8 34.8
158.6 155.1 161.9
Current assets
Investment securities 15 359.0 242.8 318.1
Financial assets measured at fair value 15 32.0 22.5 41.0
Trade and other receivables 75.2 78.0 83.4
Derivative financial instruments - 3.1 1.3
Cash and cash equivalents 453.3 448.7 456.1
919.5 795.1 899.9
Financial assets held for sale 15 20.9 46.3 46.2
Total assets 1,099.0 996.5 1,108.0
Equity and liabilities
Capital and reserves - attributable to equity holders of the parent
Issued capital 17 0.1 0.1 0.1
Share premium 15.6 15.6 15.6
Retained earnings 936.9 847.4 941.0
Foreign exchange reserve (33.6) (39.9) (46.2)
Cash flow hedging reserve 0.1 1.6 1.1
919.1 824.8 911.6
Non-controlling interests 21.3 21.3 21.1
Total equity 940.4 846.1 932.7
Liabilities
Non-current liabilities
Lease liabilities 13 6.7 6.9 7.3
Deferred tax liabilities 8.2 8.7 10.5
14.9 15.6 17.8
Current liabilities
Derivative financial instruments 0.3 - -
Lease liabilities 13 2.1 2.5 2.5
Third-party interests in consolidated funds 15 117.3 89.4 105.7
Trade and other payables 24.0 38.6 45.5
143.7 130.5 153.7
Financial liabilities held for sale 15 - 4.3 3.8
Total liabilities 158.6 150.4 175.3
Total equity and liabilities 1,099.0 996.5 1,108.0
Interim condensed consolidated statement of changes in equity
For the six months ended 31 December 2021
Attributable to equity holders of the parent
Issued Share premium Retained earnings Foreign exchange reserve Cash flow hedging reserve Total Non-controlling interests Total
capital
£m
£m
£m
£m
£m
£m
equity
£m
£m
Audited balance at 1 July 2020 0.1 15.6 813.2 27.6 (0.1) 856.4 22.6 879.0
Profit for the period - - 127.7 - - 127.7 0.8 128.5
Other comprehensive income/(loss):
Foreign currency translation differences arising on foreign operations - - - (67.5) - (67.5) (0.7) (68.2)
Cash flow hedge intrinsic value gains - - - - 1.7 1.7 - 1.7
Total comprehensive income/(loss) - - 127.7 (67.5) 1.7 61.9 0.1 62.0
Transactions with owners:
Purchase of own shares - - (23.3) - - (23.3) - (23.3)
Share-based payments - - 14.5 - - 14.5 - 14.5
Dividends to equity holders - - (84.7) - - (84.7) - (84.7)
Increase in non-controlling interests - - - - - - 0.5 0.5
Dividends to non-controlling interests - - - - - - (1.9) (1.9)
Total contributions and distributions - - (93.5) - - (93.5) (1.4) (94.9)
Unaudited balance at 31 December 2020 0.1 15.6 847.4 (39.9) 1.6 824.8 21.3 846.1
Profit for the period - - 112.4 - - 112.4 0.9 113.3
Other comprehensive income/(loss):
Foreign currency translation differences arising on foreign operations - - - (6.3) - (6.3) (0.4) (6.7)
Cash flow hedge intrinsic value losses - - - - (0.5) (0.5) - (0.5)
Total comprehensive income/(loss) - - 112.4 (6.3) (0.5) 105.6 0.5 106.1
Transactions with owners:
Purchase of own shares - - - - - - - -
Share-based payments - - 14.8 - - 14.8 - 14.8
Dividends to equity holders - - (33.6) - - (33.6) - (33.6)
Increase in non-controlling interests - - - - - - 0.3 0.3
Dividends to non-controlling interests - - - - - - (1.0) (1.0)
Total contributions and distributions - - (18.8) - - (18.8) (0.7) (19.5)
Audited balance at 30 June 2021 0.1 15.6 941.0 (46.2) 1.1 911.6 21.1 932.7
Profit for the period - - 93.7 - - 93.7 1.7 95.4
Other comprehensive income/(loss):
Foreign currency translation differences arising on foreign operations - - - 12.6 - 12.6 0.2 12.8
Cash flow hedge intrinsic value gains - - - - (1.0) (1.0) - (1.0)
Total comprehensive income/(loss) - - 93.7 12.6 (1.0) 105.3 1.9 107.2
Transactions with owners:
Purchase of own shares - - (25.8) - - (25.8) - (25.8)
Share-based payments - - 13.0 - - 13.0 - 13.0
Dividends to equity holders - - (85.0) - - (85.0) - (85.0)
Increase in non-controlling interests - - - - - - 0.1 0.1
Dividends to non-controlling interests - - - - - - (1.8) (1.8)
Total contributions and distributions - - (97.8) - - (97.8) (1.7) (99.5)
Unaudited balance at 31 December 2021 0.1 15.6 936.9 (33.6) 0.1 919.1 21.3 940.4
Interim condensed consolidated cash flow statement
For the six months ended 31 December 2021
Unaudited Unaudited Audited
6 months to
6 months to
12 months to
31 December
31 December
30 June
2021
2020
2021
£m
£m
£m
Operating activities
Profit after tax 95.4 128.5 241.8
Adjustments for non-cash items:
Depreciation and amortisation 1.6 1.6 2.8
Accrual for variable compensation 13.3 14.5 33.4
Foreign exchange gains (3.0) (2.6) (4.3)
Net gains on investment securities (28.0) (30.2) (70.9)
Finance (income)/expense 1.9 (20.4) (23.9)
Tax expense 20.6 22.1 40.7
Other non-cash items - (0.1) (0.3)
Cash generated from operations before working capital changes 101.8 113.4 219.3
Changes in working capital:
Decrease/(increase) in trade and other receivables 0.9 (7.6) 2.4
Decrease/(increase) in derivative financial instruments 1.6 (4.8) (3.0)
Increase/(decrease) in trade and other payables (21.5) (12.1) (5.2)
Cash generated from operations 82.8 88.9 213.5
Taxes paid (13.0) (24.0) (64.3)
Net cash from operating activities 69.8 64.9 149.2
Investing activities
Interest and investment income received 4.1 1.6 3.2
Acquisition of associates - (2.6) -
Purchase of non-current financial assets measured at fair value (0.6) (0.9) (8.1)
Purchase of financial assets held for sale - (25.4) (42.2)
Purchase of financial assets measured at fair value (5.5) (6.4) (14.4)
Sale/(purchase) of investment securities 20.6 37.6 (33.3)
Sale of non-current financial assets measured at fair value 1.1 2.4 2.6
Sale of financial assets held for sale 0.1 7.2 7.2
Sale of financial assets measured at fair value 23.8 20.6 58.4
Net cash on initial consolidation of seed capital investments 0.5 (4.3) (5.2)
Purchase of property, plant and equipment (0.3) (0.5) (0.7)
Net cash generated/(used) in investing activities 43.8 29.3 (32.5)
Financing activities
Dividends paid to equity holders (85.0) (84.7) (118.3)
Dividends paid to non-controlling interests (1.8) (1.9) (2.9)
Third-party subscriptions into consolidated funds 2.2 30.4 54.9
Third-party redemptions from consolidated funds (1.1) (2.5) (0.6)
Distributions paid by consolidated funds (10.7) (26.1) (28.8)
Contribution by non-controlling interests 0.1 0.5 0.5
Payment of lease liabilities (note 13) (1.0) (1.0) (2.1)
Interest paid (note 13) (0.2) (0.2) (0.4)
Purchase of own shares (25.8) (23.3) (23.3)
Net cash used in financing activities (123.3) (108.8) (121.0)
Net increase/(decrease) in cash and cash equivalents (9.7) (14.6) (4.3)
Cash and cash equivalents at beginning of period 456.1 500.9 500.9
Effect of exchange rate changes on cash and cash equivalents 6.9 (37.6) (40.5)
Cash and cash equivalents at end of period 453.3 448.7 456.1
Cash and cash equivalents comprise:
Cash at bank and in hand 47.7 97.9 51.4
Daily dealing liquidity funds 272.3 282.3 333.5
Deposits 133.3 68.5 71.2
453.3 448.7 456.1
Notes to the interim condensed consolidated financial statements
1) General information
These interim condensed consolidated financial statements of Ashmore Group plc
and its subsidiaries (the Group) for the six months ended 31 December 2021
were authorised for issue by the Directors on 9 February 2022.
Ashmore Group plc is listed on the London Stock Exchange and incorporated and
domiciled in the United Kingdom.
2) Basis of preparation
The interim condensed consolidated financial statements have been prepared in
accordance with International Accounting Standard 34 (IAS 34) Interim
Financial Reporting as adopted for use in the UK and the Disclosure Guidance
and Transparency Rules (the DTR) of the UK's Financial Conduct Authority (the
UK FCA).
The interim condensed consolidated set of financial statements has been
prepared by applying the accounting policies and presentation that were
applied in the preparation of the Group's published consolidated financial
statements for the year ended 30 June 2021, which were prepared in accordance
with International Financial Reporting Standards (IFRSs) adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union and in
accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006, which are materially the same as
UK-adopted international accounting standards. The annual financial statements
of the Group for the year ended 30 June 2022 will be prepared in accordance
with UK-adopted international accounting standards.
These interim condensed consolidated financial statements and accompanying
notes are unaudited, do not constitute statutory accounts within the meaning
of Section 434 of the Companies Act 2006 and do not include all the
information and disclosures required in annual statutory financial statements.
They should be read in conjunction with the Group's Annual Report and Accounts
for the year ended 30 June 2021 which are available on the Group's website.
Those statutory accounts were approved by the Board of Directors on 2
September 2021 and have been filed with Companies House. The report of the
auditors on those accounts was unqualified.
Going concern
The Board of Directors has considered the resilience of the Group, taking into
account its current financial position, and the principal and emerging risks
facing the business in the context of the current economic outlook. The Board
reviewed cash flow forecasts for a period of 12 months from the date of
approval of these financial statements, which indicate that the Group will
have sufficient funds to meet its liabilities as they fall due for that
period. The Board applied stressed scenarios, including severe but plausible
downside assumptions, and the impact on assets under management, profitability
of the Group and known commitments. While there are wider market uncertainties
that may impact the Group, the stressed scenarios, which assumed a significant
reduction in revenue for the entire forecast period, show that the Group and
Company would continue to operate profitably and meet their liabilities as
they fall due for a period of at least 12 months from the date of the release
of these results. The interim financial statements have therefore been
prepared on a going concern basis.
3) New accounting standards and interpretations
The following amendments to IFRS standards and interpretations were effective
for the first time in the six months to 31 December 2021. Their adoption has
not had a material impact on these interim financial statements:
- Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9,
IAS 39, IFRS 7, IFRS 4 and IFRS 16).
No other standards or interpretations issued and not yet effective are
expected to have an impact on the Group's consolidated financial statements.
4) Segmental information
The Group's operations are reported to and reviewed by the Board on the basis
of the investment management business as a whole, hence the Group is treated
as a single segment. The key management information considered is adjusted
EBITDA which is £92.0 million for the period (H1 2020/21: adjusted EBITDA of
£107.2 million was derived by adjusting operating profit by £1.6 million of
depreciation and amortisation expense, £29.4 million income related to seed
capital and £4.9 million of foreign exchange gains). The additional
disclosures below provide the location of the Group's non-current assets at
year end other than financial instruments and deferred tax assets. Disclosures
relating to revenue by location are provided in note 5 below.
Analysis of non-current assets by geography
As at As at As at
31 December
31 December
30 June
2021
2020
2021
£m
£m
£m
United Kingdom and Ireland 24.4 24.7 24.8
United States 66.1 65.5 65.1
Other 2.9 6.1 3.2
Total non-current assets 93.4 96.3 93.1
5) Revenue
Management fees are accrued throughout the period in line with prevailing
levels of assets under management and performance fees are recognised when the
specific assessment criteria have been met and it is highly probable that a
significant income reversal will not subsequently occur. The Group is not
considered to be reliant on any single source of revenue. None of the Group's
funds provided more than 10.0% of total revenue in the period (H1 2020/21:
none; FY2020/21: none) when considering management fees and performance fees
on a combined basis.
Analysis of revenue by geography
6 months to 6 months to 12 months to
31 December
31 December
30 June
2021
2020
2021
£m
£m
£m
United Kingdom and Ireland 106.1 120.0 229.9
United States 12.3 13.1 26.8
Other 19.1 18.1 36.2
Total revenue 137.5 151.2 292.9
6) Foreign exchange
The foreign exchange rates which had a material impact on the Group's results
are the US dollar, the Euro, the Indonesian rupiah and the Colombian peso.
£1 Closing rate Closing rate Closing rate Average rate Average rate Average rate
as at
as at
as at
6 months
6 months
12 months
31 December
31 December
30 June
ended
ended
ended
2021
2020
2021
31 December
31 December
30 June
2021
2020
2021
US dollar 1.3545 1.3670 1.3815 1.3636 1.3107 1.3472
Euro 1.1910 1.1172 1.1649 1.1739 1.1108 1.1315
Indonesian rupiah 19,304 19,206 20,031 19,534 18,931 19,389
Colombian peso 5,513 4,676 5,158 5,267 4,852 4,968
Foreign exchange gains and losses are shown below.
6 months to 6 months to 12 months to
31 December
31 December
30 June
2021
2020
2021
£m
£m
£m
Net realised and unrealised hedging gains 2.7 8.7 9.2
Translation gains/(losses) on non-Sterling denominated monetary assets and 0.3 (6.1) (4.9)
liabilities
Total foreign exchange gains 3.0 2.6 4.3
7) Finance income
6 months to 6 months to 12 months to
31 December
31 December
30 June
2021
2020
2021
£m
£m
£m
Interest and investment income 3.1 2.2 4.3
Net realised gains on seed capital investments measured at fair value 2.2 3.3 8.5
Net unrealised gains/(losses) on seed capital investments measured at fair (7.0) 15.1 11.5
value
Interest expense on lease liabilities (note 13) (0.2) (0.2) (0.4)
Net finance income/(expense) (1.9) 20.4 23.9
Included within net realised and unrealised gains and losses on seed capital
investments measured at fair value are £1.1 million losses in relation to
held for sale investments (note 15a), £4.2 million losses on financial assets
measured at FVTPL (note 15b) and £0.5 million gains on non-current financial
assets measured at fair value (note 15c).
Included within interest and investment income are gains of £2.7 million from
investment securities on consolidated funds (note 15d).
8) Share-based payments
The cost related to share-based payments recognised by the Group in the
condensed consolidated statement of comprehensive income is shown below:
6 months to 6 months to 12 months to
31 December
31 December
30 June
2021
2020
2021
£m
£m
£m
Omnibus Plan 14.3 16.3 33.3
Phantom Bonus Plan 0.1 0.1 0.1
Total share-based payments expense 14.4 16.4 33.4
The total expense recognised for the period in respect of equity-settled
share-based payment awards was £13.3 million (H1 2020/21: £14.5 million;
FY2020/21: £29.9 million).
The Executive Omnibus Incentive Plan (Omnibus Plan)
Share awards outstanding under the Omnibus Plan were as follows:
6 months to 6 months to 12 months to
31 December
31 December
30 June
2021
2020
2021
Number of shares subject to awards
Number of
Number of
shares subject
shares subject
to awards
to awards
Equity-settled awards
At the beginning of the period 41,302,176 43,516,936 43,516,936
Granted 8,940,670 8,667,215 8,728,902
Vested (6,968,188) (10,433,669) (10,517,931)
Forfeited (60,398) (414,822) (425,731)
Outstanding at the end of the period 43,214,260 41,335,660 41,302,176
Cash-settled awards
At the beginning of the period 283,769 315,185 315,185
Granted 38,293 778 778
Vested (50,760) (32,194) (32,194)
Forfeited - - -
Outstanding at the end of the period 271,302 283,769 283,769
Total awards
At the beginning of the period 41,585,945 43,832,121 43,832,121
Granted 8,978,963 8,667,993 8,729,680
Vested (7,018,948) (10,465,863) (10,550,125)
Forfeited (60,398) (414,822) (425,731)
Outstanding at the end of the period 43,485,562 41,619,429 41,585,945
The weighted average share price of awards granted to employees under the
Omnibus Plan during the period was £3.74 (H1 2020/21: £3.62; FY2020/21:
£3.62), as determined by reference to the average Ashmore Group plc closing
share price for the five business days prior to grant.
The liability arising from cash-settled awards under the Omnibus Plan at the
end of the period and reported within trade and other payables in the interim
condensed consolidated balance sheet is £1.2 million (H1 2020/21: £0.8
million; FY2020/21: £0.8 million) of which £nil relates to vested awards.
9) Taxation
Analysis of tax charge for the period
6 months to 6 months to 12 months to
31 December
31 December
30 June
2021
2020
2021
£m
£m
£m
Current tax
UK corporation tax on profits for the period 12.6 7.9 24.4
Overseas corporation tax charge 7.3 10.8 17.3
Adjustments in respect of prior periods 0.1 - (0.4)
20.0 18.7 41.3
Deferred tax
Origination and reversal of temporary differences 0.6 3.4 1.8
Effect on deferred tax balance of changes in corporation tax rates - - (2.4)
Tax expense for the period 20.6 22.1 40.7
Factors affecting tax charge for the period
6 months to 6 months to 12 months to
31 December
31 December
30 June
2021
2020
2021
£m
£m
£m
Profit before tax 116.0 150.6 282.5
Profit on ordinary activities multiplied by the prevailing UK tax rate for the 22.0 28.6 53.7
financial year of 19.0% (H1 2020/21: 19.0%; FY2020/21: 19.0%)
Effects of:
Non-deductible expenses 0.2 0.2 0.3
Deduction in respect of vested shares (Part 12, Corporation Tax Act 2009) 0.2 (2.3) (3.4)
Different rate of taxes on overseas profits (1.8) (1.1) (3.8)
Non-taxable income - (3.0) (4.1)
Effect on deferred tax balances from changes in corporation tax rates - - (2.4)
Derecognition of historical deferred tax assets - - 0.4
Other items - (0.3) -
Tax expense for the period 20.6 22.1 40.7
10) Earnings per share
Basic earnings per share for the six months to 31 December 2021 of 14.17 pence
(H1 2020/21: 19.40 pence; FY2020/21: 36.40 pence) is calculated by dividing
the profit after tax for the financial period attributable to equity holders
of the parent of £93.7 million (H1 2020/21: £127.7 million; FY2020/21:
£240.1 million) by the weighted average number of ordinary shares in issue
during the period, excluding own shares.
Diluted earnings per share is calculated based on basic earnings per share
adjusted for all dilutive potential ordinary shares. There is no difference
between the profit for the year attributable to equity holders of the parent
used in the basic and diluted earnings per share calculations.
Reconciliation of the weighted average number of shares used in calculating
basic and diluted earnings per share is shown below.
6 months to 6 months to 12 months to
31 December 2021
31 December
30 June
Number of ordinary shares
2020
2021
Number of ordinary shares
Number of ordinary shares
Weighted average number of ordinary shares used in the calculation of basic 660,910,543 658,339,545 659,341,111
earnings per share
Effect of dilutive potential ordinary shares - share awards 42,551,687 42,551,290 41,926,476
Weighted average number of ordinary shares used in the calculation 703,462,230 700,890,835 701,267,587
of diluted earnings per share
11) Dividends
Dividends paid
6 months to 6 months to 12 months to
31 December 2021
31 December 2020
30 June
£m
£m
2021
£m
Final dividend for FY2020/21: 12.10p (FY2019/20: 12.10p) 85.0 84.7 84.7
Interim dividend for FY2020/21: 4.80p - - 33.6
85.0 84.7 118.3
In addition, the Group paid £1.8 million (H1 2020/21: £1.9 million;
FY2020/21: £2.9 million) in dividends to non-controlling interests.
Dividends declared/proposed
Company 6 months to 6 months to 12 months to
31 December 2021
31 December 2020
30 June
pence
pence
2021
pence
Interim dividend declared per share 4.80 4.80 4.80
Final dividend proposed per share - - 12.10
4.80 4.80 16.90
The Board has approved an interim dividend for the six months to 31 December
2021 of 4.80 pence per share payable on 30 March 2022 to shareholders on the
register on 4 March 2022.
12) Goodwill and intangible assets
Goodwill Fund management intangible assets Total
£m
£m
£m
Cost (at original exchange rate)
At 31 December 2021, 31 December 2020 and 30 June 2021 70.4 0.9 71.3
Accumulated amortisation and impairment
At 30 June 2020 - (0.3) (0.3)
Amortisation charge for the period - (0.1) (0.1)
At 31 December 2020 - (0.4) (0.4)
Amortisation charge for the period - (0.1) (0.1)
At 30 June 2021 - (0.5) (0.5)
Amortisation charge for the period - - -
At 31 December 2021 - (0.5) (0.5)
Net book value
At 30 June 2020 89.1 0.6 89.7
Accumulated amortisation for the period - (0.1) (0.1)
FX revaluation through reserves* (8.2) - (8.2)
At 31 December 2020 80.9 0.5 81.4
Accumulated amortisation for the period - (0.1) (0.1)
FX revaluation through reserves* (0.8) - (0.8)
At 30 June 2021 80.1 0.4 80.5
Accumulated amortisation for the period - - -
FX revaluation through reserves* 1.5 - 1.5
At 31 December 2021 81.6 0.4 82.0
* FX revaluation through reserves is a result of the retranslation of US
dollar-denominated intangibles and goodwill.
Goodwill
The Group's goodwill balance relates to the acquisition of subsidiaries.
Goodwill acquired in a business combination is allocated to the
cash-generating units that are expected to benefit from that business
combination. It is the Group's judgement that the lowest level of
cash-generating unit used to determine impairment is the investment management
segment level. The Group has assessed that it consists of a single
cash-generating unit for the purposes of monitoring and assessing goodwill for
impairment. This reflects the Group's global operating model, based on a
single operating platform, into which acquired businesses are fully integrated
and from which acquisition-related synergies are expected to be realised.
During the period to 31 December 2021, no factors indicating potential
impairment of goodwill were noted. Based on the calculation as at 31 December
2021 using a market share price of £2.91, the recoverable amount was in
excess of the carrying value of goodwill and no impairment was implied. In
addition, the sensitivity of the recoverable amount to a 10% change in the
Company's market share price will not lead to any impairment. Therefore, no
impairment loss has been recognised in the current or preceding periods.
Fund management contracts
Intangible assets comprise fund management contracts and contractually agreed
share of carried interest recognised by the Group on business combinations. No
factors were identified suggesting that fund management contracts intangible
assets were impaired as at 31 December 2021. The remaining amortisation period
for fund management contracts is three years.
13) Leases
The Group's property, plant and equipment include right-of-use assets
recognised on office leases for which the Group is a lessee under operating
lease arrangements. Information about leases is provided below.
6 months to 6 months to 12 months to
31 December
31 December
30 June
2021
2020
2021
£m
£m
£m
Property, plant and equipment owned by the Group 1.7 2.0 1.8
Right-of-use assets 8.4 9.1 9.4
Net book value 10.1 11.1 11.2
Lease liabilities are presented in the condensed consolidated balance sheet as
follows:
31 December 2021 31 December 2020 30 June
£m
£m
2021
£m
Current 2.1 2.5 2.5
Non-current 6.7 6.9 7.3
Total lease liabilities 8.8 9.4 9.8
The carrying value of the Group's right-of-use assets, lease liabilities and
the movement during the period are set out below.
Right-of-use assets Lease liabilities
£m
£m
At 1 July 2020 9.9 10.2
Additions and remeasurement of lease obligations 0.5 0.5
Lease payments - (1.2)
Interest expense (recognised in finance expense) - 0.2
Depreciation charge (recognised in other expenses) (1.1) -
FX revaluation through reserves (0.2) (0.3)
At 31 December 2020 9.1 9.4
Additions and remeasurement of lease obligations 1.7 1.7
Lease payments - (1.3)
Interest expense (recognised in finance expense) - 0.2
Depreciation charge (recognised in other expenses) (1.1) -
FX revaluation through reserves (0.3) (0.2)
At 30 June 2021 9.4 9.8
Lease payments - (1.2)
Interest expense (recognised in finance expense) - 0.2
Depreciation charge (recognised in other expenses) (1.1) -
FX revaluation through reserves 0.1 -
At 31 December 2021 8.4 8.8
Total cash outflow included within financing activities in the condensed
consolidated cash flow statement in respect of principal and interest paid on
lease liabilities during the period amounted to £1.2 million.
14) Fair value of financial instruments
The accounting policies relating to the estimation of fair values are
consistent with those applied in the preparation of the Group's Annual Report
and Accounts for the year ended 30 June 2021.
The Group has an established control framework with respect to the measurement
of fair values. This framework includes committees that have overall
responsibility for all significant fair value measurements. Each committee
regularly reviews significant inputs and valuation adjustments. If third-party
information is used to measure fair value, the team assesses and documents the
evidence obtained from the third parties to support such valuations. There are
no material differences between the carrying amounts of financial assets and
liabilities and their fair values at the balance sheet date.
Fair value hierarchy
The Group measures fair values using the following fair value levels that
reflect the significance of inputs used in making the measurements, based on
the degree to which the fair value is observable:
Level 1: Valuation is based upon a quoted market price in an active market for
an identical instrument. This fair value measure relates to the valuation of
quoted and exchange traded equity and debt securities.
Level 2: Valuation techniques are based upon observable inputs, either
directly (i.e. as prices) or indirectly (i.e. derived from prices). This fair
value measure relates to the valuation of quoted equity securities in inactive
markets or in interests in unlisted funds whose net asset values are
referenced to the fair values of the listed or exchange traded securities held
by those funds. Valuation techniques may include using a broker quote in an
inactive market or an evaluated price based on a compilation of primarily
observable market information utilising information readily available via
external sources.
Level 3: Fair value measurements are derived from valuation techniques that
include inputs not based on observable market data.
For financial instruments that are recognised at fair value on a recurring
basis, the Group determines whether transfers have occurred between levels in
the hierarchy by reassessing categorisation (based on the lowest level input
that is significant to the fair value measurement as a whole) at the end of
each reporting period.
The fair value hierarchy of financial instruments which are carried at fair
value is summarised below:
At 31 December 2021 At 31 December 2020 At 30 June 2021
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
Financial assets
Investment securities 266.4 71.2 21.4 359.0 185.1 41.4 16.3 242.8 209.0 66.7 42.4 318.1
Financial assets held for sale - 20.9 - 20.9 - 46.3 - 46.3 - 46.2 - 46.2
Financial assets at FVTPL - 32.0 - 32.0 - 21.0 1.5 22.5 - 39.2 1.8 41.0
Derivative financial instruments - - - - - 3.1 - 3.1 - 1.3 - 1.3
Non-current financial assets - - 33.5 33.5 - 0.1 28.9 29.0 - - 34.0 34.0
Total financial assets 266.4 124.1 54.9 445.4 185.1 111.9 46.7 343.7 209.0 153.4 78.2 440.6
Financial liabilities
Third-party interests in consolidated funds 100.4 9.4 7.5 117.3 81.2 2.1 6.1 89.4 73.7 15.1 16.9 105.7
Financial liabilities held for sale - - - - - 4.3 - 4.3 - 3.8 - 3.8
Derivative financial instruments - 0.3 - 0.3 - - - - - - - -
Total financial liabilities 100.4 9.7 7.5 117.6 81.2 6.4 6.1 93.7 73.7 18.9 16.9 109.5
The Group recognises transfers into and transfers out of fair value hierarchy
levels as at the end of the reporting period. Investments with a carrying
value of £3.3 million were transferred out of level 3 into level 1 and level
2 as their value was determined based on observable prices as at 31 December
2021. There were no transfers between level 1 and level 2 of the fair value
hierarchy during the period.
Financial instruments not measured at fair value
Financial assets and liabilities that are not measured at fair value include
cash and cash equivalents, trade and other receivables, and trade and other
payables. The carrying value of financial assets and financial liabilities not
measured at fair value is considered a reasonable approximation of fair value
as at 31 December 2021, 31 December 2020 and 30 June 2021.
Fair value measurements using significant unobservable inputs (level 3)
The following table presents the changes in level 3 items for the period.
Investment securities Financial Non-current financial Third-party interests in consolidated funds
£m
assets at
assets
£m
FVTPL
£m
£m
At 31 December 2020 16.3 1.5 28.9 6.1
Additions 13.9 - 7.2 6.9
Disposals (3.0) - (0.1) (1.3)
Unrealised gains/(losses) recognised in finance income 11.2 0.3 (0.3) 4.7
Unrealised gains/(losses) recognised in reserves 4.0 - (1.7) 0.5
At 30 June 2021 42.4 1.8 34.0 16.9
Additions - - 0.6 -
Disposals (25.5) - (1.2) (10.7)
Transfers out (1.5) (1.8) - -
Unrealised gains/(losses) recognised in finance income 5.8 - 0.5 1.3
Unrealised gains/(losses) recognised in reserves 0.2 - (0.4) -
At 31 December 2021 21.4 - 33.5 7.5
Valuation of level 3 financial assets recognised at fair value on a recurring
basis using valuation techniques
Investments valued using valuation techniques include financial investments
which, by their nature, do not have an externally quoted price based on
regular trades, and financial investments for which markets are no longer
active as a result of market conditions e.g. market illiquidity. The valuation
techniques used in the estimation of fair values are consistent with those
applied in the preparation of the Group's Annual Report and Accounts for the
year ended 30 June 2021.
The following tables show the valuation techniques and the significant
unobservable inputs used to estimate the fair value of level 3 investments as
at 31 December 2021 and 30 June 2021, and the associated sensitivity to
changes in unobservable inputs to a reasonable alternative:
Asset class and valuation technique Fair value at 31 December 2021 Significant Range of estimates Sensitivity factor Change in
£m
unobservable input
fair value
£m
Unquoted securities
Market multiple and discount 5.9 EBITDA multiple 15x +/- 1x +/- 0.4
Marketability adjustment 30% +/- 5% -/+ 0.4
Discounted cash flow 16.3 Marketability adjustment 40%-60% +/- 5% -/+ 1.8
Discount rate 10%-20% +/- 5% -/+ 3.7
Unquoted funds
Net assets approach 32.7 Net asset value 1x +/- 5% +/- 1.6
Total level 3 investments 54.9
Asset class and valuation technique Fair value at 30 June 2021 Significant Range of estimates Sensitivity factor Change in
£m
unobservable input
fair value
£m
Unquoted securities
Market multiple and discount 23.7 EBITDA multiple 5x-15x +/- 1x +/- 1.5
Marketability adjustment 5%-95% +/- 5% -/+ 2.9
Discounted cash flow 13.4 Marketability adjustment 20%-60% +/- 5% -/+ 1.5
Discount rate 10%-20% +/- 5% -/+ 2.9
Unquoted funds
Net assets approach 41.1 Net asset value 1x +/- 5% +/- 1.9
Total level 3 investments 78.2
The sensitivity demonstrates the effect of a change in one unobservable input
while other assumptions remain unchanged. There may be a correlation between
the unobservable inputs and other factors that have not been considered. It
should also be noted that some of the sensitivities are non-linear, therefore,
larger or smaller impacts should not be interpolated or extrapolated from
these results.
15) Seed capital investments
The Group considers itself a sponsor of an investment fund when it facilitates
the establishment of the fund in which the Group is the investment manager.
The Group ordinarily invests seed capital in order to provide initial scale
and facilitate the marketing of funds to third-party investors. Aggregate
interests held by the Group include seed capital, management fees and
performance fees.
a) Financial assets and liabilities held for sale
Where Group companies invest seed capital into funds operated and controlled
by the Group and the Group is actively seeking to reduce its investment, and
it is considered highly probable that it will relinquish control within a
year, the interests in the funds are treated as held for sale and are
recognised as financial assets and liabilities held for sale. No such fund was
seeded in this manner and met the above criteria during the period
(H1 2020/21: three funds; FY2020/21: seven funds).
The non-current assets and liabilities held for sale at 31 December 2021 were
as follows:
31 December 2021 31 December 30 June
£m
2020
2021
£m
£m
Financial assets held for sale 20.9 46.3 46.2
Financial liabilities held for sale - (4.3) (3.8)
Financial assets held for sale 20.9 42.0 42.4
Investments cease to be classified as held for sale when they are no longer
controlled by the Group. A loss of control may happen through sale of the
investment and/or dilution of the Group's holding. When investments cease to
be classified as held for sale they are classified as financial assets
measured at FVTPL. During the period, no fund (H1 2020/21: none; FY2020/21:
none) was transferred to the FVTPL category.
If the fund remains under the control of the Group for more than one year from
the original investment date, it will cease to be classified as held for sale,
and will be consolidated line by line after it is assessed that the Group
controls the investment fund in accordance with the requirements of IFRS 10.
During the period, three funds (H1 2020/21: three funds; FY2020/21: five
funds) with an aggregate carrying amount of £21.2 million (H1 2020/21: £28.1
million; FY2020/21: £44.1 million) were transferred to consolidated funds.
There was no impact on net assets or total comprehensive income as a result of
the transfer.
Included within finance income are net losses of £1.1 million (H1 2020/21:
net gains of £10.9 million; FY2020/21: net gains of £10.8 million) in
relation to held for sale investments (refer to note 7).
As the Group considers itself to have one business segment (refer to note 4),
no additional segmental disclosure of held for sale assets or liabilities is
applicable.
b) Financial assets measured at fair value through profit or loss
Financial assets measured at FVTPL at 31 December 2021 comprise shares held in
debt and equity funds as follows:
31 December 2021 31 December 30 June
£m
2020
2021
£m
£m
Equity funds 12.9 13.8 33.7
Debt funds 19.1 8.7 7.3
Financial assets measured at fair value 32.0 22.5 41.0
Included within finance income are net losses of £4.2 million (H1 2020/21:
net gains of £3.8 million; FY2020/21: net gains of £8.2 million) on the
Group's financial assets measured at FVTPL.
c) Non-current financial assets measured at fair value
Non-current financial assets relate to the Group's investments in closed-end
funds and are designated as FVTPL. Fair value is assessed by taking account of
the extent to which potential dilution of gains or losses may arise as a
result of additional investors subscribing to the fund where the final close
of a fund has not occurred.
31 December 2021 31 December 30 June
£m
2020
2021
£m
£m
Real estate funds 1.6 2.4 1.8
Infrastructure funds 19.2 17.4 20.2
Other funds 10.1 9.2 9.4
Non-current financial assets measured at fair value(1) 30.9 29.0 31.4
1. Excludes £2.6 million of other non-current financial assets measured at
fair value that are not classified as seed capital (31 December 2020: £nil;
30 June 2021: £2.6 million).
Included within finance income are net gains of £0.5 million (H1 2020/21: net
gains of £3.2 million; FY2020/21: net gains of £2.2 million) on the Group's
non-current financial assets measured at fair value.
d) Consolidated funds
The Group has consolidated 15 investment funds as at 31 December 2021 (31
December 2020: 13 investment funds; 30 June 2021: 14 investment funds), over
which the Group is deemed to have control. Consolidated funds represent seed
capital investments where the Group has held its position for a period greater
than one year and its interest represents a controlling stake in the fund in
accordance with IFRS 10. Consolidated fund assets and liabilities are
presented line by line after intercompany eliminations.
The table below sets out an analysis of the carrying amounts of interests held
by the Group in consolidated investment funds.
31 December 2021 31 December 30 June
£m
2020
2021
£m
£m
Investment securities(1) 359.0 242.8 318.1
Cash and cash equivalents 8.9 7.7 10.4
Other(2) 0.3 - (0.8)
Third-party interests in consolidated funds (117.3) (89.4) (105.7)
Consolidated seed capital investments 250.9 161.1 222.0
1. Investment securities represent trading securities held by consolidated
investment funds and are measured at FVTPL. Further detailed information at
the security level is available in the individual fund financial statements.
2. Other includes trade receivables, trade payables and accruals.
The maximum exposure to loss is the carrying amount of the assets held. The
Group has not provided financial support or otherwise agreed to be responsible
for supporting any consolidated fund financially.
Included within the interim condensed consolidated statement of comprehensive
income are net gains of £30.0 million (H1 2020/21: net gains of £30.9
million; FY2020/21: net gains of £72.5 million) relating to the Group's share
of the results of the individual statements of comprehensive income for each
of the consolidated funds, as follows:
31 December 2021 31 December 30 June
£m
2020
2021
£m
£m
Investment income 2.7 1.5 3.3
Gains on investment securities 51.0 55.9 123.5
Change in third-party interests in consolidated funds (23.0) (25.7) (52.6)
Other expenses (0.7) (0.8) (1.7)
Net gains on consolidated funds 30.0 30.9 72.5
Included in the Group's cash generated from operations is £2.0 million cash
utilised in operations (H1 2020/21: £0.3 million cash utilised in
operations; FY2020/21: £0.4 million cash generated in operations) relating to
consolidated funds.
As at 31 December 2021, the Group's consolidated funds were domiciled in
Guernsey, Luxembourg, Saudi Arabia and the United States.
16) Financial risk management
The Group is subject to strategic, business, client, investment, operational
and treasury risks throughout its business as discussed in the Risk management
section of the Group's Annual Report for the year ended 30 June 2021, which
provides further detail on the Group's exposure to and the management of risks
derived from the financial instruments it uses.
Those risks and the risk management policies have not changed significantly
during the six months to 31 December 2021.
17) Share capital
Authorised share capital
Number of Nominal value
shares
£'000
Ordinary shares of 0.01p each at 31 December 2021, 30 June 2021 and 31 900,000,000 90
December 2020
Issued share capital - allotted and fully paid
As at As at As at As at As at As at
31 December 2021
31 December
31 December 2020
31 December 2020
30 June
30 June
Number of
2021
Number of
Nominal value
2021
2021
shares
Nominal value
shares
£'000
Number of
Nominal value
£'000
shares
£'000
Ordinary shares of 0.01p each 712,740,804 71 712,740,804 71 712,740,804 71
All the above ordinary shares represent equity of the Company and rank pari
passu in respect of participation and voting rights.
As at 31 December 2021, there were equity-settled share awards issued under
the Omnibus Plan totalling 43,214,260 shares (31 December 2020: 41,335,660
shares; 30 June 2021: 41,302,176 shares) that have release dates ranging from
August 2022 to October 2026.
18) Own shares
The Trustees of The Ashmore 2004 Employee Benefit Trust (EBT) acquire and hold
shares in Ashmore Group plc with a view to facilitating the vesting of share
awards. As at 31 December 2021, the EBT owned 52,749,597 (31 December 2020:
52,430,131; 30 June 2021: 52,345,869) ordinary shares of 0.01p with a nominal
value of £5,275 (31 December 2020: £5,243; 30 June 2021: £5,235) and
shareholders' funds are reduced by £181.6 million (31 December 2020: £180.1
million; 30 June 2021: £179.8 million) in this respect. The EBT is
periodically funded by the Company for these purposes.
19) Related party transactions
Related parties of the Group include key management personnel, close family
members of key management personnel, subsidiaries, associates, joint ventures,
Ashmore funds, the EBT and the Ashmore Foundation.
Key management personnel
The compensation paid to or payable to key management personnel is shown
below:
6 months to 6 months to 12 months to
31 December
31 December
30 June
2021
2020
2021
£m
£m
£m
Short-term benefits 0.3 0.3 1.3
Defined contribution pension costs - - -
Share-based payment benefits 0.8 0.7 2.5
1.1 1.0 3.8
Short-term benefits include salary and fees, benefits and cash bonus.
Share-based payment benefits represent the cost of equity-settled awards
charged to the interim condensed consolidated statement of comprehensive
income.
During the period, there were no other transactions entered into with key
management personnel (H1 2020/21 and FY2020/21: none). Aggregate key
management personnel interests in consolidated funds at 31 December 2021 were
£96.5 million (31 December 2020: £33.1 million; 30 June 2021: £80.2
million).
Transactions with Ashmore funds
During the period, the Group received £55.8 million of gross management fees
and performance fees (H1 2020/21: £69.1 million; FY2020/21: £124.7 million)
from the 101 funds (H1 2020/21: 101 funds; FY2020/21: 106 funds) it manages
and which are classified as related parties. As at 31 December 2021, the Group
had receivables due from funds of £7.2 million (31 December 2020:
£10.8 million; 30 June 2021: £8.1 million) that are classified as related
parties.
Transactions with the EBT
The EBT has been provided with a loan facility to allow it to acquire Ashmore
shares in order to satisfy outstanding unvested share awards. The EBT is
included within the results of the Group. As at 31 December 2021, the loan
outstanding was £169.9 million (31 December 2020: £174.5 million;
30 June 2021: £160.0 million).
Transactions with the Ashmore Foundation
The Ashmore Foundation is a related party to the Group. The Foundation was set
up to provide financial grants to worthwhile causes within the Emerging
Markets countries in which Ashmore invests and/or operates with a view to
giving back into the countries and communities. The Group made donations of
£0.5 million to the Foundation during the period to 31 December 2021
(H1 2020/21: £38,900; FY2020/21: £1.0 million).
20) Commitments
Undrawn investment commitments
As at As at As at
31 December
31 December
30 June
2021
2020
2021
£m
£m
£m
Ashmore Andean Fund II, LP 0.1 0.1 0.1
Ashmore Avenida Colombia Real Estate Fund I (Cayman) LP 0.1 0.1 0.1
Ashmore I - CAF Colombian Infrastructure Senior Debt Fund 6.5 9.9 6.3
Ashmore KCH HealthCare Fund II 1.8 - 2.4
Total undrawn investment commitments 8.5 10.1 8.9
21) Post-balance sheet events
There are no post-balance sheet events that require adjustment or disclosure
in these interim condensed consolidated financial statements.
22) Accounting estimates and judgements
In preparing these interim condensed consolidated financial statements the
significant judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were substantially the
same as those that applied to the Annual Report and Accounts for the year
ended 30 June 2021.
Cautionary statement regarding forward looking statements
It is possible that this document could or may contain forward looking
statements that are based on current expectations or beliefs, as well as
assumptions about future events. These forward looking statements can be
identified by the fact that they do not relate only to historical or current
facts. Forward looking statements often use words such as anticipate, target,
expect, estimate, intend, plan, goal, believe, will, may, should, would, could
or other words of similar meaning.
Undue reliance should not be placed on any such statements because, by their
very nature, they are subject to known and unknown risks and uncertainties and
can be affected by other factors that could cause actual results, and the
Group's plans and objectives, to differ materially from those expressed or
implied in the forward looking statements. There are several factors that
could cause actual results to differ materially from those expressed or
implied in forward looking statements. Among the factors that could cause
actual results to differ materially from those described in the forward
looking statements are changes in the global, political, economic, business,
competitive, market and regulatory forces, future exchange and interest rates,
changes in tax rates and future business combinations or dispositions. The
Group undertakes no obligation to revise or update any forward looking
statement contained within this document, regardless of whether those
statements are affected as a result of new information, future events or
otherwise.
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE HALF-YEARLY
FINANCIAL REPORT
We confirm that to the best of our knowledge:
the interim condensed consolidated financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted for use in the
UK and that this interim report includes a fair review of the information
required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication
of important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial statements,
and a description of the principal risks and uncertainties for the remaining
six months of the financial year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first
six months of the current financial year and that have materially affected the
financial position or performance of the entity during that period and any
changes in the related party transactions described in the last Annual Report
that could do so.
By order of the Board
Mark Coombs
Chief Executive Officer
9 February 2022
Independent Review Report to Ashmore Group PLC
Conclusion
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 31
December 2021 which comprises the consolidated statement of comprehensive
income, consolidated balance sheet, consolidated statement of changes in
equity, consolidated cash flow statement and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed consolidated set of financial statements in the
half-yearly financial report for the six months ended 31 December 2021 is not
prepared, in all material respects, in accordance with IAS 34 Interim
Financial Reporting as adopted for use in the UK and the Disclosure Guidance
and Transparency Rules (the DTR) of the UK's Financial Conduct Authority (the
UK FCA).
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures.
We read the other information contained in the half-yearly financial report
and consider whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FCA.
The latest annual financial statements of the Group were prepared in
accordance with IFRSs adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union and in accordance with international accounting
standards in conformity with the requirements of the Companies Act 2006 and
the next annual financial statements will be prepared in accordance with
UK-adopted international accounting standards. The Directors are responsible
for preparing the condensed set of financial statements included in the half-
yearly financial report in accordance with IAS 34 Interim Financial Reporting
as adopted for use in the UK.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the DTR of the
UK FCA. Our review has been undertaken so that we might state to the Company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Jatin Patel
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
9 February 2022
Alternative performance measures
Ashmore discloses non-GAAP financial alternative performance measures (APMs)
in order to assist shareholders' understanding of the operational performance
of the Group during the accounting period and to allow consistent comparisons
with prior periods.
The calculation of APMs is consistent with the financial year ending 30 June
2021. Historical disclosures relating to APMs, including explanations and
reconciliations, can be found in the respective interim financial reports and
annual reports and accounts.
Net revenue
As shown in the consolidated statement of comprehensive income (CSCI), net
revenue is total revenue less distribution costs and including foreign
exchange. This provides a comprehensive view of the revenues recognised by the
Group in the period.
Reference H1 2021/22 H1 2020/21
£m
£m
Total revenue CSCI 137.5 151.2
Less: CSCI (2.0) (3.1)
Distribution costs
Add:
Foreign exchange CSCI 3.0 2.6
Net revenue 138.5 150.7
Net management fees
The principal component of the Group's revenues is management fees, net of
associated distribution costs, earned on assets under management.
Reference H1 2021/22 H1 2020/21
£m
£m
Management fees CSCI 133.0 142.0
Less: CSCI (2.0) (3.1)
Distribution costs
Net management fees 131.0 138.9
Net management fee margin
The net management fee margin is defined as the ratio of annualised management
fees less distribution costs to average assets under management for the
period, in US dollars since it is the primary currency in which fees are
received and matches the Group's AuM disclosures. The margin is a principal
measure of the firm's revenue generating capability and is a commonly used
industry performance measure.
H1 2021/22 H1 2020/21
Net management fee income (US$m) 178.2 183.6
Average assets under management (US$bn) 91.2 87.7
Net management fee margin (bps) 39 42
Variable compensation ratio
The charge for employee variable compensation (VC) as a proportion of earnings
before variable compensation, interest and tax (EBVCIT). The linking of
variable annual pay awards to the Group's profitability is one of the
principal methods by which the Group controls its operating costs. The charge
for variable compensation is a component of personnel expenses and comprises
share-based payments and performance-related cash bonuses, and is accrued in
the interim accounts at 20% of EBVCIT.
EBVCIT is defined as operating profit excluding the charge for variable
compensation and seed capital-related items. The latter comprises gains/losses
on investment securities, change in third-party interests in consolidated
funds, and other expenses in respect of consolidated funds.
Reference H1 2021/22 H1 2020/21
£m
£m
Operating profit CSCI 117.9 130.1
Less: CSCI, Note 15d (27.3) (29.4)
Seed capital-related items
Add:
Variable remuneration n/a 22.8 25.2
EBVCIT 113.4 125.9
EBITDA
The standard definition of earnings before interest, tax, depreciation and
amortisation is operating profit before depreciation and amortisation. It
provides a view of the operating performance of the business before certain
non-cash items, financing income and charges, and taxation.
Reference H1 2021/22 H1 2020/21
£m
£m
Operating profit CSCI 117.9 130.1
Add:
Depreciation & amortisation n/a 1.6 1.6
EBITDA 119.5 131.7
Adjusted net revenue, adjusted operating costs and adjusted EBITDA
Adjusted figures exclude items relating to foreign exchange translation and
seed capital. This provides an alternative view of profits, excluding the
volatility associated with those items, which is used by management to assess
the Group's operating performance.
Reference H1 2021/22 H1 2020/21
£m
£m
Net revenue CSCI 138.5 150.7
Less:
Foreign exchange translation Note 6 (0.3) 6.1
Adjusted net revenue 138.2 156.8
Reference H1 2021/22 H1 2020/21
£m
£m
Personnel expenses CSCI (36.5) (38.8)
Other expenses CSCI (12.1) (12.0)
Less:
Other expenses in consolidated funds Note 15d 0.7 0.8
Add:
VC: 20% on foreign exchange translation Note 6 0.1 (1.2)
Adjusted operating costs (47.8) (51.2)
Reference H1 2021/22 H1 2020/21
£m
£m
EBITDA 119.5 131.7
Less:
Foreign exchange translation Note 6 (0.3) 6.1
VC: 20% on foreign exchange translation Note 6 0.1 (1.2)
Seed capital-related items CSCI, Note 15d (27.3) (29.4)
Adjusted EBITDA 92.0 107.2
Adjusted EBITDA margin
The ratio of adjusted EBITDA to adjusted net revenue, both of which are
defined and reconciled above. This is an appropriate measure of the Group's
operational efficiency and its ability to generate returns for shareholders.
Adjusted diluted EPS
Diluted earnings per share excluding items relating to foreign exchange
translation and seed capital, as described above, and the related tax impact.
Reference H1 2021/22 H1 2020/21
pence
pence
Diluted EPS CSCI 13.3 18.2
Less:
Foreign exchange translation Note 6 - 0.7
Tax on foreign exchange translation (19%) - (0.1)
Seed capital-related items CSCI, Note 7, Note 15d (3.6) (7.0)
Tax on seed capital-related items (19%) n/a 0.7 1.0
Adjusted diluted EPS 10.4 12.8
Conversion of operating profits to cash
This compares cash generated from operations, excluding consolidated funds, to
adjusted EBITDA, and is a measure of the effectiveness of the Group's
operations in converting profits to cash flows for shareholders. Excluding
consolidated funds also ensures consistency between the cash flow and adjusted
EBITDA.
Reference H1 2021/22 H1 2020/21
£m
£m
Cash generated from operations Consolidated cash flow statement 82.8 88.9
Less:
Cash flows relating to consolidated funds Note 15 2.0 0.3
Operating cash flow 84.8 89.2
Conversion of operating profits to cash 92% 83%
Capital resources
Ashmore Group plc is subject to consolidated regulatory capital requirements
and therefore is required by the Financial Conduct Authority (FCA) to
determine its regulatory capital requirement and the capital resources
available to meet this requirement. The method by which the Group calculates
its capital resources is defined by the FCA and summarised in the table below.
Note that intangible assets include deferred acquisition costs and the
foreseeable dividends relate to the declared interim dividend of 4.80 pence
per share.
Reference H1 2021/22 H1 2020/21
£m
£m
Total equity Balance sheet 940.4 846.1
Less deductions:
Investments in associates Balance sheet (0.8) (3.2)
Foreseeable dividends Note 11 (33.8) (33.6)
Goodwill and intangible assets Balance sheet (82.5) (82.0)
Capital resources 823.3 727.3
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